TMI Tax Updates - e-Newsletter
August 7, 2018

Case Laws in this Newsletter:

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

Highlights / Catch Notes

• Income Tax:

  TDS u/s 192 - value of the perquisite - the amended provision as per section 17(2)(vi) is only to determine the value of ESOP transaction and the obligation for withholding tax accrues only when the shares are allotted after completion of commitments on the part of the person who exercised the option.
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• Income Tax:

  Enhancement of amount by way of loss claimed on valuation of certain shares by the Ld.CIT(A) - CIT(A) has power to enhance and accordingly the contentions of assessee on this issue are rejected.
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• Income Tax:

  Disallowance of expenditure u/s. 37(1) - allowable busniss expenditure - AO cannot step into the shoes of assessee to re-fix the amount - There is no power to AO to reduce the claim, whereas he can examine whether the amount can be allowed or not in full.
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• Income Tax:

  Depreciation on intellectual property rights (IPR) acquired and purchased by the assessee - There cannot be a ground and reason to hold that the assessee had not “put to use” the intellectual property rights assets in the year in question.
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• Customs:

  Rejection of an amount of the customs duty paid in excess - assessment was not challenged - The excess duty claimed by the respondents considering the FOB price as cum-duty price is in accordance with law and the original authority should have allowed the refund.
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• Customs:

  SEZ Unit - rejection of refund claim - jurisdiction over port of import - the finding of Asst. Commissioner Import Mumbai to refuse refund claim on grounds of jurisdiction holding that the Mumbai customs have no authority is erroneous.
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• Service Tax:

  Manpower recruitment and supply agency services - campus placement fees from the willing students enrolled by ICFAI - placement facilitation provided by educational institutions whereunder the placement charges are collected from students and not from an employer or a prospective employer - not chargeable to service tax.
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• Service Tax:

  Valuation - inclusion of interest on free loan - The cost of the bank guarantee is incurred by the appellant - Thus, there is no case to add an amount of notional interest in the value of taxable services rendered.
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• Service Tax:

  Valuation - receipt of bonus by the service provider for efficient use of diesel and explosives - this amount was not known at the time of provision of services - This amount cannot be included as value of taxable services rendered u/s 67.
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• Service Tax:

  CENVAT Credit - input services - outdoor catering service - restaurant service - credit cannot be allowesd since in the negative list - however no penalty.
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• Service Tax:

  Penalty u/s 78 - reverse charge mechanism - revenue neutrality - assessee could have gained nothing since the entire amount could have been available to them as CENVAT credit. Since the entire exercise is revenue neutral, no mala fide can be attributed to them - No penalty.
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• Service Tax:

  Cargo Handling Services - agricultural produce - raw sugar is a product which has undergone processing - the benefit of exemption is not extendable to raw sugar. Thus, the Cargo Handling Services in respect of handling of cargo of raw sugar would attract the levy of service tax
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• Service Tax:

  Appellate Authority which exercised quasi-judicial power should not be influenced by departmental clarifications and Board Tariff Ruling while adjudicating the cases.
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• Service Tax:

  Classification of Services - If the goods are moved out of the factory or into the factory they meet the definition of “cargo” and the activities of handling it is “cargo handling service” - the activity under taken by the appellant/assessee must be classified as cargo handling service.
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• Central Excise:

  Claim of exemption for manufacture of corrugated tray /pads - the product in question are product of corrugated paper and corrugated paper board and these are also used for packing and safe transportation of the bottles and cans as other products of corrugated paper and paper board such as cartons, or boxes, are being used - the products classifiable under both the sub-sub-headings will be entitled to the exemption notification.
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• Central Excise:

  Deemed manufacture - labeling or re-labeling of containers and repacking from bulk packs to retail packs - if the appellant is undertaking manipulation of documents to prove his case before the adjudicating authority, it has to be held that confirmation of demand so raised are correct.
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• Central Excise:

  Invocation of Extended Period of Limitation - This being the legal position requiring interpretation by the Hon’ble Supreme Court, it can be safely assumed that there cannot be any scope for suppression - invocation of larger period is not proper and unsustainable.
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• Central Excise:

  CENVAT Credit - input services - 'tour operator services’ used for transporting workers and staff to the factory - the assessee is not entitled to the credit of service tax paid on the buses hired to bring workers to their factory.
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• Central Excise:

  Classification - appellants manufactured and cleared two types of needles for sutures i.e. one having horizontal punch and the another having vertical punch - the impugned item being part / accessory of the ‘Atraumatic Needled Suture’ required to be classified under CETH 9018
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• Central Excise:

  Valuation - manufactured goods under-valued - quantification of evasion - nothing has been brought on record by the appellants that the statements have been recorded under duress/coercion. It is not the case of the appellant that the said statements were retracted in reasonable time.
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• VAT:

  Appointments of administrative member (technical member) of the tribunal - Constitutional validity of Section 11 of the VAT Act and Rule 6 of the VAT Rules - concept of independence of judiciary - SC sustained the direction given by the HC for appointments of the members and constitution of bench.
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Articles

• CONVERSION OF LIMITED LIABILITY PARTNERSHIP (LLP) INTO COMPANY
• ANTI-PROFITEERING IN GST-YET ANOTHER COMPLAINT DISMISSED
• SUPPLY OF FOOD OR DRINK IN A MESS OR CANTEEN IN AN EDUCATIONAL INSTITUTE
• Proper boosting is necessary for Making India Cashless is need of the hour

Notifications

• Companies Law

• File No. 1/1/2018-CL.I - dated 31-7-2018 - Co. Law
  Central Government appoints the day of 31th July, 2018 as the date on which the provisions of Section 36 of the Companies (Amendment) Act, 2017 shall come into force

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• Customs

• F. No. 354/232/2016-TRU(Pt-I) - dated 2-8-2018 - ADD
  Corrigendum - Notification No. 33/2018-Customs (ADD), dated the 1st June, 2018

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• GST - States

• 21/2018-State Tax(Rate) - dated 26-7-2018 - Gujarat SGST
  Changes in rates of tax on Handicraft goods

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• 20/2018-State Tax(Rate) - dated 26-7-2018 - Gujarat SGST
  Amendment in Notification No. 5/2017-State Tax (Rate) dated 30th June,2017

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• 19/2018-State Tax (Rate) - dated 26-7-2018 - Gujarat SGST
  Amendment in Notification No. 2/2017-State Tax (Rate) dated 30th June, 2017

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• 18/2018-State Tax (Rate) - dated 26-7-2018 - Gujarat SGST
  Amendment in Notification No. 1/2017-State Tax (Rate) dated 30th June 2017

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• 17/2018-State Tax (Rate) - dated 26-7-2018 - Gujarat SGST
  Amendment in Notification No. 11/2017- State Tax (Rate) dated 30th June 2017

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• 16/2018-State Tax (Rate) - dated 26-7-2018 - Gujarat SGST
  Amendment in Notification No. 14/2017- State Tax (Rate) dated 30th June, 2017

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• 15/2018-State Tax (Rate) - dated 26-7-2018 - Gujarat SGST
  Amendment in Notification No. 13/2017- State Tax (Rate)dated 30 June 2017

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• 14/2018-State Tax (Rate) - dated 26-7-2018 - Gujarat SGST
  Amendment in Notification No. 12/2017- State Tax (Rate)dated 30th June 2017

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• 13/2018-State Tax (Rate) - dated 26-7-2018 - Gujarat SGST
  Amendment in Notification No. 11/2017- State Tax (Rate) dated 30th June, 2017

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• 21/2018-State Tax (Rate) - dated 27-7-2018 - Maharashtra SGST
  Prescribe concessional MGST rate on specified handicraft items, to give effect to the recommendations of the GST Council in it’s 28th meeting held on 21.07.2018

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• 20/2018-State Tax (Rate) - dated 27-7-2018 - Maharashtra SGST
  Amendment Notification No. MGST-1017/C.R. 103(4)/Taxation-1 [No.5/2017-State Tax (Rate)], dated the 29th June 2017

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• 19/2018-State Tax (Rate) - dated 27-7-2018 - Maharashtra SGST
  Amendment in Notification No. MGST-1017/C. R.-103(1)/Taxation-1 [Notification No. 2/2017 – State Tax (Rate)], dated the 29th June 2017

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• 18/2018-State Tax (Rate) - dated 27-7-2018 - Maharashtra SGST
  Amendment in Notification No. MGST-1017/C. R. 104/Taxation-1 [Notification No. 1/2017- State Tax (Rate)], dated the 29th June 2017

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• 17/2018-State Tax (Rate) - dated 27-7-2018 - Maharashtra SGST
  Amendment in Notification No. MGST. 1017/C. R. 103(10)/Taxation-1 [Notification No. 11/2017- State Tax (Rate)], dated the 29th June 2017

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• 16/2018-State Tax (Rate) - dated 27-7-2018 - Maharashtra SGST
  Amendment in Notification No. MGST-1017/C. R. 103(13)/Taxation-1 [Notification No. 14/2017- State Tax (Rate)], dated the 29th June 2017

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• 15/2018-State Tax (Rate) - dated 27-7-2018 - Maharashtra SGST
  Amendment in Notification No. MGST.1017/C.R.- 103(12)/ Taxation.-1 [Notification No. 13/2017-State Tax (Rate)], dated the 29th June 2017

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• 14/2018-State Tax (Rate) - dated 27-7-2018 - Maharashtra SGST
  Amendment in Notification No. MGST.1017/C. R. 103(11)/Taxation-1 [Notification No. 12/2017- State Tax (Rate)], dated the 29th June 2017

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• 13/2018-State Tax (Rate) - dated 27-7-2018 - Maharashtra SGST
  Amendment in Notification No. MGST-1017/C. R. 103(10)/Taxation-1 [Notification No. 11/2017- State Tax (Rate)], dated the 29th June 2017

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• F.12(56)FD/Tax/2017-Pt-III-070 - dated 26-7-2018 - Rajasthan SGST
  Amendment in the Notification F.12(56)FD/Tax/2017-pt-I-50 dated 29-06-2017, related to the exemptions on supply of services under RGST Act, 2017.

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• F.12(56)FD/Tax/2017-Pt-III-069 - dated 26-7-2018 - Rajasthan SGST
  Amendment in the Notification No. F.12(56)FD/Tax/2017-pt-I-49 dated 29-06-2017, related to the rate of tax for supply of services under RGST Act, 2017.

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• F.12(56)FD/Tax/2017-Pt-III-064 - dated 6-7-2018 - Rajasthan SGST
  The Rajasthan Goods and Services Tax (Seventh Amendment) Rules, 2018.

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• F.12(56)FD/Tax/2017-Pt-II-061 - dated 29-6-2018 - Rajasthan SGST
  Amendment in the Notification number F.12(56)FD/Tax/2017-Pt-I-046, dated 29th June, 2017.

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• F.12(46)FD/Tax/2017-Pt-III-053 - dated 19-6-2018 - Rajasthan SGST
  The Rajasthan Goods and Services Tax (Sixth Amendment) Rules, 2018.

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• F.12(46)FD/Tax/2017-Pt-II-052 - dated 13-6-2018 - Rajasthan SGST
  Notification regarding disposal of perishable or hazardous goods after seizure under section 67(8) of the RGST Act, 2017.

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• G.O. Ms. No. 89 - dated 26-7-2018 - Tamil Nadu SGST
  Amendments in the Notification No. II(2)/CTR/532(d-16)/2017, dated the 29th June, 2017, - Reverse charge on supply of services.

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• G.O. Ms. No. 88 - dated 26-7-2018 - Tamil Nadu SGST
  Amendments in the Notification No.II(2)/CTR/532(d-15)/2017, dated the 29th June, 2017 - Service exempt from state tax.

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• G.O. Ms. No. 87 - dated 26-7-2018 - Tamil Nadu SGST
  Amendments in the Notification No.II(2)/CTR/532(d-14)/2017, dated the 29th June, 2017 - Rate of state tax on services.

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• G.O. Ms. No. 79 - dated 10-7-2018 - Tamil Nadu SGST
  Designation of the officers for the purposes of Tamil Nadu Goods and Services Tax Act 2017 (Tamil Nadu Act 19 of 2017).

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• G.O. Ms. No. 77 - dated 6-7-2018 - Tamil Nadu SGST
  The Tamil Nadu Goods and Services Tax (Seventh Amendment) Rules, 2018.

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• G.O. Ms. No. 73 - dated 29-6-2018 - Tamil Nadu SGST
  Amendment in the Commercial Taxes and Registration Department Notification No.II(2)/CTR/532(d-11)/2017, published at page 84 in Part II--Section 2 of the Tamil Nadu Government Gazette, Extraordinary, dated 29th June, 2017.

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• G.O. Ms. No. 68 - dated 19-6-2018 - Tamil Nadu SGST
  The Tamil Nadu Goods and Services Tax (Sixth Amendment) Rules, 2018.

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• G.O.Ms.No. 133 - dated 16-7-2018 - Telangana SGST
  Telangana Goods and Services Tax (Sixth Amendment) Rules, 2018

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Circulars / Instructions / Orders

• GST - States - F.17(131)ACCT/GST/2017/3640 - dated 22-6-2018
  Appellate Authority as Joint Commissioner- Appeals in GST
• GST - States - F.1(PS-ACCT-HQ)ESTT/CCT/18/818 - dated 22-6-2018
  Appellate Authority under GST.
• GST - States - F.12(31)FD/Tax/2018 - dated 15-5-2018
  Tax Deduction at Source under GST.

News

• Auction for Sale (Re-issue) of Government Stocks

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• GeM to ensure transparency in public procurement

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• Minister Shri Nitin Gadkari inaugurated NITI Aayog’s International Conference on Sustainable Growth through Material Recycling: Policy Prescriptions”

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• Startup India’s Academia Alliance Programme

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Case Laws:

• Income Tax

• 2018 (8) TMI 347
  Unexplained cash credit under Section 68 - Held that:- Tribunal, on examination of facts, has come to the conclusion that the investment made by the shareholders is not hit by Section 68 of the Act. It records, that the entire basis of the Revenue's case is based on surmise that the respondent was taking bogus purchase bills and cash was introduced in the form of share capital without any evidence in support. Therefore, the view taken by the impugned order of the Tribunal on facts is a possible view. Addition of 5% of cash purchases as profit by way of discount - Held that:- As submission on behalf of the appellant-Revenue is not supported by any material on record. It proceeds, as held by the impugned order of the Tribunal, purely on the basis of surmise that the cash purchases would necessarily involve a discount which has been offered to and availed of, by the respondent-assessee. This submission is not backed by any cogent or demonstrative evidence. Addition of 2% as unexplained expenses by way of commission/service charges paid for arranging accommodation bills - Held that:- There is no challenge to the impugned order of the Tribunal holding that the additions on account of bogus purchases is not sustainable. In such a case, there is no reason why the 2% commission would have been allegedly paid on accommodation bills. Thus, there is no unexplained expenditure as even according to the Revenue, before us, there are no bogus purchases. Thus, the view taken by the Tribunal in the present facts is a possible view and therefore this Question does not give rise to any substantial question of law

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• 2018 (8) TMI 346
  Depreciation on intellectual property rights acquired and purchased by the assessee from Monsanto India Limited - “put to use” - Held that:- The intellectual property rights purchased by the assessee included trademarks ‘Lasso’, ‘Machete’ and ‘Fast Mix’, rights to reference and use of registration data in support of product registration, benefits of business contracts, business information, business intellectual property right, trademarks and rights against third parties. It is an accepted and admitted position that the products sold by the respondent-assessee had borne the trademarks ‘Lasso’, ‘Machete’ and ‘Fast Mix’. Substantial advertisement and sales promotion expenditure was incurred. Use of intellectual property rights for sales and marketing was not questioned and commented upon in the assessment order. Depreciation was disallowed as the asset had not been put to use for manufacturing activities. This cannot be a ground and reason to hold that the assessee had not “put to use” the intellectual property rights assets in the year in question. Mere purchase of the products, from third party or the fact that assessee was not engaged in manufacturing activity, would not make any difference.

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• 2018 (8) TMI 345
  Non-cognizable offence punishable u/s 279-A - Compliance of proceedings under Section 155 of the Cr.P.C., 1973 - Held that:- Vide the present petition, apart from the prayer clause (e) which has been made in the petition seeking setting aside of the order dated 21.09.2017 vide which the learned Trial Court had observed that the application filed by the petitioner seeking closure of the case and termination of proceedings due to the alleged non-compliance of mandatory provisions of Section 155 Cr.P.C., 1973 would be heard at the stage of the final arguments, there are other prayers made by the petitioner vide clauses (b)(c)(d) & (f) of the petition. On a consideration of the submissions that have been made on behalf of the petitioner and the respondent in relation to the proceedings dated 21.09.2017, presently the order dated 21.09.2017 of the learned Trial Court in CC No.515996/16 is set aside with directions to the learned Trial Court to dispose of the application filed by the petitioner under Section 155 of the Cr.P.C., 1973 before proceeding to hear the final arguments in the matter. The petitioner and the respondent both would be entitled to make submissions in relation to the applicability or otherwise of Section 155 of Cr.P.C., 1973 to the proceedings under the Income Tax Act. Petitioner seeks to withdraw the present petition qua the said prayers at prayer clauses (b)(c)(d) & (f) seeking liberty to seek redressal in accordance with law after disposal of the application under Section 155 of the Cr.P.C., 1973.

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• 2018 (8) TMI 344
  Disallowance of expenditure u/s. 37(1) - allowable busniss expenditure - Held that:- AO cannot step into the shoes of assessee to re-fix the amount that should have been paid. There is no dispute that the amount was paid for the purpose of business, as AO has allowed the amount partly. Since the provisions of Section 37(1) does not have any restriction to allow the amount partly, so long as the expenditure was incurred for the purpose of the business wholly and exclusively, the same has to be allowed. The restrictions placed in other provisions like that 36(1)(iii) for the purpose of interest, u/s. 40A (expenses or payment not deductible in certain circumstances) and also restrictions placed u/s. 30 and 31 does not apply to the facts of the case. AO has wrongly considered the claim. There is no power to AO to reduce the claim, whereas he can examine whether the amount can be allowed or not in full. In view of that, since the restrictions u/s. 37(1) are not applicable, the whole of the amount claimed is to be allowed as the expenditure is not proved to be personal or capital in nature, as provided in the section itself. Enhancement of amount by way of loss claimed on valuation of certain shares by the Ld.CIT(A) - Held that:- CIT(A) has jurisdiction to consider the loss claimed of the assessee, which AO has not examined, as he has powers to enhance also given to him u/s. 251. The provisions of Section 251(1)(a) empowers the CIT in an appeal against an order of assessment to confirm, reduce, enhance or annul the assessment. Thus, since the CIT(A) has not unearthed a new source of income, but only has gone by the annual report/ statements enclosed to the return in which assessee has claimed trading loss to set-off to other incomes, we are of the opinion that CIT(A) has power to enhance and accordingly the contentions of assessee on this issue are rejected. Coming to the merits of addition i.e., disallowance of loss claimed, it is to be noted that assessee having purchased shares of ₹ 155/- per share has valued the same at ₹ 10/- as on 31-03-2002, so as to claim a notional loss in the transaction of purchase of shares. As pointed out by Ld.CIT(A) in the order, there is no fall in the value of the share and the said company (DQ) has issued further shares to others at ₹ 167/- as on 30-11-2001 to ₹ 290/- on 16-07-2004 (as stated in pg.18 of the order). It is also to be noted that in the course of argument also, Ld. Counsel fairly admitted that the intrinsic value of the share is around ₹ 23.52 and therefore valuation of share at ₹ 10/- is certainly without any basis. We agree with the Ld.CIT(A) that the valuation of shares at a lesser price than the cost was resorted to only to claim notional loss. Since we are affirming the order of the CIT(A) on this issue, the question of consideration of loss whether it is ‘speculation’ or not under the provisions of Section 73 Explanation does not arise. In view of that, we reject the contentions raised by assessee and grounds on this issue are rejected. - Appeal of assessee is partly allowed.

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• 2018 (8) TMI 343
  TDS u/s 192 - value of the perquisite - value of ESOP transaction - Non-compete fee - Held that:- The ex-employee has a right to exercise, once he exercises the option, the price of the shares are freezed. That means, the exercise of the option is only acceptance of the proposal as per the scheme 2007. The proposal comes with the obligation i.e. with conditions of such exercise of option. Once the option is exercised, the company which allots the shares has certain obligation on their part to safeguard their interest. The allotment cannot be completed without receiving the full price of the shares. In the given case, mere receipt of the price agreed is not enough but to receive the cost of shares exercised along with the withholding tax. These are obligations on the part of person exercising the opinion. This transaction will come to an end as and when the person exercising the option also completes his part of commitment. Mere exercise of the option is not enough, it is only initial acceptance of right or proposal, which comes with certain commitments. As and when the commitment is complete, the proposal said to be accepted. The goal post of acceptance shifted until completion of the commitment which comes along with the scheme. As submitted by AR, the provisions of section 192 is applicable only on payment basis not on accrual basis. The value of the perquisite can be determined as per section 17(2)(vi) of the Act but is taxable only when the assessee makes the payment, in this case, allotment of shares. In case, it is accepted the contention of ld. CIT(A) that separation agreement should not be used to defer the tax liability, the company allots the shares and pays the withholding tax. Then, the company allots the shares without receiving full consideration on such shares. In case, Mr. Vikram fails to comply with the separation agreement, the company cannot cancel the allotment of shares. Therefore, the assessee has to safeguard its interest first. Coming to other argument that withholding tax should have been paid against the non-compete fee, in our view, the non-compete fee is not accrued in this AY, it is also the findings of ld. CIT(A). Therefore, the amended provision as per section 17(2)(vi) is only to determine the value of ESOP transaction and the obligation for withholding tax accrues only when the shares are allotted after completion of commitments on the part of the person who exercised the option. Mere exercise of acceptance is only acceptance of general proposal. Accordingly, grounds raised by the assessee on this are allowed.

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• 2018 (8) TMI 342
  Disallowance of expenditure u/s. 37(1) - allowable busniss expenditure - Held that:- AO cannot step into the shoes of assessee to re-fix the amount that should have been paid. There is no dispute that the amount was paid for the purpose of business, as AO has allowed the amount partly. Since the provisions of Section 37(1) does not have any restriction to allow the amount partly, so long as the expenditure was incurred for the purpose of the business wholly and exclusively, the same has to be allowed. The restrictions placed in other provisions like that 36(1)(iii) for the purpose of interest, u/s. 40A (expenses or payment not deductible in certain circumstances) and also restrictions placed u/s. 30 and 31 does not apply to the facts of the case. AO has wrongly considered the claim. There is no power to AO to reduce the claim, whereas he can examine whether the amount can be allowed or not in full. In view of that, since the restrictions u/s. 37(1) are not applicable, the whole of the amount claimed is to be allowed as the expenditure is not proved to be personal or capital in nature, as provided in the section itself. Enhancement of amount by way of loss claimed on valuation of certain shares by the Ld.CIT(A) - Held that:- CIT(A) has jurisdiction to consider the loss claimed of the assessee, which AO has not examined, as he has powers to enhance also given to him u/s. 251. The provisions of Section 251(1)(a) empowers the CIT in an appeal against an order of assessment to confirm, reduce, enhance or annul the assessment. Thus, since the CIT(A) has not unearthed a new source of income, but only has gone by the annual report/ statements enclosed to the return in which assessee has claimed trading loss to set-off to other incomes, we are of the opinion that CIT(A) has power to enhance and accordingly the contentions of assessee on this issue are rejected. Coming to the merits of addition i.e., disallowance of loss claimed, it is to be noted that assessee having purchased shares of ₹ 155/- per share has valued the same at ₹ 10/- as on 31-03-2002, so as to claim a notional loss in the transaction of purchase of shares. As pointed out by Ld.CIT(A) in the order, there is no fall in the value of the share and the said company (DQ) has issued further shares to others at ₹ 167/- as on 30-11-2001 to ₹ 290/- on 16-07-2004 (as stated in pg.18 of the order). It is also to be noted that in the course of argument also, Ld. Counsel fairly admitted that the intrinsic value of the share is around ₹ 23.52 and therefore valuation of share at ₹ 10/- is certainly without any basis. We agree with the Ld.CIT(A) that the valuation of shares at a lesser price than the cost was resorted to only to claim notional loss. Since we are affirming the order of the CIT(A) on this issue, the question of consideration of loss whether it is ‘speculation’ or not under the provisions of Section 73 Explanation does not arise. In view of that, we reject the contentions raised by assessee and grounds on this issue are rejected. - Appeal of assessee is partly allowed.

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• 2018 (8) TMI 341
  Validation of notice issued u/s 153C - without having any incriminating material - Held that:- As per the provisions of section 153C A.O. is required to initiate the proceedings and issue the notice only on the basis of money, bullion, jewellery, other article or thing seized or requisitioned belonged to or any books of accounts or documents seized or requisitioned pertains to or pertain to the assessee. It is settled law that in the case of completed assessments, no addition under section 153C is permitted to be made without having the seized material. This Tribunal in the case of Lalitha Devi vs. Assistant Commissioner of Income Tax, (2018 (4) TMI 337 - ITAT VISAKHAPATNAM) held that invoking provisions of section 153C of the Act without having incriminating material is bad in law. In the instant case the Ld DR did not place the satisfaction recorded by the AO for issuing the notice u/s 153C. From the Ld. CIT(A) order foundation for the issue of notice u/s 153C was the letter dated 08/10/2006 and the affidavit executed on 01/01/2008 which were scanned by us and found that there was no indication of any financial transaction leading to understatement of income except the mention of purchase of property on 05/02/2004 which is relevant to the Assessment Year 2004-05 and are not relevant to the assessment years under consideration. Therefore, the said documents cannot be held to be the incriminating material for the purpose of initiating the proceedings under section 153C of the Act. Earlier the assessments in this case are completed, since, the time limit for issue of notice u/s 143(2) got expired before the date of search, the AO did not make any addition in the assessment orders on the basis of the seized material. - Decided in favour of assessee

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• 2018 (8) TMI 340
  Addition on account of difference in purchase made - CIT-A deleted the addition violating Rule 46A of the IT Rules 1962 - Held that:- As find that the AO in his remand report has not completed his investigations in a proper manner. The appellant was always ready to submit all vouchers as demanded. It cannot expected from the Appellant that gunny bags of vouchers would be brought to the office for verification. He should have asked for some vouchers for a test check basis. This has been done and produced before me hence find force in the contentions of the of the appellant. All their sanctions are noted duly in their notings which matches with their revised reconciliation. As find no basis for the disallowance in the purchases and hereby delete the amount which was disallowed by the A.O. Hence the amount is deleted - no infirmity in the impugned order of the CIT-A and it is justified. Ground raised by the revenue is dismissed

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• 2018 (8) TMI 299
  Question of remand - appeal is dismissed. All the pending application also stand disposed off - Held that:- Special Leave Petition is dismissed. However, all contentions are left open.

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• 2018 (8) TMI 298
  Disallowance on account of broken period interest - treated as capital expenditure - Held that:- In view of decision rendered by this Court in Deputy Commissioner of Income Tax, Chennai vs. T.Jayachandran and other connected appeals [2018 (4) TMI 1473 - SUPREME COURT] this special leave petition stands dismissed.

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• 2018 (8) TMI 297
  Deductible / Exempted income u/s 10(29) - depreciation to be excluded from the income or not - CIT(A) allowed the computation after excluding depreciation as part of the expenditure and taking gross receipts from warehousing and Inland Container Depot/ Container Freight Station (‘ICD/CFS’) - Held that:- Special Leave Petition is dismissed both on the ground of delay and merits. Pending applications, if any, stand disposed of.

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• 2018 (8) TMI 296
  Revision u/s 263 - CIT-A has rendered an elaborate finding as to why the amounts could not be treated as capital - Held that:- Issue notice.There shall be stay of remand in the meantime.

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• 2018 (8) TMI 295
  Addition made under Section 153A - Addition made under Section 153A were set aside by the Tribunal, on application of the decision in ‘Commissioner of Income Tax Vs. Kabul Chawla’ (2015 (9) TMI 80 - DELHI HIGH COURT) - Held that:- Special Leave Petition is dismissed. Pending application stands disposed of.

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• 2018 (8) TMI 294
  Capital gain computation - Value of sale consideration - Held that:- Special Leave Petition is dismissed.Pending applications, if any, stand disposed of.

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• 2018 (8) TMI 293
  TDS u/s 194C - addition u/s 40(a) (ia) - tds liability - Held that:- No ground for interference is made out in exercise of our jurisdiction under Article 136 of the Constitution of India. The special leave petition is accordingly dismissed.

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• 2018 (8) TMI 292
  Revision order u/s 263 - scope of exercise of power under Section 263 - Held that:- Issue notice. Further proceedings before the Assessing Officer are stayed.

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• Customs

• 2018 (8) TMI 338
  Jurisdiction - power of DRI to issue SCN - Revenue’s grievance is that the CESTAT remanded the issues for reconsideration by the concerned Commissioner in view of the previous judgment of this Court in Mangli Impex Limited v. Union of India [2016 (5) TMI 225 - DELHI HIGH COURT] - Held that:- Following the order in Forech India [2017 (12) TMI 984 - DELHI HIGH COURT], this appeals are allowed and the CESTAT would independently apply its mind to the question of jurisdiction and also decide the appeal on merits, including the aspect of imposition of penalty if any - Appeal allowed in part.

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• 2018 (8) TMI 337
  Validity of order passed by the Settlement Commission - Section 127B, sub-section (1) proviso (a) of CA - The conclusion of the Settlement Commission is that, the petitioner/applicant has failed to satisfy it that he has complied with the requirement of proviso (a) by producing a Show Cause Notice or referring to it at least in his application. Held that:- It is entirely for the petitioner to seek refund, but if he seeks it and the monies are lying with the Revenue beyond 30.9.2018, but without compliance with our direction, then, on receipt of the request from the petitioner made in writing, the said amount shall be refunded within a period of eight weeks from the date of receipt of that application. Petition disposed off.

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• 2018 (8) TMI 336
  SEZ Unit - Jurisdiction of Commissioner of Customs (Appeals), NCH, Mumbai - rejection of refund claim - duty paid under protest - refund claim returned on the ground that differential duty was paid vide challan raised at Vishakhapatnam and instructed the appellant to file refund claim before the appropriate authority of SEZ, Chippada and not in the NCH, Mumbai. Held that:- The Board circular dated 03.02.1996 is applicable to the appellant since evaporation and other natural causes might have caused such loss in transit. Therefore it has nothing to do with SEZ unit. Further, the goods were imported to Mumbai port and warehoused there for which Mumbai customs port as defined in Rule 2 of Regulation 1995 should be considered as the port of import. Any subsequent transit of goods are of inland transit for which further submission of bill of entry at Vishakhapatnam was uncalled for - This being the factual position, the finding of Asst. Commissioner Import Mumbai to refuse refund claim on grounds of jurisdiction holding that the Mumbai customs have no authority is erroneous and such finding should not have found support of the Commissioner (Appeals) in his order. More importantly the amended Rule 47(5) brought by the department of commerce vide Notification dated 05.08.2016 has not excluded the jurisdiction of the Commissioner of Customs in respect of refund case - in the instant case, there is no denial of the fact that the Asst. Commissioner Customs-Bond, Mumbai is appropriate authority since he has got jurisdiction over customs port i.e. Mumbai where imports have taken place. The Asst. Commissioner of Customs- bond Mumbai has the jurisdiction to decide the refund application - appeal allowed - the matter is remanded back to the adjudicating authority to dispose of the refund application of the appellant already filed before it.

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• 2018 (8) TMI 335
  Recall of Order - respondent directed to release the 'bank guarantee' given by the appellant/applicant, at the stay stage - Held that:- We are satisfied that against similar order (pari materia) Revenue preferred appeal before Hon'ble Delhi High Court in Arif Khichi and Others [2018 (6) TMI 23 - DELHI HIGH COURT], and the Hon'ble Delhi High Court has criticised the disposal of appeal by this Tribunal by way of remand, awaiting the final outcome in the case of Mangli Impex by the Apex court - Accordingly, following the ruling of Hon'ble Delhi High Court in Arif Khichi and Others, we allow this misc. application and recall the final order dated 19.06.2017 in appeal number no. C/497/2010. Appeal fixed for final hearing on 8-8-2018.

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• 2018 (8) TMI 334
  Rejection of an amount of the customs duty paid in excess - rejection of refund on the ground that the assessment had become final, there being no challenge to such assessment - Held that:- There is no dispute as to the fact that filing of the shipping bill, discharge of the customs duty appellant herein and also question of considering the FOB as cum duty value - Identical issue decided in the case of Sameera Trading Company [2010 (5) TMI 518 - CESTAT, BANGALORE], where it was held that the Circular No. 18/2008, dated 10-11-2008 issued by CBEC, it was clarified that by taking the FOB price declared by the exporter as cum-duty price and working backwards from the FOB price to determine the value for assessment. The excess duty claimed by the respondents considering the FOB price as cum-duty price is in accordance with law and the original authority should have allowed the refund. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 333
  Refund claim - relevant date - Whether the date of issue of the order or the date of receipt of the order by the appellant should be considered for reckoning the date by which refund claim has to be filed? Held that:- The law has been laid down by the Hon’ble Apex Court in the case of M.M. Rubber Co. [1991 (9) TMI 71 - SUPREME COURT OF INDIA], where it was held that the date to be reckoned in such cases starts from the date of the order was communicated to the appellant. It is clear that as far as the assessee is concerned, the date of the order should be taken as the date on which it has been communicated to them - There is no alternative to hold that the date of the communication of the order of the CESTAT to the appellant should be reckoned to decide the time limit for filing the refund claim. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 291
  Safeguard duty - N/N. 4/2012-Cus (SG) dt. 05.10.2012 - imported Carbon Black N 330 - Held that:- Appeals admitted - Proceedings in pursuance to the impugned order shall remain stayed until further orders.

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• 2018 (8) TMI 290
  Valuation - re-determination of value by the Original Authority - mutuality of interest - Held that:- Issue notice on civil appeal as well as on application for stay.

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• Corporate Laws

• 2018 (8) TMI 339
  Restoration of name of company by ROC - Held that:- In the case on hand, first of all the ROC did not follow the procedure laid down in Section 560 sub-section (1), (2) and (3) of the Companies Act, 1956. The objections of the Intervening Applicant are not at all sustainable in view of the above discussion, and hence overruled. The ROC in his Representation stated that the Company has not filed its Annual Returns and Balance Sheets and therefore the name of the Company has been struck off for non-filing of statutory returns. The ROC has stated that the Petitioner has not given specific reasons for restoring the name of the Company. However, the ROC has stated that he has no objection if this Tribunal passes an appropriate order for restoring the name of the Company as per provisions of Section 560 subject to the following; (a) Filing of overdue statutory returns; (b) Publication of notice in two leading newspapers circulating in the District and Official Gazette of Government of India in respect of restoration of the name of the Company in the Register maintained by the ROC. Considering all the aforesaid aspects, this Tribunal is of the view that it is just to restore the name of the Company in the Register of Companies maintained by the Registrar of Companies, Gujarat. In view of the above, this Petition is allowed. The Registrar of Companies, Gujarat, Dadra & Nagar Haveli is directed to restore the name of the Company, M/s. Kamran Kapadia Land Developers Private Limited, to the Register of Companies upon the Petitioners (i) The Petitioners shall file all over due statutory returns with fee and additional fee as required under the Companies Act; (ii) The Petitioners shall publish a Notice in leading newspapers circulating in the District as well as in the Official Gazette of the Government of India with regard to the restoration of the name of the Company in the Register of Companies maintained by the Office of the Registrar of Companies, as per the draft notice approved by the Registrar of Companies at the expenses of the Petitioners; (iii) The Petitioners shall also pay an amount of ₹ 10,000/- to the Ministry of Corporate Affairs by way of Demand Draft drawn on Nationalised Bank towards the cost incurred by the Government in striking off the name of the Company within 3 (three) weeks from the date of this order.

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• Service Tax

• 2018 (8) TMI 332
  Classification of Services - work of loading and unloading of reels/reams/bundles/pallets on to and from trailer/trucks in the godown within the company s mill - extended period of limitation - penalty. Held that:- The term cargo is not defined in Finance Act, 1994. Therefore, the dictionary meaning of the word which refers to goods carried on ship, aircraft or motor vehicle. Thus, for the activity to be classified as cargo handling services, the goods in question must be cargo, i.e., the goods must be put on a motor vehicle or ship or aircraft etc., and moved out of or into factory. The contract requires the handing to be done within the godown of the mill premises but is silent on whether this handling is meant for movement within the factory or it is handling of cargo to be shifted out of the factory. Usually, goods are moved within the factory, using material handling equipment such as cranes and forklifts although trucks etc., can also be used - If the goods are moved out of the factory or into the factory they meet the definition of cargo and the activities of handling it is cargo handling service - the activity under taken by the appellant/assessee must be classified as cargo handling service. Extended period of limitation - Held that:- It is not in dispute that this is a classification issue and the Department had issued the show cause notice in 2008 whereas, the assessee had been paying service tax under various other headings namely Manpower supply and Business Auxiliary Service from 2005 onwards. Thus, the nature of activity undertaken by the assessee is within the knowledge of the Department from 2005-2006 onwards - there is no ground to invoke extended period of limitation in this case. Penalty - Held that:- As it is the question of interpretation of classification of services, where the Department appears to have changed its opinion, no penalties under Section, 76, 77 78 are imposable. The penalties are therefore set aside and the demand along with interest within the normal period of limitation is upheld - The demand for extended period is set aside - appeal allowed in part.

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• 2018 (8) TMI 331
  CENVAT Credit - input services - Whether the services such as architects service, construction service, management consultancy service, real estate agent service, erection and commissioning service etc. used for construction of the premises are admissible input services for taking CENVAT Credit as against the output service of the appellant i.e. renting of immovable property and other related services on which Service Tax has been discharged? Held that:- Any service used by the service provider for providing an output service is admissible “input service”. Input service specifically includes amongst other services used in relation to setting up of premises of the provider of output service or an office relating to such provider. From the definition of input service, it is clear that the input service is not limited to the services for providing output service but it also includes the services for setting up the premises of provider of output service - In the present case, all the input services involved are used for setting up the premises In the case of Musaddilal Projects Ltd. Vs. Comm of C.Ex., Cus and ST, [2017 (4) TMI 951 - CESTAT HYDERABAD], it was held that various inputs and input services used for construction of a building were eligible for CENVAT Credit prior to the amendment of law from 01.04.2011 - The present case also relates to the pre-amendment period (i.e., June 2007 - March 2009). The CENVAT Credit is therefore admissible. Applicability of Circular dated 04.01.2008 - Held that:- The proceedings before the Commissioner are vitiated and have been hit by administrative consideration - The Apex Court in the case of Orient Paper Mills Ltd. Vs. UOI, [1968 (5) TMI 15 - SUPREME COURT OF INDIA] held that Appellate Authority which exercised quasi-judicial power should not be influenced by departmental clarifications and Board Tariff Ruling while adjudicating the cases. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 330
  Demand of Service Tax - it was revealed that the appellants have not included value of all services provided/received for discharging their service tax under various categories like Port Services, Cargo Handling Services and Goods Transport Agency services for the period 2004-05 to 2005-06 - Extended period of limitation - penalty. Port Services - Held that:- The Tribunal has analyzed the very same issue in their case ASPINWALL & CO. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MANGALORE [2010 (10) TMI 321 - CESTAT, BANGALORE], where it was held that Since the service provider are issued with stevedore licence by the NMPT to operate within the port area it cannot therefore be said that they are not authorized by the NMPT for rendering services in relation to vessels and goods within the port area - demand set aside. Demand on Cargo Handling Services in respect of raw sugar - Held that:- The manufactured products are excluded from the definition of “agricultural produce”. The Notification is available only to such produce which fall within the definition given in the Notification. Since, in our opinion, raw sugar is a product which has undergone processing, we are of the opinion that the benefit of exemption is not extendable to raw sugar. Thus, the Cargo Handling Services in respect of handling of cargo of raw sugar would attract the levy of service tax - demand upheld. Penalties - Held that:- No positive act of suppression has been established by the Department with cogent evidence to conclude that there is suppression of fact on the part of the appellant. Apart from merely stating that the appellants did not disclose the fact of rendering of Port Services, Cargo Handling Services and Goods Transport Agency Services, there is no deliberate act with an intention to evade payment of service tax established by the Department to conclude that there is suppression of facts - the penalty imposed under Section 78 with respect to both issues (Cargo Handling and GTA Services in respect of raw sugar) cannot sustain - penalty u/s 76 upheld. Appeal allowed in part.

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• 2018 (8) TMI 329
  Extended period of Limitation - demand on reconciliation of documents carried out during the course of departmental audit - invocation of proviso to Section 73 of the Finance Act, 1994 - Held that:- Absolutely no justification has been given in the SCN for supporting the allegation of suppression. The tax demand has been raised only as a result of the discrepancy noticed at the time of audit - the invocation of extended time limit is without any justification - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 328
  Penalty u/s 78 - reverse charge mechanism - revenue neutrality - service tax with interest paid on being pointed out - Held that:- There is no dispute on the facts of the case that the appellant had received some services which were liable to service tax under reverse charge mechanism. When this was pointed out he paid service tax along with interest. It is also not in dispute that the service tax so paid could be claimed by them as CENVAT credit - When service tax is short paid by not reflecting the full value in the ST3 returns which subsequently detected during audit it will not be unreasonable to conclude that there was suppression with a mala fide intention. The assessee could have gained nothing since the entire amount could have been available to them as CENVAT credit. Since the entire exercise is revenue neutral, no mala fide can be attributed to them as there is nothing on record to show that they gained by not paying the Service Tax - penalty set aside. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 327
  CENVAT Credit - input services - outdoor catering service - restaurant service - short term accommodation service - whether the appellant is eligible for Cenvat credit on food / restaurant services / outdoor catering services and short term accommodation services? Outdoor catering service - restaurant service - penalty - Held that:- The Larger Bench of the Tribunal in the case of Wipro [2018 (4) TMI 149 - CESTAT BANGALORE] has settled the issue and observed that the credit is not eligible for outdoor catering services after 1/4/2011 - The argument of the Ld.Consultant is that the exclusion clause as well as the Larger Bench decision would not apply, as they provide food to the candidates and not to the employees. The argument of the Ld.Counsel is neither tenable or acceptable - credit rightly denied - However, since the issue has travelled to the Larger Bench and there were divergent views prior to that, the penalty on this count requires to be set aside. Short term accommodation service availed by the appellant for giving accommodation to instructors - Held that:- The accommodation was provided only to instructors who were imparting the coaching services. These are directly used for providing output services - the appellant is eligible for credit on short term accommodation services. Appeal allowed in part.

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• 2018 (8) TMI 326
  Rectification of Mistake - Held that:- The Tribunal had considered all the arguments advanced by both sides before passing the final order and have taken note of all case laws cited by both sides. It is also seen that the Final Order is not passed in liminie or in any summary fashion. Detailed reasons have been given in the Final Order for each and every conclusion - It may be mentioned that it is not necessary to discuss each and every argument of the appellant. Only the cumulative effect will have to be mentioned in the order. In the name of ROM review of the appeal is not permissible. ROM Application dismissed.

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• 2018 (8) TMI 325
  CENVAT Credit - input services - painting and polishing work carried out in the Hotel - denial of credit on the ground that the hotel rooms were exempted from service tax during the relevant period - Held that:- Rule 6(5) of the Cenvat Credit Rule stipulates that no credit shall be allowed on input services which are used exclusively for output service which is exempted or not liable to payment of service tax - In the present case, it cannot be stated that the construction service of painting has been used exclusively for rendering exempted service and hence the demand for reversal is not justified. In addition, it is seen from the record that the appellant has been proportionately reversing the credit on inputs/ input service as per Rule 6(3) of the Cenvat Credit Rules, 2004. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 324
  Valuation - inclusion of value of the free supply of materials in assesable value - inclusion of Bonus received from service recipient for economically using the diesel and explosives at the end of providing services. Whether the value of the free supply of materials viz., explosives and diesel by service recipient M/s SCCL has to be included for the purpose of reckoning the Service Tax payable? - Held that:- Hon’ble Apex Court in the case of Bhayana Builders [2018 (2) TMI 1325 - SUPREME COURT OF INDIA] held that the value of free materials supplied by the service recipient cannot be included in the value for the purpose of reckoning Service Tax - demand set aside. Whether bonus which they receive from their service recipient for economically using the diesel and explosives at the end of providing services is liable to be included in the value of services rendered? - Held that:- In almost an identical case, in the case of Intercontinental Consultants and Technocrats [2018 (3) TMI 357 - SUPREME COURT OF INDIA], it has been held by the Supreme Court that value of free diesel and explosives supplied by the service recipient cannot be included in the value of services rendered for the purpose of assessment of Service Tax under Section 67. As far as the issue of bonus received by the service provider for efficient use of diesel and explosives is concerned, this amount was not known at the time of provision of services - This amount cannot be included as value of taxable services rendered under Section 67. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 323
  Benefit of N/N. 01/2006-ST - inclusion of value of free supplied materials in the gross amount - Held that:- The issue of materials supplied free by the service receiver has been finally settled by the Hon’ble Supreme Court in the case of M/s Bhayana Builders (P) Ltd., [2018 (2) TMI 1325 - SUPREME COURT OF INDIA], where it has been held that the value of free supply of goods or materials by the service recipient is not includible in the gross amount, for calculation of Service Tax even if the assessee claims abatement of service tax - demand set aside. Demand on mobilization advance paid - point of Taxation Rules - the relevant period of demand in this show cause notice is 2007-2008 to 2011-2012 and the last mobilization advance was paid on 01.12.2010 - Held that:- It has been held in the case of Thermax Instrumentation Ltd., [2015 (12) TMI 1222 - CESTAT MUMBAI] that the advances received by the appellants are not receipts but are in the form of loan given to them and not a payment against invoice and service tax cannot be levied on them - In this case, although interest is not charged by the service provider he takes a counter guarantee in the form bank guarantee from the service provider for an equal amount while providing advance. The service recipient is free to encash the bank guarantee at any time. The cost of the bank guarantee is incurred by the appellant - Thus, there is no case to add an amount of notional interest in the value of taxable services rendered - demand set aside. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 322
  Manpower recruitment and supply agency services - campus placement fees from the willing students enrolled by ICFAI - taxability - Held that:- The activity carried out by the appellant is a service of placement to the student, which indicates that appellant is helping the students of ICFAI to get a job - placement is an activity of finding the job for a person who is on the lookout of employment and is service rendered to prospective employee which will not, get covered under the definition of “manpower recruitment and supply agency services”. The Tribunal in the case of Motilal Nehru National Institute of Technology [2015 (8) TMI 1138 - CESTAT ALLAHABAD] was considering identical issue has held that The placement facilitation provided by educational institutions whereunder the placement charges are collected from students and not from an employer or a prospective employer, do not on a fair and reasonable interpretation of the taxable service as defined in the Act, fall outside the purview of either the definitional or enumerative provision of the Act. Demand set aside - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 289
  Mining lease - levy of service tax - royalty - whether the royalty under the Act of 1957 is a “consideration” or not and further if that is “consideration”, then what would be the effect pertaining to payment of service tax? - Held that:- Issue notice. Until further orders payment of service tax for grant of mining lease/royalty by the petitioners shall remain stayed.

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• 2018 (8) TMI 287
  Mining lease - levy of service tax - royalty - whether the royalty under the Act of 1957 is a “consideration” or not and further if that is “consideration”, then what would be the effect pertaining to payment of service tax? - Held that:- Issue notice. Until further orders payment of service tax for grant of mining lease/royalty by the petitioners shall remain stayed.

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• Central Excise

• 2018 (8) TMI 321
  Clandestine removal - Held that:- The finding of the Tribunal that the Commissioner (Customs and Excise) has recorded a finding that M/S LIPL has made payment of Central Excise Duty which they had recovered from the customers is incorrect and run contrary to the record and order passed by the commissioner - The Commissioner as is evident from his order has also held that M/s LIPL had availed the Cenvat credit on raw material in violation of Rule 3/(3)/ 3(4) of the Cenvat Credit Rules 2002/2004 for the amount of Central excise duty they had collected from their customers. The Commissioner (Customs and Excise), Noida had confirmed the demand of ₹ 8,45,11,283.00/- which was charged and collected by M/s LIPL as Central excise duty from their buyers under Section 11D of the Act and interest thereon under Section 11DD of the Act - The findings of the Tribunal are, thus, wholly incorrect, against the record and unsustainable. Matter remanded back to the Tribunal to decide afresh - appeal allowed by way of remand.

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• 2018 (8) TMI 320
  Penalty under Rule 96ZP of the Rules - Compounding Scheme - Jurisdiction - power of Commissioner (Appeals) to impose penalty - Whether the CESTAT, New Delhi was justified in setting aside the order of the Commissioner (Appeals), Central Excise, Meerut and imposing maximum amount of penalty under Rule 96ZP of the Rules? - Held that:- The law as regards imposition of penalty being settled by the Apex Court in the matter of Union of India vs. Dharamendra Textile processors [2008 (9) TMI 52 - SUPREME COURT], the Department is apparently justified in contending that the Commissioner (Appeals) does not have any its discretionary power to modify and reduce the quantum of penalty in comparison to the quantum of duty liability fixed by the lower authority. The records apparently disclose that the proceedings were initiated in terms of the provisions of law comprises under Rule 96 ZP of the said rules. Apart from the fact that the said rules nowhere provide any discretion to the authorities in the matter of quantum of penalty and the same clearly prescribe that the penalty should be equivalent to the amount of duty payable by the party in the facts and circumstances of the case, the Commissioner (Appeals) on assumption that there was no intention to evade payment of duty could not have reduced the quantum of penalty Decided in favor of assessee.

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• 2018 (8) TMI 319
  Valuation - manufactured goods under-valued - The department has alleged undervaluation of excisable goods manufactured by the appellants to the extent of 40% i.e., it was alleged that the actual price was suppressed and only 60% of the price was declared on the invoices - allegations leveled by the department on the basis of few chits/slips/documents recovered during searches - disowning of statements during the cross-examination - penalty. Whether the allegations leveled by the department on the basis of few chits/slips/documents recovered during searches can be sustained? - Held that:- The statements recorded at different locations from different persons on different dates giving the same conclusion is amply proof that the statements are reliable documents. The learned Commissioner (A) has either remanded back the cases with a direction that the quantification of evasion on the basis of evidence available on record is required to be restricted with reference to the actual evidence available and cannot be extended to those transactions which relate to other dealers/customers where no evidence is available - the Commissioner (A) has taken a fairly judicious view of the case of the appellant and has given directions to restrict the duty liability to the extent of documents, statements which corroborate the actual transactions whereas the show-cause notices were issued with a generalized principle extrapolating one instance to the entire set of clearances by the appellants - the question is answered in affirmative. Reliability of statements - Whether disowning of statements during the cross- examination is a valid ground for not taking the statements into consideration? - Held that:- In this case, the cross examination was not denied and the case was not only based on the statements of the persons it was corroborated by the evidence wherever it was available. As observed by the adjudicating authority, nothing has been brought on record by the appellants that the statements have been recorded under duress/coercion. It is not the case of the appellant that the said statements were retracted in reasonable time - Division Bench decision in the case of D.R. Chakrapani Chettiar and Others [1985 (6) TMI 180 - CEGAT MADRAS] has held that “If the appellant did not controvert the confession immediately and did not make any grievance on remand before the Magistrate about any alleged act of extortion or coercion regarding the statement, confession cannot be said to have been extorted by coercion or was not voluntarily and that “Retraction of confessional statements after a period of more than six months from the date of its recording not attached any credence”. Whether penalty can be leveled separately on the partners of the firms invariably? - Held that:- In the case of Pravin N.Shah vs. CESTAT [2012 (7) TMI 850 - GUJARAT HIGH COURT] it has been held that once firm is penalized, separate penalty is not imposable upon the partner of the firm because partner is not a separate legal entity and cannot be equated with employee of the firm if no specific role is attributed to partner - penalty on partners set aside. Appeal disposed off.

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• 2018 (8) TMI 318
  Classification of manufactured goods - appellants manufactured and cleared two types of needles for sutures i.e. one having horizontal punch and the another having vertical punch - Department took the view that there cannot be two classifications for minor variations in the products and that they were not eligible for exemption under Notification No.6/2006-CE. Whether disputed goods are complete Atraumatic Needled Sutures or whether they are only parts and accessories thereof? Held that:- Notwithstanding the stand of the department that items are required to be classified under CETH 90183210 as needles for suture, the fact is that they cannot be used as such for suturing purposes - it is noted that type 2 needle suture thread is fused with the needle by the manufacturer and the due is sterilized and packed. In the event, while the cleared needles having vertical punch‛, may well be final goods for the appellants, it can only be considered as a part or accessory for the manufacturer who would eventually be manufacturing Atraumatic Needled Suture - the impugned item being part / accessory of the Atraumatic Needled Suture required to be classified under CETH 9018, the said impugned goods would fall within the beneficial scope of Sl.No.59 of N/N. 6/.2006-CE and be eligible for the exemption provided thereunder. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 317
  Scope of SCN - Valuation - related party transaction - Held that:- The demand in the show cause notice is only on the ground that PPL and assessee were related parties and therefore the price at which M/s PPL was selling the chairs to the customers should be the assessable value for the purpose of Central Excise duty - There is no demand whatsoever in the show cause notice on the grounds that there is an additional consideration for sale. That being the fact that Order-in-Original has travelled beyond the scope of show cause notice in confirming the demand which is not correct and the same needs to be set aside. Since the demand has been found liable to be set aside the interest and penalties do not survive either. The demand confirmed in the Orderin- Original and the interest and the penalties imposed are liable to be set aside - Appeal allowed.

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• 2018 (8) TMI 316
  Method of Valuation - Toffees - goods not intended for retail sale - Section 4 or 4A of CEA - Department took the view that the subject goods were not intended to be sold in retail, were not required to be affixed with M.R.P. as they are exempted under Rule 34(b) of the Standard of Weights and Measures (Packaged Commodity) Rules, 1977 (SWM (PC) Rules); that the jars/pouches are admittedly a wholesale pack, hence, these goods merited valuation in terms of Section 4 of the Act only - Extended period of Limitation. Held that:- The issue of whether the plastic jars/pouches containing individual toffees, which weigh around 2-2.5 gms, which are required to be assessed to Central Excise Duty under Section 4/4A of the Act, has been mired in litigation for quite some time. In fact, there were contradicting judgments by the Tribunal - The law has finally been settled only by the judgment of the Hon’ble Apex Court in Central Arecanut & Cocoa Marketing & Processing Co-Op. Ltd. [2008 (9) TMI 506 - SUPREME COURT] - Hence, certainly, before this date, the ratio laid down by the Hon’ble Apex Court in Continental Foundation Joint Venture case [2007 (8) TMI 11 - SUPREME COURT OF INDIA] will apply on all fours to the facts of this appeal, where it was held that Demand raised by the department has been quashed on the ground of adjudication beyond the normal period of limitation and non-availability of the extended period of limitation. The proceedings initiated by way of the Show Cause Notice 06/2007 dt. 26.03.2007 for the period 01.03.2002 to 31.03.2006 will be hit by limitation beyond the normal period of limitation. Hence, only the periods covered by the other SCNs dated 24.04.2007, 14.03.2008, 21.08.2008 and 30.04.2009 within the normal period alone will survive. Penalties - Held that:- Discernibly the entire dispute is one of interpretation of manner of assessment, whether under 4 or 4A of the Act and as mentioned earlier, there was considerable confusion in the matter till it was settled by the Hon’ble Apex Court - the penalties imposed are unwarranted and we set aside the same. Appeal allowed in part.

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• 2018 (8) TMI 315
  100% EOU - Effect of notification - Additional Customs Duty (CVD) at the rate of 4% - Benefit of N/N. 29/2004-CE dated 09.07.2004 - denial of benefit on the ground that a notification issued under Section 5A of the Act cannot be made applicable to EOUs unless it is specifically provided in the notification, therefore according to Revenue, CVD has to be calculated @ 8% which is the tariff rate prescribed under the Central Excise Tariff Act. Held that:- The issue is squarely covered by a recent decision of this Bench in COMMISSIONER OF CENTRAL EXCISE, SALEM VERSUS SRI GUGAN MILLS AND SARADHA TERRY TOWELS LTD. [2018 (6) TMI 908 - CESTAT CHENNAI], where it was held that For calculating the duty of excise for the purpose of discharging CVD liability, any notification issued in respect of the goods cleared by EOU also has to be taken into consideration. Appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 314
  CENVAT Credit - input services - 'tour operator services’ used for transporting workers and staff to the factory - whether the appellant is entitled to credit of the service tax paid on the tour operator service used for transporting their employees from their residence to the factory? - Held that:- Once the workers come into the factory their services are used in relation to the manufacture of final products. But bringing workers to the factory or providing accommodation to them outside the factory or providing any other welfare measures for the workers or their families have no nexus with the manufacture of the final products, although they are welfare measures meant for the general well being of the workers who manufacture the goods - thus, the assessee is not entitled to the credit of service tax paid on the buses hired to bring workers to their factory. Credit not allowed - appeal dismissed - decided against appellant.

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• 2018 (8) TMI 313
  Invocation of Extended Period of Limitation - CENVAT Credit - common inputs used in manufacture of dutiable as well as exempted goods - Light Diesel Oil (LDO) and Superior Kerosene Oil (SKO) - Held that:- The issue relating to the period 2001-04 for which the Show Cause Notice was issued in 2006, the first decision of the Supreme Court was decided on 16.07.2008 and the Order-in-Original in the case on hand was passed on 13.04.2017 by which time a reference had been made by the Hon’ble Apex Court itself for constituting a Larger Bench considering the fact that there were divergent views of two different Benches of the Hon’ble Apex Court. This being the legal position requiring interpretation by the Hon’ble Supreme Court, it can be safely assumed that there cannot be any scope for suppression and coupled with the pleadings that the appellant had declared in its ER-1 returns the facts that were legally required from time to time - invocation of larger period is not proper and unsustainable. Revenue has erred in invoking the extended period of limitation - appeal allowed on Limitation.

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• 2018 (8) TMI 312
  Valuation - Central Excise duty on the activated carbon imported by them and repacked from bulk packs to retail packs - It is the case of the department in the show cause notice that such activity would amount to manufacture as per chapter note no. 9 of chapter 38 and demanded, approximately ₹ 1.34 Crores and interest thereon and also sought to impose penalties - Whether Central Excise duty needs to be paid on the quantity of the goods which were cleared by the appellant and whether they have to be considered as manufactured products as per chapter note no.9 of chapter 38? Held that:- The adjudicating authority has specifically recorded that appellant had manipulated various purchase documents which were produced during personal hearing, to show that they have received the goods in retail packs. No satisfactory explanation is put forth by the appellant before us on this point except to state that there is nothing on record to show that there was manipulation - if the appellant is undertaking manipulation of documents to prove his case before the adjudicating authority, it has to be held that confirmation of demand so raised are correct. The adjudicating authority has recorded a factual finding that the appellant had received the activated carbons from the suppliers in retail packs only and he sold the same in the said retail packs only. This factual finding for dropping the demands other than the amount confirmed is not effectively controverted by the Revenue in their appeal - In the absence of any evidence to show that there was packing or repacking from bulk packs to retail packs, the demands dropped by the adjudicating authority is correct. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 311
  Reversal of SAD Credits - Department has alleged that quantities of wire bars cleared as such were only pertaining to the imported wire bars and therefore. Credit of Additional duty (SAD) amounting to ₹ 4,21,97,191/- should have been reversed by the appellants along with interest - Held that:- The department has taken the extreme view that all sales effected for the wire bars during the period of demand were only of the imported quantity of wire bars and therefore, the CENVAT credit of SAD pertaining to such quantities have been demanded. The department does not have any concrete evidence to establish that the inputs namely wire bars cleared as such, for sale were only from the imported quantities of wire bars on which credits of SAD has been taken by the appellants. There is no merit in demanding reversal of entire amount of SAD on the entire quantity of wire bars sold by the assessee as such since 2010 to 2011 and without any scientific or factual basis when facts remain that the as such quantities were both from imported as well as locally purchased consignments - The methodology of reversal of cenvat credit adopted by appellant is based on scientific and factual basis and therefore, the amount of SAD is reversed by them along with interest, need to be accepted. Penalty - Held that:- The proper compliance of Rule 3 of Cenvat Credit Rules, 2004 has been made - penalty not justified. Appeal disposed off.

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• 2018 (8) TMI 310
  Rectification of Mistake - this Tribunal has mentioned that the appeal filed by M/s Airvision India Pvt. Ltd, against the impugned order is dismissed, whereas, the said appeal has been filed by the Revenue, therefore, to that part it is to rectify as appeal filed by the Revenue against M/s Airvision India Pvt. Ltd. is dismissed. Held that:- Admittedly, the mistake apparent on record has been pointed out by the ld. AR found to be correct, therefore, para 10 of the order read as under: “Accordingly, the appeal filed by the Revenue against M/s Airvision India Pvt. Ltd. is dismissed.” This Tribunal has not given any finding for imposition of penalty on M/s D R Polymers, therefore, to that extent, order is re-called and this Tribunal is required to hear the parties for imposition of penalty on M/s D R Polymers. The application for rectification of mistake is allowed.

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• 2018 (8) TMI 309
  Valuation - inclusion of VAT in assessable value - Revenue was of the view that VAT liability discharged by the utilisation of the investment subsidy granted in Form 37B actually paid, for the purpose of Section 4 of the Central Excise Act - Held that:- Identical issue decided in the case of SHREE CEMENT LTD. SHREE JAIPUR CEMENT LTD. VERSUS CCE, ALWAR [2018 (1) TMI 915 - CESTAT NEW DELHI], where it was held that There is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 308
  Valuation - inclusion of VAT in assessable value - Revenue was of the view that VAT liability discharged by the utilisation of the investment subsidy granted in Form 37B actually paid, for the purpose of Section 4 of the Central Excise Act - Held that:- Identical issue decided in the case of SHREE CEMENT LTD. SHREE JAIPUR CEMENT LTD. VERSUS CCE, ALWAR [2018 (1) TMI 915 - CESTAT NEW DELHI], where it was held that There is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 307
  Refund claim - reversal of CENVAT Credit was made, which was not required - Held that:- Admittedly the amount reversed by the appellant was not required to be reversed, therefore, they filed refund claim which is correct, in these circumstances, appellant is entitled to claim refund of ₹ 3,88,550/- - the appellant is not liable to pay any interest and no penalty can be imposed on the appellant. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 306
  Benefit of N/N. 4/2006 CE dated 1/3/2006 (as amended) - manufacture of corrugated tray /pads - Department was of the view that corrugated trays / pads should have been cleared after payment of full excise duty as the notification only covers the corrugated cartons, boxes and cases of corrugated paper or paperboards and not corrugated tray / pads - Held that:- N/N. 4/2006 dated 1.3.2006 as amended by N/N. 10/2010 CE dated 27.2.2010 and N/N. 12/12 CE dated 17.3.2012. It is seen that notification specifically covers products classified under Chapter sub heading 481910. On further perusal of the Tariff, it is seen that Chapter sub-heading 4819.10 covers all products of description as cartons / boxes and cases of corrugated paper or paper board. Coming back to the product manufactured by the appellant, the photograph of the sample of products manufactured which are known in trade parlance as corrugated trays and corrugated pads. These products are primarily used for packing and transportation of various kinds of bottles/ cans after wrapping the same with plastic sheets. The primary purpose and use of such corrugated trays and pads is for packing and safekeeping and safe transportation of the product as is the purpose of boxes and cartons - There is no denial of fact that the product in question are product of corrugated paper and corrugated paper board and these are also used for packing and safe transportation of the bottles and cans as other products of corrugated paper and paper board such as cartons, or boxes, are being used - the products classifiable under both the sub-sub-headings will be entitled to the exemption notification. Corrugated pads/ trays are classifiable under CETH 48191090 under the overall classification under subheading 481910 are nothing but the product of corrugated paper and paper board and same are entitled for benefit of notification No. 4/2006-CE dated 1.3.2006 as amended as well as under notification No. 12/2012-CE dated 17.3.2012. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 305
  Rectification of Mistake - recall of order - Classification of goods - Amla Shikakai Powder, Brahmi Amla Oil, Natural Hair Wash Powder and Hairolin–H - Held that:- There has been a mistake of law in the final order of this Tribunal dated 27th July, 2017, resulting in miscarriage of justice, as the afore-mentioned rectification order dated 28/03/2005 of Hon’ble Supreme Court, was not brought to knowledge of the Tribunal. In the interest of justice, we recall the miscellaneous order No. 50834 of 2017 dated 22nd December 2017 passed in Excise ROM application No. 50933 of 2017 ex-parte and necessary modifications made. ROM Application allowed.

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• 2018 (8) TMI 304
  Validity of appeal before higher appellate forum - acceptance of liability and payment of same made - Waiver of SCN - appellant accepted his liability, waived SCN and thereafter, filed the appeal before Commissioner (Appeals) - Held that:- Admittedly, the appellant waived the show cause notice and deposited the entire dues as envisaged by the provisions of section 11AC (1)(d) of Central Excise Act. On such deposits made by the appellant, the case was held to be concluded. It is not open to the assessee to re-start the proceedings by way of filing an appeal thereagainst - The entire purpose of the said section is to reduce litigation and wherever the assessee admits the duty liability and deposited the same along with interest, the said provision further grants him relief in terms of quantum of penalty. The appellant having adopted the said course, cannot be allowed to take U-turn and challenge the order before the Higher appellate forum. Appeal dismissed - decided against appellant.

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• 2018 (8) TMI 303
  CENVAT Credit - input services - whether the input service credit is admissible for Mandap Keeper Service and Rent-a-cab service? - Held that:- An amendment was made in the definition of input service in the year 2011 which was effective from 01.04.2011. By way of, the said amendment, Rent-a-cab service has been excluded from the definition of the input services - Since the entire demand of credit in show cause notice dt. 18.04.2012 in respect of Rent-a-cab service is for the service received by them before 01.04.2011, the credit is available to appellants. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 300
  Exemption subject to conditions - Benefit of N/N. 44/2001-CE(N.T.), dt.26.06.2001 - Held that:- Appeal admitted. - Application for stay is dismissed.

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• 2018 (8) TMI 288
  Stay on demand of Interest - case of appellant is that the entire demand stand paid but there is a subsequent demand for interest on the amount assessed and prays for stay of the same - Held that:- Appeal admitted - The interest demand raised shall remain stayed during the pendency of the appeal.

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• CST, VAT & Sales Tax

• 2018 (8) TMI 302
  Principles of Natural Justice - Held that:- This Writ Petition can be conveniently disposed of by accepting the alternate and without prejudice proposal of the respondents. While accepting that alternate request and without prejudice proposal, we clarify that we have not endorsed any of the pleas of the petitioners as raised in the petition - Whether it was a calculation or arithmetical mistake or otherwise or is an attempt to reopen a completed assessment, will have to be determined by the Assessing Officer, but before he decides and determines it, he must comply with the principles of natural justice - Petition disposed off.

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• 2018 (8) TMI 301
  Appointment in Maharashtra Sales Tax/VAT Tribunal - Held that:- The High Court has mentioned that State shall ensure that Members shall be judicially trained in the sense that they have long experience of dealing with the quasi-judicial proceedings - SLP dismissed.

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