TMI Tax Updates - e-Newsletter
September 21, 2018

Case Laws in this Newsletter:

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

TMI SMS

• Special audit of the accounts u/s 142(2A) - sufficient compliance of the proviso to Section 142(2A) has been made - Petition dismissed.

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Highlights / Catch Notes

• GST:

  Levy of GST - liquidated damages for delay in erection, testing and commissioning - independent supply or not? - The appellant could have opted for harsh measures like termination of contract but instead it chooses to tolerate the delay in return of payment of money - Levy of GST confirmed.
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• GST:

  Rate of tax - supply and setting up of ‘solar power generating system’ - Supply of the said turnkey EPC contract is a ‘composite supply’ u/s.2(30) of the CGST Act, 2017. The said composite supply falls within the definition of works contract u/s.2(119) of the CGST Act, 2017.
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• Income Tax:

  Validity of special audit of the accounts u/s 142(2A) - petitioner has not made any objection regarding procedure followed by the AO or by the Pr. CIT, in the entire process of Special Audit till the completion of Special Audit and only after the fact that the accounts have been verified by the Special Auditor, the present writ petitions have been filed - Petition dismissed.
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• Income Tax:

  Allowability of share loss - genuineness of claim - the Tribunal held that the transaction fully supported by the documentary evidences could not be brushed aside on suspicion and surmises - No substantial question of law
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• Income Tax:

  Penalty u/s 271 (1)(c) - when the computation was made u/s 115JB, the aforesaid concealment had no role to play and was totally irrelevant. Therefore, the concealment did not lead to tax evasion at all.
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• Income Tax:

  Capital gain - there is no Joint Development Agreement (JDA), but only an unregistered sale agreement, which could not be fulfilled due to external reasons and there was no handing over of possession at any point of time to the purchaser - the addition made by the AO is uncalled for.
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• Income Tax:

  Addition made on account of difference in credit of income as per 26AS statement and income credited in Income and Expenditure accounts - these timing differences in recognition of revenue with corresponding TDS, will get adjusted in future years and hence there is no tax evasion on the part of the assessee.
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• Customs:

  Sanction of pending IGST refund claims where the records have not been transmitted from the GSTN to DG Systems-reg.
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• Customs:

  Valuation of imported goods - Ramie Unprocessed Yarn - The enhancement of the declared value cannot be done on the basis of NIDB data
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• Customs:

  Benefit of exemption from customs duty - import of power cables of voltage of more than 80V - telecom equipment for which these cables are used all have an operating voltage of less than 80V. - unintended aberrations in such compliance should not result in derailment of the exemption benefit otherwise eligible.
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• Customs:

  Import against Advance License - fulfilment of export obligation - physical diversion of raw material - benefit under the DEEC scheme under various customs notifications - Tribunal decided the issue against the Revenue - no question of law arising for consideration in this appeal much less a substantial question of law.
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• Customs:

  Concessional rate of duty - the goods imported by the appellants will not benefit from the B.C.D rate of 10% but will only be eligible for higher B.C.D. rate since the CKD kits imported contained engine or gearbox or transmission mechanism in preassembled form (but not mounted on chassis or body assembly) - Demand confirmed for normal period with redemption fine - No penalty.
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• DGFT:

  Activation of E-com module for SEIS, based on ANF 3B notified vide Public Notice 15/ 2015-20 dated 28.06.2018
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• Corporate Law:

  Companies (Corporate Social Responsibility Policy) Amendment Rules, 2018
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• LLP:

  Limited Liability Partnership (Second Amendment) Rules, 2018 - Processing of Form RUN-LLP (Reserve Unique Name-Limited Liability Partnership), Form FiLLiP (Form for incorporation of Limited Liability Partnership), Form 5, Form 17 and Form 18
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• Service Tax:

  Refund claim - unjust enrichment - When there is no material on record to suggest that the appellant has, in fact, collected the service tax element despite the fact that the service was a non-taxable entity, the Revenue cannot retain the same without granting refund to the assessee.
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• Service Tax:

  Demand of amount collected in the name of service tax - Sub-section (1) of 11D will apply only to the person who is “liable to pay duty” and where the person has collected any amount in excess. - when the assessee would not come under the ambit of service tax prior to 16.05.2005, Section 11D(1) would not be applicable.
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• Service Tax:

  CENVAT Credit - input services - legal services - denial on account of nexus - these services were in relation to acquisition of the new plants and investments which have no nexus whatsoever with the manufacture by any of their plants. These facts are not in dispute - credit denied.
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• Service Tax:

  Construction Services - composite Works Contracts - In respect of any contract which is a composite contract, service tax cannot be demanded under CICS / CCS for the periods also after 1.6.2007 for the periods in dispute.
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• Service Tax:

  Construction Services - composite Works Contracts - for sole reason of not filing the intimation opting to pay service under Works Contract Service, the demand cannot sustain.
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• Central Excise:

  CENVAT Credit - input/capital goods - old Structures and other structural items - The inputs procured have in fact been used in the fabrication of capital goods and hence are entitled to the CENVAT Credit.
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• Central Excise:

  Clandestine removal - penalty has rightly been imposed on the appellants for their collaborative role in the conspiracy of clandestine removal of goods by M/s HSAL and enabling evasion of duty
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• VAT:

  Mere failure to carry the prescribed declaration form duly filled in is liable for penalty as per provisions of Section 78 (5) of the RST Act, and there is no need to prove mens rea on the part of the assessee - penalty upheld.
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Articles

• PART I: GST AUDIT REPORT COMMENTARY
• TAX DEDUCTED AT SOURCE UNDER ‘GST’

Notifications

• Companies Law

• File No.1 /1/2018-CL-I - 4907 (E) - dated 19-9-2018 - Co. Law
  Central Government appoints the 19th September 2018, as the date on which the provisions of section 37 of the Companies (Amendment) Act, 2017 shall come into force

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• File No. 05/03/2018-CSR - 895(E) - dated 19-9-2018 - Co. Law
  Companies (Corporate Social Responsibility Policy) Amendment Rules, 2018

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• Customs

• 81/2018 - dated 20-9-2018 - Cus (NT)
  Exchange Rates Notification No.81/2018-Custom(NT) dated 20.9.2018

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• 80/2018 - dated 19-9-2018 - Cus (NT)
  Exchange Rates Notification No.80/2018-Custom(NT) dated 19.9.2018

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• GST

• 52/2018 - dated 20-9-2018 - CGST
  Seeks to notify the rate of tax collection at source (TCS) to be collected by every electronic commerce operator for intra-State taxable supplies

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• 02/2018 - dated 20-9-2018 - IGST
  Seeks to notify the rate of tax collection at source (TCS) to be collected by every electronic commerce operator for inter-State taxable supplies

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• GST - States

• 1358-FT - dated 14-9-2018 - West Bengal SGST
  Corrigendum to notification no. 1034-F.T. [18/2018-State Tax (Rate)] dated 27.07.2018

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• 24/2018–C.T./GST - dated 13-9-2018 - West Bengal SGST
  Seeks to extend the due date for filing of FORM GSTR - 3B for newly migrated (obtaining GSTIN vide notification No. 1081 F.T., dated 06.08.2018) taxpayers [Amends notification No. 17/2018-C.T./GST dated 10.08.2018 (34/2018 – State Tax)]

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• 23/2018–C.T./GST - dated 13-9-2018 - West Bengal SGST
  Seeks to extend the due date for filing of FORM GSTR - 3B for newly migrated (obtaining GSTIN vide notification No. 1081 F.T. , dated 06.08.2018) taxpayers [Amends notification Nos.11-C.T./GST dated 18.09.2017 (35/2017 – State Tax) and 04/2018-C.T./GST dated 23.03.2018 (16/2018 – State Tax)]

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• 22/2018–C.T./GST - dated 13-9-2018 - West Bengal SGST
  Seeks to extend the due date for filing of FORM GSTR - 3B for newly migrated (obtaining GSTIN vide notification No. 1081 F.T., dated 06.08.2018) taxpayers [Amends notification Nos. 04-C.T./GST dated 08.08.2017 (21/2017 – State Tax) and 18-C.T./GST dated 15.11.2017 (56/2017 – State Tax)]

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• 21/2018–C.T./GST - dated 13-9-2018 - West Bengal SGST
  Seeks to extend the due date for filing of FORM GSTR - 1 for taxpayers having aggregate turnover above ₹ 1.5 crores

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• 20/2018–C.T./GST - dated 13-9-2018 - West Bengal SGST
  Seeks to waive the late fee paid under section 47 by certain classes of taxpayers

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• 19/2018–C.T./GST - dated 13-9-2018 - West Bengal SGST
  Seeks to extend the due date for filing of FORM GST ITC-04

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• 1345-F.T. - 51/2018-State Tax - dated 13-9-2018 - West Bengal SGST
  Seeks to bring into effect section 52 of the WBGST Act (provisions related to TCS) from 01.10.2018

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• 1344-F.T. - 50/2018-State Tax - dated 13-9-2018 - West Bengal SGST
  Seeks to bring into effect section 51 of the WBGST Act (provisions related to TDS) from 01.10.2018

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• 1343-FT - 49/2018-State Tax - dated 13-9-2018 - West Bengal SGST
  West Bengal Goods and Services Tax (Tenth Amendment) Rules, 2018

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• 1342-F.T. - 48/2018-State Tax - dated 13-9-2018 - West Bengal SGST
  West Bengal Goods and Services Tax (Ninth Amendment) Rules, 2018

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• 1341-F.T. - 43/2018-State Tax - dated 13-9-2018 - West Bengal SGST
  Seeks to extend the due date for filing of FORM GSTR - 1 for taxpayers having aggregate turnover upto ₹ 1.5 crores

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• 1340-F.T. - 41/2018-State Tax - dated 13-9-2018 - West Bengal SGST
  Seeks to extend the due date for filing FORM GST ITC-01 by certain classes of persons

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• 1339-F.T. - dated 13-9-2018 - West Bengal SGST
  West Bengal Goods and Services Tax (Eighth Amendment) Rules, 2018

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• Income Tax

• 54/2018 - dated 18-9-2018 - IT
  U/s 35(1) (ii) of IT Act 1961 Central Government approved for organization . M/s Indian Council of Medical Research

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• 49/2018 - dated 14-9-2018 - IT
  U/s 10(46) of the Income-tax Act, 1961 Central Government notifies ‘Tripura Electricity Regulatory Commission’, a commission constituted by the State Government of Tripura, in respect of the specified income arising to the said Commission

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• 48/2018 - dated 14-9-2018 - IT
  U/s 10(46) of the Income-tax Act, 1961 Central Government notifies ‘Gujarat Water Supply and Sewerage Board’, Gandhinagar, a Board constituted by Government of Gujarat, in respect of the specified income arising to that board

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• 47/2018 - dated 14-9-2018 - IT
  U/s 10(46) of the Income-tax Act, 1961 Central Government notifies ‘Kandla Special Economic Zone Authority’, Kutch, an authority constituted by the Central Government, respect of the specified income arising to that authority

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• 45/2018 - dated 14-9-2018 - IT
  U/s 10(46) of the Income-tax Act, 1961 Central Government notifies ‘Petroleum and Natural Gas Regulatory Board’, New Delhi, a Board constituted by the Government of India, in respect of the specified income arising to the said Board

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• LLP

• F. No. 17/61/2016-CL-V (Pt. I) - G.S.R. 896 (E) - dated 18-9-2018 - LLP
  Limited Liability Partnership (Second Amendment) Rules, 2018

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Circulars / Instructions / Orders

• DGFT - Trade Notice No. 33/2018 - dated 20-9-2018
  Activation of E-com module for SEIS, based on ANF 3B notified vide Public Notice 15/ 2015-20 dated 28.06.2018
• Customs - 33/2018 - dated 19-9-2018
  Sanction of pending IGST refund claims where the records have not been transmitted from the GSTN to DG Systems-reg.

News

• Gurugram Zonal Unit of the Directorate General of GST Intelligence (DGGI) arrests two businessmenin a case of fraudulent issuance of Input Tax Credit (ITC) invoices without actual supply of goods, involving evasion of approximately ₹ 79.21 crore on the taxable value of concocted supplies of ₹ 450 crore

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• Exchange Rate of Foreign Currency Relating To Imported and Export Goods Notified

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• Government announces the Revision of interest rates for Small Savings Schemes for the Third Quarter of the current Financial Year 2018-19

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Case Laws:

• GST

• 2018 (9) TMI 1185
  Levy of GST - liquidated damages for delay in erection, testing and commissioning - independent supply or not? - construction of new power plants or renovation of old plants or for operation of maintenance activities, etc. - whether the levy of liquidated damages would be supply of services by the appellant u/s. 7(1)(d) of the CGST Act, 2017 as referred at Sr.No. 5(e) in Schedule 2 to the CGST Act? - challenge to Advance Ruling decision. Held that:- Section 3 of the contract the specific clause - 7 provides for the levy of liquidated damages if the project completion is delayed beyond the scheduled date. This clause leads us to the conclusion that the appellant is in a contractual agreement with the contractor to impose levy of liquidated damages and to accept the amount of liquidated damages in case of the completion of the project beyond the scheduled date. Thus, the appellant has tolerated an act or a situation. The purpose of payment of liquidated damages is an act of tolerance in the sense that when there is delay in the completion of the project, the appellant is put to certain hardships which he tolerates in return of the payment of liquidated damages. What entry 5(e) provides that any supply of services of tolerating an act is a supply and therefore the impugned transaction is also a 'supply' under the provisions of the CGST Act. The definition clearly provides that if the parties agree for liquidated damages, the sum fixed is a measure of damages for a breach. In the impugned case, liquidated damages are contractually stipulated for delay in the completion of the project. The agreement provides that the contractor may pay a certain percentage for the delay - the appellant was well within his rights to provide for the termination of agreement in case of delay in completion of the project. But in the instant case both the parties agreed that such will not be the effect in case of delay. The appellant agrees to tolerate the delay done by the contractor in return for payment of liquidated damages. The appellant could have opted for harsh measures like termination of contract but instead it chooses to tolerate the delay in return of payment of money - the said act falls under clause 5(e) of Schedule-II of the Act. The consideration remains unchanged and how the amount is recovered would not change the nature of the supply. Also, neither the definition of 'contract price' nor 'contract value' as given in the Agreement refers to the contingency of liquidated damages. Contract price is defined in clause 3.13 (A) as the total lump sum price plus the price variations. This is an independent clause having no relation to the eventuality of liquidated damages, for which as we have said above, a separate clause has been given. The fact that the liquidated damages are recovered from the bill is only a method of payment- the fact that there are two agreements remains unaltered. Regarding the agreement between Maharashtra State Power Generation Company Limited (Owner) and Bharat Heavy Electricals Limited (Contractor) for Erection & Commissioning of Main Plant Package at Chandrapur T.P.S. Expansion Project 2 x 500 MW, the finding of the AAR, is agreed upon that GST would be applicable on the Liquidated Damages.

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• 2018 (9) TMI 1184
  Slaughtering processing of Sheep/Goat meat and supplies these products to Army against tenders issued by the Indian Army - supplies in unit containers or not? - Whether the supplies being made by the appellant to Army in respect of meat of sheep/goat in packages (a sample of packing material was produced before us) can be considered as supplies in unit containers or not in terms of the explanation under Notification No. 1/2017- Integrated Tax (Rate) dated 28/06/2017 as amended? Held that:- The nature of supplies is such that it is not possible to decide the exact quantity (either weight or volume) or the number in advance in respect of the packages to be sent to Army as the goods of supply are natural, not man made, and no two animals are same. Also, there is no such requirement from the buyer side i.e. Army who have floated the tender on total weight basis and the payments are also made monthly/fortnightly and not as per packages or consignments. The concept of pre-determined quantity or number is possible when the buyer/customer/consumer/recipient is aware in advance i.e. before the purchase/receipt of the said goods about the fixed quantity/weight/number contained in the package which is not the case here. Regarding marking and labeling also, Army has prescribed certain details to be printed/ mentioned on the packages like date of manufacture, lot number/batch number, firm s name and address, storage instructions, thawing instructions, for defence purpose only etc. It has not been prescribed that the actual number of carcass inside the HDPE bag or the individual weight of the carcass is required to be indicated/mentioned on the HDPE bag. There cannot be any pre-determined quantity or number in the packages and when there cannot be any pre-determined quantity or number inside the package there is no question of indication of the same on the package. Therefore, the frozen meat of goat/sheep supplied by the appellant to Army in HDPE bags does not qualify for the supplies made in unit containers as per definition provided in the explanation to the notification no. 01/2017-IGST (Rate) dt. 28-06-2017 as amended. Ruling:- The whole (Sheep/Goat) animal carcass in its natural shape in frozen state in different weight and size packed in LDPE bags without mentioning the weight and one or two such LDPE bags further packed in HDPE bags being supplied to Army by appellant against tender shall not qualify as product put up in Unit Container .

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• 2018 (9) TMI 1183
  Rate of tax - supply and setting up of solar power generating system - Composite supply - Whether contract for supply of/construction of a solar power plant, wherein both goods and services are supplied, can be construed to be a composite supply in terms of Section 2(30) of the Central Goods and Services Tax Act, 2017 as claimed by the appellant or the same is works contract services as per the ruling made by the AAR? - Challenge to AAR decision. Held that:- It is seen that there is a single contract for supply of 60 MW/81 MW Solar Power Plant in the State of Karnataka and the owner has appointed the appellant for supply of the Solar Power Plant which as per (B) of the agreement includes engineering, design, procurement, supply, development, testing and commissioning of the Plant as per Scope defined in the Schedule of the Contract - The contract fulfills the condition of composite supply. There is a supply of goods and services. They are naturally bundled in the sense that the goods and services may be required to fulfill the intention of the buyer in giving the contract. The supply of goods and services are provide as a package and the different elements are integral to flow of supply i.e. one or more is removed, the nature of the supply would be affected. Thus, from a reading of the entire contract as well as from the definition of composite supply what can be easily gathered is that the buyer has given a contract for setting up Solar Power Generating Supply to the appellant and therefore it is single composite supply of goods and services and installation thereof. In order to understand the scope of a composite supply and also to know what may be the criteria to judge a supply as a composite supply , the CBIC has published an e-flier on the subject. As per the e-filer, Composite supply entails the concept of naturally bundled supply , and whether services are bundled in the ordinary course of business would depend upon the normal or frequent practice followed in the area of business. It also says that in order to qualify for a composite supply one of the characteristic would be that none of the individual constituents are able to provide the essential character of the service . Thus, the contract for providing the design, procurement, supply, development, testing and commissioning of the Plant which includes the supply of both goods and services is a composite supply as per the definition in the Act. There are two taxable supplies- one of goods and the other of services and they both are naturally bundled and it is natural and also a practice to expect that the contractor who will supply the goods will also supply the services alongwith it. In the business of contracts for the Solar Power Generating System, it is a practice to provide a Plant as a whole along with the supply of services - the order of AAR is differed with. Immovable property - what would be the principal supply and whether it would be a supply of services or supply of goods? - Held that:- In the present case, we have seen that the detailing of the system being what it is, it cannot be called a simple machine by any stretch of imagination. The PV module may be an important part of the system but what is intended to be bought is not the PV module but an entire system. Thus, we affirm the conclusion drawn by the ARA that the Agreements made lead to the erection of a Solar Power generating System. If the transaction is treated as a composite supply , whether the Principal Supply in such case can be said to be solar power generating system which is taxable at 5% GST? - Held that:- We have treated the transaction as a Composite supply and a works contract falling u/s. 2(119) of the CGST Act, 2017 and Para 6 of SCHEDULE II [ACTIVITIES TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICES] treats works contracts u/s 2(119) as supply of services - there arises no occasion to go into the issue of principle supply . Whether benefit of concessional rate of 5% of solar power generation system and parts thereof would also be available to sub-contractors? - Held that:- The ARA has held that no details were brought before them and therefore in the absence of documents they have expressed their inability to deal with the question. As no fresh documents were produced before us and also there being no original ruling of the ARA, we hold that we will not deal with the question in the present proceedings. Order: Supply of the said turnkey EPC contract is a composite supply u/s.2(30) of the CGST Act, 2017. The said composite supply falls within the definition of works contract u/s.2(119) of the CGST Act, 2017. We have treated the transaction as a Composite supply and a works contract falling u/s. 2(119) of the CGST Act, 2017 and Para 6 of SCHEDULE II [ACTIVITIES TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICES] treats works contracts u/s 2(119) as supply of services . In view thereof, there arises no occasion to go into the issue of principle supply .

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• Income Tax

• 2018 (9) TMI 1182
  TPA - Comparable selection criteria - including Motilal Oswal Investment Advisors Pvt. Ltd. in the final set of comparables - Held that:- Tribunal concluded that though Motilal Oswal Investments Advisory Pvt. Ltd. was declaring a solitary stream of operating income under the head “advisory fee”, but un-disputedly it was engaged in diversified fields and the financial results for each segment were not seperately available. Considering that it engaged in many diversified fields and not only in the field of rendering nonbinding advisory services, the ITAT came to a finding that Motilal Oswal Investments Advisory Pvt. Ltd. was not a concern which could be included in the list of comparable companies. We do not think that these findings of fact are in any way perverse or vitiated by any error apparent on the face of the record which, in turn, would give rise to any substantial question of law. We are in full agreement with the findings given by the ITAT. No hesitation in holding that by comparing Motilal Oswal Investments Advisory Pvt. Ltd. to the assessee company (for the purposes of determining the ALP) would be like comparing apples and oranges. This being the case, we do not find any infirmity in the order of the ITAT excluding Motilal Oswal Investments Advisory Pvt. Ltd. from the final list of comparables which would give rise to any substantial question of law. No substantial question of law .

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• 2018 (9) TMI 1174
  Computation of long term capital gain assessable - assessment in the hands of co-sharer - land of the assessee as situated within 8kms. from municipality - Held that:- The value of the property ought to be taken at ₹ 39,36,290/- as on 1.4.1981 after giving benefit of indexation, which value would come to ₹ 2,48,77,353/- and capital gain come in the share of the assessee would be only ₹ 40,880/-. Apart from the above, we have been appraised ourselves with the latest order of the AO computing the capital gain in the hands of a co-sharer. Two co-owners cannot be treated differently for the same transaction. Therefore, we are of the view that addition made by the AO in the hands of the assessee is not sustainable. We allow the appeal of the assessee partly and direct the AO to take taxable capital gain in the hands of the assessee at ₹ 40,880/- equivalent to the one assessed in the hands of Shri Dashrathbhai Somabhai Prajapati, the other co-sharer. In view of the above discussion, appeal of the assessee is partly allowed.

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• 2018 (9) TMI 1173
  Penalty u/s 271 (1)(c) - disallowance of Registrar of Companies Charges and Deduction u/s 80HHC - assessee has already paid tax as per the provisions of MAT u/s 115JB - Held that:- No doubt, there was concealment but that had its repercussions only when the assessment was done under the normal procedure. The assessment as per the normal procedure was, however, not acted upon. On the contrary, it is the deemed income assessed under Section 115JB of the Act which has become the basis of assessment as it was higher of the two. Tax is thus paid on the income assessed under Section 115JB. Hence, when the computation was made under Section 115JB of the Act, the aforesaid concealment had no role to play and was totally irrelevant. Therefore, the concealment did not lead to tax evasion at all. Thus, there is no concealment of income or inaccurate furnishing of documents in the present case and case of CIT Vs. M/s Nalwa Sons Investment Ltd. squarely applicable to the present case [2010 (8) TMI 40 - DELHI HIGH COURT] - decided in favour of assessee

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• 2018 (9) TMI 1172
  Deduction u/s 80P - addition holding that dividend income received from IFFCO is not exempt - Held that:- As decided in assessee's own case as verified that it is cooperative society as is ascertainable from the Registration Certificate produced by the appellant and on my behest the appellant has also produced I.T. Return of the Bank wherein the status is mentioned to be cooperative society. Even otherwise it is not the case of the A.O. that U.P. Cooperative Bank Ltd. is a company. Thus, the amount being dividend received from the aforesaid cooperative societies is expressly exempt u/s 80P (2)(d) of the Act. Similar view has also been taken by the CIT (A) in appellant’s own case for A.Ys. 2007-08, 2009- 10, 2010-11 & 2011-12. In view of the above, it is held that the Assessing Officer is not justified to make addition - Decided in favour of assessee

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• 2018 (9) TMI 1181
  Deduction under section 80IB(10) - assessee is engaged in the business of housing development - AO disallowed the claim mainly on the ground that the assessee was not the owner of the land and the approval of the project was not in the name of the assessee - Held that:- Various issues arising out of the claim of different assessee's under section 80IB(10) came to be thrashed out in case of Commissioner of Income Tax vs. Radhe Developers [2011 (12) TMI 248 - GUJARAT HIGH COURT] wherein took note of various development agreements executed by the assessee in favour of individuals claiming that they had been engaged in the activity of housing development. Revenue's contention, that the nature of activities carried on by the assessee's would only qualify them to be the contractors executing works contract, was also considered. It was held that the assessee had undertaken the development of housing project at their own risk and cost. The owner of the land had accepted the full price of the land. He was therefore not concerned with the successor or failure of the housing project. Reference was made to the definition of term “transfer” under section 2(47)and held that merely because the land was held by the original owner when the housing development project was executed, would not be detrimental to the assessee's claim of deduction under section 80IB(10) of the Act. - Decided against revenue

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• 2018 (9) TMI 1171
  Denial of exemption of long term capital gains - gain arising on transfer of shares - exemption claimed u/s.10(38) - treating such sum as unexplained income u/s.68 - denial of natural justice - Held that:- The transactions claimed by the assessee whether real or sham, requires a revisit by the ld. Assessing Officer. Useful reference may be made to the law laid down by Hon’ble Apex Court in the case of CIT vs. Sunita Dhadda [2018 (3) TMI 1610 - SUPREME COURT OF INDIA] while affirming a judgment of Hon’ble Rajasthan High Court in the case of CIT vs.Smt. Sunita Dhadda [2017 (7) TMI 1164 - RAJASTHAN HIGH COURT] where the importance of providing an opportunity to cross examine the witness has been stressed. Their lordship held that this was an important constituent of natural justice. Only after all the steps required under law is complete, it can be ascertained whether claim of capital gains was bogus or not. We therefore set aside the orders of the lower authorities and remit the issue back to the file of the ld. Assessing Officer for consideration afresh in accordance with law. Appeal of the assessee is partly allowed for statistical purposes.

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• 2018 (9) TMI 1170
  Set off of derivative loss - maintainability of loss arising from derivative transactions against the regular income - allowability of derivative loss in terms of Section 43(5)(d) - Held that:- The payment made to the share broker towards such losses is not in dispute. The specific order number and trade time is available on record. It is not the case of the Revenue that no transaction has been executed against the order number specified in the contract. Therefore, in these circumstances, it will be difficult to draw inference against the assessee for allowability of derivative loss in terms of Section 43(5)(d) of the Act. As relying on CIT vs. M/s. Sri Vasavi Gold & Bullion Pvt. Ltd. [2018 (4) TMI 802 - MADRAS HIGH COURT] we find merit in the case of the assessee with reference to the derivative loss arising in the equity segment and commodity segment. As regards, loss of ₹ 19, 678/-, it is claimed on behalf of the assessee, the correct loss stands at ₹ 23, 86, 040/- as against ₹ 23, 66, 362/- assumed by the AO in the commodity segment. Considering the smallness of amount and having regard to the documentary evidences, we do not see any warrant to differ with the version of the assessee. Therefore, the loss claimed by the assessee in the derivative segment is found to be covered by the exception provided under s. 43(5) of the Act and consequently, such loss requires to be allowed for set off against the regular income of the assessee. - Decided in favour of assessee

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• 2018 (9) TMI 1169
  Levy of fees under section 234E - intimation issued under section 200A in respect of processing of TDS - Held that:- We find that the issue in all these appeals is now squarely covered in favour of the assessee by the decision of ITAT Amritsar Bench in the case of Sibia Healthcare Private Limited vs. DCIT [2015 (6) TMI 437 - ITAT AMRITSAR] adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments contemplated under section 200A. The impugned levy of fees under section 234E is unsustainable in law. We, therefore, delete the impugned levy of fee under section 234E of the Act. - Decided in favour of assessee.

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• 2018 (9) TMI 1168
  Levy of fees under section 234E - intimation issued under section 200A in respect of processing of TDS - Held that:- Identical issue has come up for consideration before the Tribunal in the case of Little Servants of Divine Providence Charitable Trust vs. ITO(TDS)[2016 (9) TMI 960-ITAT, Cochin] wherein as held issue in all these appeals is now squarely covered in favour of the assessee by the decision of ITAT Amritsar Bench in the case of Sibia Healthcare Private Limited vs. DCIT [2015 (6) TMI 437 - ITAT AMRITSAR] adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments contemplated under section 200A. The impugned levy of fees under section 234E is unsustainable in law. We, therefore, delete the impugned levy of fee under section 234E of the Act. - Decided in favour of assessee.

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• 2018 (9) TMI 1163
  Capital gain - JDA or agreement for sale - eligible transfer u/s 2(47) - as submitted by assessee possession in question of the impugned property was never handed over to the purchaser, hence, there was no part performance of the contract as per the terms of section 53A of the Transfer of Property Act - Held that:- The agreement for sale dated 12. 12. 2008 and the cancellation of agreement dated 04. 05. 2011 are on record. Clauses of agreement for sale states that the possession of the property is to be handed over to the buyer only when the entire sale consideration is paid by the purchaser. In the instant case, the entire sale consideration was never paid by the purchaser. The sale agreement dated 12. 12. 2008 was cancelled vide agreement dated 04. 05. 2011 and prior to the cancellation of sale agreement, substantial portion of advance received by the assessee was refunded to the intended purchaser. The agreement for sale is not a registered document. As held in the case of CIT v. Balbir Singh Maini (2017 (10) TMI 323 - SUPREME COURT OF INDIA) that after amendment of Registration Act, 1908 in the year 2001, unless the document containing the contract to transfer any immovable property is registered, it shall not have any effect in law. In the instant case, there is no Joint Development Agreement (JDA), but only an unregistered sale agreement, which could not be fulfilled due to external reasons and there was no handing over of possession at any point of time to the purchaser. The property in question as on the date is still with the assessee and there is no transfer of the impugned property at any point of time. Therefore, the addition made by the Assessing Officer is uncalled for and we uphold the finding of the CIT(A). - Decided against revenue

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• 2018 (9) TMI 1162
  Reopening of assessment - additions made u/s 68 of the share capital - since the director did not appear before the ld. AO the entire amount has been added to the income of the assessee - whether AO has not made independent enquiry at his end to disprove the claim of the assessee company?- Held that:- We find that the ld. CIT(A) also purposely overlooked such conduct of the AO and confirmed the same on the basis of the finding by the AO in a stereotyped manner without considering the relevant laws, the present legal position in the identical facts of the case, the judgements passed by this ld. Tribunal which has attained finality by the pronouncement of the Apex Court. The identical case which was disposed of in ITO, WARD-6 (1) , KOLKATA VERSUS M/S DEEPSIKHA DISTRIBUTORS PVT. LTD. [2018 (6) TMI 361 - ITAT KOLKATA] as held without any discussion on this issue of limitation, the Ld. CIT(A)-2, Kolkata allowed ground no.1 of the assessee before him, which states that the notice u/s 143(2) of the Act was not served as the assessee within the statutory period specified under law. Hence this order is passed without application of mind. CIT(A) has passed a mechanical order without considering the legal position and the facts of the case as brought out by the AO. Thus we set aside this appeal to the file of the AO for fresh adjudication - Decided in favour of assessee for statistical purposes.

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• 2018 (9) TMI 1161
  TPA - comparable selection - Held that:- It is not in dispute that the assessee itself selected M/s Acropetal Technologies Ltd. as one of the comparables. When the assessee came to know that some adverse information about M/s Acropetal Technologies Ltd., nothing wrong in bringing it to the notice of the Transfer Pricing Officer and DRP and request for removal of that comparable from consideration. Therefore, this Tribunal is of the considered opinion that the TPO as well as DRP are bound to consider the information which was brought to their notice subsequent to the filing of transfer pricing documentation. Hence, this Tribunal is of the considered opinion that the matter needs to be reconsidered by the Transfer Pricing Officer. Accordingly, the orders of the authorities below are set aside and the issue is remitted back to the file of the Assessing Officer. AO shall follow the statutory provisions and pass the necessary orders as provided under Section 144C Exclusion of expenditure incurred in foreign currency towards communication and insurance from the total turnover - Held that:- Assessing Officer is directed to exclude the expenditure incurred by the assessee from both the export turnover and total turnover. The orders of the DRP as well as the Assessing Officer are modified accordingly. Consideration is exclusion of foreign exchange gain from profits of the undertaking - Held that:- Gain due to foreign exchange fluctuation on the export is a profit from export, therefore, this Tribunal is of the considered opinion that the same cannot be excluded. In fact, this Tribunal in the assessee's own case for assessment year 2009-10 had taken a similar view by placing reliance on the judgment of Madras High Court in CIT v. Pentasoft Technologies Ltd.[2010 (7) TMI 75 - MADRAS HIGH COURT] - the orders of the lower authorities are set aside and the Assessing Officer is directed to treat the gain due to foreign exchange fluctuation as part of the export profit.

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• 2018 (9) TMI 1160
  Addition made on account of difference in credit of income as per 26AS statement and income credited in Income and Expenditure accounts - Held that:- We note that these timing differences in recognition of revenue with corresponding TDS, will get adjusted in future years and hence there is no tax evasion on the part of the assessee. Moreover, the details of the impugned addition at ₹ 1,93,02,985/- made by the AO is not available, that is, on what basis he worked out the addition at ₹ 1,93,02,985/-, therefore, we do not agree with the addition made by assessing officer. CIT(A) has rightly deleted the impugned addition. - Decided against revenue Provision made on accrual basis for future expense - Held that:- We note that the amount represents entitlements due to the respective Chapters computed on the basis of collections from membership subscription under the control, and that these amounts should be applied by the respective Chapters. Therefore, it is an ascertained expenditure which obviously must be applied by the Chapters. As far as the Head Office is concerned, obviously in the Consolidated Income and Expenditure Account this is styled as 'Provision', but in effect it is not so, and for the application of the expenditure is done by the respective Chapters. Also, as seen in the Consolidated Income and Expenditure Account, this item of expenditure/style of narration has also been there in earlier years. So it has been a regular feature, being expenditure applied by the Chapters and hence it is not a ‘provision’. - Decided against revenue Depreciation claimed without appreciating the fact that the cost of acquisition earlier years thereby reducing written down value to nil - Held that:- We are of the view that the depreciation needs to be allowed. This is a primary accepted principle of accounting. The assets obviously undergo wear and tear/diminution in value and therefore the decline in value has to be accounted for on a systematic way. Be as it may, there has been an insertion in the Act vide Finance (No. 2) Act, 2014, w.e.f. 01.04.2015, being sub-section (6) to section 11 whereby the provisions of section 11 shall be determined without any deduction or allowance by way of depreciation or otherwise in respect of any asset. This insertion is w.e.f. 01.04.2015, and therefore is not applicable to the AY 2010-11 to the assessee under consideration. - Decided against revenue

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• 2018 (9) TMI 1159
  Rectification of mistake - Addition u/s 68 - whether the assessee has proved the genuineness of the transaction at its hands by proving the identity, creditworthiness and genuineness of the creditors? - Held that:- Since, neither the Assessing Officer at the time of remand or the learned Commissioner (Appeals) while deciding the appeals have doubted the identity, creditworthiness and genuineness of the transaction, assessee’s claim had to be accepted, more so, when the creditors have confirmed the credits appearing in their name. SEBI report is not in the case of the assessee but in case of persons some of whom are share applicants of the assessee. The assessee is required to prove the source of fund at its hands and cannot be called upon to prove the source of source. Since, the Department has failed to demonstrate any mistake of the nature as contemplated under section 254(2) of the Act the present application is bound to fail. What the Department wants by filing this application is a review of the earlier decision of the Tribunal which is not permissible under the provision of section 254(2) of the Act which is very limited in its scope and ambit and only applies to rectification of mistake apparent on the face of record. With the aforesaid observations, we decline to entertain the misc. application filed by the Revenue.

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• 2018 (9) TMI 1180
  Dis-allowance of depreciation claim on intangible assets - alternative remedy - Held that:- No doubt that the petitioner has filed an appeal before the First Appellate Authority and challenged the order of assessment in respect of the such dis-allowance. It is also true that the First Appellate Authority has allowed the appeal in part and directed the Assessing Officer to appraise the evidences and verify two confirmations from the said two companies and thereafter, to allow the depreciation software as claimed, provided, the Assessing Officer is satisfied with the verification of the confirmations. Therefore, it is not as though the First Appellate Authority had given a positive direction to the Assessing Officer to accept the case of the petitioner insofar as with regard to the issue of depreciation on intangible assets as such. On the other hand, the order of remand clearly indicates that allowing of the depreciation software as claimed by the petitioner, is subject to the satisfactory verification of the confirmations by the Assessing Officer.Therefore, this Court is not inclined to interfere with the order impugned in this writ petition only on the reason that the petitioner is to avail an alternative remedy of appeal before the Appellate Authority.

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• 2018 (9) TMI 1179
  Validity of special audit of the accounts u/s 142(2A) - whether there has to be a pre-decisional hearing and an opportunity has to be granted to the assessee for the purpose? - Held that:- The requirement of pre-decisional heairng was met as Principle Commissioner of Income-tax (Central), Bhopal, before deciding the issue of approval for Special Audit gave the opportunity to the petitioner. The petitioner has not made any objection regarding procedure followed by the Assessing Officer or by the Principal Commissioner of Income Tax (Central), Bhopal, in the entire process of Special Audit till the completion of Special Audit and only after the fact that the accounts have been verified by the Special Auditor, the present writ petitions have been filed on 04.04.2018. On 13.08.2018, it was pointed out that no assessment order was passed and the period for assessment is going to expire today, ie., 13.08.2018, we issued notice to the Revenue and directed that the assessment proceedings may go on, but no final order shall be passed without the leave of this Court. On the next date of hearing, learned counsel for the Revenue has submitted that the assessment order has been passed on 13.08.2018 and the petitioner is having statutory remedy of appeal before the Commissioner of Income-tax and submitted that the writ petitions are rendered infructuous. Considering the law laid down in the case of Sahara India (Firm) V/s. Commissioner of Income-tax, Central – I (2008 (4) TMI 4 - SUPREME COURT), so also the fact that Principal Commissioner of Income-tax granted two opportunities to the petitioner vide show cause notice dated 30.11.2017 and letter dated 11.12.2017, we are of the view that sufficient compliance of the proviso to Section 142(2A) has been made. We are also unable to persuade ourselves to agree with the proposition canvassed by the learned Senior counsel for the assessee.

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• 2018 (9) TMI 1178
  Addition on protective assessment - sum seized from the present assessee was surrendered, offered and accepted as part of the larger amount - Held that:- It is quite evident that the sum of ₹ 86 lakhs, though seized from the present assessee was surrendered, offered and accepted as part of the larger amount of ₹ 2.26 crores by the asseesse’s employer i.e. Mr. Sunil Aggarwal and as such no question of law therefore arises because that amount was brought to tax. As far as the other sum of ₹ 41 lakhs is concerned, we notice that the Revenue does not appear to have even preferred an appeal before this Court against the order of the ITAT made at the hands of Mr. Sunil Aggarwal, on a substantive basis. The insistence on stating that that amount should be added in the hands of the present assessee (Mr. Gopal Singh Sood) is not justified. No question of law arises

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• 2018 (9) TMI 1177
  Allowability of share loss - genuineness of claim - assessment u/s 158BD/158BC - Held that:- It appears that the share loss and the whole transactions were supported by contract notes, bills and were carried out through recognized stockbroker of the Calcutta Stock Exchange and all the payments made to the stockbroker and all the payments received from stockbroker through account payee instruments, which were also filed in accordance with the assessment. It appears from the facts and materials placed before the Tribunal and after examining the same the Tribunal came to the conclusion and allowed the appeal filed by the assessee. In doing so, the Tribunal held that the transaction fully supported by the documentary evidences could not be brushed aside on suspicion and surmises. However, it was held that the transactions of share are genuine. Therefore, we do not find that there is any reason to hold that there is any substantial question of law involved in this matter. Deplicate

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• 2018 (9) TMI 1167
  Recalling of the ex-parte order - during the pendency of the appeal, the assessee was behind the bars being involved in some criminal cases and was released on bail only on April 11, 2016, whereas, the appeal in question was heard and decided on 19.4.2016 - Held that:- A perusal of the record shows that the assessee, an accused, involved in a very serious criminal case was in jail for a long time . The assessee was granted bail by the Hon'ble Punjab & Haryana High Court vide order dated 11.4.2016, a copy of which has been placed on the file. Keeping in view the problem and difficulties faced by the assessee, his mental position and other related problems at that time, it cannot be said that the assessee unnecessarily avoided the appearance on 19.4.2016 before this Tribunal. We find that the assessee was prevented by the sufficient cause for non-appearance. Ex-parte order dated 19.4.2016 of the Tribunal is set aside and the appeal of the assessee is restored to its original position and number. In the result, this M.A. filed by the assessee is hereby allowed.

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• 2018 (9) TMI 1166
  Revision u/s 263 - non deduction of TDS u/s 194H - payment of incentive to various sub-dealers - assessee is a wholesale dealer of recharge vouchers, coupons, SIM cards for telecom entities, like, Idea Cellular Ltd. and Tata Teleservices - Held that:- It cannot be held that any relationship exists between the assessee and his sub-dealers; therefore, we hold that nature of payment in the form of incentive to various sub-dealers cannot be equated with commission as stipulated u/s.194H. Accordingly, we hold that there is no requirement for deducting TDS. Thus, in view of our aforesaid reasoning, we hold that the assessment order is not prejudicial to the interest of revenue. Since one of the limb of exercising jurisdiction u/s.263 is missing, i.e., it is not prejudicial to the interest of the revenue; therefore, such a revisionary jurisdiction u/s.263 cannot be sustained. Hence, the order of the ld. CIT is set aside and the grounds raised by the assessee are allowed.

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• 2018 (9) TMI 1176
  Penalty u/s.271(1)(c) - Assessee in its return of income claimed depreciation @ 40% on plant and machinery when the applicable rate of depreciation was only 25% for the subject Assessment Year - Held that:- The fact that the assessee was eligible to claim higher rate of depreciation @ 40% in the immediately preceding year was not disputed. It is also quiet natural in this computer era to prepare Depreciation chart by downloading the relevant figures from the chart of the immediately preceding year. Viewed from this angle, we are of the view that the explanation of the assessee appears to be bonafide one. It is quite possible that the depreciation rate may escape the attention while preparing the Depreciation Chart, since the basic depreciation rate has not been changed in the Statute during the year under consideration. Hence, we are of the view that the explanation given by the assessee should be considered as bonafide one and hence Explanation 1 to sec.271(1)(c) shall apply to the same.- Decided in favour of assessee

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• 2018 (9) TMI 1165
  Deduction u/s 80IC - deduction @ 100% of profit derived from manufacturing activities of unit - Held that:- We do not agree to the above contention raised by the Revenue at this stage. A perusal of the order of the Assessing officer reveals that the Assessing officer has not disputed that the assessee unit has carried out substantial expansion as provided under clause (b) of sub section (2) read with clause (ix) of sub section (7) of section 80IC of the Act. Almost similar view has also been taken in the case of ‘M/s Stovekraft India vs. Commissioner of Income Tax’ [2017 (12) TMI 69 - HIMACHAL PRADESH HIGH COURT] as held Revenue has not disputed, (a) the units having carried out substantial expansion within the definition of the Section, (b) their entitlement and extent of deduction would be dependent upon interpretation of the relevant provisions. Eligibility for deduction u/s 80IC in respect of interest income - Held that:- We restore the issue relating ground No.2 to the limited extent that if the interest expenditure incurred by the assessee has nexus with the interest income earned by the assessee, the assessee will be eligible for netting off/setting off of the same against the interest income. The matter is, therefore, restored to the file of the Assessing Officer to decide this issue afresh on this limited point. - Appeal of the assessee is treated as allowed for statistical purposes.

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• 2018 (9) TMI 1108
  Addition u/s 68 - Addition on account of peak credits worked out on the basis of pen drive - Held that:- Peak credits of the transactions in the pen drive stood accepted by one Shri Chetan Gupta as its income. The addition made in the hands of assessee company on the same basis cannot be sustained. Once the said peak credits have been added in the hands of Shri Chetan Gupta, the same cannot be again added in the hands of assessee company. No contrary material is placed on record on behalf of the Revenue. We, accordingly, do not find any justification to sustain the addition made by the authorities below in the hands of Assessee Company. - Decided in favour of assessee.

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• 2018 (9) TMI 1164
  Penalty proceedings u/s. 271(1)(c) - addition made u/s.68 in respect of share application money from two companies - Held that:- These parties did not appear before the Assessing Officer in response to the summons issued u/s.131; and secondly, in inquiry conducted by the Investigation Wing earlier these companies were found to be involved in providing accommodation entries. No specific inquiry or information pertaining to the assessee that these companies have provided the accommodation entries to the assessee was unearthed. Assessee has filed various evidences to prima-facie prove the identity of the parties, creditworthiness; and genuineness of the transaction. In light of these facts and evidences the preponderance of probability goes in favour of the assessee that the share application money has come from the known sources for which the entire transactions have been confirmed. At least in the penalty proceedings, it can be inferred that once these evidences have not been rebutted or found to be false, we do not find any reason to confirm the penalty on such additions. Accordingly, same are directed to be deleted. - Decided in favour of assessee

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• 2018 (9) TMI 1175
  Revision u/s 263 - Commissioner found that the extent of loss of gold in a financial year of 72 kg that was worth in excess of ₹ 10.87 crore required a closer scrutiny - Appellate Tribunal found that the loss of gold of similar extent had been allowed in previous financial years and in at least one subsequent financial year - Held that:- Appellate Tribunal referred to the extent of loss that is claimed by the industry as a whole and discovered that about five per cent loss per year was par for the course. Though the figure in this case was on the higher side of 72 kg, yet such amount was a little over five per cent of the quantity of gold obtained by the assessee during the relevant financial year. As to the other grounds indicated in the show-cause notice, including the perceived excess depreciation, the Appellate Tribunal went into the facts and rendered an opinion on the facts that the assessment order had been correctly made. Commissioner required the assessment to be reopened and even directed the assessing officer to proceed in a particular manner. Some of the directions issued by the Commissioner indicated that the fresh assessment to be undertaken by the assessing officer was to only be a facile exercise as the quantum of addition in several cases were dictated to the assessing officer by the Commissioner in his relevant order dated October 21, 2014. Since the matters of fact that were referred to in the Commissioner’s order have been appropriately dealt with the Appellate Tribunal and the Appellate Tribunal was satisfied that the order under Section 263 of the Act issued by the Commissioner was without basis, the Appellate Tribunal’s order does not warrant any interference, particularly as no substantial question of law arises in the circumstances.

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• Customs

• 2018 (9) TMI 1151
  Concessional rate of duty - import of BMW CARS IN CKD - Department took the stand that as the imported goods namely, Engine Assembly and the Transmission Sub-assembly/Gear Box were in a pre-assembled form, the appellant was not eligible to avail the concessional rates provided in the said Notifications. - clause (i) of Sl. No. 344 of Table appended to Notification 21/2011Cus. and sub-clause (1)(a) of Sl. No. 437of Notification 12/2012-Cus. Whether imports made by the appellant: (i) are CKD imports for the period 1.3.2011 to 23.3.2011, entitled to a rate of Customs duty at 10% (as claimed by the appellant) or a rate of Customs duty at 60% (as claimed by the Department); (ii) are CKD imports for the period 24.3.2011 to 11.4.2013, entitled to a rate of Customs duty at 10% (as claimed by the Appellant) or a rate of Customs duty at 30% (as claimed by the Department)? Invocation of Longer period of limitation under Section 28 (4) of the Customs Act, 1962 - Penalty under Section 114A and Section 112 (a) of the Customs Act, 1962 - imposition of redemption fine in lieu of confiscation under Section 125 of the Customs Act, 1962. Held that:- The changes brought about by Notification No. 31/2011-Cus. not only created an additional slab of concessional duty, but also further clarified what exactly would be considered as CKD. Notification 31/2011-Cus. in fact expanded the types of imports which could be considered as CKD unit. In the Notification 31/2011 if the engine, gearbox and transmission mechanism was not in a pre-assembled condition, this would be considered as a CKD kit, meriting the lowest rate of 10% BCD - At the same time, even if the engine, gearbox and transmission mechanism was in a pre-assembled form, however not mounted on the chassis or a body assembly, even if such imported kit may well be considered as a CKD kit for the purposes of the notification, that will be required to suffer BCD @ 30%. If the imports do not fit into any of these two categories, they would have to pay customs duty @ 60%. As clarified by the TRU in their letter dt. 25.04.2011, only those CKD kits where all the parts and components including engine/gearbox and transmission assembly which are imported in a completely knocked down condition, will alone benefit from the lowest rate of 10% BCD. Thus, as per the amended Notification (31/2011-Cus.) when all the parts and components are imported in completely knocked down condition, the lower rate of 10% BCD will be applicable. A combined reading of the Notification No.31/2011-Cus. as also the TRU letter dt.25.4.2011 serves to clarify that not in a preassembled condition meant imported in completely knocked down condition - However, even when the engine or gearbox or transmission mechanism was imported in preassembled form, with the remaining parts, components etc., the entire kit would still be treated as a CKD kit, though required to suffer a higher rate of 30% BCD. It is also pertinent to note that if the imported automobile CKD kit has the engine or gearbox or transmission in preassembled condition, the entire kit will not get the benefit 10% BCD under entry 344 (1) (a) but will have to suffer 30% BCD under entry 344 (1) (b). In the present case, From the samples of the Bill of Entry and related documents filed by appellants in page 32 onwards of compilation of documents Vol-I, we find that in a sample Bill of Entry No.7949107 dt.14.09.2012, the imported goods were declared as BMW cars in CKD . In the Bill of Entry the imported goods are declared as falling within the Customs Tariff Heading 87039090 and claiming benefit of Notification No.12/2012-Cus. Entry 431 (1) (a) namely claiming BCD @ 10%. The related corresponding Invoice No.GCO 7402 dt. 23.07.2012 describes the consignment as BMW CKD Cars BMW CKD automobile parts - the effect of notification No.31/2011-Cus. and also Notification No.12/2012-Cus.is that 10% BCD will be available only when the CKD kit imported contains engine / gearbox / transmission assembly in completely knocked down condition, i.e. not in preassembled condition. So also, in respect of another Bill of Entry 9190798 dt. 01.02.2013, the description of the imported goods is given as BMW Cars in CKD . The Custom Tariff Heading declared was 87039090 claiming concessional rate of 10% BCD available as per Sl. No. 437(1)(a) of Notification 12/2012-Cus. The corresponding invoice GCQ 8426 dt. 07.01.2013 describes the goods as CKD Cars BMW CKD Automotive Parts . Here also, the invoice advises to refer to packing list or alternatively, the invoice attachment, for description of quantity and nature of goods supplied . It appears to reason that assembly engine imported is already a complete preassembled engine. So also, the packing list does not contain items like gearsets, torque converters, mechatronic parts etc. which are components that go into the assembling of an automatic gearbox. Hence it appears to reason that the imported transmission sub-assembly / assembly auto gearbox / automatic transmission are gear box / transmission which are already preassembled at the time of import - Reference is also made to letters of appellants dt. 22.03.2013 and 04.04.2013 wherein it has been clarified that they do not assemble internal components of engine and automatic gearbox at the Chennai plant. We have then no doubt in our mind that the goods imported by the appellants were not of the type and nature which would merit the lowest B.C.D rate of 10% as extended vide the Notification No.21/2011-Cus. and later in No.31/2011-Cus. as amended by Notification No.12/2012-Cus. The allusion made to the rulings of the AAR will also not help the case of the appellants - the goods imported by the appellants will not benefit from the B.C.D rate of 10% but will only be eligible for higher B.C.D. rate since the CKD kits imported contained engine or gearbox or transmission mechanism in preassembled form (but not mounted on chassis or body assembly). Both for the periods 01.03.2011 to 23.03.2011 as also 24.03.2011 to 11.04.2013, the appellants are not entitled to a rate of B.C.D. @ 10% but will necessarily have to discharge B.C.D @ 60% and 30% respectively only - the issue decided in favor of Revenue. Time Limitation - Held that:- the imported kits had been examined by Customs Officers during the period March 2011 to April 2013 and in most of these reports, it has been confirmed that the impugned goods have been found in CKD condition. - The allegation that appellant has suppressed facts of import of pre-assembled engine and preassembled transmission mechanism or that they have misstated the description of the goods to avail concessional rate of duty is demolished - the extended period of limitation cannot be invoked in this case and hence, the differential duty liability can be confirmed and demanded only for the normal period of limitation - For this limited purpose, the matter would be required to be remanded to the adjudicating authority to work out the duty liability afresh limited to the normal period of limitation. Penalties - Held that:- For the very reason that ingredients justifying invocation of extended period not being present in this case, further also taking into account that the issue per se revolves around interpretation of the notification which itself underwent a number of changes, we hold that the penalty under Section 114A of the Customs Act, 1962 is not just and fair and is therefore set aside - penalty set aside. Confiscation - Redemption Fine - Held that:- With regard to confiscation of the goods, as there has been definite contraventions of Section 111 (m) and (o) of the Customs Act, 1962, the confiscation ordered by the adjudicating authority is upheld. However, we reduce the redemption fine to ₹ 1,00,00,000/- (Rupees One Crore only) imposed under Section 125 of the Customs Act, 1962. Appeal is partly allowed and partly remanded.

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• 2018 (9) TMI 1155
  Maintainability of petition - alternative statutory remedy existed - Section 128 of the Customs Act, 1962 - Benefit of N/N. 46 /2011–Cus dated 01.06.2011 - Case of petitioner is that the benefits already granted through the Notification No.46 of 2011 had been withdrawn mistakenly - import of “Carbonless Paper Black Image” and the same is classifiable under customs tariff heading 4809 - Held that:- The institutional respects are to be maintained by the constitutional Courts. Whenever there is a provision for an appeal under the statute, without exhausting the remedies available under the statute, no writ petition can be entertained in a routine manner. Only on exceptional circumstances, the remedy of appeal can be waived, if there is a gross injustice or if there is a violation of fundamental rights ensured under the Constitution of India. Otherwise, all the aggrieved persons from and out of the order passed by the original authority is bound to approach the Appellate Authority. The institutional functions and exhausting the appeal remedies by the aggrieved persons, are to be enforced in all circumstances and writ proceedings can be entertained only on exceptional circumstances. Rule is to prefer an appeal and entertaining a writ is only an exception. This being the legal principles to be followed, this Court cannot entertain the writ petitions in a routine manner by waiving the remedy of appeal provided under the statute. Thus, When an effective alternative remedy is available, a writ petition cannot be maintained - reliance placed in the case of CITY AND INDUSTRIAL DEVELOPMENT CORPORATION VERSUS DOSU AARDESHIR BHIWANDIWALA & ORS [2008 (11) TMI 662 - SUPREME COURT]. The writ petitioner is at liberty to approach the appropriate Appellate authorities and thereafter, before the Appellate Tribunal constituted under Section 129(A) of the Customs Act,1972 for the purpose of redressing his grievances in the manner known to law - petition disposed off.

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• 2018 (9) TMI 1154
  Jurisdiction power of DRI to issue SCN - Section 28 of the Customs Act, 1962 - Held that:- Following the order in Forech India [2017 (12) TMI 984 - DELHI HIGH COURT], this appeal is allowed in part and the CESTAT would independently apply its mind to the question of jurisdiction and also decide the appeal on merits.

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• 2018 (9) TMI 1153
  Import against Advance License - fulfilment of export obligation - physical diversion of raw material - benefit under the DEEC scheme under various customs notifications - Tribunal decided the issue against the Revenue - Whether any substantial question of law arises for consideration in this appeal? Held that:- The revenue cannot raise the contentions questioning the order passed by the CESTAT dated 16.01.2002, which has attained finality. Since the revenue did not challenge the said order by filing an appeal before this High Court, the contentions raised by the learned counsel Mr.Pramod Kumar Chopda that the order is only an order of remand and therefore the department participated in the de-novo adjudication cannot be sustained and we are not inclined to accept the other said submission on account of candid and pointed observations made by the tribunal as to the manner in which the adjudication order was required to be done de-novo. Thus, the order passed by the tribunal dated 16.01.2002 was not an order of remand simplicitor but order with pointed observations and directions explicitly with regard to the stock of raw materials and finished goods in the factory premises. The entire issue revolves around facts, which has been considered by the adjudicating authority and the tribunal concurrently against the revenue and in favour of the assessee, and as such, there is no question of law arising for consideration in this appeal much less a substantial question of law. Appeal of Revenue dismissed.

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• 2018 (9) TMI 1152
  Jurisdiction - power of DRI to issue SCN - Held that:- Once the legal issue, which is subject matter of appeal before the Tribunal, is pending consideration before Hon'ble the Supreme Court, the Tribunal itself should have decided the cases on merits after the decision of Hon'ble the Supreme Court instead of remanding those cases back to the Adjudicating Authority. The impugned order passed by the Tribunal is set aside. The matter is remitted back to the Tribunal to be decided on merits after decision of Hon'ble the Supreme Court in Mangali Impex Limited's case - appeal allowed by way of remand.

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• 2018 (9) TMI 1158
  Valuation of imported goods - Ramie Unprocessed Yarn - enhancement of value based on NIDB data - Held that:- The value of imported goods cannot be enhanced on the basis of NIDB data. Both the lower authorities while relying on the NIDB data for enhancement of value have however, not bothered to ascertain whether such NIDB data related to value of goods as declared by the concerned importers or whether the same reflected the enhanced values after assessment. Thus even on this very issue of reliance of NIDB data for enhancement, the impugned order cannot then be sustained. Also, It cannot be the case that goods had been invoiced by supplier with indication of Denier or Nm, such invoiced details have not been declared by the appellants while filing the Bill of Entry. The enhancement of the declared value cannot be done on the basis of NIDB data - appeal allowed.

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• 2018 (9) TMI 1157
  Penalty u/s 114A of CA - Classification of imported goods, ‘binders’ with different nomenclatures - Bonafide classification - the appellant had paid the duty and interest much before the issuance of SCN - Held that:- When a bona fide mistake was admitted right at the initial stage, we have to only hold that it was without any intention of defrauding the Revenue and therefore, we are of the view that no penalty is exigible. Reduction in quantum of penalty - Held that:- When the lower appellate authority grants leniency to an extent of 75%, we see no reason not to extend it to 100% when clearly the Revenue is not in appeal. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1156
  Benefit of exemption from customs duty - import of cables - telecom equipment for which these cables are used all have an operating voltage of less than 80V. - Department took the view that the cables imported by the appellants are power cables of voltage of more than 80V and not all the cables are designed for telecommunication use as evident by the manufacturer's product data sheet - Sl. No. 28 of Notification No. 25/2005-Cus. dated 1.3.2005 - Held that:- The purpose and intent of the 1996 Rules is basically to monitor the route taken by goods imported under certain exemption notification benefits, inter alia, to ensure that they are being used for intended purpose and in the intended manner. While this may be so, it is relevant to note that appellants herein cannot be judged in the same manner as a fly-by-night operator. Even as per the narration in para-8 of the impugned order, they are a 100% subsidiary of the Volex Group, UK and are in the business in the manufacturing cable assemblies for telecommunication and consumer electronic goods industries with major clients such as Erickson India, Idea Cellular, Tata, Nokia, Dell, Lenovo, Samsung, Philips etc. The appellants are also a unit registered with the Central Excise authorities filing periodical returns indicating the excise product manufactured and cleared from their factory. While no doubt, the procedural requirements of the 1996 Rules would be required to be followed for availing the benefit of exemption under Sl.No.33, we hold that unintended aberrations in such compliance should not result in derailment of the exemption benefit otherwise eligible. While holding that appellant cannot take benefit of the exemption under Sl.No.28 of notification No. 25/2005-Cus. for the impugned imported goods, it is held that they can very well avail the benefit under Sl.No.33 of the same notification instead. Penalty u/s 112 (a) of the Customs Act, 1962 - Held that:- The penalty of ₹ 4,66,000/- imposed on appellants under Section 112 (a) of the Customs Act, 1962 is also unjustified and the same is therefore set aside. Appeal allowed.

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• FEMA

• 2018 (9) TMI 1150
  Order passed u/s 37(A)(3) of FEMA, 1999 - Competent Authority (CA) has confirmed the seizure of mutual funds as equivalent to US $ 16,00,000 held outside India by the appellant - whether as per Section 37(A)(4) proviso, the seizure can be set aside which was confirmed by the impugned order dated 18.05.2018? - Appellate Tribunal’s power - Held that:- CA or Adjudicating Authority has the power to deal with this seizure order only, and not review its own order once passed under Section 37(A)(3). Hence, the contention of the appellant that it has the powers to review, is not borne out by this legal provision. Coming to the Appellate Tribunal’s power, Section 37(A)(5) clearly mentions that any person aggrieved by any order passed by the Competent Authority under Section 37(A)(3) may prefer an appeal to the Appellate Tribunal. Hence, the Appellate Tribunal jurisdiction is limited only to the orders passed by the Competent Authority under Section 37(A)(3). He does not have any original jurisdiction to get into any issues which have not been dealt by the original authority or are subsequent developments to the passing of the order by the Competent Authority. The law is very clear in as much as the Competent Authority has the power only to confirm or otherwise, the seizure done under Section 37(A)(1). The Appellate Tribunal’s powers are only limited to hearing of appeals against these orders. In any case, the adjudication proceedings will have to be gone through as Section 37(A)(4) clearly lays down that the seizure will continue till the disposal of adjudication proceedings. Hence, no merits in the application asking for setting aside the seizure on the above grounds. It is therefore disallowed. Reply be filed in the main appeal within four weeks time and rejoinder within four weeks thereafter.

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• Service Tax

• 2018 (9) TMI 1149
  Construction Services - composite Works Contracts - pure services - Department was of the view that such payment is not proper for the reason that the services cannot be classified as Works Contract Service and also because appellants have not exercised their option for payment of service tax under Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007. Held that:- The services provided by the appellant in respect of the projects executed by them for the period prior to 1.6.2007 being in the nature of composite works contract cannot be brought within the fold of commercial or industrial construction service or construction of complex service - For the period after 1.6.2007, service tax liability under category of ‘commercial or industrial construction service‟ under Section 65(105)(zzzh) ibid, ‘Construction of Complex Service‟ under Section 65(105)(zzzq) will continue to be attracted only if the activities are in the nature of services‟ simpliciter. For activities of construction of new building or civil structure or new residential complex etc. involving indivisible composite contract, such services will require to be exigible to service tax liabilities under ‘Works Contract Service‟ as defined under section 65(105)(zzzza) ibid - The show cause notices in all these cases prior to 1.6.2007 and subsequent to that date for the periods in dispute, proposing service tax liability on the impugned services involving composite works contract, under ‘Commercial or Industrial Construction Service‟ or ‘ Construction of Complex‟ Service, cannot therefore sustain. In respect of any contract which is a composite contract, service tax cannot be demanded under CICS / CCS for the periods also after 1.6.2007 for the periods in dispute. Demand raised for the reason that appellants did not intimate the department about their intention to opt for payment of service tax under composition scheme under Works Contract Service - Held that:- The Tribunal in the case of Vaishno Associates Vs. Commissioner of Central Excise [2018 (3) TMI 417 - CESTAT NEW DELHI] had occasion to consider this issue and held for sole reason of not filing the intimation opting to pay service under Works Contract Service, the demand cannot sustain. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1148
  CENVAT Credit - input services - legal services - denial on account of nexus - Rule 2(l) of CENVAT Credit Rules, 2004 - Held that:- The definition specifically requires the services to be in or in relationship to the manufacture of final products and the inclusive part of the definition enlarges the scope of such services so that any ambiguity removed. If the legal services availed by them had some relationship to the manufacture of goods or were in relation to the manufacture or even to the factory of manufacture this could not have been covered in the inclusive part of definition. Evidently, these services were in relation to acquisition of the new plants and investments which have no nexus whatsoever with the manufacture by any of their plants. These facts are not in dispute - thus, the legal services availed by the appellant are not covered by the definition in Rule 2(l) of the CENVAT Credit Rules, 2004 and therefore, the appellant has wrongly availed the CENVAT credit. Credit not allowed - appeal dismissed - decided against appellant.

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• 2018 (9) TMI 1147
  Demand of Interest and penalty - extended period of limitation - Reverse charge mechanism - business auxiliary service - payment made to overseas commission agent - non-payment of service tax - sub-section (3) of Section 73 - Held that:- it is up to the respondent department to establish that the appellant had practised any kind of act contemplated under sub-rue (4) so that penalty can be imposed on it. Going by the adjudication order and also the order passed by the Commissioner (Appeals), it cannot be said to have been established by the department that such practice of fraud collusion etc., were established before those authorities. In view of the fact that parameters of proviso to Section 73 and ingredients constituting suppression of fact by the appellant has not been made out and the same had not been established by the respondent department before the authorities adjudicating the matter, it can safely be concluded that Section 4 would have no application to the case of the appellant attracting penalty, in which case explanation 2 to sub-section (3) of Section 73 will have its effect. Demand set aside - appeal allowed.

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• 2018 (9) TMI 1146
  Classification of services - Business Auxiliary Service or not?- multi-level marketing service - Held that:- The issue of taxability of multi-level marketing service under BAS is no more res-integra and stands settled by this Tribunal in the case of Charanjeet Singh Khanuja vs. C.S.T. Indore/Lucknow/Jaipur/Ludhiana [2015 (6) TMI 585 - CESTAT NEW DELHI], where it was held that such services are classifiable as Business Auxiliary Service and liable to service tax. Extended period of limitation - Held that:- The extended period is not applicable in the present case. On the same basis, penalty is not imposable as well - demand of service tax for the normal period of limitation along with interest is upheld - penalty set aside. Appeal disposed off.

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• 2018 (9) TMI 1145
  Reversal of CENVAT credit - Held that:- When the assessee has pleaded that even the copy of the CENVAT Register was produced, that perhaps is sufficient to examine the veracity of the assessee’s claim that it did reflect the reversed CENVAT. But, I see no finding at all either in the Order-in-Original or in the impugned order of the lower appellate authority on these documentary evidences and the orders therefore are not speaking orders. The issue requires re-examination by the adjudicating authority - appeal allowed by way of remand.

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• 2018 (9) TMI 1144
  Levy of service tax - renting of immovable properties such as commercial complex, shops, lands etc. to various parties - Held that:- The Hon’ble Supreme Court has found it proper to defer decisions in these matters awaiting the judgment of the nine Judge Bench in Mineral Area Development Authority and Others [2011 (3) TMI 1554 - SUPREME COURT] - in the interests of justice, all these appeals should be kept in abeyance pending the decision of the Hon’ble Supreme Court in all the three cases referred to supra, namely UTV News Ltd. [2018 (5) TMI 1367 - SUPREME COURT OF INDIA], Home Solutions Retails India Ltd. [2011 (10) TMI 13 - SUPREME COURT OF INDIA] and Ritika Pvt. Ltd. [2011 (12) TMI 706 - SUPREME COURT], since the final outcome therein will have a translational impact and affect the decision in all such matters as covered in these appeals.

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• 2018 (9) TMI 1143
  Levy of service tax - renting of immovable properties such as commercial complex, shops, lands etc. to various parties - Held that:- The Hon’ble Supreme Court has found it proper to defer decisions in these matters awaiting the judgment of the nine Judge Bench in Mineral Area Development Authority and Others [2011 (3) TMI 1554 - SUPREME COURT] - in the interests of justice, all these appeals should be kept in abeyance pending the decision of the Hon’ble Supreme Court in all the three cases referred to supra, namely UTV News Ltd. [2018 (5) TMI 1367 - SUPREME COURT OF INDIA], Home Solutions Retails India Ltd. [2011 (10) TMI 13 - SUPREME COURT OF INDIA] and Ritika Pvt. Ltd. [2011 (12) TMI 706 - SUPREME COURT], since the final outcome therein will have a translational impact and affect the decision in all such matters as covered in these appeals.

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• 2018 (9) TMI 1142
  Levy of service tax - renting of immovable properties such as commercial complex, shops, lands etc. to various parties - Held that:- The Hon’ble Supreme Court has found it proper to defer decisions in these matters awaiting the judgment of the nine Judge Bench in Mineral Area Development Authority and Others [2011 (3) TMI 1554 - SUPREME COURT] - in the interests of justice, all these appeals should be kept in abeyance pending the decision of the Hon’ble Supreme Court in all the three cases referred to supra, namely UTV News Ltd. [2018 (5) TMI 1367 - SUPREME COURT OF INDIA], Home Solutions Retails India Ltd. [2011 (10) TMI 13 - SUPREME COURT OF INDIA] and Ritika Pvt. Ltd. [2011 (12) TMI 706 - SUPREME COURT], since the final outcome therein will have a translational impact and affect the decision in all such matters as covered in these appeals.

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• 2018 (9) TMI 1141
  Demand of amount collected in the name of service tax - section 11D of the Central Excise Act - Held that:- Sub-section (1) of 11D will apply only to the person who is “liable to pay duty” and where the person has collected any amount in excess. - The Commissioner (Appeals) has correctly concluded that when the assessee would not come under the ambit of service tax prior to 16.05.2005, Section 11D(1) would not be applicable. Adjustment of an amount of ₹ 2,73,952/- paid by the respondent - said amount was paid by mistake of law - Held that:- Sub-section (4) of 11D provides for adjustment of such amount inter alia arising against any other proceeding for determination of duty of excess. This being so, the action is within the boundaries of law. Appeal dismissed - decided against Revenue.

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• 2018 (9) TMI 1140
  Time limitation - Short-payment of service tax - Held that:- It is seen that the contention of the appellant that they have not received the copy of the order and that they applied to the Assistant Commissioner on 28.9.2015 is not supported by any probable evidence - Commissioner (Appeals) has rightly rejected the appeal on the ground of limitation - Appeal dismissed.

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• 2018 (9) TMI 1139
  Refund claim - unjust enrichment - CBEC Circular No. 123/5/2010 T.R.U. dt. 24.05.2010 - whether there was any unjust enrichment? - Held that:- There is no doubt that the nature of service rendered by the assessee was an exempted service which did not invite the levy of service tax and the original authority having been satisfied that a part of the claim for refund was eligible has sanctioned ₹ 3,33,299/- - There is no specific order with regard to the credit of the same into the Fund as required by Section 11B of the Central Excise Act, 1944, which means that the amount continued to remain only with the Revenue, which is clearly without authority of law. When there is no material on record to suggest that the appellant has, in fact, collected the service tax element despite the fact that the service was a non-taxable entity, the Revenue cannot retain the same without granting refund to the assessee. Appeal allowed.

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• 2018 (9) TMI 1138
  Refund claim - time limitation - Rule 5 of CENVAT Credit Rules, 2004 - Held that:- Reliance placed in the case of CCE & CST, BENGALURU SERVICE TAX-I VERSUS M/S. SPAN INFOTECH (INDIA) PVT. LTD. [2018 (2) TMI 946 - CESTAT BANGALORE], where it was held that In respect of export of services, the relevant date for purposes of deciding the time limit for consideration of refund claims under Rule 5 of the CCR may be taken as the end of the quarter in which the FIRC is received, in cases where the refund claims are filed on a quarterly basis - appeal allowed in part.

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• 2018 (9) TMI 1137
  Jurisdiction - Whether the explanation to Rule 6 (1) of the Service Tax Rules, 1994, which was introduced with effect from 10.05.2008, would be retrospective or otherwise? - Held that:- Identical issue decided in the case of The Principal Commissioner of GST, Delhi Vs. McDonalds India Pvt. Ltd. [2017 (10) TMI 514 - DELHI HIGH COURT], where it was held that As per Rule 6, it is the date when the amount is credited/debited that is relevant and not the fact that the amount remains in the books. Any contrary interpretation would result in the provision being made retrospective, which was not the intention - appeal disposed off.

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• 2018 (9) TMI 1136
  CENVAT Credit - duty paying invoices - It was alleged that the invoices of OMS are not proper documents for taking credit - case of Revenue is that Since the CENVAT credit claim has become delinked, appellant is not entitled to avail CENVAT credit - Held that:- Ld. Adv. has been at pains to demonstrate that there is no break-up in CENVAT credit chain right from the broadcaster upto Amurtanjan. We do not find any infirmity in the manner of passing of the Cenvat credit. In any case, OMS was merely acting as a conduit for transfer of the amount from the broadcaster to the appellant. The ratio of M/s. Zapak Digital Entertainment Ltd. [2016 (12) TMI 737 - CESTAT, MUMBAI], is applicable on all fours to the case on hand, where Reliance placed on the decision of the case of Marigold Coatings [2016 (5) TMI 10 - GUJARAT HIGH COURT], wherein it was held that duty credit cannot be taken on the strength of endorsed invoice. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2018 (9) TMI 1133
  Clandestine removal - allegation was that M/s HAL was supplying Ferro-alloys to M/s HSAL without any invoices - The appellant have not challenged the facts or evidences in this case nor have they contested their involvement in abetting evasion of duty. The main plea of the appellant is that they were supplier of the raw material and did not deal with the excisable goods, which were liable to confiscation and they had no knowledge that the goods were liable to confiscation. Held that:- The appellants were supplying Ferro Alloys to M/s HSAL. Invoice book was recovered from their godown, which had parallel invoice nos. and invoices from that invoice book had been used in clearance of the Ferro Alloys. The daily report were also found, which contained each and every activity taking place in godown, which confirms that various types of Ferro Alloys were dispatched to M/s HSAL without the cover of the invoices, or the billing was done but no material was dispatched, or the goods were dispatched to M/s HSAL, but the invoices were issued to some other parties. All these facts and evidences clearly show that various employees and the Director of the appellant were clearly in the knowledge that the supplies were being made for goods, which were liable to confiscation. In fact, any excisable goods cleared by appellant without cover of invoices are also liable to confiscation - The active involvement of the appellant in the entire modus operandi is thus established in relation to fraudulent supply of raw material without payment of duty to M/s HSAL in a well organized manner thereby abetting evasion of duty by M/s.HSAL. Penalty - Held that:- In the instant case, Ferro Alloys were dispatched to M/s HSAL without the cover of the invoices, or the billing was done but no material was dispatched, or the goods were dispatched to M/s HSAL, but the invoices were issued to some other parties. Clearly, the appellant were not merely sending raw material without issuing invoices but were also engaged in other modus operandi. All these were done with sole intent to enable evasion of duty - thus, penalty has rightly been imposed on the appellants for their collaborative role in the conspiracy of clandestine removal of goods by M/s HSAL and enabling evasion of duty - however, quantum of penalty reduced. Appeal allowed in part.

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• 2018 (9) TMI 1132
  CENVAT Credit - input/capital goods - old Structures and other structural items - Held that:- There can be no doubt that the definition of inputs also covers the inputs used within the factory for manufacture of capital goods. The question begging a decision is whether goods procured by the appellant, which are admittedly in the form of scrap, have been used in the fabrication of capital goods such as EOT Crane Slag Crusher Machine, Pollution Treatment Plant, Mould Stand, Cable Tray etc. This fact has been certified by an independent Chartered Engineer vide his certificate dated 03/10/2015. The reason why such a certificate has not been accepted by the lower Authority is that the certificate describes the inputs as MS Steel Scrap‟. The inputs on which such Cenvat Credit has been availed have been classified under 73089010. These cover goods in the form of fabrication structures. The use of the term MS Steel Scrap‟ by the Chartered Engineer cannot discount the value of the certificate. The inputs procured have in fact been used in the fabrication of capital goods and hence are entitled to the CENVAT Credit - credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1131
  Classification of goods - SIOOXY - contention of revenue was that the said goods fall under Tariff Item No.3004.50.90 as other medicament contain vitamins or other products of heading 2936, whereas the contention of the appellant was that the said goods are classifiable under Chapter 15 of Schedule to Central Excise Tariff Act, 1985 as dietary supplements. Held that:- From the record, we are unable to know whether revenue has got the product got tested by the Drug Control Authorities to come to the conclusion that the product has therapeutic or prophylactic properties and also whether the natural ingredients are encapsulated as such without subjecting to any chemical modification. This fact can be verified by the Original authority - appeal allowed by way of remand.

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• 2018 (9) TMI 1135
  CENVAT Credit - input services - Construction services - Held that:- The conclusion of the Tribunal is well founded, as construction service is an eligible service for credit for providing output service of renting of immovable property and without construction of the building, the renting of immovable property cannot be provided - Appeal dismissed - decided against Revenue.

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• 2018 (9) TMI 1134
  Condonation of delay in filing this motion - reason for delay is failure to remove office objections on or before 07.01.2016. Held that:- The transfers of the officers of the department does not absolve the Revenue from prosecuting its appeal with sincerity and vigilantly. The reasons given in the affidavit in support of the Motion do not inspire confidence and it evidences the casual manner in which the Revenue prosecutes its appeal before this court - there is no reason to condone the delay of 746 days for setting aside the order dated 10.12.2015 passed by the Prothonotary and Senior Master. The Notice of Motion is dismissed.

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• 2018 (9) TMI 1130
  Recovery of Fraudulent availment of Cenvat credit - Principles of natural justice - Held that:- From the sequence of events, it is evident that the adjudicating authority did not follow the principles of natural justice. The appellant were not given a chance to effectively defend their case by not providing the relied upon statements and the matter was adjudicated ex-parte even as the appellant were making repeated pleas for copies of four statements relied in the show cause notice to be given to them. This plea of the appellant was not dealt by the Commissioner (Appeals), while deciding their appeal. The matter is remanded back to the adjudicating authority with the direction that the copies of relied upon statements which have been repeatedly requested by the appellant should first be provided to the appellant and thereafter the matter should be adjudicated afresh by giving a fair opportunity to appellant to defend their case - appeal allowed by way of remand.

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• 2018 (9) TMI 1129
  SSI Exemption - use of Brand name of others - brand name “BASANT-BI” - N/N. 8/2003 dated 01.03.2003 - Held that:- The issue related to trade mark or brand name ‘Basant’ is already decided by this Tribunal in the case of Commissioner of Central Excise & Service Tax-Ludhiana vs. M/s Basant Presses (India) [2017 (6) TMI 805 - CESTAT CHANDIGARH] wherein this Tribunal has held that ‘Basant’ trade mark was being used by M/s Basant Mechanical Works, Ludhiana and the same even if used by M/s Basant Presses (India), they were eligible for SSI exemption - The appellant was eligible to avail benefit of exemption under Notification No. 8/2003 dated 01.03.2003 which is also for availing the benefit of SSI exemption - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1128
  Recovery of duty - goods which were procured under the CT-I Certificate without payment of duty from the manufacture for the purpose of export of the same - Held that:- The proceedings indicate that through ARE-I No. 75 dated 04.12.2007, the appellant had exported 2000 Kg of Aluminium Phosphide 56%. Therefore, we hold that the appellant was not entitled to pay Central Excise Duty involved in 2000 Kg of Aluminium Phosphide so procured by the appellant. The appellant was also, therefore, not required to pay interest on the amount of Central Excise Duty involved in said 2000 kg of Aluminium Phosphide - appeal allowed in part.

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• 2018 (9) TMI 1127
  Refund claim - assessment orders not challenged - Section 11A of Central Excise Act - area based exemption availed - N/N. 56/2002-CE dated 14.11.2002 - Held that:- The issue emerges before us is that, as refund claim was sanctioned to the appellant, and without challenging those assessment orders of refund claims sanctioning thereof, can be challenged by way of issuance of show cause notice under Section 11A of the Act or not - the provisions of Section 11A of the Act are not applicable to the facts of this case - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1126
  Refund claim - assessment orders not challenged - Section 11A of Central Excise Act - area based exemption availed - N/N. 56/2002-CE dated 14.11.2002 - Held that:- The issue emerges before us is that, as refund claim was sanctioned to the appellant, and without challenging those assessment orders of refund claims sanctioning thereof, can be challenged by way of issuance of show cause notice under Section 11A of the Act or not - the provisions of Section 11A of the Act are not applicable to the facts of this case - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1125
  Quantum of Cenvat credit admissible in respect of central excise duty paid by an 100% EOU claiming benefit of Sr. No. 2 of N/N. 23/2003-CE dated 31.03.2003 - Held that:- Clause (a) of Sub- Rule 7 of Rule 3 of Cenvat Credit Rules, 2004 wherein there is a specific provision that if the Central Excise Duty is paid in terms of Sr. No. 2 of the Notification No. 23/2003-CE dated 31.03.2003 then the admissible Cenvat credit is 50% of [X multiplies by {(1+BCD/100) multiplied by (CVD/100)}], where BCD and CVD denote ad valorem rates, in per cent, of basic customs duty and additional duty of customs leviable on the inputs and X denotes the assessable value. The authorities at lower level by resorting to said provision have correctly arrived at the conclusion that out of Cenvat credit of ₹ 1,21,28,954/- Cenvat credit of ₹ 69,85,771/- was not admissible to the appellants and also credit of ₹ 7,73,909/- was not admissible to the appellants - appeal dismissed - decided against appellant.

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• 2018 (9) TMI 1124
  CENVAT credit - inputs - services receives from Emerson Electric Company (EEC) on account of payroll processing and related process of Employers PF, Travel Expenses, etc. - denial on account of nexus - Held that:- The credit is to be allowed, as the services is having nexus with manufacturing activity - credit allowed - appeal allowed.

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• 2018 (9) TMI 1123
  Recovery of the duty paid from the CENVAT account with interest - Penalties - Held that:- The period involved is prior to 31.3.2005 on which date the non-obstante clause was introduced in Rule 8, wherein there has been a restriction imposed for paying duty liability using the CENVAT account when there is a delay in payment of duty - appeal dismissed - decided against Revenue.

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• 2018 (9) TMI 1122
  CENVAT Credit - input services - courier services for sending the samples of their products to buyers in foreign countries - Department was of the view that these are export of goods as the courier services is akin to outward transportation of finished goods from factory gate to the customer’s premises and therefore is not eligible for credit. Held that:- The samples have been sent free of cost to the prospective buyers. It cannot be said to be removal of finished goods, which involves sale of excisable goods. It is more akin to sales promotion or marketing or advertisement of the product which has been sent to the prospective foreign buyer. The same would fall within the inclusive part of the definition - credit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 1121
  Condonation of delay in filing appeal - It is the grievance of the appellant that the Commissioner (Appeals) has not condoned the delay of 208 days in filing the appeal - Held that:- As per Section 128 of the Customs Act, 1962, the Commissioner (Appeals) has only powers to condone delay upto 30 days - The Hon’ble Supreme Court in the case of Singh Enterprises [2007 (12) TMI 11 - SUPREME COURT OF INDIA] has categorically held that the Commissioner (Appeals) cannot condone the delay beyond the said permit provided in the statute - application dismissed.

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• 2018 (9) TMI 1120
  CENVAT Credit - Courier service - audit fee - manpower used for TDS entry - insurance service - housekeeping service - consultancy services - book adjustment - penalty. Courier service - whether the appellant is eligible for credit availed on courier service used for sending free samples to the buyers abroad? - Held that:- Although the said service has been shown in the show cause notice and the orders as outward transportation, the appellant has produced invoices as discussed in the adjudication order to show that these service are availed by the appellant for sending the free samples to the buyer abroad. The documents show that the services of DHL courier service were availed by the appellant for sending the samples of medicines to buyers abroad - thus, these are not outward transportation service as alleged in the show cause notice or in the adjudication order - However, the said invoices were not produced before the adjudicating authority - matter kept on remand for verification of invoices. Audit Fee - Held that:- It is seen that the authorities below have allowed credit in respect of service tax paid on charges paid to the auditor. The appellant is contesting the service tax paid on the conveyance charges for the auditor. However, he has not furnished any document to show that the vehicle used for conveyance of the auditor was registered in the name of the service provider - credit denied. Manpower used for TDS entry - Held that:- Since the appellant has to do the work of deducting the tax at source, manpower have been used for such work (data entry), the disallowance of credit is unjustified - credit allowed. Insurance service - Held that:- It is seen that the appellant had availed goods transit insurance as well as employees insurance. Needless to say that the goods transit insurance is directly related to the manufacturing activity and therefore eligible for credit. With regard to employees insurance, which is in the nature of covering the risk of gratuity amount, I am of the view that the same would not fall within the exclusion clause. The manufacturer avails such insurance to cover the financial risk that he would have to face in case of payment of gratuity to employees and therefore is directly related to manufacture - credit on the services allowed. Housekeeping service - Held that:- It is seen that the appellant has not produced the entire invoices regarding this issue - matter requires reconsideration. Consultancy services - Held that:- Since the said services are availed for legal advice / consultancy, I am of the view that the same would be eligible for credit, if the appellant produces the invoices - matter remanded. Also, appellant submitted that under the heading book adjustment, the appellant has actually availed credit of manpower supply agency service availed for calibration service of the machines - Held that:- Since these are directly related to manufacturing activity, the said services would be eligible for credit, if the appellant produces the invoices - matter on remand. Penalties - Held that:- There were doubts as to whether rent-a-cab services are eligible for credit after 1.4.2011. So also there were divergent views as to whether WCS used for repair and renovation is eligible for credit. Being interpretational in nature, penalties on these services set aside. Appeal allowed in part and part matter on remand.

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• 2018 (9) TMI 1119
  CENVAT credit - hiring of cabs (Rent-a-Cab Services) - It appeared to the Department that the said services are not eligible for credit as it falls within the exclusion Clause of the definition of input services. Whether the appellants are eligible for credit on Rent-a-Cab Services after 01.04.2011, whereby the exclusion in clause (B) has been introduced in the definition of input services Held that:- The services of Rent-a-Cab will not qualify as input service and will not be eligible for credit if the motor vehicle is not a capital good for the service provider - It can be seen from the definition of capital goods that when the motor vehicle which is used for transporting of the passengers or for renting of vehicles, is registered in the name of the service provider, the same would be a capital good for the service provider. Thus, if the motor vehicles are capital goods for the service provider who is providing service of Rent-a-Cab / renting of cabs, then the said services would be eligible for credit. The said fact as to whether these vehicles are capital goods for the service provider requires verification. Appeal allowed by way of remand.

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• 2018 (9) TMI 1118
  CENVAT Credit - input services - rent-a-cab services for the period April 2011 to May 2011 - Held that:- For the period for which the services have been consumed is shown as prior to 1.4.2011. However, this fact has to be verified for which, it is fit to remand the matter to the adjudicating authority, who shall consider the issue whether the services have been availed by the appellant prior to 1.4.2011 and also consider the applicability of the decision relied by the ld. counsel for appellant - appeal allowed by way of remand.

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• 2018 (9) TMI 1117
  CENVAT credit - input services - Outdoor Catering Services - whether the Outdoor Catering Services is eligible for credit after the amendment to the definition of ‘input services’ with effect from 01.04.2011? Held that:- The last Clause of definition of Input Service excludes those services provided in relation to Outdoor Catering, etc., when such services are used primarily for personal use or consumption of any employee - also, Larger Bench of the Tribunal, in the case of M/s. Wipro Ltd. [2018 (4) TMI 149 - CESTAT BANGALORE], has considered the very same issue and held that credit is not eligible after 01.04.2011. Appeal dismissed - decided against appellant.

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• 2018 (9) TMI 1116
  Demand of Interest and penalty - wrongly availed credit reversed on being pointed out - whether the interest and penalties confirmed are sustainable or not? Held that:- It is seen that the appellant has not furnished necessary documents to establish that at the time of availing the credit, they had sufficient credit balance. The learned Counsel for appellant has prayed for a further chance to furnish the necessary documents - it is fit to remand the matter to the adjudicating authority so as to provide the appellant a further opportunity to produce the relevant documents - appeal allowed by way of remand.

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• 2018 (9) TMI 1186
  Rectification of Mistake - Held that:- The Tribunal had held that credit is eligible and by typographical error, it has been stated that the disallowance of credit is 'justified' though the impugned order has been set aside on this count. Since being a typographical error, I am of the view that the error needs rectification and the ROM on this count is allowed. The appellant has also brought to the notice of the Tribunal that in respect of credit to the tune of ₹ 30,192/-„ the appellant had reversed voluntarily the credit on 30.3.2013 before utilization. That the Tribunal did not consider this issue and required to set aside the penalties on this count. ROM Application allowed.

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• CST, VAT & Sales Tax

• 2018 (9) TMI 1115
  Rate of tax - bearings - Assessing Officer disallowed the claim of concessional rate of tax on the said turnover and assessed the turnover at 8% on the ground that bearings have specific entry in the I Schedule and they are not eligible to be sold against Form XVII declaration for lower rate of tax at 3% - Held that:- The Revenue has not disputed the factual position, which was taken note of by the Appellate Assistant Commissioner (CT), which has not been adequately dealt with in the order passed by the Tribunal. Thus, on facts, the Appellate Assistant Commissioner (CT) was fully justified in allowing the appeal and considering the factual matrix - the substantial questions of law, which have been raised, do not arise for consideration in this Tax Case. Tax case revision dismissed.

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• 2018 (9) TMI 1114
  Input tax credit - Section 11(3)(a)(vii) of the Gujarat Value Added Tax Act, 2003 - purchase of cement, sand, steel, grit, concrete etc. that are used for manufacture of capital goods - Whether the Tribunal has erred in law and in facts in directing the assessing officer to follow judgment of tribunal, against which tax appeal is pending at the relevant time before High Court without verifying the factual details? Held that:- As the issues involved in the present Appeal are concerned, the same are covered by the decision of this Court, which has been confirmed by the Hon’ble Supreme Court - Appeal dismissed.

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• 2018 (9) TMI 1113
  Appeal dismissed for want of prosecution - Section 46 of the Madhya Pradesh Value Added Tax Act, 2002 - Held that:- Imperative it is for the Appellate Board where on the day fixed for hearing or on any other date to which the hearing may be adjourned, the appellant does not appear in person or through an authorised representative when the appeal is called on for hearing, the Appellate Board may dispose of the appeal on merits after hearing the respondent - Evidently, the Appellate Board was not conferred with the discretion to dismiss the appeal for want of prosecution. The impugned order is set aside - The matter is relegated to the Appellate Board for decision in appeal on merits.

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• 2018 (9) TMI 1112
  Levy of tax at a higher rate - penalty under Section 28 (1) of the Madhya Pradesh Commercial Tax Act, 1994 - invalid C-Forms - Held that:- The transaction should be made with the registered dealer and who has submitted C-Form, but in the case in hand, C-Forms submitted by the purchaser have been found forged, which clearly shows that the purchasers are not registered dealer, therefore, the petitioner is liable to pay tax and penalty as imposed by the Competent Authority and the same has been affirmed by the Appellate Board, therefore, order dated 24.09.2016 passed by the Appellate Board is just and legal. Penalty - Held that:- Mere failure to carry the prescribed declaration form duly filled in is liable for penalty as per provisions of Section 78 (5) of the RST Act, and there is no need to prove mens rea on the part of the assessee - penalty upheld. Appeal dismissed - decided against appellant.

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• 2018 (9) TMI 1111
  Constitutional validity of Madhya Pradesh Value Added Tax Amendment (Validation) Act, 2017 - Madhya Pradesh VAT Act, 2002 - Validation clause. Held that:- The object and reason to bring the said Validation Act is that there is belief that in case of manufacture of taxable as well as tax free goods proportionate Input Tax Rebate on inputs is permissible, especially in view of specific provisions of admissibility of full amount of Input Tax Rebate in case of taxable goods and of the amount which is in excess of 4% in case of tax free goods, proportionate Input Tax Rebate was being allowed since beginning i.e. from 1st April, 2006 - Since there was a need of explaining the VAT Act regarding the Input Tax Rebate on the entire raw material, whereas by-products are both taxable and nontaxable, therefore, using the powers conferred under the Constitution, the amending notification has been issued providing explanation for Input Tax Rebate which shall be computed after apportioning the Input Tax in proportion to the value of Schedule-I and Schedule-II goods so manufactured. It is well settled law that validating act cannot validate and effect if it simply deem legal consequences, without amending law from which the said legal consequence could follow - As per Validation Act, it is clear that by a competent legislative provision, the substratum of foundation of a judgment has been removed with retrospectively, the said exercise is a valid legislative exercise and it does not suffer from any invalidity. Petition dismissed.

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• 2018 (9) TMI 1110
  Validity of recovery order - garnishee order - Held that:- Since the petitioner has not deposited the admitted payable tax amount, the respondents have rightly issued the notice dated 7.10.2016 under Section 24(5)(a) of the VAT Act, 2002. Inspite of notice, the petitioner chooses not to pay the admitted tax liabilities and, therefore, the respondents have initiated the special mode of recovery by issuing the garnishee order dated 26.10.2016, which is an independent action under Section 28(1) of the M. P. Value Added Tax Act, 2002. Petition not maintainable.

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• 2018 (9) TMI 1109
  Jurisdiction - Competency of the State and its functionaries to impose Commercial Tax/ Value Added Tax on Indian Made Foreign Liquor / Rectified Spirit - Held that:- Since the present batch of writ petitions relates to assessment year 2011-12 & 2012-13, they are allowed in the same terms in GWALIOR ALCOBREW PVT. LTD. (FORMERLY GWALIOR DISTILLERS LTD.) RAIRU FARM AGRAM MUMBAI ROAD GWALIOR VERSUS THE STATE OF MADHYA PRADESH [2016 (9) TMI 355 - MADHYA PRADESH HIGH COURT] and UNITED SPIRITS LIMITED [2016 (10) TMI 208 - MADHYA PRADESH HIGH COURT]. The impugned action in the form of assessment order, order passed by the Revisional Authority, Appellate Authority or the show cause notice and proceedings initiated thereon are quashed - Petition allowed.

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