ORDERS

Order No 135

CBEC issues transfer order of 10 IRS officers

Order No 137

CBEC amends Chain of Nomination for certain Pr Chief Commissioners & Chief Commissioners

CASE LAWS

2017-TIOL-1494-HC-MUM-IT

CIT Vs BAJAJ ALLIANZE LIFE INSURANCE COMPANY LTD : BOMBAY HIGH COURT(Dated: August 1, 2017)

Income tax - Section 194J

Keywords - SMS services - imparting training to technical team

The Revenue preferred the present appeal challenging the order, whereby the ITAT had held that the provisions of Section 194J was not applicable in respect of the payments made to M/s. Valuefirst Messaging Pvt. Ltd. for providing SMS services as well as technical support services, more particularly, when the service agreement between the assessee and M/s. Valuefirst Messaging Pvt. Ltd. provided for imparting training to a technical team designated by the assessee and further M/s. Valuefirst was entrusted with responsibility to ensure that the SMS service works in accordance with the agreed functionality / description and conforms to the stated service level agreement.

On appeal, the HC held that,

Whether payment made for merely assisting the Assessee in sending SMS messages to customers, which involves no technical or professional skills, does not warrant TDS deduction u/s 194J - YES: HC

++ it has been observed by the Tribunal that M/s. Valuefirst Messaging Pvt. Ltd. is merely assisting the assessee in sending SMS messages to its customers. The preamble of the agreement between the assessee and M/s. Valuefirst Messaging Pvt. Ltd. itself describes that M/s. Valuefirst Messaging Pvt. Ltd. is a company engaged in providing mobile messaging solutions to carry data over mobile network using its mobility platform. There is no technical or professional services, which can be said to have been offered by M/s. Valuefirst Messaging Pvt. Ltd. The judgment of the Apex Court in a case of Director of Income Tax (International Taxation) V/s. A.P. Moller Maersk A/S - and another judgment of the Apex Court in a case of Commissioner of Income Tax Vs. Kotak Securities Ltd. - 2016-TIOL-37-SC-IT has considered that such a service and charges paid, as not fees for technical services and no liability of direct tax of such liability arises.

Revenue's appeal dismissed

2017-TIOL-1493-HC-MUM-IT

PREMLATA PURSHOTTAM PALDIWAL Vs CIT : BOMBAY HIGH COURT (Dated: August 1, 2017)

Income tax - compulsory acquisition - enhanced compensation - interest on FD - income from other sources

The Assessee owned an agricultural land in village Borkhedi, Dist. Nagpur, which was compulsorily acquired by Government of India issuing a notification u/s 4 of Land Acquisition Act. The Land Acquisition Officer granted a compensation of Rs.9.33 Lakhs to the appellants on acquisition of the notified land. As the appellant was aggrieved by above compensation, it ensured a Reference was filed u/s 18 of Land Acquisition Act by the Collector to the Civil Judge, who enhanced the compensation to Rs.63.33 Lakhs. Since an appeal was preferred against the judgment of Civil Judge by the State, the assessee was permitted to withdraw the amount of Rs.63.33 Lakhs on her furnishing a bank guarantee of Rs.35 Lakhs and solvent surety for the balance to the satisfaction of the Court. Consequent to complying with the above, the enhanced compensation of Rs.63.33 Lakhs was received by the assessee. The Assessee thereafter deposited the entire amount of Rs.63.33 Lakhs in Fixed Deposit with the Banks and had earned interest of Rs.3.40 Lakhs for the A.Y 1998-99. The AO accordingly sought to tax the interest received on FDs as income from other sources. The assessee resisted the same on the ground that the issue of compensation had not yet been finally decided and the income on account of compensation would accrue to her only on final determination of the compensation by the High Court. The AO did not accept the assessee's claim and brought the interest of Rs.3.40 Lakhs to tax. Identical orders were passed by the AO for the other three assessment years.

On appeal, the CIT(A) allowed the claim of Assessee by holding that the issue with regard to enhanced compensation had not yet been finally determined. Consequently, no income could have been said to have accrued during the subject A.Y as same was subject to final decision of the High Court in the pending appeal. Further, it invoked the principle of restitution to hold that interest on FD accrued would be subject to restitution u/s 144 of Civil Procedure Code. Consequently, it held that interest earned on FD was also subject to the final conclusion of the proceeding in respect of compensation for acquisition of land by the High Court. On further appeal, the Tribunal recorded the fact that the parties were agreed that the original compensation and enhanced compensation received on account of land being acquired was not taxable, for the reason it was agricultural income. However, so far as interest on enhanced compensation u/s 28 of Land Acquisition Act was concerned, it restored the same for reconsideration, to the AO. So far as the appeals for A.Ys 1998-99 to 2001-02 are concerned, it allowed the Revenue's appeal by holding that interest received on fixed deposit with banks was taxable as income under head income from other sources.

On appeal, the HC held that,

Whether when the compensation for compulsory acquisition received at the interim stage is not brought to tax as it only accrues at the final determination, then on the same basis the interest earned on the amount of FD should also follow the principal amount received at interim stage - YES: HC

++ in the present facts, although the interim order allowed the assessee to withdraw the amount of Rs.63.33 lakhs, there was no stipulation in the interim order that in case the appellant loses, she was obliged to return the amount to the State along with interest. Therefore, the facts in the present case are completely distinguishable from the decision of the Delhi High Court in Paragon Construction. The requirement of returning the amount along with interest thereon by a subsequent order of the Court is uncertain. Therefore, such an uncertain event cannot by itself divest the accrual of interest income on the fixed deposit in subject assessment year in the hands of the assessee. Further as pointed out above, there was no obligation in terms of the order allowing the appellant to withdraw the amount of Rs.63.33 lakhs, to deposit the same in fixed deposits and return it along with interest received on fixed deposit to the State in case it loses in the appeal filed by the State before the High Court. Therefore, the interest if awarded at the final hearing would not necessarily be related to the interest earned on the fixed deposit in the absence of any such direction being made in the interim order. Thus the impugned order of the Tribunal has correctly held that the decision of the Delhi High Court in Paragon Construction would have no application in view of the above distinction to the present facts. In fact the above findings would dispose of the substantial question of law in favour of the Revenue. However, we have considered the further submissions made by the assessee challenging the impugned order. The core issue which arises for our consideration is whether interest received on fixed deposit for the subject assessment year has accrued to the assessee for being taxed. The main limb of the assessee's case is that the interest on the fixed deposit should not be brought to tax in the subject assessment year as the source of the deposit on which the interest has been earned is the compensation received by her in land acquisition proceedings. It is a settled issue between the parties that the amounts received at the interim stage in the land acquisition proceedings cannot be brought to tax not only for the reason that it is agricultural income but also for the reason that final determination of the enhanced compensation receivable by the assessee has not yet been finally determined. Assessee's counsel very fairly states that it is not appellant's claim that interest received on the fixed deposits is not taxable because it is agricultural income. Admittedly it is not agricultural income. However, the interest accruing to the assessee on fixed deposit is taxable only on the final determination of the compensation receivable by her in the land acquisition proceedings pending before this Court. This for the reason that it is a continuation of the compensation receivable on acquisition of land and, therefore, it has to be considered as a part of enhanced compensation which is yet to be determined by the Court. Therefore, when the compensation received at the interim stage cannot be brought to tax as it only accrues at the final determination, then on the same basis the interest earned on the amount of fixed deposit should also follow the principal amount of Rs.63.33 lakhs received at interim stage;

Whether once the interim compensation was received by assessee pending the final disposal by Writ Court, it became a part of her wealth to be utilised as she deems fit, and hence the FD of such compensation made with the bank loses its character as 'compensation received at the interim stage from High Court' - YES: HC

Whether 'source of funds' to earn income, can determine the taxability of the income earned on the capital amount which has been invested - NO: HC

Whether Section 144 of Code of Civil Procedure can be triggered, only if the successful party makes an application to the Court for restitution - NO: HC

++ the submission of Assessee's counsel ignores the facts that once the interim compensation has been received by the assessee pending the final disposal by the High Court, she is free to deal with the amount as she deems fit. There is no requirement under the law nor any direction given by the Court while passing an interim order allowing the appellant to withdraw the sum of Rs.63.33 lakhs so as to invest the same in fixed deposits and account for the interest earned thereon. The moment the assessee receives/withdraws the amount of Rs.63.33 lakhs from the Court, it becomes a part of her pool of income/wealth to be utilised/disposed of as she deems fit. Therefore, the fixed deposit which is made in the Bank at the time of deposit loses its character as compensation amount received at the interim stage from the High Court. This link/connection is broken. It is a deposit made in the Bank by assessee in her own capacity as an individual and not as a trustee appointed by the Court to make fixed deposit for the benefit of any accrual or interest arising therefrom for the benefit of successful party in the litigation before it. The source of funds to earn income cannot determine the taxability of the income earned on the capital amount which has been invested. This in the absence of any statutory mandate otherwise. The income earned would be chargeable to tax irrespective of the source of the funds from which the income has been earned. In such circumstances, the interest on the fixed deposit would be chargeable to tax, as sought to be done by the Assessing Officer under the head income from other sources. It was next submitted that in any view of the matter on the principle of the restitution as provided u/s 144 of the Civil Procedure Code, the assessee would be obliged to return the amount of Rs.63.33 lakhs along with all benefits obtained by her to the successful party i.e. the State. Section 144 of the Code of Civil Procedure would only be triggered if the successful party makes an application to the Court for restitution. This application for restitution by the successful party is not a certainty. An application for restitution may or may not be made by the successful party. In any event even if application is made, the benefit which the assessee would have gained out of benefit/income out of the amount of Rs.63.33 lakhs would be net of tax. In those circumstances, the requirement for the appellant to pay to the State would be only the net amount received by her after payment of taxes due. Thus we find no merit in the submission that no tax is payable on the income earned on the fixed deposits as the same could be subject to proceedings of restitution under Section 144 of the Code of Civil Procedure.

Assessee's appeal dismissed

2017-TIOL-1492-HC-MUM-IT

TRUSTEE OF SAURASHTRA TRUST Vs DIT : BOMBAY HIGH COURT (Dated: August 4, 2017)

Income tax Act, 1922 - Section 4(3)(i) - Income tax Act, 1961 - Sections 2(15), 11, 140A(3), 273(2)

Keywords - publishing of news paper - general public utility - penalty - Nil return - bonafide belief

The Assessee is a Trust founded in or about 1941 and it has been publishing newspapers and other periodicals since then. According to the assessee/Trust, it conducts activities for welfare of people of India in general and people from Kutch, Khatiawad and Gujarat, in particular. For educating the masses, it is publishing newspapers and periodicals in Mumbai as well as Gujarat. It is the case of assessee that the income earned by it was exempt from the liability of payment of income tax. From A.Y 1941-42 till A.Y 1961-62 the income of assessee was exempted u/s 4(3)(i) of Income Tax Act, 1922, as publishing of newspapers falls under the definition of General Public Utility. Subsequently, in the I.T.Act, 1961, the term "Charitable Purpose" came to be defined in Section 2(15) which included relief of poor, education, medical relief and the advancement of any other object of general public utility not involving carrying on of activity of profit. Accordingly, by following decision of the Supreme Court in the matter of Sole Trustee, Loka Shikshana Trust vs. CIT - 2002-TIOL-875-SC-IT-LB and Indian Chamber of Commerce vs. CIT, denied exemption to the assessee u/s 11 of I-T Act, 1961, by holding that the assessee/Trust had earned profit from the activity of distribution of newspaper. However, in view of the rulings of Supreme Court in the matter of Surat Art Silk Cloth Manufacturers Association, instead of denying exemption u/s 11 of I-T Act, 1961 for the A.Y 1975-76 to A.Y 1978-79 re-manded the matter to the AO to reexamine the issue. Thereafter, for the A.Y 1983-84, the assessee/Trust filed an estimate of income as Nil. The regular assessment was completed u/s 143(3) assessing the income of Trust at Rs.84,65,270/. The assessment came to be revised under CIT's order u/s 264 and total income came to be determined at Rs.6,26,52,031/-. The AO, on perusal of the estimate of income for the purpose of advance tax submitted by the assessee/Trust, found it to be untrue. Accordingly, the AO imposed penalty of Rs.2,90,409/- by invoking provisions of Section 273(2)(a) of I-T.Act, 1961. Similarly, for the said assessment year, the AO further found that the assessee did not pay the self assessment tax as was payable u/s 140A(1) of I-T.Act, and accordingly he imposed penalty of Rs.26,34,216/-. In June 1985, the learned ITAT denied exemption claimed u/s 11 to the assessee for the A.Y 1975-76 to A.Y 1978-79. The Revenue, as such, was assessing the income earned by the assessee by publishing newspapers and periodicals as taxable income.

Feeling aggrieved by the action of imposition of penalty u/s 273(2)(a) & 140A(3) of I-T.Act, the assessee filed two separate appeals before the CIT(A), who was pleased to hold that there was no liability for payment of self assessment tax on the basis of the return filed by the assessee. It was further held that no penalty had been imposed in the past years u/s 140A(3) and the return filed for earlier years had not been decided by the Tribunal till June 1985. As such, there was no case for holding that the assessee/Trust should have declared the income in its return and should have filed the self assessment tax u/s 140A(1). So far as penalty u/s 273(2)(a) is concerned, the CIT(A) was pleased to hold that the assessee/Trust was relying on the decision of the Apex Court in the matter of Surat Art Silk Cloth Manufacturers Association for contending that its income was exempted from payment of the tax, and therefore, it was not liable to pay any advance tax. There was no malafide intention on the part of the assessee/Trust in filing NIL estimate of the advance tax and no penalty was levied in past A.Ys on the assessee u/s 273(2)(a) of Income Tax Act. On appeal, the ITAT restored penalty imposed on the assessee u/s 273(2)(a) and u/s 140A(3) by observing that the assessee/Trust could not take shelter for refusal to pay tax by taking shelter of the decision of the Apex Court.

On appeal, the HC held that,

Whether ITO can direct an Assessee to pay penalty u/s 140A(1), if he has not submitted any estimate of advance tax by declaring estimated taxable income and by paying advance tax - YES: HC

++ it needs to be noted that the facts involved in the instant reference are not in dispute. Undisputedly, the assessee/Trust came to be formed in the year 1941 and it is involved in activities of publishing newspaper and periodicals. It is undisputed that the assessee/Trust was earning income from its activities of publishing newspapers and periodicals and was claiming its income to be exempt since its formation. At this juncture, it is apposite to note that in the matter of Surat Art Silk Cloth Manufacturers Association, the Apex Court had an occasion to examine the term "Charitable purpose.", and it was held therein that the quantum of its income is not the test to determine whether the Trust is created for a charitable purpose. What is relevant is the object and purpose of creation of the Trust. As per provisions of Section 273(2)(a), a false estimate or failure to pay advance tax makes an assessee liable for penalty. However, such penalty is leviable after hearing the affected party and only when the AO comes to the conclusion that the assessee knew or had reason to believe that the estimate of advance tax submitted by the assessee is untrue. Similarly, Section 140A(1) enjoins an assessee to submit the returns of income after assessing the tax and after paying the tax prior to furnishing the return of income. The return is required to be accompanied by proof of payment of self assessed tax. If the assessee fails to pay such self assessed tax, then after hearing the assessee, the ITO can direct him to pay penalty as prescribed by sub-section (3) of Section 140A(1). In the case in hand, undisputedly, the assessee/Trust has not submitted any estimate of advance tax by declaring estimated taxable income and by paying advance tax as per estimate of the income offered for the tax for the A.Y. Ultimately, in the original assessment it was found that the assessee/Trust had earned income of Rs.84,65,270/- which came to be revised under orders of the CIT(Appeals) u/s 264 to Rs.62,65,203/-. The assessee/Trust claimed that income earned by it by the activity of publishing newspaper and periodicals is an exempt income, it being a Trust meant for "Charitable purpose." However, the record reveals that since beginning the Revenue was treating the income earned by the assessee/Trust as taxable. It is worthwhile to mention that from the A.Y 1962-63 onwards, in view of specific definition of the term "Charitable purpose" as found in Section 2(15) of the I.T.Act, 1961, the income earned by the assessee/Trust came to be assessed for the income tax. By enactment of the Income Tax Act of 1961, the term "Charitable Purpose" came to be defined u/s 2(15) of the said Act. It is, thus, clear that to the knowledge of the assessee / Trust, since last about 21 years, consistently, the Revenue is treating the income earned by the assessee / Trust as taxable income by holding that the income earned by the assessee / Trust by publishing newspaper and periodicals is not the income exempt from payment of the income tax;

Whether 'Nil' estimate of return filed by a Newspaper Trust can be said to be based on 'bonafide belief', if the Revenue is consistently treating the income earned by Trust as taxable income since last 21 yrs by holding that income from publishing newspaper is not exempt from payment of income tax - NO: HC

Whether non-levying penalty in past years, can be claimed as a ground to conclude that said trust was not having any reason to believe that estimate of advance tax payable by it is untrue - NO: HC

++ attempt of the assessee / Trust to show that its income is exempt from the liability of payment of income tax, taken from the year 1962-63 onwards, consistently failed. It is borne from the record that in November 1976 the ITAT decided appeals rejecting the claim of the assessee / Trust for having earned income exempted from the liability of payment of income tax, on the presume that it being a charitable Trust. This claim of the assessee / Trust came to be negated by holding that the income from activities relating to printing, publishing newspapers is not exempted u/s 11 of Income Tax Act, 1961. This makes it explicitly clear that the assessee / Trust was well aware of the fact that even the ITAT had given the verdict that the income earned by the assessee/Trust cannot be exempted from the liability of payment of income tax. In the wake of this factual backdrop, the act of the assessee/Trust in not paying self assessment tax by returning its income and filing "NIL" estimate of the advance tax cannot be said or termed as bonafide act. After decision of the ITAT in November 1976 in respect of A.Y 1962-63 to 1970-71 for subsequent years, the assessee/Trust never paid advance or self assessment tax. It appears that despite this fact the Revenue had not imposed any penalty on it. This resulted in continuation of non-payment of the income tax by the assessee/Trust on the pretext that its income is exempt. The act on the part of the assessee/Trust gives an indication that as the Revenue was not imposing any penalty on its income held to be taxable in past years, a modus was adopted to submit "NIL" estimate of the advance tax and non-payment of the self assessment tax, while filing return of its income. The assessee/Trust ought not to have assumed for itself that it is not liable to pay tax on its income, particularly in the light of past verdicts of the authorities in its own matter. Reversal of order of penalty for the A.Y 1982-83 by the CIT(A) is of no avail for the A.Y 1983-84. So also, non-levying penalty in the past years is no ground to conclude that the assessee/Trust was not having any reason to believe that the estimate of advance tax payable by it is untrue or that it had bonafide belief that income earned by it is an exempt income not liable to be taxed at the hands of the Revenue;

++ it is noted that Section 140A(1) contemplates payment of tax on the basis of any return required to be furnished. Though the assessee/Trust was knowing from its past experience that its income was liable for tax, despite filing the return u/s 139, the same was not accompanied by proof of payment of the tax. Rather, no tax was paid prior to filing of the return of self assessment and only exempt came to be claimed. In view of the fact that the assessee/Trust was earning income and it was made subjected to payment of tax by the Revenue, the act of the assessee/Trust cannot be said to be genuine or bonafide act. It is relevant to note that while confirming the penalty levied on the assessee/Trust u/s 273(2)(a) as well as u/s 140A(3) of Income Tax Act the ITAT has thoroughly examined the matter and concluded that as for last forty years, income of the assessee/Trust was held to be taxable by several decisions rendered by the Tribunal which were not upset till then, there is no scope for holding that the assessee/Trust was prevented by a reasonable cause from filing its estimate of advance tax and in not paying the tax on the basis of self assessment. The ITAT further held that there is no provision in law to conclude that the penalty u/s 140A(3) cannot be imposed if the proceedings were not initiated during the course of original assessment or that the return came to be filed u/s 239. The ITAT further held that even if the claim is for an exemption being a charitable society, the society is bound to file its return u/s 139(4)(a), if its income without taking into account the provisions of Sections 11 and 12 is above the taxable limit. The ITAT held that the assessee/Trust is not covered by the provisions of Section 2(15) and hence the return cannot be considered as one filed u/s 239 of I-T.Act, 1961. We do not find any illegality or perversity in such finding. It cannot be said that the assessee/Trust was under bonafide belief that its activities were nontaxable and therefore there was no reason for it to believe that its estimate of advance tax was untrue or that it was under bonafide and reasonable belief that its income is exempt. The length of period during which the assessee/Trust was denied benefit of exemption does not allow us to hold that the assessee/Trust had reasonable belief to consider its income entitled for exemption, resulting in consequential actions of filing "NIL" estimate of advance tax and non-payment of the self assessment tax. In the light of foregoing, we hold that the ITAT was justified in allowing the appeals of the Revenue and confirming penalty levied on the assessee/Trust u/s 273(2)(a) and u/s 140A(3) of I-T.Act, 1961.

Reference in favour of Revenue

2017-TIOL-1491-HC-MAD-CUS

BRITE GARMENTS Vs Dy. CC (EPCG): MADRAS HIGH COURT (Dated: July 18, 2017)

Cus - The petitioner imported Circular Knitting Machines for manufacturing Unprocessed Knitted Fabric & claimed benefits of exemption from BCD and levy of 10% CVD - Revenue contended that the machines were only (Knitted) Fabric Making Machines & were not required for manufacturing garments because they were incapable of doing so - Hence revenue denied said benefits.

Held - The issue at hand is covered by the precedent of the Apex Court in Commissioner of Customs, Kolkata Vs. Rupa And Co. Ltd. 2004-TIOL-65-SC-CUS , which dealt with identical facts w.r.t. textile machinery imported under EPCG scheme - Here, it was held that for manufacture of garments, it could not be said that only stitching and knitting machines were required - Apart from that the manufacturer may himself manufacture the yarn of fabric or want to test the quality of the fabric or dye/dry the fabric or inspect the defects etc. - Separate machines would be required for all these processes - Hence the term 'capital goods' required for manufacture of textile garments would thus include all machines required for the ultimate manufacture of the garments - Following such precedent, the impugned orders denying benefit of exemption merit being set aside: High Court (Para 2,3,4)

Writ petition allowed

2017-TIOL-1490-HC-MAD-CX

CHENGALRAYAN COOPERATIVE SUGAR MILLS LTD Vs CESTAT : MADRAS HIGH COURT (Dated: June 28, 2017)

CX - the assessee is involved in the manufacture of sugar and molasses - Assessee had stored 4993.930 MTs of molasses in earthen pits and masonry tanks, while the excise authorities had given permission for storage of molasses only in steel tanks - Moreover, assessee's request to store molasses in earthen pits was declined by the excise authorities - Subsequently, duty demand was imposed on the assessee vide an SCN - Although the demand was later dropped by the Adjudicating Authority, revenue's appeal before the Commr.(A) was allowed and the same was upheld by the Tribunal - Whether the storage of molasses in earthen pits amounted to removal, within the meaning of Rule 9 r/w Rule 49 of CER, 1944.

Held - The record shows that the allegation against the assessee is that the storage of molasses was made by the assessee in earthen pits, located within the premises - Clearly, the molasses were not removed outside the precincts of the factory - Moreover, the "premises appurtenant" to the place of production, curing or manufacture could only be premises which are attached or annexed to such premises - The earthen pits, in this case, were not annexed to the place of production or manufacture, i.e., factory premises, as is evident from the record - Therefore, the stage and/or time for payment of duty had not arisen as contemplated under Rule 9 r/w Rule 49 of the 1944 Rules - the assesseee could not have been called upon to pay duty, merely, on account of the fact that the molasses had been stored in earthen pits, which are otherwise located within the factory premises - Hence, Tribunal order merits being set aside: High Court (Para 1-6,11.1-17)

Appeal Allowed

2017-TIOL-1489-HC-MAD-ST

AQUA BASE CONTAINER SERVICES Vs CST : MADRAS HIGH COURT (Dated: July 3, 2017)

ST - Duty demand under the head "Maintenance or Repair service" imposed on the petitioner, vide an O-i-O - The petitioner sought a stay on the O-i-O and also filed an application for condonation of delay - Later, the Commr.(A) noted that the petitioner had already paid some amount of the duty demand, and directed a pre-deposit - Petitioner claimed to have made the pre-deposit but the Commr.(A) concluded that the condition for pre-deposit had not been complied with - Subsequently, the appeal was dismissed for being time barred.

Held - Records show that the pre-deposit was made by the petitioner through banking channels - Hence the Commr.(A) erroneously held that the condition of pre-deposit was not complied with - Now w.r.t. limitation, law permits the Commr.(A) to condone a delay for a further period of 3 months - Here the appeal was filed within limitation - Moreover, the petitioner attributed the delay caused to the misplacing of the papers by the petitioner's counsel, and the consequently late preparation & filing of appeal - There is nothing on record to show that he explanation given by the petitioner is false & the same apparently was a genuine mistake - The law of limitation is not intended to defeat the rights of parties except those who are adopting dilatory tactics or purposely evading the proceedings - Since the delay was condonable and not inordinate, such delay was condoned and Commr.(A) directed to adjudicate and pass fresh order: High Court (Para 4,5,6)

Writ Petition Allowed

2017-TIOL-2793-CESTAT-MUM

MAHARASHTRA SMALL SCALE INDUSTRIES DEVELOPMENT CORPORATION LTD Vs CST : MUMBAI CESTAT (Dated: March 15, 2017)

ST – Appellant had allegedly rendered services of C&F Agents but had not discharged Service Tax liability during the period 16/07/1997 to 31/12/2001 – Before the o-in-o was passed appellant discharged the entire tax liability – AA appropriated the amount paid towards tax and demanded interest and penalty - appellant before CESTAT - Appellant submitting that they have paid interest and seek waiver of penalty on the ground that being a Government of Maharashtra undertaking they could not have had any intention to evade service tax liability. Held: Appellant has pleaded before the lower authorities that there was no intention to evade any tax as they being Government of Maharashtra undertaking - this pleading was not properly appreciated by the adjudicating authority and the only finding is that it is difficult to accept that the appellant was unaware of Central Government legislation and hence there was a deliberate attempt to not to discharge service tax liability to the Government – such reasoning of the adjudicating authority seems to be mis-directed as it is a known fact that service tax liability on the services rendered by the C&F Agents were placed in the hands of the recipient of service by retrospective amendment – it is also a fact that during the relevant period there was confusion as to who has to discharge service tax liability under reverse charge mechanism and the matter was agitated before the highest court – strong force in the contention of the appellant that there is no intention to evade payment of tax as being an undertaking of the Govt. of Maharashtra – fit case for invoking the provisions of s.80 of the FA, 1994 for setting aside the penalties imposed – appeal is allowed to the extent it contests the imposition of penalties by the adjudicating authority: CESTAT [para 8, 9]

Appeal partly allowed

2017-TIOL-2794-CESTAT-MUM

CCE Vs ZENSAR TECHNOLOGIES LTD : MUMBAI CESTAT(Dated: May 30, 2017)

ST - Refund - Rule 5 of CCR, 2004 r/w notification 5/2006-CE(NT) - basis of not inclusion of service value of service provided by the branch offices is that the same was not provided from India - if that is so, then the same is not includible in the total turnover of the respondent for the reason that only turnover which pertains to the activity carried out by the respondent from India will only be taken as total turnover - Revenue cannot apply two yardsticks, that for the purpose of export turnover by the respondent from India and for the purpose of total turnover - Once the revenue itself has admitted that the service provided from the branch office of overseas is not includible in the export turnover, the same principle has to be applied with regard to total turnover - Value of services provided by the branch offices cannot be added in the total turnover - no infirmity in the order of the Commissioner(A) - Revenue's appeals are dismissed: CESTAT [para ]

Appeals dismissed