2018-TIOL-NEWS-016, Dated: Thursday, January 18, 2018

2018-TIOL-NEWS-016 | Thursday January 18, 2018

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DIRECT TAX


	2018-TIOL-103-HC-DEL-IT + Story CIT Vs National Internet Exchange Of India Whether subscription fees charged by trade regulatory bodies, for assigning domain name registration, can be brought to tax as 'commercial receipts' - NO: HC - Revenue's appeal dismissed: DELHI HIGH COURT 2018-TIOL-99-HC-KAR-IT Kotarki Constructions Pvt Ltd Vs ACIT Whether mere making of bald averment that assessee is not entitled to deduction u/s 80-IA(4) being engaged in the business of works contract, will not undo the effect of Section 80-IA(4) itself, which specifically gives such deductions to assessee engaged in business of development of infrastructure facilities - YES: HC Whether development work of laying down of even a new National Highway or a road will amount to works contract - NO: HC Whether works contract of development of new roads or additional lanes by widening of existing roads, will be eligible for the benefit of deduction u/s 80-I(4) - YES: HC Whether eligibility to tax benefit u/s 80IA can be denied only to the sub-contractors, who are executing such works contracts on behalf of the principal contractors - YES: HC - Assessee's petition allowed: KARNATAKA HIGH COURT 2018-TIOL-108-ITAT-MUM + Story Idea Cellular Ltd Vs PR CIT Whether when the bid price paid by cellular company for allotment of 3G spectrum band license, has been capitalized as an "Intangible Asset", then the same will be eligible for depreciation u/s 32(1) - YES: ITAT Whether once an asset qualifies to be an "Intangible Asset", depreciation is to be allowed u/s 32, regardless of the period for which it is owned by the assessee - YES: ITAT Whether expenditure on 3G Spectrum fees merely confers upon the cellular company, the right to use a particular frequency/spectrum while providing telecommunication services - YES: ITAT - Assessee's appeal allowed: MUMBAI ITAT 2018-TIOL-107-ITAT-MUM ACIT Vs JB Diamonds Whether disallowance of interest can be made, based on a presumption that a part of interest bearing fund is utilized for interest free loans, where an assessee has mixed funds, including sufficient interest free funds - NO : ITAT - Revenue's Appeal Dismissed: MUMBAI ITAT 2018-TIOL-106-ITAT-MUM ITO Vs Clifton Securities Pvt Ltd Whether purchase of shares and their subsequent sale, both occurring in the same AY, and resultant non-reflection of the shares in the balance sheet for such AY, will warrant addition on account of unexplained investment - NO: ITAT - Revenue's Appeal Dismissed: MUMBAI ITAT 2018-TIOL-105-ITAT-MUM Morgan Stanley India Company Pvt Ltd Vs ACIT Whether when assessee has taken suo-moto action and disallowed an amount more than the receipts of dividend income, no further disallowance u/s 14A r.w Rule 8D is sustainable - YES: ITAT - Assessee's appeal allowed: MUMBAI ITAT 2018-TIOL-104-ITAT-MUM Mumbai International Airport Pvt Ltd Vs DCIT Whether in order to maintain consistency, similar additional grounds accepted in previous AYs can be allowed for consideration in current AY also - YES: ITAT Whether disallowance of provision for leave encasement can be made without examining whether such provision has been made on acturial basis or not - NO: ITAT Whether an airline is entitled for depreciation on payment of upfront fee paid to Airport Authority of India, as it has created capital asset in form of license to develop and modernize Airport - YES: ITAT - Assessee's appeal allowed: MUMBAI ITAT 2018-TIOL-103-ITAT-MUM Shoppers Stop Ltd Vs ACIT Whether disallowance u/s 14A r.w. Rule 8D can be made in a case, where there is no exempt income - NO: ITAT Whether disallowance u/s 36(1)(iii) on account of notional income is justified, when the subsidiary has neither made any entry for interest in its books nor paid any interest till date to its principle company – NO: ITAT - Assessee's appeal allowed: MUMBAI ITAT

INDIRECT TAX

SERVICE TAX SECTION

2018-TIOL-108-HC-DEL-ST + Story

Max Life Insurance Company Ltd Vs CCE & ST

ST - Petitioner cannot challenge one part of the order-in-original before the High Court and another portion before CESTAT - it will not be appropriate and proper for High Court to examine the impugned order in piecemeal – Petitioner permitted to file amendment application before CESTAT and challenge the directions contained in the o-in-o which were initially challenged before High Court - same should be considered by the CESTAT in accordance with law and it would not be dismissed on the ground that the amendments sought are belated or beyond time - clarified that order cannot be treated as precedent since the same is passed in the particular facts of the present case, which are exceptional - Writ petition disposed of: High Court [para 10, 12, 13] - Petition disposed of : DELHI HIGH COURT

2018-TIOL-105-HC-MAD-ST

KSM Earth Movers Vs Deputy.CCE

ST - Being aggrieved by the order in original No.03/2017 (DC-S-Tax) dated 31.01.2017 of the Deputy Commissioner of Central Excise, Erode-II Division, Erode, Writ Petition No.19626 had been filed by the appellant on the following grounds (i) action taken by the respondent is barred by limitation (ii) respondent, a quasi judicial authority, has failed to give reasons (iii) denial of opportunity - the writ Court, vide order dated 16.8.2017, dismissed the writ petition - the writ Court, however, granted permission to the appellant to file an appeal before the appellate authority, if so advised - appellant in writ appeal before High Court.

HELD: Though the appellant sought for reversal of the order made in W.P.No.19626 of 2017 dated 16.8.2017, this Court is not inclined to delve into the merits of the same, for the reason that the Supreme Court, as well as this Court, have consistently held that in matter relating to revenue, when there is an effective and alternative remedy, writ is not ordinarily maintainable- in the case on hand, question as to whether action was taken within the time provided under section 73(1) of the Finance Act or under the extended period and violation of natural justice, also can be urged before the appellate authority - this Court is not inclined to entertain the appeal -order of the writ Court is sustained - appellant is permitted to move the appellate forum - Writ Appeal is dismissed: HIGH COURT [para 3, 4, 5, 6] - Writ Appeal dismissed: MADRAS HIGH COURT

2018-TIOL-242-CESTAT-ALL

Gail Gas Ltd Vs CC, CE & ST

ST - Assessee was purchasing the gas from M/s Gail India Ltd. and were further selling the same to its own customers, through the process of movement of gas through the pipelines - The assessee availed the Cenvat Credit of service tax paid by M/s Gail India Ltd. and utilized the same for payment of their own service tax liability by treating the transportation activity as a taxable activity - Short issue required to be decided is as to whether the assessee is entitled to avail the credit of service tax paid by M/s Gail India Ltd. - In view of the fact that assessee stopped payment of service tax from 2013 onwards on the said activity of transportation, without any objection by Revenue reveals that there was no requirement on the part of assessee to pay the service tax - However, dispute relates to availment of Cenvat Credit of tax paid by M/s Gail India Ltd. - Such credit stands utilized by assessee for payment of service tax on their activity of transportation even though there was no requirement to do so - By paying service tax, assessee has utilized the entire Cenvat Credit and as such it can be concluded that the credit paid by the assessee stands reversed - In such a scenario, confirmation of the same for the second time is neither justified nor warranted - In the majority decision in case of Asian Colour Coated Ispat Ltd. 2014-TIOL-2111-CESTAT-DEL, it is held that the availment of Cenvat Credit availed by assessee cannot be demanded again from him on the ground that the activity undertaken by him does not amount to manufacture, when credit stands utilized by him for payment of duty on their final product - Though the said decision is in the context of Central Excise but the ratio of the same would equally apply to the service tax matters - In view of foregoing, there is no warrant for confirmation of Cenvat Credit availed and already utilized by assessee for payment of service tax on their activity of transportation of gas through pipelines: CESTAT - Appeal allowed: ALLAHABAD CESTAT

2018-TIOL-241-CESTAT-AHM

Bodal Chemicals Ltd Vs CCE

ST - the assessee claimed refund of tax paid on goods exported, under Notfn. No. 41/2007 - Such claim was filed within one year from date of export - However, the Revenue rejected such claim on grounds that it was not filed in the proper proforma, apart from other deficiencies - When the assessee filed revised claims, having cured the deficiencies, the revised claims were rejected as well, on merit and on limitation -

Held - Although the assessee acknowledged that some documents were not submitted with the original claim, the requisite details were subsequently provided, in satisfaction of the conditions specified in the Notfn. - Hence matter remanded for verification of documents substantiating assessee's claims: CESTAT (Para 2,6) - Case Remanded: AHMEDABAD CESTAT

CENTRAL EXCISE SECTION

2018-TIOL-247-CESTAT-MUM + Story

PRS Permacel Pvt Ltd Vs CCE

CX - Medical Insurance Service, whether Input Service – Rule 2(l) of CCR, 2004 - There are legal requirements relating to providing insurance cover to employees, however, there are no legal requirements to provide such cover to family members - CENVAT credit is, therefore, admissible to the extent the insurance cover relates to employees for whom it is mandatory to provide such cover - matter remanded to original authority to examine the facts and allow credit to the extent the same relates to the statutory mandatory cover required to be provided: CESTAT [para 4] - Matter remanded: MUMBAI CESTAT

2018-TIOL-246-CESTAT-BANG

Lamina International Vs CCE & ST

CX - the assessee company had filed four claims for refund of excise duty paid - The Revenue passed an adjudication order rejecting the refund claims - Such order was overturned by the Commr.(A), who allowed the assessee's appeal - After several rounds of litigation, the refund claims were allowed - But then the Revenue issued a letter to the assessee seeking recovery of a separate amount - Again after much litigation, the High Court directed the assessee to deposit such amount, which the assessee then remitted - Later, the Revenue raised demand for interest which also was remitted by the assessee - Subsequently, the High Court settled the issue in favor of the assessee, pursuant to which, the assessee sought refund of such duty paid - The assessee also claimed refund of the interest paid - Though the Revenue granted refund of the principal amount, the assessee's claim for refund of interest was denied -

Held - Considering the Apex Court's decision in Ranbaxy Laboratories Ltd., the assessee held to be eligible for refund of interest paid on the principal amount - Moreover, the Commr.(A) held also held that appeal was not maintainable against a letter sent by the jurisdictional Commr., as the same was not of the nature of an adjucating order - Such findings are incorrect, considering the Karnataka High Court's decision in Chief Commissioner Central Excise, LTU vs. TNT Pvt. Ltd. - Hence Revenue directed to refund amount of interest: CESTAT (Para 4,6,9,10,11,12) - Appeal Allowed: BANGALORE CESTAT

2018-TIOL-245-CESTAT-DEL

Force Motors Ltd Vs CCE & ST

CX - Assessee engaged in manufacture of motor vehicle and parts thereof and availing credit of duty paid on various inputs in terms of Cenvat Credit Rules, 2004 - The dispute is with reference to liability of assessee to reverse the credit on inputs which, the Revenue claimed, has been cleared by assessee without use in the manufacturing process and shown in their accounts as "written off" - Revenue initiated proceedings against assessee for recovery of the credit availed on these inputs, the value of which was shown as "written off" in their books of accounts - Various show cause notices were issued covering the period April, 2000 to Jan. 2015 - Identical issue for a different period has come up before the Tribunal in assessee's own case 2017-TIOL-2487-CESTAT-DEL in favour of assessee - By following the said decision for same assessee for the different period, no justification found for denial of credit - Accordingly, the impugned order is set aside: CESTAT - Appeals allowed: DELHI CESTAT

2018-TIOL-244-CESTAT-DEL

Jindal Steel And Power Ltd Vs CCE

CX - the assessee-company manufactures sponge iron, pig iron, steel bloom, slab, round, steel beam etc. - The assessee also has a captive mine from where coal is mined - The Revenue sought to levy Clean Energy Cess - The present issue revolves around date of application - The assessee claimed that only the quantum of final product would attract cess, after processing of the freshly-extracted coal -

Held - Cess was payable on the specified goods when removed from the mines - Hence, Cess is to be paid on the quantity of coal raised from the mine, w.e.f. July 1, 2010 - Hence assessee's claims rejected - Other issues raised to be decided afresh: CESTAT (Para 2,3,5,6,7) - Appeal Partly Allowed: DELHI CESTAT

2018-TIOL-243-CESTAT-DEL

Sika India Pvt Ltd Vs CCE

CX - Assessee engaged in manufacture of various construction chemicals and discharging Duty on such goods in terms of Section 4 of CEA, 1944 - The goods manufactured by assessee were classified by them under CETH 3816 as miscellaneous chemicals while the department was of the view that classification under 3816 was incorrect and proceeded to reclassify the goods under CETH 3214 - After considering the ingredients and the possible use of goods manufactured, Tribunal views that most of these products are not of a type used for surfacing preparations for walls ceilings - They also do not find use in activity of painting - Thus rules out the classification under chapter 3214 - Silica sand is used in many of products manufactured - After referring to Chemical Technology Encyclopedia; it is found that silica is commonly used as a raw material for making refractory coatings - Refractory cement, mortar and concretes are classifiable under CETH 3816 - However similar goods which have non-refractory applications are found under CETH 3824 - The assessee, before lower Authorities has agitated alternation classification under 3824 for their products - Such claim has been dealt with and denied only in respect of two or three products - In respect of the other products this alternate claim has not been discussed at all.

In O-I-A, Commissioner (A) in respect of a different unit of assessee classified some of products under 3824 and a few under 3214 - After careful consideration of record of the case and submissions, matter is remanded to Commissioner with a direction to carefully examine the alternate claim of assessee for classification under CETH 3824 in respect of all the goods manufactured by assessee: CESTAT - Matter remanded: DELHI CESTAT

CUSTOMS SECTION

2018-TIOL-240-CESTAT-HYD

CC Vs JSW Steel Ltd

Cus - the assessee-company imported coal & claimed exemption from Customs duty under Notfn. No. 21/2002 - Subsequently, upon being directed, the assessee deposited an amount in protest - The assessee filed a refund claim, which the Adjudicating Authority dismissed as being premature - However, the Commr.(A) allowed the refund -

Held - The Commr.(A) held that on the date of filing refund, there was no duty liability assessed - Thus the refund claim had to be allowed & subsequent SCN & duty demand could not validate illegal recovery made during the investigation - Considered relevant findings of the Commr.(A) - Also considered findings of the Karnataka High Court in M/s Naresh Kumar & Company Vs. Union of India - Hence the O-i-A in dispute merits being upheld: CESTAT (Para 4,6) - Appeal Dismissed: HYDERABAD CESTAT

2018-TIOL-239-CESTAT-DEL

New Globe Logistics Pvt Ltd Vs CC

Cus - On a specific intelligence that a consignment consigned to M/s. ABB Ltd, was lying unclaimed in Air Cargo Complex, Officers of SIIB, Import & General Commissionerate, New Delhi marked a preventive check on it - The Consignment were shifted to the disposal unit - Since the memory cards were lying unclaimed for a considerable period, same were seized on the reasonable belief that the same were liable for confiscation - On the basis of investigation, Department preceded for confiscation of goods and for imposition of penalties on various persons, including assessee - It is an admitted fact on record that consignment in question were lying unclaimed with Customs Department and that nobody came forward to clear the goods from the customs Custody - Since Sh. Loveleen Sawhney has not filed any documents in respect of clearance of imported consignments - Thus, he cannot be termed as ‘importer’ under Section 2(26) of Customs Act, 1962 - Further, Department has not adduced any concrete evidence that assessee have active participation or role in illegal importation of subject goods in question - Thus, assessee cannot be exposed to penal consequences provided in Section 112(a) of Customs Act - Therefore, no merits found in impugned orders, so far as imposition of penalties against the assessees are concerned: CESTAT - Appeals allowed: DELHI CESTAT

MISC CASE

2018-TIOL-107-HC-DEL-MISC

Yogesh Mittal Vs Enforcement Directorate

Code of Criminal Procedure - the applicant was arrested for offences under the PMLA - He was then remanded to judicial custody from time to time - The charge sheet was required to be filed within 60 days of arrest of the applicant - The supplementary prosecution complaint was filed before the Special Court, two days before the expiry of such period - Before the same was filed, the applicant filed an application for bail - The same was dismissed by the High Court - Later, the applicant filed an SLP against such dismissal, which was accepted - He also filed a writ challenging constitutional validity of Section 45 of PMLA, which imposed two additional conditions for granting bail for offence punishable with imprisonment exceeding three years - The Apex Court found such provision with its two conditions, to be unconstitutional & and remanded the matter back to the respective Courts for hearing bail applications on merits without applying the two conditions - In light of the same, the applicant sought a clarification w.r.t. his bail application - The Apex Court remanded the same to the High Court - Hence the issues which arise are whether cognizance would require to be taken again on filing of a supplementary complaint, and whether the order of the Trial Court, dtated August 2, 2017, would amount to taking cognizance - Thereupon, whether the custody of the petitioner after August 11, 2017 was illegal, whereupon the applicant could seek bail as a right.

Held - Considering various precedents, cognizance is taken of the offence and not the offender - Further, cognizance of an offence once taken, cannot be taken again for the second time - Since cognizance is already taken of the offence & not of the offender, and where no new offence is made out from the additional material collected which supports an earlier offence, no further cognizance is required to be taken - Since in the present supplementary complaint no new offence was found, and it was only additional evidence in support of the offence already filed in the main complaint, the cognizance was not required to be taken again - Thereby, the order dated August 2, 2017 passed by the Special Court tagging the supplementary prosecution complaint with the main complaint is not illegal - Moreover, the applicant filed the present bail application, which came up before this Court on June 15, 2017 - During pendency of the bail application, the applicant sought permission to file additional ground for bail, and since no cognizance had been taken, his custody was illegal - Such application was allowed on August 11, 2017 - Another application was filed, heard on August 25, 2017 claiming that no valid remand order, had been passed on August 11, 2017 - Further, the remand, if any was beyond 15 days - Hence the custody of the applicant was illegal & the additional grounds were also allowed on August 25, 2017 - This development occurred before the custody could be legalized on August 31, 2017 - Thereby, even the bail application was heard on August 29, 2017, which is before the custody of the applicant became legal - Hence the date of application, the date of return and the date of hearing were all at the time when the custody of the applicant was illegal - Hence the applicant is entitled to be released on bail on this count itself - Applicant directed to be released on furnishing of security: HC (Para 1-4,15,16.6,17.2,18.1,19.6,21) - Bail Application Allowed : DELHI HIGH COURT

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