2018-TIOL-NEWS-190 Part 2, Dated: Monday, August 13, 2018

2018-TIOL-NEWS-190 Part 2 | Monday August 13, 2018

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CASE STORIES


	Cus - CBLR, 2018 - Regulation 15 - Prohibition cannot extend to an entire zone but has to be restricted to that section (or sections) of Customs station: CESTAT I-T - Permission granted by CIT cannot countermand mandatory requirement of seeking permission from ACIT so as to validate notice for re-opening of assessment: HC Drawback - Procurement of inputs duty free against form 'H' is not made a disqualification anywhere under Drawback Rules or Notifications: Revisionary Authority

DIRECT TAX


	2018-TIOL-324-SC-IT CIT Vs UP State Bridge Corporation Ltd The Apex Court took the view that the Special Leave Petition deserves to be dismissed both on the ground of delay and merits. - Revenue's SLP dismissed: SUPREME COURT OF INDIA 2018-TIOL-323-SC-IT-LB CIT Vs Zee Entertainment Enterprises Ltd Delay condoned. Issue notice. Tag with SLP(C) Diary No.19552 of 2018. - Notice issued: SUPREME COURT OF INDIA 2018-TIOL-322-SC-IT PR CIT Vs Bell Granito Ceramics Ltd Having heard the parties, the Apex Court dismissed the SLP. - Revenue's SLP dismissed: SUPREME COURT OF INDIA 2018-TIOL-321-SC-IT Kailash Nath And Associates Vs PR CIT Having heard the parties, the Apex Court dismissed the SLP as withdrawn. - Assessee's SLP dismissed: SUPREME COURT OF INDIA 2018-TIOL-1597-HC-MUM-IT CIT Vs Zee Entertainment Enterprises Ltd Whether payments made to non-executive & independent directors can be treated as salary which casts TDS obligations - NO: HC - Revenue's appeal partly allowed: BOMBAY HIGH COURT 2018-TIOL-1582-HC-MAD-IT CIT Vs A Sundaralingam Whether the Revenue's appeal contesting deletion of addition is sustainable where the tax value involved is lower than the limit prescribed in CBDT Circular No. 21/2015 - NO: HC - Revenue's appeal dismissed : MADRAS HIGH COURT 2018-TIOL-1581-HC-MAD-IT CIT Vs Chennai Central Cooperative Bank Ltd Whether the Revenue can contest grant of exemption as per the provisions of Section 194A(3)(v) where a similar issue stood settled in favor of the assessee - NO: HC - Revenue's appeal dismissed : MADRAS HIGH COURT 2018-TIOL-1282-ITAT-HYD Gayatri Infra Ventures Ltd Vs ACIT Whether the ITAT has power to condone the delay in filing a miscellaneous application u/s 254(2) for rectifying the dismissal of an appeal for non-prosecution of the assessee - NO: ITAT - Assessee's Miscellaneous application dismissed : HYDERABAD ITAT 2018-TIOL-1281-ITAT-MAD GE Power Conversion India Pvt Ltd Vs ACIT Whether matter merits remand where the Tribunal passes an order without recording any finding on a particular issue raised by the assessee - YES: ITAT - Case remanded : CHENNAI ITAT 2018-TIOL-1280-ITAT-DEL Jaypee Powergrid Ltd Vs ITO Whether interest received on FDRs for the period prior to the commencement of business is in the nature of capital receipt and not taxable as income from other sources - YES : ITAT - Assessee's appeal allowed : DELHI ITAT

INDIRECT TAX

SERVICE TAX

2018-TIOL-2500-CESTAT-ALL

Coperion Ideal Pvt Ltd Vs CC, CE & ST

ST - Assessee has entered into an agreement with M/s.Coperion Warner Pfleiderer & Gmbh Co. KG Germany and M/s. Coperion Waeschle Gmbh & Co. KG Germany wherein it provides information to foreign parties required to understand the domestic market condition and for preparing quotes - The foreign parties were engaged in production and supply of various machineries - Coperion Waeschle Gmbh & Co. KG, was engaged in manufacture of bulk material handling systems and components of plastics - Similarly, Coperion Werner Pfleiderer & Gmbh & Co was engaged in manufacture and supply of Twin Screw Compounders LSK, machinery for compounding and pelletising - During audit of assessee's business, department perused the ST-3 return and Balance Sheet of assessee wherein department noticed that the assessee had received commission from foreign parties - The detailed transactions were explained by assessee to the department by way of letters - The issue is decided by Tribunal in favour of assessee in case of Sumitomo Corporation of India Pvt.Ltd. 2017-TIOL-452-CESTAT-DEL - In view of discussions and findings, impugned order set aside: CESTAT

- Appeal allowed : ALLAHABAD CESTAT

2018-TIOL-2499-CESTAT-DEL

BPT Polymers Pvt Ltd Vs CCE

ST - The assessee had been appointed as Handling and Transporting Agent by M/s Oswal Chemical and Fertilizers Ltd. for providing certain services - The assessee also entered into two formal agreements with M/s Oswal - After scrutinizing the agreement between two parties, Revenue formed an opinion that the activities carried out by assessee for M/s Oswal are liable to payment of Service Tax under category of C&F Agent Service - After perusal of both the agreements entered by assessee with M/s Oswal and the activities expected to be carried out by them, it is noted that assessee has not acted as an agent of M/s Oswal - Though they have been entrusted with responsibility of receiving goods at railway siding and storing the same in godown as also loading of same onto the truck, it cannot be said that the assessee has acted as agent of principal least of all as C&F Agent of principal - The assessee cannot be said to have acted as C&F Agent of M/s Oswal - Impugned order is set aside: CESTAT

- Appeal allowed : DELHI CESTAT

CENTRAL EXCISE

2018-TIOL-2498-CESTAT-DEL

Hotel Leela Venture Ltd Vs Commissioner Audit, Central Excise & CGST

CX - Assessee is engaged in providing taxable services of accommodation in hotel for lodging purposes - The Department, during an audit observed that the assessee has availed a total of cenvat credit on annual maintenance of lifts installed in building - It is the case of Department that said service do not fall in category of input service - Though the impugned order has in detail discussed about the definition of Works Contract and the word repair, maintenance and renovation is very much the part thereof, but as has been held by Supreme Court in case Ramala Sahkari Chini Mills Ltd. 2010-TIOL-102-SC-CX that the phrase "and includes" is not intended by legislature to impart a restricted meaning to the definition of inputs - It is an apparent and admitted fact that the assessee is providing output services of accommodation/ lodging from said premises - The use of word repair and maintenance in Works Contract is not applicable to the given circumstances as definition of Works Contract has to be read as a whole and the perusal thereof makes it clear that when the repair, maintenance is the part of a contract where construction is also an activity then that renovation will be covered under definition of Work Contract else it will be very much inclusive part of definition of input - Adjudicating Authorities have formed a very rigid opinion about the definition of input services which has strictly been denied by Apex Court in Chini Mills case - The Apex Court has rather warned the Adjudicating Authorities to be utmost reasonable while interpreting the provisions of Law especially when the provisions are expressly mentioned: CESTAT

- Appeal allowed : DELHI CESTAT

2018-TIOL-2497-CESTAT-ALL

Avadh Rail Infra Ltd Vs Commissioner, GST & Central Excise

CX - The excess amount, which was sought as refund was paid under mistake of law and the said amount does not represent Service Tax in view of Notfn 26/2012-ST wherein it was provided that Service Tax would be applicable only on 25% of consideration - The assessee had paid Service Tax on 100% - Therefore, under Section 66B of FA, 1994, the amount sought as a refund, does not represent Service Tax - The Service Tax paid, was paid under category' of "Reverse Charge Mechanism" - The assessee himself was the service recipient - Therefore, question of passing on incidence on other person, does not arise at all since the assessee was service recipient - Therefore, the finding by Commissioner (A) that the claim of refund was hit by bar of unjust enrichment is not sustainable - In the case of Parijat Construction 2017-TIOL-2170-HC-MUM-ST itwas held that the amount paid as duty by mistake of law is not covered by Section 11B of CEA, 1944, so far as limitation is concerned - In case of K. V. R. Constructions 2010-TIOL-68-HC-KAR-ST it was held that if an amount paid by assessee to Revenue considering Service Tax, it is to be treated as deposit at the hands of Government and over such amount limitation under Section 11B does not apply - Impugned order is not sustainable and assessee is entitled to avail refund along with interest with effect from 26/08/2015: CESTAT

- Appeal allowed : ALLAHABAD CESTAT

2018-TIOL-2496-CESTAT-HYD

Shakti Met Dor Ltd Vs CCE, C & ST

CX- The assessee manufacturers of steel doors with frames - It claimd exemption under Notification No. 10/1997- CE - The Revenue took a view thart benefit of the exemption was not available to the assessee as the subject goods were not eligible for exemption - The eligible goods included scientific and technical instruments, apparatus, equipment (including computers), accessories, parts and consumables, c omputer software, Compact Disc Read Only Memory (CDROM), recorded magnetic tapes, microfilms, microfiches and prototypes - Duty demand was raised denying the benefit of the notification under Section 11A (1) read with Rule 8 of the Central Excise Rules - The demand was confirmed by lower authorities - Hence, the present appeal.

Held: One of the conditions of the notification was that the institute must be registered under DSIR - In respect of description of the goods, in the National Institute of Oceanography case, exemption was allowed on furniture that was ergonomically and specially designed for the purpose of carrying of the research - Likewise, in Blue Star Ltd. case & Godrej Applicances Ltd. case the supply of air conditioners was held to be for research usage - However, in the present case, it cannot be concluded that the doors in question supplied to the research institute were related to research purpose - Therefore, the description of the goods do not match - Hence, the order challenged is upheld but due to assessee's bonafide belief that subject goods are eligible for exemption - The penalty is delted : CESTAT (Para 1, 6, 7)

- Appeal Partly Allowed : HYDERABAD CESTAT

CUSTOMS

INSTRUCTION

cus_instruction12_2018

No safeguard duty on solar cells till final decision by High Court

CASE LAWS

2018-TIOL-1596-HC-MUM-CUS

Novel Impex Vs CC

Cus - Provisional release of goods - Contending inter alia that the request has not been responded and order of CESTAT not implemented, petitioner has sought for a writ of mandamus, directing the respondents herein to implement the orders passed by CESTAT vide its Final Order dated 13.04.2018 - Mandamus cannot be issued to curtail the statutory right of respondents, in preferring an appeal under provisions of Customs Act - But at the same time, considering the lis between parties, provisional release has already been directed to be made, subject to certain conditions - Petitioner has a right to seek for provisional release - Equally respondents have a right to prefer a statutory appeal - As per Section 130 of Customs Act, 1962, six months period is provided for filing a statutory appeal - When provisional release is directed to be made, petitioner should not suffer till the last date of filing of statutory appeal - Respondents are directed to file the statutory appeal within two weeks: HC

- Writ disposed of: MADRAS HIGH COURT

2018-TIOL-1595-HC-MUM-CUS

Opms Clearing And Forwarding Agencies Pvt Ltd Vs CC

Cus - The is a Customs Broker, registered with Madras Customs House and operating under a licence and has been functioning in whole area of Mumbai Customs for the last two years - On 9.4.2018, it tried to access EDI system of Mumbai Customs but was informed that it is suspended - When the statute or law prescribes for a remedy of appeal, it is conceded that it is alternate and equally efficacious - The misconception that an appeal can be filed only if there is an order passed and duly served on parties like the petitioners need not detain the court - It is a misconception, for even inaction or noncompliance with the rules or not passing a specific order of suspension but putting up a one line communication or note of suspension on the website can also be highlighted - That can be made as a ground of challenge and the Appellate Authority's attention could be invited to rules and the procedural matters which would have to be complied with before suspending the licence - The petitioners thus can highlight every possible grievance, including that the manner chosen or adopted contravenes the law - Further, petitioners can highlight the inaction of authorities in not dealing with representation of petitioners promptly - The Tribunal has been consistently entertaining appeals and even against the orders of suspension - It has on several occasions granted relief when it has found a patent illegality or non-adherence to the rule of law - Tribunal is wellequipped to consider cases of even inaction of authorities and its appellate power is wide enough to deal with such issues and grant necessary reliefs - The apprehension of petitioners that there is no order and therefore there is no appeal is thus not wellfounded: HC

- Writ dismissed: BOMBAY HIGH COURT

2018-TIOL-2495-CESTAT-ALL

Mridul Agarwal Vs CC

CUS- The assessees are are engaged in jewellery business - On audit, it was noticed that the foreign origin gold had been illegally imported from Nepal into India - The Revenue took a view that this action of the assessee was in contravention of Section 111 of CA Act & Notification No.9/96, thereby liable to confiscation - The SCN was issued on grounds that assessee is an artisan and as such it is beyond his capacity to own 1.7 KG of gold - Duty demand was raised.

Held: Gold is not a prohibited item and can be imported upon payment of duty - Further, the customs officers have seized the Gold on the suspicion of smuggling, without there being any actual evidence of smuggling - Inaddition, the statement of the other assessee's is not admissible as evidence u/s 138B of the Customs Act which provides that if an authority in any proceedings under the Act wants to rely upon the statement of any person (made during enquiry), such person is required to be examined as witness - Also, if the adjudicating authority finds evidence of the witness admissible, then such witness should be offered for cross examination and only thereafter the evidence is admissible - Therefore, the imposition of penalty is deleted on grounds of non-compliance of section 138B of the Act - Moreover, the other assessee's have denied their connection with the seized goods - Hence, in absence of any corroborative evidence the order challenged is set aside : CESTAT (Para 1, 2, 3, 19, 20, 21)

- Appeal Allowed : ALLAHABAD CESTAT

2018-TIOL-2494-CESTAT-MAD

Ravi Prasad Studios Vs Commissioner of Central Customs

Cus - The importer imported 10 lighting equipment for studios through its CHA - The Revenue took the view that the goods were undervalued & incorrect payments were made to the foreign supplier - Duty demand was raised - The case was adjudged and order-in-original was passed rejecting the declared valuation as well as enhanced - Furthermore, the subject goods were confiscated and penalty imposed u/s 112(a) of the Customs Act, 1962 -

Held: The enhancement stand done by the lower authorities only on the ground of contemporaneous imports, without first rejecting the transaction value - There is no evidence of any type to reflect upon the fact that the excess consideration for the imported goods stand paid by the assessee to the exporter, over and above the invoice value - Therefore, the transaction value cannot be rejected and enhance - Hence, the order challenged is set aside: CESTAT (para 1, 6)

- : CHENNAI CESTAT

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