I-T - If AO's order is based on wrong application of Accounting Standard to financial statements of assessee, it is a fit case for invocation of powers u/s 263: ITAT

ST - No respite for State Bank of India - Penalty of Rs. 91 lakhs upheld: CESTAT

Gati Ltd Vs ACIT

Whether if the AO's order is based on wrong application of Accounting Standard to financial statements of the assessee, it is a fit case for invocation of powers u/s 263 - YES: ITAT

- Assessee's appeal dismissed: HYDERABAD ITAT

2019-TIOL-486-ITAT-DEL

Suresh Dutt Malhotra Vs ACIT

Whether AO is bound to mechanically follow the conclusion in assessment order in order to levy penalty for submission of inaccurate particulars of income - NO: ITAT

Whether if assessment and penalty proceeding are exclusive of each other, findings in the assessment proceedings would operate as res judicata in penalty proceedings - NO: ITAT

- Assessee's Appeal Allowed: DELHI ITAT

DCIT Vs Albasta Wholesale Services Ltd

Whether when the AO in orders passed for an earlier AY acknowledges the commencement of business operations, then the AO cannot do a volte face and question the date of commencement of such operations in current assessment - YES: ITAT

Whether when money is advanced by the assessee to its subsidiary on ground of commercial expediency, then it is a business expenditure - YES: ITAT.

- Revenue's appeal dismissed: DELHI ITAT

Key Components Pvt Ltd Vs ITO

Whether when there is no independent application of mind by the AO to the report of the Investigation Wing such report can be the basis for reasons to believe that income chargeable to tax has escaped assessment - NO : ITAT

- Assessee's appeal allowed: DELHI ITAT

2019-TIOL-483-ITAT-DEL

Process Cum Products Development Centre Vs Addl.CIT

Whether the term 'education' u/s 2(15) includes systematic instruction, training and skill development provided for manufacture of sports goods & hence eligible for exemption u/s 10(23C)(iiib) being for no-profit motive- YES: ITAT

Whether an assessee should be considered as a 'training institute' even though it receives income from production of equipment also, if such amount is finally used for training purposes- YES: ITAT

- Assessee's appeal allowed: DELHI ITAT

Diwali Capital And Finance Pvt Ltd Vs DCIT

Whether when the genuineness of the source of cash credit is established from the documents furnished by the assessee, addition on account of unexplained cash credit on merit is sustainable - NO: ITAT

Whether when the company master data discloses the credibility of an investing company to the satisfaction of the Revenue, addition on account of unexplained cash credit received from such company is justified - NO: ITAT

- Assessee's Appeal Allowed: MUMBAI ITAT

Super Tech Industries Vs ITO

Whether gross profit already shown & taxed must be reduced for the purpose of levying tax on gross profits made on account of bogus purchases so as to avoid double jeopardy to the assessee - YES: ITAT

- Assessee's appeal partly allowed: MUMBAI ITAT

Singh And Singh Trading Co Vs ITO

Whether failure of the assessee to explain expenditures shown in the return during the hearing of penalty proceedings, is sure shot recipe for levy of penalty u/s 271(1)(c) - YES: ITAT

Whether when the assessee seeks to admit additional evidence u/r 46A during the penalty proceedings, it could be only admitted once the reason for non-furnishing of evidence is duly considered by the CIT(A) - YES: ITAT

- Assessee's Appeal Dismissed: AMRITSAR ITAT

SERVICE TAX

2019-TIOL-567-CESTAT-MUM + Case Story

State Bank of India Vs CST

ST - Banking and Other Financial Services - Short payment of tax - When demand is made as per proviso to section 73(1) of the FA, 1994, penalty u/s 78 is mandatory - Penalty of Rs.91 lakhs on SBI upheld - Appeal dismissed: CESTAT [para 4.2, 4.6, 5.1]

- Appeal dismissed : MUMBAI CESTAT

2019-TIOL-560-CESTAT-HYD

ST - The assessee is engaged in providing services to leading telecom operators - Their branch office in Secunderabad is registered separately as an entity under service tax and so is their corporate office at Gurgaon - The SCN alleged that their corporate office has erred in transferring their input service credit as it should not have, at any point of time, exceeded 20% of output service tax liability of the company - There is nothing in the allegations that show that the assessee registered as service tax payer in their Secunderabad office had taken any credit wrongly - They have not rendered any exempted services and were therefore, not required to reverse any CENVAT credit - There is also nothing on record to show that they have availed CENVAT credit in excess of 20% of service tax paid by them in their office - Although, the assessee and their corporate office are part of same legal entity, it is inconceivable that their branch office in Secunderabad who have received credit through ISD invoices from their corporate office has full knowledge of how the credit was availed by their corporate office and how it was transferred to their various branch offices across the country - As far as assessee is concerned, they have legitimately taken credit on the basis of ISD invoices which they received from their own corporate office - No ground found to hold that assessee has not discharged his responsibility under Rule 9 regarding the admissibility of credit to them - The demand, interest and penalties are therefore, not sustainable: CESTAT

- Appeal allowed: HYDERABAD CESTAT

2019-TIOL-559-CESTAT-KOL

ST - The department has made an audit and observed that the Bongaingaon Refinery and Petro Chemicals Ltd. (BRPL) was receiving crude through Haldia Barauni Pipe Line (HBCPL) for which terminating facility of Barauni Refinery was used for storage and onward dispatch to BRPL and Barauni Refinery was recovering terminal charges shown as miscellaneous income and recovery of maintenance charges in their books of accounts - It has been the contention of department that warehousing and storage services were being provided by assessee for M/s HBCPL and the charges recovered by them for providing such facility were legally leviable to service tax which the assessee have failed to pay to department and therefore two SCNs came to be issued to assessee - The entire operation of transportation of crude from Haldia port to BRPL is covered by a single contract - The terminal facilities are only intermediate operation of transportation of goods through pipeline - Since, the requisite amount of service tax has already been paid on service of transportation through pipeline provided by respective parties, the terminal facilities being the integral part of entire pipeline facilitating the transportation of liquid crude, it will not be legally correct to consider the terminal facilities as independent facilities for which no real transaction of service charges have actually taken place and therefore demanding a service tax on the notional value taken by assessee only for the purpose of accounting of cost of different units working under assessee, will be not in the interest of service tax law - Since, service tax has already been paid on entire amounts which have been charged for transportation of crude through pipeline, charging service tax separately for the terminal facilities is legally not sustainable - Impugned order is set aside: CESTAT

- Appeals allowed: KOLKATA CESTAT

2019-TIOL-558-CESTAT-DEL

ST - The issue involved is as to whether assessee is entitled or not for Cenvat Credit availed on insurance deposits on the ground that insurance of deposit is not an input service under Rule 2(l) of CCR, 2004, for them - The Adjudicating Authority accordingly held that they are not entitled to avail and utilise Cenvat Credit - The issue is no more res integra in view of the judgments of coordinate bench of Tribunal on the same issue - The Revenue has no force in their argument since no banker will prefer to take risk against the financial services provided by not taking insurance - Moreover same is mandatory in terms of DICGE - Accordingly, they have taken the insurance cover which will definitely form the part of input service for the output service being rendered by them - Impugned order is set aside: CESTAT

- Appeals allowed: DELHI CESTAT

CENTRAL EXCISE

2019-TIOL-557-CESTAT-MAD

CX - The appellant-company is engaged in the sale of Cast Iron Spun Pipes & Ductile Iron Fittings - During the relevant period, it availed input credit on BAS, in respect of service tax charged by its commission agents for sales promotion of the appellant's products, which included procuring orders for the assessee - During the relevant period, SCNs were served, proposing to deny credit on such input service on grounds that it was not covered under the scope of Rs 2(l) of CCR 2004 - It also proposed penalty u/r 15(1) of CCR 2004 - On adjudication, the O-i-O allowed credit on other services, but disallowed credit in respect of Courier Service and Business Auxiliary Service (Commission Agent) - Hence demands were raised for recovering credit availed on these services, with interest and penalty.

Held: From a perusal of CBEC Circular No. 943/4/2011-CX dated 29.04.2011 it is clear that the credit is admissible on 'services of sale' of dutiable goods on commission basis - The commission is payable only when the 'services of sale' of the dutiable goods are made through another person and not by self - This circular clarifies that credit on 'services of sale' is not sale per se - This Circular is clarificatory in nature & is also retrospective in nature since no substantive changes are introduced - Considering the contract with the broker to whom the commission is paid, it is seen that the agent is not a sole agent of the appellant - The term of brokerage is also fixed - Hence the activities of the commission agent/broker fall under 'services of sale', going by their responsibilities such as labor, promotion & settlement of disputes, collection of dues & inspection notes - Hence the orders denying credit are not sustainable: CESTAT (Para 2.1,2.3,7.2,7.3)

- Assessee's appeals allowed: CHENNAI CESTAT

2019-TIOL-556-CESTAT-ALL

CX - The dispute relates to classification of product namely Hajmola Candy - Initially the assessee claimed classification of Hajmola Candy under chapter 30 of CETA, 1985 and same has attained finality by order of Tribunal dated 25.03.1994 holding that Hajmola Candy contains 25% active ingredients and 75% sugar merits classification under chapter heading 3003.30 as Ayurvedic Medicine Vide SCN in respect of assessee's Baddi Unit, Revenue sought to re-classify the said product under chapter heading 2108.90 as miscellaneous edible preparations - Similar issue came up before High Court of Bombay in case of Eco Valley Farms & Foods Ltd. - 2013-TIOL-03-HC-MUM-CX - In view of said decision of High Court of Bombay it is held that as Revenue themselves has accepted the merit classification under chapter heading 1704.90 as sugar confectionary, in that circumstances, the SCN cannot be issued for earlier period and the SCN can be issued for prospective period - The classification as approved by Commissioner (A) vide its order dated 16.01.2003 has attained finality and not been challenged, in that circumstances, the SCN is not sustainable: CESTAT

- Appeal allowed: ALLAHABAD CESTAT

2019-TIOL-555-CESTAT-ALL

CX - The issue involved is whether Service Tax paid on various Input Services used for 'Maintenance of Residential Colony' which is Industrial Township is admissible to assessee as Cenvat Credit when assessee is manufacturing aluminium - Both sides have agreed that the issue is no more res integra and decided by this Tribunal for period covering from November, 2009 to March, 2010 through Final Order dated 27.12.2018 which was passed on the basis of another Final Order dated 03.04.2017 - The period involved in the present dispute is from March, 2009 to October, 2009 - Relying on the said Final Order dated 03.04.2017 this Tribunal has held that assessee was entitled for Cenvat Credit of Service Tax paid on Input Services which have gone into Maintenance of Residential Colony which is attached to the manufacturing unit - In these terms, impugned order is set aside: CESTAT

- Appeal allowed: ALLAHABAD CESTAT

CUSTOMS

2019-TIOL-554-CESTAT-KOL

GSP Shipping And Logistics Agency Vs CC

Cus - The proceedings against assessee has emanated from investigation undertaken by DRI into imports made by M/s M.A.Traders as well as M/s Z.S.Tradecom Pvt. Ltd. - The Commissioner at the time of adjudication has recorded the fact that assessee did not have any involvement in said import made by M/s Z.S.Tradecom Pvt. Ltd. - As such, alleged violations in respect of various Regulations under CBLR, 2013, are required to be examined with reference to the import made by M/s M.A.Traders - The proprietor of M/s M.A.Traders is Mr. Maswood Ahmed, but Mr.Ahmed has admitted that he had not authorized any one to import goods in the name of his firm - But the investigation conducted by DRI revealed that Mr.Abid Ali has claimed to be the authorized signatory of M/s M.A.Traders and has signed the documents and handed over to the assessee for filing Bills of Entry for these four consignments - The main allegation against assessee is that they have failed to comply with requirement of KYC and obtain authorization from the importer - There are discrepancies between the statements given by Mr. Abid Ali as well as Mr. Maswood Ahmed - The assessee has sought cross-examination of both the witnesses - Though one of the witnesses is said to have appeared on 12.03.2018, no personal hearing took place on that date - Since cross-examination of two witnesses is claimed to be significant to defence for assessee, the matter needs to be remanded to adjudicating authority to pass denovo orders after extending an opportunity for cross-examination of Mr. Abid Ali as well as Mr. Maswood Ahmed - The impugned order is set aside and the matter is remanded for passing denovo orders after granting cross examination - Since the Customs Broker Licence of assessee stands revoked as on date, the Commissioner is directed to complete denovo proceedings to pass orders expeditiously, in any case within a period of one month from the date of receipt of this order: CESTAT

- Matter remanded: KOLKATA CESTAT

2019-TIOL-553-CESTAT-HYD

Cus - Appellant imported "Gas Manifold System" through Inland Container Depot at Hyderabad - they also imported ‘accessories' to "Gas Manifold System" through Air Cargo Complex, Hyderabad - benefit of notification 21/2002-Cus was denied in respect of both imports - in appeal, Commissioner(A) held that they were eligible for concessional rate of duty as per notf. 21/2002-CUS (S.No.362) in respect of "Gas Manifold System", however, he disallowed the benefit of this notification to the ‘accessories' on the ground that the accessories imported were without the main equipment and further that the suppliers invoice specifies each item of the accessories under different chapter heading of the CTA, 1975; that in terms of Rule 2(a) of General Rules of Interpretation, imported accessories cannot be classified with the main item imported because they were imported separately - appeal to CESTAT.

Held: It is not in dispute that the appellant is a society registered with the State Government and is covered by the Condition No.77 to S.No.362 of the exemption notification 21/2002-CUS - It is for this reason that the main equipment imported by the appellant viz., gas manifold system has already been given the benefit of exemption notification by the first appellate authority - As regards entitlement of exemption to ‘accessories',a plain reading of the exemption notification does not require the chapter heading of the accessories to be the same as that of main equipment or even the accessories to fall under Chapter 90 -moreover, there is nothing in the notification which requires the accessories or spare parts to be imported along with the main equipment only to claim the benefit of this notification - Such an interpretation of the first appellate authority is not supported by the wording of the exemption notification - assessee is eligible for notification 21/2002-Cus in respect of the ‘accessories' imported - impugned order set aside and appeal allowed: CESTAT [para 8, 9, 10]

- Appeal allowed: HYDERABAD CESTAT