Bhagavathy Velan Vs DCIT

Whether CBDT Instructions pertaining to litigation policy are binding upon the ITAT or upon the High Court so as to compel such fora or else the litigant, to withdraw a particular appeal - NO: HC

- Assessee's appeal dismissed: MADRAS HIGH COURT

2019-TIOL-1328-HC-MUM-IT

Swastic Safe Deposit And Investments Ltd Vs ACIT

Whether where return of assessee is accepted without scrutiny, the fundamental requirement of income chargeable to tax having escaped assessment must be satisfied - YES: HC

Whether in absence of satisfaction of such fundamental requirement, the AO would lack jurisdiction to reopen a concluded assessment in such case - YES: HC

Whether when sale consideration did not give rise to any taxable income, mere error or oversight in not disclosing such transaction in the return would not give rise to escaped income - YES: HC

- Assessee's petition allowed: BOMBAY HIGH COURT

2019-TIOL-1327-HC-MAD-IT

Karur Vysya Bank Ltd Vs PR CIT

Whether I-T Department can retain the tax paid by the employer towards fringe benefit tax for contribution made by them to pension fund for subsequent A.Y - NO: HC

- Assessee's petition allowed: MADRAS HIGH COURT

2019-TIOL-1193-ITAT-DEL

Whether if no business activity or construction is carried out on a piece of land, it can still be treated as stock in trade merely because it is shown as stock in trade in the books of account - NO: ITAT

- Assessee's appeal allowed : DELHI ITAT

Haryana Auto Agency Vs ITO

Whether deduction claimed on account of insurance fee & registration charges merits being disallowed if the assessee fails to demonstrate genuineness of such expenses - YES: ITAT

- Assessee's appeal dismissed : DELHI ITAT

Khagol Mandal Vs DIT

Whether extension of recognition u/s 80G granted to a trust can be denied, where its activities do not undergo any change in the precedings AYs & where the relevant authority omits to examine relevant evidence proving the charitable nature of the trust's activities - NO ITAT

- Assessee's appeal allowed : MUMBAI ITAT

Hem Labh Developers Vs ACIT

Whether penalty proceedings initated by the AO without stating that the proceeding was for furnishing of inaccurate particulars of income or for concealment of income or for both, is sustainable - NO: ITAT

Whether interest paid on share capital at higher rate if found bonafide, the taxpayer cannot be held liable for furnishing inaccurate particular of income and thus no penalty provision would be attracted - YES: ITAT

- Assessee's appeal partly allowed : MUMBAI ITAT

SERVICE TAX

Varsani Construction Company Vs State Of Gujarat

ST - Petitioner challenges the order passed by the Commissioner of Central Goods and Service Tax, Kutch Commissionerate, Gandhidham-Kutch, confirming service tax demand of Rs.30,32,35,954/-, Rs.16,24,32,578/- and imposing penalties, interest etc. - It was pointed out to the Petitioner that they have an alternative efficacious remedy in the form of a statutory appeal provided under Section 86 of the Finance Act, 1994 before the Appellate Tribunal - Bench is not impressed by the submission of the petitioner that this petition may be entertained without asking the writ applicant to avail the alternative remedy of preferring an appeal before the Appellate Tribunal - Bench is not going into the issue whether the grievance redressed by the writ-applicant as regards non-supply of the documents is genuine or not; that this argument can be canvassed before the Appellate Tribunal - Petition disposed of without expressing any opinion on merits: High Court [para 7, 8]

- Petition disposed of: GUJARAT HIGH COURT

2019-TIOL-1323-HC-MUM-ST

ST - Delay of 102 days in institution of appeal before CESTAT was not condoned and, therefore, appeal to High Court – appellant submits that after receipt of letter dated 16th November 2017 issued by the jurisdictional office informing that their appeal had been rejected by the Commissioner(A) that the Trustees of the appellant searched the office record and found the order-in-appeal dated 13th February 2017; that service of order-in-appeal upon staff of the appellant does not amount to valid service upon the appellant, which is a Charitable Trust; that the office staff failed to bring the order-in-appeal to the notice of the appellant's Trustee, who was alone empowered to take decisions in the matter; that this is a case of a bona fide communication gap and therefore, delay ought to have been condoned.

Held: It cannot be said that there was no communication of the order-in-appeal to the appellant, merely because such order, may not have been personally served upon the Trustees of the appellant - The service of the order-in-appeal at the appellant's registered address, in the facts and circumstances of the present case, constitutes valid communication for the purpose of period of limitation for filing of appeal to operate – nonetheless, the delay in institution of appeal was of only 102 days; the explanation that the order-in-appeal may have been received by some staff member who did not bother to place the same before the Trustees of the appellant can neither be said to be implausible nor does the same smack of any mala fides - The appellant has really not gained anything by instituting the appeal beyond the prescribed period of limitation, therefore, it cannot be said that no 'sufficient cause' was made out to explain the delay of 102 days in institution of appeal - Upon cumulative consideration of all these factors coupled with the fact that the delay was of only 102 days, a case had been made out for condonation of delay - Tribunal was not justified in dismissing the appellant's application for condonation of delay of 102 days in the institution of appeal - parties to appear before the Tribunal on 8th July 2019 in order to enable the Tribunal to fix an appropriate date for disposal of the appeal on merits: High Court [para 8, 9, 11, 14, 15, 16]

- Appeal allowed: BOMBAY HIGH COURT

2019-TIOL-1322-HC-KERALA-ST

ST - Appellant is engaged in the business of providing Commercial or Industrial construction services, construction of residential complex services etc. – Audit stated that there has been a short payment in payment of service tax inasmuch as the appellant had not included the value of cement and steel supplied by the clients free of cost in computing the value of taxable service rendered by it during the period from January, 2008 to March, 2011 – in response to letter from department, appellant paid an amount of Rs.53,48,526/- on different dates during the period between 27.08.2012 and 06.03.2013 – Later, on 23.10.2014, the appellant filed an application dated 14.10.2014 in the prescribed form for refund of the amount of Rs.53,48,526/- on the the ground that as per the decision of the Tribunal - Larger Bench in Bhayana Builders (P) Ltd., the value of materials supplied by service recipient free of cost shall not be taken into consideration in computing the taxable value of services rendered – claim was rejected by the Assistant Commissioner on the ground that it was filed beyond one year from the relevant date stipulated in Section 11B (1) of CEA, 1944 – said order was upheld by Commissioner(A) as well as Tribunal and, therefore, appeal filed before High Court – appellant contending that the amount was paid on account of coercion and threat made by the authorities and the payment was made under protest and it cannot be treated as payment of service tax to attract Section 11B of the Act; that period of limitation has to be computed from the date of judgment of the Supreme Court in . Bhayana Builders (P) Limited - 2018-TIOL-66-SC-ST which has given finality to the issue.

Held: Decision of the Supreme Court in Bhayana Builders (supra) was rendered on 19.02.2018 - The appellant had paid the amount in question as service tax and when the amount was paid, it had the colour of tax, it had the colour of legality; demand for payment of the amount then made was legal, the levy of tax had the colour of validity when it was paid - Only consequent upon interpretation of the provisions in the relevant statute by the Supreme Court in Bhayana Builders (supra), the amount levied had lost the colour of tax, therefore, it cannot be contended by the appellant that the amount paid by him was not towards service tax - There is no basis for the contention raised by the appellant that the amount was paid by the appellant on account of coercion and threat made by the authorities and there is no material produced in support of this contention - levy of service tax from the appellant for the relevant period had attained finality by the time the Supreme Court rendered the decision in Bhayana Builders (supra) - In such circumstances, the appellant cannot take advantage of the decision in Bhayana Builders (supra) to contend that the application for refund filed by it was within the prescribed time - an assessee is not entitled to take advantage of a decision rendered in a case filed by another person to get extension of the period of limitation - Tribunal was, therefore, correct in its finding that the application for refund filed by the assessee was beyond the period of limitation provided under Section 11B(1) of the Act: High Court [para 14, 18, 21, 25, 29, 30, 32]

ST - Tribunal has found that, in view of the decision of the Commissioner (Appeals) allowing an appeal filed by the appellant against another show cause notice, the appellant has got fresh cause of action to file a fresh application for refund of the amount before the original authority - The Tribunal has given liberty to the appellant to file a fresh application for refund of the amount before the original authority - The decision of the Tribunal in this regard has not been challenged by the department and therefore, the appellant can still avail this remedy: High Court [para 31]

- Appeal dismissed: KERALA HIGH COURT

2019-TIOL-1819-CESTAT-MUM

Vertex Trade And Interchange Pvt Ltd Vs CST

ST - Revenue allegation is that CENVAT credit for input services received prior to the date of registration is not admissible – SCN issued and demand confirmed by original authority and upheld by Commissioner(A) - appeal to CESTAT.

Held: It is not the case that the appellant was not at all registered - They were registered at Wardha and, therefore, rejection of credit of the CENVAT is not tenable in view their taking subsequent registration for the Mumbai office - appellant were rendering taxable service right from the financial year 2007 – 08 for the same project for which input services were received - appellant is entitled to take the CENVAT credit, however, matter remanded to the Adjudicating authority for the limited purpose of verification of the invoices for input services received prior to the date of registration at Mumbai office - there is no case of misconduct on the part of the appellant so penalties under section 77 and 78 are set aside – matter remanded: CESTAT [para 5, 6]

2019-TIOL-1804-CESTAT-DEL

Ideas Inc Management Pvt Ltd Vs CCE

ST - The assessee-company is registered with the Service Tax Department - As per the amended provisions of Rule 6 of STR, tax was to be paid by the 5th of the following month in which the payment for service was received or the bill for the service was raised - Upon audit, the Revenue noted that the assessee had not paid tax on the full billed amount by the 5th day of the following month - Short-payment of tax was also observed - The Range Officer also served reminders to the assessee to pay the remaining tax with interest, but elicited no response - The Revenue then alleged there to be wilful suppression of facts - Hence SCN was issued by invoking extended period of limitation, proposing to raise duty demand with interest & penalties u/s 76, 77 & 78 of the FA 1994 r/w Rule 7C of the STR 1944 - The assessee did not reply to the SCN, although its Director attended personal hearing & assured that the outstanding tax would be paid - On adjudication, the demands were confirmed - On appeal, the Commr.(A) quashed the penalty u/s 76 & reduced quantum of penalty imposed u/s 78 - Hence the present appeal.

Held: Admittedly, there is failure on part of the assessee in respect of payment of taxes - The assessee also failed to pay tax with interest before issuing of SCN - However, subsequent to passing of O-i-O. the assessee deposited the dues - Hence the assessee is eligible for benefit of reduced penalty, also considering the fact that the assessee admitted tax liability at the time of personal hearing - Hence the penalty u/s 78 is reduced to 25% of the adjudicated tax dues - The assessee must inform the adjudicating authority regarding payment of interest & 25% penalty within 45 days of receipt of this order: CESTAT

- Assessee's appeal partly allowed :DELHI CESTAT

CENTRAL EXCISE

CIRCULAR

excircular1070

CBIC prescribes revised procedure for making payment of CEX and ST arrears under new CBIC-GST Integrated portal

CASE LAWS

2019-TIOL-1818-CESTAT-MUM

Western Coalfields Ltd Vs CE & ST

CX – Assessee depositing Clean Energy Cess but quoting wrong assessee code – they, therefore, requested the Commissioner to rectify the mistake – department disagreeing and demanding Clean Energy Cess along with proposal for imposition of penalty etc. – demand confirmed, hence appeal.

Held: It is not denied that the appellants have not paid Clean Energy cess - The only mistake was the wrongful mention of the assessee code - The assessee code mentioned also pertains to the appellants themselves - It is not the case of the department that the code used is not in existence or is in defunct – High Court as well as the Tribunal has held that payment of tax is a wrong code will not make the payment null and void; that when undisputed fact is that the petitioner did pay a certain excise duty, merely mentioning wrong code in the process, cannot result into such harsh consequence of entire payment not being recognized as valid, incurring further liability of repayment of the basic duty with interest and penalties - As long as the duty is paid and credited duly to the Govt. of India account, procedural infractions which are curable in nature will not nullify such payments - Demanding such duty second time is certainly harsh and has no sanction of law, more so along with interest and penalty – impugned order set aside and appeal allowed: CESTAT [para 5.1, 6]

2019-TIOL-1806-CESTAT-MAD

Dalmia Laminators Ltd Vs CGST & CE

CX - The issue is with regard to disallowance of credit on GTA service - The Supreme Court in case of Ultra Tech Cement Ltd. - 2018-TIOL-42-SC-CX has held that credit is eligible from the place of removal upto the buyer's premises - However, in the case of Roofit Industries Ltd. - 2015-TIOL-87-SC-CX , the Apex Court has held that when the sale is on FOR basis, all the charges/cost have to be included in assessable value for the payment of central excise duty - Thus, in such cases, when the sale takes at buyer's premises, the place of removal is the buyer's premises - Therefore, it is necessary to determine the place of removal to consider the eligibility of credit of service tax paid on freight charges upto the buyer's premises - For this purpose, matter is remanded to the Commissioner (A) who shall look into the issue of eligibility of credit on GTA service after determining the place of removal: CESTAT

- Matter remanded :CHENNAI CESTAT

2019-TIOL-1805-CESTAT-MAD

PCS Technology Ltd Vs CGST & CE

CX - The assessee is manufacturer of computers - It appeared that the assessee had procured packaged software viz., XP Professional and antivirus from their own unit i.e., M/s. PCS Technology Ltd., Silvassa/Pune, loaded them on to CPUs manufactured by them and cleared them along with bought out items such as monitors, keyboard and mouse as Automatic Data Processing Systems (computer sets) from their factory on payment of duty - It further appeared that assessee had presented CPUs pre-loaded with the aforesaid software for sale to their customers under a composite contract for the supply/installation of computer systems; that during the period from April 2010 to September 2010, assessee did not pay duty on the value of such software preloaded for the reason that software was not pre-loaded, but sold separately - Assessee had also argued that on the re-sale of such software they had paid service tax under category of "Information Technology Software Service" (ITSS) - The Department however took the view that assessee is liable to pay duty on the value of such pre-loaded operational software since after 01.01.2017, software pre-loaded on CPU became assessable to duty as part of CPU - The software is preloaded in CPU - Assessee do not manufacture software - The purchase order for computer system is a composite one which is for supply of computer system preloaded with Windows XP (OS) and Antivirus software besides the service and installation at customer's site - Shri. D.B. Maheswari, who is in charge of operations of M/s. PCS Technology Ltd., has deposed that the assessee is an OEM customer to Microsoft (MS) - M/s. Repro India Ltd. is the authorized representative of MS to the assessee - From the master image copy, operating software (OS) is preloaded on to the Hard Disk Drive (HDD) and the system is tested - If the customer has not ordered the OS, it is removed from HDD before shipment - If the customer has ordered OS, the preloaded software on HDD is allowed to go along with sealed pack media and manual - The product key is pasted on computer case while shipping - No infirmity found in the conclusions drawn in impugned Orders relating to these appeals that the value of software which was loaded and cleared along with the computer would have to be included in the value of the computers cleared by the assessee - The software in the present case is operating software which forms integral part of the computer system, without which the computer cannot function - All the Circulars are therefore of no assistance to the assessee and only intend to mislead on the issue - From the foregoing, no grounds found to interfere with the demand or interest confirmed in the impugned Orders - However, taking note of the peculiar facts of the case, especially the payment of service tax, the penalties are unwarranted - The impugned Orders are modified to the extent of setting aside the entire penalties imposed without disturbing the confirmation of demand or interest thereon: CESTAT

- Appeals allowed :CHENNAI CESTAT

CUSTOMS

NOTIFICATIONS

Procedure for availing Transport and Marketing Assistance (TMA) for Specified Agriculture Products - amendments

dgft19pn013

Amendment in Para 2.54 of the Handbook of Procedures, 2015-2020

dgft19not009

Amendment in import policy of seeds of Peas

cnt46_2019

CBIC increases Tariff value of Gold

cuscvd19_001

Definitive Countervailing duty imposed on 'New/unused pneumatic radial tyres with or without tubes and/or flap of rubber (including tubeless tyres)' used in buses and lorries/trucks imported from PR China

ctariffadd19_026

Anti-dumping duty on Paracetamol imported from PR China extended till July 9, 2019

CASE LAW

2019-TIOL-1803-CESTAT-BANG

Cfs Petta Vs CC

Cus - The appellant is a Container Freight Station under the Kerala State Warehousing Corporation & is approved under the Handling of Cargo in Customs Area Regulations, 2009 for receipt, storage, delivery, dispatch or otherwise handling of imported goods and export goods and are included as custodian as per Section 45 of the Customs Act, 1962 - Another entity imported some cases of Vodka, filed bill of entry u/s 59 & 61 of the Customs Act and deposited the same in the CFS - The CCSP who is having no warehousing licence issued under the Act, received and stored the imported bonded cargo in their CFS - The CCSP was later directed to explain why bonded cargo was de-stuffed & warehoused at CFS which is not a public bonded warehouse licensed u/s 57 - Besides, it so happened that some of the goods were found missing from the storage of CFS upon detailed examination of the inventory - Hence SCN was issued to the appellant proposing to raise duty with interest on the missing cargo u/s 142(1) of the Customs Act - Penalty was imposed as well - On adjudication, duty demand with interest was confirmed under Regulation 6(i) & 6(j) of the Handling of Cargo in Customs Area Regulations, 2009 along with penalty - Hence the present appeal.

Held: The duty demanded is liable to be paid with interest since the goods went missing while in the appellant's custody - In respect of the penalty imposed, it is seen that no enquiry was conducted by the Commissioner under Regulation 12 - Besides, the O-i-O appears to be contradictory, considering that proceedings initiated under Regulation 11 & 12 were dropped, yet penalty was imposed under Regulation 12(8) - Hence the penalty merits being set aside as it is unsustainable - The duty demand with interest is sustained: CESTAT

- Appeal partly allowed :BANGALORE CESTAT