TMI Tax Updates - e-Newsletter
January 4, 2018

Case Laws in this Newsletter:

Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

Articles

1. EXTENSION OF ANNUAL GENERAL MEETING UNDER INSOLVENCY AND BANKRUPTCY CODE, 2016

   By: DR.MARIAPPAN GOVINDARAJAN

2. GST update on admissibility of Input Tax Credit on the services related to motor vehicles

   By: Pradeep Jain

News

1. Impact of Demonetisation and GST on key Industrial Sectors

2. Impact of 'Make In India' Initiative on leather sector

3. Cabinet approves MoU between India and the USA for co-hosting the Global Entrepreneurship Summit 2017 (GES-2017) in India

4. Cabinet gives approval to the Approach to be adopted by India at the Eleventh Ministerial Conference of the WTO held in Buenos Aires, Argentina during 10-13 December 2017

5. RBI Reference Rate for US $

6. Anti-dumping duty likely on Chinese chemical imports

7. Based on investors’ grievances, action has been taken against 80 companies in FY 2015-16, against 149 companies in FY 2016-17 and against 83 companies in 8 months of FY 2017-18

8. Companies report CSR expenditure of ₹ 13,625.25 crores in FY2015-16; education, differently-abled and livelihood get maximum CSR funds of ₹ 4,647.67 crores

9. 196 companies faced penal action in FY 2014-15 for non-compliance of CSR norms; Maharashtra tops in CSR expenditure in FY 2015-16

10. Sports related CSR expenditure increase to ₹ 80.05 crores in FY 2015-16 as compared to FY 2014-15; North-East sports related CSR surges to ₹ 103 lakhs in FY 2015-16 as compared to FY 2014-15

11. After Green Revolution and White Revolution, the Financial Revolution in India is all set to transform the Rural Economy: Secretary, Corporate Affairs;

12. The Government of I ndia notifies the Scheme of Electoral Bonds to cleanse the system of political funding in the country; Electoral Bond would be a bearer instrument in the nature of a Promissory Note and an interest free banking instrument; Bond(s) would be issued/purchased for any value, in multiples of ₹ 1,000, ₹ 10,000, ₹ 1,00,000, ₹ 10,00,000 and ₹ 1,00,00,000 from the Specified Branches of the State Bank of India (SBI)

Notifications

IBC

1. IBBI/2017-18/GN/REG020 - dated 7-11-2017 - IBC

Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons) (Third Amendment) Regulations, 2017

SEZ

2. F. No. D.12/19/2013-SEZ - dated 2-1-2018 - SEZ

Uniform list of services to be followed in SEZs - Reg.

Circulars / Instructions / Orders

IBC

1. IBC/01/2017 - dated 25-10-2017

Clarification regarding approval of resolution plans under section 30 and 31 of Insolvency and Bankruptcy Code, 2016

DGFT

2. 49/2015-2020 - dated 3-1-2018

Modification of SION existing at Sl. No K 36 for export product "Hulled Sesame Seeds"

Highlights / Catch Notes

Income Tax

• AO Must Issue Draft Assessment Order u/s 144C Even If Case Is Remanded by Tribunal.

  Case-Laws - AT : Failure to pass a draft assessment order under Section 144C - even in the case of a remand by the Tribunal, the AO has to pass a draft assessment order and not the final assessment order - AT
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• Assessment Valid if AO Transposes Amalgamated Company as Assessee; Fresh Notice Needed u/s 142(1) IT Act.

  Case-Laws - AT : Validity of assessment against non existent company - AO can proceed with the assessment proceedings, by transposing the amalgamated company as the assessee and issuing fresh notice u/s 142(1) of the Act and complete the assessment proceedings. - AT
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• Section 45(2) of Income Tax Act applies only after explicit conversion of capital asset into stock-in-trade by owner.

  Case-Laws - AT : Capital gain - effective date of Conversion of capital asset into stock in trade - till the time the owner himself either converts the capital asset into stock-in-trade, the provisions of section 45(2) of the Act will not be attracted. Thus, what is provided is that only positive act/conduct of the owner assessee in applying/treating a capital asset into stock-in-trade is relevant to determine the applicability of section 45(2) of the Act. - AT
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Indian Laws

• Does a Bounced Cheque Mean Enforceable Debt? Examining Cash Loans & Section 269SS of India's Income Tax Act.

  Case-Laws - HC : Cheque bounce - enforceable debt or not - Cash Loan - Contravention of Section 269SS of the IT Act - Section 269-SS does not declare all transactions of loan by cash in excess of ₹ 20,000/- as invalid, illegal or null and void as the main object of introducing the provision was to curb and unearth black money - HC
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Service Tax

• Chhattisgarh Municipal Corporation Act: Service Tax Confirmed on Rental of Buildings and Shops for Business Use.

  Case-Laws - AT : Renting of Immovable property service - local authority functioning under Chattisgarh Municipal Corporation Act, 1956 - appellant had buildings/shops, which were given out to people for running business in terms of Mukhyamantri Swalamban Yojna and similar such schemes - demand confirmed for normal period of limitation - AT
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Central Excise

• Central Excise: Goods Sold in Bulk Without Modification Not Subject to Levy, No Manufacturing Process Involved.

  Case-Laws - AT : Manufacture - BPL Kit - Goods purchased are in bulk and sold in bulk - Classification of goods - When the procured electrical components are sold in original bulk packing without any process of fixing or mounting on any board, we find no justification at all to subject such clearances to central excise levy. - AT
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• High Court Rules Branding Footwear as "Metro" and "Mochi" Doesn't Qualify as Manufacturing u/s 2(f)(iii) Definition.

  Case-Laws - HC : Manufacture - activity of taking out footwear in finished form from the boxes bearing M.R.P. and labelling the same with their brand names “Metro” and “Mochi” and of putting them into the same boxes - on plain reading of subclause( iii) of clause (f) of Section 2, the activity does not amount to manufacture within the meaning of clause (f) of Section 2. - HC
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Case Laws:

• Income Tax

• 2018 (1) TMI 146
  Reopening of assessment - reasons to believe - Held that:- The assessment was completed under Section 143(3) of the Act. Thus, all materials were available in the hands of the assessing officer and the impugned re-assessment proceedings is clearly a case of change of opinion and on the facts noted above and by applying the law laid down in the aforementioned decisions, the impugned proceedings are illegal and not sustainable. - Decided in favour of assessee.

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• 2018 (1) TMI 145
  Disallowance u/s 43B - delay in payment - retrospectivity - Held that:- The issue raised in this appeal is squarely covered by the decision in Industrial Security and Intelligence India Private Limited [2015 (7) TMI 1063 - MADRAS HIGH COURT] wherein held omission of second proviso to Section 43B and amendment to first proviso by Finance Act, 2003 are curative in nature and are effective retrospectively, i.e., with effect from 1.4.1988 i.e., the date of insertion of first proviso. If the assessee had deposited employee's contribution towards Provident Fund and ESI after due date as prescribed under the relevant Act, but before the due date of filing of return under the Income Tax Act, no disallowance could be made in view of the provisions of Section 43B as amended by Finance Act, 2003. In the present case, the assessee had remitted the employees contribution beyond the due date for payment, but within the due date for filing the return of income. Hence, following the above-said decisions, we find no reason to differ with the findings of the Tribunal. - Decided against revenue

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• 2018 (1) TMI 144
  Reopening of assessment - valid reasons to believe - Held that:- We find from the facts that the first notice for reopening was issued virtually on the same ground and the assessee cooperated in the assessment proceedings and the Assessing Officer appears to have been satisfied with the submission and completed the assessment without any additions. Subsequently, there has been a change of officer who has issued the second reopening notice which has ultimately culminated in the assessment order dated 28.03.2013. Thus we find that the Tribunal has done thorough factual exercise and held that the reopening for the second time on the same issue is nothing but change of opinion and is not permissible in law. Furthermore, the Tribunal has specifically recorded that the revenue could not establish that the income has escaped assessment due to the failure on the part of the assessee. Further, this finding recorded by the Tribunal is on re-appreciation of the factual position. No substantial question of law.

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• 2018 (1) TMI 143
  Disallowance under Section 80M - establishment of nexus between the investments made during the year and the borrowed funds - Penalty proceedings initiated under Section 271(1)(c)- Held that:- The issue is clearly covered in view of the decision of this Court in the Commissioner of Income Tax vs. Reliance Utilities and Powers Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT ). We have perused the said judgment. The Division Bench held that when the funds available were both interest-free and overdraft and/or loan taken, then a presumption would arise that the investments made would be out of interest-free funds generated or available with the company, provided the interest-free funds were sufficient to meet the investments. In the case at hand, Mr.Suresh Kumar fairly conceded that the said decision holds the field as on date. In view of the above and considering the issue at hand, we are of the view that the respondent assessee is held entitled to benefit of the aforesaid presumption and accordingly, the questions proposed do not give rise to any substantial question of law. The impugned order does not call for interference and accordingly the appeal need not be entertained.

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• 2018 (1) TMI 142
  Entitled to the depreciation on the block of asset consisting of motor car remaining after crediting sale proceeds of the motor car sold during the year - Held that:- We have observed that the assessee sold motor car but there were other motor cars also existing in the block of assets and the said block of asset of motor car has not ceased to exist as on 31.03.2009 . The assessee has claimed loss on the sale of motor car of 26,686 which was wrongly debited to P 95,94,810/- on account of renovation expenses of the premises for his hospitality business wherein renovation was carried out by the assessee . The assessee could not file the evidences before the A.O to substantiate its claim that these are revenue expenses allowable under the Act. The assessee has furnished additional evidences before learned CIT-A who has refused to admit the same . After considering the material on record and hearing the parties , We are of the considered view that evidences which were filed before the learned CIT-A need to be admitted and adjudicated on merits in accordance with law to sub-serve the interest of substantial justice. Thus, we hereby direct to admit these additional evidences filed by the assessee before learned CIT(A) Disallowance of provision of bonus - Held that:- We did not find any infirmity in the order of learned CIT-A in dismissing the ground of appeal as not been pressed by the assessee because in any case assessee has itself submitted that assessee will claim these expenses in A.Y 2010-11 based on actual payments for the bonus made to the employees in the month of October 2009 which in our considered view is in consonance with provisions of Section 43B(c) r.w.s. 36(1)(ii) . The learned counsel for the assessee has fairly agreed before us that this ground may be dismissed. Hence keeping in view entire factual matrix of the issue we dismiss this ground in the light of the above discussion. Violation of provisions of Section 40(a)(ia) - assessee has claimed these expenses on which income-tax was deducted at source which was paid late beyond the period prescribed u/s 40(a)(ia) - Held that:- We have observed that the assessee has itself submitted before learned CIT-A that assessee has claimed these expenses on which income-tax was deducted at source which was paid late beyond the period prescribed u/s 40(a)(ia) , in AY 2010-11 and thus, the claim of expenses can be allowed in A.Y 2010-11 after verification by the AO . The learned CIT-A has dismissed this ground on the basis of submissions made by the assessee. We do not find any infirmity in the decision of learned CIT-A in dismissing this ground as in any case there will be no prejudice to the assessee as the same expenses shall be allowed in the subsequent year i.e. 2010-11 in which assessee has paid the TDS to the credit of Central Government , after due verification and examination by the AO. We dismiss this ground. Non granting of total TDS receivable by the assessee - Held that:- We do not find any infirmity in the order of learned CIT-A in issuing directions to the A.O to verify the claim of the assessee on merits after due verification with 26AS. We direct the A.O to verify the claim of the assessee and allow the credit of prepaid taxes by way of TDS receivable as is refelected in 26AS after due verification on merits in accordance with law.

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• 2018 (1) TMI 141
  TPA - comparable selection criteria - Held that:- Assessee is engaged in providing contract software services, back office support services, corporate IT support services and marketing support services to its Associated Enterprises [AE], thus companies functionally dissimilar with that of assessee need to be deselected from final list.

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• 2018 (1) TMI 140
  Validity of assessment against non existent company - assessment in the name of a company which had been amalgamated and had been dissolved with the said amalgamating company - Held that:- In the case before us, we find that the returns were filed by the amalgamating company and the notices u/s 143(2) & 142(1) were issued probably to the assessee prior to amalgamation, therefore the scrutiny assessments were validly initiated, but the assessment order is passed on a non-entity. Therefore, in our opinion, the assessment proceedings cannot be held to be invalid ab initio. The AO can proceed with the assessment proceedings, by transposing the amalgamated company as the assessee and issuing fresh notice u/s 142(1) of the Act and complete the assessment proceedings. AO is directed accordingly. Failure to pass a draft assessment order under Section 144C - Held that:- We find that when the issues were set aside by the Tribunal, it is not merely for correcting mathematical errors in the calculations, but it is for reconsidering the issue in accordance with the directions of the ITAT. Wherever, the AO/TPO exercise their discretion after verification, and pass an order, it is incumbent upon them to give the assessee an opportunity to present its case or to appeal against such orders. It is for this reason that the statues provide that the AO shall pass a draft assessment order against which the assessee can either choose to file its objection before the DRP or choose to file an appeal before the CIT (A) and after the assessee exercises its option, the AO can pass the final assessment order in accordance with the directions of the DRP or the assessee can file an appeal before the CIT (A). As per section 144C of the Act, the AO first has to pass the draft assessment order and the choice is with the assessee either to approach the DRP or the CIT (A). Only if the assessee chooses to prefer an appeal before the CIT (A), can the AO pass the final assessment order. Similar facts had arisen in the case of JCB India Ltd (2017 (9) TMI 673 - DELHI HIGH COURT) before the Hon'ble Delhi High Court and the Hon'ble High Court has held that even in the case of a remand by the Tribunal, the AO has to pass a draft assessment order and not the final assessment order

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• 2018 (1) TMI 139
  Unexplained investment u/s 69 - Held that:- When the purchase of the flat was funded from the loan raised from M/s Citi Finance, therefore, it was incorrect on the part of the lower authorities to conclude that the source of investment in the property was unexplained. We are of the considered view that the lower authorities on the basis of premature observations had taken a hyper technical view and despite the fact that the material available on record clearly revealed that the investment made towards purchase of flat was from the loan raised from Citi Finance, had thus wrongly concluded that the source of investment to the extent of 36,75,826/- on 31.03.2006 was to be held as an unexplained investment u/s 69 in the hands of the assessee. We are of the considered view that as the investment of 36,75,826/- is clearly routed to the loan raised from Citi Finance, therefore, the addition of the same as an unexplained investment u/s 69 in the hands of the assessee cannot be sustained. We thus set aside the order of the CIT(A) and delete the addition of 36,75,826/-. Disallowance of the claim of interest on housing loan raised by the assessee u/s 24(b) - Held that:- When the assessee, viz Smt. Shardaben Bhavani, Mr. Dharmesh D. Bhavani (son of the assessee) and Sh. Devaram C. Bhawani (husband of the assessee) are the joint owners of the flat and had as co-borrowers raised the loan for purchase of the property, viz. Flat No. 2001 in Kent Garden Tower, Borivli, Mumbai, therefore, the entitlement of the assessee towards claim of deduction of such interest on housing loan shall be restricted to the extent of her 1/3rd share. We thus direct the A.O to allow deduction of the interest on housing loan to the assessee to the extent of 1/3rd of the aggregate of the interest payable on such loan during the year under consideration. The order of the CIT(A) sustaining the disallowance of the entire amount of the interest on housing loan claimed by the assessee u/s 24(b) is modified in terms of our aforesaid directions. The Ground of appeal No. 4 is partly allowed. Addition u/s 69 - Held that:- In the case of the present assessee nothing could be safely gathered from a perusal of the dumb notings in the impugned impounded document. We thus in the backdrop of our aforesaid observations that there is no basis for relating the notings in the impounded document, viz. Annexure A-2 – Page 37 with the sale of Flat No. 2001, Kent Garden, Borivali (W), Mumbai, therefore, are of the considered view that the addition of 54,20,000/- made by the A.O u/s 69 and sustained by the CIT(A) cannot be upheld. We thus set aside the order of the CIT(A) and delete the addition

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• 2018 (1) TMI 138
  Disallowance of brought forward depreciation.the relevant details are not before us and the determination of the quantum of unabsorbed depreciation to be allowed to be set off has to be necessarily done by the authorities below. Accordingly, we restore the issue of unabsorbed depreciation to the file of the Ld. CIT (Appeals) to be decided afresh after due examination of the facts and relevant details and also considering the ratio of the judgments of the Hon’ble High Court of Delhi in the cases of CIT vs Kei Industries Ltd. [2015 (3) TMI 618 - DELHI HIGH COURT] and CIT v. TEI Technologies (P) Ltd (2012 (9) TMI 47 - DELHI HIGH COURT ) and after giving due opportunity to the assessee to present its case. We also direct the assessee to cooperate with the proceedings before the Ld. first appellate authority and to submit all the relevant details when required to do so failing which the Ld. first appellate authority will be at liberty to decide the issue on merits. Disallowance of commission - Held that:- A perusal of the impugned order shows that the Ld. CIT (Appeals) had raised the query on 11/03/2013 requiring the assessee to furnish the details by 18/03/2013 which was not complied by the assessee. The impugned order was passed on 22/03/2013. Thus, the assessee did not have ample time to submit the details as required by the Ld. first appellate authority. Accordingly, in the interest of justice, we deem it fit to restore this issue also to the file of the Ld. CIT (Appeals) with the direction to examine it afresh after calling for the required details from the assessee and after giving due opportunity to the assessee. We also direct the assessee to cooperate with the proceedings before the Ld. first appellate authority and to submit all the relevant details when required to do so failing which the Ld. first appellate authority will be at liberty to decide the issue on merits. Accordingly, this ground of the assessee also stands allowed for statistical purposes. Disallowance on account of agriculture expenses - Held that:- CIT (Appeals) on the ground that nothing was brought on record by the assessee during the first appellate proceedings to rebut the observations of the AO. In the interest of justice, we deem it fit to restore this issue also to the file of the Ld. CIT (Appeals) with the direction to examine it afresh after calling for the required details from the assessee and after giving due opportunity to the assessee. We also direct the assessee to cooperate with the proceedings before the Ld. first appellate authority and to submit all the relevant details when required to do so failing which the Ld. first appellate authority will be at liberty to decide the issue on merits. Accordingly, this ground of the assessee also stands allowed for statistical purposes.

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• 2018 (1) TMI 137
  Penalty u/s 271(1)(c) - Held that:- Assessing Officer, in the penalty order, has observed that the assesseee has furnished inaccurate particulars. The AO has held that the act of not adding back the impugned amount to the computation of income was an act of furnishing of inaccurate particulars of income. The Ld. CIT (A) has also confirmed the imposition of penalty. However, with regard to the provisions of section 271(1)(c ) of the Act pertaining to penalty, the Hon’ble Apex Court has authoritatively laid down that making of a claim by the assessee which is not sustainable will not tantamount to furnishing inaccurate particulars. See CIT vs. Reliance Petroproducts Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT ) - Decided in favour of assessee

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• 2018 (1) TMI 136
  Addition as income from other sources - claim of agricultural income - Held that:- We are of the view that the primary onus is on the assessee to demonstrate through verifiable evidence in support of the agriculture income so claimed in the return of income. However, in view of conflicting claims by both the parties and in absence of a specific finding in support of no income from the agriculture produce from the land so co-owned by the assessee, we deem it fit to restore the matter to the file of the AO to examine the same afresh in light of evidence so produced by the assessee and where so required, to carry out independent verification. In the result, the ground is allowed for statistical purposes. Estimate income from business - Held that:- Firstly, regarding estimation of business income at 5 lacs by the ld CIT(A) as against 15 lacs estimated by the AO, we hereby affirm the following findings of the ld CIT(A) which we find just and reasonable given the peculiar facts and circumstances of the instant case wherein the assessee has admitted his receipts from property brokerage business to the tune of 15 Lac and in absence of books of accounts and other details in support of incurrence of various expenses so claimed, the expenses remain unverifiable Unexplained cash deposits - Held that:- Matter relating to verification of source of cash deposits in the assessee’s bank account is accordingly set-aside to the file of the AO to examine the same afresh taking into consideration the contention so raised by the ld AR before us and after providing reasonable opportunity to the assessee. Income earned from petrol pump - Held that:- AR has contended that the assessee purchased the land at Village Sawar, Kekri on which he incurred expenditure of 20,000/- which is duly reflected in statement of affairs as on 31.03.2006. Since there is no finding of the lower authorities, the matter is set aside to the file of the AO to examine the said contention of the ld AR and decide afresh as per law. In the result, ground is allowed for statistical purposes. Disallowance of depreciation - AR has contended that necessary details in support of claim of depreciation has already been filed with the lower authorities - Held that:- Since there is no finding of the lower authorities, the matter is set aside to the file of the AO to examine the said contention of the ld AR and decide afresh as per law. In the result, ground is allowed for statistical purposes. Unexplained source of funds for purchase of car - Held that:- It is not in dispute that the assessee has taken loan of 5,50,000 from HDFC bank and to this extent, source of funds for purchase of car worth 9,88,000 stands explained. Further, the ld AR has contended that the balance amount of 3,38,000/- in respect of purchase of car and the repayment of bank loan installment of 3,72,000/- is paid by the assessee from his bank account with SBBJ Sodala, Jaipur from where the amount is withdrawn/ transferred to HDFC bank account for payment towards purchase of car/ installments. Since there is no finding of the lower authorities, the matter is set aside to the file of the AO to examine the said contention of the ld AR and decide afresh as per law. In the result, ground is allowed for statistical purposes.

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• 2018 (1) TMI 135
  Withdrawing the registration granted u/s 12AA/12A vide order u/s 12AA(3) r.w.s. 293C from the initial year, the registration was granted - Held that:- Hon’ble Delhi High Court in case of DIT(Exemtion) Vs. Mool Chand Khairati Ram Trust (2011 (4) TMI 563 - DELHI HIGH COURT) is squarely applicable where it was held that power to cancel the registration once granted was only confined to the registration granted under cl. (b) of sub-s. (1) of s. 12AA till before 1st June, 2010. Of course, now w.e.f. 1st June, 2010, the power vests with the CIT even to cancel the registration granted under any of the clauses of sub-s. (1) of s. 12A. In that view of interpretation, there was no power vested with the CIT to cancel or withdraw the registration granted to the assessee under s. 12A(a) in the year 1974. Accordingly, we hold that the withdrawal of registration granted u/s 12A to the assessee since its inception is not as per law and to this extent the order passed by him to withdraw the registration from the initial year is not approved. Considering the fact that assessee is engaged in promoting the game of golf and having been granted registration u/s 12A w.e.f. 15.06.1999, we see no reasons to cancel the same particularly when the objects and the activities of assessee at the time of grant of registration and cancellation thereof remains the same. In these circumstances, we do not concur with the order of ld. CIT withdrawing, the registration u/s 12AA(3) of the Act. The ground of assessee is allowed.

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• 2018 (1) TMI 134
  Refusing to grant registration u/s.12AA - proof of charitable activities - Held that:- In the instant case, it is admitted in the impugned order that the objects of the assessee society are charitable in nature and in absence of pointing out any specific activities of the assessee society which were not genuine, in our considered view, rejection of application for registration u/s.12AA of the Act on the ground of diversion of funds for the benefit of executives of the association in violation of provisions of Section 13(1)(c) of the Act is not justified. The violation of provisions of Section 13(1)(c) of the Act is a matter which is to be looked into by the Assessing Officer while making assessment after grant of registration u/s.12AA of the Act and the Assessing Officer has to act as per the provisions of law. We, therefore, set aside the order of the CIT(E) and direct him to grant registration to the assessee society u/s.12AA of the Act. Thus, this appeal of the assessee is allowed.

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• 2018 (1) TMI 133
  Forward contracts loss on foreign exchange transactions assessed as speculation loss u/s 43(5) - Held that:- The assessee is exporter of tobacco and during the year under consideration the assessee entered into foreign exchange forward contract to mitigate the loss on fluctuation of foreign currency. There is no dispute with regard to the fact that the assessee is not trading in currency and the entire transactions were routed through bank. The total export turnover of the assessee was US$ 5,61,17,429 and the value of forward contracts booked by the assessee was US$ 4,22,92,364 which is less than the value of the exports. The facts of the issue are similar to that of the decision of Hon’ble ITAT, Visakhapatnam in the case of Sri Ramalingeswara Rice & Oil Mill [2016 (10) TMI 924 - ITAT VISAKHAPATNAM] and the issue is squarely covered by the order of this Tribunal. - Decided against revenue.

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• 2018 (1) TMI 132
  Estimation of income from IMFL business - 10% OR 5% - Held that:- The coordinate bench of the Tribunal in the case of Tangudu Jogisetty (2016 (7) TMI 379 - ITAT VISAKHAPATNAM) has considered the profit level in the line of business and decided that 5% of purchase price is reasonable profit margin in the line of IMFL business and directed the A.O. to re-compute the profit of the assessee. Thus we direct the A.O. to re-compute the income of the assessee at 5% of purchase price. Accordingly, this ground of appeal raised by the assessee is allowed. Unexplained credits in the capital account - As per the Trading account there was no opening stock, hence it appears that the impugned assessment year would be the first year of business. For IMFL business the year starts from 1st July and the assessee had introduced the cash on 02.07.2010. The AO has not discussed the issue in the assessment order and the assessee has not established before us that sum of 18 lakhs was generated out of business income. Therefore, we remit the matter back to the file of the AO to reexamine the issue whether the cash credit made in the books of accounts relating to 18 lakhs was business income or not and reconsider the issue afresh on merits. Unexplained gifts - Held that:- The assesseee is sister-in-law of Sri T.V.Ramana Murthy who is working as APSRTC driver, Gr.I for the last 10 years and as per the salary certificate, his gross salary is around 25,000/-. To support the business of his brother’s wife, Sri T.V.Ramana Murthy has stated to given a gift of 1.5 lakh. He has filed the confirmations and the source was explained as salary savings. Since the creditor is identified and having salary income of 25,000/- per month, we are of the view that there is no case for suspecting the gift and making the addition of 1,50,000/- relating to gift received from Shri T.V.Ramana Murthy. Accordingly addition made by the AO amounting to 1.5 Lakh out of the total addition of 20,68,500/- is deleted. With regard to the balance amount of 19,18,500/-, the assessee did not place any evidence to controvert the finding of the Ld.CIT(A). Therefore, we uphold the order of the CIT(A) and confirm the addition of 19,18,500/-. The appeal of the assessee on this ground is partly allowed.

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• 2018 (1) TMI 131
  Additions in the search assessment framed u/s 153A/143(3) - absence of any incriminating material found during the course of search to that effect - Held that:- The assessments for the Asst Years 2009-10 and 2012-13 fall under the category of completed assessments and hence the additions made by the ld AO which are contested before us by the assessee cannot be made in the assessments framed u/s 153A of the Act as they are not backed by any incriminating materials found in the course of search. Accordingly the grounds raised by the assessee for all the appeals are allowed.

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• 2018 (1) TMI 130
  Capital gain - effective date of Conversion of capital asset into stock in trade - whether the industrial land held by the assessee was converted into stock-in-trade on 1st April 2002 (as held by the Assessing Officer) or on 1st April 2006 (as contended by the assessee) - Held that:- It was only in financial year 2000-01 that the assessee had sought permission for converting the said land from industrial to residential but this does not imply that the assessee had converted the land into stock-in-trade during the financial year 2000-01. We find merit in the contention of the assessee that the land was converted from capital asset to stock-in-trade only during the year under consideration i.e. FY 2006-07 and not any time before that, because the language of section 45(2) of the Act provides that capital asset held by the owner is converted by him into stock-in-trade or capital asset is treated as stock-in- trade by the owner and in both the situations, the emphasis is on the treatment given by the owner of the capital asset. Thus, till the time the owner himself either converts the capital asset into stock-in-trade, the provisions of section 45(2) of the Act will not be attracted. Thus, what is provided is that only positive act/conduct of the owner assessee in applying/treating a capital asset into stock-in-trade is relevant to determine the applicability of section 45(2) of the Act. We also agree with the assessee’s contention that since the assessee had applied for obtaining permission from the Ghaziabad Development Authority (GDA), Ghaziabad for conversion of industrial land into residential land during financial year 2002-03, the land cannot be treated as converted in the financial year 2002-03 as in terms of section 45(2) of the Act, the conversion takes place only by the voluntary act of the assessee for such conversion and a mere act of seeking permission for conversion of land use will not come within the definition of ‘transfer’. Therefore we hold that the industrial land was held as capital asset till assessment year 2007-08 and the same was converted into stock-in-trade only in the financial year 2006-07 and not in assessment year 2003-04 as contended by the department. Determination of Fair Market Value of the industrial land as on 01.04.1981 - Held that:- Assessing Officer adopted value of 20/- per sq yd which the Ld. CIT (A) himself has rejected on the ground that the value of 20/- per sq yd as intimated by the UPSIDC was not applicable to the assessee’s case as the assessee’s land did not fall under the UPSIDC area. We find no reason to interfere with the findings of the Ld. CIT (A) in this regard as this finding is duly supported by letter from the UPSIDC dated 17.12.2009 addressed to the ACIT, Ghaziabad which mentions that the assessee’s land did not come under the jurisdiction of the UPSIDC. Thus, the sole ground in department’s appeals in both the years stands dismissed. Computation of long term capital gain - whether the figure of 100/- sq yd, being the circle rate, as adopted by the ld. CIT (A) is to be sustained or the value of 190/- per sq yd, as contended by the assessee - Held that:- Although the assessee has duly been following up the matter pertaining to the issuance of completion certificate, the transfer of ownership of the open areas/facilities in terms of clause (iv) of the agreement is still not complete as per the letter dated 25.09.2012 issued by the GDA. It is also pertinent that these additional evidences filed by the assessee have not been examined by the lower authorities. Therefore, while we do agree with the assessee’s contention that the Fair Market Value as on 1.4.1981 should be enhanced so as to include the cost of unsaleable area in terms of open space/facilities etc., the issue will necessarily have to be decided by the Assessing Officer after duly considering the valuation report submitted by the assessee supporting the Fair Market Value of 190/- per sq yd as neither the Assessing Officer nor the Ld. CIT (A) have commented upon the same. We also hold that should the assessee be able to demonstrate before the Assessing Officer that the transfer of ownership of unsaleable area has taken place, as contemplated in clause (iv) of the agreement, the assessee should be allowed due weightage of the same while computing the market value of the same as on 1.4.1981. Accordingly, ground nos. 2, 2.1 and 2.2 for both the years in assessee’s appeal stand allowed for statistical purposes.

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• Customs

• 2018 (1) TMI 129
  Duty-free import in terms of the N/N. 52/2003 - Fire fighting equipments - Smoke detectors - Micro perforated fiber sheets - Cafeteria tables - whether these goods would be covered for duty-free import in terms of the N/N. 52/2003? - Held that: - there is no dispute to the fact that the goods have been covered by valid certificate from the STPI and also the goods were still found in the bonded warehouse - reliance placed in the case of ACCENTURE SERVICES PVT. LTD. Versus COMMISSIONER OF CUSTOMS, BANGALORE [2007 (8) TMI 509 - CESTAT, BANGALORE], where it was held that once the approval has been taken from the STPI authorities, for import of certain goods, the benefit of duty free clearance has to be necessarily given by the Customs authorities - appeal allowed.

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• 2018 (1) TMI 128
  Whether the appellant is eligible for benefit of exemption under Served from India Scheme (SFI scheme) issued under Notification No.92/2004-Customs dt. 10/09/2004 subject to fulfillment of conditions enumerated under the said notification? - separate exemption of SAD under Notification No.20/2006-Cus dt. 01/03/2006. Held that: - issue is covered by the decision in the case of KIMS Health Care Management Ltd. Versus Commissioner of Customs [2017 (11) TMI 410 - CESTAT BANGALORE], where relying in the case of Gujarat Ambuja Exports Ltd. Vs. UOI [2013 (6) TMI 536 - GUJARAT HIGH COURT] wherein the Hon’ble Gujarat High Court held that the imported goods were entitled to the benefit of N/N. 20/2006 Cus. when they (imported goods) were exempted from duty under Notification 45/2002-Cus. when imported under DEPB scheme where the duty is debited to the duty entitlement passbook - appeal allowed - decided in favor of appellant.

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• 2018 (1) TMI 127
  Valuation - includibility - addition of 50% of the supervision charges in the assessable value - Held that: - there being a clear finding of fact that separate agreement is there for supervision of erection commissioning testing and training of the plant for which separately paid by importer and respondent herein over the port importation activity. Accordingly, the said inclusion of the 50% of the charges in the provisional assessment by the Adjudicating Authority in unsustainable - the inclusion of 50% of the supervision charges in the assessments, set aside - decided in favor of assessee.

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• 2018 (1) TMI 126
  Smuggling - Gold - penalty u/s 112 and 114AA of the CA - Held that: - the term absolute confiscation is not used in the entire Customs Act and as such the provisions mandate confiscation - with reference to Section 125 of the Customs Act, the Learned Commissioner (Appeals) observed that while using the term owner, identifies such owner as a person to whom the goods may be redeemed practically. It is for this reason that Section 125 of the Act ibid, also prescribes that where the owner is not known, the option of redemption would be given to the person from whose possession or custody such goods were seized - appeal dismissed - decided against Revenue.

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• Insolvency & Bankruptcy

• 2018 (1) TMI 125
  Corporate insolvency procedures - financial debt having a commercial effect of borrowing - Held that:- The present transaction which relate to a Cash Call fall within the definition of commercial effect of borrowing. Further, by raising dispute with respect to quantum of amount due under such transaction or omission to perform the terms of the contract or such allegation to exceed beyond the terms of the contract does not necessarily absolved the corporate debtor from its liability arisen under such contract, until a Competent Court of Law determines the issue and adjudicate the dispute. In our humble opinion the RP and COC have not been vested such jurisdiction under the Code to adjudicate a dispute/claim of an interested/affected party, while preparing for a resolution plan. Therefore, the present applicant is qualified as per the terms of PSC & JOA is to be treated as a financial creditor to the extent of amount of expenditure incurred by it on behalf of the Corporate Debtor Company. Since, there appear some dispute with regard to quantum of expenses incurred by and the amount due under the Cash Call and JIBs as the Corporate Debtor Company has also sought indemnification of some loss occurred to it, which is a subject matter of a Competent Court of Law. Therefore, we restrain ourselves to express our view on merits of such issue involved but must feel that the present applicant deserves to be treated as a financial creditor and its claim of expense incurred by it fall within the ambit and scope of a financial debt having a commercial effect of borrowing. Hence, it is entitled to be included in COC as a financial creditor. However, the ratio of its voting share can be decided by the COC by taking into consideration the actual amount so far incurred by the GSPC on behalf of the JODPL, but excluding the interest component and other miscellaneous expenses. The COC may adopt above guidelines as suggested by us and to take appropriate decision for preparation of a resolution plan for the sake of revival of the Corporate Debtor Company, which is paramount interest and the main theme of the I & B Code.

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• Service Tax

• 2018 (1) TMI 118
  Classification of services - Works Contract Service - Matter remaining pending on the file of respondent pursuant to the order of remand - Held that: - The grounds raised by the petitioner in the earlier round of litigation is identical to the grounds raised herein and one more additional point is with regard to retrospective effect of Finance Act, 2017. This issue has been specifically canvassed in this writ petition - this Court is of the view that the issue, which is covered in the present writ petition viz., the demand of service tax for the period from 01.04.2010 to 30.06.2012, also requires to be re-done. Since the remand, which was ordered by this Court for the period from July 2012 to September, 2013 is yet to attain finality and for the subsequent period, the demand has been dropped by a speaking order, the impugned issue requires re-consideration. Matter is remanded to the respondent for fresh consideration.

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• 2018 (1) TMI 117
  CENVAT credit - non-production of documents - Held that: - the case needs to be remanded back because the documents which had been produced before me have not been produced before the adjudicating authority, therefore, I remand the case to the original authority to pass a de novo order after considering the evidence which the appellant may produce in support of his case - appeal allowed by way of remand.

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• 2018 (1) TMI 116
  Renting of Immovable property service - local authority functioning under Chattisgarh Municipal Corporation Act, 1956 - appellant had buildings/shops, which were given out to people for running business in terms of Mukhyamantri Swalamban Yojna and similar such schemes - Held that: - “Renting of immovable property” service is with reference to renting, leasing, licensing, or other similar arrangement of immovable property for use in course for “furtherance of business or commerce.”.The exclusion given is with reference to renting of such property by religious body or education body. We could not find any exclusion from the tax entry which will apply to the appellants - We could not find any exclusion from the tax entry which will apply to the appellants. Renting of vacant land - land used for commercial construction for renting out - Held that: - After 1.7.2010, the same will be liable to tax - reliance placed in the case of In The Matter of Greater Noida Industrial Development Auth. Versus Commissioner of Customs, Central Excise And 6 Others [2015 (4) TMI 661 - ALLAHABAD HIGH COURT]. Extended period of limitation - Held that: - the appellant is a statutory authority functioning as a local Government. The nature and status of the appellant is such that there can be no allegation of malafide, willful intend to evade government tax - the demand for the extended period cannot be sustained in the present facts of the case. Appeal allowed in part - the jurisdictional authorities directed to re-quantify the tax liability applying correct rate of tax for the material time.

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• 2018 (1) TMI 115
  Abatement - Erection, Commissioning & Installation services - N/N. 1/2006-ST dated 01.03.2006 - denial on the ground that the conditions enumerated therein have not been fulfilled for claiming the benefit of abatement - Held that: - since the admitted fact is that the appellant had not supplied plant, machinery equipment etc. and only undertook the job of erection commissioning and installation of the capital items installed in the factory of the service receiver, the condition of said notification, in totality has not been fulfilled, in order to get the benefit of abatement provided there under - denial of benefit of abatement are proper and justified. Penalty - Held that: - since the issue involves interpretation of N/N. 01/2006-ST dated 01/03/2006, the benefit of Section 80 of the Act should be extended for non-imposition of penalties under various provisions of the Act - penalties set aside. Appeal allowed in part.

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• 2018 (1) TMI 114
  Renting of immovable property service - lease of land and building, plant and machinery for the use in the course of furtherance of business or commerce - Held that: - The lease amount received by the appellant appears to be prima facie for the leasing of the plant and machinery as well as land and building as a whole. It appears to us that such amount received is liable for service tax under the category of renting of immovable property service, since the amount has been received in furtherance of business. The appellant is directed to deposit the entire amount of service tax demanded within a period of eight weeks. Subject to the payment of service tax as above and compliance thereof, the rest of the demand made in the impugned order will remain stayed.

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• 2018 (1) TMI 113
  SEZ unit - refund of service tax - N/N. 40/12-ST dt. 20.06.2012 - Held that: - the Revenue in their memo of appeal, has not been satisfactorily able to convass their case. Once the substantive condition of the Notification has been fulfilled by an Assessee, denial of refund on the procedural condition, which are impossible to observe, cannot be appreciated - appeal dismissed - decided against Revenue.

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• 2018 (1) TMI 112
  Whether the adjudicating authority was correct in coming to conclusion as to appellant has short paid the service at liability during relevant period in question or otherwise? Held that: - on perusal of records, like the invoice raised by the appellant to various clients (including few governments agencies), it is found that the said Invoices are towards supply of various products viz single sheet calendars, stickers and envelops and posters, 3D embossed sheets, Flute boards and form boards holdings etc., and the said invoices indicate discharge of applicable CST - VAT and some invoices also raised by the appellants are for display of the holdings, on which applicable service tax is discharged - Surprisingly, the adjudicating authority has not recorded any findings on this factual position. Appeal allowed - decided in favor of appellant.

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• 2018 (1) TMI 111
  CENVAT credit - Pantry Boy Service/Catering Service - Event Management Services - Held that: - both the services are related to the business of the respondent and they have received the benefit of the same directly or indirectly, in the rendering of their Output Taxable Services - credit allowed - appeal dismissed - decided against Revenue.

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• 2018 (1) TMI 110
  100% EOU - Refund of CENVAT credit of service tax paid under Voluntary Compliance Entitlement Scheme (VCES), availed - Held that: - the appellant is under wrong understanding that Cenvat credit availed for the taxes paid under VCES-2013 can be claimed as refund - Section 109 of Chapter VI of Finance Act, 2013 explicitly states that such amount paid shall not be refunded in any circumstances - appeal dismissed.

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• Central Excise

• 2018 (1) TMI 109
  Manufacture - activity of taking out footwear in finished form from the boxes bearing M.R.P. and labelling the same with their brand names “Metro” and “Mochi” and of putting them into the same boxes - Held that: - As admittedly, the footwear in finished form was received by the respondent, it is impossible to say that in the form in which the footwear was received, it could not be marketed or sold in open market by the respondent-assessee. Even without carrying out the activity of putting its brand name, the final product namely the footwear could have been marketed and sold to the consumers. Even assuming that one or two brand names affixed by the respondent are very popular, by affixing the brand name, at highest the value of the footwear will increase - on plain reading of subclause( iii) of clause (f) of Section 2, the activity does not amount to manufacture within the meaning of clause (f) of Section 2. On plain reading of subclause( iii) of clause (f) of Section 2, the activity does not amount to manufacture within the meaning of clause (f) of Section 2. Appeal dismissed.

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• 2018 (1) TMI 108
  Manufacture - Goods purchased are in bulk and sold in bulk - Classification of goods - BPL kit - whether classified under CETH 85371000 or otherwise? - Held that: - Admittedly, the appellant-assessee cleared, at least, part of their sales in original bulk packing as procured by them from the market/manufacturers without any process undertaken by them. The invoice for the same is also referring to the items individually. When the procured electrical components are sold in original bulk packing without any process of fixing or mounting on any board, we find no justification at all to subject such clearances to central excise levy. Goods purchased are in bulk and sold in bulk; the appellant assessee did not undertake any process on such goods. The goods cleared by the appellant were generically called as ‘BPL Kit.’ It is apparent that the method of clearance is mandated by the terms of agreement with their clients. There is no standard commercially identifiable item which is available for sale or purchase in the market. In other words, there is no ‘BPL Kit’ commercially known and marketed. The clearances made by the appellant-assessee to the various clients as per their requirement are not any new manufactured product, commercially identifiable as ‘BPL Kit.’ The Revenue did not produce any evidence or did not even assert that these are commercially known and marketed product. The electrical components retained their name, character and use and there is no new commercially identifiable product emerging in the present case. Appeal allowed - decided in favor of appellant.

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• 2018 (1) TMI 107
  Extended period of limitation - allegation is that the appellant had mis-declared the quantity of deemed credit eligible during the said period - Held that: - The appellant having furnished details and also having reflected all the details in their P&L statement as well as trial balance, cannot be held guilty of fraud or suppression or mis-declaration of facts, especially when the department relies upon the very same documents to demand the duty - the department has failed to establish suppression of facts or willful mis-statement with intent to evade payment of duty. The demand is hit by limitation and requires to be set aside which hereby do - Since the issue on limitation is answered in favor of the appellants, we do not think it necessary to enter into the merits of the case.

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• 2018 (1) TMI 106
  CENVAT credit - Duty paying documents - taking credit without receipt of goods - fraudulent activity or not - Appellant is engaged in Manufacturing activity or not - Difference of opinion - matter referred to Third Member.

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• 2018 (1) TMI 105
  Valuation - transaction value - Whether the duty of Central Excise is payable on the Refinery Gate Price i.e. RGP paid by the OMCs to the appellant or it is payable on the subsidised price at which the OMCs so sell the goods (SKO i.e. Superior Kerosene Oil) under PDS and LPG-Liquefied Petroleum Gas Domestic to their consumers? Held that: - identical issue decided in the case of Kochi Refineries Ltd. Versus Commissioner of Central Excise, Cochin [2017 (4) TMI 323 - CESTAT BANGALORE], where it was held that the price or cost paid/received to/by an assessee or manufacturer (from independent buyer) constitutes the assessable value / transaction value for the purpose of levy of Central Excise duty. Appeal dismissed - decided against appellant.

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• 2018 (1) TMI 104
  Refund claim - unjust enrichment - abatement under N/N. 2/2007-CE (NT) dated 01.02.2007 - as the amount of abatement has been increased, therefore, the appellant has paid excess duty - Held that: - As the price of the said goods has been fixed by the drugs authority, therefore, whatever duty is payable on the said goods is to be borne by the appellant and the appellant has charged only the MRP print price on their final goods and no evidence has been produced by the Revenue that the appellant has charged any amount over and above MRP price - whatever duty has been paid by the appellant and the same has been borne by the appellant only, therefore, question of bar of unjust enrichment does not arise - appeal allowed - decided in favor of appellant.

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• 2018 (1) TMI 103
  Principles of Natural Justice - CENVAT credit - Section 9D of CEA, 1944 - Held that: - there was no adherence to provisions of Section 9D of CEA, 1944. It is evident that the proper procedure under Section 9D has not been followed by the adjudicating authority. It is clear that there has been gross violation of principles of natural justice at the adjudication stage as well as at the first appellate stage. In these circumstances, it will be in the interest of justice that the appellant are provided RUDs and the matter is adjudicated afresh. The matter is remanded back to the adjudicating authority to decide the case afresh after providing the required RUDs to the appellant and to follow procedure laid down in Section 9D of the Act - appeal allowed by way of remand.

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• 2018 (1) TMI 102
  Clandestine removal - shortage of M.S. Ingots - the demand has been confirmed by the appellate authority on the sole ground that the same has already been deposited by the appellants and appropriated - Held that: - The deposit of the duty at the time of visit of the officer, when subsequently challenged by them, cannot be ground for confirmation of the same. The appellate authority after observing in favor of assessee on the issue of clandestine manufacture and removal, should have set aside the demand also - appeal allowed.

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• 2018 (1) TMI 101
  Clandestine production and removal - Sugar - Held that: - the allegation of excess unaccounted production of Sugar is purely based on the alleged excess production of Molasses reported by the appellant themselves vide letter dated 27/11/2012 and dated 01/05/2013. There is no dispute that the quantity of Molasses stored in the tank had been determined by dip reading. Determining the quantity of Molasses by dip reading is not a foolproof method as the volume of Molasses may undergo change due to variation of temperature. As such, on the basis of excess Molasses reported during stock taking, it cannot be alleged that there was excess production of Sugar. It is well settled principles of law that shortage of raw material, by itself cannot lead to the inevitable conclusion of clandestine clearances of the final product. Appeal dismissed - decided against Revenue.

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• 2018 (1) TMI 100
  CENVAT credit - duty paying documents - denial on the ground that the same has been availed on the basis of debit notes which could not be considered to be eligible documents for the purpose of availment of credit - Held that: - the said issue stands decided in the same assessee’s case [2017 (10) TMI 1043 - CESTAT ALLAHABAD], laying down that the credit availed on the basis of debit notes cannot be denied. CENVAT credit - denial on the ground that the invoices are in the name of the assessee’s Head Office, whereas the credit has been availed in the factory premises - Held that: - the issue have been covered in the case of M/s Dhampur Sugar Mills Ltd. Versus CCE Meerut-II (Vice-Versa) [ 2016 (9) TMI 681 - CESTAT ALLAHABAD], where it was held that the credit remains allowed - Similarly, the bills for renting of various offices having been raised in the name of the head office, have been held to be eligible documents. CENVAT credit - service tax paid on the telephone bills, which telephones are installed in the residence of the employees as also in the schools run by the appellant themselves for the welfare of the children of the employees - denial on the ground of nexus - Held that: - Tribunal in the appellant’s own case has held such credit as admissible. CENVAT credit - service tax paid on insurance of the vehicles - Held that: - said issue decided in the case of M/s JSW Steel (Salav) Ltd. Versus Commissioner of Central Excise, Raigad [2016 (8) TMI 450 - CESTAT MUMBAI], where relying on the decision of Hon'ble High Court of Delhi in the case of DSCL Sugar Vs. CCE, Lucknow [2012 (12) TMI 830 - CESTAT NEW DELHI], the credit of the insurance services is allowed. Appeal allowed - decided in favor of appellant.

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• 2018 (1) TMI 99
  Clandestine removal - manufacture of biscuits - Held that: - occurrence of rejects and/or process loss is a normal feature in the biscuit industry - appellant had given proper intimation to the Revenue Authority of the proposed destruction and the same was destroyed after about two weeks from the date of such intimation - there is no evidence on record of any clandestine activity and/or attempted removal on the part of the appellant. The whole show cause notice is presumptive - appeal allowed - decided in favor of appellant.

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• 2018 (1) TMI 98
  CENVAT credit - credit taken on invoices on which proper address was not found - Held that: - there is only clerical error in the invoice(s). Admitted facts are that the appellants had two units in the same industrial area, only difference name – “Structure Division”, by the same management. Further admitted facts are that goods were found properly accounted in the proper records as required and no discrepancies were found with regard, and used in manufacture of finished goods, cleared by appellants on duty payment - credit allowed. Reversal of CENVAT credit under protest - CC Billets - Held that: - the Commissioner (Appeals) erred in observing that reversal is without protest. As appellants have not accepted objection of Revenue and have also been contesting the matter in appeal. Thus the reversal of credit ipso facto is not admission - credit on Billets is fully allowed. Levy of duty - removal of scrap - Held that: - cogent explanation was given by the appellants, not found untrue. Thus demands have been confirmed only on presumptions - demand set aside. Inputs found short - MS Angles - Held that: - admittedly there is no calculation sheet annexed to Panchnama, neither any such calculation is referred in the show cause notice. Thus the demand is by way of presumption which is not tenable. Appeal allowed in part.

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• 2018 (1) TMI 97
  CENVAT credit of CVD - duty paying documents - credit availed on the strength of said photocopy of the Bill of Entry - Rule 9 of CCR, 2004 - Held that: - The admitted fact is that the goods were imported on payment of appropriate duty of Customs, the goods were received in the factory and they were used in the manufacture of final product and Cenvat credit of CVD paid on the input was availed as Cenvat credit - reliance placed in the case of COMMISSIONER OF C. EX., LUCKNOW Versus FUSION ELECTRONICS (P) LTD. [2010 (11) TMI 285 - CESTAT, NEW DELHI], where it was held that Production of photocopies of Bill of Entry by the respondents cannot be held against them - appeal allowed - decided in favor of appellant.

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• 2018 (1) TMI 96
  Interest on delayed refund - Section 11BB of Central Excise Act, 1944 - Held that: - the Learned Commissioner (Appeals) has erred in treating 10/06/2016 as the date of filing of refund application - 8,25,000/- was refunded on 30/09/2016 which was deposited under TR-6 challan on 04/05/2007 and application for refund of the same was filed on 09/10/2007 and refund of the same was sanctioned on 26/12/2007 but actually refunded on 30/09/2016 - under the provisions of Section 11BB of Central Excise Act, 1944 the appellant is entitled for interest from 09/01/2008 to 30/09/2016. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2018 (1) TMI 95
  Refund of excess tax under protest - unjust enrichment - Held that: - at the relevant time viz. for the period 1995–96 to 1999–2000 the petitioner had collected tax from its customers at the rate of 6% and paid the same. The excess amount was paid by the petitioner only in the year 2001 to avoid liability of interest and penalty. It cannot be gainsaid that in respect of sales made during the period 1995-96 to 1999-2000, the petitioner could not have recovered the additional tax from its customers and must have paid it out of its own funds. The question of unjust enrichment therefore, does not arise. It is not the case by the respondent department that the petitioner Company had paid the differential amount in the years concerned but the same is paid during the pendency of the dispute before the Tribunal. Hence, there is no reason to doubt the same as the respondent authorities have already, while considering the challans for the assessment year 1999-2000 has granted refund to the petitioner Company. Petition allowed.

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• 2018 (1) TMI 94
  Production of Form C declaration - under what circumstances the respondent can exercise its power under Section 84 of TNVAT Act? - Held that: - The case on hand is one such case where the petitioner states that they are now in possession of the relevant declaration forms and if opportunity is granted, the petitioner would be able to produce the same - this Court is inclined to grant one opportunity to the petitioner to remedy the breach and produce the necessary documents - petition allowed by way of remand.

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• 2018 (1) TMI 93
  Rate of tax - sale of scientific equipments to educational institutions - Held that: - This very issue was considered by this Court in the case of Tvl. Consolidated Engineering Services v. The Commercial Tax Officer [2016 (6) TMI 1273 - MADRAS HIGH COURT] and the Court after taking into consideration the earlier decision, has allowed the writ petition and remitted the matter back to the authority for re-doing the assessment. Matter is remanded back to the respondent to take note of the decision in the above referred case and extend the concessional rate of tax to the petitioner, by re-doing the assessment for the relevant year.

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• 2018 (1) TMI 92
  Sales effected to exporters in the auction center - exemption u/s 5(3) of the CST Act, 1956 - rejection on the ground that they have not complied with G.O.Ms.876 dated 29.07.1982 - Held that: - Identical issue decided in the case of M/s. The United Nilgiri Tea Estates Co. Ltd., M/s. Stanes Amalgamated Versus The Commercial Tax Officer (FAC), The State of Tamil Nadu [2017 (12) TMI 689 - MADRAS HIGH COURT], where it was held that the production of certificates as per the notification dated 29.07.1982, would be required only in cases where the tea brokers are not registered - The petitioner is a registered dealer on the file of the first respondent and also on the file of the Commercial Tax Officer, Coonoor. M/s.Tea Serve issued certificates to the petitioner as to the nature of sale effected and payment of tax made to the sales tax authorities. The matter is remanded to the first respondent for redoing the assessment in accordance with law - petition allowed by way of remand.

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• Indian Laws

• 2018 (1) TMI 124
  Grant of regular bail - purchase of prohibited drugs - illegal trade of prohibited drugs - Since occupants of the vehicle including present bail petitioner were unable to produce valid papers with regard to the transportation/possession of aforesaid psychotropic substance, police confiscated the contraband, and since then, the bail petitioner is in custody - Held that: - this Court sees substantial force in the argument of Mr. Rana, learned counsel representing the petitioner that at this stage, there is nothing on record to infer that the bail petitioner purchased prohibited drugs i.e. “codeine phosphate” for illegal trade of the same, rather record itself suggests that same was purchased on the basis of licence issued in favour of the bail petitioner. Whether licence possessed by the bail petitioner was meant for purchase/sale of prohibited drugs or not, is a question of trial and same shall be determined by the court below on the basis of evidence adduced on record by the Investigating Agency, but definitely, at this stage, there is nothing on record, which could compel this Court to conclude that bail petitioner purchased the aforesaid drugs for indulging in illegal trade of the same. The Court sees no reason to keep the bail petitioner in jail for an indefinite period, especially, when he has already suffered for more than seven months. Needless to say, guilt, if any, of the petitioner is yet to be proved in accordance with law and as such, his freedom cannot be ordered to curtailed for an indefinite period during the pendency of the trial. Petitioner is ordered to be released on bail - Petition allowed.

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• 2018 (1) TMI 123
  Offence punishable under Section 18/20 of N.D.P.S. Act - carry of psychotropic substance - poppy husk - non-compliance with section 50 and 57 of N.D.P.S. Act - Held that: - A perusal of recovery memo would reveal that the police party told the accused that he is at liberty to get his search done before Gazetted Officer or Magistrate, however, the accused on finding himself caught by the policemen told that the police party may conduct his search. In my firm opinion, the appellant was not made aware about his legal right of getting searched before the Magistrate or the Gazetted Officer. Mere mentioning the words in the recovery memo that the accused was asked to give his search before Magistrate or Gazetted Officer, is not a sufficient compliance. There is non-compliance of Section 50 of NDPS Act, coupled with no document regarding compliance of Section 57 and nonjoining or non-procuring the public witness, creates reasonable doubt in the entire prosecution story. That being the position, impugned judgment and order is liable to be set aside and the appeal deserves to be allowed. Appeal allowed.

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• 2018 (1) TMI 122
  Offence u/s 8/22 of the NDPS Act - recovery of 120 grams Alprazolam powder from him - compliance of Section 42 and Section 50 of NDPS Act - Held that: - Upon perusal of the said consent memo, it is found that it has been signed by some officer on 18.7.2013, and has also been signed by the accused-appellant and it is recorded in this memo that accused was arrested on 18.7.2013 by police party with Aprazolam powder and was apprised about his legal right that he could give his search in presence of a Gazetted Officer or a Magistrate but he had told them that they could take his search and it was not required to call any such officer as he was satisfied with them. Beneath that, signature of some officer appears to have been made although it has not been got clarified in cross-examination by defense as to who had put that signature. The said consent memo not being signed by the person who had prepared the same would not cause prejudice to the accused because it bears the signature of the accused and has also been signed by some officer who was member of raiding party. Had there been no signature of the accused on the said consent memo, doubt could have been raised as to whether the accused had given any such consent - there is no doubt that there was sufficient compliance made of Section 50 of NDPS Act by apprising the accused of his above right. Since the possession of contraband substance (Alprazolam) has been found established, the burden shifts on the accused in view of provision under Section 35 and 54 of the NDPS Act as to how he came in possession of such a huge quantity of contraband substance. He has not adduced any evidence in defense so as to discharge burden shifted upon him. Therefore, there seems to be no infirmity in the judgment delivered by the court below holding the accused guilty. Appeal dismissed - decided against appellant.

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• 2018 (1) TMI 121
  Offence u/s 8/22 of N.D.P.S. Act - recovery of Contraband item - Heroin - Held that: - Accused can avoid to undergo further imprisonment in default of payment by making payment of such fine, therefore, it is the duty of court to keep in view the nature of offence, circumstances under which it was committed, the position of the offender, the other relevant considerations before ordering the offender to suffer imprisonment. It is argued that the accused is very poor, whose family is unable to maintain itself, accused had not committed any offence earlier, in such circumstances such an accused may be given relief by directing him to undergo smaller punishment in default of payment of fine so that only because of his inability to pay fine, serious prejudice may not be caused to his family members who are innocent. This Court is of the view that the accused may be granted relief in terms of the reduction in default sentence.

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• 2018 (1) TMI 120
  Cheque bounce - enforceable debt or not - Cash Loan - Contravention of Section 269SS of the IT Act - complaint under Section 138 of the Negotiable Instrument Act - Held that: - Section 269-SS only provides for the mode of acceptance payment or repayment in certain cases so as to counteract evasion of tax. However, Section 269-SS does not declare all transactions of loan by cash in excess of 20,000/- as invalid, illegal or null and void as the main object of introducing the provision was to curb and unearth black money - the order of acquittal as passed, cannot withstand judicial scrutiny and deserves to be set aside.

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• 2018 (1) TMI 119
  Smuggling - ganja - Section 8/20 of N.D.P.S. Act - non-compliance of the provision of Section 50 of the Act - personal search - Held that: - it transpires that the accused-appellant was not apprised by the arresting police party that he had a right under law (under Section 50 of N.D.P.S. Act) to opt for being searched before a Gazetted Officer/Magistrate, which is a mandatory provision which would have adverse effect on the accused-appellant being held guilty - the principle of personal search would apply it would involve search of the body of human being as presented to public view usually with its appropriate coverings and clothings and not any briefcase, bag, container etc., which a person carries with him because these articles are not inextricable from his person. In the case at hand Section 50 of the Act would be applicable which has not been followed in letter and spirit by the prosecution by disclosing to him his legal right to be searched before a Gazetted Officer/Magistrate as is apparent from the evidence which has been taken into consideration above. It is not established beyond reasonable doubt that the contraband Ganja as well as the contraband sample were separately sealed properly and were kept intact in safe custody. It is also not clear as to whether the samples of their seals were also kept safely. Further it is also made clear that when the sample contraband was tested, it was returned with seal of the F.S.L., which was opened before court at the time of recroding of statement of witnesses. The accused-appellant deserves to be acquitted of charges under Section 8/20 of the Act - Appeal allowed.

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