Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 18, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Deductions from estimated income - Depreciation should be excluded but the interest and remuneration to working partners are allowable as deduction as it does not fall under section 30 to 38 of the Act - AT
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AO and the CIT (A) are not on the same page for levy of penalty u/s 271 (1)(c) of the Act. Further, mere disallowance of a claim will not automatically attract the levy of penalty - AT
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When a partner retires from the firm and receives share of amount calculated on the value of partnership asset including goodwill of the firm, there is no transfer of interest of the partner in the goodwill and no part of the amount received is exigible as capital gain u/s 45 - AT
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On-money received - document seized during survey - the difference between the rate stated in the letter of intent and the sale agreement is the undisclosed income which has to be added in the income returned by the assessee. - AT
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Penalty u/s 271(1)(b) - failure to comply with statutory notices issued u/s 142(1) - it is difficult to gather all the required information within a short period i.e 7 to 15 days - No penalty - AT
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TDS u/s 194J - open access charges incurred by the assessee towards transmission of electricity from its plant to various parts of the country, through transmission lines owned by M/s. Power Grid Corporation of India is not a royalty and accordingly, the assessee need not to deduct TDS under the provisions of section 194J of the Act - AT
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Exemption u/s 11 - the assessee association’s primary purpose was advancement of objects of general public utility and it would remain charitable even if an incidental or ancillary activity or purpose, for achieving the main purpose was profitable in nature - assessee is not hit by proviso to section 2(15) - AT
Customs
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Recovery of Duty drawback - non receipt of export proceeds - Rule 16A is a clarificatory provision clarifying the position of law which already exists in the form of Section 75 of the Customs Act, 1962, and therefore, will have retrospective effect - SC
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Refusal for allowing advance authorisation and a duty free import authorisation (DFIA) - relaxation is not a right and nothing accrues in the petitioners' favour to apply and seek unconditional relaxation - HC
Indian Laws
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Payment of motor vehicle tax - Whether a service can be classified as Deluxe service only on the ground that the seats in the vehicle have push back or reclining facility - No - HC
Service Tax
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CENVAT credit - trading activity - input services - entire quantum of the service tax paid by the commission agent entitled as credit to the appellant - AT
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Rate of tax - rate as on date of payment of tax or as on the date on which service provided - in the SCN nothing is mentions about the period when the services were provided - No demand can be raised on such an ill founded SCN - AT
Central Excise
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SSI Exemption - Clubbing of clearances - where the companies are indeed interdependent and possibly even related through financial control and management, the value of clearances has to be clubbed together in the interests of justice - AT
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Clandestine removal of excisable goods - When on the date of stock taking itself appellant was reluctant to sign the stock taking made by the department and the authorized representatives then it cannot be said that GSCL has extended any concessions to the department in stock taking in whatever manner they want. - AT
VAT
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Constitutional validity of levy of VAT on pan masala containing tobacco - The State's power to legislate is not curtailed by the ADE Act. If that is not curtailed, then, any reliance on the constitutional scheme of distribution of revenues and taxes cannot be of assistance - HC
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Principles of natural justice - levy of penalty - the inherent defect, which has crept in the order, affects its very validity. The violation of the principles of natural justice is writ large on the face of the impugned order, which is sufficient to hold that the same is not sustainable. - HC
Case Laws:
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Income Tax
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2016 (10) TMI 556
Estimation of income - Deduction of expenditures from estimated income - Held that:- Estimation of income at 9% in respect of the contracts taken by the assessee itself and executed by it; at 8% in respect of receipts from sub-contract works taken from others and executed by the assessee; and 4% of the gross receipts in respect of contracts given by the assessee to third parties on sub-contract basis, as reasonable. In consonance with the view taken in similar cases, also considering the fact that the assessee is dealing with construction as well as development activities, we set aside the impugned order of the CIT(A) and direct the Assessing Officer to recompute the income of the assessee at 9% of the gross receipts in respect of contracts taken on its own for construction and additional 2% for the development activities. In total, the income should be estimated @ 11% of the gross receipts. Allowability of depreciation out of estimated income is concerned, we find that this Tribunal in similar matters, as in the case of M/s. Teja Constructions, Secunderabad, [2014 (1) TMI 832 - ITAT HYDERABAD] has been consistently holding that depreciation being an allowable deduction under S.32 of the Act, and since all out goings falling under S.30 to 38 are deemed to have been allowed while estimating the income, no separate deduction is allowable in respect of the same out of the estimated income in this respect. Depreciation should be excluded but the interest and remuneration to working partners are allowable as deduction as it does not fall under section 30 to 38 of the Act. Accordingly, Assessing Officer is directed to estimate the income @ 11% on gross receipts and to give deduction of interest and remuneration to partners.
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2016 (10) TMI 555
Penalty under section 271(1)(c) r.w.s 274 - claim for deduction u/s 54B was made by filing inaccurate particulars - Held that:- Having regard to the rival contentions and the material on record, we find that the assessee has furnished all the information relating to the sale of the land and also purchase of agricultural land in its return of income filed by way of Form ITR. Assessee is also eligible for deduction u/s 11 of the Act as it is carrying on activities of imparting education. The only income of the assessee which is chargeable to tax is the Long Term Capital Gain. The assessee has declared the LTCG, but has claimed deduction u/s 54B of the Act. The assessee has not challenged the findings of the authorities below that the assessee is not eligible for deduction u/s 54B of the Act and has accepted the taxability of the same. The AO has initiated the penalty proceedings for concealment of income, whereas the CIT (A) has confirmed the penalty on the ground of furnishing of inaccurate particulars of income. Therefore, it is seen that the AO and the CIT (A) are not on the same page for levy of penalty u/s 271 (1)(c) of the Act. Further, mere disallowance of a claim will not automatically attract the levy of penalty. Hon'ble Supreme Court in the case of CIT vs. Reliance Petro Products Ltd, (2010 (3) TMI 80 - SUPREME COURT ) has held that a mere making of the claim which is not sustainable in law, by itself, will not amount to furnishing of inaccurate particulars regarding the income of the assessee. Similar view has been expressed by various High Courts and the Tribunal in the decisions cited Supra by the learned Counsel for the assessee. In view of the same, we delete the penalty levied by the AO and confirmed by the CIT (A). - Decided in favour of assessee.
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2016 (10) TMI 554
Capital gain - amount received by retiring partner - transfer of goodwill - Held that:- In the instant case, as noted above, the assessee as a retiring partner has received certain amount over and above the capital balance towards his share in the partnership firm. The partnership firm has continued to exist after the retirement of the assessee partner. The Revenue has treated the additional amount so received from the partnership firm as long term capital gain and sought to tax the same. However, we find that in the case of Mr. Riyaz A. Shaikh (2013 (12) TMI 248 - BOMBAY HIGH COURT ) has held amount received by a partner on retirement cannot be taxed as long term capital gain on transfer of goodwill. When a partner retires from the firm and receives share of amount calculated on the value of partnership asset including goodwill of the firm, there is no transfer of interest of the partner in the goodwill and no part of the amount received is exigible as capital gain under section 45 of the Act. - Decided in favour of assessee
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2016 (10) TMI 553
On-money received - document seized during survey - Held that:- A document was seized during the course of survey from the premises of the assessee, the assessee has not been able to explain the reason for executing such documents. The document seized (letter of intent) is on the joint letter head of the assessee and Sanand Properties Pvt. Ltd. The letter of intent specifically mentions the description of shop, area and the per sq. ft. rate. Admittedly, the assessee has entered into sale agreement with Mrs. Usha Majummdar and Ms. Punam Majummdar in respect of same Shop No. 129 which has been mentioned in the letter of intent. However, in the sale agreement the rate of shop has been stated to be much lower than what has been stated in the letter of intent. Thus, the document seized cannot be termed as dumb document. An inevitable conclusion that can be drawn from the seized document and the sale agreement is that the difference between the rate mentioned in those two documents is the ‘on-money’ that has been received by the assessee. Therefore, the difference between the rate stated in the letter of intent and the sale agreement is the undisclosed income which has to be added in the income returned by the assessee. In so far as contention of the assessee that addition to the extent of net profit should be made, as the entire on-money received cannot be the profit of the assessee, we do not intent to agree with this contention. The assessee has disclosed the entire expenditure in its books of account. The assessee has not been able to show the additional expenditure which has been incurred but not disclosed in the books. The on-money received by the assessee in respect of Shop No. 129 is the pure profit of the assessee with no corresponding expenditure. Therefore, we reject the contention of the assessee to consider only the profit element as the undisclosed income of the assessee. The addition in respect of on-money received in respect of Shop No. 129 i.e. the shop in respect of which the document was seize during survey is upheld. Whereas, in the absence of any material to show that on-money was received in respect of other shops sold or booked during the financial year 2006-07, the addition on account of on-money is not sustainable. The principle of extrapolation of ‘on-money’ on the other shops sold/booked during the period relevant to assessment year under appeal is rejected in the absence of any material on record.- Decided partly in favour of assessee.
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2016 (10) TMI 552
Penalty u/s 271(1)(b) - failure to comply with statutory notices issued u/s 142(1) of the Act - A.O. was of the opinion that the assessee has failed to offer proper explanation for nonattendance as on the date of hearing - contention of the assessee that non-attendance as on the date of hearing is not intentional, as the A.O. has called for voluminous information for 7 assessment years within a short period of 7 to 15 days - Held that:- We find force in the arguments of the assessee for the reason that the assessee has appeared on all the occasions and furnished necessary information for completion of assessment which is evident from the fact that the A.O. has completed the assessment u/s 143(3) of the Act. Though, assessee initially not appeared before the A.O. in one or two occasions, the reason given by the assessee for nonappearance appears to be reasonable and bonafide. Therefore, we are of the view that the A.O. was not correct in levying penalty u/s 271(1)(b) of the Act. Though, the CIT(A) appreciated the facts, failed to consider the explanation offered by the assessee for the assessment year 2013-14, in view of voluminous information called for by the A.O. and also the assessment being a search assessment. Normally, search assessments are done for 7 years, wherein the assessee is required to furnish information at one stretch for all the assessment years, for which sufficient time is required. In the present case on hand, the A.O. has given 7 to 15 days time. In our opinion, it is difficult to gather all the required information within a short period. Therefore, we are of the view that the explanations offered by the assessee that he could not attend on the dates of hearing because of insufficient time to collect voluminous information appears to be reasonable and bonafide. Accordingly, we direct the A.O. to delete the penalty levied for the assessment year 2013-14. - Decided in favour of assessee.
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2016 (10) TMI 551
TDS u/s 194J - whether open access charges paid by the assessee towards transmission of electricity from its plants to various parts of the country is coming within the definition of royalty as defined u/s 9(1)(vi) of the Act? - Held that:- We find that the assessee has used transmission lines owned by M/s. Power Grid Corporation of India Ltd. for transmitting power from its plant to various parts of India. The assessee has paid open access charges through M/s. Reliance Energy Trading Ltd. for use of transmission lines. There is nothing on record to show that the assessee has used any patent, invention, model, design, secret formula or process or trade mark or similar property and associated rights in that property to say that the open access charges paid by the assessee is coming within the meaning of royalty as defined u/s 9(1)(vi) of the Act. In our considered view, the A.O. without understanding the provisions, brought in the concept of definition of royalty provided in sub clause (iva) of explanation2 of section 9(1)(vi) of the Act, the use or right to use any industrial, commercial or scientific equipment to cover open access charges incurred by the assessee within the definition of royalty as defined u/s 9(1)(vi) of the Act. Therefore, we are of the view that open access charges incurred by the assessee towards transmission of electricity from its plant to various parts of the country, through transmission lines owned by M/s. Power Grid Corporation of India is not a royalty and accordingly, the assessee need not to deduct TDS under the provisions of section 194J of the Act. The CIT(A) after considering the relevant facts rightly deleted additions made by the A.O. We do not see any error or infirmity in the order passed by the CIT(A),. Hence, we inclined to uphold the CIT(A) order and dismiss the appeals filed by the revenue. - Decided in favour of assessee.
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2016 (10) TMI 550
Charitable institution - applicability of the provision of section 13 (8) - benefit of section 11 - Held that:- in the given facts and detailed reading of the various judicial decisions through the years, interpreting the definition of “charitable purpose” as laid out in section 2(15) of the Act and also the definition of “business” in relation to the said section amply revels that the theory of dominant purpose has always, all through the years, been upheld to be the determining factor laying down whether the Institution is Charitable in nature or not. Where the main object of the Institution was “charitable” in nature, then the activities carried out towards the achievement of the said, being incidental or ancillary to the main object, even if resulting in profit and even if carried out with non members, were all held to be “charitable” in nature. Hon'ble Apex Court in the earliest case of Andhra Chamber of Commerce ( 1980 (5) TMI 3 - SUPREME Court ) had clearly laid out the principle that if the primary purpose of an Institution was advancement of objects of general public utility, it would remain charitable even if an incidental or ancillary activity or purpose, for achieving the main purpose, was profitable in nature. In our view the basic principle underlying the definition of “charitable purpose” remained unaltered even on amendment in the section 2(15) of the Act w.e.f. 01/04/2009, though the restrictive first proviso was inserted therein. Accordingly, in the given facts of the case as discussed above in detail, the assessee association’s primary purpose was advancement of objects of general public utility and it would remain charitable even if an incidental or ancillary activity or purpose, for achieving the main purpose was profitable in nature. Hence, assessee is not hit by newly inserted proviso to section 2(15) of the Act. This issue of assessee’s appeal is allowed.
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2016 (10) TMI 549
Assessment u/s 153C - unexplained payment - whether there was sufficient material to prima facie show that in such handwritten noting in the seized document, reference to 1105 was a cash payment by the petitioner to B. Nanji - Held that:- This is not a case where the satisfaction recorded by the Assessing Officer of the searched person can be stated to be based on no material. There is thus prima facie material to suggest that incriminating documents seized during the search belonged to the petitioner. The Revenue has for the purpose of brief scrutiny available at this stage led before the Court sufficient material not to interfere with the pending assessments. Facts in all petitions are common. They are therefore, not separately recorded or referred.
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2016 (10) TMI 548
Allowability of professional fees paid expenses - whether the Tribunal was right in treating the professional fees paid to its collaborator KSB AG of Germany for implementing the SAP programme as an allowable expenditure when the use of this software enhances the efficiency of the organization which is enduring in nature and as good as the acquisition of an asset? - Held that:- Taking note of rapid technological development, purchase of technology may not lead to any enduring benefit as the same may have to be upgraded very soon. In any case, the finding of fact in this case is that there is no purchase of technology by the respondent assessee. In the above view, the impugned order essentially renders a finding of fact that question as proposed does not give rise to any substantial question of law. Thus, not entertained.
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2016 (10) TMI 547
Validity of eopening of assessment - deduction issue of section 80IB(10) - Held that:- with regard to this deduction issue of section 80IB(10) of the Act, on earlier occasion, the Assessing Officer has thoroughly examined the eligibility aspect of the petitioner. The scrutiny assessment has taken place under section 143(3) of the Act and in final order on 17.02.2006 after considering the material on record, the deduction is made available to the petitioner to the extent of ₹ 1,83,17,435/- and therefore, the deduction issue has been at threadbare level examined by the Assessing Officer in scrutiny assessment. It is also emerging from the record that action which is sought to be initiated is beyond the period of four year and looking to the reasons which have been reflected from page 67 of the petition compilation, the only reason for reopening of assessment is an insertion of explanation to section 80IB(10) of the Act with retrospective effect from 01.04.2001 and reasons indicate that there is no element of any nondisclosure on the part of the petitioner. It is also appearing from the record that in response to the query which has been raised by the respondent authority, the petitioner has provided adequate material related to the development work which was undertaken by the petitioner and the petitioner has tried to justify his claim by furnishing necessary documents including the agreement, profit and loss account as well as audit report. The said material has also been examined in detail in past at the time when scrutiny assessment has taken place Reopening is admittedly beyond the period of four years and there is no element of non disclosure material facts on the part of the petitioner, we are of the opinion that the action impugned is not permissible and therefore, in view of above situation, the impugned action is invalid and we hereby quash and set aside the same and accordingly, the impugned notice dated 12.03.2010 as also the order dated 21.12.2010 are quashed and set aside. - Decided in favour of assessee
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2016 (10) TMI 546
Rectification of mistake - addition u/s 68 - Held that:- Tribunal has got limited power to rectify mistake u/s. 254(2) of the Act. In the case before us, the AO has not pointed out any arithmetical mistake in the order of the Tribunal nor has he proved that legal position taken by the Tribunal has altered because of subsequent judgment of the Hon’ble jurisdictional high court or the Hon’ble Apex court. The Tribunal has decided the issue after considering all the facts and provisions of law. In our opinion, no mistake is apparent, in the impugned order of the Tribunal. We would also like to mention that the case of Jansampark(2015 (3) TMI 410 - DELHI HIGH COURT), relied upon by the DR has no relevance to decide the issue before us. The matter deals with section 68 of the Act and does not deal with scope of section 254(2)of the Act. Therefore, we are of the opinion that application filed by the AO deserves to be rejected.
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2016 (10) TMI 545
Validity of reopening of assessment - reasons to believe - Held that:- We are of the view that AO has not applied his mind so as to come to an independent conclusion that he has reason to believe that income has escaped during the year. In our view the reasons are vague and are not based on any tangible material as well as are not acceptable in the eyes of law. The AO has mechanically issued notice u/s. 148 of the Act, on the basis of information allegedly received by him from the Directorate of Income Tax (Investigation)-I, New Delhi. Keeping in view of the facts and circumstances of the present case and the case law applicable in the case of the assessee, we are of the considered view that the reopening in the case of the assessee for the asstt. Year in dispute is bad in law and deserves to be quashed. - Decided in favour of assessee.
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2016 (10) TMI 544
Dividend dividend u/s 2(22)(e) - Held that:- In this case, assessee directly withdrew the money from another company and said outstanding amount to M/s. Amit Cottons Pvt. Ltd., was settled by way of transfer entries between the two companies but ultimately, as per the provisions of Section 2(22)(e), it is paid on behalf of assessee by such company. Therefore, it is within the purview of the provisions of Section 2(22)(e). In view of that, we affirm the order of CIT(A) to the extent of amount confirmed u/s. 2(22)(e) in the order. Assessee’s grounds are accordingly rejected.
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2016 (10) TMI 543
Limitation period on levy of penalty u/s 271(1)(c) - Held that:- Hon’ble Madras High Court in the case of Rayala Corporation vs. UOI (2006 (4) TMI 96 - MADRAS High Court ) held that, in case where appeal against assessment order was pending before the Tribunal, then in such a situation, the limitation period on levy of penalty would be 6 months from the end of the month in which the order of the Tribunal received by the AO. The aforesaid decisions will allay the fear of the revenue regarding limitation issue for passing of the penalty order. Before us, the revenue has not brought any contrary decision to what has been laid down by the Hon’ble Gujarat High Court. Thus, on the facts of the present case, we direct the AO to keep the penalty proceedings in abeyance concurrently for the period of 6 months or till the passing of the order by this Tribunal, whichever is earlier. On the next date of hearing both the parties shall ensure that, hearing of the appeal is taken on peremptorily basis.
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2016 (10) TMI 542
Revision u/s 263 - deemed dividend addition u/s 2(22)(e)- assessee is challenging this finding by contending that the deemed dividend, if any, is taxable in the hands of the person, who is the shareholder of the lender Company and not in the hands of the persons or entities other than the shareholder - Held that:- Here in this case, M/s. Birendra Chandra Saha admittedly is not a shareholder in M/s. Mascot Woodcraft Pvt. Ltd. and the loan was advanced to the assessee-company. The beneficiary shareholder of M/s. Mascot Woodcraft Pvt. Limited, i.e. Smt. Kamala Saha is not the registered shareholder of M/s. Mascot Woodcrafts Pvt. Limited. In these circumstances, the decision of this Tribunal in the case of Bhaumik Colour (P) Limited [2008 (11) TMI 273 - ITAT BOMBAY-E ] is applicable on all fours. Respectfully following the same, we hold that the ld. CIT is not justified in making the addition of ₹ 95,70,953/- under section 2(22)(e) of the Act as deemed dividend. - Decided in favour of assessee.
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2016 (10) TMI 541
Revision u/s 263 - CIT(A) held the order of the AO as erroneous & prejudicial to the interest of Revenue on the ground that the AO failed to examine the issue of interest income whether it is eligible for exemption u/s 10AA - Held that:- From the facts, we find that the AO while allowing the exemption u/s 10AA of the Act objected that the certain expenses and interest income on FD claimed by the assessee have been wrongly apportioned to the different units of the assessee. From the above order of Ld. CIT(A) we find that the issue of “income on FD” has been duly dealt in the order of AO and subsequently by ld. CIT(A). The AO has not accepted the plea of the assessee for allocation of the interest income on FD & interest expenses. This observation of the Assessing Officer, in our considered view, shows that the AO has admitted that the interest income on FD has direct link with the business and accordingly the same is eligible for deduction u/s 10AA of the Act. In the instant case, the impugned order passed by ld. CIT u/s 263 of the Act looks to the issue from different angle and therefore holding the order of the AO erroneous and prejudicial to the interest of Revenue. If that is allowed then there can be several dimensions to view the issue which has been overlooked by the AO at the time of assessment. Accordingly, the impugned order passed by AO after application of mind cannot be regarded as erroneous in so far prejudicial to the interest of revenue because the Ld. CIT will look the issue at different angle. The impugned order passed by AO is neither erroneous nor prejudicial to the interest of revenue. Therefore we find the impugned revision order unsustainable in law, and we, therefore, quash the same. The issue gets the relief accordingly. - Decided in favour of assessee.
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Customs
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2016 (10) TMI 566
Recovery of Duty drawback - non receipt of export proceeds - demand of duty with interest - jurisdiction of Assistant Collector of Customs - Rule 16A of the Duty Drawback Rules 1995 - Section 75 of Customs Act, 1962 - whether Rule 16A of the Duty Drawback Rules 1995 had retrospective effect and the drawback before 06.12.1995 can be recovered? - Held that: - Suffice is to point out that the effect of Section 75 of the Customs Act, 1962, is that in case value/price of the goods exported is not received, it is to be presumed as if no drawback was ever allowed and in that view of the matter, the duty drawback which was taken by the appellant had to be refunded. That would be the position even de hors Rule 16A of the Duty Drawback Rules, 1995. Therefore, Rule 16A is a clarificatory provision clarifying the position of law which already exists in the form of Section 75 of the Customs Act, 1962, and therefore, will have retrospective effect - drawback to be recovered. - Decided against the appellant. On drawback of excise duty, the refund was granted along with 12% Simple Interest, though the said amount is refunded but the interest component has not been released to the appellant till date. If that be so, then the amount of interest shall be released in favour of the appellants within three months.
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2016 (10) TMI 565
Refusal for allowing advance authorisation and a duty free import authorisation (DFIA) - Failure to fulfill export obligation - claim of unconditional relaxation - recognised Export House - It is evident from the petition itself that they aware of the defaults and which had occurred - Principles of natural justice - writ of certiorari - Held that: - Once relaxation is not a right and nothing accrues in the petitioners' favour to apply and seek unconditional relaxation, then, all the more we do not think that the exercise undertaken by the experts in the field and in charge of interpretation and implementation of the foreign trade policy should be interfered by us in our equitable and discretionary jurisdiction under Article 226 of the Constitution of India. A person who has not been able to fulfill the obligations cannot insist on an unconditional relaxation or exemption - All imports and exports of more than one advance authorisation can be considered provided inputs are common and properly accorded for as per norms - also considered as to how the exercise of clubbing at the instance of the petitioners firstly enabled the petitioners to prolong the period for fulfillment of the export obligation and secondly, that the petitioners were aware that the first of such authorisation can be taken into consideration for relaxing the period within which the export obligation has to be completed - Petition dismissed
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2016 (10) TMI 564
Import of Ammonium Nitrate - restoration of licence in Form P-3 under the Explosive Act, 1884, (Act) - licence to possess for sale of Ammonium Nitrate from a store house exceeding 30MT or in tanks as per Ammonium Nitrate Rules 2012 - licence issued on 03.12.2014, to remain valid till 31.03.2019 - opportunity of being heard - whether invocation of power under Section 6E read with Rule 42(5)(i), of the Rules to revoke the licence without affording the opportunity of hearing to petitioner justified? - Held that: - it is evidently clear that the respondent on receipt of the information from the Principal Commissioner of Customs, Chennai, has taken note of the materials placed before it and it appears on further investigation on selected buyers, mentioned that the entire quantity of Ammonium Nitrate was used in Mines and Quarries for blasting operations and not used for agricultural purposes. The respondent taking into consideration the information received by it, has formed an opinion that licence granted to the petitioner requires to be placed under suspension as an interim measure and the reasons for exercising the power of interim suspension is vivid on a reading of the impugned order. Therefore, the petitioner is not correct in contending that the Licencing Authority has not recorded his opinion, while exercising the power of the interim suspension. In terms of proviso in Rule 42(5), the respondent has granted an opportunity to the petitioner to show cause as to why the Licence should not be cancelled. Therefore, the impugned order cannot be stated to be devoid of reasons nor it can be stated that the competent authority did not form an opinion before passing the order of interim suspension. Lack of jurisdiction - power of authority for interim suspension - the Joint Chief Controller of Explosives, South Circle - Held that: - The learned Additional Solicitor General produced before this Court a chart, attested by the Chief Controller to show the delegation of powers granted by the Chief Controller. By virtue of the said chart, it is seen that the Joint Chief Controller has been delegated with the power for interim suspension and issuance of the show cause notice. Whether the order of rejection of the petitioner's application for issuance of licence in Form P-5, for import of Ammonium Nitrate is just and proper.? - Held that: - the use of Ammonium Nitrate having been regulated, the petitioner cannot, as a matter of right, claim that except for the circumstances set out in Rule 6(4), there can be no restriction on import or export of Ammonium Nitrate, and it cannot be a ground to interfere with the impugned order, as the Rule 6 only postulates general restrictions. Thus, while rejecting the application submitted by the petitioner for grant of licence in Form P-5, bearing in mind the interest of the National Security, thought fit to restrict issuance of licence in favour of the Ammonium Nitrate users and the petitioner being a trader, rejected their application. The restriction imposed is a reasonable restriction in the light of the fact, separate Rules were framed for regulation of the use of Ammonium Nitrate, which has been specifically brought within the definition of an explosive substance. In such circumstances, this Court is not inclined to interfere with the impugned order. Detention of consignment by the customs - purchase order placed on 06.05.2015 i.e., much prior to the petitioner's application for grant of licence in Form P-5 for import of Ammonium Nitrate and therefore, when it became a necessity to obtain a licence, the petitioner had applied for the same and thus the detention of consignment justified? - Held that: - The date of purchase order is of no relevance, while considering as to whether the petitioner is entitled to import the impugned goods, what would be relevant is the law which prevails on the date when the bill of entry is filed and on such date, though the goods were freely importable unless the importer had a licence in Form P-5, import was impermissible. Thus, the petitioner having not been granted a licence in Form P-5, cannot claim that the impugned consignment should be released to the petitioner. If this is done, it would tantamount to issuing a direction to the authorities to disobey the rules, which cannot be done. Petition dismissed - competent authority directed to consider the petitioner's reply dated 01.06.2016, to the show cause notice, dated 20.05.2016, afford an opportunity of personal hearing to the petitioner and pass orders on merits and in accordance with law, within a period of 30 days.
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2016 (10) TMI 563
Imposition of penalties u/s 112 of the Customs Act on CHA - delivery of the imported consignment through a godown in Bhiwandi, while the said material had to be delivered to a factory premises of some other person - Held that: - reliance placed on appellant's own case [2005 (5) TMI 99 - CESTAT, MUMBAI] where it was held that there is no charge of an act of misdeamour having been committed by this employee of CHA licencee which would render the goods liable to confiscation while under clearance from the customers. The post import association with the delivery of goods, up to a godown in Bhiwandi, ipso facto will not cause for the violation of conditions of a DEEC import. The violation of DEEC imports would be constituted only after the goods have been diverted and not used by the DEEC licence holder/importer and thus no penalty imposed. Penalty not imposed following the judgement of appellants own case - appeal allowed - decided in favor of appellant.
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2016 (10) TMI 562
Proper officer - Juridiction to issue Show Cause Notice - Constitutional validity and effect of Section 28(11) of the Customs Act, 1962 - Validity of SCN issued by the Additional Director General, DRI, Bangalore - Apex court stayed the operation of the impugned judgment [2016 (5) TMI 225 - DELHI HIGH COURT]
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Corporate Laws
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2016 (10) TMI 558
Application filed suo-moto for compounding - Held that:- We have heard the Practicing Company Secretary who urged before us that due to some unavoidable circumstances, the accounts were not finalized and hence Annual General Meeting could not be held on time. The Practicing Company Secretary further contended that Annual General Meeting was held subsequently on 27/11/2014 and accounts were approved by the share holders of the company. The Practicing Company Secretary further stated that applicants voluntarily filed this suo-moto application accepting violation of provision of section 96 of Companies Act, 2013. The Practicing Company Secretary has further stated that violation is punishable under section 168 of companies Act, 1956. The Practicing Company Secretary further contended a lenient view may be taken as company has subsequently held Annual General Meeting with delay of 57 days. We have looked into the documents filed in support of the Petition. The petitioners relied on the extract of the Board Resolution dated 15/03/2016. The Resolution reads that the Board of Directors agreed to file suo-moto applications for compounding. Petitioners also filed photo-stat copy of statement of Profit & Loss A/c for the year ending 31/03/2014 and also financial statement for the year ending 31/3/2014. We have received report from the Registrar of Companies, Bengaluru who stated that violation can be compounded by levying compounding fee on the Applicants. The compounding fee levied shall be paid by the Applicants within 15 days from the date of this order.
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Service Tax
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2016 (10) TMI 581
Refund of service tax - services utilized for export purposes - N/N. 41/2007-ST dated 06.10.2007, port services entitled to refund claim - THC charges - bill of loading charges - origin haulage charges - repo charges - CHA services - transportation of empty containers from port to factory charges - whether denial of refund claim justified on the ground that these services do not fall under the category of port services? - Held that: - the issue stands decided in various cases M/s SRF Ltd. Versus C.C.E., Jaipur-I [2015 (9) TMI 1281 - CESTAT NEW DELHI], M/s. Shivam Exports, M/s. Mecshot Blasting Equipment (P) Ltd. And M/s. Shree Ram Industries Versus CCE Jaipur [2016 (2) TMI 259 - CESTAT NEW DELHI]. As much as the issue stands decided, the assessee would be entitled to the refund of service tax paid on the said services. In some of the cases the refund stands denied on the ground that the appellant have not submitted proper invoices and have only produced debit notes. The said issue is covered by the earlier decision of the Tribunal laying down that the said debit notes would be admissible documents for the purpose of refund. Matter remanded for grant of refund wherever held admissible - appeal disposed off.
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2016 (10) TMI 580
Denial of CENVAT credit - Chartered Accountant services - apart from the copies of invoices issued by the Chartered Accountant the appellant has not produced any evidence on record to show that consideration for the said services stand paid by them, along with service tax - Held that: - there is no dispute about the Chartered Accountant Services, being cenvatable, and the only dispute relates to the verification of the documents, the impugned order set aside and matter remanded to the original adjudicating authority for examining the appellants claim. Needless to say that the appellant shall produce all the documentary evidence in support of their claim before the adjudicating authority.
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2016 (10) TMI 579
Levy of service tax prior to 01.06.2007 - works contract - management, maintenance or repair service - erection, and commissioning or installation services - services under the works contract was introduced w.e.f. 01.06.2007 - whether denial of demand of service tax justified on the ground that the services of appellant comes within the ambit of works contract? - Held that: - the decision in the case of L&T Ltd. vs, CCE Kerala [2015 (8) TMI 749 - SUPREME COURT] apply where it was held that the services falling under the category of works contract cannot be taxed prior to 01.06.2007. Demand of service tax not sustainable - appeal rejected - decided against Revenue.
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2016 (10) TMI 578
CENVAT credit - trading activity - input services - restriction of the Cenvat credit to the extent of about 80% in the ratio of value of material supplied by the appellant to the value of services provided by the appellant under the supply and services agreements - denial of a part of the Cenvat credit taken on input services - 'Input Service' as defined in Rule 2 (I) of the Cenvat Credit Rules - whether the credit on such input services were properly taken? - Held that: - The commission agent services have been used by the appellant for procurement of Turnkey orders from DISCOMS. Since part of such orders are for supply of goods manufactured by the appellant and the other part is for supply of services, such services quality as input service. Similarly insurance services availed for the goods and services would also be eligible as input service. reliance placed in the decision of the case of COMMISSIONER OF CENTRAL EXCISE, LUDHIANA Versus AMBIKA OVERSEAS [2011 (7) TMI 980 - PUNJAB & HARYANA HIGH COURT] where it was held that overseas commission agents used for procuring orders would be covered under input service. Utilization of CENVAT credit - Rule 3 (4) of the Cenvat Credit Rules, 2004 - whether the credits taken have been properly used for making payment of excise duty/service tax on output service? - Held that: - Cenvat credits properly taken may be utilized for payment of either excise duty on final products manufactured or service tax on output service rendered. The scheme of Cenvat credit does not require segregation of the credits availed in terms of whether such input/input services or utilized for the manufacture of final products are used for rendering output service. This specific issue has been clarified time and again by CBEC. The issue has been clarified by DGST in a FAQ raised and also by CBEC in Circular No. 381/23/2010/862 dated 30/03/2010 - similar views have been taken in the case of M/s Pipavav Shipyard Ltd. Versus Commissioner, Central Excise & Service Tax, Bhaavnagar [2015 (8) TMI 58 - CESTAT AHMEDABAD]. The credits have been properly availed on input services - restriction of the CENVAT credit to the service portion of the contract withheld - entire quantum of the service tax paid by the commission agent entitled as credit to the appellant - appeal allowed - decided in favor of appellant.
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2016 (10) TMI 577
Validity of SCN - rate of tax - rate as on date of payment of tax or as on the date on which service provided - Held that: - nothing mentioned in the SCN about the period of service. When the liability arose is not coming out of the show cause notice, it is a case of denial of course of natural justice to defend. Such an ill founded SCN not being expectation of the law, adjudication fails to stand - SCN not tenable - appeal allowed - decided in favor of appellant.
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Central Excise
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2016 (10) TMI 576
Sanction for prosecuting the petitioner - evasion of excise duty - mis-declaration of goods - PVC rigid pipes - PVC Scrap - Held that: - there is no provision of law under which such sanction was mandatory. Complaint accompanied by an affidavit - the case of Mrs. Priyanka Srivastava and another vs. State of Uttar Pradesh and others [2015 (5) TMI 47 - SUPREME COURT OF INDIA] referred - Held that: - The said direction issued in the above said judgment was in the context of a complainant who had filed prior application under Sections 154(1) and 154(3) while filing a petition under Section 156(3) should be indicated by an affidavit and that without going through such procedure in the first instance to invoke the authority of the Magistrate under Section 156(3) would lead to an abrasion. However, it is found that Section 154(1) would be attracted in respect of cognizable offences and the question of any such steps being taken under Section 154 does not arise in the present case on hand as the complaint was filed under Section 200 of the Criminal Procedure Code. The offences alleged are non-cognizable as found from the provisions of the Central Excise Act, 1944 - the mandate as found in Srivastava's case would not apply. Petition dismissed - decided against petitioner.
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2016 (10) TMI 575
Refund of amount alongwith interest - demand raised earlier towards which the amount already deposited is set aside - amount directed to be refunded to the petitioner - Insofar as the demand for interest at the rate of 18% per annum of such amount is concerned, this court while passing the order dated 6th December, 2013 had not specified that the petitioner would be entitled to refund of the amount with interest if it succeeded in the petition. The amount deposited by the petitioner is pursuant to an interim order passed by the court and is not in the nature of payment of excise duty and hence, the provisions of the Central Excise Act for refund would not be applicable. Consequently, the provisions of section 11BB of the Central Excise Act which provides for interest on delayed refund, would not be applicable. It is settled legal position that in the absence of a statutory provision entitling the assessee to interest, a mandamus cannot be issued to the revenue to pay interest. Therefore, though the petitioner has claimed interest at the rate of 18%, the same is not backed by any statutory provision and hence, the relief prayed in the application to that extent cannot be granted. Application succeeds - petitioner entitled to get the refund only of amount deposited earlier, and no interest granted - in case such amount is not paid to the petitioner within a period of three months, the opponents shall be liable to pay interest at the rate of 18% to the applicant for the subsequent period till the date of actual payment.
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2016 (10) TMI 574
Condonation of delay - Held that: - a fair chance is required to be given to the petitioner to see that his appeal before the Tribunal be disposed of and dealt with on its own merits in accordance with law, more particularly, when the learned advocate has drawn the attention of this Court that requirement of deposit of 10% is already fulfilled while presenting an appeal - Decided against the assessee
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2016 (10) TMI 573
SSI exemption - N/N. 8/2003-C.E., dated 1st March 2003 - use of brand names belonging to others - documents to be placed to substantiate the plea. It is not understood why, information concerning registration of trademarks, which is in the public domain, could not be gathered by the Department and placed before the CESTAT. Permitting the Department to do so at this stage, nearly eight years after the issuance of the show cause notice, is justified? Held that: - The CESTAT has held that even if the affixing of a sticker to the footwear in question may amount to manufacture, the Respondents would nevertheless be entitled to exemption under the aforementioned notification as an SSI unit. This factual finding does not, in the considered view of the Court, give rise to any substantial question of law. This is irrespective of the preliminary objection of the Respondent on the maintainability of the present appeal on the ground that the issue arising from the impugned order of the CESTAT concerns payment of duty and, therefore, an appeal is maintainable only before the Supreme Court. Appeal dismissed.
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2016 (10) TMI 572
Modification of the order - Waiver of the pre deposit - Negative net worth of the company - the petitioner failing to convince the Tribunal that the entirety of the pre-deposit should be waived, the petitioner was not entitled to carry an application for modification on the basis of an order of a Coordinate Bench or an order of the Supreme Court which could have been relied upon on October 28, 2015 - The doctrine of precedents as it is applicable to a Tribunal is primarily founded on the larger public policy of the requirement an element of certainty of the outcome in a set of circumstances - the application for modification admitted that the fact that the petitioner company had a negative net worth “had not been brought to the notice of this Honble Tribunal earlier - the petition is utterly unmeritorious and is dismissed with costs assessed at ₹ 10.000/-. - Decided against the assessee
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2016 (10) TMI 571
Denial of remission of Excise Duty - quantity not kept in steel tank - whether denial justified on the ground that quantity which was required to be kept in steel tank was not kept? - Held that: - the appellant was duty bound to keep the molasses in the three tanks to their full capacity. Since appellant has not utilized the three tanks to the fullest capacity so the Tribunal was justified in granting remission of excise duty on 15,651 quintals but refused to grant remission on the balance quantity which could be stored in the steel tank - denial of remission justified - appeal dismissed - decided against appellant.
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2016 (10) TMI 570
SSI Exemption - Clubbing of clearances - dummy units - benefit of exemption under N/N. 8/2003 - Held that: - evidence found that there is a financial flow back between the two units and both the units are controlled by the same person. There is a specific evidence of financial flow from one entity to another entity and both the entities are being controlled by two Directors viz., S/Shri V.S. Manohar and V.U. Thambi. If the corporate veil is lifted then it can be revealed that both the entities are one and the same and therefore there is nothing wrong in clubbing the clearances of both the units for the purpose of computation of aggregate value of clearances for SSI exemption. The decision in the case of Parle Bisleri (P) Ltd. Versus CCCE [2010 (12) TMI 26 - Supreme Court of India] relied upon where it was held that where the companies are indeed interdependent and possibly even related through financial control and management, the value of clearances has to be clubbed together in the interests of justice. Invocation of extended period of limitation - Held that: - extended period has been rightly invoked by the Department as the Director has concealed the true facts from the Department with intent to evade payment of duty and the said Director whose statement was recorded and he has admitted the factum of flow of funds between the two units is personally responsible and the penalty has rightly been imposed on him. Demand of duty, interest and penalty confirmed - appeal rejected - decided against assessee.
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2016 (10) TMI 569
Differential duty under the compounded levy scheme u/s 3 (a) of the Central Excise Act - iron and steel products manufactured in Hot Steel Rerolling Mills with effect from 01.09.1997 - constitutional validity of Rule 5 - the decision in the case of R.S. Industries (Rolling Mills) Vs Union of India [2016 (5) TMI 1277 - RAJASTHAN HIGH COURT] referred - Held that: - the issue of the case R.S. Industries (Rolling Mills) Vs Union of India is similar and the decision apply. Since the matter is pending before the Hon’ble Supreme Court for final determination, regarding the constitutional validity of Rule 5, of the Hot Re-rolling Mills Capacity Determination Rules 1997, the present appeals is disposed off by observing that the outcome of the pending appeals before the Apex Court would apply. Imposition of penalty and interest - Held that: - the decision in the case of Shri Bhagwati Steel Rolling Mills Vs CCE [2015 (11) TMI 1172 - SUPREME COURT] apply where it was held that a penalty can only be levied by authority of statutory law, and Section 37 of the Act, does not expressly authorize the Government to levy penalty higher than ₹ 5,000/-. This further shows that imposition of a mandatory penalty equal to the amount of duty not being by statute would itself make Rules 96ZO, 96ZP and 96ZQ without authority of law. The Rules of 96ZO, 96ZP and 96ZQ striked down insofar as they impose a mandatory penalty equivalent to the amount of duty on the ground that these provisions are violative of Articles 14, 19(1)(g) and are ultra vires the Central Excise Act - imposition of penalty and interest not sustainable in law - appeal disposed off - decided against appellant.
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2016 (10) TMI 568
Valuation - transaction value u/s 4(1)(a) of the Act - place of removal - delivery charges and transportation cost beyond the place of removal includible in the assessable value or not - whether the petroleum products cleared from warehouse to Company Owned Company Operated Outlets (COCOO) are to be valued in terms of Section 4(1)(b) of the Central Excise Act, 1944 read with Rule 7 of the Central Excise Valuation Rules? - Held that: - the decision in the case of CCE, Viskahapatnam vs. BPCL [2012 (12) TMI 471 - CESTAT, Bangalore] relied upon where it was held that valuation based at the time of removal of petroleum products from installation is only material for charging duty of Central Excise, subsequent sale from COCOO being immaterial. CESTAT, Bangalore has given the meaning of place of removal for the period prior to 14.5.2003. The case in hand is for the period March 1999 to November 2001, which is prior to 14.5.2003, for which old definition of place of removal is relevant. For the period prior to 14.5.2003, the place of removal did not include the premises like COCOO. The price charged by these outlets from the ultimate buyer, therefore, cannot be included in the transaction value for arriving at the duty of Central Excise for the subject goods. Appeal allowed - decided in favor of appellant.
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2016 (10) TMI 567
Clandestine removal of excisable goods - demand of duty with interest - imposition of penalty - whether appellants are indulged in clandestine manufacture and clearance of Iron and Steel finished goods falling under Chapter-75 of the Central Excise Tariff Act, 1985? - A daily performance report of H R Strips prepared by the Quality Control in charge of GSCL - Held that: - clandestine removal is a serious charge and cannot be held on the basis of presumption, assumption and surmises. It is observed that daily performance report recovered from the factory premises of GSCL only indicate the quantities tested by the Quality Control In-charge of the appellant and does not convey the daily manufacturing quantity of GSCL. Statement of Shri Pradip Chatterjee dated 07.03.2006 also indicate that this report is not maintained regularly. There is no correlation brought out by the Adjudicating authority that the quantities mentioned in this report are not reflected in the statutory records of Appellant GSCL. Appellant also requested for the cross examination of Shri Pradip Chatterjee but the same has not been entertained by the Adjudicating authority. It is now a well accepted legal proposition that by virtue of Section 9D of the Central Excise Act, 1944 cross examination of the relied upon witness has to be extended when the same is sought for by the aggrieved party. If for any reasons the request cannot be entertained then the same has to be rejected and informed to the concerned party separately for redressal if he intends to appeal against such rejection. In the absence of cross examination of the concerned witness the evidentiary value of that statement is lost. Alleged shortage of finished goods as per a joint stock taking held on 07.09.2005 - Held that: - When on the date of stock taking itself appellant was reluctant to sign the stock taking made by the department and the authorized representatives then it cannot be said that GSCL has extended any concessions to the department in stock taking in whatever manner they want. Stock was required to be verified on actual weighment basis as per relied upon case laws and not on the basis adopted by the department while calculating shortages in stock of the appellant. Charge of the department regarding clandestine removal and demand on this ground is not sustainable and is required to be rejected. Weighment slips of the Golden Weighbridge under the control of appellant GSCL - Held that: - The statements of relied upon witnesses are the only evidences on record as they are only authenticating the documents recovered from the factory/official premises of the appellants. There is no evidence of extra raw materials purchased/procured by the appellant GSCL and extra power consumption. During Stock taking no excess/shortage in raw materials were found. Appellant GSCL and his employees did not admit to clandestine removal. No doubt the investigation conducted do suggest a strong suspicion about clandestine activities but a suspicion howsoever grave cannot take the place of proof of clandestine clearance like seizure of clandestinely removed goods, seizure of cash admitted by the concerned persons to be sale proceeds of the illicitly removed goods, excess procurement of raw materials, excess power utilization, confirmation by some of the transporters and recipients to indicate that such clandestined cleared goods have been transported/received by them - clandestine removal of goods cannot be proved. Imposition of penalties - Held that: - once on merit case is decided in favour of the appellants then penalties cannot be imposed upon them under various provisions of the Central Excise Act, 1944 and the rules made thereunder. Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2016 (10) TMI 561
Constitutional validity of levy of VAT on pan masala containing tobacco - claim of exemption from VAT since tobacco products liable to ADE (GSI) under section 3 of the ADE Act, 1957 - The Parliament omitted Chapter headings 2401, 2402 and 2403 and sub-heading and tariff item thereunder from the First Schedule to ADE Act 1957 vide section 10, Taxation Laws (Amendment) Act, 2007 (Act No.16 of 2007) effective from 1st April, 2007, without losing share of central taxes. This enabled States to levy VAT on tobacco with effect from 1st April, 2007. Held that:- We need not refer to Articles 270 to 281 of the Constitution prior to 2000 and Article 270 to 281 of the Constitution post 2000 for the simple reason that we are considering the question about the State Legislature's power to tax pan masala with tobacco. Prior to that we must refer to Schedule A. The petitioners rely upon Chapter 24 of the Central Excise Tariff Act, 1985, in which after the Finance Act 2001, it classified pan masala containing tobacco as 2404.09. Mrs. Jeejeebhoy is right in submitting that pan masala on the face of it is different from tobacco and constitutes a separate class by itself. We have perused Chapters 21 and 24 of the Central Excise Tariff Act and as appearing in the compilation tendered by the petitioners from pages 88 to 90, 93, 96 and 101. The corresponding Note, namely, Note No.3 in Chapter No.21 was amended to clarify that pan masala covered by Chapter 21 would not have tobacco as an ingredient. Corresponding to that was the change brought about in column (3) to the First Schedule of the ADE Act to include Tariff Entry 2404.49, namely, pan masala containing tobacco (page 111 of the petitioners compilation). Thus until 2001, pan masala was not included in either page 24 of the Central Excise Tariff Act nor in the the First Schedule to the ADE Act. Pan masala containing tobacco is known to the commercial world as different from tobacco. Pan masala is said to be a preparation containing betel-nuts and one or more of the ingredients referred above. Unlike the other entries in Chapter 24 of the 1985 Act, essentially dealing with tobacco, pan masala may or may not contain tobacco. The State's power to legislate is not curtailed by the ADE Act. If that is not curtailed, then, any reliance on the constitutional scheme of distribution of revenues and taxes cannot be of assistance. That would probably deprive a State of its share in the revenue even if a tax is levied and collected in that State, but would not denude it of its power which is otherwise traceable to the constitutional provisions referred above. The principle that sub-ordinate legislation cannot be given retrospective effect equally is of no assistance in the facts and circumstances of the present case. We are not concerned here with tobacco but a product (pan masala) containing tobacco. Hence, the effect of the explanation as above need not be considered at all. Decided against the petitioner.
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2016 (10) TMI 560
Principles of natural justice - levy of penalty u/s 12(3)(b) and 10(3)(1) of the Act - determination of total and taxable turnover for the relevant year - inspection of the business premises by the officials of the Enforcement Wing - while denying the allegations made in the pre-revision notice dated 16.11.2004, as defamatory and mala fide, the petitioner requested copies of the records, which were relied upon in the notice, agreeing to pay cost and further requested for an opportunity to enable them to file their objections to the proposal - Held that: - the decision in the case of Kalra Glue Factory Versus Sales Tax Tribunal And Others [1987 (3) TMI 110 - SUPREME Court] relied upon. If the respondent, for any valid reason, was of the view that the statements and records need not have been furnished, he could have rejected the request by passing a separate order and that could not have been done at the time of completing the assessment and passing the impugned order. Thus, the inherent defect, which has crept in the order, affects its very validity. The violation of the principles of natural justice is writ large on the face of the impugned order, which is sufficient to hold that the same is not sustainable. Petition allowed - matter remitted back to the respondent with a direction to consider the request of the petitioner for furnishing of statements and records and an opportunity of cross examination and thereafter proceed in accordance with law - decided in favor of petitioner.
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2016 (10) TMI 559
Denial of exemption on sale of cotton hank yarn - levy of penalty u/s 27(3) of the TNVAT Act, 2006 - audit conducted by officials of the Enforcement Wing - reliance placed on findings of Enforcement Officials - Held that: - The Assessing Officer, being a Statutory Authority, is bound to independently consider the objections given by the dealer and not mechanically be guided by the observations of the officials of the Enforcement Wing. That apart, there are no reasons assigned by the respondent for not accepting the elaborate objections given by the petitioner. In fact, identical observations have been made for all the four assessment years, though the petitioner had filed separate objections for all the assessment years. Thus, the impugned orders are held to be one without any reasons and outcome of a total non application of mind. These are good and sufficient reasons to interfere with the impugned orders - petition allowed - matter remanded for fresh consideration after giving an opportunity of being heard - decided in favor of petitioner.
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Indian Laws
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2016 (10) TMI 557
Payment of motor vehicle tax, penalty and interest - the petitioner is plying a Deluxe service vehicle - Held that:- Stage Carriage services are either Ordinary or Express and Deluxe. The seating arrangement of a tourist vehicle provided under Rule 128 of the Central Rules applies to the Deluxe buses, i.e., Deluxe services by virtue of Rule 158 (2) of the Rules of 1994 and the rate of tax per seat in respect of such Deluxe services are provided in the first Schedule of the Taxation Act. Therefore, in order to make any permit holder liable to pay tax per seat applicable to a Deluxe bus, the vehicle has to provide for seating arrangement and other features in accordance with Rule 128 of the Central Rules and Rule 158 (2) & (3) of the Rules of 1994. However, on perusal of the Traffic Inspector's verification report, it would clearly appear like noon day that the petitioner's vehicle has seating capacity of 2 x 3 and not two and two or one and two or one and one on either side, as provided under Rule 128(10)(ii) of the Central Rules. When the petitioner's permit is not issued for Deluxe service nor the vehicle is designed to have seating arrangement of a deluxe vehicle, the petitioner is not liable to pay tax for Deluxe services, therefore, the impugned demand deserves to be set aside. Whether a service can be classified as Deluxe service only on the ground that the seats in the vehicle have push back or reclining facility. It appears, there is no such provision that only on such facility being available in a vehicle it can be classified as a Deluxe service. What Rule 128 (iii) of the Central Rules provides for is only one of the requirements of seating arrangement for a tourist vehicle and that is not the only requirement for classifying a vehicle as tourist vehicle. Even otherwise, the impugned demand notice has been issued without making any assessment in accordance with the procedure prescribed under Rule 8-A of the Taxation Act. - Decided in favour of assessee
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