TMI Tax Updates - e-Newsletter
October 30, 2017

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Insolvency & Bankruptcy FEMA PMLA Service Tax Central Excise CST, VAT & Sales Tax

TMI SMS

• Full Exemption allowed in respect of IGST on supply of services to Nepal and Bhutan against payment in INR

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• Unstitched Salwar Suits - Mere cutting and packing of fabrics into pieces - continue to be classifiable as fabric - GST rate will be 5%

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Articles

1. Tax Benefits from Different Types of Loans under the Income Tax Act, 1961

   By: Arwind Sharma

2. Applicability of GST Compensation Cess on Penultimate Export Sales/ Procurement from Unregistered Dealers

   By: Ramnarayan Balakrishnan

News

1. Apparel exporters flag post-GST issues before Par panel

2. GST – Frequently Asked Question

3. GST – Frequently Asked Question

4. India and US Hold 11th Trade Policy Forum Meeting in Washington D.C. On 26th October

Notifications

Customs

1. 82/2017 - dated 27-10-2017 - Cus

Seeks to prescribe effective rate of duty under chapters 50 to 63 on textile products

2. 81/2017 - dated 27-10-2017 - Cus

seeks to amend notification No. 14/2006-customs dated 1st march 2006, to prescribe effective rate of duty on specified fabrics

3. 80/2017 - dated 27-10-2017 - Cus

Seeks to increase the tariff rate on textile products in chapters 50 to 63 in the First Schedule to the Customs tariff Act, 1975

4. 98/2017 - dated 27-10-2017 - Cus (NT)

Amendment in Notification No.96/2017-CUSTOMS (N.T.), dated 18th October, 2017

GST

5. 53/2017 - dated 28-10-2017 - CGST

Seeks to extend the due date for submission of details in FORM GST-ITC-04

6. 52/2017 - dated 28-10-2017 - CGST

Seeks to extend the due date for submission of details in FORM GST-ITC-01

7. 51/2017 - dated 28-10-2017 - CGST

Central Goods and Services Tax (Eleventh Amendment) Rules, 2017

8. 42/2017 - dated 27-10-2017 - IGST Rate

Seeks to amend notification No. 9/2017- Integrated Tax (Rate) so as to exempt IGST on inter-state supply of services to Nepal and Bhutan against payment in INR

GST - States

9. 50/2017-State Tax - dated 24-10-2017 - Gujarat SGST

WAIVER OF LATE FEE GSTR-3B AUGUST SEPT 2017.

10. 40/2017-State Tax (Rate) - dated 23-10-2017 - Gujarat SGST

Rate On Supply Of Goods For Export of 0.05 per cent.

11. 49/2017-State Tax - dated 18-10-2017 - Gujarat SGST

Evidence For Deemed Exports.

12. 48/2017-State Tax - dated 18-10-2017 - Gujarat SGST

Notifying Deemed Exports.

13. 47/2017-State Tax - dated 18-10-2017 - Gujarat SGST

The Gujarat Goods and Services Tax (Tenth Amendment) Rules, 2017.

14. 39/2017-State Tax (Rate) - dated 18-10-2017 - Gujarat SGST

Notifies the State tax rate of 2.5 per cent on intra-State supplies of goods.

15. 46/2017-State Tax - dated 13-10-2017 - Gujarat SGST

Amendments in the Notification No.(GHN-27)GST-2017-S.10(1)-TH dated 23rd June, 2017, No.8/2017- State Tax - Policy Increase in Composition Turnover Limit.

16. 45/2017-State Tax - dated 13-10-2017 - Gujarat SGST

The Gujarat Goods and Services Tax (Ninth Amendment) Rules, 2017.

17. 40/2017-State Tax - dated 13-10-2017 - Gujarat SGST

Policy Payment Of Tax On Issuance of Invoice.

18. 38/2017-State Tax (Rate) - dated 13-10-2017 - Gujarat SGST

Amendments in the Notification, No. (GHN-39)GST-2017/S.11(1)(4)-TH, Dated the 30th June, 2017, Notification No.8/2017- State Tax (Rate) - Rate Exemption on Payment Of Tax under Section 9(4)

19. 38/2017-State Tax - dated 13-10-2017 - Gujarat SGST

Amendments in the Government Notification, No.(GHN-81)GST-2017/S.23(2)-TH, Dated the 15th September, 2017, Notification No.32/2017- State Tax - Policy Add Certain Items Of Handicrafts.

20. 37/2017-State Tax (Rate) - dated 13-10-2017 - Gujarat SGST

Notifies State Rate For Motor Vehicles On Lease

21. 36/2017-State Tax (Rate) - dated 13-10-2017 - Gujarat SGST

Amendments in the Notification No.(GHN-33)GST-2017/S.9(3)(1)-TH dated 30th June, 2017, No.4/2017- State Tax (Rate)- Reverse Charge On Used Vehicles Etc.

22. 35/2017-State Tax (Rate) - dated 13-10-2017 - Gujarat SGST

Amendments in the Notification, No.(GHN-36)GST-2017/S.11(1)(1)-TH dated 30th June, 2017 No.2/2017-State Tax (Rate) - Exemption On Certain Goods.

23. 34/2017-State Tax (Rate) - dated 13-10-2017 - Gujarat SGST

Amendments in the Government Notification,No.(GHN-31)GST-2017/S.9(1)(1)-TH dated 30th June,2017, No.1/2017-State Tax (Rate) -

24. (GHN-104)GST-2017/S.9(1)(10)-TH-31/2017-State Tax (Rate) - dated 13-10-2017 - Gujarat SGST

Amendments in Notification, Notification No.(GHN32)GST-2017/S.9(1)(2)-TH, dated, the 30th June, 2017, No.11/2017- State Tax (Rate), -

25. 82/ST-2 - dated 19-9-2017 - Haryana SGST

Specifying the date for the filing of return in form of GSTR-3B for the months of August to December.

SEZ

26. S.O. 3423(E) - dated 17-10-2017 - SEZ

Amendment in Notification No. S.O. 2964(E), dated 05.09.2017

Circulars / Instructions / Orders

GST - States

1. 10/10/2017-GST - dated 18-10-2017

Clarification on issues wherein the goods are moved within the State or from the State of registration to another State for supply on approval basis.

GST

2. Order No. 05/2017 - dated 28-10-2017

Extension of time limit for intimation of details of stock held on the date preceding the date from which the option for composition levy is exercised in FORM GST CMP-03

3. Order No. 08/2017 - dated 28-10-2017

Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the Central Goods and Service Tax Rules, 2017

4. Order No. 07/2017 - dated 28-10-2017

Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 117 of the Central Goods and Services Tax Rules, 2017

5. Order No. 06/2017 - dated 28-10-2017

Extension of time limit for submitting application in FORM GST REG-26

6. 13/13/2017 - dated 27-10-2017

Clarification on Unstitched Salwar Suits - regarding.

Customs

7. 134 /2017 - dated 26-10-2017

SUB: Non-compliance of Sanitary and Phyto-Sanitary measures by Indian Exporters/Importers–reg.

8. 133/2017 - dated 17-10-2017

Sub: Refund SMS Seva for refund claims filed at JNCH, Nhava Sheva

9. 130/2017 - dated 12-10-2017

Subject: Selection and scanning of Mulund ICD bound containers at JNCH

Companies Law

10. 14/2017 - dated 27-10-2017

Relaxation of additional fees and extension of last date of filing AOC-4 and AOC-4 (XBRL non-IndAS) under the Companies Act, 2013-reg.

Highlights / Catch Notes

GST

• Service Supply to Nepal & Bhutan Exempt from IGST if Paid in INR Under New Rule.

  Notifications : Full Exemption allowed in respect of IGST on supply of services to Nepal and Bhutan against payment in INR (Indian Rupees)
  Visit to Get Source

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• GST on Unstitched Salwar Suits: Cutting and Packing Fabrics Remain at 5% Rate Under Fabric Heading.

  Circulars : GST on Unstitched Salwar Suits - Mere cutting and packing of fabrics into pieces of different lengths from bundles or thans - would continue to be classifiable under the respective heading as the fabric and attract the 5% GST rate
  Visit to Get Source

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Income Tax

• Section 35DDA allows assessing authority to classify Voluntary Retirement Scheme payments as revenue expenditure.

  Case-Laws - HC : Section 35DDA of the Act did not preclude the assessing authority to consider the VRS payment as revenue expenditure. - HC
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• Jewelry Theft Loss Deductible Without Insurance Payout; Claim Valid Despite Insurer's Non-Compensation.

  Case-Laws - AT : Allowance of loss incurred on account of theft of jewellery - Merely because the insurance company has not compensated the assessee and did not accept the claim of the assessee does not mean that the assessee has not incurred loss or theft has not taken place
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• Hindu Undivided Families (HUFs) cannot claim Section 54B exemption on LTCG for years before 2012 amendment.

  Case-Laws - AT : LTCG - exemption u/s 54B - scope of amendment - making HUF eligible for claiming exemption u/s. 54B - assessee being HUF is not eligible for claiming exemption u/s. 54B of the Act during the assessment year - the 2012 amendment in not retrospective.
  Visit to Get Source

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• Taxpayers Can Offset Long-Term Capital Losses from Share Sales Against Gains from Land Sales to Reduce Tax Liability.

  Case-Laws - AT : Set off of long term capital loss from sale of shares off market against the long term capital gain on sale of land allowed.
  Visit to Get Source

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Central Excise

• CRAX Corn Rings and Natkhat Wheat Puffs classified under CTH 19059030 for Central Excise as extruded or expanded products.

  Case-Laws - AT : Classification of goods - ‘CRAX Corn Rings’ - ‘Natkhat Wheat Puffs’ - to be classified under CTH 19059030 as ‘extruded or expanded products, savoury or salted’ and not under CTH 19041090
  Visit to Get Source

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• Central Excise Act: No automatic duty adjustment for transaction value changes via credit/debit notes. CENVAT credit remains unaffected.

  Case-Laws - AT : CENVAT credit - issue of credit notes/debit notes - there is no such provision in the scheme of the Central Excise Act and the Rules thereunder that on subsequent alteration of transaction value, there results an automatic adjustment in the duty payable
  Visit to Get Source

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Case Laws:

• Income Tax

• 2017 (10) TMI 1163
  Cancelled the registration under Section 12AA(3) - Held that:- The jurisdiction of the Writ Court in such cases to intervene in proceedings in determination of the decision of the Settlement Commission, which are statutorily final are necessarily sacrosanct in terms of the various judgments of this Court, as noticed in that judgment, therefore, that decision does not confer any power to the Court in this case. So far as the decision in Mohan Meakin [2017 (9) TMI 955 - ITAT DELHI] with respect to the documents being characterized as “dumbed case” is concerned, the Court notices that some of them may overlap with the documents of the Assessee, but that itself is not determinative of their character or their credibility. The Court, based upon the materials on that case, so far as the Mohan Meakin is concerned, rendered its findings in the context of the facts of that case. Further, in paragraph 56 of that order, the Tribunal had expressly recorded that search proceedings took place in the context of Section 153A, in the very premises of Mr. Miglani, i.e. with respect to the Assessee. The Court is of the opinion that there is no merit in the Appeal. However, it is clarified that the cancellation of registration in this case could have related back only from the date of introduction of Section 12AA(3) i.e. with effect from 01.10.2014 and not earlier.

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• 2017 (10) TMI 1162
  Legality of amount seized lying in Canara bank - refusing to release an amount of Rs. 5 Crores from out of the seized amount - consequential benefits under the PMGKY Scheme - Held that:- As pointed out earlier, the amount taken away from the current account of the petitioner was Rs. 36.98 Crores. Out of the said amount, a sum of Rs. 20 Crores has been disclosed under the PMGKY Scheme. If the declaration filed by the petitioner under Section 199C is accepted by the department, the department will have to do two things, viz., (a) to release the amount of Rs. 5 Crores; and (b) to allow the petitioner to encash the amount of Rs. 5 Crores invested in RBI bonds under Section 199F. In other words if the declaration under PMGKY Scheme is accepted by the department, the petitioner will get release of Rs. 5 Crores. Though according to the petitioner the department will be left with a surplus of Rs. 16.97 Crores, even after the release of Rs. 5 Crores, the case of the department is that they left only with a sum of Rs. 5 Crores after releasing a sum of Rs. 5 Crores, after adjusting the amount payable under all heads for all these years. Therefore, we are of the considered view that the release of Rs. 5 Crores will not hamper either any investigation or further proceedings on the part of the department. There is also one more aspect. If the declaration under PMGKY Scheme is accepted by the department, the petitioner will not only get immediate release of Rs. 5 Crores, but will get RBI bonds encashable after four years to the total value of Rs. 5 Crores together with interest. The amount lying in RBI bonds, if allowed to be retained as security for any eventuality, till the conclusion of all the proceedings, the departments interest will be more safeguarded, even if they release the amount of Rs. 5 Crores. Therefore, in fine, the writ petition is disposed of directing the respondents to release an amount of Rs. 5 Crores to the petitioner within two weeks. The amount of Rs. 5 Crores lying in RBI bonds, shall be kept by the department as security for the release of the amount hereby ordered, until the conclusion of any proceedings pending or to be initiated by the department. If the declaration under PMGKY Scheme is finally accepted, the RBI bonds may also be released to the petitioner, provided no other dues are found payable by the petitioner.

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• 2017 (10) TMI 1161
  Addition under Section 69C - Held that:- We find that there was a search under Section 132 of the Act in the premises of the assessee on 05.10.2005. In the previous year to the assessment year, the assessee had purchased 60.412 cents of land from 3 persons and in the accounts, the value of the property was shown as Rs. 1,57,36,700/-. However, from the residences of the two sellers, a paper giving details of the consideration given was found and it is revealed that the actual consideration paid was Rs. 2,03,20,100/-. When confronted, two sellers confirmed the excess payment, while one denied the allegations. This led to an assessment and an addition under Section 69C and the same was confirmed by the first appellate authority. It is this order which was challenged by the assessee in the Tribunal. A reading of the order passed by the Tribunal shows that the Tribunal had followed the orders passed by it in the case of one of the sellers and it is primarily following that order the appeal was allowed.

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• 2017 (10) TMI 1160
  Levying penalty under Section 271(1)(c) - disallowance of rebate claim under Indo-Canadian DTAA - gains from the alienation of any property, other than referred under Clause 1 of Article 13 of the Indo-Canadian DTAA may be taxed in both contracting States or petitioner's case is that she has transferred the immovable property situated in India and hence, the gains arising on the same is taxable in India - Held that:- There was no allegation against the petitioner of furnishing inaccurate particulars and the petitioner on receiving a notice submitted a response stating that the claim for rebate is not allowable, the petitioner had filed a revised computation statement and accordingly, the assessment was completed. Thus, the withdrawal of the rebate claimed was voluntary and in any event, the same cannot be brought within the expression concealment of particulars or furnishing inaccurate particulars as in the case of M/s.MAK Data (2013 (11) TMI 14 - SUPREME COURT). A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the Return cannot amount to the inaccurate particulars. See CIT., Ahmedabad Vs. Reliance Petroproducts Private Ltd. [2010 (3) TMI 80 - SUPREME COURT] - Decided in favour of assessee.

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• 2017 (10) TMI 1159
  GP determination - excluding certain items of turnover from the gross turnover of the assessee - Tribunal directed that Rs. 31,07,29,889/- be excluded from the total turnover and that the additional 0.44% be levied on Rs. 59,45,76,475/- - Held that:- The turnover has been returned by the assessee itself and such returned turnover of the assessee included the items which are now ordered to be excluded by the Tribunal. Further, the assessee itself has no case that in the gross turnover for the previous years relied on by the first appellate authority, it had excluded the items which are now ordered to be excluded by the Tribunal. If that be so, the assessee could not have contended that for the assessment year in question, the Revenue should not have estimated its gross turnover including the items that are now ordered to be excluded. Yet another fallacy in the order of the Tribunal is that, the Tribunal has ordered that 0.44% be estimated on Rs. 59,45,76,475/-. According to us, if it is to be so estimated, firstly, the percentage of the gross profit should have been worked out on the reduced gross turnover applying the gross profit of Rs. 14,99,85,294/-. If it is so done, the percentage of gross profit for the Assessment Year in question would have been 25.23%, and if so, the average percentage of gross profit would have been 19.86%, as against 16.94% now adopted. Consequently, the addition to be made would also have been 3.36% as against 0.44% now ordered by the Tribunal. Similar exercise would have been needed for the other years as well. - Decided in favour of the Revenue and against the assessee.

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• 2017 (10) TMI 1158
  Addition on account of bad debts written off - Held that:- As it has been recorded by the CIT(A) that the Assessing Officer was oblivious of the amendments made by the Finance Act w.e.f. 01.04.1989 which had been explained by the CBDT’s circular dated 23.1.1990 wherein in Para 6.6 it had been mentioned that the amendment was to rationalize the provisions regarding the allowability of all debts. It was laid down that the assessee had only to write off debts as irrevocable in its account and was not required to prove that they had become bad. Thus, in view of Section 36(1)(vii) read with Section 36(2) of the Act, the disallowance was correctly deleted. Addition on account of cessation of liabilities under Section 41(1) - Held that:- Apex Court in CIT Vs. Sugauli Sugar Works Private Limited, (1999 (2) TMI 5 - SUPREME Court) it was held that merely by virtue of the fact that a debt becomes time barred, the right of the creditor will not come to an end nor the liability will cease and in these circumstances, Section 41(1) of the Act was not attracted. Thus, when the liability qua the amount which was still standing in the balance sheet of the assessee, which fact had not been disputed by the Assessing Officer, the same could not be said to have ceased. Thus, the Tribunal did not interfere with the findings recorded by the CIT(A) on this issue. Addition on account of VRS expenses - deduction u/s 35DDA - Assessing Officer showed that addition had been made merely on the basis of wrong interpretation of the provisions contained in Section 35DDA - Held that:- Any deduction claimed for the financial year 2000-01 in question under Section 35DDA of the Act was to be considered for the assessment year 2001-02, when undisputedly, Section 35DDA was incorporated in the statute w.e.f. 01.04.2001. Thus, the assessee was certainly entitled to get the benefit for the same. Moreover, the Assessing Officer had allowed VRS payment in the earlier year and deduction claimed in the year under consideration was only a consequential relief for the 5th year. Further, Section 35DDA of the Act did not preclude the assessing authority to consider the VRS payment as revenue expenditure. Thus, the Tribunal rightly upheld the findings recorded by the CIT(A) on this issue Decided against revenue

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• 2017 (10) TMI 1157
  Bogus purchases - Held that:- On this aspect the assessee is making a grievance that AO failed to verify the fact of the assessee paying an advance of Rs. 14,47,20,500/- to M/s A.K. Traders and as against the said advance amount M/s A.K. Traders supplied the material worth Rs. 2,91,28,413/-, as such, in respect of the balance, litigation before the Court was initiated while the balance amount of Rs. 11,55,92,087/- was shown in the balance sheet on the asset side as amount recoverable. The other grievance of the assessee is that the Ld. CIT (A) also failed to consider the written submission made by the assessee on 23.03.2015, where an attempt was made to prove the genuineness of the purchases from M/s A.K. Traders and M/s G.S. Steels by furnishing the bills, vouchers etc. Having considered opinion that the verification of the facts pleaded by the assessee will go to the root of the case and has a bearing on the just tax liability of the assessee. However, since it is not possible for verification of such fact in this forum, we deem it just and proper to set aside the matter to the file of the AO for verifying the facts pleaded by the assessee with reference to the documents produced by him before the Ld. CIT (A). With this view of the matter, we restore the matter to the file of the AO for consideration afresh on the above lines by giving an opportunity to the assessee to put forth their case and evidence. Since we dispose of the appeal itself, stay petition becomes infructuous. Hence, it is liable to be dismissed.

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• 2017 (10) TMI 1156
  Levy of penalty u/s 271(1)(c) - defective notice - Held that:- Assessing Officer has not specified whether the notice was issued for concealment of particulars of income or for furnishing of inaccurate particulars of income Drawing up penalty proceedings for one offence and finding the assessee guilty of another offence or finding him guilty for either the one or the other cannot be sustained in law and the notice issued u/s 274 r.w.s. 271(1)(c) of the Act shall specify under which limb of Sec. 271(1)(c) of the Act the penalty proceedings were initiated, and in the absence of such clarity, the proceedings are bad in law. We, therefore, hold that the impugned penalty proceedings are bad in law and cannot be sustained. - Decided in favour of assessee.

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• 2017 (10) TMI 1155
  Addition on capital expenditure - allowability as revenue expenditure - Held that:- In the present case, it is noticed that the Ld. CIT(A) categorically stated in para 4.4 of the impugned order that the assessee furnished bills in support of the expenditure incurred, he had examined those bills and found that certain items of expenditure were prima facie capital in nature but all other expenses relating to tyres, repair and maintenance etc., were revenue in nature. He, therefore, considered the expenditure of Rs. 13,56,645 in the nature of capital and sustained the disallowance to that extent. We, therefore, do not see any valid ground to interfere with the findings of the Ld. CIT(A) because the findings given by the Ld. CIT(A) were not controverted by bringing any cogent material on record. In that view of the matter, we do not see any merit in this appeal of the department. - Decided against revenue.

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• 2017 (10) TMI 1154
  Disallowance made u/s. 40(a)(ia) - commission paid on sales to a non-resident individual, situated outside India - fee for consultancy services liable to be taxed in the hands of foreign agent in terms of Section 5 read with Explanation -2 to section 9(1)(vii) - Held that:- In the facts of the case, the agreement between the assessee and the agent and any documentary evidence supporting the services rendered are critical for deciding, whether the services rendered are in the nature of purely commission services or in the nature of consultancy services. The lower authorities have not examined the services rendered by the foreign agent in the light of required documentary evidences. In view we are of the opinion that the issue of holding the services rendered by the agent as fee for consultancy services, need reexamination by the Assessing Officer. Accordingly, we restore the matter to the file of the Assessing Officer for re-examination of the issue in dispute. The ground No.1 of the appeal is accordingly allowed for statistical purposes. Disallowance of credit card expenses - Held that:- In view of the facts of the case, we feel it appropriate to restore the matter to the file of the Assessing Officer for consideration afresh. The assessee shall be afforded sufficient opportunity of being heard. The Ground No. 2 of the appeal is also allowed for statistical purposes.

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• 2017 (10) TMI 1153
  Revision u/s 263 - CIT(A) revising the assessment framed by the AO under section 143(3) for claiming higher cost of acquisition and excess indexation cost - Held that:- The evidences clearly leads us to the fact that the cost of acquisition of these two row houses i.e. No. 10 and 11 is Rs. 53,69,696/- and this was acquired as on 12-11-1994 vide agreement cum allotment letter from where the assessee started making payment as it is clearly evident from the above Paras. In view of the above facts and circumstances, we are of the view that the assessment framed by AO under section 143(3) of the Act is neither erroneous nor prejudicial to the interest of the Revenue. Accordingly, we quashed the revision order passed by CIT(A) under section 263 of the Act and allow the appeal of the assessee.

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• 2017 (10) TMI 1152
  Maintainability of appeal - monetary limit - Held that:- If the tax effect excluding surcharge, education cess etc. is below Rs. 10 lakhs, the Revenue is not authorised to file an appeal and if it is filed, they should withdraw the appeal. 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.

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• 2017 (10) TMI 1151
  Addition unexplained expenditure u/s 69 - bogus purchases - Held that:- The addition was restricted on the basis of profit ratio of the impugned purchased (Rs.2159 8572/-). We have noticed that ld. Commissioner (Appeals) has restricted the addition on the basis of profit element embedded in the bogus purchases. We are of the considered opinion that under Income Tax Act only real income can be taxed by the Revenue. We may further conclude that even if the transaction is not verifiable, the only taxable is the taxable income component and not the entire transaction. And after considering the facts of the case and the rival contentions of the parties we are of the opinion that in order to fulfil the gap of revenue leakage the disallowance of reasonable percentage of such purchases would meet the end of justice. The Hon’ble Bombay High Court in CIT Vs Hariram Bhambhani [2015 (2) TMI 907 - BOMBAY HIGH COURT] held that revenue is not entitled to bring the entire sales consideration to tax, but only the profit attributable on the total unrecorded sales consideration alone can be subject to income tax. In the result this ground of appeal raised by revenue is dismissed. Addition on account of difference in TDR - Held that:- The original owner of TDR was one Shri Ramesh Shah Partner of M/s Sumer Corporation who had obtained DRC from Bombay Municipal Corporation (BMC). The assessee filed copy of agreements, ledger accounts of the assessee in the books of Premleela Investment and the confirmation of the opening balance with Premleela Investments to substantiate their contention. The actual transaction for purchase of TDR was examined by the learned Commissioner (Appeals) and also examined the value of transaction entered by the assessee as well as the value of agreement between seller Premleela Investments and come to the conclusion that the value of agreement is Rs. 1,99,02,636/- and deleted the addition. We have seen that the learned Commissioner (Appeals) verified the facts and the consideration paid by the assessee for purchase of TDR from Premleela Investments. The learned DR has not been able to bring any incriminating fact or evidence to discard the finding of learned Commissioner (Appeals). Thus, we do not find any merit in the grounds of appeal raised by the revenue. In the result this ground of appeal raised by revenue is dismissed.

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• 2017 (10) TMI 1150
  Capital gain computation - Held that:- Indexed cost of acquisition should be at Rs. 25,82,368/- and accordingly, the long term capital gain has to be computed accordingly. It is directed to the Assessing Officer to act upon accordingly. Claim of deduction u/s 54 - Held that:-Correct income has to be computed and correct income has to be given under the Income tax Act is the scheme of the Act and spirit of law and in this regard, the assessee having purchased a property in Kundli for which necessary papers were adduced before the ld. CIT(A) and also before us, which could not be controverted by the ld. DR and, therefore, in all fairness, and in the facts and circumstances of the case, the Assessing Officer is directed to allow the exemption u/s 54 of the Act as claimed before the ld. CIT(A) and accordingly, the addition so made is directed to be deleted. Grounds raised by the assessee are allowed.

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• 2017 (10) TMI 1149
  Reopening of assessment - no existence of reasons to believe - Held that:- There is no live nexus in the reasons recorded and same are done at behest of the order passed by Commissioner of income tax appeals. There is no independent application of mind. Only factor that certain disallowance has been made in earlier year cannot give carte blanche in favour of revenue to reopen the other years, unless in reasons appropriate nexus and correlation is established between the findings relied in the order of Commissioner of income tax appeals and facts prevalent in present case. It is surprising that although said order of Commissioner of income tax appeals is the main heart of the reasons but that heart has left the assessment order when assessing officer has made the final addition. It is surprising as to how when the final addition is made the basis of the reopening being order passed by Commissioner of income tax appeals can be abandoned and aborted like this . As rightly contended by ld. AR before me that there is no fresh tangible material having live nexus so as to support the instant reopening. - Decided in favour of assessee.

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• 2017 (10) TMI 1148
  Eligible for exemption u/s 54 - eligibility criteria - assessee share in the utilization of capital gain - Held that:- The assessee claims to have invested Rs. 20 lakhs (being ½ of her share) for purchase of new asset. However, we notice that assessee appears to have shown a total investment Rs. 50 lakhs in aggregate i.e. 30 lakhs from personal account and Rs. 20 lakhs (½ share) from joint account as against her obligation to the extent of Rs. 35 lakhs only. Also ambiguity exists on record as to whether the other joint owner (husband of the assessee) has availed claim of exemption, if any, upto Rs. 20 lakhs (being ½ of his share only) or entire Rs. 40 lakhs made through joint account towards purchase in his own right. The assessee, in our view, would be entitled to exemption to the extent of Rs. 20 lakhs being 50% of her share in the utilization of capital gain subject to the satisfaction of the AO that the aforesaid claim of payments from joint account has not been simultaneously availed by other joint owner also. The other portion on the investment claimed from the personal account of the assessee is stated to have been made after furnishing the return of income but before extended the due date of filing of return of income. However, as noted above, once the return has been furnished, the subsequent payments made towards purchase would not be eligible for exemption unless the same was first deposited in capital gain account scheme and utilized therefrom. Therefore, the assessee is entitled to relief to the extent of Rs. 20 lakhs only out of indexed capital gain subject, however, to the necessary verification of the claim of the other joint-owner as noted above. The decision relied upon by the assessee does not spell anything different. The issue is set aside and remanded back to the file of AO for the limited purpose of verification of extent of claim made by other joint-owner on payment of Rs. 40 lakhs towards purchase made out of joint Bank account as elaborated earlier. The assessee shall be at liberty to adduce the necessary evidences in this regard and remove prevailing ambiguity. Appeal of the assessee is allowed in part for statistical purposes.

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• 2017 (10) TMI 1147
  Revision u/s 263 - Held that:- We are of the firm conviction that from the withholding by the assessee of the actual source of the investment, viz. loan raised by him on 21.08.2008 from his client, i.e M/s Kalpavruksha Plantation Pvt. Ltd., during the course of the assessment proceedings, it can safely be inferred that the same had been so done with a purpose of avoiding verification of certain issues which would had a strong bearing on the income of the assessee. We are of the considered view that the acceptance of the claim of the assessee by the A.O without making any verification, thus clearly renders the order passed by the A.O on the said aspect, as erroneous and prejudicial to the interest of the revenue. We also do not find ourselves to be in agreement with the contention of the assessee had made the payment of the purchase consideration not from the loan raised from his mother Mrs. Suneeta Pawar was discernible from the ‘Agreement', copy of bank statement, ‘balance sheet’ of the assessee on 31.03.2009, which were there before the A.O, therefore, it could safely be gathered that the A.O after perusing the said factual position and being conversant of the fact that the investment did not pertain to the year under consideration, but was relatable to A.Y. 2009-10, had thus after due application of mind accepted the claim of the assessee. We have further perused the judgment of the Hon’ble High Court of Bombay in the case of CIT Vs. Gabrial India Ltd. [1993 (4) TMI 55 - BOMBAY High Court] and are of the considered view that the same being distinguishable on facts would thus not assist the case of the assessee. We are further of the considered view that after the insertion of Explanation 2 to Sec. 263 w.e.f 01.06.2015, which would be applicable to the case of the assessee, the order which in the opinion of the Pr. CIT had been passed by the A.O without making inquiries or verification, thus, on the said count would be rendered as erroneous in so far as it is prejudicial to the interest of the revenue, and as such amenable for revision u/s 263. We thus in light of our aforesaid observations uphold the revision of the order u/s 263 on the aforesaid issue under consideration. Applicability of the provisions of Sec. 50C - Held that:- We have deliberated on the invocation of the revisional powers by the Pr. CIT on the ground that as the agreement was for a consideration of Rs. 5,00,00,000/-, however, the value adopted by the Stamp Valuation authority was Rs. 5,38,45,100/-, therefore, the A.O had not verified the applicability of Sec. 50C in the hands of the seller. We are of the considered view that as the applicability of the provisions of Sec. 50C is not attracted in the hands of the assessee, viz, buyer, therefore, for the purpose of verifying the tax liability of the seller, viz. third party, the case of the assessee could not be revised. We thus set aside the exercise of the revisional jurisdiction by the Pr. CIT on the issue pertaining to verification of the applicability of Sec. 50C in the hands of the seller of the property.

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• 2017 (10) TMI 1146
  Addition with respect to amount received from one M/s. IL&FS Transportation Network Ltd. - assessee had claimed it as a security deposit in pursuance to an MOU, against which services were to be performed - AO had disagreed and concluded that it was in the nature of an amount owned by the assessee itself - CIT(A) has allowed relief to the extent amount has been repaid, and he has not touched upon the ‘nature’ of the credit at the time of its receipt - whether there is enough justification to say that the amount has been received for which assessee has a liability to either repay or render the services as envisaged in the MOU. Held that:- Whether or not the said plea is tenable is relevant to decide the fate of the impugned sum of Rs. 40,00,000/-, but the same has not been addressed by the CIT(A). So far as the source of the credit is concerned, there is no dispute, and the only dispute is with regard to the nature of the amount and, in our considered opinion, the onus to prove the nature of impugned credit is entirely on the assessee. In our considered opinion, it would be in the fitness of things that the assessee is allowed an opportunity to demonstrate with positive evidence that with respect to the sum of Rs. 40,00,000/-, the liability to repay M/s. IL&FS Transportation Network Ltd. continues inspite of the fact that the arrangement envisaged in the Agreement (Memorandum of Understanding) dated 18.04.2008 has not fructified, a fact which is not in dispute. Since the aforesaid aspect requires a factual appreciation of the state of affairs, we deem it proper to restore the matter back to the file of the CIT(A). It is directed that the CIT(A) shall examine the aforesaid aspect on the basis of the material and evidence that the assessee may submit before him. Accordingly, the issue relating to assessability of sum is restored back to the file of the CIT(A) to be decided after hearing the assessee and as per law.

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• 2017 (10) TMI 1145
  TPA - selection of comparable - Held that:- Assessee is providing advisory services where high level of knowledge is required, thus comparables functionally dissimilar with that of assessee need to be deselected from final list. Non deduction of tds - Disallowance of provision for legal and professional fees - Held that:- When the provisions are made and payments are not received and in the subsequent year the provision made is offered for taxation, the impugned amount cannot be disallowed and hence cannot be brought under the ambit of taxation u/s 40(a)(ia). - Decided in favour of assessee Disallowance of Travelling and Conveyance Expenses - Held that:- DRP has rightly observed that reimbursement of expenses cannot be a reason for the non-examination of the expenditure booked as expenses by the IT authorities. De hors providing necessary details assessee cannot seek full allowance of expenditure. We find that the interest of justice would meet adequately if the matter is remitted to the file of the Assessing Officer. The Assessing Officer is directed to give the assessee an opportunity to give the details and canvass the veracity of expenses

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• 2017 (10) TMI 1144
  Allowance of loss incurred on account of theft of jewellery - claim made to the insurance company had been rejected - Held that:- Hon’ble Jurisdictional High Court in the case of G. G. Dandekar Machine Works Ltd. vs. CIT [1993 (1) TMI 40 - BOMBAY High Court] has clearly held whether any loss from theft, dacoity, embezzlement, etc., is deductible or not, what is material is whether the loss incurred by theft, dacoity, etc., is incidental to the carrying on of the business. It does not make much difference whether such act is committed by the employees of the assessee or by strangers. It is difficult to draw a distinction between embezzlement of the amount from the bank and theft of the amount from the cash box of the businessman from his sales counter or business premises. What is material is whether the loss was caused to the assessee in the course of his business activity. In the case of Badridas Daga vs. CIT (1958 (4) TMI 2 - SUPREME Court), the Hon’ble Apex Court took a view that loss resulting from embezzlement by an employee or agent in a business is admissible as a deduction under section 10(1) of the Indian Income-tax Act, if it arises during the course of carrying on of the business and is incidental to it. This is a case where theft has taken place in respect of the trading asset of the assessee and during the course of carrying on the business by it. Merely because the insurance company has not compensated the assessee and did not accept the claim of the assessee does not mean that the assessee has not incurred loss or theft has not taken place. We, therefore, confirm the order of the CIT(A) and dismiss the appeal of the Revenue

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• 2017 (10) TMI 1143
  Eligible for exemption u/s 54 - eligibility criteria - Held that:- We are of the opinion that unless the assessee has violated the provisions of section 54 in such a way that by allowing the exemption, the purpose of the legislation would be defeated, the assessee cannot be denied the exemption. In the case before us, we find that the assessee has invested in purchase of the residential flats within two years after sale of the original asset and is eligible for exemption u/s 54 of the Act subject to the fulfillment of the other conditions stipulated in the section. As we have already held that the deposit in Term Deposit A/c can be considered as compliance u/s 54(2) of the Act, provided the assessee has deposited the entire capital gains and has not availed any loan against the said A/c and has utilized the same for purchase of the new property. The issue is therefore, set aside to the file of the AO only for verification of this aspect. The other objection of the AO that the new property is purchased in the joint names of the assessee and his son also is not sustainable in view of the decision of the Hon'ble Delhi High Court in the case of CIT vs. Ravinder Kumar Arora [2011 (9) TMI 343 - DELHI HIGH COURT]. Assessee’s appeal is treated as allowed for statistical purposes.

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• 2017 (10) TMI 1142
  Unexplained investment in stock - determination of closing stock as on the date of survey - revenue has determined the closing stock which is higher than the value declared by the assessee - Held that:- The assessee has not maintained any stock register, therefore, the difference in the closing stock was arrived by applying the GP ratio as well as through physical verification. In the absences of stock register, the revenue had no option except to resort to determine the closing stock after applying the GP ratio. In the instant case, we find that the ld. CIT(A) has given the finding with regard to the GP ratio which comes to 12.81%, therefore, in our considered view, the closing stock, as determined by the AO at the rate of 13%, is correct and reasonable. The plea taken by the assessee that the goods worth of Rs. 3,37,288/-, was received prior to the date of survey but in this regard, we find that no such entry was recorded in the books of accounts. Had this been a genuine purchase, in our considered opinion, it must have entered in the accounting books of the assessee. Therefore, we are of the view that the claim of the assessee that the goods were purchased prior to the date of survey and these were subsequently returned back to these parties due to low quality material does not sound good. In view of the above discussion, we do not find any infirmity in the order of the lower authorities, hence this ground of appeal of the assessee is dismissed.

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• 2017 (10) TMI 1141
  LTCG - exemption u/s 54B - scope of amendment - making HUF eligible for claiming exemption u/s. 54B - retrospective or prospective - Held that:- As in view of the plain reading of section prior to amendment and in the light of ratio laid down in the case of Commissioner of Income Tax Vs. G.K. Devarajulu (1990 (12) TMI 36 - MADRAS High Court) we hold that the assessee being HUF is not eligible for claiming exemption u/s. 54B of the Act during the assessment year under appeal. Accordingly, the appeal of the assessee is dismissed. The issue raised in present appeal is identical to the one adjudicated by Hon’ble Madras High Court. There is no scope left for the Tribunal to further interpret the provisions of the section on this aspect or to deliberate on retrospective applicability of amendment to section 54B brought in by the Finance Act 2012. The ld. AR has not brought to our knowledge any judgment of Hon’ble Jurisdictional High Court or the Hon’ble Apex Court suggesting retrospective applicability of the amended provisions of section 54B of the Act. - Decided against assessee.

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• Customs

• 2017 (10) TMI 1140
  Principles of natural justice - opportunity of being heard - adjudication procedure - Held that: - A perusal of Section 122A of the Customs Act shows that an opportunity of hearing to a party in a proceeding is required to be given before passing the order. If sufficient cause is shown at any stage of the proceeding, the adjudicating authority may grant more time to the party for reasons to be recorded in writing. A proviso has also been inserted that adjournment shall not be granted more than three times to a party during the proceeding. Admittedly, in the present case, the petitioner had purchased the above mentioned goods from M/s Sanex International PTE Ltd. & Sunagro PTE., Singapore at Container Freight Station, Dhandari Kalan, Ludhiana, which were cleared provisionally. However, the assessment had been finalised against the petitioner, without affording an opportunity of personal hearing and issuance of show cause notice under Section 28 of the Act - No opportunity of hearing was given to the petitioner. Neither any show cause notice under the provisions of the Act was issued nor any opportunity of hearing was given to the petitioner before passing the impugned order, resulting in violation of principles of natural justice - similar issue decided in the case of R.V. General Trading Vs. Union of India [2016 (9) TMI 673 - PUNJAB & HARYANA HIGH COURT], wherein in the absence of affording an appropriate opportunity of hearing, the impugned order was set aside and the matter was remitted back to the competent authority for fresh consideration. The action of the respondents in not providing an opportunity of hearing or issuance of any show cause notice to the petitioner before passing the impugned order cannot be held to be justified - the matter is remanded to the competent authority for passing fresh order - petition allowed by way of remand.

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• 2017 (10) TMI 1139
  Duty Exemption Pass Book (DEPB) Scheme - it came to light of Revenue that the documents filed before Jt. DGFT to obtain the DEPB scrips were fake including the BRC bearing No. 0305023 dated 16.07.1998 claimed to have been issued by Union Bank of India, Bandra, Mumbai - Held that: - Impugned DEPB scrips were obtained by appellant fraudulently from Jt. DGFT and that was sold by him. He was actively and consciously involved in defrauding revenue for which interest of Customs was prejudiced. Appellant was not at all a stranger to the commission of the offence alleged by investigation. Having pre-determined mind to deceive the exchequor, he perpetuated fraud against Revenue. Accordingly, he was liable to the penal consequence provided under section 112(a) of the Customs Act, 1962 - if circumstances establish that there is high degree of probability that a prudent man ought to act on the supposition that there was design to obtain DEPB scrips without any export and such scrips sold for duty free import in contravention of the law or abetting to achieve such ill object, such act against public Revenue calls for penal consequence to curb such mischief. Penal provisions are enacted to suppress the evils of defrauding Revenue which is an anti-social activity adversely affecting the public revenue, earning of foreign exchange, economic and financial stability of the economy. Therefore such provisions are construed in a manner to suppress the mischief and to promote the object of the statute, preventing evasion, foiling artful circumvention thereof. Thus construed, the term fraud within the meaning of these penal provisions is wide enough to take into its fold any one or series of acts committed. Appellant fails to succeed in his appeal having acted malafide causing detriment to the interest of public revenue. Ill will of appellant came to record. Pre-ponderance of probability was in favour of Revenue and lent credence to its case. Appeal dismissed - decided against appellant.

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• 2017 (10) TMI 1138
  Provisional release of seized goods - Section 110A of the Customs Act, 1962 - case of the revenue is that as Swatch Group (India) Pvt. Ltd, the importer has cleared the watches by declaring RSP which is less than the RSP at which the appellants are selling the watches, therefore, M/s Swatch Group (India) Pvt. Ltd has misdeclared the value of the impugned goods - Whether in the facts and circumstances in the case, the goods can be released to the appellant being owner of the goods or not? - Held that: - From the documents produced, it is clear that the appellant is the owner of the impugned goods - the goods are required to be released to the owner of the goods - decided in favor of appellant. Whether conditions imposed for provisional release are harsh to the appellant, if so, what should be the conditions for provisional release? - Held that: - in case of Kuber Casting (P) Ltd. V/s Union of India [2013 (9) TMI 784 - PUNJAB & HARYANA HIGH COURT] the Hon’ble High Court after examining the issue held that the bank guarantee of 30 per cent of the value of the goods seized is harsh condition to the appellant and thereafter the Hon’ble High Court direct to pay the differential duty and on payment of the differential duty, the Adjudicating Authority was directed to release the goods to the appellant - the appellant directed to pay the differential duty of Rs. 21,78,906/- on the seized goods for release of the goods provisionally. Appeal allowed in part.

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• 2017 (10) TMI 1137
  Penalty on CHA - Regulation 18 read with Regulation 20 & 22 of CABLR 2013 read with Regulation 20(1) read with Regulation 22 of CHALR 2014 - illegal export of granite slabs - no proceedings were initiated for revocation of CHA License - Held that: - In the case of Vikrant Gogia Vs. CC Delhi [2016 (11) TMI 1468 - CESTAT NEW DELHI] also the penalty was dropped against the customs broker in a situation where the customs authorities held that the revocation of the CHA license as proposed by the Revenue is not warranted - Admittedly in this case also, the Ld. Commissioner has held that the revocation of customs broker license is not warranted. Penalty set aside - appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 1136
  Rectification of mistake - case of applicant is that the submissions were neither mentioned nor discussed in the impugned order - Held that: - the Hon’ble Supreme Court in the case of CIT vs. K. M. Thapar [1989 (2) TMI 5 - SUPREME Court], observed that only cumulative effect of the arguments will have to be mentioned in the order. It is not necessary to repeat each and every word of the arguments and case law. If some incidental facts were not mentioned, then rectification is not permissible. The impugned order has been passed on merit after hearing both parties and we find no infirmity in it. There is no apparent mistake in the impugned order. Thus, RoA has not merit and the same is dismissed. RoA application dismissed.

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• 2017 (10) TMI 1135
  Penalty - import of mobile phones - restricted item or not - conspiracy to import goods - front/ bogus firms - Held that: - The investigation carried out at DRI established that Shri Preet Mohinder Singh along with Shri Mukesh Arora and Shri Ankur Gupta have conspired in misusing IEC code number of Shri Anil Kumar, Proprietor of M/s. Samay International for a monetary consideration of Rs. 15000/- to Rs. 20,000/- per month. Shri Preet Mohinder Singh along with others ordered importation of mobile phones. Investigation has further established that the goods have been mis-declared in terms of description as well as value - Shri Preet Mohinder Singh has played a vital role in illegal import of mobile phone using the IEC code number of M/s. Samay International. Penalty imposed on Shri Preet Mohinder Singh upheld - appeal dismissed - decided against appellant.

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• 2017 (10) TMI 1134
  Valuation - enhancement of declared value - fax message seized from residential premises of Shri MKPP - Held that: - the show-cause notice admitting to compare the incomparable imports from different suppliers, from different countries and where there is an apparent difference in description of the imported product. In such a scenario, the attempt of the department to enhance the import values of all the consignments based on the fax message recovered from Shri BMS relating to B/E No.304848, dated 07.12.2000 is legally not justified - enhancement of value does not sustain. Penalties - Held that: - penalty u/s 114(a) of the CA, 1962 can be imposed only in respect of the differential liability determined in respect of B/E No.304848 - it would in the interest of justice to reduce the penalty imposed under section 112(a) ibid of Shri MKPP reduced to Rs. 10,000/-. Appeal allowed in part.

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• Corporate Laws

• 2017 (10) TMI 1133
  Oppression and mismanagement - Fraudulent allotment of shares - Petitioners are alleging that although share capital money is paid officially, shares were not allotted in respect of 19850 shares - Held that:- If, really petitioners were aggrieved for not allotting 32,3,29,850 shares, then they should have raised the said issue then and there itself. Moreover, unless it is specifically stated while making payment of Rs. 32,98,500/- it was paid towards share application money, it cannot be said that out of the amount paid by the petitioners Rs. 32,98,500/- is representing the share application money. As already said, according to the respondents, out of Rs. 100.00 lacs paid, Rs. 31.00 lacs is taken as share application money or as consideration for the shares allotted. Therefore, the grievance of the petitioner that instead of allotting 3,29,850 shares allotting 3,10,000 shares only, amounts to oppression do not merit acceptance. In the case on hand, the understanding that was reached between the petitioners and respondents No. 2 to 4 on 17.01.2010 has not been included in the Articles of Association and in case of breach of the terms of such understanding, the petitioners cannot take their redressal by recourse to company Tribunal under Sections 397-398 of the Companies Act, 1956 or at present under sections 241-242 of the Companies Act, 2013. Coming to the terms of MoU petitioner shall provide Rs. 20.00 lacs as unsecured loan without interest and arrange for Rs. 150.00 lacs working capital from Citi Bank. According to the respondents’, because of the petitioners unintended promise they lost an opportunity of getting working capital facility from the existing bank State Bank of India and other banks. It is the case of the petitioners, inspite of their best efforts they could not get working capital limits of Rs. 150.00 lacs from Citi Bank on the ground that the norms of the first respondent company do not fit in with the norms of Citi Bank. Therefore, all said and done it is also a breach on the part of the petitioners. Petitioners themselves pleaded that without necessity of funds, respondents started insisting them to invest further funds. Therefore, the investments by petitioner is not on the lines on which the understanding was entered between two parties. In view of the aforesaid discussions, it can only be said that the petitioners failed to establish any act of oppression and mismanagement

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• 2017 (10) TMI 1132
  Winding up petition - Company Petition under Sections 397 and 398 of the Companies Act, 1956 - scope of default - Held that:- It is clear that the R1 Company is a family concern which has been run on informal basis and for the benefit of the shareholders (who are all family members and relatives). The petitioners has stated that the R2 has misused the power of attorney available with him to deprive the R1 Company and the petitioners have stated that the purchase consideration was not credited to the bank account of the R1 Company. However, except for the Profit and Loss account and balance sheet for the financial year 2005-2006 no other statements containing facts like statement of bank accounts, Board Resolutions, Annual Returns for the subsequent periods etc. have been produced neither by the petitioners nor by the respondents. As against the issues raised by the petitioners against R2 a series of allegations against P1 have been made by the R2. The petitioners undoubtedly are the majority shareholders and also have representation in the Board. They could have taken up the issue in the Board Meeting or could have even removed R2 as a Director of the Company. For reasons best known to the petitioners, R2 has continued to be a Director in the Board till date. On these grounds alone the company Petition is liable to be dismissed. The Petitioners have challenged single/isolated past concluded transaction, that took place on 2nd July, 2004, of which he had the knowledge, as it is admitted fact that during 2009, the Petitioner sold properties in the same building in 10th Floor, so was aware of structure on the terrace, and have filed the Petition after the lapse of around 7 years from the date of the transaction in question. Therefore, a single/isolated past concluded transaction cannot be a base for seeking relief under Sections 397 and 398 of the Companies Act, 1956.

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• 2017 (10) TMI 1130
  Compounding of offences - Appellants failed to file its Annual Return for the financial year ended 31st March 2013 within 60 days of holding the Annual General Meeting resulting in non-compliance of statutory requirement under Section (s) 92, 137,96 and 129 of the Companies Act, 2013 - penal action under sections 92(5), 137(3), 99 and 129(7) of the Companies Act, 2013 invoked - whether the Tribunal had jurisdiction to compound the offences under Section 441 for the alleged violation of Section (s) 92, 137, 96 and 129 of the Companies Act, 2013? - Held that:- In the present case, we find that apart from violation of Section 96, where punishment fine has been prescribed, for violation of Section (s) 92, 137 and 129 of the Companies Act, 2013, alternative punishment of imprisonment or fine or imprisonment with fine, have been prescribed. In view of such provision we hold that for offences under Section (s) 92, 137 and 129 etc., where alternative punishment of fine has been prescribed, apart from imprisonment, the Tribunal is empowered to compound the offence only with the permission of the Special Court. In absence of investigation or pendency of any case before any court of law for alleged violation of Section (s) 92, 137,96 and 129 of the Companies Act, 2013, we hold that there is no requirement for the Tribunal to seek any permission from Special Court for the purpose of compounding any of such offence. It is well within the jurisdiction of the Tribunal to compound the offence where alternative punishment of fine is prescribed in place of imprisonment and where no case is pending before the Special Court. We further hold that the Tribunal is also empowered to compound such offence (s) under section (s) 92, 137 and 129 etc., where the alternative punishment of fine in place of imprisonment has been prescribed even where case (s) are pending before the Special Court, but in such cases, permission of the Special Court is required to be obtained prior to compounding the offence. In view of the position of law and facts of the case, we are of the view that the Tribunal was not correct in returning the file to the Appellants to move application before the Special Court constituted at Dwarka, New Delhi nor it had jurisdiction to direct the Registrar of Companies to file their report in the concerned Special Court. In the facts and circumstances of the case, the Tribunal, was required to decide as to whether alternative punishment of line can be imposed on the company and/or the Managing Director, Director (s), CFO or any officer, after taking into consideration the report, called for from the Registrar of Companies. The Register of Companies has requested this Appellate Tribunal to pass appropriate order on merit of the case. However, as no report has been submitted by the Registrar of Companies as to what is maximum fine payable by Appellants for the alleged offences, as noticed above and the period of such offences etc., have not been detailed, we are not expressing any opinion about fine, if any, to be imposed on the company or one or other Managing Director/Director or Director or CEO or officer of the company. Thus the impugned order passed by the Tribunal is set aside. The case is remitted back to the Tribunal, New Delhi Bench, to decide the quantum of penalty as may be imposed on the company and its officers like Managing Director, Director, CEO, CFO etc., for alleged violation after calling for report from the Registrar of Companies, Delhi 8B Haryana, New Delhi and notice to the parties.

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• Insolvency & Bankruptcy

• 2017 (10) TMI 1131
  Corporate Insolvency resolution process - Held that:- In the present case time was afforded to the applicant on 24.08.2017, for removal of the aforesaid defect. The applicant has filed certified Bank statements along with copy of report of Chartered Accountant dated 29.07.2017 on 30.08.2017, which cannot be termed as compliance of sub-section (3)(c) of Section 9 of the Code. Despite opportunity afforded admittedly the applicant has failed to complete the required documents till date. The word “shall” used in sub-section (3) of Section 9 of the Code shows mandatory requirement, which includes inter alia clause C of sub-section (3). Therefore, on a bare perusal of the above-mentioned provision it is clear that furnishing of certificate from the relevant financial institution by applicant inter alia is a mandatory requirement under Section 9 of the Code and in the absence of such certificate from the financial institution maintaining accounts of the operational creditor, the application filed by the applicant is clearly incomplete. As a sequel to the above discussion the present application filed by operational creditor is rejected being incomplete.

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• FEMA

• 2017 (10) TMI 1129
  Investigation and enquiry into violation of FEMA and the Rules and Regulations - Held that:- Any investigation undertaken with an intention to unearth violations of provisions of FEMA cannot be characterized as motivated or malicious merely because before initiation of such proceeding, an award had been passed against the Central Government regarding alleged breach of contract entered into between the Government and the Company. Alleged breach of contract is one thing and violation of FEMA is totally another thing. This Court cannot interfere in the matter to stall the investigation and enquiry by the adjudicating authority. In such matters all such allegations can be pleaded, demonstrated and proved by way of reply to show cause notice. Prima facie I am of the view that such bare allegations cannot form basis for stalling investigation and enquiry into violation of FEMA and the Rules and Regulations framed thereunder. As rightly contended by learned Additional Solicitor General hapter V of FEMA read with Rules framed, provides a complete network of provisions adequately structuring rights and remedies available to a person who is aggrieved by any adjudication under FEMA. In the instant case once a reply is submitted to the show cause notice, the adjudicating authority may take a decision to proceed in the matter or not to proceed. In case it decides to proceed, full opportunity will have to be provided to petitioners. If it is found that petitioners were guilty, then there is a provision to appeal to the Appellate Tribunal. If any person is aggrieved by any decision or order of the Appellate Tribunal, he may file an appeal to the High court. Thus, it is clear that the Act and the rules framed provide sufficient mechanism for redressing the grievance of petitioners. In such circumstances, merely on the basis of certain allegations of malafides, this Court cannot entertain the writ petition to quash the show cause notice or the complaint exercising jurisdiction under Article 227. It will tantamount to preventing investigation and enquiry into violations of serious nature which may affect the economic fabric of the Country. Truth will, in anyway, ultimately emerge. Therefore, keeping open all contentions of petitioners and reserving liberty to them to avail the remedies provided under the provisions of the Act read with the Rules and Regulations framed thereunder, these writ petitions are dismissed.

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• PMLA

• 2017 (10) TMI 1128
  Appeal under section 26 of Prevention of Money Laundering Act, 2002 - Provisional Attachment - Held that:- The Adjudicating Authority (PMLA), while passing the Impugned Order, did not consider the judicial precedents cited by the appellant on the above propositions of law asserting the supremacy and priority of the charge/rights of the appellants (being Secured inconsistency between the two, before giving an overriding effect to the non obstante clause. Neither the respondent no. 1 nor the Adjudicating Authority (PMLA) have indicated what "law" was being overridden by their use of Section 71 of the Act, and how such law was inconsistent with the provisions of the PMLA, 2002. The objectives of the PMLA, 2002 do not detract or derogate from the protection of legitimate transactions and financial assets as afforded by legislation such as the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The learned Adjudicating Authority (PMLA) has failed to appreciate that the definition of “proceeds of crime” and/or “value thereof” has no application to the facts of the present case inasmuch as in the present case, the legitimacy of the transaction entered into between the Appellant and the Respondent No. 7 is not in dispute. Therefore, the attached vehicle being the subject matter of the Loan Facility which predates the allegations of money laundering against the Respondent No. 7, is clearly identifiable and admittedly, not having been obtained or derived out of any criminal activity, does not fall within the definition of “proceeds of crime” or “value thereof”. Adjudicating Authority (PMLA) has not understand that the Loan Facility provided by the Appellant to the Respondent No. 7 for purchase of the attached vehicle is public money and not proceeds of crime or value thereof. Thus, no order can be passed by the Respondent No. 1 prejudicing the genuine business transaction of the Appellant Bank. The impugned order is patently illegal and not sustainable in law. We set-aside the Impugned order dated May 31, 2017 confirming the Provisional Order passed by the Respondent No. 1/Directorate of Enforcement with respect and limited to the attachment of the vehicle AUDI Car Model-A3 35 TDI DL 2CAT 4920; and also provisional attachment order no. 01/2017 dated January 27, 2017 passed by the Respondent No. 1/Directorate of Enforcement with respect to and limited to the attachment of the vehicle AUDI Car Model-A3 35 TDI DL 2CAT 4920; and also provisional attachment order no. 01/2017 dated January 27, 2017 passed by the Respondent No. 1/Directorate of Enforcement with respect to and limited to the attachment of the vehicle AUDI Car Model-A3 35 TDI DL 2CAT 4920. The vehicle in question shall be returned to the appellant forthwith who is entitled to disposed of and after adjustment of loan amount party, the appellant is entitled to file the recovery of balance amount as per law.

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• Service Tax

• 2017 (10) TMI 1127
  CENVAT credit - input services - Outdoor catering services/canteen services - Rent-a-cab/Tour operator services - Held that: - the learned Commissioner have not arrived at any finding that the Outdoor cantering service was provided with respect to any particular employee. It is admitted fact that the service was provided for all the employees in general and further as regards the Outdoor cantering services received during events is concerned, the same is also allowable as such events are meant for business promotion purposes and building of goodwill - also, there is no finding by the learned Commissioner to the contrary, save and except bald allegations - credit allowed. Penalty - Held that: - the issue relates to interpretation of the provisions of Cenvat Credit Rules and there is no misconduct or contumacious conduct on the part of the appellant in taking the credits - penalties set aside. Appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 1126
  Business Auxiliary Service - Right Concept Marketing (RCM) - levy of service tax - Extended period of limitation - Held that: - there was ambiguity in interpretation of the statutory definition of Business Auxiliary Service, the demand for extended period of limitation cannot be sustained. Admittedly, there is no sustainable ground in this case like fraud, misstatement etc., on the part of the appellant for defrauding the Government Revenue. Since the period of dispute is from May, 2004 to March, 2007 and the SCN was issued on 14/05/2008, the same is clearly barred by limitation of time, having being issued beyond the normal period - demand set aside - appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 1125
  Reverse Charge Mechanism - services availed from a foreign service provider - whether the appellant was required to pay service tax under reverse charge mechanism for the period 2004-2005 to 2006-2007 or not? - Held that: - as per the decision of the Hon’ble High Court of Bombay in the case of Indian National Shipowners Association [2008 (12) TMI 41 - BOMBAY HIGH COURT], prior to 18/04/2006 appellant was not required to pay service tax, therefore, demand of service tax for the period prior to 18/04/2006 is set aside - For the period post 18/04/2006 the demand of service tax is confirmed along with interest. Penalty - Held that: - As issue of taxability of service was in dispute before the Hon’ble High Court of Bombay in the case of Indian National Shipowners Association, therefore, no penalty is imposable on the appellant. Matter remanded to recalculate the demand payable - appeal allowed by way of remand.

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• 2017 (10) TMI 1124
  Extended period of limitation - Section 73 of Finance Act, 1993 - Held that: - When the Department has issued the show cause notice on 04/01/2010 for the period of 01/01/2005 to 31/11/2006, the notice is certainly within five year period as provided in the Proviso to Section 73 of Finance Act, 1994, which says that wherever short-levy or short- payment of service tax is because of willful miss-statement or suppression of facts etc, the show cause notice can be issued within five year period of the relevant date. When the facts on record clearly indicate that there was suppression of fact of payment of outward freight by the Appellant from the Department, the show cause notice has rightly been issued on time the time, limit being five years from the relevant date; and the demand has rightly been confirmed by the impugned order. Appeal dismissed - decided against appellant.

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• 2017 (10) TMI 1123
  CENVAT credit - rebate - whether the appellant, an exporter of services is entitled to Cenvat credit for the services received at their unregistered premises which was subsequently included in their Centralized Registration-Certificate and further whether they are entitled to rebate on the services exported? Held that: - In the case of Atrenta India Pvt. Ltd. [2017 (4) TMI 563 - ALLAHABAD HIGH COURT] held that the provisions of Cenvat Credit Rules do not stipulate registration as a condition precedent for eligibility to claim Cenvat credit and refund/rebate thereof. The Hon'ble High Court also observed that where refund is otherwise admissible, interpretation to deny refund of the rebate to party, by Department cannot be legally sustainable. Appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 1122
  Jurisdiction to issue SCN - Whether SCN have been rightly issued by the Service Tax Division, at Saharanpur (the Commissioner of Central Excise & Service Tax, Meerut-I) under the fact that the appellant who are manufacturer of Head light & Tail light, etc. for 2 wheelers, have their Head Office at New Delhi and the Head Office is also independently engaged in other businesses of contract nature? Held that: - there is no dispute to the fact that the said elements for services received from M/s Nohmi Bosai Ltd., Japan was paid charges for vetting of design drawing of NN-100 System for Fire Detection & Protection System at 2x250 MW, Bhilai STPS, Bhilai Jharkhand (Chhattisgarh) - Further, the said activity have got no relation with the affairs of the factory at Saharanpur nor any Cenvat credit was transferred by the Head Office to the factory at Saharanpur. The Service Tax Division, at Saharanpur under (the Commissioner of Central Excise & Service Tax, Meerut-I) did not have jurisdiction to issue notice - appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 1121
  Classification of services - “Commercial & Industrial Construction Services” or “Work Contract services” - the department was of the view that the Appellant had provided services to their clients/customers in respect of execution of a particular work under “work contract” - principles of natural justice - Held that: - As the impugned order is ex-parte, and appellant had sought time by filling representation and no opportunity was allowed to file written submission and evidence - there is Violation of Principle of Natural Justice - Also law on works contract stands clarified subsequently - matter remanded with direction to the Adjudicating authority to pass a reasoned order, after hearing the Appellant - appeal allowed by way of remand.

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• Central Excise

• 2017 (10) TMI 1120
  Recovery of the arrears of central excise duty - Garnishee notice - Section 11 of the CEA, 1944 - Held that: - the petitioner has now paid only four instalments and defaulted in payment of the fifth instalment - the first instalments of Rs. 21.54 lakhs was paid on 11.09.2017, and even before the petitioner could take steps to pay the second installment before 22.9.2017, one of the secured creditors, who had lent monies to the petitioner, viz. ICICI Bank had moved the National Company Law Tribunal (Division Bench) Chennai (NCLT) by filing CP/564(IB)/CB/2017, under Section 7 read with Rule 4 of the Insolvency and Bankruptcy Code, 2016 - the petitioner can no longer maintain the present Writ Petition - petition dismissed.

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• 2017 (10) TMI 1119
  Clandestine removal - Shortage of inputs and finished goods - substantiation of facts - Held that: - Shri Sandeep Maheshwari, authorised officer of the appellant has only stated that he is unable to explain the reasons of shortage. Such statement, without further corroboration, cannot be accepted as evidence of clandestine removal of goods, without payment of Central Excise duty - further, the stock verification was conducted on average basis, without consideration of the actual weighment of goods. Thus, it cannot be said that the stock position arrived at is correct and proper. No iota of evidence was produced by the department to prove that the goods found short during verification were removed clandestinely from the factory without payment of Central Excise duty - reliance placed in the case of CHANDPUR ENTERPRISES LTD. Versus COMMR. OF C. EX. & SERVICE TAX, MEERUT-I [2014 (8) TMI 970 - CESTAT NEW DELHI], where it was held that demand cannot be sustained, without substantiation of the fact of clandestine removal of goods - allegation of clandestine removal cannot be sustained. Appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 1118
  Clandestine removal of finished goods and raw material - shortage of stock - stock taking done on the basis of eye estimation - Held that: - in the case of plastic pipe, as per records, it was shown the stock of 3860 Kg where as on physical verification stock was found nil. For that, no clarification was given by the Ld. Counsel for the appellant although stock taking has been done on eye estimation basis. As a particular item is having nil stock, in that circumstances, the charge of shortage and clandestine removal stands proved. For rest of the demand the revenue failed to prove that the goods found short as stock taking has been done on eye estimation basis. In that circumstances, the rest of the demand is set aside. Appeal allowed in part.

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• 2017 (10) TMI 1117
  Clandestine removal - assessee is of the view that stock taking done on the basis of eye estimation - Held that: - from nowhere of the panchnama as well as the proceedings it is coming out how the wheighment of the stock was done. Moreover, it has mentioned in the panchnama and the statement of Shri Vijay Gupta that weighment of scrap was done only on approximation basis and the assessee repeatedly asked for supply of the weighement slips which has not been provided to the assessee - As wheighment details has not been produced by the revenue, in that circumstances, it is concluded that the wheighment has been done on eye estimation basis - demand set aside. The demand of Rs. 15,55, 360/- has been confirmed on the basis of the corroborative statement of Shri Vijay Gupta. As other evidence has been produced by the revenue on record to corroborate the clandestine removal of goods, therefore in the light of the decision of the Tribunal in the case of Devender Sandhu Impex Ltd. V/s Commissioner of Central Excise., Ludhiana [2016 (1) TMI 104 - CESTAT NEW DELHI] on the basis of statement of Shri Vijay Gupta, the demand is not sustainable. Appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 1116
  CENVAT credit - outward freight - whether appellant is eligible to avail CENVAT credit of service tax paid on outward freight paid by him during 2010-11 to December 2012 and for the month of March 2013? - Held that: - all clearances to their purchasers were ex-works of the recipient of the goods (free of road) - appellants are eligible to avail the CENVAT Credit of the service tax paid on outward freight transaction value - matter is remitted back to the adjudicating authority for limited purpose of arriving at the quantum of CENVAT that is available to the appellant on the service tax paid on the outward freight under transaction value as per the Section 4 of the Central Excise Act. Liability of interest - Held that: - based upon the quantum which has been arrived at by the adjudicating authority, the appellant has to discharge the interest on the amount of CENVAT credit which has been held ineligible. Penalty - Held that: - since the issue is of interpretation, there is no warrant to visit the appellant with any penalties. Appeal allowed by way of remand.

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• 2017 (10) TMI 1115
  Interest on delayed refund - whether interest on delayed refund is payable during the period between expiry of three months from the date of filing the refund application for the principal amount, till its refund; or, from the date, when the principal amount was paid by the applicant? - Held that: - the issue with regard to computation of the period for payment of the interest amount is no more res Integra, in view of the judgment of Hon’ble Supreme Court in the case of Shreeji Colour Chem Industries [2008 (9) TMI 12 - SUPREME COURT], wherein it has been ruled that payment of interest has to be made in accordance with Section 11BB ibid, from the date of expiry of three months from refund application, till the date of its refund. In the present case, since the Tribunal is entertaining and disposing the appeal filed under the Central Excise statute, the provisions contained in the statute alone has to be considered for deciding the issue involved in the appeal. On perusal of the said statutory provisions, it reveals that other than Section 11BB ibid, no other provision exists in the Central Excise statute, dealing with payment of interest from the date of actual deposit of the disputed amount. Thus, such interpretation placed by the appellant cannot be accepted, in absence of any statutory mandates. The appellant is only entitled for interest for delay of 25 days in sanction of refund amount - appeal dismissed - decided against appellant.

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• 2017 (10) TMI 1114
  CENVAT credit - whether the appellant is entitled to avail Cenvat credit of service tax on commission paid to service commission agent who causes sale of Sugar & Molasses manufactured by the appellants or not? - Held that: - relying on the decision of this Tribunal in the case of Essar Steel India Ltd. [2016 (4) TMI 232 - CESTAT AHMEDABAD], I hold that appellants are entitled to avail Cenvat credit on commission paid to the selling agent for selling the goods in terms of Rule 2(l) of the Cenvat Credit Rules, 2004 - appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 1113
  Clandestine removal - SSI Exemption - power cables including submersible power cable falling under Chapter 85 of the Central Excise Tariff Act - Held that: - For the purpose of Central Excise Act, 1944, there is sufficient material available on record by which it is established that there was a clandestine removal of the goods, especially when the Proprietor, Shri Ravinder Kumar Gupta, had admitted that the goods were manufactured and supplied to the buyers without making any entry in the books - Neither vouchers were prepared nor books were maintained. The driver has admitted that he had transported the goods only on the basis of ‘kachchi parchies’. Meaning thereby, that no vouchers were given to him. Entries made in the ‘kachchi parchies’ stand fully corroborated with the statements of the Proprietor recorded on various dates and the same were not retracted. Not only that, further corroboration comes from the statement of the buyers as also from the driver of the assessee-Appellants’ Company who used to transport the goods under the cover of ‘kachchi parchies’. All the evidences are sufficient to arrive at a finding that the assessee-Appellants were, admittedly, indulged in the clandestine removal of the goods. Appeal dismissed - decided against appellant-assessee.

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• 2017 (10) TMI 1112
  Valuation - freight charges - includibility - Department was of the view that the goods have been sold to the customers at the buyers premises and hence the freight charges collected by the appellant are required to be added to the transaction value for payment of Central Excise duty - place of removal - Held that: - it is evident that the goods have been removed from the factory and sent directly to the premises of the buyers. As per the terms of the purchase order, the appellant is required to deliver the goods at the premises of the buyer and has to bear all liability upto the delivery point - in the instant case, the goods have been sold in terms of section 4(1)(a) except that the excisable goods are to be delivered at the buyers premises. Rule 5 makes it clear that the cost of transportation from the factory gate upto the place of delivery is to be excluded computing the assessable value - freight charges not to be included in the assessable value for the purpose of excise duty. Explanation 2 to Rule 5 will not be applicable in the facts of the present case since, the place of removal is factory gate and not the premises of buyer of goods. Appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 1111
  CENVAT credit - inputs - silver nitrate, tungsten powder, hydrazine hydrate etc. which are used in the manufacture of final products - Department was of the view that since the appellant was clearing duty paid as well as exempted products, they are required to reverse the amount at the rate of 5% of the value of clearance of exempted products, in terms of Rule 6(3) of CCR, 2004 - Held that: - Revenue has not brought any evidence on record to establish that duty paid inputs have, infact, been utilized in the manufacture and clearance of exempted products which is the primary requirement to incur the mischief of Rule 6(3) - it is incumbent upon the Revenue to bring on record evidence to indicate that inputs on which cenvat credit has been availed, have been used partially in the manufacture of dutiable goods as well as partially in exempted products. In the absence of such an evidence, it is not proper to raise demand of duty on the basis of doubts. It is evident that significant quantity of silver on which credit was not taken has also been used in the manufacture of dutiable goods - In the light of fact that appellant has maintained the records, regarding receipt of duty paid inputs and use of the same in the manufacture and clearance of dutiable products, demand is set aside. Appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 1110
  CENVAT credit - returned goods - Rule 16 of the CER, 2002 - Held that: - Cenvat credit can be availed only when the goods are accompanied by documents evidencing the details of the goods, the duty involved as well as mode of transport with registration number of vehicles. Such details are to be entered in invoice which are stipulated under Rule 11 of the Central Excise Rules, 2002. After these particulars are found to be untrue, it gives rise to irrevocable presumption about the genuineness of goods transported and the documents covered by it. The goods cannot be considered as received by M/s. BEPL in the light of evidence regarding vehicle numbers / GRs. Further, there is nothing on record to indicate that Shri Arvind K Doshi, CEO of M/s. JRPL was instrumental in such activity. Hence, there is no justification for imposing penalty on Shri Doshi, and hence set aside. Appeal allowed in part.

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• 2017 (10) TMI 1109
  Valuation - deduction of cash discount - Held that: - in appellant’s own case M/s Kisan Irrigation Ltd. Versus Commissioner of Central Excise, Indore [2016 (1) TMI 696 - CESTAT NEW DELHI], the Tribunal after relying on the decision of the Apex Court in M/s Purolator India Ltd [2015 (8) TMI 1014 - SUPREME COURT] held that such cash discount is eligible for deduction to arrive at dutiable transaction value. It is very clear that the Hon’ble Supreme Court was also dealing with a case of cash discount which was denied for deduction by the Revenue on the ground that the same was not actually passed on to the customers. In the present case also, the denial of discount for abatement from transaction value is on that ground only. Appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 1108
  Maintainability of appeal - authorization as per section 35B of the CEA 1944 - Clandestine removal - ingots - it was alleged that the ingots were received in the factory of the respondent and they cleared the same without recording in their statutory records - Whether the appeal is maintainable under section 35(b)(2) of the Central Excise Act 1944 or not? - Held that: - from the records of the case it is not coming out when the committee was found and was constituted. Moreover, both the Commissioners have signed on the Review order without date and even in one case without name. The said records does not show that whether the officers applied their mind to the issue and recorded any opinion as per the requirement of section 35(b) of the Central Excise Act. Why the order of Commissioner (A) was not legal or proper and warranted to be challenged by the Commissioner (A) - reliance placed in the case of COMMISSIONER OF CENTRAL EXCISE, DELHI-I Versus KUNDALIA INDUSTRIES [2012 (8) TMI 789 - DELHI HIGH COURT], where it was held that No opinion is formed by the Committee of Commissioners about the illegality of the order as required under Section 35B of the Central Excise Act. There was no authorization by the Committee of Commissioners to file appeal on its behalf - appeal dismissed being non-maintainable. Whether during the relevant period, the Additional Director General of DGCEI was having the jurisdiction to issue SCN? - Held that: - the SCN has been issued to the respondent on 08.05.2001. Whereas the N/N. 38/2001-CE(NT) dated 26.06.2001 was effective from 01.07.2001. Admittedly, the SCN has been issued prior to the effective date of N/N. 38/2001-CE(NT) - at the time of issuance of the show cause notice, the Additional Director General, Shri R.K. Sharma of DGCEI was not having any jurisdiction to issue the show cause notice - decided in favor of respondent-assessee. Whether the adjudicating authority was an appropriate officer to adjudicate the matter or not? - Held that: - In terms of the office memo dated 12.02.1958, 23.03.1958 and 28.05.1958 it has been stipulated that for Gazetted appointments, there should be a gazette notification. As no such notification has been placed on record for promotion and appointment of Shri Rajiv Aggarwal as Joint Commissioner, therefore, the adjudication order passed by him as Joint Commissioner is not sustainable in the eyes of law - decided in favor of respondent-assessee. Whether the retracted statement of Shri Purushottam Kumar Gupta is admissible evidence or not? - Held that: - the retraction made by the respondent is available on record. Therefore, the retraction made by the respondent is required to be considered and no credence of retraction was given. Therefore, the said retraction is admissible. Consequently, the statements given by Shri Purushottam Kumar Gupta on 10.10.2000 and 08.03.2001 are not admissible as an evidence - decided in favor of respondent-assessee. Whether the loose slips recovered from Dharamkanta can be relied upon to allege clandestine removal of goods or not? - Held that: - the katcha slips has not been identified by the panch witness, therefore, the statements of Shri Purushottam Das Gupta and these katcha slips cannot be the basis to allege clandestine clearance of the goods. Moreover, Shri Nepal Singh also denied that he has written these documents during the cross examination. No other evidence has been produced by the Revenue on record to allege clandestine removal of the goods and in the absence of any concrete evidence on record, the charge of clandestine removal of goods is not sustainable against the respondent - decided in favor of respondent assessee. Whether penalty on Shri Purushottam Kumar Gupta can be imposed or not? - Held that: - As the charge of clandestine removal is not sustainable against the respondents, therefore, no penalty can be imposed on the respondents. Appeal dismissed - decided against Revenue.

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• 2017 (10) TMI 1107
  SSI Exemption - use of brand names - case of appellant is that the brand names were owned by the wife of Shri Mahesh Chand Goyal, Karta of the family and Shri Sundeep Kumar Goyal. This was a family settlement - Held that: - From the ratio laid down by the Hon’ble Supreme Court in the case of CCE vs Minimax Industries, [2011 (1) TMI 782 - DELHI HIGH COURT], it is evident that the brand name can be utilized by the family members. However, regarding the turnover of the two units, which were engaged in the manufacture, it is not clear from the record whether it was clubbed or not. For this limited purpose i.e. clubbing of the turnover of the two units, the matter remanded to the original authority to decide the same de novo. Appeal allowed by way of remand.

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• 2017 (10) TMI 1106
  Interest - penalty - Valuation - Annual capacity based production - Compounded Levy Scheme - Held that: - The Hon'ble Apex Court in the case of Shree Bhagwati Rolling Mills [2015 (11) TMI 1172 - SUPREME COURT] has held that the levy of interest and penalty are invalid, quashing the provisions of section 96ZO, 96ZP and 96ZQ - the demand of interest and penalties imposed are unsustainable - duty demand upheld - appeal allowed in part.

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• 2017 (10) TMI 1105
  Transfer of input service credit - utilisation of credit for payment of excise duty - extended period of limitation - Held that: - It is seen that the proceedings has been initiated against the appellant on the basis of the audit conducted by the department and an objection raised by them, based upon the entries made in their statutory accounts. As such, it can be safely concluded that the appellant had reflected all the facts in their accounts - appellant had filed the returns disclosing the factual position to the Revenue. This reflects upon the bonafide of the appellant and even if there is some different view of the Revenue, the appellant cannot be saddled with any malafide, so as to justifiably invoke the longer period - extended period cannot be invoked - demand set aside - appeal allowed - decided in favor of appellant.

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• 2017 (10) TMI 1104
  Classification of goods - ‘CRAX Corn Rings’ - ‘Natkhat Wheat Puffs’ - classified under CTH 19059030 of the Central Excise Tariff Act, 1985 as ‘extruded or expanded products, savoury or salted’, attracting Nil rate of duty or under CTH 19041090, attracting duty @ 16% adv? - Held that: - relying in the decision in the case of FRITO-LAY INDIA Versus COMMISSIONER OF C. EX., PUNE [2006 (11) TMI 28 - CESTAT,MUMBAI], where it was held that Meal blend have cooked by heating, hence classification under Heading 19.04 ibid further not sustainable and Classifiable under Sub- heading 2108.99 ibid - appeal dismissed - decided against Revenue.

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• 2017 (10) TMI 1103
  CENVAT credit - duty paying documents - whether under the admitted fact that after making purchases of inputs, the respondent-assessee will be benefitted to full credit after issue of credit notes/debit notes, resulting in reduction of the transaction value only? - Held that: - there is no such provision in the scheme of the Central Excise Act and the Rules thereunder that on subsequent alteration of transaction value, there results an automatic adjustment in the duty payable - Upon being asked if there is any provision in the Act and Rules, the ld. A. R. was unable to point out any such provision in the Act and Rules. This is a frivolous appeal filed by Revenue - appeal dismissed - decided against Revenue.

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• CST, VAT & Sales Tax

• 2017 (10) TMI 1164
  Validity of assessment order - TNGST Act - Section 54 of the TNGST Act - opportunity to cross-examine - Held that: - without affording an opportunity of cross examination of the other end dealer, there was no scope for the respondent to rely on the material relating to the said dealer for determination of the said liability on the petitioner - petition allowed.

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• 2017 (10) TMI 1102
  Validity of protective assessment - Section 38(5) of the Act - KVAT Act - case of petitioner is that u/s 38(5) of the Act, the protective assessment can be issued only if the prescribed authority has reasons to believe that such dealer would fail to pay any tax, penalty or interest so assessed or imposed or payable. There was no reason whatsoever for the lower authorities to believe that the petitioner would fail to pay the taxes, penalties or interests' so assessed or imposed - Whether the authority was justified in invoking the provision of section 38(5) when a notice under Section 82 of the Karnataka Value Added Tax Act has already been issued? Held that: - section 82 of KVAT Act does not give any inference that there is any prohibition for initiating action under section 38(5) of the Act, once a notice under section 82 of the Act is issued - Further, it is also not the case of the petitioner that the proceedings under section 82 of the Act has been concluded with respect to the relevant years 2005-06, 2006-07, 2007-08 and 2008-09. Thus, nothing has prevented the prescribed authority to initiate action under section 38 of the Act, provided the essential of the said section are met with. The opinion expressed by the Apex Court in Larsen & Toubro Ltd. (supra) cannot be considered as an excuse for the dealer under the Act for non payment of his tax periodically. In the absence of any specific direction or stay order allowing him to desist or delay from making payment of tax, merely because of an opinion to refer a matter to a larger Bench by the Hon'ble Apex Court cannot be taken as reasonable excuse for the dealer for non-payment of the tax which is a revenue to the State, at the appropriate time. As such, the petitioner since had no valid reasons for non-payment of tax. The prescribed authority had every reason to believe that the petitioner would fail to pay any tax, penalty or interest so assessed or payable by him. In this regard, the prescribed authority in its order under section 38(5) of the Act dated 11.11.2011 has given a detailed reasoning as to what made it to arrive at a belief that the petitioner would fail to pay the taxes, penalties and interests that are legally payable. We do not find any reason to disbelieve or reject those reasonings given by the prescribed authority. Petition dismissed - decided against petitioner.

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• 2017 (10) TMI 1101
  Best judgement assessment - Belated filing of returns - whether the impugned orders of assessment making a best of judgment assessment after the returns were filed, were just and proper? - Held that: - It is not in dispute that the returns for the relevant assessment years were filed by the learned counsel for the petitioner after the inspection was conducted in the place of business of the petitioner. However, the fact remains that the respondent accepted the belated returns by exercising its powers in levying a composition fee of Rs. 2,000/- for each assessment year in terms of Section 72(1)(b) of the said Act. On such returns being accepted after the levy of composition fee, it goes without saying that such returns, for all the practical purposes, shall be the returns and deemed to have been presented within the time permissible for the relevant assessment year. Whether a best of judgment could have been made? - Held that: - there could not have been an estimate of turnover without any material especially when the returns filed by the petitioner, though belatedly, have been accepted by the respondent - the decision in the case of A.Ponnusamy Vs. Government of Madras [1967 (7) TMI 119 - MADRAS HIGH COURT], would be squarely applicable to the facts of the present case, where it was held that it is only any excess sales not covered by the purchases that can be added. The matters are remitted back to the respondent for a fresh consideration - petition allowed by way of remand.

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