Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 4, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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GST – CONCEPT & STATUS (Updated as on 01st October 2018)
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Construction Services - Construction of factory for Madhepura Electric Locomotive Pvt. Ltd. which subsidiary of Indian Railways - The nature of activity undertaking by the applicant is Works Contract - However, the work completed by the applicant company cannot be held to be Resale/supply to railway company - the rate of GST applicable will be at 9%.
Income Tax
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Complaint u/s 276(C)/277 - punishment for making false statement and verification in account - absence of mens-rea - In every prosecution case, the Court shall always presume culpable mental state and it is for the accused to prove the contrary beyond reasonable doubt. No doubt, this presumption is a rebuttable one.
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Offence under Section 276CC - The fact that the assessee had subsequently furnished the return of income for AY 2003-04 on 24.10.2007 can also not take away from the fact that he had incurred the liability to be prosecuted earlier on account of failure to furnish the income-tax return within the stipulated period.
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Claim of depreciation - The assessee has been given only the right to develop, maintain and operate the toll road and further to collect the toll for the specified period. This right as discussed above is an intangible asset falling u/s 32(1)(ii)
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MAT computation - The claim to allow reduction of the brought forward losses of the petitioner company from the net profit in order to compute book profits under section 115JB of the Act in absence of any unabsorbed depreciation in the assessment year under consideration, cannot be accepted
Customs
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Duty Free Import Authorisation Scheme (DFIA) - Application for second extension of validity of the Duty Free Import Authorisation - rejection on the ground that the petitioner was unable to establish a case of genuine hardship - petition dismissed.
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Valuation of imported goods - Viscose Filament Yarn (VFY) - under-invoicing by misdeclaring the value - rejection of declared value - Demand confirmed - levy of penalty and redemption fine confirmed though reduced.
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Valuation of imported goods - related party transaction - the relationship has not influenced the transaction value under the Customs Valuation Rules - It is trite that the assessable value can’t be rejected merely on the grounds of NIDB data.
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Classification of imported goods - Even if the waiver of notice was by consent, the obligation on the part of the assessing officer to render a rationale and comprehensive finding for the alternative classification cannot be alienated
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Re-export of Confiscated goods - appellant imported the prohibited goods without any BIS certification - redemption fine imposed by the Commissioner for the purpose of re-export is not sustainable in law - However, levy of penalty confirmed.
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Enhancement of value - The entire case of the Revenue is based upon visual examination of the goods by the Customs officers and there is no expert opinion on record to show that the goods were actually usable as steel sheets/strips. - There is no justification for enhancing the value of the goods or to confiscate the same or to impose penalties upon the appellants.
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Extended period of limitation - Since all the goods have been procured by obtaining necessary permission from STPI as well as Customs authorities and the Customs was fully aware of the import and therefore it does not lie in the mouth of the Department now to contend that the appellants, hence suppressed the material facts.
Corporate Law
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Company under liquidation - right of the State on leased out property - they continue to remain as lessee. And the object for which the land was leased out being frustrated, on winding up of the company in question; the land leased out to it stands reverted to its owner, the State.
Indian Laws
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Another Milestone in the direction of “Ease of Doing Business”: Incorporation of Limited Liability Partnership (LLP) through a complete online system made a reality
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Dishonor of Cheque - offence punishable under section 138 of the N.I. Act - Since the N.I. Act is a self contained law the same will not get diluted simply for the reason of appointing liquidator and the death of the Managing Director especially in the existence of one of the Director who is the 3rd respondent herein.
Service Tax
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Levy of Service Tax - payment of royalty towards use of mineral resources - This petitioner appears to be a chance taking petitioner. In advance it is avoiding the liability which is not permissible in the eye of law.
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Commercial Training or Coaching Centre - Liability of Service tax on degree of B.Arch. - case of Revenue is that the degree of B.Arch. is not recognized/approved by AICTE and hence assessee is liable to pay service tax - contention of revenue rejected - demand set aside
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Classification of services - Photography services or not? - Though the appellant was having a photography studio but such activity is of merely collecting and getting the negative processed from photo labs and further handing over the same to the customers. - Demand set aside beyond the normal period of limitation.
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Supply of Taxable Goods Services to SEZ - It is quite evident that these services have been wholly consumed for authorized operations by the SEZ Unit/ Developer. - Benefit of exemption allowed.
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Online Information and Data Retrieval services - Levy of Service Tax - transaction of assignment of the receivables by the respondents to the assignee - cannot be taxed as OIDR service.
Central Excise
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CENVAT credit - fake invoices - two different handwriting are visible in those two bills and it appears that labour charges have been purposefully inserted in the bills to cover the services availed under the Cenvat Credit Rules - Going by the unethical practice adopted by the appellant, it can be said that the same would amount to fraud within the definition of IPC.
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Classification of goods - in the absence of test reports or expert’s opinion, the Revenue’s endeavour to hold that the goods being manufactured by the appellant are not chewing tobacco, but Jarda scented tobacco cannot be appreciated.
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Refund claim - demand recovered during investigation towards reversal of cenvat credit was higher - confirmed demand was much lower than paid on the ground of period of limitation - refund allowed.
Case Laws:
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GST
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2018 (10) TMI 142
Rate of GST - Construction Services - Construction of factory for Madhepura Electric Locomotive Pvt. Ltd. which subsidiary of Indian Railways - Supply of services - Composite Supply - Special Purpose Vehicle - whether the construction services are connected to Railways or not? Held that:- The nature of activity undertaking by the applicant is Works Contract - However, the work completed by the applicant company cannot be held to be Resale/supply to railway company - the rate of GST applicable will be at 9%.
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2018 (10) TMI 141
Vires of Rule 96(10)(b) of Central Goods and Service Tax Rules - Refund of IGST in case of export / Zero rated supplies - Validity of subordinate legislation giving retrospective effect to the amended provision by virtue of which, upon export of goods, the duty which is already refunded, would have to be paid back to the Government. Held that:- Notice returnable on 17.10.2018. Direct service to respondent No.3 is permitted.
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2018 (10) TMI 140
Vires of time limit prescribed under Rule 117 of the CGST Rule 2017 and Rule 117 of the West Bengal GST Rules, 2017 - Carry forward of Credit under existing laws to GST - petitioner contends that, the time limit prescribed under Rule 117 of the CGST Rule 2017 and Rule 117 of the West Bengal GST Rules, 2017 is ultra vires to the provision of Section 140 of the CGST Act, 2017 - Held that:- The issues raised in the writ petition are such that, an opportunity should be afforded to the respondents to file affidavits - Let affidavit-in-opposition be filed within two weeks after ensuing Puja Vacation. Reply thereto, if any, be filed within a week thereafter - List the writ petition in the Monthly Combined List of December, 2018 under the heading “Hearing”.
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Income Tax
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2018 (10) TMI 139
Income accrued in India - Existence of Permanent establishment (PE) so as to attract the provisions of Section 9 - Income accrued in India - income directly or indirectly attributable to the branches/offices is not taxable in India - DTAA between India and Japan - Held that:- This special leave petition is disposed of in the light of our order titled Director of Income Tax ( International Taxation) 2, New Delhi v. M/s. Mitsui and Company [2018 (7) TMI 141 - SUPREME COURT OF INDIA]
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2018 (10) TMI 138
Eligibility for deduction under Section 10A - existence of unit at Dehradun - whether Dehradun Unit is a mere extension of Malad, Mumbai Unit - Held that:- SLP dismissed.
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2018 (10) TMI 137
Complaint u/s 276(C)/277 - punishment for making false statement and verification in account - absence of mens-rea - Penalty u/s 271(1)(C) - willful attempt to conceal the particulars of income with a view to evade the payment of Tax - Held that:- Generally a guilty mind is a sine qua non for an offence to be committed. However, The Taxation Laws S. 278E has carved out an exception to this rule. The said Section places the burden of proving the absence of mens-rea upon the accused and also provides that such absence needs to be proved not only to the basic threshold of "preponderance of probability" but "beyond reasonable doubt". In every prosecution case, the Court shall always presume culpable mental state and it is for the accused to prove the contrary beyond reasonable doubt. No doubt, this presumption is a rebuttable one. In present case, as is evident from complaint, there is definite finding under section 144 of Income Tax Act that accused/petitioner had ₹ 20,20,420/- income in assessment year 2000-2001; Even appeal preferred by petitioner has been dismissed. The ground taken that there was no wilful default on behalf of petitioner in concealing the income is not tenable, because it is factual defence, which is to be proved during course of trial. The criminal court has to judge the case independently on the evidence placed before it. So complaint lodged by respondent and process issued thereon against petitioner does not suffer from any infirmity of law.
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2018 (10) TMI 136
Assessment u/s 153A - no material is found in the course of proceedings under Section 132(1) - Held that:- Members of the Tribunal rendered their opinion that factually there was no incriminating material found during the course of search relating to the addition made on account of deemed dividend. The very fact that Section 132 was resorted requiring the Assessing Officer to record the necessary satisfaction, was lacking in this case. The assessment, which had gained finality, in the absence of any material termed as incriminating having thus been subjected to assessment/reassessment, the Tribunal held in favour of the assessee. We do not think that the Tribunal's understanding of the legal provisions in the backdrop of these peculiar facts suffers from such legal infirmity or perversity necessitating our interference in further Appellate jurisdiction. No substantial question of law.
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2018 (10) TMI 135
Offence under Section 276CC - disobedience of Section 139 (1) by failure on the part of the assessee to furnish the return of income - Held that:- In the context of complaint relating to AY 2003-04, the evidence of complainant had shown disobedience of Section 139 (1) by failure on the part of the assessee to furnish the return of income. The notice under Section 142 (1) which had been served had also not been complied with. This added to the gravity and to the reasons for filing of the criminal prosecution. The subsequent notice (Ex.PW-2/5) cannot prima facie be read so as to supersede the previous notice (Ex.PW-2/4) particularly to have the effect of giving to the assessee indefinite period for compliance since that can never be the intention of the law or of the process issued thereunder. The fact that the assessee had subsequently furnished the return of income for AY 2003-04 on 24.10.2007 can also not take away from the fact that he had incurred the liability to be prosecuted earlier on account of failure to furnish the income-tax return within the stipulated period. In the opinion of this Court, the revisional court took the correct view in the case of complaints relating to AY 2004-05 and 2005-06, but fell into error in the context of complaint relating to AY 2003-04. There was no case made out for discharge of assessee in the latter case.
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2018 (10) TMI 134
Employees’ contribution of Provident Fund and ESIC - failure to deposit before due date - addition u/s 36 [1] (v)(a) read with Section 2 [24](x) - Held that:- This issue has been examined by this Court in the case of Commissioner of Income Tax vs. Gujarat State Road Transport Corporation [2014 (1) TMI 502 - GUJARAT HIGH COURT] that as there is no amendment in Section section 36(1)(va) of the Income Tax Act and considering section 36(1)(va) of the Income Tax Act as it stands, with respect to any sum received by the assessee from any of his employees to which the provisions of clause (x) of sub-section (24) of section 2 applies, assessee shall not be entitled to deduction of such amount in computing the income referred to in section 28 if such sum is not credited by the assessee to the employees' account in the relevant fund or funds on or before the due date as per explanation to section 36(1)(va) of the Act - By deleting Second Proviso to section 43B by Finance Act, 2003, it cannot be said that Section 36(1) (va) is amended and/or explanation below clause (va) of sub-section (1) of section 36 is deleted, which is with respect to employees' contribution - Decision in Alom Extrusions Ltd. (2009 (11) TMI 27 - SUPREME COURT ), distinguished - additions confirmed - Decided in favour of Revenue.
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2018 (10) TMI 133
Expenditure on replacement of old machinery - replacement of ring frames in spinning mill - allowable revenue expenditure or capital expenditure - Held that:- The issue as to how such expenditure has to be treated is no longer res integra and has been decided by the Hon'ble Supreme Court in Commissioner of Income-tax vs. Sri Mangayarkarasi Mills (P.) Ltd.[2009 (7) TMI 17 - SUPREME COURT]. In the light of the said decision, the matter requires to be remanded to CIT (A) to consider as to whether the expenditure incurred by the assessee for replacement of ring frames results in enduring benefit
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2018 (10) TMI 132
Penalty U/s 271(1)(c) - non specification of charge - defective notice - inappropriate words in the notice issued u/s 274 r.w.s. 271 have not been struck off - Held that:- A perusal of the notice issued u/s 274 r.w.s. 271 dated 31.03.2004 shows that the inappropriate words in the said notice have not been struck off and it is a printed notice. Even the last line of the said notice only speaks of section 271 and does not even mention of section 271(1)(c) of the I.T. Act. We find an identical issue had come up before this Bench of the Tribunal in the case of Sahiwal Investment & Trading co. vs. ITO [2018 (7) TMI 1472 - ITAT DELHI] holding the notice issued by the Assessing Officer under Section 274 read with Section 271(1)(c) to be bad in law as it did not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. - Decided in favour of assessee
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2018 (10) TMI 131
Depreciation on plant and machinery without reducing the compensation received - Held that:- As relying on earlier AYs in view of the non-cooperation of the assessee in presenting the details the WDV for the year under consideration which in-turns is to be adopted for working the depreciation for the year cannot be determined. In the interest of justice, we deem it fit to restore the issue back to the file of the Assessing Officer to determine the WDV for the year under consideration in line with the WDV determined for the preceding years and allow the claim of the assessee as per law. A reasonable opportunity of hearing to the assessee shall be afforded - Appeal of Revenue is allowed for statistical purposes.
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2018 (10) TMI 130
CIT-A power to set aside the issue - CIT(A) directing the AO to verify the claim of depreciation in regard to lease assets - Held that:- This issue has already been adjudicated by the Tribunal in AY 1996-97 [2018 (5) TMI 39 - ITAT MUMBAI] wherein Tribunal after considering the issue in detail has allowed the claim of the assessee dismissing the Revenue’s appeal and confirm the order of the Ld. CIT(A) in holding that assessee is eligible to claim depreciation from sale and lease back assets in respect of the transactions other than Nath Pulp & Paper Mills Ltd. To put an end to the litigation in this case as the matter is very old and relates to the A.Ys. 1996-97, we sustain the order of the CIT(A) partly as indicated above and the claim of the assessee is directed to be allowed as per the observations of the Ld.CIT(A) without any further verification by the Assessing Officer. - Decided in favour of assessee.
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2018 (10) TMI 129
Addition on account of share application money on protective basis u/s 68 - Identity of the investor credit worthiness and genuineness - Held that:- Evidences placed by the assessee establish that the sufficient sources are available to Shri K. Srinivasa Rao to make the investment of ₹ 98,00,000/-. CIT(A) the assessee has given complete cash trail and cash flow to explain the sources and the department did not bring any evidence to controvert the finding given by the CIT(A). In the instant case, Identity of the investor credit worthiness and genuineness is established and we do not find any reason to interfere with the order of the CIT(A) and the same is upheld. In the assessee’s case, the addition was made on protective basis in the hands of the assessee company and completed the assessment of Shri K.Srinivasa Rao on substantive basis. Once the assessment is made on substantive basis on the correct person, the protective assessment has no legs to stand and required to be deleted. On this reason also we delete the addition made by the AO. Accordingly the appeal of the revenue on this ground is dismissed. Addition u/s 69 - Held that:- The fact that the assessee had remitted the funds of ₹ 92.54 lakhs from banking channels and raised the loans with Dhanalakshmi Bank for an amount of ₹ 1,19,44,000/- was not disputed by the AO. As observed by the Ld.CIT(A), there was cash balance of ₹ 1,52,78,047/- as per the financial statement submitted by Shri K.Srinivasa Rao as at the end of 31.03.2010. From the above, it is established that Shri K.Srinivasa Rao is having sufficient source to make the investment of share application money in the company. Therefore, there is no case for suspecting the genuineness of the transaction having established the identity, credit worthiness and source of the capital. Hence, there is no case of making the addition u/s 69, accordingly, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue.
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2018 (10) TMI 128
Addition on account of long term Capital gains - sale of agriculture land - Held that:- As stated on oath that the residential plots sold during the year were effected by him only and he has duly received the sale consideration from various plot owners and those transactions had no financial relation with the assessee. There is no dispute about the price of agriculture land per acre which is at ₹ 41,50,000/- per acre and is above the prevailing rate of ₹ 40,48,552/- as provided in the guidelines of Zila Panjiyak Sanyojak. Therefore are of considered view that both the lower authorities erred in calculating the sale consideration by invoking provisions of Section 50C and applying the price of each plot of land sold during the year and thereby computing the Long Term Capital Gain. Allow this issue in favour of the assessee and direct the revenue authorities to calculate the Long Term Capital Gain by taking the sale consideration of impugned agriculture land at ₹ 1,68,90,500/- as against the sale consideration confirmed by the CIT(A) at ₹ 3,83,79,019/-. Decided in favour of the assessee. Denying the benefit of exemption u/s 54B for investment in agriculture land in the name of son and daughter of the assessee - Held that:- The provisions of Section 54B is mainly focused on providing the benefit to such assessee who sells their agriculture land and invest the sale consideration so received for purchasing another piece of agriculture land. The main weightage is for applying the consideration for purchase of agriculture land and it is not specifically mentioned as to whether it has to be purchased in the name of the assessee. For better perusal we mention below the provisions of Section 54B. Reason that why the benefit should not be given for purchase of agriculture land in the name of his son and daughter who are not someone not connected or strangers to the assessee and as held by the Hon'ble High Court that the assessee includes his legal heirs also so as to give the vide and legal interpretation. We therefore are of the view that the CIT(A) erred in denying the exemptions u/s 54B of the Act to the assessee for investment of sale consideration for purchasing agriculture land in name of his son and daughter at ₹ 49,86,085/- and ₹ 12,50,175/- respectively. We accordingly set aside the findings of both the lower authorities and direct the Ld. Assessing Officer to give the benefit of exemption u/s 54B to the assessee at ₹ 62,36,260/- which is over and above the benefit of ₹ 91,18,190/- already allowed by Ld.CIT(A) u/s 54B. In the result the issue No.3 raised by the assessee under Ground No.2 of the appeal is allowed. Adoption of cost of acquisition of land sold by the assessee - Held that:- There was sale of agriculture land measuring 1.647 hectare. The cost of acquisition on 1.04.1981 was taken at ₹ 5 lakhs per hectare thereby computing the cost of acquisition at ₹ 8,23,500/-. The onus to prove the basis of taking the cost of ₹ 5 lakh per hectare was on the assessee. However during the course of assessment proceedings two registration sale deeds of the nearby agriculture land situated at Village Raslakhedi were available. As per the sale deed dated 25.7.1985 the rate of land was ₹ 10,000/- per acre and in another case of registered sale deed dated 31.7.85 also the rate was ₹ 10,000/-. No new evidences were brought on record. We are of the view that cost of acquisition for 1.647 acres should be adopted at ₹ 1 lakh per hectare which will work out the acquisition cost at ₹ 1,64,700/- per hectare. Ld.A.O is hereby directed to adopt the cost of acquisition at ₹ 1,64,700/- as against ₹ 8,23,500/- adopted by the assessee. This ground of appeal of the assessee is partly allowed.
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2018 (10) TMI 127
Determination of Arm length price in respect of interest charged on advances given to the subsidiary company M/s Jayant PTE Ltd, which is also the Associated Enterprise(AE) of the assessee company - Held that:- As decided in the assessee’s own case for the assessment year 2011-12 and 2012-13 decided the issue in favour of the assessee and held that on out bound loans, the LIBOR rate should be adopted. In the instant case, the assessee has charged the interest @ 4. 5% which is more than the LIBOR rate. Respectfully following the view taken by this Tribunal in the assessee’s own case for the assessment year 2011- 12 and 2012-13 supra, we uphold the order of the Ld. CIT(A) and dismiss the appeal of the revenue on this ground. Corporate guarantee fee - Held that:- Similar view was taken up by the Coordinate Bench of ITAT, Hyderabad in the case of Batronics India Ltd. (2017 (9) TMI 1649 - ITAT HYDERABAD). In the instant case, the facts are identical. The assessee had given corporate guarantee to its 100% subsidiary and the AE for the purpose of business. The assessee had not incurred any expenditure towards the corporate guarantee. The revenue could not bring any evidence to establish that the assessee had incurred any expenditure for extending the corporate guarantee. As stated by the Ld. AR it is the obligation on the part of the assessee to extend the support and assistance to its subsidiaries for business development. Since the facts are identical, respectfully following the view taken by coordinate benches in the case laws cited, we hold that the corporate guarantee given by the assessee on behalf of its AE would not constitute an international transaction within the meaning of 92B of the Act. Accordingly, we uphold the order of the Ld. CIT(A) and dismiss the appeal of the revenue.
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2018 (10) TMI 126
Assessment u/s 153A - proof of incriminating material found in search - Held that:- In the absence of any incriminating material found from the premises of the assessee, additions made in the year is outside the scope of Section 153A of the Act. The present case is squarely covered by the decision of the Hon’ble Jurisdictional High Court in case of CIT vs. Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT]. - Decided in favour of assessee.
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2018 (10) TMI 125
Penalty u/s. 271(1)(c) - non specification of charge - defective notice - Held that:- We find that the notice dated 15.10.2010 issued by the AO u/s. 274 read with Section 271 does not specify which limb of section 271 of the Act, the penalty proceedings had been proposed and levied i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars, and the decisions of Karnataka High Court in CIT vs Manjunatha Cotton & Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] and CIT & Anr. Vs. M/s SSA’s Emerald Meadows [2015 (11) TMI 1620 - KARNATAKA HIGH COURT] are applicable. We find it difficult to sustain the penalty levied and sustained by the authorities below. Therefore, the penalty in dispute is not sustainable in the eyes of law. We accordingly quash the penalty proceedings. Since the penalty has been quashed on the legal ground, there is no need to adjudicate the merits of the case. - Decided in favour of assessee
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2018 (10) TMI 124
Disallowance of claim of depreciation on toll road u/s.32 by treating the same as plant and machinery - Held that:- Issue under consideration is covered by the order of the Tribunal in assessee’s own case for the A.Y.2009-10 [2015 (5) TMI 305 - ITAT MUMBAI] and also by the order for A.Y.2010-11 [2017 (6) TMI 237 - ITAT MUMBAI] as held assessee is entitled to the claim of depreciation on the road to collect toll being an intangible asset falling within the purview of section 32(1) (ii) of the Act. Even the assessee is not the owner of the toll road. The assessee has been given only the right to develop, maintain and operate the toll road and further to collect the toll for the specified period. This right as discussed above is an intangible asset falling under section 32(1)(ii) of the Act. - Decided in favour of assessee. Treatment to interest income - income from business or other sources - Held that:- Following the order of Tribunal in assessee’s own case, we do not find any merit in the action of lower authorities treating the interest income under the head of “income from other sources. - Decided in favour of assessee.
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2018 (10) TMI 123
Reopening of assessment - unexplained deposits - eligibility of reason to believe - tangible material - Held that:- There is no nexus between the prima-facie inference arrived in the reasons recorded and information; the information was restricted to cash deposits in bank account but there was no material much less tangible, credible, cogent and relevant material to form a reason to believe that cash deposits represented income of the assessee; that even the communication dated 24.1.2012 could not be made a basis to assume jurisdiction in view of the fact that such an enquiry letter is an illegal enquiry letter and thus cannot be relied upon; that the proceedings initiated are based on surmises, conjectures and suspicion. The same are without jurisdiction; that the reasons recorded are highly vague, far-fetched and cannot by any stretch of imagination lead to conclusion of escapement of income and these are merely presumption in nature; that it is a case of mechanical action on the part of the AO as there is non-application of mind much less independent application of mind so as to show that he formed an opinion based on any material that such deposits represented income. See KRISHAN KUMAR VERSUS ITO [2017 (12) TMI 1612 - ITAT NEW DELHI]- Decided in favour of assessee
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2018 (10) TMI 122
Disallowance of unabsorbed cost of TDR - computing the Profit on sale of TDR under normal provisions of the Act and computing the book profits u/s.115JB - Held that:- For the A.Ys. 2009-10 and 2010-11 the Revenue though filed an appeal before the Hon’ble High Court, the issue of whether the assessee is entitled to claim for revised cost of TDR is not agitated before the Hon’ble High court and the Revenue accepted the decision of the Tribunal in holding that the profit arising out of the sale of TDR has to be recomputed in line with the revised computation of cost of sale of TDR as filed by the assessee. In the circumstances, and respectfully following the same in principle, we hold that the assessee is entitled to revise its cost of TDR and the same has to be recomputed in line with the revised computations of TDR as filed before the lower authorities. Since the revised cost of computation is prepared on same method as adopted in earlier years which was also accepted by Assessing Officer in earlier years while giving effect to ITAT order, we see no reason to accept the same for this Assessment Year. Thus, we direct the Assessing Officer to accept the revised computation of cost of TDR after verification. Subject to verification claim of the assessee is allowed. Disallowance of unabsorbed cost of TDR while computing income u/s.115JB - Held that:- We find that the Lower Authorities have not examined the claim of the assessee and no findings have been given by the Lower Authorities on this issue. Keeping in view the submissions of the assessee and also our decision in ground No.2 above while computing the income under normal provisions of the Act, we feel it appropriate to restore this issue to the file of the Assessing Officer who shall examine the claim of the assessee and allow in accordance with law. This ground is allowed for statistical purpose. Disallowing the deduction of unrealized cost debited to P&L account while computing the income under normal provisions of the Act and also while computing the book profits u/s. 115JB - Held that:- Hon’ble Karnataka High Court in the case of Asia Power Projects (P.) Ltd., v. DCIT [2014 (10) TMI 109 - KARNATAKA HIGH COURT] while considering the allowability of expenditure on abandoned projects, it was held that even though the assessee invoked arbitration clause and pending the expenditure on abandoned project should be allowed in the year in which the contract is terminated. We feel it appropriate to restore this issue to the file to the Assessing Officer who shall examine the whole issue in the light of the above observations and to decide in accordance with law while computing the income under normal provisions of Act as well as book profits u/s. 115JB of the Act. Needless to say that the Assessing Officer shall provide adequate opportunity of being heard to the assessee. Bank guarantee forfeiture by MIAL is an allowable expenditure. We find in the Assessment Order the Assessing Officer expressed a doubt as to whether this ₹ 25 Crores included in the unrealized cost of ₹ 441.93 crores or not. CIT(A) the assessee submitted that the said expenditure of ₹ 25 Crores does not form part of write off exceptional loss of ₹ 441.98 crores. In view of the above, following the decision of the Jurisdictional High Court, we hold that the bank guarantee forfeited is allowable business expenditure subject to verification of the Assessing Officer. This ground of the appeal is allowed. Disallow the capitalization of expenses by reducing the work in progress on account of payment made to tenants and development expenses - Held that:- We find that the assessee has not substantiated its claim with complete details of expenditure and with supporting evidences. In the circumstances, we are of the view that this issue has to be examined afresh by the Assessing Officer. Thus we set aside this issue to the file of the Assessing Officer for denovo adjudication in accordance with law after providing adequate opportunity of being heard to the assessee. The assessee may produce necessary details to substantiate its claims. This ground is allowed for statistical purposes. Claim for set off of brought forward losses and unabsorbed depreciation - Held that:- Set off of brought forward losses and unabsorbed depreciation are only consequential in nature, therefore we restore these grounds to the file of the Assessing Officer who shall examine and allow set off of brought forward losses and unabsorbed depreciation in accordance with law. This ground is allowed for statistical purpose. Deemed rental income on the properties which were stock in trade of the assessee - Held that:- In order to give relief to Real Estate Developers, section 23 has been amended w.e.f. AY 2018-19 (FY 2017-18). By this amendment, it is provided that if the assessee is holding any house property as his stock-in-trade which is not let out for the whole or part of the year, the annual value of such property will be considered as Nil for a period up to one year from the end of the financial year in which a completion certificate is obtained from the competent authority. In view of the above amendment to section 23, we are not adverting to the case laws relied on by the Ld. counsel and Ld. DR. In the instant case, the assessee is a builder and developer. The issue of taxability is with regard to 51 unsold flats. The AY is 2012-13. In view of the insertion of sub-section (5) in section 23 by the Finance Act, 2017, w.e.f. 01.04.2018 narrated hereinbefore, we set aside the order of the Ld. CIT(A) and allow the ground of appeal.
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2018 (10) TMI 121
MAT computation - Bringing to tax the Net Profit declared in the Profit Loss Account as Book Profit under the provisions of section 115JB - Held that:- As in CAIRN EXPLORATION (NO. 7) LTD 1 VERSUS UNION OF INDIA 2 [2010 (10) TMI 1182 - GUJARAT HIGH COURT] similar issue has already decided the issue raised in the appeal in its case against the assessee. The Court in above case does not find the impugned provision to be in any manner unconstitutional, hence, the question of reading it down to save its constitutional validity does not arise, Besides, the provisions of clause (iii) of the Explanation to section 115JB are clear and ambiguous and it is not possible to take two views as to the meaning of the statutory language. Hence, the request to read down the provision also does not merit acceptance. Consequently, the question of directing the respondents to allow reduction of the brought forward losses of the petitioner company from the net profit in order to compute book profits under section 115JB of the Act in absence of any unabsorbed depreciation in the assessment year under consideration, also cannot be accepted - Decided in favour of revenue
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Customs
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2018 (10) TMI 117
Supplies made to SEZ - fulfillment of Export obligation when import was made against Advance Authorisation scheme - Minutes of meetings / orders dated 1st August, 2017 and 6th December, 2017 of the Policy Relaxation Committee in the office of the Director General of Foreign Trade, respondent no.2 - Held that:- Following the decision in the case of arsen and Tubro Ltd. (2017 (10) TMI 40), the impugned orders / minutes be set aside and the respondents be directed to issue export obligation discharge certificates in respect of advance authorizations in question. Decided in favor of petitioner.
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2018 (10) TMI 116
Duty Free Import Authorisation Scheme (DFIA) - Application for second extension of validity of the Duty Free Import Authorisation - rejection on the ground that the petitioner was unable to establish a case of genuine hardship - Held that:- As is apparent from the plain language of the Paragraph 2.58 of the FTP, the DGFT is empowered to grant exemption, relaxation or relief from the provisions of FTP or any procedure if he so deems fit. However, it is important to note that such exemption, relaxation or relief can be only granted if it is in public interest and on the grounds of genuine hardship and adverse impact on trade - In the present case, the PRC had considered the petitioner’s request and had concluded that the petitioner had not established a case of genuine hardship. Whether, in the facts of the present case, the decision of the PRC is arbitrary or unreasonable and warrants interference in these proceedings? - Held that:- The discretion to relax the conditions of the FTP/HBP rests with the PRC and not this Court. Therefore, the scope of judicial review of the decisions of the PRC is limited. Unless the petitioner is able to establish that the decision of the PRC was perverse, arbitrary, capricious or unreasonable or otherwise contrary to the statutory framework, no interference with such decision would be permissible - It is, at once, clear that the petitioner had not set up a case of any unexpected hardship or any emergent situation that had precluded the petitioner from completing the imports. Essentially, the petitioner had sought extension of the Duty Free Import Authorization on the ground of commercial expediency. The PRC was of the view that since the petitioner had not set up a case of genuine hardship, it was not entitled to any relaxation in terms of Paragraph 2.58 of the FTP - This Court is unable to accept that the said decision is arbitrary, unreasonable or otherwise falls foul of Article 14 of the Constitution of India. Whether the petitioner had been afforded sufficient time to comply with the import obligations for completing the imports under the Duty Free Import Authorization? - Held that:- The petitioner had obtained an import authorization which remained valid for twenty-four months. The DGFT noted that, in this manner, the petitioner had secured a Duty Free Import Authorization which was valid for a period longer than those issued to other exporters. Also, the petitioner had not made out a case of genuine hardship. Petition dismissed.
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2018 (10) TMI 115
Detention of goods - mis-declaration of the value of the cargo - ownership of the Cargo - whether the conditions imposed in the order dated 19.01.2018, for provisional release are fair and reasonable or is it onerous and unreasonable? Held that:- Undoubtedly, there is room for exercise of discretion while considering an application for provisional release exercising powers under Section 110A of the Act. However, such exercise cannot be unguided or unbridled. The exercise of discretion and imposition of conditions should satisfy the test of reasonableness vis-a-vis the factual matrix - What is required to be seen in the instant case is whether there was justification on the part of Customs Department to insist upon Bank Guarantee for ₹ 1,00,00,000/-. Admittedly, in the order dated 19.01.2018 no reasons have been assigned by the Customs Department to impose such a condition. The circular does not foreclose exercise of the discretion by the competent authority, who imposes condition on examination of the Cargo. On a reading of the show cause notice it appears that there are several materials, which have been referred to in the show cause notice and it is for respondent to reply to the show cause notice and participate in the adjudication. Since, show cause notice has been issued to the respondent, this Court would be fully justified in considering the allegations made in the show cause notice while considering as to what would be the reasonable conditions to be imposed in the respondent's case, while ordering release. Non-cooperation of the respondent with the investigation - Held that:- It was noted that the respondent did not co-operate with the DRI, Ahmedabad and one Senior Intelligence Officer of DRI, Ahmedabad was present in Court and directions were issued after which, the respondent appeared before the Officer at Chennai and a statement was recorded. Therefore, Mrs.R.Hemalatha is right in her submission that the non-cooperative attitude of the assessee also to be borne in mind so that ultimately when the adjudication is completed, the amount of duty if determined, should not become irrecoverable. Provisional release of goods allowed subject to conditions imposed - appeal allowed in part.
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2018 (10) TMI 114
Maintainability of petition - petitioner association is registered under the Societies Registration Act and importers of vegetable seeds are its members - Classification of goods - coriander seeds and chilly seeds imported by the members of the petitioner association. Held that:- There is no reason to entertain the present writ petition for several reasons. The petitioner association has not filed list of its members but it appears that some of its members are facing proceedings pursuant to show cause notices issued to them - Whether the goods imported by a particular person were spices or coriander and chilly seeds would be primarily a factual dispute. This lis has to be decided and adjudicated on case to case basis. Petition not entertained by leaving it open to the members of the petitioner association to take up their stand and stance in each specific case.
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2018 (10) TMI 113
Valuation of imported goods - Viscose Filament Yarn (VFY) - under-invoicing by misdeclaring the value - rejection of declared value - enhancement of value - allegation is that the appellants have misdeclared the Viscose Filament Yarn imported by them and also undervalued the said goods and evaded Customs Duty. Held that:- It is seen that for the two containers for which the Bill of Entry No. 524213 dated 26.08.2003 was filed, there was no misdeclaration with respect to description of goods. The differential duty demand confirmed on the ground of under-invoicing is ₹ 93,261/- in respect of these two containers - Since from the previous imports it is seen that the goods were imported for higher value, we find that there is no requirement for interfering with the enhancement of value. Thus, the differential duty demand of ₹ 93,261/- in respect of Bill of Entry dated 26.08.2003 is sustained and therefore, the conclusion that the goods in these two containers are liable for confiscation does not require interference. Redemption fine u/s 125 of CA - Held that:- The redemption fine imposed under Section 125 of the Customs Act, 1962 is on the higher side. The enhancement of value being only marginal, we are of the view that the redemption fine can be reduced to ₹ 30,000/-. Penalty u/s 112(a) of CA - Held that:- The penalty imposed under Section 112(a) in respect of the above Bill of Entry also appears to be on the higher side and is reduced to ₹ 15,000/-. In respect of the 12 Bills of Entry, it is brought out from evidence that only 2 Bills of Entry Nos. 499206 and 499208 both dated 11.06.2003 showed discrepancy with regard to the description of the Deneirage of the goods imported. While the Master Bill of Lading showed the description of both 600D and 120D, the House Bill of Lading in respect of these two Bills of Entry showed declaration as 600D only - the differential duty demand as well as the penalty imposed in respect of the 10 Bills of Entry cannot sustain and requires to be set aside which we hereby do - the differential duty demand along with penalty in respect of the 2 Bills of Entry Nos. 499206 and 499208 dated 11.06.2003 is upheld. The matter is remanded to the adjudicating authority for requantification of the differential duty and for revision of penalty. Appeal allowed in part and part matter on remand.
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2018 (10) TMI 112
Valuation of imported goods - related party transaction - rejection of declared value - enhancement of value based on NIDB data - Royalty on sales. Held that:- The Commissioner (Appeal) has not given any categorical finding as to how the relationship had influenced the transaction value especially when it is on record by way of affidavit that the LTA agreement of 2005 and 2013 have not changed. The pattern of sale transaction the terms and conditions in the two LTAs are same. Even in the impugned order which has been passed against O-I-O No. SVB/CUS/Review/HO/RK/2014-15 dated 4.03.2015 by the adjudicating authority has examined the agreement in detail and came to the conclusion that the relationship has not influenced the transaction value under the Customs Valuation Rules. On this finding of the Commissioner(Appeal) has not given as to how the NIDB data will be relevant in this case when it is apparent from the facts on records that there is no import/sale of the products in India. The Commissioner (Appeal) has simply accepted the grounds of appeal filed by the Revenue in without giving any independent findings on the point received in the appeal. On the other hand we find that the lower Adjudicating Authority has dealt with the valuation of the imported by the Appellant as per Customs Valuation Rules after going through the LTA, and examining the affidavit filed by the Appellant. There is no application of NIDB data in the case where the issue is examination of adoption of valuation under Rules, 2(2) Customs Valuation Rules, 2007 Ipso-facto. It is trite that the assessable value can t be rejected merely on the grounds of NIDB data - In the case of Commissioners (Appeal) in the impugned order has not taken any pain to find out the NIDB data available for the product in question especially when there is a categorical acceptance by the Adjudicating Authority that there is no import/sale price available before him. The order passed by the primary Adjudicating Authority is restored.
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2018 (10) TMI 111
Classification of imported goods - stainless steel melting scrap grade 304 - whether the goods classified under heading 7204 2190 or under heading 7219 9090 of the First Schedule to the Central Excise Tariff Act, 1975? - Anti-dumping duty - Valuation - Principles of natural justice. Held that:- The order of the original authority has, while recording that the show cause notice was waived, gone on to classify the goods under a different heading with a mere assertion and in the absence of a proper examination of the validity for adoption of the alternative classification. In the normal course, a change in classification must be preceded by a show cause notice indicating the grounds on which the revision is proposed. Even if the waiver of notice was by consent, the obligation on the part of the assessing officer to render a rationale and comprehensive finding for the alternative classification cannot be alienated - such an exercise has not been carried out. The proceedings against the appellant to have not been in compliance with the principles of natural justice as well as the provisions of law pertaining to classification of goods and valuation - the original authority is directed to consider the matter afresh on the classification of the imported goods - appeal allowed by way of remand.
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2018 (10) TMI 110
Re-export of Confiscated goods - Redemption fine for the purpose of re-export of goods - penalty - import of prohibited goods without BIS Certification - case of Revenue is that the appellant imported the prohibited goods without any BIS certification which was rightly confiscated - non-compliance of the provisions of Foreign Trade Policy read with Section 3(3) of the Foreign Trade (Development and Regulation) Act, 1992. Held that:- Admittedly the appellant did not have the BIS certification which was required for the purpose of import of the impugned goods. Further the Commissioner of Customs has rightly confiscated the goods. Further, in view of the order of the Commissioner of Customs, the goods have been re-exported also vide various shipping bills which are on record dated 05.02.2018. The Hon’ble Supreme Court in the case of Siemens Ltd. [1999 (8) TMI 84 - SUPREME COURT OF INDIA] held that once the goods are re-exported then in that event, the redemption fine is not imposable - thus, redemption fine imposed by the Commissioner for the purpose of re-export is not sustainable in law. Penalty - Held that:- Since the appellant has violated the conditions of Foreign Trade (Development and Regulation) Act, therefore, the penalty imposed on the appellant under Section 112(a) is justified - penalty upheld. Appeal allowed in part.
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2018 (10) TMI 109
Misdeclaration of imported goods - import on High Sea Sales basis - it was found that the consignment contained seconds/defective/CRGO sheets/strips - enhancement of value - confiscation - penalty - Held that:- The appellant had admittedly imported the goods on High Sea Sale basis and has filed a declaration based upon the documents issued by the foreign supplier. It is the appellant only, who made a request for first check as also for mutilation of the goods. Said request of the assessee stand accepted by the Revenue and the goods were allowed to be cleared only after mutilation. In such a scenario, the enhancement of the value, confiscation of the goods and imposition of penalties are not justified. The entire case of the Revenue is based upon visual examination of the goods by the Customs officers and there is no expert opinion on record to show that the goods were actually usable as steel sheets/strips. There is no justification for enhancing the value of the goods or to confiscate the same or to impose penalties upon the appellants - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 108
100% EOU working under the STP Scheme - benefit of N/N. 52/2003 dt. 31/03/2003 - Import of glazed frames and glass doors - it was held by Department that the said import do not fall in the definition of modular furniture and the said items are not exempted under the N/N. 52/2003-Cus and demanded Customs Duty on the same (Which was earlier foregone) - Extended period of limitation. Held that:- The appellants have imported the goods considering the same as modular furniture and have availed the benefit of Notification No.52/2003-Cus. Further we find that in the proforma invoice and sale invoice and Bill of Entry, they have described the goods as parts of modular furniture. Further we find that the STPI authorities have also permitted the import of goods under Customs Notification No.52/2003-Cus after satisfying themselves that the goods were eligible for duty free import and necessary certificate was also issued. Further we find that for availing exemption under Notification No.52/2003-Cus dt. 31/03/2003, two conditions need to be satisfied (a) STPI unit is set up as per the authorization granted by the Development Commissioner / STPI authorities and a certificate is issued by STPI stating that the goods are required to be installed or used in the unit and (b) the import is authorized by the Standing Committee. In the present case, both the conditions have been fulfilled by the appellant and once the Committee has authorized the import, then, in our opinion, the Customs Department later on cannot question the benefit under the Notification. Extended period of limitation - Held that:- The Department has not brought any evidence on record to show that there was an element of fraud, collusion or any willful mis-statement or suppression of facts on the part of the appellant justifying the invocation of extended period of limitation - Since all the goods have been procured by obtaining necessary permission from STPI as well as Customs authorities and the Customs was fully aware of the import and therefore it does not lie in the mouth of the Department now to contend that the appellants, hence suppressed the material facts and are not eligible for the benefit of the Notification - entire demand is barred by limitation. Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2018 (10) TMI 120
Company under liquidation - right of the State on leased out property - application for determination of right over the property - Held that:- during liquidation proceedings, the State of Madhya Pradesh through its functionaries had filed an application that they are the owner/lessor of the property in question. However, the company court without dwelling on the same passed the liquidation order. The official liquidator on receiving the inventories since proceeded to put on auction the land in question, in our considered opinion, it was well within the right of the State to have moved an application for determination of their right over the property. The analysis takes care of the submissions on behalf of the official liquidator that it will be beyond the jurisdiction of the Company Judge to dwell upon the dispute as to the title over the land in question. And dispels the doubt as to whether it was within the competence of the Company Judge to have entertained the application on merit. To conclude, when the impugned order is tested on the anvil of above analysis, it cannot be given the stamp of approval. Consequently, it is set-aside. Application filed by the State of Madhya Pradesh claiming to be the owner of the immovable property in question, being the successor of erstwhile owner, is allowed. It is held that the lessee and subsequent transferee from the original lessee did not incur absolute right and title in the immovable property in question. In other words, they continue to remain as lessee. And the object for which the land was leased out being frustrated, on winding up of the company in question; the land leased out to it stands reverted to its owner, the State of Madhya Pradesh. As a consequence whereof, it is held that the official liquidator has no right to auction the leased property in question.
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2018 (10) TMI 119
Compounding of an offence - application under Section 441 of the Companies Act, 2013 - defaulted in filing the Annual Return and Financial Statements within the statutory period for the financial year 2014-2015 - Held that:- The income of the company is ₹ 36,479/- for the year ending 31st March, 2017, we reduce the amount payable by the Company to ₹ 50,000/- under Section 92. In so far as fine imposed under Section 137 is concerned, the same having calculated @ ₹ 1,000/- per day, we are not going to reduce the amount which has already been reduced to 1.5 lakhs. In so far as the rest of the Appellants are concerned, counsel for the Appellant did not pursue the case with regard to Appellant Nos.3 and 4, but prayer is made to reduce the amount so far as Appellant No.2 – Mr. Anil Kumar Agarwal is concerned in view of his income. However, as we find that the fine has already been reduced to ₹ 1 lakh in each of the case, we are not inclined to interfere with the impugned order so far it relates to Mr. Anil Kumar Agarwal, Mr. Ved Prakash Jain and Mr. Kishan Lal Sharma. Their prayer is rejected.
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2018 (10) TMI 118
Oppression and mismanagement - Fraud and forgery - Held that:- We find that the oral submissions and claims of the Appellants trying to deny the documents, which appear to have come into existence in ordinary course of events, cannot be accepted. There is material to show that the Appellant No.1, who was taking great care of the interest of the Appellants, was MD of the Company till 26.10.2012 and was party to the increase in authorized share capital as well as documents show that list of allottees also was bearing his signature. He appears to have subsequently resigned from the post of MD and continued as Director. The Appellants cannot be heard denying their own documents. Merely denying documents bearing signatures of Appellant No.1 is not enough. Burden of proving an averment is on the party making the averment. Appellants have failed to prove documents adverse to their claims to be false or forged. Appellants through Appellant No.1 were in control of the affairs till 06.03.2012 cannot simply disown documents bearing signatures of Appellant No.1 by merely saying that they trusted Respondent No.2 and had signed blank papers and that the same have been misused. Fraud and forgery when alleged require details and circumstances to be proved to spell out possibilities and actual fraud and forgery. Calling for forensic evidence is supportive evidence in this regard and even that was not resorted to. The Appellants thus failed to prove oppression and mismanagement on the part of Respondents.
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Service Tax
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2018 (10) TMI 99
Levy of Service Tax - amount of royalty paid by the petitioner to the State of Jharkhand towards use of mineral resources - reverse charge mechanism - Held that:- Neither any show cause notice nor any adjudication upon the payment of service tax amount has been done by the respondents. As and when show cause notice is issued by the respondent upon this petitioner, a reply shall be given and such show cause notice shall be adjudicated upon by the respondents in accordance with law and on the basis of evidence on record. This petitioner appears to be a chance taking petitioner. In advance it is avoiding the liability which is not permissible in the eye of law. Petition dismissed.
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2018 (10) TMI 98
CENVAT Credit - input services - boarding and lodging charges - it was the case of Revenue that appellant had not produced any document before him to establish the linkage between the input and output service availed and rendered by the appellant respectively Held that:- I fail to understand if those documents are still available with the appellant to be produced before this appellate Tribunal, though cannot be taken as additional evidence produced at this end, why it failed to produce those before the adjudicating authority and why the Commissioner (Appeals) had not even considered the sample copy of invoices produced before him and not given any finding on those. Admittedly, Rule 9(5) and (6) have put the burden of proof regarding admissibility of cenvat credit on the provider of output service but before utilisation of cenvat credit accumulated in once account, there is no procedure available whereby an appellant can take prior approval of availment of such credit from the competent authority. It is, therefore, equally true that onus lies on the department to justify that appellant’s availment and utilisation of cenvat credit was admissible or inadmissible. In the instant case the appellant was noticed for availment of inadmissible credit on the ground that hotel accommodation was taken for personal use of its employees. This appears to be bald allegation without any verification or scrutinisation of purpose for which accommodation was taken in the hotel by the appellant company for its employees - Scrutinisation of bills and its admissibility as piece of evidence, though permissible under the law, could never be done at this end since the same would amount to mini-adjudication and not disposal of appeal. The Commissioner (Appeals) can exercise power vested with adjudicating authority in accepting evidence and making further enquiry as he deems proper after providing opportunity to the appellant to establish and justify the nexus between the input and output services concerning admissibility of cenvat credit on tax paid for hotel and lodging accommodation. The order passed by the Commissioner (Appeals) is set aside - matter is remanded back to him for fresh adjudication - appeal allowed by way of remand.
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2018 (10) TMI 97
Belated filing of appeal - non-payment of pre deposit - case of appellant is that they could not file the said appeal before the Commissioner (Appeals) within two months of receipt of the order but filed the same within 30 days thereafter with a prayer for condonation of delay explaining sufficient grounds for such delay but that was not accepted by the Commissioner (appeals). Held that:- Section 35B (b) empowers the Appellate Tribunal to entertain appeal against an order passed by the Commissioner (Appeals) under Section 35A and in view of Sub-Section 4 to Section 35A, such order of the Commissioner (Appeals), at the time of disposal of appeal before him, shall state the points for determination, the decision thereon and the reasons for such decisions - Since this Appellate Tribunal cannot go beyond the order of the Commissioner (Appeals) to scrutinize the merit of the decision of the adjudicating authority, it is a fit case which necessitates readjudication by the Commissioner (Appeals) as under Section 35A (3). He is also empowered to make such further enquiry as may be necessary in order to pass such order as he may think proper and not to confine his views on the merits of the order of the adjudicating authority. Nonpayment of statutory pre deposit amount for filing of appeal - appellant contention that 80 per cent of duty liability has been discharged by them has not been supported by any documentary evidence - Held that:- Going by the statutory provision appeal should not have been entertained or admitted for hearing bereft of statutory pre deposit but the moment it is admitted for hearing, such failure on the part of appellant would have been pointed out to it enabling it to make pre deposit so as to ensure natural justice and not to dismiss the appeal at the end of hearing, after completing the entire exercise of appeal proceedings - Further having regard to the fact that 10 per cent pre deposit vide challan as exhibit A is filed at this end, no further discussion is required to be done on pre deposit. The appeal is allowed and the delay of 3 weeks in filing appeal before the Commissioner (Appeals-III) is condoned at this end - Predeposit having been made at this end, matter is remanded back to him for re-adjudication - application allowed.
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2018 (10) TMI 96
Commercial Training or Coaching Centre - Liability of Service tax on degree of B.Arch. - case of Revenue is that the degree of B.Arch. is not recognized/approved by AICTE and hence assessee is liable to pay service tax - Board’s Circular No. 107/1/2009-ST dated 28.01.2009 - Whether the assessee-Respondents are liable to pay Service Tax under the category of ‘Commercial Training or Coaching Centre’ in terms of Section 65(27) of the Finance Act, 1994, as amended, and the degree of B.Arch offered by them is recognized by law for the time being in force? Held that:- It is not in dispute that the said degree B. Arch. is a recognized degree under UGC Act (University Grants Commission) and also recognized by Rajasthan Technical University, Kota; Council of Architecture; and Yashwantrao Chavan Maharashtra Open University. However, the only case of the Department is that, the said degree is not recognized by AICTE by relying upon the Board Circular dated 28.01.2009. Reliance placed in the case of SHRI PRINCE SHIVAJI MARATHA BOARDING HOUSE’S COLLEGE OF ARCHITECTURE, KOLHAPUR & OTHERS VERSUS STATE OF MAH AND OTHERS [2004 (9) TMI 682 - BOMBAY HIGH COURT], wherein the issue was, Whether the All India Council of Technical Education Act, 1987 over rides the provisions of Architects Act, 1972 in the matter of prescribing and regulating norms and standards of architectural institutions? and the Hon’ble High Court has held that the provisions of the Architects Act are not impliedly repealed by the enactment of AICTE Act because in so far as the Architecture Institutions are concerned, the final authority for the purposes of fixing the norms and standards would be the Council of Architecture. Impugned order upheld - Service tax on degree of B.Arch. not leviable - appeal dismissed - decided against Revenue.
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2018 (10) TMI 95
Penalty - delayed payment of Service Tax - appellant states that delay caused on account of the fact that the mother of one of the partner was suffering from heart problems - Architect Services - Held that:- There was delay in payment of service tax which was on account of the reasonable cause as the mother of one of the partner was suffering from heart problem - Tribunal in the case of Raj Kumar vs. CCE [2009 (2) TMI 36 - CESTAT, NEW DELHI] has accepted the fact that if the service tax is not paid in time due to the illness of the father of the assessee, which is a reasonable cause and by invoking Section 80 of the Finance Act, penalty imposed was set aside. Penalty set aside by invoking section 80 - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 94
Penalty u/s 76, 77 and 78 of the Finance Act, 1994 - erection, commission and installation services - non-discharge of service tax due to bonafide belief as at that time there was confusion on the taxability of the services relating to transmission of electricity by various Electricity Boards - Held that:- There was confusion about taxability of services rendered in relation to transmission and distribution of electricity, which was clarified by issue of Notification No. 45/2010 dated 28.7.2010. It is a fit case to invoke Section 80 of the Finance Act, 1994 - penalty set aside by invoking section 80, without disturbing duty demand - appeal allowed in part
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2018 (10) TMI 93
Cash refund of accumulated CENVAT Credit - export of output services - input services namely, Group Mediclaim Top-up Policy - Rule 5 of the CENVAT Credit Rules, 2004 - Held that:- There is no dispute of the fact that the top-up Mediclaim policy is in addition to the regular Mediclaim policy extended by the appellant to its employee and the amount of Service Tax has been paid by the appellant on the premium amount of the top-up policy. Learned AR for the Revenue has disputed the fact that nowhere in the impugned order it is stated that the appellant had not collected the Service Tax amount along with the premium of the top-up policy from the respective employees. For the limited purpose of verification of the fact whether the amount of service Tax claimed as credit by the appellant has been recovered from their employees, the matter is remanded to the adjudicating authority - appeal allowed by way of remand.
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2018 (10) TMI 92
Classification of services - Photography services or not? - Collection Centre for collection of exposed photo films received from various clients for getting some processed from different colour labs - Board’s Circular dated 27.12.2001 - extended period of limitation. Held that:- Board’s Circular dated 27.12.2001 has clarified the issue that the collection centre who merely collects the exposed film from their clients and gets it developed from other processing lab, will not be covered by the Photography Services - Though the appellant was having a photography studio but such activity is of merely collecting and getting the negative processed from photo labs and further handing over the same to the customers. Extended period of limitation - Held that:- Having been held as a non taxable service by above circular of the Board, there could be a bona fide belief on the part of the assessee not to pay service tax on the said activity - The appellant themselves approached the Board for clarification and as such it cannot be said that there was any mala fide on their part so as to justifiably invoke the longer period of limitation - demand raised against them is hit by the bar of limitation. However, smaller portion of demand (for appellant’s activity of enlargement of negatives, which is taxable) may fall within the period of limitation, which the learned advocate has agreed to pay - matter remanded to the Original Adjudicating Authority for quantification of the demand falling within the period of limitation - appeal allowed by way of remand.
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2018 (10) TMI 91
Penalties u/s 76, 77 & 78 of the Finance Act, 1994 - Erection, Commissioning and Installation - appellant case is that services provided by them would fall under the category of ‘Works Contract’ and placed reliance in the case of ommissioner of Central Excise & Customs, Kerala vs. Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT] - Revenue submits that inasmuch as the said decision of the Hon’ble Supreme Court was not available at the time of passing of the impugned orders and the applicability of the same is to be examined in the terms of the contract entered into by the appellant with the service recipient, the matter is required to be re-examined. Held that:- The applicability of the Hon’ble Supreme Court’s decision on ‘Works Contract’ in the above referred case, is required to be examined by referring to the terms and conditions of the various contracts. Such verification can be done only at the level of the Original Adjudicating Authority - appeal allowed by way of remand.
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2018 (10) TMI 90
Supply of Taxable Goods Services to SEZ - Exemption under Notification No 9/2009-ST dated 3.3.2009 & 17/2011-ST dated 01.03.2011 - supplies made to SEZ units/ Developers / Main Contractors etc for development of SEZ Units - benefit of the exemption is sought to be denied in respect of those services which have been- i. Not wholly consumed within the SEZ; and ii. Provided to the contractors providing the services to SEZ unit or developer. Held that:- During the course of arguments and in the Appeal paper book appellants have produced the copy of the invoices and attached log sheets in respect of the supplies made by them to SEZ Unit developers/ Units. There is no dispute about the fact that these invoices, logsheets and contracts were also produced and examined by the Commissioner during the course of adjudication. From the perusal of the invoices and log sheets it is quite evident that each log sheet is signed jointly by the crane operator, user/ Client Site in Charge, Site Engineer/ Site Supervisor and Project Manager certifying the usage hours of tangible goods on daily basis at the respective site. These weekly log sheets are then made the basis for issuance of the invoice by the service provider to the service recipient. There is no dispute that the sites in respect of which these invoices/ log sheets are, belong to the SEZ Unit or a developer and these services have been wholly consumed at the said site - the services provided by the appellant in respect of these sites have been provided by the appellant to the SEZ Unit or developer. Further there appears to be no dispute also about the fact that these services are falling in the category of the approved services for the SEZ Operation, in respect of those SEZ Unit/ Developer. Since as per the documents produced along with appeal, there is no dispute in respect of the fact that these services have been provided to a SEZ Unit / Developer and consumed within the SEZ, the exemption is admissible in respect of the services so provided. Commissioner also has not sought to state the contrary but has only sought to deny the exemption on the ground that in these instances the exemption should not have been allowed affront but by way of the claim of refund by the SEZ Unit/ Developer. Since there has been substantial compliance the order of Commissioner holding that these services have not been wholly consumed within the SEZ is not sustainable. It was only by the notification No 17/2011-St dated 1.03.2011 that for determining whether services have been consumed wholly within the SEZ, categorization of services was done, and in respect of services provided by the appellant (category III services), the services were to be considered as wholly consumed within SEZ only if the SEZ unit or Developer does not own or carry on any business other than SEZ operation was introduced. It is quite evident that these services have been wholly consumed for authorized operations by the SEZ Unit/ Developer. Issue in respect of the supply of service to the Contractors of the SEZ Unit or Developers is no longer res-integra. This tribunal has in case series of case as listed below held that exemption shall be available even if the services for consumption in SEZ by the SEZ Unit/ Developer are provided through the Contractor of SEZ Unit/ Developer. Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 89
Extended period of limitation - proviso to sub-section (1) of Section 73 of the Act - Commercial Training and Coaching services - suppression of facts or not - Held that:- There are no documentary evidences produced/relied upon by the appellant to refute the charges leveled against it. Since the impugned order has considered both factual and legal issues at length and arrived at the conclusion that the appellant had suppressed the taxable value with intent to evade payment of service tax, such findings cannot be disturbed at this juncture, without proper substantiation. Appeal dismissed - decided against appellant.
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2018 (10) TMI 88
Online Information and Data Retrieval services - Levy of Service Tax - transaction of assignment of the receivables by the respondents to the assignee - recipient of services - Whether the transaction under consideration, i.e. the assignment of debt by the respondents to the assignee is a service liable for tax under the category of taxable services? Held that:- Undisputed fact is that RCOM was recipient of certain services from RIL which included the services of sale of handsets to the customers of RCOM. RIL was the provider of services and selling the handsets to customers of RCOM in respect of which the outstanding dues has arisen. These outstanding dues amounting to ₹ 3901 Crores were assigned by M/s RIL to M/s SESPL for a consideration of ₹ 3426 Crores. SESPL paid the entire amount of ₹ 3426 Crores to RIL 26.03.2004. Later on SESPL got merged with M/s RCIL the respondent, and all the assets including the receivables assigned by the RIL became assets in the hand of RCIL. RCIL after writing of the bad debts and other adjustments reduced the net receivables to ₹ 1212.12 Crores and assigned the same to Mahimna and Traitrya for a consideration of ₹ 297 Crores. Thus in fact the transaction between the respondents and assignee is one of the assignment/ sale of receivables for a consideration and not one of providing the taxable service under the category of “Online Information and Data Retrieval” services. In the entire appeal revenue has challenged the order of Commissioner on the ground that Commissioner has failed to cause the verification of the documents, and have sought the matter to be remanded back to the adjudicating authority for causing the verification of the documents - the said ground of verification is not sustainable as all the documents relating to said transaction ₹ 297 Crores were before the Commissioner and only after consideration of the said documents he has arrived at the findings. Since no service has been provided by the respondents in the present case under the category of “Online Information and Data Retrieval” services under the transaction under consideration, there is no merit in the appeal filed by the revenue. Appeal dismissed - decided against Revenue.
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2018 (10) TMI 87
Utilization of CENVAT Credit for payment of Service Tax by service recipient - Reverse Charge Mechanism - period of dispute is from October' 2008 to September' 2009 - Held that:- Tribunal, in the case of the appellant itself, MORARJEE TEXTILES LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, NAGPUR [2015 (2) TMI 755 - CESTAT MUMBAI], on identical set of facts, by analyzing the provisions of Rule 2(r), 2(p) and 2(q) of the Cenvat Credit Rules, 2004 read with the provisions of Rule 2(1)(d)(iv) of the Service Tax Rules, 1994 has held that since the person is liable to pay service tax as a recipient of taxable service, it is erroneous in not considering him as the service provider for the purpose of utilization of Cenvat credit for payment of service tax under reverse charge mechanism. Under the un-amended provisions of sub-rule (4) of Rule 3 of the Cenvat Credit Rules, 2004 (effective up to 30.06.2012), there were no specific restrictions imposed for utilization of credit for discharging the liability under reverse charge mechanism by the recipient of service. Such restriction was brought w.e.f. 01.07.2012, by amending the provisions of the said rule - In the present case, since the period of dispute is from October' 2008 to September' 2009, the case of the appellant will be governed under the provisions of un-amended Rule 3(4) ibid and in absence of specific restrictions contained therein for non-utilisation of Cenvat credit by the service recipient, the benefit of the existence rule should be available for utilization of Cenvat credit for payment of service tax under reverse charge mechanism. Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 86
Extended period of limitation - commercial training and coaching service - renting of immovable property service - mandap keeper service - suppression of facts or not? - Held that:- The definitions provided in the service tax statute in respect of the disputed services viz., commercial training and coaching service, renting of immovable property service and mandap keeper service were highly ambiguous with regard to levy of service tax. There were divergent views by different judicial forums with regard to sustainability of levy of service tax on such services. In view of amendment made subsequently in the definition of disputed taxable services and in view of the divergent views expressed by the judicial forums with regards to the levy of service tax on such taxable services, the extended period cannot be invoked for confirmation of service tax demand inasmuch as non-payment of tax, in such eventuality, cannot be attributable to fraud, suppression of facts, collusion, etc. on the part of the tax payer in defrauding Government revenue - the service tax demand confirmed beyond the normal period of limitation has rightly been set aside by the learned Commissioner (Appeals) in the impugned order dated 01/04/2014 - appeal dismissed - decided against Revenue.
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2018 (10) TMI 85
Penalty u/s 77 and 78 - payment of Service Tax on being pointed out - Construction of residential complex service - bonafide belief - invocation of section 80 - Held that:- The appellant had no fraudulent intention to defraud the Government revenue. Rather, due to complexity of the issue regarding leviability of service tax on the disputed service, the appellant did not pay the service tax and subsequently paid such amount before adjudication of the matter - Since the appellant did not pay the service tax due to the reasonable belief that the same is not payable, the benefit of section 80 of the Act can be invoked in the circumstances of the case for waiver of penalties imposed on the appellant - penalty set aside - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 84
Business Support Services - appellant is a manufacturer of excisable goods namely, MS Angles, MS Channels and MS Rounds - appellant had arranged trucks for delivery of the said final products at customer's destination and for such activity, it had collected delivery charges from the customers - Department interpreted that such extra amount retained by the appellant for delivery of the goods at the premises of the buyer should be considered as a taxable service under the category of 'Business Support Service'. Held that:- Perusal of the purchase orders placed by the buyers on the appellant transpires that they placed orders for supply of the goods manufactured by the appellant. There were no separate agreements between the buyers and appellant for providing any service, over and above supply of goods - there is no involvement of a service provider and a service receiver relationship in the sale transaction made between the parties. Since transportation cost incurred was in context with delivery of goods at the buyers premises, it cannot be said that such facility extended by the appellant should be considered as a taxable service, leviable to service tax under the category of 'business support service' - thus, the activities undertaken by the appellant, do not confirm to the definition of taxable service, for the purpose of levy of service tax thereon. Appeal allowed - decided in favor of appellant.
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Central Excise
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2018 (10) TMI 83
SSI Exemption - case of appellant is that their clearances, even as per the amount mentioned in the show cause notice is only ₹ 23,82,886/-, which is well below the threshold limit - Benefit of the N/N. 8/98-Central Excise dated 02.06.1998 - burden to prove - Held that:- The exemption notification should be interpreted strictly and the burden of proving the applicability would be on the assessee to show that his case comes within the parameters of exemption notification - In the instant case, the asseessee has miserably failed to prove that their case comes within the conditions stipulated in the exemption notification. Therefore, the Tribunal as well as the adjudicating authority have rightly rejected the case of the assessee. Appeal dismissed - decided against assessee.
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2018 (10) TMI 82
Clandestine manufacture and removal - MS Ingots and TMT Bars - parallel set of central excise invoice - the entire case of the department is based on the private records seized from the factory premises of ASPL as well as the statements of various persons recorded during the course of investigation - whether the appellant Anant Steel Private Limited (ASPL for short) have suppressed their production and have resorted to clandestine removal of the finished goods? Held that:- The Commissioner is incorrect in observing that if the records could not be found on earlier search, but found at later search the same would not make the recovered records untrue and fake. But, these facts, create reasonable doubt regarding the authenticity of the seized private records, as they relate to period prior to Oct 2011. Therefore, Commissioner could not have solely relied upon these documents without testing the genuineness of the details stated therein by conducting investigation with the persons who were named in the said documents - the investigation is also totally silent on this aspect and not even a single person whose name was found mentioned in the said private records, to whom ASPL has been alleged to have supplied TMT bars or the name of the transporters whose details were found mentioned in the said private records were issued summons for the purpose of recording their statement, so as to use it as corroboration. Reliance placed upon the statements of various persons including employees - Held that:- Commissioner has committed an error in rejecting the request of ASPL for cross-examination, by concluding that the same was an attempt to delay the adjudication proceedings. We have come to this conclusion by noting the fact that ASPL has prayed for cross-examination on 21.03.2016 i.e. during the pendency of adjudication proceedings whereas, the adjudication order came to be passed only on 26.08.2016 i.e. after five months of the request. Further, it is now settled law that in case the adjudicating authority wants to rely upon the statements recorded during investigation, such witnesses have to be examined in adjudication proceedings and an opportunity of cross-examination has to be granted. In the absence of cross-examination, no reliance could have been placed on such statements. Demand based on respective private records - Held that:- The department has not brought on record any evidence to show that the said documents were not genuine. Even the Commissioner has chosen to totally overlook the said evidence and relied upon the said weighment register even though Shri Mithilesh Singh who was author of the said weighment register had stated on affidavit that he had prepared the said weighment register by recording random entries to implicate ASPL, for which he was paid money - the Commissioner ought to have taken into consideration documents placed on record regarding the capacity of production of the two furnaces in question, which clearly establishes that ASPL could not manufacture the quantity of MS Ingot reflected in the weighment register, on the basis of which the demand of duty has been confirmed upon it. The Tribunal, in the case of Fact Paper Mills Ltd. v CCE, Bhavnagar [2012 (2) TMI 473 - CESTAT AHMEDABAD], while dealing with the allegation of clandestine manufacture and removal under similar circumstance, had set aside demand by holding that the allegation of clandestine manufacture in not sustainable when the assessee did not even have the capacity to manufacture the quantity of excisable goods alleged to be cleared clandestinely. We are surprised to find that the Commissioner in the adjudication order, instead of dealing with the contentions and evidence led by ASPL, has tried to justify the entries recorded in weighment register, by merely relying upon the retracted statement of Shri Mayank Bansal. Oral evidence cannot override the documentary evidence brought on record - the demand of duty on the basis of weighment register is not sustainable. Also, there is no corroborative evidence on record in the form of capacity determination, electricity consumption, receipt of raw material, etc. to establish manufacture of any clandestine quantity. Therefore, duty is levied only on presumption and assumption, as such, is fit to be set aside. The charge of clandestine manufacture and removal cannot be based on private records unless the same are corroborated through some other independent evidence which is totally missing in the present case as no person named in the private records was inquired or investigated to confirm the authenticity of the entries recorded in the said documents The allegation of clandestine manufacture and removal of TMT bars, made in the SCN, on ASPL is merely on assumption and presumption without any material evidence corroborating the said allegation. The demand of duty on ASPL, therefore, is not sustainable - As demand of duty itself is not sustainable, no interest or penalty could be imposed on ASPL as well as on other appellants on whom penalties were imposed under Rule 26 of the Central Excise Rules, 2002. Appeal allowed - decided in favor of appellant.
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2018 (10) TMI 81
CENVAT credit - allegation of fraud and tampering of evidence is raised against the appellant - section 73 of the Indian Evidence Act. Held that:- As per section 73 of the Indian Evidence Act, comparing of handwriting and signature can be done by a court but even such requirement would not arise in the instant case since to a man of ordinary prudence, two different handwriting are visible in those two bills and it appears that labour charges have been purposefully inserted in the bills to cover the services availed under the Cenvat Credit Rules - Going by the unethical practice adopted by the appellant, it can be said that the same would amount to fraud within the definition of IPC. The documentary evidence produced before the Court have no connection on the actual transactions made by the appellant but those appear to have been are created for the purpose of meeting the requirement of law - fraud established - Appeal dismissed.
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2018 (10) TMI 80
Refund of excise duty paid - Compound levy scheme for SS Patta/ Patti - abatement on pro-rata basis - refund claimed on the ground that they have paid the excise duty for the entire month of November 2016and February 2017 whereas the cold rolling machines operating during those months were dismantled - refund was rejected on the ground that the appellant have not opted for the first time under the compounded levy scheme in both these months and as such the conditions of the impugned notification remains unfulfilled. Whether the refund claim of the proportionate Central excise duty deposited for the non working period of newly added machines is admissible to appellant, or otherwise? Held that:- The appellant had applied for addition of cold rolling machines and the permission were granted by the superintended Jodhpur. It is thereafter that the appellant filed the impugned refund claim for duty deposited for the non working period of machines. The aforesaid notification has been issued under the provisions of Rules 15 of Central Excise Rules, 2002. Said rule provides for special procedure for payment of duty on the basis of such factors as may be relevant to production of such goods. This notification gives an option to the manufacturer of SS Patta/ Patti which are subjected to the process of cold rolling, whereby assessee can pay excise duty on the basis of no. of cold rolling machines installed for cold rolling of those goods. Since this notification is issued under Central Excise Rules the provision thereof cannot be construed in the manner which is against Central Excise Act. Rule 3 of Central excise Act 1994 says that the duty is leviable on the manufacture of the excisable goods. Hence, when no cold rolling machine was installed or any of the machine was not operational question of payment of duty including such non-operational/ non-installed machine shall not arise. The decision in the case of Jupiter Industries [2006 (4) TMI 164 - HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR] squarely applies to the appellant wherein it was held that payment of duty after dismantling of machines and discontinuance of production is not contemplated by Rule 96 ZB and 96 ZB(2) of Central Excise Rules, 1944. Sub Rule 2 of Rule 96 ZB lays down the method of calculation of sum payable. It was held that these rules in no way stipulates that any sum at the compounded rate is payable towards duty for the machine which is not in existence with the manufacturer nor does it say that no refund claim can be made with regard to excess payment made - The decision is squarely applicable in the instant case where the appellant had paid the duty for the months of November to February despite that all cold rolling machines were not operating for certain no. of days, during the month of November 2016 to February 2017. The appellant is entitled for the proportionate refund of duty for the days when the cold rolling machines were not operational - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 79
Classification of goods - chewing tobacco - Zarda - classified under Central Excise Tariff Sub-Heading as 24039910 and under Central Excise Tariff Heading 24039930 respectively or otherwise - the entire case of the Revenue is based upon the declaration of the assessee without making any efforts to find out as to what exactly was being manufactured by the appellant. If the Deputy Commissioner did not approve the declaration filed by the assessee, he was under obligation to make enquiries including physical verification in terms of Rule 6(2) of the Chewing Tobacco Rules, 2010. - whether the product being manufactured by the appellant was chewing tobacco or Jarda scented tobacco? Held that:- Admittedly in the present case the appellants have marketed their product as chewing tobacco and not as Jarda scented tobacco - Revenue has neither disputed the manufacturing process undertaken by the appellant which shows non-use of any scent or perfume in the product nor have made any enquiries from the dealers, shopkeepers or the ultimate consumers of the product. No evidence of procurement of Perfume or Scent as raw material and then use in the product stands produced by the Revenue. No employee of the assessee was examined so as to establish that perfume being used for manufacture of their final product. As such the said factor of marketing of the goods as chewing tobacco leads us to inevitable conclusion apart from other reasons as discussed above, that the product in question is admittedly chewing tobacco and not Jarda scented tobacco. An identical issue was the subject matter of the Tribunal decision in the case of Urmin Products Pvt.Ltd. v. Commisioner of Central Excise, Ahmedabad [2010 (3) TMI 461 - CESTAT, AHMEDABAD], where it was held that both sides not clearly shown whether product Chewing Tobacco or Zarda Scented Tobacco. Label calls the product as Flavoured Chewing Tobacco, no Zarda Scent having been added and not sold as Zarda Scented Tobbaco, appellant s claim that the product is Flavoured is Chewing Tobbaco has to be accepted. The ratio of the said decision is fully applicable to the facts of the present case. We also note that the appellant s request for getting the sample drawn and tested by CRCL was not accepted by the Revenue and in the absence of any such test reports or expert s opinion, the Revenue s endeavour to hold that the goods being manufactured by the appellant are not chewing tobacco, but Jarda scented tobacco cannot be appreciated. No reason stands advanced by the Revenue for not accepting the appellant s request and get the samples tested for finding out the exact nature of the product. Appeal allowed.
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2018 (10) TMI 78
Principles of natural justice - appellant case is that on receipt of the show cause notice they have requested the department for supply of relied upon documents from time to time, which were not handed over to them inspite of several efforts - Recovery of Central Excise Duty - Held that:- The appellants be provided copies of the documents as requested by them, as mentioned in their various letter, and the appellants would bear the necessary copying charges as agreed - The Department is directed to supply all these documents within one months from the date of communication of this order and thereafter the appellants should file their reply to the notice within one months from the date of receipt of the relevant documents - appeal allowed by way of remand.
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2018 (10) TMI 77
Benefit of N/N. 6/2006-CE dated 01.03.2006 - Sub-contract - international competitive bidding - whether the appellants were entitled to exemption in terms of Notification No.6/2006 as sub-contractors whereas the award has been given to the main contractor M/s. Reliance Infrastructure Ltd. against international competitive bidding? Held that:- In the case of M/s. Sarita Steels & Industries Ltd. v. CCE, Visakhapatnam [2010 (7) TMI 568 - CESTAT, BANGALORE], it was observed that the sub-contractor, who has been appointed by the main contractor, who participated in international competitive bidding, would also be entitled to the benefit of the Notification in respect of goods cleared for execution of project. Appellant entitled for benefit of notification - appeal allowed - decided in favor of appellant.
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2018 (10) TMI 76
Refund claim - demand recovered during investigation towards reversal of cenvat credit was higher - confirmed demand was much lower than paid on the ground of period of limitation - inadmissible CENVAT credit - fake invoices - Held that:- Calculating the inadmissible amount of cenvat credit due, penalty equivalent to credit and interest thereof the total amount becomes due from the Appellant in terms of Tribunal's Order is ₹ 1,33,473/- which the appellant is required to discharge. However during the course of the appellant proceedings an amount of ₹ 9,19,491/- has been recovered from the appellant. In absence of any other grounds raised by the Revenue on the admissibility of the refund claim of the balance amount, in my view the appellants are entitled to refund of ₹ 7,86,018/-. Appeal allowed - decided in favor of appellant.
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Indian Laws
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2018 (10) TMI 107
Acceptance of Settlement entered into between parties - acquittal of accused - Section 138 of the Negotiable Instruments Act - Held that:- This is not a case wherein offence for which the petitioner has been charged can strictly be termed to be an offence against the State. On the other hand, continuation of criminal case against the petitioner would put the petitioner to great oppression and prejudice and extreme injustice would be caused to him in case the impugned judgment of conviction and sentence are not set aside. This court is not powerless in such situation and adequate powers have been conferred upon it not only under Sections 397 read with Section 401 or Section 482 Cr.P.C. but also under Section 147 of the Act for accepting the settlement entered into between the parties and to quash the proceedings arising out of the proceedings, which have consequently culminated into a settlement. This power has been conferred to subserve the ends of justice or/and to prevent abuse of the process of any Court. In the present case, the parties have already reached an amicable settlement and at best it was the complainant/respondent who could be said to be affected and aggrieved party, but herein even the affected and aggrieved party i.e. complainant/respondent is not interested to pursue the complaint and does not want to hold the petitioner responsible for the offence under the Act. Therefore, quashing of the complaint initiated at the instance of the respondent/complainant would be a step towards securing the ends of justice and to prevent abuse of process of the Court. The petitioner is acquitted of the offence under Section 138 of the Act - compensation amount which has been deposited by the petitioner before the learned trial court shall be released in favour of the respondent - revision petition disposed off.
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2018 (10) TMI 106
Dishonor of Cheque - offence punishable under Section 138 of the Act - acquittal of accused - Principles of Natural Justice - Held that:- This Court holds that the learned trial Court has not appraised the entire evidence on record in a wholesome and harmonious manner and the analysis of the learned trial Court hence suffers from a perversity or absurdity of mis-appreciation and non-appreciation of evidence on record. There is merit in the appeal, and the same is allowed. The impugned judgment is quashed and set aside. The accused/respondent be produced before this Court, for his being heard on quantum of sentence, on 22.10.2018.
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2018 (10) TMI 105
Dishonor of Cheque - recovery of loan amount from petitioner-guarantor - section 138 of Negotiable Instruments Act - existence of subsisting liability / enforceable debt against the petitioner - whether the respondent can proceed against the petitioner straight away without proceeding against the Principal Debtors on the ground that the petitioner stood as a guarantor for the repayment of loan by the Principal Debtors? Held that:- It is an admitted case that the petitioner stood as a guarantor for the balance amount of ₹ 28,54,000/- payable by Vijaya Prakash and Anand. The Hon'ble Supreme Court in ICDS Ltd [2002 (8) TMI 577 - SUPREME COURT OF INDIA], has categorically held that in view of the language used under Section 138 of the Negotiable Instruments Act, “any cheque” which has been drawn for whatever reasons it may be, the liability under the provision cannot be avoided. The Supreme Court also went on to hold that issue as regards coextensive liability of the guarantor and the Principal Debtor is totally out of the purview of Section 138 of Negotiable Instruments Act. The Hon'ble Supreme Court by relying upon the two expressions “any cheque” and “other liabilities'' has categorically held that the moment the cheque is issued in discharge of any debt or other lability, there cannot be any restriction or embargo in the matter of application of the provisions of Section 138 of Negotiable Instruments Act. The application of Sections 126 and 128 of the Contract Act will have no relevance in a case under Section 138 of Negotiable Instruments Act. In view of the judgment of the Supreme Court, it is clear that the respondent need not really wait for the Principal Debtor to repay and they can always proceed against the petitioner who, admittedly stood as guarantor and issued cheque as security. The undertaking dated 06.06.2017 clearly states that the Principal Debtors will repay the amount of ₹ 28,54,000/-. The moment the Principal Debtors fail to make payment, the liability of the petitioner as a guarantor will come into operation. Since the principal debtor did not make any payment, the respondent proceeded to deposit the cheque on 09.10.2017. This Court does not find any ground to quash the proceedings and the petitioner has to face the proceedings before the Court below and raise all the defence available to him. It is made clear that the findings given in this order will have no bearing on the proceedings before the Court below and the petitioner is at liberty to raise all the contentions before the Court below and the Court below shall decide the case strictly on its own merits - the criminal original petition is dismissed.
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2018 (10) TMI 104
Dishonor of Cheque - Section 138 of Negotiable Instruments Act - When the cheque was presented for collection, the same was returned with an endorsement 'no such account'. The statutory notice was issued to the respondent, but he had not replied for the same. Held that:- The revision petitioner having failed to respond to the notice, only during the trial has pleaded about the new fact and about different transaction between him and one Peyathevar, wherein his friend Nallathambi was also involved. The deposition of Peyathevar recorded in the suit filed by Peyathevar against the revision petitioner/accused, will not have any bearing to decide the defence raised by the revision petitioner - The deposition of the accused in that proceeding is a self serving statement of the accused in the civil proceedings between him and one Peyathevar, that cannot be a piece of evidence to be put against the complainant, who is not a party to that proceeding and who had no opportunity to cross examine the deponent. Therefore it has no evidential value for any consideration, in the absence of confronting the same with the maker of the statement. The revision petitioner in the cross examination has admitted the signature in the cheque and the receipt of the statutory notice. He has also admitted that he has not lodged any complaint against the Peyathevar or Latcaham/complainant regarding this subject cheque - In the said circumstances this Court finds no error or illegality in the judgments passed by the Courts below. Considering the above facts and circumstances, this Court is of the opinion that in respect of sentence, in lieu of imprisonment for three months and fine of ₹ 3,000/- the revision petitioner/accused, shall pay compensation of ₹ 1,00,000/- to the respondent/ complainant within a period of sixty days from the date of order. Criminal Revision Case is disposed of subject to certain modifications.
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2018 (10) TMI 103
Dishonor of Cheque - offence punishable under section 138 of the N.I. Act - existence of loan in dispute - hire purchase agreement. Held that:- It is the admitted case that the present hire purchase agreement Ex-R1 was entered into by the parties concerned for the previous transaction. At the same time it is relevant to point out here that the accused has not denied his signatures in any of the exhibits meant for the monetary liability upon the complainant. However, even in the cross examination the accused has not deposed that under some cloudy circumstances, he was constrained to put his signatures. Moreover, admittedly no reply was given to the statutory demand notice issued by the complainant and the accused has not disputed the existence of the Ex-R1 then he is liable to answer and to give explanation as to why Ex-R1 came to light. As a prudent person he ought not to have entered into such an agreement by putting his signature. No doubt when the accused has not denied the execution of Ex-R1 and the contents thereon, then in the considered opinion of this court, he is liable to disprove the case of the complainant as the complainant has shifted the burden to prove the case upon the accused. It is seen form the records that quite numbers of cheques were issued followed by the execution of Ex-R1. Apart from that the transactions are supported by other documents as admitted by either parties. At this juncture, it is relevant to point out here that though the counsel for the accused denied the passing of consideration; he has no answer as to why the statutory demand notice was not replied properly and why legal action was not taken as against the complainant. Moreover these aspects are to be answered properly by the accused as the accused is the executant of all the documents including the cheques. Whether Section 139 of N.I. Act will aid the appellant company? - Held that:- Admittedly the accused company had not denied the execution of subject cheques and the signatures therein. Thus it is needless for this Court to say that the respondents’ company had not rebutted the presumption provided under Sections 118 and 139 of N.I. Act - In the instant case, the initial burden of proving the case of the complainant has been completed when the complainant has proved the execution of cheques and other supporting documents by the accused. Then the burden is shifted to the accused to disprove the case of the complainant. As for as the burden to disprove the case of the complainant, the accused is expected to let in reliable documentary evidence and the mere and bare denial will not be suffice to hold that the accused has disproved the case of the complainant successfully. Apart from that the accused has not denied the causing of statutory demand notice, but he has admitted that no reply was offered by him - Though the accused is not legally expected to cause a reply notice, but to disprove the case of the complainant he ought to have taken the steps and stands which are taken during the course of trial. Apart from that section 20 of the N.I. Act would make it clear that once the issuance of cheque is admitted, then it is for the accused to disprove the case of the complainant, hence this court is under the compulsion to reiterate that the mere and bare denial alone would not help the accused to get rid of the case. Therefore the presumption as contemplated under section 139 of N.I. Act is in favour of the complainant. Since the N.I. Act is a self contained law the same will not get diluted simply for the reason of appointing liquidator and the death of the Managing Director especially in the existence of one of the Director who is the 3rd respondent herein. The 3rd accused / 3rd respondent is convicted and sentenced to undergo Simple Imprisonment of 6 Months each of the following cases and the Sentences are Ordered to run Concurrently - the respondents herein shall pay fine amount of ₹ 5,000/- in each cases to the appellant / complainant, in default to pay the fine amount mentioned, the 3rd accused shall undergo one month Simple Imprisonment in each case and the Compensation shall be paid by the respondents / accused to the appellant / complainant - Appeal allowed.
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2018 (10) TMI 101
Withdrawal of Auction Proceedings - Auction of immovable secured assets - Section 26-E of the SARFAESI Act, 2002 - Held that:- In view of Section 26-E of the SARFAESI Act, 2002, the debts due to any secured creditor shall be paid in priority over all other debts and all revenues, taxes, cesses and other rates payable to the Central Government or State Government or local authority. Hence, the notice dated 19.01.2018 is unsustainable in law - petition allowed.
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2018 (10) TMI 100
Motor Vehicle Tax - petitioner remitted the Motor Vehicle Tax based on seating capacity, the department insisted it should be based on floor area - Amendment effected through Kerala Finance Bill 2016 - Held that:- The motor vehicles registered before 01.10.2017 could pay the tax under the unamended provision - the petitioner can pay the motor vehicle tax under unamended provision - petition allowed.
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