Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
October 6, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Customs
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46/2017 - dated
4-10-2017
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ADD
Seeks to impose anti-dumping duty on imports of "PNA"" originating in or exported from China PR.
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94/2017 - dated
5-10-2017
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Cus (NT)
Rate of exchange of conversion of the foreign currency with effect from 6th October, 2017
GST - States
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F.NO.FIN/REV-3/GST/1/08 (Pt-1)/458 - dated
18-9-2017
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Nagaland SGST
Amendment in the Notification No. F.NO.FlN/REV-3/GST/1/08 (Pt-l) 'D' dated 30-06-2017,- regarding Tractors Parts
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28070- FIN-CT1-TAX- 0043/2017 - dated
22-9-2017
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Orissa SGST
Amendment notification No. 19845-FIN-CT1-TAX-0022/2017 dated 29th June, 2017 (SRO No. 299/2017) relating to refund of unutilised ITC.
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28066-FIN-CT1-TAX-0043/2017 - dated
22-9-2017
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Orissa SGST
Amendments in the Notification No.19833-FIN-CT-1-TAX-0022-2017), dated the 29th June, 2017, bearing S.R.O. No.296/2017
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27995-FIN-CT1-TAX-0043/2017 - dated
21-9-2017
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Orissa SGST
Notification for exemption of Intra-State Supply of Heavy Water and Nuclear Fuels under OGST Act, 2017.
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27991-FIN-CT1-TAX- 0043/2017 - dated
21-9-2017
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Orissa SGST
Amendment in the Notification No.19873-FIN-CT1-TAX-0022-2017,dated 29.06.2017 bearing SRO No.306/2017 under OGST Act, 2017.
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27987-FIN-CT1-TAX-0043/2017 - dated
21-9-2017
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Orissa SGST
Amendment to Notification No.19869-FIN-CT1-TAX-0022-2017, dated 29.06.2017 bearing SRO No.305/2017 under OGST Act, 2017.
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S.R.O. No. 412/2017 - dated
16-9-2017
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Orissa SGST
Notification on the Constitution of Odisha State Authority for Advance Ruling.
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S.R.O. No. 411/2017 - dated
16-9-2017
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Orissa SGST
The Odisha Goods and Services Tax (Sixth Amendment) Rules, 2017
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S.R.O. No. 410/2017 - dated
16-9-2017
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Orissa SGST
Notification under Section 51 of the OGST Act, 2017 for TDS.
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S.R.O. No. 403/2017 - dated
16-9-2017
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Orissa SGST
Notification on granting exemption to a casual taxable person making taxable supplies of handicraft goods from the requirement to obtain registration.
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S.R.O. No. 401/2017 - dated
16-9-2017
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Orissa SGST
Waive off of late fee payable under section 47 of OGST Act, 2017 for all registered persons who failed to furnish the return in FORM GSTR-3B for the month of July, 2017 by the due date.
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S.R.O. No. 382/2017 - dated
5-9-2017
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Orissa SGST
Notification on constitution of the State Level Screening Committee.
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Export of services - The supply of services to Nepal or Bhutan will be deemed to be export of services only if the payment for such services is received by the supplier in convertible foreign exchange.
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Export of goods to Nepal or Bhutan or SEZ developer or SEZ unit will be permissible irrespective of whether the payments are made in Indian currency or convertible foreign exchange as long as they are in accordance with the applicable RBI guidelines
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GST - There is no concept of Deemed Export - supplies to EOUs are taxable like any other taxable supplies. - However, EOUs, to the extent of exports, are eligible for zero rating like any other exporter.
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GST - There is no concept of Deemed Export - there is no provision for issuance of CT-1 form which enables merchant exporters to purchase goods from a manufacturer without payment of tax under the GST regime.
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LUT - Export - Till mandatory self-sealing is operationalized, sealing of containers, wherever required to be carried out under the supervision of the officer, shall be done under the supervision of the central excise officer
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If the LUT / bond is not accepted within a period of three working days from the date of submission, it shall deemed to be accepted.
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Furnishing of LUT - export of goods or services - Till the time FORM GST RFD-11 is available on the common portal, hard copy may be furnished, duly filled, to the jurisdictional Deputy/Assistant Commissioner having jurisdiction over their principal place of business.
Income Tax
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Condonation of delay - removal of office objections - As a result Revenue officials are grossly negligent, we hold that there is no sufficient cause for condoning this enormous delay - HC
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Capital Gains - Even if it is assumed that transfer of shares of the said company amounted to transfer of plot of land, in the absence of any evidence of extra amount having been exchanged, no addition can be made by invoking section 50C
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Validity of best judgement assessment u/s 144 - notice issued u/s 143(2) is clearly barred by limitation and hence, consequent assessment order passed by the A.O. u/s 144 cannot sustain.
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Assessee is entitled for 100% depreciation in respect of vinyl flooring, false ceiling, glass and wooden partitioning, electrical wiring, Net work cabling etc., in the leased premises as they are Temporary structures.
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TPA - international transaction - any further adjustment only on the basis of the outstanding receivables would have distorted the picture and recharacterised the transaction
Customs
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Procedure for amendment/conversion in shipping bill after grant of LEO and before shipment of goods
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Refund claim - MMTC not being government organization but only a corporation cannot become eligible for extended period of limitation of one year for filing refund claim
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Project import - failure to produce installation certificate - especially considering that appellant has submitted other proof to establish the installation, cannot then sustain the demand of merit rate of duty
SEZ
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SEZ units - sourcing of precious metals from Nominated agencies - Strict Adherence of Rule 27(6) of SEZ Rule, 2006
Indian Laws
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Commission of offence punishable u/s 138 read with Section 141 of NI Act - Mere averments in the petition that the writ petitioner/accused No.4 was a sleeping partner having no knowledge of the transaction in question is not sufficient to quash process issued against him. - HC
Service Tax
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Refund of service tax paid - retrospective exemption - the period of six months prescribed under Sub. Sec.(3) of Sec.103 of the Finance Act,2016 cannot be extended by the departmental authorities.
Case Laws:
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Income Tax
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2017 (10) TMI 179
Interest payable u/s 244A(1)(b) on refund of excess amount – Excess amount paid on self-assessment - Held that:- When there is a self-assessment and tax is paid in terms of such self-assessment, the obligation to award interest does not arise. We do not think that it would be fair for the Revenue to demonstrate to us that the Division Bench judgment of this Court in Stock Holding Corporation of India Limited (2014 (11) TMI 899 - BOMBAY HIGH COURT), which discusses all these questions and answers them against the Revenue and in favour of the assessee, should be brushed aside or ignored. It is not shown to be per incuriam, nor is it demonstrated that this judgment has not been accepted by the Revenue, and therefore, challenged in the Hon'ble Supreme Court of India and that challenge is pending or this judgment has been reversed. In the absence of such material on record, we do not think that the Division Bench judgment, which discusses all the questions and which are identical to the present case, should be discarded in this manner. Division Bench judgment of this Court in Stock Holding Corporation of India Limited (supra), we answer each of these questions against the Revenue and in favour of the assessee
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2017 (10) TMI 178
Condonation of delay - removal of office objections - Held that:- As far as this Court is concerned, whatever may be the mode or procedure of filing Appeals and which was known to departmental panel Advocates engaged earlier, which has now been stated to be dissolved and independent Advocates are entrusted with the duty to file Appeals, nothing of this nature will prevent the Revenue officials in-charge of the concerned Departments or wings from following up their matters. The papers being handed over to the Advocate, their responsibility does not come to an end. There has to be a follow-up and the Revenue Advocates as also their officials can learn a lesson or two from their counterparts or adversaries, namely, the assessees. That Advocates or officials are underpaid or not paid on time and Government matters remain neglected because of several reasons, some of which may be intentional and deliberate, does not mean such explanations have to be necessarily accepted. It is time and again held by the Hon'ble Supreme Court that Government and its Departments including the Department of Income Tax is not a special litigant. The law of limitation does not exempt it. If 30 days' time was given to remove office objections, they were not removed and no application was moved within the next 30 days to set aside the conditional order and there is a delay in this case, as is brought on record by the assessee, of 958 days, then, this is no explanation for the same. As a result Revenue officials are grossly negligent, we hold that there is no sufficient cause for condoning this enormous delay. The explanation on affidavit is devoid of any particulars, vague and general in nature. It is rejected. The Applications for restoration are dismissed.
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2017 (10) TMI 177
Disallowance under Section 14A - calculation of disallowance figures - Tribunal did not accept the figure of disallowance worked out by the assessee - Held that:- Although the Tribunal, in one line or sentence in para 8, says that the disallowance to be made under Rule 8D is determined at ₹ 3,50,000/, we are not in agreement with Mr. Suresh Kumar that the Tribunal has accepted the applicability of this Rule/sub-rule/clause. This one sentence or one line cannot be read in isolation and out of context. Once the formula prescribed in Rule 8D(2)(iii) of the Rules could not have been applied is the essential conclusion, then, merely because the Tribunal did not accept the working of disallowance by the assessee in its entirety, does not mean that the appeal raises a substantial question of law. We do not think that the Tribunal's exercise can be termed as totally erroneous or illegal. It is neither perverse. The Tribunal's order cannot be said to be vitiated by an error of law apparent on the face of the record. We do not think that the working by the Tribunal or the determination of the disallowance at ₹ 3,50,000/ does not meet the ends of justice. It is restricted bearing in mind the facts and peculiar to the assessee's case. Partly the assessee's arguments have been accepted and the appeal allowed by setting aside the order of the Assessing Officer and that of the Commissioner of Income Tax (Appeals). We do not think that the question proposed by Mr. Suresh Kumar is a substantial question of law.
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2017 (10) TMI 176
Disallowance u/s. 14A read with Rule 8D - sufficiency of funds - Held that:- It is evident that the assessee had sufficient own funds, which were utilised for making any investment in inventories and to sundry debtors to the tune of ₹ 18.19 crores and for making new investment in shares of M/s HAIL of ₹ 6,63,30,000. In addition, the assessee company had current year's profit of ₹ 6.85 crores. Under the circumstances, I hold that the new investment of ₹ 6.63 crores made in the shares of M/s HAIL, the subsidiary company was made out of own funds of the assessee and not from the borrowed funds. Accordingly, no disallowance under Section 14A could have been made. Regarding the administrative expenses in respect of making such an investment, evidently the investment has been made in the subsidiary company, therefore, no effort in the form of market research, monitoring and seeking paid assistance of professionals in making such investment was needed. Accordingly, we hold that no administrative efforts can be attributed to making of investment in the shares of HAIL, the subsidiary company. On careful consideration of the reasoning given by the AO for making the addition under Rule 8D in the assessment order, we find that the AO has not examined the claim of the assessee in this regard. Moreover, the AO did not consider that investment of ₹ 18.75 crores was deleted by the ITAT and the new investment of ₹ 6.63 crores was also made in the same manner out of own fund of the assessee for the purpose of making investment in subsidiary company for the purpose of core business of the assessee. Further, it has already held that no administrative expenses can be attributed to making such an investment in the subsidiary company. Keeping in view the same, we find that the lack of satisfaction of the AO with the claim of the AO is not on cogent grounds. Accordingly, the AO could not have invoked the provisions of Rule 8D, in the light of the binding decision of the Hon'ble Delhi High Court in the case of CIT Vs. Maxopp Investments (2011 (11) TMI 267 - Delhi High Court ).- Decided against revenue
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2017 (10) TMI 175
Delayed payment in respect of employees contribution by the assessee of Provident Fund and ESIC - Payment not made on due date but made before the due date of filing return u/s 139(1) - addition u/s 36(1)(vi) - Held that:- Hon’ble jurisdictional Delhi High Court in the case of CIT Vs. AIMIL Ltd. (2009 (12) TMI 38 - DELHI HIGH COURT) has considered the employee’s contribution deposited after due dates prescribed under the relevant acts, and allowed the benefit of the deduction to such contribution, if paid before the return is filed. We find that the Hon’ble jurisdictional High Court above has allowed deduction of payment of employee’s contribution before the due date of filing of return of income after considering the decision of the Hon’ble Supreme Court in the case of CIT Vs. Vinay Cement Limited (2007 (3) TMI 346 - Supreme Court of India ). In the instant case, identical issue in dispute is before us. The decision of the jurisdictional High Court is binding on the Tribunal and first appellate authority working within the jurisdiction of the High Court. - Decided in favour of assessee.
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2017 (10) TMI 174
Addition on account of alleged bogus sales - proof of genuine claim - Held that:- The Sales Tax Department in its enquiry have found the parties to be providing bogus accommodation entries. The assessing officer also issued notices to these parties at the addresses provided by the assessee. All these notices have returned unserved. Assessee has not been able to produce any of the parties. Neither the assessee has been able to produce any confirmation from these parties. In such circumstances, there is no doubt that these parties are non-existent. We find it further strange that assessee wants the Revenue to produce assessee's own vendors, whom the assessee could not produce. The purchase bills from these non-existent/bogus parties cannot be taken as cogent evidence of purchases. In light of the overwhelming evidence the Revenue authorities cannot put upon blinkers and accept these purchases as genuine. In the present case, the assessee wants that the unassailable fact that the suppliers are non-existent and thus bogus should be ignored and only the documents being produced should be considered. This proposition is totally unsustainable - Decided against assessee.
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2017 (10) TMI 173
Attached rental accrued to the assessee and compensation awarded adjusted against the demand raised by the Revenue - Held that:- From the letter dated 20.01.1988, written by Special Land Acquisition Collector, it is apparently clear that the cheques for ₹ 3,89,930/- and ₹ 3,90,213/- on account of compensation to be paid to the assessee were handed over to the Tehsildar, Delhi on 24.07.1986. When the compensation amount reached in the hands of the Tehsildar, Dehradun, where it was already attached by the Revenue against the demand of ₹ 20,59,964/- as is evident from para 4(c) of the assessment order then the revenue department is under legal obligation to pass speaking order that such & such amount belonging to the assessee has been adjusted against such & such demand raised by the Department. Again it was for the Revenue to verify and intimate the assessee that the amount of rental and compensation had been adjusted against the said demand. CIT(A) is required not only to dispose of the appeal but to conduct a discreet inquiry by summoning concerned officer and requisite record from the quarter concerned or to reconstruct the record, if need be, in compliance to the order passed by the Hon’ble High Court in order to adjudicate the controversy at hand once for all. Because right from 1986, the assessee is moving like a rolling stone by approaching one forum after another right from Assessing Officer, CIT(A), Chairman, CBDT, Hon’ble High Court and then Tribunal having its no fault. Consequently, the impugned order is set aside and file is remitted back to the learned CIT(A) to decide the issue afresh after providing opportunity of being heard to the assessee. Learned counsel for the assessee has also assured to extend necessary assistance to arrive at the logical conclusion.
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2017 (10) TMI 172
Invoking section 50C to make the additions - transfer of property by transferring shares in the company - determination of capital gain - eligible transfer u/s 2(47) (vi) - Held that:- Section 50C could be invoked only if the sale consideration received is less than the value adopted by Stamp Valuation Authority of the State Government for the purpose of payment of stamp duty. However, there is no evidence that any stamp duty has been paid towards transfer of the plot of land as held by the AO and that the Stamp Valuation Authority adopted any particular value as sale consideration for payment of stamp duty in the present transaction. In fact, in this case there is a mere transfer of shares of a company and no stamp duty appears to be payable towards plot of land. The procedure adopted by the AO in determining the capital gain from the said transaction is not tenable under the law as it stood applicable for the current assessment year. We are of the view that section 2(47)(vi) is applicable in the cases where the asset in question is like a group of houses owned by a company and each shareholder is allotted a house for his personal enjoyment similar to what is prevalent in housing cooperative societies. However, there is no necessity to adjudicate on this issue as even if it is assumed that transfer of shares of the said company amounted to transfer of plot of land, in the absence of any evidence of extra amount having been exchanged, no addition can be made invoking section 50C as noted in the previous paragraph. Therefore, addition made by the AO was rightly deleted by the Ld. CIT(A) - Decided in favour of assessee.
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2017 (10) TMI 171
Deduction u/s.80IA(4) - Captive Power Generation Plant (“COGEN”) - assessee company is engaged in the business of Manufacture of aluminium Extruded Section and carrying out job work for others - Held that:- Assessee is eligible for deduction u/s.80IA(4)(iv) of the Act in respect of COGEN Units. Allowable revenue expenditure - Held that:- Assessee has correctly claimed the expenses of dies and tools as revenue in nature.
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2017 (10) TMI 170
Enhancement of the income on account of jewellery weighing 461.046 grams. - Held that:- In the present case, it appears that the ld. CIT(A) added the jewellery valuing ₹ 9,26,702/- which the AO considered as explained but no proper reason has been given by the ld. CIT(A) in support of his action. It is also noticed that the ld. CIT(A) had confirmed the addition of ₹ 34,23,008/- without assigning any cogent reason. We, therefore, deem it appropriate to set aside this issue back to the file of the ld. CIT(A) to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee. Addition on account unaccounted cash - Held that:- In the present case, it appears that the explanation of the assessee was that the cash found during the course of search was out of the withdrawals made by him and his wife. In our opinion, the authorities below had not appreciated the facts in right perspective. We, therefore, deem it appropriate to set aside this issue back to the file of the ld. CIT(A) to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee.
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2017 (10) TMI 169
Income tax leviable on a notional basis on ALV - Held that:- A perusal of the assessment orders dated 7.5.2013 and 27.5.2013 further shows that the AO also has not examined the issue in detail but has simply recomputed the assessee’s income in terms of the earlier assessment orders passed u/s 143(3) of the IT Act, 1961. Therefore, it is our considered opinion that it is a fit case to be restored to the file of the AO for re-examining the entire issue in light of the judgment in the case of Ansal Housing Finance & Leasing Co. Ltd. (2012 (11) TMI 323 - DELHI HIGH COURT) and also after taking into account the submissions of the assessee in this regard. Needless to say that the AO will allow due opportunity to the assessee of being heard.
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2017 (10) TMI 168
Addition as Income from other sources by CIT-A - Income tax Officer has added as a unexplained credit u/s. 68 and also not granted Long Term capital gain u/s.10(38) of I. T. Act - Held that:- As no direct or material evidence against the assessee to hold that the share transactions were not genuine, we respectfully following the above decisions of the Tribunal, hold that additions made by the AO u/s.68 are not warranted and are accordingly deleted. In this case, transaction are made for the D-mat account and STT has also been paid. Assessee has sold his shares to authorized stock exchange and received Invoice duly paid STT on his selling shares. In our opinion, the order of the CIT(A) is not sustainable. - Decided in favour of assessee.
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2017 (10) TMI 167
Legally u/s.153A/153C - Held that:- Assessments have become final and there were no pending proceedings, therefore the assessments are unabated as no incriminating material was found. In such cases no addition could be made legally u/s.153A/153C of the Act unless there was some incriminating material found during the course of search. As observed by us in the above paras there is nothing on record/Assessment Orders to suggest that the additions were made based on any specific incriminating material seized during the course of the search. Hence, following the decisions of the Hon'ble Jurisdictional High Court in the case of CIT v. Continental Warehousing Corporation (Nhava Sheva) Ltd. (2015 (5) TMI 656 - BOMBAY HIGH COURT) we hold that the additions made while competing the assessments u/s. 153A/153C cannot be sustained.
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2017 (10) TMI 166
Validity of best judgement assessment u/s 144 - delay in issuing notice u/s 143(2) - period of limitation - Held that:- The assessee has filed return for the A.Y. 2006-07 on 12-6-2007. As per the pre amended proviso, notice ought to have been issued on or before 30-6-2008. The A.O. has issued notice u/s 143(2) on 24-9-2008. Therefore, considering the facts of the case and also respectfully following Allahabad High Court decision in the case of Tulsi Food products vs. DCIT (2012 (4) TMI 379 - Allahabad High Court) we are of the view that notice issued u/s 143(2) is clearly barred by limitation and hence, consequent assessment order passed by the A.O. u/s 144 dt 15-12-2008 is hereby quashed.
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2017 (10) TMI 165
Bogus purchases - addition at 12.5% of the purchases made from M/s. Foram Traders/Apple Industries and M/s. VSK Enterprises - assessments were reopened after an enquiry conducted u/s. 131 - Held that:- The assessments were completed on 11.03.2015 by the Assessing Officer. Obviously there is no reference of these details provided by the dealers in the Assessment Orders. These confirmations also appear to have been filed before the Ld.CIT(A). The evidences on record have not been appropriately appreciated by the learned Assessing Officer. The confirmations from parties were not before him at the time of completion of assessments. It is the finding of the learned Assessing Officer that assessee could not produce the purchase bills, transport receipts, details of Octroi Payment, details of goods receipt note and details of storage of goods. Assessee is a whole sale trader of paper and iron and it is not a manufacturer. The matter has to be examined thoroughly by the Assessing Officer afresh in the light of the confirmations filed by the dealers supporting the sales made by them to the assessee. Thus, this matter is restored to the file of the Assessing Officer for denovo adjudication in accordance with law after obtaining necessary information from the assessee. The assessee shall provide all the details including the confirmations from the dealers, stock register, purchase register etc., in support of its contentions and to prove the genuineness of the purchases from these two dealers. Appeals of the assessee are partly allowed for statistical purposes.
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2017 (10) TMI 164
Levy of penalty u/s 271(1)(c) - denial of deduction under section 10B on interest income - Held that:- We find that the assessee has claimed deduction under section 10B of the act on interest amount of loans and advances and AO brought to tax the excess claim of deduction of ₹ 7,26,926/- under the head income from other sources. The assessee claimed that admissibility of deduction u/s. 10B on the component of interest receipt was from funds advanced that were used in the business Since the funds were temporarily available out of business, the same were deployed as a matter of prudence in order not to keep the funds idle. It was brought to notice of the AO that assessee did not have surplus funds that were deployed to earn interest and thus the funds were business funds only and income there from constituted profits and gains of business. It was also explained to the AO that, the assessee paid interest of ₹ 140,526/- on funds borrowed and this was allowed by the AO as business expenditure. To reduce this interest burden, the assessee deployed funds available on a temporary basis for fruitful purposes rather than keeping the funds idle. - Decided in favour of assessee.
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2017 (10) TMI 163
Penalty u/s. 271(1)(c) - excess deduction claimed in terms of provision of section u/s. 80IAB(10) read with section 80IAB(3) - Held that:- It is notable that the addition, on the basis of which the impugned penalty has been imposed, observing inaccurate particulars of income furnished by the assessee, has been deleted by the Tribunal, as also observed by the ld. CIT(A) in the impugned order reproduced above. Therefore, once the very basis of imposition of penalty, stands collapsed, there remains no justification to sustain the penalty in the instant case. We accordingly, find no good ground to disturb the decision reached by the ld. CIT(A) in the impugned order while canceling the penalty. Hence, the appeal of the Revenue has no merit and deserves to fail.
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2017 (10) TMI 162
Bogus purchases - estimation of profit - Held that:- The assessee has not furnished documents like delivery challans, transport receipts, stock register etc. to prove the transportation of material from the place of the impugned suppliers to the place of assessee. As noticed that the assessee has also failed to furnish confirmation letters obtained from the suppliers in order to prove the genuineness of the purchases. Since the assessee has reconciled the purchases with sales, tax authorities have presumed that the assessee would have sourced material from some other source and have accordingly estimated the profit element embedded therein. The Assessing Officer had estimated the profit at 12.5% which was reduced to 6.5% by the learned CIT(A). In the facts and circumstances of the case, estimate of 6.5% of the value of alleged bogus purchases is reasonable and hence decision rendered by Ld CIT(A) does not call for any interference. Accordingly, uphold the order of the learned CIT(A). - Decided against assessee.
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2017 (10) TMI 161
Depreciation claimed on temporary structure - whether the structure is not older existing structure but it is a new structure and also this structure cannot be considered as temporary structure - Held that:- There is a force in the argument of ld.A.R that the temporary structure created in leased out premises cannot be considered as a capital expenditure so as to grant depreciation over a period of 5 years. The judgement relied by the ld.A.R is rightly considered by the CIT(A) on the issue. Accordingly, we are of the opinion that the assessee is entitled for 100% depreciation in respect of vinyl flooring, false ceiling, glass and wooden partitioning, electrical wiring, Net work cabling etc., in the leased premises as they are Temporary structures. Accordingly, we dismiss the appeal of Revenue.
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2017 (10) TMI 160
Bogus purchases - G.P. determination - Held that:- Considering the primary statements given by Shri Dharmichand Jain and the failure on the part of the assessee to produce the said parties for examination to the AO and also the decision in the case of Nikunj Eximp Enterprises (2013 (1) TMI 88 - BOMBAY HIGH COURT) we find, the decision of the CIT (A) in restricting the addition to a portion of the bogus purchases is justified. Regarding 12.5% adopted by the CIT (A) relying on the judgment of the Hon‟ble Gujarat High Court in the case of Simit P Sheth (2013 (10) TMI 1028 - GUJARAT HIGH COURT) we find, the said judgment is the source material for the said 12.5%. The CIT (A) did not apply his mind to the nature of the business, VAT % and the relatable GP & NP rates of the different businesses. In our view, the GP / NP rate vary from business to business. Profit percentage in construction business is similar to that of the Gold Jewellery business. In our view, it is not proper to adopt some percentage of construction business to the business of Gold Jewellery. Further, it is a well established company and the GP rates are varying from 5.37% (AY 2010-2011) to 10.26% (AY 2012- 2013). In our view, this issue of percentage GP or NP need to revisit the file of the AO. AO is directed to study the relevant details of the company or that of the other good comparable ones and decide the issue afresh after granting a reasonable opportunity of being heard to the assessee. Addition of interest attributable to advances given for acquisition of property - adequacy of own funds - Held that:- Considering the request of the Ld AR, we find, there is need for facts on if the assessee posses adequate own funds, if the interest bearing funds are found flowing in the advances given for purchase of the property etc. AO is directed to examine the issue afresh after granting a reasonable opportunity of being beard to the assessee
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2017 (10) TMI 111
TPA - international transaction - Interest on receivables on the working capital - Held that:- As decided in case of Kusum Health Care Pvt. Ltd [2017 (4) TMI 1254 - DELHI HIGH COURT] there has to be a proper inquiry by the TPO by analysing the statistics over a period of time to discern a pattern which would indicate that vis-a-vis the receivables for the supplies made to an AE, the arrangement reflects an international transaction intended to benefit the AE in some way. With the Assessee having already factored in the impact of the receivables on the working capital and thereby on its pricing/profitability vis-a-vis that of its comparables, any further adjustment only on the basis of the outstanding receivables would have distorted the picture and recharacterised the transaction - Decided in favour of assessee. Excess deprecation claim on fixed assets - Held that:- Similar issue was raised in AY 2008- 2009 which was remanded back to the Assessing Officer to verify the claim of depreciation. Thus on similar line in the present Assessment year also the Assessing Officer is directed to verify the claim of the assessee as per law.
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Customs
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2017 (10) TMI 159
Additional Duty of Customs (ADC) - Import of Nylon Filament Yarn - N/N. 29/2004-CE dated 09.07.2004, as amended - Department took the view that the imported goods do not satisfy the conditionalities of the said notification and hence the concessional rate of duty would not be available to them - whether the goods imported by the appellants will fall under the beneficial impact of Central Excise exemption N/N. 29/04-CE, Sl.No. 5A for the purpose of discharging additional duty of customs (CVD)? Held that: - Additional duty of customs, also known as countervailing duty (CVD) is imposed to provide a level playing field for the indigenous goods who have to bear the brunt of local taxes, in particular central excise duty levied on manufacture of identical goods in India. Also, goods imported into India in most cases benefit from export incentives like duty drawback in the concerned country of export. The important factum, however, is that the additional duty of customs has to be equal to the excise duty for the time being leviable - Honble Supreme Court in the case of Thermax Pvt. Ltd. Vs. Collector of Customs [1992 (8) TMI 156 - SUPREME COURT OF INDIA], held that CVD will be equal to excise duty for the time being leviable on a like article if produced or manufacture in India. The Honble Apex Court went on to further observe that we have to forget that the goods are imported and imagine that the importer had manufactured the goods in India and determine the amount of excise duty that he would have been called to pay in that event. In the case of the present appellants themselves held that for additional duty, actual manufacture or production of a like article was not necessary and for that quantification of additional duty imported article has to be imagined as to be manufactured or produced in India and then to see what excise duty was leviable there on. Appeal dismissed - decided against appellant.
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2017 (10) TMI 158
Refund claim - exports made during June 2008 to November 2008 - Shipping Bills covered by order of the Settlement Commission dated 07.05.2015 - Shipping Bills in which plea of time bar raised by Revenue - Held that: - The take away from the submissions of both sides is that in respect of assessee's appeal No.C/14/2012, MMTC is not pressing for the refund claim in respect of these Shipping Bills - Appeals in respect of these shipping bills are dismissed. Refund claim - Refund denied on the ground of non-submission of original of exporter copy of shipping bill - Held that: - the matter is remanded to the original authority to consider the refund claims on the basis of Indemnity Bonds that may allowed to be produced by MMTC - matter on remand. Refund claim - Actual export after exemption given to export of iron ore fine on 07.12.2008 - Original Shipping Bill prepared on 5.12.2008. Thereafter, cancelled due to substitution of vessel. Actual export on 9.12.2008 vide fresh Shipping - Held that: - the issue herein also is being remanded to the original authority to consider the claim made by MMTC that export duty was paid on a shipping bill which was cancelled due to non availability of vessel and that actual export was done after the duty was exempted, hence the refund is justified - matter on remand. Refund claim - time limitation - Held that: - MMTC not being government organization but only a corporation cannot become eligible for extended period of limitation of one year for filing refund claim - decided in favor of Revenue. Appeal allowed in part by way of remand.
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2017 (10) TMI 157
Classification of imported goods - restricted item - Marine Gas Oil (HSD) lying in the fuel tanks - whether MGO (HSD) should be considered as part of the vessels and be classified under TH 89.08 or would be classifiable under Ch 27 of the Customs Tariff Act, and therefore, is a restricted item? - Held that: - whether the Marine Gas Oil imported inside the fuel tanks of vessels which are imported for breaking is subject to ITC restrictions is no longer res integra and is squarely covered by the decision of this Tribunal in the case of A.G. Enterprise [2014 (8) TMI 44 - CESTAT AHMEDABAD], where it was held that so far as classification of the ships/vessel, brought in for breaking up along with surplus fuel, will have to be considered classifiable under Heading 89.08 of the Import policy as an integral part of the vessel/ship, as per opinion given by DGFT under F.No.IPC/4/5(684)/97/82/PC-2(A), dt.26.06.2013 - appeal allowed - decided in favor of appellant.
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2017 (10) TMI 156
Scope of SCN - remand beyond the parameters of the grounds of appeal - the department was aggrieved only with non-addition of royalty in the assessable value - Held that: - the Commissioner (Appeals) addressed not just the issue of addability of royalty which alone was appealed by the Department but also other issues like payment to foreign supplier in the name of professional and consultancy charges and also directed collection of extra duty deposit of 5% of value of the goods imported, which action, in our view, has surely gone beyond the grounds of appeal placed before him by the department - The Commissioner (Appeals) should not have ordered remand beyond the parameters of the grounds of appeal which he has himself taken note of at the beginning of the order - we order modification of the impugned order to the extent that the remand and de novo adjudication ordered by the Commissioner (Appeals) will only be restricted to the grounds of appeal preferred by the department - matter on remand, by way of modification in impugned order.
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2017 (10) TMI 155
Rectification of mistake - while passing the order, it resulted into an error, glaring at para 4.1 of the Final Order of the Tribunal dated 6.2.2014 - Held that: - Considering the fact that the matter has been remanded by the Hon’ble Gujarat High Court, to consider these evidences available on record and pass an appropriate order on the application, these documents have been admitted placed for the first time enclosing with the written submission and the same had not been verified by both the authorities below. Ld. A.R. for the Revenue fairly submits that these documents need to be scrutinized by the authorities below to ascertain its genuineness - the order id to be rectified - ROM application allowed.
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2017 (10) TMI 154
Classification of goods - Steam Coal - Bituminous Coal - Held that: - When the matter was heard before the Larger Bench, taking note of the fact that the issue has already been taken up and pending before the Hon'ble Supreme Court, the Larger Bench relegated these Appeals to the respective Benches to dispose the same in the light of the observations of Larger Bench in its order dt.16.01.2017 - the present appeals are disposed of with liberty to the appellants to approach this Tribunal after final verdict on the issue of classification of Steam Coal and Bituminous Coal from the Hon'ble Apex Court.
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2017 (10) TMI 153
Classification of goods - Heavy Melting Scrap (constituted of rail line scrap of length below 1.5 meter) - whether the rail cut length below 1.5 meters are to be assessed under chapter heading 72.04, as claimed by the assessee or the same are classifiable under chapter heading 73.02, as contended by the Revenue? - concessional rate of duty in terms of N/N. 012/2012-CUS., dated 17.03.2012 - Held that: - Board Circular No. 8/2006-cus dated 17.01.2006, supporting the revenue’s views was quashed by the Hon’ble Madras High Court as also by Hon’ble Punjab and Haryana High Court - In view of the decisions of the Hon’ble Supreme Court in the case of Madras Steel Re-Rollers Association [2012 (8) TMI 788 - SUPREME COURT OF INDIA], we deem it fit to set aside the impugned orders and remand the matter to the original adjudicating authority for fresh decision - appeal allowed by way of remand.
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2017 (10) TMI 152
Classification of goods - Heavy Melting Scrap (constituted of rail line scrap of length below 1.5 meter) - whether the rail cut length below 1.5 meters are to be assessed under chapter heading 72.04, as claimed by the assessee or the same are classifiable under chapter heading 73.02, as contended by the Revenue? - concessional rate of duty in terms of N/N. 012/2012-CUS., dated 17.03.2012 - Held that: - Board Circular No. 8/2006-cus dated 17.01.2006, supporting the revenue’s views was quashed by the Hon’ble Madras High Court as also by Hon’ble Punjab and Haryana High Court - In view of the decisions of the Hon’ble Supreme Court in the case of Madras Steel Re-Rollers Association [2012 (8) TMI 788 - SUPREME COURT OF INDIA], we deem it fit to set aside the impugned orders and remand the matter to the original adjudicating authority for fresh decision - appeal allowed by way of remand.
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2017 (10) TMI 151
Valuation of export goods - misdeclaration of Value - dyed and printed fabrics (Dupatta and Sarees) made out of 100% Polyester Filament Yarn/Texturised Yarn - It appeared to the department that the appellant had misdeclared the value by over-invoicing in order to get higher ineligible Duty Entitlement Pass Book (DEPB) benefit in contravention of Section 14 (1), Section 50 of the Customs Act and the provision of the Foreign Trade Policy 2004-2009 relating to DEPB scheme - The major grievance of the appellant concerns the method of which the CIU report for Present Market Value (PMV) of the export goods was determined and its veracity. Held that: - it emerges that appellant had not initially been given a copy of the CIU report and they had to obtain the same on 09.10.2006 after they made RTI application. Appellant also draws attention to further discrepancies in the CIU report stating that the description of the goods have been given as "sarees, blouses, skirts etc.", whereas the goods exported were "100% Polyester Fabric" - a doubt or suspicion on the correctness or otherwise of the import or export transaction will require to be supported by evidence and not on half baked information or reports, assumptions and presumptions. It is also well settled cardinal rule of law that if any documents are relied upon to allege an infraction or act or omission on the part of a noticee, copies of the same will definitely have to be provided to such noticee, to enable him to put forth his counter response to the same - In the instant case, the main edifice of the charge of overvaluation is the purported CIU report to ascertain the Present Market Values (PMV). By not supplying a copy of the same to the appellant during the adjudication proceedings, the latter have certainly been put to disadvantage - We are unable to find any reasoned and in-depth analysis of the contentions of the appellant nor is there any adequate discussion and reasoning while upholding the allegations against the appellant. The impugned order indeed suffers from lack of application, non-cognizance of submissions made by the appellant and peremptory dismissal of such contentions without any detailed reasoning - entire matter remanded back to the adjudicating authority for de novo consideration - appeal allowed by way of remand.
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2017 (10) TMI 150
Project import - import of Microprocessor based ticketing machine including Access Control Systems and Validator - denial of concessional rate of duty on the ground that the appellant did not produce installation certificate even after reminder letters - Held that: - The Tribunal in the case of Creative Industries P. Ltd. Vs CC & CEX, Hyderabad [2008 (6) TMI 23 - CESTAT Bangalore] had held that non-production of installation certificate for the purpose of Regulation (7) of the Project Import Regulations, 1986 is only procedural requirement and not a condition determining the eligibility of the impugned goods for the benefit of concessional rate of assessment - the non-submission of the installation certificates, especially considering that appellant has submitted other proof to establish the installation, cannot then sustain the demand of merit rate of duty in respect of the goods imported vide Bill of Entry No.5219 dt. 25.01.1989 namely computerized PCB in-circuit tester - decided in favor of appellant. Import of Validator - appellants have contended that the goods were never cleared by them - Held that: - From the facts of the case, it emerges that appellants had not mentioned or produced evidence for abandoning the goods during the time that they were in bond. We therefore hold that the Commissioner (Appeals) cannot be faulted in his conclusion that plea of the appellant for abatement of the duty on the warehoused goods they were not cleared cannot be entertained notwithstanding such warehoused goods were disposed of by the department - decided against appellant. Liability of Interest - Held that: - as the goods were imported in 1989 and the legal statutory provisional for enabling charging of interest was introduced only w.e.f 26.5.1995 by the Finance Act, 1995, hence there is merit in the appellant s contention that no interest can be demanded in respect of the imports which was done in 1989 - decided in favor of appellant. Decided partly in favor of appellant.
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Corporate Laws
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2017 (10) TMI 149
Interest recovered on orders of penalty issued - Section 28A of the Securities and Exchange Board of India Act, 1992 - whether interest can be recovered on orders of penalty issued under the Act and/or orders of disgorgement of unlawful gains, when the said amounts have remained unpaid? - Held that:- The Interest Act of 1978 would enable Tribunals such as the SAT to award interest from the date on which the cause of action arose till the date of commencement of proceedings for recovery of such interest in equity. The present is a case where interest would be payable in equity for the reason that all penalties collected by SEBI would be credited to the Consolidated Fund under Section 15JA of the SEBI Act. There is no greater equity than such money being used for public purposes. Deprivation of the use of such money would, therefore, sound in equity. This being the case, it is clear that, despite the fact that Section 28A belongs to the realm of procedural law and would ordinarily be retrospective, when it seeks to levy interest, which belongs to the realm of substantive law, the Tribunal is correct in stating that such interest would be chargeable under Section 28A read with Section 220(2) of the Income Tax Act only prospectively. This is a positive indication that Section 28A was intended only to have prospective application. It must be clarified, however, that interest is chargeable only with effect from 25.8.2014, as Section 220 was not referred to, while enacting Section 28A, in any of the three Ordinances preceding the Amendment Act of 2014.) However, since it has not taken into account the Interest Act, 1978 at all, we set aside the Tribunal s findings that no interest could be charged from the date on which penalty became due. The Civil Appeals 10410- 10412 of 2017 are allowed insofar as the penalty cases are concerned. Going to the facts in Civil Appeal No. 5677 of 2017 Shri Subramonium Prasad is correct in his submission. If there is default in payment of ₹ 6 crores within the stipulated time, no future interest is payable inasmuch as a much severer penalty of being debarred from the market for 7 years was instead imposed. We have noticed how the appellant has, in fact, suffered the aforesaid debarment and how he made payment of ₹ 6 crores on 6.1.2014 from the sale of shares. The SAT was incorrect in stating that the order dated 21.7.2009 contained an obligation to pay interest at the rate of 12% per annum on the unlawful gain of ₹ 4.05 crores till payment.
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2017 (10) TMI 148
Auction procedures - auction of Sahara Aamby Valley City - Held that:- Held that:- We are of the convinced opinion that grant of further time to the respondent-contemnor and entertaining post-dated cheques which are dated 11th November, 2017, would tantamount to travesty of justice and extending unwarranted sympathy to a person who is indubitably an abuser of the process of law. He, who thinks or for that matter harbours the notion that he can play with law, is under wrong impression. To quote a phrase from Chief Justice Marshal, 'it is not a laboratory where children come to play'. We are constrained to state that the respondent-contemnor in his own way has treated this Court as a laboratory and has made a maladroit effort to play, possibly thinking that he can survive on the ventilator as long as he can. He would have been well advised that a person who goes on a ventilator may not survive for long and, in any case, a time would come when he has to be comatosed. Here comatose takes place as regards the ambitious effort made by the respondent-contemnor. Therefore, we direct without any hesitation that the auction shall be held as per the direction given by this Court and the Official Liquidator is permitted to carry out the auction as per procedure and during the auction the Registrar General of the High Court of Bombay, who is designated as Supreme Court appointee, shall remain personally present to over see the physical auction at the auction venue at Mumbai. After the auction is held, liberty is granted to the counsel for the parties to mention.
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Insolvency & Bankruptcy
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2017 (10) TMI 147
Corporate Insolvency Resolution Process - Insolvency & Bankruptcy Code, 2016 - Held that:- Having heard the submission of Shri Bishwajit Dubey along with Shri Rahul Agarwal, Advocate for Financial Creditor as well as Shri R.P. Agrawal, Advocate for Corporate Debtor, the present petition deserves admission. Hence, it is admitted under the Section 7 of the I & B Code
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PMLA
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2017 (10) TMI 146
Contravention of provisions of Section 8(3) & 8(4), 73 read with Section 68 of the Foreign Exchange Regulation Act, 1973 - Held that:- When the matter is taken up today for hearing, the stand of the respondent remains the same that the record is not traceable and counsel requested for an adjournment. The request is opposed by the counsel for the appellant in view of the directions passed by the High Court. He has suggested that without prejudice the impugned order be quashed and the part penalty amount deposited by the appellant be kept by the respondent and appeal be disposed of accordingly. There is a force in the submission of the learned counsel for the appellant. The show cause notice was already issued in 1999. More than 18 years have been passed. Proof of service has not been produced. Even the despite of direction issued by the High Court, the matter is not being heard for the last two years. In the present case admitted by the respondent the record is not traceable, the appeal is accordingly allowed, however as agreed by the appellant that without prejudice, the 10% penalty amount deposit by the appellant be kept by the respondent and the appellant shall not claim the refund of the said amount. The impugned order is set-aside.
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Service Tax
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2017 (10) TMI 141
Refund of service tax paid - retrospective exemption - rejection of refund on the ground that the same was filed beyond the period of six months as stipulated u/s 103 of Finance Act, 2016 and thus barred by limitation - the Respondent filed an application on 28.11.2016 for refund of Service Tax of ₹ 12,67,61,271/-paid during the period 01.04.2015 to 29.02.2016 - whether the refund claim filed on 28.11.2016 is admissible to the Appellant even though it was filed beyond the time limit prescribed under sub-sec.(3) of Section 103 of Finance Bill,2016, where under an application for refund shall be made within a period of six months from the date on which Finance Act, 2016 receive the assent of the President of India? - The learned Commissioner (Appeals), considering the delay as mere procedural lapse, condoned the same and held that the refund is admissible to the Appellant - whether learned Commissioner (Appeals) is correct in enhancing the period of six months and condoning the delay? Held that: - it is clear that the intention of the legislature while enacting Section 103 of Finance Act,2016 was to provide the refund of Service Tax paid during the period 01.4.2015 to 29.02.2016 within a period of six months from the date of assent to the Finance Bill 2016 by the President of India. Therefore, the legislature must have taken into consideration the circumstances/eventualities in prescribing the period of limitation in filing the refund claim, without making any reference to possible delay in filing it and then authorizing the officers exercising jurisdiction, to condone the same on sufficient cause being shown. The question whether the time limit prescribed under the refund provisions in the context of refund claimed could be relaxed/ extended by the authorities, has been considered by the Hon’ble Supreme Court in the case of UOI Vs. Kirloskar Pneumatic Company [1996 (5) TMI 87 - SUPREME COURT OF INDIA], where it was held that The power conferred by Article 226/227 is designed to effectuate the law, to enforce the Rule of law and to ensure that the several authorities and organs of the State act in accordance with law. It cannot be invoked for directing the authorities to act contrary to law - Their Lordships of Hon’ble Gujrat High Court in Indian Oil Corporation Ltd.’s case [2011 (12) TMI 540 - GUJARAT HIGH COURT] laying down the principle that limitation prescribed under Sec.11B of CEA, 1944 is not a procedural one and thus the period laid down thereunder cannot be extended. It can safely be inferred that the period of six months prescribed under Sub. Sec.(3) of Sec.103 of the Finance Act,2016 cannot be extended by the departmental authorities. The Ld. Commissioner(Appeals) has erred in condoning the delay in filing the refund claim by the Respondent - appeal allowed - decided in favor of Revenue.
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2017 (10) TMI 140
Validity of SCN - merger of two SCN - Extended period of limitation - proviso to Sub-section (1) of Section 73 of the Finance Act, 1994 - Held that: - the show cause notice for the extended period cannot be issued on the same facts if earlier show cause notice on the same facts has been issued - both the show cause notices dated 17.03.2010 and 17.05.2010 are not sustainable - appeal allowed - decided in favor of appellant.
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2017 (10) TMI 139
CENVAT credit - Capital goods - duty paying documents - it was alleged that the credit of duty involved in capital goods cannot be passed on or transferred without issuance of proper invoice under Rule 11 of CER, 2002 - time limitation - Held that: - in the present case, the demand is raised by invoking extended period of limitation and the Revenue has already accepted the fact that extended period cannot be invoked, as also by appreciating that the appellant is a Public Sector undertaking and in the absence of any evidence, malafide cannot be attributed to them, it is fit to hold that the demand is barred by limitation - appeal allowed - decided in favor of appellant.
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2017 (10) TMI 138
Refund claim - erroneous deposit of service tax - Time Limitation - Section 11B of the CEA, 1944 - Held that: - the Service Tax was paid under club or association services for which the appellant was registered but there is no finding on the appellant’s plea that they are governed by principle of mutuality - The plea of the appellant that their case is covered by the case of Vidarbha Cricket Association Vs. CCE, Nagpur [2014 (1) TMI 204 - CESTAT MUMBAI (LB)] has also not been discussed and no findings have been given on other judgment relied upon by the appellant - there has been partial application of mind at the level of the Ld. Commissioner (Appeals) in examining the entire issue - matter remitted back to the first appellate authority for fresh consideration denovo - appeal allowed by way of remand.
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2017 (10) TMI 137
Validity of SCN - Time limitation - whether the show cause notice is validly issued by invoking the extended period of limitation? - Held that: - there is no element of suppression, concealment or any action, inaction on the part of the appellant to evade the payment of duty nor any collusion etc., so as to attract the proviso of Section 73(1) of the Finance Act read with Section 11A of the Central Excise Act. Accordingly, we hold that the show cause notice is bad for invoking the extended period of limitation - as per the show cause notice, Revenue have got all the information from the records maintained by the appellant in the ordinary course of the business. Not a single instance of any manipulation or suppression and/or misinformation have been pointed out, save and except the bald allegations made in the show cause notice. CENVAT credit - whether Service Tax input credit was rightly taken by the appellant during the period from 1st January, 2010 till 29th March, 2010, pending approval of the scheme of the demerger by the Hon'ble High Court, which was approved by the order of Hon'ble High Court dated 19 March, 2010? - Held that: - The transfer of the Cenvat Credit under sub Rule (1) and (2) shall be allowed only if the stock of inputs as such or in process, or the capital goods is also transferred along with the factory or business premises to the new site or ownership and the inputs or capital goods on which credit had been availed of are duly accounted for to the satisfaction of the Deputy Commissioner of Central Excise as the case may be the Assistant Commissioner of Central Excise. Further, Rule (3) of Rule 10 indicates that such transfer will be allowed only when input capital goods in respect of which credit was transferred were also transferred to the transferee - Whereas in the present case, the Cenvat Credit in respect of input services was already consumed to a certain extent before 29 March, 2010 - admittedly the dispute arose because of the order of merger dated 1 February, 2008, allowing merger with effect from the retrospective date 01 April, 2006. However, during the material time when Service Tax was discharged by the appellant RSPL, the same was illegally paid and credited to the Government. As such tax paid on input service was held to be correctly utilized by the appellant in terms of Cenvat Credit Rules, 2004 - in view of the admitted fact on record that part of the credit already stood utilized prior to 29 March, 2010 for discharging of Service Tax levied on output services of the 6/7 outgoing channels. Thus, the demand based on the input credit is wholly untenable and misconceived by the learned Commissioner. Whether Service Tax on Reverse Charge Basis under the classification online information and data access or retrieval services falling under Section 65(105)(zzzzb) have been rightly demanded? - Held that: - the appellant did not provide such service as an output service which was allegation in the show cause notice for demanding duty and as such the demand of ₹ 45 lakhs is not maintainable on this score also. The show cause notice to be not maintainable - appeal allowed - decided in favor of appellant.
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2017 (10) TMI 136
Commission, incentives and profit/ overriding commission - taxability - appellant is authorised dealer of Mahindra and Mahindra Ltd. and engaged in purchase and sale of vehicles - whether the activities would be considered as provision of BAS under Section 65(19) of Finance Act or not? - Clearing and forwarding agent service - Held that: - all the receipts received by the appellant herein by whatever name called-commission, incentive, overriding commission are received by way of trade discount, are by way of dealership arrangement on principal to principal basis - SCN is unsustainable - appeal allowed - decided in favor of appellant.
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Central Excise
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2017 (10) TMI 135
Misdeclaration of value - Interest - Penalty - Rule 6 of the Valuation Rules, 2000 - the decision in the case of Tycon Automation Private Ltd., Shri Dinesh Kumar Bhardwaj, Tycon Automation Pvt. Ltd. Versus C.C.E., Noida [2016 (12) TMI 1456 - CESTAT ALLAHABAD] contested - Notices issued.
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2017 (10) TMI 134
SSI exemption - clubbing of clearances - dummy units - demand was issued for wrong availment of benefit of SSI exemption by the appellant, M/s Aero Dynamics Pvt. Ltd. by creating three dummy units so as to distribute the clearance value of parts and components of humidification systems, manufactured and cleared by them during the period in question so as to remain within the exemption limit, prescribed under the said notification - Held that: - In countering the aforesaid findings, the appellant has not placed any evidences before us to show that it has wrongly included the value of certain parts and components, thereby the amount of duty calculated and confirmed is incorrect. In absence of any such evidence before us, there is no reason to interfere with the findings of the Ld. Commissioner on the above issue. The appellant are eligible to the benefit of cum-duty price, as held in the first round of litigation and the said Order has been accepted by both sides as no appeal was filed against the said Order. In the result, the appeal is remanded to the adjudicating authority with a direction to allow cum-duty price benefit and compute the demand accordingly - appeal allowed by way of remand.
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2017 (10) TMI 133
Denial of exemption notification no No.14/2002-CE dated 01/03/2002 - CBEC Circular No.667/58/2002-CX dated 26/09/2002 - Held that: - it is clear that all the textile fabrics used for the manufacture of final products shall be deemed to have been duty paid even without production of documents evidencing payment thereof. As per this explanation it is not required to look into the facts whether the grey fabrics was suffered duty or otherwise and all the fabrics used shall be treated deemed duty paid and accordingly, the condition stands fulfilled - we are of the view that as per explanting (2) of the Notification, when the assesee is not required to prove whether the knitted textile fabrics of cotton used for manufacture of processing fabrics is duty paid or otherwise, accordingly, the grey fabrics used by the appellant is deemed duty paid, Condition No.3 of the Notification stands fulfilled - Appeal allowed.
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2017 (10) TMI 132
Classification of goods - whether the imported goods is cans with leads or it is aluminium semi-finished electrolytic capacitors as contended by the Revenue on the basis of report of technical expert? - whether they are eligible for exemption N/N. 13/1997-Cus. dt. 1.3.1997 (Sr. No.50)? - Held that: - though the technical report was provided to the appellant but the cross-examination could not be conducted for one or other pretext. The appellants have taken this matter very strongly that the reports is very cryptic for the reason that except giving views/opinion that the goods are in the nature of aluminium semi-finished electrolytic capacitors, did not discuss anything above the cans with leads which was admittedly imported though along with other components - the order was passed in violation of principles of natural justice by not conducting the cross-examination of the technical expert namely Shri S.A. Khan, Project Manager of BITS Pilani, and Dr. G.V. Prabhu-Gaunkar, Principal, College of Engineering. If for any reason the cross-examination of these persons are not possible then these reports cannot be taken into consideration for deciding the case. As regard reports of Kiran Electronics and the technical details retrieved from internet from Website of Nichicon Corporation. We are of the opinion that since in the earlier two orders this Tribunal has clearly directed the Commissioner to examine the technical aspect only through the report of Government Institutes/Department of Electronics. Therefore it was not open for Commissioner to rely on the opinion of Kiran Electronics and website, therefore we direct the Commissioner not to rely on these documents - matter related to the issue on exemption N/N. 13/97-Cus remanded to the Commissioner. We direct the Commissioner to first cross-examine authors of the report given by BITS Pilani and College of Engineering, Goa if the cross-examination is not possible the said reports to be ignored and the matter may be decided afresh on the basis of other available records - matter on remand. Whether the modvat credit to the appellant on the aforesaid goods can be denied for want of correct declaration made under Rule 57G of erstwhile Central Excise Rules, 1944? - Held that: - the credit was disallowed by the Commissioner not only on the ground that the appellant have wrongly declared the input as cans with leads whereas the goods was found to be aluminium semi-finished electrolytic capacitors. In this regard, we find that even if it is accepted the appellant have wrongly declared the inputs the modvat credit only for this reason cannot be denied. The fact is that whatever input imported by the appellant was received by the appellant in their factory and used in the manufacture of aluminium semi-finished electrolytic capacitors which was cleared on payment of duty. Since this fact is not under dispute modvat, credit only for want of correct declaration cannot be denied. In terms of amended Rule 57G by N/N. 7/99-CE dt. 9.3.1999, whereby it was clarified that the credit cannot be denied for non-filing of declaration under Rule 57G - the modvat credit is admissible to the appellant - demand set aside. Penalty - Held that: - the issue involved is of grave interpretation on the technical aspect of the product - the major amount relates to the issue on modvat credit which was held to be allowed by us, personal penalty is not warranted therefore the personal penalties imposed on both the persons are set aside. Appeal allowed in part and part matter on remand.
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2017 (10) TMI 131
Valuation - physician samples - Job-work - when the manufacturer as a job worker and manufacturing physician samples for the principal, whether the valuation would be governed by Rule 8 of Central Excise Valuation Rules, 2000 or otherwise? - Held that: - the appellant is engaged in the manufacture of physician sample and supplied to their principal on job work basis by charging the job charges. In this fact the transaction of goods between the manufacturer and the principal is of deemed sale and since there is no actual sale involved the valuations will be governed by Rule 8 of Central Excise Valuation Rules, 2000 - On the identical set of facts, this Tribunal has decided the matter in the case of Cosmo Remedies [2016 (4) TMI 323 - CESTAT MUMBAI] wherein it was held that it is not open to the revenue to demand duty on the value arrived at in terms of rule 4 of the Central Excise Valuation rules - demand set aside - appeal allowed - decided in favor of appellant.
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2017 (10) TMI 130
Refund in cash - N/N. 39/2001-CE dated 31/07/2011 - Held that: - the law clearly lays down the person availing benefit of N/N. 39/2001-CE will utilize the Cenvat Credit only for domestic clearances and if after utilizing the entire credit for such domestic clearances if any duty is paid in cash, the same will be refunded to the manufacturer - In the instant case, the appellants have exhausted their Cenvat Credit on export under rebate in violation of N/N. 19/2004-CE (NT) as amended by N/N.37/2007. Consequently, since the appellants utilized most of their credit available in rebate, they ended up paying part of the duty in cash, for which they have filed the refund claim - no refund in cash allowed - appeal dismissed - decided against appellant.
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2017 (10) TMI 129
CENVAT credit - CVD paid on imported inputs - inputs - Department took the view that appellants were not eligible to avail CENVAT credit in respect of the imported inputs which had been re-exported - Held that: - What is not in dispute is that the imported inputs which had not been used in the manufacture of Relays, for various reasons, have been re-exported. It is not the case that, pursuant to such re-export, appellants have claimed any drawback in respect of duties suffered on the re-exported product or, for that matter, any export benefit thereon. From the facts on record, we find that it appears that they have not claimed even any refund or drawback in respect of the concession rate of customs duty initially paid on the imported inputs - once the imported inputs have been re-exported, this would bring about a legal position as if the said goods had not been imported at all. Appellant also complied with all the provisions of the CIGCRDMEG Rules while effecting re-export of the impugned goods. Identical situation came up in the case of M/s. MRF Ltd. Versus Central Excise and Service Tax [2016 (3) TMI 439 - CESTAT CHENNAI], where it was held that in the Board's circular No.283/117/96 dated 31.12.1996 it has been clearly stated that the credit availed on inputs which are re-exported as such under Bond need not be reversed. Appeal allowed - decided in favor of appellant.
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2017 (10) TMI 128
Clandestine manufacture and removal - MS Ingots - the second show cause notice is pending adjudication - multiplicity of proceedings - Held that: - The appeal is of the year 2010 and it has been pending before the Tribunal. Ahead of the transition of Indirect Tax to GST, this Tribunal has been given a mandate to dispose of all old cases. Viewed in this light, we are of the considered opinion that it would be appropriate and prudent to close the file for the purpose of statistics - the appeal is disposed as file closed.
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2017 (10) TMI 127
Loose Stock - duty liability - whether the loose stock shown in column (in Finishing room) is a finished stock or otherwise in order to levy duty as per rate prevailing prior to 15.12.98 or in term of section 3A after 15.12.98 or otherwise? - Held that: - Once the goods is manufactured in terms of Section 2 (f) which is not in dispute in the present case, the said goods become an excisable goods hence the same is finished goods - Accordingly the loose stock of fabric in the present case is Finished goods and the stock of such Finished goods lying as on 15.12.1998 will attract excise duty at the rate prevailing during the period prior to 15.12.2008 i.e 12% BED & 8% AED - the issue is no longer res-integra as it has been decided against the assessee by Divisional Bench of this Tribunal in the judgment of Vishnu Dying & Printing works [2005 (11) TMI 142 - CESTAT, MUMBAI], where it was held that The loose stock only refers to stock of finished goods which have not been packed as there is a separate entry for finished goods in the packed condition in the RG-1 register - appeal allowed - decided in favor of Revenue.
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2017 (10) TMI 126
Clandestine manufacture - determination of production capacity of machines - Rule 173E of Central Excise Rules, 1944 - Held that: - we do not see any reason to disagree with the findings of the Ld Commissioner, who has rightly held that determination of production capacity of machines installed in other premises would be a futile exercise, as it could not give a correct picture of production capacity of the appellant - appeal dismissed - decided against appellant.
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2017 (10) TMI 125
Clandestine removal - processed fabrics - the documents retrieved from the premises of Kumbharamji Jaluram Verma on 30.12.97 is the foundation of the allegation against the Respondent, as search of their factory premises, on the very same day, neither revealed any discrepancy in the stock of goods nor any incriminating document was also found in their factory premises - Held that: - even though the said documents mentioned various information but the same had not been analysed through proper investigation to ascertain its correctness by the Revenue, therefore, the entries could not be authenticated. Therefore, the entries thereunder remain to be established that the same pertain to the Respondent and the quantity of goods recorded could have been cleared from the factory of the Respondent without payment of duty - Revenue has not carried out investigation properly even though show cause notice was issued much after detection/retrieval of the documents from the residential premises of Shri Kumbharamji Jaluram Verma. It is difficult to digest that there has been no proper attempt also by conducting discreet inquiry/investigation to ascertain the alleged fact of evasion of duty to the tune of around one crore by the department and the investigation was carried out in a hopeless manner for which the officers responsible need to be reprimanded and at least there should be a mandatory procedure in carrying out investigation based on the principles of law settled, instead of leaving to the whims and pleasures of the investigating officers entrusted with the job of protecting public interest and revenue - appeal dismissed - decided against Revenue.
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2017 (10) TMI 124
Principles of Mutuality of interest - scope of 'related person' - whether subsidiary company included within the scope of Related person? - Extended period of limitation - Held that: - after the amendment to Section 4 with effect from 01.7.2000, subsidiary company has been specifically included in the scope of the definition of ‘related person’, hence, to establish mutuality of interest is no more relevant in such cases - the value to be determined as per Rule 8 of the Central Excise Valuation Rules, 2000 on clearances to their subsidiary M/s Raghuvir Exim Ltd. - appeal allowed - decided in favor of Revenue.
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2017 (10) TMI 123
Interest - Penalty - Notification No. 6/2003 dated 1.3.2003 - Held that: - the assessee company in a letter dated 05.05.2003 (Page No. 59 of Appeal Paper book Set -1) to M/s Maruti Enterprises gives the details of the despatched goods for the month of March 2003 to April 2003 and asks for confirmation from their buyers, M/s Maruti Enterprises, that the goods mentioned in the letter bore no logo or brand name. The invoices cum challan also in the name of M/s Maruti Enterprises (given on Page No.60 and 61 of Appeal Paper Book Set-1) also show the said goods as unbranded. BUT the partner of the said buyer, M/s Maruti Enterprises namely Shri Nandlal Meghraj Shah, in his statement (given on Pages 57 & 58 of Appeal Paper Book Set-1) recorded on 11.05.2004 under Section 14 of Central Excise Act, 1944 before the Superintendent (Preventive), Central Excise, Vadodara clearly says that the goods purchased by them are of the brand name "Madhuram" "Chitta Brand", though the same have been mentioned as "Unbranded Goods" in the two invoices - Appeal dismissed - decided against the assessee.
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2017 (10) TMI 122
CENVAT credit - input services - Goods Transport Agency Service - Renting-a- Cab Service - Catering Service - Air And Rail Booking Service - Authorized Service Station - Held that: - for rent-a-cab service, service was indeed related to manufacturing and Business Activity of the appellant - similar issue decided in the case of The Principal Commissioner Versus M/s. Essar Oil Ltd. [2015 (12) TMI 1062 - GUJARAT HIGH COURT] - credit allowed. CENVAT credit - Air & Rail Travel Booking Services - Held that: - the business of any company, travel of their executive and staff is necessary requirement in relation to the various activity of the company such as marketing, purchase etc, therefore travelling of the executive and staff is inevitable to run the business therefore service is related to travelling i.e. Air & Rail Travel Booking Services is necessary service for running the business hence in our view credit is admissible - credit allowed. CENVAT credit - Outdoor Catering Services - Held that: - Since outdoor Catering Service is mandatorily requirement for factory it is part and parcel of the overall manufacturing activity. Accordingly, the Cenvat credit is admissible - credit allowed. CENVAT credit - Authorized Service Station - Held that: - Authorized Service station services availed in respect of the vehicles used by the company for its operations. Company's factory situated outside city limits. Vehicles owned by the Company used by employees and others, hence the service is an input service - credit allowed. Except GTA in all the service credit is admissible - appeal allowed - decided partly in favor of appellant.
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2017 (10) TMI 121
Rectification of mistake - instead of the correct Appeal No. E/55009/2014-EX[DB], M/s Chandpur Enterprise Ltd. versus Commissioner of Central Excise, Meerut-I, they have wrongly mentioned Appeal No. E/56082/2014-EX[DB], which is the Appeal No. of its director Mr. Vipin Kumar Mittal - Held that: - we allow the said Misc. Application for rectification in the cause title of Misc. Application No. E/MISC/70160/2017 - ROM allowed. Rectification in cause title - under the scheme of de-merger M/s Chandpur Enterprise Ltd. have de-merged its Food Division, now known as M/s Emtees Food Ltd. and also its Steel Division, now known as M/s VKM Industries Ltd., pursuant to scheme of de-merger - Held that: - we allow this Misc. Application for change in cause title and allow the change in the name of the appellant M/s Chandpur Enterprises Ltd. to ‘M/s VKM Industries Ltd. - ROM allowed.
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2017 (10) TMI 120
Liability of interest - reversal of CENVAT credit which has been taken by them which is not admissible to them - case of appellant is that they were maintaining sufficient balance in their Cenvat credit account and is not required to pay interest - Held that: - If the appellant is maintaining sufficient balance in their Cenvat credit account, in that circumstances, the appellant is not liable to pay interest in the light of the decision of Hon’ble High Court of Karnataka in the case of CCE vs. Bill Forge Pvt. Ltd. [2011 (4) TMI 969 - KARNATAKA HIGH COURT] for the intervening period. SCN issued by invoking extended period of limitation - Held that: - the show cause notice has been issued by invoking extended period of limitation and the Hon’ble High Court of Punjab & Haryana in the case of Jai Bharat Maruti Ltd. [2013 (10) TMI 355 - PUNJAB & HARYANA HIGH COURT] has held that to demand interest on differential duty, the show cause notices required to be issued within the period of limitation, i.e. one year - SCN not sustainable as is time barred. Appeal allowed - decided in favor of appellant.
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2017 (10) TMI 119
Valuation - it was found that Shri Yunus and Kasim was the labourer are not the manufacturer - Held that: - as per Section 3 of the Central Excise Act, 1944 duty is to be demanded from the manufacturer of excisable goods - In this case, Revenue has failed to ascertain who is the manufacturer of the impugned goods. By filing these appeals, it reveals that Revenue wants demand duty from all the respondents, whereas duty is to be demanded from the manufacturer only and that could be only one person not all person - appeal dismissed - decided against Revenue.
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2017 (10) TMI 118
Abatement - duty paid under Chewing Tobacco and Unmanufactured Tobacco Packing Machines Rules, 2010 - abatement claim was rejected by the learned Commissioner (Appeals) on the ground that the abatement claim sanctioned by the adjudicating authority for November, 2014, the order has been set aside by the learned Commissioner (Appeals) therefore they are not entitled for abatement claim for the month of December, 2014 - Held that: - it is not disputed that the factory of the appellant remains closed during the period from 08.12.2014 to 22.12.2014 for 15 days. As per the Rule 10 of Chewing Tobacco and Unmanufactured Tobacco Packing Machines Rules, 2010, the appellant is entitled for abetment claim of duty paid as their factory remain closed for 15 days - It is the fact on record that on 04th December, 2014 when the appellant paid the duty for the month of December, 2014 the abetment claim for November, 2014 was sanctioned and the same has been utilized for payment of duty for the month of December, 2014 - the appellant is entitled for abetment claim - appeal allowed - decided in favor of appellant.
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2017 (10) TMI 117
Shortage in stock - case of appellant is that the stock taking done on the basis of eye estimation and is not sustainable - Held that: - the method through which said stock taking was conducted has not been indicated in the said Panchnama dated 28.02.2013. Therefore, the contention of the appellant that there was no stock taking carried out but it was only the eye estimation through inspection that 106 MT of Billets were stated to be short cannot be proved to be wrong on the basis of record - appeal allowed - decided in favor of appellant.
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2017 (10) TMI 116
SSI exemption - clubbing of clearances - Revenue entertained a view that the two units owned by the two brothers are one and the same - Held that: - It is well settled law that the two units belonging to two different relations, complete by themselves and independently registered with the tax authorities, cannot be termed to be one and the same units and clearances of the two cannot be clubbed - the appellate authority extended the benefit to the respondents on the ground that both are independent units duly registered independently with the Central Excise department as well as also there is no allegation or evidence of any joint financial inter-tuning between the two. The Revenue in their memo of appeal have not rebutted the said finding of the Commissioner (Appeals) by production of any positive evidence - benefit remains allowed - appeal dismissed - decided against Revenue.
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2017 (10) TMI 115
Validity of subsequent SCN - the present SCN was issued on 13.01.2006 to the same assessee covering period from 03.08.2001 to 20.11.2002 whereas SCN dated 06.07.2005 also covered the period, covered by present SCN - Held that: - it is apparent that the source of information for both the show cause notices is the same - the later SCN i.e. 13.01.2006 was not sustainable since the said SCN dated 13.01.2006 was issued by invocation of proviso to sub Section (1) of Section 11A of CEA, 1944, in view of the ruling by Hon’ble Supreme Court in the case of Nizam Sugar Factory [2006 (4) TMI 127 - SUPREME COURT OF INDIA] - appeal allowed - decided in favor of appellant.
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2017 (10) TMI 114
SSI Exemption - use of Brand name of others - whether PET has used the brand name of another so as to deny the benefit of SSI exemption? - Held that: - There is no dispute that brand name "CASCADE" originally belonged to Swarna Steel Works (SSW) which was a partnership firm with Shri P. Alagesan, Shri A. Mahesh and Smt. A.Swarnalatha as partners. There is no dispute that the very same P. Alagesan is also proprietor in Pratheep Electro Technics (PET) - Various decisions of higher appellate courts have now unequivocally held that benefit of SSI exemption is admissible to a proprietary concern manufacturing excisable goods bearing brand name owned by another partnership firm, in which the proprietor of the first concern is a partner of the second. SSI exemption cannot be denied for the impugned period to PET for use of the brand name "CASCADE" - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (10) TMI 113
Recovery of tax arrears - company in liquidation - whether the respondent can proceed against erstwhile Director of a Public Limited Company for recovery of tax payable by the Company? - Held that: - the proceedings against the company for recovery of the arrears can be done in accordance with law - Section 19 A of the TNGST Act cannot be taken assistance of the respondent for sustaining the order, which provides for the liability to tax of a partitioned Hindu family or dissolved firm. It is further pointed out that Section 19B of the TNGST Act, which provides for liability to tax of a Private Company, on winding up as in the said case, cannot be invoked, as the defaulter was a public limited company. It has clearly stipulated that as against the petitioner who was the erstwhile director of public limited company, proceeding under Section 19B which has been invoked by the respondent for issuing impugned recovery notice, could not have been invoked against the petitioner - recovery notice issued against the respondent invoking Section 19B of the Act, is without jurisdiction - petition allowed. Recovery from petitioner in his individual capacity - Held that: - the impugned assessment orders cannot be given effect to, against the petitioner nor any recovery can be made from him. The petitioner is not required to challenge the impugned assessment orders, as admittedly the defaulting assessee is a Public Limited Company M/s.Union Motors Service Limited - it is made clear that the respondent can proceed against the defaulting company and it is reported that the Company has now been wound up, the respondent is given liberty to file an appropriate claim petition before the Official Liquidator who has been appointed as a provisional liquidator for winding up the said company - petition closed. Petition allowed - decided in favor of petitioner.
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2017 (10) TMI 112
Validity of assessment order - TNVAT Act - the petitioner has not cooperated with the assessment proceedings and has not produced the reconciliation statement to enable the Assessing Officer to complete the assessment - Held that: - if the materials are placed in the petitioner's business premises, then obviously, invoices ought to have been raised in the name of the petitioner or else, it should have been shown as a product for demonstration purpose only and would be taken back by the manufacturer/supplier. However, these facts have to be established by the petitioner before the Assessing Officer, for which purpose, they are bound to produce the entire details of stock, more particularly, the closing stock details along with item code-wise reconciliation statement - this Court is of the view that one more opportunity could be granted to the petitioner to go before the assessing officer for producing all the necessary documents - petition allowed by way of remand.
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Indian Laws
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2017 (10) TMI 145
Arbitration proceedings - whether the Division Bench was justified in considering the arbitrability of the dispute for the first time in the appeal? - Held that:- Intervention of the court is envisaged only in few circumstances like fraud or bias by the Arbitrators, violation of natural justice. The court cannot correct the errors of the Arbitrators. Division Bench was not justified while considering the arbitrability of the disputes for the first time, particularly, when the respondent has not urged the issue relating to ‘No Claims Certificate’ before the Chief Justice, Arbitral Tribunal or before the learned Single Judge. Whether the Arbitral Tribunal was justified in awarding interest on the delayed payments in favour of the appellant? - Held that:- It is clear that the appellant is not entitled for any interest on the amount awarded by the Arbitral Tribunal. The Arbitral Tribunal had determined the amount payable to the appellant in a sum of ₹ 11,13,136/- and interest of ₹ 12,44,546/-. A sum of ₹ 38,82,150/- was deposited by the respondent which includes the award amount, interest for the pre-reference period, pendente lite and post-award interest. We have held that the appellant is not entitled for any interest. The appellant has already withdrawn 50% of the amount deposited by the respondent, which is in excess of the award amount exclusive of interest. Having regard to the facts and circumstances of the case, we deem it proper to direct the respondent not to recover the excess amount withdrawn by the appellant. Ordered accordingly.
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2017 (10) TMI 144
Dishonor of cheques - Commission of offence punishable under Section 138 of NI Act - deposit the compensation amount as ordered by the trial court and first appellate court - Held that:- It is obligatory on the part of the court to pass an appropriate order in regard to awarding sentence so the order to pay compensation may be enforced. In the present, case the petitioners are deliberately flouting the judgment of the first appellate court. In this view of the matter, it is directed that the petitioners shall deposit the amount of compensation of ₹ 53,76,000/- as awarded by the first appellate court within three weeks before the trial court minus ₹ 6 lacs as deposited before the trial court earlier, failing which this petition shall stand dismissed automatically without reference to the Court.
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2017 (10) TMI 143
Offences under sections 7 and 8 r/w Section 13(d) of the Prevention of Corruption Act and Section 120-B of IPC - Held that:- On perusal of the record and hearing the parties at the stage of discharge under Section 227 of Cr.P.C., if the Judge is of the opinion that there is ground for presuming that the accused has committed an offence, he is competent to frame charge for such offence even if not mentioned in the charge sheet. The court below has dealt in detail each and every fabric of charge sheet material to come to the conclusion that there are grounds to frame the charge against the accused No.1 for the offences under Section 120-B of IPC and sections 7 and 13 (1)(d) r/w Section 13(2) of the P.C. Act and against accused No.2 for the offences under Section 120-B of IPC and Section 8 of the P.C. Act r/w Section 120 of IPC. The offence under section 120-B of IPC i.e. conspiracy cannot be expected to be proved by direct evidence. Generally, as a matter of prudence, it can only be construed on the basis of the circumstantial evidence and in connection with the allegation attributed against each of the accused. The order of the court below is well reasoned, not warranting revisional jurisdiction of this court.
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2017 (10) TMI 142
Commission of offence punishable under Section 138 read with Section 141 of NI Act - Whether criminal liability under Section 141 of the N.I.Act cannot be fastened against the Partner or a Director, who at the time of commission of offence was a sleeping Partner or ladies as well as others, who may not be knowing anything about the business of the Firm? - Held that:- It is well settled that there needs to be averment in the complaint that Partner of Firm or Director of the Company was in-charge of and was responsible to the Firm or the Company, as the case may be for conduct of the business of the Firm/Company, as the case may be. The basic requirement under Section 141 of the N.I.Act is to make specific averment in the complaint that accused Partner or Director who was neither signatory to the cheque nor the Managing Director or Managing Partner, as the case may be, at the time of commission of offence was incharge of and responsible to the Firm or Company for conduct of business. It is categorically averred by respondent No.2/original complainant in paragraph Nos.2 and 5 of the compliant that petitioner/accused No.4 was incharge of and was responsible for the affairs of the Partnership Firm in its day to day conduct of business. It is further averred that even cheques were issued with the knowledge and consent of all accused persons, who had taken active part in the transaction. These averments are certainly sufficient to put the writ petitioner/accused for trial. He may, on his part, establish that the offence was committed without his knowledge or that he had exercised due diligence to prevent the commission of offence, but that will be the subject matter of the defence in the trial and such defence may be established by cross-examining the complainant or by adducing defence evidence. He may point out at the trial that he is just a sleeping partner of the firm. At this stage, what is required to be considered is whether there is sufficient ground for prosecuting the writ petitioner/accused No.4 and that ground is established by averments made in the complaint. Mere averments in the petition that the writ petitioner/accused No.4 was a sleeping partner having no knowledge of the transaction in question is not sufficient to quash process issued against him. This defence will have to be established during the trial. Writ petitions are devoid of merit and the same are dismissed
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