TMI Tax Updates - e-Newsletter
November 15, 2016

Case Laws in this Newsletter:

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

Articles

1. GST: 10 POINT SERIES ON TAX INVOICE

   By: Puneet Agrawal

2. Withdrawal of Service tax exemption on cross border B2C online information and database access or retrieval services w.e.f. December 1, 2016

   By: Bimal jain

3. GST: 10 POINT SERIES ON ENROLMENT OF EXISTING TAXPAYERS UNDER GST

   By: Puneet Agrawal

News

1. The Prime Minister Shri Narendra Modi reviewed the position regarding the supply and availability of currency notes yesterday late evening and took certain decisions to further activate the dispensing of cash through the networks of Banking Correspondents (BCs), Post Offices, ATMs, Banks and E-payment systems

2. Constitution of Task Force for enabling dispensation of Mahatma Gandhi (New) Series Banknotes - Recalibration and reactivation of ATMs

3. Finance Ministry reviews the position regarding availability and distribution of all denomination of bank notes in different parts and regions of the country; Issuance of the new series of ₹ 500/- notes commenced; Instructions issued to the Banks and Post Offices to ensure proper distribution of all denomination notes including small denominations up to the last mile including through mobile banking vans and Banking Correspondents (BCs)

4. Issue of ₹ 500 banknotes inset letter ‘L’ in Mahatma Gandhi (New) Series

Circulars / Instructions / Orders

DGFT

1. 43/2015-2020 - dated 11-11-2016

Inclusion of new Regional Office of DGFT at Vijayawada, Andhra Pradesh in Appendix-1 A of Foreign Trade Policy, 2015-20

Highlights / Catch Notes

Income Tax

• Assessing Officer Must Follow Legal Fiction to Logical Conclusion in Tax Matters for Consistent Analysis.

  Case-Laws - HC : Scoped of inquiry/scrutiny made by AO - It is undoubtedly aphorism that a legal fiction ought to be taken to its logical conclusion and the mind should not be allowed to boggle. This merely implies that a fiction should logically take a direction; the train of thought however cannot divert elsewhere. - HC
  Visit to Get Source

  ---

• High Court Upholds ITAT Decision: AO Must Refer Rent Valuation to Officer, Follow Rent Control Act Principles.

  Case-Laws - HC : Reference of matter to the Valuation Officer - Instead of leaving any discretion in the hands of the AO in working out, all that the Tribunal did was to direct the AO to get guided by the principles contained in the Rent Control Act in the matter of fixation of fair rent - Order of ITAT upheld - HC
  Visit to Get Source

  ---

• Income Tax Addition Based on Unexamined Statement Deleted Due to Lack of Assessee's Cross-Examination Rights.

  Case-Laws - AT : Addition on account of commission out of accommodation business activities - the addition made on the basis of the statement collected at the back of the assessee and the right of cross examination was not provided to him - additions made deleted - AT
  Visit to Get Source

  ---

• 15% interest from August 2000 to November 2001 included in sale consideration, treated as capital gain, not interest income.

  Case-Laws - AT : Nature of receipt of Penal interest - the additional amount received by the assessee being 15% interest from 8.8.2000 to 22.11.2001 is part of sale consideration and accordingly will be treated as part of capital gain and not the income from interest. - AT
  Visit to Get Source

  ---

• AO Can Question Assessee's Documents u/s 68 Without Probing Source of Source.

  Case-Laws - AT : Addition u/s 68 - AO is an Investigation Officer and if the assessee files some documents, it is within the investigation power of the AO to raise questions on those documents. It cannot be held to be amounting to exploring the source of source. - AT
  Visit to Get Source

  ---

Customs

• High Court Grants Duty Remission for Completely Destroyed Warehoused Goods u/s 23(1) of Customs Act, 1962.

  Case-Laws - HC : Remission of duty u/s 23(1) of the Customs Act, 1962 - warehoused goods were completely destroyed in the fire - Department never disputed the fact that the goods were destroyed - remission of duty allowed - HC
  Visit to Get Source

  ---

• High Court Confirms Appellate Tribunal's Decision Allowing Star Export House to Sell Duty-Free Products Domestically Under Policy.

  Case-Laws - HC : Status holder in Star Export House - Whether the Appellate Tribunal is correct in holding that in terms of para 4.1.3 and para 4.1.5 of the Foreign Trade Policy 2004-2009 the appellants could have cleared the resultant products manufactured out of duty free inputs in the domestic market before fulfillment of the export obligation? - Held Yes - HC
  Visit to Get Source

  ---

• Court Upholds Constitutional Validity of Regulation 6(1)(1) for Cargo Handling; Dismisses DIAL's Claims of Operational Losses.

  Case-Laws - HC : Constitutional validity of Regulation 6(1)(1) of the Handling of Cargo in Customs Areas Regulations, 2009 - the grievance that Regulation 6 can potentially render DIAL’s functioning unviable and result in losses to it, has to fail. - HC
  Visit to Get Source

  ---

Service Tax

• High Court rules writ petition unsuitable for resolving factual disputes over service tax notice issued to property, not assessee.

  Case-Laws - HC : Challenge to the order confirming the demand of service tax - SCN notice issued in the name of property and not in the name of assessee - Renting of Immovable Property Service - writ petition cannot be entertained to adjudicate disputed questions of facts raised by the petitioner - HC
  Visit to Get Source

  ---

• Appellant-assessee denied service tax exemption due to undisclosed work; extended limitation period applies for tax assessment.

  Case-Laws - HC : Appellant-assessee is not exempted from service tax as claimed - assessee does not disclose the work at all and there was a clandestine suppression of facts on his part, therefore, extended period of limitation was available to the Revenue - HC
  Visit to Get Source

  ---

• Assessee Claims Exemption as Commission Agent Under Notification 13/03-ST Despite Conducting Marketing Surveys for Orders /03ST.

  Case-Laws - AT : Claiming exemption under the notification number 13/03-ST - As much as the assessee gets the commission only when the product stands purchased by the Customer, they have to be held as commission agent, irrespective of the fact that for procuring such orders from the buyers they were doing marketing survey also - AT
  Visit to Get Source

  ---

• Tribunal Reverses Decision Favoring Assessee After Apex Court Denies Stay Request.

  Case-Laws - AT : Tribunal has recalled the order passed by the it in favor of assessee after the decision of Apex court refusing to grant stay - AT
  Visit to Get Source

  ---

• Value of Goods Excluded from Taxable Services; Revenue's 80/20 Division Argument Lacks Evidence; Demand Set Aside.

  Case-Laws - AT : Applicability of notification No. 12/03-ST dated 20.6.03 - Exclusion of value of goods from taxable services - Revenue's contention that such bifurcation of 80% and 20% is artificial is not based upon any evidence - demand set aside - AT
  Visit to Get Source

  ---

Central Excise

• High Court Confirms Kanpur Excise Letter of May 9, 2013, Is Non-Binding and Not a Directive Nationwide.

  Case-Laws - HC : Letter dated 9.5.2013 sent by Additional Commissioner, Central Excise, Kanpur is not a direction to superior authorities across the country but only communication of certain facts and authorities are free to proceed in any manner, in accordance with law, independently, and said circular is not binding on any such authority - HC
  Visit to Get Source

  ---

• CENVAT Credit Allowed Across Units: Input Service Tax Can Be Paid at a Different Location.

  Case-Laws - AT : CENVAT Credit - Merely because the input service tax is paid at a particular unit and the benefit is sought to be availed at another unit, the same is not prohibited under law. - AT
  Visit to Get Source

  ---

• Court Grants Common Central Excise Registration for Two Lead Ingot Units Across the Road from Each Other.

  Case-Laws - AT : Denial of common registration - manufacture of lead ingots - Whether appellant are eligible to a common Central Excise registration for their two units situated across a road? - Held Yes - AT
  Visit to Get Source

  ---

Case Laws:

• Income Tax

• 2016 (11) TMI 457
  Penalty u/s 271(1)(C) - Surrender of a claim - amnesty to the assessee against the penalty - whether there been no scrutiny in the case, there would have been no question of any surrender by the assessee? - Held that:- There is no allegation on record which suggests that the assessee had made any incorrect, erroneous or false details in his returns, which would result in invitation of the penalty under section 271(1)(C) of the Act. The court below have recorded that no inaccurate particulars were furnished by the assessee and the penalty has been deleted on account of the fact that the provision of section 271((1)(C) of the Act were not attracted in the case. - Decided in favour of assessee

  ---

• 2016 (11) TMI 456
  Entitlement to claim benefit of Section 10A - Transfer of computer software by the Indian branch to the head office - whether can be said to be ‘sale’ to the head office out of India - whether as the software is developed by the branch as per the requirement of Head Office and not sold to any third party? Held that:- In this case the AO carried out the exercise mandated by Section 10A(7) read with Section 80-IA(8). Consequently the particulars of the price or cost reported by the assessee were not binding or conclusive but rather they attained finality in the assessment proceedings, after due addition. It underwent further inquiry/scrutiny under Chapter X of the Act. It is undoubtedly aphorism that a legal fiction ought to be taken to its logical conclusion and the mind should not be allowed to boggle. This merely implies that a fiction should logically take a direction; the train of thought however cannot divert elsewhere. The absence of a “deemed export” provision in Section 10A similar to the one in Section 80HHC does not logically undercut the amplitude of the expression “transfer of goods” under Section 80-IA(8) – which is now part of Section 10A. Such an interpretation would defeat Section 10A(7) entirely. Substantial questions of law framed are to be answered in favour of the assessee and against the Revenue.

  ---

• 2016 (11) TMI 455
  Reference of matter to the Valuation Officer to ascertain the rent of the building after applying the provisions of Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 - Held that:- The formula contained for fixation of fair rent under the Rent Control Act is, what is now directed to be 'adopted' for the purpose of arriving at a reasonable rental value the property leased out by the assessee would fetch. Instead of leaving any discretion in the hands of the Assessing Officer in working out, all that the Tribunal did was to direct the Assessing Officer to get guided by the principles contained in the Rent Control Act in the matter of fixation of fair rent. No legal infirmity in the order passed by the Tribunal warranting our interference - Decided against the assessee.

  ---

• 2016 (11) TMI 454
  Confirmation of penalty u/s. 271(1)(c) - additions pertaining to sale of PCBs and closing stock in finished goods - Held that:- It is the action of AO in bringing into tax, sale recorded in next year as ‘sale’ of this year on the reason that goods were shown as ‘discharged’ in the RG1 Register. In fact, there is no concealment as such. It is only the question of year of taxability. With reference to three Shock Pulse Analysers valued at Rs. 3,10,802/- again it is the RG1 Register which is the basis for AO’s action and assessee’s contentions that this stock was part of work-in-progress has not been disproved. It may be that it does not have much tax effect in assessee’s case, therefore, assessee has not pursued the litigation, but as the facts indicate assessee’s contentions that the same value was shown in work-in-progress and the addition is a double addition have not been invalidated. Considering these, we are of the opinion that these two amounts certainly does not fall in the category of concealment of income and therefore, penalty cannot be levied on the above two amounts. - Decided in favour of assessee Disallowance of 80-IA - Held that:- Assessee has acquired the property earlier in 01-04-1992 and the EMC Electronik unit was set up in AY. 1992-93. It was submitted that it has complied with all the conditions of Section 80-IA. This being the third year of the claim, AO analysed that assessee purchased second hand machinery and disallowed the claim. It is to be noted that claim u/s 80-IA was allowed by the Ld.CIT(A) after due examination by him. On further appeal by Revenue, ITAT however, has not allowed the claim. This shows that it is mere rejection of a claim. Mere disallowance of a claim does not come within the purview of ‘concealment of income’. It can also do not form under the category of ‘furnishing of inaccurate particulars’. See COMMISSIONER OF INCOME-TAX Versus RELIANCE PETROPRODUCTS PVT. LTD. [2010 (3) TMI 80 - SUPREME COURT] - Decided in favour of assessee

  ---

• 2016 (11) TMI 453
  Claim of depreciation - AO has disallowed the depreciation on the ground that machine has not been put to use in the year under consideration - Held that:- Machine was ready to use in the year under consideration on 15.03.2004 as evident from the testing report which is placed on page 7 of the paper book. In similar facts and circumstances, several courts have decided this issue in favour of assessee. In holding so we find support from the judgment of Hon’ble High Court of Calcutta in the case of CIT Vs. Union Carbide (I) Ltd. [2002 (2) TMI 95 - CALCUTTA High Court ] wherein held Once it is shown that the assessee has put the machinery to use for the purpose of its business, further enquiry about the degree or type of use is not permitted by the language of s. 32-Once the assessee can establish bona fide use of machinery for the purpose of its business, the assessee establishes its right to claim depreciation-. - Decided in favour of assessee Disallowance on account of interested on the borrowed fund and management fees - Held that:- As we have already decided the first ground of appeal of the Revenue in favour of assessee by observing that the impugned machineries were entitled for the depreciation in the year under consideration. As the said equipment was undoubtedly put to use on and from 14.03.2005. The suspicion of the AO that the machines were under trial is unfounded and in contradiction to the documentary evidence in respect of the said installation. The acceptance report and the confirmation on behalf of the seller speaks unequivocally that the machine was in workable condition from 14.3.2005 and under no circumstances, it may be said that it was under trial. This is because of the simple reason that no customer would accept the report from under trial machine at reasonably high cost. Such report may be faulty and unacceptable. So, whatever the AO concluded was not based on fact but was on the basis of his surmise and conjecture Following the same analogy we do not find any reason to interfere in the order of ld. CIT(A) and accordingly, the inter-connected issues raised by Revenue is dismissed.- Decided in favour of assessee Expenditure incurred in repair on rented property - Held that:- We find that assessee was admittedly running its business from rented premises and repair expenses were incurred in the rented premises only. In such circumstances, various courts have decided this issue in favour of assessee. Unabsorbed depreciation carried forward - Held that:- Where there is current depreciation for such succeeding year the unabsorbed depreciation is added to the current depreciation for such succeeding year and is deemed as part thereof. If, however, there is no current depreciation for such succeeding year, the unabsorbed depreciation becomes the depreciation allowance for such succeeding year. Thus any unabsorbed depreciation available to an assessee on 1st day of April 2002 (A.Y. 2002-03) will be dealt with in accordance with the provisions of section 32(2) as amended by Finance Act, 2001. And once the Circular No.14 of 2001 clarified that the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from A.Y.1997-98 upto the A.Y.2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever. See GENERAL MOTORS INDIA PVT. LTD Versus DEPUTY COMMISSIONER OF INCOME-TAX [2012 (8) TMI 714 - GUJARAT HIGH COURT ]

  ---

• 2016 (11) TMI 452
  Claim of deduction u/s 10AA disallowed - retrospective amendment effect - Held that:- By the virtue of the retrospective amendment, instead of Rs. 2000 (total turnover) being taken for the computation of deductible export profits, Rs. 500 (total turnover of the undertaking) is to be taken. This means that the eligible profits for deduction will be Rs. 100 and not Rs. 25. Now by the retrospective amendment to Section 10AA (7) by the Finance Act 2010 the benefit conferred on to the assessee from 1/4/2010 has been made applicable from 1/4/2006 and shall apply to Assessment Year 2007-08 also. The assessee had made payment of Rs. 84,38,357/- as professional and legal charges in relation to taking over the business from Hindustan Motors Ltd incurred during Assessment Year 2006-07. As the expenditure was incurred for the purpose of acquiring a capital asset it was not claimed as revenue expenditure by the assessee. The said professional charges were disallowed by the Assessing Officer but CIT(A) in its finding correctly held that if there is a retrospective amendment then authority with whom the matter is pending becomes legally duty bound to follow the amendment in letter and spirit. Thus, the CIT(A) allowed the additional ground and directed the Assessing Officer to grant the relief u/s 10AA of the Act. Depreciation claim on legal and professional charges - Held that:- The professional charges have to be allowed because the expenses incurred by the assessee was as per the agreement and it was not Hindustan Motors which was incurring the expenses. It actually forms the part of actual cost of the acquisition. Therefore, CIT(A) was right in allowing claim of depreciation

  ---

• 2016 (11) TMI 451
  Addition on account of commission out of accommodation business activities - addition made on the basis of the statement collected at the back of the assessee and the right of cross examination was not provided - Held that:- In pursuance to the search conducted Mr. Himanshu Verma was examined by the Investigating Authority on 14.4.2012 and in his statement he admitted that various Chartered Accountant acted as middlemen for commission and a list of 13 Chartered Accountant was given in which the name of the assessee was appearing against Serial No. 10 alongwith his mobile number. On the basis of the statement of Sh. Himanshu Verma that in the absence of any evidence the AO made the addition on account of commission for providing accommodation entries @ 0.15% of Rs. 2.47 crores computed at Rs. 37,12,500/- and made the addition in the case of the assessee. As find considerable cogency in the contention of the Ld. Counsel of the assessee that merely on the basis of the statement of Sh. Himanshu Verma the addition in dispute has been made in the hands of the assessee which is contrary to the various decisions rendered by the Hon’ble Supreme Court of India, Hon’ble High Court and the Tribunals. Revenue Authority has not provided any statement of Sh. Himanshu Verma recorded during Survey to the assessee and no opportunity of cross examination has been given to the assessee which is not sustainable in the eyes of law, in view of the Hon’ble Supreme Court decision in the case of Kishinchand Chellaram vs. CIT (1980 (9) TMI 3 - SUPREME Court ) wherein it has been held that evidence collected at the back of the assessee has to be confronted to the assessee to give him opportunity to rebut the evidence, otherwise, same is not admissible. Also in Andaman Timber Industries vs. Commissioner of Central Excise reported in (2015 (10) TMI 442 - SUPREME COURT ) wherein the assessee is entitled for cross examine the witness. I note that the Hon’ble Apex Court concluded that not allowing assessee to cross-examine, amounting to serious flaw which make impugned order nullity and violation of principles of natural justice. Thus the addition made on the basis of the statement collected at the back of the assessee and the right of cross examination was not provided to him, hence, delete the addition in dispute made by the AO and confirmed by the Ld. CIT(A) - Decided in favour of assessee

  ---

• 2016 (11) TMI 450
  Adoption of profit @10% of the undisclosed contract receipt - Held that:- The impugned undisclosed receipt was on account of payments directly made by the parties of assessee to the truck owners and tax was deducted at source in the name of assessee. There was a reasonable cause on the part of assessee in not being able to enter such direct payments to truck owners in its books of account. Further the impugned gross receipt cannot be treated as income as it is in the nature of freight charges and the profits element in the impugned receipt can only be taxed and not the gross amount. Therefore, ld. CIT(A) has rightly sustained the addition to the extent of 10% of the gross receipt. - Decided against revenue Unexplained on account of unexplained cash deposit - Held that:- As the impugned bank account in which cash has been deposited has been shown in the regular books of account and all the debits and credits in this bank account have been reflected in the related account in the books and the closing bank balance of SB account is also shown in the audited balance sheet as observed by ld. CIT(A). Certainly there is no element of unexplained cash credit so as to invoke provisions of section 68 of the Act as the impugned amount of Rs. 39,21,381/- is duly explained either as business receipt or out of regular cash withdrawal. We therefore, find no reason to interfere with the order of ld. CIT(A) and uphold the same. - Decided against revenue

  ---

• 2016 (11) TMI 449
  Revision u/s 263 - eligibility for deduction u/s 80IA - Held that:- In the given facts and circumstances of the case, Assessing Officer was having two legal possible views of either treating the assessee as a developer or a works contractor and on the basis of details available, ld. Assessing Officer treated the assessee as a developer eligible for deduction u/s 80IA of the Act. In view of this, it can be said that the assessment u/s 143(3) of the Act is neither erroneous nor prejudicial to the interest of Revenue. Accordingly, we disagree with the finding of ld. CIT and set aside his order u/s 263 of the Act and restored the assessment order u/s 143(3) of the Act. Therefore issue raised in this appeal is decided in favour of assessee. Accordingly, the appeal of assessee is allowed. Deduction under section 80-IA - Held that:- Assessee is not merely a contractor but a developer looking to the scope of activities undertaken by it for the completion of the project and, therefore, eligible for deduction u/s 80IA of the Act. Disallowance of business loss - Held that:- From going through the observation of ld. CIT(A) we find that impugned transaction of giving bank guarantee to Rajkamal Builders was in the course of business for carrying out of the contract for construction of water treatment of GWSSB & ADB and amount of Rs. 17,77,540/- was outstanding to be received has been claimed as business loss as there was no possibility to recover the same. However, these facts could not be proved by the assessee with the support of necessary documents. Ld. AR has made a request for setting aside the issue for examination to which ld. DR did not object. Therefore, we set aside this issue to the file of Assessing Officer for the purpose of verification of necessary evidence/documents which will be submitted by assessee. Disallowance u/s 2(24)(x) r.w.s. 36(1)(va) of the Act towards non-payment of employees contribution to the Government- Held that:- CIT(A) has rightly disallowed the expenditure of employees contribution to P.F. deposited after the due date

  ---

• 2016 (11) TMI 448
  Penalty u/s 271(1)(c) - addition made on the basis of estimation - Held that:- As per the settled law penalty proceedings are different from assessment proceedings because the standard of proof required for imposition of penalty is different from that on which an addition could be maintained. Mere addition to the income of the assessee does not mean that the assessee has concealed. Thus this is not a fit case where penalty can be imposed under section 271(1)(c) of the Act for concealment of income or for furnishing incorrect particulars of income. - Decided in favour of assessee

  ---

• 2016 (11) TMI 447
  Nature of receipt of Penal interest - additional consideration for the delay in the open offer as per the SEBI Regulations - whether had to be taxed as interest income or capital gain - Held that:- In the case in hand the interest is received in pursuance to the directions of the SEBI and due to delay in completion of the process of buy back of shares as prescribed under the SEBI regulations. The real acquisition of shares took place only in the month of November 2001 and prior to the said date it cannot be said that the interest was paid due to delay in the payment of consideration. Therefore, we held that the additional amount received by the assessee being 15% interest from 8.8.2000 to 22.11.2001 is part of sale consideration and accordingly will be treated as part of capital gain and not the income from interest.

  ---

• 2016 (11) TMI 446
  Effect of retrospectivity of Section 40(a)(ia) - taxes paid to the credit of Central government before the due date of filing of return - Held that:- We have observed that the assessee has made payment to contractors and also on account of brokerage and professional fees which were made before 1-3-2007 i.e. within first eleven months of the financial year 2006-07 and taxes were deducted at source under Chapter XVII-B of the Act and admittedly the said taxes deducted at source were deposited to the Credit of Central Government by the assessee after the end of financial year 2006-2007 but before the due date of filing of return of income u/s 139(1) of the Act. It is an undisputed position that the assessee has duly paid the taxes deducted at source under Chapter XVII-B of the Act during the first eleven months of the financial year ended 31-03-2007 before the due date of filing of return u/s. 139(1) of the Act . Section 40(a)(ia) was amended by Finance Act, 2010 whereby under the amended provisions, the tax deducted at source under Chapter XVII-B of the Act if paid to the credit of Central government before the due date of filing of return u/s 139(1) of the Act, no disallowance u/s. 40(a)(ia) of the Act is called for . The decisions relied upon by the assessee supports the claim of the assessee, we hold that the assessee having made payment of tax deducted at source in the first eleven month of financial year ending 31-03-2007 to the credit Central Government before the due date of filing of return of income u/s. 139(1) of the Act, no disallowance can be made u/s 40(a)(ia) of the Act and accordingly we delete the disallowance made by the A.O. by holding that the amendment made by the Finance Act, 2010 to Section 40(a)(ia) of the Act is retrospective - Decided against revenue

  ---

• 2016 (11) TMI 445
  Addition u/s 68 - borrowed fund from depositor - creditworthiness of the depositor had not been proved by the assessee - Held that:- In this case, after discharging of initial onus, ld. AO raised serious concerns about the claim of the assessee, its veracity and genuineness. These concerns have not been replied by the assessee. Ld. CIT(A) without adverting to these crucial facts has gone on a tandem to hold that the source of source cannot be examined by the AO. The fact of the matter is that the AO intended to verify the correctness of the claim canvassed the assessee himself. The assessee did not endeavour to examine the source of source on its own. The ld. AO is an Investigation Officer and if the assessee files some documents, it is within the investigation power of the AO to raise questions on those documents. It cannot be held to be amounting to exploring the source of source. Therefore, in our considered opinion, the assessee has failed to meet with the rebuttal of the ld. AO as enshrined in Section 68 thus the onus which shifted to assessee has not been discharged. - Decided against assessee

  ---

• 2016 (11) TMI 444
  Addition of all sundry creditors - denial of natural justice - AO issued a show cause to assessee on the basis of statements of two creditors and added all the sundry creditors to the income of assessee without allowing any opportunity to assessee to cross examine the creditors - Held that:- According to settled legal proposition in case Revenue collected material behind the back of the assessee and used the same against him and no opportunity was given to him to cross the person whose statement has been used against the assessee for making the addition. Then it is clear violation of principles of natural justice justifying deletion of addition. In view of above, CIT(A) rightly observed that Assessing Officer was not justified in making the addition of entire sundry creditors to the income of assessee on the basis of inquires conducted from only two creditors. The purchase and sales reflected in the audited books of accounts have been examined and accepted. There is no adverse inference in respect of any entry relating to sale, purchase or payments made to creditors. Assessee filed confirmatory letters of balances of all creditors, who have been paid off in subsequent years. The confirmatory letters filed by assessee include the confirmatory letters of the two creditors whose statements have been recorded by Assessing Officer. The two creditors, whose statements were recorded, were not allowed to be cross-examined by assessee. - Decided in favour of assessee

  ---

• 2016 (11) TMI 443
  Depreciation admissible on new induction of motor car in the block of assets - commercial v/s personal use - assessee claimed depreciation at the rate of 50%/2 i.e. 25% as vehicles were not used for 365 days in the previous year - The AO granted depreciation at the rate of 15% - Held that:- AO has granted depreciation at the rate of 15% without examining relevant provisions. It appears that his finding is based upon his experience and past impression. He was of the opinion that once Board has not granted higher rate of depreciation to cars, which are put in the business of hiring, then how a partner, who used motor car for the purpose of business can be granted at a such rate. In the case he had an impression, higher rate of depreciation at the most could be granted to the car used for the public transportation for the people. On appeal, the ld.CIT(A) observed that CBDT has amended I.T. Rules by Income Tax (Third Amendment) Rules, 2009 and new Appendix has been introduced. The ld.CIT(A) made reference to Notification no.10/2009 dated 19.1.2009 and also para-6 of the said notification which gives definition of commercial vehicle. I have examined this notification available on page no.1.426 of Income Tax Rules (3rd Edition) of Taxmann i.e. 2016 edition. Paragraph-6 contemplates definition of “commercial vehicle”. This paragraph is available at page no.1.433 of the Taxmann’s Income Tax Rules and find it is verbatim same as considered by the ITAT, Mumbai in Daleep S. Chandnani Versus Assistant Commissioner of Income-tax, Circle 4, Kalyan [2006 (10) TMI 262 - ITAT MUMBAI ]. There is no such condition that vehicle would qualify as “commercial vehicles” when licensed to be used as public transport - Decided in favour of assessee

  ---

• 2016 (11) TMI 442
  Addition u/s 68 - shares purchased out of the gain received - reopening of assessment - contention of the assessee that the speculation gain earned on sale and purchase of shares of Mastek Limited and Wipro Limited was invested in making investment in shares of Buniyad Chemicals Limited and Talent Infoways Limited - Held that:- As contented by the assessee that said speculation gain on purchase and sale of shares of Mastek Limited and Wipro Limited had already suffered taxation as the assessee offered the same for taxation in the return of income filed with the Revenue but no evidence to support these contention to demolish the findings and conclusions of learned CIT(A) has been filed before us . Thus, in present scenario based on factual matrix of the case as culled out from the records, the matter need to be set aside and restored to the file of the AO for the purposes of verification of the contention of the assessee that the assessee had in fact invested speculation gain of Rs. 1,00,044/- earned on sale and purchase of shares of Mastek Limited and Wipro Limited on 10-04-2003 in making investment in the shares of Buniyad Chemicals Limited and Talent Infoways Limited and if this contention of the assessee is found to be correct then the addition of Rs. 1,00,518/- as made by the AO and confirmed/sustained by learned CIT(A) shall stand deleted. - Decided in favour of assessee for statistical purpose.

  ---

• Customs

• 2016 (11) TMI 469
  Advance licence - Duty Exemption Scheme - DEEC - invocation of Section 11(2) of FTDR Act, 1992 - Held that: - We do not find any substance even in the contention that the show cause notices being silent about the proposed levy of penalty, it is not open to the respondents to invoke Section 11(2) of FTDR Act, 1992. On a perusal of the show cause notices, we found that the petitioner was put on notice that it failed to submit the documents to prove the fulfilment of export obligation. It is also relevant to note that the show cause notice dated 01.12.2009 was in fact issued under Section 14 of the FTDR Act proposing to take action under Section 11(2) for non-fulfilment of export obligation against the advance licence dated 22.12.1999. Hence, the allegation that the show cause notices were silent about the action proposed has no factual basis. - The contention that the Directors of the appellant company should not have been made liable also deserves no consideration since none of the Directors approached this Court. Appeal dismissed - decided against appellant.

  ---

• 2016 (11) TMI 468
  Proceedings against the officer of the department - Inflation of value of exported goods - bar u/s 155(2) of the CA, 1962 - Section 40 of the Central Excise Act, 1944 - Held that: - The words "no proceeding" appearing in sub- section (2) of Section 155 of the Customs Act, in my humble opinion, do not include criminal prosecution, as for the protection pertaining to prosecution, there is specific provision under sub-section (1) of Section 155 of the Customs Act. Sub-section (2) of Section 40 of the Central Excises and Salt Act, which has been dealt with by the Hon'ble Apex Court in Public Prosecutor, Madras Vs. R.Raju & Anr. [1972 (8) TMI 44 - SUPREME COURT OF INDIA] is not pari materia with sub-section (2) of Section 155 of the Customs Act, and therefore, the bar as provided under sub-section (2) of Section 40 of the Central Excises and Salt Act cannot be made applicable to Section 155(2) of the Customs Act - The petitioner is not claiming the protection under Section 155(1) of the Customs Act and as per the discussions made by me hereinabove, the protection of Section 155(2) of the Customs Act is not available to the petitioner. Thus, there is no illegality in the impugned order. Petition dismissed - decided against petitioner.

  ---

• 2016 (11) TMI 467
  Revocation of licence - CHA - forfeiture of security deposit - Regulation 20(7) of the Customs Broker Licence Regulations, 2013 - plea of limitation and non-service of notice and orders on the petitioner - Held that: - Department is able to prima facie establish that the petitioner had the knowledge of the proceedings. The petitioner had been prolonging the issue which has been recorded by the respondent in the impugned order, wherein it has been stated that the petitioner did not appear for personal hearing offered to them by the Inquiry Officer on 17.10.2014, 27.10.2014 and 28.10.2014 and did not make any oral or written submissions. Therefore, the Inquiry Officer was left with no option except to give a report based on the available records. The twin contentions raised by the petitioner in this Writ Petition challenging the impugned order namely, with regard to the plea of limitation and non-service of notice and orders on the petitioner stand rejected and both contentions are answered against the petitioner. Hence, in respect of the other factual contentions that the petitioner may raise challenging the impugned order, it is appropriate that the petitioner should invoke the appellate remedy available under the provisions of the Act. The appellate remedy available to the petitioner is before the Tribunal which is the final Court of fact. The Tribunal is empowered to re-appreciate the factual contentions and come to a correct conclusion as to whether the stand taken by the petitioner is justified or not? The Tribunal can call for and examine the records of the Department to test the correctness of the petitioner's submissions. Therefore, the petitioner has to necessarily avail the alternative remedy. The facts are seriously disputed and to consider the same, it would be necessary to adjudicate those disputed questions of fact, which obviously cannot be done in a Writ Petition and this was not permitted to be done before this Court at the very inception and that was preciously the reason for the petitioner to restrict their contentions in the Writ Petition on the above two grounds. Likewise, the counter affidavit filed by the respondent was only restricted to those two contentions raised by the petitioner. Therefore, in respect of all other contentions, which the petitioner may raise, have to be necessarily done before the Appellate Tribunal - petition dismissed - it is left open to the petitioner to avail the appellate remedy before the CESTAT raising other factual contentions other than the two contentions, which have been negatived by this Court. If the petitioner avails the alternate remedy, the CESTAT while computing limitation shall exclude the period from 01.09.2015, when the Writ Petition was presented before this Court till the receipt of the certified copy of this order - decided against petitioner.

  ---

• 2016 (11) TMI 466
  Remission of duty u/s 23(1) of the Customs Act, 1962 - warehoused goods were completely destroyed in the fire - refund with interest - import of 1040 bags of white oats - Held that: - Department never disputed the fact that the goods were destroyed - Department was not inclined to accept the order passed by the Commissioner of Appeals and filed an Appeal before the CESTAT. The CESTAT, vide order dated 08.08.2012, dismissed the Appeal. - It is a classical case where the Department has failed to take any action in spite of the remission claim having attained finality, pursuant to order of the CESTAT, dated 08.08.2012. The delay from 2012 to 2016 remains unexplained. There cannot be any dispute for the petitioner being entitled for remission of customs duty paid. Therefore, this Court is inclined to issue a positive direction to the respondents to grant remission of the duty and effect refund to the petitioner. The interest of the Department / Revenue has been sufficiently safeguarded as the petitioner has already executed a perpetual indemnity bond which shall be kept alive. Remission of duty allowed - refund of duty paid already allowed - for interest on refund, matter remanded back. - Decided in favor of appellant.

  ---

• 2016 (11) TMI 465
  Status holder in Star Export House - Whether the Appellate Tribunal is correct in holding that in terms of para 4.1.3 and para 4.1.5 of the Foreign Trade Policy 2004-2009 the appellants could have cleared the resultant products manufactured out of duty free inputs in the domestic market before fulfillment of the export obligation? - import of raw materials against advance licences - N/N. 43/2002-Cus dated 19th April, 2002 and 93/2004-Cus dated 10th September, 2004 - Held that: - provisions relating to advance licence under the FTP do not require that the export obligation should be completed out of imported duty free raw materials alone. In other words the licence holder is free to fulfill the export obligation out of indigenous raw materials. The goods are liable to confiscation when they are imported relying on exemption notification, but that exemption is subject to a condition. If that condition is not observed, the Hon'ble Supreme Court held that the goods are liable to confiscation. The power of the customs authorities is held to be absolute. Imposition of penalty u/s 114A - export obligation under the advance authorisation - Held that: - the assessee suppressed the actual consumption of raw-materials and undeclared consumption norms while applying for licences on ad-hoc norm basis. The allegation is of diversion of raw-materials imported duty free for the manufacture of finished goods in domestic market before fulfillment of export obligation. This is one violation or breach alleged or attributed. The tribunal, in para 39 also holds that in some cases, raw-materials imported were not utilised or physically incorporated in the production of goods exported. The declarations given for obtaining the licences were false. It is also held that export obligation in large number of licences is yet to be completely fulfilled even though the period is over long back - penalty upheld. No interest is payable on any of the customs duties that are due from the appellant. Appeal dismissed - decided partly in favor of appellant.

  ---

• 2016 (11) TMI 464
  Constitutional validity of Regulation 6(1)(1) of the Handling of Cargo in Customs Areas Regulations, 2009 - ultra-vires the provisions of Customs Act, 1962 - waiver of demurrage charges - Held that: - the power to frame regulations is located in Section 42 (1) and (2) of the Airports Authority of India Act, 1994. This court has, in its preceding discussion, held that the above power cannot be questioned, as wide and that as long as Parliamentary intent is discernable, subordinate legislation, which broadly conforms to its objectives, cannot be impeached. In exercise of its powers, Regulation 6 (1) was framed; it specifically obliges service providers not to charge demurrage in certain cases if directed not to do so (“subject to any other law for the time being in force, shall not charge any rent or demurrage on the goods seized or detained or confiscated by the Superintendent of Customs or Appraiser or Inspector of Customs or Preventive officer or examining officer, as the case may be."). Interestingly, the duty not to charge – when imposed by any customs official authorized to do so, is specifically subordinated to other laws (“subject to any other law for the time being in force”). Thus the powers under the Airports Authority Act, 1994. Identical power vests with the Central Government under the AAI Act to issue directions (Section 40). In the event DIAL is of the view that customs authorities’ directions to it to not charge demurrage are unwarranted, it can seek guidance and directions in that regard, from the Central Government. In these circumstances, the grievance that Regulation 6 can potentially render DIAL’s functioning unviable and result in losses to it, has to fail. Petition dismissed - decided against petitioner.

  ---

• Corporate Laws

• 2016 (11) TMI 459
  Conversion from public to private company - Held that:- The Petitioner has complied with provisions of Section 14 to be read with Rule 68 of NCLT Rules, 2016. Therefore, having regard to all the circumstances, the conversion from public to private is in the interest of the Company which is being made with a view to comply efficiently with the provisions of Companies Act, 2013 causing no prejudice either to the members or to the creditors of the Petitioner. Therefore, the conversion is hereby allowed. The Petitioner is hereby directed to give effect of the conversion by alteration in its Articles which is hereby addressed and communicate the altered Articles within a period of 15 days to the Registrar.

  ---

• Service Tax

• 2016 (11) TMI 493
  Challenge to the order confirming the demand of service tax - SCN notice issued in the name of property and not in the name of assessee - Renting of Immovable Property Service - jurisdiction of respondent to pass the order - Held that: - the issue involved in the instant case revolves upon disputed and complicated questions of fact and the plea of jurisdiction raised by the petitioner essentially involves adjudication into facts and it is not purely a jurisdictional aspect as brought forward in several other cases including that of the decision in the case of Calcutta Discount Co. Ltd. vs. Income Tax Officer, Companies District I, Calcutta and another reported [1960 (11) TMI 8 - SUPREME Court]. Therefore this is a fit case where the petitioner should be relegated to avail the appellate remedy and the writ petition cannot be entertained to adjudicate disputed questions of facts raised by the petitioner - writ petition not maintainable - Liberty is granted to the petitioner to file an appeal before the Commissioner (Appeals-I), Coimbatore and while entertaining the appeal and computing the period of limitation, the period during which this writ petition was pending i.e. from 26.08.2016 to till the date of receipt of the certified copy of this order shall stand excluded - petition dismissed - decided against petitioner.

  ---

• 2016 (11) TMI 492
  Suppression of facts - extended period of limitation - Claim of exemption - Section 65 (97a) and 65 (105) (zzza) - Held that: - The words drilling, digging, repairing, renovating, or restoring are all connected with the work water sources or water bodies, therefore, three items which are excluded are: (1) agriculture; (2) irrigation; and (3) watershed development and work related to water sources or water bodies. There is an agreement of assessee with a company SICCL engaged in development of residential and other buildings, colonies and township. Levelling work of levelling soil including filling of gorges/nallah removing of shrubs, grass and rubbish etc. was for the purpose of development of his site Sahara City Homes, Amritsar. The total area of work was for 24 acres approximately. Levelling of soil in the context of work done at the instance of SICCL was not for agriculture or irrigation but it was connected with development of a township/residential scheme of Sahara City Homes, Amritsar. The condition of land at the time of work was carried, was also not relevant. When work agriculture/irrigation has been used in contradiction to the other works, which are included in taxable service, the message is very clear that here the agriculture means simple cultivation of soil and earth of animals which is primarily connected with simple agricultural work. When an agricultural land is taken and development work like soil levelling etc. is carried out for the purpose of development of township etc., then it cannot be said that work of levelling of soil etc. is connected with agriculture or can be said to be an agricultural work at all. Assessee is also not engaged in the work of agriculture simpliciter. An attempt was made that agricultural work should be read as agricultural land but we find no reason for such reading of relevant provision as quoted above. Section 65 (97a) is in respect of service and not to the nature of project, land or other things. Appellant-assessee is not exempted from service tax as claimed - assessee does not disclose the work at all and there was a clandestine suppression of facts on his part, therefore, extended period of limitation was available to the Revenue - Appeal dismissed - decided against appellant-assessee.

  ---

• 2016 (11) TMI 491
  Refund - service tax paid on exports - N/N. 41/2007-ST - time bar - Held that: - the refund will have to be held as filed within time in respect of those exports for which refund stands claimed in the cases, where the service tax involved has been paid within a period of sixty days prior to the date of filing of the refund claim, i.e., 12.02.2009. Accordingly, we remand the matter to the original authority to re-decide the refund claims.

  ---

• 2016 (11) TMI 490
  Taxability - installation and commissioning charges - repair and maintenance of the equipments - training of staff of the customers - Revenue has sought to recover the service tax on such activities for the period prior to 01.07.2003 by taking the view that such services would stand covered by the taxable services of Consulting Engineer for the period upto 30.06.2003. With effect from 01.07.2003, service tax already stands discharged by the appellant. However, a portion of the service tax paid is disputed - Held that: - It is settled law that when a new entry has been introduced in the service tax net from a particular date, the same activities cannot be levied to service tax for the prior period under different entry. In the present case, the three services have been included in the statute books with effect from 01.07.2003. Consequently, there can be no demand for service tax for the period upto 30.06.2003 under a different head as Consulting Engineer service. Payment of service tax for a portion of the taxable value received by the appellant - service tax paid by HO - Held that: - Ld. Counsel for the appellant has contended that they are in a position to submit the proof of such payment once again before the original authority. Ld. Departmental Representative submits that even though copies of some challans are available on the record of the appeal, it is not possible to correlate such challans with the service tax demand. Under the circumstances, we are of the view that the case may be remanded back to the Commissioner with a direction to consider the documents submitted by the appellant and pass fresh orders after the verification of the same. However, we add that there shall be no demand of service tax prior to 01.07.2003 on the activities carried out by the appellant, which are covered by the services introduced with effect from 01.07.2003. Appeal disposed off - matter remanded.

  ---

• 2016 (11) TMI 489
  100% EOU - demand - invocation of proviso to Sub-Section 1 of Section 73 of Finance Act, 1994 - Held that: - the entire demand in the show-cause-notice is raised by invoking proviso to Sub-Section 1 of Section 73 of the Finance Act, 1994. The requirement under said proviso is that suppression or misstatement etc. is to be established separately and intention to evade Service Tax is to established separately for invoking said proviso. The appellant are service receiver and they are entitled for credit of Service Tax paid as service receivers, and as a result, it could not be established by Revenue that the appellant had intention to evade payment of Service Tax. Since, the intention to evade payment of Service Tax could not be established through the said show cause notice, the said proviso was not invokable. As a result, the entire demand has became bad in Law - appeal allowed - decided in favor of appellant.

  ---

• 2016 (11) TMI 488
  Whether the appellant has provided commission agent services, during the relevant period which were exempted vide notification number 13/03-ST dated 20.06.2003 or they have provided Business Auxiliary Services which would be liable to tax? - Held that: - the appellate authority is not disputing the fact that the appellant is satisfying condition (ii) and (iii) of the above definition but has not held the appellant to be Commission agent because he only informs the principal about the customers and his principal himself enters into a contract with the customers. In our views, such a distinction made by Commissioner (A) does not advance the revenue s case. Admittedly, the customer is brought to the principal by the appellant and the commission is paid to the appellant only when the sale / purchase is materialized. Whether negotiation is done by the principal or by the appellant will not have any effect on the fact of getting commission only on the finalization of the sale / purchase. We find that an identical situation was considered by the Tribunal in the case of Commissioner of Central Excise Vadodara Vs. M A Menon & Co. [2008 (11) TMI 109 - CESTAT, AHMEDABAD] wherein the Tribunal held that in as much as the assessee was primarily engaged in the sale activity and gets his commission only when the sale materializes he has to be held as commission agent. As much as the assessee gets the commission only when the product stands purchased by the Customer, they have to be held as commission agent, irrespective of the fact that for procuring such orders from the buyers they were doing marketing survey also - the appellant is only a commission agent. If that be so, the benefit of notification number 13/03 dated 20.06.2003 would be available to them - appeal allowed - decided in favor of appellant.

  ---

• 2016 (11) TMI 487
  Eligibility of 75% abatement on taxable value - the claim of appellant is that the appellant has not actually rendered such service as a consignor, he has not availed the credit of duty paid on inputs or capital goods for providing such taxable services but the appellant merely paid the tax which in the normal course should have been paid by the transport agency - suppression of facts - time bar - Held that: - I am of the considered opinion that there was no infirmity in the impugned order as the learned Commissioner (A) has allowed 75% abatement on the taxable value for the purpose of payment of service tax. I also find that extended period has rightly been invoked because from 1.1.2005 there was no confusion as to who is liable to pay service tax in case of goods transport agency. Therefore I uphold the impugned order and dismiss the appeal of the appellant.

  ---

• 2016 (11) TMI 486
  Recalling of an order passed by the tribunal in favor of assessee after the decision of Apex court refusing to grant stay - Classification of the services - jurisdiction of Court u/s 35L of the Act - suppression of facts - Held that: - Intentionally or unintentionally the fact remains that the Bench was not appraised of the said order of the Hon'ble Supreme Court As we have already observed that nondisclosure of the relevant facts and obtaining of a favourable order by not bringing the relevant facts to the notice of the Bench abuses the due process of law and vitiates the very order so obtained. As such, we deem it fit to recall the order passed on ROM application as prayed for by Revenue and allow the Miscellaneous Application filed by them.- decided in favor of Revenue.

  ---

• 2016 (11) TMI 485
  Applicability of notification No. 12/03-ST dated 20.6.03 - exemption of the value of all taxable services as is equal to the value of goods and materials sold by the service provider to the recipient of service - Held that: - the appellants were issuing separate invoices to service recipient, one indicating the value of goods sold, on which VAT was paid by them and the other indicating the value of service. This fact was clearly mentioned in the work order issued by M/s. Delhi Jal Board and the said fact was also reflected in the appellants balance sheet. Revenue s contention that such bifurcation of 80% and 20% is artificial is not based upon any evidence produced before us. As already observed by Joint Secretary, the same is bland allegation and not referring to any documentary evidence. If Revenue has alleged that same is artificial bifurcation, it is for them to substantiate the allegation by producing the sufficient documentary evidence. As lower authorities have examined the facts, as also the work order and the fact of issuance of separate invoices along with the fact of payment of VAT on the goods sold, we find no justifiable reason to interfere in the impugned order of the authorities below. Accordingly, Revenue s appeal is rejected.

  ---

• 2016 (11) TMI 484
  Pre-deposit - Section 35F of Central Excise Act, 1944 - interpretation of statute - Held that: - reliance placed on the decision of the case of Greatship(India) Pvt. Ltd. Vs. Commissioner of Service Tax, Mumbai-I [2015 (4) TMI 1006 - BOMBAY HIGH COURT] where it was held that the Court interpreting the statute should not proceed to add the words which are not found in the statute. It is equally settled that if the person sought to be taxed comes within the letter of the law he must be taxed, however, great the hardship may appear to the judicial mind to be. On the other hand, if the Crown seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of law the case might otherwise appear to be. It is further settled that an equitable construction, is not admissible in a taxing statute, where the Courts can simply adhere to the words of the statute. It is equally settled that a taxing statute is required to be strictly construed. Common sense approach, equity, logic, ethics and morality have no role to play while interpreting the taxing statute. It is equally settled that nothing is to be read in, nothing is to be implied and one is required to look fairly at the language used and nothing more and nothing less. We do not find substance in the argument that since the confirmed demand cannot survive the scrutiny of law being contrary to the settled principle of law, the Appeal should be entertained and heard on merit without compliance of Sec. 35F of CEA,1944 as applicable to service Tax Appeals. In the result, the appeal is not entertained.

  ---

• Central Excise

• 2016 (11) TMI 483
  Whether the respondents are right in imposing any condition while granting rebate on duty beyond the conditions prescribed under rule 18 of the Rules of 2002 - Held that: - the revisional authority erred while holding that the petitioner should have also maintained and adhered the procedure given under the SION norms - Petition allowed - Decided in favor of the assessee.

  ---

• 2016 (11) TMI 482
  Recovery - Held that: - since the Tribunal is already seized of the matter and the appeal is pending since 2008 and an order of stay has been in force from 2008 and periodically extended, this Court is of the view that pending disposal of the appeal, there cannot be any threat of recovery. Extension of stay - Held that: - This Court is also informed that the appeals of the year 2007 are being heard. Since the appeal filed by the petitioner is of the year 2008, it may take sometime for the appeal to be disposed of by the Tribunal. Therefore, ends of justice would be met if an order of stay, granted by the Tribunal and extended from time to time and the last of such extension being 12.8.2015, is continued till the disposal of the appeal before the Tribunal. Accordingly, the respondents shall not initiate any action for recovery of excise duty, which is the subject matter of appeal before the Tribunal. Liberty is granted to the petitioner to file appropriate application before the second respondent - the Commissioner of Central Excise (Appeals-II), to re-transfer the appeals to the Call Book and if such an application is filed, the Commissioner shall take into consideration that the identical issue is pending before the Tribunal in the assessee's own case and shall pass appropriate orders on merits and in accordance with law, within a period of three weeks from the date, on which, such application is filed. Petition disposed off.

  ---

• 2016 (11) TMI 481
  Refund - principles of unjust enrichment - section 35H(4) of Central Excise Act, 1944 - whether the rejection of refund on the ground of " undue enrichment" that duty was paid on intermediate products and question of passing on incidence of duty to customers does not arise is justified? - Held that: - in order to attract plea of "unjust enrichment" under section 11B(1), Reference made by Tribunal to Section 11B(2) proviso (c) is not justified as the said provision is not attracted. However, refund was wrongly denied to Assessee and to that extent concurrent findings in favour of Assessee has rightly been recorded by CCE(A) and Tribunal. Hence, the ultimate order of Tribunal is justified and warrants no interference. Both the questions are thus answered in favour of Assessee and against Revenue.

  ---

• 2016 (11) TMI 480
  Jurisdiction of Additional Commissioner - letter/circular dated 9.5.2013 issued by Additional Commissioner from Office of Commissioner, Customs and Central Excise, Commissionerate, Kanpur - initiation of necessary action against exporters of responding Commissionerate relating to Rules 91 and 92 of Central Excise Rules, 2002 - Held that: - the letter has disclosed a modus operandi of certain footwear manufacturers for availing All Industry Rate of Drawback on the footwear exported by them and an attempt has been made by said circular to bring aforesaid modus operandi to notice of all concerned when some activity, followed by manufacturers or exporters, who are in the ambit of Central Excise, constitutes an act to evade duty if the manner in which they operate and other illegal activities are communicated to various authorities in department, such communication cannot be said per se illegal or without jurisdiction. We have no manner of doubt that such communication of modus operandi or facts relating to functioning of such persons by itself cannot be treated to be a direction or instruction to take action in any particular manner - letter dated 9.5.2013 sent by Additional Commissioner, Central Excise, Kanpur is not a direction to superior authorities across the country but only communication of certain facts and authorities are free to proceed in any manner, in accordance with law, independently, and said circular is not binding on any such authority - petition disposed off.

  ---

• 2016 (11) TMI 479
  Denial of CENVAT credit - service tax paid on transportation of goods from factory to warehouse - input services - whether the service tax paid on GTA services on the outward freight from the factory to the warehouse are eligible as input service? - place of removal of goods - Held that: - place of removal in the case of the assessee is not the factory gate rather it is the warehouse or the depot from where the goods are sold to ultimate consumers or buyers. Further, in view of the various judgments it was held that the place of removal extends to customer premises. Moreover the Circular No.988/12/2014-CX dated 20.10.2014 which has been relied upon by the assessee issued by the Board clearly states that the CENVAT credit of service tax paid on goods transported from factory to depot is admissible irrespective of basis of valuation of goods - the impugned orders in the appeals filed by the assessee are not sustainable in law and I set aside the impugned orders by allowing the appeals of the assessee with consequential relief, if any. As far as appeals filed by the Revenue are concerned, I do not find any infirmity in the impugned orders passed by the Commissioner (A) therefore I uphold the impugned orders and dismiss the Revenue s appeals.

  ---

• 2016 (11) TMI 478
  100% EOU - Rejection of refund claim - accumulated cenvat credit - Rule 5 of the Cenvat Credit Rules - N/N.5/2006 (CE) NT dated 14.3.2006 - limitation bar - the claim should be filed in respect of Export Oriented Units on monthly basis - Held that: - in terms of clause 6 of the notification 5/2006 read with section 11B, refund claims pertaining to the period falling within one year from the date on which the refund claim has been filed are to be held as within time; claim prior to this period , will be hit by time bar and to determine the amount of refund allowable I remand the matter to original adjudicating authority to quantify and allow the refund on the above lines.

  ---

• 2016 (11) TMI 477
  CENVAT Credit - input service distributor - cross unit utilization - security service - general insurance service - consultancy engineering services - input services received at Sikkim unit, having no nexus with manufacturing at their Dadra unit, therefore, not eligible to CENVAT Credit being fall outside the scope of definition of input service prescribed at Rule 2(l) of CENVAT Credit Rules 2004 - Held that: - the Appellants on the basis of invoices issued under Rule 4A of Service Tax Rules, 1994 by their head office registered as an input service distributor availed CENVAT Credit at their manufacturing facility at Dadra unit. It is also not in dispute that the entire credit relates to the input services viz. security service, general insurance service, consultancy engineering services received and utilized at their Sikkim unit. It is the contention of the Appellant that as per the existing provisions during the relevant period, there was no necessity that the input services be received and utilized in the factory of the manufacturer where CENVAT Credit was availed. Reliance placed on the decision of the case of CCE Bangalore-I Vs ECOF Industries Pvt. Ltd 2011 [2011 (2) TMI 1130 - KARNATAKA HIGH COURT] where it was held that The law mandates that the manufacturer who wants to avail the benefit of this service tax if he has more than one unit he should also get registered himself as a service provider and then, he would be able to collect all the input service tax paid in all its units and accumulate them at its head office and distribute the said credit to its various units. Merely because the input service tax is paid at a particular unit and the benefit is sought to be availed at another unit, the same is not prohibited under law. CENVAT credit allowed - appeal allowed - decided in favor of appellant.

  ---

• 2016 (11) TMI 476
  Repayment of Cenvat credit utilised in contravention of Rules 3 and 4 of the Cenvat Credit Rules, 2004 - credits have been used for making payments for the finished products which have not been manufactured in the assessee's factory - job work - Held that: - the assessee has admittedly got the goods manufactured on job work basis in its sister concern in terms of Notification No.214/86-CE. As per the definition in 2(f) of the Central Excise Act, 1994, the term manufacturer will include any person who gets goods manufactured outside factory. On this ground also the demand for reversal of Cenvat credit is not justified. Limitation bar - Held that: - the demand has been raised by mechanically invoking the proviso to Section 11A of the Act. I find no discussion or even a murmur of any evidence or allegation that the respondent has indulged in the act of suppression of facts or wilful mis-statement, contravention to the provision of the said Rule. In the absence of any of the ingredients, there can be no justification to invoke the extended period of time for issuing demand. Respondent has relied on many case laws including the decision of the Hon'ble Supreme Court in the case of CCE Vs. Chemphar Drugs & Liniments [1989 (2) TMI 116 - SUPREME COURT OF INDIA]. In the said decision Hon'ble Supreme Court categorically held that conscious or deliberate withholding of information by manufacturer is necessary to invoke larger limitation of five years. In the present case, the Department has acquired full knowledge about the facts of the case at the time of visit of the factory by the officers on 17.03.2006. Consequently, the Show Cause Notice, if any, ought to have been issued within a period of one year from that date. The Show Cause Notice stands issued on 09.03.2009. Appeal allowed - decided in favor of appellant.

  ---

• 2016 (11) TMI 475
  CENVAT credit - capital goods cleared after use - Held that: - the appellant was not required to pay excise duty that is in another words debit of Cenvat credit taken at the time of receipt of said capital goods under Rule 3(5) of Cenvat Credit Rules, 2004 while removing the said capital goods after use. Therefore, I set aside the Order-in-Appeal and allow the appeal. The appellant shall be entitled for consequential relief, in accordance with law.

  ---

• 2016 (11) TMI 474
  100% EOU - clandestine removal - shortage of materials - goods found short in their premises were transferred to the present appellant s premises on account of same being moth infected, the excess found in the present appellants case, cannot be held as liable to confiscation - Held that: - The shortages found during the relevant period are in respect of yarn and polywool etc. which are to the tune of small fractional percentage of the total stock. It stand held in number of decisions that shortages in the raw material itself cannot lead to inevitable conclusion of clandestine removal of the final product, in the absence of any further evidence on record. In the present case, I find that apart from the shortages, there is no evidence to show that clandestine production and removal of final product. It is only a marginal small percentage shortage in the stock of raw material, I find no justifiable reason to upheld the impugned orders confirming the demand of duty on the finding of clandestine removal. Accordingly, the impugned order is set aside and appeal allowed with consequential relief to the appellant.

  ---

• 2016 (11) TMI 473
  Imposition of penalty u/r 25, 26 and 27 read with Section 11AC - forged invoices - issue of invoices without supply of material - Held that: - the penalty has been imposed under Rule 25 read with Section 11AC without determination of duty which is not permissible in law. As in this case no duty was determined as per the provisions of Section 11A(10) which is required to be determined if penalty under Section 11AC is to be imposed. Further, I also find that the Revenue has not investigated the case properly and no evidence has been brought on record which can prove the allegation that the appellant was issuing cenvatable invoices without the supply of material. The present case is not a case of non-payment, short-payment or non-levy or short-levy of duty, therefore the imposition of penalty under Rule 25 read with Section 11AC of Central Excise Act is not warranted. No doubt Shri A. P. Venkateshwaran who is the Director of Finance and Accounts has admitted in his statement that there is mixing of various grades and also admitted the shortage of quantity but has stated that the same was not with intent to evade payment of duty. Therefore, keeping in view the facts, I am of the opinion that the imposition of penalty under Rule 25 read with Section 11AC is not imposable in the absence of determination of duty. Therefore I set aside the penalty under Rule 25. Since the Director has admitted that they have not maintained the record properly and there is inter mixing of material of one grade with another grade and they have not been able to establish one to one correlation of the invoices and this shows that they have not maintained proper statutory records and therefore they are liable to be penalised under Rule 27 instead of Rule 25 & 26. Therefore, I impose penalty of Rs. 5,000/- each on both the appellant under Rule 27 and set aside the penalty imposed under Rule 25 on the appellant No.1 i.e. Tulsyan NEC Ltd. and under Rule 26 on A.P. Venkateshwaran, Director, therefore both the appeals are disposed of accordingly.

  ---

• 2016 (11) TMI 472
  100% EOU - rejection of refund claim - Rule 5 of the Cenvat Credit Rules 2004 - the appellant has submitted that their unit had closed its manufacturing activity during August 2005 itself. Since they are not manufacturing and clearing any product on payment of duty, they are not able to utilise the CENVAT account. Therefore they have prayed that the amount be refunded to them in cash only. Held that: - The jurisdictional High Court of Karnataka in the case of Union of India V. Slovak Trading Co. Pvt. Ltd. [2006 (7) TMI 9 - KARNATAKA HIGH COURT] has clearly held that there is no express prohibition in terms of Rule 5. The Hon’ble High Court has observed that the Tribunal is fully justified in ordering refund partly in the light of the closure of the factory and in the light of the assessee coming out of modvat scheme and this judgment of the Hon’ble High Court was affirmed by the Hon’ble Supreme Court. Further the judgment of the Hon’ble High Court has been followed in number of cases by various Tribunals as cited supra. On the other hand the judgments relied upon by the learned AR is not applicable in the facts and circumstances of the present case when the jurisdictional High Court has allowed the refund of unutilized cenvat credit under Rule 5 of the Cenvat Credit Rules 2004 and the same has been affirmed by the Hon’ble Supreme Court - the impugned judgment is not sustainable in law and is hereby set aside by allowing the appeal of the appellant with consequential relief of interest to be quantified and paid by the adjudicating authority - appeal allowed.

  ---

• 2016 (11) TMI 471
  Denial of Cenvat credit - GTA services - whether the demand only on the ground that the factory is considered as a place of removal and any outward transportation beyond the factory is not entitled for credit as per the definition of input service under Cenvat Credit Rules, 2004, justified? - time bar - Held that: - Cenvat credit of Rs. 6,03,113/- in respect of clearances to SEZ (paid and appropriated) and Cenvat credit of Rs. 24,34,593/- in respect of clearances to the customer on which no excise duty was paid are not eligible to the appellant. As already noted the disallowance of these credits were not contested on merit. We find no merit in the contest on time bar as recorded above. They are eligible for credit of remaining amount with reference to clearances to depot and consignment agents. The penalty amount also accordingly reduced equal to credit taken on clearance to customers, as stated above. In these terms, the appeal is partly allowed.

  ---

• 2016 (11) TMI 470
  Setting-up a new cement plant adjacent to existing plant and machinery - CENVAT credit - steel items used in the set-up activities - whether the denial of CENVAT credit on the ground that these steel items were used in the fabrication of supporting structures and also in creation of immovable assets and as such, is justified? - Held that: - It has been held by the Tribunal consistently that the steel items when they were used in fabrication of capital goods and their accessories inside the manufacturing premises are eligible for credit. The principle of user test evolved by the Hon’ble Supreme Court in Rajasthan Spinning and Weaving Mills [2010 (7) TMI 12 - SUPREME COURT OF INDIA] has been applied in this regard. A reference can be made to the latest decision of the Tribunal in Singhal Enterprises [2016 (9) TMI 682 - CESTAT NEW DELHI] where it was held that applying the “User Test” to the facts in hand, we have no hesitation in holding that the structural items used in the fabrication of support structures would fall within the ambit of ‘Capital Goods’ as contemplated under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat Credit . It is not categorically established in the present case that all the steel items are used in creation of immovable assets only. On the contrary, the appellants submitted detailed certificate by a Chartered Engineer. We have perused the same. The said certificate records that upon physical examination, it was certified that the steel items have been used for fabrication of various equipments/accessories in various locations of the plant - The categorical assertion of facts by the appellant as supported by the Chartered Engineer Certificate should have been rebutted with evidences of such nature before making summary conclusion on the basis of the presumption. We find the original order is not legally sustainable. Denail of CCR not sustained - appeal allowed - decided in favor of appellant.

  ---

• CST, VAT & Sales Tax

• 2016 (11) TMI 463
  Genuinity of transaction - consignment sale - Held that: - the transactions with M/s. Jay Bhavani Enterprise, M/s. Maharashtra Agro Products and M/s. Prabhat Oil Industries as genuine, it cannot be said that any substantial question of law arise as sought to be contended on behalf of the State. The findings recorded by the learned Tribunal are on appreciation of evidence and the material on record. As observed hereinabove after considering the material on record and considering the transactions with each of the aforesaid sellers, the learned Tribunal has specifically given the finding which cannot be said to be either perverse and/or contrary to the evidence on record. Even the report from the Maharashtra Government upon which the reliance has been placed has been dealt with and considered by the learned Tribunal - no substantial question of law arise - appeal dismissed - decided against appellant-Revenue.

  ---

• 2016 (11) TMI 462
  Revision of assessments - principles of natural justice - Held that: - It is a settled legal position that the Assessing Officer is an independent statutory Authority, who has to consider the dealer's objections, when they respond to the pre-revision notices and cannot be solely guided by the report of the Enforcement Wing Officials and if done so, it would amount to abdication of the statutory duty cast upon the Assessing Officer. In fact, what has been done by the respondent is clearly an abdication of his statutory duties - the entire revision of assessment has to be re-done, after affording reasonable opportunity to the petitioner to produce the necessary records, as they have addressed their suppliers and they are in the process of gathering details - petition allowed - matter remanded.

  ---

• 2016 (11) TMI 461
  Suppression of facts - Held that: - though the specific provision as found in the Tamil Nadu General Sales Tax Act, for production of the Books of Accounts, was not found in the TNVAT Act, that does not mean that the Assessing Officer can refuse to look into the Books of Accounts. The Assessing Officer, should bear in mind as to how the VAT regime works as it is a process of self assessment. Therefore, when the Assessing Officer takes up a case for revision of assessment, then obviously the dealer should be granted an opportunity to produce the Books of Accounts and other records to substantiate their stand. Therefore, the observation made by the Assessing Officer that he need not call for the Books of Accounts of the dealer is untenable. When the Appellate Authority is examining the correctness of the order passed by the Assessing officer, it is incumbent to examine all the facts. It is the settled legal position that the appeal is a continuation of the original proceedings and the appellate authority is entitled to re-examine all the factual issues. Therefore, what the Appellate Authority should have done is to direct the petitioner to produce the Books of Accounts and substantiate the claim that there is no sales suppression and they have not claimed any ITC on unreported purchases. Without doing so, the Appeal ought not to have been dismissed. Therefore, this is a fit case where the Appellate Authority should be directed to re-hear the appeal, examine the petitioner's Books of Account and then come to a conclusion. Petition allowed - matter remanded.

  ---

• 2016 (11) TMI 460
  Challenge to the Notice - Imposition of penalty u/s 53 of the Karnataka Value Added Tax Act, 2003 - explanation furnished by the petitioner including the furnishing of e-sugam number is not satisfactory - Held that: - Since the impugned notice is merely a notice calling upon the petitioner to show-cause as to why the penalty in question may not be imposed upon him, the writ petition at this stage filed against the same is pre-mature. - this Court relegates the petitioner back to the Assessing Authority with a direction to the Assessing Authority to consider the representation of the petitioner in accordance with law and then pass appropriate speaking orders in accordance with law - writ petition disposed off - matter remanded.

  ---

• Indian Laws

• 2016 (11) TMI 458
  Application under Section 340 Cr.P.C. moved in complaint case filed under Section 138 of Negotiable Instruments Act, 1881 - petitioner seeks an order quashing/setting aside the order passed by the Additional Sessions Judge, Dwarka, Delhi dismissing the appeal against the order passed by the learned Metropolitan Magistrate Dwarka in his application under Section 340 Cr.P.C. moved in complaint case filed by respondent No.1 under Section 138 of Negotiable Instruments Act, 1881 Held that:- Additional Sessions Judge by taking note of the fact that in the criminal complaint in which the application under Section 340 Cr.P.C. was filed by the petitioner herein, respondent No. 1 had submitted that loan was taken by the petitioner for commencing his business from her husband and she has given a cheque only. The admission of respondent No. 1 in her pleadings including the affidavits regarding the date, time and execution of all the affidavits and contents thereof cannot tantamount to commission of offence of perjury. Finding the contents of the complaint filed by the complainant/respondent No. 1 being neither false nor contradictory to the story of advancing loan to the petitioner through her husband/respondent No. 2, the learned Additional Sessions Judge agreed with the reasoning of the learned Metropolitan Magistrate taking a view that no offence of perjury has been committed by the respondents. This court does not find any irregularity or infirmity in the impugned orders. In addition, in view of the foregoing discussions on the principles relating to exercise of inherent powers under Section 482 of Cr.P.C., this Court does not find the present case being fit for exercising the inherent powers under Section 482 of Cr.P.C. in the present case.

  ---