TMI Tax Updates - e-Newsletter
November 21, 2017

Case Laws in this Newsletter:

GST Income Tax Customs Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. CONCEPT OF TAX COLLECTION AT SOURCE (TCS) IN GST

   By: Dr. Sanjiv Agarwal

2. Significant Changes in GST compliance (23rd GST Council Meet)

   By: Manish Didwania

News

1. Auction for Sale (Re-issue) of per cent Government Stock

2. Logistics Sector granted Infrastructure Status

3. India Signs Loan Agreement with World Bank for USD 100 Million for “Shared Infrastructure for Solar Parks Project”

4. RBI Reference Rate for US $

5. Bar Leadership Summit on reforms in Indian Legal Services Sector

Notifications

GST - States

1. ERTS(T) 65/2017/Pt/043 - dated 31-10-2017 - Meghalaya SGST

Extends the time limit for furnishing the return by an Input Service Distributor in FORM GSTR-6.

2. ERTS(T) 65/2017/Pt I/042 - dated 31-10-2017 - Meghalaya SGST

Extends the time limit for furnishing the return in FORM GSTR-5A for the month of July, 2017, August, 2017 and September 2017.

3. ERTS(T) 65/2017/Pt I/041 - dated 31-10-2017 - Meghalaya SGST

Exemption On "Handicraft Goods"

4. ERTS(T) 65/2017/Pt I/040 - dated 31-10-2017 - Meghalaya SGST

Waiver the late fee payable FORM GSTR-3B for the months of August and September, 2017 by the due date.

5. ERTS(T) 65/2017/Pt I/038 - dated 31-10-2017 - Meghalaya SGST

Notifies Supply of goods by a registered person against Advance Authorisation.

6. ERTS(T) 65/2017/102 - dated 25-9-2017 - Meghalaya SGST

Last date for furnishing of return in FORM GSTR-3B

7. ERTS(T) 65/2017/101 - dated 25-9-2017 - Meghalaya SGST

Amendment in the Notification No. ERTS(T) 65/2017/1, dated 29.6.2017.

8. ERTS(T) 65/2017/100 - dated 25-9-2017 - Meghalaya SGST

Notifies the category of registered persons who not be eligible for refund of ninety per cent. of the total amount claimed as refund on account of zero-rated supply of goods or services or both.

9. ERTS(T) 65/2017/099 - dated 25-9-2017 - Meghalaya SGST

Amendments in the Notification No. ERTS(T)65/2017/17, dated 29.6.2017.

10. ERTS(T) 65/2017/098 - dated 25-9-2017 - Meghalaya SGST

Amendments in the Notification No. ERTS(T)65/2017/12, dated 29.6.2017.

11. ERTS(T) 65/2017/097 - dated 25-9-2017 - Meghalaya SGST

Amendments in the Notification No. ERTS(T)65/2017/11, dated 29.6.2017

12. ERTS(T) 65/2017/096 - dated 25-9-2017 - Meghalaya SGST

Amendments in the Notification No. ERTS(T)65/2017/13, dated 29.6.2017.

Circulars / Instructions / Orders

GST

1. 19/19/2017 - dated 20-11-2017

Clarification on taxability of custom milling of paddy – regarding.

Customs

2. 44/2017 - dated 18-11-2017

Implementing Electronic Sealing for Containers by exporters under self-sealing procedure by Circular 26/2017-cus dated 01.07.2017, 36/2017 dated 28.08.2017, 37/2017 dated 20.09.2017 and 41/2017 dated 30-10-2017.-reg.

3. 149/2017 - dated 16-11-2017

Subject: Export of Milk Products (Quality Control, Inspection and Monitoring) Rules, 2000.

Highlights / Catch Notes

Income Tax

• Software License Fees in India Not Taxable as Royalty Under Treaty; Section 9(1)(vi) of Income Tax Act Applies.

  Case-Laws - AT : Supply of software on licence - Taxability in India - If the receipts cannot be taxed under the treaty as royalty, then it cannot be taxed under the domestic law under section 9(1)(vi) Income Tax Act and the amended provision cannot be read into treaty - AT
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• Taxpayer's Section 54 Exemption Denial Overturned: Sale Deed Not Required for Property Sale Completion.

  Case-Laws - AT : AO was not justified in denying the claimed exemption under section 54 of the Act to the assessee on the basis that possession of the property was not handed over to the buyer and thus, sale was not complete in absence of execution of Sale Deed. - AT
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• High Court: Tax Authorities Must Record Rationale Before Requisitioning Documents u/s 132A(1)(b) of Income Tax Act.

  Case-Laws - HC : Requisitioning of books of accounts and their documents u/s 132A(1)(b) without recording satisfaction or reason to believe is not sustainable in law - HC
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• High Court Rules Hedging Transactions for Actual Goods Delivery Are Business Losses, Not Speculative for Tax Purposes.

  Case-Laws - HC : Nature of loss - "business loss" or "speculative transactions" - what is "hedging transaction" and when it can be a "speculative transaction"? - safeguard against loss through price fluctuation in respect of the contract for actual delivery of the goods manufactured - allowed as business loss - HC
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• Use Section 263 for Correcting Errors in Income Tax Assessments Instead of Reassessment.

  Case-Laws - HC : Reopening of assessment - if some aspect, vital or important, is overlooked during assessment, per se the remedy are not reassessment, but rather, the corrective jurisdiction under Section 263 - HC
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VAT

• Poultry Feed Supplements: Not Automatically Medicine for Tax Purposes, Affects VAT and Sales Tax Classification.

  Case-Laws - HC : Classification of Poultry Feed Supplements - mere fact that certain items may cure disease or strengthen bones, liver etc., for that reason alone they may not be held medicine and not Balanced Cattle Feed or Poultry Feed. - HC
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Case Laws:

• GST

• 2017 (11) TMI 1032
  Detention and seizure of goods - Section 129(1) of the U.P. GST Act, 2017 - questions of facts - Held that: - in the instant case since the factual disputed issues are involved and further that the penalty proceedings are already initiated, as intimated by the counsel for the State, therefore, it would be proper in the interest of justice that the seized goods be released in favour of the petitioners on the payment of an amount of Rs. 1,11,564/- the goods and vehicle be released forthwith on payment of the amount of tax as has been indicated in the SCN dated 26.9.2017 being Rs. 1,11,564/- - petition dismissed - decided against petitioner.

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• 2017 (11) TMI 1022
  Non-filing of GST Registration within the stipulated time - Held that: - The provisional ID and password allotted to the petitioner for the purposes of GST is not working - it is provided that no coercive action would be taken against the petitioner for not filing the GST return within the time stipulated.

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• 2017 (11) TMI 1021
  Cancellation of GST Registration - Held that: - the copy of the order has not been supplied and that no notice or opportunity of hearing was given before cancelling the registration - In the absence of any order of the cancellation on record, we find it difficult to proceed in the matter.

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• Income Tax

• 2017 (11) TMI 1033
  Reopening of assessment - “reasons to believe" - change of opinion - Held that:- What is the “tangible material” which compelled the AO, in all these four cases, to issue the impugned reassessment notices? None absolutely. This is not a case of the kind visualized, in Phoolchand (1993 (7) TMI 1 - SUPREME Court), where something relating to a past year comes to light in the course of assessment in a later assessment year; nor is the revenue arguing that some new and significant information about concealment of income brought to light. The revenue is indulging in fishing, by way of scrutinizing again, something that had been specifically gone into, i.e the character of income and the extent of deduction claimed. Now, Usha International (2012 (9) TMI 767 - DELHI HIGH COURT) referred to by the revenue itself points out that if some aspect, vital or important, is overlooked during assessment, per se the remedy are not reassessment, but rather, the corrective jurisdiction under Section 263. That such jurisdiction cannot be exercised for some reasons, would not entitle the revenue to resort to reassessment, which in this case, is nothing but impermissible review. Considering that the reassessment is premised on reasons which were explicitly gone into (evident from queries to the assessee during the original assessment) for previous years, in the three writ petitions, the notices are clearly unsustainable. Non issue of notice - As far as one year, goes additionally, the court notices that reassessment is not permissible, for the reasons articulated in Silverline (2015 (11) TMI 809 - DELHI HIGH COURT). There is no dispute that the revenue had issued a notice under Section 143 (2) but failed to complete the assessment. In these circumstances, the notice is not sustainable on this ground as well. Assessee appeal allowed.

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• 2017 (11) TMI 1030
  Applicability of 80HH - Additional question of law - Held that:- We are of the opinion that the correct course of action is to remand the proceedings to the Tribunal. The two factors persuade us to take this course of action,that is to frame the above additional question of law and send the same for consideration of the Tribunal both on factual as well as legal aspects. Firstly, factor is that, prima facie, we find that in the Return of income of the Assessee, there is an indication that the Respondent-Assessee has treated itself to be an entity covered under Section 80HH of the Act. Secondly, we cannot be oblivious of the fact that when the order disposing of the present Appeal by the Division Bench was challenged by the Revenue in the Apex Court, a specific ground was taken by the Revenue in their affidavit regarding the applicability of Section 80HH of the Act. Thereafter, the Apex Court had set aside the order disposing of the Appeal and the matter is being now agitated before us. We do not wish to conclude this factual aspect, but what we wish to reiterate is that it cannot be said that the aspect of applicability of 80HH of the Act was never in contemplation of any of the parties to this litigation. If the factual position is established that the Respondent-Assessee falls within the ambit of Section 80HH of the Act and has taken benefit of certain tax exemption, then question will arise whether law laid down by this Court in the case of Indian Rayons will be applicable to the Respondent-Assessee and its case regarding not claiming depreciation could stand.

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• 2017 (11) TMI 1026
  Revision u/s 263 - claim of the respondent assessee under Section 11/12 wrongly allowed to the assessee despite the fact that the assessee society is not registered under Section 12A/12AA - ITAT has concluded that Commissioner has taken a particular view that the gross received is more than Rs. 1 crore therefore, the assessee society is not entitled to get the benefit of the provisions of Section 10(23C)(iiiad) - Held that:- In the present case admittedly the assessee society/ college has received an account of tuition fee and other fee less than Rs. 1 crore (which is prescribed limit) i.e. Rs. 95,71,259/- therefore, the Tribunal has rightly held that the proceedings under Section 263(1) initiated by the Commissioner are illegal and the Commissioner is not empowered to invoke the power of Section 263 of the Act as the basic consideration to hold that the order of Assessing Officer is erroneous, is missing upon the facts and circumstances of the present case. We are in full agreement with the finding of the ITAT as we find that the assessee society is running a school and has admittedly received the tuition fee being the annual receipts below the prescribed limit of Rs. 1 crore and according to us the exemption limit clearly provides the cut of figure of Rs. 1 crore being the annual receipt of the educational Institution or the University, as the case may be, and not that of the total income of the society running the educational Institution or University. In the present case, the income of Rs. 6,67,000/- towards the buildings/capital assets and Rs. 4,01,900/- received towards donation cannot be part of the annual receipts of the University/College/School. Therefore, in our considered opinion the assessee is entitled for exemption under Section 10(23C)(iiiad) as annual income of the assessee society did not exceed Rs. 1 crore. - Decided in favour of assessee.

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• 2017 (11) TMI 1024
  Transfer of case u/s 127 - Centralization of cases ACIT, Central Circle Bikaner - adherence to principles of natural justice as giving assessee opportunity to file his objection as well as for personal hearing.- Held that:- The group of cases are assessed on different place, namely, at Delhi, Noida, Bikaner, Mumbai etc. and therefore the submission of the learned counsel for the petitioner has no force as the cases of the petitioner group are centralised in accordance with law, and even otherwise the instructions are just to facilitate the authorities to carry on the execution of the proceedings in accordance with law and after due consideration of the entire material and facts of the case. Learned counsel for the petitioner has not supported his submission, while pressing the aforesaid circular/ instruction, except tried to place sub-clause (c) of the said instruction, which in our opinion is not relevant in the facts of the present case. In our opinion, in this group of cases, dozens of cases relating to the petitioner's group were proposed to be brought to one place for co-ordinated investigation, did not require any further or better or detailed reasons so as indicated in the impugned order passed under Section 127 of the Act. We find that in the present case the principle of natural justice had been complied with and we further find that the order impugned has been passed by the authority after due consideration of the material and in accordance with law. - Decided against assessee.

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• 2017 (11) TMI 1023
  Reopening of assessment - excessive brought forward losses for the assessment year in question - no order has been passed by the assessing authority to rectify return proceedings under Section 143(1)/154 of the Act while accepting the claim of the assessee by brought forward losses - Held that:- In the instant case, the return of the assess claiming unabsorbed losses of earlier years was allowed by the assessing officer, however subsequently the assessing authority has initiated the re-assessment proceedings under Section 147 as no order has been passed by the assessing authority to rectify return proceedings under Section 143(1)/154 of the Act while accepting the claim of the assessee by brought forward losses of earlier years. The ITAT has noticed that the reasons stated by the assessing officer in the notice issued under Section 154/254 and in the notice issued under Section 148 of the Act are not same. After detailed discussion the Tribunal had reached at the conclusion that the notice issued under Section 148 of the Act is in accordance with law as the assessing officer had reason to believe that the income liable to tax had escaped assessment by allowing the assessee the excessive brought forward losses for the assessment year in question. Even no submission has been made by the authorised representative of the assessee with regard to other grounds that is with regard to non-issuance of notice under Section 143(2) of the Act or non-receiving of the notice by the assessee. The findings of fact therefore, recorded by the Tribunal are clearly need no interpretation by this Court. The Tribunal has dealt with the issue after due consideration of the material and record and has passed a reasoned speaking order, which needs no interference by this Court, hence the appeal filed by the appellant has no force, accordingly the same is dismissed.

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• 2017 (11) TMI 1020
  Nature of loss - "business loss" or "speculative transactions" - what is "hedging transaction" and when it can be a "speculative transaction" ? - mode of business of Assessee - Held that:- Section 43(5) provides that speculative transaction means a transaction in which a contract for the purchase or sale of any commodity including stocks and shares, is periodically and ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips.It is significant to note that Section 43 nowhere provides that such hedging contracts must necessarily be purchase contracts. Of course, in cases where loss through future price fluctuation in respect of contracts for actual delivery of goods manufactured or merchandise sold, can in fact not be safeguarded by entering into contract for sale of raw materials or merchandise, there would be no reason to exclude such transaction from the ambit of Section 43(5) (a) of the Act. It may be that in the case of merchandise one may urge that when one enters into a hedging contract in respect of merchandise to guard against loss through future price fluctuation in respect of the merchandise sold, such contract has necessarily to be that of a contract for purchase (we are not concerned with this question in this reference), but then the same thing cannot be said about hedging contracts entered into by a manufacturer in respect of raw material. Even though in the commercial world the cost of raw material plays an important role in determining the price at which a manufacturer agrees to sell or deliver the manufactured goods, yet it does not necessarily mean that future price fluctuation in respect of the manufactured product must correspond to price fluctuation in respect of the raw material. There can be cases where even while the price of raw materials falls, the price of the manufactured goods contracted to be delivered may go up resulting in a loss to the manufacturer. In such a case, the loss that is likely to be occasioned to a manufacturer in respect of price fluctuation of the goods contracted to be delivered can be safeguarded by entering into hedging contract by way of sale of the raw materials. In our opinion, there exists no valid reason for, in the case of a manufacturer, excluding from the ambit of hedging contracts contemplated by Section 43(5) (a), hedging contracts in respect of raw materials that are entered into by way of sale and confining the same to hedging contracts by way of purchases of such raw materials alone. It will depend upon the facts of each case whether a particular transaction by way of forward sale, which is mutually settled otherwise than by actual delivery of the said goods, has been entered into with a view to safeguard against loss through price fluctuation in respect of the contract for actual delivery of the goods manufactured . See Additional Commissioner of Income Tax Vs.M.P. Sugar Mills Private Limited (1983 (8) TMI 42 - ALLAHABAD High Court) - Decided in favour of Assessee

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• 2017 (11) TMI 1019
  Unexplained investment in purchase of agricultural land - sale agreement and other documents found and impounded during the course of survey under section 133A - Held that:- In the absence of evidence on record, higher price for sale of land cannot be presumed from the consideration shown in registered sale deeds and rates of property fixed by the Stamp Valuation Authority for registration purposes cannot be taken to be the price for which the property might have been sold. Thus, there was no justification for the Assessing Officer to use the agreement to sell 13.25 hectares of land at Rs. 8.25 crores that was never executed, and the offer to purchase 10.21 hectares, a part of the same 13.25 hectares, for Rs. 7 crores that was not accepted and taken to a logical conclusion, as evidence of fair market value of the land in question. Besides these two the Assessing Officer did not bring any other evidence to show that the market value of the impugned 10.21 hectares was Rs. 7 crores. The comparison by the Assessing Officer between qualitatively different agreements with completely different terms and conditions was not appropriate. The Assessing Officer did not bring on record any evidence to show that the appellant had indeed paid Rs. 7 crores to Satya Narain Kanchhal and Rukmani Devi Kanchhal for land admeasuring 10.21 hectares - Decided in favour of assessee.

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• 2017 (11) TMI 1017
  Dispute Resolution Panel's orders without taking note of the documents despatched to it by courier - violation of the principles of natural justice - Held that:- The petitioner was surprised to learn subsequently that on July 24, 2017, itself the Dispute Resolution Panel had passed the impugned orders without taking note of the documents despatched to it by courier. Clearly, the respondent acted in violation of the principles of natural justice, despite the time being granted to the petitioner till July 24, 2017, to submit documents sought by the Dispute Resolution Panel, the Dispute Resolution Panel passed the order on July 24, 2017 itself and that too without taking on record the documents produced by the petitioner till then. The time given for the petitioner to do so was just four days. This was clearly unreasonable, particularly, since there was an intervening weekend between July 20/24, 2017.

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• 2017 (11) TMI 1016
  Contravention of the procedure provided in section 12AA - allowing the rectification of the Trust Deed after the Commissioner's order of rejection from granting exemption Pursuant to the order dated April 17, 2017 BY ITAT - Held that:- An affidavit has been filed by Mr. A.P. Singh, who is one of the trustees of the Uma Sanjeevani Charitable Trust (respondent), placing on record inter alia the rectification deed dated January 22, 2016. He has also enclosed, with the affidavit, an order dated May 4, 2017 passed by the Commissioner of Income-tax (Exemptions) granting registration under section 12AA read with section 12A of the Income-tax Act, 1961 to the respondent-trust after taking on record the rectification deed. No substantial question of law

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• 2017 (11) TMI 1014
  Application of the assessee u/s 12AA grant of registration - Rejection of registration holding that the aims and objects of the assessee were not charitable in nature - fees charged by the assessee from the students had been used for the purposes other than running the educational institution - Held that:- Nothing had been placed by the Revenue to show that the fees charged by the assessee from the students had been used for the purposes other than running the educational institution managed by the assessee-trust. There is nothing on record to suggest that the objects and activities of the assessee-trust are not of charitable character. Further, the Assessing Officer while passing the assessment order under section 143(3) of the Act for the assessment year 2012-13 had accepted the income of the assessee at nil as returned by the assessee. Therefore, the income derived by the assessee by way of fees from the students was applied for the aims and objects of the trust. The Commissioner of Income- tax had not found that the activities carried out by the assessee were not in consonance with its objects. Still further, in the enquiry report submitted by the Assessing Officer, nothing was mentioned as to on what basis he did not recommend for registration to the assessee. The Tribunal had rightly held that the trust was eligible for registration and directed the Commissioner of Income-tax to grant registration to the assessee - Decided in favour of assessee.

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• 2017 (11) TMI 1009
  Validity of requisition under section 132A(1) - sufficiency to order requisition of the seized cash - requisition made under section 132A(1) to the S.S.P. Muzaffar Nagar for producing the cash which was recovered from one of the accused Held that:- The submission that there was sufficient information and material for forming an opinion in sending the requisition under section 132A(1) as is reflected from the order-sheet is of no substance inasmuch as the information and the reason to believe has to be contained in the letter of requisition itself. Even otherwise, the order-sheet only contains that the local Hindi newspaper contains the news item that Smt. Rewati Singh was murdered and looted and the looted amount of about Rs. 51 lakhs was seized by the Muzaffar Nagar Police from the accused persons. A further order dated August 13, 2010 states that the seizure of the aforesaid amount is a strong reason to believe that Hukum Singh is having income which is not being disclosed. Therefore, the newspaper information is sought to be made the basis for issuing the above requisition letter but the availability of such information by itself without there being any other material or information which would justify that the person in possession was having income over and above that disclosed and that he had concealed the real income is not sufficient to order requisition of the seized cash. Requisitioning of books of accounts and their documents under section 132A(1)(b) without recording satisfaction or reason to believe is not sustainable in law and is therefore liable to be quashed. In view of the above decisions no requisition could have been made under section 132A(1) to the S.S.P. Muzaffar Nagar for producing the cash which was recovered from one of the accused. The documents or the books of account in respect whereof the requisition is said to have been issued have not been disclosed either in the requisition or in any other supportive material which means that the requisitioning authority had no intimation whatsoever as to the documents or the books of account which he proposes to be requisitioned. In such a situation, the only inference which can be drawn is that no satisfaction or any reason to believe was validly recorded by the requisitioning authority for issuing the requisition. In view of the above, the conclusion drawn by the Assistant Commissioner of Income-tax for requisition under section 132A(1) is not legally tenable in law and cannot be sustained.

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• 2017 (11) TMI 1008
  Disallowance of deduction claimed u/s 80-IA(4) - income derived from the industrial undertaking of container freight station at JNPT - Held that:- This issue is squarely covered against the Revenue in light of the decision of the Delhi High Court in the case of Container Corporation of India Ltd. v. Asst. CIT [2012 (5) TMI 260 - DELHI HIGH COURT ] as well as CIT v. Continental Warehousing Corporation (Nhava Sheva) Ltd. reported in [2015 (5) TMI 656 - BOMBAY HIGH COURT]. In the aforesaid two decisions, the Delhi High Court as well as the Bombay High Court, after considering the Central Board of Direct Taxes Circular No. 10 of 2005, dated December 16, 2005 have specifically observed and held that looking to the facilities provided by the container freight station, the container freight station is an inland port as it carries out functions of warehousing, customs clearance and transport of goods from its location to sea-port and vice versa by rail or by trucks in containers. Under the circumstances, the learned Tribunal has rightly deleted the disallowance of deduction claimed by the assessee under section 80-IA(4) of the Act. - Decided in favour of assessee.

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• 2017 (11) TMI 1006
  Denial of registration u/s 12 AA - Application for grant of approval of the assessee u/s 80G rejected - proof of charitable activities - whether trust or institution which is yet to start any charitable activity cannot be granted registration u/s 12AA? - Held that:- At the time of grant of registration it is not proper to insist on charitable activity having been already carried out by the society or charitable institution seeking registration. See D.I.T. vs Foundation of Opthalmic & Optometry Research Foundation Centre [2012 (8) TMI 777 - DELHI HIGH COURT] In the order of CIT(E) the denial of registration u/s 12 AA of the Act to the assessee cannot be sustained. The registration u/s 12AA of the Act is therefore directed to be allowed to the assessee. Since the registration u/s 12 AA of the Act is allowed to the assessee and since the only reason for the CIT(E) to deny grant of approval to the Assessee u/s 80G of the Act was that there is no registration u/s 12AA granted to the assessee, the approval u/s.80G of the Act is also directed to be granted to the assessee. - Decided in favour of assessee.

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• 2017 (11) TMI 1005
  Capital gain computation - Adoption of sale value of land transfer - Held that:- As far as the value of sale consideration is concerned, the AO made a mistake in adopting the guide line value as at the time of sale of Flat No. 202, which was subsequent to the date of agreement i.e., 19-06-2001 which happens to be in AY. 2002-03 and not in the impugned year. Assessee offered capital gains on completion of super structure during the year and obtained 8 flats. Therefore, there is nothing wrong in adopting the cost of super structure as full value of consideration. AO is directed accordingly. Cost of acquisition - Held that:- The value of transferred land and cost of building demolished. As far as the cost of land is concerned, the value as on 01-04-1981 has to be adopted. However, as the guidelines values are not revised upto 1995, the AO adopted Rs. 70/- after allowing 5% increase in the value as fixed in 1975. This is not correct. The value of Rs. 1,000/- claimed by assessee is also without basis. Moreover, the cost of building demolished would also become cost, as the building would reduce the freehold land value. Demolition of existing building could result in developing the land. Therefore, the cost of building will be allowable as cost of improvement. The AO’s hyper technical view that assessee transferred only ‘land’ is not correct as the demolition of existing building for developing a new structure is part of the ‘transfer’ and the cost has to be allowed while computing ‘capital gains’. The AO is therefore directed to consider the cost of building demolished at Rs. 100/- per sq. ft., as claimed. The value of land can be determined approximately at Rs. 300/- keeping in mind the claim of assessee and AO’s determination on guideline values. AO is directed to adopt cost of acquisition accordingly. Benefit of Section 54/54F - Held that:- AO’s contention that assessee owns more than two residences was not correct. Assessee got eight apartments subsequently, on transfer of one residential house property, by way of development agreement. Nowhere the AO contends that assessee had more than one building as on the date of transfer i.e., on 19-06-2001. Subsequent acquisition of any number of houses will not prevent assessee claiming the deduction for transfer as on 19-06-2001. Therefore, the AO’s view can not be upheld. Assessee is entitled for deduction u/s. 54/54F. The decision in Suseela M.Jhaveri's case [2007 (4) TMI 289 - ITAT BOMBAY-I ] holding that only one residential house should be given the relief under Section 54 does not appear to be correct and we disapprove of it. Assessee is entitled for claim u/s. 54/54F on all the flats. AO is directed to allow the deduction as claimed. Compensation received for vacating the building - This is a capital receipt. AO has to adopt the same as part of the transfer. Rs. 1 Lakh cannot be brought to tax as ‘income from other sources’. AO is directed to include the same as cost of sale consideration. However, the facts indicate that assessee has offered capital gain in the return of income. The assessment has been reopened u/s. 147 on the reason of escapement of income. Assessee also filed the same return in response to the notice u/s. 148. Consequently, the claims settled cannot be reagitated and only that part of the income which has escaped assessment has to be considered. Following the principles laid down by the Hon'ble Supreme Court in the case of CIT Vs. Sun Engineering Works (P) Ltd., [1992 (9) TMI 1 - SUPREME Court], direct the AO to compute the capital gains as directed above and in case the same falls below the returned income, accept the returned income as such.

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• 2017 (11) TMI 1004
  Penalty u/s 271(1)(c) - whether the notice issued by the Assessing Officer dated 27/10/2011 is valid or not? - Held that:- From the reading of the notice, it is not clear whether Assessing Officer has initiated penalty proceedings for concealment of particulars of income or furnished inaccurate particulars. Therefore, the notice issued by the Assessing Officer is a vague notice and is liable to be quashed in the light of the decision of the Hon'ble Jurisdictional High Court in the case of Smt. Baisetty Revathi (2017 (7) TMI 776 - ANDHRA PRADESH HIGH COURT) and also SSA’s Emerald Meadows (2016 (8) TMI 1145 - SUPREME COURT). - Decided in favour of assessee.

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• 2017 (11) TMI 999
  Addition u/s 68 - unexplained cash credit in the Federal Bank A/c - Held that:- We are of the opinion that when it appears to the AO that the financial capacity of the lenders was weak with their earning capacity of Rs. 1,500/- to Rs. 4,500/- per month, the AO should have examined the issue by questioning them to know the source of the amounts for extending the loan to the assessee, instead of rejecting the sworn statements without scrutiny. No reasons are assigned by the AO for discarding the sworn statements and it is not known where from the AO gathered the information relating to the financial capacity of these persons. For this reason, we find that Rs. 1 lakh is not such a big amount as could not be contributed by five persons and in the absence of any material the AO should have accepted the contention of the assessee. Addition of pigmy savings of the daughter of the assessee and the other amount as compensation from Insurance Company - Held that:- In so far as the compensation from Insurance Company is concerned the assessee could have produced the relevant documents. However, we cannot expect any such evidence in respect of Rs. 38,085/- and the pigmy savings of the daughter of the assessee cannot be termed as income of the daughter so as to club such income with the income of the assessee. Such savings of the daughter could obviously be out of the amounts provided by the assessee. We, therefore, find it just and reasonable to accept the explanation of the assessee in respect of Rs. 38,085/- and reject the contention of the assessee in respect of the balance amount. We, therefore, direct the AO to delete Rs. 1 lakh and Rs. 38,085/- and we confirm the rest of the addition. Addition relating to the interest paid on unsecured loans - non deduction of TDS - Held that:- There was a clear assertion by the assessee before the Ld. CIT (A) that since the deductee-assessee had paid due taxes in time on the interest income received from the assessee and duly shown in their respective return, the payment of interest cannot be treated as income of the assessee and hence, addition made on this aspect cannot be sustained. In spite of this clear submission, Ld. CIT (A) failed to deal with this aspect in his order while dealing with ground no. 3. In all fairness Ld. CIT (A) should have rejected this contention of the assessee only after considering the same and by assigning the cogent reasons. Though the Ld. CIT (A) recorded a finding that the submissions of the assessee were considered and those were found to be out of context and devoid of merits, we are unable to agree with him. It is not known how the contentions raised by the assessee by referring to the provisions u/s 201(1A) of the Act and the payment of the advance tax by the recipients of the interest amount are irrelevant. We, therefore, do not find reasoning given by the Ld. CIT (A) as satisfactory and find it difficult to sustain the same. We consider that it is a fit case to restore the ground to the file of the AO for verification of the facts pleaded by the assessee and to give a fresh finding. We, therefore, remand this ground to the file of the AO to verify whether the recipients of the interest amount have paid the advance tax and self assessment tax in respect of this particular interest amount by giving an opportunity to the assessee of being heard. Disallowance towards 10% of the total expenses on the ground that the same is attributable to the personal use of telephone and travelling expense - Held that:- In so far as telephone is concerned, we agree with the authorities below but in so far as travelling and shop expenses are concerned, we do not find it justifiable to make any disallowance without pointing out any discrepancy in respect of those two expenses. We, therefore, sustain the disallowance u/s 37 of the Act to a tune of Rs. 1,536/- and delete the rest of the same.

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• 2017 (11) TMI 998
  Allowable business expenses - non furnishing of the primary details at any stage of proceedings and infirmities in the documents that were produced at the appellate stage, created a reasonable doubt as to the authenticity of the provision and the expenditure - Held that:- Assessee failed to plead before us any reasons for their inability in securing such evidence at least by now in support of their contentions. All these facts put together, do not inspire any confidence in our mind to believe that when the goods were delivered for a sum of Rs. 20,49,100/-, the assessee does not know the probable value thereof and went on to create the provision for a sum of Rs. 51 lakhs, could not secure the primary evidence even in respect of the expenditure that was booked, and unable to explain why the balance provision for Rs. 30,50,900/- had to be created. All these things show that at the end of the relevant financial year the assessee did not have even the faintest idea as to the probable expenditure that may have to be paid for which the provision has to be created. We, therefore, find that the plea taken by the assessee does not seem to be believable ex facie, as such. With this view of the things, we do not propose to interfere with the findings of the Ld. CIT (A) while dismissing the appeal. We, therefore, find the appeal devoid of merits and accordingly, the same is liable to be dismissed. Appeal of the assessee is dismissed.

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• 2017 (11) TMI 997
  Grant of deduction u/s 80P(2) to the assessee-society - Held that:- In the instant case, admittedly, the assessee has produced a certificate showing that it is registered as a Primary Agricultural Credit Society under the provisions of the Kerala Co-operative Societies Act, 1969. Since the Hon’ble Kerala High Court in case of M/s Chirakkal Service Co-operative Bank & Ors [2016 (4) TMI 826 - KERALA HIGH COURT] has categorically held that a Primary Agricultural Credit Society registered under the Kerala Cooperative Societies Act, 1969 is entitled to the benefit of deduction u/s. 80P(2) of the Act, we are of the view that the CIT(A) is justified in directing the Assessing Officer to grant the benefit of deduction u/s. 80P(2) of the Act.

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• 2017 (11) TMI 994
  Disallowing the claim u/s 11(2) and U/s 11(1)(a) - AO observed that giving and receiving funds between two trust having common trustees for mutual benefits is a clear violation of the provisions of section 13(1)(c) - purpose of accumulation was not specific, which is mandatory for accumulation u/s 11(2) - Held that:- We are of the view that when the Assessing Officer finds that the income which was set apart in any Assessment Year for future expenditure for charitable purposes has not been utilized for the charitable purpose, then he has to bring such non-charitable expenditure to tax in the year of its expenditure as per the provisions of section 11(3). But such expenditure for non-charitable purpose cannot be the basis for denial of exemption u/s.11. Therefore, the observation of the Assessing Officer that the assessee is not expending the set apart incomes of the earlier years in subsequent years for charitable purposes is not borne out of facts. In the assessee’s case under consideration, the assessee trust filed the Form no.10 and made the compliance and there is no any mistake on the part of the assessee. - Decided in favour of assessee.

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• 2017 (11) TMI 993
  Disallowance u/s 14A r.w.r. 8D(2)(ii) - Held that:- As for the disallowance under Rule 8D(2)(iii), the assessee on her own had disallowed a sum of Rs. 5 lacs in the return of income out of total administrative expenses of Rs. 40,73,576/-. The Ld. AO had not recorded any satisfaction as to how the said disallowance made by the assessee is incorrect having regard to the accounts of the assessee in terms of Section 14A(2) of the Act read with Rule 8D(1) of the Rules. Accordingly, this Tribunal held that the other disallowance under Rule 8D(2)(iii) deleted by the Ld. CIT(A) was in order and dismissed the appeal of the revenue. We find that the aforesaid finding given would squarely apply to the instant appeal also as admittedly the revenue had agitated the disallowance made under Rule 8D(2)(ii) of the Rules in the sum of Rs. 49,31,531/-. Since, this issue had already been decided by this Tribunal in assessee’s case for the assessment year 2010-11 in original assessment proceedings, there is no need to adjudicate the same again in the reassessment proceedings. Hence, the ground no. 1 raised by the Revenue is dismissed. Addition made towards rental income in respect of five shops - determination of income - ownership of shops - assessee pleaded that she is not the owner of the property and hence there could not be any charge of rental income of notional basis under the head income from house property on her - Held that:- In the instant case, the assessee had used these five shops for the purpose of her business in the capacity of sub-licensee. These facts are not in dispute. Hence there is no scope for assessment of rental income on notional basis on fair market value determined by the Inspector of Income Tax. The legislature in its wisdom had contemplated to bring to tax the rental income from properties held as stock in trade on notional basis after one year from the date on which they were acquired, and this amendment is effective only from 01.04.2018. We find similar provision was conspicuously absent previously under the Income Tax Act more particularly, under the head ‘profits and gains of business or profession’ for chargeability of notional income for five shops. Hence, we hold that the Ld. CIT(A) had rightly deleted the addition made towards rental income under the head income from house property in the instant case and accordingly, the ground no. 2 of the revenue is dismissed.

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• 2017 (11) TMI 992
  Claim of depreciation - there was no working during the year - Held that:- As during the year under consideration the assessee has business receipts in the nature of sales in the preceding as well as subsequent years and it has made purchases during the relevant previous year and in the earlier year as well as subsequent years, except F.Y. 2011-12. Also found that the purchase invoice for the relevant P.Y. and the Sales invoice for the Preceding P.Y. bore the address of the said Bandra premises. Thus, the presumption drawn by the assessing officer that asset was not put to use is baseless. The asset was already a part of the block. Also, depreciation on the said building premises was allowed in A.Y. 2012-13 which is the assessment year relevant to the year of purchase. Furthermore, detailed finding recorded by CIT(A) at para 6 has not been controverted by bringing any positive material on record. The issue under consideration is also covered by the decision of Bombay High Court in case of G.N. Agarwal [1993 (8) TMI 5 - BOMBAY High Court]. Appeal of the revenue is dismissed.

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• 2017 (11) TMI 988
  Grant of interest / compensation on the delayed payment of interest u/s 244A - Held that:- There is an inordinate delay of more than 10 years in payment of balance amount to the assessee, hence, in the light of the decision of the Hon ble Supreme Court in the case of CIT Vs. Gujarat Flluro Chemicals [ 2013 (10) TMI 117 - SUPREME COURT] the assessee is otherwise entitled for the compensation from the Revenue for inordinate delay in the payment of interest. We accordingly direct the Revenue to pay compensation in the shape of simple interest on the amount due at the rate at which the assessee otherwise would have been entitled to, on the delayed payment of excess tax paid. In view of this, these appeals of the assessee are treated as allowed.

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• 2017 (11) TMI 987
  Validity of assessment u/s 153C - date for the purpose of section 153C - date of satisfaction note u/s 153C recorded - period of limitation - Held that:- Date of receiving the seized documents and other evidences should be taken as 29.01.2013. By virtue of first proviso to section 153C, date of initiation of search for computing six assessment years has to be counted as if date of search is 29.01.2013. Six assessment years covered u/s 153C would be A.Y. 2007-08 to A. Y. 2012-13. Therefore, impugned assessment years 2006-07 cannot covered within six assessment years as envisaged u/s 153C. Accordingly, Ld. CIT(A) rightly held that the impugned assessment for A. Y. 2006-07 is time barred and not covered u/s. 153C of I.T. Act. Accordingly, the impugned assessment order was rightly held annulled, which does not need any interference on our part, hence, we uphold the same. - Decided in favour of assessee.

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• 2017 (11) TMI 983
  Capital gain claim - on doubt about the handing over of the possession of the property as per the Terms of the Agreement treated as Unexplained money under section 68 - exemption under section 54 denied - co-ownership on property - Held that:- It is in general practice to make entire payment of amount in consideration pending the execution of Sale deed, only when possession of the property is handed over to the buyer. Hence, there was no reason to doubt about the handing over of the possession of the property as per the Terms of the Agreement and as per the financial statements of the buyer company on full payment of the amount in consideration. It is undisputed position of law that for the purpose of section 2(47) of the Income Tax Act, “transfer” of immovable property is complete on handing over of the possession of the property on payment of sale consideration in performance of a contract of the nature referred to in section 53-Aof the Transfer of the Property Act. It is also undisputed fact that name of the owner on the record of House Tax and Electricity Departments is transferred on the basis of Registered Sale Deed only. Thus the report of the Income Tax Officer has no relevance. And above all, in the case of co-owner i.e. Rajendra Kanodia & Sons (HUF) who was owner of the 50% of the same property, the Assessing Officer in the assessment under section 143(3) for the same assessment year has allowed the claimed exemption under section 54 of the I. T. Act on the sale of their 50% of the property. Under these facts and circumstances, we hold that the Assessing Officer was not justified in denying the claimed exemption under section 54 of the Act to the assessee on the basis that possession of the property was not handed over to the buyer and thus, sale was not complete in absence of execution of Sale Deed. We thus, while setting aside orders of the authorities below in this regard, direct the Assessing Officer to allow the claimed exemption - Decided in favour of assessee.

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• 2017 (11) TMI 982
  Disallowance u/s. 14A - nexus between the expenditure incurred and tax free income - Held that:- Considering the tax exempt investment of Rs. 759.04 crores and tax exempt income of Rs. 46.56 crores, some administrative and managerial expenses are definitely incurred which are attributable to tax exempt investment income. Therefore, as per Rule 8D(2)(iii), 0.5% of average value of investment calls for disallowance u/s 14A keeping in view the administrative and managerial expenses attributable to tax free investment income. The AO has disallowed Rs. 3,63,00,0007- under Rule 8D(2)(iii) being 1/2% of average value of tax exempt investment which is, therefore, justified. In view of the above factual and legal position, the disallowance made by the AO u/s 14A is reduced from Rs. 49.15 crores to Rs. 3.63 crores. Accordingly the grounds of appeal are partly allowed. Disallowance as revenue expenditure being software expenses - Held that:- As AR had submitted the details of AMC charges which has been allowed by the ld. CIT(A) as revenue expenditure, but in case of license fee for oracle database, antivirus software etc., the appellant could not establish that the same were for a particular period. The case laws relied upon by the appellant has rightly been distinguished by the ld. CIT(A). We, therefore, find that the ld. CIT(A) has passed a good order which needs no interference on this issue. Accordingly, grounds No. 7 in both the appeals of the assessee are dismissed. Addition on account of excess depreciation claimed on temporary wooden structure - Held that:- This issue is covered by the decision of Tribunal for A.Y. 2008-09 & 2009-10 whereby the issue has been restored to the file of AO observing that assessee has shown these items as furniture and fixtures and we do not find that Appendix I as per Income tax rules 1962 prescribed under the head furniture and fixtures any class of items, which is eligible for 100 % depreciation. As per annexure D of the tax audit report, assessee himself has classified it is temporary wooden structure. Definitely, it is apparent that it is not building which CIT (A) has considered. Therefore, from the facts it is not clear that whether it is building or furniture and fittings. Secondly, we agree with the views of the CIT (A) that AO has erred in allowing depreciation at the correct rates has amortized these expenditure over 5 years. Therefore, in absence of these facts, this ground of appeal is restored back to the file of AO for fresh verification. Addition on account of interest on overdue deposits - Held that:- The claim of assessee, in our opinion, is not acceptable until it is ascertained that the actual payment of the provision has been made to the customers or not. We, therefore, restore this issue to the file of AO for the limited purpose to verify whether actual payment of the provision has been made to the customers or not and to decide the same accordingly as per law. Addition made on account of excess deduction u/s. 36(1)(viia) - Held that:- From the computation of income it is clear that the appellant has claimed the deduction u/s 36(1)(viia) as per the provision which is sum of the amount not exceeding 7.5% of the total income before making any deduction under this clause and chapter VI-A i.e. 7.5 % of Rs. 22,16,97,03,324/- (Rs. 166,27,27,749/-) and 10% of average aggregate advances pertaining to rural branches i.e. (10% of Rs. 3,043,77,68,253/-) Rs. 304,37,76,800/- as per auditor certificate qualifying the deduction under rule 6BA read with sec 36(1)(viia). The claim made by the appellant u/s 36(1)(viia) is to the extent it does not exceed 7 ½ % of the total income and an amount not exceeding 10% of the aggregate average advances made by the rural branches of such bank computed in the prescribed manner. In view of the above, the arbitrary disallowance made by the AO cannot be sustained. Therefore, the same is deleted and appeal is allowed in this ground

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• 2017 (11) TMI 981
  Supply of software on licence - Taxability in India - whether the payment received by the assessee from supply of software, is taxable in India as royalty in India or not either under section 9(1)(vi) or under Article 12(3) of India USA DTAA or both? - Held that:- Software is sold to be used only on one server in India and not in other jurisdictions. As clarified that clause 2.3 of the licensing agreement uses the word ‘applicable supplement’ which suggests that supplement would be different for different customers depending upon various customers. Though the order form is standard, but they may be different in supplement agreement so as to number of users, manage code, size base for different customers. It is only with a view to provide flexibility to customers, the clause subscription to overnight the Master Licensing agreement have been inserted. Thus, the reference made by the ld. CIT D.R. to these clauses and also supplement will not change the basic fact that what has been sold by the assessee is purely a copyrighted software given for use of the customers without transferring any kind of right to use and with lot of restrictions as given in clause 2.4 of the agreement. We completely agree with the clarification and submission made by the Ld. Counsel that supplementary agreement does not enlarge the scope of the main license agreement but only envisages providing access to all the persons within the enterprise. Thus, in view of the discussion made above and respectfully following the judgment of Hon’ble Delhi High Court, in the cases of DIT vs. Nokia Networks (2012 (9) TMI 409 - DELHI HIGH COURT) DIT vs. Ericsson A.B. (2011 (12) TMI 91 - Delhi High Court); DIT vs. Infrasoft Ltd. (2013 (11) TMI 1382 - DELHI HIGH COURT ); and CIT vs. Alcatel Lucent Canada (2015 (5) TMI 431 - DELHI HIGH COURT) we hold that the payment received by the assessee does not fall within the ambit of ‘royalty’ under Article 12(3) of India USA DTAA and hence, the same cannot be taxed under the terms of India USA Treaty. If the receipts cannot be taxed under the treaty as royalty, then it cannot be taxed under the domestic law under section 9(1)(vi) Income Tax Act and the amended provision cannot be read into treaty as held by the Hon’ble Delhi High Court in aforesaid cases. Accordingly, the appeal of the assessee is allowed.

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• 2017 (11) TMI 980
  Validity of assessment made u/s 153A - Held that:- Departmental representative could not point out any incriminating material before us. In view of this respectfully following the decision of the Hon’ble Delhi High Court in case of CIT versus Kabul Chawla (2015 (9) TMI 80 - DELHI HIGH COURT ) and also following the provisions given Commissioner of income tax versus sun pharmaceuticals Ltd [2017 (9) TMI 1416 - GUJARAT HIGH COURT] of rule 27 of the income tax appellate tribunal rules were invoked, and also the decision of the coordinate bench in the case of the daughter of the assessee where on identical facts and circumstances the appeal of the revenue is dismissed, we dismiss the appeal of the revenue on this count. Addition of unexplained cash - Held that:- Merely because the reason that the assessee and the husband of the assessee are legally separate cannot be the reason for not giving the credit of the cash found during the course of search. It is never established that both are not staying in the same residence and further over and above the sum of Rs. 60,000 per month, the husband of the assessee was not paying her other sums. It is pertinent to note here the assessment proceedings for assessment year 2001 – 02 which was also before us in a separate appeal wherein a sum of Rs. 58 lakhs was received from the husband of the assessee. Therefore it is apparent that despite the fact being both the assessee and her husband separate the amount of cash found during the course of search is covered by the withdrawal of assessee and her husband. Furthermore it is not the case of the revenue that amount of cash withdrawal by the husband of the assessee has been used somewhere else and is not available. In view of this we reverse the finding of the Ld. Lower authorities and allow the appeal of the assessee directing the assessing officer to delete the addition of Rs. 12.96 Lacs on account of excess cash found during the course of search. In the result ground No. 2 of the appeal of the assessee is allowed. Addition of sum received by the assessee from her husband Mr. Suresh from the account payee cheques - Held that:- it is nowhere established by the revenue that money belongs to the assessee and it is rooted through the bank account of her husband. In fact, he held that there is sufficient money in the bank account of the husband of the assessee, and the above sum as been paid on account of order of the Hon’ble court who has determined the sum based on the creditworthiness of the payer. The Ld. departmental representative could not point out that how the identity, creditworthiness of the husband of the assessee is not proved and further when the sum is paid in pursuance of a court order, the genuineness of the transaction cannot be doubted. In view of this we confirm the order of the Ld. CIT (A) in deleting the addition of Rs. 1 230700 made in the hands of the assessee on account of some received by assessee from her husband. In the result ground No. 2 of the appeal of the revenue is dismissed. Unexplained jewellery found during the course of the search - Held that:- The value of the jewellery found during the course of search was far less than the value of jewellery declared by the family. Further more in para No. 13 of the order. He has considered the individual wealth tax return of the assessee and held that merely because the description of the jewellery do not tally with the description of the jewellery declared by the appellant cannot be added in the hands of the assessee due to the frequent repair, renovation, alteration, modification of jewellery which can be explained in the available cash on hand and withdrawals of the assessee. Therefore in view of the above finding of the Ld. CIT appeal which is not disputed, we do not find any infirmity in the order of the Ld. CIT appeal in deleting the above addition. Validity of assessment order passed under section 153A - whether order cannot be held to be legally valid as the assessment was not pending and no evidence of undisclosed income was found during the course of search and therefore the assessment deserves to be annulled? - AY 2005-06 - Held that:- It is provided that the assessing officer shall assess or reassess the total income of the 6 assessment years immediately preceding the assessment year relevant to the previous year in which such searches conducted or requisition is made and further relevant assessment year. It is further provided that if on the date of initiation of the search under section 132 or making of recreation under section 132A. If any of the assessment or reassessment is pending within the period of 6 assessment years, or for the relevant assessment year then they shall abate. Therefore, in the present case the assessment for assessment year 2005 – 06 was not pending and therefore the assessing officer sell assess or reassess the total income in respect of this assessment year because it is falling within such 6 assessment years. Hence, it cannot be said that the assessment order passed by the Ld. assessing officer is invalid. In view of this ground No. 2 of the appeal of the revenue is allowed and order of the Ld. CIT appeal annulling the assessment order is set aside.

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• 2017 (11) TMI 976
  Reassessment of proceeding - AO while making the addition in reassessment proceedings, did not consider the request of assessee to provide him the information received against the assessee and to give him an opportunity to cross-examine the said broker by issuing summons to him - Held that:- The assessee has received the payments on 02.09.1998 of Rs. 5 lacs and Rs. 4,41,333-50 on 22.09.1998, which is after about six months from the last transaction/settlement date, as noted above. It is also found that in some Broker’s notes certain columns such as order No. Trade No. Trade time, are lying blank. The authorities below are required to examine the effect of these columns as also the settlement period as per National Stock Exchange Rules prevailing at the relevant point of time. We, therefore, feel it expedient in the interest of justice that thorough examination and proper verification of the impugned share transactions is necessarily to be made independently with reference to the documentary evidences laid by assessee and in the light of above observations in order to check the genuineness of the impugned transactions. We, therefore, set aside the order of the ld. CIT(A) and restore the matter back to the first appellate authority to decide the appeal afresh after making proper examination in the light of observations made in the body of this judgment. The ld. CIT(A) if feels necessary, may take remand report from the AO in this regard. Appeal of the assessee is allowed for statistical purposes.

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• Customs

• 2017 (11) TMI 1013
  Jurisdiction - Whether the Custom, Excise and Service Tax Appellate Tribunal exceeded its jurisdiction in the recalling its earlier order dated 26.10.2005 by restoring to powers under Sub-section 2 of Section 129B of the Customs Act? - Held that: - The power of the Tribunal under Section 129B(2) of the Act is identical to the power under Section 254(2) of the Income Tax Act. Therefore, while exercising power under Section 129B(2) of the Act to rectify mistake apparent on the face of the record, would include within it the power to recall an order while exercising jurisdiction under Section 254(2) of the Income Tax Act or Section 129B(2) of the Act for rectification of mistake - identical issue decided in the case of ASSISTANT COMMISSIONER, INCOME TAX, RAJKOT Versus SAURASHTRA KUTCH STOCK EXCHANGE LTD [2008 (9) TMI 11 - SUPREME COURT ], where it was held that in exercise of power under Section 254(2) of the Income Tax Act, 1962 the Income Tax Tribunal has power to recall an order passed under Section 254(1) of the Income Tax Act while exercising power of rectification as provided under Section 254(2) of the Income Tax Act - appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 1012
  Principles of natural justice - petitioners were denied a right of cross-examination of the witnesses of the prosecution by the customs authorities - Held that: - Although the petitioners have statutory alternative remedy, the petitioners have chosen to apply under Article 226 of the Constitution of India impugning the order-in-original. Existence of a statutory alternative remedy is not a complete bar to the maintainability of a writ petition. Despite existence of a statutory alternative remedy, the writ petition is maintainable if it is demonstrated that the impugned order suffers from jurisdictional error or has been passed in breach of principles of natural justice or is vitiated by bias or malice or is perverse - The petitioner was denied an opportunity to cross-examine the witnesses - the impugned order suffers from breach of principles of natural justice - petition allowed - decided in favor of petitioner.

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• 2017 (11) TMI 1007
  Diversion of the goods to the DTA - demand - two parallel proceedings in relation to the same subject matter - Held that: - once the question of duty liability based upon the allegation of diversion of the goods to the DTA in relation to the goods imported vide Bill of Entry No. 2376, dated 25-9-2003 has already been adjudicated upon, it is not permissible for the respondents to pursue another proceeding in relation to the same subject matter as it is not permissible for the authorities to prosecute two parallel proceedings in relation to the same subject matter. While it is true that the show cause notice dated 18-12-2008 does not propose confiscation of goods and levy of penalty, an order of confiscation or penalty would be only consequential to the confirmation of the duty liability. In the facts of the present case, having regard to the fact that the adjudicating authority, albeit beyond the scope of the proceeding before him, has thought it fit to issue a show cause notice in respect of levy of duty and interest, and has already proceeded to adjudicate upon the same, it is now not permissible for the respondent authorities to proceed further to adjudicate upon the same controversy in another parallel proceeding. Confiscation of goods - Held that: - though there may be additional proposals in the subsequent show cause notice, the basic proposal relates to confirmation of duty and interest based upon the allegation of diversion, which has already been adjudicated upon pursuant to the show cause notice dated 18-12-2008. The adjudicating authority having already adjudicated upon the issues, it is not permissible for it to keep the proceedings of the show cause notice dated 6-9-2007 in abeyance till the culmination of the proceedings arising from the show cause notice dated 18-12-2008. The continuance or otherwise of the show cause notice dated 6-9-2007 cannot be contingent upon the outcome of the proceedings arising out of the show cause notice dated 18-12-2008 - further proceedings pursuant to the show cause notice dated 6-9-2007, which relate to a subject matter which already stands adjudicated, stand vitiated - SCN do not sustain. Petition allowed - decided in favor of petitioner.

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• 2017 (11) TMI 1003
  Penalty - smuggling of gold by the process of courier - case of appellant is that the impugned order is passed merely on presumption and assumption without any legally sustainable evidence - Held that: - In view of the clear cut evidence by way of various statements recorded during investigations which have not been controverted by the appellants except saying that they are not concerned with the said courier and it does not belong to them - in view of the detailed reasoned order passed by both the authorities below discussing the role of each appellants in the matter of smuggling of gold by the process of courier, there are no infirmity in the impugned orders - appeal dismissed - decided against appellant.

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• 2017 (11) TMI 989
  Misdeclaration of goods - the goods declared as finished leather but found to be other than finished leather, in the absence of wax coating - confiscation - redemption fine - penalty - Public Notice No. 21/2009 dated 01.12.2009 - Held that: - identical issue decided in the case of M/s. Expos Leather Company Versus Commissioner of Customs, Chennai [2010 (4) TMI 1112 - CESTAT CHENNAI], where confiscation and imposing penalty was set aside after noting that no effort was made to export the goods in question and that the goods had been allowed to be taken back for the purpose of applying protective coating so as to make the goods conform to the definition of finished leather - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 974
  Valuation - import of Old and used Digital Multifunction Printer - enhancement of value - Held that: - As for the question of confiscation of the goods for mis-declaration of value, the appellants had declared the goods correctly in description/quantity/value and classified them under proper chapter heading of Customs Tariff. The value of the goods was enhanced on the basis of the Chartered Engineer’s certificate which was accepted by both the parties. We agree with Commissioner (Appeal)’s findings that (i) mere enhancement of value on the basis of C.E. certificate cannot be a ground for treating declared value as mis-declared unless there is other corroborative evidence. (ii) except enhancement on the basis of C.E.’s Certificate, there is no other material on record to inform that declared value was mis-declared - appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 973
  Classification of goods - Computer Parts Input-Output Unit EOV DIGITIZER - Revenue claims classification under CTH 9022 19 00 whereas appellant claims it to be under CTH 8471 41 90? - Held that: - specific entry relied upon by Revenue demonstrates the nature and character of the goods to attract it to the category it serve purposes of that entry - Although end-user is not the criteria for classification, but the very character and nature of goods when subscribe to a specific entry, that prevails over a general entry for classification. Therefore the classification sought by Revenue under CTH 9022 is appropriate - appeal dismissed - decided against appellant.

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• 2017 (11) TMI 972
  Penalty - smuggling - Red Sanders Wood - Held that: - In the present case, the findings of the Adjudicating Authority that the appellant had not informed the police, which would not come within the purview of attempt to export goods improperly by the appellant. The word “attempt would indicate an intent combined with an act to export goods improperly.” So, the imposition of penalty under Section 114(i) on the appellant is not justified - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 970
  N/N. 53/97-Cus., dated 3-6-1997 - Waste - Clandestine removal - Held that: - it does not appeal to common sense as to how without SION fixed by the EXIM Policy which governed the appellant for the purpose of import and export and also the notification governing the appellant, as aforesaid, having no mention about any SION or percentage of wastage, appellant shall be arbitrarily dealt - Making further examination, it is noticed that the waste generated was not deliberate and the appellant has paid excise duty thereon when cleared. Department has not made any case to show that there was deliberate pilferage of the raw material by the appellant or diverted the same. In absence of any mala fide being brought on to record, appellant cannot be suspected to have made any undue gain at the cost of the State - appeal allowed - decided in favor of appellant.

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• Service Tax

• 2017 (11) TMI 1018
  Vires of Rule 5A (1) of the Service Tax Rules 1994 - abuse of powers and patent illegality in carrying out the survey/seizure operation in the premises of the Petitioner - Held that: - It is surprising that despite these serious allegations, till date, the Respondents have chosen not to file reply. The failure of the Respondents to do so would have legal consequences. At the same time, the Court cannot be denied the assistance required in matters involving such serious allegations - The Commissioner, Services Tax Delhi –III will produce before this Court in a sealed cover, the entire records pertaining to the case on the next date of hearing - petition is part heard - matter on remand.

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• 2017 (11) TMI 1015
  Intellectual Property service - It is alleged that the Respondent has allowed M/s. Talareja Trade to use brand name PahiliDhar for marketing country liquor manufactured by the Respondent - Held that: - The Respondent is holding CL1 License for manufacturing country liquor and was desirous of obtaining higher returns on the investment made by it on its country liquor plant. The Respondent decided to appoint M/s.Talareja Trade as sole selling agent for the sell of country liquor produced by it. In fact it is noted that M/s. Talareja Trade has become “c” class members of the Respondent Cooperative Sugar Factory. After having perused of the relevant clauses of both the agreements, we find that the finding of the Appellate Tribunal that no Intellectual Property Service has been given by the Respondent cannot be said to be perverse - By the agreements, M/s.Talareja Trade were appointed as sole selling agents of the country liquor which was to be manufactured by the Respondent - appeal dismissed - decided against appellant.

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• 2017 (11) TMI 1002
  Business Auxiliary Service - For operation of receiving EMI payments and remitting the same to SPV / Trust, the appellant-assessee is paid a consideration in percentage terms - Securitization Service Fee - Revenue held a view that this fee is liable to service tax under 'Business Auxiliary Service' as the appellant-assessee provided service to the SPV / Trust which will fall under clause (iv) of Section 65 (19) prior to 10.9.2004 - Held that: - Securitization Service Fee in fact which is sought to be taxed under BAS cannot be attributed to any of the services rendered under the categories mentioned under BAS - For an activity of service which is incidental or auxiliary support service, the activity of the main person (service receiver) is to be identified. In the present case, the obligation of the Trust for PTC holders is identified as the main activity which is incidentally or auxiliarily supported by the appellant-assessee. We find no reason for such inference. It is neither supported by contractual arrangements nor factually established - decided against Revenue. Business auxiliary services - the allegation is that the appellant-assessee is providing service to ICICI bank which is incidental or auxiliary to the bill collection - Held that: - The cheques and other bills collected by the appellant-assessee are on their own account which are further passed on in terms of agreement with the ICICI bank. The conditions of transaction and schedule of payment will not influence the nature of activity as agreed upon between the two contracting parties - We find no element of Business Auxiliary Service in such arrangement - decided against Revenue. Appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 979
  Cargo Handling service - supply of coal handling machine (JCB) to M/s Chhattisgarh Power & Coal Benefication Ltd. (CPCBL), Bilaspur - Held that: - the respondent is supplying machinery (JCB) for the client in which absolute possession over the machinery is with the client. Supplying operator does not in any way dilute such absolute possession - The statutory definition in terms of Section 65 (105) (zzzzj) of the Finance Act, 1994 is very clear to the effect that for tax liability for the supply of tangible goods should be without transferring right of possession and effective control of such machinery - the exclusion in the tax entry will operate - appeal dismissed - decided against Revenue.

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• Central Excise

• 2017 (11) TMI 1034
  Rectification of order by subsequent order - proviso to Section 11 A - extended period of limitation - Held that: - Not only the aforesaid finding is a pure finding of fact, which conclusion of the learned Tribunal is duly supported by adequate reasons, we do not find any error on a substantial question of law to have been committed by the learned Tribunal - As already observed, the demand raised on the assessee was primarily founded on the sales practices contained in the sales policy and sales agreement. Benefits of deduction passed on to the buyer under the sales policy and sales agreement have not been allowed to the assessee. Time limitation - Held that: - as the materials on the basis of which the claims/demands have been raised were before the Revenue at all material points of time, no question of suppression or mis-statement can legitimately arise to enable the Revenue to avail the benefit of extended period of limitation. Appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 1011
  Rejection of Settlement Commission application - Section 32E(1) of the Central Excise Act, 1944 - the application was filed prior to the receipt of the order of adjudication - Held that: - the order-in-original was not dispatched to the petitioner, but from the facts on record it transpires that the same was served in-person. In writ jurisdiction, we cannot embark upon the disputed question of fact about the time the order was served - It would not be possible for this Court in its writ jurisdiction to embark upon an enquiry as to the time the petitioner received order-in-original and the filing of application for settlement - petition dismissed - decided against petitioner.

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• 2017 (11) TMI 1010
  Validity of SCN - SCN premised upon Rule 8(3A) of the CER, 2002 - Held that: - Rule 8(3A) of the Central Excise Rules, 2002 is held to be ultra vires Articles 14 and 19(1)(g) of the Constitution of India - petition allowed - decided in favor of petitioner.

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• 2017 (11) TMI 1001
  CENVAT credit - mismatch of coding and description between the supplier s document and the records maintained by the receiver - Revenue entertained a view that the transport of duty paid Vacuum Circuit Breakers from SLW to AEI unit of the appellants are not duly accounted for and the credit availed by AEI unit on such items are not available due to various reasons - Held that: - there is no overwriting or manipulation of the invoices as inferred in the original order. In fact, there is no description of the goods in the invoices and only code numbers are mentioned and admittedly the multiple grades of inputs were shown separated by stroke - It is not correct to allege that the descriptions are not matching when there is no description based on words to explain the nature of goods in the duty paid document. Item code is the description and as explained the codes are not varied substantially except for making it more specific in the recipient s end for further accounting and monitoring - there is no legal or factual basis for denial of credits. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 1000
  Waste and scrap of the capital goods - Rule 3 (5A) of CCR, 2004 - duty demanded at flat rate without classifying items and without determining rate of duty leviable - Held that: - identical issue decided in the case of SHRIRAM ALKALI & CHEMICALS Versus COMMISSIONER OF C. EX., SURAT [2010 (8) TMI 274 - CESTAT, AHMEDABAD], where it was held that waste and scrap are not covered by the definition and in any case department has not made any effort to classify the same, it has to be held that appellants have made out a very strong case in their favor - As the issue has already been settled that without classifying the waste and scrap, duty cannot be demanded from the appellants - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 996
  CENVAT credit - fake invoices - non-existent dealers - whether the principles laid down by the Hon’ble Gujarat High Court in Prayag Raj Dying & Printing Mills Pvt. Ltd.'s case is applicable and the demands raised for extended period of limitation is bad in law? - extended period of limitation - Held that: - it was held the case of Prayag Raj Dyeing and Printing Mills Pvt. Ltd. that in the absence of any allegation that the appellants were parties to the fraud, the larger period of limitation cannot be applied, and thus, even if the original document was assumed to be issued by practising fraud, the appellants being holders in due course for valuable consideration without notice, the larger period of limitation cannot be extended. The conclusion has been drawn that the Appellant had failed to establish that these dealers who had issued invoices to them, based on which the Appellant had availed CENVAT credit were not in existence. These facts were well within the knowledge of the Appellant, since they failed to establish their claim existence of these dealers made before this Tribunal in the first round of litigation, for verification of which the matter was remanded. The Appellant could not produce any cogent evidence to rebut the said findings of the ld. Commissioner (Appeals) before this Tribunal but reiterated the same submissions advanced before the ld. Commissioner (Appeals) - appeal dismissed - decided against appellant.

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• 2017 (11) TMI 995
  CENVAT credit - 16 Injection Moulding Machines - clearance of capital goods as such - Held that: - the appellant had availed credit of the capital goods during the financial years 2004-2005 and 2005-2006 and later these capital goods were removed after being used for more than one and half year in the year June 2006-2007 - before the Ld. Commissioner (Appeals), the decision of the Larger Bench of the Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE Versus NAVODHAYA PLASTIC INDUSTRIES LTD [2013 (12) TMI 82 - CESTAT CHENNAI], was not available, where it was held that When capital goods are removed after use, it cannot be considered as a case of removal of goods “as such” for the purpose of reversing the entire credit taken at the time of receiving the capital goods as prescribed in Rule 3 (5) of CCR 2004 - it is prudent to remand the matter to the Ld. Commissioner (Appeals) to decide the issues afresh taking into consideration the principle of law laid down by the Larger Bench - appeal allowed by way of remand.

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• 2017 (11) TMI 991
  Extended period of limitation - it is the contention of the appellant that the entire facts were in the knowledge of the Department and the declarations made on the invoices clearly showed the number of packages being supplied by them free of cost, hence longer period of limitation was not justified - Held that: - Admittedly, the letter stands received by the Revenue as also the fact that the invoices carried a declaration to the fact of free supply of goods does not stand doubted by the Revenue. In fact the said declaration available in the invoices stand accepted in the show cause notice itself. If that be so, there cannot be any mala-fide intention, mis-statement or suppression with intent to evade payment of duty on the part of the appellant. In the absence of the same, the longer period of limitation is not available to the Revenue - the demand having been raised behind the normal payment of limitation, is fully time barred. Penalty - CENVAT credit - inputs/raw materials, cleared the same to their sister unit without reversal of the credit - Held that: - In view of the fact that the appellants have subsequently debited their Cenvat account in respect of inputs, which were cleared by to their sister unit, as also on account of the fact that the entire situation was Revenue neutral inasmuch as the credit debited by the appellant was available as credit to their sister unit, I find no justification for imposition of penalty upon them. Appeal allowed in part.

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• 2017 (11) TMI 990
  Clandestine removal - branded Gutkha - onus of prove on Revenue - Held that: - Revenue in their memo of appeal, have nowhere improved upon the evidences, which stand considered by the Appellate Authority as insufficient - The findings cannot be arrived at on the basis of assumption and presumption and require tangible and positive evidence. No such evidence stands produced by the Revenue, thus, requiring no interference in the impugned order of the Commissioner (Appeals) - appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 986
  Valuation - cement to its own workers under concessional price - MRP based valuation - Held that: - price printed on the packages being the maximum MRP which may be charged from the ultimate customer, duty was required to be paid on such MRP after permissible abatements - The Central Excise duty is payable on MRP as per the Central Excise Act. When it is so, we do not find any reason to interfere with the impugned order - demand of duty sustained. Penalty - Held that: - the difference of duty was paid by the appellant suo moto - when the duty is paid suo moto before issuance of show cause notice, penalty is not leviable. Appeal allowed in part.

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• 2017 (11) TMI 985
  CENVAT credit - input/input services - Commission paid to agents engaged for sale promotion - Transport and Refreshment charges for the manpower employed - Charges for design and development of final products - Held that: - at the relevant time Rule 2(l) of Cenvat Credit Rules, 2004, input services includes the sales promotion as well as the activities relating to the business - The Commission was paid for the sales promotion as well as to the activities relating to business - credit allowed. CENVAT credit - Design Development of electronic meters - Held that: - It is not necessary for every manufacturer to use every design. Sometimes, designs fail and needs further research to compete in the market - In the instant case, the payment has been made for Research and development which is essentially an activity relating to manufacture of goods and promoting of business - credit allowed. Transportation and refreshment charges - Held that: - it appears that services were not provided by the appellant but by the contractor. In the contract, there is no reference pertaining to the transportation/refreshment - credit cannot be allowed. Appeal allowed in part.

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• 2017 (11) TMI 984
  Natural justice - cross-examination - CENVAT credit - fake documents - Held that: - Sh. Ramesh Chand Aggarwal has categorically stated that during the period from February to March 2003, they have not received the goods along with invoices but for rest of the demand, he has not admitted, in that circumstances, the demand on account of denial of Cenvat Credit for the period February to March 2003 on the invoices issued by Sh. Rupesh Bansal in the name of various firms is denied - interest and penalty also upheld. For rest of the demand, the matter needs fresh adjudication at the end of the adjudicating authority after granting cross-examination of the persons namely Sh. Rupesh Bansal and transporters as the same is required to be provided to the appellant for fair adjudication. Partly decided against appellant and part matter on remand.

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• 2017 (11) TMI 978
  Clandestine removal - use of brand name of two firms - who is the actual manufacturer? - Held that: - no attempt have been made to find out the actual manufacturer of the goods seized on the date of search from the residential promises. From the facts on record and the findings of the Adjudicating Authority, I find that he have taken contrary stands - under the facts and circumstances, the two firms namely Indian Chemicals Industries and M/s Rahat Industries are the actual manufacturers instead of the respondent individuals, who are admittedly partners either in both or one of these two firms - no reason have been assigned by the learned Joint Commissioner for not treating these two firms to be manufacturer of the goods found and seized on the date of search. The allegation of clandestine removal is not established which are simply based on print outs from floppy disks, without there any further enquiry with respect to the transactions and the persons involved in the transactions therein - appeal dismissed - decided against appellant-Revenue.

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• 2017 (11) TMI 977
  Validity of SCN - whether under the facts and circumstances, the issue of show cause notice is in accordance with the provisions of the CEA? - Held that: - the issue of show cause notice is bad and against the provisions of the Act. It has been particularly specified in Section 11 A sub Section 2(B), that where an assessee either on its own motion or on being so pointed out by the Departmental Officers, deposit the tax under intimation to the Department, in such case, no show cause notice be issued. So far the variation in the stock of raw material and finished goods is concerned, admittedly the stocktaking was done by way of estimation and in such manner of stocktaking - the variation of 2% to 3%, as worked out by the Revenue is a normal variation not calling for any adverse inference. The whole show cause notice is untenable and cannot be upheld - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 975
  Export of goods - whether the demand of Central Excise duty against the assessee in respect of goods said to be exported through merchant exporter and EOUs is correct or not, particularly when the respondent-assessee has submitted Form H issued by the State Sales Tax Departments as proof of export? - Held that: - there is no dispute regarding export of the said goods - When the export of the goods is not in question, then there is no justification to demand the Central Excise duty on the goods which have been deemed to be exported - appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 971
  Refund claim - goods returned back to their Gorakhpur unit, on which duty has been paid - refund claim was rejected on the ground that they have no jurisdiction to entertain the refund claim - N/N. 16/95-C.E. (N.T.), dated 27-4-1995 - Held that: - the appellant has rightly entitled for the refund claim under N/N. 16/95-C.E. (N.T.). Whether the bar of unjust enrichment is applicable to the appellant or not, admittedly, the duty has been paid by the appellant and the goods have been sent to their unit or stock transfer basis. In that circumstances, the Gorakhpur unit is not entitled to take credit on those goods, therefore, the question of bar of unjust enrichment is not arises. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2017 (11) TMI 1031
  Validity of assessment order - TNGST Act - Jurisdiction - Held that: - identical issue decided in the case of M/s. Salem Steel Suppliers, M/s. Madras Steel Agencies, M/s. Rajyog Steels, M/s. Reliable Steels, M/s. Myco Steel Agency Versus The Deputy Commissioner (CT) , The Commercial Tax Officer [2017 (9) TMI 946 - MADRAS HIGH COURT], where it was held that The power under Section 16(1) is wide enough and cannot be said to be limited to assessment of assessable turnover under that sub-section by the Assessing Authority only. It is to be invoked in all cases, where, a statutory functionary under the Act assumes jurisdiction to assess the escaped turnover. Therefore, it was held that, in passing an original order of assessment, the Board exceeded its powers under Section 34, and that the order was also passed beyond time. Therefore, the order was held to be unenforceable in law. - petition allowed - decided in favor of petitioner.

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• 2017 (11) TMI 1029
  Recovery of sales tax arrears - auction of personal property of petitioner to recover dues of Company - whether respondents 1 and 2 can proceed against the personal property of the petitioner for recovery of the sales tax arrears payable by the 3rd respondent/company? - Held that: - even as per the statement made by the first respondent, the company owns properties. Therefore, the impugned notice proposing an auction of the petitioner's personal property is wholly without jurisdiction - reliance placed in the case of Chamundeeswari Versus Commercial Tax Officer, Vellore Rural [2007 (1) TMI 254 - HIGH COURT OF MADRAS], where it was held that It is well-settled that a company is a legal entity by itself and it can sue or can be sued as a legal entity and any dues from the company have to be recovered only from the company and not from its directors - petition allowed - decided in favor of petitioner.

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• 2017 (11) TMI 1028
  Revision of return - validity of assessment order - Held that: - the petitioner had filed a revised return on 21.12.2015 upto October 2015. Admittedly these revised returns were made much prior to the inspection done by the Enforcement Wing officers which was carried out in the business premises of the petitioner on 29.12.2015 and 30.12.2015. Therefore, the respondent ought to have considered the revised return for the said period. The revised returns filed by the petitioner for November 2015 and December 2015, which was received by the respondent on 01.12.2016, could not have been considered in view of the legal embargo under Section 7(9) r/w.Section 19(11) of the TNVAT Act. What has happened in the present case is that the respondent has taken total purchase from 2010-11 to 2015-16 and assessed the petitioner to tax in a single Assessment year 2015-16. Therefore, to that effect, there is an error in the Assessment Order. Petition dismissed - decided against petitioner.

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• 2017 (11) TMI 1027
  Levy of Trade Tax - classification of goods - Poultry Feed Supplements - Whether the Poultry Feed Supplements as sold by the Revisionist/Assessee under its respective brand names are covered under the Entry 'Poultry Feed' and accordingly, are liable for exemption from Trade Tax? - Held that: - mere fact that certain items may cure disease or strengthen bones, liver etc., for that reason alone they may not be held medicine and not Balanced Cattle Feed or Poultry Feed. A Division Bench of this Court in Friends Medicon (P) Ltd. Vs State of U.P. and others, [1996 (12) TMI 402 - ALLAHABAD HIGH COURT], also considered true meaning and import of word "Poultry Feed". It observed that word ''Feed' means, food given to an animal fodder, pasture, meal etc.' Poultry feed' has acquired a definite connotation in livestock farming and there are certain ingredients used as ''concentrates' in such feeds for the health and strengthening of poultry livestock. Feed simplicitor is essential for the maintenance of poultry feed but the concentrates like vitamins etc. in the food stuff enable the poultry to maintain energy, to perform the vital process of life and provide material to replace essential tissues, breakdown of which occurs in the body continuously - Even in the present case it could not be disputed that it composed of water, and organic and mineral matters. Organic matter is composed of proteins, ats, crude fibre and soluble carbohydrates. There are certain substances known as vitamins, medicines to remove toxins for strength and development of poultry. It is well settled that as also need of common parlance that an animal feed supplement or cattle feed supplement or poultry feed supplement or balanced cattle feed or poultry feed is actually used as energy nutrients as well as nutrients rich with substance needs for strengthening the body and its development so that a person engaged in such farming may have good yield of cattles and poultry as the case may be. Tribunal has erred in law in holding the items traded by revisionists by treating the same as medicines or drug and not as poultry feed supplements. The items in view of the circular of Trade Tax Commissioner have to be considered as balanced poultry feed and would have dealt with accordingly - revision allowed - decided in favor of revisionist.

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• 2017 (11) TMI 1025
  Jurisdiction - Whether un-constituted Tribunal i.e., Pondicherry Sales Tax Appellate can admit the Tax Appeal in respect of Puducherry Value Added Tax Act, 2007. The said Act came into force on the 1st of July' 2007. Whether is it sustainable in Law? - Whether non-issuing of notification has been issued by the Government for constitution of Pondicherry Value Added Tax Appellate Tribunal and non - appointing of a Judicial Officer to exercise the function conformed under the new Act is sustainable in Law? - Held that: - in exercise of the powers in Section 33 of the erstwhile Pondicherry General Sales Tax Act, appointment has been made and since then, the Appellate Tribunal is functioning - as rightly contended by the learned Government Advocate (Pondicherry), when notification had already been issued, under the erstwhile Pondicherry General Sales Tax Act, 1967, then the saving clause, is attracted - decided against petitioner. Whether the Assessing Officer has got power to file the Tax Appeal before the Tribunal under Section 49(1) of the Pondicherry Value Added Tax, 2007and is it sustainable in Law? - Held that: - Object of the then Pondicherry General Sales Tax Act, 1967, is to levy general tax on sale or purchase of goods in the Union territory of Pondicherry and to validate the levy and collection of such tax under certain Act of Pondicherry. Pondicherry Value Added Tax Act, 2007 is enacted to provide for the levy and collection of value added tax on the sale or purchase of goods in the Union territory of Puducherry and for matters connected therewith or incidental thereto - Under Article 265 of the Constitution of India, Government is empowered to levy tax. Tax is paid to the Government and it is the duties and functions of the authorities in the Commercial Taxes Department, to implement the taxing laws. Ultimately, it is the revenue, which is collected by the Government, by way of tax. As regards intra-state sale, there are provisions, both in the PVAT Act, 2007 or TNVAT, 2006, as the case may be. Finality of orders, against the Government, at the first appellate stage, at the instance of an assessee, ie., before the Appellate Assistant Commissioner (CT), Commercial Taxes Department, Puducherry, 2nd respondent herein and the same cannot be questioned by the Government and that no officer, would not be in a position to challenge the correctness of the the Appellate Assistant Commissioner (CT), Commercial Taxes Department, Puducherry, 2nd respondent herein, even if there is an incorrect approach, either on facts or law. In a lis, involving tax, it is the Government and assessee, who are the parties and the assessing officer, is only an officer, implementing the taxing laws, on behalf of the Government - If the Appellate Assistant Commissioner (CT), Commercial Taxes Department, Puducherry, 2nd respondent herein, has committed an error, on facts or law or both, as the case may be, certainly the Government or any authorised officer, to levy tax, on behalf of the Government, can always maintain an appeal to the Appellate Tribunal, testing the correctness of the order - Literal construction of the words, "any person", confining only to an assessee and not to any officer to file an appeal, against the order of the appellate authority, to the Tribunal, would result in absurdity and the same would not serve the purpose and object of the Act. Hypothetical construction of the words, "any person", to mean only the assessee, would be inconsistent with the object and policy of the Act. It would defeat or impair the policy of the Act. Object, aim and scope of the Act, should be kept in mind and meaning should be collected from the expressed intention of the legislature - the issue decided against petitioner. Whether the Assessing Officer has got power to levy higher rate of tax by overlooking the Government order and whether is it sustainable in Law? - Held that: - perusal of the material on record shows that the Appellate Tribunal has analysed the evidence and recorded a categorical finding of misclassification of Liquefied Petroleum Gas (LPG) and filing of returns, to gain benefit of lesser tax. The Tribunal has properly applied the Government Orders, applicable to the period in question. There is no perversity. Hence, the Substantial Question of Law No.4, is answered in the negative, against the assessee. Considering the material on record, we are of the view that the petitioner has not made out a case for interference, with the order of the Appellate Tribunal, Puducherry, dated 28.06.2017 passed in Tax Appeal No.15 of 2015. Revision dismissed - decided against revisionist.

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