Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
November 5, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Reopening of assessment - whether the Assessing Officer has “reason to believe” that any income chargeable to tax has “eascaped assessment”? - the reason to believe as formed by the AO are not in terms as contemplated by section 147 and as mandated by the courts - AT
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Penalty under section 271(1) (c) - the cost of construction in the immovable property was found to be a false claim - where the claim of the assessee was found to be false, the assessee is liable to penalty under section 271(1)(c) - HC
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Accrual of income - Taxation in the light of Section 145 - the terms of the agreements, which enable the assessee to demand overdue charges (AFC) is only an enabling provision and the recovery of overdue charges is not certain and is taxable on cash receipt basis and not accrual basis - HC
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Exemption u/s 10B - The stand of the assessee is that automatic route is available to the units, which are having investment less than 100 millions as is the case of the assessee, therefore, the approval by the Director of STPI is sufficient to claim the deduction u/s 10B - benefit of exemption allowed - AT
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Exemption u/s 11 & 12 denied - the insertion of the proviso to section 12A(2) of the Act has to be construed as retrospective in operation - the benefit of change in law by Finance Act 2014 should be available and for all the years, the benefit of exemption should be available on the date of registration as all the assessments were pending - AT
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Reopening of assessment - amalgamation of company - From the documents on record, it is writ large that the reassessment proceedings have been initiated on the change of opinion which is impermissible under the Act. - AT
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Penalty u/s. 271C - failure to deduct tax (TDS) - In case the assessee is in a genuine and bona fide belief that it was not under obligation to deduct tax penalty u/s. 271C cannot levied - AT
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Denial exemption U/s.11 & U/s.12 - if one of the trustees appointed is not competent to contract, he cannot be made as a trustee as rightly pointed out by the Revenue. However, in this given case, there are other trustees on whom the property in the trust can be legally vested. Therefore, it cannot be said that the creation of the trust is void ab initio as held by the Revenue. - AT
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Eligibility for benefit U/s 11 - transaction of the sale of the land by the assessee in a wise manner by applying commercial prudence is only an activity which is incidental to the main objects of the assessee - proviso of Section-2(15) will not be applicable - AT
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Disallowance u/s 40(a)(ia) - amount paid to seconded employees on which tax is not deducted at source - since the assessee was not liable to deduct tax under s. 194J, there is no question of levying any interest also under s. 201(1A) - AT
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Business expenditure u/s 37 - Disallowance of fines, penalties etc., levied for non maintenance of KYC forms, short collection of margin money - disallowance is contrary to law and the same is directed to be deleted. - AT
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Penalty under section 271(1)(c) and under section 271AAA - once the penalty is initiated under section 271AAA in the assessment order, there cannot be any occasion to impose the penalty under section 271(1)(c). - AT
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When one wing of the Central Government considers the transport charges on transport of CO2 Gas as a part of sale consideration and levies excise duty on the same, we wonder as to why the other wing of the Central Government refuses to treat the same as sale consideration for the purpose of granting benefit U/s.80-IB - AT
Customs
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EPCG benefit - violation of Section 45 of the Customs Act - goods were shifted without payment of duty and without authorization of the proper officer - reducing the redemption fine from ₹ 1.2 crores to merely ₹ 1 lac was not proper - SC
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100% EOU - good were imported by the appellant-assessee for construction of its unit from where the goods meant for export were to be manufactured and therefore, these goods are in the nature of capital goods - benefit of exemption allowed - SC
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Demand of interest of differential duty - the recovery is made u/s 28 of the Customs Act without reference to section 18(3) - The order which is not in consonance with the show cause notice issued to the petitioner as well as the relevant statutory provisions, cannot be sustained. - HC
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Validity of order of Settlement Commission rejecting the balance Settlement Applications arising out of the second and third Show Cause Notices - since section 28AB no longer remained on the statute-book, no interest was paid by them under the said section. - matter restored before the commission - HC
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Settlement of case - before submitting reply to the show cause notice, approached the Settlement Commission - The dismissal of the application filed before the Settlement Commission affirmed - HC
Corporate Law
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Winding up of the respondent company seeked - It is well settled that proceeding for winding up, is not a proceeding for the recovery of outstanding dues. Nor for that matter, can the remedy of a petition for winding up be utilized to pressure a company which is commercially solvent to pay a debt which is bonafide disputed - HC
Service Tax
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Sponsorship of the IPL matches - whether the service falls within the exclusionary clause of Section 65 (105) (zzzn) of the Finance Act, 1994 - SC dismissed the appeal filed by the revenue against the decision of CESTAT
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Denial of abatement of 75% - GTA service - it is evident that once the service provider is not registered with service tax, the fulfilment of condition of notification No.32/2004 does not arise. - appellant is eligible to pay service tax as a recipient and they are eligible for abatement - AT
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Activities of conducting aerobics and yoga classes - Undoubtedly the appellant is a charitable institution and are establishment and they would fall under the category having all the facilities providing health and fitness Centre - Demand of service tax confirmed - AT
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Whether the appellant had in fact provided the works contract service is of course a question of fact. It is so asserted in the appeal for the first time - matter remanded back - Since the appellant wholly obstructedhas failed to cooperate in the adjudication proceeding, cost of ₹ 5 lakh imposed - AT
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Request for quashing of FIR - Recovery of service tax dues - once the Act of 1994 was a special and complete Code in itself, wherein even the procedure for penalty has been provided, governing the fact situation as obtaining in the present case, registration of the impugned FIR was nothing but abuse of process of Court and the same cannot be sustained. - HC
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Denial of benefit of VCES - When the entire amount as contemplated under the Scheme stood paid before the due date and the petitioner satisfied all other requirements under the Scheme, the respondents are not justified in denying the benefit of the Scheme to the petitioner only on the ground that the amount of ₹ 6,36,103/- had initially been paid towards the interest and penalty. - HC
Central Excise
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Activity of production of Marble Slabs / tiles from rough irregular marble slabs - cutting and polishing of the granites into slabs and tiles do not amount to activity of manufacture - AT
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Allowability of refund of Cenvat credit availed on inputs used in the manufacture of goods cleared by DTA unit to a 100% Export Oriented Unit - DTA unit clearing goods to 100% EOU can be termed as export for the purpose of allowing DTA unit to claim refund of unutilized CENVAT credit - HC
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Cancellation of registration of central excise in the hands of purchaser of the property - There is no infirmity in the action of the respondents in issuing registration certificate in favour of the petitioner despite a subsisting registration certificate in favour of seller - HC
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Recovery of duty under Section 11 of the Central Excise Act, 1944 from the Purchase of asset - charge on the property of the defaulting company / seller - what has been transferred are the assets of the defaulting unit and not the business or trade - recovery cannot be made - HC
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Processing and export of Shrimps/Prawns - Not an Agricultural produce - assessee is not entitled to exemption in terms of Notification No. 6/02-CE - Tribunal committed an error in allowing exemption on the ground that in the earlier years, exemption was allowed - SC
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100% EOU - by-products Soyabean Solvent Extraction Raw Oil was not covered under 100% EoU scheme and hence tariff rate applicable in DTA which was nil would be applicable to the by-product - SC
VAT
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Levy of vat on E-commerce transactions - virtual shop - facility for providing online sale or purchase of goods - department did not challenge or rejected the returns filed by the actual sellers / dealers - demand of VAT can not be raised from the petitioner (Flipkart / myntra) - HC
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Levy of Entry Tax under the provisions of the U.P. Act of 2007 - Demand of interest - since the petitioner has disputed its liability from the very inception, the same cannot be treated to be the admitted tax for the purpose of Section 8(1) of the Act read with Section 33(2) - HC
Case Laws:
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Income Tax
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2015 (11) TMI 129
Penalty U/S 271(1)(c) - change in the head of income - income from the sale / maturity of National Housing Bond under the head long term capital gain or income from other sources - Held that:- In the present case, the assessee offered to tax, the income from the sale / maturity of National Housing Bond under the head long term capital gain. The A.O. chooses to tax the same under ht head 'income from other sources'. The interest of all the three years was offered to tax in the year of maturity and not year-wise. In my view, this is just change in the head of income under which the income is offered to tax. The taxation of the receipt is changed to the head of income 'other sources' from the head of income 'capital gain'. We are of the considered opinion that the explanation filed by the assessee is bona fide. This is a case of a bona fide mistake on part of the assessee. All the information has been disclosed in the income tax return filed by the assessee. Income had been offered under the head 'capital gain' T.D.S. Under these circumstances, we cancel the penalty levied u/s 271(1)(c) of the Act - Decided in favour of assessee.
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2015 (11) TMI 128
Reopening of assessment - whether the Assessing Officer has “reason to believe” that any income chargeable to tax has “eascaped assessment”? - Held that:- The legal issue raised by the assessee is exactly similar to the case of assessee’s sister concern i.e. Indo Arab Air Services vs. ACIT [2014 (7) TMI 291 - ITAT DELHI] that the reason to believe made by the AO are self-contradictory and based only on suspicion. The ld. CIT(Appeals) has decided the issue only on the issue of change of opinion or sufficiency of reasons and not on the tenability and correctness of reasons and the AO’s own contradictory reasons. The assessee has assailed the primary information itself being wrong, vague and bereft of any material. We find merit in the argument of ld. Counsel that the reason to believe as formed by the AO are not in terms as contemplated by section 147 and as mandated by the courts in the decisions referred to above. Respectfully following the above referred judgments by the Hon’ble Supreme Court, i.e., Lakhmani Mewal Das [1976 (3) TMI 1 - SUPREME Court]; Ganga Saran & Sons P. Ltd. [1981 (4) TMI 5 - SUPREME Court], Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT OF INDIA ] and Sheo Nath Singh [1971 (8) TMI 6 - SUPREME Court] we hold that the AO did not have valid reason to believe that impugned income had escaped assessment. Thereby, the reopening is quashed as bad in law. - Decided in favour of assessee.
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2015 (11) TMI 127
Reopening of assessment - certain proceedings under Central Excise Act - CIT(Appeals) passed orders granting stay of interest and in respect of the tax amount, the petitioner was permitted to deposit the same in 16 installments - Held that:- Assessee filed additional documents wherein a copy of the decision dated 16.09.2015 passed by the Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as 'CESTAT') is annexed revealing that in appeal against the Order-in-Original of the Excise Department, the CESTAT has set aside the said order and remitted the case back to the Adjudicating Authority for fresh adjudication. In view of the aforesaid subsequent event, it would be appropriate if the petitioner approaches the CIT(Appeals) once again with an application for stay bringing the aforesaid events to the notice of the CIT (Appeals). We are confident that CIT(Appeals) shall consider the application on its own merits and pass orders thereon within a period of four weeks from the date of filing the application.
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2015 (11) TMI 126
Review petition - revenue invoking the provisions of Section 114 read with order 47 Rule 1 of CPC to contend that there is an error apparent on the record in the judgments passed by this Court on 24.5.2014? - whether Section 115 JB provides that any amount credited to the profit and loss account on account of amounts withdrawn from the reserve or provision had to be reduced from the book profit with an exception that if such reserve or provision is out of reserve created prior to or before 1.4.1997 and, such reserve has been created not by way of debit to the profit and loss account, then the same will not be permitted to be reduced from the net profit as per profit and loss account? Held that:- The questions now sought to be raised in these petitions cannot be gone into because the power of review cannot be exercised on the ground that the decision is incorrect or erroneous on merit, as the same lies only within the ambit of higher court having appellate power. It is the appellate court which alone is in a position to correct the error committed by the subordinate courts by virtue of power of appeal conferred on the said court by some statute, of course subject to the exception that the error is otherwise apparent on the face of record and not an error which has to be fished out and searched. Under the guise of review, the parties are not entitled to re-hearing and this Court while exercising power of review cannot sit in appeal over its own order. Having said so, it can safely be concluded that the petitioners have failed to make out a case within the four corners of Section 114 read with Order 47 Rule 1 of the Code of Civil Procedure. Accordingly, we find no merit in these Review Petitions and the same are dismissed, leaving the parties to bear their costs. - Decided against revenue.
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2015 (11) TMI 125
Addition made in respect of undisclosed stock - ITAT deleted the addition - Held that:- Tribunal has recorded concurrent findings of fact to the effect that the revenue had failed to establish that there was in fact any difference in the quantity of stock and has thereafter merely applied the decision of the jurisdictional High Court in the case of CIT v. Veerdip Rollers (P.) Ltd. [ 2007 (10) TMI 376 - GUJARAT HIGH COURT] wherein in a similar set of facts it had been held that there was no justification for making any addition on the allegation of inflated stock shown to the bank, to the facts of the present case. Under the circumstances, the conclusion of the Tribunal being based upon concurrent findings of fact recorded by it after appreciation of the evidence on record, in the absence of any perversity being pointed out in the findings of fact recorded by it, it cannot be said that the impugned order gives rise to any question of law, much less, a substantial question of law, so as to warrant interference. - Decided against revenue.
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2015 (11) TMI 124
Disallowance of interest under section 36(1)((iii) - CIT(A) deleted the addition confirmed by ITAT - Held that:- The term loan, on which deduction of interest was sought, had entirely been used for the purpose of purchasing the assets which were hypothecated to the bank. The assessee had also produced sufficient evidence before the Assessing Officer to indicate that it had sufficient interest free funds to take care of the advances even if the same were accepted to be the advances. The Commissioner (Appeals) has recorded a categorical finding of fact to the effect that the Assessing Officer has failed to establish any nexus between the borrowings and the utilization of funds. It is in these circumstances, that the Tribunal has recorded a concurrent finding of fact to the effect that it could not be said that interest bearing funds were diverted for non-business purpose. Having regard to the fact that the conclusion arrived at by the Tribunal is based upon concurrent findings of fact recorded by it after appreciation of the evidence on record, in the absence of any perversity being pointed out in the findings of fact recorded by the Tribunal, the same does not give rise to any question of law. - Decided against revenue. Disallowance under section 40(a)(ia) - non deduction of TDS on the payment made to the C & F agent - CIT(A) deleted the addition confirmed by ITAT - Held that:- The assessee had deducted the TDS in respect of the payment made to the C & F agent and separate bills had been raised in respect of reimbursement expenses incurred by the agent. Since the reimbursement bills were separately raised, there was no requirement to deduct TDS in respect thereof. Under the circumstances, it cannot be said that there is any legal infirmity in the impugned order passed by the Tribunal in holding that disallowance under section 40(a)(ia) of the Act could not be made in respect of reimbursement bills which were separately raised as no TDS was required to be deducted in respect thereof. Under the circumstances, the impugned order passed by the Tribunal does not give rise to any question of law, much less a substantial question of law, as proposed or otherwise.- Decided against revenue.
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2015 (11) TMI 123
Penalty under section 271(1) (c) - disallowance of exemption under section 54 for construction - Held that:- The Tribunal while affirming the findings of the Assessing Officer and the CIT(A) had recorded that the assessee had failed to produce bills or vouchers. She had also failed to produce any proof of construction and the date of completion of construction during the assessment proceedings. Merely reflecting the expenditure incurred on construction in the balance sheet alongwith the income tax return was not sufficient to establish the claim No merit in the claim of the assessee that it is not exigible to levy of penalty under section 271(1)(c) of the Act on the aforesaid disallowance as the claim made by the assessee vis a vis the cost of construction in the immovable property was found to be a false claim and the assessee has failed to discharge the onus of establishing that it had undertaken the aforesaid construction of the immovable asset. Merely because the assessee had reflected certain amount of expenditure claimed to be on account of construction of property in its balance sheet does not entitle the assessee to the claim of deduction under section 54 of the Act being the amount spent on construction of the asset on sale of residential property. In the entirety of the facts and circumstances where the claim of the assessee was found to be false, the assessee is liable to penalty under section 271(1)(c) of the Act - Decided against assessee.
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2015 (11) TMI 122
Accrual of income - Additional Finance Charges (AFC) also known as Overdue Charges (ODC) - Taxation in the light of Section 145 - Held that:- In the instant case, the Revenue is not in a position to show that due to the change of accounting method, the Revenue suffered loss. Admittedly, there is no finding to that effect in the assessment order. We also find that the change in method of accounting has not caused any loss to the Revenue, because AFC on receipt by the assessee-company has been offered to tax. Accordingly, we hold that the change of method of accounting of overdue charges from the mercantile basis to cash system insofar as AFC does not create any income, but the method of accounting only recognizes income. It would not be proper for the Department to contend that post amendment to Section 145 of the Income Tax Act, the change in the method of accounting adopted by the assessee should be re-looked. In the light of the decision of this court in the case of Annamalai Finance (2004 (10) TMI 51 - MADRAS High Court), we find no justification or good reason why we should reject the claim of the assessee. We have no hesitation to hold that collection and accrual of AFC happen simultaneously in the present case as and when received, as has been held by this Court. Hence, AFC cannot be treated as income on accrual basis. Following the decision of this Court reported in CIT V. Annamalai Finance Ltd [2004 (10) TMI 51 - MADRAS High Court] and CIT V. Annamalai Finance Ltd.(2009 (11) TMI 11 - MADRAS HIGH COURT), we hold that the terms of the agreements, which enable the assessee to demand overdue charges (AFC) is only an enabling provision and the recovery of overdue charges is not certain and is taxable on cash receipt basis and not accrual basis. Deletion of additions made towards Additional Finance Charges, also known as Overdue charges confirmed - Decided in favour of assessee.
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2015 (11) TMI 121
Exemption u/s 10B - as per AO assessee did not have approval of prescribed authority as required by CBDT and the green card issued by Chairman Inter Ministerial Standing Committee (IMSC), as software technology park scheme, is merely a concession provided by the Government to the units set up on STP Zones to avail certain facilities on priority basis but does not have any bearing with the allowance and/or disallowance of deduction u/s 10B Held that:- The Assessing Officer has not disputed the activities of software development of the assessee. Certain additional evidences were filed before the ld. First Appellate Authority in the form of Circulars, notifications, letter with respect to delegation of power to the Director STPI/IMSC with respect to granting permission, which were forwarded for the comments of the AO under Rule 46A of the Rules. The Assessing Officer was of the view that green card is merely a concession, provided by the Government, to set up units in STP zones to avail certain facilities on priority basis and was of the view that for claiming deduction u/s 10B, the assessee is expected to obtain approval of CEO of STPI, as required in CBDT instructions dated 18/10/2010. The assessee filed further communication, pursuant to the report of the Assessing Officer. Again, remand report was sought from the Assessing Officer. Admittedly, there is no dispute with respect to fulfillment of other conditions as provided u/s 10B of the Act for claiming such deduction. The stand of the assessee is that automatic route is available to the units, which are having investment less than 100 millions as is the case of the assessee, therefore, the approval by the Director of STPI is sufficient to claim the deduction u/s 10B of the Act. Even, the green card is issued by the designated officer on behalf of the Secretary, Govt. Of India, Ministry of Information Technology and Chairman Inter Ministerial Standing Committee. It is also noted that for A.Y. 2008-09, the claim of the assessee, identically, was allowed and the claimed deduction amounting to ₹ 3,24,70,565/- was granted u/s 10B of the Act. This factual matrix was not controverted by the Revenue. In view of this factual position, unless and until, contrary facts are brought to our notice, the department is not expected to deny the claimed deduction. Our view is fortified by the decision of Western Outdoor Interacting Pvt. Ltd. (2012 (8) TMI 709 - BOMBAY HIGH COURT) wherein held that the relief granted in the first Assessment year in which claim was made and accepted then the Income Tax Officer cannot withdraw the relief for subsequent years, more specifically, so, when the Revenue has not even suggested that there was any change in the facts warranting a different view for subsequent years. We find that there is no change in facts and identical facts are existing which were available for A.Y. 2008-09, therefore, it is not open to the department to deny claimed deduction. - Decided in favour of assessee.
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2015 (11) TMI 120
Claim of deduction u/s. 80IB(10) - A.O denied the deduction mainly for the reason that according to the A.O, Assessee was a "Developer" but a Contractor - CIT(A) allowed the claim - Held that:- CIT(A) while granting relief to the Assessee has given a finding that the land cost was debited by the Assessee to its Profit and Loss account, the entire risk and control over the residential unit of the two schemes developed by the Assessee was of the Assessee. She has further given a finding that the tests laid down in the case of Shakti Corporation [2008 (11) TMI 436 - ITAT AHMEDABAD] to claim deduction u/s. 80IB(10) stand fulfilled in the case of Assessee. With respect to the area in case of certain flats where it was held by DVO to be in excess of 1500 sq. ft., Ld. CIT(A) has given a finding that in view of the definition of "built up area", the areas of the flats did not exceed the area of 1500 sq. ft. because balcony/veranda could not be included in the built up area of 1500 sq. ft. prescribed by the statute. She has further held that commercial construction has not been found to have been incurred by the Assessee and that Assessee was eligible for deduction u/s. 80IB(10) of the Act. Before us, Revenue has not placed any material on record to controvert the findings of ld. CIT(A). In view of these aforesaid facts, we find no reason to interfere with the order of ld. CIT(A) - Decided in favour of assessee.
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2015 (11) TMI 119
Reopening of assessment - eligibility for exemption under section 11 & 12 denied - existence of the assessee society for charitable purposes in the assessment years under appeal - Held that:- It is an established position in law that a proviso which is inserted to remedy unintended consequences and to make the provision workable, a proviso which supplies an obvious omission in the section and is required to be read into the section to give the section a reasonable interpretation, requires to be treated as retrospective in operation, so that a reasonable interpretation can be given to the section as a whole and accordingly the said insertion of first proviso to section 12A(2) of the Act with effect from 1.10.2014 should be read as retrospective in operation with effect from the date when the condition of eligibility for exemption under section 11 & 12 as mentioned in section 12A provided for registration u/s 12AA as a pre-condition for applicability of section 12A. A receipt which is by birth, capital in nature, cannot change its character merely for want of registration of society u/s 12AA of the Act. It is not the case of the revenue that the donations received are meant for general functioning of the charitable objects of the society, in which event, the donations received thereon would take the character of revenue receipts requiring to be credited in the income and expenditure account for utilization towards charitable objects thereon. Hence we hold that in any case, the donations received by the assessee society cannot be brought to tax in the assessment. We hold that since the only reason for denial of exemption u/s 11 was absence of registration u/s 12AA (which was granted to assessee society on 29.10.2010 with effect from 1.4.2010) for the relevant assessment years and on no other ground, the benefit of change in law as above by Finance Act 2014 should be available and for all the years, the benefit of exemption should be available on the date of registration as all the assessments were pending as shown above. In this connection, it requires mention specifically that all the receipts of the donation were proved on enquiry to have been received from the claimed donors and utilized for the specific purpose (construction of old age home) for which they were received.In conclusion, we hold that the insertion of the proviso to section 12A(2) of the Act has to be construed as retrospective in operation. - Decided in favour of assessee.
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2015 (11) TMI 118
Transfer pricing adjustment - transfer pricing adjustment - international transaction of both the export of finished goods and import of finished goods for re-sale - TNM Method v/s RPM method - whether no merit in deviating from the TNM Method applied by the assessee to benchmark its international transactions with its associate enterprises on aggregate basis? - Held that:- The assessee has time and again explained the reasons why it had adopted the TNMM method and had also explained the difference between the exports made to the associate enterprises and non-associate enterprises and also sales made in the domestic market. The assessee has also explained the functional risks which are different for both the segments and consequently, no comparison could be made on the gross profit level, as adopted by the TPO for benchmarking international transactions of the assessee with its associate enterprises. The explanations of the assessee have been rejected by the TPO/CIT(A) without any basis, wherein similar explanation has been accepted by the TPO itself in all the other years. The conduct of the business and the products manufactured are identical in the year under consideration, when compared to the other years i.e. assessment years 2006-07, 2007-08 and 2008-09. In the entirety of the above said facts and circumstances, we are of the view that the adoption of TNMM method was the most appropriate method for benchmarking international transactions with its associate enterprises and we find no merit in the order of Assessing Officer in adopting RPM / CPM method to benchmark the international transactions with its associate enterprises. We hold that the TNMM method should be applied on aggregate basis for benchmarking international transactions of the assessee. Thus we hold that for benchmarking international transactions with its associate enterprises on aggregate basis, TNMM method should be applied and since the margins declared by the assessee are higher than the margins declared by the comparables picked up by the assessee in its TP study report and consequently, the international transactions entered into by the assessee with its associate enterprises being at arm's length price, no addition is warranted in the hands of the assessee - Decided in favour of assessee. Set off of brought forward unabsorbed depreciation before claiming of deduction under section 10B - Held that:- The issue in the present appeal is squarely covered by the ratio laid down by the Hon’ble Bombay High Court in CIT Vs. Black & Veatch Consulting Pvt. Ltd. (2012 (4) TMI 450 - BOMBAY HIGH COURT) to hold that the deduction under section 10B of the Act is to be computed in the hands of the assessee before adjusting brought forward unabsorbed losses / depreciation. - Decided in favour of assessee. Disallowance the claim of bad debts - CIT(A) allowed claim - Held that:- the issue of claim of bad debts written off in the books of account in the impugned assessment year is squarely covered by the ratio laid down by the Hon’ble Supreme Court in TRF Ltd. Vs. CIT (2010 (2) TMI 211 - SUPREME COURT) and following the said ratio, we uphold the order passed by the CIT(A). - Decided in favour of assessee.
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2015 (11) TMI 117
Addition made on account of employees contribution to PF after due date - contravention of the provisions of section 36(i)(va) - Held that:- It is an undisputed fact that the assessee has contributed towards PF and ESIC before due date of filing return under the Income Tax Act. It is well settled law that the contributions made to such funds before due date of filing return are admissible as expenditure. The Hon'ble Bombay High Court in the case of CIT Vs. Ghatge Patil Transport Ltd. (2014 (10) TMI 402 - BOMBAY HIGH COURT) by placing reliance on the decision of CIT Vs. Alom Extrusions Ltd. reported as (2009 (11) TMI 27 - SUPREME COURT) has laid down the law in this regard. We do not find any merit in the appeal of the Revenue, accordingly, the same is dismissed. - Decided in favour of assessee. Reopening of assessment - amalgamation of company - benefit of set off and carry forward of brought forward business losses and unabsorbed depreciation of the amalgamating companies in the hands of the assessee company denied - Held that:- In the present case, the reassessment proceedings u/s. 147 r.w.s. 148 have been initiated by the Assessing Officer merely on the basis of change of opinion which is not permissible under law. At the time of scrutiny assessment all the information was available before the Assessing Officer. The Assessing Officer had an opportunity to examine and raise query. A perusal of the assessment order passed u/s. 143(3) shows that the Assessing Officer was well aware of the fact about the amalgamation of the companies with the assessee company. The Assessing Officer had raised certain queries on the depreciation claimed by the assessee on ‘license to collect toll’ in respect of amalgamating companies. Thus, it is evident that the Assessing Officer had knowledge about the amalgamation of the companies as well as issues relating thereto. A perusal of the reasons for reopening further strengthen our view wherein the Assessing Officer has categorically stated, ‘On perusal of the material available on record…..’ the Assessing Officer has reasons to believe that the amalgamating companies does not satisfy the definition of Industrial Undertaking u/s. 72A. From the documents on record, it is writ large that the reassessment proceedings have been initiated on the change of opinion which is impermissible under the Act. Therefore, reopening of assessment is bad in law and subsequent proceedings arising there from are not sustainable, accordingly, are liable to be set aside. - Decided in favour of assessee.
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2015 (11) TMI 116
Penalty u/s. 271C - failure to deduct tax and deposit to Govt. account - short deduction of TDS u/s. 194D of the Act treating the payments as contractual receipts u/s. 194C - CIT(A) deleted penalty - Held that:- The assessee has made payments treating the same as contractual payments in lieu of the agreement after obtaining opinion from the advocate. There is no dispute that the assessee has deducted tax u/s. 194C of the Act for contractual payment on the basis of the opinion of advocate and this is also not under dispute that the deductions were required to be made by the assessee u/s. 194D of the Act from the payments being made by the assessee either reimbursement of expenses or payments being contractual or commission income. Once there is advice from an expert, assessee has to rely on it and this constitutes a reasonable cause. See Woodward Governors India (P) Ltd. Versus Commissioner Of Income Tax And Others. [2001 (4) TMI 34 - DELHI High Court]. In case the assessee is in a genuine and bona fide belief that it was not under obligation to deduct tax penalty u/s. 271C of the Act cannot levied. See CIT Versus Eli Lilly & Company (India) Pvt. Ltd. [2009 (3) TMI 33 - SUPREME COURT - Income Tax] The advice of the expert i.e. advocate after going through the clauses of the agreement holding the same as contractual obligation may be ill conceived advice but assessee has no option except to believe the same. Accordingly, in view of facts and circumstances of the case, we are of the view that the CIT(A) has rightly deleted the penalty and we confirm the same. - Decided in favour of assessee.
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2015 (11) TMI 115
Denial exemption U/s.11 & U/s.12 - one of the trustees was a minor and not competent to hold the post of trustee - Held that:- A trustee may also disclaim to be a trustee and shall prevent the trust property from vesting in him. A disclaimer by one or two or more co-trustees vests the trust property in the others and makes him or them sole trustee or trustees from the date of the creation of the trust. Thus, if one of the trustees appointed is not competent to contract, he cannot be made as a trustee as rightly pointed out by the Revenue. However, in this given case, there are other trustees on whom the property in the trust can be legally vested. Therefore, it cannot be said that the creation of the trust is void ab initio as held by the Revenue. Further, there are no provisions in the Indian Trusts Act,1882, to debar the trustees if they reside outside India. Section-11(1)(a) of the Act only provides that the income of the trust has to be applied in India and in the case of the assessee that is not disputed. Moreover, there are no statutory provisions in any Act to debar the family members of the author of the trust to be the trustees of a charitable trust. As long as the objects of the Trust are charitable and for the benefit of the general public at large the charitable nature of the trust cannot be denied. Therefore, we hereby direct the Ld. Assessing Officer to treat the trust as a charitable trust recognized U/s.12AA of the Act since the registration granted by the Ld.DITE is not withdrawn and assess the income of the Trust, if any, in accordance with the provisions of the Act and on merits. - Decided in favour of assessee.
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2015 (11) TMI 114
Eligibility for benefit U/s.11 - CIT(A) allowed the claim and not taxing the profit arising out of the sale of land since the proceeds were utilized for charitable activities of the Trust as per the provisions of sections 11, 12 & 13 of the Act - Held that:- It is apparent from the facts of the case that the assessee had sold its unutilized land for pursuing its main objects viz., education. In order to secure maximum revenue, the assessee has indulged in commercial transactions. It must be kept in mind that such transactions were made only for the purpose of extending its charitable activities with more resources. Retaining land which is not required for the purpose of the assessee’s trust will not help the assessee to comply with its objects in a constructive manner. Therefore, prudently the assessee trust has realized maximum revenue from the sale of the excess land, and utilized the same for complying with the main objects of the assessee trust viz., Education. Hence as held by the Ld. CIT (A), the transaction of the sale of the land by the assessee in a wise manner by applying commercial prudence is only an activity which is incidental to the main objects of the assessee. Therefore, the view of the Ld. CIT (A) that the proviso of Section-2(15) will not be applicable to the facts of the assessee’s case is appropriate and justified considering the facts and circumstances of the case. Therefore, we hereby confirm the order of the Ld. CIT (A). - Decided in favour of assessee.
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2015 (11) TMI 113
Disallowance u/s 40(a)(ia) - amount paid to seconded employees on which tax is not deducted at source - Held that:- Since the issue raised in this appeal is identical to the issue decided by this Bench of the Tribunal in the assessee’s own case for the subsequent assessment year 2010-11 what has been paid to the deputed personnel is a salary and hence the assessee was not liable to deduct tax at source from the payment made by it to IHC as reimbursement of salaries in respect of various personnel deputed to the hotel of the assessee. The alternative contention of the counsel also has to be accepted in view of the clear provisions of the Explanation to s. 191. Assuming, without admitting, that the assessee was liable to deduct tax at source under s. 194J, still no demand for non-deduction of tax could have been raised against the assessee. This is because the deductor will be liable only if the recipient has not paid the tax on the amount received by him. In the instant case, it is not disputed that the deputed persons, wherever liable, have paid the tax on the salaries received by them and hence no further tax can be collected from the assessee. The order passed under ss. 201, and 201(1A) is bad in law and the CIT(A) had also erred in confirming the same. Needless to add, since the assessee was not liable to deduct tax under s. 194J, there is no question of levying any interest also under s. 201(1A) Both the Revenue Authorities has not examined the following aspects and held the issue against and in favour of the assessee; i.e., whether the tax has been duly deducted at source by the assessee’s subsidiary company on the payment made by the assessee to the seconded employees from the assessee’s subsidiary company, whether the payment made by the assessee company to the seconded employees from the assessee’s subsidiary company amounts to advance payment to the assessee’s subsidiary company which is reimbursable and does not amount to additional service charges payable by the assessee company to the assessee’s subsidiary company and also the decisions cited by the assessee hereinabove, we hereby remit back the matter to the file of the Ld. Assessing Officer to consider all these aspects discussed hereinabove and pass appropriate order as per merits and law. - Decided in favour of assessee. Disallowance invoking Section-14A of the Act and Rule 8D of the Rules - Held that:- This issue is also identical to the issue raised in the assessee’s own case for the subsequent assessment year 2010-11. Since we have directed the Ld. Assessing Officer to delete the addition made on account of Section-14A with respect to investments made in the assessee’s subsidiary company following the decision of the Chennai Bench of the Tribunal in the case EIH Associates Hotels Vs. CIT [2013 (9) TMI 604 - ITAT CHENNAI ] we hereby direct the Ld. Assessing Officer to verify whether the fact of the case is identical as to what is submitted by the Ld. A.R before us and if found to be so, delete the addition made on account of Section-14A of the Act. - Decided in favour of revenue for statistical purposes
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2015 (11) TMI 112
Eligibility for interest on refund - Held that:- AS decided in Vaibhavi Discretionary case [2015 (4) TMI 3 - ITAT MUMBAI] no substance in the argument of the Revenue that the delay in the refund was caused because of the conduct of the assessees. In fact, the assessee was questioning the proposition of the Revenue to assess the income in the hands of the Main Trusts. That is why the beneficiary trusts have filed their individual returns of income disclosing the benefits received from the main trusts also. But when KVSS was pronounced by the Government of India, it was for the assessees to decide whether to take benefit out of that or not. Therefore, it is only when KVSS was promulgated, the assessee had an occasion to make a move and settle the dispute. So also the proceedings were locked up in different appellate forums. Therefore, there is no merit in the argument of the Revenue that the delay was caused by the conduct of the assessees. Therefore, Assessing Officer is directed to pay interest on refund of ₹ 40,442/- till 29.02.1988 and interest on refund of ₹ 11,138/- till 28.11.2000 as prayed. - Decided in favour of assessee.
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2015 (11) TMI 111
Business expenditure u/s 37 - Disallowance of fines, penalties etc., levied for non maintenance of KYC forms, short collection of margin money - Held that:- Nature of expenses incurred in the name of fines or penalties are same as have been incurred in assessment year 2007-08. These facts could not be controverted by the Ld DR during the course of hearing. Therefore, relying upon the judgment of Hon’ble Tribunal in assessee’s own case, we find that disallowance is contrary to law and the same is directed to be deleted. - Decided in favour of assessee. Disallowance of Bad Debts - Held that:- This issue, on legal principles, now stands covered in favour of the assessee by the judgment of Hon’ble Supreme Court in the case of TRF Ltd. [2010 (2) TMI 211 - SUPREME COURT ] wherein it has been held that in view of the amended law, the assessee is now required to merely show the write off of the debts, and the establishing a debt as ‘bad’ is not mandatory. Therefore, on legal principle, we hold that the impugned claim is allowable to the assessee. We send this issue back to the file of the AO for the limited purpose of verification of the details as were required by the Ld CIT(A) and which were allegedly not filed by the assessee. - Decided in favour of assessee for statistical purposes.
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2015 (11) TMI 110
Disallowance under section 14A - Held that:- Having noted that there are admittedly no direction expenses incurred in earning the dividends which could qualify for being covered by rule 8D2(i), we delete the impugned disallowance. The assessee gets the relief accordingly. - Decided in favour of assesae Allocation of STT - Held that:- With the consent of the parties, this issue is remitted to the file of the Assessing Officer for fresh adjudication in the light of the principles laid down by Hon’ble Bombay High Court in the case of CIT Vs Manish D Innai [2015 (4) TMI 441 - BOMBAY HIGH COURT] and in the light of such other binding judicial precedents as may be available at that point of time. As we do so, we make it clear that we have refrained from adjudication on merits for the reason that the correctness of the factual elements embedded in learned counsel’s arguments cannot be ascertained from the material on record before us Allocation of common expenses - Held that:- Allocation of common expenses between speculation and non-peculation business is covered by Tribunal’s decision in assessee’s own case for the immediately preceding assessment year. Explanation to Section 73(1) is not applicable and, therefore, loss from business of purchase and sale of shares on delivery basis cannot be considered as speculation loss and only the loss from commodity transaction business has to be considered as speculation loss.
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2015 (11) TMI 109
Penalty under section 271(1)(c) and under section 271AAA - whether no penalty under section 271(1)(c) could be lawfully levied in the appellant’s case, since it was governed by the provisions of Section 271AAA(3)? - Held that:- We have upheld the plea of the assessee on merits that the penalty for undisclosed income’, on the given facts and in respect of the assessment year before us, could only be imposed, if at all, only under section 271AAA and not under section 271(1)(c). In any case, once the penalty is initiated under section 271AAA in the assessment order, there cannot be any occasion to impose the penalty under section 271(1)(c). We have perused the copy of the assessment order filed by the assessee which specifically states that the penalty is initiated under section 271AAA and no other document, suggesting that penalty was initiated under section 271(1)(c), has been filed before us. Be that as it may, as have held that penalty under section 271(1)(c) could not have been imposed on the facts of this case, the initiation aspect of the penalty is anyway no more than academic. In view of these discussions, the Assessing Officer was clearly in error in invoking the provisions of Section 271(1)(c) on the facts of this case. We, therefore, delete the impugned penalty. - Decided in favour of assessee.
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2015 (11) TMI 108
Computation of allowable deduction u/s.80-IB - CIT (A) directing the AO to include the Cylinder Transport charge for the purpose of computation of allowable deduction - Held that:- On examining the facts of the case it is revealed that the Central Excise Department has included the cylinder transport charges as a part of the sale consideration for the sale of liquid carbon dioxide; accordingly, they have levied central excise duty on the same. When one wing of the Central Government considers the transport charges on transport of CO2 Gas as a part of sale consideration and levies excise duty on the same, we wonder as to why the other wing of the Central Government refuses to treat the same as sale consideration for the purpose of granting benefit U/s.80-IB of the Act when the Act does not specifically prohibit from granting such benefits. The only grouse of the Revenue that transport charges on sale of liquid carbon dioxide gad does not have direct nexus with the assessee's industrial undertaking and therefore, the assessee is not entitled to the benefit of 80-IB of the Act are not acceptable. When the expenditure incurred towards transport charges for procuring raw materials is treated to have direct nexus with the assessee's industrial undertaking and allowed as deduction, the delivery charges of the finished product i.e., liquid carbon dioxide should also have to be treated in the similar manner as having direct nexus with the assessee's industrial undertaking and an integral part of the Turnover when the Act does not prevent from such inference - Decided against revenue.
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Customs
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2015 (11) TMI 142
Settlement of case - before submitting reply to the show cause notice, approached the Settlement Commission - Application to Section 127B of Customs Act - Maintainability of appeal - Held that:- Bills of Entry appended to the show cause notice issued to the petitioners would indicate that these are notified goods under Section 123 of the Act. It is because of this precise reason, Settlement Commission having taken note of the fact that goods in question would fall within the definition of goods as notified under Section 123 of the Act, has held that the 3rd proviso to sub-sec.(1) of Section 127B is attracted or in other words, same would come into play and as such, held that application is not maintainable. In that view of the matter, we are of the considered view that the application filed by the writ petitioners seeking for settlement of dispute before the Settlement Commission by invoking Section 127B of the Act, was not required to be entertained by the Settlement Commission and as long as the ingredients of Section 123 are attracted and application of the petitioner would squarely fall within 3rd proviso of Section 127B of the Act. Petitioners are yet to reply to the show cause notice. The dismissal of the application filed before the Settlement Commission as affirmed by the learned Single Judge which has been confirmed by us, would not prevent the writ petitioners to file reply to the said show cause notice and during the course of the adjudication proceedings, if the petitioners are able to establish that goods in question do not fall under the notification No.204-CUS dated 20.07.1984, it would be open to them to approach the Settlement Commission under Section 127B of the Act. In such an event, Settlement Commission shall adjudicate the application without being influenced by any observations made in its earlier order or in this order.
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2015 (11) TMI 141
Application for regular bail - Recovery of sever tablets of Coldest Pseudoephedrine powder - Held that:- One car, one weapon, eight cartridges and fake bills have also been recovered. During investigation fake bills have been recovered and record has been found forged and fabricated, which means that these tablets made from Pseudoephedrine powder, though under licence, have been misused by the petitioner by showing the sale of it to fake firms. - Keeping in view the heavy recovery from the petitioner and in view of the allegations that fake bills have been prepared and the tablets are shown to have been sold to fake firms, I do not find it a fit case where petitioner is entitled to benefit of grant of bail. - Decided against appellant.
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2015 (11) TMI 139
Validity of order of Settlement Commission rejecting the balance Settlement Applications arising out of the second and third Show Cause Notices - In respect of first Show Cause Notice application was accepted by the commission - Held that:- Admittedly the Settlement Applications were filed by the Petitioners in the year 2012-2013. On the date when these Applications were filed under section 127B, section 28AB no longer remained on the statute-book and therefore it was impossible for the Petitioners to comply with the condition as set out in clause (c) of the 1st proviso to section 127B(1) which continued to stipulate that no Settlement Application could be made unless the Applicant had paid the additional amount of customs duty accepted by him along with interest due under section 28AB. It was in these circumstances and as rightly submitted by Mr Shah, that the Petitioners brought to the notice of the Authorities that since section 28AB no longer remained on the statute-book, no interest was paid by them under the said section. Despite this, the Petitioners had undertaken that they would pay interest under section 28AA as and when determined by the Settlement Commission. Admittedly, the Settlement Commission, whilst ordering that the Settlement Applications (arising out of the 2nd and 3rd SCNs) are allowed to be proceeded with, did not impose any condition or direct the Petitioners to pay any interest The Settlement Commission was totally in error in coming to the conclusion that the Petitioners' Settlement Applications could not be entertained because an Appeal was pending before the CESTAT. As stated earlier, the Appeal before the CESTAT was not against the 3rd SCN but was against the ex-parte decision of the Authorities to appropriate a sum of ₹ 41,79,324/- towards a time barred claim. Matter restored back to the file of the Settlement Commission for a de novo consideration and in accordance with law. - Appeal disposed of.
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2015 (11) TMI 138
Demand of interest of differential duty - Finalization of Provisional assessment - maintainability of writ petition - Imports made prior to insertion of sub-section (3) of Section 18 of the Customs Act, 1962 - Held that:- it is the case of the petitioner that the adjudicating authority has not acted in accordance with the provisions of the Customs Act and in defiance of the law laid down by the jurisdictional High Court. On the facts as emerging from the record, and for the reasons that follow, this court is of the view that the availability of an alternative statutory remedy of appeal, would not preclude the court from entertaining this writ petition under Article 226 of the Constitution. The adjudicating authority, in almost every paragraph of the reasoning assigned by it, has reiterated the conclusion that interest is recoverable under section 28 of the Act. It appears that by reiterating that it has arrived at the conclusion that interest is recoverable under section 28 of the Act not less than nine times, the adjudicating authority seems to have wished away the question as regards applicability of the provisions of section 18(3) of the Act and the decisions interpreting the said provision on which reliance had been placed by the petitioner. The revenue officers are bound by the decisions of the higher authorities and cannot refuse to follow the same on the ground that the same is not acceptable to the department. The Supreme Court has also taken care to suggest as to what steps can be taken by the department to secure the interest of the revenue when the department has not accepted the decision of the higher authority, including the High Court. However, it is not open for the adjudicating authority or any other authority to ignore a binding decision of the court on the ground that the department has not accepted the same. The show cause notice has been issued for recovery of interest on differential customs duty as per the provisions of sub-section (3) of section 18 of the Act, and resort has been made to section 28 only for the purpose of recovery of such amount. Under the circumstances, unless it is held that the petitioner is liable to pay interest on the differential duty under section 18(3) of the Act, the question of making any recovery of such interest amount under section 28 of the Customs Act would not arise. The impugned order, which proceeds on the basis that the recovery is only to be made under section 28 of the Customs Act without reference to section 18(3) of the Act, therefore, not being in consonance with the show cause notice issued to the petitioner as well as the relevant statutory provisions, cannot be sustained. Ordinarily it would not exercise powers under Article 226 of the Constitution of India to set aside an order passed by the adjudicating authority when there is an efficacious alternative statutory remedy available under law. However, having regard to the facts of the present case wherein the controversy involved stands concluded by a decision of the jurisdictional High Court in the case of Commissioner of Customs (Preventive) v. Goyal Traders (2011 (8) TMI 720 - Gujarat High Court ), which stands affirmed by the Supreme Court in the case of Jaswal Neco Ltd. v. Commissioner of Customs, Visakhapatnam (2015 (8) TMI 243 - SUPREME COURT), no fruitful purpose would be served by relegating the petitioner, either to the adjudicating authority for deciding the matter afresh, or to the Tribunal, against the order passed by the adjudicating authority. - Impugned order is set aside - Decided in favour of assessee.
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2015 (11) TMI 137
Duty demand - exemption in terms of Notification No. 53/97-Cus or Notification No. 1/95-CE. - 100% EOU - Invocation of extended period of limitation - Held that:- It is not necessary that the material which is imported into India has to be used in the manufacture of articles which are to be exported out of India. Even if the said material is used "for the purpose of manufacture of articles" or "for being used in connection with the production or packaging or job work", the same shall still be covered by the aforesaid notification and thus would not attract any customs duty. The table which mentions the goods that are entitled to exemption specifically include "capital goods". It could not be disputed that the aforesaid good were imported by the appellant-assessee for construction of its unit from where the goods meant for export were to be manufactured and therefore, these goods are in the nature of capital goods. Goods are used for the purpose for which they are imported. If the perception of the Revenue was that these are not captive goods or the benefit of Notification No. 53/97 is not available to the assessee, the period of limitation started at the threshold and therefore, on the facts which were known to the Revenue the Show Cause Notice could have been issued within a normal period of limitation prescribed under Section 28 which was six months at the relevant time. - Decided in favour of assessee.
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2015 (11) TMI 136
EPCG benefit - Confiscation of goods - reduction in redemption fine - violation of Section 45 of the Customs Act - goods were shifted without payment of duty and without authorization of the proper officer - Held that:- there is a clear violation of the provisions of Section 45 of the Customs Act. In such circumstances, when the confiscation was held to be valid, we are of the view that reducing the redemption fine from ₹ 1.2 crores to merely ₹ 1 lac was not proper. We have considered this aspect. According to us the interest of justice would be subserved in fixing the redemption fine to the extent of 50% of the fine imposed by the Commissioner. Other directions contained in the order of the Tribunal are maintained. - Appeal disposed of.
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2015 (11) TMI 135
Rectification of mistake - Supreme Court dismissed the appeal filed by assessee in view of order passed [2015 (8) TMI 673 - SUPREME COURT],. The appeal was filed against the decision of Tribunal [2005 (4) TMI 493 - CESTAT, NEW DELHI].
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2015 (11) TMI 134
Eligibility of benefit of concessional duty in terms of Serial No. 174 of table to the Notification 11/97-Cus., dated 1-3-97 to CD-R Blank (Recordable) imported - Supreme Court after hearing the parties, dismissed the appeal as the tax effect is insignificant. The appeal was filed against the decision of Tribunal [2005 (6) TMI 100 - CESTAT, MUMBAI]; wherein Tribunal held that since serial No. 174 is very clear, we find that the benefit thereunder is not applicable to the goods in question, since as per the respondent, what has been imported is unrecorded media, but which gets subsequently recorded.
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Corporate Laws
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2015 (11) TMI 133
Demerger - allegation of oppression and mis-management - substitution of existing Board of Directors - Held that:- In our view, there did not exist any searing urgency to substitute the existing Board of Directors as done and to continue with it till the disposal of the suit and at the same time to keep the proceeding of the CLB pending till then. This is more so, as can be culled from the order dated 6.8.2014 of the CLB, the status of the respondent No.1 as Executive Director of the Company has been secured and further alienation of the assets of the company, otherwise has been restrained. Assuredly, these are based on undertakings before the CLB as given by the appellants, the contesting Directors and the CLB having taken note thereof, the same are as good as binding directions on the parties. The aspect of demerger as adverted to hereinabove, is the subject matter of adjudication in a separate proceeding on which, at this stage, no observation is called for. Suffice it to state however, that the aspect of demerger for the present cannot ipso facto be an impelling factor to conclude in favour of allegation of oppression and mis-management as made by the respondent No. 1. As in the course of hearing, some grievance was expressed on behalf of respondent No. 1 that her status as the Executive Director of the company, stands undermined due to uncalled for surveillance imposed at the instance of the existing Board of Directors, we make it clear, as has been assured before us, that she ought to be allowed to function in the aforesaid capacity being provided with all facilities and privileges attached to the office as permissible in law, so much so that she does not have any occasion to complain in this regard. This indeed ought to be in accord with the letter and spirit of the undertaking offered by the Board of Directors to the CLB. The respondent No. 1 too would cooperate in the day to day management of the affairs of the company in her said capacity. The existing Board of Directors would also abide by the undertaking as recorded in the order dated 6.8.2014 of the CLB qua the alienation of the assets of the company. The set-up of the Board of Directors and the arrangement vis-a- vis the administration of the affairs of the company, as was existing on the date on which the order dated 6.8.2014 was passed by the CLB, would continue until further orders by it. The CLB is, however, directed to dispose of the proceeding before it as expeditiously as possible. As the suit filed by the respondent No. 1, as noted hereinabove, is also pending, we hereby direct the Civil Court before which it is pending, to deal with the same with expedition as well, so as to provide a quietus to the lingering family discord in the overall well- being of the company and its constituents.
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2015 (11) TMI 132
Winding up of the respondent company seeked - Whether in the given facts and circumstances the respondent-Company is required to be wound up having failed and ignored to make payments of the outstanding amount being unable to pay its debts? - Held that:- In the matter of Vijay Industries Vs. NATL Technologies Limited [2008 (12) TMI 404 - SUPREME COURT OF INDIA] reiterated the prerequisites for winding up on the ground of inability to pay debt by holding that for invoking Sec.433(e) what is necessary that despite service of notice by the creditor, the company which is indebted in a sum exceeding one lakh rupees then due, failed or neglected to pay the same within three weeks thereafter or to secure or compound for it to the reasonable satisfaction of the creditor. It has further been held that Section 433(e) does not state that the debt must be precisely a definite sum and it is not a requirement of law that the entire debt must be definite and certain. No doubt, numbers of e-mails and other correspondences have been exchanged between the parties, which would indicate that the petitioner had indeed raised a dispute with the respondent, but then the question arises as to whether the defense raised by the respondent is a bonafide one or not. After all, to raise a presumption of a company’s inability to pay its debts it is not enough merely to show that the company had omitted to pay the debt despite service of statutory notice, it must be further shown that the company had omitted or neglected to pay without reasonable excuse and conditions of insolvency in the commercial sense exist. The petitioner has neither made any averment nor has placed any document on record to demonstrate that the respondent is commercially insolvent. On the other hand, from the documents on record, it is evident that the respondent is a profit making solvent company and is in a position to meet its debt as and when it arises. The respondent-Company has clearly set out in their reply the reasons why the amount as claimed by the petitioner has not been paid to them and the contents thereof have already been reproduced (infra). The debt, therefore, is disputed and it cannot also be said that the respondent-Company has no genuine or substantial ground for refusal to pay or is unable to pay the same. The Company refusal to pay debt is as a result of bonafide dispute. The dispute is substantial and genuine and cannot be termed to be spurious, speculative, illusory or misconceived. In view of the preceding analysis, it is evident that the amount due in the instant case has not crystallized and there is a bonafide dispute with regard to liability of the respondent to pay the amount in question to the petitioner. The petitioner has also failed to prove that the respondent is insolvent in the commercial sense. It is well settled that proceeding for winding up, is not a proceeding for the recovery of outstanding dues. Nor for that matter, can the remedy of a petition for winding up be utilized to pressure a company which is commercially solvent to pay a debt which is bonafide disputed. For the reasons aforesaid, no case for winding up of the respondent is made out. In the result, the company petition fails and is hereby dismissed, so also the pending application(s) if any.
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FEMA
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2015 (11) TMI 131
Bail application - Arrest made without the mentioning of name in FIR - arrest of the applicant without a warrant in a non-cognizable offence - applicant is alleged to have received ₹ 7 crores from one Natural Trading Company and ₹ 6.31 crores from one M/s Gangeshwar Mercantile Pvt. Ltd. without satisfactory explanation - revention of Money Laundering Act, 2002 - Held that:- Applicant, at this stage, has failed to satisfactorily establish that the moneys received by him are untainted, inasmuch as, the circumstances brought on record by the Directorate of Enforcement reveal that there are doubts that the origin of the moneys received by the applicant, which appear to be connected with the scheduled offence. Under the circumstances, having regard to the involvement of the applicant in the offences in question as indicated hereinabove, it would not be possible for this court at this stage, to state that there are reasonable grounds for believing that the applicant is not guilty of the offences alleged against him. It may be reiterated that while considering the question of grant of bail in the present case, since the applicant is an accused in the scheduled offence, the rigours of section 45 of the PML Act would apply and the court is required to record twin satisfaction, one that, there are reasonable grounds for believing that the applicant is not guilty of such offence and second that, he is not likely to commit any offence while on bail. One of the conditions precedent, namely, that the applicant is not guilty of such offence, is not satisfied, the applicant is not entitled to be released on bail under section 45 of the PML Act. - any observation made in this order is a prima facie observation made only for the purpose of deciding the bail application and the same shall have no bearing on the merits of the case at the time of trial which has to be adjudicated on the basis of the evidence that may be led by the respective parties. - Decided against appellant.
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Service Tax
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2015 (11) TMI 170
Denial of benefit of VCES - Denial on the groud that the amount paid towards interest and penalty cannot be adjusted towards liability of tax dues under the Scheme - Section 107(4) - whether in the facts and circumstances of the present case, the petitioner can be said to have paid the entire tax dues declared amounting to ₹ 20,63,597/- so as to be entitled to the benefit of the VCE Scheme as contended by the petitioner or whether the petitioner has failed to pay the said amount, inasmuch as, the amount of ₹ 6,36,103/- had initially been paid towards the interest and penalty and hence, cannot be considered as payment under the scheme, as contended by the revenue. Held that:- It was after the introduction of the Scheme, that the petitioner in ignorance of the Scheme paid the amount payable towards service tax, penalty and interest in relation to four revenue paras. At that point of time, the respondent authorities did not draw the attention of the petitioner to the fact that it could avail of the benefit of the Scheme. However, well within the time limit prescribed under the Scheme, the petitioner in due compliance with the provisions of the section 107 of the Act, submitted a declaration under sub-section (1) thereof and paid more than fifty per cent of the tax dues before 31st December, 2013 as required under sub-section (3) thereof and in order to comply with the provisions of sub-section (4), viz. payment of the remaining amount, requested for adjustment of an amount of ₹ 6,36,103/- paid under the wrong accounting code of interest and penalty to the correct code of service tax, which request was duly acceded to by the respondent authorities and such correction was made before 30th May, 2014. When the entire amount as contemplated under the Scheme stood paid before the due date and the petitioner satisfied all other requirements under the Scheme, the respondents are not justified in denying the benefit of the Scheme to the petitioner only on the ground that the amount of ₹ 6,36,103/- had initially been paid towards the interest and penalty. The impugned communication/order which seeks to deny the benefit of the Scheme to the petitioner under such hyper technical plea, therefore, cannot be sustained. - Decided in favour of assessee.
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2015 (11) TMI 169
Request for quashing of FIR - Recovery of service tax dues - Held that:- The moment petitioner received any demand put to him by the competent authority, he immediately deposited the amount of ₹ 1,05,705/-, which is so mentioned in the official communication (Annexure P-3). This amount deposited by the petitioner reflected in Annexure P-3, was towards service tax because this fact has also not been disputed by learned counsel for the State. - when the Act of 1994 was a special Act, which would prevail upon the general provisions, he had no answer and rightly so, it being a matter of record. It has also not been argued on behalf of the respondent-State that any competent authority, after following the procedure provided under the abovesaid relevant provisions of law contained in the Act of 1994, has arrived at a conclusion, pointing out any financial liability of the petitioner, which might have been outstanding against him. Having said that, this Court feels no hesitation to conclude that once the Act of 1994 was a special and complete Code in itself, wherein even the procedure for penalty has been provided, governing the fact situation as obtaining in the present case, registration of the impugned FIR was nothing but abuse of process of Court and the same cannot be sustained. If any competent authority, after following the procedure laid down under the Act of 1994, comes to the conclusion that some amount was outstanding against the petitioner on account of service tax or any other financial liability for that purpose, petitioner would not be running away from his legal obligation and he would deposit the same, as he had been doing on earlier occasions also. In this view of the matter, it can be safely concluded that continuation of the criminal proceedings arising out of the impugned FIR, would certainly result in further abuse of process of Court, therefore, the same cannot be sustained, for this reason as well. - as an abundant precaution that the competent authority under the Act of 1994, would be at liberty to proceed further against the petitioner, as per the procedure provided therein. If the competent authority, after following the procedure under the Act of 1994 arrives at a conclusion that petitioner is liable to pay any amount, he shall be duty bound to pay the same, in accordance with law. - Decided in favour of assessee.
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2015 (11) TMI 168
Imposition of penalty u/s 76, 77 & 78 - Maintainability of appeal - Monetary limit - Held that:- Revisional order came to be passed by the Commissioner of Central Excise, Trichy, vide order dated 13.12.2007, imposing penalty of ₹ 200/- per day under section 76 of Finance Act, 1994 and also a penalty of ₹ 1,000/- under Section 77 of the Finance Act, 1994. The Commissioner also imposed a penalty of ₹ 1,49,170/- on the assessee under Section 78 of the Finance Act, 1994. Therefore, it is very clear from the records that the monetary limit having been fixed at ₹ 2 Lakhs, even as per the order of the Revisional authority, the interest and penalty being less than ₹ 2 Lakhs, the appeal is not maintainable. - circular issued by the Board is squarely applicable to the facts of the present case - Decided against Revenue.
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2015 (11) TMI 167
Wrongful availment of CENVAT Credit - outward transportation service - Held that:- Court, in Borg Warner's case (2015 (4) TMI 254 - MADRAS HIGH COURT), on the issue of outward freight charges, had occasion to consider the decision of the Karnataka High Court in the case of CCE - Vs - ABB Ltd., Bangalore - [2011 (3) TMI 248 - KARNATAKA HIGH COURT] : on an identical issue, and answered the issue in favour of the assessee. - Following the above cited decisions - Decided in favour of assessee.
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2015 (11) TMI 166
Commercial or Industrial Construction service - Work contracts - Appellant neither furnished documents nor responded to the show cause notice or the summons issued - Held that:- Work contracts was not a taxable service prior to 1.6.2007, as Commercial or Industrial Construction Service defined, Section 65 (25b) of the Finance Act, 1994. At least since 1989, the law is clearly settled vide the judgment in Builders Association of India vs. UOI - [1989 (3) TMI 356 - SUPREME COURT OF INDIA] that in works contract, since there is a fusion to two distinctly taxable aspects, namely rendition of service and deemed transfer of goods involved in execution of the works; service tax is leviable only on those aspects amounting to rendition of service and excluding deemed sale of goods. Whether the appellant had in fact provided the works contract service is of course a question of fact. It is so asserted in the appeal for the first time but has not been so asserted or pleaded before the adjudicating authority. Since the appellant has wholly failed to cooperate in the adjudication proceeding by non-cooperation and thereby disabled the ld. Commissioner to properly discharge his statutory functions, to pass a well considered order of assessment and since such non-cooperation of the appellant had resulted in substantial waste of public money involved in the primary adjudication proceeding as well as the clearly avoidable expenditure of appellate resources, we consider it appropriate to afford an opportunity to the appellant to submit its facts and figures and legal defences before the adjudicating authority in de novo proceeding, but on costs of ₹ 5 lakhs, which shall be remitted to the credit of the Union Government, within 30 days - Impugned order is set aside - Decided in favour of assessee.
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2015 (11) TMI 165
Demand of service tax - Whether the appellant is required to discharge the service tax liability on an amount collected by them for conducting aerobics and yoga classes and whether extended period can be invoked - Held that:- Appellant had not co-operated with the lower authorities and did not produce any documents in order to arrive at the correct service tax liability. The appellant had been claiming that they had indicated the amount in their audited balance sheet which were produced before the lower authorities is also incorrect as they are not in a position to produce the acknowledgement copy of the letters vide which the balance sheets were handed over to the department. - appellant could have carried bonafide impression as ST-3 form which requires indicating the amount for exempted services was introduced on 01.03.2006 will also not carry their case any further inasmuch as they are covered under Health and Fitness Centre was never in doubt as they themselves registered under the same category and discharged the service tax liability on the amounts received by them for Gymnasium used by their members. It would be incorrect to say that they were not aware the services rendered by them would not fall under the category of Health and Fitness Service. - health and fitness centre is including a hotel or resort providing health and fitness service. Undoubtedly the appellant is a charitable institution and are establishment and they would fall under the category having all the facilities providing health and fitness Centre. - No merit in appeal - Decided against Assessee.
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2015 (11) TMI 164
Refund Claim - show-cause notice has been issued by the Reviewing Authority for reviewing the refund after one year - Refund claim was sanctioned by the adjudicating authority since the value realized on sale of Recharge Coupon Vouchers was less than the MRP - Bar of limitation - Held that:- A harmonious reading of sections 73 and 84 lead to the conclusion that once the order passed in terms of section 84 holds that the refund was erroneously sanctioned, the recovery thereof can be effected only through the mechanism of section 73 (1). Naturally the time limits laid down in section 73 (1) have to be adhered to. Rather we find that if any other interpretation of a combine reading of Section 73 and erstwhile Section 84 is accepted, it would lead to an incongruous situation whereby every show cause notice for recovery of erroneous refund could be issued beyond the time stipulation of one year as long as the proceedings under Section 84 are completed within the specified time limit of two years. It is obviously not the intention of the lawmakers to provide incongruity in the combined reading of these Sections. - Decision in assessee's own previous case followed [2015 (6) TMI 510 - CESTAT MUMBAI] - Decided in favour of assessee.
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2015 (11) TMI 163
Denial of abatement of 75% - GTA service - Notification 32/2004-ST dt. 3.12.2004 - assessees engaged individual truck operator/owner for transport of granite blocks from quarry to the factory and from factory to the port of destination and paid service tax on the GTA by availing Notification 32/2004-ST - Denial on the ground that the assessees not fulfilled the condition of the notification - Held that:- Exemption is not applicable if the service provider has availed input and capital goods credit for providing GTA service and they should not have availed notification 12/2003. We find that in the present case the service providers are the transport operators. On perusal of payment vouchers dt. 25.4.2005, 3.6.2005 and 26.8.2006 issued by the appellants to various individual truck owners, we find there is no document or any consignment note by the assessee. It is pertinent to state that as per GTA rules, the GTA should issue consignment notes and not the individual truck owners. In the present case, since the individual truck operator is not registered with service tax, the question of availing input credit or capital goods credit does not arise. The Board’s circular dt. 27.7.2005 and 23.8.2007 are applicable to consignment agents who issue consignment notes to, transporters and they have to declare in the invoice that they have not availed any credit. In this case, transport operators who rendered GTA service to assessee are not registered with central excise or service tax. Therefore, it is evident that once the service provider is not registered with service tax, the fulfilment of condition of notification No.32/2004 does not arise. - appellant is eligible to pay service tax as a recipient and they are eligible for abatement and the appellants have rightly paid 25% service tax on the freight paid. It is pertinent to state that w.e.f 1.1.2010 both the conditions (i) & (ii) stipulated under the proviso to the said notification were deleted and the abatement is applicable without any conditions. In view of foregoing discussion, we hold that appellants are eligible for the benefit of exemption notification No.32/2004. Therefore, question of demanding differential service tax and imposition of penalty does not arise. - Decided in favour of assessee.
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2015 (11) TMI 162
Sponsorship of the IPL matches - whether the service falls within the exclusionary clause of Section 65 (105) (zzzn) of the Finance Act, 1994 - Supreme Court after hearing the parties dismissed the appeal as being devoid of merit. The appeal was filed by Revenue against the decision of Tribunal [2013 (4) TMI 428 - CESTAT NEW DELHI]; wherein Tribunal held that Sponsorship is not in relation to sports events, but is sponsorship of BCCI / IPL. No justification for the adjudicating authority’s assumption that since there is an underlying commercial element in the IPL events, the sponsorship, which is otherwise in relation to a sports event, is not so. In the absence of any limiting words or phrases in the provision (excluding sponsorship of sports events having a commercial purpose from the benefit of immunity to service tax), the adjudicating authority cannot engraft its own policy choices and preferences to the legislatively conferred immunity.
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2015 (11) TMI 161
Demand of service tax - Mandap Keeper service - Supreme Court dismissed the appeal filed by Revenue since the tax effect in the present appeal is a meagre one. The appeal was filed against the decision of Trbinal [2005 (5) TMI 2 - CESTAT, BANGALORE]; wherein Tribunal held that analysis and the rules and by-laws in the Memorandum and Articles of Association of the instant case, are same as in the case of Saturday Club Ltd. The Hon'ble High Court distinguished the term of "Mandap Keeper" with that of "Members Club" and has finally concluded that "Members" and "Club" both are same entity. It is held that one may be called as "principal" when the other may be called as "agent", therefore, such transaction in between themselves cannot be recorded as income, sale or service as per applicability of the revenue tax of the country. Hence, the Court has held that "I do not find it is prudent to say that members' club is liable to pay service tax in allowing its members to use its space as 'mandap'. The analysis of the Calcutta High Court in the case of Saturday Club Ltd.", clearly applies to the facts of this case and applying ratio thereof, the demand of service tax on the appellant is set aside.
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Central Excise
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2015 (11) TMI 156
Benefit of Notification No. 8/97 dated 01.03.1997 - Manufacture of product by 100% EOU - Held that:- Commissioner vide its Order-in-Appeal dated 26.09.1992 allowed the said appeal holding that by-products Soyabean Solvent Extraction Raw Oil was not covered under 100% EoU scheme and hence tariff rate applicable in DTA which was nil would be applicable to the by-product removed by the respondent. This finding has been upheld by the Customs, Excise and Service Tax Appellate Tribunal as well. It has affirmed the order of the Commissioner (Appeals) and dismissed the appeal of the Revenue challenging the order of the Commissioner (Appeals). - No question of law arises for consideration - Decided against Revenue.
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2015 (11) TMI 155
Denial of MODVAT Credit - Capital goods - capital goods are used in such captive mine - capital goods used for construction of concrete structure and foundation - Held that:- Commissioner (Appeals) has not given any findings on the stand taken by the assessee that the mining area was a part of the factory premises as per the ground plan and the registration certificate. It is further discerned that if the mines from which the material is excavated and is used for manufacturing the final product by the assessee is captive mine and a part of the factory premises and the capital goods are used in such captive mine, then the assessee would be entitled to the MODVAT credit. - while making these comments, the CESTAT has erred inasmuch as even as in the show cause notice issued by the respondent-Department it was admitted that the goods are not in the nature of capital goods and these were used for construction of concrete structure and foundation on which the various heavy machineries in a cement plant was to be erected. - goods in question were captively used for the construction of the plant and had nothing to do with the mining which is accepted by the Department itself in the show cause notice. - Matter remanded back - Decided in favour of assessee.
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2015 (11) TMI 154
Denial of exemption Notification No. 6/2002-CE, dated 1-3-2002 - processing and export of Shrimps/Prawns - Agricultural produce or not - Refrigeration Compressors/Gas Compressors, procured by the appellants for the preservation, storage or transport of agricultural produce - Held that:- whereas Notification No. 19/99 specifically covered the produce i.e. Shrimps/Prawns, present Notification confines the exemption only to agricultural produce, Shrimps/Prawns cannot be treated as agricultural produce. This aspect is highlighted by the Commissioner (Appeals) in his analysis and the assessee in its counter affidavit has simply taken the plea that once similar benefit was granted to the assessee in the earlier year it was not open to the Department to agitate the issue once again and in support of the submission the assessee has relied upon the judgment of this Court in Commissioner of Central Excise vs. Suntract Electronics Pvt. Ltd.[2002 (11) TMI 118 - SUPREME COURT OF INDIA]. For the reasons given, the aforesaid judgment would be no help to the assessee inasmuch as the earlier period was covered by different Notification - assessee is not entitled to exemption in terms of Notification No. 6/02-CE. The impugned decision of the Tribunal is, accordingly, set aside - Decided in favour of Revenue.
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2015 (11) TMI 153
Demand of duty of free supply of goods as intermediate goods - Activity of manufacturer of Hydraulic Control Lever Assembly and other assembly - whether an excise duty is applicable on such goods - Held that:- Tribunal has answered the question in the negative following the judgment of this Court in International Auto Ltd. vs. Commissioner of Central Excise, Bihar [2005 (3) TMI 132 - SUPREME COURT OF INDIA], holding that manufacturer of final products would be entitled to adjust the credit on the inputs supplied by it to the intermediate purchasers and also entitled to credit for the duty paid by the intermediate purchasers on its products. - Tribunal has rightly relied upon the judgment which squarely covers the subject matter of this appeal. - Decided against Revenue.
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2015 (11) TMI 152
Duty demand - Valuation - extra trade discount of 10 per cent - Held that:- CESTAT has found that the respondent and the purchaser, to whom the supplies were made, are not related persons. In respect of extra trade discount of 10 per cent, the explanation given by the respondent stating that this additional 10 per cent includes an amount for holding seminars, publicity and marketing, has been accepted. - no substantial question of law is involved - Decided against Revenue.
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2015 (11) TMI 151
Contempt petition - recovery of dues - during the pendency of writ petition, the respondents have sold the property - Held that:- it is clear that contemnors have not been restrained from selling the attached property. - Even otherwise, if the property under attachment is sold, the rights of the applicants stand protected. No ground for initiating contempt proceedings against the respondents is made out. - Decided against Revenue.
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2015 (11) TMI 150
Waiver of pre deposit - petitioner submits that since the proceedings are relating to the period prior to amendment to the Finance Act in the year 2014, without insisting free deposit, the appeal shall be entertained - Held that:- Department has already challenged the judgment in [2015 (3) TMI 634 - KERALA HIGH COURT] before a Division Bench of this Court. - The appeal shall be entertained without insisting of free deposit in accordance with the unamended provisions on an undertaking by the petitioner that in the event of Muthoot's case is being reversed by this Court, the petitioner shall deposit 7.5% of the amount as per the amended provisions. - the demand for pre deposit is set aside.
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2015 (11) TMI 149
Denial of recovery of CENVAT credit - misdeclaration of goods - petitioners case is that the raw material whether imported or procured locally for manufacture of PVC compound was sold by respondent no. 1 in the local market. The containers meant for export, when physically examined were found to contain Fly Ash and not PVC compound - Held that:- Petitioners did not examine the order of the Settlement Commission and whether or not the respondent no. 1 had taken CENVAT benefit or passed on the CENVAT benfit to the extent of ₹ 35,19,040/-. In the first place, the figure of ₹ 61,32,963/- should not have been mentioned in the prayer clause as the Settlement Commission itself had directed refund of ₹ 26,13,923/- with interest and the said amount stands deposited. It shows non-application of mind on the part of the petitioners when they filed the present writ petition. - there is no prayer in the writ petition for enhancement of rate of interest or penalty etc.. The petitioners had opportunity and could have even moved an amendment application, but no steps have been taken. - Decided against Revenue.
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2015 (11) TMI 148
Validity of revenue appeal - submissions of the appellant herein that the formation of opinion by the Commissioner before filing of appeal by Revenue is mandatory under Section 35B (2) of the Central Excise Act - Clandestine removal of goods - Held that:- Any Central Excise Officer may exercise the powers and discharge the duties conferred or imposed by or under the Act or these Rules on any other Central Excise Officer who is subordinate to him, meaning thereby that the Chief Commissioner, the highest officer in the Central Excise Department is empowered to discharge the duties conferred or imposed by or under the Act or the rules on any other Central Excise Officer, who is subordinate to him. Therefore, in view of the power under Rule 3 (3) of the Central Excise Rules, the Chief Commissioner is entitled to file the appeal and, therefore, this objection raised by the assessee/appellant cannot be sustained. Nevertheless, with regard to the question of power to file appeal is concerned, it is seen from the record that no such plea was raised before the Tribunal and, therefore, we are not inclined to accept the plea at this stage - it is clear that a prayer has been made to restore the Order-in-Original passed by the Additional Commissioner of Central Excise, wherein the demand of duty invoking the larger period was taken up. The above prayer, in the considered opinion of this Court, protects the limitation of the respondent/Revenue. In such view of the matter, it cannot be contended that there was no plea of limitation raised before the Tribunal. - Decided against the assessee.
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2015 (11) TMI 147
Claim of interest on refund - Non compliance with order of court wherein petitioner were granted interest - Held that:- in compliance of the order dated 02.03.2012 passed by this Court, the respondent Department had sanctioned refund of ₹ 4,40,742/- including interest amount of ₹ 1,54,668/- to the petitioner vide Order-in-Original dated 12.04.2012. As per the respondent, the correct interest amount on the date of sanctioning of refund on 12.04.2012 comes to ₹ 1,54,668/-. - since the respondent Department is duty bound to pay the interest amount in favour of the petitioner, therefore, three months time is granted to the respondent Department to comply with the order passed by the Commissioner (Appeals), failing which the petitioner shall be entitled for an amount of ₹ 50,000/- in addition to the interest due. - Petition disposed of.
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2015 (11) TMI 146
Recovery of duty under Section 11 of the Central Excise Act, 1944 from the Purchase of asset - charge on the property of the defaulting company / seller - Cancellation of registration of central excise in the hands of purchaser of the property since the registration of seller is still existing - Held that:- proviso to section 11 of the Act clearly provides that the dues of the defaulter can be recovered from the person who succeeds in such business or trade of the defaulter. Evidently therefore, a pre-requisite for exercise of powers under the proviso to section 11 of the Act is that the successor should have purchased the business or trade of such person. - on a perusal of the provisions of sub-section (1) of section 15 of the Karnataka Sales Tax Act, it is apparent that the provisions thereof are more rigorous, inasmuch as, the same envisage that the transferor and transferee shall be jointly and severally liable to pay any tax or penalty or any other amount payable in respect of such business and remaining unpaid at the time of transfer. Under the said provision, the transferor is deemed to be the dealer liable to pay the tax or penalty or other amount under the Act. However, under the proviso to section 11 of the Act, in case where the person from whom the duty or any other sums of any kind is recoverable or due, transfers or otherwise disposes of his business or trade in whole or in part, or effects any change in the ownership thereof, as a consequence of which he is succeeded in such business or trade by any other person, all excisable goods, materials, preparations, plants, machineries, vessels, utensils, implements and articles in the custody or possession of the person so succeeding may also be attached and sold for recovery of such dues. Thus, under the proviso to section 11 of the Act, it is only the specified assets that can be attached and sold for recovery of the central excise dues of the predecessor but the purchaser is not deemed to be a defaulter. It is evident that resort could not be made to the proviso to section 11 of the Act, inasmuch as, what has been transferred are the assets of the defaulting unit and not the business or trade. The above position has been further made clear by the Supreme Court in the case of Rana Girders Limited v. Union of India and others, (2013 (8) TMI 540 - SUPREME COURT ). In the facts of the said case, before the High Court, the Excise Department had contested the petition on the ground that the appellant therein being the successor-in-interest which had purchased the land and building as well as plant and machinery, was liable to make the payment having regard to the judgement of the Supreme Court in Macson's case [2003 (11) TMI 71 - SUPREME COURT OF INDIA]. The appellant therein had argued that since the appellant had not purchased the entire unit of the principal borrower, the judgement of Macson case was not applicable and that on the contrary, it is the law laid down in Union of India v. SICOM Ltd., (2008 (12) TMI 53 - SUPREME COURT ), the ratio whereof was attracted. It was argued that Macson case was specifically distinguished by the Supreme Court in SICOM Ltd. case, holding that Macson case would be applicable only in transfer of "ownership of business" i.e. when there is a sale of business as an ongoing concern and not in case of mere transfer of its specified assets. The High Court after referring to the stipulations in the sale deed to the effect that the statutory liabilities arising out of the property shall be borne by the vendee, was of the view that these covenants provided clear and unambiguous stipulation as per which, the appellants therein agreed to discharge the statutory liabilities and since the excise dues were statutory in nature, it had become the liability of the appellant to pay the same. What has been purchased by the petitioner are the assets of the defaulter unit-GSL (India) Limited and not the business or trade in whole or part of the defaulter. In view of the decision of the Supreme Court in State of Karnataka v. Shreyas Papers (P) Ltd. (2006 (1) TMI 243 - SUPREME COURT) foisting of liability of the defaulting transferor onto the transferee comes into effect only if the"ownership of the business"is transferred. As discussed hereinabove, the ownership of the business has not been transferred to the petitioner and consequently, pursuant to the sale of the assets of the defaulting unit, the petitioner is not rendered a successor in the business or trade in whole or in part of the defaulting unit and hence, the proviso to section 11 of the Act would not be attracted - respondents are not justified in seeking to cancel the registration granted in favour of the petitioner on the ground that in respect of the same premises two units cannot be registered. It is apparent that the proviso to section 11 of the Act could not have been invoked by the respondents in the facts of the present case. Under the circumstances, the demand raised by the respondents for the outstanding central excise dues of GSL (India) Limited being contrary to the provisions of section 11 of the Act as well as the show cause notice dated 23.02.2012 to the extent the same calls upon the petitioner to show cause as to why its central excise registration should not be suspended/revoked for non compliance of the "Terms and Conditions" of the Sale Certificate issued by ARCIL, cannot be sustained. - Decided in favour of petitioner. The respondents are not justified in seeking to cancel the registration granted in favour of the petitioner on the ground that in respect of the same premises two units cannot be registered. - There is no infirmity in the action of the respondents in issuing registration certificate in favour of the petitioner despite a subsisting registration certificate in favour of GSL (India) Limited. Consequently, the said ground stated in the show cause notice is misconceived and does not merit acceptance.
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2015 (11) TMI 145
Allowability of refund of Cenvat credit availed on inputs used in the manufacture of goods cleared by DTA unit to a 100% Export Oriented Unit - Held that:- Insofar as clearances from DTA units to 100% export oriented units are concerned, the Tribunal has placed reliance upon the decision of the Supreme Court [2007 (4) TMI 6 - SUPREME COURT OF INDIA] wherein it has been held that DTA sales against foreign exchange or other supplies in India can be equated with physical exports. Thus, the Tribunal has merely applied decisions of the jurisdictional High Court as well as the Supreme Court to the facts of the case while holding that DTA unit clearing goods to 100% EOU can be termed as export for the purpose of allowing DTA unit to claim refund of unutilized CENVAT credit. Under the circumstances, it is not possible to state that the impugned order passed by the Tribunal suffers from any legal infirmity so as to give rise to any question of law, much less, a substantial question of law so as to warrant interference. - Decided against Revenue.
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2015 (11) TMI 144
Duty demand - Activity of production of Marble Slabs / tiles from rough irregular marble slabs - whether the processes undertaken by the appellant amount to manufacture or not - Held that:- Tribunal had occasion to examine a similar issue in the case of Oriental Trimex Ltd. (2009 (8) TMI 454 - CESTAT, NEW DELHI). The Tribunal held that production of cut to size marble slabs and polished marble tiles from marble blocks and marble slabs do not amount to manufacture. We observe that note 6 inserted in Chapter 25 of the Tariff S.E. 01.03.2006 makes it clear prior to that date any person carrying out such process will not be subjected to excise. It was held that the processes specified in the said chapter note cannot be held classificatory in nature. The Hon'ble Rajasthan High Court in the case of Anmol Granites (2006 (1) TMI 142 - HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR) held that the Hon'ble Apex Court's decision in the case of Aman Marbles Industries Pvt. Ltd. (2003 (9) TMI 81 - SUPREME COURT OF INDIA) implies to the fact that cutting and polishing of the granites into slabs and tiles do not amount to activity of manufacture and such decision is binding on all Tribunal's in India. - impugned order is not sustainable and accordingly set aside the same - Decided in favour of assessee.
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2015 (11) TMI 143
Condonation of delay - Delay of 45 days - Held that:- Appellants have filed appeals before this Tribunal within 135 day i.e. 45 days after 90 days. The reason for causing further delay has been explained by the ld. Counsel that the Director of the Company told them that they are preferring appeals against the order of the Hon'ble High Court before the Hon'ble Apex Court in their case. As the reasons for causing delay has not been explained satisfactorily with any cogent evidence but having a casual approach. The appellants have relied in the case of N. Balakrishnan Vs. M. Krishnamurthy (1998 (9) TMI 602 - SUPREME COURT OF INDIA), wherein the Hon'ble Apex Court has held that time limit is fixed for filing the appeal and if there is a delay, that is to be explained on day to day basis. Admittedly, the appellants failed to do so, therefore, we do not find any merits in the applications for condonation of delay. - Decided against assessee.
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CST, VAT & Sales Tax
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2015 (11) TMI 160
Levy of Entry Tax under the provisions of the U.P. Act of 2007 - Demand of interest - Held that:- From a perusal of the assessment order that the department has imposed the tax liability on the goods imported by the Company treating it to be a "machinery". The petitioner has disputed the liability of tax under the Act from the very outset and has contended that the goods imported by the petitioner are "electrical equipments" and not a "machinery" and was, therefore, not liable to pay any tax. On the other hand the department contends that the petitioner had challenged the vires of the Act of 2007. The validity of the entry tax was upheld by the High Court and consequently, the petitioner was required to deposit the entry tax along with returns which was legally due and payable. Since the same was not deposited, the tax would be deemed to be the admitted tax in view of Section 8(1) of the Act read with Section 33 of the U.P. VAT Act. Even though the vires of the Act of 2007 had been upheld, the petitioner nonetheless disputed the liability of payment of tax under the Act of 2007 on the ground that the petitioner was importing "electrical equipments" and that the petitioner was not liable to pay any tax as it was not a "machinery". This fact, that the petitioner has disputed its liability under the Act is not disputed by the respondents. The fixation of the liability under the Act of 2007 in the assessment orders are being contested by the petitioner in the appeal. We are consequently of the opinion that since the petitioner has disputed its liability from the very inception, the same cannot be treated to be the admitted tax for the purpose of Section 8(1) of the Act read with Section 33(2) of the U.P.VAT Act. Thus, for the purpose of imposition of interest, the provisions of Section 8(1B)of the U.P.Act read with Section 33(4) of the U.P. VAT Act would be applicable for the purpose of determining the interest liability. - Decided in favour of assessee.
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2015 (11) TMI 159
Demand of VAT and levy of Penalty u/s 67 of KVAT - E-commerce transactions - virtual shop - facility for providing online sale or purchase of goods - breach of the provisions of Sections 20 and 40 of the KVAT Act - Registeration not obtained under KVAT - Non filing of returns and non maintenance of true and correct accounts - The petitioner contends that it has absolutely no role to play in the transaction of sale and purchase and hence it could not have been proceeded against under the penal provisions of the KVAT Act. Held that:- Rather than stating the reasons that prompted the revenue authorities to suspect an evasion of tax, and calling for the explanation of the assessee to those reasons, the notice proceeds to draw definite conclusions as regards the commission of an offence by the assessee. There is no indication in the notice as to why the revenue authorities considered the petitioner a dealer, or why the transactions in question had to be treated as local sales as against inter-state sales. The notice adopts the figure furnished by the petitioner, representing the total turnover in respect of sale transactions completed through its online portal to customers in Kerala during the relevant period, as the total sales turnover of the petitioner for the purposes of quantifying the tax liability and penalty against the petitioner. The impugned orders only find that there were transactions of sale that resulted in goods being delivered to customers in Kerala, but do not go further and find that it was the petitioner who effected those sales. Further, there is no consideration of the specific contention of the petitioner that the sales in question were effected by sellers who were registered on its online portal, and that all the said sales were inter-state sales on which the respective sellers had paid applicable tax under the CST Act. A specific finding on the above issues, in my view, was necessary to clothe the authority concerned with the jurisdiction to proceed against the petitioner under the penal provisions of the KVAT Act, and the absence of a finding on these issues, denudes the authority concerned of such a jurisdiction. The most perplexing aspect of the instant case, however, is that WS Retail, the seller responsible for effecting majority of the sales to customers in Kerala, through the online portal of the petitioner, is registered as a dealer under the KVAT Act and, in the returns submitted by the said dealer for the relevant period, they had conceded NIL taxable turnover under the KVAT Act, on the contention that their entire sales turnover pertained to inter-state sales effected by them. Under the said circumstances and, in the absence of any material to suggest that the returns filed by the said seller were rejected by the revenue authorities, one fails to understand how the revenue authorities could proceed to levy tax, or impose penalty, on the petitioner in respect of the same turnover. The findings in the impugned orders reflect a patent non-application of mind by the authority concerned and also smack of arbitrariness. - Demand and penalty set aside.
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2015 (11) TMI 158
Refund claim - Amensty scheme - settlement of arrears of tax under the KGST Act - Demand of interest - whether the amounts deposited during the pendency of provisional assessment deserve to be refunded, since the appellant-assessee has deposited amounts under the Amnesty Scheme - Held that:- If the appellant-assessee is successful before apex court, he would be entitled for refund of entire amount, i.e., two deposits already made and also the amount paid under the Amnesty Scheme. If the apex court holds against the appellant-assessee, so far as liability to pay tax he had already taken the benefit of the Amnesty Scheme. In the present case, by virtue of section 55C, pre-deposit amounts could be appropriated in terms of sub-section (3). With the dismissal of STR before this court as early as March 31, 2009, provisions of section 55C would be applicable. Therefore, if any interest was payable, that would be first adjusted and then balance amount to be paid has to be calculated. The date of submission of application for settlement of arrears was on June 25, 2009 and the amount to be paid as per Amnesty Scheme was intimated on July 3, 2009. Only on July 4, 2009 SLP was filed challenging the order dated March 31, 2009. Mere filing of SLP would not vest the appellant-assessee with any right and it cannot be considered as continuation of revisional proceedings, which is a settled position. - normal rule that payment has to be first adjusted towards interest and then towards principal as provided under section 55C is applicable. - Decided in favour of Revenue.
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2015 (11) TMI 157
Compounding of offense - Duty on goods stored in the undeclared godowns - Non maintenance of books of accounts - Held that:- Offence alleged to have been committed by the Petitioner, in respect of the undeclared godowns, was the failure to keep true and complete accounts. The requirement for maintaining true and correct accounts by dealers is one that is mandated by Section 40 of the Act and the penal provision that is attracted in cases of default is Section 71 of the Act. The books of accounts required to be kept by a dealer, such as the Petitioner, are enumerated in Rule 58 of the KVAT Rules. The requirement of maintaining accounts for each godown, if there is more than one godown for keeping his stock, is also mandated by the said Rule. In the light of the said provisions, the Petitioner's composition of the offence of "failure to keep true and correct accounts" virtually amounted to an admission by it of the fact that it had not kept true and correct accounts in respect of the stock in its undeclared godowns. - Petitioner cannot be permitted to go back on the admission that formed the basis of the acceptance by the State of his application for compounding under Section 74 of the Act. Accordingly, we find that the Petitioner could not have availed the appellate remedy under Section 55 of the Act against Annexure-B order of the Intelligence officer and the finding of the Appellate Tribunal that holds so is legally un-assailable. Resultantly, we see no reason to interfere with Annexure-D order of the Appellate Tribunal - Decided against assessee.
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Indian Laws
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2015 (11) TMI 140
Jurisdiction of In-charge Chief Metropolitan Magistrate - Application under section 14 of the SARFAESI Act - Held that:- Under section 14 of the SARFAESI Act, the bank / financial institution is to approach a pre-existing court already constituted under the provisions of the CrPC, 1973. It is well settled that the Chief Metropolitan Magistrate or the District Magistrate, as the case may be, whilst deciding an Application under section 14 of the SARFAESI Act, acts in a very limited jurisdiction and does not adjudicate any lis between the bank and the borrower. His jurisdiction is invoked only for the limited purpose of seeking his assistance in taking the possession of the secured assets. This assistance would be rendered to the banks/financial institutions subject to them complying with the conditions and stipulations set out in section 14. The argument canvassed on behalf of the Petitioners that the In-charge Chief Metropolitan Magistrate had no jurisdiction to entertain the Applications filed by the Respondent Banks under section 14, is wholly without merit. - This doctrine, which is now well established, propounds that the acts of officers “de-facto” performed by them within the scope of their assumed official authority, in the interest of public or third persons and not for their own benefit, are generally as valid and binding, as if they were the acts of officers “de-jure”. This doctrine is founded on good sense, sound policy and practical expedience. It is aimed at the prevention of public and private mischief and the protection of public and private interest. It avoids unnecessary confusion and needless chaos. Even though an illegal appointment may be set aside and a proper appointment may be made, but the acts of those who hold office “de-facto” are not so easily undone and may have lasting repercussions and confusing sequels, if attempted to be undone. Otherwise, as soon as the Judge pronounces a judgment, a litigation may be commenced for a declaration that the judgment is void because the Judge is not a Judge. This is exactly the case before us. Hence, the rule against collateral attack on the validity of judicial appointments cannot be permitted in such a fashion. We, therefore, find that even assuming that the In-charge Chief Metropolitan Magistrate did not have the actual authority, or was not clothed with the powers to entertain an Application under section 14 of the SARFAESI Act, by applying the “de-facto” doctrine, it would make no difference in the present case. - even if the Chief Metropolitan Magistrate’s order of 4th February, 2012 was held to be in excess of exercise of its powers, the orders passed pursuant thereto by the Additional Chief Metropolitan Magistrate ought not to have been set aside in view of the “de-facto” doctrine that has now been well settled and evolved in larger public interest. We, therefore, with great humility, find ourselves unable to agree with the decision of the Gujarat High Court in the case of Manjudevi R Somani [2013 (4) TMI 742 - GUJARAT HIGH COURT] - No merit in these Writ Petitions.
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2015 (11) TMI 130
Infringement of the fundamental rights guaranteed by Article 21 - Non apprehension of accused who set ablaze the deceased - Held that:- Transfer of the investigation to the Central Bureau of Investigation or any other specialised agency, notwithstanding the filing of the chargesheet, would be justified only when the Court is satisfied that on account of the accused being powerful and influential the investigation has not proceeded in a proper direction or it has been biased. Further investigation of a criminal case after the chargesheet has been filed in a competent court may affect the jurisdiction of the said Court under Section 173 (8) of the Code of Criminal Procedure. Hence it is imperative that the said power, which, though, will always vest in a Constitutional Court, should be exercised only in situations befitting, judged on the touchstone of high public interest and the need to maintain the Rule of Law. - Following the death of Itishree Pradhan is concerned, in view of the chargesheet filed and the departmental action taken against the erring officials, we do not feel the necessity of any further direction in the matter, at this stage. We are, therefore, inclined to take the view that the power of this Court to refer a matter to Central Bureau of Investigation for further investigation, after filing of the chargesheet by the State investigating agency, ought not to be invoked in the present case. Instead, the course of action that would be now mandated by law against the accused Netrananda Dandasena should be allowed to reach its logical conclusion at the earliest. At the same time the investigation that has been kept open against the unidentified accused should be completed without delay. - Trial of accused Netrananda Dandasena shall not be held up on that count or on any other count and the same shall proceed forthwith and be concluded within the earliest possible time. - Petition disposed of.
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