TMI Tax Updates - e-Newsletter
December 12, 2016

Case Laws in this Newsletter:

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

Articles

1. No Service Tax when payment is by card and single transaction value is below INR 2,000/-

   By: Monarch Bhatt

2. Transitional Provisions under Revised Model GST Law (Nov-2016)

   By: CSSANJAY MALHOTRA

News

1. Committee of Chief Ministers on adoption of Digital Payments meets in New Delhi

2. Committee on Digital Payments headed by Shri. Ratan P Watal, Principal Advisor, NITI Aayog and former Finance Secretary submits its Final Report to the Union Finance Minister Shri Arun Jaitley

3. Government withdraws exemptions given for the use of ₹ 500/- old notes, from the mid night of December 9, 2016, for making payments at railway ticketing counters, ticket counters of Government or Public Sector Undertakings buses for purchase of tickets; For making payments to catering services on board, during travel by rail; and For making payments for purchasing tickets for travel by suburban and metro rail services

4. Monopoly by Cellular Service Providers

5. Measures taken/being taken by the Government to ease out the indebtedness

Circulars / Instructions / Orders

Service Tax

1. F. No. 137/ 155 /2012-Service Tax( Part-I) - dated 9-12-2016

Digital mode of payment while making financial transantions-past assessments

Income Tax

2. 40/2016 - dated 9-12-2016

Directions under section 119 of the Income-tax Act, 1961

Highlights / Catch Notes

Income Tax

• Income from Contract Cancellation and Interest Classified as Revenue Receipts for Assessee.

  Case-Laws - HC : The income received from the cancellation of the contract and the interest thereon received would all constitute revenue receipt in the hands of the assessee - HC
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Customs

• Confiscated Used Tyres: Confiscation Upheld, Re-export Ordered, 15% Redemption Fine, 10% Penalty on Assessable Value.

  Case-Laws - AT : Import of old and used tyres - confiscation and again ordering re-export of confiscated goods is contrary to each other - confiscation of goods upheld with imposition of redemption fine of 15% of assessable value - imposition of penalty upheld to 10% of assessable value - AT
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Service Tax

• Service Tax Demand Set Aside for Turnkey Contract on Nerla Lift Irrigation Scheme Pipeline Installation.

  Case-Laws - AT : Turnkey contract - Erection Commissioning or Installation Services or under Commercial and Industrial Construction Services - Contract for providing and laying spiral welded/fabricated M.S. Pipe line for raising main and its allied works for Nerla lift irrigation scheme - demand set aside - AT
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• Appellant's Sales Promotion & Accounting Services to Foreign Clients Qualify as Exports; Entitled to Service Tax Benefits.

  Case-Laws - AT : Export of services - sale promotion and back office accounting services - the benefits of the services provided by the appellant has accrued to the foreign principals - consideration was received in convertible foreign currency - benefit of export allowed - AT
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Central Excise

• High Court Rejects Duty Remission Claim Due to 4-Year Delay and Failure to Notify Loss Within 24 Hours.

  Case-Laws - HC : Remission of duty - the first information regarding such loss or destruction etc. to be sent within 24 hours of the occurrence. That they have failed to inform the department at all is not disputed. Moreover, what took them 4 years to file the remission of duty application - claim rejected - HC
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Case Laws:

• Income Tax

• 2016 (12) TMI 507
  Subvention received - Grant-in-aid - Revenue receipt or capital receipt - amount received by the assessee on revenue account as held by HC [2013 (11) TMI 1488 - KARNATAKA HIGH COURT] - Held that:- The view expressed by this Court that unless the grant-in-aid received by an Assessee is utilized for acquisition of an asset, the same must be understood to be in the nature of a revenue receipt was held by the High Court to be a principle of law applicable to all situations. The aforesaid view tends to overlook the fact that in both Ponni Sugars (2008 (9) TMI 14 - SUPREME COURT ) and Sahney Steel (1997 (9) TMI 3 - SUPREME Court) the subsidies received were in the nature of grant-in-aid from public funds and not by way of voluntary contribution by the parent Company as in the present cases. The above apart, the voluntary payments made by the parent Company to its loss making Indian company can also be understood to be payments made in order to protect the capital investment of the Assessee Company. If that is so, we will have no hesitation to hold that the payments made to the Assessee Company by the parent Company for Assessment Years in question cannot be held to be revenue receipts. We also find such a view in a recent pronouncement in Commissioner of Income Tax versus Handicrafts and Handlooms Export Corporation of India Ltd. [2013 (9) TMI 299 - DELHI HIGH COURT] with which we are in respectful agreement. - Decided in favour of assessee.

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• 2016 (12) TMI 506
  TCS (Tax Collection at Source) - whether cotton waste is scrap within the meaning of the term under Section 206C? - Held that:- The issue would require consideration by the authorities concerned. It would not be a pure question of law. It would be a mixed question of law and fact. There is no warrant for entertaining a writ petition when the petitioners can avail the remedy under the Act itself. Respondents No. 1 and 2 confirms that it is always open to the petitioners to seek a refund by filing appropriate returns under the provisions of the Act itself. This was also an appeal under Section 260A of the Act. The issue has not attained finality. We see no reason in that case to entertain this writ petition. The petitioner ought to be relegated to the remedy under the Act.

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• 2016 (12) TMI 505
  Deduction in respect of cost of funds and proportionate administrative and other expenses u/s 57 - whether Tribunal was right in law in holding that the income by way of interest on deposits held with scheduled banks was chargeable to tax u/s 56 under the head ‘income from other sources’ without allowing any deduction in respect of cost of funds and proportionate administrative and other expenses u/s 57?- Held that:- The appellant does not appear to have claimed the deduction under Section 57 of the Income Tax Act (in short the Act) in view of the contention before the authorities that the gross interest income ought to be considered as business income. It was treated by the authorities as income from other sources. The ends of justice would be met by permitting the appellant to raise this contention before the Tribunal. It is only for this limited purpose that the appeal on this question is remitted to the Tribunal. It is open to the Tribunal to consider the issue itself or to remit it further. The appeal is accordingly disposed of so far as question above is concerned.

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• 2016 (12) TMI 504
  Interest under sections 234-A and 234-B - Held that:- The petitioner was liable to file his return for the assessment year 1999-2000 by 31.07.1999. The petitioner infact filed the returns for all the years on 08.01.1999 which the respondents accepted and acted upon. It would be unfair now for the respondents to raise a contention that those returns are non-est. The question, therefore, of the petitioner being liable to pay interest under section 234-A does not arise. The interest under section 234-B of the Act is on account of the delay in payment of advance tax. The interest is now sought to be levied for the period 01.10.1998 to 07.01.1999. Here again the interest could be charged at the highest only upto 23.12.1998 the date on which the respondents received the petitioner’s letter dated 21.12.1998 calling upon the respondents to recover the tax due from the account attached on 13.10.1998. Infact the advance tax was payable only in the year of the receipt of the amount and by 15.12.1998. The advance tax in that event would have been payable only by 15.12.1998. Accordingly the petitioner’s liability to pay the interest under section 234-B would be only from 15.12.1998 to 23.12.1998. We are conscious of the fact that no appeal has been filed against the assessment order. However, the petitioner made a representation for waiver of interest in view of these facts which was partially accepted. Further orders on the representation are purportedly under section 119(2)(a) of the Act against which an appeal is not maintainable. The only question is whether it ought to have been accepted in full or not.We are also informed that in the petitioner’s brother’s case which is identical to the petitioner’s case, a similar representation has been accepted in its entirety. In these the circumstances, the impugned order is set aside/modified by providing that the petitioner’s liability to pay interest is restricted only under section 234-B and only for the period 15.12.1998 to 23.12.1998.

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• 2016 (12) TMI 503
  Penalty under section 271(1)(c) - proportionate disallowance of interest on the amount advanced by the respondent-assessee to its sister concern - Held that:- What is important is that it was found that there was no concealment of the particulars of income and that the particulars furnished were not inaccurate either. In these circumstances, we see no reason to interfere with the concurrent findings of both the appellate authorities as there was no concealment. Nor is any interference warranted with the exercise of discretion in not levying the penalty.- Decided in favour of assessee. Incorrect claim while calculating the MAT under Section 115JB - Held that:- The provisions of Explanation 1(viii) of Section 115JB(1)define book profit to mean the net profit as shown in the profit and loss account for the relevant previous year prepared under sub-section (2), as increased by the amount of deferred tax, if any such amount is credited to the profit and loss account. Thus, we will assume that the deferred tax was to be included while computing the MAT under Section 115JB. However, the CIT (Appeals) and the Tribunal deleted the penalty, inter alia, on account of the fact that sub-clause (viii) was introduced in the year 2008 with retrospective effect from 01.04.2001 i.e. before the return was filed for the assessment year 2007 with which we are concerned. It is not the appellant’s case that there was suppression of any material or a deliberate mis-statement. The mere fact that an incorrect claim was made was held not to be sufficient in the facts and circumstances of the case to initiate the penalty proceedings. There is no warrant for interference with the exercise of discretion. - Decided in favour of assessee.

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• 2016 (12) TMI 502
  Unexplained investment - Held that:- More particularly when the assessee discharged its onus by submitting and producing necessary material in support of his case that the aforesaid transactions belongs to one one Rakesh Panchal HUF and thereafter onus was shifted upon the A.O. to hold necessary inquiry with respect to the said alleged transactions and/or the amount belongs to Rakesh Panchal HUF, which the A.O. failed to discharged, it cannot be said that the learned tribunal has committed any error in deleting such addition. We are in complete agreement with the view taken by the learned CIT(A) as well as the learned tribunal. - Decided in favour of assessee Unexplained expenditure under section 69C - Held that:- From the material on record and the findings recorded by the learned CIT(A) as well as the learned tribunal, it appears that there was no evidence whatsoever collected by the A.O. that the assessee incurred expenditure towards discounting of the cheques. It was the specific case on behalf of the assessee that as the assessee did not incur any expenditure towards discounting of the cheques, thereafter it was for the A.O. to collect evidence showing that in fact, the assessee incurred expenditure. Once it was the case on behalf of the asseessee that it had not incurred any expenditure, in that case, thereafter onus is upon the A.O. to disprove the same by collecting material evidence, which in the present case, A.O. failed. Under the circumstances, the learned CIT(A) has rightly deleted the addition made by the A.O. on account of unexplained expenditure as well as the learned tribunal. - Decided in favour of assessee

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• 2016 (12) TMI 501
  Deduction under Section 80IB [10] - whether Evidences found during the survey u/s. 133A of the Act shows that construction was not completed on 31/03/2012 ? - BUC for Tower ‘A’, ‘B’ & ‘F’ were issued by the local authority on 2/4/2012 - Held that:- As more particularly when the housing project was already completed/ constructed prior to 31st March 2012 and BU permission was applied prior to 31st March 2012, but was granted by the local authority on 2nd April 2012, the assessee cannot be denied deduction under Section 80IB [10] of the Act. Under the circumstances, the learned CIT [A] has rightly allowed deduction under Section 80IB [10] of the Act with respect to such units/housing project and the same has been rightly confirmed by the learned Tribunal. - Decided in favour of assessee

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• 2016 (12) TMI 500
  Taxability on interest received from Head Office and other overseas branches - Held that:- We were told that the Revenue is aggrieved because no disallowance under Section 14A of the Act has been done by the Tribunal on the interest income. This explanation for being aggrieved, we are unable to comprehend for the reason that once the Tribunal holds that interest income is taxable, no occasion would arise to disallow expenditure under Section 14A of the Act. This indicates the casual manner of filing appeals without any application of mind. - Decided against revenue Deduction on account of interest paid by assessee - Held that:- Before the Tribunal, the respondent assessee had challenged the order of the lower authorities bringing to tax the interest received by it from its Head Office and branch offices. However, at the hearing before the Tribunal, the respondent assessee gave up this challenge. Consequently, the orders of the lower authorities bringing to tax the interest income received from its Head Office and other overseas branches were held to be taxable. It is in that context that the impugned order of the Tribunal held that the interest paid by the assessee to its Head Office / overseas branches would also be deductible to bring to tax the net interest income i.e. interest received less interest paid.- Decided against revenue TDS u/s 195 - whether payment constitute Royalty as per Explanation 2 to Section 9(1)(vi) - disallowance under Section 40(a)(i) - Held that:- The impugned order of the Tribunal is a well reasoned order. It holds that mere taking assistance from ADPC at its Regional Head Office, cannot be held to be payment of Royalty for the use of assets. The decision of the Delhi bench Tribunal relied upon by both the Assessing Officer and also by the CIT(A) in the case of Asia Satellite Telecommunications Co. Ltd. (2002 (11) TMI 263 - ITAT DELHI-C ) has been reversed by the Delhi High Court as reported as Asia Satellite Telecommunications Co. Ltd. Vs. Director of Income Tax [2011 (1) TMI 47 - DELHI HIGH COURT]. The entire issue is now before the Assessing Officer to determine whether or not the amount paid for the information technology facility to the Regional Head Office is at all taxable or not within the parameters of Section 44C of the Act even if it is treated as Head Office expenses.- Decided against revenue

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• 2016 (12) TMI 499
  Compensation received on account of the cancellation of contract - Held that:- The assessee was having other sources of income and therefore the termination of the contract with BCCL was nothing but was normal incident of business. Other than that the assessee was free to carry on his trade because there was no restriction on the assessee that he would not be able to execute any other contract and therefore the tribunal came to the conclusion that the money received by the assessee from the cancellation of the contract was a revenue receipt and not a capital receipt. The income received from the cancellation of the contract and the interest thereon received would all constitute revenue receipt in the hands of the assessee. - Decided against assessee

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• 2016 (12) TMI 498
  Refund application - Held that:- Once the petitioner gives up the constitutional and the larger challenge and are agreeable that their refund application if processed in accordance with law and expeditiously they would be satisfied and would not press the petition thereafter, we are of the opinion that the following order will serve the ends of justice. While clarifying that this order is passed in the peculiar facts and circumstances of the petitioner's case and shall not be treated as a precedent for any future case and that we have expressed no opinion on the rival contentions, particularly on the larger challenge raised in the writ petition and they are kept open for being considered and decided in an appropriate case, we dispose of this petition in the following terms: We direct that the refund application of the petitioner pending with the Department shall be processed by the Competent Authority, namely, respondent No.4, as expeditiously as possible and in accordance with law.

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• 2016 (12) TMI 497
  Transfer of case jurisdiction from Rourkela to Sambalpur - opportunity not been provided to the assessee - Held that:- It is not that the cases of the assessees – petitioners herein have only been transferred, rather by virtue of the policy decision, the cases of other assessees have also been transferred. Furthermore, there is no mala fide alleged against the authorities. The petitioners when came to know about the transfer of their cases from Rourkela to Sambalpur, they made representations before the authority that copy of the order be provided since decision has been taken without providing an opportunity of being heard. The authorities have taken into consideration this aspect of the matter and passed a well reasoned order showing the reason that due to the policy decision of re-structuring of the Income Tax Department in the area concerned, the decision has been taken to transfer the cases from Rourkela to Sambalpur and by this the petitioners – assessees are not going to be prejudiced in any way. We gathered from the record that the underlying object of the decision is equitable distribution of work and as such the order passed by the authorities is for administrative convenience. The authorities have taken into consideration the grievance of the assessees that if they will feel any inconvenience, they may make request before the authority to hear their matter at Camp Court, Rourkela in this way also the interest of the petitioners – assessees have been protected. So far as the ground that the authorities while passing order on 22nd August, 2016 have reviewed its own order, which they cannot do and as such, the said order is per se illegal, but we find no force in this argument for the reason that this cannot be said to be review of the order, since there is no change in the orders, i.e. in the orders dtd.29.1.2015 and 22.8.2016, rather the grievance of the petitioners has been looked into and reasons of transfer of the cases has been communicated to them by reitering the reasons. No reason to interfere with the decisions taken by the authority.

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• 2016 (12) TMI 496
  Penalty u/s 271(1)(c) - rejection of the patently wrong claim of the assessee of setting off of brought forward business loss in its return of income - ITAT deleted penalty levy - Held that:- Tribunal noted that the respondent had claimed the set off of its business income of Rs. 1.85 crores against the brought forward business losses of the earlier years on the basis of a legal opinion received from a leading firm of Chartered Accountants dated 15.06.2001. The Tribunal found nothing clandestine in the manner in which the opinion was sought. In any event, even our attention was not invited to anything which suggests any malafides either in the obtaining of the opinion or otherwise. Further, the loss was allowed to be carried forward in the assessment year, namely, assessment year 2002-2003. Inter alia, in these circumstances, the Tribunal found as a matter of fact that the letter dated 13.12.2006 was voluntary and not merely because a notice had been issued under Section 143(2) of the Act. This is a perception on the basis of the facts of the case and warrants no interference. As there is no financial implication on account of the change in the basis of the claim, no substantial question of law arises in this case. - Decided against revenue

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• 2016 (12) TMI 495
  Reopening of assessment - grievance of the petitioner is that the Principal Commissioner of Income Tax has besides deciding the dispute with regard to the date of issue of notice dated 28th March, 2015 also held that the notice has been served upon the petitioner by virtue of deemed service of notice - Held that:- We notice that the impugned order dated 6th September, 2016 the Principal Commissioner of Income Tax has correctly recorded that the following two issues had to be decided by him consequent to the order dated 13th July, 2016 of this Court : (i) Whether or not the alleged notice under Section 148 of the Act was issued, and (ii) If so, the date of its issuance. Therefore, all observations/findings with regard to service of the impugned order dated 6th September, 2016 are completely outside his mandate and are to be ignored. It would be open for the Assessing Officer while deciding on the reopening notice to independently consider the issue of service of the impugned notice dated 28th March, 2015. Needless to state the Assessing Officer will not be even remotely influenced by the observations as to deemed service of the notice in the impugned order dated 6th September, 2016. We must make it clear that window of four weeks was provided only to safeguard the petitioner in case the order of the Principal Commissioner of Income Tax is in breach of our directions. This safeguard given to the petitioner will not entitle it to convert the writ court into an appellate authority to examine the weight to be given to the evidence led before the Principal Commissioner of Income Tax. In fact, nothing has been shown to us which would even remotely suggest that the order dated 6th September, 2016 is perverse in any manner.

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• 2016 (12) TMI 494
  Sale of land - Nature of the amount received by the assessee - whether the income or loss arising thereof is to be computed under the head ‘Capital Gains’ or as ‘Income from other sources’ - Held that:- The nature of the amount received by the assessee as to whether the income or loss arising thereof is to be computed under the head ‘Capital Gains’ or as ‘Income from other sources’. Admittedly, the amount in question was received by the assessee on account of sale of land and further that the assessee is not in the business of sale and purchase of lands. Hence, under the circumstances the income of the assessee is to be computed under the head ‘Capital gains’. Year of taxability - Held that:- Though the lower authorities have themselves held that in fact such an income was required to be taxed in the assessment year 2002-03 itself, yet, the fact remains that the transfer of the land was not affected in the records. The ownership of the land was standing in the name of the assessee up to the assessment year 2010-11. There was no means or ways for the Revenue Authorities to note that the assessee has sold the land in the year 2001. It was only when the assessee himself disclosed the sale in the assessment year 2010-11 on execution of the sale deed that the matter came to the knowledge of the Revenue Authorities. The assessee himself has shown the capital gain/loss treating that the transfer has taken place in the assessment year 2010-11. Now the assessee is estopped from his own act and conduct to say that the transfer has taken place in the year 2001 relevant to assessment year 2002-03. Moreover, no one can be allowed to take the benefit of his own wrong. It is not the case of the Revenue that the assessee has received any amount over and above the said amount of Rs. 45,50,000/-. Hence, we do not find any merit in the findings of the Ld. CIT(A) that the sale consideration of the land should be taken as market value of the said land under section 50C of the Act. Indexation benefit - Held that:- If the transfer is to be treated as dated back to year 2001, no tax can be levied on the assessee for the year under consideration neither on account of capital gains nor under the head ‘Income from other sources’. As observed above, if we treat the transfer being done in the financial year 2009-10 relevant to assessment year 2010-11, then the assessee is entitled to the indexation cost up to the date of transfer. Entire sale consideration has been received by the M/s. Darshan Builders and they have offered the said amount for taxation as per the provisions of law. So far as the consideration of Rs. 45,50,000/- of land received by the assessee is concerned that was not on account of any part of sale of land. The assessee was the owner of the entire land which was transferred by the assessee as per the terms of the agreement dated 29.06.01. Under the circumstances it is not a case of single transaction of sale. It is in fact a case of two transactions of sale. The first sale transaction made by the assessee to the M/s. Darshan Builders is for a consideration of Rs. 45,50,000/-. Second sale transaction is done by M/s. Darshan Builders to M/s. Tulsi Gruh Nirman & Associates for a sum of Rs. 1.71 crores. So far as the second transaction is concerned, the said M/s. Darshan Builders has already offered the entire consideration of Rs. 1.71 crores for taxation as per the provisions of law. So far as the first transaction is concerned which was not relating to any part of the land but was in relation to the sale of rights of the assessee in the entire land, hence, the assessee was entitled to the indexed cost in relation to the entire land and not 27% of the total consideration relating to the second transaction. No justification on the part of the authorities either taxing the sale consideration received by the assessee as income from other sources or in restricting the indexation benefit to the assessee up to assessment year 2002-03 or up to the 27% of the sale consideration.

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• 2016 (12) TMI 493
  Penalty u/s 271(1)(c) - bogus purchases - Held that:- A.O. had given sufficient opportunity to produce the parties during assessment proceedings but the assessee failed to discharge his onus. The primary onus is on the assessee to provide cogent evidences/explanations that these were genuine transactions for the purchase of spare parts which are used for the business of the assessee. The Revenue has doubted the genuineness / bonafide of the purchase transactions which are alleged to be accommodation entries/ bogus purchases. The onus is on the assessee to justify the consumption of the spare parts for the purpose of the business of the assessee. The assessee did not file any evidence to prove that these were genuine purchase transactions undertaken by the assessee. Thus the Revenue has rightly imposed penalty u/s 271(1)(c) of the Act which we hereby confirm - Decided against assessee

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• 2016 (12) TMI 492
  Claim of exemption u/s 54 - denial of claim as assessee failed to deposit the sale proceed of the property sold in the notified capital gain account maintained with the bank as per capital gain scheme as also the assessee failed to file necessary evidences towards construction of new residential house at Rajasthan - Held that:- We have observed that the ratio of the decision of the Hon’ble Bombay High Court in the case of Humayun Suleman Merchant [2016 (9) TMI 70 - BOMBAY HIGH COURT] is directly applicable and assessee will be entitled to claim exemption u/s 54 of the Act for all the amount utilized for the construction of new residential house at Rajasthan till the date of filing of return of income on 18.11.2008 which was filed within time stipulated u/s 139 of the Act. In the interest of justice keeping in view facts and circumstance of the case, this matter needs to be set aside and restored to the file of the AO for making necessary verification as to the amount of exemption which the assessee is entitled for exemption u/s 54 of the Act in accordance with the ratio of decision laid down by the Hon’ble Bombay High Court in the case of Humayun Suleman Merchant (supra) and in accordance with law, by the AO after verification of the evidences - Decided in favour of assessee for statistical purposes.

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• 2016 (12) TMI 491
  Addition to total income on account of sale bill not realized - Held that:- We have observed that the assessee has earned contractual receipts of Rs. 11,798/ - from Kaapi Machines (India) Pvt. Ltd. who deducted tax at source on this amount of Rs. 11, 798/ - which was reflected in ITS details. The said receipts had not been disclosed as income by the assessee in the return of income filed with the Revenue. The assessee has taken a plea that the assessee cancelled the bill due to dispute with the party but the party deducted tax at source which is reflected in form no 26AS. No evidence has been submitted by the assessee about the dispute with the client or cancellation of the bill. Since the assessee failed to discharge the onus cast on him with respect thereto, the assessee's contentions are rejected and order of the learned CIT(A) is confirmed. - Decided against assessee Addition of expenses - Held that:- We have observed that the assessee has incurred total expenses of Rs. 2,78,851/- on account of advertisement, business promotion, telephone & mobile expenses, conveyance and miscellaneous expenses. The assessee could not produce proper and satisfactory evidence/explanations before the authorities below to prove that the expenses were incurred wholly and exclusively for the purposes of business. Ad-hoc addition has been made @ 25% of the total expenditure by the authorities below on the ground that personal usage cannot be ruled out. However, no deficiency has been pointed out by the A.O. which is specific to any bill/voucher submitted by the assessee, but keeping in view satisfactory details about expenditure being incurred wholly and exclusively for the purpose of business was not submitted by the assessee, personal usage with respect to these expenses being incurred for personal purposes instead of business purposes cannot be completely ruled out. In view thereof interest of justice will be best served if the disallowance of the afore-stated expenses is restricted to 10% of the total expenditure - Decided partly in favour of assessee Addition on account of excess rent paid - Held that:- The assessee failed to submit the details of the working of increased rent being excess payment of Rs. 8,000/- over and above the subsisting rent agreement which was stated to be an old agreement. In our considered view, this enhanced rent of Rs. 8,000/- is not allowable in the absence of rent agreement or some other evidence satisfactory explanation to corroborate and substantiate the increased rent. The assessee did not submit any details, explanation or evidence to substantiate its contentions about increased rent and this enhanced rent of Rs. 8,000/- cannot be allowed as deduction while computing income of the assessee keeping in view facts and circumstances of the case, as the assessee is not able to discharge the onus cast on the assessee, and the addition made by the A.O. as confirmed by the Id. CIT(A) is hereby upheld/confirmed, as we do not find any infirmity in the order of learned CIT(Al which we affirm. - Decided against assessee Addition on sundry deposits in the Balance Sheet - Held that:- Since the assessee could not produce any evidence/ satisfactory explanations to explain these deposits appearing in its Balance Sheet, in our considered view, the decision of the Id. CIT(A) is quite justified and we uphold the same as we donot find any infirmity in the appellate order of learned CIT(A) which we affirm. - Decided against assessee

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• 2016 (12) TMI 490
  Income from sale of shares - capital gain of business income - Held that:- Interest of justice will be best served if the gain arising from the sale/purchase of shares which are held for a period of up-to 30 days from the date of purchase is to be treated as business income, while wherein the period of holding of shares is more than 30 days, the gains arising there-from would be treated as short term capital gain/long capital gain depending upon the period of holding as stipulated in the Act.

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• 2016 (12) TMI 489
  Income from sale of shares - Nature of income - short term capital gain or business income - Held that:- From the record, we found that assessee was having capital of Rs. 2.30 crores as against investment in shares of Rs. 1.21 crores. Thus, capital was much more than the investment in shares. There was secured loans of 5.23 lakhs against assessee s own Kisan Vikas Patra, and bank overdraft of Rs. 11.56 lacs against assessee s own FDR s. Thus, loan from bank was only against assessee s own security which cannot be treated as business advance. Assessee was also having loan from family members without any interest. From the record we also found that assessee has no business income. No evidence on record to suggest that assessee had any establishment for running share activities. Assessee has also not claimed any business expenditure in respect of her activity of dealing in shares. No organized activity to suggest a business activity in existence. No significant risk exposure from borrowings. Capital is more than investments in shares. Secured loans are not significant compared to the level of investment in shares and any case, obtained on security of liquid assets. Unsecured loans are from family members and after taking into account corresponding loans given to family members, the net amount is not significant. From the record, we also found that in the immediate preceding assessment year 2005-2006, assessment was framed u/s.143(3) r.w.s.153A dated 31/03/2010, wherein AO has accepted assessee s claim of short term capital gains on sale of shares, however, in the assessment year 2007-08 to 2009-2010, the AO has followed his order for assessment year 2006-07 without mentioning any peculiar facts for treating the capital gain as business income. We found that decision of Supreme Court in Radhasaomi Satsang vs. CIT (1991 (11) TMI 2 - SUPREME Court ) has been relied by CIT (A) on proposition that each year's assessment is final for that year does not govern later year and principle of res judicata is not applicable to income tax proceedings. In view of the above, we direct the AO to treat gain arising out of sale of shares as short term capital gains rather than business income.

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• 2016 (12) TMI 488
  Non-deduction of tax at source u/s.194J - non deduction of tds on amount paid on account of internet charges - Held that:- ITAT in the case of M/s Kotak Securities Ltd. (2012 (2) TMI 77 - ITAT MUMBAI ), wherein it was held that no TDS is required to be deducted in respect of bank guarantee charges paid to bank, accordingly assessee cannot be said to be in default for such non-deduction of TDS on such payment. Facts of the instant appeals are similar, respectfully, following the order(supra), we do not find any infirmity in the order of CIT(A) holding that assessee is not in default for non-deduction of TDS on such payments. Non-deduction of tax at source u/s.194H - default in respect of payment of bank guarantee charges - Held that:- The Mumbai Bench of Tribunal in the case of Kotak Securities Ltd. vs. DCIT, (supra) has held that bank guarantee charges are not liable for deduction of tax under section 194H on the ground that such transactions are on principal to principal basis and the element of agency which is essential to cover it as 'commission' as per Explanation to section 194H is absent. Appeal of the Revenue is dismissed whereas appeal of the Assessee is allowed.

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• Customs

• 2016 (12) TMI 470
  Classification of goods - old and used tyres - classified under CTH 40122020 or under schedule III Part B- List of Hazardous Wastes Applicable for Import & Export of Hazardous Waste (Management, Handling & Transboundary Movement) Rules, 2008 at Basel No. B-3140 with description as Waste of Pneumatic Tyres which can be imported with the permission of Ministry of Environment and Forest - The Original Authority, therefore, ordered confiscation of the goods imported under Section 111(d) & (o) of the Customs Act, 1962 and gave an option to redeem the goods on payment of redemption fine of Rs. 3,40,000/- under Section 125 of the Customs Act, 1962 and ordered re-export of the same goods and also imposed penalty of Rs. 1,70,000/- on appellant under Section 112 (a) of Customs Act, 1962. Held that: - I find that ordering of confiscation and again ordering re-export of confiscated goods is contrary to each other. On absolute confiscation, the goods became property of Government of India and appellant does not have any authority to export the same - confiscation of goods upheld with imposition of redemption fine of 15% of assessable value - imposition of penalty upheld to 10% of assessable value - the applicable duty on the assessable value shall be payable if the goods are taken/released on payment of Customs duty, redemption fine and penalty. The goods shall be released by completing customs formality within two weeks of payment of customs duty, redemption fine and penalty - appeal allowed - decided partly in favor of appellant.

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• 2016 (12) TMI 469
  Classification of goods - old and used tyres - classified under CTH 40122020 or under schedule III Part B- List of Hazardous Wastes Applicable for Import & Export of Hazardous Waste (Management, Handling & Transboundary Movement) Rules, 2008 at Basel No. B-3140 with description as Waste of Pneumatic Tyres which can be imported with the permission of Ministry of Environment and Forest - The Original Authority, therefore, ordered confiscation of the goods imported under Section 111(d) & (o) of the Customs Act, 1962 and gave an option to redeem the goods on payment of redemption fine of Rs. 2,75,000/- under Section 125 of the Customs Act, 1962 and ordered re-export of the same goods and also imposed penalty of Rs. 1,35,000/- on appellant under Section 112 (a) of Customs Act, 1962. Held that: - I find that ordering of confiscation and again ordering re-export of confiscated goods is contrary to each other. On absolute confiscation, the goods became property of Government of India and appellant does not have any authority to export the same - confiscation of goods upheld with imposition of redemption fine of 15% of assessable value - imposition of penalty upheld to 10% of assessable value - the applicable duty on the assessable value shall be payable if the goods are taken/released on payment of Customs duty, redemption fine and penalty. The goods shall be released by completing customs formality within two weeks of payment of customs duty, redemption fine and penalty - appeal allowed - decided partly in favor of appellant.

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• 2016 (12) TMI 468
  Suspension of CHA licence - Regulation 19(1) of CBLR, 2013 - contravention of the provisions of CBLR, 2013 - time bar - Held that: - It is seen from the records that Commissioner of Customs, Delhi received the prohibition order issued by Commissioner of Customs, Mumbai on 26.04.2016. This may be considered as the date of receipt of Offence Report. Regulation 20(1) contemplates issue of Show Cause Notice to the customs broker by the Commissioner within a period of 90 days from the date of receipt of Offence Report. The issue of Show Cause Notice is to be followed within a period of 90 days by submission of Inquiry Report by Asst. Commissioner/Dy. Commissioner and ultimate passing of the order by the Commissioner within a period of 90 days from the date of submission of Inquiry report - A perusal of the records of the present case reveals that the initial Show Cause Notice under Regulation 20 has not been issued till date even though the offence Report was received by the Commissioner of Customs, Delhi on 26.04.2016. Ninety days period has already expired on 25.07.2016. Hon'ble Madras High Court has emphasised the observance of time limits strictly under the CHALR, 2004/CBLR, 2013 in the case of Saro International Freight System Vs. CC, Chennai [2015 (12) TMI 1432 - MADRAS HIGH COURT] - As such the order of the lower authority which was issued without adhering to the time schedule is liable to be set aside on these grounds. Accordingly, we set aside the impugned order of the original authority and allow the appeal. Appeal allowed - decided in favor of appellant-assessee.

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• Service Tax

• 2016 (12) TMI 487
  Suppression of facts - extended period of limitation - Claim of exemption - Section 65 (97a) and 65 (105) (zzza) - the decision in the case of NKG Infrastructure Limited Versus Commissioner of Customs, Central Excise And Service Tax [2016 (11) TMI 492 - ALLAHABAD HIGH COURT] contested - Held that: - Special Leave Petition is dismissed - Interlocutory Applications, if any, shall stand disposed of.

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• 2016 (12) TMI 486
  Condonation of delay - Held that: - One of the fundamental principles of law which is consistently followed while dealing with Applications seeking condonation of delay is that if the cause of justice is likely to suffer, the delay that has occasioned in approaching the Court concerned should be dealt with on liberal lines and normally deserves to be condoned, if necessary by putting the party at default on some terms. Normally, the delay can be refused to be condoned where the rights of the other party, which have crystallized in the meantime are likely to be impacted by condonation of such delay. The delay also is not permitted to be condoned where the opposite party has altered its position under bonafide impression that the party who has suffered the decree has accepted that. In such circumstances, condonation of delay is construed to cause, undue and irreversible hardship to the opposite side. In such cases, delay can be declined to be condoned - In the instant case, the Appellant has shown the reason for occasioning of the delay. He has pointed out that he has some medical issue that required greater attention to be paid by him. A certificate from the competent Physician has also been produced to vouch for the said fact. In such circumstances, a liberal approach ought to have been adopted by the Tribunal for condonation of delay, particularly when the delay is only of 291 days, but not an enormous or abnormal one. What surprised us the most is, the observation of the Tribunal that irreversible hardship would be caused to the Department in recovering the dues. The Department as part of the Central Government had the necessary authority and there are adequate measures provided for effecting recovery of arrears. Therefore, the delay of 291 days in preferring the appeal cannot be construed as to be causing such an unsurmountable hardship to the Government of India in the matter of recovery of dues by it. Therefore, we are of the opinion that the order passed by the Tribunal declining to condone the delay is not justified and is an unsustainable one and hence it is set aside The delay in preferring the appeal before the Tribunal by the Appellant/Assessee is condoned subject to payment of Rs. 3,000/- in each case representing compensatory costs, within 15 days from today, in the Office of the Commissioner of Service Tax concerned, Chennai. Upon production of the receipt for payment of Rs. 3,000/- in each case, the Tribunal will proceed to entertain the appeals and deal with them on merits. If for any reason, the Appellant fails from payment of costs, it shall be construed that the Final Order Nos.41421 and 41422 of 2015 dated 15.10.2015, passed by the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai, are accepted by him without any further reference to this Court. Delay condoned - decided in favor of assessee.

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• 2016 (12) TMI 485
  Turnkey contract - Erection Commissioning or Installation Services or under Commercial and Industrial Construction Services - Contract for providing and laying spiral welded/fabricated M.S. Pipe line for raising main and its allied works for Nerla lift irrigation scheme - including all related civil, mechanical and electrical works as per design and drawing, commissioning, testing of the entire pipe line and pumping machinery including maintenance for two years after completion of the scheme. - Held that: - It can be noticed from the description of the work awarded to the appellant, it is a contract turnkey project which results in an erected structure with installation of pumping machinery, electrical switch yard and other related civil, mechanical and electrical structures, in our considered view would get covered under head Commercial and Industrial Construction Services. This specific issue was before the Larger Bench of the Tribunal in the case of Lanco Infratech Ltd. [2015 (5) TMI 37 - CESTAT BANGALORE (LB)], wherein the Larger Bench has settled that the law and held that irrigation projects/lift irrigation projects would get covered under CICS prior to January, 2007 but eligible for exemption. We also find strong force in the contention of the appellant that the issue is now covered under Hon'ble Supreme Court in the case of Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT], in the said case the Hon'ble Apex Court was considering the same issue of vivisected contract for taxability under different categories. Whether the issue that the contract entered would get covered under Erection Commissioning or Installation Services was never before the lower authorities and hence the appellant should not be allowed to raise the same before the Tribunal is also dismissed as the Bench has recorded the finding on casual perusal of contract entered into is works contract wherein the appellant has used material in all the projects. Since the issue is question of law, in our opinion it can be raised before the Tribunal. The impugned order is set aside on merits itself. Since we are allowing the appeal on merits, we are not recording any observation on the various submissions made by both sides - appeal allowed - decided in favor of appellant-assessee.

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• 2016 (12) TMI 484
  Denial of CENVAT credit on various inputs services which are consumed for construction of the building - demanf of tax on interest-free deposit, forfeited amounts - renting of immovable property services - Held that: - As regards the denial of CENVAT credit of input and inputs services used in relation to the building of the property which was to be used by the appellant for the commercial purpose by leased out the area of such commercial property, we find that there is no dispute that the appellant had discharged the Service Tax liability on the amount received as rent from their clients. If appellant is discharging Service Tax liability on the output services under the category of renting of immovable property , we do not find any reason for denial of CENVAT credit on various input and inputs services used in relation to building of such commercial property. As regards the demand of Service Tax liability on the interest-free security deposit, we find that the adjudicating authority has calculated notional interest payable on such interest-free security deposit and related the notional interest as received in relation to renting of immovable property services. We are not in agreement with such finding of the adjudicating authority, for the reason that an agreement between the appellant and his customer provides for interest free security deposit, which is nothing but advance, Revenue cannot state that such security deposit will earn interest, and notional interest needs to be taxed. As regards Service Tax liability on the amount which was forfeited by the appellant as liquidated damages for rendition of the customer in not taking the possession of the premises contracted for, we do agree that Service Tax liability on such amount forfeited as liquidated damages does not arises. As regards the CENVAT credit improperly availed on amount of Rs. 3.30 crores (approx), we find that the issue needs reconsideration by the adjudicating authority as various documents produced before us as also before the adjudicating authority, in our opinion were not considered in proper prospective and no findings are given; without expressing any opinion on the merits of this issue, we set aside the finding of the adjudicating authority on this point and remit this point for redetermination by the adjudicating authority after following the principle of natural of justice. Appeal partly allowed - matter on remand.

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• 2016 (12) TMI 483
  Consulting engineer service - transfer of technology/technical collaboration in respect of the technology it was developed by them in pharmaceutical field. - Held that: - Since we are concerned with the issue prior to amendment of definition, it has to be held that the appellant's services of rendering/transferring technical know-how in respect of pharmaceutical and bulk drugs may not get covered under the definition of Consulting Engineer Services. Our this view is fortified by the judgement of the Hon ble High Court of Karnataka in the case of Turbotech Precision Engineering Pvt.Ltd. [2010 (4) TMI 344 - KARNATAKA HIGH COURT], where it was held that impugned period being prior to 2006, respondent not covered under consulting engineer service, service tax liability not arise. Appeal allowed - decided in favor of appellant-assessee.

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• 2016 (12) TMI 482
  Refund claim - export of goods - Notification no. 41/2007-ST dated 6.10.2007 - manufacture and export of soya bean extract - time bar - whether the refund claim, filed before the wrong authority in time, and subsequently filed with delay before the proper authority, is to be held as filed within time? - Held that: - the refund claim, which has been filed within time before the wrong authority, is to be held as filed in time. I also note that the authorities below have not examined the claim on merits. The learned Departmental Representative has also pointed out certain misgivings on the eligibility of the refund claim on merits. Hence, I deem it proper to set aside the impugned order and remand the matter to the Original Adjudicating authority. He shall consider the claim as filed in time and examine the same on merit and pass an appropriate order. I make it clear that the appellant may be given due opportunity of hearing before passing the denovo orders - appeal allowed by way of remand.

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• 2016 (12) TMI 481
  Export of services - sale promotion and back office accounting services - whether service tax is liable to be paid by the appellant under the category of business auxiliary service, on reverse charge basis? - Held that: - Service tax is a destination based consumption tax. Even though the activities of sales promotion and back office accounting has been rendered in India, the service is provided to the foreign principal. This is clearly evident from the fact that the benefits of the services provided by the appellant has accrued to the foreign principals of the appellant who has in turn, paid the consideration to the appellant in convertible foreign currency. This has also satisfied the second condition specified in the export of Services Rules. We also note that the CBEC clarification has been issued in the context of situations of the type faced by the appellant in the present case - the activities covered in the present dispute are clearly covered within the Export of Service Rules, 2005. Consequently no service tax will be payable on reverse charge basis - appeal allowed - decided in favor of appellant-assessee.

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• 2016 (12) TMI 480
  Imposition of penalty u/s 76 and 78 of FA - the entire amount of duty has been paid before issuance of Show Cause Notice - the judgment of Hon'ble Gujarat High Court, Raval Trading Co. Vs Commissioner of Service Tax [2016 (2) TMI 172 - GUJARAT HIGH COURT], referred to - Held that: - I find that in the case of Raval Trading Co. Vs Commissioner of Service Tax, Simultaneous penalties under Sections 76 and 78 was levied and it was held that we answer the additional question in favor of the appellant-assessee and delete the penalty under Section 76 of the Finance Act, 1994, while upholding the penalty imposed under Section 78 and other penalties. Therefore, simultaneous penalty under Sec. 76 and Sec. 78 of Finance Act, 1994 cannot be imposed on the Appellant. Consequently, penalty imposed under Sec.76 is set aside. As regards the benefit of 25% of penalty on payment of duty and interest, the issue is covered by the decision of Hon'ble Gujarat High Court in the case of Santosh Textile Mills [2011 (3) TMI 1649 - GUJARAT HIGH COURT] and Appellant would be entitled to discharge 25% of the penalty imposed under Section 78 of Finance Act, 1994 subject to fulfillment of the conditions laid down therein - However, for the purpose of ascertaining the quantum of interest, and fulfilment the condition laid down under Sec. 78 of the said Act, the matter needs to be remanded to the Adjudicating Authority. Appeal allowed by way of remand.

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• Central Excise

• 2016 (12) TMI 479
  Whether in absence of any permission from the Commissioner Central Excise for making changes the benefit of Rule 4 read with Rule 3 of the Hot Re-Rolling Steel Mills Annual Capacity Determination Rules 1997 could be given to the assessee? - Held that: - This very issue has now been finally set at rest by the Apex Court in the case of Commissioner of Central Excise, Chandigarh Vs. DOABA Steel Rolling Mills reported in [2011 (7) TMI 10 - SUPREME COURT OF INDIA] wherein the Apex Court has come to the conclusion that Rule 5 of the 1997 Rules, is not fettered in any way by any restriction and can be invoked even in a case of determination of the annual capacity of production of the factory where there has been a change in the installed machinery or any part thereof - question stands answered in favor of the appellant-department and against the assessee - appeal allowed.

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• 2016 (12) TMI 478
  Maintainability/entertainability of the present Appeals - Section 35G of the Central Excise Act - Held that: - despite having found that the present Appeals under Section 35G of the Act before this Court shall not be maintainable, the present Appeals are not required to be entertained and/or held to be maintainable merely because the Department earlier before the Hon’ble Supreme Court withdrew it with a liberty to prefer appeals before this Court, more particularly when the question of maintainability of appeals before this Court has not been addressed before the Hon’ble Supreme Court and as observed hereinabove, there is no finding and/or decision of the Hon’ble Supreme Court with respect to maintainability and/or entertainability of these Appeals before this Court against the impugned common judgment and order passed by the learned Tribunal under Section 35G of the Central Excise Act. The present appeals against the impugned common judgment and order 12th May 2015 passed in Appeal Nos. E/12386 as may be available under the provisions of the Central Excise Act. With this, both the Appeals are dismissed as not maintainable.

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• 2016 (12) TMI 477
  Maintainability of appeal - condonation of delay - Held that: - learned Commissioner (Appeals) did not accept the case on behalf of the appellant that they received OIA on 27.08.2012 merely on presumption and assumption and on surmises and conjectures. The learned Commissioner (Appeals) has observed that as the OIO was dispatched by Department and sent through RPAD on 25.07.2012 and therefore, considering the period of maximum 10 days as reasonable period for reaching OIO from the date of dispatch from the postal department to the factory of the appellant, the OIO ought to have been reached the appellant latest by 04.08.2012. Therefore, learned Commissioner (Appeals) treated and considered the starting point of limitation from 04.08.2012. The aforesaid finding cannot be sustained for the simple reason that the starting point of limitation is considered merely on presumption and assumption. The learned Commissioner (Appeals) has considered the date of dispatched of the OIO but has not considered in fact on which date the appellant received the copy of OIO. If according to department OIO was sent through RPAD, in that case, department must have received acknowledgment receipt with the signature and seal of the company. The Commissioner (Appeals) could have and ought to have called for the acknowledgment receipt of the RPAD to ascertain on which date the appellant / assessee received the copy of the OIO. The acknowledgment receipt of the RPAD is always with the department. Therefore, department was required to produce the cogent reason to prove the only date of receipt of OIO by the appellantassessee. The impugned order passed by the learned Commissioner (Appeals) confirmed by the learned Tribunal cannot be sustained and the matter is required to be remanded to the learned Commissioner (Appeals) to pass appropriate order on the aspect of condonation of delay afresh and in light of the observations made herein above. It will be open for the learned Commissioner (Appeals) to call for the necessary particulars from the department with respect to exact date of receipt of OIO by the appellant either from acknowledgment receipt of RPAD and / or from any other documents such as inward register etc. - appeal allowed by way of remand.

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• 2016 (12) TMI 476
  Partial withholding of the refundable excise duty - The litigants are industrial units which were set up in the designated duty exemption zones in the North Eastern States, under the new industrial policy resolution of the Central Government, notified in the year 1997 and 2007. These industries were made eligible for 100% tax exemption and concession by the two notification(s) of 08.07.1999 and 25.04.2007, for 10 year period. As per the incentive mechanism, full refund of excise duty was provided to the units - Notification No.20/2007- Central Excise - Held that: - it would be appropriate to take note of the fact that for certain categories of industries, the rate of refundable excise duty is stipulated at 75% and if we approve the calculation of the Deputy Commissioner under his order of 12.02.2016, a successful litigant may have to pay back to the authorities a portion of the permitted refundable sum, instead of getting back 50% of the differential amount, in terms of the interim order passed by the Apex Court. The interim order passed by the Hon’ble Supreme Court on 07.12.2015 in the I.A. No.3/2015 was made applicable by the Gauhati High Court in all the pending cases and therefore the determination of the amount due in terms of the Court’s interim order, cannot include what was undisputedly paid back as refundable excise duty, which the manufacturers were entitled to receive, irrespective of the outcome of the litigation. Therefore inclusion of those already refunded sum, was not justified for determining the amount due. In our understanding, only the differential amount can be taken into account for deciding what sum to be paid back now to the manufacturer. In other words, 50% of the unpaid amount is the due amount and this must be refunded to the eligible units, subject to furnishing of solvent surety to the satisfaction of the jurisdictional commissioner. It is declared so accordingly. Before we part with the records, it is necessary for us to observe that while relief through the judgment of June 24th 2009 was confined to the writ petitioners, the benefit of the relief was expanded to cover all the industries set up pursuant to policy of 1997 and 2007, under the Division Bench judgment dated 20.11.2014 in the WA No.243/2009. Therefore, our above observation on the receivable amount will universally apply to all the eligible industries and the interim relief is not to be restrictive to only the litigants, before the Court - by virtue of the interim order operating in all these cases, the respondent authorities are ordered to disburse 50% of the withheld segment of the refundable amount, to the units subject to furnishing of solvent surety by those units. Such interim refund or the entitlement to receive the balance 50% of the withheld sum, will abide by the final decision of the Hon’ble Supreme Court in the pending challenge of the central Government in SLP(C) No.11878/2015 and other related cases. It is ordered accordingly. As the petitioners have been deprived of the benefit of the successful litigation and the respondents are expected to act with promptitude in granting due refund, the necessary exercise in this regard should be completed within 8(eight) weeks, from today.

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• 2016 (12) TMI 475
  DEEC Scheme - Whether the adjudicating authority is not required to call the DEEC and other related documents for quantification of correct amount of refund? - Held that: - the Government itself was of the definite opinion that it lacked jurisdiction at least in the circumstances of the case. Although the learned counsel has urged that the Assessee approached the Central Government without appraising it of the pendency of the appeal, this Court is not persuaded to differ with the submission of the Assessee because what in fact is being urged is that it is speaking in two voices. Having expressed itself with respect to the lack of jurisdiction in the facts, the government cannot be heard to say that it did possess jurisdiction under Section 35EE - answered against Revenue. Whether the CESTAT has the jurisdiction to decide the appeal in respect of any order passed by the Commissioner (Appeals) under Section 35A of the Central Excise Act, 1944 read with sub-section 1(b) of Section 35B of the Act ibid and proviso thereto in the cases wherein goods have been exported out of India (except to Nepal and Bhutan) CEAC 11/2005 Page 2 of 7 without payment of duty? - Held that: - the permissibility of the credit in the facts of the case, undoubtedly, Rule 57F, as existing on the date, did not permit credit in case of clearance made from the third party premises as in the present case. This Court is obvious of the fact that the concerned jurisdictional Commissioner did permit such clearance and that on that basis the exports were made and even the DEEC benefits were given. All that the job workers did was to put together all manufactured products which answered the specifications of the importers’ requirements in terms of the order given by the CESTAT in this case. In light of the difficulties faced by such exporters especially those relying upon third party manufacturers, in the absence of their capacity to deal with larger orders this rule enabled the authority to make such clearance order and also enabled claim of credit from 22.02.1999 onwards - larger interest of justice lies in not disturbing the order of the CESTAT. Appeal dismissed - decided against Appellant.

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• 2016 (12) TMI 474
  Remission of duty - Rule 49 (1) (A) of the Central Excise Rules, 1944 - Held that: - as per the units own statement, the clandestine removal or theft as they call it took place in April 2001 and they filed an FIR only in October 2001 i.e. after 6 months. What took them so long to inform the police is not forthcoming. Moreover, they never informed the department about the said "theft" and the department on its own, based on the news item in the local news paper, took further action which culminated in the issue of a demand notice. This is a clear violation of the provision of Board Circular No. F. No. 40/73-CX-1 & F.No. 21/29/65-CX-IV, which stipulates that the first information regarding such loss or destruction etc. to be sent within 24 hours of the occurrence. That they have failed to inform the department at all is not disputed. Moreover, what took them 4 years to file the remission of duty application with the department also remains unexplained. Hence, even without going into the issue whether 'thefts' would fall with the ambit of cases to which remission duty can be claimed, for which they have cited some case laws, I find that the remission application is liable to be rejected on this ground alone. Appeal disposed off - decided in favor of Department.

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• 2016 (12) TMI 473
  Valuation - whether freight and insurance amount pertaining to the goods cleared by the Assessee should be included in the assessable value of the goods or not? - Held that: - Under normal circumstances, the assessee is obliged only to go before the Appellate Authority under Section 35(1) of the Central Excise Act, 1944. The order under challenge is an order against which a statutory appeal is available. Therefore, generally we would have refrain from entertaining the writ petition on the ground of availability of statutory alternative remedy - But the case on hand stands on a unique footing. This is a case where the petitioner has paid an amount of Rs. 10,82,682/- as against a duty demand of Rs. 11,94,200/-. In other words the petitioner has not come to this Court bypassing the alternative remedy of appeal, for the purpose of avoiding the pre-deposit condition. More over, the grievance of the petitioner is something peculiar. His grievance is that under explanation to Section 4 (1) of the Act, the price-cum-duty for excisable goods sold by the assessee should be determined in a particular manner - But unfortunately, there has been no discussion nor any finding recorded. Since the requirement under Explanation to Section 4(1) is statutory, the adjudicating authority appears to have failed to comply with this requirement, forcing us to interfere with the Order-in-Original. Though it is true that the adjudicating authority may not have a power of review as available to Civil Courts, the fact remains that the petitioner is not aggrieved by the mere absence of a power of review. The petitioner is aggrieved by the failure of the adjudicating authority to consider his objections to the show cause notice and to record a finding. Therefore, we need not go into the question as to whether the matter should have been reviewed or not. The writ petition is allowed, the impugned order of the Additional Commissioner is set aside - Matter remanded back for re-adjudication.

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• 2016 (12) TMI 472
  Refund claim - difference between excise duty leviable on like goods and the additional customs duty under a Notification no.12/2012 – CE, read with Section 3 (1) of the Customs Tariffs Act - Held that: - In SRF Limited’s case [2015 (4) TMI 561 - SUPREME COURT], the condition applicable i.e. No.20 relied upon by the revenue was that credit should not have been availed of under CENVAT for inputs or capital goods used in the manufacture of dutiable goods in India - The Supreme Court rejected the contentions identical with the present one espoused by the revenue in the present case. The petition has to succeed and direction is issued to the respondent to process the refund claims and pass appropriate orders, having regard to the fact that the petitioner has filed supporting certificates in the form of Chartered Accountant’s Certificate and other documents, claiming that the benefit was not passed on to the consumer. The respondents are directed to pay the appropriate refund amount together with interest payable till the date of actual payment, within three weeks.

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• 2016 (12) TMI 471
  Manufacture - marketability - process of cold-rolling of stainless steel patta/pattis - the decision in the case of M/s. Gujarat Industries & Others Versus Commissioner of Central Excise-I, Ahmedabad [2015 (12) TMI 743 - SUPREME COURT] contested - Held that: - We have carefully gone through the review petitions and the connected papers. We find no error much less apparent in the order impugned - The review petitions are, accordingly, dismissed. Petitions dismissed - decided against petitioner.

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• CST, VAT & Sales Tax

• 2016 (12) TMI 467
  Refund claim - pre-audit - revisional jurisdiction - Article 226 of the Constitution - Held that: - it cannot be said that respondent has issued show cause notice to take order dated 07.07.2016 under suo motu revision has no jurisdiction at all and / or considering the provision of statute, it cannot be said that there is total lack of jurisdiction and the petitioners have yet to reply to the show cause notice and ample opportunity shall be available to the petitioners to represent their case and / or making submission before the revisional authority, we are of the opinion that present petition which is at the stage of show cause notice may not entertained and the petitioners may be relegated to reply to the show cause notice and participate in the revisional proceedings. It will always be open for the petitioners to make submission before the Revisional Authority and in reply to the show cause notice that there is no factual foundation to take order dated 07.07.2016 under suo motu revision and / or grounds stated in the show cause notice are not tenable and the revisional authority bound to consider the same in accordance with law and on merits. Therefore, we are of the opinion that no exceptional case is made out to interefere with the present petition under Article 226 of the Constitution of India against the show cause notice - present petition not entertainable - The petitioners are relegated to file reply to the show cause notice and participate in the revisional proceedings. In the facts and circumstances of the case, the Revisional Authority is directed to decide and dispose of revision (suo motu revision) against the orde dated 07.07.2016 within the perod of two months from the date of filing of the reply to the show cause notice by the petitioners, however after observing principles of natural justice and giving fullest opportunity to the petitioners - petition dismissed.

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• 2016 (12) TMI 466
  Levy of VAT - nature of activity - activity is in the nature of sale of goods or providing services - petitioner has only agreed to sell the dredger after completion of the construction. - in respect of the receipts for carrying out various services, petitioner had paid service tax as evident from Exts.P2 and P3, VAT to be levied or not - non-application of mind - Held that: - The petitioner has a case that they have been subjected to double taxation by calling upon them to pay service tax also. There is no dispute regarding the proposition as contended by the learned counsel for the petitioner that the sale tax and service tax are to be charged depending upon the nature of transaction and in their respective parameters. But, the question is how it has to be differentiated and which part of it can be assessed to tax under the Kerala Value Added Tax Act and which part could be assessed tax under the Service Tax Act. This is a matter which requires enquiry and I don't think that this Court will be justified in considering such issues at this stage of proceedings when the matter is still at large. - Petition dismissed for want of alternate remedy.

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• 2016 (12) TMI 465
  Benefit of Form ST-1 - Did the Appellate Tribunal fall into error in holding that the ST-1 forms used by the assessee were invalid and therefore could not be the basis of any benefit? - Held that: - From a combined reading of the Form and the Rules, it is quite evident that the declaration per se does not contain any provision limiting the date or dates or time period for which it is valid. All that proviso to Rule 7(1) of the Rules requires is that if transactions are concerned with the delivery of goods spreading over different years, it is necessary to furnish a separate declaration in respect of goods delivered in each year. We fail to understand how this provision would come to the aid of the Revenue in the circumstances of the case. The Form concededly was issued in August, 1994; there was absolutely no authority or warrant for the Revenue to stamp on it “1994-95”, to denote its validity, given that the circular was issued much later on 23.06.1995. The so-called validity of the Form, therefore, could not have bound either the selling or the purchasing dealer in the circumstances of this case It is further reaffirmed by Rule 8(9) of the Rules which specifically states that a registered dealer is bound to surrender to the appropriate Assessing Authority all unused declaration forms remaining in hand upon cancellation of his certificate. Thus, Forms once issued per se have validity in terms of the Rules. The rejection of the Forms in the present case and claiming deduction on the basis thereof for the sale of PVC resins at Rs. 9,25,52,964/- was contrary to law. The findings of the Sales Tax Tribunal and the Authorities below are accordingly reversed. Appropriate relief shall be given to the dealer - appeal allowed - decided in favor of assessee.

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• 2016 (12) TMI 464
  Classification of goods - welded wire mesh - falls under commodity code 2041 or under code 301? - Held that: - taking note of the fact that the clarification dated 10.7.2007 is said to have been followed by the other Assessing Officers, this Court is of the view that while dismissing the writ petitions at the very threshold, to meet the ends of justice and at the same time, protect the interest of the Revenue, the petitioners are granted liberty to move the Principal Secretary and Commissioner of Commercial Taxes seeking clarification as regards the rate of tax payable on the sale of the product manufactured by them namely welded wire mesh - petition dismissed.

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• 2016 (12) TMI 463
  Rate of tax - Petitioner being a presumptive tax dealer is liable to pay only tax @ 0.5% on the turnover if the turnover is less than 60 lakhs. However, the assessment is made by charging tax @13.5% - Held that: - Perusal of Ext.P3 order would indicate that the assessing officer had taken such a view on the following facts (1) The dealer has produced only photo copy of 4 invoice along with the reply. He has not produced the originals for verification since he claim that the purchase was made by their associate concerns Mookken Devassy, Palarivattom; (2) On verification of the photo copies of the invoice produced the means of transport (vehicle no.) were not endorsed in invoice. Accordingly the photo copy of the bill is seemed to be not genuine. Particularly the transport as per the documents were commenced from Muvattupuzha to Palarivattom in a distance of 30 kilometer and the journey to be performed in a carrier vehicle. When such a view had been taken by the assessing authority, I do not think that this Court will be justified in considering the claim made by the petitioner on merits. Petitioner will have to challenge the aforesaid findings in a properly constituted appeal. Hence, I do not think that this Court is justified in interfering with the matter bypassing the appellate remedy available to the petitioner - petition allowed - petitioner allowed to prefer an appeal.

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• Indian Laws

• 2016 (12) TMI 462
  Liability to pay the property tax - petitioners have purchased the shops in question in the Bank auction conducted by the Bank in exercise of powers of the Securitization Act and in public auction / auction notice - whether the petitioners can be held liable to pay the property tax on the aforesaid properties /shops for the period prior to they purchased the properties in Bank auction or not? - Held that:- The petitioners have purchased the shops in Bank auction conducted by the Bank under the provisions of the Securitization Act and Rules and prior to their purchase it was not brought to the notice of the petitioners – purchasers that there is any property tax due for the properties /shops and after their purchase, the same is recovered from the petitioners, the impugned action of respondent no.1 in recovering the property tax for the properties /shops for the period prior to the petitioners purchased the shops i.e. prior to 05/03/2014 cannot be sustained. Present petition succeeds. The action of respondent no.1 in recovering the property tax for the aforesaid shops /properties, which the petitioners have purchased in bank auction for the period prior to 05/03/2014 is hereby quashed and set aside. Consequently, any amount recovered towards the property tax dues for the period prior to the petitioners purchased the properties /shops, the same may be refunded to the petitioners within a period of four weeks from today. However, it is observed that it will be open for respondent no.1-Corporation to recover the property tax dues for the period prior to 05/03/2014 from the erstwhile owner.

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• 2016 (12) TMI 461
  Demand notice issued under section 13(2) of the SRFAESI Act - publication of the demand notice in the newspapers - whether the petitioner is at all entitled to be compensated or not having regard to the conduct of the second respondent? - Held that:- No record maintained by the respondents in relation to having “reasons to believe” that publication of the demand notice in the newspapers has become absolutely essential for making the borrower/guarantor aware of what is required of him/them. The ‘sine qua non’ is thus conspicuous by its absence. That apart, no answer could be given by Mr. Saha as to why the photograph of the second petitioner was published despite the admitted fact of he having received the demand notice. Evasion of notice by the said Sushil Kumar Paul, if at all, could not have given rise to any situation warranting publication of the photograph of the second petitioner. There cannot thus be any doubt that the second respondent has conducted himself in a manner not authorized by law by publishing the demand notice in the newspapers with the photograph of the second petitioner. Interestingly, the second respondent had the photograph of the second petitioner published in the newspapers not at the stage of taking measures under section 13(4) of the Act but at a point of time when at the end of the PNB itself, the right to invoke measures under section 13(4) had not even crystalized. Over and above all these, it appears that the second respondent did not also care to abide by the circular letter dated March 22, 2013 issued by another senior officer of the PNB. It would, therefore, appear that the second respondent has acted in breach of the circular letter dated March 22, 2013. Considering the overall facts and circumstances, it appears to be crystal clear that the second respondent has grossly abused his authority. This is not a fit and proper case for any compensation to be awarded by the court of writ to the petitioners. While declining compensation, liberty to approach the appropriate forum for recovery thereof in accordance with law is reserved. As having regard to the findings recorded above that the second respondent grossly exceeded his authority in publishing the demand notice in the newspapers with, inter alia, the photograph of the second petitioner, this writ petition stands disposed of with the direction that the respondents shall publish an apology in the said newspapers (Ananda Bazar Patrika and The Times of India) expressing regret for having published the photograph of the second petitioner, within 30 days from date. The petitioners shall also be entitled to costs of proceedings assessed at Rs. 50,000/-, to be paid within the same period as aforesaid. Liberty of the PNB to recover the publication charges as well as costs of proceedings from the second respondent, in accordance with law, is also reserved.

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