TMI Tax Updates - e-Newsletter
December 13, 2016

Case Laws in this Newsletter:

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

TMI SMS

• Inter state sale or intra state sale - retail sales of goods via online portal - movement of goods is outside the state - No local VAT - HC

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News

1. GST Council meet inconclusive; Apr 1 target unlikely

2. RBI denies Rumours on Axis Bank

3. The Ministry of Finance through a letter to all the MDs &CEOs/CMDs of PSBs and Chairman, IBA directs that all the bank branches in the country be alerted to reflect correctly the cash deposit in old and new currency and inform the customers about the same; Action taken in this regard be reported by 16.12.2016

4. The Union Finance Minister holds Pre-Budget Consultative Meeting with the Representatives of IT Industry; FM: Software Development and Information Technology Enabled Services (ITeS, including BPO & KPO) industry had emerged as one of the most dynamic and vibrant sectors in India;. Electronic Market in India is one of the Largest in the World and is expected to reach US $400 Billion in 2020

Notifications

Companies Law

1. F. No. 17/60/2012-CL-V - G.S.R. 1127(E) - dated 9-12-2016 - Co. Law

Corrigendum - Notification No. G.S.R. 1075(E), dated the 17th November, 2016

Highlights / Catch Notes

Income Tax

• Section 24(a) Deduction: Evidence Unusable if Collected Without Taxpayer's Knowledge or Opportunity to Respond.

  Case-Laws - AT : Deduction u/s 24(a) against income from house property - any material collected at the back of the assessee and not confronted to the assessee ad without calling for comments of the assessee would not be admissible in evidence against the assessee - AT
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• Section 194C TDS Applies to Gold Making Charges, Even if Payees Are Employees, Due to Income Threshold Exceedance.

  Case-Laws - AT : TDS u/s 194C - making charges of gold - Even if we assume that the 23 persons who were paid making charges were employees of the appellant, then also in most of the cases TDS provisions are attracted because payment to each individual person exceeded the minimum taxable income - AT
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Customs

• Court Rules Mobile Phone Importers Eligible for CVD Exemption Due to Impossible Condition under Notification No. 6/2002.

  Case-Laws - AT : Exemption from CVD - import of mobile phones - the condition which was not possible of satisfaction - appellants were entitled to exemption from payment of CVD in terms of Notification No. 6/2002 - AT
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Service Tax

• Hotel Property Lease Exempt from Service Tax for Renting of Immovable Property Services to Operating Companies.

  Case-Laws - AT : Renting of Immovable Property service - There is no liability of service tax in respect of property of ‘Hotel Chandela’ leased out for running, operating, etc. to IHCL AT
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• Service Tax on C&F Agent Services Excludes Reimbursable Expenses; Total Taxable Value Miscalculated.

  Case-Laws - AT : C&F agent service - inclusion of reimbursement of expenses - the service tax stands demanded on the total amount paid to the assessee by the principal. Clearly, there is no prescription to include reimbursable expenses in the total value of taxable service. - AT
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Central Excise

• Exemption Under Notification 67/95 CE Applies to Captive Consumption of Armoured Cable in Power Cable Manufacturing.

  Case-Laws - AT : Captive consumption - intermediate product i.e. armoured cable, which has been used for manufacture of power cables which is ultimately cleared to Mega Power Projects - benefit of exemption under n.no. 67/95 CE allowed - AT
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• CENVAT Credit Allowed Across Units: Input Service Tax Paid at One Unit, Benefit Claimed at Another Permissible by Law.

  Case-Laws - AT : CENVAT credit - input services - Merely because the input service tax is paid at a particular unit and the benefit is sought to be availed at another unit, the same is not prohibited under law - AT
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• CENVAT Credit Rules: No Credit Allowed for Aviation Fuel, Diesel, or Motor Spirit Under Input Definition.

  Case-Laws - AT : CENVAT credit - Aviation fuel - definition of inputs expressly excludes Light diesel oil, HSD and motor spirit. In that case the credit on Aviation turbine fuel cannot be allowed. - AT
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• CENVAT Credit Denial for High Mast Lighting System's Umbrella Structure in Inflammable Product Manufacturing Deemed Unjustified.

  Case-Laws - AT : CENVAT credit - Umbrella structure is part of the high mast lighting where high inflammable products are manufactured. Therefore the denial of credit is unjustified. - AT
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VAT

• Court Rules Flipkart Sales as Inter-State for VAT: Purchase Orders Trigger Goods Movement Across State Lines.

  Case-Laws - HC : Inter state sale or intra state sale - retail sales of goods via the online portal www.flipkart.com - the bill is raised and the identified package is consigned to another state - held as inter state sale - the purchase order, which is placed outside the State has occasioned the movement of goods. - HC
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• Wooden Cable Drums Excluded from Crate, Box, or Chest Classification for VAT Purposes, Rules High Court.

  Case-Laws - HC : Classification - WBVAT - Wooden Cable Drum cannot come within the description of a Wooden Crate or Box or Tea Chest as enumerated in serial No. 169. A drum cannot be said to be crate or a box or a chest - HC
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• Court Reviews Partial Rejection of Input Tax Credit Refund Due to Wastage u/s 19(9) of TNVAT Act.

  Case-Laws - HC : Partial rejection of the petitioner's applications for refund of the input tax credit for the period from July 2015 to June 2016 - wastage under Section 19(9) of the TNVAT Act - since the respondent has adopted a uniform percentage, the same calls for interference. - HC
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Case Laws:

• Income Tax

• 2016 (12) TMI 559
  Disallowance of deduction claimed under Section 54 - utilization of capital gain - Held that:- When the assessee advanced a sum of Rs. 83,00,000/- as on 31.07.2011, before the due date for filing of return of income, for a purchase of residential flat to M/s Total Environment Building Systems Pvt. Ltd., this would amount to utilization of capital gain. In the case before us, the admitted capital gain is Rs. 64,84,686/- and what was advanced by the assessee for purchasing the flat is Rs. 83,00,000/-. In view of the above, this Tribunal is of the considered opinion that the assessee, in fact, utilised the capital gain for purchasing the flat before 31.07.2011. Hence, the assessee is entitled for exemption under Section 54 of the Act. This Tribunal is of the considered opinion that the CIT(Appeals) has rightly allowed the claim of the assessee by placing reliance on the judgment of Apex Court in Fibre Boards (P) Ltd. (2015 (8) TMI 482 - SUPREME COURT ).- Decided in favour of assessee

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• 2016 (12) TMI 558
  GP addition - rejection of books - estimation of income - Held that:- The Assessee has also admitted that the purchases made of milk in the month of March have been recorded in the month of April and this practice has been followed regularly. The milk has been purchased in cash and in most of the cases no invoices were available therefore the affairs of the assessee are not open for verification. Under these circumstances the AO has rightly invoked the provision of section 145(3) of the Act which is upheld. As regards the estimation of income, it is noted from the records that the assessee has declared the total turnover of Rs. 5.93 crores which was estimated by the AO at Rs. 6.5 crores and reduced by ld. CIT(A) to Rs. 6.25 crores. The estimation made by AO is solely for the reason that certain sales against free coupons issued is not recorded for which it is explained that the free coupons were issued as a marketing strategy and free distribution of the material could not be forming part of the sales and the corresponding receipts from the dealers as security deposits is separately kept under the head “Security Deposits”. Therefore there is no occasion for recording the same under the head “Sales”. Under these circumstances the turnover declared by the assessee should not be disturbed more particularly when the assessee’s record are subject to examination by Central Excise and VAT authorities who have not doubted the turnover declared in the year under appeal. Determination of GP rate - the turnover of the assessee has been on increasing trend and it is an established principal of marketing that the turnover would be increased by lowering the profit margins. In this case certain deficiencies were pointed out by the AO including the recording of purchases of the month of March in April for which it was explained that same process is applied every year and if the effect of the purchases recorded in the month of April for the purchases made in month of March of preceding assessment year vis-à-vis the purchases of the month of March of the year under appeal recorded in subsequent assessment year is considered the resultant figure is worked out at Rs. 2,32,659/- by which at the most the profit is deflated. Thus GP of preceding assessment year is to be applied on the declared turnover of Rs. 5,93,59,027/- (5,93,59,027x 14.70% = 87,25,776) which has resulted into the GP of Rs. 87,25,776/- as against the GP declared at Rs. 81,77,000/- shown by the assessee and accordingly an addition of Rs. 5,48,776/- ( Rs. 87,25,776 minus Rs. 81,77,000) is hereby confirmed to cover up all the possible leakage of the revenue Addition on forfeited security deposit which has not been shown as income - Held that:- During the course of hearing assessee referred to the computation of total income of the assessee's paper book wherein depreciation chart is showing a sum of Rs. 14,18,501/- as sales and was reduced from the written down value of plant & machinery. It is contended that the assessee has claimed depreciation on such deep freezers and the amount of security forfeited has been reduced from the written down value and the depreciation was claimed on such reduced value. Therefore, there is no occasion to declare such receipts separately in the Profit & Loss Account. After verification of these facts from the assessee's paper book page 99, it is found that as against the total amount of Rs. 14,20,581/-(as per AO’s order page 11) assessee has reduced the value of plant & machinery by Rs. 14,18,501/- therefore the same is hereby directed to be deleted and the balance amount of Rs. 2,080/- is hereby upheld. - Decided partly in favour of assessee Non deduction of tds on interest paid - addition u/s 40(a)(ia) - Held that:- It is noted from the record that the tax was not deducted on the payment of interest however the assessee has submitted the certificate in Form 26A duly signed by a chartered accountant stating that the due tax on such interest has been paid by the recipient. The Finance Act, 2012 has made an amendment in section 40(a)(ia) through which a proviso was inserted w.e.f. 01.04.2013 wherein it has been cleared that the recipient has paid the tax and assessee is not deemed to be in default under the first proviso to sub section 1 of section 2001 then for the purpose of section 40(a)(ia) it shall be deemed that the assessee has deducted and paid tax on such sum subject to furnishing on the certificate by the chartered accountant. Thus no deduction could be made u/s 40(a)(ia) if the assessee is not declared as assessee in default u/s 201(1) for which the necessary certificate is claimed to have been furnished before the lower authorities. Therefore direct the AO to verify this fact and if the claim of the assessee is found correct, no disallowance be made on this account. Hence Ground of the assessee is set aside to the file of the AO for making necessary verification and this ground of the assessee is allowed for statistical purposes.

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• 2016 (12) TMI 557
  Addition as profit from trading in gold - appellant had resorted to under valuation of closing stock - Held that:- As decided in assessee's own case this Tribunal had indeed considered the argument of the assessee on gold content in the stock and held that only real gold content was to be considered. It also held that the valuation at rate of 538.599 per gram, as done by the assessee considering the actual gold content in 91.6 purity gold jewellery was correct. Since the method of valuation has to be consistant, following that decision we direct the AO to rework the net profit in accordance with the above Tribunal decision . To this extent, this appeal ground is allowed. Disallowance on the making charges, inter alia, on the ground that the vouchers are self-vouched and not verifiable etc the CIT(A) held that inter alia that “apparently, it is an agreed addition and there is no dispute about the observations made by the AO. Thus find that the disallowance is reasonable and accordingly, the addition is confirmed”. The assessee has not let in any material to dislodge the above findings and hence we dismiss this ground of appeal.- Decided against assessee TDS u/s 194C - non deduction of TDS on making charges to various persons - Held that:- . The appellant has not furnished any details regarding the basis of the making charges paid to each of the 23 persons but it appears from the AO's observations that making charges were paid to each person according to the work completed by him. It is also mentioned in the assessment order that the 23 persons who were paid making charges were actually paid as lead persons for the work completed by their team. This lead person in turn paid to the other workers. But as far as the appellant is concerned, the payment is made to the lead person for the work done by himself or his team. Thus there is an implied contract between the appellant and such persons who have been paid the making charges. The provisions of sec 194C are clearly attracted. Even if we assume that the 23 persons who were paid making charges were employees of the appellant, then also in most of the cases TDS provisions are attracted because payment to each individual person exceeded the minimum taxable income. The appellant should have deducted tax u/s 192. The disallowance is therefore, confirmed. - Decided against assessee

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• 2016 (12) TMI 556
  Addition on the basis of the statement of Shri Hanuman Yadav - Assessment under section 143(3) read with section 153 - whether the addition can be sustained solely on the basis of the statement of Shri Hanuman Yadav, when there is no material placed on record that Shri Hanuman Yadav has made any claim against the assessee in any court of law seeking cancellation of sale deed or filing a recovery suit? - Held that:- As held in case of Shri Ghanshyam Das Agarwal [2013 (6) TMI 497 - ITAT JAIPUR]that in the absence of any conclusive evidence the document could not have been disbelieved. The ld. D/R could not point out any binding precedent wherein it has been held that the oral statement would over ride the documentary evidence. Therefore, respectfully following the case above We are of the view that the AO was not justified to make addition solely on the basis of the statement of Shri Hanuman Yadav when there was a registered sale deed and more particularly when the maker of statement has not challenged the sale deed before any court of law. It is also not placed on record whether the sale deed was executed under coercion. Therefore, considering the totality of facts of the present case, we hereby direct the AO to delete the addition - Decided in favour of assessee.

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• 2016 (12) TMI 555
  Disallowance made u/s 40A(3) - CIT(A) confirming the disallowance towards making cash payment for purchase of land as capital assets, holding the same as purchase of stock in trade - Held that:- As perusuing the materials available on record it is noted from fixed assets chart of the company from audited accounts that as on 31st March 2012 assessee company has credited the tangible assets by an amount of Rs. 36,30,983/- which is shown as investment in the land. Also gone through the Memorandum and Articles of Association wherein the main objects to be pursued by the company on its incorporation to manage land buildings, to deal in real and personal property, to invest and deal with the money of the company not immediately required to in such a manner as the company may deem fit. It also includes acquire any movable and immovable property. The accounts of the assessee shows that the assessee has not claimed any such expenditure in its profit and loss account. Therefore, there cannot be any disallowance of such expenditure by invoking the provisions of Section 40A(3) of the Act - Decided in favour of assessee

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• 2016 (12) TMI 554
  Penalty u/s 271(1)(c) - disallowance on account of Rule 8D r.w.s. 14A - Held that:- he action of the AO in making disallowance of expenditure incurred by the assessee in relation to earning of exempt income in the afore-stated manner without complying with the provisions of Section 14A of the Act to identify the expenditure incurred by the assessee in relation to earning of exempt income having regards to the accounts of the assessee or coming to the conclusions that it is not possible to identify the amount of expenditure incurred by the assessee in relation to earning of exempt income keeping in view the manner in which the accounts are maintained by the assessee , the mandate for levying of penalty u/s 271(1)(c) of the Act is not fulfilled more-so it was the contention of the assessee that no expenditure has been incurred by the assessee in relation to earning of exempt income which does not form part of the total income . The contention of the assessee was that no expenditure was incurred by the assessee for earning of exempt income and it was all the more incumbent on the authorities below to have identify and ascertained the expenditure incurred by the assessee in relation to earning of exempt income having regard to the accounts of the assessee, which exercise to ascertain disallowance having regard to the accounts of the assessee was unfortunately had not been undertaken by the authorities below and in the absence thereof, we are afraid penalty proceedings u/s 271(1)(c) of the Act are not sustainable despite the fact that the assessee voluntarily came forward with the amount of disallowance as per Section 14A of the Act read with Rule 8D and did not file appeal against the additions so made by the AO in assessment proceedings. Thus penalty deleted. - Decided in favour of asssessee

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• 2016 (12) TMI 553
  Lease charge of the building - taxability under head income from house property or business income - restricting the claim of deduction u/s 24(a) on the rental income considered as ‘’Income from other sources’’ - Held that:- It is observed that the annual rental value was calculated by the AO on the basis of facts revealed in the course of survey conducted u/s 133A of the Act. The statement of the Director of the company was recorded in which he admitted that the business of the assessee company had been completely closed in Sept. 1999 and there was no business activity in the assessee company except rental income. It is noted that the ld. AR of the assessee had not advanced any specific submission as to the sustenance of the action of the AO by the ld. CIT(A). Thus the issue of lease charge of the building is taxable under the head income from other sources as there is no sufficient evidence to establish that income should be charged under the head income from house property or business income. The ld. CIT(A) has rightly restricted the deduction u/s 24(a) of the Act as rental income was assessed under the head Income from other sources. Thus not inclined to interfere with the order of the ld. CIT(A) which is sustained. - Decided against assessee Income earned from leasing of plant and machinery - income from Other Sources or Income from business - Held that:- It is noted from the record that the assessee had leased out its plant and machinery and earned the rental income of Rs. 96,000/- due to close down its business since Sept. 1999 which has been explicitly admitted by the Director of the Company. It is also noted from the ld. CIT(A)’s order that the ld. AR of the assessee could not controvert the findings of the AO on this issue. When the Director of the assessee company had admitted that the assessee company had closed down its business due to losses and there was no business activity in the assessee company except rental income then it cannot be considered as business income of the assessee. Hence, we concur with the findings of the ld. CIT(A) which is sustained - Decided against assessee Disallowance of business expenditure - Held that:- The assessee could not controvert the findings of AO before the ld. CIT(A) and the ld. CIT(A) took the support of the same contentions of the Director of the assessee that the assessee company had completely closed down its business in Sept. 1999 and there was no business activity in the assessee company except the rental income . Once the business income was treated as income from other sources by the AO, the claim of the expenses of the assessee was held unjustified by the ld. CIT(A) and he confirmed the action of the AO. Thus find no reason to interfere with the order of the ld. CIT(A). - Decided against assessee Treatment to Misc. Income - under the head Income from other sources or business income - Held that:- The assessee could not controvert the findings of AO before the ld. CIT(A) and the ld. CIT(A) took the support of the same contentions of the Director of the assessee that the assessee company had completely closed down its business in Sept. 1999 and there was no business activity in the assessee company except the rental income. Hence, when there was no business run by the assessee company during the year then addition made AO under the head Misc. income was rightly confirmed by the ld. CIT(A) - Decided against assessee

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• 2016 (12) TMI 552
  Addition made u/s. 69A - unexplained income - Held that:- From the books of account furnished before the authorities below and which is place on record, it is clear that the assessee had sufficient funds to prove the cash seizure on 29/03/2007 and the same is clearly recorded in the books of account maintained by the assessee. It is for the said reason that the addition made in the hands of Shri Abdul Rasheed and Shri K.A. Sojumon was deleted by the CIT(A). As mentioned earlier, in the original assessment, no addition was made by the Assessing Officer. The original assessment was completed after examining the books of account, the ledge copies etc. From the books of account maintained by the assessee, it is clear that the assessee has sufficient cash availability as on 27/03/2007. - Decided in favour of assessee

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• 2016 (12) TMI 551
  Claim of depreciation of assets of Silvasa unit - Held that:- Claim was declined by the Tribunal in assesse’s own case by following the decision of Hon’ble Bombay High Court in the case of Scope Industries Pvt. Ltd., [2006 (10) TMI 75 - HIGH COURT, BOMBAY ]. Respectfully following the order of the Tribunal in preceding years, we confirm the action of the lower authorities for decline of claim of depreciation on assets of Silvasa unit - Decided against assessee Applicability of Section 50C - Held that:- This issue of determination of full value of consideration for computation of capital gains in respect of properties sold need to be set aside and restored to the file of the AO for fresh adjudication of the issue on merits after consideration of the valuation report of the DVO and also objections of the assessee . The AO shall giver proper and adequate opportunity of being heard to the assessee in accordance with principles of natural justice and the assessee shall be allowed to file all necessary evidences and material in support of its contentions including objections to the DVO valuation report which shall be evaluated on merits to compute capital gains payable by the assessee in accordance with provisions and scheme of the Act. Long term capital gains earned on sale of properties - tax rate applicable as per the assessee is concessional tax rate as applicable to long term capital gains@20% as provided u/s 112 - Held that:- We are of considered opinion that Section 50 of the Act is a provision with deeming fiction whereby for the purposes of computing capital gains in the case of depreciable assets , the gains arising from the transfer of the said assets has to be treated as capital gains arising from transfer of short term capital assets u/s 50 of the Act, but for the purpose of applicability of tax rate it has to be treated as long term capital gain if held for more than three years and brought to tax at rate@20% as stipulated u/s 112 of the Act. This proposition is supported by the order of co-ordinate benches of the Tribunal in the case of Smita Conductors Limited v. DCIT [2013 (9) TMI 1056 - ITAT MUMBAI ] Transfer pricing adjustment - addition with respect to Royalty Payment made u/s 92CA - Held that:- The facts and circumstances during the year under consideration are same as in the earlier years. Respectfully following the decision of the Tribunal in preceding years, as stated above, we do not find any infirmity in the order of CIT(A) for deleting the disallowance of royalty payment as there was no case of any excess payment made of royalty by assessee than approved by SIA to justify its disallowance by way of TP adjustment Disallowance of expenditure on advertisement films deleted

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• 2016 (12) TMI 550
  Trading addition - bogus purchases - CIT(A) restricting the trading addition to Rs. 7,85,442/- on bogus purchases as against the trading addition of Rs. 57,28,311/- on the basis of GP rate applied by the ld Assessing Officer @ 8.32% on total sale - Held that:- The Coordinate Bench in the case of assessee for A.Y. 2008-09 [2015 (4) TMI 533 - ITAT JAIPUR ] has decided this issue in the case of assessee by applying NP rate @ 15% on unverifiable purchases and had not found applicable average GP rate applied by the ld Assessing Officer. Thus, we do not find any reason to intervene in the order of the ld CIT(A). Accordingly, we confirm the order of the ld CIT(A). - Decided against revenue

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• 2016 (12) TMI 549
  Disallowance made under section 40A(3) - cash payments (in excess of Rs. 20,000 on each occasion) - Held that:- Identical issue with regard to the disallowance u/s 40A(3) of the Act in the case of assessee ‘s case who are engaged in the business of country spirits which had come up for consideration before this Bench in the case of Ramnagar Pachwai and C.S. (Shop) vs ITO [2016 (11) TMI 1034 - ITAT KOLKATA] wherein held The payment made by the assessee retail vendor to the Principal, Government of West Bengal through its wholesale agent. The relationship between the assessee (authorised retailer) and Government of West Bengal (the supplier) acting under West Bengal Excise Rules through its authorised wholesaler licensee (agent), both de facto and de jure, is one of "principal" and "agent". We hold that the assessee retail vendor had made payment to the said agent (wholesale licensee) would fall under the exception provided in rule 6DD(k) of the Rules. The assessee had made payments only to the customer of State Bank of India and not to State Bank of India. Hence the assessee's case does not fall under the exception provided in rule 6DD(a) of the Rules. We hold from the aforesaid findings that the assessee's case falls under the exceptions provided in rule 6DD(b) and rule 6DD(k) of the Rules. We have no hesitation in deleting the disallowance made under section 40A(3) of the Act in all the years under appeal. - Decided in favour of assessee.

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• 2016 (12) TMI 548
  Claim of exemption u/s 10(23C)(vi) denied - Held that:- The assessee trust came to existence in 1954. It is running educational institutions. It has been registered under Section 12AA of the Act since 25.8.1998. It is also enjoying the exemption under section 80G. Thus, the department has never doubted about the genuineness of the activities of the trust and purpose of its existence. While rejecting the application of the Trust under section 10(23C), the ld.CCIT has not pointed out any specific aspect. He only harboured a belief that assessee might have some ancillary activities not associated with education. This is only a hypothetical observation. In all the decisions relied, it has been propounded that if the assessee has not taken other objections mentioned in the trust deed, and exclusively carried out activities of education, then approval under section 10(23C) will not be denied. Thus we allow the appeal of the assessee and direct the prescribed authority to grant approval under section 10(234C)(vi) to the assessee for the Asstt.Year 2013-14. - Decided in favour of assessee

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• 2016 (12) TMI 547
  Disallowance of claim of loss - Held that:- The assessee did not raise any specific submissions on this issue and even have not pointed out any material from the Paper Book as to how the assessee would be entitled for claim of deduction on account of loss so claimed. In the absence of any specific submission and production of sufficient material, we are not inclined to interfere with the orders of authorities below. This issue is, therefore, decided against the assessee Claim of assessee under section 24(a) disallowed - Held that:- . We, after going through the orders of authorities below did not find any whisper in the impugned orders if Assessing Officer has supplied copy of information under section 133(6) of the Act to the assessee before passing any adverse orders against the assessee. Therefore, any material collected at the back of the assessee and not confronted to the assessee ad without calling for comments of the assessee would not be admissible in evidence against the assessee. The assessee, therefore, rightly relied upon decision of the Hon'ble Supreme Court in the case of Kishan Chand Chela Ram (1980 (9) TMI 3 - SUPREME Court ). There is no other material brought on record against assessee for disallowing claim under section 24(a) of the Act. Considering the above discussion, we are of the view that authorities below were wholly unjustified in denying deduction under section 24(a) of the Act in favour of the assessee. The rental income is clearly assessable as income from house property in the case of the assessee. Therefore, assessee would be entitled for deduction under section 24(a)

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• 2016 (12) TMI 546
  Computation of capital gains - adoption of the indexed cost of acquisition with reference to the year in which previous owner first held the asset and not the year in which the assessee became owner of the asset by way of inheritance - Held that:- The learned Commissioner of Income Tax (Appeals) following the decision of the Hon’ble High Court of Bombay in the case CIT Vs. Manjula J.Shah [2011 (10) TMI 406 - BOMBAY HIGH COURT ] held that “while computing the capital gains arising on transfer of a capital asset acquired by the assessee under a gift, the indexed cost of acquisition has to be computed with reference to the year in which the previous owner first held the asset and not the year in which the assessee became the owner of the asset.” Since the learned Commissioner of Income Tax (Appeals) has only followed the decision of the Hon’ble High Court of Bombay in arriving at his decision, we do not find it necessary to interfere with the order of the learned Commissioner of Income Tax (Appeals) on this issue. - Decided in favour of assessee Disallowance being investment claimed as deduction under section 54 - Held that:- The assessee had made the payment to the builder and it was beyond her control to compel the builder to comply with the terms and conditions of the initial agreement she entered with the builder for constructing her residential flat. Therefore, following case Smt. Shasi Varma Vs. CIT reported in [1996 (3) TMI 65 - MADHYA PRADESH High Court ] we are of the considered view that the assessee is entitled for the deduction under section 54 of the Act. - Decided in favour of assessee Disallowance of the claim of exemption under section 54 of the Act in respect of investment in house property outside India - Held that:- On perusing the provisions of section 54 of the Act we find that the benefit of section 54 of the Act was specifically denied for any residential house property acquired outside India by the Finance Act, 2014 w.e.f. 01.04.2015. Before that no such restriction existed in the Act. The relevant case before us is for the assessment year 2010-11. In this period, the assessee had the benefit of few Tribunal decisions in her favour on the issue which she relied while claiming the benefit of section 54 of the Act. Further, as pointed out by the learned Authorized Representative the decision of the Hon’ble Gujarat High Court in the case Leena Jugalkishor Shah Vs. ACIT [2016 (12) TMI 351 - GUJARAT HIGH COURT] is also in favour of the assessee on the identical circumstances. Thus no hesitation to hold the issue in favour of the assessee who had invested the sale proceeds of her asset in a residential house property in California(USA). Therefore, we hereby direct the learned Assessing Officer to grant the benefit of section 54 - Decided in favour of assessee

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• 2016 (12) TMI 545
  Allocation of expenses relating to the Head office to the SEZ unit - Held that:- It is not in dispute that both Head office and SEZ unit are under common management. Further there is interlacing of funds also. The books of accounts of both the units were maintained by the assessee only. Hence it cannot be altogether ruled out that the benefit of various expenses booked in the Head officer did not go to the SEZ unit. The expenses listed out by the AO and confirmed by Ld CIT(A) such as Foreign tour expenses, motor car expenses, office expenses, printing & stationery etc., are common in nature and SEZ unit could have also been benefitted by the those expenses. A.R submission that the Block insurance policy was taken only for Head office and not for SEZ unit requires examination. Accordingly we restore the issue relating to “Block insurance policy” to the file of the AO with the direction to examine the relevant policy documents and if it is found that the same has been paid in respect of Head office only, then the AO should exclude the same from common expenses. In respect of remaining expenses confirmed by Ld CIT(A), in our view, the order of Ld CIT(A) does not call for any interference, since the allocation of those expenses in the sales ratio appears to be reasonable. Accordingly we confirm the order passed by Ld CIT(A) in respect of remaining expenses. - Decided partly in favour of assessee

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• Customs

• 2016 (12) TMI 523
  Release of detained goods - gold kara (bracelet) - gold kara (bracelet) was his ancestral jewellery and was owned by him even before leaving for Dubai - Section 110(2) of the Customs Act, 1962 - Held that: - It is only on appraisal of the gold kara (bracelet) that the authorities would be in a position to take a decision whether to seize the goods or not and it is only thereafter that the limitation, as prescribed by sub-Section 2 of Section 110 of the Customs Act, would be triggered. Since the petitioner has not presented himself for appraisal, the seizure has not taken place and, accordingly, there is no question of issuance of any notice under Section 124(a) of the Act - Consequently, the gold kara (bracelet), seized from the petitioner and detained by the respondents, is liable to be returned to the petitioner. The writ petition is allowed. The respondents are directed to unconditionally release the gold kara (bracelet), seized by the respondents under the Detention Receipt dated 11.02.2015, to the petitioner within two weeks from today, on the petitioner presenting a certified copy of this order before the Superintendent of the Warehouse where the gold kara (bracelet) is stored - appeal allowed - decided in favor of appellant-assessee.

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• 2016 (12) TMI 522
  Refund of SAD - Section 27 of the Customs Act - condition no. 16 of Notification No. 12/2012-Ex. dated 17.03.2012 - rejection of refund due to availment of CENVAT credit - Held that: - reliance placed on the decision of the case of M/s SRF Ltd., M/s ITC Ltd Versus Commissioner of Customs, Chennai, Commissioner of Customs (Import And General), New Delhi [2015 (4) TMI 561 - SUPREME COURT], where it was held that the CEGAT has come to the conclusion that when the credit under the CENVAT Rules is not admissible to the appellant, question of fulfilling the aforesaid condition does not arise. In holding so, it followed the judgment of the Bombay High Court in the case of Ashok Traders v. Union of India [1987 (10) TMI 53 - HIGH COURT OF JUDICATURE AT BOMBAY], wherein the Bombay High Court had held that it is impossible to imagine a case where in respect of raw nephtha used in HDPE in the foreign country, Central Excise duty leviable under the Indian Law can be levied or paid. Thus, the petitioner’s claim has to succeed. A direction is issued to the respondents to process the refund application and pass appropriate orders having regard to the materials placed provided it is filed within two weeks - petition allowed - decided in favor of petitioner-assessee.

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• 2016 (12) TMI 521
  Imposition of penalty - section 130 of Customs Act, 1962 - mens rea - Held that: - upon examination on the material available on record, it becomes abundantly clear that in fact, the assessee was found guilty of mens rea of tempering with the goods that he was seeking to export. In the garb of exporting basmati rice, the assessee was trying to take out non-basmati rice which was clearly prohibited. There is a clear finding of fact recorded by the tribunal that not only was the assessee attempting to play fraud but also upon re-examination of the sample reports, it was found that the assessee had actually tried to export consignments of non-basmati rice which were prohibited to be exported by a Notification No.: 39 (RE-2008)/2004-09 dated 19.9.2008 and in fact, it was found that every container was loaded with 55 bags of basmati rice and 430 bags of non-basmati rice and, therefore, the plea as made by learned counsel for the assessee that it was a case of mishandling of goods during loading, cannot be taken to be true. It was a deliberate strategy to keep the basmati rice in the front of container in order to avoid the detection of the non-basmati rice which was sought to be taken out surreptitiously - The imposition of penalty, therefore, is justified - appeal dismissed - decided against appellant-assessee.

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• 2016 (12) TMI 520
  Implementation of facility notice - It is stated that as per this Facility Notice issued on 3rd May, 2011, the importers have been given a liberty to take their goods to a Container Freight Station of their choice provided such intimation is given to the shipping lines 72 hours prior to the arrival of the vessel. However, even after issuance of the Facility Notice by the 2nd Respondent, the shipping lines are not complying with the instructions - It is stated that the vessel owner along with other information as provided in the Import General Manifest has to also inform the proper officer about the nominated CFS where imported goods will be stuffed once they reach the Indian Port. Generally, the shipping agents choose the CFS on behalf of the importers and after getting the permission from the Assistant / Deputy Commissioner the goods are unloaded at the Ports and are brought to the CFS, stacked therein after verification by the customs authorities under the bond. Thereafter, the CFS allows destuffing of the goods and after the formalities of assessment and payment of customs duty are made, the goods can be moved out. The custodian releases the goods from CFS by issuing them a gate pass. However, the shipping lines themselves choose the CFS of their choice with whom they have a tie up and intimate to the Customs Authorities that there is no say from the importers. It is therefore apparent that the CFS operators near several ports may be paying a nomination premium to shipping lines to get business and have been recovering the money from the importers making the import costlier. Held that: - We do not think that we can resolve the contractual disputes. The Petitioner essentially has a contractual dispute but if several importers and over a passage of time are complaining about the working of the system which is evolved by the Facility Notice, then, surely the customs and competent authority managing the customs house at the port can look into and rather should look into these grievances. Therefore, without in any manner expressing any opinion with regard to the contractual dispute, since there are day to day and practical difficulties projected in implementing the Facility Notice, we direct the competent authority or the 2nd Respondent by himself to treat the present Petition and all annexures thereto as a complaint or representation in writing by the Petitioner importer. The competent authority shall take a decision on the same as expeditiously as possible and within a period of two months from the date of receipt of a copy of this order. With these directions the Writ Petition is disposed off.

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• 2016 (12) TMI 519
  Jurisdiction of Tribunal - punishment imposed on CHA - the person approached the CHA and identified himself as representative of the exporter, the CHA in the present case did not bother to verify the information provided and based on that testing the antecedents of the exporters - Held that: - in substantive adjudication proceedings against the exporter, the Tribunal found that the present Respondent /Appellant before it cannot be penalized. The penalty imposed in adjudication proceedings was set aside. That was with certain observations. Secondly, this was a case where the Enquiry Officer had exonerated the Respondent from all charges. The disciplinary authority disagreed with them. The charges are not as serious as involving oneself in fraudulent activity. Finally, it was found that the CHA licence was suspended. However, that suspension was revoked after two months. Thereafter, the enquiry ended as above. Till the Commissioner / Disciplinary Authority passed an order in March 2014, the CHA licence was under operation. Thereafter, from March, 2014 till the Tribunal passed the impugned order and duly communicated in to the parties, the licence was revoked. In the facts and circumstances of the present case this was adequate punishment, according to the Tribunal. We do not find the discretion to be exercised either arbitrarily or capriciously. The impugned order cannot be termed as perverse or vitiated by any error of law apparent on the face of the record either. In such circumstances, there are no substantial questions of law arising from the impugned order. The appeal is devoid of merits and is dismissed.

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• 2016 (12) TMI 518
  Release of confiscated goods - two watches - redemption fine already paid - Held that: - this is a fit case where appropriate direction should be issued to release the watches in question, upon the petitioner complying with the conditions as per the order passed by the Commissioner (Appeals) dated 5.12.2013. Mere pendency of the revision petition before the Revisional Authority will not amount to an order of stay, that too when the revision petition is pending for more than three years. Further, the Department has not been able to obtain any orders from the Revisional Authority - However, this Court is not inclined to issue any such direction in the instant case for the reason that the Department has not been able to move the Revisional Authority and obtain any orders for over three years. Having accepted the redemption fine from the petitioner, there is no justification on the part of the Department to refuse to comply with the Order-in-Appeal dated 5.12.2013. The writ petition is disposed of directing the release of the goods in question forthwith on payment of the personal penalty to the tune of Rs. 10,000/-, as ordered by the Commissioner (Appeals), as already the petitioner paid the redemption fine to the tune of Rs. 80,000/-. The goods shall be released within two days - petition allowed - decided oin favor of assessee.

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• 2016 (12) TMI 517
  Refund claim - Anti Dumping duty - claim of refund on the ground that the Sunset review order issued by the competent authority, Govt. of India vide Notification No. 111/2002 dated 21.9.2002 has reduced the Anti Dumping duty 10.27% as against earlier prescribed rate of 27.97% as per Notification No. 74/2000 - Held that: - I find that Order-in-Original grants partial relief to the appellant to the extent for the period 1.4.2000 to 31.3.2001, which held that the appellants are entitled to refund of the Anti Dumping subject to production of necessary documents. Since Revenue has not contested this order, it is not open to Commissioner (Appeals) to change it in any manner other than in respect of issue on which the appellant had filed an appeal. Thus, the order of the Commissioner (Appeals) which deals with period 1.4.2000 to 31.3.2001 is set aside. The second issue arose in impugned order pertaining invocation of the clause of unjust enrichment. The issue is premature in so far as such issue arises only if refund is held to be admissible. In the instant case, both the lower authorities have found it to be inadmissible and therefore their observations regarding unjust enrichment are superfluous and are set aside. The refund can be sanctioned only when an order in terms of Section 9AA (i) is passed. I hold that refund cannot be sanctioned under Section 9AA to the appellants on the strength of any order issued under clause (5) of Section 9A. The impugned order is set aside in so far as it relates to refund for the period 1.4.2000 to 31.3.2001 and the matter is remanded to the original adjudicating authority. The appellants are free to produce necessary documents - appeal disposed off - decided partly in favor of appellant.

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• 2016 (12) TMI 516
  Anti Dumping duty - import of tiles - mis-declaration of goods to evade duty - classified under heading 6908.90.90 as glazed ceramic tiles? - Whether the appellant had misdeclared the goods so as to make them liable for confiscation under Section 111(m) of the Customs Act and consequent penalty thereof? - whether the appellant is required to declare the MRP of the goods when they are imported for personal use? - Held that: - the order of the adjudicating authority of assessment to bill of entry by charging anti-dumping duty is correct and does not require any interference. Since there was misdeclaration, we hold that the goods are liable for confiscation. However, the adjudicating authority has imposed redemption fine of Rs. 9,00,000/- as against CIF value of approximately Rs. 22 lakhs which, in our considered view, is disproportionate. Ends of justice will be met if redemption fine is reduced to Rs. 5,00,000/- from Rs. 9,00,000/-. The appellant is required to discharge this redemption fine. As regards penalty imposed on this issue, we find that the penalty is also excessive and disproportionate. Accordingly, we reduce the penalty from Rs. 5,00,000/- to Rs. 2,00,000/- and order accordingly. As regards the CVD payable based upon MRP, we find that the adjudicating authority has totally erred in coming to such conclusion. First and foremost, we find that in the case of imported goods, the MRP has to be declared by the importer if there is going to be resale of the goods. In the case in hand, it is undisputed that the tiles which were imported were to be used by the appellant for their personal use. On this factual matrix, we find that CVD discharged by the appellant based upon the declared value + customs duty is correct and does not require any interference. Further, we find that the adjudicating authority has arrived at MRP in a very unorthodox manner of calculating the same as 2.5 times of the CIF value of the consignment. There is no rationale behind such arrival of the MRP. In view of this, the findings of the adjudicating authority that CVD has to be paid on MRP determined seems to be incorrect and is liable to be set aside and we do so. The appeal of the appellant as regards the discharge of CVD based upon MRP basis calculated is allowed while the appeal of the appellant on the setting aside of redemption fine and penalty and anti-dumping duty is rejected subject to modification - appeal disposed off - decided partly in favor of appellant-assessee.

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• 2016 (12) TMI 515
  Demand of rubber cess - import of rubber under Advance Authorization Scheme - Held that: - the matter is squarely covered by CESTAT Chennai decisions in the cases of TTK-LIG Ltd. vs. CC, Chennai [2008 (7) TMI 646 - CESTAT, CHENNAI], where it was specifically held that the demand of cess on imported natural rubber is not sustainable. Appeal dismissed - decided against Appellant-Revenue.

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• 2016 (12) TMI 514
  Exemption from CVD - import of mobile phones - N/N. 12/2012-CE dated 17.3.2012 - The Notification No. 12/2012 also provided a concessional rate of CVD of 1% on import of mobile phones classified under CTI 8517 subject to the condition 16 of Notification No. 12/2012-CE, wherein the assessee should not have taken credit under the Cenvat Credit Rules, 2004 in respect of the inputs and capital goods used in the manufacture of these goods - Held that: - these mobile phones are imported and the cenvat credit has not been taken by a foreign manufacturer of the said goods. The said issue has been examined by Hon’ble Apex Court in the case of SRF Ltd. [2015 (4) TMI 561 - SUPREME COURT] where the CEGAT found that only those conditions could be satisfied which were possible of satisfaction and the condition which was not possible of satisfaction had to be treated as not satisfied and thus the Hon’ble Supreme Court held that appellants were entitled to exemption from payment of CVD in terms of Notification No. 6/2002. After the impugned period and after the judgment of the SRF Ltd., department itself has given the benefit to the appellant for concessional rate of duty till the statutory amendment has taken place in notification No. 12/ 2012. Therefore, we hold that appellants are entitled for benefit of exemption by satisfying the condition No. 16 of notification no. 12/2012. In these terms, impugned orders are set aside - appeal allowed - decided in favor of appellant-assessee.

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• PMLA

• 2016 (12) TMI 508
  Anticipatory bail applications - money laundering - Held that:- Having gone through the scrutiny of the documents produced on behalf of the parties and the pleadings made in the anticipatory bail applications of the petitioners, material produced by the learned standing counsel for Directorate Enforcement, following admitted facts emerges that the defence taken in the instant anticipatory bail applications for grant of anticipatory bail have earlier also been taken in the Cr.M.P. No. 2686 of 2016 for quashing the order taking cognizance by the court below which has not been accepted by this Court that the loan was given by Ankita Singh to his brother Surya Sonal Singh and the said Cr.M.P was dismissed, so taking all these facts and also the fact that the prosecution prima facie has been successful in proving the following facts (i) the predicate crime (ii) tainted property, and the property purchased. Thus we are not inclined to grant anticipatory bail to the petitioner Surya Sonal Singh and petitioner ­Narendra Mohan Singh. Accordingly, their prayer for anticipatory is hereby rejected. They are directed to surrender before the trial court within four weeks from the date of this order and pray for regular bail which shall be considered by the trial court in its own merit. So far anticipatory bail application on behalf of the petitioner­ Ankita Singh is concerned, taking the fact of provision under section 437 Cr.P.C which makes provision for consideration of bail to the person under the age of 16 years or is a woman or is sick or infirm and also the fact that investigation is complete, prosecution report has been submitted, cognizance has been taken, I am inclined to grant anticipatory bail to the petitioner ­Ankita Singh Accordingly, petitioner­Ankita Singh in (A.B.A. No.4286 of 2016) is directed to surrender in the Court below within four weeks from the date of this order and in the event of her arrest or surrender the Court below shall enlarge the above named petitioner on bail on furnishing bail bond of Rs. 25,000/­ (Rupees twenty five thousand), with two sureties of the like amount each to the satisfaction of Sri B.K. Tiwari, learned Special Judge, C.B.I, Ranchi in connection with ECIR/02/PAT/2009/B of 2011, corresponding to ECIR­02/Pat/09/AD(B), subject to conditions as laid down under Section 438(2) of the Cr.P.C and also subject to further condition that one of the bailers shall be local resident of Ranchi district and another bailor must be government servant.

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• Service Tax

• 2016 (12) TMI 544
  Renting of Immovable Property service - building used for accommodation including hotels - Explanation 1 to Section 65 (105) (zzzz) of the Finance Act, 1994 - Held that: - Explanation 1 to Section 65(105) (zzzz) of the Act makes it very clear that buildings used for residential purposes and accommodation including hotels cannot be covered under the wordings “immovable property”. In the present case, there is no dispute on the fact that the entire property/space named as ‘Hotel Chandela’ is used as hotel only; when it is so, Revenue’s stand that the service tax is liable for the renting of subject property is not correct and is untenable in the eyes of law. There is no liability of service tax in respect of property of ‘Hotel Chandela’ leased out for running, operating, etc. to IHCL - appeal allowed - decided in favor of appellant-assessee.

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• 2016 (12) TMI 543
  Imposition of penalty u/s 78 - invocation of section 80 - evasion of tax - Held that: - the adjudicating authority has reached to conclusion that there is no deliberate intention to evade payment of duty on the part of the appellant. It needs to be mentioned that the appellant was disclosing the liability of service tax in the Income Tax returns and the balance sheets. It is also submitted that the appellant was under much financial difficulties due to ill health and therefore defaulted the payment and there was no intention to evade payment of tax. Penalty is imposed as a punishment for an act of suppression, fraud or wilfull misstatement with intent to evade payment of duty. In the present case, the appellant having disclosed the liability of service tax in returns filed before the Income Tax authorities, no suppression can be alleged against the appellant - I hold that the imposition of penalty is unsustainable - appeal allowed - decided in favor of appellant-assessee.

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• 2016 (12) TMI 542
  Levy of tax - transportation charges - reverse charge mechanism - import of yarn from Nepal - Held that: - I find that in an identical case, in the case of M/s. Radha Mohan Textiles Pvt. Ltd., M/s. Opel Sulz Pvt. Ltd. and M/s. Sai Leela Synthetics Pvt. Ltd. Versus C.C.E. Jaipur-II [2016 (10) TMI 962 - CESTAT NEW DELHI], this Tribunal has allowed the appeal in favour of the appellant holding that the appellant is not liable to pay service tax on the transportation charges under reverse charge mechanism. Appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 541
  Levy of tax - commission earned on sale of cars - facilitation charges collected from customers for registration of vehicles - commission foregone on loans marketed by appellant to customers - Held that: - One of the essential requirements in taxing of services is the existence of ‘service-provider’ and ‘recipient of service’ with the latter making over the agreed upon consideration to the former. Appellant, admittedly, markets products of financial institutions for which they are entitled to a commission. There is common ground here on the taxability of commission as received. However, the appellant claims to have waived a portion of the commission otherwise receivable which the bank then uses to reduce the consideration that it receives for such financing from customers. It would appear that consideration not received by the appellant from the financial institutions for one service is adjusted to compensate for the reduced consideration received by the financial institution for another service rendered to another recipient. The manner in which the financial institution treats these outflows of commission and inflow of interest would unlock the proper perspective of consideration in these transactions, particularly, the one between the appellant and the financial institution. This is an aspect that has not been attended to in the impugned order. Likewise the contention of the appellant that there are errors in computation among which are inclusion of the amounts not received during the period when tax was leviable only on receipts, the non-adjusted excess tax paid in the half-yearly returns in comparison with financial statements, inclusion of bad debts and reversals in the taxable value and the inclusion of credit entries without netting the debit entries. These are crucial to determination of taxable value and will have to be considered. To enable a re-visit of the taxability of subvented amounts as well as the above-mentioned accounting entries, we deem it appropriate that the matter be remanded to the original authority for deciding afresh on the last two issues. The other two issues are not the subject of this remand as they stand decided in favour of appellant - appeal allowed by way of remand.

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• 2016 (12) TMI 540
  Rejection of refund claim - credit availed on service tax paid on various input services used for export of IT Software Service - Rule 5 of Cenvat Credit Rules, 2004, r/w Notification No.5/2006, dated 14-03-2006 - Held that: - The period involved in both the appeals is prior to 01-04-2011, when the definition of input service had wide ambit, as it included the words "activities relating to business'. In the decisions of KPMG Vs CCE, New Delhi [2013 (4) TMI 493 - CESTAT NEW DELHI], the Tribunal has held the input services are eligible for credit. Appeal disposed off - refund partly allowed - matter on remand.

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• 2016 (12) TMI 539
  Rejection of refund claim - payment of service tax on the transportation of cement under GTA services for the period 16-11-1997 to 02-06-1998 under protest, pursuant to a letter issued by department dated 10-12-2003 requiring the appellant to pay service tax - whether the department can retain the amount paid as service tax by the appellant under protest under the category of GTO services for the period 16-11-1997 to 02-06-1998? - Held that: - the demand can be confirmed only if a show cause notice is issued prior to the amendment brought out to the Finance Act making the service recipient liable to pay service tax. In this case, undisputedly the department has not issued a show cause notice quantifying the amount. A letter issued to the appellant cannot take the place of a show cause notice provided under law. The Ld. Counsel for appellant submitted that a second letter was issued to the appellant demanding interest after payment of amount under protest. However, for reasons not known, department has refrained from raising a demand/issuing a show cause notice - as the appellant has paid the Service Tax amount under protest, I hold that the appellant is eligible for refund. The impugned order rejecting the refund is set aside - appeal allowed - decided in favor of appellant-assessee.

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• 2016 (12) TMI 538
  Taxability - storage and warehouse charges - C&F agent service - Held that: - The scope of the service under storage and warehousing is different from the service of renting of immovable property which stands introduced in the statute from a later date. The CBEC vide their clarification F. No. B-11/1/2002-TRU dated 1.8.2002 has clarified the scope of the service under storage and warehousing. It has been specifically explained that mere renting of space cannot be said to be in the nature of storage and warehousing of goods. The essential test is whether the storage keeper provides for security of goods, loading unloading and stacking of goods in the storage area. C&F agent service - inclusion of reimbursement of expenses - Held that: - The normal activity of C&F agent is limited to arranging for despatch of the goods of the principal by engaging transport. However, the cost of transportation need not be borne by him. In the present case, the costs of transportation, when incurred by the assessee, have been reimbursed by principal. The value of taxable service in relation to clearing and forwarding operations is the gross amount charged for such services under Section 67. This has to be taken to mean the amount charged for providing the service. In the present case the service tax stands demanded on the total amount paid to the assessee by the principal. Clearly, there is no prescription to include reimbursable expenses in the total value of taxable service. Appeal rejected - decided against Revenue.

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• 2016 (12) TMI 537
  Refund claim - Commercial or Industrial Construction Service u/s 65(30a)(b) - Assesse undertook civil construction of viaduct and stations of Delhi Metro Railway Project - Revenue was of the view that the assesse were liable to discharge service tax on the activity - Held that: - there is no dispute as to the fact that contract which was awarded to appellant is a turnkey contract for completing the project of DMRC. We find strong force in the contention raised by the learned Counsel that an identical contract for civil contract awarded by DMRC to Afcons infrastructure Ltd. [2013 (8) TMI 530 - CESTAT MUMBAI] which was sought to be tax after vivisection said contract by the department. The said Afcons infrastructure Ltd. aggrieved by the adjudicating authority's order confirming the demand, was in appeal before the Tribunal which was disposed of by the Bench - Since the issue involved in the case is in respect of very same DMRC but a construction company for civil contract. As such contract cannot be vivisected, the impugned order is to be held as unsustainable. Appeal allowed - decided in favor of appellant-assessee.

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• Central Excise

• 2016 (12) TMI 536
  Denial of CENVAT credit - channels, angles, MS Sheets, Plates, Joist used for purpose of manufacture - denial on the ground that the products do not qualify as capital goods as per Rule 2(b) (ii) of the Cenvat Credit Rules, 2004 - Held that: - As the appellant is able to show that the items Channel, Angle, Plate, MS Plate, angle under CTH 72163100, 72162100, 72085110, 72162100 and 72162100 respectively were used as inputs for fabrication or repair of capital goods, therefore, cenvat credit on these items are allowed and there is no remarks were made by the Chief Engineer on items HR plates and Plate under CTH 72085210 and 72085110 respectively, therefore, cenvat credit on these items is dis-allowed - appeal disposed off - decided partly in favor of appellant-assessee.

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• 2016 (12) TMI 535
  Denial of CENVAT credit - various input services - Held that: - In respect of services mentioned under Table-A in both the appeals, I am of the considered opinion that “Pest control service, Courier service and Maintenance of RO plant service” are very much in the nature of services that are required in relation to the manufacturing activity, their utilisation is also not debarred by the definition under Rule 2 (l) of CCR, 2004, hence these are very much eligible “input services” - However, in respect of “Godown rent for Maruti castings” mentioned under Table-A in both the appeals, I am of the considered opinion that the godown rent was paid for storage of castings manufactured by them and sold to their customer M/s. Maruti Castings. By no stretch of imagination can it be accepted that this is an input service in or in relation to the manufacturing activity. It is only a facilitation provided to the customer. Hence, this service cannot come within the ambit of Rule 2 (i) of CCR, 2004, and therefore not an eligible input service. In respect of services mentioned under Table-B in both the appeals, I am of the considered opinion that CAMC charges for Franking machine, it is seen that the same relate to the service and maintenance charges of franking machine, which is an admissible input service. Postal charges are very much admissible for the purpose of Rule 2 (l) of CCR - However, in respect of the following other services mentioned under Table-B such as i) Man power charges provided to Executive Mess; ii)Car hire charges; iii)Cell phone/Telephone services; iv)Service and maintenance charges for staff bus; v)AMC charges of photo copier availed by the appellant, no clarity about their nature and purpose, is forthcoming from the records, including, in the impugned order. Nor is the ld. Counsel able to throw more light thereon whether or not these are indeed utilised in or in relation to the manufacturing activity or whether they have been utilised by the employees and/or by their families or any other persons who are not concerned with the appellant. In the result, except for Credit relating to godown rent for 'Maruti Castings' and the services discussed in para-7 above, the remaining disputed services are held as eligible input services for the purpose for Rule 2 (l) of CCR. In respect of services listed at para-7, the matter is remanded to original authority for denovo consideration for the limited purpose to enable the appellant to adduce sufficient proof, if any, to satisfy the requirement that they are eligible input services used by them for the purpose of Rule 2 (l) ibid - appeal partly allowed - matter on remand.

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• 2016 (12) TMI 534
  Conversion of a portion of factory to 100% EOU - Extended period of limitation - The respondent cleared capital goods, on which the cenvat credit was availed to the said 100% EOU without payment of duty or without reversal of Cenvat Credit. - Notification No. 1/95 dt. 4.1.1995 -Held that: - it is observed that the Ld. Commissioner (Appeals) allowed the appeal of the respondent on the ground that 100% EOU is eligible for the cenvat credit if all the cenvat credit is reversed by the respondent. I find that this finding of the Ld. Commissioner is also based on the judgment cited by the Ld. Counsel in the case of Sandoz Pvt. Ltd., [2013 (10) TMI 145 - BOMBAY HIGH COURT]. The Ld. Commissioner also held that the demand is time barred as the show cause notice was issued beyond one year of the removal of the goods. I find that the Commissioner (Appeals) observed that the goods were cleared under CT-3 which was issued by the department. In the present case, the 100% EOU is located within the same premises and falling under the same jurisdiction of the Central Excise, Pune. Therefore the authority issuing the CT-3 certificate must be aware about the 100% EOU as well as the respondent factory. In view of this fact there appears to be no suppression of fact on the part of the appellant, therefore, the show cause notice issued beyond the stipulation period is time barred. Moreover, the judgment in the case of Behr India Ltd. Vs. Commissioner of C. Ex., Pune-II [2016 (6) TMI 827 - CESTAT MUMBAI] having the similar facts and circumstances, applying to the fact of the present case. Appeal dismissed - decided against Revenue.

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• 2016 (12) TMI 533
  Classification of item - Brahmi Amla Oil - Ayur natural hair wash - Hairolin-H - Held that: - it appears that the issue has come up before the Tribunal in the case of Gurukul Kangri Pharmacy vs. C.C.E., Meerut I [2005 (12) TMI 159 - CESTAT, NEW DELHI], where it was held that use of the oil for treatment of headache, eye problem, night blindness, week memory, hysteria, amnesia, blood pressure, insomnia etc. and the product being registered with Drug Controller and manufactured under Drug licence, has to be treated as ayurvedic medicine and the mere fact that the same is sold across the counter and not under the Doctor s prescription does not lead to the conclusion that the same is not medicament - By applying the doctrine of ejusdom - genesis, we are of the view appellant's claim for classification under 3003.30 is accepted. When it is so then to this effect, the impugned order is set aside and the appellant will get the relief accordingly Regarding the third item i.e. natural hair wash (Amla Shikakai Powder) - Held that: - the identical issue has come up before the Hon’ble Supreme Court in the case of Meghdoot Gramodyog Sewa Santhan vs. C.C.E.,Lucknow [2004 (10) TMI 93 - SUPREME COURT OF INDIA] where the Hon’ble Supreme Court observed that A product may be medicinal without having been prescribed by a Medical Practitioner. It was also not necessary for a person manufacturing medical products to claim classification under Tariff Heading 3303.031 without establishing that the product had in fact been tested on patients in controlled situations or that the outcome had not been tested for effectiveness. This would be particularly true in the cases where the products are claimed to be based on traditional ayurvedic formulae - By following the ratio laid down by the Hon’ble Supreme Court, we find no reason to interfere with the order passed by the lower authority pertaining to the second item namely, natural hair wash (Amla Shikakai Powder). The orders of the lower authorities are hereby sustained along with the reasons mentioned therein pertaining to the Natural Hair Wash Powder. Appeal disposed off - decided partly in favor of assessee.

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• 2016 (12) TMI 532
  Captive consumption - denial of benefit of N/N. 67/95 CE - intermediate products, armoured cable - whether the appellants are liable to pay the duty on intermediate product i.e. armoured cable, which has been used for manufacture of power cables which is ultimately cleared on payment of duty in the open market and to Mega Power Projects without payment of duty? - Held that: - An identical issue came up before the Tribunal in the case of Thermo Cables Ltd. [2012 (12) TMI 942 - CESTAT BANGALORE] wherein this Tribunal held that a conjoint reading of sub-rule (6) of Rule 6 of the CENVAT Credit Rules 2004 and clause (vi) under the proviso to N/N.67/95-CE ibid would show that the assessee’s claim for exemption from payment of duty on copper wire under the Notification was not hit by the opening portion of the proviso to the Notification - assessee was not liable to pay CE duty on copper wire manufactured and captively used in the manufacture of insulated (power) cables in the factory during the material period. As facts of the case are not disputed that the appellant is manufacturing final products and clearing the same on payment of duty in the open market and to Mega Power Projects without payment of duty. In that circumstances, the appellant is entitled for benefit of N/N. 67/1995 ibid for intermediate product emerging during the course of manufacture of final product - appellant entitled to benefit of N/N. 67/95 CE - appeal allowed - decided in favor of appellant-assessee.

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• 2016 (12) TMI 531
  Cement exported to Nepal - RSP was not mentioned - Denial of benefit of Notification No. 4/2006-CE dated 1.3.2006 - Held that: - The contents of the notification and of the table annexed therewith at Sr. No.1A and 1C are very clear that when the subject goods are not covered for declaration of retail price under Standards of Weights and Measures (Packaged Commodities) Rules, 1977, the benefit of the notification under Sr. No. 1A is not admissible for the subject goods; however, the goods where the retail sale price is not required to be cleared other than package form would be entitled to the benefit in this Notification No. 4/2006-CE (supra) under its S. No. 1C of the table attached. Therefore, by reading the description of excisable goods mentioned in Col. 3 at S. No. 1C of the table annexed to the subject notification, the appellant in respect of the goods exported to Nepal is entitled to the benefit of this notification. We find that CESTAT Delhi in the case of Prism Cement Ltd. Vs. CCE, Bhopal [2015 (2) TMI 748 - CESTAT NEW DELHI] decides the issue, where it was held that In terms of third proviso to Sl. No.1C of the table annexed to the Notification No.4/2006-C.E., where the retail sale price of the goods are not required to be declared under SWM Rules, 1977 and are not declared, the duty shall be determined as in the case of goods cleared in other than packaged form. Since, in this case the goods had been cleared for export to Nepal and as such there was no requirement to declare the MRP on the bags of the cement in accordance with the provisions of SWM Rules, 1977, the cement would have to be treated as "other than packaged form" even though the MRP had been printed and accordingly, we are of the prima facie view that the same would be covered by Sl. No.1C of the table annexed to the Notification No.4/2006-C.E., where the duty is 14% adv. or Rs. 400/- per M.T. whichever is higher. There is no dispute that if the duty is charged at the rate prescribed in Sl. No.1C of the table annexed to the Notification No.4/2006-C.E., there would be no short payment. Appeal allowed - benefit of notification allowed - decided in favor of appellant-assessee.

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• 2016 (12) TMI 530
  Denial of CENVAT credit - M.S. Angle, M.S. Channel and welding electrodes - imposition of penalties - Held that: - it appears that subject matter is covered by Hon’ble Supreme Court decision in the case of CCE, Jaipur vs. Rajasthan Spinning & Weaving Mills Ltd. [2010 (7) TMI 12 - SUPREME COURT OF INDIA] wherein it was held that Applying the "user test" on the facts in hand, we have no hesitation in holding that the steel plates and M.S. Channels, used in the fabrication of chimney would fall within the ambit of "capital goods" as contemplated in Rule 57Q. It is not the case of the Revenue that both these items are not required to be used in the fabrication of chimney, which is an integral part of the diesel generating set, particularly when the Pollution Control laws make it mandatory that all plants which emit effluents should be so equipped with apparatus which can reduce or get rid of the effluent gases. Therefore, any equipment used for the said purpose has to be treated as an accessory in terms of serial No.5 of the goods described in column (2) of the Table below Rule 57Q - there cannot be any doubt that the M.S. Angle and M.S. Channel are eligible for cenvat credit as they are covered under the definition of either capital goods under Section (2)(a)(A) or input under Section 2(k) of the Cenvat Credit Rules, 2004. In respect of admissibility of cenvat credit for the item namely welding electrodes the Hon’ble Chhattisgarh High Court in the case of Ambuja Cement Eastern Ltd. vs. CCE, Raipur [2010 (4) TMI 429 - CHHAITISGARH HIGH COURT] and Hon’ble Rajasthan High Court in the case of Hindustan Zinc Ltd. vs. Union of India [2008 (7) TMI 55 - HIGH COURT RAJASTHAN] allowed the cenvat credit on the welding electrodes. We follow these decisions and hold that the appellant is entitled to cenvat credit on welding electrodes treating the same as input. Appeal allowed - CENVAT credit allowed - decided in favor of appellant-assessee.

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• 2016 (12) TMI 529
  CENVAT credit - input services - security service - general insurance service - consultancy engineering services - input services received at EOU unit - whether the the input services viz. security service, general insurance service, consultancy engineering services received at their Silvasa EOU unit, having no nexus with manufacturing activity at the said unit, therefore, not eligible to CENVAT Credit being fall outside the scope of definition of input service prescribed at Rule 2(l) of CENVAT Credit Rules 2004, is justified? Held that: - Undisputedly, the Appellants on the basis of invoices issued under Rule 4A of Service Tax Rules, 1994 by their head office registered as an input service distributor, availed CENVAT Credit at their manufacturing unit. It is also not in dispute that the entire credit relates to the input services viz. security service, general insurance service, consultancy engineering services received and utilized at their other unit. It is the contention of the Appellant that as per the existing provisions during the relevant period, there was no necessity that the input services be received and utilized in the factory of the manufacturer where CENVAT Credit was availed. The Appellants have heavily placed reliance on the judgment of Hon'ble Karnataka High Court in the case of ECOF Industries Pvt. Ltd. [2011 (2) TMI 1130 - KARNATAKA HIGH COURT]. In the said case, the Hon'ble High Court was confronted with the question whether the invoices issued by the head office in respect of the services received at one unit, in favor of other unit, would be eligible to CENVAT Credit. Their Lordships, after interpretation of scope of input service and input service distributor held that The law mandates that the manufacturer who wants to avail the benefit of this service tax if he has more than one unit he should also get registered himself as a service provider and then, he would be able to collect all the input service tax paid in all its units and accumulate them at its head office and distribute the said credit to its various units. Merely because the input service tax is paid at a particular unit and the benefit is sought to be availed at another unit, the same is not prohibited under law. I find that the present circumstances are more or less similar to the facts of the ECOF Industries Pvt. Ltd's case. In these circumstances, I do not see any reason not to follow the aforesaid judgment of Hon'ble Karnataka High Court in ECOF Industries Pvt. Ltd's case - CENVAT credit allowed - appeal allowed - decided in favor of appellant-assessee.

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• 2016 (12) TMI 528
  Unjust enrichment - duty paid twice initially on 31.03.1999 and later between 05.07.1999 to 15.07.1999 - refund allowed by way of credit in the Cenvat account - whether the refund allowed by way of credit in CENVAT account justified or the refund should have been made in cash? - Held that: - reliance placed on the decision of the case of Gauri Plasticulture (P) Ltd Vs CCE Indore [2006 (8) TMI 225 - CESTAT, MUMBAI], where similar issue was decided and it was held that When right to refund does not accrue under law, claim thereof is inconceivable - it is very much clear that the refund cannot be allowed in cash. I do not find any discrepancy in the impugned order. Consequently, the impugned order is upheld and the appeal, being devoid of merit, is dismissed - decided against appellant-assessee.

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• 2016 (12) TMI 527
  Clandestine removal - Whether delay in making dispatch entry in RG-1 (stock register) under the facts that entry of duty for payment was debited in the other statutory records namely RG-23 part-II or PLA, a case of clandestine removal is made out? - Held that: - the appellant preferred appeal before learned Commissioner (Appeals), who vide the Order-in-Appeal dated 25/01/2010 was pleased to observe that inspite of several letters written by him (9 in number) to the Additional Commissioner Central Excise, Meerut-II requesting therein to send the concern/relevant documents being RG-23 part-I register and RG-1 register, but till the date aforesaid record have not been received by him. It is further observed that from perusal of correspondence between Adjudication Branch of Central Excise, Meerut-II and Adjudication Branch of Central Excise, Noida, copies of which were endorsed to the ld. Commissioner (Appeals), it was evident that the documents are still not traceable and/or readily available despite a lapse of more than five years. In order to confer substantial Justice the ld. Commissioner set aside the Order-in-Original and remanded the matter back to the adjudicating authority with the direction to decide the case within three months, after providing the appellants the relevant RG 23 part-I register and RG-1 register and thereafter affording an opportunity to the appellants to present their case. Pursuant to remand the second Order-in-Original dated 14/03/2013 was passed by the Additional Commissioner, Meerut-II. As pointed out by the learned Advocate for the appellant, it is evident on perusal of the records that the relied upon documents, as directed by the ld. Commissioner (Appeals) were not provided to the appellant assessee and again the duty of Rs. 4, 21,831/- was confirmed along with confiscation of the seized goods and the seized stock with option to redeem on payment of redemption fine. However, penalty on Manoj Kumar, driver was not imposed as the amount of Rs. 3,14,060/- and Rs. 14,38,961/- were found to be admissible credit. Being aggrieved, the appellant preferred appeal before ld. Commissioner (Appeals), who vide the impugned order have been pleased to uphold the recovery of duty of Rs. 4,21,831/-, uphold the confiscation of the goods seized and also the truck seized but have been pleased to reduce the redemption fine to Rs. 50,000/- and further, he was pleased to set aside the confiscation of the seized molasses. And further been pleased to reduce the redemption fine to Rs. 1,50,000/- on the excess found goods. I find that the Order-in-Original, passed in the second round dated 14/03/2013, have been passed in violation of the principles of natural Justice, as well as in gross violation of the orders and directions of the ld. Commissioner (Appeals). Accordingly, the said order is not sustainable. Accordingly, I set aside the Order-in-Appeal and the Order-in-Original and allow the appeal. The appellant assessee will be entitled to consequential benefits, in accordance with law. So far the pre-deposits or the payment of duty pending adjudication or appeal is concerned, the same are refundable to the appellant along with interest, as per Rules - appeal allowed - decided in favor of appellant-assessee.

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• 2016 (12) TMI 526
  CENVAT credit - denial of credit on the ground that items are not covered under the definition of Capital Goods / inputs as provided under CENVAT Credit Rules, 2004 - Held that: - The Aqueous Film Forming Foam(AFFF) is used in Diesel Hydro Treator (DHT) and Hydrogen Generation Unit, Fire Fighting system. The credit is denied on AFFF, stating that pre-commissioning and commissioning of DHT is not integrally connected with manufacture. The equipments in DHT project, is set up by appellant to manufacture Euro III/IV HSD and is part of manufacturing process. Hence any item used in pre-commissioning or commissioning activity for the subject project is very much part of the manufacturing process. The Diesel Hydro Treator plant /project is intended for meeting the new BIS specifications and is a part of manufacturing activity. Therefore, the denial of credit is unjustified. The credit on umbrella structure is denied for the reason that it is a composite structure. This is not sufficient ground for denial of credit. It is not disputed that Umbrella structure is part of the high mast lighting where high inflammable products are manufactured. Therefore the denial of credit is unjustified. The credit availed on Aluminium coil used for insulation of pipes is held to be admissible in various judgments viz; CCE, Trichy Vs National Oxygen Ltd. [2006 (7) TMI 84 - CESTAT, CHENNAI] as without such insulation, heat in pipes and tanks cannot be controlled. The credit availed on caustic soda lye is denied on the ground that it does not fall within the definition of capital goods. The appellants have raised the contention that credit is eligible under the category of inputs. In the case of Tamil Nadu Petro Products V CCE, Chennai [2001 (3) TMI 226 - CEGAT, CHENNAI] the credit on this item was held to be admissible. Again, credit availed on paint thinner, Hydrazine hydrate, chemicals used for cleaning, liquid nitrogen, and transformer oil etc, has been held to be admissible in the judgments relied by the appellant. However, I cannot agree with the credit availed on Aviation fuel. It is submitted by appellant that this item is used to conduct quality test based on which certificate is renewed periodically. As rightly pointed out by the Ld AR, the definition of inputs expressly excludes Light diesel oil, HSD and motor spirit. In that case the credit on Aviation turbine fuel cannot be allowed. Appeal disposed off - decided partly in favor of appellant-assessee.

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• 2016 (12) TMI 525
  Clandestine removal of goods - confiscation u/r 25 of Central Excise Rules, 2002 and imposition of penalty on Managing Director of the company - appropriation of bank guarantee - whether the appellant had duly accounted for the excess finished goods alleged to have been found during the time of search? - Held that: - The confiscation is ordered on the presumption that appellant would have removed the goods without payment of duty. In fact, the appellant has paid duty on the goods as per the duty determined. In the case of Quippo energy Pvt.Ltd. Vs CCE&ST,Ahmd. [2015 (10) TMI 1726 - CESTAT AHMEDABAD] the Tribunal held that if goods are not available, the same cannot be confiscated. In the instant case, the goods were provisionally released and appellant cleared them by paying duty. Therefore, I hold that the confiscation and the imposition of redemption fine is without any legal basis and therefore, liable to be set aside. The statement of Shri Shiva Kanth shows that the appellant was indulging in clandestine removal of goods. This evidence together with the admitted fact that the appellant had not accounted the stock of Cefrozil and Cefdinir in the RG 1 register, would attract the provisions under Rule 26 of Central Excise Rules, 2002. However, in this regard the penalty of Rs. 10,00,000/- imposed on Shri M. N.Reddy Managing Director is on the higher side. A penalty of Rs. 1 lakh in my view would meet the ends of justice. I set aside the order of confiscation. The penalty imposed on Shri M.N.Reddy is reduced to Rs. 1,00,000/-. The impugned order is modified to the above extent - appeal allowed - decided partly in favor of assessee.

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• 2016 (12) TMI 524
  Valuation - Physical sample - Transaction value or MRP Basis - Rule 4 of Central Excise Valuation Rules, 2000 - Held that: - when the excisable goods are sold and the transaction value is not tainted by any factor and is fulfilling the conditions of Section 4(1)(a), the tax liability has to be discharged in terms of such transaction value. We find that Section 4A will come into play when the physician samples are also covered under the said category for MRP based assessment - Since physician samples are not sold in retail and MRP is not fixed on the same and when the samples were sold by the appellant-assessee on a transaction value to the principal customer such transaction value should form basis of assessment. Regarding goods manufactured on loan licence basis where raw material and packing material were given by the principal brand owner, the appellant -assessee followed cost construction method to value the physician samples cleared by them to the principal manufacture - Held that: - Hon’ble Supreme Court in the case of Biochem Pharmaceuticals India Limited vs. CCE, Daman, Vapi [2015 (9) TMI 312 - SUPREME COURT] held that the provisions of Rule 3 to 5 of the Valuation Rules, 1975 are not applicable. We note that Rule 4 of 1975 Rules and Rule 4 of 2000 Rules are identical. Further, the Hon’ble Supreme Court also referred to the CESTAT decision which accepted valuation to be on the basis of cost of production or manufacture of the goods - Appeal allowed - decided in favor of the assessee.

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• CST, VAT & Sales Tax

• 2016 (12) TMI 513
  Inter state sale or intra state sale - eCommerce transactions - movement of goods - registration of dealer - Whether the retail sale of mobile phones, computer spare parts, personal healthcare products, car accessories, cameras etc., done by the petitioner via the online portal www.flipkart.com would qualify as an inter-state sale or a local sale within the union territory of Puducherry? - Held that: - the purchase order is placed outside the State of Tamil Nadu and the movement of goods has occasioned on account of the purchase. This fact is not disputed by the Revenue, they have clearly admitted that after the customer chooses a particular product, the bill is raised and the identified package is consigned to Puducherry. In the instant case, there can hardly be any doubt, as the revenue has accepted that the purchase order, which is placed outside the State has occasioned the movement of goods. One more aspect pointed out by the Revenue is with regard to use of incorrect TIN number in the E-Sugam form generated by the petitioner at Karnataka. Admittedly, the form is electronically generated and unless and until all columns are filled, the computer system will not generate the form. The petitioner's explanation is that the furnishing of TIN number is not required. However, the said column cannot be left blank and the movement of goods are to Puducherry, the first three digits of Puducherry code are mentioned and this is no way amounts to suppression. The explanation given by the petitioner is reasonable considering the facts and the nature of transaction done by the petitioner. The consigner and the consignee is the petitioner and the goods moved from State of Karnataka to Puducherry and it is on self basis. The consignment is shown as electronic items, garments etc., stored in several bags. Therefore, mere mention of TIN number by giving only the code of Puducherry as assigned by the Commercial Taxes Department that by itself will not be a ground to state that the petitioner has committed an offence. The transactions done by the petitioner are inter-state sales and the order impugned in the Writ Petition is not sustainable and liable to be set aside - petition allowed - decided in favor of petitioner-assessee.

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• 2016 (12) TMI 512
  Classification of goods - Wooden Cable Drums - chargeable under sl. No. 169 of Schedule “C” to the West Bengal Value Added Tax Act, 2003? - Held that: - The present writ petition is against the revisonal order. The revisional order has to be adjudged on the basis of the materials made available with the revisional authority. At no stage, the petitioner brought to the notice of any of the adjudicating authority up to the revisional authority that, the item is governed by sl. No. 169. At this stage, therefore, I am not in a position to permit the petitioner to argue that, the case of the petitioner is governed by sl. No. 169 and not otherwise. That apart on consideration of serial 169 I accept the contention made on behalf of the respondents that a Wooden Cable Drum cannot come within the description of a Wooden Crate or Box or Tea Chest as enumerated in serial No. 169. A drum cannot be said to be crate or a box or a chest. A wooden drum is not specifically stated in serial no. 169. The items described therein takes colour from each other. On such premises, a wooden drum cannot be said to fall into the items described in serial no. 169. - petition dismissed - decided against petitioner.

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• 2016 (12) TMI 511
  Rate of tax - idols and statues made of gold and handicrafts including furniture - taxable at the rate of 4% under Entry No.47 of third schedule to the Karnataka Value Added Tax Act, 2003 and Entry 41 of the third schedule of the Act in the previous Advance ruling given under Section 60 of the KVAT Act, 2003 or taxable at the rate of 14% under Section 4(1)(b) of the KVAT Act, 2003 - Held that: - this Court is satisfied that the impugned order does not deserve to be sustained and the same deserves to be quashed and set aside as the same does not assign any reasons worth the name. A quasi-judicial order without any reason cannot be sustained in law. The writ petitions are therefore allowed and setting aside the impugned order Annexure C dated 21/03/2012, the matter is restored back to the Commissioner of Commercial Taxes for passing fresh orders with detailed reasons and referring to the previous record of the case and after providing an opportunity of hearing to the petitioners-assessee. Till the Commissioner passes such orders afresh, the further proceedings against the petitioner- assessee in pursuance of the Annexure F notices shall remain stayed - The Commissioner of Commercial Taxes is expected to pass appropriate orders upon this remand, within a period of three months from today - petitions disposed off by way of remand.

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• 2016 (12) TMI 510
  Partial rejection of the petitioner s applications for refund of the input tax credit for the period from July 2015 to June 2016 - wastage under Section 19(9) of the TNVAT Act - the respondent adopted a percentage of 5% and 1% respectively - Held that: - to ascertain as to whether there are quantum of loss of goods, which were purchased, on which, tax was paid, the Assessing Officer has to conduct an exercise, by which, he has to ascertain as to what would be the loss and uniform or ad hoc percentage cannot be adopted. To do so, it would be necessary for the Assessing Officer to conduct an inspection of the place of business of the petitioner to acquaint himself with the manufacturing process. However, since the respondent has adopted a uniform percentage, the same calls for interference. With regard to the second issue wherein the respondent rejected the claim for input tax credit on certain purchases effected on the ground that the commodities were not exported is concerned, the petitioner s case is that those products are used in the manufacture of other goods, which are exported, as specified under Sub-Section (1) of Section 8 of the State Act and they are entitled to avail the input tax credit. However, the petitioner had no opportunity to put forth their objections on the above head. The last issue is with regard to the rejection of the claim for refund of input tax credit on capital goods. The respondent has not assigned any specific reasons for rejection, but stated that the claim is in dispute. The nature of the dispute has not been spelt out in the impugned order. That apart, the petitioner did not have any opportunity to put forth their objections. Therefore, the findings rendered by the respondent on all the above three heads call for interference. The writ petitions are allowed by setting aside the findings of the respondent on the above three heads and the respondent is directed to issue a show cause notice to the petitioner on all the above three heads. On receipt of the notice, the petitioner shall file their objections and on receipt of the objections, the respondent shall cause an inspection of the petitioner s factory to acquaint himself regarding the manufacturing process so as to enable him to ascertain the invisible loss and the visible loss and thereafter, after affording an opportunity of personal hearing to the petitioner, redo the assessment on the above three heads by passing a speaking order in accordance with law - appeal allowed by way of remand.

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• Indian Laws

• 2016 (12) TMI 509
  Order of dismissal from service challenged - Held that:- If an employee intends to enforce his constitutional rights or a right under a statutory Regulation, the civil court will have the necessary jurisdiction to try a suit. If, however, he claims his right and corresponding obligations only in terms of the provisions of the Industrial Disputes Act or the sister laws so called, the civil court will have none. In this view of the matter, in my considered opinion, it would not be correct even to contend that only because the employee concerned is also a workman within the meaning of the provisions of the 1947 Act or the conditions of his service are otherwise governed by the Standing Order certified under the 1946 Act ipso facto the Civil Court will have no jurisdiction. In a case where no enquiry has been conducted, there would be violation of the statutory Regulation as also the right of equality as contained in Article 14 of the Constitution of India. In such a situation, a civil suit will be maintainable for the purpose of declaration that the termination of service was illegal and the consequences flowing therefrom. However, the Court may hasten to add that if a suit is filed alleging violation of a right by a workman and a corresponding obligation on the part of the employer under the Industrial Disputes Act or the Certified Standing Orders, a civil suit may not lie. However, if no procedure has been followed as laid down by the statutory Regulation or is otherwise imperative even under the common law or the principles of natural justice which right having arisen under the existing law, subpara (2) of paragraph 23 of the law laid down in Premier Automobiles Ltd. vs. Kamlekar Shantaram Wadke of Bombay & others [1975 (8) TMI 124 - SUPREME COURT ] shall prevail. [Vide Bal Mukund (2009 (2) TMI 807 - SUPREME COURT )] For all the foregoing reasons, the preliminary objection as regards the maintainability of this writ application is upheld. I hold that this writ application is not maintainable against the Reliance Industries Limited. This writ application is disposed of with liberty to the legal heirs of the original writ applicant to approach any other forum for the redressal of their grievance if so advised. The time spent by the writ applicant in prosecuting the present proceeding shall be taken into consideration for the purpose of limitation in case the writ applicant choose any such remedy where the question of limitation would be relevant.

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