Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 14, 2017
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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GST - Provisional release of detained goods - When the statute itself provides for a mechanism (for adjudication following detention of goods including for the provisional release thereof pending adjudication), a deviation therefrom cannot be ordered. - HC
Income Tax
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Due date of deposit of tax deducted at source/tax collected at source during the month of October, 2017 extended from 7th November, 2017 to 8th November, 2017
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Nature of amount received as compensation towards rent out property - Mense profit - Mense profit is not revenue receipt but capital in nature - not taxable - AT
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Assessee would not be entitled to deduction on the gross receipt without reducing depreciation under Section 80-IA regardless of whatever interpretation they want to place on the provisions of Section 80IA. - HC
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Treatment of alimony received by the assessee from her ex-husband - scope of section 56(2)(vi) - in the definition of spouse, exspouse is also included except where there is an evidence that the payment is not made as a gift or an alimony but for some other consideration or by virtue of some other transaction - AT
Customs
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Where imported goods subject to Countervailing Duties are exported out of the country as such, then the Drawback payable under Section 74 of the Customs Act, 1962 would also include the incidence of Countervailing Duties as part of total duties paid, subject to fulfilment of other conditions
FEMA
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Investment by Foreign Portfolio Investors (FPI) in Government Securities Medium Term Framework – Review - Revision of Limits
Service Tax
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Photography Service - production of Electors Photo Identity Cards (EPIC) - Since the respondents were engaged by the Government of Tamil Nadu, for production of EPICs and not merely taking photographs of the voters, the activity would not fall under photography service. - AT
Central Excise
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Area Based Exemption - doctrine of promissory estoppel - for the period declared vide N/N. 20/2007 the Petitioner would be entitled to the excise duty exemption as promised therein - Consequently impugned N/N. 20/2008 and 38/2008 are liable to be quashed to the extent they curtail and whittle down the 100% excise duty exemption benefit as promised vide Notification No.20/2007 and is hereby quashed. - HC
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Manufacture or service - These blinds are in the nature of curtains and cannot be said to become immovable properties when they are mounted on the wall. The roller blinds can be unbolted and removed at any time which renders these blinds to be in the nature of movable rather that immovable property - AT
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As long as the goods are used for the intended purpose, in this case, that of storage of agricultural produce, the notification benefit cannot be denied. Storage of a small quantity of non-farm produce, along with the agricultural produce, cannot result in cancellation of the notification. - AT
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Classification - Even if the card kit is classifiable under the Central Excise Tariff Heading No.84.48, these three items viz. Traverse assembly , Drive king assembly and Flat drive reversal systems which are some of the items of the unit viz card kit and having individual functions cannot be classified under 84.48 - AT
VAT
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Benefit of Composition Tax - dealer selling Liquor - Merely because the petitioner - assessee can bifurcate the turnover relating to different commodities and the Respondent-Assessing Authority can also verify the same, it does not entitle the petitioner-assessee to claim blanket benefit of composition under Section 15 of the Act. - HC
Case Laws:
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GST
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2017 (12) TMI 640
Input tax credit - credit on SGST charged by the hotels located outside Delhi - Held that: - It is pointed that different provisions are applicable in case of online bookings through web travel portals and they are able to avail the credit - The respondents will examine the assertions and so called anomalies. We will be informed on the treatment accorded on sale of manufactured goods and other services which are provided by an assessee across the country.
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Income Tax
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2017 (12) TMI 644
Disallowance of depreciation on Crawler Cranes and Dozers - entitled for depreciation @ 15% and not @ 30% as claimed by the assessee - Held that:- It is not possible to include each and every type of vehicle in the depreciation schedule. Due to rapid industrialization, the various types of machines used in transport business are increasing day after day with each machine carrying out a particular type of activity in a more efficient manner. These machines do not find direct representation in the depreciation schedule. In such situation, the functional similarly with the nature of activity performed by the listed machine has to be done to determine under what category a particular machine would fall. We also found that CBDT vide Instruction No.617 dated 13.09.1973 has even included “forklift” in the category of motor vehicle entitled for higher depreciation of 30%. The Hon. Supreme Court in the case of Chairman Rajasthan State Road Transport Corp and Other-vs-Santosh and Others (2013 (5) TMI 965 - SUPREME COURT) have analyzed the definition of the term motor vehicle to hold even a tractor to be motor vehicle as it is capable of being adapted to run on public roads. Thus no merit in action of lower authorities for declining higher claim of depreciation at 30% on Crawler Cranes and Dozers. - Decided in favour of assessee.
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2017 (12) TMI 639
Nature of amount received as compensation towards rent out property - Mense profit - revenue receipt or capital receipt - Whether the receipt was treated as rent from the said premises and accordingly treated as income from house property and was brought to tax? - Held that:- Mense profit is not revenue receipt but capital in nature. Identical ratio was laid down in the case of Narang Overseas [2008 (2) TMI 817 - ITAT MUMBAI] and M/s Goodwill Theater Pvt. Ltd.[2013 (6) TMI 781 - ITAT MUMBAI] thus, on this ground, the appeal of the assessee deserves to be allowed. This order will be applicable to both the years under consideration, being on identical facts.
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2017 (12) TMI 634
Sales tax subsidy - addition to the income of the Assessee by treating it as revenue receipt - Held that:- With regard to the very same sales tax subsidy provided in the State of Haryana, pursuant to the Scheme in force in the said State during the AY in question, this Court, in Commissioner of Income Tax v. Johnson Matthey India (P) Limited [2015 (3) TMI 1305 - DELHI HIGH COURT] allowed it as capital receipt - Thus issue answered the said issue in favour of the Assessee and against the Revenue.
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2017 (12) TMI 633
Addition u/s 274 r.w.s 271(1)(c) - claim for deduction of bad and doubtful debts at the rate of 10% of the average advances made by the assessee’s rural branches - Held that:- Merely making of a claim which was not accepted or not acceptable to the Revenue would not tantamount to furnishing of inaccurate particulars so as to attract the provisions of section 271(1)(c) of the Act. In the facts of the present case, the entire penalty order is based upon the facts as placed by the assessee on the record. Thus, merely because the assessee had made a claim which came to be disallowed, the provisions of section 271(1) (c) of the Act would not be attracted. Under the circumstances, the Tribunal was wholly justified in holding that there was nothing to indicate that the assessee had furnished inaccurate particulars of income warranting imposition of penalty under section 271(1)(c) of the Act. See Commissioner of Income-tax v. Reliance Petroproducts (P) Ltd. [2010 (3) TMI 80 - SUPREME COURT ] - Decided in favour of assessee.
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2017 (12) TMI 631
TPA - Computation of income from international transaction having regard to arm's length price - comparability selection of M/s.HMT Limited - Held that:- In the instant case, whether M/s.HMT Limited can be a comparable or not is a factual issue. The learned Tribunal has factually assessed the similarities between M/s.HMT Limited and the respondent assessee and the same, in our considered opinion, does not warrant interference of this Court under Section 260A of the Income Tax Act, 1961.
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2017 (12) TMI 625
Entitlement to the deduction u/s 80-IA - income from generation of power - entitled to deduction on the gross receipt without reducing depreciation under Section 80-IA - Held that:- Expenses incurred and depreciation has to be reduced from the gross receipt, to arrive at the figure on which deduction is to be allowed under Section 80 IA of the Act. Deduction was to be allowed only on the net profits of the said undertaking, which was eligible for deduction under Section 80-IA. It is an accepted and admitted position that the appellant-assessee was entitled to depreciation of over ₹ 3.24 crores on the wind mills, which were installed and used for generating electricity and also commission income. Thus, the depreciation, which was to be allowed and given on the wind mills was almost fifteen times the income earned by the appellant-assessee from generation of electricity, which was eligible for deduction under Section 80-IA. This being the position, we do not think the appellant-assessee would be entitled to deduction on the gross receipt without reducing depreciation under Section 80-IA regardless of whatever interpretation they want to place on the provisions of Section 80IA. In the facts of the present case, the question of bifurcation of depreciation in view of the two lines of business, etc. wanes, as the amount of depreciation, even on bifurcation, which would be reduced from the gross receipts of the undertaking eligible for deduction under section 80IA of the Act, would be significantly higher. We do not, therefore, in the facts of the present case, find any good ground or reason to interfere with the impugned order passed by the Tribunal. The question of law is accordingly, in the facts of the present case, answered against the appellant-assessee and in favour of the Revenue.
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2017 (12) TMI 615
Addition of “Project Monitoring Expenses” and “Erection and Commissioning Charges” - whether the assessee has failed before the A.O to specify the reason of less profit this year although turnover went up substantially as compare to last year - Held that:- As perused all the records and gone through the order of the CIT(A) wherein the CIT(A) has rightly deleted the addition as the Assessing Officer made the estimated addition or ad-hoc addition without assigning any reason to that effect. Merely, on the basis of surmises, the Assessing Officer cannot make an addition when the assessee has given all the details about the expenses and the same was never doubted by the Assessing Officer at any point of time. CIT(A) rightly held that the Assessing Officer made estimated disallowances because of some expenses which had gone up, however, the Assessing Officer had not brought on record a single instance of expenses not being vouched properly or any of these expense being artificially inflated or being of a bogus nature, the CIT(A) further held that there was no allegation that the expenditure occurred out of any other activity and Assessing Officer did not bring on record any instance of the expenditure being used for purposes of the other business. The addition made by the AO was rightly deleted by the CIT(A) - Decided against revenue
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2017 (12) TMI 613
Disallowance u/s 14A - Held that:- We find that the assessee himself has suo moto made disallowance of ₹ 58,095/- before CIT(A). On query from the Bench, the learned Sr. Departmental Representative (‘DR') could not counter the judgement of the Hon’ble Delhi High Court before us, or he could not brought any precedent of Hon’ble jurisdictional High Court in Revenue’s favour. Accordingly, we are of the view that the issue is squarely covered and hence, we restrict the disallowance at ₹ 1,51,348/- to the extent of exempt income. We direct the AO accordingly. Not allowing carry forward of speculation loss - Held that:- Admittedly, the assessee has claimed speculation loss in the return of income at ₹ 56,42,063/- but the AO himself has verified from the records that the speculation loss is at ₹ 1,04,65,899/-. According to us, the assessee is entitled for this loss and this has been verified by the AO from records. Accordingly, we direct the AO to allow the speculation loss at ₹ 1,04,65,899/-. The appeal of assessee is allowed and that of the Revenue is dismissed.
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2017 (12) TMI 612
Estimation of income on sale of IMFL - profit estimation - Held that:- In IMFL business, few newspapers have no doubt mentioned about considered sale of liquor at a higher price i.e. at a price higher than the rate fixed by the Government, but the fact remains that in the assessee’s case, there is nothing on record to suggest that he has flouted the norms and sold liquor at a higher price. The Government of Andhra Pradesh through AP Beverages Corporation Ltd. is the only agency authorised to sell IMFL. Sale rate is fixed by A.P. Beverages Corporation. However, having regard to the huge licence fee payable and other incidental expenditure, the ITAT, Visakhapatnam Bench in the case of Meka Ramamurthy [2017 (12) TMI 589 - ITAT VISAKHAPATNAM] consistently held that profit rate at 5% of purchase price, clear of all deductions is reasonable. Consistent with the view taken therein, estimate of profit at 5% of purchase price is reasonable and directed Assessing Officer, accordingly. Addition towards unexplained investment - Held that:- Neither before the Assessing Officer nor before the ld.CIT(A), the assessee could prove the source of investment, in fact, no explanation was offered. Thus, additional evidence filed for the first time, cannot be entertained, more particularly on the ground that even the confirmation letters are not sufficient to prove the investment. It is the duty of the assessee to prove the creditworthiness of the parties also, which is absent in the instant case. Having regard to these circumstances, the addition made by the Assessing Officer and confirmed by the ld. CIT(A) under section 69 of the Act is upheld.
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2017 (12) TMI 611
Reopening of assessment - non compliance with section 151 - reasons to believe - Held that:- The reopening in this case lacks jurisdiction on twin counts. Firstly, the assessee has not been properly intimated about any such satisfaction/approval despite request in the objection to reopening filed before the Assessing Officer repeatedly. Secondly, in the remand proceedings before the ld. Commissioner of Income Tax (Appeals), a sanction/approval letter dated 30.03.2015 which is of the same date as the date of notice for reopening has been submitted. This satisfaction/approval is of Joint Commissioner of Income Tax (Appeals). In reply, to assessee’s objection, the Assessing Officer never gave any such detail. This gives credence to the submission of ld. Counsel of the assessee that due approval/satisfaction was not obtained in this case before issue of notice of reopening. Hence, the sequence of events and discussion hereinabove make it clear that the satisfaction/approval has not been duly obtained as envisaged in the Act and as mandated in the case laws referred by the ld. Counsel of the assessee. In such situation, when the reopening proceedings vis-a-viz compliance with section 151 has not been duly met with, the reopening proceedings deserve to be declared as void-ab-initio and the same is declared void-ab-initio as such. - Decided in favour of assessee.
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2017 (12) TMI 609
TPA - ALP adjustment on account of interest on receivables - Held that:- We see no reasons to take any other view of the matter than the view so taken by us in the case of Micro Ink [2015 (12) TMI 143 - ITAT AHMEDABAD]. Respectfully following the same, we uphold the grievance of the assessee and delete the impugned ALP adjustment of ₹ 57,32,095/- on account of interest on receivables. The assessee gets relief accordingly.
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2017 (12) TMI 600
Disallowance u/s 14A r.w.r. 8D(2)(ii) - Held that:- There is sufficient own funds available with the assessee company for making the investments. But we find that the investments were carried over from the earlier years and whether the same were made out of own funds or out of borrowed funds, the details of which are not available before us. That is precisely the requirement of the Hon’ble Jurisdictional High Court in the case of Dhanuka & Sons vs CIT (2011 (4) TMI 861 - CALCUTTA HIGH COURT) warranting the assessee to prove the sources for making the investments in the respective years as to whether the same were made out of own funds or borrowed funds of the assessee. Hence we deem it fit and appropriate, to remand this issue to the file of the ld AO, to examine the sources for making investments in the respective earlier years of making investments and decide the same in accordance with law. Disallowance towards discount allowed - Held that:- We find that the assessee had filed complete details of discounts provided to the customers by way of deduction from the sale bills under and details of discounts allowed to customers under various schemes provided by Maruti. We also find that the assessee had explained the nature of each scheme of discount before the ld AO vide letter dated 12.3.2014 together with the relevant annexures including the ledger accounts, monthly statement for April 2010 (as sample basis) and sample sale invoices. We hold that the ld AO had not appreciated the evidences submitted before them and had not taken any efforts to understand the business model of the assessee and proceeded to disallow the entire discount paid to customers. Addition towards advance from customers as unexplained cash credit u/s 68 - Held that:- It is very usual for a car dealer such as assessee, to receive booking advance from various prospective customers at the time of booking the vehicle and the same would be reflected as advance from customers, which would get adjusted with the sale invoice in subsequent period on delivery of the vehicle. In case if the customer wishes to cancel the order, the same would be refunded as per the terms and conditions agreed upon. This is the general practice followed by every car dealer in the country. We find that the assessee had provided the names, address and PAN of all the parties from whom advances were received. The entire details were very much available on record before the ld AO regarding this issue which has not been appreciated by the ld AO. We find that the ld CITA had appreciated the very same evidences and deleted the addition made u/s 68 of the Act. We find that there is absolutely no case made out by the ld AO for framing this addition u/s 68
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2017 (12) TMI 599
Gain on sale of land/factory shed - Revenue contends that the original factory shed never formed part of the block of asset as no depreciation has been admittedly claimed on the factory shed in transfer nor has been allowed - section 50 Applicability - Held that:- It is an admitted position that the assessee has never claimed any depreciation on the asset under transfer. Therefore, the very premise for claiming the same to be part of block of asset for the purpose of s.50 is a damp squib. Secondly, the benefit of section 50 is available only when the depreciation has been allowed on the asset under transfer. It is an admitted position that no such depreciation has been either claimed or allowed on factory shed in transfer. The assets sold is thus not a depreciable asset in so far as provisions of s.50 is concerned. Admittedly, assessee has claimed indexation benefit as per its submission before the CIT(A). Thus, the asset in transfer was also not understood to be a Short Term Capital Asset as contemplated under s.50 of the Act by the assessee himself. Therefore, we do not, in totality, see any substance in the plea of the assessee. A reading of the order of the CIT(A) shows that action of the CIT(A) is in confirmity with law and does not call for any modification. - Decided against assessee.
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2017 (12) TMI 598
Deemed dividend addition u/s 2(22)(e) - taxability of loans/advances received by the assessee - Held that:- We find that the legal fiction in section 2(22)(e) enlarges the definition of dividend but does not extend to or broaden the concept of a ‘shareholder’. As the assessee is not a shareholder of the lender-company, the receipt is not susceptible to tax under s.2(22)(e) in its hands . See Baumik Colour Pvt.Ltd. [2008 (11) TMI 273 - ITAT BOMBAY-E] - Decided in favour of assessee.
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2017 (12) TMI 595
Penalty u/s 271(1)(c) - assessee is not entitled to seek deduction u/s 10B and for want of meeting this requirement the claim of the assessee becomes a wrong claim - Held that:- It is an admitted fact that the moment the notice was issued calling upon the assessee to explain why the deduction u/s 10B should not be disallowed, the assessee filed a return of income withdrawing the claim for deduction u/s 10B of the Act. In the circumstances, we find that the Ld.CIT (A) is justified in his view that the issue whether claimed u/s 10B is a deduction or exemption is a debatable issue and on this aspect the reasoning given by the Ld.CIT (A) in paragraph no. 3 is impacable. See CIT vs. Reliance Petro Products Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT) as held that disallowance of a claim for deduction will not automatically lead to the levy of penalty unless there is concealment of income or furnishing of inaccurate particulars. We are agreeing with the findings of the Ld. CIT (A) that by reason a bona fide legal claim in the return of income even if the same is ultimately found to be not acceptable, it would be said that income has been concealed or inaccurate particulars of income were furnished, and consequently, the assessee cannot be penalized. We, therefore, while upholding the order of the Ld. CIT (A) dismiss the grounds of appeal. - Decided in favour of assessee.
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2017 (12) TMI 593
Disallowance of exchange fluctuation loss on forward contracts - nature of speculative transactions - whether the assessee is able to have one to one co-relation between forward contracts and its bills receivables / payables? - AO opined it to be in the nature of speculative transactions as defined u/s 43(5) - Held that:- In this case, it is an undisputed fact that the assessee has not carried out its forward contracts through recognized stock exchange. The assessee has entered into forward contracts with its bankers. Therefore, to ascertain forward contracts entered into by the assessee are hedging transactions or speculative transactions, forward contracts have to clear the basic test provided for examining the nature of transactions of hedging and speculative transactions. Case of the assessee is covered by the decision of Supreme Court in the case of Woodword Governor (I) Pvt Ltd (2009 (4) TMI 4 - SUPREME COURT) because the assessee has profit / loss on fluctuation in respect of its forward contracts on the basis o marked to market at the end of the financial year based on the prevailing exchange rate. However, the assessee has failed to prove the basic test provided for categorizing that its forward contracts are in the nature of hedging transactions. Even the lower authorities have failed to appreciate the facts in the right perspective in the light of the arguments of the assessee that its forward contracts cannot be linked to its export bills receivables / payables, but total value of its forward contracts is not more than its exposure to foreign currency in the form of receivables / payables. Therefore, we are of the considered view that the issue needs to be re-examined by the AO in the light of above discussions. Hence, we set aside the issue to the file of the AO and direct him to consider the issue afresh Disallowance of expenditure incurred in relation to exempt income u/s 14A r.w.r. 8D(2)(i) and 8D2)(iii) - Held that:- The assessee failed to bring on record any evidence to controvert the finding of the lower authorities. Though the Ld.AR contended that the AO has not established link between expenditure incurred by the assessee to earn exempt income, failed to prove that the assessee has not incurred any expenditure in the backdrop of the clear findings of the AO as well as the CIT(A) that the assessee has paid huge interest on borrowings and also incurred common expenditure like general administration and other expenses. Therefore, we are of the view that the CIT(A) was right in restricting disallowance to 5% of the value of investments. We do not find any error in the order of CIT(A). Hence, we are inclined to uphold the order of CIT(A) and dismiss the ground raised by the assessee. Disallowance of interest u/s 36(1)(iii) for diversion of interest bearing funds - Held that:- The assessee fails to bring on record any evidences to rebut the findings of facts recorded by the CIT(A). Though the assessee has relied upon the decision of Hon’ble Supreme Court in the case of Vardhman Polytex Ltd (2008 (1) TMI 26 - HIGH COURT, PUNJAB AND HARYANA), in the backdrop of the clear findings of the AO and CIT(A) that the assessee has failed to explain the availability of interest free funds to explain acquisition of capital asset, interest paid on loans borrowed has to be disallowed u/s 36(1)(iii) for diversion of funds for acquisition of capital asset. Therefore, we are inclined to uphold the order of the CIT(A) and reject the ground raised by the assessee.
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Customs
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2017 (12) TMI 628
Provisional Release of goods - Section 110 (A) of the Customs Act, 1962 - Held that: - The factual matrix of the present case appears to be not in dispute, as the allegation was not pertaining to mis disclaration of the nature of the goods, but with regard to retail selling price of the products. Thus, if ultimately, on adjudication, it is found that that the retail selling price declared by the petitioner, in the Bill of Entry is lower than the actual retail price, then, it would result in changes in the valuation of the goods, demanding higher rate of tax, penalty and other charges. As far as the adjudication levies in respect of live consignment are concerned, it is yet to be quantified. Though the Board's Circular provides for such adjudication levies, there can be no question of quantifying the same at this stage, without opportunity to the petitioner. Further, the amount of ₹ 30,00,000/- for the duty liability in respect of the past imports cannot be insisted upon at this juncture, as no proceedings have been initiated against the petitioner, in respect of those consignments, which were already cleared. Petition disposed off.
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2017 (12) TMI 624
Suspension of CHA License - Regulation 19(2) of the Customs Broker Licencing Regulation 2013 (CBLR) - the allegation against the petitioner in the instant case is that they have contravened Regulation 11(d) & Regulation 11(e). In as much as the petitioner did not advice their client to comply with the provisions of the Act and failed to exercise due diligence to ascertain the correctness of the information and even assuming ultimately, an order has been passed. Held that: - There can be no dispute over the settled legal position that there is no res judicata in matters pertaining to tax for different assessment years. However, the facts of the present case, calls for a different approach. The allegation against the petitioner was that in the bill of entry, the word 'computer', was deliberately added to the item description of goods, at the behest of the importer in violation of Section 46(4) of the Customs Act, with a view to claim duty exemption benefit. At the first blush, it appears the insertion of word computer, in the bill of entry, though alleged to be deliberate, cannot be construed as a serious matter. The respondent stated that the petitioner failed in his obligations contemplated under Regulation 11 by adding the word computer , to the 'item description' without seeking proper explanation from the importer, thereby violating Section 46(4) of the Customs Act. In such circumstances, it cannot be stated that the respondent did not properly exercise its discretion, while suspending the petitioner's licence under Regulation 19(1), nor it can be stated that the interpretation given by the respondent was either perverse or arbitrary not to bring the petitioner's case within the ambit of appropriate case in Regulation 19(1) . Considering the conduct of the petitioner and the facts, the first respondent has exercised his powers and found the petitioner's case to be an appropriate case for immediate suspension. After the petitioner was afforded an opportunity, he was given a hearing and the order of suspension has been directed to be continued and the reasons assigned in the impugned order are just and germane to the allegations made against the petitioner - Petition dismissed - decided against petitioner.
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2017 (12) TMI 616
Quantum of redemption fine and penalty - Import of vehicle - Department was of the view that necessary Type Approval Certificate have not been produced and the conditions have not been complied with - Held that: - the commissioner has observed that substantial part of the conditions in Sl. No. 2 of ITC (HS) Policy to Chapter 87 has been complied and only the conditions (b) and (c) of the said policy have not been complied. There is no dispute that the vehicle was imported for the personal use of the company Chairman - Taking into consideration all these facts along with the fact that the vehicle has been imported for use of special need person, the Commissioner has imposed the redemption fine of ₹ 5,10,000/- and penalty of ₹ 1,00,000/- - impugned order upheld - appeal dismissed - decided against Revenue.
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Corporate Laws
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2017 (12) TMI 636
Deposit of the amounts contained in the statutory notice - Held that:- Merely because the Petitioner did not enter into correspondence though breach was committed by the Respondent would not dent the case of the Petitioner in so far as their claim based on Soyabean Meal contracts is concerned. Since the parties had a running business relationship, it may be possible that the parties were trying to work out and in the said process time might have elapsed. In the said context it is required to be noted that even in respect of the Guar Seed contracts the delivery date as per the said contracts was 27/07/2012. The Respondent did not address any correspondence for almost a year before addressing the letter dated 15/06/2013. Hence the aforesaid fact suggests that the parties being in continuous business relationship did not desire to precipitate the matter and were trying to resolve the same. Respondent i.e. the Appellant herein has not raised any substantial or genuine grounds to avoid the payment and the defences raised on behalf of the Respondent are therefore not bonafide. In our view, the learned Single Judge has in the facts and circumstances rightly issued the directions which are contained in the operative part of the impugned order.
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Service Tax
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2017 (12) TMI 614
Photography Service - production of Electors Photo Identity Cards (EPIC) in various districts of Tamil Nadu - whether the issue of EPICs can be considered as photography services? - Held that: - The production of EPICs involve capturing of photographic images of identified electors, resizing of images, linking of images with the electoral rolls data base, printing of photo rolls as per Election Commission of India guidelines throughout the Districts of Tamil Nadu. That such production of EPICs would amount to production of goods - as per the Board's Circular No.167/18/95-CX4 dated 14.8.1995, the Board has clarified that the photo identity cards and holograms merit classification under Chapter 4901.90 of the CETA, 1985. Since the respondents were engaged by the Government of Tamil Nadu, for production of EPICs and not merely taking photographs of the voters, the activity would not fall under photography service. The activity carried out by the appellant would not fall within the definition of photography service - appeal dismissed - decided against Revenue.
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2017 (12) TMI 605
Levy of service tax - labour charges collected for the services rendered in other three branches - case of appellant is that the manufacturer viz., MML has not given any permission for conduct of authorized service stations in the places Dindigul, Theni and Karaikudi and therefore the amounts collected toward labour charges in these branches cannot be subject to levy of service tax under the category of Authorized Service Station services - Held that: - Clause 11 of the agreement stipulates that the dealer (appellant) shall provide and arrange with its branches, sub-dealers and service centres to provide adequate and satisfactory after sales service for the products used in the territory including those which have not been sold by them - When the agreement mentions the territory to include all these places, the appellant s contention that they were not authorized to conduct service stations in Theni, Dindigul and Karaikudi and therefore the demand of service tax not sustainable is untenable and unacceptable. Penalty u/s 76 not tenable - penalty u/s 78 and demand of tax with interest upheld - appeal allowed in part.
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2017 (12) TMI 596
Interest on refund - Section 11BB of Central Excise Act, 1944 - case of appellant is that when the refund applications were filed on the respective dates in respect of the amounts stated in the Table, such refund not being granted by the Authority below, it is entitled to interest - Held that: - Bare perusal of the statutory provision in Section 11BB of the Act throws light that Section 11BB comes into operation only after an order of refund has been made under Section 11B of Central Excise Act, 1944. This is the pre-requisite for grant of refund. In the present case of the appellant, right to refund arose only in terms of order of Tribunal which was passed on 10.2.2016. If Revenue has not granted refund within three months of filing of application in terms of such order, it is entitled to interest thereafter. Learned adjudicating authority is therefore directed to examine whether refund application was filed in terms of order dated 10.2.2016 and whether such refund applications were disposed of within three months thereof. Appeal allowed by way of remand.
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Central Excise
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2017 (12) TMI 643
Benefit of SSI Exemption - Classification of goods - Road Marking Paints - classified under CETA 3210.90 or under CETA 3208.90? - case of appellant is that they are eligible for SSI exemption as prevalent during the impugned period, in which case they claim that there shall be no duty liability since all their clearances will be within the exempted turn over limits - Held that: - appellants have accepted the CETA classification of 3208.90 in respect of Road Marking Paints manufactured by them as proposed in the SCNs and confirmed in the orders of the lower authorities. - appellant had opted for availing modvat credit ab initio, in which case, they will not be eligible for full duty exemption but instead will have to discharge duty liability at "effective rate of duty less 10%" from the beginning. This being so, the contention of the appellant that they are eligible for availing turn over based SSI exemption does not succeed - demand upheld. Demand of interest - Held that: - the provision for demand of interest was introduced for the first time by insertion of Section 11AA only w.e.f. 26.5.1995 by Section 73 of the Finance Act, 1995. Subsequent insertion of Section11AB was made w.e.f. 28.9.1996 by Section 76 of the Finance Act, 1996, which too was amended w.e.f. 11.5.2001. Even so, statutory provisions for demand of interest on duty not paid, short paid etc. cannot have retrospective effect. The SCNs based on which the above differential duty has been demanded have been issued well before the aforesaid introduction of Section 11AA / Section11AB, and in consequence they do not incorporate any demand of interest liability on the differential duty demanded - the demand of interest in this case is not supported by the law then in force, for which reason it will not sustain - demand set aside. Appeal allowed in part.
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2017 (12) TMI 638
Area Based Exemption - doctrine of promissory estoppel - notifications whittling down the exemption benefits - It is the case of the Petitioner that the Petitioner started investing for setting up its first unit from the year 2005 only. Evidently therefore, the Petitioner had started the investment only after issuance of impugned Notification No. 27/2004 amending N/N. 56/2003 which notification put into operation the Industrial Policy, 2003. The said Notification is cogent and clear. The Petitioner does not fall in any of the two categories of units as mentioned therein - whether the Petitioner has been able to establish that the Respondents had vide the Industrial Policy, 2007 and Notification No. 20/2007 made a promise, which the Petitioner had acted upon putting itself in a detrimental position which would compel the Respondent No.1 to make good the promise. Held that: - the Petitioner started its investment only in the year 2005 and thereafter. When the Petitioner thus started its investment in the year 2005 the incentive scenario in Sikkim was that under the previous regime Notification No. 56/2003 by which the Industrial Policy, 2003 was operationalized had been amended vide impugned Notification No.27/2004 by making it clear that only those new industrial units which have commenced commercial production on or after 23.12.2002 but not later than 31.03.2007 would be entitled to the exemption. It is an admitted fact that the Petitioner started its commercial production on and from 20.04.2009 for its first unit. However, the intention of the Respondent No.1 to offer central excise duty exemption was unequivocal. The Respondent No. 1 had both knowledge and intention that the said promise would be acted upon. It is evident that the Petitioner could not avail the benefit of Notification No. 56/2003 as amended by Notification No. 27/2004 as it did not commence commercial production till 31.03.2007 i.e. the cut of date. It is also evident that the Respondent No.1 had made a promise and pursuant thereto the Petitioner had made substantial investments. Between the periods 09.07.2004 i.e. the date of issuance of impugned Notification No. 27/2004 till 01.04.2007 the date on which the Industrial Policy, 2007 was declared the policy continued to be as provided in Notification No. 56/2003 and as amended by impugned Notification No. 27/2004 i.e. that of 100% exemptions from excise duty. Thus the submission of the Petitioner that the investments were made in establishing its unit due to the clear promise held out by the Respondent No.1 is surely not out of place. As the Petitioner had failed to commence commercial production within the period 23.12.2002 to 31.03.2017 as specified by Notification No. 56/2003 as amended by Notification No.27/2004 it was not entitled to claim exemption under the aforesaid notification as held above. Consequently, we shall refrain from examining the challenge to the impugned Notification Nos. 27/2004, 21/2008 and 36/2008. Whether by issuing the impugned N/N. 20/2008 the Respondents has done away or curtailed the benefit granted under N/N. 20/2007? - Held that: - The intention of the Respondent No.1 was made clear. After the amendment to Notification No.20/2007 by impugned Notification No.20/2008 the exemption of excise duty equivalent to the amount of duty paid other than the amount of duty paid by utilisation of CENVAT credit under the CENVAT Credit Rules, 2004 was now to be equivalent only to the duty payable on value addition undertaken in the manufacture of the said goods by the said unit - Under the amended paragraph 2A of Notification No.20/2007 as amended by impugned Notification No. 20/2008 the duty payable on value addition shall be equivalent to the amount calculated as a percentage of the total duty payable on the excisable goods. For the goods i.e. P & P medicaments falling under chapter 30 of the first schedule, the rate prescribed in the table to the amended paragraph 2A was 56%. Reading of the amended paragraph 2A leaves no room for doubt that the total 100% exemption once declared by the Industrial Policy, 2007 and as put into operation by Notification No. 20/2007 was hugely reduced to only 56% that too only on the value addition undertaken in the manufacture of the said goods. Simply put value addition is the amount by which the value of any good is increased at each stage of its production, exclusive of initial cost. Whereas in the original Notification No. 20/2007, the exemption on payment of excise duty was referable to the excise duty payable on the finished goods in the impugned Notification No. 20/2008 the excise duty was restricted to the quantum of value addition only. This surely was something not promised vide the Industrial Policy, 2007 and Notification No. 20/2007. In the present case the Petitioner seeks to enjoy the benefit promised by the Respondent No.1 for the period of 10 years as declared by the Respondent No.1 - In the present case no material whatsoever has been placed by the Respondent No.1 to show that the withdrawal was in public interest save stating that the notification itself states that it is in public interest leave alone showing a superior public interest to resile from the promise held out clearly vide Industrial Policy, 2007 and 100% exemption granted pursuant thereto vide Notification No. 20/2007 Coming now to the point raised by Mr. Vikram Nankani, learned Senior Advocate that the Petitioner having inadvertently sought exemption under Notification No. 56/2003 whereas the Petitioner was in fact eligible for exemption under the Industrial Policy, 2007 and the Notification No.20/2007 the benefit which the Petitioner was otherwise eligible to avail of could not be prohibited from claiming the same - the Petitioner which was entitled to exemption benefit under N/N. 20/2007 but sought benefit under Industrial Policy, 2003 and N/N. 56/2003 would be entitled for the benefit under the Industrial Policy, 2007 as put into operation vide impugned N/N. 20/2007. The facts and circumstances of the present writ petitions, therefore, squarely falls within the parameters of the doctrine of promissory estoppel and that it would be unconscionable on the part of the Respondent No.1 to shy away from it without fulfilling its promise. The relief that must, therefore be granted on the facts of the present case is that for the period declared vide N/N. 20/2007 the Petitioner would be entitled to the excise duty exemption as promised therein - Consequently impugned N/N. 20/2008 and 38/2008 are liable to be quashed to the extent they curtail and whittle down the 100% excise duty exemption benefit as promised vide Notification No.20/2007 and is hereby quashed. All impugned orders/ demand notices/show cause notices which are against the aforestated declarations of law are also quashed. Petition allowed.
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2017 (12) TMI 627
Refund claim - amount deposited under coercion - Held that: - the department cannot hold on any amount from the assessee, which the department has no authority in law to retain. If the petitioners had disputed the duty liability at the very outset and promptly taken up the issue with the authorities immediately, the question of the department's authority to withhold such amount would rest on entirely different considerations. The facts of the present case are, however, peculiar. The petitioners having deposited the amount voluntarily and irrespective of what the petitioners now contend, we see no force or coercion. The petitioners did not take up the issue of the duty not being payable for nearly one and a half years. In the meantime, by their conduct and offer, the petitioners stopped the department from carrying out further investigations. There is no reason to direct the department to refund the amount in question at this stage - petition allowed.
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2017 (12) TMI 622
Validity of Rule 96ZQ of the CER, 1944 - petitioner has claimed a declaration that Rule 96ZQ of the CER, 1944 is illegal and null and void and is liable to be struck down - Held that: - In the case of Shree Bhagwati Steel Rolling Mills [2015 (11) TMI 1172 - SUPREME COURT], the Apex Court has held that Rule 96ZQ is invalid - the order imposing penalty in exercise of powers under Rule 96ZQ of the said Rules cannot be sustained - penalty set aside - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 617
Waste and scrap - excisability - it appeared that appellant had removed a quantity of 22,790 MT of waste and scrap which had arisen during the course of manufacture of finished goods to one Kanishk Steel Industries without payment of excise duty - Department took the view that such waste and scrap that have arisen during the course of manufacture are excisable and dutiable - SSI Exemption - Held that: - The department has only found fault with the assessee for having removed the said waste and scrap without following the procedures of Notification No.214/86-CE. Though appellants did not take permission or intimate that they are sending the goods to a job worker under N/N. 214/86-CE, it is not in dispute that waste and scrap that were sent out to Kanishk Steel Industries were done so only on delivery notes and the converted products had also been received back under invoices accounted for and utilized in further manufacture of final products. There is thus no allegation that the waste and scrap have been diverted or clandestinely sold. In any case, the broad procedural requirements of N/N. 214/86-CE, though not opted for, have been largely followed. The waste and scrap could at best be considered as captively consumed goods, the value of which is definitely not required to be excluded under the SSI exemption notification - the value of reusable scrap which is again used in the manufacture of final products will then not form part of the aggregate value of clearances for the purposes of SSI Notification. Appeal allowed - decided in favor of appellant.
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2017 (12) TMI 610
Classification of goods - Traverse Assembly - Flat Drive Reversal System - whether classified under CTH 84.48 or otherwise? - Held that: - The lower appellate authority in para-3 of the impugned order has gone into detail into the performance and functioning of each of these impugned items. He has correctly observed that it is not the case that these items are sent along with a new carding machine, but that they are actually being sent separately with other items and are only being fitted to old carding frame and old carding cylinder for improving performance. Even if the card kit is classifiable under the Central Excise Tariff Heading No.84.48, these three items viz. Traverse assembly, Drive king assembly and Flat drive reversal systems which are some of the items of the unit viz card kit and having individual functions cannot be classified under 84.48 and hence they are rightly classifiable under the Heading No.84.83 (in as much as they have more gearing and shaft operation systems, with independent motors or otherwise) as held by the lower authority and attracts applicable rate of duty. Appeal dismissed - decided against appellant.
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2017 (12) TMI 608
Interpretation of statute - whether the phrase intended for storage of agricultural produce can be interpreted as intended for exclusive storage of agricultural produce only? - Held that: - The Hon’ble Apex Court in the case of State of Haryana Vs. Dalmia Dadri Cement Ltd. [1987 (11) TMI 94 - SUPREME COURT OF INDIA] had gone into the interpretation of the term for use and had concluded that the term only means intended for use and that if the legislative intent was to allow exemption on actual use, the words goods actually used or goods used would have been incorporated - However, analogously applying the ratio therein to the facts of the present appeal, the term intended to be used should not be interpreted as intended to be used only or intended to be used exclusively. The tenor and language of the relevant notification entry and condition certainly do not that carry any such rigidity. As long as the goods are used for the intended purpose, in this case, that of storage of agricultural produce, the notification benefit cannot be denied. Storage of a small quantity of non-farm produce, along with the agricultural produce, cannot result in cancellation of the notification. It is not in dispute that the impugned goods were not used for storing agricultural produce, or for that matter, that only non-agricultural produce was stored therein - the appellant has not fallen foul of the notification - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 607
CENVAT credit - removal of moulds to other manufacturers (other than the job workers) for production of goods without reversing the credit availed on such moulds - Rule 3 (5) of CCR, 2004 - Held that: - The Hon ble High Court in the case of CCE, Pondicherry Vs. Whirlpool of India Ltd. [2014 (9) TMI 717 - MADRAS HIGH COURT] had analysed the issue whether it is necessary for the purpose of sub-rule 8 of Rule 57 S of CER, 1944, that raw materials should be supplied by the assesse for the purpose of construing the person as a job worker. The issue has been answered in favour of the assesse. The facts in the present case as to whether the person to whom the appellant has sent the moulds is a job worker or not requires verification - appeal allowed by way of remand.
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2017 (12) TMI 606
Clandestine Removal - main allegation raised against the appellants is that they did not have reeling machines which were fully functional during the disputed period and that they were clearing only cone yarn in the guise of hank yarn to evade payment of central excise duty - Held that: - the department has not been able to establish clandestine clearances of the finished products on the part of the appellants - In Continental Cement Company Vs. UOI [2014 (9) TMI 243 - ALLAHABAD HIGH COURT], the Hon’ble High Court held that unless there is clinching evidence of the entry and purchase of raw material, use of extra electricity, sale of final products, the mode of flow back of funds, the demand cannot be confirmed solely on the basis of presumptions and assumptions - Clandestine removal is serious charge against the manufacturer, which is required to be discharged by the Revenue by adducing sufficient and tangible evidence. The Tribunal in the case of Rama Spinners Pvt. Ltd. [2016 (11) TMI 156 - CESTAT HYDERABAD], held that allegation based mainly on statements and some records recovered from the third party cannot be basis for the demand alleging clandestine removal. Demand set aside - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 604
Manufacture or service - whether the presented goods are considered as excisable goods liable to payment of excise duty or the whole process is to be considered as a service in which certain goods are supplied during the course of rendering service? - Held that: - Since the fabric is fixed to the aluminum tube in the factory as also the motor in certain cases, therefore, the blinds can be said to have come into existence in the factory premises. Such blinds are installed at the site of the customer. These blinds are in the nature of curtains and cannot be said to become immovable properties when they are mounted on the wall. The roller blinds can be unbolted and removed at any time which renders these blinds to be in the nature of movable rather that immovable property. These facts also have been admitted by Shri Zakkaria Vergere Salaria, MD of the company in his affidavit. Hence there is no justification in the claim of the appellant that the goods become immovable property Time limitation - Held that: - There is nothing to show that the appellant had ever informed the Department or had tried to take the view of the Department on their product. Further, it is well settled that ignorance of law in no excuse - the party has suppressed the fact of manufacturing of blinds from the Department and extended period of limitation under section 11A (1) is invokable in this case. Appeal dismissed - decided against appellant.
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2017 (12) TMI 603
CENVAT credit - fake invoices - Department found that the machines installed in the factory premises of M/s. Satvik Industries and the number of employees were insufficient to manufacture the PVC insulated wire and winding wire of copper that is their final product - Held that: - The expression “reversal of credit” is normally used when wrong credit is reversed by debit in the cenvat credit account without issue of any invoice. The expression is also used when any inputs on which credit is taken is cleared as such (without use in further manufacturing) by covering the inputs so cleared by invoice on which duty reversal is shown. These situations are inherently different from the situation where credit is taken fraudulently and then used for issuing invoices showing utilization of cenvat credit because the person issuing the invoices enables the person receiving the invoice to take credit of duty so shown as paid. The Cenvat credit rules provide for availing cenvat credit on inputs subject to the condition that an invoice is issued with all necessary details of the goods and duty paid in favour of the recipient. It is further a necessary condition that the goods should accompany the invoice - In the present case it stands admitted by all concerned persons that only invoices have been issued for transfer of credit and no goods have accompanied such invoices - Verifications have been undertaken with the RTO authorities with reference to the specific registration numbers of vehicles found in the invoices. This evidence conclusively establishes that the invoice indicating the duty amount has covered only paper transactions and cannot be a valid document for transfer of credit. Appeal dismissed - decided against appellant.
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2017 (12) TMI 602
Benefit of N/N. 214/86-CE dated 25.03.1988 - denial on the ground that no excise duty was paid on the final products manufactured out of job worked goods by the principal manufacturer - Held that: - The specified goods manufactured in a factory as a job work are exempt when they are used in relation to the manufacture of the final products on which duty of excise is leviable in whole or in part - Admittedly, the final products which are manufactured using the goods manufactured by the appellant in job work did not suffer any duty of excise. This is clearly a violation of the main condition of N/N. 214/86. As such there is no question of eligibility of the appellant for the said exemption. Extended period of limitation - penalty - Held that: - It is not open the appellant to disassociate activity in isolation as the exemption Notification No.214/86 is availed with the conditions put on both principal manufacturer and job worker. Failure of any one of the obligations will make the exemption unavailable - penalty upheld. Appeal allowed in part.
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2017 (12) TMI 601
Condonation of delay in filing appeal - the appellant never informed the department about change of address after closing of the factory - Held that: - a person cannot take advantage of his wrongs as per the maxim COMMODUM EX INJURIA SUA MEMO HABERE DEBET - the assessee-appellant has never informed the department about the change of address. Earlier also appellant was not serious about the show cause notice. There is no proper explanation in the present case, so as per Section 5 of the Limitation Act, 1963, the delay of about nine years cannot be condoned - the delay of nine years in the instant case is without proper explanation - application for condonation of delay dismissed - decided against appellant.
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2017 (12) TMI 597
Clandestine removal - Whether for some discrepancy found in the quantity of stock of raw material and finished goods, than the recorded balance in the register, whether duty and penalty are being rightly imposed along with confiscation of the goods found in excess, and further order for release of goods on payment of redemption fine is tenable in the facts and circumstances of the case? Held that: - no actual weighment of the stock of raw materials and finished goods was made. Thus, the whole exercise was done by way of eye estimation as is evident from. Under such circumstances and method of stock verification, there is bound to be discrepancies - So far as stock of finished HR strips is concerned, the difference is of 33 MT against the recorded balance of 126.440 MT. Thus, there is difference of little more than 20%. I hold that in the case of eye estimation, which is admittedly the case, such variation and/or excess quantity computed does not lead to any adverse inference against the assessee. Further, as per the facts on record, there is no attempt by the appellant-assessee to remove the goods clandestinely. Admittedly, the finished goods were lying inside the factory. Appeal allowed - decided in favor of appellant.
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2017 (12) TMI 594
Refund claim - unjust enrichment - Held that: - there is no dispute on the fact that refund was payable to the respondent on merit - even in the case of captive consumption the unjust enrichment will be applicable as held by the Hon’ble Supreme Court in the case of UOI Vs. Solar Pesticide Pvt. Ltd. [2000 (2) TMI 237 - SUPREME COURT OF INDIA] - appeal dismissed - decided against Revenue.
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2017 (12) TMI 592
Penalty u/s 11AC - CENVAT credit - trading activity - whether the appellant is required to comply with the provision of Rule 6(3) by making payment at the rate 5% of the value of trading activity being exempted service? - Held that: - there is ambiguity on the issue, there was no intent to evade duty - as per the fact of the case no malafide established on the part of the appellant therefore ingredients required for invocation of Section 11AC are absent - appeal dismissed - decided against Revenue.
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2017 (12) TMI 591
Clandestine removal - cash recovered from the office of the appellant was seized on the ground that this cash is proceed of sale of clandestine removal of goods - Held that: - in entire case it was not established that who is manufacturer of the goods and whether the goods were cleared clandestinely by carrying out investigation with the manufacturer. Therefore there is no link between the manufacturer, manufactured goods, receipt thereof and sale of same goods by appellant. The confiscation of cash was ordered under Section 121 of Customs Act, 1962 which is applicable in case of central excise. It has to be established that goods were cleared clandestinely. Since no investigation was carried out on the part of any manufacturer, even name of any manufacturer was not indicated, in the entire investigation, it cannot be concluded that cash lying with the broker is against the sale of the goods which was clandestinely removed, therefore for holding that cash is towards proceed of clandestine removal of goods Appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (12) TMI 635
Penalty - whether in the facts and circumstances of the case, the revisional authority was justified in levying penalty under section 34(7) of the GVAT Act? - Held that: - The revisional authority in the order passed under section 75 of the GVAT Act has imposed penalty under section 34(7) of the said Act. Sub-section (7) of section 34 of the GVAT Act provides for imposing penalty after affording the dealer an opportunity of being heard - Evidently, therefore, the statute contemplates issuance of notice indicating the default and the penalty proposed to be levied prior to passing any order under sub-section (7) of section 34 of the Act. In the facts of the present case, it is an admitted position that no notice in Form 309 as prescribed under sub-rule (1) of rule 46 of the rules has been issued to the respondent dealer. Consequently, it cannot be said that the respondent was afforded any opportunity of being heard as contemplated under sub-section (7) of section 34 of the GVAT Act. Levy of penalty was in breach of the provisions of sub-section (7) of section 34 of the GVAT Act - petition dismissed - decided against petitioner-Revenue.
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2017 (12) TMI 629
Maintainability of appeal- whether against the impugned order, an appeal is maintainable under Section 27 of the MVAT Act, 2002? - Held that: - In the present case, the order impugned has been passed on the application for stay made by the petitioner in the pending appeals. While deciding such application, no issue could be finally decided or concluded and only a prima facie consideration of the controversy involved in the appeal is required to be made with a view to ascertain whether the appellant has made out a prima facie case - Sub-section (1) of Section 27 of the said Act of 2002, on the face of it gives an impression that an appeal will lie to this Court from every order passed by the Tribunal on a substantial question of law. The Division Bench considered the view taken by the Apex Court and Delhi High Court in certain other cases and came to the conclusion that against a procedural order or an interlocutory order which does not affect the rights and liabilities of the parties, an appeal will not be maintainable under sub-section( 1) of Section 20 as the word “order” will not include an interlocutory or a procedural order which does not decide the rights between the parties. Petition disposed off.
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2017 (12) TMI 626
Rate of tax - cake gel - taxable at 4% or 12%? - Held that: - The general rule pertaining to classification of a product is to see as to whether the product will fall under any of the specific entry, which specifically prescribe a product and when the product does not fall under any of the specific entry, the Authority would be justified in classifying the product under the residual or general entry - Though the petitioner had approached the first respondent for clarification, the Authority should specifically state as to why the petitioner's product should be classified under Entry 49 in Part D of first schedule to the Act, when according to the petitioner, the product is a vegetable oil consisting of admixture of other substances and through a process that is being used for human consumption - petition allowed - decided in favor of petitioner.
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2017 (12) TMI 623
Whether after constituting a Bench of three members in terms of Sub-Section (6) of Section 11 of the Maharashtra Value Added Tax Act, 2002 the learned President of the Maharashtra Sales Tax Tribunal could have passed an order that reference to a Bench of three members was unwarranted and whether the learned President could have alone disposed of the Appeal on merits? Held that: - In the present case, the roznama shows that though after hearing the case fully, judgment was reserved by a Bench of three members, on 5th December, 2016, the Appeal was placed only before the learned President - In his order recorded in the roznama, the learned President has stated that both the parties have been informed that the Appeal cannot be referred to a Bench consisting of three members. After the Bench of three members had fully heard the Appeal, only the said Bench could have come to the conclusion that the reference made to the said Bench of three members was unwarranted. Even in the report submitted by the learned President, he has not stated that even the other two members constituting the Bench of three members passed a similar order. The roznama shows that on 5th December, 2016, the Appeal was placed only before the learned President and the Roznama order was signed only by the learned President. Thus, the order that the reference was unwarranted has been passed only by one of the three members forming a part of the Bench of three members. The order dated 5th December, 2016 will have to be held as completely illegal and consequently the judgment and order dated 7th December, 2016 delivered by the learned President will have to be set aside - Appeal is restored to the file of the Maharashtra Sales Tax Tribunal.
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2017 (12) TMI 621
Concessional rate of duty - Assessing Officer was of the view that there was no manufacturing activity involved in conversion of wet blue hides into finished leather and hence, the dealers were not eligible to purchase chemical against Form XVII at concessional rate - Held that: - Issue in the present case is covered by a decision of this Court in Golden Leathers v. Secretary, TNSTAT, [2010 (4) TMI 535 - MADRAS HIGH COURT], wherein, a Hon'ble Division Bench has categorically held that the process of transformation of blue leather into finished leather amounts to manufacturing activity. In the case on hand, wet blue (semi-finished) leather has been converted into finished leather. Golden Leathers' case squarely applies to the case on hand - the process of conversion of wet blue (semi-finished) leather into finished leather, amounts to an manufacturing activity. Tax revision dismissed.
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2017 (12) TMI 619
Benefit of Composition Tax - dealer selling Liquor - denial on the ground that as per Rule 135(4) of the KVAT Rules, 2005, a Dealer selling liquor is not entitled to have the benefit of composition of tax under Section 15 of the Act - Held that: - The petitioner-assessee is admittedly selling liquor in one of its Units or Divisions namely, 3-Star Hotel run by it. The petitioner also holds a common registration number with the Respondent-Department. Merely because the petitioner - assessee can bifurcate the turnover relating to different commodities and the Respondent-Assessing Authority can also verify the same, it does not entitle the petitioner-assessee to claim blanket benefit of composition under Section 15 of the Act. If the State does not intend to give the benefit of composition to the Dealer selling liquor, it can certainly do so and no valid challenge can be made to the same - The petitioner Dealer cannot compel the Respondent-Department to grant such composition benefit, while maintaining the common registration and also simultaneously carry on the business of the goods or commodities like liquor which is specifically prohibited under Rule 135(4) of the Rules for availing such benefit. Petition dismissed - decided against Petitioner.
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Indian Laws
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2017 (12) TMI 641
Offence under Section 8/21 of the NDPS Act - benefit of bail - 199 bottles of Wincerex Cough Syrup were recovered - Held that:- This Court is of the opinion that the law laid down by the Hon’ble Apex Court in Mohd. Sahabuddin & Anr. Vs. State of Assam (2012 (10) TMI 1163 - SUPREME COURT) is amply clear, whereby the recovery of cough syrup containing Codeine Phosphate in bail matter was found to be sufficient ground to reject the bail application. The said precedent law has been followed by the coordinate Bench of this Court in the aforequoted judgment, after considering at length, the judgments cited by the learned counsel for the petitioner. Merely because the recovery is of small quantity, as defined in the Schedule, the benefit of bail cannot be granted to the present petitioners. In light of the aforesaid discussion, this Court is of the opinion that since Codeine Phosphate has been defined as manufactured drugs under the NDPS Act and falls within the purview of the said Act and the investigation in the present case is still continuing, no case for grant of bail to the present petitioners is made out.
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2017 (12) TMI 637
Illegal export of narcotic drugs and psychotropic substances in commercial quantities - extraction of contents in two hard disks and the report of an expert in Ex.P148 informing calculation details for each substance - Held that:- The evidence of PW-1 to the effect that immediately on receipt of Ex.P1 he decided about the house search, in our view, depicts the true state of affairs i.e., as a person authorised, he acted within his own powers u/s.42 of the Act but failed to comply with the requirements of Section 42(2) of the Act in reducing the information received by him into writing as also in recording the grounds of his belief that a search warrant or authorisation could not have been obtained by him without affording opportunity for concealment of evidence or facility for the escape of an offender, both of which are to be forwarded to the immediate official superior within 72 hours as required under section 42(2) of the Act. The genuineness of Ex.P1 itself is rendered highly doubtful since the same finds no mention in Ex.P33 - Section 57 report. PW-2 has spoken to his not knowing who made the endorsement even while confirming that the Zonal Director had signed the same and the Zonal Director himself has not been called as a witness. Finding that the mandatory provision u/s.42(2) of the Act stands not complied with and finding much more that is wrong with the prosecution case as indicated above, this Criminal Appeal is allowed. The judgment of learned Additional Sessions Judge/Presiding Officer, Special Court for Essential Commodities Act Cases, Coimbatore is set aside. Appellants are acquitted of all charges. First appellant is directed to be released forthwith unless his detention is required in connection with any other case. Fine, if any, paid shall be refunded.
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2017 (12) TMI 632
Offence punishable under Section 18 of NDPS Act - factum of recovery of 4 kgs of opium from each of the two accused - Held that:- No force in the contention raised on behalf of the appellant regarding non-compliance of Section 50 of NDPS Act. PW-1 SI Avtar Singh and PW-2 HC Rajbir Singh stated consistently regarding the factum of recovery of 4kgs of opium from each of the two accused. PW-3 DSP Amarjit Singh Bajwa in whose presence the accused had been searched also stated identically about recovery proceedings. All the three witnesses were cross-examined at length on behalf of the accused but the witnesses remained firm on their statements. Nothing could be elicited during their cross-examination, which can be said to be helpful to the accused. As the aforesaid three PWs having stated consistently regarding recovery of 4 kgs of opium from each of the two accused, the factum of possession of contraband by the accused stands fully established. The report of the Chemical Examiner (Ex.PP) shows that upon chemical examination, the samples were found to be of 'opium'. The chemical examiner in his report (Ex.PP) has further recorded specifically that the seals on the samples were intact and tallied with the specimen seals. The report of the chemical examiner cannot be doubted on any count. The plea of the accused as per his 313 Cr.P.C. statement to the effect that he had been falsely implicated is not supported by any evidence. The factum of recovery of 4 kgs of opium from each of the two accused is fully proved. The said quantity would fall within the category of commercial quantity. No infirmity in the impugned judgment and the same is upheld. There is no room even for reduction in the sentence, keeping in view the quantity of contraband recovered.
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2017 (12) TMI 630
Offence under NDPS Act - compliance of the provisions of Section 50 of NDPS Act - case of recovery of 05kg and 150gm heroin/smack or even of little more than 1 kg heroin - guilty of charge under Section 21(ii)(C) of NDPS Act - Held that:- In view of above position of law, in the case at hand from record it is absolutely clear as recorded in the recovery memo itself and also narrated by PW-1 and PW-5 that accused were apprised only about their rights to be searched in presence of a Gazetted Officer and not in presence of a Magistrate. Hence, on facts it is found that the prosecution has failed to make full compliance of the provisions of Section 50 of NDPS Act in this case which will adversely affect the prosecution's case and would vitiate the conviction. It is evident from the above discussion that the prosecution has failed to make full compliance of Section 50 of NDPS Act. There is infirmity found in regard to the seal used in sealing the sample contraband which was sent to the F.S.L. The procedure which is prescribed for collecting the sample by the Narcotics Control Bureau, New Delhi has not even remotely been followed. The five packets which were allegedly recovered of heroin/smack each weighing little more than 01kg, were not weighed separately nor was it established as to from which particular packet the sample was taken, therefore, the recovery of the said quantity would be doubtful. The cumulative effects of all these infirmities found by this Court appears to have escaped attention of the lower court or it may be said that the lower court did not make proper appreciation of the evidence on record. Thus, the prosecution has failed to establish its case of recovery of 05kg and 150gm heroin/smack or even of little more than 1 kg heroin as held by court below from the accused-appellants beyond shadow of doubt. Both the appeals are allowed. The judgment and order under challenge of the court below is set aside and the accused-appellants are held not guilty of charge under Section 21(ii)(C) of NDPS Act. They be released in this case forthwith, if not detained in any other case.
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2017 (12) TMI 620
Offence under NDPS Act - accused was found in possession of 500 grams of illegal charas - Held that:- Though non-production of Malkhana Register cannot be the sole ground for passing the acquittal order, but the said fact coupled with other evidence on record, may impact adversely the prosecution's case, in case necessary steps are not taken by the prosecution in proving the case against the accused to the hilt. As mentioned here that it could be possible that the accused drove the said motorcycle without having any knowledge that the same contained any contraband/Charas in its dicky. Had the same been owned by him or there would be some link that some person had directed him to reach the said contraband to a particular place, he could very easily be imputed its knowledge, but the evidence to that offences has not come on record. It need not be stated that stricter the punishment, higher the burden of prosecution to prove the case against the accused beyond any shadow of doubt. In view of above infirmities found it is held that the learned court below has not been able to appreciate evidence on record in proper perspective in the light of the latest position of law and according to this Court's view, the prosecution has failed to prove its case beyond reasonable doubt that the accused was found in possession of 500 grams of illegal charas, of which he could not show the license. The appeal is liable to be allowed and is, accordingly, allowed. The judgment of learned court below is set-aside. Accused is held not guilty and is acquitted of the charges levelled against him. Let the accused be released forthwith in this case, if not wanted in any other case.
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2017 (12) TMI 618
Offence under sections 8/21 of the NDPS Act - Held that:- The prosecution has been able to prove on the basis of evidence on record of two eye-witnesses i.e. PW 1 and PW 3 that the accused was arrested on 10/4/2011 at 6.00 AM in front of Maduwadih station near SBI ATM just before Hanuman temple because of his suspicious conduct and when he disclosed that he had illegal heroin, the police party apprised him that he had a right to be searched before Magistrate/Gazetted Officer if he so wanted, in compliance with section 50 of NDPS Act, but he declined and gave a written consent to be searched by the police party itself. Thereafter illegal heroin weighing 350 grams was recovered from the bag carried by him, for which he was not having any license to possess. The recovered contraband (heroin) was sealed on the spot and a sample of seal was also prepared. Recovery memo was also prepared on the spot. Whereafter PW 2 registered F.I.R. against him under section 8/21 of NDPS Act at PS Maduwadih the same day i.e. on 10/4/2011 at 7:30 AM as Case Crime No. 93 of 2011, when the accused along with the recovered contraband in sealed condition was brought to the police station by the police party. PW 5 had taken 2 dockets of the recovered contraband and sample seal on 19/4/2011 to Circle Officer's office and on the copies of both these dockets the Circle Officer obtained his 3 signatures each and verified/attested them. Thereafter 2 copies of dockets of contraband and sample of seal were taken by him to Forensic Science Lab, Ram Nagar, Varanasi and the same were handed over to them. The Forensic Science Lab sent its report dated 4/5/2011, admissible under section 293 Cr. P.C. which states that a bundle wrapped in cloth bearing sample seal was received by them on 19/4/2011 which contained suspected heroin weighing 347.20 grams in a polythene bag (difference in weight may have been due to weighing machine), which after being tested was found to be heroin. The Investigating Officer (PW 4) has drawn the site plan at the instance of first informant who submitted charge-sheet against accused after taking the entire evidence on record into consideration. No material contradictions are found in the statements of witnesses. Therefore no substance is found in appeal.
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