TMI Tax Updates - e-Newsletter
December 16, 2019

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax

Articles

1. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

News

1. Changes in DFIA Transferability Scheme

2. Industrialization of Backward Areas of the Country

Notifications

Customs

1. 90/2019 - dated 13-12-2019 - Cus (NT)

Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seed, Areca nut, Gold & Silver

GST

2. 72/2019 - dated 13-12-2019 - CGST

Seeks to notify the class of registered person required to issue invoice having QR Code

3. 71/2019 - dated 13-12-2019 - CGST

Seeks to give effect to the provisions of rule 46 of the CGST Rules, 2017.

4. 70/2019 - dated 13-12-2019 - CGST

Seeks to notify the class of registered person required to issue e-invoice.

5. 69/2019 - dated 13-12-2019 - CGST

Seeks to notify the common portal for the purpose of e-invoice

6. 68/2019 - dated 13-12-2019 - CGST

Central Goods and Services Tax (Eighth Amendment) Rules, 2019

GST - States

7. Removal of Difficulty Order No. 09/2019- State Tax - dated 11-12-2019 - Bihar SGST

Bihar Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019

8. 104 /GST-2 - dated 13-12-2019 - Haryana SGST

Haryana Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019

Income Tax

9. 103/2019 - dated 13-12-2019 - IT

Declaration respect of the undisclosed income

Highlights / Catch Notes

GST

• Court Orders Price Reduction for Flats in "Bounty Acres" to Reflect Input Tax Credit Benefits Received by Developer.

  Case-Laws - NAPA : Profiteering - purchase of Flat in the Respondent’s project ‘Bounty Acres’ - Respondent shall reduce the prices to be realized from the buyers of the flats commensurate with the benefit of ITC received by him
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• Respondent Ordered to Refund Overcharges on Floridaa Flats, Must Pass ITC Benefits to Buyers.

  Case-Laws - NAPA : Profiteering - purchase of flats in the Respondent’s project “Floridaa” - Respondent has profiteered during the period of investigation. - the Respondent shall reduce/refund the price to be realized from the buyers of the flats commensurate with the benefit of ITC received by him.
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Income Tax

• Assessment Reopened u/s 68 for Full Sale Proceeds Based on Fraudulent Billing Evidence, Additions Confirmed.

  Case-Laws - AT : Addition u/s 68 - Re-opening of assessment - addition of full value of sale proceeds including long term capital gain as accommodation entry based on the statement of the Director of the Company which is engaged in fraudulent billing activities - Additions confirmed.
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• Section 68 Additions Confirmed for Unexplained Cash Credits Due to Minimal Income of Share Applicant Companies with Large Transactions.

  Case-Laws - AT : Additions u/s 68 - unexplained cash credit - From the details of share applicants companies it is clear that they have meagre income or nil income - As per the bank statement, huge transactions have been made and the amount i.e. more or less have been withdrawn on the same day - Additions confirmed.
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• Assessing Officer's Error in Accepting Unverified Statement Leads to Revision u/s 263 for Revenue Protection.

  Case-Laws - AT : Revision u/s 263 - The assessee has completely failed to discharge its onus and the AO clearly erred in accepting the bald statement made by the assessee without conducting any enquiry and certainly the action of the AO is clearly erroneous and prejudicial to the interest of Revenue.
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• Late Fee u/s 234E for Late TDS Filing Unsustainable Before June 1, 2015 for AY 2013-14.

  Case-Laws - AT : Levy of late fee u/s 234E - late filing of quarterly electronic TDS returns, as provided u/s 200(3) for AY 2013-14 - the levy of fees u/s 234E for any period prior to 01/06/2015 would not be sustainable in the eyes of law.
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Customs

• Confiscation and Penalty Set Aside for Lead Acid Battery Import u/s 149 of Customs Act 1962.

  Case-Laws - AT : Confiscation - penalty - import of lead acid rechargeable batteries - import in the name of others IEC number - If the foreign supplier or Kolkata Customs officials had informed the Appellant or IEC Holder regarding this, a correction could have been done under Section 149 of the Customs Act 1962 by amending the documents - Since there is no duty evasion, confiscation and penalty set aside.
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• Confiscation and penalty imposed for misdeclaring restricted export item: Sheep Nubuck Finished Leather. Goods lacked required snuffing process.

  Case-Laws - AT : Misdeclaration of export goods - Export of restricted item - Sheep Nubuck (Snuffed) Finished Leather - as per the test report, it is not Nubuck Leather at all as the process of snuffing essential for making nubuck leather has not been undertaken - confiscation and penalty upheld.
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Service Tax

• Exemption Denied for Public Phone Service Due to Undefined "Local Calls"; Service Tax Demand Upheld by Authorities.

  Case-Laws - AT : Benefit of exemption for public telephone operating only for "local calls" - calls made to mobile service operators - In the absence of any contrary definition of local calls anywhere, we have no choice but to hold that the appellant is not entitled to the benefit of exemption notification which was available for public telephones to be used for local calls - on merits the demand is sustainable.
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• Service Tax Demand on Pesticide Marketing Overturned; Classified as Agriculture Extension Services u/s 65B(4) of Finance Act 1994.

  Case-Laws - AT : Demand of service tax on the activity of marketing and promotion of pesticides/insecticide - Services merit classification of services rendered by the appellant are agriculture extension services which are covered under negative list as per section 65B (4) of the Finance Act, 1994. Therefore, the appellant are not liable to pay service tax.
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Central Excise

• Appellant Not Liable for CENVAT Credit on MS Drums u/r 6(1), No Manufacturing Involved Post-March 2015.

  Case-Laws - AT : CENVAT Credit - it is an admitted fact that MS drums have not been manufactured by the appellant and therefore Rule 6(1) is not applicable even after the insertion of Explanation w.e.f. 01/03/2015.
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• CENVAT Credit Covers Rent for Back-Office Premises and Accommodation for Visiting Officials in Bangalore.

  Case-Laws - AT : CENVAT Credit - input services - rent for the premises leased for the purpose of back office as well as for the purpose of residential accommodation for its Managing Director and other officials who visit Bangalore on official work - credit allowed.
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• Legal Ruling: Ready Mix Concrete and Concrete Mix Are Different; Exemption Benefits Only Apply to Concrete Mix.

  Case-Laws - AT : Ready Mix Concrete (RMC) and concrete mix (CM) - manufacturing at site - whether CM and RMC are one and the same thing? - HELD No - Concrete Mix and Ready Mix Concrete are two different products and the said Notification No.4/97-CE extends the exemption benefit only for ‘Concrete Mix’ and the said exemption would not be available for Ready Mix Concrete.
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VAT

• Assessment Orders Void for Lack of Detailed Analysis; Demand Notices Unsustainable Under Law.

  Case-Laws - HC : The assessment orders can safely be termed as absolutely non-speaking orders, sans giving the facts only about the functioning of the Company and quoting the provision of law - the impugned orders / demand notices cannot be sustained in the eyes of law.
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Case Laws:

• GST

• 2019 (12) TMI 586
  Profiteering - purchase of Flat in the Respondent s project Bounty Acres - benefit of reduction in the rate of tax not passed on - contravention of section 171 of CGST Act - penalty - HELD THAT:- The provisions of Section 171 of the CGST Act, 2017 have been contravened by the Respondent as he has profiteered an amount of Rs. 97,40,448/- inclusive of GST 18%, 12%, 8%) on the base profiteered amount of Rs. 87,06,553/-. Further, the Respondent has realized an additional amount of Rs. 33,972/- which includes both the profiteered amount @3.47% of the taxable amount (base price) and 18% GST on the said profiteered amount from the Applicant No. 1. Further, he has realized an additional amount of Rs. 97,06,476/- which includes both the profiteered amount @3.47% of the taxable amount (base price) and GST (@ 18%, 12% 8%) on the said profiteered amount from the flat buyers other than the Applicants in the present proceedings as per Annexure-23 of the Report. These buyers are identifiable as per the documents placed on record and therefore, the Respondent is directed to pass on this amount of Rs. 97,40,448/along with interest @18% per annum to these flat buyers from the dates from which the above amount was collected by him from these buyers till the payment is made, within a period of 3 months from the date of passing of this order. This Authority under Rule 133 (3) (a) of the CGST Rules, 2017 orders that the Respondent shall reduce the prices to be realized from the buyers of the flats commensurate with the benefit of ITC received by him - Since the present investigation is only up to 31.08.2018 any benefit of ITC which accrues subsequently shall also be passed on to the buyers by the Respondent. Penalty - HELD THAT:- The Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in his Bounty Acres project in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has thus resorted to profiteering. Hence, he has committed an offence under Section 171 (3A) of the CGST Act, 2017 and therefore, he is apparently liable for imposition of penalty under the provisions of the above Section - Accordingly, a SCN be issued to him directing him to explain why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him. Application disposed off.

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• 2019 (12) TMI 585
  Profiteering - purchase of flats in the Respondent s project Floridaa - benefit of input tax credit (ITC) not passed on by way of commensurate reduction in prices - contravention of section 171 of CGST Act - penalty - HELD THAT:- The Respondent has profiteered by an amount of Rs. 2,69,77,661/- during the period of investigation. Therefore, in view of the above facts, this Authority under Rule 133 (3) (a) of the CGST Rules, 2017, orders that the Respondent shall reduce/refund the price to be realized from the buyers of the flats commensurate with the benefit of ITC received by him as has been detailed above. As far as the final computation of the additional ITC that will be available to the Respondent is concerned, the same could not be determined at the time of investigation by the DGAP, as the construction of the project was yet to be completed. As the present investigation has been conducted only up to 31.12.2018, therefore, we order that any additional benefit of ITC, which may accrue to the Respondent subsequently, shall also be passed on by him to all the eligible buyers. In case this additional benefit is not passed on to the Applicants No. 1 to 71 or to other eligible buyers, they shall be at liberty to approach the Haryana State Level Screening Committee for initiating fresh proceedings under the provisions of Section 171 of the above Act against the Respondent. Penalty - HELD THAT:- The Respondent has denied benefit of ITC to the buyers of the flats being constructed by him in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and has committed an offence under Section 171 (3A) Of the above Act and therefore, he is liable for imposition of penalty under the provisions of the above Section - Accordingly, a Show Cause Notice be issued to him directing him to explain as to why the penalty prescribed under Section 171 (3A) Of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him. Application disposed off.

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• Income Tax

• 2019 (12) TMI 584
  TDS u/s 194J - Channel Placement fees - Whether was not in the nature of Royalty as defined u/s.9(1) (vi) and so the tax is not required to be deducted u/s.194J despite insertion of clarification by virtue of Explanation 6 in Section 9(1)(vi) w.e.f. 01.06.1976? - HELD THAT:- We find no reason to interfere with the judgment/ order impugned. Accordingly, the Special Leave Petition is dismissed. However, question of law kept open.

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• 2019 (12) TMI 583
  Eligibility of deduction u/s 80IB(10) - ITAT allowed the claim - as per revenue assessee has not completed the project due to failure attributable to assessee itself within stipulated time prescribed u/s. 80IB(10) - HC allowed the claim - HELD THAT:- SLP dismissed.

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• 2019 (12) TMI 582
  Benefit of exemptions u/s. 11 - Charitable activity u/s 2(15) - Tribunal has merely applied the decision of this court in the case of Ahmedabad Urban Development Authority v. Assistant Commissioner of Income Tax (Exemptions) [ 2017 (5) TMI 1468 - GUJARAT HIGH COURT ] to the facts of the present case - HELD THAT:- It is not the case of the appellant that the Tribunal has wrongly applied the decision to the facts of the present case. The sole ground put forth is that the Special Leave Petition filed by the revenue against the said decision is pending before the Supreme Court. In the aforesaid premises, it is not necessary to set out the facts and contentions in detail. For the reasons recorded in the decision of this court in the case of Ahmedabad Urban Development Authority v. Assistant Commissioner of Income Tax (Exemptions) (supra), this court does not find any infirmity in the impugned order passed by the Tribunal so as to give rise to any question of law, much less, a substantial question of law, warranting interference.

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• 2019 (12) TMI 581
  Deduction u/s 80IC - substantial expansion - exemption at the same rate of 100% beyond the period of five years on the ground that the assessee has now carried out substantial expansion in its manufacturing unit - HELD THAT:- This appeal is covered by judgment titled Pr. Commissioner of Income Tax versus M/s. Aarham Softronics [ 2019 (2) TMI 1285 - SUPREME COURT] An undertaking or an enterprise which had set up a new unit between 7th January, 2003 and 1st April, 2012 in State of Himachal Pradesh of the nature mentioned in clause (ii) of subsection (2) of Section 80IC, would be entitled to deduction at the rate of 100% of the profits and gains for five assessment years commencing with the initial assessment year . For the next five years, the admissible deduction would be 25% (or 30% where the assessee is a company) of the profits and gains. In case substantial expansion is carried out as defined in clause (ix) of subsection (8) of Section 80IC by such an undertaking or enterprise, within the aforesaid period of 10 years, the said previous year in which the substantial expansion is undertaken would become initial assessment year , and from that assessment year the assessee shall be entitled to 100% deductions of the profits and gains. (d) Such deduction, however, would be for a total period of 10 years, as provided in subsection (6). For example, if the expansion is carried out immediately, on the completion of first five years, the assessee would be entitled to 100% deduction again for the next five years. On the other hand, if substantial expansion is undertaken, say, in 8th year by an assessee such an assessee would be entitled to 100% deduction for the first five years, deduction @ 25% of the profits and gains for the next two years and @ 100% again from 8th year as this year becomes initial assessment year once again. However, this 100% deduction would be for remaining three years, i.e. 8th, 9th and 10th assessment years.

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• 2019 (12) TMI 580
  Reopening of assessment u/s 147 - HELD THAT:- As initiated for the same reasons, is factually correct, but the same does not render the proceedings to be illegal. Since the proceedings are for different assessment years, the argument so zealously advanced, is untenable. So far as the satisfaction of the concerned Ao and the Commissioner, Income Tax is concerned, a perusal of the pages Nos.65 to 69 available on record clearly suggests that both the authorities have applied their mind objectively and to the fullest extent required under the law. No other argument was advanced by the learned counsel for the petitioner. This Court does not find the impugned notice to be void or without jurisdiction in any manner. The writ petition, therefore, fails.

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• 2019 (12) TMI 579
  Exemption u/s 11 - Whether assessee is right in law and fact in holding that the assessee is a religious and charitable institution and carried on kuri business for utilizing the income therefrom also for the charitable purpose such as medical relief, education etc. ? - Tribunal is right in holding that the interest claimed cannot be taxed in the hands of the assessee trust as it is exempt from taxation? - HELD THAT:- In view of the remand made by the hon ble Supreme Court in Dharmodayam Co. case, the matter requires reconsideration by the Tribunal. Of course, we take note of the fact that in the case of Dharmodayam Co. [ 2000 (11) TMI 10 - SC ORDER] the Tribunal had ultimately found the issue in favour of the assessee therein. But question as to whether a similar situation prevails in the instant case which would satisfy the different conditions stipulated under sub-section (4A), is a matter which requires examination. Since some of the reference cases are of the year 2005, we do not think it appropriate to dismiss them on the basis of the litigation policy of the Government. Instead we leave it open to the respondent to take up such contention before the Tribunal, at the time when the matter is considered afresh. Instead of specifically answering question of law referred, we think it only appropriate to remit the income tax appeals for fresh consideration

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• 2019 (12) TMI 578
  Taxing the capital gain arising at the hands of the assessee for transfer of a long term capital asset - HELD THAT:- Tribunal found the facts of the present case akin to those arising in the decision of Chaturbhuj Dwarkadas Kapadia [ 2003 (2) TMI 62 - BOMBAY HIGH COURT] in facts of the case, the consequential directions for taxing the income in the assessment year 2003-04 outhg to have been granted. In absence of any such specific direction, there is a risk of the assessee arguing that the assessing officer cannot reopen the assessment, since there is no directions issued by the Tribunal for taxing the income for the said year. To put the entire issue beyond the possibility of doubt or debate, we issue such directions. We are informed that subsequent to the Tribunal passing the impugned judgment, the Assessing Officer has already passed a fresh order of the assessment for the assessment year 2003-04 taxing the capital gain in the said year.

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• 2019 (12) TMI 577
  Addition u/s 68 - Re-opening of assessment - addition of full value of sale proceeds including long term capital gain as accommodation entry based on the statement of the Director of the Company which is engaged in fraudulent billing activities and in the business of providing bogus speculation profit/loss, commodities, profit/loss on commodity trading (through MCX) - HELD THAT:- 0n the basis of detailed inquiries and the material available on record, the AO has made addition and CIT(A) has considered the issue threadbare and after applying various judicial pronouncements reached to the conclusion that assessee has taken accommodation bill which was in the form of credit entry of the books of accounts and credit worthiness of the creditors was not proved. The detailed finding so recorded by the lower authorities are as per material on record. However, nothing was produced before me so as to persuade me to deviate from the finding recorded by lower authorities. Accordingly, do not find any reason to interfere in the order of the lower authorities. Appeal of the assessee is dismissed.

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• 2019 (12) TMI 576
  Income of the assessee u/s 56(2)(vii) - difference between the amount paid to the land owners and the market price estimated by the Registration Department - whether the amount paid to the agreement holder for purchase of property has to be taken into consideration as cost of acquisition or not? - pre-existing right for purchase of the property by Durai and associates by virtue of agreement for sale executed with the land owners - HELD THAT:- The right to purchase the property can be specifically enforced through a court of law. Therefore, when there was pre-existing right to sell the property in favour of Durai and associates, the assessee cannot purchase the property unless the agreement to purchase the property in favour of Durai and associates is discharged. In other words, the agreement holder, namely, Durai and associates has to be paid for his pre-existing right to purchase the property. This Tribunal is of the considered opinion that the payment made to pre-existing agreement holder to purchase the property to the extent of Rs. 1,58,00,000/- has to be considered as cost of the property/ purchase price. If this amount of Rs. 1,58,00,000/- paid to the agreement holder, namely, Durai and associates was taken into consideration, admittedly, there was no benefit accrued to the assessee. In fact, the assessee has paid more than the market value fixed by the Registration Department. Therefore, there is no question of computing any income under Section 56(2)(vii). Tribunal is unable to uphold the orders of the lower authorities. Accordingly, orders of both the authorities below are set aside and the addition is deleted. - Decided in favour of assessee.

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• 2019 (12) TMI 575
  Revision u/s 263 - an order which is erroneous and prejudicial to the interest of Revenue - deduction in respect of interest and exchange fluctuation loss outstanding on Floating Rate Notes (FRN) - The assessee has added interest paid and foreign exchange loss on the date of Balance Sheet to Capital Assets in those cases where funds were applied for acquisition of capital assets/projects and in case if the funds are applied for working capital , then the said interest / foreign exchange losses were charged to Profit and Loss Account as Revenue Expenses. Held that:- The assessee has completely failed to discharge its onus and the AO clearly erred in accepting the bald statement made by the assessee without conducting any enquiry and certainly the action of the AO in accepting these capital work in progress accumulated over years as Revenue expenses in the year under consideration while computing income of the assessee chargeable to tax without making any enquiry which was certainly warranted based on facts and circumstances of this case before allowing entire capital work in progress existing upto ay: 2002-03 as Revenue expenses in this year viz. ay: 2003-04 is clearly erroneous and prejudicial to the interest of Revenue and learned CIT rightly interfered by invoking his revisionary powers u/s 263 of the 1961 Act. The AO simply accepted the contentions of the assessee that the assessee has made claim of deduction of lower interest but has not directed its enquiry as to whether any benefit or cessation or remission of liability has taken place which is required to be brought to tax u/s 41(1) or Section 28(iv) or any other relevant section of the 1961 Act. Thus, under these circumstances, the assessment order passed by AO is erroneous so far as is prejudicial to the interest of Revenue and the learned CIT rightly invoked its revisionary powers u/s 263 of the 1961 Act, which action of learned CIT we upheld/confirms. We order accordingy. Appeal of the assessee dismissed.

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• 2019 (12) TMI 574
  Levy of late fee u/s 234E - late filing of quarterly electronic TDS returns, as provided u/s 200(3) for AY 2013-14 - Held that:- As rightly observed by co-ordinate bench in para-17, the decision of Hon ble Bombay High Court in Rashmikant Kundalia v. Union of India [ 2015 (2) TMI 412 - BOMBAY HIGH COURT] deal only with examining the constitutional validity of provisions of section 234E of the Act and do not deal with effect of amendment in Section 200A w.e.f. 01.06.2015. Therefore, respectfully following the aforesaid view of co-ordinate bench of Pune Tribunal, we hold that view favorable to the assessee was to be adopted and therefore, the levy of fees u/s 234E for any period prior to 01/06/2015 would not be sustainable in the eyes of law.

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• 2019 (12) TMI 573
  Additions u/s 68 - unexplained cash credit - Share Capital and Share premium - identity creditworthiness of the Shareholders and genuineness of the transaction - Held that:- From the details of share applicants companies it is clear that they have meagre income or nil income. While going through the bank statements submitted by the assessee for a small period, which have been placed on record, we find that huge transactions have been made and the amount i.e. more or less have been withdrawn on the same day. The ld. AR of the assessee also unable to satisfy that the share applicant companies have genuineness business activities. The creditworthiness of the share applicants, in the present case in hand, have not been proved by the assessee, therefore, the AO has rightly made addition on account of unexplained cash credit.

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• 2019 (12) TMI 538
  TDS u/s 194A - payment of interest from the District Co-operative Bank Kottayam to the petitioner - Benefit of the exemption provided u/s 194A(3)(v) - case of the petitioner that the interest income accruing to it is from the deposits made by the petitioner with the Kottayam District Co-operative Bank and hence, as per the provisions of Section 194A(3)(v), the provisions of sub section (1) thereof, which contemplate a deduction of tax at source would not apply - HELD THAT:- Through a statement filed by the learned Standing Counsel appearing on behalf of the 1st respondent, it is conceded that the petitioner would get the benefit of the exemption provided under Section 194A(3)(v) of the Income Tax Act. Taking note of the statement, I allow the writ petition by declaring that there will be no requirement of deducting tax at source in the case of payment of interest from the District Co-operative Bank Kottayam to the petitioner.

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• Customs

• 2019 (12) TMI 572
  Surrender of un-utilised MEIS scrips - Classification of export goods - Salmonidae - whether classified under HS Code 03031900 or under ? - HELD THAT:- While it may be a fact that under the Customs Act the Customs authorities do look into the classification of a commodity for the purposes of recovery of the Customs duty evaded or avoided at the time of import/export of goods, it does not follow that the JDGFT is denuded of its jurisdiction with regard to the matters covered by the Foreign Trade (Development Regulation) Act and Rules. In the instant case the action taken by the JDGFT is traceable to the power conferred on him under the Foreign Trade (Development Regulation) Act, 1992 and hence, so long as the JDGFT has only found that there has been mis- classification, and consequent mis-declaration of goods, by the petitioners while claiming and receiving export benefits, he cannot be seen as acting without jurisdiction, or in excess of jurisdiction, while taking remedial action against the petitioner exporters. There is no jurisdictional error occasioned by the JDGFT while passing the orders impugned in these writ petitions - as per the Foreign Trade (Development Regulation) Act and Rules, there is an appeal provided against the impugned orders of the JDGFT, before the DGFT, which the petitioners can effectively pursue. Petition dismissed.

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• 2019 (12) TMI 571
  Misdeclaration of imported goods - readymade garments - Bills of Entry were assessed and during examination it was found that the appellants had imported goods in excess of what were declared in the Bills of Entry and other documents - benefit of N/N. 99/2011-CUS dated 09.11.2011 - HELD THAT:- It is not in dispute and is evident from the records as well as the impugned order that the appellant had mis-declared the quantity of goods and had imported goods in excess of what was declared in the Bills of Entry and the other documents. Country of origin certificate from Bangladesh (SAFTA certificate) which would entitle them to import goods under an exemption also covered such quantity of the goods as was declared in their Bills of Entry. What is in violation of the Customs Act is only the excess quantity of the goods which have been imported by them without declaring in any of the documents. These goods are also not covered by the SAFTA certificate. Confiscation of goods - HELD THAT:- A plain reading of section 111 (e) and (l) shows that these apply to such goods only which have been concealed and have not been declared and not the entire quantity of goods. In fact section 111(l) is very categorical that it applies to goods found in excess of what have been declared. Therefore, we find that excess goods are liable for confiscation and not the entire consignment imported by the appellant - the confiscation of the remaining goods is not supported by law and accordingly needs to be set aside. Benefit of Notification - HELD THAT:- The denial of the exemption Notification for the entire quantity of goods when the bulk of the goods are already covered by the SAFTA certificate is not supported by any legal provision. Therefore, the demands need to be set aside. Redemption fine - penalty - HELD THAT:- The amount of redemption fine imposed by the impugned order as well as the penalties imposed upon the appellants need to be proportionately reduced. Appeal allowed in part - part matter on remand to the original authority for the limited purpose of calculation of the amount of duty, fine and penalty.

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• 2019 (12) TMI 570
  Confiscation - penalty - import of lead acid rechargeable batteries - import in the name of others IEC number - restricted item or prohibited item - DRI alleged that Rule 6 of the Batteries (Management and Handling) Rules 2001 notified under Environment (Protection) Act 1986 was not met since the importer did not have registration with the Ministry of Environment and Forests or an agency designated by it - HELD THAT:- It is an admitted fact that there is no case of duty evasion or undervaluation of goods or that the CTH declared in the Bill of Entry is incorrect. It is also an admitted fact that the Bill of Entry was filed by M/s Sky Traders which had a valid and functioning IEC Code issued by the DGFT. The goods were admittedly cleared from Kolkata Port on 14.05.2016 and booked for delivery at the premises of M/s Sky Traders at 212, Usha Kiran Building, 2nd floor, Azadpur, Delhi- 110033, but were intercepted in New Delhi by DRI on 18.05.2016 - It is also an admitted fact that the DRI visited the premises of IEC Holder M/s Sky Traders but did not find the IEC Holder there, while the Appellant herein, Shri Anil Kapani visited DRI(HQ) and claimed ownership of the goods. If the foreign supplier or Kolkata Customs officials had informed the Appellant or IEC Holder regarding this, a correction could have been done under Section 149 of the Customs Act 1962 by amending the documents since nothing turns on such an error because no advantage would have fallen upon the Appellant or IEC Holder as this is a purely technical and clerical issue since Registration Certificate from Ministry of Environment and Forests is easy to obtain by submitting the documents as required under the Standard Operating Procedure for Grant, Renewal or Cancellation of registration to the Importers of New Lead Acid Batteries under Rule 5 of the Batteries (Management and Handling) Rules and also that description of goods in the Bill of Entry is based on Invoice and Packing List prepared by the supplier which admittedly was rechargeable batteries, therefore the Appellant or IEC Holder cannot be faulted. Confiscation of goods under Section 111(d) of the Customs Act 1962 cannot be sustained since lead acid rechargeable batteries are not prohibited, but restricted and can be imported with Registration Certificate of the Ministry of Environment and Forests which was admittedly obtained from Central Pollution Control Board, Delhi and which is to be seen from the time of import - Once confiscation of goods cannot be sustained, penalty under Section 112(a) and/or 112(b) cannot be imposed on the Appellant since penalty under Section 112 is contingent on confiscation of goods under Section 111 of the Customs Act 1962. The question of imposing penalty under Section 114AA of the Customs Act 1962 does not arise as far as the Appellant herein is concerned since Section 114AA can be invoked only in case of use of any false document, statement or declaration made intentionally for import transactions and not for using IEC of some other person. Appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 569
  Refund of Cess paid - cess was paid under protest - refund rejected on the ground of that assessment order not challenged and also on the ground of unjust enrichment - HELD THAT:- The Bills of Entry were assessed at zero rate of duty and the amount was debited in Bond. The issue involved is only of rubber cess. As per Appellant if there is no duty charged on Bill of Entry, in that case there was no question of challenging the assessment - further, no documentary evidence has been provided in relation to this aspect. Also the question of unjust enrichment has to be considered carefully since as per the Appellant the amount of such refund amount was also shown as receivables in Balance Sheet apart from certificate by the Chartered Accountant - Thus without expressing any views on merits of the case, it is deemed appropriate to send back both the appeals to the adjudicating authority for reconsidering the case afresh. Appeal allowed by way of remand.

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• 2019 (12) TMI 568
  Misdeclaration of export goods - Export of restricted item or not - Sheep Nubuck (Snuffed) Finished Leather - compliance with the Public Notice No.92-97 dt. 27.5.1992 issued by DGFT - HELD THAT:- As is evident from the second test report of CLRI dt. 27.12.2010, the sample was tested by CLRI to see if it matches the description in the shipping bill. In the first test report, it was tested on the specifications for Nubuck Leather of cows or buffaloes while the description of the goods by the appellant was Sheep Nubuck leather . The second sample was ordered to be tested which was tested and it was again confirmed that it is not Nubuck Leather at all as the process of snuffing essential for making nubuck leather has not been undertaken. There was misdeclaration of the goods in the shipping bill by the appellant. The confiscation of the goods for improper export is provided for on various grounds under Section 113 of the Customs Act. Clause (d) of Section 113 provides for confiscation of any goods attempted to be exported or brought within the limits of any customs area for the purpose of being exported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force. Confiscation of goods where the description does not match with the declaration is provided for under Section 113 (i) and (ii). In this case, as per the usual practice, the exports were not held up but were allowed after taking an undertaking from the appellant. After the testing, it was found that the nature of the goods exported did not match with the description given in the shipping bill. Therefore, they have been confiscated under Section 113 (i) and (ii) of the Customs Act, 1962. The argument of the Ld. counsel that their goods were not prohibited from export under Foreign Trade Policy and the Public Notice issued therein does not come to their rescue because there is no confiscation on this count at all - The only confiscation was on the ground that the appellant has described the goods wrongly. We find that the second test report confirms that the goods were not which were described in the shipping bill - confiscation of the goods under Section 113 and imposition of redemption fine of Rs. 10,000/- under Section 125 in lieu of confiscation (as the goods have already been exported after the appellant gave an undertaking) calls for no interference. The imposition of penalty of Rs. 5000/- under Section 114 is liable to be upheld Appeal dismissed - decided against appellant.

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• Corporate Laws

• 2019 (12) TMI 567
  Oppression and mismanagement - Jurisdiction to entertain a suit - Rejection of prayer for an ad-interim order of injunction - rejection on the ground of suppression of material facts and also on the ground that this issue would require adjudication on the identical core issue - registration of transfer of shares - bar under section 430 of the Companies Act, 2013 - HELD THAT:- From the facts pleaded in paragraphs 11 to 15 of the plaint and the recourse available under sections 58(1) and 59(2) of the Act, it is clear that the application for non-registration of the shares of the appellant had to be made before the Tribunal under section 59(1) of the Act as this was something that the NCLT was expressly empowered to determine - Once the tribunal receives the application under section 59(1) of the Act, it is empowered, under section 59(2) of the Act extracted herein above, to either dismiss the appeal or direct that the transfer or transmission shall be registered by the company within a period of ten days of the receipt of the order . If the appellant succeeds in this application, the natural corollary would be that it would then be deemed to be a member within the meaning of section 2(55) of the 2013 Act. In that eventuality, the other reliefs that it is seeking, under sections 241 and 242 of the 2013 Act, could then be granted. Therefore, there would be no bar on a combined application being filed, as is the prevailing norm. The equitable right of the transferee gets metamorphosed into the absolute right of a shareholder only when the names of the transferees after the recognition of the transfer, are entered on the register. This can be viewed from another angle and it is this: when once the transferee does everything that he is required to do under law, to get his name entered on the register by proper lodgement of the instruments of transfer and no other obstacles remain in enforcement of the said right, the transfer becomes effective as against the company also. Thereafter, the company cannot unilaterally alter its articles affecting the aforesaid right of the transferee. In the present case, the reliefs claimed are being sought directly against the company/respondent no. 1 - for the transferee to have maintained an action against the company for oppression and mismanagement, the reliefs would have had to be couched in terms through the transferor. However, even then, for the reasons indicated in the preceding paragraph, the proper forum to grant those reliefs would be the NCLT. This is another reason, in addition to the reason given in the paragraph above, for the suit to not be maintainable. No reliefs as prayed for by the appellant can be granted at this stage since the court is of the prima facie view that if does not have the jurisdiction to try, receive and entertain the suit - In view of my prima facie finding that this court does not have the jurisdiction to grant any of the reliefs prayed for in the plaint and having regard to the fact that all the reliefs claimed in the plaint could be claimed before the NCLT in the pending proceeding and in fact if the prayer made before the NLCT is allowed it could have the same effect or consequence or bearing, I am not inclined to pass any interim order at this stage. The matter in issue in the suit can be more appropriately and effectively decided and adjudicated by the NCLT. The appeal and the applications are dismissed - the interim order passed by the order dated 14th June 2019 and extended by the orders subsequently passed stand vacated.

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• Insolvency & Bankruptcy

• 2019 (12) TMI 566
  Maintainability of application - initiation of CIRP - Section 7 of the Insolvency and Bankruptcy Code 2016 - amount due and payable - Whether an amount of Rs. 1,29,50,000/- paid by the petitioner to the Respondent Company is a financial debt? - HELD THAT:- The Petitioner in his petition pleaded that the loan was advanced as an understanding between him and the Corporate Debtor and its Managing Director, who happened to be his nephew and that the loan was payable on demand. It is nowhere pleaded that such understanding included the payment of interest against the loan and the rate thereof. There is also no pleading that the payment was made against the issue of shares at a future date. The advancement of the said loan accordingly is not covered under any of the clauses of the definition. There is also no material on record to show that the amount was disbursed against the consideration for the time value of the money - Taking all these aspects into consideration it is accordingly clear, for the purpose of this case, that the amount would not come within the definition of a financial debt, though it is admitted that the petitioner had advanced this amount to meet the fund requirements of the Company - answered in the negative. Whether the Respondent had committed default in paying the said amount? - HELD THAT:- The Respondent Company had not paid back the amount to the petitioner. More so when the payment of Rs. 5 lakhs is not admitted against the loan amount but against an independent unsecured loan. In that view of the matter it is to be held that there has been a default by the Respondent in repayment of the debt, though not financial - issue answered in affirmative. Whether the amount is due and payable to the petitioner? - HELD THAT:- The Application under Section 7 of the IBC is not a suit. Suits relating to money needs to be filed within three years when the amount became due. In the instant case admittedly, there was no time limit agreed upon between the parties for repayment of the amount advanced. The amount payable on demand pleaded by the petitioner could not be extended for an uncertain period. In the absence of any contract between parties the amount needed to be repaid within three years from the date when they were respectively advanced. The amounts accordingly would have been due and payable on or before 14.12.2010, 10.02.2011 and 25.03.2011 respectively. There is no material on record that the Respondent made any admission of debt respectively within these periods or subsequent thereso - Application having been filed only on 13.11.2018 was grossly time barred. The debt accordingly was not due and payable - issue is answered in the negative. Petition not maintainable - petition thus cannot be admitted.

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• 2019 (12) TMI 565
  Maintainability of application - initiation of CIRP - Corporate Debtor defaulted in making repayment - date of default - HELD THAT:- The application made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees stipulated under section 4(1) of the IBC. Therefore, the default stands established and there is no reason to deny the admission of the Petition - In view of this, the Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor. Petition admitted - moratorium declared.

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• 2019 (12) TMI 564
  Oppression and Mismanagement - Admissibility of application - initiation of CIRP - pre-existing dispute or not - HELD THAT:- The Company Petition under Sections 241 and 242 of the Companies Act, 2013 filed by the 1st Respondent is pending before the National Company Law Tribunal . In the said case, application for interim relief filed by the 1st Respondent has been heard and the order has been reserved on 14th May, 2018. During the pendency of the aforesaid application for payment of salary, without waiting for decision of NCLT, the 1st Respondent issued Demand Notice u/s. 8(1) of the I B Code on 26th July, 2018, for the same amount as claimed and prayed for before the Tribunal in a Petition u/s. 241,242, which has already been disputed by the Corporate Debtor . Though the Adjudicating Authority ( National Company Law Tribunal ) Principal Bench has noticed that the petition u/ss. 241, 242 and 244 of the Companies Act, 2013, with prayer for payment of salary is pending before the National Company Law Tribunal and the Corporate Debtor in the said case disputed the entitlement of 1st Respondent to get salary of the said period, the Adjudicating Authority has admitted the application u/s. 9 - as there is a pre-existence of dispute with regard to salary payable to the 1st Respondent and matter is pending for decision before the National Company Law Tribunal , New Delhi prior to issuance of Demand Notice u/s. 8(1), the application u/s. 9 of the I B Code filed by the 1st Respondent was not maintainable. The application u/s 9 of the I B Code filed by the 1st Respondent is dismissed. In effect, the order(s) passed by ld. Adjudicating Authority appointing Interim Resolution Professional , declaring moratorium etc. pursuant to impugned order of admission and action taken by the Resolution Professional , including the advertisement published in the newspaper; calling for applications and all such actions are declared illegal and are set aside.

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• 2019 (12) TMI 563
  Maintainability of application - initiation of CIRP - suppression of facts or not by the Corporate debtors before NCLT - matter was pending before BIFR / AAIFR - Whether the application preferred by the Company in terms of Section 4(b) of the SIC Repeal Act, 2003 is barred under Section 11(d) of the I B Code? - prosecution against the Company under Section 77(a) of the I B Code. HELD THAT:- From the plain reading of the Form-6 filed by the Company ( Corporate Debtor ), it appears that in absence of any specific or separate Form for filing reference in terms of proviso to sub-section (b) of Section 4 of SIC Repeal Act, 2003 r/w Section 252 of the I B Code, application in Form-6 was filed by the Company. It cannot be treated as an application under Section 10 of the I B Code. The Adjudicating Authority while admitting the application by order dated 16th June, 2017 mentioned that this Company Petition was filed by Amar Remedies Ltd. (Company- Corporate Debtor ) under Section 10 of the Insolvency and Bankruptcy Code, 2016 r/w Rule 7 of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Though, wrong reference of Section 10 has been made therein, in the opening paragraph, the Adjudicating Authority noticed that the Corporate Insolvency Resolution Process was sought for and earlier the matter was pending before the BIFR in reference No. 55/2014, followed by Appeal No. 4/2016 filed before AAIFR. Therefore, it is clear that reference case was filed by the Appellant, while admitting the application mentioning of a wrong provision of law such as Section 10 by the Adjudicating Authority, cannot takeaway the right of the Company to file application for Corporate Insolvency Resolution Process under sub-section (b) of Section 4 of the SIC Repeal Act, 2003. In view of Section 252 of the I B Code read with Schedule Eighth annexed thereto; and substituted sub-section (b) of Section 4, particularly proviso thereto of SIC Repeal Act, 2003 is a part of the Code. In terms of the proviso to Section 4(b) of SIC Repeal Act, 2003, as the Appeal before the AAIFR stood abated, the Company had a right to file reference for initiation of Corporate Insolvency Resolution Process against it under the I B Code - Applications under Section 7; Section 9 and Section 10, are the only applications, which are filed for initiation of Corporate Insolvency Resolution Process under Chapter II of Part II, cannot be filed, if prohibited in terms of Section 11. The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 also do not mandate to provide such intimation to the Adjudicating Authority - Therefore, it cannot be alleged that the Company/ Corporate Debtor or the Appellant-Pratima P. Shah, Director suppressed the material fact of the pendency of the winding-up petition. Initiation of proceeding under Section 77(a) of I B Code - HELD THAT:- The Adjudicating Authority before referring the matter was required to record its prima facie opinion after giving opportunity of hearing to the Appellant. Such procedure is required to be followed before referring any matter to the Registrar of Companies/Insolvency and Bankruptcy Board of India or the Central Government for punishment under Chapter VII of the I B Code. The Corporate Insolvency Resolution Process was initiated more than a year back by a separate Bench of the Adjudicating Authority (National Company Law Tribunal) on 16th June, 2017. Subsequently, at the stage of approval of the Resolution Plan under Section 31(1), it was not open to the another Bench of the Adjudicating Authority to declare the initiation of Corporate Insolvency Resolution Process as illegal. The case remitted back to the Adjudicating Authority (National Company Law Tribunal) to pass appropriate order under Section 31 of the I B Code, taking into consideration the fact that the Resolution Plan has already been approved by the Committee of Creditors in their 7th meeting with a voting share of 83.02% - appeal allowed.

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• 2019 (12) TMI 562
  Initiation of Liquidation proceedings - Sections 33 and 34 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- This Tribunal in the circumstances of the case, taking into consideration the provisions of law as well as on facts, is constrained to order for liquidation of the Corporate Debtor and amidst such background the Corporate Debtor stands liquidated with the incidence of liquidation to follow, on and from the date of this order in terms of the provisions of the IBC, 2016, and more particularly as given in Chapter - III of IBC, 2016, and also in terms of Insolvency and Bankruptcy (Liquidation Process) Regulations, 2017.

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• 2019 (12) TMI 561
  Maintainability of application - initiation of CIRP - Section 9 of the Insolvency and Bankruptcy Code, 2016 - Appellant is negotiating for settlement with the Operational Creditor and no Committee of Creditors has been constituted - HELD THAT:- Taking into consideration the fact that the Committee of Creditors has not been constituted and the parties have already reached the settlement in the light of the decision of the Hon ble Supreme Court in Swiss Ribbons (P.) Ltd. v. Union of India [ 2019 (1) TMI 1508 - SUPREME COURT ] and being satisfied, we exercise inherent power under Rule 11 of the National Company Law Appellate Tribunal, 2016 and allow the Respondent- Operational Creditor to withdraw the application under Section 9. The impugned order dated 6th March, 2019 admitting the application under Section 9 stands set aside. The Terms of Settlement should be treated to be a decision and decree of this Appellate Tribunal - Moratorium rejected - application preferred by Respondent under Section 9 of the I B Code is dismissed. Learned Adjudicating Authority will now close the proceeding.

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• Service Tax

• 2019 (12) TMI 560
  Maintainability of appeal - appropriate forum - Franchise service - failure to obtain service tax registration for providing franchise service, which is a taxable service - failure to discharge due service tax liability inclusive of Education Cess and Secondary Higher Education Cess - HELD THAT:- A perusal of Section 35L (b) goes to show that an appeal against any order passed by the CESTAT relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment shall lie directly to the Hon ble Supreme Court. Such order, as is noticed earlier, is not made appellable to the High Court, as Section 35G specifically excludes such an order from being a subject matter of an appeal before the High Court. A perusal of the judgment of the High Court of Delhi in Ernst Young Pvt. Ltd. [ 2014 (2) TMI 1133 - DELHI HIGH COURT ] goes to show that a contention was advanced by the Revenue that the expression rate of duty or value of service should be construed in a narrow manner limiting it to the rate of duty payable on the service chargeable to tax or the valuation of the service which is chargeable to tax and that the same will not encompass the question as to whether the activity is a taxable service under the charging section - The High Court of Delhi held that determination of any question relating to rate of tax would necessarily directly and proximately involve the question, which is, whether the activity falls within the charging section and service tax is leviable on the said activity. It was further held that the said determination is integral and an important injunct to the question of rate of tax. In case service tax is not to be levied or imposed and cannot be imposed under the charging section, no tax would be payable - the words rate of tax in relation to rate of tax would include the question whether or not the activity is excisable to tax under a particular or specific provision. While respectfully following the decision of High Court of Delhi in Ernst Young Pvt. Ltd., we also note that Sub-Section (2) of Section 35L, which was inserted by the Finance (No.2) Act, 2014 with effect from 06.08.2014, makes it abundantly clear that the determination of any question having relation to the rate of duty shall include determination of taxability or excisability of goods for the purpose of assessment. These appeals before this Court are not maintainable under Section 35G of the Act of 1944 - Appeal dismissed as being not maintainable.

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• 2019 (12) TMI 559
  Levy of service tax - rental of the immovable property - HELD THAT:- There are no question of law arising in the present appeal - appeal disposed off.

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• 2019 (12) TMI 558
  Recovery treated as consideration for charging service tax - This part of the recovery is treated by Revenue as - the employer has been served with a show cause notice demanding service tax from that part of the amount which he recovers out of the salary paid to the employee if the employee breaches the contract of total term of employment - HELD THAT:- From the record, we note that the term of contract between the appellant and his employee are that employee shall be paid salary and the term of employment is a fixed term and if the employee leaves the job before the term is over then certain amount already paid as salary is recovered by the appellant from his employee. The said recovery is out of the salary already paid and we also note that salary is not covered by the provisions of service tax - Appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 557
  CENVAT Credit - input services - pure agent services - it was alleged that the appellants have availed ineligible cenvat credit in as much as the appellants have not paid service tax on the entire amount of incidental expenses recovered from VML - Board s Circular F. No. 137/85/2007- CX.4 and No.97/8/2007 dated 23.08.2007 - penalty - HELD THAT:- It is an admitted fact that on certain services procured by the appellant for M/s. VML, where also the invoices were in the appellant s name, but they have claimed full reimbursement from M/s.VML by further adding their service charges. Admittedly, the appellants have paid service tax (output tax) only on the service charges/mark-up made by them or levied by them. Thus, it is held that such services will not form part of input services under Rule 2 (l) of Cenvat Credit Rules for the appellant. However, on other input services, where the appellant have not recovered the amount of service charges plus service tax by way of reimbursement, they shall be entitled to cenvat credit. Penalty - HELD THAT:- The issue is wholly interpretational in nature and there is no element of contumacious conduct or suppression of facts. Admittedly, all the transactions are duly recorded in the books of accounts ordinarily maintained. Further, the appellants were registered with the Department and have been regularly complying including filing periodical returns - Accordingly, the penalty imposed under Rule 15 of Cenvat Credit Rules read with Section 78 of the Finance Act is set aside. Appeal allowed in part.

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• 2019 (12) TMI 556
  Telephone service - public telephone operating only for local calls - Meaning and scope of Local Calls - nature of calls made to mobile service operators - Benefit of exemption notification 03/94 (ST) dt.30.06.1994 (Sl.No.12 13) - Whether the appellant is entitled to the benefit of exemption notification 03/94 (ST) dt.30.06.1994 (Sl.No.12 13) which is available to only telephones used for local calls, in respect of those telephones which were used for long distance calls as well as calls to mobile phones? - HELD THAT:- There is an individual telephone exchange and a number of exchanges are grouped together as an exchange system. Calls can be made from within the exchange or to other exchanges within the exchange system or to lines connected to other exchange systems. It is not the case of the appellant that the entire Andhra Pradesh is a single exchange system. There were several exchange systems in the state and through the public telephones in question, a call can be made to any line in any of the exchange systems throughout the states. Clearly, in terms of the Indian Telephone Rules, 1951, this cannot be called a local call and a phone used for such calls cannot be called as telephone meant for local calls only. Further, mobile networks also do not form part of the exchange system in the aforesaid definition. Therefore, calls made to mobile networks also cannot be called as local calls. In the absence of any contrary definition of local calls anywhere, we have no choice but to hold that the appellant is not entitled to the benefit of exemption notification which was available for public telephones to be used for local calls - on merits the demand is sustainable. Extended period of limitation - HELD THAT:- From the SCN, the intention to evade payment of service tax is not very evident. No doubt the appellant has wrongly availed exemption notification 03/94 (ST) in respect of these services and as the department dealing with the telephones, the appellant should have known better than anybody else what local calls are. They should also have known that they have enlarged the scope of the public telephones to make calls to mobiles and to the entire state of Andhra Pradesh - the revenue has not established the case to invoke extended period of limitation - extended period cannot be invoked. Penalties - HELD THAT:- The appellant were extremely careless in not paying service tax on the disputed services but we are unable to accept that there is a positive effort to suppress the facts or an intention to evade payment of service tax - the penalty under Section 78 imposed upon the appellant is also not sustainable - however, Penalties under Section 76 77 are upheld and need to be recomputed as necessary. The demands are upheld on merits for the normal period of limitation along with interest - the penalties under Section 76 77 are upheld and may be recomputed as necessary - appeals are remanded to the original authority for the limited purpose of computation.

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• 2019 (12) TMI 555
  CENVAT Credit - Capital goods - motor vehicles - appellant had rendered only service of clearing and forwarding agent - bundled services - recovery u/r 14 of CENVAT Credit Rules 2004 read with proviso to Section 73(1) of Finance Act 1994 - HELD THAT:- Clearing and forwarding agency service was clearly not covered under Rule 2(a)(B). Rule 2(a)(B) of CENVAT Credit Rules 2004 did not permit CENVAT credit used for cargo handling, transportation etc. but specifically for rendering some services classifiable under some sub-clauses of Section 65(105). The services which are rendered often involve more than one type of activities. In such cases, the service should be classified as that service which gives its essential character. There is no provision in this Section or under any other provision to classify the same service under more than one head for different purposes such as one head for paying service tax and another to claim CENVAT credit. Undisputedly the appellant has only rendered clearing and forwarding services which does not entitle them to CENVAT credit on the motor vehicles in view of the specific exclusion in CENVAT Credit Rules 2004 - thus, the appellant has wrongly availed CENVAT Credit. Extended period of limitation - penalty - HELD THAT:- There are no reason for the appellant to have availed CENVAT credit when they were not rendering services which would entitle them to such credit. This is a clear violation of the provisions of the rules with an intent to evade irregularly availed CENVAT credit and to that extent evade payment of service tax - the invocation of extended period of limitation as well as imposition of penalty justified. Appeal dismissed - decided against appellant.

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• 2019 (12) TMI 554
  Classification of services - Erection, Commissioning or Installation Service or not - construction of off shore well and modification of existing off shore well platform in Krishna-Godavari basin, besides some other construction services - HELD THAT:- The final order portion of Ld. Commissioner is contrary to her own findings in para 25 of the order. Therefore, we find that the sentence The total amount of Rs. 25,78,46,297/- demanded above towards total service tax payable includes CENVAT Credit demanded amount of Rs. 1,20,09,077/- also in para v of the ORDER needs to be quashed as it is contrary to the findings of the adjudicating authority in para 25. Penalty - HELD THAT:- In terms of Section 78 of the Finance Act, 1994, the penalty imposable is equivalent to the amount of service tax not paid. Accordingly, in cases of wrong availment of CENVAT Credit, the amount of penalty imposable is also equivalent to the amount of CENVAT Credit wrongly availed. The adjudicating authority has no discretion of imposing a lesser penalty than what is mandatory, under Rule 15 of CCR, 2004 - the penalty under Rule 15 needs to be enhanced. Appeal disposed off.

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• 2019 (12) TMI 553
  Business Auxiliary Services - marketing and promotion of pesticides/insecticide - extended period of limitation - HELD THAT:- Issue decided in the case of M/S. FRONTIER AGROTECH PVT LTD VERSUS CCE, JAMMU [ 2018 (8) TMI 1171 - CESTAT CHANDIGARH ], where it was held that the services undertaken by the appellant are agriculture extension services which are exempted from payment of duty. Services merit classification of services rendered by the appellant are agriculture extension services which are covered under negative list as per section 65B (4) of the Finance Act, 1994. Therefore, the appellant are not liable to pay service tax. Appeal allowed - decided in favor of appellant.

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• Central Excise

• 2019 (12) TMI 552
  Validity of Rule 5 of CER - Whether an assessee who chooses once to pay duty in terms of Rule 96-ZP(3) can be compelled to pay duty calculated in accordance with the said Rule for all times to come without any regard to the actual production is a question which requires examination? HELD THAT:- The question posed before us did not arise at all on facts and the question which has been referred is not something which the assessee disputes. The matter is sent back to a Division Bench to decide the questions stated in para 20 of Bhuwalka Steel Industries Limited and Another [ 2017 (3) TMI 1357 - SUPREME COURT ].

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• 2019 (12) TMI 551
  CENVAT Credit - input services - transport of goods by road on outward carriage - Circular No. 1065/4/2018-CX dated 08/06/2018 - HELD THAT:- After the decision of the Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. [2018 (2) TMI 117 - SUPREME COURT], the CBEC has issued the Circular dated 08/06/2018 wherein the field formation have been given the liberty to examine each and every case on the basis of the law laid down in various cases. Also, after the Circular issued by the Board various Benches of the Tribunal have remanded the case back to the original authority to examine the eligibility of cenvat credit of service tax on transportation of goods up to the customer s premises after the period w.e.f. 01/04/2008. In view of the decision of the Madras High Court in the case of BATA INDIA LIMITED, HOSUR VERSUS THE COMMISSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, CHENNAI-III [2019 (3) TMI 519 - MADRAS HIGH COURT] and also in view of the Board Circular No. 1065/4/2018-CX dated 08/06/2018, the matter needs to be remanded to the original authority to verify certain factual aspects such as whether the sale is on FOR basis, whether the freight is integral part of the sale price, whether the duty paid on the value inclusive of freight amount etc. The matter is remanded back to the original authority to pass a fresh order after examining the various documents for the disputed period - appeal allowed by way of remand.

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• 2019 (12) TMI 550
  CENVAT Credit - allegation that the appellant has not paid service tax correctly and also did not reverse an amount of 6% of the value of exempted goods cleared - invoices issued beyond one year - HELD THAT:- The appellant has reversed the said credit before issuance of show-cause notice with penalty of 15%. Therefore there is no justification for imposing penalty and more over, the appellant had sufficient CENVAT credit in their account during the relevant period. Similarly the CENVAT credit on GTA was reversed by the appellant along with interest and also 15% penalty which is sufficient and therefore no penalty is required on this CENVAT credit which was reversed. Demand of reversal of 6% on containers used for packing inputs on which credit has been availed - HELD THAT:- Even if the amendment in Rule 6(1) w.e.f. 01/03/2015 wherein Explanation has been added to Rule 6(1), it is clear that Rule 6(1) would apply only when inputs or input services are used in relation to the manufacture of exempted goods - Further, it is an admitted fact that MS drums have not been manufactured by the appellant and therefore Rule 6(1) is not applicable even after the insertion of Explanation w.e.f. 01/03/2015. Appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 549
  CENVAT Credit - input services - transport of goods by road on outward carriage - Circular No. 1065/4/2018-CX dated 08/06/2018 - HELD THAT:- After the decision of the Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. [2018 (2) TMI 117 - SUPREME COURT], the CBEC has issued the Circular dated 08/06/2018 wherein the field formation have been given the liberty to examine each and every case on the basis of the law laid down in various cases. Also, after the Circular issued by the Board various Benches of the Tribunal have remanded the case back to the original authority to examine the eligibility of cenvat credit of service tax on transportation of goods up to the customer s premises after the period w.e.f. 01/04/2008. In view of the decision of the Madras High Court in the case of BATA INDIA LIMITED, HOSUR VERSUS THE COMMISSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, CHENNAI-III [2019 (3) TMI 519 - MADRAS HIGH COURT] and also in view of the Board Circular No. 1065/4/2018-CX dated 08/06/2018, the matter needs to be remanded to the original authority to verify certain factual aspects such as whether the sale is on FOR basis, whether the freight is integral part of the sale price, whether the duty paid on the value inclusive of freight amount etc. The matter is remanded back to the original authority to pass a fresh order after examining the various documents for the disputed period - appeal allowed by way of remand.

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• 2019 (12) TMI 548
  CENVAT Credit - duty paying invoices - forged documents - credit has been denied to the Appellants on the ground that the Appellant purchased Scrap of S.S /M.S whereas the invoices were issued for SS Circle, MS Rounds Bars, MS Flats and Pipes falling under chapter 72 which are not their inputs - penalty - HELD THAT:- The Appellants have shown purchase of goods in their statutory records and account books and the transactions stands recorded therein. Further no dispute has been raised about the transportation of said goods to the Appellant Units. The Appellant has also shown production of goods from the purchased goods and it stands recorded in books of accounts as well as statutory records. No evidence of falsification of statutory or accounts is on record - Also there is no dispute about the consumption of impugned material and clearance of finished goods manufactured. Even if it is assumed that the dealer s records does not show the purchase of impugned goods, but the fact remains that the Appellant s record are showing receipt of goods. Only on the basis of statements, the cenvat cannot be denied when the records are not held to be untrue or falsified. There are no investigations to the effect that the Appellant purchased goods from elsewhere to the extent of quantity of goods allegedly not received by them. Also there is no evidence to show that the consideration paid for the Appellant s purchase and through banking channels towards alleged fictitious purchase and cash was received back by the Appellants - the revenue could not establish the fraudulent availment of cenvat credit beyond doubt - Appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 547
  CENVAT Credit - input services - rent for the premises leased for the purpose of back office as well as for the purpose of residential accommodation for its Managing Director and other officials who visit Bangalore on official work - HELD THAT:- Perusal of the rental agreement shows that the premises can be used for residential/guesthouse and back office purposes and the appellant have used the same for the official purpose only. The issue is squarely covered by the decision of the Tribunal in the case of R. K. Marbles [ 2016 (10) TMI 1289 - CESTAT NEW DELHI ] where the Tribunal has allowed the CENVAT credit on renting of immovable property service. Thus, the inclusive clause in the definition of input service covers the impugned input service - credit allowed - appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 546
  Clandestine removal - TMT Tor and Bars - corroborative evidences or not - Department has to establish that the appellant had the manufacturing capacity to produce the goods alleged to have been clandestinely cleared. No evidence has been brought on the record that the appellant had manufacturing capacity beyond the goods cleared with payment of duty. No charges of extra electricity consumption or alternate source of electricity has been alleged. HELD THAT:- It is evident from the Panchanama that the Kingston make pen-drive was recovered from the possession of the Director of the company, Shri Pramod Kumar Gupta. Whereas the appendix to the recovery memo clearly indicates that the documents were retrieved and made relied upon were from HP Pen Drive - the contention of the Learned Advocate is agreed upon that the alleged documents were not retrieved from the pen drive recovered from the possession of the Director of the company, Shri Pramod Kumar Gupta. In such circumstances, the charges of clandestine removal are based on the documents which do not belong to the appellant company. There were 5 computers installed in the office when the Panchanama was drawn and it was found that no incriminating documents or data was present in the said 5 computers. This clearly proves that the department does not have any source data of the said pen-drive and in absence of any certification to support the alleged data of the pen-drive, the said electronic data cannot be relied upon to prove the charges of clandestine removal. Hence, demand based on the said alleged pen-drive is not maintainable in the eyes of law and thus liable to be set aside. No evidence as regards to purchase of excess raw material, use of excess electricity, deployment of extra labor force to prove the illicit manufacturing and clearance activity has been brought into the record. No evidence as regards to purchaser of the raw material, transportation of finished goods, receipt of cash payment etc has been brought into the record. The Department is solely relying upon the statement of the Director of the company and only some of their employees. The statement of the Director is not conclusive and mere observatory in nature wherein he has stated that it might be possible that some of the entries will not match the corresponding invoices. Such a statement cannot be said to be of conclusive proof of clandestine removal in absence of corroborative evidence - Similarly, the statement of employees cannot be relied upon when the request of cross-examination has been denied on vague ground. Even otherwise Revenue chose not to examine any witnesses in adjudication, and in such a case their statements cannot be considered as evidence. The demand of duty, penalty and interest against the appellant and its Director is set aside - appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 545
  Demand of differential duty - export of consignment of cobalt bearing tools - demand on the ground that the duty payable on the said export goods was Rs. 8,21,837/- whereas the appellant has paid a duty of Rs. 19,584/- on the said goods as they had cleared as scrap - extended period of limitation - HELD THAT:- In the case of COMMISSIONER OF C. EX., SURAT-I VERSUS NEMINATH FABRICS PVT. LTD. [ 2010 (4) TMI 631 - GUJARAT HIGH COURT] , the suppression was admitted by the assessee and the said suppression came in the knowledge of the department at the time investigation, in that circumstances, the Hon ble High Court held that mere knowledge cannot absolve the assessee not to invoke extended period of limitation. Admittedly the facts of clearance of the said subject goods on lower duty was in the knowledge of the department itself in the year 2000, therefore, the extended period of limitation cannot be invoked in the facts and circumstances of the case - Appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 544
  Benefit of N/N. 14/2002-CE dated 01 Mar 2002 - appellant is a composite mill engaged in spinning of cotton yarn from cotton fibres, weaving of grey fabrics and processing of said grey fabrics with the aid of power - legal fiction created in law - HELD THAT:- The issue is no longer res-integra as settled by the judgment of Hon ble Supreme Court in the case of M/S. SPORTS LEISURE APPAREL LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NOIDA [ 2016 (8) TMI 128 - SUPREME COURT] where it was held that explanation II to the said exemption Notification Nos. 14/2002 and 15/2002 create legal fiction and that was the precise purpose for which this explanation was added. It is trite law that a fiction created by a provision of law is to be given its due play and it must be taken to its logical conclusion. Benefit cannot be denied - appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 543
  Benefit of N/N. 4/97-CE dated 01.03.1997 - Ready Mix Concrete (RMC) and concrete mix (CM) - manufacturing at site - whether CM and RMC are one and the same thing? - HELD THAT:- The appellant could not establish that the goods manufactured by the appellant were anything other than Ready Mix Concrete . The revenue has established that the goods manufactured were Ready Mix Concrete . The ruling of Hon ble Supreme Court in the case of M/S LARSEN TOUBRO LTD. ANOTHER, ECC CONSTRUCTION GROUP VERSUS COMMISSIONER OF CENTRAL EXCISE, HYDERABAD [ 2015 (10) TMI 612 - SUPREME COURT] is squarely applicable in the present case - The Hon ble Supreme Court in the said case has settled the issue in respect of Ready Mix Concrete and have held that Concrete Mix and Ready Mix Concrete are two different products and the said Notification No.4/97-CE extends the exemption benefit only for Concrete Mix and the said exemption would not be available for Ready Mix Concrete. Appeal dismissed - decided against appellant.

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• 2019 (12) TMI 542
  Clandestine manufacture - absence of any evidence about the alleged manufacture of goods - corroborative evidences or not - detailed examination carried out or not - HELD THAT:- For demand of such Central Excise duty, revenue has not produced any evidence about the excess production of Final product nor produced any evidence in respect of procurement of excess raw material - There is no evidence on record about the dispatch of excess quantity of goods through the transporters. Further, customers were also not identified and the consumption of power was also not taken into consideration. The retrieval of data by Government Examiner of questioned documents only establishes that such data was maintained by M/s KIL - such maintenance of data by representative of M/s KIL does not establish actual payment by the appellant. No evidence of actual payment has been brought on record by revenue. The manufacture of such quantity of goods on which Central Excise duty of around Rs. 5.5 crores was demanded is not established - Since Central Excise duty is on manufacture and manufacture is not established, therefore, there is no basis for demand of Central Excise duty to the tune of Rs. 5,58,89,762/- - Since the demand is not sustainable the penalty is on the appellants are not sustainable. Appeal allowed - decided in favor of appellant.

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• 2019 (12) TMI 541
  Appropriation of refund - Revenue is aggrieved by the sanction of Rs. 20,12,525/-, which is sought to be reversed - also aggrieved by the sanction of Rs. 30,00,000/- though partially appropriated - HELD THAT:- No appeal had been filed by Revenue before the first appellate authority against the sanction of Rs. 30,00,000/-. Accordingly, that sanction cannot be agitated before the Tribunal in an appeal arising from a decision of the first appellate authority on challenge by the assessee. It is seen that the sanction of Rs. 20,12,525/- is a consequence of the finding by the first appellate authority that such deposit had been effected in relation to the show cause notice dated 5th March 2009. Those proceeding culminated in the order of the first appellate authority dated 6th September 2010 setting aside the demand. As the order of the first appellate authority which led to sanction of refund in the impugned order is non-existent and the show cause notice requires fresh disposal, the interim deposit should stand restored - appeal by way of remand for deciding eligibility only in relation to the claim for Rs. 20,12,525/-.

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• CST, VAT & Sales Tax

• 2019 (12) TMI 540
  Levy of sales tax - Stock/ Branch Transfer of goods - inter-state sales or not - CST Act - HELD THAT:- Admittedly, before the Assessing Authority himself adequate proof of movement of goods from Tamil Nadu to Kerala had been produced by the Assessee. In support of the branch transfer/ stock transfer made by the Assessee, the prescribed Form F were also furnished by the Assessee. No pre-concluded contract with the buyer was found in the record of the Assessing Authority. The mere presumption of the Assessing Authority without any documentary evidence that the goods have moved from Tamil Nadu to Kerala and Bangalore pursuant to some pre-existing contract is unfounded. Merely because the agent happened to sell the goods received from the Principal in Tamil Nadu on the same date of receipt of goods or on the very next day or any day immediately thereafter, it is not a ground to treat the stock transfer/ branch transfer as an inter-state sale. Therefore, merely on the assumption or presumption of any such kind of pre-existing contract, the Assessing Authority could not have imposed the tax under the provision of Central Sales Tax Act. Since necessary documents and evidence were already furnished before the Assessing Authority himself, furnishing of the same again before the Appellate Authorities was not at all called for. And therefore, on this premise, the Appellate Authority should not have confirmed the finding of the Assessing Authority that the Assessee is liable to pay tax under the Central Sales Tax Act. Petition allowed.

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• 2019 (12) TMI 539
  Deduction of tax at source - production, supply and sale of electricity, and for the purpose of production of the electricity - deduction of 2% on account of VAT - Section 45(1) of the Jharkhand Value Added Tax Act, 2005 - HELD THAT:- A plain reading of section 45(1), shows that the deduction of the TDS from the bills raised by the CCL for supply of coal, was mandatory on the part of the petitioner Company, which the Company had not carried out, though the fact remains that the State has not been put to any loss thereby, and this is a case of revenue neutral, so far as the tax liability is concerned, as admittedly, the State has already realised its due tax from CCL. However, the fact remains that the wordings of sub-Section (5) of Section 45 of the J.V.A.T. Act shows that the penalty was required to be realised from the petitioner Company. The Proviso also makes it clear that before imposing the penalty the petitioner Company was required to be heard in the matter, meaning thereby, that the Company could make out a case, that it was not liable to pay any penalty what so ever, which the authority concerned was required to record in the assessment order, with his reasons to differ, in case the authority disagreed. A plain reading of the impugned assessment orders clearly show that the mandate of Proviso to Section 45(5) of the J.V.A.T. Act, has not been followed by the Assessing Authority. There is no discussion at all about the defence of the Company and without stating anything about the reasons that might have been shown before the Assessing Authority by the counsel for the Company, the assessment orders / demand notices have been passed. The assessment orders can safely be termed as absolutely non-speaking orders, sans giving the facts only about the functioning of the Company and quoting the provision of law - the impugned orders / demand notices cannot be sustained in the eyes of law. Matter remanded back to the Assessing Authority to pass the reasoned order afresh, after giving proper hearing to the petitioner Company, positively within a period of six months from the date of communication of a copy of this order - appeal allowed by way of remand.

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