TMI Tax Updates - e-Newsletter
December 26, 2015

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws FEMA Service Tax Central Excise CST, VAT & Sales Tax Wealth tax Indian Laws

Articles

1. PROCEDURES AND COMPLIANCES UNDER PROPOSED GST LAW IN INDIA

   By: Nexdigm IDT

2. POWER OF CESTAT IN GRANTING STAY BEYOND 365 DAYS

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Minimum Export Price (MEP) Onion Export

Notifications

DGFT

1. 29/2015-20 - dated 24-12-2015 - FTP

Export Policy of Onions- Removal of Minimum Export Price (MEP) on Onions.

Income Tax

2. 94/2015 - dated 21-12-2015 - IT

Agreement for Avoidance of double taxation and prevention of fiscal evasion with foreign countries - Macedonia

Circulars / Instructions / Orders

VAT - Delhi

1. Public Notice - dated 3-11-2015

Advisory for Casual Dealers

Highlights / Catch Notes

Income Tax

• Tax Authorities Misinterpret Agreement, Tax Assessee's Flat Sale as Long-Term Capital Gain Under Adventure in Trade Rule.

  Case-Laws - HC : Sale of flats - The AO, the CIT (A) and the ITAT have proceeded on an erroneous legal premise that the agreement entered into by the Assessee with the builder and the consequent sale of the flats by the builder on behalf of the Assessee was an adventure in the nature of the trade - taxable as long term capital gain - HC
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• Honorarium from German publisher classified as capital, not taxable income, per case law and tax regulations.

  Case-Laws - HC : Compensation received from the German publisher - Honorarium receipt - receipt represents compensation for the loss of a source of income - capital in nature - not taxable - HC
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• Tax Recovery Halted During Pending Appeal Before Commissioner; Collected Amounts Held Until Appeal Outcome.

  Case-Laws - HC : Recovery proceedings - Pending appeal before the Commissioner(Appeals) therefore, there shall be stay against further recovery of the tax demand arising out of such order of assessment. However, amount already recovered by the department would not be returned at this stage, and would be adjusted eventually upon the Commissioner (Appeals) deciding the appeal of the petitioner - HC
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• Assessing Officer's tax attempt leads to double taxation on surrender amount and application, despite proper record-keeping.

  Case-Laws - AT : Double taxation - It is surprising that AO wants to tax the surrender amount as well as its application which definitely amounts to double addition in the hands of the assessee specially when the amounts are recorded in the books of accounts and there is no evidence that same is not available with the assessee - AT
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• Excess stock additions overturned due to lack of inventory copy and violation of natural justice principles. No additions upheld.

  Case-Laws - AT : Addition on account of excess stock found during the course of survey - Assessing Officer has not countered the allegations of the assessee that copy of the inventory was not provided to him - dditions have been made without following the due process of law and principles of natural justice - No additions - AT
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• No Capital Gain Tax on Partnership Firm for Payments to Retiring Partners as No Asset Transfer Occurs.

  Case-Laws - AT : There is no transfer of capital asset by way of distribution of capital asset at the time of making the payments to the retiring partners and therefore, no capital gain is chargeable to tax in hands of the assessee partnership firm - AT
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• Reassessment u/ss 147/148 deemed illegal for search cases; should have followed Section 153C.

  Case-Laws - AT : The Assessing Officer, instead of complying with the provisions of section 153C, proceeded with the reassessment under section 147/148 which is not applicable to search cases. Therefore, the impugned assessment order passed u/s 143(3), r.w.s. 147 of the Income tax Act, 1961 is illegal, arbitrary and without any jurisdiction - AT
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• IPL Franchise Fee for Deccan Chargers Classified as Revenue Due to Non-Permanent Rights Under BCCI Agreement.

  Case-Laws - AT : Nature of payments made by assessee franchise to BCCI towards right to operate IPL franchises of 'Deccan Chargers' (DC) for a period of ten years - the franchise fee paid is revenue in nature because by making such annual payment the appellant does not acquire any rights of permanent nature - AT
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• Assessee Fails to Provide Donation Details; Anonymous Donations Taxable u/s 115BBC(1), CIT(A) to Re-evaluate Case.

  Case-Laws - AT : Anonymous donations to be taxed under section 115BBC(1) - We find that Assessing Officer had called for the details of donations received by the assessee, which the assessee failed to give - CIT(A) directed to re-adjudicate the issue - AT
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• AO Unjustified in Disallowing Unpaid Sales Tax Recorded as Contingent Liability; No Impact on Profit & Loss Account.

  Case-Laws - AT : Disallowance of unpaid sales Tax due in the previous years - shown as a contingent liability. - there is no impact in the Profit & Loss account since the assessee had not claimed any deduction on that score. - AO could not have made any disallowance on this issue - AT
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Customs

• Port Authorities Auction Goods Without Notice; Petitioner's Duty Payment and Diligence Questioned Under Customs Regulations.

  Case-Laws - HC : Auction of goods by the port authorities due to non clearance - the question of non-issuance of notice before the public auction does not arise. Even after paying the customs duty, the petitioner should have been more vigil and strenuous in clearing the goods - HC
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• Extraneal Peritoneal Dialysis Solution Classified Under Chapter 9018 for Customs, Not CTH 3004.

  Case-Laws - AT : Classification under CTH 3004 or under CTH 9018 - Import of Extraneal Peritoneal Dialysis Solution with 7.5% Icodestrin - CPAD is rightly classifiable under Chapter heading 9018. - AT
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Service Tax

• Service Tax Exemption Questioned for Rent-a-Cab Services in SEZs; Preliminary Ruling Unfavorable to Assessee.

  Case-Laws - AT : Rent a cab Service - pick-up and dropping of the employees in the SEZ - Whether, this will result in service provided to SEZ hence not eligible to service tax - prima facie case is against the assessee - AT
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• Contract Focuses on Payment to Contractor; Division of Receipts Doesn't Exempt Tax Obligations, Preliminary View Unfavorable to Assessee.

  Case-Laws - AT : Manpower supply service - The contract is only concerned with the agreed amount to be paid to the contractor. Bifurcation of the receipt does not ipso facto take away the appellants from the scope of taxation. - prima facie view is against the assessee - AT
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• Challenge to Denial of CENVAT Credit on Services Linked to Manufacturing Costs Under Review.

  Case-Laws - AT : Denial of CENVAT credit on photography / validation service, transit insurance service and insurance service - Nexus with manufacturing activity - any amount which has been accounted as an expenses and considered in costing of final products, credit should be allowed - AT
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• Tribunal's initial view on CENVAT Credit denial for input services lacks precedent value; impacts goods clearance disputes.

  Case-Laws - AT : Denial of CENVAT Credit - input service - Clearance of goods from factory gate - prima facie view taken by the tribunal in the stay matter cannot have precedent value - AT
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Central Excise

• High Court to Decide on Rebate Denial for CVD Paid by DTA Suppliers to SEZ Units u/r 18 Dispute.

  Case-Laws - HC : Supply of goods to SEZ units by DTA suppliers - deemed export - procedure not followed - Rebate to of CVD paid claimed under Rule 18 of the Central Excise Rules, 2002 on the strength of disclaimer certificate by the suppliers in favour of the Petitioner - refund / rebate denied - HC
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• Tax Statute Interpretation Must Strictly Follow Language: No Room for Intendment, Words' Clear Meaning Governs.

  Case-Laws - HC : It is by now well settled that in a taxing statute there is no scope of any intendment and the same has to be construed in terms of the language employed in the statute and that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the rules and the notification. - HC
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• Tribunal's Order Lacks Justification in Rejecting Revenue's Appeal on Fabric Manufacture Discrepancies in RG-1 Register, Para 7 Criticized.

  Case-Laws - HC : Discrepancy in RG-1 Register - clandestine manufacture and clearance of fabrics - The charges of clandestine activities are required to be adjudicated by appreciating the factual matrix and by giving sufficient and cogent reasons. A perusal of the order of the Tribunal more particularly para 7 thereof shows that no legally justified reasons have been recorded for rejecting the appeal of the revenue. - HC
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• CENVAT Credit Allowed for Input Services on Rented Property, Validating Nexus with Manufacturing Process.

  Case-Laws - AT : Denial of CENVAT Credit - input services - renting of immovable property service is having direct nexus in the manufacture of goods - credit allowed - AT
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• General Manager Not Automatically Liable for Clandestine Goods Removal Without Evidence of Knowledge u/r 209A.

  Case-Laws - AT : Imposition of penalty - Clandestine removal of goods - Merely because he was the General Manager for a limited period, cannot make him liable to penalty under Rule 209A unless there is evidence to show that such clandestine activity was being carried out with his knowledge and consent and under his instructions. - AT
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• Court Upholds Penalty and Extended Period Without Questioning Appellants' Bona Fide Intentions.

  Case-Laws - AT : Once the bona fide of the appellants are not being doubted for the purpose of imposition of penalty, the same cannot be doubted for the purpose of invocation of longer period. - AT
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• Court Rules: Export Rebate Claims Valid Despite Application Defects, No Specific Format Required u/r 18.

  Case-Laws - HC : Rebate claims - export of goods - defect in the original application - Bar of limitation - neither Rule 18 nor notification of GOI prescribe any procedure for claiming rebate and provide for any specific format for making such rebate applications. The Department, therefore, should have treated the original applications /declarations of the petitioner as rebate claims - HC
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VAT

• Court Rules Sale Price of Used Vehicles Exempt from Tax u/s 6(3) of DVAT Act, 2004.

  Case-Laws - HC : Whether the sale price received by the Appellant on sale of used motor vehicles could not be included in the turnover as it was exempt from tax under Section 6(3) of the DVAT Act, 2004 - Held Yes, section 6(3) of DVAT Act would be applicable and the benefit cannot be denied. - HC
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• High Court Rules Service Tax Excluded from Gross Turnover for Sales Tax/TDS in Jammu and Kashmir.

  Case-Laws - HC : Valuation - Sales tax / Service Tax in J&K - inclusion of service tax in the gross turnover for the purpose of levy of Sales Tax / TDS - Relief granted to the petitioners - HC
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Case Laws:

• Income Tax

• 2015 (12) TMI 1292
  Sale of flats - assessable as an adventure in the nature of trade OR long term capital gain - Held that:- The Court finds that merely because the Assessee approached the builder for constructing the flats on the portion apart from the already constructed portion, would not make the transaction an 'adventure in the nature of trade.' All that the Assessee had received from the sale of the flats was a residential flat of the value of Rs. 5,32,855 and Rs. 4 lakhs in cash as a result of the agreement entered into with the builder. As explained by this Court in Shanti Banerjee (deceased) by LRs (2015 (11) TMI 1213 - DELHI HIGH COURT ) where the construction and sale of the flats do not change the character of the asset and there was no material to show that the Assessee ever had the intention to exploit the plot as a commercial venture, the transaction cannot be characterized as ‘an adventure in the nature of trade’ leading to the resultant receipt as business income in her hand. The fact that the Assessee got a flat on the rear second floor apart from the original constructed portion on the ground floor made no difference to the nature of the transaction. The AO, the CIT (A) and the ITAT have proceeded on an erroneous legal premise that the agreement entered into by the Assessee with the builder and the consequent sale of the flats by the builder on behalf of the Assessee was an adventure in the nature of the trade. - Decided in favour of the Assessee and against the Revenue

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• 2015 (12) TMI 1291
  Addition u/s 68 - Held that:- As far as the present case is concerned, the Assessee has indeed discharged its onus of proving the creditworthiness and genuineness of the lender (TIL). There was no requirement in law for the Assessee to prove the genuineness and credit worthiness of the sub-creditor, which is in this case was TCL. - Decided in favour of the Assessee

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• 2015 (12) TMI 1290
  Compensation received from the German publisher - Honorarium receipt - Character of the receipt in the hands of the Assessee - whether a capital receipt not chargeable to tax under Income Tax Act? - Held that:- Certain facts of the present case are not disputed by the Revenue. First, that the Assessee was a journalist by profession and was appointed as the foreign correspondent in India of a German news magazine Der Spiegel. The second is that the German publisher was paying a lumpsum amount upon termination as sign off compensation for performance of authorship/professional services for a continuous period of 23 years". Thirdly, the letter written by the publisher acknowledges that the compensation was being paid "Due to the loss of his work place and in consideration of his long time association". These factors have a bearing on the character of the receipt in the hands of the Assessee. Indeed this was compensation for loss of an income-generating asset. The Court concurs with the conclusion of the CIT (A) that the sum paid to the Assessee was "to compensate for the abrupt loss of source of income" and that the termination of contract had fatally injured the appellant's only source of income for the last 20 years." The mere fact that the Assessee was free to earn through other sources would not make a difference to this position. Recently this court in Khanna and Annadhanam v. Commissioner of Income Tax [2013 (1) TMI 681 - DELHI HIGH COURT] was considering the nature of a receipt in the hands of the Assessee, a firm of Chartered Accountants for the termination of an arrangement by which it was receiving referral work from abroad. After discussing the decisions of the Supreme Court in Kettlewell Bullen and Co. Ltd. (supra) and Oberoi Hotel Pvt. Ltd. v. CIT [1999 (3) TMI 2 - SUPREME Court ] wherein held as that if the receipt represents compensation for the loss of a source of income, it would be capital and it matters little that the assessee continues to be in receipt of income from its other similar operations. - Decided in favour of the Assessee

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• 2015 (12) TMI 1289
  Recovery proceedings - assessee prayed for refund of the amount already recovered by the department by attaching the petitioner's bank account - deduction under section 80IB(10) disallowed - Held that:- For whatever reason if the Assessing Officer was of the opinion that such deduction was not allowable, such findings could have been recorded. However, in the present case, we prima facie find that after rejecting the assessee's revised valuation of the closing stock, the Assessing Officer simultaneously proceeded to reject the claim for deduction under section 80IB(10) of the Act interalia on the ground that only to avoid minimum alternative tax liability for the later years, such claim is being advanced. In isolation, perhaps this assessment of the Assessing Officer of the situation may have been justified but when the Assessing Officer rejected the very valuation of the closing stock, we wonder whether it was even open for her to process the assessee's claim for deduction under section 80IB(10) of the Act. Prima facie, these aspects are incongruent. We make it however, clear that these are purely prima facie observations and certainly not meant to disturb or dislodge the order of assessment or in any manner influence the appellate proceedings. Nevertheless, we cannot escape the conclusion that the petitioner has made out a strong prima facie case against the order of assessment in which as noted, the sole addition is on the basis of rejection of petitioner's claim for deduction under section 80IB(10) of the Act. Pending appeal before the Commissioner(Appeals) therefore, there shall be stay against further recovery of the tax demand arising out of such order of assessment. However, amount of Rs. 20.05 lacs (rounded off) already recovered by the department would not be returned at this stage, and would be adjusted eventually upon the Commissioner (Appeals) deciding the appeal of the petitioner.

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• 2015 (12) TMI 1288
  Disallowance u/s 14A - Held that:- It is agreed between the parties that the issue raised herein stand concluded against the Revenue by the decision of this Court in the case "Godrej & Boyce Mfg.Co.Ltd. VS. DCIT, (2010 (8) TMI 77 - BOMBAY HIGH COURT ) - Decided against revenue Claim of rebate under Section 88E - ITAT deleted the addition - Held that:- Revenue does not dispute the fact that for the Assessment year 2006-07 the claim under Section 88E made by the respondent-assessee was on the similar basis as adopted in the subject Assessment Year and the claim was accepted by the Revenue. In view of the decision of the Tribunal in KBII Securities Pvt. Ltd. (2012 (7) TMI 930 - ITAT MUMBAI) which has been merely followed by the impugned order as well as the Revenue accepting an identical basis adopted in the earlier Assessment Year, coupled with the fact that even before us the Revenue is unable to point out to why and how the method of allocation of expenses made by the respondent-assessee is incorrect and/or bad.- Decided against revenue

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• 2015 (12) TMI 1287
  Unexplained investments u/s. 69 - ITAT deleted the addition - Held that:- Upon appreciation of the evidence on record and finds no reason to take a different view. In the opinion of this court, having regard to the evidence which has come on record, which reveals that there is an agreement to sell executed between the assessee and the sellers, which shows the price of the plots of land in question to be a much higher figure than the documented price and the fact that the sellers have stated that they have received higher amounts by way of on-money and have also shown receipt of such amount in their incometax returns, the circumstances do raise a suspicion. However, as held by the Supreme Court in Commissioner of Incometax v. Daulatram Rawatmull, (1964 (3) TMI 14 - SUPREME Court ), even if circumstances raise a suspicion, suspicion cannot take the place of evidence. In the light of the above discussion, it is evident that the conclusion arrived at by the Tribunal is based upon findings of fact recorded by it upon appreciation of the evidence on record. The learned counsel for the appellant, despite strenuous efforts, is not in a position to point out any perversity in the findings recorded by the Tribunal. Under the circumstances, in the absence of any material to the contrary being brought to the notice of the court so as to dislodge the findings of fact recorded by the Tribunal, the impugned order of the Tribunal being based upon concurrent findings of fact recorded after appreciating the evidence on record, does not give rise to any question of law - Decided in favour of assessee.

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• 2015 (12) TMI 1286
  TDS u/s 195 - Disallowance u/s 40(a)(ia) - payment of commission to a agent outside India - CIT(A) deleted the addition - Held that:- In the present case, the asseessee produced all the evidences relating to the transactions it had with the party who procured the above said goods for food for Oil programme and all the payments were routed through valid channels by way of Banks where it is shown that the expenditure by way of commission incurred in relation to business, having relevant material on record and accepting the same as genuine transactions, but, however, basing on a report which is not part of the assessment, disallowing the claim is unjustified. With reference to the Circular No:786 dt:07-02-2000 issued by the CBDT it is very clear that no tax is deductible u/s 195 of Act on export commission and related charges payable to a non-resident for services rendered outside India is an allowable expenditure. Therefore, in the light of observations of above, we deem it proper to hold that the payment of commission to a agent outside India is a business expenditure is allowable and we confirm the order passed by the Ld. CIT(A).- Decided in favour of assessee.

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• 2015 (12) TMI 1285
  Reopening of assessment - higher rate of depreciation claimed - Held that:- We are of the view that the AO reopened the assessment after having accepted the contention of the assessee that higher rate of depreciation is allowable. Again reopening the assessment on same set of facts is not justified. The assessee also filed the statement claiming depreciation along with the return and basing on which the depreciation was allowed in the original assessment. It could not be said that the AO did not apply his mind and there was nondisclosure of facts by the assessee. The AO completed the assessment proceedings in the year 2008 and again a notice under section 148 was issued in the year 2011, wherein he did not find anything new material against the assessee to reopen the assessment but he only basing on the facts of the original assessment, he issued the said notice for reassessment and passed the reassessment changing only the rates of depreciation available to the said claims. Therefore, we are of the view that in this present case the AO on mere change of opinion only issued the said notice much less for any tangible material found during these three years. By respectfully following the ratio or principle laid down by the Hon’ble Supreme Court in the case of CIT vs. Kelvinator of India India, 320 ITR 561 [2010 (1) TMI 11 - SUPREME COURT OF INDIA ] we are of the view that no tangible materials are found by the AO to reopen the assessment for A.Y. 2006-07, which was originally concluded in the year 2008 and we find no justification in reopening the assessment. Accordingly, the revised additional ground raised by the assessee is allowed. - Decided against revenue.

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• 2015 (12) TMI 1284
  Post Search assessment - double additions - Benefit of the surrender made by the assessee - Held that:- In this case assessee has prepared a cash flow statement from the books of accounts of the assessee and shown that sources of the amount of Rs. 25,00,000/- taken to Bhuveneshwar on 5.8.2008 and Rs. 45,00,000/- cash seized on 22.8.208 are out of the amount available with the assessee on account of surrender made. As per the detailed breakup of the entries passed by the assessee on account of surrender shows that an amount of Rs. 45,00,000/- Seized by Income tax department and Rs. 25,00,000/- being cash sent to Bhuvenshwar shown as 'cash to BBS' as per page no 6 of the paper book.. As per page 2 of the paper book, Cash flow statement shows that as on 6.8.2008 assessee was having the cash balance of Rs. 1,50,85,236/- and out of which on 31.7.2008 an amount of Rs. 6,14,597/- was spent on Infoage, on 5.8.2008 Rs. 25,00,000/- utilized for sending for cash to Bhuvneshwar and on 22.8.2008 cash was seized by Income tax department of Rs. 45,00,000/-. As per that statement assessee still has the balance of Rs. 74,70,639/- as at 22.8.2008 which is taken in to the books of accounts. This cash flow statement is not controverted by the AO as well as CIT(A) when it was specifically submitted that same is made based on the entries made in the cash book immediately after the surrender of Rs. 2,47,85,236/-. It is surprising that AO wants to tax the surrender amount as well as its application which definitely amounts to double addition in the hands of the assessee specially when the amounts are recorded in the books of accounts and there is no evidence that same is not available with the assessee Merely on the basis of time period in absence of any contrary material assets/ cash available with the assessee in its books cannot be disbelieved. We reject the contention of the revenue that because of elapse of such a long time, credit of surrender made by assessee cannot be granted for the amount used by assessee out of that disclosure/surrender. Therefore we reveres the order of CIT (A) and delete the addition - Decided in favour of assessee.

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• 2015 (12) TMI 1283
  Disallowance of deduction u/s 36(1)(viii) - Held that:- Admittedly, in the case in hand, the assessee has transferred the amount of Rs. 200 crores in the special reserve created during the subsequent year, out of the general reserve created during the year under consideration, whereas the claim of deduction has been made in respect of the amount of Rs. 161 crores only. We, therefore, direct the AO to allow the claim for the deduction to the assessee in the light of the decision of the co-ordinate bench of the Delhi Tribunal in the case of "M/s. Power Finance Corporation Ltd. vs. JCIT" (2008 (7) TMI 982 - ITAT DELHI). - Decided in favour of assessee Disallowance of provision towards liability arising on account of wage revision payable to employees - Held that:- The issue is squarely covered by the decision of the co-ordinate bench of the Tribunal in the case of "Tata Communications Ltd. vs. DCIT" [2013 (2) TMI 506 - ITAT MUMBAI ] wherein the Tribunal has taken a view that in case of salary/wage revision, what is important is not the date of signing the agreement nor the date of approval granted by the DRE, what is important is the effective date of commencement. The Tribunal, while relying upon the decision of the Hon'ble Supreme Court in the case of "Bharat Earth vs. CIT [2000 (8) TMI 4 - SUPREME COURT], held that in such a case the incurring of liability was certain and the same could also be estimated with reasonable certainty, although, the actual quantification may not be possible. In the case in hand also as per the agreement and the policy, the wage revision was certain and it could have been reasonably estimated also. Hence, the provision made by the assessee towards wage revision was allowable - Decided in favour of assessee Inclusion of income of foreign branches into the total income of the assessee - Held that:- The assessee will be entitled to credit of such taxes which have been paid by the branches in other contracting states. Since the issue is squarely covered by the decision of the co-ordinate bench of the Tribunal in the own case of the assessee, hence, respectfully following the same, the appeal of the Revenue is treated as allowed in the same lines.

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• 2015 (12) TMI 1282
  Addition on account of excess stock found during the course of survey - CIT(A) deleted the addition - Held that:- As agreeing with the view of the Learned CIT(Appeals) that once the surrender during survey was retracted immediately, then it was incumbent upon the Assessing Officer to provide to the assessee the inventory showing the alleged difference in stock and if no such inventory is provided to the assessee then it is not only a violation or principles of natural justice but also casts doubt on the veracity of stock taking itself. There cannot be an automatic addition either on t he basis of statement recorded during survey or on the basis of stock inventory whose copy was never provided to the assessee. In the remand report, the Assessing Officer has not countered the allegations of the assessee that copy of the inventory was not provided to him. Thus concur with the finding of the Learned CIT(Appeals) that additions have been made without following the due process of law and principles of natural justice. The Assessing Officer either in the assessment order or in the remand report, has not revealed the procedure adopted for physically verifying the stock. Keeping these material aspects of the case, Learned CIT(Appeals) has rightly deleted the addition - Decided in favour of assessee

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• 2015 (12) TMI 1281
  Treatment to payment made to retiring partners as transfer of capital assets by way of distribution & brining the same to tax as short-term-capital gains in the hands of assessee firm - Held that:- We hold that there is no transfer of capital asset by way of distribution of capital asset at the time of making the payments to the retiring partners and therefore, no capital gain is chargeable to tax in hands of the assessee firm. Accordingly, order of the CIT(A) is set aside and addition made stands deleted. See COMMISSIONER OF INCOME-TAX AND ANOTHER Versus GURUNATH TALKIES [2009 (7) TMI 738 - KARNATAKA HIGH COURT ] - Decided in favour of assessee.

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• 2015 (12) TMI 1280
  Reopening of assessment - Held that:- Assessing Officer, has no jurisdiction to issue notice u/s 148 of the Act to reopen the assessments in respect of those six assessment years immediately preceding the assessment year in which search is conducted or requisition is made. The period under consideration falls within the exclusive domain of section 153A. In the instant case, since the assessment is made consequent to search in another case, the Assessing Officer is bound to issue notice u/s 153C and thereafter proceed to assess or reassess total income under section 153A of the Act. The Assessing Officer, instead of complying with the provisions of section 153C, proceeded with the reassessment under section 147/148 which is not applicable to search cases. Therefore, the impugned assessment order passed u/s 143(3), r.w.s. 147 of the Income tax Act, 1961 is illegal, arbitrary and without any jurisdiction. Hence, the assessment order dated 31-12-2010 passed u/s 143(3) r.w.s. 147 is quashed. Since, we have allowed the assessee ground on legality of reopening of assessment u/s 147 and quashed the assessment order, therefore, we do not consider it appropriate to discuss the other grounds raised by the assessee on merits of the case. - Decided in favour of assessee.

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• 2015 (12) TMI 1279
  Nature of payments made by assessee franchise to BCCI towards right to operate IPL franchises of 'Deccan Chargers' (DC) for a period of ten years - Held that:- The character of the payment would depend on nature of rights acquired and the period for which such rights was acquired by the appellant. Any payment made for obtaining a commercial right would be a capital expenditure. But payment made periodically for exploiting such rights is revenue in nature. Therefore, in the instant case, payment made at the first instance for grant of right to be franchisee can be considered as capital payment. However, the subsequent annual payments made by the assessee are clearly for exploiting the rights as a franchisee, which are for a year and which can be terminated for non-payment of the franchise fees in the subsequent year. Therefore, the franchise fee paid is revenue in nature because by making such annual payment the appellant does not acquire any rights of permanent nature - Decided against revenue

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• 2015 (12) TMI 1278
  Exemption under section 10(23C)(iiiad) - CIT(A) allowed the claim - Held that:- From the perusal of the said proviso, we see that the provisions of this proviso are applicable only to clauses (iv), (v) (vi) and (via) of section 10(23) of the Act. Since the assessee is claiming exemption under section 10(23C)(iiiad) of the Act, there is no need to file Audit Report in Form No.10BB. In view of the above, the assessee has complied with all the conditions of section 10(23C)(iiiad) of the Act. We do not find any infirmity in the order of the learned CIT (Appeals) and confirm the same. - Decided in favour of assessee. Anonymous donations to be taxed under section 115BBC(1) - Held that:- We find that Assessing Officer had called for the details of donations received by the assessee, which the assessee failed to give. However, since the Assessing Officer denied the benefit of exemption under section 10(23C)(iiiad) of the Act to the assessee, he did not make any further addition under section 115BBC of the Act. The assessee has raised this issue before the learned CIT (Appeals) by taking a specific ground. However, from the perusal of the order of the learned CIT (Appeals), we see that the learned CIT (Appeals) has not adjudicated the said issue. In view of this, we restore this issue to the file of the learned CIT (Appeals) to adjudicate the same as per law.

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• 2015 (12) TMI 1277
  Disallowance of interest computed @ 12% on advances given to sister concern - Held that:- As the details submitted shows that assessee is engaged in the business transactions with that company as these advances were given for the purpose of Printing and Dying Groups services for the assessee, it cannot be said that the advances are not for the purpose of the business of the assessee company. Further the assessee was having interest bearing fund of Rs. 36,21,707/- and non interest bearing funds of approximately Rs. 13.51 crores in the form of share capital and reserves and surpluses as at 31st March, 2009, therefore there is a considerable force in the arguments of AR that as it has more non-interest bearing funds available with it then the amount of alleged advances given to sister concern, the presumption of diverting the interest bearing funds used for giving this advances is not correct. Hon'ble Bombay High Court in case of CIT vs. Reliance utilities Ltd. [2009 (1) TMI 4 - HIGH COURT BOMBAY] has held that the principle for disallowance u/s 36(1)(iii) would be that if there are funds available both interest free and loans taken, then a presumption would arise that investment would be out of interest free fund generated or available with the company, if the interest free funds were sufficient to meet the investments . In the case of the assessee this presumption is established in view of huge interest free funds available with the assessee. Hence we delete the disallowance as interest @ 12% on advance outstanding to sister concern - Decided in favour of assessee. Addition as unexplained loans and advances - Held that:- We are convinced that loans and advances are outstanding as per the balance sheet of the company in case of two parties as at 31-3-2009 amounting to Rs. 1,41,71,094/- and the maximum outstanding balance at any time during the year of these two parties in aggregate amounts to Rs. 1,50,41,688/-. Therefore the actual balance outstanding is only Rs. 1,41,71,094. The note no. 6 in schedule no. 19 of the balance sheet as well as the auditor's report clearly describes so. The ld. AO as well as the CIT(A) both erred in reading the audited accounts of the company and making and confirming the addition. According to us and as details furnished there is no difference in the balance sheet of the assessee and therefore we delete the addition - Decided in favour of assessee. Addition on suspense account - Held that:- Suspense account is arisen out of various debits and credits which could not be identified by the assessee. Same were neither offered as income nor claimed as expenditure. Ultimately in financial year 2010-11 the assessee has written it back to the P & L Account and as it is not disputed that there is no difference between the tax rate of the current year as well as AY 2011-12, therefore we set aside this issue back to the file of AO for verifying the facts whether the suspense account written back has been offered to tax in Financial Year 2010-11i.e. AY 2011-12 and if so, delete the addition in the assessment year in the appeal. - Decided in favour of assessee for the statistical purposes.

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• 2015 (12) TMI 1276
  Addition on account of development expenses - CIT(A) deleted the addition - Held that:- this issue is covered by the order of the ITAT for AY 2002- 03 and also by the orders passed by his predecessors for other assessment years. He observed that the AO had not pointed out any change in facts in the year under appeal as compared to the preceding assessment years and accordingly, ordered deletion of the disallowance made by the AO correctly as the impugned expenditure has been incurred by the assessee with the object of studying and identifying new areas of activities which would result in increased profits from business of manufacturing. The expenditure on feasibility study does not mean that it is incurred towards any new business- Decided in favour of assessee. Addition made on account of sale of land - Addition u/s 68 - CIT(A) deleted the addition - Held that:- during the year under consideration i.e. AY 2007-08, there was no physical receipt of money in the books of the assessee and all that had happened was that a sum of Rs. 2.50 crores was transferred by the assessee to the account of Escorts Limited (Parent Company) by a book entry. We also take note that the Permanent Account Number (PAN) of Mr. Satish Lamba was furnished before the CIT (A) and complete details including address of Mr. Lamba was furnished to the Assessing Officer. Therefore, we find that the said sum of Rs. 2 crores has been advanced against the agreement to sale of land from Mr. Satish Lamba ; and since sale has not taken place due to procedural delay and clearance from Haryana Urban Development Authority, the sale has not been executed and the assessee has rightly shown the said amount of Rs. 2 crores as advance. Therefore, we do not find any infirmity in the order of CIT (A) deleting the said addition made by the AO and uphold the order of the CIT (A) on this issue - Decided in favour of assessee. Addition on account of royalty expenditure - CIT (A) deleted the disallowance - Held that:- This issue has already been decided in favour of the assessee by the Tribunal for assessment year 2004-05 and the same was followed by the CIT (A) in this relevant assessment year to conclude the expenditure is of a revenue nature - Decided in favour of assessee. Disallowance u/s 35AB - Held that:- A perusal of the agreement reveals that there is nothing in it to suggest that the arrangement between the assessee and M/s Escorts Limited (100% holding company) is for providing a technical know-how and thus, we agree with the CIT (A) that there is no justification on the part of the AO to treat the expenditure as covered by Explanation to Sec 35AB of the Act. We further find that the genuineness of the expenditure is not in doubt since the AO himself has allowed 1/6th of the expenditure and the balance to be allowed in subsequent assessment years. The assumption of the AO that assessee had incurred expenditure for acquiring technical know-how is at best can be termed as guess-work and is not on the basis of any evidence to contradict the claim of the assessee or borne out of the agreement. We, therefore, hold that as the genuineness of the arrangement with the holding company is not in doubt and since no know-how has been acquired by the assessee, section 35AB is not attracted. - Decided in favour of assessee. Disallowance of interest paid for the late deposit of TDS deducted - Held that:- The payment was made on account of interest on delayed payment of tax. In other words, the AO disallowed the interest paid for the late deposit of TDS deducted, on account of interest on FBT and interest on Service Tax, We take note of the fact that the payment was actually made by the assessee on account of late deposit of service tax etc. and this factual position has not been controverted by the assessee before the CIT (A) and before us. Therefore, we find that the AO has rightly made the disallowance - Decided against assessee. Disallowance as unclaimed liability u/s 41 - Held that:- We find that the assessee has not furnished any documentary evidence to prove the identity/creditworthiness and genuineness of the sundry creditors before the AO or before the CIT (A). Therefore, we concede to the request of the Ld DR and remand this issue back to the file of the AO for adjudicating this issue de-nova and the assessee may produce necessary evidences before the AO to prove the identity/creditworthiness and genuine of the sundry creditors - Decided in favour of assessee for statistical purposes. Disallowance of unpaid sales Tax due in the previous years - Held that:- This amount represents unpaid sales tax liability and the same was disclosed itself by the assessee as a contingent liability. We find that there is no impact in the Profit & Loss account since the assessee had not claimed any deduction on that score. Therefore, we find that AO could not have made any disallowance on this issue - Decided in favour of assessee.

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• 2015 (12) TMI 1275
  Transfer pricing adjustment - selection of comparables - Held that:- We are inclined to accept the contention of the ld. CIT DR because there is no straitjacket formula given in either section 92A(2)(b) or in Rule 92A(2)(b) or in Rule 10B of the Rules for applying filter to the related party transactions, however, it is a well-settled proposition that if any company is functionally comparable with the taxpayer but at the same time it is more than a specific percentage of RTP, then the same should be ignored by treating it as a controlled transaction and hence, the view taken by the ITAT Delhi in the case of Nokia India Pvt. Ltd. (2014 (11) TMI 101 - ITAT DELHI ) is a balanced view supported by various orders of the Tribunal on the issue. Therefore, we are inclined to accept the contention of the ld. CIT DR that a company should be considered as non-comparable only if its RPT exceeds 25%. It cannot be ignored that the NTPCES is also enjoying settlement of all employees from the holding company NTPCS at cost and the benefits received from the holding company and related party transactions (RPT) are not monetised in the annual report and in absence of specific data in this regard, NTPCES cannot be held as comparable with the assessee company. Therefore, AO/TPO was not justified in including NTPCES in the final set of comparables for benchmarking impugned international transaction of the assessee company and they are directed to delete the same. The functional dissimilarity as well as distinction in the geographical market in the light of foreign exchange fluctuation risk of the assessee company coupled with below 25% RPT undertaken by the CIEL, we, therefore, decline to agree with the conclusion of the AO/DRP/TPO that the CIEL is a suitable comparable for the purpose of proposed TP adjustment made by the authorities below. Functional dissimilarity and other aspects cannot be ignored and these factors clearly demonstrate that CIEL should not have been included in the final set of comparables for making transfer pricing adjustment pertaining to the impugned international transactions of the assessee company and we order to exclude the same from the final set of comparables. Mark to market losses on foreign exchange forward contracts disallowed - Held that:- Undisputedly, the facts and circumstances of the present case are more or less similar to the present AY 2009-10 and the assessee booked mart to market loss of Rs. 21.80 crore as on 31.3.09 being difference in the INR value of the USD as on 31.3.09 and the value of which the hedging contract was agreed to be settled. We further note that the assessee is following mercantile system of account for recognition of this loss in its financial statements. When we see the order of the DRP para 3.7.1, then it is amply clear that the ld. DRP has alleged that the forward contracts are not fully supported by the underlying support invoice both in terms of the amount as well as the tenure. DRP has drawn the table in this appeal and thereafter noted that out of 9 forward contracts, the assessee has only used 4 forward contract fully and the assessee has not used these forward contracts immediately but started using them against the sale invoice after the lapse of time of few months. Ld. DRP further noticed that contract no. 1461 was used for the first time on 31.10.08 for a nominal sum of USD 632 and thereafter in November for USD 144247 and balance in December 2008 for USD 2755121. Thus, it shows that there was no underlying asset for this contract from 6.8.2008 till 31.10.08. The entire forward contract could be utilised only by 31.12.08. There is no observation of the ld. DRP in para 3.7.1 which support the contention of the assessee that all forward contracts were duly honoured by delivery of contracts under USD. In this situation, in principle, we agree that in view of the ratio laid down by Hon’ble Supreme Court in the case of Woodward Governer (2009 (4) TMI 4 - SUPREME COURT) while the assessee is following mercantile system of accounting, the loss suffered by the assessee by fluctuation in the foreign exchange as on the date of balance sheet is an item of expenditure u/s 37(1) of the Act. Under this proposition and dicta of Hon’ble apex court, and facts emerging from the DRP order, we find it appropriate that the issue requires detailed examination and verification and calculation on scientific basis at the end of the AO/DRP in the light of relevant proposition and provisions of the Act. Therefore, relying on the said propositions and following the judgement of Hon’ble apex court in the case of Woodward Governor (supra), we restore this issue to the file of AO/DRP for a fresh adjudication after factual analysis and examination of the impugned transactions after affording due opportunity of hearing for the assessee and without being prejudiced by the earlier orders.

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• 2015 (11) TMI 1506
  Additions made on account of Transfer pricing adjustment - Held that:- It is an undisputed fact that the assessee is engaged in the business of investment advisory, therefore, the comparables relating to merchant banking cannot be accepted. Chartered Capital & Investment Ltd be excluded as comparable as this company is totally functioning on different platform and cannot be used as comparable. Edelweiss Capital Ltd. company is also functionally not comparable. Sumedha Fiscal Services Ltd. company is also functionally not comparable with the assessee as The investment service provide by this company are in the field of Stock Broking, Depository services, Commodity Broking and Currency Derivatives Broking and Corporate services are for equity placement, Financial Restructuring, Merchant Banking and also Mergers and Takeovers. This company has earned income from fee based activities like Loan Syndication and Project Consultancy Services at Rs. 787.63 lacs. Motilal Oswal Investment Advisors Pvt. Ltd. company also cannot be included in the final list of comparable firstly because it is doing business on a different filed and secondly and more importantly the related party transaction is more than 50%. Disallowance of foreign travel expenditure - Held that:- The details of expenditure which are exhibited at pages 6,7 & 8 of the assessment order. We find that the details are complete and exhaustive. The AO has not understood the nature of expenditure qua the business of the assessee. As mentioned elsewhere, the assessee is an Investment Advisory Company and for the purpose of its advisory business, it has to meet various clients across the globe for which travelling is must. It is an error to say that assessee was soliciting/seeking potential investors by taking these foreign visits. The findings of the AO are clearly erroneous on the facts of the case and the DRP further fell into error by confirming the same. We, therefore direct the AO to delete the impugned disallowance - Decided in favour of assessee Incorrect adjustment on account of refund not received - Held that:- We restore this issue to the file of the AO. The AO is directed to furnish the complete adjustment sheets to the assessee explaining how the refund was adjusted after giving a reasonable opportunity of being heard to the assessee - Decided in favour of assessee.

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• Customs

• 2015 (12) TMI 1254
  Auction of goods by the port authorities due to non clearance - Auction done without notice to Assessee - Held that:- Any kind of communication or reply, addressed before or after the notice, does not confer any right on the consignee to seek any legal remedy. Therefore, it is more clear that either the goods should have been cleared soon after the publication of the notice or some steps should have been taken legally by the petitioner - When the petitioner and the respondents are in exchange of correspondences in respect of the clearance of the goods, there is no need for any specific notice regarding the clearance of goods. However, in the case on hand, the agent of the petitioner himself had admitted that he was intimated about the disposal of the consignment and the press notice was issued in the English Daily, dated 19.6.2002 and a copy of the same was affixed in the office of the Cargo Terminal, Chennai and therefore, viewed from any angle, the question of non-issuance of notice before the public auction does not arise. Even after paying the customs duty, the petitioner should have been more vigil and strenuous in clearing the goods. - Court does not find that the action of the auctioning the goods of the petitioner suffers from any infirmity. - action of the auctioning the goods of the petitioner suffers from any infirmity - Decided against Assessee.

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• 2015 (12) TMI 1253
  Confiscation of goods - Penalty u/s 117 - Held that:- No doubt the goods may be liable to confiscation strictly going by the proviso to Section 111(d) read with Foreign Trade Act. However the Revenue never chose the option of imposing penalty under Section 112 at the original stage in all these cases and not resorting to confiscation, in my opinion it is too late or the matter to be reopened. The proper course to be adopted would have been to remand the matter to the original authority so that the importers are given an opportunity to contest proposal for confiscation, imposition of redemption fine (in the absence of goods) and imposition of penalty under Section 112. It is settled law that when goods are not available and have already been released on payment of duty, they cannot be confiscated. Only in the case of provisional assessment where goods are released conditionally, confiscation can be resorted to and fine can be imposed if the goods are not available. - for the only offence of not having the IE Code at the time of importation, imposing penalty under Section 112 and remanding the matter for that purpose may not be necessary. It is not the case that no penalty has been imposed on the importers in this case. In my opinion under these circumstances penalty imposed by the original authority in all the cases will serve the purpose and therefore I consider that it would not be appropriate to consider the appeals - Decided against Revenue.

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• 2015 (12) TMI 1252
  Classification of goods - Classification under CTH 3004 or under CTH 9018 - Import of Extraneal Peritoneal Dialysis Solution with 7.5% Icodestrin - Held that:- Revenues appeal is against classification of CAPD under 9018 was allowed by the Commissioner (Appeals). The L.A.A. in the impugned order had relied the Tribunals order in the appellants own case reported in [2004 (7) TMI 454 - CESTAT, NEW DELHI]. Revenue appealed against the above Tribunals order and Hon’ble Supreme Court upheld the order [2015 (5) TMI 695 - SUPREME COURT] and dismissed the Revenue appeal. - By respectfully following the Apex courts order in the appellants own case, we hold that CPAD is rightly classifiable under Chapter heading 9018. - Decided against Revenue.

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• 2015 (12) TMI 1251
  Refund of Additional Customs duty - Held that:- Commissioner (Appeals) should grant fair opportunity to the appellant to explain its case. Since, prima facie , it appears that the appellant by the aforesaid averment and evidence has discharged its burden of proof, the authority should examine thoroughly to satisfy the law as to the eligibility of refund of Additional Customs duty claimed by the appellant. - Since the matter has travelled a lot, learned Commissioner (Appeals) should issue notice to the appellant within a month of receipt of this order or the applicant may make an application within one month of receipt of this order before Commissioner (Appeals) to hear the matter afresh and dispose the same by a reasoned and speaking order. - Matter remanded back.

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• 2015 (12) TMI 1250
  Imposition of redemption fine - Enhancement in penalty - Held that:- On the account of redemption fine, there is no material from the appellant to suggest that redemption fine should not have been imposed. There appears no reason to intervene to the quantum of redemption fine determined by learned Commissioner (Appeals). The appellant fails on this count but succeeds on the count of penalty. - Decided partly in favour of assessee.

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• Corporate Laws

• 2015 (12) TMI 1246
  Penalty imposed on under section 15A(b) of SEBI Act for failing to make annual disclosures under Regulation 8(3) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations, 1997 (‘Takeover Regulations, 1997’ for short) during the financial years ended March 31, 2002 to 31st March, 2011 - Held that:- Every listed company has to make yearly disclosures to the stock exchanges disclosing the shares held by the persons/promoters set out under Regulations 8(1) and 8(2) as on the last day of the financial year including the change in the shareholding, if any, compared to the shareholding on the last day of the previous financial year. In other words whether there is any change in the shareholding or not, the listed company is obliged to make disclosures under Regulation 8(3) and cannot avoid such obligation on ground that there is no change in the shareholding of the persons/promoters set out under Regulations 8(1) and 8(2) of Takeover Regulations, 1997. Various alternative contentions raised by the appellant for the delay in making disclosures under Regulations 8(3) as also various mitigating factors pointed out on behalf of the appellant do not exonerate the appellant from the obligation to make disclosures under Regulation 8(3), because the obligation under Regulation 8(3) is mandatory and the company failing to discharge that obligation is statutorily liable to pay penalty under section 15A(b) of SEBI Act. The penalty imposable under section 15A(b) of the SEBI Act for violating Regulation 8(3) at the relevant time was Rs. One Lakh for each day during which such failure continues or One Crore rupees whichever is less. In the present case, penalty imposable for failure to make yearly disclosures for the financial years ended March 31, 2002 to March 31, 2011 at the rate of Rs. One Lakh per day would run into several crores of rupees. However, after taking into consideration all the mitigating factors set out under Section 15J of SEBI Act, the Adjudicating Officer of SEBI has imposed penalty of Rs. 5 Lakh which cannot be said to be unreasonable or excessively harsh.

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• FEMA

• 2015 (12) TMI 1245
  Power of court to review and supervise the investigations against the political party - investigations under Foreign Contribution (Regulation) Act, 2010 (FCRA) - Held that:- Undoubtedly the Courts, in exercise of their power of judicial review, are entitled to direct investigation into an offence alleged to have taken place, as reiterated by the Constitution Bench in State of West Bengal Vs. Committee for Protection of Democratic Rights West Bengal (2010) 3 SCC 571 and such direction would not amount to infringement of the doctrine of separation of powers but such power should not be exercised just for asking or to satisfy the ego or vindicate the prestige of a party interested in such investigation and only if find such a direction necessary in the facts and circumstances of the case/situation. - Courts would be justified in issuing such a direction only if were to find prima facie an offence to have been committed and the Investigating Agency, for whatsoever reason, unwilling to act lest investigate or if find the investigation though undertaken, to be not a fair one or when find the gravity of the offence prima facie found by the Court to be such which requires investigation by a specialized agency, to restore public faith in the process of law. Either of the said requirements to have been met. Not only has the State/State Agency not refused investigation or a willingness to look into the allegations made in the petition against the respondents but from a perusal of the records produced before us we find the State to have, in the context of each and every averment made in the present case, launched an inquiry/investigation in accordance with law. The petitioner has also not been able to make out a case of the likelihood of the investigation against the respondents being not fair and proper, owing to political factors or owing to the investigative agencies being under the administrative control of the respondents. In fact, this Court had closed the earlier writ petition filed by the petitioner finding no prima facie merit in the allegations of the petitioner to call for an order by the Court in exercise of its power of judicial review, to the investigative agencies to investigate. - No reason as to why the investigative agencies to whom the petitioner has already complained would not look into or are not looking into the allegations or would not discover the truth. - Appeal disposed of.

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• Service Tax

• 2015 (12) TMI 1273
  Demand of service tax - Rent a cab Service - pick-up and dropping of the employees in the SEZ - Whether, this will result in service provided to SEZ hence not eligible to service tax - Held that:- Pick-up and dropping may be due to discharge of contractual obligation as part of remuneration package of employee. But that does not appear to have no relevance in the course of the integral connection to the SEZ. Secondly, the letter of Commerce Department is issued on 19.11.2013 bringing Rent-a-Cab service to the fold of exclusion. Rent-a-Cab service is expected to terminate in the SEZ to fall with the scope of exclusion. Appellants case does not appeal to be appreciated at this stage that above service fall in the exclusion category and that too when exclusion was permitted by Ministry beyond the date of adjudication period. Thirdly, it also does not appear to commonsense that the services has any integral connection to appreciate as input service. - Assessee directed to make pre deposit - Decided against assessee.

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• 2015 (12) TMI 1272
  Waiver of pre deposit - Demand of service tax - Manpower supply service - Held that:- Prima facie, contention of the appellant does not appeal to common sense when the manpower supply contractor has a liability to compensate the labourers engaged. The contract is only concerned with the agreed amount to be paid to the contractor. Bifurcation of the receipt does not ipso facto take away the appellants from the scope of taxation. However, all these are our prima facie view without expressing any opinion at this stage. - Keeping in view interest of Revenue, appellants are directed to predeposit 10% of the service tax demand in each case within eight weeks - Partial stay granted.

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• 2015 (12) TMI 1271
  Waiver of pre deposit - business auxiliary service - reimbursement of expenses - Held that:- There was no direct nexus between the incentive received and the service provided. It is noticed that in the case of M/s. Agronaut Logistics (India) Pvt. Ltd. Vs. Commissioner of Service Tax, Chennai by the appellant was heard on Monday, Tribunal prima facie opined that appellant therein had not acted as an agent on behalf of the freight forwarding service provider. It acted independently like a service provider in railway tender to rent luggage bogies. This, prima facie, convinces that the appellant has acted on principal to principal basis at arms length. - prima facie case tilting balance of convenience in favour of the appellant, without expressing any opinion at this stage, there shall be waiver of predeposit during pendency of the appeal. - Stay granted.

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• 2015 (12) TMI 1270
  Validity of Tribunal's order - Intellectual Property Right service - Penalty u/s 77 & 78 - Held that:- Tribunal on prima facie of the agreement dated 20.12.2006, came to the conclusion that there was a strong prima facie case in favour of the assessee as there was permanent transfer of intangible goods from the Swedish entity to the assessee and, thus, transaction falls outside the scope of Section 65(55b)(a) of the 1994 Act. Thus, the Tribunal finding strong prima facie case in favour of the assessee granted waiver of pre-deposit in full and stayed all further proceedings for realization of the adjudicated liability during the pendency of the appeal. The appeal before the Tribunal raises a debatable issue - No illegality or perversity could be pointed out by the learned counsel for the appellant in the findings recorded by the Tribunal which may warrant interference by this Court. Accordingly, no substantial question of law arises in this appeal - Decided against Revenue.

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• 2015 (12) TMI 1269
  Denial of CENVAT credit on photography / validation service, transit insurance service and insurance service - Nexus with manufacturing activity - Held that:- as regards the “transit insurance” and “insurance service”, these are in respect of finished goods and goods exported which are manufactured and within the factory in respect of business of manufacture. If that so, these services are used by the appellant for his business activity. In my considered view the judgement of the Hon'ble High Court of Bombay in the case of Deepak Fertilizers & Petrochemicals Corpn. Ltd. - [2013 (4) TMI 44 - BOMBAY HIGH COURT] will squarely cover the issue in favour of the assessee. As regards the service tax credit availed on photography/ validation service at site, I find that these services were availed by appellant for installation of equipments/machineries on the site and to ascertain the same in the consonance of the design and drawing submitted by their clients. It is recorded by the lower authorities that the appellant had specifically mentioned that these amounts of service tax are included in the cost of final product, though being undertaken at the site but are in respect of business activity. I find this Bench in the case of Reliance Industries Ltd. [2015 (11) TMI 100 - CESTAT MUMBAI] has relying upon the judgement of the Hon'ble High Court in the case of Ultratech Cement, held any amount which has been accounted as an expenses and considered in costing of final products, credit should be allowed - impugned order denying CENVAT credit is incorrect and liable to be set aside - Decided in favour of assessee.

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• 2015 (12) TMI 1268
  Denial of CENVAT Credit - input service - Clearance of goods from factory gate - Held that:- The fact is that the ownership of the goods and the risks related thereto remain with the respondent at least up to the loading of the goods on the ship at the port of shipment. Section 4 of the Central Excise Act, 1944 inter alia states that the place of removal is "any other place from where the excisable goods are to be sold after the clearance from the factory". Thus, the place of removal is in case of export goods in the port of shipment. The CHA services are utilised by the respondent before the goods were loaded onto the ship. The decision of Ultra Tech Cement (2007 (3) TMI 738 - CESTAT AHMEDABAD) cited by Revenue only states that "prima facie there for services beyond the stage of manufacture and clearance of goods from the factory could not be input services". It is evident that CESTAT had only given a prima facie view in the case of Ultra Tech Cement (supra) and therefore the said judgement has no value as a precedent. - no merit in Revenue's appeal - Decided against Revenue.

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• Central Excise

• 2015 (12) TMI 1267
  Claim of exemption - Washing natural clay - use / non use of acid - sale of the product under trade name "Bleach-9” - activated clay/activated earth - Maintainability of petition - Alternate remedy - breach of principles of natural justice - Opportunity of cross examination not granted - Conflicting chemical test reports of different chemical examiners - Held that:- directions relate to sending the matter for the opinion of the Chief Chemist, therefore, one of the important factors in the ultimate outcome of these proceedings would be the report of the Chief Chemist. The record further reveals that the report of the Chief Chemist is adverse to the petitioner. It is further the case of the petitioner that the material furnished by it has not been considered at the time of preparing such report. Under the circumstances, it cannot be said that the petitioner was not justified in seeking to cross-examine the Chief Chemist, which opportunity has been denied by the adjudicating authority under the specious plea that the petitioner does not want to pay the excise duty. - The petitioner also requested for a personal hearing before taking any final decision in the matter. However, the adjudicating authority has proceeded to adjudicate the show-cause notice without affording any opportunity to cross-examine the Chief Chemist as well as without affording any further opportunity of hearing. Therefore, there is a clear case of breach of principles of natural justice, under the circumstances, the contention that the petition should not be entertained on the ground of availability of an alternative remedy under the statute, does not merit acceptance. While opinion of the Chief Chemist has been called for pursuant to the directions issued by the Commissioner (Appeals), the true purport of the directions issued by the Commissioner (Appeals) has not been conveyed to the Chief Chemist. Under the circumstances, the Chief Chemist has not applied his mind to the matter in the light of the directions issued by the Commissioner (Appeals). The adjudicating authority, having regard to the directions issued by the Commissioner (Appeals) was required to furnish the operative part of the order passed by the Commissioner (Appeals) to the extent of the directions issued by him as well as the supporting documents, namely, the two reports of the different chemical examiners of the same laboratory as well as the documents furnished by the petitioner to the adjudicating authority in support of its case namely, the reports of IIT, Bombay, Vaibhav Enviro Consultant, Ahmedabad etc. were also required to be forwarded to the Chief Chemist. While from the affidavit-in-reply as well as the impugned order, it appears that the said documents have been forwarded to the Chief Chemist, however, in the absence of the specific directions issued by the Commissioner (Appeals) being brought to the notice of the Chief Chemist, the report does not appear to have been prepared keeping the said parameters in mind. With a view to bring finality to the proceedings, the matter is once again required to be referred to the adjudicating authority to ensure that the matter is once again referred to the Chief Chemist together with the directions issued by the Commissioner (Appeals) and the supporting documents as referred to hereinabove, for a fresh opinion on the question as to whether on the parameters contained in the two reports of the Chemical Examiner, Vadodara, it could be said that Bleach-9 is activated earth. The Chief Chemist would also be required to keep in mind the documents/reports furnished by the petitioner in support of its claim. Upon such report being furnished, a copy thereof is required to be furnished to the petitioner and in case the report is adverse to the petitioner, the petitioner shall be entitled to an opportunity of cross-examining the Chief Chemist. Thereafter, it is only after affording a reasonable opportunity of hearing to the petitioner that the final order may be passed by the adjudicating authority. - Decided in favour of assessee.

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• 2015 (12) TMI 1266
  Supply of goods to SEZ units by DTA suppliers - deemed export - procedure not followed - Rebate to of CVD paid claimed under Rule 18 of the Central Excise Rules, 2002 on the strength of disclaimer certificate by the suppliers in favour of the Petitioner - Held that:- In case of the petitioner, the goods in respect of which rebate is sought under the notification are raw materials which have been imported from foreign countries or procured locally from local manufacturer. The claim for rebate has been lodged on the goods received by the supplier on payment of duties including CVD. It is the case of the petitioner that the dealers have imported the goods and paid all duties including CVD, which is equivalent to the central excise duties as if the goods are manufactured in India. However, as rightly contended by the learned Standing Counsel for the respondents, the Countervailing Duty paid at the time of import of goods is a duty equal to the central excise duty leviable on such goods if manufactured in India. Such duty is levied to offset the disadvantage to like Indian goods due to high excise duty on their inputs and to provide a level playing field to indigenous goods which have to bear various internal taxes. However, such duty is not an excise duty. It is by now well settled that in a taxing statute there is no scope of any intendment and the same has to be construed in terms of the language employed in the statute and that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the rules and the notification. Procedure laid in the notification dated 06.09.2004 provides for sealing of the goods and examination at the place of the despatch. Undisputedly, in the case of the present petitioner, no such procedure has been followed. Moreover, the notification defines duty for the purpose of the notification to mean the excise duty collected under the enactments stated therein. Undisputedly, the duties paid by the petitioner in relation to the goods in question do not fall within the enactments stipulated in the notification. Clearly therefore, the petitioner has failed to satisfy the basic requirements for availing of the benefits under the notification. - petitioner is not entitled to any declaration to the effect that it is eligible for getting the rebate claim as sought for in the petition - Decided in favour of Revenue.

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• 2015 (12) TMI 1265
  Search and Seizure of goods - Discrepancy in RG-1 Register - clandestine manufacture and clearance of fabrics - Held that:- Assessee's dyeing master Shri Harbans Lal during the course of adjudication had accepted that the entries made in the diary belonged to him and were relating to his business transactions. The Tribunal further observed that the Commissioner (Appeals) also took into consideration the retraction made by the appellant by way of sending telegram and that the appellants have no capacity to manufacture such a huge quantity of poly fabrics. The Tribunal by merely observing that the learned Advocate for the assessee had placed on record the number of decisions laying down that entries made in the private note book read with statement cannot be held to be evidence to conclude against the assessee, rejected the appeal of the revenue. The charges of clandestine activities are required to be adjudicated by appreciating the factual matrix and by giving sufficient and cogent reasons. A perusal of the order of the Tribunal more particularly para 7 thereof shows that no legally justified reasons have been recorded for rejecting the appeal of the revenue. The Tribunal being a final fact finding authority was required to deal with all aspects of facts and also law and then record its conclusions based thereon. - Decided in favour of Revenue.

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• 2015 (12) TMI 1264
  Duty demand - Clandestine removal of goods - whether 34,174 pieces of  inserts used by Railways were manufactured and cleared by the respondent clandestinely without payment of duty - Held that:- entire basis of allegation by the Revenue rests on the discrepancy in the production figures between the private register called as insert register and the statutory RG-1 register. Explaining the discrepancy as recorded by the ld.Commissioner(Appeals) in the impugned order, the Director of the respondent in his statement dated 23.10.2008 categorically stated that the private insert register is maintained at foundry level and it records the production at foundry level and cannot be considered as quantity manufactured and ready for dispatch as recorded in their RG-I register. There is no discrepancy in the reasoning of the ld. Commissioner(Appeals) in rejecting the allegation of clandestine removal of 34,174 pieces due to the difference in the figures in the insert Register and RG-1 Register(DSA) and consequently short payment of duty. Before this forum also the Revenue could not produce any substantial evidence to contradict the aforesaid finding of the Ld. Commissioner(Appeals). In these circumstances, I do not find merit in the appeal of the Revenue - Decided against Revenue.

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• 2015 (12) TMI 1263
  Availment of CENVAT Credit - welding electrodes - Held that:- Tribunal allowed cenvat credit on welding electrodes used in or in relation to the manufacture of finished goods. By respectfully following the High Court’s decision (2006 (6) TMI 114 - MADRAS HIGH COURT ), I hold that the assessee is eligible for availing cenvat credit on welding electrodes used in or in relation to the manufacture of finished products. - Revenue relying on the Vikram Cement Vs. CCE, Indore (2009 (7) TMI 217 - CESTAT, NEW DELHI), is not relevant in view of the jurisdictional High Court of Madras decision and other Hon’ble High Court orders as discussed above, I am of the view that the impugned order, is not sustainable - Decided in favour of assessee.

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• 2015 (12) TMI 1262
  Denial of CENVAT Credit - input services - 100% EOU - Renting of Immovable Property services - Adjudicating authority has denied the benefit only on the ground that the rented premises Unit-II and Unit-III were located at different places than that of the registered premises - Held that:- Unit I, Unit-II and Unit-III share same legal entity, production processes and interlinked. Raw materials have been sent to Unit-II and Unit-III by Unit-I but for production of intermediate products and the intermediate products are received back by Unit-I for the manufacture of final products. Unit-II and Unit-III are exclusively producing the goods only for Unit-I. Without processing at Unit-II and Unit-III, final products cannot be manufactured at Unit-I. Therefore, renting of immovable property service is having direct nexus in the manufacture of goods at Unit-I. Rule 2 (1) of CCR, 2004, clearly mentions that service utilized in or in relation to manufacture of final products is eligible as input services. Hence, the benefit of cenvat credit on input services cannot be denied to the appellants. In view of the foregoing, I find that the appellant has made out the case in their favour and the impugned order is liable to be set aside - Decided in favour of assessee.

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• 2015 (12) TMI 1261
  Duty demand - Clandestine removal of goods - demand on alleged shortage/ excess quantity of finished goods and inputs - Held that:- Even the excess found stock of finished goods i.e. quoted Duplex boards were laying in the factory at the time of visit of the Preventive Officers. It is also not the case of the Department that the shortage quantity of goods has been removed from the factory clandestinely, in view of the fact that neither in the SCN nor in the orders passed by the lower authorities, there is any mention to that effect. Hence in absence of any tangible evidence that the goods have been removed clandestinely by the appellant, I agree with the submissions of the Ld. Advocate that non-maintenance of proper records by the factory supervisor of the appellant has resulted in shortage/ excess in the stock of the goods. However considering the fact that the appellant has not maintained proper records, which is statutorily required to be maintained, I am of the view that the appellant is liable to pay the redemption fine and the penalty imposed by the authorities below. However considering the gravity of the case, I am of the view that the ends of justice will be met if the penalty imposed under Rule 25 of the Central Excise Rules is reduced to Rs. 20,000/- and penalty imposed under Rule 15 of the Cenvat Credit Rules is reduced to Rs. 25,000 - redemption fine can also be reduced to Rs. 67,441/- i.e. equal to the Central Excise duty payable on removal of impugned goods. - Decided partly in favour of asseessee.

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• 2015 (12) TMI 1260
  Demand of differential duty - Clandestine clearance of goods - Held that:- Allegation of clandestine removal rests on the discrepancy in the figures of OB & CB of Stock mentioned in the monthly ER-1 Returns relating to manufacture and production of only three items, namely, (i) Duraphos Rustokik etc. (ii) Phoschem Phosbond etc. & (iii) Phoschem Phosbond etc.. There is no difference between the OB and CB in DSA for June & July, 2010 and also for August & September, 2010. It is their claim that due to inadvertence, while filing ER-1 Returns, CB & OB have not matched for the said periods. - there is no discrepancy noticed by the Department in the Daily Stock Accounts in recording the OB & CB of Stock in relation to the said items. However, while recording the figures in ER-1 Returns, there could be possibility of writing, error in entering the data relating to OB and CB of the said items due to switching over from manual system of maintenance of records to computerized system. - Besides, except the said errors in recording the CB & OB in the respective ER-1 Returns, the Department has not adduced any other evidence in support of clandestine removal. In the result, the impugned order is set aside - Decided in favour of assessee.

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• 2015 (12) TMI 1259
  Valuation of the goods cleared in DTA - Held that:- Decisions in these cases were based upon the Tribunal's decision in the case of Morarjee Brembana Ltd. vs. Commissioner of Central Excise, Nagpur [2003 (2) TMI 100 - CEGAT, MUMBAI]. The department has also filed Civil Appeal against the said order of the Tribunal before the honble Supreme Court. The Honble Supreme Court vide order [2015 (4) TMI 354 - SUPREME COURT] has decided the appeal of Morarjee Brembana Ltd. In the same order, the honble Supreme Court has dismissed the Revenue's appeals filed in their own case. - Decided against Assessee.

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• 2015 (12) TMI 1258
  Recovery of duty - Imposition of penalty - Held that:- Since, the amount of duty along with interest has been paid by the appellant on its own ascertainment and over and above such amount, no further amount towards Central Excise duty or interest was payable, there was no necessity for issuance of SCN, or for adjudication of the matter in view of the provisions of Section 11A(2B) of the Central Excise Act, 1944. As per the statutory mandates, upon payment of duty amount the issue has to be statistically closed for all practical purposes. Thus, I am of the view that issuance of SCN and adjudication of the matter in imposing the penalty under Central Excise Rules was not justified in the circumstances of the case. Further, in absence of suppression, misstatement, collusions etc., penal provisions contained in Rule 25 of the Central Excise Rules, 2002 cannot be invoked, justifying imposition of penalty. It is an admitted fact on record that the authorities below have not specifically observed that non-payment of duty within the prescribed time limit is attributable to the ingredients mentioned in the said rule. Thus, I am of the view that imposition of penalty under Rule 25 is not legal and proper. - there is no substance in the impugned order, justifying imposition of penalty - Decided in favour of assessee.

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• 2015 (12) TMI 1257
  Imposition of penalty - Clandestine removal of goods - Held that:- Appellant, it is seen that he was the General Manager of the Company w.e.f 2.6.1995. The clandestine removal findings against the main company are for the period from 1.1.1995 to 3.8.1995 i.e., during the period when he was not in the services of the company. On going through the findings of the Commissioner for imposition of penalty upon him, it is seen that the penalty stand imposed on the sole ground that he was the General Manager of the company and as such, was responsible for production and clearance of the goods without payment of duty. Apart from the above observations made by the adjudicating authority there is no evidence, at all, to show that the said appellant was in any way connected with the clandestine activities of the manufacturing unit. Merely because he was the General Manager for a limited period, cannot make him liable to penalty under Rule 209A unless there is evidence to show that such clandestine activity was being carried out with his knowledge and consent and under his instructions. - Decided in favour of appellant.

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• 2015 (12) TMI 1256
  Reversal of proportionate CENVAT Credit - clearance of exempted final products - Held that:- The impugned order of Commissioner (A) dropping the penalty does not stand challenged by the Revenue and as such has attained finality. Inasmuch as the appellate authority has observed that there is no mala fide on the part of the assessee, I find that invocation of longer period is not justified on the said ground itself. It is well settled law the circumstances for invocation of longer period and for imposition of penalties on an assessee are identical. Once the bona fide of the appellants are not being doubted for the purpose of imposition of penalty, the same cannot be doubted for the purpose of invocation of longer period. As such, I agree with the learned advocate that extended period cannot be invoked against them. On this ground itself I set aside the impugned order - Decided in favour of assessee.

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• 2015 (12) TMI 1255
  Denial of rebate claims - export of goods - defect in the original application - Bar of limitation - Held that:- Admitted facts are that the petitioner had made necessary declarations in format of Annexure-19 which is prescribed under Rule 19 of the said Rules. Along with it, the petitioner had also supplied documents of proof of export and for that rebate would be made. We notice that Rule 18 of the said Rules pertains to rebate of duty and provides for rebate claims by following the procedure prescribed by the Government of India under a notification. Rule 19 of the Rules pertains to export without payment of duty. Thus, both these Rules operate in vastly different fields. It is in terms of Rule 18 that the Government of India under notification No.19/2004 laid down detailed procedure for making rebate claims. On the other hand, Annexure-19 is prescribed for declaration necessary for export without duty in terms of Rule 19 of the said Rules - neither Rule 18 nor notification of Government of India prescribe any procedure for claiming rebate and provide for any specific format for making such rebate applications. The Department, therefore, should have treated the original applications /declarations of the petitioner as rebate claims. Whatever defect, could have been asked to be cured. When the petitioner re-presented such rebate applications in correct form, backed by necessary documents, the same should have been seen as a continuous attempt on part of the petitioner to seek rebate. Thus seen, it would relate back to the original filing of the rebate applications, though in wrong format. These rebate applications were thus made within period of one year, even applying the limitation envisaged under Section 27 of the Customs Act. - Appeal disposed of.

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• CST, VAT & Sales Tax

• 2015 (12) TMI 1249
  Denial of exemption claim - Whether in view of the judgment of this Court in Anand Decor v. Commissioner of Trade & Taxes, [2014 (12) TMI 1024 - DELHI HIGH COURT], the sale price received by the Appellant on sale of used motor vehicles could not be included in the turnover as it was exempt from tax under Section 6(3) of the DVAT Act, 2004 - Held that:- counsel for the Respondent, informs the Court that the Respondent has challenged the decision of this Court in Anand Decor (supra) by way of a Special Leave Petition ('SLP') which is pending in the Supreme Court. Mr. Narayan fairly stated that in the light of the Appellant's statement in its modification application before the Tribunal that it fulfils all the conditions for availing the exemption under Section 6 (3) of the DVAT Act, the judgment in Anand Decor (supra) would cover the case of the Appellant as well. Mr. Narayan added that the Respondent would be free to proceed in accordance with law against the Appellant in the event that the judgment of this Court in Anand Decor (supra) is reversed by the Supreme Court. - Court does not have to speculate what the outcome of the Respondent's SLP in the Supreme Court might be, as far as this Court is concerned, its judgment in Anand Decor (supra) would cover the case of the Appellant as well - Impugned order is set aside - Decided in favour of assessee.

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• 2015 (12) TMI 1248
  Demand of interest on the delayed payment of Value Added Tax (VAT) refund - Held that:- Perusing the present petition and without expressing any opinion on the merits of the case, we dispose of the present petition by directing respondent No.2 to take a decision on the letters dated 1.9.2014, 6.1.2015 and 28.4.2015, in accordance with law by passing a speaking order and after affording an opportunity of hearing to the petitioners within a period of two months from the date of receipt of certified copy of the order. It is further directed that in case it is found that the petitioners are entitled to the amount of refund, the same be released to them within next one month in accordance with law. - Decided in favour of assessee.

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• 2015 (12) TMI 1247
  Valuation - Sales tax / Service Tax in J&K - inclusion of service tax in the gross turnover for the purpose of levy of Sales Tax / TDS - Request for quashing clarification No.1 of 2014 dated 14th January, 2014 issued by Commissioner, Commercial Taxes Department of Excise and Taxation, Jammu- respondent No.2 herein on the ground that the same offends the statutory and legal rights of petitioners in so far it provides for charging of service tax on the gross value of the contract items - quashment of the Notification No.1/2014 dated 14.01.2014 - Whether respondent No.2 was legally justified in holding that the service tax was leviable on the gross value of the contract irrespective of inclusiveness of the tax factor in the approved rate of a given item. Held that:- A bare look at the provisions engrafted in Section 25-C of the Act of 1962 lays it bare that the Commissioner is empowered to determine issues and issue clarifications in regard to various issues including issues relating to nature of any transaction and whether any tax is payable in respect of any particular sale or purchase. That being so, commissioner cannot be said to be lacking jurisdiction in issuing the impugned clarification. The objection is, accordingly, overruled. Payment for execution of works in terms of agreements was released in favour of petitioner after deducting tax over the gross amount. It is contended on behalf of respondents that under provisions of the Act of 1962 and Rules framed thereunder, sales tax is leviable on the gross amount of the contract. The sales tax leviable on the services rendered by the contractor in the shape of works contract has to be deducted at source from the gross amount of the contract. Thus, sales tax is included in the gross amount of the contract. The levy of sales tax under the Act of 1962 is not subservient to the contract agreement inter se the parties. The Assessing Authorities are under a legal obligation to look into every aspect of taxable turnover of a dealer at the time of assessment. There is no ambiguity in it that the types of services enumerated in the provision are covered under the definition of goods. A transaction, whether involving transfer of property or not, shall be deemed to be a sale by the person making the same. Services provided in execution of works contract are goods and, thus, the services provided constitute sale of goods which is exigible to tax under the relevant tax schedule. It is, therefore, amply clear that it is the services provided in the shape of works contract together with the goods, skill, labour, and consumables etc. which constitute goods. The person who executes the works contract is deemed to sell these goods attracting the tax provision. - In case of the former, the entire sales consideration would be taxable under Sales Tax Act or VAT Act whereas in the later case, the part of consideration payable on account of labour and service element would be excluded from the total consideration received and sales tax or value added tax would be chargeable only on the balance amount. A Five Judge Bench of the Hon ble Apex Court, in M/s. Kone Elevator India Pvt. Ltd. Vs. State of Tamil Nadu and ors. [2014 (5) TMI 265 - SUPREME COURT] dealt with the controversy whether manufacture, supply and installation of LIFTS is to be treated as sale or works contract . The majority view was that the decision rendered in State of AP Vs. Kone Elevators (India) Ltd. reported in [2005 (2) TMI 519 - SUPREME COURT OF INDIA] did not correctly lay down the law. Contract for supply of goods and materials as well as installation amounts to works contract and the constitutional Bench Judgment of the Hon ble Apex Court upholds such view. However, the impugned clarification, though reiterating the same principle, departs from the issue as to whether service tax has to be charged on the gross amount of the contract or after deducting the tax element in contracts where the agreement is inclusive of taxes. It is, fallacious to hold that Rule 19 of the Rules of 1962 does not cover inclusion of tax in sale price. Such an interpretation would render Clause (d) of Rule 19 of the aforesaid Rules redundant which provides the formula for computation of tax included in the sale price. Relief granted to the petitioners - Decided in favor of assessee.

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• Wealth tax

• 2015 (12) TMI 1274
  Determination of net wealth - Inclusion of value of Lamborghini car - Did the Income Tax Appellate Tribunal (ITAT) fall into error in holding that the assessee who is not owner of the Lamborghini Car since it did not acquire the asset and was therefore not liable under the Wealth Tax Act - Held that:- Decision in the assessee's own previous case [2015 (12) TMI 117 - DELHI HIGH COURT] followed - Decided in favour of assessee.

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• Indian Laws

• 2015 (12) TMI 1244
  Commission of an offence u/s 33/51 & 39/63 of Standards of Weights and Measures (Enforcement) Act, 1985 and Packaged Commodities Rules, 1977 - Notice under Section 251 of the Code of Criminal Procedure (for short ‘Cr.P.C.’) issued by the learned Metropolitan Magistrate challenged - whether there has not been any unjust enrichment to the company or any loss to the prospective customer and there is complete absence of any malafide intention? Held that:- The reply to the show cause notice dated 11.10.2010 by the petitioner company makes it very clear that the wrapper with the same MRP of Rs. 320/- was ordered in bulk which remained unused. A revised price is required to be printed before packing the contents. It was in this context and under such circumstances that the initial label which fortunately and incidentally contained the same MRP pwas blacked out and a separate MRP of Rs. 320/- was printed. This fact stands buttressed by the invoices sent to the retailers throughout the country which was made part of the show cause notice. That apart, it is not the case of the respondent that the label was blacked out and printed separately by changing the MRP and after the packing of the contents. Thus the clarification vide notification No.SSR57B(E) dated 26.8.1993 referred to above namely that there is no bar on the manufacturer to blank out the earlier declarations and reprint the revised declarations, before packaging is not in derogation of or inconsistent with sub Clause (7) of Rule 23. Thus it cannot be assumed that the petitioner company packaged the content namely the tube and thereafter reprinted the label of price on the wrapper. Thus no offence under any one of the sections of the Act of 1985 can at all be said to have been made out. Be it noted that the Standards of Weights and Measures (Enforcement) Act, 1985 has been repealed with effect from 01.03.2011 vide Section 57 of the Legal Metrology Act, 2009. However, since the alleged offence is said to have been committed prior to the repeal, the provisions of the 1985 Act would apply. On the above premised reason, this Court considers the charges against the company to be absolutely groundless and, therefore, the complaint (Complaint No. 600/11/WM) and the notice under Section 251 of the Code of Criminal Procedure by the Metropolitan Magistrate are hereby quashed.

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