Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
December 27, 2019
Case Laws in this Newsletter:
GST
Income Tax
Benami Property
Customs
Corporate Laws
PMLA
Service Tax
Central Excise
Indian Laws
Articles
News
Notifications
DGFT
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S.O. 4604 (E) - dated
24-12-2019
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FTP
Corrigendum to Notification S.O. 4540 (E) dated the 18th December, 2019
GST
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06/2019 - dated
24-12-2019
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UTGST
Seeks to amend Notification No. 14/2018-Union territory Tax, dated the 8th October 2018
GST - States
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G.O. Ms. No. 63 - ORDER No. 09/2019 – State Tax - dated
12-12-2019
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Puducherry SGST
Puducherry Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019
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G.O. Ms. No. 62 - dated
12-12-2019
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Puducherry SGST
Waive filing of Form GST ITC-04 - job-worker for F.Y. 2017-18 & 2018-19
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G.O. Ms. No. 61 - dated
12-12-2019
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Puducherry SGST
Seeks to amend Notification G.O. Ms. No. 34, dated the 5th August, 2019
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G.O. Ms. No. 60 - dated
12-12-2019
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Puducherry SGST
Amendment in Puducherry Goods and Services Tax Rules 2017
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F.17(131-pt-II)ACCT/GST/2017/5210 - dated
24-12-2019
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Rajasthan SGST
Notification regarding extension the due date for furnishing FORM GSTR-3B for November, 2019
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25/2019-State Tax (Rate) - dated
1-10-2019
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Tripura SGST
Seeks to notify the grant of alcoholic liquor licence neither a supply of goods nor a supply of service as per Section 7(2) of Tripura GST Act, 2017
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23/2019-State Tax (Rate) - dated
1-10-2019
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Tripura SGST
Amendment in Notification No. 4/2018- State Tax (Rate), dated the 21 February, 2018
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22/2019-State Tax (Rate) - dated
1-10-2019
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Tripura SGST
Amendment in Notification No. 13/2017- State Tax (Rate), dated the 29th June, 2017
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21/2019-State Tax (Rate) - dated
1-10-2019
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Tripura SGST
Amendment in Notification No. 12/2017 - State Tax (Rate) dated 29th June 2017
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Classification of supply - Rate of GST - The Applicant is making a mixed supply to the Tollygunge Club of printing service and intermediary service for selling space for advertisement on behalf of the club - It shall be treated as supply of the above intermediary service taxable @ 18% of GST
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Classification of goods - pellets - The Applicant is supplying mixes and dough for preparation of biscuits and other bakers’ wares, whether or not preparation of the final edible item involves further baking or frying. It is, therefore, classifiable under tariff item 1901 20 00.
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In the absence of pendency of any proceedings under sections 62, 63, 64, 67, 73 or 74 of the GST Acts, the orders of provisional attachment of the bank accounts of the petitioners under section 83 of the GST Acts are without authority of law and are rendered unsustainable.
Income Tax
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Exemption u/s 11 - Entitled to the registration u/s 12AA - when the original application was filed by the respondent it was a fledgling organization. Today another 2-3 years have passed and therefore, the Commissioner would have the benefit of seeing the records of the respondent to verify whether it does indeed meet the test of Section 12AA or not. - Order of ITAT directing the CIT to consider additions documents sustained.
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Claim of interest on capital and remuneration to partners from the assessed income - The applicability of Section 28(v) cannot be excluded in the matter of best judgment assessment in respect of an assessee firm. - Claim allowed.
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Assessment u/s 153A - proof of incriminating material found in search - the profit and loss account and balance sheet of the assessee company, by any stretch of imagination, cannot be considered as incriminating material - Additions deleted.
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Penalty u/s 271C - Non deduction of TDS on payment of External Development Charges (EDC) - the issue became debatable if the TDS is to be deducted or not on the EDC providing reasonable cause to the assessee not to deduct the TDS. Consequently, penalty levied by the AO and confirmed by the ld. CIT (A) is not sustainable in the eyes of law.
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AO cannot occupy the armchair of the assessee and direct it to make the payment of wages at particular rate. As such it was the wisdom of the assessee for making the payment of the wages at the particular rate which cannot be questioned by the AO.
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Revision u/s 263 - when there will be no Revenue loss even if provisions of section 45(2) is applied then in such a situation the Commissioner is not allowed to exercise its power u/s 263 of the Act merely because the AO has accepted the capital gains declared by the assessee.
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Reopening of assessment u/s 147 against deceased assessee - the notice issued u/s 148 in the name of the deceased assessee is a nullity in the eyes of law. Further, no notice u/s 148 has been issued in the name of the legal heirs and therefore, the provisions of section 159 cannot be invoked in the instant case.
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LTCG - exemption u/s 54F - CIT(A) while enhancement has not given any reasons as to why the enhancement is necessary and why the assessee is not justified in adopting the figure of the actual sale consideration received. - AO as well as CIT(A) failed to justify the stand by making additions in respect of long term capital gain without granting exemption u/s 54F
Central Excise
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Export of goods or not - clearance of Aviation Turbine Fuel (ATF) when loaded into flight operating on international route - there is a violation of principle of natural justice in passing the de novo order - matter remanded back.
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When the appeal was decided by the Tribunal through Annexure A order, the decision was taken based on the law as it stood then. In a subsequent decision of the hon'ble Supreme Court the law was declared as otherwise, based on a change of opinion. Such a change of opinion of law cannot be taken as a 'mistake apparent on the face of the record' which could be rectified.
Case Laws:
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GST
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2019 (12) TMI 1118
Classification of supply - procurement of advertisements for the Directory - bundles services or intermediary services or mixed supply - whether classifiable as selling of space for advertisement in print media? - applicability of SI No. 21 (i) of N/N. 11/2017 - CT (Rate) dated 28/06/2017 (corresponding State N/N. 1135FT dated 28/06/2017), as amended from time to time. HELD THAT:- Selling of space for advertisement, when made as an intermediary, is classifiable under SAC 998362, which excludes sale of advertising space in print media (SAC 998363) and is taxable @ 18% under SI No. 21 (ii) of the Rate Notification - Service by way of printing (SAC 998912) of all goods falling under Chapter 48 or 49 of the First Schedule of the Customs Tariff Act, 1975 (where the physical inputs are supplied by the printer) is taxable @ 12% under SI No. 27 (i) of the Rate Notification. The mixed supply of the Applicant should, therefore, be treated taxable under SI No. 21 (ii) of the Rate Notification. The Applicant is making a mixed supply to the Tollygunge Club of printing service (SAC 998912) and intermediary service for selling space for advertisement on behalf of the club (SAC 998362). It shall be treated as supply of the above intermediary service taxable @ 18% under SI No. 21 (ii) of Notification No. 11/2017 - CT (Rate) dated 28/06/2017 (corresponding State Notification No. 1135FT dated 28/06/2017), as amended from time to time.
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2019 (12) TMI 1117
Classification of goods - pellets - classified under HSN 1103 20 00 under the First Schedule of the Customs Tariff Act, 1975 or otherwise? - HELD THAT:- The Applicant is supplying mixes and dough for preparation of biscuits and other bakers wares, whether or not preparation of the final edible item involves further baking or frying. It is, therefore, classifiable under tariff item 1901 20 00.
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2019 (12) TMI 1116
Principles of Natural Justice - Provisional attachment of Bank Accounts - CGST and Gujarat SGT Act - It is the case of the petitioners that after the arrest of the second petitioner on 1.4.2019, no notice had been issued to the petitioners with regard to the issue in question and no show-cause notice had been issued under section 73 or 74 of the GST Acts - Pending proceedings or not - HELD THAT:- It appears that according to the respondents, investigation pursuant to the search conducted under section 67 of the GST Acts is still going on and therefore, according to the respondents, the proceedings under section 67 of the GST Acts are not yet completed. In the present case, since the premises of the petitioners came to be searched, the provisions of sub-section (2) of section 67 of the GST Acts would be attracted. In terms thereof, pursuant to an authorisation issued in this behalf, the proper officer may search the premises in respect of which the search is authorised and seize goods, documents or books or things and retain the documents or books or things so long as may be necessary for any inquiry or proceedings under the Act. In the present case, search proceedings were conducted at the premises of the petitioners on 27.9.2018. Thereafter, there was a visit by the respondents on 1.4.2019 which led to the arrest of the second petitioner. Thereafter, no search has been conducted at the premises of the petitioners. The search proceedings have, therefore, ended. On a plain reading of section 83 of the GST Acts, it is clear that a sine qua non for exercise of powers thereunder is that proceedings should be pending under section 62 or section 63 or section 64 or section 67 or section 73 or section 74 of the GST Acts - In the present case, the proceedings under section 67 of the GST Acts are no longer pending and pursuant to the search, proceedings under any of the other sections mentioned in section 83 have not been initiated. Under the circumstances, on the date when the orders of provisional attachment came to be made, the basic requirement for exercise of powers under section 83 of the GST Acts was not satisfied. The provisional attachment of the bank accounts of the petitioners under section 83 of the GST Acts is, therefore, not in consonance with the provisions thereof and cannot be sustained. In the absence of pendency of any proceedings under sections 62, 63, 64, 67, 73 or 74 of the GST Acts, the orders of provisional attachment of the bank accounts of the petitioners under section 83 of the GST Acts are without authority of law and are rendered unsustainable. The impugned orders of provisional attachment passed under section 83 of the GST Acts are hereby quashed and set aside and the respondents are directed to forthwith release the attachment over the said bank accounts as well as the bank accounts listed at Annexure-B to the petition - petition allowed.
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Income Tax
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2019 (12) TMI 1115
Exemption u/s 11 - Entitled to the registration u/s 12AA - claim of assessee that it was an alumni association of a school and was set up for charitable purposes and was therefore entitled to the exemption under Section 12AA - assessee placed on record an order under Section 12 A(a) in respect of the main school which had been granted about 15 years ago - HELD THAT:- Arguments of both counsel are too extreme. It cannot be said that the certification in favour of the school is entirely irrelevant nor can it be said that merely because the school got a certificate under Section 12A(a) the alumni association would also be entitled to exemption as of right. In the circumstances, what the Tribunal has done cannot be said to be illegal. The Tribunal has not reversed any finding of the Commissioner but has merely asked the Commissioner to consider another document, the relevancy and importance of which would be determined by the Commissioner himself. Moreover, it is also not disputed that when the original application was filed by the respondent it was a fledgling organization. Today another 2-3 years have passed and therefore, the Commissioner would have the benefit of seeing the records of the respondent to verify whether it does indeed meet the test of Section 12AA or not. In sum and substance, therefore, we do not deem it appropriate to interfere with the order.
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2019 (12) TMI 1114
Order of assessment u/s 158BC(c) - Procedure for block assessment - validity of search - undisclosed income determined - Authorisation and assessment in case of search or requisition - HELD THAT:- From perusal of Section 158BC it is evident that the computation of undisclosed income should be based on such evidence which is seized during the search which is not accounted in the regular books of account. In the present case the warrant of authorization has not been produced before this Court despite order dated 13.10.2019. Therefore, it is open for this Court to draw an adverse inference. However, in the peculiar fact situation of the case, we deem it appropriate to grant liberty to the revenue to proceed afresh in accordance with law. However, on account of non-production of the warrant of authorization, the adverse inference has to be drawn. Therefore, the first substantial question of law is answered in favour of the appellant and against the revenue, however, with the liberty to the revenue to proceed against the appellant in accordance with law. Validity of search - Admittedly, the authorities were under an obligation to examine the validity of the search and thereafter only to proceed to initiate the block assessment proceeding, which has not been done in the instant case. Therefore, the second substantial question of law framed is also answered in favour of the assessee and against the revenue. Challenge the action of the AO to assess u/s 158BC when the condition precedent are not existing as much as for computation of income u/s 158BC - From perusal of the material on record, it is evident that there was no seizure with regard to the assessment year 1988-89 and 1989-90 during the course of the search and seizure operations. However, the Assessing Officer while computing the undisclosed income has taken into account the income in respect of the aforesaid case also and thus the order passed by the Assessing Officer is in violation of Section 158BC(c) of the Act and therefore, the Tribunal was not justified in holding that there is no merit to challenge the action of Assessing Officer to assess under Section 158BC(c) of the Act. Accordingly, the third substantial question of law is also answered in favour of the assessee and against the revenue. In view of preceding analysis, the impugned order dated 09.09.2011 insofar as it contains the findings against the appellant passed by the Income Tax Appellate Tribunal is hereby quashed and set aside. The order of assessment dated 28.11.2000 as well as the order of Commissioner of Income Tax (Appeals) dated 23.08.2002 are also hereby quashed and set aside. However, liberty is granted to the revenue to proceed against the appellant, if so advised in accordance with Section 158BC of the Act.
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2019 (12) TMI 1113
Unexplained cash credit u/s 68 - sale of agricultural crops - HELD THAT:- ITO found the nature of Business of assessee as 'Trading of green tea leaf and production of green tea leaf and other agricultural products. Total sale receipt from the agriculture crops was ₹ 25,50,349/-, out of which payment amounting ₹ 11,21,439/- received through bank, a copy of ledger account attached in page 47 of PB. The ld DR however, reiterated the stand taken by the AO. The assessee has submitted these all significant evidences during the appellate proceedings. Neither the AO nor the CIT(A) disputed the fact that the assessee is not owner of land. Considering this factual position, we delete the addition of ₹ 14,28,910/-. Bogus sundry creditors - During the course of scrutiny proceedings, the A/R gave the name and address of eleven sundry creditors. The sundry creditors are linked with purchases done by assessee. We note that assessee`s purchases were not doubted by the assessing officer. Assessee`s books of accounts are audited by a chartered accountant. Books of accounts of the assessee has not been rejected by assessing officer. Once the transaction gets completed, it may happen that the creditor may not cooperate in income tax proceedings and does not respond to notice under section 133(6) of the Act issued by AO during scrutiny assessment. The assessee submitted before the bench that brought forward balance of ₹ 41,84,399/- relates to assessment year 2012-13 and AO had already examined them in the assessment proceedings for A.Y.2012-13, therefore, these should not be treated bogus sundry creditors. In assessee`s case some of the creditors also replied the notice under section 133(6) of the Act. The ld DR for the Revenue did not doubt the factual position narrated above. Considering the entirety of the facts and circumstances of the case, we delete the addition - Decided in favour of assessee.
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2019 (12) TMI 1112
Estimation of turnover - CIT(A) resorting to the weighted average method - appellant has shown gross receipts from retail trading on the basis of turnover - counsel submitted that the assessee has shown income as per provisions of section 44AF - HELD THAT:- Undisputedly, for the relevant assessment year, the appellant has disclosed total gross receipts of ₹ 28,98,562/- and shown net profit @ 10% to arrive at business income of ₹ 2,89,856/-, which is higher than the rate of 5% prescribed by the legislature for computing the profits and gains of retail business, who have turnover less than ₹ 40 lakhs during the relevant financial period. Therefore, as noted that the assessee herself has shown higher percentage of net profit of the turnover. Since there is no dispute regarding estimation of net profit, therefore, no further addition is required on this point. From the assessment as well first appellate order, unable to see any valid reason or show cause to the assessee by the authorities below before making any addition on account of closing stock found during the survey. It is well established principle of business of accounting that if the assessee s income of the assessee has been shown or estimated u/s.44AF then the assessee is not required to maintain any books of account and no further addition or disallowance is called for regarding his trading expenditure or any other account. Therefore, the addition made on the basis of closing stock found during the survey cannot be held as sustainable. I may point out that even if the authorities below want to tinker the point of closing stock found during the survey, then they are also required to consider the opening stock of the assessee at the beginning of the financial year i.e. on 1.4.2009 otherwise, addition on account of closing stock cannot be made in the hands of the assessee especially when the assessee herself is showing higher percentage of net profit on the turnover undertaken during the relevant financial period. Accordingly, Ground No.B is allowed. Unexplained investment - appellant could not produce any evidence before the CIT(A) to justified the source of such income - assessee is legal heir of parents and got all the movable and immovable property after their demise - HELD THAT:- AO has made addition by invoking the provisions of section 69 of the Act without any specific provisions of the Act and the assessee has substantially established that she had sufficient source of funds in the form of her accumulated saving for the last 15 years, against sale of property and jewellery and other valuables received from her parents on their death. Therefore, unable to agree with the contention of the lower authorities for making the addition and confirming the same. - Decided in favour of assessee.
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2019 (12) TMI 1111
Claim of interest on capital and remuneration to partners from the assessed income - Scope of the partnership Deed - CIT(A) was of the opinion that since profit has been estimated on gross receipts after survey u/s 133A of the Act, the assessee is not entitled for any further deduction. - HELD THAT:- We find that partnership deed dated 01.05.2008 at clause 8 contains provision for interest on capital @ 12% per annum and clause 17 provides for remuneration to whole time working partners and method of computation of remuneration is also provided. Vide supplementary deed dated 01.04.2010, manner of paying remuneration to whole time working partners have been revised. We find that in Assessment Years 2009-10 to 2011-12, the assessee has been claiming interest on capital and remuneration to partners, which are verifiable from the computation of income placed in the paper book. As relying on VIJAY CONSTRUCTIONS [ 2006 (8) TMI 607 - ALLAHABAD HIGH COURT] we direct the Assessing Officer to allow remuneration to the partners and interest on capital as per provisions of law.
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2019 (12) TMI 1110
Assessment u/s 153A - proof of incriminating material found in search - HELD THAT:- Since the date of search and seizure operation is 20.11.2009, it can be safely concluded that since no notice was issued and served upon the assessee u/s 143(2) of the Act, assessment is complete. In our considered opinion, the profit and loss account and balance sheet of the assessee company, by any stretch of imagination, cannot be considered as incriminating material. It is also not the case of the Revenue that the bank accounts were unearthed during the search operation. On these facts, the ratio laid down by the Hon'ble High Court of Delhi in the case of Kabul Chawla [ 2015 (9) TMI 80 - DELHI HIGH COURT] squarely apply - Decided in favour of assessee.
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2019 (12) TMI 1109
Addition u/s 68 - Assessee has accepted the amount received from the account of ARRS Developers Ltd., to his bank account as deemed dividend u/s.2(22)(e) - HELD THAT:- AO was not right in making addition in the hands of the assessee u/s.68 of the Act and ld CIT(A) was not correct in upholding the same. It is pertinent to note that the assessee has conceded ₹ 50,00,000/- as received as deemed dividend u/s.2(22)(e) of the Act only before the Tribunal and the authorities below had no occasion to deal with the issue while considering this fact. Therefore, in the changing scenario, we confirm ₹ 50 lakhs in the hands of the assessee u/s.2(22)(e) of the Act and consequently, other additions made by the AO and confirmed by ld CIT(A) only on the basis of ledger/book entry in the respective accounts and balance sheet of the assessee and his wife cannot be held as sustainable. Addition u/s 68 - sum payable to the daughter of the appellant Smt. Silpa Agarwal against sale of shares of M/s ARSS Infrastructure Projects Ltd. - HELD THAT:- We find no error in the findings of the ld CIT(A) that no materials were produced before the authorities below. Before us, no valid explanation was submitted by ld counsel for the assessee to prove that Silpa Agarwal has paid the amount of ₹ 1,25,000/- to the assessee. - Decided against assessee.
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2019 (12) TMI 1108
Disallowance of discount given to dealers - HELD THAT:- As decided in own case [ 2017 (12) TMI 1395 - ITAT PUNE] the assessee as businessman had taken business decision to make a policy for the distribution of its goods and to pay discount to different dealers in this regard. Such business decision cannot be negated by the Assessing Officer on the surmise that as per the Assessing Officer, the discount paid by the assessee was higher. The assessee is best judge of its business arrangement and in the absence of any evidence found that the expenditure has not been incurred, merely on the ground that the rate of discount paid is higher, the expenditure cannot be disallowed in the hands of assessee. We find support from the ratio laid down by the Hon'ble Supreme Court in CIT Vs. Walchand Co. Pvt. Ltd. [ 1967 (3) TMI 2 - SUPREME COURT] . Accordingly, we find no merit in the order of Assessing Officer in this regard. Disallowance of late delivery charges - HELD THAT:- As in assessee s own case for A.Ys. 2010-11 and 2011-12 we find no error in the order of CIT(A) in holding that the late delivery charges paid by the assessee were in the nature of expenditure carried out during the course of carrying on the business. The said late delivery charges were levied by the OEM customers, who were given specific orders to the assessee for delivery within time frame, but because of the delay in the project, clause for L.D. charges was applied and the amount was recovered from the assessee. In the totality of the above said facts and circumstances, we are of the view that the said expenditure is duly allowable in the hands of assessee. Accordingly, we hold so Disallowance of depreciation on windmill at 80% as it was commissioned on 09.08.2007 - AO noticed that high rate of depreciation was also claimed on civil work and installation of electrical lines - HELD THAT:- As decided in own case apellant was entitled to higher depreciation on the electrical line for transmission of the power generated. The Assessing Officer is directed to call for the breakup of each of these items of expenditure and allow accelerated depreciation on the items mentioned
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2019 (12) TMI 1107
Registration application u/s 12A Rejected - charitable activity u/s 2(15) - as per CIT-E activities of the assesse-society are not charitable in nature - A R submitted that the assessee society has taken premises on nominal rent from M/s Brahampuri Refugee Co-operative Society and the said premises are provided to needy persons to perform social obligation and other activities at affordable rate on no profit and no loss basis and a copy of the rent deed/IKarnama - HELD THAT:- Arrangement of taking premises on hire and giving it to needy persons as so claimed by the assessee society need to be examined afresh by the ld CIT(E). Further, the ld. AR has submitted that the predominant activity of the assessee-society is not hiring of the premises rather predominant activities of the assessee-society are holding of eye camps, yoga classes, celebration of festivals like Dushshera, Holi, Chetichand etc. and the receipts arising out of the hiring of premises are incidental receipts and the same are used for advancement of its main objectives. The predominant activities where so carried out by the assessee society as so claimed will not necessarily result in any receipts, rather the assessee society has to incur expenses towards carrying out such activities and in order to fund such activities, where the premises and other places are given on rent and receipt arising therefrom will only be reflected in the financial statements and are used for carrying out the main activities, the latter activities will qualify as ancillary and in fulfillment of main activities and not the main and predominant activities. However, we find that the said facts regarding carrying out main activities as so claimed by the assessee society are not emerging from the order of the ld. CIT(E) and thus not borne out of the records before us, though the assessee society has submitted some photographs which would again need verification. Therefore, in the interest of justice and fair play, we deem it appropriate that the matter is set-aside to the file of the ld CIT(E) to decide the matter afresh after providing reasonable opportunity to the assessee-society. Matter is set aside to the file of the ld. CIT(E) and the appeal filed by the assessee is allowed for statistical purpose.
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2019 (12) TMI 1106
Penalty u/s 271C - Non deduction of TDS on payment of External Development Charges (EDC) - HELD THAT:- Firstly, the assessee was not required to deduct TDS as the payment of EDC was not made out of any statutory and contractual liability to HUDA with whom the assessee has no privity of contract; secondly, the assessee has reasonable cause for non-deduction of tax at source by the assessee company; thirdly it is not the case of the Revenue authorities that the assessee has intentionally avoided the deduction of TDS by bringing on record contumacious conduct of the assessee; and fourthly, with continuous clarifications by the CBDT and DTCP discussed in the preceding paras, the issue became debatable if the TDS is to be deducted or not on the EDC providing reasonable cause to the assessee not to deduct the TDS. Consequently, penalty levied by the AO and confirmed by the ld. CIT (A) is not sustainable in the eyes of law, hence ordered to be deleted. So, the appeal filed by the assessee is allowed.
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2019 (12) TMI 1105
Disallowance on account of labour expenses - HELD THAT:- Genuineness of the payment of the wages to the temporary staff cannot be suspected as it was subject to professional tax and Provident fund. Once the genuineness of the expenses is established, then in our considered view the AO cannot occupy the armchair of the assessee and direct it to make the payment of wages at particular rate. As such it was the wisdom of the assessee for making the payment of the wages at the particular rate which cannot be questioned by the AO. In the similar facts and circumstances the disallowance made by the AO in the case of the assessee in the earlier assessment year i.e. 2008-09 [ 2016 (12) TMI 1803 - ITAT AHMEDABAD] was deleted by this tribunal Therefore, in our considered view the principles laid down by this tribunal in the own case of the assessee are squarely applicable to the case on hand. Accordingly, respectfully following the same we set aside the finding of the learned CIT-A and direct the AO to delete the addition made by him - Decided in favour of assessee.
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2019 (12) TMI 1104
Penalty u/s 271(1 )(c) - non recording of proper satisfaction in terms of provisions of section 271(l)(c) - whether the assessee has concealed particulars of income or has furnished inaccurate particulars of such income during assessment proceedings - HELD THAT:- Satisfaction recorded by the AO shows that at the time of initiating penalty AO himself was not aware enough if he has initiated the penalty proceedings on account of furnishing of inaccurate particulars of income or for concealment of income by the assessee rather mechanically sought to initiate the penalty proceedings u/s 271(1)(c) of the Act. When initiation of the penalty itself is not valid, it does not provide any cause of action as required u/s 271(1)(c) of the Act to levy the penalty on the assessee. Moreover when AO has not recorded valid satisfaction required u/s 271(1)(c) notice issued u/s 274 read with section 271(1)(c) to initiate the penalty proceeding is not specified one so as to make out if the assessee has concealed particulars of income or has furnished inaccurate particulars of such income. Ratio of CIT vs. SSA s Emerald Meadows [ 2016 (8) TMI 1145 - SC ORDER] is applicable to the facts and circumstances of the present case because when at the time of initiating the penalty proceedings AO was not clear enough as to whether penalty proceedings have been initiated for concealment of particulars of income or furnishing inaccurate particulars of income, penalty cannot be levied. - Decided in favour of assessee.
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2019 (12) TMI 1103
Revision u/s 263 - Capital gains declared by the assessee from the sale of ancestral property as the AO has not applied the provisions of Section 45(2)and consequently the profit arising from sale of the property ought to have been bifurcated into capital gains as well as business income - HELD THAT:- In the case in hand, the fair market value of the asset shall be taken as the valuation adopted by the stamp duty authority as provided u/s 50C of the Act being full value consideration and therefore, for the purpose of computing the capital gains the said amount of ₹ 1,08,25,150/- would be deemed to be full value consideration which is the actual sale consideration. Therefore, there will be no change in the capital gains computed and declared by the assessee even after applying the provisions of section 45(2) of the Act. Resultantly, the business income, if any, from the said transfer under the provisions of Section 45(2) of the Act would be Nil being the cost of acquisition of stock in trade and the sale consideration of the said property is the same. Even after invoking the provisions of Section 45(2) of the Act, there would be no change in the tax liability of the assessee and hence the order passed by the AO cannot be said prejudicial to the interest of the Revenue. It is undisputed proposition of law that for exercising the power u/s 263 of the Act, the Commissioner has to satisfy itself that the order passed by the AO is erroneous as well as prejudicial to the interest of the Revenue. Without satisfaction of the twin conditions that the order passed by the AO is erroneous as well as prejudicial to the interest of the Revenue, the provisions of Section 263 cant be invoked. Therefore, in the case in hand, when there will be no Revenue loss even if provisions of section 45(2) is applied then in such a situation the Commissioner is not allowed to exercise its power u/s 263 of the Act merely because the AO has accepted the capital gains declared by the assessee. Hence, impugned ex-parte order passed by the ld.PR. CIT without proper opportunity of hearing to the assessee and without establishing the order of the AO is prejudicial to the interest of the Revenue is not sustainable in law and consequently the same is quashed and set aside.
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2019 (12) TMI 1102
Deduction u/s 80P(2) - CIT(A) passed order u/s 154 wherein the claim of deduction u/s 80P was denied - HELD THAT:- In the case of Chirakkal Service Co-operative Co-operative Bank Ltd. v. CIT [ 2016 (4) TMI 826 - KERALA HIGH COURT] had held that when a certificate has been issued to an assessee by the Registrar of Co-operative Societies characterizing it as primary agricultural credit society, necessarily, the deduction u/s 80P(2) has to be granted to the assessee. Full Bench of the Hon ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT [ 2016 (4) TMI 826 - KERALA HIGH COURT] had held that the A.O. has to conduct an inquiry into the factual situation as to the activities of the assessee society to determine the eligibility of deduction u/s 80P. In view of the dictum laid down by the Full Bench of the Hon ble jurisdictional High Court (supra), we restore the issue of deduction u/s 80P(2) to the files of the Assessing Officer. AO shall examine the activities of the assessee and determine whether the activities are in compliance with the activities of a co-operative society functioning under the Kerala Co-operative Societies Act, 1969 and accordingly grant deduction u/s 80P(2) of the I.T.Act. Interest on the investments with Cooperative Banks and other Banks , the co-ordinate Bench order of the Tribunal in the case of Kizhathadiyoor Service Cooperative Bank Limited [ 2016 (7) TMI 1405 - ITAT COCHIN] had held that interest income earned from investments with treasuries and banks is part of banking activity of the assessee, and therefore, the said interest income was eligible to be assessed as `income from business instead of `income from other sources . However, as regards the grant of deduction u/s 80P on such interest income, the Assessing Officer shall follow the law laid down in the case of The Mavilayi Service Co-operative Bank Ltd. V. CIT (supra) and examine the activities of the assessee-society before granting deduction u/s 80P of the I.T.Act on such interest income. It is ordered accordingly.
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2019 (12) TMI 1101
Reopening of assessment u/s 147 against deceased assessee - legal heirs of the deceased assessee have challenged the assumption of jurisdiction u/s 147 - HELD THAT:- The undisputed facts are that the assessee, Shri Bhura Ram had expired on 26.11.2008 as per death certificate dated 11.02.2009 issued by Jaipur Municipal Corporation. The reasons for reopening the assessment u/s 147 were recorded on 15.03.2013 and thereafter the notice u/s 148 was issued in the name of assessee on 20.03.2013. Therefore, at the time of issuance of the notice u/s 148, the assessee had already expired and the notice was thus issued in the name of deceased assessee. Further, we find that there is no subsequent notice u/s 148 which has been issued by the Assessing Officer on the legal heirs of the deceased assessee. In the instant case, the notice issued u/s 148 in the name of the deceased assessee is a nullity in the eyes of law. Further, no notice u/s 148 has been issued in the name of the legal heirs and therefore, the provisions of section 159 cannot be invoked in the instant case. Consequently, the present reassessment proceedings initiated by issuance notice on the deceased assessee are being quashed for want of jurisdiction. - Decided in favour of assessee.
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2019 (12) TMI 1100
LTCG - exemption u/s 54F - Long term capital gain on the sale of the property by adopting deemed sale value u/snder section 50C - HELD THAT:- AO admitted the claim of the assessee for exemption u/s 54F(1)(b) in respect of investment on long term capital gain but instead of taking actual sale consideration received, has adopted the figure of sale consideration by invoking Section 50C. This is not in accordance with the provision of Section 50C which has created a deeming fiction. Section 54F is an exemption provision and it has given its applicability in itself, therefore, Section 50C will not come under picture. The Long Term Capital Gain exemption is admissible u/s 54F(1)(b) of the Income Tax Act, 1961 wherein total taxable gain comes to ₹ 2,68,830/- only as the investment made by the assessee adopting the figure of the actual sale consideration received in consequence with Section 54F. Therefore, CIT(A) while enhancing the addition has ignored the very effect of the provisions of Section 54F. Besides this, the CIT(A) while enhancement has not given any reasons as to why the enhancement is necessary and why the assessee is not justified in adopting the figure of the actual sale consideration received. Thus the Assessing Officer as well as CIT(A) failed to justify the stand by making addition of ₹ 30,17,456/- in respect of long term capital gain without granting exemption u/s 54F - Appeal of the assessee is allowed.
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2019 (12) TMI 1099
Addition u/s 69 - unexplained cash deposits - HELD THAT:- CIT(A) did not accept opening cash balance on the ground that the assessee is not maintaining books of accounts, however, accepted the factum of sale of land earning of agricultural income and did not accept the contention that the amount so withdrawn was deposited in the bank account. We have considered the material available on record and perused the finding of the Ld. CIT(A) the undisputed fact is that the CIT(A) accepted the fact that assessee was having agricultural income and also sold a piece of agricultural land proceeds whereof was deposited in the bank account of the assessee. It is also not rebutted by the revenue that before making deposits of sum of ₹ 10,65,000/- on 18.07.2005. The assessee had withdrawn sum of ₹ 40,000/-, ₹ 5,000/-, ₹ 7,000/- and ₹ 11,00,000/- on 04.07.2005,09.07.2005, 12.07.2005 and 15.07.2005 from the same bank account. Hence, the cash available with the assessee was higher than the cash deposited on 18.07.2005. The revenue has not placed on record demonstrating that these sums were utilized for any other purpose. Therefore, we are unable to affirm the finding of the Ld. CIT(A) for sustaining this addition as made on the basis that purpose of withdrawal of specific sums was not given. In our view revenue should have brought some material suggesting that the money as withdrawn from the bank account was used somewhere else and it was not available with the assessee for making deposits. In absence of such facts Ld. CIT(A) ought to have accepted the source of deposit of ₹ 10,65,000/- on 18.07.2005. Hence, we direct the AO to delete this addition. In respect of the remaining addition it is noticed that the Ld. CIT(A) has not accepted the opening cash balance of ₹ 5,27,432/-. Looking to the fact that the assessee was having agricultural income and other source of income even if the opening balance is considered to be higher at least the assessee would be having cash on hand a sum of ₹ 3,00,000/- which appears to be reasonable. Hence, the assessing officer is directed to delete the addition of ₹ 3,00,000/- being available as cash in hand. Regarding higher consideration received in cash we are of the considered view that onus was on the assessee to prove that the cash was received in addition to sum mentioned in sale deed. Further, the provisions of section 50C would not help as same operate in the different field. The contention of the assessee is therefore rejected. Hence, out of addition of ₹ 16,04,000/- sustained by the Ld. CIT(A) we direct the AO to delete the addition of ₹ 13,65,000/-, and remaining addition of ₹ 2,39,000/- is sustained. Ground numbers 3 to 6 are partly allowed.
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Benami Property
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2019 (12) TMI 1098
Benami Property - Scope of amendment - retrospective or prospective - legality, validity and propriety of the impugned show cause notice and Provisional Attachment Order (PAO) - amendment application urged that during the pendency of this case, the respondents have passed a consequential order under Section 24(5) of the Prohibition of Benami Property Transactions, 1988 (Act of 1988) - HELD THAT:- We have perused the show cause notice and are unable to hold that it is issued without authority of law, which warrants interference by this Court at this stage. Since we are not unable to hold that show cause notices were issued without authority of law, the judgments cited by Shri Mishra regarding alternative remedy are of no assistance to the petitioners. As held by this Court in Kailash Assudani OTHERS [ 2017 (8) TMI 383 - MADHYA PRADESH HIGH COURT] these petitions cannot be entertains. Pertinently, parties are at loggerheads on a factual aspect whether petitioner has filed the reply to the show cause notice or not ? Shri Mishra, learned senior counsel repeatedly and vehemently contended that the reply on merits to the show cause notice was indeed filed whereas Shri Lal refuted the same. We are not inclined to enter into this aspect at this stage. Since the petitioner is at liberty to raise all relevant aspects before Adjudicating Authority under Section 26 of the Act of 1988, interference is declined.
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Customs
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2019 (12) TMI 1095
Maintainability of petition - pre-mature stage - matter still under investigation - Provisional release of goods - bed sheets - as per submissions of the petitioner, the goods in question are bed sheets, imported from China, whereas as per submission of the respondent-DRI, since there was a mis-declaration about the value and classification of the goods in the Bill of Entry, therefore, the goods in question have been held up - HELD THAT:- It appears that since the DRI DZU is still investigating, the goods in question and a show cause notice is yet to be issued, we cannot entertain this petition at this pre-mature stage. The respondents have all powers, jurisdiction and authority to issue show cause notice within a period of six months and therefore, we see no reason to entertain this writ petition, at this stage - petition dismissed.
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Corporate Laws
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2019 (12) TMI 1097
Grant of bail - Illegal mining - unaccounted money - summon for alleged commission of offences punishable under Sections 477A read with Section 120B Indian Penal Code, 1860 and under 628 of the Companies Act 1956 and under Section 448 of the Companies Act, 2013. HELD THAT:- In terms of Section 212 (6) of the Companies Act, 2013, the offence prescribed under Section 448 of the Companies Act, 2013 which relates to making of a statement which is false in any material particulars knowing it to be false or which omits any material fact, knowing it to be material in any return, report, certificate, financial statement, prospectus, statement or other document required by, or for, the purpose of any of the provisions of this Act or the rules made thereunder makes a person culpable under Section 447 of the Companies Act, 2013 - In terms of the ambit of Explanation-(i) to Section 447 of the Companies Act, 2013 which defines fraud for the purpose of the said Section, a false statement in relation to in any return, report, certificate, financial statement, prospectus, statement or other document required by, or for, the purposes of any of the provisions of this Act or the rules made thereunder, any person makes a statement which is false in any material particulars, knowing it to be false or which omits any material fact, knowing it to be material, would fall within the ambit of Sections 448 and 447 of the Companies Act, 2013 as sought to be contended on behalf of the petitioner. In the present case, the relevant documents attributed against the applicant were stated to have been collected from the office of Jitender Kumar, Chartered Accountant, the co-accused (A-79), which the SFIO submitted were statutory records like minutes book prepared after the occurrence of the event in order to complete the legal formalities but were not the documents prepared during the course of actual functioning of the company and that the minutes books and other documents were not required to be signed by the petitioner and the same were not signed - In as much as it has been submitted on behalf of the petitioner that the documents have not been filed with any statutory authorities and the same were only draft documents prepared from the statutory records available and downloaded from the site of the MCA, the applicability of Section 448 of the Companies Act, 2013 becomes wholly doubtful in the absence of any signed document having been submitted by the petitioner. As regards the contention that has been raised on behalf of the SFIO that orders under Section 439 of the Cr.PC, 1973 as sought by the petitioner herein, cannot be granted without reference to the provisions of Section 212(6) and 212(7) of the Companies Act, 2013 without entering a finding on the required level of satisfaction of the Court that there are reasonable grounds for believing that the petitioner is not guilty of the offences alleged to have been committed by him and that the petitioner is not likely to commit any offence while on bail - the provisions of Section 212(6) of the Companies Act, 2013 in the facts and circumstances of the instant case would have also to be considered and thus, it cannot be contended that the embargo of Section 212(6) would essentially operate in the instant case. In the instant case, there are no contentions raised on behalf of the SFIO that the applicant s presence cannot be secured or that the applicant would flee from justice or that the applicant can influence the witnesses or tamper with the evidence in any manner. The applicant in the circumstances is allowed to be released on bail on filing a bail bond in the sum of ₹ 2,00,000/- with two sureties of the like amount to the satisfaction of the Special Judge, Companies Act, with conditions that he shall not leave the country, shall not tamper with the evidence, shall provide his contact details to the Serious Fraud Investigation Office (SFIO) and shall commit no offence whatsoever. Bail application disposed off.
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PMLA
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2019 (12) TMI 1094
Money Laundering - proceeds of crime - attachment of mortgaged property - tri-partite agreement - criminal activity or not - HELD THAT:- Admittedly, the factory premises were purchased in the year 2005. Therefore, the Tribunal accepted the contention that the said property, which was mortgaged to Bank of Baroda, could not be subject to attachment as proceeds of crime. Admittedly, the said properties had been acquired prior to the commission of the alleged crime, which is stated to be committed somewhere in 2011-12. Thus, the said properties could not be stated to be assets which were derived from any criminal activity. The proceeds of crime are defined to mean any property derived or obtained directly or indirectly by any person, as a result of criminal activity relating to a scheduled offence. Indisputably, the properties involved in this petition were not derived or obtained as a result of any criminal activity as the same had been acquired much prior to commission of the alleged scheduled crime. The contention that the value of any property derived from criminal activity can also be attached as proceeds of crime, is misconceived in the facts of this case. It is an admitted fact that the properties, as sought to be attached by the appellant, had been acquired and mortgaged by respondent no.1 prior to the commission of any scheduled offence. Thus, on the date of commission of the offence and on the date of the attachment order, the said properties did not vest with respondent no.1. Respondent no.1, being the mortgagor, was left with equity of redemption and all interest in the said property stood transferred to the mortgagee (respondent no.2), prior to the order of provisional attachment - There is no dispute that the respondent no.2 bank had acquired the mortgage of the property in question for valuable consideration. Therefore, any interest in the property acquired by them cannot, by any stretch, be considered as proceeds of crime in the hands of the mortgagee bank. The said order of Provisional Attachment, whereby the properties in question were attached and the order passed by the Adjudicating Authority confirming the said attachment, are wholly unsustainable - appeal dismissed.
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Service Tax
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2019 (12) TMI 1092
Refund of service tax wrongly paid - refund was rejected on the ground of time limitation - Section 11B read with provisions of Section 83 of the Finance Act - appellant have paid service tax on GTA under the reversed charged mechanism in respect of transportation of rice from their rice mill to the godown of Food Corporation of India from the period 2015-16 and 2016-17, the service is exempted under the Notification No. 25/2012-ST dated 26.06.2012 as amended. HELD THAT: - Admittedly, the duty in this case has been paid under the mistake of law as the appellant is engaged in transportation of agriculture products, which is rice, that is exempted by the Notification No.25/2012 dated 26.6.2012. The appellant has paid the service tax under the mistake of law. The issue is settled in favour of the appellant by the Hon ble Supreme Court in case of ITC [ 1993 (7) TMI 75 - SUPREME COURT ] and also by the decision of this Tribunal in case of Ambiance Hospitality [ 2018 (12) TMI 1112 - CESTAT NEW DELHI ] The decision of Hon ble Supreme Court in case of Doaba Cooperative Sugar Mills, [ 1988 (8) TMI 103 - SUPREME COURT ] is not identical to the case at hand. In this case it was the question of refund of duty and it is the provisions of Section 28 of the Customs Act prescribed have rightly been upheld by the Supreme Court. Therefore, this decision distinguish and not applicable in the facts and circumstances of the case. Refund allowed - appeal allowed - decided in favor of appellant.
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2019 (12) TMI 1091
Condonation of delay in filing refund claim - Refund of service tax - time limitation - refund claim has been filed beyond the period of one year stipulated in the Notification No 17/2011 - HELD THAT:- In similar cases with respect to Exemption Notification No 7/2011 available to SEZ developers, this Bench had taken a liberal view and condoned the delay as was available under the Exemption Notification - reliance can be placed in the case of HBL POWER SYSTEMS LTD. VERSUS CCCE ST, VISAKHAPATNAM-II [ 2018 (10) TMI 168 - CESTAT HYDERABAD ] where the delay in filing refund claims by the SEZ unit was condoned by this Bench. The delay in filing the refund claim is condoned and the original authority is directed to sanction refund claim to the extent admissible on merits - appeal allowed.
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Central Excise
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2019 (12) TMI 1093
Rectification of mistake - error apparent on the face of record - subsequent change in law - Levy of penalty - appellant herein had paid the duty before issuance of SCN - whether a subsequent declaration of law through decision of the apex court can be considered as a mistake apparent on the face of the record, enabling a rectification under Section 35C(2) of the Act? HELD THAT:- In a catena of decisions of the Hon ble apex court it is held that, 'a mistake apparent on the record' must be an obvious and patent mistake and the mistake should not be such which can be established by a long drawn process of reasoning. The power to rectify a mistake should be exercised when the mistake is a patent one and should be quite obvious. The mistake cannot be such, which can be ascertained by a long drawn process of reasoning. Further, while rectifying a mistake, an erroneous view of law or a debatable point cannot be decided; or an incorrect application of law can also not be corrected. When the appeal was decided by the Tribunal through Annexure A order, the decision was taken based on the law as it stood then. In a subsequent decision of the hon'ble Supreme Court the law was declared as otherwise, based on a change of opinion. Such a change of opinion of law cannot be taken as a 'mistake apparent on the face of the record' which could be rectified by invoking Section 35C(2) of the Central Excise Act. Further, such material cannot be used for unsettling the settled position attained through disposal of the appeal, alleging that there occurred any mistake apparent from the face of the record. It cannot be utilized for reopening a concluded decision, which had attained finality between parties inter se - thus, the above appeal has to succeed. The question of law framed is answered in favour of the appellant and against the Revenue.
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2019 (12) TMI 1090
Export of goods or not - clearance of Aviation Turbine Fuel (ATF) when loaded into flight operating on international route - whether the said clearance should be considered as exported by the appellant or otherwise? - necessary documents not supplied to appellant - principles of natural justice - HELD THAT:- A report was submitted by the Assistant Commissioner vide letter dated 20/02/2013 which was not given to the appellant and the de novo order was passed on the back of the appellant without putting them to notice of what is observation of Assistant Commissioner, why they have not accepted the documents submitted by the appellant. The Assistant Commissioner was supposed to only establish that the ATF supplied is amount to export or otherwise. So, the same can be established not only on the basis of ARE-3 but on the basis of other documents - there is a violation of principle of natural justice in passing the de novo order. Appellant may be supplied the letter/report given by the Assistant Commissioner and also an opportunity of personal hearing for making any additional submission, if required. Thereafter, a reasoned order may be passed - The appeal is allowed by way of remand to the Adjudicating Authority.
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Indian Laws
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2019 (12) TMI 1096
Dishonor of Cheque - amicable settlement - Section 138 of N.I. Act - compounding of offences - HELD THAT:- In view of the settlement arrived at between the parties, the offence under Section 138 of the NI Act against the petitioner is permitted to be compounded, subject to payment of costs of ₹ 5,000/- to be deposited by the petitioner with the Delhi High Court Legal Services Committee within a period of eight weeks from the date of this order. The petitioner stands acquitted. Petition disposed off.
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