TMI Tax Updates - e-Newsletter
December 31, 2016

Case Laws in this Newsletter:

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

TMI SMS

• Brand promotion of INTEL/ MICROSOFT - The activity of promotion or marketing of logo or brand doesn't cover under Business Auxiliary Service

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• Default u/s 201(1) - failure to deduct TDS - even if the payee files a nil return or a loss return - assessee is liable to pay interest - HC

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• CE - there will be no need to add back the discounts to the assessable value, even if the same are subsequently recovered - Tri

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Articles

1. E Commerce under GST

   By: Abhishek Gupta

2. TRANSITIONAL PROVISIONS-PART-III

   By: Pradeep Jain

3. WHEN DO WE EXPECT GST NOW

   By: Dr. Sanjiv Agarwal

News

1. India and Singapore Sign a Third Protocol for Amending the Double Taxation Avoidance Agreement (DTAA)

2. Department of Economic Affairs, Ministry of Finance releases Quarterly Statistics on India’s External Debt for the Quarters at end-September 2016; India’s External Debt at end-September 2016 stock stood at US$ 484.3 billion, recording a decline of US$ 0.8 billion (0.2 per cent) over the level at end-March 2016

3. Change in Tariff Value of Crude Palm Oil, RBD Palm Oil, Others – Palm Oil, Crude Palmolein, RBD Palmolein, Others – Palmolein, Crude Soyabean Oil, Brass Scrap (All Grades), Poppy Seeds, Areca Nuts, Gold And Silver Notified

4. Direct Tax Dispute Resolution Scheme- 2016 extended up to 31st January, 2017

5. Department of Economic Affairs, Ministry of Finance - Year End Review – 2016

6. RBI Reference Rate for US $

7. Closure of the scheme of exchange of Specified Bank Notes (SBNs) at banks on December 30th 2016- Accounting

8. Spectre of default, credit pain may tail banks next year too

9. Awareness about Copyrights pertaining to Film and TV Industry emphasised to counter piracy

10. Two More Advance Pricing Agreements signed by the Central Board of Direct Taxes

Notifications

Customs

1. 149/2016 - dated 30-12-2016 - Cus (NT)

Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver

Income Tax

2. 124/2016 - dated 29-12-2016 - IT

Seeks to Amend Notification Number S.O. 1902(E) dated the 26th May, 2016

3. 122/2016 - dated 27-12-2016 - IT

Income-tax (36th Amendment) Rules, 2016 - Investment of Providend fund moneys - INVESTMENT PATTERN

Circulars / Instructions / Orders

DGFT

1. 49/2015-2020 - dated 30-12-2016

Extending Merchandise Exports from India Scheme (MEIS) benefit for ‘Onions Fresh or Chilled’ under ITC (HS) code 07031010 up to 31.03.2017

2. 50/2015-2020 - dated 30-12-2016

Enlistment of one PSIA in terms of para 2.55 (d) of HBP 2015-20 in Appendix 2G.

Highlights / Catch Notes

Income Tax

• Club Membership Security Deposits: Refundable Under Conditions; Classified as Capital Receipt for Tax Purposes.

  Case-Laws - HC : The security deposit recovered from the members at the time of their enrollment as a club member is refundable on occurrence of the contingencies mentioned in the Rules, Regulations and ByeLaws, same is required to be treated as a deposit and a capital receipt consequently - HC
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• DRP Rules Loan to Subsidiary at 247 Basis Points Above LIBOR is Arm's Length, Citing Indian Banks' Practices.

  Case-Laws - HC : When the DRP itself stated that since Indian banks were charging 250 basis points above LIBOR on similar loans, there was no good reason for holding that the loan advanced to a subsidiary at 247 basis points above the LIBOR rate to be not at arm’s length. - HC
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• Manufacturers of Injection Blow Molding Machines Can Deduct u/s 10B Before Set-Off of Losses and Depreciation.

  Case-Laws - AT : Entitlement to deduction u/s 10B - assessee is engaged in the business of manufacture of Injection Blow Molding Machines - whether exemption u/s 10B has to be allowed from the total income before set off of brought forward losses and depreciation? - Held Yes - AT
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• Section 14A Disallowance Not Applicable: No Dividend Income, Strategic Investments in Subsidiaries Only.

  Case-Laws - AT : Disallowance u/s 14A - since the assessee has not earned any dividend income and the investments were made only as a strategic investment in wholly owned subsidiary companies no disallowance under section 14A is attracted - AT
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• CIT(A) Failed to Issue Proper Notice on Section 40(a)(ia) Issue, Violating Section 251(2) Provisions.

  Case-Laws - AT : The issue relating to invoking of section 40(a)(ia) was not before the AO at all and in this background, it was imperative for the CIT(A) to have issued an appropriate notice to the assessee - provisions of section 251(2) clearly militate against the aforesaid approach of the CIT(A) - AT
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• Court Upholds Interest Liability for TDS Failures u/s 201(1A) Despite Nil or Loss Returns by Payee.

  Case-Laws - HC : Default u/s 201(1) - failure to deduct TDS - liability to pay interest u/s 201(1A) if the payee of such amounts has files a nil return or a return showing a loss - assessee is not permitted to decide for itself what the liability of the deductee assessee is or is likely to be - demand of interest confirmed - HC
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Customs

• Valuation Rejection Overturned: Discrepancy Found in Engine Manufacturing Year on Certificate and Plate.

  Case-Laws - AT : Valuation - rejection on the ground that the Chartered Engineer's certificate issued in the country of export was not acceptable owing to discrepancy with the year of manufacture on the plate affixed to the engine - ground of rejection not valid - demand set aside - AT
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• Imported Goods Valuation: Use Declared Price Unless Significant Discrepancy Found Through Market Inquiry. Avoid Loading.

  Case-Laws - AT : Valuation of imported goods - Unless there is substantial difference between the declared price and the value determined after market enquiry, loading must be avoided and the transaction value can be accepted - AT
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• Bond Without Explicit Interest Terms Bars Interest Recovery Despite Duty Condition per Notification.

  Case-Laws - AT : When the bond does not contain the terms of payment of interest, recovery of interest cannot be made, despite there is a condition of executing the bond not only for the duty but also for the interest, in terms of notification - AT
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Corporate Law

• Non-Shareholder Cannot Request Document Inspection u/s 163 of Companies Act 1956.

  Case-Laws - Tri : Entitlement to supply of copies of documents - inspection of the documents - Petitioner is not being a shareholder of the company - he is not entitled to seek this relief u/s 163 of the companies Act 1956 - Tri
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Service Tax

• Promoting 'INTEL' and 'MICROSOFT' logos not classified as Business Auxiliary Services for service tax.

  Case-Laws - AT : Business Auxiliary Services - brand promotion of ‘INTEL' and ‘MICROSOFT' - The activity of ‘promotion or marketing of logo or brand’ does not cover under the category of Business Auxiliary Service - AT
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• Reimbursable Expenses for Ads and Materials Procurement Excluded from Consulting Engineering Services; No Service Tax Demand.

  Case-Laws - AT : Valuation - reimbursable expenditure - incurring of certain expenditure on behalf of the principals like placing advertisements for procurement of materials - The activities for which such charges are levied are not covered in the definition of consulting engineering services. - demand set aside - AT
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• Appellant's Services to Foreign Institutional Investors Classified as Export Due to Destination-Based Tax and Overseas Recipients.

  Case-Laws - AT : Refund - Services provided by the appellant to Foreign Institutional Investors can be termed as export of services as the service tax being a destination based tax, the recipient of the services are situated abroad. - AT
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• Appellant's activities fully documented; no malafide intent found. Revenue's extended action period not applicable.

  Case-Laws - AT : BAS - All the activities undertaken by the appellant were a part of the reflection made in the balance sheet and income tax return in which case no suppression or malafide can be attributed to the assessee. No malafides could be proved by Revenue - the extended period would not be available to the Revenue. - AT
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• Refund Claim Denied: Appellant Must Recover Service Tax Payment Directly from Company, Considered an Internal Matter.

  Case-Laws - AT : Rejection of refund claim - if M/s Bata India Ltd., did not pay the service tax to the appellant, it is for the appellant to proceed against M/s Bata India Ltd., to recover the said amount. This is wholly an internal affair between the appellant and M/s Bata India Ltd. - rejection justified. - AT
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• CENVAT Credit Refund Approved for Export Services; Valid Accumulated Credit Entitles Businesses to Refund.

  Case-Laws - AT : Refund of cenvat credit - export of services - since the substantive ground of taking CENVAT credit in the first place being correct would lead to the obvious conclusion that ultimately if it gets accumulated the refund has to be sanctioned - AT
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Central Excise

• Reversal of Cenvat Credit: Interest and Penalties Imposed for Retaining Credit on Destroyed Goods Not Bona Fide.

  Case-Laws - AT : Reversal of Cenvat credit on CVD - Having continued to retain the credit after destruction of the same till being pointed out by the department cannot be construed as a bonafide act - demand of interest and penalty confirmed - AT
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• Cash Discounts in Central Excise: Recovery Doesn't Affect Initial Valuation, Supported by Case Law.

  Case-Laws - AT : Valuation - Cash discounts - scope of ambit - there will be no need to add back the discounts to the assessable value, even if the same are subsequently recovered - AT
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• Refund Approved: Excise Duty Incorrectly Debited and Not Collected, No Unjust Enrichment Involved.

  Case-Laws - AT : Refund claim - excise duty paid wrongly - The entry was made debiting the excise duty without actually collecting the excise duty - they have not paid the excise duty raised in the invoice which establishes that the duty burden has not been passed on - refund is not hit by unjust enrichment - AT
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• Legal Decision Bars Recovery of EOU's Unfulfilled Export Dues by Attaching Lessor's Property.

  Case-Laws - AT : Attachment of property - an 100% EOU, vacated the premises before fulfillment of the export obligations - recovery cannot be made from the Lessor by attachment of the property - AT
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Case Laws:

• Income Tax

• 2016 (12) TMI 1559
  Receipt of membership fees - nature of income - revenue or capital receipt - assessee is carrying on the business of club activities - Held that:- Considering the fact that the security deposit is refundable after a period of 25 years or on occurrence of the contingencies mentioned in the byelaws and it cannot be said that the assessee club had absolute dominion over the impugned deposits, the case on behalf of the Revenue that the same be treated as revenue income cannot be accepted. Merely because the security deposit is not kept apart and/or subsequently the amount of security deposit is utilized by the club for other purposes such as construction and providing other amenities at the club, the same shall not loose the “character of deposit”, which as observed hereinabove is refundable on occurrence of the contingencies as mentioned in the byelaws. No error has been committed by the learned Tribunal in holding the same as Capital Receipt in view of the decision in the case of S.S. Sakhar Karkhana Ltd. (2004 (9) TMI 6 - SUPREME Court ). Considering the fact that the security deposit recovered from the members at the time of their enrollment as a club member is refundable on occurrence of the contingencies mentioned in the Rules, Regulations and ByeLaws, same is required to be treated as a deposit and therefore, the same is required to be considered as capital receipts. We confirm the impugned judgment and order passed by the learned Tribunal. - Decided in favour of assessee

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• 2016 (12) TMI 1558
  Validity of reopening of assessment - reopening of the assessment is on the information / data supplied by the office of the Principal Director of Income Tax (Investigation), Ahmedabad vide his confidential letter - non application of individual mind by AO - Held that:- The material on the basis of which the A.O. seeks to assume the jurisdiction under section 147 if the Act is the information received from the external source viz. the Principal Director of Income Tax (Investigation), Ahmedabad. It cannot be disputed that on the basis of the information received from another agency, there cannot be any reassessment proceedings. However, after considering the information / material received from other source, A.O. is required to consider the material on record in case of the assessee and thereafter is required to form an independent opinion on the basis of the material on record that the income has escaped assessment. Without forming such an opinion, solely and mechanically relying upon the information received from other source, there cannot be any reassessment for the verification. At this stage it is required to be noted that even in the reasons recorded, there is no allegation that there was any failure on the part of the assessee in not disclosing truly and fully material facts necessary for assessment. Under the circumstances, the assumption of the jurisdiction to reopen the assessment beyond the period of four years in exercise of powers under section 147 of the Act is bad in law and contrary to the provisions of section 147 of the Act. Under the circumstances, on the aforesaid ground alone, the impugned reassessment proceedings deserve to be quashed and set aside. - Decided in favour of assessee

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• 2016 (12) TMI 1557
  Validity of reopening of assessment - assessee while claiming the deduction u/s 80IA did not submit separate Profit & Loss Account and balance sheet of the undertaking, therefore,AO ought not to have allowed deduction - Held that:- Division Bench of this Court in the case of Sabarkantha District Co-operative Milk Producers Union Ltd. (2014 (6) TMI 977 - GUJARAT HIGH COURT)has held that deduction under Section 80IA Income Tax Act cannot be denied solely on the ground that separate Profit & Loss Account and balance sheet are not produced, if otherwise the petitioner – assessee is entitled to deduction under Section 80IA of the Income Tax Act. In that view of the matter on the very ground /reasons, but with respect to another assessment year now it is not open for the Assessing Officer to reopen the assessment for the Assessment Year 2010-11 on the ground that the petitioner – assessee did not submit separate Profit & Loss Account and the balance sheet while claiming deduction under Section 80IA of the Income Tax Act. The Assessing Officer was not justified in allowing the deduction under Section 80IA of the Income Tax Act to the extent of Rs. 45,54,649/- The aforesaid issue is now concluded by the Division Bench of this Court, and therefore, on the aforesaid ground /reasons, the Assessing Officer is not justified in reopening the assessment for the Assessment Year 2010-11 that too beyond four years. - Decided in favour of assessee

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• 2016 (12) TMI 1556
  Validity of reopening of assessment - non disposing objections submitted by the petitioner assessee against the reasons recorded to reopen the assessment - Held that:- In the case of GKN Driveshafts (India) Ltd (2002 (11) TMI 7 - SUPREME Court ) clarify that when a notice under section 148 of the Income-tax Act is issued, the proper course of action for the notice is to file a return and if he so desires, to seek reasons for issuing notices. The Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the notice is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order. In the instance case, as the reasons have been disclosed in these proceedings, the Assessing Officer has to dispose of the objections, if filed, by passing a speaking order, before proceeding with the assessment in respect of the abovesaid five assessment years AO may not pass any reassessment order in haste, more particularly either disposing of the objections and/or without giving reasonable and sufficient time to the assessee to challenge the order disposing of the objections and as nothing is on record that as on today either the objections made by the petitioner are disposed of and/or any decision disposing of the objections is communicated to the petitioner, we dispose of the present Special Civil Application at this stage.

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• 2016 (12) TMI 1555
  Validity of reopening of assessment - reasons to believe - non entitlement to writing of premium and claiming notional loss also on revaluation of year end - Held that:- There is no allegation whatsoever that there was any failure on the part of the assessee in disclosing true and correct facts necessary for assessment. From the reasons recorded, it appears that according to the AO though the assessee was not entitled to both the benefits simultaneously i.e. writing of premium and claiming notional loss also on revaluation of year end and still such benefit have been granted by the AO. Therefore, it is not a case that there was any failure on the part of the assessee in not disclosing true and correct facts. As observed herein above, even there are no allegation in the notice as well as the reasons recorded that there was any failure on the part of the assessee in not disclosing true and correct facts necessary for assessment. In that view of the matter the condition precedent to assume jurisdiction under Section 147 of the Act to reopen the assessment beyond the period of four years, more particularly, contained in proviso to Section 147 of the Act are not satisfied. - Decided in favour of assessee.

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• 2016 (12) TMI 1554
  Validity of reopening of assessment - notice issued against non-existent Company - company amalgamated - Held that:- This Court in the case of Khurana Engineering Ltd. Vs. Deputy Commissioner of Income-Tax reported in [2013 (2) TMI 128 - GUJARAT HIGH COURT ] held that once the original assessee is ordered to be merged into another company, consequently not in existence, notice for assessment / reassessment against the transferor Company shall not be sustainable. As in the present case when the impugned notice is issued in the name of the original assessee, the same has been issued against the non-existent Company, as after the order passed by this Court sanctioning the scheme of merger and the original assessee - transferor Company Pvt. Ltd. was ordered to be merged into one M to M Traders Private Limited and thereafter even the said M to M Traders Private Limited is further ordered to be merged into the petitioner - assessee Company, the impugned notice against the non-existent Company is not not permissible. - Decided against revenue

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• 2016 (12) TMI 1553
  Invoking Section 142A - reference to the DVO - rejecting books of accounts stating the cost of construction of residential property in question as well as the land appurtenant thereto is not based on any incrimination material found or any infirmity being pointed out - Held that:- From the decision of the Hon'ble Supreme Court in the case of Sargam Cinema (2009 (10) TMI 569 - Supreme Court of India ) and Goodluck Automobiles Pvt. Ltd (2012 (9) TMI 157 - Gujarat High Court) and Vijaykumar D Gupta (2014 (4) TMI 860 - GUJARAT HIGH COURT ), it cannot be said that the learned Tribunal has committed any error in deleting the addition made by the Assessing Officer which was made on the basis of valuation department by the DVO as unless and until the books of account are first rejected by the Assessing Officer, the Assessing Officer is not justified in making the reference to the DVO's under Section 142 A of the Act. - Decided in favour of assessee

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• 2016 (12) TMI 1552
  Section 10B deduction availability - actual receipts by the assessee - Held that:- This court is of the opinion that the ITAT’s findings cannot be faulted. The submissions of the revenue with respect to Section 10B (3) in the context further is that the “sale proceeds of articles of things or computer software” export it out of India and received in or brought into India by the assessee into the converted foreign exchange – the condition spelt out in Section 10B (3), cannot be limited or restricted to only actual receipts by the assessee. There can be basis where the assessee might export through a third party which might in the first instance received the foreign exchange and in turn transmit it. Rather than a per se rejection of such transaction what is essential for the AO in each case to decide whether the third party was beneficiary to the transaction and received any amount all out of such proceeds. Thus such as attachment order and exercise of banks lien etc. amount may not be actually received into the assessee’s account or received by it at all. In such cases too, it cannot be claimed that unless the amounts actually are received by the assessee would not qualify for benefit under Section 10B. Whether unlike under Section 80HHC where the benefit of deduction is available even to a third party but one who facilitates the manufacturer by an exporter from which earnings are reported, (termed as “supporting manufacturer”) Section 10B makes no similar provision? - Held that:- Section 80HHC was undoubtedly brought at a prior point in time – for the first time in 1984. The emphasis of Section 80HHC is the grant of qualify the deduction to business exporters of goods or merchandise. Section 10B so introduced at a later point in time i.e. in 2000 by Finance Act of 2000 with effect from 01.04.2001. Likewise the existing Section 10A was substituted with effect from 01.04.2001. The original provision of Section 10A was enacted in 1981. The commonality to substitute 10A and 10B is apparent by the fact that both refer to profits and gains derived by undertaking by export of articles or things or computer software for 10 consecutive years. Previous ruling of this court in CIT vs. Tei Technologies Pvt. Ltd. (2012 (9) TMI 47 - DELHI HIGH COURT)& CIT vs. Kei Industries Ltd. (2015 (3) TMI 618 - DELHI HIGH COURT) exphasized the distinction between Section 10A and 10B on the one hand and Section 80HHC on the other characterising the category of former exemption even though they are termed deductions and the latter i.e. Section 80HHC as a deduction. This reasoning has to be kept in mind even while rejecting the revenue’s contention on this score.

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• 2016 (12) TMI 1551
  Inapplicability of transfer pricing exercise with respect to loans advanced to subsidiary/AE - provisions of Chapter X of the Income Tax Act and Rule 10A of Income Tax Rules applicability - Held that:- In this case, while examining the sum advanced in question, especially the rate of interest, the DRP and later the ITAT closely scrutinized not only the prevalent LIBOR rates but also the risk assessment. The Tribunal – as is evident from the extracted part of its reasoning, held that when the DRP itself stated that since Indian banks were charging 250 basis points above LIBOR on similar loans, there was no good reason for holding that the loan advanced to a subsidiary at 247 basis points above the LIBOR rate to be not at arm’s length. These findings are essentially factual and based upon the choice of either accepting in entirety the DRP reasoning which itself had found the TPOs approach incorrect or substituting it with the ITAT’s reasoning. In other words, as between the views of the DRP and that of the ITAT, this court is being asked preferred that of the former. Ipso facto this does not constitute a question of law, however this Court finds some merit and substance in the revenue’s grievance with the ITAT’s observations that advances to foreign subsidiaries per se may not constitute international transactions. This court clarifies that such observations should not be treated as binding and that it is up to the concerned Transfer Pricing Officer to undertake the necessary scrutiny having regard to the facts of each case to discern whether indeed the terms of any given loan are at arm’s length or not. To that extent the wide observations of the ITAT are not approved but are confined to the facts of the present case. On the first issue, no question of law arises. Disallowance under Section 14A - Held that:- The findings of the ITAT that the kind of disallowance made could not be sustained, was entirely fact dependent inasmuch as application of Rule 8D in this case was wronged upon. The assessee had contended successfully that the funds deployed to derive the tax exempt income were its own and were not borrowed. These findings too are factual and cannot constitute questions of law.

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• 2016 (12) TMI 1550
  Entitlement to deduction u/s 10B - assessee is engaged in the business of manufacture of Injection Blow Molding Machines - whether exemption u/s 10B has to be allowed from the total income before set off of brought forward losses and depreciation? - Held that:- Respectfully following the decision of Hon’ble Bombay High Court in the case of Black & Veatch Consulting (P) Ltd. (2012 (4) TMI 450 - BOMBAY HIGH COURT ) , in the case of Ganesh Polychem Ltd. v. ITO (2012 (8) TMI 953 - ITAT MUMBAI) and the latest decision of Hon’ble Bombay High Court in the case of CIT v. Techno Tarp and Polymers Pvt. Ltd. (2015 (12) TMI 909 - BOMBAY HIGH COURT) the appeal of the Revenue is not sustainable in law and hence we dismiss appeal filed by the Revenue , by upholding/sustaining the appellate order of the ld. CIT(A)’s wherein partial relief was granted to the assessee by holding that the assessee is entitled to deduction u/s 10B of the Act from current year’s profits without setting off of carry forward of business losses of the eligible unit and hence the appeal filed by the Revenue is dismissed. We would also like to clarify that Hon’ble Bombay High court in the afore-stated judgment dated 05-12-2015 in the case of CIT v. Techno Tarp and Polymers Pvt. Ltd has laid down proposition of law that even unabsorbed depreciation of eligible unit shall not be set-off against the current year profits of eligible unit while computing deduction u/s 10B of the Act.We order accordingly.

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• 2016 (12) TMI 1549
  Income from sale of shares - lower authorities treating the short term capital gain and long term gain arising out of sale of shares as business income - taxing the same at normal rate of income-tax, instead of special rates prescribed u/s 111A / 112 of the Act and also denied benefit of exemption u/s 10(38) - Held that:- It is an undisputed fact that in AY 1999-2000 the assessee included its shares as part of ‘investment’ and since then the assessee has been consistent in approach by showing the same under the head ‘investment’ and claiming the income from sale of shares as assessable under the head ‘Income from capital gains’. But the AO breached the consistency approach in the year before us despite the fact that in all earlier and subsequent years the stand of the assessee has been accepted. This approach is not permissible under the law. On the other hand, the assessee has offered the impugned income as assessable under the head ‘capital gains’ in accordance with law and facts and in line with its consistent approach. Thus, after taking into account all the facts and circumstances of the case, and especially in view of the circulars of the Board, we do not find legality in the actions of the lower authorities in assessing the impugned income under the head ‘business’. Thus, the impugned income arising from sale of shares is directed to be assessed under the head ‘capital gains’, i.e. short term capital gain or long term capital gain, as the case may be. The AO is also directed to provide all consequential benefits as have been mentioned in grounds of appeal, after verifying requisite facts, viz. granting of exemption u/s 10(38) wherever applicable, charging of tax on special rate prescribed u/s 111A/112 and setting off of brought forward short term capital losses of AY 2009-10, in accordance with law and facts of this case. - Decided in favour of assessee.

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• 2016 (12) TMI 1548
  TDS u/s 194J - Non deduction of tds on transaction charges paid to stock exchanges - Held that:- Since both the revenue and the assessee were under the bonafide belief for nearly a decade that tax was not deductible at source on payment of transaction charges, no fault can be found with the assessee in not deducting the tax at source in the assessment year in question and consequently disallowance made by the assessing officer under Section 40(a)(ia) of the Act in respect of the transaction charges cannot be sustained. See Kotak Securities Ltd. case [2011 (10) TMI 24 - Bombay High Court] - Decided in favour of assessee Treatment to loss on sale of shares of subsidiary company as business loss on the ground that the same has erroneously been treated as capital loss by the assessee - Held that:- Admittedly, the AO has passed the assessment order on the basis of the facts represented by the assessee and the assessee did not raise this issue even before the CIT(A) during appeal proceedings. Under these circumstances, the assessee cannot raise this issue before the Tribunal. In our considered opinion since this is not a legal ground the same cannot be admitted as an additional ground at this stage. Hence, we dismiss this ground of appeal.

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• 2016 (12) TMI 1547
  TDS u/s 194C - Disallowance u/s 40(a)(ia)- non deduction of tax at source from reimbursement of expenses - Held that:- The assessee was simply providing services of facilitators by arranging the transport vehicles from the other transporters for which he used to get the reimbursement from those parties for whom he arranged these services and used to charge his commission only which was duly shown as income. We therefore, find merit in the contentions of the ld. AR that the assessee was not supposed to deduct TDS on the reimbursement made. We therefore inclined to restore the matter to the file of AO by setting aside the order of ld.CIT(A) and directing the AO to verify the reimbursement of expenses after hearing the same and accordingly decide the issue as per law and fact. Accordingly, we allow this ground for statistical purposes.

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• 2016 (12) TMI 1546
  Reopening of assessment - Disallowance at 2% of net commission of assessee out of a total receipts shown by the assessee being sales made - Held that:- We find from the order of the AO that the assessee is unable to prove the amounts credited in the bank A/c in cash as well as other credit entries and the persons to whom accommodation bills were provided. The assessee could not provide the details of beneficiaries it means that no sale has been affected by the assessee. The CIT(A) has totally gone on wrong premise by treating the unaccounted sale on which net commission of 2% is to be charged as profit of the assessee but according to us the assessee is unable to prove the sales as he is unable to prove the beneficiaries. First of all, the assessee has to prove the beneficiaries to whom these accommodation entries are given and in case he is able to provide information in relation to beneficiaries and beneficiaries admit that they have paid only net commission, only then the commission is added otherwise the entire deposits to be added in the hands of the assessee. But, before that the compete verification of facts are required because none of the authorities below have brought on record the facts of the case. Even otherwise, the assessee has to provide details of beneficiaries so that the AO can verify and finalize the assessment as per the provisions of the Act. Accordingly, both the appeals, of Revenue as well as assessee, are allowed for statistical purposes and matter is remanded back to the AO. The orders of lower authorities are set aside.

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• 2016 (12) TMI 1545
  Disallowance of hotel expenses as being not incurred for purpose of business - "wholly and exclusively" - company has incurred hotel expenses for stay of Shri Samyak Veera,NRI, who stayed in India as a strategic investor for monitoring project in India - Held that:- The expenditure incurred being “wholly and exclusively does not mean that it has to be incurred necessarily. The expression "wholly and exclusively" used in section 37 of the IT. Act does not mean necessarily and the payments made voluntarily are not to be disallowed only on account of their voluntary character. So long as there is a reasonable nexus between the expenses incurred and the business of the assessee, the expenses will be regarded as having been incurred for the purposes of business. Thus, the test to find out whether a particular expenditure is wholly or partly justified or exclusively incurred for the purpose of business is not to see whether it is necessary, but to be considered as commercial expediency and has to be judged from a prudent businessman's point of view. The true test is to find out whether the business man, when he expends the money is acting reasonably in the interest of his own business. Every businessman knows his interest best and it is for assessee to decide how to promote his business interest. Therefore, the disallowance made by the AO on the ground that the hotel expenses was not incurred "exclusively" for the business purpose is not justified. In view of above discussion, we do not find any merit in the action of lower authorities disallowing the expenditure incurred by assessee for the purpose of its business. - Decided in favour of assessee

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• 2016 (12) TMI 1544
  Disallowance u/s 14A - investment made as a strategic investment in group companies - Held that:- We hold that since the assessee has not earned any dividend income and the investments were made only as a strategic investment in wholly owned subsidiary companies no disallowance under section 14A is attracted. Thus, we direct the Assessing Officer to delete the disallowance made under section 14A in both these assessment years. - Decided in favour of assessee

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• 2016 (12) TMI 1543
  Applicability of Section 35ABB vis-a-vis spectrum charges paid by the assessee - charges paid after the change in the telecom policy in 1999 - Held that:- The question of law sought to be urged is squarely covered by the previous decision of this Court in the assessee’s case for another assessment year CIT v. Bharti Hexacom Ltd.(2013 (12) TMI 1115 - DELHI HIGH COURT ). Therefore, this question cannot be framed and is answered against the revenue. Treatment by the assessee in its books of accounts to the lease rent paid to IBM for use of its software and equipments should have been amortized or the assessee permitted to claim that they were revenue expenses - Held that:- This Court holds that the impugned order has correctly appreciated that the treatment of a particular transaction in the books of accounts is inconclusive as of its true nature which has to be adjudged on an independent consideration by the Assessing Officer. In this case, therefore, the ITAT’s conclusion was justified that the expenditure was essentially revenue in character. No question of law arises

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• 2016 (12) TMI 1542
  Taxability of Software Supply - Royalty or Business Income - DTAA between India & Israel - Permanent Establishment (PE) - Held that:- In view of the judgment of Hon’ble Supreme Court in the case of Radhasoami Satsang (1991 (11) TMI 2 - SUPREME Court ), we respectfully follow the order of the Tribunal for A.Ys. 2003-04 & 2006-07 and hold that the payment received by the assessee on account of supply of software by the assessee to Reliance in pursuance to agreements made between both the parties dated 27th September, 2002 read with supplementary agreement 17th September, 2007 is not in the nature of ‘Royalty’ within the meaning of Article 12 of DTAA between India and Israel and therefore not liable to tax as such, but assessable as business income of the assessee subject to other provisions of the Act and DTAA. Thus, Ground decided in favour of the assessee. TTI India was Dependent Agent Permanent Establishment (DAPE) of the assessee company in India - Held that:- As per Section 12 of agreement dated 27th September 2002, between the assessee and Reliance, it was agreed that a separate agreement would be entered into for providing annual maintenance services by the assessee to Reliance but this agreement was never entered into. Subsequently, assessee’s subsidiary i.e. TTI India entered into a separate agreement with Reliance for verification of AMC dated 28th May 2003. The said agreement was executed independently by TTI India as independent terms and conditions and on ‘Principal to Principal’ basis, and assessee was not part to the said agreement. Articles of Indo Israel DTAA have not been referred to at all while deciding this issue against the assessee. Dependent agency principles were not applicable in this case. It was also submitted that in A.Y. 2006-07, the Tribunal has already examined all the facts and held that assessee did not have any PE in India, and thus he requested for following order of the Tribunal. - Decided in favour of the assessee Expenses taxed as Fees for Technical Services in the hands of assessee - Held that:- In A.Y. 2005-06, Ld. CIT(A) decided this issue in favour of the assessee wherein it was held that amount of reimbursement of expenses (which were similar to expenses reimbursed in the impugned year) could not be taxed as FTS in the hands of assessee and this issue was not contested by the Revenue and thus attained finality. - Decided in favour of the assessee Levy of interest u/s 234B - Held that:- Interest under section 234B was not leviable upon the assessee being non-resident, in view of the judgment of Hon’ble Bombay High Court in the case of DIT v. NGC Network Asia LLC (2009 (1) TMI 174 - BOMBAY HIGH COURT ). - Decided in favour of the assessee

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• 2016 (12) TMI 1541
  Addition invoking section 68 - accretion in share capital - as per AO foreign inward remittance certificates furnished by the assessee did not correspond to the previous year relevant to the assessment year under consideration and he held that the assessee company had failed to establish the identity or creditworthiness of the shareholder and the genuineness of the transaction of receipt of share capital - Held that:- Evidently, the appellant company had furnished Foreign Inward Remittance Certificates (FIRC) issued by the bank and it is also not disputed that contribution to the shareholder’s capital is in terms of RBI regulations. It is also clear from the copies of the documents submitted by the assessee company to the RBI in connection with receipt of share capital monies from Becrux Trade & Invest Ltd. that the nature of such receipts are of share capital. In fact the observation of the Assessing Officer that the FIRCs issued by the HDFC Bank do not pertain to the year under consideration is contrary to the fact-situation. In the Paper Book filed before us, assessee has placed copies of the three FIRCs issued by HDFC Bank, which clearly evidence that a sum of Rs. 3,25,13,110/- has been received during the previous year relevant to the assessment year under consideration. In the Paper Book assessee has also placed copies of the share certificates issued to the holding company M/s. Becrux Trade & Invest Ltd., Cyprus and also other documents filed with the Registrar of Companies in connection with the issue of share capital. In fact, assessee company has also placed on record the financial statements of holding company Becrux Trade & Invest Ltd., Cyprus at pages 46 to 81 of the Paper Book, which clearly depicts investment made in the assessee company. Thus we find no reason for the Assessing Officer to invoke the provisions of section 68 - Decided in favour of assessee Disallowance under section 40(a)(ia) - non deduction of tds - non issue of show cause notice - Held that:- The order of the CIT(A), clearly reveal that no show casue notice was issued to the assessee for disallowing a sum of Rs. 1,04,36,195/- by invoking the provisions of section 40(a)(ia) of the Act. Quite clearly, the issue relating to invoking of section 40(a)(ia) was not before the Assessing Officer at all and in this background, it was imperative for the CIT(A) to have issued an appropriate notice to the assessee . In fact the provisions of section 251(2) of the act clearly militate against the aforesaid approach of the CIT(A). Moreover, even on facts, the assessee has pointed out that the impugned amount is a part of a suo-motu disallowance made in the return of income itself. Thus the impugned addition is unwarranted and is hereby directed to be deleted. - Decided in favour of assessee

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• 2016 (12) TMI 1540
  Revision u/s 263 - disallow the claim of exemption u/s 54EC and 54F - order erroneous and prejudicial to the interest of the revenue - Held that:- In the present case on hand, on perusal of the facts available on record, we find that the A.O. has conducted detailed enquiry and also examined the issues pointed out by the CIT. The assessee has explained the issue pointed out by the CIT with necessary evidences. Therefore, the CIT, cannot assume jurisdiction to revise assessment order, once, assessee explained that it had filed all the details before the A.O. on the issues on which CIT wants further verification. It is the general presumption of law that, the A.O. has considered all the details before completion of assessment and the CIT cannot presume that the enquiries conducted by the A.O. is insufficient and also the A.O. has not applied his mind, unless CIT proves that assessment order passed by the A.O. is erroneous and also prejudicial to interest of revenue. In this case, assessment order passed by the A.O. is neither erroneous nor it is prejudicial to the interest of revenue, as the issue of capital gains and exemption u/s 54EC and 54F has been examined by the A.O. and also there is no prejudice is caused to the interest of revenue as investments in 54EC and 54F is in accordance with law. Therefore, we are of the view that the assessment order passed by the A.O. u/s 143(3) of the Act dated 16-01-2013 is not erroneous in so far as it is prejudicial to the interest of the revenue. - Decided in favour of assessee.

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• 2016 (12) TMI 1539
  Claim of weighted deduction u/s.35(2AB) involving revenue and capital expenses - Held that:- We deem its appropriate at this stage to throw some light on the nature and ambit of Form 3CL. The same comes under Rule 6(7A) of the Income Tax Rules, 1962 framed under the provisions of the Act. The above sub rule is relevant for approval of expenditure incurred on in house research & development facility by a company u/s.35(2AB). Sub clause (b) thereof is the specific provision thereto stipulating that the prescribed authority shall submit its report in relation to the approval of in house Research & Development facility in Form No.3CL to the Director General (Income Tax Exemptions) within 60 days of its granting approval. The same is merely in the form of intimation to be sent from prescribed authority’s end to the department. An assessee engaged in such Research & Development activity having already obtained Form 3CM approval of its facility has no role to play in such correspondence. We notice that a co-ordinate bench of this tribunal in ACIT vs. M/s. Torrent Pharmaceuticals [2009 (11) TMI 819 - ITAT AHMEDABAD] holds that the impugned weighted deduction is not to be restricted to the extent of the amount of the necessary expenditure incurred stated in such Form 3CL. We further find that hon’ble jurisdictional high court’s decision in CIT vs. CLARIS LIFESCIENCES Ltd. (2008 (8) TMI 579 - Gujarat High Court) upholds this tribunal’s decision in the very assessee’s case observing that expenses incurred before Form 3CM approval cannot be denied for the purpose of Section 35(2AB) weighted deduction. We follow the very reasoning to opine that facts of the instant case rather go a step further wherein the appellant has only claimed those expenses which relate to the time period as approved in the Form 3CM. We accordingly hold that the assessee is very much entitled for claiming the above capital and revenue expenses incurred on in house research and development. The Assessing Officer had rightly held it entitled for the above weighted deduction after verifying all necessary particulars during the course of scrutiny. We have no reason to disagree that the assessee’s weighted deduction claim raised u/s.35(2AB) of the Act is very much allowable - Decided in favour of assessee

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• 2016 (12) TMI 1538
  Addition of 10% of work in Progress - Method of accounting - AO following percentage completion method as against the project completion method adopted by the assessee - postponement of tax liability - assessee submitted that Accounting Standard AS-7 issued by the Institute of Chartered Accountants of India(ICAI) is applicable to contractor and not to builder - Held that:- It is not shown by learned DR that Government has prescribed adoption of Percentage completion method of accounting for builders u/s 145 and the builders cannot follow project completion method of accounting within the mandate of Section 145 of the Act. It is also not shown that project completion method followed by the assessee is in infringement of cash or mercantile method of accounting as stipulated u/s 145 of the Act. The Revenue has accepted the ‘project completion method’ in the immediately preceding two years i.e. assessment year 2009-10 and 2010-11. It is also not shown by learned DR that the project completion method of computing income is not allowed by the provisions of the Act or it does not yield in computing correct income of the assessee. It is well settled that project completion method is one of recognized method of accounting. After considering the various case laws cited by the assessee based on peculiar facts of the case, we are of the considered view that consistency has to be followed as the Revenue has accepted the ‘project completion method’ in the past . The entire profit from this project is stated to have been offered for taxation and due taxes are stated to have been paid to the Revenue albeit in assessment year 2014-15. In our considered view in order to render substantial justice and fair play in the instant case keeping in view peculiar facts and circumstances of the case, we are inclined to accept the appellate order of the ld. CIT(A) subject to verification by the A.O. that the entire profits earned by the assessee from this project ‘Quantum Tower’ in totality has been offered for taxation and due taxes on this project were duly paid to Revenue as contended by the assessee , albeit in the succeeding years by following ‘project completion method’, (including, inter-alia, profit earned on sales of Rs. 42.10 crores as well on closing stock of Rs. 29.50 crores) for which the assessee is directed to produce relevant evidence before the AO to substantiate that entire income from this project in totality has suffered tax and no prejudice is caused to the Revenue . In view of our detailed discussion and reasoning as detailed above, the appeal filed by the Revenue is dismissed subject to verification by the A.O. that the entire profits from this project has been offered for taxation by the assessee albeit in succeeding years and due taxes have been paid by the assessee to the Revenue with respect to the project ‘Quantum Tower’, on Rambaug, S.V. Road, Malad (W), Mumbai. - Decided in favour of assessee.

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• 2016 (12) TMI 1537
  Entitlement to the benefit u/s.80P(2)(a)(i) - applicability of provisions of section 80P(4) on assessee - assessee is a Credit Co-op. Society engaged in the business of providing credit facility to its members - Held that:- Assessee credit co-op. society is not carrying on the activity in the nature of banking business and is also not registered under the Banking Regulation Act and is only confined for accepting and providing finance to its members. Further on going through the definition of banking as per the Banking Regulation Act - "Banking means the accepting, for the purpose of lending or investment, of deposits of money from the public repayable on demand or other wise and withdrawal by cheque draft order or otherwise." From going through this definition it is clear that under the banking business lending and accepting deposit is from public at large which is not so in the case of assessee society wherein finance business is confined only to its members. We are, therefore, of the view and the finding given by ld. CIT(A) relying on the decision of the Co-ordinate Bench in the case of M/s Jafari Momin Vikas Credit Co-op. Society Ltd. (2014 (1) TMI 481 - ITAT AHMEDABAD ), we find that provisions of section 80P(4) of the Act are not applicable to the assessee and is, therefore, eligible to claim deduction u/s 80P(2)(a)(i) of the Act. - Decided in favour of assessee

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• 2016 (12) TMI 1534
  Default u/s 201(1) - failure to deduct TDS - liability to pay interest u/s 201(1A) if the payee of such amounts has files a nil return or a return showing a loss - Held that:- We will presume that the first proviso to sub section (1) operates retrospectively and that the proviso to sub section (1A) does not. As the amendment of 2009 is with effect from 01.07.2010, a question may arise in a given case whether it applies only from the next assessment year i.e. From 01.04.2011 or whether it applies to the assessment year 2010-11 only from 01.07.2010 and prior to that i.e. From 01.04.2009 to 30.06.2010 the unamended provisions applies. The issue, however, does not affect the result of this appeal. Even if the proviso to sub section (1) is not retrospective, it would make no difference to the assessee's case in view of the judgment of the Supreme Court in Hindustan Coca Cola Beverage P. Ltd. vs. Commissioner of Income Tax [2007 (8) TMI 12 - SUPREME COURT OF INDIA ].The last sentence makes it clear that even if the deductee assessee has paid the tax dues, it would not alter the liability to charge interest under Section 201(1A) till the date of payment of taxes by the deductee assessee. It is further held that the same would not even affect the liability for penalty under Section 271C. Thus, even prior to the amendment on 1st July, 2012, the liability to pay interest under Section 201 (1A) was there even in cases where the deductee assessee had paid the tax dues. The language of Section 201 is clear and unqualified. It indeed does not permit an assessee to decide for itself what the liability of the deductee assessee is or is likely to be. That is a matter for the assessing officer who assesses the returns of the deductee assessee. It is in fact not even possible for him to do so. He cannot ascertain with any degree of certainty as to the financial position of the deductee assessee. A view to the contrary would enable an assessee to prolong the matter indefinitely. If accepted, it may even entitle the assessee to contend that it is not liable to pay interest till the finalisation of the assessment of the deductee assessee. This could never have been contemplated by the Legislature. The language of Section 201 does not even suggest such an intention. Even if the assessee is in a position to ascertain the tax liability of the deductee assessee, it would make no difference for the reasons already stated. The section does not distinguish between cases where an assessee is in a position to determine the tax liability of the deductee assessee and cases where it is not in a position to do so. The terminal point has to be taken as a date on which the payee/deductee should have filed returns. Thus, even before and de hors the amendment of 1st July, 2012, the assessee would be liable to pay interest under Section 201(1A). The amendment which introduced inter-alia the first proviso to Section 201(1) is of no assistance to the assessee either. Section 197 establishes that where the deductor assessee wishes to reduce its liability on account of a possible absence of liability or a reduced liability of the deductee assessee, the deductee assessee must obtain a certificate. In the event of such a certificate being issued in favour of the deductee assessee, the person responsible for paying the income i.e. the deductor assessee would be entitled to deduct tax at the rates specified in such certificate or deduct no tax as the case may be. Section 197 thus, militates against the deductor assessee unilaterally not paying or paying an amount less than the specified amount of TDS. It militates against the deductor-assessee deciding for itself the deductee assessee's liability to tax. Sub section (1A) as amended by Finance Act, 2010 with effect from 1st July, 2010 is applicable in respect of the assessment year 2010-11. The section as amended also does not make any difference to the assessee's liability to pay interest. In the circumstances, the question of law is answered in favour of the appellant-revenue and against the respondent-assessee.

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• Customs

• 2016 (12) TMI 1509
  Rectification of mistake - though the Ld. Commissioner has given correct findings in the impugned order but made serious error inasmuch as he has not imposed penalty under Section 114A and wrongly mentioned the Section 27AB for charging interest instead of Section 28AB - Held that: - From the comparison of operative portion of the order and the findings reproduced above, it is apparent that though Ld. Commissioner has given correct findings in above para regarding the imposition of penalty under Section 114A and for charging the interest under Section 28AB in the operative portion of the order, penalty under Section 114A was not imposed and for charging interest. wrong Section 27AB was mentioned instead of correct Section 28AB. Therefore we are of the view that there is apparent and Serious error made by the Ld. Commissioner in the impugned order. Accordingly, we hold that respondent is liable for penalty equal to custom duty under Section 11A of the Customs Act, 1962 and respondent is also liable for payment of interest in terms of Section 28AB of the Customs Act, 1962 on the Custom Duty of Rs. 1,39,93,825/- - appeal allowed - decided in favor of Revenue.

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• 2016 (12) TMI 1508
  Refund of SAD - certain goods were shown to have been sold prior to the date of payment of SAD - no clarifications could be produced in this regard and the error claimed by respondent as clerical error - Circular No.6/2008-Cus. dated 28.04.2008 - Held that: - The respondent has submitted a Certificate from C.A. who certified the financial records of the respondent. In terms of the Circular of CBEC, in an ordinary course the certificate should have been accepted as a proof. However, since a serious discrepancy was found in the invoices total reliance of the certificate is not accepted. We find that the onus of proving that they have paid ST/VAT on the imported goods lies on the respondent. The respondent has sought to discharge the said onus by C.A. certificate as there is a serious discrepancy noticed in the invoice as pointed out by Revenue. In these circumstances, we set aside the impugned order and remand the matter to the original adjudicating authority and the respondents are directed to submit the C.A. certificate along with all documents relied upon by the C.A. in preparing the said certificate - appeal allowed by way of remand.

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• 2016 (12) TMI 1507
  Condonation of delay of 114 days - delay due to the reasons that at the time of receipt of the order impugned before the Tribunal, the Consultant was out of country, and thereafter, the managing partner was also out of country and it was also the case on behalf of the appellant-assessee that the father of the Consultant was not well and had passed away and even his wife was suffering from breast cancer - Held that: - the learned Tribunal ought to have condoned the delay in preferring the Appeal since there does not appear to be any deliberate delay and/or negligence on the part of the appellant in not preferring the Appeal within the period of limitation. By not preferring Appeal within the period of limitation, as such, the appellant-assessee was not going to be benefited - delay condoned - appeal allowed - decided in favor of appellant-assessee.

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• 2016 (12) TMI 1506
  Implemention of the order passed by the Commissioner of Customs (Appeals-I) - Held that: - the Appeal filed by the Department has been dismissed, by order, dated 30.11.2015. Therefore, this Court cannot adjudicate the correctness of the said order in this Writ Petition, when the petitioner seeks for implementation of the order passed in Order-in-Appeal, dated 14.09.2015. Thus, on the peculiar facts and circumstances of the case, this Court has no other option, except, to direct the respondents to comply with the order passed by the Commissioner of Customs (Appeals-I), dated 14.09.2015 - petition allowed - decided in favor of petitioner.

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• 2016 (12) TMI 1505
  Valuation - Wartsila Reconditioned 18V32LN engine no. 21888 with Napier Trubocharger Reconditioned ABB alternator rated at 7600 KVA with AVR - rejection of declared value - rejection on the ground that the Chartered Engineer's certificate issued in the country of export was not acceptable owing to discrepancy with the year of manufacture on the plate affixed to the engine - Held that: - the pre-shipment inspection report issued by Bureau Veritas was examined, and it clearly states that the original manufacturing date of the engine is 10th October 1994 and that of the alternator is 17th October 1995 with the common base plate having been manufactured on the 2nd of April 1996. While Revenue has no issue in accepting the original manufacturing date of the alternator, they do not accord the same credibility to the manufacturing date of the engine as certified in the certificate. Undoubtedly, both the lower authorities are of the view that the certificate does not reflect the date on the plates affixed to the engine. Even if that were an acceptable proposition, the enhancement of value should have been in accordance with the provisions in the Customs Valuation Rules and not by placing reliance on an expert appraiser as has been done by the original authority. Reliance was placed in the decision of the case of Essar Graphics (P) Ltd. v. Commissioner of Customs, Chennai [1998 (8) TMI 250 - CEGAT, MADRAS], where it was held that rejection of value cannot be done merely relying on foreign Chartered Engineer’s certificate Declared value to be accepted - appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 1504
  Exports of contraband/ restricted goods - Hashish - imposition of penalty u/s 114 of the CA, 1962 - whole case revolves mainly on the statements of the appellant recorded and certain evidences relied upon by the Revenue - it was claimed by appellant that the statements were taken under coercion and duress - Held that: - it is not only appellants statement alone but there are various corroborative evidences such as categorical statement of Shri. Nitin K Bhanushali who clearly stated that appellant is the main person who was involved in the exports of contraband/ restricted goods - further nothing was found in support of appellant, that the allegations are untrue, and violating the principles of natural justice. Ld. Commissioner in the denovo adjudication process complied with the principle of natural justice holding that Shri. Haresh Gandhi had aided and abetted Shri. Nitin Bhanushali in the illegal exports and passed a reasoned order of imposition of penalty u/s 114 - imposition of penalty upheld - appeal dismissed - decided against appellant.

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• 2016 (12) TMI 1503
  Public charitable trust - import of equipments for diagnostic centre - benefit of Customs Notification No.64/88, dated 1.3.1988 - Held that: - from a reading of the annexures to the writ petition it is apparent that the demand has been raised after a factual satisfaction. That satisfaction is based on inspection, scrutiny and verification of the records and documents provided by the petitioner itself - A conditional exemption is available and can be availed of on tendering proof of satisfaction of the terms and conditions thereof, else the exemption cannot be availed of. In the instant case, all the terms and conditions of the exemption Notification were made known and voluntarily accepted by the petitioner. It even executed a Bond and also submitted a Bank Guarantee and as noted by us hereinabove - Once being aware of the clear stipulations in the exemption Notification, but failing to satisfy them, the petitioner was not entitled to any exemption. The demand is rightfully raised and deserves to be confirmed. Petition dismissed - decided against petitioner.

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• 2016 (12) TMI 1502
  Release of detained goods - implementation of order of commissioner of customs - principles of judicial discipline - 4 No's gold bars totally weighting 400 grams of gold - Held that: - Once the appellate authority, namely, the Commissioner of Customs has passed the order on 30.06.2015 and without obtaining any order of the stay of the appeal, the respondent should not keep themselves by disobeying the order passed by the appellate authority. Reliance was placed in the case of Union of India vs. Kamalakshi Finance Corporation [1991 (9) TMI 72 - SUPREME COURT OF INDIA], where it was held that the respondent failed to respect the order of the Apex Court and failed to implement the order shows contempt of Court - The Hon'ble Apex Court and this Court in various cases very categorically held that the order of the Joint Commissioner of Customs and the Commissioner of Customs (Appeal) clearly shows that the petitioner has not committed any violation, therefore, they should implement the order of the Commissioner of Customs in a true letter and dispute. Even mere filing of the revision against the order of appellate authority would not empower the respondent to deny release of the goods in question and the respondent have not given any proper explanation as to why no stay order has been obtained against the order of the Commissioner of Customs (Appeals) dated 30.06.2015, even though the said order said to have been challenged by way of further appeal. Respondent was directed to release the goods - petition allowed - decided in favor of petitioner.

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• 2016 (12) TMI 1501
  100% EOU - Fulfillment of export obligation - installation of machinery - import under EPCG scheme - Notification No. 49/2000-Cus. dated 27.3.2000 - Held that: - Since the appellants have put the goods imported to use and have partially fulfilled the export obligations, it is not proper to deny the benefit due to partial fulfilment of export obligations and demand the entire duty - Secondly, the duty has been demanded without taking into account the depreciated value. This is not correct. In the present case, the capital goods have been put to use by the appellants. Therefore, at the time of de-bonding, duty can be demanded only on the depreciated value - Further, the non-fulfilment of export obligation is on account of the business conditions prevailing at that time and not on account of any mala fide act. In such circumstances, imposition of penalties is not justified - redemption fine and penalties set aside. The duties of customs are payable at the time of importation of the goods. Admittedly, the capital goods were imported by the appellant on 28.12.2000 and the same has been in the custody of the appellant; therefore, the appellant is liable to pay duty chargeable as on 20.12.2000. Consequently, the plea of the appellant that depreciated value of the machine is to be taken as basis for the duty is not acceptable. Appeal disposed off - decided partly in favor of appellant.

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• 2016 (12) TMI 1500
  Valuation of imported goods - PVC coated cloth polyester taffeta - mis-declaration of value of goods as similar goods were imported by VIP Industries at a higher rate - Held that: - the goods imported by VIP Industries is not from the same supplier and the quantity by VIP Industries is far less and in kgs. while the goods imported by the respondent are huge for trading purposes - adjudicating authority has held that there is marginal difference between the declared price and the value proposed to be loaded, that the transportation, handling, charges and margin of profit are not based on any standard formula and a slight difference in these charges would substantiate the declared price. Unless there is substantial difference between the declared price and the value determined after market enquiry loading must be avoided and the transaction value can be accepted - impugned order upheld - appeal dismissed - decided against Revenue.

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• 2016 (12) TMI 1499
  Issuance of writ in the nature of certiorari for quashing the impugned arrest notice dated 6.12.2016 - Sections 132, 135(a) of the Customs Act, 1962 - Held that: - in the present case summon was issued on 6.12.2016 under Section 108 of the Customs Act, 1962 to the petitioner to appear on the next date i.e. 7th December, 2016 at 11:30 hours and also to produce the documents and records mentioned in the Schedule at Serial No. 1 to 5 - It is very surprising that on the same day i.e. 6.12.2016 the notice of arrest was also issued to the petitioner by the office of Superintendent (SIIB), Customs Commissionerate, Noida. As such, notice of arrest suffers from non-application of mind, and appear to be arbitrary and unreasonable and is, therefore, liable to be quashed. Impugned arrest notice quashed - petition allowed - decided in favor of petitioner.

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• 2016 (12) TMI 1498
  Recovery of interest - N/N. 36/97-Cus dated 11/4/1997 - though the appellant was required to execute the bond in respect of duty and interest thereon. However the appellant executed the bond only in respect of duty and there is no mention about interest in the said bond. Even the bond accepting authority has not raised any objection at the time of execution of the bond - Held that: - The identical issue has been decided by the Hon’ble Apex Court in case of Jayaswal Neco Ltd [2015 (8) TMI 243 - SUPREME COURT] wherein Hon’ble Apex Court held that when the bond does not contain the terms of payment of interest, recovery of interest cannot be made, despite there is a condition of executing the bond not only for the duty but also for the interest, in terms of notification - demand of interest set aside - the confirmation of demand and appropriation of amount of duty paid by the appellant are maintained - appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2016 (12) TMI 1496
  Petition under section 397 and 398 - maintainability of petition - requisite qualification to file petition u/s 397 and 398 - Held that:- Requisite clarification of holding l/10th shareholding is to be seen on the date of presentation of the petition. In this instant case on the date of presentation of the petition, petitioner nos. 1 to 3 were not members of the respondent no. 1 company, who were only transferee of shares and transferor of shares had not authorized the petitioner nos. 1 to 3 to file a petition. Therefore, petitioner nos. 1 to 3 have no right to file and bring a petition under section 397 and 398 of the Act. It is also relevant to mention here that aggregate shareholding of petitioner nos. 1 to 3 only comes to 7.2% of the total shareholding. Therefore, it is clear that they do not fulfil the requisite number to bring a petition under section 397 and 398 of the Act. As regards the petitioner no. 4 holding is concerned, his shareholding, i.e., 7.05% of total shares, cannot be considered for reckoning the requisite number of shares because their name has been struck off w.e.f. 2007. Therefore, on the date of presentation of the petition in 2015 petitioner no. 4 has no legal existence. So they were not authorized to file a petition.

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• 2016 (12) TMI 1495
  Entitlement to supply of copies of documents - inspection of the documents - qualified person u/s. 163 - Held that:- This Petitioner has no shareholding in the company, therefore, he will not get any occasion to attend Annual General Meetings of the company or any of the meeting of the company to question the acts of the company. So this Bench does not see any purpose in granting such a relief to a stranger to the company because by giving a conjoint meaning of the person mentioned in sub-section 2 of Section 163 - member or debenture holder and of any other persons, this Petitioner will not fall under any of the above three classes of persons, therefore, this Petitioner is not entitled to seek this relief u/s. 163. This Bench having noticed that this Petitioner is in the habit of raising frivolous litigation again many of the listed companies either by subscribing one or two shares or under the head of "any other person" u/s. 163 by asking inspection of the documents from the date of inception of the companies. Knowing fully well, that it will not be possible to provide inspection of the documents from the date of inception, when the company failed to provide inspection or supply of copies, he files Petitions u/s. 163 or sec. 219 of the Companies Act, 1956. If any company says copies are provided as sought by the Petitioner, he will start arguing for exemplary costs for not providing inspection in the period mentioned in the statute. Since this Bench has noticed that he is not a qualified person u/s. 163 to seek inspection, this Bench hereby dismisses all these 62 Petitions by imposing cost of Rs. 1000/- each in every TCP

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• 2016 (12) TMI 1494
  Entitlement to supply of copies of documents - inspection of the documents - Held that:- Petitioner is not being a shareholder of the company, this Bench, in agreeing with the argument of the Respondents' counsel, holds that he is not entitled to seek this relief under section 163 of the companies Act 1956 and there being no purpose for granting such a relief to the Petitioner, these Petitions are hereby dismissed considering these litigations as misconceived, vexatious and frivolous.

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• Service Tax

• 2016 (12) TMI 1536
  Pre-deposit - Business auxiliary service - commission agent service - The agreement entered into with M/s Hyundai Motors no doubt provides that the appellant has to actively and vigorously promote Hyundai products. They are also required to undertake servicing of Hyundai vehicles - is the service classified under business auxiliary services? - Held that: - The important aspect of definition of commission agent is that there should be a relationship of agent and principal with the appellant acting as agent of M/s Hyundai Motors. A perusal of the agreement entered into by the appellant with M/s Hyundai Motors, reveals that it has been made on principal to principal basis - Prima facie, it appears that the levy of service tax does not appear to be sustainable especially in view of the fact that the relationship between the appellant and M/s Hyundai Motors are on principal to principal basis - the case merits waiver of pre-deposit in full - appeal allowed - waiver of pre-deposit granted till disposal of the appeal.

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• 2016 (12) TMI 1535
  Business Auxiliary Services - services of brand promotion of ‘INTEL' and ‘MICROSOFT' - activity of ‘promotion or marketing of logo or brand' - the advertisements of computers (the Appellants final products), carrying a foot note “Intel Inside” and “Microsoft Windows” logos, belonging to their respective owners - advertisement expenses is received from Intel and Microsoft? - suppression of facts - extended period of limitation - levy of penalty - difference of opinion - 3rd member decision Held that:- We need not concern ourselves with all the specific activities enumerated in section 65(19) and may restrict ourselves to that of ‘promotion or marketing or sale of goods produced or provided by or belonging to the client’. A question that arises is whether the two supplies benefit in any manner from the inclusion of their logos in the advertisement and publicity material deployed by the appellants. In scale and reputation, appellants are incomparable with the two global giants. It is difficult to conceive that the products of these two entities will find additional acceptability in the market owing to the inclusion of their respective logos. The products themselves are amenable to utilization only by computer manufacturers and the publicity, if any, among the potential customers of the two appellants is unlikely to derive any economic benefits to the supplier. At best, it may be surmised that the scheme incentivizes the appellants to procure more products from the two suppliers and to enhance the sales of the computers manufactured by the two appellants. Such a benefit to the appellants would not qualify as promotion of product of client. Indeed, the impugned order should have ascertained the existence of a client-provider relationship between the appellants and the two suppliers along the nature of the fiscal flow accruing to the appellants as a prelude to determining the taxability. The activity of ‘promotion or marketing of logo or brand’ does not cover under the category of Business Auxiliary Service - In view of the judgment in the case of Jetlite (India) Ltd. [2010 (12) TMI 40 - CESTAT, NEW DELHI], demand set aside - decided in favor of appellant.

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• 2016 (12) TMI 1533
  Reversal of credit - Rule 6(3)(b) of the CENVAT Credit Rules, 2002 - Held that: - considering the fact that while passing the impugned judgement and order the learned tribunal has relied upon the decision of the Larger Bench of the learned tribunal in the case of Nicholas Piramal (India) Limited [2008 (4) TMI 744 - CESTAT, MUMBAI], which subsequently has been reversed / set aside by the Hon’ble Bombay High Court in the recent decision COMMISSIONER OF C. EX., THANE-I Versus NICHOLAS PIRAMAL (INDIA) LTD. [2009 (8) TMI 224 - BOMBAY HIGH COURT], the impugned judgement and order passed by the learned tribunal cannot be sustained and the same deserves to be quashed and set aside and is accordingly quashed and set aside. The benefits of amended Rule 6 of the CENVAT Credit Rules, 2002, amended by Finance Act, 2010, which is reported to be amended retrospectively w.e.f. 1/3/2002 is concerned, considering the decision of the Division Bench of this Court in the case of Shree Rama Multi Tech Ltd. [2011 (2) TMI 575 - GUJARAT HIGH COURT], it is observed that if the respondent makes an application within a period of one month from today with supporting documents for getting benefits of amended Rule 6 of the CENVAT Credit Rules, 2002, as amended by Finance Act, 2010, the same be considered in accordance with law and on merits and in light of the amended Rule 6 of the CENVAT Credit Rules, 2002, as amended by Finance Act, 2010. Appeal disposed off - decided partly in favor of appellant.

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• 2016 (12) TMI 1532
  Taxability - commission received - sale of branded hoses - Whether the appellant is required to discharge the Service Tax liability on the amount received as commission during the period July, 2003 to February, 2007 in respect of the goods sold by them? - section 80 - Held that: - in the case of Hindustan Petroleum Corporation Ltd. Vs. Commissioner of Central Excise, Mumbai [2014 (11) TMI 166 - CESTAT MUMBAI] as produced by the learned AR, the Bench took a call of upholding the penalties imposed at the HPCL, only on the ground that the agreement in that case specifically indicated that the HPCL will get the commission inclusive of Service Tax as applicable. In the case in hand, such clause is absent in the agreement and we are of the view that during the relevant period there could be a doubt as to whether Service Tax liability arises on the amount received as commission on the sale of items manufactured by someone else or otherwise - section 80 invoked - penalty set aside - tax and interest upheld - appeal disposed off - decided partly in favor of assessee.

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• 2016 (12) TMI 1531
  Rejection of refund claim - service tax paid to M/s Aditi Computers who were engaged by the appellant for carrying out activities such as billing etc of the electricity distributed by the appellant to consumers - time bar - the service tax stands paid during the period August, 2004 to April, 2006 and the refund has been filed on 22.11.2007. The argument raised by the appellant is that the one year time limit will not be applicable to the present refund claim, since the service tax has been paid on a service which is not taxable. Held that: - Refund of any amount paid as tax is necessarily to be governed by Section 11B of the Central Excise Act, 1944 which has been made applicable for purposes of refund of service tax by Section 83 of the Finance Act 1994. Consequently, refund of any amount of service tax has to satisfy the provisions of Section 11B of the Act. This section requires refund claim to be filed within a period of one year from the relevant date, which in this case is the date of payment of service tax - Since, the refund claim has not been filed within the time limit prescribed under Section 11B, the claim has been rightly rejected. Appeal rejected - decided against appellant.

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• 2016 (12) TMI 1530
  Valuation - reimbursable expenditure - incurring of certain expenditure on behalf of the principals like placing advertisements for procurement of materials required for executing the project, clearing & forwarding of such material from the port to the project sites etc - whether the reimbursable expenses to be included in assessable value? - Held that: - We find that reimbursed expenses in question are of a type which is not required to be rendered by consulting engineering services. The activities for which such charges are levied are not covered in the definition of consulting engineering services. We also find that the identical issue was subject matter of Tribunal’s decision in the case of Louis Berger International Inc. Vs. CCE [2009 (3) TMI 375 - CESTAT, BANGALORE], where it was held that reimbursement of expenses incurred while rendering consulting Engg. Services are liable to be deducted from the gross value - no demand can be made on reimbursable expenses. Entire demand beyond the normal period of limitation - barred by limitation. Appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 1529
  Service tax liability - Manpower Recruitment or Supply Agency service - Held that: - service rendered by the appellant in respect of the Magnaflux testing and rectification of defects, the agreement also does not indicate that what all functions that needs to be undertaken by the appellant for holding him under the category of Manpower Recruitment or Supply Agency service. Since this agreement and various other submissions as to the inclusion of tax liability etc. was not taken before the Adjudicating Authority in the absence of any reply or availing the opportunity of personal hearing, we deem it fit to leave the issue to be decided by the Adjudicating Authority on remand proceedings - appeal allowed by way of remand.

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• 2016 (12) TMI 1528
  Denial of CENVAT credit - cement and steel - identical questions involved in the present Appeals is at large before the Hon’ble Supreme Court in the Appeal arising from the decision of the Division Bench of this Court in the case of Mundra Ports & Special Economic Zone Ltd. Vs. C.C.E & Customs [2015 (5) TMI 663 - GUJARAT HIGH COURT] - Registry to notify the Appeals for final hearing after the decision of the Hon’ble Supreme Court in Appeal against the decision of the Division Bench of this Court in the case of Mundra Ports & Special Economic Zone Ltd. (Supra) and on the note filed by the learned advocate appearing on behalf of either of the parties.

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• 2016 (12) TMI 1527
  Rejection of refund claim - unjust enrichment - export of services - Held that: - the services rendered by the appellant for Institutional Investors situated abroad from whom brokerage is charged by them. In any case, the services were rendered by the appellant to the Institutional Investors who are situated abroad hence service tax law does not apply to them as also on the export of services. Services provided by the appellant to Foreign Institutional Investors can be termed as export of services as the service tax being a destination based tax, the recipient of the services are situated abroad. Identical issue came up before the bench in the case of Commissioner of Service Tax, Pune II v. HSBC Software Development (I) Pvt Ltd [2016 (2) TMI 475 - CESTAT MUMBAI], where it was held that service rendered outside the country are outside the ambit of taxation. The question of unjust enrichment does not arise in the case of export of service - appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 1526
  Business auxiliary services - sale of goods to M/s. Amar Products on commission basis - Circular no. 59/8/2003 dated20.06.2003, 62/11/2003-ST(F.No. B3/7/2003) dated 21.08.2003 and B/2/8/2004-TRU dated 10.09.2004 - Time bar - Held that: - There is no dispute on the facts that the appellant in his individual capacity has provided services to M/s. Amar Products and was not having any commercial concern for undertaking the business in regular course. As such we find no infirmity in the views adopted by Commissioner (A) or the original adjudicating authority which is based upon boards circular and the precedent decisions. Time bar - Held that: - during the relevant period there was a lot of confusion. All the activities undertaken by the appellant were a part of the reflection made in the balance sheet and income tax return in which case no suppression or malafide can be attributed to the assessee. No malafides could be proved by Revenue - the extended period would not be available to the Revenue. Appeal rejected - decided against Revenue.

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• 2016 (12) TMI 1525
  Rejection of refund claim - denial on the ground that the amount of service tax sought as refund has not been paid by the appellant but has been paid by M/s Bata India Ltd. - time bar - M/s Bata India Ltd., Chennai are one of the tenants of appellants - Held that: - The appellant has filed refund claim of Rs. 9,47,140/- on the ground that the tenant M/s Bata India Ltd., has also paid the service tax on the rent paid to appellant on which the appellant has also discharged the liability. The appellant's contention is that there is excess amount of payment of service tax to the Government and therefore apellant is eligible for refund. This contention cannot be accepted for the simple reason that the appellant who is liable to pay service tax in Guntur Commissionerate has paid the service tax and the liability is discharged. If M/s Bata India Ltd., has also paid the very same amount erroneously in Chennai Commissionerate it is for M/s Bata India Ltd., to apply for refund. So also if M/s Bata India Ltd., did not pay the service tax to the appellant, it is for the appellant to proceed against M/s Bata India Ltd., to recover the said amount. This is wholly an internal affair between the appellant and M/s Bata India Ltd. - rejection justified. Time bar - Held that: - The date of payment of service tax by appellant is 20.04.2012. The refund claim is 14.06.2013 which was received in the office of department on 17.06.2013. Therefore the refund claim is beyond the period of one year as prescribed under section 11B of Central Excise Act read with Section 83 of the Finance Act - rejection justified. Rejection of refund claim upheld - appeal dismissed - decided against assessee.

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• 2016 (12) TMI 1524
  100% EOU - Rejection of refund claim - input services availed for export of services - N/N. 5/2006-CE (N.T) dated 14.03.2006 - rejection on the ground that software services were not taxable during the relevant time - Held that: - The lower authorities have taken the view that input services availed during April 2006 to March 2007 are not relatable to the services exported in September 2007. This situation has arisen from the fact that the credit of input services has not been taken during the period for which the refund has been claimed. This brings us to the question whether credit availed for a period prior to the quarter/month for which the refund has been claimed is eligible for refund or not? This specific issue has been considered at length and decided in favor of the appellant in the case of Sai Advantium Pharma Ltd.[2015 (3) TMI 1230 - CESTAT BANGALORE], where it was held that Once credit was admissible and unless there was no nexus between the output service exported and input services were used when credit was taken, the refund of the same also could not have been denied since the substantive ground of taking CENVAT credit in the first place being correct would lead to the obvious conclusion that ultimately if it gets accumulated the refund has to be sanctioned - rejection of the refund claim filed under Notification 5/2006-CE (NT) is without justification - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2016 (12) TMI 1523
  Refund - Cenvat credit - Rule 5 of CENVAT Credit Rules (CCR) 2004 - NNo.27/2012-CE - Held that: - The adjudicating authority has reached to a categorical finding of nexus between the input service and the manufacture of excisable goods by the appellant. Learned counsel further submitted that all the services have been held to be input service by various decisions of the Tribunal and the High Court and in support of his submission - Appeal allowed - decided in favor of the assessee.

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• 2016 (12) TMI 1522
  Cenvat credit - Input services - Pnelaty - Rule 15(2) of CCR, 2004 - Time limitation - I find force in the contention of the Ld. Advocate for the appellant in as much as on the very same issue of the eligibility of Cenvat Credit on security services, audit had raised objection in the year 2008 (Copy of the letter enclosed at Page No 97 and 98 of Appeal Memorandum). Therefore, it cannot be said that the appellant had suppressed the facts in availing the credit on such Input Services from the knowledge of the department - Appeal partly allowed.

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• 2016 (12) TMI 1521
  Reversal of Cenvat credit on CVD - Rule 26 of Central Excise Rules, 2002 - Interest - Penalty - the Appellants are eligible to avail credit on the inputs which were brought to the factory with intention to use in the manufacture of finished goods but soon after they came to know that the inputs could not be used and required to be destroyed, they should have reversed the credit voluntarily under intimation to the department. Having continued to retain the credit after destruction of the same till being pointed out by the department, in my opinion, cannot be construed as a bonafide act. - Levy of interest and penalty confirmed. In the absence of any valid reason and specific evidence against the employee Shri K.D. Dholakia, penalty imposed on him is set-aside - Decided against the assessee.

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• 2016 (12) TMI 1520
  Refund - Classification of Di-calcium Phosphate - Held that: - I find from the records viz. letter dt. 20.07.2006 that the said amount has been claimed as paid by debiting the CENVAT credut amount towards discharge of duty on disputed product Di-calcium Phosphate which was later classified as an exempted product - Whereas, in the letter dated 20.07.2006, the appellant had categorically submitted that the credit of Rs. 10,96,976/- involved in the raw materials/inputs used in the manufacture Di-calcium Phosphate has been debited by them while computing the refund amount - Appeal allowed by way of remand.

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• 2016 (12) TMI 1519
  Imposition of penalty u/r 25 of the Central Excise Rules 2002 - The appellants have defaulted monthly payment of excise duty on due date in respect of the clearance of their final product for more than one month - demand on the ground that during the default period the duty should have been paid on consignment basis and also from PLA and not by utilizing the cenvat credit - Held that: - The only lapse on the part of the appellants was they were supposed to pay duty through PLA on consignment basis. In this fact, it cannot be said that the appellants had any intention to evade payment of duty as each and every consignment was undisputedly cleared on the invoices issued under Rule 11 of Central Excise Rules, 2002 - Since the appellants have paid the duty even from cenvat account and the department has accepted the said payment for the reason that the said payment of duty, therefore the only lapse at present is that the appellants have not paid the duty on consignment basis but on monthly basis. For this lapse in my considered view, the penalty under Rule 25(1) (a) cannot be imposed. However there is no doubt that the appellants have contravened the provision inasmuch as they have paid duty on monthly basis as against requirement of payment of duty on consignment basis. Therefore they are liable for penalties but not under Rule 25(1) (a) but under Rule 27 of the Central Excise Rules. As per my above discussion, I reduce the penalties from Rs. 1lakh each to Rs. 5,000/- each. Appeal disposed off - decided partly in favor of appellant.

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• 2016 (12) TMI 1518
  Valuation - manufacture of Air Conditioners/Refrigeration equipment and supplying the same on self basis at site and undertaking the job of erection and installation of such Air Conditioners/Refrigeration - whether the freight charges to be included in the assessable value? - most appropriate method in the case is Rule 8 - Held that: - On a plain reading of Rule 8 it is clear that the value should be 115% of the cost of manufacture of the product. The provision does not provide to add any elements over and above the 115% of the cost manufacture. Therefore addition of freight charges in the value of 115% is without authority of law - freight charges is not includible in value adopted by the respondent - appeal dismissed - decided against Revenue.

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• 2016 (12) TMI 1517
  Valuation - Cash discounts - scope of ambit - whether the cash discount realized back by the appellants through debit notes is chargeable to central excise duty? - Held that: - what has to be seen in order to arrive at the correct value of excisable goods under Section 4 is such value at the time of removal, and this being so under both the old Section and the new Section, cash discount has to be allowed as has been held in Union of India v. Bombay Tyre International Limited [1983 (11) TMI 70 - SUPREME COURT OF INDIA] - there will be no need to add back the discounts to the assessable value, even if the same are subsequently recovered - appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 1516
  CENVAT credit - advertisement service - denial on the ground that such service has no nexus with the output service provided by the appellant namely, authorized service station service - Held that: - Since the service tax paid on the disputed service is in relation to the business activities of the appellant, in my view, cenvat credit cannot be denied on the ground that the same is not conforming to the definition of input service - appeal allowed - credit allowed - decided in favor of appellant.

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• 2016 (12) TMI 1515
  Imposition of penalty - belated payment of duty - Rule 8(3) of the Central Excise Rules, 2002 - whether the respondent is liable to pay penalty under Rule 25 of the Central Excise Rules 2002 for non-payment/delayed payment of interest under Rule 8(3) of the Central Excise Rules 2002? - Held that: - Rule 25 stipulates penalty subject to provisions of Section 11AC Central Excise Act, 1944. In other words for imposing penalty under Rule 25, the short payment must be due to the reasons of fraud, collusion or any willful mis-statement or suppression of facts with an intent to evade payment of duty. As no allegations with respect to suppression of facts are made in the show-cause notice issued to the respondents, penalty under Rule 25 cannot be imposed in this case - appeal rejected - decided against Revenue.

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• 2016 (12) TMI 1514
  Refund claim - excise duty paid wrongly - unjust enrichment - Held that: - Under Section 12B of Central Excise Act, 1944 when the invoice is raised including the excise duty a presumption is raised that the incidence of duty is passed on. But this presumption is a rebuttable one. When the invoice was mistakenly raised including the duty and when excise duty was not collected, there is no question of the burden of duty being passed on. The appellant paid excise duty wrongly, and the same though included in invoice has not been collected from BHEL. The entry was made debiting the excise duty without actually collecting the excise duty - BHEL has categorically stated that they have not paid the excise duty raised in the invoice which establishes that the duty burden has not been passed on - refund is not hit by unjust enrichment - appellant is eligible for refund - appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 1513
  Cement and clinker - Reversal of CENVAT credit - Rule 3(5B) of Cenvat Credit Rules - Held that: - the parties below have not examined the documentary evidence. The appellant has also produced these documents in the present appeal also. But in the impugned order, the learned Commissioner (Appeals) has observed that the appellants have not produced any documentary evidence to prove that the provision is made only for partial value of goods for write off. In view of this finding returned by the Commissioner, I am of the opinion that this case needs to be remanded back to the learned Commissioner with a direction to consider the documents and the worksheets and the policy of the company with regard to partial write off - appeal allowed by way of remand.

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• 2016 (12) TMI 1512
  Pre-deposit - Section 35F of the Central Excise Act,1944 - interpretation of statute - Held that: - I find that the wordings employed therein are as clear as daylight. In clause (iii) it is unambiguously prescribed that any person aggrieved by a decision or order referred to Clause (b) of sub- Section (1) of Sec. 35B of Central Excise Act, unless deposits 10% of the duty/penalty or duty and penalty, as the case may be, the appeal shall not be entertained. I do not find any reason to read the said provision in any other manner, so as to come to the conclusion that the Appellant is required to deposit 2.5% and not 10% as prescribed under the said provision, in view of the settled principle of statutory interpretation. Appeal dismissed - decided against appellant.

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• 2016 (12) TMI 1511
  Attachment of property - factory premises was leased to M/s Siddhnath Exports, an 100% EOU, for the period from 27.03.2000 to 26.03.2006. Since M/s Siddhnath Exports defaulted in payment of confirmed excise duty and penalty amounting to Rs. 4,59,00,617/-, the recovery proceeding of the said amount was initiated from the Appellants - the recovery notice was issued to the Appellant on 11.10.2005 along with M/s Siddhnath Exports for recovery of the outstanding dues under Section 142(1)(c)(ii) of Customs Act, 1962. It is not in dispute that under registered lease deed executed on 27.03.1999, the Appellants had leased their factory, building and plant and machinery to M/s Siddhnath Exports for a period of six years commencing from 27th March 2000, and till 26th March 2006 and stipulated that in any case, the factory was not to be vacated till the export obligation was discharged. However, the said lessee M/s Siddhnath Exports has left their premises before completion of export obligations and expiry of lease period of six years. Held that: - I find that on the very same issue, the Tribunal has discussed in detail, the legality of the recovery of the outstanding dues from the lessor when the lessee, an 100% EOU, vacated the premises before fulfillment of the export obligations in Rajabali Ismail Rajbara case[2014 (3) TMI 483 - CESTAT AHMEDABAD (LB)] and by majority held that recovery cannot be made from the Lessor by attachment of the property - appeal allowed - decided in favor of appellant.

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• 2016 (12) TMI 1510
  Pre-deposit - Section 35F of the Central Excise Act,1944 - interpretation of statute - Held that: - I find that the wordings employed therein are as clear as daylight. In clause (iii) it is unambiguously prescribed that any person aggrieved by a decision or order referred to Clause (b) of sub- Section (1) of Sec. 35B of Central Excise Act, unless deposits 10% of the duty/penalty or duty and penalty, as the case may be, the appeal shall not be entertained. I do not find any reason to read the said provision in any other manner, so as to come to the conclusion that the Appellant is required to deposit 2.5% and not 10% as prescribed under the said provision, in view of the settled principle of statutory interpretation. Appeal dismissed - decided against appellant.

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• CST, VAT & Sales Tax

• 2016 (12) TMI 1497
  Detention of seized truck and goods - non payment of tax dues - Held that: - The Truck is detained since 15th October 2016, therefore, if the truck is kept idle for a longer period, the condition of Truck shall be deteriorating and it shall not be in the interest of either of the parties. Under the circumstances, the truck can be released on the terms stated hereinabove, which the petitioner has agreed to comply with. The petitioner has agreed to pay/deposit a sum of Rs. 20,00,000/= on or before 24th December 2016 and has also agreed to pay balance amount of Rs. 84,08,325/= with interest; if any on the outstanding amount on or before 20th February 2017 - An undertaking affirmed by the Regional Manager and the authorized signatory of the petitioner-Company to the aforesaid extent is also filed - petition disposed off - decided in favor of petitioner.

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