TMI Tax Updates - e-Newsletter
February 22, 2016

Case Laws in this Newsletter:

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

TMI SMS

• Refund of un-utilized cenvat credit - Rule 5 - period of limitation - the claim is to be filed within one year and after end of the quarter.

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Articles

1. No bar on admissibility of Cenvat credit either as Inputs or Capital goods at any stage of proceedings

   By: Bimal jain

2. DISCIPLINARY ACTION AGAINST RETIRED GOVERNMENT SERVANT

   By: DR.MARIAPPAN GOVINDARAJAN

Notifications

Customs

1. 28/2016-CUSTOMS (NT) - dated 18-2-2016 - Cus (NT)

Notifying Sikta LCS, District West Champaran, Bihar

2. 27 /2016-Customs (N.T.) - dated 18-2-2016 - Cus (NT)

Amendment in principal Notification No. 12/97-Customs (N.T) dated 02.04.1997

Highlights / Catch Notes

Income Tax

• Possession of Documents Presumed Ownership Under Income Tax Act Section 292C, Rebuttable with Evidence.

  Case-Laws - HC : Section 292C, inter alia, provides that where any books of accounts or other documents are found in possession or control of any person in the course of search u/s 132 or survey under Section 133A of the Act, it may be presumed that such books or documents belong to such person. Undisputedly, such presumption is rebuttable - HC
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• Court Rules Bank Securities as Stock in Trade for Tax; Valued at Cost or Market, Whichever is Lower.

  Case-Laws - HC : Loss on revaluation of investments - valuation of stock in trade - the securities of the Banks are investment and have to be valued at costs or market price, whichever is less - claim of loss allowed - HC
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• No deduction under Income Tax Act section 80IB(10) if project completion exceeds the prescribed timeframe.

  Case-Laws - AT : Entitlement to deduction under section 80IB(10) - once it cannot be held that the project was completed within the prescribed period, the assessee is not entitled for deduction u/s 80IB(10) - AT
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• Tribunal Confirms Assessee's Eligibility for Section 10A Tax Exemption on IT-Enabled Services Export Despite Initial Denial.

  Case-Laws - AT : Deduction u/s 10A denied - assessee customized the electronic data and it was admittedly exported. This Tribunal is of the considered opinion that processing the data by the assessee would amount to providing IT enabled service, therefore, the assessee is eligible for exemption u/s 10A - AT
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• Golf Promotion Group in Tamilnadu Wins Tax Exemption; Court Says Benefits Extend Beyond Members, Granting Section 11 Relief.

  Case-Laws - AT : Exemption u/s 11 - object of the assessee is to promote the game of golf in the State of Tamilnadu. The benefits can be available not only for the members of the assessee-society but also non-members. Therefore, the beneficiaries cannot be identified - principles of mutuality is not applicable - exemption u/s 11 allowed - AT
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Customs

• Authority's Price Hike for Imported Pumps Overruled: Inappropriate Valuation Based on Non-Comparable Sales.

  Case-Laws - AT : Valuation - it is evident that the invoice price of Euro 1,62,350/- of pumps imported, sold to third parties on High Sea Sale Basis are not comparable goods with the goods imported by the appellants @ Euro 1,49,000. The rejection of declared price and loading EURO 1,62,350 ordered by the authority is not sustainable. - AT
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• Court Rules on Software Import Exemption for Phones: Valuation Demand Confirmed, Interest and Penalties Waived.

  Case-Laws - AT : Valuation - Claim of exemption on import of software - the software/data loaded on the Flash memory is specific to the user/customer. It contains caller ID and caller block software. The phones imported have embedded software with required parameters for its functioning - demand confirmed though interest and penalty waived - AT
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Corporate Law

• 2013 Companies Act Amendment: M.D. Disqualification Applies Automatically Unless Overridden by Special Resolution.

  Case-Laws - HC : Effect of amendment of the Companies Act in 2013 - Appointment of M.D. - if he was already appointed prior to 1-4-2014 when he was below the age of 70 years, on account of operation of statute, disqualification, whenever incurred after the Amendment Act, would operate automatically, subject to proviso i.e. special resolution being passed by the Company - HC
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Service Tax

• Toll Operations and Maintenance by NHAI Exempt from Service Tax as Non-Business Activity Under Business Auxiliary Service Rules.

  Case-Laws - AT : Business Auxiliary Service - Activity of maintaining complete Toll Operation, supply of Man Power and maintenance of Toll Collection System including Plaza maintenance etc. - NHAI is not running any business - Activity is not taxable - AT
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• Service tax applies to commissions from sponsoring new distributors and turnover achievements, not on trade discounts or profits.

  Case-Laws - AT : Multi Level Marketing - BAS - service tax is not payable on the Trade discount earned and profit on Trading in Amway goods. But the same is taxable on the commission earned from activity of sponsoring new distributors and commission earned on turnover achieved by them - AT
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• Refund Claim for Unutilized CENVAT Credit Must Be Filed Within One Year After Relevant Quarter Ends; Refund Approved.

  Case-Laws - AT : Refund of un-utilized cenvat credit - period of limitation - the claim is to be filed within one year and after end of the quarter - Refund allowed - AT
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• Tribunal Remands Case for Further Review on Service Tax Liability Due to Lack of Consignment Note Discussion.

  Case-Laws - HC : Extended period of limitation - assessee stopped payment of service tax in the pretext of seeking clarification from the Commissioner - Tribunal, without any discussion of these findings arrived at by the Commissioner, by a cryptic conclusion has held that in absence of any consignment note actually having been issued, no liability of service tax arises - matter remanded back - HC
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• High Court Dismisses Appeal on Cargo Handling Service Demand; Tribunal's Decision to Set Aside Demand Stands.

  Case-Laws - HC : Cargo Handling Service - whether tribunal did not consider the arguments of the revenue while setting aside the demand - If the Appellant is of the opinion that its arguments and contentions have not been considered, the proper remedy for the Appellant is to first move before the Tribunal itself inviting its attention to the same. - Appeal dismissed - HC
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Central Excise

• Cenvat Credit Denied for Non-Inclusion of Calico Land in Registration; Allowed Later as Procedural Lapse Corrected.

  Case-Laws - AT : Denial of Cenvat Credit of service tax - mere non-inclusion of Calico land in the excise registration at the time when the services were availed is only a procedural lapse which was rectified subsequently by the service tax authorities - credit allowed - AT
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• Appellant's Battery Process Qualifies for Cenvat Credit; Transforming Semi-Finished Units into Marketable Products Under Central Excise Rules.

  Case-Laws - AT : Cenvat Credit - activity undertaken by the appellant amounts to manufacture. Therefore, they have rightly taken the Cenvat Credit on semi finished / incomplete batteries received from their sister unit to do the process making them marketable in complete condition - AT
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• CENVAT Credit Denial to Bangalore Unit Unjustified; Either Unit Could Claim Full Credit.

  Case-Laws - AT : Denial of CENVAT credit - either of the two units could have availed the entire credit. As such, it is of the view that denial of credit to the Bangalore unit is not justified. - AT
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• Credit Note Issuance Overcomes Unjust Enrichment Barrier for Non-Registered Buyer in Excise Duty Refund Claim.

  Case-Laws - AT : Refund claim - buyer of the respondent are not registered with Central Excise Department, therefore, claiming the credit of duty paid - credit note issued by the respondent is sufficient proof of passing the bar of unjust enrichment - AT
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VAT

• Authority Must Pay Interest on Delayed Sales Tax/VAT Refunds from Deposit to Payment at Statutory Rate.

  Case-Laws - HC : Claim of interest of on Refund of sales tax / vat which was paid under protest - The Competent authority shall compute the interest payable to the petitioners for the entire period between the deposit of the tax till actual payment and pay to the petitioners such interest at the statutory rate - HC
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Case Laws:

• Income Tax

• 2016 (2) TMI 607
  Cognizance of provisions of Section 292C - addition made by the AO on the basis of the impounded documents found in search - whether evidence was impounded not only from the premises of the assessee, but from the Computer of the assessee - Gross Profit addition deleted - Held that:- Section 292C of the Act, inter alia, provides that where any books of accounts or other documents are found in possession or control of any person in the course of search under Section 132 or survey under Section 133A of the Act, it may be presumed that such books or documents belong to such person. Undisputedly, such presumption is rebuttable. It is not disputed that the Assessee had clearly denied having any dealing with M/s Smridhi Sponge Limited and had also filed an affidavit to that effect. The ITAT found, as a matter of fact, that the Assessee on its part had made the necessary enquiries and also provided final accounts of M/s Smridhi Sponge Limited; confirmation from the Director of M/s Smridhi Sponge Limited; details of the bank accounts; final accounts; Director's Report; PAN Number etc. which sufficiently discharged the burden cast on the Assessee. The ITAT also found that the Assessee had provided the necessary information for the AO to make the requisite enquiries from M/s Smridhi Sponge Limited as well as M/s Galaxy Exports Pvt. Ltd. In our view, no interference with the order of the ITAT is called for under Section 260A of the Act since the findings of the ITAT are essentially factual. Further, we find no infirmity with the findings returned by the ITAT and in any event the same cannot be held to be perverse by any stretch. - Decided against revenue

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• 2016 (2) TMI 606
  Loss on revaluation of investments - valuation of stock in trade - ITAT allowed the claim - Held that:- We find that the issue as raised before us is no more res integra. This Court had an occasion to deal with identical question in the case of Commissioner of Income Tax Vs. HDFC Bank, reported in [2014 (8) TMI 119 - BOMBAY HIGH COURT ] and held the assessee has maintained the accounts in terms of the RBI Regulations and he has shown it as investment. But consistently for more than two decades it has been shown as stock-in-trade and depreciation is claimed and allowed. Therefore, notwithstanding that in the balance-sheet, it is shown as investment, for the purpose of Income Tax Act, it is shown as stock-in-trade. Therefore, the value of the stocks being closely connected with the stock market, at the end of the financial year, while valuing the assets, necessarily the bank has to take into consideration the market value of the shares. If the market value is less than the cost price, in law, they are entitled to deductions and it cannot be denied by the authorities under the pretext that it is shown as investment in the balance-sheet. Thus, the view that the securities of the Banks are investment and have to be valued at costs or market price, whichever is less. - for the purposes of income tax, what has to be taxed is a real income and not necessarily the income on the basis of the manner in which the accounts are prepared. Thus, the issue is settled issue. - Decided against the revenue.

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• 2016 (2) TMI 605
  Validity of reopening of assessment - eligibility of benefit under Section 80IA denied - change of opnion - jurisdiction of AO - Held that:- We are unable to understand how the mandate of the Act requiring the Assessing Officer to have reason to believe that income chargeable to tax has escaped assessment can be ignored on the altar of revenue collection. If such a submission is to be accepted, it would, be the beginning of the end of the Rule of Law. In fact, a Division Bench of this Court in IL & FS Investment Managers Ltd. v/s Income Tax Officer [2006 (11) TMI 181 - BOMBAY High Court ] has concluded the issue by pointing out that where the Assessing Officer in response to the query from the Revenue audit has opposed the reopening, it cannot be said that the Assessing Officer has formed his opinion that income has escaped assessment for the purpose of the reopening notice. In fact, though on the above issue itself, the appeal is not being entertained, it may be pointed out that none of the other two conditions precedent viz. no change of opinion and failure to disclose all material facts are satisfied in this case to sustain reopening of the assessment for AY 2004-05. So far as the change of opinion is concerned, both the CIT(A) as well as the Tribunal have rendered a finding of fact that there is a change of opinion. It is thus clear that necessary enquiry was made into the profits claimed by the eligible unit for the purpose of benefit under Section 80IA of the Act during regular assessment proceedings. So far as failure to disclose fully and truly all facts are concerned, it is noticed from the reasons recorded that its basis for issuing the reopening notice is the records of the Assessee in possession of the Assessing Officer during regular assessment proceedings. It is noticed from those records that the Assessee had claimed excess profits in respect of its power generating units. The obligation of the Assessee under the Act is only to disclose primary facts necessary for assessment. The application of law and the determination of the market value of the electricity sold by the eligible units under Section 80IA to the other units of the Respondent - Assessee is a subject matter of enquiry by the Assessing Officer while passing an order under Section 143(3) of the Act in regular assessment proceedings. Thus, there is no failure on the part of Respondent to disclose truly and fully all material facts which would warrant reopening of an assessment. - Decided in favour of assessee

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• 2016 (2) TMI 604
  Addition on account of transfer pricing adjustment - calculation of the assessee’s PLI - Held that:- In the present case, the assessee has taken a stand that capacity adjustment be allowed on the assumption of all the comparables operating at 100% capacity level, which is not evidenced from any material on record. On a pertinent query, the learned Authorized Representative candidly admitted that no such data was available to vouch such a claim. In the absence of any reliable data to support the difference between the capacity utilization levels of the assessee and the comparables, we are helpless in granting any such adjustment. Summing up, we hold that neither there is any warrant for adjusting the assessee’s profit margin with capacity adjustment, nor such adjustment, in the facts and circumstances of the present case, can be allowed in the profit margin of comparables. We, therefore, dismiss this ground of appeal. Selection of comparable - Held that:- E-Infochips Limited as the assessee is simply engaged in rendering software development services and there is no sale of any software products, this company, in our considered opinion, ceases to be comparable. It is obvious that from the common pool of income from both the streams of software products and software services, one cannot deduce the revenue from software services and no one knows the impact of revenue from Products on the overall kitty of profit, which may be significant. Since no segmental data of this company is available indicating operating profit from software development services, we order to exclude this company from the list of comparables. E-Zest Solutions this company is its functional dissimilarity. We have gone through the Annual report of this company which is available in the paper book. Its Profit and loss account specifies `Income from operations’. It is further borne out that it is providing end-to-end development, software project development services. As the assessee is also engaged in the customised software development, we find this company to be functionally similar. The same is, therefore, retained in the list of comparables. L 25.55 crore. Apart from that, the balance-sheet of this company shows certain `Software’ in its Schedule of fixed assets under the head `Intangible assets’. The above facts conclusively prove that this company is also engaged in the sale of Products apart from rendering software development services. Adopting the same reasons as given for the exclusion of Einfochips Ltd., we order for the exclusion of this company as well. Persistent Systems and Solutions Ltd. - The Annual Report of this company has been placed in the second paper book, from which it is lucid that this company is engaged only in providing software development and consultancy services, which is similar to those rendered by the assessee. When confronted, the ld. AR did not raise any objection to the inclusion of this company in the final set of comparables. We, therefore, uphold the impugned order in treating this company as comparable. Persistent Systems Ltd. - The TPO has himself observed that this company does have some products, but, product revenue is only 7.2% and, hence, this company is predominantly a software service provider. This discussion is contained in para 21.67 of the TPO’s order. Even Schedule-11 to the Profit 37 crore and odd. Though the break-up of revenue from software services and software products is available, but, the break-up of operating costs and net operating revenues from these two segments have not been given. It is further observed that the TPO has taken entity level figures for the purposes of making comparison. Since such entity level figures contain revenue from both software services and software products, as against the assessee only providing software services, we are disinclined to treat this company as comparable Wipro Technology Services Ltd.earned a revenue from Master services agreement with Citigroup Inc. for the delivery of technology infrastructure services. This agreement was, in fact, executed between the assessee’s AE, Wipro Ltd., and Citigroup Inc., a third person. This unfolds that the transaction of earning revenue from software development support and maintenance services by Wipro Technology Services Ltd., is an international transaction because of the application of section 92B(2) i.e., there exists a prior agreement in relation to such transaction between Citigroup Inc. (third person) and Wipro Ltd. (associated enterprise). In the light of this structure of transaction, it ceases to be uncontrolled transaction and, hence, Wipro Technology Services Ltd., disqualifies to become a comparable uncontrolled transaction for the purposes of inclusion in the final list of comparables under Rule 10B(1)(e)(ii). Acropetal Technologies Ltd. (Seg.) as find from the Annual accounts of this company, a copy of which is available at page 892 of the paper book, that it has a separate segment of software development covering `Enterprise solutions’ and `IT infrastructure solutions’. The nature of activity done by this company under these segments is broadly similar to that conducted by the assessee. Since the TPO has considered only the segmental figures of this company for the purposes of inclusion in the list of comparables, we find no reason to accept the assessee’s contention for its expulsion from the set of comparables. Sankhya Infotech Ltd. (Seg.) - AR’s contention that this company was doing huge research and development and, hence, the same should be excluded, does not merit acceptance because the research and development activity is restricted to the Product segment as is apparent from page 1198 of the paper book which states that: ‘the company has in-house research and development centre involved in developmental activities for new ‘products’ in the fields of simulations and training.’ Once this contention of the assessee is rejected and revenue from software products is excluded to the only inclusion of revenue from software development services segment which is akin to that of assessee, we feel no difficulty in considering this company as comparable on segmental level. The impugned order is upheld. Zylog Systems Ltd. - AR invited our attention towards page 9 of the TPO’s order containing list of 19 companies on which the assessee’s objections were sought for the purposes of their inclusion in the list of comparables. Name of Zylog Systems Ltd. is absent from such list., thus ends of justice would meet adequately if the impugned order on this issue is set aside and the matter is restored to the file of AO/TPO for deciding the inclusion or otherwise of Zylog Systems Ltd. in the final set of comparables afresh after entertaining objections from the assessee.

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• 2016 (2) TMI 603
  Registration granted under section 12AA(1) denied - receipts / earning of the assessee during the relevant previous year has exceeded prescribed limit - Held that:- Only because the receipts / earning of the assessee during the relevant previous year has exceeded prescribed limit, for that reason alone the assessee institution cannot be considered as non-charitable. For cancellation / withdrawal of registration under section 12AA(3), the provisions of section 2(15) cannot be brought into play. More so, when there is no material brought on record by the learned DIT(E) to demonstrate / establish that either there is change in the objects of the appellant institutions on the basis of which registration was granted earlier or the activities of the institution are not in accordance with its stated objects. As held in the judicial pronouncements cited by the learned counsel, the first proviso to section 2(15), is not at all relevant for the purpose of cancellation / withdrawal of registration under section 12AA(3) though, it may be relevant for examining assessee's claim of exemption section under section 11 which can only be looked into during the assessment proceedings. In view of the aforesaid, we are inclined to set aside the order of the learned DIT(E) and direct him to restore registration granted under section 12AA(1) of the Act to the appellant institution from the date of cancellation. - Decided in favour of assessee

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• 2016 (2) TMI 602
  Estimation of profit - Held that:- As relying on case of ACIT V/s. M/s Teja Constructions [2014 (1) TMI 832 - ITAT HYDERABAD] we direct Assessing Officer to estimate the profit from main contract work at 8% and on sub-contract work at 5% of the receipts. Deduction towards interest and remuneration payment to partners - Held that:- It is seen that the Income-tax Appellate Tribunal, Hyderabad Bench in the case of M/s C. Eswara Reddy V/s. CIT (2011 (1) TMI 1238 - ITAT HYDERABAD ) after considering the decision of the jurisdictional High Court in the case of Indwell Construction V/s. CIT (1998 (3) TMI 121 - ANDHRA PRADESH High Court ) as well as the provision contained u/s 44AD of the Act, directed for allowing deduction towards interest and remuneration payment to partners after estimation of income by rejecting books of accounts in case of a firm engaged in executing contract work. Even thereafter in a series of decisions, this Bench of the Tribunal has consistently held a view that deduction towards interest and remuneration payment to partners is to be allowed from profit estimated after rejecting books of account in case of a firm engaged in the business of works contract. In the aforesaid view of the matter, we direct the AO to allow deduction towards payment of interest and remuneration to the partners after estimating the profit

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• 2016 (2) TMI 601
  Eligibility for deduction u/s. 80P(2)(a)(i) - Held that:- Section 80P(4) is applicable only to cooperative banks and not to credit cooperative societies. The intention of the legislature of bringing in cooperative banks into the taxation structure was mainly to bring in par with commercial banks. Since the assessee is a cooperative society and not a cooperative bank, the provisions of section 80P(4) will not have application in the assessee’s case and therefore, it is entitled to deduction u/s 80P(2)(a)(i) of the Act. In coming to the aforesaid conclusion, the Tribunal also followed the decision of the Hon’ble jurisdictional High Court in CIT Vs. Sri Biluru Gurubasava Pattina Sahakari Sangha Niyamitha, Bagalkot,(2015 (1) TMI 821 - KARNATAKA HIGH COURT ) and other decisions. Following the aforesaid decision of the Tribunal, it is held that the assessee society is eligible to deduction u/s. 80(P)(2)(a)(i) of the Act - Decided in favour of assessee

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• 2016 (2) TMI 600
  Entitlement to deduction under section 80IB(10) - Held that:- As in the instant case, no certificate was issued by the Architect. Moreover, the requisite application for issuance of completion certificate was not moved in proper format and along with requisite documents. Therefore, in the light of these facts, it cannot be held that the project was completed within the prescribed period. We, therefore, following the order of the Tribunal for assessment year 2006-07, hold that in case of Fortuna Apartment, the assessee is not entitled for deduction under section 80IB(10) of the Act. In the case of Fortuna Reviera Blues Housing Project, the assessee has placed reliance upon a letter dated 29.3.2011 in which a request was made for issuance of completion certificate, but this letter is not supported by any Architect Certificate. Except this letter, no other evidence was filed to establish that the project was in fact completed before 31.3.2011. In the absence of any other specific evidence to establish that the project was completed before 31.3.2011, it is not possible for us to hold that the project was completed within the prescribed period, more so in the light of the fact that the completion certificate was issued on 26.9.2011 and also in the light of the judgment of the Hon'ble M.P. High court in the case of CIT vs. Global Reality (2015 (10) TMI 2384 - MADHYA PRADESH HIGH COURT ), according to which the date of issuance of completion certificate is the date of completion of the project. In the light of these facts, we are of the view that the assessee is not entitled for deduction under section 80IB(10) of the Act in respect of Fortuna Reviera Blues Housing Project also. - Decided against assessee

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• 2016 (2) TMI 599
  Deduction u/s 10A denied - whether the assessee has to be treated as rendering service in IT enabled service and hence, eligible for exemption u/s 10A? - whether collection of data and processing the same would amount to IT enabled service or not? - Held that:- The majority customers of the assessee are investment banks. The information/data furnished by the assessee is being used in the business activity of the customers, therefore, it is not a mere collection of data as claimed by the Revenue. The Delhi High Court in the case of ML Outsourcing Services (P) Ltd. (2014 (9) TMI 396 - DELHI HIGH COURT ) examined this issue elaborately and after referring to the Circular issued by the CBDT dated 26.9.2000, found that using information technology in scanning data, processing it, conducting online tests for short-listed candidates and analyzing their results would amount to data processing. We have also gone through the Third Member decision in the case of Accurum India (P) Ltd. (2009 (11) TMI 550 - ITAT MADRAS-A). This Tribunal by majority opinion, found that the requirement of sec. 10A is that there should be customized electronic data and such data should be exported outside India. In this case also, the assessee customized the electronic data and it was admittedly exported. This Tribunal is of the considered opinion that processing the data by the assessee would amount to providing IT enabled service, therefore, the assessee is eligible for exemption u/s 10A of the Act. - Decided in favour of assessee

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• 2016 (2) TMI 598
  Eligibility of exemption u/s 11 - whether collection of sponsorship fee for conducting tournament, green fee for allowing non-members to use the golf ground would be an activity in the nature of trade or commerce? - claim on the principles of mutuality - Held that:- Sponsorship fee collected for conducting tournament and green fee for use of gold ground cannot be considered to be a commercial activity and therefore, it is not in the nature of trade or commerce. It may be a commercial advertisement for the individual or institution who is paying the sponsorship fee but as far as the assessee is concerned, the sponsorship fee received is an income incidental to the main activity of promoting golf in the state of Tamilnadu, therefore, at any stretch of imagination, the collection of sponsorship fee cannot be considered as commercial activity by the assessee. Similarly, the tournament fee, annual subscription fee, green fee, catering income, round charges etc. are incidental to the main activity of promoting the sport of golf. As rightly submitted by the ld. Representative for the assessee, the non-refundable membership fee collected at the time of admission is in the nature of capital receipt, therefore, it cannot be treated as income of the assessee. Therefore, the CIT(A) is not justified in saying that the assessee is engaged in activity which is similar to commerce or trade. This Tribunal is of the considered opinion that the assessee is engaged only in promoting the sport of golf and receiving subscription, tournament fee, sponsorship fees etc. are in the course of its carrying on the charitable activity. Therefore, the activity of the assessee is not similar to commerce or trade. In this case, the object of the assessee is to promote the game of golf in the State of Tamilnadu. The benefits can be available not only for the members of the assessee-society but also non-members. Therefore, the beneficiaries cannot be identified. In fact, the object of the society enables to provide training and financial assistance to all individuals. In those circumstances, this Tribunal is of the considered opinion that the principles of mutuality is not applicable to the facts of this case. In view of the above discussion, this Tribunal is of the considered opinion that the assessee is eligible for exemption u/s 11 of the Act as charitable institution in respect of the income generated in the course of its activities in furtherance of its objects. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to grant exemption u/s 11 of the Act in respect of the income of the assessee which is utilized for the object of the society. - Decided in favour of assessee

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• 2016 (2) TMI 597
  Reopening of assessment - Held that:- The assessee in the assessment proceedings u/s.143(3) r.w.s 147 of the Act has filed material information which the Assessing Officer has overlooked the vital documents further the assessee filed appeal before the Commissioner of Income Tax (Appeals) and also filed submission 05.06.2015, which ld. Commissioner of Income Tax (Appeals) has ignored. Therefore, we are of the opinion that one more opportunity be given on the principles of natural justice as the Commissioner of Income Tax (Appeals) confirmed the order of the Assessing Officer without going into the merits of the case. Considering the facts and circumstances, we set aside the order of the Commissioner of Income Tax (Appeals) and remit the disputed issue back to the file of the Commissioner of Income Tax (Appeals) for hearing and the ld.CIT(A) should provide adequate opportunity of being to the assessee and dispose off the appeal on merits.

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• 2016 (2) TMI 596
  Sale of shares - normal business income OR short term capital gain - Held that:- As in terms of the Circular no. 1/2007 of CBDT also, neither the frequency of trading in shares nor the volume indicate that the appellant had been engaged in regular and significant trading in shares for itself. An investor may have two portfolios, one for trading purpose and another for investment. Evidently, the appellant had not made transactions except the single transaction of sale and purchase of shares which were allotted to it on all application at the time of IPO. Therefore, keeping in view the above facts, the aforesaid transaction is held to be investment in nature, which has been rightly shown as capital in nature. This ground is accordingly, allowed in favour of the appellant. - Decided in favour of assessee Disallowance of advertisement expenditure - Held that:- the appellant had made a full page advertisement, on 24 March 2008 in the "Business Standards" newspaper, which was clearly in the name of appellant company only and therefore the suspicion of the appellant that it may have been for the purpose of the entire group and not for the appellant company only, was based on incorrect facts. The appellant company therefore, meets all the requirements under section 37(1) of the Act in making claim of the advertisement expenses, which were for the purpose of business promotion of the appellant company - Decided in favour of assessee

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• Customs

• 2016 (2) TMI 616
  Valuation - mis-declaration of import of 100% nylon lurex yarn (CTH 5602) as 100% nylon yarn - import against advance authorisation licence - It also came out during the investigation that the appellant did not have necessary machinery to carry out the manufacture of export goods, from 100% nylon yarn allowed to be imported duty free under advance authorisation and was also sending the differential amount to the supplier to cover undervaluation via hawala transaction. Held that:- In the present case, there existed DRI alert Notes and also NIDB data to doubt the declared value. Indeed Explanation (iii) in the said Rule makes it clear that in the sector stances it was totally reasonable to doubt the transaction value. Indeed the Ld. advocate for the appellant during the arguments conceded that there existed reasonable doubt to reject the transaction value but he questioned the enhancement of value saying that there was no legal basis for doing so. Thus none of the judgements cited by the appellant come to its rescue in as much as rejection of the transaction value was clearly within the competence of the primary adjudicating authority. To enhance the value to the same level at which the goods were assessed in the appellants own case and with his consent when imported just a couple of months earlier can in no way be called unreasonable comparison with contemporaneous imports. - Demand confirmed - Decided against the assessee. The primary adjudication order is not a detailed one because the appellant did not want to reply the Show Cause Notice or appeared for hearing and therefore there was no arguments to rebut from the appellants side.

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• 2016 (2) TMI 615
  Valuation - loading on the goods imported from their related supplier by the Special Valuation Branch - inclusion of value towards design and drawing fees - The appellant amended the collaboration agreement by deleting the clause relating to payment of design and drawings. - Held that:- it is evident that the invoice price of Euro 1,62,350/- of pumps imported, sold to third parties on High Sea Sale Basis are not comparable goods with the goods imported by the appellants @ Euro 1,49,000. The rejection of declared price and loading EURO 1,62,350 ordered by the authority is not sustainable. We hold that the declared value of the pumps imported is the correct transaction value. - Loading of value rejected - Decided in favor of assessee. Loading of Technical Know how fees to the Transaction value of imported goods - Held that:- the development cost already included in the Transaction value of imports of 27 units is not liable to be added to the Transaction value of imported goods. Since the agreement is effective from January 2012 the Technical know how fee cannot be added to the imports made in 2011 and not applicable to other models as well other than the pumps model S36X. - the original authority ordering of loading of Technical know how fee of Euro 720,000 to the Transaction value of 76 Nos Pumps under Rule 10 (1) (c) is not sustainable and not backed with any evidence. - Decided in favor of assessee.

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• 2016 (2) TMI 614
  Valuation - Claim of exemption on import of software - Alongwith import of cellular phones the appellants also imported CD ROMS and filed B/Es separately for phones and CD-ROMS claiming phones as "hardware portion" of FWTs and CD-ROMS as "Software Portion" of the said FWTs. A dispute arose on the nature of goods imported, mainly with reference to split up of hardware and software portions of FWTs for assessment purposes. Customs duty is payable on phones but exempted on imported software. Revenue conducted detailed follow up investigations and came to the conclusion that the 'Software' claimed to have been contained in the CD ROMS are already pre-loaded in the phones and there is no software as goods to be assessed separately for claiming exemption. Held that:- It is the clearly admitted fact that the software/data loaded on the Flash memory is specific to the user/customer. It contains caller ID and caller block software. The phones imported have embedded software with required parameters for its functioning. The present appeals deal with Fixed Wireless phones, with PCB inside, a part of which is claimed as a recorded media for software. As examined with technical literature earlier in the order, the logic/programme loaded in the said memory unit is the fundamental necessity for the function of the FW telephone. It cannot be compared to any optional or identifiable software as a recorded media. Such software as available for computers are nowhere comparable to the programme software pre-loaded in the memory chip of the PCB. The Fixed Wireless phones as imported require to be classified and assessed as phones with no segregation of value assignable to the software separately, as claimed by the importers. - Demand of duty confirmed - however, demand of interest, redemption fine and penalty waived. - Decided partly in favor of assessee.

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• Corporate Laws

• 2016 (2) TMI 584
  Scheme of Amalgamation - Held that:- Considering the above facts and circumstance and taking into account the contentions raised by the affidavits and reply affidavits and the submissions advanced during the course of hearing, this Court is satisfied that the observations made by the Regional Director, Ministry of Corporate Affairs, have been suitably addressed. It can be concluded that the present Scheme of Arrangement is in the interest of the shareholders and creditors of all the companies, as well as in the public interest, therefore, the same deserves to be sanctioned.

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• 2016 (2) TMI 583
  Effect of amendment of the Companies Act in 2013 - Appointment of M.D. - whether, after the amendment of the Companies Act in 2013 which was brought into force with effect from 01/04/2014, any Managing Director who was appointed prior to the Amendment Act i.e. before 01/04/2014 would have a right to continue to act as Managing Director after his attaining the age of 70 years without special general resolution being passed by the Company in its general meeting? - Held that:- It has to be borne in mind that by virtue of the Amendment Act of 2013, which came into force on 01/04/2014, one additional disqualification was added to the list of disqualifications which were in existence under the old Act under Section 267. Since a new clause was added as further disqualification for appointment or continuation as Managing Director of the Company, it would operate not only at the stage of appointment but also would operate in the case of a person who has already been appointed and attained the age of 70 years and such a person, therefore, by virtue of disqualification, had no right to be continued as Managing Director, unless a special resolution was passed by the Company. There is no question therefore of the retrospective application of the provision. Since Section 196(3)(a) would apply prospectively, whoever attains the age of 70 after the Amendment Act came into force would cease to function as Managing Director by operation of statute. In the present case, prior to 2013 Amendment Act, appointment after the age of 70 years was not permissible subject to proviso but after the Amendment Act came into force, this was added as disqualification for further continuation of a person after he attained the age of 70 years. In a case therefore where the appointment is already made and thereafter eligibility criteria is changed then, in that event, it could be said that the vested right is created in a person who is already appointed prior to the amendment and additional eligibility criteria could not be applied retrospectively. However, in a case where additional disqualification is added to the Section then in such a case, after disqualification is incurred after his initial appointment, he would cease to continue as Managing Director since the disqualification would operate as cesession or discontinuation to work as Managing Director. In our view, the learned Single Judge has failed to note this distinction between the disqualification which is added after the appointment and the eligibility criteria which is added after his appointment. In the former case, disqualification would operate even after the appointment but in the latter case, it would operate prospectively. If appointment to the post of Managing Director is made after coming into force of the Amendment Act, 2013 on 1-4-2014, a person who is above the age of 70 years cannot be appointed on account of disqualification, subject to fulfillment of the proviso. On the other hand, if he was already appointed prior to 1-4-2014 when he was below the age of 70 years, on account of operation of statute, disqualification, whenever incurred after the Amendment Act, would operate automatically, subject to proviso i.e. special resolution being passed by the Company. Appeal allowed.

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• Service Tax

• 2016 (2) TMI 611
  Business Auxiliary Service - Activity of maintaining complete Toll Operation, supply of Man Power and maintenance of Toll Collection System including Plaza maintenance etc. - in the case of Swarna Tollway (Pvt.) Ltd Vs CCE Guntur [2011 (5) TMI 192 - CESTAT, BANGALORE], the Tribunal allowed the appeal of the Assessee, on the identical issue, where the toll collection is related to the National Highway Authority of India. The Tribunal consistently viewed that the National Highway Authority of India cannot be treated as the customers of the Appellant. It is also observed that the NHAI is not running any business. Hence, we do not find any force in the submissions of the learned Authorised Representative for the Revenue. It is seen that the facts of the present case are squarely covered by the decisions of the Tribunal in the case of Intertoll India Consultants (P) Ltd [2011 (5) TMI 257 - CESTAT, NEW DELHI] and Intertoll ICS CE CONS O & MP Ltd [2013 (12) TMI 731 - CESTAT NEW DELHI]. - Demand set aside - Decided in favor of assessee.

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• 2016 (2) TMI 610
  Multi Level Marketing - Business Auxiliary Services - Demand of service tax on commission earned from activity of sponsoring new distributors and commission earned on turnover achieved by them - Held that:- service tax is not payable on the Trade discount earned and profit on Trading in Amway goods. But the same is taxable on the commission earned from activity of sponsoring new distributors and commission earned on turnover achieved by them and accordingly remanded with direction to recalculate the tax liability. - Matter remanded back to recalculate the service tax liability - Decided partly in favor of assessee.

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• 2016 (2) TMI 609
  Refund of un-utilized cenvat credit - period of limitation - export of services - refund claim filed within one year from the end of relevant quarter - rule 5 of Cenvat Credit Rules, 2004 - Held that:- unless the entire quarter is completed, the exporter cannot file his refund claim, as the crucial documents like Bank Realization Certificate issued during the said quarter are required to be submitted along with the refund claim. Also the formula prescribed in the new Rule 5 of the CCR requires the use of 'Net CENVAT credit' which can be arrived at only at the end of the relevant quarter Notification provides for filing of refund claim within specific period, that would be applicable and the provisions of Section 11B of Central Excise Act, 1944 which is sought to be relied upon by the AR as well as in grounds of appeal is not applicable, as refund claim is filed by the respondent is not under Section 11B of the Central Excise Act; accordingly I do not find any error in decision of the first appellate authority as well as the Tribunal, no error apparent on the face of record; on this count, i.e. that the claim is to be filed within one year and after end of the quarter. - Refund cannot be denied - Decided against the revenue.

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• 2016 (2) TMI 608
  Demand of service tax on the value of SIM cards while rendering “telecommunication services” between September 2002 and March 2006 - Held that:- SIM cards do not have a function other than as a service unextricably linked to the activation thereof which is itself acknowledged as a taxable service. - The appellant’s contention in the grounds of appeal that discharge of VAT obligation to the state government will relieve them of tax liability under Finance Act, 1994 is, therefore, not tenable. Cenvat Credit - duty paying documents - address and name is different on the face of most of the Invoices - Held that:- the onus vests on the claimant of credit to evidence the receipt of such services at such premises as are pertinent to the taxable services being rendered. Goods permit a certain ease of ascertainability by the tax officer; services are not easily amenable to such authentication and mere evidence of amalgamation of an entity with appellant will not suffice for the purpose of Rule 9(2) of CENVAT Credit Rules, 2004 without evincing place of receipt of input service as the place pertinent to supply of output service. The claim of the appellant fails rendering the order of the original authority unassailable on this count. Taxability of charges on roaming facility availed by customers of overseas service provider while in India - Held that:- the tax was not being collected and paid into the Consolidated Fund of India since the introduction of the tax in 1994 and the Central Government has decided to regularize this industry practice prevailing for the period upto January 2007. The appellant being a licencee who has been conforming to the trade practice, is also a beneficiary of this magnanimity. Impugned order is not upheld on this count. Extended period of limitation is not invokable - Decided partly in favor of assessee.

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• 2016 (2) TMI 595
  Extended period of limitation - assessee stopped payment of service tax in the pretext of seeking clarification from the Commissioner - Held that:- The order of the Commissioner is well reasoned and discussed. It has analyzed the facts threadbare arriving at the conclusion that the mere seeking of a clarification from the Board cannot be sufficient justification to withhold payment of service tax. This aspect of the matter has not been considered by the Tribunal. The Commissioner further arrived at the finding that after the clarification by the Board, the Respondent has in fact paid the service tax, but partially only. The Commissioner further arrived at the finding that the plea for seeking clarification from the Board could not be a valid justification for the Respondent to take advantage of their own wrong by now invoking the plea of limitation. The Commissioner has further arrived at a finding of fact from the documents produced by the transporters and also submitted by the Respondent that the transport challans fulfilled all the requirements of the consignment note and that there may have been some additional information in it for the sake of convenience would not take the basic character of a consignment note fulfilled. The Tribunal, without any discussion of these findings arrived at by the Commissioner, by a cryptic conclusion has held that in absence of any consignment note actually having been issued, no liability of service tax arises. The question in the facts of the case is that once liability has been admitted by the Respondent, can technicalities justify non-compliance with the law when there is no substantive defence. - Case remanded back to tribunal for a fresh decision - Decided against the revenue.

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• 2016 (2) TMI 594
  Cargo Handling Service - whether tribunal did not consider the arguments of the revenue while setting aside the demand - Held that:- Tribunal reflects that the departmental representative did not make any submissions opposing the contentions of the Respondent that the unsustainability of the claims was covered by earlier orders of the Commissioner and precedents of the Tribunal itself. The departmental representative simply supported the impugned order of the Commissioner. What may or may not have transpired before the Tribunal is best known to the members of the Tribunal itself. The pleadings in the appeal extracted above are delightfully vague and cannot be construed as non-consideration of the argument of the departmental representative. Recitals in the order sheet are sacrosanct so far as the superior Court is concerned with regard to what may or may not have transpired before the Tribunal. If the Appellant is of the opinion that its arguments and contentions have not been considered, the proper remedy for the Appellant is to first move before the Tribunal itself inviting its attention to the same. - Appeal dismissed - Decided against the revenue.

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• Central Excise

• 2016 (2) TMI 593
  Education cess levy - Held that:- Once the measure of customs duty equivalent to Central Excise leviable on the like goods has been worked out, the question of levying Education cess separately in respect of clearance by 100% EOU to DTA does not arise. See Commissioner Versus Meghmani Dyes & Intermediates Ltd. [2014 (11) TMI 615 - Supreme Court of India ]

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• 2016 (2) TMI 592
  Denial of Cenvat Credit of service tax - Recovery of duty under Section 11A(1)- violation of Rule 3 of CENVAT Credit Rules, 2004 - invoice raised in respect of Calico land which was not incorporated in the manufacturing premises and in respect of certain invoice credit was sought to be denied on the ground that service tax registration no. of supplier were not mentioned in their invoices - Held that:- It is a fact that the land belonging to Calico was purchased by the appellant in an auction got conducted by the Gujarat High Court and appellant took possession of the same in the year 2005. They applied for inclusion of Calico land in their RC vide their letter dated 20.12.2007 and the same was granted by the excise authorities with effect from 16.05.2008. It is also a fact that the wall around the Calico land was got constructed by the appellant; purchase order as well as invoice are also in the name of HPCL, i.e. the appellant. In view of this mere non-inclusion of Calico land in the excise registration at the time when the services were availed is only a procedural lapse which was rectified subsequently by the service tax authorities w.e.f 16.05.2008 by including the said land in the registration certificate of the appellant. Thus in considered view, input service credit cannot be denied on this mere procedural lapse to the appellant It is pertinent to note that in respect of few invoices issued by the service providers, the appellant had admitted the wrong availment of Cenvat Credit of 72,675/- and have already reversed the same along with interest. Now coming to the alleged total demand of 5,55,112/-, the appellant are entitled to Cenvat Credit of 3,73,507/- and 1,08,930/- totalling 4,82,437/- and the remaining amount of 72,675/- has already been reversed by the appellant along with interest. Admittedly, appellant had wrongly availed Cenvat Credit of 72,675/-, therefore, the appellant is liable to penalty of equal amount under Rule 15(3) of CENVAT Credit Rules, 2004 read with Rule 25 of Central Excise Rules, 2002. In view of the foregoing, the appeal of the appellant is partly allowed to the extent that they are entitled to Cenvat Credit of 4,82,437/- but they are liable to penalty of equal amount of the credit wrongly availed to the tune of 72,675/-.

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• 2016 (2) TMI 591
  Cenvat Credit on semi finished / unformed batteries denied - Whether the activity undertaken by the appellant on amounts to manufacture or not? - Held that:- Semi finished / incomplete batteries received by the appellant and by the process undertaken by the appellant have become complete batteries / marketable. Therefore, the activity undertaken by the appellant is squarely covered by the section note 6 of Section 16 of Tariff Act 1985. Therefore, we hold that activity undertaken by the appellant amounts to manufacture. Therefore, they have rightly taken the Cenvat Credit on semi finished / incomplete batteries received from their sister unit to do the process making them marketable in complete condition. The appellant has succeeded on the issue that whether their activity amounts to manufacture or not. We also hold that as per the decision of Hon'ble High Court in the case of Ajinkya Enterprises (2012 (7) TMI 141 - BOMBAY HIGH COURT ) wherein it has been held that if activity does not amount to manufacture, the goods cleared on payment of duty shall amount to reversal of credit. In that situation also appellant is not required to reverse Cenvat Credit. In these circumstances, the appellant has correctly taken the Cenvat Credit and we do not find any merit in the impugned order. - Decided in favour of assessee

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• 2016 (2) TMI 590
  Denial of CENVAT credit - whether Bangalore unit was not entitled to avail the entire CENVAT credit of service tax paid by them? - Held that:- Admittedly both the units at Bangalore as well as at Hubli are the units of the same appellant and the credit availed by one unit could have been distributed to the other unit even though the services were not actually availed at that unit. This leads to the conclusion that either of the two units could have availed the entire credit. As such, it is of the view that denial of credit to the Bangalore unit is not justified. Otherwise also, as find that the appellant’s unit is registered as LTU inasmuch as it is exercising administrative control as per the provisions of Rule 12A of the CENVAT Credit Rules 2004, the CENVAT credit lying at one unit can be transferred to the other unit. As such even if the credit was required to be taken at Hubli plant, the same could have been transferred to the Bangalore unit in terms of the said rule. As such, find no justification for denial of the credit to the appellant. - Decided in favour of assessee

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• 2016 (2) TMI 589
  Cenvat credit denied - capital goods removed to the sister concern - extended period of limitation - Held that:- It is undisputed that appellant had availed Cenvat credit of 83,494/- which is an amount debited by their sister unit while transferring the moulds to them. It is also a fact that during the relevant period in question, i.e., October, 2000 provisions of Rule 57AC(2) of Central Excise Rules, 1944 did not contemplate for availing of 100% of Cenvat credit on the capital goods if they were to be removed in the same financial year. As find that the reliance placed by the ld. counsel on Hindustan Lever Ltd. (2004 (3) TMI 221 - CESTAT, MUMBAI ) of the Tribunal is misplaced, as the said view of the Tribunal has been upturned by the Hon’ble High Court recording clearly that the provisions of Central Excise Act, 1944 post 1-3-2002 cannot be applied for the interim period when there were no provisions for availment of 100% Cenvat credit on capital goods if they were to be removed as such to their sister concern or any other place. On merits, find that the appeal fails. As regards the extended period invoked on an allegation that there was suppression, misstatement with intent to evade payment of duty, find that these allegations are not correct inasmuch, find that in the appellant’s own case, the Additional Commissioner of Central Excise, Kanpur Commissionerate, in an identical issue of transfer of moulds to their units has held that appellant could avail 50% of the amount of the duty payable on moulds, when purchased. Nothing was brought to the notice that revenue had filed an appeal against such an order. The appellant herein during the period October, 2000 (relevant period in this case) could have entertained a bona fide belief that they are eligible for Cenvat credit of 50% of the amount of duty payable on the capital goods when they were cleared by the manufacturer. In my considered view, the show cause notice which invokes the extended period for the demand of ineligible Cenvat credit is blatantly hit by limitation and the findings reached by both lower authorities as to the demand being correct even on limitation, is liable to be set aside on the ground of limitation. - Decided in favour of assessee

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• 2016 (2) TMI 588
  Refund claim - Commissioner (A) has allowed the refund claim holding that respondent has passed the bar of unjust enrichment - Held that:- On passing of duty of incidence is to be seen in a way that whether the buyer has claimed the credit of duty paid by the respondent or not. Admittedly the buyer of the respondent are not registered with Central Excise Department, therefore, claiming the credit of duty paid by the respondent does not arise. In these circumstances, the credit note issued by the respondent to their buyers is a sufficient document to hold that respondent has passed the bar of unjust enrichment. As discussed above, the fact is on record that buyer of the respondent are not registered dealer and have not taken Cenvat credit of the duty paid by the respondent. In that case, credit note issued by the respondent is sufficient proof of passing the bar of unjust enrichment. In these circumstances, hold that respondent is entitled for refund claim of excess duty paid by them at the time of provisional clearance of the goods. - Decided in favour of assessee

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• 2016 (2) TMI 587
  Penalties imposed under the provisions of Rule 26(2) of the Central Excise Rules 2002 - appellants herein have issued invoices for the scrap purchased from manufacturing industries and passed on the Cenvat credit of duty but factually they have only delivered the market scrap to the recipients - Held that:- As find from a specimen Invoice No. 2857 of 29-9-2007 the, delivery challan issued by the main appellant is clearly indicates that goods “waste and scrap” are “non-excisable goods” and the description given is also loose scrap; while the tax invoice indicates the same as “waste & scrap” procured from Jyoti Structures Ltd. In my considered view, when the challan issued by the appellant indicates the goods as non-excisable goods, cannot become an excisable goods on which payment made. There is no explanation put forth by the appellant on this specific point. In the considered view the findings recorded by the first appellate authority as reproduced herein above clearly indicates that the appellant did not supply the inputs as mentioned in the duty paying documents. In view of the above find that both the appellants have not made out any case in their favour. The main appellant being a Pvt. Ltd. has been penalized under Rule 26(2) of Central Excise Rules, 2002 and the penalty needs to be upheld, while the 2nd appellant Shri Lalit Inderchand Baliya being a Director is also penalized under the same Rule. The penalty imposed on the 2nd appellant is unwarranted. In the facts and circumstances of the case, penalty imposed on the 2nd appellant is set aside while the penalty imposed on the main appellant is upheld as has been ordered by the first appellate authority. - Decided in favour of assessee

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• 2016 (2) TMI 586
  Rejection of refund claim on the point of unjust enrichment - Held that:- It is for the first time that when the appeal was filed before Commissioner (Appeals) against the rejection of the refund claim vide adjudication order passed in de novo proceedings that Commissioner (Appeals) examined the refund claim on merits. Though as find acceptance in the reasononings of Commissioner (Appeals) that when the quantitative discounts were not known at the time of removal of the goods and the duty was paid on the higher assessable value, subsequent reduction of the assessable value may not be in accordance with law, especially when the assessment was not provisional. Further I find force in the plea of the learned advocate that the issue on merits was never the subject matter of the proceedings and introduction of the same, for the first time, by Commissioner (Appeals), while deciding the remand proceedings, cannot be appreciated. Taking up the matter on merits, which were not subject matter of the show-cause notice, amounts to going beyond the show-cause notice. Not only that when the matter was addressed by the Tribunal for the first time, Revenue never raised the issue that the refund claim is not admissible even otherwise. The matter was argued only on the issue of unjust enrichment. As such, fully agree that rejection of refund claim on merits by Commissioner (Appeals) is not proper and legal. It is not disputed that the appellant has given quantitative discounts to their distributors and have issued credit notes to them. The distributors are the buyers and for the purpose of unjust enrichment, they have to be considered so. There is no concept of not passing on the duty to the ultimate consumer and as long as the buyers had been passed on the benefit of reduction in duty, the same would satisfy the principles of unjust enrichment. Accordingly hold that the appellant is entitled to the refund of duty. - Decided in favour of assessee

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• 2016 (2) TMI 585
  Eligibility of cenvat credit on the steel item - limitation period prescribed under Section 11A - Held that:- In the present case, no iota of evidence has been brought on record by the Department to prove that taking of cenvat credit by the appellant is attributable to suppression, misstatement, collusion etc., with intent to evade payment of duty. Thus in such an eventuality, the SCN was required to be issued within one year from the relevant date. In so far as the SCN dated 16.04.2010 for the period 2008-2009 is concerned, the same is barred by limitation of time, having been issued beyond the period of one year. However, in so far as the credit taken for the period 2009-2010, the SCN has been issued within limitation period prescribed under Section 11A of the Central Excise Act. Thus as per the decision of the Larger Bench of the Tribunal in the case of Vandana Global Ltd. vs CCE Raipur [2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) ] the appellant is liable to reverse cenvat credit attributable to such ineligible credit along with interest. Imposition of penalty under Rule 15(2) of the Cenvat Credit Rules 2004, read with section 11AC of the Central Excise Act 1944 is not justified in the facts and circumstances of the present case, especially in view of the fact that there was no element of suppression, misstatement, collusion, fraud etc., on the part of the appellant to defraud payment of Revenue to the Government exchequer. To sum up, SCN initiated for the period April 2008 to February 2009 is barred by limitation of time as per the proviso to section 11A of the Central Excise Act, 1944 and to that extent the appeal succeeds. With regard to the period 2009-2010, am of the view that wrongly availed cenvat credit can be recovered from the appellant along with interest. Thus, appeal for the period 2009-2010 is dismissed.

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• CST, VAT & Sales Tax

• 2016 (2) TMI 613
  Constitutional validity of requirement of mandatory pre-deposit of 25% without giving any discretion to the revisional authority to waive such deposit. - Section 65(3) of the Punjab Value Added Tax Act, 2005 (PVAT) - Held that:- provisions of Section 65(3) of PVAT Act are held to be intra vires, however, the Tribunal shall decide the matter in accordance with law in terms of the judgment in Punjab State Power Corporation Limited's case [2016 (2) TMI 245 - PUNJAB AND HARYANA HIGH COURT] - Decided in favor of assessee.

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• 2016 (2) TMI 612
  Claim of interest of on Refund of sales tax / vat which was paid under protest - earlier Apex court clarified that if lease is executed in one State but the goods are situated in another State, no local tax was payable in the state - Held that:- Such refund was actually paid to the petitioners alongwith partial interest. When the petitioners demanded interest for the full period, the authority conveyed to the petitioners that by virtue of the judgement of Supreme Court in case of Mafatlal Industries on the basis of principles of unjust enrichment, the petitioners were not entitled to any refund in the first place. Question of paying interest, therefore, would not arise. For multiple reasons, such approach was wholly erroneous. Firstly, whether the principles of unjust enrichment, as expounded by the Supreme Court in case of Mafatlal Industries would apply at all is a question. More importantly, such question could not have been considered by the authority without any opportunity to the petitioner. Even more importantly, the claim of interest is statutorily recognized under Section 54 of the Sales Tax Act and flows from the petitioners' right to seek refund. The authority who himself granted such refund, now questions the legality and validity of his own order. He did not have any power of review. The revision authority has not yet taken his order in revision. The Assistant Commissioner of Commercial Tax, therefore, had no authority to question his own order of granting refund. The Competent authority shall compute the interest payable to the petitioners for the entire period between the deposit of the tax till actual payment and pay to the petitioners such interest at the statutory rate after adjusting the interest already computed and paid over while granting refund. - Decided in favor of assessee.

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• Indian Laws

• 2016 (2) TMI 582
  Eviction from disputed property - jurisdiction of Additional District Magistrate under Section 14 of SARFAESI Act - petitioner is a lessee - Held that:- It is a settled position of law that under Section 14 of the SARFAESI Act, the Chief Metropolitan Magistrate or the District Magistrate, acts in assistance of the secured creditor in taking possession of the secured assets. In the present case, the power under Section 14 has been exercised by the Additional District Magistrate by assisting the respondentBank in taking possession of the secured asset. By auctioning the disputed property, the respondentBank is no longer in possession. The possession of the disputed property is with respondent No.5. Without any challenge to the auction, the auction purchaser cannot be dispossessed of the property purchased in a public auction, the possession of which has been handed over to it, solely because the petitioner now seeks to assert its rights as a lessee at this stage. This Court is of the view that the petitioner is guilty of suppression of material facts which would have a vital effect on the adjudication of the petition. Further, in view of the implementation of the impugned order under Section 14 of the SARFAESI Act, the petitioner cannot seek to undo the auction and its legal consequences, without even raising a challenge to it. For the aforestated reasons, this Court does not consider it necessary to deal with the submissions regarding the availability of an alternative remedy under Section 17 of the SARFAESI Act.Similarly, the issue regarding the jurisdiction, or the lack of it, of the Additional District Magistrate to pass an order under Section 14 of the SARFAESI Act, as contended by the petitioner, is not required to be dealt with as the said order has already been implemented. For similar reasons, it is not necessary to examine whether, or not, the petitioner is/ was a lessee of the secured asset. For the reasons indicated hereinabove, this Court considers the present petition to be devoid of merit.

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