Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 9, 2018
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Reopening of assessment - assessment against deceased person - liability of Legal representatives - in the light of the provisions of section 159 of the Act the proceedings are required to be initiated against a legal representative and not against the deceased. - HC
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Reopening of assessment - assessment against deceased person - liability of Legal representatives - Insofar as the provisions of section 292B of the Act are concerned, the same would not be applicable as the petitioner is not the assessee - HC
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The assessee was entitled for deduction on account of interest paid to Allahabad Bank on the borrowed funds under section 57(iii) - such interest payment being more than the interest earned in both the years under consideration, no addition was liable to be made to the total income of the assessee on this issue - AT
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TDS u/s 194H - Addition u/s 40(a)(ia) - when the assessee is not directly and indirectly in deciding the quantum of alleged commission/discount as well as determining the retail price at which the recharge coupons is sold to the customer then the provisions of section 194H cannot be applied - AT
Customs
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Valuation - rejection of transaction value - From among the documents recovered from the laptop and mobile phone, the department has recovered the invoices/commercial invoices pertaining to the goods imported under these Bills of Entry - re-determining the value of the past imported goods on the basis of such invoices is justified - demand confirmed - AT
Indian Laws
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Maintainability of appeal - doctrine of harmonious construction - whether an appeal, not maintainable under Section 50 of the Arbitration and Conciliation Act, 1996, is nonetheless maintainable under Section 13(1) of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015? - Held No - SC
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Appointment of an arbitrator - When the contractee accepted the final payment in full and final satisfaction of all its claims, there is no point in raising the claim for losses incurred during the execution of the Contract at a belated stage - SC
IBC
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Corporate Insolvency Resolution Process - whether Appellant is not a ‘Financial Creditor’? - a loan advanced against the time value of money - Held No - AT
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Corporate insolvency process - This petition under Section 9 of the I & B Code cannot be filed in the representative capacity of 284 workers - The operational creditor himself can file a petition regarding the debt of other persons, only in case debt is assigned or transferred to him. - Tri
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Corporate Insolvency Resolution Process - existence of eligible debt - Operational Creditor had provided security services to the Corporate Debtor and maintained a running account in respect of the said transaction - application admitted - Tri
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Corporate insolvency process - The rationale of giving a particular treatment to a financial creditor in the process of insolvency of a company under the Code of 2016 cannot be said to offend any provisions of the Constitution of India. - HC
Service Tax
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Recovery of Service Tax dues - Garnishee order - There is no illegality in the impugned Garnishee proceedings under Section 87 of the Act for recovery of the Service Tax dues from the petitioner. - HC
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Voluntary Compliance Encouragement Scheme (VCES) - rejection of declaration on the ground that the tax payable and due to the petitioner as declared under the said VCES, 2013 was paid before the date of promulgation itself on 10.5.2013 - rejection of declaration was unjustified and cannot be sustained - HC
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Refund claim of service tax paid earlier - place of provision of service - Fashion Designing Services - there is nothing on record to show that the service or a part of the service has been performed in India - not taxable - refund allowed - AT
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Export of service - receipt of consideration in convertible foreign exchange - The said debit of foreign exchange by the UK bank and consequent credit in Indian rupee in Indian bank as part of nostro transaction is reported to RBI and necessarily forms part of foreign exchange earning in India - AT
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Programme producer service with reference to domestic radio stations - There is no second person at the time of appellant producing the programme which is apparently for self - such transactions are not covered by programme producer service as the appellant did not produce programme for a third party - demand of service tax set aside - AT
Central Excise
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CENVAT credit - Refund claim - input services - man power recruitment service and security service - Section 68 (2) is a special mechanism for shifting part liability to pay service tax from service provider to service recipient but it does not convert in the service recipient into service provider - Rule 5B of CCR has no application in the appellants case. - AT
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CENVAT credit - the legitimate claim of the appellant for availment of cenvat credit cannot be denied for simple reasons that the First Stage/ Second Stage dealer has not filled up the columns correctly - AT
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CENVAT credit - capital goods - imported two extruder machines - it is found that both the authorities below are reading a non-existent condition into the definition of capital goods which is impermissible. - AT
VAT
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Input Tax Credit (ITC) - there cannot be breach of principles of natural justice in disallowance of the Input Tax Credit in the hands of the petitioner-assessee, if the selling dealer himself is shown to be an non-existing dealer from entity - HC
Case Laws:
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Income Tax
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2018 (2) TMI 443
Deduction claimed by the assessee/respondent u/s 10A - foreign inward remittances received were held not to constitute income qualifying for deduction under Section 10A - Held that:- It is quite apparent that customized electronic data or product or service clearly falls within the description of an activity that qualifies for deduction under Section 10A. The lower authorities, we also note this, have relied upon certain other decisions, which take the extended or enlarged meaning of the expression “service” so as to imply not mere manufacture or production of articles or goods but other services. This view is reflected by the Court’s judgment in Commissioner of Income Tax v. Kiran Kapoor (2015 (2) TMI 20 - DELHI HIGH COURT). Having regard to the nature of the services, and, furthermore, that the STPI clearances were granted for the particular activity i.e. call centre, the Court is of the opinion that there is no error of law, calling for interference.
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2018 (2) TMI 442
Claim for deduction u/s 10A - Tribunal allowed partial claim - Held that:- The conclusion arrived at by the Tribunal regarding the claim of the assessee under section 10A of the Act is based upon concurrent findings of fact recorded by it after appreciating the material on record. Under the circumstances, the said ground of appeal being based purely upon the findings of fact recorded after appreciation of the evidence on record, in the absence of any perversity being pointed out in the impugned order, does not give rise to any question of law. Disallowance of interest expenses - Held that:- The assessee had obtained secured loans of ₹ 2,20,80,792/-, whereas it had reserve surplus of ₹ 9,63,57,283/-, share capital of ₹ 10,30,45,000/- and share application money of ₹ 2,17,75,000/-. Thus, the assessee had considerable surplus funds in proportion to the secured loans. Under the circumstances, since the assessee had advanced interest-free loans out of its surplus funds, the question of disallowing the expenditure in respect of interest incurred on the borrowed funds did not arise, inasmuch as, no part of the borrowed funds had been advanced by the assessee to the concerned parties. Under the circumstances, the Tribunal was wholly justified in upholding the deletion of disallowance of interest expenses of ₹ 15,21,790/-.
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2018 (2) TMI 441
Reopening of assessment - validity of notice issues - eligible reasons to believe - Addition u/s 40A - Held that:- The first condition is not attracted inasmuch as there is no allegation that the petitioner has failed to file a return, as contemplated in the proviso. Insofar as the second condition is concerned, on a perusal of the reasons recorded, it is evident that there is not even a whisper therein as regards any failure on the part of the petitioner to disclose truly and fully all material facts necessary for the assessment nor can any such failure be culled out upon considering the reasons in their entirety. Under the circumstances, the assumption of jurisdiction on the part of the Assessing Officer under section 147 of the Act after a period of four years from the end of the relevant assessment year is without any authority of law. Assessment is sought to be reopened on the ground that various expenses were paid, out of which, payment was made in cash to eight persons which was required to be disallowed under section 40A(3) of the Act. A perusal of the documents annexed along with the petition reveals that at the time of the scrutiny assessment proceedings under section 143(3) of the Act, the Assessing Officer had called for details of the expenses incurred by the petitioner, who had duly submitted the same. The statements submitted by the petitioner clearly revealed the payments made in cash to different parties in detail. Evidently, therefore, at the time of the regular assessment, the Assessing Officer had gone into the issue and had not thought it fit to make any disallowance under section 40A(3) of the Act. Therefore, the reopening is based upon a mere change of opinion, which also renders the impugned notice unsustainable. - Decided in favour of assessee.
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2018 (2) TMI 440
Disallowance made u/s 80IA(4) - captive power plants of the assessee were not separate undertakings, profits from them being notional,and hence, not included in gross total income - Tribunal deleted the disallowance - Held that:- Order passed by the Commissioner (Appeals) that denial under section 80IA on the ground that captive power plants of the assessee were not separate undertakings, profits from them being notional,and hence, not included in gross total income, etc., was not tenable in view of the decision in the case of Ahmedabad Manufacturing and Calico Printing Co. Ltd. [1986 (3) TMI 46 - GUJARAT High Court] wherein the court in the context of availability of deduction under section 80I, held that deduction under section 80I was available irrespective of the fact whether products were sold in open market or used for consumption by other units. The Tribunal in the impugned order has followed its earlier decision in the case of Banco Aluminium Ltd. in assessment year 2009-10 and has allowed the ground of appeal. It may be germane to refer to the decision of this court in the case of A.C.I.T., Bharuch Circle, Bharuch v. Pragati Glass Works Pvt. Ltd. (2012 (1) TMI 309 - GUJARAT HIGH COURT) wherein the court was dealing with the issue as to whether the Tribunal was right in law in directing to compute deduction under section 80IA by taking the market value of the electricity generated by the assessee at the rate of ₹ 5.00 per unit as against the market value of the electricity ₹ 4.51 per unit actually paid by the eligible business and considered by the AO for computing deduction under section 80IA in conformity with the provisions of section 80IA(8) of the Act, since the eligible unit cannot recover more than the duty paid - Decided against revenue
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2018 (2) TMI 439
Reopening of assessment - assessment against deceased person - liability of Legal representatives - Held that:- As the original assessee viz. father of the petitioner passed away on 19.08.2012. The petitioner had informed the revenue authorities about the same in the year 2013. The authorities were very well aware that the petitioner is the heir and legal representative of the deceased assessee, despite which, more than four years after the death of the assessee, the impugned notice has been issued in his name, namely against the deceased assessee. On a plain reading of section 159 of the Act, it is apparent that for the purpose of making an assessment, (including an assessment, reassessment or recomputation under section 147) of the income of the deceased and for the purpose of levying any sum in the hands of the legal representative in accordance with the provisions of subsection (1) any proceeding which could have been taken against the deceased if he had survived, may be taken against the legal representative. Therefore, in the light of the provisions of section 159 of the Act the proceedings are required to be initiated against a legal representative and not against the deceased. The impugned notice under section 148 of the Act is therefore, not in consonance with the provisions of section 159 of the Act. Insofar as the provisions of section 292B of the Act are concerned, the same would not be applicable in the facts of the present case as the proviso thereto says that nothing contained in the section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment. In the present case, apart from the petitioner is not the assessee, the petitioner has raised objection before completion of the reassessment and, therefore, the provisions of section 292BB would not be applicable in the facts of the present case. - Decided in favour of assessee
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2018 (2) TMI 438
Exemption u/s 10(23C)(vi) - Reopening of assessment - Held that:- The assessee is entitled to seek reasons for reopening of the assessment and if such request is made, the assessing officer is bound to furnish the reasons for reopening and on receipt of the reasons for reopening, the petitioner is entitled to submit their objections, which have to be dealt with by the assessing officer and an order has to be passed thereof. It is thereafter open to the assessee to question the order, if they are so advised. Therefore, the present writ petitions are premature in the sense that the petitioner has not sought for the reasons for reopening of the assessment. Thus, for the above reasons, this Court is inclined to dispose of the writ petitions with the following direction:- The petitioner/University through the competent authority in terms of Tamil Nadu Act 20 of 2013 is directed to address the respondent requesting for reasons for reopening and the respondent is directed to furnish the reasons for reopening giving sufficient time to the petitioner/University to submit their objections to the reopening proceedings. On receipt of the objections, the respondent shall consider the same and pass a speaking order on merits and in accordance with law and communicate the same to the petitioner.
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2018 (2) TMI 437
Unexplained cash credits - Held that:- AO has made the addition under section 68 of the IT Act. However, learned CIT-A has modified the order and upheld the addition under section 69A. In this scenario it was incumbent upon the CIT-A who give proper notice and opportunity to the assessee regarding the intention to modify the section under which the addition was proposed. The interest of justice will be served if the matter is remitted to the file of the assessing officer. The assessing officer is directed to consider the issue afresh after giving proper opportunity of being heard to the assessee. Assessee stands allowed for statistical purposes
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2018 (2) TMI 436
Computation of fringe benefit tax - Assessee pleaded that when a particular item of expenditure has been disallowed by the Ld. AO as not incurred wholly and exclusively for the purpose of business u/s 37 of the Act, then the same should not be subjected to levy of fringe benefit tax - Held that:- We find that the Ld. AO has fairly pleaded only for exclusion of the amount disallowed in the sum of ₹ 7,91,147/- from the computation of fringe benefit tax which, in our considered opinion, is just and fair. We find that CBDT Circular No. 8/2005 dated 29.08.2005 had in response to Frequently Asked Questionnaire (FAQ) has clarified the same. We find that the similar exclusion from FBT has been done properly by the Ld. AO in the assessment proceedings of assessment year 2007-08. From the facts narrated we find that this sum of disallowance of expenditure had been subjected to FBT. We are inclined to accept the alternative plea of the Ld. AR that the disallowed is to be excluded from the computation of FBT as worked out in the aforesaid table. Hence, we direct the ld. AO to re-compute the FBT computation as directed above. Accordingly, grounds raised by the assessee are allowed for statistical purposes.
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2018 (2) TMI 435
Penalty proceedings u/s 271(1)(c) - unexplained sales made to two parties - quantum side has attained finality and therefore, penalty on such addition is justified - Held that:- When, purchases, opening stock and direct expenses on debit side and gross sales, closing stock on credit side and balancing figure of gross profit and G.P. rate has not been disturbed; and books of accounts, trading results and other evidences have neither been rejected nor has any discrepancy been found. Here the nature of credit is sales and the onus that lied upon the assessee to prove the source of the sale has been proved by producing the sale bills against which it has received the amount and has shown it as part of its gross income - it cannot be a satisfaction either for initiation or for levy of penalty u/s 271(1) (c) under any of the limb of the charge. It is well settled principle that penalty proceedings are separate and distinct from the assessment proceedings and the assessee in the penalty proceedings may adduce any fresh evidence or may rely on same material or the evidence to prove that he is not guilty of either furnishing of inaccurate particulars of income or for concealment of income - entire explanation and evidence filed by the assessee is neither been found to be incorrect nor has been proved to be incorrect on the basis of any material on record as the information and the genuineness of the entries in the books of accounts of the third party has not been put to verification or cross examination by the AO. Simply relying on the account of the third party cannot be the basis for making any addition in the hands of the assessee leave alone levying the penalty u/s 271(1)(c). - Decided against revenue
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2018 (2) TMI 434
Assessment u/s 153C - Unexplained purchase u/s. 69C - satisfaction note eligibility - Held that:- No reason to accept the contention of the assessee that the said satisfaction note was recorded in the case of assessee and not in the case of person searched as required by law. Besides, no specific ground has been has been raised in the cross objection on the satisfaction note in particular. Accordingly, this issue is decided against the assessee and we find no justification to disturb the findings reached by the ld. CIT(A) on this count. Assessment barred by limitation - Held that:- The assessments made by the Assessing Officer u/s. 153C of the Act for A.Yrs. 2003-04 and 2004-05 are beyond the scope of section 153C and the same being void ab initio deserve to be quashed. Accordingly, the cross objections of the assessee for A.Yrs. 2003-04 and 2004-05 deserve to be allowed on this legal issue only and since the assessments for these years are held as void, the appeals of the Revenue for these years deserve to fail. See CIT Versus RRJ Securities Ltd. And Vica-Versa [2015 (11) TMI 19 - DELHI HIGH COURT] Also remit the issue of additions on merits back to the file of the Assessing Officer to decide the same afresh in the light of directions/observations given by ITAT, Bench ‘B’ in the case of DCIT vs. M/s. Devi Dayal Petro Chemicals Pvt. Ltd [2014 (10) TMI 216 - ITAT DELHI] wherein held AO will first verify the years to which the seized documents belonged - There would be no justification for continuation of the proceedings under Section 153C to which the seized documents do not belong. If the transactions are duly accounted for in the books of account, as contended by the learned counsel, the AO will drop the proceedings initiated u/s 153C
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2018 (2) TMI 433
Addition u/s 14A - earning of exempt income - suo-motu disallowance - Held that:- As assessee has earned dividend income for which no disallowance has been made by assessee in the return of income filed, as per section 14A(1), computation has to be adopted as per Rule 8D of the Income Tax Rules,1963. On perusal of the computation made by the AO, it is observed that the disallowance made is more than exempt income. Hon’ble Delhi High Court in the case of Cheminvest Pvt. Ltd. vs. CIT [2015 (9) TMI 238 - DELHI HIGH COURT] wherein it has been held that disallowance under Rule 8D cannot exceed the exempt income. Therefore in our considered opinion the disallowance needs to be recomputed. As there are no expenses other than the expenses recorded in Schedule 10 to P&L account, we find it appropriate to restrict the disallowance to a sum of ₹ 10,000/- which could be attributed to earning of exempt income. - Decided against assessee.
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2018 (2) TMI 432
Computing income from life insurance business - determining the income of the assessee u/s. 44 - Held that:- Following the orders of tribunal in the assessee’s own case for asst. year’s 2011-12 and 2012-13 we are of the view and hold that surplus/deficit of policy holders account may be aggregated with the surplus/deficit of the shareholders account for determining the income of the assessee u/s 44 of the Act. We find no reason to interfere with the finding/order of the ld CIT(A) on this issue and consequently dismiss the appeal filed by Revenue.
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2018 (2) TMI 431
Disallowance u/s 14A - Held that:- We find that the assessee has made investments in shares, PPF and mutual funds and no exempt income was earned during the year under consideration. Therefore, in view of decision of Hon’ble High Court of Delhi in the case of Chem Investment [2011 (11) TMI 30 - DELHI HIGH COURT] we find no infirmity in the order of Ld. CIT(A) and accordingly the ground raised in this regard by the Revenue is dismissed. Disallowance u/s 40(a)(ia) - short deduction and non-deduction of TDS - Held that:- It is observed from the assessment order it is clearly mentioned by the AO that the assessee did not furnish any evidence in support of his claim on expenditure. But however, it is seen from para no. 5.2, 5.3 and 5.4 the CIT(A) observed and deleted the said addition on the basis of documents and bills. Therefore, it shows that the assessee submitted a new documents before the CIT(A) which were not admittedly before the AO for his verification. Therefore, in these circumstances we deem it appropriate to remand this issue to the file of the AO for verification in terms of evidences filed Disallowance made u/s 40A(3) - payments in cash aggregate of payments exceeding the statutory limit of ₹ 20,000/- - Held that:- CIT(A) has verified the said payments in details found to be made through account payee cheques. The Ld. AR before us referred to page nos. 416 to 453 which are in the ledger accounts of the various entities as reflected in AO’s order under the different head i.e. service charge, drawing and drafting, machinery hire charges, material testing charges, soil exploration charges, transport charges and business promotion charges. Therefore, in our opinion the order of CIT(A) justified in holding the payments were made through account payee cheques and all other payments were made in cash are below the prescribed monetary limit u/s 40A(3) of the Act Addition made on account of unexplained cash credit - Held that:- Cash was deposited out of existing cash as per cash book. Regarding the account of the statement of the Kalikapur Branch which reflects opening balance in savings bank twice on 20.10.2008 at serial nos. 2 and 9. It is also observed at page no. 409, some of the payments were cancelled and transferred to SB account. Therefore, as rightly observed by the CIT(A) that there were cancellation of some amounts, duplication of amounts and also transferred from one existing account to another account belonging to the assessee. Therefore, we find no infirmity in the order of CIT(A). The addition made u/s 68 of the Act is deleted.
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2018 (2) TMI 430
Disallowance u/s. 14A in the reassessment order - Held that:- Commissioner of Income Tax (Appeals) is quite correct in holding that he was not in a position to entertain any such ground. We find that the issue relating to disallowance u/s. 14A was in the original assessment order passed on 30.12.2013. Hence, the Commissioner of Income Tax (Appeals) is quite correct that the assessee should have raised the ground against that decision in appeal against that assessment order. There is no question of condonation of delay as raised by the assessee as when the addition was not made in the reassessment order; there was no occasion for the CIT (Appeals) to consider the issue relating to disallowance u/s. 14A. - Decided against assessee.
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2018 (2) TMI 429
Deduction u/s.80IB - calculation of claim - expenses claimed as deduction for calculating net profit for Silvassa Unit – II - Held that:- AO failed to point out any direct nexus of the alleged common expenditures to have been incurred for Silvassa Unit – II and also did not pointed out any defect in the allocation statement prepared by the assessee for expenses claimed as deduction for calculating net profit for Silvassa Unit – II. We therefore set aside the findings of the ld. CIT(A) and allow ground 1, 2 and 3 of the Assessee and direct the Assessing Officer to allow the deduction u/s.80IB of the Act as claimed by the assessee in its return of income. Disallowance of weighted deduction u/s.35(2AA)- Held that:- Assessee has been unable to produce Form 3CI as contemplated in Rule 6(6) of the I. T. Rules. In this circumstances we are unable to accept assessee’s plea of allowing weighted deduction of 175% of the amount paid. However, we intend to accept the assessee’s alternate plea of allowing the deduction of expenditure of ₹ 2,20,800/- paid by the assessee to National Laboratory. From perusal of Form 3CH (Rule 6(6) of the I.T. Rule) which is an order of approval of scientific research programme placed in Paper Book, we find that the assessee has paid ₹ 2,20,800/- through cheque No.265292 dated 22.11.2010. We therefore accept the assessee’s alternate plea and allow the expenditure of ₹ 2,20,800/- as against ₹ 3,86,400/- claimed by the assessee.
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2018 (2) TMI 428
Disallowance u/s. 14A r.w. Rule 8D(2)(iii) - Held that:- The disallowance should not be more than dividend income. Further in this case the assessee itself has disallowed expenses of ₹.6,15,628/- which is more than the dividend income of ₹.5,20,000/- earned during this assessment year. Therefore, there should not be any further disallowance u/s. 14A r.w. Rule 8D of the I.T. Rules. Thus we direct the Assessing Officer to delete the disallowance made u/s. 14A r.w.Rule 8D(2)(iii) of I.T Rules. - Decided in favour of assessee.
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2018 (2) TMI 427
Validity of proceedings u/s 153A - proof of incriminating material/document/evidence - Held that:- As decided in assessee's own case there is no denial that no incriminating material was found at the time of search proceedings. It is also an undisputed fact that prior to the date of search, the assessee had filed Wealth Tax returns. The only evidence which came to the notice of the search party were the Wealth Tax Returns filed by the assessee. In our considered opinion, the Wealth Tax Returns of the group, by any stretch of imagination, cannot be considered as incriminating material in the hands of the assessee. Except for this, there is nothing on record to suggest any incriminating material/document/evidence - Decided in favour of assessee.
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2018 (2) TMI 426
Penalty u/s. 271FA - penalty order as appealable order before this forum - Held that:- Section 271FA is a penalty which is leviable by the prescribed Income Tax authority. The order of the DIT indicates that he is nominated to be by the Income Tax authority for accepting the returns to be filed u/s. 285BA(1). Therefore, it seems the DIT has invoked the powers of 271FA for levying of penalty. Even though there is no specific provision for appeal before this forum, nor before the CIT(A), Ld.DIT specifically gave the option to assessee to file the appeal before the Ld.CIT(A). Assessee, however took its own opinion, in the absence of clarification sought from DIT(I&CI) and preferred the appeal before this forum. Since a penalty order u/s. 271FA is not directly appealable order before this forum, the appeal preferred by assessee is liable to be dismissed. - Decided against assessee.
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2018 (2) TMI 425
Interest earned on investment out of funds borrowed from Bank - income from other sources - set off of interest income from the project cost as development expenditure account - Held that:- This issue is squarely covered in favour of the assessee by the decisions of the Hon’ble Supreme Court in the cases of Bokaro Steel Limited (1998 (12) TMI 4 - SUPREME Court) and Karnal Cooperative Sugar Mills Limited (1999 (4) TMI 7 - SUPREME Court) as rightly held by the ld. CIT(Appeals). Assessee clearly show that the investment out of funds borrowed from Bank was temporarily made by the assessee to reduce the interest cost and since such utilization was directly linked with the activity of construction of Mall-cum-Shopping Complex, which formed the capital structure of the assessee-company, the interest earned on investment was viewed as capital receipts, which was going to reduce the cost of construction - if the said interest income was to be held as liable to tax in the hands of the assessee under the head “income from other sources”, the assessee was entitled for deduction on account of interest paid to Allahabad Bank on the borrowed funds under section 57(iii) as held in the case of Karnal Cooperative Sugar Mills Limited (supra) and such interest payment being more than the interest earned in both the years under consideration, no addition was liable to be made to the total income of the assessee on this issue. We, therefore, find no infirmity in the order of the ld. CIT(Appeals) giving relief to the assessee - Decided against revenue
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2018 (2) TMI 424
TDS u/s 194H - Addition u/s 40(a)(ia) - want of deduction of tax at sources in respect of the commission/discount to the retailers of recharge cards - Held that:- The assessee is an intermediatetory and only recording this transaction in the books of account for the purpose of completeness. Hence, when the assessee is neither competent nor responsible nor actually paying any commission to the retailer on sale of recharge coupons to the retailers then the obligation for deduct tax u/s 194H is attracted only against the service provider and not against the assessee who is only a distributor and receiving its share of the commission/ margins provided by the service provider. The determination of sale price of recharge coupons is in the sole domain of the service provider and the assessee is no role in determining the retail price at which the retailer is selling the recharge coupons to the customer or end user of the service. Accordingly, when the assessee is not directly and indirectly in deciding the quantum of alleged commission/discount as well as determining the retail price at which the recharge coupons is sold to the customer then the provisions of section 194H cannot be applied on the assessee. - Decided in favour of assessee.
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2018 (2) TMI 423
Unaccounted investment in Jewellery added to the total income of the assessee - Held that:- It is undisputed fact that assessee has filed wealth tax return for A.Y.2008-09, wherein total Jewellery has been shown. Coordinating Bench in assessee’s own case for Asst. Year 2009-10 held that no denial that no incriminating material was found at the time of search proceedings. It is also an undisputed fact that prior to the date of search, the assessee had filed Wealth Tax Returns. The only evidence which came to the notice of the search party were the Wealth Tax Returns filed by the assessee. In our considered opinion, the Wealth Tax Returns of the Group, by any stretch of imagination, cannot be considered as incriminating material in the hands of the assessee. Except for this, there is nothing on record to suggest any incriminating material/document/evidence - We allow the appeal of the assessee and direct the Assessing Officer to delete the addition.
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Customs
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2018 (2) TMI 422
Relief to prayer 30(ii) and 30(iii) of the plaint - Held that: - the defendant no. 3 has no real prospect of defending the claim as it has neither entered appearance nor filed its written statement or denied the documents of the plaintiff, this Court is of the view that there is no need to relegate the plaintiff to lead ex parte evidence - the present suit is decreed qua defendant no.3 in accordance with prayer 30(ii) and 30(iii) of the plaint along with actual costs - suit stands disposed off.
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2018 (2) TMI 421
Penalty u/s 112(a) of the CA, 1962 - allegation pertains to the genuinity and legality of the DEPB licence - cross-examination - Held that: - the petitioner cannot insist upon the cross examination of the Investigating Officers - the petitioner would state that he had only dealt with the DEPB scripts and purchased the same from Mr.Satish Mohan Agarwal, New Delhi and he is no way connected with the allegations made in the SCN - petition dismissed.
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2018 (2) TMI 420
Valuation - rejection of transaction value - contemporaneous imports - Held that: - The valuation of imported goods is required to be done in terms of Section 14 of the Customs Act, 1962, read with the Customs Valuation Rules, 2007. The transaction value of imported goods can be rejected only as per the provisions of Rule 12 of the Customs Valuation Rules - In the present case, in respect of 32 Bills of Entry pertaining to imports, certain documents were recovered during the course of search from the laptop and mobiles pones. From among the documents recovered from the laptop and mobile phone, the department has recovered the invoices/commercial invoices pertaining to the goods imported under these Bills of Entry. Such invoices indicate that the goods were procured by the appellant from the foreign supplier at significantly higher prices than what has been declared to the department at the time of filing Bills of Entry - the adjudicating authority has rightly rejected the transaction value of goods imported under the 32 Bills of Entry, in terms of Rule 12 of the Customs Valuation Rules, 2007. There is no infirmity on the part of the adjudicating authority in re-determining the value of the past imported goods on the basis of such invoices - there is no need for the Revenue to collect evidence in the form of contemporaneous imports. Appeal dismissed - decided against appellant.
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2018 (2) TMI 419
Refund of Extra Duty Deposit (EDD) - denial on the ground of unjust enrichment - principles of natural justice - Held that: - there has been no discussion in the impugned order about various evidences produced by the Appellants before the adjudicating authority in support of their claim for sanction of refund - the order passed by the Commissioner (Appeals) is not based upon the merits and facts and the matter needs to be reconsidered - appeal allowed by way of remand.
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2018 (2) TMI 418
Redemption fine - penalty - live consignment of Rough Marble - consignment of Marbles which were imported earlier or otherwise - Held that: - there is no dispute as to the fact that there was an excess quantity of 10.84 MT of Rough Marble Blocks which was seized and confiscated - argument of the Ld. Counsel that they were not aware of the quantum of Marble loaded by the supplier and the said Marble needs to be considered as rough and the gross weight needs to be considered is an unacceptable arguments - the redemption fine imposed is disproportionate to the value of the goods and needs to be reduced from ₹ 41,000/- to ₹ 27,000/-. Penalty - Held that: - the ends of justice is will be met if imposed on this issue is fixed at ₹ 15,000/- - As regards the penalty imposed by the First Appellate Authority on a finding that the quantity of 118.27 MT of Rough Marble slabs which were excess than the quantity declared in respect of 12 Bills of Entry, I find that he was correct in coming to the conclusion that in the absence of goods, the same cannot be confiscated. To that extent, the impugned order is correct. Since the liability for confiscation of the Rough Marble Slabs is upheld, the penalty imposed on the appellants for such violation also needs to be upheld. It is noticed from the records that the value of the Rough Marble Slabs which was found excess in respect of 12 Bills of Entry, was approximately ₹ 16.73 lacs, Keeping in mind the convention of Tribunal, and to meet the ends of justice, penalty imposed on the appellant on this issue is fixed at ₹ 1,50,000/-. Appeal disposed off.
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2018 (2) TMI 417
Benefit of N/N. 6/2012 Sl.No. 234 - import of goods declared as "Glass Fiber Reinforced Guypsum Boards (GRG Board)" of Tapered Edge 'Boral' brand - denial of cross examination - principles of natural justice - Held that: - on the one hand, the CTA laboratory where the samples of impugned consignment had been sent did not test presence/content of glass fibre. At the same time, the Customs laboratory has confirmed the correctness of the goods as declared in a number of imports made prior and subsequent to the one under dispute - Exemption N/N. 6/2006-CE only exempts goods imported Glass Fibre Reinforced Gypsum Board (GRG) at Sl.No.234 (iv) without any condition thereto. Thus the insistence on IS standards by the customs authorities is not a requirement in the said notification. The goods are not conforming to the standards of Gypsum Reinforced Gypsum Boards even when the Deputy Director, CTAL has stated in cross examination that they did test presence/content of glass fibre - We are also unable to fathom how even the request for re-testing of the samples made by the appellant has been dismissed peremptorily by the lower appellate authority for the reason that further re-testing would not serve any fruitful purpose. Appeal allowed - decided in favor of appellant.
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2018 (2) TMI 416
Valuation - assessable value to be adopted for demand of Central Excise Duty in the case of Superior Kerosene Oil (SKO) (PDS) and Liquid Petroleum Gas (LPG) (Domestic) - Revenue was of the view that the appellant had paid duty on subsidized price instead of paying duty on the Refinery Gate Price - Held that: - the similar issue for a different period pertaining to the appellant came up before the Tribunal in the case of Kochi Refineries Ltd. Versus Commissioner of Central Excise, Cochin [2017 (4) TMI 323 - CESTAT BANGALORE] in which the Tribunal has held that the price or cost paid/received to/by an assessee or manufacturer (from independent buyer) constitutes the assessable value / transaction value for the purpose of levy of Central Excise duty - impugned order upheld - appeal dismissed - decided against appellant.
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2018 (2) TMI 415
Debonding order - suppression of facts - validity of SCN - Held that: - the SCN is bad and barred by limitation. There is no allegation of any cotumacious conduct, suppression or mis-statement on the part of the appellant. It is apparent that the SCN have been issued by way of change of opinion and accordingly, the said notice is bad and not maintainable - also, it is evident from the facts that on the record that the consent of authority, namely the Development Authority have not been obtained and as such the show cause notice is bad on this score also - appeal allowed - decided in favor of appellant.
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Corporate Laws
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2018 (2) TMI 414
Rectification of the Register of Members of the Company - Transfer of shares - Held that:- Actions of the R1 and R2 would prove that the share of the petitioner has been transferred without his concurrence and the name of the petitioner has been deleted from the Register of Members without sufficient cause. Since, the transfer to R3 has been made by the Company knowing fully well that one more duplicate certificate is in existence and the transfer was made on the basis of the earlier duplicate share certificate, this Bench has no hesitation to declare that the petitioner has made out a case for ordering the rectification of Register of Members and that the transfer was made on forged documents and it is null and void. Since the first transfer to R3 is made on the forged documents, the question of non-joinder of party will not arise, therefore the preliminary objections of the R1 and R2 in this connection should fail. Further, the R3 ought to have contested the matter independently by filing the proof of payment made to the petitioner, but he has adopted the written statement of the R1 and R2 which shows the collusion between the R1, R2 and R3. If the transfer from R3 to Smt. S.M. Vijila is genuine, she should have approached this Tribunal suo motu in order to protect her interest in the shares, but she also failed to do so. Allow the petition and direct the Company to rectify the Register of Members by deleting the name of Mrs. S.M. Vijila and restore the name of the petitioner in that place within 30 days from the date of the receipt of this order.
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Insolvency & Bankruptcy
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2018 (2) TMI 447
Corporate Insolvency Resolution Process - whether Appellant is not a ‘Financial Creditor’? - a loan advanced against the time value of money - according to Appellant, the Time value of money to be calculated by expected future value of the Appellant’s investment in the Respondent for allowing it to continue as a “on-going concern” and to make profits. - Held that:- In the present case, the Appellant has failed to bring on record any evidence to suggest that she disbursed the money has been made against ‘consideration for the time value of money’. There is nothing on the record to suggest that the Respondents borrowed the money. In absence of such evidence, the Appellant cannot claim that the loan if any given by the Appellant comes within the meaning of ‘financial debt’ in terms of sub-section (8)(a) of Section 5 of the ‘I&B Code’. The Appellant has also failed to show that the amount has been raised by Respondent under any other transactions, such as sale or purchase agreement, having commercial effect of borrowing. In absence of any such evidence, the Appellant cannot claim that loan amount, if any given to the Respondent comes within the meaning of ‘financial debt’, as defined under sub-section (8)(f) of Section 5 of the ‘I&B Code’. We hold that the Adjudicating Authority rightly held that the Appellant is not a ‘Financial Creditor’. Appeal dismissed.
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2018 (2) TMI 446
Corporate insolvency process - maintainability of joint application or joint Demand Notice by the Operational Creditor - Held that:- Footnote given in Form 5 is not in consonance with the provision of Section 8 of the I & B Code, because Section 8 does not authorise joint application or joint Demand Notice by the Operational Creditor. Section 7 which deals with the financial creditor allows joint application by the financial creditor. The note provided at the end of Form V, Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 requires reconsideration by Appropriate Authorities. This petition under Section 9 of the I & B Code cannot be filed in the representative capacity of 284 workers. The petitioner has filed this petition in the representative position of 284 employees which is not maintainable under Section 9 of the I & B Code. The operational creditor himself can file a petition regarding the debt of other persons, only in case debt is assigned or transferred to him. On this ground, the petition is not maintainable.
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2018 (2) TMI 445
Corporate Insolvency Resolution Process - existence of eligible debt - Operational Creditor had provided security services to the Corporate Debtor and maintained a running account in respect of the said transaction - Held that:- This Bench is satisfied that the Corporate Debtor defaulted in making payment of the outstanding debt claimed by the Operational Creditor. The Operational Creditor has fulfilled all the requirements of law. Therefore, CP/667/(IB)/CB/2017 is admitted and the commencement of the Corporate Insolvency Resolution Process is ordered, which ordinarily shall get completed within 180 days, reckoning from the day this order is passed. The moratorium is hereby declared which shall have effect from the date of this Order till the completion of Corporate Insolvency Resolution Process, for the purposes referred to in Section 14 of the I&B Code, 2016.
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2018 (2) TMI 444
Corporate insolvency process - winding proceeding already initiated by the High Court is still pending - Held that:- In the present case as we find that a winding up proceeding has been passed and is pending against the appellant, we hold that the application under section 10 of I&B code at the instance of the corporate applicant is not maintainable in view of the bar imposed under Section 11(d) of I&B Code. Appeal dismissed.
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PMLA
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2018 (2) TMI 413
Attachment orders - offence under PMLA - Held that:- There is no nexus whatsoever between the alleged crime and the Bank who is mortgagee of the properties in question which were purchased before sanctioning the loan. Thus no case of money-laundering is made out against Bank who has sanctioned the amount which is untainted and pure money. They have priority to recover the loan amount/debts by sale of assets over which security interest is created, which remains unpaid. The Ld. Adjudicating Authority has not appreciated the facts and law involved in the matter and the primary objective of section 8 of PMLA is that the Adjudicating Authority to take a prima facie view on available material and facts produced. The contentions raised by Mr. Neeraj Atri, Advocate has no substance. The provisional attachment in the present matter is bad and against the law. In the circumstances available in the present case, the allegation of money laundering prima facie, so far as present appellant & properties involved in this appeal, found to be unsustainable for the purpose of attachment under the PMLA, 2002. We set aside the Impugned Order dated 30.05.2016 and the Provisional Attachment Order dated 08.12.2015. The mortgaged properties attached under the PAO 03/2015, so far as, properties concern in this appeal are released from attachment forthwith.
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Service Tax
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2018 (2) TMI 409
Recovery of Service Tax dues - Garnishee order under Section 87 of the Finance Act of 1994 - Held that: - Admittedly in the present case, the Service Tax Liability determined against the petitioner assessee under the Garnishee orders Annexure A and Annexure B has not been set aside or even stayed by any higher Authority or Court or the Tribunal. Therefore, such liability of the petitioner assessee to pay such Service Tax to the Central Government does not have any bar or restriction upon the amount to be recovered by the Assessing Authority. There is no illegality in the impugned Garnishee proceedings under Section 87 of the Act for recovery of the Service Tax dues from the petitioner. Petition dismissed - decided against petitioner.
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2018 (2) TMI 408
Voluntary Compliance Encouragement Scheme (VCES) - rejection of declaration on the ground that the tax payable and due to the petitioner as declared under the said VCES, 2013 was paid before the date of promulgation itself on 10.5.2013 - Held that: - the petitioner admittedly has complied with all the relevant conditions of VCES, 2013 and therefore, its declaration, prima facie, deserved to be accepted and has been wrongly rejected by the respondent – Assistant Commissioner - there is no prohibition in VCES, 2013 itself for the Service Tax demand due, and payable for the period October 2007 to December 2012, which was due and payable as on 1.3.2013, and the same could be paid between the period 1.3.2013 and 10.5.2013 , when the VCES Scheme itself was announced. In the absence of any such prohibition, the respondent–Assistant Commissioner could not reject the Declaration solely on this ground. This Court is clearly of the opinion that the rejection of the Declaration of the petitioner under VCES, 2013 by the respondent– Assistant Commissioner was unjustified and cannot be sustained and the Writ Petition therefore deserves to be allowed and the same is accordingly allowed - the matter is remanded back to the said Assistant Commissioner, Mangalore for passing a fresh order in accordance with law - petition allowed by way of remand.
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2018 (2) TMI 407
Valuation - includibility - amount recovered for repair/re-winding of the defective stators in their bills for repair of compressors - Held that: - the appellants are not denying the use of the repaired stators for repair of compressors without which such repairing process is not completed As such the stator is an inputfor rendering the output service and therefore the cost of the input is to be added to the value of the taxable service. Extended period of limitation - Penalty u/s 78 - Held that: - the dispute in the instant case regarding valuation was not a matter which should have created any doubt in the mind of the appellant - non-inclusion of said value was obviously with intent to evade payment of duty and thus imposition of penalty and invocation of extended period of limitation are justified. Appeal dismissed - decided against appellant.
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2018 (2) TMI 406
Scope of business support services - amounts were used towards getting the motorcars registered and the excess amounts received were retained by the appellants - Held that: - In the case in hand, the amount collected as extra charges is not for any of the services which are enumerated in the said definition. Therefore, the definition of business support service will not cover the services rendered by the appellant even in the residual category of other transaction processing - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 405
Refund claim of service tax paid earlier - place of provision of service - Fashion Designing Services - proviso to Rule 3(ii) of Taxation of Services (Provided from Outside India & Received in India) Rules, 2006 - Held that: - through the said Rule 3(ii) of Taxation of Services (Provided from Outside India & Received in India) Rules, 2006 certain services were deemed to have been performed in India even if they were partly performed in India and partly performed from outside India and that the service received by the respondent was covered under Rule 3(ii) of Taxation of Services (Provided from Outside India & Received in India) Rules, 2006 - there is nothing on record to show that the service or a part of the service has been performed in India - refund allowed - appeal dismissed - decided against Revenue.
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2018 (2) TMI 404
Refund of Service Tax paid on the goods exported - rejection on the ground of time limitation - Held that: - the refund claim submitted subsequently with the proper authority enclosing therewith almost the same set of documents/evidences in support of the claim albeit with reduced claim, cannot be considered as barred by limitation. Rejection of refund also on the ground that sufficient evidences were not produced in establishing the fulfillment of conditions laid down under the said Notification - Held that: - the Appeal is required to be remanded to the Adjudicating authority for the purpose of verification of the documents on record. Appeal allowed by way of remand.
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2018 (2) TMI 403
Business Auxiliary Service - Short payment of service tax - whether reimbursable expenses are includible in the taxable value or not? - Held that: - The facts make it clear that the amount impugned is reimbursable expenses on which service tax has been demanded - issue whether reimbursable expenses are to be included in the taxable value or not is settled by the decision in the case of Commissioner of Service Tax Versus M/s. Sangamitra Services Agency [2013 (7) TMI 862 - MADRAS HIGH COURT], where it was held that the amounts are not to be included in assessable value - demand set aside - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 402
Liability of service tax - installation charges collected - benefit of N/N. 12/2003 - Held that: - The amount received for such services are taxable services - the appellant has no case on merits. Penalty - Held that: - there is a clear finding by the Commissioner (Appeals) observing that it is sufficiently established that reasonable cause is made out by the appellant for non-payment of service tax during the disputed period. This was because there was much confusion as to whether installation charges and carriage fees are to be subjected to levy of service tax - penalty set aside by invoking section 80. Appeal allowed in part.
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2018 (2) TMI 401
Refund of service tax paid mistakenly - main ground for rejection of the entire refund claim is that the appellants have not furnished sufficient documents to establish that the incidence of duty has not been passed on to another - Held that: - we may deem it fit to remand the matter to the original authority to consider the issue of unjust enrichment. The adjudicating authority shall give the appellants a chance of personal hearing as well as sufficient time to produce documents. Time limitation - Held that: - as per mandate of Constitution no tax can be levied or collected without the authority of law and since the Commissioner (Appeals) has held that appellants are not liable to pay tax, the payment having been made under mistake, the refund claim is not barred by limitation. Appeal allowed by way of remand.
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2018 (2) TMI 400
Cleaning activity services - services of cleaning, housekeeping and other general conservancy services to BSNL and Trichy Airport - Held that: - There is no allegation that appellants have billed or collected service tax amounts from BSNL or AAI. This being so, we are of the considered opinion that tax liability should be calculated after extending exemption limits available to small service providers and allowing cum tax benefit on the liabilities so arrived at - For the limited purpose of recalculating tax liability, the matter remanded back to the original authority. Penalty - Held that: - penalties imposed u/s 76 & 78 of the FA are an overkill and will require to be set aside - penalty imposed u/s 77 upheld. Appeal allowed by way of remand.
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2018 (2) TMI 399
Levy of service tax - after Sales Service to the customers during the warranty period - Tax on the materials utilized in providing the service during the warranty period - Held that: - Under the works contract there can be no levy of service tax on the material component which have already been provided in the works contract-Determination of Value Rules. Further, under the Finance Act, 1994 there is no taxing power to tax the material component, in a works contract - appeal dismissed - decided against Revenue.
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2018 (2) TMI 398
Valuation - includibility - Whether appellant is liable to pay Service Tax under the category of 'Manpower Recruitment or Supply Agency Service' on the reimbursable expenses namely Wages, Bonus, ESI, Provident Fund, etc.? - Held that: - the issue is settled in the case of Sangamitra Services Agency v. Commissioner of Central Excise [2007 (7) TMI 33 - CESTAT, CHENNAI], where it was held that such expenses are not includible in arriving at the taxable value - demand set aside. Scope of Manpower Recruitment or Supply Agency Service - Held that: - The definition of 'Manpower Recruitment and Supply Services' during the relevant period used the words 'commercial concern' which was amended with effect from 1-5-2006. The disputed period is from 16-6-2005 to 30-9-2005 - The words 'commercial concern' in the definition was substituted by the words 'any person' only with effect from 1-5-2006. The period involved being prior to 1-5-2006 the appellant succeeds on this ground. Appeal allowed - decided in favor of appellant.
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2018 (2) TMI 397
Cargo Handling service - liability of service tax - whether appellant are liable to Service Tax on handling charges paid separately to the transporter/supplier for handling the molasses within the factory premises of the appellant? - Held that: - as the same have been incurred for activity within the factory of the appellant and the same forms part or valuation of the goods cleared being excisable goods liable to duty, no Service Tax is leviable on the same - demand set aside - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 369
Export of service to foreign principal located in UKProgramme Producer Service - demand on the ground that one of the condition mainly, receipt of consideration in convertible foreign exchange has not been fulfilled in such exports - whether or not appellant received consideration for exported service in convertible foreign exchange? - Held that: - FIRCs did not identify the nature and name of foreign convertible currency - It is manifestly clear that the amount credited to the account of the appellant in India is in consequence of a debit of pound sterling account maintained by participated bank in nostro mechanism in UK. The said debit of foreign exchange by the UK bank and consequent credit in Indian rupee in Indian bank as part of nostro transaction is reported to RBI and necessarily forms part of foreign exchange earning in India - the amount has not reached India from UK in Indian rupees - we find no merit in the findings by the lower authority to the effect that foreign exchange has not been received in convertible foreign currency for export of services by the appellant. Programme producer service with reference to domestic radio stations to whom the appellant gave various programmes for broadcasting - Held that: - a plain reading of the statutory definition for programme producer service makes it clear that such programme producer should produce programmes on behalf of another person - In the present case, the appellants did not produce programmes for another person. There is no second person at the time of appellant producing the programme which is apparently for self - such transactions are not covered by programme producer service as the appellant did not produce programme for a third party. Appeal allowed - decided in favor of appellant.
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Central Excise
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2018 (2) TMI 396
Time limitation for filing appeal - MODVAT/CENVAT credit - changes in CCR and there being no saving clause enabling the continuance of such proceedings - Held that: - the appeal was rejected on 08.03.2001. The saving clause came into force two months after the appeal was rejected. The amendment was brought into Section 35C(2) in 2002 with effect from 11.05.2002, i.e., more than one year after the appeal was rejected. The appellant even then waited for another two years before an application was filed, which was produced at Annexure-C dated 19.01.2004. It is also pertinent that there were three appeals dismissed by the CESTAT as per Annexure-B, as seen from the cause titles of a number of appeals extracted in the order. The appellant diligently filed two appeals and left out the appeal in the present proceedings. The appellant is found to have not diligently prosecuted the appeal in the present proceedings - appeal dismissed - decided against appellant.
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2018 (2) TMI 395
Whether the Customs, Excise and Service Tax Appellate Tribunal was right in allowing the appeal preferred by the assessee holding that the Revenue could not have applied the extended period of limitation? Held that: - Mr. R. Santhanam, Advocate, who appears for the respondent, fairly states that the Tribunal had relied upon an earlier decision in the case of the assessee, which has been reversed by the Allahabad High Court with an order of remand - In view of the statement made by Mr. R. Santhanam, Advocate, we are setting aside the impugned order with a direction for remand, without commenting on merits - appeal allowed by way of remand.
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2018 (2) TMI 394
Penalty - clandestine removal - shortage of finished goods - Held that: - the entire charge of clandestine removal of goods is based on labour attendance register. The Central Excise officers searched the factory premises and could not find any other corroborative evidence to link the said labour attendance register to alleged clandestine removal of goods. In my considered view, the charge of clandestine removal of goods cannot be sustained merely on the basis of labour attendance register, which is uncorroborative in nature. The Tribunal, in the case of Golden Steel Corporation Ltd. v. CCE, Kolkata-II [2016 (10) TMI 567 - CESTAT KOLKATA], observed that the clandestine removal of goods is a serious charge and cannot be held on the basis of presumption, assumption and surmises. In that case, the demand was raised on daily performance report of HR strips prepared by quality control incharge of the assessee recovered from its factory. The Tribunal set aside the demand. There is no material available on record of clandestine removal of the shortage material and the imposition of penalty under section 11AC of the Central Excise Act, 1944 is not warranted. Appeal allowed - decided in favor of appellant.
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2018 (2) TMI 393
CENVAT credit - final product chargeable to NIL rate of duty - Held that: - the issue regarding availability of credit has been dealt by the Hon’ble High Court of Bombay in the case of Sharp Menthol India Ltd. [2011 (4) TMI 27 - BOMBAY HIGH COURT], where it was held that the Cenvat Credit cannot be denied as the final product fruit pulp is chargeable to Nil rate of duty as per tariff, exported by the appellants. Refund claim - input services - man power recruitment service and security service - Rule 5B of the CCR, 2004 read with N/N. 12/2004-CE (NT) dated 03/03/2014 - Held that: - It is possible that the person liable to pay service tax may not be the service provider. If the Government intended to provide this facility to service recipient paying service tax on reverse charge basis the Government would have used the word person liable to pay service tax and not the word service provider. Section 68 (2) is a special mechanism for shifting part liability to pay service tax from service provider to service recipient but it does not convert in the service recipient into service provider - Rule 5B has no application in the appellants case. Appeal dismissed - decided against appellant.
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2018 (2) TMI 392
CENVAT credit - consignment received from the First Stage/ Second Stage dealers - it was alleged that the invoices issued by the First Stage/ Second Stage dealers do not indicate the details of entries made in RG-23D and as per the Provisions of Rule 9(3) of the CCR 2004 - Held that: - the First Stage/ Second Stage dealer has to maintain records indicating the facts where inputs or capital goods was supplied from the stock. Except few invoices, wherein the declaration is not filed, it could have been verified by the Revenue from the concerned Jurisdictional authorities - the legitimate claim of the appellant for availment of cenvat credit cannot be denied for simple reasons that the First Stage/ Second Stage dealer has not filled up the columns correctly - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 391
Refund of Education cess and Higher Secondary Education cess relating to area based exemption - N/N. 39/2001 dated 31.07.2011 - Held that: - the issue has been considered by the Hon’ble Supreme Court recently in SRD Nutrients Pvt. Ltd. Vs CCE Guwahati [2017 (11) TMI 655 - SUPREME COURT OF INDIA], where it was held that appellants were entitled to refund of Education Cess and Higher Education Cess which was paid along with excise duty once the excise duty itself was exempted from levy - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 390
CENVAT credit - it appeared to the officers that the said scrap was non-cenvatable - Held that: - there is no allegation that the scrap was non-duty paid nor there was any allegation that the inputs were not received factory in the factory - demand set aside - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 389
Interpretation of statute - 1st proviso to Rule 10 of Pan Masala Packing Machine (Capacity Determination and Collection of Duty) Rules, 2008 - abatement - removal of non-notified goods - whether prohibited or not? - Held that: - if non notified goods are prohibited from removal during the closer of factory or when the machines manufacturing the notified goods are sealed then such interpretation will mean that the rules have provided such provisions which are beyond the provision under Sub-section (3) of Section 3A of the Act and therefore it cannot be interpreted that even if non notified goods are removed, the said 1st proviso to Rule 10 prohibits abatement - appeal allowed.
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2018 (2) TMI 388
Remission of duty - goods on which work in progress destroyed by fire - Held that: - the demand confirmed through the proceedings is ultimately allowed by way of remission through said Final Order dated 14/09/2017 - the said confirmation of demand does not sustain - appeal allowed.
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2018 (2) TMI 387
Classification of Indian Katha - whether the same will under sub Heading 32019010 as per the Department or under 14049050 as claimed by the appellant-assessee? - Held that: - the issue, have already been adjudicated by the precedent order of this Tribunal between the department and same party [2017 (2) TMI 764 - CESTAT ALLAHABAD], where it was held that The goods manufactured by the appellant during the relevant period are classified under 14049050 as ‘Indian Katha' - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 386
CENVAT credit - components which were procured by the assessee for purpose of setting up the captive power plant - Held that: - other than a blind assertion, no documentary evidence has been submitted by the assessee either during the course of the present appeal or even before the adjudicating authority. The finding of fact on crucial issue is matter to resolve the present dispute. It is appropriate to set aside both the impugned orders and remand the matter to the jurisdictional Commissioner to carry out the verification whether the components involved in the present dispute were used for setting up of a power plant and whether such power plant has been constructed in the premise of the assessee - appeal allowed by way of remand.
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2018 (2) TMI 385
Benefit of N/N. 148/73 CE dated 21.07.73 - Veneered Particle Boards Commercial - Held that: - On a perusal of the Trade Notice No. 26/70 dated 21.02.1970, it has been clarified the position with reference to the N/N. 201/69 dated 16.08.1969 it is clarified that the tariff value is to be determined on the basis of the plywood. The Trade Notice has clarified that the Veneered Particle Board on which decorative plywood is pasted on either or both sides are to be assessed as though it consisted only of said plywood - the Trade Notice has not clarified the aspect of whether the Veneered Particle Board without the plywood will be eligible for such benefit - the reference to Trade Notice is not relevant to decide the issue before us. It is on record that some of the show-cause notices have cited Rule 10 for demand of the differential duty whereas the certain other show-cause notices have cited Rule 10A of the erstwhile Central Excise Rules, 1944. Appeal allowed - decided in favor of Department.
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2018 (2) TMI 384
Benefit of N/N. 1/2011-CE dated 01.03.2011 - Instant food mixes - CENVAT credit on inputs/capital goods used for manufacture of packing materials - denial of benefit on the ground that the CENVAT credit availed - Held that: - similar issue decided in appellant own case M/s. MTR Foods (P) Ltd. Versus Commissioner of Central Excise, Customs and Service Tax BANGALORE-I [2016 (8) TMI 485 - CESTAT BANGALORE], where it was held that CENVAT credit taken in case of inputs, for the manufacture of packing material (Chapter 39) can’t be wrongly linked with the manufacture of another category of goods namely Instant Food Mixes, Ready-to-eat food product, etc. - benefit allowed - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 383
CENVAT credit - clearance to 100% EOU - It appeared to Revenue that under Sub Rule (5) of Rule 3 of CCR, 2004, appellants were required to reverse the said Cenvat Credit of ₹ 11,88,931/- on clearance of DMO to 100% EOU - Held that: - during the relevant period when Rule 57F was on Statute there was no provision equivalent to Caluse (ii) of Sub Rule (6) of Rule 6 of CCR 2004 - if the Cenvat Credit is availed on inputs and if the same are cleared to 100% EOU as provided under Sub Rule (6) of Rule 6 of CCR 2004, Cenvat Credit of duty paid on such inputs cannot be denied - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 382
CENVAT credit - final product becomes exempted absolutely - recovery of credit availed along with penalty - Held that: - the provision of Rule 11 of Central Credit Rules, 2004 required the manufacturer to pay an amount equivalent to Cenvat Credit involved in the inputs lying in stock on the date on which the final product becomes absolutely exempted under a Notification issued under Section 5A of Central Excise Act, 1944. The proceedings can be limited only to the recovery of amount equivalent - The Act or Rules made thereunder have not provided for imposition of any penalty - appeal dismissed - decided against Revenue.
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2018 (2) TMI 381
CENVAT credit - input service distributor - it was alleged that M/s. ITC LTD are neither manufacturers of excisable goods nor service providers in terms of the CEA 1944, and the FA 1994, respectively, and therefore it appeared that they are not entitled to distribute input services credit as an input service distributor - Held that: - similar issue decided in appellant own case Commissioner of Central Tax, Bangalore Versus M/s. ITC Ltd. [2017 (9) TMI 942 - CESTAT BANGALORE], where it was held that only two limitations are put for the distribution of credit by an input service distributor. Firstly, it cannot exceed the amount of service tax paid and secondly, the credit of service tax attributable to service used shall not be distributed in a unit exclusively engaged in the manufacture of exempted goods or providing of exempted services. Appeal allowed - decided in favor of appellant.
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2018 (2) TMI 380
CENVAT credit - input services - outward catering service - denial on the premise that the same is covered under exclusion class of Rule 2(l) of CCR 2004 - Held that: - Admittedly, it has not been disputed by the authorities below that the outdoor catering service in question has been provided by the appellant to the employees in the factory in terms of section 46 of the Factories Act, 1948 wherein the appellant is required to provide canteen service to the employee mandatorily - CENVAT credit cannot be denied to the appellant in terms of the decision of this Tribunal in the case of Hindustan Coca Beverages Pvt. Limited [2016 (8) TMI 35 - CESTAT HYDERABAD], where it was held that outdoor catering services are used by appellant in relation to the business of manufacture and not for any personal use or consumption of employee and credit allowed - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 379
Valuation - abatement - whether appellants are eligible for abatement on prorota basis during the period of non-functioning of the furnaces? Held that: - the claim of the assessee for pro-rata basis is to be allowed, which we hereby do - the demand of interest as well as imposition of penalties is unsustainable. Appeal allowed by way of remand.
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2018 (2) TMI 378
CENVAT credit - AFBC boiler, which was assembled at the site of the appellants - case of the department is that appellants have taken ineligible Cenvat credit on items used in the fabrication of the boiler embedded to earth, which is not capital goods or inputs - Held that: - issue decided in the case of M/s. Singhal Enterprises Private Limited Versus The Commissioner Customs & Central Excise, Raipur [2016 (9) TMI 682 - CESTAT NEW DELHI], where it was held that applying the “User Test” to the facts in hand, we have no hesitation in holding that the structural items used in the fabrication of support structures would fall within the ambit of ‘Capital Goods’ as contemplated under Rule 2(a) of the Cenvat Credit Rules, hence will be entitled to the Cenvat Credit. Time Limitation - Held that: - it is established that appellants had enquired from the department whether credit can be availed. The jurisdictional officer replied in the positive. The department thereafter cannot allege that appellants are guilty of suppression of facts - appeal succeeds on limitation also. Appeal allowed - decided in favor of appellant.
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2018 (2) TMI 377
Benefit of N/N. 04/2006 dated 01.03.2006 as amended - Cement packaged in the form of 50 kg per bag - Held that: - similar issue decided in the case of GRASIM INDUSTRIES LTD. (UNIT-I) Versus COMMISSIONER OF C. EX., TRICHY [2008 (10) TMI 462 - CESTAT, CHENNAI], where it was held that CBEC Circular No.124/02/2008 CX-3, DT.12/06/2008 vide Para 3 read with Para 2 (ii) of the Circular categorically states that exemption would be eligible under Sl.No.1C of N/N. 4/2006-CE whenever the goods are sold to institutional/industrial consumers - demand not sustainable - appeal dismissed - decided against Revenue.
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2018 (2) TMI 376
Dutiability - Zinc Dross & Zinc Ash - waste - whether Zinc Dross & Zinc Ash, cleared by the respondent/assessee as waste are dutiable? Held that: - the issue herein is squarely covered in favor of the respondent/assessee by ruling of Hon'ble Bombay High Court in the case of Hindalco Industries Limited Versus Union of India [2014 (12) TMI 657 - BOMBAY HIGH COURT], wherein Hon'ble Bombay High Court has been held that Dross and skimming of aluminium, zinc or other non-ferrous metal are waste and hence not dutiable - appeal dismissed - decided against Revenue.
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2018 (2) TMI 375
Extended period of limitation - CENVAT credit - input service - outward transportation/freight incurred - Held that: - the issue herein is wholly interpretational as held by the learned Commissioner (Appeals) - in several judgments of this Tribunal, it have been held that prior to the amendment in the year 2008, in the definition of input in Rule 2(l) of CCR, Cenvat Credit was available on the outward transportation, wherein the place of removal was the factory gate. The SCN have been issued for the period January, 2005 to August, 2006 on 19 October, 2007 which is clearly beyond 12 months from 10 September, 2006 (date of filing return) - The SCN issued invoking the extended period of limitation is bad and the same is not sustainable - appeal allowed - decided in favor of appellant.
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2018 (2) TMI 374
Classification of goods - whether “Armada” vehicle manufactured by the appellant was 10 seater vehicle falling under Tariff Heading 8702 or below that to be classified under Tariff Heading 8703? Held that: - Mere assumption that Armada vehicle had sitting capacity below 10, does not make the adjudication sustainable. Ld. adjudicating authority did not conduct physical verification of the vehicle nor the vehicle was sent to the Motor Vehicle authority to ascertain the seating capability thereof, for a proper classification - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2018 (2) TMI 373
Validity of assessment order - section 39(1) of the KVAT Act, 2003 - Principles of Natural Justice - the adverse material was not confronted to the petitioner and merely on the basis of a Investigation Report, the disallowance of ‘ Input Tax Credit’ was made by the Assessing Authority which too was not supplied to the petitioner-assessee and he was not given an opportunity to controvert the said adverse material. Held that: - There cannot be said to be any breach of principles of natural justice in the course of such assessment proceedings resulting in the disallowance of the Input Tax Credit in the hands of the petitioner-assessee, if the selling dealer himself is shown to be an non-existing dealer from entity. Mere production of papers, which could be a hand work of the petitioner-assessee himself, could not be allowed to be claimed such Input Tax Credit in the hands of the petitioner-assessee, unless on due verification and cross check, such tax paid by the selling dealer on the actual sale of such goods to the petitioner-assesse e was shown to have been deposited with the State Treasury by such selling dealer. The State cannot be expected to give credit of Input Tax Credit unless on a verification that the selling dealer is not only shown to be existing but such actual sales attracting such liability is established in the hands of the selling dealer and such tax has been deposited by the selling dealers with the State in due discharge of his obligations under the provisions of the KVAT Act, 2003 or at least he exists to undertake the discharge of such tax obligation on his part - petition is misconceived and is thus dismissed.
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2018 (2) TMI 372
Jurisdiction - whether the Deputy Commissioner of Commercial Taxes (Audit – 65) DVO-6 Bangalore was competent to pass the re-assessment order dated 23.11.2010? Held that: - The reading of S.2(24) makes it clear that the authority competent to authorize is either the Government or the Commissioner. The records produced by the respondent show that on 18.05.2009 the Joint Commissioner of Commercial Taxes (Adm) – VAT Division 6 addressed a letter to the Deputy Commissioner, Commercial Taxes (Central Office- 2) seeking authorization for an Officer to conduct re- assessment of tax liability of the appellant - it is clear that the authorization was not expressly in favour of any specific officer either by name or by designation. This Court in Windsor Garden Pvt. Ltd. Versus State of Karnataka and Another [2010 (11) TMI 886 - KARNATAKA HIGH COURT] has held that only Officer who has been authorized by the Commissioner is competent to make re-assessment and such authorization must be express - The Commissioner in this case has not given any such express authorization to Deputy Commissioner of Commercial Taxes (Audit – 65) DVO-6. The proposal of the Additional Commissioner itself is defective. It does not specify any particular officer by designation or by name. Consequently, the re-assessment order is without competence. Appeal allowed.
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2018 (2) TMI 371
Validity of order of the Joint Commissioner of Commercial Taxes (Appeals) - time limitation - Held that: - the contention that was put forth on behalf of the petitioner in the appeal before the Tribunal was that the first appellate authority though had the occasion to verify the books of accounts, had not done so and had modified the liabilities based on assumptions. If that be the position, the books of accounts being available, is required to be noticed and the petitioner would have the opportunity in the first appeal, where it has been remanded, to put forth all contentions with regard to the determination of the taxable turn-over based on the liability, as ordered by the Tribunal - Tribunal, in fact, has remanded the matter to the first appellate authority for consideration.
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2018 (2) TMI 370
Works Contract - rate of tax - iron and steel items - taxable at 4% or otherwise? - Held that: - The issue involved herein is no longer res integra in view of the dictum enunciated by the Hon’ble Apex Court in the case of Gannon Dunkerley & Co. Versus State of Rajasthan & Larsen & Toubro Ltd. & Union of India [1992 (11) TMI 254 - SUPREME COURT OF INDIA], where it was held that the declared goods in question can only be taxed at the rate of 4% - revision petition dismissed - decided against Revenue.
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Indian Laws
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2018 (2) TMI 412
Maintainability of appeal - doctrine of harmonious construction - whether an appeal, not maintainable under Section 50 of the Arbitration and Conciliation Act, 1996, is nonetheless maintainable under Section 13(1) of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015? Held that: - Both the Commercial Courts Act as well as the detailed Arbitration Amendment Act of 2015, were brought into force on the same day, i.e. 23rd October, 2015, as a result of two reports of the Law Commission of India. An order which refers parties to arbitration under Section 8, not being appealable under Section 37(1)(a), would not be appealable under Section 13(1) of the Commercial Courts Act. Similarly, an appeal rejecting a plea referred to in sub-sections (2) and (3) of Section 16 of the Arbitration Act would equally not be appealable under Section 37(2)(a) and, therefore, under Section 13(1) of the Commercial Courts Act. It is clear that Section 13(1) of the Commercial Courts Act, being a general provision vis- -vis arbitration relating to appeals arising out of commercial disputes, would obviously not apply to cases covered by Section 50 of the Arbitration Act. Why Section 37 of the Arbitration Act was expressly included in the proviso to Section 13(1) of the Commercial Courts Act, which is equally a special provision of appeal contained in a self-contained code, which in any case would be outside Section 13(1) of the Commercial Courts Act? - Held that: - Parliament may have found it necessary to emphasize the fact that an order referring parties to arbitration under Section 8 is not appealable under Section 37(1)(a) and would, therefore, not be appealable under Section 13(1) of the Commercial Courts Act - In all arbitration cases of enforcement of foreign awards, it is Section 50 alone that provides an appeal. Having provided for an appeal, the forum of appeal is left to the Court authorized by law to hear appeals from such orders . Section 50 properly read would, therefore, mean that if an appeal lies under the said provision, then alone would Section 13(1) of the Commercial Courts Act be attracted as laying down the forum which will hear and decide such an appeal. Section 13(1) of the Commercial Courts Act must be construed in accordance with the object sought to be achieved by the Act. Any construction of Section 13 of the Commercial Courts Act, which would lead to further delay, instead of an expeditious enforcement of a foreign award must, therefore, be eschewed. Even on applying the doctrine of harmonious construction of both statutes, it is clear that they are best harmonized by giving effect to the special statute i.e. the Arbitration Act, vis- -vis the more general statute, namely the Commercial Courts Act, being left to operate in spheres other than arbitration. Appeal dismissed.
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2018 (2) TMI 411
Appointment of an arbitrator for resolution of the dispute between the appellant-Company and respondent No. 1-Company - works contract - whether the respondent-Contractee Company has made out a case for referring the dispute to Arbitration? Held that: - When the contractee accepted the final payment in full and final satisfaction of all its claims, there is no point in raising the claim for losses incurred during the execution of the Contract at a belated stage which creates an iota of doubt as to why such claim was not settled at the time of submitting Final Bills that too in the absence of exercising duress or coercion on the Contractee by the appellant-Contractor. There was full and final settlement of the claim and there was really accord and satisfaction and in our view no arbitrable dispute existed so as to exercise power under Section 11 of the Act. The High Court was not, therefore, justified in exercising power under Section 11 of the Act. Appeal allowed - decided in favor of appellant.
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2018 (2) TMI 410
Grant of Bail - fundamental postulate of criminal jurisprudence - Held that: - The grant or refusal of bail is entirely within the discretion of the judge hearing the matter and though that discretion is unfettered, it must be exercised judiciously and in a humane manner and compassionately. Also, conditions for the grant of bail ought not to be so strict as to be incapable of compliance, thereby making the grant of bail illusory. It is not necessary to go into the correctness or otherwise of the allegations made against the appellant. This is a matter that will, of course, be dealt with by the trial judge. However, what is important, as far as we are concerned, is that during the entire period of investigations which appear to have been spread over seven months, the appellant was not arrested by the investigating officer. Even when the appellant apprehended that he might be arrested after the charge sheet was filed against him, he was not arrested for a considerable period of time. When he approached the Allahabad High Court for quashing the FIR lodged against him, he was granted two months time to appear before the trial judge. All these facts are an indication that there was no apprehension that the appellant would abscond or would hamper the trial in any manner. The trial judge, as well as the High Court ought to have judiciously exercised discretion and granted bail to the appellant - appeal allowed.
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