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TMI Tax Updates - e-Newsletter
March 11, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Highlights / Catch Notes
Income Tax
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Determination of total income - addition to ncome in hands of assessee - actual business was controlled by the assessee and Shri S.J. Baid was only signing the papers as per directions of the assessee. Under these circumstances the substantive addition has been rightly made in the hands of the assessee - AT
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Revision u/s 263 - addition u/s 14A - the assessee had erred on the revenue side and offered more amount of disallowance u/s 14A of the Act which has been accepted by the ld AO - it had only caused prejudice to the interest of the assessee. Hence, the dual conditions stipulated in section 263 of the Act are not satisfied cumulatively. - AT
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Penalty u/s. 271(F) - non furnishing the return within the due date - bonafide belief that income was not taxable - There was reasonable cause for the failure of the assessee to comply with the provisions of the Act - No penalty - AT
Customs
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Amendment in bill of lading - amendments in bills of lading, being documents of title, are to be made only on the original bill of lading; multiple versions of documents of title are unheard of. It is also a document of custodianship. - AT
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Imposition of penalties u/s 112 (a) and (b) of CA, 1962 - the noticees were not heard on the confiscability of the goods. In the absence of such an opportunity, there was no scope for rendering a finding on liability for confiscation - that also eliminated the jurisdiction to invoke section 112 of Customs Act, 1962 - AT
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Validity of permission granted to amend import general manifest - It is a fundamental procedure in customs clearance for bill of entry to be filed only by the person named in the manifest and, if upon arrival, the ownership is found to have changed, that contract of sale is consummated only by enabling the buyer to clear the cargo; that requires amendment - AT
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ADD - Scope of levy of 'anti-dumping duty' on clearances from a special economic zone - jurisdiction to levy during the inter regnum between the expiry of a provisional levy and imposition of final levy - no ADD can be collected for the period - demand set aside - AT
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Remission of duty - failure to fulfill export obligation - re-warehoused goods in the bonded premises got burnt and were completely destroyed - It would be meaningless to call upon the assessee who has lost the goods imported, to pay the duty and then request for remission of the same - AT
Service Tax
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Activity of lifting, transportation and distribution of coal - handling and distribution agent - agreement entered with NCCF for carrying out above activity - whether the above activity would fall under Business Auxiliary Services or not? - Revenue failed to prove that services were provided - AT
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Recovery of late fee u/s 70 of the FA, 1994 read with Rule 7C of the Rules - late filing of return - appellant had finished filing of he returns upto the stage of ‘Save’ status - electronic-submission thereof was effected - returns had been prepared in the system but, only not submitted, demand cannot be raised - AT
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Rejection of VCES - works contract service - VCES application will necessarily be hit by second proviso to Section 106 (1) ibid since it seeks to make a declaration on the same issue for which a notice or order of determination had been issued against them for earlier period - AT
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CENVAT credit - Renting of cycle stand in factory - input service credit in respect of rental charges for cycle stand is not found satisfying the provisions of Rule 2(l) of the Rules - credit not allowed - AT
Central Excise
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Whether the Tribunal was justified in holding that irrespective of the purpose for which the duty has been granted in respect of the excess production of sugar during the lean period, refund on account of the exemption of notification would be subject to the principle of unjust enrichment? - Held Yes - HC
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MODVAT credit - indifference in the description of goods in the subject invoices - Eventually when the documents placed on record themselves point out that all types of scrap were utilised by the assessee, then, one cannot just pick and choose any statement or single out a document to deny the Modvat Credit - HC
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Refund - appropriation - whether the appropriation of refund claim after sanctioning the same, against the confirmed demand, is proper or legal, in a case where an appeal has been filed and the same is pending? - Held NO - Refund allowed - AT
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Valuation - related party transaction - The sale to or through an interconnected undertaking cannot be treated as sales made through related persons. Therefore, the entire foundation of allegation stands demolished - the fact being a common Director do not establish the mutuality of interest - AT
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Valuation - Job work - cost construction method - The short payment of duty is not due to the malafide intention of the respondent but for the reason the principal manufacturer has not provided the correct cost of material timely to the respondent - penalty u/s 11AC is not imposable. - AT
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Clandestine removal - job-work - The supply of the material for job work was nowhere recorded in any of the records of the appellant nor any document was issued. Therefore, the removal of the goods will be treated as clandestine removal without payment of excise duty - AT
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Refund claim - As the appellant were not having the original invoices at the time of procurement of inputs, therefore, appellant had to pay duty through PLA after exhausting Cenvat Credit lying in their Cenvat Credit account. Later on Cenvat Credit availed strength of original invoices, but unable to utilize - refund allowed - AT
Case Laws:
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Income Tax
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2017 (3) TMI 437
Rectification of mistake - deduction under Section 80HHA and 80I of the Act on the gross profit - Held that:- There is no scope for interference with the orders of the Tribunal in these appeals. Though we have framed the question “whether a issue which is debatable could be corrected under Section 154 of the Act”, the same would not arise for consideration in the circumstances of the case. The issue was not debatable, as the same was decided in Motilal Pesticides India Private Limited vs. Commissioner of Income Tax, Delh [2000 (2) TMI 9 - SUPREME Court] wherein held that the assessee would be entitled to deduction under Section 80HH of the Income tax Act on the net profit and not on the gross profit. Though the Full Bench of this Court has decided the issue in the year 2009, the Hon'ble Supreme Court had decided the same way back in the year 2000 in the matter of Motilal Pesticides India Private Limited. Since the Assessing Officer had permitted the deduction under Section 80HHA and 80I of the Act on the gross profit, the Assessing Officer was justified in rectifying the mistake as permitting the deduction under Section 80HHA and 80I of the Act on the gross income was an error apparent on the face of record.
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2017 (3) TMI 436
Validity of reopening of assessment - Held that:- Notice u/s 143(2) of the I.T. was never issued. Thus since the AO did not issue notice u/s 143(2) of the IT Act,1961 which is a compulsory requirement of the statute, the impugned order u/s 147 deserves to be invalidated - Decided in favour of assessee
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2017 (3) TMI 435
Determination of total income - addition to ncome in hands of assessee - Held that:- As assessee was real owner of the business carried on in the name of M/s Industrial Agencies, Nagpur and Shri S.J. Baid was only nominal owner of the business. It was held that actual business was controlled by the assessee and Shri S.J. Baid was only signing the papers as per directions of the assessee. Under these circumstances the substantive addition has been rightly made in the hands of the assessee. Nothing has been brought before us to negate the well reasoned factual findings of Ld. CIT(A). Under these circumstances, we have no other option but to uphold the order of CIT(A). As a result, all the grounds are dismissed.
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2017 (3) TMI 434
Income from Short Term Capital Gain treated as undisclosed income under the head income from other sources - non opportunity to cross examine - Held that:- The AO had relied upon the statement of MMC to make the addition. Thus, we had witness of the AO. It was his duty to provide the copy of the statement of MMC to the assessee and to afford the opportunity to cross examine him. AO on request of the assessee had issued a summon to MMC,but he did not appear. Therefore, we do not understand how the FAA has observed that the assessee did not make any specific request for cross examination of MMC. It is also very strange that the FAA,being a judicial authority, has held that non providing opportunity of cross examination would not vitiate the assessment proceedings. If the AO/assessee wants to rely upon the statements of someone it is their duty to prove the truthfulness of such statements. Filing of affidavits/cross examination of the person making assertion can be means of verifying the genuineness of the statements.There can be other means also.But,the basic principles remain the same-person relying upon statement of someone has to prove it and especially when it is challenged by another party. We have not come across the statement of MMC where he has included the name of the assessee to whom he or the group concerns had issue fictitious bills or bills for claiming non-genuine profit/ loss.MMC has given a general statement disclosing broader outline of the transactions entered into by him and the group entities. He had never stated that all the transactions entered into by group were non genuine. His statement was a good lead to take the investigation further and make specific queries. But it was not done. We are left with the general statement of MMC on side and on the other side are the facts like payment/receipt of share transaction value through banking channels, transfer of shares in and from the D-mat account, FAA’s finding that the sale was not in doubt, non observation of principle of natural justice by not providing cross examination of MMC.If all these facts and circumstances are weighed in the scale of reasoning, it would tilt in favour of the assessee. We are of the opinion that there was no justification on part of the FAA to direct the AO to tax the entire sale proceed of shares in the hands of the assessee during the year under consideration. Similarly, the AO was not justified to hold the STCG as business transaction. The assessee was not dealing in the shares and securities and the shares of KCL were held by him as investment and not as stock in trade. - Decided in favour of assessee.
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2017 (3) TMI 433
TDS u/s 194C - addition u/s. 40(a)(ia) - Held that:- We find that the assessee had filed additional evidence in terms of rules 29 of ITAT Rules in the form of certificate from M/s. Baba Transport which is enclosed in page 1 of the paper book and from the said certificate it is seen that M/s. Baba Transport had duly accounted for in their books and in the income tax return the receipt of monies from the assessee to the tune of ₹ 9,50,000/-. It is also seen that the said certificate admittedly contains PAN and income tax particulars of M/s. Baba Transport. We find that even though the said certificate is not signed by the Chartered Accountant of M/s. Baba Transport, but still in the interest of justice and fair-play, we deem it fit and appropriate to set aside this issue to the file of the AO to examine the veracity of the contents of the said certificate given by M/s. Baba Transport, and if found to be correct, the assessee would be entitled for taking the benefit of second proviso to sec. 40(a)(ia) of the Act read with section 201(1) of the Act which has been held to be retrospective in operation by the decision cited supra and accordingly, the issue should not be invited with disallowance u/s. 40(a)(ia) of the Act. With regard to other two payments in the sum of ₹ 1,00,000/- each to M/s. Maa Jagadamba Transport and M/s. Shiv Shakti Transport, we find that the assessee was not able to adduce any evidence even before us. However, in view of the fact that the said payments were made by account payee cheques and those parties being residing at a far away location, we deem it fit and proper in the interest of justice and fair play to set aside this aspect of the issue (i.e in respect of these two parties only) also to the file of the AO to decide the same afresh in accordance with law. Disallowance of payments made to labourers for screening work - Held that:- We find from the bank statement enclosed in page 33 of the paper book, the names of the three parties viz., A. K. Goala, Sanja and labour association are duly reflected therein on three different dates. This clearly proves that the assessee had issued bearer cheques to those three parties. Hence, the finding of the AO that payments were made by account payee cheques is factually incorrect. We also find that the assessee had filed ledger account before the AO which clearly proves that the payments were made to two labour sardars and one labour association for payment to labourers for various dates. This fact is also supported by wage sheet filed by the assessee in the form of additional evidence before us. However, since wage sheet was not available before the lower authorities for their examination, we deem it fit and appropriate in the interest of justice and fair play, to set aside this issue to the file of the AO to examine the wage sheet and the contention of the assessee that the payments were made to labour sardar and labour association and if the same are found to be true, the assessee should not be invited with disallowance u/s. 40(a)(ia) of the Act as the same does not fall within the ambit of provisions of section 194C of the Act. Addtion on account of difference in the value of sundry creditors - Held that:- We find lot of force in the argument advanced by the Ld. AR that no addition could be made in respect of the opening balance difference in sundry creditors to the tune of ₹ 5 lacs. Accordingly, we direct the AO to delete the same. In respect of balance sum of ₹ 3,34,070/- being the two cheque payments purported to have been paid by the assessee to the said party the same could be easily verified by the AO from the bank statements of the assessee. Hence, we direct the AO to obtain the details of cheques credited by the said party Nirmal Kumar Pradip Kumar and produce the same to the assessee and match the same with the bank statement of the assessee to understand the factual position as to whether the assessee had indeed made any payment to the said party in the sum of ₹ 3 lacs and ₹ 34,070/-. This, in our considered opinion, would meet the ends of justice. We are not inclined to accept the argument of the Ld. DR to give direction to the AO for assessment of ₹ 5 lacs in the earlier years instead of AY 2009-10 as, in our considered opinion, the same cannot be given as it is not relevant for the disposal of the year under appeal.
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2017 (3) TMI 432
Revision u/s 263 - addition u/s 14A - Held that:- AO had sought to make disallowance u/s 14A of the Act having regard to the accounts of the assessee in terms of section 14A(2) of the Act and we hold that he need not resort to Rule 8D always for the purpose of making disallowance. Admittedly, the Rules cannot prevail over the Act as it is only a subordinate piece of legislation. When the Act clearly stipulates the point that the ld AO is entitled to make disallowance u/s 14A(2) of the Act having regard to the accounts of the assessee , then no error could be attributed on that aspect in the order of the ld AO. Moreover, we also find that if Rule 8D is adopted , then it would only result in lesser disallowance figure u/s 14A of the Act as enumerated above in the detailed factual workings given by the assessee before the ld CIT. Hence it could be safely concluded that the assessee had erred on the revenue side and offered more amount of disallowance u/s 14A of the Act which has been accepted by the ld AO. Hence it could be safely concluded that the ld AO had taken a possible view and this action had not caused any prejudice to the interest of the revenue but on the contrary as stated above, it had only caused prejudice to the interest of the assessee. Hence, the dual conditions stipulated in section 263 of the Act are not satisfied cumulatively. The most celebrated judgement of Gee Vee Enterprises vs Addl CIT (1974 (10) TMI 29 - DELHI High Court ) would not come to the rescue of the revenue in the instant case as the facts of the instant case did not provoke any further enquiry in the mind of the ld AO and hence there cannot be any error that could be attributed in his order. Hence the ld CIT could not invoke revision jurisdiction u/s 263 of the Act in the instant case. - Decided in favour of assessee
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2017 (3) TMI 431
Unexplained credit in bank deposit - Held that:- As based on the AIR information, the AO found cash deposits to the tune of ₹ 27,04,907/- with Axis Bank for acquiring bonds/debentures in the Financial Year relevant to Assessment Year 2008-09. We find that the CIT(A) has examined the issue in perspective and has granted partial relief thereon. The order of the CIT(A) appears reasoned and plausible. In the absence of any rebuttal from the assessee, we are not inclined to interfere with the findings of the CIT(A). - Decided against assessee
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2017 (3) TMI 430
Royalties - payment to foreign companies towards purchase of certain software for its internal use in the business of the assessee - India-USA DTAA - P.E. in India - Held that:- As decided in assessee's own case [2016 (6) TMI 96 - ITAT MUMBAI ] the payments made for purchase of standardized software cannot be considered to be a royalty with the meaning of provisions of sec. 9(1)(vi) as well as India-USA DTAA. The orders passed by Ld CIT(A) holding the above view are upheld and other orders passed by Ld CIT(A) and that of the assessing officer are set aside. - Decided in favour of assessee
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2017 (3) TMI 429
Penalty u/s.271(1)(c) - unconfirmed/unsubstantiated cash credit - Assessee’s claim is that the necessary particulars were duly submitted - Held that:- The lack of response from the creditors cannot lead to an inference of concealment. As regards the cash credit of ₹ 2 lacks it has been submitted that name of the party was duly disclosed and assessing officer has failed to take cognizance of the same. In these circumstances in our considered opinion assessee cannot be held guilty of concealment or furnishing of inaccurate particulars of income. Ld. CIT was aware of this aspect but has held that the difference between assessed income and the returned income leads to an inference that there was concealment. This is totally against the exposition of the Hon’ble Apex Court in the case of Reliance Petro product [2010 (3) TMI 80 - SUPREME COURT] Furthermore we note that a larger bench of the Hon’ble Apex Court in the case of Hindustan steel Ltd vs State of Orissa [1969 (8) TMI 31 - SUPREME Court] had expounded that penalty need not be levied if the conduct of the assessee is not found to be contumacious. In the facts and circumstances of this case in our considered opinion the assessee's conduct is not contumacious to warrant levy of penalty. - Decided in favour of assessee.
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2017 (3) TMI 428
Penalty u/s. 271(F) - non furnishing the return within the due date - reasonable cause as attributed by the assessee in this regard is that assessee was under a bonafide belief that the income/allowance as MLA was exempt u/s. 10(14) and also in view of the earlier case laws where receipt of goodwill from the firm at a time of retirement was not taxable he considered the same exempt - Held that:- Upon careful consideration in our consider opinion the reasonable cause attributed by the assessee for failure to comply with the provision of filing return on due time is reasonable of acceptable. Hence the assessee case false under the sweep of Section 273 B of the I.T. Act. The said section provides that no penalty shall be impossed inter-alia for failure under this section if the assessee proves that there was reasonable cause of the said failure. There was reasonable cause for the failure of the assessee to comply with the provisions of the Act. Accordingly assessee should not be visited with the regour penalty u/s. 271(F) of I.T. Act. - Decided in favour of assessee
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2017 (3) TMI 427
Deduction of TDS u/s 194H - agency discount allowed by the assessee - assessee is in the business of operating FM Radio broadcasting stations - Held that:- The issue of obligation of deduction of tax at source by the Television Channels or Media Companies upon the payments made to advertising agencies has been settled by the board in its circular No.5/2016 dated 29th February 2016. Thus, from the above circular it is clear that this issue is now settled in favour of the assessee on the basis of judgments in the case of Jagran Prakashan Ltd. [2014 (5) TMI 482 - ALLAHABAD HIGH COURT ] and T.V. Today Network Ltd. [2014 (1) TMI 1405 - DELHI HIGH COURT ] taken a clear stand that no TDS is required to be deducted on the impugned payments made by the assessee to the advertising agency. - Decided in favour of assessee TDS u/s 194J OR 192 - payments made to Radio Jockey(ies) - Held that:- On examination of various clauses of the agreement, it is noted that neither it is mentioned anywhere that RJ would be employee of the assessee, nor it can be concluded on the basis of holistic reading of the entire agreement that there was any employer-employee relationship between assessee and RJs. Thus as there was no relationship of master and servant between the assessee and RJ. Nothing has been brought before us by the AO or by Ld. DR to establish any such relationship between the two. Under these circumstances, we find that the order of Ld. CIT(A) holding that the assessee company has rightly deducted the tax at source u/s 194J is perfect. - Decided against revenue
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Customs
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2017 (3) TMI 451
Remission of duty - section 23 of CA, 1962 - denial on the ground that firstly, the appellants has not used the goods for the intended purpose and secondly as they had not fulfilled the export obligation stipulated in the notification - re-warehoused goods in the bonded premises got burnt and were completely destroyed in a major fire accident - Held that: - It is pertinent to mention that Section 23 does not state that remission of duty can be allowed only if duty is paid - Section 13 deals with situation of remission of duty when goods are lost by pilferage. Section 23 deals with remission of duty when goods are lost otherwise than as a result of pilferage. The Oxford dictionary meaning of remission is 'cancellation of a debt, charge or penalty'. The word used in Section 23 is remission' and not 'refund'. Neither does Section 13 nor Section 23 state that in order to claim remission the duty has to be first paid by the assessee. The goods when imported under notification will get duty exemption only upon fulfilling the conditions. Therefore, even though exempted at the time of import, a demand can be raised when the conditions are violated. In the instant case, department has raised the duty demand for the reason that appellant did not fulfill the conditions of the notification. Then the question arises, under the circumstances, whether appellant has to pay the duty or can be granted remission of duty. Section 23 when read as a whole (i.e., with both subsections and the proviso) it is clear that there is no pre-condition to pay the duty before claiming remission. It would be meaningless to call upon the assessee who has lost the goods imported, to pay the duty and then request for remission of the same. The Section would then be of no purpose. The Law makers in their innate wisdom has used the word remission and not refund, adjustment or rebate. The rejection of remission of duty ₹ 21,52,512/- is unjustified - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 450
Refund claim - N//N. 11/2005-Cus dated 1st March 2005 - denial on the ground that refund claim was not accompanied by any order-in-appeal as required following the ratio of the decision of the Hon’ble Supreme Court in Priya Blue Industries Ltd v. Commissioner of Customs (Preventive) [2004 (9) TMI 105 - SUPREME COURT OF INDIA] - Held that: - the order of the original authority is not a rejection of the refund claim but identifies lacunae that impede processing of the claim. It also goes on to advice the applicant to either produce an order-in-appeal setting aside the assessment or to get the bill of entry re-assessed - As the order of the adjudicating authority is not a rejection of the refund claim and as the impugned order has not set aside the return of the claim as ordered by the original authority there is no reason for interference by the Tribunal - appeal rejected - decided against Revenue.
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2017 (3) TMI 449
ADD - Scope of levy of 'anti-dumping duty' on clearances from a special economic zone - jurisdiction to levy during the inter regnum between the expiry of a provisional levy and imposition of final levy - natural justice - Held that: - the authorized officer and the first appellate authority have not examined the records to ascertain if the goods cleared to the appellant did match the description in the ‘anti-dumping' notification with the SEZ as a mere staging place for removal into DTA. The bill of entry filed for claiming exemption u/s 26 of SEZ Act, 2005 would evidence that ADD had been foregone at that stage. Should it be so evinced as having been foregone and the same goods have been cleared as such against a bill of entry into the DTA the levy of ADD would be correct in law. As this exercise was not undertaken at the lower stages, the impugned order, bereft of this consideration, lacks sanctity. Reliance was placed in the case of Commissioner of Customs, Bangalore v. G M Exports [2015 (9) TMI 1162 - SUPREME COURT], where it was held that the relevant provisions of Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 renders it against authority of law to collect ADD for the time that a notification provisional or final-did not exist. Appeal allowed - decided in favor of appellant.
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2017 (3) TMI 448
Imposition of penalty - appellant had exported goods which are mis-declared in weight and value and are held liable to be confiscated under the provisions of Section 113 of the CA, 1962 - Held that: - Mis-declaration of the goods in value is also seems to be proved against M/s M.N. Enterprises, proprietor. The grounds of appeal of M/s M.N. Enterprises only seeks to challenge the impugned order on the ground that the purchase price of the goods was as per the present market value. The adjudicating authority has clearly recorded a finding that it is not so - penalty upheld. As regards penalty imposed on M/s International Express Company, the CHA and its employee and partner, we find that the adjudicating authority has imposed penalty u/s 114(iii) only on the ground that the shipping bill in which the goods were exported or sought to be exported have been filed by the CHA and signed by its employee. In the entire order of the adjudicating authority there is nothing on record to show that the employee of CHA or the partner of CHA were aware of the fact that they were having any knowledge of the mis-declaration of the quantity and value of the goods - penalty dismissed. Appeal disposed off - decided partly in favor of appellant.
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2017 (3) TMI 447
Imposition of penalties - recovery of ‘red sander wood logs’ in courier package shipped - natural justice - Held that: - The appellant is a courier that accepts packages from other booking agencies. There is no requirement for the courier to examine cargo or items that are shipped through them. It is a normal practice for such entities to rely upon the documents furnished by those who actually do the booking at the customer’s end - there being no evidence that the appellant was aware of the illegal nature of the shipment being effected or that the appellant was aware that the owner was the said Syed Ismail and not Frankie as mentioned in the documents, the ingredients for the imposition of penalty u/s 114 and 114AA does not exist - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 446
Amendment in bill of lading - amendment made in bill of lading to substitute M/s Ratnamani Metals and Tubes Ltd, Ahmedabad as consignee in lieu of M/s Kirtanlal & Sons - the charge against the respondent is that the manifest had not made any reference to M/s Ratnamani Metals and Tubes Ltd, Ahmedabad and the goods had been off-loaded in India without being manifested - Held that: - There is no doubt that goods have been unloaded, whether inadvertently or otherwise, but there is no allegation that these were not inventorised in the records of the duly appointed custodian. In the absence of any such evidence, invoking of section 111(g) for confiscation is not in accordance with law. the respondent had informed the adjudicating authority that the revision in bill of lading was made after the filing of the manifest and, therefore, no lapse could be attributed to the agent - It must also be noted that amendments in bills of lading, being documents of title, are to be made only on the original bill of lading; multiple versions of documents of title are unheard of. It is also a document of custodianship and a shipping line cannot issue a bill with a later date owing to implications of responsibility for safe delivery of cargo being alienated for the inter regnum - appeal dismissed - decided against Revenue.
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2017 (3) TMI 445
Refund - SAD - rejection on the ground that refund was claimed in accordance with circular no. 6/2008-Cus dated 28th April 2008 which limited the claim to one per each month - Held that: - circular of Central Board of Excise and Customs has not barred sanctioning of a second claim even though it placed emphasis on filing of a single claim for each month to streamline the procedure - the instructions dated 20th October 2010 in F. No. 390/Misc./67/2010-JC of Central Board of Excise and Customs restricts the resort to appellate remedies only to such cases that involve revenue of at least ₹ 1 lakh. It is also clarified by instruction dated 17th August 2011 that this monetary limit would apply to cases of refund as well - appeal dismissed - decided against Revenue.
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2017 (3) TMI 444
Imposition of penalties u/s 112 (a) and (b) of CA, 1962 - Held that: - Section 112 of CA, 1962 is liable to be invoked only for acts of omission and commission in relation to goods that are liable to confiscation. It is not an independent provision in accordance with which penalty may be imposed on individuals. In the absence of a finding on liability of goods for confiscation, section 112 cannot be invoked - When the jurisdiction to confiscate was alienated, and not resorted to by the adjudicating authority, the noticees were not heard on the confiscability of the goods. In the absence of such an opportunity, there was no scope for rendering a finding on liability for confiscation. The adjudicating authority rightly desisted from invoking the jurisdiction to confiscate. However, that also eliminated the jurisdiction to invoke section 112 of Customs Act, 1962. Consequently, the imposition of penalties on the appellants is without sanction of law - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 443
Jurisdiction - import of goods without Import Export Code (IEC) - whether the adjudicating authority is empowered to examine the matter and come to a conclusion that the contravention is not sufficiently of grave import as to warrant confiscation and with its consequent detriment in terms of section 125 and section 112 of CA, 1962? - Held that: - An IEC does not purport to be a licence to import goods. It can be acquired by a simple procedure and is generally applied for by regular importers. A causal importer may not be sufficiently aware of the requirement that code is to be procured - The adjudicating authority has taken note of the circumstances and has taken the stand that this is a remediable lapse. Even if the goods were confiscated, it was open to the adjudicating authority to allow redemption on nominal fine and to impose nominal penalty. In the absence of any special commercial advantage derived from import without a code, fine and penalty is not likely to be anything other than nominal - appeal rejected - decided against Revenue.
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2017 (3) TMI 442
Validity of permission granted to amend import general manifest - Held that: - That there was a bill of lading is not in doubt and that the manifest did reflect the bill of lading is also not in doubt. That it was intended for Mumbai and was sought to be cleared in Mumbai is not in doubt. That such manifested cargo should become unmanifested is a transformation that is not comprehensible - That such a manifest is sought to be amended is not surprising. It is a fundamental procedure in customs clearance for bill of entry to be filed only by the person named in the manifest and, if upon arrival, the ownership is found to have changed, that contract of sale is consummated only by enabling the buyer to clear the cargo; that requires amendment. There is no evidence to show that manifest did not reflect the documents of title or that the amendment that was sought did not have the support of documents of title. Accordingly, confiscation has been ordered without the authority of law. Imposition of penalty is also without authority of law - appeal allowed - decided in favor of appellant.
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Service Tax
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2017 (3) TMI 473
Activity of lifting, transportation and distribution of coal - handling and distribution agent - agreement entered with NCCF for carrying out above activity - whether the above activity would fall under Business Auxiliary Services or not? - Held that: - payment against the orders procured from consumers was to be collected in advance alongwith service charge of NCCF and was to be deposited with NCCF before lifting the coal from collieries and that the nature of transaction was sale of coal on advance payment and that could not be termed as any service provided on behalf of NCCF. - From the clauses of the agreement, it is clear that there is no consideration flowing from NCCF to respondent-assessee that clearly means that respondent-assessee is not providing any service to NCCF - demand set aside - appeal dismissed - decided against Revenue.
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2017 (3) TMI 472
Change in the records of the Tribunal - change of appellant's name - this Bench has made a policy to dispose of all the pending appeals of 2007 by end of January 2017, these appeals shall be heard to reduce pendency. In the event, appellant remains absent, the matter shall be decided on its own merit - The stay granted by interim orders is extended till 20.4.2017 - miscellaneous application disposed off.
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2017 (3) TMI 471
100% EOU - Refund claim - rejection on the ground that no service is involved on import of hardware materials on which tax of that amount was paid up by appellant being the credit availed based on photocopy of invoices - Held that: - the amount paid by appellant for import of hardware from Singapore, which did not involve any service as correctly observed by both original and lower appellate authority. The question of refund of this amount u/r 5 ibid will certainly not arise - appellant is advised that they can very well take back the credit of the difference between the amount claimed by them u/r 5 and the amount sanctioned - appeal dismissed - decided against appellant.
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2017 (3) TMI 470
CENVAT credit - various input services - denial on account of nexus - Held that: - services are very much eligible input services for the purpose of Rule 2 (l) ibid, for the reason that they are in the genre of eligible services of which examples have been given in the first part of the said definition and secondly, since none of the services are disbarred in the specific exclusions given in the second half of the definition, subject to such services not being used primarily for personal use or consumption etc - matter remanded for denovo consideration only for the limited purpose for determining whether any of the aforesaid services, which are otherwise eligible for the purposes of Rule 2 (l) ibid, are disbarred for “being used primarily used for personal use or consumption”. Penalty u/r 15(1) ibid - Held that: - the appellant had already reversed/paid ₹ 1,82,913/-, and that in any case, the entire dispute has emanated as account of differences in interpretation of eligibility of the said input services for the purpose of Rule 2 (l) ibid, I am of the considered opinion that no penalty under Rule 15(1) ibid should be imposed on the appellant. Appeal allowed - decided in favor of appellant.
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2017 (3) TMI 469
Recovery of late fee u/s 70 of the FA, 1994 read with Rule 7C of the Rules - imposition of penalty u/s 77 (2) ibid - appellant claims that is a semi-literate provider providing manpower service and as such the actual submission per se remained to be done inadvertently - Held that: - appellant had finished filing of he returns upto the stage of ‘Save’ status. However, electronic-submission thereof was effected only on 26.4.2013 - e-filing status of the appellant is non-intentional and simply it is ignorance of their part. It is also not disputed that in the initial stages of the ACES implementation even established assesees with sufficient infrastructure were facing problems of e-filing returns etc. due to teething problems - returns had been prepared in the system but, only not submitted, demand cannot be raised - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 468
VCES - works contract service - Section 106 (1) of FA, 2013 - rejection on the ground that no declaration shall be made on the same issue for any subsequent period where a notice or an order of determination has been issued on the said issue - Held that: - The service carried out during the material period was also works contract service only, the only difference being that for the earlier period, value of taxable service was received directly from the individual flat buyers. However, in the instant case, since they had to suspend the project midway and sought the help of their partner, the cost already incurred by them was reimbursed to them by the latter. However, this reimbursement is only for the value of taxable service already rendered for works contract service, albeit for incomplete part of the project - the V.C.E.S application will necessarily be hit by second proviso to Section 106 (1) ibid since it seeks to make a declaration on the same issue for which a notice or order of determination had been issued against them for earlier period - appeal dismissed - decided against appellant.
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2017 (3) TMI 467
CENVAT credit - input service - renting of cycle stand in factory - catering services for the factory - Held that: - decision in the case of M/s. Sundaram Fasteners Limited Versus CCE, Chennai - II [2015 (11) TMI 1539 - CESTAT CHENNAI], relied upon, where it was held that Appellant availed catering service to discharge an obligation under the Factories Act. Therefore, there shall not be denial of CENVAT credit in respect of service tax paid to avail the catering service for the factory prior to 31.3.2011 - credit allowed. Renting of cycle stand in factory - Held that: - input service credit of ₹ 29,667/- in respect of rental charges for cycle stand is not found satisfying the provisions of Rule 2(l) of the Rules - credit not allowed. Penalty imposed to the issue of service tax under reverse charge - Held that: - There was indeed lack of clarity in the matter during the relevant period - penalty set aside. Appeal disposed off - decided partly in favor of appellant.
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Central Excise
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2017 (3) TMI 466
Maintainability of appeal - monetary limit to file appeal - Held that: - considering the Central Board of Excise & Customs instruction No. 390/Misc./163/2010-JC/Pt dated 30th December 2016 read with subsequent communication dated 8th February 2017, as the amount involved in the present Appeal is less than the monetary limit fixed by the CBEC to prefer appeal before the High Court ie., ₹ 20 lakhs, the present Tax Appeal is not entertained on the aforesaid ground alone - appeal dismissed being not maintainable.
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2017 (3) TMI 465
Refund claim - unjust enrichment - Whether the Tribunal was justified in holding that irrespective of the purpose for which the duty has been granted under N/N. 132/82-CE dated 21.04.1982 in respect of the excess production of sugar during the lean period from May 1982 to September 1982, refund on account of the exemption of notification would be subject to the principle of unjust enrichment? Held that: - the assessee appellant has passed on the liability of central excise duty to the purchasers - In view of the admitted position of fact and the clear position in law that the manufacturer cannot be entitled to claim refund of duty that has not been borne by him or has been passed on to the purchaser, we do not find any error in the findings recorded by the Tribunal - appeal dismissed - decided against assessee.
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2017 (3) TMI 464
Waiver of the condition to pre-deposit - Held that: - as the assessee has failed to point out any serious infirmity in the procedure adopted or order passed by the Tribunal in the pre-deposit matter, the Tribunal appears to have passed the order on the basis of material on record on a prima facie view over the fact that the assessee was engaged in paper transactions. The Tribunal thus refused to exercise its discretion and rejected the waiver application. We find no error in the approach of the Tribunal - In view of the fact that the Tribunal has subsequently dismissed the appeal, for non compliance of the order of pre-deposit, the order passed dismissing the assessee's appeal dated 14.12.2009 is set aside subject to assessee depositing the entire disputed demand of penalty as above. Upon such compliance, the Tribunal is directed to decide the appeal as expeditiously as possible - appeal disposed off.
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2017 (3) TMI 463
CENVAT credit - extended period of limitation - while the Tribunal had remanded the matter to the Commissioner (Appeals) on the issue of applicability of extended period of limitation, the Tribunal has decided the issue against the appellant on reversal of CCR 2004, amounting to ₹ 25,78,578/- - Whether the Hon'ble Tribunal is justified in allowing the appeal of the department on merits without considering the contentions of the appellants urged in support of their case? Held that: - The Tribunal appears to have taken the view that inasmuch as the manufactured goods had not returned to the factory within 180 days, therefore, the assessee was not entitled to the benefit of Rule 4 (5) (a) of the CCR, 2004. However, no discussion or finding has been returned in respect of the application claimed to have been filed by the assessee for addition of the premises. The fact of such application having been filed is also not denied in the present proceedings - in view of the fact that the Tribunal has remanded the matter on the issue of extended period of limitation, we deem it proper that the Commissioner (Appeals) while deciding the issue of limitation on remand may also decide the issue raised by the assessee in respect of the application of Rule 4 (5) (a) of the Cenvat Credit Rules, 2004 amounting to ₹ 25,78,578/- - appeal allowed by way of remand.
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2017 (3) TMI 462
Search - Evasion of duty - The petitioners submitted that the request contained in their letter specifically to cross examine all these three employees, since their statements were relied upon, has been rejected - Held that: - We do not think that such an approach, apart from being unhealthy and non conducive to fair and impartial adjudication sub-serves the cause of justice. The cross examination of these persons is not a proper method to belie their expertise and it is sought apparently for inconveniencing and making them uncomfortable for giving a version to help the investigation in the matter and for delaying the adjudication proceedings is one of the reasons assigned in the impugned communication - The petitioners shall cross-examine these three persons and who shall remain present before the adjudicating authority on 14.3.2017, at 11:00 a.m - petition disposed off - decided in favor of petitioner.
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2017 (3) TMI 461
MODVAT credit - indifference in the description of goods in the subject invoices - denial on the ground that no correlation could be established between the input scrap actually received and used in the manufacture of excisable goods and the scrap described in the invoices under which input scrap was received. Held that: - There was no need to give any specific instructions for supplying a particular variety of scrap. How that scrap can be used in induction furnace was duly explained. This is not, therefore, a case of irregular availment of the Modvat Credit - Eventually when the documents placed on record themselves point out that all types of scrap were utilised by the assessee, then, one cannot just pick and choose any statement or single out a document to deny the Modvat Credit - appeal dismissed - decided against Revenue.
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2017 (3) TMI 460
Pre-deposit of duty and penalty - Compounded levy scheme - for non compliance of the order passed by the 1st respondent, the earlier appeals preferred by the petitioner before the 1st respondent was dismissed for default - Held that: - the pre-deposit amount of ₹ 25 lakhs ordered to be deposited by the 1st respondent had been deposited. In the circumstances, the impugned order passed by the 1st respondent dismissing the appeal for non compliance is hereby is set aside and the same is remanded back to the 1st respondent/tribunal for consideration afresh - appeal allowed by way of remand.
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2017 (3) TMI 459
CENVAT credit - denial on the ground that the assessee is not eligible to take credit on the strength of documents, which are not statutorily prescribed - Held that: - CBEC vide Circular No. 218/52/96-CX dated 04.06.1996 has clarified that such persons who are taking part in transit sale need not get themselves registered as per provisions of Rule 57G of the CER, 1994 - the appellant is inconsonance with the procedure prescribed by the department - also, there is no dispute that both the duty paid inputs and the documents indicating payment of duty were received by the appellant and used in the manufacture of finished goods. It is now a well accepted legal proposition that minor procedural lapses cannot be made as a basis for denying credit to the manufacturer - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 458
Refund - appropriation - whether the appropriation of refund claim after sanctioning the same, against the confirmed demand, is proper or legal, in a case where an appeal has been filed and the same is pending? - Held that: - the adjustment of refund sanctioned by the Adjudicating Authority and adjusted towards interest liability is pre-mature - When the matter is pending and the entire amount of duty liability has been recovered along with amount of penalty, there was no occasion to adjust the sanctioned refund against the interest liability - the refund amount already sanctioned to the appellant to be released within 30 days - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 457
CENVAT credit - denial on the ground that no evidence was adduced before the Adjudicating Authority on behalf of the appellant to show that the subject goods were received in the factory and used in the manufacture of final product - Held that: - substantial benefit of credit cannot be denied so long as it can be proved that the good are duty paid and received in the factory and are used in the manufacture of final product. These are all procedural and technical lapses, which are curable in nature. Accordingly, matter remitted to the Adjudicating Authority to verify the documents and decide the issue in accordance with law - appeal allowed by way of remand.
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2017 (3) TMI 456
Benefit of Kar Vivad Samadhan Scheme, 1998 - Revenue contends that the tax arrears in question are not in dispute as on the date of filing of the declaration - whether the benefit of the Scheme can be extended to the declarant or not? - Held that: - The alleged tax arrears have not attained finality inasmuch as the petitioners have disputed the same by filing an appeal before the Commissioner (Appeals). Importantly, the Department admitted that a sum of ₹ 55 lakhs recoverable as tax arrears prior to 1.4.1998 has been disputed. The letter dated 8.2.1999 also disputes this position. Hence, there is an application fully maintainable and covered by the Scheme - petition allowed.
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2017 (3) TMI 455
Valuation - related party transaction - Revenue claims that the assessee and M/s.Ballarpur Industries Ltd. are under the same management, therefore, Rule 8 shall be made applicable on assessee - Held that: - even though the appellant is an interconnected undertaking but for the purpose of Central Excise Valuation Rules, 2000. The sale to or through an interconnected undertaking cannot be treated as sales made through related persons. Therefore, the entire foundation of allegation stands demolished - the fact being a common Director do not establish the mutuality of interest - appeal dismissed - decided against Revenue.
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2017 (3) TMI 454
Clandestine removal - job-work - appellant claim that the goods were sent by the appellant for job work on their behalf. Therefore there was no need to pay any duty - Held that: - neither any proper challan was issued mentioning the provision of job work nor any entry was made in the records of the appellant - Movement of the finished goods can be made for job work by following the procedure and if the procedure is not followed, it will be treated as removal of finished goods and it attracts excise duty - the supply of the material for job work was nowhere recorded in any of the records of the appellant nor any document was issued. Therefore, the removal of the goods will be treated as clandestine removal without payment of excise duty - demand upheld. Imposition of penalty u/r 26 on employees of the appellant company - Held that: - since the goods were cleared with their knowledge and they have malafide intention, not followed the procedure, no account for the removal in the books, penalty u/r 26 were correctly imposed. Appeal dismissed - decided against appellant.
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2017 (3) TMI 453
Valuation - cost construction method - whether the penalty u/s 11AC and interest u/s 11AB is chargeable in the fact that the differential duty was payable due to variation in the value arose because the correct cost of raw material was not available at the time of clearance of the goods to the respondent as the same was being provided by the principal of the respondent? - Held that: - there is no malafide on the part of the respondent - The short payment of duty is not due to the malafide intention of the respondent but for the reason the principal manufacturer has not provided the correct cost of material timely to the respondent - penalty u/s 11AC is not imposable. Interest - Held that: - interest is unavoidable as the same is in the nature of piggyback of the duty. It was admitted that duty was paid belatedly therefore for the delay the interest payment is inevitable - demand of interest upheld. Appeal allowed - decided partly in favor of appellant.
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2017 (3) TMI 452
Refund claim - denial on account of non availment of Cenvat Credit and non utilization thereof - Held that: - as per CCR, 2004 an assessee can avail Cenvat Credit after receipt of the goods on the strength of the original invoices. There is no time limit prescribed in CCR, 2004 for availing of Cenvat Credit on inputs - It is admitted fact that later on the appellant has availed Cenvat Credit on the said inputs on the strength of original invoices. As the appellant were not having the original invoices at the time of procurement of inputs, therefore, appellant had to pay duty through PLA after exhausting Cenvat Credit lying in their Cenvat Credit account. Later on Cenvat Credit availed strength of original invoices definitely, the appellant was not entitled to take excess refund, this is a revenue neutral situation - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (3) TMI 441
Release of bank guarantee - petitioner claim that the bank guarantee should be discharged and handed over to the petitioner, in view of the fact that delay in disposal of the revision petition is resulting in financial detriment to the petitioner - Held that: - the respondent no.1 is directed to dispose of the revision petition, as expeditiously as possible, though, not later than six weeks from the date of receipt of a copy of this order, after affording personal hearing to the petitioner and/ or its authorised representative - petition allowed - decided in favor of petitioner.
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2017 (3) TMI 440
Principles of natural justice - though objections were called for and hearing was posted on 05.11.2016 in Ext.P3, the assessee admittedly filed his objections only on 29.11.2016. The assessment proceedings at that point was not over and the Assessing Officer took note of the objections in the order passed. The Assessing Officer has stated in Ext.P5 that the assessee could have availed of the opportunity for hearing on 29.11.2016, when the objection was filed - Held that: - the order of assessment itself has to be set aside on grounds of violation of principles of natural justice - petition allowed - decided in favor of petitioner.
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Indian Laws
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2017 (3) TMI 439
NDPS Act - sentences awarded to the appellant by the trial court seeked to be reduced - Held that:- In the present case, the appellant is in custody since the date of his arrest i.e. 28.05.2007 and as per the letter of Superintendent, Central Jail, Udaipur dated 01.11.2014 addressed to the Government Advocate, Rajasthan High Court Jodhpur, the age of the appellant on 01.11.2014 was 74 years and up to 30.10.2014 he has served 7 years 5 months and 1 day’s imprisonment, as such at present the age of the appellant is about 77 years. Learned Special Public Prosecutor is not in a position to dispute the fact that the appellant is convicted for the first time for the aforesaid offences and no other criminal case was or is pending against the appellant. Looking to the peculiar facts and circumstances of the case, this Court is of the view that the ends of justice would be met if the sentences of imprisonment of appellant awarded by the trial court for the offences punishable under Sections 8/18 and 8/25 of NDPS Act are reduced from 15 years’ rigorous imprisonment to minimum sentences of 10 years’ rigorous imprisonment for each of the offence. Consequently, this appeal is allowed in part. While maintaining the conviction of appellant - Nand Lal S/o Veni Ram recorded by the trial court for the offences punishable under Sections 8/18 and 8/25 of NDPS Act, his sentence is reduced from 15 years’ rigorous imprisonment to 10 years’ rigorous imprisonment for each of the offence. Both the sentences are ordered to run concurrently. However, the fine imposed by the trial court is maintained but the sentences in default of payment of fine are reduced from 2 years’ rigorous imprisonment to 3 months’ rigorous imprisonment for each default.
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2017 (3) TMI 438
Regularization to Watchman from the date of completion of ten years of service with salary and other benefits - Held that:- The learned Single Judge of the High Court, while allowing the writ filed by the respondent extended the benefit of the said G.O. Ms. No.22 dated 28.02.2006 and directed the appellants to grant regularisation of respondent’s service from the date of completion of ten years of service with salary and other benefits. The learned Judge failed to take note of the fact that as per G.O. Ms.No. 22 dated 28.02.2006, the services of employees working in various government departments on full-time daily wage basis, who have completed more than ten years of continuous service as on 01.01.2006 will be regularised and not part-time Masalchis like the respondent herein. In G.O.Ms. No. 84 dated 18.06.2012, the Government made it clear that G.O.Ms. No. 22 dated 28.02.2006 is applicable only to full-time daily wagers and not to part-time daily wagers. Respondent was temporarily appointed part-time worker as per Tamil Nadu Finance Code Volume (2) Appendix (5) and his appointment was completely temporary. The respondent being appointed as part-time Masalchi, cannot compare himself to full-time daily wagers and seek benefit of G.O.Ms.No.22 dated 28.02.2006. The Single Judge also failed to consider that the Government did not grant regularisation of services of any part-time employee on completion of ten years of his service as envisaged under the G.O.Ms. No.22 dated 28.02.2006. The learned Single Judge erred in extending the benefit of G.O.Ms.No.22 dated 28.02.2006 to the respondent that too retrospectively from the date of completion of ten years of service of the respondent. As rightly contended by the learned senior counsel for the appellants, if the respondent is to be given monetary benefits from the date of completion of ten years of service, that is from 01.04.1999 till the date of his regularization that is 18.06.2012, the financial commitment to the State would be around ₹ 10,85,113/- (approximately)towards back wages apart from pension which will have a huge impact on the State exchequer. It is pertinent to note thateven the regularisation of services of part-time employees vide G.O.(Rt.) No.505 Finance (AA-2) Department dated 14.10.2009 and G.O.(2D) No.32 Finance (T.A. 2)Department dated 26.03.2010 was effectedby extending the benefit of G.O. dated 28.02.2006 only from the date of Government Orders and not from the date of completion of their ten years of service. The Division Bench also failed to take note that G.O.Ms.No. 22 P &AR Dept. dated 28.02.2006 is applicable only to full-time daily wage employees and who had completed ten years of continuous service as on 01.01.2006 and not to part-time employees.As per G.O.(Rt.) No.84 dated 18.06.2012, the respondent is entitled to the monetary benefits only from the date of issuance of Government Order regularizing his service that is 18.06.2012. The impugned order of the Division Bench affirming the order of the Single Judge granting benefits to the respondent from the date of completion of ten years of service is erroneous and the same is liable to be set aside.
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