TMI Tax Updates - e-Newsletter
March 17, 2018

Case Laws in this Newsletter:

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

Articles

1. NO TAX CAN BE IMPOSED BY INFERENCE OR BY ANALOGY

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Goods and Services Tax Rate and Policy

2. Taxes collected by Service Providers

3. GST Export Refunds

4. Surveys Undertaken by the Reserve Bank of India (RBI)

5. Transparent Political Funding System

6. Government implementing various programmes/schemes for promoting inclusive growth

7. Prompt Corrective Action (PCA) of RBI on Public Sector Banks (PSBs)

8. One Time Settlement of NPAs

9. Ecosystem for Fin Tech Companies

10. 107 companies and 7 LLPs under SFIO scanner in PNB fraud case

11. Rs 4.07 crores out of ₹ 5.29 crores utilised to provide financial education under Investors Awareness Programmes in 2017-18

12. India to host International Competition Network Annual Conference for the first time from 21st to 23rd March 2018 at New Delhi

13. Felicitation Programme organised for Atal Pension Yojana Service Providers under ‘We for Victory’ Campaign; More than 4 lakh accounts mobilised by the Banks on the occasion

14. RBI Reference Rate for US $

15. Minister of Commerce & Industry, Suresh Prabhu, Chairs Meeting on Making India USD 5 Trillion Economy in 7 Years

16. INDIA’S FOREIGN TRADE: February 2018

Notifications

Customs

1. 08/2018 - dated 15-3-2018 - ADD

Seeks to impose anti-dumping duty on imports of 'Ofloxacin' originating in or exported from China PR

GST - States

2. GSL/GST/RULE-138(14)/B.9 - dated 15-2-2018 - Gujarat SGST

Exemption for e-way bill for Intra-State Movement.

3. EST/1/Jurisdiction/B.6351 - dated 6-2-2018 - Gujarat SGST

Officers Jurisdiction of the State of Gujarat with effect from 1st february 2018

4. GSL/GST/Rule-138(14)/B.08 - dated 1-2-2018 - Gujarat SGST

Extension for intra-state e-way bill.

5. (GHN-22)GST-2018/S.9(1)(18)-TH - dated 1-2-2018 - Gujarat SGST

Corrigendum to Notification No-62018-State Tax (Rate)

6. GSL/GST/RULE-138(14)/B - dated 31-1-2018 - Gujarat SGST

Corrigendum to Notification No.GSL/GST/RULE-138(14)/B.7 dated the 29th January, 2018 - for Intra-State Movement.

7. GSL/GST/RULE-138(14)/B.07 - dated 29-1-2018 - Gujarat SGST

Requirement of E-way bill for Intra-state movement

8. (GHN-21)GST-2018/S.11(1)(28)-TH-09/2018-State Tax (Rate) - dated 25-1-2018 - Gujarat SGST

Amendment to Notification No.(GHN-124)GST-2017/S.11(1)(21)-TH dated the 15th November, 2017, notification No. 45/2017- State Tax (Rate) - for supply to research institute.

9. (GHN-20)GST-2018/S.11(1)(27)-TH-08/2018-State Tax (Rate) - dated 25-1-2018 - Gujarat SGST

Amendment to Notification No.(GHN-31)GST-2017/S.9(1)(1)-TH, dated the 30th June, 2017, 1/2017 -State Tax (Rate), for tax on old vehicles.

10. (GHN-19)GST-2018/S.11(1)(26)-TH-07/2018-State Tax (Rate) - dated 25-1-2018 - Gujarat SGST

Amendment to Notification No.(GHN-36)GST-2017/S.11(1)(1)-TH dated the 30th June, 2017, notification No.2/2017-State Tax (Rate) - for tax on goods.

11. (GHN-18)GST-2018/S.9(1)(17)-TH-06/2018-State Tax (Rate) - dated 25-1-2018 - Gujarat SGST

Amendments in the Government Notification, Finance Department No.(GHN-31)GST-2017/S.9(1)(1)-TH, dated the 30th June, 2017, notification No.1/2017-State Tax (Rate).

12. (GHN-17)GST-2018/S.11(1)(25)-TH-05/2018-State Tax (Rate) - dated 25-1-2018 - Gujarat SGST

Exemption on the consideration paid to central government in case of license lease for crude or natural gas.

13. (GHN-16)GST-2018/S.148(5)-TH-04/2018-State Tax (Rate) - dated 25-1-2018 - Gujarat SGST

To notify sub-contractor as registered person in case of works contract

14. (GHN-15)GST-2018/S.9(3)(8)-TH-03/2018-State Tax (Rate) - dated 25-1-2018 - Gujarat SGST

Amendments in the Government Notification, Finance Department No. (GHN-34)GST-2017/S.9(3)(2)-TH, dated the 30th June, 2017, notification No.13/2017- State Tax (Rate). - for tax on services.

15. (GHN-14)GST-2018/S.11(1)(24)-TH-02/2018-State Tax (Rate) - dated 25-1-2018 - Gujarat SGST

Amendment to notification No.(GHN-41)GST-2017/S.11(1)(7)-TH dated the 30th June, 2017, notification No.12/2017- State Tax (Rate) - for tax on services.

16. (GHN-13)GST-2018/S.9(1)(16)-TH-01/2018-State Tax (Rate) - dated 25-1-2018 - Gujarat SGST

Amendments in the Government Notification, Finance Department No.(GHN-32)GST-2017/S.9(1)(2)-TH, dated the 30th June, 2017 notification No.11/2017- State Tax (Rate)

17. (GHN-9)/GST-2018/S.128(6).TH-05/2018-State Tax - dated 23-1-2018 - Gujarat SGST

Waiving late fee for GSTR-5

18. (GHN-8)/GST-2018/S.128(5).TH-04/2018-State Tax - dated 23-1-2018 - Gujarat SGST

Waiving late fee for GSTR-1.

19. (GHN-7)/GSTR-2018(18).TH-03/2018-State Tax - dated 23-1-2018 - Gujarat SGST

The Gujarat Goods and Services Tax (Amendment) Rules, 2018.

20. (GHN-6)/GST-2018/S.146(2).TH-09/2018-State Tax - dated 23-1-2018 - Gujarat SGST

Notifying Website for E way Bill and other procedure

21. (GHN-11)/GST-2018/S.128(8).TH-07/2018-State Tax - dated 23-1-2018 - Gujarat SGST

Waiving late fee for GSTR-6.

22. (GHN-10)/GST-2018/S.128(7).TH-06/2018-State Tax - dated 23-1-2018 - Gujarat SGST

Waiving late fee for GSTR-5A

Circulars / Instructions / Orders

GST - States

1. GSL/S.5(1)/B.16 - dated 14-2-2018

Power Delegation to Appellate Authority

2. GSL/S.5(1)/B.15 - dated 14-2-2018

Amending Order for Power Delegation

3. GSL/S.5(1)/S.83/B.14 - dated 15-1-2018

Power delegation for provisional attachment

4. 26/2017-GST - dated 29-12-2017

Filing of Returns under GST- regarding

5. 25/2017-GST - dated 22-12-2017

Manual filing of applications for Advance Ruling and appeals before Appellate Authority for Advance Ruling.

6. 22/2017-GST - dated 22-12-2017

Clarification on issues regarding treatment of supply by an artist in various States and supply of goods by artists from galleries.

7. 11/2017-GST - dated 22-12-2017

Extension of lime limit for intimation of details of stock held on the date preceding the date from which the option for composition levy is exercised in FORM GST CMP-03

8. 23/2017-GST - dated 22-12-2017

Issues in respect of maintenance of books of accounts relating to additional place of business by a principal or an auctioneer for the purpose of auction of tea, coffee, rubber etc.

Highlights / Catch Notes

Income Tax

• Non-resident sellers of Andhra Pradesh Paper Mills shares to pay 10.506% tax on long-term capital gains per section 112(1).

  Case-Laws - AAR : The tax payable by the Applicant (Non-resident) on the long term capital gains arising on the sale of equity shares of Andhra Pradesh Paper Mills Limited, an Indian listed company, are required to be computed at 10.506% (inclusive of surcharge and cess) of the amount of capital gains, as per the proviso to section 112(1) of the Income tax Act, 1961. - AAR
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• Section 263 Income Tax Act: Lack of Enquiry Justifies Case Revision, Inadequate Enquiry Does Not. Critical Distinction Explained.

  Case-Laws - AT : Revision u/s 263 - Lack of enquiry is a reason for taking up the case for revision u/s 263 of the Act but the inadequate enquiry cannot be a reason for taking up the case for revision u/s 263 of the Act - AT
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• Penalty Imposed for Willful Short Deduction of TDS on Brand Fee u/s 271C; Revenue Loss Argument Rejected.

  Case-Laws - AT : Penalty u/s 271C - Short deduction of tax at source (TDS) in respect of Brand fee paid - The argument of the assessee that short deduction does not cause loss to the revenue is not a reasonable explanation and it shows the willful default of the assessee for short deduction - AT
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• Taxpayer's Exemption Claim Upheld Despite Not Depositing Funds Under Capital Gains Scheme: Section 54F Interpretation.

  Case-Laws - AT : Exemption u/s.54F - onstruction of a new residential house - failure of the assessee in not depositing the unutilized sale consideration in a bank account under Capital Gains Accounts Scheme, during the interregnum was not fatal to a claim u/s. 54F(1) - AT
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Customs

• Refund Application Deadline for Special Additional Duty Not Excessive, Complies with Article 14 of the Constitution.

  Case-Laws - AT : Refund of SAD - time limitation - Merely because a condition is imposed to file a refund application within a stipulated time limit, it cannot be held to be onerous, excessive and, therefore, ultra vires Article 14 of the Constitution - AT
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Indian Laws

• Regular Fly-in, Fly-out Visits by Foreign Lawyers May Be Considered Practicing Law, Casual Advisory Visits May Not.

  Case-Laws - SC : Visit of any foreign lawyer on fly in and fly out basis may amount to practice of law if it is on regular basis. A casual visit for giving advice may not be covered by the expression ‘practice’ - If prohibition applies to an individual, it equally applies to group of individuals or juridical persons. - SC
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Service Tax

• Franchise Service Tax: Only Fees for Representational Rights, Including Royalties, are Taxable.

  Case-Laws - AT : Franchise service - only those amounts directly relatable to the representational right granted by the franchisor to the franchisee and the royalty/franchisee fee towards that right would alone be part of taxable for the purpose of levy under this category. - AT
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• Appellants Must Pay Taxes on Loan Disbursement Commissions Under Business Auxiliary Services; Government Policy Compliance Not an Exemption.

  Case-Laws - AT : Appellants may be mandated to act in a particular manner by the Policy of the government. That by itself will not exempt them from tax liability - there is no case for excluding income of appellant as commission in disbursing loan, from tax liability under BAS - demand upheld - AT
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• Service Tax Case: Lump Sum Payments Not Excluded as 'Reimbursement' Without Actual Expense Basis.

  Case-Laws - AT : Valuation - inclusion of reimbursement of expenses - Apparently, there is no reimbursement on actual basis and the exclusion under the category of 'reimbursement expenses' cannot be admitted for such lump sum payment - AT
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• Service Classification Dispute: Works Contract vs. Commercial Construction; Consistent Tax Argument Required Pre/Post June 1, 2007.

  Case-Laws - AT : Classification of service - works contract service or Commercial and Industrial Construction service? - appellant cannot be allowed to have two different grounds for the purposes of challenging the demands pre and post 01.06.2007. - AT
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Central Excise

• Appellant Denied CENVAT Credit Due to Law Prohibiting Double Benefits Despite Area-Based Exemption.

  Case-Laws - AT : CENVAT credit - When the appellant is enjoying area based exemption then the Cenvat Credit cannot be given as law does not provide double benefit - AT
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VAT

• Court Rules Watery Coconut Is Not a Separate Commodity from Dry Coconut Due to Lack of Legislative Classification.

  Case-Laws - HC : Coconut includes dry coconut as well as watery coconut as, watery coconut becomes dried coconut after some point of time - the petitioners' contention that watery coconut is a separate class and distinct commodity from coconut in absence of any specific classification by the legislature, cannot be accepted - HC
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Case Laws:

• GST

• 2018 (3) TMI 739
  Confiscation of seized vehicle along with certain quantities of beedies - Held that: - As the seized vehicle is not liable for confiscation in default of payment of tax that may be determined/already determined, no purpose will be served by keeping the said vehicle under continued detention - petition allowed.

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• Income Tax

• 2018 (3) TMI 738
  Entitlement to the benefit of proviso to Section 112 (1) - concessional rate of tax at 10.506 % (inclusive of surcharge and cess) - non-resident assessee - tax on the long-term capital gains earned by the Applicant on sale of shares of Andhra Pradesh Paper Mills Ltd. an Indian listed company, pursuant to an open offer - Applicant is a Company registered in Finland - Held that:- Following the decision Cairn UK [2013 (10) TMI 430 - DELHI HIGH COURT] we conclude that the benefit under the proviso to section 112(1) of the Act could not be denied to the Applicant. Yes, the tax payable by the Applicant on the long term capital gains arising on the sale of equity shares of Andhra Pradesh Paper Mills Limited, an Indian listed company, are required to be computed at 10.506% (inclusive of surcharge and cess) of the amount of capital gains, as per the proviso to section 112(1) of the Income tax Act, 1961.

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• 2018 (3) TMI 737
  Denying deduction for provision of bad debts made for standard assets u/s 36(1)(viia) - assessee has failed to furnish the details of deduction - Held that:- It is apparent from the material placed before us that the RBI guidelines prescribes the provision on standard assets from the year ended March 31, 2000 directing the banks to make a general provision of a minimum of 0.25% on standard assets. The decision rendered by the Commissioner of Income Tax is unjustifiable for the reason that assessee is bound by the guidelines issued by the Reserve Bank of India. Any contrary view taken by the Income Tax Authorities would disentitle the assessee from claiming deduction under Section 36(1)(viia) of the Act. In view of non-furnishing of the material documents in support of the claim before the Tribunal, it was left with no other option except to confirm the order of the Commissioner of Income Tax (Appeals). We deem it appropriate to remand the matter to the Tribunal setting aside the impugned order with liberty to the assessee to place on record the material documents in support of its case for deduction towards provision for bad debts made for standard assets of Rs. 15,00,000/- relating to the assessment year 2011-12. - Decided in favour of assessee.

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• 2018 (3) TMI 736
  Revision u/s 263 - TDS u/s 194H on incentives passed on to the retailer - TDS liability - Held that:- It is evident that passing on incentives by the wholesale distributor to the retail dealer, there is no principal and agent relationship and cannot be held to be commission or brokerage paid to the recipient. Provisions of tax deduction at source u/s 194H of the Act would not attract the tax and accordingly disallowance u/s 40(a)(ia) of the Act is applicable, thus the assessment made u/s 143(3) cannot be held to be erroneous since the incentives passed on by credit note to the retail dealers is neither commission nor brokerage as discussed above, the section 194H of the Act has no application in this case. In the instant case as observed from the Ld. Principal CIT’s order, the A.O. has called for the details of the ledger accounts of the incentives and the details of salaries paid to its employees. In respect of salaries paid to employees, the A.O. did not make any addition in the consequential order passed u/s 143(3) r.w.s. 263 of the Act dated 29.12.2017. In respect of the incentives passed on to the retailers, the A.O. has obtained the details of ledger accounts and examined the same. Therefore, it is established beyond doubt that the A.O. has examined the issue and taken one of the possible views. Not examining the entire transaction and sales by the assessee company to its retail dealers and sales by its dealers till to the end users and verification of principal agent relationship etc. at best can be treated as inadequate enquiry but not lack of enquiry. Once the A.O. has conducted the enquiry and completed the assessment and the enquiry conducted was inadequate, there is no case for revision u/s 263 for inadequate enquiry. Lack of enquiry is a reason for taking up the case for revision u/s 263 of the Act but the inadequate enquiry cannot be a reason for taking up the case for revision u/s 263 of the Act. - Decided in favour of assessee.

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• 2018 (3) TMI 735
  Penalty u/s 271C - Short deduction of tax at source in respect of Brand fee paid - TDS u/s 194J or u/s 194C - Held that:- With regard to the belief of the assessee that the payment was in the nature of contract payment the agreement clearly indicated that the payment was brand fee and the assessee had not entered in to any contract for rendering the services but manufactured the goods on it’s own in the brand name of parent company and sold the same to APBCL. For using the Brand name the assessee had made the payment of Royalty which clearly indicated by the agreement and discussed in detail by the CIT(A). Therefore this argument of the assessee is not tenable. The argument of the assessee that short deduction does not cause loss to the revenue is not a reasonable explanation and it shows the willful default of the assessee for short deduction In the instant case the assessee could not establish with the tangible evidence to show that there was reasonable cause for short deduction of tax. Therefore we are of the considered view that the assessee has failed to explain the reasons for short deduction of tax at source, hence, we up hold the order of the Ld. CIT(A) - Decided against assessee.

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• 2018 (3) TMI 734
  Validity of reopening of the assessment - non specification of charge - detailed examination by AO - Held that:- DR was unable to place before us the order sheet copy of the Assessing Officer and the reasons recorded therein to indicate that some new material was found by the Assessing Officer to enable him to reopen the assessment and the notice was issued essentially on account of the fact that the return filed by the assessee does not contain true and correct particulars of income Upon going through the assessment order passed u/s 143(3) AO had the benefit of examining the books of accounts in detail and examined the nature of business for the purpose of making additions towards handling charges and commission income, impliedly reflecting that the A.O admitted that the assessee was mainly carrying on the business as a commission agent for and on behalf of the consigners. Such being the case, the notice issued u/s 148 itself is bad in law. - Decided in favour of assessee.

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• 2018 (3) TMI 733
  Deposit with Andhra bank to be treated as qualifying for deposit under capital gains scheme - assessee pleads that it was due to mistaken understanding and adverse market situation in real estate as reasonable cause for not making the investment as required by the Act qualifying for exemption from capital gain - Held that:- The assessee has not invested either in flat or construction of accommodation or deposited the sum of Rs. 50 lacs in the designated capital gain account, instead it has deposited the same in Andhra Bank not qualifying for capital gain. The. We find that it is trite law that the assessee can get relief only within the four corners of law. The assessee having not complied with the provisions of law by making the requisite investment in residential accommodation or investment in designated capital gain account cannot claim relief from capital gain to the extent of Rs. 50 lacs deposited in Andhra Bank account which is not qualifying for capital gain exemption. Treatment of interest under housing loan as cost of improvement and application of cost inflation index thereupon - Deductions from income from house property - Held that:- The interest on housing loan has not been mandated to be allowed as deduction otherwise than the prescription of law prescribed as above. Furthermore, we find that the CIT(Appeals) in his appellate order has referred to certain decisions of Hon’ble Apex Court and Hon’ble High Courts which are on this issue and are against the proposition being canvassed by the assessee. It is trite law that the decision from the higher judicial forums take precedence over the decisions of the tribunal. Accordingly, in our considered opinion, the CIT(Appeals) has properly appreciated the issue in light of the relevant law and appropriate case laws from higher forums. Accordingly, we do not find any infirmity in the order of the ld. Commissioner of Income Tax (Appeals). - Assessee appeal dismissed.

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• 2018 (3) TMI 732
  Unexplained amount on Google charges - unexplained investments - source of expenditure incurred on behalf of company through credit card - Held that:- The assessee is a Director of M/s.HMGT (India) Tours and Travels Private Limited and had used his credit card for making payments on behalf of the private limited company. The expenses incurred by the assessee by using his credit card on behalf of the company, was reimbursed by the private limited company. AO reduced the reimbursement made by the private limited company from the total credit expenditure incurred by the assessee and the difference was considered as unexplained investment. CIT(A) examined the cash deposits and after considering the reimbursement received by the assessee from the company, the balance was treated as unexplained investments. We find the issue has not been properly dealt by the Assessing Officer. The Assessing Officer ought to have considered the source of deposit which had facilitated the credit card payments of the assessee (whether the expenditure is incurred on his behalf or on behalf of the company). Thus in the interest of justice, we are of the view that the matter needs to be examined by the Assessing Officer afresh Unexplained deposits with SBT - Held that:- Confirmation letter of the seller was not considered by the Assessing Officer nor by the CIT(A). In the interest of justice and equity, we are of the view that the matter needs to be considered afresh by the Assessing Officer. The Assessing Officer shall take into account the total sale consideration. The amounts the assessee had paid from his bank account and also from the loan account availed by the assessee. Unexplained investment - Held that:- The addition of Rs. 19,73,310 by the CIT(A) is an error in view of his findings in para 6.3(i) [page 9 of CIT(A)’s order]. The CIT(A) erroneously had not reduced the relief of Rs. 5,93,000 granted by him in para 6.3(i) of his order. Accordingly, the addition made by the A.O. is reduced to Rs. 13,79,710. No other arguments were raised by the assessee in regard to the addition made by the A.O. amounting to Rs. 19,73,310. Hence ground No.4 is partly allowed by restricting the addition to Rs. 13,79,710 instead of Rs. 19,73,310. It is ordered accordingly.

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• 2018 (3) TMI 731
  Loss claim arising from MCX trading difference - speculation loss OR normal business loss - Held that:- Assessee’s loss in question arising from its transactions carried out in MCX are not delivery based since not executed in a recognized exchange. It fails to dispute the fact that the relevant exchange i.e. MCX stock exchange stood recognized w.e.f. financial year 2013-14. It has come on record that in case of Vimal Oil & Foods Ltd. (2015 (8) TMI 70 - ITAT AHMEDABAD) has followed assessee’s case itself in preceding assessment year 2011-12 as held that such a subsequent notification of stock exchange covers preceding assessment years as well. This is not the Revenue’s case that the CIT(A)’s identical findings in preceding assessment year 2011-12 have not attained finality. - Decided against revenue.

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• 2018 (3) TMI 730
  Genuineness of the transactions of purchase and sale of diamonds - Held that:- Undisputedly the trading in diamond has been claimed by the assessee only during the year under consideration. It is also not disputed that the assessee has made 5 purchases and 7 sales transactions only with two parties each for purchases and sales. To verify the genuineness of the transactions and particularly in view of the facts that the assessee has claimed loss of Rs. 54,43,913/- to be set off against the short term capital gain the AO conducted the enquiry and investigation through ADIT, Surat as these two parties namely M/s Makoda Exim Pvt. Ltd. and M/s Pulkit Impex Pvt. Ltd. were stated from Surat. Even the notices issued u/s 133(6) were received back with the postal remarks the parties were not available at the given address. AO issued commission u/s 131(b) to the ADIT investigation, Surat to verification the genuineness of the transactions of purchase and sale of diamonds. In its report the ADIT has stated that none of the parties from whom the assessee has claimed to have purchased the diamonds were available at the addresses given by the assessee. AO has given its finding on the basis of the report of the ADIT that these parties are not found at the given address and therefore, there was none existence of the parties. CIT(A) has confirmed the action of the AO when the assessee has failed to file any evidence to controvert the facts as reveals in the investigation carried out by the AO. Additional evidence in support of the claim that these parties have shifted their addresses and therefore, they were not found at the given address. The assessee has also sought to produce PAN and return of income filed by these two parties to show the identity and existence of these parties. The assessee has also sought to produce the bank statement of these parties showing the entries of the payments made by the assessee. Thus, the additional evidence sought to be produced by the assessee are very much relevant for adjudication of the issue and most of these evidences are independent and not created by the assessee or the other parties except the confirmation and letter of change of address. The considered view that the matter requires to be reconsidered and adjudicated after carrying out proper verification in respect of the additional evidence filed by the assessee.

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• 2018 (3) TMI 729
  Stay of demand - Held that:- It is not in dispute that in A.Y. 2007-2008, the matter in issue have been considered by the Tribunal in proceedings under section 263 of the I.T. Act and in subsequent year also the same issues have been considered and decided. The Department filed appeals before Hon’ble Delhi High Court on which one of the issue have been admitted by the Hon’ble Delhi High Court in the Departmental Appeals. The appeal of assessee for A.Y. 2012- 2013 is pending consideration before the ITAT, Delhi Bench, in which interim stay have been granted in favour of the assessee without any condition. The assessee also filed writ petitions for both the assessment years under reference before the Hon’ble Delhi High Court for grant of interim relief during the Court holiday in which also the Hon’ble Delhi High Court has granted interim relief in favour of the assessee Considering all we direct that outstanding demand for both the years under reference shall remain stayed for a period of six months or disposal of the appeals whichever expire earlier, subject to assessee paying Rs. 10 crores to the Revenue Department, latest by 25th March, 2018 for A.Y. 2013-2014. The appeals be fixed for hearing on ‘out of turn basis’ on 23rd April, 2018. Paper books, if any, be filed as per Rules Advance paper book be supplied to the Revenue Department.

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• 2018 (3) TMI 728
  Expenses incurred in cash in excess u/s 40A(3) added to the income of the assessee which is untoward & liable to be deleted - Held that:- The assessee filed copy of the confirmation from M/s. Kalra Bus Service, Jaipur with regard to supply of diesel. This confirmation states that diesel were supplied in drums. As per this confirmation none of the payments in a day exceed Rs. 20,000/-. The confirmation filed by the assessee is admitted as an additional evidence for the purpose of adjudicating the issue involved in the appeal. The AO did not have the benefit of looking at the additional evidence. The addition confirmed by the CIT(A) is set aside and the issue is remanded to the AO for fresh consideration. We may also add that before the AO and CIT(A) the expenditure of Rs. 4,44,527/- was stated to be for purchase of spare parts of the truck. Now a different stand is taken by the assessee. This aspect may also be taken note of by the AO in the set aside proceedings. Addition u/s 40(a)(ia) - tds u/s 194C - payments made to M/s. Kathat Freight Services towards supply of labour - Held that:- Before us the limited prayer for the assessee was to set aside the order of CIT(A) and remand the issue to the AO to enable the assessee to show before the AO that M/s. Kathat Freight Services had shown receipts from the assessee in the return of income filed for the relevant assessment year. The prayer for the assessee is based on the second proviso to section 40(a)(ia) which provides that if the payee has shown the receipts from the assessee in his return of income and paid tax on such receipts and has furnished in the return of income then no disallowance can be made u/s 40(a)(ia) should be made. This proviso was inserted by the Finance Act, 2012 w.e.f. 01.04.2013. This amendment was held to be applicable retrospectivley in the case of Anasal Land mark Township (P)Ltd (2015 (9) TMI 79 - DELHI HIGH COURT)). Disallowance of wages - Held that:- Addition sustained by the CIT(A) deserves to be deleted because the books of accounts have been produced along with the vouchers by the assessee before the AO. Specific instances of unverifiable vouchers was not pointed out by the AO . Thirdly, the AO did not even call upon the assessee to show cause as to why disallowance should not be made before making the disallowance. For these reasons the addition sustained by the CIT(A) is directed to be deleted.

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• 2018 (3) TMI 727
  Assessment u/s 153(A) - Disallowance of expenditure u/s 14A - Held that:- We are of the view that the appeal against the order dated 20.06.2012 and passed u/s 143(3) of the Act does not become infructuous, consequent to the search action u/s 132 in the case of the assessee on 11.10.2012 as per the second proviso to section 153A the assessment completed prior to the search action will not abate. Therefore the CIT(A) should be directed to decide the appeal of the assessee filed against the order dated 20.06.2012 passed u/s 143(3) on merits. The order of CIT(A) is accordingly set aside and the CIT(A) is directed to consider the appeal of the assessee on merits after affording opportunity of being heard to the assessee. Appeal of the assessee as allowed for statistical purpose.

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• 2018 (3) TMI 726
  Addition on account of undisclosed sources - unexplained investment - assessee had not paid the amount for purchase of property directly from her account and had not filed documentary evidence which can prove that the payment through transfer by her son was paid to the seller/related to the purchaser of the property under consideration - Held that:- From the details as recorded by the AO that there was a cash withdrawal from the bank account of Shri Raj Kumar the son of the assessee of Rs. 45 lacs and also there is transfer entry of Rs. 83 lacs which was accepted by the AO in his order however, the AO has considered only the cash withdrawal as source available with the assessee for payment of consideration. CIT(A) noted that an amount of Rs. 83 lacs was paid through cheque No. 868041 dated 14.01.2009 which was also shown in the details as recorded by the AO. Therefore, when the purchase consideration to the extent of Rs. 83 lacs paid through cheque from the account of the son of the assessee then, the balance amount of Rs. 19,44,940/- was very much accepted by the AO as source from the cash withdrawal of Rs. 45 lacs. Accordingly, no merit and substance in the present appeal of the Revenue

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• 2018 (3) TMI 725
  Difference in the income reported by the assessee as per its books of accounts and as reflected in AIR date base of the Revenue - Tax deducted u/s 194H - Held that:- Income of Rs. 6461/- was reflected in the AIR Data base of the Revenue i. e. in form no 26AS in the case of the assessee and tax of Rs. 646. 13 was reflected to have been deducted u/s 194H @10% on the said income on behalf of the assessee for which the learned CIT-A has issued necessary direction to AO to verify contention of the assessee as to factual aspect of the matter and to pass orders thereafter on merits. The assessee is free to raise all contentions on merits in the said de-novo proceedings before the AO including raising the contention that the said income was not earned by the assessee and the AO shall after making necessary verifications of the contentions of the assessee will pass such orders on merits in accordance with law . We fail to see what prejudice is caused to the assessee in undergoing such verifications process more-so the said income of Rs. 6461/- on which income-tax was shown to be deducted at source@10% u/s 194H is reflected in 26AS i. e. AIR data base of the Revenue to be pertaining to the assessee and hence we have no hesitation in confirming the appellate order of the learned CIT-A on this ground and hence the contention of the assessee stood rejected and the ground taken by the assessee in CO stood dismissed. Needless to say the AO shall grant proper and adequate opportunity of being heard to the assessee in the proceedings conducted by the AO. Carry forward and set off of brought forward losses - Held that:- Assessee will be entitled for carry forward and set off of unabsorbed depreciation for AY 2007-08 to 2012-13 and we hold that Section 79 of the 1961 Act has no applicability so far as carry forward and set off of unabsorbed depreciation is concerned. The assessee succeeds Coming to the provisions of Section 79 so far as carry forward and set off of business losses are concerned, which is applicable to a company in which change in shareholding has taken place in the previous year to a company which is not a company in which public are substantially interested, stipulates that no loss incurred in any year prior to the previous year shall be carried forward and set off against the income of the previous year unless on the last day of previous year the shares of the company carrying not less than fifty-one per cent of the voting power were beneficially held by persons who beneficially held shares of the company carrying not less than fifty-one percent of the voting power on the last date of the year or years in which the loss was incurred. There is no difficulty so far as previous year 2009-10 (AY 2010-11) is concerned as HDFC Limited only acquired 25.64% shares in the assessee company and the persons who held more than fifty-one shares in AY 2007-08 to AY 2009-10 namely Mr Anil Bohora and Mr Ajay Bohora continued to hold more than fifty-one percent shares in the assessee company as at the end of the previous year 2009-10(AY 2010-11) as their shareholding fell from 100% to 74.36% as on 31-03-2010. The difficulty arose in the previous year 2010-11(AY 2011-12) when the HDFC Limited were allotted new shares by the assessee company which took its shareholding to 62.28% and thus the persons namely Mr Anil Bohora and Mr Ajay Bohora who held 100% shares in the previous relevant to AY 2007-08 to 2009-10 and 74.36% in AY 2010-11 which were in any case more than 51% had their shareholding skid to 37.72% in previous year 2010-11(AY 2011-12) which led to falling of their equity below fifty-one percent thereby being hit by the bar created by provisions of Section 79 of the 1961 Act so far as carry forward of losses for AY 2007-08 to 2010-11 is concerned. This would lead to disallowance of the brought forward losses of the assessee from AY 2007-08 to 2010-11 in AY 2011-12 itself and no carry forward of losses for AY 2007-08 to 2010-11 shall be allowed. In AY 2012-13, there was no change in shareholding of the assessee company as the HDFC Limited continued to hold 62.28% shareholding in the assessee company and there will be no difficulty in allowing set off or carry forward further of losses for the AY 2011-12 to the succeeding years. Similarly, there is no difficulty in carry forward of the assessed losses for the AY 2012-13 to the succeeding years is concerned.

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• 2018 (3) TMI 724
  Restriction of claim made u/s.54F while computing capital gains arising on sale of a property - whether exemption could given under Section 54F of the Act where investment in a new residential house was made within three years from the date of transfer of the asset giving rise to the capital gains, even when the assessee had not deposited the unutilized amount in Capital Gains Accounts Scheme, before the due date prescribed for filing of return u/s.139(1)? - Held that:- Once construction of a new residential house was completed within the three years period, failure of the assessee in not depositing the unutilized sale consideration in a bank account under Capital Gains Accounts Scheme, during the interregnum was not fatal to a claim u/s.54F(1) of the Act. See CIT vs. K. Ramachandra Rao [2015 (4) TMI 620 - KARNATAKA HIGH COURT] Assessee was eligible for claiming exemption u/s.54F of the Act for the full amount utilized by it for construction of a new residential house within three year period allowed u/s.54F(1) of the Act. However, whether assessee had completed the residential house within the said period and how much was invested by the assessee within the said period for such residential house, requires verification by AO. We therefore set aside the orders of the authorities below and remit the issue back to the file of the AO for the limited purpose of verifying the quantum of investment made by the assessee for construction of the new residential house within the period mentioned in Sec.54F(1) of the Act and allow such deduction, if the construction of the house was completed within a said period. - Decided in favour of assessee for statistical purposes.

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• Customs

• 2018 (3) TMI 723
  Jurisdiction - power to issue SCN - Whether the Customs, Excise and Service Tax Appellate Tribunal was justified and correct in law in passing the order of remand to the original adjudicating authority to first decide the issue or jurisdiction after decision of the Supreme Court against the decision of Delhi High Court in Mangali Impex Limited versus Union of India [2016 (5) TMI 225 - DELHI HIGH COURT]? - Held that: - the substantial question of law is answered in favour of the appellant with an order of remand to the Tribunal, without expressing any opinion on merits - appeal disposed off.

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• 2018 (3) TMI 722
  Issuance of cheque for the premium amount in lieu of surrendered REP licences - REP licences, Imprest Licence issued from time to time in accordance with the import-export policy in force - Held that: - where advance/imprest licences have already been issued, the claim was to be filed with the licensing offices in Part-II of the application form. The claim shall be scrutinized and in the manner indicated in Part-II of the Circular along with E.P. copy of the shipping bill and bank certificates of export/realisation. The premium amount will then be paid for the unutilised CIF value, as indicated in the exchange control copy of the licence as on 1st March 1993. As far as pending advance licence application, it shall be filed with the licencing authority with whom the application for advance licence is still pending and there are other stipulations in para 2(c), which have to be complied with. Para 3(2)(d) deals with the pending claims of gem and jewellery REP licences. The petitioner must blame himself for having approached this Court belatedly and much after the cut off date. Secondly, the respondents are not obliged to preserve the records and endlessly. All that we have are three copies of applications made by the petitioner and we have referred to the details thereof There is thus merit in the contentions of the respondents that the scheme was to operate exclusively under the supervision of Reserve Bank of India. Secondly, the benefit of orders passed by this Court in the writ petitions which were filed in this Court but before the cut off date, can be of no assistance. The petitioner cannot be granted any relief - petition dismissed.

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• 2018 (3) TMI 721
  Refund of SAD - N/N. 102/2007-CUS dated 14.09.2007 - rejection on the ground of time limitation - whether the refund claim of Rs. 12,19,989/- filed pursuant to the exemption N/N. 102/2007-Cus dated 14.09.2017, on 03.08.2016 for imports made and duty paid June 2015 to July 2005 is barred by limitation? - Held that: - The Hon’ble Bombay High Court in the case of CMS Info Systems Ltd. vs UOI [2017 (1) TMI 786 - BOMBAY HIGH COURT] after analyzing the principles and conditions of the Notification 102/2007-Cus dated 14.09.2007 and taking note of the judgment of Delhi High Court in Sony India Pvt. Ltd. [2014 (4) TMI 870 - DELHI HIGH COURT] has held that Merely because a condition is imposed to file a refund application within a stipulated time limit, it cannot be held to be onerous, excessive and, therefore, ultra vires Article 14 of the Constitution - appeal dismissed - decided against appellant.

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• 2018 (3) TMI 720
  Classification of Steam Coal and Bituminous Coal - Held that: - it is worth mentioning that approximately 350 appeals on the said issue filed before different benches and large number of the same are before this bench. Since the final disposal of the appeals rests on the judgment of the Hon’ble Apex Court on the classification issue of Steam Coal and Bituminous Coal, therefore, we are not in agreement with the argument of the learned Special Counsel for the Revenue that the Revenue would be free to enforce the demands during the intervening period i.e. after the present order is passed and till the final verdict of Hon'ble Supreme Court delivered. In the interest of justice the status quo should be maintained i.e. no recovery nor any refund of the amounts involved in these appeals would be processed during this period. Appeal disposed off.

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• 2018 (3) TMI 719
  Classification of imported coal - The steam coal attracted nil rate of duty whereas the bituminous coal falling under CTH 2701 1200 attracted 5% duty as per N/N. 12/2012-Cus. dated 17.3.2012 - Held that: - different Benches of CESTAT rendered conflicting decisions. The Chennai Bench as well as Ahmedabad Bench held that coal imported would fall under steam coal attracting nil rate of duty. It was also followed by the Mumbai Bench. On the other hand, the Bangalore Bench of CESTAT held that the coal imported would be bituminous coal attracting duty @ 5%. Thus, in view of the conflicting decisions, the matter was referred to the Larger Bench and vide order dated 16.1.2017, the issue was taken up for consideration by the Larger Bench - taking note of the fact that the decision rendered by the Bangalore Bench in the case of M/s. Maruti Ispat and Energy Pvt. Ltd. was appealed before the Hon’ble Apex Court, vide Civil Appeal Nos.28937/2014 and 9725/2014, the Larger Bench directed that the matter being subjudice before the Hon’ble Apex Court, the assessees were granted opportunity to come again before the Tribunal after the verdict from the Hon’ble Apex Court. The department has not filed any appeal against the Larger Bench decision. Pursuant to the Larger Bench, which has given liberty to the appellants to await the outcome of the Hon’ble Apex Court’s decision, various Benches of CESTAT as in the case of CESTAT, Hyderabad as well as CESTAT, Ahmedabad have already disposed the appeals applying the Larger Bench decision, as stated supra. The CESTAT, Hyderabad has remanded the matter directing the adjudicating authorities to conduct denovo proceedings after the outcome of the decision of the Hon’ble Apex Court. Appeal allowed by way of remand.

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• Corporate Laws

• 2018 (3) TMI 718
  Winding up petition - Held that:- In the course of winding up of a company, it appears that any person who has misapplied, or retained, or become liable or accountable for, any money or property of the company, the court can direct the said person to repay or restore the money. May only note that under section 446 of the Companies Act where winding up order has been made, the OL takes into custody and control all the property of the company of which the company is entitled to. It is apparent from the facts as stated above that Mr. Vinod Vij, the Ex-Director of the Company after passing of the winding up order taken money from the Batra Hospital which he was not entitled to receive in terms of the provisions of the Companies Act. He further claims to have disbursed the amount for the bonafide payment of debts of the respondent Company which he could not have done. This fact itself of having disbursed the funds to discharge the bonafide debts of the respondent Company is a doubtful contention. Further there is no merit in the plea of Mr. Vij that he was not aware that he cannot operate the accounts of the company to make bonafide payments for and on behalf of the company. Allow the present application and pass a direction to Mr. Vinod Vij to deposit with the OL the said amount of Rs. 16,31,174/- within four weeks from today. In the interest of justice, the period for depositing the said sum is extended by eight weeks.

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• 2018 (3) TMI 717
  Winding up petition - Held that:- The entire controversy actually centres around the invoice of the petitioner that was raised. There are available before the court two invoices, one is for Rs. 22,94,953/- filed by the petitioner. The other one is for Rs. 15,75,062/- filed by the respondent. The amount of Rs. 15,52,427/- has already been paid to the petitioner. Keeping in view the above facts, it is not possible for this court to adjudicate this disputed question of fact that have been raised by the respondent. Thu it is not possible to allow this petition.

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• Service Tax

• 2018 (3) TMI 712
  Reimbursement of service tax paid - liability of recipient of services towards service provider - case of the petitioner is that so far as service tax is concerned, the Indian Oil Corporation issued a circular dated 20.4.2016 with regard to applicability of service tax to the service provider for operation of the permanent company owned company operated outlets - Held that: - respondents 1 and 2 are directed to consider the petitioner's request for reimbursement of service tax paid by them strictly in accordance with the policy circular dated 20.4.2016, within a period of three weeks from the date of receipt of a copy of this order - petition allowed.

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• 2018 (3) TMI 711
  Refund claim - time limitation - Held that: - The impugned orders have been passed without proper application of mind and without taking note of the fact that the petitioner has succeeded upto the Tribunal. In other words, the Revenue failed before the Commissioner of Appeals as well as the Tribunal - the impugned orders passed by the respondent are wholly unsustainable - petition allowed.

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• 2018 (3) TMI 710
  CENVAT credit - whether the appellant is eligible for credit on the various input services like Mandap Keeper Service, Real Estate Agent Service, Transport of Goods by Air Service, Programme Producer Service, Event Management Service etc.? - Held that: - The period involved is prior to 1.4.2011 when the definition of input services had a wide ambit as it included the words activities relating to business - The Hon ble High Court of Bombay in the case of Coca Cola India Pvt. Ltd. Vs. Commissioner of Central Excise, Pune [2009 (8) TMI 50 - BOMBAY HIGH COURT] has analysed the implication of the term within the definition of input services and has held that almost all activities relating to the business of the assessee would fall within the ambit of input service - the denial of credit alleging that these services do not qualify for input service is unjustified. CENVAT credit - denial on the ground that appellant though has a centralized registration but does not have centralized billing system - Held that: - The credit was availed at Hosur on the input services which have been availed at the various service centres since the appellant has obtained centralized registration for credit - the denial of credit on this ground cannot sustain. Time limitation - Held that: - The appellant has furnished necessary details of credit availed along with ST 3 returns. The documents produced show acknowledgement by the department. This clearly evidences that the appellant has not suppressed facts regarding the availment of credit on input services - the SCN issued invoking extended period cannot sustain. Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 709
  Franchise service - Appellants had entered into Franchisee Agreement with IMA Mental Arithmetic Academy, Malaysia. They had also entered into Franchisee Agreement with various franchisees appointed by them in India - Department took the view that the gross amounts collected by the appellant including admission fee, course instructor fee, tuition fee etc. would be eligible for service tax under the category of Franchisee Service under section 65(47) of the Finance Act, 1994. Held that: - As per the definition, the payment to be made by the franchisee to the franchisor is only for the right to sell or manufacture goods or to provide service or undertake any process identified by the franchisor etc. The payment required to be paid for use of the IMA Mental Arithmetic course have been indicated as 25% of the gross fees collected. As per section 65(105)(zze), the taxable service is that given to a franchisee by the franchisor in relation to franchise . This being so, only those amounts directly relatable to the representational right granted by the franchisor to the franchisee and the royalty/franchisee fee towards that right would alone be part of taxable for the purpose of levy under this category. The tax liability for the appellant in respect of franchisee appointed by them within India will not include the amounts relatable to admission fee, tuition fee, competition fee and course instructor fee - appeal allowed in part.

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• 2018 (3) TMI 708
  CENVAT credit - inputs/capital goods - input services - duty paid on towers and shelters - exemption under N/N. 4/2004-ST dated 31.3.2004 on Telecom Services provided to SEZ units. Whether the credit availed on inputs/capital goods as well as towers and shelters is eligible or not? - time limitation - Held that: - credit is not eligible - as regards limitation, the issue whether credit is admissible on inputs / capital gods as well as towers / shelters was contentious for a long time and had travelled upto the Larger Bench of the Tribunal and thereafter to higher fora. Also, there is nothing to establish that appellant had availed credit suppressing facts with intent to evade duty - extended period cannot be invoked - penalties also set aside - the demand for the normal period will sustain, however, the penalties for the normal period are set aside. Disallowance of credit on input services - Held that: - the issue stands covered by the decision in the case of Vodafone Essar South Ltd. (supra). The Tribunal in the said decision analysed the eligibility of credit on the very same services. The various services were used for providing output services. Further, the period is prior to 1.4.2011 when the definition of input services had a wide ambit as it included the words activities relating to business - credit not allowed. Denial of exemption under Notification No.4/2004 dated 31.3.2004 - Held that: - Merely because the facility of the mobile phone is used outside the SEZ unit also, the exemption in terms of Notification No. 4/2004 cannot be denied - benefit of notification allowed. Appeal allowed in part.

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• 2018 (3) TMI 707
  Business Auxiliary services - appellants disbursed loan to identified industry and obtained the commission for such financial activity - Revenue entertained a view that such commission earned while disbursing loan will be attracting service tax under the category of business auxiliary services in terms of Section 65(19) of the Finance Act, 1994 - Held that: - The fact remains that appellant did disburse the loans to the commercial enterprises in furtherance of their business and they did get the commission - The appellant is independent corporation for commercial activity. They may be mandated to act in a particular manner by the Policy of the government. That by itself will not exempt them from tax liability - there is no case for excluding income of appellant as commission in disbursing loan, from tax liability under BAS - demand upheld. Extended period of limitation - Held that: - the appellant is nothing to gain from suppressing the fact and no malafide intend can be attributed to them in the present facts and circumstances of the case - demand proceeding initiated against the appellant are barred by limitation for the period beyond normal period. Appeal allowed in part.

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• 2018 (3) TMI 706
  CENVAT credit - Department was of the view that since the respondent did not maintain separate accounts for the input services used towards the taxable activity as well as exempted activity, the respondent will be required to pay an amount in terms of Rule 6 (3A) of the Cenvat Credit Rules - Held that: - The respondent has carried out, during the disputed period, the taxable service of authorized service station. They also carried out, from the same premises, the activity of trading of four wheelers. They have availed Cenvat Credit of various input services which the Department has claimed has been utilized both for the taxable service as well as trading. The activity of trading has come under the category of exempted service only w.e.f. 01/04/2011 and the said amendment carried out to Cenvat Credit Rules cannot be considered as having any retrospective effect - appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 705
  Valuation - inclusion of reimbursement of expenses - certain amounts received from the clients which the appellant claim to be reimbursable expenses as well as demurrage charges on containers which is not related to any service - Held that: - it is clearly recorded by the lower authority that the demurrage charges accruing to the liners is not subjected to tax. It is the amount which is retained by the appellant which cannot be considered as penal demurrage and is actually attributable to expenses in handling of containers and related activities which are more in the nature of ship husbandry work which is liable to be taxed. Other expenses like telephone charges, survey charges, document charges - Held that: - Apparently, there is no reimbursement on actual basis and the exclusion under the category of reimbursement expenses cannot be admitted for such lump sum payment - the exclusion under the category of reimbursement expenses are subject to the condition that such expenses would have been normally incurred by the client but incurred by the assessee-appellant and later reimbursed by the client on actual basis as per pre-arrangement known to both the parties. In the absence of such factual assertion in the present case, we are not able to interfere with the findings recorded on this count. Appeal dismissed - decided against appellant.

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• 2018 (3) TMI 704
  Valuation - civil construction activity - Revenue held a view that the appellants have to discharge the tax under industrial and commercial construction service on the full value (including the value of material received free from the recipient of service) - Held that: - reliance placed upon the decision of DV Patel & Company Vs. CCE, Nagpur [2017 (10) TMI 404 - CESTAT MUMBAI], where the Tribunal examined the works contract service with reference to Commercial, Industrial and construction service and held that the value of free supplied material are not includable. The tax liability confirmed on the appellant under Commercial Industrial construction service for the period prior to 1.3.2006 is not leviable - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 703
  Refund claim - unjust enrichment - Section 11B of Central Excise Act, 1944 - Held that: - the Lower Authorities did not have the benefit of said precedent ruling of this Tribunal nor they had the advantage of said certificate dated 29/11/2017 issued by Chartered Accountant - matter remanded to the Learned Commissioner (Appeals) with a direction to examine the issue.

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• 2018 (3) TMI 702
  Short payment of service tax - Renting of Immovable Property Services - construction of Residential Complex Service - Held that: - it is very clear that in so far as Renting of Immovable Property is concerned there was no need of issuance of show cause notice. Therefore, question of imposition of penalty on service tax of Rs. 25,54,666/- does not arise - Further, in respect of short payment of Rs. 6,40,460/-, matter remanded back to the Original Authority with a direction to examine whether excess paid amount of Rs. 11,62,889/- was paid before the due date of payment of service tax amounting to Rs. 6,40,460/- and if yes then in that event there was no need for issuance of show cause notice, even for demand of short payment of service tax on ‘Construction of Residential Complex Service’ under any other circumstances, original authority shall decide the matter in respect of service tax on Construction of Residential Complex Service in accordance with law - appeal allowed by way of remand.

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• 2018 (3) TMI 701
  Penalty - GTA Service - interpretation of N/N. 34/2004-ST dated 02.12.2004 - the appellant was misguided by wrong interpretation of the notification. The appellant was paying service tax when the freight amount exceeded Rs. 1500/-. Further, all the details of all the transactions wherein the freight was less than Rs. 1500/- were also recorded in the books of accounts. The appellant cannot be held guilty for suppression of facts and the penalties imposed is unjustified - the appeal is partly allowed by setting aside the penalties imposed without disturbing the demand of service tax.

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• 2018 (3) TMI 700
  Non-payment of service tax - service of maintenance and repair - extended period of limitation - Held that: - The period involved is 1.7.2003 to 30.9.2004. The Show Cause Notice is dt. 25.6.2008. It is merely stated the appellants failed to discharge the service tax and file returns. This is not enough. There should be clear evidence of suppression of facts with intent to evade payment of tax. We do not find any evidence in this regard - SCN invoking extended period not invokable. Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 699
  Applicability of the N/N. 9/2003 as amended - Commercial Training and Coaching services - Held that: - The scope of term vocational training institute which is redefined only in 2010. On plain reading of exemption it is seen that those courses which provide such skills to the trainee to seek employment directly after such training or coaching shall be excluded from tax liability - the present courses are covered by such exemption in the said notification - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 698
  Classification of service - works contract service or Commercial and Industrial Construction service? - case of appellant is that the work undertaken by them comes under Works Contract, which came into existence only w.e.f. 01/06/2007 - Held that: - Admittedly, it was the assessee himself who took a plea that the services being provided by them fell under the category of Works Contract and as such the demand for the period prior to 01.06.2007 would not arise - The appellant cannot be allowed to have two different grounds for the purposes of challenging the demands pre and post 01.06.2007. The relief having been granted to them for the period prior to 01.06.2007. it has to be held that the services being provided by them for the entire period fell under the category of Works contract, in which case the confirmation of demand by Commissioner (Appeals) cannot be faulted upon. Penalty - Held that: - the issue was a genuine issue of legal interpretation, which was the subject matter of litigation before various forums - penalty cannot be imposed. Appeal allowed in part.

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• 2018 (3) TMI 697
  Time limitation - Business Auxiliary Services - Held that: - in an identical situation, this Tribunal in the case of South City Motors Ltd. Vs. CST, Delhi [2011 (11) TMI 408 - CESTAT, NEW DELHI] has held that levy of service tax for providing loans to various customers was highly contentious and no malafides or suppression can be attributed and the demand should be confined within the normal period of limitation - In this case, since the SCN was issued beyond the normal period provided under Section 73 ibid, the proceedings initiated by the Department are squarely barred by limitation of time. Levy of service tax - sale of goods - principal agent relationship - Held that: - there is no involvement of any principal and agent relationship and essentially the transaction between the assessee and Maruti Suzuki are on principal to principal basis, with reference to sale of goods, such transaction cannot be termed as a service for the purpose of levy of service tax - decided against Revenue. Appeal disposed off.

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• 2018 (3) TMI 696
  Business Auxiliary Services - activity of promoting the business of banks - CBEC Circular No. 87/05/06-ST dated 06.11.06 - Held that: - Admittedly, in this case, the appellant are introducing the clients for providing loans from the banks and for that appellant is receiving the commission/incentive. In that circumstances, the activity undertaken by the appellant is appropriately classifiable under business auxiliary services for promoting business of banks, therefore, they are liable to pay service tax. The figures have taken for calculation of demand on the basis of bank’s statement of the appellant and as per the bank’s statement, there are certain entries which do not pertain to the commission to the appellant - the matter needs correct quantification of demand be recovered from the appellant - appeal allowed by way of remand.

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• Central Excise

• 2018 (3) TMI 695
  Effect of the order of CESTAT - Held that: - Once the effect of this order is that the tribunal's direction is upheld, then, all that remains is giving effect to the order of the CESTAT - writ petition is disposed of by directing the respondents to give effect to the order of the CESTAT as expeditiously as possible and in any event within a period of two months from the date of receipt of a copy of this order - petition disposed off.

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• 2018 (3) TMI 694
  Whether the judgment and order of the Appellate Tribunal is perverse inasmuch as though a specific submission was made on the issue of Rule 25 of the Central Excise Rules, 2002 and on the issue of increase of penalty by the Adjudicating Authority by issuing a Corrigendum before the Appellate Tribunal, the same has not been dealt with by the Appellate Tribunal? Held that: - In the Appeal before this Court, we do not have benefit of the reasons recorded on the said two contentions as the Appellate Tribunal has not dealt with the same. As observed earlier, this omission on the part of the Appellate Tribunal raises substantial questions of law. Due to non consideration of the aforesaid two contentions, the impugned judgment and order of the Appellate Tribunal is vitiated, and therefore, there is no option but to pass an order of remand confined to the aforesaid two contentions of law regarding penalty imposed without invoking specific clause under Rule 25 of the said Rules and the penalty being increased by the Adjudicating Authority by issuing a Corrigendum. Matter remanded to Appellate Tribunal.

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• 2018 (3) TMI 693
  CENVAT credit of 2% Education Cess and 1% Secondary and Higher Secondary Education Cess paid on CVD portion of the duty by 100% EOU - Held that: - identical issue decided in the case of M/s. Jai Corp. Limited Versus Commissioner of Central Excise & ST., Vapi [2014 (11) TMI 706 - CESTAT AHMEDABAD], where it was held that there is no restriction on taking credit of cess in the Cenvat Credit Rules, 2004 although there is a restriction regarding utilization of various credits - Rule 3(1) does allow taking of credit of cess specifically - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 692
  CENVAT credit - HR Coil, MS Pipe, SS Tube, Joints etc., used for fabrication of capital goods and its supporting structures - Held that: - the issue is addressed by Principal Bench at Delhi in the case of Singhal Enterprises Pvt. Ltd. Vs. Commissioner of Central Excise & Customs, 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. Even though in principle, the appellant are eligible to credit, however, the use of the said item is not supported by evidence, hence, the matter is remanded to the adjudicating authority for verification of the said facts - appeal allowed by way of remand.

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• 2018 (3) TMI 691
  CENVAT credit - input service - Man-power supply service - case of appellant is that once the service tax was paid and the invoices issued indicating the payment of such service tax, the appellant are eligible to take credit of the service tax paid as the said services are used in or in relation to manufacture of finished goods - the amount which the service provider paid whether to be consider as a deposit or service tax for deciding the eligibility of credit? - Held that: - the issue is more or less settled in the case of Commissioner of Central Excise, Ahmedabad-III Versus Nahar Granities Ltd. [2014 (5) TMI 57 - GUJARAT HIGH COURT], where it was held that a manufacturer would be entitled to avail the cenvat credit in respect of the inputs used for the manufacture of a final product or in providing taxable service of the excise duty specified in First Schedule to the Excise Tariff Act - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 690
  Clandestine removal - MS ingots - shortage of raw material and finished goods - Held that: - In the absence of any other evidence on record to show that the clandestine activity has been undertaken by the appellant, confirmation of demand of duty is not justified - apart from the weighment slips, there is no further evidence on record to show that the appellant had procured the huge raw material in a clandestine manner and has manufactured their final product which stands cleared by them in a clandestine manner. Mere statements of the Director which is inculpatory in nature cannot be adopted as a ground for upholding the activities of clandestine removal, for which the onus is heavily placed on the Revenue. Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 689
  Valuation - manufactured goods transferred from the factory, to the depot, from where the same were ultimately sold - case of Ld. Commissioner is that that sufficient documents were not produced - Held that: - there is no merit in the said observation of the Ld. Commissioner after going through the annexures enclosed with the Appeal Paper Book - adjudicating authority is directed to consider the evidences produced by the appellant in determining the assessable value for the relevant period as per Rule 7 of the Central Excise Valuation Rules, 2000 - appeal allowed by way of remand.

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• 2018 (3) TMI 688
  Valuation - includibility - Department is of the view that the amount of interest was received from State Government Scheme, 2003 is includible in the assessable of the goods cleared during the period in dispute - Held that: - identical issue decided in the case of Shree Cement Ltd. Shree Jaipur Cement Ltd. Versus CCE, Alwar [2018 (1) TMI 915 - CESTAT NEW DELHI], where it was held that There is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 687
  Clandestine removal - SSI exemption - crossing of threshold limit of Rs. 1 crore - Held that: - there is no evidence which indicates that the value of goods manufactured in the factory have exceeded Rs. 1 crore limit - there is no justification for allegation of clandestine manufacture and clearance made by the Revenue - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 686
  Valuation - captive consumption - Rule 8 of the Central Excise Valuation Rules - Department was of the view that for goods which have been captively consumed, Rule 8 of the Central Excise Valuation Rules will be applicable and the value needs to be computed on the basis of the cost construction @ 110% of the CAS-4 value - Held that: - when goods are partially consumed by independent buyers, it is not mandatory that the goods cleared for captive consumption has to be valued on the basis of cost construction. It is valid to take the transaction value of independent buyers i.e. comparable prices for adopting of payment of Central Excise duty. The respondent-assessee has, in fact, paid the duty on the basis of the transaction value of goods cleared to independent buyer - appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 685
  Abatement claim - closure of factory for more than a period of 15 days - Pan Masala - Held that: - identical issue decided in the case of M/s Godfrey Philips India Ltd. Versus Commissioner of Central Excise And Service Tax, Ghaziabad [2015 (8) TMI 35 - CESTAT NEW DELHI], where it was held that The denial of abatement is only on the ground that appellant is required to pay duty for whole of the month and thereafter to claim the abatement but that is not correct view in the light of the decision of this Tribunal in the case of Shree Flavours Pvt. Ltd. [2014 (4) TMI 417 - CESTAT NEW DELHI] - appellant allowed for the abatement - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 684
  Refund claim - Rule 11 (2) of the Cenvat Credit Rules, 2004 - appellants deposited an amount equivalent to the Cenvat Credit (including Cess) allowed to them in respect of inputs lying in stock or in process or contained in final products lying in stock on the date of switch over - Held that: - Rule 11(2) as well as Rule 11(3) do not deal with a situation in which the balance in the cenvat credit is not adequate to cover the duty attributable to the inputs as well as finished products in stock on the date of opting out of cenvat credit scheme - there is no requirement for the appellants to pay the balance amount in cash. Consequently, they will be entitled to the refund of such amount, if already paid - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 683
  Benefit of N/N. 67/95 - Captive Consumption - Whether the assessee is eligible for exemption under N/N. 67/95 for captive consumption of inputs when the final products are cleared availing exemption of N/N. 6/2006? - Held that: - the issue is covered by the decision in the case of M/s. Areva T And D India Ltd. Versus CCE & ST, LTU, Chennai [2018 (2) TMI 209 - CESTAT CHENNAI], where it was held that the exclusion made under sub-clause (vii) of sub-rule (6) of Rule 6 of CCR, 2004 read with proviso to N/N. 67/95 makes it clear that the exemption for captive consumption of intermediate products has been correctly claimed by the appellant - appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 682
  CENVAT credit - appellant is enjoying area based exemption - endorsement of the vouchers - Held that: - in the CCR 2004 there is no word “endorsement of the vouchers” - raw material was purchased from Noida for Haridwar which was enjoying area based exemption. The goods have reached the appellant destination and the business deal was over - When the appellant is enjoying area based exemption then the Cenvat Credit cannot be given as law does not provide double benefit - appeal dismissed - decided against appellant.

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• CST, VAT & Sales Tax

• 2018 (3) TMI 681
  Inter-state sale - Form C - Whether the Appellate Tribunal is correct in law in confirming higher rate of tax on interstate sale covered by C Forms, uploaded in the website of the department and produced before the authorities below contrary to the provisions of CST Act? Held that: - Though returns were submitted for the assessment years 2007-08 to 2010-11, the department has taken eight years to finalise the assessment for year 2007-08. No reasons have been assigned for the delay in passing assessment orders, within the financial year - To ascertain the cause shown in the appeals for not producing the 'C' form declarations for the assessment years 2007-08 to 2010-11, we directed the learned counsel for the petitioner to produce the appeal memorandums filed before the appellate authority. In the case of State of H.P., and others v. Gujarat Ambuja Cement Ltd., and another [2005 (7) TMI 353 - SUPREME COURT OF INDIA], the Hon'ble Supreme Court while dealing with belated filing of statutory forms, held that if the appellate authority is satisfied that assessee was prevented by reasonable and sufficient cause which dis-enabled him to file the forms in time, it can be accepted. It can also be accepted as additional evidence in support of the claim for deduction. In the instant case, respondent No.1-company made a specific request before the revisional authority which was turned down. Therefore, the question of any non-compliance with the relevant statutes does not arise. As in the case of assessment years 2011-12 to 2013-14, the matter is remanded to the Assessing Officer to proceed in accordance with the provisions of the Central Sales Tax Act, substantial question of law is answered in favour of the assessee - tax revision allowed.

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• 2018 (3) TMI 680
  Revision of returns - willful omission or suppression with an intent to evade tax or not? - Held that: - the petitioner, on detecting an omission in the returns originally filed by it, came forward to rectify the defects, by expressing his readiness to pay the differential tax and interest in respect of the transactions that were omitted in the return that was originally filed. Since the petitioner voluntarily came forward to rectify the omissions and pay the differential tax, and the action of the petitioner is not pursuant to the detection of any suppression by the Department, the mere apprehension that, on the petitioner being permitted to pay the differential tax, he might lay claim to the input tax credit of tax paid on purchases that were not reported, cannot, in my view, be a ground to deny the petitioner the opportunity to come forward and rectify an anomaly in the returns, so as to ensure a compliance with the statutory provisions. The petitioner in this case having established that he had approached the respondents, for correcting omissions in the returns filed by him for the assessment year 2011-12, before any proceedings were initiated against him for differential tax demands or for the imposition of any penalty for breach of any statutory provision, ought to be permitted to revise his returns to include the omissions noticed - petition allowed.

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• Indian Laws

• 2018 (3) TMI 716
  Whether foreign law firms/lawyers are permitted to practice in India? Whether the expression practise the profession of law includes only litigation practice or non-litigation practice also? - Held that: - In Pravin C. Shah versus K.A. Mohd. Ali [2001 (10) TMI 1049 - SUPREME COURT OF INDIA], it was observed that right to practice is genus of which right to appear and conduct cases is specie - Ethics of the legal profession apply not only when an advocate appears before the Court. The same also apply to regulate practice outside the Court. Adhering to such Ethics is integral to the administration of justice. The professional standards laid down from time to time are required to be followed. Thus, we uphold the view that practice of law includes litigation as well as non litigation. Whether such practice by foreign law firms or foreign lawyers is permissible without fulfilling the requirements of Advocates Act and the Bar Council of India Rules? - Held that: - practicing of law includes not only appearance in courts but also giving of opinion, drafting of instruments, participation in conferences involving legal discussion. If not, whether there is a bar for the said law firms or lawyers to visit India on fly in and fly out basis for giving legal advice regarding foreign law on diverse international legal issues? - Held that: - Visit of any foreign lawyer on fly in and fly out basis may amount to practice of law if it is on regular basis. A casual visit for giving advice may not be covered by the expression practice - If prohibition applies to an individual, it equally applies to group of individuals or juridical persons. Whether there is no bar to foreign law firms and lawyers from conducting arbitration proceedings and disputes arising out of contracts relating to international commercial arbitration? - Held that: - It is not possible to hold that there is absolutely no bar to a foreign lawyer for conducting arbitrations in India. If the matter is governed by particular rules of an institution or if the matter otherwise falls under Section 32 or 33, there is no bar to conduct such proceedings in prescribed manner. If the matter is governed by an international commercial arbitration agreement, conduct of proceedings may fall under Section 32 or 33 read with the provisions of the Arbitration Act. Even in such cases, Code of Conduct, if any, applicable to the legal profession in India has to be followed. It is for the Bar Council of India or Central Government to make a specific provision in this regard, if considered appropriate. Whether BPO companies providing integrated services are not covered by the Advocates Act or the Bar Council of India rules? - Held that: - The BPO companies providing range of customized and integrated services and functions to its customers may not violate the provisions of the Advocates Act, only if the activities in pith and substance do not amount to practice of law. The manner in which they are styled may not be conclusive. As already explained, if their services do not directly or indirectly amount to practice of law, the Advocates Act may not apply. The foreign law firms/companies or foreign lawyers cannot practice profession of law in India either in the litigation or in nonlitigation side - however, there was no bar for the foreign law firms or foreign lawyers to visit India for a temporary period on a fly in and fly out basis for the purpose of giving legal advice to their clients in India regarding foreign law or their own system of law and on diverse international legal issues. Mere label of such services cannot be treated as conclusive. If in pith and substance the services amount to practice of law, the provisions of the Advocates Act will apply and foreign law firms or foreign lawyers will not be allowed to do so - appeal disposed off.

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• 2018 (3) TMI 715
  Validity of order dated 26th July, 2017 - lack of Quorum - Petitioner submits that the Appellate Authority constituted under Section 22A of the Chartered Accountants Act, 1949 must consist of five (5) members - interpretation of Section 22A of the CA Act. Held that: - In the present case no vacancy has arisen which can be filled up as the said fifth member has neither resigned nor has been removed. There is no provision in the enactment to fill up "vacancy" by recusal in a particular case by any other mode. Temporary absence or recusal of a member in a particular appeal, would not make the Appellate Tribunal dysfunctional till a new member is appointed, which as recorded above as per the CA Act is impermissible. The rationale behind the Rule is that the litigation cannot be a non sequitur. In other words, there cannot be a litigation system in which it is impossible to litigate a given case. It is on the aforesaid principle that we have examined the statutory provisions of the CA Act and the effect of recusal of one member of the five-members of the Appellate Authority and held that recusal will not stall hearing and decision of the appeal. Contention of lack of quorum on account of recusal of one member of the five member Appellate Authority for the aforesaid reasons fails and is rejected. The Appellate Authority of four members can hear and decide the appeal, in spite of recusal of one of the members, namely, Mr. Sunil Goyal - petition dismissed - decided against petitioner.

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• 2018 (3) TMI 714
  Restoration of validity of orders - respondent's unauthorized absence from duty and his absence from the Head Quarters during the period of his suspension, without prior approval of the competent authority - Disciplinary Authority had formed an opinion that a proper inquiry had not been conducted in this case - grievance of the petitioner/UOI is that the Tribunal erred in holding that in the garb of a further inquiry, a de novo inquiry had been ordered or that while remitting the inquiry, another Inquiry Officer had been appointed with a motive to get a favourable report. Held that: - It is not the case of the petitioner that the first Inquiry Officer (Ms.Archana Wadhwa, Member (Judicial), CESTAT) was not available or incapacitated to conduct the inquiry, when the inquiry had been remitted. From the inquiry report submitted by the first Inquiry Officer, it is clear that specific findings have been given in respect of each of the charges leveled against the respondent. We are unable to decipher any lawful reasons for the Disciplinary Authority to remit the inquiry report back to the IO for directing a further inquiry and simultaneously, for appointing some other Inquiry Officer and another Presenting Officer, despite the inquiry having been duly conducted, by giving an opportunity to both sides of leading evidence as per the list of witnesses and list of documents. The Tribunal has rightly held that such a procedure cannot be termed as a ‘further inquiry’ but for all effect and purposes, a fresh inquiry or a de novo inquiry as a ‘further inquiry’ is required to be held from the stage at which any infirmity in the procedure would have crept in, which is not the case herein. Even such a ‘further inquiry’ has to be done by the same Inquiry Officer unless and until the said Inquiry Officer is unavailable or incapacitated to conduct the entire inquiry. The learned Tribunal cannot be faulted in holding that under Rule 15(1) of the CCS (CCA) Rules, 1965, the Disciplinary Authority may remit the case to the same Inquiry Officer and not to a new Inquiry Officer. Petition dismissed with costs quantified as Rs. 10,000/-.

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• 2018 (3) TMI 713
  Information within the meaning of Rule 7 of the Chartered Accountants (Procedure of Investigation of Professional and other Misconduct and Conduct of Cases) Rules, 2007 - Scope of SCN - case of petitioner is that petitioner cannot be asked to file a written statement in respect of his involvement under the aforesaid provisions as it is beyond the purview of the SCN - Held that: - Considering the nature of the allegations levelled against petitioner and his Reply to it, initiation of disciplinary proceedings against petitioner is well justified - Impugned ‘prima facie opinion’ though holds petitioner guilty cannot be said to be stigmatic as it is only a prima facie opinion and the finding of guilt has to be returned only after the conclusion of the disciplinary proceedings. Impugned ‘prima facie opinion’ is clarified to the aforesaid extent while making it clear that jurisdiction of respondent in initiating disciplinary proceedings shall be confined to the Show-Cause Notice and so, petitioner cannot be called upon to give his response in respect of applicability of the provisions of Income Tax Act, FEMA, Benami Act, Prevention of Money Laundering Act, etc.. - petition disposed off.

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