TMI Tax Updates - e-Newsletter
March 20, 2017

Case Laws in this Newsletter:

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

Articles

1. THREE HEARING DATES IN A SINGLE NOTICE - VALID?

   By: DR.MARIAPPAN GOVINDARAJAN

2. Revision or enhancement when lack of enquiry by AO is ground - action against AO must be a precondition for revision or enhancement against assessee - a point of view

   By: DEVKUMAR KOTHARI

3. Maintenance of Accounts and other record in GST Law

   By: Sanjeev Singhal

News

1. Resolution of Stressed Assets by Banks

2. Reforms to Boost Commodities Trading

3. GOI signatory of Multilateral Competent Authority Agreement for automatic exchange of Country-by-Country Reporting (CbC MCAA) pertaining to tax cooperation to enable automatic sharing of Country-by-Country information

4. Social Security Schemes

Circulars / Instructions / Orders

VAT - Delhi

1. 28/2016-17 - dated 17-3-2017

Filing of online return for 3rd quarter of 2016-17 - extension of period thereof

Highlights / Catch Notes

Income Tax

• Tax Exemption Allowed for Compulsory Land Acquisition Even After Negotiated Settlement u/s 10(37) Income Tax Act.

  Case-Laws - SC : Exemption u/s 10(37) - compulsorily acquired of land - merely because the assessee to avoid litigation entered into negotiations and settled the final compensation would not alter the character of acquisition which remains compulsory - benefit of exemption allowed - SC
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• Tax authorities confirm demand against assessee due to unproven donor income source under Income Tax Act Section 68.

  Case-Laws - HC : Addition u/s 68 - proof of source of the donor - Gift from his brother (relative) - The assessee had not proved his brother's source of income to the Department - demand confirmed - HC
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• Settlement Application Abates Without Final Order; Delays by Both Petitioners and Department Acknowledged; Matter Restored for Review.

  Case-Laws - HC : Automatic abatement of settlement application if no final order is passed by the Settlement Commission - though the petitioners to some extent were also responsible for the delay caused in completion of the proceedings, but it cannot be said that the petitioners alone were guilty of causing such delay because the department was also contributory in prolonging the proceedings for one reason or the other - matter restored - HC
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• Court Rejects Review Request: Omission of Legal Authority Not an Error on Record.

  Case-Laws - HC : Application for rectification / review of its order - Omission on the part of counsel to cite an authority of law does not amount to error apparent on the face of record so as to constitute ground for reviewing prior judgment. - HC
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• High Court Expunges ITAT's Merit Observations from Record in Case Remanded to Assessing Officer for Re-Adjudication.

  Case-Laws - HC : Validity of recording of observations by the ITAT while remanding the matter to the A.O. for re-adjudication of the issue - the observations made by the Tribunal at paragraph of the Judgment on merits of the case deserves to be expunged and accordingly they are expunged. - HC
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• Court Rules Privilege Fee as Business Expenditure if Incurred to Fulfill Statutory Obligation for Business Operations.

  Case-Laws - HC : Disallowance of the payment of the privilege fee - business expenditure or not - If any assessee has incurred expenses to discharge its statutory obligation for doing of business, the same by no stretch of imagination can be termed as not for the purpose of business or profession. - HC
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• High Court to Reevaluate Chartered Accountant Fee for Section 142 Special Audit Under Income Tax Act.

  Case-Laws - HC : Determination of fee payable to Chartered Accountant (CA) for special audit assigned to him u/s 142 - Chartered Accountants are not automatons who, without having access to food or being able to attend to all other necessities, would churn out good quality reports after analysing voluminous records. - bill submitted by the petitioner needs a fresh look - HC
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Customs

• Zinc Dross Import Classification Settled: Falls Under CTH 79020010, Not CTH 79020090.

  Case-Laws - AT : Classification of imported zinc dross shelf - resticted item - whether classified under CTH 79020090 or under CTH 79020010 - whether the zinc dross in question is of seal grade or any other grade, the same is classifiable under heading 79020010 - AT
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• Exemption Benefit Granted for Import of Coating Material and Welding Supplies with Essentiality Certificate from Indian Government.

  Case-Laws - AT : Project import - import of field joint coating material, welding electrodes, magnetic ribbon and welding material - once Essentiality Certificate has been given by the Government of India, Ministry of Petroleum and Natural Gases, benefit of exemption to be allowed - AT
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• Valuation of Imported CDs/DVDs: Determine Unit Price and Deductive Value per Rule 7 for Accurate Tax Assessment.

  Case-Laws - AT : Valuation - CD/DVDs - Once this unit price at which the imported goods were institutionally sold has been decided, the deductive value is to be arrived at after giving the deductions mentioned in the Rule 7 - AT
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• Tribunal Approves Exemption for Computer Parts Import, Overturns Initial CPU-Only Interpretation, Allowing Duty-Free Clearance.

  Case-Laws - AT : Import of Parts of Computers - denial of exemption on the ground that the Notification applies to Central Processing Unit (CPU) and not to Parts of Computers - Tribunal granted the exemption on Parts of computers imported for manufacture of Personal Computers, which have been cleared on payment of duty.
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• Appellant Liable for Diverting Goods Imported Under DEEC Scheme Without Manufacturing; Violated License Terms, Duty Upheld.

  Case-Laws - AT : Diversion of goods imported under DEEC Scheme - the main appellant has to use the same for manufacture of final products. In the absence of any such manufacture, appellant could not have diverted the imported Tin Ingots & Nickel as per the DEEC licence - the duty liability upheld - AT
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Corporate Law

• Compounding Offences Under Companies Act Shouldn't Allow Evasion of Accountability for Large-Scale Misconduct and Document Fabrication.

  Case-Laws - Tri : Compounding of offences arising out of various defaults and non- compliance of statutory requirements - Compounding of the offences under the Companies Act would hamper the Criminal Prosecutions and no accused should be allowed to get away with deliberate large scale bungling and fabrication of documents carried out with criminal intention.
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Service Tax

• Lettuce and Onion Cutting Not Classified as Business Auxiliary Service; Service Tax Demand Overturned.

  Case-Laws - AT : Business Auxiliary Service - whether the activity of cutting and packing of lettuce, onion and salad mix would fall under the category of business auxiliary service under the Head of production or processing of goods for, or on behalf of client or not? - Held no - demand set aside - AT
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• Freight Charge Markup Not a Commission Under Business Auxiliary Services, Says Authority: No Service Tax Applicable.

  Case-Laws - AT : Business Auxiliary Services - receipt of markup on freight - with reference to amount collected from exporters/ shippers the original authority clearly recorded that it is not the case that this amount is a commission earned by the respondent while acting on behalf of the exporter and said mark-up value is of freight charges and are not to be considered as commission - AT
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Central Excise

• Appellant Can Challenge CENVAT Credit Reversal by Filing Detailed Reply to Show Cause Notice Ensuring Fair Hearing.

  Case-Laws - AT : CENVAT credit - natural justice - simple reversal of the CENVAT credit at the asking of the Revenue does not debar the appellant to contest the same by filing a detailed reply to the SCN - AT
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• Court Rules on Tax Valuation: Notional Interest on Dealer Advances to be Included, Impacting Cash Discount Policy.

  Case-Laws - AT : Valuation - inclusion of notional interest on advances received - they did not extend this cash discount to those dealers who are not making advance payment - additions and demand confirmed - AT
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VAT

• High Court Rules Sales Tax Dues are First Charge on Property per Section 38(C) of Bombay Sales Tax Act.

  Case-Laws - HC : Whether the sales tax dues constitute a first charge over the property? - the sales tax dues constitute a first charge over the property by virtue of the provisions of Section 38(C) of the Bombay Sales Tax Act - HC
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Case Laws:

• Income Tax

• 2017 (3) TMI 747
  Reopening of assessment - claim of the assessee under Section 80IA - Held that:- Assessing Officer, while framing scrutiny assessment under Section 143 [3] of the Act, considered the claim in detail of the assessee under Section 80IA of the Act and only thereafter, considering the activities and functionalities of CFS, treated and considered CFS as Port itself. Therefore, after a detailed scrutiny and even after Assessing Officer and Additional Commissioner of Income-tax, Jamnagar personally verifying the activities/functionalities of the CFS, having treated CFS as an Inland Port, granted benefit under Section 80IA pf the Act. Therefore, even if communication dated 29th October 2005 by Jawaharlal Nehru Port Trust to the assessee would have no direct effect on the grant of benefit under Section 80IA of the Act, as on facts and considering the activities of CFS, the Assessing Officer has already held CFS as a Port itself. Under the circumstances it cannot be said that there was any suppression of material facts on the part of the assessee in not disclosing true and correct facts necessary for the assessment. Considering the very CBDT Circular No. 10 of 2005 dated 16th December 2005 as looking to the facilities provided by CFS, the CFS is an Inland Port as it carries out functions of warehousing, customs clearance and transport of goods from its location to sea-port and vice versa by rail or by trucks in containers. - Decided in favour of assessee

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• 2017 (3) TMI 746
  Claim of interest expenditure under section 36(1)(iii) - Held that:- Each assessment year being a separate unit, the disallowance of interest expenditure in such circumstances cannot be based on the closing balance of interest free loan in a given year. Rather, the Assessing Officer may examine the amount of interest free loan given in the previous year relevant to the assessment year in question and only if the Assessing Officer is satisfied that the assessee had not available to it, sufficient own funds to give such a loan in that year he may invoke section 36(1)(iii) of the Act and disallow such interest expenditure as may be warranted and not otherwise. An assessee who had available to him sufficient own funds or interest free funds in any previous year and had given the interest free loans in that previous year itself would only be burdened to establish only that much i.e. he advanced the said loan/s from such interest free advances or surplus funds, and no more. Once this is established no disallowance under section 36(1)(iii) of the Act would be warranted against interest paid on business borrowings for reason of having given interest free loans. Thus, while the Tribunal has found 39,45,705/- were available by way of interest free advance with the assessee and that disallowance under Section 36(1)(iii) of the Act, commensurate to such deposit was not warranted, yet there is a total lack of any finding as to the amount of interest free loan given by the assessee in the previous year relevant to the assessment year 2010-11, both by the Tribunal and also by the CIT (Appeals). We are therefore of the view that the questions of law raised in the memo of appeal deserve to be answered partially in favour of the assessee to the extent that in view of the finding recorded by the Tribunal as to availability of 39,45,705/- by way of interest free advance, the Tribunal was further required to record a finding as to the amount interest free loan given by the assessee in the previous year relevant to the assessment year 2010-11.

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• 2017 (3) TMI 745
  Claim for exemption u/s 10(37) - whether the land of the appellant was compulsorily acquired? - impact of negotiations regarding consideration etc. - correctness of the judgment in the case of Info Park Kerala v. Asst. CIT [2008 (10) TMI 638 - KERALA HIGH COURT] - Reopening of case u/s 147 / 148 - validity of notice - Held that:- In so far as acquisition of the land is concerned, the same was compulsorily acquired as the entire procedure prescribed under the LA Act was followed. - The settlement took place only qua the amount of the compensation which was to be received by the appellant for the land which had been acquired. It goes without saying that had steps not been taken by the Government under sections 4 and 6 followed by award under section 9 of the LA Act, the appellant would not have agreed to divest the land belonging to him to the Techno Park. He was compelled to do so because of the compulsory acquisition and to avoid litigation entered into negotiations and settled the final compensation. Merely because the compensation amount is agreed upon would not change the character of acquisition from that of compulsory acquisition to the voluntary sale. It may be mentioned that this is now the procedure which is laid down even under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 as per which the Collector can pass rehabilitation and resettlement award with the consent of the parties/land owners. None the less, the character of acquisition remains compulsory. For notification under section 4 and award under section 9 of the LA Act, the appellant would not have entered into any negotiations for the compensation of the consideration which he was to receive for the said land. As far as the acquisition of the land in question is concerned, there was no consent. The appellant was put in such a condition that he knew that his land had been acquired and he cannot reiterate the same. The appellant, therefore, only wanted to salvage the situation by receiving as much compensation as possible commensurate with the market value thereof and in the process avoid the litigation so that the appellant is able to receive the compensation well in time. If for this purpose the appellant entered into the negotiations, such negotiations would be confined to the quantum of compensation only and cannot change or alter the nature of acquisition which would remain compulsory. We, therefore, overrule the judgment of the Kerala High Court in Info Park Kerala v. Asst. CIT [supra]. Proceedings under section 148 of the Act are quashed - Decided in favor of assessee.

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• 2017 (3) TMI 744
  Computation of capital gains - whether was an asset coming within the purview of Sec. 49(1)(ii) as it was acquired on the release executed by the previous life interest holder which amounted to a gift,therefore, the cost of the acquisition of asset would be deemed to be the cost of the original settlor? - Held that:- The relinquishment/surrender in the instant case does not constitute a Gift in the absence of a transfer by Neville Wadia to the assessee nor does it come under Section 4(1)(c), (d) or (e) of the Gift Tax Act. We are unable to agree with the submissions of the Revenue as Neville Wadia the releasor was not absolutely entitled to the property nor has he caused the same to be vested in himself jointly with any other person. He has also not caused any appropriation to be made from and within the said property. Moreover, the effect of clause 4(1)(d) of the Gift Tax Act will be deemed to be gift made in favour of the other person by the person who caused the property to be so vested upon appropriation and the Tribunal was not correct in concluding that the assessee had acquired a capital asset by way of gift. The Tribunal's decision to restore the matter to the file of the Assessing Officer is not justifiable as it seems to have been influenced by deeming provision in the definition of a Gift under the Gift Tax Act. In Neville Wadia (1972 (9) TMI 20 - BOMBAY High Court ), the revenue contended that the operative words in the release of deed constituted transfer of life interest by the assessee in favour of his daughter and son. The contention was negatived by this Court. This Court held that whatever came to the daughter and son of the assessee in that case (the son being the assessee in the present reference) was a result of provisions made in their favour as beneficiaries under the original deed of settlement dated 30th January, 1947 and that by use of the words in the operative clause did not create any interest in favour of the daughter and the son of the assessee and the operative portion of the deed gave Neville Wadia complete release and discharged the trustees from all obligations against them and it was impossible to construe the deed to hold that it was deed of transfer of the life estate of the assessee in favour of his daughter and son. The Court found that the Revenue's contention was entirely unsustainable having regard to the language of the deed. In this case the person who caused appropriation by executing the release is Neville Wadia and it is not the case of the Revenue that Neville Wadia has been held liable to be taxed in relation to the release in favour of his children. As far as clause 4(1)(d) of the Gift Tax Act is concerned the same has no application at all. At best 4(1)(c) of the Gift Tax Act would be of some relevance and we find no reason, given the decision of our Court in Neville Wadia (supra), to hold that there has been a “transfer” or “gift” in favour of the present assessee of any Capital asset, even assuming that the definition of “Gift” under the Gift Tax Act can be pressed into service by the Revenue. - Decided in favour of the assessee.

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• 2017 (3) TMI 743
  Unexplained investment in excess stock - statement recorded u/Sec.133-A - Held that:- AO has not allowed the cost of construction of 2,45,000/- as per the revised return filed by the assessee on 14.07.2012 stating that no bills/vouchers for purchase of material for construction purposes were submitted. However it is evident from the purchase deed that constructed area at the time of purchase on 27.03.2003 was 146.31 Sq.Mtrs. Consisting of five rooms, kitchen, garage, store, bathroom and toilet. However as per the sale deed dated 23.02.2011, the old construction was demolished and RCC pillars were constructed over 900 Sq.Ft. As per the decision of collector of stamps, the construction has been valued at 12,66,056/- as on 27.03.2012 while determining the value for stamp valuation. Also the assessee has submitted the individual balance sheet as on 30.03.2010 wherein the construction for 2,45,855/- (for indexed cost of improvement of 2,76,587/-) has been shown. In view of above facts, apparently the assessee has demolished the original construction and made the new construction thereon as per the facts stated above. Accordingly the addition made by the AO to be deleted.

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• 2017 (3) TMI 742
  Addition u/s 68 - proof of source of the donor - whether amount has received by way of Gift from his brother (relative) through banking channel? - Held that:- The assessment has been completed against the assessee primarily on the basis that he has failed to prove his creditor's creditworthiness and not sub-creditors creditworthiness. The assessee had not proved his brother's source of income to the Department Thus we are of the considered opinion that the Assessing Officer, the first appellate authority and the Tribunal has not committed any illegality justifying interference. Therefore, answering the questions of law in favour of the Revenue

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• 2017 (3) TMI 741
  Entitlement to the benefit of S.194A(3)(v) - cooperative bank requirement to deduct tax from the payment of interest on time deposits of its members paid or credited before 1st June, 2015 - Held that:- Taking overall view of the matter and according to the Counsel appearing for the parties it also goes to the root of the issues so raised, we are inclined to allow the appeals. The Explanatory Notes has made the position of law clear that such Co-operative Banks are not liable to deduct any amount from the TDS, prior to the effective date 1/06/2015. The appellant Co-operative Bank was not under obligation to deduct the amount from the TDS, for the assessment years prior to 1/06/2015 i.e. from 2010-11 to 2013-14. There is substance in the submission of the Counsel appearing for the parties.

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• 2017 (3) TMI 740
  Constitutional validity of provisions of Section 245D(4A) and 245HA - automatic abatement of settlement application if no final order is passed by the Settlement Commission before 31.03.2008 - cause of delay - Held that:- After getting the Principal Bench’s advice on 19.08.2016, earnest attempts were made to reconstruct the files as the matters were very old and records were not readily available with the Principal Bench and thereafter to get comments of both the petitioners and the department. However, the petitioners have delayed sending their comments/counter comments repeatedly. Extension of time for appearance during hearing was also sought, knowing well that the time limit, fixed by Division Bench of this Court was approaching near. Final comments were ultimately furnished by the petitioners on 09.12.2016, just before the limitation date. The department has legitimately sought time to examine the petitioners’ comments and contentions, which cannot be granted in view of the limitation that is expiring on 27.12.2016. The Settlement Commission therefore, squarely blamed the petitioners for the delayed responses and repeated requests for adjournments, which impeded the process of finalization of the matters. However, the Settlement Commission also noted that Pr. CIT has also sought a period of one and a half months to carry out the required verification and observed that this request of the department could not be brushed aside because in view of the principles of natural justice, due opportunity needs to be given to both the parties. Therefore, the Settlement Commission held that even though period of six months fixed by this Court was expiring on 27.12.2016, it was not possible for it to conclude the proceedings by that date and therefore, proceedings in the cases should be taken to have abated. If 27.12.2016, as per computation made by the Settlement Commission, was the date up to which proceedings were to be concluded, there was no occasion for the Settlement Commission to declare the proceedings to have abated one week before that date, i.e. on 19.12.2016, the date on which impugned order was passed. Besides, the facts as noted hereinabove would show that though the petitioners to some extent were also responsible for the delay caused in completion of the proceedings, but it cannot be said that the petitioners alone were guilty of causing such delay because the department was also contributory in prolonging the proceedings for one reason or the other, particularly when it demanded a period of one and a half months, whereas already a week’s time was left before period of six months fixed by Division Bench of this Court would have expired. Therefore, this Court is of the opinion that ends of justice would be met, if the time to conclude the aforesaid proceedings is extended by further three months from today with direction to the parties to produce copy of this order before the Settlement Commission within a period of one week with clear stipulation that the Settlement Commission shall take up the proceedings, if not possible on day to day basis and if not, then on weekly basis and shall not grant undue adjournment to either of the parties and if adjournment is granted then it should be for a maximum period of seven days at one go and the Settlement Commission shall conclude its proceedings within a period of two months and utilize remaining period of three weeks to finalise and frame its final order. Writ petitions are allowed. The impugned order dated 19.12.2016 is set aside. The matter is remitted back to the Settlement Commission for deciding it afresh in accordance with the aforementioned directions.

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• 2017 (3) TMI 739
  Eligibility to balance 10% of additional depreciation under Section 32(1)(iia) - claim of carry forward to next AY - number of days of use - Held that:- A perusal of the extract of the Memorandum relied upon would show that the legislature recognised the fact that the manner in which the Revenue chose to interpret the provision, as it stood prior to its amendment would lead to discrimination, in respect of plant and machinery, which was used for less than 180 days, as against that, which was used for 180 days or more. In our opinion, as indicated above, the amendment is clarificatory in nature and not prospective, as is sought to be contended by the Revenue. The Memorandum cannot be read in the manner, in which, the Revenue has sought to read it, which is, that the amendment brought in would apply only prospectively. We are, clearly, of the view that the Memorandum, which is sought to be relied upon by the Revenue, only clarifies as to how the unamended provision had to be read all along. In any event, in so far as the Court is concerned, it has to go by the plain language of the unamended provision, and then, come to a conclusion in the matter. As alluded to above, our view, is that, upon a plain reading of the unamended provision, it could not be said that the Assessee could not claim balance depreciation in the A.Y., which follows the A.Y., in which, the machinery had been bought and used, albeit, for less than 180 days. Thus, having regard to the foregoing discussion, we are of the view that no interference is called for with the impugned judgment of the Tribunal. - Decided in favour of assessee.

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• 2017 (3) TMI 738
  Application for rectification / review of its order [2016 (12) TMI 872 - GUJARAT HIGH COURT] - Validity of reopening of assessment - notice issued to non existent company - Held that:- By detailed and cogent reasons this Court has negatived the challenged to the notice under Section 148 of the Act. Omission on the part of counsel to cite an authority of law does not amount to error apparent on the face of record so as to constitute ground for reviewing prior judgment. See case of Dokka Samuel [1997 (3) TMI 619 - SUPREME COURT]

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• 2017 (3) TMI 737
  Validity of recording of observations by the ITAT while remanding the matter to the A.O. for re-adjudication of the issue - Assessment of income under the correct hand - joint development agreement (JDA) - one partner is offering rental income as taxable in its hand - Held that:- It is trite that the Tribunal has discretionary power to remand the matter to the A.O. for fresh consideration. However, any observation made by the Tribunal while remanding the matter for examination of certain issues would prejudice the rights of the Assessee resulting in violation of the principles of natural justice besides influencing the A.O. while re-examining the matter. It is for the A.O. to apply his mind and come to a conclusion, after proper examination of the issue involved. Hence, we are of the considered opinion that the observations made by the Tribunal at paragraph of the Judgment on merits of the case deserves to be expunged and accordingly they are expunged. Hence, the substantial question of law formulated above, is answered in favour of the Assessee and against the revenue. The matter is remanded to A.O. to reconsider the same afresh.

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• 2017 (3) TMI 736
  Disallowance of the payment of the privilege fee - allowable business expenditure - Held that:- It is an undisputed position that, the respondent-original petitioner has entered into agreement with the Government of Karnataka and as per such agreement, the fee is agreed to be paid for grant of lease by the State Government to the respondent-Company. The State Government, in exercise of its delegated statutory power has to notify the privilege fee for the respective financial year which the respondent-Company has agreed to pay. The character of liability to pay privilege fee is not only by virtue of the contract but is by way of a statutory obligation once lease is granted in favour of the respondent-Company by the State. It is on account of the lease so granted, the respondent-Company is in a position to undertake the business of the liquor as per the terms and conditions of the licence. Hence, in any case, payment of privilege fee can be termed as by way of necessity. If any assessee has incurred expenses to discharge its statutory obligation for doing of business, the same by no stretch of imagination can be termed as not for the purpose of business or profession. Since in the present case, it is privilege fee and the liability to pay the said amount arises on account of the statutory obligation even if the payment of which is agreed upon by contractual arrangement, such expenditure would not fall into the arena of voluntariness or the ground of commercial expediency or facilitation in carrying on of the business. Even if the decision upon which the reliance has been placed by the learned ASG are considered, the assessing officer will have a power to examine the commercial expediency for the expenditure incurred but it cannot be said that he will have jurisdiction to disallow the expenditure incurred for necessity or with a view to have a direct benefit in the business of liquor. On the contrary, the assessing officer being a statutory authority under the Act is bound to respect all the laws may be made by the Parliament or may be made by the State Legislature. He has no jurisdiction to examine the constitutional validity of any Act or the statute or a subordinate legislation which creates statutory liability upon the assessee to make the payment by way of an expenditure incurred. Under the circumstances, we find that the action of disallowance of the payment of the privilege fee by the assessing officer for the respective period of assessment years which is prior to 1.4.2014 is per se without jurisdiction and also ultravires to his power under the Act. The disallowance of the deduction of privilege fees as expenditure is wholly without jurisdiction and the observations made by the assessing Officer so far as constitutional validity of the relevant Act and the Rules and the power exercised by the State for delegated legislation for fixation of the quantum of fees can also be said as ultravires to his power because he has no power or authority to test the validity of any statutory provision, may be made by the State Legislature or the Parliament. - Decided in favour of assessee

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• 2017 (3) TMI 735
  Stay of demand - AO has not given due consideration to the top line credit adjustment - Held that:- The impugned order dated 22.02.2017, undoubtedly, has given effect to the OM, relied upon by the petitioner in the sense that the demand has been stayed subject to substantial relief of 85%. However, the circular – as noticed earlier and highlighted by the petitioner also carved out an expenditure in regard to certain “covered matters” or in regard to other contentious issues, the condition of 15% pre-deposit can be relaxed. The petitioner contentions in this regard are three fold. The impugned order does not disclose whether the AO had an occasion to consider or examine these issues. In these circumstances, the Court is of the opinion that the AO should consider and make an order under Section 220(6) of the Act specifically dealing with the three arguments urged by the petitioner and reflected in this order. The AO shall pass appropriate orders in this regard, after giving such necessary opportunity to the petitioner as he deems expedient in the circumstances, with the approval of the competent officer i.e. the concerned Principal CIT/Commissioner of Income Tax (Appeals), within two weeks from today.

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• 2017 (3) TMI 734
  Reopening of assessment - undisclosed income on sale of land - one "sauda chittihi" seized during the search of the premises of one Shri Rajesh Vaghani - year of assessment - Held that:- It is required to be noted that as such the "sauda chittihi" upon which the reliance has been placed, the assessee is not the signatory. Even the concerned persons who signed and / or executed the said "sauda chittihi" were not even the owners of the land in question. It has also come on record that even the said "sauda chittihi" was not acted upon. Even thereafter, the assessee has sold the property to one Shri Popatbhai Kakadia, who is also not signatory to "sauda chittihi". There does not appear to be any other tangible material available with the AO to even prima facie show that the assessee had received any on money in cash and / or sale consideration of 8,92,77,830/-. Similarly on the basis of the amount mentioned in the "sauda chittihi" to which, neither assessee nor even the purchasers Shri Popatbhai Kakadia were signatory, the formation of the opinion by the AO that the assessee has sold the land at 8,92,77,830/-( 4601 per yard multiply by 14397.328 sq yard = 8,92,77,830/-) is only on surmises and conjectures and for which, there is no tangible material available with the AO. Thus AO has materially erred in forming the opinion that assessee had received the sale consideration of 8,92,77,830/-and thereby has wrongly considered the difference of 8,62,68,330/-as undisclosed income and thereby has materially erred in holding that any income chargeable to tax has escaped assessable for AY 2009-10. There is no other tangible material with the AO, by which, it can prima facie be considered that 8,92,77,830/-has been received by the assesseesellers as sale consideration. The transfer of land has been taken place on 27.03.2008 when the sale deed has been executed. Therefore, it can be said that income has arisen in the AY 2008-09 and therefore, if at all any income has escaped assessment, the same can be said to be in AY 2008-09. By impugned notice, assessment for AY 2009-10 is sought to be reopened on the ground that income chargeable to tax has escaped assessment in 2009-10. When, it was pointed out to AO that the transfer had taken place on 27.03.2008 and therefore, it can be said that the income has arisen in the year 2008-09 and therefore, there cannot be any escapement of income in the year 2009-10. Even otherwise, as per the decision in the case of CIT vs. Hormasji Mancharji Vaid [2001 (6) TMI 58 - GUJARAT High Court] the capital gain under Section 45 of the Act arises in the year of execution of deed and not when the same was registered with the office of the Sub-Registrar. Under the circumstances also, the AO has materially erred in forming the opinion that any income chargeable to tax has escaped assessment for the year 2009-10.- Decided in favour of assessee

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• 2017 (3) TMI 733
  Waiver of interest under Section 234C - Whether the final conclusion recorded by the learned Single Judge that the explanation of the petitioner was acceptable so as to falling in category of paragraph-2(b) of the notification dated 26.06.2006 Annexure ‘B’ can be sustained or not? - Held that:- Single Judge made a final observation that the assessee’s explanation is acceptable calling for exercise of discretion under pargraph-2(b) of the notification dated 26.06.2006. Thereafter, the learned Single Judge has remitted the matter to the Chief Commissioner for consideration of the case for extent of waiver of interest in terms of the notification dated 26.06.2006. In our considered view, recording of final conclusion for acceptance of the explanation of the respondent was not called for or rather can be said to be exceeding the jurisdiction inasmuch as observed by us hereinabove while exercising the power under Article 226 of the Constitution against the order of the lower authority and after having interfered in the decision making process, the matter was required to be remanded keeping the rest of the aspects open, of course, by excluding the aspects which are already considered by the High Court under Article 226 of the Constitution of India. In our view, such an exercise of jurisdiction of accepting the explanation of the assessee is at par with the appellate power which in normal circumstances would not be available in the scope of judicial review under Article 226 of the Constitution. We do not find that any abnormal circumstances are recorded to make a departure from the normal principles of relegating the matter to the authority for consideration afresh in accordance with law. Hence, the opinion recorded i n the impugned order of acceptability of the explanation of the assessee cannot be sustained. Hence the point referred to hereinabove needs to be answered in a manner that the finding could not have been recorded of accepting the explanation of the assessee and the observations made in the impugned order at paragraph- 24 which are underlined in the above referred reproduced portion deserves to be set aside. Once the aforesaid observations are set aside, the consequence would be for reconsideration of the case for waiver of interest under Section 234C of the Act in terms of the notification dated 26.06.2006 and the other aspects so observed in the impugned order in paragraph-24 would also not be required. Observations and the directions issued by the learned Single Judge in the impugned order at paragraph-24 are set aside and modified to the extent that the matter shall be reconsidered afresh by the Chief Commissioner for waiver of interest charged under Section 234C of the Act in terms of the notification dated 26.06.2006, in light of the observations made by the learned Single Judge upto paragraph-23 of the impugned order. The Chief Commissioner shall examine the matter and pass appropriate order preferably within a period of eight weeks from the date of receipt of a certified copy of the order of this Court after giving opportunity of hearing to the respondent-assessee.

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• 2017 (3) TMI 732
  Determination of fee payable to Chartered Accountant (CA) for special audit assigned to him u/s 142 - Calculation of time billed for professional work - Held that:- Spending 9 to 10 hours a day for a special audit would include the time spent on basic necessities, food and refreshments etc. Unlike employees, professionals do spend 9 to 10 hours a day on their work, even at odd hours, and attend to their basic necessities in the remaining hours of the day. Exclusion of such necessary recess for consumption of food and refreshment, etc. for a person to render quality work is illogical. In any case, the billing is not for 24 hours a day but for a part thereof. Therefore, to assume that the time billed was not exclusively for the professional work is without basis and untenable. Chartered Accountants are not automatons who, without having access to food or being able to attend to all other necessities, would churn out good quality reports after analysing voluminous records. Notably, the work experience of the partners ranges from 3 to 27 years while the range permissible billing rate is between 3,500/- to 7,500/- and the rate of sitting could have been correspondingly adjusted as per their regular sitting hours or accepted degree of competence; instead it has arbitrarily been reduced to an average rate of 4,000/- per hour. The disallowance of certain hours based on the assumption that the auditors would have spent some time on lunches, refreshments etc. is erroneous. If such disallowance is permitted then the corollary argument would be that some members of the audit team or the entire team was not adequately focussed on the special audit. This kind of reasoning assumes thought-control or thought-intensity monitoring. Such nature of control is neither envisaged under the Rules nor is it reasonable. What the Revenue is to assess in such circumstances is whether the special audit report was (i) within time, (ii) of the desired quality (iii) the billing is commensurate to the nature of inquiry and the quantum of the records to be looked into; etc. If the audit report is of good quality and inter alia, authored by a qualified professional having a fair number of years of experience then he/she may well be entitled to ask for the highest prescribed billing rate.In the circumstances, the Court is of the view that the bill submitted by the petitioner needs a fresh look.

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• 2017 (3) TMI 731
  Claim of deduction u/s 80-IA - interest derived from security deposit - Held that:- The consistent view of the Courts has been that wherever, in such like sections, the expression “derived” is used, as against “attributable to”, the width and the amplitude is narrower. Therefore, courts have held consistently that in order to come to a conclusion as to whether such profits or gains, i.e., income, would be amenable to deduction, the effective source of such income is to be looked at. Once, it is found that the income is derived from a secondary source, which is not the effective source, it falls outside the purview of such like provisions, which provide for deductions with purpose of giving fillip to the designated activity, which, in the instant case, is the business of developing a Special Economic Zone. We may also indicate that in so far as the judgement of the Bombay High Court in CIT V. Jagdishprasad M.Joshi, [2008 (11) TMI 326 - BOMBAY HIGH COURT] is concerned, it has taken a view qua the provisions of Section 80-IA of the Act, which is contrary to the view taken by us. We are unable to persuade ourselves to agree with the view of the Bombay High Court. We are informed that the Revenue has carried the matter in appeal to the Supreme Court, and the appeal so filed stands admitted.Therefore, for the foregoing reasons, we find no infirmity in the order of the Tribunal as held Authorised Representative could not support with explanation whether assessee has claimed deduction u/s.80-IAB of the Act for the assessment year 2008-09 on interest income. We found the assessee could not substantiate the direct nexus with the industrial undertaking. Interest derived by the industrial undertaking of the assessee on deposits made with the Electricity Board for the supply of electricity for running the industrial undertaking could not be said to flow directly from the industrial undertaking itself and was not profits or gains derived by the undertaking for the purpose of the special deduction under section 80HH.- Decided against assessee

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• Customs

• 2017 (3) TMI 764
  Classification of imported goods - zinc dross shelf - resticted item - whether classified under CTH 79020090 or under CTH 79020010 - confiscation of goods on the ground that the weight of the slab imported by the appellant is 500 kgs - Held that: - the classification of the goods imported would fall under category of 79020010 and there is no violation nor there is misdeclaration in order to hold that the goods are liable for confiscation under Section 111(d) of the Customs Act, 1962 - similar issue decided in the case of ROSE ZINC LTD. Versus COMMISSIONER OF CUSTOMS, JAIPUR [2011 (8) TMI 932 - CESTAT, NEW DELHI], where it was held that whether the zinc dross in question is of seal grade or any other grade, the same is classifiable under heading 79020010 - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 762
  Project import - whether the items i.e. field joint coating material, welding electrodes, magnetic ribbon and welding material are eligible for concessional rate of duty as per N/N. 11/97-Cus. under serial No.226 or otherwise? - Held that: - the sponsoring Ministry i.e. Ministry of Petroleum and Natural Gases has issued an Essentiality Certificate to the appellant along with the list of items that could be imported by the appellant, which included the items which are imported and the benefit of concessional rate of duty under project import was sought - On the face of such Essentiality Certificate which has been given by the Government of India, Ministry of Petroleum and Natural Gases, the adjudicating authority coming to the conclusion that the project imports facility cannot be extended to the appellant is totally incorrect finding - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 761
  Illegal import - Beef Tallow, imported directly - confiscation - penalty - whether Beef Tallow imported by the appellant and sought clearance of the same after producing the licenses, are liable for confiscation or otherwise? - Held that: - at the time of import, item Beef Tallow was to be canalized and needs to be imported through State Trading Corporation. The issue of direct import by the appellant is covered against them having not imported through State Trading Corporation - appellant could have entertained a bonafide belief that direct import of Beef Tallow under the Import & Export Policy can be done so for earlier order before 5th June 1981, and post this date will be required to be done through State Trading Corporation - confiscation and penalty set aside - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 760
  Method of Valuation - import of CD/DVDs - deductive value or computed value - related party transaction - royalty - inclusion of royalty in assessable value - Held that: - if valuation cannot be arrived at under normal provisions of Section 14 and then further under Rules 3, 4 and 5 of CVR, 2007, then valuation of imported goods are to be determined under Rule 7 or under Rule 8, and where valuation is not determined even under Rules 7 and 8, then valuation is to done under Rule 9 of CVR, where it is called Residual Method. The Deductive value is to be arrived at by considering the unit price at which the goods were sold to institutional buyers, as these sales satisfy the provision of Rule 7 of CVR, 2007, which state that value of imported goods shall be based on the unit price at which such goods or identical/similar goods are sold in the greatest aggregates quantity to unrelated persons in India. Once this unit price at which the imported goods were institutionally sold has been decided, the deductive value is to be arrived at after giving the deductions mentioned in the Rule 7. With this finding the matter deserves to be remanded to the original adjudicating authority. Whether duty is liable to be paid on the royalty? - Held that: - the royalty paid and payable for the goods imported through link is to be taken into account for the purpose of assessable value. However, there is premise that the goods imported through link, that is through internet, which are called download and which may be sold by the importer appellant cannot be subjected to the Customs duty. The downloads imported through link or through internet are not the subject matter of present proceedings - For the present proceedings when downloads through internet are not the subject matter no comments of the Tribunal on the same are called for. Appeal allowed by way of remand.

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• 2017 (3) TMI 759
  Imposition of penalty u/s 114(i) and 114(iii) of the CA, 1962 on the officers of customs and CHA - exports of garments - misdeaclaration of goods exported - valuation - penalty stands imposed upon SHRI ASHOK KUMAR INDORA, INSPECTOR on the ground that he has not done proper examination of the consignment inasmuch as, 500 pieces per package were declared whereas, 400 pieces of garments per package were found - Held that: - the said reasoning cannot be adopted for imposition of penalty in terms of Section 114 of the Act, inasmuch as there is nothing on record to show that there was any mensrea on the part of the said appellant so as to abet the illegal export - penalty set aside. Imposition of penalty on SHRI BORIA RAM, SUPERINTENDENT on the ground that he has passed the let export order, which is not a mere formality but has legal requirement to be fulfilled by the Superintendent diligently and the law places a great responsibility on the officer to ensure that the government revenue is not siphoned by such fraudulent means - Held that: - Any lapse in performance of duty can, at the most, be considered as inefficiency which will not lead to any charge of abetment or connivance, thus attracting the penal action - in the absence of any evidence to reflect upon the said appellant’s role to play in the alleged misdeclaration, penalty set aside. Imposition of penalty on SHRI B.N. GANDHI PROP. CHA FIRM on the ground that he has failed to follow the provisions of CHA Regulations, 2013 and they have not adhered to the requirements and thus, are guilty of filing the shipping bills, in utter disregard to the provisions, placed on them by the Regulations - Held that: - violation of any of the provisions of the Customs Broker Licensing Regulations, 2013 would result in revocation of his license, in terms of the said Regulation and in the absence of any evidence to the contrary, will not call for any penalty on the CHA - penalty set aside. Penalty set aside - appeal allowed - decided in favor of appellants.

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• 2017 (3) TMI 758
  Import of Parts of Computers - denial of exemption on the ground that the Notification applies to Central Processing Unit (CPU) and not to Parts of Computers - Benefit of N/N. 76/2004-Cus dated 26.07.2004 - Held that: - exemption under N/N. 6/2002-CE dated 1.3.2002 at Sr.261 is applicable to Parts of Computers used within factory of production for the manufacture of Computers of Heading 84.71. Admittedly, the Appellant is manufacturers of branded Computers and have used the Parts of computers imported for manufacture of Personal Computers, which have been cleared on payment of duty. Therefore, they would be eligible for exemption. Another ground for denying the refund by the Commissioner (Appeals) is that that the Appellant have not challenged the assessment order and, hence, they would not be eligible for refund of duty paid - Held that: - In the regime of self-assessment, the scope for grievance and filing of appeal is non-existent, as non-filing of appeal against the assessment of the Bill of Entry does not deprive the assessee the right to file refund. Appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 757
  DEEC Scheme - duty discharged on the imported goods under DEEC Scheme of Tin Ingots & Nickel, which were diverted in violation of condition of actual user as per DEEC Scheme - whether M/s Metal Link Alloys Ltd is liable to discharge the duty liability on the Tin Ingots & Nickel which were imported under DEEC Scheme (Actual User Condition)? - whether the penalty imposed on Shri Bhanwarlal M Jain, Director, another appellant in this appeal is correct or otherwise? Held that: - the import of Tin Ingots & Nickel under DEEC Scheme is on Actual User Condition, the main appellant has to use the same for manufacture of final products. In the absence of any such manufacture, appellant could not have diverted the imported Tin Ingots & Nickel as per the DEEC licence - the duty liability upheld and interest on the said duty liability, and the penalty imposed is also correct. The penalty imposed on the individual Shri Bhanwarlal M Jain set aside and appeal allowed subject to condition that the main appellant discharges the entire Customs duty, liability and interest thereof. Appeal disposed off - decided partly in favor of appellants.

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• 2017 (3) TMI 756
  Confiscation of goods - the first appellate authority having held that the goods are liable for confiscation u/s 111(o) of the CA, 1962, has not confiscated the goods and has not imposed any penalty on the respondent - benefit of N/N. 16/2000-Cus dated 1st March 2000 - whether the appellant needs to be saddled with the confiscation of the goods imported by availing benefit of various notifications or otherwise; penalty to be imposed on appellant or otherwise? - Held that: - condition number 48 of notification that in non-compliance of full or part, differential duty needs to be discharged by the importer is only requirement and there is no condition or requirement that adjudicating authority should confiscate the goods u/s 111(o) of the CA, 1962, nor there is any clause for imposition of penalty on the importer. The respondent has discharged the entire Customs duty having not met the conditions of notifications; on being pointed out by the Departmental Officer, if that be so appellant has fulfilled the mandate of notification by paying duty on being demanded - adjudicating authority was correct in dropping the proceeding initiated by the show-cause notice for confiscation the goods and imposition of penalty - appeal dismissed - decided against Revenue.

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• Corporate Laws

• 2017 (3) TMI 753
  Company petition filed by a duly authorised person - authorization - whether he manager has no right to file the petition by way of delegating powers vested in him to the authorised signatory viz. Mr. Bartholomew Kamya? - Held that:- Pursuant to the 'Shareholders' Resolution' notarised by the Notary Public Ref.No.201277/1/2013, on 5.11.2013, the Chief Executive Officer of ETA ASCON Holding LLC, by way of "Appointment of Manager's Resolution" dated June 4, 2014, appointed Mr.Shaukat Ali Mir as General Manager of the petitioner company and vested him with the powers enumerated in the said resolution that included the right to delegate all or part of the authorities. Based on this, Mr.Shaukat Ali Mir has given an "Authorisation letter" to Mr. Bartholomew Kamya, authorising him to sign the petition that has been filed under Sections 397 and 398 of the Companies Act, 1956 before CLB/NCLT. The source of "Authorisation letter" given to Mr.Bartholomew Kamya is the 'Shareholders' Resolution' dated 5.11.2013. The authorisation is held to be in accordance with law and hence Mr. Bartholomew Kamya is competent to sign the petition filed under Sections 397 and 398 of the Companies Act, 1956. Therefore, C.A.I stands dismissed and the Company petition is held maintainable.

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• 2017 (3) TMI 752
  Compounding of offences arising out of various defaults and non- compliance of statutory requirements - Held that:- There is merit in the arguments advanced by the Ld. Counsel for the SFIO that non-adherence to the statutory requirements under the Companies Act were intentional and deliberate. In certain cases of prosecution for an offence under the Companies Act, the defaults are sometimes rectified and compounding such defaults would have no effect on any criminal prosecution. However, in the present cases, the defaults are incurable and cannot be rectified. Compounding of these offences would demolish and prejudice the prosecution under the Penal provisions also. Given the circumstances, find that the present prayers for compounding in all these petitions cannot be permitted, as these were not due to any bonafide omission or a delayed rectification of a statutory requirement. The offences herein under the Companies Act and those under the Penal Code are intrinsically linked and incurable. Compounding of the offences under the Companies Act would hamper the Criminal Prosecutions and no accused should be allowed to get away with deliberate large scale bungling and fabrication of documents carried out with criminal intention. Petitioner/applicant is not entitled to compounding of the offences under the Companies Act.

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• 2017 (3) TMI 751
  Professional misconduct - Chartered Accountant certified the documents without proper verification and without following the procedures laid down in the declaration contained in the certificates - Held that:- Based on the arguments which have been submitted by both of the parties, we deem it appropriate to delete the names of Applicants/R8 & R9 from the array of Respondents in the company petition and direct the Institute of Chartered Accountants of India that para 34 and 35 of the company petition and the counter filed by the Respondent/Petitioner-1 be treated as complaint against Applicants/R8 & R9 in Form-I under sub-rule (1) of Rule 3 of the Chartered Accountants (Procedure of investigation of professional and other misconduct and conduct of cases) Rules, 2007 read with Section 21(3) of the Chartered Accountants Act, 1949 and to investigate into the allegations levelled against the Applicants/R8 & R9, if found correct, appropriate action be taken against them. The complainant is directed to provide the said documents including e-mail dated 23.08.2016 in triplicate before the Director (Discipline) of the Institute of Chartered Accountants of India by making payment of the fees prescribed. Accordingly, the Company applicant is disposed of.

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• 2017 (3) TMI 750
  Public examination of six persons prayed for - to disclose the assets of a company in liquidation and such other relevant information as would be helpful in the liquidation of the company. - Held that:- The issue is no longer res integra. Decision n case of Satish Churn Law Vs. H.K.Ganguly [1961 (12) TMI 39 - SUPREME COURT OF INDIA] olds that the court has to decide the application filed before it without the involvement of the person whose public examination is prayed for. No doubt, if a person is summoned for being publicly examined he/she would have to be made known the subject matter and the issues on which the person would be examined. The person would also be entitled for the complaint filed against the person. The position therefore would be that the decision whether or not to publicly examine a person is a decision to be taken by the court with the assistance of only the Official Liquidator or the person who has moved the application. Needless to state that the Official Liquidator or the applicant person would have to prima facie satisfy the court with reference to objective facts that case is made out to publicly examine the person named. The said person cannot participate in said decision making process. Only if the court summons the person would the person have a right to know the material in respect of which the person is being examined so that the person can respond. Proceedings by their very nature are not adversarial and are intended at gathering relevant facts which would facilitate the assets of a company to be recovered so that the dues of the creditors can be paid in accordance with law. Accordingly we modify the impugned order and direct the learned Single Judge to decide the applications filed before the Company Judge seeking public examination of persons guided by the law declared by the Supreme Court in Satish Churn’s case (supra).

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• Service Tax

• 2017 (3) TMI 794
  Tour operators service - the respondent is engaged in the “promotion of tours”, whether included in the Tour operators service or not? - Held that: - CESTAT Delhi in the case of Commissioner of Service Tax, Delhi vs. Paras Holidays Pvt. Ltd. [2015 (10) TMI 2098 - CESTAT NEW DELHI] based on its decision in the case of COX Kings India Ltd. [2013 (12) TMI 1024 - CESTAT NEW DELHI] holds that the tour operator services in case of outbound tours are not taxable - appeal dismissed - decided against Revenue.

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• 2017 (3) TMI 793
  Liability of tax - Commission Income - commission received from affiliates in foreign country - whether covered under Business Auxiliary Services or not? - Held that: - the services rendered by the respondent were in relation to procuring orders and promoting products, of foreign suppliers. Admittedly, the said services fall under the category of “BAS”. However, it is a well settled legal position that the nature of service rendered by the respondent is consumed by the foreign supplier of goods. The benefit is directly accruing to such foreign entities - there is no tax liability on the respondent in respect of services, which are rendered to the suppliers of the goods from foreign countries - The activities of export of service is not to be taxed. Reversal of CENVAT credit - credit availed on common input services, attributable to their trading activities - Rule 6(3) of Cenvat Credit Rules, 2004 - Held that: - input service credit available is only when output service is taxable. If there is no output service, no credit can be taken - Since trading, during the material time, is not even considered as an “exempted service”, it necessarily follows that no credit on input services used for trading activities can be availed at all. If there are common input services, it necessarily follows that, in the absence of separate accounts, the services attributable to taxable output service can only be held eligible to the respondent - the respondent is liable to reverse the credit attributable to the trading activities. Appeal disposed off - decided partly in favor of Revenue.

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• 2017 (3) TMI 792
  Natural justice - air travel agent service - short payment of tax - Held that: - the Original Authority passed ex-parte order though he recorded that adequate opportunities have been provided to the appellant. The impugned order also did not examine the issues raised by the appellant for a proper finding - when the appellants have discharged service tax as a travel agents in terms of provisions of Rule 6 (7) of Service Tax Rules, 1994 and submitted supporting documents of income received on sale of tickets, the same is required to be scrutinized for correctness. Additional service tax demand cannot be confirmed only on the ground of certain categories of income are indicated in the profit and loss account of the appellant - Similarly, on the tax liability on the commission income for use of CRS, the learned Commissioner (Appeals) did not arrive at a clear finding as to what kind of promotion or marketing of such CRS and to which client, is being made by the appellant - matter requires reconsideration - appeal allowed by way of remand.

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• 2017 (3) TMI 791
  Refund claim - denial on account of time bar u/s 11B of the CEA, 1944 - during the period under consideration, the 'liaisoning Services' provided by appellant were not subject to Service Tax, a refund claim was filed - Held that: - no tax was due against the assessee-Appellants as the services provided by them were not subject to tax. At the relevant time, there was no authority/provision to collect the tax from the assessee- Appellants. Hence, this is an amount which was deposited in good faith - in the instant case also, the assessee-Appellants were not subjected to Service Tax. Therefore, mere payment made by the assessee-Appellants will neither validate the nature of payment nor the nature of transaction. The assessee-Appellants were rendering “liaisoning service”. The said services were not liable to Service Tax at the relevant time. Hence, the Department would not be in a position to collect service tax on the said activities since the same is not leviable - the Government will have no authority to retain the said amount and will have to be refunded. It is not a case of refund of tax, but return of deposit for which limitation (Section 11B of the Act) is not applicable. Appeal allowed - decided in favor of assessee-appellant.

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• 2017 (3) TMI 790
  PSU - the appellant was required to execute various services to BALCO for its captive power plant at its Korba Aluminum Complex, since they did not have facilities for transportation, handling and storage of coal etc - Business Auxiliary Services - cost of transportation - whether the cost of transportation was to be included for purposes of payment of service tax under “Business Auxiliary Service”? - Held that: - the activity of crushing of coal cannot be covered within any of the sub-clauses of BAS until its amendment w.e.f 16.06.2005. After the said amendment, the activity can be brought within the term of “processing” and hence, liable to Service Tax under BAS. Consequently, there can be no demand for Service Tax prior to this date. Transportation of coal - consideration received from BALCO - whether comes under BAS or not? - Held that: - In the definition of BAS, any service provided to a client in relation to the “Business Auxiliary Service” is covered within the definition. If the crushing of coal is considered as the activity covered under BAS, transportation of coal for such purpose would also be included since it is intimately connected with crushing. In any case, the contract for activity includes both. Hence, we find no basis to exclude 30/- from payment of service tax. Time limitation - The appellant has claimed that the Show Cause Notice is time barred. Since, the same has been issued more than one year from the date in which the appellant intimated the audit party - Held that: - date of knowledge was of no significance - the SCN is not time barred. Penalty - Held that: - The levy of Service Tax under BAS has seen repeated amendments to enlarge the scope of this service. Hence, we consider this to be a fit case to waive the penalties imposed in the impugned order under Section 80 of the Finance Act, 1994 - penalty set aside. The original adjudicating authority is directed to re-quantify the demand w.e.f. 16.06.2005 - appeal allowed in part and part matter on remand.

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• 2017 (3) TMI 789
  Book adjustment to discharge liability of tax - whether book adjustment can be treated as payment of service tax in terms of Rule 6 of Service Tax Rules, 1994? - Central Government Establishment. - Held that: - it is evident that the appellant paid the tax and there may be some procedural lapses for which the demand of tax is not sustainable in the eyes of law. Penalty - Held that: - appellant, being a Central Government Department paid the tax as per the directions of the office of the Comptroller and Auditor General, by book adjustment. At this juncture, the observation of the Adjudicating Authority against the appellant that they defrauded the exchequer is extremely shocking and the Adjudicating Authority should avoid such language in their orders - the imposition of penalties are waived u/s 80 of the FA, 1994. The Adjudicating Authority is directed to verify the payment of tax by book adjustment - appeal allowed by way of remand.

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• 2017 (3) TMI 788
  Tax liability - amounts received as parking fee from the users of parking space in the property - amounts received as renovation charges from various occupants of the property as and when certain renovation are carried out by any of the occupants of the property - demand on the ground of Non-payment of service tax - time limitation - Held that: - the impugned order did not give categorical finding after examining the documents and evidence submitted by the respondent/ assessee. It is necessary to give a clear finding regarding the nature of activity undertaken by the respondent/assessee, the consideration received for such activity which is liable to service tax - matter on remand. Time limitation - demand held as time barred only on the ground that the SCN was issued after 1½ years of audit - Held that: - the relevant date u/s 73 (1) of the FA, 1994 is with reference to the date of filing return etc. The normal period or extended period is determined based on the provisions contained therein. If the ingredients for invoking demand for extended period are available, then such demand can be raised for 5 year period. The date of knowledge of the Department is not relevant in such situation - time limitation not invocable - this matter also needs reconsideration. Appeal allowed by way of remand.

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• 2017 (3) TMI 787
  Business Auxiliary Service - whether the activity of cutting and packing of lettuce, onion and salad mix would fall under the category of business auxiliary service under the Head of production or processing of goods for, or on behalf of client or not? - Held that: - an identical issue came up before the very same Bench in the case of Tasty Bite Eatables Ltd. [2015 (11) TMI 231 - CESTAT MUMBAI] wherein the Bench held for similar activity that the activity of processing the vegetables by the appellant will be in relation to agriculture hence not liable to service tax under business auxiliary services - demand set aside. Whether the appellant is required to discharge the service tax under Consulting Engineer service by way of reverse charge mechanism for transfer of technical know-how or otherwise? - Held that: - the said agreement entered by appellants with the foreign entity is in respect of transfer of technical know-how and design and drawing in order to establish the facility in India. We find that there is no consultancy or technical assistance extended given by the Engineering firm - similar issue decided in the case of CST vs. Leibert Corporation [2014 (3) TMI 265 - CESTAT MUMBAI], where it was held that The said service does not, in any way, relate to supply of technical know-how which the respondent has undertaken. Appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 786
  Manpower recruitment or supply agency service - whether the appellants have rendered the services of manpower recruitment or supply agency service or otherwise? - Held that: - there is no restriction as to the specific number of employees to be brought for such purposes; and work force employed by the appellant was on the role of the appellant only and is supervised by the appellant - this contract cannot be considered as a contract for supply of manpower to KLL - the services would not fall under the category of manpower recruitment or supply agency services - demand set aside - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 785
  Valuation - reimbursable expenditure - Custom House Agent Service - whether the B/L, DDC charges, GOH container charges, Inland haulage charges, on carriage charges, THC, Via Charges, APT tax, AWB fee, AWC charges, MYC Charges, PCA Charges, X-ray charges etc are to be included in the taxable value? - Held that: - Tribunal in CST vs, Lee & Muirhead Pvt. Ltd. [2011 (10) TMI 504 - CESTAT, CHENNAI] had occasion to examine the includibility of reimbursable expenditure in the taxable value for CHA service. It is held that when amounts are reimbursed on actual basis, the said charges are not to be included for service tax purpose - demand set aside. Business Auxiliary Services - whether brokerage and commission amount is to be considered as a commission received for promoting clients’ business and are accordingly to be subjected to tax under the category of business auxiliary service? - Held that: - the income earned by the respondent, to be considered as taxable under any service category, should be shown to be in lieu of provision of a particular service. Mere sale and purchase of cargo space and earning profit in the process is not a taxable activity under FA, 1994 - The facts of the case indicated that the mark-up value collected by the respondent from the exporter is an element of profit in the transaction. The respondent when acting as agent on behalf of airlines/shiplines was discharging service tax w.e.f. 10.09.2004. However, with reference to amount collected from exporters/ shippers the original authority clearly recorded that it is not the case that this amount is a commission earned by the respondent while acting on behalf of the exporter and said mark-up value is of freight charges and are not to be considered as commission. Based on these findings the demand was dropped - demand set aside. Appeal dismissed - decided against Revenue.

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• 2017 (2) TMI 1564
  Extended period of limitation - service tax short paid - Held that: - No case of any contumacious conduct and/or suppression on the part of the respondent is made out. It is further held that the appellant have rightly paid Service Tax on receipt basis - the SCN is bad and the impugned demand Is not sustainable - appeal dismissed - decided against Revenue.

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• Central Excise

• 2017 (3) TMI 784
  CENVAT credit - natural justice - impugned order challenged on the ground that the same has been passed without considering the submissions of the appellant and without considering the various judgements relied upon by the appellant - also the order is not speaking order - Held that: - the impugned order is not sustainable in law because the same has been passed mechanically without considering the submissions of the appellant. Both the authorities have not considered the reply filed by the appellant to the SCN wherein the appellants have contested the denial of CENVAT credit by producing the documents as well as the judgements/decisions in their favor allowing CENVAT credit in similar situations. Further simple reversal of the CENVAT credit at the asking of the Revenue does not debar the appellant to contest the same by filing a detailed reply to the SCN. Both the authorities have not considered the same and therefore the impugned order is without any reason and is passed in violation of principles of natural justice - appeal allowed by way of remand.

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• 2017 (3) TMI 783
  Denial of CENVAT credit - interest - penalty - the main allegation against the appellant is that the appellant failed to submit any documentary evidence to substantiate their claim that the goods have been received from the manufacturer or dealers and used in or in relation to the manufacture of finished goods - Held that: - Rule 9(4) is applicable in respect of maintenance of the records by the dealers. It is a case that the appellant availed the credit on the basis of the documents through a middleman and the inputs were directly received by the appellant from the dealer who was registered with the Central Excise authorities - the Tribunal on an identical issue in the case of Jupiter Alloy & Steel (India) Ltd. v. CCE, Kolkata-IV, [2016 (12) TMI 1217 - CESTAT KOLKATA], where it was held 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 - appeal allowed - demand set aside - decided in favor of appellant.

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• 2017 (3) TMI 782
  Scope of SCN - Whether M/s Neha Refrigeration was a necessary and/or proper party in the adjudication of the SCN which was issued to Respondent No.1 and therefore whether the Tribunal was right in interfering with the original order dated 29th January 2004 passed by the Commissioner (Adjudication) and in allowing the appeals preferred therefrom? Held that: - The appreciation and appraisal of the documentary and oral evidence by the Commissioner was faulted by the Tribunal. Its detail finding would indicate that show cause notice should have been issued to M/s. Neha Refrigeration asking them as to why they should not be termed as a dummy unit. That show cause notice was not issued. However, apart from this, even on merits there was no material to hold that M/s. Neha Refrigeration was a dummy unit. That is how the Tribunal proceeded and once it proceeds on this line, we do not see any basis for the apprehension that the Tribunal's understanding of the legal provision is flawed. The Tribunal will not and necessarily in every matter of this nature proceed to hold that a notice to the sole proprietor would not suffice in law and in addition an independent notice should be addressed and to the sole proprietary concern - We do not see how the substantial question, as framed, would arise from any factual findings in the Tribunal's Order. By clarifying that this question does not arise from the impugned Order of the Tribunal, and if at all it arises in any future case, it shall not be taken to have been decided by this Court by mere confirmation of the Tribunal's Order impugned in this case - appeal disposed off.

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• 2017 (3) TMI 781
  NCCD - Benefit of exemption under N/N. 50/2003 dated 10th June 2003 - Area based exemption - It is the case of the appellant that after almost three and half years of the application for registration and after two and half years of the Audit Objection and response, appellant came to be served with Annexure-8 Show Cause Notice dated 26th August, 2011, whereby the appellant was called upon the pay NCCD and the cesses. A proposal was also made to impose an equal amount of penalty. Demand was raised for interest also - Held that: - the Notification does not extend the benefit of exemption from NCCD. This interpretation flows from the plain words used and there is no room for ambiguity or construction - The appellant has no case that it has changed its position relying upon the policy decision dated 07.01.2003. The policy decision dated 07.01.2003 is followed up by the Notification to effectuate the policy decision is what apparently understood by the Authorities. The Notification took shape in a little over six months from the date of the policy decision. It is nearly after four years that the Industrial Unit commences the commercial production. By the time, the industrial unit was set up, in fact, the appellant must be attributed with clear notice of the express terms of the Notification, which does not provide for exemption from NCCD. The appellant cannot be permitted to raise a plea of promissory estoppel in the facts of this case based on the policy decision dated 07.01.2003 as there is neither pleading nor materials placed to support a finding that the appellant had altered its position acting on a promise as is said to be contained in the policy decision dated 07.01.2003. Is the Notification Contrary to the Policy and Whether the Notification Being An Implementing Notification is entitled to beneficial interpretation? - Held that: - there is no challenge to the Notification. The justification for the omission to challenge is stated to be that if the appellant challenges the Notification, it would amount to questioning the benefits, which the appellant is admittedly entitled to. It is pointed out, however, that the reliefs sought by way of Prayer No. 1, namely, declaration that the appellant is entitled to the benefit of exemption under Notification in respect of levy of duty of Excise as NCCD for a period of 10 years would suffice. The interpretation should, as far as possible, be beneficial in the sense that it should suppress the mischief and advance the remedy without doing violence to the language - The language of the Notification in question does not permit us to read into the notification the levy with which the appellant stands visited. We would be guilty of torturing out of shape the clear expressions found in the Notification. This is impermissible even if it is in the wings of the theory of beneficial construction or it being an implementing notification. Whether in the absence of Notification exempting NCCD, we could, on the strength of the Notification, as issued, vouchsafe the benefit of exemption to the appellant? - Held that: - It may be true that the goods manufactured by the appellant is to be found in the seventh schedule to the Finance Act of 2001 as also the schedule to the Excise Act mentioned in the notification. It is true that by virtue of sub-section (3) of Section 136, the provision relating to exemption from duty is made applicable to NCCD. This only means that it is open to the Authority acting under Section 5-A of the Excise Act to grant exemption from NCCD invoking the power therein, but that is of far cry from saying that since the Notification was issued under Section 5-A, it must be treated as having also impliedly granted exemption from payment of NCCD. Interest - Held that: - Having regard to Section 136(3) of the Finance Act, 2001, prima facie provisions of the Act were available to the Authorities for all purposes would come to the rescue of the respondent if the interest is levied from the relevant time, but we do not wish to finally conclude this issue as we would allow the appellant to raise this contention before the statutory authority duly constituted. We also leave open the contention of the appellant to impugn the quantum of interest. Penalty - Held that: - we would think that there is indeed express power as provision of imposition of penalty is available in respect of NCCD. As regards the quantum and even whether penalty should be imposed, we direct that it is open for the appellant to raise the contentions in a duly constituted proceeding. Appeal dismissed - decided against appellant.

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• 2017 (3) TMI 780
  Valuation - cash discount - whether the cash discount realized back by the appellants through debit notes is chargeable to Central Excise duty? - Held that: - there will be no need to add back the discount to the assessable value, even if the same are subsequently recovered - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 779
  Investigation - short stock during stock taking - Clandestine removal - Penalty - Held that: - To establish a case of clandestine manufacture there must be some positive evidence in the form of unaccounted procurement of raw materials, excess consumption of electricity, identification of buyers of clandestinely manufactured goods, identification of transporters transporting such goods to buyers, receipt of unaccounted cash against sales of such goods etc. I find that apart from the said shortages there is no other evidence on record indicating that the short found goods stands removed by the assessee in the clandestine manner. As rightly contested by the Ld. Advocate such loose computer sheets cannot be formed the basis for arriving at the findings of the clandestine removal in the absence of the fulfillment of conditions of section 36 B(4) of the CEA - Appeal disposed off.

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• 2017 (3) TMI 778
  Wrong calculation of the duty liability - demand of duty to the extent of 28,35,468/- along with interests and penalty of an equal amount - Held that: - this differential duty has arisen only as a result of a mistake in the calculation made by the respondent. In such cases, the Revenue is expected to raise demand under Section 11A within the normal time limit. Accordingly, the demand falling within the normal time limit upheld and the remaining portion of demand vacated - Penalty imposable u/s 11AC is also set aside. Demands to the extent of 7,74,558/- on Noophin injection as well as 2,15,778/- in respect of Sivphine injections - Held that: - Increased MRP of injections has been alleged by the Revenue on the basis of investigation carried out in respect of New Pharmaceutical product in Karnataka. However, such investigation report has not been shared with the respondent during the course of the adjudicating proceedings. The concerned witness has also been not made available for examination by the respondents. In view of above, we find no reasons to interfere with findings of Commissioner (Appeals) setting aside this demand. Demand of 1,66,042 on dyna pro powder - Held that: - Revenue was of the view that assessment of these product needs to be done under Section 4A whereas the assessee was of the view that it should be under Section 4 of the Central Excise Act. Commissioner (Appeals) has set aside the demand on account of time bar for the period beyond normal time period. Such a view adopted the Commissioner (Appeals) is upheld. Seizure of goods - Held that: - there is no justification for confiscation of the goods valued at 93,29,605. Since, the differential duty demand has arisen on account of wrong calculation. Consequently, the order of the Commissioner (Appeals) is fully justified in setting aside the confiscation and hence upheld. Appeal disposed off - decided partly in favor of appellant.

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• 2017 (3) TMI 777
  Dutiability - H.D.P.E. Bags which were procured duty free - benefit of N/N. 43/2001-CE(NT) dated 26.06.2001 - demand on the ground that appellant had not fulfilled the conditions of notification as appellant could not produce any proof of export by usage of these HDPE bags - Held that: - the appellant had not indicated in the invoices prepared by them for the clearance of soyabean de-oiled cakes that the said soyabean de-oiled cakes were packed in HDPE bags. In the absence of any evidence to show that they had cleared the export consignment of soyabean de-oiled cakes in HDPE bags, we find that there is no case for the appellant. As regards the claim of learned Counsel that the submission of 'H' Form by merchant exporters as a proof of export of the goods cleared, we have no doubt in our mind that 'H' Form is one of the conclusive evidence to indicate that the goods are exported but in the case in hand the 'H' Form does not indicate any connection between the goods cleared for export and the goods exported as also the documents of clearances from the appellant's factory do not indicate that soyabean de-oiled cakes was in fact packed in HDPE bags. The appellant is not able to convince us that the goods cleared by them for export, were packed in HDPE bags which were procured duty free by claiming benefit of N/N. 43/2001-CE (NT) dated 26.06.2001 - appeal dismissed - decided against appellant.

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• 2017 (3) TMI 776
  Reversal of CENVAT credit - Rule 6(4) of the CCR, 2002 - exemption under N/N. 49/2003 dated10.06.2003 vide which the goods were exempted from whole of the duty of excise or additional duty of excise which were manufactured in the new units located in the Uttarakhand for the period of 10 years was denied - Held that: - an identical issue has come up before this Tribunal in the case of The General Manager, Century Pulp & Paper vs CCE, Meerut-II, Final Order No. 50862-50864/2017 dated 15.02.2017, wherein it was held that the appellant assessee will be entitled to the Cenvat credit availed and credited to their Cenvat credit account prior to 03.02.2007, the day when the assessee opted for benefit of the N/N. 50/2003 dated 10.06.2003 - credit allowed - appeal allowed. Reversal of Refund claim granted - The Commissioner (Appeals) has granted the refund pertaining to the reversal of the Cenvat Credit as per Rule 6(4) of the CCR, 2002 - Held that: - the assessee-Appellants are entitled for the reversal of the Cenvat Credit, we find no merit in the appeals filed by the Department. Hence, both the appeals filed by the Department are dismissed. Appeal disposed off - appeal of assessee allowed - appeal of Department dismissed.

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• 2017 (3) TMI 775
  CENVAT credit - Shortage in the stock of inputs - Held that: - the representative of the appellant had accepted to such shortage and later also the Director agreed to the said shortage and discharged duty on the same. At no stage of the proceeding, the correctness of the shortages arrived at during the course of panchnama on 10.7.2007 has been disputed by the appellant. Therefore, the plea now raised by the appellant to recalculate the shortage on the basis of the ratio of book stock as on 10.7.2007 in my opinion is not acceptable - Cenvat Credit of Rs. 3,38,365/- confirmed on the shortage in the stock of Inputs is upheld. As far as the credit of 17,88,402 is concerned, the same has been demanded on the ground that there has been mis-match in the generation of waste; the excess quantity of wastage was shown to have been generated in the manufacture of their own goods with an objective to cover up the excess inputs used in the manufacture of job work goods - the said issue is no more res-integra being covered by the judgments referred by the Ld Advocate in the cases of Sterlite Industries (I) Ltd, [2004 (12) TMI 108 - CESTAT, MUMBAI] - the demand of 17,88,402/- confirmed by the lower authorities below is liable to set aside. Both the authorities below while confirming the Cenvat Credit on shortage of Inputs though imposed equivalent penalty u/r 15(2) of CCR,2004 read with Sec. 11AC of CEA,1944 but not extended the benefit of discharging 25% of the penalty on fulfilment condition laid down under the relevant provisions, hence the appellant is entitled to he said benefit subject to fulfilment of the conditions. Penalty on employee - Held that: - there is no justification for imposition of penalty against the employee on mere shortage in the stock of Inputs which has been not accounted for at the time of the visit of factory and there is no allegation of its removal of such inputs without payment of duty - penalty set aside. Appeal disposed off - decided partly in favor of assessee.

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• 2017 (3) TMI 774
  Principles of natural justice - confiscation of excess found goods - currency - Held that: - the Revenue’s entire case is based upon the loose chits recovered during the course of search of the factory read with the statements of various persons. Though the appellant had made a request for cross examination of the said deponents so as to establish the veracity of the truth of the said statements, the adjudicating authority has neither referred to the said request nor decided on the same and proceeded to pass the final impugned order - There is no justification for jettisoning the procedure statutorily prescribed by plenary legislation for admitting into evidence and statement recorded before the Gazetted central Excise Officer - matter is remanded for consideration afresh - appeal allowed by way of remand.

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• 2017 (3) TMI 773
  Validity of Assessment order - Natural justice - certain documents recovered from two ex-employees formed basis of enquiry and assessment order by Commercial Taxes Department - Held that: - the Original Authority declined the requests of the appellants for cross-examining various persons who conducted the investigation or whose statements were relied upon. The reason recorded by the Original Authority is neither satisfactory nor legally sustainable. The allegation of unaccounted manufacture and clearance is a serious charge which requires corroboration with sustainable evidence which is lacking in the present case - The Revenue has failed to even prima facie establish the existence of a sustainable case of unaccounted manufacture and clearance - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 772
  Benefit of 25% penalty - Held that: - the expression subject to the provisions of Section 11AC of the Act in Rule 25(1) of Central Excise Rules, 2002 would make it clear that the option u/s 11AC of the Act, would apply in Rule 25 of the Rules. Further, it is well settled, that Rules cannot travel beyond the Act. Therefore, the appellant is entitled to exercise the option to pay the penalty, 25% of the duty in terms of Section 11AC of the Act read with Rule 25 of Central Excise Rules - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 771
  Liability of duty - supervision charges - whether the appellants are liable to pay the supervision charges for service of the staff on M.O.T. basis or on the Cost Recovery basis? - Held that: - the conclusion drawn by the appellants that the order of the Commissioner allowed them to pay on M.O.T basis for the entire period is erroneous and is not forthcoming from the letter dt. 05.03.1999 - the benefit of M.O.T. basis should be given from the date of the letter of the appellants dt. 14.10.1998 rather than the date of the order of the Commissioner dt. 05.03.1999 - appeal dismissed - decided against appellant.

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• 2017 (3) TMI 770
  Entitlement of interest - relevant dates - whether the Appellant's claim for interest from the date of pre-deposit of duty i.e. March/April, 2004 is admissible or as held by the learned Commissioner (Appeals) after expiry of three months from the date of filing refund claim as prescribed u/s 35F of CEA, 1944? - Held that: - From bare perusal of the provisions of Section 35FF, it transpires that grant of interest is automatic, if the refund of pre-deposit is not refunded within three months from the date of communication of order - the Appellant is entitled for interest after the expiry of three months - appeal dismissed - decided against appellant.

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• 2017 (3) TMI 769
  CENVAT credit - Block Making Machine - denial of credit on CVD on the ground that the said machine is the final product and does not fall under the category of input or capital goods - whether the Appellants are eligible for CENVAT Credit of CVD paid on the manufactured goods cleared initially without payment of duty under bond for export? - the goods were exported for exhibition purpose and later returned, at the time of re-import, the CVD was required to be paid or not? - Held that: - As per Rule 16 of CER, 2002, the goods which were cleared and brought back to the factory for being re-made, refined, re-conditioned or for any other reason, the assessee shall be eligible to take credit as if the such goods are received as input under CENVAT Credit Rules 2004 - a fiction has been created to consider the finished goods cleared initially, when returned to the factory for being remade, refined and reconditioned etc or for any other reason as an input - In the present case, the situation is covered under the expression or for any other reason , hence, the Appellants are definitely eligible to the credit of the CVD paid on said goods on its re-importation - credit allowed - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 768
  Shortage in stock - shortage of MODVAT inputs in respect of which credit was taken, but not utilized and having been disposed off by them without payment of Central Excise duty - natural justice - demand - Held that: - the appellants after about 9 years, requested to supply the documents and the submission of the appellant after 10 years of stock verification that weighment was not done correctly, cannot be accepted. Therefore, the demand of duty along with interest is justified. Penalty - Held that: - there is reason for shortage. There is no material available on record to show that the shortage quantity was removed clandestinely - mere shortage of goods during stock verification could not construe clandestine removal or manufacture of the goods - penalty set aside. Appeal allowed - decided partly in favor of appellant.

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• 2017 (3) TMI 767
  Valuation - welding electrodes - notional interest - whether notional interest accruable on advance is includible in the assessable value? - Held that: - Rule 6 of the Valuation Rules, 2000 contemplates for inclusion of any additional amount in the value of the goods sold if it is not included - where the assessee receives any advance payment from the buyer against the delivery of any excisable goods no notional interest shall be added unless the Central Excise officer has evidence to the effect that advance received has influenced the fixation of the price by way of charging lesser price from or by offering a special discount to the appellant buyer who has made the advance deposit. It is an admitted position in this case that appellant offered 5% cash discount to the dealers who made advance payment. On a specific query from the Bench as to whether the same 5% cash discount is offered to any other dealer who is not making any advance to make payment, Ld. C.A. fairly states that they did not extend this cash discount to those dealers who are not making advance payment. On this factual position we have to hold that Explanation 2 to Rule 6 categorically covers the issue as in the case in hand is against the appellant-assessee. Assessable value on which duty liability needs to be discharged is the after addition of the cash discount - appeal allowed - decided in favor of Revenue.

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• 2017 (3) TMI 766
  Clandestine removal - confiscation - demand calculated based upon the loose sheets of private records as found for the period 2006-07 to 16.12.2010 - Held that: - It is undisputed that the said note book was recovered from the appellant’s premises and the Director was confronted with the said note book and it was admitted as being maintained for clandestinely removed goods. We have no hesitation to uphold the demand of duty on the goods clandestinely removal as recorded in the private note book as the appellant has no explanation for such clandestinely removed goods nor are they able to show that the duty liability has been discharged - demand upheld. Confiscation - finished goods which were found during visit of the officers remained unaccounted in statutory book - Held that: - the appellant has been clearing the goods clandestinely without recording the same in the statutory books as indicated by us herein above while upholding the demand of duty on clandestine gods. In our view, the adjudicating authority was correct in confiscating the finished goods which were found unrecorded and redemption fine imposed in lieu of confiscation is also appropriate. We find no reason to interfere with such reasonable order passed by the adjudicating authority on the confiscation of the unaccounted goods. As regards the demand of duty confirmed , due to difference in balance sheet figure, we find that the appellant had filed balance sheet certified by the Chartered Accountant, it is found that There is also no reconciliation to come to the conclusion that the figures shown as sales figure in the loose sheet of balance sheet recovered from the appellant premises are correct sale figure. We also note that, on mere perusal of the said loose sheets which were photocopies, there is some gaps and omissions which could not be answered by the officers of the Department, for example, there is total mismatch of sales figures indicated to the manufacturing expenses recorded. In view of foregoing , we are of the view that in the absence of any corroborative evidence to support the claim that sales figure in which appears in loose sheets of balance sheets are acceptable, we are of the opinion that demand on this count needs to be set aside. The demand of duty on this count is set aside. Penalty u/r 26 of CER, 2002 on Director - Held that: - on the face of the fact that he has accepted that there was clandestine removed goods as recorded in the private note book, we uphold penalty is imposable but reduce the same to to 3 lakhs. Appeal disposed off - decided partly in favor of appellant.

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• 2017 (3) TMI 765
  Clandestine removal - 5,06,762 kgs. of dyes intermediates - demand - penalty - Held that: - it is settled principle of law that the evidences collected during the course of investigation whether in favour of the Revenue or otherwise ought to have been made available to the assessees and the appellant is free to make such use of such evidence in support of their case. Therefore, it is prudent to remand the matter to the adjudicating authority to decide the issue afresh - appeal allowed by way of remand.

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• 2017 (3) TMI 763
  Cigarettes - clandestine manufacturing and removal under own Brand Name - allegation on the basis of the details contained in the laptops seized from the possession of Shri Marvin Ali, General Manager. In the statement recorded from Shri Marvin Ali initially he had accepted the clandestine removal of cigarattes. However, ld. Commissioner dropped the demand citing the reason that Shri Marvin Ali has retracted his statements. Also during his cross-examination before the adjudicating authority he has denied his earlier statements and claimed that these have been taken under duress. Held that: - Section 14 of the CEA empowers the departmental officers to record the statement of witnesses which are formally admissible as evidence. However, in the present case almost all the statements have been categorically retracted. We also observe that the details are available in the laptop only for a period of three months. Section 36B specifies that computer printout will be admissible only when it is established that the computer has been used regularly in the ordinary course of activities to store such information. Since, this aspect has not been established; the adjudicating authority has rightly chosen to disregard this piece of evidence. Whenever allegations of clandestine clearances are made, the onus is clearly on the Revenue to establish the clandestine manufacture and clearance of the goods on the basis of tangible and reliable evidence. The onus on the department is even more in the case of units which are under physical control such as the respondent’s factory which is manufacturing cigarettes - Revenue has failed to prove conclusively that the respondent has clandestinely manufactured and removed cigarettes and evaded the Central Excise duty. The evidence marshalled by the Revenue has been proved to be grossly inadequate to discharge the burden of conclusively establishing clandestine clearance. The evidence on record at best raises a doubt in our mind but fails to establish the charge of clandestine clearance. The evidence is proved to be grossly inadequate even by the yardstick of preponderance of probability. Appeal dismissed - decided against Revenue.

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• CST, VAT & Sales Tax

• 2017 (3) TMI 755
  Whether the sales tax dues constitute a first charge over the property? - Held that: - this Court held that the sales tax dues constitute a first charge over the property by virtue of the provisions of Section 38(C) of the Bombay Sales Tax Act. The question involved in this writ petition stands answered against the petitioner - petition dismissed - decided against petitioner.

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• 2017 (3) TMI 754
  Natural justice - cancellation of sales tax registration - petitioner was not been served with the impugned order and that he came to know of the cancellation of his registration upon by downloading the information from the internet - Held that: - the petitioner had no knowledge of the notice - notice is required to be issued before taking any steps towards cancellation of registration of a dealer - impugned order quashed for breach of principles of natural justice - petition allowed - decided in favor of petitioner.

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• Indian Laws

• 2017 (3) TMI 749
  Complaint under Section 138 NI Act - dishonour of cheques - Summon order - whether the petitioner is jointly & severally responsible for the day to day conduct of the business of the Company- M/s Sabreen & Co. as alleged by the respondent/complainant in the complaint under Section 138 NI Act? - Held that:- The Form C dated 18.01.2013 shows one Shanu Malik as a partner of the Company- M/s Sabreen & Co. and the signature on the letter dated 09.06.2011 made by the partner on behalf of the Company- M/s Sabreen & Co. resembles with the signature of the present petitioner's signature made on the petition as well as on the vakalatnama. The plea taken by the respondent/complainant is that Shanu Malik and Shahne Alam are the same person. The partnership deed placed on record is of the year 1999 and Form C is of the year 2013. There is no Form C filed by the parties for the relevant period, i.e. for the year 2011 when the alleged offence was committed. The determination of whether the petitioner was the partner of the Company- M/s Sabreen & Co. or he was responsible for the day to day affairs of the Company in presence of the letter dated 09.06.2011 would be determined after leading the evidences by the parties in the trial. Mere taking of the plea by the petitioner that he was not the partner of the Company- M/s Sabreen & Co. ipso facto does not dispels him from the alleged allegation under Section 138 NI Act. The allegations alleged by the respondent/complainant are disputed questions of fact which cannot be looked into at this stage and the onus for proving otherwise lies on the petitioner which can only be discharged at the trial. Reliance is placed on the judgment of this Court in the case MOJJ Engineering Systems Ltd. & Ors. vs. A.B. Sugars Ltd [2008 (8) TMI 951 - DELHI HIGH COURT ] Therefore, in presence of the letter dated 09.06.2011 the plea taken by the petitioner loses its significance. Consequently, the impugned summoning order dated 29.08.2012 as well as the order on notice dated 27.11.2013 passed by the learned Metropolitan Magistrate, NI Act (West)/Delhi in C.C. No. 3871/1 does not warrant any interference by this Court to invoke inherent powers under Section 482 Cr.P.C. and the present petition is dismissed.

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• 2017 (3) TMI 748
  Proceedings pending before the Recovery Officer under the RDDBFI Act - attachment orders - proceedings initiated by HUDCO under the provisions of SARFAESI Act - Held that:- (i) The Recovery Officer attached to DRT-II, Delhi shall consider and decide the objections raised by SGS Constructions as well as other objectors, if any, with regard to Property No.6 specified in the Recovery Certificate dated 30.06.2008 and pass an appropriate order in accordance with law within 3 months from today. (ii) The consideration of the objections by the Recovery Officer shall be in accordance with the procedure prescribed under the Second and Third Schedules to the Income Tax Act, 1961 and the Income Tax (Certificate Proceedings) Rules, 1962. (iii) The order of the Recovery Officer dated 01.07.2015 as confirmed by DRT by order dated 10.07.2015 and by DRAT by order dated 20.07.2015 is hereby set aside and the application of SGS Constructions for amendment of its objections shall stand allowed as prayed for. (iv) So far as the proceedings initiated by HUDCO under the provisions of SARFAESI Act are concerned, the DRT shall decide all the Applications under Section 17(1) pending on its file including the claim of SGS Constructions that Property No.6 being an agricultural land is beyond the purview of the SARFAESI Act and pass an appropriate order in accordance with law within three months from today. (v) Till appropriate orders are passed by the Recovery Officer and DRT in terms of the above directions, status quo obtaining as on today with regard to Property Nos. 1 to 6 shall be maintained in all respects.

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