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TMI Tax Updates - e-Newsletter
March 26, 2015
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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TDS on interest accrued on the term deposits made by the Registry in terms of the orders passed by the Court in Motor Accident Claims cases - Circular, dated 14.10.2011, issued by the Income Tax Authorities quashed - amount ordered to be refunded with 12% interest - HC
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Power to transfer cases - Section 127(2)(a) is nothing, but a machinery provision - CIT is having power of transfer even without assigning any reason and therefore the order passed by the CIT is perfectly valid in law and the same need not be quashed - HC
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Addition under section 68 - Such could be proved by the Revenue in the present case through the statement of the persons, but unfortunately, they were not made available for crossexamination and therefore, the statements could be used as an evidence against the asseessee. No other evidence was available with the Revenue. - HC
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Undisclosed investment - mere fact of producing an affidavit by the wife or mother of the assessee may not be treated by the Assessing Officer as sufficient explanation - Additions confirmed - HC
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Application of advance ruling dismissed for non-prosecution - the endeavour of the Authority should be to decide the case on merits and settle the issue between the parties in advance and not throw out the application on mere technicalities. - Application of advance ruling to be accepted - HC
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Fuel charges expenditure - entry was passed on one day and assessee has issued different cheques, which seems to have been encashed on a single day in cash - Since AO did not enquire, nor CIT(A) considered it necessary to examine the genuineness of transactions, the claim of fuel charges should be enquired afresh - no disallowance - AT
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Penalty imposed by AO u/s 271AA - in absence of specific query raised by the authorised officer during the course of recording of statement u/s 132(4) of the Act about the manner in which undisclosed income has been derived and AO was not justified in imposing penalty u/s 271AAA - AT
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Transfer pricing adjustment - adjustment to the arm’s length price of the advertisement services received from the associated enterprise - Since the agreement is also silent, we do not accept that the assessee could utilize the basket of adslots and aggregate the same for achieving the target. - AT
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Reopening of assessment - Notice u/s 148 r.w.s 151(2) - the sanction accorded by the CIT(A) is not in accordance with law and in such a situation sanction accorded to the Assessing Officer is not valid - Provisions of section 292BB not applicable - AT
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Legally speaking since no income has accrued & neither any payment has actually been received by the appellant company, making addition in respect of estimate price of steam amounts to taxing of notional income which is not permissible. - AT
Customs
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Import of two television sets as baggage - petitioners claimed exemption of the entire amount of customs duty in respect of the said two television sets, on the ground that all the nine members of the joint family were travelling together, and the said televisions sets were to be used by members of their joint family - Exemption denied- HC
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Restoration of appeal - Appeal dismissed for non compliance of pre deposit order - even in matters of application seeking stay and waiver of the condition of predeposit, the Tribunal must apply its mind - HC
Corporate Law
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Application for scheme of amalgamation under Section 394 of the Companies Act,1956 - Evading capital gains tax - Evading income tax - The Regional Director prays that the Petitions ought to be dismissed on the ground of suppression alone - Amalgamation approved conditionally - HC
Indian Laws
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Section 66A of the Information Technology Act,2000 held unconstitutional - Against the fundamental right of free speech and expression guaranteed by Article 19(1)(a) of the Constitution of India - Not saved under Article 19(2) - SC
Service Tax
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Levy of penalty - Reverse charge mechanism - period from 18.04.2006 to 31.3.2008 - the issue has attained finality with the judgement of Indian National Ship Owners Association on 14.12.2009 - a fit case for invoking provisions of Section 80 - penalty waived - AT
Central Excise
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Clandestine removal of goods - Clearance of goods without issuance of bills - as the clearance value was within the SSI exemption, the confiscation of the goods cannot be sustained. So, the imposition of penalties are not warranted - AT
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Denial of rebate claim - the duty payment certificate submitted by applicant were missing from their office. In such a situation the claimant cannot be penalized by rejecting the rebate claims for lapses on the part of department - CGOVT
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Denial of rebate claim - Difference in AREs-1 value and FOB value given in the Shipping Bill - the rebate amount need not be changed if the difference in both values is due to difference in exchange rate subject to condition that value represents transaction value - CGOVT
VAT
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Imposition of penalty - The mens rea is not required to be proved as necessary ingredient for imposition of penalty under sub-section (5) of Section 78, on proving violation of sub-section(2) of Section 78 of the RST Act, 1994 - HC
Case Laws:
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Income Tax
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2015 (3) TMI 812
Deemed dividend - all the payments made by KIPL to the assessee upto 31.3.09 by way of loans and advances should be treated as "deemed dividend" as per AO - According to the CIT (Appeals)and also confirmed by Tribunal, the provisions of Section 2 (22) (e) stand attracted, however, in calculating the dividend amount, the Assessing Officer had erred in not taking into consideration the amount that has been repaid by the assessee to KIPL - Held that:- There is no dispute that the company is a controlled (private limited) company in which the public are not substantially interested. Further, the assessee is admittedly a shareholder and Director of KIPL. It is also beyond controversy that at all material times, the company possessed "accumulated profits" in excess of the amount which the assesseeshareholder was paid during the previous year. The Income-tax Officer found that surplus reserve of the company for the year ending 31.3.09 stood at ₹ 10,26,62,126/-. The assessee drew money for the purpose of making payments, which were personal in nature, aggregating ₹ 76,86,829/-, which amount was shown as loan or advance in the books of accounts of KIPL. The company's business is not money-lending and it could not be said that the loans had been advanced by the company in the ordinary course of its business. In such circumstances, in the instant case, all the amounts advanced to the assessee/appellant under the head loans and advances fall squarely within the ambit of Section 2 (22) (e) of the Income Tax Act Assessing Officer has taken the entire amount of ₹ 76,86,829/- received by the assessee from the company as dividend, while computing the income, but has lost sight of the payment made. In such circumstances, this Court is of the considered opinion that the CIT (Appeals) has rightly come to the conclusion that "the position as regards each debit will have to be individually considered, because it may or may not be a loan. The AO is, therefore, directed to verify each debit entry on the aforesaid line and treat only the excess amount as deemed dividend u/s 2 (22) (e) of the Act". We find such a direction issued by the CIT (Appeals), as upheld by the Tribunal is in consonance with the provision of Section 2 (22) (e) of the Act, and only those amounts, which reflect in the debit side of the books of accounts of the company falling under the definition of loans and advances, with regard to the shareholder, in the relevant year will be entitled to be taken as deemed dividend. - Decided in favour of the Revenue
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2015 (3) TMI 810
Power to transfer cases - impugned transfer has been made from the file of second respondent to the file of third respondent - whether the order of transfer dated 16.12.2008 made by the first appellant/first respondent is valid as per law or the same is liable to be quashed? - Held that:- It is true that the respondent/petitioner is having separate educational institutions in and around Thuckalay, Kanyakumari District. It is also true that the Chairman of the respondent/ petitioner is running several educational institutions in Kerala in his individual capacity. But no-one can say that the said A.P.Majeed Khan is not getting income from the institutions which are being run by the trust as well as from the institutions which are being run by him in his individual capacity. Under the said circumstances for making effective assessment and also for having coordinate enquiry and investigation, such transfer is must and the same would not create any prejudice to the respondent/petitioner. Since Section 127(2)(a) is nothing, but a machinery provision and since no serious allegations have been levelled against the appellants/respondents, this Court is of the considered view that the first respondent/first appellant is having power of transfer even without assigning any reason and therefore the order passed by the first appellant/first respondent is perfectly valid in law and the same need not be quashed. The learned Single Judge has simply observed that such transfer is not factually justifiable and consequently allowed the writ petition. In view of the discussion made earlier, this Court has received considerable force in the contention putforth on the side of the appellants/ respondents and therefore the impugned order passed by the learned Single Judge is liable to be quashed.
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2015 (3) TMI 809
Addition under section 68 - assessee failed to prove the genuineness of the transaction - Tribunal deleted addition - Held that:- The attempt made to contend that the burden is upon the assessee to prove the identity of the person, creditworthiness of the person and the genuineness of the transaction are to be examined in context to the existence of the person concerned, the factum of actual money in possession of the person and having paid to the asseessee and the mode of payment. Thereafter, if the person concerned is in existence and has actually paid the amount from his account by cheque, it can be said that the initial burden is discharged so far as explanation to be considered under section 68 of the Act. Thereafter, the burden would be upon the revenue to show that either the person was bogus or there was no financial capacity to make the payment and the arrangement of money was artificial or that the money has not passed over and it was only by way of an eye wash. Such could be proved by the Revenue in the present case through the statement of the persons, but unfortunately, they were not made available for crossexamination and therefore, the statements could be used as an evidence against the asseessee. No other evidence was available with the Revenue. Under these circumstances, if the Tribunal has found that the explanation under section 68 of the Act was acceptable in absence of nondischarge of the burden upon the Revenue, such a finding of fact would not call for interference when the appeal before this Court is limited to the substantial questions of law. - Decided in favour of assessee.
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2015 (3) TMI 808
Undisclosed investment - additions of two amounts of ₹ 1.50 lacs and ₹ 1 lac which the assessee claimed to have been received from his mother and wife respectively - Held that:- In the present matter undoubtedly the investment having been found to be in the name of the assessee and assessee alone, that too in the course of search and seizure under Section 132 of the Act, the presumption can only be that they form part of unaccounted income of the assessee and the mere fact of producing an affidavit by the wife or mother of the assessee may not be treated by the Assessing Officer as sufficient explanation and neither the Assessing Officer nor the Tribunal has found the same to establish the genuineness of the two transactions. The said findings are purely findings of fact which is in the domain of the Assessing Officer and the Tribunal and it cannot be said that the findings are either based upon no material and are perverse. This Court is of the view that such findings are the natural presumption to be drawn from the nature of evidence that the assessee had produced before the Assessing Officer. - decided against assessee.
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2015 (3) TMI 807
Cessation or remission of the liability - tribunal deleted the addition made under Section 41(1) - Held that:- All the sundry creditors were shown in the return for the Assessment Year 2007-08 who were already shown as sundry creditors in the earlier Assessment Year 2006-07 and, therefore, as such, there was no remission or cessation of liability during the year under consideration and the Assessing Officer was not justified in making the addition under Section 41(1) of the Act. Thus relying upon the decision of this Court in the case of Commissioner of Income Tax Vs. Bhogilal Ramjibhai Atara (2014 (2) TMI 794 - GUJARAT HIGH COURT) when the learned tribunal has allowed the appeal and has deleted the addition of ₹ 31,82,258/- under Section 41(1) of the Act, it cannot be said that the learned tribunal has committed an error, which calls for the interference of this Court. - Decided against revenue.
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2015 (3) TMI 806
Rejection of books of accounts - application of 6% G.P. Rate - transactions with sister concern are liable to be examined as per the provisions of sec 40A(2) - Held that:- CIT(A) to hold that the action of the AO of rejecting the books of accounts is not justified and then considered in detail the various reported decisions with respect to the G.P. Rate and held that since the assessee had furnished complete particulars of transactions, various issues which in turn were analysed and the purchases made from its sister concern as compared with other parties had resulted in excess payment of ₹ 10,02,125/-. The addition under Section 40A(2)(b) was restricted to that sum. The ITAT confirmed this but required the AO to give effect to the order. At the same time, it remitted the matter on certain limited aspects as Ld. CIT(A) has not confronted the AO with the details of transactions furnished by the assessee with sister concern. Under the circumstances, we are of the considered opinion that in the interest of justice the issue should be set aside to the file of the AO for fresh verification. No question of law arises. - Decided against revenue. Disallowance of interest - ITAT decision for directing cancellation of disallowance - Held that:- ITAT recorded that the assessee had sufficient erest-free funds. Consequently, the application of Reliance (2009 (1) TMI 4 - HIGH COURT BOMBAY) cannot be faulted. Being a finding of fact, this Court does not propose to re-examine the matter. Furthermore, we notice that the entire addition is to the tune of ₹ 12,10,000/- and the tax effect is less than ₹ 10 lakhs. Consequently, no question of law arises on this count too. - Decided against revenue.
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2015 (3) TMI 805
Application of advance ruling dismissed for non-prosecution - also application for restoration has been rejected - Held that:- Orders dated 16.01.2014 and 30.04.2014 deserve to be set aside. Firstly, the order dated 16.01.2014 is an order simply dismissing the application of the petitioner for non-prosecution, whereas Rule 17 of The Rules 1996, permits the Authority to decide the matter exparte on merits. Further, no adequate reason for rejecting the application for restoration has been given in the order dated 30.04.20214. Merely by saying that the averments made in the two affidavits are contradictory would not be sufficient. The Authority ought to have specified as to what was the contradiction in the two affidavits and why the same was not acceptable. After having gone through the two affidavits, what we find is that initially the applicant-writ petitioner had stated that the notice for hearing on 16.01.2014 was not received by him. In the second affidavit, it was stated that though the said notice may have been delivered but it was misplaced and never brought to the notice of the applicant. The said averments cannot be termed as contradictory statements because the consistent stand of the applicant was that the notice was never within the knowledge of the applicant. In a case like this, where a party seeks Advanced Ruling, under the provision of the Income Tax Act, from the Authority to find out as to whether certain provisions of the Act would be applicable in the case of the applicant-writ petitioner or not, the endeavour of the Authority should be to decide the case on merits and settle the issue between the parties in advance and not throw out the application on mere technicalities. Application of advance ruling accepted - decided in favour of assessee.
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2015 (3) TMI 804
Defective applications for grant of stay rejected - whether the petitioner is entitled to any relief? - Held that:- There is no dispute that a communication was sent by the advocate for the appellant/petitioner, enclosing a medical certificate in proof of he being sick and on account of the same, not being able to attend the Tribunal and take steps to cure the notified defects. The Tribunal, without taking into consideration the reason stated in the communication sent seeking adjournment and also the annexed medical certificate, has passed the impugned order, whereby, the said applications were dismissed. If the advocate for the petitioner/appellant had not sought adjournment on medical grounds, the Tribunal would have been justified in passing the impugned order. Since adjournment was sought on the ground of illness of the advocate, which was certified by a medical practitioner, the Tribunal has acted with material irregularity in not taking into consideration the said fact and in passing the impugned order. There is lack of application of mind and focused consideration. Except the sentence, noticed supra, there is no reasoning. is lack of application of mind. Non-consideration of the prayer for adjournment sought on medical ground by the advocate on record is apparent. There is denial of reasonable opportunity. W.P. allowed. Petitioner is permitted to file fresh applications for grant of stay, if so advised, within a period of two weeks from today.
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2015 (3) TMI 803
Addition u/s 40(a)(ia) - non deduction of tds on interest paid to Bajaj Auto Finance Ltd. and legal charges paid - amounts which are actually paid and are not outstanding as on the year end - Held that:- As at the time of hearing, assessee made a new legal argument that second proviso to section 40(a)(ia) of the Act was inserted by Finance Act, 2012 w.e.f. 01.04.2013, whereby it is provided that the disallowance u/s 40(a)(ia) of the Act would not be made if the assessee is not deemed to be an assessee in default under the first proviso to section 201(1) of the Act. The stand of the assessee is that the said proviso should be understood as retrospective in nature as it has been introduced to eliminate unintended consequences which may cause undue hardships to the tax payers. It was pointed out that in similar circumstances, the Pune Bench of the Tribunal in the case of ITO vs. M/s Gaurimal Mahajan & Sons [2015 (3) TMI 770 - ITAT PUNE] following the decision of Antony D. Mundackal vs. ACIT [2013 (12) TMI 67 - ITAT COCHIN] has restored the matter back to the file of the Assessing Officer. In the precedent Gaurimal Mahajan(supra), the Tribunal noted that such a plea was raised for the first time before the Tribunal and the correctness or otherwise of the contentions raised was not examined by the lower authorities. Therefore, the Tribunal restored the matter back to the file of the Assessing Officer for examination afresh, following the decision of the Cochin Bench of the Tribunal in the case of Antony D. Mundackal (supra) in a similar circumstance. The Ld. Representative submitted that the matter be restored back to the file of the Assessing Officer in the light of the order of the Tribunal dated 06.01.2014 (supra). The aforesaid plea of the respondent-assessee has not been seriously opposed by the Ld. Departmental Representative appearing for the Revenue. Following the aforesaid precedent, we therefore deem it fit and proper to restore the matter back to the file of the Assessing Officer who shall consider the plea of the assessee based on the second proviso to section 40(a)(ia) of the Act inserted by the Finance Act w.e.f. 01.04.2013 in the light of the directions of cases quoted. - Decided in favour of assessee for statistical purposes
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2015 (3) TMI 802
Validity of assessment framed under Section 153A read with section 143(3) - A.Ys. 2001-02 to 2006-07) - Held that:- Considering the undisputed fact emerging in the assessment for the assessment years 2001-02 to 2006-07 are that no addition other than the addition on account of difference in construction as shown by the assessee in its books of account and as estimated by the D.V.O. in his report has been made which impliedly supports the contention of the assessee that no incriminating material was found during the course of search proceedings at the premises of the assessee. It is also an un-rebutted fact that on the date of search, assessments based on the return of income originally filed for the assessment years under consideration were not pending as the returns of income filed for these assessment years and processed under Section 143(1) of the Act had reached finality in the absence of issuance of notice under Section 143(2) of the Act within the prescribed time limit. Thus in view of cited decisions by the Learned AR that is in the cases of All Cargo Global Logistics Ltd. vs. CIT (2012 (7) TMI 222 - ITAT MUMBAI(SB)) and others, we are of the opinion that the assessments framed under sec. 153A for the assessment years under consideration are not valid. - Decided in favour of the assessee. Validity of addition made on undisclosed investment in construction - basis of valuation report of the D.V.O. to make additions - Held that:- Sole addition made in these assessment years under consideration is on account of difference in construction as shown by the assessee in its books of account and as estimated by the D.V.O. in his report is also not sustainable in view of the decision of Hon’ble Supreme Court in the case of Sargam Cinema Vs. CIT (2009 (10) TMI 569 - Supreme Court of India ) holding that the Assessing Authority could not have referred the matter to the D.V.O. without the books of account being rejected. It was held that reliance placed on the report of the D.V.O. is misconceived. The additions made on account of undisclosed investment in the construction based on the valuation report of the D.V.O. are thus held as not justified - Decided in favour of the assessee. Validity of assessment framed under Section 153A - (A.Y. 2007-08) - Held that:- As during the course of search in the premises of the assessee several documents including prima facie incriminating material were found and seized. Thus, it cannot be said that there was no incriminating material found during the course of search to concur with the contention of the assessee that the assessment framed under Section 153A of the Act was not valid. - Decided against assessee. Addition as undisclosed income - addition of undisclosed stock - A.O. in bringing to tax the assessee’s share out of the alleged surrender of ₹ 1.6 crores - Held that:- find substance in the contention of the Learned AR that an addition cannot be made solely on the basis of surrendered amount dehors evidence in corroboration and ignoring subsequent retraction thereto by the assessee with valid reason. Here the case before us is that when surrendered income was objected by the assessee with sufficient reason then the same should have been duly considered by the Assessing Officer and Learned CIT(Appeals) while making and upholding the additions. The assessee vide several letters including letter dated 17.10.2008, 22.10.2008, 13.11.2008, 05.12.2008, 24.12.2008, 26.12.2008, wrote to the Assessing Officer and with written submissions dated 28.1.2010, 24.1.2011 before the CIT(Appeals) tried to point out many discrepancies in the stock taking and working out the undisclosed sales and profit by the Assessing Officer but the same have been ignored without assigning any reason. The Learned CIT(Appeals) has also not dealt with the contents of the above letters. We thus to meet the end of justice set aside the issues raised to the file of the Assessing Officer to decide these afresh after verifying the contents of these letters after affording adequate opportunity of being heard to the assessee - Decided in favour of assessee for statistical purposes. Addition on account of cash receipt - incorrect facts have been recorded - Held that:- the authorities below have justified decoding of those figures by making addition of zero to the figure where after recording the figure, a zero was mentioned after putting decimal e.g., if ₹ 1,000 was written as ₹ 1000.0, the Assessing Officer had decoded the figure as ₹ 10,000. Learned CIT(Appeals) upheld this action of the Assessing Officer. But he did not agree with the Assessing Officer for adopting similar decoding of figure where ₹ 1,000 was written and thereafter no decimal with zero was put. We, however, find substance in the contentions of the learned AR that there was no concrete basis for doing so by the authorities below for the decoding of the figure. The additions in question are thus not sustainable in absence of any basis particularly in a search proceedings under sec. 153A of the Act. These additions are accordingly deleted. - Decided in favour of assessee.
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2015 (3) TMI 801
Validity of reopening of assessment - validity of reasons recorded - Held that:- As per the reason to believe for reopening, it is noted by the Assessing Officer that in the information forwarded by Addl. DIT (Inv.), Meerut to the Investigation Wing, Lucknow, it was stated that M/s H. B. Relan & Co., Karol Bagh, Delhi was providing accommodation entries of short term / long term capital gain in lieu of cash received from intending beneficiaries and Smt. Manju Bansal i.e. the assessee, is one of beneficiary. It is further noted by the Assessing Officer that to verify the genuineness of the transactions, letters were issued by the ADIT (Inv.), Lucknow to different stock exchanges and it was found that the date of purchase, date of sale and price of scripts were not corroborated with the information provided by the assessee. From these reasons, it is apparent that the Assessing Officer has not merely acted upon the information provided by Addl. DIT (Inv.), Meerut to the Investigation Wing, Lucknow but further enquiries were made and it was noted by Assessing Officer that the assessee has made purchases of these shares during 03/09/99 to 04/10/99 at a cost of ₹ 3,37,445/- and these shares were sold during 11/09/2000 to 30/11/2000 at a hefty sale consideration of ₹ 48,41,763/- within a period of 13 months from the date of purchase. Enquiries were made from various stock exchanges and also from the brokers before initiating the assessment proceedings. Considering these facts, the reopening proceedings are validly initiated - Decided against assessee. Additions made on realized on sale of shares - LTCG OR income from other sources - Held that:- In the present case the assessee has furnished copy of sale and purchase bill, contract note, share certificates etc. The assessee has also furnished the official quotation from various stock exchanges. the evidences brought on record by the assessee in support of the claim of long term capital gain cannot be rejected by the Revenue without bringing adverse material on record and merely on the basis of some statement of some broker. The theory of human probability is also not attracted in the present case because this is noted that the assessee is engaged in the speculation transactions in share also and therefore, the judgment of Hon'ble Apex Court in the case of CIT v. DURGA PRASADMORE [1971 (8) TMI 17 - SUPREME Court] and SUMATI DAYAL v. CIT [1995 (3) TMI 3 - SUPREME Court] are not rendering any help to the Revenue in the facts of the present case. We, therefore, hold that in the facts of the present case, as discussed above, the claim of the assessee regarding long term capital gain deserves to be accepted. - Decided in favour of assessee.
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2015 (3) TMI 800
Validity of proceeding u/s 153C - Held that:- The absence of a satisfaction recorded by the Assessing Officer of the searched persons, the Assessment framed u/s 153C of the Act by the Assessing Officer cannot be sustained, as such same is bad in law. It is observed that the Revenue has not placed any material on record in respect of evidence qua the present assessee collected during the search operation. Moreover, the satisfaction as envisaged under Section 153C is also not placed on record. Therefore, we have no option but to accept the contention of Ld. Counsel for the assessee that no satisfaction was recorded by the Assessing Officer of the searched party, this contention is supported by the reply of Revenue furnished under Right to Information Act. It is expected that the Assessing Officer should be careful in complying with the mandate of law to avoid loss to exchequer. Accordingly the ground raised by the assessee in cross objection, that the proceedings initiated under Section 153C is bad in law is allowed. The assessment framed u/s 153C read with section 143(3) pertaining to the Assessment Year 2003-04 is quashed. - Decided in favour of assessee.
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2015 (3) TMI 799
Additions of Sundry Creditors - CIT(A) deleted the addition - Held that:- We agree with the observation of the Ld.CIT(A) that the methodology adopted by the Assessing Officer prima facie suffers from certain deficiencies. Entire closing balance cannot be treated as un-accounted credits without examining what was received during the year. Moreover, these are all trade credits and arising out of Books of Accounts, out of the running accounts on account of purchases and payments made over a period of time. Further, the closing balances have been confirmed by the parties. In view of this, there is no merit in Revenue's contentions. We uphold the order of CIT(A) and reject the Revenue's contentions in the respective assessment years. Even though Revenue raised as Ground No.5, the issue of not having any incriminating material which Ld.CIT(A) also considered, we are of the opinion that there is no need for adjudicating this issue on legal principles alone when on facts, no addition can be made out of the closing credit balances when purchases/ other transactions were accepted. Whether there is incriminating material or not, Assessing Officer's addition per se is not correct on facts itself. - Decided against revenue. Unexplained credits - Held that:- Assessee did not give any information when these amounts were adjusted or returned. In the absence of these details, we are unable to give any finding, whether the amounts can be considered as cash credits or trade credits. Therefore, issue of examining these amounts are restored to the file of Assessing Officer to examine in respective assessment years and determine whether they can be treated as unexplained cash credits. Assessing Officer's order did not specify the details of credit. Therefore above analysis is based on the details filed by assessee. Assessing Officer is directed to examine the amounts that were considered for addition and exclude trade credits from purview of cash credits. If assessee has furnished any mode of receipt/mode of adjustment or repayment of the amounts and confirmations from the said parties, then Assessing Officer can make necessary enquiries to examine whether they are genuine or not. With these observations, the issue of examining the credits which are not adjusted in the trade either during the year or later year is restored to the file of the Assessing Officer. - Decided in favour of assessee for statistical purposes. Addition on commission received - Held that:- We are of the opinion that there is no dispute with reference to accounting of the commission of ₹ 26,61,915/- in the AY.2007-08, during which year assessee has rendered services and accounted as income. The TDS claim also pertains to AY.2007-08. Considering these facts, we do not see any reason to sustain the addition in AY.2006-07, just because the other parties have deducted TDS on advance amounts paid. In view of this, CIT(A) order stands modified. The addition is deleted from AY.2006-07. - Decided in favour of assessee. Disallowance of fuel charges - Held that:- As seen from the information available on record, there is no dispute with reference to the fact that journal entry for the above expenditure was passed on one day for the so called fuel charges and assessee has issued different cheques, which seems to have been encashed on a single day in cash. Assessing Officer also, even though accepted by ringing up the person on phone, did not make any enquiry with reference to the genuineness of the transactions. The reservations of the Additional CIT seems to be somewhat genuine since Assessing Officer did not make proper enquiry. At the same time, CIT(A) also in our opinion is not correct in allowing the amount to the extent of clearance through bank account while disallowing the cash payments. Unless the transaction is proved to be non-genuine, just because the payments were made in cash or is drawn by the said person from the bank, the same cannot be considered as non-genuine. Since Assessing Officer also did not enquire, nor CIT(A) considered it necessary to examine the genuineness of transactions, We are of the opinion that the claim of fuel charges should be enquired afresh. Assessee is directed to furnish the necessary invoices raised, the mode of transport of husk to the factory premises and utilisation of the husk in the process of manufacturing of decorative laminated sheets and the genuineness of the payments to the said party. - Decided in favour of assessee for statistical purposes.
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2015 (3) TMI 798
Profit earned on sale of shares - Capital gains v/s business income - Held that:- After going through the order of the Tribunal in assessee's own case for the immediately preceding assessment year, wherein facts and circumstances were the same, we direct the AO to treat the profit on sale of shares as short term and long term capital gains depending on the period of holding of shares. -Decided in favour of assessee. Undisclosed sale of shares - CIT(A) deleted addition - Held that:- After recording the finding to the effect that sale proceeds of 5000 shares of M/s Rajesh Exports have been credited by the assessee in its books of accounts on 21-8-2008 i.e. before the end of the financial year, the CIT(A) held that there was no escapement of sale proceeds of 5000 shares. The finding recorded by CIT(A) has not been controverted by ld. DR. It is pertinent to mention here that no ground has been taken by the Revenue with regard to violation of Rule 46A by the CIT(A) in respect of any additional documents considered by him while deleting the addition. Accordingly, there is no infirmity in the order of CIT(A) deleting addition made on account of 5000 shares of Rajesh Exports. - Decided in favour of assessee. Addition made on account of undisclosed shares of M/s Hindustan Organic Chemicals ltd has been deleted by the CIT(A) after observing that there was typographical mistake with regard to purchase of shares of Hindustan Organics on 28-2-2007, which was actually 15,000 shares and not 2,17,761 shares. Since the addition was made by AO only on the basis of typographical mistake, which has been detected by CIT(A) and after considering the correct nos. of shares purchased on 28-2-2007 we do not find any infirmity in the order of CIT(A) for deleting the addition made on account of shares of M/s Hindustan Organics Chemicals Ltd. - Decided in favour of assessee. Addition made on account of deemed dividend u/s.2(22)(e) - addition was made by the AO in respect of loan taken by the assessee firm from M/s Koradia Construction Pvt. Ltd. - addition deleted by the CIT(A) - Held that:- It is not disputed that assessee is not shareholder of M/s Koradia Construction Pvt. Ltd, therefore, the amount of loan received by the assessee not in the capacity of shareholder, is not liable to be treated as deemed dividend u/s.2(22)(e) in the hands of assessee firm in view of the decision of Hon‟ble Bombay High Court in the case of Universal Medicare Pvt. Ltd.,[2010 (3) TMI 323 - BOMBAY HIGH COURT ]. The issue is also squarely covered by the decision of Bhaumik Colour Paint Pvt. Ltd.,[2008 (11) TMI 273 - ITAT BOMBAY-E ]. Accordingly, we do not find any reason to interfere in the order of CIT(A) for deleting the addition made u/s.2(22)(e) of the Act. - Decided in favour of assessee. Disallowance u/s 14A - CIT(A) deleted disallowance - Held that:- As per our considered view while computing disallowance under Rule 8D only those investments which are made for earning exempt income is to be taken into account and other investments which fetches taxable income are to be excluded. Keeping in view the fact that assessee has offered taxable income in respect of its investment in future and options business as well as capital gains, we restore the computation of disallowance under Rule 8D. We direct accordingly. - Decided in favour of revenue for statistical purposes. Disallowance on account of undisclosed income under the head other sources i.e. sale of shares - AO has made the addition on the plea that assessee has sold 25000 shares of Karuturi Communication on behalf of Koradia Construction, which is reflected in the ledger account - Held that:- From the record we found that during the year assessee has purchased 15401 shares of Karuturi Communication and sold the same. M/s Koradia Construction have shares 25000 shares of the Karuturi Communication. When the order for sale of shares on 13.07.2007 was placed by assessee for 15401 shares and M/s Koradia Construction (sister concern) placed order for sale of 25000 shares to Khandwala Integrated Financial Services Ltd., who was common broker for assessee and sister concern, by mistakenly broker issued contract memo in the name of assessee for sale of 40401 shares. As the amount of sale proceeds of 25,000 shares is belong to Koradia Construction, therefore, the same was credited to their account which was reflected in confirmation of account. After considering all these facts of the case, the CIT(A) vide para 7.3 held that assessee sold only 15401 share which has also been offered for tax, and 25000 shares belonged to M/s Koradia Construction which was confirmed by them. Therefore, addition for sale of 25,000 shares cannot be made in the hands of assessee. The finding recorded by the CIT(A) is as per material on record. Accordingly, we do not find any reason to interfere in the order of CIT(A) for deleting the addition made with regard to sale of 25000 shares of Karuturi Communication Ltd. - Decided in favour of assessee.
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2015 (3) TMI 797
Penalty imposed by AO u/s 271AA - surrender of ₹ 50 crores, as the assessee had not substantiated the manner in which the undisclosed income was derived with any corroborative evidence - CIT(A) deleted penalty levy - Held that:- Assessee replied all the questions of revenue authorities in the statement recorded on 4.3.2010 u/s 132(4) of the Act. We further note that during the assessment proceedings, the assessee in his reply dated 25.7.2011, further submitted details of the surrendered income of ₹ 50 crore and submitted that he had entered into various speculative transactions and also transaction related to properties during the period from 1.4.2009 to 4.3.2010 i.e. FY 2009-10 relevant to AY 2010-11 and the said transactions were carried out in an unrecognised manner and neither any accounting records nor any documentary evidence/support in respect of these transactions/activities carried out by the assessee were maintained. Under these facts and circumstances of the case and in the light of decision of ITAT Delhi “E” Bench in the case of Neeraj Singal[2013 (6) TMI 762 - ITAT DELHI], we are of the opinion that the present case is squarely covered in favour of the assessee by the decisions of of CIT vs Radha Kishan Goel (2005 (4) TMI 47 - ALLAHABAD High Court ), by the decision of Hon’ble Gujarat High Court in the case of CIT vs Mahendra C. Shah (2008 (2) TMI 32 - GUJARAT HIGH COURT) in favour of the assessee and hold that in absence of specific query raised by the authorised officer during the course of recording of statement u/s 132(4) of the Act about the manner in which undisclosed income has been derived and AO was not justified in imposing penalty u/s 271AAA of the Act. We also notice a peculiar fact of the present case that during the course of assessment, replying to the query of the AO, the assessee vide his reply dated 25.7.2011, as reproduced hereinabove, explained the manner in which the undisclosed income has been derived which cannot be ignored. Therefore, we reach to a logical conclusion that the CIT(A) was right in granting relief for the assessee in deleting the penalty and we are unable to see any controversy or any other valid reason to interfere with the same - Decided in favor of assessee.
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2015 (3) TMI 796
Transfer pricing adjustment - adjustment to the arm’s length price of the advertisement services received from the associated enterprise - downsliding adjustment of ALP of ₹ 82,78,760/- made by the TPO and sustained by the DRP - Held that:- We do not find anywhere either in the agreement or in the submissions made before the revenue authorities that the assessee had to pay more in non prime time slot to off-set the deficit of revenue transferred to Star TV in prime time slots. From the rate card the assessee had to make the payment of ₹ 15,10,22,365/- in the financial year, against which the assessee was able to make the payments of ₹ 10,00,22,000/- only. Except for a clause prescribing an interest @ 9% on shortfall, there are no penalty clauses, which could create pressure or insinuate the assessee to fall back on non prime time slots to recover the shortfalls in payment to be made as per agreed rate card. Since the agreement is also silent, we do not accept that the assessee could utilize the basket of adslots and aggregate the same for achieving the target. We cannot accept the submissions of the AR that the aggregation could be allowed because, the payments were being made for same channel and same functions, i.e. ad-space, the difference between them only being prime time slot and non prime time slot. Since there was no justification for higher payment made by the assessee as compared to the third party payments, the adjustment as suggested by the TPO and sustained by the DRP, according to us is fair and reasonable and does not call for any disturbance, which we sustain. - Decided against the assessee.
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2015 (3) TMI 795
Reopening of assessment - issuance of Notice u/s 148 r.w.s 151(2) - Sanction for issue of notice - Held that:- Provisions of sub-section (2) of section 151 of the Act is to be applied for issuing notice under section 148 of the Act and as per sub-section (2) of section 151 of the Act, the Assessing Officer was required to obtain sanction/approval from the Jt. Commissioner of Income-tax and in the instant case, approval/sanction was obtained from the ld. Commissioner of Income-tax. Therefore, we have no hesitation in holding that the sanction accorded by the CIT(A) is not in accordance with law and in such a situation sanction accorded to the Assessing Officer is not valid and hence the Assessing Officer could not assume jurisdiction to issue notice under section 148 of the Act and in that case when the Assessing Officer has issued notice under section 148 of the Act without assuming valid jurisdiction, notice issued under section 148 of the Act is illegal and void ab initio. In the instant case, since notice under section 148 of the Act was issued without obtaining approval from the competent authority, notice issued under section 148 of the Act is invalid and, therefore, the assessment framed consequent thereto is not a valid assessment and void ab-initio. We accordingly set aside the order of the ld. CIT(A) and annul the assessment. Provisions of section 292BB of the Act is not applicable in the present facts of the case, as the issue in dispute is with regard to the validity of jurisdiction assumed by the Assessing Officer for issuing notice under section 148 of the Act.- Decided in favour of assessee.
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2015 (3) TMI 794
Addition made on account of the sale value of exhaust steam supplied to SSL - not charging for steam supplied to SSL - transactions between holding and subsidiary company - Held that:- The entire project of sugar production plant of SSL as well as the power generation unit of the appellant was in fact part of some project owned by one company. The power generation unit was separated to get investment from French company Air-Liquide, which agreed to join as JV (joint venture) partner. Therefore the transaction of exchange of bagasse & water with power & steam is in fact between two limbs of same project. If the whole project was owned by one company (as in fact it was initially) only the net profit of the entire project would have been taxable. As can be seen in the last paragraph reproduced above from he letter of SSL, the appellant company proposed to be made a subsidiary of SSL (and in fact has already become so). Looked from this angle, the transaction is between the holding and subsidiary company. Therefore in my opinion action of the appellant company in not charging for steam supplied to SSL is quite justified and cannot be said to be deliberate or motivated. Moreover even if an assessee gives (sells) his goods free of cost to other, there is no provision in the IT Act to tax its sale value' as income on presumptive basis. Legally speaking since no income has accrued & neither any payment has actually been received by the appellant company, making addition in respect of estimate price of steam amounts to taxing of notional income which is not permissible. Thus addition deleted. - Decided in favour of assessee. Deduction u/s 80IA - 50% of receipts from UPSEB - whether are eligible for computation of deduction u/s 80-IA - CIT(A) holding that steam is one of the form of power and as is eligible for deduction u/s 80-IA - Held that:- Similar issue has been decided by the ITAT in favour of appellant in AY 99-00 and AY 01-02. In the said years, the ITAT has followed its order for AY 00-01 and has held that AO was not justified in reducing the amount received by appellant from the gross receipt eligible for deduction u/s 80- IA. However, because the entire addition in respect of sale of steam was deleted this alternate ground becomes infructuous and hence treated as dismissed for statistical purposes. Thus ground having become infructuous, is dismissed. - Decided in favour of assessee.
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2015 (3) TMI 793
Deduction u/s 36(1)(viii) disallowed - computation of deduction under Chapter VI-A - Nexus with income chargeble as income from other sources - nexus of investment in such bonds with the interest bearing or interest free bonds - CIT(A) restored the deduction u/s 36(1)(viii) to the amount as claimed by the assessee - case of the Revenue is that since the amount of ‘Reserves and surplus’ appearing in the assessee’s balance sheet is more than the investment made in the UP State Bonds, etc. which fetched interest income of ₹ 10.41 crore, and the amount of interest bearing advances being more than the interest bearing loans, the presumption should be drawn that such investments were financed by the assessee out of its capital and reserves and not from any interest bearing funds. And as such, the claim for deduction of interest and other charges amounting to ₹ 145.66 crore is untenable. Held that:- There is no discussion in the assessment or the impugned order as to the nexus of investment in such bonds with the interest bearing or interest free bonds. The AO has gone with the figures of the current year to hold that interest bearing advances are more than the interest bearing loans. On the other hand, the contention of the assessee is that investment in such bonds were made in earlier years and that too out of interest bearing funds. The ld. CIT(A) has simply held that since deductions under Chapter VI-A are to be done on net basis, the assessee deserves relief. He failed to note that the question under consideration was not about the calculation of the amount of deduction under Chapter VI-A, but the computation of income under the head `Income from other sources’, for which there is a separate scheme set out in Chapter IV-F of the Act. Under such circumstances, we cannot sustain the view canvassed by the ld. CIT(A). Accordingly, the impugned order is set aside and the matter is sent back to the AO for deciding this issue afresh to find out the source of the amount invested in such funds, at the time when such investments were made. - Decided in favour of revenue for statistical purposes.
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Customs
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2015 (3) TMI 820
Smuggling racket - Search and seizure - Illegally imported – Penalty on Revenue officers - abatement of smuggling - refusal of cross-examination request to the appellants - Held that:- SCN and findings of the Adjudicating authority have plainly brought out through various connecting strands of materials the interconnection between those involved in the smuggling and the present appellants. Apart from Mamoor Khan, the role of Dil Agha was highlighted; he figured time and again on various dates when the textiles were brought in. R.N. Zutshi’s voluntary statement dated 17.01.2001 identified Dil Agha as having introduced himself as Mamoor Khan’s brother and with effect from the last week of July, 2000 he had been in touch with R.N. Zutshi (as a substitute of Mamoor). R.N. Zutshi confirmed that Mobile No.9811065987 and landline No.3930733 belonged to him (Dil Agha) and that after August, 2000, Dil Agha used No.9811158376. This statement corroborated the statement of Dil Agha recorded on 23.05.2001. Dil Agha’s unsigned statement was duly supported by two independent witnesses. It established a close connection between Mamoor Khan and Dil Agha on one hand, and regular passengers (or couriers) such as Olga K, Gulia etc. on the other. Dil Agha’s association with Mamoor was also confirmed by Abdul Qayum, Manager of Sameer Guest House, Ballimaran, Delhi in his statementdated 20.12.2000. The evaluation of these materials led to the adjudicating orders’ conclusion that Dil Agha was an important player in smuggling silk fabrics through Uzbeki women and that the charges made against him for conniving, abetting and conspiring were established. - The conclusions of the Customs adjudicating Commissioner did not rest on the various statements recorded under Section 108 only. A very crucial element which lent corroboration to those statements were the call detail records. The absence of goods or the fact that in earlier instances they had been cleared without dispute, or even after payment of differential duty, in the opinion of the Court do not constitute impediments to a SCN and proceedings on the question of abetment of any of the appellants. In all such instances where a conspiracy (that has achieved its objective) is unearthed, the articles - especially in the form of goods would be no longer available. However, that would in no manner absolve the culpability of those involved, especially those who play key roles in the fulfillment of such conspiracies. The fact that differential duties were paid on particular dates and the record of entry of those involved in the smuggling racket, precisely constitute the evidence which both corroborates and establishes the allegations. Printout details of the calls made between those accused of smuggling, such as Dil Agha, Olga established the allegations of conspiracy and abetment. The statement of transporters, smuggled goods traders, those frequently seeing some of them like the manager of Sameer Guest house, lent further support to the statements of R.N. Zutshi (though retracted later) and Dil Agha. Last but not the least, the previous records maintained in the Airport also confirmed the stories of Olga and Dil Agha about the frequency of visits and that on several occasions differential duty was paid; the corroboration of quantities was likewise founded on scrutiny of the records. Commissioner did not go by only the statement of R.N. Zutshi to hold the other appellants guilty; he had a lot of other corroborative materials to support his findings. It is, therefore, held that the Appellants’ submissions that the charge of abetment could not have been made against them for past transactions in the absence of the goods, or that many of them were not involved or present at the Airport when the actual lone consignment was seized in August 2000, are meritless. Each of the appellants were implicated for their complicity not on the basis of solitary evidence only, such as confessional statement of R.N. Zutshi, but also other materials: phone call records during the various past occasions when the passenger couriers had landed; the presence and role of the concerned appellants in helping the clearance of consignments, corroboration through statement of others, etc. The chain of circumstances to prove the allegations they had to answer, therefore, had been explained. The appellants, significantly did not seek cross examination for over 5 years, though they were aware that the statements were to be used during the proceedings that had been put to them in the SCNs. Furthermore, they had also not given any convincing or reasonable explanation for the phone calls received from Mamoor Khan, Dil Agha, Olga, etc. In the circumstances, the findings of the lower authorities that they were not prejudiced, and that principles of natural justice were not violated, cannot be interfered with. Commissioner did not rely only on the weight metre ratio, but also considered another criterion - It was, therefore, concluded that on each of the dates, the weight of the baggage was around 4000 kgs when two trucks of 3750 kgs capacity were hired on each occasion. The investigation calculated the baggage weight on the lowest and safest side as 2364 kgs on 17.7.2000 and 1914 kgs on 21.8.2000 and proposed the same for assessment. The weights were proportionately worked out on the basis of the ratio of actual weight and recorded weight as on 28.8.2000 i.e. 1.9144 times the recorded weight. Here the figure of 2364 kgs was computed by multiplying the recorded weight of 1235 kgs by 1.9144 and the figure of 1914 kgs has been worked out by multiplying the recorded weight of 1000 kgs by 1.9144. This clearly shows application of mind to the material available. The CESTAT too had occasion to consider these findings. Besides stating that the figures were arbitrarily worked out, the appellants were unable to show any intrinsic inaccuracy, given that the past transactions were noticed; wherever the Green Channel was used, the Commissioner endeavored to co-relate the quantities brought in clandestinely with the truck weight relative to that date. The Court does not find any infirmity with this approach warranting interference with a pure finding of fact. Commissioner held that there was no infirmity in arriving at the actual weight of excess baggage brought in, based upon the position of 28.8.2000 and its application for part clearances, based upon practical logic. Acknowledging a margin for accuracy, it was held that since the issue concerned past clearances for which no other documents were available, it was held that it is a reasonable and acceptable methodology and the results thereof cannot be far from truth, though they cannot be absolutely exact. Again, we see no infirmity or question of law with this approach, warranting interference. As far as the question of non-service of notice upon the main culprits is concerned, the Commissioner rendered his findings in Para 418, holding that some of those foreign nationals could not be personally served; yet notice was issued and published in a known manner. The Appellants were, however issued notice; there was clear evidence of their culpability. Therefore, the Customs authorities were entitled to proceed and impose the penalties and make adverse orders. - Decided against assessees.
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2015 (3) TMI 819
Suspension of license - prohibition of the operation of the custom broker licence issued to the petitioner - Held that:- when the regulation is silent with regard to compliance, principles of natural justice have to be read into. However, it has also been observed that, in the matter of paramount emergent situation, particularly in public interest, it may not always be necessary to grant 'pre-decisional hearing' with regard to the proceedings under Regulation No. 21 and that such action however has to be restricted to be in operation for a limited period, to safe guard the interest of the parties concerned. It is also made a mention that, a 'pre-decisional hearing' must be the rule and its dispensation is an exception. The scope of the provision was considered by a Single Bench of the Calcutta High Court as well. Considering the facts of the particular case involved therein, it was observed that the impugned order was passed without affording an opportunity of hearing, as the allegation indicated in the impugned order did not reveal that it was so emergent and exceptional, and whether where the order of prohibition was inevitable. Course pursued by the respondent is not liable to be branded as arbitrary or illegal. However, it is to be made clear that operation of the said order has to be limited for a definite period, in view of the observations of Apex Court [1981 (1) TMI 250 - SUPREME COURT OF INDIA] and the Division Bench of the Mumbai High Court [2013 (6) TMI 272 - BOMBAY HIGH COURT] as mentioned already. - The petitioner is set at liberty to file objection, if any, also producing copy of the relevant documents within two weeks and the matter shall be finalized, taking appropriate steps and pass necessary orders in tune with relevant provisions of law, after hearing, within one month thereafter. The right of the petitioner to continue to operate will depend upon the orders to be passed by the respondent. It is made clear that the petitioner will be at liberty to challenge the order to be passed by the respondent, in accordance with law, if it goes detrimental to the rights and interests of the petitioner. - Decided against Petitioner.
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2015 (3) TMI 818
Import of two television sets as baggage - petitioners claimed exemption of the entire amount of customs duty in respect of the said two television sets, on the ground that all the nine members of the joint family were travelling together, and the said televisions sets were to be used by members of their joint family - therefore he claimed refund of customs duty collected by the Customs authorities with interest - Held that:- Baggage Rules were framed under Section 79(2) of the Customs Act for regulating the exemption granted under the enabling section 79(1) of the said Act and while framing the said Baggage Rules the Central Government was conscious of the fact that as per Section 79 exemption is granted in respect of an article or articles in the baggage of an individual passenger brought for his own use or for the use of his/her family. Thus, in order to ensure that the user of the words "All Passengers" in the opening sentences in Clauses (a) to (d) under Column 1 of the said Appendix does not give rise to any ambiguity in spite of the clear language of Section 79 of the Customs Act, the Explanation was put under Appendix "A" to exclude any claim for free allowance by a passenger, by pooling the free allowance of any other passenger. Any other interpretation, as contended by the petitioners, shall render the said Explanation otiose. After considering the provisions of sub-section (2) of Section 79 of the Custom Act, as stated above and the relevant Rules of the said Baggage, I cannot but hold, that in Rule 2(d) of the said Baggage Rules, the definition of "family" has been provided for the purpose of interpreting the user of an article brought by a passenger for the use of his family under Section 79(2)(b) of the Customs Act and the said definition of family in Rule 2(d) of the Baggage Rules does not create any ambiguity. Thus, none of the decision of the Supreme Court cited by Mr. Dutt in the cases of C. Krishna Prasad (1974 (11) TMI 2 - SUPREME Court), has any manner of application in this case. - illegality in the collection of customs duty for a sum of Rs . 39,984/- from the petitioners on account of the said television sets and consequently the writ petition fails - Decided against assessee.
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2015 (3) TMI 817
Restoration of appeal - Appeal dismissed for non compliance of pre deposit order - Whether the CESTAT is justified in dismissing the Appeal of the Appellant only on failure to pre-deposit and without considering on merits for nonest order passed by the adjudicating authority without jurisdiction? - Held that:- even in matters of application seeking stay and waiver of the condition of predeposit, the Tribunal must apply its mind. The Tribunal must take into consideration relevant and germane tests particularly whether a prima facie and arguable case is made out and if there is any financial hardship and whether that aspect has been pleaded and sufficiently proved. Thus, the rights of the parties and their equities have to be balanced. - Tribunal must ensure that it gets adequate time to take up the Appeals and for final disposal, so that the parties and lower authorities are guided not only in terms of interpretation and exposition of law by the Tribunal's final orders and for application to given facts and circumstances. That is equally the duty of the Tribunal as a last fact finding authority and while supervising the subordinate authorities. Tribunal has referred to the conflicting views and opinions of different High Courts. It has also referred to several conflicting decisions and orders of its own and chose to analyse each of them and while deciding an interlocutory application. This is really uncalled for. - Assessee has been completely nonsuited because of its failure to comply with the condition of predeposit of ₹ 1 crore , we are of the view that this Appeal deserves to be allowed partly. If the Appellant before us deposits a sum of ₹ 30 lacs within a period of 6 weeks from today, the Tribunal shall restore the Appeal to its file and decide it on its own merits and in accordance with law, uninfluenced by any tentative and prima facie findings. - Decided conditionally in favour of assessee.
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Corporate Laws
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2015 (3) TMI 816
Application for scheme of amalgamation under Section 394 of the Companies Act,1956 - Regional Director observation regarding contradictory statement in affidavit in relation to beneficial owner of the shares - Evading capital gains tax - Evading income tax - Retrospective appointed date - Held that:- The Learned Senior Advocate appearing for the Petitioners has submitted that afore stated issues pertaining to fixing of the liability qua payment of income tax and capital gains may independently be decided by the tax authorities.- In my view, the Learned Senior Advocate of the Petitioners is right and the aforesaid issues as regards the liability, if any, of the Petitioners and their shareholders, towards payment of capital gains tax as well as income tax can be left to the tax authorities to be decided in accordance with the applicable laws at the appropriate stage without being influenced by the observations made herein. It is quite clear from the record that the Petitioners have been less than forthright in placing the facts on record. As I have already held, prima facie it is apparent that the Transferee was not the beneficial owner of the shares of the Transferor Company either on 1st or 7th April 2008. It is also clear that the Petitioners have taken inconsistent stands in this connection viz. in one place they say that the relevant date on which the Transferee was the beneficial owner of the shares was 1st April 2008 and in another place they say that this date was 7th April 2008. The Petitioners have also not come forth with the correct facts in respect of the two SPAs or the effect thereof. Further, the Petitioners have suppressed the income tax demands, which have undisputedly been raised on them, in the Petitions as well as in their various affidavits filed in this Court. To my mind these were relevant facts which were required to be placed on record by the Petitioners. As rightly pointed out by the Regional Director, the Petitioners have falsely stated in the affidavits filed with me that there were no income tax liabilities. To my mind there is no doubt that the Petitioners have sought to mislead this Court. It is no answer to say that the Court cannot look into these matters in its supervisory jurisdiction. Suppression of material facts and making false and incorrect statements is a very serious matter with serious consequences and it is the duty of the Court to examine the allegations of suppression etc. carefully and if found to be correct to take appropriate action against the party concerned. It is also not an answer to say that M. Dinshaw and K.B. & Sons have affirmed the transaction and have consented to the scheme in writing. Even if that be so, it was the duty of the Petitioners to come clean with the Court and place all the facts on record. The Regional Director prays that the Petitions ought to be dismissed on the ground of suppression alone. According to him a party should not be shown any latitude and indulgence in such matters. Ordinarily, I would have agreed with the Regional Director. However, in the facts of the present case and particularly in view of the final order I propose to make I am of the view that instead of dismissing the Petitions on this ground, imposition of costs on each of the Petitioners will meet the ends of justice. - The scheme of amalgamation conditionally approved.
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Service Tax
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2015 (3) TMI 832
Service tax liability - Reverse charge mechanism - Imposition of penalty - Held that:- For the period 18.04.2006 to 31.3.2008 service tax liability along with interest gets fastened on appellant is required to discharge interest liability on the said service tax in accordance with law. This takes us to the penalty imposed by the lower authorities on the appellant specifically for the period 18.04.2006 to 31.03.2008. We find that the contentions raised by the learned C.A. have a strong force. We do agree that during the relevant period the entire issue of service tax liability under reverse charge mechanism was being contested vehemently by both the sides at higher judicial forum. We find that the issue has attained finality with the judgement of Indian National Ship Owners Association on 14.12.2009. In our considered view and the facts and circumstances of this case, this is a fit case for invoking provisions of Section 80 of the Finance Act, 1994, by setting aside the penalties imposed by the lower authorities - Decided in favour of assessee.
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2015 (3) TMI 831
Denial of refund claim - Business Auxiliary Services - no ground to pay service tax as the service rendered by them would fall under the category of ‘Export of Service' and the service tax paid by them was under protest - Held that:- The issue is squarely covered by the majority decision of the Tribunal in the case of Paul Merchants Ltd. decision [2012 (12) TMI 424 - CESTAT, DELHI (LB)] wherein an identical issue involving the very same principal, M/s. Western Union Money Network Ltd. for money transfer to persons located in one country to another person located in another country was considered. In the impugned order, the ratio has been recorded by the first appellate authority at paragraph 16. Secondly, we find that the grounds of appeal, as raised by the department, is relying upon the stay order passed by the bench in the case of Weizmann Forex Ltd. The final order of the Tribunal in the case of Paul Merchants Ltd. is the law settled as the stay orders are always on a prima facie view being taken. Thirdly, in our considered view, the judgment of the Tribunal in the Paul Merchants case has been followed in various other decisions and a view has been taken in favour of the assessee. - impugned order is correct, legal and does not suffer from any infirmity - Decided against Revenue.
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2015 (3) TMI 830
Demand of service tax - Reverse charge mechanism - remuneration paid to the Overseas Commission Agent - held that:- Appellant is not liable to tax on reverse charge basis prior to the period 18.4.2006. Thus, the demand in appeal no. ST/86/07 is fully set aside along with penalty and interest. So far the demand in appeal No. ST/133/09 is concerned, we hold that the demand prior to 18.4.2006 is set aside. The appellant shall only be liable to pay the demand of Service Tax subsequent to 18.4.2006 along with interest as per Rule. In the facts and circumstances granting the benefit of Section 80, we set aside all the penalties including under Section 78 - Decided in favour of assessee.
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Central Excise
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2015 (3) TMI 833
Denial of rebate claim - Assessee paid duty @10% instead of @ 4% under Notification No. 4/2006, dated 1-3-2006 - Revenue contends that assessee did this in order to provide higher amount of rebate for the merchant-exporter - Held that:- The plain reading of instructions issued by C.B.E. & C. regarding assessment of export goods, reveals that the export goods shall be assessed to duty in the same manner as the goods cleared for home consumption are assessed. Further the classification and rate of duty should be as stated in Schedule of Central Excise Tariff Act, 1985 read with any exemption notification and/or Central Excise Rules, 2002. These C.B.E. & C. Instructions clearly stipulate that applicable effective rate of duty will be as per the exemption notification. The said instruction is issued specifically with respect to sanctioning of rebate claim of duty paid on exported goods. Duty was payable @ 4% on the export goods also and rebate cannot be granted on the duty paid in excess of effective rate prescribed in the Notification No. 4/2006-C.E., dated 1-3-2006 as amended, as stipulated in the above said C.B.E. & C. Instructions. Respondent are clearing goods for home consumption on payment of duty @ 4% or 5% in terms of Notification No. 4/2006-C.E. as amended. The above said C.B.E. & C. Instructions state that export goods are to be assessed in the same manner as the goods for home consumption. So, respondent has to assess all goods whether cleared for export or home consumption in a same manner. He cannot assess export goods as higher rate of duty @ 10% and goods cleared for home consumption at lower rate of duty @ 4% or 5%. He has to choose any one notification and assess all clearance of goods in the same manner even if there are two effective rates of duty as per two notifications. In this case, the situation is different since Notification No. 2/2008-C.E. as amended prescribed duty at General Tariff rate of 10% whereas effective rate of duty is 4% or 5% vide Notification No. 4/2006-C.E. as amended. Even the Joint Secretary (TRU) C.B.E. & C. D.O. Letter, dated 29-2-2008 stipulated that rate of duty beneficial to assessee have to be extended. The said letter has not allowed payment of duty under both notifications. Assessee could have opted for one notification for all clearance even if it is considered as case of applicability of two notifications. Government finds that the respondents are not eligible to claim of rebate of duty paid @ 10% i.e. General Tariff Rate of Duty ignoring the effective rate of duty @ 4% or 5% in terms of exemption Notification No. 4/2006-C.E., dated 1-3-2006 as amended. As such Government is of considered view that rebate is admissible only to the extent of duty paid at the effective rate of duty i.e. 4% or 5% in terms of Notification No. 4/2006-C.E., dated 1-3-2006 as amended, on the transaction value of exported goods determined under Section 4 of Central Excise Act, 1944. The amount of duty paid in excess of duty payable at effective rate of 4% or 5% is to be treated as voluntary deposit made by manufacturer with the Government. The excess paid amount may be allowed to be re-credited in the Cenvat credit account of the manufacturer subject to compliance of the provisions of Section 12B of Central Excise Act, 1944. - Decided in favour of Revenue.
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2015 (3) TMI 826
Duty demand - Carpentry work - appellant has manufactured various items of furniture without obtaining Central Excise registration and without payment of excise duty and without following any Central Excise procedure - Manufacturer or not - Bar of limitation - Held that:- appellant is not having control over the sub-contractor. Therefore, the appellant has clarified the test laid down by thisTribunal in the case of Shri Shankar Re-rolling Mills (1996 (8) TMI 229 - CEGAT, MUMBAI). However, other learned Judge has held that when the agreements were not produced during the investigation and the agreements produced before the Tribunal do not even speak anything about the scope of the work and the invoices produced very clearly indicate that the invoices are from labour contractor and are for carpentry labour charges, the appellant only can be considered as manufacturer. This will also be keeping in line with the practice for such industry. Invocation of extended period of limitation - Held that:- in the show cause notice there is no allegation against the appellant that the appellant has not paid the duty by way of willful misstatement or suppression of facts or having mala fide intention not to pay central excise duty in contravention of the provisions of the Central Excise Act/Rules. In these circumstances, again we hold that, as held by HMM Ltd. (supra), the extended period is not invokable, hence the demands raised in the show cause notice are barred by limitation. - Decided in favour of assessee.
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2015 (3) TMI 825
Clandestine removal of goods - Clearance of goods without issuance of bills - Excess stock found lying in the factory - Confiscation of seized goods - Release of goods on issuance of bank guarantee - Held that:- entire case was made out on the basis of statements of the buyers and the computer printout. Commissioner (Appeals) already held that the evidentiary value of the statements is weak. It is also noted that the statements of the 30 persons were mostly similarly pre-drafted. The investigating officers failed to comply with the conditions of Section 36B of the Act in respect of relying upon this computer print out. There is no adequate material available on record to establish the clandestine removal of goods. Therefore, the demand of duty solely on the basis of these materials cannot be sustained. Hence, as the clearance value was within the SSI exemption, the confiscation of the goods cannot be sustained. So, the imposition of penalties are not warranted. - demand of duty along with interest and penalties on the appellants cannot be sustained. Accordingly, the impugned orders are set aside - Decided in favour of assessee.
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2015 (3) TMI 824
Denial of rebate claim - Goods fully exempted - Duty for which the rebate claims were filed had been paid out of Cenvat credit availed by the processors on the strength of bogus/fake invoices - Applicant failed to prove the genuineness of the duty payment and veracity of the input stage credit taken by the processors - Held that:- DGCEI investigated the case and issued show cause notice dated 15.12.10 wherein they categorically stated that the said five suppliers were non-existent; that the processors availed cenvat credit on the basis of bogus invoices issued in the name of said five bogus suppliers; that the facts of the case clearly proves culpability of the merchant exporter; and that payment of duty from such fraudulently availed cenvat credit cannot be treated as payment of duty for granting rebate under Rule 18 of Central Excise Rules 2002. Adjudicating authority-has recorded in his-findings that in this case applicant had-shown on paper to have procured the grey fabrics from bogus grey suppliers and passed on the fake - cenvat credit by endorsing such fake invoices to the processors. As such there is nexus between. applicant and manufacturer. The applicant had facilitated the wrong availment of cenvat credit by showing purchase/supply of grey fabrics on his account from the non-existent grey suppliers. Under such circumstances, the applicant was party to said fraudulent availrnent of cenvat credit & then payment of duty fraudulently from such credit, on exported goods. As such, applicant was party to said fraudulent availement of cenvat credit and the transaction between - manufacturer and exporter was not bonafide. Contentions of the applicant that duty was paid on exported goods by issuing invoices under Rule 11 of Central Excise Rules 2002, and foreign remittances towards export sale proceeds were received, do not help them in making them entitled for rebate claim since the said goods were cleared for export by fraudulent payment of duty from wrongly availed cenvat credit as discussed in above para. The said fraudulent payment of duty are only debit entries on paper and no actual duty was paid and applicant was found party to said fraud. - As such, exported goods cannot be treated as duty paid goods: Since-the fundamental-condition of-payment of duty on exported goods is not satisfied the rebate claim were-rightly held inadmissible in these cases. - impugned orders require no interference. As regard genuineness of duty payment certificates, the original authority has observed that genuineness of duty payment and verification of input stage credit of raw material (i.e. grey fabric) is not on record in any of the rebate claims filed by the merchant exporter as the same are lost by department. The applicant in this regard stated that they submitted before the, Commissioner (Appeals) that duty payment certificates were verified by the jurisdictional excise officers and were sent to rebate sanctioning authority and that though, the said certificates were found missing in the file of department, the duty payment can be verified from monthly return filed in the range office. Government notes that original authority has not stated that duty payment certificates (DPC) were not submitted by the applicant. The SCN dated 15.12:11 issued for rejection of Said claim has also not pointed out anything about non-submission of said DPCs. The adjudicating authority has simply stated that DPC are not available in rebate claim files. - In this case department has admitted- that the duty payment certificate submitted by applicant were missing from their office. In such a situation the claimant cannot be penalized by rejecting the rebate claims for lapses on the part of department. The original authority could have got the verification of duty payment done from jurisdictional Central Excise Range afresh rather than rejecting the claim. Government therefore directs the original authority to consider the said claim for sanction after getting the duty payment particulars verified by the jurisdictional range superintendent. - Decided in favour of assessee.
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2015 (3) TMI 823
Denial of rebate claim - rebate claims were sanctioned of duty paid on value which was more than transaction value - Held that:- Rebate of duty paid on transaction value of goods determined under section 4 of Central Excise Act 1944 is admissible under rule 18 of Central Excise Rules 2002 read with Not. No. 19/04-CE(NT) dated 6.9.2004, Government had reiterated the findings of GOI [2005 (7) TMI 120 - GOVERNMENT OF INDIA] in the case of M/s Bhagirath Textiles wherein it was held that exporter is not liable to pay duty on CIF value of goods but duty is to be paid on transaction value determined under Section 4. - there cannot be any strict statutory relied upon citation which can be taken as guiding precedents because each one of above citation have different background of factual merits pertaining to manufacturers manufacturing goods of different sub-headings following different set of Notifications, choosing different beneficial schemes and changing thereof in between a given financial year thereby leading to arise of different question of law. Difference in AREs-1 value and FOB value given in the Shipping Bill is due to the difference in calculations only and the same cannot be attributed to freight & Insurance charges. Applicant has claimed that difference in ARE 1/FOB value is due to difference in foreign exchange rates adopted in the case of ARE-1 & Shipping Bills. In this regard Government observes that CBEC has clarified in Circular No. 510/06/2000-Cx dated 3.02.2000 that there is no question of requantifying the amount of rebate by applying some other rate of exchange prevalent of subsequent the date on which the duty was paid. From this, it is quite clear that the rebate amount need not be changed if the difference in both values is due to difference in exchange rate subject to condition that value represents transaction value - Commissioner (Appeals) has erred in setting aside the sanction of entire rebate claims. As such, the sanction of impugned rebate claim excluding the disputed amount of ₹ 55661/- and ₹ 1975/- is upheld and impugned orders-in-original are restored to this extent. The impugned order-in-appeal is also modified to this extent. The matter is required to be remanded back to original authority to decide afresh the rebate claims to the extent of disputed amounts of ₹ 55661/- and ₹ 1975/- only. - Decided in favour of appellants.
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2015 (3) TMI 822
Sanction of partial rebate claim - applicant exporter has cleared export goods on payment of duty (BED) (a) 10% in terms of Notification No. 2/2008-C.E., dated 1-3-2008 as amended, whereas they were clearing goods for home consumption on payment of duty (BED) @ 4% in terms of Notification No. 4/2006-C.E., dated 1-3-2006 as amended - original authority sanctioned the rebate claims to the extent of duty paid @ 4% and allowed recredit of balance amount in their Cenvat credit account - Held that:- both the Notifications prescribed effective rates of duty. Notification No. 30/2004-C.E. prescribed nil rate of duty provided manufacturer does not avail Cenvat credit on inputs. This clarification does not say that duty can be paid at tariff rate when the exemption notification is existing. Simultaneously availment of these notifications is allowed in the said circular as they pertain to different situation like whether he is availing Cenvat credit or not. This circular is of no help to the applicant as in their case there are no two conditional notifications prescribing two effective rates. Moreover, there is no such circular issued in case of pharmaceutical products pertaining to Notification in question allowing their simultaneous availment. The other Circular No. 937/27/2010-CX., dated 26-11-2010 is not applicable as in the instant case there is no applicability of provisions of Section 5A(1A) of Central Excise Act, 1944. There is no merit in the contentions of applicant that they are eligible to claim rebate of duty paid @ 10% i.e. General Tariff Rate of duty ignoring the effective rate of duty @ 4%. Government is of the considered view that lower authorities are legally right in holding that duty was payable @ 4% in terms of exemption Notification No. 4/2006-C.E., dated 1-3-2006 as amended and rebate is admissible only to the extent of duty paid at the effective rate of duty i.e. 4% in terms of Notification No. 4/2006-C.E., dated 1-3-2006. Government observes that original authority and appellate authority have rightly restricted the rebate claim to the extent of dut2y paid @ 4% (BED) in terms of Notification No. 4/2006-C.E., dated 1-3-2006. The amount of duty paid in excess of duty payable at effective rate of 4% as per Notification No. 4/2006-C.E. is to be treated as voluntary deposit made by applicant with the Government - Decided against assessee.
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2015 (3) TMI 821
Sanction of partial rebate claim - applicant had been paying duty @ 4% for the goods cleared for home consumption they were required to pay at the same rate on the export goods also - Instead of paying duty @ 4% for export clearances, they paid duty @ 10% - Assistant Commissioner sanctioned cash rebate of duty paid @ 4% on the FOB/ARE-1 value whichever is lower and remaining amount was sanctioned by way of credit in their Cenvat account under Rule 18 of the Central Excise Rules, 2002 read with Section 11B of the Central Excise Act, 1944 - Held that:- applicants were availing Notification No. 4/2006-C.E., as amended till Feb., 2010 in respect of all clearances made both for home consumption as well as for exports by paying duty @ 4% only. All the rebate claims were being sanctioned accordingly. From March/April, 2010 onwards applicants started paying duty @ 10% in terms of Notification No. 2/2008-C.E. as amended on export goods and claimed rebates of duty paid at higher rate. Applicants apparently opted to pay duty on export clearances at higher rate so as to encash the accumulated Cenvat credit through the said rebate claims. In this case, both the Notifications prescribed effective rates of duty. Notification No. 30/2004-C.E. prescribed nil rate of duty provided manufacturer does not avail Cenvat credit on inputs. This clarification does not say that duty can be paid at tariff rate when the exemption notification is existing. Simultaneously availment of these notifications is allowed in the said circular as they pertain to different situation like whether he is availing Cenvat credit or not. This circular is of no help to the applicant as in their case there are no two conditional notifications prescribing two effective rates. Moreover, there is no such circular issued in case of pharmaceutical products pertaining to Notification in question allowing their simultaneous availment. The other Circular No. 937/27/2010-CX, dated 26-11-2010 is not applicable as in the instant case there is no applicability of provisions of Section 5A(1A) of Central Excise Act, 1944. Place of removal may be factory/warehouse, a depot, premise of a consignment agent or any other place of removal from where the excisable goods are to be sold for delivery at place of removal. The meaning of words “any other place” read with definition of “sale”, cannot be construed to have meaning of any place outside geographical limits of India. The reason of such conclusion is that as per Section 1 of Central Excise Act, 1944, the Act is applicable within the territorial jurisdiction of whole of India and the said transaction value deals with value of excisable goods produced/manufactured within this country. Government observes that once the place of removal is decided within the geographical limit of the country, it cannot be beyond the port of loading of the export goods. It can be either factory, warehouse or port of export and expenses of freight/insurance incurred up to place of removal form part of assessable value. Under such circumstances, the place of removal is the port of export if sale takes place at the port of export. Original authority and appellate authority have rightly sanctioned the rebate claim to the extent of duty paid at effective rate of duty @ 4% in terms of Notification No. 4/2006-C.E., dated 1-3-2006 as amended, on the transaction value determined in these cases in terms of Section 4 of Central Excise Act, 1944. The amount of duty paid in excess of duty payable at effective rate of 4% as per Notification No. 4/2006-C.E., as amended on the transaction value of exported goods, is to be treated as voluntary deposit made by applicant with the Government. - excess paid amount is to be returned/adjusted in Cenvat credit account of assessee. Moreover Government cannot retain the said amount paid without any authority of law. Therefore, the lower authorities have rightly allowed the re-credit of said excess paid amount of duty in their Cenvat credit account. - no infirmity in the impugned orders and therefore upholds the same. - Following decision of M/s. Belapur Sugar and Allied Industries Ltd. v. CCE [1999 (4) TMI 79 - SUPREME COURT OF INDIA] and M/s. Nahar Industrial Enterprises Ltd. v. UOI [2008 (9) TMI 176 - PUNJAB AND HARYANA HIGH COURT] - Decided against assessee.
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CST, VAT & Sales Tax
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2015 (3) TMI 828
Constitutional validity of Rajasthan Tax on Entry of Goods into Local Areas Act, 1999 - violation of freedom of trade, commerce and intercourse under Article 301, not saved by Article 304(b) of the Constitution of India, the Act - Held that:- In the State of Rajasthan, the Act of 1999 is still in force, in which the entry tax is levied on 55 items on varying rates from 0.25% to 65% on Sugar, Batasha, Mishri, Makhana and Sugar Toys (Entry No.1) @ 0.25% to Pan Masala (not zarda mixed) (Entry No.46) @ 65%, and Tobacco, cigarettes, cheroots, cigars and cigarillos, zarda mixed pan masala including gutkha and churi @ 65% (Entry No.54) respectively. By a notification of the same date i.e.14.7.2014, it was provided that the State Government had exempted from the tax payable under the Act of 1999, with immediate effect, in respect of the goods specified in the List of 53 items, on the condition that the tax leviable under the Rajasthan Value Added Tax Act, 2003 (Act No.4 of 2003), in respect of such goods has been paid in the State. Despite availability of the judgment in M/s.Dinesh Pouches Limited(2) Vs. State of Rajasthan & Ors.(2007 (8) TMI 667 - RAJASTHAN HIGH COURT) to both the parties, it was not brought to the notice of the Division Bench, hearing M/s.Godfrey Philips India Limited(2) Vs. State of Rajasthan & Ors.(2000 (5) TMI 1055 - RAJASTHAN HIGH COURT), five months after the judgment was rendered in M/s.Dinesh Pouches Limited (2) Vs. State of Rajasthan & Ors.(supra). On the same material, the Division Bench in M/s. Godfrey Philips India Limited(2) Vs. State of Rajasthan & Ors., and in pursuance to the same order of the Apex Court remitting the issue, recorded contradictory findings. It however did not choose, in view of the order of remittance of the Supreme Court dated 14.07.2006, to decide the writ petition. In our view, both the parties represented by same counsels should have drawn the attention of the Division Bench to the earlier decision of the High Court. The review petitions have however been filed by the petitioners to review the opinion in M/s.Godfrey Philips India Limited(2) Vs. State of Rajasthan & Ors.(supra). Since Civil Appeals arising out of the judgments passed by this Court in M/s.Godfrey Philips India Limited(1) Vs. State of Rajasthan & Ors.(supra) and M/s.Dinesh Pouches Limited(1) Vs. State of Rajasthan & Ors.(supra) are still pending in the Hon'ble Supreme Court, both the judgments passed in pursuance to the directions issued by the Hon'ble Supreme Court, which had remitted the issues for findings to be recorded by the High Court, be forwarded by the Registry of the High Court to Hon'ble Supreme Court, to be placed on the record of [2010 (4) TMI 849 - SUPREME COURT OF INDIA]. Since we have refrained ourselves from deciding the issues, which are pending in the Hon'ble Supreme Court, we do not propose to extend the interim orders, and leave the parties to seek appropriate remedies, for protecting their interests. - Decided against appellant.
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Indian Laws
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2015 (3) TMI 834
Offense punishable under Section 55(a) of the Kerala Abkari Act - Seizure of 218 plastic cans which contained 33 litres of spirit - Interest of appellant in contraband goods - Held that:- There is nothing on record to suggest that the appellant had any such interest. The Investigating Officer ought to have made an endeavour to identify those behind the purchase and transport of the contraband. He should have looked for the consignor and consignee both. That is because arrest and prosecution of the driver of the lorry in which the goods were being carried can hardly be enough to weed out illegal trade in liquor. So long as the kingpins are not identified and brought to book the purpose sought to be served by the law prescribing a deterrent punishment cannot be achieved. It is common knowledge that in matters of illegal trade whether in liquor, drugs or other contrabands, the smaller fish only gets caught while the sharks who flourish in such trade often go scot free. The arrest and prosecution of the carriers of contrabands is in that view mere lip service to the avowed purpose underlying the legislation. No reason is forthcoming in the present case why no effort was made by the Investigating Agency to expose the racketeers without whose support and involvement such a big consignment of spirit could not have been purchased nor its transportation arranged. - Penalty and sentence reduced - Decided partly in favour of appellnt.
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2015 (3) TMI 827
Decrease in pension of petitioner - The allegation made under the charge is that during the year 2004-2005, he had issued seven Transit Passes to a registered dealer M/s. VNMAD Firm, to a total value of ₹ 15,08,250/- for the interstate movement of goods on consignment sales to the Pondicherry Union State and thereby facilitated the trader to evade sales tax at the rate of 4% and that by the above said act, he has failed to maintain integrity, devotion to duty and thus violated Rule 21 of the Tamil Nadu Government Servants Conduct Rule, 1973 - Held that:- The petitioner was functioning as Additional Deputy Commercial Tax Officer and retired from service on attaining age of superannuation on 31.05.2006. It is stated by the petitioner and not disputed by the respondents that till his retirement, there were no adverse remarks and any other proceedings initiated or pending against him. It is also seen that the first respondent has forwarded the pension papers of the petitioner to the Accountant General for sanctioning of pension and other pensionery benefits, after the retirement of the petitioner for the grant of pension. However, after a period of two years, the first respondent issued a charge memo dated 01.07.2008 under Rule 17(b) of the Tamil Nadu Civil Services (Disciplinary and Appeal) Rules, containing two charges. The allegation made against the petitioner was that he issued 7 false transit passes to one trader which enabled the said trader to create false records to evade sale tax to the tune of ₹ 60,330/-. It is crystal clear that consultation of the Tamil Nadu Public Service Commission before passing the order under Rule 9(1)(a), is essential and cannot be dispensed with. Whether the views furnished by the TNPSC is binding on the Government or not is another thing. But at the same time, when taking of such view is being mandatory and if no such view is taken, the order passed under Rule 9(1)(a) is to be held as vitiated. - no such consultation was made with the TNPSC before passing the impugned order. Admittedly, a notice was issued calling upon the petitioner to show-cause about the proposed punishment. He replied thereby not agreeing with such proposed punishment. As per the proviso to Rule 9(1)(a), the respondent ought to have taken view of the TNPSC. In this case, it has not been done and on the other hand, the first respondent has passed the impugned order only, on the reason that this Court has directed the first respondent to pass final orders within 30 days. Needless to say that if this Court has directed the authority to pass order within 30 days, it does not mean that such order can be passed without following the mandatory procedure contemplated under the relevant Rule. Therefore, I am of the view that the impugned order having been passed in violation of Rule 19(1)(a) cannot be sustained. - Decided in favour of petitioner.
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2015 (3) TMI 815
To challenge order passed by the Debt Recovery Appellate Tribunal (DRAT) - Sale of asset under SARFEASI Act - Public notice need to be published in two leading newspapers. - Held that:- Unless and until a clear 30 days notice is given to the borrower, no sale or transfer can be resorted to by a SECURED CREDITOR. In the event of any such sale properly notified after giving 30 days clear notice to the borrower did not take place as scheduled for reasons which cannot be solely attributable to the borrower, the SECURED CREDITOR cannot effect the sale or transfer of the SECURED ASSET on any subsequent date by relying upon the notification issued earlier. In other words, once the sale does not take place pursuant to a notice issued under Rules 8 and 9, read along with Section 13(8) for which the entire blame cannot be thrown on the borrower, it is imperative that for effecting the sale, the procedure prescribed above will have to be followed afresh, as the notice issued earlier would lapse. In that respect,the only other provision to be noted is sub-rule (8) of Rule 8 as per which sale by any method other than public auction or public tender can be on such terms as may be settled between the parties in writing. As far as sub-rule (8) is concerned, the parties referred to can only relate to the SECURED CREDITOR and the borrower. It is therefore, imperative that for the sale to be effected under Section 13(8), the procedure prescribed under Rule 8 read along with 9(1) has to be necessarily followed, inasmuch as that is the prescription of the law for effecting the sale as has been explained in detail by us in the earlier paragraphs by referring to Sections 13(1), 13(8) and 37, read along with Section 29 and Rule 15.In our considered view any other construction will be doing violence to the provisions of the SARFAESI Act, in particular Section 13(1) and (8) of the said Act. In view of our reasons and in view of the conclusion arrived at by the Appellate Tribunal, with which we have agreed to, the position of law as opined by the Supreme Court in Mathew Varghese's case [2015 (1) TMI 461 - SUPREME COURT], we do not see any reason for this Court to interfere with the impugned judgment in exercise of our discretionary jurisdiction under Article 226 and 227 of the Constitution of India. We accordingly dismiss the writ petition.
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2015 (3) TMI 814
Validity of Sec.69A and information technology rules 2009 - Validity of Section 118 (d) of the Kerala Police Act - Held that:- The Preamble of the Constitution of India inter alia speaks of liberty of thought, expression, belief, faith and worship. It also says that India is a sovereign democratic republic. It cannot be over emphasized that when it comes to democracy, liberty of thought and expression is a cardinal value that is of paramount significance under our constitutional scheme. - Section 66A of the Information Technology Act,2000 held unconstitutional - Against the fundamental right of free speech and expression guaranteed by Article 19(1)(a) of the Constitution of India - Not saved under Article 19(2). It is significant to notice first the differences between the US First Amendment and Article 19(1)(a) read with Article 19(2). The first important difference is the absoluteness of the U.S. first Amendment - Congress shall make no law which abridges the freedom of speech. Second, whereas the U.S. First Amendment speaks of freedom of speech and of the press, without any reference to “expression”, Article 19(1)(a) speaks of freedom of speech and expression without any reference to “the press”. Third, under the US Constitution, speech may be abridged, whereas under our Constitution, reasonable restrictions may be imposed. Fourth, under our Constitution such restrictions have to be in the interest of eight designated subject matters - that is any law seeking to impose a restriction on the freedom of speech can only pass muster if it is proximately related to any of the eight subject matters set out in Article 19(2). The real rule is that if a law is vague or appears to be so, the court must try to construe it, as far as may be, and language permitting, the construction sought to be placed on it, must be in accordance with the intention of the legislature. Thus if the law is open to diverse construction, that construction which accords best with the intention of the legislature and advances the purpose of legislation, is to be preferred. Where however the law admits of no such construction and the persons applying it are in a boundless sea of uncertainty and the law prima facie takes away a guaranteed freedom, the law must be held to offend the Constitution as was done in the case of the Goonda Act. This is not application of the doctrine of due process. The invalidity arises from the probability of the misuse of the law to the detriment of the individual. If possible, the Court instead of striking down the law may itself draw the line of demarcation where possible but this effort should be sparingly made and only in the clearest of cases. In this case, it is the converse proposition which would really apply if the learned Additional Solicitor General’s argument is to be accepted. If Section 66A is otherwise invalid, it cannot be saved by an assurance from the learned Additional Solicitor General that it will be administered in a reasonable manner. Governments may come and Governments may go but Section 66A goes on forever. An assurance from the present Government even if carried out faithfully would not bind any successor Government. It must, therefore, be held that Section 66A must be judged on its own merits without any reference to how well it may be administered. It has been held by us that Section 66A purports to authorize the imposition of restrictions on the fundamental right contained in Article 19(1)(a) in language wide enough to cover restrictions both within and without the limits of constitutionally permissible legislative action. We have held following K.A. Abbas’ case [1970 (9) TMI 104 - SUPREME COURT] that the possibility of Section 66A being applied for purposes not sanctioned by the Constitution cannot be ruled out. It must, therefore, be held to be wholly unconstitutional and void. The present being a case of an Article 19(1)(a) violation, Romesh Thappar’s judgment [1950 (5) TMI 23 - SUPREME COURT] would apply on all fours. In an Article 19(1)(g) challenge, there is no question of a law being applied for purposes not sanctioned by the Constitution for the simple reason that the eight subject matters of Article 19(2) are conspicuous by their absence in Article 19(6) which only speaks of reasonable restrictions in the interests of the general public. The present is a case where, as has been held above, Section 66A does not fall within any of the subject matters contained in Article 19(2) and the possibility of its being applied for purposes outside those subject matters is clear. We therefore hold that no part of Section 66A is severable and the provision as a whole must be declared unconstitutional. It will be noticed that Section 69A unlike Section 66A is a narrowly drawn provision with several safeguards. First and foremost, blocking can only be resorted to where the Central Government is satisfied that it is necessary so to do. Secondly, such necessity is relatable only to some of the subjects set out in Article 19(2). Thirdly, reasons have to be recorded in writing in such blocking order so that they may be assailed in a writ petition under Article 226 of the Constitution. However, what has been said about Section 66A would apply directly to Section 118(d) of the Kerala Police Act, as causing annoyance in an indecent manner suffers from the same type of vagueness and over breadth, that led to the invalidity of Section 66A, and for the reasons given for striking down Section 66A, Section 118(d) also violates Article 19(1)(a) and not being a reasonable restriction on the said right and not being saved under any of the subject matters contained in Article 19(2) is hereby declared to be unconstitutional. Conclusion - Section 66A of the Information Technology Act, 2000 is struck down in its entirety being violative of Article 19(1)(a) and not saved under Article 19(2). - Section 69A and the Information Technology (Procedure & Safeguards for Blocking for Access of Information by Public) Rules 2009 are constitutionally valid. - Section 118(d) of the Kerala Police Act is struck down being violative of Article 19(1)(a) and not saved by Article 19(2.
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2015 (3) TMI 813
Whether the order of conversion of land passed by the Tahsildar under Kerala Land Tax Act would circumvent the provisions of beneficial legislations such as Kerala Conservation of Paddy and Wetland Act, 2008 and the Kerala Land Utilization Order, 1967 - Held that:- Rectification of mistake narrated in Section 18 relates to the apparent mistake on the face of the record in relation to any order passed by the prescribed authority, appellate authority or the revisional authority under the Act. Therefore, the rectification of mistake can only be in respect of proceedings or orders passed by the original authority, appellate authority or the revisional authority. - Statutory enquiry to ascertain whether the land is a “Paddy Land” or “Wetland” and conversion of the land for residential purpose or for any public purpose is governed by KLU Order or the Kerala Wetland Act, 2008 for conversion of the land from “Nilam” (Wetland) to ‘Purayidam’ (Dry Land). The concerned authorities constituted under KLU Order or Kerala Wetland Act 2008 are the competent authority. Nature of the land cannot be changed or converted by directing changes in the Basic Tax Register which is maintained only for the purpose of land tax. The rectification envisaged by Section 18 of Kerala Land Tax Act can only be in respect of arithmetical or clerical error, that too in the order of determining the tax due. Section 18 cannot be made use or the same cannot be taken as a means to effect conversion of the nature of the land bye-passing the competent authority and the procedure stipulated under the KLU Order, 1967 and the Kerala Wetland Act, 2008 and the impugned judgment is liable to be set aside. - Decided in favour of Appellant.
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