TMI Tax Updates - e-Newsletter
April 2, 2016

Case Laws in this Newsletter:

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

Articles

1. Union Budget 2016: Important changes in Service Tax and Credit Rules effective from April 1, 2016

   By: Bimal jain

2. India-ASEAN Trade In Goods Agreement (Safeguard Measures) Rules, 2016

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. Highlights of Union Finance Minister’s Visit to Melbourne today

2. Gold Monetisation Scheme Liberalized to make it more attractive for potential depositors

3. Finance Minister Shri Arun Jaitley:There are big opportunities for Foreign Investors to invest in India in view of its big market and high growth potential

4. Request to Taxpayers to Avail Facility for Online Rectification

Notifications

Customs

1. 28/2016 - dated 31-3-2016 - Cus

seeks to amend Notification No. 69/2011-Customs, dated 29th July, 2011 so as to provide deeper tariff concessions in respect of specified goods imported under the India-Japan Comprehensive Economic Partnership Agreement (IJCEPA), w.e.f. 1st of April, 2016

2. 27/2016 - dated 31-3-2016 - Cus

Effective rates of basic duty of customs on specified goods imported by persons returning to India after a period of not less than 365 days of stay abroad during previous 2 years or under bona fide transfer of residence to India

3. 26/2016 - dated 31-3-2016 - Cus

Effective rate of duty of customs on baggage - Articles imported into India by a passenger or a member of a crew as baggage

4. 44/2016 - dated 31-3-2016 - Cus (NT)

Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver

5. 43/2016 - dated 31-3-2016 - Cus (NT)

Seeks to amend Baggage Rules, 2016

FEMA

6. FEMA 22(R) /RB-2016] - dated 31-3-2016 - FEMA

Foreign Exchange Management (Establishment in India of a branch office or a liaison office or a project office or any other place of business) Regulations, 2016

Income Tax

7. 24/2016 - dated 30-3-2016 - IT

Income-tax (9th Amendment) Rules, 2016

8. 23/2016 - dated 29-3-2016 - IT

Section 10(46) of the Income-tax Act, 1961 – Central Government notifies “Maharashtra State Board of Technical Education” for dealing with specified income

Service Tax

9. 21/2016 - dated 30-3-2016 - ST

Point of Taxation (Second Amendment) Rules, 2016

SEZ

10. S.O. 1217(E) - dated 21-3-2016 - SEZ

Rescinding of a sector specific Special Economic Zone for food processing and related services at Hassan in the State of Karnataka

11. S.O. 1218 (E) - dated 15-3-2016 - SEZ

Set up a Sector Specific Special Economic Zone for information technology and information technology enabled services at Navi Mumbai

Circulars / Instructions / Orders

DGFT

1. 22/2015 - dated 31-3-2016

Clarifications on Trade Facilitation Measures

Highlights / Catch Notes

Income Tax

• High Court: Assessment Orders Violating Section 144C of Income Tax Act Are Void, Lacking Jurisdiction.

  Case-Laws - HC : An assessment order passed by the AO which is contrary to the mandatory requirement of Section 144C of the Act, is entirely without jurisdiction. - HC
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• Court Rules Ignorance of Law Not a Defense for Failing to Discharge TDS Liability with Evidence of Legal Fee Expenditure.

  Case-Laws - HC : Failure to discharge TDS liability - evidence of expenditure towards fee paid to the lawyers and engagement of services of Chartered Accountant are sufficient circumstances to hold that non-deduction of tax at source is not due to ignorance of law. - HC
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• India Taxes Business Income Under DTAA for Refinery BEDS Package; Not Considered Royalty or FTS, Affects TDS.

  Case-Laws - AT : Business income/profits taxable in India as per the DTAA - payment made towards BEDS package for the refinery at Visakhapatnam - tds liability - payment in question was neither royalty nor FTS. - AT
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• Section 12AA Registration Denied for Society Due to Misappropriation of Funds by Management Committee Members.

  Case-Laws - AT : Registration under section 12AA denied - the members of the management committee has siphoned off or misappropriated the income of the Society and thus the activity of the Society, cannot be termed as genuine - AT
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• Shares Sold via PMS Classified as Capital Gains Due to Stock-to-Investment Conversion Lacking Section 45(2) Provision.

  Case-Laws - AT : Transaction in shares/mutual fund by engaging PMS - receipt from sale of shares after conversion from stock in trade to investment has to be held as capital gain in absence of provision like sec. 45(2) - AT
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• No Penalty for Income Concealment Due to Non-Filing: Section 271(1)(c) Inapplicable, 271(1)(a) Not Initiated.

  Case-Laws - AT : Penalty u/s. 271(1)(c) - There is no provision in the IT Act for levying concealment of income u/s 271(1)(c) for non-filing of a return. The relevant provision is sec. 271(1)(a), which is neither initiated nor attracted - No penalty - AT
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Customs

• Appellant Wins Case: Regulation No. 7 Not Applicable Retroactively for Reduced Customs Duty Under Project Import Regulations 1986.

  Case-Laws - AT : Eligibility for benefit of reduced Custom duty under Project Import Regulations, 1986 - as regulation no. 7 was not in the statute when the goods were imported, hence it cannot be pressed into service for denying the benefit of project import regulation to the appellant. - AT
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• Court Declares Order on Ownership of Seized Gold at Airport Invalid Due to Lack of Jurisdiction.

  Case-Laws - AT : Determination of ownership - Competiting claims of title to seized goods - the declaration under the impugned order that the gold seized at the air port belongs to M/s. Vee Ess Jewellers, is a conclusion which is patently without jurisdiction and therefore non-est and inoperative - AT
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• Amendment to Baggage Rules 2016 simplifies customs procedures for importing and exporting personal baggage, enhancing efficiency and clarity.

  Notifications : Seeks to amend Baggage Rules, 2016 - Notification
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• New Customs Duty Rates for Returning Residents to India: Eligibility and Updates Explained for Transfers of Residence.

  Notifications : Effective rates of basic duty of customs on specified goods imported by persons returning to India after a period of not less than 365 days of stay abroad during previous 2 years or under bona fide transfer of residence to India - Notification
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• Customs Duty Updates for Baggage: Key Changes for Passengers and Crew Entering India. Ensure Compliance with New Regulations.

  Notifications : Effective rate of duty of customs on baggage - Articles imported into India by a passenger or a member of a crew as baggage - Notification
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FEMA

• Foreign Exchange Management Regulations, 2016: Guidelines for Foreign Entities Setting Up Business in India Under FEMA Framework.

  Notifications : Foreign Exchange Management (Establishment in India of a branch office or a liaison office or a project office or any other place of business) Regulations, 2016 - Notification
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Indian Laws

• Tax Authorities Encourage Use of Online Platform for Easy Correction of Tax Filing Discrepancies.

  News : Request to Taxpayers to Avail Facility for Online Rectification
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• Gold Monetisation Scheme Liberalized: Enhanced Terms to Boost Deposits, Mobilize Idle Gold, and Cut Import Reliance.

  News : Gold Monetisation Scheme Liberalized to make it more attractive for potential depositors
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• Words like 'Not Negotiable' or 'Account Payee Only' are key to restraining cheque negotiability and ensuring security.

  Case-Laws - HC : Negotiable Instruments - Cheque - To restrain negotiability, addition of words 'Not Negotiable' or “Account Payee Only' is necessary. A crossed bearer cheque can be negotiated by delivery and crossed order cheque by endorsement and delivery. Crossing affords security and protection to the holder of the cheque - HC
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• Appellate Bench Criticized for Impermissible Roving Enquiry, Failing Legal Procedures, and Ignoring Public Interest Concerns.

  Case-Laws - SC : The Appellate Bench should have applied more restraint and proceeded in accordance with law instead of making a roving enquiry. Such a step is impermissible and by no stretch of imagination subserves any public interest. - SC
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Service Tax

• Refund Amendment in Notification No. 41/2007-ST Not Retrospective; Effective Only from Actual Deletion Date.

  Case-Laws - AT : Refund of Service tax - nature of amendment - retrospective or prospective - Deletion of the condition of the Notification no. 41/2007 - ST is only reflective upon the legislative intent and would be effective only from the date of its actual deletion. - AT
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• Cenvat Credit Denied for Security Services at Employee Residential Colonies Adjacent to Factory Premises.

  Case-Laws - AT : Cenvat credit in respect of Security Services provided to the residential colony of the employees situated adjacent to the factory premises is not admissible. - AT
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• Refund Claim Period Starts After Excluding 30/4/2009 u/s 9; Deadline Met on 30/4/2010, Refund Granted.

  Case-Laws - AT : Refund - computation of period of limitation - In terms of Section 9 of General Clauses Act, 30/4/2009 has to be excluded therefore the period of one year is reckoned from 1/5/2009 accordingly last date of filing of refund claim is 30/4/2010 on which appellant indeed filed refund claim. - Refund allowed - AT
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• Amendment to Tax Rules Clarifies When Service Tax Liability Arises, Aiming to Streamline Compliance and Enhance Consistency.

  Notifications : Point of Taxation (Second Amendment) Rules, 2016 - Notification
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Central Excise

• Refund Claims Time-Barred After 5 Years; No Automatic Refund Under Notification 33/99-CE Without Timely Filing by 7th.

  Case-Laws - AT : Refund claims filed after a period of more than 5 years from the date of payment of duty - Revenue cannot be expected to grant suo-moto refund under Notification No. 33/99-CE when no such claim is made by 7th of the next month either in the specific statement under the exemption notification or RT-12 return filed. - refund claim is clearly time barred - AT
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• Court Rules No Additional Duty on Price Increase Post-Depot Clearance for Factory Goods.

  Case-Laws - AT : Valuation of the goods - sale through depot - It is not in dispute that the appellant cleared the goods from their factory, at the price prevalent at the depot and therefore, the demand of duty cannot be raised for increase of the price after clearance of the goods from the depot. - AT
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• Goods Valuation Should Use Transaction Value u/s 4, Not MRP-Based Section 4A, for Industrial Consumer Gifts.

  Case-Laws - AT : Valuation of Goods u/s 4 i.e Transaction Value or u/s 4A i.e MRP based value - as the goods are sold to the industrial consumers who in turn supplied these goods as free gifts and these are not ultimately sold in retail sale either by the consumer or by the person who purchases it or by the ultimate buyer. - To be assessed u/s 4 and not u/s 4A - AT
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VAT

• Supreme Court Clarifies Exemption Notification Interpretation: Proviso Should Not Unduly Limit Main Condition in VAT and Sales Tax Context.

  Case-Laws - SC : Benefit of exemption Notification - Scope of the proviso to then main condition - Giving over due and extended implied interpretation to the proviso in the notification will nullify and unreasonably restrict the general and plain words of the main notification. Such construction is not warranted - SC
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• Penalty Imposed u/s 78(5) of Rajasthan Sales Tax Act Without Second Opportunity After 15-Year Delay.

  Case-Laws - HC : Imposition of penalty - when an opportunity was already granted, second opportunity, in the facts and circumstances of the case and that too after fifteen years, is not required to be given. Therefore, penalty under Section 78(5) of the Rajasthan Sales Tax Act, 1994 has to be imposed - HC
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Case Laws:

• Income Tax

• 2016 (4) TMI 45
  Validity of assessment order passed by the AO - Dispute Resolution Panel (DRP) declared that the AO lacked jurisdiction to deal with an issue - AO nevertheless proceeded to pass a final assessment order in the teeth of the order of the DRP. - Eligible assessee in terms of Section 144C(15)(b) - Matter was referred to Transfer Pricing Officer (‘TPO’) for determination of the arm’s length price (‘ALP’) - Held that:- In the first place the Court would like to observe that this is an instance of blatant disregard by the AO of the order of the DRP notwithstanding that the DRP had categorically held that the two Petitioners do not satisfy the conditions of an ‘eligible assessee’ in terms of Section 144 (15) (b) (ii) of the Act. As already noticed under Section 144C(10) of the Act the AO had no option but to comply with the order of the DRP. Even if no direction was issued by the DRP under Section 144C (5) of the Act, the fact that the DRP held that both the Petitioners were not ‘eligible Assessees’ could not have been ignored by the AO. It appears to the Court that it is plain that under Section 144C, the AO should have proceeded to pass an order under Section 143 (3) of the Act. Instead the AO confirmed the draft assessment order passed under Section 144C (1) of the Act. This, therefore, vitiated the entire exercise. The Court has no hesitation in holding that the final assessment order dated 28th January 2015 is without jurisdiction and null and void. The draft assessment order dated 28th March 2014, having been passed in respect of entities which were not 'eligible assessees', is also held to be invalid. An assessment order passed by the AO which is contrary to the mandatory requirement of Section 144C of the Act, is entirely without jurisdiction. Thus the draft assessment order dated 28th March 2014 and the final assessment order dated 28th January 2015 passed by the AO are held to be void ab initio and quashed on that basis. The orders consequential thereto also do not survive.

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• 2016 (4) TMI 44
  Reopening of assessment - Held that:- The petitioning assessee had to provide for the entire amount due of Rs. 19,20,000/- that accrued to the retired partner irrespective of the amount actually paid upon Accounting Standard-15 coming into effect; but the concerned partner would show only the amount received of Rs. 4,80,000/-. While the figures appear to be mismatched, that is because of the different accounting systems followed by the two assessees. When the two systems of accounting are different, it is not the payment made by one which is being received by the other, but the provision made by one which is being received for a particular period by the other; which may not always match. Since it does not appear that there was either any failure on the part of the petitioning assessee to disclose any material on the basis of which the reassessment would be necessary or there is any discovery of new material by the assessing officer from elsewhere which could prompt the same, the notice dated March 31, 2014 issued by the assessing officer and all steps taken pursuant thereto for reassessment of the petitioning assessee’s accounts for the assessment year 2007-08 stand set aside.

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• 2016 (4) TMI 43
  Disallowance u/s 40A - Whether the Appellate Tribunal has erred in law and on fact in holding that payment of interest @ 15% and 16% to the persons covered u/s 40A(2)(b) is commensurate with the prevailing market rate? - Held that:- Tribunal has recorded a finding of fact to the effect that the interest paid by the assessee to the persons mentioned under section 40A(2)(b) is commensurate with the interest rate prevailing in the open market. In the light of such finding of fact, it is not possible to state that the conclusion arrived at by the Tribunal that the assessee has not extended any undue benefit to the persons covered under section 40A(2)(b) of the Act, suffers from any legal infirmity warranting interference. The said ground of appeal is, therefore, rejected. Appeal admitted on second question of law Whether the Appellate Tribunal has erred in law and on fact in deleting the amount of Rs. 2,63,12,188/- treated by the Assessing Officer as deemed dividend u/s 2(22)(e) of the Act in this case?

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• 2016 (4) TMI 42
  TDS u/s 194C - payments made to the harvesters and transporters were pursuant to a 'Contract' - Held that:- In the instant case, assessee is involved in manufacturing Sugar and its byproducts in a large scale. Therefore, the assessee has no escape but to comply with various Fiscal Statues such as Income Tax, Sales Tax, Customs Act, Central Excise Act etc., and Labour Laws such as Factories Act, ESI Act, PF Act etc. Further, there is clear evidence on record to show that the assessee has paid large sums of fee to the Lawyers and availed services of Chartered Accountant also. These two aspects namely, evidence of expenditure towards fee paid to the lawyers and engagement of services of Chartered Accountant are sufficient circumstances to hold that non-deduction of tax at source is not due to ignorance of law. On admitted facts non-compliance of statutory compliance of statutory provisions of Sections 194C, 194I and 194J of the Act stand proved. Therefore, in the light of the settled position of law the only consequence that flows is to invoke Section 40(a)(ia) of the Act as has been rightly held by the Assessing Authority and affirmed by the First Appellate Authority. In the result, the appeals filed by the Revenue are allowed by answering the following substantial question of law in its favour and it is held that in the facts and circumstances of this case, the Tribunal was not correct in interpreting the language of section 40(a)(ia) to mean that the consequence of disallowance is attracted only in respect of amounts which remain payable on the last day of the financial year. - Decided in favour of revenue

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• 2016 (4) TMI 41
  Business income/profits taxable in India as per the DTAA - payment made towards BEDS package for the refinery at Visakhapatnam - tds liability - whether payment is towards purchase of capital asset, that it was not for FIS, as contemplated under Article -12 of DTAA - Held that:- If an assessee makes payment for basic engineering program or basic design to a non-resident entity and the supplier does not have a PE in India, such payments would not be taxed in India. If the assessee purchases BEDP out rightly it would amount to purchase of capital asset. But, if the payment is made for use of property rights the payments has to be taxed as Royalty. There is conceptually difference in payment made for use of certain rights for a certain period and payment made for acquiring basic designing. In the case under consideration, it is clear that the assessee had treated other two payments as Royalty and had deducted tax at source, that the American-company had provided the assessee basic engineering design to set up a plant, that designing work was not carried out in India and the payment was also made outside India. Therefore, in our opinion, the assessee was not liable for deducting tax at source for the said payment. The agreements cannot be treated a part of a composite agreement-one agreement is for supply of basic designing to set up a plant and others are for use of property-rights. Reversing the order of the FAA, we hold that payment in question was neither royalty nor FTS. - Decided in favour of assessee

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• 2016 (4) TMI 40
  Additional depreciation u/s 32(1)(iia) on plant and machinery - whether to claim additional depreciation, the assessee’s main business must be manufacture or can be it an activity of the main business i.e. ancillary activity? - Held that:- It is clear that the manufacturing activity of the assessee is a separate economical activity and incidental to the main business. Since, the assessee was already running a manufacturing activity independently and manufacturing pipes as it is observed in the above judgment, that one business can be advantageously combined with another business. Hence, in the present case, as per the provisions of section 32(11)(iia) and relying on the decision of Hon’ble Madras High Court in the case of Hi Tech Arai Ltd. (2009 (9) TMI 60 - MADRAS HIGH COURT ), the assessee is already engaged in the business of manufacture even though it is an activity of the main business. In our considered view, the assessee is eligible to claim additional depreciation u/s 32(1)(iia) of the Act as an existing manufacturer. - Decided in favour of assessee.

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• 2016 (4) TMI 39
  Disallowance of expenses - business expediency - Held that:- In the case of CIT versus Rajendra Prasad Moody (1978 (10) TMI 133 - SUPREME Court ), while deciding the issue for deduction for expenses under the head income from other sources, the Hon’ble court has held that what section 57(iii) requires is that the expenditure must be laid out or expended wholly and exclusively for the purpose of making or earning income and the section does not require that this purpose must be fulfilled in order to qualify the expenditure for deduction and it does not say that the expenditure shall be deductible only if any income is made or earned. The same principle applies for allowability of deduction of expenditure under the head profit and gains of business. Thus in our considered view the expenses debited by the assessee in the profit and loss account and claimed under the head profit and gains of the business are allowable both on the principle up consistency as well as business expediency. Accordingly the findings of the Ld. Commissioner of Incometax( Appeals) on the issue in dispute are reversed. Disallowance of depreciation - building was let out and the rental income from the same was claimed under the head income from house property - Held that:- As the building was let out and therefore the depreciation corresponding to that part cannot be allowed to the assessee. In subsection (2) of section 38 of the Act, it is clearly laid down that where any building is not exclusively used for the purpose of business or profession the deductions under clause (ii) of subsection (1) of section 32 shall be restricted to fair proportionate part thereof which the Assessing Officer may determine having regard to the use of such building for the purpose of business or profession. Thus in view of the clear provisions of the Act in this regard, we restore the issue to the file of the Assessing Officer and direct the Assessing officer to allow the depreciation in accordance with the provisions of section 38(2) of the Act.

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• 2016 (4) TMI 38
  TDS u/s 194C OR 194J - payments for production of programmes for broadcasting and telecasting and payments for uplinking charges - Held that:- As decided in assessee's own case for A.Y. 2009- 10 Coordinate Bench followed the decision of the Hon'ble Delhi High Court in the case of Prasar Bharati (2006 (11) TMI 159 - DELHI High Court ) holding that placement charges/ carriage fees is covered under the definition of work contracts and therefore tax was to be deducted at source on such payments under section 194C, we decide this issue in favour of the assessee

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• 2016 (4) TMI 37
  Registration under section 12AA denied - non charitable activities - siphoned off or misappropriation of income of the Society - Held that:- It is clear that the assessee society unsuccessfully tried to justify that family members of the management committee members rendered any kind of services. The fact that the names of 4 ladies were appearing in the attendance registers of the teachers and no attendance was marked against their names since beginning of the year, was observed in the course of survey proceeding, however, the assessee tried to justify that those 4 ladies are not teaching staff and a separate attendance registers was being maintained. This explanation was not found convincing by the Assessing Officer, as no such attendance register was found or produced in the course of survey proceeding. Further, the name of 4 lady members was entered in the attendance register of the teachers and no attendance was marked against their name, clearly established that the subsequent explanation by the assessee society of having separate attendance register was not true. The Assessing Officer has observed that the remuneration paid to those family members was also more than arm’s length remuneration. The facts of the case clearly show that the assessee society was engaged in siphoning of money under the garb of carrying out charitable activity in the name of education. Thus we are of considered opinion that the members of the management committee has siphoned off or misappropriated the income of the Society and thus the activity of the Society, cannot be termed as genuine and the Society in the garb of charitable activity of education, is engaged in enriching its members through undue means. It is evident that the Commissioner of Income Tax has not found the object of the society and genuineness of its activities as satisfactory, and refused the registration as per section 12AA(1)(b)(ii) of the Act. - Decided against assessee

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• 2016 (4) TMI 36
  Addition of unsecured loans - Held that:- The appellant has filed confirmation, copy of PAN card, copy of bank statement, cheque nos., copy of passport with residence for UAE and affidavit explaining source of income and details of transactions. Identity of Shri Pankaj Kapoor is established by the name, address, PAN and confirmation. PAN is enough to prove the identity of a person. Genuineness of the transactions is also fully established by the fact that the transaction is duly confirmed by the creditor and the amount is received by Alc Payee cheques which are duly debited in the bank account of the creditor which has confirmed the same. As regards creditworthiness, it is very clear from the affidavit itself that Shri Pankaj Kapoor is deriving income from proprietorship business under the name and style Mls Oracle General Trading having its business address as - P. O. Box - 64834, Dubai, UAE. As also examined the bank account of the creditor with centurion bank of Punjab, Connaught Place, New Delhi which indicates debit of Rs. 50,00,000/- vide cheque no. 429301 in favour of Shri Vikrant Puri on 04/05/2006 in Alc no. 0011-408624-001. Similarly there are debit entries of Rs. 70,00,000/- vide cheque no. 429307 on 22/06/2006, Rs. 1,00,00,0001- vide cheque no. 429314 on 5/12/2006 and Rs. 1,00,00,000/- vide cheque no. 429315 on 12/12/2006 in the same account. Therefore, creditworthiness of the creditor is also fully established. Moreover, the AO has not brought any material on record to prove that credit is bogus which he failed to do. - Decided in favour of assessee

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• 2016 (4) TMI 35
  Fair Market Value of land for the purpose of Computation of Capital Gain - Indexed cost of acquisition - whether FMV of land for the purpose of Computation of Capital Gain, should have been taken on the date of Notification in official Gazette by which agriculture land became the Capital assets within meaning of section 2(14)(iii)? - Held that:- What is relevant is the actual “cost of acquisition” of the asset in the hands of the assessee and not the FMV on the date on which the asset became a capital asset for the purpose of levy of capital gains tax. The only exception is where the asset was purchased prior to 1.4.1981, the legislation has provided a specific relaxation by virtue of which the actual cost can be substituted for FMV prevailing as on 1.4.1981. The said relaxation cannot be extended, as suggested by the ld. AR, to situations where the FMV on the date an asset becomes a capital asset should be considered. In our view, the position will remain the same whether the asset was a capital asset within the meaning of section 2(14) at the time of initial purchase or it falls within the definition of the capital asset because of subsequent legislative notifications as in the instant case where due to the a specific notification, the agriculture land falls within the specified limits of a municipality and it came within the ambit of a capital asset under section 2(14) of the Act. Accordingly, once an asset becomes “capital asset” and it is transferred thereafter, the capital gains has to be computed in the manner laid down in section 48, and 55(2) of the Act as has been rightly done by the AO in the instant case.- Decided against assessee Deduction claimed u/s 54F - Held that:- Where the assessee has demonstrated the withdrawal of Rs. 15,40,000/- towards construction of residential house from his bank account and cost of construction being supported by the valuer’s report, the AO is directed to give necessary relief by way of deduction under section 54F of the Act.- Decided in favour of assessee Addition on unexplained cash deposit in Bank account - Held that:- AO made the addition simply on the ground that the assessee could not explain the source of deposit. It is pertinent to note that neither the question of deposit of cash was made in query letter dated 29.02.2011. The compliance of query letter was made and copy of same is placed in paper Book. The final reply of various query letter was made, it is evident from the above that the AO never put question about the explanation regarding cash deposits in such circumstances the addition was made without affording the opportunity to the assessee, which is against the principal of natural justice.Considering the totality of the facts and circumstances of the case, the matter is set-aside to the file of the AO to examine the same afresh after providing reasonable opportunity to the assessee. - Decided in favour of assessee by way or remand

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• 2016 (4) TMI 34
  Disallowance of additional depreciation claimed - Held that:- The assessee is entitled for remaining 10% of the depreciation during the year under consideration. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to allow balance 50% of depreciation, namely, 10% of additional depreciation during the year under consideration. - Decided in favour of assessee

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• 2016 (4) TMI 33
  Disallowance in respect of amortization of premium paid on Government Securities - Held that:- Identical issue had come up before the Tribunal in assessee’s own case in an appeal filed by the Revenue wherein the order of the CIT(A) upheld in allowing the deduction on account of amortization of premium paid on HTM securities and hold that amortization premium paid on Govt. Securities debited to Profit and Loss Account, as per RBI guidelines has to be allowed being expenses incurred during the course of business of banking - Decided in favour of assessee Addition on account of unclaimed liabilities - CIT(A) allowed part relief - Held that:- We find that the issue raised in the present appeal is identical to the issue raised by assessee in aforesaid appeal for A.Y. 2010-11 wherein held the assessee continues to recognize the liability and once the liability has been so recognized by the assessee, there is no merit in treating the same as income of the assessee though some of the amounts may not be recoverable by application of provisions of Limitation Act. - Decided in favour of assessee

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• 2016 (4) TMI 32
  Transaction in shares/mutual fund by engaging PMS - whether an investment activity and resultant gain/loss was assessable under the head Capital Gains or business income - Held that:- The issue stands decided in favour of the assessee and against the revenue by the decision of the Tribunal in assessee’s own case for A.Y.2008-09 which has been followed by the CIT(A) that activity of transaction in shares/mutual funds by engaging PMS was an investment activity and therefore the resultant gain was assessable under the head capital gains. Accordingly, the appeals filed by the revenue were dismissed. - Decided in favour of assessee Disallowance u/s.14A - CIT(A) deleted the addition - Held that:- No infirmity in the order of the CIT(A). The learned CIT(A) has given a categorical finding that expenditure on PMS has not been claimed by the assessee and there does not remain any other expenditure other than this expenditure, therefore, no disallowance u/s.14A r.w. Rule8D can be made. The above factual finding given by the learned CIT(A) could not be controverted by the learned DR - Decided in favour of assessee Treating the stock-in trade of shares as investment - treatment merely on the basis of a notice of closure u/s.176(3) - Held that:- We find identical issue had come up before the Tribunal in the case of the assessee for the A.Y. 2007- 08 wherein held that the finding given by the learned CIT(A) that assessee has duly given the notice of discontinuation of business vide letter dated 7-11-06 filed before the AO on 12-04-06 which is within the prescribed period of time as per section 176(3) of the Income Tax Act could not be controverted by the learned DR. Further it has been categorically submitted by the assessee before the lower authorities that he has discontinued the share trading business and the closing stock in shares as on 31-03-06 has been transferred to his capital account at cost and the same also remains uncontroverted.It has been held by the Mumbai Bench of the Tribunal in the case of ACIT Vs. Bright Star Investment Pvt. Ltd. (2008 (7) TMI 442 - ITAT BOMBAY-H ) that receipt from sale of shares after conversion from stock in trade to investment has to be held as capital gain in absence of provision like sec. 45(2)- Decided in favour of assessee

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• 2016 (4) TMI 31
  Capital gain v/s business income - activity of transaction in shares/mutual by engaging PMS - Held that:- Activity of transaction in shares/mutual funds by engaging PMS was an investment activity and therefore the resultant gain was assessable under the head capital gains - Decided against revenue Disallowance u/s.14A - Held that:- As decided in assessee's own case CIT(A) has given a categorical finding that expenditure on PMS has not been claimed by the assessee and there does not remain any other expenditure other than this expenditure, therefore, no disallowance u/s.14A r.w. Rule8D can be made. The above factual finding given by the learned CIT(A) could not be controverted by the learned DR. - Decided against revenue

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• 2016 (4) TMI 30
  Disallowance of software development and maintenance expenses - revenue v/s capital expenditure - Held that:- The assessee had demonstrated that the above expenditure was incurred by the assessee for up gradation of existing software for smooth running of online lottery business of the assessee. We, therefore, hold that the said expenditure was rightly claimed by the assessee as revenue expenditure. We, accordingly, hereby, set aside the finding of the Ld. CIT(A) on this issue and delete the disallowance so made by the lower authorities on this issue and direct the AO to treat the said software expenses as revenue in nature. - Decided in favour of assessee Unexplained credit - addition u/s 68 - Held that:- It has been explained that these documents pertained to a 10 year old period and the assessee was making all out effort to trace the same, however, despite best efforts the same could not be produced before the lower authorities. Since the said documents have now been retrieved and the same go to the root of the case, it has been pleaded that the same be admitted as additional evidence in support of the pleadings of the assessee. The Ld. A.R. in this respect has further relied upon an affidavit of one Mr. Sushil M. Waghmare, Director of the assessee company, wherein, the above facts have been explained and it has been submitted that the above documents be taken into consideration for just and proper decision of the case.We have gone through the application, affidavit and the relevant documents. We find that the relevant documents go to the root of the case and are very much necessary to be looked into for just and proper decision of the case. We, therefore, allow the application of the assessee for additional evidence and direct the AO to admit the documents relied upon and sought to be produced by the assessee and after considering the said documents/evidence, decide the issue afresh in accordance with law. This issue is accordingly restored to the file of the AO. - Decided in favour of assessee by way of remand Late deposit of Employees’ Contribution to PF - addition u/s 43B - Held that:- This issue is covered in favour of the assessee by the decision of the Hon’ble Supreme Court in the case of “CIT vs. Alom Extrusions Ltd.” reported in (2009 (11) TMI 27 - SUPREME COURT ) wherein held that the amendment to section 43B vide Finance Act, 2003 w.e.f. 01.04.2004, whereby, the second proviso to section 43B has been deleted and further amendment to 1st proviso has been made, whereby, it has been provided that nothing contained in the said section shall apply in relation to any sum which is actually paid by the assessee on or before the due date applicable for furnishing the return of income, is retrospective in nature and would operate from 01.04.1988. The Hon’ble Bombay High Court has in the case of “CIT vs. Hindustan Organics Chemicals Ltd.” [2014 (7) TMI 477 - BOMBAY HIGH COURT] has held that the Employees’ Contribution to PF is covered by the said decision and that the applicable date will be on or before the due date of filing of return of income for deposit of the said contribution. Moreover, we find that the assessment year under consideration before us is A.Y. 2005-06 for which the said amendment otherwise is applicable. The findings of the Ld. CIT(A) on this issue are therefore upheld. - Decided in favour of assessee

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• 2016 (4) TMI 29
  Bogus purchases - disallowance sustained by Ld CIT(A) @ of 12.5% of the total purchases - Held that:- As asked Ld. DR to point out if there was anything wrong in the findings of Ld. CIT(A) with regard to disallowance sustained by Ld CIT(A) @ of 12.5% of the total purchases. In response, nothing wrong was pointed out by Ld. DR in the reasoning given by Ld. CIT(A). It is noted that no adverse or incriminating material, whatsoever, has been brought on record by Ld AO in assessment proceedings or by Ld DR before us, to show that these purchases were bogus. The factual findings recorded by the Ld. CIT(A) that all the purchases and sales were properly backed up with quantitative re-conciliation, were not controverted by the Ld. DR. In view of the detailed findings recorded by the Ld. CIT(A) which remain uncontroverted, unchallenged and un-rebutted before us, and in view of peculiar facts of this case, we have no other option but to uphold the order of Ld CIT(A). - Decided against revenue.

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• 2016 (4) TMI 28
  Rectification of mistake in the order (ROM) - TDS on interest paid to Head Office (HO) and branches and commission paid to branches - disalllowance u/s 40(a)(ia) - Held that:- Some merit in the assessee's claim that the tribunal, even if it does not consider the claim for commission to correspondents as at par with that allowed to HO/branches, should state its' reason/s for upholding the disallowance, i.e., adjudicate the same. There is no positive or clear finding in the matter, informing as to why it considers the assessee's claim as exigible for disallowance u/s. 40(a)(ia). The claim cannot simply be brushed aside, even if, as apparent, it has not been considered as payment to self. The order should explicitly state as to why the claim does not qualify for deduction, stating its reason/s, even if, as it appears, it is for the reason of non-deduction of tax at source, which is admitted. To this extent, we find the assessee's claim for non-adjudication as valid. The impugned order is, accordingly, recalled for adjudicating the assessee's Ground in-so-far as it relates to the assessee's claim toward commission paid/allowed to correspondents. We may, it may be emphasized, not be construed as having issued any opinion in the matter; the hearing before us being limited to the 'mistake' attending the impugned order. Before parting, we may add that there has been clearly also an omission to include the word 'commission' along with the word 'interest' at para 15 of the impugned order, so that the word 'interest' therein would require being read as 'interest/commission'. - Decided in favour of assessee

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• 2016 (4) TMI 27
  Deduction u/s 80P(4) - Held that:- Assessee is not coming under the purview of co-operative bank and its activities are confined to its members whereas in case of co-operative bank dealings are done with members as well as nonmembers and the operational activities of co-operative bank is quite similar with the other scheduled bank working under the strict guidelines and norms of RBI as mentioned in the Banking Regulation Act, 1949. We, therefore, are of the confirmed view that assessee cooperative society does not fall in the exception mentioned in section 80P(4) of the Act and falls under the category of co-operative society engaged in the business of providing credit facilities to its members; mentioned under the provisions of section 80P(2)(a)(i) of the Act. Further as the Assessing Officer has not dealt any other issues on merits, we find it justified to remand the matter back to the file of Assessing Officer with a clear finding to assess the assessee cooperative society as a co-op. society falling under the category of provisions of section 80P(2)(a)(i) of the Act and not under the provisions of sec.80P(4) of the Act and accordingly frame fresh assessment order after providing reasonable opportunity of being heard to the assessee who will file financial statement and details of income earned and then decide the quantum of deduction available, if any, to assessee u/s 80P(1) of the Act.

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• 2016 (4) TMI 26
  Penalty u/s. 271 (1) (c) - Held that:- As the record reveals assesse had filed all the relevant documents, information and events before ld. AO during the course of filing of return for AY 2006-07, assessment proceedings and in AY 2007-08 also. When the order of Hon'ble Rajasthan High Court approving the scheme of demerger was passed, the same was also duly and promptly filed by the assesse with ld. AO. These facts have not at all been disputed by the department in any manner. The allegation of concealment or inaccurate particulars has not been established by the ld. A.O. on discovery of any new fact, information or inquiry. The entire adverse inference is drawn on nothing but asseessee's own record and Hon'ble High Court approval for demerger schemes after the income tax department is heard. In our considered view there exists no scope to hold that assesssee has concealed any fact or furnished inaccurate particulars in the return of income dtd. 27-11-2006 filed prior to approval of demerger scheme by Hon'ble Rajasthan High Court. So also in the return filed in response to notice u/s 148 as it is not disputed that assessee did not claim any set off of loss. Thus we see no justification in alleging that assesssee has concealed any fact or furnished inaccurate particulars in any returns of income. A multitude of undisputed facts mentioned above clearly demonstrate that there were no effort much less intention to conceal any particulars or file any inaccurate particular of income by assessee testing it on the touchstone of preponderance of probability, human conduct, surrounding circumstances or reasonable logic. There is no loss to revenue as assessee has paid all the due taxes. It has not taken any advantage as it has not claimed any set off of such losses in any manner in the subsequent year. There being repetitive and full disclosure of facts and record; there being no loss to revenue as the loss is not set off by the assesse and merely because revised return is not filed by the asssessee, it is desirable the all the surrounding circumstances, human conduct and assessee's explanation are to be considered in harmonious manner. Considering all the aspect we are not in agreement with authorities below that assessee concealed or filed inaccurate particulars of income so as to be liable for impugned penalty. Having filed all the relevant details on several occasions whose veracity is not at all challenged by the revenue, the sole issue remains whether the impugned concealment penalty is legally or factually leviable for not filing of a revised return which was undertaken by assesse. In our considered view penalty provision for not filing a return are different i.e. sec 271(1)(a) and not 271(1)(c). Besides in original return or notice u/s 148 assesssee did not conceal any income or furnished inaccurate particulars. By the time or original return merger scheme was not approved and assesse offered income in return in response to notice u/s 148. It is trite law that penalty u/s 271(1)(c) cannot be imposed by picking up one default, the levy is to be considered after carefully considering the entirety of facts, record, assessee's submissions, judicial precedents and applying proper discretion. Any penalty imposed without proper care and in an arbitrary manner has a propensity to become untenable. There is no provision in the IT Act for levying concealment of income u/s 271(1)(c) for non-filing of a return. The relevant provision is sec. 271(1)(a), which is neither initiated nor attracted. Thus the penalty has been imposed for not filing a return and unfounded allegation that assessee filed inaccurate particulars in return of income dtd. 27-11-06 is unsustainable. In our considered view this is not a fit case for imposition of penalty.- Decided in favour of assessee

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• Customs

• 2016 (4) TMI 12
  Waiver of pre-deposit of entire amount of differential duty, not covered by the bank guarantees, interest and penalty - Import of dense wavelength division multiplex equipment (DWDM), and certain imported CDs allegedly used for its functioning - Scope of Section 129-E of the Customs Act and its proviso - Appellant's claimed of financial hardship - Held that:- for balance of convenience and irreparable loss, the Tribunal should consider the necessity to safeguard the interests of revenue, and should impose such conditions as may be required in this regard, while passing an order on the application to waive the pre-deposit for preferring an appeal. Two significant expressions, used both in Section 35-F of the Central Excise Act and Section 129-E of the Customs Act, are undue hardship to such person and safeguard the interests of the Revenue. While considering the application, seeking waiver of pre-deposit, these twin requirements should be kept in view. Undue hardship is a matter within the special knowledge of the applicant, and must be established by him. A mere assertion of undue hardship would not suffice. The expression undue hardship is, ordinarily, related to economic hardship. The Tribunal is required to consider the question whether or not a direction to deposit the amount would cause undue hardship. Without considering the said question, it cannot go into the merits of the appeal itself. The other aspect, which relates to safeguarding the interests of Revenue, is a matter which the Tribunal should focus upon, while considering whether pre-deposit should be waived either wholly or partially. It is for the Tribunal to impose such conditions as it deems proper to safeguard the interests of Revenue. While dealing with the application, the Tribunal should consider the material placed by the appellant in support of the plea of undue hardship, and also stipulate such conditions as are required to safeguard the interests of the Revenue. Some principles should be borne in mind while considering applications for stay, or for dispensing with the requirement of pre-deposit, under Section 35F of the Central Excise Act or under Section 129E of the Customs Act, or other similar provisions. As the prima facie findings recorded by the CESTAT, in the order under appeal, disclose a systematic fraud having been committed by several companies and individuals, both within the country and abroad, to evade customs duty; the elaborate steps taken to disguise the software embedded in the imported equipment as customised software; and the conscious and deliberate efforts at misrepresentation only to deprive the Government of its legitimate revenues in the form of customs duty, can it be said that the order of CESTAT suffers from such an illegality as to necessitate interference in appeal by this Court? Whether interference by the High Court is permissible, in the exercise of its appellate jurisdiction under Section 129-B of the Customs Act when the order of the CESTAT give rise to a substantial question of law - Held that:- the discretion exercised by CESTAT, to restrict waiver only to the penalty imposed, that too partially, is on a detailed analysis of the evidence on record, and for just and valid reasons. Whether the Tribunal should have exercised its jurisdiction differently is not a substantial question of law justifying interference. While no substantial question of law would arise even if one of the two possible views appeal to the High Court, we are satisfied that, in the facts and circumstances of the present case, no view, other than that formed by the CESTAT, is possible. As the CESTAT has only directed that the customs duty, payment of which was evaded to be paid earlier, be paid along with interest, and has waived a substantial part of the penalty for some of the appellants, and in its entirety for a few others, the orders under appeal cannot be said to suffer from a patent illegality giving rise to a substantial question of law necessitating interference in an appeal under Section 130 of the Customs Act. Whether failure by the appellant to comply with the order passed under the proviso to Section 129-E of the Customs Act, would result in dismissal of the appeal filed before the CESTAT - Held that:- it is necessary, in the first instance, to note the legal regime prevalent before sub-section 2-A was inserted to Section 129-B of the Customs Act and Section 35-C of the Central Excise Act. Section 129-E did not expressly provide for rejection of the appeal for non-compliance with the requirement regarding the deposit of penalty or duty but, when Section 129-E made it obligatory on an appellant to deposit the duty or penalty pending the appeal, and if a party did not comply either with the main sub-section or with any order passed under the proviso, the appellate authority was fully competent to reject the appeal for non-compliance with the provisions of Section 129-E of the Customs Act, 1952. Accepting the contention, that Section 129-E of the Customs Act did not give any power to the CESTAT to dismiss the appeal for non-compliance with the requirements regarding deposit of duty, interest or penalty, would have meant that the appeal would have to be kept on file for ever, even when the requirements of Section 129-E was not complied with. Retention of such an appeal on the file would have served no purpose for, unless Section 129-E was complied with, the CESTAT could not have proceeded to hear an appeal on merits. The logical consequence of failure to comply with Section 129-E was rejection of the appeal on that ground. Section 129(1) of the Customs Act, 1952 prior to, and Section 129-E of the Customs Act after, the substitution of Chapter XV by the Finance Act, 1980, (and Section 35-F of the Central Excise Act) provided a conditional right of appeal against the duty demanded or penalty levied. Although these Sections did not expressly provide for rejection of the appeal for non-deposit of duty or penalty, yet it made it obligatory on the appellant to deposit the duty or penalty, pending the appeal, failing which the Appellate Tribunal was fully competent to reject the appeal. So, it is clear that the provisions of Section 129(1)ibid, Section 129-E ibid and its provisos were inserted thereto, as a result, failure to deposit the whole of the duty, interest and penalty, or such part thereof, within the time stipulated by CESTAT would result in dismissal of the appeal, and the appellate proceedings before the CESTAT coming to an end. Therefore, viewed from any angle the orders under appeal, passed by the CESTAT, do not necessitate interference in proceedings under Section 130 of the Customs Act, 1952. - Decided against the appellant

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• 2016 (4) TMI 11
  Legality and correctness of judgment passed under Section 20 (b) NDPS Act - Possession of 600 grams of Hashish concealed in an iron trunk - Held that:- as there are inconsistencies and discrepancies, the statement of the Investigating Officer and the evidence produced by the prosecution can’t be believed to base conviction for stringent provisions of the Act. The law on this aspect is that “stringent the punishment stricter the proof”. In such like cases, the prosecution evidence has to be examined very zealously so as to exclusive very chance of false implication. The prosecution has failed to establish the commission of offence by the respondent and beyond reasonable doubt. It cannot be allowed to take benefit of the respondent’s inability to establish his defence in 313 Cr.P.C. statement. Mere apprehension of the respondent is not enough. The evidence is scanty and lacking to establish that the contraband was recovered from the possession of the respondent in the manner alleged by the prosecution on the said date and time. Therefore, the respondent rightly deserved the benefit of doubt and the impugned judgment on that score cannot be faulted. - Decided against the revenue

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• 2016 (4) TMI 10
  Mis-declaration of goods - Classification of the API 5L PSL2x70 and x80 grades - Stainless Steel - Alloy steel’ - ‘Non alloy steel - Production of Advance Authorizations - CESTAT had decided the issue along with various other issues including limited period of extension and willful mis-declaration on the Bills of Entry in favour of appellant reported in [2014 (5) TMI 789 - CESTAT AHMEDABAD]. - Apex Court dismissed the revenue review petition

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• 2016 (4) TMI 9
  Eligibility for benefit of reduced Custom duty under Project Import Regulations, 1986 - Goods imported during the period November and December 1986 and benefit of project import regulations were extended - Department contended that appellant has to comply with condition no. 7 of project import regulations - Held that:- as regulation no. 7 was not in the statute when the goods were imported, hence it cannot be pressed into service for denying the benefit of project import regulation to the appellant. Therefore, appellant is eligible for benefit of reduced custom duty. - Decided in favour of appellant with consequential relief

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• 2016 (4) TMI 8
  Validity of impugned order - Competiting claims of title to seized goods - Seizure of assorted gold jewellery - Held that:- it is axiomatic that there is no provision under the Customs Act, 1962 which authorizes adjudicating authorities under this Act to decide competing claims of title to goods which are the subject matter proceedings under the Act,. Adjudication and determination of competiting claims of title to goods which are subject to proceedings under the Customs Act is nevertheless outside the purview and jurisdiction of authorities under the Customs Act, 1962. We also perceive that the judgment of the Hon'ble Delhi High Court dated 4.10.10 (Civil Writ Petition No. 13070/2009) does not direct the respondent / Commissioner to adjudicate upon and determine competiting claims regarding title to the seized gold jewellery. It is a trite legal principle that adjudicating power is essentially a legislated grant and is not to be inferred as a derivative of a curial decree. Learned Counsel for the appellant, for the respondent SBI and learned DR fairly concede the position that neither the respondent/ Commissioner nor this Tribunal have jurisdiction to determine, in the circumstances of this case, whether the seized goods belong to either the appellant; to M/s. Vee Ess Jewellers; or to the State Bank of India, under the hypothecation agreement between the later. Therefore, the declaration under the impugned order that the gold seized at the air port belongs to M/s. Vee Ess Jewellers, is a conclusion which is patently without jurisdiction and therefore non-est and inoperative. - Appeal disposed of

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• Corporate Laws

• 2016 (4) TMI 3
  Scheme of arrangement for demerger - Held that:- Learned counsel appearing for the Regional Director is not having any other objection except the contentions raised at para Nos. 9 to 11 as stated above. Considering the fact that the Regional Director has decided not to make any objection to the scheme except to the objections/observations made at para Nos. 9 to 11 in his affidavit and considering the fact that those objections/observations cannot be sustained in view of the findings rendered as stated supra by following the earlier decisions of this Court, find that there cannot be any impediment for this Court to allow all these company petitions. Accordingly, all the company petitions are allowed as prayed for.

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• Service Tax

• 2016 (4) TMI 25
  Refund of Service tax - paid on specified services in terms of the provisions of Notification No.41/2007-ST 6.10.2007 - Non-fulfillment of condition contained in proviso (e) to para (1) of Notification that the goods exported without availing drawback of service tax paid on the specified services under the Customs, Central Excise and Service Tax Drawback Rules, 1995- Held that:- the appellant's contention that deletion of the condition (e) with effect from 7.12.2008 should be considered as retrospective cannot be accepted. Condition (e) is admittedly part and parcel of the Notification and the benefit of the Notification is dependent on the fulfillment of a particular condition enumerated therein. The said condition was part of the above Notification, during the relevant period and it was incumbent upon the assesee to fulfill the same for the purpose of availment of the benefit of the Notification. The deletion of the said condition of the Notification subsequently cannot be considered to be clarificatory in nature so as to hold the same to be effective with retrospective effect. Deletion of the condition of the Notification is only reflective upon the legislative intent and would be effective only from the date of its actual deletion. Therefore, refund cannot be allowed. - Decided against the assessee

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• 2016 (4) TMI 24
  Admissibility of Cenvat credit - Security services provided to the residential colony of the employees situated adjacent to the factory premises - Appellant contended that residential colony is a necessity for running 24 hours production in the factory therefore security services provided to the residential colony is in relation to the manufacturing of final product - Held that:- by following the judgment of M/s. Manikgarh Cement Vs. CCE, Nagpur [2010 (10) TMI 10 - BOMBAY HIGH COURT], the Cenvat credit in respect of Security Services provided to the residential colony is not admissible. Hence the demand of Cenvat credit is upheld. Imposition of penalty - Held that:- the issue is not free from doubt and it involves interpretation of definition of input and input services, therefore the appellant is not liable for penalty in the facts and circumstances of the case. Therefore, the penalty imposed is set aside. - Decided partly in favour of appellant

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• 2016 (4) TMI 23
  Rejection of refund claim filed under Rule 5 read with Notification No. 5/2006-CE(NT) dated 14/3/2006 - Accumulated Cenvat credit against export of services for the period April, 2009 to June, 2009 - Time bar in terms of Section 11B of Central Excise Act and non qualification of test of input as defined under Rule 2(l) of Cenvat Credit Rules, 2004 - Held that:- the date of exports are 30/4/2009, 31/5/2009 and 30/6/2009 and the refund claim was filed on 30/4/2010. In terms of Section 9 of General Clauses Act, 30/4/2009 has to be excluded therefore the period of one year is reckoned from 1/5/2009 accordingly last date of filing of refund claim is 30/4/2010 on which appellant indeed filed refund claim. Therefore there is no delay in filing refund claim and accordingly the impugned order to the extent of rejection of refund claim for an amount of Rs. 1,58,556/-, is set aside and rejection of claim of Rs. 1615/- is maintained. - Decided partly in favour of appellant

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• 2016 (4) TMI 22
  Stay appeal - Extension of period of stay - Applicant has not taken necessary steps for disposal of the appeal - Held that:- the appeal was not taken for hearing by the Tribunal as there is huge pendency of the appeals. Lot of appeals have already been listed and therefore it is difficult to take up the appeals hearing at this stage. Therefore, the extension of stay is granted till the disposal of the appeal. - Stay granted and appeal disposed of

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• 2016 (4) TMI 21
  Scope of Banking besides these agreements were not examined/scrutinized by the original adjudicating authority even though equipped with enough manpower to undertake such a herculean task. Ascertaining of the facts are vital to application of the principle of law, in the interest of justice this aspect need to be remitted to the ld. Commissioner for verification of the facts in detail and ascertain the true nature of transaction between the appellant and its customers during the period under dispute and arrive at the conclusion whether the transaction/services falls within the scope of taxable services of banking and other financial services defined at Section 65(12) of Finance Act, 1994. Leviability of Service tax - Whether value representing securitization transaction deducted from the total value as non-taxable service for the period 2002-03 & 2003-04 is correct or not - Appellant also entered into the transaction of securitization, whose value had been rightly deducted from the gross taxable value for the financial year 2002-03 & 2003-04 being in the nature of sale transaction and followed necessary guidelines issued by the RBI, applicable to banks/financial institutions and NBFCs in this regard - Held that:- the true transaction of securitization contracts entered into with respective Banks/customers ought to be examined before arriving at any conclusion whether the amount claimed by the appellant is the result of a sale transaction or service as argued by the revenue, and accordingly are leviable to service tax or otherwise. Therefore, this aspect also needs to be remitted to the Ld. Commissioner for consideration afresh. Rejection of RBI statement figures while calculating the service tax liability for the period 2004 - 05, 2005 - 06 and 2006 - 07 - Held that:- the ld. Commissioner has not recorded any observation as to why the said figures be discarded. Any order/finding without reasons is cryptic and it'll be difficult for the appellate authorities to examine the correctness or otherwise of such findings, hence such order cannot be sustained in law. Therefore, the computation for the financial years 2004-05, 2005-06 & 2006-07 are set aside and the adjudicating authority is directed to record a detailed finding supported by reasons in discarding the RBI statement figures and adopting the figures submitted before him. Leviability of Service tax - 'Collection commission' under the category of 'Business Auxiliary Service'(BAS) as defined under Sec.65(12) - Commission received in terms of collection of EMI from the borrowers on behalf of several Banks and providing financial service to the banks in disbursement of loan by the customer- banks which resulted in promoting or marketing of the services provided by the clients (banks), hence fall under clause(ii) i.e. 'promotion or marketing of services provided by the client' of the said definition of BAS - Held that:- the ld.commissioner has not confirmed demand of service tax on the collection commission considering the appellant as a commission agent and the amount received as agency commission but, he has confirmed the demand service tax on such receipts under Clause-(ii) of the Definition of BAS as defined under 65(19) of the Finance act, 1994. Also, Ld. Commissioner has without scrutiny of the agreements/contracts with the client Banks, arrived at the conclusion that the service rendered by the Appellant are in the nature of promoting the business of client-banks and hence classifiable under BAS. As held in Pagaria Auto Centre vs. CCE, Aurangabad [2014 (2) TMI 98 - CESTAT NEW DELHI (LB)], it is necessary to examine/scrutinize the transaction to ascertain whether it is BAS or otherwise. Therefore, this issue also needs to be remitted to the Ld. Adjudicating authority for consideration afresh. In computing the demand under this category the ld. adjudicating authority has discarded the figures of the RBI statement without recording reasons. Therefore, the ld. Commissioner also should record reasons in computing the demand, in the event it is concluded by him that the said service is taxable. Recovery of Rs. 93.00 Lakhs, collected by the appellant representing the said amount as service tax, under section 11D of the Central Excise Act, 1944 - Appellant contended that only an amount of Rs. 7,54,689/- was collected by the Applicant representing service tax and the amount of Rs. 69,52,945/- was collected as contingency deposit but not supported by any evidence - Held that:- It has not been substantiated by the appellant as to how the said contingency deposits had been collected from the customers, that is, whether it was collected in lump sum or was shown as deposits in the respective agreements/contracts or Bills raised by the appellants or any other manner during the relevant period. Advancing the bare claim that collection was towards contingency deposit could not lead to any conclusion that these amounts have been collected as deposits, not as representing service tax as alleged by the department since at the initial stage of investigation the said facts were admitted by the Assistant Vice President (AVP) of the appellant. Thus, it is necessary to lead more evidences by the appellant to substantiate their claim that the amount of Rs. 69,52,945/- which was collected from the customers/clients were nothing, but contingency deposits and not service tax. In the interest of justice, therefore, the Appellant be provided a further fair chance to produce before the adjudicating evidence in favour of the said claim. So this issue has also needs be remanded for consideration afresh. Liability of Service tax for the period 2002-03 & 2003-04 - Amounts received towards management fees, penal interest and termination charges - Held that:- by following the decision of the Tribunal in the case of Bank of Baroda Bank of Baroda v. CCE, Jaipur [2014 (3) TMI 653 - CESTAT NEW DELHI] and Small Indistires & Devlopment Bank of India Vs. CCE, Chandigarh [2011 (1) TMI 495 - CESTAT, NEW DELHI], service tax is not payable on the penal interest and prepayment/termination charges. With regard to the Management fees the Ld. Commissioner is directed to record a detailed finding supported with reasons on its leviability to service tax. Demand on penal interest and termination of charges - Held that:- since most of the issues raised by the assesse and the revenue are remanded for reconsideration, hence, it would be inappropriate to record any observation on the applicability of extended period and penal provisions at this stage when the facts are not clear. The adjudicating authority would be free to decide after analysis of facts/evidences on record and that would be produced in the remand proceeding to arrive at a conclusion on the aspect of limitation and imposition of penalty accordingly. - Appeal disposed of

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• Central Excise

• 2016 (4) TMI 20
  Quantum of penalty - demand of an amount @8% under Rule 6 of the Cenvat Credit Rules with respect to liquid nitrogen used in the manufacture of dutiable and exempted finished products - Held that:- As per Rule 12 of the Cenvat Credit Rules, 2002, recovery machinery for taking improper credit existed in Cenvat Credit Rules, 2002. The Appellant was further well aware of paying 8% of the amount under Rule 6 of the Cenvat Credit Rules when common inputs are used in the manufacture of dutiable and exempted finished products and where no separate accounts are maintained. The Appellant also did not pay the disputed amount immediately on being pointed out by the department. The amounts paid by the Appellant were as a result of Stay order dated 29.01.2010 passed by the First Appellate Authority as mentioned in paragraph-4 of the Order-in-Appeal dated 20.06.2012. However, there is substance in the argument made by the Appellant that all the relevant details with respect to dutiable and exempted goods were mentioned in the periodical returns filed with the department. On perusal of the records and in the interest of justice this Bench is of the view that a penalty of Rs. 20,000/- under Rule 13(1) of the Cenvat Credit Rules, 2002 will meet the ends of justice. Accordingly penalty imposed upon the Appellant by the Adjudicating Authority under Order-in-Original is reduced to Rs. 20,000/-

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• 2016 (4) TMI 19
  MODVAT Credit denied - stock taking taken by the statutory auditors of the appellant was sufficient to hold that the inputs were diverted by the appellant and accordingly, demand of CENVAT Credit and imposition of penalty has been correctly adjudicated against the appellant - Held that:- The appellant is engaged in the manufacture of Aluminium and calcined alumina. Certain shortages in the inputs were noticed as per the statutory audit undertaken by the appellant. It is the case of the appellant that the said stock taking was not correct as reconciliation done at the end of the financial year indicated excess of raw materials The stock verifier's report also indicated that the approval of various representatives of the assessee who were also associated with the Chartered Accountant was taken of the manner of verification. The stock verification was done in the presence of the custodian of the bagged calcined alumina, Internal Audit Department, Representative of Finance Department and the Departmental Representative of Raw Materials. The report also shows that the discrepancies and reconciliation were discussed with the concerned officials during the course of verification as well as while finalizing the report. The report further goes on to say that the findings of the Auditor of M/s. R.K. Das that the responsible officers of the appellants company were associated with the stock verification; that verification was done in their presence and the method of verification was approved by them. No room is left for any doubt that there were shortage of bagged calcined alumina and we hold accordingly - Decided in favour of assessee.

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• 2016 (4) TMI 18
  Denial of CENVAT credit with respect to motor vehicle chassis (Tractor) falling under Chapter 87 of the Central Excise Tariff Act, 1985 - interest and an equivalent amount of penalty has been imposed under Rule 13 (1) of CENVAT Credit Rules, 2002 - Held that:- From the above definition of capital goods, goods of Chapter 87 are not covered within the definition of capital goods for the purpose of taking CENVAT Credit as capital goods. There is also nothing on record to suggest as to how the said goods are directly used in or in relation to the manufacture of metals, the end product of the appellant. It is observed from Order passed by the first appellate authority relied upon Supreme Court's judgment in the case of J.K. Cotton Mills Vs. C.C.ST (1964 (10) TMI 2 - SUPREME COURT OF INDIA ), where it is held that use of goods in relation to manufacture has to be clearly established. It is categorically held by the first appellate authority that motor vehicle chassis on which CENVAT Credit is taken has not been used directly in or in relation to the manufacture of the finished goods manufactured by the appellant. Accordingly, the Bench does not find any merit in interfering with denial of CENVAT Credit and interest ordered by the first appellate authority against the appellant. In the case of Gajra Gears Ltd. Vs. CCE (2015 (5) TMI 629 - SUPREME COURT ), Hon'ble Apex Court also made the observations that material handling equipments like hand trolley or fork lift and operational machines are classifiable under Chapter 73 of the Central Excise Tariff and not eligible for CENVAT Credit. In view of the above observations and the settled proposition of law, appeal filed by the appellant with respect to admissibility of CENVAT Credit is rejected. So far as imposition of penalty upon the appellant is concerned, it is observed that the appellant is a Government of India undertaking and cannot be said to have any malafide intention to take CENVAT Credit by fraud, willful misstatement etc. Accordingly, penalty imposed upon the appellant is set aside.

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• 2016 (4) TMI 17
  Refund claims filed after a period of more than 5 years from the date of payment of duty - Eligibility to the benefit of refund scheme under Notification No. 33/99-CE dated-8/7/1999 under clause 3 (b) - belatedly filing substantial expansion applications and refunds - Held that:- In the present case the statement under clause 2 (a) of the exemption notification No.33/99-CUS is a mandatory condition that an assesse should claim the refund of duty by 7th of the next month . This condition cannot be interpreted liberally as laid down by the Apex Court. However, accepting RT-12 return in place of specific statement could be a liberal interpretation provided such RT-12 return also specifies refund amount under Notification No. 33/99-CE. Revenue cannot be expected to grant suo-moto refund under Notification No. 33/99-CE when no such claim is made by 7th of the next month either in the specific statement under the exemption notification or RT-12 return filed. Specific time limits have been prescribed under Notification No. 33/99-CE for filing a refund statements under clause 2 (a) . This statement could be a specific statement under Notification No. 33/99-CE or a RT-12 Return but such statement should have a claim for refund of duty paid through PLA. The provisions of Section 11B of the Central Excise Act, 1944 are not applicable to the refunds arising out of exemption Notification No. 33/99-CE because specific monthly time limits have been prescribed under this notification. Accordingly, on cumulative reading of various provisions of Notification No. 33/99-CE, we are of the considered opinion that refund claims, filed after more than 5 to 6 years of such duty payment, are clearly time barred. - Decided against assessee

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• 2016 (4) TMI 16
  Under-valuation of the goods - “place of removal” under Section 4 of the Central Excise Act 1944 - Held that:- The finding of the Adjudicating Authority that the appellant is required to pay duty on such goods sold from the depot at a higher price over and above price as declared in their declaration, is contrary to provision of Section 4(1)(a) of the Act, 1944 and the case laws. It is not in dispute that the appellant cleared the goods from their factory, at the price prevalent at the depot and therefore, the demand of duty cannot be raised for increase of the price after clearance of the goods from the depot. Thus, the demand of duty cannot be sustained. With regard to demand of duty for the period from 28.9.1996 to March 1999 the Adjudicating Authority observed on the basis table as mentioned in the impugned order, that there was difference in price between the columns “Rate Charged from Customer from Depot” and “Declared Price of Goods in the factory at which duty paid at the time clearance /Sale Price (S.P.)”. It is observed that S.P. is inclusive of duty. The appellant in their reply to show cause notice categorically stated that the duty element is required to be excluded in the invoice value of the depot. The appellant also submitted some of the copies of invoices to show that the price it depot is cum-duty price. It is noticed that as per Section 4 (3) (d) of the Act, 1944, value in relation to any excisable goods does not include excise duty, sales tax etc., Hence, the findings of the Adjudicating Authority that the factory price is inclusive of duty cannot be sustained. Denial of benefit of cash discounts from assessable value - Held that:- It is not in dispute that the duty has been demanded in respect of cash discount, which was not actually passed on to the customer. The Hon’ble Supreme Court in the case of Purolator India Ltd [2015 (8) TMI 1014 - SUPREME COURT ] set aside demand of duty on cash discount issue. The Hon’ble Supreme Court allowed cash discount even after introduction of Transaction Value for the reason the cash discount for prompt payment as agreed by the buyer at the time of clearance of goods is a contractual price and it would be deducted from the sale price. It may be noted that the present case is prior to July 2000 and therefore, the appellant is eligible for deduction of cash discount from the assessable value.

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• 2016 (4) TMI 15
  Demand under Rule 8(3A) - whether appellants have not paid central excise duty on consignment basis during default period and also utilized cenvat credit for payment of duty against the provisions of Rule 8 (3A) of CER? - Held that:- The Hon'ble High Court of Madras in the recent judgement in the case of Malladi Drugs & Pharmaceuitcals Ltd. Vs UOI (2015 (5) TMI 603 - MADRAS HIGH COURT ) and A.R. Metallurgicals Pvt. Ltd. (2015 (5) TMI 661 - MADRAS HIGH COURT ) decided batch of writ petitions and struck down Rule 8(3A) as ultra vires and allowed the writ petitions of assessees. Thus we hold that demand of duty under Rule 8(3A) is unsustainable as the said Rule has been struck down by the Hon'ble High Court and the demand of duty and penalty imposed in the impugned orders is liable to be set aside. - Decided in favour of assessee

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• 2016 (4) TMI 14
  CENVAT credit wrongly availed - penalty imposed - Held that:- The appellants have reversed the credit and also deposited the interest. The appellants have not been able to substantiate their act of availing credit as per provisions of law. Therefore the finding of the authorities below that appellant has wrongly availed credit does not call for any interference. Equal amount of penalty under Rule 15 read with 11AC is imposed upon the appellants besides separate penalty upon the Vice President under Rule 26 of Central Excise Rules. The appellant has reversed the credit alongwith interest before the issuance of show cause notice. The appellant reversed the credit and deposited the interest vide GAR-7 Challans dated 17.10.08 and 15.02.2011. But show cause notice dated 18/03/2011 was issued to the appellant and proceedings were initiated. Sub clause (2B) of Section 11A provides that when duty has been so paid no notice shall be served on the assessee. Therefore the penalty imposed is totally unjustified. The same are set aside.

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• 2016 (4) TMI 13
  Valuation of Goods under Section 4 i.e Transaction Value or under Section 4A i.e MRP based value - Differential duty demand - revenue proposing to assess the goods under Section 4A as per the M.R.P - goods cleared to industrial consumers by the assessee as free supply - Held that:- As decided in Jayanti Food Processing (P) Ltd. Vs CCE Rajasthan [2007 (8) TMI 3 - Supreme Court ] what is material is the definition of “retail sale price”. The requirement of Rule 6(1)(f) is specific. It requires the retail sale price of the package be printed or displayed on the package. If there is no sale involved of the package, there would be no question of Rule 6(1)(f) being attracted. There is a clear indication in the definition of “retail sale price” as provided in Rule 2(r) which clearly explains that the MRP means the maximum price at which the commodity in packaged form “may be sold” to the ultimate consumer. Thus, the definition of “sale” in Section 2(v) of the SWM Act becomes relevant. Therefore, unless there is an element of sale, as contemplated in Section 2(v), Rule 6(1)(f) will not be attracted and thus such package would not be governed under the provisions of SWM (PC) Rules which would clearly take such package out of the restricted arena of Section 4A(1) of the Act and would put it in the broader arena of Section 4 of the Act The ratio of the above case law is squarely applicable to the present case as the goods are sold to the industrial consumers who in turn supplied these goods as free gifts and these are not ultimately sold in retail sale either by the consumer or by the person who purchases it or by the ultimate buyer. Thus we hold that the detergent powders cleared to the industrial consumers are exempted from M.R.P. and not covered under Section 4A. Accordingly, we hold that differential duty confirmed in the impugned orders are liable to be set aside - Decided in favour of assessee

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• CST, VAT & Sales Tax

• 2016 (4) TMI 7
  Benefit of exemption Notification - Scope of the proviso to the main condition - issued under Section 8(5) of the CST Act read with Rule 28A(4)(c) of the Rules - Sale of Radio Pagers manufactured by M/s Bharati Telecom Limited that was holding a valid exemption certificate under Rule 28A of the Rules - Appellant claimed central sales tax exemption of such goods in terms of notification dated 04.09.1995 by urging that such exemption was in respect of sale of goods which were manufactured by any dealer in the State of Haryana who held a valid exemption certificate - Held that:- the purport and impact of Rule 28-A is with reference to eligible industrial unit, is not only clear from the definition clauses which define eligibility certificate, exemption certificate, etc. but also from sub-rule (4)(a) which stipulates that the benefit of tax exemption or deferment shall be given to an eligible industrial unit holding exemption or entitlement certificate for the period specified. Clause (c) to sub-rule (4)(2) postulates that goods manufactured by an eligible industrial unit availing of exemption under this Rule shall be exempt from levy of tax on all successive stage/stages of sale or purchase, subject to the dealer affecting the said purchase or sale furnishing a certificate in the form of ST-14A obtained from the assessing authority. This clause has the effect of granting exemption from levy of tax at all successive stages of sale and purchase in intra-state trade or commerce i.e. within the State of Haryana. To put it differently, it extends the benefit granted under clause (n)(ii) which relates to inter-state trade or commerce to intra-state sale or purchase. Such sales may be one or successive and tax at all stages is exempt. The exemption, therefore, is good specific, subject of course to other conditions being satisfied. Though the proviso to the said notification stipulates that the dealers should have also not charged any tax under the Central Sales Tax Act on the sale of goods manufactured by him but it should be given a greater or more significant role in interpretation of the main part of the notification, except as carving out an exception. It means and implies that the requirement of the proviso should be satisfied i.e. manufacturing dealer should not have charged the tax. The proviso would not scuttle or negate the main provision by holding that the first transaction by the eligible manufacturing dealer in the course by way of inter-state sale would be exempt but if the inter-state sale is made by trader/purchaser, the same would not be exempt. That will not be the correct understanding of the proviso. Giving over due and extended implied interpretation to the proviso in the notification will nullify and unreasonably restrict the general and plain words of the main notification. Such construction is not warranted. Therefore, the assessee shall reap the benefit of the notification in question.- Decided in favour of appellant

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• 2016 (4) TMI 6
  Sustainability of Annexures A-2 and A-3 - in view of the decision of the Hon'ble High Court in cases of vires of Section 62(5) of PVAT Act - Dismissal of appeal for non-deposit of total demand - Business of sale of cars and its spare parts etc. - Held that:- in view of the decision of this court in Punjab State Power Corporation Limited v. The State of Punjab and others [2016 (2) TMI 245 - PUNJAB AND HARYANA HIGH COURT], the orders dated 27.11.2014 (Annexure A-2)and dated 1.10.2015 (Annexure A-3) passed by the Tribunal are not sustainable and set aside. - Matter remanded back

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• 2016 (4) TMI 5
  Enhancement of turnover to 40 times - Suppression of gross turnover - Dealer in grocery articles - Stock of materials goods with reference to the books of accounts not found in order - Held that:- the enhancement of the figure by the Tribunal on the conclusion of facts for which refrained from reference on question of law. There is no discussion of any fact showing nexus of enhancement of 40 times to the facts of the case. Had there been the discussion to prove the enhancement of the turnover 40 times correcting the finding of the assessing authority, the conclusion of the Tribunal by following the decision of Ranital Rice Mill [1993 (11) TMI 215 - ORISSA HIGH COURT (Orissa)] could have been appropriate. So the conclusion of the learned Tribunal following the authority is based on no evidence. On the other hand the learned Tribunal has not followed the aforesaid authority properly, but under the veil of such decision has decided the case arbitrarily against the petitioner. So the conclusion arrived at by the learned Tribunal about suppression of the turnover and multiplying it 40 times is based on no factual aspects. Hence the order of the Tribunal is vulnerable, illegal and perverse. - Petition disposed of

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• 2016 (4) TMI 4
  Imposition of penalty - Section 78(5) of the Rajasthan Sales Tax Act, 1994 - Mandatory declaration form ST-18A was blank and the goods were under stock transfer - Whether mens rea is required to be proved - Held that:- as per decision of Hon'ble Apex Court in the case of Guljag Industries v. Commercial Taxes Officer [2007 (8) TMI 344 - SUPREME Court] and Larger Bench of this court in the case of ACTO Versus Indian Oil Corporation Ltd. [2015 (11) TMI 1078 - RAJASTHAN HIGH COURT], mens rea is not essential and therefore, the observation of the Tax Board in this regard is reversed. Rule 53 clearly postulates that a declaration form is required to be carried by an assessee duly filled in, signed and sealed despite all the other documents being available with the incharge of the vehicle. If there is requirement of carrying declaration form and the form is left blank for any reason whatsoever, then it is a clear-cut case of non-carrying requisite document. It is apparent that the assessee was aware that the declaration form is required to be carried, which was duly signed by the authorized signatories of the respondent but for the reasons best known to it, all other particulars were admittedly left blank. The mandate of law and requirement is to be fulfilled. Thus the Hon'ble Apex Court has clearly held that declaration forms 18A/18C, which have been duly signed by the assessee but left blank, then section 78(2)(a) stood attracted. Also an opportunity was granted by the AO to the assessee of proving its case which included filling up of the declaration form, which the assessee now claims before this court, but after almost 15 years, the matter can not be remitted back to the AO for rectifying the deficiency/discrepancy which remained in the declaration form ST-18A. So, when an opportunity was already granted, second opportunity, in the facts and circumstances of the case and that too after fifteen years, is not required to be given. Therefore, penalty under Section 78(5) of the Rajasthan Sales Tax Act, 1994 has to be imposed. - Decided in favour of revenue

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• Indian Laws

• 2016 (4) TMI 2
  Metropolitan Magistrate, Ahmedabadterritorial jurisdiction to try the offence of dishonour of cheque, punishable under Section 138 of Negotiable Instruments Act, 1881 - Held that:- In the case in hand, there is no question of presenting the cheque for payment over the counter because the cheque is crossed. When a cheque is crossed, the holder cannot encash it at the counter of the bank. The payment of such cheque is only credited to the bank account of the payee. A cheque is either 'open' or 'crossed'. An open cheque can be presented by the payee to the paying banker and is paid over the counter. A crossed cheque cannot be paid across the counter but must be collected through a banker. A crossing is a direction to the paying banker to pay the money generally to a banker or to a particular banker, and not to pay otherwise. The object of crossing is to secure payment to a banker so that it could be traced to the person receiving the amount of the cheque. Crossing is a direction to the paying banker that the cheque should be paid only to a banker or a specified banker. To restrain negotiability, addition of words 'Not Negotiable' or “Account Payee Only' is necessary. A crossed bearer cheque can be negotiated by delivery and crossed order cheque by endorsement and delivery. Crossing affords security and protection to the holder of the cheque. Thus, in view, the learned Metropolitan at Ahmedabad has the jurisdiction to try the case instituted by the complainant for the dishonour of the cheque.

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• 2016 (4) TMI 1
  Termination of contract awarded and forfeiting the security deposit placed by the contractor for the work to the state and further stating that the work had been put an end to at the cost and risk of the contractor - High Court of Kerala has reversed the decision of the learned Single Judge whereunder he had declined to interfere with the order of the Secretary, Public Works Department, Road and Projects of the State terminating the contract - Held that:- There was no disputed question of fact, but it required interpretation of the terms of the contract of insurance. Similarly, if the materials that come on record from which it is clearly evincible, the writ court may exercise the power of judicial review but, a pregnant one, in the case at hand, the High Court has appointed a Commission to collect the evidence, accepted the same without calling for objections from the respondent and quashed the order of termination of contract. The procedure adopted by the High Court, if we permit ourselves to say so, is quite unknown to exercise of powers under Article 226 in a contractual matter. We can well appreciate a Committee being appointed in a Public Interest Litigation to assist the Court or to find out certain facts. Such an exercise is meant for public good and in public interest. For example, when an issue arises whether in a particular State there are toilets for school children and there is an assertion by the State that there are good toilets, definitely the Court can appoint a Committee to verify the same. It is because the lis is not adversarial in nature. The same principle cannot be taken recourse to in respect of a contractual controversy. It is also surprising that the High Court has been entertaining series of writ petitions at the instance of the respondent, which is nothing but abuse of the process of extraordinary jurisdiction of the High Court. The Appellate Bench should have applied more restraint and proceeded in accordance with law instead of making a roving enquiry. Such a step is impermissible and by no stretch of imagination subserves any public interest. Thus the appeal is allowed and the judgment and order passed by the Appellate Bench is set aside.

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