TMI Tax Updates - e-Newsletter
April 3, 2017

Case Laws in this Newsletter:

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

Articles

1. FOUR GST BILL THAT WERE PASSED BY CABINET

   By: esha agrawal

2. GST COUNCIL'S 13TH MEETING: AGENDA STILL UNFINISHED

   By: Dr. Sanjiv Agarwal

3. INPUT SERVICE TAX DISTRIBUTOR UNDER GST REGIME

   By: DR.MARIAPPAN GOVINDARAJAN

4. Concept of Deemed Sales and GST

   By: Shripada Hegde

News

1. GST - REGISTRATION - Draft Rules 31-3-2017

2. GST - REFUND - Draft Rules 31-3-3017

3. GST - PAYMENT OF TAX - Draft Rules 31-3-2017

4. GST - TAX INVOICE, CREDIT AND DEBIT NOTES - Draft Rules 31-3-2017

5. GST - Input Tax Credit - Draft Rules 31-3-2017

6. GST - TRANSITIONAL PROVISIONS - Draft Rules 31-3-2017

7. GST - Determination of Value of Supply - Draft Rules 31-3-2017

8. GST - COMPOSITION RULES - Draft Rules 31-3-2017

9. Finance Bill gets presidential assent, takes effect from today

10. Release of the Central Government’s assistance of ₹ 1,712.10 crore from National Disaster Response Fund (NDRF) to State of Tamil Nadu for Drought and Cyclone Relief and ₹ 1,235.52 crore to State of Karnataka for Drought Relief

11. Text of the Union Finance Minister Shri Arun Jaitley’s Keynote Address at the Opening Ceremony of the Second Annual Meeting of the New Development Bank (NDB)

12. South Asia Subregional Economic Cooperation (SASEC) program of Asian Development Bank (ADB) expanding towards the East with Myanmar becoming its newest member in 2017

13. Exchange rate of the Indian rupee

14. Finance Ministry releases India’s External Debt Statistics end-December 2016

15. Central Board of Direct Taxes (CBDT’s) APA Program crosses the 150 Milestone

16. 18 Offices of Banking Ombudsmen situated across India, receive complaints with regard to Loans and Advances

17. The Union Government has announced revised rates of interest on Small Savings Schemes for the First Quarter of 2017-18 to bring them somewhat closer to market rates

18. Ms. Vanaja N. Sarna, IRS (C&CE:1980) appointed as Chairman, Central Board of Excise and Customs (CBEC); Takes charge today on superannuation of Shri Najib Shah

19. CESS/Surcharge on Petroleum Products

20. Independent External Monitor for Disinvestment

21. Growth of General Insurance Sector

22. National Payments Corporation of India (NPCI)

23. Education Loans

24. Dr. Navrang Saini takes charge as Whole Time Member, IBBI

25. Insolvency and Bankruptcy Board of India notifies Information Utilities Regulations

26. Cabinet approves moving of official amendments to The Companies (Amendment) Bill, 2016 to be Tabled in Parliament

Notifications

Central Excise

1. 8/2017 - dated 31-3-2017 - CE (NT)

Central Excise (Advance Rulings) Amendment Rules, 2017

Customs

2. 11/2017 - dated 31-3-2017 - 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, 2017

3. 31/2017 - dated 31-3-2017 - Cus (NT)

Seeks to notify Foreign Post Offices

4. 30/2017 - dated 31-3-2017 - Cus (NT)

Amendment in Notification No. 63/94 -Customs (NT), dated the 21st November, 1994

5. 29/2017 - dated 31-3-2017 - Cus (NT)

Customs (Advance Rulings) Amendment Rules, 2017

6. 28/2017 - dated 31-3-2017 - Cus (NT)

Deferred Payment of Import Duty (Amendment) Rules, 2017

7. 27/2017 - dated 31-3-2017 - Cus (NT)

Bill of Entry (Forms) Amendment Regulations, 2017

8. 26/2017 - dated 31-3-2017 - Cus (NT)

Bill of Entry (Electronic Integrated Declaration) Amendment Regulations, 2017

9. 25/2017 - dated 31-3-2017 - Cus (NT)

Amendment to Notification No. 40/2012-Customs (N.T.), dated the 2nd May, 2012

10. 24/2017 - dated 31-3-2017 - Cus (NT)

Handling of Cargo in Customs Areas (Amendment) Regulations, 2017

Income Tax

11. 24/2017 - dated 31-3-2017 - IT

Section 10(46) of the Income-tax Act, 1961 Central Government notifies Science and Engineering Research Board, a board constituted by Central Government, in respect of the following specified income arising to that Board

12. 23/2017 - dated 31-3-2017 - IT

Section 10(46) of the Income-tax Act, 1961 Central Government notifies Madhya Pradesh Electricity Regulatory Commission, a Commission constituted by the State Government of Madhya Pradesh in respect of the following specified income arising to that Commission

Service Tax

13. 12/2017 - dated 31-3-2017 - ST

Service Tax (Advance Rulings) Amendment Rules, 2017

VAT - Delhi

14. F.3(14)/Fin(Rev-I)2012-13/DSVI/151 - dated 28-3-2017 - DVAT

Appointment of Assistant Commissioner cum VATO

Circulars / Instructions / Orders

FEMA

1. 43 - dated 31-3-2017

Investment by Foreign Portfolio Investors in Government Securities

DGFT

2. 64/2015-2020 - dated 31-3-2017

Extending Merchandise Exports from India Scheme (MEIS) benefit for ‘Onions Fresh or Chilled’ under ITC (HS) code 07031010 up to 30.06.2017

Highlights / Catch Notes

GST

• Amendments to Central Excise Regulations Post-GST: Key Changes, Compliance Tips, and Transition Guidance for Businesses

  : Central Excise - Post GST amendments
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Income Tax

• Assessing Officer Can Declare Assessee in Default Under TDS Only if Income is Taxable: Sections 195 & 191.

  Case-Laws - AT : TDS u/s 195 r.w.s. 191 - in order to treat the assessee/payee as an assessee in default it is required that the income so paid or credited to the account of the payee/recipient is capable of being brought within the tax net and such assessments should be lawfully made by the AO on the payee/recipient - AT
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• Secondment Agreement Expenses Qualify as Employee Benefits and Are Allowable u/s 37(1) of the Income Tax Act.

  Case-Laws - AT : The expenses incurred are in the nature of employee benefits, though paid under secondment agreement, in respect of persons working for the assessee - Expenses are allowable u/s 37(1) - AT
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• Assessing Officer to Adopt Rs. 600/Sq. Yard Valuation by Registered Valuer for Capital Gains Calculation as of April 1, 1981.

  Case-Laws - AT : Computation of capital gains - The market value of the property may be more or may be less - when a registered valuer has worked out the market value of the property as on 1 st April 1981 at ₹ 600 / - per square yard after taking into account the location of the land, the same should be adopted by the Assessing Officer - AT
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• Waived Loan for Capital Expenditure Not Taxable u/ss 41(1) or 28(iv) in MAT Computation.

  Case-Laws - AT : MAT computation - Additions u/s 41(1) - principal portion of the waived loan - a loan which is originally taken for capital expenditure, if waived, will not give rise to taxable income either under section 41(1) or under section 28(iv) - AT
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• Sales Tax Refund Under PSI 2007 Scheme Deemed Capital Receipt, Not Taxable.

  Case-Laws - AT : Nature of sales tax incentive - revenue receipt OR Capital subsidy - the incentive received by the assessee under the PSI, 2007 scheme in the form of refund of sales tax is Capital receipt, not liable to tax. - AT
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Customs

• Linden Wood Slats Classified Under Customs Tariff Act Subheading 4421.90 for Importers.

  Case-Laws - AT : Classification of imported item - Linden Wood Slat - The Linden Wood Slats imported by the Appellants are correctly classifiable under S.H. No. 4421.90 of Customs Tariff Act - AT
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• Customs Broker License Suspended Under Regulation 19(2) Despite Employee Dismissal; Employer Held Responsible for Misconduct.

  Case-Laws - HC : Suspension of CHA licence - Regulation No. 19(2) of the Customs Broker Licensing Regulations, 2013 - The dismissal of one of the employees of the petitioner does not grant immunity to the petitioner from the alleged offence - HC
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• Imported Goods Misclassified: Test Reveals Items as Imperfect Tin-Coated Sheets, Not Pure Tin or Tin Plates.

  Case-Laws - AT : Classification of imported goods - The test result clearly states that these are not pure tin or tin plates but they are tin coated sheets with few visible imperfections. Tin sheets/tin plates (waste) have to be distinctly different from tin coated sheets. - AT
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Service Tax

• Service Tax Demand on Gujarat Water Supply Project for Human and Animal Welfare Overturned, No Commercial Activity Involved.

  Case-Laws - AT : Levy of service tax - water supply projects are essential for the human beings and animals welfare for their consumption. The respondent was executing the project of the Government of Gujarat for providing water to the human beings as well as animals. No commercial activity is involved in the instant case as the water was not sold to anybody - demand set aside - AT
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• Service Tax Dispute: Clarification Needed on Private Bus Operators' Earnings with State Transport Corporation Partnership.

  Case-Laws - AT : Levy of service tax - appellant engaged private buses to ply under the banner of M/s ASTC on bus routes reserved for M/s ASTC only - the private bus operators paid 10% to M/s ASTC and retained 90%. This is the conflicting position between the situations, which needs proper clarification - AT
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• Taxable Activities Start June 1, 2007; Composition Scheme Benefits Valid Despite Prior Payments Under Construction Service.

  Case-Laws - AT : The activities carried out by the appellants are taxable only w.e.f. 01/06/2007. In such situation, it is clear that their payment of tax in terms of composition scheme should be examined for correctness based on the said provisions only - Benefit of composition cannot be denied merely on the ground that service tax was paid under construction service prior to 01/06/2007 - AT
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• Consulting Engineering Services Classified Under Export of Services Rules, 2005; Location of Recipient Key for Export Status.

  Case-Laws - AT : Export of services - Since consulting engineering service also is a category (iii) service as mentioned in Export of Services Rules, 2005, the location of recipient of service is relevant. As such, the appellants were engaged in providing services, which are exported out of country. - AT
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• Royalty Payments on Journal Contents Exempt from Service Tax, Not Linked to Intangible Property Rights Like Trademarks.

  Case-Laws - AT : Liability of service tax - royalty payment for providing contents for the journal - It is not relating to right to intangible property like trade market designs, patterns or any other similar intangible property. Admittedly, the contents of the journal are copy right materials and, as such, are excluded from the tax liability under IPR service - AT
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Central Excise

• Court Rules Appellant Must Pay Full Penalty if Speculating on Proceedings Outcome, Not Just 25.

  Case-Laws - HC : Whether the appellant was entitled to the benefit of payment of only 25% of the penalty? - If the assessee wishes to speculate as to the outcome of the further proceedings, he must do so at his own risk - HC
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• Kulfi Mix Classification Under CTH 0404 Confirmed; Applies to Ready-to-Consume Kulfi by Appellant Too.

  Case-Laws - AT : Classification of “Kulfi” - If the Kulfi Mix which is a dry powder merits classification under CTH 0404, then “Kulfi” manufactured by appellant which is ready to consume would definitely merit classification under 0404 - AT
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• Natural Beta Carotene's classification remains unchanged under Central Excise, regardless of its form or packaging as a supplement.

  Case-Laws - AT : Classification Natural Beta Kerotene - It may be that as a marketing requirement the subject item(s) have been sold as food supplement or dietary supplement but it does not change the classification of the item just because the item is packed into a retail form i.e. a capsule - AT
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• Court Allows CENVAT Credit on Re-Imported Rubber Stoppers; Rejects Revenue's Claim of Non-Qualification as 'Input' Goods.

  Case-Laws - AT : CENVAT credit - Rubber Stoppers - exported goods re-imported on rejection - credit availed on CVD which was required to be paid at the time of re-import - denial of credit on the ground that the said product being finished goods and does not fall under the category of ‘input’ or ‘capital goods’ - contention of revenue is not correct - credit allowed - AT
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VAT

• Tax Authority Can Recover Dues by Selling Shares, Accessing Bank Accounts Beyond Jurisdiction Under KVAT, KTEG Acts.

  Case-Laws - HC : Lien over Bank account - territorial jurisdiction - both KVAT and KTEG Acts authorize recovery officers to demand money from "any person" and authorize recovery by attachment and sale of share in Companies. Hence, by natural corollary a tax recovery authority can lay its hands on the money in deposit in a bank account situated beyond its territory if the same is accessible online - HC
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• Court Rules Exporter's Process Not Manufacturing; Respondent's Form "H" Sale Claim Under CST Permissible.

  Case-Laws - HC : CST - penultimate sale against form H - the process carried out by the exporter cannot be said to be manufacture, and therefore, the claim of the respondent of sale against Form “H” is allowable - HC
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• Iron and Steel Used in Construction Eligible for 4% Concessional Tax Rate u/s 14 of CST Act 1956.

  Case-Laws - HC : CST - Iron and Steel - the “Iron and Steel” purchased by the respondent–assessee and used in the execution of the civil works contracts of the construction of the buildings, remains “Iron and Steel” as declared goods under the provisions of Section 14 of the Central Sales Tax Act, 1956 and therefore are taxable only at the concessional rate of 4% and not at 13% rate of tax - HC
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• Cement Manufacturer Can Claim Input Tax Credit Under KVAT for Pre-Production Cement Purchases for Plant Setup.

  Case-Laws - HC : Input tax credit - KVAT - a manufacture of cement, is entitled to claim input tax credit in respect of the tax paid by it on the purchase of cement prior to its commencement of commercial production and such cement being used for laying the foundation and erection of cement manufacturing plant and machiner - HC
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Case Laws:

• Income Tax

• 2017 (4) TMI 67
  Not allowing the accumulation of the 15% and the income was allowed u/s.11(1)(a) - Held that:-CIT(A) has relied on the decision of Hon’ble Supreme Court in the case of A.I.N. Rao Charitable Trust (1995 (10) TMI 2 - SUPREME Court) wherein, it is held that exemption available u/s.11(1)(a) i.e. 15% of income is unfettered and not subject to any conditions. In the case before us, assessee has claimed 15% accumulation u/s.11(1)(a) of the Act. Hence, we do not see any reason to interfere with the order of the Ld. CIT(A) and reject ground of appeal taken by department. Disallowance of dividend income from investment in UTI units as exempt u/s.10(33) - Held that:- Dividend income on shares and mutual funds and long term capital gain on sale of shares an exempt u/s 10(34),10(35) and 10(38) respectively and cannot be brought to tax by applying section 11 and 13 of the Act. In view of the order passed by the co-ordinate bench we allowed this issue in favour of the assessee and delete the addition confirmed by the CIT(A) in question. Assessee is entitled to carry forward the excess application to the subsequent years.

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• 2017 (4) TMI 66
  Revision u/s 263 - advance received - Held that:- CIT-A has observed that it was advance received by Assessee against future supply and could not have been treated to be income in that year for the reason that it was a contingent liability and in future money could have been refunded in case of incomplete supply or cancellation of order or missing of any article etc. However, it is evident from record that aforesaid money was received by Assessee in furtherance of his trading activities for supply, and, therefore, has to be shown as income in the year in which it was received. Mere fact that there may be a contingency of refund of that amount in future will not make any difference inasmuch in the year in which it was received, it has to be shown as income. The logic given by CIT is clearly misconceived, illegal and irrational. When we questioned on this aspect, learned counsel appearing for Revenue, could not dispute that once an amount has been received in a particular year, which satisfy the definition of Income under Section 2(24) of Act, 1961, it has to be shown as "income" in that year and cannot be carried forward in the next year on any presumed contingency. Therefore, on this aspect, we find that order passed by AO cannot be said to be erroneous in any manner and Tribunal has rightly held in favour of Assessee. Credit card payment - CIT has observed that no enquiry was made by AO as to whether entire amount was business expenses or personal expenses - Held that:- Tribunal on the contrary has observed very categorically that AO has made a proper enquiry with respect to debit entry of Rs. 27,75,722/-. The finding recorded by Tribunal, therefore, is a finding of fact with regard to enquiry and even otherwise, we find that CIT himself has not made any enquiry to find out whether expenses allowed by AO towards payment through credit card were erroneous. In absence of any such finding, and for observing merely that no enquiry was made by AO, an order under Section 263 could not have been passed for the reasons that conditions for attracting Section 263 are that order passed by AO is erroneous and prejudicial to the interest of Revenue. We, therefore, answer the aforesaid question also against Revenue and in favour of Assessee.

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• 2017 (4) TMI 65
  Rectification of mistake - Held that:- Scope of Section 154 is very limited. If there was any erroneous order passed by any Assessing Authority which has caused prejudice to Revenue, the proper course would have been to take recourse to the remedy available elsewhere, for example Section 263 but in clandestine manner the power of rectification cannot be exercised. We, therefore, answer question in favour of Assessee and against Revenue.

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• 2017 (4) TMI 64
  Reopening of assessment - reasons to believe - whether statement made by Mr. Sanjay Rastogi that he and his associates provided bogus entries to various entities, could not have been the basis for valid reassessment notice? - Held that:- The entire basis for the reassessment notice impugned by the petitioner is Sanjay Rastogi’s statement. His questioning and his answers nowhere implicate the petitioner. He specifically names 2-3 concerns as the beneficiaries of the bogus entry business / activity that he was carrying on. However, the statement nowhere mentions the petitioner. The second aspect - and more crucially in this case-is that the issue with respect to the commission expenditure claimed by the petitioner had undergone a further fresh inquiry – albeit in one previous AY 1996-97. The Assessing Officer, on that occasion too felt that the expenditure needed more scrutiny or inquiry. The assessee / petitioner was able to show that M/s Hallmarks Healthcare Ltd. was an existing company which had filed returns and was assessed to income tax. The statement of Sanjay Rastogi may have been the starting point for some kind of an inquiry but in the circumstances of this case, to hold or assume that the individual concern had some association and every transaction of that concern needed scrutiny, was too far at a distance to tread as to sustain as ‘reasons to believe’, under Sections 147/148 of the Act.

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• 2017 (4) TMI 63
  Pre deposit - waiver of demand deposit - Held that:- In the present case, no doubt the AO did not in the first instance so refer the matter to the higher official; however, this court’s order had clearly stated that the issue with respect to such relief should be reconsidered. If the AO felt constrained by the terms of the circular, he could have sought a clarification; at worst, he could have referred the matter to the Commissioner, if he thought that he did not have the power to grant such relief. What he could not have done was to revisit the entire issue as to whether the relief to the extent of 85% waiver of demand deposit could be given. AO could not have revisited the matter, as if there were a fresh or open remand. The court notices that the AO – after rejecting the assessee’s claim for benefit (i.e beyond 85% waiver) directed payment of Rs. 203 crores after adjusting Rs. 27,93,09,100/- refund. This relief (of adjustment of Rs. 27,93,09,100/- refund) had not been considered in the earlier order. In these circumstances, it is held that the impugned order, to the extent it reviewed the previous order (dated 22nd February, 2017) cannot be sustained. The relief granted (i.e adjustment of refund amount of Rs. 27,93,09,100/-) is, however, upheld. Accordingly, the impugned order, to the extent it reviewed the previous order of 22nd February 2017 and directed payments of Rs. 62,71,95,920/- is set aside. However, to the extent that it granted relief under Para (E) of the instruction (which the AO was within his rights to grant in terms of the remand) is upheld. Therefore, the assessee is directed to deposit the balance amount, i.e. Rs. 34,78,86,820/- (Rs. 62,71,95,920/- minus Rs. 27,93,09,100/-) within two weeks, which would be sufficient compliance of the orders.

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• 2017 (4) TMI 62
  Maintainability of appeal - monetary limit - Held that:- There is no case made out by the department under Section 260 A of the Income Tax Act to admit the appeal for final hearing. There is no perversity pointed out and/or referred. The conclusions so drawn by the Higher Authorities based upon the material available on record and it is well within the framework of law. This is not the case where the question of fact can be treated and convert as question of law for want of additional material and/or material on record. After hearing the parties and after going through the reasons given by the Appellate Authorities and the conclusions so drawn cannot be stated to be adverse and/or contrary to the record and/or law. The Tribunal's orders and the conclusions, so drawn, could not be stated to suffer from any legal infirmities. It is also settled that timely Circulars issued by the CBDT under the provisions of the Income Tax Act, required to be kept in mind while entertaing/admitting and/or deciding the appeal. The reasons, therefore, so given referring to those Circulars have been kept in mind while passing this order as on merits also we have noted that there is no substantial question of law involved or arose. Therefore, there is no occasion to frame or re-frame any additional question of law for the reason above recorded. We are dismissing the appeal at the admission stage itself. In view of the above, we are inclined to observe that there is no substantial point for determination involved. There is no non-application of mind. The concurrent finding reflects the position on facts in the case in hand. There was no question to file the revised return on facts.

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• 2017 (4) TMI 61
  Application of provisions of explanation 1 to section 73 - why loss suffered in share trading activity should not be considered as speculation loss as per the provisions of explanation to section 73? - Held that:- We find that the assessee had disclosed loss of Rs. 1.85crores from share trading business, longterm capital loss of Rs. 1.68 crores and short-term capital gain of Rs. 20.52 lakhs, that the AO treated the share trading business under the head speculative business and denied the benefit of setting off of losses to the assessee, that the FAA reversed his order. The assessee, being an investment company, was dealing in shares and had suffered a loss during its regular course of business. Therefore, in our opinion, the AO was not justified in holding it to be speculative business. Now, if the facts of the case are considered it becomes clear that the assessee was a investment company and the share were sold in the normal course of its business. Therefore, in our opinion, the order of the FAA does not suffer from any legal or factual infirmity. Upholding the same, we decide the effective ground of appeal against the AO. - Decided in favour of assessee

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• 2017 (4) TMI 60
  TDS u/s 195 - non deducted tax at source on the remittances to its AE - default under section 201(1) - whether amounts remitted by the assessee to its Associated Enterprises (AE) in this period was exigible to tax as ‘royalty’ under section 9(1)(vi) of the Act as well as Article 12(3)(a) of the India-Singapore DTAA - Held that:- Special Bench of ITAT, Mumbai in the case of Mahindra & Mahindra Ltd. (2009 (4) TMI 207 - ITAT BOMBAY-H ) we hold that in order to treat the assessee/payee as an assessee in default it is required that the income so paid or credited to the account of the payee/recipient is capable of being brought within the tax net and such assessments should be lawfully made by the AO on the payee/recipient. Since these two conditions as required by Explanation to section 191 of the Act have not been satisfied, the orders of the AO under section 201(1) r.w.s. 201(1A) of the Act for assessment year 2007-08 and 2008-09 treating the assessee as an assessee in default under section 201(1) of the Act and thereby raising tax liability and charging interest thereon under section 201(1A) are unsustainable in law and are accordingly cancelled. - Decided in favour of assessee

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• 2017 (4) TMI 59
  Penalty under Section 271 (1) (c) - not offering any amount under Section 14A as well as disallowance under first explanation to Section 37 (1) of expenditure in the nature of penalty paid to the Delhi Development Authority (“DDA”) upon a composition - Held that:- As far as the first disallowance under Section 14A is concerned, the reasoning of the CIT (A) (endorsed by the ITAT that the position in law was in a state of flux and the benefit of doubt could be given to the assessee), is sound. With respect to the disallowance under Section 37 (1), here too, we notice that the CIT (A) had granted relief but that order was set aside by the ITAT. Having regard to these peculiar facts, penalty under Section 271 (1) (c) could not have been imposed. - Decided in favour of assessee.

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• 2017 (4) TMI 58
  Forum for redressal of grievance - Held that:- Public policy demands that a person has right to choose the forum for redressal of his grievance, but he cannot be permitted to choose two forums in respect of the same subject matter for the same relief. We are not inclined to interfere with the impugned order passed by the High Court [2016 (10) TMI 504 - HIMACHAL PRADESH HIGH COURT]. SLP dismissed.

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• 2017 (4) TMI 57
  Scope of Section 153A - whether AO has power to reassess return of Assessee not only for the undisclosed income found during search operation but also in regard to assessment order already finalized or stood processed under Sectin 143(1)? - Held that:- As is evident Section 153A commenced with the words notwithstanding anything contained in Section 139, 147, 148, 149, 151 and 153, meaning thereby whatever has been provided in the aforesaid provisions that will not bar Assessing Officer in proceeding with the assessment or reassessment of total income for six assessment years, immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. The word 'assess' or 'reassess' not only suggest but show that power under Section 153A includes reassessment and that would be done only when assessment has already been finalized. There is inherent hint in Section 153A and there is no reason to restrict its scope. We find that this issue has now been finalized by a Division Bench of this Court in Commissioner of Income Tax Vs. Raj Kumar Arora [2014 (10) TMI 255 - ALLAHABAD HIGH COURT ] wherein held that the reasons given by the Tribunal that no material was found during the search cannot be sustained, since we have held that the Assessing Officer has the power to reassess the returns of the assessee not only for the undisclosed income, which was found during the search operation but also with regard to the material that was available at the time of the original assessment. The judgment and order of Tribunal to this extent is hereby set aside and the additions made by Assessing Authority which were deleted by Tribunal by taking otherwise view with respect to the scope of Section 153A are restored. - Decided in favour of revenue

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• 2017 (4) TMI 56
  Disallowance under the head advance and loans given by the assessee to its 100% subsidiary - CIT-A allowed claim - Held that:- We find that two amounts were advanced to the WOS under the head loan and advances, that the MOA in Clause 10B clearly stipulated that assessee could run a subsidiary outside India, that the subsidiary was purchasing goods from the assessee only, that it suffered losses and finally the European business had to be discontinued, that the loan/advances made to the WOS were for running the business of the assessee in Germany. In our opinion, the nature of the transaction in the hand of the recipient cannot decide the allowability of expenditure in the hands of the lender. We are deciding the case of an entity which had advanced certain amount to its subsidiary for running its business. In such a case expenditure incurred by it has to be allowed as business loss or an expenditure incurred for running the business i.e. u/s. 28/37 of the Act. - Decided against the AO.

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• 2017 (4) TMI 55
  Attributation of profits on offshore revenues - Held that:- Assessing Officer estimated taxable income in respect of offshore activities at 25% of the gross revenues. Admittedly, similar issue on the very same facts, has come before this Bench of the Tribunal in assessee’s own case for the assessment year 2006-07. The Tribunal had restored the issue to the file of the Assessing Officer with a direction that an afresh exercise be undertaken and attributation of profits on offshore revenues be determined. Consequent to such direction, the Assessing Officer, for the assessment year 2006-07, adopted 10% as the profit attributation on offshore revenues. As the Department has itself come to this decision on these very facts, we have no hesitation in applying the same percentage to the year under consideration. The Assessing Officer is directed to adopt 10% as the profit attributation on offshore revenues for the impugned assessment year 2007-08. Disallowances u/s 40(a)(i) and section 40(a)(ia) - Held that:- We set-aside the issue to the file of the Assessing Officer for fresh adjudication de-novo in accordance with law. The assessee states that its claim for deduction of expenses were disallowed u/s 40(a)(i) and section 40(a)(ia) in the earlier year and are being claimed in the current assessment year 2007-08. This claim has to be verified. Hence, we set aside the same to the file of the Assessing Officer. In the result, ground is allowed for statistical purposes.

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• 2017 (4) TMI 54
  Penalty proceedings u/s 271(1)(c) - false claim of exemption u/s 10(37) - defective notice - Held that:- The notice has been issue in the pre-typed performa there is no specific charge. Therefore in our considered view, notice issued u/s 271(1)(c) of the Act is not as per the law laid down by the Hon’ble Karnataka High Court in the case of Manjunatha (2013 (7) TMI 620 - KARNATAKA HIGH COURT). Another ground is that the assesee had disclosed all material before the authorities below. Merely that the claim of the assessee for entitlement exemption u/s 10(37) of the Act was rejected by the Assessing Officer would not be the basis for initiation of proceedings. - Decided in favour of assessee.

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• 2017 (4) TMI 53
  Penalty imposed u/s 271(1)(c) - assessee claimed short-term capital loss on sale of shares - Held that:- There is no dispute with regard to the fact that the assessee had placed all materials before the Assessing Officer. Therefore, it cannot be inferred that the assessee concealed the factum of the transaction from the Assessing Officer. The assessee claimed short-term capital loss on sale of shares. This transaction was duly reflected by the assessee. The Revenue’s contention is that this transaction is colorable device to avoid liability of capital gain tax on account of sale of long-term capital asset. It is also undisputed that the assessee had disclosed all the materials before the authorities below and the law is well settled that penalty proceedings and quantum proceedings are two different and distinct proceedings. The claim of the assessee was reiterated on the ground that in quantum the assessee has claimed short-term capital loss on account of sale of shares. A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. See COMMISSIONER OF INCOME-TAX Versus RELIANCE PETROPRODUCTS PVT. LTD. [2010 (3) TMI 80 - SUPREME COURT ] - Decided in favour of assessee

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• 2017 (4) TMI 52
  Addition u/s 69 - source of investment made by the assessee in respect of purchase of the property - Held that:- In this case, the alleged party Sri Nallamilli Veerabhaskara Reddy is a crucial party, the Assessing Officer ought to have given opportunity to the assessee to produce before him. Such an opportunity has not been given to the assessee. Even the Assessing Officer has examined the document writer Sri J. Sadashiva Reddy and no opportunity was given to the assessee to cross examination him. Therefore,find that the Assessing Officer has made an enquiry behind back of the assessee without following proper procedure and without giving proper opportunity to substantiate his case and to prove the source of investment. Assessing Officer has committed gross violation in coming to the conclusion that the investment made by the assessee is not a genuine transaction. Under these facts and circumstances of the case, find that the addition made by the Assessing Officer under section 69 cannot be sustained. Insofar as, the claim of savings of Rs. 2,28,000/- is concerned, the Commissioner of Income Tax (Appeals) has already given relief of Rs. 1.5 lakhs, hence, find that the order passed by the Commissioner of Income Tax (Appeals) is justified and no interfere is called for. In view of the above, appeal filed by the assessee is partly allowed.

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• 2017 (4) TMI 51
  Unexplained credit u/s 68 - Held that:- Keeping in view, the totality of facts, attendant circumstances, human probabilities, and in the presence of plausible explanation by the assessee, relevant material, and fulfillment of ingredients enshrined in section 68 of the Act, we find that onus cast upon the assessee was duly discharged, therefore, we find no infirmity in the conclusion drawn by the Ld. Commissioner of Income Tax (Appeal), resulting into dismissal of appeal, filed by the Revenue. - Decided in favour of assessee

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• 2017 (4) TMI 50
  Addition on undisclosed income - Reopening of assessment - Held that:- Assessing Officer without taking into consideration all the information furnished, documents produced and available with him, make the addition of Rs. 13,63,080/- in the hands of the assessee while finalizing the assessment proceedings, without appreciating the facts, that on the basis of dump, uncorroborated and unsigned documents, without having any nexus to the payment of Rs. 13,63,080/- alleged to be paid to the assessee, the addition made only on the basis of presumption and guesswork of the Assessing Officer was not tenable, even the Directors of the company could also further not been able to prove the authenticity and validity of the document wherein reflecting the amount if any be paid to the appellant of Rs. 13,63,080/- during the Financial Year 2007-08 in their Statements recorded u/s 132 and 131 of the Income Tax Act 1961 and in their cross-examination also, therefore, the additions made are not liable to the sustained. - Decided in favour of assessee

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• 2017 (4) TMI 49
  TDS u/s 195 - reimbursement of payroll costs and reimbursement of related professional and legal fees to Burt Hill Inc USA - Held that:- Assessee did not have any tax withholding obligations so far as these reimbursements are concerned. As the assessee did not have any tax withholding obligations, the very foundation of impugned disallowance under section 40(a)(i), which get triggered by the lapses in discharging such obligations, ceases to hold good in law. We, therefore, uphold the grievance of the assessee, and direct the Assessing Officer to delete the impugned disallowance. Disallowance of medical insurance premium paid for the employees placed at the disposal of the assessee under secondment agreement with Burt Hill Inc USA - Held that:- The seconded employees, in respect of which the impugned insurance premium was paid, were not only de facto employees of the assessee at the relevant point of time, the assessee had the obligation, under secondment agreement, to bear these costs. The expenses so incurred are in the nature of employee benefits, though paid under secondment agreement, in respect of persons working for the assessee. It was in the furtherance of legitimate business interests of the assessee that these payments were made, and, therefore, the deduction was indeed admissible under section 37(1) of the Act. We uphold the grievance of the assessee.

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• 2017 (4) TMI 48
  Computation of capital gains - Deduction u/s 54F - sale of land appurtenant to the residential house owned by the appellant - Held that:- In the instant case, it is not the case of AO and CIT (Appeals) that the land was not appurtenant to the residential house. The case of the CIT (Appeals) is that the assessee has sold only the land appurtenant to the house and not residential house which, according to the Karnataka High Court in Shri C.N. Anantharaman vs. ACIT [2014 (10) TMI 932 - KARNATAKA HIGH COURT] is not a requirement under the law and exemption u/s 54 of the Act is also available to the land which is appurtenant to the house. The front page of the sale deed itself shows that the land was part of residential house No. 64, Agrasen Vihar, Muzaffarnagar. Therefore, the exemption as claimed and allowed by the Assessing Officer should be upheld and the enhancement as made by the CIT (Appeals) is not sustainable in the eyes of law, hence, the same is deleted. - Decided in favour of assessee Application of rate for the purpose of working out the capital gain - FMV - Held that:- The market value should have been taken as was in the hands of previous owner Smt. Asha Swarup from whom the appellant had received the property because she is the previous owner as far as the assessee is concerned and because Smt. Asha Swarup had acquired the property as on 31 st March 1985, hence the market value of the property should have been taken into account as on 31st March 1985 as worked out by the registered valuer at Rs. 730/ - per sq yard. Without prejudice to above, even if it is presumed that it is the cost in the hands of Smt. Jyotsna Kumari Swarup has to be taken into account because Smt. Asha Swarup had acquired the property by way of a will from Smt. Jyotsna Kumari Swarup. Even then the market value of the property as on 1 st April 1981 was more than as adopted by the Assessing Officer. The Assessing Officer has adopted the market value of the property as that was notified by the Stamp Authorities for the purpose of levy of stamp duty by circle rates. The Stamp Authorities, while fixing the circle rates, did not take into account various advantages and disadvantages and the location of the property, but they fixed the circle rate on a fixed rate for whole of the locality. Hon'ble Jurisdictional Allahabad High Court in the case of Dinesh Kumar Mittal vs. ITO [1991 (3) TMI 78 - ALLAHABAD High Court ] as been held that there is no rule of law to the effect that the value determined for the purpose of stamp duty is the market value of the property. The market value of the property may be more or may be less. Therefore, in such circumstances, when a registered valuer has worked out the market value of the property as on 1 st April 1981 at Rs. 600 / - per square yard after taking into account the location of the land, the same should be adopted by the Assessing Officer. - Decided in favour of assessee

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• 2017 (4) TMI 47
  MAT computation - Interest amount liable to tax u/s. 41(1) - principal portion of the waived loan - Held that:- On similar nature of issues there are divergent views of various benches of the Tribunal, however, one common point/ratio permeating through all the decisions, which can be deduced by us is that, if an assessee company is in receipt of a ‘capital receipt’ which is not chargeable to tax at all, that is, it does not fall within any of the charging section or can be classified under any heads of income under the Income Tax Act, then same cannot be treated as part of net profit as per Profit & Loss account or reckoned as ‘working result’ of the company of the relevant previous year and consequently, cannot be held to be taxable as ‘book profit’ under MAT in terms of section 115JB. Accordingly, our conclusion remains the same that, the capital surplus on account of waiver of dues neither is nether taxable nor can be included in computation of book profit u/s 115JB. The loan taken for an acquisition of a capital asset does not constitute trading liabilities which has been allowed as a deduction in earlier years and any kind of waiver thereof would fall within the deeming fiction of section 41(1). We have already clarified that the amount which can be subjected to tax under section 41(1) can only be those amounts or receipts which have been allowed as deduction in the computation of income in the earlier years and if this primary condition is not satisfied, then there cannot be any addition under this section. In the case of Hon’ble Bombay High Court in Solid Containers (2008 (8) TMI 156 - BOMBAY HIGH COURT) the waiver of loan was taken for trading activity and the assessee has credited such a waiver to the profit & loss account and claimed it to be a capital receipt. Before us one more argument was taken by the Ld. CIT D.R. that provision of section 28(iv) would get attracted because the waiver of loan amounts to value of any benefit or perquisite, whether convertible into money or not, arising from business. First of all it is seen that it is neither the case of the Assessing Officer nor the case of the Ld. CIT(A) that the amount of waiver of loan is to be taxed under section 28(iv). The Hon’ble Bombay High Court in the case of Mahindra & Mahindra vs. CIT [2003 (1) TMI 71 - BOMBAY High Court ] held that a loan which is originally taken for capital expenditure, if waived, will not give rise to taxable income either under section 41(1) or under section 28(iv).

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• 2017 (4) TMI 46
  Levy of interest under Section 201(1A) - non deduction of TDS under Section 194A (3) in respect of the interest on the deposits - Held that:- Facts in the present case clearly show that M/s VTU has filed an application for retrospective recognition under Section 12AA of the Act to the CBDT under Section 119(2B) of the Act. In the event the CBDT accepts the claim of the assessee, then the liability of the assessee under Section 201(1) and 201(1A) of the Act would efface. This being so in the interest of natural justice the issues in these appeal are restored to the file of the Assessing Officer with the following directions:- AO is to await the decision of the CBDT in respect of the petition filed by the VTU in respect of the retrospection grant of registration under Section 12AA of the Act. In the event the application filed by the VTU is not considered favourably by the CBDT then in respect of the levy under Section 201(1) the Assessing Officer is to re-adjudicate the issue in line with the decision in the case of Hindustan Coca Cola Beverage Private Limited as referred (2007 (8) TMI 12 - SUPREME COURT OF INDIA ), as also after considering the impact of the certificate issued by the deductee (VTU) in form 26A. In respect of levy of interest under Section 201(1A) of the Act the interest is to be computed for the period from the date from which the tax was deductable to the date of filing of the return by the deductee (VTU). This is because once any income is liable for TDS then in the hands of the deductee no interest under Section 234A, 234B & 234C can be levied in respect of such income. Therefore till such income is disclosed by the deductee in its return the liability of the tax rests on the deductor. Once the deductee has filed his return disclosing such income then for such return to become valid the taxes of such return should have been paid and the liability in respect of such taxes and the credit for such taxes goes to the deductee only.

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• 2017 (4) TMI 45
  Revision u/s 263 - whether deduction claimed under section 10A could be curtailed? - Held that:- The onus is upon the department to prove that there existed an arrangement between the assessee and its Associated Enterprises to earn more than ordinary profits and in the absence of the said onus having been discharged by the department and following the parity of reasoning as in Honeywell Turbo Technologies (India) Pvt. Ltd. Vs. DCIT [2017 (3) TMI 1533 - ITAT PUNE] and Tata Johnson Controls Automotive Limited Vs. DCIT [2016 (4) TMI 963 - ITAT PUNE], we find no merit in the order of the Commissioner passed under section 263 of the Act in holding that the Assessing Officer while granting deduction under section 10A of the Act has passed the said order without any application of mind. Where the Assessing Officer in his order considered the claim of assessee under section 10A of the Act and allowed the same, merely because the Commissioner is not agreeable to the view adopted by the Assessing Officer, the exercise of jurisdiction under section 263 by the Commissioner cannot be upheld. - Decided in favour of assessee

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• 2017 (4) TMI 44
  Nature of sales tax incentive / Refund of sales tax - revenue receipt OR Capital subsidy - Held that:- In the present case, the incentive in the form of refund of sales tax is on account of setting up of new industrial unit with twin objective of balance development of regions and generation of employment. As per the scheme there are two modes of payment of Industrial Promotion Subsidy. The subsidy to the extent of 75% of the eligible investments as reduced by the benefit of electricity duty exemption and stamp duty exemption or to the extent of taxes paid to the State Government within a period of 7 years, whichever is lower. It is not the choice of the assessee to opt for either of the two modes. The beneficiary under the Scheme will receive the subsidy after comparative analysis of both the modes, whichever is lower. The assessee is eligible to claim the incentive subject to the compliance of certain conditions mentioned in the PSI 2007 scheme, subject to the maximum limit as specified in the scheme. Since the assessee is eligible to qualify in the latter part of the scheme, the assessee is receiving incentive/subsidy in the form of refund of sales tax from the State Government. As far as the purpose of subsidy is concerned, it is quite evident that it is for setting up of new Mega Project in the classified area. Hence, the decision of Coordinate Bench of the Tribunal in the case of Rasiklal M. Dhariwal (HUF) Vs. DCIT (2011 (3) TMI 1619 - ITAT PUNE ) would not apply in the facts and circumstances of the case. Thus, in the facts of the case and in the light of various decisions discussed above, we hold that the incentive received by the assessee under the PSI, 2007 scheme in the form of refund of sales tax is Capital receipt, not liable to tax.

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• 2017 (4) TMI 43
  Applicability of withholding tax on interest payment by the appellant to NOIDA - rectification of mistake - Held that:- The Hon’ble Allahabad High Court has considered decision of Hon’ble high Court in [2011 (2) TMI 1251 - Allahabad High Court ] based on which the ld CIT(A) has reversed the order, while deciding the issue of applicability of withholding tax on interest payment by the appellant to NOIDA. Hon'ble high Court has conclusively held that the decision in that particular case does not come to aid of the revenue as it was restricted to the issue as to whether NOIDA would be a local authority or not and did not deal with the issue of whether NOIDA is a corporation established by State Act. Hon High court has conclusively held that NOIDA is ‘corporation’ established Uttar Pradesh Industrial Area Development Act, 1976 and therefore it is entitled to exemption from deduction of tax at source u/s 194A of the Income Tax Act. Therefore, respectfully following the decision of Honourable high court in [2016 (5) TMI 570 - ALLAHABAD HIGH COURT], we hold that the order of the ld CIT(A) in challenge before us is not sustainable. Further as the matter has reached before Hon'ble Supreme Court for adjudication whether tax is required to be deducted on interest payments made by the banks to NOIDA, itself suggests that the issue was debatable and do not fall in the purview of provisions of section 154 of the Act under which the impugned order was passed by the ld CIT (A). On this count also the ld CIT(A) erred in reversing his order based on application of the Addl. CIT, TDS. Hence, we quash the order of the ld CIT (A).

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• Customs

• 2017 (4) TMI 19
  Duty exemption scrips - appellants claimed to have been legally purchased but which, nevertheless, are established as having been obtained by the transferors through fraud - Held that: - Propriety demands that contrarian views having been placed on record, we must take recourse to time-tested institutional mechanism to resolve the predicament. In our view, a uniform and consistent approach is mandated even though instinctive sympathies, as human beings, may lie with an innocent party in a business transaction of sale and purchase; but even conscious that, since the dawn of commercial engagement, the doctrine of caveat emptor must stand to handicap a buyer in transactions if chaos and mayhem are not to prevail. That uniformity and consistency can be consummated only with a resolution that brooks no contrarian view. A larger bench alone can settle the issue - matter referred to larger bench.

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• 2017 (4) TMI 18
  Classification of imported item - Linden Wood Slat - whether Linden Wood Slat imported by appellants for manufacture of pencils would be classifiable under CTH 4421.90 as Articles of Wood as claimed by them or under CTH 4408.90 as held by the lower authorities? - Held that: - in order to cover the item under Heading 44.08, the wood should be either in sheet form, like sheets for plywood or veneer sheets or should be sawn length-wise, sliced or peeled. Here, the reference is made to planks of wood, cut and sliced logs, etc. and not to the items which are articles of wood, as in instant case wooden slats are used for manufacture of wooden pencils. Therefore, the Revenue’s contention that the disputed wood slats would fall under CTH 4408.90 cannot be upheld - in ITC (HS) Classification also the disputed product is specifically mentioned under the description ‘Pencils Slat’. The Linden Wood Slats imported by the Appellants are correctly classifiable under S.H. No. 4421.90 of Customs Tariff Act - appeal allowed - decided in favor of appellant.

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• 2017 (4) TMI 17
  Suspension of CHA licence - Regulation No. 19(2) of the Customs Broker Licensing Regulations, 2013 - attempt to clear consignments in order to avail inadmissible drawback - post decisional opportunity of being heard provided to petitioner - the petitioner submitted that the impugned orders are erroneous and the correctness of the same may be examined by this Court, without relegating the petitioner to invoke the appeal remedy - whether the respondent was justified in suspending the petitioner’s licence invoking the power under Regulation 19(1) of the Regulations, when the Principal Commissioner of Customs, Mumbai had forwarded his order, dated 13-4-2016, for necessary action under Regulation 20 and/or 22 of the Regulations? - Whether the respondent was right in continuing the order of suspension after affording an opportunity to the petitioner in terms of Regulation 19(2) of the Regulations? Held that: - It may be true that the Principal Commissioner of Customs, Mumbai, communicated his order dated 13-4-2016, to the respondent for necessary action in terms of Regulation No. 20 and/or 22 of the Regulations. According to the respondent, the order should have read as Regulations 19 & 20 and not Regulations 20 & 22 and it is a typographical error - Be that as it may, the order passed by the Principal Commissioner of Customs, Mumbai is not an order empowering the respondent to initiate action under the Regulations. The power to suspend a Customs Broker Licence is conferred on the respondent in terms of the Regulations. Therefore, even if the Commissioner of Customs, Mumbai, has not referred to any of the provisions of the Regulations, yet, the respondent was well within his jurisdiction to exercise all powers under the Regulations. Therefore, quoting of Regulation No. 20 or 22 is of no consequence and that can hardly be a ground to test the correctness of the impugned order. Therefore, such contention raised by the petitioner stands rejected. The dismissal of one of the employees of the petitioner does not grant immunity to the petitioner from the alleged offence and that the order suspending the petitioner’s Customs Broker Licence was passed on 5-5-2016, immediately after the order of the Principal Commissioner of Customs, Mumbai was received by the office of the respondent on 22-4-2016 - The order impugned is a speaking order and no error can be attributed to the same. The reasons assigned are cogent and therefore, this Court does not propose to interfere with the exercise of the power of licensing authority under Regulation No. 19. Petition dismissed - decided against petitioner.

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• 2017 (4) TMI 16
  Classification of imported goods - description of the goods declared by the importer appellant as “defective rejects non-alloy steel sheets with tin coating” was changed to “tin plate waste/waste/tin plate misprints” falling under Chapter Heading 72.10 of ITC (HS) - Held that: - The test result clearly states that these are not pure tin or tin plates but they are tin coated sheets with few visible imperfections. Tin sheets/tin plates (waste) have to be distinctly different from tin coated sheets. The importer appellant has already declared that these are ‘defective and rejects non-alloy steel sheets with tin coating’. When the test report i.e. test result dated 7-11-2003 given by the Chemical Examiner of Cochin Customs supports what has been declared by the appellant, the impugned order on enhancement of value cannot be sustained. Further correct description of the goods is ‘non-alloy steel sheets with tin coating (defective and rejects)’, the Department’s premise that the subject goods require import licence and that the import of the said goods could be allowed only through Customs Sea Ports of Mumbai, Chennai and Kolkata is not sustainable - the Revenue prima faciely erred in describing the goods wrongly; consequently the impugned order is set aside - appeal allowed - decided in favor of appellant.

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• 2017 (4) TMI 15
  Condonation of delay - maintainability of appeal - revenue has changed its opinion regarding classification and has filed appeal after a huge delay which remained unexplained - Held that: - No reasonable cause and plausible explanation stand shown to us for condoning such a huge delay - Whereas there can be no quarrel about the legal issue that the reasonable delays should be condoned in the public interest and substantial justice is to be preferred over the technical issue but as already observed in the present case that the Revenue has not explained huge delay of 749 days at all and the only reason advanced by the Revenue is that the change of view has occurred on account of investigation conducted in the year 2016 and the change in rate of duty. This fact cannot be considered as a reasonable explanation for delay especially when the Revenue’s stand has been upheld by the lower authorities and cannot be made the basis for condoning the delay - delay not condoned - appeal barred by limitation - decided against Revenue.

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• 2017 (4) TMI 14
  Opportunity for cross-examination - Held that: - taking into consideration the earlier order passed by this court, the writ petition is allowed, and the impugned order is quashed and the respondent is directed to afford an opportunity of personal hearing, during which the petitioners can make a request to the respondent to provide an opportunity to cross-examine Mr. J. Thiyagarajan and G. Venkatesh of M/s. Surana Corporation, who are infact petitioners in the earlier writ petition, in the event, the respondent proposes to rely upon the statement recorded by them during the adjudication of SCN - petition allowed - decided in favor of petitioner.

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• 2017 (4) TMI 13
  N/N. 203/92-Cus., dated 19-5-1992 - contravention of the Condition No. V(A) of the notification by availing Modvat Credit - validity of SCN - Held that: - the SCN denying the exemption N/N. 203/92-Cus. was issued without support of any evidence that whether the respondent has availed the MODVAT credit u/r 57A or otherwise. Therefore, the learned Commissioner has rightly dropped the proceedings on the ground that SCN cannot be issued on presumption and assumption. The allegation of SCN should be supported by documentary evidence which was not done so while issuing SCN - it is not permissible in law to issue a blanket SCN without the support of any evidence - appeal dismissed - decided against Revenue.

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• 2017 (4) TMI 12
  Smuggling of foreign currency and gold - detention of person - baggage rules - whether the detention of detenue justified? - Held that: - the confessional statement and other independent facts including seizure and recovery of important documents and currency notes and nature and manner of activities in which the detenue Fazal was involved have deleterious effect on the national economy thereby adversely affecting the interest and the security of the State. It is these things that have been foundation for forming the subjective satisfaction for the order of detention. As held by the Apex Court in the case of PRAKASH CHANDRA MEHTA Vs. COMMISSIONER AND SECRETARY, GOVERNMENT OF KERALA & OTHERS [1985 (4) TMI 280 - SUPREME COURT], particularly in paragraphs 78 to 82 and in the wake of the overwhelming materials gathered in the course of investigation by the authorities in the form of seizure of currency notes and several other incriminating materials, the need to protect the society from social menace by detaining such persons engaged in smuggling and related activities which have adverse effect on the national economy aimed at disrupting the economy has to be kept in mind along with the all important fact that procedural safeguards have to be ensured and the power conferred on the authorities is not casually exercised so that fundamental freedom guaranteed to the citizens is not undermined - Therefore, by adopting such pragmatic and realistic approach, we have carefully considered the entire materials and are of the view that exercise of power by the authorities, in the instant case, has been strictly as per the safeguards provided. Detention upheld - petition dismissed - decided against detenue.

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• 2017 (4) TMI 11
  High Seas purchase - valuation - Palm Kernel Fatty Acid Distillate - what will be the price of the goods that should be adopted for determining assessable value, namely, the prices at which the Singapore supplier procured the goods or otherwise the price at which the said supplier invoiced the goods to the high seas buyer? - Held that: - what was certified in the accompanying certificates of origin was only in respect of goods sold and invoiced by Kalmart Systems (Malaysia) and M/s. MAMBA SDN BHD (Malaysia) and not by Aavanti Industries (Singapore). These Certificates of Origin have further certified the Name of Signatory Company as M/s.Kalmart Systems, Malaysia and M/s.Mamba SDN BHD. If the importer wants the customs authorities to accept as genuine these certificates of origin as also the Bills of Lading, Packing List etc. certified therein, by implication, the invoices of Kalmart Systems (Malaysia) and MAMBA SDN BHD (Malaysia) who stand certified on those documents will only get credence and be accepted for the purpose of determining the transactions. The Invoice No.KSS01 9903/370 dt. 10-10-2003 of Kalmart Systems (Malaysia) for unit value of US$ 397.50 PMT and Invoice No.MA046/10103 dt. 14-10-2003 of Mamba Sdn Bhd (Malaysia) for unit value of USD 385.00 will have to be necessarily taken as the correct invoice and transaction value and consequently for determination of assessable value in respect of goods covered by B/E No.550460 and 551112 respectively. These would be the correct prices paid or payable for the purposes of Rule 4 (1) of the Customs Valuation Rules, 1988. Appeal dismissed - decided against appellant.

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• Corporate Laws

• 2017 (4) TMI 5
  Lien of the appellant on the money deposited by the respondent company in liquidation - Power of recognized stock exchanges to make bye-laws - lien possessed by the Stock Exchange - Held that:- Instant case of there being no workman who has filed any claim before the official liquidator and therefore the question of the official liquidator protecting the interest of any workman does not arise. On facts, it is not a case where workmen s dues would be required to be treated at par with a secured or a charged asset. It is not a case where a security is subject to a pari passu charge with the workers and thus on the facts of the instant case Section 529A of the Companies Act, 1956 is not attracted. The legal position qua the appellant would be that its functioning is regulated under the Securities Contracts (Regulation) Act, 1956 and the Rules made thereunder. Under the Securities Contracts (Regulation) Rules, 1957 the Central Government has notified Rules and Rule 8 prescribes the qualifications for membership of a recognized stock exchange. As per Rule 8(1)(f) a member of the Exchange has to sever all connections with other businesses upon being enrolled a member. The bye-laws of the appellant are statutory and deposits made by a member with the appellant is subject to a first and paramount lien for any sum due to the appellant or other trading member or to a third party for discharge of the liability of the member towards the third party. In the instant case there would be a lien of the appellant on the money deposited by the respondent company in liquidation when it became a member of the appellant and since there are no workmen dues the official liquidator has not to watch the interest of any workman. As a matter of fact other than persons who used the services of the respondent company to act as a broker on the stock exchange no one has any claim against the company. Therefore the manner of adjudication of the claims and disbursement in the instant case has to be as per the bye-laws of the appellant.The appeal is accordingly allowed.

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• FEMA

• 2017 (4) TMI 4
  Rejecting the petition of the petitioner for releasing the foreign currency notes recovered from the vehicle of the petitioner - Held that:- From plain reading of Section 451 of Cr P C, it appears that the Court should pass order with regard to the custody or release of the seized articles. Admittedly, the petitioner was having licence to deal in foreign currency and his licence was valid up till 31.08.2016. He applied for renewal of his licence on 04.01.2016, one month before the date of expiry of that licence. From the perusal of Annexure 2 it appears that the Reserve Bank of India renewed the licence of the petitioner to deal in foreign currency on 04th January, 2016. The petitioner again applied for renewal of licence and in this interregnum period, it shall be deemed that the licence of the petitioner is valid unless there is express order by the authority concerned to reject the application of the petitioner granting his licence. It also transpires that the petitioner, who is dealing in foreign currency and the aforesaid foreign currency worth Rs. 39,12,102.30 P was seized and is kept in the District Treasury. Apparently, no useful purpose would be served in keeping the currency in the District Treasury. Therefore, that currency should be released in favour of the petitioner on providing proper security. It is also a fact that foreign currency is not a material evidence. Therefore, find that the rejection of the petition of the petitioner by the Court of learned Chief Judicial Magistrate as well as the learned Additional Sessions Judge X, East Champaran at Motihari holding that the petitioner has got no licence is illegal and it cannot be allowed to sustain. Considering the facts aforesaid, the quashing petition is allowed. Direction to the Court below to release the foreign currency in favour of the petitioner on providing security of the same amount with one surety.

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• PMLA

• 2017 (4) TMI 1
  Prevention of Money Laundering - order of attachment - Held that:- It can be seen from the records that all the offences allegedly committed by the writ petitioner were earlier to the insertion of the provision in the schedule of the Prevention of Money Laundering (Amendment) Act, 2009, and as such, they have no application. Therefore, the Enforcement Case Information Report and the order of attachment are without jurisdiction and are liable to be quashed. As we have, already, held that the writ petitioner cannot be prosecuted for the offences alleged, as they are not the scheduled offences under the PML Act. Those offences under the Mines and Geology (Development and Regulation) Act, 1957, the Forest (Conservation) Act, 1980, the Indian Penal Code and the Prevention of Corruption Act, 1988, were included in the PML Act declaring them as scheduled offences only with effect from June 1, 2009. Hence, the Enforcement Directorate could not have invoked the provisions of the PML Act with retrospective effect. The petitioner cannot be tried and punished for the offences under the PML Act when the offences were not inserted in the schedule of offences under the PML Act. This would deny the writ petitioner the protection provided under clause (1) of Article 20 of the Constitution of India. Article 20(1) of the Constitution of India prohibits the conviction of a person or his being subjected to penalty for ex-post facto laws. Consequently, the order of attachment is, also, liable to be set aside. Whether allegation of theft or illegal mining is not a scheduled offence under the PML Act? - Held that:- As the offence of theft is not a scheduled offence under the PML Act, by applying the same principles as we have taken above, we find no merit in the initiation of proceedings against the petitioners in these writ petitions under the amended PML Act. Hence, the action taken against them under the said Act is, also, liable to be quashed. An ECIR can, only, be registered once there has been a conviction and a judicial conclusion has been arrived at as to the quantum of proceeds of that crime. It is only upon a conviction by a trial court in the predicate offence the accused could be investigated upon accordingly.We, therefore, allow all these writ petitions and quash the action initiated against all these writ petitioners by the enforcement authorities. We, also, quash the attachment orders passed against the writ petitioners.

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• Service Tax

• 2017 (4) TMI 42
  Taxability - The respondent-assessee was providing water supply to M/s Gujarat Water Supply and Sewerage Board under Sujlam Suflam Yojna of the Government of Gujarat - whether the said service taxable as commercial and construction services or not? - Held that: - the respondent is not selling water to anybody. Needless to mention that water supply projects are essential for the human beings and animals welfare for their consumption. The respondent was executing the project of the Government of Gujarat for providing water to the human beings as well as animals. No commercial activity is involved in the instant case as the water was not sold to anybody - identical issue decided in the case of Nagarjuna Construction Co. Ltd. Vs. Commr. of Central Excise, Hyderabad [2010 (5) TMI 232 - CESTAT, BANGALORE], where it was held that production of drinking water to the community in Gram Panchayats and Nagar Panchayats in the State on recovery of user charges at a highly subsidized rate, we find, does not come within the expression 'industry' used in the definition of the taxable entry in question - appeal dismissed - decided against Revenue.

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• 2017 (4) TMI 41
  Levy of service tax - appellant engaged private buses to ply under the banner of M/s ASTC on bus routes reserved for M/s ASTC only. The private buses which were under the names, banners and colours of M/s ASTC, as per agreement. It is claimed that 90% collection will have to go to the operators of the private buses and remaining 10% will have to go M/s ASTC for providing bus stoppage, banners facilities etc. Staff and bus were to be provided the private bus owners - Held that: - the entire revenue collected by the private operators, will have to be deposited to M/s ASTC, after that, M/s ASTC made the payment to the consignor operator of 90% of the revenue collected. From the impugned order, it appears that the private bus operators paid 10% to M/s ASTC and retained 90%. This is the conflicting position between the situations, which needs proper clarification - matter remanded back to the adjudicating authority to decide the issue in denovo - appeal allowed by of remand.

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• 2017 (4) TMI 40
  Default clause - maintainability of appeal - Whether the CESTST under its order dated 17.07.2015, is justified by dismissing the appeal in light of default clause under order dated 19.11.2014? - Held that: - Though the appellant is under obligation to adhere with the condition precedent, but in the instant matter, it appears that there was some dispute with regard to inclusion of interest with the amount that was to be deposited, therefore, some delay occurred in the matter - matter to be reheard in the interest of justice - appeal allowed by way of remand.

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• 2017 (4) TMI 39
  Valuation of taxable service - clearing and forwarding agent service - whether reimbursable expenditures like ground rent, telephone, postal charges, electricity etc. on actual basis are be included in the taxable value? - Held that: - there is no dispute regarding these expenditures having been incurred by the appellant in terms of the agreement and also being reimbursed on actual basis by their client. The appellants are not disputing their service tax liability on the agency commission and remuneration received for providing C & F services - reliance placed in the case of Commissioenr of Serivde Tax, Chennai vs. Sangamitra services Agency [2013 (7) TMI 862 - MADRAS HIGH COURT], where Relying upon the judgment in the case of Sri Sastha Agencies Pvt Ltd., Vs. Asst. Commissioner reported in 2006(11)TMI 193- CESTAT, BANGALORE, wherein it is held that no element other than remuneration received by a Clearing & Forwarding agent from their principal was to be included in the taxable value of the service - appeal allowed - decided in favor of assessee.

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• 2017 (4) TMI 38
  Liability of tax in terms of the composition scheme of 2007 - Imposition of penalties u/s 77 and 78 - short payment of service tax - works contract - Held that: - the activities carried out by the appellants are taxable only w.e.f. 01/06/2007. In such situation, it is clear that their payment of tax in terms of composition scheme should be examined for correctness based on the said provisions only. It is seen that there is no format or prescribed specific procedure for exercising separate option under the scheme. After the introduction of new tax entry when the appellants discharged service tax in terms of the applicable provisions, it is clear their entitlement cannot be denied. The denial of composition scheme by the Original Authority is mainly on the ground that the appellant cannot exercise option under the scheme as the contracts were taxable under ‘commercial or industrial construction service’/’construction of complex service’ prior to 01/06/2007 and accordingly after 01/06/2007 they cannot opt for payment of service tax under works contract service under composition scheme - The reason for denial of the benefit recorded in the impugned order is not sustainable - also the imposition of penalties on the appellant is not justified. Appeal allowed - decided in favor of appellant.

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• 2017 (4) TMI 37
  Export of services - Refund claim - unutilised CENVAT credit - denial on the ground that the services provided by the appellant appear to fall under the category of ‘intellectual property service’ and not under ‘engineering consultancy service’ as claimed by the appellant and also on the ground that the services were rendered in India and cannot be categorized as export. Held that: - the services rendered by the appellant will fall under the category of taxable services provided or to be provided to any person by a consulting engineer in relation to advise, consultancy or technical assistance in any manner in one or more disciplines of engineering including the discipline of computer hardware engineering [Section 65 (105) (g)]. We also refer to the trade notice of the Department dated 04.07.1997 which explained the scope of tax entry. We note that the appellants are not involved in any service of intellectual property and do not come in possession of any such IPR. The terms of the agreement do not provide for payment of any consideration for transfer of any such IP Rights. The appellants are engaged in providing consultancy with reference to licensed unit in India for and on behalf of foreign entity. As such, based on the location of the recipient of service, the service is to be considered as exported. The benefit of service accrues to a foreign company and the said company pays consideration for such service. Since consulting engineering service also is a category (iii) service as mentioned in Export of Services Rules, 2005, the location of recipient of service is relevant. As such, the appellants were engaged in providing services, which are exported out of country. The appellant’s eligibility to refund claim under Rule 5 of the Export of Services Rules, 2005 read with N/N. 12/2005- ST has to be examined - appeal allowed by way of remand.

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• 2017 (4) TMI 36
  Project management and marketing consultant - Business auxiliary service - period prior to 01.07.2003 - validity of SCN - Held that: - the SCN did indicate more than one service for tax liability of the appellant. The contract under which the considerations were received were composite and covers various activities. It is clear that split up figures for each one of the taxable service of different nature were not provided in the SCN. The same is possible only when documents with supporting evidence were submitted by the appellant. Such details could have been submitted even at the time of adjudication. The first Original order was passed ex-parte - The said order was set aside and the first appellate authority remanded the case for a fresh decision. Real Estate Consultant - Held that: - it is clear that the appellant did provide taxable service under the above category. As such, the appellants are liable to service tax under above said category during the relevant period. Extended period of limitation - Held that: - admittedly, the appellants raised various bills to Rajasthan Housing Board which indicated service tax element separately. Though, the appellants submitted that they did not receive the tax amount from their clients, the incidence of tax liability is apparently in the knowledge of the appellant and they have not got themselves registered with the Department, neither filed periodical returns. In the facts of this case, we find that a demand for extended period in terms of proviso to Section 73 (1) is rightly invokable. Penalty u/s 76 and 78 - invocation of section 80 - Held that: - The appellants though raised bill with service tax, have not received the tax amount from the Rajasthan Housing Board. This is being categorically asserted by the appellants and there is no contrary finding by the lower authority. As such, we find there is a reasonable cause for non-payment of service tax by the appellants and accordingly, the provisions of Section 80 can be applied for waiver of penalty imposed u/s 76 and 78. Appeal allowed - decided partly in favor of assessee.

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• 2017 (4) TMI 35
  Liability of service tax - Business Auxiliary Service - Manpower Recruitment or Supply Agency Service - Intellectual Property Right Service - Club or Association Service - Held that: - It is by now a settled principle that the services provided by the Club or Association to its members would not amount to service provided to another - reliance placed in the case of Sports Club of Gujarat Ltd. vs. Union of India [2009 (8) TMI 667 - Gujarat HIGH COURT] - the appellants are not liable to service tax under the category of Club or Association Service - demand not sustained. Business Auxiliary Service - Held that: - It is clear from the arrangement, that the appellant is conducting periodical MAT examination. Interested students pay the fee and write the examinations. The grades obtained by the student, as certified by the appellant help the students to get admission in the management institute. It helps the management institute also in selecting the right students for their course. The appellant is not acting on behalf of anybody while conducting the MAT examination. We find there is no provision of service on behalf of any client. As such, we hold no service tax can be levied on the examination fee collected by the appellant from the students for MAT examination - demand not sustained. Manpower recruitment or supply agency service - Held that: - the appellants are collecting charges from the organizations and there is no public service involved in conducting examination for recruitment of personnel for various organizations which included commercial public sector undertakings. As such, we are of the opinion that the services rendered by the appellants are liable to be taxed under manpower recruitment or supply agency service - however, such demand has to be confirmed only for the normal period covered by both the show cause notices. As already noted, the second show cause notice also invoked extended period which is legally unsustainable - demand sustained for normal period. Intellectual Property Right Service - It is the case of the appellant that the said contents are copy right materials and, as such, are excluded from the purview of tax entry of “intellectual property right” - Held that: - the royalty payment is admittedly for providing contents for the journal. It is not relating to right to intangible property like trade market designs, patterns or any other similar intangible property. Admittedly, the contents of the journal are copy right materials and, as such, are excluded from the tax liability under IPR service - demand not sustained. Extended period of limitation - SCN dated 23/04/2009 was issued covering the period 10/09/2004 to 31/03/2008. Another SCN on the same issues was issued on 24/10/2011 covering the period 2008-2009 to 2010-2011. The second SCN also was issued invoking extended period of demand - Held that: - repeat SCN on the same issue on similar set of facts cannot be issued invoking extended period of time. Such action is not legally sustainable - penalties set aside. Appeal allowed - decided partly in favor of assessee.

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• Central Excise

• 2017 (4) TMI 68
  Maintainability of appeal - appeal dismissed for non-payment of interest - Held that: - the appellant has deposited the tax amount, however, the interest amount is not deposited though the appellant has agreed to deposit the same within four months from the date of application. The appellant has also averred the ground about financial constraints - It would not be appropriate to nonsuit the appellant by default - Considering the ground of financial stringencies put forth by the appellant, we are inclined to grant one more opportunity to the appellant to deposit entire interest - appeal allowed - decided partly in favor of appellant.

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• 2017 (4) TMI 34
  Whether the appellant was entitled to the benefit of payment of only 25% of the penalty? - Held that: - the appellant not having complied with the conditions precedent of the first proviso, namely, the payment of the duty and interest determined under section 11A(2) and Section 11AB, respectively, within 30 days of the communication of the order of the adjudicating authority. The first Proviso not having been complied with, the appellant is not entitled to the benefit of the second Proviso. Thus, the appellant is not entitled to the benefit of the reduced duty - decided against appellant. Whether an assessee is liable to pay penalty only to the extent of the balance unpaid amount of the duty determined under section 11A(2) of the Act? - Held that: - The injustice caused by a wrong determination is righted by the third proviso under which the reduced duty determined to be payable is to be taken into account for the purpose of section 11AC which would also include the first proviso. Fairness, therefore, is established. No prejudice, therefore, is caused to the assessee. If the assessee wishes to speculate as to the outcome of the further proceedings, he must do so at his own risk - the concession granted under the first proviso to section 11AC is to a person who has been guilty of fraud, collusion, etc. - we are not inclined to take the view in favour of the assessee in a case under section 11AC for it involves an assessee who has been found guilty of fraud, collusion, etc. - decided against appellant. Appeal dismissed - decided against appellant.

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• 2017 (4) TMI 33
  Maintainability of petition - Principles of natural justice - non-grant of opportunity to cross examine the signatory of the CRCL report - non-grant of any opportunity of personal hearing to deal with the contents of the CRCL report - Held that: - while it is true that the central issue involved in the case before the adjudicating authority relates to a classification dispute, however, it is equally true that none of the questions raised before this court relate to classification of the subject goods. The questions before this court relate only to the breach of principles of natural justice and hence, the availability of an alternative statutory remedy will not act as a bar in exercising writ jurisdiction under Article 226 of the Constitution of India. Reliance was placed upon the report of the CRCL in respect of which the petitioner was not granted any opportunity of hearing, it is manifest that there is a breach of principles of natural justice warranting interference by this court. Additionally, the petitioner has set out several grounds in the communication dated 10.02.2016 stating the reasons as to why it seeks to crosse-xamine the signatory of the CRCL report. However, the request has fallen on deaf ears. It is settled legal position that the right to crosse-xamine ought or to have opportunity to effectively exercise that right is an essential part of principles of natural justice. Under the circumstances, the adjudicating authority was required to give fair opportunity to the petitioner to not only deal with the report of the CRCL, which was received subsequently but also to give an opportunity to the petitioner to crosse-xamine the Director (Revenue Laboratories) in respect of the contents of the report and the inferences drawn therein. Non-grant of opportunity to crosse-xamine the Director (Revenue Laboratories) in respect of the report on which reliance has been placed by the adjudicating authority, also amounts to breach of principles of natural justice. Matter is restored to the file of the adjudicating authority from the stage of furnishing of the report of the chemical analyzer to the petitioner, to decide the same afresh in accordance with law, after affording the petitioner an opportunity to cross-examine - petition allowed by way of remand.

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• 2017 (4) TMI 32
  Maintainability of appeal - it is claimed that this is not an order falling within the purview of this court's appellate powers. Rather, it pertains to the determination of any question having relation to the rate of duty of excise. Therefore, in terms of sub-section (1) of section 35-L of the Central Excise Act, 1944, an appeal against this order would lie to the Hon'ble Supreme Court of India - Held that: - The underlying controversy clearly points towards a provision, which is attracted. We have seen that this is an issue squarely falling within the wording, namely, “to the determination of any question having relation to the rate of duty of excise”. These words in clause (b) of sub-section (1) of section 35-L are of widest amplitude. They cannot be ignored to accept the argument of Mr. Jetly on the maintainability of these appeals and namely that the tribunal having decided only a limited issue these appeals are maintainable. Such bifurcation and of the clear wording of wider amplitude is not permissible - appeal dismissed being not maintainable.

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• 2017 (4) TMI 31
  Refund - eligibility of respondent for refund from 1-2-2001 - Revenue's case is that the respondent did not follow the procedure u/r 233B of erstwhile CER, 1944 and hence, the claim for refund is time-barred - Held that: - Rule 233B was in Central Excise Rules, 1944. The said provision is not available in Central Excise Rules, 2001/2002 as such the elaborate procedure under Rule 233B do not cover the substantial period in dispute. Further, in view of the clear finding by the Commissioner (Appeals) regarding protest made by the respondent for allowing refund from 1-2-2001 which is not factually rebutted by the Revenue, we find no reason to interfere with the above finding - appeal rejected - decided against Revenue.

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• 2017 (4) TMI 30
  Time limitation for issuance of SCN - assessing officer sent a notice to the assessee asking it to furnish documents to show on what basis it was claiming Cenvat credit on the construction items - Held that: - Section 11A(3) of the CEA, 1944 provides limitation of one year to the Central Excise Officer to issue notice to the assessee. However sub-section (4) provides that when there is fraud; collusion; any wilful mis-statement; suppression of fact and contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of duty, the period of limitation will be five years. The assessee has not withheld any fact; the assessee has not misstated any fact; the assessee has not suppressed any facts. The assessee may have been guilty of claiming wrong Cenvat credit but as pointed out by the CESTAT, there continues to be divergence of opinion with regard to the issue whether Cenvat credit can be claimed on the inputs used for setting up the factory in which goods were manufactured. Therefore, it cannot be said to be a fraudulent claim or a claim which has an aspect of dishonesty attached to it - In this view of the matter, limitation would only be one year. Appeal dismissed - decided against Revenue.

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• 2017 (4) TMI 29
  SSI exemption - use of brand name of others - Held that: - It is recorded that the respondents had no sales of such amplifiers in the past. The statements which were retracted could not be basis for confirmation of duty demand. It is clear that no stickers with brand name were recovered during the visit by the officers as is evident from the panchnama - It is also categorically submitted by the respondents that they had never manufactured broad band amplifiers and hence the question of clearing branded amplifiers did not arise. They have submitted receipts for receiving these amplifiers - based on 105 pieces of saw filter modulator with brand of purportedly of another person, the Department demanded duty on all the goods cleared for past 4½ years considering them as cleared with brand name. We find no justification for such extrapolation which is nothing but presumptive demand - appeal dismissed - decided against Revenue.

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• 2017 (4) TMI 28
  Maintainability of appeal - non-impleading necessary parties/respondents - Rule 6(2) of CESTAT Procedure Rules - Held that: - What is provided in the said rule is that a single appeal has to be filed in respect of each order in original by the aggrieved persons. It does not relieve the appellant from impleading all the respondents/necessary parties to the appeal - As necessary parties are not impleaded and the appeal is filed only against one person, although in the appeal grounds the prayer is to set aside the order passed against all five persons, I find that the appeal is not maintainable due to the above discussed defect of not impleading necessary parties/respondents - appeal dismissed being not maintainable.

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• 2017 (4) TMI 27
  SSI exemption - use of brand name of others - Held that: - the brand name “Naughty” is in the name of Shri Sanjay Agrawal, one of the Directors of M/s. Naughty Foods Pvt. Ltd. The said brand name was registered as manufacturer and merchant in the name of Sanjay Agrawal. He was using the above brand name earlier as proprietor of M/s. Naughty Foods. The Commissioner (Appeals) recorded that Shri Sanjay Agrawal being owner of the brand name has used the said brand name in respect of the goods manufactured in the unit in which he was Managing Director - exemption allowed - appeal dismissed - decided against Revenue.

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• 2017 (4) TMI 26
  Classification of “Kulfi” manufactured by appellant - whether classified under Chapter Heading 0404.00 or under C.H. 2105 as “ice cream” - whether the product is eligible for SSI exemption? - Held that: - On perusal of the records we note that the C.H. 0404 of the Central Excise Act is applicable in the case in hand as it is undisputed that the “Kulfi” is milk product and the manufacturing process of “kulfi” are explained by the appellant before the lower authorities is also not disputed - the Tribunal was considering similar issue in the case of Nestle (I) Ltd. [2001 (3) TMI 157 - CEGAT, COURT NO. IV, NEW DELHI] wherein the Tribunal was considering the classification of Nestle Milkmaid Kesar Kulfi Mix, Nestle Milkmaid whether falls under Chapter Heading 0404 or Chapter sub-heading 2108.90 after considering the entire gamut and also the ingredients in the product Nestle Milkmaid and Kulfi mix, Bench after considering the Explanatory note to HSN held that Nestle Milkmaid and Kulfi would fall under Ch. 04.04. If the Kulfi Mix which is a dry powder merits classification under CTH 0404, then “Kulfi” manufactured by appellant which is ready to consume would definitely merit classification under 0404. Appeal allowed - decided in favor of assessee.

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• 2017 (4) TMI 25
  Classification Natural Beta Kerotene - impact of change in packing - Pro 9 Natural Mixed Kerotenoids - classified under Chapter Heading No. 2936 of Central Excise Tariff or under Chapter Heading 2108.99 as food/dietary supplement - appellant's case is that the items have been sold to customers under capsule form and as food supplement, and mere change in packing will not change the classification - Held that: - there has been no change in the item imported in bulk form as well as a capsule. The item(s) are sold in retail to an ultimate consumer. The respondent has not added any extra material to the item(s) viz. Natural Beta Kerotene and Pro 9 Natural Mixed Kerotenoids. The respondent mentions that these items have only been filled into the capsule without adding or using any other vitamin or pro-vitamin or any other material. It may be that as a marketing requirement the subject item(s) have been sold as food supplement or dietary supplement but it does not change the classification of the item just because the item is packed into a retail form i.e. a capsule - appeal dismissed - decided against Revenue.

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• 2017 (4) TMI 24
  CENVAT credit - outdoor catering service (canteen service) - the demand notices were issued to the appellant alleging that approximately 50% of the value of the said service has been recovered from their employees in providing the outdoor catering service (canteen service) - The contention of the Advocate for the appellants on the other hand is that the canteen service has been provided free of cost to their employees by distributing food coupons. The appellant had not recovered any amount from their employees in providing outdoor catering service (canteen service) - Held that: - such categorical claim of the appellant needs to be scrutinized on the basis of evidences on record and the evidences that would be placed by the appellants before the adjudicating authority - appeal allowed by way of remand.

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• 2017 (4) TMI 23
  Refund claim - Rule 5 of CCR, 2004 - denial on account of nexus - Held that: - issue has been settled by this Tribunal in the case of Bombay Dyeing & Mfg. Co. Ltd. Vs. CCE, Raigad [2014 (11) TMI 577 - CESTAT MUMBAI], where it was held that no one to one correlation is required for claim refund under Rule 5 of Cenvat Credit Rules, 2004 for refund of unutilized Cenvat Credit on account of export of goods - refund allowed. The availment of Cenvat Credit has not been challenged by the Revenue in that circumstances without denying Cenvat Credit, refund claim filed by the appellant cannot be objected. Refund allowed - decided against Revenue.

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• 2017 (4) TMI 22
  CENVAT credit - denial on the ground that the appellant had availed the benefit of depreciation u/s 32 of the Income Tax Act, 1961 on the capital goods and also availed CENVAT credit on the same capital goods - violation of Rule 4(4) of the CCR, 2004 - Held that: - the Revised Return for the Assessment Year 2010-11 has been accepted resulting into surrendering of the depreciation benefit claimed earlier u/s 32 of the Income Tax, 1961 on the capital goods on which CENVAT credit was also availed - these documents were not placed before the adjudicating authority at the time of adjudication, hence could not be scrutinized. To ascertain the fact whether the appellant had surrendered the benefit of depreciation under Income Tax Act,1961 on the same capital goods on which CENVAT credit availed, during the relevant period, the matter is remitted to the adjudicating authority - appeal allowed by way of remand.

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• 2017 (4) TMI 21
  CENVAT credit - recovery of excess credit availed than entitled - First stage dealer’s invoices - Held that: - both the authorities below have not analyzed the evidences and recorded finding on the actual quantity of goods on which the appellant had availed credit against the dealer’s invoice. Therefore, the matter needs to be remitted to the original adjudicating authority to examine in detail the quantity received/purchased and the CENVAT credit availed by the Appellant against the dealer’s invoices - appeal allowed by way of remand.

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• 2017 (4) TMI 20
  CENVAT credit - Rubber Stoppers - exported goods re-imported on rejection - credit availed on CVD which was required to be paid at the time of re-import - denial of credit on the ground that the said product being finished goods and does not fall under the category of ‘input’ or ‘capital goods’ - whether the Appellants are eligible to CENVAT Credit of the CVD paid on re-import of the manufactured goods initially without payment of duty under bond for export - Held that: - As per Rule 16, the goods which were cleared and brought back to the factory for being re-made, refined, re-conditioned or for any other reason, the assessee shall be eligible to take credit as if the such goods are received as input under CENVAT Credit Rules 2004 - The SCN proposed to deny the credit on the ground that it is their finished goods and CCR 2004 does not permit credit on the finished goods. I do not find any substance in the said allegation and confirmation by the authorities below inasmuch as in the Rule itself it is made clear that the goods which were initially cleared on payment of duty on its receipt be considered as ‘input’ and accordingly the CENVAT Credit would be admissible as it is an ‘input’ under CCR, 2004 - Appellants are definitely eligible to the credit of the CVD paid on said goods on its re-importation - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2017 (4) TMI 10
  Lien over Bank account - ex parte reassessment order - territorial jurisdiction - The petitioner maintains its account with Khairtabad (Hyderabad) branch of Bank of Baroda, which is beyond the territorial limits of State of Karnataka. Hence the first respondent could not have exercised his authority and issued any notice to its banker - reliance placed in the case of [1989 (4) TMI 300 - KARNATAKA HIGH COURT] where the recovery proceedings were stayed solely on the ground that the department has sought to recover the entire tax in dispute in the absence of any order being made by the appellate authority on the stay applications and coercive process is being taken to recover the disputed tax. Whether first respondent could issue recovery notices to the branch manager of the petitioner's bank situated beyond the State of Karnataka under the provisions of the KVAT Act and KTEG Act? - Held that: - Attachment of a "net enabled" bank account stands precisely on the same footing as that of attachment and sale of shares in a company - both KVAT and KTEG Acts authorize recovery officers to demand money from "any person" and authorize recovery by attachment and sale of share in Companies. Hence, by natural corollary a tax recovery authority can lay its hands on the money in deposit in a bank account situated beyond its territory if the same is accessible online. Therefore applying "effects doctrine", the recovery proceedings initiated by the first respondent under the provisions of the KVAT Act and KTEG Act are pre-eminently tenable. Whether first respondent could have issued notices whilst writ petitions filed by the petitioner and I. A.s for stay are pending consideration? - Held that: - A careful perusal of the authority relied upon by the petitioner in the case of M. L. Narasimha Gupta shows that there is a classic difference between the two cases. In the said case, this court was concerned with an I. A. for stay to be considered by an appellate authority in a statutory appeal. In contrast, the case on hand is a writ petition wherein, the petitioner has challenged the "vires" of the Act and incidentally challenged the tax liability. Therefore, the immunity from recovery argued by the learned counsel for the petitioner is misconceived. Petition dismissed - decided against petitioner.

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• 2017 (4) TMI 9
  Grant of anticipatory bail - Offences u/s 85(1)(c) of the GVAT Act, 2003, as well as Sections 465, 467, 468, 471 of the Indian Penal Code, 1860 and Section 66(c)(d) of the I.T. Act, 2000 - one M/s.Usmani Marketing who had a particular TIN Number and whose owner was accused No.1-Mohamad Umar Haji Usmanbhai was involved in the activity of preparing bogus bills and was further involved in not depositing the amount of VAT for the period from 01st July, 2002 to 12th June, 2015 and the TIN number allotted to the said firm by the office of the Commercial Tax Commissioner was misused - Held that: - There was no gainsaying that the applicant was doing mason work in the firm. He was a Peon. According to his case, he was not knowing computer. It appears that TIN number of the firm which was misused through one another Aaiyamali Farukhi. Looking to the total operation of facts furthered by the investigational material available, it is difficult to appropriate any major role at this stage for the applicant to view his conduct filled with criminality so as to deny him the anticipatory bail. Application allowed.

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• 2017 (4) TMI 8
  CST - penultimate sale against form H - The Assessing Officer denied the sales against Form “H” on the ground that the after the exporter purchased the goods in question from the respondent-dealer the same was not sold by the exporter in the form in which it has been purchased from the respondent and after undertaking same process on it, goods came to be sold, which amounted to manufacture and resultantly the tax demand at the rate of 10% on the said sales - Held that: - the controversy in the present Tax Appeal is squarely covered against the revenue in view of the the decision of the Division Bench of this Court in the case of State of Gujarat Vs. Ambica Agro Product [2016 (10) TMI 857 - GUJARAT HIGH COURT] by which in the similar set of facts and circumstances the Division Bench has held that the respondent is entitled to the claim under Form “H” and has held that the process carried out by the exporter cannot be said to be manufacture - the process carried out by the exporter cannot be said to be manufacture, and therefore, the claim of the respondent of sale against Form “H” is allowable - appeal dismissed - decided against appellant.

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• 2017 (4) TMI 7
  Concessional rate of tax - Iron and Steel - respondent-assessee's case is that the “Iron and Steel” purchased by the respondent–assessee and used in the execution of the civil works contracts of the construction of the buildings, remains “Iron and Steel” as declared goods under the provisions of Section 14 of the Central Sales Tax Act, 1956 and therefore are taxable only at the concessional rate of 4% and not at 13% rate of tax - Held that: - the issue is no longer res-integra as decided in the case of Smt. B. Narasamma Versus Deputy Commissioner Commercial Taxes Karnataka & Another [2016 (8) TMI 636 - SUPREME COURT], where it was held that commercial goods without change of their identity as such, are merely subject to some processing or finishing, or are merely joined together, and therefore remain commercially the same goods which cannot be taxed again, given the rigor of Section 15 of the Central Sales Tax Act - petition dismissed - decided against Revenue.

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• 2017 (4) TMI 6
  Input tax credit - manufacture of cement - Whether the tax paid by the assessee, a manufacture of cement, is entitled to claim input tax credit in respect of the tax paid by it on the purchase of cement prior to its commencement of commercial production and such cement being used for laying the foundation and erection of cement manufacturing plant and machinery, in view of Sections 11 and 12 of the KVAT Act? Held that: - though the cement is specified in item No.5 of Fifth Schedule, since the cement in the present case was admittedly utilised for laying down of foundation and civil works for erection of cement manufacturing plant and machinery itself, such cement, along with the plant and machinery itself, should be deemed to be used for the purpose of manufacturing of other goods for sale, namely cement itself, after the commencement of commercial production. Therefore, it falls in exception of negative clause of Section 11 of the KVAT Act and the assessee would be entitled to input tax credit. While Section 11 of the KVAT Act provides for restriction on input tax credit, in its exception carved out under Section 11(a)(2) as well as Section 12 of the KVAT Act, providing for deduction of input tax credit in respect of the capital goods, both would support the case of the present assessee. Reliance was placed in the case of Maruti Suzuki Limited Vs. Commissioner of Central Excise, [2009 (8) TMI 14 - SUPREME COURT], where it was held that installation of electrical and electronic goods which have nexus to the manufacturing process like the Speeder System used in that case to provide backup electricity in the manufacturing process, the Court allowed the input tax credit in respect of the tax paid on such Speeder System under the provisions of KVAT Act dealing with Section 11(a)(2) and Fifth Schedule of the KVAT Act. The petitioner would be entitled to claim input tax credit in respect of the tax paid by it in respect of such cement purchased and used by it during the relevant period, prior to the commencement of its commercial production, for the purpose of erection of the plant and machinery - petition allowed - decided in favor of assessee.

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• Indian Laws

• 2017 (4) TMI 3
  Liability of petitioner to pay entertainment tax in respect of 49012 STBs operated through its cable service control room - Held that:- By virtue of second proviso to section 3(1) of the Act of 1979, the liability to pay entertainment tax in respect of admission to entertainment offered through a multi system operator would be upon the proprietor of the cable service control room/multi system operator and it is immaterial whether he collects it directly from subscriber or indirectly through an associate or franchisee cable operator or an agent, who collects it from the person making the payment. In the absence of factual foundation laid, showing the particulars of the cable operator or that such cable operator was not an associate/franchise or agent, the liability to pay tax cannot be resisted by the petitioner under the Act. The Act of 1979 has been enacted by the state legislature invoking its authority under Entry 62 of list 2, and the IInd proviso to Section 3(I), which makes the proprietor of multi system operator liable to pay tax, is within the legislative competence of State and is otherwise not questioned. No provision could be shown in the West Bengal Act or the Delhi Act, similar to the one contained in the second proviso to Section 3(1) of the Act of 1979. It clearly holds the proprietor of multi system operator liable to pay entertainment tax, as has already been discussed above. As such, the challenge laid to the impugned orders on the ground that the petitioner is not liable to pay tax, in the facts of the present case, fails. So far as the second aspect of dispute raised i.e. role of subscription received by the petitioner, find that the petitioner has clearly disputed it before the assessing authority and also in appeal. Petitioner's consistent case was that it had received subscription at the rate of Rs. 100 and not Rs. 150 as claimed by the department. The appellate authority has noticed this contention, but has not dealt with it. Learned Standing Counsel has not able to show any consideration on this aspect of the matter in the appellate order. In such circumstances, on this limited aspect the matter is liable to be remitted back to the appellate authority for a fresh consideration of cause. In view of the discussions aforesaid, the writ petition succeeds and is allowed in part. The liability of petitioner to pay entertainment tax in respect of 49012 STBs operated through its cable service control room is upheld. However, the matter with regard to determination of rate of subscription is remitted back to the appellate authority for consideration of petitioner's objection in that regard.

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• 2017 (4) TMI 2
  Offence punishable under Section 138 of the Negotiable Instruments Act - Held that:- Indisputably, the applicant herein has not signed the cheque. She might have signed the loan agreement along with her husband but that by itself is not sufficient to fasten the liability if the cheque drawn by the husband is dishonoured. See Mrs. Aparna A. Shah Versus M/s Sheth Developers Pvt. Ltd. and another [2013 (7) TMI 718 - SUPREME COURT] In view of the settled position of law, there is no other option but to quash the proceedings so far as the applicant herein is concerned. This application is, accordingly, allowed. The proceedings of the Criminal Case pending in the Court of the learned Metropolitan Magistrate, Negotiable Instruments Court No.36, Ahmedabad, are hereby quashed so far as the applicant herein is concerned.

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