TMI Tax Updates - e-Newsletter
May 20, 2016

Case Laws in this Newsletter:

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

TMI SMS

• Income Tax Act 1961, Service Tax (Chapter V of FA, 1994), Customs Act, 1956, Central Excise Act 1944 as amended by Finance Act, 2016

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Articles

1. CHALLENGING THE ISSUE OF SHOW CAUSE NOTICE

   By: DR.MARIAPPAN GOVINDARAJAN

2. SERVICE TAX - Changes effective from 14th May, 2016

   By: Monarch Bhatt

News

1. RBI aligns Rules for Investment in Credit Information Companies (CICs)

2. Commerce Minister Smt. Nirmala Sitharaman says transition from barter trade to normal trade - a step forward to boost trade

3. Income Tax Act 1961, Service Tax (Chapter V of FA,, 1994), Customs Act, 1956, Central Excise Act 1944 as amended by Finance Act, 2016

4. Regulating Financial Innovation: P2P Lending Platforms Design Challenges (Shri R. Gandhi, Deputy Governor – May 17, 2016 – at the Mint Marketplace Lending Summit held at Four Seasons Hotel, Mumbai)

5. RBI Reference Rate for US $

Notifications

Companies Law

1. S.O.1795 (E) - dated 18-5-2016 - Co. Law

Central Government appoints the 18th day of May, 2016, as the date on which the provisions of clause (iv) of sub-section (29) of section 2, sections 435 to 438 and section 440 of the Companies Act, 2013 shall come into force

2. S.O. 1796 (E) - dated 18-5-2016 - Co. Law

Establishment of Special Courts for the purposes of trial of offences punishable under the sub-section (1) of section 435 of Companies Act, 2013

Customs

3. 77/2016 - dated 19-5-2016 - Cus (NT)

Rate of exchange of conversion of the foreign currency with effect from 20th May, 2016

DGFT

4. 8/2015-2020 - dated 18-5-2016 - FTP

Amendment in export policy of edible oils

Income Tax

5. S.O.1508 (E) - dated 26-4-2016 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On - Sadhu Vaswani Mission, Maharashtra

6. S.O.1507 (E) - dated 26-4-2016 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On - Sri Sathya Sai Central Trust, Anantapur, Andhra Pradesh

7. S.O.1506 (E) - dated 26-4-2016 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On - Smile Foundation, Green Park Extension, New Delhi

8. S.O.1505 (E) - dated 26-4-2016 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On - Cancer Patients Aid Association, Mumbai

9. S.O.1504(E) - dated 26-4-2016 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On - Thirumalai Charity Trust ‘Thirumalai’ Mumbai

10. S.O.1503(E) - dated 26-4-2016 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On - Chington Development Society, Senapati, Manipur

11. S.O.1502(E) - dated 26-4-2016 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On - Asian Society of Continuing Medical Education, Chennai

12. S.O.1501(E) - dated 26-4-2016 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On - Smt. Savitaben Ramanlal Dahyalal Shah, Sarvajanik Hospital & Prashutigruh Trust, Mehsana, Gujarat

13. S.O.1500 (E) - dated 26-4-2016 - IT

U/s. 35AC, IT ACT, 1961 - Eligible Projects or Schemes, Expenditure On - Jankidevi Bajaj Gram Vikas Sanstha, Pune

SEZ

14. S.O. 1700(E) - dated 26-4-2016 - SEZ

De-notification of certain area from the Multi Product Special Economic Zone at Indore, Madhya Pradesh;

Circulars / Instructions / Orders

Service Tax

1. 193/03/2016 - dated 18-5-2016

Clarification regarding leviability of service tax in respect of services provided by arbitral tribunal and members of such tribunal

RBI

2. DBR.CID.BC.No.98/20.16.042/2015-16 - dated 19-5-2016

Investment in Credit Information Companies

Income Tax

3. PRESS RELEASE - dated 19-5-2016

India and Slovenia sign Protocol amending the India-Slovenia Double Taxation Avoidance Convention

FEMA

4. 70 - dated 19-5-2016

Money Transfer Service Scheme - Submission of statement/returns under XBRL

5. 71 - dated 19-5-2016

Rupee Drawing Arrangement - Submission of statement/returns under XBRL

DGFT

6. 10/2015-2020 - dated 18-5-2016

Amendment of Appendix 2 X under Foreign Trade Policy, 2015-20

Highlights / Catch Notes

Income Tax

• Deductions Denied for Lack of Ownership Proof in LTCG Case u/ss 54EC and 54F.

  Case-Laws - AT : LTCG - deductions claimed u/s. 54EC and 54F denied - Except the fact that assessee has received the so called 1/4th share out of the total consideration, there is no indication of any assessee’s ownership on the property, either to full extent or to 1/4th extent. - AT
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• Assessing Officer mistakenly treated bank deposits as undisclosed income without verifying the actual source of funds.

  Case-Laws - AT : AO proceeded on the fallacious assumption that the bank deposits constituted undisclosed income, over-looking the fact that the source of the deposits need not necessarily be the income of the assessee - AT
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• Subsidy Classification: Capital vs. Revenue - Assess on Merits, Not Just Sales Tax Proportion.

  Case-Laws - AT : Treatment of subsidy receipt - capital or revenue subsidy - Merely because subsidy received was equivalent to a substantial percentage of the sales tax paid, it cannot be construed that the same was in form of refund of sales tax paid and exigible to tax - AT
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• Minor Children's Loan to Taxpayer Explained, Not Unexplained Cash Credit u/s 68 of Income Tax Act.

  Case-Laws - AT : Unsecured loan advanced by two, minor son and minor daughter, to the assessee is explained and cannot be added as unexplained cash credit u/s. 68 - AT
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• Bata Workers Sickness Benefit Society contributions qualify for tax allowance u/s 37(1) of the Income Tax Act.

  Case-Laws - AT : Contribution to Bata Workers Sickness Benefit Society - the fund was constituted bona fidely for the welfare of its employees in the smooth running of the business and, hence, the said contribution was to be allowed u/s 37(1). - AT
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Customs

• Bankers Issuing Guarantees Without Full Collateral Risk Public Funds; Unhealthy Practice for Private Business Operations.

  Case-Laws - HC : If a banker issues a bank guarantee without taking 100% cash security in respect thereof, then such banker is extending a credit facility out of public money. If such a bank guarantee is invoked, then the public money stands to be jeopardized. Such a scenario is not healthy. A private party should not be allowed to do its business on the strength of public money. - HC
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• Show Cause Notices Issued Long After Exoneration by Dy DGFT Deemed Harassment and Legal Process Abuse.

  Case-Laws - HC : SCNs issued to the Petitioners, more than one and half years after the Dy DGFT exonerated them of the very same allegations, is nothing but a harassment of the Petitioners and an abuse of the process of law. - HC
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Corporate Law

• Special Courts Set Up to Speed Up Trials for Offences u/s 435 of Companies Act, 2013.

  Notifications : Establishment of Special Courts for the purposes of trial of offences punishable under the sub-section (1) of section 435 of Companies Act, 2013 - Notification
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Indian Laws

• Amendments to Indian Tax Laws: Updates on Income Tax Act 1961, Customs Act 1956, and more per Finance Act 2016.

  News : Income Tax Act 1961, Service Tax (Chapter V of FA, 1994), Customs Act, 1956, Central Excise Act 1944 as amended by Finance Act, 2016
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Service Tax

• Income Tax Department Salary Classification Prevents Service Tax on Consultancy Fees.

  Case-Laws - AT : Liability of Service tax - if an amount paid to a person is considered as a salary by the Income Tax Department, it cannot be held by the Service Tax Department,as amount paid for consultancy charges and taxable - AT
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• Arbitral tribunal services: tax liability falls on business recipients with over Rs. 10 lakh turnover in taxable territory.

  Circulars : Service Tax liability for services provided by an arbitral tribunal shall be on the service recipient if it is a business entity located in the taxable territory with a turnover exceeding rupees ten lakh in the preceding financial year.
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Central Excise

• Cenvat Credit Limited to Job Worker's Premises, Not Depot, Under Central Excise Rules: Court Decision Explained.

  Case-Laws - AT : Cenvat Credit - premises of job worker is the “place of removal” and not the depot of the principal manufacturer, therefore, Cenvat credit of service tax paid by the Respondent upto the place of removal will be admissible - Services from Job worker to Depot not eligible for credit - AT
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• Appellant's Duty Demand Deemed Illegal After Concern Found to be a Dummy Entity.

  Case-Laws - AT : Once the independent existence of a concern is denied and is held to be dummy concern, in that case the duty could not have been demanded from Appellant which is illegal - AT
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• Appellants entitled to Cenvat credit on GP sheets due to lack of evidence against them under Central Excise rules.

  Case-Laws - AT : Cenvat credit on GP sheets cannot be denied to the appellants without corroborative evidence - AT
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• Court Overturns Duty Evasion Penalties After Investigation Reveals Unsigned Slips and Conflicting Statements.

  Case-Laws - AT : Clandestine removal of manufactured goods - Demand of duty along with interest and penalty - Evasion of duty - Kachcha slips recovered during investigation which were not signed at all - Some exculpatory and some inculpatory statements were recorded - demand set aside - AT
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Case Laws:

• Income Tax

• 2016 (5) TMI 768
  Reopening of assessment - reasons to believe - Held that:- It was a mere suspicion of the AO, that prompted him to initiate assessment proceedings under section 147, which is neither countenanced, nor sustainable in law. Too, the AO proceeded on the fallacious assumption that the bank deposits constituted undisclosed income, over-looking the fact that the source of the deposits need not necessarily be the income of the assessee. That being so, in keeping with ‘Bir Bahadur Singh Sijwali’ (2015 (2) TMI 60 - ITAT DELHI ), the reasons recorded to initiate assessment proceedings under section 147 of the Act and all proceedings pursuant thereto, culminating in the impugned order, are cancelled. - Decided in favour of assessee

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• 2016 (5) TMI 767
  Sale consideration received - ‘Income from Other Sources’ instead of ‘Income from Long Term Capital Gains’ - deductions claimed u/s. 54EC and 54F denied - Held that:- Assessee being the 4th plaintiff, did not claim any ownership of the property. Therefore, we are of the opinion that both the authorities are correct in rejecting assessee as owner of the property. Even the rectification deed placed on record no where confers any ownership on assessee except indicating that assessee is also party to the transactions with M/s. Team One Builders. How assessee acquired the ownership was not established either before the CIT during the course of proceedings u/s. 263 or before the other authorities in the course of consequential assessment proceedings. Except the fact that assessee has received the so called 1/4th share out of the total consideration, there is no indication of any assessee’s ownership on the property, either to full extent or to 1/4th extent. Therefore, since the ownership on the property is not established to be that of assessee, either at 1/4th or fully, we are of the opinion that the authorities are justified in treating the consideration received by assessee as ‘income from other sources’ and denying the deductions claimed u/s. 54EC and 54F which are applicable only when there is capital gains. - Decided against assessee

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• 2016 (5) TMI 766
  Addition of unsecured loan received from his minor daughter and son u/s. 68 - Held that:- The assessee has enclosed the complete bank statement from where it is clear that minor daughter Annica Phillips has advanced a sum of 1,35,000/- out of RBI Bond maturity and RBI Bond interest and also other deposits made. The assessee has also enclosed copies of RBI certificate issuing RBI bonds in the name of Rohan, minor son and Annica Phillips, minor daughter with repayment of 6.5% Saving Bonds 2003 and repayment of 7% Saving Bank Schemes 2002. These documents clearly establish the source of loan transaction, i.e., advancing of money by minor Annica Phillips and Rohan Phillips amounting to 13.50 lacs and 1.350 lacs respectively. On query from the Bench, the ld. Sr. DR stated that these documents were not filed before the A.O. but we find that the assessee has given certificate in its paper book that these were filed before the A.O. as well as CIT(A). The CIT(A) has particularly noted this fact in his order which is reproduced above. Further, these bank details were available before the A.O. from where these loans were given and maturity proceeds of RBI Bonds were deposited. In entirety of the facts and circumstances of the case, we are of the view that in the case of the above unsecured loan, the assessee is able to prove the creditworthiness and genuineness of the transaction, i.e., the immediate source of the transaction. In such circumstances, we feel that unsecured loan advanced by these two, minor son and minor daughter, to the assessee is explained and cannot be added as unexplained cash credit u/s. 68 - Decided1 in favour of assessee

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• 2016 (5) TMI 765
  Treatment of subsidy receipt - capital or revenue subsidy - Held that:- It is clear from the reading of the objective of the scheme is to was to enable the assessee to set up a new unit. The object of the Scheme in the present case was to promotion of' industries in the state of West Bengal. It was available to a "New Unit" which has been defined under the scheme to mean an industrial unit in the large medium/small scale sector having investment in capital assets which is established and commissioned by the entrepreneur for the manufacture of goods in West Bengal, for the first time on or after the 1st January, 2000 and is registered with the Directorate of Industries/Directorate Cottage & Small Scale Industries/Directorate of Tourism. Once the objective of the scheme is to enable setting up of a new unit, the manner and quantum in which the subsidy is disbursed is of no consequence. In the given facts and circumstances of the case. Merely because subsidy received was equivalent to a substantial percentage of the sales tax paid, it cannot be construed that the same was in form of refund of sales tax paid and exigible to tax. Hence one time subsidy received from the State Government under the scheme of industrial promotion for expansion of its facilities and for modernization purposes is capital receipt and cannot be brought into tax net. Depreciation on moulds - Held that:- We are of the view that the issue requires fresh consideration by the AO. There is no basis to come to a conclusion that rolling mills used in iron and steel industry are also in the nature of moulds but are in a rolling form. As to whether they are materially same or different cannot be decided without technical and expert evidence. It is also seen that moulds used in rubber and plastic manufacture are entitled to higher depreciation of 30%. A different treatment for moulds used in iron ingot manufacture cannot be allowed on the basis of such general observations as done by the CIT(A). Therefore we set aside the order of the CIT(A) on this issue and direct the AO to examine the claim of the Assessee in the light of the observations made above.

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• 2016 (5) TMI 764
  Disallowance on account of delayed deposit of ‘Employees ‘contribution towards PF - Held that:- After examining these provisions, the Hon'ble Supreme Court and High Court have held that if the contribution is deposited y the appellant before the due date of submission of its Return, it will be entitled to deduction - vide the Apex Court decision in CIT vs Vinay Cement Ltd. (2007 (3) TMI 346 - Supreme Court of India ) and CIT vs Alom Extrusions Ltd. (2009 (11) TMI 27 - SUPREME COURT ). - Decided in favour of assessee. Disallowance on account of contribution to Bata Workers Sickness Benefit Society - Held that:- There was a valid agreement entered into between the parties and enforceable in law against each other. Therefore, it became legal obligation of the assessee-company to make the contribution to the society and as such the contribution to the society was not hit by section 40A(9) as such an obligation fell within the last part of the said section that the contribution was made by the assessee-company to a fund required to be set up by or under any other law for the time being in force. Besides, there was no dispute that the fund was constituted bona fidely for the welfare of its employees in the smooth running of the business and, hence, the said contribution was to be allowed under section 37(1). - Decided in favour of assessee. Disallowance on account of payment of technical collaboration fees paid to a company incorporated in Canada - “Payment of Royalty” - what is the approach that has to be adopted for determining ALP in the case of cost contribution agreement which is akin to the arrangement in the present case between the Assessee and its parent company? - as claimed by the Assessee that since, the rate of royalty paid by the assessee at 1.5% was lower than the rate of royalty paid by the comparable uncontrolled enterprises in a similar condition, the Assessee claimed that the price paid in the transaction was to be regarded as having been undertaken at arms length price? - Held that:- Assessee in its Transfer Pricing Documentation, for the purpose of benchmarking, applied Comparable Uncontrolled Price ("CUP") method as the most appropriate method. For application of CUP, the assessee identified following four comparable companies from the Secretariat for Industrial Assistance (SIA) database engaged in providing similar services paying an average rate of royalty of 3.95% and 3.5% on domestic sales and export sales respectively. The TPO, however, following the Transfer Pricing assessment order for assessment year 2003-04, determined the arm's length price of payment of royalty as 'nil' allegedly holding that no services were actually received by the assessee. The entire amount paid to Bata Ltd., Canada was therefore added to the total income of the Assessee by way of adjustment to the ALP. The TPO has not disputed the most appropriate method for determination of ALP chosen by the Assessee viz., CUP method and comparability of the companies set out in the TP study of the Assessee with the Assessee. The arithmetic mean of the comparables chosen by the Assessee in its TP study was average rate of royalty of 3.95% and 3.5% on domestic sales and export sales respectively. The claim of the Assessee that the rate of royalty paid by the assessee at 1.5% was lower than the rate of royalty paid by the comparable uncontrolled enterprises in a similar conditions has therefore to be accepted. The price paid by the Assessee to its AE has therefore to be held as at Arm’s Length.- Decided in favour of assessee.

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• 2016 (5) TMI 763
  Penalty U/s 271(1)(c) - Held that:- The investment made in the house purchased was withdrawn from the bank account of the son as well as wife of the assessee, which has also not been controverted by the lower authorities. The daughter in law of assessee also made payment for the purchase of house from the sale proceeds of her car. These explanations were made before the ld Assessing Officer during the course of assessment proceedings, but had not been accepted by him. It is also undisputed fact that the various additions have been confirmed by the Coordinate Bench under various heads but in our view that the assessee has filed bonafide explanation, which was not found false to the lower authorities. Whatever income in the return cannot be assumed by the Assessing Officer as concealed income as the various Hon'ble High Courts have decided this issue in favour of the assessee when financial year of relevant assessment year 2007-08 has not been ended i.e. survey was conducted on 21/3/2007, therefore, assessee for reason to file the return on or before 31st October, 2007, which has been filed on 31/10/2007 and disclosed the income at 15,19,443/- in it. The ld AR of the assessee also contended that there was no satisfaction of the Assessing Officer at the time of initiation of penalty proceedings of the Assessing Officer for specifically concealed the particulars of income or furnished inaccurate particulars of income. It is a fact that the ld Assessing Officer initiated the penalty proceedings “penalty notice U/s 271(1)(c) is being issued separately” but he has not mentioned whether this penalty is for concealment of income or furnishing inaccurate particulars of income. However, in the penalty order under the various heads, he held this penalty for concealed income. After considering the totality of all facts and legal position, we find that the ld CIT(A) was not right in confirming the penalty U/s 271(1)(c) of the Act even on remaining additions. Accordingly, we delete the penalty confirmed by the ld CIT(A) and dismiss the revenue’s appeal against the order of the ld CIT(A). - Decided in favour of assessee.

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• 2016 (5) TMI 762
  Entitlement to the benefit of deduction u/s 80P(2)(a)(i) - Held that:- Assessee being a credit coop. society does not fall within the provisions of section 80P(4) of the Act as the assessee society is not required to be registered with Reserve Bank of India because for carrying on banking business it is must. We are therefore of the view that assessee is eligible for deduction u/s 80P(2)(a)(i) of the Act and no interference is called for in the order of ld. CIT(A) relating to this ground - Decided against revenue. Whether interest income on bank deposits is taxable as income from other sources u/s 56 of the Act and is not eligible for deduction u/s 80P(2)(a)(i)? - Held that:- Respectfully following the decision of the co-ordinate bench in the case of ITO vs. M/s Jafari Momin Vikas Co-op. Credit Society Ltd.(2014 (1) TMI 481 - ITAT AHMEDABAD ), we are of the view that assessee is eligible for deduction of bank interest.

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• 2016 (5) TMI 761
  Addition on bogus purchases and non-business expenditures - Held that:- In the audited financial statements at Annexure-I to Form No.3CD dated 21.09.2009 wherein consolidated financial figures are to be mentioned by the Tax Auditor. In this Annexure- I, there is a specific column at Sr. No.10 which asks about the commission received by the assessee during the year and to our surprise, the amount shown in the current year as well as preceding year is NIL. We also observe from the audited balance-sheet that the inventory at 2,16,358.79 is appearing under the head “application of funds” but the same figure does not find any place in the audited Trading 54,13,176.52 is payable to farmers which is approximately 30% of the sales and in the balance-sheet under “advance and deposits” a sum of 39,15,975/- is shown as advance to M/s. Thakorbhai & Co., Amalsad, Navsari. These types of financial transactions raise a question as to whether the assessee has entered into these transactions as a trader of agricultural goods or as a commission agent. We are, therefore, of the view that there are series of questions which remained unanswered in the order of the ld. Assessing Officer and more specifically about the distinction between the type of activity of which the assessee is actually engaged into has not been brought on record which needs to prove that whether the assessee is a commission agent or a trader of agricultural products. We, therefore, set aside the matter to the file of the ld. Assessing Officer to examine various issues discussed above and pass a fresh assessment order after giving proper opportunity of being heard to the assessee and while framing fresh assessment order, he should be clear to assess as to whether the assessee is a commission agent or a trader and then proceed further to deal with the related issues. - Decided in favour of Revenue for statistical purposes.

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• 2016 (5) TMI 760
  Disallowance u/s 40(a)(ia) - failure to deduct TDS u/s 194C - Held that:- The details ought to have been submitted before the AO, but in the interest of justice, the ld.CIT(A) has also called for the details viz. copies of GRs. not submitted by the assessee with regard to the 11 parties. The assessee did not file their income tax details in order to determine whether these parties have paid taxes on the amounts paid by the assessee to them without deduction of taxes. Thus, a perusal of the CIT(A)’s order would indicate that the ld.CIT(A) was conscious of the fact that other issues have also bearing on the controversy and they are required to be examined. Before us, neither any paper book has been filed by the assessee nor any one has appeared in spite of service of notice. Therefore, we do not have any material on the strength of that we could dispute the finding of the facts recorded by the CIT(A). - Decided against assessee.

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• 2016 (5) TMI 759
  Penalty u/s 271(1)(c ) - addition u/s 69 - Held that:- CIT(A) in this case has travelled beyond his jurisdiction in levying the penalty u/s 271(1)(c ) of the Act. It is well settled that penalty can be levied by the Ld.CIT(A) only with respect to enhancement of assessment. In this case there is no enhancement of assessment. Moreover when the AO had initiated penalty proceedings u/s 271(1)(c) of the Act and dropped the same, the Ld.CIT(A) does not have any jurisdiction to reinitiate such proceedings or start a fresh proceedings. Thus on this ground alone the penalty is to be quashed. - Decided in favour of assessee

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• 2016 (5) TMI 758
  Revision u/s 263 - disallowance of expenses - Held that:- AO, after duly examining written submissions, audited copies of balance sheet, trading and profit 35,000/- out of expenses. Whereas, on the other hand, ld. CIT, without examining the books of accounts and bills/vouchers, during the proceedings u/s 263, returned the findings on the basis of assumptions. It is un-understandable that from the cash book, ledger, day book, stock register, audited balance sheet, profit 28,30,711/- by the ld. CIT by impugned order is concerned, it is categoric case of the assessee that it has raised fresh loan of only 1,10,500/- from Mohit and 50,000/- from Rahul during the year under assessment and the balance unsecured loans were old loans raised in the earlier years. It is proved from Schedule - 3 of the audited balance sheet explaining break-up of the unsecured loans lying. Hon’ble Rajasthan High Court in the judgment cited as CIT vs. Parmeshwar Bohra [2007 (1) TMI 105 - RAJASTHAN HIGH COURT] while deciding the identical issue held that carry forward amount of the previous years did not become an investment or cash credit generated from the relevant assessment year and as such, advantage of carry forward unsecured loan cannot be made u/s 68 of the Act - Decided in favour of assessee

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• 2016 (5) TMI 757
  Penalty u/s 271(1)(c) - Held that:- Satisfaction for initiation of penalty proceedings u/s.271(1)( c) of the Act is not discernible from the order of assessment. The show cause notice u/s.274 of the Act is also defective as it does not spell out the grounds on which the penalty is sought to be imposed. See Shri Satyananda Achariya Biswas Versus DCIT, Central Circle-Xiii, Kolkata [2015 (12) TMI 1524 - ITAT KOLKATA ] - Decided in favour of assessee

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• 2016 (5) TMI 756
  Unexplained cash deposits in bank account - receipt of sale of gold and various withdrawals of the bank accounts - Held that:- To meet the medical expenditure cash used to be withdrawn and kept with the assessee and re-deposited in the bank account. As far as sale of gold by the assessee to Maxpro India is concerned the evidence on record shows that Maxpro India had issued purchase vouchers for having purchased gold from the assessee and having made payments in cash for such purchase of gold. Copy of the purchase vouchers have been filed before us. A perusal of the same shows that Maxpro India to whom gold was sold on 02.04.2010 and 31.10.2011 is assessed to tax having PAN NO.ABCPA 3898 M. Before CIT(A) assessee also filed a copy of the bank statement of Maxpro India with ICICIC bank from the period 10.12.2011 to 05.12.2013. The address in the bank statement is 89, Burtolla Street, Kolkata-700007. The assessee has filed a copy of the licence issued by Kolkata Municipal Corporation which shows that Maxpro India having address at 89., Burtolla Street, Kolkata-700007 was licenced to use the aforesaid terms for office as well as retail sale of non food items. In the light of the above documentary evidence the failure of the department to procure the presence of Maxpro India for verification of the claim made by the assessee remains unexplained. We are of the view that in the light of the documentary evidence on record the assessee has successfully explained the sale of gold through Maxpro India and the conclusions to the contrary by the revenue authorities cannot be sustained. Since the sale of gold is held to be properly explained the sale proceedings of the gold and withdrawals from the bank account was sufficiently explained the cash deposits in the bank account. The anomaly pointed out by CIT(A) is that on 19.04.2010 cash of 3,00,000/- was withdrawn from ICICI Bank and on the very same day deposit of 49,000/- is made in ICICI bank at Bikaner. As already stated it can be seen from the cash book of the assessee that as on 19.04.2010 there was the availability of cash as on 19.04.2010 even after withdrawal of 3,00,000/- to the extent of 73,000/-. In such circumstances we are of the view that there cannot be any adverse inference drawn from these circumstances. Taking into consideration the facts and circumstances of the case we are of the view that the addition made by the AO and sustained by CIT(A) deserves to be deleted - Decided in favour of assessee.

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• 2016 (5) TMI 755
  Disallowance u/s 40(a)(ia) - retrospectivity - Held that:- Hon ble Delhi High Court in the case of CIT Vs. Ansal Land Mark Township (I) Pvt.Ltd., [2015 (9) TMI 79 - DELHI HIGH COURT ] has taken the view that the insertion of the second proviso to Sec.40(a)(ia) of the Act is retrospective and will apply from 1.4.2005. Once it is held that the Assessee is entitled to the benefit of 2nd proviso to Sec.40(a)(ia) of the Act, the CIT(A) ought to have directed the AO to verify whether the recipients have included the receipts paid by the assessee in their respective returns of income and also paid taxes on the same. To the extent the recipients from the Assessee have so included the sum in their returns of income and filed the same, no disallowance u/s.40(a)(ia) of the Act ought to have been sustained by the CIT(A). The CIT(A) ought to have also directed the AO that in case the recipient parties are not cooperating in providing details, the AO should call for the information u/s. 133(6) or 131 of the Act, for verification of the same. In this regard we also find that the Assessee has furnished all the details of assessment particulars of the recipients of payment from the Assessee. The AO therefore should not have any difficulty in making the required verification. We therefore set aside the order of the CIT(A) to the extent to which he had sustained the order of the AO on the disallowance u/s.40(a)(ia) of the Act and remand the issue to the AO to verify whether the recipients have included the receipts paid by the assessee in their respective returns of income and also paid taxes on the same. To the extent the recipients from the Assessee have so included the sum in their returns of income and filed the same, no disallowance u/s.40(a)(ia) of the Act should be made by the AO. In case the recipient parties are not cooperating in providing details, the AO should be directed to call for the information u/s. 133(6) or 131 of the Act, for verification of the same. - Decided in favour of assessee for statistical purpose.

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• 2016 (5) TMI 754
  Disallowance u/s 14A - Held that:- The Hon’ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. v. Dy. CIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] has held that Rule 8D could not be considered as retrospective and the said Rule could be applied only with effect from the Assessment Year 2008-09. Further, the Bombay High Court also observed in the above-referred case that the Assessing Officer would first be required to check the concerned assessee's offer of disallowance and only after recording his dissatisfaction, if any, the Assessing Officer could commute the amount to be disallowed in accordance with sub-section (2) of section 14A. The abovereferred subsection (2) of section 14A was inserted by the Finance Act, 2006, with effect from the Assessment Year 2007-08. The Assessee’s case being for the Assessment Year 2003-04, there cannot be any applicability of the above-referred subsection (2) of section 14A or Rule 8D in the Assessee's case for the Assessment Year 2006-07. Thus we hold that 1% of the exempt income alone should be disallowed u/s.14A of the Act. MAT applicability - Held that:- provisions of section 115JB of the Act are not applicable to the assessee which is a banking company.

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• 2016 (5) TMI 753
  Addition u/s 40(a)(ia) - no deduction of Tax (TDS) on full labour charges - retrospectivity - Held that:- The amendment to Sec.40(a)(ia) of the Act whereby a second proviso was inserted in sub-clause (ia) of clause (a) of Section 40 by the Finance Act, 2012, w.e.f. 1-4-2013. The provisions are intended to remove hardship. We are of the view that the hardship in such an event would be taxing an Assessee on a higher income in one year and taxing him on lower income in a subsequent year. To the extent the Assessee is made to pay tax on a higher income in one year, there would still be hardship. The Hon’ble Delhi High Court in the case of CIT Vs. Ansal Land Mark Township (I) Pvt.Ltd. [2015 (9) TMI 79 - DELHI HIGH COURT] has taken the view that the insertion of the second proviso to Sec.40(a)(ia) of the Act is retrospective and will apply from 1.4.2005. Thus the alternative prayer of the learned counsel for the Assessee to remand the issued to the AO for verification as to whether payees have included the receipts from the Assessee in their returns of income in terms of the decisions referred to above is accepted. - Decided in favour of assessee for statistical purpose. Undisclosed purchases - assessee submitted that only the profit element embodies in these purchases should be brought to tax and not the unrecorded value of purchases - Held that:- CIT(A) correctly held that the above arguments can apply only in case where there are regular unaccounted purchases and sales. He held that in the case of the assessee the entire sum of 5,97,436/- have been paid out of the books and therefore the assessee had to explain the source of funds from which these purchases were made. Since the source was not explained the entire sum is liable to be taxed. - Decided against assessee

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• 2016 (5) TMI 752
  Rejection of books of accounts - addition to book profits - addition towards difference in balances of sundry creditors - Held that:- AO on one hand had rejected the books of account and on the other hand resorted to make various additions by relying on the same rejected books of account u/s. 145(3) of the Act. In these circumstances, the ld.AO ought to have resorted to estimate the business profit in a rational manner. To meet the ends of justice, we deem it fit and appropriate , to direct the ld.AO to adopt 8% of the turnover of the assessee’s business as taxable business profits

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• Customs

• 2016 (5) TMI 776
  Entitlement to extension of EPCG licence - Export licence had expired prior to the policy spoken of by the petitioner - Recovery of certain claims - Petitioner submitted that BIFR has extended the export obligations for a period of ten years from March 31, 2008 and the scheme sanctioned by the BIFR is under implementation. Therefore, it is binding upon the respondents - Held that:- the authorities will look into the performance of the first petitioner in respect of the EPCG Licence subsequent to the expiry of the period sanctioned by the BIFR, i.e., ten years from March 31, 2008. The authorities will be at liberty to take such steps against the petitioners in respect of its obligations under such licence if the petitioners have failed to discharge such obligations. Security for the event of default - in fulfilling the obligations under the licence within the extended time - Petitioner submitted that relevant circulars of the department allow the petitioner to furnish security by way of a bank guarantee. Also the bank guarantee in question has been renewed on May 3, 2016 and is in terms of the General Exemption No. 56 and the Circular No. 52/95, the same should be allowed to be accepted. Moreover, as the petitioner being a sick company it would be harsh and burdensome if it is directed to put in cash security. Held that:- the petitioner has obtained the bank guarantee by furnishing cash security to the bank issuing the bank guarantee. Therefore, the petitioner is in a position to put in a cash security with the bank concerned to obtain the bank guarantee. The plea of undue hardship is not available to the petitioner in such circumstances. Moreover, the present bank guarantee is valid upto March 31, 2019. In the event of the authorities not making any demand within such period of time, the petitioner will be entitled to take the plea that the bank guarantee is no longer valid. In such eventuality, the State Exchequer ultimately suffers. Conversely, if money is allowed to be deposited with the authorities, the same will enure to the benefit of all the parties. The petitioner will receive refund of the money deposited in the event it is found to be refundable. However, in the event the petitioner is found to be a debtor to the authorities then the money lying with the authorities, can be adjusted against such claim without any further action. Invoking the bank guarantee and receiving the payment, entails further proceedings and allows a party furnishing the bank guarantee to indulge in further litigation. If a banker issues a bank guarantee without taking 100% cash security in respect thereof, then such banker is extending a credit facility out of public money. If such a bank guarantee is invoked, then the public money stands to be jeopardized. Such a scenario is not healthy. A private party should not be allowed to do its business on the strength of public money. Therefore, the petitioner will deposit a cash security with the authorities as security for the subject licence. - Petition disposed of

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• 2016 (5) TMI 775
  Revocation of CHA licence - Illegal export - Non-completion of proceedings within stipulated period - Regulation 22(5) of CHALR, 2004 - Held that:- the time limits in the CHALR 2004 for issuance of the SCN to the CHA licence holder and completion of the inquiry within 90 days of issuance of such SCN are sacrosanct. The aforesaid time limits were engrafted into Regulation 22 of the CHALR, 2004 by a Notification No. 30/2010- Cus.(N.T.) dated 8th April, 2010. Simultaneously, the CBEC issued Circular No. 9/2010 dated 8th April 2010 clarifying the procedures governing the suspension and revocation of CHA licence. This Court has consistently emphasised the mandatory nature of the aforementioned time limits in several of its decisions. The directions issued by the CESTAT in the impugned order, permitting the Respondents to proceed with and complete the inquiry within a further period of 60 days from the date of the impugned order of the CESTAT despite noting that the mandatory time limits under the CHALR had not been adhered to is do not sustain and is accordingly set aside. Also the SCN issued by the Respondents to the Petitioner pursuant to the order of the CESTAT, the consequential inquiry report and the order passed by the Respondents revoking the Petitioner’s licence are also held to be unsustainable in law and are hereby set aside. The CHA licence of the Petitioner that stood revoked will stand revived forthwith. - Decided in favour of petitioner

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• 2016 (5) TMI 774
  Validity of SCN dated 28th March 2014 and 19th February 2015 - Export of frozen boneless buffalo meat - Availed export incentives for the export of frozen buffalo meat under Duty Exemption Pass Book Scheme (‘DEPB’) and Vishesh Krishi and Gram Upaj Yojena (‘VKGUY’) - Contravention of provisions of the ITC (HS) read with Export (Quality Control and Inspection) Act, 1963 the 1992 Rules and Order issued vide S.O. 203 dated 15th January 1993 - Confiscation in lieu of redemption fine and imposition of penalty. Appellant submitted that in respect of the very same issue which forms the subject matter of the impugned SCNs, the Dy. DGFT passed a detailed adjudication order exonerating the Petitioners from any violation of the FTDR Act or the FTR Rules. Therefore, on the same set of allegations no further SCN could have been issued by Respondent No. 1, pointed out that the alleged violation of the Act as mentioned in the SCN is consequent upon the purported violation of the FTDR Act, of which the Petitioners had been exonerated by the DGFT after a detailed enquiry. Therefore, the very exercise of issuing the impugned SCNs stood vitiated. Held that:- the impugned SCNs do not refer to alleged violations of the Act that are not consequential upon the alleged violations of the FTDR Act or FTR Rules. As already noticed, this aspect has already been examined thoroughly by the Dy DGFT while passing the order dated 24th September 2012. In fact, as can be seen from the body of the order, the Dy DGFT during the course of those proceedings consulted the Customs authorities and sought their clarifications on various aspects which have been referred to hereinbefore. Respondents are unable to point out any portion of the impugned SCNs which is any different from the SCN and the consequent adjudication order passed by the Dy. DGFT. In the circumstances, the impugned SCNs issued to the Petitioners, more than one and half years after the Dy DGFT exonerated them of the very same allegations, is nothing but a harassment of the Petitioners and an abuse of the process of law. Therefore, the SCN dated 28th March 2014 issued by the Commissioner, Central Excise, Noida and the SCN dated 19th February 2015 issued by Commissioner of Customs (Export), Navi Mumbai, Maharashtra and all the proceedings consequent thereto are quashed. - Decided in favour of petitioner

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• Corporate Laws

• 2016 (5) TMI 771
  Rehabilitation Scheme - attachment of movable or immovable assets of the company - whether the Company was not entitled to get the period of rehabilitation scheme extended? - Held that:- Sanctioned Scheme (SS-02) has outlived its life which came to an end on 31st March, 2011. the Revenue is, thus, entitled to recover its dues. We are not deciding this issue in the present appeal and permit the parties to approach the Board seeking clarification as to what was meant by the words 'to consider' i.e., whether the Board meant that it was mandatory on the part of the Revenue to waive the interest and penalty or it was only recommendatory and, therefore, it was upto to the Department to agree or not to agree to the said request. The jurisdiction of the Board, whenever such application is filed, would be limited to the aforesaid aspect alone and the Board shall decide the issue within the period of two months. Otherwise, we make it clear that as the Scheme has lapsed no further proceedings of any nature are to be entertained by the Board including the application for modification filed by the Company and pending before the Board. The Income Tax Department shall be entitled to take steps for attachment of the properties of the Company, including Ville Parle land as per the provisions of the Income Tax Act and shall be entitled to sell the same. If there are any secured creditors in respect of these properties, such attachment and sale shall be subject to the rights of those creditors. Out of the proceeds, the Principal amount of tax due to the Income Tax Department and even the admitted excise dues shall be paid to the Revenue. Insofar as payment of interest and penalty is concerned, that would be dependent upon the decision which the Board would give. Before parting with, we may point out that M/s. Sheth Developers Private Limited and Suraksha Realty Limited have filed applications to intervene in the matter as they submit that in respect of Ville Parle Land, MOU was entered into by the Company with them. However, once it is found that such an agreement was in violation of the Scheme, the arrangement with the aforesaid interveners entered into by the Company loses its legal force and no right would accrue to these interveners on the basis of the said agreements. We, thus, dismiss the plea raised by the intervener.

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• Service Tax

• 2016 (5) TMI 786
  Liability of Service tax - Nature of Amount paid to director - Salary of Management Consultancy Service - from 18-4-2006 till 31-10-2006 - Reverse Charge Mechanism - amount paid to Mr. Alan Van Niekerk (director) was running a proprietor ship concern also - Held that:- if an amount paid by the appellant to Shri Alan Van Niekerk is considered as a salary by the Income Tax Department, a branch of Ministry of Finance, Department of Revenue, it cannot be held by the Service Tax Department, another branch of Ministry of Finance, Department of Revenue, as amount paid for consultancy charges and taxable under Finance Act. The same department of Government of India cannot take different stand on the amount paid to the very same person and treat it differently. Therefore, the amount which is paid to Mr. Alan Van Niekerk, has to be treated as salary to the director and the salary is not to be considered as to fall under the category of “Management Consultancy Services” and liable for Service Tax. Impugned order set aside as unsustainable. - Decided in favour of appellant with consequential relief

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• 2016 (5) TMI 785
  Demand of interest - Appellant contended that no interest is recoverable in such a situation where it did not receive the amount from SAIL as SAIL directly made the payments to the sub-contractors and the interest is chargeable with reference to the date of receipt of the payments. Held that:- SAIL made some of the payments directly to the sub contractor as per the High Court’s order but such payments were made obviously on behalf of the appellant. It was for this reason that the sub-contractors did not ask the appellant to make payments for services rendered (as per sub-contracts between them and the appellant) for which they directly got payments from SAIL and the appellant also did not ask SAIL to pay it for the services rendered as per its contracts with SAIL for which SAIL directly paid to the sub-contractors. Thus it was the appellant liability towards the sub contractors which was being discharged by SAIL by making direct payments to sub-contractors. So, the appellant was deemed to have received those payments and therefore was liable to pay interest in case service tax relating to such payments was paid later than the due date. - Decided against the appellant

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• 2016 (5) TMI 784
  Denial of Cenvat credit - Service tax paid availing services of agri-horticulture consultancy - Appellant submitted that the said services were input service for which the service tax paid on that service - Held that:- copy of the letter dated 1-9-2015 of the Tamil Nadu Pollution Control Board submitted by the appellant shows that it was directed to develop adequate green belt inside the premises for controlling pollution. The reasoning given in that order is that the emission/noise pollution shall be controlled through this process of green belt development. This ground calls for grant of Cenvat credit considering that the appellant is engaged in the manufacture of the goods mentioned in the Pollution Control Board order requiring emission/noise pollution control. - Decided in favour of appellant

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• 2016 (5) TMI 783
  Defect memo - Asked to file separate appeal in respect of each Bill of Entry and pay Court fees for each assessment - Held that:- as per Rule 6A of CESTAT (Procedure) Rules, 1982 it has been clarified [in the Explanation (1)] that in a case where the impugned order-in-appeal has been passed in respect of more than one orders-in-original, the Memoranda of Appeal shall be equal to the Orders-in-original to which the case relates. In the instant case, each Bill of Entry has to be deemed to be an assessment order i.e. order-in-original in respect of which the impugned orders in appeal were passed and therefore, the appellant has to file appeal in respect of each Bill of Entry. As regards the payment of registration fee it is found that CESTAT in the case of Glyph International Ltd. v. C.C.E. & S. Tax [2013 (8) TMI 17 - CESTAT NEW DELHI] after discussing the issue has clearly held that Section 86(6) of Finance Act, 1994 restricts charging of fees on appeals involving demand of Service Tax, interest or levy of penalty only. Provisions of sub-section (6) of Section 129A of the Customs Act are pari materia Section 86(6) of the Finance Act, 1994. As in the present case there is no involvement of any demand of Custom duty, interest or levy of penalty, therefore, no registration (Court) fee is payable by the appellant. - Defect memo and miscellaneous application disposed of

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• 2016 (5) TMI 782
  Whether engineering consultancy service, commercial or industrial construction service, erection, maintenance and installation service or banking service shall be considered as input service or not - Held that:- it is strange that how without bringing out an edifice, Revenue shall realize its dues towards rental service. Therefore, Commissioner (Appeals) has not committed any error to grant Cenvat credit to the respondent on those input services which are not disintegrated from providing output service - Decided against the revenue

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• Central Excise

• 2016 (5) TMI 781
  Admissibility of Cenvat credit - Job-work - GTA service tax paid when goods are manufactured by the job worker and cleared on payment of duty from the factory premises of job worker - Cenvat credit taken by the Respondent for the freight paid by them upto the factory premises of job worker while sending raw materials and also freight charges paid by Respondent from the job workers to the Depots of the Respondent while sending finished goods. Held that:- premises of job worker is the “place of removal” and not the depot of the principal manufacturer, therefore, Cenvat credit of service tax paid by the Respondent upto the place of removal will be admissible. At the same time, service tax paid by the Respondent for transportation of goods from the job workers premises (place of removal) to the Depots of the Respondent has to be treated as services availed beyond the place of removal as there cannot be two manufacturers and two place of removals for the same goods. Demand - Invokation of extended period of limitation - Rule-14 of CCR, 2004 read with proviso to section 11A(1) of the Central Excise Act, 1944 - Held that:- the matter is of interpretation of provisions of CCR, when a part of the service tax credit has been held to be admissible to the Respondent, therefore, extended period of 5 years cannot be invoked and demand has to be restricted to the normal period of limitation with respect to CENVAT Credit availed by the Respondent for transportation services availed from the factory premises of the job worker to the depot of the Respondents. Also the penalty imposed upon the Respondent under Rule 15(2) of CCR, 2004 read with Section 11AC ibid is not substantiable and is set aside. - Decided partly in favour of revenue

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• 2016 (5) TMI 780
  Demand of duty and imposition of penalties - under Notification No. 175/86 CE dt 01.03.86 - Clubbing of clearances of appellant with other company - Appellant contended that they have separate factory with machinery and set up and there is no mutuality of interest between them and M/s NTB International and the facts relied upon for confirmation of demands in previous period no more exists - Held that:- once the Appellant concern is alleged to be dummy concern/ fragment of M/s NTB International in that case the demand should not have been proposed against the appellant as in the eyes of the revenue the Appellant has got no independent existence. Thus it is found that the impugned orders suffers from serious infirmity on this count. Once the independent existence of a concern is denied and is held to be dummy concern, in that case the duty could not have been demanded from Appellant which is illegal. In the instant appeals, in the remand proceedings the demand has again been confirmed against the Appellant whose independent existence has been denied by the revenue. This confirmation of demand against the Appellant itself recognizes their independent existence and thus the demand made by holding the same to be part of M/s NTB international is illegal and not sustainable. While remanding the earlier show cause notice the Tribunal had directed the adjudicating authority to examine the basis of clubbing for an earlier period. However the adjudicating authority without examining the basis of clearances again confirmed the demand which shows that no fresh enquiries were made to determine as to how the Appellant is connected with M/s NTB and whether the facts show the mutuality of interest between the two. Since the demand was confirmed without examining the actual facts which can lead to clubbing of Appellant with M/s NTB international, we hold that on account of this count also, the demand is not sustainable. As the Appellant is a partnership firm and M/s NTB international is a Private Ltd. Company and therefore they cannot be clubbed. The adjudicating authority has not considered any of these aspects and confirmed the demand against the Appellant firm by clubbing it with M/s NTB International which is illegal. Therefore, on this ground also the demand against the Appellant is not sustainable. Therefore, demand against the appellant are not sustainable and are set aside. Also since the demand itself is not sustainable, we hold that the revenues appeal towards imposition of penalty against M/s Polybelt is also not sustainable. - Decided in favour of appellant with consequential relief

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• 2016 (5) TMI 779
  Demand of duty - Seizure of 143 M.T. of calcite powder - Classifiable under C.T.H. 3824.90 leviable Central Excise to duty at the rate of 16% ad-valorem - Held that:- it has evident that the Commissioner (Appeals) has noted that the appellant is not seriously disputing the fact that the manufacturing process of their product involved apart from crushing, grinding other process as well such as roasting. The appellant contended that it did not do any roasting at all. The Commissioner (A)’s observation does not dispute that the appellant disputed the same though Commissioner (A) did not regard it to have been seriously disputed. So long as the roasting was disputed, the Commissioner (A) was not justified in assuming that there was roasting without corroborative evidence which doesn’t exist. Resultantly the impugned order becomes devoid of the adequate basis to sustain the classification under CTH 3824.90. Demand of duty - Willful misstatement/suppression of facts - Held that:- willful misstatement/ suppression of fact has been upheld by the Commissioner (Appeals) essentially on the ground that the appellant did not take registration and clear the goods without payment of duty. In case of CCE vs. Chemphar Drugs Liniments [1989 (2) TMI 116 - SUPREME COURT OF INDIA], the Supreme Court held that something positive other than mere inaction or failure on the assessee's part or conscious withholding of information when assessee knew otherwise is required for invoking extended period. In the case of Continental Foundation Joint Venture Vs CCE, Chandigarh-I [2007 (216) ELT 177 (SC)2007 (8) TMI 11 - SUPREME COURT OF INDIA], the Supreme Court went to the extent of saying that any incorrect statement by itself cannot be equated with willful mis-statement. Therefore, in the light of these judicial pronouncements, we are of the view that the allegation of willful misstatement / suppression of facts is also not sustainable in the present case. Consequently demand pertaining to the period beyond the normal period of one year will also be hit by time bar. - Decided in favour of appellant

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• 2016 (5) TMI 778
  Demand of duty alongwith interest and imposition of penalty - Fraudulent availment of modvat credit on GP sheet which was neither an input nor it was used for the manufacture of OE parts - No positive evidence on record for diversion of the goods GP sheets and procurement of HR/CR sheets - Held that:- this Tribunal on identical issue in the case of Silence Auto vs. CCE, Chandigarh [2014 (6) TMI 306 - CESTAT NEW DELHI], wherein this Tribunal has held that the adjudications are made against the appellants on the basis of surmises and conjectures without any corroborative evidence and in the facts and circumstances of the case the demand is not sustainable. Therefore, by following the same, the credit on GP sheets cannot be denied to the appellants without corroborative evidence. - Decided in favour of appellant with consequential relief

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• 2016 (5) TMI 777
  Clandestine removal of manufactured goods - Demand of duty along with interest and penalty - Evasion of duty - Kachcha slips recovered during investigation which were not signed at all - Some exculpatory and some inculpatory statements were recorded - Denial of cross examination of persons whose statements are inculpatory - Appellant submitted that while manufacturing MS ingots, the appellant consumed electricity 900 to 1000 units for manufacture of 1 MT MS ingots whereas the allegation of clandestine clearance of the goods is considered less than the electricity consumption worked out to 490 units per MT which is not possible in any circumstance. Held that:- in the absence of any corroborative evidence towards clandestine manufacture and clearance of the finished goods by the appellant. Moreover without verifying the activity of trading undertaken by the appellants on the basis of eye estimation of stock, the demand confirmed in the impugned order are not sustainable. Therefore, the impugned order is set aside. - Decided in favour of appellant with consequential relief

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• CST, VAT & Sales Tax

• 2016 (5) TMI 773
  Period of limitation - Seeking quash of notices for initiating assessment proceedings - years 2009-10 to 2015-16 and years 2009-10 to 2011-12 - Assessment proceedings are time barred - Petitioner contended that even if the amendment dated 21.9.2015 was considered, whereby the limitation period had been increased from 3 years to 6 years, then also the assessment proceedings were time barred as the said amendment was prospective in nature. Held that:- on perusal, it is found that petitioner on receipt of the notices, filed replies dated 3.5.2016 to the said notices. So at this stage, we do not find any justifiable reason to interfere with the notices under challenge. Respondent shall decide the replies dated 3.5.2016 within a period of six weeks from the date of receipt of the certified copy of the order, in accordance with law after affording an opportunity of hearing to the petitioner and by passing a speaking order before proceeding further in the matter. - Petition disposed of

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• 2016 (5) TMI 772
  Seeking de-sealing of premises - sealed under Section 60 of the DVAT Act - Petitioner applied to the DT&T way back on 12/14th March 2016 but no response till date after a reminders - Held that:- the continued sealing of the Petitioner's premises is contrary to the legal position explained by the Court in the various orders. Accordingly it is directed that the business premises of the Petitioner shall be de-sealed forthwith and in any event not later than 4 pm on 13th May 2016 in the presence of the authorized representative of the Petitioner. It is pointed out that the printouts of the data from the sole personal computer in the premises have already been taken by the DT&T. The proceedings of the de-sealing shall be drawn up and signed by the representative of the Petitioner as well as the concerned VATO. - Petition disposed of

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• Indian Laws

• 2016 (5) TMI 770
  Arbitration enforcing the Foreign Award - whether Part I of the Arbitration Act is excluded from its operation in case of a Foreign Award where the Arbitration is not held in India and is governed by foreign law? - Held that:- Clause 28 in the present case must be intended to have a similar effect that is to exclude the applicability of Part I of the Indian Arbitration and Conciliation Act since the parties have chosen London as the seat of Arbitration and further provided that the Arbitration shall be governed by English Law. In this case the losing side has relentlessly resorted to apparent remedies for stalling the execution of the Award and in fact even attempted to prevent Arbitration. This case has become typical of cases where even the fruits of Arbitration are interminably delayed. Even though it has been settled law for quite some time that Part I is excluded where parties choose that the seat of Arbitration is outside India and the Arbitration should be governed by the law of a foreign country. We are thus of the view that by Clause 28, the parties chose to exclude the application of Part I to the Arbitration proceedings between them by choosing London as the venue for Arbitration and by making English law applicable to Arbitration, as observed earlier. It is too well settled by now that where the parties choose a juridical seat of Arbitration outside India and provide that the law which governs Arbitration will be a law other than Indian law, part I of the Act would not have any application and, therefore, the award debtor would not be entitled to challenge the award by raising objections under Section 34 before a Court in India. A Court in India could not have jurisdiction to entertain such objections under Section 34 in such a case. The proceedings under Section 34, which occurs in Part I, are liable to be dismissed as untenable. The Civil Appeals of Eitzen are liable to succeed and are, therefore, allowed. The judgment of the Bombay High Court enforcing the Foreign Award under Part II of the Arbitration Act is correct and liable to be upheld.

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• 2016 (5) TMI 769
  Complaint made under Section 141 of the Negotiable Instruments Act - validity of summons - Held that:- We find that in the complaint, the appellant has not made a specific statement that the appellant as a Director and arrayed as an accused was in-charge and was responsible to the Company for the conduct of the business of the Company in its day-to-day affairs. In view of that, we do not find that the complaint which has been lodged is in consonance with the requirements made under Section 141 of the Negotiable Instruments Act and the law laid down by this court in in National Small Industries Corporation Limited vs. Harmeet Singh Paintal and Another, [2010 (2) TMI 590 - SUPREME COURT OF INDIA ] . The order so passed by the High Court is thus set aside and we quash the order passed by the High Court vis-a-vis the appellant issuing the summons dated 03.08.2013.

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