Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
May 30, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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Expenses incurred on dismantling, transportation and re-erection and commissioning of the manufacturing units to another location - Shifting of the plant was only for the purpose of manufacturing activity continuing to exist and carrying on its business - Allowed as revenue expenditure - HC
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The depreciation is allowed by the government to give part of the profit to the businessman and he can make another plant and machinery at the end of the old machinery life to continue his business. - AT
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Short deduction of TDS - Non residents not having PAN - TDS @10% or 20% - invoking the provisions of Section 206AA - the PANs now made available for both the assessment years, the deductees are mostly from USA, China, Korea, Finland and Italy. DTAAs are available with all these five countries - the provisions of DTAA prevail over the provisions of I.T. Act, 1961 - AT
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Addition u/s 44BB - AO has presumed that assessee’s representative might have come earlier also before the actual arrival of the barge in the Indian waters. Such hypothesis cannot be sustained. The actual period of the two projects cannot be combined as they are unconnected works. - AT
Customs
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Classification of Dumb Floating Cranes Barge - The purpose of such vessel is to load/unload cargo from ship/shore on to the barge and to move such cargo between ship and shore. Such vessels will be rightly classifiable under Heading 8905. - AT
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Classification of Rubber Process Oil - the imports of the appellants do contain a higher percentage of aromatic constituent than prescribed for classification under Heading 2710. - AT
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Mere failure on the part of the appellant to produce some document to the satisfaction of the Customs Authority does not ipso-facto lead to inevitable conclusion that the goods are smuggled. - AT
Service Tax
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Whether exemption provided for job work activities under N/n. 8/2005 dated 01.03.2005 should be considered as exempted service in terms of Rule 2(e) ibid for applicability of the embargo created in Rule 6 ibid? - the mischief of Rule 6(3) of the CCR, 2004 will get attracted - AT
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Refund claim - N/N. 41/2007-ST dated 06/10/2007 - the refund of Service tax is available in spite of claiming drawback - AT
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Refund claim - N/N. 41/2007-ST dated 06.10.2007 - freight (GTA) paid to and fro to the port of export - the appellant has explained that the transportation charges paid by them for transportation of goods from their factory to the export of goods - refund allowed. - AT
Central Excise
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As the amount paid by the respondent was during the pendency of finalisation of their provisional assessment and therefore, the same shall be treated as duty and on finalisation of provisional assessment, the respondent is entitled for interest of intervening period of excise duty paid by them - AT
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Refund claim - deemed exports - assessee claims that the supplies from DTA to SEZ unit is a deemed export and as good as physical exports - refund allowed - AT
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SSI exemption - clubbing of clearances - whether the appellants have played foul of the provisions of 2(vi) of SSI exemption N/N. 8/2002-CE, which was in force during the relevant period? - Held Yes - AT
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100% EOU - CENVAT credit - whether the respondent was correct in utilising the CENVAT credit balance available with him for discharge of applicable duties on the inputs cleared from their premises or otherwise? - Held Yes - AT
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Manufacture - Intermediary product - impregnated special woven fabric - chargeability of duty/marketability - this intermediate product cannot be marketed and therefore it cannot be called as excisable goods - AT
Case Laws:
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Income Tax
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2017 (5) TMI 1320
Addition u/s 44BB - eligibility for the benefit of DTAA between India and UAE - Permanent Establishment in India - Held that:- We note that the assessee has conceded that for the services rendered to Arcadia Shipping Limited, the same needs to be taxed u/s 44BB of the Income-tax Act. Hence, as regards the issue of taxability u/s 44BB of the services rendered to Arcadia Shipping Limited, we set aside the order of learned CIT(A) and restore that of the Assessing Officer. As regards the services rendered with respect of other works, we note that the duration for each of them was less than nine months. The learned CIT(A) has given a clear finding and we find ourselves in agreement with the same. The Assessing Officer has not based his order on any cogent reasoning. He has presumed that assessee’s representative might have come earlier also before the actual arrival of the barge in the Indian waters. Such hypothesis cannot be sustained. The actual period of the two projects cannot be combined as they are unconnected works. In such situation, the Assessing Officer’s view that the period of the two works should be combined cannot be sustained. Departmental Representative’s submission that the issue should be considered by applying a different Article than the one applied by the A.O. the same is also not sustainable. The A.O. has invoked Article 5(2)(h) of the DTAA between India and UAE and has based his decision on the analysis thereof. After consideration of the same learned CIT(A) has found that the assessee cannot be held to be liable for tax as the period of the stay was less than nine months required to form a permanent establishment so as to come under the ambit of taxation under this Article. Now learned DR is agreeing that the view of the A.O. is not sustainable, however, he states that the issue should be considered under Article 5(1) of the said DTAA. We find that the above is neither the case of the A.O. nor any ground in this regard has been raised. Hence, we do not find this plea of the learned Counsel of the assessee sustainable. - Decided partly in favour of assessee.
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2017 (5) TMI 1319
Addition u/s 68 - arithmetic mistake committed while uploading the amounts in the return filed for AY. 2009-10 - reopening of assessment - Held that:- We are satisfied that assessee has the capacity to advance the amounts earlier and as confirmed by the parties, assessee received the amounts on 01-04- 2008. It was a simple mistake in uploading the data, while filing the return of income for AY. 2009-10 and there is no unaccounted income which was brought to capital account. The allegations of AO are unfounded and the presumptions of the CIT(A) are equally unfounded. Being a senior officer of the department it is not expected from the CIT(A) to give wrong findings, so as to confirm the order of the AO. Since we have examined the facts, we are satisfied that there is no unaccounted income brought to capital account by assessee. Accordingly, grounds are accepted. Even though assessee contended that the proceedings are wrongly initiated, we are of the opinion that prima-facie there seems to be some discrepancy, on the basis of which AO has reopened the assessment. Be that as it may, as we are satisfied that there is no unaccounted income to be brought to tax u/s. 68 of the Act, the issue of reopening becomes academic. - Decided in favour of assessee.
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2017 (5) TMI 1318
Addition on account of the undisclosed income - Held that:- There is nothing on record to contradict the findings of the ld. CIT(A) and ITAT that no cash for ₹ 7,33,50,000/- or a lesser amount found at any of the premises of Sh. Vineet Beriwala or Sh. SS Beriwala, nor any details of any investment/ expenditure having been made out of this supposed amount of ₹ 7,33,50,000/- were found in search on Sh.Vineet Beriwala or Sh. SS Beriwala. Thus there being no corroborative evidence found in search or post search investigation to substantiate the fact that the appellant has made unaccounted cash payment for ₹ 7,33,50,000/- to Sh. Vineet Beriwala or Sh. SS Beriwala during the year, the assumption of payment of cash derived from alleged paper seized cannot be supported. Therefore, ld. CIT(A) has rightly deleted the addition. The ld. CIT(A) has also recorded the findings on legal aspect of the case also, inasmuch as the alleged paper was not found from the possession of assessee and there was no corroborating evidence to show that the said papers seized from third party belong to the assessee. He has also relied on several decisions of Hon'ble Higher courts. The Revenue has not brought any material on record contrary to the findings reached by the ld. CIT(A) - Decided against revenue
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2017 (5) TMI 1317
Monetary limit for filing appeal - audit objection existence - Held that:- It is plain that the Revenue's audit objection is for each AY and not for the Assessee in general. In the present instance, while there is an audit objection for AYs 2008-09, 2009-10 and 2010-11, there is no audit objection for the AY in question i.e., AY 2007-08. Therefore, the Revenue cannot take advantage of para 8(c) of the said Circular to justify the filing of the present appeal.
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2017 (5) TMI 1316
Deduction u/s 80HHC to the assessee on counter sales made to foreign tourists - Held that:- There is no dispute between the parties that the transactions of counter sales effected by the respondent involved customs clearance within the meaning of Explanation (aa) to Section 80HHC(4A) of the Act and further that the sales were in convertible foreign exchange. In these circumstances, we are of the view that the Revenue having accepted and consistently followed the position of law settled by Ram Babu's case [1996 (5) TMI 61 - ALLAHABAD High Court], particularly in the case of the assessee itself, there is no merit in this appeal.
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2017 (5) TMI 1315
Expenses incurred on dismantling, transportation and re-erection and commissioning of the manufacturing units to another location - revenue v/s capital expenditure - Held that:- Before us the Revenue has made no grievance of the finding of fact arrived at by the CIT(A) and the Tribunal that the shifting of the plant from Kolhapur to Ankleshwar was on account of agitation of villagers at Chipri, Kolhapur. Thus the shifting of the plant was only for the purpose of manufacturing activity continuing to exist and carrying on its business. The grievance to the finding of fact (concurrent) by the CIT (A) and the Tribunal is being urged by seeking to establish new facts before us, when the same was not even a suggestion made before the Authorities cannot be entertained. In fact except the above, no submission has been urged to indicate why the allowing of expenditure for shifting of the plant as revenue expenditure in the present facts is not sustainable. We find that the view taken by the Tribunal in the present facts is a possible view. Therefore no substantial question of law - Decided against revenue
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2017 (5) TMI 1314
Revision u/s 263 - Held that:- CIT exercising his powers vested u/s 263 set aside the order of the AO passed u/s 143(3) on the ground that the AO has not made any enquiry nor called for any details in respect of bank deposits and also in respect of payments which exceeded ₹ 20,000/- and simply accepted the return filed by the assessee. We also find that the CIT has correctly set aside the order of the AO and directed to redo the assessment as the AO has not made any enquiry and no details were called for, but, simply accepted the return filed by the assessee. When the Bench has specially pointed out to the ld. AR of the assessee that any questionnaire issued or any details were called for by the AO during the course of assessment, the AR submitted that no such questionnaire and details were called for by the AO. Therefore, we are inclined to accept the action of the CIT in exercising his power u/s 263 in setting aside the order of the AO passed u/s 143(3) and directed to redo the assessment. Accordingly, we uphold the order of the CIT and dismiss the grounds raised by the assessee. Addition u/s 40A - AO made addition as the assessee has made the payments by way of cash exceeding ₹ 20,000/- - Held that:- Before the CIT(A), the assessee in his written submissions stated that he has incurred diesel expenses of ₹ 12,71,116/- during the year under consideration and not ₹ 3,17,.825/- as stated by the AO. The CIT(A) without examining the record, deleted the addition. We find that in the paper book at pages 49 to 53, as pointed out by the ld. DR, there are certain payments, which exceeded ₹ 20,000/-. However, the amount mentioned by the AO and the amount mentioned by the ld. DR are not matching and there is a difference in the total amount. Thus, we set aside the order passed by the CIT(A) and remit the matter back to the file of the AO with a direction to examine the ledger account of the assessee and, if, he found any violation by the assessee in making the cash payments exceeding ₹ 20,000/-, invoke the provisions of section 40A(3) and decide the issue in accordance with law.
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2017 (5) TMI 1313
Addition u/s 41 - Held that:- The assessee during the course of the assessment proceedings had filed complete details giving the names and addresses of the creditors to show that not only the liabilities were outstanding but also-that the same were duly acknowledged by the sundry creditors as well. Moreover, a copy of the bank-account of the assessee has also been placed on record out of which all these sundry creditors have been paid through account payee cheques in the following Financial Year. Therefore, the Ld. CIT(A) rightly held that the liabilities in respect of various sundry creditors mentioned above were still outstanding at the end of the Financial Year relevant to the assessment year under consideration and the provisions of section 41(1) were not applicable in the assessee’s case, hence, the addition made by the A.O. on this account was rightly deleted - Decided against revenue Disallowance on account of car running and depreciation - Held that:- Once the assessee can establish bonafide use of the machinery for the purposes of the assessee's business, then and in that event, the assessee establishes the right to claim depreciation. We further note that the assessee has himself admitted that some element of personal use of the cars cannot be ruled out in the absence of logbook and other relevant details. Therefore, some reasonable disallowance on account of personal use of the cars was required to be made. However, disallowance made by the A.O. to the extent of 30% was held to be excessive. Therefore, the disallowance of 20% of the car maintenance and running expenses and depreciation would be reasonable and was rightly confirmed to that extent and accordingly, the disallowance on these accounts was restricted to ₹ 1,03,012/-, which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) on the issue - Decided against revenue Disallowance of Tour and Travelling expenses - Held that:- We note that the disallowance has been made by the A.O. by observing that examination of the vouchers revealed ineligible nature of the expenses to this extent. However, no specific instance of disallowable nature has been pointed out by the A.O. nor has he brought on record any evidence in support of these observations. Therefore, disallowance made on this account was rightly deleted - Decided against revenue
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2017 (5) TMI 1312
Addition of excess depreciation on aircraft - reopening of assessment - Held that:- We note that as per Entry no. III(3)(i) of Part-A of the Depreciation Table in Appendix-I, of the Income Tax Rules, 1962 the depreciation available on aircraft is @40%, hence, it was rightly held by the Ld. CIT(A) that the Assessee's claim was correct and AO should also understand that depreciation on aircraft cannot be equated with depreciation on motor vehicle. The depreciation is given on plant and machinery depending on its life and maintenance cost involved in such machinery. The depreciation is allowed by the government to give part of the profit to the businessman and he can make another plant and machinery at the end of the old machinery life to continue his business. Therefore, Ld. CIT(A) has rightly observed that the AO should understand the basic requirement of law and discuss the matter with his supervise officers before reopening the case. Hence, the addition of depreciation disallowance was rightly deleted by the Ld. CIT(A), which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) on the issue in dispute - Decided against revenue
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2017 (5) TMI 1311
Penalty under section 271(1)(c) - deduction under section 36(1)(viii) being declined - Held that:- As noted explanation of the assessee that (a) vide CBDT notification no SO 627(E) dated 4.8.99 producing milk and milk products have been held to be industry, and that (b) proviso to section 36(1)(viii) is in respect of the limitation on deduction, and as such the limited impact of proviso not being satisfied in any event is that no such limitation will come into play. It is thus contended that the assessee is eligible for the relevant deduction and the matter, for adjudication on that issue, is right now pending before Hon’ble jurisdictional High Court. The assesse’s claim cannot be said to an outlandish or unacceptable explanation for the purpose of penalty. We see merits in this approach. Whatever be the merits of this claim, the claim is a reasonable claim with prima facie some merits in it and such a claim cannot be simply brushed aside for the penalty purposes. Whatever be the merits of this claim, the claim is a reasonable claim with prima facie some merits in it and such a claim cannot be simply brushed aside for the penalty purposes.We, therefore, direct the Assessing Officer to delete the penalty in respect of the claim of deduction under section 36(1)(viii). As regards penalties in respect of quantum addition we have noted that there is nothing to suggest that explanation of the assessee is incorrect and that the interest earned on the funds are indeed required to be used for designated purposes and yet the addition has been confirmed on the ground that interest was not actually refunded. Once again, whatever be the status of taxability, the fact remains that neither the explanation of the assessee has been found to be incorrect or false or simply unbelievable. The CIT(A) was thus quite justified in holding that the penalty could not be imposed simply because the income has turned out to be taxable and a wrong claim is made by the assessee. We approve the action of the CITI(A) on this point and decline to interfere in the matter. As regards the claim for amortization of lease hold land, there is nothing before us to controvert the findings of the CIT(A) and as such demonstrate that it was not a debatable point at the point of time when income tax return was furnished and that it has not been made in a transparent manner. It is well settled in law that a mere rejection of claim of deduction by itself cannot result in penalty under section 271(1)(c) being imposed. The explanation of the assessee has not been disputed or rejected by the learned Departmental Representative. On this point also, we thus uphold the action of the CIT(A). In effect, while assessee succeeds in his grievance, the Assessing Officer’s grievance is rejected. - Appeal of assessee allowed.
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2017 (5) TMI 1310
Allowance of deduction u/s 54 - ‘a residential house’ - single residential house or one consisting of multiple units - Held that:- The issue in dispute is squarely covered by the decision of this Tribunal in the case of Late K. Jaipal and others [2015 (11) TMI 1443 - ITAT HYDERABAD] wherein held merely because a residential house consists of several independent residential units, deduction under S.54/S.54F could not disallowed. - Decided against revenue.
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2017 (5) TMI 1309
Short deduction of TDS - Non residents not having PAN - TDS @10% or 20% - invoking the provisions of Section 206AA - Held that:- The provisions of DTAA prevail over the provisions of the Income Tax Act, 1961. In the case on hand, the appellant deducted tax at source at 10% of the payments made u/s 195 to the non residents relying on DTAAs prevailing with the countries in which the deductees are residing. While processing these returns, as the PAN of such deductees was not mentioned in the returns, higher rate of tax, i.e., 20% was applied, as per provisions of section 206AA. At the same time, there cannot be any doubt over the claim of the appellant that provisions of DTAA override the provisions of Income Tax Act, 1961. However, it appears that there is no channel available to the appellant to put this stand before the Assessing Officer while processing the TDS return. As seen from the list of deductees and the PANs now made available for both the assessment years, the deductees are mostly from USA, China, Korea, Finland and Italy. DTAAs are available with all these five countries. Hon'ble Supreme Court in the case of CIT Vs. P.V.A.L. Kulandagan Chettiar (Dead) Through LRs [2004 (5) TMI 8 - SUPREME Court] where it is clearly reiterated that the provisions of DTAA prevail over the provisions of I.T. Act, 1961. - Decided against revenue
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2017 (5) TMI 1308
Exemption u/s 10A - Held that:- After perusing the Tribunal’s finding in assessee’s own case for the assessment year 2006-07, as aforesaid, we are of the considered opinion, that the issue in dispute is squarely covered by the aforesaid decision of the ITAT in assessee’s own case, and therefore, respectfully following the precedent, as aforesaid, we find that Ld. CIT(A) has rightly allowed the exemption u/s. 10A of the Act and passed a well reasoned order on the issue in dispute, which does not need any interference on our part - Decided in favour of assessee.
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2017 (5) TMI 1307
Denial of deduction u/s 80IC on the income on account of AMC - Held that:- Such AMC charges are directly relatable to the business carried on by the assessee of manufacturing, commissioning and erection of electronic systems, machines and equipments as per customers’ varying specifications and, therefore, such AMC charges are directly relatable to the business carried on by the assessee. See ACIT Vs. Spray Engineering Devices Ltd. [2012 (7) TMI 587 - ITAT CHANDIGARH]
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2017 (5) TMI 1306
Penalty u/s. 271(1)(c) - addition u/s 68 - defective notice - Held that:- The notice issued u/s. 274 r.w.s 271(1)(c) of the Act was illegal and bad in law as it had not specified the charges on which the penalty was levied i.e. for concealment of particulars of income or furnishing inaccurate particulars of income, therefore, we allow the appeal of the assessee. - Decided in favour of assessee.
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2017 (5) TMI 1305
Determining the ALP of AMP expenses - Held that:- We set aside the impugned order and remit the matter to the file of TPO/AO for a fresh determination of the question as to whether there exists an international transaction of AMP expenses. If the existence of such an international transaction is not proved, the matter will end there and then, calling for no transfer pricing addition. If, on the other hand, the international transaction is found to be existing, then the TPO will determine the ALP of such an international transaction in the light of the relevant judicial position, after allowing a reasonable opportunity of being heard to the assessee. A bare perusal of the mandate of Rule 10B(1)(c) postulates under sub-clause (ii) that: “the amount of a normal gross profit mark-up to such costs,, in a comparable uncontrolled transaction… is determined.” Such gross profit mark-up of comparable uncontrolled transactions is adjusted under sub-clause (iii) to take into account the functional and other differences, if any, between the international transaction and the comparable uncontrolled transactions. Thus, it is vivid that it is the adjusted gross profit mark up of the comparables which is applied to the direct and indirect cost incurred by the assessee in respect of international transaction, for determining the ALP under Cost Plus Method and there is no mandate for considering the assessee’s own gross profit rate for this purpose. We, therefore, do not countenance the working done by the TPO in this regard. To sum up, the impugned order on this score is set aside and the matter is sent back to the TPO/AO for a fresh determination of the ALP of AMP expenses. - Decided in favour of assessee for statistical purposes. Denial of deduction u/s 80IC - quantification of income for the purpose of granting deduction u/s 80-IC - Held that:- The issue of quantification of deduction u/s 80IC has not attained finality in at least the immediately preceding three assessment years. In the absence of any decision on such issue for the earlier years, it is not possible to independently evaluate and examine the issue in the instant appeal. Under these circumstances, we set aside the impugned order on this score and remit the matter to the file of the Assessing Officer for a de novo determination of the amount eligible for deduction u/s 80IC of the Act. Needless to say, the assessee will be allowed a reasonable opportunity of hearing.- Decided in favour of assessee for statistical purposes.
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2017 (5) TMI 1304
Disallowance made u/s.14A - scope of amendment - Held that:- The legislature brought certain amendments and provided that no deduction shall be allowed in respect of the expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. In the present case,the FAA has recorded the finding of fact that the assessee did not make any claim for exemption of any income from payment of tax. It was on this basis that he held that disallowance u/s.14A of the Act could not be made.In the case before us,admittedly the assessee did not make any claim for exemption. In such a situation section 14A of the Act would have no application. See Cheminvest Limited Versus Commissioner of Income Tax-VI [2015 (9) TMI 238 - DELHI HIGH COURT] - Decided in favour of assessee Addition u/s 36(1)(iii) - proportionate interest on borrowed funds used for acquisition of capital asset - availability of own funds - Held that:- We find that the assessee had sufficient own funds and reserves to purchase new assets, that there is no evidence to prove that existing work in progress had increased because of loans taken by the assessee.The balance sheet of the assessee proves that it had sufficient fund.Therefore,respectfully following the judgment of Reliance Utilities and Power Ltd.(2009 (1) TMI 4 - BOMBAY HIGH COURT) we decide the effective ground of appeal in favour of the assessee
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Customs
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2017 (5) TMI 1327
Classification of imported goods - Dumb Floating Cranes Barge Gudami imported from Muscut - The appellant seeks classification of these vessels under 8901.1040 as barges or 8901 90 00 as other vessels for transportation of goods or persons - It is the view taken by Revenue that 8901 10 covers various vessels which on the basis of description, can be inferred as those for transport of persons - whether the goods classified under CTH 8901 10 40 or classified under CTH 8905 90 90? - Benefit of N/N. 21/2002-Cus. dated 1.3.2002 - Held that: - Even though the imported vessels are described as barges, these vessels do not have the engines necessary for self-propulsion and are required to be pulled by means of a tug. Consequently, it does not have the prime requirement of having ability for classifiable under Heading 8901 - Only with the capacity to navigate, the barges can be described as vessels for the transport of persons or goods. Consequently, the classification goes out of the purview of Heading 8901. Heading 8905 covers vessels of various types whose navigability is subsidiary to their main function. Such vessels need not have the capability of navigation on their own. The imported vessels have cranes on board and can move cargo from ship to shore and vice versa. The purpose of such vessel is to load/unload cargo from ship/shore on to the barge and to move such cargo between ship and shore. Such vessels, in our opinion, will be rightly classifiable under Heading 8905. Appeal rejected - decided against appellant.
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2017 (5) TMI 1326
Mis-declaration of imported goods - scrap - confiscation - Held that: - in this case there was no seizure of goods because the goods were not available and it had already been consumed - confiscation cannot be ordered in the absence of seizure of goods and therefore, the imposition of redemption fine of ₹ 5,00,000/- is not sustainable in law. Once the redemption fine is not imposable, consequently penalty u/s 112(a) of the CA also cannot be imposed since there was no seizure of goods in the first place. Appeal allowed - decided in favor of appellant.
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2017 (5) TMI 1325
Classification of Rubber Process Oil - classified under CTH No. 2707 or under CTH 2710 - Held that: - the matter is covered by the decision of this Tribunal in the case of Kushal N. Desai vs. Commissioner of Customs (Import), Mumbai [2016 (9) TMI 973 - CESTAT MUMBAI], where it was held that the imports of the appellants do contain a higher percentage of aromatic constituent than prescribed for classification under Heading 2710. The alternate heading which describes the imported goods to be waste brings it under the ambit of Hazardous Waste (Management, Handling & Trans-Boundary Movement) Rules, 2008 - the subject item is rightly classifiable under CTH 27079900 - appeal dismissed - decided against appellant.
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2017 (5) TMI 1324
Refund claim - CVD/cess on imported rubber - whether appellants are liable to pay at the time of import additional duty of customs under Section 3 (1) of Customs Tariff Act, 1975 equal to such duty of excise levied as cess under Rubber Act? Held that: - circular dt. 2.2.97 and 29.9.97 clarifying that for imported goods equivalent amount of cess leviable as duty of excise has to be collected as additional duty of customs and that even though Rubber Act, 1947 would provide for collection of cess on imports, additional duty of customs is payable on imported rubber by virtue of Section 3 of CTA, 1975. The additional duty of customs is very much leviable under Section 3 (1) of the CETA in respect of imported rubber equal to the duty of excise levied as cess under Section 12 of the Rubber Act, 1947. Rejection of refund claim justified - appeal dismissed - decided against appellant.
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2017 (5) TMI 1323
Town seizure for non-notified goods - burden of proving - whether in the case of Town seizure for non-notified goods (readymade garments) under Section 123 of the Customs Act, 1962, whether it is the onus of Revenue to prove that the goods are smuggled and whether the order of confiscation with redemption fine and further penalty of ₹ 5 lakhs under Section 112(a) of the Customs Act, 1962, is sustainable? Held that: - the readymade garments in question, being not notified goods under Section 123 of the Customs Act, 1962, were freely importable. It is well settled that initial burden to prove smuggling of non-notified goods lies on the Department. The appellants have given cogent explanation along with evidence of import of the goods, through licit route and the same have not been found to be untrue. Further, revenue have rejected the evidences produced, on flimsy ground which is not tenable. I find that the whole case of revenue is based on presumptions and no evidence have been led as to the allegation of smuggling. Mere failure on the part of the appellant to produce some document to the satisfaction of the Customs Authority does not ipso-facto lead to inevitable conclusion that the goods are smuggled. Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2017 (5) TMI 1321
Petition for winding up - Held that:- There are serious disputes between the parties with regard to their rights and liabilities, as mentioned above, the parties have already taken recourse to the arbitration proceedings, therefore, the parties should settle their disputes before the Arbitral Tribunal. The winding up petition is not the right remedy for settling the dispute between the parties. For, a winding up proceeding is a summary proceeding, wherein this court is not expected to hold a mini-trial. Therefore, for the reasons stated above, this winding up petition is devoid of any merit. It is, hereby, dismissed.
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Service Tax
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2017 (5) TMI 1349
Refund claim - scope of input services - services used in the export of goods - time limitation - whether the refund claim of ₹ 6,04,051/- is barred by limitation? - N/N. 5/2006-CE(NT) - Held that: - the Notification specifically prescribed that the period of limitation as prescribed u/s 11B of CEA, 1944 would be applicable to refunds filed under Rule 5 of CCR, 2004 - it is not clear when the remittance for export of services had been received by the appellant. Therefore, for this limited purpose of calculation of period of limitation and consequently, the amount of refund, the matter needs to be remanded to the Adjudicating Authority - matter on remand. Whether the claim of ₹ 18,58,545/- is eligible as Input Services being used in the export of finished goods? - Held that: - these services viz., Rent a Cab Services, Catering Service (Canteen), Mobile/Telephone Service, Courier Service, Advertising and Marketing Service, Professional Service, Banking Service- HP Finance Service are held to be Input Service - reliance placed in the case of M/s HCL Technologies Ltd. Versus Commissioner of Customs And Central Excise And Service Tax, Noida [2015 (9) TMI 1037 - CESTAT NEW DELHI], where it was held that - the credit availed on the service tax paid in relation to these Input Services are admissible. Appeal allowed - part matter decided in favor of assessee and part matter on remand.
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2017 (5) TMI 1348
Refund of CENVAT credit - real estate agent services - technical testing and analysis services - denial on account of nexus - Held that: - with regard to the real estate agent services as well as technical testing and analysis services, both the services fall in the definition of input service and both the services are related with the business activities of the company - refund allowed. Advertisement service - cargo handling service - Held that: - there is no finding given by the learned Commissioner (A), therefore case remanded to the learned Commissioner (A) with a direction to pass reasoned order with regard to these two input services - matter on remand. Appeal allowed by way of remand.
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2017 (5) TMI 1347
Whether exemption provided for job work activities under N/n. 8/2005 dated 01.03.2005 should be considered as exempted service in terms of Rule 2(e) ibid for applicability of the embargo created in Rule 6 ibid? Held that: - The services in this case were exempted from payment of service tax under N/N. 8/2005-ST dated 01.03.2005 on the condition that the goods produced by the job worker of using raw material or some semi finished goods should be returned back to the client for use in or in relation to manufacture of any other goods, on which appropriate excise duty is payable. On fulfillment of such conditions, the appellant was extended the benefit of non-payment of service tax. Such exemption though conditional, is availed by the appellant - the mischief of Rule 6(3) of the CCR, 2004 will get attracted - appeal dismissed - decided against appellant.
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2017 (5) TMI 1346
Reverse Charge Mechanism - services received from abroad - time limitation - Held that: - the SCN dated 05.01.2011 was issued by invoking the extended period in respect of the services received by the respondent from service provider situated abroad and the very same services also disputed in the second SCN and it was informed that the said SCN has not reached its logical conclusion. Scope of second SCN - Held that: - once an audit report was issued and base on that report, SCN dt. 05.01.2011 issued invoking extended period, second SCN dated 11.04.2012 could not have been issued demanding service tax by invoking extended period on the said audit report. Appeal dismissed - decided against Revenue.
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2017 (5) TMI 1345
Refund claim - N/N. 41/2007-ST dated 06/10/2007 - denial on the ground that goods have been exported, claiming drawback - Held that: - the specified services for which refund is allowable under N/N. 41/2007-ST dated 06/10/2007 as substituted and amended, read with N/N. 33/2008-ST dated 07/12/2008 read with N/N. 80/2006-Cus. (NT) dated 13/07/2006, the refund of Service tax is available in spite of claiming drawback - appellant will be entitled to refund under N/N. 41/2007-ST dated 06/10/2007 - appeal allowed - decided in favor of assessee.
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2017 (5) TMI 1344
Rectification of mistake - Held that: - the contentions in the said Para 5 of ROM Application are totally wrong when compared with the record as reflected in above stated Para 13 of appeal memorandum, so far as they related to allegations made against the counsel & facts on record. I, therefore, hold that there was no apparent mistake of facts on the face of record - application for ROM dismissed.
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2017 (5) TMI 1343
Refund claim - N/N. 41/2007-ST dated 06.10.2007 - Terminal Handling Charges - denial on the ground that this is not a port service - Held that: - the issue has already been settled by the Hon’ble Gujarat High Court in the case of AIA Engineering Pvt. Ltd. [2015 (1) TMI 1044 - GUJARAT HIGH COURT] wherein it has been held that Terminal Handling Charges are covered under port service - refund allowed. Goods Transport Agency Service - denial on the ground that the transportation charges has been paid to and fro to the port of export - Held that: - it is merely allegation that the transportation charges has been paid by the appellant to and fro from their factory but no evidence has been produced by the Revenue on record and the appellant has explained that the transportation charges paid by them for transportation of goods from their factory to the export of goods - refund allowed. Time limitation - scope of SCN - Held that: - issue of time barred and the appellant has claimed drawback, were not raised in the SCN, therefore, the observations made by the lower authority is beyond the scope of SCN, which are not maintainable. Appeal allowed - decided in favor of appellant.
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Central Excise
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2017 (5) TMI 1342
Valuation - scrap - job-work - scrap generated at the job workers end should have been returned to appellant, but the same was retained by job workers who sell the same directly, for which value at ₹ 4/- per kg is predetermined and adjusted for calculating and paying machined rates to the job workers - Held that: - the adoption of assessable value of ₹ 4/- per kg by the appellant for calculating their duty liability on the scrap generated at the job workers end cannot be then disputed by the department. There can be no further demand of duty on the generated physically available scrap other than that discharged by appellant on value of ₹ 4/- per kg. In consequence, there will also be no penalty in respect of the duty liability discharged by this manner. Coming to the duty liability on burning/transportation loss, irrecovable scrap, we find that the learned counsel has conceded the same. However, he prays for cum-duty benefit - Held that: - while maintaining the notional value of the quantum involved on such process loss etc. at ₹ 4/- per kg., the appellants are extended cum-duty benefit for purposes of calculating their duty liability thereon - the matter is remanded back to the adjudicating authority for revised calculation of duty liability. Penalty - Held that: - it is not in dispute that the appellants have paid the entire duty liability at the rate of ₹ 4/- per kg even before issue of SCN, hence, in our considered opinion, the beneficiary provisions of Section 11AC can be applied and the appellants will have to pay penalty equal to only 25% of the duty liability. Appeal allowed by way of remand.
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2017 (5) TMI 1341
Entitlement to interest on Pre-deposit - finalisation of provisional assessment - whether the amount of Rs. One Crore paid by the respondent, on the directions of ld. Commissioner (Appeals) is to be treated as pre-deposit or an amount of duty, after finalisation of the provisional assessment? - Held that: - Section 37 of the CEA, 1944, Clause (2) (ibb) provides for charging or payment of interest on the differential amount of duty which becomes payable or refundable upon finalisation of all or any class of provisional assessments - Admittedly, after assessment was finalised by this Tribunal, the respondent is entitled to claim interest on the excess duty paid by them before finalisation of assessment. As the amount paid by the respondent was during the pendency of finalisation of their provisional assessment and therefore, the same shall be treated as duty and on finalisation of provisional assessment, the respondent is entitled for interest of intervening period of excise duty paid by them - appeal dismissed - decided against Revenue.
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2017 (5) TMI 1340
Refund claim - deemed exports - assessee claims that the supplies from DTA to SEZ unit is a deemed export and as good as physical exports - Held that: - the Commissioner (A) has allowed the appeal of the assessee by relying on the judgment of the Hon’ble Supreme Court in the case of Virlon Textile Ltd. vs. CCE [2007 (4) TMI 6 - SUPREME COURT OF INDIA] wherein it has been held that refund could not be denied on the ground that it was deemed export - appeal dismissed - decided against Revenue.
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2017 (5) TMI 1339
CENVAT credit - material development plant - material expansion plant - Department took the view that the said plant was embedded to the earth and hence immovable property - Held that: - The Section 37B order dated 15-01-2002 issued by the Board is very exhaustive going into 9 paras and clarifies various parameters and situations when and where the plant / machinery etc. would be considered immovable or otherwise - the present dispute will requires to be remanded back to the original adjudicating authority for denovo consideration to apply the tests laid down in the Board's Section 37B. Penalty - Held that: - since the matter per se was under confusion, a fact recognized even by the Board in para 4 of the aforesaid section 37B order, the adjudicating authority should also adjudicate afresh the matter of imposability of penalty. Appeal allowed by way of remand.
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2017 (5) TMI 1338
100% EOU - CENVAT credit - whether the respondent was correct in utilising the CENVAT credit balance available with him for discharge of applicable duties on the inputs cleared from their premises or otherwise? - Held that: - respondents are 100% EOU; procured inputs indigenously as well as imported the same by claiming the benefit of N/N. 52/2003-Cus and N/N. 22/2003-CE which enables them to import the goods without payment of duty; they have sought the permissions of the authorities to clear the inputs which they are unable to consume in 100% EOU; authorities granted permission to respondents for clearance of such inputs to DTA on discharge of applicable duties; the applicable duties have been discharged by the respondent by debit in the CENVAT account considering them as Central Excise duty. Appeal rejected - decided against Revenue.
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2017 (5) TMI 1337
SSI exemption - clubbing of clearances - whether the appellants have played foul of the provisions of 2(vi) of SSI exemption N/N. 8/2002-CE dated 1.3.2002, which was in force during the relevant period? - Held that: - there is no doubt that the Director of Executive Forms and the partner of Honeywell Form connived to fraudulently keep their overall clearance value of the firm within the rupees one crore exemption limit for SSI units. They have embellished this subterfuge by seeking and obtaining registration of the very same premises giving different door number to it. Thus they tried to project that the two firms were operating at different premises and therefore, the benefit of SSI exemption under N/N. 8/2002 can be claimed by each of them separately - the original authority has been considerate generous to the appellants by extending cum-duty benefit and the lower appellate authority has further reduced the penalties on the director/partner considerably - appeal dismissed - decided against appellant.
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2017 (5) TMI 1336
Levy of duty and penalty - clandestine manufacture and removal - issuance of parallel invoices - Held that: - no search have been carried out in the premises of M/s SCL. All the documents, pen drive, computer hard disc, etc. on the basis of which demand had been raised, were recovered from the factory & office of M/s PPPL. The proposed demand had been mainly confirmed on the ground that the Director of appellant-M/s SCL have admitted the fact of clandestine removal, to M/s PPPL. The case of the Revenue is based solely on the basis of third-party records which are mainly the computer printouts. No evidence have been brought on record by Revenue in terms of Section 36B (2) of the Central Excise Act, which requires that for admissibility of data obtained from microfilms, computer printouts, etc., satisfaction have to be recorded. Revenue have failed to establish certain fundamental criteria for the allegation of clandestine removal, as there is no tangible evidence of clandestine manufacture by these appellants, and the whole demand is based on mere assumptions and presumptions. There is no investigation with respect to usage of unaccounted or excess raw materials, discovery of any finished goods outside the factory, use of electricity far in excess than what is necessary for manufacture of goods, otherwise manufactured and validly cleared on payment of duty, proof of actual transportation of goods etc. Inferences cannot be drawn about such clearances merely on the basis of notebooks, diaries privately maintained or some computer data recovered from pen drives not maintained in the ordinary course of business. Further, the impugned orders are vitiated for not giving opportunity of cross-examination, including examination of the witnesses of the Revenue. The demand being mainly based on some private records, etc., maintained by third party - M/s Panchwati Prayogshala for their internal control cannot be the sole basis for raising demand against M/s SCL - the demand is not sustainable against M/s SCL - appeal allowed. So far M/s Panchwati Prayogshala Private Limited & its Director Mr. Pankaj Goel are concerned, the matter been settled before the Settlement Commission, as noticed hereinabove and accordingly I set aside the penalties. Appeal allowed - decided in favor of appellant.
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2017 (5) TMI 1335
Valuation - Pan masala - abatement - whether under the Pan Masala Packaging Machines (capacity determination and collection of duty) Rules, 2008, the abatement is admissible suo motu or the duty has to be paid first and the abatement is to be allowed, thereafter? Held that: - the issue herein is squarely covered by the precedent ruling of this Tribunal in the case of M/s Trimurti Fragrances Pvt. Ltd. [2015 (8) TMI 34 - CESTAT NEW DELHI], where it was held that payment of duty first for the whole month and then claiming of rebate is not a precondition and duty is payable for the number of days for which a factory was working. Thus, demand of duty for the whole month was held unsustainable. Appeal dismissed - decided in favor of respondent-assessee.
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2017 (5) TMI 1334
CENVAT credit - common Input Services used both for manufacturing and trading activities - whether proportionate Cenvat Credit on the Input Services that had been used for trading activities is required to be reversed? - Held that: - There is no dispute of the fact that the appellant had reversed proportionate credit supported by Chartered Accountant's certificate dt 03.5.2017 - before the authorities below they have already claimed about such reversal of credit being not considered, at this stage remanding the case to the Adjudicating Authority for verification of the evidences would not serve the purpose. Considering the Chartered Accountant's certificate and the fact that earlier, the appellant claimed proportionate reversal of credit on Common Input Service used in trading services, in my opinion, imposition of penalty is not warranted. Appeal disposed off - decided partly in favor of assessee.
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2017 (5) TMI 1333
Penalty - Benefit of N/N. 32/99-CE dated 08.07.1999 - CENVAT credit - mis-declaration of place of removal of goods - Held that: - Sub-rule (2) of Rule 26 was inserted by Notification No.08/2007-CE(T) dated 01.03.2007 whereas the clearances involved are for the period from 11.06.2003 to 31.05.2005 and the provisions of said Sub-rule (2) which come into operation on 01.03.2007 were not applicable to the clearances made before 01.03.2007 - penalty not sustainable - appeal allowed - decided in favor of appellant.
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2017 (5) TMI 1332
Waste/by-product - whether Ferric Chloride waste is a manufactured product? - Held that: - Board's circular dt. 25/04/2016 clarifying that the by-products/waste arising during the course of manufacture is not excisable - waste/by-product arising during the manufacture process is not a manufactured product and the same cannot be considered as excisable goods even after the introduction of Section 2(d) of the CEA, 1944 w.e.f. 10/05/2008 - demand set aside - appeal dismissed - decided against Revenue.
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2017 (5) TMI 1331
Valuation - erection charges - includibility - Held that: - since no excise duty is payable on the installation cost as has already been settled, it cannot be presumed that the disputed duty has been recovered from M/s. IOCL - From the evidence on record, it cannot be construed that the duty burden has been passed on - appeal dismissed - decided against Revenue.
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2017 (5) TMI 1330
CENVAT credit - duty paying invoices - The ingredients and packing materials are provided to the appellant by BIL - denial of credit on the ground that availment of credit on the basis of endorsed invoices for the above period is irregular particularly in view of the change in the position of rules w.e.f. 01/04/1994 - Held that: - The Larger Bench of the Tribunal in the case of Barmer Lawrie & Co. Ltd. [2000 (1) TMI 74 - CEGAT, NEW DELHI] has held that after 01/04/1994 endorsed invoices are not valid documents for claiming CENVAT credit. Appeal allowed - decided in favor Revenue.
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2017 (5) TMI 1329
Intermediary product - impregnated special woven fabric - chargeability of duty/marketability - Held that: - goods have emerged during the continuous process of manufacture of tubular bags and have got a self-life of only a few minutes. It is established that this intermediate product cannot be marketed and therefore it cannot be called as excisable goods - the goods are not marketable and therefore are not excisable and no duty of Central Excise leviable on the subject goods - appeal allowed - decided in favor of assessee.
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2017 (5) TMI 1328
Valuation - Dharmada/Charity service - includibility - whether amount of Dharmada/Charity is includible in the assessable value of the excisable goods sold by the appellant? - Held that: - there was nothing more to decide by the adjudicating authority except re-quantification of the duty extending benefit of cum duty price which was ordered by this tribunal by applying the correct rate of duty therefore no discretion was left to the adjudicating authority to decide the issue a fresh on the merit - appellant is entitle for the cum duty benefit and also rate of duty applicable is @ 50% during the period for July to February, 2000 and 40% for the period for March, 2001 to Jun, 2001 - appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2017 (5) TMI 1322
Validity of assessment proceedings - natural justice - Held that: - There is absolutely no noting on the file to indicate what happened to the orders passed by the OHA. There appears to be complete failure on the part of the VATO to act in accordance with law and, in particular, to abide by the order of the superior authority, in this case, the OHA and to carry out the mandate of the OHA's orders. With the impugned orders bristling with so many obvious illegalities, the question of the Petitioner now being relegated to the OHA, as suggested by the counsel for the Respondent, does not arise - petition allowed.
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