TMI Tax Updates - e-Newsletter
June 11, 2016

Case Laws in this Newsletter:

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

TMI SMS

• Code of ethics- CA professional providing accommodation entries, defrauding revenue, deserves to be debarred from practice for life time -HC

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Articles

1. REFUND OF TAX COLLECTED WITHOUT AUTHORITY OF LAW

   By: DR.MARIAPPAN GOVINDARAJAN

2. NO SERVICE TAX ON FLATS UNDER COMPOSITE CONTRACTS

   By: Dr. Sanjiv Agarwal

News

1. Consolidated FDI Policy Circular of 2016

2. RBI Reference Rate for US $

Notifications

SEZ

1. S.O. 1996(E) - dated 25-5-2016 - SEZ

Full De-notification 20.76 hectares area for specific Special Economic Zone for information and information technology enabled servies sector at Gambheeram Village, Anandapuram Mandal, Visakhapatnam District, in the State of Andhra Pradesh - M/s. Andhra Pradesh Industrial Infrastructure Corporation Limited

Circulars / Instructions / Orders

VAT - Delhi

1. No. Misc/HR/18/12426-438 - dated 2-6-2016

Arrangement of Zones

DGFT

2. 8/2016 - dated 9-6-2016

Clarification regarding FPS benefits to "Other Cast Articles of Iron & Steel"- ITC (HS) code- 7325 under Sl. No. 279 of Appendix 37 D as revised vide Public Notice 52 dated 25.02.2014

Customs

3. 26/2016 - dated 9-6-2016

Form of application for a Licence under Public Warehousing Licensing Regulations, 2016 / Private Warehousing Regulations, 2016 / Special Warehousing Regulations, 2016

Highlights / Catch Notes

Income Tax

• Court Orders Lifetime Ban for Chartered Accountants in Revenue Fraud Scheme, Violating ICAI Code of Ethics.

  Case-Laws - HC : Scam of providing accommodation entries by Chartered Accountants - defrauding the revenue - Violation of Code of Ethics ICAI - Such a professional deserves to be debarred from practice for life time - HC
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• Court Confirms Commission Receipts are Assessable; Appeals by Father and Son Dismissed; Protective Assessment Deleted.

  Case-Laws - HC : Addition to commission receipts assessable in the hands of the appellant on a substantive basis - rectification of mistake to delete protective assessment - both the appeal of father assessee and son assessee dismissed - HC
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• Employer-Provided Rental Deposit Not Taxable as Perquisite Under Tax Law Section.

  Case-Laws - AT : Determination of perquisite value - Notional interest on deposit given by the employer with the landlord for securing the rented premises - Not a perquisite - not taxable - AT
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Customs

• Revenue's Use of National Import Database Challenged in Valuing Old Used Clothing Imports; Legal Validity Questioned.

  Case-Laws - AT : Import of old used worn clothing - Legality of valuation of imported goods - As Revenue could not produce the details of NIDB data, it is apparent from the findings of the original authority that such general application of value of other imports is not legally tenable. - AT
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• Tribunal Rules on Refund Claims for Short-Shipped Goods: Strict Adherence to Central Excise/Customs Act Time Limits Required.

  Case-Laws - AT : Refund - Period of limitation - Short shipment of goods which has not been imported - this Tribunal being a creature under the Central Excise/Customs Act cannot go beyond the statute and therefore cannot relax the time limitation provided under the statute - AT
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• Refund Approved for Undelivered Goods: Customs Duty and Interest to be Returned Regardless of Re-export Status.

  Case-Laws - AT : Refund claim - irrespective of the position of re-export the fact is not under dispute that the goods in respect of which custom duty and interest was paid has not been delivered to the appellant - refund should be granted - AT
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Corporate Law

• "Company" in Tender Notice Defined Strictly as per Companies Act, Excludes Firms.

  Case-Laws - SC : On reading of the terms of the NIT it is clear that the word “Company” can only mean a company as understood under the Companies Act and cannot be read to include a firm. The word “Company” in the NIT is incapable of any other meaning. - SC
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Service Tax

• Court Rules Union of India Must Refund Service Tax Paid in Error, Not Covered by Section 11B and Section 83.

  Case-Laws - HC : Claim of Refund - period of limitation - Amount of service tax deposited by mistake - if any amount is deposited by the assessee, the same cannot be retained by the Union of India under the one or other pretext when a service provider is not liable to make payment of the service tax and if any payment is made, it cannot be covered under Section 11B ibid to be read with Section 83 ibid - HC
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• Tribunal Denies Service Tax Refund Due to Statutory Time Limit Despite Unauthorized Payment by Law.

  Case-Laws - AT : Refund - Period of limitation - Service tax paid on the output service on which there was no levy - amount paid was without authority of law - Tribunal being a creature under the Central Excise/Customs Act cannot go beyond the statute and therefore cannot relax the time limitation provided under the statute - AT
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• High Court Upholds Rs. 25,000 Cost Imposed on Authority for Issuing Order Without Proper Consideration.

  Case-Laws - HC : Imposition of Cost on adjudicating authority - The adjudicating authority had passed the order without application of mind and such orders adversely and severely impinge upon the public trust in the public authorities - Tribunal correctly imposed the cost of ₹ 25,000/- on the adjudicating authority - HC
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Central Excise

• Court Evaluates 405-Day Filing Delay; Appellant Cites Mother's Passing as Justification for Extension. Explanation's Sufficiency is Key.

  Case-Laws - HC : Condonation of delay - 405 days - appellant has contended that his mother had passed away - length of time, should not weigh in the minds of the Courts/tribunals, in considering the sufficiency of the cause shown, but at the same time, cause should be explanatory. - HC
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• Recording Expenses in Profit & Loss Means Duty Passed to Customers; Key for Central Excise Refunds Eligibility.

  Case-Laws - AT : Refund - If the amount has been shown as expenditure in the Profit and Loss account, it amounts to passing of the incidence of duty to the customers. - AT
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• Excess Duty Payments Can Offset Shortfalls in Final Provisional Assessments; No Restrictions Apply.

  Case-Laws - AT : Adjustment of excess payment of duty towards short payment of duty ascertained at the time of finalisation of provisional assessment - there is no bar in adjusting the excess paid duty towards the duty short paid - AT
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• SSI Exemption: Clubbing Allowed Only if One Unit is Principal and Other is Dummy for Excise Purposes.

  Case-Laws - AT : SSI Exemption - Clubbing of clearance of 3 manufacturing units - clubbing of clearance of 2 Units can be ordered only if one unit is the principal unit while the other is a dummy one, which had been floated with a view to camouflage clearance of the principal unit - AT
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Case Laws:

• Income Tax

• 2016 (6) TMI 387
  Addition to commission receipts assessable in the hands of the appellant on a substantive basis - rectification of mistake to delete protective assessment - application filed by father-assessee M/s. Siemens Ltd. before the Settlement Commission admitting the unsubstantiated commission payments as its own income and the Settlement Commission had accepted such disclosure - Held that:- In a Circular issued by the Central Board of Direct Taxes, bearing No.71, dated 20.12.1971, the Board has indicated that once the same income is assessed as a protective measure in the hands of more than one assessee, the protective assessment needs to be cancelled after the relevant assessments have become final and conclusive. The Circular also indicates that the only method of doing this is by invoking Section 154, irrespective of the time prescription contained in Sub-Section (7) of Section 154. We do not think that the above Circular can be made use of by persons whose transactions prima facie do not appear to be genuine. The cases on hand will not be covered by the Circular for one more reason namely that the assessee do not stop with the mere receipt of money. He withdrew it and claimed to have paid to different third parties, but those payments were disallowed. Therefore, if his submission that he had paid money to third parties is true, the money received by him could be only his income. Therefore, the appellant cannot contend that the order of the Settlement Commission clinches the entire issue. - Decided against the appellant/father-assessee. Maintainability of the application under Section 154 - Held that:- The Assessing Officer rejected the application under Section 154 by a one line order. It was set aside by the Commissioner of Income Tax (Appeals). The Tribunal held that the issue raised by the assessee will fall under the category of a "debatable issue" and not "error apparent". We think that is a correct view taken by the Tribunal. While the treatment of the payment made by M/s. Siemens Limited at the hands of the appellant herein, after it was treated differently at the hands of M/s. Siemens Limited can, given some allowance, be treated as an error apparent, the moment it is shown to have been rejected in the order of Assessment, it would become at the most a mistake correctable on an appeal but not an error apparent. Hence, the second substantial question of law is also to be answered against the appellant/assessee.

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• 2016 (6) TMI 386
  Determination of perquisite value - Notional interest on deposit given by the employer with the landlord for securing the rented premises - whether is not to be treated as a perquisite? - Held that:- Admittedly, the assessee’s employer, i.e. M/s. Kotak Investment Advisors Ltd., had provided rent free accommodation to assessee for which it paid rent of Rs. 2,10,000/- and a deposit of Rs. 20,00,000/-. As per the records in Form No. 12BA, it was seen that the perquisite value of rent paid of Rs. 2,10,000/- was considered in the hands of the assessee. Respectfully following the decision of CIT vs. Shankar Krishnan (2011 (9) TMI 728 - Bombay High Court ), we hold that the contention of the authorities below that notional interest on the deposit paid by the employer to the landlord for securing accommodation while computing the perquisite value of the residential accommodation is to be included in the assessee’s income is not sustainable in view of the express words used in Rule 3 of the I.T. Rules, 1962 as amended w.e.f. 01.04.2001 and accordingly direct the AO to delete the addition made in this regard. - Decided in favour of assessee.

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• 2016 (6) TMI 385
  Disallowance on total investment made in shares of subsidiary company - whether the investment made for the purchase of shares of subsidiary company was not a legitimate business activity of the appellant - Held that:- The Tribunal's finding that the investment made by the assessee company for purchase of shares in the subsidiary company was not a legitimate business activity, was in fact, an expansion beyond what the Assessing Officer had himself envisaged. It was not even the case of the Revenue that investment made by the assessee in subsidiary company was for some illegitimate purpose or a mere device to divert its tax bearing income. - Decided in favour of assessee

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• 2016 (6) TMI 384
  Unexplained credit under Section 68 - ITAT delted the addition - Held that:- Revenue does not dispute that in the present case despite the Assessee furnishing confirmation from the investor companies, their acknowledgment returns, certificates of incorporation, confirmation of payment of share application money etc, the AO did not conduct any inquiry to verify the said documents. He only relied on the report of investigation which in turn was based entirely on the statements of the alleged accommodation entry providers The Court is not willing to accept the submission of revenue to urge that in such event the matter should be remanded to the CIT (A) for a fresh consideration of the genuineness and creditworthiness of the creditors for the reason that the AY in question is of 2003-04 and at this stage to remand the matter to enable the Revenue to rectify an obvious error would not be justified. No substantial question of law arises. - Decided against revenue

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• 2016 (6) TMI 383
  Eligibility of deduction under Section 80IA - Held that:- Having exercised its option and its losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section 80IA of the Income Tax Act. There appears to be no distinction on facts in relation to the decision reported in Velayudhaswamy Spinning Mills [2010 (3) TMI 860 - Madras High Court ].- Decided in favour of the assessee.

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• 2016 (6) TMI 382
  Penalty under Section 271(1)(c) - whether the ITAT was justified in upholding the order of the Commissioner of Income Tax, Appeals [‘CIT(A)’] deleting the penalty imposed by the Assessing Officer (‘AO’) under Section 271(1)(c)? - Held that:- Apart from the fact that the order of the ITAT is concurring with that of the CIT(A), the reasons for deleting the penalty have been adequately discussed in the concurrent orders of the CIT (A) and the ITAT. The Court is not persuaded to hold that the said order suffer from any legal infirmity.

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• 2016 (6) TMI 381
  Reopening of assessment - recording of reasons - formation of belief - petitioner has disclosed loss of Rs. 77,51,810/- and the petitioner has been assessed at an income of Rs. 35,96,518/- on the book profit under section 115JB - Held that:- In the light of the decision of this court in the case of India Gelatine and Chemicals Ltd. v. Assistant Commissioner of Income Tax (No.1) (2015 (2) TMI 808 - GUJARAT HIGH COURT), having regard to the fact that even if the entire amount which is proposed to be added by the Assessing Officer is sustained, there would be no addition to the tax liability of the petitioner and the petitioner would still be governed by the provisions of section 115JB of the Act and assessed on the same book profit, it cannot be said that there was sufficient material before the Assessing Officer to form the belief that income chargeable to tax has escaped assessment. The impugned notice issued under section 148 of the Act, therefore, cannot be sustained. For the foregoing reasons, the petition succeeds and is, accordingly, allowed in favour of assessee.

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• 2016 (6) TMI 380
  Unexplained cash - release of seized articles (cash) belonging to the petitioner - Held that:- It is not in dispute that the seized articles (cash) belong to the petitioner, who has also disclosed the unexplained cash of Rs. 21,73,000/- for taxation in the year under consideration, and in fact, the respondent, in the assessment proceedings, has also accepted such fact and has given credit of Rs. 8,84,040/- to the petitioner against the seized amount. The person from whom the cash had been seized namely, Shri Vinod Sen has also admitted that such cash belongs to the petitioner. Evidently therefore, there is no dispute as regards the title of the seized assets (cash). The respondent is, therefore, not justified in not releasing the balance amount to the petitioner on the ground that the cash had been seized from Shri Vinod Sen. Nonetheless, since the respondent has voiced an apprehension that the cash having been seized from Shri Vinod Sen, in case Shri Vinod Sen stakes a claim to the seized amount, the Department would be put in a precarious situation, the court is of the view that the said apprehension can be allayed by calling upon the petitioner to file an undertaking to the effect that in case Shri Vinod Sen stakes such claim, the petitioner would indemnify the Department. The respondent is directed to forthwith refund the balance amount after adjusting the tax dues of the petitioner with interest (if any) in accordance with law subject to the petitioner filing an undertaking before this court that in the event Shri Vinod Sen stakes a claim to the seized amount, the petitioner should indemnify the Department in respect thereof - Decided in favour of assessee.

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• 2016 (6) TMI 379
  Net refund after adjustment of any outstanding demands along with interest - rectification of mistake - Held that:- It is difficult to understand the adamant approach adopted by the respondent in not giving effect to the order passed by the Commissioner (Appeals) when he is duly empowered by the provisions of section 245 of the Act to adjust the refund against other pending dues. In fact, the petitioner has implored the respondent to adjust the refund amount against other dues, but to give effect to the rectification order. The requests made by the petitioner, however, have fallen on deaf ears as the respondent has granted himself a stay against the order passed by the Commissioner (Appeals) and refused to give effect to the same. The respondent being statutorily bound to comply with the provisions of sub-section (5) of section 154 of the Act, in the opinion of this court, cannot refuse to give effect to the order passed by the Commissioner (Appeals). The stand adopted by the respondent in the affidavit-in-reply and as urged before this court is thoroughly misconceived and contrary to the provisions of law. Under the circumstances, the petition deserves to be allowed by issuing the directions as prayed for therein. For the foregoing reasons, the petition succeeds and is, accordingly, allowed. The respondent is directed to forthwith give effect to the order dated 5.9.2013 passed by the Commissioner (Appeals) and grant consequential refund along with interest, after adjustment of any outstanding dues. Having regard to the fact that the petitioner was required to approach this court on account of the inaction on the part of the respondent in not complying with the statutory duty cast upon him, costs are quantified at Rs. 10,000/- (Rupees ten thousand).

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• 2016 (6) TMI 378
  Validity of assessment u/s 153A - addition in pursuance to notice issued under Section 153A - Is not the Tribunal erroneous in holding that addition in pursuance to notice issued under Section 153A can be made only if incriminating material is found and seized in case where there is also abatement of regular assessment proceedings, and are not, such an approach and the resultant conclusion perverse and uncalled for ? - Held that:- On a reading of Section 153A(1) it is categoric and clear that once a notice is issued and the Assessing Officer has required the assessee to furnish return for a period of six assessment years as contemplated under clause (b) then the assessee has to furnish all details with respect to each assessment year since the same is treated as a return filed under section 139. It is true that as per the first proviso, the Assessing Officer is bound to assess or reassess the total income with respect to each assessment year following the six assessment years specified in sub-clauses (a) and (b) of Section 153A. However, even if no documents are unearthed or any statement made by the assessee during the course of search under section 132 and no materials are received for the aforespecified period of six years, the assessee is bound to file a return, is the scheme of the provision. Even though the second proviso to Section 153A speaks of abatement of assessment or reassessment pending on the date of the initiation of search within the period of six assessment years specified under the provision that will also not absolve the assessee from his liability to submit returns as provided under Section 153A(1)(a). This being the scheme of the provisions of the Act, the Appellate Tribunal ought to have considered the issue with specific reference to the facts involved in the case and as provided under Section 153A. However, we find that the Tribunal without appreciating the facts and circumstances has proceeded purely on the basis that the cases at hand were covered under the Special Bench decision in All Cargo Logistics Ltd. (2012 (7) TMI 222 - ITAT MUMBAI(SB) ). In our view the course adopted by the Tribunal was not the proper one to decide the question with regard to the sustainability of the order passed by the First Appellate Authority. Therefore, we are of the considered opinion that the Tribunal has not adopted the right method to decide the issue with regard to the question framed in these appeals and therefore, it is only necessary to remand the matter to the Tribunal for fresh consideration.

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• 2016 (6) TMI 377
  Cancellation of registration u/s 12A - assessee runs a diabetic centre under the name of Sunny Park Diabetic Endocrine Centre - whether the Learned DIT(E) is justified in cancelling the registration u/s 12AA(3) of the Act? - Held that:- Learned DIT(E) himself had stated in his order that the activity of ‘Solace’ would fall under the fourth limb of the definition of charitable purpose u/s 2(15) of the Act i.e ‘advancement of any other object of general public utility’. Hence in view of the aforesaid findings and judicial precedents relied upon and in view of the CBDT Circular No. 21/2016 dated 27.5.2016, we hold that the Learned DIT(E) should not have resorted to the act of cancellation of registration u/s 12AA(3) of the Act in the facts and circumstances of the case. The other issues, regarding whether the pranic healing activity would fall under the definition of ‘medical relief’ or whether ‘Solace’ is a health club/Spa or not, are left open as the same are not relevant for adjudication at present in this case - Decided in favour of assessee

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• 2016 (6) TMI 376
  Reopening of assessment - reasos to believe - Held that:- We find that the Hon’ble Apex Court in the case of GKN Driveshafts (India) Ltd. vs. ITO(2002 (11) TMI 7 - SUPREME Court) has held that “it is clear that the completion of assessment/reassessment without furnishing the reasons recorded by the AO for initiation of proceedings under section 147/148 of the Act is not sustainable in law as it is incumbent on the AO to supply them within reasonable time. We note that on the anvil of this judgment, on the request of the Assessee, the AO is bound to furnish the reasons recorded for initiation of proceedings under section 147 of the Act within a reasonable period of time so that the assessee could file its objections thereto and the AO was to dispose of the same by passing a speaking order thereon, which the AO has not done. We also note that even as per the rules of natural justice, the assessee is entitled to know the reasons on the basis of which the AO has formed an opinion that income assessable to tax has escaped assessment. The furnishing of reasons to the assessee is to enable/facilitate it to present its defence and objections to the initiation of proceedings under section 147/148 of the Act. Therefore, we are of the considered opinion that there was no justifiable reasons for the AO to deprive the assessee of the recorded reasons by him for initiating proceedings under section 147/148 of the Act. Therefore, in our considered opinion, the reopening in question is not sustainable in the eyes of law. Accordingly, we allow the assessee’s appeal on legality aspect without proceeding to adjudicate on merits by quashing the assessment order. - Decided in favour of assessee

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• 2016 (6) TMI 375
  Reopening of assessment - reason to believe - time barred - Held that:- We have perused the reasons recorded by the AO and we find that the AO issued notice u/s. 148 of the Act on 30.3.2010 for the assessment year in dispute i.e. 2003-04 which is after the expiry of 4 years from the end of the relevant assessment year. We are of the view that the case of the assessee is governed by the first proviso to section 147 of the Act and in the original assessment made u/s. 143(3) vide assessment order dated 30.3.2006 the AO had made detailed enquiry of the share application money received by the assessee company. We find that there is no omission or failure on the part of the assessee to disclose fully and truly all material facts relating to share application money because the assessee had submitted details of share application money in initial assessment proceedings which was verified by the AO by way of issue of summons to the share applicant who duly responded to the summons. We further find that in the reasons recorded the AO has nowhere alleged that escapement of income has occurred by reason of either omission on the part of the assessee to disclose fully and truly all material facts for assessment. It is a settled law that in the absence of omission or failure on the part of the assessee to disclose fully and truly all material facts, the time limit to issue notice u/s. 148 expired on 31.3.2008, therefore, the notice u/s. 148 dated 30.3.2010 is time barred. Therefore, we are of the considered view that Notice issued u/s. 148 of the Act is illegal and deserve to be quashed - Decided in favour of assessee

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• 2016 (6) TMI 374
  Reopening of assessment - Held that:- It is found that the Ld. AR was right in its contention that there was a change of opinion which was clearly seen in the letter produced before us dated 24/9/2003 sent to Senior Receipt Audit Officer. In the said letter, the stand of the A.O was that objection raised by the department may be treated as settled as the adjustment mentioned therein was not permissible under the Act. This letter was produced by the Ld. DR during the course of hearing. This letter clearly shows that notice under Section 148, was a clear change of opinion. There was no new material found by the Assessing Officer. There was a clear opinion given by the Assessing Officer before the Auditor that there was no evidence as the said provision was an unascertained liability as per letter dated 24.09.2003. Thus, the proceedings under Section 147 of the Income Tax Act, 1961 are not valid as the notice under Section 148 of the Act was issued on account of change of opinion. Therefore, CIT(A) was incorrect while dismissing the appeal of the assessee. - Decided in favour of assessee

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• 2016 (6) TMI 373
  Period of limitation u/s 201(1)/201(1A) for passing an order - TDS u/s 194C - non deduction of tds on the expenditure incurred as “Pay Channel Cost” - demand raised u/s. 201(1) and interest charged u/s. 201(1A) - Held that:- The proceedings initiated u/s 201(1)/201(1A) should be completed within one year from the end of the financial year in which proceedings u/s 201(1)/201(1A) were initiated. Admittedly, in the instant case, the assessing officer has passed the orders after expiry of eight years from the date of issuing of notice. Accordingly, the order passed by the AO is barred by limitation. Accordingly we set aside the order passed by Ld CIT(A), since the order passed by the AO is barred by limitation. Accordingly the same stands quashed.

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• 2016 (6) TMI 372
  TDS u/s 194C - payment of AMC charges - Held that:- It is undisputed fact that the assessee had paid the whole amount of Rs. 75,000/- during the year under consideration but as claimed by the AR that it is below the prescribed limit but the year under consideration, the limit was Rs. 50,000/- U/s 194C of the Act. The case law cited by the assessee is squarely applicable, therefore, additions confirmed by the ld CIT(A) under both the heads is deleted. - Decided in favour of assessee Disallowance of electricity expenses - Held that:- The assessee has not been able to establish that these expenses were incurred wholly or exclusively for the business purposes, therefore, we uphold the order of the ld CIT(A) on this ground - Decided against assessee Disallowance of remuneration paid to the partner U/s 40(b) - Held that:- CBDT cannot issue a circular which goes against the provisions of IT Act by applying this circular No. 739 dated 25/3/1996, both the authorities had not allowed the remuneration computed on the basis of Section 40(b)(v) of the Act but it is fact that the assessee had quantified remuneration on the basis of partnership when CIT have coterminous power with A.O. and the assessee has submitted modified partnership before him and Hon’ble Himachal Pradesh High Court decision on this issue in the case of Durga Dass Devki Nandan Vs. ITO (2011 (3) TMI 20 - HIMACHAL PRADESH HIGH COURT) was relied upon by the AR of the assessee, which is squarely applicable on the facts of the case. He was not justified to confirm the addition on account of remuneration of partner. The documents produced by the assessee before the Assessing Officer did not have any room to drawing presumption and reaching conclusion that such a document was produced was not genuine. Therefore, amended partnership deed cannot be doubted by the ld CIT(A) in the case of assessee. By following the decision of Hon’ble Jurisdictional High Court on this issue, we have considered view that the assessee is rightly entitled for deduction of remuneration paid to the partners. Accordingly, we reverse the order of the ld CIT(A) on this ground - Decided in favour of assessee

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• 2016 (6) TMI 371
  Penalty proceedings u/s 271(1)(c) - undisclosed brokerage income - Held that:- Merely because the income was offered by M/s Sandhya Prakash Ltd. in its return would not exonerate the assessee from declaring such income in its return, which was earned and received by it for the services rendered by it to the sellers for sale of their land. Transferring of money to its sister concern M/s. Sandhya Prakash Ltd. at the most can be said to be an application of income. Thus, it was an income of the assessee earned by it for A.Y. 2008-09 chargeable to tax. But the assessee had concealed the particulars of this income by not offering for tax the amount of income of Rs. 1,92,00,000/- earned by it in its return of income. Therefore, considering the facts and circumstances of the case and legal position on the issue, we are in full agreement with the A.O. that the assessee had concealed particulars of income of Rs. 1,92,00,000/- on account of brokerage earned and received by it by not offering the same as its taxable income in the return of income furnished for A.Y. 2008-09. Therefore, the assessee was liable for penalty u/s 271(l)(c) of the Act for concealment of its income to the tune of Rs. 1,92,00,000/- as brokerage income. - Decided against assessee.

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• 2016 (6) TMI 370
  Revision u/s 263 - as per CIT(E) AO gave the benefit of mutuality to the assessee and charged only interest income instead of taxing the whole excess of income over expenditure, which resulted the mistake in the assessment of income of Rs. 2,32,45,608/- - Held that:- After thoroughly examined the aforesaid documentary evidences, produced by the assessee in the shape of Paper Book and the case law cited in assessee’s own case for the assessment year 2009-10, before us, we are of the considered view that the arguments advanced by the Ld. Counsel of the assessee is very much plausible and convincing, because the claim of the assessee regarding the applicability of ‘principle of mutuality’ in its return of income has been filed by the assessee alongwith the return of statement of account, meaning thereby the assessee has claimed the applicability of ‘principle of mutuality’ in its return of income. The AO during the course of assessment proceedings has also directed the assessee to explain the applicability of ‘principle of mutuality’ which we have seen at the assessment proceedings thereby the issue of ‘principle of mutuality’ has been discussed and detailed enquiry has been done at the level of the AO and assessee also filed its details before the AO in the assessment proceedings with regard to the applicability of ‘principle of mutuality’. After perusing the assessment order dated 07.3.2013 passed u/s. 143(3) of the I.T. Act, we have seen that AO has rightly considered the applicability of ‘principle of mutuality’ in the assessment order especially the para 7 of the assessment order. Revision order od CIT(A) cancelled - Decided in favour of assessee.

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• 2016 (6) TMI 369
  Exemption u/s. 54EC - error of valuation being adopted by the AO u/s 50C - as per assessee AO instead of making a reference to the DVO, the AO himself has adopted the value declared in the Sale Deeds without looking into the assessee contentions with regard to lesser receipt of sale consideration - Held that:- We find that the contentions of the assessee with regard to lesser receipt of sale consideration were not examined by the revenue authorities. Therefore, in the interest of justice, we set aside the order of ld. CIT(Appeals) and restore the matter to the file of Assessing Officer with a direction to readjudicate the issue afresh after affording opportunity of being heard to the assessee. If need be, reference may be made to the DVO to ascertain the fair market value. - Decided in favour of assessee for statistical purposes.

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• 2016 (6) TMI 368
  Scam of providing accommodation entries by Chartered Accountants - Violation of Code of Ethics of the Institute of Chartered Accountants of India (ICAI) - Held that:- From the facts, noticed above, it is clear that respondent No. 1 grossly violated the code of ethics for Chartered Accountants. He admitted his guilt before the Income-tax authorities, which resulted in defrauding the revenue. Thereafter, he left the country. He did not avail of the opportunity afforded to him at different stages to defend the case against him. A professional, who behaves in this manner, deserves to be dealt with sternly. In our opinion, the conduct of respondent No. 1 is wholly unworthy of a Chartered Accountant, who is expected to maintain high standard of professional conduct. The punishment proposed by the Institute in these circumstances is quite lighter. Such a professional deserves to be debarred from practice for life time. Hence, in exercise of powers conferred under Section 21(6) of the Act, we deem it appropriate to direct that name of respondent No. 1 be removed from the register of members of the Institute of Chartered Accountants of India for life. Ordered accordingly.

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• Customs

• 2016 (6) TMI 398
  Period of limitation - Revokation of CHA licence and forfeiture of security deposit - recall of the container of Red Sander logs from Dubai - Held that:- the notice issued under Regulation 22 was beyond the period of 90 days from the date of offence report. As there is no specific offence report in the records, the evidence of knowledge of the concerned officer may be considered as per the Hon'ble Madras High Courts observation in M/s. AM. Ahamed & Co. Versus The Commissioner of Customs (Imports) [2014 (9) TMI 237 - MADRAS HIGH COURT]. Further, decision on the show cause notice was taken more than 16 months after the issue which again is beyond the time limits mentioned in the said Regulation. As such without going into the merits of the case we find that the impugned order is not sustainable as the same is barred by limitation and consequently without jurisdiction. - Decided in favour of appellant

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• 2016 (6) TMI 397
  Import of old used worn clothing - Legality of valuation of imported goods - declared value is much lower than the price fixed by the Commissionerate vide Internal instruction and Alert Circular dated 17.9.2008 issued by DRI - Held that:- the method adopted by the original authority for fixing the value of imported goods is not in accordance with the provisions of Valuation Rules. There is a self-contradiction in the finding by the original authority. While he rejects the application of Rules 4 to 8 as no comparable consignment of identical or similar goods are available, he takes general value as per NIDB data without establishing whether the said data is relevant in respect of identical or similar goods. As Revenue could not produce the details of NIDB data, it is apparent from the findings of the original authority that such general application of value of other imports is not legally tenable. There is no cogent reason for rejection of transaction value for these imports. Quantum of redemption fine and penalty - Held that:- in view of our finding on the valuation of the imported goods it is found that redemption fine and penalty is sustainable only with reference to violation of Foreign Trade Policy. This is not being contested by the appellant also. Considering the overall facts and circumstances we find that redemption fine imposable on these goods can be fixed at 15% of the declared value. Similarly, the penalty imposed under Section 112(a) of the Custom Act, 1962 can be reduced and fixed at 10% of the declared value. - Decided partly in favour of appellant

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• 2016 (6) TMI 396
  Period of limitation - Invokation of Regulation 20(2) of the CHALR, 2004 - Revokation of CHA licence - Tribunal's order not being followed - Held that:- considering the law laid down as well as facts and circumstances and suffering of the CHA for the last 3 years and the fact that the Authority has immediately revoked the licence of the appellant without implementing the order of the Tribunal, the order of revocation is set aside being barred by limitation. It is made clear that when order of suspension failed to stand, the order of revocation also lost its existence. The Authority is directed to consider renewal of the CHA licence expeditiously without delay since from the date of suspension i.e. 30.01.2013 the CHA has already undergone suffering for more than three years. - Decided in favour of appellant

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• 2016 (6) TMI 395
  Valuation - 100% EOU - Includability - lump-sum fees for technical assistance and licence agreement - supplier and importer are related to each other - Held that:- the respondent is 100% EOU and their import is not chargeable to custom duty therefore even if there is any variations in the valuation, there will be no effect of custom duty payment. We therefore without going into merit of the issue that whether lump-sum technical assistance fees is includible in the assessable value or otherwise, we find that since no custom duty involved, in the present case due to respondent being 100% EOU, the Revenue's appeal does not survive. We therefore without giving any observation on the issue of valuation, dismiss the appeal of the Revenue only on the point that no custom duty demand is involved. - Decided against the Revenue

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• 2016 (6) TMI 394
  Refund - Period of limitation - Short shipment of goods which has not been imported - Provision of Section 27 is not applicable - Held that:- it is found that the appellant have admittedly paid the Customs duty only after import and verification it was found that there is a short shipment of the goods. However, even though there is a short shipment but the amount paid by the importer/appellant is admittedly as a Customs duty only. Only for the reason that the goods were not imported the nature of the amount paid as duty will not stand altered, therefore whatever duty was paid by the appellant is a Customs duty only. Therefore, the refund of such Customs duty, in my considered view, is governed by Section 27 of the Customs Act, which is the only provision which deals with refund of duty refundable. Since the amount claimed as refund by the appellant can be refunded only under Section 27 of the Act, the limitation provided in the said Section shall also apply for sanction of refund. There is no other provision for refund of Customs duty except under Section 27 of the Act, therefore limitation is applicable. However, on the issue of limitation for the purpose of refund, the Hon’ble Supreme Court in the various judgments categorically held that for refund of any amount, the statutory time limit provided under the Customs/Central Excise Act has to be followed mandatorily. Therefore, this issue has been clearly settled by the Hon’ble Supreme Court that even though the refund of duty recovered without authority of law but for the refund claims made before the departmental authorities, limitation provided under the Customs Act/Central Excise Act or Rules made there under is applicable. The authorities functioning under the Act bound by its provision. Therefore, since refund of any amount is covered by Section 27 and there is no other provision, this Tribunal being a creature under the Central Excise/Customs Act cannot go beyond the statute and therefore cannot relax the time limitation provided under the statute. As per my above discussion and settled legal position, the refund claim being filed after 6 month is hit by limitation and therefore correctly rejected by the lower authority. The impugned order is upheld. - Decided against the appellant

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• 2016 (6) TMI 393
  Seeking issuance of certificate to the DGFT for re-credit of the DEPB amount which was debited at the time of import - Non-fulfillment of conditions 3(i) and (ii) of Board Circular No. 75/2000-Cus dated 11.09.2000 - goods imported and cleared by debiting the duty credit under DEPB licence - re-export of goods being found not suitable for their purposes within 6 months from the port of registration of the DEPB - Held that:- no importer will re-export the goods as unsuitable if it is not so, hence any duty discharged on such goods re-exported needs to returned to an importer. The issue is no more res integra, covered by the judgment of the Hon'ble Supreme Court in the case of Rochiram & Sons Vs. Union of India [2008 (4) TMI 45 - SUPREME COURT]. Therefore, the impugned order is unsustainable and set aside. - Decided in favour of appellant with consequential relief

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• 2016 (6) TMI 392
  Refund claim - Custom duty and interest paid towards bill of entry which was showing pending since 2007 - Rejected on account of non submission of documents - Import of 200 pcs of 1GB DDR 2 SD RAM Modules - Goods not cleared as per statement therefore re-called back by the supplier - Held that:- though no evidence was produced regarding the export of the goods but at the same time it is clearly observed by the lower authority in the impugned order the goods have not been delivered to the appellant i.e. after payment of duty in 2003 against bill of entry, out of charge order was not given. This clearly shows that irrespective of the position of re-export the fact is not under dispute that the goods in respect of which custom duty and interest was paid has not been delivered to the appellant. If the bill of entry has been filed and the custom duty has been paid then custom department should deliver the goods to the importer and in such case no refund shall arise. However in the present case, it has been informed by the assessment group of Customs that no out of charge was given to the said bill of entry and it also informed that no re-export permission was given to the importer, therefore either delivery of the goods should be given to the appellant and if department is failed to give delivery of the goods by not giving out of charge then appellant shall be entitle for the refund of the duty and interest paid by them. I therefore direct the Adjudicating authority either to give out of charge order and deliver the goods to the appellant or if it is not possible, refund should be granted to the appellant in accordance with the law. - Appeal allowed by way of remand

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• Corporate Laws

• 2016 (6) TMI 388
  Qualification of bidder for tender - High Court relied on Section 366 of the Companies Act which falls under Chapter XXI and some other statutes to conclude that the word 'Company' used in the NIT was somewhat vague. Thereafter, it was held that respondent no.1 was erroneously held ineligible and excluded from the tender process - Held that:- Section 366 of the Companies Act is completely inapplicable to the facts and circumstances of the case. The provisions of Section 366 of the said Act are applicable only to that part of the Companies Act to which a reference has been made in that Section. Similarly, reliance placed for interpreting ‘company’ on several other statues such as the Income Tax Act, Negotiable Instruments Act, Employees State Insurance Act and Minimum Wages Act etc. is wholly irrelevant. On reading of the terms of the NIT it is clear that the word “Company” can only mean a company as understood under the Companies Act and cannot be read to include a firm. The word “Company” in the NIT is incapable of any other meaning.The NIT makes it absolutely clear that only an individual or a company is eligible to participate in the tender. Since Respondent No. 1 is neither an individual nor a Company but a firm, Respondent No. 3 was fully entitled to reject the bid of the said respondent. Under the circumstances, we are of the opinion that the decision of the High Court deserves to be set aside and we do so accordingly.

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• Service Tax

• 2016 (6) TMI 416
  Imposition of Cost on adjudicating authority - Payable to Prime Minister's National Relief Fund - Held that:- the Tribunal had recorded that the analysis of the adjudicating authority was nothing but verbatim reproduction of the submission of the appellant and no finding was recorded about the taxability of services and the analysis/discussions/findings of the adjudication are very shoddy. It had been highly and conspicuously nonspeaking, non-reasoned, arbitrary and cavalier while passing the order. The adjudicating authority had passed the order without application of mind and such orders adversely and severely impinge upon the public trust in the public authorities. It was further recorded that a public authority in such circumstances while performing quasi-judicial function deserves to be put to costs. Accordingly, the Tribunal imposed the cost of Rs. 25,000/- on the adjudicating authority who passed the order in question. No illegality or perversity could be pointed out in the aforesaid findings recorded by the Tribunal which may warrant interference by this Court. - Decided against the Revenue

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• 2016 (6) TMI 415
  Period of limitation - Refund claim - Erection, Commissioning and Installation Services - Amount deposited by mistake for the period prior to 16.06.2005 as the services provided by the petitioner was added in the Finance Act, 1994, for the payment of Service tax with effect from 16.06.2005 - Held that:- the show cause notice was given by the respondents on 20.11.2009 for the payment of service tax for the year 2004-05 and for the year 2005-06. This amount was never recovered by this petitioner from the persons to whom the services were provided by this petitioner in the relevant years. As there was no tax liability at all because, the tax liability starts from 16.06.2005 and therefore, the amount deposited by this petitioner which is, ought to be refunded by the respondents. Section 11B of the Central Excise Act to be read with Section 83 of the Finance Act, 1994 are not applicable to the facts of the present case because, the amount paid by the petitioner is never under the Central Excise Tax nor under the service tax when there is no liability to make the payment of the amount and under the mistake of facts or under mistake of law or under both if any amount is deposited by the assessee, the same cannot be retained by the Union of India under the one or other pretext when a service provider is not liable to make payment of the service tax and if any payment is made, it cannot be covered under Section 11B ibid to be read with Section 83 ibid. - Petition allowed and disposed of

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• 2016 (6) TMI 414
  Refund - Period of limitation - Commercial or Industrial Construction Services - Service tax paid on the output service on which there was no levy - amount paid was without authority of law - Held that:- at the time of payment the assessee pays the amount under a particular head such as service tax, excise duty etc. and when subsequently it is found that this amount is not payable, the same amount stand refundable to the assessee and such refund is treated as refund of service tax/duty only. Therefore, the provision if any applies for refund of such duty is only provided under Section 11B and there is no any other provision. Any amount which is to be refunded shall be refunded in accordance with Section 11B which include the condition of time limitation. The issue has been clearly settled by the Hon'ble Supreme Court that even though the refund of duty recovered without authority of law but for the refund claims made before the departmental authorities, limitation provided under the Customs Act/Central Excise Act or the Rules made thereunder is applicable. The authorities functioning under the Act bound by its provision. Since the refund of any amount is governed by Section 11B and there being no other provision, this Tribunal being a creature under the Central Excise/Customs Act cannot go beyond the statute and therefore cannot relax the time limitation provided under the statute. Therefore, the refund claims being filed after one year is hit by limitation and therefore correctly rejected by the lower authority. The impugned orders are upheld. - Decided against the appellant

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• 2016 (6) TMI 413
  Period of limitation - delayed filing of appeal before the Commissioner (Appeal) - Demand of Service tax & Education Cess - Appeal filed by appellant beyond the maximum prescribed period of 3 months - Held that:- the Supreme Court in the case of Singh Enterprises vs. Commissioner of Central Excise [2007 (12) TMI 11 - SUPREME COURT OF INDIA], while dealing with Section 35 of the Central Excise Act has held that the Commissioner did not have the power to condone the delay beyond the period of 30 days from the day of expiry of 60 days prescribed for filing statutory appeals. Therefore, having regard to the decision of Supreme Court no merit found in the appeal. - Decided against the appellant

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• 2016 (6) TMI 412
  Stay petition - realization of demand during pendency of appeal - goods used in works contract prior to 01.06.2007 - Held that:- in view of the settled position of law enunciated by Apex Court in the case of CCE, Kerala Vs. Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT], dispensing with the requirement of pre-deposit, the appeal is remitted back to the adjudicating authority with some guidelines. - Stay application disposed of

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• 2016 (6) TMI 411
  Cenvat credit of service tax paid for maintenance of garden in the premises of the appellant to Agri-Horticultural Consultants - Held that:- Denial of Cenvat credit in respect of the impugned service and imposing penalties on the appellants are set aside as this service was utilized in relation to the manufacture of the final product. See India Glycols Ltd [2014 (1) TMI 1549 - CESTAT NEW DELHI] wherein held that since this is the statutory requirement and without fulfilling the same, the appellant unit would not be allowed to carry out manufacturing activity, the services of manpower supply used for the maintenance of the green belt have nexus with the manufacture of the final product - Decided in favour of assessee.

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• 2016 (6) TMI 410
  Payment of service tax to the CHA and Courier Agency for export of finished goods - refund of service tax in terms of Notification No. 41/2007-ST dated 06.10.2007 as amended vide Notification No. 17/2008-ST dated 19.02.2008 rejected - Held that:- After going through the details given by the appellant along with the certificates of the CHA, find that the appellant has furnished sufficient details which if examined can establish the link proving to the fact of export of goods by the said CHA. This exercise has not been done by the lower authorities. Therefore find substance in the submission of the learned counsel for the appellant and that the impugned orders are not sustainable in law and therefore set aside the orders and remand both the cases to the original authority with the direction to examine the details furnished by the appellant to prove the payment of service tax to the CHA and Courier Agency for export of finished goods - Decided in favour of assessee by way of remand.

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• 2016 (6) TMI 409
  Imposition of penalty - Section 76 of the Finance Act, 1994 - default in payment of service tax - paid afterwards with interest - manpower recruitment or supply agency service - no suppression or intention to evade tax - tax collected had not been paid - Held that:- the appellant has produced documents showing that his mother was hospitalized for serious ailment and that he was going through utter financial crisis. In the judgments relied by the appellant, the penalty under Section 76 has been set aside when service tax along with interest was paid after pointing out by department. Therefore, by following the dictum laid in the judgments of Tribunal in the case of Vista Infotech Bangalore Vs. CST, Bangalore [2009 (8) TMI 289 - CESTAT, BANGALORE], and the decision of Karnataka High Court in the case of CST Vs. Master Kleen [2011 (9) TMI 788 - KARNATAKA HIGH COURT] and in the case of CST Vs. Prasad Bidappa [2012 (8) TMI 749 - KARNATAKA HIGH COURT], I hold that the penalty imposed under Section 76 is liable to be set aside. - Decided in favour of appellant

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• Central Excise

• 2016 (6) TMI 408
  Condonation of delay - 405 days - Imposition of duty and personal penalty - Held that:- the said order certainly is prejudicial to the interest of the appellant. Though, while dismissing the condonation petition, CESTAT, Chennai Bench, has observed that there is no justifiable cause, going through the reasons assigned, it could be seen that the appellant has not offered a detailed explanation. Also the Tribunal has observed that dislocation of residence is not a justifiable cause. But the fact remains that the appellant has contended that his mother had passed away. As rightly contended by the appellant that length of time, should not weigh in the minds of the Courts/tribunals, in considering the sufficiency of the cause shown, but at the same time, cause should be explanatory. The appellant is also of the view that reasons assigned are not explained in details, but considering the prejudice to be caused, in the event of dismissal of the applications filed to condone the delay and following the principles of law enunciated in the decision of the Hon'ble Supreme Court, we are inclined to condone the delay of 405 days in filing the appeal before CESTAT on condition that the appellant pays costs of a sum of Rs. 2,500/- in each of the appeals to My Lord the Hon'ble Chief Justice's Relief Fund, within a period of three weeks. - Decided in favour of appellant

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• 2016 (6) TMI 407
  Waiver of pre-deposit - Imposition of pre-condition - Deposit of a sum of Rs. 25 lakhs - No reasons provided for such imposition - Held that:- since the time to make the pre-deposit has expired and the proceedings are still pending, the petitioner will deposit a sum of Rs. 25 lakh with the appropriate Authority within a fortnight from date. In default of deposit as directed herein the proceedings before CESTAT will stand dismissed. In the event the deposit as directed is made within the time specified, the Appellate Tribunal is requested to take up for consideration of the appeal as expeditiously as possible. - Petition disposed of

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• 2016 (6) TMI 406
  Refund claim in respect of the levy of compounded duty disputed - Discharge the burden of unjust enrichment - Held that:- C.A. certificate does not help the appellants. Under the Compounded Levy Scheme, the invoices do not show the duty element. The duty is calculated on the basis of number of machines installed and the duty element is recovered by the assessee as part of the cost of production. There is no separate entry with respect to the duty amount in the invoices. The certificate of C.A. states that the above mentioned firm had made the payments as per the demand raised by the Government Department and subsequently no amount either before or after payment has been recovered from the Customers towards duty. The invoices issued by the appellant would obviously not shown any duty element and, therefore, question of showing the recovery of duty separately does not arise. In view of the above, the C.A. certificate has no evidential value. If the amount has been shown as expenditure in the Profit and Loss account, it amounts to passing of the incidence of duty to the customers. Unjust enrichment is a question of fact and the said order does not disclose as to what was the nature of document which was produced and why the burden cast on the assessee was discharged by them. Thus find that the appellant has not been able to discharge the burden of unjust enrichment raised by the Revenue

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• 2016 (6) TMI 405
  Adjustment of excess payment of duty towards short payment of duty ascertained at the time of finalisation of provisional assessment - Held that:- When there is provisional assessment, the same is applicable to the entirety of the goods and to arrive at final duty liability, adjustments of duty excess paid to the short payment have to be made. See Toyota Kirloskar Auto Parts Pvt. Ltd. vs. CCE, LTU, Bangalore [2011 (10) TMI 201 - KARNATAKA HIGH COURT ] In conclusion, it is to be held that there is no bar in adjusting the excess paid duty towards the duty short paid. Consequently, the appeals succeed in favour of assessee.

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• 2016 (6) TMI 404
  Denial of credit - transport documents and the check post details raised a serious question regarding the bonafidiness of the transport of duty paid inputs lying in stock at their Gurgaon unit and later transported to the new Bhiwadi unit - Held that:- There is no dispute regarding the raw material account and other statutory records maintained both at Gurgaon unit and Bhiwadi unit. When the licence was surrendered for Gurgaon unit, the officers conducted verification of records regarding input receipt credit availability etc. and finally the surrender of certificate was accepted on 18/2/2008. The truck numbers in the GR forms issued by the transport were apparently not correct. This by itself does not establish the non-transport of goods. The claim of the appellant that the usual practice of the transporters is to indicate some truck numbers as per the initial plan or to get business and later transport the goods through other own vehicles or arranged vehicles. I find that the discrepancy in the truck numbers alone cannot lead to the conclusion of non-transport/non-receipt of duty paid inputs in Bhiwadi unit in the absence of clear evidence regarding improper diversion of the said items. The material receipt record and the statutory records maintained at Bhiwadi cannot be easily discounted. Certain duty paid inputs have in fact been cleared to some buyers as such. There has been no verification to check up the correctness of such transaction. In the absence of any allegation such transactions are to be admitted as correct and supporting the contention of the appellant at least partially. Regarding the stamp on the check post, it is noted that the inter-stage movement of goods have been recognized by the concerned Sales Tax Authorities and the assessment for the material period have been completed factoring the inter-stage movement of the impugned inputs to Bhiwadi unit. The denial of credit is mainly sought to be made on various purported discrepancies in the GR forms, date of invoices and actual receipt of goods in Bhiwadi unit. Though certain enquiries conducted by the Department raised certain suspicion in this case, there is no categorical conclusion to the enquiry through a finding that the duty paid inputs have been diverted to place other than their Bhiwadi unit or the production and other records of Bhiwadi unit do not reflect the correct position. Too many un-filled gaps in the case makes the proceeding before lower Authorities as unsustainable.- Decided in favour of assessee

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• 2016 (6) TMI 403
  SSI Exemption - Clubbing of clearance of 3 manufacturing units - duty demand alongwith interest and equal amount of penalty - mis-utilisation of SSI benefit provided in Notification No.8/2001 (CE) dated 01.l03.2001, by not accounting for the clearance value of its other units M/s. Manish Garments and M/s.Manish Apparels in its books of accounts - Held that:- Adjudicating authority has not specified that out of the 3 appellants, who is the principal manufacturer and who are the dummy units of the principal manufacturer. In absence of clear specifications with regard to the principal manufacturer, in whose turn over, the clearances of dummy units have to included, it is not only difficult but imposible to recognise as to who is the principal manufacturer, on whom the duty liability can be fastened. The operative portion in the adjudication order fixing the liability for payment of duty and penalty by all the appellants, jointly and severally, clearly shows that the Revenue has recognised implicitly all the appellants as independent units. Hence, without categorically specifying or bifurcating as to who is the principal manufacturer and who are the dummy ones, floated with a view to conceal clearance of principal manufacturer, confirmation of duty demand will not stand for judicial scrutiny. The SSI exemption provided under Notification No.01.03.2001 cannot be denied on the ground that the said Notification specifies the manufacturer and not the manufacturers for the purpose of getting SSI benefit. Thus find support from the decision in the case of Shiva Exim Enterprises (2005 (2) TMI 294 - CESTAT, NEW DELHI ) cited by the ld. Advocate for the appellant, wherein it has been held by the Tribunal that clubbing of clearance of 2 Units can be ordered only if one unit is the principal unit while the other is a dummy one, which had been floated with a view to camouflage clearance of the principal unit. Though the Revenue has filed Civil Appeal against the decision of Tribunal in the case of Shiva Exim Enterprises (supra), the Hon'ble Supreme Court have dismissed the same holding the view taken by the Tribunal that there could not have been the clubbing of the two units. - Decided in favour of assessee.

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• 2016 (6) TMI 402
  Eligibility to avail the credit on input services - generation of electricity which is partly cleared to their sister units who are also engaged in the manufacture of dutiable final products - Held that:- Considering that the electricity has been used in the manufacture of dutiable final products and also the fact that all units belong to the appellant the denial of credit is not justifiable in the present case. Further, it is a fact that if the appellant were to follow the procedure for input service distribution the credit eligibility on part of the electricity cleared to sister unit could not have been questioned and the credit could have been passed on to the unit which is actually using the electricity or retained fully by the appellant himself without proportionate distribution. Such being the factual position, find that the impugned orders are not sustainable. Further, the reliance placed on Maruti Suzuki Ltd. vs. CCE, Delhi - III (2009 (8) TMI 14 - SUPREME COURT) is not appropriate. The input service credits attributable to the electricity sold to utility companies are not available to the appellants as held by the Hon’ble Supreme Court. This, the appellants are not contesting and have already reversed the amount towards such input service credits. - Decided in favour of assessee.

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• 2016 (6) TMI 401
  Non-payment of cenvat credit on supplementary invoices - penalty imposed - period of limitation - Held that:- The admitted facts are that the appellants cleared inputs as such, on which they have availed cenvat credit. The credit on inputs was availed on two different dates. Initially, on the main invoice and later on the additional amount based on supplementary invoice. When such inputs were cleared, they paid an amount equal to the credit taken for the first time without considering the credit taken on supplementary invoices. The plea on the part of the appellant is that there has been an omission mainly due to the credit taken on two occasions and not with an intent to avoid the payment of duty. The admitted facts are that the amount along with interest so payable has been paid as pointed out by the Audit. As find that based on the facts as narrated above, no proceedings by way of issuance of notice is required in the present case in terms of sub-section (2 B) of Section 11A of the Central Excise Act, 1944. In the present case, the show cause notice issued after almost three years of Audit invoked extended period for demanding the amount, which is paid with interest by the appellant much before the issue of notice. As such, find that the impugned order is not sustainable inasfar as the penalty is concerned. The appeal is allowed to that extent.

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• 2016 (6) TMI 400
  Cenvat Credit on various MS items - disallowance of claim as they are used only as supporting structures to support boilers, its components and accessories - Held that:- It is an admitted fact that during the period of dispute there has been large number of litigation regarding eligibility or otherwise of similar set of items for various accesses under Cenvat Credit Rules, 2002/2004. As seen from the decision of the Tribunal in Vandana Global Ltd. vs CCE, Raipur reported (2010 (4) TMI 133 - CESTAT, NEW DELHI (LB) ), the eligibility in these type of items for credit have been a subject matter of large number of decisions. Examining all these, the Tribunal arrived at the decision that goods like cement and steel items used for laying foundation and for building support structure cannot be treated either as inputs for capital goods or as inputs. Considering these factual position, it is not tenable to hold that the respondent suppressed material facts and intended to evade payment of duty. Further, admittedly the respondents have been filling the statutory returns with full particulars as specified therein which also included the disputed credits. As such, the demand in the present case is also hit by time bar. - Decided against revenue

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• 2016 (6) TMI 399
  Ineligibility of cenvat credit - waiver of penalty - Held that:- As find that there is no suppression of facts as suppression is a finding which would presuppose non disclosure and there has been no withholding of information in the instant case. A mere failure to disclose certain facts to the department would not result in willful suppression of facts as decided by the Honble Supreme Court on various occasions and in particular in the case of Pahwa Chemicals Pvt. Ltd. Vs- CCE (2005 (9) TMI 92 - SUPREME COURT OF INDIA) wherein held that mere failure to declare does not amount to willful mis-declaration or willful suppression. There must be some positive act on the part of the party to establish either willful mis-declaration or willful suppression. All the particulars were culled out only from the respondents record. It is also a fact that when the department culls out a case from the record of the assessee the allegation of suppression is unsustainable. The respondent has raised a specific plea that the Audit parties have visited their unit several times and the Revenue is fully aware of their activities. This fact has not been countered by the Revenue stating that the appellant's record were not inspected and that Audits were not conducted. I find that all the judgements relied upon by the Revenue are inapplicable as in the instant case the availment of cenvat credit was on account of misinterpretation of rules by the appellant and the Revenue had conducted Audits which would go to show that there was in fact no suppression of facts. Thus the appellants are entitled to grant of waiver of penalty.

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• CST, VAT & Sales Tax

• 2016 (6) TMI 391
  Validity of default notices of assessment of tax and interest issued u/s 32, 33 and 59(2) of DVAT - Availability of alternative remedy - Ex parte notices - notice deemed to be served - pasting of the notices on the web page of the dealer - Held that:- the Court finds, that there are obvious glaring errors in each of the impugned orders which appear to system generated and issued without application of mind. In the circumstances relegating the Petitioner to the alternative remedy of going before the OHA would cause further delays in resolving the disputes that have arisen and would not be efficacious. Therefore, the above preliminary objection is rejected. Service of notices - Section 59 (2) DVAT Act - Held that:- Unless it has been agreed to the contrary between the originator and the noticee, the service of an electronic record will occur only when it enters a computer resource outside the control of the originator. Section 100A of the DVAT Act, inserted with effect from 16th November 2005, enables the Commissioner to issue summons/notices/orders in electronic form. Section 100A of the DVAT Act appears to be in conformity and consistence with Sections 12 and 13 of the IT Act. The originator of the notices is a statutory authority, having the powers in terms of the DVAT Act read with the DVAT Rules to prescribe the manner of service of electronic orders, summons, notices etc. The Commissioner, as the originator of the notices under Section 59 (2) of the DVAT Act, has in terms of the order issued by him on 17th January 2014 deemed that pasting of the notices on the web page of the dealer would be deemed service of notice on the dealer. The Petitioner being a registered dealer under the DVAT Act ought to have been aware of the Order dated 17th January 2014 issued by the Commissioner. The Petitioner was required to go to its account on the DT&T website to view the notices posted on the said website. If the Petitioner had given the mobile phone details to the DT&T, it would have received SMS alerts as well. The failure by the Petitioner to go to the website to view the impugned notices, notwithstanding the order dated 17th January 2014 of the Commissioner, disables it from contending that there is no proper service on it of the said notices under Section 59 (2) of the DVAT Act. Issuance of notices by Record Keeper - Held that:- while there is a noting signed by the Record Keeper that reads: “default assessment orders and penalty framed under Section 32 and 33", there is nothing beyond that to suggest that it was the Record Keeper who framed such orders. It is plausible that the Record Keeper was merely noting the fact of the notices having been framed. From this it is not possible to infer that the impugned notices of default assessments of tax, interest and penalty were issued by the Record Keeper and not by the VATO. Validity of ex parte default notices of assessment of tax, interest and penalty - Section 32 & 33 of the DVAT Act - Inter-state sales - Held that:- each of the impugned notices of default assessment of tax and interest reveal inter alia the tax period for which the demand has been raised. While Column 2 titled 'turnover reported by dealer' contains a figure (presumably as shown in the return filed by the dealer), Columns 3 and 4 titled 'turnover assessed' and 'tax paid' are shown as '0'. The remaining Columns 5, 6, 7 and 8 titled 'tax assessed', 'additional tax due, 'interest' and 'total amount due contain figures. If the turnover assessed is zero, it is not possible that the tax assessed is at a figure for e.g., of Rs. 14,43,938 for the first quarter of 2014. This sort of obvious error can only be explained by some defect in the system through which the said notices have been generated. No attempt has been made by the DT&T to explain the error. The second obvious error is that the impugned notices of default assessment claim that the Petitioner made inter-state sales to the dealer in Rajasthan who was found to be a 'suspicious/bogus' dealer. The notices proceeds to state that “since the dealer has made ISS of fabrics to the tune of.”, he is being asked to pay additional tax and penalty under Section 86 (10) of the DVAT Act. If indeed the sale was an inter-state one, then only the CST Act would apply and not the DVAT Act. Therefore, each of the notices issued are set aside. Mr Narayan maintains that what the DT&T is seeking from the Petitioner is the information and documents mentioned in the notices dated 11th August 2015 issued under Section 59 (2) of the DVAT Act. Therefore, there is no need to issue fresh notices. - Petitions disposed

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• 2016 (6) TMI 390
  Grant of exemption of Entertainment Tax for Tamil movie - application not processed in time - film is due for release - Held that:- the petitioner's application for the grant of exemption of Entertainment Tax has not yet been processed by the respondents. If it is not processed at the earliest point of time, the petitioner would be put to hardship and prejudice. Therefore, the respondents are directed to process the petitioner's application for the grant of exemption of entertainment tax and after getting the concurrence from the Election Commission of India, suitable orders can be passed in the application following the guidelines issued by the Hon'ble Supreme Court of India in the petitioner's own case reported in [2015 (8) TMI 1288 - SUPREME COURT] - Petition disposed of

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• 2016 (6) TMI 389
  Assessment of tax due @ 150% - Section 25(4) of the Act - Pea-gravel - Petitioner submitted that it remained under the impression that since Review Petition has been filed the assessment proceeding should be stayed and therefore he did not appear before the assessing officer - Held that:- we are not at all in agreement with the submission of petitioner. When there was no stay order by any higher authority, it was the duty of the assessee to have appeared before the assessment officer. After the Division Bench delivered its Judgment, the petitioner knew that there was a judgment against him which he very candidly admitted in his communication. Therefore, he was duty bound to appear before the assessing officer with all his accounts. If he has not done so it is at his own peril and now he cannot Turn around and say that he should be granted another opportunity to place his accounts before the assessing officer. Therefore, the prayer of the petitioner is rejected and the assessment order in so far as the assessment of the tax is concerned is upheld. Demand of interest - Section 25(4) of the Act - Petitioner contended that plaintiff did not deposit the tax in view of the judgment delivered by the Court in the year 2006 and therefore, he should not be made liable to pay tax for this period - Held that:- this is not a case where a person has not paid tax on the basis of some litigation or decision rendered in a case of other parties. It is the petitioner himself who approached this Court. Once a party approaches this Court and gets a stay order or gets an order in his favour the party must be aware that if the stay order is vacated or if the final judgment is set aside or modified all consequences will follow. Interest is statutorily payable and we, therefore, have no hesitation in holding that the petitioner is liable to pay interest on the amount of tax assessed by the assessing officer from the date when the amount fell due till payment of the assessed amount as per the rates fixed in the TVAT Act. Imposition of penalty - Section 31(5) of the Act - petitioner was not trying to evade the payment of tax - Held that:- every citizen has right to approach this Court. The petitioner had approached this Court and a Single Judge had decided the matter in his favour in the year 15.06.2007 that pea-gravel is not exigible to tax. Therefore, there was no question of the petitioner filing any returns because once this judgment had been passed in favour of the petitioner the petitioner was justified in not submitting returns because no returns are required to be submitted in respect of an item which is not exigiible to tax. Furthermore, penalty under Section 31(5) can only be imposed if the Commissioner is satisfied that the dealer in order to evade or avoid payment of tax has not filed the returns within the prescribed period. As held by us above this is not a case of the dealer avoiding to file returns on this ground. Therefore, for the same reasons penalty under Section 25(4) can also not be imposed because the petitioner had sufficient cause not to file a return during that period. - Decided partly in favour of petitioner

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