Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 13, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Exemption towards supply of services provided to government under any training programme - Recipient of the service OKCL is a body corporate which cannot be regarded as Government - Benefit of exemption cannot be extended.
Income Tax
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TDS u/s 195 - TDS liability on expenditure of commission payment - payments made by the assessee to alleged foreign commission agents does not involve element of income assessable in India, and therefore, there is no obligation upon the assessee to deduct TDS
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Disallowance of deduction u/s 35 - assessee had made donation to a institute engaged in Scientific Research - no additional tax burden can be put on the assessee by making retrospective operations of certain notifications or withdrawal of notifications.
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Receipt of agency commission - amount related to renting out of property - nature of income - house property or busniss income - said receipt of agency commission would squarely fall under the ken of business income.
Customs
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Refund of Terminal Excise Duty - Deemed Exports - Supplies made under ICB - no customs Duty exemption to goods supplied to the Chennai Metro Rail Project was ever given - Respondents are directed to process the petitioners’ claim for TED refund for the concerned period.
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Jurisdiction - CESTAT - Nothing is placed on record to suggest that, the single member passing the impugned was duly authorized by the President of CESTAT to hear and adjudicate the matter, sitting singly. In absence such authorization under Section 129C(4) of the Act of 1962, I am afraid that, the singe member had jurisdiction to decide the case and pronounce the impugned order.
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Valuation of imported goods - Lighting equipment for studios - In the absence of any evidence reflecting upon the incorrect payments made to the foreign supplier, the transaction value cannot be rejected and enhanced
Service Tax
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Renting of immovable property - Leasing out of water bodies for the purpose of aquaculture and fishing rights - scope of negative list as provided under section 66D of the Finance Act - not liable to service tax.
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CENVAT Credit - input services for providing output service namely sponsorship service - Appellant has collected service tax wrongly from service recipient and paid to Central Government instead of the service recipient paying it directly to Central Government for sponsorship services - the demand raised for the extended period cannot sustain.
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Refund of un-utilized CENVAT credit - denial of refund on the ground that respondent had not raised invoice within 14 days of rendering the service - it is merely a procedural violation - refund cannot be denied on this ground.
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Business Auxiliary Service - The process of lamination carried on HDPE/PP fabrics, paper bags and cotton fabrics etc. amounts to manufacture within the meaning of section 2(f) of Central Excise Act, 1944 - no service tax liability.
Central Excise
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Classification of goods - Pipes and Couplings - Parts of A.C. or not - Pipe fittings made out of pipes and tubes continue to be pipes and tubes. Therefore, it is not a different article for excise classification but only a smaller article within the same classification provided that there is no change in basic physical property and possible end use.
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Classification of manufactured goods - choco-dipped wafer layers and wafer covered with delicious chocolate layer - classifiable under 1905-32-11.
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Valuation - such specific engineering design and drawing are pre-requisite for manufacturing the conveyor belts and therefore the value of such drawing and designs is intrinsic to the value of the product namely conveyor belts, manufactured by the appellant.
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CENVAT Credit - input services - services received by them for raising the height of tailing Dam for disposal of Industrial Waste - credit allowed.
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Waste - Fatty Acid, Soap Stock, Spent Earth etc. - process of manufacture is for refined oil and the waste which arises during the course of such manufacture cannot be considered as manufactured excisable goods.
VAT
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Classification of goods - Sharbat Rooh Afza - "Sharbat Rooh Afza" is neither a fruit drink nor a fruit juice nor a processed fruit rather it is a "Non Fruit Syrup/Sharabat" being a concentrated sugar syrup
Case Laws:
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GST
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2018 (7) TMI 756
Valuation - Trade Discount - Whether the amount paid to dealer towards 'rate difference' post supply can be considered for the purpose of arriving at the 'transaction value' in terms of Section 15 of the Central Goods and Service Act' 2017? The Applicant requested to permit them to withdraw the application filed for advance ruling vide their letter dated 29.05.2018, even prior to personal hearing - Held that:- The application filed by the Applicant for advance ruling is dismissed as withdrawn.
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2018 (7) TMI 755
Exemption towards supply of services provided to government under any training programme - Applicability of Entry 72 of Notification No.12/2017-Central Tax - supplies made by the Applicant to the Government and Government aided higher secondary schools in Odisha under the ICT Project - Whether the services provided by the Applicant to the Government and government aided higher secondary schools under the ICT Project, are covered under the scope of Entry No. 72 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017? Held that:- When the language of a taxing statute is clear, if the conditions of supply falls within the four corners of statute allowing exemption, it is to be exempted. If not, tax is to be levied. No exemption can be granted by inference or analogy. No supply can be taxed or excluded from tax on the basis of intention or scheme of the Act. The contract is for supply, installation, maintenance and commissioning of projection system, interactive white board, computer hardware, connected accessories, installation of soft ware and other allied accessories, site preparation, maintenance of equipment and provision of computer education services for 5 years in 3409 Govt, and Govt. aided high schools of Odisha under ICT@school project in the state of Odisha. The total contract value is ₹ 617,18,63,000/-. Thus, the contract is clearly for supply of goods and services including training. It is a composite supply having distinctly identifiable components with distinct value attributable to each of the components. No doubt, the applicant has provided computer training service as part of the contract, but the said service is not pre-dominant or principal supply. In fact the contracted supply has three distinct supply components out of which training is a small component. It is not a case of transfer of goods without consideration but rather a case of supply of goods on consideration payable in installments agreed between the contracting parties. Besides, as per para 1(c) of Schedule II of the OGST/CGST Act ,any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full consideration as agreed, is a supply of goods and not a service. Expenditure borne by the Central Government, State Government or Union territory administration - Held that:- It is quite clear that as per the contract, payment for the work done is to be made by OKCL and not the state government, though the source of funding the expenditure is by the State Government. Recipient of the service OKCL is a body corporate which cannot be regarded as Government - The supply undertaken by the applicant is in the nature of composite supply, service provided or to be provided is not exclusively in the nature of training programme - Though the source of funding for the service is the state Government and Central Government, yet, as per the contract, the payment responsibility is vested on OKCL. Ruling:- The activities of the applicant by way of supply, of goods valid services under the ICT project are not covered under Entry 7.2 of the notification no.12/2017 dated 28.06.2017, to be entitled to the benefit of exemption from GST.
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2018 (7) TMI 754
Extension of time to obtain the final registration - CGST Act, 2017 and the WB GST Act, 2017 - Held that:- The Central Goods and Service Tax Act, 2017 and West Bengal Goods and Service Tax Act, 2017 are new in their operation. In the facts of the present case, it appears that, the petitioner has suffered under circumstances beyond its control, preventing the petitioner to take appropriate steps under the two Acts of 2017 - It would be appropriate to request the first respondent so far as the State authorities are concerned and 4th respondent so far as the central authorities are concerned to consider and decide the request of the petitioner for grant of permanent registration, in accordance with law. The State and the Central Government will consider the grant of final registration under their respective jurisdiction - petition allowed.
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Income Tax
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2018 (7) TMI 753
Nature of land sold - capital asset or agricultural land - maintainability of appeal - Held that:- Right of appeal is not automatic. Right of appeal is conferred by statute. When statute confers a limited right of appeal only in a case which involves substantial questions of law, it is not open to this Court to sit in appeal over the factual findings arrived at by the Appellate Tribunal. In this case, the learned Tribunal arrived at the factual finding that the land in question sold by the respondent assessee was agricultural land. Mr.T.R.Senthil Kumar, emphatically argued that the Assessing Officer arrived at his finding based on the fact that the land in question had been classified in the records of the Sub Registrar Office as revenue land. However, as would appear from the order of the assessment itself, it was classified as agricultural land in the revenue records. Even otherwise, Tribunal had looked into the relevant materials including the revenue records, as also records which indicate that the respondent assessee ran a Nursery. The learned Tribunal was of the view that whether there was agricultural income or not was not relevant. No fault can be found with the reasoning of the learned Tribunal. The fact that there was loss and not income could not have made any difference to the nature and character of the land. No substantial question of law.
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2018 (7) TMI 752
Bogus purchases - estimation of income - Held that:- The sales turnover achieved by the assessee has not been disputed by the revenue and the payments were through banking channels. The assessee was in possession of primary purchases documents. At the same time, the assessee could not conclusively substantiate the purchases made by him and failed to produce any of the party to confirm the transactions. Notices issued u/s 133(6) elicited no satisfactory response. Assessee was confronted with the adverse material during assessment proceedings. The delivery of material could not be substantiated by the assessee. All these factors, in our opinion, cast a serious doubt on assessee’s claim. CIT(A) erred in giving full relief to the assessee by observing that the cross examination was not provided to the assessee whereas the assessee could not discharge the primary onus of proving the transactions beyond doubt. The adverse material, as available on record was duly confronted to the assessee whereas the assessee could not substantiate delivery of material and also could not produce any of the four parties to confirm the transactions. Addition, in our opinion, which could be made, was to account for profit element embedded in these purchase transactions to factorize for profit earned by assessee against possible purchase of material in the grey market and undue benefit of VAT against such bogus purchases. We estimate the same @12.5% of alleged bogus purchases of ₹ 35,54,956/- which comes to ₹ 4,44,370/-. The addition to that extent stand confirmed by us. The revenue’s appeal stand partly allowed.
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2018 (7) TMI 751
Disallowance u/s. 14A read with rule 8D - Held that:- We note that when assessee is possessed of mixed funds which includes its own funds in sufficient quantity, a presumption that its own funds were utilized for the advances is to be drawn as held by the Hon’ble Bombay High Court in Reliance Utility & Power Ltd. Vs. CIT [2009 (1) TMI 4 - BOMBAY HIGH COURT]. Relying on the aforesaid decision of the Hon’ble Bombay High Court, we find force in this ground raised by the assessee. Therefore, we direct the AO to verify the facts stated above and if it is found that assessee had own funds to make investment in tax free securities, then no disallowance u/s. 14A of the Act is warranted. So this ground of assessee is allowed for statistical purpose. Whether the Ld. CIT(A) is justified in directing the AO compute the disallowance under rule 8D(ii) and 8D(2)(iii) by adopting those investments which have yielded exempted dividend during the relevant year? - Held that:- This Tribunal has consistently followed the dictum of law laid down in REI Agro Ltd. Vs. DCIT [2013 (9) TMI 156 - ITAT KOLKATA] in which the Tribunal held that only investment which has given rise to the exempted income should be taken into consideration while computing disallowance u/s. 14A read with Rule 8D (iii) of the Rules. This order has been upheld by the Hon’ble Calcutta High Court [2013 (12) TMI 1517 - CALCUTTA HIGH COURT]. CIT(A) order is confirmed only in respect to his direction for application of Rule 8D (iii) and since the Ld. DR was unable to bring on record any change in law or facts, we do not find any infirmity in the order of the Ld. CIT(A). Treatment to the expenses of ERP upgradation -revenue expenditure or capital - Held that:- We note that the issue is squarely covered in favour of the assessee by the decision of ITAT in assessee’s own case for AYs. 2003-04, 2004-05 and 2008-09 and the Ld. CIT(A) has given relief to the assessee by following aforesaid decisions, cited supra. Since the Ld. CIT(A) has directed the AO to consider the software expenses as allowable revenue expenses by following the aforesaid decisions of ITAT, supra and the Ld. DR was unable to bring on record any change in law or facts, we do not find any infirmity in the order of the Ld. CIT(A). Proportionate disallowance of interest attributable to CWIP - Held that:- We note that the issue is squarely covered in favour of the assessee by the decision of ITAT in departmental case for AY 2008-09.
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2018 (7) TMI 750
Penalty u/s 271(1)(c) - assessee guilty of furnishing inaccurate particulars of income with regard to claim for depreciation disallowed in the assessment - Held that:- No finding whatsoever on the part of the Revenue authorities below that any detail supplied by the assessee in his return of income is found to be incorrect and erroneous or false. It is also not in dispute that the disallowance of depreciation has been accepted by the assessee. It is also not in dispute that the assessee claimed bonafide mistake in making excess claim of depreciation. AO has failed to make out the case of ‘concealment of income or furnishing of inaccurate particulars of such income’ by the assessee, so as to attract the provisions contained u/s 271(1)(c) of the Act, hence penalty levied by the AO and confirmed by the Ld. CIT(A) is hereby ordered to be deleted - Even at the time of issuance of the notice as well as at the time of passing the penalty order, AO was not clear, “as to whether the penalty proceedings are being initiated for ‘concealment of the particulars of income or furnishing inaccurate particulars of income’, rather the assessee has been charged for having ‘concealed the particulars of income as well as furnishing inaccurate particulars of such income - Decided in favour of assessee
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2018 (7) TMI 749
Nature of land sold - Agricultural or capital asset - CIT-S holding that land sold by the assessee was not a capital asset even though it had been declared as a part of industrial area by the Govt. and had in fact been sold as non agricultural land - Held that:- Agricultural land which was cultivated by the assessee for agricultural purposes, on being notified by the Govt, the land was sold for industrial purposes The impugned land was sold by the assessee is an "agricultural land" as it is shown so in the land records and the assessee has given proper explanation about not showing the agricultural income in her return of income due to smallness. In view of this we do not find any infirmity in the order of the ld CIT(A) and we uphold it. Accordingly, appeal of the revenue is dismissed.
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2018 (7) TMI 748
Benefit of exemption u/s. 11 denied - assessee had given gifts to another Trust under the name of M/s. PMR Bangaru Subbammal Educational Trust - dealing with unregistered trust - Held that:- The land had been made available to M/s. PMR Bangaru Subbammal Educational Trust, which is a Trust that does not have registration u/s. 12AA of the Act. It is also an undisputed fact that the assessee trust has given loans, which are interest free to M/s. PMR Bangaru Subbammal Educational Trust, that the objects of the assessee-trust and that of M/s. PMR Bangaru Subbammal Educational Trust are identical, would not make M/s. PMR Bangaru Subbammal Educational Trust as having registration u/s. 12AA of the Act. M/s. PMR Bangaru Subbammal Educational Trust must on its own independent status claim and have the registration u/s. 12AA of the Act. In the absence of such registration, dealing with such an unregistered trust would affect the exemption available to the assessee. Where violation of sub-section (2) of section 13 takes place the benefit, directly or indirectly, to any person referred to sub-section(3) of Section 13, then the First provisions of section 13(1) clearly states that nothing contained in section 11 or section 12 shall operate so as to exclude from the total income of the previous year of the person in receipt thereof, which clearly shows that provisions of the section-11 and section-12 are no more available in such cases. Assessing Officer was right in denying the benefit of section-11 in respect of the income of assessee as there has been violation of the provisions of the sections 13(1)(c) and 13(1)(d) read with section 13(2) of the Act. In the circumstances, the order of the CIT(Appeals) on this issue stands reversed and the order of the ld. Assessing Officer is restored. - Decided in favour of assessee. Issue of depreciation in respect of charitable trust is squarely covered by the decision of the Apex Court in the case of Rajasthan & Gujarati Charitable Foundation Poona [2017 (12) TMI 1067 - SUPREME COURT], the ld. Assessing Officer is directed to allow the assessee’s claim of depreciation.
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2018 (7) TMI 747
Deduction u/s 80P(2) - belated return filled - return filed beyond the period stipulated u/s 148 - Held that:- Return filed beyond the period stipulated u/s 148 can also be accepted and acted upon provided further proceedings in relation to such assessments are pending in the statutory hierarchy of adjudication in terms of the provisions of the I.T.Act. In view of the above conclusions of the Hon’ble High Court in Chirakkal Service Coop Bank Ltd vs CIT [2016 (4) TMI 826 - KERALA HIGH COURT] we direct the Assessing Officer to consider the claim of deduction u/s 80P of the I.T.Act as expeditiously as possible. Therefore, the appeals filed by the assessee are allowed for statistical purposes.
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2018 (7) TMI 746
TDS u/s 195 - TDS liability on expenditure of commission payment - default under section 201(1) & 201(1A) of the Act for not deducting tax while making remittance to non-residents - withholding of tax - PE in India Held that:- Assesses were engaged in manufacturing of steel billets, wire rods, bright bars etc. They have been exporting these products to foreign countries. They have certain agents who have procured orders outside India and the assessee's have paid commission on such orders. Therefore, respectfully following order of the ITAT in the case of Welspun Corporation Ltd. (2017 (1) TMI 1084 - ITAT AHMEDABAD) as well as orders in the assessee’s own case, we are of the view that no interference is called for in the order of the ld.CIT(A) that payments made by the assessee to alleged foreign commission agents does not involve element of income assessable in India, and therefore, there is no obligation upon the assessee to deduct TDS. - Decided in favour of assessee.
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2018 (7) TMI 745
Depreciation on computer software purchased separately (SAP software) - @60% OR 25% applicable to intangible assets - Held that:- As relied upon the order of the Tribunal in the case of ACIT Vs. Zydus Infrastructure P.Ltd. (2016 (8) TMI 696 - ITAT AHMEDABAD) held that licenced software are also subjected to depreciation at the rate of 60%. Tribunal also observed that even if depreciation is lowered, then there would not be any change in taxable income of the assessee, as the assessee-company is a unit eligible for deduction under section 10A of the Income Tax Act, and therefore, in either way, the entire exercise would be revenue neutral and adjudication becomes merely an academic. Claim of deduction u/s.10AA of the Act on exchange fluctuation gain - Held that:- It is undisputed that appellant realized foreign exchange on account of export from eligible unit at SEZ. Further in value terms there are two entries i.e. entry of sale on the date of export as per invoice and entry of gain / loss on account of realisation of such sale. There is no other activity of sale or services but it is on account of two different value of foreign currency for two different time frames related to one sale, hence such gain /loss is part and parcel of sale and, profit/income of the eligible unit entitled for deduction u/s.10AA of the Act. AO is directed not to reduce foreign exchange rate fluctuation gain from profits of business while computing deduction u/s.10AA
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2018 (7) TMI 744
Depreciation on account of non compete fee - Fee paid on account of trade and commerce and is a commercial right to enforce performance of the terms of the agreement Held that:- Non-compete fee paid is an intangible asset acquired by the assessee on which depreciation has to be allowed u/s. 32(1)(ii) of the act. See case of Ingersoll Rand International Ltd. [2014 (6) TMI 934 - KARNATAKA HIGH COURT]
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2018 (7) TMI 743
Disallowance of 19% of the job charges - Held that:- As the issue involved in the year under consideration as well as all the material facts relevant thereto are similar to A.Y. 2010-11, respectfully follow the order of the Division Bench of this Tribunal for A.Y. 2010-11 and restrict the disallowance made by the A.O. out of consumable expenditure at 19% of the total job charges earned to the extent of 2%. The impugned order of the Ld. CIT(A) on this issue is accordingly modified and ground no 1 of the assessee’s appeal is partly allowed. Disallowance of weigh-bridge charges under section 40(a)(ia) for non-deduction of tax at source - Held that:- Contention specifically raised by the learned counsel for the assessee for the first time before the Tribunal requires verification by the A.O. as there is no finding given either by the A.O. or by the Ld. CIT(A) on this aspect of the matter. Thus find merit in this contention of the learned DR. The impugned order of the Ld. CIT(A) on this issue is accordingly set aside and the matter is restored to the file of the A.O. for deciding the same afresh after verifying the claim of the assessee that there was no contract between the assessee and M/s. Murshed Weigh Bridge for use of waybridge - Decided in favour of assessee for statistical purposes.
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2018 (7) TMI 742
Disallowance on account of sundry balances written off u/s 36(l)(vii) - Held that:- Principle of holding the security deposits as expenditure in the capital field is concerned, we do not find any error in the order of the Ld. CIT(A). However, before us the Ld. counsel has submitted that part of the security deposits were adjusted toward pending rent and therefore, same would fall in the nature of business expenditure. We find that this issue has not been verified by the lower authorities and before coming at conclusion that the security deposits written off are not allowable as revenue expenditure, it is essential to examine the factual position, whether part of such security deposits were adjusted against outstanding rent. In view of the above facts and circumstances, we feel it appropriate to restore this issue to the file of the Ld. CIT(A) for verification of the claim of the assessee - Decided in favour of assessee for statistical purposes.
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2018 (7) TMI 741
TPA - comparable selection - Held that:- Companies functionally different with market support services segment need to be deselected from final list Forex Fluctuations, bank charges, provision for doubtful debt and provisions written back should be considered part of operating margin calculation - expenses as intrinsically related to business operation of the assessee Held that:- No infirmity in the order of the DRP holding that the losses/gains due to foreign exchange fluctuation as part of the operating margin and the bank charges as part of the operating expenditure of the assessee. Further, the order of the DRP holding the provision for doubtful debts and provision for written back as part of operating margin is also upheld. The ground raised by the Revenue on this issue is accordingly dismissed.
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2018 (7) TMI 740
Addition U/s 40(a)(ia) non deduction of TDS on generator hiring charges and transportation expenses - Held that:- Nothing has been brought on record either during the assessment or the appellate proceedings that the TDS so deducted has been deposited before the due date of filing of return of income. In view of the same, the addition so made by the Assessing officer regarding DG hire charges is hereby confirmed. Non deduction of TDS on the transportation expenses - contention of assessee as under no obligation to deduct TDS on the transportation expenses - Held that:- In this regard, we find that at the assessee’s paper book, at page 55, payment of ₹ 1.50 lakhs, ₹ 1.90 lakhs and ₹ 4 lakhs has been made on respective dates and the amounts have been debited under the head “transportation expenses”. Therefore, prima facie the contention so raised by the assessee cannot be accepted. Further, in absence of any documentary evidence in support of its contention, the addition so made by the Assessing Officer is hereby confirmed. Addition on account of interest on FDR not disclosed in the books of accounts - Held that:- CIT(A) has returned a finding that the appellant is maintaining the books of account on mercantile basis and therefore the accrued interest should have been accounted for on such FDR and should have been declared as income during the year. We do not see any infirmity in the said finding of the ld. CIT(A). However, as far as the quantum of interest is same, AR has contended that the AO has presumed accrued interest @ 10% on FDR. In light of the same, we hereby directed the Assessing Officer to apply the interest rate as applicable on the specified FDR amount as prevalent during the relevant period. Alternative plea of the ld. AR cannot be accepted as it would be a case of fresh claim and there is nothing on record in terms of any interest of secured loans which has been contractually agreed upon between the assessee and borrowers and which has not been debited in the P & L account. Unexplained cash credit U/s 68 - Held that:- Assessee was required to prove the identity, creditworthiness of the lender and genuineness of the transaction in the form of copy of return of income, computation of income and bank statement but the assessee has not furnished any details which can prove the same and in absence of the same, it has been held that the assessee has not discharged the onus cast upon him U/s 68 of the Act. The ld. CIT(A) has also returned a finding that the assessee has not discharged the onus of providing the requisite evidences to show the genuineness of loan amount received from M/s Tomar construction Company. Accordingly, we do not see any infirmity in the finding of the ld. CIT(A). Hence, the same is confirmed and the ground taken by the assessee is dismissed. Disallowance of interest U/s 36(1)(iii) - Held that:- contended by the ld. AR that interest free funds available with the assessee are more than the interest free advance to M/s Ganpati Real Mart and Developers Pvt. Ltd. and therefore, it cannot be held that the borrowed funds from the over draft account have been diverted as advances to M/s Ganpati Real Mart and Developers Pvt. Ltd. It has further been contended that the said advance is for the purpose of purchase of shop which is in the posssession of the assessee however, for some technical reasons the registry has not been made in the name of the assessee. In our view, all these contentions needs to be verified and we accordingly, set aside the matter to the file of the Assessing officer to examine. Disallowance of 30% of the diesel and fuel expenses of ₹ 1,00,000/- and repairs and maintenance expenses - Held that:- As during the appellate proceedings, no evidence has been brought on record to substantiate the expenses as having incurred for the purposes of the business. The ld. CIT(A) has returned the finding that in absence of discharging the primary onus proving that such expenses have been incurred or expended for the purpose of assessee’s business, the AO is justified in disallowing such expenditure. We do not see any infirmity in the said findings of the ld CIT(A). Hence, the ground taken by the assessee is dismissed. Disallowance of depreciation on fridge - Held that:- During the assessment proceedings, the assessee was asked to furnish the documentary evidence in support of addition made in fixed asset however, in absence of any bills towards the purchase of the fridge, the claim of the depreciation was disallowed. During the appellate proceedings, the CIT(A) has returned a finding that the assessee has not been able to discharge the onus of providing the details of putting to use the asset during the year, therefore he confirmed the disallowance of depreciation - No infirmity in the finding of the ld. CIT(A).
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2018 (7) TMI 739
Retirement Fees - capital gain - acquiring management rights by the assessee company of two schemes acquired - Held that:- In B.C. Srinivasa Shetty (1981 (2) TMI 1 - SUPREME COURT) held that “goodwill generated in newly commenced business cannot be described an asset within the meaning of section 45 of the Act and the transfer of good-will initially generated in a business does not give rise to a capital gain for the purpose of Income Tax. As per amended provisions contained u/s 55(2)(a) of the Act extracted above w.e.f. 1.4.2003 are applicable to the instant case. For the purpose of section 48 & 49 cost of acquisition in relation to a capital asset being goodwill of a business shall be taken as nil. When the assessee company had undisputedly been running 14 schemes, out of which 12 schemes were floated by it and two schemes were acquired from J.F. Mutual Funds during the Financial Year 2002-03 for a consideration of ₹ 88,29,925/- and the said consideration paid by the assessee for acquisition of rights to manage asset was in the nature of payment for acquiring the right/license to manage to schemes, the same mere capitalized as intangible asset and claimed depreciation @ 25%, the transfer of whole business by the assessee in terms of agreement dated 3.6.2004 to the Principal Asset Management Company and Principal Trustee Company Ltd. by virtue of the agreement, the consideration of ₹ 53768659/- received by the assessee is for transfer of the management rights to the transferee free company which cannot be treated as ‘Retiring fees’ because while acquiring management rights by the assessee company of two schemes acquired from J.F. Mutual Funds, assessee itself admitted by claiming the depreciation on the consideration of ₹ 88,29,925/- @ 25% with Written Down Value of such right at ₹ 49,66,833/- as on 31.3.2005. When the assessee itself has admitted acquisition of management right qua two schemes acquired from J.F. Mutual funds as intangible assets, the assessee is estopped by its own act and company from denying the management rights transfer for a consideration of ₹ 5,37,68,659/- transfered by it to Principal Mutual Funds as intangible asset/goodwill. Findings returned by the Ld. CIT(A) granting relief to the assessee, that no capital gain is leviable on the retirement fees received by the assessee in this case is not sustainable in the eyes of the Law, hence, reversed and the findings returned by AO are hereby restored.
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2018 (7) TMI 738
Rectification of mistake - basis for moving an application under section 254(2) - Held that:- As during the course of hearing, the Bench is at liberty to ask questions and solicit response from the ld AR and in the process, if the AR has got some unilateral impression on the outcome of the hearing and that too, without the Bench even whispering a word, such impression cannot be a basis for holding some mistake on part of the Bench when the matter is being heard and the decision has not been pronounced. Till the final decision in the matter is not finally pronounced in the Open court, any impressions which either of the parties may get cannot be a basis for moving an application under section 254(2) of the Act. Regarding non-consideration of various Co-ordinate Bench decisions so relied upon by the ld AR, it is not essential that the Bench is required to gave its specific findings on each of the decisions so long as the said decisions have been duly considered before a final view has been taken. Regarding the penalty show-cause dated 18.06.2012, the Bench has considered the first show-cause dated 28.12.2011 and the second show-cause dated 18.06.2012 and in the totality of facts held that the assessee was made aware of the penalty proceedings having been initiated against him and he chooses to ignore the same. The said findings are in the context of issuance of show-cause and denial of reasonable opportunity being heard. Therefore, it is incorrect to hold that the Bench heavily relied upon only the communication dated 18.06.2012 as another show-cause notice. At the same time, we note that discussion regarding the second show-cause dated 18.06.2012 find mention in the penalty order only and there is no separate copy of the show-cause which is available on record. We, however, agree with the ld AR that the non-consideration of the decision of the Hon’ble Rajasthan High Court in case of Sheveta Construction Co. Pvt Ltd vs ITO [2016 (12) TMI 1603 - RAJASTHAN HIGH COURT] is a mistake apparent from record in the context of specific limb of section 271(1)(c) invoked by the AO and penalty finally levied by the AO
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2018 (7) TMI 737
Disallowance of deduction u/s 35 - assessee had made donation to a institute engaged in Scientific Research - rescinded notification effect - Held that:- The institute, whom the donation was made was in existence and notified during the F.Y. 2013-14 when the assessee has made donations. The CBDT has rescinded notification on 15/9/2016. Although, it has been made retrospective effect from 01/4/2007. This institute was validly recognized by the CBDT on the date of donation made by the assessee. The approval granted to the institute was very much in force at the time of donation made by the assessee. The assessee had no reason to disbelieve the operation of approval and notification of the institute. In such a situation, the deduction claimed by the assessee is justified. The subsequent notification by the CBDT rescinding the approval retrospectively shall not or should not affect the claim of the assessee. There was no information with the assessee regarding non-genuinity or not observing the standard fixed by the CBDT for making eligible itself for deduction U/s 35 of the Act. The assessee’s act was in a bonafide manner. It is well settled proposition of law that no additional tax burden can be put on the assessee by making retrospective operations of certain notifications or withdrawal of notifications. - Decided in favour of assessee.
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2018 (7) TMI 736
Addition on the surrendered sum made at the time of survey - Held that:- The statement of Shri Ajay Kumar Jain was recorded on the date of survey on 23.02.2010 only u/s 133A of the Act. Hence, we are inclined to accept the argument of the ld. AR that the ld. AO had factually erred by stating the statement has been recorded u/s 131 of the Act thereby contemplating to give evidentiary value for the same. It is not in dispute that barring the statement from Shri Ajay Kumar Jain, no other corroborative evidences were found by the survey team or by the assessing officer at the time of assessment proceedings by pointing out certain deficiencies from books of accounts of the assessee to support the disclosure made in the sum of ₹ 60 lacs at the time of survey. - Decided against revenue
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2018 (7) TMI 735
Receipt of agency commission - amount related to renting out of property - nature of income - house property or busniss income - Held that:- PRIL (user) is only granted permissive use of the services and facilities provided in the premises by the assessee - the user would not be vested with or enjoy any right, title or interest of any kind of the retail outlet / showroom premises. As per the terms of the agreement, the users had no right of occupancy. They have only limited access to use the space for the purpose of their business and that too, in respect of certain activities, during the specific hours of the day only. Thus the users do not enjoy any tenancy right as per the agreement. We also find that the assessee is responsible for payment of maintenance charges, municipal and other taxes, rates and as well as other such related outgoings We find that the assessee had provided various arrangements on a daily basis to the user, to ensure smooth and efficient running of the retail outlet/ showroom which reflect a clear manifestation of an organized activity carried out by the assessee for a set purpose of earning profits out of commercial exploitation of the property owned by it. In consideration of rendering the services as per the agreement, the assessee is compensated in the form of commission calculated at 10% of gross sales in the said retail outlet /showroom. Hence it could be safely concluded that the said receipt of agency commission would squarely fall under the ken of business income and to be assessed accordingly. Moreover, we also find that the said treatment of assessing the agency commission as business income and allowing depreciation thereon, has been allowed by the department up to Asst Year 2009-10 and out of which, the assessments for the Asst Years 2006-07 , 2008-09 and 2009-10 were completed u/s 143(3) of the Act
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2018 (7) TMI 734
TPA - ALP Determination - MAM selection - rejecting RPM method - CUP method adoption - Held that:- Revenue has accepted the method in subsequent years i.e. AY 2011-12 to 2013-14. In view of the above given facts and circumstances, we are of the view that the Revenue should adopt the CUP method for benchmarking the international transaction as it is doing consistently in subsequent years. Since we have held that CUP is the most appropriate method in the case of the assessee, we not consider RPM. The AO is directed accordingly.
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2018 (7) TMI 733
Nature of receipt under the subsidy scheme - whether was not in the nature of a helping hand to the trade but was capital in nature - subsidy scheme of the State Government took the form of an exemption of entertainment duty in Multiplex Theatre Complexes newly set up, for a period of three years, and thereafter payment of entertainment duty @ 25% for the subsequent two years - Held that:- SLP dismissed.
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2018 (7) TMI 732
Revision u/s 263 - dis-allowance of transportation charges for non deduction of tds - effect of retrospective amendment - Held that:- SLP dismissed.
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2018 (7) TMI 731
Valuation of the Land – Valuation done by the Valuation Officer taking note of the sale instances which are near to the date of sale - Held that:- SLP dismissed.
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2018 (7) TMI 730
G.P. estimation @ 3% - assessee has clearly violated the provisions of section 40A(3) - cash payments of above ₹ 20,000/were made for the purchases of waste paper - Held that:- SLP dismissed.
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2018 (7) TMI 729
Benefit of deduction u/s 10AA - modernization of existing unit or new undertaking - profits and gains derived from Exports - Held that:- SLP dismissed.
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2018 (7) TMI 728
Stay petition - pre-dopisits - Held that:- Learned counsel for the petitioner seeks leave to withdraw this petition with liberty to the petitioner to approach the Assessing Authority for extension of time. The special leave petition is accordingly dismissed as withdrawn with the liberty prayed fo
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2018 (7) TMI 727
Condonation of delay - reason for delay - no valid/ sufficient reasons to condone the delay - Held that:- SLP dismissed.
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2018 (7) TMI 726
Validity of order of transfer a case u/s 127 - reason as to why case of the petitioner or any other case of the aforesaid group of companies requires to be transferred outside New Delhi to NOIDA - in all 48 companies of the group were involved, all of whom have their head offices in Delhi and out of which, 40 companies were filing returns in Delhi - Held that:- SLP dismissed.
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2018 (7) TMI 725
TDS u/s 194H - not deducting the tax on payment of commission/brokerage on price difference to the milk societies (DCS & PDCS) - assessee in default - no rendering of any services and the payment is not made for any managerial services Held that:- SLP dismissed.
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2018 (7) TMI 724
Accrued interest in relation to NPA - amount not brought to the tax by the assessee - applicability of section 145 - assessee is a cooperative bank - ITAT quashed and set aside order of AO - Held that:- SLP dismissed.
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2018 (7) TMI 723
Reopening of assessment - capital gain addition - transfer of land - sale consideration has been received by the petitioner on 27.03.2008 and the possession has also been handed over on 27.03.2008 - Held that:- SLP dismissed.
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2018 (7) TMI 722
Valuation of depleted/unusable/unsalable/rat bitten stock - assessee not able to produce the last purchase invoice to prove how old the stock was which could be written off/rejected - Disallowance of claim under Section 24(1) against rental income derived - Held that:- SLP dismissed.
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2018 (7) TMI 721
Validity of order passed by the Settlement Commission u/s 245D - additional disclosure of income - telescope the additional disclosures for a particular year and taking into account the comparable figures for that year decide whether such disclosures would shake the initial disclosures - Held that:- Special leave petition is dismissed
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2018 (7) TMI 720
Addition on account of booking of vehicles-in the bogus/fictitious names - cogent and credible material that the bookings were in fact made by the Assessee - Held that:- SLP dismissed.
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2018 (7) TMI 719
Benefit of deduction u/s 10AA - modernization of existing unit or new undertaking - Held that:- SLP dismissed.
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2018 (7) TMI 718
Assessment u/s 153C - existence of satisfaction note - satisfaction note of the AO of the Assessee, being a carbon copy of the satisfaction note of the AO of the searched person - Held that:- SLP dismissed.
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2018 (7) TMI 717
Addition u/s 68 - assessee had sold certain shares, the very purchasers were found to be bogus - Held that:- SLP Dismissed.
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2018 (7) TMI 716
Benchmarking of management fee - payment of royalty - MAM - CUP OR TNMM - Held that:- SLP dismissed.
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2018 (7) TMI 715
Benefit of Section 80HH - duty and onus on the shoulder of the assessee to show that he was also engaged in manufacturing activities - Held that:- SLP dismissed.
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2018 (7) TMI 714
Validity of reopening of assessment - lack of notice under Section 143 (2) - notice under Section 143 (2) of the Act to the Assessee is mandatory prior to framing an assessment - Held that:- SLP dismissed.
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Customs
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2018 (7) TMI 713
Refund of Terminal Excise Duty - Deemed Exports - Supplies made under ICB - Petitioner contends that contents of Para 8.3 of the old FTP are more or less identical to Para 7.05(ii) of the new FTP - denial of refund on the ground that the supply was under ICB, which was ab-initio exempted in terms of para 7.02-B(e)(i) & (ii) of the FTP, 2015-20 read with para 7.05(ii)(a) of the FTP, 2015-20 - validity of Para 7.05(ii)(a) of the Foreign Trade Policy 2015-2020 - Para 8.3(c) and Para 8.4(d) of the New FTP. Held that:- Both the central excise and customs exemption notifications would spell out that no customs duty exemption to goods supplied to the Chennai Metro Rail Project was given to the petitioner; it cannot be said that such exemption was ever enjoyed by it. Therefore, the respondents’ argument that excise duty was exempt “ab initio” in respect of supplies made under the contracts funded by JICA, to the Chennai Metro, are factually incorrect. The exemption was not “ab initio” (i.e. per se) exempt; it was conditional upon availability of customs duty exemption, by virtue of Note 41 to the Excise Duty exemption notification. However, the customs duty exemption notification restricted duty exemption only to supplies made to specified contracts relating to the Delhi Metro Rail Corporation. Thus, the respondent authorities, in the opinion of the court, proceeded on an entirely erroneous premise. The Supreme Court’s ruling in Director General of Foreign Trade and Ors. v. Kanak Exports and Ors. [2015 (11) TMI 80 - SUPREME COURT OF INDIA] has now authoritatively settled the issue that provisions of the Export Import Policy and the related Handbook are statutory. Therefore, any clarification issued by any official: howsoever high in rank she or he might be, cannot override the policy. In the present case, a combined reading of the central excise exemption notification and the customs duty exemption notification made it clear that such unconditional exemption was not extended to the goods. Rather, unconditional exemption was given only to goods supplied under contracts funded to the Delhi Metro Rail Corporation. This meant that the goods in question, supplied by the petitioner were dutiable. Clearly, therefore it was entitled to terminal excise duty refund, on a plain analysis of Para 8.3 of FTP 2009-2014. The supplies were made to Chennai Metro during the period 31.10.2014 to 04-03-2015. Para 7.05(ii)(a) of the new FTP is applicable from the date FTP 2015-2010 came into force. The restrictive condition in regard to denial of TED refund is to be considered in the light of the new FTP. Para 7.05(ii) of the new FTP provides "however supply of goods which are exempted ab initio from payment of terminal excise duty would be ineligible to get refund of TED" - The relevant Customs Notification namely Notification No. 12/2012-Cus dated 17.03.2012 at S. No. 354 (subject to condition 40) only provides an exemption from customs duty to goods supplied to Delhi Metro Rail Corporation Ltd ("DMRC"). Condition 40 in turn prescribes for relevant certificates to be issued by the concerned personnel of DMRC certifying that the goods concerned were used in Phase-I and specific corridors of Phase-II. It is clear, here again that no customs Duty exemption to goods supplied to the Chennai Metro Rail Project was ever given. Such exemption is the basis for excise duty exemption. Consequently, there is no question of any ab initio excise exemption operating in the Petitioner’s favor under Notification 12/2012 dated 17.03.2012 in respect of the supplies made by it - the bar prescribed under Para 7.05(ii) is inapplicable. The impugned orders/letters denying refund of TED are hereby quashed - Respondents are directed to process the petitioners’ claim for TED refund for the concerned period and release the amounts which they are entitled to in respect of supplies made - petition allowed - decided in favor of petitioner.
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2018 (7) TMI 712
Principles of quorum non juris - Jurisdiction - power of Single Bench to decide the issues related to CHA - Held that:- Section 129 of the Act of 1962 empowers the Central Government to constitute an Appellate Tribunal to be called CESTAT consisting of such judicial members and technical members, as it thinks fit, to exercise powers and discharge the functions, conferred upon CESTAT, by the Act of 1962. Section 129C of the Act of 1962 deals with the procedure of the Appellate Tribunal. It stipulates that, the powers and functions of the Appellate Tribunal may be exercised and discharged by Benches constituted by the President amongst the members thereof. Subsection (2) requires, a Bench to be consisted of one judicial member and one technical member. Nothing is placed on record to suggest that, the single member passing the impugned was duly authorized by the President of CESTAT to hear and adjudicate the matter, sitting singly. In absence such authorization under Section 129C(4) of the Act of 1962, I am afraid that, the singe member had jurisdiction to decide the case and pronounce the impugned order. Existence of statutory alternative remedy against the impugned order under Section 130 of the Act of 1962 is not an absolute bar to the maintainability of the writ petition particularly when the petitioner has been able to substantiate that the impugned order was passed without jurisdiction and is a nullity. The impugned order is a nullity and is therefore quashed.
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2018 (7) TMI 711
Violation of conditions for Import of goods without payment of duty - actual user conditions - Benefit of N/N. 21/2002 Customs dated 01.03.2002 - it was alleged that majority of sales were affected to customers for use in non-plantations sector like agriculture, Sericulture, forestry, hospitals, Government organizations, hotels and resorts etc. and only small portion of the imports were sold for use in plantations sector - Case of appellant is that as there is no specific condition in the Notification that the said machinery should actually be used in coffee/tea/rubber plantations, it is enough if they are capable of being used in the said sector. Held that:- Serial no. 252 (A) of the N/N. 21/2002 Customs, dated 01.03.2002 prescribes concessional rate of duty for the machinery or equipment specified in list (A) in List 32 (A), the said list 32 (A) parts of machinery for use in coffee/tea/rubber plantation sector. It is seen that the exemption Notification is applicable to purely a particular sector i.e. coffee/tea/rubber plantations. It would be said that it is applicable to any sector; the movement of goods are capable of being used in the said sector. Admittedly, some of the machines may be capable of being used other sectors also, however, for the same reason it cannot be held that the exemption will be applicable if the machines are used in other sectors. Such an interpretation would lead to mis-construction of the intent of the Notification. It is seen that the exemption Notification is applicable to purely a particular sector i.e. coffee/tea/rubber plantations. It would be said that it is applicable to any sector; the movement of goods are capable of being used in the said sector. Admittedly, some of the machines may be capable of being used other sectors also, however, for the same reason it cannot be held that the exemption will be applicable if the machines are used in other sectors. Such an interpretation would lead to mis-construction of the intent of the Notification. Extended period of limitation - Held that:- The fact of sale or use in other sectors was never disclosed to the Department. It is only after the department conducted an enquiry the facts come to the light. There is a clear suppression of the material fact - extended period is correctly invoked. Appeal disposed off.
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2018 (7) TMI 710
Valuation of imported goods - Lighting equipment for studios - enhancement of value done on the ground of contemporaneous imports, without first rejecting the transaction value - Held that:- The transaction value was not rejected - Even the imports, which have been held to be contemporaneous by the lower authorities, are actually not contemporaneous in as much as the same differ in respect of the period or country as also the quantum of the goods. The transaction value cannot be rejected in the absence of any evidence to show that higher amount stands paid by the importer - In the present case, there is no evidence of any type to reflect upon the fact that the excess consideration for the imported goods stand paid by the appellant to the exporter, over and above the invoice value. In the absence of any evidence reflecting upon the incorrect payments made to the foreign supplier, the transaction value cannot be rejected and enhanced - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 709
Redemption fine - penalty - it was the case of appellant that Inasmuch as, the value adopted by the Revenue was on the lower side, the appellant was not interested in export of the goods - Held that:- Apart from the report of the Valuation Committee, there is no other evidence to show over-valuation of the cargo. Even the status of the Valuation Committee does not stand disclosed i.e., as to who were the members of the said Committee, how they arrived at the value?; what was the basis of the findings? and what was the technical and expert qualification of the said members? - impugned orders are not sustainable - redemption fine and penalty set aside - appeal allowed.
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Insolvency & Bankruptcy
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2018 (7) TMI 757
Corporate insolvency process - Held that:- The acknowledgement of the debt is available in the accounts of the petitioner since 2008-09 upto 31. 03. 2016. As already discussed above, the respondent’s contention that the financial statement of respondent placed on record by the petitioner has been made in connivance with the ex-employee of the respondent is not supported by any proof and moreover, the Balance Sheet as at March 2016 filed by the petitioner at Annexure A-11 of the application is signed by the Chartered Accountant as well as two Directors. Therefore, the respondent’s explanation is found without any basis. The respondent has sought to rely upon the Balance Sheet as in March 2017 (Exh. R-3) and has stated that no dues to the petitioner are shown therein. However, the respondent has not filed on record any details to reconcile the account of the petitioner shown in the Balance Sheet of the respondents of March 2016 and March 2017. The deletion of the Trades Payable to Mahavir Traders in the Balance Sheet of March 2017 appears to be an afterthought by the respondents to remove evidence of the Trades Payable of Mahavir Traders in the respondents’ accounts. In view of the foregoing discussion, the respondent’s contention that the claim is time barred cannot be accepted. The petitioner, being an operational creditor, is not bound to propose the name of the Resolution Professional to be appointed as Interim Resolution Professional. The petitioner, however, has filed written communication in Form 2 (Annexure A-10 of application and Annexure A-2 of diary No. 2831 dated 11. 12. 2017) from Mr. Anjum Goyal, registered Resolution Professional having allotted Registration No. IBBI/IPA-002/IP-N00251/2017- 18/10765, giving all the necessary particulars as required in the form and that he is presently not serving as IRP/RP/Liquidator in any proceedings. It is also stated by him that there are no proceedings pending against him with the Insolvency and Bankruptcy Board of India (IBBI) or ICSI. Having perused the form, we find the same to be in order. We find that all the compliances have been made and the application is complete and the petition deserves to be admitted.
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PMLA
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2018 (7) TMI 708
Offense under Prevention of Money-Laundering - question of determination of sex - Held that:- It is an admitted fact that initially the appellant was permitted to appear through the authorised agent. The impugned notice was issued on finding certain new facts and contradiction in the statements given, which could not be satisfactorily explained by the authorised agent. The appellant has been rendering a professional service by travelling extensively throughout the country. While doing so, the question of determination of sex did not stand in any way. However, for appearing before an authority, which is mandated by law, she seeks protective discrimination as a woman. A legal profession stands apart on its own. In discharge of a professional duty, there is no difference between a man and woman. The summons were issued to the appellant in her discharge and capacity as a professional and not otherwise. It is clear from reading of Section 160 of the Code of Criminal Procedure, certainly, the fair construction principle as discussed supra would apply. This Court is unable to see any demon in the summons issued at this stage. There is no need to speculate. Neither a likelihood of bias nor malice can be seen through the summons issued. The appellant did not choose to challenge the summons earlier. She did rightly appear through the authorised agent. Issues have been raised only when the second respondent had asked her to appear in person. The Submissions on the CBI enquiry vis-a-vis the summons cannot be countenanced with the scope being totally different. Similarly, the scope and applicability of Sections 126 to 129 of the Indian Evidence Act, 1872, is not required to be gone into at this stage as otherwise we will be entering into a realm of speculation. We also find that the appellant is not entitled to invoke Section 160 of the Code of Criminal Procedure since the special enactment specifically deals with the power, authority and procedure for issuance of summons under Section 50 of the Act and therefore, there is no requirement to read the proviso to Section 160 of the Code of Criminal Procedure into Section 50 of the Act. The contention of the learned Senior Counsel appearing for the appellant that the averments not being controverted, there is a deemed acceptance, in our considered view cannot be countenanced. When there is no material to substantiate the averments, there is no need to deny them. The appellant has not produced sufficient materials, even prima facie so as to enable us either to hold the existence to likelihood of bias or malice either in fact or law. In fine, both the appeals stand dismissed. However, liberty is given to the respondents to issue a fresh summons to the appellant requiring her appearance in person. No costs.
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2018 (7) TMI 707
Offence under PMLA - attachment Order in regard to properties mortgaged/hypothecated with the Appellant Bank - mortgaged properties purchased from the proceed of crime - Held that:- It is admitted position that the loan was given by the bank in good faith who had suffered a loss because of non-return of money by the borrowers. It is evident from the said proviso that in case the claimant would be able to satisfy the Special Court that it has acted in good faith and suffered the loss despite of having taken all the reasonable precautions and is also not involved in the offence of money laundering then the Special Court is empowered to restored such property during the trial. In the facts of the present case, the mortgaged properties are not purchased from the proceed of crime. Those were purchased prior to FIR against borrower/accused and even prior to execution of mortgaged deed agreement. The question of proceed of crime qua those properties does not arise. Even the stand of the respondent in almost in all the cases where it was found that the attached properties are mortgaged properties which were not purchased from proceeds of crime, the Bank are victim parties and are innocent parties who are entitled to recover the loan amount from the said mortgaged properties, but the banks be allowed to dispose the properties after the trial and final out-come of criminal complaints filed against the borrowers under schedule offence and prosecution complaint. The said argument cannot be accepted in view of settled law and new amendment in sub-section 8 of section 8 of the Act. Thus, the stand earlier taken by the respondent no. 1 is wholly vague and without any substance. The provisional attachment order thus apparently bad and against the scheme of the Act. In case the Special Court passes the order to release the property of the victim and innocent party is mortgaged property could be disposed of for the purpose of adjustment of the amount due from the borrowers. Once it was found that the appellant is a innocent party who is not involved in the money laundering directly or indirectly or assist any party and the mortgaged property is also not purchased from the proceeds of crime then the question of provisional attachment order and confirmation thereof does not arise and the victims/innocent party i.e. innocent party would be entitled to disposed of the said property. The allegation of money laundering, so far as present appellant & properties involved in this appeal are concerned, found to be unsustainable for the purpose of attachment under the PMLA, 2002. Both set of appeals are allowed.
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Service Tax
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2018 (7) TMI 705
Renting of immovable property - Leasing out of water bodies for the purpose of aquaculture and fishing rights - negative list as provided under section 66D of the Finance Act - period between April, 2008 to 30.6.2012 - Held that:- The view of the Department that aquaculture and leasing of water bodies are two separate activities and, therefore, leasing of water bodies is not exempted from levy of service tax is certainly not tenable as we find that water bodies can only exists on vacant land and for undertaking aquaculture, the presence of water bodies is absolutely essential and pre-requisite. Leasing of water bodies for fishing purposes is same as leasing of vacant land for aquaculture and therefore, same is fully covered under the exclusion clause of Section 65 of the Finance Act, 1994 and hence not leviable to Service tax. Period between 1.7.2012 to August, 2013 - Held that:- Same provisions have continued in slightly modified way wherein the activity of agriculture has been included in the negative list of items under section 66 D of the Finance Act, 1994 and agriculture as defined in clause (3) of the Section 65 B, as the cultivation of plants and rearing of all life-forms of animals, except the rearing of horses, for food, fiber, fuel, raw material or other similar products - fishing/ aquaculture is part of the broader definition of agriculture and thus exempted from levy of service tax. Agriculture being in the negative list of items under Section 66D of the Finance Act, 1994 is not leviable to service tax and thus for this period also, the service tax is not leviable on leasing of water bodies. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 704
CENVAT Credit - retrospective applicability of the amendment to Rule 2(k) of CCR, 2004 - goods used in the construction of factory shed and in laying down the foundation of various capital goods - Held that:- Amendment to Rule 2(k) vide Notification No. 16/2009 dated 7.7.2009 is only prospective and same cannot be made retrospective as held by various High Courts as well as by this Tribunal in various judgments - reliance placed in the case of Mundra Ports & Special Economic Zone Ltd. vs. CCE & Cus [2015 (5) TMI 663 - GUJARAT HIGH COURT] - appeal dismissed - decided against Revenue.
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2018 (7) TMI 703
Imposition of penalty - no suppression of facts - tax with interest paid on being pointed out - Held that:- Admittedly the factum of providing maintenance services and the receipt of consideration for the same was a part of the appellant’s business records. The appellant admitted their tax liability and paid major amount even prior to the show cause notice. To that extent, imposition of penalty upon him is not justified. As regards the balance amount the appellant have paid the same before the adjudication order - The penalty is required to be imposed when an assessee acts with a mala fide intention to evade payment of duty. In the present case the appellant having reflected their activities in their books of accounts, it cannot be held that there was any intention on their part to evade payment of duty. Penalties set aside - demands along with interest confirmed - appeal allowed in part.
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2018 (7) TMI 702
CENVAT Credit - input services for providing output service namely sponsorship service - The department was of the view that appellant being not eligible to pay service tax for sponsorship services and credit cannot be allowed - The demand arises out of the basic allegation that the appellant has wrongly paid the service tax on sponsorship service when actually service recipient ought to have paid. Held that:- The department has no case that the appellant has not paid the service tax on these input services nor is there a case that they are not used for providing sponsorship service. The only allegation is that the appellant ought not to have collected the service tax on sponsorship service. Generally, it is the output service provider who has to pay the service tax and in some cases like sponsorship services, the Service Tax Rules provide that the liability to pay service tax is upon the service recipient. Appellant has collected service tax wrongly from service recipient and paid to Central Government instead of the service recipient paying it directly to Central Government for sponsorship services - Other than this allegation of wrongly paying the service tax on sponsorship service, there is no evidence of positive act of suppression of fact with intent to evade payment of service tax on the part of appellant. On the mere ground that the appellant has wrongly discharged the service tax on sponsorship services, the entire demand has been raised. There is no iota of evidence to establish that there was any willful intention on the part of the appellant to evade payment of service tax by suppression of facts - the demand raised for the extended period cannot sustain and requires to be set aside. The impugned order is set aside on the ground of limitation and the appeal is allowed
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2018 (7) TMI 701
Business Auxiliary Service - use of ‘Computer Reservation System - Galileo Software’ in their business for Centralized Reservation Centre system - Penalties - Held that:- The issue whether the appellant is liable to service tax for the use of AMADEUS software has been settled by the decision of the Tribunal in the case of D. Pauls Consumer Benefit Ltd. Vs. Commissioner of Central Excise, New Delhi [2017 (3) TMI 1019 - CESTAT NEW DELHI], where it was held that the service provided by the assessee-Appellants has rightly been covered under the heading “Business Auxiliary Service” as defined u/s 65(19) of the FA, 1994 - levy of service tax upheld. There is no iota of evidence adduced by the department to establish that the appellant has suppressed facts with intent to evade payment of service tax. Further, the issue was under litigation before the Tribunal and had been thereafter decided wherein it was held that the said amounts received are taxable - penalty do not sustain. The impugned order is modified to the extent of setting aside the penalties without disturbing the demand of service tax or the interest thereon - Appeal allowed in part.
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2018 (7) TMI 700
Management, maintenance and repair service - demand raised as per the corrigendum dated 5.3.2010 - time limitation - Held that:- Such corrigendum is issued by the department with a delay of two years revising the demand without any basis - the appellant is not liable to pay the revised demand as per the corrigendum dated 5.3.2010 and the amount already paid by the appellant would suffice compliance of the demand under dispute in this appeal It is not the case of the department that the appellants have collected service tax. Since the appellant has discharged the service tax along with interest as well as 25% penalty as per the show cause notice dated 24.12.2008, the revised demand cannot sustain - The impugned order is modified to extent of reducing the duty demand as per show cause notice dated 24.12.2008 along with interest and the 25% penalty already paid by the appellant. Appeal disposed off.
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2018 (7) TMI 699
Penalty u/s 78 of FA - GTA Services - no suppression of facts with intent to evade duty - Held that:- It has to be noted that the original authority has not imposed any penalty u/s.78, though the demand was confirmed. There is no discussion by the original authority that there was any suppression of facts with intention to evade payment of tax on the part of the appellant. In the absence of such evidence, the penalty imposed u/s.78 cannot sustain - Further, during the relevant period, there was much confusion as to whether service tax under GTA would be applicable to the appellant and the issue being interpretational one, penalty cannot sustain. In K.Gopalakrishnan vs CCE, Chennai [2017 (1) TMI 1503 - MADRAS HIGH COURT], it was held by the Hon’ble High Court that the suppression of facts with intention to evade payment of service tax has to be established for imposing penalty u/s.78 of the Act. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 698
Refund of un-utilized CENVAT credit - denial of refund on the ground that respondent had not raised invoice within 14 days of rendering the service - Held that:- The issue is settled in respondent own case COMMISSIONER OF SERVICE TAX, CHENNAI VERSUS M/S. SCOPE INTERNATIONAL PVT. LTD. (VICE-VERSA) [2018 (7) TMI 91 - CESTAT CHENNAI], where it was held that raising invoices within 14 days is a mere procedural requirement and not such condition has been laid in N/N. 5/2006 - refund cannot be rejected on this ground. Refund claim - credit on ‘Rent a Cab’ and Outdoor catering services’ were held to be not eleigible - Held that:- The Hon’ble High Court in the case of CCE Vs. Turbo Energy Ltd. [2015 (3) TMI 632 - MADRAS HIGH COURT] has held that these services are eligible for credit - refund cannot be rejected. Appeal dismissed - decided against Revenue.
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2018 (7) TMI 697
Classification of services - lease rent received for leasing out machineries - whether classified under Banking and Financial Service or under supply of tangible goods? - scope of SCN - Held that:- The activity subjected to levy of service tax in the present case is the leasing of machineries. The said activity does not fall within the definition of Banking and Financial Service. Scope of SCN - Held that:- the Commissioner (Appeals) has proceeded to confirm the demand after 16.5.2008 to 31.12.2008 holding that supply of tangible goods is taxable from 16.5.2008 - Since there is no SCN proposing to demand under supply of tangible goods, the Commissioner (Appeals) having travelled beyond the show cause notice and demand cannot sustain. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 696
Valuation - Commercial or Industrial Construction Service - inclusion of value of goods and materials supplied free by the appellant in assessable value - Section 67 of the Finance Act - whether the value of goods and materials supplied free to the appellant is to be included in the gross amount charged to arrive at total taxable value? Held that:- The said issue has been considered in the case of Bhayana Builders (P) Ltd. [2018 (2) TMI 1325 - SUPREME COURT OF INDIA] wherein the Apex Court has observed that the gross amount charges does not include value of free goods and materials supplied. The demand cannot sustain - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 695
Classification of services - Letting out the studio for the purpose of film shooting - Whether classifiable under the category of Renting of immovable property service or under the category of Video Tape Production Service - Held that:- The Tribunal in the appellant’s own case M/S. AVM STUDIOS VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI [2018 (4) TMI 1098 - CESTAT CHENNAI] has analyzed the issue and arrived at the conclusion that the activity does not fall under the category of video tape production service - Further, the assessees are also discharging service tax on the said activity under renting of immovable property service with effect from 1.6.2007. Demand set aside - appeal dismissed - decided against Revenue.
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2018 (7) TMI 694
Business Auxiliary Services - activity of cutting or slitting of Iron and Steel Coils into sheets or into narrow width coils as per the requirement of the customers - demand raised by invoking extended period of limitation - Held that:- It is a fact that a lot of litigation was going on during the relevant period about the said activities being manufacturing activities or not - the appellants registered themselves with the department on 20.09.2006 in which case the activities being under taken by them came to the notice of the Revenue. Even then a period of around three years was taken by the Revenue to issue SCN for the past period. There is no justification, for invocation of extended period in such a scenario - demand barred by limitation. Penalty - Held that:- As it is already held in favor of the appellant on the point of limitation and has set aside the demand, in which case no penalty would be leviable on the assessee - penalty set aside. Demand of service tax on the packing materials - Held that:- Apart from the fact that the Notification No. 12/2003 excludes the value of the materials sold, the demand has been made under Rule 5 of Service Tax (Determination of Value) Rules, which Rules has already been struck down by the Hon’ble Delhi High Court in the Case of Intercontinental Consultants & Technocrats Pvt. Ltd. Vs. UOI [2012 (12) TMI 150 - DELHI HIGH COURT] - decided against Revenue. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 693
Club or Association Service - Held that:- Demand already held to be not payable by the Hon'ble High Court of Gujarat in the case of M/s. Sports Club of Gujartat Ltd Vs Union of India [2013 (7) TMI 510 - GUJARAT HIGH COURT] wherein by following the ratio laid down by the Hon'ble Jharkhand High Court in the case of M/s.Ranchi Club Ltd., Vs Chief Commissioner of Central Excise & Service Tax, Ranchi Zone [2012 (6) TMI 636 - JHARKHAND HIGH COURT ] the said entry under the “Club or Association Service” was held to be ultra vires - demand not sustainable. Penalty - Renting of Immovable Property Service - Held that:- Inasmuch as, the appellant has discharged the tax liability from the date of assent of the President to the Finance Act, 2012 as also by appreciating the fact that the litigation was going on in respect of the tax liability on Renting of Immovable Property, there are no reasons to impose any penalty upon the appellant - penalty set aside. CENVAT Credit - input services - Rent-a-Cab Service - Health Insurance Services - Air Travel Services - Held that:- The issues are no more res integra and stands decided in favour of the assessee by the various Tribunal decisions - reliance placed in the case of M/s. Sanmar Foundries Ltd. Vs Commissioner of Central Excise, Trichy [2016 (4) TMI 1069 - CESTAT CHENNAI] and M/s. Fiem Industries Ltd. Vs Commissioner of Central Excise, Chennai-III [2016 (3) TMI 1165 - CESTAT, CHENNAI] - credit allowed. Appeals are allowed.
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2018 (7) TMI 692
Business Auxiliary Service - LDPE lamination of unlaminated HDPE / PP woven fabrics received from various units - demand of service tax on the ground that the activity of lamination does not amount to manufacture - Held that:- The process of lamination carried on HDPE/PP fabrics, paper bags and cotton fabrics etc. amounts to manufacture within the meaning of section 2(f) of Central Excise Act, 1944 - demand of service tax do not sustain - appeal allowed - decided in favor of appellant.
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Central Excise
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2018 (7) TMI 691
Cum-duty benefit - D. No. 9450/2017 - Delay condoned - Leave granted. D.No. 42125/2017 - The civil appeal(s) is/are dismissed on the ground of delay in terms of the signed order.
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2018 (7) TMI 690
Classification of goods - Pipes and Couplings - Parts of A.C. or not - exemption notification No.6/2006 dated 1.3.2006 and circular dated 15.6.2009 - Couplings removed without payment of Central Excise Duty alongwith pipes - assessee claims that the pipes and couplings are same product and falls under same head, thus they are not liable to pay duty on the said couplings - case of Revenue is that the Pipes and Couplings falls under different heads at the relevant point of time Held that:- The issue involved in this appeal is covered by the decision of the Apex Court in the case of Bharat Forge and Press Industries (P.) Ltd. [1990 (1) TMI 70 - SUPREME COURT OF INDIA], where it was held that merely because goods after processing become different commercial commodity or have a distinctive name does not change the excise classification if they continue to be goods of same species. Pipe fittings made out of pipes and tubes continue to be pipes and tubes. Therefore, it is not a different article for excise classification but only a smaller article within the same classification provided that there is no change in basic physical property and possible end use. Appeal dismissed - decided against Revenue.
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2018 (7) TMI 689
Scope of Remand - the liberty was given to raise all contentions, whether that would entitle to the appellants-assessees to raise other issues also besides the two aspects, for which the aforesaid remand was made by the High Court? - Held that:- The contentions left open for the assessees were required to be raised were with regard to these three aspects only and not all the issues other than the aforesaid three aspects were allowed to be raised again in that remand. The said observation was qualified and classified by this Court in the immediately succeeding sub-para of para-18 itself, where this Court classified that the learned Tribunal shall examine both the aspects which are remanded by this Court - The observation which is sought to be relied upon by the learned counsel for the appellants, as if all issues were set at large to be argued again by the assessee is a misconceived argument and the same cannot be accepted. The same is liable to be rejected and accordingly it is rejected. Demand u/s 3A of CEA - availability of Section 3A of the Central Excise Act, 1944, for the period of assessment 2003- 04 & 2004-05 - Held that:- The principles enumerated in the provision of S.3A could not therefore be excluded by necessary implication for the period prior to 10.05.2008 as well and therefore, finding of facts arrived at by the Adjudicating Authority and the learned Tribunal which reduced the demand of evaded duty to fall in line with the extent of evasion of duty as indicated in the show cause notice remains a finding of fact and does not give rise to any substantial question of law for consideration by this Court in terms of S.35G of the Act - The said findings of facts on estimated evasion of duty cannot be said to be perverse in any manner, giving rise to any question of law even, much less the substantial question of law which is the essential requirement of invoking S.35G of the Act. Appeal dismissed - decided against appellant.
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2018 (7) TMI 688
CENVAT Credit - input services - rent-a-cab service - the ground on which the credit has been disallowed is that the said services are primarily used for personal use or consumption of the employees - Held that:- If the motor vehicle is designed to carry passengers and is registered in the name of the service provider, for being used for providing output service of transportation of passengers or for renting of vehicle, then the said motor vehicle will fall within the definition of ‘capital goods’. So if the motor vehicle is registered in the name of the service provider and used to render the services of rent-a-cab service, the said services would qualify as input services. In the present case, the department has not alleged that the motor vehicles are not registered in the name of the service provider. In fact, there is no allegation that the motor vehicle which was used for providing rent-a-cab service was not capital goods for the service provider. When the definition of input services makes an exclusion specifying the category of vehicles / service provider, which does not fall within the definition, it is incumbent upon the department to examine whether the impugned services fall within such exclusion or not before disallowing the credit - As the show cause notice does not raise any allegation with regard to the category of motor vehicle / service provider, which is excluded as per clause (B), the disallowance of credit stating that the services fall within the exclusion clause is not correct. Credit allowed - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 687
CENVAT Credit - whether credit is admissible on GTA services upto the buyers premises for outward transportation of goods? - Held that:- The issue stands squarely covered by the decision of the Supreme Court in Ultra Tech Cements Ltd. [2018 (2) TMI 117 - SUPREME COURT OF INDIA], where it was held that Cenvat Credit on goods transport agency service availed for transport of goods from place of removal to buyer’s premises was not admissible to the respondent - credit not allowed - appeal dismissed - decided against appellant.
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2018 (7) TMI 686
CENVAT Credit - input services - outward transportation of goods for the goods cleared from their factory gate to their own units at Jamshedpur and Uttarakhand - Stock transfer - place of removal - periods September 2009 to February, 2010 and October 2014 to April 2015, May 2015 to February 2016. Held that:- The Hon’ble Apex Court in the case of Ultratech Ltd. [2018 (2) TMI 117 - SUPREME COURT OF INDIA] had laid the law that after 1.4.2008 CENVAT credit on GTA service is not eligible from the factory to buyer’s premises and eligible only upto the place of removal which is the factory gate - credit cannot be allowed. Appeal dismissed - decided against appellant.
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2018 (7) TMI 685
Classification of manufactured goods - choco-dipped wafer layers and wafer covered with delicious chocolate layer - According to the appellant these goods are classifiable under Central Excise tariff heading 1905-32-19, while the Department wants to classify it under tariff heading 1905-32-11 - whether the classification can be based on the Statutory definition in another law viz., Prevention of Food Adulteration Act, 1954 which describes standards for a product to be sold as chocolate? - Held that:- This issue is no longer res integra as Hon’ble Apex Court in the case of Commissioner of Central Excise, New Delhi Vs. Connaught Plaza Restaurant (P) Ltd [2012 (12) TMI 149 - SUPREME COURT] has held that the definition under the Prevention of Food Adulteration Act cannot be utilized to decide the tariff classification - also, the Food Safety and Standards Act, 2006, through its section 97 has appealed 8 acts including the Prevention of Food Adulteration Act, 1954, which the appellant sought to rely upon. Even otherwise, the definition under the Prevention of Food Adulteration Act cannot be relied upon to decide the classification under Excise Tariff. Whether the material in question is chocolate or cocoa? - Held that:- As far as the classification of the material in question is concerned, Chapter 19 does not deal with the definition of chocolate although it refers to wafers containing chocolate and other wafers. Chocolate is defined in the explanatory notes to HSN in 18.06 - neither it mandates to have cocobutter in the mixture for it to be chocolate nor is there any prohibition on the use of vegetable fat other than coco-butter in the mixture for the material to be classified as chocolate. Thus, the material in question is classifiable as chocolate. Whether the wafers can be said to be containing chocolate if the chocolate is only present between the two thin layers and not integrated into the wafer itself? - Held that:- It is not necessary that a wafer to be called so, has to consist of only one layer. What the appellant is selling and what is sought to be classified is a wafer containing more than one layer. It is never in dispute that what they are selling are wafers and that they contain cocoa and other ingredients. There is nothing in the Central Excise Tariff or in the HSN which mandates the chocolate to be incorporated in the batter of the wafer or into any particular layer. The products manufactured by the appellant are classifiable under 1905-32-11 - appeal dismissed - decided against appellant.
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2018 (7) TMI 684
CENVAT Credit - input services - Hazardous Waste Management and Handling Services - denial on the ground of nexus - Held that:- The removal of waste from the factory premises is extremely essential for carrying out the manufacturing activity as well as for complying with the Pollution Control Norms - the disallowance of credit, alleging that the said services do not have nexus with manufacturing activity, is unjustified - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 683
Valuation of manufactured goods, Conveyor Belts - inclusion of charges for drawing and engineering designing of conveyor belts in assessable value - The Department has been of view that the charges recovered by the appellant from their buyers should have formed the part of the assessable value under Section 4 of the Central Excise Act, 1944 as engineering designing and making drawing of same are intrinsic part of the manufacture of the product. Held that:- The assessable value of the manufactured products as provided under Section 4 of the Central Excise Act, 1944 includes all the cost elements which are prior to the clearance of the manufactured goods from the factory gate in the normal course of trade. In this case, since the engineering drawing and designing of the conveyor belts was to the specific requirements of each customer, for this purpose before undertaking manufacturing activity of conveyor belts, a detailed exercise were undertaken by the appellant with their customers/buyers to ascertain their requirements and then engineering drawing & design were made for manufacture of Custom made conveyor belts - such specific engineering design and drawing are pre-requisite for manufacturing the conveyor belts and therefore the value of such drawing and designs is intrinsic to the value of the product namely conveyor belts, manufactured by the appellant. Since these specific designs were pre-requisite for the manufacture and sale of their product ,therefore, the value of such engineering drawing and designing will certainly form the part of assessable value as provided under Section 4 of the Central Excise Act, 1944 - decided against assessee. Since the assessee has already taken service tax registration for the same activity and have been paying service tax, whether they need to pay Central Excise duty again on the same activity and whether the charges of suppression, mis-statement, fraud or mis-representation are invocable in this case for demanding duty under the extended time proviso of Section 11A(1) of the Central Excise Act, 1944 and whether the penalty under Section 11AC is also imposable on them? - Held that:- The tax under any statute is to be assessed and paid as per the requirement of that statute. Even though the assessee might have paid the tax wrongly under a different tax statute, it in fact does not satisfy the compliance of the statute under which the assessee is rightly required to pay his tax liability - the payment of service tax on the charges recovered from the buyer of engineering drawing & design is not a proper compliance of provisions of Central Excise Act, 1944 and thus short payment of central excise duty stands recoverable. Whether the provisions of Section 11A of Central Excise Act, 1944 demanding duty under the extended time proviso are invocable in this case or not? - Held that:- It is a matter of fact that the appellant is registered for service tax with the same department and is regularly filing their service tax return as well as service tax on the engineering drawing and designing service. Also, there is no element of mis-statement or suppression or fraud on the part of appellant with an intent to evade central excise duty - It is a matter of record that on the same service, the appellant have duly discharged the service tax liability and all the returns were before the Department and therefore in this case the elements required for invoking extended time proviso are not present and thus the extended time proviso under Section 11A of Central Excise Act, 1944 is not invocable. The matter remanded back to the original adjudicating authority for a limited purpose of calculation and confirmation of Central Excise duty for the normal period of one year as per the provisions of Section 11A of Central Excise Act, 1944 - decided partly in favor of assessee as regards extended period.
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2018 (7) TMI 682
CENVAT Credit - input services - services received by them for raising the height of tailing Dam for disposal of Industrial Waste - Rule 2(1) and 3 of CCR 2004 - Whether the services received for raising of height of tailing dam can be treated as input service in terms of Rule 2(l) of the CCR? Held that:- It is an admitted fact that the services in question availed by the respondent in relation to the raising height of tailing dam are used essentially for the purposes of disposal of hazardous waste, in compliance with the Environmental laws. Without complying with the said environmental laws, the respondent couldn’t carry out the manufacturing process and cannot run the factory. Therefore the services received for raising the height of tailing dam for disposal of industrial waste are integrally connected with the manufacturing of finished products by the respondent. There is no allegation that the services received for raising the height of tailing dam were being used for other purpose than collecting the waste generated during the manufacturing process. The tailing dam is used for collecting residue of plant generated during the beneficiation process and the same is an integral part of process of manufacture. Therefore the service received for rising of height of tailing dam falls under the scope of ‘input service’ as defined under Rule 2(l) of the Cenvat Credit Rules, 2004 and as per Rule 3 of the Cenvat Credit Rules, 2004, a manufacturer or producer of final product is allowed to take credit of service tax paid on any ‘input service’ received by them. On an identical issue in respondent‘s own case, M/S HINDUSTAN ZINC LIMITED VERSUS CCE, JAIPUR-II [2017 (7) TMI 387 - CESTAT NEW DELHI], this Tribunal has held that the cenvat credit received on the services for raising the height of tailing dam and maintenance service for pipeline work of tailing dam, used for disposal of industrial waste and polluted water in compliance with Environmental laws is an input service within the meaning of Rule 2(1) of Cenvat Credit Rules, 2004 used by the manufacturer indirectly in or in relation to the manufacture of final products and clearance of final products from the place of removal. Credit allowed - appeal dismissed - decided against Revenue.
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2018 (7) TMI 681
Classification of manufactured goods - ayurvedic medicines - it was alleged that M/s IRLP is manufacturing beauty products as that of cream, lotions, etc. and thus are the manufacturers of the products called cosmetics and toilet preparations which are chargeable to duty at the rate of 40% under Chapter 33 of CETA - related party transaction. Held that:- This Tribunal After talking in detail all names of products and descriptions on the label, 72 products of the appellant were held as not to be ayurvedic medicines but as cosmetics. M/s. IRLM and IRLP were held not to be related persons. In terms of Section 4 (4) (c) of Central Excise Act, in as such the price at which M/s. IRLP sold the product was held to be the one to be adopted as the basis for Department for the assessable value. Similarly, M/s IRLP & IRL Marketing were also held to not to be the related persons. Hence, the price at which IRLP sold the goods for the basis of determining the assessable value - The benefit of extended period of limitation was also denied to the Department and the penalties upon IMPL, IRLM and Smt. Vinita Jain were set aside and the matter was remanded only for requantificaton of the duty depending upon the finding about 72 products of the appellants to be classified as cosmetics and depending upon only those Show Cause Notices which were within the period of general limitation. It becomes clear that the only Act assigned to Commissioner while remand was to requantify the duty in terms of above. The matter with respect to limitation and that of penalty was settled and thus has attained finality. Thus, it is held that the Commissioner in the Order under challenge has exceeded its authority being out of the ambit of the direction of Hon’ble apex court while remanding the matter. We hereby confirm the demand as far as requantification of duty is concerned. However, we set aside the penalties and the interest imposed - appeal allowed in part.
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2018 (7) TMI 680
Recovery u/s 11D - Demand of Differential duty - seven transactions in which the RTP of FO was more than the LDO - The department is of the view that the negative differential duty total amounting to ₹ 12.25 lakhs, which has arisen on account of the above price scenario, is required to be paid by the appellant in terms of section 11D - Held that:- When the LDO has been cleared at the price of FO, then higher amount shall be the transaction value and ED computed of transaction value is the actual ED payable. Thus, there is no excess payment of ED to be deposited under section 11D - The excise duty payable on LDO including the BED and the specific duty is higher than that on FO in the impugned seven transactions. Therefore, there is no justification for demanding payment of the amount under section 11D - demand set aside. Penalty - Held that:- The appellant himself has worked out and paid the differential duty and only after receiving such intimation of payment of duty, the department has issued show-cause notice followed by the impugned order - no allegation of suppression can be sustained against the appellant - penalty set aside. Appeal allowed in part.
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2018 (7) TMI 679
Penalty - CENVAT Credit - input services - the services used for repair and maintenance of the factory premises - case of Revenue is that the services provided were in the nature of construction service, and that the same was not used by the appellant directly or in relation to the manufacture of the final products and clearance of the final products up to the place of removal and credit cannot be allowed - Held that:- The assessee had not disclosed the fact of its availing Cenvat credit of service tax paid on construction services provided to the department, which came to light only on due verification of accounts by the departmental audit. This observation, clearly, not supported by any evidence. It is therefore a clear case of bonafide mistake in availing Cenvat credit for which no penalty is exigible. Decided in favor of assessee.
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2018 (7) TMI 678
CENVAT Credit - Input services - Rent-a-Cab service - Rule 2 (l) of the CCR, 2004 - Held that:- The Hon’ble Karnataka High Court in the case of Tata Auto Comp. Systems Ltd. [2011 (4) TMI 1397 - KARNATAKA HIGH COURT] has been held that these services are eligible for availing Cenvat credit - credit allowed - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 677
CENVAT Credit - welding electrodes - whether welding electrodes used for repair and maintenance of machinery are eligible for credit? - Held that:- The Hon'ble High Court of Madras in the case of TN News Prints and Paper Ltd. had considered the very same issue and held that the appellants are eligible for credit - the denial of credit is incorrect - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 676
Benefit of N/N. 67/1995-CE dated 16.03.1995 - The department was of the view that since the respondents are availing concession of duty, they are not eligible for the benefit of N/N. 67/1995-CE dated 16.03.1995 - Held that:- The paper cone is neither exempt nor subject to ‘Nil’ rate of duty and the same is cleared on the quantity based exemption as provided in N/N. 4/2006-CE. Therefore, the respondents cannot be denied the benefit of captive consumption exemption in terms of N/N. 67/1995-CE - The issue stands decided in the case of Pitamber Coated Paper Ltd. (supra) as well as in the decision in the case of M/s. Raguman Packages & Others Vs. CCE [2018 (2) TMI 204 - CESTAT CHENNAI] - appeal dismissed - decided against Revenue.
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2018 (7) TMI 675
CENVAT Credit - empty barrels - Bitumen was mixed with duty paid Superior Kerosene Oil (SKO) and thereafter packed in duty paid empty barrels. - Re-packing the same from bulk to small packs - Whether assessee have availed Cenvat Credit correctly or otherwise when the activity undertaken by them on the inputs according to Revenue does not amount to manufacture? Held that:- The Hon'ble High Court of Karnataka in the case of CCE, Bangalore-V v. Vishal Precision Steel Tubes & Strips Pvt. Ltd. [2017 (3) TMI 1287 - KARNATAKA HIGH COURT] has held that When once duty is paid by the assessee treating the activity as manufacturing activity by the Department, CENVAT credit is available and there is no question of reversal of CENVAT credit. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 674
CENVAT credit - input services - Rule 6(3A) of the Cenvat Credit Rules - effluent sludge which emerges in the Effluent Treatment Plant - N/N. 76/86 -CE.,dated 10.02.1986 - The Revenue has taken a view that the appellant is required to reverse an amount at the rate of 10% and 5% of the value of sludge cleared as per Rule 6(3) of the Cenvat Credit Rules - Held that:- The sludge which arises is nothing but a waste, which has arisen in the process of manufacture. The same may be excisable and that is the reason the same was granted exemption vide exemption notification. An identical issue came up before the tribunal in the case of M/s. Magnum [2014 (4) TMI 416 - CESTAT NEW DELHI], which dealt with the sludge formation in Effluent Treatment Plant in respect of the appellants paper manufacturing factory. The Tribunal held that there is no requirement for such reversal. There is no justification for ordering reversal under Rule 6(3) of Cenvat Credit Rules, 2004 - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 673
CENVAT Credit - The entire case against the appellant is made out on the basis of statement of Shri Satya Narayan Dey and his exercise book - penalty u/r 26 - Held that:- . Further records and documents as placed by the appellant no. 1 in support of the contention that the impugned goods were received by them and used in the manufacture of final product cannot be brushed aside merely on the basis of the statement of appellant no 3 and its exercise book. In any event, the weight of the consignments as mentioned in the invoices of the appellant cannot be construed that the said material are related to the consignment of the CONCOR. The Investigating officer failed to recover any material from the appellant no. 1 and 2 in respect of non-receipt of inputs. It is significant to note that the appellant no. 3 stated that his trading business is related to the various persons but the appellant no. 3 could not produce any evidence in respect of alleged involvement of the appellant no. 1 & 2. It is noted that there is no document corroborating the consignment of Pig Iron having fixed weight of 27.5 M.T./28 M.T. loading in the container of Concord is related to the appellant's consignment. On perusal of the statement of the appellant no. 3 it is apparent on the face of record that the appellant no. 3 was engaged in a trading business on the basis of the documents of Cenvat Invoice to take any ineligible benefits to the manufacturer - penalty upheld - However, the quantum of penalty is excessive which is required to be reduced. The appeals filed by the appellant no. 1 and 2 are allowed - Appeal of appellant no. 3 allowed in part.
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2018 (7) TMI 672
100% EOU - Concessional rate of duty - sl. No. 80(A) of N/N. 21/2002-Cus. dated 1.3.2002 - clearance of goods Danazol in DTA - denial of benefit hat the respondents have not followed the condition covered under Entry No.80(B) of Notification and that the drug “Danazol” bulk drug would fall under 80(b). The bulk drug imported by the respondent is not eligible for concessional duty as Sl. No. 80(A) refers to “Drug”. Held that:- The issue whether assessee is eligible for the benefit of Notification and whether the condition attached to S. No. 80(B) is only procedural one was considered by the Tribunal in various decisions and held in favor of the assessee - In the case of CIPLA Ltd. Vs. CC, Chennai [2007 (8) TMI 131 - CESTAT, CHENNAI], it was held that admittedly, the ‘bulk drugs’ imported by the appellants were specifically mentioned in List 3 appended to Sl. No. 80(A) of Customs Notification No. 21/02 and are liable to be considered as ‘drugs’ mentioned at 80(A). It is beyond doubt that ‘bulk drugs’ are also ‘drugs’. They are so defined under the Drugs (Prices Control) Order, 1995 also. Benefit of notification allowed - appeal dismissed - decided against Revenue.
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2018 (7) TMI 671
Levy of duty - Waste - Fatty Acid, Soap Stock, Spent Earth etc. - Whether the fatty acid, soap stock and spent earth emerged during the course of manufacture of refined oil is to be treated as ‘waste’ or liable to excise duty or not? - Held that:- The said issue was considered by the Larger Bench of the Tribunal in the decision in the case of M/s Ricela Health Foods Ltd. & Others Vs. CCE, Chandigarh, Allahabad [2018 (2) TMI 1395 - CESTAT NEW DELHI], and the Tribunal has held that the process of manufacture is for refined oil and the waste which arises during the course of such manufacture cannot be considered as manufactured excisable goods. Thus, no duty can be demanded on such items like fatty acids, soap stock and spent earth, which arise during the course of manufacture of refined oils. Demand cannot sustain - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 670
CENVAT Credit - input services - manufacture of both dutiable and exempted products - appellants failed to maintain separate accounts for the input services used in manufacture of dutiable and exempted products - Held that:- On being pointed out, the appellants have reversed the entire input service tax credit availed during the disputed period which comes to ₹ 46,17,410/- - having reversed the credit that has been irregularly availed by them, the department cannot force upon the appellant to pay 10% of the value of clearances. The said issue has been settled in the case of SPM Industries [2014 (3) TMI 1054 - ANDHRA PRADESH HIGH COURT], where it was held that Where the credit taken has been reversed on inputs utilised in manufacturing of the final exempted product stand deleted in the account of the assessee, it cannot be said that the assessee has taken credit for the duty paid on the inputs utilised in the manufacture of the final product, which is exempted. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 669
CENVAT Credit - inputs - iron & steel items such as M.S.Angle, H.R. Plate, M.S. Beam, M.S.Channel etc. - the main thrust of the argument of the Revenue is that the iron and steel items were mainly used in the support structure and will not satisfy the criteria of parts and components or accessories of such machinery - Held that:- The observation of Revenue has to be supported by material facts. The same is not available in the present appeal. It is to be noted that whether iron and steel item is to be considered as part or component or accessory of capital goods can be decided by applying "user test" as decided in Jawahar Mills Ltd. [2001 (7) TMI 118 - SUPREME COURT OF INDIA] - Admittedly, in large number of cases, the Tribunal as well as various High Courts allowed credit in similar set of facts. Credit allowed - appeal dismissed - decided against Revenue.
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CST, VAT & Sales Tax
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2018 (7) TMI 668
Classification of goods - Sharbat Rooh Afza - U.P. VAT Act - common parlance test - 'essential character' test - Whether the Commercial Tax Tribunal was legally justified in passing the impugned order classifying the product "Rooh Afza" under the residuary entry (Entry 1 of Schedule V) and not under the Entry 103 of Part A of Schedule II of the U.P. VAT Act? Held that:- The application of common parlance test is an extension of general principles of interpretation of Statute for deciphering the mind of the law-maker. In the absence of a statutory definition in precise term; words, entries and items in physical Statute must be construed in terms of their commercial or trade understanding or according to their popular meaning. In other words they have to be constructed in the sense that the people conversant with the subject matter of the Statute would attribute to it. Resort to rigid interpretation in terms of artificial and technical meaning should be avoided in such circumstances - the Tribunal has neither committed any error of law to apply common parlance test nor committed any error to record the findings of fact that "Sharbat Rooh Afza" is not a fruit drink. It is evident that the commodity in question i.e. "Sharbat Rooh Afza" is neither a fruit drink nor a fruit juice nor a processed fruit rather it is a "Non Fruit Syrup/Sharabat" being a concentrated sugar syrup which is not specified in Schedule-I, II, III & IV of the Act. Therefore, it is an unclassified item falling under the residuary entry of Schedule-V of the Act - Since the commodity "Sharbat Rooh Afza" does not fall under any Entry in Schedule I, II, III and IV, therefore, it shall fall under the residuary entry in Schedule-V of the Act. Revision dismissed - decided against revisionist.
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Indian Laws
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2018 (7) TMI 706
Dishonor of cheque due to insufficiency of funds - Non-payment of part of amount related to purchase of property - liability towards electricity dues as on the date of the sale deed - appellant claims to have issuued two cheques subsequently for discharge of his liability but the respondent denies of the same - Section 138 of the Negotiable Instrument Act. Liability towards electricity dues as on the date of the sale deed - Held that:- It is absolutely clear that the respondent has merely raised a bogie of there being some outstanding electricity dues from the time when Gulzar Singh occupied the property in question. There is absolutely no basis for the same. It is not the case of the respondent that the electricity supply company i.e., BSES Yamuna Power Ltd. has raised any demand in respect of the electricity meters installed in his premises, ever since he came in occupation of the same. It is evident that the cheque of ₹ 5,00,000/- was issued by the respondent towards the balance sale consideration. May be, the same was left with Surender Kumar, till such time as the appellant satisfies the respondent with regard to the apprehended outstanding electricity bills, whereafter, the balance payment of ₹ 5,00,000/- was to be handed over to the appellant. Only this arrangement explains issuance of the said cheque of ₹ 5,00,000/- by the respondent and its being handed over to a third party, namely, Surender Kumar – as claimed by the respondent. The appellant has proved beyond all reasonable doubt that the cheque in question was issued by the accused in discharge of a legally recoverable debt. It has also proved that the said cheque has been dishonoured upon presentation and, despite issuance of statutory notice of demand within the period of limitation, the amount has not been paid by the accused. The defence set up by the accused has not been probablised and he has not been able to create any doubt in the mind of the Court that the said cheque was not issued towards discharge of a legally recoverable debt. The respondent accused has not been able to rebut the presumption arising in favour of the appellant holder of the cheque. The respondent accused is held guilty for commission of the offence under Section 138 of the Negotiable Instruments Act - appeal allowed - decided in favor of appellant.
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9911796707
