Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 21, 2017
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
TMI Short Notes
Articles
News
Notifications
Customs
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72/2017 - dated
20-7-2017
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Cus (NT)
Exchange Rate of Foreign Currency relating to Imported and Export Goods Notified
GST
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F.No.354/117/2017-TRU Pt. - dated
12-7-2017
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CGST Rate
Corrigendum - Notification No. 2/2017-Central Tax (Rate), dated the 28th June, 2017,
GST - States
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05/10/2017-FD(TAX)(D). - dated
29-6-2017
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Manipur SGST
Council, fixes the rate of interest per annum.
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05/10/2017-FD(TAX)(C). - dated
29-6-2017
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Manipur SGST
Harmonised System of Nomenclature (HSN) Codes,
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05/10/2017-FD(TAX)(B). - dated
29-6-2017
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Manipur SGST
Appoints the provisions of sections 6 to 9, 11 to 21, 31 to 41, 42 except the proviso to sub-section (9) of section 42, 43 except the proviso to sub-section (9) of section 43, 44 to 50, 53 to 138, 140 to 145, 147 to 163, 165 to 174 of the said Act, shall come into force.
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05/10/2017-FD(TAX)(A) - dated
29-6-2017
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Manipur SGST
Aggregate turnover in the preceding financial year did not exceed fifty lakh rupees.
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17/2017-State Tax (Rate) - dated
28-6-2017
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Manipur SGST
Electronic Commerce Operator.
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16/2017-State Tax (Rate) - dated
28-6-2017
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Manipur SGST
United Nations or a specified international organisation shall be entitled to claim refund of State tax paid on the supplies of goods or services.
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15/2017-State Tax (Rate) - dated
28-6-2017
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Manipur SGST
The Council notifies that no refund of unutilised input tax credit.
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14/2017-State Tax (Rate) - dated
28-6-2017
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Manipur SGST
Neither as a supply of goods nor a supply of service.
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13/2017-State Tax (Rate) - dated
28-6-2017
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Manipur SGST
Notifies the categories of supply of services on reverse charge basis.
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12/2017-State Tax (Rate) - dated
28-6-2017
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Manipur SGST
Exempts the intra-State supply of services state tax leviable thereon under sub-section (1) of section 9.
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11/2017-STATE TAX (RATE) - dated
28-6-2017
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Manipur SGST
Notifies the state tax, on the intra-State supply of services.
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10/2017-State Tax (Rate) - dated
28-6-2017
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Manipur SGST
Exempts intra-State supplies of second hand goods.
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09/2017-State Tax (Rate) - dated
28-6-2017
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Manipur SGST
Exempts intra-State supplies of goods or services or both received by a deductor under section 51.
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08/2017-State Tax (Rate) - dated
28-6-2017
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Manipur SGST
Exemption shall not be applicable where the aggregate value of such supplies of goods or service or both.
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07/2017-State Tax (Rate) - dated
28-6-2017
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Manipur SGST
The supply of goods by the Unit Run Canteens to the authorized customers.
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06/2017-State Tax (Rate) - dated
28-6-2017
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Manipur SGST
Specified the Canteen Stores Department shall be claim a refund of fifty per cent. of the applicable state tax paid on inward supplies of goods.
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05/2017-State Tax (Rate) - dated
28-6-2017
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Manipur SGST
Notifies the goods no refund of input tax credit shall be allowed, where the credit has accumulated on account of rate of tax on inputs
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04/2017-State Tax (Rate) - dated
28-6-2017
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Manipur SGST
specified the supply of goods on reverse Charge basis.
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03/2017-State Tax (Rate) - dated
28-6-2017
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Manipur SGST
Council, hereby exempts intra-State supplies of goods, Petroleum operations undertaken under specified contracts.
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02/2017-State Tax (Rate) - dated
28-6-2017
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Manipur SGST
Council, hereby exempts intra-State supplies of goods Schedule appended to this notification.
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01/2017-STATE TAX (RATE) - dated
28-6-2017
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Manipur SGST
Notifies the rate of the state tax.
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05/10/2017-FD(TAX) - dated
22-6-2017
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Manipur SGST
The Manipur Goods and Service Tax Rules, 2017
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ERTS(T) 65/2017/001 - dated
29-6-2017
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Meghalaya SGST
Notifies the rate of the State tax.
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FIN/REV-3/GST/1/08 (Pt-1) “C” - dated
30-6-2017
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Nagaland SGST
Composition U/s 10(1) of the Nagaland Goods and Services Tax Act, 2017
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KA.NI.-2-858/XI-9(42)/17 - dated
30-6-2017
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Uttar Pradesh SGST
Uttar Pradesh Goods and Services Tax (First Amendment) Rules, 2017
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KA.NI.-2-844/XI-9(47)/17 - dated
30-6-2017
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Uttar Pradesh SGST
Categories of services on which tax will be payable under reverse charge mechanism under the Uttar Pradesh Goods and Services Tax Act, 2017
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KA.NI.-2-843/XI-9(47)/17 - dated
30-6-2017
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Uttar Pradesh SGST
Notification regarding the exemptions on supply of services under the Uttar Pradesh
Goods and Services Tax Act, 2017
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KA.NI.-2-842/XI-9(47)/17 - dated
30-6-2017
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Uttar Pradesh SGST
Notify the state tax the intra-State supply of services
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KA.NI.-2-838/XI-9(47)/17 - dated
30-6-2017
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Uttar Pradesh SGST
Notification regarding rate of interest under the Uttar Pradesh Goods and Services Tax Act, 2017
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KA.NI.-2-837/XI-9(47)/17 - dated
30-6-2017
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Uttar Pradesh SGST
Exempted supply of goods under section 11(1) of the Uttar Pradesh Goods and Service Tax Act,2017
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KA.NI.-2-836/XI-9(47)/17 - dated
30-6-2017
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Uttar Pradesh SGST
Notifies the rate of the state tax
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KA.NI.-2-834/XI-9(15)/17 - dated
30-6-2017
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Uttar Pradesh SGST
Notification regarding to bring into force certain sections of the Uttar Pradesh Goods and Services Tax Act, 2017
Income Tax
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62/2017 - dated
18-7-2017
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IT
Income-tax (21st Amendment) Rules, 2017 - Amendment to Form No. 3CEFA
Highlights / Catch Notes
GST
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GST - Corrigendum to Notifications - Prescribing Rate of tax and Exemption from GST in case of Goods
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Whether a Job worker is eligible to avail the benefit of Composition Scheme? What happened where the nature of activity undertaken by the job worker is amounting to Manufacture? will he be denied the benefit of composition as service provider?
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Whether a Works contractor having turnover below ₹ 75 lacs is eligible to avail benefit of composition scheme? What happened in case of other service providers? Can a restaurant server provider (Dhaba wala) is allowed under this scheme.
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Whether all the manufactures are eligible to avail the benefit of Composition Scheme? If no, what are the exception?
Income Tax
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Income-tax (21st Amendment) Rules, 2017 - Amendment to Form No. 3CEFA - Notification
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Indexation benefit on capital gains u/s.48 - From the plain reading of 3rd proviso section 48 of I.T. Act, government securities are not excluded for indexation benefit only bond or debenture included in the third proviso to Sec.48.
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Levy of penalty u/s 271D - The reasons given by the assessee that there is a business exigency in as much he needs to make the payment for purchase of landed properties, the reasons given by the assessee is not coming within the purview of reasonable cause as defined u/s 273B
Customs
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It is a situation wherein an exporter discharges the export duty based upon the Fe-content which is noticed as more than 62%, applies for a refund claim of the export duty paid when the discharge port analysis report indicates Fe-content as less than 62%, Revenue will not entertain such a claim on the ground that the export duty liability correctly discharged as and when the goods are presented for examination.
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Classification - sandalwood pieces of Tanzania Origin - classified under CTH 121190 or under CTH 44039922/440300? - - the impugned goods would then not be hit by the exclusion contained in Chapter Note 1(a) of Chapter 44. In consequence, they would continue to be classified in Chapter 44 only
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Import of printer mechanism falling under the heading 8473.30 of Customs Tariff - the denial by department of notification benefit involving a technical interpretation of the impugned item without any technical expert opinion, reeks of arbitrariness and is unjust and unfair
Service Tax
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The royalty paid by the appellant to their holding company in USA towards the that receipt and use of software does does not fall under the 'Intellectual Property Service' - Demand set aside
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Whether services provided by overseas branches of the respondent has to be included in the total turnover, particularly when the adjudicating authority has not included the same in the export turnover for the purpose of refund under Rule 5 of CCR, 2004 read with N/N. 5/2006-CE(N.T.) dated 14-3-2006? - Held No
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Refund claim - time limitation - whether the refund of service tax in terms of N/N. 52/2001-ST dated 30-12-2011 in respect of service tax paid on the input service and used for export of service is admissible when it is filed beyond the limitation of one year as provided under said notification? - Held No
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Just because appellant carried out ancillary activities of loading, unloading etc., which is not the essential character of the activity contracted to him but only ancillary to the main work of transportation of break-bulk cargo, it would not be just and proper to bring such activity within the fold of "Cargo Handling Service".
Central Excise
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CENVAT credit - input service distributor - it was alleged that the branch sales office (ISD) has not filed proper returns, showing the distribution of cenvat credit to Bhilai Steel Plant - Credit cannot be denied for mere procedural lapse.
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Charge on properties - Central Excise authorities have acted without jurisdiction in proceeding against the petitioners in respect of the defaults committed by the assessee. All proceedings including the orders of attachment initiated by the Central Excise authorities on the basis of default of its assessee against the petitioners are set aside. - HC
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Shortage of goods - Clinker & HDPE Bags - appellant claims that the allegation of clearance/removal of Clinker & HDPE Bags clandestinely is vague and presumptive and not corroborated with any evidence - CENVAT credit - The appellant shall be entitled to take credit, of the Cenvat credit reversed for HDPE Bags.
VAT
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Released of seized truck - Reasonable interpretation of such provision would be that against the seizure power which could be for indefinite period, unless curtailed by statutory provision, detention would be a temporary measure. - HC
Case Laws:
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GST
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2017 (7) TMI 623
GST on legal services - reverse charge mechanism - Respondents (Government) are seeking more time to address the important legal and constitutional issues that arise in these petitions and it is asserted in the Court on behalf of the Respondents that as to date, in fact, no coercive action is taken against the lawyers, law firms or providers of legal services, Limited Liability Partnerships (LLP), for non-compliance with the legal requirement of the CGST, IGST and DGST - Next Date is 14th September, 2017
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Income Tax
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2017 (7) TMI 664
TDS u/s 195 - interest u/s 201(1) and 201(1A) - Held that:- We find it difficult to hold that period consumed by Revenue in prosecuting matter against main payee would have resulted in accrual of a right upon Assessee so as to deprive Revenue from proceeding u/s 201 (1) and 201(1A), though, admittedly, Assessee-petitioner has committed default by not complying Section 195 by non-deduction of TDS on the amount paid to Smt. Nidhi Raman. Defence of petitioner that it was misrepresented by seller by not disclosing by any of them that she was an N.R.I. would equally be available to Revenue also for explaining delay and also their bonafide is fortified that they make all possible efforts to recover entire amount of tax from person liable to pay tax and as a last resort they have sought to exercise power under Section 201 (1) and 201(1A) against Assessee. While exercising power of judicial review in the case like present one, it would be appropriate to consider whether power has been exercised by competent authority within a reasonable period and whether delay is unjust, arbitrary, whimsical or it is for valid reasons. If Court finds that delay in exercise of power is for valid and bonafide reasons,alleged delayed exercise of power cannot be held invalid. We, therefore, find ourselves unable to agree with the submission of learned counsel for petitioner that proceedings initiated by respondents-Revenue Authorities under Section 201(1) and 201(1A) is bad being barred by period of limitation.
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2017 (7) TMI 663
Denial of waiver of interest levied under Section 234(B)- Held that:- When identical issue came up for consideration before the Division Bench in the case of M/s Upasana Finance Limited vs. Deputy Commissioner of Income Tax, Company Circle III (3) [2016 (7) TMI 1323 - MADRAS HIGH COURT] remanded the matter for fresh consideration to decide the question as to whether Lease Equalisation Reserve and Special Depreciation Reserve would fall under clause (g) to the explanation to the second proviso of Section 115JA of the Income Tax Act. In the instant case also such procedure has to be adopted as the respondent has to take note of the legal position which holds the field as on date and in particular, when the amended provision was given retrospective effect. Writ petitions are allowed and the impugned orders are set aside and the matters are remanded to the respondent to decide the question of law which has been raised by the petitioner and as noticed above, after affording an opportunity of personal hearing to the petitioner and pass appropriate orders, on merits and in accordance with law.
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2017 (7) TMI 662
Addition u/s 40A (3) - Held that:- It is evident that the factum of the genuineness of payments and identity of the payees has not been doubted by the lower authorities and that the principle of Commercial expediency of the payment has been ignored. Thus we hold that order of the ld CIT(A) is not based on finding of facts or correct application of law. We, accordingly hold that CIT(A) was not justified in upholding the addition of ₹ 80,024/- made by the Ld AO U/s 40A(3) of the Act. Addition on adhoc basis without rejecting the books of account and pointing out any specific instance of unverifiable or unvouched expense - Held that:- The accounts maintained by the assessee have been audited in accordance with the provisions contained in the Act. The books of account have been accepted as true and correct for the purposes of computation of income from business. We, therefore, do 12 not find any justification in sustaining such an ad hoc or lump-sum disallowance by the ld CIT (A) without any basis. Therefore, we are of the considered view, that no such adhoc disallowance, can be justified. Accordingly, the adhoc disallowance confirmed by the by the CIT (A) at ₹ 2,00,000/- out of various expenses is deleted
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2017 (7) TMI 661
Addition being capital reserve arising on amalgamation of wholly owned subsidiary company - Held that:- In the case of the assessee, the subsidiary company was amalgamated with the assessee company and there was no business transaction in the amalgamation. Surplus on amalgamation is not taxable u/s.28(iv) of Income Tax Act and we set-aside the order of the lower authorities and allow the appeal of the assessee. Indexation benefit on capital gains u/s.48 - Held that:- From the definition of the capital asset, the government securities are not excluded from the definition of capital asset. Therefore, the government securities are capital assets. As per Sec.2(42A) the expression ‘security’ shall have the meaning assigned to Clause-11 of Securities Contracts Regulation Act, 1956 which includes government securities as discussed in the Ld.CIT(A) orders which was extracted above. From the above guidance note Bonds and securities distinguishable. The Bonds are not freely tradable and the securities are freely tradable. Therefore, the Bonds cannot be equated with the securities. The assessee has made investments in government securities and sold the securities after holding the period of more than 12 months to treat the securities as long term capital assets. The capital gains arising on transfer of long term company assets are entitled for the benefit of indexation as per Sec.48 of Income Tax Act. From the plain reading of 3rd proviso section 48 of I.T. Act, government securities are not excluded for indexation benefit only bond or debenture included in the third proviso to Sec.48. Therefore, we do not find any infirmity in the order of the Ld.CIT(A) and the same is upheld. - Decided against revenue
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2017 (7) TMI 660
Reopening of assessment - no notice under section 143(2) issued before completing the assessment proceedings by AO - reason to believe - Held that:- The failure by the AO to issue a notice to the Assessee under Section 143(2) of the Act when the Assessee made a statement before the AO to the effect that the original return filed should be treated as a return pursuant to a notice under Section 148 of the Act, is fatal to the order of re-assessment. See Principal CIT vs. Jai Shiv Shankar Traders Pvt. Ltd. [2015 (10) TMI 1765 - DELHI HIGH COURT] Also at the time of recording the reasons, the Assessing Officer should have prima-facie belief but that belief must be arisen out of the material. Until and unless the ingredients stipulated under section 147 of the Act are not complied with, the reasons recorded cannot be regarded to be bona-fide. We accordingly on this basis also, following the decision in the case of Principal CIT vs. G & G Pharma India Ltd. (2015 (10) TMI 754 - DELHI HIGH COURT) quash the assessment order. - Decided in favour of assessee. Addition u/s 68 - Held that:- CIT(A) has categorically held that the assessee has discharged his onus to prove all the ingredients as stipulated under section 68 of the Act inasmuch as he has clearly stated that the Assessing Officer has not made any enquiry to examine the contents of the information submitted by the assessee. The assessee has received subscription for share capital from four corporate entities through cheque and these corporate entities are duly registered with ROC and they are active as per the website of the Ministry of Corporate Affairs. They are also having permanent account number and regularly filing their returns. The Assessing Officer without discharging his onus or bringing any material to the contrary, just rejected the evidences filed by the assessee. Hon'ble Supreme Court in the case of CIT vs. Orisssa Corporation(1986 (3) TMI 3 - SUPREME Court) has categorically held that for inaction of the Assessing Officer, the assessee cannot be penalized. - Decided in favour of assessee.
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2017 (7) TMI 659
Disallowing the loss on account of sale of shares of HCL Technologies Ltd - Held that:- The issue in favour of the assessee in the appeal filed against the original assessment order and original CIT(A)’s order and since no incriminating material was found during the course of search and the addition was made solely on the basis of the statement of the assessee, therefore, we hold that the CIT(A) was not justified in disallowing the loss on account of sale of shares of HCL Technologies Ltd. The grounds raised by the assessee are accordingly allowed.
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2017 (7) TMI 658
Claim of deduction u/s 54/54F - amount deposited in specified capital gains account maintained with bank before the time stipulated u/s 139(1) - Held that:- The assessee has sold two flats for a total consideration of ₹ 42 lacs. Stamp duty authorities have valued the two flats at ₹ 50,40,611/- while the DVO has determined the value of the two flats at ₹ 59,64,000/-. The DVO valuation is higher than the value adopted by the stamp duty authorities. The stamp duty authorities have adopted the full value of the two flats at ₹ 50,40,611/- and in view of provisions of Section 50C(3) the value as adopted by stamp duty authorities shall have to be adopted to be full value of consideration of the property for computing capital gains under provisions of the Act, as the valuation adopted by DVO is higher than stamp duty authorities valuation. The assessee is entitled for the deduction u/s 54/54F in accordance with law for all the investment made in the new eligible before the date of filing of return of income as provided u/s 139 of the Act or wherein the amount is deposited in specified capital gains account maintained with bank before the time stipulated u/s 139(1) of the Act. The assessee has stated to have invested in the new residential property on 23 September, 2005 while the due date of filing return as extended by CBDT was 31.08.2005 but the said investment was made before the expiry of date of filing of return of income as stipulated u/s 139(4) of the Act and the assessee had diled return of income on 17-10-2005 wherein the investment was made prior to filing of return of income with the Revenue, and hence the assessee will be entitled for the deduction. CIT(A), on appeal allowed the deduction to the tune of ₹ 25 lacs while it is the claim of the assessee that the assessee has further spent an amount of ₹ 5,51,846/- towards stamp duty, registration charges and other miscellaneous expenses in the new house property. In our view, this claim of the assessee for being eligible for higher deduction u/s 54/54F of the Act on the grounds that the said sum was spent before the filing of return of income on 17.10.2005 within time stipulated u/s 139(4) of the Act required verification by the AO and hence we are inclined to set aside and restore this issue to the file of the A.O. with direction to verify the claim of the assessee of having spent the amount of ₹ 5,51,846/- towards stamp duty, registration and other miscellaneous expenses with respect to the acquisition of eligible new asset, prior to the filing of return of income on 17.10.2005.
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2017 (7) TMI 657
Trading additions - Held that:- Where the reasons for the decline in the G.P rate has been accepted by the AO as well as by the ld CIT(A), we do not see any justifiable reason to upheld the trading additions made by the AO on account of low G.P rate. The basis of adopting 35% G.P rate by the AO and how the same has been derived at - whether based on assessee’s past history or similar line of business is not clear. Similarly, the basis of upholding the ad-hoc addition of ₹ 20,00,000 by the ld CIT(A) is equally not clear especially when the CIT(A) was satisfied with the explanation of the assessee regarding the fall in G.P rate. Given that the assessee has given a justifiable explanation with supporting numbers to corroborate its explanation for the fall in G. P rate, we delete the trading addition of ₹ 93.70 lacs as made by the AO. Disallowance on account of travelling expenses - Held that:- The bills/vouchers for travelling expenses have been examined by the AO and in absence of any specific defect pointed out by the AO, the ad hoc addition of ₹ 10 lacs cannot be sustained in eye of law. The revenue’s ground no. 2 is thus dismissed. Addition of foreign travel expenses - Held that:- Once the adequate material evidence is on record, the observation of the AO doesn’t inspire confidence at all where he says that “visits of the CEO for some other projects and business purposes of some visits are not justified”. Where the assessee has given adequate supportive documentation in support of the foreign travel in terms of bills and tour report containing travel dates, purpose etc, we don’t see any justifiable reason to sustain the ad hoc addition on account of foreign travel expenses. It is not the case of the Revenue that some non-employees or relatives of the directors, etc visited overseas. Further, the necessity of foreign travel is a business decision which should be best left to the assessee company unless there are some substantial corroborative evidence to prove otherwise Addition of “Motor car expenses" - Held that:- No specific discrepancy has been pointed by the AO in the bills/vouchers submitted by the assessee. It is not the position of the Revenue that the expenses claimed are bogus in nature or not incurred for the purposes of the business. The adhoc disallowance cannot therefore be sustained in eye of law. Addition u/s 68 - Held that:- Once the identity and credit worthiness of the subscribers is established and genuineness of transaction is not doubted, mere non-filing of the confirmation cannot be held sufficient enough to attract the provisions of section 68 of the Act. In the peculiar facts of the present case, where the share application money has been received from the existing shareholders and the necessary particulars in terms of name, address and PAN number have been furnished to the AO, the AO could have carried out further verification/enquiry where he is not satisfied with the assessee’s explanation. There is nothing on record to suggest that the AO has carried out any further enquiry after receiving the necessary details. Therefore, in the entirety of facts and circumstances of the case and in light of judicial authorities quoted supra, we delete the addition made under section 68 of the Act. Addition of repair and maintenance expenses and disallowance made on account of repair and maintenance expenses - Held that:- We have heard the rival contentions of both the parties and perused the material available on the record. Where the AO has verified the vouchers/bills submitted by the assessee on test check basis and has not found any defect therein, we see no justifiable reason to sustain the disallowance. Addition of advertisement and publicity expenses - Held that:- It is the contention of the ld AR that expenditure was incurred in respect of publication in the newspapers which is duly supported by news paper cutting. However, there is no such finding by the lower authorities. The matter is accordingly set-aside to the file of the AO to examine the same a fresh Addition on account of alleged receipt of on-money as income of the assessee on the basis of custom and Central Excise Order passed against the assessee in earlier years - Held that:- In the instant case, the AO has placed his reliance on the findings in the assessment order for AY 1996-97 and given that the Coordinate Bench has already taken a view in the matter referred supra, we do not see any reason for us to deviate from the said view taken by the Coordinate Bench. Nothing has been brought to the notice of the Bench in respect of whether CESTAT order has been pronounced or not since the date of passing of order by the Coordinate Bench in August 2016. Once the CESAT order is pronounced, the nature of implications as well as the years involved would be clear and the Revenue as well as the assessee would be in a better position to put foreword their respective contentions. Hence, the findings and directions contained in Coordinate Bench decision for AY 1996-97 shall apply mutatis mutandis to the impunged assessment year as well. Hence, ground of assessee is allowed for statistical purposes. Disallowance on account of difference in the rate of interest - Held that:- It is not in dispute that the fixed deposits were placed with banks as margin money to avail the facility of bank guarantee which the appellant requires for the purposes of its business. The purpose of fixed deposit was thus not for the purposes of earning interest income but to secure bank guarantee for the purposes of business. At the same time, nothing has been brought on record to the attention of the Bench by either of the parties to determine what kind of irregularities had been revealed by the department of company affairs in matter of interest payment – the basis for sustaining the disallowance by the ld CIT(A). In the interest of justice and fair play, we therefore remand the matter back to the file of the AO to examine the details of enquiry conducted by department of company affairs and how the same is relevant for the transaction under consideration. Ground no. 8 of assessee’s appeal is allowed for statistical purposes. Valuation of perquisite in the hands of the employees will determine the allowability of expenditure incurred by the assessee on provision of such perquisites to its employees - Held that:- The valuation of perquisites has been defined under section 17 of the Act and the same is relevant for the purposes of determining the taxability in the hands of the employees. Where there is any recovery by the employer from the employees, the same is adjusted while determining the value of the perquisite in the hands of the employees. The valuation of perquisite is thus relevant for determining the taxability in the hands of the employee and not for the purposes of allowability of expenditure which has been incurred in provision of such perquisite by the employer. In the hands of the employer, what is relevant to determine is whether the expenditure incurred by the employer in provision of various perquisite is as per the terms of employment and other related contractual arrangements entered into with the respective employee or not and as per the employment policy of the assessee company. In the instant case, it is not the case of Revenue that the expenditure on perquisite has been incurred by the assessee which is not supported by the employment contract of the respective employees or not in accordance with the employment policy. Further, the necessary details in respect of perquisite provided to Shri K. N. Modi were provided in the assessment proceedings as apparent from the assessment order itself and in respect of all the employees during the remand proceedings. We therefore do not agree with the findings of the ld CIT(A) in this regard. Ad hoc disallowance of interest payment - Held that:- The matter is set-aside to the file of the AO to examine the above said contention of the assessee and where the same is found to be correct, the AO is directed to allow the necessary relief to the assessee following the order passed by the Coordinate Bench for AY 1996-97. Ground allowed for statistical purposes. Disallowance on account of interest on deposits with RSEB - Held that:- AO has stated clearly in his remand report that “The assessee has submitted a letter from JVVNL, M.I.A., Alwar bearing No. 2594 that no interest was paid by JVVNL on security amount deposited in F.Y. 1997-98. The same was allowed to be paid by JVVNL w.e.f. 13.08.2004 per annum.” Once there is a clear finding of fact given by AO that no interest was payable by JVVNL or receivable by the assessee for the year under consideration and ld CIT(A) has also taken cognizance of the same, we are unable to understand what prejudice is caused to the Revenue. The provision for payment of interest by State Electricity Boards on security deposits of the customers was inserted by the Electricity Act, 2003 and interest is being received by the appellant from JVVNL, w.e.f 13.08.2004. In absence of any specific provision in the Electricity Act, 2003 which governs the terms of arrangement between the assessee and JVVNL, the imputed interest cannot be said to have accrued to the assessee company. We accordingly donot find any infirmity in the order of ld CIT(A) in deleting the disallowance of imputed interest of ₹ 60 lacs. Disallowance on account of valuation of stores and spares - Held that:- CIT(A) deleted the addition made by the Assessing Officer by holding that the appellant has stated that the closing stock of stores and spares is valued at cost and has filed complete details of the computerized copy of the stock ledger. The AO has verified the stock register of stores and spares with relevant vouchers on test check basis in the course of remand proceedings and given his finding that stock of stores and spares has been valued at cost. In view of these facts, the ld CIT(A) has deleted the addition of ₹ 50 lacs made by the AO. Where the stock has been valued by the assessee as per accepted accounting policy at cost and the same has been verified by the AO to be in consonance with the said policy, we do not see any infirmity in the order of the ld CIT(A) in confirming the disallowance of such addition
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2017 (7) TMI 656
Characterization of functions/activities undertaken by the assessee while rendering services to its associated enterprises - market research company OR IT enabled services company - Held that:- It is quite clear that the ITE services involve a predominant use of technology to achieve the desired output. The illustrative list of activities brought out by CBDT clearly show that ITE services involve routine human tasks which are carried out more and more by use of technology on the part of human resources. In contrast, if we were to compare such like services with the activities of a market research service provider, it would be evident that in market research, output is the product of collecting, collating and analysing of information/data, which may involve use of technology, whereas in the case of ITE services, rendering of services is primarily driven by use of technology on the part of human resources. In our considered opinion, the DRP was quite justified in coming to conclude that market research services undertaken by assessee cannot be compared with ITE services. In fact, in para 9 of the order of DRP, distinction between market research agency and an IT-enabled service provider under the Service Tax Rules has also been tabulated which clearly shows that the two are incomparable. Therefore, under these circumstances, the TPO was clearly in error in benchmarking the ‘international transactions’ entered by the assessee on account of market research services with the concerns which were engaged in providing ITE services, since the two activities were incomparable. A concern involved in rendering of ITE services cannot be compared with a concern which is rendering market research services, as is the case of the assessee. Therefore, insofar as the issue relating to characterisation of assessee’s functions are concerned, we find no error on the part of DRP in upholding the stand of assessee that the TPO erroneously considered it as an ITE service provider. Disallowance of proportionate interest - Held that:- As in the past years, namely, Assessment Years 2004-05 and 2005-06, in a consolidated order passed by the Tribunal stand of assessee has been upheld that no addition can be made on account of notional interest in the valuation of closing work-in-progress. Thus, on this Ground, assessee succeeds. Denial of deduction u/s 80G - Held that:- It would be in the fitness of things that the Assessing Officer verifies and allows the claim of assessee for deduction u/s 80G of the Act, having regard to the donation receipt, a copy of which has also been placed in the Paper Book at pg. 609. Thus, on this aspect, assessee succeeds for statistical purposes.
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2017 (7) TMI 655
Addition applying net profit rate of 12% instead of 8% on the gross receipts as declared by the assessee - Held that:- Application of net profit rate of 12% for the purpose of estimating business income of the assessee. It is admitted fact that assessee did not maintain any books of account and any detail to show as to how the business income have been computed. The issue is, therefore, covered against the assessee on identical facts by order of ITAT Chandigarh Bench in the case of the same assessee. Addition of cash deposits - Held that:- As proved by the assessee on record that assessee has made cash withdrawals during the year under consideration from various banks in a sum of ₹ 7.65 Cr and made re deposit of cash of ₹ 4.30 Cr in the same year out of such cash withdrawals. Thus, assessee proved that assessee was having availability of the cash for re deposit in other bank accounts. The Assessing Officer has not brought any evidence on record to prove that assessee has spent the amount of withdrawn of cash somewhere else. Therefore, in the absence of any adverse material against the assessee on record, authorities below should not have rejected the explanation of the assessee. The onus upon revenue has not been discharged in any manner. Authorities below were not justified in considering the re-deposit of cash of ₹ 3.13 Cr as unexplained cash deposit. Therefore, set aside the impugned orders and delete the addition of ₹ 3.13 Cr in assessment year 2009-10. In assessment year 2010-11, the Assessing Officer made identical addition of ₹ 2,03,99,700/-. It is admitted fact that in this year, cash deposits were of ₹ 4,20,83,700/- against cash withdrawals of ₹ 7,60,15,550/-. This issue is admittedly same as have been considered in preceding assessment year 2009-10, therefore, following reasons for decision for assessment year 2009-10, we set aside the orders of authorities below and delete the entire addition. - Decided in favour of assessee and against revenue.
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2017 (7) TMI 654
Levy of penalty u/s 271D - Held that:- A.O. is right in invoking the provisions of section 271D of the Act. Considering the assessee has accepted the loans from close friends and relatives and also part of the amount has been accepted through banking channels by way of bearer cheques, we are of the view that the genuine transactions accepted from close friends and relatives through banking channel are not coming within the rigors of the provisions of section 271D of the Act. Therefore, we are of the view that out of the total credits of ₹ 53,55,925/-, a sum of ₹ 31,15,000/- has been accepted from close relatives through banking channels are not hit by the provisions of section 271D of the Act. Accordingly, we are of the view that the A.O. was erred in levying penalty u/s 271D of the Act, to the extent of ₹ 31,15,000/- loans accepted from close relatives through banking channel. Hence, we direct the A.O. to exclude a sum of ₹ 31,15,000/- out of the total credit of ₹ 53,55,925/- for the purpose of levy of penalty u/s 271D of the Act. Accordingly, out of total penalty of ₹ 53,55,925/- a sum of ₹ 31,15,000/- is deleted and balance of ₹ 22,40,925/- is confirmed. In so far as assessment years 2007-08 is concerned, the assessee has accepted cash loans of ₹ 10 lakhs from 2 persons. Though, the assessee claims to have accepted cash loans from the persons and repaid within the same financial year, the facts remain that the assessee has accepted the loans in cash in contravention of the provisions of section 269SS of the Act. The reasons given by the assessee that there is a business exigency in as much he needs to make the payment for purchase of landed properties, the reasons given by the assessee is not coming within the purview of reasonable cause as defined u/s 273B of the Act. Therefore, we are of the view that the A.O. was right in levying penalty of ₹ 10 lakhs u/s 271D of the Act, for contravention of the provisions of section 269SS of the Act. Accordingly, confirmed penalty levied by the A.O.
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2017 (7) TMI 653
Addition u/s 68 - unexplained cash deposits - Held that:- Facts and material on record clearly support the explanation of the assessee that assessee genuinely entered into agreement to sell dated 08.05.2008 and received advance of ₹ 31 lacs through the agreement and agreement was witnessed by Shri Sandeep Uppal, property dealer who has confirmed the entire transaction in his statement recorded by Assessing Officer at appellate stage. There is no dispute that assessee is owner of the property. The receipts of receiving advance money and refunding part of the amount have been placed on record. Therefore, assessee is able to prove that assessee has received the amount of ₹ 31 lacs on account of advance received for sale of property. The objections of the Assessing Officer have, therefore, been met and as such, there was no justification for the authorities below to make and confirm the addition of ₹ 31 lacs. Therefore, set aside the orders of authorities below and delete the entire addition. - Decided in favour of assessee.
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Customs
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2017 (7) TMI 634
Misdeclaration of goods - The goods had actually originated from Taiwan and Korea but were falsely claimed to have originated from Singapore for claiming exemption - penalty - Held that: - The record suggests that the said agency Marubeni Chemicals had supplied similar nature of goods to several agencies making the same false claim of origin of goods being Singapore. The Singapore customs authorities had carried out the investigation and found that all such certificates were forged - impugned order upheld - appeal dismissed - decided against appellant.
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2017 (7) TMI 633
Provisional assessment - applicability of Section 28 of the Act of 1962 - Held that: - the petitioner had applied under Section 18(1) for the purpose of assessment. Section 18(1) of the Customs Act, 1962 permits the importer, where he is unable to make selfassessment, to make a request to the proper officer for assessment. In the present case, the petitioner had done so. Under Section 18(2) of the Act of 1962, it is the duty of the officer concerned to inform the duty leviable on the goods imported as finally assessed. In the present case, a final assessment of the duty has not happened. Nothing has been placed on record to suggest otherwise. The Customs Authorities have invoked Section 28 of the Act of 1962 without a final order of assessment. Section 28 of the Act of 1962 allows the Customs Authorities to recover duties not levied or short levied or erroneously refunded. In the present case, none of the situations contemplated under Section 28 has arisen. The duty is yet to be finally assessed for the petitioner to be said to be guilty of not paying the duty or paying short levy of the duty payable. The question of refund does not arise at all. Therefore, a failure contemplated under Section 28 of the Act of 1962 not happening, the authorities should not have invoked Section 124 of the Act of 1962. Section 124 of the Act of 1962 allows issuance of show-cause notice before confiscation of goods. The authorities could not have invoked Section 28 read with Section 124 of the Act of 1962 in the facts of the present case. The overwhelming inference, therefore, is that the impugned show-cause notice was issued without jurisdiction. The final order emanating out of the show-cause notice consequently suffers from the same defect - petition allowed - decided in favor of petitioner.
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2017 (7) TMI 632
Smuggling - import of betel nuts - whether of Indian origin or Foreign origin? - correctness of statements recorded under Section 108 of Customs Act, 1962 - confiscation - Held that: - the Original Authority has taken into consideration the statements dated 14 January, 2013 of two drivers who stated that goods were brought from Nepal and the markings on the packing materials but did not take into consideration the retractions filed by the said two drivers retracting their statements dated 14.01.2013. We find that the Original Authority has not examined the evidence before him objectively and therefore, his finding that the goods were of third country origin and they were brought from Nepal and they were brought through a route which was not specified, are all imaginary - the confiscation of 40 MT of Betel Nuts ordered through the impugned Order-in-Original is not sustainable and also for the reason that onus to prove that the goods were of smuggled nature has not been established by Revenue in the entire course of proceedings. Since the smuggled nature of the goods is not established, the confiscation of trucks and penalty on all the appellants under Section 112 of Customs Act, 1962 automatically needs to be set aside - appeal allowed - decided in favor of appellant.
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2017 (7) TMI 631
Benefit of N/N. 17/2001-Cus, dated 01.03.2001 - import of printer mechanism falling under the heading 8473.30 of Customs Tariff - Department took the view that the notification benefit cannot be claimed by the importers since the impugned item is an assembly containing Populated Printed Circuit Board (PPCB) - whether the imported item will fall within the ambit of an assembly which includes Populated Printed Circuit Board? - Held that: - the contention of appellant has however not been addressed or suitably countered by the lower authorities. On the other hand, the lower authorities states “the importer has accepted that the printed mechanism contains the populated printed circuit board” - the denial by department of notification benefit involving a technical interpretation of the impugned item without any technical expert opinion, reeks of arbitrariness and is unjust and unfair - appeal allowed - decided in favor of appellant.
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2017 (7) TMI 630
Classification of imported goods - sandalwood pieces of Tanzania Origin - classified under CTH 121190 or under CTH 44039922/440300? - Held that: - it clearly emerges that the exclusion therein will affect only those types of wood, which are in form of chips, shavings, or crushed, ground, powdered etc., and further, of a kind used primarily in perfumery, etc. Discernibly, the purpose of the Chapter note is to take out from the ambit of chapter 44, only such types of wood which are used primarily for perfumery, when presented in a ready to use raw material form, as chips, shavings, ground, crushed, etc. This certainly is not the case with respect to the impugned goods - the impugned goods would then not be hit by the exclusion contained in Chapter Note 1(a) of Chapter 44. In consequence, they would continue to be classified in Chapter 44 only - appeal allowed - decided in favor of appellant.
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2017 (7) TMI 629
Valuation - based on the N/N. 62/2007-CUS extends reduced export duty only if the Fe-content is less than 62%, the authorities issued a SCN to appellant, directing him to show cause as to why duty @ ₹ 300 PMT should be not demanded from them based upon the Fe-content analysis at discharge port - Held that: - the case of the Revenue is totally without basis - It is an admitted fact that the Fe-content in the iron-ore which was presented for examination, assessment and clearance for export had 61.52% as Fe-content. The provisions of Customs Act, 1962 for the discharge of export duty clearly provide for duty on the goods which are as presented for examination for export. It is also mandated in the Customs Act, 1962 that assessment and examination of the goods in the conditions in which the same have been presented should be done and also if the assessment is made on the basis of chemical test, the authorities should rely upon the analysis report of such goods. It is a situation wherein an exporter discharges the export duty based upon the Fe-content which is noticed as more than 62%, applies for a refund claim of the export duty paid when the discharge port analysis report indicates Fe-content as less than 62%, Revenue will not entertain such a claim on the ground that the export duty liability correctly discharged as and when the goods are presented for examination. Appeal allowed - decided in favor of appellant.
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2017 (7) TMI 628
Liability of interest - section 18 of CA - Valuation - palm oil - N/N. 36/2001 dated 03.08.2001 - importer claimed to adopt invoice value and not tariff value - Held that: - assessments of crude oil were being done provisionally under the Customs Act. There is no dispute in this regard. The liability of importer to pay interest in provisional assessment, from the first day of the month in which the duty is provisionally assessed, was brought into effect vide an amendment to Section 18 vide Gazette Notification No.35 dated 14.07.2006 - Amended provisions do not provide for any retrospective effect for the new insertion in Section 18. This being so, operatability of the provision will start ticking only from 14.07.2006, on which date the Gazette Notification has been issued. The order of the Assistant Commissioner demanding interest from the importer on the differential duty for the period from the date of provisional assessments till the date of payment of differential duty upheld - appeal dismissed - decided against Revenue..
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2017 (7) TMI 627
Penalty u/s 112 of CA - invalid DFRC licences - Held that: - there is no dispute as to the fact that when the appellant purchased DFRC licence from M/s Ria Impex Pvt. Ltd., those licence were transferrable as per the endorsement of DGFT authorities. The appellant in bonafide belief that these licences are validly procured licences resold them in the market. The provisions of Section 112 of the Customs Act, 1962 would apply in any case, if the appellant has played any role in the import of the goods which were liable for confiscation - the appellant having played no role in export of the goods a fraudulent DFRC licence was procured by M/s Ria Impex Pvt. Ltd., and had no role in importing the goods under transferred DFRC licences cannot be visited with penalty u/s 112 of the CA, 1962. Appeal allowed - decided in favor of appellant.
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Corporate Laws
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2017 (7) TMI 625
Issue of duplicate shares - transfer of shares - Held that:- In the case on hand, there is no specific provision in the Companies Act under which this Tribunal can give a direction to the Board of the Company to issue duplicate shares. However, when there is refusal on the part of the Board of the Company to issue duplicate shares, if after it was satisfied that the share certificates were lost or when such power was not properly exercised by the Board, it can certainly be challenged. In the case on hand, the challenge involves title of the Petitioner to the extent of 6000 Equity Shares of ₹ 2/- each of the first respondent company. In the case on hand, there is a dispute whether the shares of the petitioner were, in fact, transferred by the petitioner in the year 2015 or not. On the basis of a transfer form, the shares were already transferred to Mr. G.K. Dhariwal. Therefore, the issue involved in this case is a disputed question of facts. Moreover, in this case, investigation by SEBI is also pending relating to certain suspicious share transactions that were undertaken by the third respondent and the transfer of shares of the petitioner is one such case. Therefore, pending investigation by SEBI also, it is not proper for this Tribunal to decide the issue. Further, the petitioner did not choose to disclose in the petition that he has already approached SEBI for issuance of duplicate shares and the matter is pending there. It amounts to suppression of material fact since the order, if any, passed may be or may not be in consonance with the order, if any, passed by this Tribunal in this proceeding. Therefore, it is a fit case where the petitioner can approach the civil court. Further, the petitioner did not choose to implead the transferee of shares by name, Mr. G.K. Dhariwal, as a party to this petition. Any order of rectification of the register passed in this proceeding would have a direct effect on the interest of Mr. G.K. Dhariwal. Therefore, Mr. G.K. Dhariwal is not only a proper party, but also a necessary party to this proceeding. But, such person has not been impleaded as a party in this petition. The petitioner is not entitled to any relief in this petition. This petition is dismissed.
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PMLA
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2017 (7) TMI 622
Offences punishable under Section 120B IPC r/w. Sections 419, 420, 468 and 471 of IPC and Sections 7 and 13(2) r/w. Section 13(1)(d) of Prevention of Corruption Act, 1988 - Held that:- The person arrested is entitled to be informed about the grounds of such arrest. It appears that the material in the sealed covers in the possession of the Directorate of Enforcement is not disclosed till date. In the given circumstances, the Special Judge was well within in his propriety to opine that there was no material before him to hold that the respondent accused was guilty of the offences. Hence, the legality of the bail granted in favour of the respondent accused cannot be disturbed in this petition. However, the materials in the hands of the Directorate of Enforcement can be submitted to the concerned Court at the time of submitting the complaint. With these observations, petition is rejected.
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Service Tax
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2017 (7) TMI 652
Refund claim - time limitation - duty paid under protest - reverse charge - whether time limitation of 1 year is applicable to duty paid under protest? - Held that: - the first appellate authority was correct in coming to the conclusion that service tax liability arises on the respondents herein only, if the said amounts were paid post 18/04/2006 - reliance place on the judgment of the Hon’ble Bombay High Court in the case of Indian National Shipowners Assocaition [2009 (3) TMI 29 - BOMBAY HIGH COURT] is correct as this judgment of the Hon’ble High Court of Bombay has been upheld by the apex court and based upon such decision, Board has also issued circular No.276/8/2009-CX.8A dt. 26/09/2011 stating that service tax liability for the payments made to an overseas service provider will arise from 18/04/2006 only - refund allowed - appeal dismissed - decided against Revenue.
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2017 (7) TMI 651
Agency Commission - Whether the Customs Excise & Service Tax Appellate Tribunal, Allahabad is correct in setting aside the Order in Original dated 30/10/2009 without giving any finding on service tax liability of the respondent on Agency Commission from Maruti Udyog Ltd., DGS&D and nonregistration of the respondent's unit No.1 i.e. 21 Vidhan Sabha Marg, Lucknow? - Held that: - we do not find any discussion on this aspect at all and respondent also could not show anything where this aspect has been dealt with - we are remanding the matter to Tribunal to consider this aspect and findings of Commissioner of Central Excise - appeal allowed by way of remand.
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2017 (7) TMI 650
Benefit of N/N. 9/2004-ST dt. 9.7.2004 - denial on the ground that appellant have availed CENVAT credit - Held that: - there is no allegation that the appellant have violated the condition of notification No. 9/04-ST. Moreover in the annexure to show cause notice which quantified the differential short paid service tax clearly shows that the show cause notice itself extended, the abatement of 60% as available under the Notification No.9/2004-ST thereafter it is not open for the adjudicating authority as well as the Commissioner (Appeals) to visit to the issue of eligibility of the abatement provided under Notification No.9/04-ST. The entire finding which is based on the said notification is baseless and not flowing from the show cause notice. The impugned order is set aside and matter remanded to the adjudicating authority to verify the correct rate of service tax applicable on the date of provision of service and accordingly re-quantify the service tax liability if any arise - appeal allowed by way of remand.
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2017 (7) TMI 649
Cargo Handling Agent Service - Held that: - provisions of sub-section (23) of section 65 of the Finance Act, 1994, Cargo Handling Service means loading, unloading, packing or un-packing of cargo and includes Cargo Handling Services provided for freight in special containers or for non-containerized freight, services provided by a container freight terminal or any other freight terminal, for all modes of transport and Cargo Handling Service incidental to freight, but does not include handling of export cargo or passenger baggage or mere transportation of goods - From the definition of Cargo Handling Service , what emerges is that mere transportation of cargo is excluded from that definition. Every activity of service of transportation of goods will surely include some manner of loading and unloading of the goods. The question to be asked is whether such loading/unloading is the primary activity involved in the services carried out. From the facts of the matter at hand, we find that the answer is in the negative. Just because appellant carried out ancillary activities of loading, unloading etc., which is not the essential character of the activity contracted to him but only ancillary to the main work of transportation of break-bulk cargo, it would not be just and proper to bring such activity within the fold of "Cargo Handling Service". The essential character of the activity carried out is only transportation. In view of Board's clarification, we have no doubt that such activity cannot then fall under the ambit of cargo handling service. Appeal allowed - decided in favor of appellant.
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2017 (7) TMI 648
Maintainability of appeal - Held that: - the consolidated appeal was filed initially by the Revenue and as today pointed out by them, they have filed three separate appeals against the impugned order, therefore the present appeal filed by the Revenue is not maintainable - appeal dismissed being not maintainable.
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2017 (7) TMI 647
Refund claim - denial on account of nexus of the services received and consumed for providing the output services - Held that: - the impugned order is correct and following the various case laws which have been cited in respect of the similar services and that also which are used for export of services. In the case in hand, there is no dispute that the respondent is an exporter of ITSS and BAS - refund allowed - appeal dismissed - decided against Revenue.
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2017 (7) TMI 646
Refund claim - time limitation - whether the refund of service tax in terms of N/N. 52/2001-ST dated 30-12-2011 in respect of service tax paid on the input service and used for export of service is admissible when it is filed beyond the limitation of one year as provided under said notification? - Held that: - As per the statutory time limit, the refund must be filed within one year from the date of export. There is no discretion provided for any authority to condon the delay. In the present case undisputedly refund claim was filed after one year from the date of exports - refund filed by the appellant is clearly time bar and the same cannot be entertained - appeal dismissed - decided against appellant.
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2017 (7) TMI 645
Intellectual Property Service - Royalty paid to holding company in USA - whether royalty paid would be classified under 'Intellectual Property Service' or otherwise? - Held that: - in appellant's own case Fluent India Pvt. Ltd. Versus Commissioner of Central Excise, Pune-I [2016 (1) TMI 442 - CESTAT MUMBAI], the Co-ordinate bench of this Tribunal has decided the issue in hand wherein it was held that The appellant is merely distributing, marketing and supporting set of computer programme known as FI software. There is absolutely no indication of any transfer of intellectual property right on a plain reading of the Agreement. Neither do we find any hidden or deeper meaning in the Agreement which would indicate transfer of intellectual property right. The royalty paid by the appellant to their holding company in USA towards the that receipt and use of software does does not fall under the 'Intellectual Property Service' - the demand raised by the Revenue was set aside - appeal allowed - decided in favor of appellant.
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2017 (7) TMI 644
CENVAT credit - rent-a-cab service - abatement - Whether the CENVAT Credit availed by the appellant in respect of the services received prior to 1.3.2006 is admissible when the same was taken after 1.3.2006 and whether consequentially the appellant is entitled for the abatement provided under N/N. 1/2006-ST in respect of their services of rent a cab? - Held that: - the notification shall not apply only in a case where the cenvat credit of service tax was availed in respect of that input services which was used for providing taxable service on which the abatement was claimed in terms of N/N. 1/06-ST - even though the credit was availed on or after 1.3.2006 but it pertains to the period prior to 1.3.2006. The services were used before 1.3.2006 for output service which was provided before 1.3.2006. The benefit of abatement under N/N. 1/2006-ST available on the output service provided on or after 1.3.2006 cannot be disputed. The factual aspect of receipt of input service prior to 1.3.2000 and used in the services provided before 1.3.2006 was not verified properly by the lower authority, therefore the matter needs to be remanded - appeal allowed by way of remand.
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2017 (7) TMI 643
Whether services provided by overseas branches of the respondent has to be included in the total turnover, particularly when the adjudicating authority has not included the same in the export turnover for the purpose of refund under Rule 5 of CCR, 2004 read with N/N. 5/2006-CE(N.T.) dated 14-3-2006? Held that: - the basis of not inclusion of service value of service provided by the branch offices is that the same was not provided from India, if that is so, then the same is not includible in the total turnover for the reason that only turnover which is pertains to the activity carried out by the respondent from India will only be taken as total turnover - The Revenue cannot apply two yardstick that for the purpose of export turnover by the respondent from India and for the purpose of total turnover, the services deemed to be provide by the respondent therefore it is not permissible. Once the revenue itself has admitted that the service provided from the branch office of overseas is not includible in the export turnover, the same principle has to be applied with regard to total turnover - the value of services provided by the branch offices cannot be added in the total turnover - appeal allowed - decided in favor of assessee.
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Central Excise
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2017 (7) TMI 642
Shortage of goods - Clinker & HDPE Bags - appellant claims that the allegation of clearance/removal of Clinker & HDPE Bags clandestinely is vague and presumptive and not corroborated with any evidence - CENVAT credit - Held that: - there is no allegation in the Show Cause Notice of any clandestine activity on the part of the appellants. The whole Show Cause Notice is based on the apparent shortage found at the time of inspection. Moreover, I find that the valuation of stock have been done basically by way of eye estimation, which is definitely prone to error. This issue have been repeatedly considered by Hon’ble Allahabad High Court, in the case of UP. STATE CEMENT CORPORATION LTD. Versus UNION OF INDIA [1996 (4) TMI 139 - HIGH COURT OF JUDICATURE AT ALLAHABAD], wherein the Hon’ble High Court have accepted that clinker is an item prone to handling, transportation and manufacturing loss. Hon’ble High Court have further held that such loss is under the category of normal loss requiring no special order of remission from the appropriate authority under Rule 21 of the CER, 2002. The appellant shall be entitled to take credit, of the Cenvat credit reversed for HDPE Bags. Further, I find that there is no contumacious conduct nor any suppression of facts as is evident on the face of the record. In this view of the matter, I set aside the balance demand of Cenvat credit as confirmed, vide the impugned order under Rule 15 (2) of Cenvat Credit Rules, 2004. I also set aside the penalties imposed, under all the Sections and/or Rules. The appellant shall be entitled to take credit of the balance Cenvat, if any. Appeal allowed - decided partly in favor of appellant.
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2017 (7) TMI 641
Clandestine manufacture - Pan Masala Packing Machine - sealing of machinery without physical removal - Revenue was of the view that the a single packing machine weighs about 200 kg, was having wheels and was required to be physically removed from the factory. As this was not done and the machine(s) was only sealed and removed to a separate room in the factory thus respondent was liable to pay duty on all such machines including the sealed machines, available in the factory - Held that: - it is not disputed that the un-installation and sealing of the machines was in such a manner that it rendered the machines non-operative. It was the decision of the proper officer under the Rules to decide as to what was feasible in the facts and circumstances at given time or specific hour. On being satisfied the proper officer did not remove the machine from the factory and instead removed them to another room after packing in duly sealed condition. He further took notice of the fact that such machines are not easily movable, need a crane to move the machines - demand set aside - appeal dismissed - decided against Revenue.
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2017 (7) TMI 640
Charge on properties - section 11 of the Act - order of attachment - Central Excise authorities had various claims against one of its assessees. Such assessee is a borrower of a Bank. The Bank had proceeded under the provisions of the Act of 2002 against its security interest. It had put up the assets belonging to the defaulter/borrower for sale. The first petitioner had participated in such sale. The sale was on as is where is and whatever there is basis as appearing in the sale notice. The first petitioner being successful in the auction sale had purchased such properties from the Bank. Whether as purchaser of the assets of the assessee can the first petitioner be said to be a person liable to pay the amount defaulted by the assessee? - Held that: - section 11E of the Act of 1944 will apply and will create a first charge on the property of the assessee or the purchaser of such property as the case may be in the event, the same is not contrary to the provisions of the Act of 2002. In the present case, the Bank claims first charge over the properties put up for sale. Moreover, as noted about, the entire business was not put up for sale. Only the assets of the assessee were put up for sale. Central Excise authorities have acted without jurisdiction in proceeding against the petitioners in respect of the defaults committed by the assessee. All proceedings including the orders of attachment initiated by the Central Excise authorities on the basis of default of its assessee against the petitioners are set aside. Petition allowed - decided in favor of appellant.
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2017 (7) TMI 639
Clandestine removal - demand on the basis of computer printouts recovered from CA/Accountant of M/s. IFL and M/s. IAPL - Held that: - no investigation was conducted at the end of the appellant and the transporters were also not investigated to reveal the truth whether the clandestinely removed goods from IFL/ IAPL were transported up to the place of appellants - no evidence has been put-forth by the Revenue that the packing material supplied by IFL/IAPL were used in the excess manufactured goods by the appellant - As the evidence of clandestine removal of packaging material from the premises of IFL/IAPL, up to the place of appellant are missing, therefore, charge of clandestine removal is not sustainable against the appellant - appeal allowed - decided in favor of appellant.
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2017 (7) TMI 638
CENVAT credit - freight - place of removal - The department was of the view that such Cenvat Credit will not be allowable after the amendment of the definition of input services under Rule 2(l) of the CCR 2004 wherein after the amendment of the definition on 01.04.2008, the credit for the input services will be allowable only upto the place of removal - Held that: - The amended definition on input services w.e.f 01.04.2008 allows Cenvat Credit on input services only upto the place of removal - In the present case since the delivery is on FOR basis, the place of removal is to be considered as the customer’s premises. Consequently, the service tax paid on freight will be available if freight has been paid upto the customer’s premises. Similar issue decided in the case of M/s Madras Cements Ltd Versus The Additional Commissioner of Central Excise, The Commissioner of Central Excise (Appeals-I) [2015 (7) TMI 1001 - KARNATAKA HIGH COURT], where it was held that Since we are of the opinion that the sale had concluded only after the delivery of the goods was made at the address of the buyer, in the facts of the present case assessee would be entitled to the benefit of CENVAT credit on Service Tax paid on outward transportation of goods by the assessee even after 01.04.2008. The appellant-assessee would thus be entitled to such benefit for the period 01.04.2008 to 31.07.2008. Appeal allowed - decided in favor of appellant.
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2017 (7) TMI 637
Quantum of penalty - case of Revenue is that since the reduced amount of penalty of 25% was not deposited within 30 days from the date of receipt of the adjudication order, the benefit of quantum of reduced penalty provided under Section 11AC ibid should not be available to the appellant and the appellant is required to pay the entire amount of penalty confirmed in the adjudication order - Held that: - there were various judicial pronouncements by this Tribunal as well as the Hon’ble High Courts, ruling that the deposit of the reduced amount of penalty of 25% should be given by the adjudicating authority in the order of adjudication - option for depositing the reduced quantum of penalty by the adjudicating authority has not been provided in the adjudication order. The law is well settled that in absence of the option given by the adjudicating authority to pay reduced amount of penalty of 25%, the same can be extended by the Tribunal at appellate stage - since the adjudicating authority had not given the option to the appellant No.1 to deposit the entire duty alongwith interest and 25% of penalty in the order dated 17.12.2008 and the appellant had suo moto deposited such amount at the time of filing the appeal before the Commissioner (Appeals), the benefit of the reduced amount of penalty as per the judgment dated 25.11.2014 of Hon’ble Apex Court can be extended at the appellate state. Appeal allowed - decided in favor of appellant.
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2017 (7) TMI 636
CENVAT credit - input service distributor - it was alleged that the branch sales office (ISD) has not filed proper returns, showing the distribution of cenvat credit to Bhilai Steel Plant - Held that: - Non-filing of the return in the proper format is a procedural lapse, for which the substantive right to distribute the credit and subsequent availment thereof by the manufacturing unit cannot be denied. GTA services - denial on the ground that GTA services were utilized by the appellants for transportation of goods beyond the place of removal - Held that: - the Hon’ble Karnataka High Court in the case of Stanzen Toyotetsu India (P) Ltd. [2011 (4) TMI 201 - KARNATAKA HIGH COURT] held that such services availed for workers to reach factory premises in time, has the direct bearing on the manufacturing activity - Since the period involved in this case is prior to the amendment of the definition of input service, the credit taken on rent-a-cab service should also be available to the appellant. Appeal allowed - decided in favor of appellant.
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2017 (7) TMI 635
Refund claim - time limitation - duty paid under protest - reverse charge - whether time limitation of 1 year is applicable to duty paid under protest? - Held that: - the first appellate authority was correct in coming to the conclusion that service tax liability arises on the respondents herein only, if the said amounts were paid post 18/04/2006 - reliance place on the judgment of the Hon’ble Bombay High Court in the case of Indian National Shipowners Assocaition [2009 (3) TMI 29 - BOMBAY HIGH COURT] is correct as this judgment of the Hon’ble High Court of Bombay has been upheld by the apex court and based upon such decision, Board has also issued circular No.276/8/2009-CX.8A dt. 26/09/2011 stating that service tax liability for the payments made to an overseas service provider will arise from 18/04/2006 only - refund allowed - appeal dismissed - decided against Revenue.
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CST, VAT & Sales Tax
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2017 (7) TMI 626
Released of seized truck - Case of the petitioner is that he is not the owner of the goods and is merely a transporter owning the truck in which the goods were being transported. The State authorities have no power to seize the truck for any alleged irregularities in the transportation relatable to the goods - can the Value Added Tax Authorities, under such circumstances seize the vehicle? - Held that: - prior to introduction of the Gujarat Value Added Tax (Amended) Act 6 of 2006, subsection (4) of section 68 empowered the concerned officer to seize the goods as well as the vehicle. With such amendment, the words now used in subsection (4) are “seize such goods and detain the vehicle - Under subsection (5) of section 68, the officer6 10 incharge of the checkpost or barrier can after giving owner, driver or personincharge of goods, a reasonable opportunity of being heard and holding an inquiry, impose penalty in addition to tax payable under the Act at the prescribed rates. The penalty would not exceed one and a half time of the tax for possession of the goods so seized. Here also, by virtue of the same Amendment Act, the words one and half time of tax for possession of goods or vehicle so seized, the legislature has deleted the words “or vehicle”. Under clause (b) of subsection (5) again, the reference to releasing of the goods and vehicle is now limited to release of goods alone. Prior to Amending Act of 2006, the authority had the power under subsection (4) of section 68 to seize the goods as well as the vehicle. This power of seizure of vehicle is now removed permitting the authorities only to detain the vehicle. Corresponding changes have been made in subsection (5) where the authority could earlier levy penalty upto one and half times the value of goods and vehicle so seized. By virtue of amendment, such penalty cannot exceed one and half times of value of goods. Subsection (7) of section 68 was newly introduced when the legislature was making above changes and therefore, refers only to sale of goods in case the person from whose possession or control the goods are seized fails to establish the ownership or pay the tax, interest or penalty or fails to provide the security for the same - the Value Added Tax Authorities now do not have power of seizure of vehicle under section 68 of the Value Added Tax Act. That power is now limited to detaining the vehicle in terms of subsection (4) of section 68. There is no further provision under section 68, how such detained vehicle would be dealt with. Reasonable interpretation of such provision would be that against the seizure power which could be for indefinite period, unless curtailed by statutory provision, detention would be a temporary measure. The respondents are directed to release the vehicle in question. The seizure of the goods would remain intact. It is clarified that if there is cost in offloading the goods from the vehicle, the same shall be borne by the petitioner - petition allowed - decided in favor of petitioner.
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Indian Laws
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2017 (7) TMI 624
Transfer of Complaint Case under Section 138 of Negotiable Instruments Act,pending in the court of Additional Chief Judicial Magistrate - I, Jaunpur to any other court of competent jurisdiction at Banda - maintainability of application - Held that:- Before the amendment, the complainants had to face double jeopardy in as much as firstly, they could not recover the legitimate money and secondly in order to file a complaint, they had to suffer the agony and pain of going to the jurisdictional court of drawer of the cheque. By the Amending Act of 2015, the law laid down by the Hon'ble Apex Court in Dashrath Rupsingh Rathod's case (2014 (8) TMI 417 - SUPREME COURT) has been nullified and after this amendment a complaint shall be filed by the payee or holder in due course of a cheque in the court of such district where the bank in which his/her account exists is situated and not at the place where the drawer's bank is situated. Thus this transfer application deserves to be allowed.
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