TMI Tax Updates - e-Newsletter
July 25, 2017

Case Laws in this Newsletter:

Income Tax Customs Corporate Laws Service Tax Central Excise Indian Laws

TMI Short Notes

• GST:

  Can a registered person, who purchases goods from a composition manufacturer / trader (dealer / supplier) take input tax credit under GST?

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• GST:

  In case of a person who is/was availing composition scheme u/s 10. What will be the due date of payment tax (GST) and submitting the return once he crosses the threshold limit of ₹ 75 Lakhs (or rs. 50 lakhs) as the case may be? Can he continue to pay tax and file the return on quarterly basis?

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• GST:

  What is the due date of payment of Tax under GST? What is the due date for payment of tax (GST) and filing of return in case of person opting for composition scheme u/s 10?

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Articles

• GST Impact on Weekend/Recreational Expenditure
• Imports under GST

News

• FAQs on GST rates

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• GST mobile vans to address traders' concerns in Delhi

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• To address the concerns of taxpayers arising from Transition to the GST regime, the Government decides to extend the time limit for filing intimation for Composition Levy (filing of intimation FORM GST CMP-01) up to 16th August, 2017; The period of applying for Cancellation of Registration is being extended up to 30th September, 2017

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• E-Patenting

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• Extension of Chennai-Bengaluru Industrial Corridor

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• Industrially Backward States

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• Industrial Growth

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• Grants Under MDA Scheme

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• Spices Exports

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• Measures to Improve Balance of Trade

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• FDI in Food Processing Industries

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• RBI Reference Rate for US $

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Notifications

GST - States

• 13/2017 - dated 29-6-2017 - Karnataka SGST
  Rate of interest per annum for the purposes of cerrtain section of the KGST Act, 2017.

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• 12/2017 - dated 29-6-2017 - Karnataka SGST
  Prescription of Turnover limit for mentioning of HSN Codes.

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• 12/2017 - dated 29-6-2017 - Karnataka SGST
  Exempted Intra-State supply of services.

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• 11/2017 - dated 29-6-2017 - Karnataka SGST
  Rate of State Tax on the Intra-State supply of services.

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• 10/2017 - dated 29-6-2017 - Karnataka SGST
  Exemption on Intra-State supplies of Second hand goods.

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• 10/2017 - dated 29-6-2017 - Karnataka SGST
  Exemption on Intra-State supplies of Second hand goods.

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• 09/2017 - dated 29-6-2017 - Karnataka SGST
  Appointing 01-07-2017 as the date from which certain section of KGST Act, 2017 will come into force.

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• 09/2017 - dated 29-6-2017 - Karnataka SGST
  Exemption on Intra-State supplies of goods or services or both received by a deductor U/s.51 of the KGST Act, 2017 from any supplier who is not registered.

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• 08/2017 - dated 29-6-2017 - Karnataka SGST
  Exemption on Intra-State supplies of goods or services or both by a registered person from any supplier who is not registered.

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• 07/2017 - dated 29-6-2017 - Karnataka SGST
  Exemption of supply of goods by Canteen Stores Department (CSD).

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• 06/2017 - dated 29-6-2017 - Karnataka SGST
  Specifying Canteen Stores Department (CSD) as a person entitled to claim refund.

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• 05/2017 - dated 29-6-2017 - Karnataka SGST
  Category of persons exempted from obtaining registration under KGST Act,2017.

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• 05/2017 - dated 29-6-2017 - Karnataka SGST
  Restriction on refund of un-utlised ITC where the credit has accumulated on account of Rate of tax on Inputs being higher than the rate of tax on the output supplies of such goods(other than Nil rated and fully exempt supplies).

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• 04/2017 - dated 29-6-2017 - Karnataka SGST
  Karnataka Goods & Service Tax Rules, 2017 and Forms.

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• 04/2017 - dated 29-6-2017 - Karnataka SGST
  Notification No.4 - Reverse Charge related Notification under KGST Act, 2017.

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• 03/2017 - dated 29-6-2017 - Karnataka SGST
  Description of Intra-State supply of goods exempted under KGST Act, 2017.

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• 02/2017 - dated 29-6-2017 - Karnataka SGST
  Description of Intra-State supply of goods exempted under KGST Act, 2017.

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• 01/2017 - dated 29-6-2017 - Karnataka SGST
  Rate of Tax and schedules under KGST Act, 2017.

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• 03/2017 - dated 28-6-2017 - Karnataka SGST
  Notification for rate of Composition Tax and certain tax payers who are not eligible for composition.

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• 02/2017 - dated 28-6-2017 - Karnataka SGST
  KGST notifying the Common Goods and Services Tax Electronic Portal.

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• 01/2017 - dated 28-6-2017 - Karnataka SGST
  Karnataka Goods and Services Tax Act, appointing the date for certain provisions to come into force.

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• FA-3-42/2017-1-V-(53) - dated 30-6-2017 - Madhya Pradesh SGST
  Exempts the intra-State supply of services said tax calculated at the rate as specified.

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• FA-3-41/2017-1-V-(47) - dated 30-6-2017 - Madhya Pradesh SGST
  Exempttion intra-State supplies of goods or services or both received by a registered person.

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• FA-3-39/2017-1-V-(45) - dated 30-6-2017 - Madhya Pradesh SGST
  Exempts, supply of goods by the CSD to the Unit Run Canteens.

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• FA-3-38/2017-1-V-(44) - dated 30-6-2017 - Madhya Pradesh SGST
  Specifies the Canteen Stores Department.

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• FA-3-30/2017-1-V-(51) - dated 30-6-2017 - Madhya Pradesh SGST
  Notifies that no refund of unutilized input tax credit of supply of services.

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• FA-3-28/2017-1-V-(48) - dated 30-6-2017 - Madhya Pradesh SGST
  Neither as supply of goods nor as a supply of service, Services by way of any activity in relation to a function entrusted to a Panchayat under article 243G.

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• FA-3-27/2017-1-V-(54) - dated 30-6-2017 - Madhya Pradesh SGST
  Council, fixes the rate of interest per annum.

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• FA-3-26/2017-1-V-(52) - dated 30-6-2017 - Madhya Pradesh SGST
  Appointed the 1st day of July, 2017, as the date on which the provisions of section 6 to 9, 11 to 21, 31 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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• FA-3-24/2017-1-V-(49) - dated 30-6-2017 - Madhya Pradesh SGST
  Notifies the registered person shall not be eligible to opt for composition levy.

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• FA-3-23/2017-1-V-(50) - dated 30-6-2017 - Madhya Pradesh SGST
  Prescribes that the registered person, whose aggregate turnover in the preceding financial year did not exceed seventy five lakh rupees.

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• FA-3-33/2017-1-V-(42) - dated 29-6-2017 - Madhya Pradesh SGST
  Notifies the rate of the state tax

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• FA-3-22/2017-1-V-(32) - dated 28-6-2017 - Madhya Pradesh SGST
  Appointed the class of officers.

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• FA-3-21/2017-1-V-(30) - dated 24-6-2017 - Madhya Pradesh SGST
  Specifies the territorial jurisdiction of areas of Circles, Divisions, Appeal offices, Zones and other offices for carrying out the purposes.

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• FA-3-19/2017-1-V-(28) - dated 24-6-2017 - Madhya Pradesh SGST
  Specifies the Circles, Divisions, Appeal Offices, Zones and other Offices including administrative office of the Commissioner of Commercial Tax, Madhya Pradesh.

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• FA-3/13-2017-1-V-(27) - dated 22-6-2017 - Madhya Pradesh SGST
  The Madhya Pradesh Goods and Services Tax Rule, 2017

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• FA-3-13/2017-1-V-(26) - dated 22-6-2017 - Madhya Pradesh SGST
  Appoints the provisions of sections 1, 2, 3, 4, 5, 10, 22, 23, 24, 25, 26, 27, 28, 29, 30, 139, 146 and 164 of the said Act shall come into force.

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• FA-3-13/2017-1-V-(25) - dated 22-6-2017 - Madhya Pradesh SGST
  Common Electronic Portal

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• FA-3-13/2017-1-V-(24) - dated 22-6-2017 - Madhya Pradesh SGST
  Appoints the class of officers

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Income Tax

• 70/2017 - dated 20-7-2017 - IT
  U/s 10(46) of the Income-tax Act, 1961 Central Government notifies Noida Special Economic Zone Authority, Noida an authority constituted under the Special Economic Zone Act, 2005 of the Government of India, in respect of the specified income arising to that authority

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• 69/2017 - dated 20-7-2017 - IT
  U/s 10(46) of the Income-tax Act, 1961 Central Government notifies Assam State Biodiversity Board, a board established by the Government of Assam in respect of the specified income arising to that board

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• 65/2017 - dated 20-7-2017 - IT
  U/s 10(46) of the Income-tax Act, 1961 Central Government notifies State Pollution Control Board, Odisha, a board established by the Government of Odisha, in respect of the specified income arising to that board

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Highlights / Catch Notes

GST

• Can a registered person, who purchases goods from a composition manufacturer / trader take input tax credit under GST?
  Visit to Get Source

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• In case of a person who is/was availing composition scheme u/s 10. What will be the due date of payment tax and submitting the return once he crosses the threshold limit of ₹ 75 Lakhs (or rs. 50 lakhs) as the case may be? Can he continue to pay tax and file the return on quarterly basis?
  Visit to Get Source

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• What is the due date of payment of Tax under GST? What is the due date for payment of tax (GST) and filing of return in case of person opting for composition scheme u/s 10?
  Visit to Get Source

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Income Tax

• Rectification applications - Power of ITAT - Tribunal could not have undertaken such incisive and detailed examination of facts and law to come to the conclusion which are completely contrary to its own conclusion arrived at after detailed considerations. Such powers simply do not flow from the power of rectification under sub-section (2) of Section 254 of the Act. - HC
  Visit to Get Source

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• Losses arising due to negligence of employees has to be allowed as expense if the loss took place in the normal course of the business and the amount involved was necessarily kept for the purpose of business
  Visit to Get Source

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• At this stage of granting registration u/s12AA, CIT has to satisfy himself about the objects of the institution and genuineness of the activities. He is not required to look into the utilisation of funds, commercial nature of activity etc., at that stage.
  Visit to Get Source

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Central Excise

• Deemed Manufacture - Computer Bracket Assembly - The activities undertaken by the appellant amounts to manufacture and they are liable to avail CENVAT credit on the inputs / input services used in the export of goods.
  Visit to Get Source

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Case Laws:

• Income Tax

• 2017 (7) TMI 779
  Income received by way of rent - ITAT treated as business income - nature of income - Held that:- The various malls are built by Assessee and are operated from the year 2001. The operational income received from the said activity, in the form of rent, and other service charges was consistently offered to tax as its business income in the earlier years and the same was accepted by the Department as a business income. After demerger, both the Assessee Companies took over the assets and liabilities of the demerged Company and continued the same business of operating and running the malls. The Tribunal has correctly considered the nature of the business activities of the Assessee Company, as well as, terms and conditions of the relevant agreements, under which the commercial space in the mall was given on hire by the Assessee Companies to the concerned parties. It also considered the various services provided by the Assessing Companies during the course of operation and running of the Family Entertainment Centre-cum-malls. Commissioner (Appeals) and the Tribunal have concurrently arrived at a conclusion that the intention of the Assessing Companies was to commercially exploit the property by way of complex commercial activities and it was not a case of letting out the property simplicitor. The rental income and the service charges thus were received by the Assessee Company as business income during the course of business carried out by them of operating and running a Mall as a commercial activity. The facts of the present case are much similar to the case of Chennai Properties and Investments Limited, Chennai [2015 (5) TMI 46 - SUPREME COURT]. We find that the appreciation of evidence by the Commissioner (Appeals) and Tribunal is not perverse and the finding arrived at by them is plausible one. - Decided against revenue

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• 2017 (7) TMI 778
  Rectification applications - Power of ITAT - application of principle of mutuality - Held that:- In the present case, as noted the Tribunal had given detailed reasons for coming to the conclusion that the principle of mutuality would not apply. While accepting the assessee’s rectification applications, the Tribunal undertook equally painstaking and elaborate consideration of the very same issues and very same facts to come to a contrary conclusion. It is not necessary nor possible for us to hold whether the Tribunal’s first view was correct or the subsequent one. It is enough to hold that the Tribunal could not have undertaken such incisive and detailed examination of facts and law to come to the conclusion which are completely contrary to its own conclusion arrived at after detailed considerations. Such powers simply do not flow from the power of rectification under sub-section (2) of Section 254 of the Act. Thus Tribunal committed a serious error in allowing the assessee’s rectification applications and recalling its earlier order of rejection of appeals. The impugned order dated 29.07.2016 is therefore set aside. Consequently, the order passed by the Tribunal of allowing all the tax appeals of the assessee by order dated 25.11.2016 would therefore automatically be rendered non-est.

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• 2017 (7) TMI 777
  Stay petition - whether the assessee has made out a prima facie case for grant of an interim order? - Held that:- The petitioner/assessee filed the stay petition dated 20.02.2017 stating that the notice dated 05.12.2016 calling for the production of vouchers and bills pertaining to the business promotion expenses and overseas transport expenses and to appear for personal hearing on 09.12.2016 was received only on 23.12.2016 due to natural calamity, viz., Vardha Cyclone. Further it was stated that the notice was sent to a wrong address and the first respondent was constrained to pass the assessment order disallowing the expenses as the assessment was likely to become time barred and no opportunity was given to the petitioner to submit the information called for. Further it was stated they through their authorised representatives had earlier furnished all the ledger accounts and details as required by the Assessing Officer from time to time. Further it was stated that aggrieved by the assessment order, they have preferred an appeal before the Commissioner of Income Tax (Appeals)-Range 15 on 18.01.2017. On perusal of the order of assessment, it is seen that the respondent accepted the fact that the authorised representative of the petitioner appeared before him on various dates and filed the details called for. However, in the assessment order the first respondent has not stated as to when the notice issued by him dated 05.12.2016 was received by the assessee/petitioner. Therefore, the assessment order being an exparte order, the correctness of which will be decided by Commissioner of Income Tax (Appeals). Thus, taking note of all the above facts, this is a fit case where the entire demand should remain stays till the appeal is disposed of by the Commissioner of Income Tax (Appeals)-Range 15.

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• 2017 (7) TMI 776
  Penalty levied u/s. 271(1)(c) - proof of concealment of particulars of income or furnishing of inaccurate particulars - Held that:- No doubt, in the present case, the assessee seems to have submitted her explanation on merits without raising a doubt as to what was the precise allegation leveled against her. However, we are more concerned with the principle involved and not just the isolated case of its application against the assessee. Further, the penalty order demonstrates that the Assessing Officer was not even certain as to what was the finding on the strength of which he imposed the penalty. This is clear from the fact that the Assessing Officer recorded that he was satisfied that the assessee had concealed/furnished inaccurate particulars of income. In the absence of a clear finding by the Assessing Officer himself, the benefit of doubt cannot be given to the revenue merely because the assessee did not complain of vagueness in the show-cause notice earlier. On principle, when penalty proceedings are sought to be initiated by the revenue under Section 271(1)(c) of the Act of 1961, the specific ground which forms the foundation therefor has to be spelt out in clear terms. Otherwise, an assessee would not have proper opportunity to put forth his defence. When the proceedings are penal in nature, resulting in imposition of penalty ranging from 100% to 300% of the tax liability, the charge must be unequivocal and unambiguous. When the charge is either concealment of particulars of income or furnishing of inaccurate particulars thereof, the revenue must specify as to which one of the two is sought to be pressed into service and cannot be permitted to club both by interjecting an or between the two, as in the present case. This ambiguity in the show-cause notice is further compounded presently by the confused finding of the Assessing Officer that he was satisfied that the assessee was guilty of both. - Decided against revenue

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• 2017 (7) TMI 775
  Reopening of assessment - eligibility to benefit of deduction under Section 80IA - Held that:- Learned Standing counsel could not dispute that when benefit of deduction under Section 80IA was allowed by A.O., he had examined relevant material and even on a query made by him, reply was submitted by Assessee and after scrutiny, assessment order was finalized. However, at the time of making assessment for A.Y. 2009-10, A.O. took a different view and disallowed the deduction but even that order stood nullified in appeals into this Court. Hence, it is not a case of any concealment of material or non disclosure of material on the part of Assessee. No new material has come and only a different view was taken by A.O. in respect of subsequent Assessment Year which has been taken a basis for reopening of assessments already made final after scrutiny, by A.O. This cannot be said to be a valid exercise of powers under Section 147/148 and in our view, Tribunal has rightly confirmed the view taken by CIT(Appeals)-III against Revenue.

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• 2017 (7) TMI 774
  Addition of bogus purchases made by the Assessee Company from its group company - ITAT deleted the addition - Held that:- Nothing incriminating was found in the search conducted qua the Assessee except two documents. The ‘core document’ was the ledger account of PRPL in the books of accounts of the Assessee. This clearly reflected the sales made by PRPL to the Assessee on various dates on which payments had been made. This document did not create any doubt about the genuineness of the transactions, particularly in the face of the evidence and enquiries and the responses available on record. These included confirmed copies of all the 23 parties from whom purchases were made by PRPL. The Assessee had also placed detailed evidence for each of the said 23 parties. This was examined afresh by the ITAT. As an exhaustive and detailed factual enquiry has been undertaken, both, by the CIT(A) and the ITAT to arrive at concurrent factual findings which have not been shown to be perverse. - Decided against revenue.

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• 2017 (7) TMI 773
  Penalty u/s 271AAA - Held that:- As per section 271AAA(2)(i), one of the conditions for obtaining relief from the imposition of penalty under s.271AAA is that the assessee in the statement recorded under s.132(4) of the Act admits the undisclosed income and ‘specifies the manner’ in which such income has been derived. Section 271AAA(2)(ii) casts obligation on the part of the assessee to ‘substantiate the manner’ in which the undisclosed income was derived. Thus, sub-section (2)(ii) finds its genesis from sub-section 2(i) of the Act. Admittedly, the Revenue is not aggrieved by the condition stipulated in sub-section 2(ii) of the Act. Impliedly, the Revenue admits that the assessee has not failed to substantiate the manner in which the undisclosed income derived. This being so, it follows by necessary implication that the assessee has not failed to specify the manner at the first place when substantiation thereof has not been called into question by the Revenue. Thus, the case of the Revenue requires to be summarily dismissed on this ground alone. Notwithstanding, we further note that the assessee has replied to the query raised while recording the statement as called for. The revenue does not appear to have quizzed the assessee for satisfying the manner in which the purported undisclosed income has been derived. We simultaneously note that no where in the assessment order or in the penalty order, the revenue has made out a case that the manner of earning undisclosed income was enquired into post search stage either. The revenue has not pointed out any query which remained unreplied or evaded in the course of search or post search investigation. Therefore looking from any angle, it is difficult to hold in favour of the revenue. - Decided in favour of assessee.

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• 2017 (7) TMI 772
  Disallowance of amount paid to its clients to compensate for their loss which occurred due to negligence of employees of assessee - Held that:- The finding of the authorities below that the copy of statement do not prove that payment was made on account of this loss of these persons is not correct as every evidence is available to demonstrate that assessee had made payments for losses suffered by its clients on account of negligence of its employees. The amount paid to these persons is necessarily an expenditure which is allowable u/s 37 of the Act as section 37 of the Act clearly states that any expenditure not in the nature of capital expenditure or personal expense laid out or expenditure wholly and exclusively incurred for the purposes of business or profession shall be allowed in computing the income chargeable under the head profits and gains or business or profession. Moreover, circular no. 35 issued by Board clearly states the losses arising due to negligence of employees has to be allowed as expense if the loss took place in the normal course of the business and the amount involved was necessarily kept for the purpose of business. In the present case, the losses were necessarily incurred in the normal course of business of assessee and therefore, the expenditure was allowable. - Decided in favour of assessee.

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• 2017 (7) TMI 771
  Denial of exemption u/s 10(23C) (iiiad) on hostel rent receipts - whether hostel is providing to other charitable educational institute for students, establishment of hostel for students is also object, receipt is utilized for charitable purposes etc.? - Held that:- In the present case, the assessee received the rent from an educational institute namely Krishna Institute of Education and Technology, it also appears that the decisions now relied by the assessee were not available to the authorities below because there is no discussion about those decisions either in the assessment order or in the impugned order of the learned CIT(A). Furthermore, it is not clear as to whether the facts were identical when the exemption u/s 10 (23C)(iiiad) was allowed to the assessee in the preceding and succeeding years. Therefore, in the absence of clear facts on record deem it appropriate to set aside the issue back to the file of the learned CIT(A) to be adjudicated afresh, in accordance with law, after considering the various decisions relied by the assessee and also after verifying the facts from the record relevant to the preceding and succeeding year. Needless to mention that a due and reasonable opportunity of being heard be provided to the assessee. Appeal of assessee allowed for statistical purposes.

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• 2017 (7) TMI 770
  Addition on account of treating agricultural income as income from undisclosed sources - Held that:- Admittedly, before the Assessing Officer, the assessee, inter-alia, admitted that no records were maintained in regard to sale of crops. The Assessing Officer had given due weightage to assessee’s plea regarding increase in land holdings. The submissions of ld. counsel that assessee’s plea on the basis of affidavit should have been accepted in toto, is devoid of any merit because unless the averments made in the affidavit are duly supported by evidence, the same cannot be taken as sacrosanct. The assessee had been provided opportunity to substantiate the averments by Assessing Officer as he had taken assessee’s statement also and, therefore, the estimate made by the Assessing Officer does not call for any inference. Accordingly, this ground is dismissed. Addition on account of interest on loan - Held that:- The onus was on assessee to establish that first step had been taken towards setting up of his business. CIT(A) concluded that there was no setting up of business because assessee failed to substantiate the purchases of ₹ 1,25,000/-. However, the assessee had also claimed rent of ₹ 69,000/- out of which ₹ 57,000/- had been paid through cheque and had also claimed ₹ 1,58,785/- towards repairs and maintenance out of which ₹ 1,51,105/- was paid through cheque as is evident from pages 52 to 53 of Paper Book. Further, the assessee had paid salary of ₹ 48,000/- in cash apart from telephone and conveyance of ₹ 9,700/-. Even if the Assessing Officer was not satisfied with the cash payments but the payments made through cheque towards rents clearly show that the assessee had taken the premises on rent for his business purpose and that was sufficient evidence to come to the conclusion that assessee had setup its business because it is not disputed that assessee eventually carried on business from the said premises. Therefore, the interest expenditure claimed by assessee was allowable as business expenditure u/s 36(1)(iii). Alternatively, even if, the Department’s view is to be accepted regarding no business activity, still, find that this claim is allowable u/s 57(iii) as entire amount borrowed had been invested in firm and, therefore, it was an allowable deduction being incurred wholly and exclusively for earning interest. Addition on account of business expenses on wrong observation & conclusions drawn - Held that:- Disallowance was that no business activity had been done by the assessee. However, as held earlier, in regard to ground no.2, that the business of the assessee had been setup, therefore, direct that expenses through cheque by assessee only should be allowed by Assessing Officer and rest incurred in cash to be disallowed as assessee failed to substantiate its claim. In the result, the ground no.3 is partly allowed.

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• 2017 (7) TMI 769
  Rejecting the application for the grant of the registration U/s 12AA - Held that:- From the trust deed placed before us, clause 5 clearly indicates that assessee is going to establish and grant educational institutions in India and/or contribute to such existing institutions. It is also observed that Ld. CIT has not made any inference about objects of trust being noncharitable in nature. The balance sheet as on 31.03.2013 reproduced in the impugned order shows that the assessee has invested a substantial sum towards purchase of land for setting up of a school and also has received corpus donations. In our considered opinion, the power of Ld. CIT under section 12AA of the Act, while considering the application for registration of trusts is limited to the extent of satisfying himself about the objects of trust, being charitable in nature. At this stage of granting registration under section 12AA of the Act, he has to satisfy himself about the objects of the institution and genuineness of the activities. He is not required to look into the utilisation of funds, commercial nature of activity etc., at that stage. Thus we direct Ld. CIT to grant registration under section 12AA of the Act to the assessee. - Decided in favour of assessee.

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• 2017 (7) TMI 768
  TPO - ALP determination - selection of comparable - Held that:- As the assessee company is engaged in development of software in various stages like engineering, research, development, debugging, coding, quality control checks, testing application, designing and programming and is exporting its services to M/s Adobe Systems Inc., USA and to M/s Adobe Systems Software, Ireland, thus companies functionally dissimilar with that of assessee need to be deselected from final set of comparable. Reimbursement charges disallowed by the A.O. having treated it to be the payment on account of royalty - assessee contended that he has claimed deduction u/s 10A and if any disallowance is made u/s 40(a)(ia) it would increase the deductions claimed by the assessee - Held that:- A.O. has disallowed the payment having treated the same as payment on account of royalty on non deduction of TDS. While adjudicating the issue the AO has not examined the aspect of increase in deduction claimed u./s 10A of the Act on disallowance of payment u/s 40(a)(ia) of the Act and therefore there would be no tax implication. Accordingly we set aside the order of A.O. in this regard and restore the matter to the A.O./T.P.O. to readjudicate the issue in terms indicated above. Accordingly the appeal is disposed of.

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• 2017 (7) TMI 767
  Unexplained cash deposits - Held that:- The time between the sum paid by the society to the appellant and the sum repaid by the assessee to the society does not inspire confidence about the genuineness of the transaction. Similarly, another conformation was provided by the assessee that is from St Xavier School but signed by some chairman there also the permanent account number of the person who has paid cash to the assessee is missing. Furthermore we do not approve of the reasoning given by the Ld. CIT appeal that the same assessing officer who passed the order for assessment year 2007 – 08 wherein the cash withdrawal shown by previous entries before the date of cash deposited in bank account has been duly considered and accepted. According to us this reason he is full of fallacy. During the year the cash has been deposited of the magnitude of ₹ 66.98 lakhs and it is always factual exercise for the every year and for each and every transaction. Such precedents or instances cited by the CIT appeal cannot be approved of. CIT (A) has accepted the claim of the assessee of receipt in cash from the Alay Hassan educational society of ₹ 13,75,000/-without verifying the creditworthiness of the society as well as the genuineness of the transaction. In the result ground, No. 1 of the appeal of the revenue is allowed accordingly. Addition on account of claim of loan from Mod. Ilyas - proof of identity and creditworthiness of credit and genuineness of the transaction - Held that:- Merely holding of the land do not justify the credit less of the depositor unless there are evidences of produce of the agricultural and it sale. When the depositor has deposited the sum through account payee cheque it is also important to verify about the source of such cheques and whether they are received on sale of agricultural produce or otherwise, The Ld CIT (A) has not examined this himself and nor directed ld AO to do so. The Ld. CIT appeal has without verifying any such evidences which justifies the creditworthiness and genuineness of the about transaction has deleted the addition. Further the amount of addition is made by the assessee is ₹ 24 Lacs whereas the addition and conformation received from the depositor is just 12 lakhs therefore there is a mismatch in the amount stated. Therefore in the interest of Justice the addition of ₹ 2 400000/-is once again set aside to the file of the Ld. CIT appeal with a direction to verify the creditworthiness and genuineness of the transaction and then decide the issue on merit. In the result ground No. 2 of the appeal of the revenue is allowed with above direction. Addition of unexplained cash deposits in the bank account - whether the sources are past withdrawals? - Held that:- Had there been balance it would have been also known that the assessee was on certain dates huge cash balance on hand such as on 26.04.2006 assessee has withdrawn a sum of ₹ 7 lakhs, which were deposited only on 18/05/2006 in the bank accounts. These are the startling features looking at the financial status who is merely earning salary and income from other sources. Further on looking at the cash flow statement at many places tuition income is shown however no such income is available to the assessee as assessee is said to be deriving only income from salary and other sources. Even assessing officer stated that assessee earns other than this short-term capital gain, interest income and dividend income but nowhere there is a reference of tuition income. Therefore we are of the opinion that the Ld. that CIT appeal has deleted the addition without using the material produced before him as well as not granting Ld. assessing officer an opportunity of verifying the evidences submitted. In the result the ground No. 3 of the appeal of the revenue with respect to deletion of the addition of ₹ 292 3500/-is set aside to the file of the Ld. CIT (A) with a direction to decide the issue with respect to the above some on merits of the case after granting proper opportunity of hearing to the assessee and Ld. assessing officer.

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• 2017 (7) TMI 766
  Addition treating sale of “Standard Software” in the nature of Royalty - Held that:- As decided in assessee's own case for A.Ys. 2007-08, 2008-09 and 2009-10 sale of software by the assessee is a standard software which is chargeable to tax under Article 7 of DTAA as business income of the assessee and not under Article 12 as ‘Royalty'

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• 2017 (7) TMI 765
  Addition u/s 68 - Held that:- The assessee filed the affidavits of the creditors giving the respective amounts by them to the assessee. The assessee also filed the statement given by the creditors before the AO. The assessee has also filed the certificates from Patwari of revenue deptt about land holdings in respect of the above cash creditors which indicate that these creditors had sufficient pieces of land. Taking into consideration the above facts and circumstances of the case, it is noted that the assessee had filed all the evidences like ID Proof, consolidated confirmations, separate affidavit by each of the creditors, copies of land holding showing their ownership on the agricultural land. Thus the genuineness, creditworthiness and capacity of the respective cash creditors are proved. Hence, the Ground No. 1 of the assessee is allowed. Addition on account of unexplained capital introduced - Held that:- AO observed some deficiencies in the submissions of the assessee like copy of death certificate has not been filed by the assessee evidencing the actual date of death of parents, the sources of ₹ 2.50 lacs as moveable assets with his parents could not be explained by the assessee, return of income / bank account in support of this contention could not be filed by the assessee, the assessee did not produce the other two brothers to evidence his claim etc. Hence, the AO was not satisfied with the submission of the assessee and thus made an addition of ₹ 2.50 lacs u/s 68 of the Act as unexplained credit in the hands of the assessee. In first appeal, the ld. CIT(A) confirmed the action of the AO with the observation that the assessee had not been able to produce his brothers before the AO for recording their statements to support his version that the amount was received by him on account of family partition of assets. The assessee was not able to show the evidence in support of the ownership of the assets and for sale of such assets. Hence, we concur with the findings of the ld. CIT(A) which is sustained. Thus Ground No. 2 of the assessee is dismissed. Disallowance on account of loss claimed by theft/ robbery - Held that:- As noted from the assessment order that the assessee had claimed loss by theft amounting to ₹ 11,735/- for which the AO required the assessee to explain and justify the same with evidences but the assessee did not file any documentary evidence as to theft of the amount. The AO disallowed the same and the ld. CIT(A) also confirmed the action of the AO as the assessee did not file a copy of the FIR or any other details of the incident for the loss claimed on account of theft. The assessee has also not filed any supporting evidence on this issue before the Bench at the time of hearing. Hence, I find no reason to interfere with the order of the ld. CIT(A) on this issue which is sustained. Thus Ground No. 3 of the assessee is dismissed. Disallowance of expenditure - Held that:- CIT(A) has granted sufficient relief to the assessee amounting to ₹ 22,234/- taking into consideration the assessment order and the submissions of the assessee before him. Hence, concur with the findings of the ld. CIT(A) on this issue. Thus Ground No. 4 of the assessee is dismissed.

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• Customs

• 2017 (7) TMI 751
  Refund of Inland Air Travel Tax (‘IATT’) - refund is sought on the basis that Sky Marshals who were deployed on its aircrafts are not `passengers' within the meaning of Section 41(f)(ii) of the FA, 1989 and hence no IATT is payable qua the sky marshals - whether the Petitioner is entitled to refund of IATT deposited by it for the period, 1st October, 2001 to 8th October, 2003? - Held that: - N/N. 2 of 2001 dated 19th April, 2001 granted the exemption from IATT to only sky marshals performing inland journey by air on free tickets issued by the Indian Airlines. The exemption was only subsequently extended to other domestic private airlines. Time limitation for filing appeal - Held that: - the limitation for filing the same was three months under Section 128 of the CA, 1962. The appeal admittedly was filed belatedly on 28th December, 2005 and was rightly dismissed by the Commissioner of Customs (Appeals). Petition dismissed - decided against petitioner.

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• 2017 (7) TMI 750
  Validity of SCN - It is the case of the respondents that the show cause notices issued by the first appellant against them lacks bona fide and the guilt of the respondents is prejudged and pre-determined at the stage of notice itself. Held that: - the investigating authority/first appellant is confined to investigating the case and submitting a report to the adjudicating authority and the first appellant cannot adjudicate the case as contemplated under the Act. As such, the investigating authority and the adjudicating authority are two different persons - the contention of the respondents herein that the investigating authority has pre-determined and pre-judged cannot be accepted. Hence, the grounds raised by the writ petitioners/respondents are liable to be rejected. The SCN issued by the first appellant is sustained with liberty to the respondents to submit their reply to the SCN - appeal allowed - decided in favor of Revenue.

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• 2017 (7) TMI 749
  SAD refund - imported timber subsequently sold in the local market - denial of refund on the ground that there was no correlation between goods imported and goods sold - Held that: - this Bench in the case of M/s. Hanuman Timber Co. Versus CC, Visakhapatnam [2016 (12) TMI 1367 - CESTAT HYDERABAD] has eloquently laid down the facts of the case which are identical as is in these two cases and held that appellant is eligible for refund - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 747
  Jurisdiction - power of DRI to issue SCN - proper officers in terms of section 2(34) of the CA, 1962 - Held that: - w.e.f. July 6, 2011, the Additional Director General, DRI was prospectively appointed as ‘proper officer’ for the purpose of Section 28 of the Customs Act. Hence, from 06.07.2011 ADG-DRI has been empowered to issue demand notice under Section 28 - Subsequently, sub-section 11 was inserted under section 28 of the Customs (Amendment and Validation) Act, 2011 dated 16.9.2011, assigning the functions of proper officers to various DRI officers with retrospective effect. Later on, i.e. for the period subsequent to the amendment, the matter i.e. the DRI officers having the proper jurisdiction to issue the SCN or not had came up before the Hon’ble Delhi High Court in the case of Mangali Impex vs. Union of India [2016 (5) TMI 225 - DELHI HIGH COURT], and the High Court inter alia, held that even the new inserted section 28 (11) does not empower either the officers of DRI or the DGCEI to issue the SCN for the period prior to 8.4.11. The impugned order set aside and matter remanded to the original adjudicating authority to first decide the issue of jurisdiction after the availability of Hon’ble Supreme Court decision in the case of Mangli Impex and then on merits of the case but by providing an opportunity to the assessee of being heard - appeal allowed by way of remand.

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• Corporate Laws

• 2017 (7) TMI 748
  Interpretation of Regulation 10 of the SEBI Takeover Regulations of 2011 - upliftment of corporate veil - Held that:- For the purpose of the present case, the Target Company, therefore, means a company whose shares are listed on a Stock Exchange. This would mean, on the facts of the present case, the Rattan Company, whose shares are listed on the two Stock Exchanges as mentioned above. Coming back to Regulation 10, it is thus clear that persons named as promoters in the shareholding pattern filed by the Rattan Company in terms of the listing agreement between the two Stock Exchanges is what is to be looked at. And for this purpose persons must be promoters of the Rattan Company for not less than three years prior to the proposed acquisition in order that the exemption under paragraph 10 would apply. On the facts of this case, therefore, the information memorandum having been filed on 19th July, 2012 pursuant to which listing took place one day later, is the relevant date from which this period is computed. This being the case, three years had not elapsed on 9/10th July, 2014, which was the date on which the earlier purchase of shares had taken place. Holding companies and their subsidiaries are treated as one group subject to control over such companies being exclusively held by the same persons. This shows that it has been statutorily recognized in sub regulation (iii) that in a given situation viz holding subsidiary relationship, the corporate veil would be lifted. When we come to sub regulations (iv) and (v), it is clear that these two sub regulations follow the pattern contained in sub regulation (ii) in as much as when it comes to persons acting in concert, the period should be not less than three years prior to the proposed acquisition, and disclosed as such pursuant to filings under the listing agreement. Also, when it comes to shareholders of a target company who have been persons acting in concert for a period of not less than three years prior to the proposed acquisition and are disclosed as such pursuant to filings under the listing agreement, the corporate veil is not lifted. In the facts of the present case, the target company is clearly defined and “means” only Rattan Limited. To go behind Rattan Limited would not only be contrary to the clear language of Regulation 10(1)(a) but would also introduce a concept viz lifting the corporate veil by the Court contrary to the Regulation itself, which, as has been pointed out above, also contains sub regulation (iii) which, in the circumstances specified, lifts the corporate veil.

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• Service Tax

• 2017 (7) TMI 764
  Natural justice - the Tribunal proceeded to pass the aforementioned order since, there was no appearance on behalf of the appellant although opportunity was granted in that behalf - appellant's contention is that they must be given opportunity of being heard - Held that: - since, the appellant says that the proceedings of the Tribunal are not correctly reflected in the impugned order, the only remedy available to the appellant would be to approach the Tribunal by way of an appropriate application to rectify the record - appeal dismissed - decided against appellant.

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• 2017 (7) TMI 763
  100% EOU - refund of CENVAT credit availed on input services - denial on the ground that these are not eligible input services - Held that: - there is no dispute as to the fact that the Respondent is an exporter of services and is registered with the Authorities. There is no dispute also that the Respondent had been exporting the services and filed refund claims - The jurisdictional Bench of the Tribunal has held in a catena of judgments, that the impugned services are eligible input services, and thus eligible for refund under Rule 5 of CCR, 2004 - refund allowed - appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 762
  Classification of service - Manpower Recruitment or Supply Agency service - the appellant as per the contract with M/s. Kalyani Lemmerz Ltd., providing the job of producing or processing in the premise of Kalyani. The terms of the job is on per piece basis - whether the service provided by the appellant to Kalyani is of Manpower Recruitment or Supply Agency service or otherwise? - Held that: - though the department has proposed the service of the appellant as classifiable under Manpower Recruitment or Supply Agency service but no evidence was adduced to conclusively hold that the service is of Manpower Recruitment or Supply Agency service. The figure of the service tax was retrieved from the bank account which does not show what is the basis of the service charge by the appellant to the service recipient. Therefore, we do not find any material evidence in the show-cause notice to hold that the appellant are providing Manpower Recruitment or Supply Agency service. From the reading of the agreement and Annexure A it can be seen that the service is the production ancillary associates and rates for the service is on per piece rate of the pieces produced. Therefore the appellant's job is not to depute the labour to the service recipient, irrespective of the number of labours, the respondent has to perform the job of producing piece for the service recipient and the rate is on per piece basis. Therefore, the wages/ salary or emolument paid to the labour is not relevant to the service recipient. That is the responsibility of the appellant. Against this evidence the department right from show-cause notice up to the Commissioner (Appeals) could not bring any material to show that there is arrangement between the appellants and service recipient there is arrangement of supply of manpower. Since the department could not establish that the service provided by the appellant are of supply of manpower, the demand on the said service is not sustainable - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 761
  Refund claim - N/N. 41/2007-ST dated 06.10.2007 as amended - denial on the ground of time limitation - Held that: - N/N. 41/2007-ST prescribed limitation of 60 days from the end of quarter which was amended by N/N. 32/2008-ST dated 18.11.2008 and extended the period of limitation to six months from the end of the quarter - the Tribunal had consistently viewed following the Circular dated 12.03.2009, that the refund claim for quarter ending March, 2008 filed under N/N. 41/2007-ST as amended by Notification No.32/2008, the limitation would be six months and effective retrospectively - In the present case, the respondent filed a refund claim on 03.07.2008 for the quarter ending on March, 2008, claim filed within time - appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 760
  Refund claim - rejection on the ground that the CENVAT credit was not admissible to the appellant - Held that: - in the present case no such show cause notice issued to the appellant for denial of Cenvat Credit availed under Rule 14 of Cenvat Credit Rules, 2004 - if the show cause notice has not been issued for disallowing Cenvat Credit by invoking Rule 14 of Cenvat Credit Rule, 2004 then subsequently such credit could not be denied to be refunded if the other conditions for refund are satisfied. We therefore, find it proper to remand the matter back to the file of Learned Commissioner (Appeals) with direction to re-determine the issue of refund of ₹ 1,19,18,476/- - appeal allowed by way of remand.

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• Central Excise

• 2017 (7) TMI 759
  Clandestine manufacture and removal of Pan Masala - Held that: - the whole case of clandestine manufacture and clearance based on certain private records and recovered from the premises of third party, cannot be sustained in absence of any cogent corroborative supporting evidences. Excess clearances of dutiable pan masala over and above the declared quantities - Held that: - the said fact has been admitted not only the main appellant, but also by various dealers, who dealt with the said items - the admitted facts corroborated by the dealers indicated to the evidence of un-accounted clearance of excess amount of pan masala pouches over and above recorded quantity. In such situation, it is for the main appellant to establish with supporting evidence to the effect that since when such practice was in vogue. It appears that in case of admitted fact corroborated by the dealers, the appellant is trying to restrict the duty demand by asserting that such clearance of excess pouches were only after 2003 - the duty demand of ₹ 3,93,857/- calculated based on evidences recorded during investigation is sustainable against the main appellant. Penalty equivalent to such amount in terms of Section 11AC is also sustainable. Confiscation of 49 bags of pan masala found in the factory premises of the main appellant - confiscation on the ground that the same are not duly accounted for and were intended for clandestine manufacture later - Held that: - the original authority held that the duty paid clearance of such goods earlier could not be linked with the seized goods and accordingly, he held that these were non-duty paid items. When the products was stated to be damaged items, the question of their marketability as excisable goods has to be examined. The same has not been done by the original authority. He made a summary conclusion that the duty paid nature of the said product has not been established. We note that if the product is not fit for market, the duty paid nature or otherwise of the same is of no relevance. Accordingly, we hold that the confiscation ordered on the above two items is not legally sustainable. Penalty u/r 26 of CER, 2002 - Held that: - the case for non-duty paid clearance, the main appellant is penalized under Section 11AC, which is equal to the duty amount. The main appellant is proprietorship firm. There is no separate identity for the proprietor from the proprietory firm. As such, we find no justification for imposition of additional penalty on the proprietor under Rule 26. Appeal allowed - decided partly in favor of appellant.

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• 2017 (7) TMI 758
  Refund claim - Manufacture of Pan Masala - case of appellant is that they operated only 5 machines during the month of August, 2011 from 01.08.2011 to 15.08.2011 and the entire duty of ₹ 62,50,000/- involved on the said five machines was paid on 06.08.2011, also, they stopped complete production of the same from 16th August till the end of August - Held that: - The sealing of all machines and the subsequent sealing of 5 machines is not disputed by the department - the provisions of PMPM Rules that Rule 10 specifically provides for abatement of duty paid by an assessee when the machines are not functioning. In the instant case, the appellant has discharged the entire duty liability for the month of August 2011 by calculating the liability based upon the functioning of five machines which were also subsequently closed from 16th August 2011. In my considered view, the abatement that is provided under Rule 10 will be applicable to the appellant herein and Revenue is mandated to refund the said amount which has been collected in excess by them from the respondent. There cannot be any demand of duty from the respondent for the period from 16.08.2011 to 31.08.2011 and having paid the entire duty for the month of August in advance, the respondent is eligible for the refund of the duty paid in excess - appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 757
  Status of the appellant as a registered co-operative society - Benefit of N/N. 88/1988-CE dated 01.03.1988 - Revenue entertained a view that the appellant is a registered co-operative society with the restricted validity of Patna Corporation area. As such they have no recognition as co-operative society in Sabajpura village where the excise unit is located, so exemption denied - Held that: - The jurisdictional Central Excise officer has taken up this issue specifically with the Registrar of Co-operative Societies, Patna. In response the Assistant Registrar vide his letter dated 16.05.2006 clarified that the registration is given as co-operative society when the members of such society reside within the jurisdiction of Patna Municipal Corporation. As such we note that the registering authority justified the registration and also noted the starting of manufacturing facility in the village after due permission from the B.D.O. of Danapur. It is clear that the appellants continue to be a co-operative society duly registered by the competent authority. They will be co-operative society for the purpose of the present Notification as the said Notification did not prescribe that registration of the society also should be in the area where the unit is located - In the present case a registered co-operative society is having the unit in rural area and manufacturing specified goods in terms of the said Notification. The facts and circumstances of the case regarding claim of exemption Notification, was brought to the notice of the Assistant Registrar, Patna Circle by the jurisdictional Superintendent of Central Excise vide his letter dated 31.03.2006. In fact the Superintendent specifically alleged that the society clearly violates the area of operation mentioned in the registration and as such requested for action taken for de-registration of the said society. Appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 756
  Refund claim - deemed exports - denial on the ground that clearances which are effected to 100% EOUs, cannot be equated to physical exports and hence Provisions of Rule 5 do not get attracted - Held that: - First Appellate Authority after considering the submissions made before him by the assessee/respondent as also various decisions, has correctly held that the refund of accumulated CENVAT credit under Rule 5 of CCR, 2004 in respect of clearances made to 100% EOU is admissible - appeal rejected - decided against Revenue.

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• 2017 (7) TMI 755
  Deletion of interest and penalty - demand of interest was on the ground that the assessments were provisional - The first appellate authority on an appeal set aside demand recording that there was no formal assessment procedure followed as per provision 7(i) of the Central Excise Rules, 2002 - Held that: - Though the appellant were declaring that the goods were being cleared to their sister concern was on provisional basis, there was no formal order from the Department that the assessment was being done on a provisional basis and with the procedure set forth under Rule 7 of CER 02 not being followed, the orders passed by the adjudicating authority demanding interest and penalty has no validity. The Tribunal in the case of TATA MOTORS LTD. Versus COMMISSIONER OF C. EX., PUNE-I [2008 (2) TMI 121 - CESTAT, MUMBAI], took a consistent view that prior to 01.03.2016, provisions of Rule 7(4) will be applicable only if there is any order of final assessment i.e. to say that the interest liability on an assessee will arise only if there is order of finalization of provisional assessment. The order of first appellate authority are in consonance with the provisions of Rule 7 of Central Excise Rules, 2002 - appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 754
  Deemed Manufacture - appellant are engaged in manufacture of Computer Bracket Assembly and in addition, they are also engaged in the export of parts / components of motor vehicles to M/s. Hyundai Assan Otomotive Sanayi, Turkey and other countries - whether the activity undertaken by the appellants tantamount to deemed manufacture as per Section 2(f)(iii) of the Central Excise Act, 1944? - Held that: - after packing, the shipping mark label is affixed on the box - Three types of packing are undertaken depending on the type of automobile parts. They are: (a) carton box packing, (b) wooden box packing and (c) metal pallet packing. The packed carton box is stuffed inside the container for export. The process of labeling and packing explained by the learned Senior Advocate, would satisfy the ingredients of deemed manufacture under Section 2(f)(iii) of Central Excise Act, 1944. The submission of learned AR that such packing is only for the purpose of transportation and that the labeling is only for the purpose of identification are too flimsy and not backed by any legal basis. The Standard of Weights and Measures Act, 1987 though provides for affixing the Retail Sale Price on packaged commodities, the said legislation has nothing to do with the question whether tune activity undertaken by the assessee amounts to manufacture or not. As per sub-clause (iii) of the said definition, packing / repacking or labeling or re-labelling would amount to the process of manufacture and the appellants have been able to successfully establish that such activities have been undertaken by them after purchase of the goods from various vendors till the goods are exported. The activities undertaken by the appellant amounts to manufacture and they are liable to avail CENVAT credit on the inputs / input services used in the export of goods - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 753
  CENVAT credit - MS Sheets, angles, MS plates, channels, MS Flats, Beams, Joining sheets, bars, channels, squares, round bars, etc. falling under Chapter 72 - case of the Revenue is that these items are only structural materials used in construction and therefore are not covered under the definition of capital goods under Rule 2 (a) (A) of Cenvat Credit Rules, 2004 - It is intriguing that the department sought to nail the tax payer on the ground that they were not able to produce in 2016-17, documents and registers which were more than thirteen years old, of 2003 vintage. It is even more interesting to note that the SCNs themselves states that the apparent irregularity came to light only at the time of verification of Cenvat Credit account by the Department. Nonetheless, if the returns have been regularly filed such a doubt should have been detected or got investigated at the time of filing of returns and certainly not thirteen years later. The entire dispute has been festering, atleast for the last thirteen years, without any light at the end of the dispute tunnel. While the impugned SCNs alleged that the appellants have wrongly availed Cenvat credit on MS sheets, angles, MS plates, channels etc., on the grounds that they are structural materials used in construction, no further illumination is extant in those notices to support such allegation. Nor is there any whisper in any of the notices, as to the exact manner of usage that these disputed items had been put to use by the appellants - when the original SCNs themselves did not in the first place refer to any supporting evidence or corroboration of the allegations therein, after as many as thirteen long years, the onus is now being put on the appellants, that the latter are unable to produce the documents. It was for the Department to have clearly substantiated their allegation with reasoning and evidence, and not the other way around. Appeal allowed - decided in favor of appellant.

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• Indian Laws

• 2017 (7) TMI 752
  Guilty of professional misconduct against CA - Disciplinary action was taken against the Respondent herein for issuing certificates for consumption of raw materials showing the value of imported raw material as CIF value to the units without seeing the records since imported value of the raw materials should have been shown as value of the raw materials and not the CIF value - also, it was alleged that the units did not maintain any record for past production, still the certificates were issued which shows that the figures were manipulated and the certificates issued were not correct - Held that: - the High Court has considered the statements made on behalf of the Respondent to hold that there is no material on record to establish that the units had paid an amount more than what was mentioned in the CIF value or purchase vouchers and merely because the sellers from whom the units had purchased the goods had imported the same, it does not mean that the units in question had paid the custom duty. Thus, no adverse inference can be drawn against the Respondent on this ground. So far as non-maintenance of books of accounts by the units is concerned, the High Court has held that it is also without any substance as it has found that the only witness examined before the Disciplinary Committee Mr. Phillips, proprietor of M/s. Progressive Storage Systems had stated that the books and the record are available at Bombay. Appeal dismissed - decided against appellant.

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