TMI Tax Updates - e-Newsletter
July 27, 2017

Case Laws in this Newsletter:

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

TMI SMS

• Tasla is classifiable under Chapter Sub Heading 8433 as agricultural implements and/or hand tools

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• When the income cannot be added u/s 68, ITAT was not competent to make the addition u/s 69A, the entire ITAT order stand vitiated in law

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Articles

1. Is GSTN Code mandatory for Export Import Business?

   By: Kishan Barai

2. Decoding of ‘Place of Supply of Goods’ under GST

   By: Venkataprasad Pasupuleti

News

1. Benami Transactions Across the Country

2. Fiscal Deficit of the Centre as percentage of GDP has declined consistently since 2013-14 from 4.5 per cent to 3.5 per cent in 2016-17 (provisional actual) and is further budgeted to come down to 3.2 per cent in 2017-18

3. Shri Subhash Chandra Garg, Secretary, Department of Economic Affairs appointed as India’s Alternate Governor on the Board of Governors of the Asian Development Bank (ADB)

4. Codex Alimentarius Commission meeting in Geneva adopts three Codex standards for spices

5. Investment Agreements with Foreign Countries

6. Credit Guarantee Fund for Startups

7. Funds Disbursed to Industrial Corridors

8. Separate Logistic Unit for Exporters

9. RBI Reference Rate for US $

10. Issues arising from the implementation of Minimum Alternate Tax (MAT) provisions relating to Indian Accounting Standards (Ind AS) compliant companies

Notifications

GST - States

1. 15/2017 - dated 19-7-2017 - Delhi SGST

The Delhi Goods and Services Tax (Third Amendment) Rules, 2017.

2. F.3(16)/Fin(Rev-I)/2017-18/DS-VI/359 - dated 30-6-2017 - Delhi SGST

Lt. Governor of the National Capital Territory of Delhi, appoint the officers

3. 17/2017-STATE TAX (RATE) - dated 30-6-2017 - Delhi SGST

Electronic commerce operator notifies intra-State supplies services

4. 16/2017-State Tax (Rate) - dated 30-6-2017 - Delhi SGST

United Nations or a specified international organisation.

5. 15/2017-State Tax (Rate) - dated 30-6-2017 - Delhi SGST

No refund of unutilised input tax credit supply of services.

6. 14/2017-State Tax (Rate) - dated 30-6-2017 - Delhi SGST

Notifies the following activities or transactions undertaken by the Central Government or State Government or any local authority.

7. 13/2017-State Tax (Rate) - dated 30-6-2017 - Delhi SGST

Notifies the categories of supply of services on reverse charge basis

8. 13/2017 - dated 30-6-2017 - Delhi SGST

Notification regarding rate of interest under the Delhi Goods and Services Tax Act, 2017

9. 12/2017 - State Tax (Rate) - dated 30-6-2017 - Delhi SGST

Exemption on Supply Of Services

10. 10/2017-State Tax (Rate) - dated 30-6-2017 - Delhi SGST

Exempttion intra-State supplies of second hand goods.

11. 10/2017 - dated 30-6-2017 - Delhi SGST

The Delhi Goods and Services Tax (Second Amendment) Rules, 2017.

12. 08/2017-State Tax (Rate) - dated 30-6-2017 - Delhi SGST

Exempts intra-State supplies of goods or services or both received.

13. 08/2017 - dated 30-6-2017 - Delhi SGST

Composition U/s 10(1) and (2) of the Delhi Goods and Services Tax Act, 2017 (Delhi Act 03 of 2017)

14. 07/2017 - dated 30-6-2017 - Delhi SGST

Delhi Goods and Services Tax (Composition and Registration) (Amendment) Rules, 2017

15. 06/2017-State Tax (Rate) - dated 30-6-2017 - Delhi SGST

Supply of Services Canteen Stores Department.

16. 05/2017-State Tax (Rate) - dated 30-6-2017 - Delhi SGST

No refund of unutilised input tax credit.

17. 04/2017-State Tax (Rate) - dated 30-6-2017 - Delhi SGST

Intra-state supply of goods reverse charge basis.

18. 03/2017-State Tax (Rate) - dated 30-6-2017 - Delhi SGST

Exempts intra-State supplies of goods amount calculated at the rate of tax specified

19. 02/2017-State Tax (Rate) - dated 30-6-2017 - Delhi SGST

Exempts intra-State supplies of goods.

20. 01/2017-State Tax - dated 30-6-2017 - Delhi SGST

Notifies the rate of the State tax

21. Order No. 01/2017-Puducherry GST - dated 25-7-2017 - Puducherry SGST

Extension Of time limit for filing intimation for composition levy under sub-rule (1) of rule 3 of the Puducherry Goods and Services Tax Rules, 2017

22. G.O.Ms. No. 18/2017- Puducherry GST (Rate) - dated 3-7-2017 - Puducherry SGST

Reducing the State tax on Fertilizers from 6% to 2.5%

23. G.O.Ms. No. 17/2017- Puducherry GST (Rate) - dated 29-6-2017 - Puducherry SGST

Tax on intra-State supply of services to be paid by electronic commerce operators.

24. G.O.Ms. No. 16/2017- Puducherry GST (Rate) - dated 29-6-2017 - Puducherry SGST

Refund in certain cases.

25. G.O.Ms. No. 15/2017- Puducherry GST (Rate) - dated 29-6-2017 - Puducherry SGST

Refund of unutilised input tax credit.

26. G.O.Ms. No. 14/2017- Puducherry GST (Rate) - dated 29-6-2017 - Puducherry SGST

Treatment of activities or transactions undertaken by the Central Government or State Government or any local authority in which they are engaged as public authority.

27. G.O.Ms. No. 13/2017- Puducherry GST (Rate) - dated 29-6-2017 - Puducherry SGST

Intra-State supply of services — State tax to be paid on reverse charge basis.

28. G.O.Ms. No. 12/2017- Puducherry GST (Rate) - dated 29-6-2017 - Puducherry SGST

Intra-State supply of services — Exemption.

29. G.O.Ms. No. 11/2017- Puducherry GST (Rate) - dated 29-6-2017 - Puducherry SGST

Rate of state tax on the intra-State supply of services.

30. G.O.Ms. No. 10/2017- Puducherry GST (Rate) - dated 29-6-2017 - Puducherry SGST

Supplies of second hand goods received by a registered person from supplier who is not registered – Exemption

31. G.O.Ms. No. 09/2017- Puducherry GST (Rate) - dated 29-6-2017 - Puducherry SGST

Tax Deduction at Source - Supply received from unregistered person – Exemption.

32. G.O.Ms. No. 08/2017- Puducherry GST (Rate) - dated 29-6-2017 - Puducherry SGST

Supply received by registered person from unregistered supplier – Exemption.

33. G.O.Ms. No. 07/2017- Puducherry GST (Rate) - dated 29-6-2017 - Puducherry SGST

Canteen Stores Department – Exemption.

34. G.O.Ms. No. 06/2017- Puducherry GST (Rate) - dated 29-6-2017 - Puducherry SGST

Canteen Stores Department - Refund of state tax.

35. G.O.Ms. No. 05/2017- Puducherry GST (Rate) - dated 29-6-2017 - Puducherry SGST

Refund of unutilised input tax credit.

36. G.O.Ms. No. 04/2017- Puducherry GST (Rate) - dated 29-6-2017 - Puducherry SGST

Supply of goods-Payment of state tax on reverse charge basis by recipient.

37. G.O.Ms. No. 03/2017- Puducherry GST (Rate) - dated 29-6-2017 - Puducherry SGST

Concessional rate for supplies to Exploration and Production

38. S.O.037/P.A.5/2017/S.11/2017. - dated 30-6-2017 - Punjab SGST

Exempt the intra-State supply of services tax calculated state of tax as specified.

Income Tax

39. 72/2017 - dated 25-7-2017 - IT

Amendment in Notification No. S.O. 1590(E), dated the 16th May, 2017

40. 71/2017 - dated 25-7-2017 - IT

Amendment in Notification No. S.O.1621(E), dated the 18th May, 2017

Circulars / Instructions / Orders

Companies Law

1. 08/2017 - dated 25-7-2017

Clarification regarding applicability of exemption given to certain private companies under section 143(3)(i) of the Companies Act, 2013- reg.

Highlights / Catch Notes

Income Tax

• High Court Rules Tribunal's Order Invalid for Improper Income Addition u/ss 68 and 69A.

  Case-Laws - HC : When the income cannot be added u/s 68 and the Tribunal was not competent to make the said addition u/s 69A, the entire order of the Tribunal stand vitiated in law - HC
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• Tax Return Mistakes Don't Invalidate Filing if It Aligns with Income Tax Act Intent, Says Section 292B.

  Case-Laws - AT : Validity of return filed manually - The provisions of section 292B also comes to the rescue of the Assessee in as much as the return filed cannot be invalid merely by the reason of any mistake, defect or omission in such return of income when in substance and effect if such return is in conformity with or according to the intent and purpose of this Act. The return filed manually may at best be said to be a defective return and not an invalid return.
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• Court Rejects Revenue Department's Request to Excuse Delay Due to Vague Explanation About Supreme Court Case Preoccupation.

  Case-Laws - AT : Petition of the revenue seeking condonation of delay - Merely mentioning that he was preoccupied with some sensitive case before the Hon’ble Supreme Court without specifying the nature of the case and whether during that period he was unable to perform/discharge his other functions/duties, we are unable to accept such kind of extremely vague reasons.
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• 30% of Operating Expenses Unjustly Disallowed; Fully Permissible u/s 11 for Charitable Activities.

  Case-Laws - AT : There is no basis for arbitrary disallowance of adhoc 30% of expenditure stated under the head 'Operating and Administrative Expenses' - These expenses were spent by way of application of income for the purpose of carrying on the charitable activity and such application of income is fully admissible u/s 11
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• Interest Paid by Branch to Head Office Not Exempt u/s 10(15)(iv)(fa); TDS Obligations Apply.

  Case-Laws - AT : Exemption u/s 10(15)(iv)(fa) are not applicable in the present case and, therefore, the contention of the assessee that interest paid by BO to HO is exempt from taxation under the said section and hence, not subject to TDS is not tenable in the eyes of law.
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• Interest on Debentures Not Exempt: No Addition or Disallowance u/s 14A(2) or Section 36(1)(iii) of Income Tax Act.

  Case-Laws - AT : Disallowance u/s 14A(2) - when interest receivable on debentures does not fall in the category of exempt income, no addition on account of disallowance of interest as claimed u/s 36(1)(iii) of the Act can be made
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• Co-operative societies in banking can claim Section 80P tax deductions unless classified as a cooperative bank u/s 80P(4).

  Case-Laws - AT : Merely because a co-operative society is carrying on the business of banking, the deduction u/s 80P could not be denied unless it comes within the ambit of cooperative bank as contemplated u/s 80P(4).
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• Clarifications on computing book profit for MAT u/s 115JB for companies using Indian Accounting Standards.

  Circulars : Clarifications on computation of book profit for the purposes of levy of Minimum Alternate Tax (MAT) under section 115JB of the Income-tax Act, 1961 for Indian Accounting Standards (Ind AS) compliant companies - Circular
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Corporate Law

• Clarification on Exemption for Private Companies from Reporting Requirements u/s 143(3)(i) of Companies Act 2013.

  Circulars : Clarification regarding applicability of exemption given to certain private companies from reporting u/s 143(3)(i) of the Companies Act, 2013- reg.
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Service Tax

• Bus Stops for Shops: Facilitation Fee Deemed Taxable Under Business Auxiliary Service Regulations.

  Case-Laws - AT : Business Auxiliary Service - “facilitation fee” - the appellant, by the act of stopping the buses only in front of contracted emporium and not in front of others, engaged in providing customers to the emporium resulting in promotion of sales.
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Central Excise

• Micronutrients Classification Under CETA: Confirmed as "Other Fertilizers" Under CETH 3105, Not CTH 3808.

  Case-Laws - AT : Classification of goods - micronutrients - classified under CTH 3105 of CETA or under CTH 3808 of CETA? - micronutrients will require to be classified as other fertilisers in CETH 3105.
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• Tasla Item Classification Confirmed Under Chapter Sub Heading 8433 for Agricultural Use and Produce Processing.

  Case-Laws - AT : Classification of Tasla - classified under chapter 73 or under chapter 84? - item in question is used for the preparation and cultivation of soil and for the preparation and cultivation of soil and for purposes of cleaning, sorting and grading of agricultural produce - classifiable under Chapter Sub Heading 8433
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Case Laws:

• Income Tax

• 2017 (7) TMI 873
  Grant of interest under Section 244A - Held that:- High Court [2015 (3) TMI 110 - DELHI HIGH COURT ] reveals that another judgment in the case of Commissioner of Income Tax v. Sutlej Industries Ltd.(2010 (3) TMI 449 - DELHI HIGH COURT) was cited wherein the view taken was that in such circumstances the assessee would be entitled to interest under Section 244A of the Income Tax Act on the refund of the self-assessment tax. The High Court further did not agree with the aforesaid view and made the following observation: “35. Having found the position of law as indicated above, we express, with respect, our inability to subscribe to, or follow, the view taken by the other Division Bench of this court in the case of Commissioner of Income Tax v. Sutlej Industries Ltd.” It is clear from the above that in the impugned judgment, the Bench has differed with the earlier view expressed by the Coordinate Bench. In the circumstances, the appropriate course of action was to refer the matter to the larger Bench and we fail to understand why it was not done. We are informed that subsequently in the case of Sutlej Industries Ltd. V. Commissioner of Income Tax pending before the High Court, the High Court has referred the matter to a larger Bench. In these circumstances, we set aside the impugned judgment of the High Court and remand the appeal back to the High Court for its afresh decision

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• 2017 (7) TMI 872
  Undisclosed income for the purpose of Section 158BD read with Section 158BC - Held that:- As regards the additions made by the AO relating to AYs 1993-94 and 1994-95 as unexplained capital, as already noted for both these AYs the Assessee’s returns were picked up for scrutiny and assessment orders, after inquiry, were initially passed by the AO under Section 143 (3) of the Act. The AO’s impugned order dated 15th November 1996 does not mention any incriminating material recovered during the search that would justify the above addition. What the AO has done is to again examine the Assessee’s books of account and seek further explanation during the course of assessment, which exercise was already undertaken by the AO when the assessments for AYs 1993-94 and 1994-95 were completed originally under Section 143(3) of the Act. In the absence of any incriminating material justifying the same, the Court finds that the impugned order of the ITAT having deleted these additions does not call for any interference. Addition as balance of capital - there is no reference by the AO in the impugned order to any incriminating material. The case of the Revenue is that the original return filed by the Assessee for AY 1986-87 was not accompanied by the balance sheet and therefore, there was no occasion for the AO at that stage to have examined it or raised a query. In any event, the Court finds that the AO has not referred to any incriminating material as such which would justify the additions except by saying that no appropriate justification was shown by the Assessee regarding the opening balance in the capital account. As under Section 158 BB (1) (c) amounts that have been recorded in the books of accounts or other documents on or before the date of search would go to reduce the ‘undisclosed income’. Viewed in the above perspective, the amount balance of capital having already been disclosed in the balance sheet of the Assessee for the AY in question, the deletion of the said addition by the ITAT cannot be faulted. Unexplained cash credits in light of the explanation offered, it was necessary for the AO to have undertaken some inquiries before arriving at the above conclusion. The mere fact of a slip of paper showing bank balances was by itself insufficient for the AO to infer that the Assessee had routed his own money through the said creditors. The addition of such a large sum based on extremely tenuous material cannot be sustained in law. Therefore, the said additions were rightly deleted by the ITAT. The corresponding deletion of the interest amount is also, therefore, justified. Unexplained receipts on account of ‘low household expenses’ for the block period, Rs. 1,63,490 on account of unexplained investment in a plot, Rs. 1,35,746 on account of deposit in the name of Ms. Archana Agarwal, wife of the Assessee and Rs. 2,33,425 on account of unexplained jewellery. The impugned order of the ITAT in regard to the deletion of each of the above additions is a detailed one which analyses the evidence with sufficient clarity. - Decided in favour of the Assessee and against the Revenue.

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• 2017 (7) TMI 871
  Reopening of assessment - reasons to believe - Held that:- In the present case as no order of assessment had been passed by the Assessing Officer, simply on the basis of intimation contemplated under Section 143(1), it cannot be said that any opinion was expressed by the Assessing Officer, which could have been changed for the purposes of giving notice for re-assessment. Thus, when there was no expression of opinion earlier at any stage by the AO, there cannot be a change of opinion in giving notice under Section 148 of the Act as has been held by the Tribunal. In addition to the above, the very fact that the objections of the respondent-assessee against the notice for re-assessment and the reasons to believe were disposed of by the Assessing Officer by detailed order and the said order was allowed to attain finality, the matter with regard to the validity of the notice and the proceedings had come to rest. The Tribunal therefore had no jurisdiction in law to allow the appeal on a technical ground that the proceedings were invalid for the reason that they were initiated on the basis of change of opinion rather than on any valid ground. Tribunal has manifestly erred in law in holding that there was a change of opinion and therefore it was not open for the authorities to have proceeded under Section 147/148 of the Act for re-assessment. - Decided in favour of the Revenue

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• 2017 (7) TMI 870
  Addition of gift as assessee's income - addition under Section 69-A or under Section 68 - ibunal ITAT adding a sum received as gift u/s 69-A after deleting the said addition under Section 68 - Held that:- The use of the word "thereon" is important and it reflects that the Tribunal has to confined itself to the questions, which are arising or are subject matter in the appeal and it cannot be travelled beyond the same. The power to pass such orders as the Tribunal thinks fit can be exercised only in relation to the matter that arises in the appeal and it is not open to the Tribunal to adjudicate any other question or an issue, which is not in dispute and which is not the subject matter of the dispute in appeal. Tribunal travelled beyond the scope of the appeal in making the addition of the said income under Section 69-A of the Act. It may be worth noting that the Tribunal has recorded a categorical finding that "it is clear that under the provisions of Section 68, the addition made by the Assessing Officer and sustained by the CIT (Appeals) cannot be sustained, meaning thereby that the Tribunal was of the opinion that the Assessing Officer and the CIT (Appeals) committed an error in adding the aforesaid amount in the income of the appellant-assessee under Section 68 of the Act. When the said income cannot be added under Section 68 and the Tribunal was not competent to make the said addition under Section 69-A of the Act, the entire order of the Tribunal stand vitiated in law. - Decided in favour of assessee and hold that the Tribunal was not competent to make any addition under Section 69-A of the Act and as the same was subject matter of the appeal before it.

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• 2017 (7) TMI 869
  Exemption of income computable under Section 11(1B) - whether the Tribunal was not justified in holding that the CIT (Appeals) could exclude the deemed Capital Gain Income of the Trust from its Total Income even though the Assessee Trust had not claimed such exclusion in its Return of Income and no Revised Return had been filed by the Assessee Trust? - Held that:- The genuineness of the transactions in question so also its nature is not disputed by the Revenue. The Commissioner (Appeals) has observed that the Assessee trust is enjoying exemption of income computable under Section 11(1B) of the Act. From perusing the Assessment Order, it is apparent that the Assessing Officer was satisfied about the claim of the Appellant that the income declared in return under Section 11(1B) was done erroneously, as on this claim made by the Appellant during Assessment, no adverse finding has been made. The judgment of Goetze India Limited (2006 (3) TMI 75 - SUPREME Court) of the Apex Court is referred to by the Division Bench of this Court in case of Pruthvi Brokers and Shareholders P. Ltd. (2012 (7) TMI 158 - BOMBAY HIGH COURT) wherein this Court has observed that the Assessee is entitled to raise not merely additional legal submissions before the Appellate Authorities but is also entitled to raise additional claims. The Appellate Authorities have jurisdiction to deal with additional grounds, which were available when the return was filed. In the present case also the Revenue had not suggested that the omission was deliberate or malafide.

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• 2017 (7) TMI 868
  Royalty and License fees paid by the Assessee to its legal owner - revenue or capital expenses - Held that:- Assessee pays an amount of Rs. 1 lakh per annum as license or copyright fees to M/s. Kirloskar Proprietary Limited for use of the name. The Assessee is also admitted as a member of M/s. Kirloskar Proprietary Limited and the Assessee has agreed to maintain the quality and to comply with the specifications prescribed by the said concerned. There is no transfer of a technical nohow. The M/s.Kirloskar Proprietary Limited is acknowledged as the original conceiver, adopter, user and registered proprietor of the trademark “Kirloskar”. For allowing the use of the trademark “M/s.Kirloskar Proprietary Limited charges from the Assessee 0.25% on annual turnover as royalty. For the earlier years also i.e. for the Assessment Years 2007-08 and 2008-09, the same is accepted as the revenue expenditure by the Assessing Officer. The finding of fact have been concurrently arrived at by the Commissioner (Appeal) and the Tribunal in a plausible manner.

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• 2017 (7) TMI 867
  Best judgment assessment - Unexplained Money - addition u/s 68 - Held that:- It is admitted by the ld AR that order passed u/s 144 of the Act are appealable before the ld CIT(A), however, he stated that for filing an appeal the AO ought to have determined the total assessed income and demand of tax and further issued notice of demand u/s 156 of the Act. He further stated that no notice of demand was issued along with the draft assessment order dated 31.03.2013. According to us the ld AR did not appreciate that it is the final assessment order which is passed u/s 144 of the Act in pursuance to the direction of the ld DRP is showing computation of total income as well as the computation of demand of tax and also accompanied by the notice u/s 156 of the Act. Therefore, such assessment order is appealable before the ld CIT(A). However, the ld AR is referring to the draft assessment order only and naturally u/s 144C of the Act there is no provision of issuing notice of demand. The notice of demand u/s 156 of the Act is required to be issued only with the final order passed in pursuance of the direction of ld Dispute Resolution Panel, which is not demined by the assessee. Therefore, according to us the tribunal is not right appellate forum where assessee should have filed such an appeal where the order is passed u/s 144 read with section 144C of the Act. Hence, according to us the appeal of the assessee is not maintainable. Disallowance under section 40(a)(i) - commission paid to advertisement agency without deducting TDS - Held that:- DAn advertiser engages an advertising agency and the advertising agency in turn approaches print and electronic media for publication/broadcast of the advertisement. There is no direct link between the print and electronic media and the advertiser. In the normal course when orders are released by the advertising agencies, the name of the client is always disclosed on it, though there is no principal agent relationship between the print and electronic media on one hand and the advertising agencies on the other hand. As per the rules of INS, accreditation is awarded by INS to the advertising agency which becomes eligible to receive 15 per cent discount from media companies on procuring advertisement space for/time in publication/broadcast for advertisers. It may be noted that even the discount is not at the will or contractual discretion; it is governed by INS regulations. In view of this we do not find any infirmity in the direction of the ld DRP in directing the ld Assessing Officer to delete the disallowance commission paid Non-deduction of tax on transmission and uplinking charges paid to Intelsat Corporation, USA - Held that:- The assessee Company had no liability to deduct tax on such payments under section 195 of the Act which provides that any person would liable to deduct tax if the payments made to non-resident are chargeable to tax. When it has already been held be the jurisdictional High Court/Tribunal that such sum is not taxable in India in the recipient, no liability could be fastened on the payer to deduct on such sum. Thus, the disallowance of above sum by invoking the provisions of section 40(a)(i) of the Act will be arbitrary and unwarranted. No infirmity in the direction of the ld DRP in directing the ld Assessing Officer to delete the disallowance transmission and up linking charges paid to Intelsat Corporation USA. Addition on account of software expenses - Held that:- The assessee has been allowed the identical claim in earlier years by the ldCIT(A) and based on that decision the ld DRP was also of the view that the above expenditure incurred by the assessee is revenue in nature. The ld DR could not controvert that why the order of the ld DRP is erroneous. In view of this we do not find any infirmity in the direction issued by the ldDRP. In the result we confirm the direction of the DRP. In view of this ground No. 3 of the appeal of the revenue is dismissed. Admission of additional evidence - Held that:- It is difficult to accept the contention of the learned counsel for the assessee that there is a complete bar for the revenue to produce any additional evidence suo motu and it can be permit- ted to do so only if the Tribunal requires such evidence and accordingly directs the Department to produce the same. In our opinion, the first limb of condition stipulated in rule 29 clearly permits both the parties to the appeal to produce additional evidence and seek the leave of the Tribunal for admission thereof making out a case that the same shall enable it to pass orders or for any substantial cause and if the Tribunal is satisfied that the additional evidence so produced is required to enable it to pass orders or for any other substantial cause, it can allow the parties including the revenue to produce such additional evidence exercising its discretion in terms of the said Rule. Unexplained money added u/s 69A - amount representing share capital raised by NDTV Networks International Holdings BV, a subsidiary of the appellant company - Held that:- he assessee has submitted scanty details and also tried to hide certain facts by not denying or owning the emails exchanged. Further it is too naive to accept in the facts and circumstances of the case that any transaction carried out through banking channel should be believed as genuine. In fact the money mostly rout through banking channels only and for these transactions only various sections in the income tax act are incorporated dehors the banking transitions such as section 69, 68 etc. It is only the banking transactions through which the tax evaders bring their unaccounted money in to the books by creating or dealing with entities/ persons without substances. In the present era where the business is carried on through and from complex, dynamic and multi jurisdictional, diverse entities, the transaction through banking channel does not have much credence, especially in like cases before us. During the course of hearing assessee was asked about KYC certificate of the foreign banks along with the beneficiary disclosure forms from the bankers from where the transactions have originated which is not submitted before us or before ld AO. Assessing Officer has correctly made the addition of Rs. 6425422000/- by invoking section 69A of the Act on account of money transferred by by M/s. Universal Studio International BV which was routed to the coffers of the assessee by entering in to series of mergers and liquidation by payment of dividend, loans without any obligation for repayment. Hence, we do not find any infirmity in the order of ld Assessing Officer as well as ld DRP and hence the addition of Rs. 642.54 crores in the hands of the assessee u/s 69A is confirmed. Decided against assessee Addition invoking the provisions of section 68 - Held that:- The assessee has explained the statement of Mr. Rao and submitting its reply at page no. 23 to 25 of its reply submitted on 02.11.2016. Even otherwise, Mr. Rao is the Director of the company and director of the some subsidiaries. He was also the CEO of the company. During the course of his examination, he was asked question No. 34 wherein the details of funds raised and retained of the foreign subsidiaries was asked. He replied that most of the funds came to the Indian subsidiaries particularly NDTV Imagine through NNPLC. According to him this included a loan of US$ 50 million, which came to NNPLC as a loan from NDTV BV and was in fact was out of subscription money received from NBCU. In view of this statement of the Director of company who was at the helm of the affairs we do not have any option but to set aside this ground of cross objection back to the file of the ld Assessing Officer with a direction to make a proper enquiry with respect to the loan of US$50 million. The ld Assessing Officer is further directed to carry enquiry also with respect to the fact that whether this loan amount was also out of subscription sum received from NBCU and is part of the total consideration of Rs. 642 crore to avoid any duplication of addition in the interest of justice. The assessee is also directed to submit the complete explanation with respect to the above loan with exhaustive evidences before the ld Assessing Officer. Needless to say that ld Assessing Officer after enquiry as deem fit confront the assessee with the result of the enquiry and after seeking the explanation of the assessee deal with the issue in accordance with the law Jurisdiction of DRP directing the ld Assessing Officer to enhance the variation as a result of further enquiry in respect of loan transaction between NDTV Network PLC UK and NDTV Networks BV - Held that:- According to the provision of section 144C(a) the Dispute Resolution Panel has power for enhancement to the variation proposed and further explanation added therein by the Finance Act 2012 with retrospective effect from 01.04.2009 also provides that the ld DRP has power to enhance the variation on any matter arising out of assessment proceedings relating to the draft order. Notwithstanding that such matter was raised or not by the eligible assessee. In view of this we dismiss ground No. 10 of the cross objection. Addition u/s 14A - Held that:- In view of the above of the ld Assessing Officer that the assessee has not been disallowed any expenditure and further the Nil expenditure could not have been incurred in relation to exempt income because of common infrastructure and expenditure. Therefore, relying on the decision of the Hon'ble Delhi High Court in Indiabulls Financial Services Ltd Vs. DCIT (2016 (11) TMI 1369 - DELHI HIGH COURT) the disallowance is required to be made u/s 14A of the Act. Further, the income of the dividend income from the foreign subsidiary is not exempt. Therefore, that investment must not be included while working disallowance u/s 14A. further, if the assessee has tax-free funds available more than the amount of investment then no disallowance with respect to the interest expenditure can be made of the nexus is not proved by the Assessing Officer. in view of all these facts in the interest of justice we set aside the issue of disallowance u/s 14A back to the file of the ld AO with a direction to recomputed disallowance after giving assessee a reasonable opportunity of hearing. TPA - grant assessee the adjustment on account of working capital - Held that:- We set aside ground of the appeal of the assessee back to the file of the ld TPO with a direction to the assessee to submit the details of working capital adjustment to the ld Transfer Pricing Officer and if the ld TPO find it after examination in accordance with the law then same may be granted to the assessee. Addition in respect of alleged international transaction of provision of corporate guarantee on the ground that appellant has been compensated from providing such alleged guarantee - Held that:- whether corporate guarantee is an international transaction or not is a matter pending before the Special Bench of the Tribunal. In view of this both the parties requested to setting aside this ground of appeal to file of TPO with a direction to decide after the order of the Special Bench. - in view of this we set aside this ground of cross objection of the assessee to the file of the ld TPO with a direction to decide the issue after the decision of the Special Bench of tribunal. Decided partly in favor of assessee.

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• 2017 (7) TMI 866
  Validity of return filed manually - benefit of set off and carry forward of losses denied - Held that:- Simply because the Assessee could not file the return electronically within the provisions of section 139(1), the benefit of set off and carry forward of losses cannot be denied for the reason that the Assessee did file return of income manually within the due date specified u/s 139(1) of the Act. The claim for set off and carry forward of losses cannot be denied on a too technical reasons on the ground that the electronic return filed by the Assessee is belated when the Assessee filed return of income manually within the due date specified u/s 139(1) of the Act. The provisions of section 292B also comes to the rescue of the Assessee in as much as the return filed cannot be invalid merely by the reason of any mistake, defect or omission in such return of income when in substance and effect if such return is in conformity with or according to the intent and purpose of this Act. The return filed manually may at best be said to be a defective return and not an invalid return. The third member of the Mumbai Bench held that the return filed separately by the four cells of the Assessee declaring total loss claimed by the Assessee did comply in substance and in effect within the intent and purpose of the Act and in view of the provisions of Section 292B and the defect is not material in the light of the provisions of Section 292B. Thus the return filed by the Assessee manually within the due date specified u/s 139(1) is a valid return - Decided in favour of assessee.

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• 2017 (7) TMI 865
  Addition u/s 68 - Disallowance due to non verification of sundry creditors - onus to prove - Held that:- The provisions of section 68 of the Act are applied to the cash credit which has not been explained by assessee. In the instant case sundry creditors are arising out of the purchases as claimed by assessee which have been duly accepted by the Authorities Below. We also find that the provision of Sec. 41(1) of the Act cannot also be invoked at the same time. It is because the liabilities shown by the assessee have not seized to exist in the books of account. However, it is the duty of the assessee to justify its transaction on the basis of evidence which in the instant case, the assessee has failed to do so. The onus lies on assessee to justify that these are sundry creditors. In order to justify the impugned trade creditors, the assessee should produce copies of PAN, ledger copies, bills / invoices details of payments, income tax return, mode of payments etc. The arguments of assessee cannot be accepted only when he furnishes the aforesaid details. In the instant case before us the assessee has summarily failed to observe the directions issued by the Authorities Below. However, in the interest of natural justice and fair play we are inclined to restore this issue to the file of AO to give an opportunity to assessee to substantiate its claim in the light of observation as discussed. Therefore, we restore this issue to the file of AO for fresh adjudication as per law. Assessee s appeal stands partly allowed for statistical purpose.

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• 2017 (7) TMI 864
  Petition of the revenue seeking condonation of delay - grounds raised by the DCIT that he was preoccupied in some sensitive matters pending before the Hon’ble Supreme Court having substantial revenue implications - Held that:- First of all, from a bare perusal of the purported affidavit filed by the Ld. DCIT, it is noted that the same is not in accordance with the provisions of law, in as much as, it suffers from various infirmities which cannot be reckoned as an affidavit at all. An ‘affidavit’ contains averments of facts which has been deposed to by the deponent who is under oath to correctly state the facts and such an averment on oath is confined to such facts as the deponent is able to prove the facts and must substantiate the grounds stated thereof. Thus, if a person chooses to rely on an affidavit for relying on certain facts, then such an affidavit should clearly express how much is the statement based on the deponent’s knowledge and how much is the statement of his belief and the grounds or belief must be stated with sufficient particularity so that the courts can safely act upon the deponent’s belief. From the reading of the aforementioned affidavit of para numbers 1 to 6, it can be seen that, there is only narration of facts which are already on record. Another fallacy which is notable in the aforesaid affidavit is that, there is no identification of the deponent by a duly authorised person. The person making an affidavit has to be identified by the Court, or Magistrate, or Officer of court, or a Notary who has been authorised under the ‘Notaries Act’; and at the foot of the affidavit the name and description of the person by whom identification is made as well as time and place of identification has to be categorically mentioned. Here in this case there is a seal of a Notary, “Mr. Azad Kumar, Advocate” who has simply mentioned “attested” and date has been marked as 12th April, 2016. There is no identification of the deponent by the notary as to on what basis he has identified the deponent. In any case the reasons given for condonation of delay cannot be held to be sufficient and reasonable cause for condonation of delay because it is too vague and general. A high ranking Government officer discharging public duty is always preoccupied with some important work or other. It does not mean dereliction of other statutory and governmental duties. If ld. DCIT was actually preoccupied in some very important assignment, then he has to clearly specify as to what was the nature of such preoccupation that it was impossible for him to take steps for filing of the Cross Objection in time. Merely mentioning that he was preoccupied with some sensitive case before the Hon’ble Supreme Court without specifying the nature of the case and whether during that period he was unable to perform/discharge his other functions/duties, we are unable to accept such kind of extremely vague reasons. - Decided against revenue

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• 2017 (7) TMI 863
  Addition u/s 14A read with Rule 8D(iii) - Held that:- In the present case, it is an admitted fact that the AO while making the disallowance u/s 14A of the Act invoked the provisions contained in Rule 8D of the Income Tax Rules, 1962, which is not applicable for the assessment year under consideration as the same is applicable for the assessment year 2008-09 onward. In this regard, it is relevant to point out that the Hon’ble Bombay High Court in the case of Godrej and Boyce Mfg. Co. Ltd. Vs DCIT reported in (2010 (8) TMI 77 - BOMBAY HIGH COURT) held that Rules 8D of the Income Tax Rules, 1962 inserted on 24.03.2008 is applicable from the assessment year 2008-09 prospectively which cannot be applied retrospectively. It is also noticed that the AO while making the disallowance out of the expenses has not given any basis for making the disallowance @ 20%. Therefore, considering the ratio laid down in the aforesaid referred to decision deem it appropriate to set aside the impugned order and remand the case back to the file of the AO to be adjudicated afresh de novo in accordance with law after providing due and reasonable opportunity of being heard to the assessee. The AO should also decide the another issues which have been agitated by the assessee in its appeal alongwith the main issues relating to the disallowances of interest u/s 14A of the Act and the expenses while framing the de novo assessment. Appeal of the assessee is allowed for statistical purposes.

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• 2017 (7) TMI 862
  Eligibility to exemption u/s 11 - activities of the assessee trust is that of holding Sangeet Sammelans and Music Festivals for promotion of music and music artists - Held that:- The nature of receipts under all heads (other than interest and donation) are primarily in the form of voluntary contributions by way of sponsorship and financial aids provided by cultural and charitable societies, Government Bodies, individuals and other private and public sector entities for promotion of social and cultural objectives and not for any trading, commercial or business consideration. It may be noted that all the objectives of trust are subservient to its main object of promotion of music and music artists in India. Raising the artists taste of the country by public performances, dramatic, musical, etc., would be an educational purposes. The nature of receipts clearly shows that the activities of the assessee trust were wholly and exclusively focused on pursuing its main objects of promoting music in the masses. Further, it was submitted that the AO is factually wrong in alleging that the books of account with supporting bills and vouchers were not produced for verification. The written submissions filed on 01.02.2013 and again on 20.02.2013 duly record that in response to the specific requirement of the A.O, the books of account and vouchers were produced for verification. Therefore there is no basis for arbitrary disallowance of adhoc 30% of expenditure stated under the head 'Operating and Administrative Expenses' amounting to Rs. 5,20,086/-. These expenses were spent by way of application of income for the purpose of carrying on the charitable activity and such application of income is fully admissible u/s 11. - Decided in favour of assessee.

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• 2017 (7) TMI 861
  Transfer of case from one Assessing Officer to another Assessing Officer - jurisdiction acquired by the JCIT - Held that:- As u/s 120 the power vests with the Board i.e. Central Board of Direct Taxes but does not vest with the Joint Commissioner of Income Tax (JCIT) as in the present case. The JCIT has acquired the powers u/s 120 on himself without any order of the CBDT or any order of the Chief Commissioner or Pr. Commissioner of Income Tax u/s 127 of the Act. Accordingly the assessee correctly prayed that the jurisdiction acquired by the JCIT on him is extra jurisdictional and therefore the assessment order passed by the Assessing Officer was ab in initio void and deserves to be quashed. As in the case of Mega Corporation Ltd. vs. Addl.CIT Range 6, New Delhi reported in (2015 (10) TMI 2365 - ITAT DELHI) whereby the Delhi Bench of the Tribunal held that once authorities’ lack jurisdiction then it is well settled it cannot participate even on elapse of time. Thus, in the absence of jurisdiction, order made by Addl.CIT is a nullity. Further provisions contained in section 124 is of no help to the Revenue in as much as here is a case where the Addl.CIT lacks jurisdiction and is not a case of exercise of jurisdiction of territorial jurisdiction. The assessment has to be completed by the authority who has initiated the proceedings for making assessment and any another authority and take over the proceedings only after a proper order of transfer u/s 127(1) or 127 (2) of the proceedings. The Revenue has not brought any order for transfer of proceedings from Dy. CIT Circle -6, New Delhi to the Addl. CIT, Range-6, New Delhi and therefore this is quite evident that the Addl. CIT – Range 6 took over the assessment proceedings without there being an order u/s 127(1). - Decided in favour of assessee.

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• 2017 (7) TMI 860
  Assessment barred by time limit - Held that:- Tribunal vide order dated 18.08.2006 had not set aside the entire assessment order in question before it, instead one of the issues regarding allowability of interest paid by the Indian PE to its head office amounting to Rs. 24,86,73,000/- was set aside to the file of the Assessing Officer to adjudicate it after ascertaining the correct facts. The view that the entire assessment order was not set aside is also strengthened with the wording of the conclusion of the Tribunal. In the result, for statistical purposes, the four appeals filed by the Revenue shall be treated as partly allowed.” We thus, fully concur with the finding of the ld. CIT (Appeals) that it is not a case where prescribed time limit for compliance of the order of the Tribunal is required to be computed under section 153(2A) of the Act as entire assessment order was not set aside by the Tribunal, rather a particular aspect of the assessment order relating to allowability of interest paid by the Indian PE to its head office after ascertaining the correct fact, was set aside by the Tribunal for fresh adjudication. The prescribed time limit for such compliance thus has been rightly held by the ld. CIT (Appeals) to be computed under the provisions of section 153(3) of the Act. Whether interest paid by the branch office to head officer is tax deductible? - deduction under section 40(a)(i) read with section 195 - Held that:- We fully concur with the finding of the authorities below that submission of the assessee is based on the nature of transaction between BO and NHB, whereas according to section 10(15)(iv)(fa), the nature of transaction on which interest is paid to non-resident should be in the nature of deposit in foreign currency. So far as the second precondition of the section that such deposit should be approved by RBI is concerned, the directive of the RBI in the present case says that BO should make payment to NHB, and therefore, such directive is with reference to transaction between the BO and NHB only. Undisputedly, RBI has not given any direction regarding source from which the BO can raise funds. We thus fully concur with the finding of the authorities below that there was no question of approval by RBI of fund flow from HO to BO as deposit in foreign currency. We thus hold that provisions of section 10(15)(iv)(fa) are not applicable in the present case and, therefore, the contention of the assessee that interest paid by BO to HO is exempt from taxation under the said section and hence, not subject to TDS is not tenable in the eyes of law. We are also fully agreeable with the finding of the authorities below that the decision in the case of ABN Amro Bank N.V. Vs. CIT (2005 (8) TMI 294 - ITAT CALCUTTA-E ) relied upon by the ld. AR having different issue is not applicable in the present case as in that case issue was as to whether interest paid by branch to its head office is subject to TDS and hence, not allowable as deduction under section 40(a)(i) read with section 195 of the Act, which is otherwise tax deductible, whereas in the present case the issue involved is as to whether interest paid by the branch office to HO is tax deductible per se or not. Withdrawal of grant of interest under section 244A - Held that:- We fully concur with the approach of the ld. CIT (Appeals) that it is consequential in nature and hence, does not need independent adjudication. We, however, agree with the contention of the ld. AR that for levy of interest under section 220(2) of the Act it is a pre-condition to issue notice of demand under section 156 of the Act first. We thus, set aside the matter to the file of the Assessing Officer to examine the contention of the assessee on the basis of material available on record that notice of demand under section 156 was issued or not and decide the matter afresh as per the law after affording opportunity of being heard to the assessee. The ground is thus allowed, for statistical purposes.

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• 2017 (7) TMI 859
  Reopening of assessee - Addition u/s 68 - unexplained cash credit in the form of share capital - Held that:- No new information has been flown to the Assessing Officer after the order passed u/s 143(3) dated 6.11.2009 i.e. original assessment. He brought to my notice at page P.B. 7 the reasons recorded and the statement of the Mr. Tarun Goyal recorded on 2.8.2009 much before the date of the original assessment is a matter of record at P.B. 2 and 3. The first provision of the section 147 shall come into play when there is a failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment for that assessment year. In the present case as pointed out earlier the Assessing Officer and the ld. DR has not on record any new fact while recording the reasons u/s 147/148 of the Act. Therefore there is change of opinion. Moreover during the enquiries made in response to u/s 133(6) which was complied with there is no observation on the said compliance by the assessee and therefore in the circumstances and facts of the case the notice issued is lacking the reasons to believe and assessee having disclosed all the material facts in the original assessment and no new facts have been recorded in the reassessment proceedings and therefore the assessment/reassessment made has rightly made by the ld. CIT (A) is directed to be quashed. - Decided in favour of assessee.

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• 2017 (7) TMI 858
  Non deposit of tds - default of short deduction of tax as per tax audit report - demand on the assessee u/s 201(1) and 201(1A) - Held that:- The assessee has deposited a sum of Rs. 982940/- in the third quarter of financial year 2010-11 and there is no admission of the TDS liability at the time of survey, therefore, difference of two figures the assessee cannot be asked to pay. The ld Assessing Officer in his assessment order has neither given the detail of how the liability of Rs. 12.25 lakhs has arisen and in whose account the tax is required to be deducted. It cannot be the case that any lump-sum amount can be deposited as TDS. Therefore, we do not find any infirmity in the order of the ld CIT(A), therefore the ground No.1 of the appeal of the revenue is dismissed. Direction of CIT(A) to AO to verify the detail by accessing the data from NSDL site and verify if there is any short deduction or nonpayment of tax and then charge interest if any - Held that:- Ld DR could not explain to us how revenue is aggrieved by the direction of ld CIT(A). according to us the ld CIT(A) has protected the interest of revenue. Therefore, we dismiss ground No. 6 of the appeal of the revenue.

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• 2017 (7) TMI 857
  Non-deposit of employees contribution towards provident fund and ESI on due date of deposit - Held that:- Following the decision rendered by Hon’ble jurisdictional High Court in case cited as CIT vs. AIMIL (2009 (12) TMI 38 - DELHI HIGH COURT) we find no illegality or perversity in the findings returned by ld. CIT (A) in deleting the addition on account of late deposit of employees contribution towards PF and ESI but before due date of filing the return. - Decided against revenue Disallowance u/s 14A(2) - Held that:- Refereeing to Assessee's contention that since the assessee has not incurred any expenditure to earn the exempt income, the interest on debentures is fully taxable under the Act and as such provisions contained u/s 14A (2) of the Act are not applicable qua investment made in the optionally fully convertible debentures, it is tenable for the reason that when interest receivable on debentures does not fall in the category of exempt income, no addition on account of disallowance of interest as claimed u/s 36(1)(iii) of the Act can be made. So, again, we find no illegality or perversity in deleting the addition made by the AO on account of disallowance of interest claimed u/s 36(1)(iii) of the Act by the CIT (A) - Decided against revenue

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• 2017 (7) TMI 856
  Valuation of property - reference to DVO - proper determination of cost of construction of property - Held that:- Admittedly, the Assessing Officer has adopted the cost of construction as per Stamp Valuation Ready Reckoner which cannot substitute the actual cost of construction provided assessee is able to substantiate his claim. However, if assessee is not able to substantiate its claim then valuation of property needs to be referred to a Registered Valuer/ DVO for determination of value of property. Whatever the discrepancies were pointed out by the Assessing Officer for rejecting the assessee’s claim were explained before ld. CIT(A), however, ld. CIT(A) has not commented upon the same in detail. Considering the entirety of facts, we consider it in the interest of justice that the Architect’s certificate being that of an expert should be admitted to advance the cause of substantial justice. The Assessing Officer would be free to refer the valuation of property to DVO for proper determination of cost of construction of property. After taking into consideration the opinion of two experts, he will frame the assessment de-novo. In the result, the assessee’s application under Rule 29 of ITAT Rules, 1963 is allowed and the matter is restored back to the file of the Assessing Officer for de-novo assessment in terms of aforementioned observations. Appeal of the assessee allowed for statistical purposes.

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• 2017 (7) TMI 855
  Denial of deduction u/s 80P - whether society had declared itself as banking organization providing credit facility to its members? - whether assessee falls u/s 80P(2)(a)(i) or u/s 80P(4) - Held that:- There is no dispute about the nature of activity carried on by assessee viz. providing credit facilities to its members only and not to general public. No deposits had been received from general public. Merely because a co-operative society is carrying on the business of banking, the deduction u/s 80P could not be denied unless it comes within the ambit of cooperative bank as contemplated u/s 80P(4). Therefore, even if, it is held that assessee was carrying on activity of banking still since, it did not answer the description of ‘banking’ as contemplated under the Banking Regulations Act, 1949, it cannot be held to be cooperative bank. From the forgoing discussion, it is clear that there cannot be any dispute that if the primary object or principal business is banking as contemplated under BRA then only the cooperative society will come within the ambit of primary cooperative bank. Now what is banking has been defined in section 5(b) of the Banking Regulations Act, 1949 and section 56, nowhere states that the context in which primary cooperative bank has been defined is in context different from that as contemplated u/s 5(b) of the Banking Regulations Act, 1949. Therefore, only those transactions of banking business come within the ambit of clause (ccv) of section 56 which meet the mandate of section 5(b) of the Banking Regulations Act, 1949. As find in the case of Shri Laxmi Credit Souhard Sahakari Ltd. (2015 (11) TMI 647 - KARNATAKA HIGH COURT ) has upheld the claim of assessee under identical circumstances and, therefore, respectfully following the decision of Hon’ble Karnataka High Court, the assessee’s claim is allowed.

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• 2017 (7) TMI 854
  TPA - selection of comparable - Held that:- Following the principle of maintenance of consistency in its approach by the Revenue on an identical issue under similar set of facts, we are inclined to accept the contention of AR that if the comparable Cox & Kings as excluded by the TPO in the subsequent assessment year 2007-08 under similar facts is excluded during the year, then the mean of other comparables would come to 19.24%, which is within + - 5% of the profit margin declared by the assessee. Thus, no adjustment is required to be made by the TPO during the year for working out the arm’s length price relating to the international transactions entered into during the year. Also find substance in the contention of the ld. AR that mean has to be applied to the transactions related to AE only and transactions related with non-AE are to be excluded from the net profit margin. The assessee has made available the complete working vis-a-viz transactions with AE and non-AE, perusal of the same shows that the margin of the assessee with respect to transactions with AE gives the profit ratio of 23.91%, which is more than the adjustment made by the TPO. It is held accordingly. The assessee succeeds on this account as well. In result, the adjustment in question made and upheld by the authorities below is held as not justified. Addition of royalty - Held that:- We find that in the immediately subsequent assessment year 2008-09, the ld. DRP following survey report by the publication “Franchising World” has observed that the average royalty percentage in travel industry is 5.6%. In the absence of any data to the contrary and non-specific comment of the TPO in this regard, the ld. DRP has taken guidance from the said survey report and since the royalty paid by the assessee was lower than 5.6%, it held the royalty percentage at 5.6% is justifiable in the case of assessee. Following the same, we find it reasonable and justifiable to direct the TPO to allow the average royalty percentage at 5.6% during the year as well against the claimed royalty percentage of 6% by the assessee. The grounds on the issue are thus partly allowed, to the above extent.

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• 2017 (7) TMI 853
  Claim of the assessee under Section 88-HHC - Whether Tribunal was justified in law in holding that the claim of the assessee under Section 88-HHC is justified even if he had not furnished the report of an accountant along with the return of income? - Held that:- We are of the opinion that the question formulated above is a substantial question of law which arises for determination and, therefore, the High Court should not have dismissed the appeal of the Revenue in limine. Having regard to the fact that it is an old matter, we could have decided the aforesaid question of law ourselves. However, since the respondent has not put any appearance, we are refrained from adopting the aforesaid course of action.

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• Customs

• 2017 (7) TMI 834
  Provisional release of detained goods - the Department is insisting upon furnishing of bank guarantee for the penalty amount, etc. - Held that: - seeking security in the form of bank guarantee is uncalled for and in a sense, dilutes the very essence of the order - the writ petitions are disposed of by directing the respondents to grant provisional release of the goods subject to the petitioners complying with the conditions imposed by this Court in W.P.Nos. 43062 to 43070 of 2016 and W.P.Nos.1620 to 1628 of 2017 respectively dated 22.12.2016 and 25.1.2017 - petition allowed - decided partly in favor of petitioner.

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• 2017 (7) TMI 833
  Issuance of detention certificate - Detention of goods - storage of goods u/s 49 of CA - Held that: - the suspension of imported goods was on account of an application being made by the Right Holder under Rule 5 of the IPR Rules. Though such an application was filed and the same was registered under due compliance of the conditions under Rule 5(a) and (b) of IPR Rules, the Right Holder did not participate in the proceedings. Therefore, the second respondent had stated that the suspension of the imported goods is lifted in terms of Rule 7(3) of the IPR Rules. In such circumstances, the petitioner, for not fault committed by them, cannot be put to prejudice - there will be a direction to the second respondent to issue necessary Detention Certificate stating the reasons for which Cargo was detained and as to when such detention was cleared - petition allowed - decided in favor of petitioner.

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• 2017 (7) TMI 832
  Time limitation - condonation of delay - the appeals initially, though filed in a letter format, were presented within the period of limitation. However, upon the error being pointed out to the appellants, the appeals were filed in the prescribed format, albeit, beyond the original period of limitation, but, within the condonable period i.e., within 90 days from the date of receipt of the order - whether or not, the appeals which were lodged by the appellants within the condonable period, i.e., beyond the period of limitation of 60 days, but, within the period of 30 days thereafter, could be rejected, on the ground that when the pre-deposit of 7.5% of the penalty was made the condonable period had already expired? Held that: - The proviso to Section 128 (1) of the 1962 Act, empowers the second respondent to adjudicate upon an appeal filed beyond the period of 60 days, but, within a further period of 30 days, provided sufficient cause is shown for the delay in presenting the appeal. Section 129 E (i) on the other hand, provides that the second respondent shall not entertain any appeal under sub-section (1) of Section 128, unless the appellant has deposited 7.5% of the duty demanded or penalty imposed or both, in pursuance of a decision or an order passed by an Officer of Customs, lower than the rank of Commissioner of Customs. A plain reading of the expression, 'presenting' which obtains, in proviso to Section 128 (1), as against 'entertain' which obtains, in Section 129 E, would have us, come to the conclusion that as long such appeal is presented, i.e., lodged, within the prescribed period of limitation including the condonable period, it cannot be dismissed solely on the ground that the mandatory pre-deposit of duty or penalty or both, was not made, before the expiry of the period of limitation, prescribed under Section 128 (1) read with the first proviso of the 1962 Act. Circular dated 14.10.2014, sensu stricto applies only vis-a-vis appeals filed with the Tribunal. Therefore, according to the procedure prescribed in the said Circular, the appellants are required to be given, at least three opportunities for processing necessary evidence of having made the prescribed mandatory pre-deposit. The second respondent could not have dismissed the appeals, on the ground that the prescribed mandatory pre-deposit was made, beyond the condonable period - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 831
  Smuggling - red sanders - confiscation - penalties - Held that: - Incidence of seizure of the red sanders by the investigation also brought role of Shri Prabhakaran who lent his CHA licence to Shri Litheesh to aid and abet smuggling of red sanders. Both the appellants could not detach themselves from the smuggling racket. Plea of both the appellants that they were innocent could have received consideration had they brought out the illegal act to the knowledge of Customs. But they did not. The proceeding under the Customs Act, 1962 is quite different and independent of any proceeding under CHALR 2004. Appellants when failed to detach themselves from the offence and endangered the interest of Custom, they were required to be dealt under the Act. Their role was also contributory to the confiscation of smuggled goods. Therefore imposition of penalties of Rs. 5,00,00/- on each of them does not appear to be unreasonable when their role in abetting and aiding smuggling was proved by investigation successfully. The law of Customs has object to curb mischief against Customs and deter smuggling. Preponderance of probability is always in favour of Revenue. The appellants in this case were intimately connected with the smuggling racket without ascertaining the identity of exporter and owner of IEC. No authorization was obtained by them to file shipping bill. Evidence came to light proving their predetermined mind to cause loss to the exchequer - appeal dismissed - decided against appellant.

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• 2017 (7) TMI 830
  Smuggling - attempted export of red sanders - Held that: - Incidence of seizure of the red sanders by the investigation brought role of the smuggling racket of which they were members. Plea of the appellants that they were innocent could have received consideration had they brought out the illegal act of Himadri to the knowledge of Customs. But they did not. Rather all of them had concerted effort to deceive Customs. The so called exporter disowned the offending consignment attempted to be exported. Penalties - Held that: - Appellants acted in connivance with the racket till the offending container was seized by the investigation resulting in discovery of smuggled goods. They could not lead any evidence to prove their detachment to the attempted export of the offending goods. They all caused prejudice to Customs and submitted to the jaws of law for appropriate penalties. Their role was contributory to the confiscation of smuggled goods. Accordingly, imposition of penalties on all of them does not appear to be unreasonable when their role in abetting and aiding smuggling was proved by investigation successfully and their connivance came to record. The appellants in this case were intimately connected with the smuggling racket without ascertaining the identity of exporter and owner of IEC. No authorization was obtained by them to file shipping bill. Evidence came to light proving their predetermined mind to cause loss to the exchequer - appeal dismissed - decided against appellant.

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• Corporate Laws

• 2017 (7) TMI 826
  Cancellation of contract - suit for recovery - outstanding amount - entitlement to interest - Held that:- Even though the Defendant had stated that they had issued letters to the Plaintiff that the delay was on the part of the Plaintiff, I hold that the Plaintiff is entitled for a sum of Rs. 6,88,009/-. In so far as the interest is concerned, it is an admitted fact that the Defendant Company had been wound up and the Official Liquidator is in charge towards the liability of various creditors. The Official Liquidator has to honour the claim of the Plaintiff. Consequently, hold that the Plaintiff is entitled only to 6% interest from the date of the suit till the claim being adjudicated by the Official Liquidator. In these circumstances, with respect to issue (1), I hold that the Petitioner is entitled for a judgement and decree for a sum of Rs. 6,88,009/- with interest at 6% p.a. from the date of the plaint till the date of judgement. Towards this decreetal amount, the Plaintiff has to prefer a claim with the Official Liquidator and the Official Liquidator has to discharge the said claim in accordance with the rules and in accordance with prorata basis as other claims of similar nature are settled. Issue (1) is answered accordingly. Cancellation charges - Held that:- The Plaintiff stated that the materials were dispatched on 12.9.1995. However, on 19.10.1995, the Plaintiff stated that due to unavoidable circumstances, the Engineer Thiagarajan could not visit and would visit on 25.10.1995. The Engineer visited only on 11.12.1995. The Defendant issued a reminder letter on 28.12.1995. Again the Defendant issued a letter on 16.5.1996 to take back the material and return the advance. Further reminders were issued on 5.6.1996 and 6.7.1996. Finally, the Plaintiff deputed M.Sasindran in connection with the lift erection work. It was under such circumstances that on 23.6.1997, the Defendant informed that they were not interested in installing the lift. These facts in the written statement of the Defendant had not been specifically denied by the Plaintiff in their reply statement. Consequently, I hold that the Plaintiff cannot turn around and blame the Defendant for cancelling the contract. Consequently, I hold that the Plaintiff is not entitled for cancellation charges of 35%, which worked out to Rs. 3,17,350/-. The issue (2) is answered against the Plaintiff. Separate payment by way of a counter claim - Held that:- As stated in Issue (1), the advance amount paid of Rs. 2,58,150/-, had already been adjusted by the Plaintiff and the said amount actually been accepted by the Plaintiff and the claim of the Plaintiff had been determined only after deducting the advance amount. When such deduction has been made, the Defendant is not entitled for separate payment by way of a counter claim. In fact, the issue of counter claim can never arise. Under these circumstances, the Defendant could only have a claim of set off which relief the Plaintiff had already granted both in its pleadings and in the evidence on record. Consequently, hold that the Defendant is not entitled for any counter claim. The issue (3) is answered against the Defendant.

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• 2017 (7) TMI 825
  Restoration of name of the Company in the Register of Companies - Held that:- The Petitioner Company has not complied with filing of the statutory returns, namely annual returns and balance sheet of the Company from the year 2000 to 2012, and in the circumstances was directed to comply with filing of the statutory returns/documents. The order imposed cost of Rs. 20,000 payable to the Central Government within 6 weeks. It is another matter that even the said directions have not been complied with. However, the above order cannot condone the consequences of non-compliance of provisions under Section 3 of the Companies Act, 1956 in relation to the maintenance of statutory minimum paid up capital of the Company being the private limited company at Rs. 1.00 lakhs (Rupees one lakh). Obviously, the provisions of the above Sections namely 3(3) and 3(5) of the Companies Act, 1956 have not been taken note of while rendering the above order dated 12.7.2013 by the Hon'ble High Court and as rightly contended by the Ld. Representative of ROC that the order dated 12.7.2013 is required to be considered as 'per incuriam'. The provisions of Section 3(3)and Section 3 (5) of the Companies Act, 1956 has not been taken note of at the time of rendering the order on 12.7.2013 making the order Hon'ble High Court per incuriam. It is a classical case where substantive statutory provisions have escaped notice of the High Court which direct material effect on the issue raised. Therefore, such an order attracts the title of 'per incuriam'. Therefore, we do not find any justifiable reason to condone the above lapse of the Petitioner Company and neither the same has been prayed for. In the circumstances, we do not find any infirmity in the action of the Respondent-ROC in striking off the name of the Company from the register of companies and hence this Petition is dismissed with cost of Rs. 10,000/- payable by the Petitioner to the Respondent within a period of two weeks from the date of its order.

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• Service Tax

• 2017 (7) TMI 852
  Renting of Immovable Property Service - whether the respondents could demand Service Tax, as mentioned in the impugned order? - Held that: - there is no discussion as to the payment effected by the petitioner and no finding has been rendered by the first respondent on the said aspect. Thus, it is clear that the impugned order has been passed without appropriate application of mind. Even after the impugned order was served on the petitioner, the petitioner submitted a representation on 20.10.2016 reiterating his earlier stand and requested for rectification of the mistake by enclosing the copies of the challans, work sheet etc., Inspite of such representation, once again, the first respondent has stated that there is no error in the Order-in-Original calling for rectification. If respondents 1 and 2 are unable to reconcile the accounts in their office, it shows the manner in which the office administration is taking place. This Court is fully convinced that the petitioner has been harassed by the Department by passing the impugned order - petition allowed - decided in favor of petitioner.

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• 2017 (7) TMI 851
  Rebate claim - input services utilized in the activity of export of services - denial on the ground that during the period when services were received some of the premises of the appellant company were not registered with the Service Tax Department - N/N. 12/2005-ST - Held that: - the issue is covered by the precedent ruling of this Tribunal in appellants own case [2017 (4) TMI 1084 - CESTAT ALLAHABAD], for the quarters April to June, 2007, July to September, 2007 and October to December, 2007, where it was held that taking notice of the fact that all such unlisted premises had subsequently been registered and recognized for the appellant, and also relying on the ruling of Hon’ble Karnataka High Court in the case of mPortal India Private Ltd [2011 (9) TMI 450 - KARNATAKA HIGH COURT], where it was held that Registration not compulsory for refund - appellant is entitled to rebate - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 850
  Business Auxiliary Service - “facilitation fee” - Revenue entertained a view that the amount received by the appellant in the name of “facilitation fee”, is commission from various shops and emporia for providing services of promoting or marketing or selling of goods provided or belonging to the emporia/shops, is liable to Service Tax under the category of ‘Business Auxiliary Service’ in terms of clause 19(i) of Section 65 of Finance Act, 1994 - Held that: - It is clear that the appellant, by the act of stopping the buses only in front of contracted emporium and not in front of others, engaged in providing customers to the emporium resulting in promotion of sales. This is clearly in the nature of promoting the sales of goods belonging to the clients and facilitation fee received by the appellant from the emporium is nothing but in the nature of commission received for providing such services - the activity of the appellant is covered by the definition of ‘Business Auxiliary Service’ leviable to service tax. Extended period of limitation - Held that: - The appellant was already paying service tax under various categories and separate litigation was there whether the activity undertaken by the appellant is covered within the definition of ‘tour operators' - the appellant is a State Government undertaking which can have no intention to deliberately evade payment of service tax - extended period not invoked. The case is remanded to the original adjudicating authority for requantification of the demand falling within the normal time limit - appeal allowed by way of remand.

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• 2017 (7) TMI 849
  Penalty - Doctrine of merger - CENVAT credit - Department entertained the view that the CTSD, Jaipur is not permitted to transfer the cenvat credit to the SSA, Udaipur on the ground that it is not registered with the Service Tax/Central Excise Department - Held that: - the penalty imposed in the adjudication order dated 27.09.2007 was set aside by the ld. Commissioner (Appeals) vide order dated 22.08.2008. Since, the adjudication order has merged with the Order-in-Appeal passed by the Commissioner (Appeals), the said adjudication order is not in existence for its review by the Administrative Commissioner in terms of Section 84 ibid. Thus, review of the adjudication order (non-existence) and passing of the impugned order are against the principle of doctrine of merger and the same cannot be sustained against the appellant - reliance placed in the case of UNION OF INDIA Versus INANI CARRIERS [2008 (11) TMI 79 - RAJASTHAN HIGH COURT], where it was held that since order in appeal has been passed against impugned original order, penalty enhanced in revision order is not justified - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 848
  Business Auxiliary Service - revisionary power under section 84 of FA - Held that: - On perusal of sub-section (4) of section 84, it is clearly stated that no order under the said section shall be passed by the Commissioner in respect of any issue if an appeal against such issue is pending before the Commissioner (Appeals). By letter dated 24.4.2007, the appellants have informed the said fact to the Revisionary Authority. Taking into consideration that the appeal filed by the appellant was pending before the Commissioner (Appeals), the impugned order passed by the revisionary authority confirming the demand of service tax is not sustainable - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 847
  Refund claim - GTA services - N/N. 41/2007-ST - rejection on the ground that description of taxable service was not correctly mentioned in the form prescribed in the notification - Held that: - these are remediable defects which the ld. adjudicating authority has to examine in the spirit of the Notification No. 41/2007 and keeping in mind the Board Circular No. 112/6/2009-ST dt. 12.03.2009. Hence, the matter needs to re-examined by the adjudicating authority - matter on remand. Refund claim rejected also on the ground that they have claimed drawback and thus violated the provision of proviso (e) of the Notification - Held that: - the ld. Commissioner (Appeals) has gone purely by presumption and not by fact. Reasoning given by the adjudicating authority in this regard also presumes inclusion of the said portion of Service Tax. Hence, this aspect also needs to re-examined by the adjudicating authority. Appeal allowed by way of remand.

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• Central Excise

• 2017 (7) TMI 846
  Classification of goods - micronutrients - classified under CTH 3105 of CETA or under CTH 3808 of CETA? - Department took the view that micronutrient products remain excluded from classification under CET 3105 and that the products should be classified only as Plant Growth Regulator under CETA 3808.20 - Held that: - similar issue decided in the case of CCE & ST Hyderabad-IV Vs Aries Agrovet Industries Limited, [2017 (7) TMI 289 - CESTAT HYDERABAD] wherein it was held that micronutrients will require to be classified as other fertilisers in CETH 3105 - since the issue per se relates to a dispute on interpretation of classification, there cannot be any imposition of penalty or for that matter confiscation of goods, land & machinery and the orders imposing such penalties or confiscating such goods etc. in the impugned order is set aside - appeal allowed in toto - decided in favor of Appellant.

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• 2017 (7) TMI 845
  Job-work - N/N. 214/86-CE - Revenue entertained a view that the electrical stampings are also being used by the appellant in the manufacture of PD pumps, which are exempted. As such, the assessee is required to pay duty on electrical stampings, as the same were got manufactured by them from the job workers who cleared them without payment of duty. Inasmuch as the PD pumps are exempted, the appellant is required to pay duty on the electrical stampings - Held that: - The dispute herein relates to the factual position - it is not clear as to what are the quantities of raw materials sent by the appellant in terms of N/N. 214/86, i.e. whether all raw materials dispatched were covered or only the raw materials sent for conversion into stampings which are to be used in fans. It is also seen that the notification contemplates execution of bond to cover such goods. It is necessary that the factual position as to what were the quantities of raw materials covered under the notification is required to be ascertained and a fresh order passed on that basis - appeal allowed by way of remand.

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• 2017 (7) TMI 844
  CENVAT credit - Iron Steel items used in the course of setting up of the said Sponge Iron Plants - Revenue entertained a view that these items cannot be at all categorised as inputs or capital goods in terms of CENVAT Credit Rules, 2002 and initiated proceedings against the respondent to recover the credits already availed by them - Held that: - the main thrust of the argument of the Revenue is that the iron and steel items like angles, sheets, plates etc. were mainly used in the support structure of these heavy capital fabrications and will not satisfy the criteria of parts and components or accessories of such machinery. We find that such observation has to be supported by material facts. The same is not available in the present appeal - appeal dismissed - decided against appellant.

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• 2017 (7) TMI 843
  Refund claim - unjust enrichment - whether the appellant herein is required to cross the hurdle of unjust enrichment in respect of refunds claimed by him of an amount wrongly debited i.e. 8% or 10% value of the goods cleared from the factory premises? - Held that: - the appellants were required to pay an amount of Rs. 63,68,953/- along with interest of Rs. 50,352/-. They were eligible for refund of the same. As these amounts do not represent duty, the refund of the same need not be subjected to the procedure prescribe under Section 11B of the Central Excise Act. Time limitation - Held that: - the question of time barred does not arise as the First Appellate Authority, has recorded clearly that amount @ 8% or 10%, are debited in January 2012, February 2012 and the issue was finalised by the First Appellate authority in the favour of the assessee vide an order dated 13.03.2013 and appellant filed refund claim on 27.03.2013 within the time prescribed the provisions - refund cannot be rejected on account of time bar. Appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 842
  Penalties u/s 11AC of CEA, 1944 - SSI exemption - valuation - Held that: - the claim of appellant that it was bonafide mistake for non inclusion of the ready mix concrete for claim SSI exemption is on a weak footing, as there is no evidence in any form of correspondence nor any letter written by the appellant to the Department - in absence of any evidence to substantiate that the appellant had entertained a bonafide belief, appeal fails and the impugned order needs to be upheld - appeal dismissed - decided against appellant.

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• 2017 (7) TMI 841
  Clandestine manufacture and removal - undervaluation - it was alleged that the assessee was removing drilling rigs, hammer assemblies and parts without accountal and without payment of duty and also indulging in under-valuation/under-invoicing of drilling rigs, such operations were conducted at various premises connected with the assessee on 26.03.2003 - Held that: - the adjudicating authority has analysed and addressed all these three issues in the impugned order. Adjudicating authority also accepted the request of KLR for cross examination of the persons whose statements have been relied upon in the show cause notice. The details of such cross examinations have been given in paras 32 to 43 of the impugned order. Perusal of these paras will indicate that the persons who were cross examined have, in the depositions given by them in cross examination, mostly given averments contrary to what had been purportedly given by them earlier in the statements recorded from them by the department officers. In other words, the statements of such persons, which have been relied upon in building up the case against KLR have been retracted by the same persons in the subsequent depositions in cross examination. On the dispute concerning alleged suppression of value of drilling rigs, adjudicating authority has thoroughly analysed the controversy in paras 55.2 to 71 of the impugned order. Lower authority has observed that there is no mention in the show cause notice whether spares sent along with rigs termed as free replacement parts were manufactured by KLR or were bought out ones. He has also observed that while customers had paid extra amounts of cash over and above the invoice price, this could be attributed to the free replacement parts also supplied. We find that this observation of adjudicating authority has merit. From the facts on record, none of the customers from whom statements had been recorded have admitted to any connivance with KLR to suppress the value of the rigs in their mutual interest. Adjudicating authority is also correct in his finding that the department also has not been able to get any evidence of such alleged collusion between customers and KLR in the alleged suppression of value of rigs. Appeal allowed - decided partly in favor of appellant.

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• 2017 (7) TMI 840
  Valuation - includibility - the allegation by department is that KLR had collected excess amount over & above Central Excise invoices resulting in under valuation and evasion of Central Excise Duty, that KLR supplied bits/hammers/rig parts without discharge of Central Excise duty and that they had indulged in large scale unaccounted procurement of raw materials/inputs - Held that: - Adjudicating authority has concluded that even if it is assumed that the said private records relate to KLR, there is no other evidence to drive home the point that the contents reflect the true picture. In this regard, we find that in the de novo proceedings, pursuant to Tribunal s directions, cross examination of Smt. Anuradha Prasad was conducted on 19.07.2004, wherein inter-alia, she has retracted her earlier statement of 02.08.1997 and had complained that the same had not been given out of her volition but as per the dictates of the officers who had recorded the statement. In such circumstances, the allegations of the department, which in any case were solely based on records recovered from the office of Smt. Anuradha Prasad and the statement of Smt. Anuradha Prasad, will then be jeopardy. We are, therefore, unable to find any fault with the adjudicating authority s findings and conclusions on this score. On the aspect of allegation that KLR had undervalued the rigs supplied to the customers, it is seen that the same is based on the statement given by customers as also the statements given by Shri K. Lakshma Reddy on various occasions. Like in the case of Smt. Anuradha Prasad, we find that Shri Lakshma Reddy had also retracted whatever he had stated in his earlier statements. We also find ourselves in agreement with the adjudicating authority s findings that even those allegations, made on the basis of such statements are not backed up by any corroborative evidence. The contention of KLR that on the date of visit to the factory by Department Officers, no unaccounted stocks of raw materials, either steel or buttons were found, has not been suitably countered by the department. This aspect definitely casts a doubt on the allegation of the department that KLR had been receiving raw materials in their factory without any accountal and using them for manufacture of unaccounted goods. The adjudicating authority has also found contradictions in the statements of raw material suppliers. In the circumstances, we hold that the adjudicating authority has been therefore correct in concluding that it would be very difficult to place reliance on them to sustain the charge of the department. Appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 839
  Refund claim - Rent-a-cab service - whether second time filing of refund claim for the quarter for which the claim had already been filed earlier can be adopted as a ground for denial of credit or not? - Held that: - the refund claim filed by the appellant in respect of Rent-a-Cab Service is beyond their control, in as much as, the said service was approved belatedly. As such, no fault can be found with the appellant's action. The notification, in substance, allows the refund of service tax so paid on SEZ Unit and denial of the same on the ground of violation of procedural requirements cannot be upheld. It is well settled law that the substantive benefits if otherwise available, should not be disallowed on the ground of violation of procedural conditions - reliance was placed in the case of WESTERN CANS P. LTD. Versus COMMISSIONER OF C. EX., MUMBAI-I [2011 (3) TMI 757 - CESTAT, MUMBAI] - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 838
  Classification of goods - Steel Bakhari or Tin Containers used for storing grains - classified under CTH 7309 or under CTH 8436? - Held that: - the term machinery has been used in the most expansive sense to cover even the apparatus or equipment or appliance which need not be machine. The word equipment has been defined in Compact Oxford Dictionary as the items needed for a particular activity or purpose. On the reading of the dictionary meaning it is clear that if a particular item is used for a particular purpose, will be equipment or apparatus. In the present case since the Steel Bakhari is used for storing seeds and is needed for the said purpose, is an equipment or apparatus and thus being the item of agriculture, is classifiable under entry 84.36 leviable to NIL rate of duty - Reliance in also placed on the decision of the Tribunal in the case of Thermax Ltd. V. CCE [1995 (11) TMI 139 - CEGAT, NEW DELHI] which has held grain storage systemas classifiable under heading 84.36. Classification of goods - Tractor Trollywithout Hub and Tyres lawn or sports ground rollers at nil rate of duty as prescribed for goods within such classification. The explanation of machineryas hereinabove is adopted for the purpose of classifying the said item. Classification of Phawara blade/Belch (both without stick) - classified under CTH 8201 or 8432? - Held that: - a spade, in commercial parlance cannot be without a stick or handle - It has been stated by the Appellant that the stick or handle is not provided by them and the same has not been refuted by the Department. The Adjudicating Authority has wrongly denied the benefit of nilrate of duty to the said items by incorrectly classifying them under Chapter Sub Heading 8201 as the items in question are both without handle but are used for soil preparation and cultivation and are therefore classifiable under Chapter Sub Heading 8432. Classification of Tasla - classified under chapter 73 or under chapter 84? - Held that: - item is classifiable under Chapter Sub Heading 8433 which reads as Harvesting or threshing machinery, including straw or fodder balers; grass or hay movers; machines for cleaning, sorting or grading eggs, fruit or other agricultural produce, other than machinery of heading 8437as the item in question is used for the preparation and cultivation of soil and for the preparation and cultivation of soil and for purposes of cleaning, sorting and grading of agricultural produce. SSI exemption - Steel Almirah & Steel Furniture - It is submitted that the exemption under N/N. 198/87-CE has been wrongly denied to the Appellant for the goods falling under the Chapter Heading 94.03 - Held that: - It is an admitted position that the Appellant is a KVIC unit [Para 21 of the Order-in-Original]. Further, it is also not disputed that the goods are genuine products of village industry or that the goods are marketed by or with assistance of the Khadi & Village Industries Commission - In the present case the intention of the notification has been satisfied and the certificate from U.P. Khadi & Village India Board which is the implementing agency of Khadi & Village Industries Commission, recognizing Appellant as a KVIC Unit, satisfies the condition of the Notification including the purpose for which exemption was granted. It is submitted that the exemption has been wrongly declined on the sole ground that the certificate is not from KVIC while recognizing that the Unit is a KVIC Unit. Exemption under Sr. No. 73.10 of the Notification No. 3/2001 dated 01.03.2001, 4/97-CE dated 01.03.1997, 5/98 dated 02.06.1998, 5/99 dated 28.02.1999, 6/2000 dated 01.03.2000 & 3/2001 dated 01.03.2001 - Held that: - the exemption under Notification No. 4/97 dated 01.03.1997, 5/98 dated 02.06.1998, 5/99 dated 09.02.1999, 6/2000 dated 01.03.2000 & 3/2001 dated 01.03.2001 is available to the Appellant as the Appellant had adduced sufficient evidence to substantiate its claim and the Order-in-Original, to that extent, is liable to be set aside - the Department has not discharged the burden of proof for disputing the classification as they have adduced no positive evidence to refute the claims of the appellant and therefore, the demands are unsustainable. Extended period of limitation - Held that: - the submissions of the appellant are uncontroverted more particularly under the admitted fact that there was no power connection in the factory premises, at the time of inspection and/or drawal of proceedings and there is no investigation by the Revenue, as to the period, during which the appellant had connection from the Electricity Department and other relevant fact like, number of units consumed, etc. It is admitted fact that they were using generator for running their welding machine and compressor. Under these admitted facts, we hold that the appellant is not liable to excise duty on the Steel Boxes & Almirah and they are entitled to exemption under Notification No. 30/2001-CE dated 01/03/2001. Appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 837
  Valuation - petroleum products - whether the petroleum products cleared from warehouse to company owned and company operated outlets are to be valued in terms of Section 4(1)(b) of the Central Excise Act, 1944 read with Rule 7 of the Central Excise Valuation Rules? - Held that: - this issue has been settled in favour of the appellant by various decisions of the Tribunal specifically, in the case of BPCL [2007 (8) TMI 137 - CESTAT, BANGALORE], where Appellant PSU unit had removed goods to their sales outlets under Administrative Pricing Mechanism but revenue rejected the same and demand raised by applying Section 4(4)(b)(iii) of CEA,1944 and Section 4(1)(b)ibid in two distinct period for valuation purpose, Valuation of appellant accepted and demand set aside - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 836
  CENVAT credit - sugar cess - it was noticed by the Department that the assessee had availed credit of "sugar cess" as input credit in respect of sugar purchased from other sugar factories for reprocessing. As per Rule 3 of the Cenvat Credit Rules, 2004 the assessee is not entitled for the cenvat credit of cess on sugar as the cess on sugar is not specified in sub clause (i) to (xi) of Rule 3(1) of the CCR 2004 - Held that: - the issue involved in the present case is no longer res integra and has been settled by the Hon'ble Karnataka High Court in the case of Shree Renuka Sugars Ltd. [2014 (1) TMI 1469 - KARNATAKA HIGH COURT], where it was held that Rule 3 of the Cenvat Credit Rules provides that a manufacturer or producer of a final product shall be allowed to take credit of the duty of excise. Therefore, once a duty of excise is paid, the manufacturer or producer of the final product is entitled to take CENVAT credit - appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 835
  CENVAT credit - job-work - denial on three grounds namely that the same has been availed on invalid documents i.e. xerox copies of invoice and secondly non-receipt of goods sent for job work within 180 days and thirdly non-reversal of Cenvat credit on the provision made for obsolete inventory? - Held that: - the appellant has proved on record that he has rightly taken the Cenvat credit on the xerox copies of the invoice and with regard to non-receipt of goods sent for job work within 180 days, he has reversed the credit on the basis of audit objections - once the appellant has reversed the Cenvat credit on being pointed out by the audit then the department should not have issued the show-cause notice, the department has not brought any material on record to show that there was fraud, willful suppression and collusion and suppression of facts with intent to evade payment of duty. The impugned order is not sustainable in law in so far the imposition of penalties and interest are concerned - appeal allowed - decided partly in favor of appellant.

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• CST, VAT & Sales Tax

• 2017 (7) TMI 829
  Levy of penalty - Held that: - this writ petition is allowed clarifying that the Department is always at liberty to seek for any documents or any books in accordance with law in respect of any details as and when required - decided in favor of petitioner.

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• 2017 (7) TMI 828
  Attachment of Bank Account - petitioner's case is that on account of the floods, the entire office premises was inundated and they could not filed objections to the notice dated 09.06.2016 - the petitioner would submit that so far as the inter-state sales not covered by the C Forms, the Assessing Officer has assessed the transaction at a higher rate of tax at 5% and in respect of the claim for exemption on stock transfer, the same has been disallowed for want of declaration Forms - Held that: - it is seen that the major component of tax due is on account of the rejection of claim for exemption on stock transfer for want of declaration Forms - there is no material before this Court to show that as to what steps have been taken by the petitioner to secure the duplicate F Forms. However, considering the fact that the assessment was completed by an order dated 29.07.2016. The petitioner has produced substantial proof of Forms and the Assessing Officer also given due credit to the said Forms. Therefore, I am of the view that it is not a case of lack of bonafide but appears to be a genuine difficulty. For that reason, this Court is inclined to issue appropriate directions to be complied with by the petitioner and simultaneously safeguarding the interest of the Revenue - petition allowed.

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• 2017 (7) TMI 827
  Rate of tax - live chicken - it is contended that only in Mahe region, tax was sought to be levied at 5% and that the same is in violation of Article 14 of the Constitution of India - Held that: - Pondicherry Value Added Tax is discriminatory, and violative of Article 14 of the Constitution of India, and to the power of the Government in levying tax, classification and class legislation, rate of tax levied in the proximate State, namely, Kerala, a Hon'ble Division Bench of this Court, while upholding the validity of Puducherry Value Added Tax, 2012 - Contention of the Writ Petitioner that the Writ Court has failed to take note of the floor rate of Rs. 73.50 per kg. to live chicken, cannot be countenanced, as the Hon'ble Division Bench has taken note of the tenable grounds of challenge to the validity on an enactment - appeal dismissed - decided against appellant.

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• Indian Laws

• 2017 (7) TMI 824
  Conviction of the Appellant/Accused (Respondent before this Court) and acquitted in respect of an offence under Section 138 of the Negotiable Instruments Act, 1881 - Held that:- Respondent/Accused ought to be examined in the present case before the trial Court because of the reason that she must explain the circumstances under which her signature was found in Exs.P1 to P3 – Cheques and further, as to how the Appellant/Complainant was in possession of the case cheques. Further, this Court proceeds to add that Section 139 of the Negotiable Instruments Act mandates a presumption that the cheque leaves were issued to discharge a legally enforceable debt or liability. Moreover, the very fact that the Respondent/Accused had issued Stop Payment Letters to the concerned Bank after issuing necessary cheques creates an impression in the mind of this Court that she is to explain under what circumstances the Stop Payment Letter was issued to the Bank although she had come out with a Paper Publication Ex.D1 that the Cheques were lost. Moreover, for a heavy sum covered under Exs.P1 to P3, the signature of the Respondent/Accused found therein were not disputed. Therefore, to prove or to bring it to the notice of the Court concerned, the facts which are especially within the knowledge of the Respondent/Accused, this Court opines that the evidence of the Respondent/Accused is very much necessary. Therefore, under the existing circumstances, this Court comes to an irresistible and inescapable conclusion that the Remand of the entire subject matter in issue is a Fair, Equitable and prudent course of action. In the result, the Criminal Appeal is allowed. The Judgments of the First Appellate Court as well as the trial Court are set aside for the reasons assigned by this Court in this Appeal. The entire subject matter in issue is remanded back to the trial Court for fresh disposal in the manner known to Law and in accordance with Law.

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