Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
July 3, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
Indian Laws
Articles
News
Notifications
Highlights / Catch Notes
GST
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Levy of IGST - High Seas Sale - Goods purchased from overseas related party situated abroad based on purchase order received from its customers and sold when in transit to its customers before the goods are entered for customs clearance in India - NO IGST - However, ITC is required to be reversed.
Income Tax
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Addition u/s 68 - addition towards consideration received for sale of shares as unaccounted income - application of rules of ‘Suspicious Transaction’ - transactions were through d-mat format. - Additions deleted.
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When there is a sufficient evidence seized material which corroborates the statement of the assessee recorded u/s 132(4) then the subsequent retraction of the statement by the assessee without any corroborating evidence cannot be accepted
Customs
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Valuation of imported goods - NIDB Data for the relevant period did not reflect the correct value of the imported goods, since NIDB Data reflects the prices after a lapse of more than a month from the current date. Therefore, complete reliance on NIDB Data for assessment of metal scrap is not proper.
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Re-export of sugar - Apparently since inadvertently the withdrawal of exemption also hit the exports of sugar against advance authorization, the Government of India on the representations made by the trade, quickly reintroduced the exemption limited to such class - benefit of exemption would apply with retrospective effect.
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Refund of anti-dumping duty - every statute is prima facie prospective unless it is expressly or by necessary implication made to have retrospective operation - Notification No.5 of 2016, dated 22.02.2016 being substitutive in nature is held to be retrospective - revenue directed to consider the refund application.
Service Tax
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Business Auxiliary Services - appellants therefore promoted the business of HDFC Chubb and for which services they were given agreed upon payment for every car insured by HDFC Chubb - demand of service tax confirmed.
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Jurisdiction of Commissioner, Raipur - appellant is not the Site Manager but the service provider only and is based at Raipur with no registration under Service Tax. - Challenge to the jurisdiction rejected.
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Refund Claim - availing small service provider scheme under N/N. 6/2005-ST - rejection of refund on the ground that the appellant had not opted to avail the said exemption but had chosen to pay Service Tax in the beginning of the year - refund cannot be allowed.
Central Excise
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CENVAT credit - input services - outward freight charges for transportation of the goods from the factory/depot of the appellant to the customer’s premises - place of removal - credit not allowed.
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Having once given up the relief of the challenge to the search and seizure, the subsequent challenge to the same is not permissible and the petition would be hit by a constructive res judicata, the petitioners would be estopped from filing the fresh writ petition for the same cause of action and on the same grounds.
Case Laws:
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GST
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2018 (7) TMI 53
Levy of IGST - High Seas Sale - Goods purchased from overseas related party situated abroad based on purchase order received from its customers and sold when in transit to its customers before the goods are entered for customs clearance in India - reversal of Input Tax Credit (ITC). Whether IGST will be leviable on such sale effected by the Applicant to customers who are known to them at the time of placing order on the overseas party? - Held that:- The applicant would be importing the goods and would be selling the goods on high seas sale basis to another buyer - It is very clear that supply of goods imported into the territory of India till they cross the customs frontier shall be treated as supply of goods in the course of inter-state trade or commerce - From the proposed transactions placed by the applicant before us there is not an iota of doubt that the goods of the applicant are imported goods and when the applicant is selling these goods on high seas sale basis, these goods have not crossed the customs frontiers of India, Thus clearly the transaction in these goods are in the nature of inter-state supply as per Section 7(2) of the IGST Act. In case of goods sold on high seas sale basis there is no levy till the time of their customs clearance in compliance with Section 12 of the Customs Act and Section 3 of the Customs Tariff Act. In view of this the import goods sold on high seas sale basis, though they are clearly in the nature of inter-state supply would come in the category of "exempt supply" as no duty is leviable on them except in accordance with proviso to Section 5(1) of the IGST Act - thus, the goods which are sold on high seas sale basis are non-taxable supply as no tax is leviable on them till the time of customs clearance in accordance with and compliance of Section 12 of the Customs Act, 1962 and Section 3 of the Customs Tariff act, 1975. Whether input tax credit will have to be reversed, to the extent of inputs, input services and common input services used by the Applicant, in case the above transaction is not subjected to the levy of IGST by treating the same as an exempt supply for the purpose of Section 17 of the CGST Act? - Held that:- The goods sold on High Seas sale basis being non-taxable supply as per Section 2(78) of the CGST Act and being exempt supply as per Section 2(47) of the CGST Act, the input tax credit to the extent of inputs, input services and common input services would be required to be reversed by the applicant as per Section 17 of the CGST Act. Ruling:- No IGST will be leviable on such sale effected by the Applicant to customers who are known to them at the time of placing order on the overseas party The input tax credit to the extent of inputs, input services and common input services would be required to be reversed by the applicant as per Section 17 of the CGST Act.
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Income Tax
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2018 (7) TMI 52
TPA - comparability of certain companies selected by the TPO and consequent adjustment made in respect of ALP of international transactions - substantial question of law or fact - Held that:- There may be cases where the Tribunal giving its own reasons and findings has found certain comparables to be good comparables to arrive at an ‘Arm’s Length Price’ in the case of the assessee with which the assessee may not be satisfied and have filed such appeals before this Court. Therefore we clarify that mere dissatisfaction with the findings of facts arrived at by the learned Tribunal is not at all a sufficient reason to invoke Section 260-A of the Act before this Court. The controversy involved herein is no more res integra in view of the decision of this Court in [2018 (6) TMI 1327 - KARNATAKA HIGH COURT], wherein it has been observed that unless the finding of the Tribunal is found ex facie perverse, the Appeal u/s. 260-A of the Act, is not maintainable.- Decided against revenue
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2018 (7) TMI 51
Denial of natural justice - Joint Commissioner while granting an approval u/s.153D to an order passed u/s.153A gave no opportunity to be provided to the Appellant - Held that:- As far as first issue is concerned, we have already dismissed the connected Appeal of the Assessee listed in the case of 'Gopal. V. Pandit v. The Commissioner of Income Tax & Another’[2016 (8) TMI 208 - ITAT BANGALORE] in which we have held that in the absence of specific provision in Section 153D the present Authority, namely, Joint Commissioner is not expected to give an opportunity of hearing to the Assessee before giving an approval to the Draft Assessment Order to be passed by the lower Authority, namely, Deputy Commissioner Seized material corroborates the income fixed under the head “Pooja” - whether seized material does not disclose such income from “Pooja”? - Held that:- No substantial question of law as it is a matter of estimate based on the relevant material seized during the course of search and the statement recorded of the Assessee u/s. 132[4] as to what was the income of the Assessee who was working as Priest during the relevant period - when there is a sufficient evidence seized material which corroborates the statement of the assessee recorded under Section 132(4) on 23.2.2009 then the subsequent retraction of the statement by the assessee without any corroborating evidence cannot be accepted as the assessee has not explained the statement and how the income shown in the seized material is not correct - decided against assessee.
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2018 (7) TMI 50
Omission of the 2nd proviso to Sec.43B as deemed to have retrospective effect - Held that:- It is squarely covered by the decision of the Hon'ble Supreme Court in Commissioner of Income Tax Vs. Alom Extrustions Ltd., reported in [2009 (11) TMI 27 - SUPREME COURT] in which the Hon'ble Supreme Court has held that omission of second proviso to s. 43B and the amendment of first proviso by Finance Act, 2003 bringing about uniformity in payment of tax, duty, cess and fee on one hand and contributions to employees welfare funds on the other are curative in nature and thus effective retrospectively w.e.f. 1st April, 1988 i.e., the date of insertion to first proviso. According question No.1 is answered holding that the omission of the second proviso to Section 43B is effective retrospecting w.e.f. 1st April, 1988. Liquidated damages paid by the assessee to the developer - Held that:- The liability has been quantified and the same has been recorded in the supplementary MOU, as noted by the Tribunal. That apart, the fact that the possession of the land in question was not handed over in terms agreed to MOU is evident from the order passed by CIT(A), which has admitted that the possession of the property was handed over sometime in the year 2001. That apart, this fact has also been noted by the Assessing Officer, while completing the assessment for the Assessment Year 2004-2005 Vide order dated 28.12.2006. We respectfully agree with the view of the High Court of Delhi in the case of Kaushalya Devi V. Commissioner of Income-tax [2018 (4) TMI 1137 - DELHI HIGH COURT]. We are required to accept the discretion exercised by the assessee, who has incurred the expenditure and if any inference is made by the Court without reference to the factual matrix or on subjective basis, it will lead to absurd results, which are not called for. Answer question No.3 against the Revenue and in favour of the Assessee. Fair market value for computing the market value on sale of land - capital gain computation - Held that:- Schedule A of the sale deed is in conformity with the submission made by the assessee and also the fact that demolition has not taken place during the relevant previous year, the vacant possession was handed over only during 2001. The Assessing Officer was directed to exclude the sale consideration relating to the building while computing the capital gain. As against this portion of the order where CIT(A) had directed the exclusion of sale consideration related to the building, while computing the capital gains, the assessee went on appeal before ITAT. No question arise much less the substantial question of law with regard to the fair market value for computing the market value on sale of land. - Decided against the Revenue and in favour of the Assessee.
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2018 (7) TMI 49
Maintainability of the settlement application - delayed proceedings - admitted tax was not paid on the disclosed income - Held that:- If the proceedings were delayed due to the reasons attributable to the applicants, the provision for abatement would apply but not otherwise. The Settlement Commission has not recorded any such finding. The department has not brought any facts to our notice to permit any further inquiry in this respect by the Settlement Commission. In plain terms therefore there is no material before us to hold that the application for settlement of the present petitioners were belated due to the reasons attributable to the petitioners - The declaration of abatement of the proceedings in case of the present petitioner is also set-aside. Coming to the question of inadequacy of the tax deposited by the assessee; as noted, the Settlement Commission has not cited any reasons for coming to such a conclusion. We have noticed that both the sides have placed materials in support of their rival contentions. We request the Settlement Commission to examine such material and come to a conclusion – whether the assessee had deposited the tax or was short in doing so. For such purpose, we would place the matter back before the Settlement Commission. Request the Settlement Commission to examine the implication of the judgment of Supreme Court in the case of Ajmera Housing Corporation & Anr.[2010 (8) TMI 35 - SUPREME COURT OF INDIA] in light of th fact that the assessee’s initial disclosure was for ₹ 75.78 lakhs and further disclosures made nearly four years later were of additional sum of ₹ 97 lakhs.
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2018 (7) TMI 48
Estimation of profit - Held that:- CIT(A) is reasonable in estimating the profit at 20%. The fact that assessee himself has offered profit of 17% on the sale consideration indicates that he has earned substantial profits, more than similarly placed building contractors. Therefore, the contention raised that the determination of profit should be at 17% on the sale consideration cannot be accepted. Since there are many lapses on the part of assessee and AO had to enquire and find out various transactions of assessee, we are of the opinion that estimation of profit at 20% on the sale consideration is reasonable and accordingly, the estimation by CIT(A) is upheld. Grounds on this issue in all the three assessment years are rejected as assessee’s main contention is only on the rate of profit. The rate of profit at 20% is confirmed. Difference in sale consideration - Held that:- There is ₹ 1 Lakh extra sale consideration determined by the AO. Like-wise, the other one is taking the registration charges of buyer as part of turnover. We are prima-facie satisfied that there are certain mistakes in determining the sale consideration by AO in the order. Since the profit is estimated on the sale consideration in each year, it is necessary to arrive at correct sale consideration. Therefore, AO is directed to examine these amounts and determine the sale consideration correctly, after giving due opportunity to assessee. The grounds in this regard are considered allowed for statistical purposes. Addition u/s 68 - Held that:- Since the income is based on estimation, the re-casted cash book need not be considered for the purpose of making addition u/s. 68 of the Act. It is true that law permits addition u/s. 68 of the Act even when books are rejected, but in the peculiar facts of the case, where assessee has prepared the cash book on the basis of the information received on enquiries caused by the AO, the so called cash credit of ₹ 40 Lakhs on 11-04-2007 need not be brought to tax separately as the income was declared at 20% on the sales turnover, rejecting statements prepared by assessee. The addition by the CIT(A) of an amount which was not added by the AO is not warranted on the facts of the case and hence AO is directed to delete the same. The order of CIT(A) to that extent is modified. Grounds are allowed. Addition u/s. 40(a)(ia) on the interest payment reflected by assessee in the cash flow statement - Held that:- To invoke the provisions of Section 40(a)(ia) amount has to be claimed as an expenditure. Since the amount was not claimed as expenditure by assessee in the computation of income or in the prepared books of account, the question of disallowance u/s. 40(a)(ia) does not arise. There may be a situation that TDS has to be made as per Section 194A and assessee may have to deduct tax on that. For that, one has to be examine the same under the provisions of Section 201. It is also not on record whether the interest payment is a single payment to one person or multiple payments which may not attract TDS. Since the fact is that this amount has not been claimed as expenditure, the disallowance u/s. 40(a)(ia) does not arise, as those provisions are applicable only on the amounts which are claimed as deduction in the P&L A/c. Method of assessment - Held that:- Assessee has agreed with the rejection of books of account and estimation of income at 20% was conformed in assessee’s appeals. Consequent to that, we see no reason to consider the grounds of Revenue. We notice that AO has not followed any systematic method in bringing to tax various amounts in the order. While appreciating the efforts put in by the AO in unearthing the information and confronting of assessee, the ultimate assessment is not properly done and so, the only option is to estimate the income as was done by the Ld.CIT(A). In view of that, we find no merit in the grounds raised by Revenue
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2018 (7) TMI 47
Penalty u/s. 271(1)(c) - non specification of charge against the assessee - Held that:- Show cause notice issued in the present case u/s 274 does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s 274 does not strike out the inappropriate words. We are of the view that imposition of penalty cannot be sustained. The plea of the assessee which is based on the decisions referred to in the earlier part of this order has to be accepted. We therefore hold that imposition of penalty in the present case cannot be sustained and the same is directed to be cancelled. See JEETMAL CHORARIA VERSUS A.C.I.T., CIRCLE-43, [2017 (12) TMI 883 - ITAT, KOLKATA]. - Decided in favour of assessee.
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2018 (7) TMI 46
Addition u/s 68 - addition towards consideration received for sale of shares as unaccounted income - application of rules of ‘Suspicious Transaction’ - Held that:- There cannot be any doubt about the transaction as has been observed by the Assessing Officer. The transactions were as per norms under controlled by the Securities Transaction Tax, brokerage service tax and cess, which were already paid. They were complied with. All the transactions were through bank. There is no iota of evidence over the above transactions as it were through d-mat format. See CIT, Kolkata-III vs. Smt. Shreyashi Ganguli reported in [2012 (9) TMI 1113 - CALCUTTA HIGH COURT] - Decided against revenue.
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2018 (7) TMI 45
Long term capital gain on the sale of a plot of land rejected - no evidences of the purchase and the sale of the land hence addition u/s 68 - Held that:- The assessee in this case has failed to prove that, the long term capital gain disclosed in the return of income during this year, is nothing but the long term capital gain that arose to the assessee on the sale of a plot of land at Jaipur during the financial year 2006-07 relevant to assessment year 2007-08. Coming to the plea that the addition cannot be made u/s 68 as this amount entered into books of accounts, the receipt in question is taxable as undisclosed income as pleaded by the ld. DR. It is well settled principle of law that mentioning of a wrong provision or non-mentioning of provision does not invalidate the addition. See case of “Action for Welfare and Awakening Rural Environment vs. DCIT [2003 (3) TMI 49 - ANDHRA PRADESH HIGH COURT]. In this case all that the AO did, was to hold that this receipt cannot be taxed under the head “Capital Gains” but was to be taxed under the head other sources as unexplained income. The assessee had claimed that it had received an amount of ₹ 7,50,000/- on sale of capital asset and thereafter could not substantiate the same. - Decided against assessee.
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2018 (7) TMI 44
Allowability of Mines Restoration Expenses - Held that:- Assessee statutorily has to restore the mine to the original shape and therefore, the Mining Restoration Expenses are ascertained liability. The quantification of which is to be examined and Ld. Counsel fairly admitted that the provision was not made according to the requirement under the Act. AO is therefore directed to examine the quantification, in the light of the additional information filed before us and particularly the workings provided in 148, 149 and 150 of the paper book. While holding that the liability is an ascertained liability and not a contingent liability, the quantification of provision to be allowed is restored to the file of AO. AO should give an opportunity to assessee to explain the quantification of provision and the quantum so decided should be allowed, subject to not exceeding the actual provision made in the books of account by the time of assessment. Grounds in all the years are partly allowed for statistical purposes. Preliminary expenses written-of - ROC fees paid to increase its authorised capital - AO disallowed the same as capital expenditure, following the principles on the issue - as contended before the Ld.CIT(A) that this amount was paid for increasing the authorised share capital and this amount is eligible for deduction u/s. 35D - Held that:- Hon'ble Supreme Court in the case of CIT Vs. General Insurance Corporation [2006 (9) TMI 116 - SUPREME COURT] the amount is allowable as revenue expenditure, as there is no fresh infusion of share capital due to conversion of already existing preference shares. However, this aspect has not been examined by the AO or CIT(A). Since the facts are to be examined afresh, we are of the opinion that the claim of amount is to be examined afresh - It is also to be noted that the contention that no fresh capital was brought in was not raised before the authorities and as seen from the submissions before the Ld.CIT(A), assessee itself has restricted the claim to 1/5th of the amount u/s. 35D. Since the claim was made before us, we deem it proper to restore the issue for examination of facts and for allowing the amount as per the provisions of law. Allowability of Corporate Social Responsibility (CSR) - AO was of the view that the same was not incurred wholly and exclusively for the purpose of business of assessee - Held that:- As contented this amount is not related to CSR but pertains to consultancy charges and advertisement expenses wrongly classified under this head. Since this issue was not examined by the AO, we are of the opinion that AO can examine the nature of expenditure and allow the same, if they are eligible for deduction u/s. 37(1). To the extent of an amount of ₹ 28,74,363/- the claim is restored to the file of AO for fresh examination, after giving due opportunity to assessee. Ground is partly allowed for statistical purposes.
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2018 (7) TMI 43
Income from sale of shares - "income from capital gains” or “income from other sources” - A.O. was of the opinion that capital gains declared by the assessee was bogus - Held that:- On identical facts, the ITAT Hyderabad Bench in the case of Smt. Sarita Devi vs. ITO and Ms. Nikita Kumar vs. ITO (2017 (5) TMI 1111 - ITAT HYDERABAD) allowed a similar contention of the other assessee's, mainly on the ground that neither the statement of Mr. Mukhesh Choksi was provided to the assessee nor the cross-examination was allowed and it was not even placed on record. Considering the similarity of facts and circumstances and binding nature of decision of the ITAT, the action of the A.O. in treating the LTCG and STCG as income from other sources was held to be not warranted. CIT(A) followed the decision of the ITAT Hyderabad on the ground that the facts are identical and unless it is contradicted by the Revenue, the findings and conclusions cannot be questioned at this stage. - Decided against revenue
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2018 (7) TMI 42
Disallowance on account of provision for gratuity and leave wages transferred to Oriental Containers Ltd. (OCL) on account of transfer of packing divisions - Held that:- We find that the assessee had claimed that the payment of gratuity and the leave wages by OCL should be considered as constructive payment of these liabilities by it. We find that the basic question of treatment given by OCL in its books of accounts has not been considered by both the lower authorities. It is one of the established principle of taxation that for one payment deduction cannot be claimed by two entities. Besides, nothing is on record as to what was decided by the purchaser and the seller of the packing divisions about the gratuity and leave wages. In short, issue needs further verification. Therefore, in the interest of justice we remit back the issue to the file of the AO for fresh adjudication. Disallowance u/s. 14A read with rule 8D - Held that:- The principle governing the 14A is that no expenditure should be allowed to an assessee if he claims exemption for such income. Thus, the first and foremost pre- condition to invoke section 14A r. w. r. 8D is incurring of expenditure for exempt income. In the case under consideration the AO has mechanically applied the formula without bringing the basic facts i. e. amount of expenditure incurred for earning exempt income. Therefore, we are of the opinion, that matter should be restored back to the file of the AO for fresh adjudication. Here, we would like to mention that a reasonable disallowance can be made if it is found that expenditure was incurred for earning tax free income. The disallowance should not be more than 2% of the exempt income. We order accordingly. Ground no. 3 is partly allowed. Reopening of assessment - Computing and charging to tax Long-Term Capital Gain (LTCG) u/s. 50B on transfer of packing division - whether the assessee could have raised the ‘sale versus exchange’ controversy in the reassessment proceedings at appellate stage-especially when it had made no such claim before the AO - Held that:- After the judgment of Bharat Bijlee [2014 (5) TMI 512 - BOMBAY HIGH COURT] it has to be held that transactions involving exchange were not covered by the provisions of section 50B of the Act. Therefore, the assessee was entitled to raise the additional ground about the sale versus exchange controversy. The failure of the assessee to raise the issue before the AO or in the original grounds of appeal filed before the FAA cannot deprive it of its legitimate claim. In the earlier paragraphs, we have held that there cannot be any estoppels in tax proceedings. So, as far as taxability of ₹ 24. 40 crores is concerned, the assessee was entitled to raise it before the FAA for the first time in form of additional grounds. We find that there is no mention of any money, in the BTA, to be received or paid by the parties concerned. The BAT speaks of ‘issue of 29, 90, 000 fully paid up shares’. Therefore, we have no hesitation in holding that shares cannot be termed cash and that until and unless money is paid a transaction cannot be termed a sale. In commercial and business worlds, it is a well recognised principle that one of the mode to transfer of assets is exchange and it is different from sale. In other words, both the terms cannot be equated. Section 2(42C)and section 50B talk of sale consideration. As the assessee had received shares and not money in lieu of the transferred packaging divisons, so, the disputed transaction cannot be termed a sale or slump sale. We also hold that it was legally justified post Bharat Bijalee Ltd. case to argue before the FAA that it was a case of exchange of assets and that it was not liable to pay tax on ₹ 24. 40 crores. We find that while issuing notice u/s. 148 the AO had observed that income had escaped on three counts. It is found that on two issues no queries were made during the original assessment proceedings. So, there is no question of changing of opinion, as argued by the assessee. On those two issues no opinion was formed. For initiating proceedings u/s. 147-148, there should be prima facie satisfaction that income had escaped assessment. At that stage the AO is not supposed to have concrete proof of escapement. The reasons to believe should be such that a common man in similar circumstances would fell that stand taken by the AO is possible view. Considering the peculiar facts of the case under consideration, we are of the opinion that the order of the FAA does not suffer from any legal infirmity. So, upholding the same, we decide ground no. 1 against the assessee.
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Customs
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2018 (7) TMI 39
Refund of anti-dumping duty - N/N. 51/2015-Customs (ADD), dated 21.10.2015 - imports of fully oriented yarn/spin draw yarn/Flat yarn of Polyester (non-textured and non-POY) and other yarns originating in or exported from China PR, Thailand and Vietnam - effect of N/N. 5 of 2016-Cus.(ADD), dated 22.02.2016 as to whether it is clarificatory in nature and if so retrospective or whether it is prospective? Held that:- The product under consideration is classified under the category "Manmade Filaments" in Chapter 54 of the Customs Tariff Act and further under 5402 47 as per Customs classification. However, Customs classification is indicative only and is in no way binding on the scope of the present investigation. In the final findings notification dated 29.09.2009 under Part B-Product under consideration and like Articles, para 4 states that the product in commercial market parlance is generally known as "Fully Drawn Yarn". The Principal Notification No.51/2015-Cus(ADD) was issued on 21.10.2015 and the amendment to that notification was given vide Notification No.05/2016-Cus(ADD) on 22.02.2016. As per the Principles of Statutory Interpretation, it is a cardinal principle of construction that every statute is prima facie prospective unless it is expressly or by necessary implication made to have retrospective operation - Notification No.5 of 2016, dated 22.02.2016 being substitutive in nature is held to be retrospective. The respondent is directed to consider and sanction refund claim made by the petitioner as expeditiously as possible - petition allowed.
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2018 (7) TMI 38
Import of restricted item - used and old photocopiers - import of impugned without specific License - Confiscation - redemption fine - Held that:- The issue is squarely covered by a decision of this Court in Commissioner of Customs Vs. M/s.City Office Equipment [2013 (4) TMI 655 - MADRAS HIGH COURT], where it was held that when paragraph 2.17 of the Foreign Trade Policy specifically refers the circumstances or the conditions under which the import policy regime is laid, in the absence of any other restriction specified anywhere either in the policy or in the Handbook of Procedures (Vol. I) with reference to any of those specified restricted category of second hand capital goods--photocopier machines and digital multifunction printing and copying machines as falling in line with personal computers and laptops, the mere instance of photocopier and digital multifunction printing and copying machines being restricted category of second hand capital goods, cannot bring them under any assumed restriction on par with personal computers/laptops for the purpose of imports into this country. Appeal dismissed - decided against Revenue.
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2018 (7) TMI 37
Import of Luxury car manufactured by Toyoto Company at Japan in the trade name of LEXUS - violation of Customs Regulations for fabricating and forging the import documents and misusing the Transfer of Residence Provisions for import of a passenger car - case of Revenue is that though the car was manufactured in the year 1994, they fraudulently declared as if it was manufactured in the year 1993 and was used by Dr. Balakrishnan (absconding accused) for a period of more than one year before the said import. Whether the trial court judgment bristles with legal and factual infirmities as submitted by the counsels appearing for the appellants? Held that:- The year of manufacturing of the said car is 1994 and not 1993 as found in the Customs Bill of Lading presented by the importer through his Clearing Agent at the time of clearing the vehicle on 8-9-1994. It is also admitted fact that the Custom duty for the import of the said car was paid from the Current Account No. 872 of M/s. Tamilarasi Publications Private Limited which was opened and operated by A-1 in the Indian Bank, Abiramapuram Branch, Chennai. The Bankers Pay Order is marked as Ex.P6. This is also not disputed by the appellants - After settling the Customs duty under KVS Scheme, the vehicle has been taken back by A-3 on 19-9-1994 under Ex.D6. Thus it is clear that the LEXUS car was imported in violation of Transfer of Residence Provisions for import of a passenger car. The settlement under KVS Scheme does not give any immunity to the appellants from prosecution under Sections 120B, 420, 468 and 471 IPC and Prevention of Corruption Act. Validity of reliance placed on the statements given by the accused persons in the DRI proceedings - case of appellant is that the proceedings under DRI literally been lifted by the CBI and photo copy of the documents collected by DRI had been marked without abiding the Law of Evidence. In the said course the statements given by the accused persons in the DRI proceedings had been relied upon by the prosecution to hold the accused guilty - Held that:- It is now well-settled that DRI, Income Tax and Customs Officials are not police officers and statement given to them are admissible in evidence. There is no bar in law to look at the statement of a person given to such officials when he is tried for offence under any other law. It is construed as previous statement given by him pertains to the offencce tried subsequently. For instance if a person gives statement to an Income Tax official under IT Act which discloses a cognizable offence to be investigated by police under IPC such confession statement which is in the nature of extra-judicial confession cannot be thrown out as inadmissible - the contention of the Learned Counsels for the appellants to reject the documents relied by the prosecution which was collected by DRI and the statements of the accused persons to DRI officials is not sustainable. Also, the prosecution has proved the charges positively whereas though the accused persons had opportunity to discharge the burden has not availed it, obviously they had no material. The brand new LEXUS car 3000 CC capacity had been imported to India totally in violation of the Customs Regulations - The Custom duty had not been paid from out of Foreign Inward Remittance but with the Indian Currency remitted into the account of A-1 and operated by A-2. The conviction and sentence imposed by the Learned Principal Special Judge for CBI Cases, is confirmed - appeal dismissed.
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2018 (7) TMI 36
Re-export of sugar imported against advance authorization - Collection of export duty on the petitioners’ re-export of such imported raw sugar during the period between 16-6-2016 and 5-7-2016 - benefit of notification dated 1-3-2011 - Held that:- The export duty was introduced on export of sugar raw, white or refined with effect from 1-3-2011. Some two years later with effect from 1-3-2013 by virtue of amendment in the exemption notification dated 1-3-2011, export of sugar was exempt from payment of duty. This exemption notification made no distinction between export of sugar from local market or re-export of sugar imported against advance authorization. The Government of India withdrew the exemption from payment of duty on export of sugar with the objective of controlling the domestic sugar prices - Held that:- This had nothing to do with the exporters such as the petitioners. Raw sugar imported against advance authorization on the condition of re-export had no impact on domestic sugar price. Impounding export duty on such exports would not serve the purpose of controlling local sugar prices. Apparently since inadvertently the withdrawal of exemption also hit the exports of sugar against advance authorization, the Government of India on the representations made by the trade, quickly reintroduced the exemption limited to such class - the Government of India was correcting an inadvertent error or an unintentional withdrawal of the exemption. If that be so, the exemption notification dated 6-7-2016 must be viewed as clarificatory or curative in nature. Petition allowed in part.
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2018 (7) TMI 35
Valuation of imported goods - high melting scrap and light melting scrap - enhancement of value based on NIDB data - the bills of entry of the appellant, which initially were 320 in No. and later were reduced to 208 have been held by the Department to be under valued and differential duty has been demanded, which otherwise has been paid by the appellant - whether NIDB Data has rightly been relied upon by the Revenue - Section 14 of the Customs Act, 1962. Held that:- According to sub-rule (1) thereof the transaction value are required to be accepted for the purpose of the charging the Customs duty except in the cases where such value is rejected in accordance of sub-rule (2) thereof. In the present case except for NIDB Data Department has no contemporaneous evidence to reflect the correct price. No doubt proviso (iii) to Section 14 of sub-section (1) provides a situation where the proper officer has a reason to doubt the truth or accuracy of the transaction value and the bill of entry can be rejected. However, simultaneously, it is also provided that in case of doubt, the price shall be calculated with reference to the rate of exchange, as in force, on the date on which the bill of entry is presented under Section 46 - Apparently and admittedly, there is no such comparison on the part of the Department. The Dy. Commissioner, vide its order dated 1st May, 2017 himself had appreciated that the NIDB Data for the relevant period did not reflect the correct value of the imported goods, since NIDB Data reflects the prices after a lapse of more than a month from the current date. Therefore, complete reliance on NIDB Data for assessment of metal scrap is not proper. Recently in Kuber India vs. CC, Jaipur [2016 (8) TMI 141 - CESTAT NEW DELHI] it was observed that rejecting transaction value by merely saying that it does not represent correct value and seems to be on lower side without any findings on contemporaneous imports, is not legally sustainable - In the present case also, Revenue has not brought any finding on the contemporaneous imports, it is not the Revenues case that any proviso to Section 14(1) of Customs Act are available in the present case. Whether the deposit of the differential duty by the appellant amounts to the acceptance of enhanced value on his part? - Held that:- The fact that the assessment of bills of entries were challenged by the appellant before Commissioner (Appeals) by way of filing appeals, is itself indicator of the fact that appellants were not satisfied that such enhancement and have exercised their right of appeal provided under the statute - reliance placed in the case of Commissioner of Customs vs. Ganesh Trading Co. [2014 (1) TMI 64 - CESTAT NEW DELHI], where it was held that payment of duty at the enhanced value and clearance of goods in urgency cannot exclude or preclude the assessee form challenging the assessed bill of entry on the sole ground that goods stand cleared at the enhanced value - Appellants are held entitled for the refund of the differential duty paid by them in accordance of the relevant rules in this regard. Appeal allowed.
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2018 (7) TMI 34
Valuation of imported goods - it has been alleged by the department that the value of the imported goods namely, dog food / snacks was grossly under-invoiced - it is the case of appellant that the lower authorities have arbitrarily rejected the transaction value of the imported consignment without giving any valid ground of its rejection - Held that:- Firstly the department did not have any concrete evidence at the time of assessment of the Bill of Entry for rejecting the transaction value declared by the appellant under section 14 of the Customs Act 1962 as the prices indicated on the website cannot primarily form the basis for undertaking the inquiry of an imported consignment. There should have been more concrete evidence before the investigating authority for prompting them to undertake detailed investigation and seizure of imported consignment. The contemporary import prices of the similar goods were very much available at the time of import on the Customs NIDB data which are almost very close to the transaction value declared by the appellant at the time of import of various consignments. The transaction value declared by the appellant were comparable or almost same as that of “similar goods” and therefore, the Department did not have any acceptable and legal evidence to reject the transaction value of the six imported consignments - appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2018 (7) TMI 41
Corporate Insolvency Resolution Process - satisfaction of default - Held that:- Form and manner of the application has to be the one as prescribed. It is evident from the record that the application has been filed on the proforma prescribed under Rule 4(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Section 7 of IBC. A default has occurred and the application under sub-section 2 of Section 7 is complete. The name of the IRP has been proposed and there are no disciplinary proceedings pending against the proposed Interim Resolution Professional. Application admitted. Interim Insolvency Resolution Professional shall immediately make public announcement with regard to admission of this application under Section 7 of the Code. We also declare moratorium in terms of Section 14 of the Code.
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2018 (7) TMI 40
Corporate Insolvency Resolution Process - amount of default and unpaid debt - power of attorney eligibility to file application - Held that:- Form and manner of the application has to be the one as prescribed. It is evident from the record that the application has been filed on the proforma prescribed under Rule 4 (2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Section 7 of IBC. We are satisfied that a default has occurred and the application under sub section 2 of Section 7 is complete; and no disciplinary proceedings are pending against the proposed Interim Resolution Professional. Thus, the application warrant admission. As a sequel to the above discussion, this petition is admitted - Interim Resolution Professional appointed The argument pressed to oppose the admission of the petition advanced on behalf of the Corporate Debtor cannot be accepted because the amount of default and unpaid debt as per the CIBIL account has been proved. Such a piece of documentary evidence result into a binding presumption. No substance in the submission of Corporate Debtor that Mr. R.C. Sharma, Assistant General Manager could not have presented this petition as he has been authorized in pursuance of Power of Attorney executed in 2003 whereas the Code has been enforced in 2016. The general Power of Attorney is a widely worded document and it has various clauses empowering the attorney to file any proceedings before Courts or Tribunal. Therefore, there is no substance in this argument as well and the same is rejected.
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PMLA
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2018 (7) TMI 33
Offence under PMLA - provisional attachment orders - whether mortgaged properties purchase from the proceed of crime? - loan granted by banks - Held that:- It is admitted position that the loan was given by the banks in good faith who has suffered a less because of non-return of money by the borrowers i.e. serial no. 11 (as a appellant). The borrower is also arrayed as one of the respondent in the appeal filed by the banks. It is evident from the said proviso that in case the claimant would be able to satisfy the Special Court that it has acted in good faith and suffered the loss despite of having taken all the reasonable precautions and is also not involved in the offence of money laundering then the Special Court is empowered to restored such property during the trial of the case. In the facts of the present case, the mortgaged properties are not purchased from the proceed of crime. Those were purchased prior to FIR against borrower/accused and even prior to execution of mortgaged deed agreement. The question of proceed of crime qua those properties does not arise. Even the stand of the respondent in almost in all the cases where it was found that the attached properties are mortgaged properties which were not purchased from proceeds of crime, the Bank are victim parties and are innocent parties who are entitled to recover the loan amount from the said mortgaged properties, but the banks be allowed to dispose the properties after the trial and final out-come of criminal complaints filed against the borrowers under schedule offence and prosecution complaint. The said argument cannot be accepted in view of settled law and new amendment in sub-section 8 of section 8 of the Act. Thus, the stand earlier taken by the respondent no. 1 is wholly vague and without any substance. The provisional attachment order thus apparently bad and against the scheme of the Act. In case the Special Court passes the order to release the property of the victim and innocent party is mortgaged property could be disposed of for the purpose of adjustment of the amount due from the borrowers. Once it was found that the appellant is a innocent party who is not involved in the money laundering directly or indirectly or assist any party and the mortgaged property is also not purchased from the proceeds of crime then the question of provisional attachment order and confirmation thereof does not arise and the victims/innocent party i.e. innocent party would be entitled to disposed of the said property. In view of the reasons amendment in the PMLA and once the provisional attachment order is set aside, the property is released the borrower/accused and the banks can only dispose of the said property after passing the order by the special court in favour of the complaint. In case the provisional attachment order and impugned orders are set- aside, the complainant may not be able to dispose of the property in order recover the loan amount even if the special court restore such properties during the trial. In view of the amendment of sub section 8 of Section 8 proviso (1) and (2) the bank is at liberty to move its claim in relation to mortgaged property before the Special Court for disposing in accordance with the law. The property attached at serial no. (i) was bought by the Borrower/Accused Company much before the enactment of the PMLA and also much before the Borrower/Accused Company approached the Appellants for financial assistance - It is accordingly release in favour of the appellant as mentioned above as the said property was purchased in the year 1994. There is no valid discussion and finding as to how this property was purchased from the proceeds of crime. Admittedly, the complaint was filed by the appellant no. 1 on 22nd February, 2012. The ECIR was registered and recorded on 20th June, 2013. The said property was purchased in the year 1994, therefore the impugned order in relation to the above said property at serial no. (i) is set aside. Consequently the provisional attachment order with regard to the said property is also quashed.
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Service Tax
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2018 (7) TMI 31
Penalty u/s 78 - service tax as well as interest paid much before the issuance of SCN but for the audit the fact of non-payment of service tax would not have come to the notice of the department, was incorrect - Held that:- Penalty u/s 78 could be imposed only if the assessee is found to have been indulged in fraud, collusion, mis-representation, wilful mis-statement or committed the contravention as prescribed in the section - In the case on hand, there is no allegation of short payment of tax nor is it the department’s case that the tax was paid belatedly and that nothing was discovered during the course of audit with regard to the non-payment of service tax or the short levy of the same or short payment of the same having erroneously refunded. Since the controversy rests solely on the adjudicating authority’s observation vis-à-vis the appellant’s claim of having paid service tax with interest before SCN, the matter requires re-verification - appeal allowed by way of remand.
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2018 (7) TMI 30
Refund Claim - availing small service provider scheme under N/N. 6/2005-ST dated 01.03.2005 - rejection of refund on the ground that the appellant had not opted to avail the said exemption but had chosen to pay Service Tax in the beginning of the year - Held that:- As per the exemption N/N. 6/2005-ST dated 01.03.2005, there is a condition which is to be complied with by the service provider and as per the condition, the provider of taxable service has an option not to avail the exemption and such exemption once exercised in a financial year, shall not be withdrawn during the remaining part of the year - In the present case, this condition has been violated by the appellant and therefore, the Commissioner (A) has rightly come to the conclusion that the appellant is not entitled to the refund amount of 24,614/- - Appeal dismissed - decided against appellant.
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2018 (7) TMI 29
Business Auxiliary Services - Consideration received towards promotion and marketing of the vehicles manufactured by MUL, which was accounted by the appellant in their books of accounts as ‘miscellaneous income’ - principal to principal relationship - whether the consideration received would be liable to be taxed under the head Business Auxiliary Services? - Held that:- The discounts/incentives received by the appellant from MUL cannot be made liable for payment of Service Tax under BAS, since the appellant is purchasing the cars from MUL on principal to principal basis and subsequently, reselling the same. Demand of Service Tax under various receipts recorded under miscellaneous income - loading/unloading charges - Pollution Check-up charges - penalty-cum processing charges etc. - commission amounts received from ICICI - Held that:- It is obvious that these amounts have been received not towards provision of any service on behalf of MUL or anybody else. Consequently, there is no justification for levying Service Tax under BAS - In miscellaneous income, commission amounts received from ICICI have also been included. This commission has been received for provision of furniture to ICICI for facilitation of accommodating representatives in the premises of the appellant for selling insurance policies for cars. Such an activity cannot be considered under BAS - demand set aside. GTA Service - appellant has paid the freight expenses in connection with transportation of Cars to their customers - liability of service tax - Held that:- Appellant have not issued any consignment notes which are necessary to identify the appellant as a goods transport agency - in the absence of consignment notes, the activity of the appellant cannot be classified under GTA service - demand set aside. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 28
Jurisdiction of Commissioner, Raipur - the work in question was executed in the State of Orissa, Bihar and West Bengal i.e. outside the geographical limits of Raipur jurisdiction - Erection, commissioning and installation Services - sub-contract - liability on sub-contractor to discharge duty, when tax once is paid by the Principal - extended period of limitation. Held that:- Admittedly, the head office of the appellant exists in Raipur. It is the simultaneous admission that the work executed by the appellant under the impugned work orders is executed at the places in State of Orissa, Bihar and West Bengal. It is the settled law that every person providing all these specified taxable services is required to pay Service Tax. Service Tax being an indirect tax, its burden is to be borne by the person, who received these services but it is to be collected and paid to the Government Exchequer by the service provider - It is also settled that Service Tax is a destination based tax. It is settled that in case the service provider has opted for centralized bill/ accounting system than any Commissionerate where he works or situates, as the case may be, shall have the competent jurisdiction. But if the service provider is regionally registered, the Commissionerate under whose jurisdiction, he is registered, shall have the competent jurisdiction. In the present case, admittedly, the appellant was neither registered centrally nor regionally - The simultaneous facts also remains is that appellant is not the Site Manager but the service provider only and is based at Raipur with no registration under Service Tax. Thus, we find nothing to conclude that Commissioner, Raipur had no jurisdiction. Whether the activity done by the appellant was not of erection and commissioning / installation? - Held that:- Admittedly, the appellant had no ownership to the raw-material for the fabrication of stool. Also that stool apparently and admittedly was for enabling mono-rail beam fabrication and thus, was to be fastened to a structure already embedded into the earth. Seen from any of these angles, the stool in the present case falls out of the definition of goods and for the said reason, out of the definition of manufacture in Section 2 (f) of Excise Act - The said conduct of appellant when read with already observed malafide on part of proprietor of appellant about the registration of one of his firm but not of the other, despite both of them being the providers of taxable services that too to the sole recipient i.e. M/s. Larsen Toubro Ltd., amounts to suppression with the sole object of tax evasion. Liability on sub-contractor - Held that:- The liability which has been discharged by M/s.Larsen and Toubro is on the gross value of the entire project. Appellant being one of the service provider admittedly, providing taxable services to Larsen Toubro and receiving the service charges from them cannot get absolve his liability towards Service Tax under the pretext of discharge beingmade by the service recipient. Otherwise also, service tax is to be deposited to the Govt. not by the recipient but by the provider, who is the appellant in the present case. Extended period of limitation - Held that:- Non-registration of the appellant, in the given circumstances, definitely amounts to suppression of relevant fact, which came to the notice of the Department lately only on the basis of some intelligence gathered by the Preventive Officers of Central Excise - extended period rightly invoked. Appeal dismissed - decided against appellant.
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2018 (7) TMI 27
Business Auxiliary Services - appellants advised their customers to approach the HDFC for taking insurance policies for the vehicles - Department took the view that this activity of both the appellants are in the nature of promoting and marketing of insurance products and services provided by HDFC Chubb and would therefore fall under the category of ‘Business Auxiliary Service’ - Held that:- Based on that information, the appellants may not have actively promoted the insurance policies of HDFC Chubb. But in restricting their data base access only to HDFC Chubb, that too on real time basis and they enabled the latter to have access to a pool of new vehicle buyers who would obviously also need first time car insurance - appellants therefore promoted the business of HDFC Chubb and for which services they were given agreed upon payment for every car insured by HDFC Chubb. Also, the transactional documents and other evidences on record indicate a substantial activity falling within the contours of the definition of ‘Business Auxiliary Service’ in Section 65 (19) of the Finance Act, 1994. Penalty - Held that:- The issue per se was mired in confusion and litigation - appellants had a reasonable cause for their failure to discharge tax liability and must be given the benefit of doubt - penalty set aside. Appeal allowed in part.
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2018 (7) TMI 26
Scope of SCN - case of appellant is that adjudicating authority has proceeded beyond the scope of Show Cause Notice. The Notice was issued under “Tour Operator Service”. However, the impugned orders have confirmed the demand under Rent-a-Cab services - Held that:- The demand made in respect of tour operator services, provided to SEZ but confirmed by the adjudicating authority under Rent-a-Cab services, will not sustain and is, therefore, set aside. Demand in respect of cancellation charges in respect of Tour Operator Service - Held that:- Punjab and Haryana High Court in the case of Janata Travels (P) Ltd. [2008 (8) TMI 187 - PUNJAB AND HARYANA HIGH COURT ] has set aside the demand in respect of charges received on cancellation of tickets - demand set aside. Appeal allowed in part.
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2018 (7) TMI 25
Works Contract - Benefit of abatement towards providing the materials used in carrying out the contracted activities - management, maintenance and repair of traffic signals poles/lights - installation/commissioning of surveillance cameras at various road inter-sections - Held that:- From the nature of activity carried out by the assessees for the Rajasthan Government, it is seen that contracts were in the form of turnkey contracts which involved supply of the materials necessary for carrying out the work of installation and maintenance of surveillance cameras, street lights etc. Consequently, such contracts are to be considered as works contracts defined under Section 65 (105) (zzzza) - reliance placed in the case of COMMISSIONER, CENTRAL EXCISE & CUSTOMS VERSUS M/S LARSEN & TOUBRO LTD. AND OTHERS [2015 (8) TMI 749 - SUPREME COURT], where it was held that such composite contracts cannot be charged to service tax under any other category prior to the introduction of WCS. - the demand for service tax for the period prior to 01/06/2007 set aside. Payment of service tax w.e.f. 01/06/2007 under the category of WCS - Composition Scheme - denial on the ground that the assessees have failed to satisfy to Rule 3 (3) of the relevant Composition Rules which require the assessees to exercise the option for payment of service tax under these composition rules for each contract - Held that:- Such requirement is only procedural and cannot come in the way of extending the benefit of composition scheme since the assessees have exercised such option, although belatedly. Penalties - Held that:- The levy of service tax under the category of works contract service was the subject matter of substantial litigation which got settled only with the decision of Hon’ble Supreme Court in the case of Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT] - the appellants, who have discharged the service tax liability in full even though part of the same was discharged after issue of show cause notice, will be entitled to the benefit of waiver of penalty under Section 80 - penalty set aside. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 24
GTA Service or not - freight charges for transport of their goods - main contention put forward by the appellant is that they had availed the services of individual transporters/truck owners - Held that:- On perusal of the documents, it was found that that it does not contain any detail with respect to the goods consigned. These vouchers were nothing but documents for monitoring the payment of freight charges to the transporter and can, in no way, be construed as a consignment note. It does not, therefore, evidence the receipt of goods by the consignee, but merely the details of the vehicle, trip and the freight charges paid. The same cannot be called a consignment note as under Section 65(50b) of the Finance Act, 1994. Demand do not sustain - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 23
Extended period of limitation - Banking and Other Financial Services - upfront fee paid on reverse charge basis - Held that:- During this very period, the issue of taxability on such payment made to foreign service provider was mired in litigation - the appellant cannot be charged with having suppressed information or having indulged in misstatement or fraud with intent to evade payment of tax liability. Also, even during the investigation stage and before issue of SCN appellants have paid up the tax liability on 28.11.2007. Extended period of limitation cannot be invoked - appeal allowed on the ground of limitation.
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2018 (7) TMI 22
CENVAT credit - payment of Service Tax under reverse charge mechanism - Rule 3 of CENVAT Credit Rules, 2004 read with Rule 9(c) and Rule 2(f) of the Place of Provision of Service Rules, 2014 - Held that:- To give a finding as to whether the issue involves in the present litigation is a 'service' given by intermediary outside the taxable limit is not within the jurisdiction of this Single Bench but, Service Tax paid on mistaken belief that the same was payable and credit availed on bona fide belief would not cause any loss of the Revenue in making adjustment of such tax paid against demand of Service Tax made for the same period. In the case of BAJAJ ALLIANZ GENERAL INSURANCE CO LTD VERSUS COMMISSIONER OF CENTRAL EXCISE [2014 (8) TMI 787 - CESTAT MUMBAI], it was held that Service Tax for service received from non-resident service provider is not required to be paid by the appellant and in a revenue neutral situation, since the same was mistakenly paid and credit availed on bona fide belief that such credit was available, can be adjusted against tax demand. Appeal allowed.
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2018 (7) TMI 21
Works Contract - Commercial or Industrial Construction Service - Construction of EWS quarters for Urban Improvement Trust, Sriganganagar - Construction of milk chilling plant for Rajasthan Co-operative Dairy Milk Federation Ltd. - failure to pay Service Tax - Held that:- Since the nature of construction activity involves both supplying of goods as well as service, the same is falling within the category of Works Contract Service and by following the decision of the Hon’ble Supreme Court in the case of L&T [2015 (8) TMI 749 - SUPREME COURT], the Service Tax demand cannot be sustained since the activity was carried out prior to introduction of WCS - demand set aside. Construction of milk chilling plant for Rajasthan Co-operative Dairy Milk Federation Ltd. - Held that:- The Cooperative society is commercial concern and hence the construction activity carryout for such an organization is liable to be considered as falling within Commercial or Industrial Construction Service - Since there is no dispute about the fact that such a construction activity have been rendered and consideration received - levy of Service Tax upheld. Appeal allowed in part.
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2018 (7) TMI 20
Management Consultancy Service - certain activities carried out by the appellant for customers situated abroad - Held that:- The requirement of Rule 3(3) of the Export of Service Goods is that the payment for the service is to be received in convertible currency. On the basis of the copies of F.I.R.C.s produced, the activity appears to be in the nature of export services - Before extending the benefit of export of services and setting aside the service tax demand in this regard, we direct the Adjudicating Authority to verify the F.I.R.C.s. - matter on remand. Demand of Service Tax - Consideration received from foreign clients in Rupees - benefit of N/N. 25/2006-ST dated 13/07/2006 - Held that:- The scope of work evidently indicates that the service to be rendered by the appellant are in the nature of filing of tax returns, and other representational services before various tax authorities. Such activities enjoy the benefit of exemption from payment of service tax under the N/N. 25/2006-ST dated 13/07/2006 - the appellant is entitled to the benefit the above exemption Notification. Appeal allowed in part and part matter on remand.
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2018 (7) TMI 19
CENVAT Credit - service tax on commission paid’ by the appellant-assessee - duty paying documents - the credit have been denied for the reason that on the date of inspection the registration number of the service provider was not found on the invoice or the invoices levelled as debit note thus it appeared to Revenue that the same is not a proper document for taking credit - Held that:- The appellant got the deficiency corrected from the service provider as it is evident that the service provider later on provided their service tax registration number by mentioning the same on the invoice under authentication of their Authorized Signatory - Credit allowed. CENVAT Credit - service tax paid to the travel agent for purchase of a ticket and to the money changer for changing of currency - rejection on the ground that the assessee could not establish that the journey was performed by the directors in relation to their business purpose as stated by them in their reply - Held that:- The reason given by the court below is arbitrary and whimsical, as no reason has been given for arriving at such conclusion. There is no mention that any evidence and/or vouchers are called for which were not produced - credit allowed. CENVAT Credit - Telephone services - duty paying documents - denial on the ground that the document is not in the name of assessee - Held that:- From the relevant invoice annexed in the appeal paper book which shows that the bill for telephone service is in the name of the appellant-company - credit allowed. CENVAT credit - bill of the interior designer - Held that:- The existence of corporate office is essential for smooth running of the factory of the appellant and accordingly, the input service credit of ₹ 12,360/- on account of interior designer services allowed to the appellant - credit allowed - Credit on rent paid with respect to the corporate office also allowed. So far the disallowance as regards labour charge and processing fee is concerned the same have already been allowed by the courts below. Appeal allowed in part.
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2018 (7) TMI 10
GTA Service - N/N. 32/2004-ST dated 03.12.2004 and N/N. 12/2003-ST dated 20.06.2003 - denial of benefit on the ground that appellant submitted only a certificate from the transporters/truck owners on their letterhead - CBEC vide Circular No.B1/6/2005-TRU dt. 27.07.200 - Held that:- CBEC vide Circular No.B1/6/2005-TRU dt. 27.07.2005 clarified that the declaration as required under Notification No. 32/2004-ST dated 03.12.2004 can be made on the letterhead of the transport company. Hon ble Gujarat High Court at Ahmedabad in the case of Commr. Of C.Ex, Cus Service Tax vs. Neral Paper Mills Pvt. Ltd. [2008 (12) TMI 121 - CESTAT AHMEDABAD] and held that substantial benefit cannot be denied for minor procedural lapses. Appeal allowed - decided in favor of appellant.
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Central Excise
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2018 (7) TMI 18
Valuation - imported goods contained in packages of about 10 grams or 10 milliliters - Held that:- The import is complete only after these activities are undertaken. Further no additional Excise duty liability occurs as the additional Customs duty has been paid on the MRP affixed and the entire exercise is revenue neutral. Then the Tribunal holds that insofar as packages of 10 grams or 10 milliliters or less, the above activity would amount to manufacture as there is no statutory requirement of undertaking the above activity before their import can be allowed. However the assessee would be eligible to take cenvat credit of the Countervailing Duty (CVD) paid on such goods. Time Limitation - Held that:- The Tribunal holds that the activity was undertaken with the knowledge and permission of the Customs Authorities and hence the finding of suppression of facts cannot be sustained - demand sustained only for normal period. Penalty - Held that:- As there was a pure question of interpretation of law, the Tribunal deleted the penalty as well. No substantial question of law - appeal dismissed.
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2018 (7) TMI 17
Principles of constructive res judicata - Validity of Search and Seizure proceedings - prior to the search conducted on 12-4-2012, no search warrant was issued which thus is in total contravention to the provisions of Section 12F of the Central Excise Act - Held that:- Though the petitioners had challenged the search and seizure proceedings in the said writ petition, but the same was not pressed while the petition was being finally disposed of - the fact that the petitioners has not pressed the said relief so far as the veracity of the search and seizure proceedings would by itself means that, they have given up the said relief and were harping more on the relief of the permission to get the witnesses called for cross-examination. Having once given up the relief of the challenge to the search and seizure, the subsequent challenge to the same is not permissible and the petition would be hit by a constructive res judicata, the petitioners would be estopped from filing the fresh writ petition for the same cause of action and on the same grounds - the petition thus would not be maintainable so far as the challenge to the search and seizure is concerned. Opportunity to cross-examine the witnesses - Held that:- Since the appeal preferred by the petitioners assailing the order dated 31-3-2017 already stands allowed in favour of the petitioners vide order dated 11-10-2017 and the matter stands remitted back to the authority concerned - matter on remand. Petition rejected.
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2018 (7) TMI 16
Time Limitation - demand on the ground that the assessee wrongly availed of the benefit of exemption notification on electric wires - Held that:- The principle is, when all the facts necessary to be disclosed by the assessee have been disclosed and there cannot be any allegation of suppression, then, the extended period of limitation cannot be invoked - In the present case, there is no suppression of facts - extended period cannot be invoked - appeal dismissed..
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2018 (7) TMI 15
Honor of Bank Guarantee - The bank guarantee was sought to be enforced by the impugned order on account of the fact that the petitioner did not complete the export obligation and did not produce the discharge certificate - revised rehabilitation scheme - Held that:- What is important to note is that the present relief granted to the petitioner is under revised rehabilitation scheme - the first respondent has to reconsider the matter and pass a fresh order, since time has been granted to the petitioner for complying with the export obligation. Appeal allowed by way of remand.
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2018 (7) TMI 14
CENVAT credit - input services - outward freight charges for transportation of the goods from the factory/depot of the appellant to the customer s premises - place of removal - Held that:- The issue of admissibility of Cenvat credit on outward transportation for the period after 1.4.2008 is no longer res integra and has been settled in favor of the Revenue by Hon ble Supreme Court in the case of CCE ST vs. Ultratech Cement Pvt.Ltd. [2018 (2) TMI 117 - SUPREME COURT OF INDIA], where it was held that the important aspect of the matter is that Cenvat Credit is permissible in respect of input service and the Circular relates to the unamended regime. Therefore, it cannot be applied after amendment in the definition of input service which brought about a total change - appeal allowed - decided in favor of Revenue.
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2018 (7) TMI 13
Scope of SCN - the plea about the filing of claims by the appellant before the wrong authority, have been brought on record by the appellant for the first time before this Tribunal and none of the authorities below had the occasion to deal with these new facts - Refund of unutilized CENVAT credit - time limitation - Held that:- Since the appellant has raised new grounds before this Tribunal for the first time which needs verification and determination and for that matter the appeal has to be remanded back to the original authority for denovo adjudication of the issues raised in the light of new facts - appeal allowed by way of remand.
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2018 (7) TMI 12
Clandestine removal or not? - N/N. 1/95-CE, dated 04.01.1995 - Shrinkage in the value of goods during the process - It is the case of the department that since the loss is much higher than what has been agreed to in terms of their bond, the assessee is bound to account for or pay duty on the excess loss - Held that:- In identical cases, the Delhi and Mumbai Benches of CESTAT have already taken a view that excess shrinkage of fabrics when sent out for job work does not automatically lead to the conclusion that there was clandestine removal and no duty is chargeable on them - reliance placed in the case of M/S. UNIWORTH TEXTILES LTD. VERSUS C.C.E. RAIPUR [2016 (5) TMI 609 - CESTAT NEW DELHI]. No duty is demandable under Section 11A on the assessee or interest under section 11AB and no penalty is imposable under section 11 AC - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 11
Clandestine removal - M.S. Ingots - third party evidences - whether the Principal Commissioner vide its impugned order dated 08.01.2018 is justified in confirming the demand of Central Excise duty of ₹ 10,68,667/- along with interest and penalty in respect of clandestine removal of 360.240 mt of M.S. Ingots recovered from the appellant M/s. Balaji Stuctural (India) Ltd., Raipur of which the appellant-Suresh Agarwal is Director? Held that:- In the impugned order nowhere it has been discussed as to how the demand to duty of ₹ 10,68, 667/- is sustainable in the absence of any clinching evidence of clandestine manufacture and removal of the goods and also in view of the fact that the said amount is already included in the duty demand of ₹ 16,04,75,554/- which has been dropped in the impugned order by the ld. Principal Commissioner. There is absolutely no evidence on record to show that the appellant has cleared 360.240 MT of M.S. Ingots. The entire demand is based upon the records recovered from Sh. S.K. Pansari proprietor of M/s. Monu Steel. The law as to whether the third party records can be adopted as an evidence for arriving at the findings of clandestine removal, in the absence on any corroborative evidence, is well settled. Only on the basis of statement of third party no demand could be made. The penalty imposed on the Sh. Suresh Agarwal, Director is also set aside. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 9
Classification of goods - P-100 - The revenue wanted to classify the product under 3824 whereas the appellant had sought classification under heading 3823 - Held that:- The office of the chemical laboratory is not sure of exact classification and has raised some doubts about classification, it is not open to original adjudicating authority to decide the issue suo motu without going back with the said clarification to the office of the chemical examiner. It is seen that the onus of establishing the change of classification is on revenue and from the records it is apparent that revenue has been unable to produce sufficient evidence to substantiate the claim. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 8
Classification of goods - Bituminous compounds 33-S, -22, -33, -43 and 33-5 - ALPHA SMR-65, -75, -120 - whether to be classified under sub-heading 2715.10 or under sub-heading 2715.90 of Central Excise Tariff? - Held that:- This is the kind of heading where the classification would be determined by the use. If the chemical composition of the product is to be the determinative factory or classification, then the sub-heading 2710.60 would become redundant as all lubricating oils falling under 2710 would find classification in other subheadings described on the basis of the technical features and parameters of the material. The assertion made in the impugned order that the classification cannot be determined on the basis of the use of the product is misplaced, especially in the instant case where the sub-heading itself requires the use of the product as a major criteria for classification. Appeal allowed - decided in favor of appellant.
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2018 (7) TMI 7
CENVAT Credit on duty paid by appellant - advance license scheme - Revenue being of the view that inasmuch as the deposits were made in terms of order of Settlement Commission, which were final order not appealable before any higher Appellate Forum, and was based on the appellants prayer for settling the dispute, the appellant was not entitled to the credit of the duty was paid - Demand of Interest - Held that:- Appellant availed the credit of the duty deposited in terms of order of the Settlement Commission but subsequently reversed the same, when proceedings were initiated against them for recovery. The fact of availment of credit was duly reflected by them in their accounts as also in the ER-1 returns thus indicating absence of any mala fide on their part - by appreciating the fact that the issue involved is on bona fide issue of legal interpretation, there is no justification for imposition of penalty upon the appellant. Demand of Interest - Held that:- The credit availed by the assessee remained as a paper entry only and the same was never utilized by them - Hon’ble Karnataka High Court decision in the case of Commissioner of Central Excise vs. Bill Forge Pvt. Ltd. [2011 (4) TMI 969 - KARNATAKA HIGH COURT] has held that in case the credit availed is reversed before utilization, no interest liability would arise - interest set aside. Appeal allowed in part.
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2018 (7) TMI 6
Valuation - inclusion of VAT in assessable value - Revenue was of the view that VAT liability discharged by the utilisation of the investment subsidy granted in Form 37B actually paid, for the purpose of Section 4 of the Central Excise Act - Held that:- Identical issue decided in the case of Shree Cements Ltd. V/s CCE, Alwar [2018 (1) TMI 915 - CESTAT NEW DELHI], where it was held that There is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 5
Valuation - inclusion of VAT in assessable value - Revenue was of the view that VAT liability discharged by the utilisation of the investment subsidy granted in Form 37B actually paid, for the purpose of Section 4 of the Central Excise Act - Held that:- Identical issue decided in the case of Shree Cements Ltd. V/s CCE, Alwar [2018 (1) TMI 915 - CESTAT NEW DELHI], where it was held that There is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 4
Request for Remand - Refund claim of duty retained on inputs which is attributable to the use of electricity for purpose other than manufacture - duty was paid under protest - Held that:- Though the Tribunal did remand the matter back to the original authority for the limited purpose of ascertainment of the applicability of the bar of unjust enrichment granting liberty to the appellant to produce before the adjudicating authority a copy of the order of the appellate authority dated 28th March 2002 related to their claim that the issue has already been settled, subject to some adjustment, in their favour - appeal dismissed - decided against appellant.
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2018 (7) TMI 3
CENVAT Credit - input services or not - Services of waste disposal management - whether the appellant is eligible to avail CENVAT Credit of service tax paid by service provider who rendered the services of waste disposal management? - Held that:- Tribunal in the case of CCE & ST v. Kanoria Chemicals and Industries Ltd. [2015 (7) TMI 970 - CESTAT AHMEDABAD] has held that CENVAT credit on effluent treatment plant has to be considered as eligible CENVAT credit as Pollution Control Boards of the respective states have put in place, a mechanism that before any permission is granted the compliance of waste management is put in place. The appellant is entitled for availment of CENVAT credit on service tax paid on hazardous waste management service - appeal allowed - decided in favor of appellant.
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2018 (7) TMI 2
Refund Claim - Applicability of N/N. 6/2002–CE - preceding N/N. 3/2001 – CE dated 01 March, 2001, which is pari materia to the subsequent N/N. 6/2002–C.E. - Held that:- The decision in the case of COMMISSIONER OF CENTRAL EXCISE, JAIPUR VERSUS M/S. MEWAR BARTAN NIRMAN UDYOG [2008 (9) TMI 33 - SUPREME COURT] is squarely applicable to the facts of present case, where it was held that S.No. 200 would apply and the assessee would be entitled to claim nil rate of duty under the said Notification. Whether in the second round of litigation, the learned Commissioner (Appeals) by his order dated 27 January, 2011, whether have rightly rejected the refund claim holding that appellant was availing the benefit of N/N. 67/1995–CE dated 16th March, 1995? - Held that:- The said ground is not available to Revenue as Revenue has no new case can be made out in the second round of litigation as has been held by a Division Bench of this Tribunal in Rajasthan Spinning & Weaving Mills vs. CCE [1998 (3) TMI 434 - CEGAT, NEW DELHI]. Whether the refund if hit by unjust enrichment? - Held that:- It is an admitted fact that the appellant had informed the Revenue vide letter dated 01 August, 2004 to allow clearances without payment of duty as they are claiming exemption under S.No. 181 of N/N. 6/2002 – CE as Revenue insisted on payment of duty for clearance - matter remanded to the file of the Adjudicating Authority to grant the refund subject to verification of unjust enrichment.
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2018 (7) TMI 1
Rectification of Mistake - the appellant points out that from the final order, it is evident that in the batch of appeals, there is difference of opinion - Held that:- It appears that only Member (Judicial), who first passed order have observed that inasmuch as the penalties on various dealers/drivers/transporters, authorize representative, etc., stand imposed by the Commissioner, are on the basis of evasion of duty by HSG (M/s Harsingar Pvt. Ltd.) and as the Tribunal has already upheld the confirmation of demand against HSG only in respect of Supari received by them from Mahesh & Co. and 306 bags, etc. The matter as regards penalty of various persons is remanded to the Commissioner for judging afresh in the light of the findings of the Tribunal - the learned Commissioner is required to re-adjudge the penalties. The learned Commissioner is directed to dispose of the remanded matter, expeditiously.
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Indian Laws
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2018 (7) TMI 32
Application of anticipatory bail - limitations under Section 37 of the NDPS Act - Held that:- Under Section 37 of the NDPS Act, when a person is accused of an offence punishable under Section 19 or 24 or 27A and also for offences involving commercial quantity, he shall not be released on bail unless the Public Prosecutor has been given an opportunity to oppose the application for such release, and in case a Public Prosecutor opposes the application, the court must be satisfied that there are reasonable grounds for believing that the person is not guilty of the alleged offence and that he is not likely to commit any offence while on bail. Having thus noticed that apparently a wrong order has been passed by the coordinate Bench of the High Court, this Court, by order dated 22-11-2017, directed the State to verify whether any steps have been taken for challenging the orders granting anticipatory bail to the co-accused. In any case, the protection under Section 438, Cr.P.C. is available to the accused only till the court summons the accused based on the charge sheet (report under Section 173(2), Cr.P.C.). On such appearance, the accused has to seek regular bail under Section 439 Cr.P.C. and that application has to be considered by the court on its own merits. Merely because an accused was under the protection of anticipatory bail granted under Section 438 Cr.P.C. that does not mean that he is automatically entitled to regular bail under Section 439 Cr.P.C. The satisfaction of the court for granting protection under Section 438 Cr.P.C. is different from the one under Section 439 Cr.P.C. while considering regular bail. The order dated 31-10-2017 passed by the Sessions Court is also set aside. All the three accused in both these appeals are directed to surrender before the trial court. However, we make it clear that they are free to apply for regular bail, in which case, the Sessions Court will consider the matter on the merits of the application.
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