TMI Tax Updates - e-Newsletter
August 17, 2018

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise Indian Laws

TMI SMS

• Levy of GST - distinct persons - The activities performed by the employees to the units located in the other states liable to GST

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Articles

1. DOCTRINE OF READING DOWN

   By: DR.MARIAPPAN GOVINDARAJAN

2. TOWARDS LESSER GST RATE SLABS

   By: Dr. Sanjiv Agarwal

3. Doctors- after PG course - PAYMENT AGAINST SERVICE BOND IS ALLOWABLE EXPENDITURE

   By: DEVKUMAR KOTHARI

4. ANALYSIS OF FUGITIVE ECONOMIC OFFENDERS BILL

   By: Rajvansh singh

News

1. Minutes of the Monetary Policy Committee Meeting July 30-August 1, 2018 [Under Section 45ZL of the Reserve Bank of India Act, 1934]

2. Exchange Rate of Foreign Currency Relating To Imported and Export Goods Notified

Notifications

Customs

1. 74/2018 - dated 16-8-2018 - Cus (NT)

Exchange Rates Notification No.74/2018-Custom(NT) dated 16.08.2018

2. 73/2018 - dated 14-8-2018 - Cus (NT)

Customs (Finalisation of Provisional Assessment) Regulations, 2018

3. 72/2018 - dated 14-8-2018 - Cus (NT)

Exchange Rates Notification No.72/2018-Custom(NT) dated 14.08.2018

4. 71/2018 - dated 14-8-2018 - Cus (NT)

Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver- Reg.

GST - States

5. 18/2018 - dated 26-7-2018 - Chhattisgarh SGST

Amendment in Notification No. 1/2017-State Tax (Rate), F-10-43/2017/CT/V (69), dated the 28th June, 2017

6. 17/2018 - State Tax (Rate) - dated 26-7-2018 - Chhattisgarh SGST

Seeks to insert explanation in an item in notification No. 11/2017 – Satae Tax (Rate) by exercising powers conferred under section 11(3) of Chhattisgarh Goods and Services Tax Act, 2017

7. 16/2018 - State Tax (Rate) - dated 26-7-2018 - Chhattisgarh SGST

Amendment in Notification No. 14/2017-State Tax (Rate), F-10-43/2017/CT/V(82), dated the 28th June, 2017

8. 14/2018 - State Tax (Rate) - dated 26-7-2018 - Chhattisgarh SGST

Amendment in Notification No. 12/201 7-State Tax (Rate), F-10-43/2017/CT/V (80), dated the 28th June, 2017

9. 13/2018 - State Tax (Rate) - dated 26-7-2018 - Chhattisgarh SGST

Amendment in Notification No. 11/2017-State Tax (Rate), F-10-43/2017/CT/V(79), dated the 28th June, 2017

10. F-10-35/2018/CT/V (52) - dated 6-7-2018 - Chhattisgarh SGST

Chhattisgarh Goods and Services Tax (Seventh Amendment) Rules, 2018

11. S.O. 114 /PGSTR/2017/R.89./2018 - dated 12-7-2018 - Punjab SGST

Seeks to amend Notification No. S.O.87/PGSTR/2017/R.89/2017, dated 14th November, 2017

12. S.O. 113 /P.A.5/2017/S.147/2018 - dated 12-7-2018 - Punjab SGST

Seeks to amend Notification No. S.O.86/P.A.5/2017/S.147/2017, dated 14th November, 2017

Circulars / Instructions / Orders

DGFT

1. Trade Notice No. 24/2018 - dated 16-8-2018

Status of Norms Fixation of Advance Authorisations obtained under Self declaration basis- reg.

2. 30/2015-2020 - dated 14-8-2018

Acceptance of installation certificate under EPCG Scheme by the RAs, wherein installation certificate is submitted beyond 18 months, without penalty

Customs

3. 27/2018 - dated 14-8-2018

Clarification regarding bank guarantee requirement for bond executed by EOUs-reg.

Highlights / Catch Notes

GST

• Non-Alcoholic Beverage Supplies to SEZ Units via Coffee Machines Not Zero-Rated Under IGST Act Section 16.

  Case-Laws - AAR : Supplies to SEZ - The supply of non-alcoholic beverages/ingredients to such beverages, to SEZ units using coffee vending machines by the applicant, do not qualify as zero rated supply, as defined under Section 16 of the IGST Act 2017.
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• Corporate Office Services to Out-of-State Units Are GST Supplies Under CGST Act Section 25(4) and Schedule I Entry 2.

  Case-Laws - AAR : Levy of GST - Supply or not - distinct persons - The activities performed by the employees at the corporate office in the course of or in relation to employment such as accounting, other administrative and IT system maintenance for the units located in the other states as well i.e. distinct persons as per Section 25(4) of the CGST Act shall be treated as supply as per Entry 2 of Schedule I of the CGST Act.
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• HDPE Tarpaulins Classified as Laminates; Not Under GST Tariff HSN 6306.

  Case-Laws - AAR : Classification of goods - Tarpaulins made of HDPE woven fabrics’ are, therefore, laminate of two materials – HDPE tapes woven into fabrics and LDPE sheets/film - Tarpaulins made of HDPE woven fabrics’ will not be classified under HSN 6306 of the GST Tariff.
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Income Tax

• Commission Can Amend Orders to Add Interest Liability u/s 254F; Decision to Sustain Order Upheld.

  Case-Laws - HC : Settlement of case - power of commission u/s 254F to rectify an order - levy of interest liability u/s 234B which was not levied in the original order - order of commission sustained.
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• Tribunal Deletes Inappropriate Rectification Order u/s 154 for Indexed Cost Recalculation in Income Tax Assessment.

  Case-Laws - HC : Rectification of an error u/s 154 - The order was passed after scrutiny u/s 143(3) - AO revised assessment order and recalculated the indexed cost of acquisition applying the provisions of Section 48(iii) of the Income Tax Act - Tribunal has rightly deleted the rectification order passed u/s 154 -
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• U.S. Managed Hosting Services Income Not Taxable in India per Section 9(i)(vi)/(vii) and India-USA DTAA.

  Case-Laws - AT : Accrual of income in India - managed hosting services - Royalty and / or Fees for Included Services under section 9(i)(vi) / (vii) - India- USA Double Taxation Avoidance Agreement (‘DTAA’). - The income is not taxable in India.
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• Indian Branch Can Deduct Interest Paid to Foreign Parent Bank; Interest Income Not Taxed in India.

  Case-Laws - AT : Taxability of Interest paid by the branch (PE) in India to its parent foreign bank in Japan - Deduction of interest so paid as expenditure - the interest income received by the head office of the assessee bank would not be chargeable to tax in India - Allowed as deduction in the hands of branch as business expenditure.
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• Company's Medical Insurance Premiums for Employees' Families Approved as Business Expense u/s 37(1) of Income Tax Act.

  Case-Laws - AT : Claim of expenditure u/s 37(1) - medical insurance premium paid for the family members of the employees of the company - Claim of expenses allowed as business expenditure.
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• Loan Against Keyman Insurance Considered Deemed Dividend u/s 2(22)(e), Taxable Up to Accumulated Profits.

  Case-Laws - AT : Deemed dividend u/s 2(22)(e) - the company took a loan against the Keyman Insurance Policy and this sum was advanced to the Appellant - deemed dividend is taxable only to the extent of accumulated profits of the company available at the beginning of the relevant financial year.
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• Tax Appeals Authority Oversteps by Imposing Penalty; Only Satisfaction-Recording Authority Can Levy Penalties per Rules.

  Case-Laws - AT : Power of CIT(A) to enhance the penalty - the authority who has recorded satisfaction alone can levy penalty. In our considered view, the CIT(A) in the present case has exceeded his jurisdiction and has levied penalty on the addition for which the satisfaction was recorded by the Assessing Officer.
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Customs

• New Customs Rules 2018: Streamlined Process for Finalizing Provisional Assessments to Boost Transparency and Efficiency in Trade Operations.

  : Customs (Finalisation of Provisional Assessment) Regulations, 2018
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IBC

• Insolvency Professional Faces Disciplinary Action for Major Infractions; Deemed Unfit for Role by ICSI.

  Case-Laws - Board : Disciplinary Processes against the Insolvency Professional who is a Professional Member of the ICSI - The infractions of the professional call for no leniency. He has rendered himself a person not fit and proper to continue as an insolvency professional.
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• Section 14 Moratorium in Insolvency Code Excludes Personal Guarantors, Applies Only to Corporate Debtors in Insolvency.

  Case-Laws - SC : Whether Section 14 of the Insolvency and Bankruptcy Code, 2016, which provides for a moratorium for the limited period mentioned in the Code, on admission of an insolvency petition, would apply to a personal guarantor of a corporate debtor - Held No
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Service Tax

• Penalty Upheld: Faulty Program No Defense u/s 78; Incorrect Service Tax Calculation Led to Penalty Imposition.

  Case-Laws - HC : Penalty u/s 78 - The assessee cannot take shelter under a faulty programme when they themselves handled in the system. The service tax could not have been calculated on the basis of the amount received from the clients minus TDS - Levy of penalty confirmed.
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• Court Upholds Limitation on Retrospective Tax Refunds; Section 103 of Finance Act, 2014 Not Discriminatory Under Article 14.

  Case-Laws - HC : Refund of service tax due to retrospective exemption - period of limitation - the petitioner could not have as a matter of right claimed such exemption and/or even consequently the refund of the tax paid - Section 103 of the Finance Act, 2014 cannot be said to be discriminatory and/or violative of Article 14 of the Constitution of India.
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• Refund Approved Due to Unjust Enrichment; Declarations Prove Duty Was Passed On, Justifying Refund Claim.

  Case-Laws - AT : Refund claim - Unjust Enrichment - Since in the case in hand, the respondent herein had furnished declarations from the parties/group companies/sister concerns to whom allegedly the incidence of duty is passed on, refund is to be allowed - refund allowed.
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• Commissioner (Appeals) Reassigned as Adjudicating Authority to Reassess Service Tax Liability in Remanded Case.

  Case-Laws - AT : Power of Remand - The order passed by the Commissioner (Appeals) remanding back the matter for fresh adjudication is set aside and the case is remanded back to the Commissioner (Appeals) to exercise the power of adjudicating authority in the matter of assessment of service tax liability of the appellant.
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• Transport by Motor Vehicles Isn't GTA Service Without Consignment Note, Per Rule 4B of Service Tax Rules.

  Case-Laws - AT : GTA Service - Mere transportation of goods by motor vehicles is not service provided by GTA and that as required under Rule 4B of Service Tax Rules, if consignment note in wherever form is not issued, the activity is not covered by the definition of GTA Service
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• Appeal Filed Late: Time Limit Starts from ROM Rejection Date, Beyond Standard and Extended Periods.

  Case-Laws - AT : Time Limitation - appeal stands filed after the normal period of three months provided for filing an appeal as also even after the extended period of three months for which the Commissioner (Appeals) is empowered to condone the delay - the time period of filing appeal has to be reckoned from the date of rejection of ROM Application.
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Central Excise

• Dealer Can Claim Refund of Unutilized Cenvat Credit After Surrendering Central Excise Registration Due to Duty Disparity.

  Case-Laws - HC : Refund of unutilized Cenvat Credit - Credit was accumulated due to disproportionate rate of duty on inputs and final products availed at the time of surrender of Central Excise Registration. - dealer shall be entitled to the refund of unutilized Cenvat Credit on closure of factory.
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• Nominal discrepancies found at assessee's premises fall within permissible limits under Standard of Weight and Measures Rules, 1977.

  Case-Laws - AT : Clandestine removal - Shortages and excesses found in the assessee’s premises which is spread over a period of time being below the permissible tolerance limit as per the provisions of the Standard of Weight and Measures Rules, 1977 and being nominal percentage has to be considered as genuine and not requiring any payment of duty or confiscation.
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Case Laws:

• GST

• 2018 (8) TMI 876
  Levy of GST - Supply or not - distinct persons - Whether the activities performed by the employees at the corporate office in the course of or in relation to employment such as accounting, other administrative and IT system maintenance for the units located in the other states as well i.e. distinct persons as per Section 25(4) of the Central Goods and Services Tax Act, 2017 shall be treated as supply as per Entry 2 of Schedule I of the CGST Act or it shall not be treated as supply of services as per Entry 1 of Schedule III of the CGST Act? Held that:- Since the IMO is covered under one registration in the state of Karnataka and the units are covered under different registrations, and the units are controlled by the IMO, they both are related persons. By implication, any supply of goods and services from IMO to the separately registered units would amount to supply of goods and services, even if made without consideration. The services provided to the employer, i.e. the corporate office by the persons employed by the corporate office are in the nature of the employee-employer relationship. Further, since the corporate office and the units are distinct persons under the Act, there is no such relationship between the employees of one distinct entity with another distinct entity, at least as per the Goods and Service Tax Acts, even if they are belonging to the same legal entity. Further, the activities made between the related persons are treated as supplies and the valuation includes all costs, the employee cost also needs to be taken into consideration at the time of valuation of goods or services provided by one distinct entity to the other distinct entities. Ruling:- The activities performed by the employees at the corporate office in the course of or in relation to employment such as accounting, other administrative and IT system maintenance for the units located in the other states as well i.e. distinct persons as per Section 25(4) of the CGST Act shall be treated as supply as per Entry 2 of Schedule I of the CGST Act.

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• 2018 (8) TMI 875
  Supplies to SEZ - non-alcoholic beverages - input tax credits relating to SEZ supplies - Whether supply of non-alcoholic beverages to SEZ units using coffee vending machines is in the nature of zero rated supply as defined under Section 16 of the IGST Act 2017? - Held that:- Each SEZ Unit is allowed to carry out predefined activities (termed as authorised operations ) to be eligible to avail the benefits of being in the Special Zone. The activities to be carried out have, therefore, to be strictly in consonance with the authorized operations certified by the proper office of the SEZ. Though the IGST Act, in Section 16(1)(b) does not categorically say that the supplies of goods and services should be for authorized operations, it is implicit therein when it says that the supplies are for the SEZ Developer or SEZ Unit. Therefore the litmus test for any supply to be termed as zero-rated supply is to ascertain essentially whether it is for authorized operations or not. The sine qua non or indispensible element is that the supply has to be certified by the proper officer as constituting authorized operations. Benefit flowing out from the SEZ Act, 2005, accrues to anyone only when the condition of authorized operations is fulfilled. Therefore even in the event of the IGST Act, 2017, not explicitly using the term authorised operations in Section 16(1)(b), it is implicit that the supply of goods or services or both described in Section 16(1)(b) have to be read as in relation to authorized operations - The applicant has not made out a case that the activity undertaken by them is certified as an authorized operation by the proper officer of the SEZ. The activity undertaken by the applicant does not qualify to be a zero-rated supply. Ruling:- The supply of non-alcoholic beverages/ingredients to such beverages, to SEZ units using coffee vending machines by the applicant, do not qualify as zero rated supply, as defined under Section 16 of the IGST Act 2017.

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• 2018 (8) TMI 874
  Classification of goods - tarpaulins made from High Density Polyethylene, a woven fabric - whether HDPE Woven Tarpaulin will be classified under HSN 6306 of the GST Tariff? Held that:- Since HDPE falls under Chapter 39, keeping in mind the Section Notes and the Tariff Heading description it is, therefore, important to ascertain, both, the width of the fabric strip that goes into the weaving and whether or not the tapes are impregnated, coated, covered or laminated with plastics or articles thereof, of Chapter 39 - Nowhere in the Application, nor in the report submitted by the officer concerned are these two conditions, namely, the width of the tape used for weaving and whether or not the tapes are impregnated, coated, covered or laminated with plastics or articles thereof, of chapter 39, stated. Tarpaulins made of HDPE woven fabrics are, therefore, laminate of two materials HDPE tapes woven into fabrics and LDPE sheets/film, and therefore, as per Section Note 1(h) of Section XI (Textile and Textile Articles) cannot fall under Chapter 63. Ruling:- Tarpaulins made of HDPE woven fabrics will not be classified under HSN 6306 of the GST Tariff.

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• Income Tax

• 2018 (8) TMI 873
  Addition u/s 68 - share application money - primary burden of establishing the identity of the applicant, the genuineness of the transaction and the creditworthiness of the party - Held that:- SLP dismissed.

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• 2018 (8) TMI 872
  Nature of amount received as award against damages for breach of contract - capital receipt or revenue receipt - Compensation of a settlement for loss of its bottling rights with Coca Cola Company, USA - Held that:- SLP dismissed.

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• 2018 (8) TMI 871
  Additions made by the assessing authority on account of accrued interest on loans which are classified as “Non-performing Assets” - applicability of provisions of section 43D - Held that:- SLP dismissed.

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• 2018 (8) TMI 870
  TDS u/s 194H and/or 194J - arrangement worked out between the assessee company and the distributor (Agency) - withhold tax at source u/s 194H in respect of sales to its distributors, which are on principal to principal basis and wherein property in the goods is transferred to the distributor - Held that:- SLP dismissed.

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• 2018 (8) TMI 869
  Claim of depreciation on hotel building - additions u/s 41(1) - additions u/s 68 - unexplained share capital - Held that:- SLP dismissed.

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• 2018 (8) TMI 868
  Deduction u/s 80O - reassessment - jurisdiction to categorize a portion of the receipts of the Appellant for professional services as attributable to alleged “routine services” - Appellant was rendering a consolidated report - indivisible part of the professional work - Held that:- The jurisdiction to reopen an assessment is a very limited jurisdiction hemmed in by various limitations, amongst them being no notice for reopening can be issued only on a change of opinion. In any event, there is admittedly, a change in law for the subject assessment years from the A.Y. 1985­-96 and 1991­-92 for which reopening notice was issued. Thus, the same would not have any impact on the present proceedings. Section 80­O of the act very clearly restricts the benefit of deduction thereunder, only to the extent technical services are rendered from India. The routine services are undisputedly services such as supervising, loading/ unloading/ storage rendered in India and not out side and / or from India. Therefore, would not qualify for deduction under Section 80­O of the Act. In any event, this routine services such as supervising, loading and storage of good, even if it requires high degree of technical know how and experience, it would still be a services rendered in India and not a service rendered from India. Consequently, it would be hit by Explanation (iii) of the Act to Section 80­O of the Act. - Decided against the assessee.

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• 2018 (8) TMI 867
  Assessment u/s 153A - allegation of generation of unaccounted money and also transfer of such money in exchange of share capital - proving any accommodation entry - reliance on third party statement - CIT(A) and ITAT deleted the additions - Held that:- The ITAT on a very detailed examination was satisfied about identity, creditworthiness and genuineness of the investor companies and held that there the assessee had discharged the primary onus to prove their creditworthiness and genuineness. The ITAT in concurring with the first appellate authority found that the assessing officer has made addition under section 68 of the Act without any reasonable basis. The first appellate authority has analyzed the transaction with each and every creditor and assigned reasons as to why the loan(s) have to be treated as genuineness and upheld the order of the first appellate authority ie., Commissioner of Income-tax (Appeals) and held that it did not suffer from any legal infirmity. A decision on the fact of ITAT can be gone into by this court only if a question has been referred to it which says that the finding of the tribunal on facts is perverse. - No substantial question of law arises - Decided against the revenue.

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• 2018 (8) TMI 866
  Additions u/s 68 - allotment of share capital - It is stated that when liability has been created equal to amount of assets transferred and shares allotted in settlement of this liability, there can be no addition under Section 68 of the said Act as unexplained cash credit - tribunal further held that, value of shares allotted to individuals would amount to unexplained cash credit - Held that:- Additions confirmed by the tribunal deleted - Decided in favor of assessee.

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• 2018 (8) TMI 865
  Settlement of case - power of commission u/s 254F to rectify an order - levy of interest liability u/s 234B which was not levied in the original order - Section 245F(1) of the 1961 Act confers on the Settlement Commission all powers which are vested in an Income Tax Authority under the 1961 Act. The Settlement Commission, therefore, has power to rectify an order. The powers under Section 154 of the 1961 Act can be exercised by the Settlement Commissioner in addition to those specifically provided under Chapter IXA. There is a difference between rectification of an order and review of an order. Such power has to be conferred by statute either expressly or by necessary implication. In this case, there is no power of review. However, the power of rectifying an apparent mistake under Section 154 of the 1961 Act includes wide power to amend the order, which has the effect of enhancing an assessment or increasing the liability of the assessee. Interest under Section 234B of the 1961 Act is to be charged up to the date of order under Section 245D(4) of the 1961 Act. The order of the Settlement Commission that the respondent assessee would be entitled to waiver of interest leviable under Section 234A of the 1961 Act; that there is no case for waiver of interest leviable under Section 234B of the 1961 Act; and that interest under Section 234B shall be charged up to the date of the order under Section 245D(4) of the 1961 Act, does not warrant interference - Decided against the assessee.

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• 2018 (8) TMI 864
  Exemption/ deduction u/s 54 - Purchase of land with superstructure - After demolishing the existing superstructure, the appellant assessee constructed a residential house - assessee submitted that the new residential property had been constructed within a period of three years from the date of sale of the old property. He argued that construction of a property cannot be done without land underneath it and, therefore, the cost of construction of the property should also include the cost of land. Held that:- It is axiomatic that Section 54(1) of the said Act does not contemplate that the same money received from the sale of a residential house should be used in the acquisition of new residential house. Had it been the intention of the Legislature that the very same money that had been received as consideration for transfer of a residential house should be used for acquisition of the new asset, Section 54(1) would not have allowed adjustment and/or exemption in respect of property purchased one year prior to the transfer, which gave rise to the capital gain or may be in the alternative have expressly made the exemption in case of prior purchase, subject to purchase from any advance that might have been received for the transfer of the residential house which resulted in the capital gain. It is not a requisite of Section 54 that construction could not have commenced prior to the date of transfer of the asset resulting in capital gain. If the amount of capital gain is greater than the cost of the new house, the difference between the amount of capital gain and the cost of the new asset is to be charged under Section 45 as the income of the previous year. - Decided in favor of assessee.

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• 2018 (8) TMI 863
  Transfer pricing - exclusion of comparable - ITAT adopted the 15% as RPT Filter as against 25% RPT filtered applied by the TPO - International Transaction of the Assessee with its associated enterprises - Held 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 the revenue.

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• 2018 (8) TMI 862
  Prosecution proceedings u/s 276C(1) and 277 - pre-charge evidence - willful attempt to evade tax - false statement in verification having been made in the returns and false statement of accounts delivered. HC dismissed the petition by holding that, there are no special circumstances made out in the case at hand for the revisional court’s view to be disturbed.

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• 2018 (8) TMI 861
  Nature of expenditure - capital or revenue - repair and maintenance expenditure - addition of income on account of minimum guaranteed quantities by users of assessee’s storage facility - Held that:- Both the issues answered against the revenue and in in favor of assessee.

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• 2018 (8) TMI 860
  Additions u/s 68 - majority of the deposits received from the public and the agents - onus to prove source of funds - Held that:- Merely because there was a permission granted under the Companies Act to accept deposits from the public, it does not necessarily follow that the deposits shown are really those received from the members of the public or from the agents. Section 68 is a provision which seeks to ensure that the income received by an assessee is not fully disclosed, by a ruse employed of showing it as credits from depositors which are not genuine and the identity of such depositors are not verifiable. The Tribunal has erred insofar as the finding that the fundamental fact of the assessee having collected deposits from the public stands proved with respect to the entire cash credits so recovered. It can be said to have been proved, only with respect to the verifiable materials produced before the AO and on which the AO had entered a satisfaction. There could hence be no rule of probability applied as against the specific provision under Section 68 of the Act. We are of the opinion that the Tribunal acted erroneously and in a perverse manner insofar as directing deletion of the addition not proved before the AO; applying the rule of probability, which is alien to the Act. Matter remanded back to AO for verification - Decided in favor of revenue.

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• 2018 (8) TMI 859
  Rectification of an error u/s 154 - The order was passed after scrutiny u/s 143(3) - AO revised assessment order and recalculated the indexed cost of acquisition applying the provisions of Section 48(iii) of the Income Tax Act - ITAT deleted the rectification order passed u/s 154 - Held that:- As rightly observed, powers under Section 154 of the Income Tax Act can be exercised only when the mistake, which is sought to be rectified is an obvious mistake, which is apparent from the record and not a mistake, which is required to be established by long drawn process of reasoning on points. Under the circumstances, in the facts and circumstances of the case and considering the original assessment order passed by the learned Assessing Officer as well as the subsequent order passed by the learned Assessing Officer under Section 154 of the Income Tax Act, we see no reason to interfere with the impugned order passed by the learned Tribunal. - Decided against the revenue.

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• 2018 (8) TMI 858
  Depreciation u/s 32 - depreciation on the non-complete fee - depreciation on brand equity - Held that:- the issue involved in this appeal is covered by the decision of this Court in Commissioner of Income Tax, Chennai Vs. M/s. Radaan Media Works India Ltd., Chennai [2017 (8) TMI 662 - MADRAS HIGH COURT] - Decided against the revenue.

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• 2018 (8) TMI 857
  Disallowance of expenditure u/s 14A read with Rule 8D - assessee has made investments, which has resulted tax free income to the assessee - Held that:- Hon’ble Court have laid down that if there be funds available; both interest free, overdrafts and loans taken, then a presumption would arise that investment would be out of interest free funds generated or available with the company. The ld.DRP has failed to take note of the ratio laid down in these decisions. It proceeded on the presumption that since funds are mixed, therefore, it is presumed that direct interest expenditure cannot be worked out and Rule 8D is to be applied. - the assessee has demonstrated that it was having sufficient interest free funds which can take care of these investments. Therefore, no interest expenditure is to be disallowed with the help of Rule 8D. - Decided in favor of assessee. Whether the amount disallowed under section 14A read with rule 8D deserves to be added back in the book profit for the purpose of section 115JB - Held that:- no addition in the book profit would be made on the basis of calculations worked out under section 14A of the Act. - Decided in favor of assessee. Nature of consideration received against sale of carbon credits - Held that:- receipts received by the assessee on sale of carbon credit are to be treated as capital receipts and not liable to tax. Non-claiming of deduction in the original return - Held that:- if a particular item is going to affect taxability of assessee, then a fresh claim can be entertained by the first appellate authority or by the DRP. Thus, we overrule this reasoning of the DRP and direct the AO to treat these receipts in both assessment years as capital receipt. Slump sale - computation of capital gain - assessee company has sold its entire wind energy business to IRL - According to the section 50D the capital gain on sale of such capital asset is to be determined by adopting fair market value of the capital assets on the date of transfer. Under this conception of law, the ld.AO has tried his best to shift the date of transfer from the assessment year 2012-13 to 2013-14. - Held that:- it provide mode of computation of capital gain on transfer of an undertaking by way of slump sale. The cost of acquisition would be taken “net worth” of the assets transferred under this section. Even if it is to be construed for the sake of arguments that transaction has taken place in the assessment year 2013-14, then also the AO cannot replace the sale consideration disclosed by the assessee as per section 50D with fair market value. Since, we have held that fair market value considered by the AO to charge the assessee with capital gain cannot be adopted either with help of section 50D or in assessment year 2012-13. Neither under section 50B nor section 50D, the AO can replace full value of sale consideration with fair market value. The transaction has taken place on 30th March, 2012. The capital gain on transfer of capital asset by way of slump sale is taxable on substantive in assessment year 2012-13 and not 2013-14. The full value of sale consideration would not be replaced with fair market value. - Decided in favor of assessee.

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• 2018 (8) TMI 856
  Taxability of income of the appellant - permanent establishment (“PE”) in India - Royalty - supply of software - taxability of entire receipts from supply of software under section 44D read with section 115(l)(b)(A) of the Act - attribution of profit - Held that:- since it has already been held in the hands of Reliance Communications [2018 (4) TMI 80 - ITAT MUMBAI] by the elaborate order referred above that the payment made by it was not royalty in the hands of the assessee, these amounts are not taxable as income in the hands of the assessee. The issue that there is no PE in India has also been decided by the Tribunal in its order [2013 (9) TMI 374 - ITAT MUMBAI] Decided in favor of assessee.

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• 2018 (8) TMI 855
  Exigibility of tax of the profits of the assessee from the operation of ships in international traffic - Article-22 of DTAA - the phrase “other than the profits from the operation of the ships in international traffic” occurring in Article-7 - Double Taxation Avoidance Agreement between India and Switzerland ('Tax Treaty') - Held that:- the issue involved in revenue’s appeal is squarely covered in favour of the assessee by a series of the decision of the ITAT in assessee’s own case. - Respectfully following the precedent, the appeals filed by the Revenue are dismissed. - Decided against the revenue.

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• 2018 (8) TMI 854
  Reopening of assessment - Taxability of deemed interest income on deposits - DTAA between India and Singapore - it is claimed that, operations of the said banking company had been wound up in December 2003 - further, the amount on which interest was earned was in the nature of a fixed deposit and not a loan prescribed as per Article 11(2)(a) of the India-Singapore DTAA . Held that:- once the reopening has been held to be invalid and the revenue chooses not to challenge the same, the adjudication on merits is a purposeless reason. Hence, this appeal filed by the Revenue is dismissed. - Decided against the revenue.

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• 2018 (8) TMI 853
  Accrual of income in India - managed hosting services - Royalty and / or Fees for Included Services under section 9(i)(vi) / (vii) - India- USA Double Taxation Avoidance Agreement (‘DTAA’). - CIT(A) observed that, the income earned by the Appellant from customers for providing managed hosting services constituted consideration for use or right to use equipment. Held that:- A payment cannot be said to be consideration for use of scientific equipment when person making the payment does not have an independent right to use such an equipment and physical access to it. In the present case also, what the assessee is providing is essentially web hosting service, though with the help of sophisticated scientific equipment, in the virtual world. The scientific equipment used by the assessee enable rendition of such a service, and such a use, which is not even by the Indian entity, is not an end in itself. In this view of the matter, even though the services rendered by the assessee to the Indian entities may involve use of certain scientific equipment, the receipts by the assessee cannot be treated as "consideration for the use of, or right to use of, scientific equipment" which is a sine qua non for taxability under section 9(l)(vi) read with Explanation 2 (iva) thereto. The income is not taxable in India - Decided in favor of assessee.

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• 2018 (8) TMI 852
  Dependent Agent Permanent Establishment in India - Article 5 of the India-USA Double Tax Avoidance Agreement ('DTAA') - AO levied tax on the total income of DPIFI (after allowing a deduction of 5% of income for expenses) at the rate of 40% {plus applicable surcharge and cess) visa- vis a rate of 15% on gross basis as per Article 12 of the India-USA DTAA pertaining to Royalty and Fees for Included Services. Held that:- DRP has noted that, Jubilant is neither selling nor storing any goods for or on behalf of the assessee. The master franchisee (Jubilant) has power to appoint its sub-franchisees but the assessee is entitled to only royalty and store opening fees from sub-franchisees also. Approval of the sub-franchisee agreement is only for the limited purpose of protecting assessee's brand image and business interests. Considering the fact that the master franchisee is an independent business enterprise and restrictions placed on it by the assessee are only to safeguard its brand value and ensure proper receipt of royalty income, we are of the opinion that jubilant does not constitute a permanent establishment or agency PE of the assessee. However, the Dispute Resolution Panel noted that since the department had not accepted the decision and filed an appeal before the ITAT, to keep the issue alive and protect the interest of the department, it upheld the Assessing Officer’s action. Since the identical issue has been decided in favour of the assessee by the tribunal in assessee’s own case, respectfully following the same, we set aside the orders of the authorities below and decide the issue in favour of the assessee.

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• 2018 (8) TMI 851
  Disallowance of deduction u/s 36(1)(va) - Provident Fund and Employees State Insurance (FP & ESI) contribution - failure to deposit before the due date of return - Held that:- where assessee did not deposit employees' contribution to employees' account in relevant fund before due date prescribed in Explanation to section 36(1)(va), no deduction would be admissible even though he deposits same before due date under section 43B. - Additions confirmed - Decided against the assessee. Disallowance of alleged legal expense u/s 37(1) - nature of payment of compounding feed - Held that:- the impugned expenditure incurred by the assessee is more in the nature of compensatory and necessitated by commercial expediency. In the normal incidences of business, certain damages are to be paid by an assessee and the expenses so incurred is an allowable deduction in the ordinary course of the business. The letter of Inspector of Legal Metrology, Nagpur dated 11.7.2012 states that the assessee to make payment of Rs. 20,000/- to avoid any future litigation. The assessee has settled the issue by paying the sum as compensation/damages for the interest of its business, which according to us, cannot be treated as incurred for infraction of any law and therefore to be disallowed. - Expenses allowed - Decided in favor of assessee.

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• 2018 (8) TMI 850
  Taxability of Interest paid by the branch (PE) in India to its parent foreign bank in Japan - Deduction of interest so paid as expenditure - India-Japan Double Taxation Avoidance Agreement (DTAA) - A.O held a conviction that as the source of the interest income earned by the head office was the latters branch office in India, thus the same as per Sec. 9(1)(v)(c) of the Act having deemed to have accrued or arisen in India, was therefore taxable in India as per the domestic law i.e. the Income Tax Act, 1961. - It was further held by the A.O that as the interest was paid by the branch office, hence the latter automatically became the representative assessee/agent as per Sec. 163(1)(c) of the Act. - CIT(A) deleted the additions. Held that:- the interest income received by the head office of the assessee bank would not be chargeable to tax in India. The Article 7(3) of India-Japan DTAA expressly provides for deduction of interest on money advanced by the Head office to its Indian PE when such foreign enterprise is a banking institution - the interest paid by the branch office of the assessee bank in India to the head office of the bank on the amounts advanced by the latter in the normal course of its banking business is allowable as a deduction while computing the income of the Indian PE i.e. the branch of the assessee bank in India. - Order of CIT(A) sustained - Decided against the Revenue.

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• 2018 (8) TMI 849
  Claim of expenditure u/s 37(1) - medical insurance premium paid for the family members of the employees of the company - wholly and exclusively for the purposes of business of the assessee - Even otherwise since the employees had not offered what amounted to be perquisites in their hands u/s. 17(2)(iv), he was of the view that these were not business expenses qualifying for deduction u/s. 37(1) - Held that:- The record reveals that the assessee had paid the insurance premiums of the employees’ family members in terms of employment Rules framed by the assessee-company there for. Therefore, it can hardly be said that the impugned expenditure were not incurred wholly and exclusively for the purpose of business, which is the real intent of Section 37(1) of the IT Act. The ld. Authorities below appear to have rejected the claim of the assessee that these payments were in the nature of perquisites to the employees as contemplated under sub-clause (iv) of section 17(2) of the IT Act, according to which any sum paid by the employer in respect of any obligation which, but for such payment, would have been payable by the assessee, shall be included in perquisites. However, in view of proviso (iii) & (iv) appended to this section clearly prohibit the application of section 17(2) in certain eventualities as contained in these provisos. Claim of expenses allowed as business expenditure - Decided in favor of assessee.

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• 2018 (8) TMI 848
  Disallowance of pooja / function expenses - Held that:- this is a recurring dispute between the assessee and the Department from past several assessment years and the Tribunal has decided this issue in favour of the assessee in all the preceding assessment years. - Claim of expenditure allowed - Decided in favor of assessee. Deduction of exemptions paid towards consultancy charges for advise on civil construction - Held that:- This is a recurring dispute between the assessee and the Department for the past several years and the Tribunal has consistently decided the issue in favour of the assessee beginning from the assessment year 1995–96 to assessment year 2001–02. - Decided in favor of assessee. Valuation of stock - disallowance of un-utilized MODVAT credit under the provisions of section 145A of the Act - Held that:- MODVAT credit of Excise Duty is not includible as unutilized MODVAT credit on the last day of the accounting year - No additions - Decided in favor of assessee Nature of sales tax incentive received - the assessee itself has treated the Sales Tax incentive received by it as revenue in nature by including it in the sales as reflected in the books of account and audited financial statements. It is only at the second appellate stage before the Tribunal the assessee has claimed the Sales Tax incentives received by it as capital in nature by raising the additional grounds. - Held that:- the additional grounds raised by the assessee have to be admitted. Accordingly, we do so. However, it is a fact on record, the issues raised in the additional grounds were never raised by the assessee in course of proceedings before the Departmental Authorities. - Matter remanded back to the AO for reconsideration of the issue. Nature of expenses incurred for issue of foreign currency bonds - assessee has claimed deduction under section 35D - Held that:- It is a fact on record that the assessee is claiming deduction under section 35D of the Act @ 1/5th of the total expenditure incurred. Therefore, when a part of the expenditure has been accepted by the Department in assessment year 2001–02, it cannot be disallowed in the impugned assessment year.

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• 2018 (8) TMI 847
  Income from house property - Deemed rental income - vacant flat - The Appellant submits that since the property has not been let out and the Appellant has not derived any benefit therefrom during the year the AO ought to have granted vacancy allowance under section 23(2) and compute the Annual Value at NIL Held that:- the assessee has claimed that the said flat had remained vacant throughout the year despite assessee’s reasonable effort to let out the same. That the assessee had requested the builder to identify the tenants. In this regard, the assessee has submitted three letters written to the builder. It may be noted that as emanating from the records and the letter, the same builder had identified the tenant for another flat of the assessee which was let out and whose rent has been offered and accepted for taxation. In this factual scenario, the authorities below have doubted the veracity of these letters and doubted the credentials of the assessee’s claim. In our considered opinion, this does not display application of mind to the facts of the case. The assessee is a well renowned cricketer. He is furnishing the return of income of Rs. 61,23,14,400/-. The let out value of the property in dispute is assessed as only Rs. 1,26,000/- by the ld. Commissioner of Income Tax (Appeals) as rent for the whole year. When the same builder has helped the assessee to find tenant for another flat, why his letters to the same builder to help him identify one more tenant, can be considered as fake, defies logic. That the assessee should maintain a dispatch register for his letters as expected by the authorities below, is also abnormal expectation. Hence, we have no hesitation in setting aside the orders of the authorities below and deleting the addition - Decided in favor of assessee.

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• 2018 (8) TMI 846
  Deemed dividend u/s 2(22)(e) - amount upto the accumulated profits of the company - rectification of an order u/s 254(2) - Appellant is a substantial shareholder in the company - the company took a loan against the Keyman Insurance Policy and this sum was advanced to the Appellant - Held that:- Since the Keyman Insurance Policy is for the benefit to the assessee, it was held that the same is taxable as deemed dividend u/s 2(22)(e) of the Act. However, as rightly pointed out by the learned Counsel for the assessee, the provisions of section 2(22)(e) of the Act would be applicable only to the extent of accumulated profits of the company available at the beginning of the relevant financial year. Thus, we agree with the contention of the assessee, that there is a mistake apparent from the order of the Tribunal. Additions restricted to the amount of accumulated profit - Decided partly in favor of assessee.

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• 2018 (8) TMI 845
  Levy of penalty u/s 271(1)(c) - defective notice u/s 274 - Held that:- the notice issued u/s. 274 r.w.s 271 of the Act, placed on record, does not specify the charge of offence committed by the assessee viz whether had concealed the particulars of income or had furnished inaccurate particulars of income. Hence the said notice is to be held as defective. - Penalty set aside - Decided in favor of assessee.

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• 2018 (8) TMI 844
  Disallowance of commission expenses paid in excess - CIT (Appeals) confirmed the addition as assessee could not substantiate the commercial exigency of such payment @ 7% as the other parties were paid commission @ 5% - Held that:- This is not the first year of the payment of commission to that party. The recipient of the commission income is also not related party under provisions of section 40A(2) of the Act. - The Revenue authorities are only authorized to see whether the expenditure has been laid out or expended by the assessee for the purposes of the business or not. Power to examine the reasonableness and adequacy of expenses - Held that:- Such powers are only available when the payment is made to a related party. It is not the case of the Revenue that the party has not rendered services to assessee. Additions to be deleted - Decided in favor of assessee.

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• 2018 (8) TMI 843
  Estimation of income from contract receipt - rejection of books of accounts - CIT(A) estimated the income @10% as against 15% estimated by the AO - Held that:- Both the sides are unanimous in stating that the facts in the assessment year under appeal are similar to earlier assessment years i.e. assessment years 2008-09 to 2011-12. Following the decision of Coordinate Bench, we estimate net profit of the assessee @ 9% of the total gross contract receipts in the assessment year under appeal as well. - Decided partly in favor of assessee.

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• 2018 (8) TMI 842
  Levy of penalty u/s 271 - while confirming the penalty imposed by the AO, CIT(A) enhanced the penalty amount - Held that:- The recording of satisfaction without mentioning of specific charge is against the principles of natural justice. The assessee should know the specific charge against which he has to defend in penalty proceedings. It is further observed that the Assessing Officer has not levied penalty u/s. 271(1)(c) in respect of additional income declared after recording of satisfaction. The Commissioner of Income Tax (Appeals) in First Appellate proceedings levied penalty on the above said additional income by exercising power of enhancement. It is a well settled law that the authority who has recorded satisfaction alone can levy penalty. In our considered view, the Commissioner of Income Tax (Appeals) in the present case has exceeded his jurisdiction and has levied penalty on the addition for which the satisfaction was recorded by the Assessing Officer. A conjoint reading of satisfaction recorded and the order levying penalty shows that there was ambiguity in the mind of Assessing Officer while levying penalty. The satisfaction has been recorded for concealment and penalty has been levied for both the charges i.e. inaccurate particulars of income and concealment of income. The order levying penalty set aside - Decided in favor of assessee.

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• 2018 (8) TMI 841
  Disallowance u/s 40A(2)(a) - excessive payments made by the assessee to its sister concerns for purchase of gold ornaments - valuation of gold/silver jewellery for making payments to sister concerns. - adoption of the rate of 'Bombay Bullion Association’ - There is difference in rates of gold and silver in Jalgaon and Bombay - CIT(A) deleted the additions. Held that:- Assessing Officer in the remand report has accepted that after applying local rates, the assessee has not made any excessive payments to the sister concerns for the purchase of ornaments. The local rates as published in the local Newspapers have been compared with the rates applied by the assessee and on verification it is found to be in order. Thus, the Assessing Officer accepted that no excessive payments were made by the assessee to its sister concerns. Under such circumstances disallowance u/s. 40A(2)(a) is uncalled for. Decided against the Revenue.

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• 2018 (8) TMI 840
  Levy of penalty u/s 271C - reasonable cause for not deducting TDS on interest paid to Agra Development Authority - Held that:- the Department has not been able to show that the bonafide belief entertained by the assessee bank, as above, does not constitute a reasonable cause within the meaning of section 273B of the Act. - AO, on verifying the documents filed by the bank, found that the Agra Development Authority had paid the requisite taxes for F.Ys. 2010-11 and 2011-12, relevant to A.Y. 2011-12 and 2012- 13. Apropos A.Y. 2012-13, the assessee made TDS immediately on coming to note that the provisions of section 194A of the IT Act are applicable to payment of interest on the FDRs of the Agra Development Authority. - No penalty - Decided in favor of assessee.

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• 2018 (8) TMI 839
  Levy of penalty - unintentional mistake in computation of income - assessee has explained that the error was not intentional and was prevented by circumstances beyond his control - defective notice - Held that:- Following the decision in the case of ‘Sachin Arora vs. ITO [2018 (3) TMI 1026 - ITAT AGRA], levy of penalty deleted - Decided in favor of assessee.

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• Customs

• 2018 (8) TMI 834
  Refund of SAD - N/N. 102/2007-Customs dated 14/09/2007 - amount claimed as refund in bills of entry was wrongly filed, for which the refund claim was filed again - denial of refund on the ground that as per Circular No. 16/2008-Customs dated 13/10/2008 issued by Board, refund can be filed only once in respect of Bills of Entry - Held that:- Admittedly, the appellant had sold the entire quantity covered by the Bill of Entry, thus entitled to the refund of entire SAD of Rs. 2,24,672/-. The refund to the extent of Rs. 1,24,672/- was filed inadvertently. They have also filed C.A. certificate indicating that the said less claiming of refund was on account of clerical mistake. Inasmuch as the same is a clerical error, the rejection of the remaining claim was not justified. The Revenue is not disputing the fact that otherwise the entire goods covered by Bill of Entry were sold and the appellant is entitled to refund of entire ‘SAD’ so paid by them - rejection of refund not justified. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 833
  Mis-declaration of imported goods - import of old and used ingots alongwith heavy melting scrap - demand alongwith confiscation, redemption fine and penalty - Held that:- The appellant admittedly purchased heavy melting scrap from another importer on high sea sale basis. The invoice of the supplier described the goods to be heavy melting scrap. Appellant have also taken a stand that the said scrap was purchased by them for actual use in their furnace and the entire consignment cleared by them has been subsequently captively used in the furnace as scrap - In the absence of any dispute to all the facts, no charge of mis-declaration can be upheld against the appellant. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 832
  Mis-declaration of imported goods - Aluminium Scrap - It appeared to revenue that description stated in the Bill of Entry was “Aluminum Scrap”, whereas the goods imported contained blocks, plates and slips of Prime Aluminum and the said goods were not scrap - Held that:- The description of the goods declared in the Bill of Entry were as per documents received from the foreign supplier and that due to said reason there was no mis-declaration in the present case are tenable - there was no intention of appellant to mis-declare the goods. The said goods were described as scrap in the Country from where they were exported and therefore, the classification of the goods claimed by the importer in the Bill of Entry is correct classification for the entire consignment - the finding of change in classification and mis-declaration held by Original Authority, does not sustain. Appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2018 (8) TMI 836
  Transfer of shares - fraudulent activity of registrar of company - forging the appellant s signature for issue of duplicate share certificates in 2012 - The appellant, sometime in 2014, came to know through the Company Secretary of Respondent No.1 that duplicate share certificates had been given to somebody else who had subsequently transferred them to a third party. As soon as she became aware of the fraud that was perpetrated on her, the appellant requested the Company to issue revalidated fresh share certificates for the said 903 equity shares on 17.09.2014. Since this was not done, despite repeated reminders for the same, a Company Petition was filed on 31.07.2015 before the Company Law Board, which was then taken up under the Amended Act by the National Company Law Tribunal. Held that:- the Appellate Tribunal in relegating the appellant to a further proceeding was not correct. We, therefore, setaside the Appellate Tribunal s order and reinstate that of the Tribunal dated 20.03.2017. - Company directed to rectify its register, insofar as the physical share certificates are concerned, and the concerned depository to rectify the demat records in accordance with this order.

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• 2018 (8) TMI 835
  Violation of certain provisions of SEBI Act, 1992 - misleading corporate announcements which led to increase in its share price and substantial increase in the volume of trading in its shares - incorrect information on promoters’ shareholding - fraudulent preferential allotment of 290 lakh shares to seven connected entities /persons without real inflow of funds. Held that:- We find it quite inexplicable on the reluctance of all the appellants to share details regarding their obtaining the shares of PCL. Given this reluctance, we find no fault in the decision of the WTM of SEBI in taking a notional value of Rs. 1 per share as acquisition cost while calculating disgorgement. Given the connection between erstwhile promoters or directors of PCL, the preferential allotment, cross directorship of various entities, usages of same address and telephone nos. etc. by some of the entities, the financial transactions between some of the entities, the offmarket transactions of shares of PCL between some of the promoters and directors of PCL connection between these entities have been conclusively established. However benefit of doubt given to two appellants. Given the above facts and finding in the impugned order that appellants in all appeals, except Appellant nos. 2 and 3 in Appeal no. 306 of 2016, have violated Regulation 3(a), 3(b), 3(c), 3(d), 4(1), 4(2)(e), (k) and (r) of the PFUTP Regulations, 2003 cannot be faulted. Similarly, finding in the impugned order that the beneficiaries of the preferential allotment have violated Regulation 8(3) and Regulation 10 of SAST Regulations, 1997 also cannot be faulted. The appellants in Appeal No. 374, 375 and 376 of 2017 are therefore liable for the violations of SAST Regulations, 1997 in addition to the violation of the PFUTP Regulations, 2003, common to all appellants, except Appellant nos. 2 and 3 in Appeal no. 306 of 2016.

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• Insolvency & Bankruptcy

• 2018 (8) TMI 838
  Disciplinary Processes against the Insolvency Professional who is a Professional Member of the ICSI - Corporate insolvency resolution process (CIRP) - corporate debtor in distress - Held that:- The process aims to rescue the corporate debtor from distress. In the instant matter, Mr. Wadhwa, in connivance with the applicant-creditor and the corporate debtor and in contravention of several provisions of the law, subverted the CIRP of Ved Cellulose Limited and thereby attempted to scuttle the life of the corporate debtor itself and frustrate the objective of the Code. It was the timely intervention of the Hon’ble Adjudicating Authority that the CIRP was rescued by rejection of the ‘resolution plan’ submitted by Mr. Wadhwa and appointment of another IRP in his place. The infractions of Mr. Wadhwa call for no leniency. He has rendered himself a person not fit and proper to continue as an insolvency professional. - Registration of Mr. Wadhwa cancelled.

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• 2018 (8) TMI 837
  Whether Section 14 of the Insolvency and Bankruptcy Code, 2016, which provides for a moratorium for the limited period mentioned in the Code, on admission of an insolvency petition, would apply to a personal guarantor of a corporate debtor - NCLT observed that, the moratorium imposed under Section 14 should apply to the personal guarantor as well - Held that:- The object of the Code is not to allow such guarantors to escape from an independent and coextensive liability to pay off the entire outstanding debt, which is why Section 14 is not applied to them. However, insofar as firms and individuals are concerned, guarantees are given in respect of individual debts by persons who have unlimited liability to pay them. And such guarantors may be complete strangers to the debtor often it could be a personal friend. It is for this reason that the moratorium mentioned in Section 101 would cover such persons, as such moratorium is in relation to the debt and not the debtor. Judgement of the tribunal set aside - Decided in favor of petitioner.

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• Service Tax

• 2018 (8) TMI 826
  Commercial training and coaching centre services - Extended period of limitation - effect of amendment, retrospective or prospective - N/N. 9/2003-ST dated 20.06.2003 as amended by N/N. 24/2003-ST dated 10.09.2004 - Held that:- There is no merit in these appeals - Admission is refused and the civil appeals are, accordingly, dismissed.

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• 2018 (8) TMI 825
  Penalty u/s 78 of the Finance Act, 1994 - service tax was being paid on the net amount received by the respondent that is on the invoice price minus TDS amount withheld by the client - case of Revenue is that the instant case was not one of simple omission or failure, but there was wilful suppression of fact - Held that:- As per Section 67 of the Finance Act, 1994, service tax is payable on the gross amount of value service rendered and service tax is payable once the amount billed is realized. But for the investigation, the non payment of service tax would have gone unnoticed. The amount received from the client would include the entire service tax which has been calculated from the customer and it should have been paid to the department. The TDS amount with held cannot be said to include the service tax component - the respondent has received the service tax and has not passed on it to the department. The invoice that is raised would contain the amount payable towards service Tax. The respondent therefore has clearly manipulated their accounts and paid lesser service tax even though they have recovered the entire portion of service tax from the client. The respondent cannot take shelter under a faulty programme when they themselves handled in the system. The service tax could not have been calculated on the basis of the amount received from the clients minus TDS. The respondent is liable to pay penalty. Section 80 of the Finance Act,1994, cannot be invoked - appeal allowed - decided in favor of Revenue.

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• 2018 (8) TMI 824
  Appeals are admitted to consider the substantial questions of law - CENVAT Credit - Learned advocate, waives service of notice of admission on behalf of the respondent in all the appeals.

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• 2018 (8) TMI 823
  Condonation of delay of 307 days in filing appeal - delay on the ground that the concerned Accountant who was looking after the accounts of the firm had resigned from the assessee-Company in August 2014 - Held that:- The learned Tribunal has erred in rejecting the appeal on the preliminary ground of delay. The delay, even though of 307 days, had been reasonably explained by the assessee and the learned Tribunal ought to have decided the appeal on merits - appeal restored back on the file of the said Tribunal, with a request to decide the same on merits after giving opportunities to both the parties - COD allowed.

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• 2018 (8) TMI 822
  Refund of service tax due to retrospective exemption - period of limitation - Retrospective exemption - Validity and Vires of Section 103(3) of the Finance Act, 1994 - The main ground on which the first Authority as well as the learned CESTAT has rejected the claim of the petitioner is that the application submitted by the petitioner for refund of claim was beyond the period of six months prescribed in subsection (3) of Section 103 of the Finance Act, 1994. Held that:- It is required to be noted that as such the service in question was subjected to service tax for the period between 01.04.2015 to 29.02.2016 and therefore, the service tax was allowable to be paid during the aforesaid period and infact the petitioner paid the same which was reimbursed by the petitioner to the service provider. However, by Finance Bill, 2016, section 103 came to be inserted in Finance Act, 2014 and the exemption which was available prior to 01.04.2015 which as such was withdrawn between 01.04.2015 to 29.02.2016 came to be restored retrospectively. However, the very section 103 of the Finance Act, 2014 provided that the assessee shall be entitled to the relief of all such service tax which has been collected but which would not have been so collected on subsection (1) within force at all material times and it further provided that notwithstanding anything contained in the said Chapter, an application for claim of refund of service tax shall be made within a period of six months from the date on which the Finance Bill, 2016 receives the assent of Hon ble The President. It cannot be disputed that but for section 103 of the Finance Act, 2014 and the exemption being granted retrospectively, the petitioner could not have as a matter of right claimed such exemption and/or even consequently the refund of the tax paid. As such the Union Government was not under any obligation to provide the exemption retrospectively and that too with refund of the tax already paid. By way of policy decision which was culminated into section 103 of the Finance Act, 2014, such an exemption was provided retrospectively and the refund was provided, however subject to subsection (3) of section 103 of the Finance Act, 2014. Even the prayer of the petitioners to direct the respondents to compute six months period within which the refund claim was to be filed in terms of section 103 of the Finance Act, 1994, from the date the requisite certificate was issued by Ministry of Shipping also cannot be granted in exercise of powers under Article 226 of the Constitution of India. No directions can be issued in exercise of powers under Article 226 which shall be contrary to the statutory provision. Grant of such relief in exercise of powers under Article 226 of the Constitution of India would be contrary to the statutory provision. The substantive right to claim the refund in favour of the petitioner would be under Section 103 of the Finance Act, 2014. Therefore, subsection (3) of Section 103 of the Finance Act, 1994 cannot be said to be discriminatory and/or violative of Article 14 of the Constitution of India as contended on behalf of the petitioner. The refund application submitted by the petitioner is rightly rejected as the same was beyond the period of limitation prescribed under subsection (3) of Section 103 of the Finance Act, 1994 - Petition dismissed.

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• 2018 (8) TMI 821
  Construction services - Construction of Residential of Complex Service - case of appellant is that the residential flats were constructed by them for weaker section of society for Ghaziabad Development Authority and same did not qualify to be residential complex service - Held that:- To qualify to be a residential complex the building or buildings should have a common area and one or more facilities of services such as park, lift, parking space, community hall, water supply or effluent treatment system, located within a premises. Further perusal of show cause notice indicates that Revenue could not make out a case that there were any such common facilities. Thus, the appellant in the instant case did not provide construction of residential complex service - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 820
  Security agency services - amount recovered as reimbursement from the sister concerns - Man power supply Service - repair & maintenance service - Held that:- Few records were shown which indicates that appellant has not charged any amount in addition to the proportionate actual salaries and wages and other expenses related to the personnel deployed by them. In the absence of any contrary evidence, it is held that the respondent has a case in their favor - demand set aside. Refund claim - amount deposited by the Respondent-assessee in the investigations carried out - Unjust Enrichment - Held that:- The first appellate authority has correctly recorded that the respondent herein had filed various declarations from the parties concerned that the said amount was not reimbursed by them to Usha Kiran Movies Limited. Such categorical finding of the fact has not been disputed by Revenue in their grounds of appeal - It is noticed that there is no dispute as to the fact that the respondent herein has not been reimbursed of the amount deposited by the group companies - Since in the case in hand, the respondent herein had furnished declarations from the parties/group companies/sister concerns to whom allegedly the incidence of duty is passed on, refund is to be allowed - refund allowed. Refund claim - amount paid to M/s Usha Kiran Movies Limited, consequent to the adjudication that took place - unjust enrichment - Held that:- It is noticed from the records that the respondents herein had filed Chartered Accountant’s certificate dated 26.03.2009 before the lower authorities. It transpires from the records that the department had appointed Director (Cost) for looking into the claim of these respondent and the said Director (Cost) vide his report stated that the respondent herein had borne the amount charged by Usha Kiran Movies Limited - respondent herein are entitled for the refund of the amounts which have been collected from them by Usha Kiran Movies Limited as correctly held by the adjudicating authority - refund allowed. Appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 819
  Business Auxiliary Service rendered towards textile processing - N/N. 14/2004-ST dt. 10.09.2004 - suppression of facts - time limitation - penalty - Held that:- The issue in dispute has been decided in favour of the appellant in a slew of Tribunal orders of the CESTAT Chennai - reliance placed in the case of TEXYARD INTERNATIONAL, SREE ANGALAMMAN EXPORTS, ATLAS EXPORT ENTERPRISES, M/S KANGAROO IMPEX VERSUS COMMISSIONER OF CENTRAL EXCISE, TRICHY [2015 (8) TMI 794 - CESTAT CHENNAI], where it was held that Service tax if any payable under reverse charge is permissible to be availed as cenvat credit and that may be refundable under Notification No.41/2007 unless otherwise deniable by law. The provision made in Central Excise Rules and Cenvat Credit Rules ensures that tax is not added to the cost of export so that Indian exporter can compete with overseas market. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 818
  Business Auxiliary Service (BAS) - non-payment of Service Tax - bonafide belief or not? - suppression of facts - demand of service tax with Interest and penalty - Held that:- In this case if no audit took place at the end of M/s Godavari Pipes Pvt. Limited, the evasion of service tax would not have been detected by the Revenue. The contention of the appellant that they wees under bonafide belief that their service recipient has to pay service tax is not acceptable as there is no written agreement between the appellant and the service recipient - also, as ignorance of law is not an excuse, therefore, the contention of the appellant is not acceptable. As appellant is not paying service tax and not filing Service Tax Returns, in that circumstances, the appellant failed to prove the bonafide belief that the service recipient are paying service tax. In fact, if service recipient is paying the service tax on behalf of the appellant, then also under Section 77 also the appellant is required to file their ST-3 returns which appellant failed to do. Penalty - Held that:- The demand of service tax was of Rs. 8,49,855/-. Against the said demand, the appellant paid an amount of Rs. 19.35,580/- which shows that appellant was diligent to pay service tax. Therefore, the said act of the appellant warrants no penalty is imposable on the appellant - penalty u/s 78 set aside - As appellant has provided taxable service for which the appellant was required to file ST-3 returns in time, which appellant failed to do. In that circumstances, penalty under Section 77 of the Act is confirmed. Appeal disposed off.

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• 2018 (8) TMI 817
  Business Auxiliary Service - sale of loan product of ICICI Bank in lieu of Commission - service to HDFC Chubb an insurance company for sale of General Insurance Policy to the buyers of the cars in lieu of Referral Fees - Demand of Service Tax on commission received from the Bank and referral fees received from HDFC Chubb. Commission received from the bank against sale of loan product - Extended period of Limitation - Held that:- The issue was not free from doubt, therefore the extended period could not have been invoked - the demand of service tax on commission in respect of commission received from ICICI bank is set aside on the ground of time bar. Referral fees received by the appellant from HDFC Chubb insurance company - Held that:- The service is in connection with business of insurance of HDFC Chubb - In terms of Sub Section 65 of Finance Act, 1994, the service provided by the appellant falls under definition of Insurance Auxiliary Services whereas the Revenue has raised the demand under wrong head. On this ground the demand of service tax under Business Auxiliary Services does not sustain. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 816
  Refund claim - Cleaning services provided to educational institution - whether the building of ISB can be considered as non-commercial building or commercial building? - Held that:- It is not in doubt that Indian School of Business is registered as a company under the Companies Act and is engaged in the business of teaching management. This activity of the Indian School of Business does not make it a non-commercial institution; it is a commercial institution engaged in the business of providing management education. They would have been covered under the Commercial Training and Coaching Services but for the exclusion clause therein. There is no such exemption as far as cleaning activity rendered by the appellant is concerned and there is no reason to treat the buildings and premises of Indian School of Business anything other than commercial buildings and premises for the purpose of cleaning services - the cleaning activity rendered by the appellant is not excluded from the scope of service tax. Appeal rejected - decided against appellant.

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• 2018 (8) TMI 815
  Power of Remand of Commissioner (Appeals)- change in Classification of services - Scope of SCN - Manpower Supply Services or Works Contract Service? - N/N. 30/12 dated 20.06.2012 - Held that:- In view of the judicial precedent set by the Hon'ble Supreme Court in MIL India Ltd. vs. CCE [2007 (3) TMI 8 - SUPREME COURT OF INDIA] that after the amendment made in 2001 into Section 35A w.e.f. 11.05.2001 the power of remand of the Commissioner (Appeals) being taken away, it was incumbent upon the Commissioner himself to continue to exercise the power of adjudicating authority in the matter of assessment of tax liability of the appellant - Further, Commissioner (Appeals) has also been empowered by Section 35(A)(3) to make such further inquiry as may be necessary, before passing the order. The order passed by the Commissioner (Appeals) remanding back the matter for fresh adjudication is set aside and the case is remanded back to the Commissioner (Appeals) to exercise the power of adjudicating authority in the matter of assessment of service tax liability of the appellant, who is duty bound to place all relevant documents before him upon notice. Appeal allowed by way of remand.

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• 2018 (8) TMI 814
  GTA Services - case of Revenue is that deduction claimed by the appellant is not correct as the transport agencies have not given specific certificate as to whether they had availed the CENVAT credit or not on the motor vehicles procured by them - whether the differential Service Tax liability as confirmed by the adjudicating authority on the appellant is correct or otherwise? - Held that:- The appellant had produced the general declarations filed by the various service providers who had specifically stated in the declaration that they had not availed credit of duty paid on inputs or capital goods while rendering the services of goods transport agency. These certificates are not disputed by the adjudicating authority but were summarily dismissed as being general in nature and not specific to consignments - impugned order has erred i holding so. In the case of Lykes Line Ltd [2016 (11) TMI 192 - CESTAT MUMBAI], similar issue came for consideration, where it was held that Once a transport agency gives the declaration that they are not availing the Cenvat credit, that means they are not availing Cenvat credit in all the transactions. Therefore, individual consignment need not bear such declaration. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 813
  Demand raised by invoking extended period of limitation - penalty - the demand primarily stands confirmed against the appellant on the ground that during the period relevant for the purposes of said appeal they had provided service falling under the category of “site formation” and “supply of tangible goods” services - Held that:- The fact whether principal contractors have discharged the service tax liability for the full amount is required to be verified - the matter needs re-examination based upon verification of the facts relatable to payment of service tax on the full value of the contract. The appellants have also taken a stand that some of the services supplied by them were relatable to the road construction or bridge construction services, which were exempted. As the matter is being remanded to the Original Adjudicating Authority, he would also examine the above stand of the appellant. Appeal allowed by way of remand.

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• 2018 (8) TMI 812
  Business Auxiliary Service - it was alleged that they have not reflected the correct value of the service in their ST-3 returns filed by them during the financial year 2009-10 to 2013-14 - Held that:- The dispute in the present appeal relates to the verification of the facts as to whether the commission which has accrued in one particular month was actually received by the assessee in a subsequent month/year/period. It might be that the payment which has been received by the appellant in one particular period was on account of the services belonging to the previous financial year. In such a scenario, the appellant’s stand has to be verified correctly from their books of account and should be matched properly. Appeal allowed by way of remand.

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• 2018 (8) TMI 811
  Refund of Service Tax paid - denial on the ground of unjust enrichment - bottling of alcoholic liquor conceived as Business Auxiliary Services and tax was erroneously paid - section 11B of the Central Excise Act - Held that:- The said certificate dated 09.12.2017 was not before the authorities below and as such does not stand considered by them. Inasmuch as the said certificate is an important document, the appellant should be given an opportunity to place the same before the lower authorities and to re-decide the issue by taking the said certificate into consideration - appeal allowed by wya of remand.

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• 2018 (8) TMI 810
  Maintainability of appeal - appeal dismissed on the ground of non-deposit of 7.5% of the confirmed duty demand against the appellant - Section 35F of CEA - Held that:- The appellants have now deposited 10% for the purpose of filling the appeal before the Tribunal. As such the condition of Section 35F for deposit of 7.5% before Commissioner (Appeals) stands satisfied - matter remanded to Commissioner (Appeals) for decision on merits.

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• 2018 (8) TMI 809
  Time Limitation - the period involved is 2011-12 and the date of SCN is 26.05.2015 - no malafide intent - Held that:- Admittedly the entire facts have been taken by the audit from the assessee’s record, thus substantiating their plea that everything was being reflected in the books of accounts - It is well-settled that in such a scenario no mala fide can be attributed to the appellant so as to justifiably invoke the longer period of limitation - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 808
  Manufacture or Service? - appellants were engaged in job work and used of get raw material from the principal manufacturer - N/N. 214 of 1986 dated 25.03.1986 - Held that:- The appellant has submitted a copy of undertaking given by the principal manufacturer under the said N/N. 214 of 1986 dated 25.03.1986 which indicates that the principal manufacturer undertook to pay Central Excise Duty arising out of the job work being done by the appellant. The said undertaking has been accepted by Revenue and the goods were received by appellant on job work Challans. The Jurisdictional Assistant Commissioner having jurisdiction over appellant did not have authority of independent assessment of activity of appellant - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 807
  Business Auxiliary Services - appellant was treating the water for M/s Sigrauli Super Thermal Power Station by chemical - Held that:- The issue is covered by the said decision of the Tribunal in the case of M/s Hitech Industrial Lining Pvt. Ltd. Vs Commissioner of Central Excise, Salem [2017 (8) TMI 837 - CESTAT CHENNAI], in favor of the assessee. The demand is also barred by limitation having been raised after the normal period. In the absence of any positive evidence to reflect upon any malafide on the part of the assessee, extended period is not available to the Revenue. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 806
  Goods Transporter Operators - retrospective amendment to the provisions of Finance Act - Held that:- An identical issue was subject matter of Tribunal’s decision in the case of M/s Seksaria Biswan Sugar Factory Ltd. Vs Commissioner of Central Excise, Lucknow, [2015 (12) TMI 1404 - CESTAT ALLAHABAD] wherein after taking into consideration the entire facts, benefit was extended to the assessee even though no show cause notice was issued and service tax was deposited by the assessee under the instruction of the Revenue. Appellant cannot be penalized for obeying the instructions of visiting staff - the authorities below is directed to process the assessee’s claim for refund of the deposited amount - appeal allowed.

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• 2018 (8) TMI 805
  Business Auxiliary Services” - appellant entered into an agreement with M/s St Micro Electronic Pvt. Ltd Asia Pacific, Singapore for market survey in India for finding a market for the goods being manufactured by the foreign entity - foreign entity has no office in India - Held that:- The matter has now been decided by Third Member and as per the Final Majority Order, the services have to be treated as export of services thus attracting no tax liability. To the same effect is the decision of the Tribunal in the case of Gap International Sourcing (India) Pvt. Ltd. [2014 (3) TMI 696 - CESTAT NEW DELHI] - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 804
  Business Auxiliary Services - suppression of value of service provided - appellant’s claim is that the said confirmation of service tax is not appropriate, inasmuch as while providing services, they have received certain amounts on account of the reimbursable expenses as also on account of the supply of goods - Held that:- The appellant has not been able to substantiate their plea by production of relevant telephone bills or the purchase of goods orders etc. Appreciating the said fact as also the fact that the demand is much on the lower side and the period involved is almost 12 years back, there is no justifiable reason to interfere in the impugned order - appeal dismissed - decided against appellant.

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• 2018 (8) TMI 803
  Business Auxiliary Services - appellant’s claim is that the said confirmation of service tax is not appropriate, inasmuch as while providing services, they have received certain amounts on account of the reimbursable expenses as also on account of the supply of goods - Held that:- The appellant has not been able to substantiate their plea by production of relevant telephone bills or the purchase of goods orders etc. Appreciating the said fact as also the fact that the demand is much on the lower side and the period involved is almost 12 years back, there is no justifiable reason to interfere in the impugned order - appeal dismissed - decided against appellant.

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• 2018 (8) TMI 802
  Penalty - Business Auxiliary Services - Held that:- There is no challenge to the findings of Commissioner (Appeals) as regards non-contest of the demand, and also by appreciating that the amount involved is not much on the higher side as also keeping in view that the period involved is almost more than 12 years old, the prayer of appellant cannot be accepted - appeal dismissed - decided against appellant.

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• 2018 (8) TMI 801
  Time Limitation - Renting of Immovable Property Service - SCN was issued on 24.09.2012 while period of demand is 01.06.2007 to 31.03.2010 which is entirely beyond the normal period of one year - Held that:- The Commissioner (Appeals) has invoked Section 80 implies that there was no willful mis-statement or suppression of fact or deliberate evasion of service tax in this case, in which circumstances, extended period cannot be invoked rendering the entire demand time barred - extended period cannot be invoked - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 800
  GTA Service - freight charges towards hiring taxies for transportation of Newspapers to various places - issuance of Consignment note - Rule 4B of Service Tax Rules - Held that:- In the said SCN there is no evidence provided to establish that consignment notes were issued by anybody in respect of said activity and that revenue sought to classify the said activity under GTA Service - Mere transportation of goods by motor vehicles is not service provided by GTA and that as required under Rule 4B of Service Tax Rules, if consignment note in wherever form is not issued, the activity is not covered by the definition of GTA Service - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 799
  Manpower Recruitment Agency Service - demand of service tax with penalty - evasion of duty - suppression of facts - Held that:- The Revenue’s allegation is based upon the bank statements as also the bills procured from their clients. In such a scenario the submission made by the ld.Advocate that the figures have not been picked up from the balance sheet does not carry any weight. The appellants have not strongly contested the matter before the lower authorities - appeal dismissed - decided against appellant.

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• 2018 (8) TMI 798
  Time Limitation - appeal stands filed after the normal period of three months provided for filing an appeal as also even after the extended period of three months for which the Commissioner (Appeals) is empowered to condone the delay - Held that:- After receipt of Order-in-Original, the appellant filed a rectification of mistake application before the Adjudicating Authority in terms of Section 74 of the Finance Act, 1994. The said Section provides for filing of such rectification applications within the period of two years and admittedly the ROM was filed by the assessee within the said period i.e., 16.08.2011. The same was rejected by the authority on 15.02.2012, which order was challenged before the Commissioner (Appeals). Whether the date of the original order has to be taken as the relevant date for the purpose of computing the limitation or the date on which the ROM Order was passed, has to be considered as the relevant date? - Held that:- The issue stands considered by the Tribunal in the case of Sree Lotus Exports vs. Commissioner of Central Excise, Trichy [2011 (6) TMI 360 - CESTAT, CHENNAI] and in the case of United Corporation vs. Commissioner of C. EX. Chandigarh [2015 (6) TMI 1033 - CESTAT NEW DELHI], it stands held that the time period of filing appeal has to be reckoned from the date of rejection of ROM Application. Thus, the relevant date would be 15.02.2012 and the appeal filed on 19.07.2012 would be within the powers of Commissioner (Appeals), for condoning the delay if any. Matter remanded to Commissioner (Appeals) to decide the limitation aspect - appeal allowed by way of remand.

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• 2018 (8) TMI 797
  Security Agency Services - N/N. 56/98-ST dated 07.10.1998 - time limitation - Held that:- Admittedly, the appellants had provided the Security Agent Service to the appellant and have also not been able to establish about that part of the said services in respect of security of lockers and strong room etc. so as earn the exemption - there are merits in appellant’s contention as regards time bar. Service tax law having been issued recently, was not free from doubt and a lot of litigation was going on specially in respect of the Security Agent Service. The appellant being an illiterate person, may have been under a bonafide belief that no tax liability gets fastened upon him. As such in the absence of any positive evidence to reflect upon the malafide of the appellant, the extended period would not be available to the appellant. Accordingly, the demand falling within the limitation period. Cum-duty benefit - Held that:- The issue is no more res-integra and it stands held in many decisions that the cum-duty benefit has to be extended. As the matter is being remanded for re-quantification of the demand falling within the limitation period, the Original Adjudicating Authority directed to extend the benefit of cum-duty also and re-quantify the demand accordingly. Penalty - Held that:- there is no malafide on the part of the appellant, there is no justifiable reason to impose penalty upon him. Appeal disposed off.

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• 2018 (8) TMI 796
  Repetition of SCN - No rebuttation by Original Authority - Held that:- The grounds of appeal are repetition of show cause notice and the findings by Original Authority have not been rebutted by Revenue - appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 795
  Contract related to development and maintenance of garden of GM Office, VTC, Executive hostel, Dispensary etc. - proviso to Sub-section (1) of Section 73 of Finance Act, 1994 - Held that:- Small part of the confirmed demand pertains to the period from 14/10/2007 to 14/10/2008 and remaining confirmed demand is not sustainable for the reason that proviso to of Sub-section (1) of Section 73 of Finance Act, 1994 was not invoked. In respect of the demand related to contract dated 23/02/2006 for the period from 14/10/2007 to 14/10/2008, we remand the matter back to the Original Authority with direction to examine the admissibility of the appellant to the benefit of said Notification No.12/2003-ST. Appeal allowed by way of remand.

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• Central Excise

• 2018 (8) TMI 794
  Refund of unutilized Cenvat Credit - Credit was accumulated due to disproportionate rate of duty on inputs and final products availed at the time of surrender of Central Excise Registration. Revenue has fairly conceded that the issue involved in the present Appeal is squarely covered against the revenue in view of the decision of the Hon’ble Supreme Court in Union of India Vs. M/s Slovak India Trading Co. Pvt. Ltd [2007 (1) TMI 556 - SUPREME COURT] - In the aforesaid decision, it is specifically observed and held that the dealer shall be entitled to the refund of unutilized Cenvat Credit on closure of factory. No substantial question of law arises in the present Appeal - appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 793
  SSI Exemption - use of Brand Name - the appellant have been using the brand name 'Surya’ 'Gold' and 'Luxmi' on their manufactured products - Extended period of limitation as per proviso u/s 11A. Held that:- It is a matter of fact as admitted by the appellant/assessee that the brand name Surya Gold and Luxmi does not belong to them and both the brand names are registered in the name of some other persons. The Department has also come to know about this fact only when they have referred to the website of Controller General of Patent Design and Trade Marks. The person availing the benefit of the notification (which provides exemption from payment of duty) has to ensure or take necessary precautions before availing the benefit of such exemption notification. It is expected from the person availing the benefit of any notification that he himself has to be sure and meet all the conditions of such notification before making any claim of benefit - It was the duty of appellant/assessee to ensure that the brands used by them does not pertains to any other person and in case the same was pertaining to any other person it was also required from them to have paid the appropriate central excise duty on manufacture and clearance of such branded goods. It is a settled law that it is the onus of ensuring compliance of the conditions of the notification are to be made by the person who is availing the benefit of such exemption notification - It is a matter of record now that the appellant/assessee have been using the brand name of other persons and thus the SSI notification benefit N/N. 8/2003-CE is certainly not available to them as per the conditions provided thereunder. Time Limitation - Held that:- The onus of proving that the conditions of notification are not being violated rest with the person availing the benefits of such notification, the assessee has failed in ensuring the proper compliance of the conditions mentioned in the N/N. 8/2003-CE and, therefore, the extended time proviso under Section 11A of Central Excise Act, 1944 is invokable in this case. Appeal dismissed - decided against appellant.

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• 2018 (8) TMI 792
  Clandestine removal - shortage of raw materials - Revenue was of the belief that the excess Duplex Paper entered in their Cenvat records involving duty of Rs. 12,31,553/- was availed only on the basis of the invoices issued by the raw material supplier, without the actual receipt of the said Duplex Paper - Held that:- The issuance of raw material from the Cenvat account is not on one to one co-relation basis. Revenue has picked up a particular period and has relied upon the receipt during that period and the consumption shown in that period. Raw material received in one particular period can always be used in the subsequent periods. The credit is available to the assessee at the time of receipt of the said raw material and there is no requirement of its use, for earning the credit. The appellants have taken a categorical stand before the authorities below, which does not stand disputed by the revenue that the payments were by the appellants through the bank channels i.e. ride cheques, which establishes that the Duplex Paper Board was actually purchased by the appellants. There is neither any allegation nor any evidence of flow back of money from the raw material seller to the appellants. The consideration of the raw material having been made by way of cheques and there being no evidence to support the revenue’s allegations, the denial of credit to the appellants on the said sole ground is not sustainable. The appellants having availed the credit in respect of the Duplex paper, is duty bound to show the utilization of the raw material in the manufacture of their final product. It is not understood as to how in the absence of the Duplex paper, the assessee would manufacture their final product - demand set aside. Confirmation of demand of Rs. 4,06,382/- based upon the dispatch advices and parallel invoices - there is a recording by the Commissioner (Appeals) that the appellants have not contested the above demand and as such the same is being upheld. Learned Advocate appearing for appellant submits that the said demand stands contested by them - Held that:- Inasmuch as, there is a dispute on the said factual fact, it is fit to set aside the said part of the order and remand the matter to the Commissioner (Appeals) for fresh decision, after affording an opportunity to the appellant. Penalty u/r 26 of CER on Shri Upendra Goenka, Director - there is no confiscation of goods - Held that:- In the absence of any proposal for confiscation, penalty under Rule, 26 cannot be imposed - Otherwise also, there is no evidence on record indicating any malafide on the part of Director, showing his association with any illegal activity - penalty set aside. Appeal allowed - decided partly in favor of appellant and part matter on remand.

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• 2018 (8) TMI 791
  Clandestine removal - MS ingots - penalty - the entire case of the department is based upon the entries in the diary recovered from one Mr. S.K. Pansari (proprietor of M/s Monu Steels) and also on the statement of the said Mr. S.K. Pansari, without their being any corroborative evidence - Held that:- In the impugned order nowhere it has been discussed as to how the demand of duty is sustainable in the absence of any clinching evidence of clandestine manufacture and removal of the goods. The entire demand is based upon the records recovered from Sh. S.K. Pansari proprietor of M/s Monu Steel. There is no evidence expect the said statement and private diary entry of 3rd party i.e. of Sh. S.K. Pansari which contains the name of the appellant. 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 can be made. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 790
  Job-Work - benefit of N/N. 214/86-CE - Department demanded duty on the ground that their suppliers of raw materials, BHEL and L&T Ltd. have not submitted undertaking as required under job work N/N. 24/86-CE. - Held that:- All the conditionalities and requirements of Notification No.214/86-CE have been substantively complied with both by the principal manufacturers as well as by the appellants. Non-submission of undertaking by the principal manufacturers should then be considered as a curable defect. In any case, such undertakings have been subsequently filed by the said suppliers - Benefit allowed - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 789
  Clandestine removal - confiscation of seized goods - demand of duty on seized PVC pipes on the premise that the said goods are meant for clandestine removal, therefore, they are liable to pay duty - Held that:- Admittedly, the show cause notice issued for the finished goods having MRP but the seized goods are not the said goods for which the show cause notice has been issued to the appellant. In that circumstances, the finished goods in the brand name of Kalinga brand PVC Pipes and Cables of Rs. 20,15,710/-, Calcium Carbonate CPW, Resin amounting Rs. 9,61,200/- and PVC Granules and Packing materials PVC Scrap amounting Rs. 1,00,000/- cannot be confiscated without issuance of the show cause notice - Confiscation of the said goods is bad in law. With regard to seizure of goods in the case of M/s Shree Ganesh Udyog, the goods seized are Kalinga brand wire & Cables to the tune of Rs. 19,39,910/-, plastic granules amounting to Rs. 1,31,200/- and Calcium Carbonate CPW & Resin amounting to Rs. 3,36,250/-, Calcium Carbonate CPW & Resin are the raw materials and same cannot be confiscated under Rule 25 of the Central Excise Rules, 2002. With regard to plastic granules, it is not the case of the Revenue that the appellant are manufacturing branded goods of third party. As the appellant are only manufacturing plastic granules and enjoying the benefit of SSI exemption under N/N. 8/2003-CE dated 01.03.2003. Further, the Revenue has not come with any evidence that the appellant is not entitled for the said exemption for manufacturing of plastic granules in their factory. Therefore, the said finished goods are not liable for confiscation - In that circumstances, goods seized in the factory of M/s Shree Ganesh Udyog are not liable for confiscation. Consequently, the redemption fine and penalties imposed on M/s Shree Ganesh Udyog is set aside and penalty imposed on Shri Anil Kapoor, Partner is also set aside. Demand of duty against M/s Shree Ganesh Industries on PVC Pipes - Held that:- The said PVC Pipes have not been removed from the factory of the appellant. As the duty payable at the time of clearances of goods, in that circumstances, at this stage, no duty is payable by the appellant. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 788
  Clandestine removal - excesses of stock - no corroborative evidence - demand solely based upon the entries made in the spiral diary recovered from the appellant’s premises during the raid - Held that:- As the entire case of the Revenue is based upon the entries made in the said diary as also the 18 loose slips without their being any other evidence on record, it is difficult to accept the findings of clandestine removal. The allegations are of clandestine removal in respect of huge quantum of the final products having been manufactured by the appellant to the extent of around 3.88 crores approx., which require a lot of raw material, their actual manufactured in the assessee’s factory in a clandestine manner, transportation of the same, buyers who have purchased it and the receipt of consideration by the appellant from their buyers. There is virtually no evidence produced by the Revenue as regards procurement of such a huge raw material or identification of transporters or buyers. The entire case stand made out on the basis of the entries made in the said private notebook without their being any corroborative evidences. It is well settled law that the allegations of clandestine removal are required to be established by production of sufficient and positive evidences, the onus for which lies heavily upon the Revenue - demand alongwith penalty set aside. Demand of duty in respect of the goods seized from the dealer’s premises and confiscation of the same along with the imposition of penalties - Held that:- It is well settled law that the goods found in the market are deemed to be duty paid unless established to be cleared without payment of duty by production of sufficient evidences. Inasmuch as we have already held that there is virtually no evidences on record to show clandestine removal on the part of the appellant, the confirmation of demand in respect of such goods found at the dealer’s premises cannot be upheld - confiscation and penalties set aside. Shortages and excesses found in the assessee’s premises which is spread over a period of time being below the permissible tolerance limit as per the provisions of the Standard of Weight and Measures Rules, 1977 and being nominal percentage has to be considered as genuine and not requiring any payment of duty or confiscation. Appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 787
  SSI Exemption - use of Brand name of others - it was alleged that branded goods manufactured under the brand name ‘Swaraj’ & ‘Prakash’ which is owned by M/s Prakash Agriculture Industries, Agra - Held that:- It is not the Revenue’s stand that the appellant have cleared the said goods in the market and there is no evidence that the same have not been used by the brand name owners as original equipment. In the absence of any such suggestions by the Revenue, the denial of the Notification on the mere ground of non-observance of procedure is not justified - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 786
  CENVAT Credit - duty paying invoices - supplementary invoices issued prior to 01.04.2011 - case of Revenue is that before 01.04.2011 there was no provision in Cenvat Credit Rules for availment of Cenvat credit on supplementary invoices - Held that:- Rule 9(1) (bb) of Cenvat Credit Rules does not have any retrospective effect. Therefore, in respect of supplementary invoices which were issued before 01.04.2011 there is no restriction on availment of Cenvat Credit - reliance placed in the case of M/s Delphi Automotive Systems (P) LTD. Vs Commissioner of Central Excise, Noida [2013 (12) TMI 156 - CESTAT NEW DELHI] - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 785
  CENVAT CRedit - GTA Services for outward transportation of their final product during the period 2013-14 and 2014-15 - demand by invoking extended period of limitation - Held that:- Admittedly, during the relevant period, all the decisions were in the favor of assessee laying down that credit of service tax paid on GTA services for transportation of the final product up to the buyer’s premises, is permissible. Further, the credit was being availed by the appellant, by reflecting the same in their Cenvat account, which have subsequently audited and an objection was raised. The factum of reflection of credit in the statutory account is indicative of the bonafide intention. Revenue apart from making a bold observation that the assessee was aware of the fact of non-admissibility of credit, has not referred to any evidence on record to show that such credit was being availed with a malafide intention. There are no basis for the revenue to arrive at the above finding. Penalty - Held that:- As the extended period has been held as non invokable, in the absence of any malafide, the penalty imposed on the appellant is also required to be set aside for the same reason. The demand having being raised beyond the limitation period is barred - adjudicating authority directed to re-quantify the demand falling within the limitation period. Appeal allowed in part by way of remand.

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• 2018 (8) TMI 784
  Clandestine removal - MS bars - Revenue entertained a view that the higher figures reflected in ER-4 return is the correct clearance from the appellant’s factory and the difference has been cleared without payment of duty, in a clandestine manner - Held that:- Apart from the said difference, there is virtually no other evidence on record to show any clandestine manufacture and removal of the goods. Even if the assessee’s explanation is not accepted it has to be appreciated that both the figures stand given in the two returns by the appellants themselves. The charges of clandestine removal are required to be produced by the Revenue and onus is heavily placed upon them. No efforts stand made by the Revenue to further investigate the matter and collect evidence of any clandestine activities - demand set aside. CENVAT Credit - duty paying invoices - credit availed on the basis of photocopies of the invoices issued by the input supplier - Held that:- The input supplier as also the appellant are falling under the same division and the input supplier have got the photocopies of the invoices certified by their range Inspector to the effect that the said inputs stand cleared by the manufacturer on payment of duty. In addition, the returns filed by the said manufacturer as also the challans issued by them stand produced - denial of credit on a hyper-technical ground, in the absence of any allegation of non-receipt of goods by the assessee, is not called for - demand set aside. Appeal allowed in toto.

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• 2018 (8) TMI 783
  Refund claim - duty paid under protest - time limitation - Held that:- Every refund application has to pass through the bar of limitation in terms of the provisions of section 11B of the Central Excise Act. However, as per exceptions carved out in the said section, the limitation would not apply if the duty stands paid under protest or the assessments are provisional. The appellant have taken a categorical stand that the reversal was being done by them after lodging their protest vide letter dated 05.06.2009. If that be so, the limitation would not apply - However, neither of the authorities below have referred to and considered the said protest letter filed by the appellants. Matter remanded to the original adjudicating authority for re-consideration in the light of the protest filed by the assessee - appeal allowed by way of remand.

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• 2018 (8) TMI 782
  CENVAT Credit - Baggasse emerged during the course of manufacture of sugar, stands cleared by the appellant without payment of duty - Rule 6(3) of Cenvat Credit Rules - Held that:- The issue stands decided by Hon’ble Supreme Court in the case of Union of India v. DSCL Sugar Ltd. [2015 (10) TMI 566 - SUPREME COURT] laying down that Bagasse being residue of agriculture product and not excisable, the same is not covered by the definition of manufacture and consequently the duty liability under Rule 6(3) would not arise - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 781
  Finalization of provisional assessment - Rule 7 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - Since the information in respect of such goods such as the cost of transportation from the factory to where the sale took place was not known in advance, Provisional Assessment was done, Held that:- The issue is no more res-integra since it has been decided by this Tribunal in appellants own case M/S UAL UTTAR PRADESH VERSUS COMMISSIONER OF CENTRAL EXCISE, ALLAHABAD [2018 (8) TMI 413 - CESTAT ALLAHABAD], where it was held that after ordering Provisional Assessment for want of data on cost of transportation subsequently Revenue cannot change its stand and order finalization of assessment by invoking the said Rule 7 - Matter remanded back to the Original Adjudicating authority with a direction to finalize the assessment by resorting to provisions of Rule 5 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, after setting aside the impugned order - appeal allowed by way of remand.

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• 2018 (8) TMI 780
  Differential duty demand - Urea - N/N. 1/2011 or N/N. 2/2011 - demand on the ground that the appellant had availed the input service tax credit in respect of security agency services and commission agent services - Held that:- The appellant stand that they have not availed the service tax paid to commission agent for sale of urea is required to be appreciated by verifying the records maintained by the assessee. For such verification, it is deemed fit to set aside the impugned order and remand the matter to the Original Adjudicating Authority - appeal allowed by way of remand.

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• 2018 (8) TMI 779
  Penalty u/r 26 of the Central Excise Rules, 2002 - Held that:- The appeals filed by M/s Apollo Metalex Pvt. Ltd. and M/s RRB Chemicals were disposed of by the Tribunal in APOLLO METALEX PVT. LTD. VERSUS COMMISSIONER OF C. EX. & S.T., NOIDA [2015 (10) TMI 960 - CESTAT NEW DELHI] setting aside the demand against the main appellant M/s Apollo Metalex Pvt. Ltd. as also setting aside the penalties on all the persons - penalty set aside - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 778
  Clandestine manufacture and removal - Ingots - demand based upon the electricity consumed by the respondent - Held that:- Apart from making general comments that the Adjudicating Authority has not applied its mind to the facts of the case inasmuch as there was enough evidence on record to confirm the demand against the assessee - Revenue did not contend that the declaration of law in the case of R.A. Castings is not applicable to the facts of the present case. The demand was primarily based upon electricity consumption, which issue stands decided right upto the Supreme Court in the case of R.A. Castings [2011 (1) TMI 1302 - SUPREME COURT OF INDIA], where it was held that excess production of steel ingots, as proof of clandestine removal, could not be estimated based only on higher electricity consumption. Appeal dismissed - decided against Revenue.

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• 2018 (8) TMI 777
  Method of Valuation - small puryia/ pouches of Chewing Tobacco - Section 4 or Section 4A of CEA? - Held that:- Small puryia/ pouches of Chewing Tobacco is correctly classified under section 4 of CEA - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 776
  Classification of ‘Quick Lime’ - whether classified under Chapter 25 of the Central Excise Tariff Act or under Chapter 28? - Held that:- Hon’ble Supreme Court’s decision in the case of Collector of Central Excise vs. Nuchem Industries Pvt. Ltd. [1997 (11) TMI 108 - SUPREME COURT OF INDIA] relied wherein it is stand held that ‘Quick Lime’ is not at all exigible to central excise duty - appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 775
  Abatement of Duty - machinery continuously sealed for a period of 23 days - denial of abatement on the ground that it cannot be said that it was continuously sealed for more than 14 days as the machine was sealed at two different locations - manufacture of Chewing Tobacco, Zarda Scented Tobacco and Pan Masala containing tobacco - Section 3A of Central Excise Act, 1944 - Held that:- The provisions of Rule 10 provided for abatement in case of continuous closure of the factory for a period of 15 days for more - Admittedly, in the present case the machine was sealed for a period of 15 days, though at two different locations. The fact remain that there was no production continuously for a period of 15 days. As such objection raised by the Revenue is hyper-technical and procedural. The shifting of the machine was done under intimation to the Revenue and under their supervision. In such a scenario, it has to be held that the machine in question was continuously sealed for more than 15 days of appellant claim for abatement has to be allowed. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 774
  CENVAT Credit - Common inputs have been used in the manufacture of appellants final excisable product i.e. lead ingots and also in the manufacture of exempted silver bullion - non-maintenance of separate records - Held that:- The appellants are essentially and primarily engaged in the manufacture of lead ingots. During the course of manufacture of said final product, dross emerges as an inevitable evil. Such dross is sent by the appellant to their job workers for extraction of silver bullion. The emergence of dross is in the nature of waste material and such waste material further been utilized for extraction of silver bullion to a small extent. Hon’ble Bombay High Court decision in the case of Rallies India Ltd. vs. Union of India [2008 (12) TMI 46 - HIGH COURT BOMBAY] has held that provisions of Rule 6 are not applicable when the product emerges either as a waste or as a by-product. Appeal allowed - decided in favor of appellant.

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• 2018 (8) TMI 773
  Manufacture - activity of packing, repacking, labeling, re-labeling of spare components and assemblies of Hydraulic Excavators - effect of the Finance Act, 2012 - Held that:- The appellant was not liable to pay any Excise duty on the activity of packing, repacking, labeling, re-labeling of spare components and assemblies of Hydraulic Excavators prior to 28/05/2012 when the Finance Act, 2012 received the assent of the President. It is an admitted fact that the said amount of excise duty relating to the aforesaid activity having been paid on 07/07/2011 i.e much before coming into effect of the Finance Act, 2012 - the appellant is not liable to pay any interest - the penalty under Section 11AC read with Rule 25 of Central Excise Rules, 2002 also set aside. Penalty u/s 77 and 78 of FA - Held that:- There is no element of fraud, suppression or contumacious conduct or falsification of records on the part of the appellant, hence the appellant is not liable to pay any penalty under Section 78 or under Section 77 of the Finance Act, 1944 - penalty set aside. Appeal allowed - decided in favor of appellant.

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• Indian Laws

• 2018 (8) TMI 831
  Eviction of the respondent-tenant - eviction on the ground that the tenant had defaulted in payment of his share of municipal tax as an occupier under the provisions of the Kolkata Municipal Corporation Act, 1980 - West Bengal Premises Tenancy Act, 1997. Whether after the amendment of the West Bengal premises Tenancy Act by Amendment Act No. 14 of 2001 with effect from 10th July, 2001 [which had incorporated sub-section (8) to Section 5] whether a tenant who defaults in payment of his/her share of municipal tax as apportioned by the landlord would be in default of rent rendering him/her liable to eviction? Held that:- In the present case, under the tenancy agreement municipal taxes were included in the monthly rent payable and any enhancement thereof was to result in enhancement of the monthly rent also. With the amendment made to the Act with effect from 10th July, 2001 and upon incorporation of sub-section (8) of Section 5, the obligation to pay municipal taxes as an occupier of the premises fell upon the tenant. The relevant clauses in the rent agreement therefore stood superseded by the statutory obligation cast on the tenant by the amendment to the Act - The respondent-tenant nowhere denied in any specific terms that the share of municipal taxes demanded was disproportionate or excessive or otherwise unauthorized in law. The argument advanced at the bar that the landlord cannot apportion the municipal taxes among different tenants if the premises is to be occupied by more than one tenant and it is the Municipal Corporation who is the authority to separately assess the tax payable by each tenant does not find any support from the provisions of the 1980 Act. From the provisions of Section 230 of the 1980 Act, it is clear that the person to be assessed to tax is the person primarily liable to pay i.e. the owner who is vested with the right to recover the portion of the tax paid by him on behalf of the tenant, if required, proportionately to the extent that the value of the area occupied bears to the value of the total area of the property. Under the 1980 Act, in the event of any default on the part of the owner to pay the tax the rent payable by the tenant(s) is liable to be attached - In the present case, default on the part of the respondent-tenant is clear and evident. The obligation to pay municipal taxes on the tenant being over and above the obligation to pay the rent by virtue of the provisions of Section 5(8) of the 1997 Act, the High Court could not have imposed on the landlord the requirement of obtaining a formal order of enhancement of rent from the Rent Controller. Appeal allowed - application filed by the landlord for eviction of the respondent-tenant is allowed.

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• 2018 (8) TMI 830
  Frustation of contract - Force Majeure - economic loss and un-viability of the contract due to loss in profit margins as a result of change in the policy - Net Trading Margin on Sale of Gold by PEC to be imported - 20:80 scheme of RB - whether with the change in the policy as made by the RBI circular dated 21st May, 2014, there is a cause of frustration of contract as contemplated in clause 7 of the tender document and/or Section 56 of the Contract Act? Held that:- In Naihati Jute Mills Ltd. vs. Khyaliram Jagannath, [1967 (10) TMI 66 - SUPREME COURT], it was held that a contract is not frustrated merely because the circumstances in which it was made are altered. The Courts have no general power to absolve a party from the performance of its part of the contract merely because its performance has become onerous on account of an unforeseen turn of events. There is no merit in the petition - petition dismissed.

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• 2018 (8) TMI 829
  Dishonor of cheque - insufficiency of funds - Offences under Section 138 of the NI Act - whether an appeal can be maintained against the judgment of acquittal for an offence punishable under Section 138 of the NI Act before the jurisdictional Sessions Court under the proviso to Section 374 Cr.P.C.? Held that:- Since it was a case of acquittal judgment passed by the jurisdictional court relating to the offences under Section 138 of the NI Act, the complainant could have preferred an appeal before the High Court under Section 378(4) Cr.P.C. and thereafter for special leave to the Supreme Court under Article 136 of the Constitution of India. The First appellate court, without having any jurisdiction as contemplated under the Cr.P.C., has entertained the appeal relating to the judgment of acquittal passed by the Trial Court in C.C.No.24880/2 007 and hence, the impugned judgment in Crl.A.725/2010 is passed without having any jurisdiction. The First Appellate Court in Crl.A.No.725/2010, erroneously has reversed the acquittal judgment held by the Trial Court in C.C.24880/2007 without any jurisdiction as contemplated under Section 378(4) Cr.P.C., where the appeal has to lie before this court in a judgment of acquittal passed by the Trial Court - appeal allowed.

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• 2018 (8) TMI 828
  Dishonor of Cheque - insufficiency of funds - only contention urged by the accused in the course of the trial is that the said cheque was handed over by him to the complainant in some other transaction and the same has been misused by the complainant to lay a false claim against him - Held that:- The reasoning assigned by the trial Court that there was no subsisting debt in respect of which the accused could have issued the cheque is liable to be set aside. Moreover, in the instant case, the complainant has produced the covering letter Ex.P.5 which clearly establishes that the accused has taken over the liability of the aforesaid Satyappa Vantigodi and in repayment of the said liability he has issued the said cheque. By taking over the said liability the accused has stepped into the shoes of the guarantor and therefore, even on that score the accused is liable to honor the said cheque. The subject cheque having been dishonored for want of insufficiency of fund, the accused has rendered himself liable for conviction under Section 138 of N.I. Act - The contra finding recorded by the trial Court being opposed to the provisions of Section 138 of the N.I. Act and the material on record cannot be sustained. It would be just and appropriate to sentence the accused to pay the fine amounting to twice the amount of the cheque i.e. Rs. 2,72,468/-. Appeal allowed.

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• 2018 (8) TMI 827
  Dishonor of Cheque - insufficiency of funds - case of accused is that the cheque in question was obtained by the Bank officials under force and duress; it was not issued by him in discharge of the debt of his father; therefore, he has not committed any offence under section 138 of N.I. Act - acquittal of accused of the offence punishable under section 138 of N.I. Act. Whether the accused could be held liable for the consequences of dishonour of the cheque when the same was issued by him in discharge of the debt due by his father? Held that:- In order to render the accused liable for the penal action, firstly, the dishonored cheque should have been issued by the accused; secondly, the said cheque should have been drawn on the account maintained by him with the banker for payment of any amount of money to another person from out of that account; thirdly, the cheque should have been issued towards the discharge, in whole or in part of any debt or liability - There is nothing on record to show that the respondent/accused has taken any action against the bank officials for return of the said cheque on the ground that the said cheque was taken by the bank officials under force and duress as contended by him. Even when the complainant issued a notice to him demanding repayment of the cheque amount, the accused did not even bother to reply to the said notice, making it evident that the contentions urged by the respondent/accused is only an after-thought and is calculated to set up a defence to avoid the liability for the dishonor of the said cheque. The conduct of the accused clearly indicate that the said cheque was issued by him to avert the seizure of the movables and other property of his father. Going by the very stand taken by the accused, it stands established that the accused issued the cheque to avert seizure of movable and immovable properties of his father for recovery of the debt due by him. It is not in dispute that, on the date of issuance of the cheque by the accused, a legally enforceable debt was due by his father. It is in discharge of this debt, the accused issued the subject cheque and thereby averted the sale or confiscation of movable and immovable properties of his father in which the accused was vitally interested. Therefore, it cannot be said that the cheque was issued by the accused without any lawful consideration. Section 138 of the N.I. Act does not debar a person from taking up the liability of another person. It is for this reason, the explanation to Section 138 of N.I. Act defines the expression ‘debt’ or ‘other liability’ as a legally enforceable debt or ‘other liability’. Further, the presumption under Section 139 of N.I. Act provides that unless the contrary is proved, the holder of a cheque received the cheque for the discharge in whole or in part of ‘any debt’ or ‘other liability’. Therefore, ‘any debt’ and ‘other liability’ would also cover the liability of another person as well. The accused having admitted the issuance of cheque and the complainant having proved the existence of a legally recoverable debt and also having established the circumstances in which the accused issued the said cheque to avert the sale or confiscation of the properties of his father, in my view, the presumption engrafted under Section 139 of the N.I. Act comes into play - The accused has failed to rebut the said presumption with cogent and acceptable evidence. Therefore, on both these counts, the findings recorded by the Court below cannot be sustained. Appeal allowed - accused is held guilty of the offence punishable under Section 138 of N.I.Act and is sentenced to pay a fine amounting to twice the amount of cheque i.e., Rs. 4,76,320/- within 60 days from the date of this order.

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