TMI Tax Updates - e-Newsletter
August 25, 2017

Case Laws in this Newsletter:

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

TMI SMS

• Though right of privacy is a fundamental right, An invasion by the Government is allowed only for legitimate aims - SC

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Articles

1. All you should know while filing Form GST TRAN-1 (Transitional Provisions)

   By: CASanjay Kumawat

2. Place of supply for GTA under GST

   By: CA.VINOD CHAURASIA

News

1. Statement on behalf of The Government – on The Supreme Court Judgement on Right to Privacy

2. Bright yellow ₹ 200 note to be out tomorrow: RBI

3. National Workshop on Enforcement of IPRs concludes with enhancing the understanding among the enforcement authorities about knowledge on IPR enforcement

4. Bilateral Meeting - India and Uzbekistan

5. Though right of privacy is a fundamental right. Informational privacy is a facet of the right to privacy. An invasion by the Government is allowed only for legitimate aims - SC

6. RBI Reference Rate for US $

Notifications

Customs

1. 39/2017 - dated 23-8-2017 - ADD

Seeks to amend notification No. 49/2012 - Customs (ADD) dated the 26th November,2012 to modify the amount of anti-dumping duty on import of Caustic Soda originating in or exported from Iran, Saudi Arabia and USA.

DGFT

2. 23/2015-2020 - dated 23-8-2017 - FTP

Amendment in Para 3.24 (j) of Chapter-3 of FTP 2015-2020 - Entitlement to export freely exportable items on free of cost basis by Status Holders has been revised.

GST - States

3. 03/2017-State Tax - dated 23-8-2017 - Delhi SGST

Amendments in the notification No. 02/2017-State Tax, dated, the 18th August, 2017

4. 02/2017-State Tax - dated 18-8-2017 - Delhi SGST

Last date for furnishing of return in FORM GSTR-3B

5. 11/2017-State Tax (Rate) - dated 30-6-2017 - Delhi SGST

Notifies that the State tax, on the intra-State supply of services.

6. 18/2017 - dated 1-7-2017 - Karnataka SGST

KST Notification No.FD 48 CSL 2017- Reducing Rate of Tax on Fertilizers.

7. F.No.17(131)/ACCT/GST/2017/2359-2368 - dated 21-8-2017 - Rajasthan SGST

Amendments in the notification No. F.17(131)/ACCT/GST/2017/2344 dated 17th August 2017.

8. F.No.12(56)/FD/Tax/2017-76 - dated 18-8-2017 - Rajasthan SGST

Amendment in the Notification no F.12(56)FD/Tax/2017-Pt-I-40 dated 29/06/2017.

9. F.No.12(46)/FD/Tax/2017-Pt-II-75 - dated 17-8-2017 - Rajasthan SGST

The Rajasthan Goods and Services Tax (Fifth Amendment) Rules, 2017.

10. F.No.12(60)/FD/Tax/2017-68 - dated 19-7-2017 - Rajasthan SGST

Rajasthan Authority for Advance Ruling.

11. 06 Re 085/2016/Taxation A1 - dated 21-8-2017 - Tamil Nadu SGST

Amendments in the Notification No. 5/2017-State Tax, Re No.085/2016 Taxation dated the 17th August, 2017,

12. 05 Re 085/2016/Taxation/A1 - dated 17-8-2017 - Tamil Nadu SGST

Last date for furnishing the return in Form GSTR-3B electronically through the common portal for the month of July 2017.

13. G.O. (Ms) No. 091 - dated 10-8-2017 - Tamil Nadu SGST

The Tamil Nadu Goods and Services Tax (Amendment) Rules, 2017.

14. G.O. Ms. No. 088 - dated 31-7-2017 - Tamil Nadu SGST

Amendments in the Notification No. II(2)/CTR/532(d-4)/2017, 29th June, 2017

15. G.O. Ms. No. 087 - dated 31-7-2017 - Tamil Nadu SGST

ERRATUM - Notification No. II(2)/CTR/532(d-4)/2017, dated the 29th June 2017.

16. G.O. Ms. No. 086 (a2), II(2)/CTR/595(a-2)/2017 - dated 27-7-2017 - Tamil Nadu SGST

Erratum - Notification No.II(2)/CTR/532(d-5)/2017 dated the 29th June 2017.

17. G.O. Ms. No. 086 (a1), II(2)/CTR/595(a-1)/2017. - dated 27-7-2017 - Tamil Nadu SGST

Erratum - Notification No.II(2)/CTR/532(d-4)/2017, 29th June 2017

18. 23/2017- State Tax (Rate) - dated 22-8-2017 - Tripura SGST

Amendments in the Notification No. 17/2017-State Tax (Rate) dated 29th June, 2017.

19. 22/2017-State Tax (Rate) - dated 22-8-2017 - Tripura SGST

Amendments in the notification No. 13/2017-State Tax (Rate) dated 29th June, 2017

20. 21/2017-State Tax (Rate) - dated 22-8-2017 - Tripura SGST

Amendments in the notification No.12/2017-State Tax (Rate), dated 29th June 2017

21. 20/2017-State Tax (Rate) - dated 22-8-2017 - Tripura SGST

Amendments in the Notification No. 01/2017-State Tax (Rate). Dated 29th June 2017

22. F.1-11(100)-TAX/GST/2017 - dated 21-8-2017 - Tripura SGST

Gazette Notification for Amendment of Notification on GSTR-3B dated 19.08.2017

Money Laundering

23. 5/2017 - dated 23-8-2017 - PMLA

Prevention of Money-laundering (Maintenance of Records) Fourth Amendment Rules, 2017

24. 4/2017 - dated 23-8-2017 - PMLA

PMLA - reporting entity - the dealer in precious metals, precious stones and other high value goods having a turnover of rupees two crore in a financial year notified as a person carrying on designated business or profession

Circulars / Instructions / Orders

GST - States

1. Circular No. 01/2017 TNGST - dated 11-8-2017

Submission of Bond/Letter of Undertaking by the Exporter in respect of Exports without payment of Integrated Tax under the IGST Act.

DGFT

2. 18/2015-2020 - dated 23-8-2017

Amendment in Para 2.84 of Chapter 2 of HBP 2015-2020 - Entitlement to export freely exportable items on free of cost basis by Status Holders has been revised

3. 19/2015-2020 - dated 23-8-2017

Amendment in Appendix 2G (List of Inspection and Certification Agencies of Handbook of Procedures (Appendices and Aayat Niryat Forms) 2015-20

Highlights / Catch Notes

Income Tax

• Court Rules Depreciation Only Applicable from Assessment Year 2015-16 Onwards for Section 11 Exemption of Income Tax Act.

  Case-Laws - HC : Grant of depreciation to an entity seeking exemption u/s 11 - Explanatory Memorandum makes it applicable only w.e.f. A Y 2015-16 and application of the amendment retrospectively would certainly lead to a great deal of hardship to the assessee. - HC
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• Advance Subscription Income Not Taxed in Year Received for Mercantile Accounting System: Income Accrual Case Decision.

  Case-Laws - AT : Accrual of income - subscription income received in advance - consultancy services and publishing of magazine - assessee is following mercantile system of accounting - amount of advance subscription cannot be subjected to tax in the year of receipt.
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• Technical Report Costs for Coal Operations Classified as Revenue Expenditure, Boosting Efficiency in Existing Business Operations.

  Case-Laws - AT : Expenditure incurred on obtaining a technical report - Power grade coal is the existing business of the assessee. This means improvement in the coal beneficiation effects the day to day business of the assessee and improves the operations of the existing business. - Exepenses allowed as revenue expenditure.
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• Confusion over License Fee Payment as Intangible Asset; No Income Additions Made in Transaction.

  Case-Laws - AT : Addition towards Licence expenses - The invoice value was shown as its income and the amount paid to its AE was shown as Licence fee expenditure in its Annual accounts. We are at loss to appreciate as to how the assessee can be said to have created an ‘Intangible asset’ by paying the Licence fee to its AE in respect of sales made - No additions
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• SIPL is an independent agent under Article 5(6) of the India-Holland tax treaty; no Permanent Establishment in India.

  Case-Laws - AT : P.E. in India - SIPL was an independent agent under Article 5(6)of the tax treaty between India and Holland, that the activities of the agent were carried out in its ordinary course of business, that the agent was not wholly and exclusively devoted to the assessee, that payments made to SIPL were at arm's length - Assessee does not have PE in India
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Customs

• EOU Avoids Confiscation for Restricted R-22 Gas Import; License Valid at Import Time Shields Against Penalty.

  Case-Laws - AT : 100% EOU - Absolute Confiscation - import of restricted item - R-22 Gas - Import shall be governed by the valid license existing at the time of import of goods, subsequent cancellation of the said license will not affect import and clearance of the goods prior to the date of cancellation of license
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Corporate Law

• SEBI Act offences now tried in Special Court, covering cases before 2002 and 2013, regardless of trial status.

  Case-Laws - SC : Trials of offences under the SEBI Act, consequent upon the 2014 Amendment Act, would stand jurisdictionally transferred for trial to a Special Court, irrespective of whether the offence under the SEBI Act was committed before 29.10.2002 and/or before 18.07.2013, and irrespective of the fact whether trial had or had not been initiated - SC
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Indian Laws

• Balancing Privacy Rights with State Interests: National Security, Crime Prevention, Innovation, and Social Welfare Safeguards.

  News : An invasion of life or personal liberty (right of privacy) - The legitimate aims of the state would include for instance protecting national security, preventing and investigating crime, encouraging innovation and the spread of knowledge, and preventing the dissipation of social welfare benefits.
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• Privacy is a fundamental freedom but not absolute under Article 21, covering life and personal liberty.

  News : Like other rights which form part of the fundamental freedoms protected by Part III, including the right to life and personal liberty under Article 21, privacy is not an absolute right.
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• Indian Supreme Court Affirms Fundamental Right to Privacy; Invasions Must Be Justified, Necessary, and Proportionate Under Constitution.

  Case-Laws - SC : Whether there is any fundamental right of privacy under the Indian Constitution - Held Yes - An invasion of life or personal liberty must meet the three-fold requirement - SC
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Service Tax

• Charitable hospitals renting property for commercial use must pay service tax u/s 65, clause 105 (zzzz).

  Case-Laws - AT : Renting of immovable property - whether renting of immovable property for commercial use given by the appellant being a charitable hospital is liable for service tax under the category of renting of immovable property for commercial use in terms of clause 105 (zzzz) of Section 65 - Held Yes
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• Railway Sleepers Loading Not Taxable as Cargo Handling Service, Says Ruling on Factory Operations.

  Case-Laws - AT : Cargo handling services - whether the shifting and loading of railway sleepers within the factory premises a service provided by the respondent would be chargeable to service tax under the category of ‘cargo handling services’? - Held No
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Central Excise

• Appellant Required to Reverse Cenvat Credit u/r 16 for Non-Manufacturing Process of Converting Cylinders to Scrap.

  Case-Laws - AT : Cenvat Credit - since the process of converting cylinders into scrap does not result into manufacture, the appellant required to reverse the credit availed under sub-Rule (1) of Rule 16 of Central Excise Rules, 2002
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• Refund Granted: No Adjudication Order Issued for Interest on Supplementary Invoices, Adjustment Premature.

  Case-Laws - AT : Adjustment of refund granted against the outstanding interest on the supplementary invoices - there is no adjudication order passed to demand interest against the appellant - adjustment is immature - refund allowed.
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Case Laws:

• Income Tax

• 2017 (8) TMI 937
  Penalty u/s 271(1)(c) - sufficient notice of the action of imposing penalty - Held that:- Held that:- The requirement of Section 274 of the Income Tax Act for granting reasonable opportunity of being heard in the matter cannot be stretched to the extent of framing a specific charge or asking the assessee an explanation in respect of the quantum of penalty proposed to be imposed, as has been urged. It is not in dispute that a reasonable opportunity of being heard in the matter, as required by Section 274 of the said Act was given to the assessee before imposing the penalty by the Income Tax Officer. The assessee furnished his explanation, which has been taken into consideration in the order. The mandatory requirement of obtaining the previous approval of the Inspecting Assistant Commissioner was followed. The penalty imposed by the Income Tax Officer was reduced by the Appellate Authority. There was no arbitrary exercise of discretion and the reasons are recorded after taking into consideration the explanation submitted by the assessee. The exercise of jurisdiction in respect of quantum of penalty is neither unjust nor beyond jurisdiction. - Decided against assessee.

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• 2017 (8) TMI 936
  Settlement Commission exercising jurisdiction under the provisions of the Income Tax Act, 1961 - Held that:- There is a distinction made between an order of assessment based on best judgment and order of assessment on the basis of the records available. In the present case, the Settlement Commission was called upon to arrive at the quantum of tax liability of the petitioners in the settlement proceeding. It has taken a particular view. The Writ Court need not enter into the factual aspect of the matter to reapprise itself and act as an appellate authority against an order passed by the Settlement Commission. The materials on the basis of which the Settlement Commission had arrived at its decision to add Rs. 6.97 Crores and take 8% as the rate of net profit for the purpose of calculation of tax were before the Settlement Commission. The Settlement Commission has taken a view thereon, giving its reason therefor. The impugned order of the Settlement Commission does not call for any interference. The issue raised is answered accordingly.

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• 2017 (8) TMI 935
  Reopening of assessment - Held that:- There is no prima facie suggestion as to why would he pay cash of Rs. 1.58 crores when he stands to gain nothing out of the deal. The Assessing Officer has mechanically adopted the observations of CIT(A), taking them out of context and making the basis of formation of his belief that income chargeable to tax in the hands of assessee has escaped assessment. To link the observations of the CIT(A) he has not referred to any other material at his command which would even prima facie suggest that the petitioner had paid such sum. We are conscious that we are at the stage of testing the confirmation of belief by the Assessing Officer and not the certainty of his observations. Nevertheless, when the belief is founded on no material whatsoever the same would be open to interference. If the material at the command of the Assessing Officer was so inadequate as no prudent person would form a belief that income chargeable to tax had escaped assessment, the court certainly even at this stage would interject.

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• 2017 (8) TMI 934
  Penalty u/s 271AAA - time limit within which such tax had to be paid - Penalty where search has been initiated - Held that:- Tribunal placed back the matter before the Assessing Officer to verify the claim of the assessee regarding involvement of the third condition of Section 271AAA namely that of payment of full tax. The Tribunal referred to the decision of the Supreme Court in case of Assistant Commissioner of Income–Tax vs. Gebilal Kanhaialal, HUF reported in [2012 (9) TMI 297 - SUPREME COURT] taking a view that the section did not lay down any time limit within which such tax had to be paid. As held by the Supreme Court in case of Gebilal Kanhaialal, HUF (supra), there is not time limit envisaged under section 271AAA for fulfillment of condition of payment of tax. When the Tribunal on the assertion of the assessee that the entire tax was paid up has placed the matter before the Assessing Officer for verification of such assertion, no question of law arises.

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• 2017 (8) TMI 933
  Claim of deduction under section 35(2AB) - Held that:- Undisputedly, the research and development facility set up by the assessee was approved by the prescribed authority and necessary approval was granted in the prescribed format. The communication in Form 3CM was thereafter, between the prescribed authority and the department. If the same was not so, surely, the assessee cannot be made to suffer. To this extent, the Tribunal was perfectly correct and the Commissioner was not, in observing that in absence of such certification, claim of deduction under section 35(2AB) was not allowable. Neither the prescribed authority nor the Assessing Officer has applied the mind as to the expenditure, be it revenue or or capital in nature, actually incurred in developing the inhouse research and development facility. To the limited extent, the Commissioner desired the Assessing Officer to verify such figures, we would allow the Assessing Officer to do so. In principle, we accept the Tribunal's reasons and conclusions. Merely because the prescribed authority failed to send intimation in Form 3CL, would not be reason enough to deprive the assessee's claim of deduction under section 35(2AB) of the Act. However, in facts of the present case, it would be open for the Assessing Officer to verify the actual expenditure incurred by the assessee.

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• 2017 (8) TMI 932
  Rejecting the books of accounts - low Gross Profit rate - Held that:- The Court finds that although the Assessee failed to produce the relevant documents before the AO, it did so before the CIT (A) who called for the remand report from the AO. After considering the remand report, the CIT(A) quashed the above-mentioned addition. Detailed reasons have been given by the CIT(A) after considering the documents and the same have been concurred with by the ITAT. The Court is unable to be persuaded that these concurrent findings of the CIT (A) and the ITAT suffer from any perversity. Consequently, the Court declines to frame any questions on this issue. Addition u/s 37 (1) - Held that:- Here again, although the Assessee had not produced the relevant vouchers before the AO, it did so before the CIT(A). The factual findings in this regard are not shown to be perverse and, therefore, the Court declines to frame any question on this issue. Addition u/s 68 - unexplained credit - Held that:- A perusal of the order of the CIT (A) in this regard shows that additional evidence was placed before the CIT(A) on which the remand report was sought. Partial relief was granted by the CIT(A) which has been confirmed by the ITAT.

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• 2017 (8) TMI 931
  Grant of depreciation to an entity seeking exemption in terms of section 11 - Scope of amendment to restrict the claim - prospective or retrospective - Held that:- Depreciation, as defined in Spicer and Pegler's Book-Keeping and Accounts is the measure of the exhaustion of the effective life of a fixed asset owing to use or obsolescence during a given period. It may be regarded as that part of the cost of the asset which will not be recoverable when the asset is finally put out of use. The object of providing for depreciation is to spread the expenditure incurred in acquiring the asset over its effective lifetime, and the amount of provision made in respect of an accounting period is extended to represent the proportion of such expenditure which has expired during that period. The necessity of providing for depreciation emanates from the fact that once an asset ceases to be effective, it will have to be replaced. Providing for depreciation would ensure setting aside out of the revenue of an accounting period, the estimated amount by which the capital investment has expired during that period. This provision, incurred for the use of that asset for the purpose of earned profit should be charged against those profits as and when earned. The claim of depreciation is thus part of standard accounting practice which is required for fair presentation of a company's financials. The computation of income in the case of an entity to which section 11 is applicable would be in two stages. Firstly, the determination of the profit arrived at, which would be the total receipts net of expenditure and depreciation incurred in earning the receipts, and secondly the stage of application to Charitable/Religious objects. The two stages are distinct and are required to be complied with consecutively in order to determine the correct income and its application. In the present batch of appeals one that involves a claim for exemption in respect of income earned from property held for charitable or religious purposes. We see no double benefit that is extended to the assessee in this regard. DIT (Exem) Vs Al-Ameen Charitable Fund Trust [2016 (3) TMI 462 - KARNATAKA HIGH COURT] - Decided in favour of the assessee. Whether the provisions of Section 11(6) inserted by Finance (No.2) Act, 2014 w.e.f. 1.4.2015, operate prospectively with effect from assessment year 2015-16 or retrospectively with respect to earlier years as well? - Held that:- We do not agree with the Revenue. The amendment, inserted specifically with effect from Assessment Year 2015-2016 seeks to disturb a vested right that has accrued to the assesee. The amendment does not purport to be clarificatory, on the other hand the Explanatory Memorandum makes it applicable only w.e.f. A Y 2015-16 and application of the amendment retrospectively would certainly lead to a great deal of hardship to the assessee. We are thus of the view that the provisions of section 11(6) of the Act inserted with effect from 1.4.2015 shall operate prospectively with respect to assessment year 2015-2016 only.

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• 2017 (8) TMI 930
  Levy of additional penalty on the petitioner for belated payment of agricultural income tax - Held that:- Admittedly, in the instant case, the petitioner had remitted the penalty, and it is only on account of the alleged mistake committed by the Department, there is an additional demand. Therefore, this is a fit case, where, the Special Commissioner should have exercised his discretion, as provided under the proviso to section 16-A 5 of the Act and waived the penalty. That apart, as of now, the Tamil Nadu Agricultural Income Tax Act has been repealed and the petitioner-Company is also not in existence. Therefore, this Court is inclined to interfere with the matter and grant appropriate relief. Accordingly, both the Writ Petitions are allowed and the impugned orders are set aside and the petitioner is granted waiver of additional penalty and interest as demanded by the second respondent

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• 2017 (8) TMI 929
  Penalty u/s 271(1)(c) - Exemption claimed u/s 54B - proof of sale of agricultural land at Neelankarai and re-investment in agricultural land at Mahabalipuram - Bonafide belief - Held that:- The Explanation to Section 271 makes it clear that, if in cases of concealment of particulars of income or furnishing of inaccurate particulars of income, the Assessee fails to offer an explanation or offers an explanation which is found by the ITO or the AAC to be false or offers an explanation which he is not able to substantiate, the amount added or disallowed in computing the total income of such person shall for the purpose of clause (c) i.e., for the purpose of concealment, be deemed to represent the income in respect of which particulars have been concealed. Penal proceedings are not automatic and the levy depends upon the facts and circumstances of each case. In the case on hand, having regard to the particular facts and circumstances of this case, the learned Tribunal has allowed the appeal and deleted the penalty. The proposition of law that emerges from the judgments referred to above is that in view of the explanation added, it cannot be said that the onus lies on the Revenue to establish mens rea in cases of concealment and/or short payment of tax. There is an onus on the Assessee. Whether the Assessee has been able to discharge the onus would depend on the facts and circumstances of the case. In the instant case, the learned Tribunal, in effect, arrived at a clear finding that imposition of penalty was not justified having regard to the facts and circumstances of the case that it was not the case of the Assessing Officer that the Assessee's claim was false or bogus. Neither the Assessing Officer nor the Commissioner of Income Tax (Appeals) had examined the claim of the Assessee that the Assessee had given money to M/s.Alpha Commercials for the purpose of investment in residential property. The Assessee's remittance of demand raised by the department cannot be a reason for levy of penalty. Assessee had bona fide believed that M/s.Alpha Commercials had, as per mutual agreement, invested the money in residential property to enable the Assessee to claim the benefit of Section 54F/54B of the Act. - Decided in favour of assessee.

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• 2017 (8) TMI 928
  Non-maintainability of the appeal on account of tax liability being less than Rs. 20 Lakh - audit objection acceptability by the department - Held that:- It appears that the contention of the Revenue about objection has not been considered. Be that as it may. We are not entering into the debate about the effect of tax liability as there are rival contentions. As the objection of the appellant regarding audit was not considered by the Tribunal, we relegate the parties to the Tribunal. In light of the above, the impugned order is set aside. The parties are relegated before the Tribunal. It will be open for the assessee to raise all the grounds with regard to non-maintainability of the appeal on account of tax liability being less than Rs. 20 Lakh as per the Circular No.21 of 2015 dated 10th December 2015, so also it will be open for the Revenue to put forth its stand about maintainability of the appeal. The Tribunal shall consider the said rival contention and decide about the tenability of the appeal vis-a-vis the Circular of the CBDT about not prosecuting the appeals where the tax effect is less. After deciding the said issue, Tribunal may pass further appropriate orders.

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• 2017 (8) TMI 927
  Unexplained money u/s 69A - Held that:- Tribunal while taking into consideration reference to the documents available, has taken note of the cash withdrawal to the extent of Rs. 1,35,000/- on 02nd April 2008 and 29th March 2008. In that view, the relief to such extent insofar as cash deposits out of Rs. 19,57,370/- was accepted and for the balance it was held that no source was explained by the appellant. The benefit relating to the interest as received and in that regard the benefit of Rs. 5,90,000/- was granted by accepting the second ground which had been raised before it. Therefore, in that background, a perusal of the appeal papers would indicate that insofar as the explanation that was sought to be put forth with regard to the cash deposits and the benefit claimed towards the interest, the Tribunal has considered the available records and on rendering a factual finding, has partially granted the benefit. In the absence of any other document placed before us, a different conclusion on facts, in any event, cannot be reached by us. Neither the fact finding as recorded by the Tribunal calls for interference in this appeal nor does the appeal raise any question of law for consideration.

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• 2017 (8) TMI 926
  Addition towards investment in gold - whether the gold in question was acquired by the assessee from out of his earnings abroad - balance of probability - ITAT deleted the addition - Held that:- We are inclined to agree with the learned counsel for the Revenue. A reading of the order of the Tribunal itself would show that while it was the burden of the assessee to prove the source of his acquisition of the gold ornaments, the Tribunal has proceeded putting the onus on the Revenue. That apart, the Tribunal has also ignored the fact that the assessee did not explain or produce any material substantiating his contention that the gold was acquired outside the country or that the acquisition was from out of his earnings. In the absence of any evidence to that effect, according to us, the Tribunal has misdirected itself in appreciating the case of the Revenue and has arrived at the impugned conclusions, which to say the least, are perverse. - Decided in favour of the Revenue and against the assessee

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• 2017 (8) TMI 925
  Unexplained cash deposits - source of complete cash deposit - Held that:- All the details were filed before the AO, which clearly show that the assessee had sufficient cash-in-hand generated out of her trading business, which was further deposited in the bank account. CIT(A) has upheld the impugned addition made by the AO by completely disregarding the submissions and explanations of the assessee, and by further alleging that the documentary evidences submitted by the assessee are sham and have been created just to prove the source of cash deposit. We further observe that Ld. CIT(A) has sustained the addition by completely deviating from the issue under consideration and by indulging into mere surmises and conjectures. The allegation of the Ld. CIT(A) that if the business of the assessee would have been genuine, there would have been some purchase or sale transactions through banking channels as well is completely misplaced, so much so that the business income of the assessee has been duly accepted by the AO as well which is evident from the fact that the addition has been made to the returned income of the assessee. Since the assessee has duly explained the source of complete cash deposit made during the year, the addition made by the AO and sustained by the Ld. CIT(A) is bad in law and liable to be deleted. Therefore, we delete the addition in dispute and allow the ground raised by the assessee.

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• 2017 (8) TMI 924
  Addition on account of marriage expenses of daughter of the assessee - new jewellery purchase - Held that:- A.O. has not brought any material on record to show if the assessee has purchased new jewellery at the time of marriage, therefore, there was no justification for the Ld. CIT(A) to give benefit to assessee only for Rs. 15 lakhs out of old jewellery accumulated by the assessee. The Ld. CIT(A) merely in presumption has held that the assessee might have given some new jewellery in the marriage besides the jewellery cleaned from M/s Ram Jewellery Place. CIT(A) also followed the CBDT Instruction no.1916-1994, dated 11th May, 1994 for giving part relief to the assessee. However the facts above clearly prove that the assessee and her family members possessed old jewellery within the limits prescribed as per the CBDT Circular. The explanation of the assessee was supported by certificate of jeweller and statement made by jeweller before the A.O. in the remand proceedings. Therefore the authorities below should have allowed the entire benefit for possessing old jewellery for a sum of Rs. 22 lakhs. Thus considering the above discussion there was no justification for the authorities below to make above addition of Rs. 15,36,500/- out of marriage expenses spent by the assessee. It may be noted that the Ld. CIT(A) has already deleted the addition on account of roka ceremony because it was performed in the preceding A.Y. Considering the totality of the facts and circumstances, set aside the orders of the authorities below and delete the entire addition of Rs. 15,36,500/-. In the result the remaining grounds of appeal of the assessee on merit are allowed.

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• 2017 (8) TMI 923
  Exemption u/s 11 eligibility - proof of activities of the assessee trust are not charitable within section 2(15) - Held that:- Having taken a view in assessment years 2007-08, 2013-14 & 2014- 15 treating the assessee as exempt u/s 11 of the Act, the AO could not have taken a view to the contrary in other years there being no change in facts or the legal position. - Decided in favour of assessee. Disallow the expenditure in various forms on estimate basis - addition limited to 10% by the ld. CIT(A) - main thrust of the argument of the AO is that since OBPL had been engaged to set up the hospital and run it, there was no requirement to incur these items of expenditure - Held that:- According to the agreement between the assessee and OBPL already referred to earlier the latter has been contracted to set up the hospital and run it for which it is entitled to 70% of the surplus remaining after meeting the entire expenditure. The liability of OBPL does not extend to meeting the aforesaid items of expenditure, which are necessary for running the hospital. In view of the aforesaid submissions of the ld. counsel for the assessee, we find no infirmity in the order of the ld. CIT(A). We hold that the disallowance made by the AO is not called for either on facts or in law. Accordingly, we direct the deletion of addition made by the Assessing Officer which is on estimate basis and on surmises and conjectures - Decided in favour of assessee.

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• 2017 (8) TMI 922
  Reopening of assessment - reasons to believe - accommodation entry operations - non-independent application of mind by AO - Held that:- Nothing was recovered in the search and seizure establishing the identity of the assessee or any link between the record showing the accommodation entry operations by Jain Brothers through their chain of companies and the investment in the assessee company. Paragraph 5 says that it is only as a result of post search investigation, it appeared to the investigation wing that the assessee had also obtained accommodation entries. A long distance has to be travelled by the Department to bridge the gap between the assessee obtaining the accommodation entries and appears to have obtaining the accommodation entries. Further it is clear from paragraph no. 7 that on obtaining such post search investigation material AO was advised that the amounts appeared to have been obtained by the assessee by way of accommodation entries to be brought to tax by initiating the action u/s 147/148 read with section 143(3) of the Act. Record does not reveal that after this advice, AO had done anything in verification of such information to form the basis for his satisfaction that the income of the assessee had escaped assessment. Assessing Officer has arrived at the satisfaction in a mechanical manner without due application of mind and since there is no rational connection between the formation of the belief and the seized material. Assessing Officer has not discharged his obligation after such allegations, and, therefore, reasons recorded by the Assessing Officer in the instance case, in our opinion, are vague and/or no reasons at all. We, therefore, quash the re-assessment proceedings initiated by the Assessing Officer as void. - Decided in favour of assessee.

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• 2017 (8) TMI 921
  Gift receipt - accessibility of income - unilateral gratuitous act without consideration out of natural love and affection or received by the assessee in exchange of brand endorsement / advertisement for the donor - revenue’s main contention that the assessee has indulged in brand endorsement for the donor and in return, received the said Villa and therefore, taxable in the hands of the assessee, being arising out of exercise of profession - Held that:- Upon perusal of chain of events leading to execution of gift as enumerated in Para 7.2, we have already reached an inevitable conclusion that all events /actions were interlinked and part and parcel of the same gift transaction and therefore, gift deed was executed by the Nakheel at the behest of Sultan only in view of the fact that ownership was vested with the company. Finally, it is well settled law that no addition could be made merely on the basis of mere suspicion, conjectures or surmises. The assessee has therefore, in our opinion, discharged the onus of proving the gift transaction being unilateral gratuitous act of the donor company and the onus was on revenue to establish the contrary, which, in our opinion, has remained undischarged. Lastly, so far as taxability of gift in kind is concerned, we find that the gift of immovable property on or after 01/10/2009 has been brought to tax by Finance Act, 2009 vide amendment to Section 56(2)(vii)(b). Before this amendment, any sum of money exceeding Rs. 50,000/- received by an individual / HUF without consideration could be brought to tax vide Section 56(2)(vii)(a). Since we are dealing with AY 2008-09 about taxability of an immovable property, the said amendment does not apply to the case of the assessee and therefore could not help the revenue in any manner. In view of the above we find that the contention / conduct of the assessee outweigh the revenue’s contention. Therefore, we are inclined to hold that the said Villa was received in gift by the assessee and not out of exercise of profession and therefore, not taxable in assessee’s hands - Decided in favour of assessee.

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• 2017 (8) TMI 920
  Accrual of income - subscription income received in advance - consultancy services and publishing of magazine - assessee is following mercantile system of accounting - selection of assessment year - Held that:- Admittedly, the assessee received Rs. 8.83 lac as advance subscription. It can be seen from the Table given on page 5 of the impugned order that there was opening advance receipt of subscription to the tune of Rs. 8,55,689/- which has been offered to tax by the assessee in the current year. Similarly, the amount received as advance subscription during the instant year has been offered to tax in the succeeding year as has been recorded in para B on page 2 of the assessment order. Under such circumstances, it becomes patent that the amount of advance subscription cannot be subjected to tax in the year of receipt. We, therefore, overturn the impugned order on this issue and order for the deletion of addition. Addition of professional fees paid by the assessee to Mr. Sagnik Goswami - CIT(A) invoked the provisions of section 40A(2)(b) for sustaining disallowance at 50% of the amount paid to Mr. Sagnik Goswami - Held that:- How the disallowance has been sustained by the ld. CIT(A) at 50% is not understandable. It can be seen from the impugned order that Mr. Sagnik Goswami earlier worked with companies like GTC Industries, American Express Bank, Lord Krishna Bank, AMROP India and CHR Global before joining the assessee. It is further relevant to note that he was paid Rs. 25.30 lac in the year under consideration which is equal to the payments to other professionals, namely, Vishal More and Arindam Mukherjee, employed by the assessee. These two professionals are M.A. (Economics), whereas Shri Sagnik Goswami is a qualified Chartered Accountant. It is further pertinent to note that the assessee earned Rs. 73.76 lac from the assignments handled by Shri Sagnik Goswami for which he was paid a sum of Rs. 25.30 lac. Under these circumstances, we are satisfied that there is no reason for sustaining even partial disallowance Assessee appeal allowed.

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• 2017 (8) TMI 919
  Unsecured Loan - addition u/s 68 - Held that:- The assessee has submitted bank account details of Shri Rakesh Kumar which is available at page no.29 of the paper book. After going through the bank statement of Shri Rakesh Kumar it was noticed that the assessee has submitted only bank statement from the month of 1st March, 2011. On that day there is a huge balance of Rs. 50,70,000/- is appearing as opening balance. On 22nd March, 2011 Shri Rakesh Kumar transferred Rs. 50 lakhs through RTGS into the account of the assessee. The A.O. as well as the CIT(A) had given opportunity to the assessee for proving the credit worthiness of the lenders. The Ld. CIT(A) has observed that merely filing one month extract of the bank account shows funds parked in the bank just before making RTGS does not indicate that the creditor had the capacity to advance loan of Rs. 50 lakhs. The Ld. AR for the assessee requested to grant him opportunity for filing of complete bank account details of lenders and credit worthiness so that onus cast upon the assessee to prove credit worthiness u/s 68 can be discharged. Therefore, the matter is remanded back to the file of the A.O. for examination of credit worthiness of lenders. - Appeal of the assessee allowed for statistical purposes.

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• 2017 (8) TMI 918
  Benefits of section 11 & 12 denied - proof of charitable activities - excess of income over expenditure - corpus donation receipt - Held that:- Assessee has received and reflected in the books the corpus donations, which has not been disputed by the AO as corpus donation to the trust, it being not the income and in any excess of receipts over expenditure which is less than 15% of receipt cannot any stretch be brought to tax. It is also not a case where there was any income from any source and hence the AO has erred in failing to appreciate that in any case it being a trust, the excess of income over expenditure since did not exceed 15% of the receipt, the same i.e. Rs. 13,03,859/- is not a part of total income as is statutorily provided and lastly that the assessee being a trust the corpus donation is not taxable and in the absence of any income of the trust income assessed is contrary to the provisions of section 5 of the I.T. Act. Lower authorities has overlooked that the assessee admittedly is a charitable institution and have been formed with the charitable objects and that is how registration u/s. 12A of the Act was granted. In the instant year the assessee trust in the absence of corpus donation which is not an income applied such corpus donation to achieve the aims and objects of the trust. It is a case where it would be seen that what the AO had taxed was a capital receipt and otherwise too even if the same was held to be income then too the excess of receipts was than 15% of receipts and in the absence of there being any income such excess is outside the scope of total income. As observed that assessee trust has carried out extensive research on topics ranging from India’s educational systems, India’s scientific achievements, Indian Philosophy, India music and dances and travel in India with a view to develop programme content for lectures and workshops, TV programmes on digital video tapes as well as for publishing content through print platform like journals etc. Numerous workshops and lectures were organized all over India, yet went on to hold it is not engaged in any charitable acitivity, which is contrary to the judgement of the Hon’ble Supreme Court of India in the case of Sole Trustee Loka Shiksha Trust vs. CIT [1975 (8) TMI 1 - SUPREME Court ]- Decided in favour of assessee.

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• 2017 (8) TMI 917
  Disallowance of interest on housing loan borrowed from Citibank - Held that:- On perusal of the details filed by the assessee, we find that the bank has issued two separate confirmation letters for repayment of interest which shows that one loan is borrowed in the name of M/s Peejay Silk Mills and another in the name of M/s Jessica Impex. Though assessee claims to have borrowed both the loans for the purpose of acquisition of property, but failed to prove the nexus of the loan and purchase of property. Therefore, we are of the view that the AO was right in making disallowance towards interest paid on housing loan borrowed in the name M/s Jessica Impex. Insofar as housing loan borrowed in the name of M/s Peejay Silk Mills, on perusal of certificate of interest issued by the bank clearly says that the assessee has paid interest of Rs. 3,99,896, but the AO has allowed interest amount of Rs. 3,39,896. Thus, there is a difference of Rs. 60,000 which has been explained by the assessee that the AO has taken incorrect figure which is evident from the fact that the certificate issued by the bank clearly establishes payment of interest of Rs. 3,99,896. Therefore, we direct the AO to allow interest of Rs. 3,99,896 as claimed by the assessee as against Rs. 3,39,896. Disallowance of expenditure of staff salary, repairs and maintenance and water charges - Held that:- AO, without any basis, simply divided the total expenditure on the basis of turnover which is not only illegal but illogical. We find force in the arguments of the assessee for the reason that unless the AO specifies himself nexus between the expenditure debited in the P hence, we are inclined to uphold the order of CIT(A) and reject the ground raised by the assessee. Disallowance of depreciation on furniture & fixture on the basis of turnover of the business and “Income from house property” - Held that:- We find force in the argument of the assessee for the reason that the assessee has filed a financial statement explaining the calculation of depreciation wherein he had bifurcated the assets used in the business activity and assets used in the buildings which is part of “Income from house property”. The AO without any basis allocated depreciation on furniture and fixtures on the basis of gross turnover and disallowed depreciation relatable to the activity of “Income from house property” on the ground that the deduction u/s 24 has been allowed. Therefore, we are of the view that the issue needs to be re-examined by the AO in the light of submissions of the assessee that a separate working has been furnished to explain the depreciation on furniture and fixtures, which is fully relatable to business activity of the assessee. Hence, we set aside the issue to the file of the AO and direct him to consider the issue afresh in the light of the details filed by the assessee.

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• 2017 (8) TMI 916
  Reopening of assessment - additions u/s 69C - purchases made from the so-called hawala operators - reasonable profit estimation - Held that:- Though the assessee has produced certain details to prove the purchases from the said parties as genuine, in view of the fact that the assessee could not prove the existence of the parties and also could not rebut the finding of the AO in the backdrop of report of Maharashtra Sales-tax department, the said purchases could not be accepted as genuine. But keeping in view the fact that the AO has not doubted sales declared by the assessee and also not pointed out any defects in the books of account or stock registers, a reasonable inference can be drawn that the assessee has obtained bills from the hawala operators to cover up the purchases from the grey market. What needs to be taxed is only the profit element embedded in such purchases and not entire purchases shown to have been made from those hawala operators. Reasonable profit in case of these transactions - Various Courts and Tribunals have upheld estimation of net profit ranging from 12.5% to 25% depending upon facts of each case. The Hon’ble Gujarat High Court in the case of Vijay Proteins Ltd vs CIT (2015 (1) TMI 828 - GUJARAT HIGH COURT) has upheld estimation of net profit at 25% on bogus purchases. The Hon’ble Gujarat High Court in the case of Smit P Sheth (2013 (10) TMI 1028 - GUJARAT HIGH COURT) has observed that no uniform yardstick can be applied to estimate net profit because of varied nature of business. Therefore, we are of the view that only profit element embedded in bogus purchases needs to be taxed and not the entire purchases from the above parties. The CIT(A), after considering the relevant facts of the case has estimated the net profit at 12.5% on total bogus purchases. We do not find any infirmity in the order of CIT(A); hence, we are inclined to uphold the order of CIT(A) and dismiss the appeals filed by the revenue. We direct the AO to estimate net profit of 12.5% on bogus purchases.

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• 2017 (8) TMI 915
  Excess allowance of depreciation - grant from US Aid through ICICI under the Program for Acceleration of Commercial Energy Research (PACER) - assessee company had adjusted this amount against the investment in plant and machinery made during the year but the cost of plant nor can the existence or absence of entries in his books of account be decisive or conclusive in the matter. In view of our aforesaid discussion, we set aside the order of the CIT(A) in each of the assessment years on this issue and direct the Assessing Officer to allow depreciation to the assessee without deducting the amount of the conditional grant received by the assessee from the actual cost/WDV of the plant and machinery. Thus, this ground in each of the assessment years is allowed in favour of assessee Expenditure incurred on obtaining a technical report - expenditure incurred on acquiring a capital asset OR revenue expenditure - Held that:- We noted that coal beneficiation has been defined as cost effective and significant step towards improving power plant efficiency and reducing the GHG emissions from the coal fired power plants in India would be to increase the availability of clean beneficiated coals using appropriate beneficiation technologies. In fact, it improves the quality of coal. From the note it is not denied that it is not for the improvement in the coal beneficiating activity for power grade coal. Power grade coal is the existing business of the assessee. This means improvement in the coal beneficiation effects the day to day business of the assessee and improves the operations of the existing business. It does not relate to a new product and, therefore, in our view the case of the assessee is duly covered by the aforesaid finding of the Hon’ble Supreme Court in the case of Alembic Chemical Works Co. Ltd. 1989 (3) TMI 5 - SUPREME Court. We also noted that the Supreme Court in the case of Empire Jute Co. Ltd. vs. CIT (1980 (5) TMI 1 - SUPREME Court ) has observed that here may be cases where expenditure, even if incurred for obtaining an advantage of enduring benefit, may, none the less, be on revenue account and the test of enduring benefit may break down. Since the expenditure incurred is for the improvement of the existing business and has not created a new business for the assessee, therefore, it will be a revenue expense. Expenses on repairs and maintenance of roads and bridges - revenue or capital expenditure - Held that:- The expenditure incurred on the construction of roads and bridges, although termed as ‘repairs and maintenance of roads and bridges’ has to be regarded as capital expenditure. Further, we also noted that, the Assessing Officer while making assessment u/s. 143(3) for A.Ys 2003-04 and 2009-10, similar expenditure has been allowed by in as revenue expenditure. There is no change in the facts in the impugned assessment years as compared to A.Ys. 2003-04 and 2009-10. In view of the decision of jurisdictional High Court in the case of CIT vs. Gopal Purohit (2010 (1) TMI 7 - BOMBAY HIGH COURT) the principle of consistency has to be followed. Additional depreciation on Plant & Machinery - whether the assessee is in the business of coal beneficiation only and no new product is manufactured - Held that:- We noted that this issue is no more res integra in view of the decision of Hon’ble Supreme Court in the case of CIT vs. Sesa Goa Ltd. (2004 (11) TMI 14 - SUPREME Court) in which has held that extraction and processing of mineral ore amounts to “production”. In view of the said decision, extraction of coal and processing thereof will tantamount to production and converting raw coal into beneficiated coal is a manufacturing process, as beneficiated coal is a different marketable product. No contrary decision was brought to our knowledge. We, therefore, confirm the order of the CIT(A) and dismiss the ground taken by the Revenue.

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• 2017 (8) TMI 914
  Unexplained cash deposits in bank account - Held that:- All the deposits totaling Rs. 91,89,000/- are fully explained and hence the addition confirmed by the CIT(A) deserve to be deleted. Rectification of mistake - invoking the section 154 - addition on deposits in the bank account with Axis Bank, Gurgaon - Held that:- The impugned issue was thoroughly examined during the remand proceedings and earlier appellate proceedings before the Ld. CIT(A). Therefore, the assessment order to the extent of impugned issue gets merged in the order of the Ld. CIT(A), and hence, the AO was not competent to invoke section 154 of the I.T. Act, 1961. Therefore, the AO’s order passed u/s. 154 of the Act as well as order of the Ld. CIT(A) are hereby cancelled and accordingly, ground no. 1 & 2 stand rejected.

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• 2017 (8) TMI 913
  International transaction of ‘Software development services' - selection criteria of comparable - Held that:- It is axiomatic that if company ‘A’ is functionally different from company ‘B’, then, such a company cannot be considered as comparable. Two companies can be treated as comparable when both are discharging overall similar functions, though there may be some minor differences in such functions, not marring the otherwise comparability. Notwithstanding the functional similarity, many a times a company ceases to be comparable because of other reasons as well. If, however, in the subsequent year, the related party transactions fall below that barrier, then such company would again become comparable. In the like manner, a company might have been treated as non-comparable due to the TPO adopting its entity level results for comparison with the segmental results of the case before him, but in a later case, the TPO may take only the related segment results. In such a later case, the company treated as non-comparable to the first company may become comparable to the second company. Thus, it is clearly deductible that if a particular company has been held to be not comparable in the case of another company, then such former company may not always be non-comparable to the assessee company also. The comparability of each company needs to be ascertained only after matching the functional profile and the relevant reasons of the other company. Ergo, this preliminary contention raised on behalf of the assessee is rejected as devoid of merits. Assessee business of ‘Software solutions’ and ‘Consultancy services’ in the area of telecommunication industry, thus industries functionally dissimilar with that of assessee need to be deselcted from final list of comparable. Addition towards Licence expenses - Held that:- The assessee agreed to share a percentage of sale price to Aircom, UK. Clause (1) of the Agreement provides that: “ITP charges to be paid by the subsidiary to the parent company @ 45% of the total sale value of software and support and maintenance charge.” Pursuant to this Agreement, the assessee raised invoices on certain customers in India. The invoice value was shown as its income and the amount paid to its AE was shown as Licence fee expenditure in its Annual accounts. We are at loss to appreciate as to how the assessee can be said to have created an ‘Intangible asset’ by paying the Licence fee to its AE in respect of sales made. Such payment @ 45% of the invoice value was the obligation of the assessee ab initio without which it could not have procured the license of ENTERPRISE suite for sale in India. This amount can be loosely characterized as cost of goods transferred to the customers in India, which has necessarily to be allowed as a revenue expenditure. Similar view has been taken by the tribunal in its order for the immediately preceding year. We, therefore, overturn the impugned order on this score and direct the deletion of addition of Rs. 112.50 lac and odd made by the Assessing Officer.

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• 2017 (8) TMI 912
  Assessment of income in India - P.E. in India - whether an agent satisfies conditions laid down in paragraph-5? - determination of tax ability of advertisement revenue earned by foreign companies - estimation of profit @ 20% of gross advertising revenues - assessee company was located in Hong Kong - India-Holland DTAA - Held that:- We find that agency agreement was entered into between Star Advertising Sales BV and News Television India Private Ltd on 31/05/1994, as per the agreement between SIPL and the assessee, SIPL was required to solicit advertisement in India for Channels, that the agent had to solicit the advertisement at the rates fixed by the assessee, that it could not enter in to any agreement with any client independently, that the even after agreement the assessee was the final and deciding authority to decide the fate of the advertisement, that the agent was to receive fix percentage of the invoiced amount as commission. The agent was free to carry out any other business. If all these facts are considered cumulatively, it becomes clear that the agent had no power to bind the assessee in any legal obligation. The assessee did not have a PE in India, that it was not carrying out any business activities in India and therefore no part of its revenue was attributable to India, that SIPL was an independent agent under Article 5(6)of the tax treaty between India and Holland, that the activities of the agent were carried out in its ordinary course of business, that the agent was not wholly and exclusively devoted to the assessee, that payments made to SIPL were at arm's length, that provisions of Circular 742 were applicable for determining the tax liability of the assessee. In short, the assessee was not liable to pay tax in India in any of the AY.s. mentioned above. Effective ground of appeal is decided in favour of the assessee.

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• 2017 (8) TMI 911
  Reopening of assessment - Jurisdictional AO has not issued any notice u/s 148 - Held that:- Assessee had its registered office in New Delhi since the date of its incorporation; filing its ITR at New Delhi right since the date of its incorporation and ITR for AY under appeal was filed on 30.11.2006 and PAN details since its incorporation also lies with the Delhi income tax authorities. And based on information received from the ADIT, Faridabad, the AO, Ward 1(1), Faridabad who did not had any jurisdiction over the assessee issued notice u/s. 148 of the Act and also issued notice u/s. 142(1). The Assessee informed the AO about its jurisdiction to be assessed at Delhi and requested for transfer of records at Delhi and accordingly, the case was transferred. Accordingly, the notice u/s.142(1) and 143(2) was issued by the Jurisdictional AO Ward 18(2), New Delhi for the first time on 15.10.2013 and no notice u/s. 148 was ever issued by the jurisdictional AO. Hence, the Ld. CIT(A)'s action of confirming the validity of assessment made by the ITO, Ward 28(2), New Delhi without service of valid notice under section 148 is not sustainable in the eyes of law and needs to be quashed. - Decided in favour of assessee.

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• Customs

• 2017 (8) TMI 879
  100% EOU - Absolute Confiscation - import of restricted item - R-22 Gas - confiscation on the ground that appellant have not obtained the Special Import License for import of R-22 Gas - Held that: - As per FTP, 2009-2014 the goods R-22 Gas is restricted items and the import of the same can be made only after obtaining import license - In the present case, appellant being 100% EOU is under the jurisdiction of Development Commissioner, who is also regional licensing authority, accordingly for all the purposes related to FTP, the development commissioner is the authority incharged of the appellant's unit - From the LOP, it can be seen that except prohibited goods, all items of import and local purchases are permitted. It is undisputed that goods R-22 Gas is not prohibited goods therefore the said goods is permitted to be imported as per LOP dated 3-1-2011. It is clear that once the LOP is obtained by EOU, no further license is required as LOP is authorization of all purposes - in the present case, when development commissioner has specifically allowed the import of R-22 Gas, there is no need of special import license. Cancellation of LOP under which appellant proposed to clear the imported goods - Held that: - right from shipment of goods, import of goods, filing of bill of entry, issue of LOP, broad banding of LOP in respect of R-22 gas and specific permission for import of R-22 gas has taken placed much before the cancellation of LOP i.e. 24-6-2013. Therefore, at the time of import the goods R-22 gas was permitted to be imported and cleared under LOP/permission granted by the Development Commissioner, therefore subsequent cancellation of LOP cannot have retrospective effect. Import shall be governed by the valid license existing at the time of import of goods, subsequent cancellation of the said license will not affect import and clearance of the goods prior to the date of cancellation of license - even though LOP was cancelled on 24-6-2013, the same will not adversely affect the import of the goods taken place prior to 24-6-0013. Accordingly, the goods were not liable for confiscation. Appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 878
  Quantum of Redemption fine - penalty - import of restricted item - old and used photocopiers - Held that: - As seen from the value enhanced as well as the redemption fine and penalties imposed, we are of the opinion that the redemption fine and penalties are high and requires interference - the quantum of redemption fine and penalty reduced - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 877
  Classification of imported goods - ‘blenders’ of three different models - classified under CTH 8438 80 90 as machinery for the industrial preparation of food or drink or under CTH 8509 as electric, mechanical domestic appliances with self contained electric motor? - Held that: - Commissioner (A), after considering the product specification from the brochure and website of the imported goods, has recorded that these goods comprise of electric motor and are meant for commercial and industrial clients and not for domestic segment. Further, he has recorded that the suppliers of “Vitamix” brand of blenders restrict themselves to the supply of blenders only for Commercial or industrial purpose in India - goods rightly classified under CTH 8438. Confiscation - Held that: - the dispute is with reference to correct classification of the goods. In view of the two competing classifications under customs tariff, the difference in opinion cannot be considered as mis declaration. Consequently, there is no justification for confiscation of the imported goods which is set aside. Appeal dismissed - decided against Revenue.

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• 2017 (8) TMI 876
  Valuation of exported goods - The value quoted by the informers in the market was used against the appellant and declared value of the goods meant for export was reduced for no reason - Held that: - Market enquiry was not the sole evidence used by Revenue in the adjudication to find mis-declaration of value of export and reduced the value of over-valued goods declared to Customs. Department found from market that the goods meant for exports were available in market at very low prices. That established overvaluation of exportable goods to secure undue benefit by appellant - Futile exercise was made by the appellant to challenge allegation without placing terms and condition of the job working and value of the exported goods. In absence of any basis, being provided by appellant to contradict enquiry result, appellant failed to prove its case. No cogent and credible evidence were led to prove that there was no mis-declaration of the value of the goods exported. In so far as the penalty on the three appellants are concerned, that is reduced from Rs. 4,00,000/- to Rs. 1,00,000/- each in proportion to the re-determined value of the impugned goods at Rs. 8,85,500/- for DEPB scraps as against declared FOB value of Rs. 29,38,320/-. Appeal allowed - decided partly in favor of appellant.

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• 2017 (8) TMI 875
  Rectification of Mistake - The plea of the applicant is that three Member Bench deciding on ADD has clearly ordered for the continuation of AD duty at the rate as applicable on the date preceding the issue of N/N. 70/2010. Whereas in the impugned order it was mentioned as levy and collection of AD duty at the rates prescribed in N/N. 70/2010-Cus - Held that: - it is clear that continued levy of AD duty at the rate applicable on the date preceding the issue of N/N. 70/2010, dated 25-6-2010 was ordered by the said Bench. The ruling of the said ADD Bench was only followed in the impugned order. However, the wordings has given a different meaning. Accordingly, we correct the errors in the impugned order - ROM application allowed.

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• 2017 (8) TMI 874
  Valuation - import of Thermal Printing Media Roll with brand name “SONY” - the department opined that in the past also the appellant might have imported the same goods with undervaluation - Held that: - it appears that duty was demanded only on presumption and without having imported items in hand. So, without any concrete material to establish pertaining the imported goods, the Revenue is not justified in raising value and demand the differential duty - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 873
  N/N. 1/64-Cus., dated 18-1-1964 - footwear - prohibited goods - denial of benefit on the ground that appellant have not mentioned country of origin on the package of the goods, i.e. footwear, therefore there is violation of the condition which made the goods prohibited - Held that: - in accordance with the N/N. 1/64-Cus., country of origin is required to be mentioned on the package of the footwear which appellant failed to do so - However, it is observed from the facts that the appellant proposed to affix the country of origin, i.e. “Made in China” in their factory and certificate can be obtained from the jurisdictional excise authority and shall be produced before the Customs Authority, however, same has been denied by the Customs Authority - appellant had no mala fide intention in not affixing the country of origin on the packages of the footwear. The goods were liable for confiscation, however appellant deserves the leniency. We therefore reduced the redemption fine from Rs. 3.5 lacs to Rs. 1 lac., penalty also reduced from Rs. 75,000/- to Rs. 25,000/-. Appeal allowed - decided partly in favor of appellant.

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• 2017 (8) TMI 872
  100% EOU - Refund claim - shortfall in export obligation - denial of the benefit of a Public Notice dated 12-8-2013 - Effective date of applicability - Held that: - The terms of the Public Notice are clear that the verification i.e. any authorization holder choosing to avail the benefit should complete the process of payment on or before 31-3-2014. The policy is applicable to “all pending cases” of the default in meeting export obligations. This Court is of the opinion that the respondent’s stand that the petitioner was ineligible to the benefit, is untenable; that the remand by the Appellate Authority to the Adjudicating Authority, it cannot be said that the matter remained concluded. Till date, the Adjudicating Authority has not passed any fresh orders and in that since the matter is “pending” or live. The petitioner fulfilled the requirement of the Public Notice and applied on 7-3-2014 i.e. well before the cut off date of 31-3-2014. The respondents are hereby directed to verify the petitioner’s application and pass the necessary orders after satisfying themselves as to other conditions of eligibility, with respect to the regularization of the default in EOU and as to its entitlement for consequential refund in terms of the Public Notice dated 12-8-2013 - petition allowed by way of remand.

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• Corporate Laws

• 2017 (8) TMI 869
  Offences punishable under SEBI - jurisdiction transferred for trial to a Special Court - whether trial would move to the changed ‘forum’ (to the Court of Session, after ‘the 2002 Amendment Act’ and, to the Special Court, after ‘the 2014 Amendment Act’)? - Held that:- It is not reasonable to read anything further into the words highlighted by learned senior counsel. ‘The 2014 Amendment Act’ expressly provided, that for all offences committed even prior to ‘the 2014 Amendment Act, proceedings would be conducted only before the Special Court. The provision itself therefore expressly mandated, that the change of ‘forum’ would operate retrospectively, and as such, pending proceedings would necessarily have to be transferred to the changed ‘forum’ – the Special Court. This is our considered view. For the reasons recorded above, we hereby hold, that even for such matters where trial had commenced under the unamended provision, after the amendments, which we have held to be operational retrospectively, the trial would move to the changed ‘forum’ (to the Court of Session, after ‘the 2002 Amendment Act’ and, to the Special Court, after ‘the 2014 Amendment Act’). We are of the view, that the ‘forum’ for trial earlier vested in the Court of Metropolitan Magistrate (-or, Judicial Magistrate of the first class) was retrospectively amended, inasmuch as, the ‘forum’ of trial after ‘the 2002 Amendment Act’ was retrospectively changed to the Court of Session. In this view of the matter, the trials even in respect of offences allegedly committed before 29.10.2002 (-the date with effect from which, ‘the 2002 Amendment Act’ became operational), whether in respect whereof trial had or had not been initiated, would stand jurisdictionally vested in a Court of Session. And likewise, trials of offences under the SEBI Act, consequent upon ‘the 2014 Amendment Act (which became operational, with effect from 18.07.2013) would stand jurisdictionally transferred for trial to a Special Court, irrespective of whether the offence under the SEBI Act was committed before 29.10.2002 and/or before 18.07.2013 (-the date with effect from which ‘the 2014 Amendment Act’ became operational), and irrespective of the fact whether trial had or had not been initiated. Our above conclusion, affirms the determination recorded by the Delhi High Court in Mahender Singh v. High Court of Delhi (2008 (1) TMI 627 - HIGH COURT OF DELHI) but for the reasons recorded hereinabove. The impugned judgment rendered by the High Court of Bombay in M/s. Classic Credit Ltd. v. State of Maharashtra (2008 (1) TMI 608 - HIGH COURT OF BOMBAY), is liable to be set aside, and is accordingly hereby set aside.

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• 2017 (8) TMI 868
  Winding up petition - Held that:- The Official Liquidator was directed to file a report under Section 481 of the Companies Act for dissolution of company within two weeks. Hence the Official Liquidator had filed an application No.1206/2017 and stated that Mr. Sachin Duggal, ex-director of the company in liquidation visited the office on 03.02.2014 and his statement was recorded under Section 130 of Company (Court) Rules. The other directors namely Mr.Sachin Duggal, Mr.Kartik Sehgal and Mrs.Indira Sehgal also visited the office on 11.08.2014 when Mrs.Indira Sehgal and Mr.Kartik Sehgal submitted an affidavit dated 13.08.2014 mentioning that the company is having no liability, creditors or assets. Similar affidavit dated 02.09.2014 by Mr.Sachin Duggal, the ex-director was submitted. The default notice was issued to Mr.Jonathan Edward Chales Grange, ex-director on 01.10.2014 but it could not be served since his address was not found. The fund position of the company in liquidation is Rs.-4,664/- as on 17.04.2017 and hence due to its abysmal fund position, no claims were invited. No claims even otherwise were received by the Official Liquidator. The Division Bench in company application No.34/2014 vide its order dated 07.12.2015 allowed moving of application under Section 481 of the Companies Act, 1956 in the present case. This Court vide its order dated 03.02.2016 permitted the Official Liquidator to publish notice of dissolution for inviting no objection(s) for dissolution of Company in ‘Jansatta’ (Hindi) and ‘Hindustan Times’ (English). In terms of order dated 03.02.2016 of this Court dissolution notice has been published in ‘Jansatta’ (Hindi) and ‘Hindustan Times’ (English) on 11.06.2016. Till date no objection has been received against the dissolution of above said company. No fruitful purpose will be served to continue the Liquidation proceedings. Thus, this is a fit case for the dissolution of the company. In the circumstances M/s SMX Technologies (India) Ltd. (in liquidation) is directed to be dissolved under Section 481 of the Companies Act, 1956 and the Official Liquidator is discharged from the liquidation proceedings of the company. The Official Liquidator is permitted to close the books of accounts of the company in liquidation after appropriating the negative funds in the company fund from the company pool fund.

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• Insolvency & Bankruptcy

• 2017 (8) TMI 867
  Amendment with regard to a fresh cause of action - Tribunal empowerment to amend any petition - Held that:- In the present case we have observed that the Tribunal otherwise is not empowered to amend any petition except to the extent as prescribed under the Act and the Rules; the Tribunal cannot allow substantial amendment to the petition/application/appeal, on merely asking for it, unrelated to the original cause of action or prayer, though it is open to the Tribunal to allow the party to file additional affidavit/reply affidavit bringing to the notice of the Tribunal the other relevant fact which are related to the original cause of action and the prayer as has already been made. In any case the Tribunal cannot allow any petition for amendment with regard to a fresh cause of action other than the cause of action for which the petition under Section 241 of the Companies Act, 2013 has been preferred. In the present case, as the amendment sought with regard to a fresh cause of action which has taken place more than three years back on 15th October, 2012, prayer made in amendment petition being barred by limitation, the Tribunal was not competent to allow the amendment. In view of discussion as made above, impugned order cannot be upheld. We, accordingly, set aside the impugned order dated 10th March 2017 and direct the Tribunal to hear the petition on the basis of the pleadings as already made in the petition under Section 241 of the Companies Act, 2013, reply thereof and rejoinder, if any, filed. However, it will be open to the Tribunal to peruse any document and call for any document if it is satisfied related to the cause of action and allegation, originally made. It is desirable that the petition be disposed of expeditiously, more than three months having already passed

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• 2017 (8) TMI 866
  Insolvency Resolution Process - Held that:- In view of the commencement of the Insolvency Resolution Process with the admission of this Petition and appointment of the Interim Resolution Professional, this Adjudicating Authority hereby passes the order declaring moratorium under section 13(1)(a) prohibiting the following as laid down in section 14 of the Code; (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; (b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002); (d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. (i) The moratorium order in respect of (a), (b), (c) and (d) above shall not apply to the transactions notified by the Central Government. (ii) However, the order of moratorium shall not apply in respect of supply of essential goods or services to Corporate Debtor. (iii) The applicant shall also make public announcement about initiation of 'Corporate Insolvency Resolution Process', as required by Section 13(l)(b) of the Code. (e) However, the supply of goods and essential services to the Corporate Debtor shall not be terminated or suspended or interrupted during moratorium period. The moratorium order in respect of (i), (ii), (iii) and (iv) above shall not apply to the transactions notified by the Central Government. (f) The provisions of sub-section (1) of Section 14 shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. This order of moratorium shall be in force from the date of order till the completion of Corporate Insolvency Resolution Process subject to the Proviso under sub-section (4) of section 14.

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• PMLA

• 2017 (8) TMI 862
  Prevention of Money Laundering - provisions prescribed under law for retention of the documents/properties - permitting the Enforcement Directorate to retain various documents/computer hardwares seized from different places in terms of Section 17(4) of PMLA - Held that:- The intention of the legislature for retention of documents is to arm the Investigating Authority to find out the truth of the allegations through the evidence collected by way of documents/records including digital records to come to a conclusion. Binding the hands of the Investigating Authority by refusing to retain the documents will not be in the interest of justice. The law has allowed the person from whom records seized or frozen to obtain the copies of record. The appellant has right under law that is section 21(2) PMLA to obtain the copies of records he required. We do not see any prejudice is caused to the appellant in retaining the documents/records seized, in the present case, from its possession. Rather it will obstruct the progress of investigation if the prayer of Enforcement Directorate to retain the documents is disallowed. Admittedly, the case is under investigations. Prima facie there are serious allegation of fraud and the investigation is at crucial stage. So in our considered view, the appellant has not made out any case to set aside the impugned order. There is due compliance of the provision under PMLA relating to retention of the records/documents. No infirmity or illegality in the impugned order.

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• 2017 (8) TMI 861
  Adjudicating Authority power to review its own orders - whether any order passed by this Tribunal directing the Adjudicating Authority to hear the applicant after passing of the confirmation order is a valid order or not? - Held that:- In the instant case after publication and communication of the confirmation order dated 11.03.2014 to the parties concerned the Adjudicating Authority became functus officio and hence was not empowered or entitled to review its own orders, that too when there are no express provisions for such a review by the Adjudicating Authority in the PMLA. But the Appellate Tribunal can exercise its power of review as per scheme of the Act. In view of the above, we are of the view that the order dated 12.12.2014 of this Tribunal allowing the applicant to invoke his remedy before the Adjudicating Authority as contemplated under proviso to section 8(2) of PMLA needs to be reviewed. Therefore, in terms of the powers vested in this Tribunal under section 35(2) of the PMLA we review the order dated 12.12.2014 of this Tribunal and pass the following order: I. Order of confirmation dated 31.03.2014 in OC No. 228/2013 in so far as it pertains to house No. D-5/5 DLF Phase-I, Gurgaon, Haryana is set aside and the matter is remanded back to the Adjudicating Authority for deciding the matter afresh after giving an opportunity of being heard to the applicant in terms of proviso to section 8(2) and also the other defendants in OC No. 228/2013. II. The Adjudicating Authority shall fix a date of hearing not beyond 45 days from the date of receipt of this order. The applicant and the defendants in OC No. 228/2013 shall appear before the Adjudicating Authority on the date fixed by the Adjudicating Authority for hearing. The Adjudicating Authority shall pass its order in remand proceedings within 45 days of the date of hearing. III. The applicant and the defendants in OC No. 228/2013 shall not sell, dispose of, alienate or create any third party interest in the property viz. D-5/5, DLF Phase-I, Gurgaon, Haryana during the pendency of remand proceedings before the Adjudicating Authority and the provisional attachment order No. 03/2013 dated 28.10.2013 in ECIR/06/JLZO/2012 shall remain alive. The applicant shall also continue to deposit charges for use and occupation of the said property @ of Rs. 50,000 per month to be deposited by 15th date of the next English calendar month.

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• 2017 (8) TMI 860
  Prevention of Money Laundering - denial of natural justice - no opportunity granted to the appellant to defend his case in connection with the property for 35% of the property attached - Held that:- No doubt normally as per the statute he was supposed to give 30 days time to defend this case. We have not been able to understand when the Adjudicating Authority was having 74 days left before the statutory deadline under section 5 of the Act, atleast one final opportunity ought to have been granted to the appellant to defend his case. It is also not in dispute that on 12th January, 2015, the appellant was in judicial custody. Even the order was passed on the next date i.e. 13th January, 2015. As per the settled law, the accused person is entitled to raise his defence within the reasonable time. We are of the view that the order passed by the Adjudicating Authority is in haste and without following the principles of natural justice particularly when 74 days was still left before the statutory deadline. The impugned order is set aside the appellant is allowed to file the reply before the Adjudicating Authority within three weeks from today irrespective of the fact that he is in judicial custody. He could given the instructions as already given in the fresh matter to his counsel so that both the matters may be decided together. We also agree that the submissions of the learned counsel for the respondent that in ground (B) that the appellant has not made the correct statement that during the entire tenure of the proceedings before the Adjudicating Authority he was in judicial custody. As a matter of fact he was on bail between 1st January, 2015 to 5th January, 2015. It might have happened due to oversight as alleged by the counsel but all the appeal, papers were signed by him. He is warned to be careful in future. To balance the case of the two sides, cost of Rs. 10,000/- is imposed on the appellant

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• Service Tax

• 2017 (8) TMI 910
  Release of seized Defendant Vessel - Held that: - the Registry is directed to transfer Rs. 18,55,18,796/ with accrued interest thereon to the Service Tax Authorities by issuing a cheque in the name of “State Bank of India A/c Service Tax” and hand over the cheque to advocate of S5 Agency World Limited forthwith which will be deposited using the plaintiffs/applicants service tax registration number AAGCS8214FST003 and the Service Tax Authorities is directed to accept the said cheque on plaintiffs/applicants account and give necessary effect thereof. It is directed that adjustment of the service tax in the present matter would be only towards liability, if any, in the captioned suit and no other past or future service tax liability of the Applicant/Plaintiff. Assistant Commissioner CGST & Central Excise, Mumbai, Mumbai East Commisionerate, Division VI, Range V is the assessing authority for Service tax present claim. The said Service Tax Authority is expected to assess the liability as early as possible. It is therefore directed that on assessment of the service tax liability by the Assistant Commissioner CGST & Central Excise, Mumbai, Mumbai East Commisionerate, Division VI, Range V, if the above sum or any part thereof is in excess of such assessed liability, the Service Tax Authorities shall refund the such excess amount to the below mentioned account details of S5 Agency World Limited directly. Appeal allowed by way of remand.

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• 2017 (8) TMI 909
  Jurisdiction - power of adjudicating Commissioner to remand the matter for verification - Held that: - instead of verifying and quantifying the demand, the Commissioner has ordered for verification of the documentary evidence. This order made by the adjudicating Commissioner does not seem to be proper or within the provisions of law. Thus, the order passed by the Commissioner is not in order. The same requires to be remanded to the Commissioner for reconsideration - The impugned order is set aside and the appeal filed by the assessee is allowed by way of remand to the adjudicating authority - appeal allowed by way of remand.

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• 2017 (8) TMI 908
  Penalty u/s 78 - Banking and other Financial services - reverse charge mechanism - duty with interest paid on being pointed out - Held that: - The levy of service tax on reverse charge mechanism during the period in question had been an area of dispute between the Revenue and the assessee, and it became clear only after the decision of the Hon’ble Bombay High Court in the case of Indian national Ship Owners Association Vs. UOI [2008 (12) TMI 41 - BOMBAY HIGH COURT] - penalty not imposable on appellant by invoking section 80 - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 907
  Valuation - includibility - sale of spare parts and service of generators, as an authorized service agent - whether, appellant are liable to pay Service Tax on the cost of spares, including lubricating oils sold for which they have raised separate invoice and paid Sales Tax/Value Added Tax? - Held that: - the appellant have under the facts and circumstances raised separate invoices for the material component used in the course of repair and maintenance of generators. Further, they have paid CST/VAT on such spare parts, including lubricating oils etc. - Sales Tax & Service Tax are mutually exclusive and as such there can be no demand of Service Tax on the utilization of the spares sold in the course of repair on which Sales Tax is paid - the demand of Service Tax on the value of spares and consumables sold separately during the course of providing repairs and maintenance to the DG Sets unsustainable - penalty also set aside - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 906
  Intellectual Property Rights Service - royalty - Held that: - it can be seen that the Intellectual Property Right should be under the law enforced in India. As per the facts of the present case, since the Intellectual Property Right which is used by the appellant belong to the foreign person and that Intellectual Property Right is not governed by any law in India, therefore it does not cover under the definition of Intellectual Property Right. Accordingly, the same is not taxable - appeal allowed decided in favor of appellant.

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• 2017 (8) TMI 905
  Renting of immovable property - whether renting of immovable property for commercial use given by the appellant being a charitable hospital is liable for service tax under the category of renting of immovable property for commercial use in terms of clause 105 (zzzz) of Section 65 of the Finance Act, 1994? - Held that: - under the category of renting of immovable property, the service is taxable, if the property is rented out for the purpose of business or commerce - In the present case even though the appellants are charitable trust, the immovable property rented out is undisputedly for the purpose of commerce or business. There is no specific exemption notification in respect of renting of immovable property by a charitable trust - demand upheld. Penalty - Held that: - the issue was contentious - still the matter is pending before the Hon’ble Supreme Court - In this scenario, entertaining the bonafide belief by the appellant is convincing, the penalty is set aside. Appeal allowed - decided partly in favor of appellant.

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• 2017 (8) TMI 904
  N/N. 01/2006-ST - Valuation - includibility - construction service - materials such as, cement and steel was provided by the service recipient, M/s. Ultra Tech Cement Ltd. free of cost to the appellant - when the value of free supplied material is not included in the gross value of construction service, whether abatement N/N. 01/2006-ST is available to the assessee? - Held that: - The fact is not under dispute that whatever material used by the appellant for providing services for construction have been included in the gross value - it has been held by the Larger Bench of this Tribunal in the case of Bhayana Builders (P) Ltd. [2013 (9) TMI 294 - CESTAT NEW DELHI (LB)] that in order to allow the abatement in terms of N/N. 01/2006-ST, the value of free supplied material by the service recipient need not to be included - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 903
  Cargo handling services - whether the shifting and loading of railway sleepers within the factory premises of M/s. Rural Engineering Pvt. Ltd., a service provided by the respondent would be chargeable to service tax under the category of ‘cargo handling services’? - Held that: - similar issue decided in the case of The Commissioner Central Excise Versus M/s Manoj Kumar and Arvind Kumar [2012 (9) TMI 941 - ALLAHABAD HIGH COURT], where it was held that In common parlance 'cargo' means load, which is to be carried by ship, aeroplane, rail or truck. The handling of transportation of goods, by itself unless it is an organised activity, which is connected with carrying cargo (load) by ship, aeroplane, rail or truck is involved would not fall within the definition of cargo handling service. The definition specifically excludes handling of export cargo or passenger baggage or mere transportation of goods - demand set aside - appeal dismissed - decided against Revenue.

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• 2017 (8) TMI 902
  N/N. 6/2005-ST dt. 1.3.2005 - R & D Service - demand confirmed on the ground the appellant have not complied with the condition of non availing the Cenvat Credit in order to avail the exemption - Held that: - the exemption is not available if the assessee availed the cenvat credit during the period for which exemption under the notification is availed of - As per the facts revealed from the ST.3 Return and the extract submitted by the appellant. It is clear that the appellant have not availed the cenvat credit in respect of input service or capital goods during the period 2010-2011 - also Revenue could not establish with tangible evidence that the appellant have availed the cenvat credit - demand set aside - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2017 (8) TMI 901
  N/N. 43/2001-CE (NT) - leather shoe uppers falling under Heading 6406 1020 - demand on the ground that the same were cleared for home consumption and not for export - Held that: - the appellants were not aware that they are liable to pay duty, there is no valid defense put forward by the appellants. But taking into consideration that the goods have been entirely exported, we are of the view that the penalties imposed under section 11AC is unwarranted - demand of duty with interest upheld - appeal allowed - decided partly in favor of appellant.

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• 2017 (8) TMI 900
  Utilisation of CENVAT credit - credit availed on Basic Excise Duty utilised towards Education Cess and Secondary & Higher Education Cess - Held that: - the issue is no more res integra being settled by the judgment of Hon’ble Gujarat High Court in the case of Madura Industries Textiles [2013 (1) TMI 352 - GUJARAT HIGH COURT] wherein it is observed that CENVAT credit availed on basic excise duty can be utilized towards discharging liability of Education Cess and Secondary & Higher Education Cess - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 899
  CENVAT credit - compensation received on imported inputs/goods of 9051 kgs. of PVC film which had been used in or in relation to the manufacture of finished goods - defective cylinders cleared as scrap - Held that: - There is no evidence on record to show that the defective PVC films were not used in the manufacture of finished goods. Merely receipt of compensation for defective inputs cannot be a ground for rejection of the credit availed by the appellant without establishing the fact that the said defective inputs had been used in or in relation to the manufacture of finished goods which the appellant categorically claimed in their reply to the show cause notice before the lower authorities - demand set aside. Defective cylinders cleared as scrap - Held that: - since the process of converting cylinders into scrap does not result into manufacture, the appellant required to reverse the credit availed under sub-Rule (1) of Rule 16 of Central Excise Rules, 2002 - demand upheld. Appeal allowed - decided partly in favor of appellant.

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• 2017 (8) TMI 898
  Refund of pre-deposit made during the pendency of the appeal before the Tribunal - Held that: - If the Revenue was aggrieved with the Tribunal's order passed in the appellant's case allowing their appeal, it was open to them to challenge the same before the higher appellate forum on the ground that the relied upon decisions of the High Courts have not been accepted by the Department and stands challenged. Once the Tribunal order attains finality, and the same has to be given effect to. There cannot be a second opinion on the above proposition and I strongly fell that the Commissioner (Appeals) has committed an error of law - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 897
  CENVAT credit - outdoor catering services - the Larger Bench of Tribunal in the case of Commissioner of Central Excise, Mumbai-V Vs. GTC Industries Ltd. [2008 (9) TMI 56 - CESTAT MUMBAI] clarified the issue as there were conflicting decisions of the Tribunal on the issue of availability of out door catering services in canteens - Held that: - The invoices included by the appellant in their appeal memorandum do not appear to be of canteen services. The CA certificate produced by the appellant in their record also does not state that the said services were in respect of canteen facility. The decision in the case of GTC Industries Ltd. would be applicable only in respect of canteen facilities. Extended period of limitation - Held that: - the appellant could have held a bonafide belief that they are entitled to Cenvat credit on service tax paid in respect of canteen services. Thus, in so far as the Cenvat Credit on outdoor catering services relates to canteen services provided in the factory premises, extended period of limitation cannot be invoked. The matter in respect of admissibility of credit on outdoor catering services other than those of canteen is remanded to the original adjudicating authority - appeal allowed by way of remand.

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• 2017 (8) TMI 896
  CENVAT credit - furnace oil (fuel) used in manufacture of both dutiable and non-dutiable goods - Rule 6(3) of CCR - non-maintenance of seperate set of accounts - Held that: - the issue is no longer res Integra and it is squarely covered in their favour in their own case M/s Sharda Forging And Stamping Pvt Ltd Versus Commissioner of Central Excise, Ghaziabad [2015 (10) TMI 1654 - CESTAT NEW DELHI], where it was held that if the assessee reversed proportionate Cenvat credit attributable to final exempted product, in this case the assessee has complied with Rule 6(3) of the Rules, is not required to pay duty equal to 10% of sale price of the exempted final products - appeal dismissed - decided against Revenue.

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• 2017 (8) TMI 895
  100% EOU - Refund of unutilised CENVAT credit - input services - telephone, travel, professional, catering, technical testing, analysis plant management, courier, security, courier, facility keeping, labour contract and plant R & M contractor, catering, etc. which have been cleared for export - Held that: - all the impugned services fall in the definition of 'input service' as provided in Rule 2(l) of CENVAT Credit Rules (CCR), 2004 as laid down in assessee's own case Apotex Pharmachem India Pvt. Ltd. Versus Commissioner of Central Excise, Customs and Service Tax Bangalore [2016 (11) TMI 578 - CESTAT BANGALORE] - refund allowed - appeal dismissed - decided against Revenue.

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• 2017 (8) TMI 894
  Valuation - it was alleged that the price charged by the appellant from its customers through the debit notes was much higher than the sale price claimed to have been charged by it from its consumers - Held that: - Records demonstrate non-production of the documents before adjudicating authority. Therefore, it is not practically possible to appreciate plea of the appellant that it had charged amount lower than the amount charged through debit notes, in absence of documents produced before Tribunal. Time limitation - Held that: - adjudication cannot be said to be time-barred when there was deliberate suppression of sale value in the return. Therefore liability to duty and penalty arises on the facts and circumstances of the case, followed by interest. Appeal dismissed - decided against appellant.

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• 2017 (8) TMI 893
  Validity of subsequent SCN - invocation of proviso to Sub-section 1 of Section 11A of the CEA, 1944, for subsequent SCN - time limitation - deduction of expenses incurred towards freight for transferring of goods from factory to depots - Held that: - the facts were within the knowledge of the Department since 06/09/2004 when the appellant had written to the Department about discontinuation of inclusion of freight element from the assessable value. Further, the said SCN dated 02/09/2005 was issued to the appellant for recovery of Central Excise duty involved in the said component of freight expense incurred - the subsequent SCN i.e. 24/11/2008 could not have been issued by invoking proviso to Sub-section (1) of Section 11A of the CEA, 1944 - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 892
  CENVAT credit on short quantity received denied - weight variations - Held that: - shortages is to the tune of 2% and less - There is no case of the Revenue that total bulk cement cleared from the Gujarat plant was not received by the appellant at Mumbai plant as no quantity was diverted in the transit therefore it is case of only weight variations between weight shown at the time of the loading of the cement into ship from Gujarat and at the time of unloading from transportation of cement from Nhava Sheva, Mumbai - similar issue decided in the case of M/s ULTRA TECH CEMENT LTD Versus COMMISSIONER OF CENTRAL EXCISE [2014 (8) TMI 180 - CESTAT MUMBAI], where it was held that As there is no allegation of diversion or pilferage and considering the fact that in some cases weight is short and weight is excess, it is held that it occurred only due to the various method of weighment of the goods - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 891
  Benefit of N/N. 108/95-CE(NT) dated 28/08/1995 - denial on the ground that the seller of HSD i.e. Indian Oil has not made sales to the United Nations project, therefore respondents should not be allowed to avail the benefit - Held that: - even though IOCL is not entitled for the refund claim, the ultimate user have been using it for United Nations Project or World Bank Project and was not debarred to take benefit under N/N. 108/95-CE(NT) dated 28/08/1995 as amended - reliance was placed on the ruling of Hon'ble High Court of Bombay in the case of Jai Bhagwati Impex Pvt. Ltd. Versus union of India [2002 (6) TMI 46 - HIGH COURT BOMBAY]. Further, as regards the availability of refund claim of additional Excise duty paid on the HSD, in case of exemption under Notification No.108/95, no distinction has been made for additional Excise duty on HSD in terms of Section 133 of the Finance Act, 1999. The respondents are entitled to the benefit of refund (including on Additional Excise duty) - appeal dismissed - decided against Revenue.

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• 2017 (8) TMI 890
  Refund claim - duty paid under protest - time limitation - Held that: - the matter was still sub-judice, when the appellant had filed further appeal against the order of the learned Commissioner (Appeals) before this Tribunal - the Commissioner (Appeals) is correct in holding that the payment of the amount on 16/06/2003 was by way of revenue deposit, in absence of there being any adjudicated or admitted dues - Commissioner (Appeals) is right in holding that the amount was paid under protest, as the respondents have been continuously agitating the demand before the higher forums - refund allowed - appeal dismissed - decided against Revenue.

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• 2017 (8) TMI 889
  CENVAT credit - It appeared that the appellants had contravened the provisions of rules 3 and 4 of CCR inasmuch as they had availed and utilized the excess service tax credit in respect of their sister/related unit - Held that: - the appellant's case is covered by the decision relied upon by the appellant in the case of Durferrit Asea Pvt. Ltd. Vs. CCE, Guntur [2010 (4) TMI 259 - CESTAT, BANGALORE], wherein it has been held that there is no compulsion to follow the procedure of Rule 7 of the Cenvat Credit Rules, 2004 to distribute the cenvat credit - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 888
  Penalty - clearance of pipes without payment of duty - N/N. 3/2004-C.E., dated 8-1-2004 - denial of benefit on the ground that there is no storage facility in the pipes - Held that: - the District Collector will be in a position to know the details of the scheme and has authorized procurement of pipes without payment of duty, as per requirement. Hence, once the District Collector issued the certificate, after considering the water scheme, the benefit of notification should be extended - The penalty stands imposed under Rule 26 for dealing in excisable goods which are liable for confiscation. The imposition of penalty is totally unjustifiable and liable to be set aside - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 887
  Adjustment of refund granted against the outstanding interest on the supplementary invoices - Held that: - there is no adjudication order passed to demand interest against the appellant and under which provisions the demand of interest was confirmed against the appellant. In that circumstances, the demand of interest against the appellant is immature - the question of adjustment does not arise - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 886
  CENVAT credit - N/N. 44/2001-C.E. (N.T.), dated 26-6-2001 - duty paid indigenous inputs procured against the invalidated Advance Licence - Held that: - The issue pertaining to the N/N. 44/2001-C.E. (N.T.) has already come up before the Apex Court in the case of CCE & C v. MDS Switchgear Ltd., [2008 (8) TMI 37 - SUPREME COURT], wherein it was observed that the recipient manufacturer is entitled to avail the benefit. A quantum of duty, already determined by the jurisdictional officer of the supplier unit, cannot be contested or challenged by the officer of recipient unit - credit allowed - appeal dismissed - decided against Revenue.

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• 2017 (8) TMI 885
  CENVAT credit - denial of credit in respect of invoices wherein the address is wrongly mentioned - Held that: - the denial of Cenvat credit merely on wrong address mentioned by oversight is not justified when the same has also been clarified by the supplier by issuing the letter which is placed on record. It is a settled law that Cenvat credit should not be denied on mere technicalities - credit allowed - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 884
  Material received short - job-work - processing loss - Held that: - the Revenue could not produce any evidence to show that there is a diversion of input or generation of physical waste and scrap which was cleared clandestinely either by the appellant or by the job worker. Therefore, the demand on 16% process loss is on the basis of assumption and presumption, therefore the same cannot sustain - It is not a department’s case that the 16% is not a process loss but either it is a physical scrap or removal of inputs as such - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 883
  Condonation of delay - Maintainability of appeal - case of Revenue is that the appeal is not maintainable insofar as it relates to determination of question having relation to rate of duty - the decision in the case of Thejo Engineering Services Pvt. Ltd. Versus Commr. OF C. Ex., Chennai-II [2015 (7) TMI 1229 - MADRAS HIGH COURT] contested - Held that: - The special leave petition is dismissed on the ground of delay.

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• 2017 (8) TMI 882
  CENVAT credit - whether items like Steel Plates, Angles, Channel, Joists, TMT flat bars, Tor Steels, MS Flats, Packing, Jointing Sheet, Steam Metallic Packing, Jointing, Gasket Sheet, Aluminium Sheet, Bagasse Carrier Chain, Forged Chain and Welding Electrodes are eligible for Cenvat credit as capital goods or inputs? - Held that: - The question how an item can be considered as ‘Input’ or ‘Capital Goods’, has been dealt with in a catena of decisions by Supreme Court, various High Courts and Tribunals. The matter ought to have been considered appropriately covering all the items which has not been done by Tribunal. The order of Tribunal, in our view, cannot be said to be a ‘judgment’ since nothing has been discussed and in a very cursory manner, appeal of Revenue has been dismissed - Matter is remanded to Tribunal to decide the appeal on merits, afresh - appeal allowed by way of remand.

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• 2017 (8) TMI 881
  Condonation of delay in filing appeal - Section 5 of the Limitation Act - Held that: - It is true that there is a delay of 539 days in preferring the tax appeal. However, considering the submissions made in support of the application to condone the delay, we are of the opinion that the delay has been explained sufficiently - when sufficient cause has been shown, the delay is required to be condoned - COD allowed.

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• 2017 (8) TMI 880
  Whether the Tribunal is justified in affirming the order of Commissioner (Appeals) rejecting the appeal as not in accordance with Rule 213 in absence of the Statement of fact and grounds of appeal without providing/any opportunity to cure the defect? - Held that: - The provision of appeal clearly contemplates an opportunity of hearing as also the principles of natural justice are inbuilt. Therefore, there is no reason why the asessee have not been given any chance to add the grounds or write the grounds. The defect was no doubt curable. The authority concerned should have allowed the appellant to cure the defect - matter sent back to Tribunal for fresh consideration - appeal allowed by way of remand.

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• CST, VAT & Sales Tax

• 2017 (8) TMI 871
  Construction contract - Section 42(3) of the MVAT Act - classification of the contract executed by the Appellant - The Appellant's case is that the terms “construction” includes “Repairs and Reconstruction” - Whether a contract for repairs or reconstruction of building is a “Construction contract” as contemplated by Section 42(3) of the MVAT Act? - Held that: - In the construction of Industrial building/real estate, the term “construction” itself means construction, alteration or repair of building structures or other real property. This includes, but not limited to improvements of all types such as bridges, dams, plants, highway­street, railway, airport, canals, channels. Above meaning has been recognized in practice and explained under the related law, since long. There is no specific artificial definition brought in force by this Act/notification. Therefore, above meaning, in our view, still hold the field. Therefore, the law needs to be interpreted accordingly - The building and other related items so added in the definition, itself make the position clear that any construction of building if repairs or alters from 2006, it will liable to 5% tax and not 8%. Therefore, not granting benefit of 5% tax to the Appellant is contrary to law. This tax is applicable to repairing or re­alteration to the old building, bridge and road also. In the present case, the terms “Works Contract” of repair and reconstruction and “Contract of Construction” of building, include repairs and reconstruction, have been in existence for more than 15 years. There is no contra material to dislodge the same. Therefore, the impugned order so passed, requires interference. The question so raised are answered positive accordingly. Whether the Tribunal is justified in upholding the decision of the Commissioner of rejecting the prayer for prospective effect? - Held that: - the question is answered in the negative against the Respondent. Appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 870
  Payment of tax on compounded basis - case of petitioner is that the application for payment of tax on compounded basis, not having been accepted by the respondents, there was no obligation on the petitioner to discharge his tax liability for the assessment year in question on compounded basis - Section 8(b) of the Kerala Value Added Tax Act - Held that: - The analogy, as per the statutory provisions, is to the formation of a contract between the assessee on the one hand, and the tax department on the other, and consequent to the formation of the contract, neither side is permitted to resile therefrom - in the absence of any acceptance of the application of the petitioner, the petitioner was obligated to discharge his liability only on the basis of the regular method of assessment of tax as indicated in Section 6 of the KVAT Act. Since there is no dispute in the instant case that, the petitioner had discharged his liability for the period in question in accordance with Section 6(1) of the KVAT Act, the demand in Ext. P5 notice cannot be legally sustained - petition allowed - decided in favor of petitioner.

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• 2017 (8) TMI 863
  Right of a secured creditor to realize the secured debts - Recovery of Debts due to Banks and Financial Institutions - attachment orders - Held that:- As correctly argued by the learned counsel for the petitioner Bank, on a parity of reasoning, Section 26-E of the 2002 Act construed likewise. In other words, not only should the amendment apply to pending lis, but the declaration that the right of a secured creditor to realize the secured debts, would have priority over all debts, which would include, Government dues including revenues, taxes, etc.,. should hold good qua 2002 Act as well. We tend to agree with the submission advanced before me by the learned counsel for the petitioner Bank. Accordingly,the impugned attachment entry would have to be lifted. It is ordered accordingly. The writ petition is disposed of, based on an undertaking given by Mr.M.L.Ganesh, who appears for the petitioner Bank, that in case, the Revenue were to succeed in the SLP, the money realised from the sale of the subject properties would be disbursed to respondent No.1, in accordance with law.

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• Indian Laws

• 2017 (8) TMI 938
  Whether there is any fundamental right of privacy under the Indian Constitution - Held Yes. Life and personal liberty are inalienable rights. These are rights which are inseparable from a dignified human existence. The dignity of the individual, equality between human beings and the quest for liberty are the foundational pillars of the Indian Constitution; Life and personal liberty are not creations of the Constitution. These rights are recognised by the Constitution as inhering in each individual as an intrinsic and inseparable part of the human element which dwells within; Privacy is a constitutionally protected right which emerges primarily from the guarantee of life and personal liberty in Article 21 of the Constitution. Elements of privacy also arise in varying contexts from the other facets of freedom and dignity recognised and guaranteed by the fundamental rights contained in Part III; Like other rights which form part of the fundamental freedoms protected by Part III, including the right to life and personal liberty under Article 21, privacy is not an absolute right. A law which encroaches upon privacy will have to withstand the touchstone of permissible restrictions on fundamental rights. An invasion of life or personal liberty must meet the three-fold requirement of (i) legality, which postulates the existence of law; (ii) need, defined in terms of a legitimate state aim; and (iii) proportionality which ensures a rational nexus between the objects and the means adopted to achieve them; and Privacy has both positive and negative content. The negative content restrains the state from committing an intrusion upon the life and personal liberty of a citizen. Its positive content imposes an obligation on the state to take all necessary measures to protect the privacy of the individual.

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• 2017 (8) TMI 865
  Proceedings before BIFR - sick industrial company - recover the petitioner's pending dues directly from the petitioner's bank account - Held that:- Consequent to a company being a sick industrial company under section 3(1)(o) of the Act, all proceedings for execution, distress or the like against any of the property of a sick company would automatically be suspended and could not be taken without the consent of the Board. It was held that in such a case, gram panchayat could not have recovered the property tax and other amount of dues from the company by initiating coercive proceedings under section 129 of the Bombay Village Panchayats Act, 1959, without the consent of the Board. The fact that the impugned demand notices seek to coercively recover the petitioner's pending dues directly from the petitioner's bank account is not possible to be disputed. The fact that no consent of the BIFR was obtained by the department when they carried out such steps is not in dispute. That being the position, we cannot upheld the action of the department. If at all the department would have to move the BIFR for appropriate order or reliefs, either permitting recovery or taking into account the dues of the department at the time of preparation of the scheme in case of the petitioner company. Our findings and observations are based on the premise that the proceedings before the BIFR are still pending. If however, it is found that the same have been disposed of, it would be open for the department to proceed further in accordance with law.

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• 2017 (8) TMI 864
  Banning/blacklisting orders - Barring the petitioner from participating in the bidding process of GAIL in future for a period of 10 years - Held that:- The very foundation of the Show Cause Notice, that the petitioner failed to check and point out fictitious documentation submitted by M/s Elgin towards supply of audio visual equipment in the contract, which have been claimed to be smuggled goods, which was investigated by Directorate of Revenue Intelligence and thus the petitioner is guilty of abetment of smuggling and other nefarious activities prohibited by the Law, does not exist. GAIL has not referred to any documentation that was submitted by the Petitioner or M/s Elgin Electronics to GAIL, at the time of execution of the work, which has been found to be fictitious. There was no investigation done by Directorate of Revenue Intelligence with regard to the equipment used for the project of GAIL. There is no finding that the equipment used for the GAIL project is smuggled or that the petitioner is guilty of abetment of smuggling and other nefarious activities prohibited by the Law. The justification given on behalf of GAIL for the impugned banning order, that the petitioner is liable to be banned as the Petitioner has failed to produce the Tax Paid invoices or explain their absence is not sustainable. GAIL has failed to show that there was any requirement for the petitioner to have produced the tax paid invoices at the time of execution of the work and if so, then why was a completion certificate issued in the year 2006, certifying the successful completion of the work. The fact that GAIL has issued the completion certificate shows that GAIL was satisfied that all was in order and the contract has been completed to their satisfaction as per its terms and conditions. Having accepted the successful completion of the contract, GAIL cannot seek to reopen the same and impose an obligation on the petitioner to now produce documents in support of the equipment purchased and used in the contract. More so, when there were no issues for nearly six years from the date of acceptance of successful completion of the contract. Since the very foundation of the Show Cause Notice and the banning order does not exist, the impugned order dated 21.10.2013 cannot be sustained. The same is accordingly quashed. With the quashing of the impugned order dated 21.10.2013, the petitioner shall be entitled to all consequential benefits of participation in future tenders, unblocking of vendor code and release of all pending payments that had been denied and/or withheld on account of the impugned order.

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