TMI Tax Updates - e-Newsletter
August 30, 2017

Case Laws in this Newsletter:

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

TMI Short Notes

1. What is the treatment of expenditure incurred on test runs.

  Income Tax:

2. What is the value at which fixed assets are to be recorded as per ICDS V relating to tangible fixed assets?

  Income Tax:

Articles

1. Simplifying miscellaneous transitional provisions under GST

   By: CA.VINOD CHAURASIA

2. Amendment relating to Forum is a procedural amendment and apply retrospectively to pending and old cases- so held by the Supreme Court

   By: DEVKUMAR KOTHARI

3. Simple under of miscellaneous transitional provisions under GST

   By: CA.VINOD CHAURASIA

News

1. Queries relating to GST on Services, received from various sectors have been scrutinised and developed into short FAQs

2. Over 36 lakh businesses file GST returns so far

3. No proposal to re-introduce 1,000 rupee notes: FinMin

4. Formulation of a new Industrial Policy

5. Fourth Session of the India-Tanzania Joint Trade Committee (JTC)

6. RBI Reference Rate for US $

7. Stakeholders who intend to pursue their insolvency cases may approach appropriate authority/court under the existing enactments, instead of approaching the Debt Recovery Tribunals (DRTs)

8. NITI Aayog launches Ease of Doing Business Report: An Enterprise Survey of Indian States

9. Seminar on Policy and Regulatory Framework for Algorithm/ High Frequency Trading discusses fair and equitable access

Notifications

GST

1. 26/2017 - dated 28-8-2017 - CGST

Seeks to extend time period for filing of details in FORM GSTR-6 for months of July & August

2. 25/2017 - dated 28-8-2017 - CGST

Seeks to extend time period for filing of details in FORM GSTR-5A for month of July

Highlights / Catch Notes

GST

• New GSTR-6 Filing Deadlines for Input Service Distributors: July Due by Sept 8, August Due by Sept 23.

  Notifications : Due date for filing of FORM GSTR-6 for months of July & August extended to 8-9-2017 and 23-9-2017 respectively - Return by an Input Service Distributor
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• Deadline for Filing FORM GSTR-5A for July Extended to September 15, 2017, for OIDAR Service Providers Outside India.

  Notifications : Due date for filing of FORM GSTR-5A for month of July extended to 15-9-2017 - Details of supplies of online information and database access or retrieval (OIDAR) services by a person located outside India made to non-taxable persons in India
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Income Tax

• High Court Rules MOU with Airport Authority Qualifies as Agreement under Sec 80-IA(4) for Tax Deductions.

  Case-Laws - HC : Deduction u/s 80-IA - agreement for operating and maintaining the infrastructure facility viz the airport - whether MOU entered into by the assessee with the Airport Authority of India could be taken as an agreement as contemplated in clause (b) of Section 80-IA(4)? - Held Yes - HC
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• No Transfer, No Tax: Developer and Co-Owners Face No Capital Gain Tax Due to Lack of Property Possession.

  Case-Laws - AT : Capital gain tax - Assessment of long term capital gain - entering development agreement between the developer and other 7 joint co-owners without any considerations - since no possession is given, no transfer - No tax liability.
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• Court Upholds Deemed Dividends Addition for Land Sale Advances u/s 2(22)(e) of Income Tax Act.

  Case-Laws - AT : Deemed dividend addition u/s 2(22)(e) - nature of receipt - advances against sale of land - arrangement tailored by the assessee with the sole intent to wriggle out of the ramifications of having received the aforesaid amount from the company - Additions sustained.
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• Stamp Duty Expenses in Demerger Deductible on Payment Basis u/s 43B, Overrides Other Income Tax Provisions.

  Case-Laws - AT : Stamp duty paid on demerger - Though section 35DD is applicable, the provisions of section 43B has an overriding effect on all other provisions of the Act, any expenditure referred to in that section shall be allowed only on payment basis - 100% expenditure allowed.
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• Tax Collected at Source Issue Remanded to Verify Ship-Breaking Scrap Sale u/s 206C with Form 27C Declaration.

  Case-Laws - AT : TCS u/s 206C - TCS & interest liability where the buyer has paid the taxes - sale of ship-breaking scrap against delcaration in Form no. 27C - matter remanded back to verify the facts.
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• Section 69C Additions Upheld: Assessee Fails to Explain Unexplained Credit Card Expenses and Fund Sources.

  Case-Laws - AT : Addition under Sec. 69C - unexplained credit card expenses - assessee had failed to explain, both the nature of the transactions and the source of money deposited by him in the bank accounts connected with the credit cards - additions confirmed
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DGFT

• New Import Restrictions on Gold and Silver from South Korea Added to ITC(HS) 2017, Chapter 71.

  Notifications : Policy Condition No. 4 restricting imports of gold and silver under Exim Codes 7113, 7114, 7115 and 7118 from South Korea is inserted in Chapter 71 of ITC(HS) 2017.
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• DGFT Extends Authority to Regulate Export and Import of Gold and Silver for Compliance with Trade Policies.

  Act-Rules : Powers of DGFT to impose restrictions on export and import of specified purposes, extended in relation to the importations or exportations of gold or silver
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• India Updates Free Export Privileges for Status Holders Under Exports from India Schemes, DGFT Oversees Changes.

  Act-Rules : Exports from India Schemes - Privileges of Status Holders - Entitlement to export freely exportable items on free of cost basis by Status Holders has been revised.
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Corporate Law

• Section 212 of Companies Act: Serious Frauds Investigation Office Gains Power to Arrest for Serious Fraud Cases.

  Notifications : Sub-sections (8), (9) and sub-section (10) of section 212 of Companies Act, 2013 came into effect w.e.f. 24-8-2017 - relating to Powers of Director, Additional Director or Assistant Director of Serious Frauds Investigation Office including the power to arrest
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• Rule 63 NCLAT Rules: Guidelines for Authorized Representatives' Appearance, Ensuring Qualified Participation in Tribunal Proceedings.

  Act-Rules : Appearance of authorised representative before National Company Law Appellate Tribunal - Rule 63 of NCLAT Rules, 2016 as amended
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Service Tax

• Appellant Bound by Declared Turnover Under VCES Scheme; Cannot Claim Inflation Now. Two Wrongs Don't Make a Right.

  Case-Laws - AT : VCES Scheme - appellant declared a turnover in their Income Statement which has been accepted by the department under the VCES scheme. When that is accepted by the department now the plea of inflated turnover cannot be taken up. Two wrongs cannot make a right.
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• Suo-Moto Adjustment of Excess Service Tax: No Monthly Requirement, 15-Day Intimation Lapse is Procedural, Not Substantial.

  Case-Laws - AT : Suo-moto adjustment of excess amount of service tax paid - there is no specific mention that the adjustment has to be done on monthly basis - non-filing of intimation within 15 days time is a procedural lapse - No demand
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Central Excise

• EOU Granted Remission of Duty for Export Goods Damaged in Transit; Not Cleared in Domestic Tariff Area.

  Case-Laws - AT : 100% EOU - remission of duty - the goods cleared for export got damaged in an accident and it cannot be said that the goods have been cleared in DTA
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• Appellants not liable for differential duty on higher-priced depot sales; no provisional assessment conducted in relevant period.

  Case-Laws - AT : There was no provisional assessment during the relevant period - the appellants are not required to pay differential duty in cases where goods have been sold at higher prices from the depot.
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• Appellant Liable for Differential Excise Duty on Motor Spirit Transfers from Korukkupet Terminal per Section 11D.

  Case-Laws - AT : Valuation - stock transfer - Motor Spirit (MS) - the demand of duty is not from depots but from Korukkupet terminal who have stock transferred the petroleum products to the depots. - Appellant is liable to pay the differential excise duty recovered in terms of Section 11D.
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VAT

• State Legislature Can Tax Goods in Unified Works Contracts Separately: Legal Authority Affirmed.

  Case-Laws - SC : Works contract - levy of sales tax - single indivisible contract - State Legislature is empowered to segregate the goods part of the works contract and impose sales tax thereupon.- SC
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Case Laws:

• GST

• 2017 (8) TMI 1142
  Denial of credit already accrued to the Petitioner on gold dore bar - Notification dated 17th August 2017 challenged - reversal of 5/6th of the CENVAT Credit which had already accrued to the Petitioner on account of payment of additional duty of customs levied under Section 3(1) of the Customs Tariff Act, 1975 paid at the time of importation of gold dore bar seeked - Held that:- The Court is of the view that the Petitioners have made out a prima facie case for grant of interim relief in their favour. Further, the balance of convenience is in their favour for grant of interim relief. Accordingly, it is directed that till the next date of hearing, no coercive steps shall be taken by the Respondents to recover the credit already availed by the Petitioners. Reply, if any, be filed within three weeks. Rejoinder thereto, if any, be filed before the next date of hearing.

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• 2017 (8) TMI 1141
  Seeking relief from penal action under GST - petitioner has been registered as sole proprietor in place of a partnership firm - amendment in the registration certificate - Held that:- Let necessary GST ID/ pass word in the name of partnership firm be issued within a period of two weeks from today and the registration certificate be corrected within a week thereafter. In the meantime, no penal action would be initiated against the petitioner on non filing of the GST return and deposit of tax thereon provided the returns and the tax is deposited within two weeks of the issuance of the correct registration certificate.

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• Income Tax

• 2017 (8) TMI 1191
  Computing taxable gain under Income Tax Act - quantum - development agreement - assessee contended that, what was transferred under the collaboration agreement was only 44% of the land owned by them in exchange for 56% of the built up area and not the entire land - consideration in kind - Held that:- ITAT has rightly decided that, "it is clear that in the year under consideration, there was transfer of not only the flats as super structure but also the proportionate land in as much as 56% of the land was retained by the assessee under the collaboration agreement. So we are in agreement with the alternate contention of the assessee's counsel that it was a sale of improved asset and consequently, cost of acquisition would include the cost of flats as well as cost of land. As far as cost of flat is concerned, we have already observed that it would be equal to the cost of construction of 56% of the built up area. The reason is obvious. The sale consideration of 44% land was in kind and, therefore, it also amounted to investment in the construction of built up area. Hence, the same will be taken as cost of acquisition of flats after examining the record of the builder" - Decided in favour of the Revenue and against the Assessee. However, ITAT did commit an error by not reducing the land and development charges from the sale consideration received by the Assessee while working out the capital gains. - This issue decided in favor of assessee.

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• 2017 (8) TMI 1190
  Benefit of deduction u/s 80-IA - agreement for operating and maintaining the infrastructure facility viz the airport - entitlement to the benefit of deduction from which year - whether MOU entered into by the assessee with the Airport Authority of India could be taken as an agreement as contemplated in clause (b) of Section 80-IA(4)? - Held that:- Having read clause-(b) of sub-section (4) of Section 80- IA, we are not persuaded to think that to satisfy the requirement of clause-(b), the agreement should be one entered into by an airport which is already functional. An airport to be operational require the facilities that are agreed to be provided by the Airport Authority vide Annexure-C and Annexure-K. It is only on installation and operation of such equipments can the airport be operated and maintained. Such an agreement would be an agreement for operating and maintaining the infrastructure facility viz the airport and for the purpose of Section 80- IA, the statute does not contemplate that the airport should already be on stream and that the agreement should be entered into thereafter. Further, this argument of the revenue would also militate against sub-section 2 which provides that the assessee would be entitled to the benefit of deduction from the year in which the undertaking or enterprise develops or begins to operate any infrastructure facility. Necessarily, therefore, the agreement and the installation of the equipments for the operation of the airport should precede the commencement of operation of the infrastructure facility to avail the benefit of deduction. The statutory provision and the agreement being as above, we cannot uphold the conclusion of the Tribunal that both the agreements could not constitute agreements specified in clause-(b. Accordingly, the findings of the Tribunal with reference to clause-(b) of sub-section (4) of Section 80-IA are set aside. The matter will stand remitted to the Assessing Officer for fresh examination - Decided in favour of assessee.

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• 2017 (8) TMI 1189
  Capital gain tax - Assessment of long term capital gain - entering development agreement between the developer and other 7 joint co-owners without any considerations - transfer u/s 2(47) - Held that:- We find that clause No. 2, 4, 5 and 28 of the Development Agreement are the essence of the contract wherein developer has agreed that the possession of the sale unit shall be given only after accommodating old tenants first and in no case developer will be entitled to possession of self components unless old tenants / occupants inducted in the respective permanent accommodation on ownership basis. Further, the assessee entered into a new development agreement cum deed of assignment of lease with another developer M/s Jiva Builders and developers dated 27-12-2007 & deed of confirmation was registered with the sub-registrar Mumbai city-3 vide dated 07-01-2010. It is also a fact that the assessee has not parted with the possession of the property till date or has not handed over the possession of the property to the new developer and even the new agreement. In view of the decision of Hon’ble Bombay High Court in the case of Geetadevi Pasari (2008 (7) TMI 990 - BOMBAY HIGH COURT), and the fact of the case that no transfer of property took place during the FY relevant to the AY 2008-09 and no possession was handed over to the developer and ultimately the agreement between the assessee and the developer, the assessee cannot be held to be liable for capital gain tax liability. Accordingly, all these five appeals of the assessee are allowed.

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• 2017 (8) TMI 1188
  Revision u/s 263 - taking loan on interest and giving interest free loans - CIT observed that, AO made inadequate inquiries - assessment order passed by the AO is brief and cryptic - Held that:- On verification of the details filed by the assessee, we find that the AO has posed a specific question for loans and advances and also purchases made by the assessee and outstanding sundry creditors shown as at the end of the financial year. The assessee has filed all the details explaining the loan given to others as per which the loans given in the normal course of business without any condition as to charging interest. Insofar as the purchases and sundry creditors, the assessee has filed a list of sundry creditors having outstanding balance of more than 1 lakh with names and addresses and also PAN. The assessee also filed confirmation letters from the sundry creditors. The AO, after satisfying with the details filed by the assessee has accepted the explanation with regard to those two issues. Therefore, we are of the view that the CIT was incorrect in observing that the AO has not conducted necessary enquiries on the issues on which he wants further verification. No doubt, the assessment order passed by the AO is brief and cryptic which does not show any light on the verification of two issues, but the facts remain that the AO has cast necessary enquiries and the assessee has furnished necessary details which fact is not disputed by the CIT. The CIT’s only point is that enquiries conducted by the AO are inadequate. No doubt, in the opinion of the CIT, the AO ought to have conducted further enquiries. But that itself is not a ground for revision of assessment order u/s 263 because once the issues on which the CIT wants further verification was already examined by the AO, then there is no scope for the CIT to conduct further enquiries by holding that the enquiries conducted by the AO are inadequate. - Decided in favour of assessee.

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• 2017 (8) TMI 1187
  Unexplained investment - addition on basis of seized document - several round of litigation - Held that:- since inception, viz. order passed by the A.O u/s 143(3) on 27.03.1998, the revenue had remained confused as to whether the amount (as is stated to have been decoded by the revenue) gathered from the ‘seized document’, viz. Page 128, represented a ‘loan given’ or a ‘loan taken’. We are of the considered view that now when it remains as a matter of fact that not only the impugned contents of the seized document, viz. Page 128 could be correlated by the revenue with any ‘seized material’, which could have justified drawing of adverse inferences in the hands of the assessee, therefore, it can safely be concluded that till date it remains an unsolved mystery for the revenue as to whether the same represented loans given or taken. - No additions - Decided in favour of assessee.

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• 2017 (8) TMI 1186
  Reopening of assessment - deemed dividend addition u/s 2(22)(e) - nature of receipt - advances against sale of land - percentage of shareholding - director of a company holding more than 10% of the shares, had during the year under consideration received an amount from the company - Held that:- The impugned ‘agreement to sell’ projected by the assessee to justify his claim that the amount of 17,50,000/- (supra) was received by him from the company in lieu of a transaction of an anticipated sale of land by him to the company, which however could not fructify on account of compulsory acquisition of the land by the government is merely an arrangement tailored by the assessee with the sole intent to wriggle out of the ramifications of having received the aforesaid amount from the company, which as per law was liable to be assessed as ‘deemed dividend’ u/s. 2(22)(e) in his hands. We find ourselves to be in absolute agreement with the observations of the CIT(A) that the claim raised by the assessee and the contentions raised in context thereto have serious loose ends which clearly militate against the basic principle of preponderance of human probabilities, and rather, as a matter of fact goes to prove to the hilt that the said claim of the assessee is the brain child of an afterthought, which was guided by an ulterior motive of avoiding assessing of the aforesaid amount as a ‘deemed dividend’ in the hands of the assessee. We find ourselves to be in agreement with the observations of the CIT(A), and are of the considered view that neither the contentions raised by the assessee before the lower authorities nor the ‘material’ available on record, supports the claim of the assessee that the amount of 17,50,000/- (supra) was received by him as an advance for an anticipated sale of land by him to the company. We thus in light of our aforesaid observations uphold the order of the CIT(A). - Decided against assessee.

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• 2017 (8) TMI 1185
  Reopening of assessment - change of opinion - excessive deduction allowed towards expenditure incurred for demerger of certain units - specific provisions of section 35DD applicability - Held that:- Though the assessee claims to have furnished necessary details before the AO at the time of original assessment, the records clearly indicate that the AO has not examined the issue of deduction claimed towards stamp duty paid on demerger of units which shows non application of mind by the AO to the facts in the right perspective of specific provisions of section 35DD of the Act. Therefore, we are of the considered view that there is no merit in the contention of the assessee that reopening is made on the basis of mere change of opinion. In this case, on perusal of the facts, we find that the assessment order is silent on the application of mind by the AO to the correct facts in the light of the specific provisions of section 35DD of the Act. Therefore, we are of the view that it is not a case of mere change of opinion and hence, we reject the legal ground raised by the assessee. Allowance of expenditure towards stamp duty paid on demerger - Held that:- No doubt, section 35DD provides for deduction towards expenditure incurred wholly and exclusively for the purposes of amalgamation or demerger of an undertaking - But the fact remains that the expenditure incurred for payment of stamp duty is in the nature of expenditure referred to in section 43B - Since the provisions of section 43B has an overriding effect on all other provisions of the Act, any expenditure referred to in that section shall be allowed only on payment basis. - No additions - Decided in favor of assessee.

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• 2017 (8) TMI 1184
  Disallowance of interest u/s 36(1)(iii) - interest on borrowed capital - Held that:- On the similar issue pertaining to disallowance of interest on borrowed capital u/s. 36(1)(iii), substantial relief had been given by the CIT(A) while disposing of the appeal of the assessee for A.Y. 2010-11. We thus remained divested of being afforded sufficient opportunity of being heard by the CIT(A). We thus in all fairness restore the issue to the file of the A.O with a direction to verify the facts as had been averred by the ld. A.R before us. The A.O is directed to consider the claim of the assessee in respect of interest which is claimed by him to have been received in respect of the amounts advanced to third parties, as well as verify the availability of interest free funds with the assessee at the time when the interest free advances were given by him to certain parties. In case if the assessee is able to substantiate the availability of interest free funds with him at the time of advancing of the interest free loans/advances, then to the said extent no disallowance of the interest expenditure claimed by the assessee u/s. 36(1)(iii) would be liable to be made. We thus restore the matter to the file of the A.O for fresh adjudication - Ground of appeal no. 1 raised by the assessee is thus allowed for statistical purposes. Disallowance of the ‘vehicle expenses’ - expenses attributed to the personal usages - Held that:- In the case of the present assessee the A.O had carried out disallowance of ‘vehicle expenses’ not merely for the reason that some part of usage of the motor cars could safely be attributed to the personal usages by the partners of the assessee firm and their family members, but also on the ground that the documentary evidence supporting incurring of the vehicle expenses by the assessee neither did inspire much confidence, nor the authenticity of the same could be proved to the hilt by the assessee. We thus in the totality of the facts involved in the case of the present assessee, in all fairness restrict the disallowance made by the A.O. in respect of ‘vehicle expenses’ to 10%. The order of the CIT(A) upholding the disallowance of ‘vehicle expenses’ at the rate of 20% is thus modified in light of our aforesaid observations. The Ground of appeal No. 2 raised by the assessee is partly allowed.

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• 2017 (8) TMI 1183
  Levy of penalty u/s 271(1)(c) - long term capital gains - assessee did not disclosed the income treating the same as loss - AO made the additions applying section 50C / fair market value - Held that:- The assessee has actually sold the property for a total consideration of 29,43,996/- but as per circle rates as assessed by the stamp valuation officer the fair market value for the purpose of section 50C of the Act is at 62,58,629/-. Subsequently, the matter was referred to DVO and DVO estimated the value at 44.97 lakhs, and reduced the estimate substantially, which comes to the differential amount at 12,25,129/- as against the difference estimated by the AO on the basis of circle rates at 29,86,753/-. The drastic change in value itself indicates that the entire exercise on the basis of estimated figures. In such circumstances, we are of the view that, the assessee is not liable for penalty u/s 271(1)(c) of the Act for furnishing of inaccurate particulars of income or concealment of particulars of income. Respectfully, following Hon’ble Bombay High Court in the case of Fortune Hotels and Estates Pvt. Ltd. (2014 (10) TMI 783 - BOMBAY HIGH COURT), we delete the penalty and allow the appeal of the assessee.

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• 2017 (8) TMI 1182
  TCS u/s 206C - TCS & interest liability where the buyer has paid the taxes - sale of ship-breaking scrap - scrap is sold to manufacturers who have given declaration in Form No. 27C - failure to furnish Form No. 27C under Rule 37C in time - CIT(A) following the decision of ITAT Jaipur Bench in his own case [2016 (8) TMI 952 - ITAT JAIPUR] remanded back the matter to AO with direction. Held that:- Earlier, In its own case, ITAT has ordered that, "AO is directed to verify such cases where certificates as per Proviso to 206C(6A) are furnished and if in such cases the advance tax deposited by the buyer is more than the tax required to be deducted by the assessee then in that case no interest u/s 206C(7) should be charged." There is contrary material whatever reported by the ld. CIT(A) in his order, therefore in absence of any material against the finding of the ld. CIT(A), I have no alternate but to concur with the finding of the ld. CIT(A) - Decided against the revenue.

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• 2017 (8) TMI 1181
  Disallowance u/s 14A - rule 8D applicability - interest expenditure - Held that:- Assessing Officer and the CIT(A) has not given a particular finding about the investments. The CIT(A) has only made observation that the conclusion made by the AO while passing the assessment order for AY 09-10, where the disallowance u/s 14A was limited to that made under rule 8D(2)(iii) only and there was no new finding recorded by the AO while passing the present Assessment order. The CIT(A) has not at all taken the cognizance about the particulars of investment and its expenses while observing that “Rule 8D(2)(ii) can be invoked only when the assessee has incurred expenditure by way of interest which is not directly attributable to any particular income or receipt, which is not the case here. Hence, no disallowance is warranted under Rule 8D(2)(ii).” Thus, Ground No. 1 & 2 needs to be look into and remitted back to the Assessing Officer for fresh adjudication.

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• 2017 (8) TMI 1180
  Reopening of assessment - reasons to believe - addition u/s 40A - belief arrived at by the A.O inextricably linked with the "material available - Held that:- A bare perusal of the "reasons to believe" reveals that the A.O in the course of assessment proceedings in the case of one Sh. Jayantilal M. Thandeshwar for A.Y. 2008-09, had gathered information that the assessee had made cash purchases of gold ornaments aggregating to 6,06,386/-(supra). We are of the considered view, that now when the belief arrived at by the A.O is found to be inextricably linked with the "material available before him, therefore, no infirmity as regards the validity of assumption of jurisdiction by the A.O does emerge from the record. We find that the A.O in the body of the „reasons to believe , after making a clear mention of the cash purchases of 6,06,386/-, alongwith the bifurcated details as regards the same, had thereafter clearly observed that the income of the assessee in excess of 1 lac had escaped assessment. Unable to persuade ourselves to subscribe to the contention that the A.O had invalidly assumed jurisdiction u/s 147. The Ground of appeal No.1 raised by the assessee before us is dismissed. Disallowance under Sec. 40A(3) of the cash purchase of jewellery - Held that:- unable to persuade ourselves to subscribe to the contentions of the ld. A.R, and being of the considered view that the case of the assessee does not fall within either of the exceptions carved out under Rule 6DD of the Income Tax Rule 1963, therefore, are of the considered view that the CIT(A) had rightly upheld the disallowance under Sec. 40A(3) of the cash purchases of gold jewellery of 6,06,386/-. A.R had also tried to impress upon us that the disallowance contemplated under Sec. 40A(3) would not extend to the „Purchases made by an assessee in the course of his business. We find that such a view was way back favourably taken by the Hon’ble High Court of Gauhati in the case of CIT Vs. Hardware Exchange (1991 (4) TMI 114 - GAUHATI High Court) wherein it was observed by the Hon ble High Court that payments made for purchasing of stock-in-trade cannot be disallowed under Sec. 40A(3). We however find that the said judgment of the Hon ble High Court had thereafter been set aside by the Hon’ble Supreme Court in the case of : Attar Singh Gurmukh Singh (1991 (8) TMI 5 - SUPREME Court ). Thus in the backdrop of our aforesaid observations - Decided against assessee. Addition under Sec. 69C - unexplained credit card expenses - Held that:- A.R had not been able to substantiate his claim that the transactions through the credit cards were relatable to his undisclosed business of trading in cloth material. We find ourselves to be in agreement with the CIT(A) that the assessee on being cornered with the undisclosed transactions carried out through his credit cards, had thus, on the basis of an afterthought and a concocted story tried to wriggle out of the same on the basis of an unsubstantiated and a frivolous explanation. We are of the considered view, that in the absence of any material which could go to support the claim of the assessee that the transactions carried out through credit cards pertained to his undisclosed business of trading in cloth material, it could safely and rather inescapably be concluded, that the assessee had failed to explain, both the nature of the transactions and the source of money deposited by him in the bank accounts connected with the credit cards. - Decided against assessee.

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• 2017 (8) TMI 1179
  Revision u/s 263 - A.O failed to examine the issue of purchase of TDR for ‘Asha Kiran’, even though the records indicate the purchase of TDR by M/s. Kamanwala Construction Ltd., directly from M/s. Eversmile Construction Ltd - Held that:- A.O had issued show cause notices on various dates and called for necessary details in respect of Asha Kiran project and loan and advances. The assessee has a filed paper book containing details filed before the A.O. Assesse has filed copies of MOU between the assessee and M/s. Kamanwala Construction Co. and also agreement for purchase of TDR between M/s. Kamanwala Construction Co. and M/s. Eversmile Construction Co. P. Ltd. wherby we find the assessee had entered into a MOU with M/s. Kamanwala Lakshchandi Todays Developers to facilitate development of project and also to load 100% TDR on the project, for which the assessee was paid consideration of 4.50 crore. The CIT, without appreciating the facts, observed that the liability was not on the assessee to purchase TDR and came to the conclusion that the A.O has erroneously allowed expenditure on TDR, which is not otherwise allowable to the assessee. Disallowance of interest for diversion of interest bearing funds - Held that:- A.O has examined the issue at the time of 143(3) assessments and also initiated rectification proceedings under section 154 of the Act, for the specific purpose of disallowance of proportionate interest paid on loans for diversion of interest bearing funds to group concerns. However, after satisfied with the explanation given by the assessee dropped 154 proceedings, therefore the CIT was incorrect in observing that there is a lack of enquiry on the part of the A.O in examining the issue of disallowance of interest. We find force in the arguments of the assessee, for the reason that although the audit reports states that the assessee has advanced interest free loans, the assessee categorically proved that the loan is advanced out of commercial expediency in the normal course its business which has been repaid over a period of time. The A.O has followed the ratio in the case of S.A Builders Ltd [2006 (12) TMI 82 - SUPREME COURT] to decide the issue of disallowance of interest which cannot be said to be erroneous and also prejudicial to the interest of the revenue. Therefore, we are of the considered view that the order passed by the A.O is neither erroneous nor prejudicial to the interest of the revenue. In the present case on hand, the order passed the AO is not erroneous, as the AO has examined the issues and also had applied his mind to the issues pointed out by the CIT, which is evident from the fact that the AO has called for necessary details required for completion of assessment. The order passed by the AO is not prejudicial to the interest of the revenue - Decided in favour of assessee.

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• Customs

• 2017 (8) TMI 1152
  Principles of Natural Justice - scope of SCN - whether the non-extension of a further opportunity of hearing to the petitioner, after the time prescribed in the SCN for submitting the reply, would vitiate Ext.P10 order, on the ground of violation of the rules of natural justice? - Held that: - it was the petitioner who sought for a waiver of the SCN, thereby leaving the issue to be decided by the Commissioner of Customs on any legal grounds available, including grounds that were not specifically enumerated in the SCN that was subsequently served on the petitioner. Under such circumstances, the petitioner cannot be heard to contend that the department had confirmed the demand against it, or found against it on grounds which were not specifically put to them, through a SCN - the SCN limited the powers of the adjudicating authority and did not affect any of the rights of the petitioner - the mere non-extension of a subsequent hearing, prior to the passing of Ext.P10 order, cannot be said to have worked to the prejudice of the petitioner - the challenge in the writ petition against Ext.P10 order cannot be legally sustained. Inasmuch as the petitioner's challenge against Ext.P10 order in this writ petition was premised on the alleged violation of the rules of natural justice, and I have specifically found that there was no violation of the rules of natural justice occasioned while passing Ext.P10 order, the appellate tribunal, while deciding the matter on merits, shall not remand the matter to the Commissioner of Customs solely on the said ground - petition dismissed - decided against petitioner.

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• 2017 (8) TMI 1151
  Refund claim - payment of extra duty deposit on ex-bond clearances effected during the period 31.01.2001 to 20.07.2012 - time limitation - Held that: - the Hon’ble Madras High Court in the case of CC (Exports), Chennai Vs. Sayonara Exports Pvt. Ltd. [2015 (3) TMI 861 - MADRAS HIGH COURT] has observed that limitation aspect is not applicable in refund of extra duty deposit made pending finalization of provisional assessment and the same are required to be automatically refunded without filing application for refund under Section 27 of the Customs Act, 1962 - the factual position in the case before the Hon’ble Madras High Court is more or less identical to the facts of the present case, thus making the ratio of law declared by the Hon’ble High Court as applicable to the facts of the present case. Refund rejected also on the ground of unjust enrichment - Held that: - No documents or records stand verified by the lower authorities so as to come to the conclusion of unjust enrichment and only a general observation to the extent that no prudent businessman would continue to pay higher duty without passing the same to the buyer of the goods, stand made by the appellate authority - As such, while allowing the appeal on the point of limitation, I set aside the impugned order and remand the matter to the original adjudicating authority for examination of the principles of unjust enrichment. Appeal allowed by way of remand.

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• 2017 (8) TMI 1150
  Penalty on Customs Cargo Service provider and a custodian - Regulations 12 (8) of HCCAR, 2009 - Held that: - the main reliance by the adjudicating authority, for imposition of penalty is the statement of the driver - the statement of the driver of the trailer, which admittedly was not the trailer intercepted by the officer, is the basis for holding against them. It is well settled law that a statement of the co-accused cannot be made the sole basis for penalizing the assessee without there being and independent corroboration from the independent source. The veracity of the said statement has also not been tested by providing x-examination of the deponent - The appellants have also contended that no outsourcing done without the permission of the Commissioner - there is no justifiable reason to impose penalty upon the appellant - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 1149
  Jurisdiction - power of DRI to issue SCN - Held that: - the powers of officers working in these organizations to issue notice under Customs Act, 1962 as proper officers has been subject matter of decision by various High Courts - I set aside the impugned orders and remand the matter to the original authority to decide the question of jurisdiction first and thereafter on merit after the matter is settled by the Hon’ble Supreme Court in the pending appeals by the Revenue against the decision of Hon’ble Delhi High Court in the case of M/s Mangali Impex Ltd., M/s Pace International And Others Versus Union of India And Others [2016 (5) TMI 225 - DELHI HIGH COURT] - appeal allowed by way of remand.

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• Corporate Laws

• 2017 (8) TMI 1145
  Liquidation proceedings - application moved by the Official Liquidator for final winding up in the matter - Held that:- The official liquidator is of the view that no fruitful purpose would be achieved by keeping the liquidation proceedings pending. Accordingly, the Official Liquidator has preferred the present application u/s 481 of the Companies Act, 1956 seeking Dissolution of the Company (in liquidation) as neither any amount/assets need to be realized nor any claim requires to be settled/disbursed. In the circumstances, respondent company namely M/s Cartel Attrie Private Limited is dissolved under Section 481 of the Companies Act, 1956 and Official Liquidator is discharged as liquidator of company. The Official Liquidator is also allowed to make payment of 18,320/- to M/s Rai and Company, Chartered Accountant towards their professional fees from common pool fund. The audit of the half yearly/annual accounts of the company (in liquidation) to be filed with this Court is also dispensed with as official liquidator is permitted to close the books of account after setting off/adjusting losses of amount of Rs.(-) 90,165/- from the common pool fund. A copy of this order be filed by the Official Liquidator with the Registrar of Companies within the statutory period, as provided for in the Act.

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• 2017 (8) TMI 1144
  Application under Sections 241 and 242 of the Companies Act, 2013 alleging ‘oppression and mismanagement’ - non adherence to provisions require the Nominee Directors to obtain consent of the Board of Directors before taking any decision on matters contemplated in the said provisions of the AoA - Held that:- It is pertinent to examine the wordings used in Article 60(d) of the AoA which are clear and unequivocal in stating that the ACL Directors (which includes the Appellants herein) are deemed to have a conflict of interest inter alia on all matters relating to OPCD Documents and that the Nominee Directors shall on such matters constitute a quorum and shall have the sole right make any decision, take any action, etc. in respect of the said matters. The Tribunal has correctly dealt with the said contentions in paragraph 23 of the Impugned Order in which paragraph it has been held that it is clear and unambiguous that the Nominee Directors have been given full liberty to give instructions to ITSL directly and therefore the Appellants’ contention that the instructions should be routed through the Board of Directors is untenable on the fulcrum of oppression and mismanagement. The Appellants have attempted to cause confusion between ‘Reserved Matters’ as per Article 63 of the AoA and ‘matters wherein the Appellants have a conflict of interest’ as per Article 60(d). The contentions raised by the Appellants which pertain to alleged unauthorized instructions given by the Nominee Directors to ITSL relate to matters concerning OPCD documents and thus fall within the ambit of Article 60(d) and not under Article 63. In fact, money is recoverable by ‘Vinca’ pursuant to legal proceeding initiated by ITSL on behalf of ‘Vinca’. It was pointed out by the Ld. Counsel for the Respondents that the present proceedings are fundamentally premised on the contention that the subject transaction is illegal and/or a colourable device to circumvent FEMA in order that FMO can secure for itself an assured return which it can repatriate out of the country. On this basis, the Appellants have contended that the actions of ITSL including of taking out legal proceedings for the enforcement of security given by or on behalf of ‘Amazia’ and ‘Rubix’ under the subject transaction are actually for the benefit of FMO. In this context, it is pertinent to note that in Summons for Judgment proceedings in the Summary Suit filed by ITSL against Hubtown before the Hon’ble Bombay High Court to enforce its rights under the Corporate Guarantee, the defence raised by Hubtown Ltd., i.e. Hubtown’s contentions in relation to the subject transaction are identical to the Appellants’ contentions in the present proceedings as set out above on which contentions the present proceedings are premised. The transaction is not violative of FEMA and that the funds realized by ‘Vinca’ upon enforcement of the security offered by and on behalf of ‘Amazia’ and ‘Rubix’ would remain with Vinca’ and is thus for the benefit of ‘Vinca’ and not FMO. Therefore, by way of the aforementioned relief sought in the Company Petition, it appears that the Appellants are attempting to obstruct receipt of funds by ‘Vinca’ upon enforcement and realization of its securities under the subject transaction and acting in a manner prejudicial to the interests of ‘Vinca’.

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• Insolvency & Bankruptcy

• 2017 (8) TMI 1143
  Initiating Insolvency Resolution Process against the Corporate Debtor - Held that:- Corporate Debtor defaulted in repaying the loan availed and also placed the name of the Insolvency Resolution Professional to act as Interim Resolution Professional, having this Bench noticed that default has occurred and there is no disciplinary proceedings pending against the proposed resolution professional, therefore the Application under sub-section (2) of section 7 is taken as complete, accordingly this Bench hereby admits this Application declaring Moratorium with the directions as mentioned herewith.

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• PMLA

• 2017 (8) TMI 1140
  PMLA - provisional attachment - Held that:- In exercise of the powers conferred under clause (f) of sub-section 2 of Section 35 of the Act, the Tribunal’s order is reviewed to the extent it upheld the confirmation of the provisional attachment of the subject property to the extent of the appellant’s undivided share, right, title and interest in the subject property. Accordingly, the order dated 16th September, 2013 in Original confirming passed by the Adjudicating Authority is set aside to the extent of the above and the matter is remanded to the Adjudicating Authority for issue of notice under Section 8(1) of the Act to the appellant, and also to the defendant therein (respondent-R-2 herein) with a copy to the Respondent-1 herein, and to decide the matter in accordance with law after giving an opportunity to the parties to file the reply to the notice along with documents which they rely on and after according opportunity of personal hearing to all parties including the Respondent-1 herein. We may clarify that till the matter is decided by the Adjudicating Authority, the subject property to the extent indicated above shall remain attached in terms of the provisions of the PMLA till the completion of the proceedings as directed. Further, the appeal against the order dated 16th September, 2013 confirming the attachment of the remaining portion of the subject property already stands rejected by this Tribunal Order dated 25.01.2016. This Tribunal also directs that subject to the appellants furnishing an undertaking not to transfer, sell create any encumbrance or third party rights in the subject premises and the subject property to the extent of their undivided share, title and interest during the pendency of the proceedings as aforesaid, the Respondent No. 1 shall restore physical possession of the Subject Premises, more particularly described in Exhibit “B” to this Appeal, to the appellants within two weeks from furnishing such undertaking. The appellant no. 1 would be entitled to enjoy the possession of the premises in question to the extent of their claim and which was occupied by him at the time of taking the possession in the year by the respondent-1 in 2014.

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• 2017 (8) TMI 1139
  Application under section 35 (2) (f) of the PMLA, 2002 for review of Judgment - Held that:- Considering the facts that similar prayer is sought by his wife and son which is pending before High Court with the same prayer, we are of the view, it would be appropriate to await the decision of the writ-petitioner as the appellant also intends to continue the said proceedings. Even otherwise, we feel that in view of order passed in LPA to the effect that the attachment shall continue, it is better to await the direction from the higher court.

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• Service Tax

• 2017 (8) TMI 1178
  CENVAT credit - mediclaim policy of employees - Keyman Insurance Policy taken for the Managing Director of the appellant company - Held that: - mediclaim policy has been taken for the period 2010-2011 involving 2,53,163/- as per the statement of the appellant, and the issue is covered by Hon’ble Karnataka High Court decision in the case of CST, Bangalore Vs. M/s Team Lease Services Pvt. Ltd. [2014 (4) TMI 948 - KARNATAKA HIGH COURT], where it was held that the said Group Insurance Health Policy taken by the assessee is a service which would constitute an activity relating to business which is specifically included in the input service definition - credit allowed. Keyman Insurance Policy - Revenue pleads that there is clear cut finding in the impugned order that subject policy taken is not ‘keyman policy’ which is evident from the cover note of the policy and no where indication is there that subject policy is a Keyman Insurance Policy - Held that: - When the fact of subject policy is disputed, the matter is required to be sent back for fresh examination and adjudication by the original adjudicating authority, who shall decide the subject matter after giving opportunity of personal hearing and submission of documents to the appellant. Appeal allowed in part and part matter on remand.

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• 2017 (8) TMI 1177
  Penalty u/s 78 - Renting of Immovable Property service - Held that: - by respectfully following the precedence set by the Hon’ble CESTAT, the jurisdictional appellate forum, I hold that penalty under Section 78 is not imposable on the appellants - reliance has been placed in the case of Sankarankoil Municipal Corporation (vide OIA No.TNL-CEX-000-APP-078-14, dated 07.08.2014) - appeal dismissed - decided against Revenue.

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• 2017 (8) TMI 1176
  VCES Scheme - Department took the view that appellants were liable to pay the short paid service tax liability of 34,11,119/- in adjudication proceedings - Held that: - it appears that the appellant declared a turnover in their Income Statement which has been accepted by the department under the VCES scheme. When that is accepted by the department now the plea of inflated turnover cannot be taken up. Two wrongs cannot make a right. Hence, we uphold the demand along with interest. Penalty - Held that: - appellant, presumably, as per wrong advice, has inflated the turnover for getting tender or other benefit which was taken into account by department and this was a new subject for the appellant who is based in rural area - penalty set aside. Appeal allowed - decided partly in favor of appellant.

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• 2017 (8) TMI 1175
  Reverse Charge Mechanism - export of medicines to the Commonwealth of Independent States (CIS) - Section 66A of the Finance Act, 1994 - Revenue case is that the registration is required for the medicines imported - Held that: - no evidence was furnished pertaining to the requirement of the registration in the CIS country - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 1174
  Works Contract Service - The allegation of the department is that the appellant has not paid service tax for the period April 2008 to March, 2009 on the ‘Works Contract service’ - Held that: - The appellant has performed a contract on the basis of ‘Works Contract’ which was brought under the service tax net w.e.f. 01.06.2007, no prior clarification is applicable in the instant case. The Commissioner has already given partial relief to the appellant. In the peculiar facts and circumstances of the case, there is no further scope to provide any relief - Appeal dismissed - decided against appellant.

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• 2017 (8) TMI 1173
  Suo-moto adjustment of excess amount of service tax paid - Adjustment of such excess amount was objected by the Department on the ground that the adjustment entry was made after 2 months and that no intimation to that effect was furnished before the Department within a period of 15 days from the date of such reversal - Rule 6 (4B) (iv) of the Service Tax Rules 1994 - Held that: - On perusal of the said rules it reveals that there is no specific mention that the adjustment has to be done on monthly basis. Further, non-filing of intimation within 15 days time is a procedural lapse. With regard to belated filing of the intimation before the Department, the same is procedural lapse - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2017 (8) TMI 1172
  Manufacture - rebate claim - CENVAT credit on the inputs/input services used in the export of goods - Held that: - the writ petition is disposed of at the admission stage itself and secondly it is not known whether any appeal is being preferred or has been preferred against the order passed by the CESTAT. One more factual aspect that has to be pointed out is that the petitioner did not take any steps to seek for early adjudication of the Show Cause Notices, though they were issued between October 2010 and December 2012 and immediately after succeeding before the Tribunal, they cannot seek for a direction to the second respondent to finally adjudicate the Show Cause Notices, as it appears that appeal time is yet to be over - second respondent/adjudicating authority is directed to take note of the petitioner's representations dated 28.06.2017, 10.07.2017 and 21.07.2017 and pass appropriate orders on merits - matter on remand.

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• 2017 (8) TMI 1171
  SSI exemption - dummy units - It was found that while the Show Cause Notice (‘SCN’) was issued to the Respondent and three of its directors, no SCN was issued to the dummy units - Held that: - each of the four units have independent existence as private limited companies or partnerships. Two of them were stated to be existing even prior to the incorporation of the Respondent - without issuing the SCN to the other units, the clearance of those units could not be combined with that of the Respondent - appeal dismissed - decided in favor of respondent-assessee.

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• 2017 (8) TMI 1170
  Clandestine manufacture and removal - According to the Department, unaccounted copper ingots and kachi parchis were found during search - Held that: - The view taken by the CESTAT on an appreciation of the evidence, in the facts and circumstances of the case, cannot be said to be improbable. Mr. Harpreet Singh was unable to persuade the Court to hold that there was any perversity vitiating the said findings - appeal dismissed - decided against Revenue.

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• 2017 (8) TMI 1168
  Concessional Rate of Duty - cement - retail sale - whether the clearances of cement made by the appellant will satisfy the conditionalities of Entry 1C of Notification No.4/2006-CE dt. 01.03.2006 to benefit from reduced duty liability of 400 per ton? - Held that: - It is seen that the appellant had sold cement in packs of 50 kgs each. Except for 945.05 MTs (self-consumption) and 632.30 MTs (stock-in-transit closing stock at warehouse), the remaining portion of the disputed clearances totalling to 29415.25 MTs were sold either to manufacturers, users, asbestos and cement/pipe manufacturers, ready-mix concrete manufactures or otherwise to builders, as infrastructure/buildings/ government projects construction, educational institutions, hospitals and societies. From a combined reading of the above reproduced provisions of Rule 2A of the Rules, these genre of buyers would fall under the category of Institutional Consumer or Industrial Consumer, in our opinion. On this score itself, we find that the provisions applicable to packages intended for retail sale in Chapter II of the said rules, will not apply to the clearances of cement by the appellant to its Industrial or Institutional consumers. In respect of the clearances of 25489.250 MT (26434.30 MT Less 945.050 MT) referred to in the Annexure to the Show cause notice, these clearances will necessarily have to be held as packages not intended for retail sale and to which the provisions of Chapter II of the Rules shall not apply. In view of Rule 2A thereof, duty demands in respect of these clearances will therefore not sustain and will have to be set aside which we hereby do - In respect of remaining 945.05 MTs for self-consumption inside the factory and 632.30 MTs unsold quantity at warehouses (Sl.No.11 to 12) of para 2(i) above by no stretch of imagination would these clearances can be considered as retail sales. These clearances cannot be considered as retail sales and hence benefit of the said notification cannot be denied to them - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 1167
  Clandestine removal - issuance of invoices only - Held that: - I find that the Department has adduced sufficient evidence that the first stage dealer M/s Rohit Ispat had no godown, that he had taken the registration on the basis of bogus rent deed and on the trading of pig iron shown as admitted by the proprietor of the M/s Rohit Ispat were only paper transactions without any accompanying goods - Evidently, there was fraud committed right from the day the dealer M/s Rohit Ispat applied for his registration and false transactions were made repeatedly & systematically to defraud Revenue. The appellant indulged in issuing invoices on the basis of paperless transactions that they had with M/s Rohit Ispat, they were very much part of the fraud. The appellant further contended that the Department has alleged violation of provision of Cenvat Credit Rules but the penalty on the co-noticee is under Central Excise Rules. I find that this objection of the appellant has no the legal basis as under Rule 26(2) of Central Excise Rules, penalty is imposable on any person who meets the requirement of that Section, which the appellant meet as they issued invoices without delivery of goods. Request for cross-examination denied - Held that: - I find that when the appellant failed to participate in the original proceedings, despite several opportunities were granted to them, it reflects that the appellant are following dilatory tactics to deprive the Revenue from recovery of its legitimate dues. Hence, the request is rejected. Appeal dismissed - decided against appellant.

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• 2017 (8) TMI 1166
  MODVAT/CENVAT credit - 0.40 mm, 0.50 mm and 0.63 mm coils - extended period of limitation - Held that: - though assessee had shown to the department that they were only using non-modvat products inputs for manufacture of exempted items, in reality, they had used the said modvatted inputs only hence misstated vital facts to the department. We find that these revelations were detected only from private records of assessee and it had come to light only after investigation undertaken by the officers. In the circumstances, while the figures may well have been taken by the departmental officers from records and balance sheet etc. nonetheless, the fact remains that these were not intimated voluntarily by assessee as they were required to, but had to be ferreted out in investigation. There not being any clandestine removal is not a yardstick for determining invocation of extended period of limitation - As correctly found by the adjudicating authority it is obvious that the facts leading to reversal of credit and payment of duty on the dies were not disclosed to the department and were found out only after in depth investigation and verification of private records and therefore there was suppression of relevant information , is a correct finding. We do not find any infirmity in the same - appeal dismissed in toto.

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• 2017 (8) TMI 1165
  Price variation clause - Refund of extra duty paid - denial on the ground that The buyer, M/s PSEB did not approve the escalated value as the material was received by them after the expiry of contractual delivery period. The appellants had not opted for provisional assessment - Held that: - the issue in dispute in the present case is squarely covered by the judgment of Hon’ble Punjab & Haryana High Court in the case of Mauria Udyog Ltd. Vs. CCE [2006 (8) TMI 49 - HIGH COURT OF PUNJAB & HARYANA (CHANDIGARH)], where it was held that Reduced price at later date could not be made foundation for seeking refund - appeal dismissed - decided against appellant.

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• 2017 (8) TMI 1164
  Valuation - duty paid in excess and duty short paid - Held that: - Since the appellant is now convinced with regard to the duty demanded, we hold that the impugned order to that extent does not call for interference. Penalty - Held that: - since the appellant has made excess payment in some months, there is no intention to evade payment of duty and therefore, the situation does not warrant imposition of penalty - penalty set aside. Appeal allowed - decided partly in favor of appellant.

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• 2017 (8) TMI 1163
  SSI exemption - use of brand name - respondents were clearing unbranded cookies and cookies bearing the brand name Cookie Man - Revenue was of the view that that the cookies sold in paper plate and in napkins are also to be treated as branded cookies as the buyer buying such cookies from the outlet are aware that the cookies sold loosely is only Cookie Man cookies and that they are the very same item that are sold in packs, denying the benefit of N/N. 8/2003 dated 01.03.2003 on these cookies - whether the respondents are eligible for the benefit of SSI exemption on the cookies sold loose in their outlets? - Held that: - In the respondent's own case, the Hon’ble Apex Court has held that the respondents would not be eligible for the benefit of SSI exemption even for the cookies sold in loose from their outlets - assessee are having an exclusive shop in Spencer Plaza complex and they are the license holder of the brand Cookie Man outlet as per the agreement with Cookie Man Pty. Ltd., Australia - demand upheld - appeal allowed - decided in favor of Revenue.

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• 2017 (8) TMI 1162
  CENVAT credit - the final products namely forgings and dies manufactured by them were cleared on payment of duty as well as under exemption to Heavy Vehicles Factory, Avadi in terms of N/N. 70/92 dated 17.6.1992 - non-maintenance of separate set of books - Held that: - In similar case, where the goods were cleared to M/s. Space Centre and M/s. Baba Atomic Research Centre in the case of DCW Ltd. [2008 (10) TMI 380 - MADRAS HIGH COURT], the jurisdictional High Court has considered that the said goods cannot fall under the category of exempted goods as provided in Rule 57CC(1) of the erstwhile CER, 1944 - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 1161
  100% EOU - remission of duty - whether remission of duty is allowable when goods cleared from the factory without payment of duty for export under bond are destroyed due to unavoidable accident before the said goods could be exported? - Held that: - The appellant being an EOU is entitled for the benefit of Notification No.24/2003 dated 31.03.2003, and that the goods have not been cleared in DTA. In the present case, the goods cleared for export got damaged in an accident and it cannot be said that the goods have been cleared in DTA - In an identical case, the Tribunal in the case of Madhav Marbles and Granites Ltd. [2008 (10) TMI 209 - CESTAT, CHENNAI], has held that the demand of duty is not sustainable since the EOU is eligible for the benefit of N/N. 24/2003 dated 31.03.2003 - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 1160
  Valuation - section 4A of the Central Excise Act, 1944 - Air Conditioners - it is alleged that the price at which the goods are sold to customer does not include, freight commission payable to dealers' advertisement charges, and charges for packing, delivery, forwarding, etc; hence, the M.R.P. printed on the containers of Air Conditioners cannot be subject to any abatement in terms of section 4A - Held that: - CBEC Circular dated 28.02.2002, clarifies that the goods will be covered for assessment under section 4A in those cases where it is required in terms of Standards of Weights and Measures Act, 1976 to declare on the package the retail price of such goods. The matter has also been settled in the case of Commissioner of Central Excise, Panchkula Vs Liberty Shoes Ltd. [2015 (12) TMI 1159 - SUPREME COURT], wherein it has been held that once the goods are specified under section 4A and are covered by Standards of Weights and Measures Act, 1976 and Rules, and not exempted u/r 34 of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 and are supplied with MRP affixed on their production, valuation u/s 4A ibid was proper. Appeal dismissed - decided against Revenue.

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• 2017 (8) TMI 1159
  Refund claim / Demand of differential duty - sale of products from Depot - excess paid duty for goods sold from Depot - Held that: - there was no provisional assessment during the relevant period - the appellants are not required to pay differential duty in cases where goods have been sold at higher prices from the depot. Like-wise, in cases where goods are sold at lower prices from the depot, the appellants will not be eligible for any refund - appeal dismissed - decided against appellant.

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• 2017 (8) TMI 1158
  CENVAT credit - stock transfer - supplementary invoices - Rule 7(1)(b) of the Cenvat Credit Rules, 2001 - Held that: - The investigation carried out by DGCEI concluded that the Madurai Unit had incorrectly adopted the value for the purposes of payment of duty for clearances to Chennai Unit. The case was settled at the level of Settlement Commission and the differential duty was paid and supplementary invoices issued based on which such credit have been taken. Similar issue came before Hon'ble High Court of Karnataka in the case of Karnataka Soaps & Detergents Ltd [2010 (2) TMI 524 - KARNATAKA HIGH COURT] in which the Hon'ble High Court held that the embargo under Rule 7(1)(b) cannot come in the way when there is no sale and it was only Stock Transfer between two Units of the same company. Appeal dismissed - decided against Revenue.

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• 2017 (8) TMI 1157
  Price escalation clause - Valuation - stock transfer - Motor Spirit (MS) - High Speed Diesel Oil (HSD) - demand of differential duty - Section 11D - Held that: - The Oil Coordination Committee has revised the administrative price of MS and HSD, to take into account the increased duties as above. Hence in respect of stocks lying in the depots on 1.3.2001 and 12.1.2002 and sold thereafter, it is evident that the appellant has recovered extra amounts attributable to increased excise duty which are liable to be paid to the government in terms of provisions of Section 11D - the demand of duty is not from depots but from Korukkupet terminal who have stock transferred the petroleum products to the depots. The collections are accounted against the Korukkupet terminal and hence we are of the view that appellant is liable to pay the differential excise duty recovered in terms of Section 11D. The duty demands under Section 11D along with payment of interest upheld - appeal dismissed - decided against appellant.

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• 2017 (8) TMI 1156
  Valuation - includibility - value of bought out items - whether the value of bought out components such as, nuts and bolts etc., which are supplied along with panels manufactured by the assessee are required to be included for the purposes of charging excise duty? - Held that: - excise duty is leviable on goods manufactured. The bought out items in the present case have been supplied along with the goods manufactured in the factory only for convenience of the customers for the purpose of erection and installation - similar issue decided in the case of Commissioner of Central Excise, Trichy Vs Neycer India Ltd. [2015 (5) TMI 494 - SUPREME COURT], where it was held that the Tribunal has rightly declined to add the value of the aforesaid components which are not the part of flushing cistern manufactured by the assessee - appeal allowed - decided in favor of appellant.

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• 2017 (8) TMI 1155
  Valuation - related party transaction - clearances made by the respondent to oil marketing companies, viz. HPCL and BPCL who are independent and separate PSUs and are unrelated buyers - Held that: - the sales made by CPCL are not exclusively to the related person i.e. IOCL. The sales made to HPCL as well as BPCL cannot be considered as sales to related persons. They are independent and separate PSUs who are unrelated buyers - reliance placed in the case of Aquamall Water Solutions [2005 (10) TMI 533 - SUPREME COURT] wherein the Apex Court upheld the Tribunal's order which held that when goods are not exclusively sold to principal holding company, Rule 9 & 10 of Central Excise (Valuation) Rules, 2000 cannot be invoked and the prices of goods sold by the principal holding company to their dealer should not be adopted as transaction value - appeal dismissed - decided against Revenue.

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• 2017 (8) TMI 1154
  Condonation of delay of 722 days in filing appeal - case of appellant is that there was some mismanagement of the affairs of the company in India by the Managing Director and therefore the company did not come to know of the order passed in the proceedings - Held that: - appellant has put forward reasonable cause to condone the delay. However, since the delay is of 722 days each in both the appeals, which is highly inordinate, we are of the considered view that appellant has to be put to payment terms - COD application allowed, subject to payment - decided partly in favor of appellant.

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• 2017 (8) TMI 1153
  Restoration of appeal - non-compliance of pre-deposit - Section 35F of the Central Excise Act, 1944 - Held that: - There is no provision in the statute or in the CESTAT Procedural Rules to condone the delay in making the pre-deposit after the appeal has been dismissed by the Tribunal for non-compliance of pre-deposit - Once the appeal has been dismissed for non-compliance, the Tribunal becomes functus officio. The case record shows that there was inordinate delay of 726 days on the part of the applicant to comply with the direction to make pre-deposit. The deposit made now by appellant does not have the character of a 'pre-deposit' as it is a deposit made not during pendency of appeal, but after dismissing the same. Again, it cannot be considered as delay at all for the reason that the deposit is made after the dismissal of the appeal. Appeal cannot be restored - appeal dismissed - decided against appellant.

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• CST, VAT & Sales Tax

• 2017 (8) TMI 1148
  Works contract - levy of sales tax - case of appellant is that being a single indivisible contract, it was not permissible for the State to extract divisibility component therein and impose sales tax on the purported sale of goods - whether Works contract given to the assessee is divisible in nature, in the facts of the case, and hence the imposition of tax and penalty made under Section 7AA of the Rajasthan Sales Tax Act, 1954 is justifiable and sustainable in law? - Held that: - there is no dispute that the contract in question was a works contract. The issue is altogether different, namely, that of divisibility. It may be mentioned that before Article 366(29A) of the Constitution was amended with effect from March 01, 1983, the test applicable was ‘dominant nature test’ or ‘degree of intention’ or ‘overwhelming component test’ or ‘degree of labour and service test’ - It is also made clear that the works contract is an indivisible contract, but, by legal fiction, is divided into two parts, one for the sale of goods and the other for supply of labour and services - This Court in Larsen and Toubro Limited and Another v. State of Karnataka and Another [2013 (9) TMI 853 - SUPREME COURT] clarified that post amendment, i.e. with effect from March 01, 1983, these tests are no longer applicable. By virtue of the Forty Sixth Amendment to the Constitution, a single and indivisible contract is now brought on par with a contract containing two separate agreements. It has also now become a settled position in law that the State Governments have power to levy sales tax on value of material in execution of the works contract. This position is brought about by creating friction whereby the transfer of moveable property in a works contract is deemed to be sale, even though it may not be well within the meaning of Sale of Goods Act. In the present case, the assessing authority, after scrutinising the agreement in question between the assessee and the State Government, returned a finding of fact that manufacture and supply of PSC pipes, jointing material specials, valves, anchor blocks, etc. do not fall within the scopes of buildings, bridges, dams, roads and canals. It was also held that the agreement was clearly in two parts, namely, (i) sale and supply of PSC pipes, jointing material specials, valves, anchor blocks, etc. and (ii) the remaining part being supply of labour and services - the assessee has, in fact, admitted that it had no grievance against the finding that supply of pipes was nothing but the sale of pipes involved in the execution of the contracts and, therefore, it was excisable to sales tax - appeal dismissed - decided against appellant.

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• 2017 (8) TMI 1147
  Maintainability of petition - Rectification of mistake - Section 84 of the TNVAT Act - whether the petitioner should be permitted to challenge the correctness of the impugned orders by way of writ petitions, when a revisional remedy is available as against the impugned orders before the Joint Commissioner (CT), Chennai (Central)? - Held that: - the contention raised by the petitioner to state that there is error apparent on the face of the record, is not purely a legal issue but a mixed question of fact and law. The respondent has noted that the income-tax certification was passed apart from the Audit Report and Form-WW duly signed by a Chartered Accountant and the contention raised by the petitioner that certification holds good only for the purpose of income-tax assessment is not acceptable. Prima facie, this Court is of the view that such a finding recorded by the respondent is correct - Admittedly, the revisional remedy before the Joint Commissioner is not only effective but also an efficacious remedy. Since the matter involves levy of tax, and there is enactment governing the transactions which provides for hierarchy of remedies, the petitioner should not be permitted to by-pass such alternative remedy available to the petitioner - petition dismissed being not maintainable.

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• 2017 (8) TMI 1146
  Detention of goods - sago and sago products - second respondent has passed the impugned order on the ground that the petitioner has filed WP.No.3711/2017 and has misrepresented and acted prejudicial in the interest of the second respondent by giving false information thereby spoiling reputation and name of the second respondent and therefore, the petitioner is debarred from participating in the daily tender sales for four years - Held that: - It is not clear as to in what manner the petitioner had brought disrepute to the second respondent society and the order dated 24.03.2017 passed by the second respondent, impugned in this writ petition, has been passed without issuing any show cause notice. Therefore, it is not understandable as to what is the basis for the impugned order - the Commercial Tax Department was of the primafacie opinion that there is likelihood that the sago which was being transported by the petitioner could be adulterated. Therefore, a direction was issued to the petitioner to take the sample for testing and accordingly, the sample was tested and the test report confirmed that there was no adulteration. Debarring a contractor or tenderer or blacklisting a tenderer has severe civil consequences and therefore, the Courts have held that before such orders are passed, the parties are entitled for a reasonable opportunity to show cause against proposed action. In the instant case, the second respondent has not taken any such steps to comply with the principles of natural justice by putting the petitioner on notice. However, taking note of the fact that samples which were intercepted and tested were found to be in order, without any adulteration, this Court is inclined to interfere with the impugned order. Petition allowed - decided in favor of petitioner.

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• Indian Laws

• 2017 (8) TMI 1169
  Renewal of license - denial of renewal of license on the ground of location of liquor vend and also on the ground that licence is in the name of the 3rd additional respondent in Ext.P5 judgment viz., T.O. Abraham and there is no application submitted by the petitioners to change the licence in the name of he 2nd petitioner to the authority concerned - whether any manner of interference is warranted to Ext.P8 order passed by the 2nd respondent? - Held that: - licensed premises in question is having a direct access from State Highway No.1, which is not at all disputed by the petitioners, even if there is no visibility as contended by the petitioners. Now turning to the contention of the respondents with respect to the bar room as per the licence, there is a categoric assertion made that, the approved bar room is situated at the entrance of the hotel, there is no contrary established facts to think otherwise. As regards transfer of license in the name of 2nd petitioner, since rule 19 of the Foreign Liquor Rules, 1953 mandates certain parameters in order to transfer licence, which is also apparently not undertaken by the petitioners. Therefore, taking into account the factual circumstances and reckoning the law it cannot be said that, Ext.P8 order passed by the 2nd respondent is suffering from any illegality, vice of arbitrariness or any other legal infirmities justifying interference of this court under Article 226 of the Constitution of India. Petition dismissed - decided against petitioner.

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