TMI Tax Updates - e-Newsletter
September 10, 2016

Case Laws in this Newsletter:

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

Articles

1. GST Bill gets President’s assent – Now becomes a law

   By: Bimal jain

2. AGGREGATE TURNOVER IN GST REGIME

   By: Dr. Sanjiv Agarwal

3. CONVERSION FROM PRIVATE COMPANY INTO LIMITED LIABILITY PARTNERSHIP

   By: DR.MARIAPPAN GOVINDARAJAN

News

1. THE CONSTITUTION (ONE HUNDRED AND FIRST AMENDMENT) ACT, 2016

2. The Income Declaration Scheme, 2016 - Reserve Bank of India(RBI) requested to issue instructions to banks to allow payment of tax under the Scheme in cash and to allow deposit of cash over the counter

3. RBI Reference Rate for US $

Notifications

Central Excise

1. 34/2016 - dated 8-9-2016 - CE

Seeks to further amend notification No.12/2012-Central Excise dated 17.03.2012

Customs

2. 48/2016 - dated 8-9-2016 - Cus

Seeks to further amend notification No.12/2012-Customs, dated 17.03.2012

Circulars / Instructions / Orders

Income Tax

1. F. No. 225/214/2016/ITA.II - dated 30-8-2016

Step to facilitate taxpayers electronic interface with the income-tax department

DGFT

2. 31/2015-2020 - dated 9-9-2016

One additional Pre-Shipment Inspection Agency is notified as PSIAs in terms of Para 2.55(d) of HBP 2015-20 in Appendix 2G

Companies Law

3. 10/2016 - dated 7-9-2016

Relaxation of additional fees for filing Form IEPF-1

Highlights / Catch Notes

Income Tax

• Service Fee for Promotion Not Taxable as Technical Service, Rules AAR in Favor of Applicant's Agreement with DRL Russia.

  Case-Laws - AAR : The service fee payable by the applicant to DRL Russia under the agreement for promotion of goods cannot be regarded for the purpose of fees for technical services. - Not taxable - AAR
  Visit to Get Source

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Case Laws:

• Income Tax

• 2016 (9) TMI 349
  Withholding of tax at source under section 195 - Fees for Technical Services - service fee payable by the Applicant to DRL Russia under the Service agreement - India-Russia DTA - Held that:- The stand of the Department is based on the assumption that the reports of medical representatives of DRL Russia are sent to India which is being utilized in India for the purpose of brand promotion in Russia. The Department has further assumed that the marketing services for research agreement and marketing services for promotion of goods agreement are interconnected and they together constitute marketing services. According to the Department the marketing research team prepares presentations for the purpose of utilization by medical representatives when they make field visits and such presentations highlight the advantages that brand of DRL India have over other similar products of the competitors. During the course of hearing we repeatedly asked the CIT (IT & TP), Hyderabad, Mr. Singhania, whether he had any evidence to support his assumptions, particularly the fact that reports prepared by the product promotion team were in respect of brand promotion and were utilized in India by the applicant. He could not produce any. It is also noticed that the Department had conducted a survey u/s 133A of the IT Act in the business premises of the applicant but could not find any such evidence and did not even ask any question relating to this aspect in the statements recorded of senior executives. The services rendered by DRL Russia in respect of agreement for promotion of goods cannot be treated as fees for technical services, it is not necessary to go into the argument whether such services will be covered by exception u/s 9(1)(vii)(b) of the Act though the applicant has argued that his case is covered by exception. However, it is suffice to say that the stand and argument of the applicant is completely faulty mainly because the product promotion agreement dated 30.1.2014 cannot be related with distribution agreement dated 16.2.2012 signed two years ago, under which exports were made. Therefore it cannot be said that service fees under product promotion agreement were paid in order to promote its products for enhancing export in Russian market The service fee payable by the applicant to DRL Russia under the agreement for promotion of goods cannot be regarded for the purpose of fees for technical services. The service fee paid by the applicant to DRL Russia is not taxable either under Article 7 or Article 22 of the India-Russia DTAA.

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• 2016 (9) TMI 348
  Allowability of proposal expenses - nature of Payments to third party service providers outside India for services in connection with expatriate movement to India in relation to the PO - Allowability of provisions made with respect to its obligation to pay a delay penalty (price reduction) - Held that:- The Head Office had not incurred any expenditure but some expenditure was incurred by one of the group concerns i.e. FWEL and as such, expenditure incurred by a third party cannot be allowed as a deduction, in computing the income of the project. The Revenue was asked by us to verify the genuineness of the expenditure. The Revenue in its report dated 20 November 2015 has after verification conceded that FWGB’s share of proposal costs [i.e. Rs. 4,79,33,690 (i.e. GBP 6,58,828)] has been charged to FWGB and FWGB has in fact paid the same to FWEL. This shows that FWEL had incurred such expenditure for the purpose of applicant’s projects in India. In view of this there is no reason to disallow such expenses as the same has been incurred for business purposes and we are of the opinion that such expenditures be allowed in the year in which it was incurred. Payments to third party service providers outside India for services in connection with expatriate movement to India in relation to the PO - nature of Fees for Technical Services - whether such payments would be in the nature of travel costs - Held that:- As regards payments made to third parties other than FWEL, there is no dispute. In respect of FWEL, the applicant has filed an affidavit explaining the nature of services and according to this detailed affidavit services are not in the nature of Fees for Technical Services as they do not satisfy the ‘make available’ clause. The mention of ‘engineering services’ on the invoice has also been explained as above and if this is true the same cannot satisfy ‘make available’ clause as these are not providing services on the basis of which the recipient can be said to acquire skills of enduring benefit nature. Department’s reliance on the fact is also based on presumption that invoices have been prepared for the purpose of Services Tax Law and the description on the invoice is in the light of the definition of taxable service in Service Tax Act. However, the affidavit filed before us does not say so. We cannot go on presumption of the Department and therefore we rely on the affidavit and rule that services provided by FWEL and other third parties are not in the nature of Fees for Technical Services. Allowability of provisions made with respect to its obligation to pay a delay penalty (price reduction) as a result of not meeting the project schedule - Held that:- The invoices show that the price reduction has been incurred in terms of clause 8.9 of the agreement. As such reduction was agreed by IOCL, the same has to be allowed to the applicant in the year in which it actually accrued. The Income Tax Authorities will allow the same after verification.The delay penalty (price reduction) will be deductable while computing profits on the basis of actual invoices raised, amount earned on these invoices and difference attributable to price reduction on year to year basis.

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• 2016 (9) TMI 347
  Chargeability to capital gains tax in India - Applicant, a tax resident of Mauritius - DTAA between India and Mauritius - transfer of 9,870,912 shares of an Indian Company - Held that:- We perused the minutes of proceedings of the Board meetings held in Mauritius relating to buyback of shares, final closing for sale of shares held in TML, appointment of KPMG India Private Limited as tax advisor, approval of financial statements, dividend declaration and distribution etc. We also noted that the Board of Directors included representatives of BT Holdings Limited, a UK company, holdings 43% of shares. These Board meetings and the nature of decisions taken in such meetings clearly indicate that control and management of affairs of the company, particularly all financial affairs were situated only in Mauritius. Hon’ble Supreme Court held in the case of CIT V. Nandlal Gandalal (1960 (4) TMI 3 - SUPREME Court ) that the expression ‘control and management’ means de facto control and management and not merely the right or power to control and manage. The word ‘affairs’ means the affairs of a HUF which are capable of being controlled and managed by the family as such. In the case of VVRNM Subbayya Chethiyar also the apex court held that the word ‘affairs’ must mean affairs which are relevant for the purpose of the Income-tax Act and which have some relation to income. On the basis of facts mentioned above, it cannot be said that the control and management of the affairs of the applicant company were wholly situated in India. The Department of Revenue has not given any substantial evidence to show that any important affairs of the company relevant for the purpose of the Income-tax Act were being controlled from India. The only argument of the Department seems to be that the real transaction was between TML and AT&T and, therefore, the control and management of the applicant should be treated as in India. There is no force in this argument as there is nothing wrong in the applicant holding the shares and transferring the same at a later stage as per the options agreement and on fulfillment of conditions by AT & T as per the agreement. Therefore, we are unable to agree with the objections raised by the Department of Revenue and hold that the applicant is not chargeable to tax in India under Article 13(4) of India-Mauritius Treaty.

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• 2016 (9) TMI 346
  Application of section 44BB - applicant company is formed and registered under the laws of U.K and is also resident of that county entered into a contract with Oil & Natural Gas Corporation Ltd. (ONGC) for hiring of services Held that:- We answer the ruling in favour of the applicant and hold that the consideration received by the applicant from the aforementioned contract dated 13-3-2012 being contract No. MR/WOB/MM/SC/2D(LO)64/2011/P96DL11005/EB-2167 between Oil and Natural Gas Corporation Limited and Marine Geology Services LLP will be covered under section 44BB of the Income-tax Act, 1961.

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• 2016 (9) TMI 345
  Tax liability - Agreement for Avoidance of Double Taxation between India and Korea - Held that:- The answer to question No. 1 is in the affirmative and it is held that it is not taxable. Identical question is disposed of by this Authority in its judgment of in the case of same assessee. [2011 (7) TMI 98 - AUTHORITY FOR ADVANCE RULINGS]

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• 2016 (9) TMI 344
  Income chargeable to tax in India as ‘fees for included services’ - Program Fee received - India-US DTAA - PE in India - Held that:- The activity of the applicant cannot be said to be a business activity particularly because the applicant is registered in USA as a non-profit public benefit corporation formed for the purpose of providing education. This is not disputed by the Revenue. If the applicant is registered as a non-profit benefit corporation in USA then its activities i.e. providing education cannot be said to be business activity of the applicant. The reliance of Revenue, therefore, on Article 7 of the Treaty is completely uncalled for as Article 7 specifically deals with business income. Viewed from any angle there cannot be a PE as defined in Article 5 of the Treaty as indeed there is none in India. It is to be seen that every time the program is undertaken in India, it is Northwest which has arranged for the place for conducting the programs. Northwest need not every time arrange for a same place. It may happen that Northwest may arrange different location for conducting the program. On this ground also there cannot be any fixed place of business on the part of the applicant. Therefore, on both the counts namely on the question of business and on the question of PE, the contention of the Revenue is unacceptable to us. The program fee is held to be non-taxable as there is no Permanent Establishment of the applicant in India.

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• 2016 (9) TMI 343
  Taxability of considerations received under the Contract - Held that:- All the considerations received under the Contract whether as a Contractor or as a Sub-Contractor by applicant Corpro would be taxable under Section 44BB of the Income Tax Act. The answer to the Question No. 2 is that the withholding of the tax would be in the spirit of Section 44BB, hence, we dispose of all the 4 applications.

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• 2016 (9) TMI 342
  TDS u/s 195 - Whether the Settlement Amount payable pursuant to the Settlement Agreement to Aberdeen Asset Management PLC, United Kingdom (“Aderdeen”), will be regarded as sum chargeable to tax under the provisions of the Act, as referred to under Section 195 thereof? - Held that:- As relying on the ruling pronounced in In Re : Aberdeen Claims Administration Inc. and Aberdeen Asset Management Plc.[2016 (1) TMI 793 - THE AUTHORITY FOR ADVANCE RULINGS NEW DELHI] wherein concluded that the settlement amount received by Aberdeen investors is not taxable under the provisions of the Income-tax Act

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• 2016 (9) TMI 341
  TDS u/s 195 - Whether the Settlement Amount payable pursuant to the Settlement Agreement to Aberdeen Asset Management PLC, United Kingdom (“Aderdeen”), will be regarded as sum chargeable to tax under the provisions of the Act, as referred to under Section 195 thereof? - Held that:- As relying on the ruling pronounced in In Re : Aberdeen Claims Administration Inc. and Aberdeen Asset Management Plc.[2016 (1) TMI 793 - THE AUTHORITY FOR ADVANCE RULINGS NEW DELHI] wherein concluded that the settlement amount received by Aberdeen investors is not taxable under the provisions of the Income-tax Act

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• 2016 (9) TMI 340
  Notice deemed to be valid in certain circumstances - application of provisions of Section 292-BB of the Act in the case of the assessee when the notice though not proved to be issued by the Assessing Officer was also not served on the assessee - company - Whether the Hon ble Tribunal acted illegally and perversely by misdirecting itself in law as well as on facts by reversing the order of the CIT (A) and restoring that of the Assessing Officer when neither notice under Section 143(2) of the Act was issued nor served, during the course of assessment proceedings ? Held that:- The notice dated 20.08.2013 was declared by the Tribunal to be a valid notice by recording findings essentially based on facts produced before it, which included Speed Post entries, copies of the Dispatch Register of the Department and the actual notice dated 20.08.2013 issued under Section 143 (2) of the Act. The assessee, having not raised any objection with regard to issuance and service of a valid notice during the assessment proceedings and rather, without any objection, having voluntarily taken part in such proceedings, were facts, which were also considered and held against the assessee. It was further observed that even the Commissioner had recorded that the notice dated 20.08.2013 duly existed in the assessment records and qua this finding of the Commissioner, the assessee had not filed any appeal or crossobjection The objection so raised by the assessee before the Assessing Officer was that the notice issued under Section 143(2) of the Act before 30.03.2013 was invalid. Thus, such objection was taken only with regard to the earlier refused notice dated 28.09.2012 and cannot be taken to be an objection to any notice issued after the filing of the return by the assessee including the notice dated 20.08.2013. From the above, it is abundantly clear that the Tribunal has essentially determined questions of fact. The conclusion being a possible view cannot be termed as perverse. Therefore, we are disinclined to interfere in the present appeal and resultantly, order dismissal of the same.

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• 2016 (9) TMI 339
  Sale of land - chargeable income - Addition on cash deposits in the State Bank of India and Axis Bank - Held that:- Commissioner, being of the view that the cash deposits made by the assessee in his saving bank accounts maintained with the Axis Bank and State Bank of India had nothing to do with the sale of land by his father and his uncles, dismissed his appeal, which gave him a cause to file an appeal before the Tribunal. The facts, as referred to above, were gone into by the Tribunal and agreeing with the Assessing Officer and the Commissioner, the Tribunal, gave its stamp of approval to the orders passed by them by dismissing the appeal of the assessee. The afore-referred inconsistencies in the stand of the assessee, were noticed which led to the rejection of the appeal of the assessee. Thus, the factual position brought forward by the assessee, to explain the cash deposits made by him in his saving bank accounts, were concurrently considered and rejected by both – the Commissioner as also the Tribunal. After having gone through the same, we find no absurdity or perversity in them warranting any interference on our part.

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• 2016 (9) TMI 338
  Reopening of assessment - discrepancy in the turnover - Held that:- AO was not agreeable to the objection of the audit party from the beginning and even during the process between issuance of notice for reopening and rejecting the objections of the petitioner, he had satisfied himself about the correctness of the petitioner's contention in this regard. We have reproduced the relevant portion of the petitioner's objections. The explanation of the petitioner in such objections to the discrepancy in the turnovers convinced the Assessing Officer that there had been no escapement of income chargeable to tax. He accepted the petitioner's ground that the excise turnover would show MRP price less 35% discount. If the turnover figures are adjusted accordingly, there would be hardly a discrepancy of 8% which in case of such a large turnover could easily occur. He in fact argued that if such discrepancy of 8.42% is extrapolated over the total turnover; the assessee's turnover from the eligible unit would match the correct figures. We have therefore no hesitation in coming to the conclusion that neither the reasons recorded by the Assessing Officer, nor the decision to issue notice for reopening were those of the Assessing Officer himself. He had acted under the compulsion of the audit party which held a belief that on account of discrepancy in the turnover figures, income chargeable to tax had escaped assessment. The Assessing Officer was inclined to believe the petitioner's explanation that such discrepancy could be reconciled. If the department was not convinced about the opinion of the Assessing Officer, it was always open for the Commissioner to take the order of assessment in revision. The action of reopening of assessment however, stands on entirely different footing and as per settled law, can be resorted to by the Assessing Officer only if he has tangible material at his command to form a reasonable belief that income chargeable to tax had escaped assessment. Such belief of the Assessing Officer cannot be substituted by that of the opinion of the audit party. - Decided in favour of assessee.

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• 2016 (9) TMI 337
  Finance Lease transaction - whether the entire lease rental should be offered as income contrary to the Accounting Standard 19 dealing with according of leases issued by the Institute of Chartered Accountants of India? - whether Tribunal was justified in not directing the assessing Officer to consider that in the case of financial lease only the interest income accrued to assessee should be taxed and not the entire lease rental as assessed by him and consequentially withdraw the claim of depreciation on leased assets? - Held that:- Tthe substantial questions of law above have been answered against the assessee and the issues are now pending before the Supreme Court

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• 2016 (9) TMI 336
  Penalty under Section 271-D - receipt of unsecured loan in cash - Held that:- There is a direct nexus of the money having flown from R.P. Goyal in the books of account of the assessee, may be towards payment of constructional activities of the assessee but it does not alter the character of deposit. The company after having received such amount was duty bound to repay back to the creditor which in the instant case may be a Director or otherwise and it is not the case of the assessee that the amount which was received from R.P. Goyal would remain with the company and was not repayable. The assessee company was duty bound to repay the said loan when demanded by R.P. Goyal or when company had sufficient liquidity. The Tribunal has also come to a finding that there is no agreement in between the two i.e. company as well as R.P. Goyal, and since there is no agreement, it is neither loan nor deposit, the said finding of the Tribunal in our view is wholly perverse. The conduct or the entry and flowing of funds is sufficient to prove that the amount was admittedly received by cash in the account of assessee as having been received from R.P. Goyal and found credited as an “unsecured loan”, proves that it was in the nature of a loan and certainly such loan having been received by cash, falls within the ambit of Section 269-SS. We are not impressed by the argument raised by the learned counsel for the assessee that R.P. Goyal being a semi literate and educated upto only 9th class, entered in the field of Cement Trading and Distributorship, promoted this company and became Chairman-cum-Managing Director of the company, was not aware of the provisions of law, in our view such an argument is worth rejection primarily since the instant appeals arose in a case of Limited Company and not R.P. Goyal. Provisions were brought into force from 1.4.1984 and such provisions were in force for almost 8 years and we cannot loose sight of the fact that over the years R.P. Goyal being in the business for years together, was not aware of the provisions of law although the presumption to know the law is to the contrary. Equally important is the fact that a Limited Company right from being formed is assisted by Chartered Accountant and Company Secretary, who are well qualified professionals & the justification tendered that R.P. Goyal being less literate, deserves no indulgence and it goes without saying that ignorance of law is no excuse. This finding of fact that the assessee as well as R.P. Goyal had common bank account in the same bank, remained unrebutted by the assessee as well, and if there is any direct nexus proved by the assessee that the amount as received from the Director was utilised towards payment to various labourers/contractors spent for constructional activities that does not improve the case of the assessee at all in these proceedings. - Decided against assessee

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• 2016 (9) TMI 335
  Sale proceedings of the shares / warrants - Short Term Capital Gain OR Business income - Held that:- We find that the two Authorities, namely, CIT(A) and the Tribunal by the impugned orders have held that the respondent assessee is an Investment Company. Further it is held that in respect of the shares in Lok Housing, which were sold during the subject assessment year giving rise to capital gains of Rs. 25.54 lakhs, the income was chargeable to tax under the head “Capital Gains” as the respondent assessee was not a Trader in shares. The aforesaid facts were found by the Authorities over and above the fact that the shares in fact were held after conversion into Demat for a period between 4 to 7 months. The Revenue has not been able to show how and why the findings arrived at by the CIT(A) and the Tribunal are in any manner perverse and / or arbitrary. Two Authorities have concurrently come to a finding of fact that the respondent assessee is an Investment Company and the shares of Lok Housing were held for over a period of four to seven months from the date of their conversion into Demat form. No substantial question of law. - Decided against revenue

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• 2016 (9) TMI 334
  Reopening of assessment - benefit of Section 80IB - Held that:- As the reasons in support do not satisfy the requirement of the proviso to Section 147 of the Act, the impugned notice is unsustainable. Therefore at this stage, we are not considering the second submission on the part of the Petitioner that this is a case of change of opinion and therefore without jurisdiction. As Respondent, states that on merits, the Petitioner was not entitled to the benefit of Section 80IB of the Act. This by itself would entitle the Respondent to issue a reopening notice. In support, he placed reliance on the decision of this court in support of Export Credit Guarantee Corporation of India Ltd. vs. Additional Commissioner of Income tax [2013 (1) TMI 517 - BOMBAY HIGH COURT] to contend that where a provision of law has been clearly overlooked or ignored in the assessment order, it would be open to the Assessing Officer to issue a reopening notice. This decision relied upon by the Respondent has been rendered in the context of assessment being reopened within a period of four years from the end of the relevant assessment years. In such cases of reopening of assessment in less than four years, the jurisdiction is not dependent upon failure to disclose fully and truly all material facts necessary for assessment as in this case, where the reopening is for a period beyond a period of four years from the end of the relevant assessment year. Thus we find absence of any failure to disclose all the material facts truly and fully which were necessary for assessment. Therefore, the impugned notice is prima facie without jurisdiction - Decided in favour of assessee

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• 2016 (9) TMI 333
  Addition u/s 68 - suspected investments and share application money - Held that:- We are of the opinion that the CIT(A)’s order – which stands confirmed by the ITAT is both sound and unexceptionable having regard to the principle applicable to Section 68 and the circumstances under which investments and share application money is deemed suspect. In the present case, the share applicant’s identity was disclosed and the source of his funds was also proved. That the AO did not deem it appropriate to probe further did not mean that the incomes were liable to be treated under Section 68. The appeal does not raise any substantial question of law

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• 2016 (9) TMI 332
  Penalty u/s 271(1)(c) - Held that:- The assessee did not disclose the details of the creditors nor their list but merely claimed them in the return. Upon the assessment being picked up in scrutiny for further enquiry, the assessee came out with the details and surrendered the income for taxation. In the circumstances, we are of the opinion that there is no infirmity with the order of the ITAT. The question of law is answered against the assessee/appellant and in favour of the revenue.

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• Customs

• 2016 (9) TMI 361
  Procurement and import of technical equipment on lease - classification - Chapter 85 of First Schedule of the Customs Tariff Act, 1975 - Chapter 90 of First Schedule of the Customs Tariff Act, 1975 - Whether the applicant is eligible to claim the exemption under Notification No. 27/2002-Cus dated 01.03.2002 as amended by Notification No. 27/2008-Cus dated 01.03.2008 under the category of temporary import of leased goods? - Held that: - the benefit of Notification No. 27/2002-Cus dated 01.03.2002, as amended by Notification No. 27/2008-Cus dated 01.03.2008 can be extended provided all the conditions satisfied as mentioned in the notification - the applicant satisfying all the conditions and is eligible to claim the exemption under Notification No. 27/2002-Cus dated 01.03.2002, as amended by Notification No. 27/2008- Cus dated 01.03.2008 under the category of temporary import of leased goods. Valuation - declared value - book value - depreciated value - Held that: - It is clearly mentioned in CBEC Circular No. 25/2015-Cus that value declared by the importer has to be examined with report of Chartered Engineer as also with the depreciated value arrived in terms of said CBEC Circular dated 19.11.1987. In case, there are significant differences from such comparison, proper officer of Customs will seek explanation from the importer for justification of declared value. If proper officer is not satisfied with said justification of the importer, he may proceed to determine the value under Rule 9 ibid.

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• 2016 (9) TMI 360
  Refund of SAD - goods imported from Nepal - Notification No. 124/2000 amending the earlier Notification No. 37/96 and enlarging the scope of exemption from basic customs duty by including SAD - retrospective effect of amendment - exemption from customs, excise duty and also SAD - rates of SAD rectified - Held that: - The exemption which was granted by notification dated 29th September, 2000 was, therefore, in the nature of specific and new exemption from payment of special additional duty, which was otherwise payable in view of the introduction of Section 3A to the Tariff Act. It is difficult to appreciate that the exemption granted vide notification dated 20th September, 2000 to special additional duty was clarificatory or to give effect to the existing protocol. We think so as protocol appended to the Treaty could not have conceived of future levy by way of proposition. In any case, factually it does not. Therefore, the notification of 20th September, 2000 conferred a new benefit which was not earlier stipulated or the subject matter of protocol. The reliance on the decision of the case Ralson India Limited v. Commissioner of Central Excise, Chandigarh [2015 (4) TMI 74 - SUPREME COURT] do not asset the case of assessee. It cannot be also said the issue of notification was a formal ministerial act which got delayed for administrative reasons. It was a conscious act and a deliberate decision which came into existence after due deliberation when it was decided to grant exemption under Section 3A of the Tariff Act. Appeal dismissed - decided against appellant.

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• 2016 (9) TMI 359
  Implementation of the order as passed by Commissioner (Appeals-I) and Release of gold chain - absolute confiscation of gold jewel - Commissioner (Appeals-I) held that the petitioner is entitled to the option of redemption under Section 125 of the Customs Act, 1962. However, while giving the option of redemption, the Commissioner (Appeals-I) passed a conditional order by virtue of which the petitioner had to pay a fine of Rs. 90,000/- and pay personal penalty of Rs. 25,000/- order not followed after lapse of several months - Held that: - as long as the order passed by the Commissioner (Appeals-I) has not been modified, the petitioner being beneficiary of the said order is entitled to get back the jewel on compliance of the conditions imposed by the Appellate Authority within reasonable time. The order was passed by the Commissioner (Appeals-I) on 28.09.2015 and inspite of lapse of several months, till date nothing worthwhile has transpired in the review application. That apart, there is no interim order staying the order passed by the Commissioner (Appeals) - fourth respondent to return the jewel in question subject to the petitioner paying the fine and personal penalty as ordered by the Commissioner (Appeals-I) and executing a bond to produce the jewel back to the Department, in the event, the revision petition filed by the department before the revisional authority is allowed - petition dispose off - decided in favor of petitioner.

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• 2016 (9) TMI 358
  Confiscation of goods - section 111 of the Customs Act, 1962 - option to pay redemption fine - section 125 of the Customs Act, 1962 - demand of duty and interest - Section 61(2) of the Act read with Section 72(b) of the Act - imposition of penalty - section 112 of the act - Extension of warehousing period - Section 61(1) of the Customs Act, 1962 - B/E Nos. 1 and 2 - confiscated goods vesting to the Central Government - Section 126 of the Act - auction of the goods - Held that: - payment of duty, interest and penalty made belatedly but before auction process. the Court permits the Department to encash the DD deposited by the auction purchaser, release the goods imported thereunder to the auction purchaser and issue the requisite sale confirmation. This is subject to the Department abiding by the further directions that may be issued by the Court at the time of disposal of this petition. It is made clear that GIL would have no right to seek the return of the aforementioned goods that are handed over to the auction purchaser. As far as B/E No.3 is concerned, the appeal preferred by GIL against the Order-in-Original dated 30th December 2014 is stated to be pending before the CCA. In terms of the Circular No. 711/4/2006 dated 14th February 2006 issued by the CBEC, the Department had to seek the permission of the CCA before proceeding with the auction. Accordingly, the Court directs status quo in respect of the auction of the confiscated goods covered by B/E No. 3 to be maintained till such time the CCA passes appropriate orders in relation thereto. Petition to be placed before the Hon’ble the Chief Justice for being listed before a Larger Bench

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• 2016 (9) TMI 357
  Refund of excess CVD paid - arithmetical error - requirement of reassessed bill of entry - certificate from chartered accountant regarding unjust enrichment - Held that: - non filing or late filing of appeal against the original assessment on the bill of entry is not relevant and appellant can challenge the assessment by way of a refund application - an opportunity of personal hearing should be extended to the appellant by AC Refunds to explain their case. Appellant shall demonstrate before AC refunds that higher CVD paid in the first assessment was only due to clerical mistake based on documentary evidence - Department is also at liberty to examine the aspect of unjust enrichment - matter remanded - appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2016 (9) TMI 353
  Adoption of financial year by subsidiary company same as its holding company - Held that:- As seen the documents along with petition and also the report of the Registrar of Companies, Karnataka, Bengaluru who recommended for change of financial year as requested by the Petitioner Company. Certified copy of latest Balance sheet of the Holding Company is enclosed with Petition. We have seen the Board Resolution of the Petitioner Company and also the consent letter of Holding Company. Affidavit of the Director of the Petitioner Company discloses that Applicant Company is one of the subsidiaries of "UNIVERSAL ROBOTS A S" and the other subsidiary companies adopted the same calendar year as financial year. So there are grounds to permit the Petitioner Company to adopt calendar year as financial year of Holding Company for the purpose of consolidation of accounts. Accordingly, the following order is passed under section 420 read with section 2 (41) of the Companies Act, 2013:- The Petitioner Company "UNIVERSAL ROBOTS (INDIA) PRIVATE LIMTIED" is permitted to adopt its financial year as 1st January to 31st December to match with the financial year of the Holding Company.

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• FEMA

• 2016 (9) TMI 352
  Proceedings leveled against co-noticee - appellant was resident outside India - Held that:- Nothing incriminating from the raid carried out at the residential and business premises of the appellant could be found. There is no documentary evidence in support of the allegations of the respondent. There is no evidence on record to show that the appellant was involved in any act of alleged purchase and sale of foreign currency. For the alleged credits in banks the bankers or any of the alleged recipient of the gift cheques etc. none of the said bankers or alleged recipients have identified the appellant. We are also of the view that there appears to be breach of principles of natural justice as only three dates in the entire Adjudication Proceedings were fixed in 1999 and the Impugned judgment was passed on 30-08-1999 ex-parte. There is no report: to the effect that the appellant was duly informed of the three dated fixed for the Adjudication Proceedings. Thus in our considered view it is a case where adequate opportunity to defend was not afforded to the appellant. The proceedings were concluded within a span of six months while in another matter with identical allegations for the alleged breach by the same Adjudicating Authority, proceedings against the appellant were dropped. We are in agreement with the Ld. counsel for the appellant that proper application of judicial mind has not been made effected while deciding the proceedings and the Adjudicating Authority was not clear about the role of the appellant in the Impugned Order. He has at several occasions wrongly mentioned noticee number of the appellant to be notice No. l instead of noticee No.2. It is also relevant to mention that opportunity for personal hearing was given on 23-03-1999 while the same Adjudicating Authority fixed 24-03-1999 in connection with SCN No. T-4/2/B/96 dated 24-03-1994. The evidence of hand writing expert as per settled legal position Is a mere opinion, however, it carries some weight and the appellant had filed a report denying that the disputed writing was not in his hand. It may also be mentioned here that the standard of proof under FERA was more stringent as compared to proceedings under FEMA and the Adjudicating Authority recorded different findings in these two matters of alleged breach of identical contraventions against the appellant i.e. of dropping the proceedings in one matter and holding him guilty in the impugned proceedings. Reliance has been wrongly placed upon the retracted statement without assigning reasons. The impugned order is totally without reasons and is non speaking and smacks of arbitrariness, therefore, it is unsustainable and consequently the appeal deserves to be allowed.

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• Service Tax

• 2016 (9) TMI 378
  Rejection of refund claim - Rule 5 of Cenvat Credit Rules, 2004 – input service - mandap-keeper service - security agency service - courier service - manpower recruitment service - rent-a-cab scheme operator service - transport service - CA service - insurance service - management consultancy service - management, maintenance and repair service – nexus with output service – receipt of services – consumption of services – Held that: - as regard the distribution of services, as per the statement made by the appellant, it was distributed in proportionate on principle of seats in individual unit. This method of distribution appears to be correct and the same cannot be discarded. Input service invoice – correct address not mentioned – input service – no nexus with output service – Held that: - if there is any error in the invoice, to satisfy correctness of the credit, department can very well verify books of accounts to ascertain whether invoice were accounted for in the respect of unit and if it is found correct then irrespective of mention of incorrect address refund should be allowed - there is no dispute that input service was received and used by the respective unit . Invoice – service tax registration – Held that: - this is a clerical error on the part of the service provider, however if the service tax amount is mentioned, merely because registration number is not appearing, refund cannot be denied. Refund allowed - Before sanctioning the refund, Adjudicating authority can verify the documents – matter remanded to the Original adjudicating authority to reconsider the refund – appeal allowed – decided in favor of appellant

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• 2016 (9) TMI 377
  Rejection of refund claim - Rule 5 of CCR, 2004 - Notification No. 27/12-CE(N.T.) dated 18/6/2012 – input services – export of output services - realization of foreign convertible currency - Section 11B of the Act - whether export turnover shall include the receipt of foreign convertible currency as per the FIRC during the particular quarter or as per the date of invoice? – Held that: - as per the FIRC the payment in convertible foreign currency was received during the relevant quarter therefore the same should be considered as export turnover during the relevant quarter only. There is no provision in the definition of turnover of services that the export turnover should be taken as per the date of invoice. Admissibility of CENVAT credit - Input services - Event Management Services - Insurance Auxiliary Services – Held that: - judgements of the cases Dell International Services India (P.) Ltd. Vs. Commissioner Central Excise (Appeals), Bangalore[2009 (6) TMI 447 - CESTAT, BANGALORE] and CCE & ST, LTU, Bangalore Vs Micro Labs Ltd.[2011 (6) TMI 115 - KARNATAKA HIGH COURT] followed – these services considered as input service - Cenvat credit is admissible on these services. Rent-a-cab services - Refund availed in excess - Telecommunication/Internet Telecommunication Service - Chartered Accountant’s Service – Held that: - assesse not entitled to refund. Period of limitation - whether limitation of one year should be reckoned from the date of FIRC or from the end of particular quarter? – Held that: - export is completed as on date of FIRC but Rule 5 provides for filing of refund on quarterly basis i.e. only after completion of the quarter. In this situation refund can only be filed after last date of the quarter. If this is so, period of one year provided under Section 11B cannot start on any date before end of the quarter, it has to be reckoned from next date of quarter ends - assessee has filed refund claim within one year from end of the quarter therefore it is within limitation – refund not time bar. Matter remanded to original adjudicating authority for computation of refund – appeal disposed off.

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• 2016 (9) TMI 376
  Invokation of extended period of limitation - Demand alongwith interest and penalties - denial of benefit of Notification No. 1/2006 which allowed abatement of 67% - Completion and finishing services of civil structure - period involved is March, 2006 to September, 2007 - availed cenvat credit and have also received free supplied items from their clients - Held that:- in terms of Sl.No.7 of notification, abatement benefit is not available to the ‘completion and finishing services’. However, we note that appellant had taken categorical stand before the lower authorities that work was being done by them under work contract and also filed an affidavit to the effect that no free supplied items were being received by them from their client. We find that in terms of the latest decision of the Hon’ble Supreme Court in the case of CCE, Kerala vs. Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT], the work contract were not liable to service tax prior to 1.6.2007. As such, it requires to be examined as to whether the appellants activities of providing ‘completion and finishing services’ would fall under the category of works contract or not. If the services were being provided under a work contract, then no liability to service tax would arise for the period prior to 1.6.2007. If there was no service tax liability, even though, the appellant had discharged Service tax on 33% of the value of services, the demand for differential duty cannot be confirmed on the said ground. Therefore, the impugned order is set aside and matter is remanded back to the adjudicating authority for examining the applicability of Supreme Court decision in the case of Larsen & Toubro Ltd. (supra) and to decide the demand issue accordingly. We keep the issue of limitation open for the adjudicating authority to re-decide in the light of appellants submissions that they were filing regular returns and were discharging the service tax liability. As such, there was no malafide or suppression on their part so as to invoke the extended period of limitation. - Matter remanded back

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• 2016 (9) TMI 375
  Demand - Maintenance and Repair Services - maintenance of computer software services - period involved is 9.7.04 to 31.3.06 - Held that:- by following the decision of Tribunal in the case of Polaris Software Lab Ltd. vs. CCE, Chennai [2015 (10) TMI 2410 - CESTAT CHENNAI], by taking note of the Hon’ble Madras High Court decision in the case of Kasturi & Sons Ltd. vs. UOI - [2011 (2) TMI 76 - HIGH COURT OF MADRAS] wherein it was held that the maintenance of Computers software became taxable service with effect from 1.6.2007 when the amendment was specifically brought under section 65 of the Finance Act, demand is not sustainable as the period in the present appeal is prior to 1.6.2007. Demand - Business Auxiliary services - service of digital scanning data processing and data entry services to the Income Tax department - Held that:- the Tribunal in the case of K P Rao Company, has considered the identical issue and has held that the said services did not fall under the category of Business Auxiliary services and would be properly classifiable under Information Technology services. Inasmuch as the information technology services was taxable with effect from 10.5.2008 and the period involved in the present appeal is prior to that, the demand on this issue is also not sustainable. - Appeal disposed of

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• 2016 (9) TMI 374
  Whether the toll tax collected by the appellants at the toll plaza under an agreement with MCD would call for payment of Service Tax on the amount retained by them under the category of “Business Auxiliary Services" or not - Held that:- inasmuch as the issue stands settled, we find no reason to uphold the impugned order. Therefore, by following the precedent decision of Tribunal in the case of PNC Construction Co. Ltd. Vs CCE, Chandigarh [2012 (12) TMI 878 - CESTAT, NEW DELHI] and Patel Infrastructure Pvt. Ltd. vs Commissioner of Central Excise, Rajkot [2013 (11) TMI 402 - CESTAT AHMEDABAD] wherein it was held that toll collection on highways cannot be held to be "Business Auxiliary Service" being provided by the assessee to the NHAI, the impugned order is set aside. - Decided in favour of appellant with consequential relief

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• 2016 (9) TMI 373
  Valuation - includability - airport tax and passenger service fee in the assessable value of the services - transport of passenger services by Air embarking in India for International Journey - Held that:- the issue stands covered by the Tribunal in the case of M/s Continental Airlines Inc. Vs CST, New Delhi [2015 (7) TMI 1079 - CESTAT NEW DELHI] wherein it was held that the airport taxes as also the passenger service fees collected by the airlines on behalf of the airports and paid to them are not includable in the assessable value for the purpose of levy of service tax. By following the decision of the Tribunal, the service tax demand against the present assessee for the earlier period raised on the same grounds was set aside by the Tribunal in the case reported as Lufthansa German Airlines vs CST (Adjn.), New Delhi [2016 (4) TMI 780 - CESTAT NEW DELHI]. Therefore, inasmuch as the issue is decided, the impugned order is set aside. - Decided in favour of appellant with consequential reief

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• 2016 (9) TMI 372
  Invokation of extended period of limitation - Demand - transportation of mine coal from pit head to railway siding within the mining area - whether to be considered as goods transport agency service as per appellant or cargo handling service as per Revenue - Held that:- inasmuch as in other case of identical situate appellants involving the same issue and identical contract with M/s. SECL, the Tribunal had held that the activities of the assessee would amount to providing services, falling under goods transport agency services. Therefore, by following the said decision, the impugned orders are set aside. In as much as the assessee’s appeal has been allowed on merits, the Revenue’s appeal, which is against that part of the order-in-appeal vide which benefit of time bar and cum-duty price has been extended to the assessee is required to be rejected. - Appeals disposed of

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• 2016 (9) TMI 371
  Demand of service tax with interest - Section 73 and Section 75 of the FA, 1994 – imposition of penalty - Section 78 and 77 of the FA, 1994 – benefit of reduced penalty if paid within stipulated time – Chemplast Cuddalore – works contract service – composition scheme - mobilization advance – ST-3 returns - discharge of tax on demand along with interest - suppression of facts – Held that: - there was a confusion regarding applicability of the tax and the mechanism. In these circumstances, the appellant failed to show the advance amount in their ST-3 return and failed to discharge tax on the same. On being pointed out the appellant paid the disputed service tax along with interest – invocation of section 80 of the Finance Act, 1994 – penalty set aside – demand of tax and interest upheld – decided partly in favor of appellant.

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• Central Excise

• 2016 (9) TMI 370
  Recovery of duty - annual capacity of production - consequential monthly duty liability fixed by the Jurisdictional Commissioner - manufacture of non-alloy steel ingots and billets - Chapter Sub-Heading No.7206.90 of the Schedule to the Central Excise Tariff Act, 1985 - Section 3A of the Central Excise Act, 1944 - CENVAT credit - Rule 57AB of the Central Excise Rules, 1944 - Held that: - the decision in the case Kalai Magal Alloys Steel Pvt. Ltd., v. CESTAT, Chennai [2014 (1) TMI 1335 - MADRAS HIGH COURT] has been relied upon, where it was held that the scheme is comprehensive, as regards payment of duty, time and manner of payment. The said judgment is also applicable, on the grounds of exclusion of the general provisions of the Act and the Rules, during the period of the compounded levy scheme. When the general provisions of availing cenvat credit are excluded, consequences thereof, is to make payment through PLA, which means remittance in cash - demand of duty justified. Imposition of penalty - Rule 96ZO(3) of the Central Excise Rules, 1944 - Held that: - imposition of penalty set aside. appeal disposed off - decided partly in favor of appellant.

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• 2016 (9) TMI 369
  Modvat credit - capital goods installed and commissioned on 16.09.1997 when restricting clause got inserted in Table to Rule-57Q(1) under Notification No.33/97-C.E.(N.T.) dated 01.08.1997 - Held that:- it is observed that amendments/insertions to Rule 57Q(1) and Rule 57 S(11) were made simultaneously under Notification No. 33/97-C.E.(N.T.) dated 01.08.1997. From the above provisions of MODVAT scheme under Central Excise Rules, 1994 it transpires that intention of the legislature behind above amendments was not to allow credit on capital goods if received by an assessee, who is paying duty on Iron and Steel finished goods under compounded levy scheme as per Section 3A of the Central Excise Act, 1944. Further as per Rule 57 S (11), if any, credit is lying unutilised the same shall lapse. Therefore, in view of the observations and the settled proposition of law by the Hon'ble Bombay High Court in the case of Coral Cosmetics Ltd.-vs.-Union of India [2005 (12) TMI 47 - HIGH COURT BOMBAY] after relying upon the Apex Court's decision in the case of Eicher Motor Ltd. vs. Union of India [1999 (1) TMI 34 - SUPREME COURT OF INDIA], the Cenvat Credit of Rs. 24,13,708.68/- has been wrongly allowed by the First Appellate Authority. - Decided in favour of Revenue

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• 2016 (9) TMI 368
  Invokation of extended period of limitation - Cenvat credit - availed on the amount of excise duty paid in purchase of steel bars, angles, MS Plates and Coils - used in fabrication of capital goods such as machinery, Anneal Lehr & cutting line etc. - period of dispute is from April 2009 to December 2009 - Held that:- the issue for the period prior to 07.07.2009 is in appellant's favour in as much as the Gujarat High Court in the case of M/s. Mundra Ports & Special Economic Zone Ltd. Vs. C.C.E. & Cus [2015 (5) TMI 663 - GUJARAT HIGH COURT]. In the order in Original and in the appellate order, it had been noted that the facts came to light only upon the visit of the internal audit party to their factory. This very fact would go to show that the records were maintained and there has been no suppression of facts coupled with an intention to evade payment of duty and therefore the invocation of longer period fails. Therefore, the appeal is allowed on merits upto 07.07.2009 and fully on limitation. - Decided partly in favour of appellant

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• 2016 (9) TMI 367
  Whether dutiable finished goods manufactured by the Appellant will be another category of manufactured goods when exemption under Notification No.10/97-CE dated 16.03.1997 is claimed - Held that:- in the absence of any contrary case law brought on record, Appeal filed by the Appellant is required to be allowed on merits. However, it has been correctly mentioned by the Revenue that in both the relied upon case laws decided by Tribunal in the cases of Commissioner of Central Excise, Chennai v. Magtorq (P) Ltd. [2008 (5) TMI 500 - CESTAT, CHENNAI] and Mukerian Papers Ltd. v. Commissioner of C.Ex., Chandigarh [2003 (11) TMI 189 - CESTAT, NEW DELHI], assesses have reversed the credit relatable to the inputs used in the manufacture of exempted goods cleared by those assesses. Accordingly Appeal filed by the Appellant is allowed subject to the condition that proportionate credit with respect to inputs used in the manufacture of finished goods exempted under Notification No.10/97-CE dated 16.03.1997, should be reversed/paid by the Appellant along with 24% interest, if not already paid/reversed. - Decided conditionally in favour of appellant

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• 2016 (9) TMI 366
  Refund claim - manufacture and clearance of TMT bars to SEZ units on payment of excise duty - Commissioner (Appeals) rejected the appeals in terms of Board's Circular No. 06/2010-Cus dated 19.03.2010 and on the ground that since the supplies made to SEZ units are deemed export, the manufactured goods could have been sent under ARE-1 without payment of duty - Held that:- in the appellant s own case, the Co-ordinate bench of this Tribunal had an opportunity to examine the similar issue reported in [2015 (2) TMI 966 - CESTAT CHENNAI] and held that the appeal is not maintainable in terms of proviso to Section 35B(1) and that the appeal has to be preferred before the revisionary authority. Since the case on hand is similar to the ruling laid above, the appellant is at liberty to file appeals before Government of India, Revision Authority. - Decided against the appellant

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• 2016 (9) TMI 365
  Whether the appellant is entitled to avail cenvat credit on capital goods which were sent to their sister unit who are job worker under Rule 4(5)(a) of Cenvat Credit Rules - Capital goods was removed/cleared from the unit where the credit was availed to appellant's own unit (sister unit) within the same Commissionerate - job worked-goods returned back to appellant's factory within stipulated period prescribed and were used in the manufacture of final product and cleared on payment of duty. Held that:- it is only the movement of capital goods between the appellant's own units situated within the same Commissionerate for use in the manufacture of the same final product. Similar issues was dealt with by the Tribunal in the various cases which were also upheld by Hon’ble High Courts. The ratio of Tribunal's decision in the case of Zenith Machine Tools Pvt. Ltd. Vs CCE Belgaum [2010 (4) TMI 481 - CESTAT, BANGALORE] by following the decision of Hon'ble Punjab & Haryana High Court in the case of Commissioner Vs Pooja Forge Ltd. [2007 (11) TMI 316 - HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH] is squarely applicable to the case. Therefore, by following the same, the impugned order is set aside. - Decided in favour of assessee with consequential relief

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• 2016 (9) TMI 364
  Cenvat credit - admissibility - credit took on documents, received from registered dealer without receipt of any inputs - no quantification of inadmissible credit has been done in the show cause notice by making reference to invoices and entries made in RG-23A Part-II - Held that:- in the absence of spelling out the allegation clearly in the show cause notice, appellant cannot be expected to explain his case. In view of the statement of partner of M/s. Ram Kumar Kamal Kumar only an amount of Rs. 2,47,844/- of credit is inadmissible to the appellant as admitted. Therefore, Modvat credit of Rs. 2,47,844/- is thus correctly denied to the appellant. Imposition of penalty - Held that:- in the light of decisions of the Tribunal in the case of Western India Paints and Colour Co.(P)-vs.- Commr. Of C.Ex., Chennai [2002 (1) TMI 166 - CEGAT, CHENNAI] and in the case of Varalakshmi Exports vs.-Commr. Of Cus.(Seaport-Export), Chennai [2013 (12) TMI 1301 - CESTAT CHENNAI] that in remand proceedings penalty cannot be enhanced when department did not file any appeal against the first adjudication order where a penalty of Rs. 2.5 lakh was imposed. However, in the interest of justice it is ordered that a penalty of Rs. 1.00 lakh (one lakh) upon the appellant will meet the ends of justice in the present proceedings. Accordingly penalty imposed upon the appellant is reduced to Rs. 1.00 lakh under Rule 173 Q (1) (bb) of the Central Excise Rules, 1944. - Decided against the Revenue

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• 2016 (9) TMI 363
  Cenvat credit - Man Power Services - service used for the purpose of cleaning of appellant's canteen during the period from October 2008 to March 2013 - service provider collected a consolidated amount towards housekeeping which also included the amount paid to the services used for cleaning of canteen - nexus to the manufacturing activity - Held that:- canteen is an integral part of the factory and clean maintenance of the factory including its precincts are a statutory requirement under Section 11 of the Factories Act, 1948. Therefore, this service has to be treated as a service used by the manufacturer in or in relation to the manufacture of final product as without complying with the said provisions of the Factories Act, 1948, manufacturing operations are not possible. Without the factory including the canteen, being clean and tidy, the efficiency would get drastically reduced. Further, it should be borne in mind that housekeeping is crucial for safe workplaces. It can also help an employer avoid potential fines for non-compliance due to bad housekeeping, which would in turn affect productivity. In view of this the appellants are eligible for credit. Invokation of extended period of limitation - Held that:- authorities have failed to appreciate that the appellants are regularly filing their ER-1 returns and in the return filed for the relevant period in terms of Rule 7 of Cenvat Credit Rules, 2004 they have shown the credit availed in respect of Service Tax paid for services rendered by M/s. Servocraft HR Solutions Pvt. Ltd; that having knowledge about the availment of credit from the return, which is acknowledged by the authority, extended period of limitation, cannot be invoked on the ground of suppression. Also penalty imposed are set aside. - Decided in favour of appellant

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• 2016 (9) TMI 362
  Cenvat credit - availed amounting to Rs. 1,35,133/- involved on the inputs lying in stock and the inputs contained in the finished goods as on that date - input quantity involving credit of Rs. 61,953/- was not available in stock as on 14.03.2011 - Imposition of penalty - Held that:- I do not find any reason to interfere with the finding of the learned Commissioner (Appeals) that the CENVAT Credit of Rs. 61,953/- is inadmissible against the total claim of Rs. 1,35,133/-. However, the Appellants should have been allowed to exercise option to pay 25% of the penalty subject to conditions laid down under Section 11AC of Central Excise Act, 1944, in view of the observation of the Hon’ble Gujrat High Court in the case of CCE Vs Harish Silk Mills [2010 (2) TMI 494 - GUJARAT HIGH COURT] and CCE Vs G.P.Presstress Concrete Works [2012 (8) TMI 933 - GUJARAT HIGH COURT]. Accordingly, the appeal is remanded to the Adjudicating authority to consider the option of payment of 25% of the penalty on fulfillment of the conditions laid down under Section 11AC of Central Excise Act, 1944. - Decided partly in favour of assessee

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• CST, VAT & Sales Tax

• 2016 (9) TMI 356
  Declared goods - roasted groundnuts - rate of tax - validity of 1979 circular and withdrawn on 2004 - Whether roasted groundnuts are declared goods under Section 14 (vi) (i) of the Central Sales Tax, 1956? - scope of the term 'that is to say' - Held that: - It is trite to note that in Gopuram [1994 (8) TMI 233 - SUPREME COURT OF INDIA], three learned Judges of the Supreme Court have noticed and held that the usage of the phrase ''that is to say' indicates the intent of the legislature to make clear or fix the meaning of what is sought to be explained or defined. Their Lordships held that the phrase 'that is to say' indicates an exhaustive enumeration and therefore consequently the benefit of Section 14 must be limited to the goods expressly mentioned therein. Therefore it would be safe to say that there is no authoritative pronouncement on the issue as to whether roasted groundnut would stand covered under clause (vi) (i) of section 14. The 1979 circular in unequivocal terms held out that roasted groundnuts would be liable to be considered as falling within the ambit of clause (vi) (i). The 2004 circular represented an authoritative yet paradigm shift from what was permitted to hold the field for decades namely, the 1979 circular. The 2004 circular, it may be noted, did not rest itself upon a declaration of the law that roasted groundnut would not be covered. The 1979 circular was issued by the Commissioner of Trade Tax U.P. who was duly empowered in terms of rule 4 of the U.P. Trade Tax Rules, 1948. This circular was clearly binding upon the other subordinate authorities working under and administering the 1948 Act. That then takes us to the issue of whether the 2004 circular had the effect of impacting transactions which had already been subjected to tax prior thereto. To this the answer must obviously be in the negative. The 2004 circular can be rightly described as an outcome of a revisit and a reconsideration of the vexed issue of taxability of roasted groundnut and whether it was liable to be treated as an unclassified item. However the moment one arrives at the conclusion that the 2004 circular was merely an outcome of an exercise of "revisit" and "reconsideration" and not an expression of opinion based upon an authoritative pronouncement of law by a competent court, it must be treated as having prospective operation. Prior to the promulgation of the 2004 circular the 1979 circular held the field and all transactions in roasted groundnuts as entered into by the assessee be subjected to tax in accordance therewith - Decided in favor of assessee.

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• 2016 (9) TMI 355
  Taxability - Indian Made Foreign Liquor – spirit – sold outside the state - benefit by virtue of entry No.18 to Schedule I of the Commercial Tax Act – exemption from payment of Commercial Tax and Central Sales Tax on the IMFL – Held that: - it is clear that to avoid double taxation in the matter of payment of excise duty on IMFL manufactured in Madhya Pradesh, Rule 12 has been framed, so that the manufacture is required to pay excise duty only once, i.e. either in the State of M.P. or in the State where it is exported. The intention of the rule maker is that the tax is paid only once. It is held that it becomes a tax free good and as the words used in the entries are "goods on which duty may be levied under the Excise Act", this would and could only mean that duty could be levied on the goods in question but the State Government thought it appropriate not to levy duty and once it is a good on which duty could be levied the exemption has to be granted – exemption available on IMFL. Statutory remedy of appeal – maintainability – Held that: - it is well settled principle of law that if any action is found to be contrary to law or unsustainable, then relegating a party to take recourse to the alternate remedy is not necessary. The case relied upon here is Paradip Port Trust Vs. Sales Tax Officer and other [1998 (3) TMI 585 - SUPREME COURT OF INDIA] – there is no reason to relegate the petitioners to take recourse to the alternate remedy available of filing appeal, once it is found that imposition of tax under the Commercial Tax Act/ VAT Act is unsustainable. Power to reopen reassessment - Re-assessment proceedings in accordance with law? – Held that: - once it is found that the imposition of duty is itself unsustainable it is not necessary to go into various other questions canvassed at the time of hearing including the power to reopen the assessment, the limitation for reopening assessment, non fulfillment of conditions statutory in nature etc – petition allowed – decided in favor of petitioner.

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• 2016 (9) TMI 354
  Recovery of benefit availed - cancellation of exemption certificate – eligibility certificate – benefit of exemption from payment of tax - valid from 20.3.1993 to 19.3.2002 - exemption certificate was issued on 28.10.1993. Benefit of Rs. 27,95,959/- was availed of by the appellant out of the total benefit admissible Rs. 72,11,700 upto June, 2000. The unit stopped production thereafter. The benefits, which were availed of by the appellant during the period of its eligibility have been withdrawn and the amount is sought to be recovered in exercise of powers conferred under the Rules – Sections 28 (4) and 28(5) of the Act - Rules 28A(2)(j)(k), (6) to 11 of the Rules. Held that: - the exemption certificate issued shall be valid unless cancelled or withdrawn from the date of commercial production or from the date of issue of exemption certificate as the case may be to the 30th June next year or when notional sales tax liability first exceeds the permissible limit, whichever is earlier. Sub-rule (9) of Rule 28A of the Rules provides for cancellation of exemption/ entitlement certificate under certain specified conditions and one of them being discontinuance of its business by the unit for a period exceeding six months or closing down its business during the period of exemption/ deferment. The facts of the case are that the period of eligibility of the appellant was from 20.3.1993 to 19.3.2002. The unit had stopped production in July, 2000. Out of the total amount of Rs. 72,11,700/-, the benefit to the extent of Rs. 27,95,959/- was availed upto 30.6.2000. There was violation of Rule 28A(9)(i) of the Rules as the unit discontinued its business for a period exceeding six months during the period of exemption. Hence, the exemption certificate was liable to be 'cancelled' for violation of the conditions of Rule 28A(11)(a). Order of Assessment - time barred – Held that: - a perusal of the order shows that in fact, it is not an assessment order, rather an order passed for demand of tax and interest on account of violation of conditions laid down in Rule 28A(11)(a)(i) of the Rules, which specifically provides that in case after availing the benefits, the unit does not remain in production for next five years, the entire amount of tax benefits availed of, shall be payable along with interest – order of demand maintainable – demand of benefit availed with interest justified

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• Indian Laws

• 2016 (9) TMI 351
  Charging excess amount than MRP on beer - Legal Metrology (Packaged Commodities) Rules 2011 - Section 18 of the Legal Metrology Act, 2009 - retail dealer – retail sale – reatail sale price – whether the serving of Indian Made Foreign Liquor in a Hotel Bar licenced by the Excise authorities in the State of Kerala will come within the definition of retail sale by a retail dealer and whether the act of selling the item over and above the retail sale price would attract the vice of Rule 18 (2) of LMPC Rules read with section 18 of the principal Act? - Held that: - It cannot be said that the transaction which takes place when a customer enters the licenced premises and purchases alcohol comes within the purview of a retail sale by a retail dealer. Further, the definition of “retail dealer” and “retail sale price” takes in sale of the commodity in packaged form for the use of the ultimate consumer, and no restriction can be placed on its mode of consumption. The decision in the case The Federation of Hotels and Restaurants Association of India and Ors V Union of India [2007 (3) TMI 336 - HIGH COURT OF DELHI] has been followed - continuance of prosecution against the petitioners can only be vexatious – petition allowed – decided in favor of petitioner

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• 2016 (9) TMI 350
  Sale of the mortgaged properties set aside - orders of Debts Recovery Tribunal - HC refusing to set aside the sale of the mortgaged properties - Held that:- The offset price was fixed on the basis of a report of the Valuation Officer and in the fixation of the said price the respondents were associated being party to the proceedings before the DRT. That apart the said grievance of the respondents-borrowers must be considered in the light of the fact that the respondents-borrowers had persistently failed either to liquidate the dues or to bring a willing purchaser who could offer a reasonable price for the mortgaged properties. Insofar as the Second Schedule of Income Tax Rules, 1961 are concerned, nothing has been brought to our notice which can be construed as imposing a restriction on the Bank from participating in the bid/auction once the invitation to bid did not result in any response from any interested bidder. Rule 17 of the Second Schedule of Income Tax Rules, 1961 to which reference has been made by the High Court, in our considered view, does not impose such a restriction inasmuch as it is the Recovery Officer on whom such an embargo has been placed. In this regard the provisions of Rule 59 of the Second Schedule of Income Tax Rules, which permit the Assessing Officer to take part in the auction would be of a particular significance. In the light of the above, the conclusion of the High Court that the auction sale in favour of the Bank is vitiated on account of violation of the Rule 17 of the Second Schedule of Income Tax Rules, 1961, cannot be accepted. Both the grounds relied upon by the High Court to come to the impugned conclusion not having been found to be acceptable, these appeals have to be allowed. We, accordingly, set aside the order of the High Court.

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