TMI Tax Updates - e-Newsletter
September 18, 2017

Case Laws in this Newsletter:

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

News

• INDIA’S FOREIGN TRADE: August 2017

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Notifications

Customs

• 76/2017 - dated 15-9-2017 - Cus
  Seeks to amend certain customs notifications in pursuance to change made in Budget 2017-18.

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• 87/2017 - dated 15-9-2017 - Cus (NT)
  Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver

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DGFT

• 28/2015-2020 - dated 15-9-2017 - FTP
  Export Policy of Pulses - Removal of prohibition on export of Pulses (Toor dal, Moong and Urad) till further orders - regarding

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GST

• 35/2017 - dated 15-9-2017 - CGST
  Seeks to extend the last date for filing the return in FORM GSTR-3B for the months of August to December, 2017

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• 34/2017 - dated 15-9-2017 - CGST
  Central Goods and Services Tax (Seventh Amendment) Rules, 2017

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• 33/2017 - dated 15-9-2017 - CGST
  TDS liability under Section 51 of CGST, 2017 come into force w.e.f. 18-9-2017 - Persons liable to deduct TDS from payment made or credited to the supplier of taxable goods or services specified

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GST - States

• 10/2017-GST - dated 12-9-2017 - Assam SGST
  Seeks to extend the time limit for filing of GSTR-6.(Suppression of Notification No. 7/2017-GST).

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• 09/2017-GST - dated 12-9-2017 - Assam SGST
  Seeks to extend the time limit for filing of GSTR-1, GSTR-2 and GSTR-3.(Supression of Notification No.8/2017-GST).

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• 19/2017 - dated 11-9-2017 - Assam SGST
  Amendments in the Notification No. FTX-56/2017/14 dated 29th June, 2017 (Notification No. 1/2017-State Tax Rate) - Seeks to reduce CGST rate on specified parts of tractors from 14% to 9 %.

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• 08/2017-GST - dated 6-9-2017 - Assam SGST
  Extention of time limit for furnishing the details or return for the month of July, 2017 and August, 2017.

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• 07/2017-GST - dated 28-8-2017 - Assam SGST
  Extention of time limit for furnishing the return by an Input Service Distributor for the month of July, 2017 and August, 2017.

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• F.No.12(46)FD/Tax/2017-Pt-II-88 - dated 15-9-2017 - Rajasthan SGST
  Notifying section 51 of the RGST Act, 2017 regarding TDS.

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• F.No.12(46)FD/Tax/2017-Pt-II-87 - dated 15-9-2017 - Rajasthan SGST
  The Rajasthan Goods and Services Tax (Seventh Amendment) Rules, 2017.

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• F.No.12(46)FD/Tax/2017-Pt-II-86 - dated 15-9-2017 - Rajasthan SGST
  Exemption to a casual taxable person making taxable supplies of handicraft goods from the requirement to obtain registration under RGST Act.

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• KA.NI.-2-1278/XI-9(42)/17 - dated 7-9-2017 - Uttar Pradesh SGST
  THE UTTAR PRADESH GOODS AND SERVICES TAX (THIRD AMENDMENT) RULES, 2017

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• KA.NI.-2-1209/XI-9(47)/17 - dated 25-8-2017 - Uttar Pradesh SGST
  Amendments in the Notification No. KA.NI.-2- 848/XI-9(47)/17-U.P. Act-1-2017-Order-(15)-2017: Dated: June 30, 2017.

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• KA.NI.-2-1208/XI-9(47)/17 - dated 25-8-2017 - Uttar Pradesh SGST
  Amendments in the Notification No. KA.NI.-2- 844/X1-9(47)/17-U.P. Act-1-2017 Order-(11)-2017: Dated: June 30, 2017

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• KA.NI.-2-1207/XI-9(47)/17 - dated 25-8-2017 - Uttar Pradesh SGST
  Amendments in the Notification No.KA.NI.-2- 843 /XI-9(47)/17-U.P. Act-1-2017-Order-10-Dated: June 30, 2017,

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• KA.NI.-2-1206/XI-9(47)/17 - dated 25-8-2017 - Uttar Pradesh SGST
  Amendments in the Notification No. KA.NI.-2-842/XI-9(47) /17-U.P. Act-1-2017-Order-(09)-2017: Dated: June 30, 2017

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• KA.NI.-2-1141/XI-9(47)/17 - dated 17-8-2017 - Uttar Pradesh SGST
  Amendment in the Government notification No.KA.NI-2-836/XI-9(47)/17-U.P. Act-1-2017-Order-(06)-2017, dated 30th June, 2017 - relating to Tractors Parts.

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• KA.NI.-2-753/XI-9(15)/17 - dated 21-6-2017 - Uttar Pradesh SGST
  Supplies or taxable goods or services or both, on reverse charge basis.

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• KA.NI.-2-752/XI-9(15)/17 - dated 21-6-2017 - Uttar Pradesh SGST
  REGARDING GSTN ELECTRONIC PORTAL.

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• 10–C.T./GST - dated 11-9-2017 - West Bengal SGST
  Supersession of notification No. 07–C.T./GST, dated the 28th August, 2017 - Extension of date of furnishing of return by ISD for the month of July, 2017.

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• 09–C.T./GST - dated 11-9-2017 - West Bengal SGST
  Supersession of notification No. 08–C.T./GST, dated the 5th September, 2017 - Extension of date of furnishing details/return for the month of July, 2017.

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• 08–C.T./GST - dated 5-9-2017 - West Bengal SGST
  Supersession of Notifications No. 01-C.T./GST dated 08.08.2017, No. 02-C.T./GST dated 08.08.2017 and No. 03-C.T./GST dated 08.08.2017 - Extension of due dates for furnishing details/return for the month of July, 2017 and August, 2017.

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• 1591-F.T. - dated 4-9-2017 - West Bengal SGST
  Waiver of late fee for late filing of GSTR-3B for the month of July, 2017

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• 07–C.T./GST - dated 28-8-2017 - West Bengal SGST
  Extension of the time limit for furnishing the return by an Input Service Distributor for the months of July, 2017 and August, 2017.

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• 1483-F.T. - dated 21-8-2017 - West Bengal SGST
  Amendments in the Notification No. 1156-F.T. dated 30th day of June, 2017 - Notification regarding e-waybill for Textiles.

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Circulars / Instructions / Orders

GST - States

• TRADE CIRCULAR NO. 09/2017 - dated 4-9-2017
  System based reconciliation of information furnished in FORM GSTR-1 and FORM GSTR-2 with FORM GSTR-3B
• 07/2017-Addendum - dated 28-8-2017
  Addendum to Trade Circular No. 07/2017 dated 19/07/2017 regarding Export

Highlights / Catch Notes

GST

• GST - Generation of E-way bill / Challan shall be mandatory (irrespective of value) in case of interstate movement of goods for Job work or by exempted persons in case of handicraft goods.
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• Anti-Profiteering Authority - Certain provisions under Rules 120, 122 and 124 of GST Rules 2017 amended.
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• Revision of FORM GST TRAN-1 - option to revise the TRAN-1 once within such period as may be extended by the Commissioner in this behalf.
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• Option to avail composition scheme under GST by electronically filing an intimation in FORM GST CMP-02 and FORM GST ITC-03 upto 30-9-2017 - See Rule 3(3A)
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• TDS liability under Section 51 of CGST, 2017 come into force w.e.f. 18-9-2017 - Persons liable to deduct TDS specified.
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Income Tax

• Income from house property - property given to sister concern without charging any Interest - inclusion of Interest of investments (deemed income) - Estimation of Annual Value - determination of rate of interest for addition - 8.5% additions confirmed.
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• Addition u/s 68 - unexplained cash credit - Many of the bank slips were signed by one person - The demand drafts were issued by Wadhwan city branch of the bank whereas the applicants were living at different places such as Kherwa, Patdi, Nana Ankleshwar, etc. - additions confirmed - HC
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• Pre-deposit - When the petitioner had no idea on what grounds the authorities primafacie thought that the standard formula of granting stay on depositing 15% of the disputed tax demand would not be appropriate, it was incumbent upon the Revenue to put such reasons to the petitioner enabling the petitioner to meet with such grounds and oppose higher collection by raising suitable defense - HC
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• Benefit of Amnesty scheme - Penalty u/s 271D and 271E - the exclusions from the Scheme, that are enumerated in Section 208 of the Finance Act, 2016, do not expressly provide for the exclusion of a declaration, such as those filed in the instant writ petition, where the amnesty is sought only in respect of a penalty that is imposed under the Income tax Act. - HC
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• Denying exemption U/s 11 - proof of charitable activities - Since, the principle of mutuality was not violated then in the said circumstances the case of assessee is liable for exemption u/s 11. Even a single instance is not on the file which may describe this fact that the assessee has been involved in the trade, business and commerce.
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Case Laws:

• Income Tax

• 2017 (9) TMI 851
  Reopening of assessment - proof of failure on the part of the Assessee ‘to disclose fully and truly all material facts necessary for the assessment' - Held that:- Nothing prevented the AO from undertaking a detailed inquiry into the list of creditors provided by the Assessee in response to the questionnaire. It is not for the Assessee to suggest to the AO how he should conduct the inquiry. There was no failure by the Assessee to fully and truly disclose all material facts necessary for the assessment. Since the pre-requisites for assumption of jurisdiction under Section 147 of the Act were not fulfilled, the Court has no hesitation in quashing the impugned notice dated 30th March 2016 issued to the Petitioner by the AO under Section 148 (1) of the Act and all proceedings consequent thereto. - Decided in favour of assessee.

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• 2017 (9) TMI 850
  Assessment u/s 153A/153C - proof of incriminating material in support of the additions made under Section 68 and under Section 14A - Held that:- Additions made by the Assessing Officer were in the absence of any incriminating material. Therefore, they are not sustainable and they came to be deleted. We do not think that any view other than the one taken by the Division Bench of this Court in the case of The Commissioner of Income Tax, Central­-IV vs. M/s. SKS Ispat & Power Limited [2017 (7) TMI 813 - BOMBAY HIGH COURT] or the reported judgment in Continental Warehousing Corporation and All Cargo Global Logistics (2015 (5) TMI 656 - BOMBAY HIGH COURT ) can be taken. Tribunal has not committed any error because the addition made under Section 68 of the IT Act deserves to be deleted. See Govind Agarwal (HUF) vs. DCIT [2013 (5) TMI 874 - ITAT MUMBAI ] - Decided against revenue

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• 2017 (9) TMI 849
  Settlement Commission Orders - Commission declared that the proceedings had abated due to non compliance by the petitioner with the provisions of section 245D(2D) of the Act and the Assessing Officer would now dispose of the case in accordance with the provisions of subsections 2, 3 and 4 of section 245HA - Held that:- The statute does not make any distinction whether the proceedings were pending before the Settlement Commission at prehearing stage or at the stage where the hearing was over and the case was pending for disposal by the Settlement Commission. The defence that the petitioner was not aware about the pendency of such proceeding ignores the documents on record. On 13.7.2007, the Settlement Commission had conveyed to the petitioner that there would be a further hearing on 7.8.2007. The footnote though was scored out in the copy forwarded to the petitioner obviously, because this did not concern the petitioner, did contain a reference to the CIT to state on the next date of hearing whether the requirement of payment of tax and interest as contained in subsection( 2D) of section 245D has been fulfilled by the petitioner. As is evident from the petitioner's letter dated 31.7.2007 written to the Settlement Commission in response to the said communication, the petitioner received the same on 13.7.2017 itself. Well before the final date of 31.7.2017 for payment of additional tax and interest, the petitioner at any rate was aware that the proceedings before the Settlement Commission was not yet disposed of. The petitioner therefore had the responsibility to pay the tax and interest as provided in section (2D) of section 245D of the Act. The petitioner failed to comply with such requirement. In terms of subsection( 1) of section 245HA therefore, the settlement proceeding would abate. This was automatic. The Settlement Commission by the impugned judgment merely made a declaration of abatement which had even otherwise come about by virtue of operation of law. The Settlement Commission had no other alternative. The alternative request of preventing the income-tax authority from using the material on record before Settlement Commission cannot be accepted in terms of plain language used in subsection( 3) of section 245HA of the Act. As noted, the petitioner has not challenged the vires of this provision.

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• 2017 (9) TMI 848
  Revision u/s 263 - admissibility of deduction claimed u/s 80IC was not properly examined during the course of assessment proceedings - order erroneous and prejudicial to the interest of Revenue - Held that:- In the instant case in the show cause notice issued, the Ld. CIT raised the fact that eligibility of deduction under section 80IC of the Act remain unexamined at the time of assessment. In our opinion, the audit report under section 10CCB and list of industries to be enclosed with license certificate issued by the drug license and controlling authority was necessary for examination of the claim of deduction under section 80IC of the Act and therefore no new issue has been raised by the CIT other than the issues raised in the show cause notice. The arguments of the Ld. counsel are not accepted and the decision relied upon by the Ld. counsel is not applicable over the facts of the instant case. In view of the above discussion, we are of the opinion that not examining the eligibility of deduction under section 80IC of the Act by the AO in the instant case had rendered the order of the AO not only erroneous but also prejudicial to the interest of Revenue, accordingly, CIT had correctly invoked the provisions of Section 263. Accordingly, the grounds of the appeal are dismissed.

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• 2017 (9) TMI 847
  Long term capital gain addition - FMV enhancement - reducing cost of acquisition of the impugned capital asset sold as on 01.04.1981 from ₹ 25,78,300/- @ ₹ 700/- per sq.yd. to ₹ 7,35,750/- only @ ₹ 250/- per sq.yd - Held that:- No reason or justification on assessee’s part in seeking to enhance fair market value of his plots sold to ₹ 700/- despite the fact that the same location suffers from various depreciating factors as well as its distance from main road seeming to be at least between 500 to 1kmtr. These crucial facts make it clear that the assessee’s plot did not enjoy much commercial value since sandwiched between Sabarmati river on the one hand and Ashram Road on the other. There is further no material that the said plot’s value in anyway suffered because of Urban Land Ceiling Law or its effect thereupon. We therefore do not find any justification in travelling further to adopt valuation of “Natraj or G. S. Shodhan” situated at much far distance in a different locality & scheme than the above sample plot. The assessee’s assertions in this regard based on coloured material and other documents are accordingly rejected. Whether both the lower authorities have correctly valued assessee’s plot @Rs.250/- only than the above sample property sold on 01.10.1981 @Rs.484.10/- per sq.mtr.? - Held that:- Although the assessee’s valuation @Rs.700/- cannot be accepted in toto so are both the lower authorities’ findings drastically reducing the above valuation to ₹ 250/- only without any concrete evidence. All this makes us to observe that application of thumb rule in such a case would meet larger interest of justice. We therefore take average of sale price of ₹ 484.10/- per sq.mtr. and the price in question taken by the lower authorities @Rs.250/- ; coming to ₹ 367.05 per sq.mtr. as the appropriate fair market value of the assessee’s property as on 01.04.1981. We make it clear that our instant adjudication is based on the above peculiar facts and circumstances shall not be treated as a precedent. The Assessing Officer shall accordingly finalize consequential computation. The assessee therefore partly succeeds on merits. The assessee’s first plea is that the Assessing Officer could not have interfered in registered valuer’s report u/s.55A(a) of the Act since the amendment in question authorizing him to proceed on such basis w.e.f. 01.07.2012 does not apply with retrospective effect. We however notice that clause(b) sufficiently answers assessee’s former legal plea being inclusive in nature since having crucial expression “in any other case”. Same is the outcome of assessee’s latter legal argument that it was mandatory for the Assessing Officer to make reference to the DVO in view of our sufficient discussion on merits supporting both the lower authorities’ action on merits since the above registered valuer’s report did suffer from apparent irregularities. The assessee’s two legal contentions are therefore rejected. Section 54EC deduction disallowance - Held that:- Learned Departmental Representative strongly seeks to revive the impugned deduction disallowance on the ground that the assessee has invested his impugned capital gains in two sets of investments of ₹ 50lacs each in as many financial years; although within six months of the same arising from sale of the abovestated capital asset. We however notice that a co-ordinate bench in case of Jyotikaben Bhupendrbhai Shah (2014 (9) TMI 495 - ITAT AHMEDABAD ) has already decided the very issue in assessee’s favour thereby accepting an identical claim of Section 54EC deduction. Learned Departmental Representative fails to indicate any distinction therein or any judicial precedent in hon’ble jurisdictional high court or that of hon’ble apex court. We therefore affirm the CIT(A)’s findings under challenge - Decided against revenue

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• 2017 (9) TMI 846
  Penalty u/s 271(1)(c) - unexplained cash credit under section 68 - benefit of Direct Tax Dispute Resolution Scheme, 2016 and Pr. CIT, Noida has issued certificate in favour of assessee - Held that:- The assessee has filed copies of sections 202 and 203 of the Direct Tax Dispute Resolution Scheme, 2016 and explained that the above Scheme will supersede the provisions contained under the Income Tax Act on filing the declaration and accepted by the Designated Authority. The Rule also provides for deeming withdrawal of the appeals when declaration is filed in specified Form and accepted by the Designated Authority. The Scheme also provides that no Appellate Authority shall decide the appeal on any issue relating to the specified tax mentioned in the declaration and in respect of which an order has been made under section 204 by the Designated Authority or the payment of same determined under that Section. The assessee, therefore, explained that these special Scheme would prevail the provisions of Income Tax Act and the appeal pending before Ld. CIT(A) shall be deemed to have been withdrawn. However, these submissions have not been made by the assessee before the Ld. CIT(A) and assessee did not appear before Ld. CIT(A) to appraise him of all the relevant provisions of the special Scheme enacted by the Direct Tax Dispute Resolution Scheme, 2016. The assessee also did not make request to withdraw appeal. The matter therefore, requires reconsideration at the level of the Ld. CIT(A). Accordingly, set aside the order of the Ld. CIT(A) and restore the appeal of assessee to his file with a direction to re-decide the appeal of the assessee considering the objections of the assessee now raised before the Tribunal. Assessee is directed to cooperate with the Ld. CIT(A) for finalization of the matter. Ld. CIT(A) shall give reasonable, sufficient opportunity of being heard to the assessee and A.O. Appeal of assessee is allowed for statistical purposes.

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• 2017 (9) TMI 845
  Capital gain computation - fair market value issue as on 01.04.1981 qua the impugned capital asset sold in the relevant previous year - Held that:- There is hardly any quarrel that both the lower authorities have made it clear in their respective orders that the very issue had arisen in preceding assessment years (supra). Mr. Soparkar at this stage refers to this tribunal’s order in assessment year 2008-09 and 2009-10 pertaining to assessee’s appeal itself has decided on 11.04.2016 adopting the said cost of acquisition as on 01.04.1981 has to be ₹ 980/- per sq.mtr. Both parties fail to indicate any distinguishing facts in the impugned assessment year. We therefore direct the Assessing Officer to adopt cost of acquisition on assessee’s capital asset as on 01.04.1981 @ ₹ 980/- per sq.mtr. to be followed by re-computation of capital gains. The assessee partly succeeds in its grievance whereas Revenue’s corresponding substantive ground is declined. Disallowing refund money paid back to its vendee within two days from both sale deed and MOU as expenditure u/s.48 (i) &(ii) - Held that:- It emerges from assessee’s registered agreement to sale dated 28.07.2008 at page 102 containing clause 9 that the vendee had agreed to purchase the land in the same zone i.e. industrial than commercial on as it is basis. The said vendee further undertook to bear all liabilities/responsibilities of costs and expenses etc. for the purpose getting approval relating to abovestated conversion. Page 106 reveals that the assessee had already received advance payment of ₹ 19,15,38,000/- by the date of agreement to sale forming more than half of the total sale price. It admittedly executed conveyance deed thereafter on 02.04.2009 without even an iota of mention therein about its MOU of the same date wherein it agreed to pay the amount in question of ₹ 2,33,98,605/- in the nature of retention money in case revised permission of conversion of the asset in question from industrial to commercial did not come within 180 days. We therefore see no merit in its contention raised that it had to part with the impugned sum as an obligation in the nature of retention money. Assessee has not been able to prove that the impugned expenditure to be falling under Section 48 (i) & (ii) of the Act for the purpose of computing consequential capital gains. Correctness of Section 14A disallowance followed by consequential addition in book profits u/s.115JB - Held that:- CIT(A) deletes the impugned disallowance on the ground that the assessee has not derived any exempt income in the impugned assessment year. He follows hon’ble jurisdictional high court’s decision in CIT vs. Corrtech Energy Pvt. Ltd.’s case [2014 (3) TMI 856 - GUJARAT HIGH COURT ]. The same factual position continues herein as well wherein the Revenue fails to quote any judicial precedent overruling the above legal proposition. We therefore see no reason to interfere in CIT(A)’s conclusion deleting the impugned addition. The Revenue’s fourth substantive ground is therefore declined whereas assessee’s substantive ground is dismissed as rendered infructuous being consequential in nature. Expenditure on various heads like barricading of main gate side with material and labour work, scooter parking shed opposite main gate, waterproofing of civil work of boiler house - Held that:- Uphold the CIT(A)’s order treating the impugned repair expense as revenue in nature

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• 2017 (9) TMI 844
  Addition u/s 14A r.w. Rule 8D - application of own fund to earn the exempt income - Held that:- CIT(A) nowhere applied the provision of section 14A r.w. Rule 8D of the Act properly. It has also not been observed that the assessee has applied his own fund to earn the exempt income or not. No satisfaction was recorded to decline the claim of the assessee if any. The facts are not disputed. The application of the funds have nowhere bifurcated. Since, there is no proper application of the provision u/s 14A r.w. Rule 8D of the Act, therefore, we are of the view that the finding of the CIT(A) is not correct and is not liable to be sustainable in the eyes of law. Therefore, in the said circumstances, we set aside the finding of the CIT(A) on this issue and restored the issue before the AO to decide the matter afresh by giving an opportunity being heard to the parties in accordance with law. Accordingly, the appeal of the revenue is hereby allowed. Loss occurred in trading of futures and Options - claimed as speculation loss in Return of Income - Held that:- We noticed that the AO has already allowed the claim of the assessee for the A.Y 2007-08 and 2010-11 and specifically held that the income from F & O activities pertain to the head of business and not speculation. In the A.Y. 2007-08. AO has held that the as per Section 43(5) of the Act, loss in deviating trading is a business loss and therefore as per section 71 the same has to be set off against the income under any other head except salary. So the mistake was found apparent on record which is required to be rectified. Accordingly, the CIT(A) directed the AO to verify the record produced by assessee in respect of loss arising from F & O activities and allow the same as business loss rather than speculative loss as inadvertently claimed by assessee. The factual position is not different at this stage. No doubt, the assessee raised the wrong claimed which has not been ordered to be rectified by the CIT(A) in accordance with law. Therefore, the finding no irregularity and illegality in the order passed by the CIT(A) on this issue we confirmed the finding of the CIT(A) on this issue and decided this issue in favour of the assessee

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• 2017 (9) TMI 843
  TDS u/s 194C - expenses on account of Hire Charges U/S 40(a)(ia) for non deduction of TDS - assessee has obtained form No.15-1 from the sub-contractors - Held that:- Once assessee has obtained form No.15-1 from the sub-contractors whose contents are not disputed or whose genuineness is not doubted then assessee is not liable to deduct tax from the payments made to sub-contractors. Once assessee is not liable to deduct tax u/s 194C then disallowance u/s 40(a)(ia) cannot be made. We also found that the assessee has also brought to the notice of AO vide letter dated 06/12/2010 that recipient of higher charges do not own more than two vehicles. Affidavits to this effect in support of its contention was also filed before the CIT(A). The issue under consideration is directly covered by the decision in the case of Valibhai Khanbhai Mankad vs. DCIT (ITAT) [2011 (4) TMI 887 - ITAT, AHMEDABAD]. Accordingly, we direct the AO to delete disallowance made u/s.40(a)(ia). Addition in respect of the amount deposited in the bank account - Held that:- Both accounts are duly disclosed in the balance sheet. Form the above details it is clear that cash deposited in the Shamrao Vitthal Co Op bank is out of the cash balance available with the assessee and are duly disclosed in the books of accounts. Accordingly AO is directed to delete the addition so made Disallowance 10% of the expenditure - Held that:- Total expenditure of ₹ 48,21,503/- was debited by the assessee in its profit and loss account. The AO has detailed this expenditure in para 7 of his order and after observing that assessee has failed to submit details of expenses and bills / invoices etc., he made an estimated disallowance of 10% of these expenses. However, looking the quantum of income earned by assessee vis-à-vis nature and amount of expenditure incurred to earn the same, we deem it appropriate, considering the totality of facts and circumstances of the case to reduce the disallowance from 10% to 5%. Accordingly, we confirm the disallowance so made by the AO to the extent of 5%. Appeal of the assessee allowed in part.

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• 2017 (9) TMI 842
  Addition on account of capital gain - STCG OR LTCG - transfer u/s 2(47) - Held that:- We are of the view from the intend and purpose of the agreement to sell deed 19-07-2004 and subsequent cancellation dated 03-12-2008 that the parties never acted on the agreement and sale was never completed. Accordingly, we are of the view that the subsequent transfer effected by the assessee vide agreement dated 03-12-2008 for a sum of ₹ 75 lacs is to be considered as long term capital gain. In view of the above, we direct the AO to assess the capital gain as long term capital gain instead of short term capital gain for the entire property which is under dispute. We direct the AO accordingly. The appeal of the assessee is allowed.

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• 2017 (9) TMI 841
  Income from house property - property given to sister concern without charging any Interest - inclusion of Interest of investments (deemed income) - Estimation of Annual Value - determination of rate of interest for addition - Held that:- tribunal has already dealt with all these arguments in arriving at interest rate of 8.5% to form reasonable basis - We therefore direct the Assessing Officer to pass consequential order accordingly adopting 8.5% as the rate of return. Rest all other substantive grounds stand rejected in both these cross appeals.

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• 2017 (9) TMI 840
  Surplus arising from sale of shares and securities - short terms capital gains OR income from business - period of holding - Held that:- CIT (Appeals) and the Tribunal having applied parameters on the facts of the case and having come to the conclusion that the assessee's stand that the shares were held by way of investment and therefore the sale thereof should result in long term capital gain instead of business income, calls for no interference. Addition u/s 68 - Held that:- Tribunal confirmed the view of the CIT (Appeals) that the Assessing Officer had made the additions only on the presumption that the loan was not found reflected in the balance-sheet of the donor which was wrong presumption. The Tribunal confirmed the view of the CIT (Appeals)) that the assessee had demonstrate the genuineness of the transaction as also the reliability and creditworthiness of the donor. Such being the facts, no question of law arises.

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• 2017 (9) TMI 839
  Addition u/s 68 - unexplained cash credit - source of money received in share applications etc - Held that:- In some of the cases, signature of the applicants in the bank slip differ with the application in the share application form. Many of the bank slips were signed by one person. Apparently, cash for 32 applicants was handed over by one person of the entire amount. The demand drafts were issued by Wadhwan city branch of the bank whereas the applicants were living at different places such as Kherwa, Patdi, Nana Ankleshwar, etc. Learned counsel for the appellant however, relied on decision of Supreme Court in case of Commissioner of Incometax v. Lovely Export(Private) Limited [2008 (1) TMI 575 - SUPREME COURT OF INDIA ]. Such judgment however, cannot be applied in a case where the genuineness of the investors in under serious doubt and Revenue after giving reasonable opportunity to the assessee and on the basis of materials collected, has come to the conclusion that the investors were not genuine which finding the Tribunal has confirmed - Decided against the assessee.

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• 2017 (9) TMI 838
  Pre-deposit - Limit the requirement of predeposit pending petitioner's appeal against the order of assessment to 15% of the demand came to be rejected - rejecting the request of the petitioner was that he could not demonstrate any financial hardship - Held that:- Financial hardship need not be the sole ground on which increase in predeposit of 15% can be opposed. Further, if the petitioner was not interested in personal hearing, his written submissions could and should have been taken into consideration before deciding his request. As noted, the Assessing Officer in the present case proposed collection of amount pending appeal at the rate of 50% of the disputed demand. He also obtained approval of the Commissioner in terms of the said circular which must have been by citing his reasons. The Principal Commissioner or any other authority without disclosing such reasons which had weighed with the Assessing Officer and which had persuaded the Commissioner to authorize the Assessing Officer to increase the demand from the petitioner, confirmed the demand rejecting the petitioner's objections. This was in breach of principles of natural justice. When the petitioner had no idea on what grounds the authorities primafacie thought that the standard formula of granting stay on depositing 15% of the disputed tax demand would not be appropriate, it was incumbent upon the Revenue to put such reasons to the petitioner enabling the petitioner to meet with such grounds and oppose higher collection by raising suitable defense. In the result, impugned order dated 30.06.2017 is set aside. The Principal Commissioner shall pass a fresh order after first providing the reasons which had weighed with the Assessing Officer in proposing and the Principal Commissioner in approving collection of 50% of the demand pending appeal to the petitioner, giving him reasonable time to respond.

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• 2017 (9) TMI 837
  Application for issuing notification under section 80IA( 4)(iii) rejected - documents accompanied by the representation of the petitioner not taken into account before rejection of the application - Held that:- The documents accompanied by the representation of the petitioner dated 21.4.2014 were not taken into account before rejection of the application of the petitioner. The petitioner has not been able to produce any conclusive proof of the service of the said communication dated 21.4.2014 to the authority. Nevertheless, when there is no time limit fixed either in the legislature or in the scheme for production of documents in support of the application for issuing notification, in the larger interest of justice, we would request the authority to consider such additional documents before taking a fresh final decision. Terminating the case of the petitioner without considering the additional documents sought to be relied upon, only on the ground that the petitioner failed to prove conclusively that such documents were inwarded before the authority before the final order of rejection was passed, would be just too harsh. Under the circumstances, impugned order dated 13.5.2014 is set aside. The authority shall pass fresh order after considering the additional documents accompanying the petitioner's representation dated 21.4.2014 made in response to the summons dated 16.4.2014

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• 2017 (9) TMI 836
  Grant of exemption/according recognition - date on which the Himachal Pradesh Road Transport Corporation General Provident Fund Trust, came to be created vide Trust Deed - Held that:- The efficacy of such recognition under the Act, 1952, was till the formation of the Trust which was as of 01.04.1998. It is not that at no point in time, recognition either under the provisions of the Act, 1952 or Income Tax Act, 1961 was accorded to the petitioner. At this point in time, it be also observed that the Mandi Kullu Road Transport Corporation and the Himachal Government Transport were amalgamated with the formation of a new body known as Himachal Road Transport Corporation w.e.f. 01.10.1974. From the order dated 25.06.2008, so passed by the Central Board of Direct Taxes, we find that there is no discussion or finding on these aspects and all this despite petitioner having urged the same in the grounds of appeal. As such, on this short ground alone, without adjudicating the petition on merits, more specifically, applicability of Rule(s) 77/78 of the Income Tax Rules, 1962, we dispose of the present petition with a direction to the Central Board of Direct Taxes to take a fresh decision pertaining to the period 01.04.1998 till 30.10.2002. Parties to appear before the Board on 17.10.2017. Decision be taken within a period of three months thereafter.

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• 2017 (9) TMI 835
  Benefit of Amnesty scheme - Penalty u/s 271D and 271E - The Direct Tax Dispute Resolution Scheme, 2016 - petitioners had offered to pay 25% of the mandatory penalties - Held that:- The issue is no longer resintegra, as the same has been decided in case Ms. Grihalakshmi Films [2017 (7) TMI 732 - HIGH COURT OF KERALA] wherein held a person, who defaults on the tax and interest liability under the Income Tax Act for the assessment year, cannot claim the benefit of amnesty in respect of the penalty alone. It is also significant to note that the exclusions from the Scheme, that are enumerated in Section 208 of the Finance Act, 2016, also do not expressly provide for the exclusion of a declaration, such as those filed in the instant writ petition, where the amnesty is sought only in respect of a penalty that is imposed under the Income tax Act. Going by the authoritative pronouncement, this Court is of the opinion that, there is no scope for restricting the interpretation given to the scheme and that the penalty as levied under Sections 271D and 271E of the Act also could be settled under the Scheme. Hence, Exts.P9 and P10 are set aside.

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• 2017 (9) TMI 834
  Assessment u/s 153C r.w.s. 143(3) - assessment framed not based on any incriminating material/document - Held that:- Notice u/s 143(2) became time barred as on 30.11.2007, whereas search took place much later on 31.10-2009. Therefore, it follows that as on the date of search, there was no pending assessment. Subsequently, the A.O. initiated proceedings under s. 153A and in the assessment completed under s. 143(3) r.w.s 153A without any incriminating material found during the course of search and addition of ₹ 1.50 crore was made on the basis of disclosed loan of this amount in the audited accounts. Once this is the position the issue is clearly covered in favour of assessee and against the Revenue by the decision of Hon’ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. 2015 (5) TMI 656 - BOMBAY HIGH COURT). Respectfully, following the same and in the given facts, we are of the view that this loan of ₹ 1.50 crore accounted for in the balance sheet for the year ending 31-03-2006 is disclosed in the return of income as evidence by the audited accounts and which has not been abated, the amount of loan cannot be added. Accordingly, we reverse the orders of CIT(A) as well as that of the AO and delete the addition made by the AO. This jurisdictional issue of the assessee’s appeal is allowed.

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• 2017 (9) TMI 833
  Denying exemption U/s 11 - proof of charitable activities - nature of activities - principle of mutuality violation - Held that:- The receipt from member, fees from guest of members, compensation from caterers, locker rent, sundry receipts nowhere falls in the category of trade business and commerce. Nothing came into notice that the assessee has changed its object. The object of the assessee trust has duly been described in the memorandum of association and the expenditure seems to its ancillary sports activities as mentioned in the memorandum of association which fail in the nature of general public utility ancillary to a dominant object. Assessing Officer nowhere gave his finding that the trust was providing the service to the outsider also and was involved in the activity of profit and also nowhere pointed out that the service of the restaurant, swimming pool etc. was provided to the outsider other than the member and family members and guest of the members also. Since, the principle of mutuality was not violated then in the said circumstances the case of assessee is liable for exemption u/s 11. Even a single instance is not on the file which may describe this fact that the assessee has been involved in the trade, business and commerce. It is also came into notice that the revenue allowed the claim of the assessee in the earlier years and also allowed the claim of the assessee for the A.Y. 2010-11 u/s 143(3). There is no factual change in the activity of assessee in the current year. Taking into account of all the facts and circumstances of the case, we are of the view that the claim of the assessee has wrongly declined, therefore, the finding of the CIT(A) is wrong and against law and facts and is not liable to be sustainable. - Decided in favour of assessee.

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• 2017 (9) TMI 832
  Claim of assessee towards deduction u/s 80IA(4) - ‘eligible profits’ for claim of deduction u/s 80IA(4) r.w.s.80IA(8) in respect of assessee’s Captive Wind Power Plant - Held that:- Deemed sales price of the power supplied by independent power plants excluding the cost towards surcharge and duty etc. levied by the supplier should be adopted for the purposes of determination of “market price” for computation of eligible profit under s.80IA(4) r.w.s.80IA(8) of the Act. Thus we are in agreement with the contentions on behalf of the assessee that for the purposes of determination of ‘market value’ of goods/services of eligible business, it is the sale of price at which the Electricity Board supplies electricity to its consumer which will be taken as market price, subject however, to the exclusion of surcharge, duty etc. thereon. The issue is thus accordingly restored back to the file of the AO for determination of eligible profit for the purposes of deduction under s.80IA(4) - Appeal of the assessee is allowed for statistical purposes.

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• 2017 (9) TMI 831
  Addition u/s 14A read with Rule 8D - AO made disallowance without recording his dissatisfaction on any cogent ground - Held that:- The findings returned by AO that, “balance disallowance to the tune of ₹ 6,41,37,885/- needs to be disallowed as per Rule 8D” are not sustainable in the eyes of law as there is not an iota of reasons of dis-satisfaction recorded by AO as to work out of disallowance of ₹ 1,63,779/- voluntarily made by the assessee itself because sub-section (2) & (3) of section 14A with Rule 8D of the Rules has only prescribed a formula for determination of an expenditure to earn the income which does not form part of the total income under the Act, which can only be invoked if the AO is not satisfied with the claim of the assessee. The assessee has come up with specific argument that it has not incurred any interest cost for earning exempt income but this plea of the assessee has also been brushed aside by the AO without recording any reason of dis-satisfaction. Moreover, when the assessee is having ample cost free funds to the tune of ₹ 6049.43 crores and had not made investment to earn exempt income as on 31.03.2011, but in its subsidiaries for commercial expediency, the question of disallowance under Rule 8D does not arise. AO has made disallowance without recording his dissatisfaction on any cogent ground and without disputing the computation of disallowance made by the assessee itself rather subjectively written that, “the balance disallowance was to be worked out in view of the provisions contained u/s 14A read with Rule 8D” which is not sustainable in the eyes of law. - Decided in favour of assessee.

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• 2017 (9) TMI 830
  Disallowance u/s 14A - no exempt income earned or receivable by the assessee in the instant year - Held that:- The controversy before us is directly covered by the judgments of the Hon'ble Madras High Court in the case of Redington (India) Ltd.(2017 (1) TMI 318 - MADRAS HIGH COURT) as well as Chettinad Logistics (P) Ltd., (2017 (4) TMI 298 - MADRAS HIGH COURT). The provisions of Rule 8D of the Rules does not come to the rescue of the Revenue in order to make disallowance under section 14A in the absence of any exempt income earned by the assessee in the relevant year. In our considered opinion, the aforesaid judgment of the Hon'ble Madras High Court clearly militates against the Grounds sought to be raised by the Revenue before us. Apart therefrom, the Hon'ble Delhi High Court in the case of Cheminvest Ltd. Vs. CIT (2015 (9) TMI 238 - DELHI HIGH COURT) also supports the proposition laid down in the two judgments of the Hon'ble Madras High Court. - Decided in favour of assessee.

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• 2017 (9) TMI 829
  Default u/s. 201(1) & 201(1A) - assessee is a bank where TDS was not deducted on interest earned on FDRs to its customers - reason for non-deduction of tax at source was stated to be the submission of Form 15G/15H by the customers - Held that:- Undisputedly assessee has submitted the Forms 15G/15H before the AO, but it was not considered on account of its non-submission in time before the jurisdictional CIT and the AO passed an order u/s. 201(1) & 201(1A) of the Act raising a demand therein. The assessee again filed the said Forms before the CIT(Appeals), but he did not take cognizance of the same and confirmed the order of AO. Since the assessee has filed the Forms 15G/15H on account of which TDS was not deducted, the lower authorities should have examined the same. Since the assessee has already filed the Forms 15G/15H before the lower authorities, we are of the view that the said Forms be examined by the AO and if the said Forms are found to be correct on verification, the assessee cannot be held to be in default and no demand should be raised u/s. 201(1) & 201(1A) of the Act. Otherwise, the AO may act in accordance with the law. Accordingly, the order of CIT(Appeals) is set aside and the matter is restored to the file of Assessing Officer to readjudicate the issue afresh in the terms indicated above, after affording opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes

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• Customs

• 2017 (9) TMI 907
  100% EOU - import of equipment availing benefit of N/N. 153/93-CUS dated 13/08/1993 - appellant has failed to fulfill their export obligation under Notification - auction - sole contention of the appellant is that as they could not repay the loan of the Vijaya Bank and bank took over the possessing property which has been auctioned - Held that: - the auction took place on 05/12/2011, whereas the appellant intimated to the Department that proceedings are going with the Debt Recovery Tribunal only on 04/05/2012 which is almost six months after the auction of the land and building with installed of the equipments in question. Admittedly there were lapses on the part of the appellant, as appellant fail to inform the Department immediately when they were declared NPA by the bank. Further, it is a fact on record that appellant has failed to discharge their export obligation, in that circumstances duty is rightly demanded on the goods in question which were imported duty free. The equipments in question are held liable for confiscation as these equipments did not use for intended purpose - As goods has been confiscated, the same is the property of the Revenue and the goods can be redeemed on payment of redemption fine as imposed in the impugned order. Penalties - Held that: - the appellants has failed to discharge their export obligation in terms of N/N. 153/93-CUS dated 13/08/1993, in that circumstances, the penalties are imposable on the appellants - the penalties imposed on the appellants are on higher side, therefore, penalties on the appellant M/s Ishan System Pvt. Ltd. is reduced to ₹ 15 lakhs and ₹ 1 lakh in the case of Shri Rukum Singh Yadav, Director of the main appellant. Appeal allowed - decided partly in favor of appellant.

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• 2017 (9) TMI 906
  Refund of SAD - N/N. 102/2007-CUS dated 14/09/2007 - rejection on the ground that the DEPB strips/reward scheme strips cannot be reused for refund of 4% of SAD - Held that: - The appellant should have been provided sufficient opportunity to produce all the relevant documents. Similarly non submission of self declaration in Annexure-I can also be rectified by giving the appellant an opportunity and cannot be made ground for rejection - appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 905
  EPCG scheme - N/N. 111/95-Cus dated 05.06.1995 - import of Capital Goods - zero rate of duty - denial on the ground that condition No. 6 of the Notification has not been fulfilled - Held that: - both zero rated EPCG licences were meant for the same export products and the total utilized value of both the zero duty licences put together exceeds ₹ 20 Crores, the Committee decided to permit the appellant to retain the facility of zero duty benefit against EPCG licence dated 11.10.96. The capital goods which were imported have been put to intended use and the goods manufactured out of the same have been exported and the obligation of export has been discharged duly by the licensing authority vide letter date4d 24.10.2005. The said letter recognizes the fulfillment of export obligation under the EPCG licence dated 11.10.96 and advised the appellants to approach the customs authorities for release of B.G./LUT executed - In the present case, there is no findings that the said licences were held to be invalid by any competent authority. We are not in agreement with the findings of the original authority who declined to consider the communications issued by the licensing authority and proceeded on independent interpretation on Customs Notification, which does not stand legal scrutiny. The licence which was validated is for the said notification only. Demand set aside - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 904
  Absolute confiscation - Import of prohibited item - used dialysis machine - case of appellant is that the goods should be allowed to be redeemed for use with redemption fine and penalty - Held that: - the equipment is the life saving equipment. It would be advisable and proper to obtain expert opinion instead of presuming or inferring the scope of the equipment. As such, we find that based on the above admitted facts, it is necessary to take an expert opinion before contesting scope of prohibition and also possibility of redeeming such goods for home consumption. The practice followed in respect of other consignments of similar goods is also to be examined - the original assessing authority directed to obtain an expert opinion and to examine such opinion along with the claim of the appellant regarding permission granted to similarly placed imports for clearance of identical goods by Chennai Customs on fine and penalty - appeal allowed by way of remand.

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• 2017 (9) TMI 903
  Redemption Fine - penalty - mis-declaration of classification of goods - undervaluation - Held that: - the Assistant Commissioner (Import) has observed that the charge of mis-declaration and mis-clasification is not sustainable against the appellant. Redemption fine - Held that: - there is no mis- declaration, therefore, provision of Section 111 (m) are not invokable to the facts of the case. In that circumstances, no redemption fine is imposable on the appellant. Penalty - Held that: - provision of the Section 112 (a) has been invoked which provides that if any goods which is prohibited goods, in that case penalty is imposable. Admittedly, the goods in question are not prohibited goods, therefore, provision of Section 112 (a) (i) of the Act are not applicable to the facts in this case. Redemption fine and penalty set aside - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 902
  Valuation of imported goods - used Konica Minilab System comprising of Printer processor and Film processer with standard accessories - Held that: - there will be no other option and further since the value declared by the importer has not been disproved in any other manner by the department, the same will then necessarily have to be accepted as the transaction value of the goods. The import has been made in the year 1996 and this dispute has been festering for over two decades. In fact this is the second time that the matter has been come up to the Tribunal. In spite of the clear and cogent directions of the Hon’ble High Court, the denovo adjudication, in our view is found wanting and has not addressed the evidences provided by the importer. The declared values have not been satisfactorily demolished or disproved by the department, as per the parameters laid down by the Hon’ble High Court, there will only be one option left, viz., to accept the declared invoice/imported price as the transaction value and calculate duty liability accordingly. This, in our view is the only way to bring closure to this abssymally long pending dispute. The import/invoice values declared by the appellant as the basis of arriving at the assessable value accepted - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 901
  Valuation - related party transaction - comparable prices - import of foreign scotch - Though the principal company was registered in USA, but the goods were imported from Scotland by making the payment in foreign currency i.e. British pound. The invoices produced by the assessee-Appellants were rejected by the Customs Department and had taken the value from their own resources which were on higher side - Held that: - an identical issue has come up before the Hon’ble Supreme Court in the case of Pernod Ricard India (P) Ltd. [2010 (7) TMI 467 - SUPREME COURT OF INDIA], where it was held that the Tribunal erred in re-opening and examining afresh the question as to whether or not the value of CAB could be determined by applying Rule 6 and, therefore, the objection of the revenue in that regard deserves to be accepted. Principles of Natural Justice - supply of comparable chart - Held that: - the considerable time has already been lapsed and the assessee-Appellants have not asked the relevant material in the first round of litigation before the Tribunal as well as before Hon’ble Delhi High Court to support his arguments. At this belated stage, demanding of the documents i.e. comparable chart is nothing but a dilatory tactics just to delay the proceedings as the period under consideration starts from 2003. The original authority has already given the chart by mentioning that the “Concentrated Alcohol Beverages‟ (CAB) was diluted upto 60% concentrate. There is no reason to interfere with the impugned order pertaining to the comparison of the price. It may be mentioned that the Department has not taken care of inflation in the price. The prices available in the year 1999 were applied in the year 2003 to 2011. If the prices have gone down in the subsequent period (under consideration), then the assessee-Appellants have not provided any comparable chart/material in spite of repeated requests by the Bench. When it is so, then the impugned order appears reasonable. Hence, by upholding the impugned order along with the reasons mentioned therein, there is no merit in the appeal filed by the assessee-Appellants. Interest - Held that: - the provisions of sub-sections (3) and (4) of Section 15 were inserted on 13.07.2006 vide Section 21 of the Taxation laws (Amendment) Act, 2006 - The said provision is not applicable retrospectively. Hence, prior to 13.07.2006, no interest can be charged. Therefore, the ground for charging interest retrospectively is allowed in favour of the assessee-Appellants. Appeal allowed - decided partly in favor of appellant.

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• 2017 (9) TMI 900
  Advanced license for duty free imports - clubbing of license with other licenses - Held that: - the DGFT is the final authority who has declined the claim of the appellant. The appellant claimed he may approach the Policy Relaxation Committee but for the purpose of the impugned order the matter has been rejected by the DGFT - appeal dismissed - decided against appellant.

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• 2017 (9) TMI 899
  Jurisdiction - power of DRI to act as ‘proper officer’ and to issue SCN - Held that: - the notice issued by the DRI who was not a competent authority as per the ratio laid down in the case of Mangali Impex Ltd. Vs. UOI [2016 (5) TMI 225 - DELHI HIGH COURT] - In this connection, we note that similar issues have been dealt with in various cases by the Tribunal recently. It is held that the matters have to be remanded back to the original authority for a decision - appeal allowed by way of remand.

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• 2017 (9) TMI 898
  Jurisdiction - power of DRI to issue SCN - Held that: - the notice issued by the DRI who was not a competent authority as per the ratio laid down in the case of Mangali Impex Ltd. Vs. UOI [2016 (5) TMI 225 - DELHI HIGH COURT] - In this connection, we note that similar issues have been dealt with in various cases by the Tribunal recently. It is held that the matters have to be remanded back to the original authority for a decision - appeal allowed by way of remand.

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• 2017 (9) TMI 897
  Jurisdiction - power of Commissioner (Preventive) to issue SCN - Held that: - the notice issued by the Commissioner (Preventive) who was not a competent authority as per the ratio laid down in the case of Mangali Impex Ltd. Vs. UOI [2016 (5) TMI 225 - DELHI HIGH COURT] - In this connection, we note that similar issues have been dealt with in various cases by the Tribunal recently. It is held that the matters have to be remanded back to the original authority for a decision - appeal allowed by way of remand.

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• Insolvency & Bankruptcy

• 2017 (9) TMI 857
  Initiation of Insolvency Resolution Process - eligible financial debt - Held that:- A perusal of the legal notice got issued by the Applicant and the statutory notice issued by Applicant clearly goes to show that Applicant recalled the entire loan amount both from the Principal Borrower and the Guarantor and both of them failed to repay the loan amount. The liability of the Respondent being a Guarantor is co- extensive with the liability of the Principal Borrower. The debt due to the Applicant Financial Creditor from the Respondent is a financial debt. There is material on record to show that there is occurrence of default in repayment of the financial debt by the Respondent herein, being the Guarantor. The Application filed by M/s. Reliance Commercial Finance Limited is complete in all respects and no defect is pointed out. In this Application filed by M/s. Reliance Commercial Finance Ltd., Respondent did not choose to file any objections. Learned Counsel appearing for the Respondent stated that they are making every effort to settle with all the creditors by making payments in due course of time. In view of the above discussion, the Application filed by the Applicant, M/s. Reliance Commercial Finance Ltd., i.e., CP (IB) No. 66 of 2017 deserves to be admitted, and it is accordingly admitted under Section 7(5) of the Code. Considering the fact that the financial debt due to the Financial Creditor, M/s. Reliance Commercial Finance Limited is higher than the debts together due to other Applicant Financial Creditors, this Adjudicating Authority is of the considered view that the Interim Resolution Professional proposed by M/s. Reliance Commercial Finance Limited should be appointed as 'Interim Resolution Professional'. Therefore, this Adjudicating Authority appoints Shri Pramod Bajranglal Kedia, C/o. Kedia & Kedia Associates, Chartered Accountants, 205, Kaling, Near Mount Carmel School, Behind Bata Show Room, Ashram Road, Ahmedabad- 380009, having Registration No. IBBI/IPA-001/IP-P00091/2017- 2018/10191, as 'Interim Resolution Professional', because his Written Communication is available. This Adjudicating Authority hereby declares moratorium under section 13(1)(a) of the Code prohibiting as laid down in section 14 of the Code. The Interim Resolution Professional appointed shall also make public announcement about initiation of 'Corporate Insolvency Resolution Process', as required by Section 13(l)(b) of the Code.

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• 2017 (9) TMI 856
  Corporate insolvency resolution process - non-compliance of requisite statutory requirement given in Secs.8 and 9 of the I & B Code - operational creditor has not issued demand notice prescribed - Held that:- In this case it is undisputed, that before filing an application in Form 5 under the I & B Code operational creditor has not issued demand notice prescribed in form and operational creditor has also not annexed affidavit relating to the fact that there is no notice given by the corporate debtor relating to the dispute of unpaid operational debt. Certificate from financial institution has not been annexed to show that no payment of unpaid operational debt has been made by the corporate debtor. This requirement of complying with the statutory requirements of sub-clause (3) of Sec.9 of the I & B Code is mandatory for initiating corporate insolvency process and only on completion of the conditions mentioned aforesaid, petition can be admitted under the provision of clause 5 of Sec.9 of the I & B Code. In Sec. 5 condition has been prescribed for admitting the petition which clearly specifies that if the application made under sub-sec. (2) is complete and there is no repayment of unpaid operational debt and invoice or notice was made to the corporate debtor has been delivered by the operational creditor and no notice of dispute has been received by the operational creditor or there is no record of dispute in the information utility and there is no disciplinary proceeding pending against the resolution professional proposed then adjudicating authority has to admit the petition under Clause 5 Sec.9. The application for initiating corporate resolution process against the corporate debtor is rejected due to non-compliance of requisite statutory requirement given in Secs.8 and 9 of the I & B Code

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• 2017 (9) TMI 855
  Proceedings under Insolvency and Bankruptcy Code, 2016 - maintainability of the Petition - claim of the 'Corporate Debtor' - Held that:- A strict onus is placed on the 'Corporate Debtor' while raising the plea of dispute and that it must be genuine and bona fide in order to avoid the debt, which is claimed by the 'Operational Creditor' as due from the 'Corporate Debtor' and in making payment of the same. However, in the instant case we do not find any merit in the contention of the 'Corporate Debtor' and hence we are unable to accede to the claim of the 'Corporate Debtor' that there is a pre-existing dispute as between the 'Operational Creditor' and the 'Corporate Debtor' as contemplated under the provisions of IBC, 2016. Turning to the maintainability of the Petition in relation to the compliance with the provisions of IBC,2016, we find that the amount claimed is in excess of ₹ 1.00 lakh being the minimum amount provided under IBC,2016 for invoking the Code. Further, we also find that the Operational Creditor has materially complied with the provision of Section 9(3) of IBC, 2016, inter alia, by providing a certificate from the bankers in relation to the unpaid debt coupled with the statement of accounts from 1.3.2016 for a continuous period up to 31.3.2017. Taking into consideration all the compliance as well, this Tribunal is per force required to come to a conclusion that an operational debt is owed by the 'Corporate Debtor' to the 'Operational Creditor' for the supply of goods which remain unpaid and which rightly entitles the 'Operational Creditor' to maintain the Petition. From the Application it is seen that under Part III of the same, the 'Operational Creditor' has left the choice of appointing Interim Resolution Professional to the Tribunal/Board. In the circumstances, by virtue of Section 16 of IBC, 2016 reference is made to Insolvency and Bankruptcy Board of India (IBBI) who will on receipt of the reference from this Tribunal recommend the name of the Insolvency Professional to this Tribunal as against whom no disciplinary proceedings are pending, within 10 days from the date of receipt of the reference. However, in view of the Petition being admitted, the moratorium as contemplated under Section 14 of IBC,2016 declared in relation to the 'Corporate Debtor'.

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• 2017 (9) TMI 854
  Corporate insolvency resolution process - eligibility of Application by corporate applicant - whether the petition has been filed under Rule 7(1) read with Section 10 of the Code or the petition has to be treated as the one under Section 9 of the Code? - Held that:- A perusal of the Rules shows that a Corporate Debtor can approach the Tribunal for initiation of a Resolution Process under Section 10 of the Code by filing an application on the Form 6. Form 6 is necessarily related to a 'Corporate debtor' invoking Section 10 of the Code and has been created under rule 7(1) of the Adjudicating Authority Rules (supra). On the contrary the demand notice is stated to have been issued under Section 8 of the Code which depicts that the petitioner claims himself to be an 'Operational Creditor'. There are thus patent contradictions in the claim made by the petitioner which cannot be resolved by reading it one way or the other. Therefore, there is no option except to dismiss this petition as misleading and contradictory. For the reasons aforementioned, this petition fails and the same is dismissed with cost of ₹ 10,000/-

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• PMLA

• 2017 (9) TMI 852
  Grant of bail - offence under the Prevention of Money Laundering Act, 2002 - petitioner, without approaching the Special Court under the PMLAct, 2002 for grant of bail, has preferred the present petition seeking bail in on the ground that his remand in judicial custody is illegal and without any jurisdiction of the learned Special Court to remand the petitioner any further after the presentation of the prosecution under Section 44 of the PMLA Held that:- The petitioner had earlier been remanded to custody with specific endorsement. However, for the fault of the Court, the prosecution cannot be made to suffer. Otherwise also, such departures from the procedure would come within the category of irregularity and not an illegality. This Court has perused the order of remand, though recorded by the Reader which says that the case is adjourned for a particular date for the purpose already fixed. This can, for the purposes of this case, be read as “remand till that date”. This Court in the aforesaid circumstances feels it necessary to caution the learned Special Court to be careful while dealing with such matters which concern the liberty of an individual. Such remands, in the name/garb of further investigation, cannot be continued for perpetuity as it would militate against the spirit of the procedural laws enacted for the purposes of giving specific time lines for the investigation of a case and commencement of the trial. Any mechanical order of remand, then, cannot be countenanced. It is, however, again made clear that this Court has not gone into the merits of the case so far as the petitioner is concerned and, therefore, the petitioner would be at liberty to approach the Special Court, PMLA for grant of bail on individual merits of his case. This bail application has only been considered with regard to the legality of the remand of the accused in either E.D custody or judicial custody.

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• Service Tax

• 2017 (9) TMI 896
  Business Auxiliary Services - appellants were agents of ICICI bank and they were providing services for them and received commission from ICICI Bank - whether taxable under the head BAS or otherwise? - Held that: - It is pertinent to note that the definition of Business Auxiliary Service had undergone amendment with effect from 10.9.2004 wherein the services provided on behalf of the client was included within the scope of the definition. Prior to that the services rendered for a client were only covered by the definition. The Notification No. 14/2004 dated 10.9.2004 granted exemption to various services provided to a client in relation to Business Auxiliary Service. Another Notification No. 25/2004 of even dated granted exemption to Business Auxiliary Service rendered prior to 10.9.2004. Extended period of limitation - Held that: - Mere non filing of returns and non-remittance of tax for rendering Business Auxiliary Service cannot be viewed as suppression of facts with intent to evade tax - the issue being interpretational one, we find no ground to invoke the extended period of limitation - penalties also set aside. The appellant is liable to pay the service tax for the normal period - appeal allowed - decided partly in favor of appellant.

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• 2017 (9) TMI 895
  Classification of services - services rendered by the appellant with respect to foreign based clients - Business Auxiliary Service or otherwise? - Held that: - The Tribunal in the case of Fifth Avenue [2009 (3) TMI 133 - CESTAT, CHENNAI] examining the identical set of facts and held that these services cannot be considered as BAS and should be treated as BSS, brought under tax liability only with effect from 01.05.2006 - The services are availed and consumed by the foreign based client and the consideration has been paid by the said client in convertible foreign exchange. The inference of the original authority is that the LC margin retained by the appellant should be considered in respect of local vendors also, is not supported by facts or law. Services rendered to the local vendors - Held that: - It is not a simple commission agent work of promotion of the product of the vendor. Though they were registering with the department under BAS and paid service tax under such category with effect from 01.05.2006, tax liability paid after 01.05.2006 is rightly to be appropriated under BSS. This is not being contested. However, for the period prior to 01.05.2006 no tax liability will arise and same is not paid by them. The services rendered by the appellants are for tax liability under the category of BSS with effect from 01.05.2006. In so far as these services rendered for foreign based clients and consideration was received in convertible foreign exchange no tax liability will not arise considering the same as export. For import of services tax liability is confirmed for the period post 18.04.2006. Penalties are set aside. Appeal allowed - decided partly in favor of appellants.

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• 2017 (9) TMI 894
  Business Support Service - case of the revenue is that under the concession agreement, the appellant provided various facility in relation to commerce to the concessionaire which fall under the category of Business Support Service - whether the service provided by the appellant to the concessionaire is classifiable as Business Support Service and liable for service tax during the relevant period or otherwise? - Held that: - As per the plain reading of the definition, it can be seen that any service provided in relation to business or commerce is a support service of business or commerce. In the present case the concessionaire is solely engaged in the commerce i.e. sale of their goods in the premises of the appellant. The appellant provides their branded store duly air-conditioned, with adequate ambience, lighting, common security, various sales schemes to attract the customer. These facilities contribute in the sale of the goods of the concessionaire from the stores of the appellant. Therefore the service of the appellant clearly covered in the first clause of the definition of support services of business or commerce. The scope of this service is not limited but very wide. In our view any service which support the operation of business and commerce of the client covers under the business support services, if it is not specified under the specific classification. As regard consideration, from the concession agreement, it can be seen that the consideration is either in the form of percentage of sale or if the total amount, as per the percentage does not meet to the minimum guaranteed amount then irrespective of percentage the fixed minimum guaranteed amount is charged by the appellant from the concessionaire. This further establish that the arrangement is not of sale-purchase of goods between concessionaire and the appellant but of service. Extended period of limitation - penalty - Held that: - before 1-6-2007 appellant neither declared their service nor filed any ST-3 returns declaring the service of Business Support Service, therefore department was completely kept in dark about the provision of service under the category of Business Support Service, therefore there is clear suppression of facts on the part of the appellant, extended period was correctly invoked - penalties imposed are also legal and correct, which do not require any interference. Appeal dismissed - decided against appellant.

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• 2017 (9) TMI 893
  Management Consultancy Services - It was alleged that the appellants have received Franchisee Service from PG and service tax on the same was payable under reverse charge as import of services in terms of Section 66A of the Finance Act, 1994 - Held that: - the so called service of Franchise was provided by PG, USA to the appellant for which the appellant has paid the fees in convertible foreign exchange, this amount was paid out of the total receipt by the appellant from the ultimate service recipient i.e. Indian Hotels therefore the service received from PG, USA got subsumed in the service provided by the appellant to Indian Hotels - As regard the service tax liability on the appellant, even if they are liable to pay the said service tax, they are legally entitled for the Cenvat credit on the entire amount which will reduce the liability of service tax on the appellant. Accordingly, the appellants net payment of service tax to the Government exchequer will reduce to the extent of service tax payable in respect of Franchise service, therefore the entire issue is revenue neutral - this is a clear case of revenue neutrality. The demand of service tax in the present case amounts to double taxation on the part of the same service charges - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 892
  Business Support Services - recovery of expenses such as RTO charges, fuel, pooja material while selling vehicle to the customers - Held that: - This issue has been settled in various tribunal judgment that this activity is not liable to service tax - demand of service tax on Business Support Service is set aside. Penalty u/s 78 - Held that: - majority of amount is related to Business Auxiliary Service. As per the submission of the appellant they have been paying service tax regularly, the said amount is also incorporated in this proceedings for which no show cause notice was supposed to be issued - no malafide intension is proved, therefore penalty under Section 78 imposed by the lower authority is set aside. Interest - Held that: - where there is delay in payment from the due date, interest shall be chargeable on such delayed payment. Appeal allowed - decided partly in favor of appellant.

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• 2017 (9) TMI 891
  CENAVT credit - services for trading activity prior to 01.04.2011 - whether trading activity exempt or not during the impugned order? - Held that: - similar issue decided in the case of M/s. FL Smidth Pvt. Ltd. Versus The Commissioner of Central Excise [2014 (12) TMI 699 - MADRAS HIGH COURT], where it was held that there is a clear finding that the appellant had not disclosed the availment of input service credit on commission in respect of trading activities and it came to the knowledge of the Department only on verification of the documents, such as, contract agreements, commission agreements etc. and therefore the plea of limitation was rightly rejected by the Authorities below - credit not allowed - appeal dismissed - decided against appellant.

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• 2017 (9) TMI 890
  Transport of Goods by Road (GTA) Service - abatement - N/N. 32/2004-ST dated 03.12.2004 - whether appellants are eligible to utilize Cenvat credit to pay the service tax under GTA services? - Held that: - There is no provision in the Cenvat Credit Rules which prohibit the utilization of Cenvat credit to discharge service tax liability under GTA services. Therefore we find the Commissioner (Appeals) has rightly held this issue in favour of the appellants. The appellant is eligible to pay service tax as a recipient and they are eligible for abatement and the appellants have rightly paid 25% service tax on the freight paid. It is pertinent to state that w.e.f. 1-1-2010 both the conditions (i) and (ii) stipulated under the proviso to the said notification were deleted and the abatement is applicable without any conditions. In view of foregoing discussion, we hold that appellants are eligible for the benefit of exemption Notification No. 32/2004. Therefore, question of demanding differential service tax and imposition of penalty does not arise. Appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 889
  Refund claim - reverse charge mechanism - whether the appellant is eligible for the refund of an amount along with interest paid by him on 31.03.2004 under reverse charge mechanism for the services rendered from goods transported for the period 16.11.1997 to 02.06.1998? - Held that: - since there is a retrospective amendment by Finance Act, 2003, tax liability which has been paid by the appellant is correctly done so and appropriated by the adjudicating authority and as well as first appellate authority and hence the question of refund does not arise - appeal dismissed - decided against appellant.

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• 2017 (9) TMI 888
  SEZ unit - refund claim - denial on the ground that the services received by the appellants were wholly consumed within the SEZ - Held that: - From the plain reading of clause (c) of the N/N. 9/2009-ST, it is clear that the exemption by way of refund is not available to the services consumed wholly within the Special Economic Zone however as per the first para of the notification all the services provided in relation to authorized operations in a SEZ and received by SEZ unit are exempted therefore the services received by the appellant even though consumed wholly within the SEZ are exempted per se. In the facts of the present case there is no dispute that the service tax was paid on such services which are otherwise exempted. Therefore the appellant is entitled for the refund but not under N/N. 9/2009-ST but under Section 11B of the CEA, 1944 - the adjudicating authority directed to process the refund claim of the appellant under the provisions of Section 11B of the Act - appeal allowed by way of remand.

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• 2017 (9) TMI 887
  Refund of unutilised CENVAT credit - time limitation u/s 11-B of CEA, 1944 - Held that: - The jurisdiction of Hon'ble High Court of Andhra Pradesh in the case of Hyundai Motor India Engineering (P) Ltd [2015 (3) TMI 1049 - ANDHRA PRADESH HIGH COURT] has held that refund claim has to be filed within one year of date of receipt of consideration - In view of this, the decision of the jurisdictional High Court of Andhra Pradesh would apply in the case in hand - appeal dismissed - decided against appellant.

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• 2017 (9) TMI 886
  Excess baggage charges - demand of service tax - Held that: - Excess baggage charges while transporting the passenger recovered as Excess baggage charges have been held not liable for service tax by this Tribunal in the case of Kingfisher Airlines Limited v. CST [2015 (11) TMI 54 - CESTAT MUMBAI (LB)]. CENVAT credit - credit availed prior to registration during the period April’ 2006 to February’ 2007 - Held that: - the said issue has been dealt by the M Portal India Wireless Solutions P. Ltd. v. CCE [2011 (9) TMI 450 - KARNATAKA HIGH COURT], wherein it has been held that being a service provider, if any Cenvat credit is availed on input service or capital goods by the assessee, the assessee is entitled to avail Cenvat credit on the said input/input service are being used for supply of taxable service - credit allowed - pre-deposit waived. Valuation - includibility - inclusion of reimbursement of insurance charges paid to the foreign service provider for providing pilots to the applicant - Rule 5(1) of the service tax Rules 2006 - Held that: - As the said provision has been struck out by the Hon'ble Delhi High court in the case of Intercontinental Consultants & Technocrats Pvt. Ltd. v. UOI [2012 (12) TMI 150 - DELHI HIGH COURT], therefore, the applicant has made out a case complete waiver of pre-deposit on this ground. The applicant has made out a case of complete waiver of pre-deposit - appeal allowed.

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• 2017 (9) TMI 885
  Renting of immovable properties - leasing out the fuselage of Airbus alongwith the connected premises of land - whether leasing out aircraft amounts to Business Auxiliary Services or Renting of immovable property services? - Held that: - there are two distinct properties which are given on lease. The lease rental contribution attributable to each one of the property has been categorically stated by the main appellant when the enquiry was conducted. There is no dispute about the consideration attributable to each one of the property. We do not agree with the appellant that the consideration has been artificially split up and brought under tax liability under two tax entries. When two properties are specifically, identified considering the nature and scope of service for which lease rent is received, we find that the lower authorities are correct in their conclusion. It is clear that the aircraft premises and the other equipments are very essential and imperative infrastructure for providing training to the participants and also to make publicity about the status of the training institute. As already noted, the training of cabin crew is imparted both in the class rooms and inside the aircraft for practical exposure. The aircraft in possession of the main appellant serves this very basic infrastructural requirement of the training by the lessee. As such, we find that lease rent attributable to this activity is rightly taxable under business support service. The second property indicated in the lease agreement is 550 sq. yards of the appellant, we note that the lessee is also to have an office premises of their choice location within the leased out land - The property lease out by the main appellant is for the furtherance of business and commerce and accordingly liable to tax. As such, we hold that the lower Authorities are correct in confirming the tax liability of the main appellant as well as Mrs. Bhateri Devi under the category of renting of immovable property service on the consideration received by them and clearly admitted by them. Penalty - Held that: - renting of immovable property service has been a subject matter of substantial litigation, and also the tax entry was interpreted to mean only services “in relation to” renting of not renting per-se - Later, amendments were brought in, in the statutory definitions alongwith retrospective changes also. A specific provision was also made in Section 80 (2) of the Finance Act, 1994 for waiver of penalty in respect of renting of immovable property service - penalties imposed on the appellants can be waived by invoking provision of Section 80 of the Finance Act, 1994 as there was reasonable cause for non-payment of service tax during the material time. Appeal dismissed - decided partly in favor of appellant with regard to penalties only.

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• 2017 (9) TMI 884
  Refund claim of service tax paid mistakenly - time limitation - Held that: - the respondent was not required to pay service tax in terms of N/N. 25/2012-ST dated 20.06.2012, but they have paid service tax mistakenly and filed refund claim. As service tax was not payable by the respondent, therefore, the amount paid by the respondent is not an amount of service tax, therefore, Section 11B of the Act are not invokable - refund allowed - appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 883
  Refund claim - denial on the ground of time limitation and also on the ground that the parking charges paid by the appellant have no nexus with the output service - Held that: - the appellant has filed the refund claim online within time and as all the documents could not be filed by the appellant online, therefore, the appellant filed physically refund claim although after one year - The date of filing of the refund claims online should be taken into consideration to determine whether a particular refund claim has been filed within the time as specified in the N/N. 5/2006-CE (NT) dated 14.03.2006, therefore, the refund claim cannot be denied to the appellant. Denial of refund on parking charges - Held that: - As the availment of cenvat credit has not been denied by the authorities below, the refund claim of the same cannot be denied on that ground that the said service is not the input service as per Rule 2(l) of the Cenvat Credit Rules, 2004 - refund allowed. Appeal allowed - refund allowed - decided in favor of appellant.

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• 2017 (9) TMI 882
  Waiver of pre-deposit - Business Auxiliary Services - Held that: - Considering the fact that whether the applicant is entitle for benefit of exemption Notification No. 06/2005 that also be dealt at the time of final hearing. Prima-facie fact that the applicant is promoting the business, therefore, at this stage, we direct the applicant to make a pre-deposit of ₹ 44,000/- within the period of 4 weeks and the compliance to be reported on 29.08.2017 - application disposed off.

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• 2017 (9) TMI 881
  Utilisation of CENVAT credit - credit for payment of service tax on GTA services - reverse charge mechanism - Held that: - reliance placed in the case of Commissioner of Service Tax Versus Hero Honda Motors Ltd. [2012 (12) TMI 734 - DELHI HIGH COURT], where it was held that para 2.4.2 of CBEC's Excise Manual of Supplementary Instructions shows that there is no legal bar to the utilisation of Cenvat credit for the purpose of payment of service tax on the GTA services - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 880
  Rate for levy of tax - works contract service - Held that: - the issue has been decided by the Hon’ble Delhi High Court in the case of CST Vs Ratan Singh Builders Pvt. Ltd. [2013 (5) TMI 450 - DELHI HIGH COURT], where it was held that the rendition of the service had been completed prior to 01.03.2008 and, therefore, the taxable event had occurred prior to 01.03.2008. Consequently, the applicable rate of tax would be the rate which was prevalent prior to 01.03.2008 - service tax is payable at the rate applicable on the day of rendering/ receiving the service - appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 879
  Sub-contract - Architect Service - Consulting Engineers Service - CBEC Circular No.B 11/I/98-TRU dated 07.10.1998 - Held that: - in this case, the appellant provided architect service and the main contractor provided Consulting Engineer Service. Thus, payment of Service Tax under different category by the main contractor will not absolve the appellant from its liability of payment of Service Tax, which was provided entirely different category of service - appeal dismissed - decided against appellant.

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• 2017 (9) TMI 878
  Erection, commissioning and installation services - equipments supplied by the appellants to its customers - Held that: - As all the agreements have not been examined by the adjudicating authority to give clear finding, therefore, the said demand is not sustainable in eyes of law - matter is remanded back to the adjudicating authority to decide the issue afresh. IPR service - royalty income pertaining to licensing of technical information/knowhow under the category of business auxiliary services - Held that: - As all the agreements entered by the appellant prior to 10.9.2004, therefore, on the basis of said agreements, the royalty is not chargeable to service tax - demand under the category of IPR service is not sustainable. Marketing support services - sale promotion and marketing services to UOP LLC and other overseas companies - Held that: - the service has been received by the service recipient located outside India and used outside India - the demand in respect of marketing support service under the category of business auxiliary service is not sustainable against the appellant. Charges paid to the company’s overseas entities in respect of maintenance of software - Held that: - it is fact on record that the software is located in a server outside India, therefore, the service has been provided outside India and used outside India only - the demand against the appellant on account of maintenance of software is not sustainable. Appeal allowed in part and part matter on remand.

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• Central Excise

• 2017 (9) TMI 877
  Classification of goods - whether formulations containing less than 135 mgs. i.e. 65 mgs of Dextropropoxyphene can be classified as 'Narcotic Drug' or 'Narcotic' within the meaning of Section 2(h) of the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 and liable to State Excise Duty? - Held that: - The term Narcotic Drug or Narcotic with which we are concerned with in the present case has been defined under Section 2(h) of the M T P Act to mean a substance which is coca leaf, or coca derivative, or opium, or derivative of opium, or Indian hemp and shall include any other substance, capable of causing or producing in human beings dependence, tolerance and withdrawal syndromes and which the Central Government may, by notification in the Official Gazette, declare to be a Narcotic Drug or Narcotic - The plain reading of item No. 86 in the notification states that a Narcotic Drug or Narcotic would include only formulations containing more than 135 mgs of Dextropropoxyphene per dosage unit.n declared as Narcotic Drug or Narcotic - In the present case admittedly the subject formulations contain less than 135 mgs i.e. 65 mgs of Dextropropoxyphene and hence cannot be classified as a Narcotic drug or Narcotic in view of the said Notification. The subject formulations of the Petitioners containing less than 135 mgs i.e. 65 mgs of Dextropropoxyphene are excluded from being classified as a Narcotic Drug under the Section 2(h) of the M T P Act. We find that the view taken by the Respondents viz. that the Petitioners are liable to the State Excise Duty under the M T P Act is thoroughly untenable - the impugned demand notices quashed. Petition allowed - decided in favor of petitioner.

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• 2017 (9) TMI 876
  Classification of goods - Plant Vitalizer with a brand name ABDA - clearance from EOU to DTA - appellant have claimed the classification of the said product under Central Excise Tariff Heading 3101.00.99 as Animal or Vegetable Fertilizers whereas Revenue objected to the said classification and initiated proceedings to reclassify the product under Chapter 38 as Miscellaneous Chemical Products and more specifically as Plant Growth Regulators under CETH 38089340 - Held that: - ABDA is marketed as Plant Vitalizer and the usage indicated in the literature clearly shows that they are not plant growth regulators. They will be more in the nature of plant growth promoter / fertilizer - the product is rightly classifiable under Chapter Heading 31010099 as Other Animal or Vegetable Fertilizer. Eligibility of the appellant for concessional rate when cleared to DTA - N/N. 23/2003-CE - Held that: - It is clear that paraffin wax is used as a raw material in the process and the claim of the appellant that it is only consumable is misplaced - Even in the technical literature given by the appellant, it is clearly stated that paraffin wax is used for coating so that the plant extracts and the dye do not get removed from the base material. The paraffin wax loses its identity as soon as it is coated over the sand. It is apparently a raw material in the manufacture of ABDA. Simply because it loses its identity as a wax does not make it a consumable item. As such for non-fulfilment of the condition of using goods manufactured or produced in India, the appellant-assessee is not eligible for the concession under N/N. 23/2003-CE. Extended period of limitation - Held that: - The intimation given by the appellant-assessee is categorical and specific. As such, no suppression of fact can be invoked against the appellant-assessee on this issue relating to classification of ABDA. ABDA manufactured and cleared by the appellant-assessee is correctly classifiable under Heading 31010099 - claim for exemption under N/N. 23/2003-CE, wherever duty is payable is not sustainable in view of violation of condition No.3 (i) of the notification - demand upheld only for normal period - appeal allowed - decided partly in favor of appellant.

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• 2017 (9) TMI 875
  Concessional Rate of Duty - N/N. 26/1999-Cus. dated 28.02.1999 - imported as well as indigenous Kerosene used in the manufacture of Linear Alkyl Benzene (LAB) - provisional assessment - whether on the failure of the assessing authority in getting the full matter verified to his satisfaction before issuing final order, the Revenue can assert that the appellants deliberately mis-represented the facts to claim ineligible concession? - Held that: - Apparently based on the documents on actual consumption, the percentage may vary. There is a mixed storage of indigenous as well as imported kerosene. The appellants followed accounting which is later found to be not acceptable to Revenue. The question is not about the correctness of the accounts. It is about verification to be done by the assessing authority before issuing speaking order on finalization of provisional assessment. The original authority had applied his mind and passed a speaking order. It is not open for starting a fresh proceeding without reviewing the said order for further appeal - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 874
  CENVAT credit - Clearance of 'CENVAT credit availed Capital Goods' without payment of duty - Rule 3(5) of CENVAT Credit Rules, 2004 - Penalty u/s 11AC of CEA, 1944, read with Rule 15(2) of the CCR, 2004 - Held that: - There is no dispute that appellant had not discharged the duty liability at the time of clearance capital goods cleared from the factory and duty liability was discharged only on being pointed out - this act of appellants is gross violation of the provisions of the law with intent to evade duty - penalty upheld - appeal dismissed - decided against appellant.

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• 2017 (9) TMI 873
  Suppression of facts - contradiction to the evidence available on records - intention to evade duty - Held that: - It is seen from the records that the First Appellate Authority while considering the appeal filed by the appellant had given detailed findings as to why he has come to conclusion as there was a suppression of fact with intend to evade duty - it can be seen from grounds of appeal of appellant, they have not at all contradicted the findings in an effective manner. The appellant has not been able to dislodge the findings of by both the lower authorities conclusion that there was an intention to evade duty and hence needs to be penalized - appeal dismissed - decided against appellant.

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• 2017 (9) TMI 872
  Valuation - includibility - whether stamping, verification & testing charges collected by the appellants and stamping fee remitted to the concerned stamping authority is liable to be included in the assessable value of the flow meters manufactured by the appellant? - Held that: - in order to make the goods marketable it is necessary to verify and stamp weights and measures. Rules are provided for weights and measures sold inter-state. The definition of weights and measures include instruments also - fee/charges collected for verification and stamping is to be included in the assessable value - decided against appellant. Apparently two SCNs have been issued for same period raising the same allegations. Except for difference in quantification of demand, both the SCNs are on the same set of facts, allegations. The second SCN is not based on any mew material. The department has opted to withdraw the first SCN, in which the duty demand is less. Thus in our view, the demand is not sustainable and requires to be set aside. Appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 871
  Penalty u/r 26 - manufacture - Tribunal had directed the Original Authority to first establish that appellant had the capacity to manufacture the quantity of Mosquito Bednets supplied to HSCC during the Financial Years 2000-01 & 2001-02 and then to give finding whether the appellant had manufactured the same in his factory - Held that: - the Original Authority could not give the sustainable finding on the capacity of manufacture possessed by the appellant/manufacturer during the said Financial Years 2000-01 & 2001-02 - the impugned Order-in-Original is not sustainable and it was presumptive in nature - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 870
  CENVAT credit - freight expenses - place of removal - whether in the case of export of the goods manufactured by them, the place of removal is the factory gate or the port of export and further whether they are entitled to Cenvat credit on freight expenses incurred from the factory gate to the port of export? - Held that: - there is no proper basis for disallowing the Cenvat credit of freight incurred by the appellant-assessee from the factory gate to the place or port of export, which is the place of removal - reliance placed in the case of Commissioner Versus Dynamic Industries Ltd. [2014 (8) TMI 713 - GUJARAT HIGH COURT], where it was held that in case of export, services used upto port of export is upto place of removal hence credit is admissible on such services - credit allowed - appeal allowed - decided in favor of appellant-assessee.

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• 2017 (9) TMI 869
  Refund claim - cess paid on final products - denial on the ground of time limitation and unjust enrichment - Held that: - appellants have not crossed the hurdle of unjust enrichment as it is seen from records that they are unable to demonstrate that they have not passed on the education cess paid. The Chartered Accountants Certificate is also not very clear and does not specifically state that the amount has not been collected by appellant - refund rightly denied - appeal dismissed - decided against appellant.

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• 2017 (9) TMI 868
  Valuation - branded chewing tobacco - case of Revenue is that the packages containing multiple pieces of identical packets of chewing tobacco are to be considered as a retail package - Held that: - the facts recorded in the notice itself will indicate that each one of the package having less than 10 gms. of chewing tobacco has contained all the details as per the statutory requirement like contents and unit price etc. Even the larger packages containing multiple pieces of such small packages, indicated the MRP of individual small package only. It is categorically asserted by the appellant/assessee that the bigger package containing multiple pieces of small retail package never carry any MRP for the sale of such package. In other words, there is no evidence on record to show that the larger package ‘(multi piece package)’ is ever intended to be a retail package for a retail consumer. Similar set of facts came up for consideration before the Tribunal in the case of CCE, Delhi – I Vs. Shakti Zarda Factory India Pvt. Ltd. [2017 (1) TMI 970 - CESTAT NEW DELHI], where it was held that the impugned goods cannot be subjected to as MRP based assessment under Section 4A. Consequent upon deletion of the provision of Rule 2 (j) and Rule 17 of Packaged Commodities Rules w.e.f. 14/01/2007 the impugned order correctly applied the legal provisions to determine the principles of valuation - there is no merit in these appeals by the Revenue. Penalty - Held that: - the issue is one of interpretation of legal provision including the statutory requirements as per Legal Metrology Department, there is no reason for imposition of penalty in such type of cases - penalty set aside. Appeal dismissed - decided against revenue.

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• 2017 (9) TMI 867
  CENVAT credit - fake invoices - input - Stainless Steel Coil - Held that: - there is a violation of principles of natural justice - It is a settled position, that whatever strong evidences are there against the appellant but if the appellant want to defend on the basis of certain evidences, it is the requirement of natural justice to consider all the submissions made by the appellant in their defence. In these circumstances, the matter needs re-consideration - appeal allowed by way of remand.

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• 2017 (9) TMI 866
  Refund of excess duty paid - rejection on the ground of unjust enrichment - Held that: - The matter needs verification of the dealers invoices to the effect of credit note given by the dealer. Though the Ld. Counsel has submitted the chart but it is not supported by any invoices issued by the dealer to the ultimate consumer therefore the matter needs to be re-considered on the factual matrix - appeal allowed by way of remand.

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• 2017 (9) TMI 865
  Valuation - excess transportation charges - whether the deferential amount between the equalized freight collected and actual cost incurred for transportation is to be added to the assessable value? - Held that: - the issue has been decided by the Hon’ble Supreme Court in the case of M/s Baroda Electric Meters Ltd. [1997 (7) TMI 126 - SUPREME COURT OF INDIA] wherein it was held that duty of excise is a tax on manufacture and not tax on profit made by a dealer on transportation - appeal allowed - decided in favor of appellant.

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• 2017 (9) TMI 864
  Refund of excess duty paid - confusion in the method of valuation - refund rejected on the ground of time bar and unjust enrichment - Held that: - as regard the time bar, since refund was admittedly filed first time within the stipulated time as prescribed under Section 11B. Subsequent re-submission of refund claim cannot be taken as filing of refund claim first time - the refund is not time-barred. Unjust enrichment - Held that: - though the appellant have submitted C.A. certificate, affidavit of the director, copies of credit note and ledger of the buyers, but as per findings of both lower authorities, it is observed that they have not properly verified these documents - the adjudicating authority must verify all these documents. Appeal allowed by way of remand.

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• 2017 (9) TMI 863
  Clandestine removal - shortage of goods - Held that: - the demand of duty of ₹ 26.71 lacs was confirmed, party was in appeal, even though Tribunal has remanded the matter, the adjudicating authority was suppose to decide the matter relates to the demand of ₹ 26.71 lacs only, for the reason that demand which was dropped by the Commissioner was not challenged by the Revenue therefore dropping the said demand attained finality. Penalties - Held that: - the penalty imposed on the appellants are excessive which deserve to be reduced considering the nature of the case and their role. Since the duty should not have been confirmed to the tune of ₹ 42 Lacs, the penalty commensurate to the said amount is also not proper. I therefore reduce penalty on Shri. Pankaj Jaju from ₹ 25 lacs to ₹ 4 Lacs and on other appellants i.e. i.e. Unique Trading Corporation penalty of ₹ 2 lacs to ₹ 25,000/-. In respect of Victor Industries, Crown Industries and Suman Bardia, penalty of ₹ 15,000/- reduced to ₹ 10,000/-. Appeal allowed - decided partly in favor of appellant.

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• 2017 (9) TMI 862
  CENVAT credit - amendment in definition of input service w.e.f. 01.4.2011 - Courier Service - whether the Respondents are eligible to CENVAT credit of the Service Tax paid on Courier Services? - Held that: - though the expression activities relating to business, such as has been deleted, but the illustrative services viz., Accounting, Auditing, Financing, Recruitment and quality control, Coaching/training, Computer Networking, Credit Rating, Share Registry, Legal Services, Security, Business Exhibition etc., even though directly not related to manufacturing activity, being not used inside the factory premises, but continued to remain in the said definition of input service - It cannot be denied that Courier Service involves a host of uses relating to the activity of manufacture and sale of goods. Tribunal in the cases of M/s Lifelong Meditech Ltd. Versus CCE & ST, Gurgaon-II [2016 (7) TMI 468 - CESTAT CHANDIGARH] opined that Service Tax paid on Courier Serves is eligible to Cenvat Credit - Service Tax paid on the Courier Services for various purposes viz., Sending Samples, Documents, finished goods etc., would be eligible to Cenvat Credit before and even after amendment to the definition to the Input Services with effect from 01.4.2011 - appeal dismissed - decided against Revenue.

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• 2017 (9) TMI 861
  Scope of SCN - Held that: - it appears that in the order-in-appeal facts have not been properly considered. When it is so, the impugned order set aside and matter remanded to the Commissioner (Appeals) to decide the issue denovo on correct facts but by providing an opportunity of hearing to the assessee - appeal allowed by way of remand.

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• 2017 (9) TMI 860
  CENVAT credit - duty paying invoices - fake invoices - H.R. Trimmings & other secondary products - Held that: - in the case of Amar Ispat Pvt. Ltd., Sandeep Garg, Mohammad A. Master, Mohsin Hajibhai Memon, Harikrishna B. Soneji, Ram Awatar Agarwal & Diamond Roadways Versus Commissioner of Central Excise, Thane-I [2015 (11) TMI 373 - CESTAT MUMBAI], the facts and evidences and modus operandi in the present case are more or less same in these decisions therefore the ratio of the aforesaid decisions are squarely applicable in the present case, where The appellants could not produce copy of the Gate register, goods receipt note or LR or even any document evidencing payment of freight charges to the driver/transporter in respect of each invoice, and the credit denied - Therefore it is established that the appellant have availed Cenvat credit fraudulently without receipt of the goods. Credit rightly disallowed - appeal dismissed - decided against appellant.

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• 2017 (9) TMI 859
  Refund of unutilised CENVAT credit - case of Revenue is that there is no one to one correlation between the inputs and exported manufactured yarn to prove that the Cenvat credit relates to relevant quarter to which refund claimed pertained - Held that: - the Tribunal held in the case of Bombay Dyeing & Mfg. Co. [2014 (11) TMI 577 - CESTAT MUMBAI] that no one to one correlation was required between inputs and exported goods. Hence, we are not convinced of this ground of appeal. Non-recording of inputs consumed in the exported final products - Held that: - the appellants have to simply demonstrate that on exporting the finished goods credit has accumulated on account of receipt of duty paid inputs by the manufacturer, which they are unable to utilize for any other purpose, and therefore cass refund is the only way out. Thus, the ground of maintenance of separate record taken for denying the refund claim is not tenable. Appeal dismissed - decided against Revenue.

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• CST, VAT & Sales Tax

• 2017 (9) TMI 858
  Jurisdiction - power of review - whether the exercise of revisional power under Section 40 of the Haryana General Sales Tax Act, 1973 after its repeal on 1.4.2003, by the Haryana Value Added Tax, 2003 is sustainable? - Held that: - A simple repeal of an Act leaves no room for expression of a contrary opinion. However, if the repeal is followed by a fresh enactment on the same subject, the applicability of the General Clauses Act would undoubtedly require an examination of the language in the new enactment to see if it expresses a different intention from the earlier Act. The enquiry would necessitate an examination if the old rights and liabilities are kept alive or whether the new Act manifests an intention to do away with or destroy them. If the new Act manifests a different intention, the application of the General Clauses Act will stand excluded. There were no proceedings pending against the respondent under the Act of 1973 when the new Act came into force on 01.04.2003. The suo-moto revisional power under Section 40 of the former Act was exercised on 07.06.2004. The repeal and saving clause in Section 61 of the Act of 2003, saved only pending proceedings under the repealed Act. The intendment clearly was that matters which stood closed under the Act of 1973 had to be given a quietus and could not be reopened. The legislature, in its wisdom having noticed the limitation and constraints under Section 61 of the Act of 2003, made necessary amendments to the same by Act No. 3 of 2010 on 02.04.2010. Any interpretation saving the revisional power under Section 40 of the Act of 1973, without any proceedings pending on the relevant date, by resort to Section 4 of the Punjab General Clause Act, 1858 would render the amendment redundant, and an exercise in futility, something which the legislature never intended to do. Such an incongruous interpretation leading to absurdity has to be avoided. The legislative provisions being different in the precedents cited on behalf of the appellants, the same have no relevance to the issue in controversy. Appeal dismissed - decided against appellant.

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• Indian Laws

• 2017 (9) TMI 853
  Dishonour of cheques - Conviction for the offence under Section 138 of the Negotiable Instruments Act - Held that:- True it is that in all cases where the loan transaction is not referred to or reflected in the Income Tax Returns, one cannot jump to a conclusion that the presumption under Section 139 of the N.I Act stand rebutted. In cases where the amount is small, the same principle may not apply. However, a huge amount of ₹ 50 lakhs has to be explained or else even when such transaction is in the realm of suspicion, an imprimatur of the Court would be given if such transaction is accepted as a valid transaction. There is no gainsaying that non reflection of the loan transaction in the ITR certainly makes the loan unaccounted for, for which penalty could be imposed on the person concerned but it does not become per se unrecoverable. In the present case, seen along with the other facts, this lapse on the part of the petitioner assumes significance. It is thus difficult to presume that there existed a debt liability. Though the petitioner has not stepped into the witness box to lead any evidence but in cases involving Section 138 of the Negotiable Instruments Act, the presumption of the existence of debt liability may be rebutted. The presumption could be rebutted even otherwise on the basis of attendant sets of circumstances and it may not be necessary in each case to expect the accused to lead evidence as in a criminal trial. A statement under Section 313 of the Cr.P.C may not be the evidence of an accused as it is only in the nature of an explanation of an accused of the incriminating circumstances. There is no presumption of law that an explanation given by the accused is always truthful but once a doubt has been created regarding the existence of the debt liability, the reverse onus requirement as has been seen in Rangappa (Supra), makes it incumbent upon the respondent/complainant to prove that loan was advanced and there existed a liability. This Court finds it difficult to believe that ₹ 50 lakhs would be advanced as loan to a person who is on litigating terms with the complainant and that also by selling off his property. We have no evidence whatsoever regarding the sale of the property or mortgage of another property to establish the liquidity/capacity of the complainant to advance loan. Cumulatively seen, the case of the respondent/complainant falls at the seams. There is no option for this Court but to set aside the same. The petitioner stands acquitted and is discharged of all his liability.

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