TMI Tax Updates - e-Newsletter
September 8, 2018

Case Laws in this Newsletter:

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

TMI SMS

• Classification of goods - exercise of discretion by the quasi judicial authority cannot be interfered by the circular - circular quashed

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Articles

• GST ON ARTIFICIAL STONE: DETERMINING FACTORS
• GST Notification No. 20/2018-C.T. (Rate) dated 26.07.2018 by which Input Tax Credit (ITC) has been made to lapse is issued beyond the powers vested in Government

News

• Quarterly Report on Public Debt Management for the Q1 of FY 2018-19 (April to June 2018) released

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• Six Hundred Global Buyers to Participate Indusfood- II 2019

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Notifications

Companies Law

• F.No. 01/12/2009-CL-I (Vol. IV) - dated 5-9-2018 - Co. Law
  Notification regarding Designation of Special Court

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Customs

• 44/2018 - dated 6-9-2018 - ADD
  Seeks to rescind the notification No. 04/2015- Customs (ADD), dated the 13th February, 2015 so as to discontinue Anti-Dumping Duty levied on 'Graphite Electrodes of all diameters' originating in or exported from China PR

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• 43/2018 - dated 6-9-2018 - ADD
  Seeks to levy anti-dumping duty on Glass CSM originating in or imported from Thailand in view of circumvention of Anti dumping duty imposed by vide Notification 48/2016 Customs(Add) dated 1 September 2016.

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Law of Competition

• F. No. 5/22/2007-CS - G.S.R. 840 - dated 6-9-2018 - Competition Law
  Competition Commission of India (Term of the Selection Committee and the manner of selection of panel of names) Amendment Rules, 2018

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Highlights / Catch Notes

Income Tax

• TDS u/s 194L/194LA - section 194L or section 194LA of the I.T. Act, 1961 had absolutely no application to the facts and circumstances of the present case. The squatters / hutment dwellers have absolutely no title in the land on which they squat or build their illegal and unauthorized hutments. This being the case, there is no question of there being any compulsory acquisition from them under any law either under the Land Acquisition Act, 1894 or any other enactments which permit compulsory acquisition of land
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• Claim of Liquidated damages - ascertained liability - Admittedly, in the instant case, no such past events have been placed before the Assessing Officer to show that there is every probability that the expenditure will be incurred. At best, the assessee can pitch their case as a case of possibility but, not a case of probability.
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• Protective assessment - tribunal quashed the order of protective assessment - In all fairness, the Tribunal ought to have decided the application filed for deferment by the petitioners nor deferred the hearing as a decision is taken in the substantive appeals filed by the Janardhan Reddy. Therefore, the same has not been done by the Tribunal.
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• Recovery of tax - immediately after the order passed by AO as confirmed by the CIT(A) without waiting for appeal period - Pathetic incompetence of the officer either in understanding the legal provisions which is borne out from the book or in understanding the judgment, which governs the law with reference to the manner of recovery. The conduct of third respondent is nothing but causing harassment to assessee.
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• Demand of interest - assessee sought adjustment of refunds due to the petitioner against the outstanding demands u/s 245 - Revenue directed to adjust the refund with the demand in accordance with law.
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• Condonation of delay denied - It is well settled that when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.
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• A person who is Managing Director or Director, as the case may be, of the company, on the date of filing of the appeal before the Tribunal is only authorized to sign and verify the appeal filed before the Tribunal in the case of a company. In the present case, nothing on record suggest that the person filing the instant appeal was so qualified. - Appeal dismissed.
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• No justification for CIT(A) to dismiss the appeal of assessee-company as withdrawn because it is well settled Law that assessee-company having once filed an appeal cannot withdraw it. Assessee-company under such circumstances was fully justified for filing appeal before the Tribunal.
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• Nature of rental income - Letting-out/renting-out the property was in fact business of the assessee-company. Therefore, same was correctly claimed by assessee-company as income from business and profession.
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• Interest income - tax-ability u/s 56 - If the assessee company receives any amount which is inextricably linked with the process of setting up its plant and machinery, such receipts will go to reduce the cost of its assets. Hence such receipts are capital in nature and cannot be taxed as income under income from other sources.
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• Taxability of sum received as interest on enhanced compensation - interest awarded u/s. 28 of the Land Acquisition Act, 1894 - enhanced compensation received on acquisition of agricultural lands - benefit of exemption allowed.
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• Frivolous appeals by Revenue - the tax authorities are callously heedless and uncaring vis-à-vis the pain and harassment caused by such obdurate acts to the public whom they are presumed to serve. Once the AO is satisfied in the remand proceeding, he cannot be said to be aggrieved by the order passed by the CIT(A) considering his own remand report.
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• Loss from mutilated currency notes claimed as business loss/business expenditure in computation of taxable total income - AO to allow the loss to the extent of 20%
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Customs

• Jurisdiction of DGFT - Power to recover customs duty - the said authority did not have power to act as Customs officer recovering the unpaid customs duty failing which, he would exercise power to impose penalty under section 11(2) of the Act.
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• DFIA scrips - Subsequent cancellation of the licenses/scrips - fraud or suppression continues, if document is not genuine and contrary interpretation defeating legislative intention will not enable perpetuation of fraud and a purchaser or successor of fraudulently obtained licence stands in the same position as the predecessor.
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• Immediate suspension of Container Freight Station (CFS) - Illegal removal of seized/confiscated goods - The order is in the nature of fixing the petitioner for the lapse with a view to save the skin of the officials of the Revenue.
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• Classification of imported goods - cargo sling - The highly technical equipment cannot be differentiated into smaller parts and cannot be classified as per the make of a smaller part in it.
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• Demand of differential duty. - the machinery provisions of law cannot subordinate the charging provisions of the statute. There is no material evidence to sustain the allegation of misdescription and statements.
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• Classification of Imported Bitumen - whether ‘petroleum bitumen’ or ‘natural bitumen’? - It is strange that a chemical laboratory arrogating to itself the expertise of denying Iran as a source of natural bitumen has been accorded such credence in the adjudication order and with no support to substantiate the contents thereof.
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DGFT

• Paragraph 2.79 D has been included in the Handbook of Procedures of FTP 2015- 20 to lay down the procedure for export of SCOMET items for display/exhibition/tenders/RFP/ RFQ/NIT purposes.
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• Paragraph 2.79 C has been included in the Handbook of Procedures of FTP 2015- 20 to lay down the procedure for export of SCOMET items for repair/replacement purposes
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• lock-wise fulfilment of EO under the EPCG Scheme - Hand book of Procedures 2015-20 amended to facilitate intimation to Regional Authorities without digital signature
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FEMA

• Approval of the Reserve Bank in certain cases for establishment of branch office, liaison office or project office or any other place of business in India - Regulation 5 as amended - NGO/ NFO or Body/Agency/Department of a foreign government covered under the FCRA shall not seek permission under this regulation.
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• Reporting requirements in case of Foreign Direct Investments (FDI)- Regulation 13 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017 as amended.
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Corporate Law

• Restoration of the name of the company as been struck off by the respondent - Pr. Commissioner of Income Tax (PCIT) sought restoration for the purpose of proceedings under the Income Tax Act - ROC directed to restore the company name which had been struck off based on the false statements.
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Service Tax

• Rejection of benefit of VCES, 2013 - recovery of Interest - The recovery notice in the absence of any adjudication order prima facie is without jurisdiction - interim stay granted.
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• Business Auxiliary Services - threshing and re-drying operations of tobacco leaves - activity of the assessees is in relation to the agriculture and not subject to service tax even before or after the negative list was issued on 1-7-2012
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• Reversal of CENVAT Credit - common input services - The mechanism adopted by the appellant for following both sub-rule (2) and sub-rule (3) in respect of different common input services defeats the very restrictions placed under different conditions of sub-rule (3)
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• CENVAT Credit - reversal of proportionate credit - Banking and other Financial Services - input service - Cash Credit/ Over Draft (CC/OD) services - whether the said service is exempt or not? - Held Yes - Reversal confirmed.
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Central Excise

• Classification of goods - 36 products of fertilizers marketed as 'Plant Growth Promoters' - Whether the circular can be issued to provide an extended meaning to the term 'essential constituent' employed in Note 6 in Chapter 31? - exercise of discretion by the quasi judicial authority cannot be interfered by the circular - circular dated 6-4-2016 quashed and set aside, being ultra vires
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• Rebate of Excise duty paid - export of Biscuits - the availability of the exemption depended upon various factors. Hence, it cannot be concluded that the exemption was absolute and unconditional. By holding the exemption to be absolute and unconditional, the Commissioner (Appeals) committed a grave error. - Benefit of rebate (refund) allowed.
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• Valuation - inclusion of price of warranty services in assessable value - Although the amounts become payable only later, in our view, this would still come within the scope of the definition of the type of warranty charges that would be required to be incorporated into “transaction value” for the purposes of Section 4(3)(d) of the Act.
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VAT

• Levy of Purchase Tax - purchases of such seeds from various farmers - the assessee had made purchases of seeds from the farmers who are unregistered dealers - the assessee company is not a farmer - demand confirmed.
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Case Laws:

• GST

• 2018 (9) TMI 372
  Unable to upload FORM GST TRAN-1 - Vires of Section 140(3) of the CGST Act and Rule 117 of the CGST Rules - Held that:- The petitioner’s representations, if any, made to the respondents shall be considered by the concerned Nodal officer in terms of the Grievance Redressal Mechanism. The empowered officer would pass a speaking order - Petition disposed off.

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• 2018 (9) TMI 371
  Transitional Credit - Section 140 of the Central General Sales Tax Act, 2017 - violation of Principles of Natural Justice - Held that:- The respondent states that the impugned order is only a show cause notice. This Court is unable to agree with the said stand taken by the learned Senior Panel Counsel appearing for the Revenue, as a show cause notice cannot pre-judge the issue. Had the first respondent issued a notice calling upon the petitioner to state as to why the transitional credit claimed by them cannot be granted or should be directed to be reversed, then it would be a different matter. In the impugned proceedings, the first respondent denied the credit and all that has been granted is 15 days' time to reverse the credit, which, according to the first respondent, is inadmissible. These are sufficient grounds to hold that the impugned order is in violation of the principles of natural justice. Petition allowed - decided in favor of petitioner.

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• 2018 (9) TMI 370
  Unable to upload FORM GST TRAN-1 - migration to GST Regime - input tax credit - Held that:- It is deemed appropriate to dispose of the writ petition permitting the petitioner to prefer an application before the additional sixth respondent, the Nodal Officer appointed to resolve issues in the nature of one raised by the petitioner - petition disposed off.

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• 2018 (9) TMI 369
  Seizure of goods alongwith Vehicle - till date no order passed inspite of appeal - Held that:- Learned Standing Counsel appearing for the respondents is not in a position to inform why the appeal could not be decided and where the seized goods are kept by the authorities till they are ordered to be released by the competent authority or court. The respondents cannot be keep on detaining or seizing the goods and to keep them on the road itself which may ultimately create numerous other problems - the Appellate Authority that is respondent no. 4 is directed to decide the appeal of the petitioners in accordance with law - petition disposed off.

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• 2018 (9) TMI 368
  Seizure of goods alongwith Vehicle - goods not accompanied by the E-way bill - case of petitioner is that as the site was not operative, the bill could not be generated but subsequently the E-way bill was downloaded on 03.06.2018 at 11.18 a.m. and was produced before the authorities. There was no intention to evade any tax to permit seizure - Held that:- The seized goods and the vehicle shall be released in favour of the petitioner on furnishing security other than cash and bank guarantee to the satisfaction of the authority concerned of the amount equivalent to the value of the goods only - List for admission/final disposal immediately on the expiry of above period.

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• 2018 (9) TMI 367
  Seizure of goods - seizure order does not disclose the specific provision of law which has been violated in transporting the goods - Held that:- Learned Standing Counsel may seek instructions in the matter and file counter affidavit within a month. The petitioner may file rejoinder affidavit, if any, within two weeks thereafter - In the meantime the goods seized along with vehicle shall be released forthwith on furnishing security other than cash or bank guarantee equivalent to the amount of tax and penalty imposed.

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• Income Tax

• 2018 (9) TMI 366
  Penalty under Section 271C - non deduction of tds - assessee in default - Held that:- Since the tax effect/liability is less than the prescribed limit as mentioned in Circular No.3/2018 dated 11th July, 2018 issued by Ministry of Finance, Department of Revenue, Central Board of Direct Taxes, New Delhi, we see no reason to interfere with the impugned orders. The special leave petitions are, accordingly, dismissed.

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• 2018 (9) TMI 365
  Retrospectivity of amendment brought in section 40(a)(ia) - no disallowance under section 40(a)(ia) required to be made as held by CIT(A) - belated deposit of TDS - Held that:- In view of the Judgment dated 24.04.2018 passed by this Court titled as “Commissioner of Income Tax Kolkata X Vs. M/s Calcutta Export Company” [2018 (5) TMI 356 - SUPREME COURT] and connected matters, these Special Leave Petitions are dismissed.

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• 2018 (9) TMI 364
  Maintainability of appeal - monetary limit - Held that:- Effect involved in this appeal is below the monetary limit, therefore, this appeal is dismissed as not maintainable. SLP dismissed.

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• 2018 (9) TMI 363
  Assessment u/s 153C - Search and seizure operation u/s 132 - addition with respect to the unaccounted sum - Held that:- SLP dismissed.

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• 2018 (9) TMI 362
  Assessment of income from the sale of 18 flats - selection of assessment year - “transfer” in terms of Section 2(47) - Non delivering of the possession - Held that:- SLP dismissed.

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• 2018 (9) TMI 361
  Block Assessment - Fixed deposits in the fictitious names not detected during search but detected by investigation which was carried after the search – Tribunal holding that the information not found during the course of search cannot be used to arrive at an undisclosed income under the block assessment as per section 158BB – Held that:- We have examined the grounds urged in support of the prayer for review. We find no error apparent on the face of the record to warrant recall of our order [2018 (5) TMI 266 - SUPREME COURT OF INDIA]. The review petition is, accordingly dismissed.

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• 2018 (9) TMI 360
  TDS u/s 194L/194LA - cost of construction incurred by the assessee is the consideration paid for acquiring such rights, interest and titles from such squatters/hutments - whether consideration given by assessee to such squatters/ hutments was not in the nature of 'compulsory acquisition of land/ structure'? - Held that:- For the purpose of implementing the scheme of the Government relating to road widening near the railway track, the assessee evacuated the illegal/unauthorized persons who were squatters/hutment dwellers. The fact of the matter was that the possession of these persons was unauthorized and illegal and they were not the owners of the land on which they had squatted / built their illegal hutments. In fact, they were trespassers. This being the case, there was no question of the land being acquired by the assessee. In fact the ITAT, and in our view correctly, came to the conclusion that the land always belonged to the State; it was encroached upon, which encroachment was removed by the assessee; and the encroaching squatters / hutment dwellers were rehabilitated. This being the case, we find that section 194L or section 194LA of the I.T. Act, 1961 had absolutely no application to the facts and circumstances of the present case. The squatters / hutment dwellers have absolutely no title in the land on which they squat or build their illegal and unauthorized hutments. This being the case, there is no question of there being any compulsory acquisition from them under any law either under the Land Acquisition Act, 1894 or any other enactments which permit compulsory acquisition of land TDS u/s 194C or 194J - short deduction of tds - payment of of maintenance contracts which relate to minor repairs, replacement of some spare parts, greasing of machinery etc. - Held that:- Assessee had made payments only in respect of maintenance contracts which relate to minor repairs, replacement of some spare parts, greasing of machinery etc. These services do not require any technical expertise, and therefore, could not be categorized as “technical services” as contemplated under section 194J of the I.T. Act, 1961. We must mention here that section 194J of the I.T. Act, 1961, deals with fees for professional or technical services. In contrast, section 194C of the I.T. Act, 1961 deals with payments to contractors. The assessee had correctly deducted TDS under the provisions of section 194C of the I.T. Act, 1961 and not as per the provisions of section 194J - Revenue appeal dismissed.

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• 2018 (9) TMI 359
  Prosecution u/s 276(C)(1) - stay application - Held that:- We inquired from the petitioner's advocate as to whether the petitioner sought any interim relief/stay during the pendency of the Appeal and he says that, that was not sought in the hope and anticipation that the Appeal itself would be disposed of. We find that interest of justice would be served if we dispose of this writ petition by keeping larger and wider question open. In the event, the petitioner seeks a stay of the order passed by the Assessment Officer by making a stay application, then, during the pendency of such application, the criminal prosecution should not be launched and, if it has been already launched, the same shall not proceed. Thus, the ad-interim stay granted by this Court would continue till the disposal of the application for stay by the First Appellate Authority.

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• 2018 (9) TMI 358
  Payment of disputed demand - petitioner as required to pay 20% of the disputed demand pending disposal of CIT(A)-4 before the Appellate Authority- Held that:- Having heard the learned Counsel for the parties at length, this Court is of the considered opinion that if the petitioner is directed to pay 5% of the disputed demand made in the impugned orders as per Annexures-Y, and Z(B) dated 25.7.2018 and 31.7.2018 respectively, it is suffice in the interest of both the parties and it is expected that the Lower Appellate Authority shall dispose of the appeal which is reserved for judgment at the earliest. Writ petition is disposed of directing the petitioner to deposit 5% of the disputed demand made in the impugned orders as per Annexures-Y, and Z(B) dated 25.7.2018 and 31.7.2018 respectively by the 5th respondent within two weeks from the date of receipt of copy of this order

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• 2018 (9) TMI 357
  Claim of Liquidated damages in respect of delay in delivery - Held that:- The documents placed before the Court will clearly show that there has been negotiations, discussions before the liquidated damages was arrived at, which was much after the subject assessment years. These documents are in fact strengthening the case of the Revenue and the findings rendered by the CIT(A) as well as the Tribunal, which had held that there is no ascertained liability. A past event that leads to a present obligation is called an obligating event and the obligating event is an event that creates an obligation, which results in an outflow of resources. Thus, only those obligations arisen for past event existing independently on the future contract of the enterprise is recognised provision. Admittedly, in the instant case, no such past events have been placed before the Assessing Officer to show that there is every probability that the expenditure will be incurred. At best, the assessee can pitch their case as a case of possibility but, not a case of probability. Thus, the assessee having failed to fulfil the triple test prescribed in Rotork Controls India (P) Ltd. (2009 (5) TMI 16 - SUPREME COURT OF INDIA), is not entitled to the deduction as claimed by them. As assessee submitted that the assessee should be entitled to claim the same in the year when the damages had been recovered. Needless to state that it is for the assessee to disclose the same in the return of income to the relevant year, which will obviously be considered by the Assessing Officer in accordance with law. Accordingly, the second substantial question of law framed in these appeals is answered in favour of the Revenue and against the assessee.

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• 2018 (9) TMI 356
  Protective assessment - tribunal quashed the order of protective assessment without considering hte deferment application of the revenue - assessment u/s 153C / 153A - It was the specific case of the petitioners before the Tribunal that a request was made to defer the hearing of the appeal on the ground that the assessment in appeal being protective basis and the order of assessment order on substantive basis in case of Gali Janardhan Reddy. The Appellate Commissioner has to decide the matter at the earliest. Therefore, a request was made to defer the appeal before the Tribunal till a decision is taken in the appeal filed by Janardhan Reddy which is a substantive appeal. Held that:- It is not in dispute that in the protective assessment order at Annexure-A there is a reference to the case of Gali Janardhan Reddy which reads as under: In the light of the above evidence, the assessee was required to show cause, vide letter dated 07.01.2013 why an amount of ₹ 194,82,50,000/- for the assessment year 2010-11 and ₹ 37,45,06,000/- for the assessment year 2011-12, should not be brought to tax as his undisclosed business income. Mr. Madhukumar Varma furnished his explanation vide letter dated 24.1.2012 by disassociating himself from the seized material and contradicting his own statements made during the time of search. Hence, his contention was rejected. In such circumstances, considering the evidence on record, the above sum of ₹ 194.82 crores is added protectively in the hands of the assessee and substantively in the hands of Mr.G.Janardhana Reddy as arising from undisclosed sources for the assessment year 2010-11. Though an attempt was made by learned counsel for the respondent, that the said order was set-aside by the Tribunal on 17.10.2016 and the same reached finality. The fact remains that a reassessment order came to be passed as per Annexure-D on 29.12.2017 and that is the subject matter of appeal pending before the Commissioner of Appeals. In all fairness, the Tribunal ought to have decided the application filed for deferment by the petitioners nor deferred the hearing as a decision is taken in the substantive appeals filed by the Janardhan Reddy. Therefore, the same has not been done by the Tribunal. When the application filed by the petitioners is pending before the Tribunal for deferment, it is appropriate for the Tribunal to decide the said application first on its merits and thereafter, can proceed in the appeal.

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• 2018 (9) TMI 355
  Recovery of tax - whether the third respondent Assessment Officer was entitled to recover the entire tax which was assessed by him immediately after the order passed by him is confirmed by the Commissioner of Income Tax (Appeals) without waiting for appeal period which is statutorily provided under the Act as contemplated in Section 253 (3) of the said Act? - Held that:- In this proceedings the learned counsel appearing for the respondent Nos.1 to 3 tried to substantiate the act of the third respondent in relying upon Section 225 of the Act and other relevant provisions which are coming under Chapter 17(d) in support of the action of third respondent Income Tax officer in recovery of the tax assessed. This Court is of the opinion that the respondents have miserably failed to substantiate the illegal act committed by the third respondent in high handedly recovering the assessed amount. Despite the fact that statutorily he is prevented from doing so which is fortified by several judgments of various High Courts and Hon ble Apex Court. Pathetic incompetence of the officer either in understanding the legal provisions which is borne out from the book or in understanding the judgment, which governs the law with reference to the manner of recovery. The conduct of third respondent is nothing but causing harassment to assessee. In that view of the matter this Court finds the amount of ₹ 15,82,41,007/- which is recovered by third respondent is in excess of his right in the fact situation, also in the light of the judgment referred to supra as could be seen from Annexure-A, the same is ordered to be refunded within one week from the date of receipt of copy of this order.

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• 2018 (9) TMI 354
  Demand of interest - assessee sought adjustment of refunds due to the petitioner against the outstanding demands u/s 245 - refunds processed online - Held that:- The petitioner made an attempt to obtain refund of the said amount of ₹ 110,52,45,145/- on TDS Reconciliation, Analysis and Correction Enabling System (‘TRACES’), an online Portal under the control and supervision of the 1st respondent. However, the petitioner could not succeed in getting its refunds processed online. The provisions of Section 245 of the Act clearly depicts that where under any of the provisions of the Act, a refund is found to be due to any person, the Assessing Officer, Deputy Commissioner (Appeals), Commissioner (Appeals) or Principal Chief Commissioner or Chief Commissioner or Prl. Commissioner or Commissioner, as the case may be, may, in lieu of payment of the refund, set off the amount to be refunded or any part of that amount, against the sum, if any, remaining payable under this Act by the person to whom the refund is due, after giving an intimation in writing to such person of the action proposed to be taken under this section. The authorities ought to have exercised their powers under the provisions of the section-245 of the Act either to refund the amount due or adjust the refund against the outstanding demands for the assessment years 2010-11 to 2013-14. The same has not been done in the present case. Writ petitions are allowed and the respondents are hereby directed to adjust the refund of ₹ 110,52,45,145/- due to the petitioner pursuant to the orders dated 22.12.2017 (Annexures-H-1 to H-4) passed by the 2nd respondent, against the outstanding demands made against the petitioner for the assessment years 2010-11 to 2013-14, in accordance with law as expeditiously as possible

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• 2018 (9) TMI 353
  Reopening of assessment - non independent application of mind - reliance on objection of the audit party - Held that:- Reopening was made on the basis of objection of the audit party and no independent application of mind was there by the AO. Furthermore, the second limb of reasons recorded by the AO that no loss for the same assessment year was adjusted against the long term capital gains was contrary to the factual matrix. Former part of this order and in view of the various judicial pronouncements mentioned hereinabove, we are of the considered view that the notice issued u/s. 148 of the Act for reopening the assessment u/s. 147 of the Act in the present case was not justified. Reassessment framed by the AO on the basis of invalid notice is set aside. - Decided in favour of assessee

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• 2018 (9) TMI 352
  Reopening of assessment - eligibility of reason to believe - escaped assessment amounts to, or is likely to be ₹ 1,00,000/- or more - Held that:- The reasons assigned by the respondent No.1 for invoking Section 147 of the Act do not specify that the escaped assessment amounts to or is likely to amount to ₹ 1,00,000/- or more for the relevant assessment year as evinced from the reasons placed on record by the petitioner before the Court. Section 151(1) provides that no notice shall be issued under Section 148 of the Act by an Assessing Officer, after the expiry of a period of four years from the end of the relevant assessment year, unless the Principal Chief Commissioner of Chief Commissioner or Principal Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer, that it is a fit case for the issue of such notice. It is mandatory for the Assessing Officer in his reasons recorded, to state that the escaped assessment amounts to, or is likely to be ₹ 1,00,000/- or more, to bring it within the ambit of Section 149(1)(b) of the Act. The mandatory requirement of Section 149(1)(b) of the Act is not complied with. Hence, the assumption of jurisdiction by respondent No.1 under Section 147 of the Act is untenable - Decided in favour of assessee

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• 2018 (9) TMI 351
  Interest on the refund granted - date from which interest on refund amount to be awarded i.e, either from the date of exemption or from the date of the application - Held that:- The respondent authorities have to decide from which date the petitioner - assessee is entitled for interest on the refund amount in view of the exemption granted by the Tribunal as long back on 28.9.2007 (Annexure-C) though the application filed on 27.3.2006 (Annexure-A). All these aspects are not considered by Respondent Nos.1 and 2. It is also relevant to state at this stage that in view of Sections 244A(1), 244A(2), 244(1A) and 153 and other relevant provisions of the Act, the Prl. Chief Commissioner or the Commissioner is the final authority to decide regarding the date from which interest on refund to be granted. In all these writ petitions, order of refund to the assessee is not at all challenged by the Revenue. There is no dispute with regard to the refund amount to the assessee. The order of refund is final. The dispute is only with regard to the date from which interest on refund amount to be awarded i.e, either from the date of exemption or from the date of the application. The same has not been considered by the authorities below. For the reasons stated above, the writ petitions are allowed. The impugned orders dated 27.5.2011 passed by the 2nd respondent declining to award interest on refund as per Annexure-F and consequential Revision Order dated 26.3.2014 passed by the 1st respondent as per Annexure-G, in all these writ petitions are hereby quashed. The matters are remanded to the 2nd respondent - Assistant Commissioner of Income Tax for re-adjudication

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• 2018 (9) TMI 350
  Condonation of delay denied - revision petition dismissed mainly on the ground of technicality - granting exemption under Section 80P(2)(a)(i) - Held that:- As brought to the notice of this Court that in identical circumstances, in the case of CIT vs Sri Biluru Gurubasappa Pattina Sahakari Sangha Niyamitha [2015 (1) TMI 821 - KARNATAKA HIGH COURT] the very CIT has condoned the delay and allowed the petition granting exemption under Section 80P(2)(a)(i) of the Act. For the subsequent assessment years 2008-09, 2012-13 and 2013-14, the Commissioner for Income Tax (Appeals) in respect of very petitioner, has granted exemption from payment of tax. In all fairness, the Commissioner while passing the impugned order ought not to have rejected the application for condonation of delay as well as revision petition. When the Commissioner himself has granted exemption to subsequent years to the very petitioner and the Board s Instruction No.13/2006 dated 22.12.2006 clearly depicts that up to six years application for refund can be entertained, but in the present case it is only two years. Therefore, the Commissioner for Income Tax ought to have proceeded to condone the delay and decide the revision petition on merits. It is well settled that when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. Writ petition is allowed. The impugned order passed by the 2nd respondent as per Annexures-H and K are hereby quashed and the matter is remanded for consideration afresh.

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• 2018 (9) TMI 349
  Qualification of person for filling appeal - qualification of person who is the Managing Director of the assessee company - Held that:- An appeal u/s 253 to the Tribunal is required to be filed in prescribed Form No. 36 and the same is to be signed by the persons specified in Sub-rule (2) of Rule 45. As per Sub-rule (2) of Rule 45, the prescribed form of Appeal, the Grounds of Appeal and the Form of Verification appended thereto, are required to be signed and verified by the person who is authorized to sign the return of income under Section 140 of the Income Tax Act,1961. As per Section 140 the return of income under Section 139 has to be signed and verified, in the case of a company, resident in India, by the Managing Director thereof, or where for any inevitable reason such Managing Director is not able to sign and verify the return or where there is no Managing Director, by any Director thereof. A combined reading of these relevant provisions makes it abundantly clear that the person who is the Managing Director of the assessee company, or its Director in certain circumstances, on the date of the filing of the return only can sign and verify the return in the case of a company, It therefore, follows that a person who is Managing Director or Director, as the case may be, of the company, on the date of filing of the appeal before the Tribunal is only authorized to sign and verify the appeal filed before the Tribunal in the case of a company. In the present case, nothing on record suggest that the person filing the instant appeal was so qualified. Therefore, the instant appeal, not signed and verified as per statutory mandate, is not maintainable in law and hence, liable to be dismissed at the very threshold - appeal stands dismissed.

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• 2018 (9) TMI 348
  Disallowance u/s 14A read with Rule 8D - Held that:- The facts of the case are identical to the facts of A. Y. 2008-09 wherein the Hon ble Delhi High Court in case of H. T. Media Ltd. Vs. Principal CIT (2017 (8) TMI 962 - DELHI HIGH COURT) held that in the facts of the case no disallowance on account of interest is called for and disallowance made by the company of ₹ 3 lac on account of administrative expenses is to be upheld, since the Assessing Officer had not recorded any satisfaction. Disallowance on account of computer peripherals - Held that:- This issue is covered in favour of the assessee by the order of the Tribunal in assessee s own case for A. Y. 2007-08 wherein the ratio laid down by the Hon ble High Court in case of BSES Yamuna Power Ltd. [2010 (8) TMI 58 - DELHI HIGH COURT] wherein the entitlement to the higher rate of depreciation on computer peripherals has been laid down by deciding the issue in favour of the assessee. Allowability of club expenses - Held that:- This issue is covered in favour of the assessee by the Tribunal for A. Y. 2007-08 in assessee s own case wherein the ratio of the Hon ble Apex Court in case of United Glass Manufacturing Co. Ltd. (2012 (9) TMI 914 - SUPREME COURT) has been followed.

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• 2018 (9) TMI 347
  Levy of penalty u/s 271(1)(c) - mistake in the letter of the Counsel for Assessee - Held that:- If there were mistake in the letter of the Counsel for Assessee, CIT(A) should have gone by the Order of the Tribunal and by following the Order of the Tribunal should have set aside and delete the penalty in the matter because there were no foundation exist for levy of the penalty against the assessee-company. CIT(A), in such circumstances, should not have allowed withdrawal of the appeal by the Counsel for the Assessee. If the Counsel for Assessee has committed a blatant mistake that should not have been allowed to continue by the First Appellate Authority and he was required by Law to follow the Order of the Tribunal to do substantial justice between the parties. No justification for CIT(A) to dismiss the appeal of assessee-company as withdrawn because it is well settled Law that assessee-company having once filed an appeal cannot withdraw it. Assessee-company under such circumstances was fully justified for filing appeal before the Tribunal. We, therefore, reject the contention of the CIT-D.R. that assessee-company cannot file appeal before the Tribunal in such circumstances.

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• 2018 (9) TMI 346
  Revision u/s 263 - whether rental income was to be taxed under the Head “Business Income” or “Income from House Property”? - Held that:- The assessee-company filed copy of the Memorandum of Association and Learned Counsel for the Assessee referred to main objects to be pursued by the assessee-company on its incorporation which provides that assessee-company would be carrying on business for construction of any type of property and to let-out or sell the same to the public, therefore, renting-out the properties is also one of the main objects of the assessee-company. Letting-out/renting-out the property was in fact business of the assessee-company. Therefore, same was correctly claimed by assessee-company as income from business and profession. The assessee-company in response to the show cause notice issued under section 263 of the I.T. Act, has specifically raised the above points in its reply before Ld. CIT. However, the Ld. CIT without considering the explanation of assessee-company, passed the impugned orders. CIT did not examine the explanation of assessee-company at all and passed the order without giving any reasons for decision for the same. Thus, no enquiry have been conducted by the CIT to come to the conclusion that original assessment orders were erroneous and prejudicial to the interests of the Revenue. A.O. has correctly accepted the rental income as business income in the facts and circumstances of the case. The Orders of the Ld. CIT, thus, cannot be sustained in Law. We, accordingly, set aside the impugned Orders of the Ld. CIT passed under section 263 of the I.T. Act and restore the original assessment orders. - Decided in favour of assessee.

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• 2018 (9) TMI 345
  Entitled to deduction u/s 80P(2) - Whether the interest income received from investments with co-operative banks is entitled to deduction u/s 80P(2)(a)(i)? - Held that:- Assessee to entitled to deduction u/s 80P(2) of the I. T. Act, the Cochin Bench of the Tribunal in the case of ITO v. The Chengala Service Co-operative Bank Ltd. [2018 (4) TMI 339 - ITAT COCHIN] after elaborately considering all the judicial pronouncements had decided the issue in favour of the assessee. Interest received on investments with cooperative Banks - Held that:- In the instant cases, it is not clear that the interest income was received out of investments made with co-operative societies. Therefore, we are of the view that deduction u/s 80P(2)(d) of the I. T. Act cannot be granted. Further, we find that the investments are made by the assessee-societies in the course of its banking business / providing credit facilities to its members and hence such income will form part of banking activities of the assessee and same is entitled to deduction u/s 80P(2)(a)(i). We are of the view that the assessee are entitled to deduction u/s 80P(2)(a)(i) in respect of interest income received on investments made with co-operative Banks. - Decided against revenue.

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• 2018 (9) TMI 344
  Interest on FDs taxed in the hands of the assessee u/s.56 - Held that:- If the assessee company receives any amount which is inextricably linked with the process of setting up its plant and machinery, such receipts will go to reduce the cost of its assets. Hence such receipts are capital in nature and cannot be taxed as income under income from other sources. The assessee company was formed to set up a mining project and the process of setting up was got delayed and deposits of share capital amount received from the share applicants with the bank in the form of fixed deposits for short term, is to be considered as inextricably linked with the process of setting of its plant and machinery. Accordingly, we hold that the interest earned by the assessee should not be treated as income from other sources and we allow the grounds of appeal of the assessee.

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• 2018 (9) TMI 343
  Addition u/s. 50C - mandation on the part of the AO to refer the matter to the DVO - Held that:- The matter be remitted to the file of the Assessing Officer for adjudication of the same de novo upon making reference to the DVO and to complete the assessment on the basis of the valuation so received from the DVO. We pass orders accordingly and direct the Assessing Officer to decide the matter afresh on the basis of the valuation to be made by the DVO by passing a speaking order in accordance with law upon giving a reasonable opportunity of hearing to the assessee. - Appeal of the assessee is allowed for statistical purposes.

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• 2018 (9) TMI 342
  Taxability of sum received as interest on enhanced compensation - interest awarded u/s. 28 of the Land Acquisition Act, 1894 - enhanced compensation received on acquisition of agricultural lands - Held that:- CIT(Appeals) was fully justified in allowing exemption u/s. 10(37) of the Act on the interest received by the assessee u/s. 28 of the Land Acquisition Act, 1894. We find no grounds to interfere with the impugned order of the CIT(Appeals). See Movaliya Bhikhubhai Balabhai v. Income-tax Officer-TDS-1-Surat [2016 (5) TMI 488 - GUJARAT HIGH COURT ]- Decided against revenue

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• 2018 (9) TMI 341
  Disallowance u/s 68 - unexplained cash credit while passing assessment order u/s 144 - assessee has failed to prove the sources of cash deposits, by way of any documentary evidence - assessment was passed u/s 144 in peculiar facts where admittedly the assessee being a ‘Non Resident Indian' permanently settled in Canada - Held that:- We note that the occasion for the AO to file an appeal did not arise. It is noticed that for filing the present appeal, approval has been granted by Pr. CIT Ludhiana on 28.07.2017. There can be no two opinions to hold that the approval admittedly has also been granted mechanically which leads to the indelible conclusion that the Administrative checks and balances placed by the Department in place for not filing frivolous appeals admittedly are not working. Since the facts and evidences considered in the remand proceedings have not been rebutted by the AO in the present proceedings, the present appeal ought not to have been filed. As once the issues have been given up by the AO in the remand proceedings, the occasion to re-agitate the very same issue by filing an appeal in the absence of any rebuttal on facts and evidences can be easily said to be not only an irresponsible criminal waste of Government time, money and resources but also gives rise to the latent resentment in public consciousness that the tax authorities are callously heedless and uncaring vis-à-vis the pain and harassment caused by such obdurate acts to the public whom they are presumed to serve. Once the AO is satisfied in the remand proceeding, he cannot be said to be aggrieved by the order passed by the CIT(A) considering his own remand report. It need not be over emphasized that as far as the world at large is concerned, the Assessing Officer is an authority and is not a specific person. Thus, merely on account of change of the AO, presumably the incumbent cannot be allowed to file appeals willy nilly. - Decided against revenue

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• 2018 (9) TMI 340
  Reopening of assessment - loss from mutilated currency notes claimed as business loss/business expenditure in computation of taxable total income - deduction u/s 37 - Held that:- the income chargeable to tax was underassessed during the course of scrutiny assessment under section 143(3) of the Act and therefore, the Assessing Officer reopened the assessment. Explanation 2 to section 147 of the Act envisages that if the income chargeable to tax was underassessed, the Assessing Officer can reopen the assessment and brought the underassessed income to tax - the appellate order dated 19.11.2012 has not influenced the Assessing Officer to reopen the assessment, which was completed under section 143(3) of the Act, but for underassessment. Under the above facts and circumstances, we are of the considered opinion that the assessment was validly reopened under section 147 Loss from mutilated currency notes - Vide circular No.RBI/2012-13/562 [DCM(FNVD) No. 5840/16.01.05/ 2012-13] dated 27.06.2013 addressed to the CMD/CEO of all Scheduled Commercial Banks, while deciding to compensate the banks 25% of the loss incurred in respect of counterfeit notes of ₹.100 and above detected by them and reported to RBI and Police Authorities, it was also emphasised in the Extract of Monetary Policy Statement 2012-13 to streamline their system in a manner which will make them bear the risk of counterfeit bank notes rather than the common man who unknowingly comes in possession of such notes. Admittedly, the assessee is engaged in trading in gold bullion and there is every possibility of getting mixed the mutilated notes during the course of his business. In the assessment year 2008-09, the Assessing Officer allowed the loss to the extent of 20% of total claim of the assessee. Similarly, we direct the Assessing Officer to allow the loss to the extent of 20% in the assessment year 2009-10. Disallowance of interest for want of TDS on the application of section 40(a)(ia) in the computation of taxable total income - assessee failed to furnish the details of interest paid and TDS thereon - Held that:- On appeal, by following the decision in the case of Palam Gas Services v. CIY [2017 (5) TMI 242 - SUPREME COURT] wherein it was held that “Word ‘payable’ occurring in section 40(a)(ia) of the Act not only covers cases where amount is yet to be paid, but also those cases, where amount has actually been paid”, the ld. CIT(A) confirmed the disallowance - no infirmity in the order passed by the ld. CIT(A) and thus, the ground raised by the assessee stands dismissed for the assessment year 2008-09.

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• 2018 (9) TMI 339
  Addition on the basis of peak credit theory - Held that:- All the details of cash deposits to the tune of ₹ 30,13,800/- is available and co-relates with the ledger account and fully explainable because the same have been routed through cash book maintained by the assessee. AO has taking into consideration the debit as well as credit entries for applying peak credit theory which is not sustainable, therefore, the observation of the Ld. CIT(A) to the extent that, in the absence of documentary evidences and clarification in respect of various cash deposits amounting to ₹ 30,13,800/- in the Bank Account of the assessee culminated into rightly assessed income of the assessee after taking into account is peak credit, is contrary to the facts and documents on record and hence can not be sustained. Even otherwise, the gross turn over o the Asseeee has also been accepted by the department in subsequent assessment year without deduction. DR has not refuted the claim of the assessee by placing on record any contrary material and/or pointing out any defect in the ledger account and the bank statement of the assessee. Thus addition to be deleted - Decided in favour of assessee

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• Customs

• 2018 (9) TMI 334
  Recovery of arrears of Revenue - Petitioner's grievance is that the recovery proceedings cannot be initiated against them, as they are not covered by the provisions of Section 11 of the Act at the relevant time when it purchased specified assets under the agreement of purchase dated 26th October 1999 - Held that:- The issue raised by the Petitioner in this case is of the appropriate interpretation of the Act. It is agreed position between the parties that the Appeal would lie from the Communication dated 18th April 2017 to the Commissioner of Central Excise (Appeals) under Section 35 of the Act. As there is an efficacious remedy available under the Act, we decline to entertain this Petition - petition dismissed being not maintainable.

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• 2018 (9) TMI 333
  Principles of Natural Justice - the only document which formed the basis/relied upon in the show cause notice dated 27th April 2012 against the Petitioner, was not furnished to the Petitioner - Held that:- This position is not disputed by the Respondents. In fact this very grievance was even made before the Appellate Authority and the same is recorded in the impugned order dated 27th March 2017. However, the impugned order dated 27th March 2017 does not even remotely consider the above fundamental grievance of the Petitioner, while dismissing its Appeal - the impugned order dated 17th May 2012 passed by the Joint Director General of Foreign Trade and the impugned order dated 27th March 2017 passed in Appeal by the Additional Director General of Foreign Trade are quashed and set aside - petition allowed.

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• 2018 (9) TMI 332
  Jurisdiction of DGFT - Power to recover customs duty - Whether the order passed by the DGFT as confirmed by the Appellate authority is legal and valid? - Held that:- The Customs authorities had not initiated any action for recovery of unpaid duty. Instead, it is the authority under the DGFT which issued show-cause notice and ultimately passed the impugned order. These steps were initiated after discharge of the LUT and bank guarantees. The show-cause notice dated 25.01.2005 which was pursued and which culminated into the final order, referred to and proposed action under section 11(2) of the Act of 1992. Section 11 of the Act of 1992 pertains to contravention of provision of the said Act, rules, orders and foreign trade policy. Subsection (2) of section 11 thus is a penal provision and has certainly not a provision for recovery of unpaid duty. It is hugely doubtful whether the said provision could have been invoked after the entire procedure of granting of license, import of goods under such license and export of finishing product as promised for obtaining the license, was over and culminated into discharge of LUT and bank guarantees given by the petitioner. However, in the present proceedings, we are not inclined to give any final expression or opinion on this aspect. In the present case, having initiated penalty proceedings the said authority asked the petitioner to pay up the customs duty with interest. He referred to section 13 of the Act of 1992 which specifies the Adjudicating Authority for imposing penalty or for confiscation. Thus, with the aid of section 13, he exercised powers for imposing penalty under section 11(2) of the Act. In the process, he ordered recovery of the customs duty of the specified amount with interest. Interestingly, he also provided in the operative portion of the order that immediately upon recovery or payment of the amount, as indicated in the preceding paragraphs, “present show-cause notice will be treated as withdrawn and case will stand as closed/discharged/realized?”. In clear terms therefore, he imposed customs duty with interest asked, the petitioner to pay the sum upon which, the penalty would be spared. Certainly, the said authority did not have power to act as Customs officer recovering the unpaid customs duty failing which, he would exercise power to impose penalty under section 11(2) of the Act. If the said authority was of the opinion that the petitioner exposed itself to any penalty, he ought to have recorded reasons and imposed the penalty. He certainly could not have, in the guise of penal powers, sought recovery of customs duty which power, in any case, he did not enjoy. Petition allowed - decided in favor of petitioner.

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• 2018 (9) TMI 330
  DFIA scrips - Subsequent cancellation of the licenses/scrips - assessee purchased the DFIA scrips and has availed exemption from customs duty - interpretation of statute - Section 28 of the Act - extended period of limitation. Held that:- The appellant steps into the shoes of the importer in the sense that they have purchased the advance licence, which was granted to the importer. If it is being that the licence obtained by the importer was obtained by fraud nothing further, remains to be done as fraud vitiates every solemn act and goes to the root of the matter and therefore, the assessee cannot be allowed to contend that on the date when they utilized the licence, it was not cancelled. Time Limitation - Held that:- The show cause notice has been issued invoking Section 28(1) of the Act, which is well within the period of six months from the date on which the offence was deducted and the licence was cancelled by the Joint Director General of Foreign Trade. Therefore, the power of the Customs Authority to initiate action shall at best commenced from the date on which the offence report is received by them and not earlier. Therefore, the contention raised by the assessee in this regard, is rejected. The correct legal position has been spelt out in the decision in Friends Trading Co. [2011 (2) TMI 382 - PUNJAB HARYANA HIGH COURT], wherein also somewhat identical issue arose for consideration and the Court held that fraud or suppression continues, if document is not genuine and contrary interpretation defeating legislative intention will not enable perpetuation of fraud and a purchaser or successor of fraudulently obtained licence stands in the same position as the predecessor. The said decision squarely would apply to the case on hand, as the petitioner is a purchaser of licence, which was fraudulently obtained. Appeal dismissed - decided in favor of Revenue.

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• 2018 (9) TMI 329
  Refund of Customs Duty paid which is otherwise exempt by way of notification - Section 27 of Customs Act - Exemption from payment of Customs Duty - N/N. 21/02/Cus, dated 01.03.2002 - import of plastic bags under the name 'GERBER' - rejection of refund claim on the ground that the petitioner had paid the duty without demur and, therefore, that in the absence of any dispute being raised by them, when the goods were cleared, no order under Section 27 can be issued. Held that:- The disputations between the parties in this case is more in the arena of factual circumstances than relating to forensic evaluations - It is now settled law by the Hon'ble Supreme Court in Escorts Limited v. Union of India [1994 (2) TMI 74 - SUPREME COURT OF INDIA] that in the absence of an objection being raised by the importer regarding the classification and the duty, at the time when the import is effected, normally the Authorities under the Customs Act would not be enjoined to issue any order under Section 27 of the Customs Act because there is no dispute raised and, therefore, there arises no reason for such an order - thus this is an issue that will require to be decided by the competent Authority at the first instance. These are essentially questions of fact, which cannot be considered here - it is now essential that a comprehensive view is obtained on all these issues at the hands of the competent Authority, so that the factual disputations can find resolution at the first instance. The 2nd respondent, the Deputy Commissioner of Customs (Import), is directed to reconsider the petitioner's claim for refund under Section 27 of the Customs Act, taking into account all relevant materials that may be placed before him by the petitioner - petition allowed by way of remand.

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• 2018 (9) TMI 328
  Immediate suspension of Container Freight Station - Illegal removal of seized/confiscated goods - Confiscation of Red Sanders and One Time Seal affixed - later on, the One time seal was tampered and the confiscated red sanders were found missing. Held that:- The impugned order of suspension specified that the custodian has failed to ensure the safety and security of the goods which were entrusted to his custody. Other than this, no other serious allegation is made against him. Admittedly, the very same petitioner was certified to be the best Container Freight Station for the past two consecutive years. There are no materials to point out that he is involved, much less, actively involved in the removal of the confiscated goods. It is not clear as to when the goods confiscated were removed illegally within these four years. Unless and until the real culprit is caught, it will not come to light as to who are all involved in this criminal offence and as to whether the petitioner has any role in such illegality. There can be a suspicion, till such time, against the Container Freight Station also - In the absence of prima facie materials to indicate that the petitioner is actively involved in the illegal removal of the seized goods in connivance with the staff or others, or hoodwinking the Customs officials, they shall be construed to be innocent. The impugned order does not disclose as to how the continuance of petitioner will prejudice the proceedings initiated and lacks further details as to the entrustment other seized goods with the petitioner hampering the public interest. The order is in the nature of fixing the petitioner for the lapse with a view to save the skin of the officials of the respondent. The order of interim stay granted by this Court, vide order dated 09.03.2018, is made absolute till the disposal of the proceedings initiated by the respondents in SCN No.01/2018 dated 24.07.2018, on certain conditions - petition disposed off.

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• 2018 (9) TMI 327
  Classification of imported goods - cargo sling - benefit of N/N. 21/2002-Cus. and No.6/2002-CE - scope of SCN - Held that:- The original authority has traversed beyond the scope of show-cause notice. It is evident by the submissions of the appellant that the impugned part is not only a mere sting or wire or rope but is part of A90B100 which consists of other units. It was not correct on the part of the department to isolate a minor part of the whole assembly and to classify the same according to the metal used in the manufacture of the same. The highly technical equipment cannot be differentiated into smaller parts and cannot be classified as per the make of a smaller part in it. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 326
  Misdeclaration of imported goods - ineligible concessional rate of duty - Import of 'secondary/defective cold rolled grain oriented steel sheet coils' as 'prime cold rolled grain oriented steel sheet coils' - demand of differential duty. Held that:- It is apparent from the history of imports made by the appellant, and from the contents of the standing instruction, that there is a substantial variation in the prices of prime and secondary/defective coils. Transformers are undeniably critical to the power transmission and distribution sector and the laminates manufactured from the coiled steel sheets are at the core of the transformer; its physical and chemical properties are crucial to its efficiency and therefore, to its price. Visual examination and photographic display will not suffice as acceptable substitutes. For a legally valid assessment of duty, there can be no escapement from a downward revision in the assessable value of the imported goods. That is the inevitable consequence of misdeclaration and consequent rejection of declared value. Revenue cannot have its cake and eat it too. If the goods are secondary, the constitutional provision mandating the collection of tax chartered by law, cannot be ignored to maximise revenue. To do so is illegal. To affirm so is to abet disregard of the rule of law. The adjudication order is tainted by this lack of validity. The facts are not established and the machinery provisions of law cannot subordinate the charging provisions of the statute. There is no material evidence to sustain the allegation of misdescription and statements, in the absence of facts and circumstances, fail the test of law - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 325
  Classification of Imported Bitumen - whether ‘petroleum bitumen’ or ‘natural bitumen’? - two test reports were in conflict with each other. Held that:- The two test reports namely, that of the Deputy Chief Chemist and of the Central Revenue Control Laboratory being in conflict with each other, will not suffice for deciding upon the classification. However, the primacy accorded to certain reports of M/s Geochem Laboratories Pvt Ltd as well as that of the National Iranian Oil Refining Company which are neither authenticated nor certified for expertise is improper. It is clear that asphaltite (natural bitumen) is available in many countries and, that too, in conjunction with existence of other hydrocarbons. Undoubtedly Pitch Lake in the Republic of Trinidad and Tobago with contents of over 10 million tonnes is the largest single source. At the same time, ‘bitumen’ occurs naturally in Canada, Venezuela, Russia, Indonesia and a number of other locations including the Kermanshah province of Iran - It is therefore, strange that a chemical laboratory arrogating to itself the expertise of denying Iran as a source of natural bitumen has been accorded such credence in the adjudication order and with no support to substantiate the contents thereof. The demand for differential duty and the penal provisions stand on foundations that are shaky, or do not exist - appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2018 (9) TMI 337
  Mismanagement and oppression - transfer of the present proceedings to the NCLT - Held that:- It has to be noted that any amendment or coming into force of a new law in place of the earlier law can always result in ouster of the jurisdiction that was conferred on the High Court by the earlier law. The jurisdiction of the High Court in company matters not being a jurisdiction of the civil jurisdiction under the Code of Civil Procedure, 1908, the same can always be ousted by the amendment of the enactment that conferred the said jurisdiction. Such ouster need not be express as the same is not a civil jurisdiction of the High Court. Accordingly, hold that the ouster of the jurisdiction of the High Court in relation to company matters does not need to be express and the same can be implied. The parties to a lis cannot insist on continuing the dispute in the forum the same was initiated. If and when there is an amendment to the special statute conferring the jurisdiction on the High Court, the same can be transferred to a Tribunal. It may be further noted that wholesale transfer of the proceedings in relation to the subject matter of the enactment has been validated by the Supreme Court in the Madras Bar Association’s case (2010 (5) TMI 393 - SUPREME COURT OF INDIA). True and correct interpretation of Section 434(1)(c) of the 2013 Act - Held that:- The appellants have no case, as the words used in Section 434 (1)(c), preceding the word “including”, are “all proceedings under the Companies Act, 1956”. Hence, the axiomatic conclusion has to be that anything and everything under the Companies Act, 1956 is intended to be included. Reading the words in an exhaustive sense would also lead to an interpretation that proceedings under Sec. 397 to 405 of the 1956 Act would come within the fold of “all proceedings under the Companies Act, 1956” used in Section 434(1)(c) of the 2013 Act. As come to the irrefutable conclusion that “including” in Section 434 (1)(c) is extensive and expansive and not restrictive in nature. Ergo, Section 434(1)(c) of the 2013 Act that states “all proceedings under the Companies Act 2013 including proceedings relating to….” would include all matters, without any exception, pending before the District Courts and High Court and all such matters would have to be transferred to the NCLT. Whether Section 68 of the Amendment Act, 1988 continues to subsist after coming into force of Section 434 (1)(c) of the 2013 Act - Held that:- preamble of the 2013 Act that states “an Act to consolidate and amend the law relating to companies” as also Section 1, sub-section 4(a) of the 2013 Act that states that the provisions of this Act shall apply to “companies incorporated under this Act or under any previous company law” leads me to the conclusion that the legislature intended to bring all matters under the gambit of the new enactment. It is also to be noted that Section 434(1)(c) of the 2013 Act, in no unspecific terms, directs transfer of all proceedings of the Companies Act, 1956 to the NCLT. As I have already held that Section 434(1)(c) deals with all proceedings under the 1956 Act, there is a clear inconsistency between the said provision and Section 68 of the Amendment Act, 1988. Following the principles enunciated in the Apex Court judgments discussed above, I am bound to hold that Section 68 has been impliedly repealed. Having answered the four issues, it is of the opinion that the issue raised by Mr. Pal with regard to taking aid of the notes on clauses need not be gone into in great detail as I have already held above that Section 434(1)(c) is absolutely lucid and unambiguous. Furthermore, it is clear that the removal of doubts or difficulties in the present case does not contradict the main provision in any manner whatsoever. The moment a new enactment comes into the statutory books, dealing with the same subject matter and specifically dealing with the same issue, and the transitional provision becomes inconsistent with the new enactment, the transitional provision has to go due to repugnancy. As held in (c) above, Section 434(1)(c) deals with all proceedings under the 1956 Act. Therefore, there is a clear inconsistency between the said provision and Section 68 of the Amendment Act, 1988. Consequentially, since the transitional provision is inconsistent with the new provision, it is impliedly repealed.

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• 2018 (9) TMI 336
  Oppression and mismanagement - withdrawal of company petition by Respondent No.2 - Held that:- As seen the Order of withdrawal pointed out by the Appellant, copy of which is at Page – 1 of Diary No.2247. The Order shows that when CP 62/2014 was taken up, the learned Member of the Company Law board noted that the Petitioner had filed for withdrawal stating that the Company Petition could not be listed due to technical reasons and so he wanted to withdraw the same. The Member (Judicial) of the Company Law Board recorded that since the Company Petition had not been moved before the Bench, the same was being dismissed as ‘withdrawn’, “giving liberty to the petitioner as permissible under the law”. When this withdrawal took place, the Company Petition 27(ND) of 2013 was already pending. If the petition was withdrawn with liberty to the present Respondent No.2, it was the option of the Respondent No.2 to pursue his remedy even by defending the petition which had been filed by the Appellant. Thus, we do not find that the Appellant can take any advantage by such a withdrawal. Merely by such withdrawal, the Appellant does not become a shareholder and cannot be heard saying that there was legal increase in the authorized share capital of the Respondent No.1 Company as claimed by him.

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• 2018 (9) TMI 335
  Restoration of the name of the company as been struck off by the respondent - Pr. Commissioner of Income Tax (PCIT) sought restoration for the purpose of proceedings under the Income Tax Act - Held that:- Since the revenue has been seriously prejudiced by the act of fraud played by the company and its directors by filing a false declaration while seeking striking off with the respondent and by also not filing the necessary income tax returns and making a full disclosure of its affairs with the office of the appellant from the relevant assessment years being 2009-10 to 2013 which it had an onus or legal duty to perform and both of which are evident from the investigation carried out by SFIO, the appellant is to be treated as “an aggrieved person' entitled to maintain the present appeal. This Tribunal also fails to understand as to how the respondent despite the report of SFIO clearly pointing out that accommodation entries had been perpetrated by the company and its directors in cahoots with the others named in the report of investigation and which is not in co-relation with the details furnished in the application and the declaration and certificate in support thereof establishing prima-facie incorrect information had been furnished in the application leading to passing of the order of striking off by the respondent is opposing the restoration of the name of the Company filed by the appellant. Based on the SFIO report, the respondent in view of the incorrect information furnished by the company and its directors inducing the respondent to strike off the name of the company in the first place should have filed an application as contemplated under 2nd proviso to Section 252 of the Companies Act, 2013 seeking for restoration of the name of the company and in the circumstances we do not find any merit in the objections which are only technical and as raised by the respondent/Registrar of Companies, particularly to the effect that if the name of the company is restored there will not be any Board and nobody will be answerable. It is for the respondent to go after the perpetrators of the fraud and to bring them before law for which it is sufficiently armed under the Companies Act, 2013 itself and hence it cannot be projected as ground for rejection of the appeal. This Tribunal orders the restoration of the name of the Company, M/s Motiram Pharmaceuticals Pvt. Ltd. in the Register of the Companies as maintained by the Registrar of Companies forthwith in order to enable the revenue to exercise its right as against the Company which had been struck off based on the false statements filed before the RoC namely the Respondent herein which vitiates the order dated 15.01.2015 and hence the order is set aside.

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• Insolvency & Bankruptcy

• 2018 (9) TMI 338
  Corporate insolvency process - Approval of Resolution Plan - Held that:- In the case on hand, the Resolution Applicant has filed a Resolution Plan and it has been approved by the CoC and the same is placed before this Authority by the Resolution Professional for its approval and this Authority by this common order is approving the Resolution Plan filed by the Resolution Applicant. In the Resolution Plan, certain amount is set apart for payment towards operational creditors. Since the claim of the Applicant involves questions of law and fact, it needs to be decided on evidence. The Applicant is at liberty to revive its claim before the appropriate forum, at appropriate stage and as decided by such forum, the payment shall be made to the Applicant proportionately from out of the amount set apart for payment to operational creditors in the Resolution Plan. This Application is disposed of accordingly.

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• Service Tax

• 2018 (9) TMI 331
  Rejection of benefit of VCES, 2013 - recovery of Interest - Appealable order or not? - Voluntary Compliance Encouragement Scheme 2013 - Held that:- Prima facie it is not open to the Revenue to recover amounts under the above Voluntary Compliance Encouragement Scheme, 2013. The Revenue would be required to follow the procedure as provided under the Finance Act, 1994 to recover its dues after issuing a proper notice. The recovery notice in the absence of any adjudication order prima facie is without jurisdiction - there would be an interim stay of the recovery dated 4th November 2016 till the final disposal of this Petition.

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• 2018 (9) TMI 323
  Classification of service - taking two helicopters on lease from the two foreign lessors ADA, Abu Dhabi and BLFIL, Ireland on dry lease basis - activity is in the nature of sales (deemed sale) or service - Business Support Service or activity as supply of tangible goods for use without transfer of right of possession and effective control - Held that:- The appeal is dismissed on the ground of delay, leaving the question of law open.

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• 2018 (9) TMI 322
  Business Auxiliary Services - threshing and re-drying operations of tobacco leaves - demand along with interest and penalties for the period April, 2013 to March, 2014 - Held that:- Identical issue was decided in the case of M.L. AGRO PRODUCTS LTD. VERSUS COMMISSIONER OF CUS., C. EX. & S.T., GUNTUR [2017 (2) TMI 1355 - CESTAT HYDERABAD], where it was held that the activity of the assessees is in relation to the agriculture and not subject to service tax as a Business Auxiliary Service even before or after the negative list was issued on 1-7-2012 - demand set aside - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 321
  The questions as proposed do not give rise to any substantial questions of law as issue raised stand concluded by the decision of this Court - appeal is dismissed.

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• 2018 (9) TMI 320
  Maintainability of petition - Alternative remedy of appeal - Demand of Service tax - Held that:- As the petitioner has an alternate remedy of appeal, we do not deem it necessary to exercise our extraordinary jurisdiction in the matter - The petition is dismissed on the ground of alternate remedy. The petitioner, if so advised, may move an application in appeal for the exemption/waiver of the condition of pre deposit of 7.5 percent of the tax demanded.

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• 2018 (9) TMI 319
  Business Auxiliary Services - business of car finance - during the period w.e.f. July 2003 to December 2004, did not make payment of Service Tax - during the course of investigation itself the appellant obtained a service tax registration on 25.10.2004 for Business Auxiliary Service and have since then started paying the service tax - demand of service tax - time limitation. Held that:- The nature of activity of the appellant is promotion on marketing of the services provided by the client. The same very much falls under sub Clause (ii) of 65(19) of the Act. The appellants actually were sourcing customers for the above mentioned banks. The actual agencies which provide the financial service by giving loans are those banks. They are actually the clients of the appellants. Thus, the services of the appellants were very much that in the nature of Business Auxiliary Services. Time limitation - Held that:- It is an admitted and apparent fact that since 01.07.2003, the appellant has not discharged the liability. They only got themselves registered under Business Auxiliary Services on 25.10.2004 but the simultaneous fact remains that during the said period (since 01.07.2003 to 10.09.2004), there was a prevalent confusion about the nature of the impugned activities - In the present case also, the demand is for the period w.e.f. July 2003 to December 2004. The Show Cause Notice was issued on 31.07.2007. Once there was an apparent acknowledged confusion about the impugned activity, nondischarge of the liability thereof cannot be alleged as an act of suppression of fact with an intent to evade tax. Resultantly, the Department was not entitled to invoke the extended period of limitation - demand is barred by limitation of time. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 318
  Classification of services - advertising agency service - multi system operator services (MSO) - whether the said services would be taxable under the head Cable Operator service or not? - extended period of limitation - Held that:- The definition under section 65 (20) has been amended with effect from 10.9.2004, wherein multi system operator were also been included in the scope of ‘cable operator service’ - Service tax is leviable on the ‘multi system operator’ providers since 10.9.04 and as the appellants have been providing multi system operator services, they are very much covered under Section 65(20) of the Finance Act, 1994 under the ‘cable operator service’ - demand upheld. Extended period of limitation - Whether the extended time proviso, circumstances in which the appellant operated is invokable or not? - Held that:- The Since the assessee was very much paying service tax as well as filing the Service tax returns for the other services , they cannot claim that they were not aware about the changes that came into effect from 10.9.2004 - longer period of limitation is available to the Revenue. Appeal dismissed - decided against appellant.

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• 2018 (9) TMI 317
  CENVAT Credit - common input services which were used by them for taxable as well as exempted services - Rule 6 (3) (c) of CCR 2004 - appellants were earlier availing credit on input services which were used by them for taxable as well as exempted services and were utilizing such credits only to the extent of 20% of the output tax liability in terms of Rule 6 (3) (c) of CCR 2004 during the material time. However, from August 2005, they switched over to the present system of availing full credit on such common input services, for which no separate accounts were maintained, and utilized the full amount of such credits. Held that:- Admittedly, the appellants were using inputs / input services which are common for exempted as well as taxable output services. In respect of certain services, they have maintained separate accounts in terms of Rule 6(2) which was found to be correct and proper by the original authority. However, the dispute is in respect of certain other common input services they have followed the scheme under Rule 6 (3). It is clear that Rule 6 (1) is a substantive plenary provision - Hon'ble Supreme Court in CCE Vs Gujarat Narmada Fertilizers Co. Ltd. [2009 (8) TMI 15 - SUPREME COURT] held that sub rule (1) of Rule 6 is plenary. It restates a principle, namely, that CENVAT credit of duty paid on inputs used in the manufacture of exempted final product is not allowable. This principle is inbuilt in the very structure of the CENVAT scheme. The mechanism adopted by the appellant for following both sub-rule (2) and sub-rule (3) in respect of different common input services defeats the very restrictions placed under different conditions of sub-rule (3). As seen in the present case itself that appellant invoked clause (c) of sub-rule (3) and submitted that they were not hit by restriction of 20% in utilizing credit on tax liability of final output services, on the ground that total credit availed under sub-rule (3) falls short of the same. We note this claim is misleading and ignoring the fact that they have maintained separate accounts and availed full credit in respect of common input services attributable to taxable output services in terms of sub-rule (2). The appellants should follow legal provision as per Rule 6. Having not followed, they cannot take a plea that there is no provision to deny credit already availed. When the appellants maintained separate accounts for common input services and availed credits under sub-rule (2) of Rule 6, then there is no question of another option for common input services under sub-rule (3) of Rule 6. Regarding submission of the appellant that the present order is beyond the scope of remand directions of the Tribunal vide final order dated 29.09.2008, we note that the Tribunal made an open remand of the case for a de novo adjudication. As such, original authority examined the issue and passed the order. In the present appeal, we have examined the grounds agitated by the appellant and we are in agreement with the final finding of the original authority. Extended period of limitation - penalty - Held that:- The appellants were actually following Rule 6 (3) with restrictions of utilisation upto 20% in terms of Rule 6 (3) (c) upto August 2005. Admittedly, they have now knowingly switched over to the present system of selectively following Rule 6 (2) as well as Rule 6 (3) which resulted in the present dispute - extended period and penalty rightly invoked. Appeal dismissed - decided against appellant.

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• 2018 (9) TMI 316
  CENVAT Credit - trading activity - common input services availed for taxable service as well as for trading - non-maintenance of separate records - what is the amount that the appellant has to reverse when common input services have been used for taxable service as well as trading when separate accounts have not been maintained? Held that:- With effect from 1.4.201, the position is very clear for the reason that trading has been made a deemed exempted service and Rule 6(3D)(c) of CENVAT Credit Rules clearly provided for the formula to arrive at the amount that has been reversed. However, for the period prior to 1.4.2011, there was much confusion as to whether trading is an exempted service or can be considered as service at all - In Ruchika Global Interlinks Vs. Commissioner of Central Excise [2017 (6) TMI 635 - MADRAS HIGH COURT], the jurisdictional High Court has held that the trading is to be considered as an exempted service prior to 1.4.2011 also. The appellant is required to reverse the credit as per the formula in Rule 6(3D)(c) of CENVAT Credit Rules, 2004 in respect of trading. However, the said amount has to be quantified - The appellant also contends that they have reversed the said amount pertaining to trading. This requires verification and for its quantification of the amounts that has to be reversed by the appellant, the matter is remanded. Appeal allowed by way of remand.

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• 2018 (9) TMI 315
  Rejection of Voluntary Compliance Entitlement Scheme application - acknowledgement of discharge of declared tax dues not issued - Section 108 of Finance Act, 2013. Held that:- It has been provided under Section 108 of Finance Act, 2013 that on the furnishing details of full payment of declared tax dues and interest the designated authority was bound to issue an acknowledgment of discharge of such dues to the declarant and after such acknowledgement was issued to the declarant no matter is eligible to be opened in any proceedings - The said provisions of Section 108 are not applicable in the present case in the absence of issue of such acknowledgement of discharge of declared tax dues. Appeal dismissed - decided against Revenue.

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• 2018 (9) TMI 314
  Waiver of penalty u/s 76 and 78 - case of Revenue is that Commissioner (Appeals) has appropriated the Service Tax and interest paid by the assessee, but has failed to appreciate the fact that it was only on the basis of observation of Audit that non-payment of Service Tax came to light - Held that:- The respondent did not pay the Service Tax even after the decision of Hon'ble High Court of Bombay in the case of Indian National Ship Owners' Association [2009 (3) TMI 29 - BOMBAY HIGH COURT], and it was only when the Audit pointed out in July, 2012, the respondent paid the Service Tax - invocation of Section 76 is justified. Penalty u/s 76 justified - appeal allowed in part.

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• 2018 (9) TMI 313
  CENVAT Credit - input service - renting of immovable property service - denial of credit on the ground that the premises No. 67 was not registered with the department - whether the appellant are entitled to cenvat credit of the service tax paid on input service namely, renting of immovable property, relating to Unit No. 67, Atlanta, Nariman Point, Mumbai? - Held that:- It is not in dispute that the appellant have been providing taxable service as well as exempted service (trading activity of rubber product) from Unit No. 67; all the invoices are raised from Unit No. 65 irrespective of whether services are provided from Unit No. 65 or 67 - denial of credit of service tax paid on renting of immovable property service relating to Unit No. 67 cannot be sustained merely for the reason that separate service tax registration was not obtained for the said premise. Further, Once the department acknowledged that services rendered from the premises No. 67 are both taxable and exempted service and demanded reversal of proportionate cenvat credit attributable to said exempted service, denial of credit on the input service i.e. Renting of Immovable Property sounds contradictory; hence cannot be sustained. Appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 312
  CENVAT Credit - reversal of proportionate credit - Banking and other Financial Services - input service - Cash Credit/ Over Draft (CC/OD) services - whether the said service is exempt or not? - demand of Interest - time limitation - penalty - Doctrine of pith and substance. Held that:- It is quite evident that the actual consideration for the CC/OD services is only higher interest rate and nothing else - Since the entire consideration received against the CC/OD services is in nature of interest, the said services provided by them to their customer are exempt from payment of service tax under Notification No 29/2004-ST dated 22nd September 2004 - Since in respect of these services the entire consideration received from the customer is exempt from payment of service tax these services would definitely be covered by the definition of exempt service as provided by this rule. Doctrine of pith and substance - Held that:- Applying the same doctrine for ascertain the true nature of exemption provided by the said notification, the interest is not only the major component but is the only component for providing the said CC/OD services. What so ever minor amounts appellants may have charged towards the administrative fees etc., will not in fact change the nature of exemption provided to the said services - by exempting the value equivalent to interest recovered for providing these services, in fact, in pith and substance exemption has been granted to the services of CC/OD provided by Banking and Financial Companies. Since, the CC/OD services provided by the appellant are exempt from payment of service tax to the extent of interest recovered, the view of Commissioner in including the quantum of interest recovered against the provision of said services for determination of the amount to be reversed in term of Rule 6(3A)(c) of the CENVAT Credit Rules, 2004 cannot be faulted with. Time Limitation - Held that:- It is difficult at this stage, to ascertain whether all the facts in relation to these services and all facts including availment of CENVAT credit and its reversal as per rule 6(3A)(c) of the CENVAT Credit Rules, 2004 were disclosed is a question of fact which cannot be ascertained by us at this moment. Commissioner has also not recorded a specific finding in this regard in his order. In the interest of justice, therefore, the appellant be allowed a fair chance to present these evidences and be subjected to scrutiny/verification by the Department - matter remanded for re-determination of issue on limitation. Demand of Interest and penalty - Held that:- Since the matter have been remanded for re-determination of issue on limitation, there should be no hesitation in holding that interest under section 75 shall be recoverable on the amounts finally determined - Penalty also needs to be re-determined after determining the issue on limitation. Appeal allowed by way of remand.

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• Central Excise

• 2018 (9) TMI 311
  Classification of goods - 36 products of fertilizers marketed as 'Plant Growth Promoters' - claim of the petitioners is that all 36 products manufactured and marketed by them contain at least one of the fertilising elements of Nitrogen, Phosphorus or Potassium as an essential constituent and the products are known as 'PGP' - validity of Circular No.1022/10/2016­CX, dated 6­/4­/2016 - scope of Jurisdiction. Whether the circular No.1022/10/2016­CX, dated 6­/4­/2016 issued by the Central Board of Excise and Customs travels beyond the scope of the jurisdiction under Section 37­B of the Central Excise Act, 1944 and is violative of Note 6 in Chapter Heading 3105 defining the term other fertilizers? Whether the Appellate Authority is bound by the circular dated 6/­4­/2016 having no jurisdiction to set it aside even if it is found running beyond the scope of power under Section 37­B of the Central Excise Act, 1944 and violative of Note 6 under Chapter Heading 3105 in the Central Excise and Tariff Act, 1985? Held that:- The said circular extensively provides guidelines to classify the products covered by various headings in Chapters 28, 29, 31 and 38. Not only that, but the circular interprets, clarify and declare what is meant by the term 'other fertilizers' in Note 6 of Chapter 31, which applies only to the products of a kind used as fertilizers and containing, as an essential constituent, at least one of the fertilizing elements Nitrogen or Phosphorus or Potassium. It holds that in the trade parlance, the sale of micronutrients as 'micronutrient fertilizers' would not lead to classification thereof under Chapter 31 as 'fertilizers' for the purposes of the Central Excise Tariff. It clarifies that for any product to merit classification under CETH 3105 as 'other fertilizers', the product must have Nitrogen or Phosphorus or Potassium or their combination as an essential constituent providing essential character to the product. Thus, the circular explains the term 'essential constituent' to mean essential character, which is broader in nature than the earlier. Whether the circular can be issued to provide an extended meaning to the term 'essential constituent' employed in Note 6 in Chapter 31? - Held that:- The answer would be clearly in the negative. The interpretation of the terms of the Statutes cannot be guided by the circulars, which merely represents the understanding of the statutory provisions by the Department. It is for the Court to declare what the particular provision of the Statute says and it is not for the Executive - the said circular cannot be sustained and has to be set aside on the ground that it travels beyond the scope of the authority under Section 37­B of the said Act and violates the restraint or prohibition statutorily imposed under the proviso therein. Whether the Appellate Authority is bound by the circular having no jurisdiction to set it aside? - Held that:- The issuance of circular under Section 37­B of the said Act is the statutory exercise of the power which binds not only the Departmental Authorities but also the quasi judicial authorities functioning under the Act to adjudicate the disputes based upon such circular. The competency to issue such circular or the question of such circular being ultra vires the power conferred, cannot be gone into by the Tribunals constituted under the Act, even if it finds that it interfers with exercise of its discretion. It is not the question of applicability of circular which is involved in this case, but it is the question of interference with the exercise of discretion by the quasi judicial authority which is involved. The only remedy available is to challenge such circular by filing the writ petition by invoking the jurisdiction under Article 226 of the Constitution of India. The Circular No.1022/10/2016­CX, dated 6/­4­/2016 issued by the Central Board of Excise and Customs in exercise of its power under Section 37­B of the Central Excise Act, 1944, is hereby quashed and set aside, being ultra vires - The parties are relegated back to the appellate jurisdiction where the appeal is pending for decision of the remaining questions in accordance with law - petition allowed.

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• 2018 (9) TMI 310
  Rejection of Settlement application - rejection on the ground as the same was filed after the passing of the adjudication order - Held that:- The date of service of the order in the context of Section 32E of the Act is immaterial. This as an adjudication could be said to be complete when the adjudication order is issued so as to be outside the control of the adjudicator - As there is prima facie a difference of language in the Act and in the Income Tax Act, 1961 the applicability of the decision rendered under the Income Tax Act, 1961 to this Act in the case of in the Yashovardhan Birla Vs. Deputy Commissioner of Income Tax Central [2016 (9) TMI 296 - BOMBAY HIGH COURT] would require consideration at final hearing. Hearing expedited. Liberty to apply.

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• 2018 (9) TMI 309
  Doctrine of Merger - Pre-deposit - non-compliance of the stay order - Held that:- It is well settled that interim order, merge with the final order. On the issue of merger, reference can be made to decision in the case of South Eastern Coalfields Ltd v. State of M.P. and others [2003 (10) TMI 638 - SUPREME COURT OF INDIA] - appeal dismissed.

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• 2018 (9) TMI 308
  Rebate of Excise duty paid - export of Biscuits - case of the petitioner is that they paid excise duty on goods cleared for the domestic market where per kg. retail sale price was more than INR 100 and that they paid excise duty on goods cleared for export on the basis of transaction value in terms of Section 4. Therefore, the petitioner availed rebate of duty - But the stand of the Department is that the petitioner was not liable to discharge excise duty on the goods exported in view of the absolute exemption from payment of duty under Notification No.12/2012, dated 17-3-2012 and that therefore the amount paid could not have been treated as duty paid, so as to enable them to claim rebate. Whether the exemption granted under Notification No.12/2012, was absolute and unconditional? - Held that:- The exemption Notification was not a blanket exemption. It was an exemption available to the goods of a particular description, subject to their satisfying two conditions viz., (a) that they are cleared in packaged form and (b) that their per kg. retail sale price equivalent does not exceed ₹ 100/-. Even the definition of the expression “retail sale price” is indicated in Explanation 1 and the method of calculation of per kg. retail sale price equivalent is given in Explanation 2. Therefore, the availability of the exemption depended upon all these factors. Hence, it cannot be concluded that the exemption was absolute and unconditional. By holding the exemption to be absolute and unconditional, the Commissioner (Appeals) committed a grave error. The Department may not be right in retaining the duty paid by the petitioner. Petition allowed - decided in favor of petitioner.

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• 2018 (9) TMI 307
  Valuation - inclusion of price of warranty services in assessable value - contract entered into between the appellant and State Bank of India and their associates - Banks were required to make payment for warranty services half-yearly in arrears, the price of which was not included in the price of the ATM and was required to be paid separately by the banks - Held that:- While the transaction value would bring within its scope not the price actually paid but that which is actually payable. Amongst the other ingredients, charges towards warranty in connection with the sale, whether payable at the time of the sale or at any other time, etc., will form part of the transaction value. Only then will the transaction value become the assessable value for levy of Central Excise Duty. What comes to the fore is that the price of warranty services is not included in the price of the products and is payable separately by the bank as per agreed rates. Not only that, after expiry of warranty period of two years, the second line maintenance charges will also kick in. Discernibly, without agreement on payment of warranty charges for two years and second line maintenance charges after expiry of that period for another three years, the ATM machine is not sold. Evidently, the agreement to pay these warranty charges and their actual payment is nothing but a condition precedent to the same. It is mandatory for the buyers of the ATMs to also accept the warranty agreement referred to above and pay warranty charges for the first two years and second line maintenance charges for the next three. Although the amounts become payable only later, in our view, this would still come within the scope of the definition of the type of warranty charges that would be required to be incorporated into “transaction value” for the purposes of Section 4(3)(d) of the Act. Time Limitation - Penalty u/s 11AC - Held that:- The ingredients of attracting invocation of extended period, in particular suppression, are very much present in this case and hence, not only will the extended period of limitation provided under the Central Excise Act be applicable but also equal penalty under Section 11AC imposable. However, the penalty of ₹ 10,000/- imposed under Rule 25 of the Central Excise Rules, 2002 is unjustified and therefore, set aside. Appeal allowed in part.

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• 2018 (9) TMI 306
  Refund claim - Payment made under protest - Held that:- The appellant has disputed the classification of their goods and the CRCL Report and sought re-test of the samples. Instead of doing so, a show cause notice dated 01.07.2016 was issued to demand the differential duty alleging that the appellant is manufacturing Jarda Scented Tobacco, but, the said show cause notice is not adjudicated till date. In that circumstances, the amount paid by the appellant during the course of investigation is not adjudged dues or duties against the appellant. Moreover, the appellant filed refund claim of the said amount paid during the course of investigation on 29.03.2017. Despite that, the adjudicating authority had not taken any pain to adjudicate the show cause notice dated 01.07.2016. Admittedly in this case, the amount has been deposited by the appellant during the course of investigation under protest and there is no dues pending against the appellant as on date, in that circumstances, the appellant is entitled for refund of ₹ 15,61,27,927/- - refund allowed - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 305
  Method of Valuation - area based exemption availed under N/N. 56/2002-CE dated 14.11.2002 - manufacture of insecticides, pesticides and selling the goods in finished condition after packing - Revenue is of the view that the assessee is not required to fix MRP on the said goods, as the packets are less than 10 gms, therefore, no MRP is required to be affixed, therefore, duty is to be paid under section 4(A) of the Act. Held that:- Tribunal in the case of Krishi Rasayan Exports Pvt. Ltd. [2018 (5) TMI 1342 - CESTAT CHANDIGARH] has held that The appellant have made packages for retail sale, they are legally bound to affix MRP of the said goods and it was held that the appellant has correctly discharged their duty liability under Section 4(A) of the Act. The assessee has discharged their duty under Section 4(A) of the Act and the same is correct - appeal dismissed - decided against Revenue.

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• 2018 (9) TMI 304
  SSI exemption - clubbing of clearances - Dummy units - N/N. 8/2000-CE & 8/2001-CE. - Held that:- During the period 01.04.2000 to 31.03.2001, the goods cleared on transfer voucher were ₹ 84,54,291/- and total clearances were ₹ 1,74,63,617/-. If the goods cleared on transfer voucher is reduced, in that circumstances, the total turnover fall within the exemption limit of ₹ 1 Crore. For the period 01.04.2001 to 25.09.2001, the total goods cleared on transfer voucher were ₹ 71,78,508/- whereas, the total sales for the said period of ₹ 1,31,30,386/-. If the goods cleared on transfer voucher is reduced, the clearance will be come down below of ₹ 1 Crore of the exemption limit. These facts were not considered by the authorities below. If the clearance made on the strength of transfer voucher have been reduced from the clearance made invoices or vice-versa, in that circumstances, the turnover of the appellant, if calculated remained the below the SSI exemption limit of ₹ 1 crore - the appellants are enjoying the benefit of SSI exemption notification and are not required to pay duty till their clearance exceeds the SSI exemption limit - appeal allowed - decided in favor of appellant.

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• 2018 (9) TMI 303
  Rectification of Mistake - Revenue application points out that the amount appearing in the first row of the said table in column 4, which read as ₹ 14,88,948/- instead of 14,8,948/- - application of M/s Eaton Industrial Systems Pvt. Ltd. points out that the table extracted in the order itself is wrong table as it pertains to only one of the show-cause notice. It was pointed out that the table appearing in para 10 of this application has the details of the demand confirmed and therefore the said table should have appeared in para 2 of the Tribunal's order dated 28.9.2017. Held that:- The application filed by M/s Eaton Industrial Systems Pvt. Ltd. is allowed - Consequently the application filed by Revenue becomes infructuous and the same is dismissed - ROM application disposed off.

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• 2018 (9) TMI 302
  100% EOU - Classification of waste - there were two parts of the unit - the waste generated during the manufacturing process of cotton blended yarn is cleared without payment of duty - whether the waste generated in second part of the unit where the appellant is manufacturing 100% cotton dyed yarn and cotton blended yarn, the waste generated therefrom is to be classifiable under chapter 52 or chapter 55 of the Central Excise Tariff Act or not? - Held that:- The issue is covered by the appellant own case WINSOME YARNS LTD. VERSUS CCE CHANDIGARH [2017 (3) TMI 364 - CESTAT CHANDIGARH], where it was held that the same is to be classified under chapter 52 of the Central Excise Tariff Act, 1985 which exempts from payment of duty - appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2018 (9) TMI 301
  Levy of Entertainment Tax - Fashion show organized by appellant - penalty - whether the event in question, a fashion show organised by the appellant, falls within the expression ‘entertainment’ and there had been ‘payment for admission’ so as to attract the relevant charging provisions of the Act, 1958? Held that:- A bare look at the definition of 'entertainment' in the Act of 1958 is sufficient to find that the expression has been defined in too wide and broad terms which undoubtedly take within their sweep an event like the one organised by the appellant, namely, a fashion show, which was sponsored by the interested manufacturers or business houses and which comprised of lifestyle parties, after-hour parties, press conferences, and exhibition of designer products/apparels by live models walking on the ramp and on mannequins. The said event definitely falls within the expressions 'exhibition' as also 'performance', apart that it would also answer to the description of an amusement for recreation and entertainment and even of a pageant. In a cumulative effect of the activities of the event in question, we are in no doubt that they were of such exhibitions and performances, which indeed provide amusement and entertainment - The event organised by the appellant, therefore, clearly answers to the wide definition of 'entertainment' per sub-clause (iii) of clause (e) of Section of 2 of the Act of 1958. Element of 'payment for admission' - Held that:- The receipts of the appellant directly answer to the description of 'payment for admission' under the Act of 1958; and when such payment for admission was received by the appellant for the event in question, which had been an 'entertainment' for the purpose of the Act of 1958, there is no escape for the appellant from the liability thereunder. Appeal dismissed - decided against appellant.

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• 2018 (9) TMI 300
  Recovery of arrears of tax, interest and penalty - recomputation of amounts - Karasamadhana Scheme-2017 - State had contended that the amount in deposit during the pendency of appeals was to be adjusted first against the head of ‘interest’ and not under the head of ‘tax’ as had been resorted to by the assessee - rejection of their applications on the ground of non-compliance with the eligibility conditions as regards deposit of ‘arrears of tax, interest and penalty’ as envisaged under the Scheme. Held that:- The payments made which are referred to by any nomen-clature being made while preferring an appeal or as a prerequisite to consider the application for stay being statutorily mandated cannot be the subject matter of appropriation till the adjudication process has reached a finality and such deposits could only be regarded as ‘colourless deposits.’ The finding of the learned Single Judge as regards the payments made pending adjudication being in the nature of ‘colourless deposits’ requires no interference - The very Scheme as envisaged in its preamble provided for waiver of 90% of penalty and interest remaining unpaid as on 15.03.2017; and further, it provided for payment of tax including arrears and 10% of penalty resulting in waiver of remaining penalty and interest. The purpose and intent of the Scheme was clear that all tax would be cleared and only a portion of penalty and interest need be paid. In this particular case, it is clear that the payments made by the respondents for admitting their appeals under various statutory provisions were under dispute and were not referable to any particular component of tax or penalty or interest and were only ‘colourless deposits’. Accordingly, these remittances cannot be deemed to be paid and offset from unpaid amount for calculation of arrears to be waived. Appeal dismissed.

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• 2018 (9) TMI 299
  Levy of Purchase Tax - purchases of such seeds from various farmers - the assessee had made purchases of seeds from the farmers who are unregistered dealers - Government notification dated 29.4.2006 - Did the case of the assessee fall within the determination order in case of M/s. Green India Farm Biotech or in the later order in case of M/s. King and Queen Seeds Corporation? The Deputy Commissioner however did not accept such representation of the company. He was of the opinion that essentially the company merely purchased seeds from the farmers. At that stage, seeds were possible of human consumption. It was only after the detailed process undertaken by the company that the seeds would become marketable and were actually sold by the company. - He confirmed the demand of tax with interest and penalty. - Tribunal deleted the demand. Held that:- The entire process of cultivation, cost and risk involved were on the shoulders of the farmer. The company had clearly purchased the seeds so produced by the farmer. This was therefore, clearly a case as one involved in determination order in case of M/s. Green India Farm Biotech and not akin to later determination order in case of M/s. King and Queen Seeds Corporation - the Tribunal committed a serious error. The revisional order of the Deputy Commissioner is restored.

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• 2018 (9) TMI 298
  Furnishing an irrevocable Bank Guarantee for the outstanding amount - Stay against the recovery of the alleged amount due sought - Section 62(4)(c)(i) of the KVAT Act - Held that:- Where Appellate Authority considers an application for an interim relief and decides to stay the payment of the alleged due amount, then it can give a stay only for 70% of the tax alleged to be due and the remaining 30% has to be paid by the appellant before it - Sub Section (i) of Section 62(4)(c) of the K.V. Act does not specifically mention that the Appellate Authority while granting stay of the impugned order for the remaining 70% of the alleged tax due can also call for the appellant to furnish any security including the Bank Guarantee for the said sum. Admittedly, the application filed by the petitioner herein before respondent No.2 as an appellant was not pending beyond a period of 30 days and that there was no deemed grant of an interim order of stay. As such, it is Section 62(4)(c)(i) of the K.V.A.T. Act is applicable, which does not specifically mention about furnishing of Bank Guarantee or other security for the remaining sum of 70% - requirement of furnishing of Bank Guarantee set aside - petition allowed - decided in favor of petitioner.

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• 2018 (9) TMI 297
  Release of seized article - Held that:- Issue notice to opposite party no.2 returnable within three weeks. Steps be taken within a week. Learned Additional Government Advocate may also file objections within three weeks - List in the fourth week of July, 2018.

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• 2018 (9) TMI 296
  Jurisdiction of the Respondent No. 1 - power of Respondent No. 1 to pass an order under Section 63-A[1] of the Act pending reassessment proceedings under Section 39[2][e] of the Act. Whether the Respondent No.1 acted without jurisdiction in invoking Section 63-A of the Act pending reassessment proceedings under Section 39[2][e] of the Act? Held that:- When once a notice is issued for the purpose of making reassessment, the assessment proceedings would be reopened and the order of assessment ceases to operate. In the present set of facts, notices for reassessment were issued under Section 39[2][e] of the Act by the Respondent No.2 on 25.06.2016 whereby the proceedings initiated under Section 39[2] of the Act were dropped. Thus, it can be held that once notice dated 25.06.2016 was issued by the Respondent No.2 to initiate reassessment proceedings, against the reassessment order dated 16.08.2014 passed under Section 39[2] of the Act, the said order dated 16.08.2014 ceases to operate, or in other words, it ceases to be in existence to revise the said order - The Respondent No.1 initiated the revisional proceedings by issuing notice dated 3.11.2016 to revise the order dated 16.08.2014 passed under Section 39[2] of the Act which has ceased to be operative on 25.06.2016 when notice was already issued by the Respondent No.2 under Section 39[2][e] of the Act. It can be held that the proceedings initiated by the Respondent No.1 under Section 63-A[1] of the Act is without jurisdiction and nullity in the eye of law - petition allowed.

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• Indian Laws

• 2018 (9) TMI 324
  Maintainability of petition - no public cause coming up - relevant persons were not even impleaded as parties - Whether any particular person is to be permitted to appear as an authorized representative or not? Held that:- Several of the features which are indicative of the questionable character of a petition, which is filed ostensibly as a PIL, but is not espousing any public cause are, obviously, available in the present petition. This petition could only be said to be an unwarranted and meddlesome interloping attempt and that too, while withholding certain relevant facts; while not even impleading the relevant persons as parties; and on a cause that is required to be taken up in different forum - this petition is required to be dismissed with exemplary costs. This petition is dismissed with costs in the sum of ₹ 1,00,000/- (Rupees one lakh), to be deposited by the petitioner within 30 days from today with the Deputy Commissioner, Bengaluru.

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