TMI Tax Updates - e-Newsletter
January 1, 2018
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
The information furnished by the registered person in the return in FORM GSTR-3B would be reconciled by the department‟s system with the information furnished in FORM GSTR-1 and discrepancies, if any, shall be dealt with in accordance with the relevant provisions of the CGST Act, 2017 and rules made thereunder.
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GST:
Where the registered person wrongly reports his aggregate turnover and opts to file FORM GSTR-1 on quarterly basis, he may be liable for punitive action under the CGST Act, 2017.
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GST:
Dates for filing of FORM GSTR-1 and FORM GSTR-3B have been put in a calendar format for ease of understanding
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Income Tax:
TDS u/s 194C - The assessee had got the work done directly through labourers and had merely paid them through the head labourer. In the absence of any contract to carry out any work with a specified person, the provisions of section 194C of the Act would not be attracted - HC
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Income Tax:
Claim of refund - Centralised Processing of Return Scheme, 2011 - If returns cannot be processed due to system failure and if the errors cannot be rectified and system cannot be made functional within a reasonable time, the Commissioner ought to permit the AOs to process the returns manually. - HC
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Income Tax:
Penalty u/s 271D - the company has accepted cash loan / cash deposits from Director - repayment of the same was also made in cash - AO did not record any satisfaction regarding penalty proceedings - No penalty - AT
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Customs:
Duty concessions to Philippines and other ASEAN countries in view of ASEAN- India FTA (AIFTA). - Notification as amended
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Customs:
Tariff concession to specified goods imported from Malaysia under India-Malaysia CECA. - Notification as amended.
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Corporate Law:
With a view to giving an opportunity for the non-compliant, defaulting companies to rectify the default, in exercise of its powers conferred u/s 403, 459 and 460 of the Companies Act, 2013, the Central Government has decided to introduce a Scheme namely "Condonation of Delay Scheme 2018" [CODS-2018]
Articles
Notifications
Customs-
97/2017 - dated
29-12-2017
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Cus
Seeks to amend notification No. 53/2011-Customs dated 01st July, 2011 so as to provide deeper tariff concessions in respect of specified goods imported from Malaysia under the India-Malaysia Comprehensive Economic Cooperation Agreement (IMCECA) w.e.f. 01.01.2018
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96/2017 - dated
29-12-2017
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Cus
Seeks to amend notification No. 46/2011-Customs dated 01.06.2011 so as to provide deeper tariff concessions in respect of specified goods when imported from ASEAN under the India-ASEAN Free Trade Agreement w.e.f. 01.01.2018
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20/2017-Customs (N.T./CAA/DRI) - dated
29-12-2017
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Cus (NT)
Appointed common adjudicating authority
GST - States-
47/2017-State Tax (Rate) - dated
14-11-2017
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Arunachal Pradesh SGST
Amendments in the Notification No. 12/2017 State Tax (rate), dated the 28th June, 2017.
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46/2017-State Tax (Rate) - dated
14-11-2017
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Arunachal Pradesh SGST
Amendments in the Notification No.11/2017- State Tax (Rate), dated the 28th June, 2017.
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45/2017-State Tax (Rate) - dated
14-11-2017
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Arunachal Pradesh SGST
Recommendations of the Council, hereby exempts the goods the amount calculated at the rate of 2.5 per cent., when supplied to the institutions specified.
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44/2017-State Tax (Rate) - dated
14-11-2017
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Arunachal Pradesh SGST
Amendments in the Notification No.5/2017-State Tax (Rate), dated the 28th June, 2017.
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43/2017-State Tax (Rate) - dated
14-11-2017
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Arunachal Pradesh SGST
Amendments in the Notification No.4/2017- State Tax (Rate), dated the 28th June, 2017.
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42/2017-State Tax (Rate) - dated
14-11-2017
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Arunachal Pradesh SGST
Amendments in the Notification No. 2/2017-State Tax (Rate), dated the 28th June, 2017.
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41/2017-State Tax (Rate) - dated
14-11-2017
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Arunachal Pradesh SGST
Amendments in the Notification No.1/2017-State Tax (Rate), dated the 28th June, 2017.
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40/2017-State Tax (Rate) - dated
13-11-2017
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Arunachal Pradesh SGST
Exempts the intra-State supply of taxable goods amount calculated at the rate of 0.05 per cent.,
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39/2017-State Tax (Rate) - dated
13-11-2017
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Arunachal Pradesh SGST
Notifies the State tax rate of 2.5 per cent on intra-State supplies of goods - Food preparations put up in unit containers and intended for free distribution to economically weaker.
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38/2017-State Tax (Rate) - dated
13-10-2017
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Arunachal Pradesh SGST
Amendment in the Notification No. 8/2017 - State Tax (Rate), dated the 28th June, 2017.
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37/2017-State Tax (Rate) - dated
13-10-2017
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Arunachal Pradesh SGST
Notifies the State tax on intra-State supplies of goods 65% of state tax applicable on Motor Vehicles.
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36/2017-State Tax (Rate) - dated
13-10-2017
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Arunachal Pradesh SGST
Amendments in the Notification No.4/2017- State Tax (Rate), dated the 28th June, 2017.
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35/2017-State Tax (Rate) - dated
13-10-2017
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Arunachal Pradesh SGST
Amendments in the Notification No. 2/2017-State Tax (Rate), dated the 28th June, 2017.
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34/2017-State Tax (Rate) - dated
13-10-2017
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Arunachal Pradesh SGST
Amendments in the Notification No.1/2017-State Tax (Rate), dated the 28th June, 2017.
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33/2017-State Tax (Rate) - dated
13-10-2017
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Arunachal Pradesh SGST
Amendments in the Notification No. 13/2017-State Tax (Rate), dated the 28th June, 2017.
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32/2017-State Tax (Rate) - dated
13-10-2017
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Arunachal Pradesh SGST
Amendments in the Notification No.12/2017- State Tax (Rate), dated the 28th June, 2017.
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31/2017-State Tax (Rate) - dated
13-10-2017
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Arunachal Pradesh SGST
Amendments in the Notification No.11/2017- State Tax (Rate), dated the 28th June, 2017.
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30/2017-State Tax (Rate) - dated
13-10-2017
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Arunachal Pradesh SGST
Amendments in the Notification No. 12/2017 -State Tax (Rate), dated the 28th June, 2017.
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2017 (12) TMI 1532
TDS u/s 194C - Disallowance u/s 40(a)(ia) - failure to deduct tax at source on the payment of labour charges to the alleged headman/ contractors of labour supplier - Held that:- Section 194C of the Act is attracted when any payment is made for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and a specified person. In the facts of the present case there is no contract between the assessee and any specified person for carrying out any work as contemplated in the section. The assessee had got the work done directly through labourers and had merely paid them through the head labourer. In the absence of any contract to carry out any work with a specified person, the provisions of section 194C of the Act would not be attracted and hence there would be no liability to deduct tax at source so as to attract the provisions section 40(a)(ia) of the Act. The Tribunal, therefore, did not commit any error in confirming the order passed by the Commissioner (Appeals). - Decided in favour of assessee Unexplained cash credit - addition u/s 68 - Held that:- The course of action adopted by the Assessing Officer defies logic. If the Assessing Officer had disbelieved that M/s Hemani Enterprises had executed the contract as a sub-contractor, he, at best, could have disbelieved the payment made to it and held that it was the assessee, who had executed the contract and worked out the profit accordingly. But when the entire amount received by the assessee was towards payment for the contract, there was no question of considering any part thereof as unexplained cash credit. In the opinion of this court, the view adopted by the Commissioner (Appeals) as concurred by the Tribunal is just and proper. Consequently, this ground of appeal also does not merit acceptance. - Decided in favour of assessee
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2017 (12) TMI 1531
ADMIT question [A] “Whether the Income Tax Appellate Tribunal was justified in law and on facts in deleting the disallowance of ₹ 30,27,85,170/- made on account of loss claimed due to cancellation of forward contract?” Disallowance of unexplained capital introduced by the partners - Held that:- In the opinion of this court, when the unexplained capital had been introduced by the partners, such unexplained addition could only be made in the hands of the partner. Therefore, no infirmity can be found in the view adopted by the Tribunal so as to give rise to a question of law. Disallowance on account of foreign travel expenses - AO had disallowed travel expenses only on the ground that Sapin Shah and Priyanka Shah were not partners of the firm - Tribunal has observed that it was true that Mr. Sapin Shah and Ms. Priyanka Shah were not partners of the assessee firm, but it was also true that they were employees of the firm who had travelled abroad for the purposes of the business of the assessee - Held that:- The Tribunal correctly noted that the assessee had filed details of sales made at Hong Kong and Dubai in respect of its foreign travel expenditure and was of the view that merely because the two persons who went abroad were not partners of the assessee firm, would not justify the disallowance. In the opinion of this court, having regard to the findings of fact recorded by it, no infirmity can be found in the reasoning adopted by the Tribunal. Disallowance u/s 40(a)(ia) - Tribunal held that the Commissioner (Appeals) had rightly deleted the disallowance after reconciling the tax deducted at source amount with the quantum on which the tax had been deducted at source. Since the conclusion arrived at by the Tribunal is based upon a finding of fact, the same does not give rise to any question of law. Disallowance on account of labour charges - AO disallowed on the ground that in spite of fall in the turnover, the labour charges were found to be higher than the previous year and made disallowance of 5% of the total labour charges claimed by the assessee - Held that:- The Tribunal correctly found that the assessee had deducted labour charges of ₹ 23.22 crore during the year under consideration as compared to ₹ 22.75 crore incurred in the immediately preceding year and further found that the rise in the labour expenses is only to the tune of ₹ 47 lakh which was higher by 2% from the expenses incurred in the immediately preceding assessment year and was of the opinion that this by itself could not be a reason for making the disallowance and confirmed the deletion made by the Commissioner (Appeals). Having the Assessing Officer has made the disallowance only on the basis of presumption, no question of law can be said to arise in respect of this issue.
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2017 (12) TMI 1530
Addition applying a net profit @ 8% in the case of an assessee engaged in the business of civil construction work - Held that:- Tribunal has recorded concurrent findings of fact after appreciation of the material on record and has based its conclusions thereon. Under the circumstances, the impugned order being based upon concurrent findings of fact recorded by the Tribunal, does not give rise to any question of law, much less, a substantial question of law, so as to warrant interference.
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2017 (12) TMI 1529
Addition on account of commission expenses claimed - No opportunity of cross examination - Held that:- AO in the instant case has no evidence other than the statement of Manoj Sarda that would prove that the commission entries were merely paper entries, On the other hand the assessee has produced many documentary evidences to prove the genuineness of the commission transaction. The commission agents too have confirmed the transactions, which have been duly accounted for in their books of accounts. Therefore, the action of the AO in ignoring all the strong material evidence brought on record and merely relying on the statement of a third party (that too a statement which is contradicting the party's own written confirmation) is not justified. The opportunity of cross examination given was inadequate and illusory. Since, inadequate opportunity was given to the assessee, the assessment was vitiated by violation of principles of natural justice and therefore the statement of Mr. Sarda does not constitute valid evidence against the assessee. After considering the facts in totality, we are of the view that the addition made by the lower authorities is not sustainable. Hence the ground of appeal of the assessee is allowed.
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2017 (12) TMI 1528
Adjustments made under section 10B(7) - restriction of claim of deduction under section 10A - profit margin shown by the assessee was higher than profit margin of the comparables selected by the assessee in its TP study report - Held that:- The issue arising in the present appeal is identical to the issue before the Tribunal in the case of M/s. Honeywell Automation India Ltd. Vs. DCIT (2015 (3) TMI 494 - ITAT PUNE) and DCIT Vs. Persistent Systems Pvt. Ltd. (2017 (12) TMI 1465 - ITAT PUNE) and following the same parity of reasoning, we find no merit in the orders of authorities below in restricting the claim of deduction under section 10A/10B of the Act. Accordingly, we reverse the same and delete addition of ₹ 34,19,130/-.
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2017 (12) TMI 1527
Return of seized gold ornaments - assessee submitted that petitioner has also been crystallized therefore gold ornaments required to be returned to the petitioner - Criminal complaint under Section 276c(1) and 277 filed by department was discharged under Section 245 of Cr.PC. - Held that:- when the learned Single Judge has granted the liberty to the petitioner to submit an application before the respondent Department and the respondent Department is directed to consider the same, no further direction is required to be issued in the present appeal.
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2017 (12) TMI 1526
Assessment u/s 158BC - additions on account of undisclosed income - Held that:- Admit, the following question of law arises for consideration: Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in setting aside the assessment order without either restoring the matter to the file of the Assessing Officer or itself examining the assessment on merits?
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2017 (12) TMI 1525
Claim of refund - Centralised Processing of Return Scheme, 2011 - Claim of higher refund vide revised return alongwith interest u/s 244A - returns containing claims for refund for the assessment years 201213, 201314, 201415 were not processed within the time frame prescribed under subsection 1 of section 143 of the said Act. Held that:- the net result of the processing done under subsection (1) of Section 143 and the order passed under subsection (3) of Section 143 is the same. The time within which the exercise of passing an order under subsection(3) of Section 143 should be done is provided in subsection(1) of Section 153 of the said Act. The stand of the department that once a notice under subsection (2) of Section 143 of the said Act is issued, there is no discretion left with the AO whether to process the return or not. Thus, the said stand taken by the department is completely contrary to subsection (1D) and the interpretation put to the said Section by the Delhi High Court as well as this Court, and therefore, the said stand deserves to be rejected. AOs cannot give priority to the processing of the returns to those assessees who approach them. We are surprised to note that there is no order of priority laid down by any authority which will bind the AOs when it comes to processing of the returns. For example, the returns of Assessment Year 201617 which were transferred to AO were not processed till 31st October, 2017 as proper ITBA software was not available. Now the income tax department must ensure that the returns which are kept pending due to its own default, are processed as per a rational policy which determines the order of priority. The phrase “administrative requirements” is very vague. In fact this clause indicates that there can be arbitrariness while deciding which returns should be given priority for the processing. Therefore, we propose to issue a direction to the respondents to formulate a rational policy on this aspect and place it before the Court within the time specified by this Court. Direction for manual processing of return - Held that:- There is no provision in both the notifications which lays down that after the returns are sent to the Assessing Officer, if he finds that the returns cannot be processed on ITBA or any other software, the same cannot be processed manually. The only object served by the refusal of the Commissioner to grant permission to process return manually was that the processing of the return was unduly delayed. In fact, the Principal Commissioner ought to have taken steps to remedy the situation and with a view to ensure that the returns transmitted to AO are not kept pending, ought to have authorised manual processing of returns. The said scheme of 2011 was brought into force with the object of expediting the processing of returns. Due to the approach adopted by the Principal Commissioner, in fact there was a delay caused in processing of the returns. Whenever returns are transferred by the Centre to AOs for processing, if the returns cannot be processed immediately because of lack of availability of proper software, or because of technical difficulties in functioning of the software, the returns must be permitted to be processed manually. There will not be any illegality attached to it. If at all software is not provided to deal with the returns of a particular year, there is no embargo imposed by law which prevents AOs from processing the returns manually. If returns cannot be processed due to system failure and if the errors cannot be rectified and system cannot be made functional within a reasonable time, the Commissioner ought to permit the AOs to process the returns manually. Petition disposed with direction to the department / government.
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2017 (12) TMI 1524
Enhancement of interest under section 234A of the Act - Held that: - On perusal of the order dated 19/04/15 it is observed that due date of filing the original return was 30/11/13 whereas assessee filed the return on 29/11/14 thereby causing a delay of 12 months - By applying Section 234A, assessee is liable to pay interest under section 234A for the period commencing on the date immediately following the due date upto the date of furnishing the return (in the present case return is furnished after the due date) at one percent per month - admittedly self-assessment tax has been paid with a delay of one month, after the due date of filing of return - the interest computed by Ld. AO under section 234A is confirmed. Levy of interest under section 234B - Held that: - section 234B is applicable where assessee fail to deposit advance tax or the advance tax deposited is less than 90% of the taxable income - In the present case Assessee admittedly has not deposited advance tax for any of the three quarters - assessee is liable to interest under section 234B at 1% for every month starting from 1st day of financial year relevant to the assessment year from 01/04/13 to 29/11/14. Appeal dismissed - decided against assessee.
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2017 (12) TMI 1523
Unexplained cash deposits in the saving bank account of Shri Nisar Y. Mullam - Held that:- The authorities below have given a finding that Shri Nisar Y. Mulla was not assessed to Income Tax till the date of survey, PAN was allotted to him on 27-02-2009 i.e. after 17 days from the date of survey. The returns of income in respect of Shri Nisar Y. Mulla for the assessment years 2007-08, 2008-09 and 2009-10 were filed on 24-03-2009 i.e. after the date of survey. The ld. AR has not been able to controvert these finding of facts. Thus, this clearly indicates that the assessee has tried to create evidence to escape from the addition of amount deposited in the saving bank account of Shri Nisar Y. Mulla. Since, the assessee has failed to explain the amount deposited in the saving bank account of Shri Nisar Y. Mulla, addition of ₹ 5,55,549/- is sustained. Accordingly, ground No. 1 raised in concise grounds of appeal by assessee is dismissed. Addition on account of excess stock and excess cash found during survey - Held that:- The assessee explained that at the time of survey the books of account were incomplete and certain entries were yet to be made in cash book. The assessee updated the books after survey. After completing the books and reconciliation it was found that there is no difference in cash. It is an undisputed fact that the Assessing Officer has not rejected books of assessee before making the additions. The assessee purportedly furnished bills of all the purchases and sales. It appears that the authorities below have not made any effort to examine the documents furnished by the assessee. Addition in respect of difference in cash has been made merely on the basis of statement of one of the partners of assessee firm. In respect of difference in stock, the Assessing Officer has not examined the stock register which was produced by the assessee subsequently. A perusal of the order of Commissioner of Income Tax (Appeals) reveals that though the issue relating to addition of ₹ 16,49,960/- on account of excess stock was taken up for adjudication but the Commissioner of Income Tax (Appeals) left the issue in between without giving his findings. Taking into consideration the entirety of facts, we are of considered view that no addition in respect of difference in stock and cash is warranted. - Decided in favour of assessee.
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2017 (12) TMI 1522
Penalty proceedings u/s 271(1)(c) - disallowance of depreciation on the amount of entertainment subsidy and disallowed on account of ESOP expenditure - Held that:- As far as penalty on addition in respect of entertainment subsidy is concerned, the ITAT has deleted the entire quantum in the quantum appeal and thus, we agree with the Ld. CIT(A) that no penalty is leviable on the same as quantum addition itself has been deleted. Disallowance on account of ESOP expenditure - Held that:- It is undisputed that accounts of the assessee were duly audited, tax audit report, computation of income and income tax return were not at variance and relevant details were filed by the assessee during the course of assessment proceedings against which the Assessing Officer has not made any adverse observation. It is also undisputed that the amount of expenditure claimed on ESOP was duly reflected in the P&L account and also in the notes to accounts. Therefore, we are of the considered opinion that penalty will not be leviable on this issue as mere making of a claim, which is not otherwise acceptable in law, will not tantamount to concealment of income or furnishing inaccurate particulars, especially when the bona fides of the assessee are not under doubt. - Decided in favour of assessee.
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2017 (12) TMI 1521
Levy of penalty u/s 271(1)(c) - initiation of penalty proceedings without recording satisfaction - contrast between the order levying penalty under section 271(1)(c) and the appellate order - unaccounted investment in purchase of shops - Held that:- In the facts of the present case, we find that the Assessing Officer has not recorded any satisfaction as to which limb of section 271(1)(c) of the Act has not been fulfilled and have not issued show cause notice in this regard and hence, initiation of penalty proceedings are bad in law. There was a contrast between the order levying penalty under section 271(1)(c) of the Act and the appellate order, wherein the penalty has been levied by the Assessing Officer for violation of Explanation 1 to section 271(1)(c) of the Act and the CIT(A) has confirmed the same for furnishing inaccurate particulars of income by concealing the income of ₹ 85 lakhs. First of all, the Assessing Officer has failed to record any satisfaction and further, the order of the Assessing Officer levying penalty is for concealment of income and the order of CIT(A) confirming the levy of penalty is on furnishing of inaccurate particulars of income. Such contrary orders by the Assessing Officer and the CIT(A) cannot survive as they have failed to come to conclusion as to whether the assessee has concealed its income or furnished inaccurate particulars of income. It cannot be a case of satisfaction of both of limbs, one by the Assessing Officer and the second by the CIT(A). Hence, there is no merit in levy of penalty under section 271(1)(c) of the Act where the initiation of penalty proceedings is without recording satisfaction. Further, levy of penalty under section 271(1)(c) of the Act, which has been levied by the Assessing Officer for concealment of income but has been confirmed by the CIT(A) for furnishing inaccurate particulars of income again suffers from infirmities and cannot be upheld. - Decided in favour of assessee.
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2017 (12) TMI 1520
TPA - rejection of aggregation approach adopted by the assessee for benchmarking its manufacturing activities - Held that:- While benchmarking the international transactions of assessee, wherein the assessee was engaged in manufacturing activities, then we hold that various activities are to be aggregated for determining the arm's length price of its international transactions. See aassessee's own case 2017 (12) TMI 1423 - ITAT PUNE Method to be applied as most appropriate method - whether internal comparability is to be made i.e. comparing the profitability of export to associated enterprises with domestic sales? - Held that:- The said issue was also adjudicated by the Tribunal in earlier years [2017 (12) TMI 1423 - ITAT PUNE] wherein the Tribunal held that while applying TNMM method, margins of assessee are to be compared with average margins of external comparable companies. Determination of PLI - TPO had applied net profit to cost to work out the PLI but the claim of assessee was that PLI of net profit to sales has to be applied - Held that:- As in assessee's own case for earlier year Tribunal directed the Assessing Officer to adopt the net profit to sales for determining PLI. Benefit of variation / reduction of 5% from the arithmetic mean - Held that:- The benefit of range of +/-5% is available if the variation does not exceed the said tolerance margin. International transactions of procurement support services provided to associated enterprises are to be aggregated and benchmarked along with international transactions under the manufacturing activities. Disallowance of deduction claimed under section 80IB - Held that:- The said issue is covered against the assessee by the earlier order of Tribunal and wherein, the Tribunal following the same parity of reasoning as in assessment year 2006-07 had upheld the orders of authorities below in allocating head office expenses, Director s salary, etc to Daman unit and upheld the re-computation of deduction under section 80IB of the Act. Following the same parity of reasoning, we dismiss the ground of appeal No.7.1 raised by the assessee. Addition u/s 14A - Held that:- The assessee during the course of hearing has filed the details in respect of disallowance of expenses under section 14A of the Act at ₹ 2,80,144/- as against working filed before the Assessing Officer, copy of which is placed at page 680 of the Paper Book, under which the disallowance worked out to ₹ 19,63,021/-. On perusal of the statement filed by the assessee, we disallow sum of ₹ 19,63,021/- under Rule 8D(iii) of the Rules being disallowance to be made in view of provisions of section 14A of the Act. The assessee is cash rich company and the share capital and reserves surplus of the said concern as on 31.03.2008 are sufficient to take care of investments made by the assessee. Consequently, no disallowance is made on account of interest expenditure under Rule 8D(ii) of the Rules by the Assessing Officer. Accordingly, the ground of appeal raised in this regard, is partly allowed.
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2017 (12) TMI 1519
Addition on accounts difference in sale rate - some flats were sold out below average selling price and below cost price by the assessee builder - Held that:- The addition of ₹ 30,00,000/- is a case of ad-hoc addition. It shot up the gross profit rate to the levels which is not there in this line of business. With this addition, the GP of the assessee records extremely high. As such, the assessee offered the additional income of ₹ 6,00,000/- vide his letter dated 20-12-2011 and the same is never retracted till date. The assessee granted discounts to various customers both for business as well as personal reasons. In absence of any direct evidence to demonstrate the concealment of sale price, rejecting the assessee’s explanation which is general in nature, rejecting the offer of additional income of ₹ 6,00,000/- given by the assessee vide his letter dated 28-12-2011, is not appropriate. Further, we are of the view that said addition of ₹ 30,00,000/- could not be sustained in full as the AO failed to consider the average sale price of the flats, while working out the variation in it. Hence, we approve the assessee’s variation of ₹ 18.88 lakhs say 19 lakhs rounded off). Therefore, we direct the AO to restrict the addition to the said assessee’s offer of ₹ 6 lakhs, which constitutes around 31.50% of the variation of ₹ 18.88 lakhs for this year. In effect, the basis, which is considered prudent by the assessee, while offering the said additional income of ₹ 6,00,000/- is approved. Accordingly ground No. 1 and 2 raised by the assessee in appeal are partly allowed. Disallowance of interest u/s.36(1)(iii) and disallowance u/s. 14A r.w.r 8D - Held that:- On facts, we find the provisions of section 36(1)(iii) of the Act and its proviso and explanation are inapplicable to the facts of this case. Similarly, AO has not properly made out if the provisions of section 14A r.w.r 8D (2) of the I.T Rule apply to facts discussed in his order. Further, the applicability of the provisions of section 37 of the Act is completely given a miss. Further, we find the claim of payment of interest to the co-owners of the land is a matter to be decided after comprehensively discussing the relevant facts needed for applying provisions of section 37 of the Act or as per provisions of section 36(1) (iii) of the Act or 14A of the Act, as the case may be. There is no clarity in AO’s order as to why the said provisions were invoked. The interest claim mentioned in section 36 of the Act relates to the claim of interest linked to the capital borrowed by the assessee. In this case there is no capital borrowed by the assessee. More facts are needed for adjudication of this issue. Matter is remanded to the file of AO for fresh examination. Addition on discount sale of shops below market price to the partner of the assessee (Smt. Taradevi Ratanlal Bafna) - Held that:- he discussion of granting discount to Smt. Taradevi Ratanlal Bafna constitutes a case of commercial expediency. Merely rejecting the assessee submissions by the AO without disapproving the assessee’s claim when documentary evidence, is not sustainable. Therefore, the provision of section 28(iv) is not relevant to this issue. The said provisions are relevant, when the benefit is accrued to the assessee and not in a case like the present one where the assessee is a seller and the discount is allowed to the partner of the firm. Accordingly, we are of the view that the decision of CIT(A) is plausible view taken by him and it does not require any interference. - Decided against revenue Unexplained investment in plot - addition u/s 69B r.w.s 50C - CIT(A) deleted the addition concluding that Section 50C of the Act is applicable by 01-04-2003 and that provision of Section 50C of the Act is applied only to the seller of the property and not to the assessee, who is purchaser - Held that:- The above reasoning of the CIT(A) is fair and reasonable and it does not call for any interference on this issue. Thus, ground raised by the Revenue in appeal are dismissed. Addition on account of unsupported expenses - AO held the said expenditure relates to the subcontracted works and therefore, the claims are not allowable - Held that:- CIT(A) found reasons on the necessity of such expenses when the works were already given on contract the same were incurred in the commercial interest of the business. He also mentioned that the expenditure was required to be incurred as a business expenditure to maintain the goodwill of the assessee. Considering the fact that the AO failed to bring any evidence on record to demonstrate the bogus nature of the expenditure, in our view, the CIT(A) fairly restricted the disallowance to ₹ 46,475/-. Therefore, we are of the view that decision of CIT(A) is fair and reasonable Difference in sale price of the flats - Held that:- We approved the working of assessee in arriving at the variation of ₹ 18.88 lakhs. For the same reasons, in principle, we find it is appropriate to uphold the decision of the AO in making additions. However, we have considered the fact that on the addition of ₹ 39,48,000/-, the profit rate of assessee for this year is phenomenonally high which is not there in this line of business. Therefore, there is requirement for downward revision of the said adhoc addition. In our view, the principle laid down by us for A.Y. 2009-10 is relevant to this year too. Therefore, we direct the AO to restrict the addition in this year too to 31.50% of the variation calculated adopting the average sale price of the flats sold in this year. AO shall adopt the manner of working the variation in sale price as done by the assessee in the A.Y. 2009-10 for arriving the figure of ₹ 18.88 lakhs. AO is directed to give opportunity to the assessee in this exercise. With this direction, we partly allow the ground raised in this regard Disallowance u/s.14A r.w. Rule 8D - Held that:- This issue should be remanded to the file of AO for fresh adjudication. AO is directed to apply binding judgments on this issue relating to investment of the excess funds qua the applicability of the provisions of section 14A of the Act
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2017 (12) TMI 1518
Penalty u/s 271D - the company has accepted cash loan / cash deposits from Director - repayment of the same was also made in cash, which is in violation of the provisions of section 269SS as well as section 269T of the I. T. Act, 1961 - Held that: - the penalty is not leviable in the matter - Hon’ble Supreme Court in the case of CIT Vs. Jai Laxmi Rice Mills [2015 (11) TMI 1453 - SUPREME COURT] has held that in the fresh assessment order there was no satisfaction recorded regarding penalty proceedings under section 271D of the Act though in that order the Assessing Officer wanted penalty proceeding to be initiated under section 271(1)(c) of the Act. Thus, the penalty under section 271D was without any satisfaction and, therefore, no such penalty could be levied. The Assessing Officer did not record any satisfaction regarding penalty proceedings under section 271D of the I. T. Act in the assessment order. Though in that order the Assessing Officer initiated penalty proceedings under section 271(1)(c) of the Income Tax Act. Thus, the penalty under section 271D was without any satisfaction and, therefore, no such penalty could be levied - appeal allowed - decided in favor of assessee.
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Customs
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2017 (12) TMI 1517
Classification of goods - Exemption Notification No. 23/98-Cus. - Piston Ring Set imported by the respondents herein for use as components/parts of engines of Shakti Power Tillers - the decision in the case of COMMR. OF CUS. (I), MUMBAI Versus LA-CAST METALS & COMPONENTS PVT. LTD. [2005 (12) TMI 509 - CESTAT, MUMBAI] contested, where it was held that Tillers rightly classified under Chapter heading 84.32 - Held that: - The judgment impugned does not warrant any interference - appeal dismissed.
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2017 (12) TMI 1516
Confiscation - personal penalties - old and used Digital Multifunction Printers/Devices imported by the petitioner - delay in adjudication proceedings - alternative remedy - Held that: - the petitioner cannot be heard to contend that the department had confirmed the demand against it, or found against it on grounds which were not specifically put to them, through a show cause notice - the mere fact that a show cause notice was subsequently issued to the petitioner did not, as indeed it could not, work to the prejudice of the petitioner, because the show cause notice only limited the grounds on which the adjudicating authority could confirm the proposals against the petitioner - the challenge in the writ petition against Ext.P6 order cannot be legally sustained, and the petitioner ought to be relegated to his alternate remedy of approaching the Appellate Tribunal against the said order. Taking note of the urgency that is projected by the learned Senior Counsel for the petitioner, I direct that, if the petitioner in the writ petition, as also the partners of the petitioner partnership, against whom personal penalties are imposed by Ext.P6 order, prefer appeals against Ext.P6 order, before the Central Excise and Customs Appellate Tribunal, Bangalore, within a period of two weeks from the date of receipt of a copy of this Judgment, after complying with all the procedural formalities, the Tribunal shall endeavour to consider and dispose the appeals on merits, within an outer time limit of three months from the date of receipt of a copy of this judgment - petition disposed off.
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2017 (12) TMI 1515
Valuation - discount - includibility - related party transaction - goods imported from their principals for purposes of stock and sale - Held that: - the quantum of imports made by the respondent justify the same to be categorized as a separate class of buyers - the order passed by the learned Commissioner(Appeals) is reasonable. He has given detailed reasons justifying the grant of discounts - appeal dismissed - decided against Revenue.
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2017 (12) TMI 1514
Penalty u/s 112(a) of the Customs Act, 1962 - it was alleged that the appellant helped importer in misdeclaration of value as well as quantity of imported assorted consumer goods - Held that: - there is no clear cut evidence of abetment or instigation on the part of the appellant to undervalue the goods declared by the importers. In fact the appellant has only acted as a Clearing and Forwarding Agent and there is no independent corroborative evidence to come to the conclusion that he has helped the importer in evading the payment of customs duty - the appellant's case is squarely covered by the provisions of Section 28(6) of the Customs Act which clearly lays down that once the duty with interest and penalty has been paid in full, then the proceedings in respect of the importer as well as other persons should be deemed conclusive. The appellant is covered by Section 28(6) and therefore the proceedings against him also stands concluded once the importer has accepted the undervaluation and paid the differential duty along with interest and penalty - penalty u/s 112(a) of the CA, 1962 set aside - appeal allowed - decided in favor of appellant.
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Service Tax
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2017 (12) TMI 1506
Release of Bank Guarantee - Petitioners took the stand that they are not to liable to pay the service tax for the period prior to 1st June 2007. It is for that reason that instead of paying service tax under protest they furnished a BG in favour of Respondent No.1 - Held that: - If the AAI (Airports Authority of India), on its own, deposited the service tax with the Central Government, the AAI would be entitled to refund thereof in accordance with law - the Court is of the view that there is no justification for Respondent No.1 to continue retaining the BG issued in its favour. Accordingly Respondent No.1 is directed to forthwith return to the Petitioners BG No. PBG 2007/70029 dated 16th February 2008 issued in its for a sum of ₹ 70 lakhs and, in any event, not later than 30th September 2017 - petition allowed.
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2017 (12) TMI 1505
Time limitation - validity of SCN - subsequent SCN - Held that: - A finding of fact has been recorded that non-filing of documents as required by summons and non appearance before the authorities is a deliberate violation of law and, therefore, the charge of suppression of facts is clearly borne out from the conduct of the Appellants - It was held that the notices issued on 8th September 2004 were not in continuation of notices for the previous period. The finding of fact is that, the notices issued on 8th September 2004 were not based on identical facts or identical evidences - demand is not barred by limitation. Appeal dismissed.
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2017 (12) TMI 1504
Levy of service tax - service provided in SEZ units - case of Revenue is that in the absence of all the agreement copies, there is every possibility that the assessee may have provided services at places outside the SEZ in respect of other units also - Held that: - Under Notification No.4 of 2004 dated 31.03.2004, taxable services of any description, as defined in Section 65(1)(90) of the Finance Act, 1994, provided to a developer of a SEZ or a unit of a SEZ by any service provider is exempted from the whole of the service tax leviable thereon, subject to conditions. The Tribunal failed to note that the assessee produced invoices clearly indicating that the services provided by him were in a SEZ - As the Tribunal did not take note of these factual aspects while considering the application filed by the assessee for waiver of the predeposit and stay and straight away directed deposit of the entire assessed liability as a condition precedent, consequent upon which the appeal itself came to be dismissed thereafter owing to his failure to do so, we are of the opinion that the orders under appeal cannot be sustained and the Tribunal necessarily has to examine the matter afresh - matter on remand.
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2017 (12) TMI 1503
Levy of service tax - composite works contract - whether the service tax can be levied on indiisible Works Contract Service(WCS) prior to 01/06/2007 i.e. the date of introduction of WCS under Section 65(105)(zzzza) of the Act? - Held that: - issue is no more res integra and has been settled by the Hon’ble Supreme Court in the case of L&T Ltd. [2015 (8) TMI 749 - SUPREME COURT] wherein the Hon’ble apex court has held that prior to 01/062007, there was no charging section to specifically levy service tax on WCS, or mechanism to tax service tax element derived from gross amount charged for works contract less value of the property in goods transferred in execution of works contract. This Tribunal in the appellant s own case, ABB LTD. Versus COMMISSIONER OF SERVICE TAX, BANGALORE [2010 (7) TMI 335 - CESTAT, BANGALORE] has allowed the appeal of the appellant by discussing all the sub-contracts in the main contract which form part of the composite contract. Appeal allowed - decided in favor of appellant.
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2017 (12) TMI 1502
CENVAT credit - sole selling commission - input service or not? - Held that: - the sales commission is directly attributable to the sales of the product. Any activities which amounts to sale of the product is deemed to be sales promotion activity in the normal trade parlance. The commission is paid on the sale of the product / services with an intention to boost the sale of the company. In view of this, the sales commission has a direct nexus with the sales which in turn is related to the manufacture of the product - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 1501
Penalty u/s 76 and 78 - non-payment of service tax - Management, Repair and Maintenance Service - Held that: - there is no suppression on the part of the assessee to attract Section 78 - penalty u/s 78 set aside. Penalty u/s 76 - Held that: - the appellant has already paid service tax of ₹ 7,38,873/- and also penalty under Section 78 amounting to ₹ 1,86,765/- being 25% of the penalty imposed and penalty under Section 76 amounting to ₹ 1,35,300/- and penalty under Section 77 ₹ 1,000/- and interest of ₹ 1,43,802/- as per the challans attached with the appeal. Since the assessee has paid the penalties under Section 76 and 78 which are not warranted and in view of my discussions above, I partially allow the appeal of the appellant and drop the penalties imposed under Section 76 and 78. Penalties set aside - appeal dismissed - decided against Revenue.
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2017 (12) TMI 1500
Tax collected but not paid - Advertising Agency Services - penalty u/s 77 and 78 - Held that: - the service tax was collected by the appellant from its customers and has not been deposited in the Government account. Further there are no justifiable reason for not depositing the service tax in the Government account - appellant paid the service tax along with interest only after it was detected by the Department - penalty upheld - appeal dismissed - decided against appellant.
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2017 (12) TMI 1499
Penalties u/s 73, 77 and 78 of the FA, 1994 as also u/s 70(a) of the Act read with Rule 7 and Rule 7C of the STR, 1994 - late registration with the Service Tax Department for not paying the Service Tax of ₹ 34,262/- on Reverse Charge Basis and the late filing the ST-3 returns - Held that: - the Tribunal in number of decisions, has held that when the law is not clear, the assessee cannot be held guilty of any suppression etc in the absence of any evidence to the contrary - There could be a doubt entertained by the assessee. When the assessee is reflecting all their business activities in their balance sheet, no malafide can be attributed to them - penalty set aside - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 1498
Penalties - non-payment of service tax - Annual Maintenance Contract Services - payment of tax with interest on being pointed out - Held that: - the legal issues, during the relevant period, were not very clear, thus, giving doubts to the assesses. In as much as, the services were a part of the appellant’s record, there was no escape for the appellant to deposit the Service Tax. In this scenario, no mala-fide intention can be attributed to the assessee so as to attract penal provisions - penalty set aside - appeal allowed.
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2017 (12) TMI 1497
Rebate claim - export of services - Time limitation - Section 11B of CEA - Held that: - in the present case, rebate claims have been filed within one year from the date of receipt of foreign exchange, which is relevant date for computation of limitation - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 1496
Refund of unutilized CENVAT credit - input services or not - denial on the ground of nexus - All the services have been held to be input service in various decisions relied upon by the appellant and the details of the invoices have also been given along with the appeal memorandum - also, the original authority has committed computation error in determining the amount of refund which is eligible by wrongly applying the method for computation of refund - the original authority directed to recompute the refund amount in accordance with law - appeal allowed.
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2017 (12) TMI 1495
Refund claim - service tax paid which is not payable - Rejection on the ground of time limitation - Section 11B of the CEA, 1944 - Held that: - It is admitted fact that the appellant is service provider in the state of Jammu & Kashmir and for the services provided by the appellant in the state of Jammu & Kashmir, no service tax is payable. In that circumstance, the amount paid towards service tax by the appellant is not an amount of service tax - when it is not an amount of service tax than the provisions of Section 11B of the Act are not applicable to the facts of this case - refund allowed - appeal allowed - decided in favor of appellant.
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2017 (12) TMI 1493
Levy of service tax - tour operator service - exemption Notification No. 20/2009-S.T., dated 7-7-2009 - Held that: - the services of the type rendered by the appellant have been exempted from payment of service tax vide Notification No.20/2009. This notification has further been amended to give retrospective effect as per Section 75 of the Finance Act, 2011. The retrospective benefit has been granted for the period with effect from 01/04/2000 - demand of tax not justified. Similar issue decided in the case of A. MANIMEGALAI Versus COMMISSIONER OF C. EX. (SERVICE TAX), SALEM [2014 (6) TMI 490 - CESTAT CHENNAI], where it was held that activity undertaken by the appellants was exempted by Notification No. 20/2009-S.T., dated 7-7-2009 and the retrospective effect was granted to the exemption through Section 75 of the Finance Act, 2011 and the same is applicable from 1-4-2000. Appeal allowed - decided in favor of appellant.
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Central Excise
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2017 (12) TMI 1494
Maintainability of appeal - Penalty - Valuation - Held that: - the decision in the case of Commissioner of Customs, Central Excise and Service Tax, Indore Versus Avtec Limited [2017 (12) TMI 1424 - MADHYA PRADESH HIGH COURT] shall apply mutatis-mutandis in the present case also, where it was held that if multiple questions are involved in the matter, then the department has to raise all these issues before the Supreme Court by filing an appeal under Section 35L of the Central Excise Act, 1944 - present appeal also dismissed following the above case.
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2017 (12) TMI 1492
CENVAT credit - panels, part of boiler - Circular No.956/09/2012 dt. 18/05/2012 - Held that: - 3 no. VFD panels are part of the boiler which is used in connection with the manufacture of final product and therefore in view of the Circular No.956/09/2012 dt. 18/05/2012, the denial of credit is not sustainable in law - credit allowed. Interest - penalty - credit taken earlier, reversed - appellant have only availed the CENVAT credit and not utilised the same and subsequently reversed - the appellants are a state government undertaking and allegation of fraud and suppression cannot be alleged against government undertaking - interest and penalty set aside - relying in the case of Commissioner Vs. Bill Forge (P) Ltd. [2011 (4) TMI 969 - KARNATAKA HIGH COURT], where it was held that if the CENVAT credit is availed but not utilised and is reversed then the assessee is not liable to pay interest. Appeal allowed - decided in favor of appellant.
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2017 (12) TMI 1491
100% EOU - CENVAT credit - input services - medical insurance - penalty - Held that: - the period is after 1.4.2011 and this is specifically excluded by the definition of input service and therefore, I deny CENVAT credit on this medical insurance given to the employees - Since there was lot of litigation during that time and there is no suppression on the part of the appellant to evade the duty, therefore, I am of the view that penalty is not imposable on the wrongly availed CENVAT credit which is laible to be reversed. With regard to the input to the extent of ₹ 9,635/-, I allow the CENVAT credit as the same fall in the definition of input. CENVAT credit - input services - maintenance or repair of the photocopier - rent-a-cab service - information technology software service - insurance of the assets of the company - Held that: - CENVAT credit on all the services allowed. Appeal allowed in pat.
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2017 (12) TMI 1490
CENVAT credit - input services - canteen construction - sales commission - time limitation - Held that: - the entire demand is barred by time as there is no mala fide intention on the part of the appellant to avail an irregular credit - Though the appellant has tried to justify the availment of credit on merit also, but once it is found that the entire demand is barred by time, then in that case, it is not required to go into the merit of the eligibility of the credit - appeal allowed.
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2017 (12) TMI 1489
100% EOU - Refund of unutilized CENVAT credit - various input services - Held that: - various judgments of the Tribunal have categorically held that the definition of input service as contained in Rule 2(I) has to be given wider interpretation so as to include all services which are received in or in relation to the business of the assessee - reliance placed in appellant own case [2017 (1) TMI 1506 - CESTAT BANGALORE] - refund allowed. Refund of ₹ 2,811/-, which was denied on account of the fact that the same pertains to Bangalore office - Held that: - the rejection is wrong because the Bangalore office is working in connection with the business of the company and similarly, the appellant is eligible for the refund of ₹ 353/-, which was rejected towards bank charges/commission and postage for which the appellant has also produced the invoice. Appeal allowed - decided in favor of appellant.
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2017 (12) TMI 1488
Penalty u/s 78 - payment of service tax before issuance of SCN - Held that: - Apart from the fact that the appellant did not discharge their service tax burden during the relevant period, there is otherwise no evidence to indicate that such non-payment of duty was on account of any malafide - As such in the absence of any suppression, mis-statement with an intent to evade payment of duty, the benefit of Section 80 of the Finance Act should be extended to the assessee - penalty set aside - appeal allowed.
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2017 (12) TMI 1487
CENVAT credit - duty paying documents - denial of credit on the ground that the same has been availed on the basis of photo copies of the invoices, which cannot be held to be eligible documents - Held that: - learned advocate submits that though the documents could not be produced before Audit Officer but during the adjudication, they contended that such original invoices are available with them and they should be given an opportunity to produce the same. The said plea of the appellant does not stand considered by the authorities below - matter remanded to the Original Adjudicating Authority for examination of the documents to be produced by the appellant, for which they would be given an opportunity - appeal allowed by way of remand.
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2017 (12) TMI 1486
Refund claim - security deposit, for maintaining the godown, which was encashed by the Revenue and credited to the Government Account - Held that: - there is no dispute about the fact that at the time of further extension of the permission to maintain an outside godown, a fresh security was given by the assessee and as such the earlier security encashed by the Revenue was to be refunded to them - It is also seen that the credit entry was made by the appellant in their PLA under intimation to the Revenue. Such intimation can be deemed to be a claim for refund and if the Revenue was not happy with the same, they could have initiated the proceedings at that point of time itself - denial of refund not justified - appeal allowed.
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2017 (12) TMI 1485
SSI exemption - use of brand name or others - Held that: - the same Commissioner in respect of the another unit using the same name has taken a view that there is a difference in the nature of logo and the word ‘Lakshmi’ which was used by the assessee and held by order dt. 24/04/2008 that the assessee is entitled for SSI exemption as they are not used brand name or trade name of another - The learned Commissioner has also relied upon the decision in the case of Grasim Industries Ltd. and other decisions which have now been relied upon by the Revenue to come to the conclusion that the appellants are entitled for SSI benefit as they have not used the same brand name belonging to another company - SSI exemption allowed - appeal allowed.
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2017 (12) TMI 1484
Valuation - includibility - free supply of the design - Held that: - the value of the design will have to be added to the value of the goods as per Rule 6 Explanation-I of the Central Excise Valuation Rules, 2000 - In the instant case, the design is about 22 years old where copyright is not applicable and it was available in the public domain. So, “nil” value can be added - appeal allowed.
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CST, VAT & Sales Tax
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2017 (12) TMI 1483
Detention of goods - in the course of lorry check, on verification of the dealer's profile and monthly returns, it revealed that they have purchased huge quantity of such machines, but no proof of payment of tax was found out - whether the order of detention passed by the respondent is valid and proper and as to whether the transaction could be treated as a sale within the State of Tamil Nadu and tax could be levied under the provisions of the said Act? - Held that: - the contract is between the State Bank of India, Navi Mumbai and the petitioner at New Delhi with a specific condition that the goods are to be supplied to the State Bank of India, Chennai to be routed through their agent and service provider M/s.Hitachi Payment Services Private Limited. Thus, the impugned order is not sustainable, more so, when the State Bank of India themselves have given a certificate dated 11.4.2017, clearly explaining the nature of transaction - petition allowed.
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2017 (12) TMI 1482
Refund of input tax credit - export sales - Form W - whether the respondent was justified in simply returning the Form-W, for the reasons assigned in the impugned notice? - Held that: - Similar issue decided in the case of R.K. Knits Versus Assistant Commissioner (CT) Adyar II Assessment Circle, Chennai and others [2011 (11) TMI 779 - MADRAS HIGH COURT], where it was held that Admittedly, the dealer had been making a claim in terms of rule 10 (10) in his monthly returns and there was no denial of the fact that the claim had been made within the time specified under the Act. In the face of the admitted fact as to the filing of Form I remaining undisputed, there was no justification in the contention of the Assistant Commissioner that Form W filed beyond 180 days resulted in the rejection of the refund claim. Writ Petitions are disposed of, by directing the petitioners to re-present the Form-W along with the copy of the decision rendered in R.K.Knits, and on receipt of the application/Form-W, the respondent shall afford an opportunity of hearing to the petitioners/Authorized Representative of the petitioners and pass orders on merits and in accordance with law on the Form -W filed by the petitioners.
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Indian Laws
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2017 (12) TMI 1513
Smuggling - Ganja - Section 8/20 of NDPS Act - compliance of Section 50 of NDPS Act - Held that: - it is well settled law that unless personal search is made of the suspect, the compliance of Section 50 of NDPS Act would not be required - It appears that here during search, person of the accused was not searched rather only the search was made of the bag which he was carrying, hence, in the light of law stated above, Section 50 of the NDPS Act shall not be applicable. Whether the compliance of Section 57 of the NDPS Act has been made? - Held that: - it is clear that though the non-compliance of Section 57 of the NDPS Act by itself may not be treated mandatory but if its non-compliance has resulted in prejudice to the accused, it will certainly have an adverse effect on the prosecution's case. Therefore, this Court would like to see whether there are other serious infirmities which may point to non-compliance of necessary provisions of law. It may also be pointed out here that the severer the punishment provided under law, stricter compliance of statutory provisions is required to be made & very meticulously. It is apparent that not only it is on record that the prosecution has failed to follow these guidelines in detail but even broadly the prosecution has failed to establish that any sample of contraband substance was taken and was sealed on the spot and the sample of the same was sent to the FSL for being tested - it would not be safe to hold that the prosecution has proved beyond doubt that the contraband substance (500 grams, Ganja) was recovered from the accused and the sample of same was found to be Ganja as has been held by the court below. These infirmities coupled with non-compliance of Section 57 of the NDPS Act would make a huge dent in the prosecution's case - the prosecution has failed absolutely to prove beyond doubt that any recovery of contraband substance (Ganja) was made from him - appeal allowed.
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2017 (12) TMI 1512
Smuggling - opium - Section 23(c) of the NDPS Act - acquittal of offence - rigorous imprisonment for a term of 12 years and a fine of ₹ 1,00,000/- with default clause - the prosecution case is that on information about a criminal, the police has raided the place and there was no prior information about the opium being kept by the accused appellant - Held that: - In the present case there is absolutely nothing is available to show as to whether direction issued vide Standing Order No. 1 of 1989 or provisions of Section 52A of the Act have been complied or not - Further there is nothing available to show as how much quantity was taken from each packet and as whether it was properly sealed prior to sending it to the FSL. No doubt, in the present case, the informant has no prior information regarding the contraband to be kept by the accused appellant. In such a situation, there is no requirement for compliance of Sections 42 and 50 of Act. However, at the same time, once he came to know about having contraband in possession of the accused, he ought to have informed the superior officer about the same and he ought to have proceeded in accordance with the provisions under the NDPS Act but neither he has informed the superior officer as provided under Section 57 of the Act nor he has followed the provisions of Section 55 regarding taking charge of articles seized and delivered nor there is compliance of provisions of Section 52A of the Act or the Standing Orders issued under the aforesaid Act. Neither the recovered seized articles nor the samples and remaining of the samples sent back by the FSL has been produced before the court nor there is anything to show that it has been kept in Malkhana and there is also nothing on the record in support of the same, neither Malkhana register has been poduced nor Malkhala In-charge has been examined in the present case, which appears to be essential in this case. The trial court has not considered the aforesaid aspect of the matter and only being swayed by evidence of the police officers, coupled with the fact that recovery of opium and the opinion recorded he had convicted the appellant under Section 18(b) of the Act - the impugned judgment of conviction suffers from several inconsistencies, discrepancies and cumulative effect of the above discrepancies and infirmities certainly dented the finding of guilt recorded in the impugned judgment of conviction. Hence it does not appear to be sustainable in the eye of law. The judgment of conviction and the order of sentence of the appellant are set aside - appeal allowed.
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2017 (12) TMI 1511
Non–compliance of provisions of Section 50(1) of the Act - seizure of contraband item - ganja/psychotropic addictive substance - Held that: - On plain reading of Section 50 of the Act, it appears that the safeguard or protection to be searched in presence of Magistrate or Gazetted Officer has been incorporated in Section 50 of the Act, to ensure that persons are only searched with a good cause. So far Section 50 of the Act, is concerned, it appears to be mandatory in nature when the search of a person of a suspect is required but the same does not appear to be applicable in a case where the recovery is from dickey or bag etc. - In the present case recovery of contraband is from the dickey of the car, however, person of the appellant has also been searched and as such submission of learned counsel for the appellant that in the above circumstance non compliance of provision of Section 50 of the Act vitiate the conviction of the appellant as though a Circle Officer was present there and there is nothing available on record to show that they have informed the accused person about his statutory right to be searched before a Magistrate or Gazetted Officer. Facts of the case in hand is also similar to that decided by Hon”ble Apex Court in the case of Dilbag Singh v. State of Punjab [2016 (12) TMI 1 - SUPREME COURT] as in this case also recovery is from the car and not from the possession of the appellant and though person of the appellant was also searched but nothing except one mobile and some sim cards were recovered and as stated above, prosecution is also not relying upon the personal seizure of the appellant. The contention of appellant regarding non-compliance of Section 50(1) does not appear to be convincing and is certainly of no help, whereas, there are sufficient cogent, consistent and reliable materials available on record with regard to recovery of commercial quantity of ganja/psychotropic addictive substance from the dickey of the car - So far conviction of appellant under Section 476 of Indian Penal Code is concerned, the same appears to be not sustainable and is hereby set aside - appeal disposed off.
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2017 (12) TMI 1510
Smuggling - Heroin - Sections 21 of NDPS Act - whether, in the light of evidence on record, compliance of Section 50 of NDPS Act has been properly made in this case by the prosecution or not? Held that: - It is mandatory for the prosecution to prove that the accused was apprised of his right to be searched in presence of a Magistrate or a Gazetted Officer. In case such right has not been apprised the conviction would vitiate. The compliance of provision of Section 50 of NDPS Act is extremely important right of the accused, non-compliance of which would make the recovery suspect - In the case at hand, it is apparent that the accused was given option of being taken before a Magistrate or a Gazetted Officer for being searched to find whether he possessed any contraband substance - It would be noted here that the provisions of Section 50 have been amended with effect from 2.10.2001 by adding Clause 5 and 6 also, but in this case those clauses would not be operational because the occurrence belongs to the year 1995 when the unamended Act was in force, provisions of which have been reproduced by the learned lower court in judgment - In the case at hand, in the light of evidence on record, it is apparent that the accused was given option to be taken before a Magistrate or a Gazetted Officer as has been stated by both the witnesses of fact i.e. PW-1 and PW-3 and entry in that regard has also been made in the recovery memo, but they certainly had not apprised him about his legal right of being searched before a Magistrate or a Gazetted Officer in right earnest, in letter and spirit, as has been laid-down in the Vijaysinh Chadubha Jadeja's case (Supra) which goes to the extent to lay down that an endevour should be made to produce the suspect before the nearnest Magistrate who enjoys more confidence of common man, hence this Court finds that compliance of section 50 of NDPS Act was not made in right earnest by apprising the accused of his legal right that he could opt to be searched before a Magistrate or a Gazetted Officer, but only such option was given to him, hence the finding of lower court in this regard is found to be erroneous. Whether the prosecution has been able to prove that the alleged recovered contraband (Heroin) from the accused was the same which was sent for being examined by the FSL and was found to be heroin and whether not recording the weight of recovered contraband, would cause prejudice to the accused? - Held that: - when the contraband material from the accused was brought to police station with the accused and the recovery memo along with sample seal, the entry of the same ought to have been proved by the prosecution to have been made in the Malkhana register, to prove that the said contraband material along with the sample seal were deposited in Malkhana and were kept there in safe custody till it was taken out for being sent to the FSL and thereafter also when the same material was received back from the FSL with seal which was used by FSL. The same should have been kept at safe place until at the time of trial, when the case property was supposed to be opened before court for being exhibited. Then only it could have been held that substance which was examined and found to be heroin by the FSL was produced before court at the time of examination of witnesses in intact condition. Therefore, link evidence is found to be missing in this case. Non-compliance of Section 57 of the NDPS Act - Held that: - non-compliance of Section 57 by itself may not be held to vitiate the conviction or trial in this case but certainly it would have adverse impact on probabative value of the evidence adduced by the proseuction. In the case at hand, it has to be taken into consideration and to see whether non-compliance of this provision has caused any prejudice to the accused. Here a very small quantity of heroin is alleged to have been recovered from the accused which can easily be procured and may be planted, hence, looking to the fact that huge penalty has been provided under law under Section 21 of the NDPS Act, therefore, it was strict liability of the prosecution to prove the said recovery genuinely from the accused. For this, they ought to have prepared a report under Section 57 of NDPS Act of arrest of the accused and seizure of the recovered contraband and should have sent it to the superior authority within stipulated time or even beyond that with a proper justification of delay which has not been done. It certainly has caused prejudice to the accused. This court finds that prosecution has failed to adduce proper evidence on record which weakens the prosecution's case. It has not been able to prove its case to the hilt beyond shadow of doubt against the accused regarding illegal recovery of heroin - accused is held not guilty of offense under Section 21 of NDPS Act and deserves to be released forthwith in this case - appeal allowed.
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2017 (12) TMI 1509
Smuggling - charas - Section 8/20 of N.D.P.S. Act - compliance under Section 50 N.D.P.S. Act - whether the provisions of Section 50 of N.D.P.S. Act would be applicable in the present case or not for which evidence on record has to be seen? - Held that: - It is apparent from the above evidence on record that the alleged contraband was recovered from the accused all of a sudden by the police party and after the recovery having been made, the police came to know about the same being charas from its smell and on being told by the accused about it. There was no prior information to the police that the accused would be carrying charas, pursuant to which his arrest might have been made - the provisions of section 50 of N.D.P.S. Act would not be applicable. Whether the prosecution has been able to prove beyond reasonable doubt that the contraband material which was recovered from the accused and subsequently seized was the same, out of which the sample was taken and sent to the F.S.L. for determining whether the same was charas or not? - Held that: - it was duty of the accused to disclose as to how he came in possession of the contraband Charas. He has simply denied the recovery of such substance and has taken the plea that he has been falsely implicated by police, in statement under section 313 of the Criminal Procedure Code. Why the police has falsely implicated him and what was enmity of police with him, has not been brought on record by examining any witness. It would not be out of place to mention that the quantity recovered from the accused is huge, which is difficult to be planted looking to its value in the International market. The statement of police witnesses recorded by the prosecution in this case cannot be disbelieved only because they were police witnesses, in absence of any public witness being available. These witnesses did arrest the accused with alleged contraband substance in the normal course of duty harboring no enmity towards him, hence it cannot be held that they might have given false statement against the accused only to ensure that the charge sheet submitted by police stands vindicated. Compliance of section 57 of NDPS Act - Held that: - The compliance of section 57 could only have adverse impact on the probative value of the evidence of the prosecution, in case the prosecution had led weak evidence in regard to recovery from the accused. But that is not the case here. Non-compliance of the provisions of section 32 B of the NDPS Act - Held that: - the Court has expressed opinion that it is not mandatory while awarding punishment under sections of NDPS Act, wherein minimum punishment is provided, to award higher punishment than the minimum prescribed without taking into consideration the grounds which are mentioned in sub section (a) to (f) of section 32 B of NDPS Act - if the said section be read with greater attention, it would reveal that the words used in it are "it may deem fit", therefore word 'may' would indicate that it would be discretionary for the Court to take the grounds into consideration which are mentioned in sub-section (a) to (f) of the said section, while awarding punishment higher than the minimum prescribed. This Court has already held that the prosecution has been successful in proving the recovery of contraband substance from the accused, of which he could show no license to possess, on the basis of entire evidence, therefore, this view of the Court may not be upset only because of the above mentioned lacuna being pointed out in investigation - The conviction of the accused appellant is upheld but his punishment is reduced to 10 years R.I., fine of ₹ 1,00,000/- and in default of payment of fine, he shall further undergo S.I. of three months - appeal allowed in part.
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2017 (12) TMI 1508
Smuggling - Charas - the accused in his statement recorded under Section 313 Cr.P.C. has denied any such recovery of contraband substance to have been made from him and has stated that he has been falsely implicated due to enmity - Held that: - although the compliance of provisions of Section 57 of NDPS Act is not mandatory but directory. The compliance may be made even with delay with sufficient explanation therefor. The court conducting trial of an accused under the provisions of NDPS Act has to take into consideration whether non-compliance of this provision has resulted in causing prejudice to the accused. If yes, then certainly the benefit may be given to the accused. From the record it apparent that the prosecution has not made compliance of Section 57 of NDPS Act as nothing has come on record indicating that any such arrest and seizure report was prepared in respect of charas having been recovered from him which might have been sent to the higher authority within 48 hours or with delay with any explanation therefor. Hence, this Court is of the view that this certainly would cause prejudice to the accused. Whether the prosecution has been able to prove the recovery of 01kg charas from the accused from the place of occurrence as alleged? - Held that: - the prosecution has failed to establish beyond reasonable doubt that 01kg charas was recovered from accused-appellant, hence without establishing the recovery, the burden under Section 35 & 54 of NDPS Act could not be thrust upon the accused to disclose as to how he came in possession of the said contraband. The court below has failed to take into consideration the infirmities pointed out by this Court in the body of this judgement. It is held that the court below did not make proper appreciation of evidence on record in right perspective particularly with regard to identification of recovered contraband substance (Charas) which is being alleged to have been recovered from the accused on the spot, to be the same, the sample of which has been found by the F.S.L. to be Charas. This being of core importance in this case, the same could not be allowed to be taken lightly. In view of the severe punishment provided under the Act, this aspect ought to have been taken into consideration with all circumspection which appears to be lacking. The appellant is held not guilty of charges under section 20(b)(ii) of NDPS Act. He be released from jail forthwith in this case, if not detained in any other case - The case property/recovered contraband (charas) be destroyed in accordance with rules after the period of appeal, provided if any, expires or if the law provides otherwise - appeal allowed.
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2017 (12) TMI 1507
Smuggling - Heroin - offences u/s.8(c) r/w 21(c), 8(c) r/w 27(A), 8(c) r/w 28 & 8(c) r/w 29 of NDPS Act, 1985 amended by Act 9/2001 - acquittal of offences - quantitative analysis report in Ex.P50 - Held that: - On consideration of the quantitative analysis report in Ex.P50, Court below rightly has found the quantum of heroin carried and sought to be exported by appellant to be commercial quantity - Ex.P50 informs that the same has been prepared by one Karthikeyan, Assisant Director and Assistant Chemical Examiner to Government. Such official is a Government Scientific Expert and as such his report falls with the purview of Section 293 Cr.P.C. - appeal dismissed.
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