TMI Tax Updates - e-Newsletter
October 31, 2017

Case Laws in this Newsletter:

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

Highlights / Catch Notes

• Income Tax:

  Levy of interest u/s 201(1A) - non-deduction of tax at source and non-remittance to Government of India account - the interest is chargeable from the date of such tax is deductible to the date of furnishing of return of income
  Visit to Get Source

  ---

• Income Tax:

  Disallowance of amortization of premium on leasehold land - Looking to the nature of the advantage which the assessee obtained in a commercial sense, the expenditure appears to be revenue expenditure.
  Visit to Get Source

  ---

• Income Tax:

  Entitlement of members and Chairman of the National Committee - Rule 11N of the Income Tax Rules, 1962 as amended.
  Visit to Get Source

  ---

• Corporate Law:

  Removal of an auditor prior to expiry of his term - The company may thereafter hold a General Body meeting for removal of petitioner, if the permission to do so is granted by the Central Government (the RD). - HC
  Visit to Get Source

  ---

• VAT:

  Works contract - in a dyeing works contract, the goods to be incorporated may either be as goods or in some other form similar to the accretion or occasions due to the application of dyes and chemicals - liable to VAT - HC
  Visit to Get Source

  ---

Articles

• GST UPDATE ON DENIAL OF SUBSTANTIAL BENEFIT FOR TECHNICAL GLITCHES

Notifications

• Customs

• 99/2017 - dated 27-10-2017 - Cus (NT)
  Amendment in various notifications

  ---

• 100/2017 - dated 27-10-2017 - Cus (NT)
  Air Freight Stations appointed for loading/unloading of export goods.

  ---

• GST

• 54/2017 - dated 30-10-2017 - CGST
  Seeks to amend Notification no. 30/2017-Central Tax dated 11.09.2017 so as to extend the due date for filing FORM GSTR-2 and FORM GSTR-3 for the month of July, 2017

  ---

• GST - States

• 116/ST-2 - dated 18-10-2017 - Haryana SGST
  Notification under clause(g) of sub rule (2) of rule 89 of the HGST Rules,2017 notifying the evidences.

  ---

• 115/ST-2 - dated 18-10-2017 - Haryana SGST
  Notifying certain supply of goods as deemed exports.

  ---

• 114/ST-2 - dated 18-10-2017 - Haryana SGST
  The Haryana Goods and Services Tax (Tenth Amendment) Rules, 2017.

  ---

• 113/ST-2 - dated 18-10-2017 - Haryana SGST
  Constituting appellate authority for advance ruling for the State under the Act.

  ---

• 112/ST-2 - dated 18-10-2017 - Haryana SGST
  Notification under section 96 of the HGST Act, 2017 constituting authority of advance ruling for the State under the Act.

  ---

• 111/ST-2 - dated 18-10-2017 - Haryana SGST
  Notification under section 9(1) of the HGST Act,2017 prescribing rate of tax @2.5% on intra supply of goods i.e. food preparations distributed free to the weaker section by the Governments.

  ---

• 110/ST-2 - dated 18-10-2017 - Haryana SGST
  Notification for Cross Empowerment under section 6(1) of the HGST Act,2017 for purposes under section 54,55 to the proper officer of the CGST Act, 2017.

  ---

• 109/ST-2 - dated 18-10-2017 - Haryana SGST
  Amendment in Notification No. 83/ST-2 dated 22.09.2017 under section 23(2) of the HGST Act, 2017.

  ---

• 108/ST-2 - dated 18-10-2017 - Haryana SGST
  Amendment in the Notification number 42/ST-2, dated the 30th June, 2017.

  ---

• 107/ST-2 - dated 18-10-2017 - Haryana SGST
  Notifying registered persons with turnover not exceeding 1.5 crore and not opted for composition as class of persons who shall pay State Tax on outward supply as specified in clause (a) of sub section (2) of section 12 of the HGST Act, 2017.

  ---

• 106/ST-2 - dated 18-10-2017 - Haryana SGST
  The Haryana Goods and Services Tax (Ninth Amendment) Rules, 2017.

  ---

• 105/ST-2 - dated 13-10-2017 - Haryana SGST
  The Haryana Goods and Services Tax (Removal of Difficulties) Order, 2017.

  ---

• 104/ST-2 - dated 13-10-2017 - Haryana SGST
  Amendment in Notification No.36/ST-2 dated 30.06.2017 regarding tax free goods under Section 11(1) of the HGST Act.

  ---

• 103/ST-2 - dated 13-10-2017 - Haryana SGST
  Amendment in Notification No.38/ST-2 dated 30.06.2017 regarding impounded/used goods under Section 9(3) of the HGST Act.

  ---

• 102/ST-2 - dated 13-10-2017 - Haryana SGST
  Amendment in Notification NO.34/ST-2 dated 30.06.2017 regarding composite scheme under section 10(1) of the HGST Act.

  ---

• 101/ST-2 - dated 13-10-2017 - Haryana SGST
  Notification regarding 65% of the State tax to be levied on Motor Vehicles entry 87 Notification issued under Section 9(1) of the HGST Act, 2017.

  ---

• 100/ST-2 - dated 13-10-2017 - Haryana SGST
  Amendment in Notification No. 35 ST 2 dated 30.06.2017 under section 9(1) regarding rate of tax on Goods in HGST Act, 2017.

  ---

• 099/ST-2 - dated 13-10-2017 - Haryana SGST
  Amendment in Notification No. 48 ST 2 dated 30.06.2017 regarding overseeing society of Reserve Bank of India.

  ---

• 098/ST-2 - dated 13-10-2017 - Haryana SGST
  Amendment in Notification NO.47/ST-2 dated 30.06.2017 under Section 11(1) regarding exemption from tax of HGST.

  ---

• 097/ST-2 - dated 13-10-2017 - Haryana SGST
  Amendments in the Haryana Government, Excise and Taxation Department, Notification number 46/ST-2, dated the 30th June, 2017.

  ---

• 96/ST-2 - dated 6-10-2017 - Haryana SGST
  The Haryana Goods and Services Tax (Eighth Amendment) Rules, 2017.

  ---

• 95/ST-2 - dated 28-9-2017 - Haryana SGST
  Amendment in the Notification No.47 ST-2 the dated 30th June, 2017.

  ---

• 93/ST-2 - dated 27-9-2017 - Haryana SGST
  Amendment in Notification No.48 ST-2 the dated 30th June, 2017 regarding exemption on supply of services and reverse charge mechanism on supply of services by sub-section (3) of Section 9 of HGST Act, 2017.

  ---

• 92/ST-2 - dated 25-9-2017 - Haryana SGST
  Amendment in Notification No.36 ST-2 dated 30.06.2017 regarding exemption from tax on items.

  ---

• 91/ST-2 - dated 25-9-2017 - Haryana SGST
  Amendment in Notification No.35 ST-2 dated 30.06.2017 - regarding rate of tax.

  ---

• 90/ST-2 - dated 25-9-2017 - Haryana SGST
  Waiver of late fee payable under section 47 or late filing of GSTR-3B for July 2017.

  ---

• 89/ST-2 - dated 25-9-2017 - Haryana SGST
  Amendment in Notification No.46 ST-2 dated 30.06.2017 regarding services of work contractors to Central Govt., State Govt. U.T. and Local Bodies.

  ---

• 88/ST-2 - dated 25-9-2017 - Haryana SGST
  Amendment in Notification No.47 ST-2 dated 30.06.2017 regarding exemption to FIFA U-17 World Cup 2017.

  ---

• 87/ST-2 - dated 25-9-2017 - Haryana SGST
  Amendment in Notification No.39 ST-2 dated 30.06.2017 regarding corduroy fabrics (new entry 6A).

  ---

• 86/ST-2 - dated 25-9-2017 - Haryana SGST
  Notification under Section 11 sub-section 1 of the HGST exemption of heavy water and nuclear fuel from tax on intrastate supplies thereof.

  ---

• 85/ST-2 - dated 22-9-2017 - Haryana SGST
  Haryana Goods and Services Tax (Seventh Amendment) Rules, 2017.

  ---

• 84/ST-2 - dated 22-9-2017 - Haryana SGST
  Notification regarding notifying Section 51 of the HGST Act, 2017 for TDS.

  ---

• 83/ST-2 - dated 22-9-2017 - Haryana SGST
  seek to granting exemption to a casual taxable person making taxable supplies to handicraft goods from the requirement to obtain registration under sub-Section (2) of Section 23 of HGST Act, 2017.

  ---

• Income Tax

• 91/2017 - dated 30-10-2017 - IT
  U/s 43 (5) of IT Act 1961 Central Government notifies Indian commodity Exchange limited (PAN:AABCI9419D) as a 'recognised association'

  ---

• 88/2017 - dated 27-10-2017 - IT
  U/s 10(46) of the Income-tax Act, 1961 Central Government notifies ‘Swasthya Sathi Samiti’, Kolkata, a body established by the Government of West Bengal, in respect of the following specified income arising to that body

  ---

• 87/2017 - dated 27-10-2017 - IT
  Under section 80G(2)(b) the Central Government Notified “Arulmigu Kapaleeswarar Thirukoil, Mylapore, Chennai,” to be place of historic importance and a place of public worship

  ---

News

• Government extends last date of filing of GSTR-2 for July, 2017 to 30th November, 2017;

  ---

• Auction for Sale (Re-issue) of Government of India Floating Rate Bonds

  ---

• The Government of India and World Bank sign $200 Million Loan Agreement for the Assam Agribusiness and Rural Transformation Project

  ---

• RBI Reference Rate for US $

  ---

Case Laws:

• Income Tax

• 2017 (10) TMI 1218
  Appeal against draft order maintainability - Held that:- We notice that AO passed draft assessment order pertaining to the assessment year under consideration on 19.12.2011. Thereafter the AO passed final order on 24.2.2012. The assessee challenged draft order passed by the AO and the Ld. CIT(A) passed detailed order dated 27.11.2012. Thereafter the Ld. CIT(A) again passed order dated 26.2.2013 holding that appeal against draft order is not maintainable. Since the Ld. CIT(A) has nullified his own order, which is under challenge, these cross appeals have become infructuous. Hence, we allow the application dated 11/08/2017 and dismiss both the appeals being infructuous.

  ---

• 2017 (10) TMI 1217
  Interim Stay seeked - Held that:- The instant case is one of search and seizure and pertains to valuation of the property and certain records were relied on by the Assessing Officer to make the subject assessment. Therefore, this Court is of the view that the petitioners should be put on condition for being entitled to grant of stay. It is submitted by the learned counsel that total tax liability in respect of the four petitioners is ₹ 3,03,28,295/- and interest of revenue would be safeguarded if 15% of the tax demand is directed to be paid by the petitioners. 15% of the said amount works out to ₹ 45,49,244/- out of which 8 lakhs has already been recovered. Hence, there will be a direction to the petitioners to pay ₹ 37,49,244/- for being entitled to a grant of stay. The payment shall be effected in one lump sum or installments within a period of 12 weeks from the date of receipt of a copy of this order.

  ---

• 2017 (10) TMI 1216
  Addition on account of interest on debit balance of the partners capital account by invoking of Section 40(b)(iv) - Held that:- The partners were required to pay interest on the debit balance at the same rate which was applicable on their credit balance. In the present case, it is not in dispute that there was debit balance in the account of the partners, however, the said debit balance has been considered by the AO on the last date of the year. In my opinion, the interest is to be charged on day to day basis and not on the balance at the end of the year. In the present case, since there is clear provision in the partnership deed for charging the interest on the debit balance of the partners and the assessee is also paying interest on the credit balance to the partners. Therefore, do not see any infirmity in the impugned order passed by the ld. CIT(A). However, the AO is required to work out the interest to be charged on the debit balance on day to day basis and not at the end of the year, for this limited purpose, the issue is restored back to the file of the AO. Disallowance of the telephone expenses, car repairs & maintenance as well as care car petrol expenses - Held that:- In the present case, the assessee admitted before the ld. CIT(A) that no separate telephone or vehicles were there for the personal use and that no log-book was maintained for running of the cars, in such circumstances, the personal use by the partners and the employees cannot be ruled out in such type of cases. However, the disallowance made by the AO and sustained by the ld. CIT(A) appears to be on higher side. I, therefore, considering the totality of the facts and to meet the ends of justice, deem it appropriate to reduce the disallowance to the extent of 10% of expenses incurred on telephone, car repairs & maintenance and car petrol instead of 1/8th made by the AO and sustained by the ld. CIT(A).

  ---

• 2017 (10) TMI 1215
  Deduction u/s 10BA - income from the duty draw back and sale of export license qualification as profit derived by an undertaking from the export out of India of eligible articles or things - Held that:- The view taken by the Supreme Court in the case of Commissioner of Income-Tax V/s Meghalaya Steels Ltd. [2016 (3) TMI 375 - SUPREME COURT] held that Shri Radhakrishnan is not correct in his submission that assistance by way of subsidies which are reimbursed on the incurring of costs relatable to a business, are under the head “income from other sources”, which is a residuary head of income that can be availed only if income does not fall under any of the other four heads of income. Section 28(iii)(b) specifically states that income from cash assistance, by whatever name called, received or receivable by any person against exports under any scheme of the Government of India, will be income chargeable to income tax under the head “profits and gains of business or profession”. If cash assistance received or receivable against exports schemes are included as being income under the head “profits and gains of business or profession”, it is obvious that subsidies which go to reimbursement of cost in the production of goods of a particular business would also have to be included under the head “profits and gains of business or profession”, and not under the head “income from other sources”. For the reasons given by us, we are of the view that the Gauhati, Calcutta and Delhi High Courts have correctly construed Sections 80- IB and 80-IC. The Himachal Pradesh High Court, having wrongly interpreted the judgments in Sterling Foods and Liberty India to arrive at the opposite conclusion, is held to be wrongly decided for the reasons given by us hereinabove. Therefore, the matter is remitted back to the AO to decide the same in the light of aforesaid decisions. It is made clear that we have not expressed anything on merits.

  ---

• 2017 (10) TMI 1214
  Entitlement to exemption u/s 10(37) - non furnishing information in respect of growing of Crop on the agricultural land during the year 2007-08 - Held that:- Since the finding of fact has been given by all the authorities that the appellant was not carrying on any agricultural activity in the plot in question in preceding two years prior to 07.10.2008, the appellant would not be entitled to the benefit of Section 10(37) of the Act. - Decided against the assessee and in favour of the department.

  ---

• 2017 (10) TMI 1213
  Levy of penalty by the AO u/s 271(1)(c) - disallowance of expenditure towards due diligence and professional consultancy - Held that:- We are of the view that the debentures whether convertible or non convertible are in the nature of loan at the time of their issuance and any expenditure incurred on issue of such debentures or bonds had to be regarded as part of the borrowing cost and have to be allowed as a deduction and as a revenue expenditure as held in the case of CIT vs. Secure Meter Ltd. (2008 (11) TMI 66 - HIGH COURT RAJASTHAN ) and CIT vs. ITC Hotels Ltd. (2009 (11) TMI 582 - Karnataka High Court). Once, the two high courts are in favour of assessee holding the Revenue in nature, the issue becomes highly debatable and two views are possible. Once two views are possible the penalty cannot be levied for furnishing of inaccurate particulars of income in view of case of CIT vs. Yahoo India Pvt. Ltd. (2013 (3) TMI 704 - BOMBAY HIGH COURT ). Hence, we are of the view that the CIT(A) has rightly deleted the penalty and we confirm the order of CIT(A). - Decided in favour of assessee.

  ---

• 2017 (10) TMI 1212
  Addition on account of share prices and premium received from six companies - Bogus transactions with shell companies - Held that:- The enquiries undertaken by the Assessing Officer in the first round do not indicate that the Assessing Officer successfully examined if all the Directors of all these six companies along with all the Directors of assessee Company are financially interfaced. The financial activities of six companies were not deeply probed by the Assessing Officer. Assessing Officer merely spoken about meager income of the six companies. Assessee’s submissions relates to the floating of joint venture was not thoroughly examined. Assessing Officer never examined the details of the violations if any in clearing the new business venture. The fact relating to inflow of funds amounting to ₹ 1.5 Crore proposed involving the said companies were not examined by Assessing Officer. Therefore, we are of the view that Assessing Officer failed to bring out the facts for deciding if the said six companies constitutes “Shell Companies”. Assessing Officer is directed to gather relevant facts and examine the persons involved in these transactions involving the inflow of ₹ 1.5 crore. These enquiries are necessary to arrive at the correct judgment on the genuineness of the transactions. Assessing Officer shall grant reasonable opportunity of being heard to the Assessee. Without going into merit of documents placed by assessee and without going into the correctness of the addition of the said amount of ₹ 1.5 Crore, we are of the view that the grounds raised by the assessee are required to be remanded to the file of Assessing Officer for fresh adjudication Non deduction of tds - payments involved in purchasing raw materials - Held that:- CIT(A) discussed the fact of non-requirement of effecting the TDS on the payments made for purchasing raw materials/finished goods from Shreeya Industries and Viana Lime Industries. The CIT(A) also gave findings that the provisions of section 194C of the Act are not applicable to the transactions of purchased goods from the said two vendors. He accordingly granted relief to the assessee on this count. We find that the same is reasonable and it does not recall for any interference. As such, we proceed to dismiss grounds of appeal raised by the Revenue and accordingly, the same is dismissed.

  ---

• 2017 (10) TMI 1211
  Penalty under section 271D - contravening provisions of section 269SS - proof of business exigency for taking cash loan - assessee-company has accepted a loan of ₹ 12 lakhs from Sri Chennupati Jaganmohan Rao, who is one of the Directors of the assessee-company - whether exceeding overdraft is definitely a compelling circumstances and reasonable cause for obtaining loan by cash? Held that:- It is a fact that overdraft facility of the assessee-company with SBI is exceeded and therefore, cheque issued by the company was dishonoured and then only, the Director of the company withdrew the cash from his personal account with Canara Bank and deposited the money in assessee’s account to complete with the day to day commitments as it is for the business expediency and also reasonable cause for the assessee to accept money in cash. We find that when the cheque issued by the assessee-company is dishonoured on the ground of exceeding the overdraft limits, it is a minimum necessity to carry out the activity of the assessee and therefore Sri Chennupati Jaganmohan Rao, who is one of the Directors of the company withdrew the cash from his personal account and deposited the same in the company’s account. Therefore, under those facts and circumstances of the case, loan taken from Sri Chennupati Jaganmohan Rao for the purpose of honour the commitments is a reasonable cause - Decided in favour of assessee.

  ---

• 2017 (10) TMI 1210
  Penalty u/s 271(1)(c) - non-deduction of tax at source and non-remittance to Government of India account - assessee in default - assessee submitted that due to financial crisis, deducted TDS was not paid to the Government account and so far non-deduction of TDS, it is submitted that due to mistake of the Finance Manager, TDS is not deducted - Held that:- Section 271C applies to both the situations where assessee failure to deduct tax at source and failure to remit the recovered tax. Accordingly, the argument advanced by the assessee’s representative is rejected. See M/s. US TECHNOLOGIES INTERNATIONAL PVT Versus CIT [2009 (6) TMI 966 - KERLA HIGH COURT] Insofar as, non-deduction of TDS is concerned CIT(A) has observed in his order that default committed by the assessee was pointed out during the survey in January, 2013, but assessee did not choose to make payment immediately, some amounts have been paid only after passing of the order under section 201(1) & 201(1A) of the Act on 27/02/2013. Only thereafter in the month of March, further payments have been made. The corresponding interest under section 201(1A) has not been paid till date. The survey was conducted on 22/01/2013, the assessee only paid the amounts in the month of March after passing of the order under section 201(1) & 201(1A) and therefore, it cannot be considered that non-deduction of tax by oversight of the Finance Manager, even it came to the notice of the assessee, it has paid only after two months. Therefore, we find no infirmity in the order passed by the ld. CIT(A) and accordingly interference is not called for. Accordingly, appeal filed by the assessee is dismissed.

  ---

• 2017 (10) TMI 1209
  Levy of interest u/s 201(1A) - non-deduction of tax at source and non-remittance to Government of India account - date from which interest will be chargeable - Held that:- The plain reading of the proviso to section 201(1A) of the Act makes it very clear that even though the assessee is not deemed to be assessee in default under first proviso to sub section (1), the interest under clause (i) shall be payable from the date on which such tax is deductible to the date of furnishing of return of income by such a resident. Therefore, the tax liability in the hands of the deductee has no relation or connection for charging the interest u/s 201(1A) of the Act. Mere non-deduction of tax at source and non-remittance to Government of India account attracts the interest u/s 201(1A) of the Act and that is the reason for which the provision has been inserted to charge interest from the date of the tax deductible to the date of furnishing of return of income by the resident. Since the decisions relied upon by the Ld. A.R. are related prior to insertion of the proviso u/s 201(1A) of the Act, the decisions relied upon by the assesse are not applicable in assessee’s case. Thus we hold that the interest is chargeable from the date of such tax is deductible to the date of furnishing of return of income and we uphold the order of the Ld. CIT(A) and dismiss the appeals of the assessee.

  ---

• 2017 (10) TMI 1208
  Reopening of assessment - Held that:- The reasons recorded by the AO in this matter solely basing on the information received from the Directorate of Investigation without any independent exercise of mental process cannot be construed as reasons to believe and the consequent proceedings of reopening are bad under law. Further, the approval/sanction of the Addl. CIT, Range 6, New Delhi is also not in accordance with the requirements of Section 151 of the Act, as is held in M/s S. Goyanka Lime and Chemicals Ltd. [2015 (5) TMI 217 - MADHYA PRADESH HIGH COURT] and this also vitiates the proceedings. For these reasons, we hold that the reopening proceedings are bad under law and are liable to be quashed. Since, we are quashed the proceedings on the questions of law, we do not deem it necessary to adjudicate the merits of additions made in this matter. Appeal of the assessee is allowed.

  ---

• 2017 (10) TMI 1207
  Allowability of claim of deduction under section 80IAB - Held that:- We find that the issue of allowability of deduction under section 80IAB on similar set of facts and reasoning was prevalent in the assessment years 2008-09 and 2009-10, wherein the Tribunal after threadbare analysis of the provisions of the Act as well as the material placed on record, has allowed the deduction. If such deduction under section 80IAB has been allowed in initial years and there is no change in the material facts in subsequent years including the year under consideration, ostensibly then, as a matter of judicial precedence, no different view or stand can be taken. This proposition is well settled by the Hon'ble Delhi High Court in the case of CIT vs. International Tractors Limited reported in [2017 (7) TMI 822 - DELHI HIGH COURT] wherein in the context of allowability of deduction under section 80IA, the Hon'ble High Court laid down that, where assessee industrial undertaking had fulfilled the eligibility condition to claim deduction under section 80IA in the initial year, then the benefit of deduction would be extended for next 10 years irrespective of whether after initial year there was an expansion of industrial undertaking by increased investment in plant & machinery that have taken it outside ambit and scope of that provision. Here in this case, not only in the initial assessment year but also in subsequent assessment year also, the similar issue of claim of deduction under section 80IAB has been discussed and analysed in detail and thereafter the said claim has been allowed in third and fourth year, therefore, the said deduction now cannot be disallowed on same set of facts. If the Revenue is aggrieved by the order of the Tribunal in earlier years, the right recourse would be to approach the higher judicial forum, that is, Hon’ble High Court under section 260A - Decided against revenue

  ---

• 2017 (10) TMI 1206
  Disallowance of amortization of premium on leasehold land - Held that:- As decided in assessee in own case for previous AY the assessee made substantial savings in monthly rent for a period of 39 years by expending these amounts. The saving in expenditure was a saving in revenue expenditure in the form of rent. Whatever substitutes for revenue expenditure should normally be considered as revenue expenditure. Moreover, assessee in the present case did not get any capital asset by spending the said amounts. The assessee, therefore, could not have claimed any depreciation. Looking to the nature of the advantage which the assessee obtained in a commercial sense, the expenditure appears to be revenue expenditure. - Decided in favour of assessee. Disallowance u/s. 14A read with Rule 8D. - Held that:- As decided in assessee in own case for A.Y 2004-05 & 2005-06 addition need to be deleted.- Decided in favour of assessee. Calculating the book profit under section 115JB and disallowance under section 14A - Held that:- Recently the Special Bench of Delhi Tribunal in ACIT Vs. Vireet Investment Pvt. Ltd.[2017 (6) TMI 1124 - ITAT DELHI] held that computation under Clause-(f) of Explanation-1 to section 115JB(2) of the Act is to be made without resorting to computation as contemplated u/s 14A r.w. Rule 8D of the Act. We may note that lower authority was not having the benefit of decision of Special Bench while passing the order impugned in the present appeal. Income from Oil Bonds to be taxed as Business Income - Held that:- Considering the decision of Co-ordinate Bench in assessee’s own case wherein the similar ground of appeal was restored to the file of CIT(A), hence, keeping in view, the principle of consistency, this ground of appeal is also restored to the file of ld. CIT(A) to decide it afresh, with similar directions. In the result, this ground of appeal is allowed for statistical purpose. Contribution to Rajiv Gandhi Institute of Petroleum Technology - Held that:- The contribution was made by assessee as per the directive of Ministry of Petroleum and Natural Gas. Rajiv Gandhi Institute of Petroleum Technology is an organization set up by Government of India for promoting quality and excellence in education and research in the area of Petroleum and Hydrocarbon. The Institute is providing education relating to the research leading to award of Bachelors, Master and Doctoral degree and Engineering Technology, Management, Science and Arts in the area of Petroleum and Hydrocarbon besides other innovative research and development for the benefit of Oil, Gas and Petrochemical Industry. The receipt of contribution placed by assessee contains the reference of certificate of exemption under section 80G, granted to Rajiv Gandhi Institute of Petroleum Technology vide letter no. 58-59/130/19/2006-07/IT/A-A-1/Luck/126/121. The assessee has already declared income for the AY under consideration, the assessee has contributed ₹ 1.55 Crore only to the said institute. We therefore direct the AO to allowed the deduction of the said contribution under section 80G

  ---

• 2017 (10) TMI 1205
  Unexplained unaccounted investment of the assessee - diamonds found from the possession of one, Shri Sunil Bhari at the Airport for a sum of ₹ 8,38,25,960/- treated as unexplained investment in the hands of the assessee - proceedings initiated under section 153C - Held that:- The entire diamonds found from the possession of the person cannot be assessed as undisclosed investments in the hands of the assessee. This factum of assessment order in the case of two companies passed u/s 153C clearly vitiates the stand of the Revenue and clinches the issue in favour of the assessee. Thus, we do not find any reason to sustain the addition on account of diamonds intercepted and found from the possession of the person at the Airport in the hands of the assessee. In any case, the ld. CIT (A) has discussed this issue threadbare and have come to a definite conclusion that the addition cannot be made in the hands of the assessee and such a finding of fact cannot be deviated from unless there is some other corroborative material to rebut each and every finding as have been incorporated by the ld. CIT (A) after appreciating the entire facts and material on record. Accordingly, the order of the ld. CIT (A) is confirmed and the grounds raised by the Revenue are dismissed.

  ---

• Customs

• 2017 (10) TMI 1204
  Penalty u/s 112(a) of the CA, 1962 - DEPB Scrips obtained fraudulently - Held that: - if circumstances establish that there is high degree of probability that a prudent man ought to act on the supposition that there was design to obtain DEPB scrips without any export and such scrips sold for duty free import in contravention of the law or abetting to achieve such ill object, such act against public Revenue calls for penal consequence to curb such mischief. The term fraud within the meaning of these penal provisions is wide enough to take into its fold any one or series of acts committed. Such act or acts when demonstrate to be reasonably proximate to the clearance of imports duty free on the basis of the DEPB scrips fraudulently obtained against false documents filed before DGFT, a trader of such scrips has to face adverse consequence of law - appellant fails to succeed in his appeal having acted malafide causing detriment to the interest of public revenue. Ill will of appellants came to record. Pre-ponderance of probability is in favour of Revenue and lends credence to its case. Appeal dismissed - decided against appellant.

  ---

• 2017 (10) TMI 1203
  Interest on delayed refund - Section 27A of the Customs Act, 1962 - Held that: - the appellant/applicant herein are entitled to interest, on the amount deposited, under the provisions of Section 129E, read with 129EE of the Customs Act, 1962 @ 6% per annum, is hereby allowed, for the period from the date of filing of the appeal till the date of grant of refund - application disposed off.

  ---

• 2017 (10) TMI 1202
  Refund of SAD - N/N. 102/2007-CUS dtd 14.9.2007 - imported goods sold in Coil or sheet form - denial on the ground that appellant had sold the goods which are different from the goods imported - cash refund - Held that: - we could not find detailed bifurcation of the sales against ‘works contract’ and as such sale of coils or sheets, submitted earlier before lower authorities along with evidence, in support of their claim, now advanced before this forum. Therefore, to ascertain the clearance of imported coils or sheets as such against invoices, the matter needs to be remanded to the Adjudicating Authority. It is made clear that the appellant would not be entitled to refund of the 4% SAD paid, when such supplies were against works contract for installation of the roofing material made out of imported goods in the premises of the customers/buyers. In the event the amount of SAD was paid by using DEPB scrip at the time of its import, refund could be allowed in cash. Appeal allowed by way of remand.

  ---

• 2017 (10) TMI 1201
  Principles of Natural Justice - even though the second test report dated 03.01.2007 was against the appellant, however, a copy of the same was neither handed over to them nor given a chance to make their submission on the said test report, and the assessment order was passed by the adjudicating authority relying the said test report - Held that: - the second test report dated 03.01.2007 has been relied upon by the adjudicating authority in denying the benefit of the Notification observing that the ash content of the imported coal is more than 12%. Even though the said test report is in agreement with the earlier test report, however, the appellant ought to have been given a chance to advance their case on the said test report before the assessment was finalized by the adjudicating authority relying the said report. The matter is remanded to the adjudicating authority to decide the case afresh - appeal allowed by way of remand.

  ---

• 2017 (10) TMI 1200
  Classification of goods - import of old and used vessels for breaking purpose - restricted item - classifiable under CTH 89 08 or otherwise? - whether the Marine Gas Oil imported inside the fuel tanks of vessels which are imported for breaking is subject to ITC restrictions? - Held that: - the issue is no longer res integra and is squarely covered by the decision of this Tribunal in the case of A.G. Enterprise [2014 (8) TMI 44 - CESTAT AHMEDABAD], where it was held that as the imports under ITC(HS) 89.08 are free without any restrictions, therefore, such MGO/HSD contained in the vessels brought in for breaking up, cannot be held as liable for confiscation - appeal allowed - decided in favor of appellant.

  ---

• 2017 (10) TMI 1199
  Violation of import conditions - demand on the ground that the steel slabs under Target Plus licences were diverted in the open market by the Appellant and were not used for the intended purposes i.e. further manufacturing - Held that: - even though allegation of diversion of goods has been made against the Appellant, but no investigation has been made as to where the goods were cleared or who are the buyers. None of the evidence which can show the diversion of goods has been brought on record. Though the non maintenance of job work record and transfer of payment made by Appellant to M/s AEL back to M/s MIL has been alleged, but the charges of diversion of goods cannot be substantiated on this ground alone. At the one hand, the allegation is made that the licence was sold by the Appellant and on the other hand, it has been alleged that the goods were diverted, which shows that the allegations against Appellant are themselves contradictory. No evidence has been adduced as to how the alleged diversion of imported goods took place and how the consideration for such alleged diversion was received - in absence of any evidence of diversion of imported goods or dispute regarding the identity of finished goods manufactured from such imported goods, the demand against the Appellant cannot be sustained. Appeal allowed - decided in favor of appellant.

  ---

• 2017 (10) TMI 1198
  Sale of liquor - Duty free shop - public notice no. 5/2006 - it was alleged that appellant have made sales of liquor from the stock of duty free imports in contravention of various conditions which are required to be adhered to by M/s. Alpha as a duty free shop. Such goods are to be considered as cleared from the bonded warehouse in contravention of the conditions in which goods were allowed to be stored in the bonded warehouse - section 72 (1)(a) of the Customs Act - confiscation - redemption fine - penalty. Held that: - The decision of the Hon’ble High Court of Karnataka in the case of Flemingo Duty Free Shops Pvt. Ltd. [2009 (7) TMI 161 - HIGH COURT OF KARNATAKA AT BANGALORE], discussed by the Adjudicating Authority has settled the issue that duty free shops are to be considered as bonded warehouses within the meaning of section 28 of the Customs Act as it is distinguishable. M/s. Alpha were issued customs bonded warehouse license and permitted to operate duty free shops in various areas of the IGI airport New Delhi. The customs department has thoroughly investigated into the facts of M/s. Alpha in terms of the bond executed for the PBWL as well as conditions for grant of permission of running the DFS, which has been made with the strict condition that import of goods such as liquor, tobacco etc. were allowed duty free only for the purpose of selling the same to international passengers. They were also required to maintain detailed documentation by which the customs authorities could verify and ascertain whether the strict conditions prescribed for DFS / PBWL have been complied by M/s. Alpha. The scrutiny of the documents relating to DFS and PBWL have revealed that the appellant have completely disregarded the conditions under which licenses were granted to them. Bills were found to have been issued without mentioning required details like name, passport number, flight number, etc. of the passenger to whom liquor has been sold. The scrutiny has further revealed that the employees of the appellant have fraudulently recorded false details pertaining to the passenger to whom liquor has been sold. Fake passport numbers and wrong names were found to have been routinely recorded. Many of the passport numbers, upon verification with regional passport office, were found to be bogus. The names of passengers recorded were found to have never travelled in international flights. The statements recorded from various functionaries of M/s. Alpha have categorically established that such falsification of record was systematically carried out for diverting duty free imported liquor to domestic passengers in complete disregard of the conditions under which PBWL as well as DFS licenses were issued to M/s. Alpha. The well designed fraud committed against Revenue came to light only with the detailed investigations undertaken. M/s. Alpha were granted PBWL as well as permission to operate DFS. The investigation has revealed that through the action of the employees of M/s. Alpha, liquor has been sold to unauthorised passengers in clear violation of the terms of the bond executed. The acts of the employees have been done in their official capacity and are binding on the employer who cannot escape the vicarious responsibility. The duty free imported liquor, which had been warehoused, was found to be removed in contravention of the warehousing bonds. Consequently, the customs duty is required to be paid in terms of section 72 (1)(a). The goods cleared are also liable for confiscation. But, since the goods were not seized by the department no redemption fine can be imposed. However, the appellant will be liable for levy of penalties. The various employees of M/s. Alpha are also liable for penalty u/s 117. Appeal dismissed - decided against appellant.

  ---

• 2017 (10) TMI 1197
  Confiscation of scrap - redemption fine - penalty - Held that: - The appellant have not challenged the fact of presence of prime HR sheets in the scrap. Neither have they felt aggrieved with the classification of the prime quality of sheets adopted by the lower authorities nor the higher valuation of the same. This leads to the inevitable fact that the prime sheets were sought to be imported in the guise of re-rollable scrap and there was mis-declaration, thus making the goods confiscable. As such, the confiscability of the goods in question is required to be upheld. Redemption fine - penalty - Held that: - the appellant have contested the quantum of redemption fine on the ground that there was nothing to suggest that the said prime quality of sheets were sent by the foreign supplier was at their request. Appreciating the fact that no evidence stands placed by the Revenue to show that such presence of sheets was at the appellant's behest, redemption fine reduced to ₹ 35,000/- - Similarly, the penalty of ₹ 15,000/-, in the absence of any evidence to show the direct involvement of the appellant, is reduced to ₹ 7,500/- Appeal allowed in part.

  ---

• Corporate Laws

• 2017 (10) TMI 1196
  Removal of an auditor prior to expiry of his term - maintainability of the application filed by respondent no.2 before the RD on the ground of limitation - Held that:- It is the petitioner’s case that the extraordinary General Body meeting was called on 01.10.2015 and the General Body meeting was held on 26.10.2015, wherein a special resolution was passed to remove the petitioner as the auditor. However, the application in Form ADT-2 was made on 14.11.2015. This Court is of the view that the aforesaid controversy need not delay the matter and thus, it is directed that it would be open for the respondent no.2 company to file a fresh application notwithstanding the application filed earlier which is pending for consideration. The respondent no.2 may thereafter hold a General Body meeting for removal of petitioner, if the permission to do so is granted by the Central Government (the RD).

  ---

• 2017 (10) TMI 1195
  Scheme of amalgamation - whether a registered partnership firm, being a body corporate, can be treated as a “company” for the purpose of Sections 230-232 of the Companies Act, 2013? - Held that:- Here it is necessary to refer to Section 394(4)(b) of the Companies Act, 1956. The said Act specifically says that a “transferee company” does not include any company other than a company within the meaning of the said Act, but a “transferor company” includes any body corporate, whether a company within the meaning of the Act or not. Therefore, as per the said proviso, even in the old Act, a transferee company must be a company registered under the Companies Act, but a transferor company includes any body corporate. In view of the said proviso in the old Act, a transferor company need not be a company registered under the Companies Act, 1956. It is sufficient if it is a body corporate. There is no dispute about the fact that a partnership firm is a body corporate. Therefore, in view of Section 394(4)(b) of the Companies Act, 1956, there can be a scheme of amalgamation between a transferor company registered as a partnership firm and a transferee company registered under the Companies Act, 1956 but not vice-versa. Applicant, being a registered partnership firm and a body corporate, is not a company within the meaning of the Companies Act, 2013 and, therefore, it cannot participate in the amalgamation proceedings that are initiated under the provisions of sections 230 to 232 of the Companies Act, 2013

  ---

• Service Tax

• 2017 (10) TMI 1192
  Repairs and maintenance of software - levy of service tax - whether classifiable under repairs and maintenance of goods or otherwise? - CBEC circular no. 70/19/03-ST dated 17.12.2003 - Held that: - even CBEC was not sure about the liability of service tax on the said services during the period 09.07.2004 to 06.10.2005. The first circular approving the liability of service tax on the said activity was issued on 07.10.2005 and the circular prior to that clearly held that the said service is not taxable. In these circumstances, it cannot be said that the appellants could not have had a bonafide belief that the said service was not taxable. Extended period of limitation - penalty - Held that: - The show-cause notice and impugned order does not give any specific grounds as to why extended period can be invoked in such circumstances. In these circumstances, the extended period of limitation cannot be invoked and consequently the demand of duty and penalty cannot be sustained. Appeal allowed - decided in favor of appellant.

  ---

• 2017 (10) TMI 1191
  Enhancement of penalties - section u/s 77 and 78 of FA - Held that: - the argument put forth by the ld. Commissioner (Appeals) as regards the penalty which has also been enhanced by Section 78 seems to be no ground as there is enough reasoning given by the first appellate authority. Accordingly, the enhancement of penalty to ₹ 2000/- under section 78 seems to be in consonance with the law. As regards the penalty imposed under Section 77(1) of the Finance Act, 1994, it is undisputed fact that the entire service tax demand which has arisen in the Appeal is ₹ 3604/- during the relevant period - the first appellate authority in the case in hand has not considered the provision as it was on the day of adjudication, order was passed. Be that as it may, I find that imposition of penalty of ₹ 2,49,400/- under the provision of Section 77 from the demand of ₹ 3604/- will be irrational and unacceptable. Appeal allowed in part.

  ---

• 2017 (10) TMI 1190
  Renting of immovable property service - Revenue is of the view that as the appellants have collectively and jointly let out the property and total rent received on the property is more than the threshold limit as per the N/N. 06/2005-ST dt. 01.03.2005, therefore, the appellants are liable to pay Service Tax under the category of Renting of Immovable Property Services. Held that: - an identical issue came up before this Tribunal in the case of Anil Saini and Others Vs. CCE, Chandigarh-I [2017 (1) TMI 101 - CESTAT CHANDIGARH], where it was held that co-owners of the property cannot be considered as liable to pay Service Tax (jointly or severally) as the Revenue has identified the services provider and the service recipients for imposing the Service Tax liability which are individuals. Therefore, the Service Tax liability is not sustainable. The demand of Service Tax against the appellants is not sustainable as the appellants are entitled to benefit of N/N. 06/2005-ST dt. 01.03.2005 - appeal allowed - decided in favor of appellant.

  ---

• 2017 (10) TMI 1189
  Management Consultant Service - non-payment of service tax - Held that: - it is difficult to appreciate that preparation of statistical report by the appellant could be construed as providing any service in connection with the management of the company, hence, would come under the scope of aforesaid definition of management consultant. Since, on merit the levy of service tax on the services provided by the Appellant cannot be sustainable, therefore, ancillary issues, namely, imposition of penalty, limitation etc., become move of academic, accordingly not dealt with - appeal allowed.

  ---

• 2017 (10) TMI 1188
  Levy of service tax - construction of drive way at the petrol pump constructed by them - Held that: - construction of drive way in the petrol pump is not taxable in view of the C.B.E.C. clarification dated 27/07/2005, wherein clarified that the benefit of drive way in commercial complex is to be allowed if the activity is recognized separately in the contract - the appellant is not liable to pay service tax for the construction of drive way. Quantification of service tax - there has been error in calculation of the tax and the figures supplied by IOCL - Held that: - for the limited purpose of calculation of the gross amount taxable and the tax payable, the matter remanded to the adjudicating authority who shall hear the appellant and after perusing the evidence led before him and obtaining any information required as fit, will pass the reasoned order in accordance with law. Appeal allowed in part and part matter on remand.

  ---

• 2017 (10) TMI 1187
  Rectification of mistake - Held that: - the appellant have adequately explained and has also filed evidence before this Tribunal and that there is no actual short paid Service tax according to Service Tax Rule 6 stipulates that Service Tax is payable on the basis of actual receipts during the relevant period - there is a mistake of fact in the Final Order by not considering the documents on record being evidence in support of the contention that Service tax was not short paid by the appellant - ROM application allowed.

  ---

• 2017 (10) TMI 1186
  Cargo Handling Service - loading and transportation of fly ash in terms of contracts with Prism Cement, Satna - The appellants are put to service tax liability only on the ground that the agreement mentions loading as one of the item of work under the scope of contract. Further, unloading charges @ 10 Per MT is separately mentioned - Held that: - Admittedly the distance involved in movement of cargo is about 300 KM. In these factual circumstances, we find that allegation and finding that the amount of ₹ 450 Per MT is attributable mainly to cargo handling and incidentally to the transportation is not factually sustainable - Even considering the unloading charges separately mentioned as ₹ 10 Per MT, we find that the contract is overwhelmingly for the work of transporting the cargo of fly ash over a long distance of about 300 KM and unloading charges of about 2% of the transportation charges will not make the contract and the consideration, primarily meant for cargo handling services. There is no factual support for such inference. Appeal allowed - decided in favor of appellant.

  ---

• Central Excise

• 2017 (10) TMI 1185
  Single registration for two factories - Chapter 2 of CBEC's Supplementary instructions - Held that: - As per the fact of the present case both the units are separated by a public road and process is same being, goods of both the units are used in each other, raw material in both the units are common, there is a common labour work force, common administration/work management, common sales tax registration, common Income Tax assessment and common balance sheet etc. As per the para 2.2 of Chapter 2 it is not necessary that all the factors should be fulfilled. On the reading of the same, I am of the view that even if one of the factor is fulfilled, the common registration can be issued. The appellant have fulfilled not only one but most of the factors provided in para 2.2 of Chapter 2, therefore they have made out a fit case for grant of single registration in respect of two units. Appeal allowed - decided in favor of appellant.

  ---

• 2017 (10) TMI 1184
  Refund of unutilized CENVAT credit - part refund denied on the ground that the fabric on which deemed credit availed by the appellant has not undergone the process of manufacturing in terms of Section 2(f) of CEA, 1944 - Held that: - the appellant have carried out the process of cutting, folding, packing etc. for the purpose of export of such goods on job work basis on behalf of principal M/s S.V. Business Pvt. Ltd. Therefore the process carried out by the appellant is only remaining part of the overall manufacturing process, partly carried by their principal and partly by them. Therefore the refund under Rule 5 cannot be denied on the ground that process alone of the appellant is not amount to manufacture. Even if input is not used directly by the manufacturer of final product declared in the notification but are contained in the said final product deemed credit of input is admissible. Therefore the input which was used by the principal for manufacture of processed fabrics, the appellant is entitled for the deemed credit, it is also admitted fact that the final goods was cleared for export by the appellant. Refund allowed - appeal allowed - decided in favor of appellant.

  ---

• 2017 (10) TMI 1183
  Manufacture - the appellant had imported various parts of motor vehicle. The said parts were subjected to process of packing repacking in unit container, labelling/ relabeling and affixing the brand name along with MRP on the product before clearing to their dealers/ customers - case of the department is that the said activity carried out by appellant is covered under third schedule to Central Excise Act and also amounts to manufacture in terms of Section 2(f)(iii) of the Central Excise Act 1944 with effect from 01.03.2003 - classification of goods. Held that: - the goods repacked and sold as spare parts is not classifiable under 8708 but it is correctly classified under respective chapter heading as held by the adjudicating authority. - in respect of goods specified in third schedule activity such as packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer amounts to manufacture. In the facts of the present case, the goods as discussed above are falling under various chapter heading as proposed in the show-cause notice are covered under third schedule and the activity which is undisputedly carried out by the appellants are packing in unit container, labelling with declaration of the MRP on the unit container are clearly covered under Section 2(f)(iii) therefore amounting to manufacture. In this undisputed fact the appellant was liable to pay excise duty on the basis of MRP based valuation under Section 4A after deduction of abatement as provided under notification issued thereunder - the activity being one of manufacturing, clearance of the goods was liable to payment of duty. Extended period of limitation - Held that: - though the transfer of spare parts to the spare part division on payment of duty may be known to the department from the records, but the activity of packing, repacking, declaration of MRP thereon was not known to the department which alone is the basis for making the product excisable. Therefore the activity of manufacture was not disclosed to the department by the appellant - extended period rightly invoked. As regards the issue of confiscation of the goods, it is found that the confiscation was made in respect of the goods which had already been cleared and the same was not available. No seizure of such goods were made. Therefore, confiscation of the goods which were not available is not legal and correct - confiscation and redemption fine set aside. Appeal allowed in part.

  ---

• 2017 (10) TMI 1182
  Benefit of N/N. 3/2006-CE dated 01.03.2006 - whether the goods manufactured and cleared by the appellant namely "Cheeselings" and "Musst Bites" edible preparations are eligible for exemption N/N. 3/2006-CE dated 01.03.2006 as "Namkeen" under entry sr. no. 29? - Held that: - the products in question are "Cheeselings" and "Musst Bites". Though these products are not fried items but sold as Namkeen. There is no definition of Namkeen. Therefore, it cannot be concluded on the basis that whether the goods is a fried one or otherwise. In such case, the principle of common parlance has to be applied. From the package of the goods, it is clear that on both products, the word "Namkeen" is clearly declared. Therefore, the product in the common parlance is bought and sold as "Namkeen" only. The product "Cheeselings" and "Musst Bites" are covered under Sr. No. 29 of the exemption N/N. 3/2006-C.E dated 01.03.2006 - the exemption is eligible to the appellant's product. Appeal allowed - decided in favor of appellant.

  ---

• 2017 (10) TMI 1181
  Area based exemption - Backward area - N/N. 56/2002-CE dated 14.11.2002 - Revenue is of the view that the appellant is not entitled for the benefit of notification, on the grounds that the process of making refined lead ingots and lead alloys, does not amount to manufacture - denial of CENVAT credit - whether the activity undertaken by M/s. GM amounts to manufacture and M/s. GMI is not liable to pay duty? Held that: - expression manufacture under Section 2(f) was initially not correctly interpreted as per CBEC letter F.No. 4/3/2006 dated 16.06.2006 wherein it has been clarified that a number of departmental and private publications of Central Excise Act, 1944, published from time to time after 1986, contain(ed) an extra word andat the end of Section 2(f)(i) and before Section 2(f) (ii). The Section 2(f) reads as - manufacture includes any process, Incidental or ancillary to the completion of a manufactured product, which means that if the goods have been manufactured and any activity is done thereon for completion of the activity for further use, it shall amount to manufacture - A similar issue has been examined by this Tribunal in the Jindal Stainless Steelway Limited [2014 (9) TMI 658 - CESTAT MUMBAI] wherein the appellant was engaged in cutting and slitting of coils. In addition to that they have carried out the slitting into desirable width as per the customersrequirement, larger weight coils are cut into smaller weight as per the customers requirement, that the coils are coated and layered with plastic for improving drawability besides applying inter-leaving paper for protection of material so as to be fit for end use application. The said activity was examined by this Tribunal, as defined under Section 2(f) wherein the process incidental or ancillary, was held to amounts to manufacture. Admittedly, in this case, M/s. GM is engaged in the activity of removing impurities from unrefined lead ingots for making lead alloy and thereafter alloy ingots. The refined lead has been recognised in Chapter 78 of Central Excise Tariff Act, 1985 - it is clear that refined lead means the metal weight at least 99.9% of lead and with some other antimony, as prescribed in the Chapter heading note. Therefore, to classify under Chapter 78, first it should be refined to the extent of 99.9% of lead. The Chapter 78 of CETA, itself recognise a separate new product of 99.9% of refined lead. Whether there is a violation of Article 14 of the Constitution of India, or not? - Held that: - M/s. GM is located in the State of Jammu Kashmir and working under Notification No. 56/2002-CE dated 14.11.2002 wherein the duty paid through PLA is entitled as credit to M/s. GM and to denial of credit to M/s. GM has resulted in discrimination when compared to other manufacturers of the same goods by same process. Moreover, in their own unit, located in Gandhidham (Gujarat) the benefit is extended. In the light of the above observation, we hold that there should be uniformity in the stand taken by the Revenue and there should be no discrimination in the case in hand and the other cases. In view of the fact that the Revenue itself has admitted that activity undertaken by the appellant amounts to manufacture, therefore, we hold that activity undertaken by M/s. GM cannot be discriminated. Whether the appellant has been treated as manufacturer or not, in terms of exemption notification under Customs N/N. 96/2009-Cus - Held that: - there is a process of manufacture when making refined lead from unrefined lead even as per the Customs authorities, read with the Import Export Policy, the FTP requires to bring into existence a new product having a distinct name, character and use, basis which the advance licences were granted to M/s. GM. Therefore, it is clear that even from this evidence, the process of making the refined lead and lead alloy ingots amounts to manufacture. Therefore, we hold that the process undertaken by M/s. GM amounts to manufacture in terms of exemption notification under Customs Notification No. 96/2009-Cus. Whether the ld. Adjudicating Authority is right to drop the demand on account of Cenvat credit utilised for payment of duty or not? - Held that: - a similar issue came up before the Hon'ble High Court of Bombay in the case of Ajinkya Enterprises [2012 (7) TMI 141 - BOMBAY HIGH COURT] wherein the Hon'ble High Court has held that in case of activity does not amount to manufacture, the payment of duty shall amount of reversal of Cenvat credit. Therefore, the ld. Commissioner has rightly allowed the claim of Cenvat credit to M/s. GM. Accordingly, the appeal filed by the Revenue is dismissed. Whether M/s. GMI is entitled for the benefit of exemption Notification No. 214/86-CE or not? - Held that: - in terms of Notification No. 214/86, the principal manufacturer has to file an undertaking before the jurisdictional Central Excise authority of job works that the principal manufacturer shall pay the duty on the manufactured goods. Admittedly, the said undertaking has been filed by M/s. GM before the authorities below. In that circumstance, there is no fault of the appellant and the benefit of Notification No. 214/86 cannot be denied. Appeal dismissed - decided against Revenue.

  ---

• 2017 (10) TMI 1180
  CENVAT credit - returned/rejected finished goods - Rule 16(1) of Central Excise Rules, 2002 - Held that: - the relevant documents/invoices for the relevant period were seized by the authorities and there is no evidence that it were returned to the Appellant. Thus, it is clear that these documents are still with the Department. In these circumstances and in the interest of justice, the matters are remanded to the ld. Commissioner (Appeals), to decide the said issue of eligibility of credit of ₹ 26,08,48/- availed on returned/rejected goods afresh - appeal allowed by way of remand.

  ---

• 2017 (10) TMI 1179
  Interest on delayed refund - Section 11BB of the CEA - relevant date - Held that: - interest on delayed refund is payable under Section 11BB of the Act on expiry of the period of three months from the date of application under Section 11B(1) of the Act and not from the date of order of refund or appellate order - we direct Mr. Mahabir, Deputy Commissioner, Central Excise/ GST, Division-II, C-56/42, Sectory-62, Noida - 201307 to file an explanation/ show cause reply, as to why not a reference be made to the Hon'ble Allahabad High Court for drawing the proceedings of contempt under the Contempt of Court Act for disobeying the mandate of law amounting to interference in the dispensing of Justice.

  ---

• 2017 (10) TMI 1178
  Demand of differential duty - finished goods and rejects cleared to DTA - Held that: - undisputedly the appellant had cleared the rejected yarn and waste in DTA in excess of 50% of FOB value without permission of the Development Commissioner, accordingly, differential duty was demanded in accordance with proviso to Section 3 (1) of the CEA, 1944 - the issue is now covered by the judgement of the Hon’ble Supreme Court in Sarla Performance Fibers Ltd’s case [2016 (6) TMI 352 - SUPREME COURT] and since the issue pertain to the period prior to the amendment to Section 3 of CEA, 1944 w.e.f 11.05.2001, differential duty calculated taking into account the formula prescribed under proviso to Section 3 (1) of Central Excise Act, cannot be sustained. The appellant had used raw-materials in the manufacture of said rejected yarn and waste therefore, the demand on the raw-material also cannot be sustained. Appeal allowed - decided in favor of appellant.

  ---

• 2017 (10) TMI 1177
  SSI Exemption - N/N. 8/2003-CE dated 01.03.2003 - Rule 11(2) of the Credit Rules - due to ignorance, credit was not reversed - Department entertained the view that the appellant was not entitled to the exemption under the SSI Notification dated 01.03.2003 on the grounds of non-reversal of the Cenvat Credit of ₹ 2,593/- on 31.03.2005 and non-filing of the intimation that the appellant would be availing full exemption with effect from 01.04.2005. Held that: - the whole show was notice is misconceived. There is no allegation that the appellant had any credit balance in their Cenvat Credit account as on 01 April, 2005. Under the provisions of Rule 11(2) of CCR, 2004 what is required is to be written off is Cenvat Credit lying unutilized in the Cenvat Credit Register on date of option to avail exemption - Further, the appellant had suo motu deposited the Cenvat Credit on the inputs lying in stock and also given intimation to the Revenue. Such deposit was made prior to issue of show cause notices. Accordingly, the impugned orders are not sustainable. Appeal allowed - decided in favor of appellant.

  ---

• 2017 (10) TMI 1176
  SSI exemption - dummy units - clubbing of clearances - Held that: - After allowing the benefit of cum-duty-price, the matter was remanded to the adjudicating authority for the limited purpose of re-calculation of the duty, but, we find that the adjudicating authority has misinterpreted the said direction and reconsidered the whole issue again and held that the appellants are not eligible to the benefit of cum-duty-price. Also on the issue of penalty, this Tribunal after recording the fact that penalty cannot be imposed on the dummy unit, directed the adjudicating authority to pass an appropriate order keeping in mind that penalty cannot be imposed of dummy unit. This direction has also not been followed. To calculate the exact amount of duty, after extending the benefit of cum duty price, the matter needs to be remanded to the adjudicating authority - appeal allowed by way of remand.

  ---

• 2017 (10) TMI 1175
  N/N. 63/95-CE dated 16.03.1995 - Revenue entertained a view that since the appellant was not one of the units specified in terms of the said N/N. 63/95-CE dated 16.03.1995, the benefit of the Notification, which exempted goods supplied to the Ministry of Defence, cannot be extended to them - Held that: - reliance placed in the case of Commissioner Versus Vulcan Gears [2011 (2) TMI 1347 - Supreme Court of India], where it was held that notification exempts the goods when they are supplied directly to the Ministry of Defence by the companies named therein and in the notification, the appellant’s name was not included in the names of the companies - appeal allowed.

  ---

• 2017 (10) TMI 1174
  Valuation - includibility - cost of FOC material supplied, amortized cost of tools supplied by HSCIL and conversion/job charges including profit at the time of clearance of their finished goods to HSCIL - Held that: - an identical issue of valuation has come up before the Tribunal in the case laws relied by the appellant in the case of M/s Shivani Detergent Pvt Ltd [2016 (11) TMI 1342 - CESTAT NEW DELHI], where the identical issue has been settled by the Tribunal in Advance Surfactants India Ltd. [2011 (3) TMI 1380 - CESTAT, BANGALORE], where it was held that the ratio laid down by the Hon’ble Supreme Court in the case of Ujagar Prints (1989 (1) TMI 124 - SUPREME COURT OF INDIA) will squarely apply i.e. to ascertain the assessable value on the cost of materials plus processing charges - appeal allowed - decided in favor of appellant.

  ---

• 2017 (10) TMI 1173
  Valuation - freight and insurance shown separately on the invoices - The department was of the view that duty has likely to be paid on equalised freight recovered from the customers - Held that: - There is no dispute that the sales were at the factory gate and the amount of freight, though charged at equalised basis, was being separately mentioned in the invoices - when the sales are at the factory gate, the deduction of freight has to be allowed even if the freight is charges at equalised basis - appeal allowed - decided in favor of appellant.

  ---

• 2017 (10) TMI 1172
  Area Based Exemption - Benefit of N/N. 50/2003 dated 10.6.2003 - denial of benefit on the ground that appellant has not filed the declaration under N/N. 76/2003 dated 5.11.2003 - Held that: - identical issue has come up before the Tribunal in the case of Aditya Packaging vs. CCE, Meerut I [2017 (6) TMI 1024 - CESTAT NEW DELHI], where it was held that the conditions inserted in N/N. 50/2003-CE are mandatory and cannot be held as mere procedural requirement - demand upheld. Penalty - Held that: - this was interpretation of law and the appellate authority has already reduced the penalty from Rupees Six lakh to Rupees Three lakh. But in the peculiar facts and circumstances of the case, the penalty is on higher side, therefore, penalty reduced. Appeal allowed in part.

  ---

• 2017 (10) TMI 1171
  Valuation - Compounded Levy Scheme - stainless steel patta/ pattis - During the period under consideration, the Pollution Control Board has closed the factory and there was no production but the department has demanded the duty in regular scheme - Held that: - identical issue has come up before the Tribunal in the case of M/s. Sarthi Rubber Industries Pvt. Ltd. vs. CCE & ST, Alwar [2017 (3) TMI 1206 - CESTAT NEW DELHI], where it was held that The closure of units admittedly, beyond the control of the assessee/appellant, is not to be treated as a failure to comply with the provisions and conditions of the notification during the period of forced closure of the units - appeal allowed - decided in favor of appellant.

  ---

• 2017 (10) TMI 1170
  Valuation - includibility - whether the cost of durable packing material supplied by the buyer can be added to the assessable value of the goods supplied by the assessee? - Held that: - the said issue is covered in favor of the assessee by the decision of this Tribunal in the matter of CCE, Indore V. Grasim Industries ltd. [2014 (4) TMI 650 - CESTAT NEW DELHI], where it was held that the testing charges of those containers would be includible in the value along with the cost of such containers if the containers are of durable and returnable nature, the amortized cost of the container including testing charges during the period of use would be includible in the assessable value - appeal allowed - decided in favor of appellant.

  ---

• CST, VAT & Sales Tax

• 2017 (10) TMI 1169
  Works contract - Levy of vat - transfer of property - in a dyeing works contract, the goods to be incorporated may either be as goods or in some other form similar to the accretion or occasions due to the application of dyes and chemicals - whether the dyes and chemicals is distinguishable from that of consumables like fuel or welding electrodes which are exhausted or disappeared after the work executed? - Held that: - These two questions of law were considered by the Hon'ble Division Bench in the case of State of Tamil Nadu V. S.S.M. Processing Mills [2013 (10) TMI 486 - MADRAS HIGH COURT] and the answer to both the questions were against the assessee, holding that bleaching contract attracts sales tax as in the case of dyeing contract, when the chemicals are purchased from outside the state. As on date, the judgment of the Division Bench in the case of S.S.M. Processing Mills has attained finality and holds the field. Therefore, the present attempt of the petitioner to argue contrary to the decision is clear attempt to reopen a settled issue in an indirect manner, which cannot be permitted - petition dismissed.

  ---

• 2017 (10) TMI 1168
  Zero rated sales - eligibility for exemption - Section 22 (2) of TNVAT Act - Held that: - two errors have been committed by the respondent while making such observation. Firstly, the respondent did not call for any such specific document. Secondly, non furnishing of the documents before the Enforcement Wing Officials is of little avail. When the revision of assessment proceeding has been taken up by the Assessing Officer, the Assessing Officer has to independently apply his mind, and assess the turnover - These two glaring errors are sufficient to hold that the impugned assessment orders are totally unsustainable. Matter requires to be remanded to the respondent for fresh consideration - petition allowed by way of remand.

  ---

• 2017 (10) TMI 1167
  Rejection of revised returns - Rule 131 of Karnataka Value Added Tax Rules, 2005 - rejection on the ground that such rejected revised returns did not indicate any additional tax liability and proof of payment thereof - Held that: - The Division Bench of this Court in the case of Jones Lang Lasalle Property Consultant India (P) Ltd. [2016 (5) TMI 826 - KARNATAKA HIGH COURT], where it was held that even the reversal of input tax credit claimed by assessee resulted in an additional tax liability and the revised returns on the basis of such additional tax liability, disclosed were required to be accepted in terms of the Circular issued by the Commissioner on 7.7.2008. Though the Assessing Authority has referred to the said Division Bench’s judgment, it appears that he has not fully understood the ratio of the same or has not carefully examined the facts of the case in the light of the aforesaid Division Bench judgment. The matter, therefore deserves to be remanded to the Assessing Authority for passing fresh orders for each month separately, accepting all the revised returns for the period July 2005 to March 2006 - petition allowed by way of remand.

  ---

• 2017 (10) TMI 1166
  Validity of assessment order - TNGST Act - Section 54 of the TNGST Act - opportunity to cross-examine - Held that: - reliance placed in the case of M/s. Rajaganapathi Traders Versus The Commercial Tax Officer (FAC) [2017 (10) TMI 1164 - MADRAS HIGH COURT], where it was held that without affording an opportunity of cross examination of the other end dealer, there was no scope for the respondent to rely on the material relating to the said dealer for determination of the said liability on the petitioner - petition allowed.

  ---

• 2017 (10) TMI 1165
  Rejection of application filed under Samadhan Scheme - case of petitioner is that such order was not intimated to the petitioner, and only when the petitioner received a notice from the second respondent, dated 18.09.2017, demanding tax, interest and penalty for the year 1992-1993 under TNGST Act, they came to know that their application filed under Samadhan Scheme has been rejected - Held that: - similar issue decided in the case of Nippon Enterprises (South) Vs. The Joint Commissioner (CT) Chennai and another) [2015 (4) TMI 1209 - MADRAS HIGH COURT], where it was held that once the superior authority (Appellate Deputy Commissioner) passes an order, such order is binding on the lower authority (Assessing Officer) who function under the jurisdiction of such superior authority and the order of the Tribunal is binding upon the Appellate Deputy Commissioner and the Assessing Officer who function under the jurisdiction of the Tribunal - first respondent is directed to entertain the Application filed by the petitioner under Samadhan Scheme and pass necessary orders in accordance with law - petition allowed.

  ---

• Indian Laws

• 2017 (10) TMI 1194
  FIR for offences punishable under Sections 384, 467, 468, 471, 120-B and 506(2) of the Penal Code - exercise of the jurisdiction under Section 482 to quash the FIR - Held that:- High Court was justified in declining to entertain the application for quashing the First Information Report in the exercise of its inherent jurisdiction. The High Court has adverted to two significant circumstances. The first is that the appellants were absconding and warrants had been issued against them under Section 70 of the Code of Criminal Procedure, 1973. The second is that the appellants have criminal antecedents, reflected in the chart which has been extracted in the earlier part of this judgment. The High Court adverted to the modus operandi which had been followed by the appellants in grabbing valuable parcels of land and noted that in the past as well, they were alleged to have been connected with such nefarious activities by opening bogus bank accounts. It was in this view of the matter that the High Court observed that in a case involving extortion, forgery and conspiracy where all the appellants were acting as a team, it was not in the interest of society to quash the FIR on the ground that a settlement had been arrived at with the complainant. We agree with the view of the High Court. The present case, as the allegations in the FIR would demonstrate, is not merely one involving a private dispute over a land transaction between two contesting parties. The case involves allegations of extortion, forgery and fabrication of documents, utilization of fabricated documents to effectuate transfers of title before the registering authorities and the deprivation of the complainant of his interest in land on the basis of a fabricated power of attorney. If the allegations in the FIR are construed as they stand, it is evident that they implicate serious offences having a bearing on a vital societal interest in securing the probity of titles to or interest in land. Such offences cannot be construed to be merely private or civil disputes but implicate the societal interest in prosecuting serious crime. In these circumstances, the High Court was eminently justified in declining to quash the FIR which had been registered under Sections 384, 467, 468, 471, 120-B and 506(2) of the Penal Code.

  ---

• 2017 (10) TMI 1193
  Tax clearance certificate - petitioner was granted a national permit for a goods vehicle - Held that:- The petitioner has not sought for surrender of the national permit, since the permit itself had lapsed on and after 08.01.2017. Therefore, all that is required to be given to the petitioner is a tax clearance certificate. Accordingly, this Writ Petition is allowed, the impugned order is set aside with the direction to the respondent to consider the petitioner's application for the issue of tax clearance certificate and pass appropriate orders in this regard within a period of eight weeks from the date of receipt of a copy of this order.

  ---