TMI Tax Updates - e-Newsletter
November 21, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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Income Tax:
Penalty on income from bad debts recovered - the assessee has to offer the same to tax in the year in which the recovery is made. Since the assessee has failed to do, in violation of the mandated provisions of law, levy of penalty confirmed - AT
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Income Tax:
TDS u/ s 195 - Assessee Company was not liable to deduct the tax at source on the bank guarantee commission paid to a foreign bank - AT
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Income Tax:
It is not possible to arrive at the conclusion that there would be no shortage of stock due to damage immature paddy damaged caused by rats etc. The basis on which the AO disallowed the claim of the assessee was that the assessee had sold the entire stock of paddy and there was no possibility of shortage and consequent loss in handling paddy - Claim of loss allowed - AT
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Income Tax:
When the transactions in question are falling under the ambit of definition of ‘international transaction’ as provided u/s.92B, then the AE being tax resident of India will not take out the matter from the purview of the TP provisions - AT
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Income Tax:
TDS u/s 195 - whether Legal fees paid to non-resident Attorneys constitute royalty as per India-UK DTAA and also constitute ‘Royalty’ / ‘Fees for technical services’ [FTS] u/s. 9(1)((vi)/vii)? - Held No - AT
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Income Tax:
Once the books of accounts has been rejected the Assessing Officer cannot fall back upon the same books for making addition on account of interest accrued on the FDRs reflected in the books of account. - AT
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Customs:
Import of iron scrap - The scrap being non-notified goods, smuggled nature of goods , are to be proved by the Revenue by producing affirmative and tangible evidence. - AT
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Customs:
Onus of proving smuggled character of goods - when at the time of inventory if the markings of the names of the foreign countries are not found, then the Revenue had failed to establish a case that the betel nuts are of foreign origin and smuggled into India - AT
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Customs:
Project import - Benefit of concessional rate of duty - By virtue of being the beneficiary of the project which was executed by L&T Ltd., FIL cannot walk into the shoes of L&T Ltd. as an appellant and contest the issue on merits - AT
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Customs:
Valuation - enhancement of value - drill bits of HSS nature - classification and the rate of duty, could not have gone beyond the report given by an expert engaged by department and that also by IIT, Mumbai. - AT
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Service Tax:
Levy of service tax on accrual basis - transaction with associated persons - when the debit/credit entry was made in the account in terms of Rule 6 of Service Tax Rules, 1994 - the issue is revenue neutral - AT
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Central Excise:
SSI exemption - use of brand name of others - Whether the identification mark put on the goods by the assessee shall be treated as trade name or brand name of others or not? - Held No - AT
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Central Excise:
Benefit of N/N. 214/86 - job work - as principal manufacturer has exported the goods under bond which means that duty is leviable on such goods but is not being paid for reasons of export, therefore, we hold that department has not understood the N/N. 214/86 in its true spirit - AT
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Central Excise:
Classification of par boiling machinery - the par-boiling machine, when examined and assessed independently satisfies all the specification of heading 84.19, thus making it compulsorily to fall under heading 84.19. - AT
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Central Excise:
Classification of plywood laminated - plywood laminated with plasticized paper are correctly classifiable under Chapter Heading 44.08 of the erstwhile first schedule to CETA 1985 - AT
Articles
Notifications
News
Case Laws:
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Income Tax
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2016 (11) TMI 747
Disallowance u/s 14A - assessee has raised the issue that the disallowance as under Rule 8D2(iii) could be made by the Assessing Officer only after establishing/specifying the nexus of the expenditure with the earning of the exempt income - Held that:- The assessee itself has accepted the fact of nexus of expenditure with the earning of the exempt income by disallowing a portion of the expenses suo motu, though not under Rule 8D, but albeit by adopting a different method, which the assessee thought to be reasonable. In such circumstances, in our opinion, no further action is required on the part of the Assessing Officer to establish the nexus of expenditure with the exempt income, when he has invoked the Rule 8D of the Income Tax Rules. We direct the Assessing Officer to compute the disallowance under Rule 8D(iii) of the Income-tax Rules at the rate of 0.5% of the investment which actually have resulted in exempt dividend income rather than 0.5% of the average of total investment. Thus, the ground of the assessee is partly allowed. Direct attributable expenses in respect of tax free dividend income - Held that:- We find that the assessee has successfully demonstrated complete flow of funds from its borrowing at a lower interest rate to the destination to different corporate entities at a slightly higher rate of interest and, therefore, the nexus of the interest expenses with activity of financing has been substantiated by the assessee and there is not a single amount of interest-bearing borrowings has been found to be related to the investment, which yielded tax free dividend income. The Assessing Officer has failed to establish any nexus between the interest-bearing borrowed funds and the investment in assets yielding tax-free income. In our opinion, the findings of the learned Commissioner of Income Tax (Appeals) on the issue in dispute is well reasoned and no interference is required on our side. Further, the Assessing Officer in the assessment year 2009-10, has also accepted the fact of having no nexus between the borrowed funds and the investment in assets yielding tax-free income and accordingly has not made any disallowance under Rule 8D2(ii) of the Act. Thus, the rule of consistency also demand that no disallowance under section Rule 8D2(ii) of the Act can be made in the year under consideration. In view of above, we uphold the findings of the learned Commissioner of Income-tax (Appeals) on the issue in dispute and the ground of the appeal of the Revenue is dismissed.
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2016 (11) TMI 746
Interest received on fixed deposit - whether was part of business income and therefore should have been considered for deduction under section 80HHC? - whether the interest earned by the assessee on fixed deposit with Vijay Bank is part of business profit or to be assessed under the head ‘income from other sources’ - netting of interest receipt against the interest expenses - Held that:- We find that the fixed deposits have been made as a precondition for credit limit and which was required for earning in the business of export and, therefore, receipts of interest has direct nexus with the export business of the assessee and inextricably linked with the export business and it was not a case of parking of funds simpliciter, thus, we hold that the interest income earned from the fixed deposit was a part of business profit and netting of interest expenses against the interest income earned from the FDR is accordingly allowed while computing deduction under section 80HHC of the Act. - Decided in favour of assessee
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2016 (11) TMI 745
TDS u/s 194C - non deduction of tds on lorry hire charges - Held that:- Assessee does not even have a contract to supply with his parties on a regular basis. It undertakes transportation of goods as and when a particular person requires them to be transported. When there is no regular contract, as in the case of Mythri Transport Corporation Vs. ACIT [2009 (1) TMI 337 - ITAT VISAKHAPATNAM ] the question of sub-contract does not arise on the facts of the case. On the facts of the case, we are of the opinion that the provisions of Section 194C are not applicable. Following the principles laid down by the above said decision, we are of the opinion that since the amount paid as ‘hire charges’ are not covered by the provisions of Section 194C, question of disallowance u/s. 40(a)(ia) does not arise. In view of that, assessee’s grounds are allowed
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2016 (11) TMI 744
Computation of long term capital gains on sale of land - adoption of sale consideration as per Stamp Valuation Authority and also Fair Market Value of the property as on 01.04.1981 - Held that:- Reference was made to the valuation officer in order to determine the fair market value as on 01.04.1981 on the pretext that the fair market value as declared by the assessee which was backed by Registered Valuer Report, was higher, which is not correct. The issue raised in the present appeal is squarely covered by the ratio laid down by the Hon’ble Bombay High Court in CIT Vs. Puja Prints (2014 (1) TMI 764 - BOMBAY HIGH COURT ) and following the same parity of reasoning, we find no merit in determination of Fair Market Value as on 01.04.1981 by the DVO than the value as declared by the assessee as on 01.04.1981 applied for determining the income from capital gains in the hands of assessee. Reversing the order of CIT(A), the additional ground of appeal raised by the assessee is allowed.
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2016 (11) TMI 743
Income from other sources - deduction on account of interest incurred/payable to the banks from the interest income - Held that:- We find clear cut nexus between the interest earned from NSE on deposits with National Stock Exchange out of bank guarantees invoked and proceeds of FDRs and interest incurred on the sources of funds which are from the various banks out of the interest bearing funds given to NSE in the form of the bank guarantees invoked in year 2002 and FDRs with lien in favour of NSE on which the lien was exercised in 2002. We find merit in the arguments of the ld.AR that the interest incurred to these banks namely Global Trust Bank and Centurion Bank , ICICI Bank should be allowed while assessing the interest income of the assessee from the deposits with NSE and we are not convinced with the findings of ld.CIT(A) that there is no nexus between the funds/deposits lying with the NSE under lien and NSE have various deposits or FDR under lien or deposits out of sources as discussed supra and the interest expense accrued in favour of various banks on the money borrowed for the purpose of FDRs for security and also for bank guarantees to NSC. Accordingly, we set aside the order of ld.CIT(A) and direct the AO to allow deduction of interest of ₹ 2,74,88,000/- out of the interest received from the National Stock Exchange. Non allowance of credit of tax - rectification application - Held that:- e find that the assessee has not been allowed credit being TDS at source on behalf of the assessee by NSE/Banks and the ld. CIT(A) has just dismissed the ground by directing the assessee to file rectification application u/s 154 of the Act which is not correct in our view and hence we are of the view that it would meet ends of justice if the AO is directed to allow the credit of TDS after verifying the claim of the assessee after allowing reasonable opportunity of being heard to the assessee. Depreciation claim - Held that:- We find that the assessee has discontinued the business following the order of SEBI and therefore there was no activity during the year and the claim of the depreciation cannot be allowed as the assessee did not carry out any business activity. However, the assessee is free to claim deprecation in the year in which the business is re-commenced on the basis of Written Down Value in the year in which the business was discontinued.
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2016 (11) TMI 742
Addition u/s 68 - genuineness of the gifts - Held that:- CIT(A) while deleting the addition has noted that the persons who have advanced the amount to the assessee are assessed to tax and their PANs were furnished to the AO during the assessment proceedings, the advances have been received through banking channels, copy of the income tax returns of the Director were also furnished along with copy of foreign inward remittance in support of the gifts received were filed. Ld.CIT(A) has held that the aforesaid documents establishes the identity, creditworthiness and genuineness of the transactions. He has further noted that Director who had advanced to the assessee are assessed to tax, the gifts received have been declared in the return of income. He has further noted that if the AO doubted the genuineness of the gifts, the same could have been examined in the individuals’ hands but no such exercise was undertaken by AO. The ld.CIT(A) has thus given a finding that assessee has discharged the onus cast upon the assessee as per the requirement of section 68 of the Act. Before us, Revenue has not placed any material on record to controvert the findings of the ld.CIT(A). - Decided in favour of assessee
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2016 (11) TMI 741
Revision u/s 263 - receipt of share capital and share premium unexplained - Held that:- As rightly pointed out by the ld. Counsel for the assessee, since the proceedings u/s 263 of the Act were concluded ex-parte, the Assessee had no occasion to place material to satisfactorily explain the receipt of share capital and share premium by the Assessee. There was however no material on the basis of which the CIT could have come to the conclusion that the receipt of share capital and share premium was not satisfactorily explained by the assessee. As rightly contended by the ld. Counsel for the assessee, the CIT ought to have set aside the order of the AO and directed the AO to conduct fresh enquiry on the lines indicated in the order of this Tribunal in the case of Subhlakshmi Vanijya Pvt. Ltd. (2015 (8) TMI 174 - ITAT KOLKATA ). We therefore modify the order of CIT and direct the AO to make fresh enquiry with regard to the receipt of share capital and share premium during the previous year after affording Assessee opportunity of being heard. With these observations the appeal of the assessee is treated as partly allowed.
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2016 (11) TMI 740
Bogus expenditure and bogus sales quantification - ad-hoc disallowance by invoking provisions of section 40(a)(ia) Held that:- From the reading of the AO’s order and CIT(A) it is not clear as to whether the bogus expenditure and bogus sales had in fact been carried out by the actual inflow and out flow of money. The conclusion that there was bogus expenditure as well as bogus sales is based on material found in the course of search, statement recorded at the time of search and material and statement recorded in the subsequent Survey u/s.133A of the Act. Therefore it cannot be said that there was no basis for the AO or the Assessee to have quantified the bogus expenditure and bogus sales. In our opinion if there had been an actual inflow of a sum of ₹ 114,10,16,936/- if such bogus income is recorded by the assessee in the books of accounts and if the corresponding bogus expenditure of ₹ 85,10,68,095/- is also evidenced by out flow of funds then the action of AO would be justified. If, on the other hand, the aforesaid transactions are only book entries without there being actual flow of funds then the action of CIT(A) would be proper and justified calling for no interference. We, therefore, set aside the order of CIT(A) and remand the issue to the AO for fresh consideration on the lines indicated above. Estimation of 0.40% rate of commission on bogus sales recorded by the assessee - Held that:- addition was rightly upheld by CIT(A) because the assessee failed to substantiate its claim that the rate of commission received was only @ 0.25%. As far as the commission paid on bogus booking of expenses is concerned, the CIT(A) has rightly held that the AO had not disputed that the assessee indulged in bogus booking of expenses and was paying commission for creating entries for such bogus expenses. As rightly held by CIT(A) one this fact is admitted, then the AO cannot deny deduction on account of payment of commission and conclusion of CIT(A) that only net commission income had to be taxed in the hands of the assesseee, in our opinion, is just and proper. The quantum of commission of expenditure on booking of bogus expenses adopted, in our view, is also justified. To this extent we confirm the order of CIT(A).
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2016 (11) TMI 739
Hiring of services for 3D OBC Seismic Data Acquisition & Processing in Sector-II - taxability in India in accordance with section 44BB(1) - Held that:- As decided in OIL & NATURAL GAS CORPORATION LIMITED Versus COMMISSIONER OF INCOME TAX & ANOTHER [2015 (7) TMI 91 - SUPREME COURT] the works carried out by the applicant are liable to be covered under the provisions, of Section 44BB of Income Tax Act. We have taken the same view in four earlier rulings and, therefore, we are convinced that the provisions of Section 44BB being a special provision was brought into existence to encourage the activities of mineral exploration.We accordingly hold that the consideration received by the applicant from the, alleged contract will be taxable in terms of Section 44BB.
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2016 (11) TMI 738
Penalty imposed u/s 271(1)(c) - not declaring the correct Long Term Capital on sale of immovable properties - Held that:- Rule of Evidence and in case the assessee fails to offer any explanation or his explanation is found to be false or the explanation is not substantiated, the presumption that he has concealed particulars of income automatically comes into play. It is true that the assessee had disclosed the transactions regarding sale of property in the computation of income filed with the return of income. We further find that the ld. CIT(A) has deleted the penalty in the case of the very assessee for A.Y 2008-09 by relying on the decision of the ITAT vide order dated 22.11.2013. In view of our above discussion, conclusion of the ld. CIT(A) and following our own order, we uphold the order of the first appellate authority and we decline to interfere with the same. We direct the AO to delete the penalty so made by him. - Decided in favour of assessee.
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2016 (11) TMI 737
Claim of deduction u/s 80G - making of a new claim - Held that:- There is no factual dispute with regard to the eligibility of deduction under section 80G of the Act. The deduction benefit was denied by the AO as the assessee failed to claim the same in its original return and no revised return was filed for the same. In this backdrop of the case we find that the assessee cannot be denied the benefit for which he is entitled by the provision of the law. In view of the judgment of the Apex court in the case of Goetze (India) Ltd. vs. CIT [2006 (3) TMI 75 - SUPREME Court] it is evident that the making of a new claim if any before the AO is required to be done only by way of filing the revised return of income and not by way of letters or by way of filing revised computation etc. But when comes to the Tribunal or for that matter the CIT(A), who is also not the assessing officer, but who is the appellate authority, assessee does not have to initiate a new claim before them by way of filing the revised return of income. As such the returns or revised returns are filed under the provisions of section 139 of the Act and it is done before the AO and not before the first or second appellate authorities i.e. CIT(A), ITAT or Higher judiciary. Therefore, in our opinion, the CIT(A) is justified in entertaining and adjudicating and therefore, the ground raised by the revenue is required to be dismissed. Accordingly, the ground of the revenue’s appeal is dismissed. Short Term Capital Loss computation - Held that:- The assessee in the instant case has sold the shares on different two dates i.e. 22.12.2008 and 2.2.2009. So it is clear that the assessee in the case on hand the assessee has sold the shares before 31.3.2009 but the AO has taken the value for the shares on the basis of balance sheet as on 31.3.2009. In our considered view the action of the AO is baseless. The AO has not brought any defect in the purchase price and sale price of the shares. The AO has made the addition on his own surmise and conjuncture. The break-up value of the share as on 31.3.2008 is of ₹ 126.93 per share which is very close the sale price of the shares i.e. ₹ 125 per share. Therefore the breakup value adopted by the AO as on 31.3.2009 is not correct value of the shares. The ld. DR failed to bring anything contrary to the findings of the ld. CIT(A). In view of above we do not find any infirmity in the order of ld. CIT(A). Hence this ground of Revenue’s appeal is dismissed.
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2016 (11) TMI 736
Short allowance of deduction under section 80HHC - requirement of reducing loss while computing deduction u/s 80HHC - Held that:- Face value of export incentive will be added under first proviso to section 80HHC of the Act to the profit as face value of DEPB/DFRC would get covered under section 28(iiib) of the Act. Secondly, only Profit on sale of DEPB/DFRC would be covered under section 80HHC (3) of the Act and 90% of such profit would be eligible to be added to this profit as per third proviso to section 80HHC of the Act. The assessee has submitted a working claiming deduction at ₹ 21,53,625/- as against submitted before the lower authorities claiming at ₹ 19,17,630/-. These figures need verification at the level of the AO. However, the claim of assessee is allowable, as the assessee has incurred a loss on sale of export incentive and hence no amount is to be excluded while calculating deduction in term of section 80HHC third proviso. Hence direct the Assessing Officer, as in the present case there is a loss, where there is a loss (and not profit) on sale of export incentives, no loss can be reduced while computing deduction under section 80HHC of the Act. - Decided in favour of assessee.
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2016 (11) TMI 735
Adhoc disallowance of expenditure - Held that:- Both the parties fairly agreed that the decision taken by the Tribunal for A.Y. 2010-11 can be applied in this year. Under these circumstances, the disallowance is restricted to 2% against 5% sustained by the Ld. CIT(A) Disallowance of professional fee paid to an interior designing consultant - addition on the ground that it was not incurred for the running of the business - Held that:- Merely because the assessee could not get the real benefit out of it, it cannot be said that the expenses were not incurred for the purposes of business of the assessee. Rendering of services and receipt of actual benefit are two different ends. What is important for allowability of an expense as business expense is that the assessee must receive service from the service provider and it should be meant for the purpose of business of the assessee. Both of these conditions are undisputedly fulfilled here. Thus, in our view, the disallowance has been wrongly made by the Assessing Officer and the same is, therefore, directed to be deleted. Disallowance of commission fee paid - Held that:- Complete documentary evidences have been brought on record by the assessee evidencing the payment and availment of services rendered by the payee. In our view, the Tribunal has rightly allowed the claim of the assessee. No different decision can be taken in the year before us. The payee remains the same; all the facts and circumstances also remain the same. Thus, respectfully following the order of the Tribunal for A.Y. 2007-08, we allow the payment of commission
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2016 (11) TMI 734
Penalty u/s 271(1)(c) on disallowance under section 14A - Held that:- Following the decision of the Coordinate Bench of this Tribunal in the assessee’s own case for A.Y. 2000- 01 we also are of the view that the issue of the disallowance under section 14A of the Act is a highly debatable one and it cannot be said that the assessee has concealed any particulars of income. In the light of the above facts and circumstances of the case, we hold that the levy of penalty under section 271(1)(c) of the Act on this issue was not justified and cancel the same - Decided in favour of assessee Penalty on disallowance of non-compete fee paid to ex-Directors - Held that:- Merely because the assessee’s claim for the said expenditure as revenue was turned down in quantum appeal proceedings; that by itself would not be ground enough to reach the conclusion that the particulars furnished/disclosed by the assessee were false, dishonest or inaccurate or that income was concealed. In this factual and legal matrix of the case, we are of the view that penalty under section 271(1)(c) of the Act was not exigible in the case on hand on the issue of the assessee’s claim regarding non-compete fee paid to ex-Directors and cancel the penalty levied thereon. - Decided in favour of assessee Penalty on income from bad debts recovered - Held that:- The reason put forward by the assessee for its action; that since bad debts claimed in this regard had been disallowed by the AO, therefore the assessee had not offered the recovery thereof for tax, in our considered view, is not acceptable as the aforesaid action of the assessee, in not offering the recovery of bad debts to tax, is not in conformity with the mandate of the provisions of section 36 of the Act. It is not the case of the assessee that a legal claim made was disallowed, which is a debatable issue. In respect of recovery on bad debts written off by the assessee, the position in law is clear and unambiguous; the assessee has to offer the same to tax in the year in which the recovery is made. Since the assessee has failed to do, in violation of the mandated provisions of law, we are of the view that action of the authorities below in levying penalty under section 271(1)(c) of the Act, in respect of the assessee’s not offering the recovery of bad debts written off in the facts and circumstances of the case is in order and we uphold and confirm the same. Decided against assessee Penalty on disallowance of employees contribution to PF/ESIC for delayed payment - Held that:- The authorities below have not disputed the averments of the assessee that the PF/ESIC was paid to the government before the due date for filing the return of income under section 139(1) of the Act. The disallowance and consequent levy of penalty by authorities below was for the assessee’s making the said payment of PF/ESIC dues beyond the due dates as per the PF Act and ESIC Act respectively. In the case on hand, the employees contribution to PF/ESCI having been admittedly paid before the due date for filing its return under section 139(1) of the Act, the disallowance made by the authorities below was not called for, as the issue in the case on hand would be covered by the proviso to section 43B of the Act. In this view of the matter, we cancel the penalty levied under section 271(1)(c) - Decided in favour of assessee Penalty on disallowance of donation - Held that:- Admittedly, the assessee has not disallowed this ineligible expenditure while computing its income for the year under consideration. In our view this is a clear case of furnishing of inaccurate particulars of income and therefore uphold the penalty levied under section 271(1)(c) of the Act in this regard. The assessee’s appeal on this issue is rejected. - Decided against assessee
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2016 (11) TMI 733
TDS u/ s 195 - liability to deduct the tax at source on the bank guarantee commission paid to VTB bank - PE in India - Held that:- When the Revenue authorities have failed to lay hands on any cogent material that the bank guarantee commission paid by the assessee company paid on account of business transaction between assessee company and VTB bank particularly in the face of the fact that VTB bank has no PE in India, the question of attracting provision contained u/s 195 of the Act does not arise. In other words, when the assessee company has directly made the payments to VTB bank, Russia through its banker in India, no income can be said to have accrued or arisen in India to the VTB bank u/s 4, 5 and 9 of the Act. So, in the given circumstances, Assessee Company was not liable to deduct the tax at source on the bank guarantee commission paid to a foreign bank. - Decided in favour of assessee
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2016 (11) TMI 732
Addition u/s 40(a)(ia) - payment incurred on account of alleged "Commission" - Held that:- To the extent the recipients from the Assessee have so included the sum in their returns of income and filed the same, no disallowance u/s.40(a)(ia) of the Act ought to have been sustained by the CIT(A). The CIT(A) ought to have also directed the AO that in case the recipient parties are not cooperating in providing details, the AO should call for the information u/s. 133(6) or 131 of the Act, for verification of the same. In this regard we also find that the Assessee has furnished all the details of assessment particulars of the recipients of payment from the Assessee. The AO therefore should not have any difficulty in making the required verification. We therefore set aside the order of the CIT(A) to the extent to which he had sustained the order of the AO on the disallowance u/s.40(a)(ia) of the Act and remand the issue to the AO to verify whether the recipients have included the receipts paid by the assessee in their respective returns of income and also paid taxes on the same. To the extent the recipients from the Assessee have so included the sum in their returns of income and filed the same, no disallowance u/s.40(a)(ia) of the Act should be made by the AO. In case the recipient parties are not cooperating in providing details, the AO should be directed to call for the information u/s. 133(6) or 131 of the Act, for verification of the same Estimation of income on account of alleged "sale of rice bran" - Held that:- Taking into consideration the process of husking carried out by the assessee of paddy, the assessee’s nature of activity ought not to have been compared with the rice mill which is a sophisticated mechanised process of operation. As already seen the plant and machinery owned by the assessee was negligible and it was only worth less than ₹ 25,000/-. Therefore the basic assumption on which the impugned addition was made by the revenue authorities cannot be sustained. Besides the above the completeness and correctness of the books of account was also not disputed by the AO and in the circumstances as already laid down by Hon’ble Amritsar Bench in the case of Chattar Extraction (P)Ltd vs ITO (2004 (1) TMI 297 - ITAT AMRITSAR ) no addition could be made on account of rice bran extraction. There is no evidence on record to show either availability of bran or its sale outside the books of accounts. - Decided in favour of assessee Denial of loss suffered on handling charges - Held that:- it is not possible to arrive at the conclusion that there would be no shortage of stock due to damage immature paddy damaged caused by rats etc. The basis on which the AO disallowed the claim of the assessee was that the assessee had sold the entire stock of paddy and there was no possibility of shortage and consequent loss in handling paddy. Such mathematical calculation in my view would not be sufficient to making the impugned disallowance. Since the impugned disallowance is made on assumptions and surmises the same is directed to be deleted. - Decided in favour of assessee
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2016 (11) TMI 731
Rejection of the accounting method adopted by the assessee for recognition of revenue and computation of the income - CIT (A) reversed the finding of the AO so far as the rejection of the books of account as well as estimation of the income at the rate of 8% but held that the income of the assessee should be computed on the basis of the actual cost and revenue as recorded in the books of account and has been certified by the NHAI - Held that:- It is not disputed by the assessee that the revenue of ₹ 14,11,08,715/- as well as cost of ₹ 14,29,36,737/- are the actual figures as per the bills raised by the assessee and cost shown in the books of account of the assessee. Further this amount is also certified by the NHAI in the IPC. Therefore in view of these undisputed facts, we do not find any error or illegality in the impugned order of the CIT (A) qua this issue. However, as regards the plea of the assessee that the consequential adjustment in the subsequent year is required, we are of the view that as per the rule of consistency the adjustment on this account is consequential and no direction is necessary. TP adjustment - limited grievance of the assessee in respect of the comparable selected by the TPO is regarding Progressive Constructions Ltd, having RPT of 61% - Held that:- There is no quarrel on the point that while determining the ALP of an international transaction, it has to be tested by comparing with uncontrolled price, which means that the comparable price should not be influenced by the transaction between the related parties. Therefore, uncontrolled price taken as ALP shall not have any revenue from RPT. However, 0% RPT is not practically possible and therefore in the due course adjudication process, the Tribunal has taken a consistent view that in the normal course 15% is the tolerance range of RPT which can be relaxed maximum to 25%. In the case of the assessee, neither the assessee nor the TPO has applied the filter of RPT. However, it is a relevant factor for selecting the comparable price that RPT should not exceed the tolerance range as discussed above. In view of the above discussion, we set aside this issue to the record of AO / TPO to verify the RPT of the comparables and then apply a suitable filter of RPT not exceeding the maximum tolerance range of 25%. Since the income of the assessee has been recomputed by taking into consideration a different revenue and cost amounts as it was taken by the assessee in the return of income, therefore, the AO / TPO is directed to recomputed the adjustment on account of ALP by considering the margins of the assessee as per the income computed by the CIT (A). Accordingly the issue of TP adjustment is set aside to the record of the AO/TPO. On the objection of the assessee regarding non-application of TP provisions when the AE of the assessee is also subjected to the tax jurisdiction of India, we find that when the transactions in question are falling under the ambit of definition of ‘international transaction’ as provided u/s.92B of the Act, then the AE being tax resident of India will not take out the matter from the purview of the TP provisions. Accordingly, we do not accept the objections raised by the assessee in this regard.
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2016 (11) TMI 730
TDS u/s 195 - whether Legal fees paid to non-resident Attorneys constitute royalty as per India-UK DTAA and also constitute ‘Royalty’ / ‘Fees for technical services’ [FTS] u/s. 9(1)((vi)/vii)? - PE in India - Held that:- Payment in question do not get covered by Section 9(1)(i) due to the fact that the payee has neither business connection in India nor any permanent establishment in India. The assessee has obtained the legal services and such services find specific treatment as per Treaty Article 15 and therefore, not covered by Article 13 which deals with ‘Royalty and Fees for Technical Services’ Moreover, Article 15 applies not only to individual but to firms also as upheld by Special Bench of the Tribunal in the case of M/s Clifford Chance Vs. Asstt. DIT (IT)(2013 (6) TMI 544 - ITAT MUMBAI ). Therefore, in the absence of any business connection in India or permanent establishment of India and considering the fact that services are rendered outside India and no employee of the attorneys were present in India for more than 90 days, we are of the considered view that impugned payments are not taxable in India as per Treaty provisions Hence, the assessee was not liable for tax deduction at source from impugned payment. - Decided in favour of assessee.
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2016 (11) TMI 729
Rejection of books of accounts - N.P. termination - Held that:- We are in agreement with the argument of learned AR and findings of learned CIT(A) in Asst. Year: 2012-13 wherein he has reduced the rate of profit to 8% from 10% and therefore, in Asst. Years: 2010-11 & 2011-12 we hold the rate of 8% instead of 10% and in view of the above, Ground No.2 to 4 in assessee’s appeal are allowed. Separate addition of interest on fixed deposits - Held that:- Once the books of accounts has been rejected the Assessing Officer cannot fall back upon the same books for making addition on account of interest accrued on the FDRs reflected in the books of account. Deprecation after estimating the income - Held that:- CIT(A) has relied upon the case law of Hon’ble Punjab & Haryana High Court in the case of Lali Construction vs. ACIT [2014 (9) TMI 500 - PUNJAB & HARYANA HIGH COURT] for allowing depreciation from the net profits even if the total income was computed by applying the net profit rate
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Customs
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2016 (11) TMI 765
Imposition of ADD - Purified Terephthalic Acid - imported from China PR, Iran, Indonesia, Malaysia & Taiwan - Held that: - although the petitioner has a statutory remedy of an appeal against the Final Findings of the DA under Section 9C of the CTA before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), in view of the heavy pendency of such appeals it is unlikely that the CESTAT will be able to take up the appeal filed at an early date. His apprehension is that the appeal itself might be rendered infructuous - the above plea does not constitute a sufficient justification to permit the petitioner to bypass the statutory remedy of an appeal provided under the CTA. It would, however, be open to the petitioner to request the CESTAT, as and when an appeal is filed by it, to dispose of the appeal expeditiously and in any event not later than six months thereafter - petition dismissed.
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2016 (11) TMI 764
Seizure of three gold bars weighing one kilogram each and Indian currency of ₹ 1,10,00,000/- from the petitioner - Section 110(2) of the Customs Act - Held that: - It is beyond dispute that no notice under clause (a) of Section 124 of the Customs Act in respect of the seizure of the aforesaid goods was issued to the petitioner till date. There is also no case for the respondent that the period fixed for initiating proceedings under Section 124 of the Customs Act has been extended in the case of the petitioner as provided for under the proviso to Section 110(2) of the Customs Act - the writ petition is disposed of directing the respondent to return the goods seized from the petitioner as provided for under Section 110(2) of the Customs Act within one month from today. It is made clear that this judgment will not preclude the respondent from proceeding against the petitioner under the Customs Act, if he has violated any of the provisions therein.
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2016 (11) TMI 763
Provisional release of the cigarettes - Held that: - Considering the nature of allegations against the writ petitioners in the light of the orders passed by the above High Courts besides an order passed by the Hon’ble Supreme Court, we direct the petitioners to join investigation by appearing before the DRI officials every day between 11 AM to 5 PM from 15-6-2016 onwards. Respondents are directed not to take coercive steps against the writ petitioners. During the course of investigation of the petitioners, petitioners’ counsel is permitted to remain present at visible but not audible distance. A DRI official be present on the next date of hearing to inform the Court about the duty liability of the petitioners in respect of subject three Bills of Entry.
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2016 (11) TMI 762
Confiscation of baggage - Offence punishable under Section 135(1)(c)(ii) of the Customs Act, 1962 - foreign currencies kept in the bag belonging to the respondent - non-declared baggage - Held that: - import of foreign currencies equivalent to US Dollar up to 15,000 was permissible without declaration and for import exceeding said limit, declaration was required - since the import of foreign currencies into India exceeded the said ceiling of US Dollar 15,000, a declaration was necessary and the same having not been given by the respondent, penalty was imposed upon him while allowing him to redeem the said currencies by the said order. Thus, what emerges from this order admitted in evidence vide Exhibit-48 is that the respondent was permitted to redeem the said currencies subject to payment of some penalty and that the currencies were not declared liable to confiscation under Section 113 of the Customs Act. The currencies were not found to be fit for confiscation as provided under Section 113 of the Customs Act. Once it is found that the said currencies were not liable to confiscation, off`ence under Section 135(1)(c)(ii), which is to the effect that if any person attempts to export any goods, which are liable to confiscation under Section 113 of the Customs Act, he shall be liable to punishment of various terms of imprisonment mentioned in the Section, was also not established in this case. Offence punishable under Section 135(i)(c)(ii) is founded on an attempt to export those goods, currencies are goods, which are liable to confiscation under Section 113. If the very foundation of the said offence is taken away, the entire edifice of the prosecution case against the respondent must collapse and it was indeed brought down already by the order dated 26, 27-10-2005 vide Exhibit-48 passed by the Joint Secretary. If this is so, no fault could be found in the judgment and order impugned herein - appeal dismissed - decided in favor of respondent-assessee.
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2016 (11) TMI 761
Revocation of CHA license - forfeiture of security deposit - forgery of signature by employee of appellant of 2 Superintendent (Customs) in ICD Parparganj, New Delhi as well as the signature of Shri Satish Kumar, G-Card holder of the appellant - Held that: - It is an admitted fact on record that from the date of the offence report and passing of the impugned order, there is a gap of 340 days. With regard to the time limit, the CBLR mandates that the proceedings for revocation of license shall be completed within 270 days (9 months) from the date of receipt of offence report. With regard to the time limit, the Hon ble High Court in the case of Madras A.M. Ahamed & Co. vs. Commissioner of Customs (Imports), Chennai [2014 (9) TMI 237 - MADRAS HIGH COURT] have held that On the question that the first respondent is duty bound to initiate proceedings within 90 days from the date of receipt of offence report, there are no two opinions, at least before me. Therefore, the decision of the Division Bench of the Delhi High Court is of no assistance to the respondents. Since the impugned order was issued by the Commissioner without adhering to the time schedule prescribed in CBLR, we are of the view that the same is liable to be set aside. Accordingly, we set aside the impugned order dated 03.06.2016 of the Original Authority and allow the appeal in favour of the appellant.
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2016 (11) TMI 760
Confiscation of seized goods - 103 bags of zinc residue and 94 bags of iron scrap - non-production of documents for production of goods - Held that: - The expression any goods and smuggled goods in Section 123 (1) of the Customs Act, 1962, would indicate that it is required to be established that the seized goods are smuggled goods. In the present case, I do not find any material that the seized goods are smuggled goods except that the packing material are bearing the name of the factories of Nepal. Even, the Chemical Examiner's report would not indicate that the seized goods are smuggled goods. The findings of the lower authorities that the seized goods are smuggled goods merely on the basis of the packing material, cannot be accepted. The appellant categorically stated that he had purchased the material locally and the goods are freely available in the open market which was not disputed by the Revenue. The scrap being non-notified goods, smuggled nature of goods, are to be proved by the Revenue by producing affirmative and tangible evidence. The lower authorities proceeded on the basis of assumption and presumption that the goods were seized from Raxaul, which is near to Nepal cannot be basis for the confiscation of the goods. I find that the Tribunal in the case of Commr. of Customs (Prev.), Kolkata Vs. Manoranjan Banik [2003 (11) TMI 428 - CESTAT, kolkata] on an identical situation rejected the appeal filed by the Revenue. In that case, the seized goods were wrapped by foreign papers. The Hon’ble Supreme Court in the case of Collector of C.Ex., Vs. Decent Dyeing Company [1989 (12) TMI 164 - SUPREME COURT OF INDIA] in the context of Central Excise Law observed that burden to prove duty paid character of the goods is not on the purchaser or job worker but Department to prove non-payment of duty so as to deny concessional duty. Similarly, in the present case, the appellant purchased the non-notified goods locally, but Department to prove smuggled goods. Confiscation of the seized goods and imposition of penalty on the appellant cannot be sustained - appeal allowed.
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2016 (11) TMI 759
Onus of proving smuggled character of goods - import of cut betel nuts - proving the contraband or smuggled nature of the seized goods being notified u/s 123 of the Customs Act by the Department - Held that: - the betel nut imported by the respondents herein is a non-notified item and as such, the burden of proof is on the appellant-department to substantiate the allegation of illegal import with evidences. I find that there is no evidence to show that the goods are of foreign origin and had been imported illegally - reliance placed on the decision of the case of Commr. of Customs (Preventive) Vs. Dungarmal Mohata [2006 (5) TMI 92 - HIGH COURT AT CALCUTTA] where it was held that when at the time of inventory if the markings of the names of the foreign countries are not found, then the Revenue had failed to establish a case that the betel nuts are of foreign origin and smuggled into India. The allegation of findings of the presence of the Third Country Origin Mark is not found in the panchanama and also in the SCN or in the Order-in-Original. The Department has failed to establish that the said goods are of foreign origin - impugned order warrants no interference - appeals dismissed - decided against appellant-Department.
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2016 (11) TMI 758
Imposition of penalty u/s 112(a) and 114AA of the Customs Act, 1962 - Held that: - I find that the Section 114AA is applicable to an importer who uses incorrect or false materials in the transaction of the business, whereas Section 112(a) deals with abatement - In the present case, it is already an admitted fact that the appellant is an agent on commission basis between the foreign supplier and the Indian importer, and he himself is not an importer per se. Therefore, I find that the penalty under Section 114AA is not imposable since the appellant cannot be brought under the category of person who are liable to penalty. Therefore, I set aside the penalty imposed under Section 114AA of the Customs Act, 1962. Penalty u/s 112(a) - Held that: - The Commissioner (Appeals) has already recorded the fact that the appellant had no direct role in the customs clearance and did not signed any customs paper and had arranged duplicate invoice for lower value for importer without knowing the actual intention of the importer. But the offence committed by the appellant is punishable under Section 112(a) of the Customs Act, 1962 and since ignorance of law and/or being unaware of the intention of the importer is not a ground of excuse, I impose a penalty of ₹ 50,000/- under Section 112(a) and direct the Adjudicating Authority to appropriate the amount, paid by the appellant, towards the same. Appeal allowed - decided partly in favor of appellant.
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2016 (11) TMI 757
Project import - limitation bar - Held that: - L&T Ltd. had preferred an appeal against the confirmation of less charge demand before the first appellate authority beyond the period of 90 days from the date of receipt of the order-in-original by them. As per Section 128 of the Customs act, the first appellate authority has no power to condone the delay beyond the period of 30 days, on expiry of 60 days time granted for filing the appeal. In the case in hand, the appeal which has been rejected by the first appellate authority of L&T Ltd., is correct as the appeal has been filed beyond 90 days and there are no provisions to condone such delay beyond 90 days. Consequently, the appeal of L&T Ltd. before the Tribunal needs to be rejected and we do so. Benefit of concessional rate of duty - utilisation of imported articles for the purpose of substantial expansion of installed capacity - Held that: - FIL was never an aggrieved party before the authorities as the project was registered with the authorities by L&T Ltd. under the Project Regulations and L&T Ltd. gave an undertaking to file all the reconciliation of material consequent to execution of the project. At no stage of the entire proceedings, FIL was a party to the proceedings nor any demands were raised against them, nor any explanation was called from them in order to contest the issue on merits. By virtue of being the beneficiary of the project which was executed by L&T Ltd., FIL cannot walk into the shoes of L&T Ltd. as an appellant and contest the issue on merits. In our view, the appeal filed by FIL is liable to be dismissed summarily and we do so. Appeal dismissed - decided against appellant.
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2016 (11) TMI 756
Valuation - enhancement of value - drill bits of HSS nature - whether the drill bits imported by the appellant have to be considered as drill bits of HSS or otherwise? - Held that: - the drill bits which are analyzed do not conform to any specification of high speed steel and do not have the strength and hardness of high speed steel and the drill bits are of mild nature and made of alloy steel. Despite such a clear test report of the IIT, the adjudicating authority has held that the goods are liable for confiscation as they are of high speed steel. In our view, the adjudicating authority being not an expert in the matter of composition of the goods which has to be kept in mind while seeking the classification and the rate of duty, could not have gone beyond the report given by an expert engaged by department and that also by IIT, Mumbai. On this point itself, we find that the entire order of the adjudicating authority holding that the drill bits are of HSS nature and needs to be confiscated for misdeclaration of the description as well as the value, seems to be unsustainable and we hold it so. Violation of N/N. 1/64-Cus. - Held that: - the Notification 1/64 was not in conformity with the provisions of the Trade Marks Act, 1999; and another notification was subsequently issued in 2007 by the Government under Customs Act. Once the Act is repealed, the provisions of the said Act which has been borrowed by the Customs notification cannot be applied in the case in hand Appeal allowed - decided in favor of appellant.
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2016 (11) TMI 755
Demand of duty alongwith interest and penalty - import of 5.470 MT of alloys steel bars - mis-statement of the facts as DEPB was not actually debited - Whether the appellant is entitled for refund of duty paid or not? - Held that: - the amounts recovered from the appellant and CHA or their representatives against the bills of entry in question, shall be given due credit to the respective parties against the demand for basic excise duty from the date of recovery of the said amounts - No part of amount of duty so paid by them was attributable to the amount of fine and penalty against them in the instant case. As it is the fact on record that the duty confirmed against the appellant has already been recovered, in that circumstance and in view of the Hon'ble High Court's order, the amount is to be refunded to the appellant. Therefore, the demand of ₹ 1,27,350/- is set aside and the same is required to be refunded to the appellant. Whether the penalty can be imposed on the appellant or not? - Held that: - As the appellant was not vigilant at the time buying of DEPB scrips, and DEPB found to be fake or forged. In that circumstance, the penalty is imposable on the appellant. As the appellant has paid duty alongwith interest and the same was appropriated in the impugned order. In that circumstance, the penalty is restricted to 25% of the duty involved. Appeal disposed off.
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2016 (11) TMI 754
Smuggled goods - burden of proof - SS coils of grade 304 - some importers of Chennai are importing stainless steel coils under DEEC licence claiming the benefit of Customs Notification and diverting the same into local market for sale in violation of the conditions of Notification - whether the goods are smuggled goods? - Held that: - the documents issued by the dealers of the goods were produced before the lower authorities. The statement of the proprietor of the appellant also indicates that they are in the business of trading of SS coils and sheets, but they have never imported SS coils and sheets. Having not controverted the said purchases made by the appellant from the local dealers, we find the burden of proof has not been discharged by the departmental authorities that the goods were of smuggled nature and that they had been illicitly imported without payment of duty. As regards the claim of the lower authorities that the goods were of imported nature, we find that except for one coil, no markings were found on any of the coils, hence whether the seized goods were imported or otherwise is itself in doubt. In such a factual matrix, we find that the ratio of the judgment of the Hon’ble High Court of Bombay in the case of Aakash Enterprises [2006 (3) TMI 174 - HIGH COURT OF JUDICATURE AT BOMBAY] squarely covers the issue in favor of the appellant herein. Confiscation set aside - appeal allowed.
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2016 (11) TMI 753
DEPB scrip - fraudulent availment of DEPB scrip on the strength of forged shipping bills and BRCs - Held that: - M/s. Sun Chemicals has purchased the DEPB scrips from market. The said DEPB scrips were obtained by submitting forged shipping bills and BRCs to the office of DGFT by Shri R.C. Jain. Appellants have strongly relied on the decision of the Tribunal in the case of Sumit Wool Processors (2015 (10) TMI 329 - CESTAT MUMBAI). On the other hand, revenue has relied on the decision of Dow Agrosciences [2011 (5) TMI 677 - CESTAT, MUMBAI]. We find that in the case of Sumit Wool Processors the facts were that DEPB scrips were obtained by overvaluation of export goods. In the instant case, DEPB scrips have been obtained by submitting forged shipping bills to DGFT. The Tribunal in the case of Sumit Wool Processors has considered the decision of Dow Agrosciences and differentiated primarily on the ground that in the case of Dow Agrosciences the DEPB scrips was obtained as a result of racket of forgery of export documents which is not so in the case of Sumit Wool Processors. In the instant case, we find that the DEPB scrips have been obtained by forging the shipping bill and BRC and therefore, the decision of Sumit Wool Processors can be distinguished on that count. We find that in identical circumstances where DEPB scrips purchased by the importer appellants were obtained by using forged shipping bills/BRCs, the recovery of duty was upheld by the Tribunal in the case of Dow Agrosciences. The decision of the Tribunal in the case of Sumit Wool Processors cannot be applied as the facts in the instant case. However the decision of the Tribunal in the case of V.M. Tex P. Ltd, Dow Agrosciences are in identical situation and therefore, relying on these decisions, the appeal of Sun Chemicals is dismissed. Imposition of penalty on Shri R.C. Jain - Held that: - The role of Shri R.C. Jain is limited to submitting forged BRC/shipping bill before the DGFT and obtaining the DEPB scrips from DGFT. Ld. counsel for Shri R.C. Jain has relied on the decision of the Hon'ble High Court of Gujarat in the case of Shah Alloys [2010 (3) TMI 781 - GUJARAT HIGH COURT] where it was held that - penalty against Shri R.C. Jain cannot be sustained. Appeal allowed - decided in favor of appellant.
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Service Tax
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2016 (11) TMI 790
Pre-deposit - Section 35G of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 - Held that: - As far as the present appeal is concerned, the learned counsel for the Appellant is unable to convince the Court why the Appellant, which is located in Bhilai in Chhattisgarh, and with the order in adjudication having been passed by the Respondent i.e. the Commissioner Service Tax at Raipur in Chhattisgarh, is precluded from filing an appeal before the High Court at Chhattisgarh against the order of the CESTAT. - Consequently, the Court declines to exercise its jurisdiction to entertain the present appeal. The Appellant is at liberty to approach the appropriate Court to avail the remedy available to it in accordance with law. Appeal not maintainable and is disposed off.
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2016 (11) TMI 789
Valuation - photographic service - the value of the material used, while providing the said services, required to be added in the assessable value of the services - period of limitation - Held that: - the demand is admittedly beyond the normal period of limitation except a part, in one case, by following the decision of the case CCE Vs. Centre Point Colour Lab [2011 (9) TMI 269 - CESTAT, NEW DELHI] where it was held that the value of services in relation to photography would be the gross amount charged including the cost of goods and material used and consumed in the course of such services - we set aside the impugned orders and remand the matter to the original adjudicating authority for requantification of the demand, if any falling within the limitation period. The issue was not free from doubt and there is no malafide on the part of the appellant, imposition of any penalty upon them is not justified. Appeal disposed off - decided in favor of appellant.
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2016 (11) TMI 788
Discharge of tax liability - GTA service performed by a society of Chhattisgarh State, statutory body performing statutory functions - Held that: - The circular No. 89/7/2006-ST dated 18.12.2006, has observed that the activities performed by Sovereign/ Public Authorities under the provisions of law are in the nature of Statutory Obligations and are being undertaken as mandatory and statutory functions. They are not in the nature of services to any particular individual for any consideration and as such, they do not constitute taxable service and no service tax would be leviable on the same. Admittedly, the authority is a Government State Body assisting the farmers in procuring their produce under minimum retail price and assisting the farmers for sale of their produce. The clarification issued by Board to the above fact is a sufficient reason for the appellant, who were performing their statutory duties, to entertain the bonafide belief that they were not liable to Service Tax. Otherwise also, I find that in the absence of any evidence to reflect upon any positive suppression or mis-statement with an intent to evade payment of duty longer period of limitation would not be available to the Revenue. Penalty set aside - Service Tax as also the interest stand confirmed against the assessee as not being challenged - appeal disposed off - decided partly in favor of appellant.
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2016 (11) TMI 787
Mis-declaration of value of service - the Adjudicating Authority confirmed and appropriated ₹ 23,07,385/- alongwith interest of ₹ 8,68,576/- and imposed penalty of ₹ 9,67,373/- under Section 78 of the Finance Act, 1994 and gave option to the appellant to pay 25% within 30 days of the receipt of the Order-in-Original - Held that: - there was no intention of misdeclaring the value of taxable services in the return. That it being a proprietary concern and due to lack of professional guidance the error had unfortunately occurred. That whatever discrepancy was pointed out by the department, the assessee did not dispute the tax liability and started paying the taxes and maximum amount was paid much before the issuance of the show cause notice and an amount of ₹ 8,68,576/- was also paid as interest under Section 75 of the Finance Act, for the delay in paying service tax amount. Further, he submits that the option given by the Adjudicating Authority was exercised and 25% of the penalty amount of ₹ 9,67,373/- imposed under Section 78 was also paid to put the entire dispute at rest and to purchase peace of mind. In this appeal, there is no material shown by the department as to how the option given to the respondent is erroneous. In my considered view, the Commissioner (Appeal) is correct in rejecting the appeal filed by the department and there is no reason to deviate from the said order - appeal rejected - decided in favor of Department.
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2016 (11) TMI 786
Rectification of Mistake - expense of the membership of the Club has been booked under the head of “Staff Welfare Expenses” and therefore, credit of same should not be allowed - Held that: - I find that the only ground on which the rectification has been sought is that the expenditure undertaken on the services of Club Membership of the Director was booked under ‘Staff Welfare Expenses’ under Schedule 17 of the Profit and Loss Account. I find that the order of the Tribunal is very clear in this regard and clearly holds that the membership of the Business Club is indirect related to the promotion of business of the appellant. In view of this, it cannot be said that there is no nexus between the services availed and the manufacture of goods irrespective of the head under which the said expenses is booked in the balance sheet - ROM application dismissed
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2016 (11) TMI 785
Levy of service tax on accrual basis - transaction with associated persons - when the debit/credit entry was made in the account in terms of Rule 6 of Service Tax Rules, 1994 - Held that: - I find that the issue is revenue neutral, in so far as the Service Tax paid by the appellant is available as credit to them. The issue is of interpretation. In these circumstances, no motives can be alleged and therefore, extended period of limitation cannot be invoked. In view of the above, the appeal is allowed.
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2016 (11) TMI 784
Time Bar - “Maintenance and Repair Services” - issuance of SCN - period of limitation - Held that: - appellant had discharged the Service Tax liability for the earlier period and for the subsequent period accepting that he is liable to pay the Service Tax on the amount received from their clients - The contention of the appellant that quarterly returns are to be filed is erroneous since the quarterly returns were replaced by Half-yearly returns with effect from 16.10.1998, vide notification 57/1998 S.T. dated 07.10.1998. Accordingly, there was time to issue the instant show-cause notice upto 25.04.2009; whereas the instant show-cause notice was issued on 20.04.2009. Therefore, it is clearly evident the show-cause notice was validly issued and cannot be termed as time-barred in respect of any portion covered by it - appeal rejected - decided against assessee.
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Central Excise
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2016 (11) TMI 783
Clandestine removal of manufactured goods - M.S. ERW Black Pipe & M.S. Scrap falling under chapter sub-heading No.7306.90 & 7204.90 of Central Excise Tariff Act, 1985 - Held that: - reliance placed on the decision of the case of Umiya Chem Intermediate vs. Commissioner of C.Ex. & Cus [2008 (7) TMI 376 - AHMEDABAD HIGH COURT], where the issue is similar - it was held in the case that when there is proper appreciation of evidence on record on the basis of the incriminating documents found in the premises of Appellant and statements recorded and evidence of shortage of material clearly establishes clandestine removal of excisable goods - I find that the above decision is clearly applicable to the facts of the case in hand since the documents seized from the Appellant's premises are corroborating with the set of challans used in the removal of goods without payment of duty and the statements recorded also proves the mala fide act and intention of the Appellant. The demand of ₹ 30,725/-(Rupees Thirty Thousand Seven Hundred and Twenty Five only) on the stock found short is overlapping and it is inclusive of the total demand raised. On this limited portion alone, I remand the matter to the Adjudicating Authority to verify the same with the records. On the basis of the above findings I uphold the impugned Order-in-Appeal except to the limited portion remanded. Appeal is disposed of accordingly
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2016 (11) TMI 782
Denial of CENVAT credit - clandestinely removal - issuance of Cenvatable invoices enabling to the another appellant to avail in admissible Cenvat Credit without supplying the goods - Held that: - the appellant filed certain documents to prove the facts that they have physically received the goods against the invoices issued by the M/s Majtic Industries Ltd. but the adjudicating authority as well as the Ld. Commissioner (Appeals) has brushed aside the submissions made by the appellants and passed an order hurriedly without considering the submissions. In these circumstances, the order passed by authority below has not leg to stand. Therefore, same is set aside and matter is remanded back to the adjudicating authority to pass a legal and appropriate order as par the direction of the order of this Tribunal on 22.09.2008 after considering the reply filed by the appellant along with documents within period of 90 days of receipt of this order after affording reasonable opportunity of being heard to the appellant. If the adjudicating authority failed to consider the replies filed by the appellants with documentary evidence the proceeding against the appellants shall be vacated - appeal allowed by way of remand.
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2016 (11) TMI 781
Process amounting to manufacture - supply of carline and body side pillar - the activity of Punching, Notching, Bending in case of carline as well as edge bending in case of Body Side Pillars - job work - Held that: - after doing Punching, Notching, Bending out of the raw material namely blank supplied by Rail Coach Factory and that can be used as part of the Rail Coach Factory. Therefore, on merits, we find that the activity undertaken by the appellant amounts to manufacture. On the basis of that clarification, it is doubtful whether the activity undertaken by the appellant amounts to manufacture or not. In that circumstance, the benefit of doubt goes in favour of the appellant. Consequently, we hold that the extended period of is not invokable as the show cause notice was issued in this case on 3.1.2002 by invoking the extended period of limitation for the period 1996-1997. In that circumstance, the show cause notice is barred by limitation. We further find that if the extended period is to be taken into account then also some art of the period five years. As we have already held that the extended period of limitation is not invokable, in the circumstances the impugned order is set aside and the appeal is allowed with consequential relief, if any.
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2016 (11) TMI 780
Opting out of Compounded Levy Scheme - demand of duty alongwith interest and penalty - conversion of cold rolled stainless steel patti/patta from hot rolled stainless steel patti/patta - Held that: - reliance placed on the decision of the case [2015 (12) TMI 743 - SUPREME COURT] where it was held that the process of cold rolled steel from hot rolled steel amounts to manufacture - the activity undertaken by the appellant amounts to manufacture. In that circumstance, the appellant is liable to pay duty alongwith applicable interest during the impugned period. Invocation of extended period of limitation - Held that: - The appellant has stopped paying duty with effect from 1.4.2000 till 31.3.2001 and no reason has been stated by the appellant why they stopped paying duty. Moreover the intention of the appellant to suppress the facts is made clear from their act of filing nil ER-I returns. As the appellant has suppressed their clearance of cold rolled steel patta and patti from the department by showing nil ER-I returns and from 1.1.2002, the appellant has resumed paying duty on their activity by understanding that their activity amounts to manufacture, In that circumstance, we hold that the adjudicating authority has rightly invoked the extended period of limitation. Appeal dismissed - decided against appellant.
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2016 (11) TMI 779
CENVAT credit - job work - GTA service - benefit of N/N. 214/86 - outward transportation of goods from the place of removal, which is their factory - Held that: - There is no difference between the inputs and input services credit and the issue being the same i.e. clearance of goods for job work in terms of N/N. 214/86-CE, the denial of credit, whether it be on inputs or on input services, cannot be upheld. As regards the credit in respect of outward transportation I find that the issue is covered by the Hon’ble High Court of Karnataka in the case of ABB Ltd [2011 (3) TMI 248 - KARNATAKA HIGH COURT] for the period upto 01.04.2008. Thereafter there was an amendment in the definition of input services. The lower authorities would examine the effect of the amendment and would re-decide the issue accordingly for the period after 01.04.2008. As such till the said period, the demand raised against the assessee is set aside and for the period subsequent to same is remanded for fresh decision. Appeal allowed - matter on remand - decided partly in favor of appellant.
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2016 (11) TMI 778
Refund claim - Held that: - Since the appellant has not contested the demand raised in the show-cause notice dated 4.9.1996, which has attained finality, filing refund claim before the lower authorities stating that the demand in the show-cause notice included wrongly an amount of ₹ 11,12,503/- is an unacceptable proposition by any stretch of imagination - appeal rejected - decided in favor of Revenue.
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2016 (11) TMI 777
Refund claim - unutilized cenvat credit of ₹ 10,37,599/- lying in cenvat credit account - closure of factory - Held that: - the issue in hand is squarely covered by the judgments cited and relied upon by the Revenue in the case of Steel Strips Vs. C.CE., Ludhiana [2011 (5) TMI 111 - CESTAT, NEW DELHI] where it was held that Law has only recognized the event of export of goods for refund of Modvat credit, as has been rightly pleaded by revenue and present reference is neither the case of "otherwise due" of the refund nor the case of exported goods. Similarly, absence of express grant in statute does not imply ipso facto entitlement to refund. So also absence of express grant is an implied bar for refund. When right to refund does not accrue under law, claim thereof is inconceivable The appellants are not entitled to refund in cash of the cenvat credit lying unutilized in their books of account - appeal dismissed.
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2016 (11) TMI 776
Reversal of cenvat credit - imposition of penalty on the assessee 25% of the Cenvat Credit reversed and penalty of ₹ 25000/- on the manager - total liability of duty exceeding SSI limit - Held that: - In this case, during the course of investigation, certain inputs were found short. The revenue has presumed that these inputs have been used in manufacturing of final product. The Revenue has not adduced any evidence that these inputs have been used in manufacturing of final product and final product has been cleared by been produced by the Revenue, therefore, duty cannot be demanded, merely, on presumption. In that circumstance, I do not find any infirmity in the impugned order. The same is upheld qua holding that reversal of cenvat credit is sufficient in this case - With regard to the penalty imposed on the assessee and its manager, I find that its case of shortage of inputs which was detected during the course of investigation and the same has not been disputed by the assessee. In that circumstances, penalty is rightly imposed on the assessee and its manager, therefore, for the imposition of penalty, I do not find any infirmity in the impugned order. The same is upheld - appeal dismissed - imposition of penalty upheld.
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2016 (11) TMI 775
Demand - maintenance of separate records in respect of receipt, Consumption and inventory of Furnace oil used in the manufacture of dutiable final products and exempted final products i.e. Maaza as per Rule 6(2) of the Cenvat Credit Rules, 2004 - whether under Rule 6(3)(b) of the Credit Rules, the respondent is required to pay 10% of the total price of the exempted goods clear by them? - Held that: - the contention of the respondent throughout the investigation is that they are not availing cenvat credit on furnace oil used in manufacture of exempted final product as per formula calculated by them. This fact has not been contraverted by the Revenue with any tangible evidence, moreover, the Ld. Commissioner (A) has held that during the proceedings have observed that the respondent is not availing the cenvat credit on furnace oil used in manufacture of final exempted product as per the formula and dropped the proceedings. In that circumstance, reliance placed on the decision of Cadila Healthcare Ltd. [2009 (8) TMI 892 - CESTAT AHMEDABAD] where it was held that no credit stand taken in respect of that part of dutiable furnace oil which has been used in the manufacture of exempted products. The demand at the rate of 10% of value of such exempted products is not called for. Demand not sustainable - appeal dismissed - decided against Revenue.
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2016 (11) TMI 774
Denial of cenvat credit - certain items used in the fabrication of storage tanks, platforms and pipelines - availment of the cenvat credit on these items used in the manufacture of exempted capital goods under N/N. 67/95-CE dated 16.03.1995 - Held that: - The Ld. Counsel during the course of arguments have produced Chartered Engineer certificate/report which has been issued after examining the storage tank installed in the factory premises of the appellant and that Chartered Engineer report is self explanatory for usage of the items but the same has not been placed before the adjudicating authority for consideration but placed before us. In that circumstances, it would be in the interest of justice to remand matter back to the adjudicating authority for denovo consideration of the issue to entitlement of the cenvat credit on steel items which is claimed by the appellant to be used in fabrication of storage tank etc. - appeal disposed off - matter on remand.
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2016 (11) TMI 773
Valuation - related party - clearance of goods to sister unit - payment of duty as per Rule 8 of the Valuation Rules, 2008 - Held that: - the appellants are clearing the goods not only to their sister unit but to independent buyers and paying duty on the clearance to their sister unit on the value at which the clearance made to independent buyers - reliance paced on the decision of the case of ISPAT INDUSTRIES LTD. Versus COMMISSIONER OF C. EX., RAIGAD [2007 (2) TMI 5 - CESTAT, MUMBAI] where it was held that the provisions of Rule 8 of the Valuation Rules will not apply in a case where some part of the production is cleared to independent buyers - the provisions of Rule 4 are in any case to be preferred over the provisions of Rule 8 not only for the reason that they occur first in the sequential order of the Valuation Rules but also for the reason that in a case where both the rules are applicable, the application of Rule 4 will lead to a determination of a value which will be more consistent and in accordance with the parent statutory provisions of Section 4 of the Central Excise Act, 1944. Appeal allowed - decided in favor of appellant.
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2016 (11) TMI 772
Reversal of CENVAT credit - consumable including furnace oil - furnace oil used in the manufacture of dutiable goods as well as final exempted goods cleared by availing the N/N. 04/97 and N/N. 5/98 - Whether credit of duty is admissible to the inputs in the present case in terms of erstwhile Rule 57C and 57CC of Central Excise Rules, 1944, used in both dutiable as well as exempted goods when no separate account has been maintained nor 8% duty reversed in respect of clearances of exempted goods? - Held that: - we find that the similar issue came up before the Hon'ble Punjab and Haryana High Court in the case of Super Auto (I) Ltd. [2007 (10) TMI 23 - HIGH COURT, PUNJAB AND HARYANA] where it was held that the credit on furnace oil which was used as fuel is not required to be reversed - As the issue has already been settled in favour of the appellant, therefore, we hold that the furnace oil used as fuel by the appellant for manufacture of dutiable as well as exempted final products, the appellant is not required to be reversed credit availed on furnace oil which has been used as fuel. Appeal allowed.
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2016 (11) TMI 771
CENVAT credit - recovery - documents on which the credit availed were irregular - Held that: - I find that the documents/evidences enclosed with the paper book on which CENVAT Credit is denied, do not inspire confidence about its genuineness, in particular, the figures entered in hand However, it also cannot be out rightly rejected that premiums have not been paid nor suffered service tax as mentioned against these documents. In my view, all these facts need to be verified with collateral/corroborative evidences. Therefore, in the circumstances, it is prudent to remand the matter to the Adjudicating authority to ascertain the correctness of these documents and entries made therein with other corroborative evidences that would be produced by the Appellant during the course of proceedings, while determining the eligibility of CENVAT Credit on such input services. All issues are kept open. Needless to mention that a reasonable opportunity of hearing be extended to the Appellant before passing the order - Appeal allowed by way of remand.
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2016 (11) TMI 770
Classification of goods - HDPE stripes/tapes is subject to classification under CETH 3920.32 - Penalty - benefit of notification No.221/86 and 217/86 whether is admissible to appellant? - Held that: - he final products should be stripes and like of synthetic textile material falling under CETH 5406.90. But the goods manufactured by the appellant was falling CETH 3920.32 relying on the decision of the Madhya Pradesh High Court as stated above. In para-15 of the order, the authority has recorded that the said notification relates to captive consumption for which that is not available to input viz. HDPE tapes since the final product of the appellant was HDPE fabrics. Accordingly, on merit, there is no scope to grant any relief to the appellant. When the gravity of the matter is looked into, there shall be penalty under Rule 173Q of Central Excise Rules, 1944 since clandestine removal was established. Further, the quantum of penalty imposed appears to be on a higher side in absence of mens rea being brought on record. Therefore, the penalty of ₹ 2 lakhs imposed under that Rule is reduced to ₹ 1,00,000/- In so far as penalty of ₹ 2 lakhs and ₹ 1 lakh imposed respectively on Shri S.R. Selvaraj, Managing Partner and Shri G. Sugumar, Manager is concerned, there was an established case of clandestine removal of excisable goods unaccounted. Therefore, imposition of penalties on both the persons who were instrumental to the clandestine removal is confirmed. In so far as penalty of ₹ 10,000/- each on the four partners are concerned, it appears that the firm having suffered penalty as above under Rule 173Q, there shall be no penalty on these partners - appeals allowed. Appeals disposed off.
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2016 (11) TMI 769
SSI exemption - use of brand name of others - Whether the identification mark put on the goods by the assessee shall be treated as trade name or brand name of others or not? - Held that: - This is a fact base case and buyers of the goods have filed affidavits stating that the goods purchased from the respondent having identification mark but these identifications marks are not their trade name or brand name. The identification marks are not the trade name or brand name of the buyers, in that instant case, we hold that the respondent is not manufacturing the goods having the brand name of others. Therefore, the respondent is entitled to avail the benefit of SSI exemption notification. Appeal dismissed - decided against Revenue.
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2016 (11) TMI 768
Benefit of N/N. 214/86 - job work - principal manufacturer not paid duty on job work goods - Held that: - as per N/N. 214/86, the job worker is entitled to clear the goods without payment of duty, in case duty has been paid by the principal manufacturer. The sole ground for denial of the benefit of N/N. 214/86 to the respondent by the Revenue is that the principal manufacturer has not paid duty. In fact, as principal manufacturer has exported the goods under bond which means that duty is leviable on such goods but is not being paid for reasons of export, therefore, we hold that department has not understood the N/N. 214/86 in its true spirit. As the Ld. Commissioner (A) has properly examined the issue as recorded above, we do not find any infirmity in the said order - respondent is entitled for benefit of N/N. 214/86 - appeal dismissed - decided against Revenue.
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2016 (11) TMI 767
Classification of par boiling machinery - classifiable under chapter heading 84.37 of Central Excise Tariff or under chapter heading 84.19? - Held that: - When we look at the two clarifications issued by the Board dated 19.5.2010 and the subsequent clarification dated 15.5.2014, we find that initially the Board had suggested classification of the par boiling machine under 84 7 considering it as a part of rice milling machinery. However, subsequent to the decision of the Tribunal in the case of Jyoti Sales Corporation vs. CCE, Panchkula [2011 (3) TMI 1317 - CESTAT, NEW DELHI] , in which the classification of such machines were made under 8419, the Board has revised its guideline and as suggested classification of such machines under 8419. In any case we are of the view that this is the classification which would be most appropriate for par boiling machines and/or driers manufactured and cleared from a factory. Admittedly heading 8419 is a heading specific to the function performed by a particular heading. The same does not refer to the industry specific machine, but is relatable to function specific m chines. If the classification is to be adopted, as contested by the assessee, on the basis of industry specific (like in the present case rice industry) then the machines which stand specifically cover d under the said heading 84.19, would get shifted to the other heading dependent upon the industry in which they are to be used, ty us making the said entry as redunt and frivolous. It is well settled principal of law that an interpretation which renders an entry otiose has to be avoided. As such, when viewed from this angle also, we get affirmed in our opinion of the par-boiling machine falling under heading 84.19. Principles of interpretation - in terms of again, the well settled principle of interpretation, an item is required to be assessed, in the form, in which the same is cleared from the manufacturers factory and not on the basis of its future use, after clearance, unless it is the requirement of the entry. As such, we note that the par-boiling machine, when examined and assessed independently satisfies all the specification of heading 84.19, thus making it compulsorily to fall under heading 84.19.
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2016 (11) TMI 766
Classification of plywood laminated with plasticized paper during 01.07.2004 to 28.02.2005 - classified under sub heading No. 4410.90 or sub heading No. 4412.99.10 or under CETH 4408.90 - Held that: - the issue is no longer res integra - reliance placed on the decision of the case of Galaxy Plywood Inds. P. Ltd Vs. Commr. of C Ex., Panchkula [2016 (2) TMI 218 - CESTAT NEW DELHI] where it was held that The chapter heading 44.08 specifically speaks about plywood, veneered panels and similar laminated wood. Whereas, the chapter heading 44.10 speaks about articles of wood not elsewhere specified. Undeniably, the impugned product does not fall into ‘article of wood’. So the product which is plasticized plywood is classifiable under chapter 44.08 only. Following the judgment relied upon by the Revenue, which relates to identical product during the same period, we hold that the impugned goods, namely, plywood laminated with plasticized paper are correctly classifiable under Chapter Heading 44.08 of the erstwhile first schedule to CETA 1985 - appeal allowed - decided in favor of Revenue.
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CST, VAT & Sales Tax
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2016 (11) TMI 752
Revision of assessments - sale of food grains on commission basis - inter-State sales - Held that: - there is no inviolable condition that the dispatch must be made within three days. If this conclusion of the Tribunal be correct, it would be all the more important and of relevance for an exercise being undertaken by the assessing authority to identify and bifurcate those transactions in which supplies have been made within three days. More fundamentally, this Court notes that although the order of remand was in respect of transactions held to be inter state sales, the assessing authority has reopened the assessment and also added two additional items while computing additional tax liability. Both these issues in the opinion of this Court warrant a reconsideration of the matter by the Tribunal. This would be required not just in respect of the issue of bifurcation of items as noted above but also in respect of the question whether the assessing authority was justified in addition of two items while computing the liability of the revisionist - revision allowed - matter remanded to the Tribunal for a decision afresh.
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2016 (11) TMI 751
Vires of Section 42(4) and 42(5) of U.P. Value Added Tax Act, 2008 - Validity of Rule 70(5) of U.P. Value Added Tax Rules, 2008 - Provincial Tax under Section 54(1)(1) - late payment of tax - imposition of penalty - eligibility certificate under Section 4-A of U.P. Trade Tax Act, 1948 - petitioner was entitled to avail aforesaid exemption up to 15.02.2010 or till the amount of exemption of tax reaches to the extent of ₹ 959,51,76,417/-, which ever is earlier - compliance of deposit of net tax to which petitioners were entitled for exemption with regard to period of January 2008 to June 2008 was practically impossible for the reason that Section 42 for the first time making such different procedure came to be enacted on 16.07.2008 and relevant rule came to be enacted on 30.01.2009 by which date time for deposit of tax along with return had already elapsed. Held that: - When issues of a statute is challenged, Court presumes constitutionality unless shown otherwise but presumption cannot go to uphold a provision whereof compliance is impossible by any person and still that statute hold one guilty and further liable of penalty and other dues for non compliance. The above doctrine and also exposition of law that a statute cannot require performance of something which is impossible and places a burden upon a person for no fault of him has also been considered in M/s. D.C.M. Ltd. and others Vs. State of U.P. And others Writ C No. 9513 of 1989 - In view of above exposition of law, when we look into the amended Rule 70(5) of Rule, 2008 as substituted by U.P. VAT (First Amendment) Rules, 2009, we find that rule framing authority, while framing a rule and enforcing the same on 30.01.2009, has required concerned units to deposit tax and submit return between July 2008 to December 2008 which is ex-facie irrational, unreasonable and improbable. When information by way of framing Rules is being given on 30.01.2009, no one can be expected to comply in retrospect i.e. during July 2008 to December 2008. In our view, Sub-rule (5) of Rule 70 as substituted by U.P. VAT (First Amendment) Rules, 2009 in Rules, 2008 is apparently irrational, arbitrary, illegal and unreasonable, hence violative of Article 14 of the Constitution. We have no hesitation in striking down the same, being wholly illegal, absurd, unfair and unreasonable, thus, violative of Article 14 of the Constitution. Consequently, sub-rules (7) to (11) of Rule 70 in respect of net tax of January 2008 to June 2008 would render inoperative for the reason that they would come into operation only when a valid sub-Rule (5) is in existence but when we strike down sub-rule (5), consequences provided under sub-rule (7) of Rule 70 also cannot be complied. Therefore, the same would become inoperative till a valid provision providing a rational procedure for compliance under Section 42(4)(d) is made by competent rule framing authority. Since dispute relates to deposit of tax from January 2008 to June 2008 and sufficient period had already elapsed since then, in order to mitigate and avoid any further scope of litigation and in the interest of both the parties, we provide and permit petitioners to deposit requisite amount of tax along with return within two months from today,if not already deposited, and if the said direction is complied with, respondent tax authorities shall treat said deposit and submission of return as due compliance of requirement of Section 42(4)(d) of Act, 2008 as amended by Amendment Act, 2008 and proceed accordingly for the purpose of refund of tax as provided under amended Section 42(5). If deposit has already been made, the same shall be treated as a deposit of tax in time then respondents shall proceed accordingly. Petition disposed off - decided partly in favor of petitioner.
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2016 (11) TMI 750
Scope and extent of Sec.49A of the Kerala General Sales Tax Act and Sec.79A of the Kerala Value Added Tax Act - Attachment of property - realisation of decree amount - violation of Order XXI Rule 46 of the Code of Civil Procedure and Sec.49A of the Kerala General Sales Tax Act - Held that: - the amount collected as tax cannot be attached in execution of the decree or otherwise in view of the bar imposed under Sec.49A of the Kerala General Sales Tax Act and Sec.79A of the Kerala Value Added Tax Act - the impugned order passed in violation of Sec.49A of the Kerala General Sales Tax Act and Sec.79A of the Kerala Value Added Tax Act - attachment of property set aside - petition allowed - decided in favor of petitioner.
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2016 (11) TMI 749
Condonation of delay in filing appeal - pre-deposit - father's ill health, prevented petitioner from taking any action and it is only when the petitioner s Bank Account was attached for recovery of the tax and penalty, the petitioner had taken action - Held that: - For the Appeal to be entertained by the Appellate Authority, the mandatory pre-deposit of payment of 25% of the disputed tax has to be made. There is nothing to show that the petitioner has effected 25% payment. However, this Court is of the view that the petitioner should not be left without any remedy especially when he has been put to difficult circumstances on account of certain personal problem - the petitioner is directed to pay 50% of the disputed tax, within a period of four weeks from the date of receipt of a copy of this order - petition disposed off.
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2016 (11) TMI 748
Detention of goods - the goods are transported from Chennai to Madhya Pradesh and the amount quoted in the invoice and in the transit pass were not relevant to each other and the value of the invoice was more than the transit pass value i.e. three times - Form LL - payment of 'one time tax' - Held that: - the entire proceedings are out of total non-application of mind. The petitioner has clearly explained as to why the consignment covered in the single invoice was split up into three. The respondent has not disputed the fact that two of the consignments have already moved from the State of Tamil Nadu and so far as the impugned consignment is concerned, it was accompanied by proper documents and the explanation given by the petitioner for the variation in the quantity was reasonable and there is nothing on record to show that the said explanation was false. The Invoice Number in the Form LL, has been correctly shown. Therefore, there is absolutely no ground for detaining the cargo or issuing the Detention Notice or compelling the petitioner to compound, especially when no offence had been committed by the petitioner. Hence, it is held that the impugned Detention Notice is wholly without jurisdiction and illegal. The impugned detention notice is quashed and the petitioner is given liberty to approach the Assessing Officer to adjust the 'one time tax' paid by the petitioner as against their regular tax dues - petition allowed - decided in favor of petitioner.
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