TMI Tax Updates - e-Newsletter
November 7, 2017

Case Laws in this Newsletter:

Income Tax Customs Service Tax Central Excise Indian Laws

Highlights / Catch Notes

• Income Tax:

  Furnishing of Report in respect of an International Group - New Rule 10DB
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• Income Tax:

  Information and documents to be kept and maintained under proviso to sub-section (1) of section 92D and to be furnished in terms of sub-section (4) of section 92D. - New Rule 10DA
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• Income Tax:

  Reopening of assessment - AO was entitled to exercise his powers u/s 148, as there was no opportunity to verify the transactions claimed to have made in those years. Therefore, it is not a case of change of opinion. - HC
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• Income Tax:

  Deemed dividend u/s 2(22)(e) - receipt of advance against agreement to sale the property to the company - subsequently agreement was cancelled due to fall in market price - so called ‘fall in market value of property and subsequent change in circumstances’ would not have come in the way of alleged sale transaction of the subject property. - additions confirmed.
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• Income Tax:

  Unexplained cash credit - Since the matching assets shown in the balance sheet, the money has come into the firm in the name of Pushkara, assessee is duty bound to explain the source with identification, genuineness and credit worthiness of the capital contributor - additions confirmed.
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• DTAA:

  DTAA with New Zealand - ASSISTANCE IN THE COLLECTION OF TAXES - New Article 26A
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• DTAA:

  DTAA with New Zealand - Exchange of information - Article 26 as amended.
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• DTAA:

  DTAA with Slovenia - ASSISTANCE IN THE COLLECTION OF TAXES - New Article 27 w.e.f. 1.3.2017
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• DTAA:

  DTAA with Slovenia - Exchange of information - Article 26 as amended w.e.f. 1.3.2017
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• DGFT:

  Prohibition on direct or indirect import and export from/to Democratic People's Republic of Korea (DPRK) - Para no. 2.17 of the Foreign Trade Policy as amended.
  Visit to Get Source

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• DGFT:

  Export and Import of goods / Import of second hand goods under EOU, EHTS, STP, BTP schemes - Para 6.01 and 6.02 of Foreign Trade Policy (FTP) aligned with GST / IGST
  Visit to Get Source

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• DGFT:

  EXPORT PROMOTION CAPITAL GOODS (EPCG) SCHEME - Indigenous Sourcing of Capital Goods and benefits to Domestic Supplier - Para 5.01 and 5.07 of Foreign Trade Policy (FTP) aligned with GST / IGST
  Visit to Get Source

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• DGFT:

  Details of Duties exempted - Import / Export under DUTY EXEMPTION / REMISSION SCHEMES - Para no. 4.14 of Foreign Trade Policy (FTP) aligned with GST / IGST
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• PMLA:

  In case the officially valid document presented by a foreign national does not contain the details of address, in such case the documents issued by the Government departments of foreign jurisdictions and letter issued by the Foreign Embassy or Mission in India shall be accepted as proof of address - PMLA
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• PMLA:

  Client Due Diligence - liability of Every reporting entity to get and verify the identity of the client - Rule 9 of PML (MAINTENANCE OF RECORDS) RULES, 2005 as amended
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• Service Tax:

  All the capital goods were used in the shopping mall to facilitate the shop owners for operation of the mall, who have been given the shops on rent by the appellant. Therefore all these capital goods were directly used by the appellant for providing output service i.e. renting of immovable property service - cenvat credit allowed.
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• Service Tax:

  Erection, commissioning and installation service - sub-contract - double taxation - If the argument of the appellant is accepted then every provision of services to another taxable service provider would not be liable to payment of service. This situation can only lead to chaos.
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• Service Tax:

  Intellectual property rights service - the payment made to Vemmar SRL, Itay cannot be considered as share of its profit of the joint venture - since the services are being provided outside India, recipient is liable to tax.
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• Central Excise:

  Clandestine removal - merely on the basis of statement of employees it cannot be concluded that the imported raw material has not been used in manufacture by the Appellant.
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Articles

• GST ON SOCIETY CHARGES
• WHETHER A post facto COMPLIANCE WILL CURE THE PROCEEDING?
• GST on Education Services

Notifications

• Companies Law

• F. No. 01/12/2009-CL-I (Vol.IV) - dated 3-11-2017 - Co. Law
  Designation of Special Court

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• Customs

• 104/2017 - dated 6-11-2017 - Cus (NT)
  Amendment in Notification No. 103/2017-CUSTOMS (N.T.), dated 2nd November, 2017

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• GST - States

• 01-U/2017 - dated 28-10-2017 - Karnataka SGST
  Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A.

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• 01-T/2017 - dated 28-10-2017 - Karnataka SGST
  Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 117.

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• 01-S/2017 - dated 28-10-2017 - Karnataka SGST
  Extension of time limit for submitting application in FORM GST REG-26.

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• 01-R/2017 - dated 28-10-2017 - Karnataka SGST
  Extension of time limit for intimation of details of stock in FORM GST CMP-03

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• 40/2017 - dated 23-10-2017 - Karnataka SGST
  Seeks to prescribe State Tax rate of 0.05% on intra-State supply of taxable goods by a registered supplier to a registered recipient for export subject to specified conditions.

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• 39/2017 - dated 17-10-2017 - Karnataka SGST
  Seeks to reduce GST rate on Food preparations put up in unit containers and intended for free distribution to economically weaker sections of the society under a programme duly approved by the Central Government or any State Government.

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• 38/2017 - dated 13-10-2017 - Karnataka SGST
  Amendment in the Notification No.(08/2017)FD 48 CSL 2017, dated the 29th June, 2017 Seeks to exempt payment of tax under section 9(4) of the KGST Act, 2017 till 31.03.2017.

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• 37/2017 - dated 13-10-2017 - Karnataka SGST
  Seeks to prescribe State Tax rate on the leasing of motor vehicles.

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• 36/2017 - dated 13-10-2017 - Karnataka SGST
  Amendments in the Notification No. (4/2017) No. FD 48 CSL 2017 dated the 29th June, 2017.

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• 35/2017 - dated 13-10-2017 - Karnataka SGST
  Amendments in the Notification No. (2/2017) FD 48 CSL 2017, dated the 29th June, 2017.

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• 34/2017 - dated 13-10-2017 - Karnataka SGST
  Amendments in the Notification No. (1/2017)FD 48 CSL 2017 dated the 29th June, 2017,

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• 01-L/2017 - dated 7-10-2017 - Karnataka SGST
  Extension of time limit for submitting the declaration in FORM GST TRAN-1

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• 07/2017-State Tax - dated 31-8-2017 - Kerala SGST
  Extends the time limit for furnishing the return of details in FORM GSTR-3.

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• 06/2017-State Tax - dated 31-8-2017 - Kerala SGST
  Extends the time limit for furnishing the details of inward supplies in FORM GSTR-2.

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• 05/2017-State Tax - dated 31-8-2017 - Kerala SGST
  Extends the time limit for furnishing of outward supplies in FORM GSTR-1.

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• 04/2017-State Tax - dated 31-8-2017 - Kerala SGST
  Last date for furnishing of return in FORM GSTR-3B.

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• 03/2017-State Tax - dated 31-8-2017 - Kerala SGST
  Date of filing of GSTR-3B.

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• G.O. (P) No. 107/2017/TAXES - dated 30-8-2017 - Kerala SGST
  The Kerala Goods and Services Tax (Amendment) Rules, 2017.

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• G.O. (P) No. 106/2017/TD - dated 30-8-2017 - Kerala SGST
  GST - Amendment of tax rates - Rectification of errors in S.R.O. No.360/2017 as per recommendation of GST Council.

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Circulars / Instructions / Orders

• GST - States - 01/2017-State Tax - dated 13-10-2017
  THE KARNATAKA GOODS AND SERVICES TAX (REMOVAL OF DIFFICULTIES) ORDER, 2017

News

• Auction for Sale (Re-issue) of per cent Government Stock

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• Investigations in cases of ‘Paradise Papers’ to be monitored through reconstituted Multi Agency Group

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• RBI Reference Rate for US $

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• Around 2.24 lakh companies have been struck-off till date for remaining inactive for a period of two (2) years or more;. Around 3.09 lakh Directors disqualified who were on the Board of Companies that have failed to file Financial Statements and/or Annual Returns for a continuous period of three (3) financial years during 2013-14 to 2015-16.;

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Case Laws:

• Income Tax

• 2017 (11) TMI 326
  Deemed dividend u/s 2(22)(e) - receipt of advance against agreement to sale the property to the company - subsequently agreement was cancelled due to fall in market price - Held that:- We find that the assessee had himself signed on behalf of NIPL (purchaser) and for himself (seller). The authenticity of the so called MOU cannot also be cross verified as it was not registered with the registering authority. Thus, the AO’s observation that “the explanation [of the assessee] is a self serving argument….” [Para 5 of the asst. order] cannot be brushed aside. The assessee’s argument that due to fall in market value of property and subsequent change in circumstances, the sale process fell through etc., cannot be taken its face value as no documentary evidence was adduced to substantiate its claim. The salient feature in the issue was that the subject property was owned by the assessee [the seller] who himself was holding 55.05% share in NIPL [the purchaser] and, thus, in our view, the so called ‘fall in market value of property and subsequent change in circumstances’ would not have come in the way of alleged sale transaction of the subject property. We have with due respects perused the case laws on which the assessee had placed strong reliance and of the view that those case laws will not come to the rescue of the assessee. The case laws relied on by the assessee are for the proposition that when amounts are advanced for business transaction / out commercial expediency, the same would not come within the purview of deemed dividend u/s 2(22)(e). In the instant case, as mentioned earlier, the amounts received by assessee is nothing but loan / advance from NIPL and assessee is camouflaging the same as a commercial transaction relating to sale of property in order to get over the provisions of Section 2(22)(e). AO was within his realm to invoke the provisions of s. 2 (22)(e) of the Act.- Decided against assessee.

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• 2017 (11) TMI 325
  Disallowance of the office expenses - Held that:- The profit and loss account clearly shows that the assessee derived income from rentals profit on sale of property rights and interest income to a tune of ₹ 9,06,827/-, as such, it is not correct on the part of the AO to conclude without any basis that there was no business activity during the year. On a careful consideration of this matter with reference to the details furnished by the assessee, we are of the considered opinion that the AO should not have disallowed the expenses in the absence of any discrepancy pointed out with reference to the books of accounts of the assessee. We, therefore, direct the AO to delete the same. Sale of property - property was purchased as a capital asset or stock in trade - Held that:- As perused the agreements dated 19.01.2001 and 27.01.2002, and sale deed dated 27.03.2004. It is clearly mentioned therein that out of 48,31,250/- the assessee received only a sum of ₹ 24,15,625/- and the balance of ₹ 18 lacs was received by one G.K.S. Holdings and on this aspect it is the submission of the Ld. AR that whatever may be the consideration receivable by the vendors under the sale deed had to be apportioned between the assessee and GKS Holdings and the entire ₹ 53,98,763/- cannot be thrown to the share of the assessee. Further the documents indicate that the assessee held the property for more than three years and the acquisition of the property was for the purpose of their office and it is only since it was insufficient for their office they sold it away to one Vaishnavi Associates. Period of holding of the property and the expenses for Genset and Air conditioner also support the contention of the assessee that the property was purchased as a capital asset but not stock in trade. It is a verifiable fact as to what exactly the portion of the sale consideration under sale deed dated 27.03.2004 was receivable by the assessee so as to apportion the amount of ₹ 53,98,763/- could be attributed to the assessee. While working out the amounts received or receivable by the assessee the liquidated damages have to be taken into consideration for the purpose of reducing the cost of acquisition. For this purpose, we deem it just and proper to set aside the matter to the file of the AO and AO will consider the questions of the sale consideration attributable to the assessee while taking into consideration the liquidated damages and the period of holding of the asset by the assessee. Needless to say that AO will afford opportunity to the assessee to produce the evidence, if any, on this aspect. With this view of the matter, we restore the issue to the file of the AO for implementing the above direction.

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• 2017 (11) TMI 324
  Transfer pricing adjustment - exclusion of Exchange loss from total expenses - TPO treated such amount as of non-operating nature and, hence, excluded it from the ambit of total expenses for working out operating costs - Held that:- As the assessee could not link exchange loss of ₹ 112.40 million with the borrowings effected by the assessee from its holding company. It is patent that foreign exchange loss on account of trade receivables and payables has to be taken as an item of operating expenditure and exchange loss on account of financing transactions will be considered as non-operating. Since the AR could not link the amount of foreign exchange loss of ₹ 112.40 million with the transaction of borrowing from the assessee’s AE, we cannot uphold the argument put forth before us without verification. We set aside the impugned order and remit the matter to the file of Assessing Officer/TPO for ascertaining if exchange loss of ₹ 112.40 million pertains to loan transactions from the assessee’s AE or trading transactions as well. A part of such exchange loss which pertains to borrowing made by the assessee from Teva Pharmaceuticals Finance Netherlands B.V., should be considered as non-operating and the remaining amount, if any, pertaining to trading transactions should be taken as operating expense. Needless to say, the assessee will be allowed a reasonable opportunity of hearing before taking any decision for the purposes of computing the assessee’s ‘Operating costs’ to find out its OP/OC. Selection of comparable - Held that:- The assessee’s aggregated international transaction under consideration is manufacturing and contract R&D, and companies functionally dissimilar with that of assessee need to be deselected from final list.

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• 2017 (11) TMI 323
  Late fee charged from the assessee u/s 234E - intimation issued under section 200A in respect of processing of TDS - Held that:- As decided in case of Wonder Waves Entertainment Pvt Ltd [2015 (10) TMI 2477 - ITAT AHMEDABAD ] the issue in all these appeals is now squarely covered in favour of the assessee by the decision of ITAT Amritsar Bench in the case of Sibia Healthcare Private Limited vs. DCIT [2015 (6) TMI 437 - ITAT AMRITSAR] adjustment in respect of levy of fees under section 234E was indeed beyond the scope of permissible adjustments contemplated under section 200A. As intimation under section 200A, raising a demand or directing a refund to the tax deductor, can only be passed within one year from the end of the financial year within which the related TDS statement is filed, and as the related TDS statement was filed on 19th February 2014, such a levy could only have been made at best within 31st March 2015. That time has already elapsed and the defect is thus not curable even at this stage. In view of these discussions, as also bearing in mind entirety of the case, the impugned levy of fees under section 234E is unsustainable in law. We, therefore, delete the impugned levy of fee under section 234E of the Act. - Decided in favour of assessee.

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• 2017 (11) TMI 322
  Additions for deemed dividend u/s 2(22)(e) - Held that:- In Circular No.19/2017, paragraph 3, the CBDT has also held that trade advances, which are in the nature of commercial transactions would not fall within the ambit of the word ‘advance’ in Section 2(22)(e) of the Act. The addition u/s 2(22)(e) is made in the case of an assessee who is an individual. Admittedly, no advance or borrowed money is received by the assessee from the concerns in which the assessee is a shareholder. There is a transaction of advancing of money by M/s Superior Films (P) Ltd. to the group concerns in the normal course of business. In view of the above as well as CBDT’s Circular No.19/2017, Section 2(22)(e) is not applicable in the facts of the case under appeal before us. - Decided in favour of assessee.

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• 2017 (11) TMI 321
  Bogus purchases - quantification of disallowance on account of bogus purchase - Held that:- AO himself has admitted the fact of existence of purchase albeit from unregistered dealers who do not have bill books. Simultaneously, the corresponding sales have also not been disputed. Noticeably, the assessee has recorded total sales to the tune of ₹ 323.43 lakhs during the year and recorded purchase of ₹ 401.88 lakhs including impugned purchases of ₹ 209.49 lakhs from M/s.Vishal Traders. Apparently, in the absence of actual purchases made from unknown unregistered dealers, it will not be possible to record the staggering sales. Thus, the fact of purchases made from unidentified other source cannot be denied on wholesome basis. Therefore, in our view, the CIT(A) has correctly appreciated the facts and granted relief towards actual purchases. We hold that the CIT(A) has rightly drawn its conclusion and estimated 25% of the value of the bogus purchases as unaccounted income of the assessee. We thus do not find any potency in the plea of the assessee for further relief towards downward estimation.

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• 2017 (11) TMI 320
  Unexplained gifts received - capacity of donor to give gifts - Held that:- In this case the assessee has claimed to have received a gift of ₹ 11 lacs from his elder sister. The sister had shown statement of income of ₹ 93,112/- for assessment year 2007-08. No return of income was filed. The source of gift in the hands of the sister has been further explained as gift from her two daughters and son at ₹ 3,00,000/-, ₹ 3,50,000/- and ₹ 2,80,000/- respectively. Rest amounts have been claimed to have come from the opening balances in the hands of the assessee. The daughters are still students and the son has just taken up a job. These persons are not filing the return of income. No statement of bank account of the said donor has been produced. No detail of the working of the opening balance in her hand has been produced. The husband of the sister is an accountant without much income. In this factual scenario, we find that it is abundantly clear that the said donor did not have the capacity to grant the gift of ₹ 11 lacs to the assessee. Hence, as the assessee has failed to discharge the onus regarding cogently proving the capacity of the donor to give the gift. Hence, we do not find any infirmity in the order of learned CIT-A. - Decided against assessee.

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• 2017 (11) TMI 319
  Unexplained purchases - AO observed that the assessee was one of the beneficiaries in the fraudulent share transactions carried out by Mukesh Chokshi - Held that:- The addition in this case is based upon the cogent materials. As mentioned hereinabove the facts and circumstances of the case clearly indicate that the assessee has entered into the sham transactions with the help of group companies of Shri Mukesh Choksi. The paper works created in this regard are merely smokescreen. The Hon’ble Apex Court in the case of Sumati Dayal vs. CIT [1995 (3) TMI 3 - SUPREME Court] and CIT vs. Durga Prasad More [1971 (8) TMI 17 - SUPREME Court] has expounded that the Revenue authorities cannot put on blinkers, but have to look into the surrounding circumstances as well. Hence, I find that the addition in this case is properly justified - Decided against assessee.

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• 2017 (11) TMI 318
  Bogus purchases - Assessee was found to have taken accommodation entry - Held that:- Credible and cogent information was received in this case by the Assessing Officer that certain accommodation entry provider / bogus suppliers were being used by certain parties to obtain bogus bills. AO has made the necessary enquiry. The issue of notice to all the parties have returned unserved. Assessee has not been able to provide any confirmation from any of the party. Assessee has also not been able to produce any of the parties. Necessary evidence relating to transportation of the goods was also not on record. In this factual scenario it is amply clear that assessee has obtained bogus purchase bills. Mere preparation of documents for purchases cannot controvert overwhelming evidence that the provider of these bills are bogus and non-existent. The Sales Tax Department in its enquiry have found that parties to be providing bogus accommodation entries. The Assessing Officer also issued notices to these parties at the addresses provided by the assessee. All these notices have returned unserved. Assessee has not been able to produce any of the parties. The assessing officer has noted that there is no cogent evidence of the provision of goods. Neither the assessee has been able to produce any confirmation from these parties. In such circumstances, there is no doubt that these parties are non-existent. I find it further strange that assessee wants the Revenue to produce assessee’s own venders, whom the assessee could not produce. The purchase bills from these non-existent / bogus parties cannot be taken as cogent evidence of purchases. In light of the overwhelming evidence the revenue authorities cannot put upon blinkers and accept these purchases as genuine. - Decided against assessee.

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• 2017 (11) TMI 328
  Reopening of assessment - proof of case of change of opinion - petitioner's/assessee's contention is that, there was no specific direction issued by CIT (A) to re-open the assessment, and it is a misreading of the order passed by CIT (A), dated 13.10.2016 - Held that:- We do not agree with the said submission in the light of the language and observations made by CIT (A) in his order, dated 13.10.2016. The reasons for deleting the addition made in the hands of the assessee-Firm for the year 2012-13, is because, the capital was required to be introduced in the course of earlier two financial years, i.e. FY 2009-10 and F Y 2010-11. The CIT (A) did not stop with this observations, but made further observation by stating that, the Assessing Officer can only take cognizance of the matter, by way of initiating suitable proceedings for the assessment years 2010-11 and 2011-12. The petitioner seeks to interpret the word 'Can' by stating that, it cannot be construed as direction, but the petitioner should read the word 'Can' along with next word 'Only. CIT(A) has pointed out that the Assessing Officer can only take cognizance of the matter, by way of initiating suitable proceedings for the assessment years 2010-11 and 2011-12. In such circumstances, it cannot be taken, as if, the observation contained in the order passed by CIT(A) is of no consequence. Such plea cannot be raised by the petitioner/assessee, as it would be fatal to their case, because, it is only on account of such observations, they got relief before CIT (A). The above observations were affirmed by ITAT. Even assuming for the sake of arguments that, there is no specific direction, in the order passed by CIT (A) yet, the Assessing Officer was entitled to exercise his powers under Section 148 as there was no opportunity to verify the transactions claimed to have made in those years. Therefore, it is not a case of change of opinion. Consequently, the challenge to the impugned proceedings has to necessarily fail. - Decided against assessee.

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• 2017 (11) TMI 317
  Reopening of assessment - whether once the reassessment found to be illegal, no liberty can be given to initiate fresh reassessment? - Held that:- CIT(A)is not empowered to direct the AO for making fresh assessment. Therefore, we modify the order of the Ld. CIT(A). The liberty as given by the Ld. CIT(A) to the AO for making fresh reassessment is held to be not within the power of the Ld. CIT(A) u/s 251. Accordingly, same is hereby quashed. Thus, Ground no. 1 to 2 of this order is allowed in the terms as stated herein before.

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• 2017 (11) TMI 316
  Sale of plot of land - Short term capital gain OR short term capital loss - Held that:- AO though issued notice u/s 133(6) and received the reply from these persons however, all other connected and relevant facts and aspects of the matter like whether these six persons were in possession of the property in question and when the property was got vacated. All these facts can be verified only in the enquiry conducted through examination of these six persons by recording their statements and giving opportunity to the assessee for cross examination. Since the AO has not conducted the requisite enquiry to reach conclusive finding of fact. We are of the considered view that these matters require a proper verification and enquiry of the relevant facts. Accordingly, we set aside this issue to the record of the Assessing Officer for conduct of proper enquiry by examination of these six persons and also giving an opportunity to the assessee to cross examine and then decide the issue as per outcome of the such fact finding enquiry. As regards the source of the money claimed for compensation the assessee has contended that the barrowed funds was used and repaid through banking channel subsequently. However, except the details of the borrowed funds the assessee has not produced any other material or documentary evidence to show the transaction of borrowed funds. Accordingly, the assessee is required to produce the documentary evidence as well as the creditors for examination by the AO. Assessee’s appeal is allowed for statistical purposes.

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• 2017 (11) TMI 313
  Penalty u/s 271C - non deduction of tds to overseas group entities - demands under section 201(1)/201(1A) - sufficient cause for non deduction of tax at source - Held that:- Claim of the assessee that the overseas entities have absolutely no presence in India remains uncontroverted even before us as the department has not brought any material on record to prove the contrary. Furthermore, the assessee has obtained a certificate from an independent Charted Accountant in Form No. 15CB, wherein, the concerned Chartered Accountant has opined that TDS is not required to be made on such payment. Also it is a fact on record that, though, the assessee has made payment of identical nature to overseas group entities in past several years without deducting tax at source, no proceedings has been initiated by the Department under section 201(1), except assessment years 2010–11 and 2011–12. In as much as, no disallowance under section 40(i)(a) has ever been made. Even though, similar payment was made in A.Y. 2010–11 and facts for both the assessment years are identical, the Assessing Officer has not initiated proceedings for imposition of penalty under section 271C for A.Y. 2010–11. Thus one can reasonably conclude that the failure on the part of the assessee to deduct tax at source while making such payment was for bona fide reasons, hence, in terms of section 273B of the Act there being a reasonable cause for such failure, no penalty can be imposed under section 271C of the Act - Decided in favour of assessee.

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• 2017 (11) TMI 312
  Addition u/s 68 - initial onus to discharge evidence - identity, creditworthiness and genuineness of the subscribers - Held that:- The evidence on record in support of the identity, creditworthiness and genuineness of the subscribers as examined and reported by the Assessing Officer does not contain any material which could be stated to be false, factitious or otherwise contrived. As agreeing with the arguments of the assessee that in terms of case laws including Nova Promoters & Finlease Pvt. Limited [2012 (2) TMI 194 - DELHI HIGH COURT] Assessing Officer has shifted back the initial onus discharged by the assessee with repudiatory evidence and materials the assessee cannot be visited with adverse consequence u/s 68 of the Act. I find that no such material has been brought on record by the Assessing Officer to displace the evidence marshalled by the assessee. In the circumstances the addition as sustained by the CIT(A) in a sum of ₹ 47 lakhs u/s 68 of the Act is unsustainable and the same is directed to be deleted. Accordingly, all the three Grounds raised by the assessee are allowed.

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• 2017 (11) TMI 311
  Claim for exemption under section 10(23C)(vi) - Held that:- It would be in the fitness of things, the matter is restored back to the file Assessing Officer to make the assessment afresh, of course after awaiting the order of the CBDT on assessee’s application for grant of approval under section 10(23C)(vi) of the Act, as has been directed by the Hon'ble Supreme Court in AMERICAN HOTEL & LODGING ASSOCIATION EDUCATIONAL INSTITUTE case(2008 (5) TMI 17 - SUPREME COURT OF INDIA). The Assessing Officer is further directed to ascertain, at the earliest, the status of assessee’s application pending before the CBDT and in the course of such an exercise he ought to bring it to the notice of the CBDT the statutory time limit, if any, applicable to make the ensuing assessment, so that the disposal of the application pending with the CBDT is carried out expeditiously. Needless to mention, the assessee is expected to render appropriate co-operation to the income-tax authorities in the matter. Even on the claim of expenses incurred by the Head Office on behalf of its Indian Branch, the matter is sent back to the Assessing Officer to be adjudicated afresh in accordance with law only after awaiting the outcome of the assessee’s application pending with the CBDT. Thus, we hereby set-aside the order of the CIT(A) and restore the matter to the file of the Assessing Officer to make a denovo assessment in accordance with law, after affording the assessee a reasonable opportunity of being heard. Thus, for assessment year 2007-08, the appeal of the assessee is allowed for statistical purposes. Payment made towards books cannot be treated as royalty - Held that:- Findings of the CIT(A) that the HO has supplied the books to the appellant branch for distribution among students in India. The books belongs HO on which expenditure is incurred by the Head Office. However the cost of books is apportioned to branch in proportionate of cost for which the CPA has given the cost of material supplied. Further, find that the AO himself allowed deduction of cost of books amounting to ₹ 3,56,567 towards cost of books on the basis of evidence submitted by the appellant. It is also seen that books made available to branch by HO does not make available the technology hence, it cannot be considered as fees for technical services within the meaning of Article 12(4) of Double Taxation Avoidance Agreement In the light of above the observation of the AO is without any basis . Hence the payment made towards books cannot be treated as royalty /fees for technical services. This ground is therefore allowed. No cogent reasoning or material brought out by the Revenue, which would require us to interfere with order of the CIT(A) - Decided against revenue.

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• 2017 (11) TMI 310
  Bogus purchases - AO has estimated net profit of 25% on total alleged bogus purchases - Held that:- It is fair and reasonable to estimate 12.5% net profit on alleged bogus purchases. The CIT(A), after considering relevant facts has rightly directed the AO to estimate the net profit of 12.5% on the alleged bogus purchases. We do not find any error or infirmity in the order of CIT|(A). Payment of additional VAT on alleged bogus purchases - whether credits need to be given for VAT payment out of net profit estimated on total alleged bogus purchases - Held that:- The issue needs to be examined by the AO in the light of the claim of assessee that it has paid additional VAT on purchases from those six parties. Hence we set aside the issue to the file of the AO for the limited purpose of verification whether the assessee has paid additional VAT on purchases from those six parties on denial of input tax credit by Sales-tax department. If the claim of the assessee is found to be correct, then the AO is directed to allow credit for payment of VAT on purchases from those six parties out of net profit determined on the alleged bogus purchases.

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• 2017 (11) TMI 315
  Addition of unexplained cash credits - addition u/s 68 - CIT(A) has appropriately considered the evidence on record and found that the transaction stood properly explained - Held that:- CIT(A) not only relied upon the confirmation filed by the creditor, but also the utilisation of the loan received, which substantiated the plea of the assessee that the amount was received to effectuate the purchase of land on behalf of the creditor, Shri Arvind Jain. Moreover, at page 37 of the Paper Book is placed a Certificate issued by the said creditor, which brings out the relevant facts. The said creditor is an income-tax payee and is stated to have advanced money to the assessee in connection with the purchase of land through banking channels. It is also averred by the creditor that he has sufficient own funds, and the factum of assessee having deployed such funds towards the purchase of land for the said creditor has also been verified by the CIT(A), which is evident from the aforesaid extracted portion of his order. There is no controversion to any of the aforesaid findings recorded by the CIT(A) and, therefore, in this view of the matter, hereby affirm the order of the CIT(A) on this aspect. Thus, on this aspect, Revenue fails.

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• 2017 (11) TMI 327
  Interest on Secured Promissory Notes disallowed - whether the said interest was in respect of the capital borrowed for the purposes of the business of the appellant? - Held that:- As in case of this very assessee in Tax Appeal[2017 (11) TMI 63 - GUJARAT HIGH COURT] we had held in favour of the assessee as held that for the said deduction, all that was necessary was that the money i.e. capital must have been borrowed by the assessee, that it must have been borrowed for the purpose of business and lastly, that the assessee must have paid interest on the borrowed amount. All that is germane is whether the borrowing was, or was not, for the purpose of the business. It was held that the provision makes no distinction between money borrowed to acquire a capital asset or a revenue asset - Decided against revenue Disallowing expenditure pertaining to Soda Ash and Lab Front projects as revenue expenditure - Held that:- This issue is covered in favour of the assessee by virtue of judgement of this Court in case of Commissioner of Income Tax vs. Nirma Ltd. [2014 (10) TMI 396 - GUJARAT HIGH COURT] the assessee through its existing administrative mechanism started a new facility for production of soda ash and had also set up facility for production of a material called lab for its captive consumption for the purpose of its existing manufacturing business. It is no doubt that the assessee is engaged in the business of manufacture of soap and the soda ash and lab so produced is used by way of captive consumption. When such facts viewed in light of the findings of the CIT (Appeals) and the Tribunal, we have no reason to interfere with the ultimate conclusion. Had it been a case of entirely a new project undertaken by the assessee as canvassed by the counsel for the Revenue, a serious question of claiming pre-operative expenditure of interest by way of revenue expenditure would arise. - Decided in favour of assessee.

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• 2017 (11) TMI 314
  Rejection of books of accounts and estimating the income - Held that:- The loose sheet belongs to the assessee and the contents in the loose sheets are true and correct. It is for the assessee to prove that if any entry recorded in the loose sheet is not correct. In this case, the assessee has not proved with tangible evidences. Though the assessee has stated that certain expenses are not recorded, he did not bring it to our notice the expenses said to be not recorded. Therefore, we hold that profit worked out by the assessee for the month of June 2007 is correct. The assessing officer estimated the yearly profit by multiplying ₹ 1,76,032/- the average monthly profit with 12 months for the assessment year 2008-09. The assessee did not furnish the true and correct financials before the AO with correct amount of sales and the profit. In the circumstances of non cooperation of the assessee the AO has no option except to estimate the profit. However the sales cannot be the same amount through the year. For the month of June 2007 the net profit was ₹ 1,37.602/- on total sales of ₹ 9,92,826/- which works out to 13.85% on total sales. Therefore we direct the AO to estimate the net profit on total sales of the assessee @13.85% for the A.Y-2008-09 or to adopt the profit admitted by the assessee whichever is higher. Accordingly this ground of appeal of the assessee is partly allowed. Depreciation, interest on partners’ capital and remuneration to partners - Held that:- No information is available with regard to the depreciation claimed by the assessee, Interest on partners capital and remuneration to partners from the assessment order. On verification of Form 35, it appears that the assessee has not raised this ground before the CIT (Appeals). However, unless the partnership deed permits the interest and remuneration it is not allowable deduction. The Ld.AR also did not place any evidence regarding the claim of interest and remuneration claimed by the partners in the Return of Income. Therefore, the assessee’s appeal on interest on partners capital and the remuneration is not tenable and dismissed. With regard to the depreciation, it is statutory allowance which required to be allowed by the assessing officer. It is seen from the loose sheets that while working the net profit for the month of June 2007, no depreciation was debited to the profit and loss account. Therefore, we direct the assessing officer to allow the depreciation as per the rules and allow the same from the income estimated as per the discussion made in the earlier paragraphs subject to providing the necessary evidences for the assets . This issue is allowed for statistical purpose. Unexplained cash credit in respect of Pushkara capital - source was not explained by the assessee during the course of survey - Held that:- It is settled issue that the assessee required to explain the source of cash credit made in the books of account with identity, capacity and the correctness of the entry with the tangible evidence. Though the assessee claimed that there was no such partner in the name of Pushkara, the assessee has shown the same as outstanding capital balance and also declared the matching assets. Therefore, the Ld.CIT(Appeals) upheld that the money does not come from mythical sources. Since the matching assets shown in the balance sheet, the money has come into the firm in the name of Pushkara, assessee is duty bound to explain the source with identification, genuineness and credit worthiness of the capital contributor. Since no explanation is forthcoming from the assessee, we hold that CIT (Appeals) has rightly confirmed the addition made by the assessing officer and the order of the CIT(Appeals) is upheld.

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• Customs

• 2017 (11) TMI 309
  Bail Application - offence punishable under Section 135(1)(i)(A) of the CA, 1962 - quantum for bailable offence - Held that: - indisputably, the charge-sheet in the matter is yet to be filed and the investigation is in progress, however, it is also not in dispute that the substantial part of the investigation is over. Moreover, the custodial interrogation of the applicant also appears to have been over as the applicant is in custody since his arrest i.e. 27/09/2017, for almost for 40 days. In the event the evaluation comes below ₹ 1 crore subsequently, the offence would be bailable. Further, a perusal of the e-mail dated 02.10.2017 at Annexure 'E' to the application, prima facie, reveals that the goods in question were wrongly sent to the applicant. Besides, the father of the applicant has filed the affidavit stating therein that they are not the import of the other container and they have nothing to do with the same. Further, it is also not in dispute that the applicant is the resident of Surat and has roots in Surat town, having responsibility towards family and has established business and hence, his presence can be secured as and when required during the investigation as well as during the trial by imposing certain conditions. This Court is of the opinion that discretion is required to be exercised in favour of the applicant for grant of bail. Moreover, the applicant assures that he will abide by the terms and conditions that may be imposed by the Court and shall not commit any breach. Hence, the application is allowed and the applicant is ordered to be released on regular bail on executing a personal bond of ₹ 10,000/- with one surety of the like amount to the satisfaction of the trial Court and subject to the conditions imposed - application allowed.

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• 2017 (11) TMI 308
  Suspension of CHA License - SCN for enquiry has been initiated on 03/08/2016 i.e. after five months and 20 days of receipt of the offence report - Held that: - Time is essence to complete proceeding initiated under the CBLR 2013 - Hon’ble High Court of Madras analysing the basic provisions relating to limitation, in the judgment of Saro International Freight System v. Commissioner of Customs [2015 (12) TMI 1432 - MADRAS HIGH COURT] came to the conclusion that adherence to the time-limit prescribed by the CBLR 2013 was mandatory - Analysing the 2013 Regulation, as well as the previous Regulation the Court held that time-limit prescribed in Regulation which empowers to take action under Regulation 18 has to follow the procedure under Rule 20 and the term shall used in such regulation should be read as mandatory and not directory. For the mandatory time limit prescribed by the Regulation, the proceedings not initiated nor concluded within the limitation shall be void. After more than five months of receipt of offence report proceedings against the CHA having been initiated, dehors the law, action of the authority shall be said to be an empty formality and shall not see the light of the day. The order of suspension is revoked - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 307
  Redemption fine - penalty - Import of used Digital Multifunction Machines - restricted item - Held that: - Since the decision of the Tribunal in the case of Shivam International [2013 (3) TMI 408 - CESTAT BANGALORE] wherein identical issue was involved has been upheld by the jurisdictional High Court of Kerala, therefore, in my considered view that the used Digital Multifunction Machines imported by the appellants in various appeals are concerned, the imposition of redemption fine and penalties on the appellants is not sustainable in law - redemption fine and penalty set aside. Import of ‘analogue photocopiers’ - Held that: - With regard to this item, no finding has been given in favour of the appellants. Therefore, with regard to ‘analogue photocopiers’, the concerned appellants are liable to pay redemption fine and penalty. Appeal allowed in part.

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• 2017 (11) TMI 306
  Quantum of redemption fine and penalty - import of old and used copier machines of Canon brand without license - confiscation - Held that: - The Commissioner while imposing the fine and penalty, has taken notice of the order in the case of COMMR. OF CUSTOMS, TUTICORIN Versus SAI COPIERS [2008 (1) TMI 402 - HIGH COURT OF JUDICATURE AT MADRAS], where it was held that The fixation of the quantum of redemption is an exercise of discretionary jurisdiction of the authorities under the Customs Act. The Court can interfere only in the circumstances in which it was demonstrated before it that the order of the Tribunal is thoroughly arbitrary, whimsical and resulting in miscarriage of justice - there is no infirmity in the order passed by the Commissioner of Customs imposing the redemption of fine of ₹ 9,00,000/- and a penalty of ₹ 2,00,000/- - appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 305
  Redemption Fine - Penalty - import of photocopier - restricted item - Held that: - the imposition of fine and penalty in the present case is not exorbitant because the imported photocopier during the relevant time was not permissible to import under Foreign Trade Policy without a license as it was restricted item, therefore the appellant has violated the Foreign Trade Policy - appeal dismissed - decided against appellant.

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• 2017 (11) TMI 304
  Genuineness of Focus License - it was alleged that appellant obtained from DGFT under fraud submitting fabricated and bogus shipping bill - Held that: - To deter use of fraudulently obtained instrument by a transferee or beneficiary thereof under Customs Act, 1962 and make him liable to the duty lost by Revenue along with transferor under Section 28AAA of the said Act, suitable provision may be enacted with deterrent penal consequence and cognizance of such cases of money laundering may be taken by the “proper officer” appointed under Customs Act, 1962 at the first instance - if the Board considers it proper, such cases may be referred to Special Investigation Team (SIT - Black Money) for further investigation, so that Hawala Operators masquerading their identity shall be brought to the fold of economic offence and face trial - appeal dismissed - decided against appellant.

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• 2017 (11) TMI 303
  Penalty on CHA and two other employees - involvement of CHA in clandestine import of tin ingots - Held that: - against the CHA action was taken under Rule 21 of the CHALR and his license was suspended which he challenged before the CESTAT and CESTAT decided in his favour. Further I also find that there is no substantive material evidence against the CHA as well as two of its employees for their involvement in the whole affairs except to file his Bill of Entry - penalty not warranted and is set aside - appeal allowed - decided in favor of appellant.

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• Service Tax

• 2017 (11) TMI 301
  CENVAT credit - input - doors, windows, frames tiles, cement etc. used for construction of shopping mall - capital goods - Lift, Escalator, Chillers, DG Sets, Heat Exchangers Wire, Cables, Fire Equipments, Water Pumps etc. which was installed in the mall for renting of the shops in the mall - input services - architect service, business auxiliary service, C&F agency service, cargo handling service, works contract service, consulting engineer service, erection, commissioning and installation service, these services were used in the construction of mall - insurance, management maintenance and repair service etc., these services were used for the operation of the shopping mall. Inputs - steel cement, doors, windows etc. used for construction of shopping mall - Held that: - As per the definition of input for the purpose of providing service, it is clear that only on those inputs Cenvat is allowed which are used for providing the output service. In the present case, cement, steel, for steel, angles, channels etc. were not used for providing output service i.e renting of immovable property. The same was used for providing construction service which is not the output service of the appellant, therefore the cenvat credit is not admissible. Moreover, w.e.f. 7.7.2009 the said goods were excluded from the definition of input service - demand upheld. Capital goods - denial on the ground that on the ground that these capital goods after installation become immovable goods, therefore the credit is not admissible - Held that: - all the capital goods were cleared by the supplier on payment of duty therefore the capital goods as such can not be said that it is immovable goods. Merely by installing the capital goods it does not become an immovable goods. If this contention of the adjudicating authority is accepted then all the capital goods such as machinery, equipments, appliances installed in the factory for production will not be eligible for cenvat credit. Therefore merely by installation of duty paid capital goods, it can not be said that it is immovable goods all the capital goods were used in the shopping mall to facilitate the shop owners for operation of the mall, who have been given the shops on rent by the appellant. Therefore all these capital goods were directly used by the appellant for providing output service i.e. renting of immovable property service. Accordingly the cenvat credit on the capital goods is admissible - demand set aside. Input service - whether the input service credit is at all admissible for the construction of a mall which is used for providing Renting of Immoveable Property Service? - Held that: - for the input services for which input service tax credit was availed at Pune, the invoices are addressed to their Bombay office. However this will not be a bar in availing the credit as the appellant had taken centralized registration at Pune before availing the credit and they did not avail credit on any input services in Mumbai as reflected in the relevant ST-3 returns. It was also submitted by them that there is no other project in the company. Therefore we find no reason to deny the credit on this ground - demand set aside. Delay in taking credit - Held that: - the appellant took the credit only when the mall was completed. Prior to that they may not have been sure whether the property is to be sold or rented. Actually 20% of the property was sold out. Therefore they took cenvat credit when the remaining property was ready to be rented out. In these circumstances, in our considered view, the substantial benefit cannot be denied to them and the delay can be ignored especially when there is no violation of legal provisions. CENVAT credit - services such as advertisement, broadcasting, C.A., cleaning service, insurance service, management maintenance and repair service etc. - denial on the ground that these services have no nexus to the output service of renting of immovable property - Held that: - the service used whether prior to construction or after completion of the construction, the cenvat credit is admissible for the reason that the services used prior to the construction is in relation to the construction of service which is admissible input service. Once demand was of wrongly cenvat credit is proposed, there cannot be an another demand of recovery of service tax which was discharged by utilizing so called wrongly availed credit for the reason that by recovery of the wrongly availed credit whatever service tax paid by utilizing cenvat credit will hold good, no further recovery can be made. Therefore the demand of service tax even though paid by utilising the cenvat credit again confirmed for recovery is not legal and proper. Therefore the demand of service tax amounting to ₹ 2,06,67,771/- is set aside. Appeal allowed in part.

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• 2017 (11) TMI 300
  Erection, commissioning and installation service - sub-contract - the appellants are doing the work in the nature of sub-contracting and the main contractor has paid taxes on the entire value - case of appellant is that service tax cannot be demanded from the appellants as it would result I double levy of service tax - services provided within the SEZ - revenue loss or revenue neutrality situation. Held that: - it is apparent if the main contractor was availing of this notification he could not have availed of the credit of the tax paid by the appellant. Thus in those circumstances the situation would not be revenue neutral. Moreover the main contractor has been granted abatement from the value only for the reason that the credit of the duty paid on the inputs and input services (by the sub contractors) has not been allowed, and also for the reason that the sub contractors have already paid duty on the value of inputs and input services. If the appellants contention is accepted it would result in defeating the very purpose of the notification and will also result in loss of revenue to the government - For provision of any output service numerous inputs services are required. For example, a consultant providing consultancy would receives input services in nature of (i) renting of immovable property service (ii) Air Travel services (iii) Business Support Service (iv) Manpower supply service (v) renting a cab services and so on. If the consultant is paying tax on the entire value of service provided by him, then would all services provider listed become exempt from paying service tax as sub-contractor. If the argument of the appellant is accepted then every provision of services to another taxable service provider would not be liable to payment of service. This situation can only lead to chaos. The appellants are involved in providing services to the main contractor which they claimed to be a sub-contract. The appellants are providing services to the main contractor and not the owner of the land. Moreover the nature of services provided by the appellants to the main contractor is not the same as those provided by the main contractor to its client. A perusal of the above circular clearly indicates that the services in respect of which the clarification has been issued relates to the services where the exercise is revenue neutral. In all these cases the main provider of service is put to tax on full value and in those circumstances if the sub-contractor/input service provider pays any service tax, the same is available as credit to the main service provider. It is apparent that these circulars were intended to reduce un-necessary work and not to provide exemption or give away revenue. In the instant case however, the main contractor is not entitled to the credit of service tax paid by sub-contractor if he is availing notification No.01/2006. Thus any service tax paid by the subcontractor would come as revenue to the Government and no credit of same would be available to the main contractor - the appellants are liable to pay service tax even when they are providing service to other contractor. Provision of services in SEZ - denial of N/N. 19/2003-ST or 1/2006-ST - denial on the ground that the appellants had failed to produce necessary documents - Held that: - The appellants have claimed that the commissioner has not given any reasons for denying the benefit. We do not understand what documents are needed in support of the claim made by the appellants. The commissioner should have identified the documents which he needs and only thereafter decided the issue. In absence of such identification and failure of appellants to produce the said documents the order cannot be sustained - matter remanded to the original adjudicating authority to identify the documents required and quantify the demand afresh. Appeal allowed by way of remand.

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• 2017 (11) TMI 299
  Refund claim - export of goods - N/N. 41/2012-ST dated 29.06.2012 as amended - main contention of the Revenue is that the particulars furnished in each and every column, must be shipping bill wise - Held that: - there is no requirement to determine FOB value shipping bill wise to determine the formula enumerated in Para 1 (c) or in Para 3 (i) of the notification - appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 288
  Intellectual property rights service - scope of service - failure to pay service tax on the provision of technical know-how - time limitation - Held that: - The appellants have relied on the decision of the Tribunal in the case of Mormugao Port Trust Versus Commissioner of Customs, Central Excise & Service Tax, Goa- (Vice-Versa) [2016 (11) TMI 520 - CESTAT MUMBAI] to assert that any payment made by a joint venture to participating company cannot be treated as consideration for the service. It is seen that the said decision was passed wherein the appellants had clearly claimed that the royalty earned was not a consideration towards renting of immovable property but it was the share of Revenue from services which were jointly rendered by the assesee and the joint venture - in the instant case, there is no claim to the effect on royalty paid is the share of profit from the joint venture to Vemmar SRL, Italy. The appellant company has specified shares of each of the participates in the joint venture in the ratio of 51%, 35% and 14% respectively. Any share of the profit if distributed has to go to each of the partner in the ratio of their shares. In the instant case, Vemmar SRL, Italy is receiving the said amount. Thus, the payment made to Vemmar SRL, Itay cannot be considered as share of its profit of the joint venture. Thus, the facts are different in the instant case and therefore, the decision of the Tribunal in the case of Mormugoa Port Trust (supra) cannot be applied to the instant case. The legal provisions defining the nature and scope of taxable service, namely intellectual Property Right & Intellectual Property Service are defined under clauses (55a) and (55b) of Section 65 of Chapter V of the Finance Act, 1994. The Intellectual Property Right means any right to intangible property namely, trademarks, designs, patents or any other similar intangible property, under any law for the time being in force, but does not include copyright. In the present case I find that the services received by the noticee includes Product &Process Technology required for manufacture of helmets. The JVA allows transfer of services on temporary basis and those services appears to be provided by a person who has established a business or has a fixed establishment from which the service is provided and his permanent address or usual place of residence is outside India. Under these facts, I hold that the services received by the notice are falling under the category of taxable service. Thus this taxable service is to be treated as if the recipient had himself provided the service in India. Extended period of limitation - Held that: - the show-cause notice has been issued within the period of five years prescribed under the clause pertaining to extended period of limitation. The date of knowledge of department has no relevance if the extended period has been invoked on the grounds mentioned under Section 73 of the Finance Act. Revenue neutrality - Held that: - availability of credit to the appellant of such duty paid has not been examined by the impugned order. We are of the view that the said issue is an important issue which needs to be examined before any findings on invocation extended period of limitation are given. The revenue neutrality has an implication on the invocation of extended period of limitation. Penalties - invocation of section 80 - Held that: - the said issue also needs to be decided after examining the issue of revenue neutrality. Appeal allowed by way of remand.

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• 2017 (11) TMI 298
  Works contract - erection, installation and commission of street lights - non-paymnet of service tax - The only defence of the appellant as regard the service of installation of street lights is that the service is related to the road therefore it is excluded from the taxable service under the head of works contract - Held that: - the installation of street lights is totally an independent service which is nothing to do with the road construction, the street lights may or may not be required besides the road, therefore it is not related to construction of road. Accordingly the service of installation of street lights being an independent service clearly falls under works contract service and during the relevant period it was taxable - demand upheld. Time limitation - Held that: - firstly appellant had not declared the transaction in their ST-3 return subsequently despite knowing the taxability of the said service, they have not come forward and informed to the department regarding the provision of service. In these circumstances there is a clear suppression of fact on the part of the appellant - extended period rightly invoked. As regard the claim of the appellant that certain services like laying of cable shifting of cable for the purpose of widening of road etc. a service tax demand of ₹ 8919/- is not sustainable - Held that: - such service is not taxable as per the Board Circular No. 123/05/2010 dt. 24.5.2010 - demand set aside. Appeal allowed in part.

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• 2017 (11) TMI 297
  GTA services - reverse charge mechanism - consignment note - case of appellant is that the service provider have not issued any consignment note and hence they will not be covered under the scope of Goods transport Agency - Held that: - reliance placed in the appellant's own case M/s Ultratech Cement Ltd. Versus Commissioner of Central Excise, Kohlapur [2017 (3) TMI 1155 - CESTAT MUMBAI], where it was held that consignment note is misplaced as in this case the transporting companies have only raised invoices for transportation of cement clinkers as per the contract which did not satisfy the requirement of the consignment note and the responsibility cast for issuing the consignment note is not met to hold that Goods Transport Agency Services are rendered. The Appellant in respect of service in question are not liable to service tax - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 296
  Refund of the service tax paid - denial on the ground of time bar and also for not producing the sufficient document - Held that: - this case needs to be remanded to the original authority as has been done earlier in identical cases JOSH P JOHN AND OTHERS Versus CST, BANGALORE AND OTHERS [2014 (9) TMI 597 - CESTAT BANGALORE] - this case also needs to be remanded to the original authority - appeal allowed by way of remand.

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• 2017 (11) TMI 295
  Refund claim - input services - security agency service - manpower recruitment service - denial on the account of nexus - Held that: - the learned Commissioner (A) has considered both these services as input services, hence the same are necessary for rendering the output service - In view of the well-reasoned order passed by the Commissioner (A), I find no infirmity in the impugned order - appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 294
  Refund of unutilized CENVAT credit - input services - manpower recruitment service - training services - security services - repair and maintenance services - Held that: - all the services have been held to be input services by various decisions of the Tribunal and the High Courts - reliance placed in the case of M/s. Coca Cola India Pvt. Ltd. Versus The Commissioner of Central Excise, Pune-III [2009 (8) TMI 50 - BOMBAY HIGH COURT], Commissioner of Service Tax Vs. Jubilant Biosys Ltd. [2014 (7) TMI 1196 - CESTAT BANGALORE] - refund allowed - appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 293
  Penalty u/s 76, 77 and 78 - Whether the revisional authority has jurisdiction to impose penalty for the first time when it has not been imposed by the adjudicating or assessing authority by invoking Section 80? - Held that: - reliance placed in the case of COMMISSIONER OF SERVICE TAX Versus M/s MOTOR WORLD & Others [2012 (6) TMI 69 - KARNATAKA HIGH COURT], where it was held that when the assessing authority in its discretion has held that no penalty is liable, by resorting to Section 80 of the Act, then the Revisionary Authority cannot invoke his jurisdiction under Section 80 and impose penalty - penalty set aside - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 292
  Refund of unutilized CENVAT credit - input services - denial on the ground that assessee had not obtained service tax registration during the period - Held that: - this issue is no longer res integra and has been settled in favour of the assessee by the jurisdictional High Court in the case of mPortal India Wireless Solutions P. Ltd. Vs. CST, Bangalore [2011 (9) TMI 450 - KARNATAKA HIGH COURT] wherein the Hon’ble Karnataka High Court has held that registration of the Department is not a pre-requisite for claiming the credit - appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 291
  GTA services - cargo handling services - It is alleged in the SCN that the appellant herein had engaged vehicles/trucks from various transport organisations and were sent to their customers for transportation of goods - whether appellant is required to discharge the service tax liability under the category of goods transport agency or otherwise? - reverse charge mechanism - Held that: - service tax liability on goods transport agency services is under reverse charge mechanism more so if the consignor or consignee falls in one of the category as indicated hereinabove or a person who is liable to pay freight charges. It is on record that appellant herein does not discharge the freight charges but claims the amount from their client who pays it to the transporters from whom they engaged the vehicles - identical issue decided in the case of ESSAR LOGISTICS LTD. Versus COMMISSIONER OF CENTRAL EXCISE, SURAT [2014 (6) TMI 763 - CESTAT AHMEDABAD], where it was held that it is very clear that the legislative intent is to tax only the services provided by a Goods Transport Agent to a customer and not the owner. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 290
  Interest - penalty u/s 77 and 78 - non-payment of service tax - bonafide belief - Held that: - the liability under renting of immovable property service was challenged and the same is still pending before the apex court, in these circumstances, appellant had a bona fide belief that they are not liable to pay service tax, but thereafter they paid the same - the appellants are entitled for the benefit of Section 80 of the Finance Act, 1994 and by resorting to Section 80, penalty u/s 77 and 78 waived - But as far as interest liability is concerned, the appellants are liable to pay the interest as per the provisions contained in Section 75 of the Finance Act, 1994 - appeal allowed in part.

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• 2017 (11) TMI 289
  Penalty u/s 78 - evasion of service tax - suppression of the value of the services provided - Held that: - the Commissioner (Appeals) after considering various decisions has come to the conclusion that the assessee had no intention to evade the payment of service tax and therefore by resorting to Section 80 of the Finance Act, the Commissioner (Appeals) has held that the lower authority has correctly given the benefits under Section 80 because the assessee has paid the service tax along with interest - appeal dismissed - decided against Revenue.

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• Central Excise

• 2017 (11) TMI 287
  SSI exemption - crossing of threshold limit - Held that: - the Ld. Commissioner has dropped the demand on the ground of time bar by giving a very reasoned finding that all the records were being maintained by the respondents and the department was not prevented to verify such records from time to time, particularly when the respondent was claiming the exemption notification. Therefore, the dropping of demand on time bar also found to be correct and legal - the adjudicating authority has to requantify the correct duty amount considering the fact that there are some repetition of demand and also on cum duty value of the goods - matter on remand. Penalty u/r 26 - Held that: - both the persons being director of the appellant company, were very well aware of the goods being cleared without payment of duty. Therefore, they are liable for penalty - decided against appellant. Penalty on M/s. ACT Trading Co. - Held that: - M/s. ACT Trading Co. is manufacturing certain parts and clearing it to M/s. Agwan Coach Pvt. Ltd.. There is no demand on goods supplied by M/s. ACT Trading Co., therefore their goods which are not liable for confiscation - penalty not sustainable. Appeal allowed in part and part matter on remand.

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• 2017 (11) TMI 286
  CENVAT credit - suo-moto re-credit taken of credit reversed earlier - Held that: - the stock of motor spirit which was de-bonded on 31.12.1998 and re-bonded on 1.1.1998 was cleared by the assessee on payment of duty during the period 1.1.1999 to 6.1.1999. This report is based on verification of RG.1, PLA, RT-12 records. It is observed that the adjudicating authority though directed the Superintendent for aforesaid report and despite the report was submitted before him he has not considered the same - both the lower authorities have not applied their mind and handled the matter in a very casual manner. In view of the above position, the matter needs to be reconsidered - appeal allowed by way of remand.

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• 2017 (11) TMI 285
  Classification of goods - solvents and turpentine oil - classified under CTH 3814 or under CTH 3805.19? - scope of SCN - Held that: - it would not be proper to say that the original adjudicating authority has gone beyond the show-cause notice. The original adjudicating authority has given his reasoning for classifying the product under 3814. In these circumstances, we find that the impugned order wrongly holds that the original adjudicating authority has gone beyond the scope of show-cause notice. Since the original adjudicating authority has given his reasoning for classifying the product under 3814 it was for Commissioner (Appeals) to decide if the said claim is correct or not. The Commissioner (Appeals) has not examined the finding on classification given by the original adjudicating authority on the ground that the said findings are beyond the scope of show-cause notice. We find that the said assertion is not proper as the show-cause notice had indeed sought to classify certain solvents under 3814 also. Matter remanded to Commissioner (Appeals) to decide the issue of classification of the product on merit - appeal allowed by way of remand.

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• 2017 (11) TMI 284
  Removal of waste and scrap generated on breakage of glass bottle - levy of tax - Held that: - reliance placed in the case of Dhillon Kool Drinks & Beverages [2001 (5) TMI 942 - SUPREME COURT], where it was held that the waste and scrap arising out of the broken bottles through the process of filling, handling etc. was neither generated during the course of manufacture of glass bottles nor it could be considered as a manufactured product - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 283
  CENVAT credit - credit availed on the strength of CHA invoice - For some bills of CHA in respect of Ahmednagar factory, credit was availed by Kanjur Marg factory wrongly - Held that: - If the data of the duty payment at Ahmednagar unit suggests that they were paying excise duty in cash, and were able to exhaust entire cenvat credit then the appellants plea would carry weight. However, if the same cannot be established then the innocence pleaded by the appellants cannot be taken on face value. In these circumstances, insofar as the issue relates to credit taken by the Kanjur Marg unit in respect of service availed in Ahmednagar unit is concerned, the issue of limitation and penalty is set aside and the matter is remanded to the original adjudicating authority to ascertain if the innocence pleaded by the appellants is justified by examining the data of duty paying and the cenvat credit availability at Ahmednagar unit - matter on remand. CENVAT credit - invoices issued in the name of CHA for the service availed by CHA in respect of imports made by them during the CHA - Held that: - From the documents presented it is seen that the said documents are not addressed to the appellants. In few documents the name of appellant appears as consignee - The invoice, bills, challan etc. issued by different agency have not been produced before the Tribunal also and In these circumstances, credit of the said service received by the CHA and which are claimed to have been received in relation to appellants consignment cannot be permitted - appeal dismissed. Extended period of limitation - Held that: - it is seen that the appellants have taken cenvat credit without the strength of any duty paying document in their name. In these circumstances, the invocation of extended period of limitation and imposition of penalty is fully justified. Appeal allowed in part.

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• 2017 (11) TMI 282
  Reversal of CENVAT credit - N/N. 12/12-CE dated 17.03.2012 - Rule 6(6) of CCR 2004 - extended period of limitation - Held that: - the law permits appellants not to reverse credit in respect of certain clearances. The clearances in respect of which reversal is not required are clearly specified under sub-rule 6(6) of Cenvat Credit Rules. The nature of clearance made under notification 12/12-C.E dated 17.03.2012 which are excluded from mischief of the said sub-rule are clearly specified in the said sub-rule itself. The clearance made by the appellants do not fall under this category - Though admittedly the ER-1 contained details of the value of the exempted goods cleared by the appellants still from that day it cannot be ascertained if the goods cleared under N/N. 12/12-C.E by the appellants in the instant case were hit by mischief of Rule 6(6) of Cenvat Credit Rules, since the exclusion from the mischief of Rule 6(6) is very specific. The appellants cannot claim that the facts that the goods were not related power projects was known to the revenue or they had disclosed the relevant fact to the revenue. In these circumstances, extended period has rightly been invoked. The appellants have sought to rely on the decision made with reference to Rule 57CC of erstwhile Central Excise Rules, 1944 - The sub-rule 6(6) deals with the excisable goods. A product is different from goods. A product is categorical where as goods are specified goods. While a product can be a class, goods are only specified goods. Thus while Rule 57CC was dealing with products the Rule 6(6) deals with excisable goods. Therefore for application of Rule 57CC the product has to be exempted. For application of Rule 6(6) the goods have to be exempted. In these circumstances, it is clear that the two rules are significantly different and therefore the provisions of Rule 57CC are not the same as Rule 6(6) of Cenvat Credit Rules. Appeal dismissed - decided against appellant.

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• 2017 (11) TMI 281
  Restoration of appeal - N/N. 5/1998-CE dated 2nd June 1998, N/N. 6/2000-CE dated 1st March 2000 and N/N. 3/2001-CE dated 1st March 2001 - utilisation of materials procured against CT-2 form by which goods are eligible to be procured at concessional rate of duty subject to fulfillment of the conditions prescribed in notification - Revenue alleged that the materials received against these CT-2 forms had not been used in the manufacture of power driven pumps designed for pumping water - inclusion of value of exempt raw material in the assessable value of ineligible finished goods - whether compliance with the mandatory condition prescribed in N/N. 5/1998-CE dated 2nd June 1998 is sine qua non and failure to comply with such condition can be visited with denial of duty exemption? Held that: - The facts relating to the procurement of goods by availing the conditional exemption and the utilisation of the goods is not in dispute - Undoubtedly, duty is leviable as per rule 6 of erstwhile Central Excise (Removal of Goods at Concessional Rate of Duty for the Manufacture of Excisable Goods), 2001 on goods procured in accordance with this procedure. That, however, is intended to provide legal sanctity for payment of duty by the buyer of goods cleared without payment of duty. This has been duly acknowledged in the order of the lower authority for confirmation of the demand on goods cleared as such, i.e., bought out. For the goods that were not so cleared but were used in manufacture of goods other than that intended in the exemption notification or used otherwise, the first appellate authority has considered the payment of duty on clearance at a value inclusive of the inputs to be sufficient compliance. The specific provision in the Rules supra for clearance as bought out items does not cover other clearances. All manufactured goods, to the extent that they are not exempted, are required to be cleared on payment of duty. The exemption availed on the goods procured by the appellant enabled the manufacturer to clear the goods without payment of duty but which, nevertheless, requires the recipient to discharge the burden of duty liability in the event of non-utilisation of the goods for the intended purpose. The liability to discharge duty on the goods manufactured out of the inputs so procured remains unchanged and is mandated in the Central Excise Act, 1944; discharge of that liability will not suffice to make good the duty liability that was waived under the exemption notification. The order of the original authority is restored - appeal allowed being restored, as sought.

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• 2017 (11) TMI 280
  Clandestine removal - shortage of inputs and finished goods - non-use of HDPE/LDPE/LLDPE in the manufacture of PP fabrics - allegation against the Appellant Unit is that they have availed the Modvat Credit of the duty paid on imported inputs, namely HDPE/LDPE/LLDPE without using the same in the manufacture of their finished products - Held that: - We find that such allegation is based upon the statement of employees but not corroborated by any evidence. There is no evidence that the raw material did not enter the factory of the Appellant or were not used in manufacture. None of the records of the Appellant Unit has been held to be non reliable. The Appellant has maintained the whole record of receipt of goods in their factory and their utilization in manufacture of finished goods and nothing contrary has been alleged to these records. No evidence has been adduced to show that the Appellant has used any other raw material other than the imported goods nor any evidence of diversion of imported raw material has been brought on record. In such circumstances merely on the basis of statement of employees it cannot be concluded that the imported raw material has not been used in manufacture by the Appellant. Reliance placed in the case of M/s Vikram Cement (P) Ltd. Vs CCE, [2012 (11) TMI 777 - CESTAT NEW DELHI] wherein it was held that the said statement alone cannot be made basis for arriving at the finding of clandestine removal in absence of other corroborative evidence on record. During the visit of officers no samples were withdrawn which could show the contents of raw material in finished goods which can support the allegation of revenue. The revenue has placed reliance upon the Opinion of Director of Laxminarayan Institute of Technology, Nagpur wherein it has been stated that P.P. Granules are the only raw material required for the manufacture of P.P. Fabrics and HDPE, LDPE and LLDPE granules have no role to play in the manufacture of polypropylene fabrics. That the addition of HDPE/LDPE/LLDPE can reduce the cost of Polypropylene fabrics as the polypropylene is around 30% costlier than HDPE/LDPE/LLDPE etc and their addition in propylene fabrics can affect the quality. We find that such opinion nowhere supports the revenue's allegation and is irrelevant to the case - the Revenue has not been able to establish that the impugned inputs were not used by the Appellants in the manufacture of their finished products. Demand of excise duty on finished goods and raw material - Held that: - mere admission of shortages cannot ipso facto lead to conclusion of clandestine removal of such short found goods. We find that the Appellant from the very beginning had been disputing the shortages and the duty so deposited by them were intimated to have been deposited Under Protest. The clandestine removal cannot be alleged only due to shortages in stock. The Revenue has not rebutted the documentary evidence produced by the Appellants - similarly in respect of shortage of inputs the Revenue has not controverted the contention of the Appellants which was duly supported by 57F Challans under which the inputs had been dispatched to Job Workers. No verification was conducted although the detailed explanation was given by the Appellant in their letter dated 23.12.1997. We find that the revenue had sufficient time to examine the claims of the Appellant as the show cause notice was issued after almost 4 years of receipt of letters from the Appellant. The Appellant had produced the said job work challans which also shows the receipt of the goods after the processes having been carried out by the Job Worker. In such view of the facts of the case, these evidence of the Appellant cannot be discarded by merely terming the same as afterthought. The demand and penalties against the Appellant Unit is not sustainable and we set aside the same - the penalty against Managing Director of the Appellant Company is also not sustainable - appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 277
  SSI exemption - use of Brand name - apart from clearance of goods, which are sold to the domestic buyers, the appellants have also sold the goods to the merchant exporter under the brand name of merchant exporter - case of the department is that the goods bearing the brand name of buyer is not eligible for SSI exemption - Board Circular No. 648/39/2002-CX dated 25.7.2002 - Held that: - merely because the goods first cleared to merchant exporter and then the same goods is exported, simplified procedure prescribed by the board cannot be denied to the appellant - The Tribunal in various decisions has consistently taken a stand that if the supply to the merchant exporter is against Form14B/Form-H, the same will be treated as export clearance - Therefore, in the present case the goods admitted supplied against Form 14-B which should be treated as export and the same should not be included in the aggregate clearance value of ₹ 100 lakhs provided under N/N. 8/2001-CE & 8/2002-CE. However, the adjudicating authority as well as the first appellate authority have not verified the factual aspect and they have rejected the claim of the appellant's goods sold to the merchant exporter is export clearance only on the basis that goods were not exported directly from the appellant's factory - matter needs to be remanded to adjudicating authority only for the purpose of verification that all the clearances of branded goods to the merchant exporter are covered by the Form 14B - appeal allowed by way of remand.

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• 2017 (11) TMI 271
  Applicability of provisions of law - relevant time - the provision of law as it existed at the time of offence would be applicable or the provision of law as it existed at the time of show-cause notice? - Held that: - The courses of action under Section 11A (1A) arises at the time of issue of show-cause notice and therefore, the law as applicable at the time of issue of show-cause notice should be made applicable - reliance placed in the case of ANEJA PROPERTY DEALER Versus COMMISSIONER OF C. EX., LUDHIANA [2008 (9) TMI 136 - CESTAT, NEW DELHI], where it was held that new provisions of Section 73(1A) is in existence at the time of issuance of SCN (21.4.06). So, Section 73(1A) is applicable - appeal dismissed - decided against appellant.

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• 2017 (11) TMI 279
  CENVAT credit - services which is in connection of shifting and setting of a new plant from Bhandup to Taloja and there to present location of the appellant - Held that: - Since the entire service is within the units of the appellant themselves and finally by availing such services the plant was setup in the factory of the appellant, therefore the services received in connection of sifting and setting of plant is admissible input services and credit is available - Moreover, even if it is accepted that the credit related with the unit either Bhandup or Taloja, in terms of Rule 10 of CENVAT Credit Rules, 2004 it is allowed to be transferred to unit where the factory is shifted. For this reason also credit cannot be denied - credit allowed. Penalty - non-reversal of CENVAT credit in respect of job work goods though the appellant had paid the CENVAT credit but interest was not paid - Held that: - there is no provision in the Act and Rules made there under for imposition of penalty for non-payment of interest. In absence of any such provision the demand of penalty of ₹ 94,750/- does not sustain and the same is set aside. Penalty - excess credit availed - Held that: - as per the fact of the case, on pointing out the discrepancy of the Audit party, appellant have admittedly reversed credit of ₹ 89,478/-. It is also noticed that there is no adjudication of any amount of CENVAT credit on this count. In absence of any determination of demand in terms of Section 11A(1), no penalty under Section 11AC can be imposed. Appeal allowed in part.

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• 2017 (11) TMI 278
  CENVAT credit - manufacture of taxable as well as exempt goods - Rule 6(3)(b) of CCR, 2004 - the respondent have opted for retrospective amendment enacted in Finance Act, 2010 during period when the said scheme was not in existent - Held that: - even without applying the amendment provision made under Finance Act, 2010 the respondent was eligible for reversal of proportionate credit for the reason that they had reversed proposed reversal credit before issue of show-cause notice and subsequently also paid the interest thereon. Once the CENVAT credit reversed along with interest, it is as good as non-availment of CENVAT credit as held by the Hon'ble Supreme Court in the case of Chandrapur Magnet Wires (P) Ltd. Vs. Collector [1995 (12) TMI 72 - SUPREME COURT OF INDIA] - when CENVAT credit along with interest paid attributed to the exempted goods, no further demand can be sustained - appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 276
  Waste - levy of excise duty - department case is that the excise duty on the removal of such waste should be paid considering such waste yarn as finished yarn and the value of finished yarn should be adopted for payment of duty - Held that: - the appellants have drawn the samples of synthetics filament yarn from the production before packing and before entering into RG-1 register. The record of the said drawal of samples was maintained by the appellants. After testing of the samples, it gets converted into waste which was cleared by the appellant on payment of duty. As per this fact, the goods which were cleared from the factory, is the yarn waste and not the finished yarn. Therefore, the duty considering the said waste as finished yarn is absolutely incorrect. The removal of waste yarn is in the same manner as goods are removed for home consumption - there is no dispute that the appellants have discharged the excise duty on the clearances of waste yarn arising out of testing of yarn. Appeal allowed - decided in favor of appellant.

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• 2017 (11) TMI 275
  Exemption under N/N. 8/96-CE dated 23/07/1996 as amended by N/N. 28/96-CE dated 11/09/1996 - case of the department is that the respondents have used less than 75% of the weight of the pulp made from non-conventional raw materials - Held that: - the department conclusively failed to provide the documents seized from the respondents. In such case, the respondent cannot make an effective defence or justify whether non-conventional raw materials was less than 75% or more than 75%. If the relied upon documents could not be produced by the department, no proceedings can be made against the respondents, irrespective of fact whether the appellant has manipulated the records or otherwise - the Ld. Commissioner has dropped the demand on the ground of time bar by giving a very reasoned finding that all the records were being maintained by the respondents and the department was not prevented to verify such records from time to time, particularly when the respondent was claiming the exemption notification. Therefore, the dropping of demand on time bar also found to be correct and legal - appeal dismissed - decided against Revenue.

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• 2017 (11) TMI 274
  Remission of duty - penalty u/s 11AC - Held that: - The estimate given by the appellants is an estimate of the stock it had before the flood and after the flood, which does not mean that the goods have been destroyed in flood. This difference would also include the goods which could not be accounted for various reasons. In these circumstances, no option but to rely on the estimate given by the insurance company. The appellants would be entitled to the remission of the quantum estimated by the insurance company and for the balance they would be required to pay the duty - appeal allowed by way of remand.

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• 2017 (11) TMI 273
  Refund of deposit made during investigation - denial on the ground of time limitation and unjust enrichment - Section 11B of CEA, 1944 - case of appellant is that the amount of refund is of deposit made during the investigation, therefore it is not a duty, and refund of such amount is not governed by Section 11B of CEA, 1944 - Held that: - the amount paid was under the head of Central Excise duty, therefore this is a case of refund of excise duty and not anything else, if this be so the refund of duty, in the present case, is clearly governed by Section 11B of Central Excise Act, 1944 - As per the provisions of Section 11B, sub-section (5) (B) (ec), the relevant date which is taken for 1 year limitation is the date of passing of the order by which the demand was dropped. In the present case the order was passed on 12.7.2010, refund claim was filed on 1.2.2012 that is much after the 1 year of relevant date, accordingly the refund is clearly time barred. Unjust enrichment - Held that: - Hon’ble Supreme Court in the case of Sahakari Khand Udyog Mandal Ltd. Vs. Commissioner [2005 (3) TMI 116 - SUPREME COURT OF INDIA] held that every refund should be passed through the test of unjust enrichment, therefore even the amount deposited during the investigation, refund of the same has to pass through test of unjust enrichment. The appellant have failed to establish that incidence of refund amount has not been passed on to any other person. Appeal dismissed - decided against appellant.

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• 2017 (11) TMI 272
  Principles of Unjust enrichment - refund claim - excess duty paid by mistake - Held that: - the appellant though has shown the excise duty in the invoices but the same has not been taken from the buyers - also, both the authorities have not considered the certificate issued by the Chartered Accountant who has verified from the records and has certified that the appellants have not collected the duty from the buyer with regard to the disputed invoices - also, the appellants have not collected the duty from the buyers and have borne the duty by themselves. Therefore the principles of unjust enrichment are not applicable in the facts and circumstances of this case. The appellant has opted duty from the exemption on 10.07.2007 is also not correct because the appellants have not filed any declaration with the Department in terms of Notification 8/2003 during the entire financial period and the duty was paid by mistake and was not recovered from the buyers and therefore crediting the refund of fee being sanctioned by the original authority is not sustainable in law. Appeal allowed - decided in favor of appellant.

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• Indian Laws

• 2017 (11) TMI 302
  Challenges a detention order issued under Section 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (“COFEPOSA”) - Held that:- The petitioner is a COFEPOSA detenu. He was throughout advised by the competent legal brains. He had the advantage of best legal assistance. He was briefing counsel and the senior counsel throughout. He could have pressed, at least in the second Writ Petition, all these grounds which are now pleaded. We have referred to the earlier pleadings and heavily relied upon by Mr. Yagnik. They are to be found in the memo of the second Criminal Writ Petition. In the representations and Applications seeking revocation of the detention order. Those were rejected and by orders dated 8th January 2017 and 4th February 2017. The Petitioner challenged these orders in the Second Criminal Writ Petition. The Petitioner specifically urged in that petition that more than eight months have elapsed after the Hon'ble Supreme Court dismissed his SLP by order dated 22nd April 2016. However, the detention order is not acted upon. Thus, the delay is not of 6 and 1/2 years but 8­10 months after the order of the Hon'ble Supreme Court. In grounds (b) and (e) at pages 18, 19 of the memo in the second Criminal Writ Petition the point or ground of delay is squarely taken. If that was withdrawn with the liberty to raise the contentions based on Subhash Popatlal Dave, we do not see how the above grounds were not available for being raised on 20th April, 2017. By then, the entire law had been settled. We have only referred to the settled legal principles and not departed or deviated from the same. Once this very plea which was available was indeed raised, so also the ground was elaborated, then, not pressing it does not mean that there is any fresh event or subsequent development which adversely affects the life and liberty of the petitioner. Even otherwise, throughout what has been pointed out and from the record as to how the petitioner was not available in these 10 to 12 months. The petitioner's wife and son had made statements which were recorded and which we do not find in any way explained, far from retracted, that last one or one and half years and at least from 22nd April, 2016 onwards, the petitioner was not available at his residential address. Thus, there is no enormous and unexplained delay in execution and service of the order of detention dated 11th February 2011. Its operation, execution and enforcement was stayed by this Court from 3rd May 2011 to 28th October 2013 and for a further period of three weeks thereafter. Then, the Petitioner approached the Hon'ble Supreme Court which stayed the detention order further till 22nd April 2016. It is only after that date the order became executable. However, even the delay in execution after 22nd April 2016 till April 2017 was challenged in the Second Criminal Writ Petition by the Petitioner – Detenue but he withdrew it with liberty to raise the very same grounds again. Thus, this liberty is of no avail. In that garb, the same ground which was expressly taken but not pressed cannot be raised again.The Petition is therefore dismissed.

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