TMI Tax Updates - e-Newsletter
March 8, 2018

Case Laws in this Newsletter:

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

Highlights / Catch Notes

• GST:

  Benefit of Reduction of late fee in case of delayed filing of FORM GSTR-5A withdrawn.
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• GST:

  E-way bill Rules - Rule 138D as amended - Facility for uploading information regarding detention of vehicle
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• GST:

  E-way bill Rules - Rule 138C as amended - Inspection and verification of goods
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• GST:

  E-way bill Rules - Rule 138B as amended - Verification of documents and conveyances.
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• GST:

  E-way bill Rules - Rule 138A as amended - Documents and devices to be carried by a person-in-charge of a conveyance
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• GST:

  E-way bill Rules - Rule 138 as amended - Information to be furnished prior to commencement of movement of goods and generation of e-way bill
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• GST:

  Availing ITC on stock held as on 30.6.2018 - submission of FORM GST TRAN 2 - Date extended from six months to 31st March 2018, or within such period as extended by the Commissioner, on the recommendations of the Council
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• Income Tax:

  The petitioner’s activities are not “commercial activity” within the meaning of clause (b) to Section 10(46) - HC issued directions to the government to accordingly issue the necessary notification under the aforesaid Section in respect of the "specified income" within a period of three months - HC
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• Income Tax:

  Reopening of assessment - special audit report as basis for reopening - though the orders of assessment passed u/s 143(3) have sanctity attached, it does not grant immunity to an assessee from proceedings for reopening of assessment year of Section 147 / 148, provided the jurisdictional requirements therein are satisfied, at the time when the reopening notice is issued - HC
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• Income Tax:

  Registration u/s. 12A - Exemption u/s 11 - Assessee is doing the charitable work to promote the awareness of universal teaching of SGGS (Shri Guru Granth Sahib) and other religious “Granths” among the general public and in the younger generation, which is very much essential in these days for the betterment of the young generation - registration allowed. - AT
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• Income Tax:

  Penalty u/s 271(1)(c) - The assessee cannot be fastened with the law of penalty without there being a clear specific charge. Fixing a charge should not be in a casual manner and it has not been permitted under the law. - AT
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• Income Tax:

  Claim of deduction u/s 57(iii) - activities undertaken by the assessee club - entrance fee receipt - assessee is not eligible to claim any deduction u/s 57(iii) of the Act over and above the deduction earlier allowed by the Tribunal in assessee's own case to the extent of 7.5%. - AT
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• Income Tax:

  Penalty imposed u/s 221(1) r.w.s. 140A(3) - non-payment of self-assessment tax - without there being any requisite corresponding amendment to Sec. 221 in consonance with the amendments carried out in Sec. 140A(3) w.e.f. 01.04.1989, the AO erred in levying the penalty. - AT
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• Income Tax:

  Addition u/s 14A - ‘net’ interest expenditure - where after setting off interest earned against the interest expenditure no further interest expense remains then disallowance cannot be made u/s 14A of the Income-tax Act, 1961.- AT
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• Customs:

  Refund of IGST on Export– Invoice mis-match cases –Alternative Mechanism with Officer Interface
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• IBC:

  Corporate insolvency proceedings - liability of the guarantee in the books of corporate debtor is in the name of the daughter - the contesting respondents do not come within the meaning of ‘Financial Creditor’ and the application u/s 7 at their instance was not maintainable - AT
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• IBC:

  IBC - The moratorium order passed by this Tribunal applies in respect of Bank Guarantees other than Performance Guarantees furnished by the Corporate Debtor in respect of its property since it comes within the meaning of ‘security interest’. Respondent No. 1 is not entitled to invoke Bank Guarantees other than that comes within the meaning of performance Guarantees, during Moratorium period. - Tri
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• Service Tax:

  Insurance Auxiliary Service - actuary services or not - Surely, the appellant does not possess any of these qualifications nor they have been appointed or registered as actuary. This being so, the main plank of the SCN cannot survive - AT
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• Service Tax:

  Supply of tangible goods for use - no documentary evidence was produced to establish that in respect of the transactions, the VAT payment has been made - matter needs to be reconsidered for verification of the actual payment of VAT.
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• Service Tax:

  Liability of service tax - auction of property service - difference between auction and tender - while both sale by tender and sale by auction may have a common intendment of selling the goods, the modalities and the processes involved in each are very different - AT
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• Central Excise:

  Attachment of immovable property - recovery of dues of lessee - Merely because Harshwardhan Exports agreed not to vacate the premises till full export obligations are discharged, would not create any additional right in the property which can be sold for the purpose of recovery of the dues of Harshwardhan Exports. - HC
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• Central Excise:

  Classification of goods - fabric based blinds for window covering - of textile fabric / material - coated with a chemical compound which is not predominant in nature - the made up textile articles made out of such fabric and in particular, interior blinds will be correctly classifiable under CET Heading 6303 - AT
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• Central Excise:

  Classification of goods - an individual tile, which has an inherent well defined visible pattern or design contributed by the marble or stone chips mixed in the cement, is without any doubt, a mosaic tile, notwithstanding the fact that the goods are marketed by the manufacturer by using the Trade Name coined by the manufacturer. - AT
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• VAT:

  Rate of tax - uniform rate of tax or different rate of tax on purchase of goods for use in the works contract - It was open to state legislatures to provide uniform rates of tax on goods involved in the execution of works contracts. Many state legislatures did so. The Karnataka legislature did so with effect from 1.4.2006, not earlier. - SC
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• VAT:

  Inter-state sales - sandalwood - Form-C - Merely because, the petitioner transported the goods outside the State will not bring the transaction within the ambit of the inter state sale - HC
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Articles

• MEANING AND SCOPE OF NOTIFICATION
• “The cost of acquisition” is a definite sum incurred to acquire capital asset- the judgment of Punjab and Hariyana High Court (FB)** appears to be contrary to law ans settled legal position - deserve to be reviewed.
• INVESTOR EDUCATION AND PROTECTION FUND

Notifications

• DGFT

• 52/2015-20 - dated 7-3-2018 - FTP
  Amendment in Para 2.17 of the Foreign Trade Policy 2015-20 on "Prohibition on direct or indirect import and export from/to DPRK (Democratic People's Republic of Korea) in terms of UNSC resolutions concerning DPRK

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• GST

• 13/2018 - dated 7-3-2018 - CGST
  Rescinding notification No. 06/2018 - CT dated 23.01.2018

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• 12/2018 - dated 7-3-2018 - CGST
  Central Goods and Services Tax (Second Amendment) Rules, 2018

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• GST - States

• F/10/05/2018/CT/V (17) - dated 25-1-2018 - Chhattisgarh SGST
  Date for Intrastate eWaybill

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• F-10-2/2018/CT/V (07)-09/2018-State Tax - dated 24-1-2018 - Chhattisgarh SGST
  Amendment of notification No. 4/2017-State Tax dated 19.06.2017 for notifying e-way bill website

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• F-10-2/2018/CT/V (06)-07/2018-State Tax - dated 24-1-2018 - Chhattisgarh SGST
  Reduction of late fee in case of delayed filing of FORM GSTR-6

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• F-10-2/2018/CT/V (05)-06/2018-State Tax - dated 24-1-2018 - Chhattisgarh SGST
  Reduction of late fee in case of delayed filing of FORM GSTR-5A

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• F-10-2/2018/CT/V (03)-04/2018-State Tax - dated 24-1-2018 - Chhattisgarh SGST
  Reduction of late fee in case of delayed filing of FORM GSTR-1

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• F-10-97/2017/CT/V (190)-01/2018-State Tax - dated 1-1-2018 - Chhattisgarh SGST
  Seeks to amend Notification No. F-10-46/2017/CT/V/(90), dated the 1st July, 2017

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• F-10-98/2017/CT/V (187) - 73/2017 - State Tax - dated 29-12-2017 - Chhattisgarh SGST
  Waives late fee for failure to furnish Return in FORM GSTR-4

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• F-10-98/2017/CT/V (186) - 71/2017 - dated 29-12-2017 - Chhattisgarh SGST
  Extends the due dates for quarterly furnishing of FORM GSTR-1 for taxpayers with aggregate turnover of upto ₹ 1.5 crore

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• F.1-11(91)-TAX/GST/2018(Part)-09/2018-State Tax (Rate) - dated 21-2-2018 - Tripura SGST
  Amendments in the Notification No. 45/2017- State Tax (Rate), dated the 14th November, 2017.

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• F.1-11(91)-TAX/GST/2018(Part)-08/2018-State Tax (Rate) - dated 21-2-2018 - Tripura SGST
  Exempts the state tax on intra-state supplies of goods Old and used, petrol Liquefied petroleum gases (LPG).

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• F.1-11(91)-TAX/GST/2018(Part)-07/2018-State Tax (Rate) - dated 21-2-2018 - Tripura SGST
  Amendments in the Notification of the Government of Tripura in the Finance Department, No.2/2017-State Tax (Rate), dated the 29th June, 2017.

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• F.1-11(91)-TAX/GST/2018(Part)-06/2018-State Tax (Rate) - dated 21-2-2018 - Tripura SGST
  Amendment in the Notification No. 01/2017-State Tax (Rate), dated the 29th June, 2017.

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• F.1-11(91)-TAX/GST/2018(Part)-05/2018-State Tax (Rate) - dated 21-2-2018 - Tripura SGST
  Central Governments share of profit petroleum intra-State supply of services by way of grant of license or lease to explore or mine petroleum crude or natural gas or both.

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• F.1-11(91)-TAX/GST/2018(Part)-04/2018-State Tax (Rate) - dated 21-2-2018 - Tripura SGST
  Registered persons who supply development rights to a developer, builder, construction company or any other registered person against consideration, wholly or partly, in the form of construction service of complex, building or civil structure.

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• F.1-11(91)-TAX/GST/2018(Part)-03/2018-State Tax (Rate) - dated 21-2-2018 - Tripura SGST
  Amendments in the Notification No. 13/2017-State Tax (Rate). dated the 29th June, 2017.

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• F.1-11(91)-TAX/GST/2018(Part)-02/2018-State Tax (Rate) - dated 21-2-2018 - Tripura SGST
  Amendment in the Notification 12/2017-State Tax (Rate), dated 29th June 2017.

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• F.1-11(91)-TAX/GST/2018(Part)-01/2018-State Tax (Rate) - dated 21-2-2018 - Tripura SGST
  Amendment in the Notification No. 11/2017-State Tax (Rate), dated 29th June, 2017.

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• F.1-11(91)-TAX/GST/2017(Part) - dated 5-1-2018 - Tripura SGST
  The Tripura State Goods and Services Tax (Fourteenth Amendment) Rules, 2017.

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• F.1-11(91)-TAX/GST/2017(Part) - dated 5-1-2018 - Tripura SGST
  Extends the due dates for quarterly furnishing of FORM GSTR-1 for taxpayers with aggregate turnover of upto ₹ 1.5 crore

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• F.1-11(91)-TAX/GST/2017(Part) - dated 5-1-2018 - Tripura SGST
  Waiving the late fee payable for failure to furnish the return in FORM GSTR-4.

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• F.1-11(91)-TAX/GST/2017(Part) - dated 5-1-2018 - Tripura SGST
  Notifying the date from which provisions of the TSGST Rules relating to E-Way Bill

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• F.1-11(91)-TAX/GST/2017(Part-IIIA) - dated 1-1-2018 - Tripura SGST
  Amendments in the Notification No.F.1-11(91)-TAX/GST/2017(part), dated the 29th June, 2017.

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• F.1-11(91)-TAX/GST/2017(Part) - dated 26-12-2017 - Tripura SGST
  Corrigendum to the Notification of the TSGST (Thirteenth Amendment) Rules,2017.

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• F.1-11(91)-TAX/GST/2017(Part) - dated 21-12-2017 - Tripura SGST
  The TSGST (Thirteenth Amendment) Rules, 2017

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• 165-F.T.-11/2018-State Tax - dated 5-2-2018 - West Bengal SGST
  Seeks to postpone the coming into force of the e-waybill rules by rescinding Notification No. 2312-F.T dated 29.12.2017.

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• 137-F.T.-09/2018-State Tax (Rate) - dated 25-1-2018 - West Bengal SGST
  Seeks to amend notification no 2023-F.T dated 14.11.2017 so as to correct name of certain department / institution.

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• 136-F.T.-08/2018-State Tax (Rate) - dated 25-1-2018 - West Bengal SGST
  Seeks to exempt certain portion of tax on specified old and used Motor Vehicles from GST under section 11 of the WBGST Act, 2017.

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• 135-F.T.-07/2018-State Tax (Rate) - dated 25-1-2018 - West Bengal SGST
  Seeks to amend notification No 1126-F.T. dated 28/06/2017, which exempts certain goods from GST under section 11 of the WBGST Act, 2017.

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• 134-F.T.-06/2018-State Tax (Rate) - dated 25-1-2018 - West Bengal SGST
  Seeks to amend notification No 1125-F.T. dated 28/06/2017, which prescribes GST rates of goods.

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• 133-F.T.-05/2018-State Tax (Rate) - dated 25-1-2018 - West Bengal SGST
  Seeks to exempt Central Government’s share of Profit Petroleum from State tax.

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• 132-F.T.-04/2018-State Tax (Rate) - dated 25-1-2018 - West Bengal SGST
  Seeks to provide special procedure with respect to payment of tax by registered person supplying service by way of construction against transfer of development right (TDR) and vice versa.

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Circulars / Instructions / Orders

• VAT - Delhi - F.6 (7)/DVAT/L&J/2013-14/2603 - dated 16-2-2018
  DELGATION OF POWER VESTED IN COMMISSIONER (VAT)
• GST - States - F.1-11(100)-TAX/GST/2017/11289-96 - dated 21-12-2017
  Extension of time limit for intimation of details of stock held on the date preceding the date from which the option for composition levy is exercised in FORM GST CMP-03
• Customs - 08 /2018 - dated 5-3-2018
  Subject: Refund of IGST on Export– Invoice mis-match cases –Alternative Mechanism with Officer Interface - reg.
• Customs - 31/2018 - dated 1-3-2018
  Subject: - Implementation of paperless processing under SWIFT — Mandatory uploading of supporting documents for all the bills of entry filed in JNCH w.e.f. 15.03.2018- Regarding.
• Customs - 07/2018 - dated 1-3-2018
  Sub: Extending eSANCHIT application to all EDI locations – reg.
• Customs - 30/2018 - dated 28-2-2018
  SUB : Information on details of Shipping Bills in cases where exporters who have inadvertently ticked “N” (for No) instead of “Y” (for Yes) in “Reward column of shipping bills while filing the EDI shipping bills, but have declared the intent in the affirmative (in wordings) in the shipping bill –reg.

News

• The Competition Commission of India (CCI) imposes penalties upon three Airlines for concerted action in fixing and revising fuel surcharge (FSC) on cargo transport

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• “Make in India” Action Plan

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• RBI Reference Rate for US $

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Case Laws:

• Income Tax

• 2018 (3) TMI 220

  Revision u/s 263 - setting aside the assessment order by the CIT in respect of land premium - Held that:- In the present case, the CIT has directed the Assessing Officer to make necessary examination regarding the extent of land acquired by the assessee with reference to which land premium of ₹ 3,50,00,000/- was demanded and rate at which said land was acquired and to whom the lands were sold and land premium was received and such receipts on account of transfer fees and stamp duty would constitute capital receipts. We are of the opinion that the Assessing Officer will make enquiries as directed by the CIT and make fresh assessment. Accordingly, we uphold the order of the CIT and dismiss the ground of appeal of the assessee.

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• 2018 (3) TMI 230

  Penalty u/s 271(1)(c) - eligibility to benefit of Section 273A - Held that:- In the present case, the petitioner was in possession of the detailed and specific information in respect of the suspicious long term capital gain on share, but he failed to submit the same prior to the detection of the Assessing Officer (prior to letter dated 27.10.2017 issued by the AO and neither he produced any material evidence or document that his case is of genuine hardship nor he pointed out that it would cause genuine hardship financially or in any manner and thus, the learned authority rightly rejected the prayer for waiver of penalty in section 273A(1)(4) of the Act, as he failed to fulfill the conditions prescribed therein and thus, we are of the view that the learned authority has not committed any legal error in passing the impugned order, no case is made out to interfere with the well reasoned impugned order as prayed by the petitioner is made out. The petition filed by the petitioner has no merit and is accordingly, dismissed.

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• 2018 (3) TMI 219

  Registration u/s. 12A denied - contents of the trust deed claims the trust to be as only a religious trust and not the educational trust or social welfare trust as shown by the assessee in its submissions during the hearing - proof of charitable activities - Held that:- After receiving the Application for grant of registration u/s. 12AA in the prescribed Form, from the Assessee/trust, the Ld. CIT(E) has not proved with the evidences that the Assessee/Trust is not genuine and is not doing any charitable activity to achieve its objects.

  At the time of granting the registration u/s. 12AA the Authority has to see or examine the genuineness of the activities of the trust or institution. Assessee has established that assessee is doing the genuine charitable activities to achieve the object of the Trust by making every possible efforts even by giving own rent free accommodation to the Trust.

  Assessee is doing the charitable work to promote the awareness of universal teaching of SGGS (Shri Guru Granth Sahib) and other religious “Granths” among the general public and in the younger generation, which is very much essential in these days for the betterment of the young generation. We further note that Assessee has filed sufficient evidences before the Ld. CIT(E) and before us for establishing the genuineness of the activity of the trust. Thus impugned order passed by the Ld. CIT(E), Chandigarh for not granting registration u/s. 12AA is not sustainable in the eyes of law - Decided in favour of assessee.

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• 2018 (3) TMI 218

  Adjustment of brought forward unabsorbed depreciation before allowing deduction u/s 10A - revision u/s 263 - Held that:- Unabsorbed depreciation is not to be reduced while working out deduction u/s 10A of the Act. See case of Canam International Pvt. Ltd.[2015 (2) TMI 108 - ITAT DELHI]. The impugned order passed by the learned Pr. CIT u/s.263 of the I.T. Act is not sustainable in the eyes of law. - Decided in favour of assessee

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• 2018 (3) TMI 229

  Addition of bogus payments - AO disallowed 40% of the total payments made on the basis of the payments made to 13 parties, who were not produced before him during the assessment proceedings - Tribunal justifying the deletion made by the CIT(A) - Held that:- We are unable to understand on what basis the disallowance is made on the total payments, if at all it should have been restricted only to the amounts paid to the 13 persons who are not produced before the Assessing Officer. Be that as it may, we find that the respondent assessee had done everything to produce necessary evidence, which would indicate that the payments have been made to the parties concerned.

  The details furnished by the respondent assessee were sufficient for AO to take further steps if he still doubted the genuineness of the payments to examine whether or not the payment was genuine. AO on receipt of further information did not carry out the necessary enquiries on the basis of the PAN numbers, which were available with him to find out the genuineness of the parties. The CIT(A) as well as the Tribunal have correctly held that it is not possible for the assessee to compel the appearance of the parties before the Assessing Officer. - Decided against revenue

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• 2018 (3) TMI 217

  Penalty u/s 271(1)(c) - non recording of satisfaction - addition income filed in response to notice issued under section 153A - Held that:- The assessee was not entitled to get the benefit of immunity under clause (b). Where voluntary disclosure was made by the assessee and where the statement was not extorted from him, then meaning of expression ‘voluntary’ was elaborated to hold the said expression ‘voluntary’ was in the context that the statement made by him was not extorted from him by applying force.

  Where penalty proceedings have been initiated on both the limbs of section 271(1)(c) of the Act and the Assessing Officer having failed to record satisfaction in respect of one of the limbs of section 271(1)(c) of the Act and the penalty having been levied for concealment or furnishing of inaccurate particulars of income i.e. without coming to a finding as to which limb has not been fulfilled by the assessee, then penalty order passed in the case suffers from infirmity. Accordingly, the same is cancelled. The Assessing Officer is directed to delete the penalty levied under section 271(1)(c) of the Act. - Decided in favour of assessee partly.

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• 2018 (3) TMI 216

  Revision u/s 263 - validity of reference made by the AO to the DVO for the valuation of the property - Held that:- The amendments which are being applicable from any date other than first April of assessment year would be applied from the next Assessment Year.

  Thus, it is clear that the amendment brought under the statutory provisions of Section 55A of the Act is not applicable in the year under consideration. As the value adopted by assessee is more than the fair market value then no reference to Valuation Officer would have been made as per the provision of Section 55A(a) as it is administered at the relevant time. Once, we have reached to the conclusion no reference can be made to the DVO for the year under consideration in the given facts and circumstances. Thus on the same basis, the assessment order cannot be held as erroneous in so far as prejudicial to the interest of revenue.- Decided against revenue

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• 2018 (3) TMI 228

  Reopening of assessment - proof of providing sufficient opportunities to the petitioner - unexplained investment under Section 69 - Held that:- By letter dated 24.11.2017, the petitioner was asked to show cause why the agricultural income of ₹ 1.6 crores should not be assessed to tax as income from other sources, investment in immovable properties for ₹ 33 lakhs be assessed as unexplained investment under Section 69 for failure to prove the source of purchase and cash deposit of ₹ 23.54 lakhs be assessed as unexplained cash u/s 68. The hearing was fixed on 29.11.2017 and on that day also, there was no response on the side of the petitioner. By letter dated 01.12.2017, the respondent called upon the petitioner to produce additional details and the case was posted on 05.12.2017. On 05.12.2017, the petitioner sought time till 11.12.2017. Thereafter, the case was adjourned to 08.12.2017. Again the case was adjourned to 18.12.2017 and even on that day, there was no response from the petitioner. Hence, the respondent had passed the assessment order on 19.12.2017 and despatched the same to the petitioner. Therefore, from the above details given by the respondent, it is clear that the respondent had given sufficient opportunities to the petitioner. However, the petitioner had failed to utilize those opportunities and produce the documents before the respondent. Therefore, the contention that the petitioner was not given due opportunity, cannot be accepted.

  On the other ground that furnishing the reasons for reopening the assessment is concerned, though the petitioner has sought for the reasons for reopening the assessment on 12.12.2017, the Assessing Officer has not furnished the reasons recorded for reopening the assessment to the petitioner. In fact, the petitioner had stated that her letter requesting the reasons recorded for reopening the assessment itself was refused, therefore, the petitioner sent the letter by Speed Post and E-mail to the respondent. Inspite of the same, the respondent had not furnished the reasons recorded for reopening the assessment to the petitioner.

  The respondent is directed to consider the request of the petitioner for furnishing the reasons recorded for reopening the assessment for the year 2013-14 within a period of fifteen (15) days from the date of receipt of a copy of this order

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• 2018 (3) TMI 227

  Rejecting request for issue of notification of exemption u/s 10(46) - Held that:- Petitioner was to provide amenities and facilities in industrial estate and in industrial area in the form of road, electricity, sewage etc. As referred to the functions and objectives for which the petitioner is established. The said activities necessarily require money and funds, which are received from the State Government. Petitioner, given the regulatory and administrative functions performed is required and charges fee, cost and consideration in the form of rent and transfer of rights in land, building and movable properties.

  Similarly payments have to be made for acquisition of land, creation and construction of infrastructure and even buildings. Carrying out and rendering the said activities is directly connected with the role and statutory mandate assigned to the petitioner. It has not been asserted and alleged that these activities were or are undertaken on commercial lines and intent. Petitioner does not earn profits or income from any other activity unconnected with their regulatory and administrative role. Income in the form of taxes, fee, service charges, rents and sale proceeds is intrinsically, immediately and fundamentally connected and forms part of the role, functions and duties of the petitioner.

  Resultantly, the writ petition is allowed and the impugned order is set aside and quashed. The petitioner’s activities, it is held, are not “commercial activity” within the meaning of clause (b) to Section 10(46) of the Act. Directions are issued to the respondents to accordingly issue the necessary notification under the aforesaid Section in respect of the "specified income" within a period of three months from the date a copy of this order is received.

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• 2018 (3) TMI 226

  Reopening of assessment - reasons to believe - special audit report as basis for reopening - Held that:- Petitioner cannot take shelter of the first proviso to Section 147 of the Act. Further the reasons recorded does indicate that the special audit report dated 21 April 2014 is the basis of the reopening notice. Thus in the above facts, it cannot be said that the Assessing Officer did not have reasonable belief that prima facie income chargeable to tax has escaped assessment.

  The second grievance is of non-application of mind by the Assessing Officer to issue the impugned notice, as it is issued upon the borrowed satisfaction of the special audit. On perusal of the reasons recorded, we find that it does indicate application of mind by the Assessing Officer to the facts in the context of audit report to reach the reasonable belief that the income chargeable to tax has escaped assessment. The special audit report was the tangible material which formed the basis of the Assessing Officer's reasonable belief. Thus there is no merit in the above grievance also.

  We find that the power of the Assessing Officer to reopen an assessment under Section 147/148 of the Act on the basis of reasonable belief is not fettled or circumscribed, to be formed only on material found during a tax audit or with material found during examining a case of tax evasion. In fact the basis of fresh tangible material is unqualified i.e. the source of the material could be from any place, however, the only pre-condition is that on the basis of the material so found / obtained by the Assessing Officer, he himself must form a reasonable belief that income chargeable to tax has escaped assessment before issuing a notice for reopening.

  There is sanctity attached to the orders of the assessment passed under Section 143 (3) of the Act. The Assessing Officer is entitled to reopen an assessment only if the jurisdictional requirements as pointed out under Section 147 and 148 of the Act satisfied. Therefore, though the orders of assessment passed under Section 143 (3) of the Act have sanctity attached, it does not grant immunity to an assessee from proceedings for reopening of assessment year of Section 147 / 148 of the Act, provided the jurisdictional requirements therein are satisfied, at the time when the reopening notice is issued. - Decide against assessee.

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• 2018 (3) TMI 215

  Penalty u/s 271(1)(c) - assessee claimed the foreign exchange fluctuation amount on account of an inadvertent error - no clear specification of charge - Held that:- The assessee’s intention was not to conceal the income. The assessee had rightly disclosed it in the Profit and Loss account and not included while computing the taxable income. The revised return of income filed by the assessee has also been accepted by the AO.

  In view of the judgment in the case of CIT vs. Reliance Petro products P. Ltd. (2010 (3) TMI 80 - SUPREME COURT) we are of the view that it is not a fit case for levy of penalty as AO had not given any finding separately as to whether there was concealment of income or whether assessee had furnished inaccurate particulars of income. The AO has imposed the penalty on the ground of disallowance of foreign exchange fluctuation. The assessee cannot be fastened with the law of penalty without there being a clear specific charge. Fixing a charge should not be in a casual manner and it has not been permitted under the law. - Decided in favour of assessee

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• 2018 (3) TMI 225

  Justification for rejection of books of accounts - Assessee has sold goods at price lower than its purchase price - estimation of profit - Held that:- It is not the case of the Revenue that the amounts reflected as sale price and/or purchase price in the books do not correctly reflect the sale and/or purchase prices. In terms of Section 145(3) AO is entitled to reject the books of accounts only on any of the following condition being satisfied.

  (i) Whether he is not satisfied about the correctness or completeness of accounts; or

  (ii) Whether the method of accounting has not been regularly followed by the Assessee; or

  (iii) The income has been determined not in accordance with notified income and disclosure standard.

  It is not the case of the Revenue that any of the above circumstances specified in Section 145(3) of the Act are satisfied. The rejection of accounts is justified on the basis that it is not possible for the Assessee who is a trader to sell goods at the prices lower than the market price or purchase price. In fact as observed by the Apex Court Commissioner of Income Tax, Gujarat Vs. A. Raman & Co. (1967 (7) TMI 2 - SUPREME Court) and in S.A. Builders Vs. Commissioner of Income Tax [2006 (12) TMI 82 - SUPREME COURT] the law does not oblige/compel a trader to make maximize its profits. - Decided against revenue

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• 2018 (3) TMI 224

  Deduction u/s 80P(2)(a)(i) denied - interest income from bank deposits is not business income but is income from other sources - Held that:- The judgment relied upon by the revenue in the case of Totgar’s Co-perative Sale Society Limited [2010 (2) TMI 3 - SUPREME COURT ] deals with Section 80P(2)(d). As aforesaid, Section 80P(2)(d) and Section 80P(2)(a)(i) of the Act being different, the said judgment is not squarely applicable to the facts of the present case. The applicability of Section 80P(2)(a)(i) of the Act has to be considered in terms of the said section. The authorities mixing up the issue of Section 80P(2)(a)(i) and Section 80P(2)(d) cannot reject the claim of the assessee under Section 80P(2)(a)(i) of the Act without giving a proper finding on the issue.

  It is prima facie apparent on record that AO proceeded to compute the income of ₹ 25,08,170/- despite the same being accounted by the assessee in the consolidated income and expenditure account for the income returned by the assessee at ₹ 11,66,894/-. Income cannot be enhanced to ₹ 25,00,000/- for the purpose of levying income tax without considering the actual figures arrived at by the assessee returned while declaring the taxable income. Hence, on this ground also the computation made by the Assessing Officer requires to be reconsidered.

  Thus the order of the Tribunal as well as the authorities are set aside and the matter is remanded to the Assessing Officer for fresh consideration. All rights and contentions of the parties are left open. The Assessing Officer shall provide an opportunity of hearing to the assessee and pass appropriate orders in the light of the judgment of the Hon’ble Apex Court. Substantial question of law is not answered.

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• 2018 (3) TMI 214

  Penalty u/s. 271AAB - non maintaining the books of account as per sec. 44AA or sec. 44AA(2) - Held that:- Since the assessee is not engaged in business or profession, he does not require to maintain the books of account as per sec. 44AA or sec. 44AA(2) of the Act, therefore, the assessee’s case falls in the second limb i.e. “or other documents” as stipulated u/s. 271AAB Explanation (c) (supra) which describes undisclosed income for the purposes of this section which is very important to adjudicate this issue.

  Therefore, the question is when the search took place, the assessee’s transactions (in this case, the speculative transaction) has been found to be recorded in the “other documents” which is (retrieved from the assessee’s accountant’s drawer) and based on that the assessee declared ₹ 2 cr. during search and later returned income of ₹ 2 cr. as income under the head “Income from Other Sources” which was accepted by the AO in toto. We note that since the income under question (Rs. 2 cr.) was in fact entered in the “other documents” maintained in the normal course relating to the AY 2013-14, which document was retrieved during search, hence, the amount of ₹ 3 cr. offered by the assessee does not fall in the ken of “undisclosed income” defined in Sec. 271AAB of the Act. So, ₹ 2 cr. which was commodity profit recorded in the other document maintained by the assessee which was retrieved during search cannot be termed as “undisclosed Income” in the definition given u/s. 271AAB of the Act. Since ₹ 2 cr. cannot be termed as “Undisclosed Income” as per sec. 271AAB of the Act, no penalty can be levied against the assessee. - Decided against revenue

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• 2018 (3) TMI 223

  Amortization advance rent against the cost of land - Revenue v/s capital - Held that:- The decision is squarely covered against the assessee in the case of Gas Authority of India Limited vs. Joint Commissioner of Income Tax, [2012 (11) TMI 325 - DELHI HIGH COURT] as held barring the right to alienate or outright sale of the property in unqualified manner, all rights of enjoyment in respect of leased properties are with the assessee. Furthermore, even though the stipulation in the deed – one of which (dated 25.07.1995 with MHIDC) was produced during the hearing by the assessee, clause 3(m) enjoins the lessee not to transfer either directly or indirectly, sell or encumber the lease benefits to any other party, the same stipulation enables transfer with "previous consent in writing of the Chief Executive Officer". - Decided against assessee.

  Expenses claimed on completed projects - Held that:- In the assessee’s case for another assessment year (Commissioner of Income Tax vs. M/s Ansal Properties and Industries Ltd [2012 (10) TMI 181 - DELHI HIGH COURT] held that the circumstances of this case showed that the (Appeal)'s Commissioner reasoning were sound and convincing and that in the absence of any specific deviation from the accounting methods and practices by the assessee, the conclusion arrived at by the AO was not warranted. - Decided against revenue.

  Unaccounted refundable security deposit and unaccounted refundable maintenance security deposit receivable by the assessee - Held that:- During the proceedings the assessee had relied on additional evidence. The ITAT directed the deletion of the sums brought to tax on these heads. The record reveals that the said amounts were in fact verified by the AO subsequently. The AO had verified that the amounts were to be allowed as the assessee was merely a facilitator on behalf of the flat owners

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• 2018 (3) TMI 213

  Revision u/s 263 - Addition u/s 36(1)(viia) - Held that:- Since the A.O. passed the order in pursuance to the directions issued under section 263 and passed the assessment order under section 143(3)/263 dated 24th October, 2013, therefore, the present proceedings before the authorities below have become infructuous because the order under section 263 have been quashed by the Tribunal. Assessee, therefore, correctly stated that since the order under section 263 have been set aside by the Tribunal, therefore, original assessment order would survive. We, accordingly, set aside the orders of the authorities below and quash the resultant proceedings under section 143(3)/263 of the I.T. Act. - Decided in favour of assessee.

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• 2018 (3) TMI 212

  Reopening of assessment - assessee as the beneficiary of accommodation entries - addition u/s 68 - Held that:- It is an admitted fact that when the matter was restored by the Tribunal to the file of the Assessing Officer with a direction to adjudicate the issue afresh by making further enquiries to find out the genuineness of the gift, creditworthiness of the donor, source of money for the pay order and to ascertain the relationship between the assessee and the donor and the occasion and purpose of gift, the assessee did not fulfill all the above direction of the Tribunal and only partially fulfilled. Even during the remand proceedings also despite opportunity given, the assessee failed to comply with the direction of the Tribunal.

  It is the submission of the assessee that due to his old age, he could not contact the donor at the relevant time and obtain necessary details for the examination of the Assessing Officer. Also if given an opportunity he will produce the donor along with relevant details since he is now in a position to produce him. Considering all it proper to restore the issue to the file of the Assessing Officer with a direction to give one final opportunity to the assessee to substantiate with evidence to his satisfaction regarding the identity and creditworthiness of the donor and genuineness of the transactions and the other direction as given by the Tribunal in the earlier order - Decided in favour of assessee for statistical purposes.

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• 2018 (3) TMI 211

  Determination of Arm’s Length Price (ALP) for Management Support Services - Held that:- Determination of ALP for Management Support Services at Rs. NIL is unwarranted and accordingly the upward adjustment made by the ld TPO in the sum of ₹ 339,17,83,606/- is deleted.

  Determination of Arm’s Length Price (ALP) for AMP expenses - Held that:- We find that the ld TPO, ld AO and the ld DRP had categorically accepted the basic fact that the assessee is a manufacturer and also engaged in distribution of products. While this is so, we are not able to comprehend the argument advanced by the ld DR that assessee is only a distributor and thereby the decision of Sony Ericsson would apply to the case. We find that since the assessee is a manufacturer cum distributor as accepted by the lower authorities, the decision rendered in Maruti Suzuki (2015 (12) TMI 634 - DELHI HIGH COURT) would be applicable to the assessee’s case, since the contention of the ld DR that assessee is only distributor, is not emanating from the records of the lower authorities. We find that the issue under dispute before us is squarely addressed by this tribunal in assessee’s own case for the Asst Year 2011-12 thus the upward adjustment made by the ld TPO and upheld by the ld DRP in the sum of ₹ 1,03,59,000/- is hereby directed to be deleted.

  Lease rental paid for motor car taken on finance lease - Held that:- We find that the issue under dispute is covered by the decision of the Hon’ble Supreme Court in the case of ICDS Ltd. (2013 (1) TMI 344 - SUPREME COURT) in favour of the assessee

  Depreciation on moulds - Held that:- AR stated that the moulds were owned by the assessee and used for the purpose of its business. Further, the moulds were exclusively used in the plastic factory by the job workers/co-makers to whom moulds were given by the assessee to be used in the plastic factory, under its control and supervision and prayed that depreciation @ 30% would be eligible on the said moulds. We find that this issue has been considered by this tribunal in assessee’s own case for the Asst Year 2011-12 as held AR has just verbally submitted that in most of the products which appears to be true. But as such no documentary evidence was filed in support of the assessee’s claim. However in the interest of justice and fair play, we are inclines to restore this matter to the file of AO for fresh adjudication in accordance with the law. espectfully following the aforesaid judicial precedent, we restore this matter to the file of the ld AO for fresh adjudication

  Non grant of deduction u/s 80G - Held that:- We find that there is no discussion in the assessment order regarding this and hence we deem it fit and appropriate to restore this issue to the file of the ld AO to verify the claim of deduction u/s 80G of the Act with the receipts and other relevant documents to be produced by the assessee before the ld AO. Accordingly, the Ground No. 9 raised by the assessee is allowed for statistical purposes.

  Short deduction of tds - Held that:- Since the issue involves only verification of certificates/Form 26AS, as the case may be, we hereby direct the ld AO to kindly verify the necessary evidences in this regard and grant TDS credit, if eligible, to the assessee

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• 2018 (3) TMI 222

  TPA - ALP determination - comparable selection - deletion directed by the ITAT, based upon its application of the Related Party Transaction (“RPT”) and the exclusion of the comparable i.e. M/s Wipro Limited (BPO service segment) - Held that:- The RPT filter, is relevant and fits in with the overall scheme of a transfer pricing study which is premised primarily on comparing light entities having similar if not identical functions. Therefore, if a particular entity predominantly has transactions with its associate enterprise – in excess of a certain threshold percentage, its profit making capacity may resulted in a distorted picture, either way. The ITAT, in the present case, followed a previous precedent and was of the opinion that a broad threshold figure of 25% RPT in the case of comparables was essential.

  Applying that rationale, the ITAT excluded some comparables listed in the TPO’s report. There is no error of law per se in this approach. As to the exclusion of M/s Wipro Limited, here too, the Court is of the opinion that the brand value of an entity has a significant role in its ability to garner profits and negotiate contracts. While considering the comparables, the likelihood of profits derived or attributable to the brand having regard to the consistency of the quality of services that an entity is able to offer would be relevant; although functionally, the two entities may be similar in terms of the services or products they offer, brand does play its own role in price or cost determination. If this singular aspect is kept in mind, the ITAT’s approach cannot be faulted with. - Decided against revenue

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• 2018 (3) TMI 221

  Deductions u/s 80-IC - Held that:- The assessee undertakes job work by providing labour employment and factory space for the purpose of manufacture of medicines by various manufacturers and claimed deductions under section 80-IC of the Act

  Tribunal found that the issue of deduction claimed by the assessee has already been decided in the case of CIT v. Impel Forge and Allied Industries Ltd. [2008 (12) TMI 370 - PUNJAB & HARYANA HIGH COURT] and it held that for claiming deductions under the aforesaid provisions the assessee was at liberty to manufacture for itself or for others and the same does not make any difference. No reason nor do we find any substantial question of law arising for consideration in these appeals under section 260A of the Act.

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• 2018 (3) TMI 210

  Treatment of STCG on sale of shares / mutual fund - rebate u/s 88E for STT paid by the assessee - Held that:- AR fairly conceded that the amount of STCG earned by the assessee included certain intra-day gains / losses which were in the nature of speculation and hence were required to be excluded while arriving at figures of STCG. Therefore, at the outset, we direct Ld. AO to exclude the same from the figures of STCG and treat the same as speculation in nature.

  We concur with the stand of Ld. AR that the short term capital gains earned by the assessee was assessable under the head Capital Gains only subject to adjustment as envisaged above. Resultantly, Ground No. 1 of assessee’s appeal stands partly allowed which makes Ground No. 8 infructuous

  Disallowance u/s 14A - adjustment of 14A disallowance against Book Profits for the purpose of computation of Minimum Alternative Tax [MAT] u/s 115JB - Held that:- Adjustment of disallowance u/s 14A was not required to be made in Book Profits for the purpose of Section 115JB

  So far as the quantum disallowance u/s 14A following the Tribunal’s order for earlier years, since aggregate interest free owned funds far exceeded aggregate investment, drawing the presumption in assessee’s favor, we delete the impugned addition. Resultantly, this ground of assessee’s appeal succeeds.

  Disallowance u/s 40(a)(ia) on account of delayed payment of TDS - Held that:- the matter stood covered in assessee’s favour by the judgment of Hon’ble Delhi High Court rendered in CIT Vs. Naresh Kumar [2013 (9) TMI 275 - DELHI HIGH COURT]. Although the TDS has been deposited by the assessee beyond due date but it is well before the due date of filing of return of income by the assessee. The facts of the issue are squarely covered by the ratio of cited decision of Hon’ble Delhi High Court where it has been held that the provisions of Section 40(a)(ia) were to be interpreted liberally and equitably keeping in mind the object and purpose behind the same so that the assessee do not suffer unintended and deleterious consequences and therefore the amendment to Section 40(a)(ia) as made by Finance Act, 2010 was retrospective in nature and therefore the amount of TDS which is deposited late but before due date of filing of return of income enables the assessee to claim the deduction of the expenditure in the concerned year itself. Respectfully following the same, by deleting the impugned addition, we allow this ground of assessee’s appeal.

  Depreciation on motors cars given on finance lease basis - Held that:- Upon perusal of sample agreements and other documents produced before us, we, prima-facie agrees with the stand of the revenue that the transactions were primarily in the nature of finance lease. However, be that as the case may be, the issue has consistently been decided by the Tribunal right from AYs 1995-06 onwards in assessee’s favor and depreciation has been allowed to the assessee. The said orders have mainly relied upon the cited judgment of Hon’ble Apex Court. The revenue is not able to point out any differentiating facts in the impugned AY vis-à-vis facts of the earlier years.Therefore, we see no reason to deviate from the stand taken by several coordinate bench of this Tribunal and accordingly, adjudicate the matter in assessee’s favour. The benefit of capital recovery or any other corresponding benefit granted by Ld. AO to the assessee shall stand withdrawn - Decided in favour of assessee.

  Disallowance u/s 14A - Held that:- we concur with the stand of Ld. AR that Rule 8D was not applicable during the impugned AY and therefore, disallowance, if any, was required to be made only on an estimated basis. We find that the assessee has earned exempt income of ₹ 281.06 Lacs in the impugned AY and therefore, upon factual matrix, we estimate the same @2% of the exempt income which comes to ₹ 5.62 Lacs. The assessee gets partial relief for the balance addition. Accordingly, these grounds stands partly allowed.

  Long Term Capital Loss on sale of certain shares - AR contended that, in all fairness, the legitimate claims were allowed to the assessee - Held that:- After hearing, we concur with the proposition that legitimate claims could not be denied to the assessee and further, there was no bar on appellate authorities to entertain new claims which were not made in the return of income in terms of decision of Hon’ble Bombay High Court rendered in CIT Vs. Pruthvi Brokers and Shareholders Private Ltd. [2012 (7) TMI 158 - BOMBAY HIGH COURT]. However, it appears from the order of Ld. first appellate authority that the factual matrix has not been verified by the lower authorities. Therefore, we concur with the stand of Ld. CIT(A) subject to verification of factual matrix by Ld. AO. Therefore, the matter is remitted back to the file of Ld. AO for verification of factual matrix

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• 2018 (3) TMI 209

  Taxability of interest received from bank and MSEB - Held that:- Interest income received from bank and MSEB to the tune of ₹ 75,63,440/- in the hands of assessee being not governed by the principle of mutuality. Authorized Representative for the assessee fairly pointed out that the said issue is covered against the assessee by the order of Apex Court in Bangalore Club Vs. CIT & Anr. (2013 (1) TMI 343 - SUPREME COURT). - Decided against assessee

  Claim of deduction under section 57(iii) - activities undertaken by the assessee club - entrance fee receipt - Held that:- The entrance fees in assessment year 2003-04 was ₹ 44,88,265/- and in assessment year 2007-08, it had raised to ₹ 1,05,20,178/-. In all these years, expenditure to the extent of 7.5% of income has been allowed in the hands of assessee. During the year, entrance fees at ₹ 2.12 crores and in assessment year 2009-10 to the tune of ₹ 1.34 crores. In view of the above said facts and circumstances, we find no merit in the plea of assessee in this regard and the same is dismissed. Accordingly, we hold that the assessee is not eligible to claim any deduction under section 57(iii) of the Act over and above the deduction earlier allowed by the Tribunal in assessee's own case to the extent of 7.5%. The second issue raised by the assessee is thus, dismissed.

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• 2018 (3) TMI 208

  Penalty imposed u/s 221(1) r.w.s. 140A(3) - non-payment of self-assessment tax - scope of amendment - Held that:- The fact that the amended Sec. 140A(3) w.e.f. 01.04.1989 does not envisage any penalty for non-payment of self-assessment tax, the Assessing Officer was not justified in levying the impugned penalty by making recourse to Sec. 221(1) of the Act.

  Sec. 221 of the Act remains unchanged, both during the pre and post amended Sec. 140A(3) of the Act and even in the pre-amended situation, penalty u/s 221 of the Act was not attracted for default in payment of self-assessment tax, which was expressly covered in pre 01.04.1989 prevailing Sec. 140A(3). Thus, without there being any requisite corresponding amendment to Sec. 221 of the Act in consonance with the amendments carried out in Sec. 140A(3) of the Act w.e.f. 01.04.1989, the Assessing Officer erred in levying the impugned penalty. Thus, on this aspect, we hereby set-aside the order of CIT(A) and direct the Assessing Officer to delete the penalty imposed u/s 140A(3) r.w.s. 221(1) of the Act. - Decided in favour of assessee

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• 2018 (3) TMI 207

  Addition u/s 14A - ‘net’ interest expenditure - Held that:- The interest expense incurred in the business of money lending was ₹ 2,0276,317/-. In the course of its business of financing, the assessee borrows and lends monies. The assessee pays interest on the borrowed funds and earns interest on the loans advanced. Therefore, both the interest income and the interest payment are intrinsically linked. There is complete inter lacing of funds and therefore, for ascertaining the tax effect, netting off of interest paid with interest received is necessary. It is for this reason that the net interest is reflected in the profit and loss account. AO should also have considered the interest on net basis. After setting off interest expense against the interest income, the assessee was let with negative figure of ₹ 6,08,163/- which had been suo moto disallowed by the assessee in its entirety.

  Thus the ‘net’ interest expenditure is to be considered for the purposes of disallowance u/s 14A and where after setting off interest earned against the interest expenditure no further interest expense remains then disallowance cannot be made u/s 14A of the Income-tax Act, 1961. - Decided in favour of assessee

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• Customs

• 2018 (3) TMI 206

  Valuation of imported goods - rejection of transaction value - redemption fine - penalty - Held that: - original adjudicating authority has held tyhat various importers have imported the goods of same make, same country of origin at higher value than the value declared by the importer. For this reason declared values has been rejected in terms of Rule 12 of the Customs Valuation Rules, 2007 read with Section 14 of the Customs Act, 1962. He has however, held that goods cannot be fully compared with identical imports and hence their value cannot be determined by following the Rules 4, 5, 7 or 8 of the Customs Valuation Rules, 2007.

  There is no infirmity in the decision of the lower appellate authority upholding the enhancement of the value of the imported goods - also, the lower appellate authority has sufficiently justified the reduction of redemption fine and penalties.

  Appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 205

  100% EOU - eligibility for depreciation on capital goods in the computation of liability to duty upon failure to comply with prescribed export obligation - Held that: - the duty liability on imported, or indigenously procured, capital goods is erased by sheer efflux of time. The appellant has been a functioning export-oriented unit since 1992 and capital goods procured in that year should be eligible for depreciation over the period that the unit has been in existence. As on the date of the impugned order, the appellant has been in existence for over a decade and, by application of the straight-line depreciation approved by the Central Board of Excise & Customs, the value of capital goods would be nil. Consequently, no duty liability would arise.

  The nexus between the value of the goods imported and the applicable duties is a legacy of time gone by. On the date of initiating proceedings against the appellant, a different regime was in place and that regime relied upon the touchstone of net foreign exchange positive. Considering the value of imports effected by the appellant, that obligation stands fulfilled.

  Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 204

  Rectification of mistake - plea that they were never issued notice, nor an opportunity of being heard in person before the decision is taken was missed by the Tribunal before arriving at the decision - Held that: - the proceedings could not have been completed against the present applicant in the manner as done by the Original Authority. To that extent, there is an apparent error in the order of the Tribunal at para 9 of the final order dated 19/09/2017 - The learned Counsel for the applicant only prays for a fair chance to represent their case before the Original Authority so that they can present their side of the defence with all supporting evidence - the matter is remanded back to the Original Authority for a fresh finding after giving adequate opportunity to the appellant to present their side of the case - appeal allowed by way of remand.

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• 2018 (3) TMI 203

  DEPB Benefit - denial of benefit on the ground that the goods were actually "Cart/Trolley Axle without hubs" classifiable under 87169090 - Held that: - the CBEC has clarified in its instructions dated 03.06.1997 that the role of customs authorities in the matters relating to DEPB Scheme would be confined to verification of correctness of exporter declaration regarding quantity, description and FOB value of the export products. It would be for the licensing authorities granting credit to ensure that the credit is permitted by them at the correct rate as notified by DGFT.

  Admittedly, no such reference has been made by the lower authorities and they have straightway gone ahead and the adjudicated the matters relating to classification of the Rear Axle Shaft.

  The matters are remanded back to the adjudicating authority, who is directed to refer the matters with all the material including Chartered Engineer Certificate to the office of DGFT - appeal allowed by way of remand.

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• 2018 (3) TMI 202

  Valuation - enhancement of value - Whether clearances of goods by paying customs duty on the higher enhanced assessable value, precludes the assessee from challenging the same before the higher appellate forum? - Held that: - in the case of Bayshore Glass Trading Pvt. Limited Vs. CC, Kolkata [2002 (7) TMI 161 - CEGAT, KOLKATA], it was observed that rejection of appeal by Commissioner (Appeals) on the ground that assessee cleared the goods on payment of duty as assessed without protest, cannot be appreciated. Filing of appeal by itself is a protest.

  Valuation - the same stand enhanced, without first rejecting the transaction value - It has been held in number of decisions that enhancement of value cannot be done on the basis of DOV data etc. without first rejecting the transaction value or without adducing any evidence of contemporaneous imports.

  Held that: - As there are contrary views and difference of opinion between the Members, therefore, the matter be placed before the Hon'ble President to refer the matter to the third member to resolve the following issues:- Whether in view of the mis-declaration of the goods impacting the rate of duty and the value of the goods, the order of the Ld. Commissioner (Appeals) should be upheld and appellants' appeal dismissed in Appeal No.C/60002/2016, C/60003/2016 and C/60006/2016, as held by Member (Technical).

  Matter referred to Third Member.

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• Corporate Laws

• 2018 (3) TMI 201

  Changes in scheme sanctioned - Held that:- Once a scheme is sanctioned and made effective, the changes allowed therein should be minor ones and not wholesale changes which would tamper with the essence of the scheme and if a company desires to modify a sanctioned scheme, though not necessary to do so for the proper working thereof, it is required to follow the procedure prescribed under Section 391 of the Act

  It should be noted that when an order sanctioning a scheme under Section 391 of the Act is passed, it operates in rem. It affects the rights of several persons including creditors, investors, etc. and also creates liabilities in favour of persons like the Income Tax Authorities. These rights and liabilities became vested once the scheme becomes effective. The windmill business was transferred to Transferee and the Scheme was made effective by Transferee by filing Form 21 with the Registrar of Companies, Transferee having started earning revenue and having filed income tax returns, undoubtedly created rights and liabilities in favour of the Income Tax Authorities.

  It should be noted that Transferee has filed returns for 3 years before this applications were filed. Therefore, these applications are not just for a simple or minor modification of the scheme. If the Court grants the prayers as sought, the net effect would be of recalling the order sanctioning the Scheme to the extent of windmill business. Just because certain tax benefits have been lost does not mean that the Scheme is not workable.

  Hence no modifications are required. If the reliefs as sought are granted, would effectively amount to tampering with the essence of the scheme which is impermissible. The basic fabric of the Scheme would change and will go beyond the confines of what the Court while sanctioning the Scheme understood in the provisions of the Scheme.

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• 2018 (3) TMI 200

  Transfer of shares - legal heirs eligibility - illegally transferred the shares owned by the petitioner without valid Transfer Deed and signature of the petitioner - Validity of company petition as time barred - Held that:- Respondent did not say that either they have informed the Petitioner at any point of time about the fact that her shares have been transferred in favour of the Respondent No.4 nor the Petitioner had knowledge about the transfer of her shares. The perusal of the pleadings reveal that the Petitioner has become aware about the transfer of her shares in favour of Respondent No.4 only on 14.7.2014, when her counsel has received the reply of her legal notice that was sent to the Respondents on 2.6.2014. Therefore, the objection of the Respondent pertaining to the issue that the Company Petition is time barred stands rejected, the petition has been filed on 26.8.2015, which is within the period of limitation.

  Issuance of Share Certificate for 500 shares to the Petitioner - Held that:- Respondents did not discharge the burden of proof pertaining to their assertion of the fact that on allotment of shares, the Share Certificates were sent to the Petitioner. It is on record that the name of the 1st Respondent Company was changed, and as a matter of procedure, the old Share Certificates were to be called back and fresh Share Certificates had to be issued; but nothing has been placed on record that at any point of time, on change of the name of the 1st Respondent Company, the fresh Share Certificates were dispatched to the Shareholders including the Petitioner. Therefore, the Respondents failed to prove their claim that the Share Certificates were issued to the Petitioner by 1st Respondent Company.

  There is even no shred of evidence to show that at any point of time the Petitioner has transferred her 500 shares to Respondent No. 4. Thus, the resolution dated 23.9.2009 passed by the Board of Directors of 1st respondent company to transfer 500 shares held by the petitioner in 1st Respondent Company is not based on any valid document, which is in violation of the provisions of Section 108 of the companies Act 1956. Therefore, the issue stands decided in favour of the Petitioner and against the Respondents.

  The 1st Respondent Company and its Board of Director seem to have transferred 500 shares on the pretext that the Petitioner has availed loan of ₹ 50,000/- from late Mrs. Thangam, who was the mother of 2nd and 4th Respondents, because as per the statement of the Respondents, the Petitioner has denied to return the amount of purported loan. It has been stated in the Counter by the answering Respondent that Mrs. Thangam had given a loan of ₹ 50,000/- by way of cheque bearing No. 958482 drawn on ICICI Bank, Egmore branch dated 22.3.2005 to the Petitioner for allotment of 500 equity shares of the 1st Respondent Company, but the Petitioner did not issue any cheque to the 1st Respondent Company for allotment of 500 shares and the Respondents failed to prove the same, as has been asserted by them in para No. 8 of their Counter,

  The legal heirs cannot stake claim over 500 shares owned by the Petitioner in 1st Respondent Company, on the ground that their late mother viz., Mrs. Thangam had advanced loan of ₹ 50,000/- to the Petitioner for purchase of 500 shares in the 1st Respondent Company. The legal heirs i.e. 2nd and 4th Respondents could have explored the possibilities of the recovery of the amount of loan, if any, by filing civil suit, before the court of competent jurisdiction. Therefore, the action of the 1st Respondent company to transfer 500 shares of the Petitioner to Respondent No. 4 is illegal and in violation of the provisions of Section 108 of the Companies Act, 1956.

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• 2018 (3) TMI 199

  Oppression and mismanagement - Held that:- Original petitioner himself has restricted his challenge to the impugned allotments made in favour of the petitioner and original second and third respondents in the company petition. When this is so, the learned counsel for the appellant is rightly submitting that without amending the company petition and without giving particulars in their application for impleadment as to how and why the appellant is a necessary party, the impleadment could not have been allowed just for the asking.

  From the paragraphs reproduced from CA 34/2016, it is apparent that it was quite a vague application. There appears substance in the submissions made by the learned counsel for the appellant that when there was no amendment sought in the company petition so as to make out a case against appellant and there were no sufficient pleadings in the application for impleadment, the impugned order as has been passed is not maintainable, at least against the present appellant. The others who have been added and have not come forward to challenge the impugned order we will not interfere as regards those other respondents who have been added.

  The appeal is allowed, the impugned order is quashed and set aside as far as the impugned order is impleading the present appellant as respondent in the company petition.

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• Insolvency & Bankruptcy

• 2018 (3) TMI 233

  Corporate insolvency proceedings - contesting respondents eligibility as ‘Financial Creditor’ - liability of the guarantee in the books of corporate debtor is in the name of the daughter - Held that:- The amount of ₹ 29,97,000/-, is claimed to have been paid by the contesting respondents either to Captain V. K. Adukia or Captain Rajeev Chauhan or the Punjab National Bank. There is nothing on record to suggest that the amount has been ‘disbursed’ in favour of ‘Corporate Debtor’ against ‘consideration for the time value of money’. The contesting respondents have also failed to bring on record any evidence to suggest that the money was borrowed or raised by the ‘Corporate Debtor’ under any other transactions including sale or purchase or other mode having commercial effect of borrowing.

  In view of the aforesaid finding, we hold that the contesting respondents do not come within the meaning of ‘Financial Creditor’ and the application under Section 7 at their instance was not maintainable. The Adjudicating Authority has failed to notice the aforesaid provisions and without going to the question as to whether the application at the instance of the contesting respondents was maintainable or not has admitted the application.

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• 2018 (3) TMI 232

  Corporate Insolvency Resolution Process - secured creditors’ right to deal with the secured assets - Held that:- In the instant application, the Insolvency Resolution Process is completed and a Liquidator has been appointed and the Corporate Debtor is undergoing the liquidation process. Therefore, the question of secured creditors’ right to deal with the secured assets, cannot be questioned by the Liquidator on account of application of moratorium, for the period, which has been already expired. But the Liquidator has got every right to have verification of security interests and the account. Here, in this application, the Bank does not interfere the right of the Liquidator regarding the verification of the security interests held by the Bank.

  Subject to section 52(7) of the code the secured creditor can proceed with the remedy available to have recourse with the secured assets in accordance with Law for the time being in force. That being so, no directions interfering the right of a secured creditor can be passed in a case of this nature. Since the secured creditor already initiated action under section 13 of the SARFAESI Act, this Adjudicating Authority Cannot issue direction against the Bank holding that the Liquidator can have any manner of control over the assets secured to the Bank. However, the liquidator’s right to verify the account and participation in the sale proceedings if any to be initiated by the Bank so as to see the interest of workmen dues is to be safeguarded and to see whether any surplus comes out of the sale cannot be interfered by the Bank. Upon the above said observation this application is liable to be dismissed.

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• 2018 (3) TMI 231

  Respondent entitlement to invoke Bank Guarantees during moratorium period - Whether Performance Guarantee is a ‘Security Interest’ or not? - Whether supply of power to Corporate Debtor can be restated? - Held that:- The moratorium imposed is only in respect of the properties of the Corporate Debtor. The moratorium order clearly says that any Security Interest created by the Corporate Debtor cannot be enforced in respect of the property of the Corporate Debtor during the moratorium period. In the case on hand, the moratorium period was extended for further period of 90 days beyond 180 days as per order dated 1st December, 2017. The 180 days’ period had expired on 2.12.2017. Now, it is extended for another period of 90 days.

  Section 3 (31) clearly says that Performance Guarantees are not included in the Security Interest. What is covered by the order of this Authority under Section 14(l)(c) is the Security Interest. Therefore, the moratorium order passed by this Tribunal is not applicable to the Performance Guarantees given by the Corporate Debtor. Therefore, the Bankers are at liberty to allow the 1st Respondent to encash the Bank Guarantees that are given in respect of Performance Guarantees subject to other objections, if any.

  The moratorium order passed by this Tribunal applies in respect of Bank Guarantees other than Performance Guarantees furnished by the Corporate Debtor in respect of its property since it comes within the meaning of ‘security interest’. Respondent No. 1 is not entitled to invoke Bank Guarantees other than that comes within the meaning of performance Guarantees, during Moratorium period.

  Coming to the aspect of disconnection of power supply by the 1st Respondent to the Applicant, it appears that without issuing any notice the power supply was disconnected to the Corporate Debtor. In the case on hand, it appears that the power supply was disconnected to the Corporate Debtor after the declaration of moratorium. Section 14(2) of the Code says, ‘the supply of essential goods or services to the Corporate Debtor shall not be terminated or suspended or interrupted during moratorium period. The supply of power is an essential goods and service with reference to the Corporate Debtor. “Essential Supplies” is defined under Regulation 32 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

  Therefore, following the orders passed by this Adjudicating Authority and the interim order dated 15.1.2018 passed by the Hon’ble Appellate Tribunal in Company Appeal (AT) (Insolvency) the Respondent No. 1 MGVCL is hereby directed to continue to supply electricity to the Corporate Debtor provided Applicant has cleared all the electricity consumption charges as on the date of disconnection.

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• Service Tax

• 2018 (3) TMI 195

  Insurance Auxiliary Service - appellant had received incentives from insurance companies - SCN has alleged that these activities of the appellant will bring them within the fold of actuary and hence they are required to pay service tax under the Insurance Auxiliary Service - Held that: - insurer registered to carry on insurance business cannot carry on such business without an appointed actuary. Such actuary has to be, inter alia, a Fellow Member of the Actuarial Society of India, an employee of the life insurer (in case of Life Insurance business or General Insurance business), a person who possesses a Certificate of Practice issued by the Actuarial Society of India - Surely, the appellant does not possess any of these qualifications nor they have been appointed or registered as actuary. This being so, the main plank of the SCN cannot survive - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 194

  Valuation - reimbursable expenses - Held that: - From the sample copies of the invoices submitted by the respondent in the typeset-3 during hearing, the disputed expenses are very much in the nature of which were reimbursed to them subsequently - There is a plethora of decisions which have consistently laid down that reimbursable expenses cannot be form part of the taxable value for arriving at service tax liability.

  The Board's Circular No. 119/13/2009-ST dated 21.12.2009 has given broad guidelines that essentially exclusion should be allowed to reimbursable charges incurred by the custom house agent.

  Appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 193

  Supply of tangible goods for use - renting of immovable property service - demand of service tax - Held that: - the appellant has supplied various tangible equipments and assets for use for renting the restaurant to Encore Hotels Pvt. Ltd. for which they were charging royalty mutually agreed from time to time - From the MOU it is observed that the various equipments were supplied by the appellant to Encore Hotels Pvt. Ltd. In such transaction, the only right to use of the equipment has been transferred, but the right in the possession and effective control remained with the appellant. Therefore, such transaction does not fall under the head of supply of tangible goods for use as provided in the Finance Act, 1994 - Moreover, the Board also clarified that in case of supply of tangible goods where the sales tax/VAT is chargeable, the same shall not be leviable to service tax.

  The adjudicating authority has clearly stated that no documentary evidence was produced to establish that in respect of the transactions, the VAT payment has been made. In such a situation, the matter needs to be reconsidered for verification of the actual payment of VAT.

  Appeal allowed by way of remand.

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• 2018 (3) TMI 192

  Liability of service tax - auction of property service - difference between auction and tender - Held that: - The auction process will normally get culminated only when there are no more bids made for the goods auctioned. Whereas, in respect of tenders, there is only one bid that each bidder can make, the tendering process will be completed at the end of the appointed time and date and, only bids received till that cut off point will be considered for evaluation. However, in the traditional method of auctioneering, apart from the auction process per se the auctioneer also provides a gamut of other related services like providing a facility, advertising or illustrating the goods in auction, engage in pre-auction estimates, short term storage services, etc. - while both sale by tender and sale by auction may have a common intendment of selling the goods, the modalities and the processes involved in each are very different.

  The impugned activities will be leviable to service tax under the scope of Auctioneer Service, cannot sustain - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 191

  Refund claim - N/N. 17/2009-ST dated 7.7.2009 and 41/2007-ST dated 6.10.2007 - rejection on the ground of time limitation - Held that: - as per N/N. 17/2009-ST dated 7.7.2009, the time limit for filing the refund claim was extended to one year - for the quarter ending July 2009 to September 2009, refund claim was filed on 9.12.2009 - Admittedly, the refund claim is filed by the appellant within time limit prescribed as per N/N. 17/2009 dated 7.7.2009.

  Refund claim - terminal handling charges - denial on the ground that these are port services - Held that: - this terminal handling charges has been paid by the appellant at port and the said service has been availed by the appellant for export of the goods - CBEC Circular dated 26.2.2010, clarifies that irrespective of the classification of service provided by the service provider, if the services are related to port service, the same shall be considered for benefit of refund - on terminal handling charges, the appellant is entitled to claim refund as the said services has been availed by the appellant at port and do qualify for port services.

  Refund claim on CHA service - denial on the ground that the invoices is not in the name of the appellant issued by the CHA - Held that: - on the shipping bill, name of the CHA mentioned and export through the authorised CHA has been made by the appellant - on charges paid to CHA and the service tax thereon, the appellant is entitled to avail Cenvat credit - refund allowed.

  Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 190

  CENVAT credit - tower materials which are used for erecting telecommunication towers on various other accessories as part of the said towers - extended period of limitation - Held that: - the assessee/appellant is a public sector undertaking and have availed such credit under bonafide belief that the duty paid on such components and items used for erection of towers are eligible to them. It is an admitted fact that the credit on various items used in the telecommunication towers were subject matter of substantial dispute starting from the Original Authority upto High Courts - extended period of limitation cannot be sustained in the present proceedings - penalties also set aside.

  Demand upheld for normal period - appeal allowed in part.

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• 2018 (3) TMI 189

  Pre-deposit - Optional Extended Warranty Service - Held that: - As there are contrary views and difference of opinion between the Members, therefore, the matter be placed before the Hon'ble President to refer the matter to the third member to resolve the following issue:- Whether the appellant is required to make the pre-deposit of 10% of service tax demand with respect to Optional Extended Warranty Service, as held by Member (Technical) that the appellant has not made out a prima-facie case for waiver of pre-deposit? - matter referred to Third Member.

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• 2018 (3) TMI 188

  Classification of services - different classification of services at suppliers' end and at recipient's end - Held that: - there cannot be different classification for the same services at the end of service provider and at the end of service recipient - in the case of M/s. Piem Hotels Ltd, [2016 (4) TMI 290 - CESTAT MUMBAI], the Tribunal has held that it is well settled proposition of law that jurisdictional officer at recipient end are not empowered to question or change the classification or valuation at supplier's end - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 187

  Classification of services - different classification of services at suppliers' end and at recipient's end - Held that: - there cannot be different classification for the same services at the end of service provider and at the end of service recipient - in the case of M/s. Piem Hotels Ltd, [2016 (4) TMI 290 - CESTAT MUMBAI], the Tribunal has held that it is well settled proposition of law that jurisdictional officer at recipient end are not empowered to question or change the classification or valuation at supplier's end - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 186

  Penalty - tax alongwith interest paid before issuance of SCN - Held that: - Section 73(3) is very clear as it says that if the tax is paid along with interest before the issuance of the SCN, then in that case, SCN need not be issued - In the present case, it is on account of bona fide mistake that the service tax was not paid and as soon as it was pointed out by the audit party, the assessee paid the service tax along with interest - in the case of Geneva Fine Punch Enclosures Ltd., [2011 (1) TMI 746 - KARNATAKA HIGH COURT], the Hon'ble high Court of Karnataka has held that if the duty is paid along with interest before the issuance of the SCN, then the penalty cannot be imposed - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 185

  Penalty - tax alongwith interest paid before issuance of SCN - Held that: - Section 73(3) is very clear as it says that if the tax is paid along with interest before the issuance of the SCN, then in that case, SCN need not be issued - In the present case, it is on account of bona fide mistake that the service tax was not paid and as soon as it was pointed out by the audit party, the assessee paid the service tax along with interest - in the case of Geneva Fine Punch Enclosures Ltd., [2011 (1) TMI 746 - KARNATAKA HIGH COURT], the Hon'ble high Court of Karnataka has held that if the duty is paid along with interest before the issuance of the SCN, then the penalty cannot be imposed - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2018 (3) TMI 182

  Clandestine removal - shortage of stock - Held that: - It is clearly well settled that allegation of clandestine removal of finished goods cannot be sustained only on the basis of mere shortage - In the case of Continental Cement Company vs. Union of India [2014 (9) TMI 243 - ALLAHABAD HIGH COURT] the Hon’ble Allahabad High Court has held that clandestine removal is a serious charge which is required to be proved by Revenue by tangible and sufficient evidence.

  In the case of the appellant, the demand of Central Excise duty cannot be upheld, since the allegation of clandestine removal has been made only on the basis of alleged shortages noticed during stock verification.

  Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 181

  Revenue neutrality - irregular availment of CENVAT credit - Held that: - the issue of Neutrality was not discussed in the orders of the lower authority. The issue of Revenue Neutrality is based on the proper examination of the facts of each case - the matter is remanded to the Adjudicating Authority to decide afresh after considering the submission of the appellant and to pass order in accordance with law - appeal allowed by way of remand.

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• 2018 (3) TMI 180

  CENVAT credit - it appeared that the appellants have availed Cenvat credit on input and input services used for generation of electricity in their Captive Power Plant (CPP) without adhering to the provisions of Rule 6 of CCR, in respect of excess quantum of electricity wheeled out to TANGEDCO - Rule 6 (3) (i) of CCR - Held that: - on the eligibility of availment of Credit in respect of eligible inputs used for generating electricity, there cannot be any doubt. The important takeaway from the definition in Rule 2 (k) (iii) of CCR, however is that the eligibility of input credits will however be restricted to goods used for generation of electricity for captive use. No doubt, there is no definition of captive use in CCR. In such a situation, the meaning of the phrase captive use as understood when used in central excise law and notifications will prevail.

  The interpretation of the phrase captive use in respect of manufacture of excisable goods will only mean consumption of goods within the factory of manufacture and, more importantly, the fact that such goods are not sold of otherwise removed from the factory of manufacture. In Rule 2 k of CCR, in the Sub rule (I iv), apart from sub rule (iii), the only other provision related to manufacture of excisable goods is sub-rule (i) which concerns all goods used in the factory by the manufacturer of final products. On the same analogy, the goods used in the production of electricity for captive use will then mean the goods used for generation of electricity for consumption of manufacturer within his own factory of manufacture but definitely not electricity which is sold outside the factory.

  Penalty - Held that: - the ingredients attracting imposition of penalty equal to tax demanded under Rule 15 (1) of CCR are not attracted to the facts of the present case - the equal penalty imposed under Rule 15(1) is set aside.

  Appeal allowed in part.

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• 2018 (3) TMI 179

  CENVAT credit - duty paying invoices - main allegation is that in the Cenvat invoices the description of goods (raw material) is HR Coils, HR Sheets, MS Rounds, MS Wire Coil etc., whereas in commercial invoices and other documents the goods (raw materials) are described differently as MS scrap - Whether there is sufficient evidence that SRIPL Unit I & II had availed cenvat credit on invoices issued by dealers declaring despatched items as SS sheets/MS sheets, coils etc. and that actual goods received by SRIPL Unit I & II was only MS/SS scrap? - Whether the proceedings per se are hit by limitation?

  Held that: - the main planks of the department s case against the assessee do not stand to scrutiny. There is also no other cogent or compelling evidence which can prop up department s allegation. Further, even the allegation made by the department that assessees have manufactured their final products by procuring locally manufactured scrap , is also not backed up by any corroborative evidence and can at best be termed as an assumption - there is no evidence of suppliers of local scrap, transporters, payment to such suppliers etc. The case of the department therefore does not sustain on merits.

  Time limitation - Held that: - Appellants have stated that they have not benefited otherwise by taking any irregular credit as alleged by the department. The proviso to Section 11 A (1) would be attracted when there is suppression of facts with intent to evade payment of duty. The department has no case that appellants utilized the alleged wrongly availed credit to discharge duty liability. There is no evidence coming forth in this angle.

  Tthe proceedings initiated by the department which have resulted in the appeals filed by SRIPL Unit I & II and other co-noticees are not only hit by limitation for the predominant period covered in the SCN, but more particularly cannot be sustained on merits.

  Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 178

  Benefit of N/N. 214/86-CE - denial on the ground that the principal manufacturer L&T has not given a declaration under N/N. 214/86-CE as required for sending the goods to the appellant as job worker - Held that: - There is no dispute that the raw material sent by L&T to the appellant were converted as per the arrangement between the assessees and L&T; that the job worked goods returned back to L&T were used further by the latter; that duty was paid on the final goods cleared by L&T - non-filing of declaration for the purposes of availing N/N. 214/86-CE benefit, is only a curable defect and demand of duty only for that reason is an overkill - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 177

  Valuation - subsidy - Department has taken the view that to the extent of the subsidy amount, the appellant has retained the VAT recovered from the buyers and hence such amounts are required to be included in the Transaction Value under Section 4(3) (d) of the CEA - Held that: - In the case of the Schemes under the Rajasthan Government, the subsidy amount is paid in the form of VAT Challan whereas in the case of the Scheme of the MP Government, the same is allowed by way of book adjustment against the tax payable for the subsequent period.

  A similar issue has come up before the Tribunal in the case of Shri Cement Ltd. V/s Commissioner [2018 (1) TMI 915 - CESTAT NEW DELHI], where it was held that There is no justification for inclusion in the assessable value, the VAT amounts paid by the assessee using VAT 37B Challans.

  Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 184

  CENVAT credit - inputs/capital goods - denial on the ground that the same have been used in the manufacture of final products which were wholly exempted from duty in terms of N/N. 115/75 - Held that: - the Commissioner has not recorded a finding of fact that the entire exercise was revenue neutral. No reasons have been assigned by the CESTAT for coming to the conclusion that entire exercise was revenue neutral - There is complete absence of findings of fact.

  There was a finding of fact that the exercise was revenue neutral. It was not a case where allegation of the suppression of material fact by the assessee was made. In the present case, a specific finding is recorded to that effect by the Commissioner. The said finding is not dealt with by the CESTAT.

  As the CESTAT which is the final fact finding authority has not done its duty, we have no option but to remand the matter for fresh consideration to CESTAT - matter on remand.

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• 2018 (3) TMI 176

  Classification of goods - fabric based blinds for window covering - Department took the view that the fabric in question was impregnated with scotch gard, a chemical which surrounds each fibre of the fabric providing an irresistible shield against dust and sail apart from imparting a strain proof quality; that the chemical coating predominantly consists of synthetic polymer and hence the said blinds are required to be classified under CETH 39253000.

  Whether the fabric based blinds for window coverings have been impregnated or coated with plastic of Chapter 39, hence do not qualify for classification under CETA 6303 as other articles of textiles and would require to be classified under CETA 39253000? - benefit of N/N. 30/2004-CE.

  Held that: - while all plastics are formed by polymerization, every polymer is not a plastic. True, all single fabric synthetic textiles are made from manmade fibres by joining monomers into polymers through polymerization. However, even though a synthetic fibre is a polymer, it is specifically classified under CET Heading 54 of the CETA and not as a plastic under Chapter 39. By the same analogy, every chemical brought about by polymerization cannot be considered as a plastic unless that is formed under external influence by moulding, casting, extruding, rolling or other process and result into shapes which are retained on the removal of the external influence. Discernibly, a chemical which may have a polymeric composition like the impugned scotchgard but which is capable of being poured, sprayed, coated, impregnated and does not have any specific retained shape surely then cannot come within the fold of plastics for the purposes of Chapter 39.

  The scotchgard which has been impregnated / coated onto the fabric of the blinds is a licensed product manufactured by 3M. A perusal of the website of 3M informs that the key ingredient of the said material earlier was PER FLOURO OCTANE SULFONIC ACID (PFOS). After some health concerns were raised in respect of PFOS, the key ingredient in scotchgard has been replaced by PERFLOURO BUTANE SULFONIC ACID (PFBS) with chemical formula C4HF9O3S, a chemical compound with a four carbon fluorocarbon chain and a sulfonic acid functional group.

  The impugned goods will be required to be considered only as a textile fabric / material, which has been coated with a chemical compound which is not predominant in nature and the fabric per se even after such impregnation will continue to be considered only as a textile fabric. This being so, the made up textile articles made out of such fabric and in particular, interior blinds will be correctly classifiable under CET Heading 6303 as contended by the assessee - the impugned goods will be eligible for duty exemption under Notification No. 30/2004-CE.

  Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 175

  Liability of interest - duty late deposited by the respondent for the months May 2015 and June 2015 - sealing of machines - Held that: - the respondent was not having any machine in operation during the period 15.04.2015 to 22.05.2015 and 01.06.2015 to 15.06.2015 in May 2015 and June 2015 as the same had been sealed and deemed uninstalled. As such no duty could be discharged in advance. After intimation to the department, the machine was desealed on 23.05.2015 and 15.06.2015 by Range Officer, and during the last 9 days/last fortnight of the respective months, the machine was put to operation and the duty applicable was paid before the end of the respective months, which is before the 5th of the following month - this Tribunal has repeatedly held that the interest liability does not arise as the machine was unsealed and re-installed only after middle of the month or nine days before of the close of the month.

  Appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 174

  SSI exemption - dummy units - clubbing of clearances - allegation is that M/s. SG is a dummy unit of M/s. SPP created on paper for the purpose of fragmentation of value of clearances of both the units so as to wrongly avail SSI exemption - Held that: - it can be seen that M/s. SG for all practical purposes was functioning as dummy unit of M/s. SPP so as to keep the clearances within the limit of SSI exemption - the value of clearances of the impugned goods cleared by M/s. SG during the relevant period has been rightly clubbed with the clearances of M/s. SPP and the demand raised is legal and proper - appeal dismissed - decided against appellant.

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• 2018 (3) TMI 173

  Benefit of N/N. 64/95-CE, dated 16.03.1995, as amended - goads cleared to the programme SAMYUKTA for the period 1.06.2006 to 21.8.2006 - Penalty u/r 25 of CER, 2002 - Held that: - The parent N/N. 64/95-CE, dt. 16.03.1995 inter-alia exemption central excise duty on all goods suplied to the programme SAMYUKTA under the Ministry of Defence, with the caveat that the exemption shah not have affect on or after the first day of December, 1999.

  The N/N. 1/2006-CE extended the validity of the parent N/N. 64/95-CE, upto Ist day of June, 2006. However, the next notification extending the validity period was 40/2006-CE, dt. 21.08.2006 which extended the validity period upto Ist day of December, 2007. December has taken the view that since the amending N/N. 1/2006-CE cause extension of validity period only upto 01.06.2006, and since there was no further notification was issued for extending the validity beyond 01.06.2006, till N/N. 40/2006-CE was issued on 21.08.2006, duty free clearance under parent N/N/. 64/95CE would not be available for the interim period.

  A similar issue had come up before Hon’ble Supreme Court in W.P.I.L Limited Vs. CCE, Meerut [2005 (2) TMI 137 - SUPREME COURT OF INDIA]. The facts were that pumps as well as part thereof which were used far manufacture of power pumps exempted from levy of excise duty since 1978. However, while issuing a consolidated notification No.46/94, incorporating earlier notification dt. 01-03-1994, part of power driven pumps which all along have been exempted, were omitted.

  The benefit of N/N. 67/95-CE in respect of impugned goods cleared by the appellant will be available even chewing the period of dispute - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 172

  CENVAT credit - the service tax was paid by the service provider by reason of fraud, collusion or willful misstatement, etc. and accordingly, as per the provisions of Rule 9(1)(bb) of the Rules, the appellant is not permitted to take Cenvat credit - Held that: - the charges leveled against the service provider regarding fraud, collusion, willful mis-statement, etc. were no more in existence in view of the proceedings dropped by the jurisdictional Commissioner (Appeals). Since the service tax amount in question was not paid by the reason of fraud, collusion, etc., the appellant cannot be denied the Cenvat credit benefit in terms of the Rule 9(1) (bb) of the Rules.

  Since the service tax paid by the service provider was availed as credit by the appellant on the basis of the bills raised by him, the benefit of CENVAT credit cannot also be denied to the appellant.

  Appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 171

  SSI Exemption - extended period of limitation - Held that: - the respondent has been regularly informing to the authorities about intention of manufacturing branded goods as well as non branded goods as their own products.

  As the matter of the fact, we perused the records produced by the Learned Departmental Representative and notice that factual findings of First Appellate Authority is correct. The Superintendent incharge of assessee had sought classification on this issued in February 2004.

  Appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 170

  Rectification of mistake - in the remand proceedings while considering the issue of penalty this Tribunal has not considered the fact that the provisions of Section 11AC of the Act for imposition of penalty were not in the statute book before 28.09.1996, therefore, for the period prior to 28.09.1996, no penalty is imposable on the appellant and for that reason the order of this Tribunal dated 28.02.2012 be recalled - time limitation - Held that: - Hon'ble Apex Court in the case of Sunitadevi Singhania Hospital Trust [2008 (11) TMI 249 - SUPREME COURT OF INDIA], held that the limitation will be applicable to the Tribunal for taking suo-moto action for rectification of mistake but the aggrieved party can file an application for rectification of mistake at any time but showing the reasons for causing delay that there has been injustice done to them by the order of this Tribunal - the affirmation of the said order of this Tribunal by the Hon'ble Apex Court is through a non-speaking order, therefore, the same cannot be held that the application for rectification of mistake is barred of limitation - issue of limitation decided in favor of applicant.

  Merger of the order of this Tribunal with the order of Hon'ble High Court as well as the Hon'ble Apex Court - Held that: - the order of this Tribunal does not merge with the order of the Hon'ble Apex Court or the Hon'ble High Court. Moreover, the Hon'ble High Court itself has given liberty to the applicant to take appropriate remedy in accordance with law.

  Penalty for the period prior to 28.09.1996 - Held that: - the order of this Tribunal dated 28.02.2012 is not correct, therefore, on the aspect of imposition of penalty prior to 28.09.1996, the issue is to be addressed by this Tribunal and only for the said issue, the order of this Tribunal dated 28.02.2012 is recalled.

  Application disposed off.

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• 2018 (3) TMI 169

  Clandestine removal - The case of the Revenue is based upon such private booklet, panchnama i.e. at site wherein it is indicated that there was shortage of finished goods; confessional statement of one Shri Sharma - Held that: - In the absence of any evidence to show or indicate that this booklet on which reliance has been placed by Revenue to hold that there was clandestine removal for the period 1.9.2001 to 15.9.2001, the entire case of the Revenue falls down in the absence of any corroborative evidence in the form of purchaser or transporter's document to indicate clandestine clearance from the factory premises of the appellant. Besides, this document which is termed as booklet and no other evidence is coming forth from the record to hold that there was clandestine removal of the finished goods. In the absence of any other evidence more specifically positive evidence establishing evasion and the absence of any other material reflecting purchase of excessive raw material, excess consumption of resources, the demand of clandestine removal fails miserably.

  The charge of clandestine removal of the goods on the main appellant and consequent penalty on the Director does not stand scrutiny of the law and the demand needs to be set aside - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 168

  CENVAT credit - reversal of service credit taken on management consultancy service pertaining to the unit in the location of area based exemption - Rule 7(b) of the CCR 2004 - Held that: - in the appellant own case Fosroc Chemicals India Pvt. Ltd. Versus Commissioner of Central Excise, Customs And Service Tax Bangalore-LTU [2016 (1) TMI 21 - CESTAT BANGALORE], this Tribunal has considered all the submissions of the assessee which have been raised in the present appeals also by the assessee as well as by the Department and held that In terms of Rule 7(b), the service tax attributable to service used in a unit 'exclusively' engaged in the manufacture of exempted goods is not available. The expression 'exclusively' appearing in the said Rule relates to the unit and not to the service tax.

  Appeal disposed off.

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• 2018 (3) TMI 167

  CENVAT credit - engines/pump/frames - denial on the premises that the process undertaken by them does not amount to manufacture - Held that: - As there are contrary views and difference of opinion between the Members, therefore, the matter be placed before the Hon'ble President to refer the matter to the third member to resolve the following issues:- Whether the activity of inspection and testing in respect of the parts for proper alignments of pump set on engines, pump and base frames and packing thereof in master box amounts to manufacture as held by the Member (Judicial)?

  Matter referred to Third Member.

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• 2018 (3) TMI 166

  Classification of goods - Chequered Tiles, Rockard designer Tiles, Plain cement Tiles and Paver blocks etc. - benefit of N/N. 10/2003-CE dt 1.3.2003 - It was alleged that the Respondent has cleared the Chequered Tiles, Rockard designer tiles and decorative Interlocking paver blocks which are not commercially known as “Mosaic Tiles” by misclassifying the same as “Mosaic Tiles” - Held that: - The revenue has not brought any fact on record that the tiles were not Mosaic or commercially not known as Mosaic - the dictionary meaning of “Mosaic” means a picture of decorative design made by the small coloured pieces of stones or tiles into a surface or the process of art of making such pictures or design.

  No adverse allegation is appearing in SCN against the Respondent that the Tiles manufactured by them do not fulfill the above criteria of Mosaic - what is important is that the goods under reference must belong to the category of Mosaic Tiles so as to eligible for exemption from duty. The term “Mosaic” is a germ and once the goods belong to the category of Mosiac, the category of goods would not debar it from the category of Mosaic. In the present case the Tiles as per the terminology used are “Chequered”, “Rockard” etc to represent them individual species of the germ “Mosaic Tiles”. If only genus is covered by the exemption and not the individual species in that case no exemption would be available where the genus is named in exemption and not the individual species.

  The Hon’ble Court in the case of KEDIA AGGLOMERATED MARBLES LTD. Versus COLLECTOR OF CENTRAL EXCISE [2003 (1) TMI 104 - SUPREME COURT OF INDIA] held that the Tiles in question would merit classification as ‘Mosaic Tiles’ despite the fact that the commercial name of the Tiles was not Mosaic Tiles and were sold by unique name to each product - In the present case following the same analogy of the Hon’ble Apex Court as above, it can be held that an individual tile, which has an inherent well defined visible pattern or design contributed by the marble or stone chips mixed in the cement, is without any doubt, a mosaic tile, notwithstanding the fact that the goods are marketed by the manufacturer by using the Trade Name coined by the manufacturer.

  The goods of the Respondent would also merit classification as “Mosaic tiles” and would be eligible for exemption - the individual name of Tiles as Chequered, Roackard or plain tiles would not exclude them from claiming exemption as the goods in question are commercially known as “Mosaic Tiles”.

  Appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 183

  Attachment of immovable property - recovery of dues of lessee - whether the department can seek recovery of the dues of Harshwardhan Exports through sale of the property of the petitioner? - proviso to subsection (1) of Section 11 of the Central Excise Act as well as on subclause (ii) of clause( c) of subsection (1) of section 142 of the Customs Act.

  Held that: - invocation of the said provisions by the department is defective. The central excise dues are that of Harshwardhan Exports. The department has not set up any case of Harshwardhan Exports and the petitioner Chandra Dyeing being one and same entity though on paper, separate companies.

  The transaction of transfer of the leasehold rights of Harshwardhan Exports to the petitioner took place before the order of attachment was passed. It is not a case where the transfer took place after the property was attached. In plain terms, the said provisions apply in case of transfer of business and not merely transfer of property or assets.

  In absence of any assertion of the department that Harshwardhan Exports and the petitioner Chandra Dyeing are the clones and the entire exercise of creating Harshwardhan Exports as a separate company was a sham transaction to defraud the Government revenue, in facts of the present case, there is no possibility allowing the respondents to sell the property of the petitioner for the unpaid dues of the Harshwardhan Exports. Even in the show cause notice dated 04.02.2010, the department has not built any such case - Merely because Harshwardhan Exports agreed not to vacate the premises till full export obligations are discharged, would not create any additional right in the property which can be sold for the purpose of recovery of the dues of Harshwardhan Exports.

  The attachment and distress imposed by the department on the property in question are set aside - petition allowed - decided in favor of petitioner.

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• 2018 (3) TMI 165

  CENVAT credit - bogus invoices - clandestine removal - Held that: - As the truck which was alleged to have carried the goods and the statement of dealers has been contested and found in favor of the appellant, therefore, cenvat credit cannot be denied on the allegation that they have procured only invoices without supplying the goods to avail inadmissible cenvat credit - credit cannot be denied.

  Clandestine removal - Held that: - loose slips recovered from Shri. Bharat Bhushan was required to be explained by him for what purpose these loose slips have been prepared. It is also noted that these loose slips have not been matching with the statement of buyers but they paid duty on the goods received by them. In that circumstances, there is no one to one co-relation in this case, therefore, the demand of clandestine removal is confirmed - penalty reduced to 25%.

  Appeal allowed in part.

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• 2018 (3) TMI 164

  SSI Exemption - assignment of brand name - date of assignment of Brand Name - Held that: - it is settled position of law that once the brand name has been assigned in favor of a person, he will be entitled to clear goods bearing that brand name considering it as his own and will be entitled to the benefit of the SSI Notification - It is not being disputed that the agreement dated 06.10.1998 has granted such assignment but the demand raised is for the period prior to this date i.e. January to September 1998. Upon perusal of the Assignment Agreement dated 06.10.1998, it is seen that in this Agreement there is a reference to the earlier agreement dated 25.08.1997. Further on perusal of a copy of the earlier assignment deed which is on record, we note that the same brand name stands assigned right from 25.08.1997 in favour of M/s Meyer Health Care Pvt. Ltd. Such being the case M/s. Meyer Health Care Pvt. Ltd. will be entitled to the SSI exemption during the disputed period.

  There is no dispute for the period subsequent to the assignment agreement, M/s Meyer Health Care will be entitled to the SSI benefit - appeal dismissed - decided against Revenue.

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• 2018 (3) TMI 163

  CENVAT credit - inputs - M.S. Plates, M.S. Rounds, M.S. Angles used as 'Parts/Components for the capital goods' in manufacture of ultimate product - Held that: - it is settled position of law that the components, spares, and accessories need not fall in Chapter-82, 84 and Chapter 85 of CETA. They can fall in any chapter. The only condition is that they should be part, component or accessory of machinery specified in clause (i)-MF (DR) circular No.276/110/96-TRU dated 02.12.1996 - the appellant are held, allowed to avail the credit of ₹ 69,09,550/- on the inputs and as such there is no contravention of Rule 3 of the Cenvat credit Rules, 2004 and no duty or credit is recoverable under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11A(1) of the Central Excise Act, 1944.

  Interest - penalty - Held that: - no interest at appropriate rate is recoverable under Rule 14 of Cenvat Credit Rules, 2004 read with Section 11AB of the Central Excise Act, 1944 - the Appellant are not liable for penalty under Rule 15 of Cenvat Credit Rules, 2004 for contravention of Rule 3 of Cenvat Credit Rules, 2004.

  Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2018 (3) TMI 162

  Rate of tax - uniform rate of tax or different rate of tax on purchase of goods for use in the works contract - rate applicable prior to 1 April 2006 when Section 4(1)(c) was introduced by an amendment into the KVAT Act 2003 - Held that: - There can be no manner of doubt that even prior to 1 April 2006 works contracts were exigible to the levy of tax. The charging section, Section 3, mandates that “the tax shall be levied on every sale of goods”. The expression ‘sale’ in Section 2(29) means ‘every transfer of the property in goods’ including ‘a transfer of property in goods (whether as goods or in some other form) involved in the execution of works contract’.

  Section 4 prescribes the rate of tax. - The expression ‘other goods’ in Section 4(1)(b) evidently means those goods which are not governed by Section 4(1)(a) - where goods are specifically covered by clauses (i), (ii), or (iii) of Section 4(1)(a), recourse to the residual provisions of Section 4(1)(b) would not be available. To allow a residual provision to consume the specific would be to invert the intent of the legislature. The state wants us to do just that.

  In Gannon Dunkerly & Co [1992 (11) TMI 254 - SUPREME COURT OF INDIA], this Court held that it is permissible for the State legislatures to prescribe a uniform rate of tax for all goods involved in the execution of works contracts, even though different rates of tax are prescribed for the sale of such goods.

  The exigibility to tax is not (as it cannot be) dependent on the state prescribing a uniform rate of tax for goods involved in works contracts. That the KVAT Act 2003 did not provide a uniform rate of tax prior to 01.04.2006 on goods involved in the execution of works contract also becomes apparent when we read the amendment which introduced Section 4(1)(c) by Act 4 of 2006. As a result of the amendment, the legislature provided that the rate of tax in respect of the transfer of property in goods involved in the execution of a works contract would be as provided in the Sixth Schedule. The Sixth Schedule elucidates works contracts of various descriptions and elucidates the associated rates of tax for each distinct category.

  By way of abundant caution, that issues of a factual nature, will fall for adjudication in the course of assessment proceedings. It was open to state legislatures to provide uniform rates of tax on goods involved in the execution of works contracts. Many state legislatures did so. The Karnataka legislature did so with effect from 1.4.2006, not earlier.

  We are unable to accept the submission of the State that upto 31 March 2006. Section 4(1)(b) envisaged a uniform rate for the transfer of goods involved in the execution of a works contract.

  Appeal dismissed - decided against appellant.

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• 2018 (3) TMI 160

  Validity of assessment order - adjustment of input tax credit - Section 19 (2) of the TNVAT Act read with Rule 10 (7) (c) of the TNVAT Rules, 2007 - Held that: - when Section 19 (17) provides that, if the ITC determined by the Assessing Officer for a year exceeds tax liability for that year, the excess can be adjusted against any outstanding tax due from the dealer/assessee The word 'any' has significance. The petitioner, being the registered dealer, both under the TNVAT Act and CST Act, would be entitled to adjust the ITC and for such liability under the CST Act - petition allowed - decided in favor of petitioner.

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• 2018 (3) TMI 159

  Recovery of tax dues - Whether the writ petitioner is a bona fide purchaser of the property and would be protected from the proceedings under the Revenue Recovery Act, and under Section 24 (A) of the Tamil Nadu General Sales Tax Act, 1959?

  Held that: - the encumbrance certificate does not reveal the charge created over the property and there is nothing to infer that the appellant / writ petitioner and his vendor with an intention to defraud the tax payable to the first respondent colluded with each other and effected transfer of the property. The business conducted by the vendor of the writ petitioner was actually closed on 01.04.2002 and the property had been purchased by the writ petitioner only in the year 2004. Therefore, it cannot be said that he had actual or constructive notice of the charge created over the property for payment of arrears of sales tax in respect of the business conducted by his vendor.

  Even though a charge is created on the properties on the finalisation of the assessment of tax and a demand is raised, the same would not preclude the bona fide purchaser from seeking protection under Section 24 (A) of the Act.

  It cannot be said that there was willful abstention or gross negligence in making any enquiry that would tantamount to a notice under Section 3 of the Transfer of Property Act, and the appellant / writ petitioner is a bona fide purchaser for value.

  Petition allowed - decided in favor of petitioner.

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• 2018 (3) TMI 158

  Imposition of VAT - sale of “Manually Operated Sprayers” - Held that: - this Court is satisfied that the said question need not be straightaway decided by this Court, as there is no sufficient material on record to embark upon such enquiry as to the nature of commodity dealt with in the present case or decide the question of interpretation about the said commodity falling under the Entry described in the Notification dated 31.3.2010 as “Agricultural Sprayers” or “Manually Operated Agricultural Implements” covered by First Schedule of the Act. Such question deserves to be first decided by the Head of the Department, viz., the learned Commissioner under Section 59(4) of the Act - petition disposed off.

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• 2018 (3) TMI 157

  Inter-state sales - sandalwood - Form-C - challenge to levy of Tamil Nadu value added tax - Held that: - identical issue decided in the case of Surya Vinayaka Industries Limited and Others Versus District Forest Officer, Salem Division, Salem and Another [2012 (11) TMI 1054 - MADRAS HIGH COURT], where it was held that Merely because, the petitioner transported the goods outside the State will not bring the transaction within the ambit of the inter state sale - petition dismissed - decided against petitioner.

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• 2018 (3) TMI 161

  Export sale - Whether the 'export sale' will also be a 'sale' which does not attract the levy of tax under Section 3(4) of the Act? - Held that: - identical issue decided in the case of Tube Investments of India Ltd. (Formerly known as M/s. TI Diamond Chain Ltd.) Versus The State of Tamil Nadu, represented by the Commercial Tax Officer [2010 (10) TMI 938 - MADRAS HIGH COURT], where it was held that Section 3(4) of the Act will have no application since situs of the export sales of the petitioners for the purpose of said Section was the State of Tamilnadu and by virtue of the said factual position, the applicability of Section 3(4) stands excluded for the exigibility of tax - tax revision dismissed.

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• Indian Laws

• 2018 (3) TMI 198

  E-auction - Section 13(8) of the SARFAESI Act - Held that: - the appellant failed to comply with the provisions of Section 13(8). The statute mandates that it is only where the dues of the secured creditor are tendered together with costs, charges and expenses before the date fixed for sale or transfer that the secured asset is not to be sold or transferred.

  The appellant, is however, entitled to a refund of his deposit of ₹ 7,00,000 with interest at 9% per annum from the date of deposit till payment - appeal allowed in part.

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• 2018 (3) TMI 197

  VAT charges relating to the period of construction - collaboration agreement - whether this is the liability of owner or liability of builder? - interpretation of statute.

  Held that: - Clause 11 of the collaboration agreement is categorical that the “entire amount required or payable for carrying out construction, development, completion” was wholly on account of the builder. This Clause can have only one interpretation. The amount required or payable for carrying out the construction includes the VAT. The VAT amount would be covered clearly under the terminology “statutory and other fees” as contained in Clause 11. Thus, the demand for VAT charges from the owner cannot be on the basis of the collaboration agreement. The builder undertook the construction for his own benefit and not the owner’s benefit. The acquiring of ownership rights by undertaking construction shows that the collaboration agreement was not a contract for rendering services to the owner. There was no sale of goods or services between the owner and the builder.

  Admittedly, the VAT charges which have been claimed relate to the period of construction and not thereafter. The transaction for which the VAT is being demanded from the owner is, as per the invoice, for the period January, 2013 which is during the period of construction. This was clearly not the responsibility of the owner.

  The owner has not bought any goods or services from the builder for her benefit, but the construction items and other goods have been purchased by the builder for completing the construction which was his own responsibility. This is not a case of a `works contract' under Section 2(zo) of the Delhi Value Added Tax Act, 2004. Thus, on a clear reading of the collaboration agreement, the suit under Order XXXVII of the CPC is itself not maintainable.

  The suit is held to be not maintainable and the same is dismissed - appeal allowed - decided in favor of appellant.

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• 2018 (3) TMI 196

  Recovery of Debt - Whether personal liberty enshrined under Article 21 of the Constitution of India is violated, in view of Article 11 of the International Covenant on Civil and Political Rights, by issuing a SCN for arrest and detention of a judgment debtor, while executing a decree under Section 25(b) of Recovery of Debts Due to Banks and Financial Institutions Act, 1993, read with Regulation 35(1) of Debts Recovery Tribunal- II Chennai Regulations 2015 or not? - Held that: - Hon'ble Justice in V.R.Krishna Iyer in JOLLY GEORGE VARGHESE's case [1980 (2) TMI 263 - SUPREME COURT] observed that “No one shall be imprisoned, merely on the ground of inability to fulfil a contractual obligation” - there shall be minimal proof of wilful failure on the part of the judgment debtor and a fair procedure be adopted in finding as to whether he has the ability to pay, but have improperly evaded or postponed in doing so, or otherwise, dishonestly committed acts of bad faith.

  When there is an element of bad faith, dishonesty, wilful evasion or neglect or indifference to pay or some deliberate or reasonable disposition, arrest and detention cannot be said to violate personal liberty enshrined in Article 21 of the Constitution of India - arrest is not by way of punishment, but to recover the arrears of public money.

  Petitioner is not a honest person but has deliberately acted with supine indeference and evaded payment. Therefore, he is not entitled to any equitable relief.

  Whether the High Court, while exercising jurisdiction under Article 226 of the Constitution of India can interfere in recovery proceedings, de hors the availability of appeal remedy under the relevant statute or not? - Held that: - the writ petitioner has not acted in good faith. Even then, he is entitled to a fair procedure and reasonable opportunity. He was served with notice and filed his counter. He was given ample opportunity to effectively contest his case. As per Section 25 and Regulation 35(1) a certified debtor shall be given opportunity to show cause as to why he shall not be arrested and detained in civil prison.

  The writ petitioner has not proved that he has acted in good faith. The past conduct and serious allegations in fudging the accounts with an ulterior motive, precludes us from granting the equitable relief, in favour of the petitioner. If at all the petitioner is aggrieved over the return of the appeal for non-compliance of statutory requirement, he would have bonafidely approached this Court with appropriate, independent petition. Seeking a prayer under the pretext of challenging the order, does not reveal any bonafide on the other hand it lacks bonafide.

  The writ petitioner is not deprived of his personal liberty enshrined under Article 21 of the Constitution of India, as the action taken, is in accordance with due procedure of law. The petitioner lacks bonafides and therefore, not entitled to the benefit of Article 11 of the International Covenant on Civil and Political Rights.

  Petition dismissed - decided against petitioner.

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