TMI Tax Updates - e-Newsletter
March 18, 2017

Case Laws in this Newsletter:

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

TMI SMS

• Restoration of CENVAT credit wrongly reversed - failure to challenge the reversal ordered by the officer - sou-mot restoration not allowed

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• Manufacture/ construction at site - it was near the site of construction of fly-over (3.05 KMs away) - exemption from duty of excise allowed

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Highlights / Catch Notes

• Income Tax:

  Additions u/s 68 - Cash deposits in the bank account - since there are deposits and withdrawals during the year, the contention of peak credit can be accepted as there are no other investments or expenditures which are subjected to verification by the AO. - AT
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• Income Tax:

  Whether the Ld.CIT(A) can issue a direction to assess to tax the amount in the hands of HUF? - Even though HUF is represented by KARTA, still as per law, HUF is ‘such other person’ within the meaning of the expression provided in Explanation 3. - CIT(A) has not given any opportunity to such other person, such direction not sustainable - AT
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• Income Tax:

  Agricultural income - Merely because the assessee’s husband owns some land, it cannot be assumed that the land was cultivated by his wife and she earned agricultural income. - AT
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• Income Tax:

  The assessee challenged the order before the CIT(A) both on merits as well as on jurisdiction and the limitation grounds - Ld. CIT(A) ought to have first decided the jurisdictional issue and only thereafter should have proceeded to decide the issue on merits if so warranted in law - AT
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• Income Tax:

  The benefit of exemption u/s. 11 of the Act would not be denied on the entire income of the assessee. It is only the investments or deposits made in violation of provisions of section 11(5) of the Act that would attract maximum marginal rate of tax as per the provisions of law. - AT
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• Customs:

  Refund - BCD - import from Japan - duty was paid at the time of import but refund claimed subsequently after obtaining certified copy of certificate of origin - The department has no case that they conducted enquiry and found that the certificate copy is fake/forged - refund allowed - AT
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• Customs:

  Release of seized gold - failure to issue within 6 months - service by affixing the notice on the notice board of the customs house would arise only in the event that the notice “cannot be served in the manner prescribed under the said clause” as laid down under Section 153 (a) - HC
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• Corporate Law:

  Over-charge towards wharfage claim from the Board of Trustees - refund of the amount allegedly paid in excess - Period of limitation - revival of extinguished claim - Section 120 of Major Port Trusts Act stipulates six months from the date of “accrual of the cause of action” whereas Section 55 stipulates “six months from the date of the payment” - SC
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• Service Tax:

  Principles of natural justice - the letters obtained from Blue Dart and the recitals contained therein, are in line with the statements made by the respective petitioners and therefore, by not furnishing those details to the petitioners, is not in any way causing prejudice to them - there is no violation of the principles of natural justice - HC
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• Service Tax:

  Works contract - service tax amount had already been collected by his principals - merely for the reason that a person did not pay service tax or did not file return does not amount to wilful suppression of facts to evade payment. - HC
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• Service Tax:

  Hiring of equipment and facilities - leasing of high quality fire equipments, electrical systems, Air Conditioning plants, DG sets, elavators, fixtures and fittings, chairs, carpeting, pantry and kitchen equipments, music and PA system, access control and security system, etc. - chargeable to service tax under section 65(105zzzq) as the “Business Support Service” - AT
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• Central Excise:

  Restoration of CENVAT credit - The failure to challenge the reversal ordered by the assessing officer has settled that burden on the assessee. The restoration of credit is not in order - Demand confirmed - however, penalty set aside - AT
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• Central Excise:

  Re-classification of goods - fly waste - classified under heading 5505.20 or under heading 5601.20? - the appellant had been initially directed to classify the goods under 5601 and any re-classification thereafter would have to be based on proper evidence - AT
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• Central Excise:

  Valuation - sale through Depot - inclusion of incidental expenses - Subsequent sale at a later point of time and the actual sale price at the later point of time is not relevant for determining the assessable value - AT
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• Central Excise:

  Manufacture / construction at site - 3.05 KMs away from the ‘site’ of the flyovers - since the said site was mentioned in the regular correspondence between N.H.A.I. and RITES Ltd. and N.H.A.I. and its engineers had full access to the site and it was near the site of construction of fly-over, benefit of exemption allowed - AT
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• Central Excise:

  CENVAT credit - the appellant received ‘supply of manpower’ from the service provider for the work in the nature of packing, forwarding, sales promotion and/or marketing which are all taxable services under the provisions of Service Tax Act and the Rules, accordingly the appellant is entitled to Cenvat credit - AT
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Articles

• VAT IMPLEMENTATION IN UAE
• Input tax credit - Matching / Mismatching Concept in Present Tax Laws vis-à-vis GST Laws
• POWERS OF GST OFFICERS UNDER CGST ACT

Circulars / Instructions / Orders

• Customs - Instructions no. 03/2017 - dated 16-3-2017
  Errors in the Bank account No., IFSC Code, etc. given by exporters for processing claims of Duty Drawback and Rebate of State Levies (RoSL) Scheme – regarding

News

• Amendment in Companies Act

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• Easy registration of Companies

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• Early warning System of Frauds

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• Redressal of Investors Grievances

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• Number of e-filed Income Tax Returns in Financial Year 2016-17 (till 28.02.2017) was 4.21 Cr: The total amount of refund issued in the current fiscal (including refund arising out of rectification, appeal effect etc.) is ₹ 1,48,459 crore (till 28.02.2017)

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• Dispensing of fake currency notes through Automated Teller Machines (ATMs)

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• Small Finance and Payment Banks

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• Government to conduct field trial with plastic banknotes at five locations of the country; Approval for procurement of plastic substrate and printing of bank notes of ₹ 10 denomination on plastic banknote substrates conveyed to RBI

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• Merger of State Bank of India (SBI) with its five subsidiaries; The existing customers of Subsidiary Banks will have access to SBI global network which has presence in all the time zones

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• Cybercrime audit on banks to check loopholes

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• Assessing the Performance of Private Insurance Companies

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• No proposal to withdraw new ₹ 2,000 notes: Jaitley

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• RBI Reference Rate for US $

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• Clarification by Central Board of Direct Taxes on rollback provision in the revised India-Korea Double Taxation Avoidance Agreement

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Case Laws:

• Income Tax

• 2017 (3) TMI 689
  Addition on undisclosed purchases and profit thereon - Held that:- On examination of the details submitted by the assessee, we find that the goods were purchased on credit basis. As there is outstanding credit balance in the books of the assessee, in the name of MUS. Thus, it can be presumed that the goods were purchased on the basis of credit. However, the lower authorities have not brought anything on record about the sales made by the assessee of such undisclosed purchases In the absence of any information about the sales of undisclosed purchases, the entire amount of purchase cannot be treated as undisclosed profit of the assessee. Therefore, we are of the view that only profit element of ₹ 21,548/- can be brought to tax. We also find that there is no allegation from the order of the lower authorities that the undisclosed purchases were made on cash basis. Besides MUS has shown sales in its books of accounts on credit basis. Therefore, the question of making addition of investment in such undisclosed purchases does not arise. In view of the above, we restrict the disallowance to ₹ 21,548/-. Accordingly, AO is directed. Hence, this ground of appeal of the assessee is partly allowed. Disallowance of expenses on estimated basis - Held that:- AO should have verified the expenses at the time assessment rather disallowing the same on the basis of estimation. The AO should have pointed out defects in respect to the specific vouchers before making the disallowance. In our considered view the AO should not disallow the expenses based on some suspicion, doubt and should not draw unreasonable inferences based on some unreasonable apprehensions. The AO has not brought on record any cogent reasons as to why this expenditure was to be disallowed. It is not the case that the expense was considered to be bogus or short comings in the vouchers in this regard as observed by the Revenue. No material has been placed before us by the Revenue to controvert the arguments of the ld. AR. In that view of the matter we find ourselves in no agreement with the reasoning and conclusion contained in the order of ld. CIT(A). With the result we reverse the finding of ld. CIT(A) with regard to delivery expenses. Disallowance for Installation and teas & tiffin charges we find that the assessee has failed to provide the supporting evidence in respect to the aforesaid expenses. Therefore the AO had to resort for the purpose of disallowance on the basis of estimation. In our considered view it was the duty of the assessee to provide the necessary details as desired by the AO as the onus lies on the assessee. Even before us the learned AR has not produced any supporting evidence in support of his claim therefore the inclined not to interfere in the order of lower authorities. Hence this ground of appeal of the assessee is partly allowed.

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• 2017 (3) TMI 688
  Assessment u/s 153C - Held that:- The person searched has not recorded any satisfaction that the income relatable to the seized material belongs to the assessees herein. Therefore, the assessments are quashed - Decided in favour of assessee

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• 2017 (3) TMI 687
  Unexplained investments - Held that:- According to the assessee, house sites were acquired for consideration of ₹ 20 lakhs wherein the market value was ₹ 99,25,000 as per the records of Sub-Registrar s Office. However, the A.O. has called upon the assessee to prove the source of investment of ₹ 20 lakhs only, which was claimed to have been paid, plus registration charges of ₹ 3,43,025. Thus the total expenditure under consideration was ₹ 23,43,025. The investment was claimed to be from withdrawals and agricultural income. As per the information furnished before the A.O. an amount of ₹ 15 lakhs was drawn from the partnership firm, besides agricultural income of ₹ 6,55,000. The Ld. CIT(A) has given detailed reasons while coming to the conclusion that this amount of ₹ 15 lakhs withdrawn from the partnership firm cannot be linked to the investments made in purchase of house sites and accordingly rejected the contention of the assessee. The availability of ₹ 6,55,000 having been accepted no further addition was made except confirming the addition of ₹ 15 lakhs under section 69 of the Act. No infirmity in the order of the Ld. CIT(A) on this issue. With regard to source of agricultural income, it is not in dispute that the land is not in the name of the assessee and there is no proof that assessee earned agricultural income. Merely because the assessee s husband owns some land, it cannot be assumed that the land was cultivated by his wife and she earned agricultural income. As rightly pointed out by the Ld. CIT(A) benefit of agricultural income cannot be given merely based on Tahsildar s certificate, unless specific evidence is placed before the tax authorities. In the instant case, no such evidence could be placed. Therefore, did not find any infirmity in the order passed by Ld. CIT(A). - Decided against assessee.

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• 2017 (3) TMI 686
  Rate for estimating the commission - Issuance of bogus bills - CIT(A) has treated total turnover reflected in different bank accounts as handled by the assessee on the basis of circumstantial evidence - Held that:- The assessee in his reply has only confirmed about transactions in Mehsana Nagrik Sahakari Bank Ltd. Papers were also found to this effect at his premises. Other bank accounts have been connected with the assessee only on assumption basis. It may be a case that person like assessee might have been carried out such transactions on behalf of Vishal Traders at Ahmedabad and other cities where these banks are located. There is no conclusive proof with the Department exhibiting the fact that transactions in all other banks were also routed through the assessee or he has deposited the cheques received from the alleged purchaser, withdrew the cash on the selfcheque issued by Vishal trades and handed over these cheques to Shri Dharmendra Pandya. Therefore, we are of the view that commission income in the hands of the assessee is to be assessed qua the turnover available in Mehsana Nagrik Sahakari Bank Ltd. In Asstt.Year 2007-08 no transactions have been carried out in this bank account. Therefore, there should not be any addition in that year. We allow the appeal of the assessee and delete addition. As far as other two years are concerned, we find that transactions are there in the Mehsana Nagrik Sahakari Bank Ltd. Commission rate adopted by the AO at 2% is reasonable rate in this type of activity. The ld.CIT(A) ought to have not reduced it to 1%. Therefore, we allow both the appeals of the Revenue and hold that whatever turnover is to be confirmed, rate for estimating the commission income will be at 2% (two percent). For Asstt.Year 2008-09 and 2009-10 we direct the AO to take the turnover available in Mehsana Nagrik Sahakari Bank Ltd. i.e. turnover of ₹ 2,04,23,897/- in Asstt.Year 2008-09 and ₹ 37,48,108/- in Asstt.Year 2009-10. The total turnover is to be computed at ₹ 2,41,72,005/-. The income of the assessee from these activities is to be worked out at 2% (two percent) of this turnover. This income will be in addition to any other income disclosed by the assessee in both the years. The ld.counsel for the assessee has agreed for the rate of 2% (two percent) as well as estimation of income at 2% (two percent) of the alleged turnover in addition to the income disclosed by the assessee. We have specifically confronted the ld.counsel for the assessee to this effect and he did not raise any objection. In this way, all these appeals are allowed.

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• 2017 (3) TMI 685
  Addition u/s 14A r.w.r 8D - Held that:- Rule 8D had no applicability for the year under consideration.The assessee had produced evidences to show that the loan taken by it was not used for investment purposes.As the loan was utilised for specific business purposes therefore,there was no justification for upholding the interest disallowance. We find that during the year under consideration the assessee had sufficient own funds for making investment. Therefore,following the judgment of Reliance Utilities(2009 (1) TMI 4 - BOMBAY HIGH COURT) we hold that the FAA had wrongly upheld the disallowance under the head interest expenditure. We find that the assessee, on its own,had made disallowance of 1%. The Hon’ble Bombay High Court in the case of Godrej Agrovet [2015 (3) TMI 651 - BOMBAY HIGH COURT] had held that disallowance of 5% in the earlier years i.e. up to the AY. 2007-08 was reasonable. Respectfully following the above,we direct the AO to restrict the disallowance to 5% of the exempt income. Applying the provisions of section 50 of the act for determination of full value of consideration in relation to sale of leasehold interest in plot at Jalgaon and Dombivali - Held that:- Provisions of section 50 were not applicable to leasehold land/building. See Commissioner of Income Tax Versus M/s. Greenfield Hotels & Estates Pvt. Ltd. [2016 (12) TMI 353 - BOMBAY HIGH COURT ] Computation of Short-Term Capital Gain (STCG) derived from transfer of units of any equity oriented mutual fund - Held that:- During the course of hearing before us it was stated that the AO had levied the tax on STCG at the rate of 30% (plus applicable surcharge)as against the rate of 10% (plus applicable surcharge). We find that the FAA has not passed and speaking order in that regard stating that issue raised by the assessee is not arising out of the assessment order. Calculation of taxes is made in the tax demand notice and if the AO does not apply correct rate of taxes, it is duty of the FAA to decide the issue. Therefore, we direct him to adjudicate the issue , raised before him , by passing and speaking order i.e. to decide the rate of taxes applicable to STCG for the year under consideration. Third ground of appeal is allowed in favour of the assessee, in part.

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• 2017 (3) TMI 684
  Claim of deduction u/s 10A - Held that:- We observe that during the course of assessment proceedings ld. Assessing Officer denied exemption u/s 10A of the Act by following his predecessor’s order in previous Asst. Year 2004- 05 and ignoring the fact that in assessee’s own case the Co-ordinate Bench has confirmed the ld. Commissioner of Income Tax(A)’s order allowing assessee’s claim of deduction u/s 10B of the Act for Asst. Year 2003-04 to 2007-08. We further observe that ld. Departmental Representative could not controvert the fact that the issue raised in these appeals ia squarely covered by the judgment of Hon. Jurisdictional High Court in the case of Saurashtra Cement & Chemicals Indus. Ltd. (1979 (2) TMI 21 - GUJARAT High Court ) relied on by the ld. Commissioner of Income Tax(A) wherein held once the deduction has been allowed in the first year of operation it cannot be denied in the subsequent year. - Decided in favour of assessee

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• 2017 (3) TMI 683
  Addition u/s 68 - cash deposit into the bank accounts - surrender of income u/s 44AD by filing revised computation of income - The assessee offered 5% of the sale proceeds deposited in the bank account - assessment u/s.153A r.w.s. 143(3), post search - Held that:- We find that the entire credit has been added by the learned Assessing Officer u/s.68 of the Act. Though, the learned CIT(A) has granted some part relief to the assessee, but fact remains that the payments have been made by the assessee to certain textile parties, therefore, the facts has not been appreciated in a justified manner, consequently, to put an end to the litigation, we are of the view that it will meet the ends of justice if the total addition is restricted to 25% of the cash deposited by the assessee in his bank account. It is worth mentioning here that the assessee has agreed to the above conclusion / addition. Thus, the appeals of the assessee are partly allowed.

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• 2017 (3) TMI 682
  Invocation of provisions of section 50B - slump sale - Held that:- CIT-A having categorically concluded that the adoption of slump sale provisions us/ 50B of the Act by the ld AO is not the correct approach, further proceeded to uphold the computation of Long Term Capital Gains (LTCG) after granting relief to the extent of ₹ 7,76,000/- alone. The facts stated herein remain undisputed and hence the same are not reiterated for the sake of brevity. We find that this is a case of simple retirement of the assessee from a partnership firm for which he received consideration of ₹ 50,00,000/- against his investment made thereon. It is not in dispute that he had invested ₹ 52,76,000/- in the firm. Hence the resultant capital loss of ₹ 2,76,000/- had to be disallowed in the memo of income by the assessee. The assessee had rightly treated the loss on sale of ₹ 2,76,000/- in his profit and loss account but had omitted to disallow the same in the memo of income. This is the only mistake committed by the assessee in our considered opinion. We find that the lower authorities had completely misdirected themselves by erroneously applying the provisions of section 50B of the Act by taking into account proportionate liabilities (which are not related to the cold storage plant) and ignoring the fact that those liabilities are still reflected in the balance sheet as on 31.3.2009. Accordingly, we direct the ld AO to disallow ₹ 2,76,000/- being capital loss in the assessment and reframe the same accordingly. Accordingly, the grounds raised by the assessee are partly allowed.

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• 2017 (3) TMI 681
  Income estimation at 5% of the stock put to sale - Held that:- As seen from the earlier year’s statements of account, it is true that the excise rental was at 9.68% of the sales for the year ending 31-03-2007 and at 9.10% for 31-03-2008, whereas for the impugned assessment year, the excise rental comes to 11%. However, as seen from the trading accounts, the gross profit for the year ending 31-03-2007 was at 15.60% for the year ending 31-03-2008, the gross profit was at 14.47%. In the impugned year, the gross profit works out to 18%. This indicates that the factor of excise rental has been compensated by the higher sale price as can be seen from the trading results. Thus, argument on payment of excise rental at higher rate does not stand. As seen from the order of the CIT(A), Ld.CIT(A) followed the decision in the case of M/s. Amaravathi Wine Shop [2012 (8) TMI 706 - ITAT, HYDERABAD] and that assessee has not made out any case to differ from the estimation of profit at 5% on cost of stock put to sale, subject to income from the business is not less than the profit earned as per the P&L A/c. Cash deposits in the bank account - Held that:- If it is a money deposited earlier and withdrawn and utilised in the business the same would not be available for further deposits. Since the same was not shown in the balance sheet as on 31-03-2008, the credit for the amount of ₹ 8 Lakhs as available on 31-03-2008 cannot be accepted, even though it is a fact that he withdrew the amount on that date. Since assessee has chosen not to show these transactions in the books of account and has not furnished any evidence that the withdrawn cash was available on that day, it is not possible to give credit for the amount. However, since there are deposits and withdrawals during the year, the contention of peak credit can be accepted as there are no other investments or expenditures which are subjected to verification by the AO. In view of that, AO is directed to verify the working provided by assessee and make addition accordingly, considering the transactions only for the year under consideration. If the working provided is acceptable then AO is directed to accept the peak at ₹ 5,81,192/-. Otherwise he is directed to rework the same after giving due opportunity to assessee.

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• 2017 (3) TMI 680
  Revision u/s 263 - whether the Ld. CIT(A) is correct in holding that the appeal filed against the assessment order passed under section 143(3) read with section 153C of the Act is infructuous or not? - Held that:- A.O. has interpreted the direction of the Pr. CIT as though it was to examine only the cash payment of ₹ 9,24,100 towards interest instead of making the assessment afresh. Accordingly, the A.O. has passed the consequential order on 30.06.2016. It is clear from the language used by the Pr. CIT i.e., “in the absence of such examination by the A.O., the assessment order so framed by the A.O. is not only erroneous but also prejudicial to the interests of the Revenue. Accordingly, the assessment order passed for A.Y. 2008-09 is set aside with a direction to the A.O. to re-do the same afresh, after examining the details of interest payment of ₹ 9,24,100 and after providing an opportunity of being heard to the assessee”. From the above directions of the Pr. CIT, it is clear that the direction to A.O was to re-do the assessment afresh after considering the fresh findings of the Pr. CIT. In our considered view, the A.O has misunderstood the direction of the Pr. CIT and passed the consequential order after considering only the cash payment towards interest. A.O should have passed the consequential order afresh. If the intention of Pr. CIT is to re-do the assessment considering only the interest, he would have directed accordingly and not by using the expression ‘afresh’. Pr. CIT has already set aside the assessment order passed under section 143(3) read with section 153C. Technically the order under section 143(3) r.w.s. 153C is non-existent. CIT(A) has rightly concluded that it is infructuous and cannot be adjudicated. The assessee has to take an appropriate remedy against the order of the A.O. under section 143(3) r.w.s. 263 but he cannot proceed to file an appeal on the order which is non-existent. In our view, the assessee will be in a better footing if he prefers an appeal against the order of the A.O. passed under section 143(3) r.w.s. 263. - Decided against assessee.

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• 2017 (3) TMI 679
  Reopning of assessment - whether the Ld.CIT(A) can issue a direction to assess to tax the amount in the hands of A. Ramakrishna, HUF? - Held that:- The direction of CIT-A is not valid. There are certain time limits prescribed for issuance of a notice u/s. 148, which is governed by the provisions of Section 149. The assessment year involved being 2005-06, the reopening cannot be done, if six years have lapsed from the end of the relevant assessment year. The assessment can be reopened for AY. 2005-06 on or before 31-03-2012. This direction given by the CIT(A) was dated 23-12-2015. By that time the direction was given, the time limits for initiation of proceedings have already lapsed. Not only that, as per Explanation 3 to Section 153 (prior to its amendment w.e.f. 01-06-2016), the CIT(A) could not have issued any such direction without giving an opportunity of being heard to such other person before the said order was passed. In this case, Shri A. Ramakrishna-individual is entirely different from A. Ramakrishna-HUF. Income Tax Act treats them as separate ‘person’. Even though HUF is represented by Shri A. Ramakrishna, still as per law, Shri A. Ramakrishna-HUF is ‘such other person’ within the meaning of the expression provided in Explanation 3. As seen from the record, the CIT(A) has not given any opportunity to such other person before a direction was given. Therefore, the direction given violates not only the provisions of law but also the principles of natural justice. The direction cannot be upheld on these reasons.

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• 2017 (3) TMI 678
  Addition on account of gross profit on the unrecorded purchases - assessee has shown its net profit @ 5% of the turnover and accordingly was of the view that the same amount of profit @ 5% should be adopted for the impugned undisclosed purchase - Held that:- On examination of lower authorities, we find that sufficient opportunities were given by the lower authorities to counter the allegations framed by the AO but the assessee failed to do so. The ld AR before us has also not brought anything contrary to the finding of ld CIT(A). Now coming to the rate adopted by the AO for determining the profit on the undisclosed purchases we find that the lower authorities have taken the GP rate as disclosed by the assessee in this return of income and the same rate of profit has also been applied on the undisclosed purchases. The argument of the assessee that the net profit on the undisclosed purchases should be used to work out profit does not have any force. It is because that all the indirect expenses has been duly incurred and claimed by the assessee against the disclose sales of the business. Thus, we are of the view there was no indirect expense which was incurred by the assessee in relation to undisclosed sale and not claimed. Thus, in our considered view the GP rate adopted by the lower authorities is reasonable in the working out the taxable income on the undisclosed purchases. However, in the interest of justice & fair play we are inclined to give one more opportunity to the assessee as he is alleging that the information received in response to the notice issued u/s 133(6) of the Act has not been confronted and DR also has no objection in this regard. Addition on account of circulating capital invested in the undisclosed purchases - Held that:- We have already restored the ground No. 4 to the file of AO for fresh adjudication in relation to the taxable profit on the undisclosed purchases. Indeed, undisclosed purchases were made by the assessee and therefore the element of the circulating capital invested in the undisclosed purchases cannot be ignored. Therefore, it is necessary to bring the same under the tax net. The ld AR has submitted that the undisclosed purchases were made on the basis of credit but he failed to bring any evidence in support of his claim. As the present issue is concerned and connected with the ground no. 4 which has been allowed for statistical purposes, therefore we are also inclined to restore this ground to the AO for fresh adjudication in accordance with the law. Disallowance u/s 40A(3) - Held that:- AR has not brought anything on record contrary to the finding of ld CIT(A). Thus, we do not find any reason to interfere in the order of ld CIT(A). Hence the ground of appeal raised by the assessee is hereby dismissed. Addition u/s.69 - Held that:- AR has not brought anything on record contrary to the finding of ld CIT(A). Though, the assessee was provided several opportunities at the time of appellate stage and remand stage but details was submitted to counter the allegation of the AO. Even before us the ld. AR failed to submit any details. Thus we do not find any reason to interfere in the order of ld CIT(A). Hence, the ground of appeal raised by the assessee is hereby dismissed.

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• 2017 (3) TMI 677
  Penalty under section 271(1)(c) - faulty notice - Held that:- The show-cause notice issued by the Assessing Officer under section 274 for the year under consideration not being in accordance with law, the penalty order passed by the Assessing Officer in pursuance thereof is liable to be cancel led being invalid. We cancel the order passed by the Assessing Officer imposing penalty under section 271(1)(c) . See CIT & Another –vs. - Manjunatha Cotton & Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] - Decided in favour of assessee

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• 2017 (3) TMI 676
  Vladity of reopening of assessment - no notice under section 143(2) issued - Held that:- We find considerable cogency in the assessee’s counsel submissions that the assessment order passed by the Assessing Officer is without jurisdiction and void-ab-initio and is liable to be quashed, as no notice under section 143(2) of the Act was issued and served on assessee. Therefore, the assessment proceedings initiated are illegal, unsustainable and untenable under the law. Hence, the assessment so framed by the AO is totally illegal and needs to be quashed. - Decided in favour of assessee

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• 2017 (3) TMI 675
  Validity of reopening of assessment - no independent application of mind - information received from the Directorate of Income Tax - Held that:- AO has not applied his mind so as to come to an independent conclusion that he has reason to believe that income has escaped during the year. In my view the reasons are vague and are not based on any tangible material as well as are not acceptable in the eyes of law. The AO has mechanically issued notice u/s. 148 of the I.T. Act, 1961 on the basis of information allegedly received by him from the Directorate of Income Tax (Inv.), New Delhi. See G&G Pharma India Limited vs. ITO [2015 (2) TMI 104 - ITAT DELHI ] - Decided in favour of assessee

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• 2017 (3) TMI 674
  TDS u/s 195 - Assessee in default as per the provisions of section 201(1) - non TDS on interest payments - India - Mauritius DTAA - Held that:- While remitting the interest payments to SCB (Mauritius) Limited in the financial years 2005-06, 2006-07 and 2007-08, the assessee did not withhold tax by relying on the provisions of Article 11(3) of the India Mauritius tax treaty which provide that where the interest income is derived and beneficially owned by a bank (which is a resident of Mauritius) carrying on a bonafide banking business, such interest income is exempt from tax in India. Ballarpur Industries Ltd (B-lLT) also a company incorporated in India, engaged in manufacturing and export of paper for the payment of interests and principal amount to Standard Chartered Bank, Mauritius, the assessee did not deducted at source relying upon the Certificate of their Chartered Accountant Certificate. The stated reason in support of the Certificate was stated to be Article 11 of DTAA between India and Mauritius. The AO apart from other reasons was of the view that there was no transaction of the assessee with Standard Chartered Bank, Mauritius as the said bank according to the AO was neither recipient of the beneficial owner of the interest. It was held that the interest is taxable as per the provisions of section 115A(1)(a)(ii) of the Act in the case of the payee. The assessee was deemed to have been assessee in default as per the provisions of section 201(1) of the Act with regard, tax was not deducted. Interest under section 201(1A) was also charged raising a total demand of ₹ 7,57,32,656. The assessee challenged the order before the CIT(A) both on merits as well as on jurisdiction and the limitation grounds. However, the Ld. CIT(A) while deciding the appeal on merits and failed to address the jurisdictional issue and on the limitation issue, he failed to give any finding. Thus we find that the impugned order cannot be upheld. As per settled legal precedents the Ld. CIT(A) ought to have first decided the jurisdictional issue and only thereafter should have proceeded to decide the issue on merits if so warranted in law. It is only when the jurisdiction of the AO is held to be established that the CIT(A) was required to decide the issue on merits. Without having addressed the jurisdictional issue the decision on merits has to be set aside back to the CIT(A) with a direction to decide the issues denovo after giving the assessee a reasonable opportunity of being heard.

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• 2017 (3) TMI 673
  Benefit of sections 11 and 12 - investment in mutual funds - AO denied the benefit of exemption u/s. 11 and 12 of the Act on the entire surplus generated by the assessee merely for the reason that the assessee has made investment in funds not approved u/s. 10(23D) - Held that:- It is no more res integra that where the investments or deposits are made by charitable trust are in violation of section 11(5) of the Act, the benefit of exemption u/s. 11 of the Act would not be denied on the entire income of the assessee. It is only the investments or deposits made in violation of provisions of section 11(5) of the Act that would attract maximum marginal rate of tax as per the provisions of law. As decided in Commissioner of Income Tax Vs. FR. Mullers Charitable Institutions [2014 (2) TMI 1033 - KARNATAKA HIGH COURT] it is only the income from such investment or deposit which has been made in violation of Section 11(5) of the Act that is liable to be taxed and that violation under Section 13(1)(d) does not tantamount to denial of exemption under Section 11 on the total income of the assessee . Where the whole or part of the relevant income is not exempted under section 11 by virtue of violation of section 13(1)(d) of the Act, tax shall be levied on the relevant income or a part of the relevant income at the maximum marginal rate. - Decided in favour of assessee

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• 2017 (3) TMI 672
  Penalty u/s. 271(1)(c) - disallowance on account of loss incurred on purchase and sale of securities and units as per provision u/s 94(7) - Adjustments to book profit by AO u/s 115JB - Held that:- Under the scheme of the Act, the total income of assessee is first computed under the normal provisions of the Act and tax payable on such total income is compared with the prescribed percentage of the book profits computed under section 115JB of the Act. The higher of the two amounts is regarded as total income and tax is payable with reference to such total income. If the tax payable under the normal provisions is higher, such amount is the total income of the assessee, otherwise, book profits are deemed as the total income of the assessee in terms of sec. 115JB of the Act. In the case before them the assessee was assessed u/s. 115JB of the Act and not under normal provisions. No doubt there was concealment but that had its repercussions only when the assessment was done under the normal procedure. The assessment as per the normal procedure was, however, not acted upon. On the contrary, it is the deemed income assessed u/s. 115JB of the Act which has become the basis of assessment as it was higher of the two. Tax is thus paid on the income assessed u/s. 115JB of the Act. Hence, when the computation was made u/s. 115JB, the concealment had no role to play and was totally irrelevant. Therefore, the concealment did not lead to tax evasion at all. Therefore, penalty u/s. 271(1)(c) of the Act could not be imposed. Also it is on record as appearing in the Ld. CIT(A)’s order that assessee has filed total dividend claimed as exemption u/s. 10(35) of the Act. That further in the order itself in the assessee’s own submission as on record, it is clear that complete and true details in relation to claim made in the return were furnished, details of dividend as well as statement of transactions of mutual fund were duly filed before the AO as and when required. See Nalwa Sons Investments Ltd.[2012 (5) TMI 150 - SUPREME COURT OF INDIA ] - Decided in favour of assessee

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• 2017 (3) TMI 671
  Application for registration U/s 12AA rejected - entitled to registration under section 80G - Held that:- The assessees were asked to submit latest audited accounts. These applicants have submitted audited accounts for the financial year 2014- 15 and 2015-16. These accounts show that these societies have made project expenses. There are programme activity expenses also. These societies have income from projects, interest, agriculture inputs and also contribution by self help groups. Prior to finalization regarding granting registration U/s 12AA and 80G of the Act, these accounts need a close scrutiny to arrive at a just conclusion. Therefore by considering the totality of the facts and circumstances of the case, we restore the issues regarding granting of registration U/s 12AA and 80G (5) of the Act to the file of the ld. CIT(E) for reconsideration and decide after considering the latest accounts of these societies and case laws relied upon. Accordingly, the issues under consideration is restore to the file of the ld. CIT(E). - Appeals of the assessees are allowed for statistical purposes only.

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• 2017 (3) TMI 670
  Disallowance u/s.40(a)(ia) - Held that:- AR for the assessee has rightly pointed out that applicability of second proviso to Section 40(a)(ia) of the Act which is held to be retrospective in the case of CIT Vs. Ansal Land Mark Township P. Ltd. (2015 (9) TMI 79 - DELHI HIGH COURT) wherein the AO is directed to verify whether the recipients have included the receipts paid by the assessee in their respective returns of income and also paid taxes on the same. Therefore, we incline to set aside the issue to the file of AO and accordingly, we direct the AO to verify as to whether the recipients have included the income in their respective returns and also paid taxes on the same. The assessee will provide the details of recipients i.e. their assessment particulars etc. to the AO so that the AO can verify. In case the recipient parties are not cooperating in providing details, the AO can call for the information u/s. 133(6) of the Act for verification of the same. Accordingly, this issue is remitted back to the file of AO to decide in terms of the above directions. This issue of assessee's appeal is allowed for statistical purposes. Addition being 5% of delivery charges made by the AO - Held that:- AO has made disallowance under the head delivery charges on adhoc basis. The AO has made adhoc deduction based on surmise and conjecture. The AO has failed to point out specific instances of the expenditure for which the bills were not produced. It is a matter of fact on record that the books of accounts as well as bills and vouchers were produced before the AO and, hence, he was not in a position to specifically point out the discrepancies, however, he has chosen to make disallowance on estimated basis. The AO cannot make the disallowance without giving opportunity to the assessee and without pointing out the specific amounts for which bills were not produced. In view of the above, we delete the addition made by Assessing Officer and confirmed by ld. CIT(A).

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• Customs

• 2017 (3) TMI 705
  Seizure of Bank Accounts - smuggling of Gold - there is no reference to any provision of law under which the impugned letters to the banks have been issued. No order under section 110 has been alleged to have been passed or produced. The counter affidavit merely states that the bank accounts have been seized as investigation is going on - whether the same are to be unconditionally de-frozen or the petitioner is to be put to some terms? - Held that: - Investigations are going on. Certainly, DRI would be entitled to take appropriate steps, in accordance with law, with regard to the imported Gold that is alleged to have been diverted and its sale proceeds, if the competent officer of the DRI is of a reasonable belief that the sale proceeds are lying in a particular account or accounts. Until such time that there is such a reasonable belief expressed, there can be no justification in a blanket order of freezing of bank accounts that are cash credit accounts in which there is no credit balance and the effect of which is that the entire business operations of the petitioner come to a standstill. The impugned letters dated 23.12.2016, issued by the Deputy Director DRI is liable to be quashed in so far as they relate to the cash credit accounts and the Bank accounts that are cash credit accounts are liable to be de-frozen - The petitioner shall be permitted to operate the cash credit accounts in Respondents No. 3 and 4 Banks - The petitioner shall, within a period of one week, furnish a security of ₹ 10,00,00,000/- in the form of an unencumbered property, over and above the amount of ₹ 7.5 Crores in the form of gold and currency seized by the Respondents - petition disposed off - decided partly in favor of petitioner.

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• 2017 (3) TMI 704
  Release of seized gold - smuggling - principles of natural justice - petitioner's case is that no notice has been served upon him within six months of the said seizure. Such notice is mandatory u/s 110 of the CA, 1962, in compliance with Section 124 and in the manner prescribed in Section 153 of the Act - Revenue however, contends that a SCN was issued to the petitioner on 05.02.2016, which was well within the stipulated six months from the date of seizure of the goods; the notice was posted through Speed Post on the same date. Also, a copy of the SCN was also pasted on the Notice Board of the customs house in compliance with Section 153 of the Act; therefore, it would be deemed to be due notice - Held that: - not only have the custom authorities failed to provide proof regarding service of notice, but also their counter affidavit is unsupported by any material proof of service - there has been no initiation of any formal enquiry or proceedings by the Customs Authorities after the seizure of the goods on 14.08.2015 - there is no deeming provision of service having been effected under Section 153(a) of the Customs Act, 1962. As stated in para 7 (supra) the records of service by affixing the notice on the notice board of the customs house would arise only in the event that the notice “cannot be served in the manner prescribed under the said clause” as laid down under Section 153 (a) - Therefore, in terms of the unambiguous language of Section 110(2), in the absence of notice within six months of the seizure of the goods, they would have to be released back to the petitioner - petition allowed - decided in favor of petitioner.

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• 2017 (3) TMI 703
  Revocation of shipping bill - Duty Drawback - Held that: - it would be only an empty formality to direct the petitioner to file such an appeal as the respondent himself based on their admitted stand can consider the case of the petitioner. Though it is contended in the impugned order that the petitioner has failed to produce proof of having realised the sale proceeds within the due date, the fact remains that the petitioner had in fact received the foreign exchange within the stipulated time - It is specifically admitted by the respondent, based on the Bank confirmation that the petitioner has fulfilled the export obligations. No doubt, the petitioner did not place the required materials at the time of personal hearing, for which also, the petitioner has stated some reason to condone such absence as it is contended that the SCN was not brought to the knowledge of the petitioner by the petitioner's staff who received the same - petition disposed off.

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• 2017 (3) TMI 702
  Confiscation - redemption fine - penalty - confiscation on the ground that at the time of import, the foreign manufacturer of the energy saving lamps imported by the appellant was not registered - Held that: - the appellant had tried to obtain the registration much before the actual imports and in these circumstances, imposition of heavy redemption fine and penalty is not justified - the redemption fine is reduced from ₹ 20 lakhs to ₹ 2.00 lakhs and penalty is reduced from ₹ 7.8 lakhs to ₹ 1.00 lakh - appeal disposed off - decided partly in favor of appellant.

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• 2017 (3) TMI 701
  Duty Entitlement Passbook Scheme - denial of DEPB benefit on the ground that the goods had not been manufactured out of inputs enumerated for the export product in the Standard Input-Output Norms (SION) - denial also on the ground that the appellant had admitted to not purchasing or utilizing ‘nitro benzene’ or ‘cast iron boring’ for the manufacture of exported products - Held that: - the exporter would not be eligible for credit if inputs allowed in the Standard Input Output Norms (SION) entry at serial no. K-195 (Misc. Product Group) had not been used in the manufacture of the product - That their manufacturing process does not utilise these two ingredients has been admitted by the appellant. Accordingly the decision of the original authority to withhold the approval for allowing credit does have the sanctity of law - It is also seen that the original authority had permitted conversion of the said shipping bills to free status. Accordingly, denial of credit alone would have sufficed, redemption fine and penalty not required - appeal allowed - decided partly in favor of appellant.

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• 2017 (3) TMI 700
  Refund - BCD - import from Japan - duty was paid at the time of import but refund claimed subsequently after obtaining certified copy of certificate of origin - Notification No. 69/2011-Cus dated 29.07.2011 - Held that: - the appellant failed to produce the specimen signatures of the authorities who issued the certificate of country of origin. But in the Procedures, no such condition is seen stated. Further, in Part 2-Product Specific Rules, in Operational Certification Procedures lays down that in case of doubt of certificate of origin the Customs Authorities of the importing country can call for information from the exporting country. The department has no case that they conducted enquiry and found that the certificate copy is fake/forged - appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2017 (3) TMI 695
  Over-charge towards wharfage claim from the Board of Trustees - refund of the amount allegedly paid in excess - Period of limitation - revival of extinguished claim - Held that:- Section 120 of Major Port Trusts Act stipulates six months from the date of “accrual of the cause of action” whereas Section 55 stipulates “six months from the date of the payment”. Proviso to Section 55 authorises the Board to remit the over-charge made in its bill on its own motion and at any time. In other words, notwithstanding the declaration contained under Section 55 of the extinguishment of the right of the claimant for refund, the BOARD is authorised to remit the over-charges in its discretion. It goes without saying that the BOARD being public body, the discretion must be exercised rationally in accordance with some known principles and policy. In view of the authority of the BOARD under the proviso to Section 55, we do not propose to interfere with the directions issued by the High Court in the judgment under appeal though such directions came to be issued on an erroneous appreciation of the law i.e., Section 55 of THE ACT. We undertook the exercise of examining the scope and amplitude of Section 55 only for the purpose of declaring the law as we are informed that a number of claims for refund similar to the claim of the respondent are pending and also likely to arrive in future, therefore, there is need to have clarity on the true meaning and scope of Section 55. Apart from the appellant, we are sure, number of applications under Section 55 must be pending with various other major ports.

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• 2017 (3) TMI 693
  Failure to disclose demerger - Held that:- Admittedly the Scheme of Arrangement providing for demerger stood confirmed and was made binding w.e.f. March 31, 2001 and once the Scheme stands approved it binds the creditor whether or not they may have specifically consented to the Scheme. Hence, even if the ITDC had not disclosed about the demerger to M/s Ashok Chopra and Co. it would still be not liable under the decree. Moreso, under the Share Purchase Agreement the liabilities stood transferred to the appellant and thereafter it was the responsibility of the appellant to assume such liability in the event of objections preferred by ITDC being dismissed. The appellant cannot allege that the failure of the ITDC to disclose subsequent events would make the ITDC liable under the decree. Learned counsel for appellant though had relied upon the decision reported as 2004 (9) Scale 384 Government of Orissa Vs. M/s Ashok Transport Agency & Ors [2004 (11) TMI 329 - SUPREME COURT OF INDIA] but the said decision is not applicable to the facts of this case, firstly because per clause 7 of the M/s OMC Alloys Limited and the Orissa Mining Corporation Limited (Amalgamation) Order, 1991 it was obligatory for the plaintiff to implead the Government in his suit and secondly in the case before us the appellant had a notice of arbitration proceedings as noted by us. Thus the law as it emerges is a mere continuation with the proceedings for the benefit of the assignee would not make the decree executable against the assignor, in this case the ITDC.

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• Insolvency & Bankruptcy

• 2017 (3) TMI 694
  Restoration of the reference of the petitioner before the BIFR and other consequential reliefs - Held that:- The writ petition was filed on 30.11.2016. In the meanwhile, a Gazette Notification No.2794 dated 28.11.2016 was issued, enforcing the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 w.e.f. 01.12.2016. With the enforcement of the said Repeal Act of 2003, the AAIFR and BIFR stand dissolved, and all proceedings of whatever nature pending before the AAIFR or BIFR under the SICA stand abated. Since AAIFR and BIFR stand dissolved and all proceedings stand abated w.e.f. 01.12.2016, this writ petition is infructuous and adjudication of the question of legality of the appellate order would be nothing but an exercise in futility. By reason of provisions of the 2003 Repeal Act, a Company in respect of which any appeal or reference or enquiry stand abated, might make reference to the National Company Law Tribunal under the Insolvency and Bankruptcy Code 2016, within 180 days from the commencement of the Insolvency and Bankruptcy Code 2016. If, as contended by the petitioner, there is any infirmity in the order impugned by reason of the same being based on the action taken by the IDBI under Section 13(4) of the SARFAESI Act, which action was according to the petitioner illegal, the petitioner should have challenged the action under Section 17 and 18 of the SARFAESI Act and obtained appropriate orders.

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• PMLA

• 2017 (3) TMI 690
  Maintainability of Revision petition under Section 397 r/w.401 Cr.P.C - Held that:- Section 397(1) Cr.P.C empowers High Court and Sessions court to call for and examine the records of any proceeding before any inferior Criminal Court situate within its or his local jurisdiction for the purpose of satisfying itself as to the correctness, legality or propriety of any finding. Sentence or order, recorded or passed, and as to the regularity of any proceedings of such inferior Court. But Section 397 (2) imposed a bar for exercising the revisional jurisdiction in relation to any interlocutory order passed in any appeal, inquiry, trial or other proceedings. Whether the order passed by the court below dismissing the petition filed under Section 167(2) Cr.P.C seeking default bail is an interlocutory order or final order? - Held that:- The order of rejecting the plea of the accused seeking bail under Section 167(2) Cr.P.C will not conclude the above proceedings, as the right of the petitioners to come out on bail was not finally determined by the Special Court. In Amar Nath's case(1977 (7) TMI 115 - SUPREME COURT), the Hon'ble Supreme court has specifically held that passing any orders in a bail petition is only an interlocutory, against which, no revision would lie under Section 397(2) Cr.P.C. In the above circumstances, have no hesitation to hold that the order passed by the Special Court rejecting the petitiners' application is only an interlocutory order, and in view of the bar under Section 397(2) Cr.P.C, petitioners cannot maintain a revision petition, before this Court. This revision petition is liable to be dismissed on the ground of maintainability alone.

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• Service Tax

• 2017 (3) TMI 730
  Principles of natural justice - the respective petitioners were not served with copies of such documents, relying upon which the adjudication order were passed - courier agency - whether the service rendered by the petitioners would fall under the category of Goods Transport Agency Service or Supply of Tangible Goods Service? - Held that: - the letters obtained from Blue Dart and the recitals contained therein, are in line with the statements made by the respective petitioners and therefore, by not furnishing those details to the petitioners, is not in any way causing prejudice to them - there is no violation of the principles of natural justice in these cases by not furnishing those documents to the petitioners, as such non furnishing is not causing any prejudice to the petitioners - petition dismissed - decided against petitioner.

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• 2017 (3) TMI 729
  Works contract - petitioner is an an A-Grade Electrical Contractor engaged in electrical works - time limitation - petitioner case is that the initiation of proceedings by the authority is beyond the period of limitation as prescribed under Section 73(1) of the FA, 1994 and there was no reason to invoke the proviso to Section 73(1) of the Act to enlarge the period of limitation by five years - another case of petitioner is that the petitioner had undertaken the contract for five builders who had already collected the service tax component from the petitioner's bill and they, having accounted for the same, there was no obligation on the part of the petitioner to pay any amount as service tax. Held that: - merely for the reason that a person did not pay service tax or did not file return does not amount to wilful suppression of facts to evade payment. That apart, the petitioner has a case that service tax amount had already been collected by his principals and they have accounted the same in their books of accounts. In the said circumstances, I am of the view that neither show cause notice nor Ext.P2 order contain any material to arrive at a finding that the Department was entitled to invoke proviso to Section 73(1) of the Act. Hence it requires a fresh consideration of the matter - matter on remand. Regarding another issue that contractors have already collected the service tax component from the petitioner's bill and they, having accounted for the same, there was no obligation on the part of the petitioner to pay any amount as service tax, apparently the said objection of the petitioner also requires to be considered in accordance with law especially when a contention is raised that the principals of the petitioner have collected service tax from the petitioner. Petition allowed by way of remand.

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• 2017 (3) TMI 728
  Hiring of equipment and facilities - leasing of high quality fire equipments, electrical systems, Air Conditioning plants, DG sets, elavators, fixtures and fittings, chairs, carpeting, pantry and kitchen equipments, music and PA system, access control and security system, etc - Revenue's stand is that providing of office utilities, equipment and facilities by the appellant to the recipient is covered under Business Support Services(BSS), which has been defined u/s 65(104c) of the FA 1994 - Held that: - From the prudent person's point of view, the said equipment and facilities are certainly in the nature of infrastructure. The appellant has provided them not on sale basis but on hiring basis. It means that there is continuous link of the appellant with these equipment. When there is a continuing link and nexus of the appellant with the said equipment and facilities it cannot be called that this is not an “infrastructural support”. And once it is an infrastructural support, the fact of providing the said equipment and facilities would be covered by the definition of “Support Services of Business or Commerce” as defined in section 65(104c) of FA, 1994 and, therefore, the collections made on account of providing these equipment and facilities to M/s Alcatel would be chargeable to service tax under section 65(105zzzq) as the “Business Support Service” provided by the appellant to M/s Alcatel. As the appellant clams that they have discharged their service tax liability on hiring charges also for the period of 01.06.2007 to 31.03.2010, the tax paid by the appellant can be appropriated by the department under the service head of “Business Support Services” - the matter needs re-examination. Penalty - Held that: - the appellants have voluntarily made payment of service tax along with interest prior to issue of SCN - provisions of section 80 of the Finance Act, 1994 would be applicable in case of appellant assessee. Therefore, the penalties imposed on the appellant assessee under sections 77 and 78 are hereby dropped. Appeal allowed by way of remand.

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• 2017 (3) TMI 727
  Liability of tax - GTA service - Site formation and clearance service - wrong valuation - Held that: - the demand has been made under GTA, the confirmation of tax liability has been made under the new category of “Cargo Handling Service”. This confirmation is legally not sustainable - on the transport of gypsum, the owner of the mines, M/s. FCI have paid service tax and the certificate to that effect has been produced by the appellant, thus, there will be no liability on the appellant on this category. Site formation and clearance service - Held that: - extraction of gypsum is one of the activities in the composite contract. The activities carried out by the appellant in the mining area has been correctly categorized as mining service w.e.f. 1.6.2007. The Department accordingly confirmed the tax liability on the appellant. However, the same activity was sought to be classified as “Site Formation and Clearance” , prior to that date. We find such proposition is legally not sustainable. Wrong quantification of taxable value - Held that: - the appellant’s claim needs to be cross verified by the jurisdictional officers for correctness. The claim of the appellant is that they have not received an amount of ₹ 37,69,684/- as a consideration for taxable service. The appellant’s liability as demanded under GTA service and Site formation & clearance service is not sustainable - the correctness of value of taxable service requires to be re-verified by the jurisdictional officer - appeal partly allowed and part matter on remand.

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• 2017 (3) TMI 726
  Refund claim - N/N. 41/2007-ST dated 16.10.2007 as amended - Goods Transport Agency (GTA) Services used in relation to export of iron ore fines - denial on account of nexus - Held that: - the issue is no more res integra - C.B.E. & C. in Para 3.2.1 of Circular No.120/01/2010-ST dated 19.01.2010 conveys that in budget 2009 the scheme under N/N. 41/2007-S.T. was simplified in N/N. 17/2009-S.T. by providing self certification or Chartered Accountant's certification about co-relation and nexus between input Services & the exports. That above logic can be followed for N/N. 5/2006-C.E. (N.T.) where such simplification of N/N. 17/2009-S.T. may not be available - the matter is remanded back to the Adjudicating authority to decide the matter on the basis of Chartered Accountant's certificate to establish the co-relation required under N/N. 41/2007-S.T - appeal allowed by way of remand.

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• 2017 (3) TMI 725
  Refund claim - denial on the ground that input services do not have nexus with the output services provided by the appellant - Held that: - the Department has not issued a SCN proposing to reject the refund claim thereby the rejection has been unilaterally done by the Department without affording an opportunity to the appellant to put forward their case for establishing by necessary documents the eligibility of refund - the Tribunal have analysed the nexus/eligibility of refund in the appellant's own case for different period - the appellant is eligible for the refund - appeal allowed - decided in favor of appellant.

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• Central Excise

• 2017 (3) TMI 724
  Valuation - related party transaction - Since the appellants and Luxor were related persons, the appellants adopted the maximum retail price of the pens, as fixed by Luxor, for discharging the duty since beginning, from which the appellant have worked out the assessable value - whether the appellants were correct in claiming the deduction on account of duty from the cum-duty price of Luxor to arrive at the transaction value? - Held that: - From the definition of transaction value under Section 4(3)(d) (w.e.f. 01.07.2000), it is seen that the deduction is available from the price actually paid or payable for the goods when sold, to the extent of amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods. An Explanation has been added to Section 4(1) with effect from 14.05.2003 through which the concept of cum-duty price was inserted in Section 4. This explanation explains how the “price-cum-duty” of the excisable goods has to be arrived at. The explanation provides for deduction of sales tax and other taxes, if any actually paid. Further, the explanation specifies that the price-cum duty so arrived at shall be deemed to include the duty payable on such goods - When we look at the calculation attached by the appellant in arriving at assessable value, we find that the retail price is the price charged by Luxor. From such retail price, initially the retailer and distributor margins are deducted to arrive at the price to distributor. Subsequently, the sales tax actually paid is deducted followed by the allowable deduction for discounts as well as the amount attributable to freight involved in transportation of the goods, from which the excise duty element is deducted to arrive at the assessable value - the explanation allowed deduction in respect of only trade discount and the amount of duty payable. Even though, the concept of value with effect from 01.7.2000 and the concept of price-cum duty with effect from 14.05.2003 are not identical to the pre 1975 provisions, the two are similar in respect of deduction which shall be allowed to arrive at value. Time limitation - Held that: - It is clear that appellant has claimed deduction for excise duty to arrive at the assessable value and accordingly claimed the benefit of exemption notification. Since all the relevant facts were in the knowledge of the department, we are of the view that the extended period of limitation is not applicable. Appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 723
  Clandestine removal - removal of finished goods under cover of parallel invoices and without debiting duty shown on such invoices - Held that: - the contents of dispatch register, recovered lorry receipts, statement of Shri R.K. Bhadoria irrefutably supports the Revenue’s stand that the subject goods were cleared without payment of Central Excise duty of ₹ 6,45,427/-. The assessee debited the said duty on 30.4.2002 voluntarily - there is no scope to interfere with the impugned order in this regard. Consequently, the confirmation of this demand of duty of ₹ 6,45,427/- along with interest and imposition of equivalent penalty on the assessee is hereby sustained. Shortage of 325.783 MT of MS Ingots and Blooms in the stock of the assessee appellant in comparison with the stock maintained in the daily stock account as on 30..4.2002 - demand - assessee appellant’s argument is that the stock was ascertained on eye estimation basis and there was no actual weighment - Held that: - there has been physical accounting of the Blooms and Ingots with proper multiplication with the average weight of such Bloom and Ingots, which was recorded in the Panchnama dated 30.4.2002. In the impugned order, it is mentioned that this is the practice followed in the steel industry and was accepted by the assessee - there is no scope to interfere with the impugned order in this regard, the demand of Central Excise duty of ₹ 4,95,738/- along with interest and imposition of equivalent penalty confirmed by the impugned order is hereby sustained. Imposition of penalty u/r 173Q of CER 1994 / Rule 25 of CER, 2001/2002 - Held that: - It will not be reasonable to further punish the assessee by imposing a high penalty of ₹ 50 lakhs, when mandatory penalty to the tune of over rupees one and half crores (precisely ₹ 1,51,44,426/-) has already been imposed. Therefore, considering totality of facts and circumstances, we reduce the said penalty of ₹ 50 lakhs to 10% of the duty evaded which comes to ₹ 15,14,422/- (10% of confirmed duty demand of ₹ 1,51,44,426/-) and the same would be payable accordingly by the appellant–assessee. Appeal disposed off - decided partly in favor of appellant.

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• 2017 (3) TMI 722
  Imposition of penalty u/r 26 of the CER, 2002 - goods cleared clandestinely in the names of others - It is on record that goods cleared without payment of duty by Shri Ashok Jain in the name of all the three firms- M/s Cosmo, M/s Riemer and M/s Max have been sold through M/s BDFH and DD Brothers - Held that: - Documents evidencing such sales recovered from the premises of M/s BDFH establish that Shri Darshan Lal through both M/s BDFH as well as DD brothers have abetted Shri Ashok Jain in these clandestine clearances and hence will be liable for penalty under Rule 26. For the above reasons, I find that the penalty imposed on BDFH by the adjudicating authority is fully justified and merits no interference. Penalty on Jainico traders, Proprietor Shri Sanjay Jain - Held that: - Shri Sanjay Jain, Partner has admitted that they were purchasing goods from Shri Ashok Jain both with bills and without bills every month. Further, goods were seized from their premises which were cleared without payment of duty. In view of the above, the penalty imposed under Rule 26 is fully justified and merits no interference. Penalty on Shri Parvesh Jain, who was the Proprietor of M/s Max - Held that: - The investigation has established that during the relevant period, goods worth nearly ₹ 5.5 crores attracting duty of ₹ 91 lakhs have been found to have been cleared to M/s BDFH without payment of duty from M/s Max. Shri Parvesh Jain also in his statement has admitted that he has managed the sales without invoices. Consequently, penalty is liable to be imposed on Shri Jain under Rule 26. Even though Shri Parvesh Jain has claimed that he was only a paid employee of Shri Ashok Jain, it is on record that he has been instrumental in getting goods manufactured in the premises of M/s Max and clearance of the same without payment of duty - Shri Parvesh Jain, Proprietor of the M/s Max will be liable for levy of penalty under Rule 26 of the Central Excise Rules. Penalties upheld - appeal dismissed - decided against appellant.

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• 2017 (3) TMI 721
  100% EOU - benefit of N/N. 30/2004-CE dated 09.07.2004 for duty chargeable Sub-Section (1) of Section 3 of CA, 1975, which in common parlance is also called CVD - whether exemption under N/N. 30/2004 CE dated 09.07.2004 for the goods manufactured by 100% EOU for payment of duty on it clearances in DTA is admissible or not? - Held that: - benefit of N/N. 30/2004 was available to the appellants for determination of extent of CVD for determination of Central Excise duty payable under proviso to Section 3 of CEA, 1944 by availing benefit of N/N. 23/2003-CE - benefit allowed - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 720
  Penalty u/s 11AC - interest under 11AB - personal penalty u/r 26 of CER, 2002 - job-work - loan licence agreement - appellant's case is that the adjudicating authority in the adjudication order did not give an option for payment of reduced penalty of 25%, even if there is a circular dated 22-5-2000 issued by the Board to the field formation that option of 25% reduced penalty provided under second provision to Section 11AC should be mandatorily mentioned in the order in original itself by the adjudicating authority - Held that: - any of the cases wherein penalty u/s 11AC of the Act is imposed the provisions contained in 1 and 2 proviso to Section 11AC should be mandatorily mentioned in the Order-in-Original itself by the adjudicating authority - as per the aforesaid board circular, the adjudicating authority must have mentioned in the Order-in-Original regarding the option of reduced penalty provided under Section 11AC - the appellant deserve an opportunity for availing option of the reduced penalty. As regard the penalties, the Managing Director was not looking after day to day maintenance of the excise records. Moreover he has not disputed the liability and admittedly paid substantial amount of duty - Regarding the penalty on the employee Shri. Dilip Oak, I found that he is a small time employee of the appellant company and is also not in the job, there is also no evidence that he is beneficiary of any non payment of duty by the appellant - personal penalty on the both above appellants are not sustainable, more so when penalty was imposed on the appellant company. Appeal allowed - decided in favor of assessee.

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• 2017 (3) TMI 719
  Restoration of CENVAT credit - imposition of penalty - the availment of credit that had been reversed and recredited in breach of proper procedure - appellant claims that without challenge to eligibility for credit, the availment of credit cannot be disallowed - Held that: - Reliance was placed by the latter on decision of the Tribunal in Commissioner of Central Excise, Belgaum v. Comfit Sanitary Napkins (I) Pvt Ltd [2004 (9) TMI 160 - CESTAT, BANGALORE] which held that conversion of excess payment of duty into credit without following refund procedure is not in accordance with law. The failure to challenge the reversal ordered by the assessing officer has settled that burden on the assessee. The restoration of credit is not in order and the dispute before us is limited to the right or wrong of that restoration. - The appellant, by breaching the procedure as laid down in law for re-credit of reversed entry, has erred. Penalty set aside - appeal disposed off - decided partly in favor of appellant.

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• 2017 (3) TMI 718
  Re-classification of goods - fly waste - classified under heading 5505.20 or under heading 5601.20? - Held that: - the appellant had been initially directed to classify the goods under 5601 and any re-classification thereafter would have to be based on proper evidence - In the absence of credible test results pertaining to length of fibre and in the absence of any evidence to support the re-classification proposal in the notice, we hold that the impugned order has erred - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 717
  Waiver of penalty imposed u/s 11AC - immediately after pointing out by the department the appellant have admittedly paid the excise duty along with interest and informed to the department before issuance of the SCN - Held that: - in terms of section 11A(2B) the SCN should not be issued if the assessee deposited the duty along with interest without contesting the same and informed to the department - In the present case, the appellant has followed the requirement of such section. Accordingly, no SCN should have been issued; consequently no further penalty could have been imposed - penalty set aside - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 716
  Valuation - quantity discount - demand of differential duty on the ground that the bonus/discount scheme was not operational during the impugned time - appellant claim that duty is to be assessed on transaction value and that the goods were subject to sale at ‘maximum retail price’ printed on the packaging - Held that: - reliance was placed in the case of M/s. Biochem Pharmaceutical Industries Versus Commissioner of Central Excise, Mumbai-III [2016 (3) TMI 664 - CESTAT MUMBAI], where it was held that quantity discount was correctly claimed by the appellant as the same was claimed at the time of sale of the goods - demand set aside - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 715
  Valuation - sale through Depot - inclusion of incidental expenses - whether charges which are in the nature of incidental expenses that are not in consonance with the charges, are liable to be included in assessable value for the period prior to the amendment in section 4 of CEA, 1944 or not? - Held that: - reliance was placed in the case of M/s. Andhra Pradesh Paper Mills Ltd. Versus The Commissioner of Central Excise Visakhapatnam-II Commissionerate Visakhapatnam [2013 (9) TMI 720 - CESTAT BANGALORE], where it was held that during this material period there was no definition in the provisions of the Central Excise Act for the ‘place of removal’ - there cannot be any demand on the appellant, there being absence of definition of ‘place of removal’ in the CEA, 1944 - For the period thereafter, the decision in the case of Bharat Petroleum Corporation Ltd [2010 (4) TMI 335 - CESTAT, KOLKATA] eliminates the scope for collection of duty, where it was held that Subsequent sale at a later point of time and the actual sale price at the later point of time is not relevant for determining the assessable value - demand set aside - appeal allowed - decided in favor of assessee.

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• 2017 (3) TMI 714
  CENVAT credit - aluminum sheet - whether the Cenvat credit in respect of aluminum sheet used for insulating pipes and used for covering galleries is admissible under the Capital goods? - Held that: - neither assessee has given any evidence regarding the actual use of the material nor department has physically verified whether material has been used. It is necessary to conclude the admissibility of credit that whether goods on which credit is taken is input or capital goods and it is foremost requirement that the use of the goods is established. Therefore the matter needs to be reconsidered by original adjudicating authority - appeal allowed by way of remand.

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• 2017 (3) TMI 713
  Maintainability of appeal - It is the allegation that the appellant had wrongly availed the benefit of N/N. 8/97-CE dated 01.03.1997 - seven SCN were issued to the respondent-assessee. But the Commissioner (Appeals) has remanded the matter to the adjudicating authority - Held that: - the original authority may have already passed the de novo adjudication order as directed in the impugned order. Hence, the present appeal has lost its efficacy - appeal dismissed - decided against Department.

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• 2017 (3) TMI 712
  CENVAT credit - MS items - TMT Bars - Held that: - the appellant had used the MS items, except TMT Bars, for the use of repair of plant and machinery. They have used MILL plates/steel plates for replacement and repair of parts of Cement Kiln. Further, the MS items were used in repair of Vertical Raw Mill. These machineries are integral part of the manufacture carried out by the appellant. Even though the said items may not fall under the definition of capital goods, the appellants are eligible for credit on MS items used in the repair of plant and machinery under the category of inputs. CENVAT credit - TMT Bars - Held that: - the appellant has used TMT Bars for civil constructions. The same cannot be allowed. Appeal allowed - decided partly in favor of appellant.

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• 2017 (3) TMI 711
  Scope of SCN - SSI exemption - reversal of credit of inputs lying in stock and inputs contained in the finished goods lying in the stock - Held that: - in the SCN there was proposal to deny the credit to the tune of ₹ 5,23,757/- whereas the Revenue is seeking to deny the credit of ₹ 23,85,552/- which is beyond the scope of SCN. Therefore, the demand of ₹ 23,85,552/- is not sustainable. Further, the demand sought to be confirmed in the SCN on the basis of average calculation without going into the actual value of credit to be denied. Therefore, the said demand is also not sustainable. Extended period of limitation - Held that: - availemnt of SSI exemption by the respondent and reversal of the credit was in the knowledge of the department on 31.3.2002. Therefore, the SCN dated 14.9.2006 is time barred. Appeal dismissed - decided against Revenue.

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• 2017 (3) TMI 710
  Valuation - freight - goods sold through the consignment agent - whether the freight was required to be included in the assessable value as per section 4 (4) (b) (iii) of Central Excise Act, 1944 - Held that: - the period of dispute is 1.4.2000 to 30.06.2000, the excise duty is payable at the price at which the goods cleared from the factory - the said issue came up before the Hon’ble Apex Court in the case of Ispat Industries Ltd. [2015 (10) TMI 613 - SUPREME COURT] wherein it was held that for the period from 28-9-1996 up to 1-7-2000, the place of removal has reference only to places from which goods are to be sold by the manufacturer, and has no reference to the place of delivery which may be either the buyer’s premises or such other premises as the buyer may direct the manufacturer to send his goods - the appellant is not required to include the freight in the assessable value - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 709
  Clandestine removal - waste - clearances of waste and empty tins without payment of duty - demand - Held that: - As the appellant is clearing the packing material of inputs and the said issue has already been settled in favor of the appellant by the decision of the Hon’ble Apex Court in the case of West Coast Industrial Gases Ltd. [2003 (4) TMI 110 - SUPREME COURT OF INDIA] and as per circular dated 6.6.2003, no duty is payable by the assesse - the packing materials of the inputs are not dutiable and hence no duty is payable by the appellant on the packaging materials of the inputs cleared as such. During the course of conversion of bigger drums, certain scrap is generated - on the said scrap duty is payable or not is as required to be examined by the adjudicating authority. As the said issues have not been examined by the adjudicating authority while passing the impugned order, therefore the same needs examination at the end of the adjudicating authority - appeal allowed by way of remand.

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• 2017 (3) TMI 708
  Validity of review order - time limitation - whether the order of review by the Committee was within time or not? - Held that: - in the earlier round of litigation, the dates of communication of the adjudication order was written as 24.3.2008, 27.09.2007, 07.03.2008, 07.03.2008, 07.03.2008 and 27.05.2008. Later on in the impugned proceedings the date of receipt has been changed which is not permissible as in the earlier round of litigation, the Revenue itself admitted the date of communication of adjudication order as mentioned in the earlier round of litigation in EA-2 taken to be correct. If the said dates are taken to be correct, then all the review orders are beyond the time limit of three months - review order was not valid - appeal allowed - decided in favor of appellant.

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• 2017 (3) TMI 707
  Manufacture / construction at site - 3.05 KMs away from the ‘site’ of the flyovers - Benefit of N/N. 3/2001-CE dated 01.03.2001 and 6/2002-CE dated 01.03.2002 - whether the exemption under N/N. 3/2001-CE dated 01.03.2001 and 6/2002-CE dated 01.03.2002 as availed on the goods falling under Heading No. 68.07 manufactured by the respondents at site of construction and used in the construction work is admissible or not? - Held that: - the Board Circular No. 456/22/99-CX dated 18.05.1999, was issued to clarify the meaning of the expression ‘site’ in the N/N. 5/98-CE dated 02.06.1998, in view of difficulties faced in availing the benefit of said exemption - since the said site was mentioned in the regular correspondence between N.H.A.I. and RITES Ltd. and N.H.A.I. and its engineers had full access to the site and it was near the site of construction of fly-over, the requirements of the Board Circular dt. 18.05.1999 are met. - Benefit of exemption allowed. Duty on waste and scrap - Held that:- Since the PSC girders and horizontal member of bond rails are held as exempted, the scrap and waste generated during the fabrication of these items have rightly been held as covered by exemption N/N. 85/95-CE dated 13.05.1995 - appeal dismissed - decided against Revenue.

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• 2017 (3) TMI 706
  CENVAT credit - denial on the ground that some invoices address to the Head Office instead of Factory address - service tax collected by M/s Himachal Pradesh State Civil Supply Corporation, on the supplies made through the said corporation - service tax paid for services-sales promotion, received by the appellant - Held that: - regarding liability of Cenvat credit on invoices issued to Head Office, instead of factory premises, the same is allowable and accordingly, the Cenvat Credit of ₹ 3,00,760 is held allowable to the appellant. So far Cenvat Credit on service tax paid for the services, provided by M/s HP State Civil Supply Corporation, all the information as required in terms of Rule 9 CCR, 2004 read with Rule 4 A of ST Rules are fulfilled and as such, the appellant is entitled to the Cenvat Credit of ₹ 39,500/- in question. So for the availability of Cenvat credit of ₹ 11,87,353/-, for supply of manpower is concerned, the service provider is registered and have raised proper bills which contained, prima facie, particulars required and the appellant have made the payment by cheque through the banking channel, which prima facie satisfies the authenticity of the transaction - the appellant received ‘supply of manpower’ from the service provider for the work in the nature of packing, forwarding, sales promotion and/or marketing which are all taxable services under the provisions of Service Tax Act and the Rules, accordingly the appellant is entitled to Cenvat credit of ₹ 11,87,353/-. Appeal allowed - decided in favor of appellant.

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• CST, VAT & Sales Tax

• 2017 (3) TMI 699
  Rate of tax - Levy of tax on sale of Battery-parts - the decision in the case of Assistant Commercial Taxes Officer, Ward-II, Ajmer Versus M/s Everlast Battery Manufacturing Company [2017 (3) TMI 668 - RAJASTHAN HIGH COURT] contested, where it has been held that battery parts are also to be considered as part of battery and the same rate should be applied - Held that: - petition dismissed.

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• 2017 (3) TMI 698
  Imposition of penalty u/s 61 of VAT Act - non-payment of tax - manufacture of Bidi - the decision in the case of ASSTT. COMMISSIONER, ANTI EVASION-II, JAIPUR Versus M/s. PATAKA INDUSTRIES PVT. LTD. [2017 (3) TMI 669 - RAJASTHAN HIGH COURT] contested - Held that: - Application for exemption from filing official translation is allowed - SLP dismissed.

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• 2017 (3) TMI 697
  Condonation of delay of 548 days - denial on the ground that the delay was not explained properly - Held that: - from the date of alleged breach the cancellation order is passed after a period of approximately 12 years. Under the circumstances and in the aforesaid facts and circumstance, the learned Tribunal has committed any error in quashing and setting aside the order passed by the Deputy Commissioner cancelling exemption registration/ certificate abinitio. Under the circumstances, appeal lack merits and therefore, to issue rule in the present application and called upon the dealer, thereafter to condone the delay and thereafter dismissed the appeal would be exercise in futility and it will cause undue hardship to the dealer as the dealer is required to be incurred expenditure for engaging lawyer etc in appeal, which lack merits - delay not condoned - appeal dismissed - decided against appellant.

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• 2017 (3) TMI 696
  Validity of assessment order - inter-state sales - C-Forms - Held that: - It is true that the notice sent to the petitioner on 09.08.2016 has not referred to the proposal on exemption claimed u/s 8 (2-A) of the CST Act. Further, the assessment order proceeded to impose tax on the said head also. Therefore, it is evident that the tax imposed on such head is without affording an opportunity of hearing to the petitioner. Thus, it is in violation of the principles of natural justice. On that ground alone, the said imposition of tax under the impugned assessment order dated 31.12.2016 is liable to be set aside for the purpose of remitting the matter to the Assessing Authority to issue a fresh proposal and thereafter pass an assessment order, after hearing the petitioner - appeal allowed by way of remand.

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• Indian Laws

• 2017 (3) TMI 692
  Award made by the respondent under Section 34 of the Arbitration Act maintainable before a court in India - Held that:- We find that in the present case, the seat of arbitration has not been specified at all in the arbitration clause. There is however an agreement to have the arbitration conducted according to the ICC rules and thus a willingness that the seat of arbitration may be outside India. In any case, the parties having agreed to have the seat decided by the ICC and the ICC having chosen London after consulting the parties and the parties having abided by the decision, it must be held that upon the decision of the ICC to hold the arbitration in London, the parties agreed that the seat shall be in London for all practical purposes. Therefore, there is an agreement that the arbitration shall be held in London and thus Part-I of the Act should be excluded. It is settled law in India that the provisions of Part-I of the Arbitration Act would apply to all arbitrations and all proceedings relating thereto. On a true construction of Clause 14 in this case, there is no doubt the parties have agreed to exclude Part-I by agreeing that the arbitration would be conducted in accordance with the ICC Rules. The parties were undoubtedly conscious that the ICC could choose a venue for arbitration outside India. That in our view is sufficient to infer that the parties agreed to exclude Part-I. The ICC could well have chosen a venue in India. The possibility that ICC could have chosen India is not a counter indication of this inference. It could also be said that the decision to exclude the applicability of Part-I was taken when the ICC chose London after consulting the parties. Either way Part-I was excluded. The view that it is the law of the country where arbitration is held that will govern the arbitration and matters related thereto such as a challenge to the award is well entrenched. The relationship between the seat of arbitration and the law governing arbitration is an integral one. The seat of arbitration is defined as the juridical seat of arbitration designated by the parties, or by the arbitral institution or by the arbitrators themselves as the case may be. Therefore, the two reasons for Part-I not being applicable are as follows:- (i) Parties agreed that the seat maybe outside India as may be fixed by the ICC; and (ii) It was admitted that the seat of arbitration was London and the award was made there. Therefore, there is no doubt that Part-I has no application because the parties chose and agreed to the arbitration being conducted outside India and the arbitration was in fact held outside India. In view of the foregoing observations, we find that the High Court committed an error in observing that the seat of arbitration itself is not a decisive factor to exclude Part-I of the Arbitration Act. We therefore set aside the judgment of the High Court and dismiss the petition filed by the respondent under Section 34 of the Arbitration Act before the Bombay High Court.

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• 2017 (3) TMI 691
  Denial of restoration of possession of the suit property and for other consequential reliefs - Securitization Application - Held that:- In view of the ratio laid down by the Supreme Court in the case of Harshad Sondagar (2015 (11) TMI 1315 - SUPREME COURT ) and in view of Section 17 which was prevailing prior to the amendment of 1.9.2016, the DRT was having power to restore the possession of the secured assets for and in favour of the borrower but it could not restore the possession of the secured assets to the lessee. Writ Petition allowed and respondent No.1-Bank is hereby directed to restore the possession of the suit property in favour of the petitioners forthwith and in any case within a period of fifteen days from today. After scrutinizing the entire material/documents available on record, we are of the considered opinion that the respondent bank has taken the possession of the suit property unceremoniously and without following due process of law. The documents available on record clearly shows that the petitioners have been forcibly evicted from the suit property in question. The aforesaid discussion on facts will unequivocally lead to a positive conclusion that the concerned officers of respondent No.1 in utter violation of the provisions of the SARFAESI Act have indulged into taking possession of the suit property and the petitioners have been evicted from the suit property unceremoniously and forcibly and therefore, we are of the considered opinion that Section 29 of the SARFAESI Act squarely applies in the present case. We therefore, grant liberty to the petitioners to file complaint as contemplated under Section 29 of the SARFAESI Act and any other law prevailing in the field against Shri. R. Ramnathan Assistant General Manager and the Authorized Officer and Shri. Sanjay Satpathi, and Law Officer of respondent No.1 Bank, for taking forcible possession who were present at the time of taking possession and any other person related with the said offence, if so advised. The directions to that effect given by the DRAT by its order dated 14.10.2014 in Para 11 are maintained to that extent. However, the further directions issued by the DRAT to the District Magistrate to consider and take cognizance if the complaint is made and to secure the presence of the said persons and dispose of the case according to law is hereby quashed and set aside. as such a direction is against the settled cannons of law. Writ Petition preferred by the respondent No.1-bank is partly allowed and while reserving the right of the petitioners to file appropriate complaint and/or to adopt proceedings as contemplated under Section 29 of the SARFAESI Act and any other law in force, the observations made by the DRAT in its order dated 14.10.2014 in Para No.11, to the extent that, “In turn the District Magistrate is directed to consider and take the cognizance if the complaint is made and to secure the presence of above person by issuing NBW and dispose of the case according to law”, are quashed and set aside. The rest of the directions issued by the DRAT in Para 11 are maintained.

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