TMI Tax Updates - e-Newsletter
July 15, 2017

Case Laws in this Newsletter:

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

Highlights / Catch Notes

• Income Tax:

  Levy of fee u/s 234E - TDS return default - Even in absence of such provision, as noted, it was always open for the Revenue to charge the fee in terms of section 234E of the Act. By amendment, this adjustment was brought within the fold of section 200A of the Act. Upon introduction of the recasted clause (c), this situation also would be obviated. Even prior to 01.06.2015, it was always open for the Revenue to calculate fee in terms of section 234E - HC
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• Income Tax:

  Rectification of mistake - In the absence of any provision to condone the delay under the Income Tax Act, it may be a case of omission in the provision of Act which cannot be supplied by us when there is no ambiguity in the provisions of section 254(2) of the Act.
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• Service Tax:

  Validity of SCN - during the pendency of finalization of assessment, no SCN can be issued - SCN were issued before finalization of assessment, therefore, the same are not sustainable in the eyes of law
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• Service Tax:

  Valuation - Reimbursement expenses - the so-called reimbursable expenses are part and parcel of the gross value of the service. Therefore, the same is includible in the gross value of the service and chargeable to service tax
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• Service Tax:

  100% EOU - STPI - Refund of unutilised CENVAT credit - in terms of Regulation 3 made under Section 47 of the Foreign Exchange Management Act, 1999, in the present case the foreign remittance in Indian rupees through Deutsche Bank is the receipt of payment in convertible foreign exchange
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• Central Excise:

  SSI exemption - Goods cleared to merchant exporter and domestic consumption - Where proof of export was furnished within 6 months, the clearances made for export were not to be added to clearances for home consumption.
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• Central Excise:

  SSI exemption - use of brand name - the respondents would not be eligible for the benefit of SSI exemption even for the cookies sold in loose from their outlets
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• Central Excise:

  CENVAT credit - removal of defective/rejected/waste components of television receivers - when inputs become damaged during the course of assembling of finished goods, the same being converted to scrap and removed as scrap, the demand of duty/denial of credit is unjustified
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• Central Excise:

  SSI exemption - Apart from alleging that the appellant is not eligible for SSI exemption after amalgamation of the two companies, there is no allegation of suppression of facts or mis-declaration - demand is barred by limitation
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• VAT:

  Jurisdiction of Assessment Order passed to deny ITC where appellant had sold goods at a price lesser than the price at which the goods were purchased by him - the appellant has not availed of ITC in respect of the subject goods i.e., cement. Therefore, there was no occasion for the Assessing Officer, in any event, to invoke the provisions of Section 19(20) - HC
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Articles

• Reverse charge mechanism under GST - Reverse gear of tax burden
• TRANSITION OF LONG TERM CONTRACTS UNDER GST

Notifications

• Companies Law

• F.No.1/1/2014-CL-V - dated 13-7-2017 - Co. Law
  CORRIGENDUM – Notification No. G.S.R. 583(E), dated the 13th June, 2017

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• F. No. 1/32/2013-CL-V-Part - dated 13-7-2017 - Co. Law
  Companies (Meetings of Board and its Powers) Second Amendment Rules, 2017

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• Customs

• 35/2017 - dated 13-7-2017 - ADD
  Seeks to Impose provisional anti-dumping duty on imports of 'O-Acid" originating in exported from China PR Mahipal Singh

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• 34/2017 - dated 13-7-2017 - ADD
  Seeks to extend levy of anti- dumping duty on imports of ' Grinding Media Balls' (excluding Forged Grinding media Balls), originating in, or exported from, Thailand and people's Republic of China imposed vide Notification 36/2012- Customs (ADD) ,dated 16th July, for one year i.e. up to and inclusive of the 15th July, 2018

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• 71/2017 - dated 14-7-2017 - Cus (NT)
  Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver

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• GST

• F. No.354/117/2017-TRU Pt. - dated 12-7-2017 - CGST Rate
  Corrigendum - Notification No. 1/2017-Central Tax (Rate), dated the 28th June, 2017

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• F.No.354/117/2017-TRU Pt. - dated 12-7-2017 - IGST Rate
  Corrigendum – Notification No. 1/2017-Integrated Tax (Rate), dated the 28th June, 2017

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• F.No.354/117/2017-TRU Pt. - dated 12-7-2017 - IGST Rate
  Corrigendum – Notification No. 2/2017-Integrated Tax (Rate), dated the 28th June, 2017

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• F.No.354/117/2017-TRU Pt. - dated 12-7-2017 - UTGST Rate
  Corrigendum - Notification No.1/2017-Union Territory Tax (Rate), dated the 28th June, 2017

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• F.No.354/117/2017-TRU Pt. - dated 12-7-2017 - UTGST Rate
  Corrigendum - Notification No.2/2017-Union Territory Tax (Rate), dated the 28th June, 2017

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• GST - States

• G.O.Ms. No. 277 - dated 1-7-2017 - Andhra Pradesh SGST
  AMENDMENTS IN NOTIFICATION G.O.Ms. No. 258, REVENUE (COMMERCIAL TAXES-II), DEPARTMENT

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• CCW/GST/74/2015-A-3, - dated 1-7-2017 - Andhra Pradesh SGST
  Authentication of any document such verification of (i) Aadhar based Electronics Verification Code (EVC);(ii) Bank account based One Time Password (OTP):

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• G.O.Ms. No. 276 - dated 30-6-2017 - Andhra Pradesh SGST
  NOTIFYING CERTAIN SERVICES STATUTORILY PROVIDED BY THE EMPLOYER TO THE EMPLOYEE ELIGIBLE FOR INPUT TAX CREDIT.

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• CCW/GST/74/2015-A-2, - dated 30-6-2017 - Andhra Pradesh SGST
  PROCEEDINGS OF THE CHIEF COMMISSIONER OF STATE TAX

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• CCW/GST/74/2015-A-1 - dated 30-6-2017 - Andhra Pradesh SGST
  Taxable persons who are required to mention HSN code/Service Accounting Code in tax invoice

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• CCW/GST/74/2015-A, - dated 30-6-2017 - Andhra Pradesh SGST
  “Proper Officer” for various functions

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• G.O.Ms. No. 267 - dated 29-6-2017 - Andhra Pradesh SGST
  NOTIFYING 50% REFUND OF THE STATE TAX PAID ON INWARD SUPPLIES OF GOODS RECEIVED BY THE CANTEEN STORES DEPARTMENT (CSD).

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• G.O.Ms. No. 266 - dated 29-6-2017 - Andhra Pradesh SGST
  SPECIFYING UNITED NATIONS, SPECIFIED INTERNATIONAL ORGANIZATIONS AND DIPLOMATIC MISSIONS WHICH ARE ELIGIBLE FOR REFUND OF TAX PAID ON RECEIPT OF GOODS AND SERVICES.

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• G.O.Ms. No. 265 - dated 29-6-2017 - Andhra Pradesh SGST
  NOTIFYING THE SUPPLY OF SERVICES SPECIFIED IN SUB-ITEM (B) OF ITEM 5 OF SCHEDULE II ON WHICH REFUND OF UNUTILIZED INPUT TAX CREDIT SHALL NOT BE ALLOWED.

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• G.O.Ms. No. 264 - dated 29-6-2017 - Andhra Pradesh SGST
  NOTIFYING THE GOODS ON WHICH REFUND OF UNUTILIZED INPUT TAX CREDIT SHALL NOT BE ALLOWED.

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• G.O.Ms. No. 263 - dated 29-6-2017 - Andhra Pradesh SGST
  NOTIFYING THE RATES OF INTEREST.

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• G.O.Ms. No. 261 - dated 29-6-2017 - Andhra Pradesh SGST
  THE ACTIVITIES OR TRANSACTIONS UNDERTAKEN BY THE GOVERNMENT OR LOCAL AUTHORITY WHICH SHALL NOT TREATED AS SUPPLY OF GOODS OR SERVICES.

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• G.O.Ms. No. 257 - dated 29-6-2017 - Andhra Pradesh SGST
  NOTIFYING THE SERVICES ON WHICH E-COMMERCE OPERATOR IS LIABLE TO PAY TAX

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• G.O.Ms. No. 256 - dated 29-6-2017 - Andhra Pradesh SGST
  NOTIFYING THE SERVICES WHICH ATTRACT TAX ON REVERSE CHARGE BASIS.

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• G.O.Ms. No. 255 - dated 29-6-2017 - Andhra Pradesh SGST
  NOTIFYING THE GOODS WHICH ATTRACT TAX ON REVERSE CHARGE BASIS.

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• G.O.Ms. No. 254 - dated 29-6-2017 - Andhra Pradesh SGST
  NOTIFYING THE APPOINTED DAY FOR CERTAIN PROVISIONS.

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• G.O.Ms. No. 253 - dated 29-6-2017 - Andhra Pradesh SGST
  DISBANDMENT OF COMMERCIAL TAXES CHECK POSTS WITH EFFECT FROM

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• G.O.Ms. No. 250 - dated 28-6-2017 - Andhra Pradesh SGST
  REGISTERED PERSONS ELIGIBLE FOR COMPOSITION LEVY UNDER SECTION 10 OF THE ACT.

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• G.O.Ms. No. 249 - dated 28-6-2017 - Andhra Pradesh SGST
  APPOINTING THE APPELLATE DEPUTY COMMISSIONERS, WITH HEAD QUARTERS AT TIRUPATHI, AND VIJAYAWADA

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• G.O.Ms. No. 248 - dated 28-6-2017 - Andhra Pradesh SGST
  APPOINTING THE OFFICERS FUNCTIONING NEW DESIGNATIONS UNDER SECTION 3 OF ANDHRA PRADESH GOODS AND SERVICES TAX ACT, 2017

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• G.O.Ms. No. 247 - dated 28-6-2017 - Andhra Pradesh SGST
  APPOINTING THE COMMISSIONER OF STATE TAX, NOTIFIED BY THE CHIEF COMMISSIONER OF STATE TAX, AS REVISIONAL AUTHORITY UNDER SECTION 2(99) OF THE ANDHRA PRADESH GOODS AND SERVICES TAX ACT, 2017

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• G.O.Ms. No. 226 - dated 22-6-2017 - Andhra Pradesh SGST
  Sub-Section (2) of Section 23 Of The Act-Specifying The Category Of Persons Exempt From Obtaining Registration Under The Act.

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• G.O.Ms. No. 225 - dated 22-6-2017 - Andhra Pradesh SGST
  THE COMMON GOODS AND SERVICES TAX ELECTRONIC PORTAL.

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• G.O.Ms. No. 224 - dated 22-6-2017 - Andhra Pradesh SGST
  NOTIFYING THE APPOINTED DAY FOR CERTAIN PROVISIONS.

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• FTX.90/2016/071 - dated 29-6-2017 - Assam SGST
  Liability to pay tax under Assam Goods and Services Tax Act, 2017 by an eligible manufacturing units under Assam Industries (Tax Exemption) Scheme. 2009.

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• FTX.90/2016/070 - dated 29-6-2017 - Assam SGST
  Liability to pay tax under Assam Goods and Services Tax Act, 2017 by an eligible manufacturing units under Assam Industries (Tax Exemption) Scheme. 2015.

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• FTX.56/2017/037 - dated 29-6-2017 - Assam SGST
  The Assam Goods and Services Tax (Second Amendment)Rules, 2017.

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• 52/ST-2 - dated 30-6-2017 - Haryana SGST
  Notification regarding the categories of services the tax on intra-State supplies of which shall be paid by the electronic commerce operator

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• 51/ST-2 - dated 30-6-2017 - Haryana SGST
  Notification regarding specialised agencies entitled to claim a refund of taxes paid on the notified supplies of goods or services or both received by them under HGST Act, 2017

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• 50/ST-2 - dated 30-6-2017 - Haryana SGST
  Notification regarding the supplies not eligible for refund of unutilized ITC under the HGST Act. 2017

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• 49/ST-2 - dated 30-6-2017 - Haryana SGST
  Notification regarding the supplies which shall be treated neither as a supply of goods nor a supply of service under the HGST Act. 2017

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• F.12(56)FD/Tax/2017-Pt-I-52 - dated 29-6-2017 - Rajasthan SGST
  Notification under section 7(2) of the Rajasthan Goods and Services Tax Act, 2017 notifying the activities or transactions which shall be treated neither as a supply of goods nor a supply of service

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• F.12(56)FD/Tax/2017-Pt-I-49 - dated 29-6-2017 - Rajasthan SGST
  Notification regarding the rate of tax for supply of services under Rajasthan Goods and Services Tax Act, 2017

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• F.12(56)FD/Tax/2017-Pt-I-48 - dated 29-6-2017 - Rajasthan SGST
  Notification under section 11(1) of Rajasthan Goods and Services Tax Act, 2017 regarding exemption on supplies of second hand goods received by a registered person dealing in second hand goods

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• F.12(56)FD/Tax/2017-Pt-I-47 - dated 29-6-2017 - Rajasthan SGST
  Notification under section 11(1) of Rajasthan Goods and Services Tax Act, 2017 regarding exempting supplies to a TDS deductor by a supplier, who is not registered

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• F.12(56)FD/Tax/2017-Pt-I-46 - dated 29-6-2017 - Rajasthan SGST
  Notification under section 11(1) of Rajasthan Goods and Services Tax Act, 2017 regarding exemption from reverse charge on supplies upto ₹ 5000 per day

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• F.12(56)FD/Tax/2017-Pt-I-45 - dated 29-6-2017 - Rajasthan SGST
  Notification under section 55 of Rajasthan Goods and Services Tax Act, 2017 specifying the CSD entitled to claim a refund of 50 percent of tax paid by it

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• F.12(56)FD/Tax/2017-Pt-I-44 - dated 29-6-2017 - Rajasthan SGST
  Notification under section 54(3) of Rajasthan Goods and Services Tax Act, 2017 notifying the goods in respect of which no refund of unutilised input tax credit shall be allowed

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• F.12(56)FD/Tax/2017-Pt-I-43 - dated 29-6-2017 - Rajasthan SGST
  Notification under section 9(3) of Rajasthan Goods and Services Tax Act, 2017 specifying the goods on which the tax shall be paid on Reverse charge basis by the recipient of the supply

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• F.12(56)FD/Tax/2017-Pt-I-42 - dated 29-6-2017 - Rajasthan SGST
  Notification under section 11(1) of Rajasthan Goods and Services Tax Act, 2017 regarding partial exemption of tax on goods required for petroleum operations or coal bed methane operations

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• F.12(56)FD/Tax/2017-Pt-I-41 - dated 29-6-2017 - Rajasthan SGST
  Notification regarding schedule of exempted goods under section 11(1) of Rajasthan Goods and Services Tax Act, 2017

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• F.12(56)FD/Tax/2017-Pt-I-40 - dated 29-6-2017 - Rajasthan SGST
  Notification regarding rate schedule under section 9(1) of Rajasthan Goods and Services Tax Act, 2017

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• F.12(56)FD/Tax/2017-Pt-I-39 - dated 29-6-2017 - Rajasthan SGST
  Notification fixing the rate of interest under Rajasthan Goods and Services Tax Act, 2017

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• Indian Laws

• F. No. 5/9/2017-CS - S.O. 2039(E) - dated 29-6-2017 - Indian Law
  U/s 54 (a) of the Competition Act, 2002 exemption of every person or enterprise

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Circulars / Instructions / Orders

• Customs - 01/2017 - dated 13-7-2017
  Constitution of Review Committees of the Chief Commissioners of Customs-Regd
• Central Excise - 02/2017-CE & ST - dated 13-7-2017
  Constitution of Review Committees of the Chief Commissioners of Central Excise and Service Tax-Regd.

News

• GST procedural hurdles easing out for exporters: CFBA

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• Further clarification on tax in reverse charge on gold ornaments;

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• Centre releases advance grant-in-aid of ₹ 51.30 crore to Arunachal Pradesh for rescue and relief operations on account of flash floods

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• European Union & India establish an Investment Facilitation Mechanism

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• Income Tax Department pushes additional cases of High Cash Deposits in Second Phase of Operation Clean Money

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• Third Meeting of the Governing Council of National Investment and Infrastructure Fund (NIIF) held today under the Chairmanship of Finance Minister, Shri Arun Jaitley;

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• RBI Reference Rate for US $

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Case Laws:

• Income Tax

• 2017 (7) TMI 462
  Reopening of assessment - capital gain - share of assessee in property sold - Held that:- Going by the primary facts, we cannot come to the conclusion that the reasons recorded by the Assessing Officer lacked validity so as to prevent even the assessment to be made. As is well settled, as long as the Assessing Officer has tangible material at his command to form a bonafide belief that income chargeable to tax has escaped assessment, the Court would not interfere with the formation of such belief unless it is shown to be wholly perverse. The primary facts which we have noticed are that even as per the assessee, the property in question was sold for a consideration of ₹ 2.37 crores and the assessee would receive 50% share out of such sale proceed. The other connected fact is that adopting valuation for the purpose of stamp duty upon presentation of the document for registration, in case of coowner, the assessing authority has assessed the sale consideration for the purpose of capital gain to ₹ 3.37 crores. Thus we do not find that the notice for reopening requires any interference in exercise of writ jurisdiction. - Decided against assessee.

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• 2017 (7) TMI 458
  Levy of fees u/s 234E - Non permissibility to levy fee till section 200A of the Act was amended with effect from 01.06.2015 - Fee for default in furnishing statements - Held that:- When section 234E has already created a charge for levying fee that would thereafter not been necessary to have yet another provision creating the same charge. Viewing section 200A as creating a new charge would bring about a dichotomy. In plain terms, the provision in our understanding is a machinery provision and at best provides for a mechanism for processing and computing besides other, fee payable under section 234E for late filing of the statements. We cannot subscribe to the view that without a regulatory provision being found for section 200A for computation of fee, the fee prescribed under section 234E cannot be levied. Any such view would amount to a charging section yielding to the machinery provision. If at all, the recasted clause (c) of subsection (1) of section 200A would be in nature of clarificatory amendment. Even in absence of such provision, as noted, it was always open for the Revenue to charge the fee in terms of section 234E of the Act. By amendment, this adjustment was brought within the fold of section 200A of the Act. Upon introduction of the recasted clause (c), this situation also would be obviated. Even prior to 01.06.2015, it was always open for the Revenue to calculate fee in terms of section 234E of the Act Section 200A is not a source of substantive power. Substantive power to levy fee can be traced to section 234E of the Act. Further the fee under section 234E of the Act is not in lieu of the penalty of section 271H of the Act. Both are independent levies. Section 271H only provides that such penalty would not be levy if certain conditions are fulfilled. One of the conditions is that the tax with fee and interest is paid. The additional condition being that the statement is filed latest within one year from the due date. The decision of Supreme Court in case of B C Srinivasa Setty (1981 (2) TMI 1 - SUPREME Court) was rendered in entirely different background. Issue involved was of charging capital gain on transfer of a capital asset. In case on hand, the asset was in the nature of goodwill. The Supreme Court referring to various provisions concerning charging and computing capital gain observed that none of these provisions suggest that they include an asset in the acquisition of which no cost can be conceived. In such a case, the asset is sold and the consideration is brought to tax, what is charged is a capital value of the asset and not any profit or gain. This decision therefore would not apply in the present case. - Decided against assessee.

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• 2017 (7) TMI 434
  Rectification of mistake - condonation of delay in filing application / petition - Held that:- We have no doubt in our mind that there is an apparent mistake in the order dated 07.04.2016 as the Tribunal has not decided the appeals of the assessee on merit but dismissed the same inlimini for want of prosecution. However, the question of rectification of mistake cannot be entertained until and unless the Miscellaneous Petition filed by the assessee is found to be maintainable. The miscellaneous petitions filed by the assessee are beyond the period of 6 months from 01.06.2016 and therefore the same are barred by limitation. In the absence of any provision to condone the delay under the Income Tax Act, it may be a case of omission in the provision of Act which cannot be supplied by us when there is no ambiguity in the provisions of section 254(2) of the Act. In view of the facts as well as the decision of the Hon’ble Bombay High Court in the case of Bharat Petroleum Corporation Ltd., Vs. ITAT and others (2013 (10) TMI 1085 - BOMBAY HIGH COURT) we hold that the miscellaneous petition filed by the assessee are beyond the period of limitation as provided under section 254(2) and are not maintainable

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• 2017 (7) TMI 433
  Deduction u/s 80HHC - Held that:- We restore the matter to the file of the AO for computing deduction allowable to the assessee u/s 80HHC of the Act in accordance with law . The assessee is directed to appear before the AO and produce all relevant evidences and explanations in support of its contentions. The AO shall provide proper and reasonable opportunity of being heard to the assessee in accordance with law in accordance with principles of natural justice. Addition u/s 14A - Held that:- The disallowance u/s 14A should be restricted to a reasonable estimation having regards to the accounts of the assessee. The ld. CIT(A) has rightly set aside and restored the issue back to the file of the A.O. for working out reasonable disallowance u/s 14A of the Act. No infirmity in the order of the ld. CIT(A) and accordingly the said appellate order of CIT(A) is sustained and confirmed and the AO in remand proceedings shall work out reasonable disallowance of expenditure incurred in relation to earning of exempt income having regards to the accounts of the assessee in accordance with mandate of Section 14A(2) of the Act. The assessee is directed to appear before the AO and produce all relevant evidences and explanations in support of its contentions. The AO shall provide proper and reasonable opportunity of being heard to the assessee in accordance with law in accordance with principles of natural justice.

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• Customs

• 2017 (7) TMI 451
  Detention of imported goods - Gold - smuggling - prohibited item - absolute confiscation - onus to prove - Held that: - Section 123 of the Customs Act, 1962 is made applicable to Gold through Sub-section (2) of Section 123 of the said Act and the said Section provides that if the goods to which said Section is made applicable are seized under the reasonable belief that they are smuggled goods than the burden to prove that the goods are not of smuggled nature was on the person from whose possession the goods were seized or the person who claims the ownership of the same. Though the appellant has shown that he purchased the said gold from M/s Bilasa & Sons Pvt. Ltd., Delhi vide tax invoice dated 07/07/2014 and another dated 11/07/2014 and M/s Bilasa & Sons Pvt. Ltd., Delhi have proved that they had purchased said Gold from M/s Supreme Gold, Delhi vide invoice dated 07/07/2014 and further that Supreme Gold, Delhi have proved that they had purchased said gold from M/s H.H.E.C. of India who had imported and got said gold cleared through Bill of Entry No. 5913058 dated 25/06/2014 in the said Show Cause Notice. The appellant have discharged burden to establish that the Gold under seizure was legitimately possessed by them and the same was legitimately cleared through filing Bill of Entry and payment of Customs duty as required under Section 123 of the Customs Act, 1962. Therefore, we find that the said Show Cause Notice dated 09/01/2015 is not tenable in law. As a result, we set aside the impugned Order-in-Original dated 27/11/2015 and held that appellant is entitled for release of said Gold under seizure within a period of 21 days. Appeal allowed - decided in favor of appellant.

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• Corporate Laws

• 2017 (7) TMI 460
  Dispute between the controlling group and the Natarajan block - directions to the effect that 18.98% of shares owned by the Natarajan block should be purchased either by the controlling group or, by SVG itself - Held that:- First, Natarajan was part of the promoter group and not a mere adviser, which is exemplified by the fact that throughout, that is, since 1987, he has been retained as a Director till the conclusion of the AGM of 26.09.2014, irrespective of the form or structure Binny Limited morphed into from time to time. Second, the principle of "quasi-partnership" or "in substance a partnership" would apply to the relationship, which subsisted in the first instance, amongst Late Ramasamy, Ethiraj, M.Nandagopal and Natarajan, and after, the death of Ramasamy amongst his son Venkatachalam and the other three gentlemen. Third, Natarajan, admittedly, did not receive any professional fee. He clearly discharged functions as Director entrusted to him, first on behalf of Binny Limited and, thereafter, on behalf of SVG as well. Over the years, it appears from the record, an understanding was reached between the persons referred to above, that they would have a representative each on the BOD of the concerned company/companies, as the case may be. Fourth, though there was clearly no written agreement in place an understanding built on trust had been forged, which required each side to ensure the appointment of the nominee of the other side on the Board of the concerned company. This facet comes through upon examining a long corporate history of nearly 27 years, spanning between 1987 and 2014. The understanding and trust, which had remained steadfast for nearly three decades was breached, when, Natararajan was not renominated to the Board of SVG. Fifth, the nature of the relationship between Natarajan and the controlling group cannot be given a short shrift by labelling it as "Directorial complaint". While, in isolation, one cannot, but agree, that corporate democracy and shareholders will must prevail these principles need to be tested in the context of facts and circumstances obtaining in each case. Bereft of context, a grievance regarding failure to obtain renomination to the BOD may seem like a Directorial Complaint. Sixth, the appellants, cannot use the "Directorial Complaint" argument or even the argument that it is a limited company having public shareholders to deny the Natarajan block its right to sit on the high table, that is, the BOD. When these arguments are put to scrutiny, what does come through, starkly, is that the public shareholders, which approximately, number 9014 are dispersed and, the company, i.e., SVG is run, in substance, like a closely held company by the Controlling group, who hold 55% of the equity stake. It is because of this reason that the Board of SVG could take a decision to allow for use of the Boat Club Property, which is even by a conservative measure, a property worth ₹ 300 Crores, for personal use of Shanmugam, its Managing Director, despite poor financials, or that, a ballot resolution dated 02.05.2015 could be passed giving powers to the Board of SVG to, inter alia, make investments or grant loans to the extent of ₹ 500 Crores, with the potentiality of these facilities being extended to associate entities/companies. As has already been alluded to herein above, while, extension of financial facilities to associate entities/companies, at this stage, can only be construed as an apprehension, it cannot be completely wished away and, therefore, the co-existence of Natarajan with the appellants can only be construed as oppressive, that is, harsh and burdensome and since, appellants are in majority, the oppression could only be on the minority, which includes the Natarajan-block. The failure to reappoint Natarajan on the Board of Directors of SVG is only the beginning of the oppression. Seventh, even if, one were to assume, for the sake of argument, that findings of oppression are not called for, in the instant case, would I, then, reverse the direction issued by the CLB on that score, which, in its own wisdom, has tried to do substantial justice between the contesting parties, by compelling the controlling group to purchase the shares of the Natarajan block. This power, as held hereinabove by me, was rightly exercised by the CLB, save and except to the extent it directed SVG to purchase the shares, upon failure of the controlling group to do so. To my mind, this power was available to the CLB, contrary to what has been argued by the counsels. Therefore, the CLB's endeavour to unlock the asset of the Natarajan block, which has stayed the course along with other co-venturers for nearly three decades, in the given facts and circumstances, does not call for interference, as it is both fair and equitable. Eighth, the deadlock, as indicated above, need not necessarily be an ingredient of 397 and 398 action. It is only one of the circumstances in which, such an action can be brought to Court. Besides, the concept of deadlock need not to be looked at in absolute terms. In my view, any issue, which creates an impediment or a possibility of a logjam in the smooth functioning of the company in the foreseeable future, is an aspect, which ought to be factored in, while examining the tenability of an action instituted under Section 397 and 398 of the 1956 Act. The majority shareholders will always allude to the argument that, since, they have the requisite numbers, whether in terms of shares or members on the Board that they can run the company without a hitch; an argument, if, accepted, would actually mean, that the Court would then give legal credence to the submission that they could run rough shod over the minority. Running of the company requires inclusiveness, which is intrinsic part of any democratic process and cannot, to my mind, be any different, where corporate jurisprudence or governance is involved. Therefore, in substance, find no difficulty in CLB coming to the conclusion that there would be impediments in running the affairs of SVG, as indicated above, and therefore, perhaps, as against the use of the expression "practical deadlock", some other expression, which would describe the situation more accurately could have been used. Perhaps, "gridlock" would better describe such like situations. Based on the foregoing discussion, the appeals are partly allowed, in as much as, the direction issued by CLB vide the impugned judgment dated 10.03.2016 is set aside to the extent, it directs purchase of equity stake of respondent Nos.1 to 6 by SVG. The other direction of the CLB, which requires the controlling group to purchase the shares of respondent Nos.1 to 6 is sustained. Since, CLB had called upon the parties to appoint an independent valuer, pending the disposition of the aforementioned matter, valuation was got done, albeit, without prejudice to the rights and contentions of the parties via Brahmayya & Co., Chartered Accountants. The valuation report was received and opened. It appears that the contesting parties did not have an opportunity to comment on the valuation report. Therefore, for this purpose, I intend to remand the matter to the National Company Law Tribunal, Chennai Branch (in short, NCLT) (in view of the changed statutory position). The parties would appear before the NCLT on 14.07.2017. The NCLT would call upon the parties to submit their objections and, thereafter, come to a conclusion, one way or the other, as to the price, at which the controlling group should be called upon to purchase the shares of respondent Nos.1 to 6. To ensure that there is a compliance, the Controlling group and/or its constituents are injuncted from selling, transferring or creating third party interest, qua their shareholding in SVG, till further orders of the NCLT, and in case, a charge or interest has already created by the controlling group, vis-a-vis their equity stake in SVG, the protem charge so created by this direction will stand subordinated to any such prior charge or interest. SVG is also injuncted from registering or recording any request for transfer of shares which are owned or controlled by Ethiraj and Shanmugam and/or its constituents except with the prior permission of NCLT. Furthermore, pending the completion of the aforesaid exercise, SVG will not transfer and/or create third party interest in its immovable assets.The NCLT would be free to modify and/or vary the protem order and also to seek other forms of solvent security, if, offered by the controlling group, till such time, the equity interest of respondent Nos.1 to 6 is bought over by them, i.e., the controlling group and/or their nominees.

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• Service Tax

• 2017 (7) TMI 453
  Validity of SCN - SCN issued during pendency of finalization of assessment - Held that: - the assessment for the impugned period has not been finalized. The finalization of the assessment is separate proceedings for which there is no bar on the Department and impugned show cause notice is not hurdle for finalization of the assessment in question - similar issue came up before the Hon’ble Apex Court in the case of CCE, Mumbai Vs. ITC Ltd. [2006 (10) TMI 149 - SUPREME COURT OF INDIA], where it was held that during the pendency of finalization of assessment, no SCN can be issued - SCN were issued before finalization of assessment, therefore, the same are not sustainable in the eyes of law - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 450
  Valuation - Reimbursement expenses - reimbursements received from the service-recipient - includibility - business, auxiliary services - repair and maintenance service - Held that: - In every service which is provided to the service recipient the contribution of the manpower always exist. Without the manpower no service can be provided. Therefore, the so-called reimbursable expenses are part and parcel of the gross value of the service. Therefore, the same is includible in the gross value of the service and chargeable to service tax - appeal dismissed - decided against appellant-

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• 2017 (7) TMI 449
  Sub-contract - taxability in hands of sub-contractor - penalty - the main submission of the appellant is that they being a sub-contractor to the main contractor, they are not liable to pay service tax - Held that: - the main contractor are provider of construction service whereas the appellant is providing an independent service of excavation for which they are the main service provider and hence, they are not entitled for the benefit as a sub-contractor - the service provided by the appellant chargeable to service tax in their own hand - demand upheld. The appellant have rightly claimed the cum-tax benefit available in principle and the same is admissible to them - As regard the interest amount of admittedly paid by the appellant, the same is rightly adjustable against the total demand. Penalty u/s 78 - Held that: - the substantial amount of service tax was paid by the appellant along with interest during the proceedings before the adjudicating authority - the penalty imposed u/s 78 is not legal and proper - penalty imposed u/s 78 invoking the provisions of Section 80 of the FA, 1994. Appeal allowed - decided partly in favor of appellant.

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• 2017 (7) TMI 446
  Refund claim - Terminal Handling Charges - Bill of Lading charges - denial on the ground that these are not port services - N/N. 41/2007-ST dated 06.10.2017 - Held that: - the Bill of Lading Charges and Terminal Handling Charges are received by the appellant for export of goods at port and are covered under port services - refund allowed. Refund claim - Transport Service - denial also on the ground that appellant has failed to provide the documentation with regard to transportation of goods from their factory to ICD as actual service provider has not provided the service to the appellant - Held that: - some discrepancy are also point out in the invoices produced by the appellant - the adjudicating authority directed to verify the documents for services received by the appellant and corresponding invoice of service provide and goods transporter to ascertain the fact, whether the invoices produced by the appellant are in respect of transportation of goods from their factory to the port of export or not - matter on remand. Part appeal allowed - part matter on remand.

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• Central Excise

• 2017 (7) TMI 465
  Waiver of penalty u/s 11AC of the Central Excise Act - no deliberate intention - failure to discharge duty, on account of confusion - the decision in the case of The Commissioner of Central Excise Versus M/s. Madras Aluminium Company Limited [2016 (12) TMI 1374 - MADRAS HIGH COURT] contested, where it was held that there is no willful intent to evade duty and hence the question of invoking the penalty under section 11AC would not arise - Held that: - the decision in the above case upheld - SLP dismissed.

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• 2017 (7) TMI 464
  Manufacture - Fly Ash - Whether 'fly ash' as formed during the production of electricity is a product, which falls within the meaning of manufacture as defined under Sections 2 (f) of the Central Excise Act? - decision in the case of The Central Board of Excise & Customs Government of India, The Commissioner of Central Excise Versus M/s. Mettur Thermal Power Station (A Unit of Tamil Nadu Generation & Distribution Corporation Ltd. (TANGEDCO) [2017 (1) TMI 222 - MADRAS HIGH COURT] contested Apex Court admitted the Appeal.

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• 2017 (7) TMI 461
  Release of seized cash - Held that: - since the goods were seized more than 6 years ago, the Petitioner may not even be interested in release of the goods upon payment of the redemption fine. That is something for the Petitioner to decide. However, it by no means renders the impugned order illegal - petition dismissed - decided against petitioner.

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• 2017 (7) TMI 459
  Rule 6(2) of the Pan Masala Packing Machines (Capacity Determination and Calculation of Duty) Rules, 2008 - packing speed of machines - The petitioner Company had declared the speed at 750 pouches per minute even when speed was not relevant for duty purpose, and had subsequently changed it to 1000 pouches per minute, when packing speed of the machine was relevant, and continued to declare it as such till such time the Company started getting complaints about the packing of the pouches. Held that: - Rule 6(2) of the Rules provides that when a declaration is made under Rule 6(1), the Deputy Commissioner or the Assistant Commissioner of Central Excise, as the case may be, may make such enquiry as may be necessary including physical verification and, thereafter, approve the declaration including the declaration with regard to maximum packing speed at which the machine can be operated for packing of notified goods of various retail sale prices and, consequently, determine and pass order concerning the annual capacity of production of the factory within 3(three) working days. The second proviso to Sub-rule 6(2) provides that if a manufacturer does not receive the approval in respect of his declaration within a period of 5(five) working days, the approval shall be deemed to have been granted subject to the modifications, if any, which the Deputy Commissioner or the Assistant Commissioner of Central Excise, as the case may be, may communicate later on but not later than 30(thirty) days of filing of the declaration. The approval of declaration is not automatic or routine and before the declaration is approved, the authority can make necessary enquiry including physical verification of the machine. The expression used in Sub-rule 6(2) is “maximum packing speed at which each of the packing machines available in his factory can be operated for packing” - While passing the aforesaid order dated 27.11.2015, it was noted that there was no good reason for physical verification of the machine to determine the maximum packing speed at which it could be operated. The aforesaid order was set aside by the Commissioner (Appeals) vide his order dated 30.08.2016 on an appeal preferred by the petitioner. It is not in dispute that the petitioner had paid excise duty based on the annual capacity production calculated on the basis that the maximum packing speed of the machine falls in the category of 301-750 pouches per minute. These findings have a direct bearing on the legality and tenability of the enquiry which is initiated solely for the reason of lowering the packing speed of the machine as the change of maximum packing speed of the machine was the central issue before the appellate authority. If it is permissible to change the parameter of maximum speed of the machine, that too, without any explanation, as held by the appellate authority, the very edifice of the enquiry has no foundation. In that context, the plea of the respondents that the issue of packing quality was not raised earlier pales into insignificance. The enquiry initiated against the petitioner company by letter dated 18.11.2015, in the facts of this case, ought not to be permitted to be continued and, therefore, the enquiry initiated in relation to packing machine ID No. 131023840 is quashed - petition allowed - decided in favor of petitioner.

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• 2017 (7) TMI 457
  Whether Rule 5 of the Hot Re-rolling Mills Annual Capacity Determination Rules, 1997 would apply to a case where annual capacity of production has been redetermined in terms of Rule 4(2) on account of change in parameters even though re-determined annual capacity is less than the actual production for the financial year 1996-97? Held that: - by later circular dated 01.01.2016, the department has made it clear that the instructions contained in the circulars dated 17.08.2011 and 17.12.2015 would apply to all pending cases. Since the earlier circulars prescribed revised monetary limits prospectively, it was open for the department to contend that such revised higher limits would not apply to pending cases. However, with circular dated 01.01.2016 the entire issue has undergone a sea change. The department now wishes that the revised monetary limit be applied to all pending cases irrespective of the date of filing. Whether the present case falls in any of the exceptions? - Held that: - First two exceptions provided in the circular dated 17.08.2011 for apparent reasons do not apply and are not even pressed in service before us by the counsel for the department. According to her, however, the third exception provided in circular dated 17.12.2015 would apply. We, however, note that the said exception is made in cases of classification and refunds issues which are of legal and/or recurring nature. Appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 455
  CENVAT credit - job-work - It appeared to Revenue that the appellants were not entitled to take CENVAT credit of duty paid on inputs unless the goods processed by the job workers were received in the factory of the appellant - Held that: - it is settled principles of law that Cenvat credit cannot be denied for the reason that the inputs were directly sent to the job workers particularly when the inputs were received after processing and were brought into the factory and duty on the final product was paid - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 454
  Classification of goods - Indian Kattha - whether the classification of the goods manufactured would fall under Tariff Item No. 14049050 or classifiable under Tariff Item No. 13021990 which is a residual entry with a description as others - Held that : - similar issue decided in the case of M/s Indian Wood Products Co. Ltd. Versus Commissioner, Customs & Central Excise-Meerut-II [2017 (2) TMI 764 - CESTAT ALLAHABAD], wherein this Tribunal had already decided the classification of identical goods under Tariff Item No. 14049050 - appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 452
  Clandestine removal - shortage of inputs - the case was booked against the appellant of clandestine removal of goods on the basis of inspection conducted in their factory premises based on certain incriminating documents recovered during inspection and it was also alleged that the assessable value has been undervaluation by the appellants - Held that: - the ld. Adjudicating Authority has not examined the issue of excisability - the adjudicating authority firstly is required to decide the issue of excisability of the product in question, therefore, the impugned order deserves no merits, accordingly, the same is set aside and the matter is remanded back to the adjudicating authority with the direction to first decide the issue of excisability of the product in question and thereafter, come to the issue of clandestine removal/undervaluation - appeal allowed by way of remand.

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• 2017 (7) TMI 448
  SSI exemption - Goods cleared to merchant exporter and domestic consumption - Circular No. 648/39/2000-CX dated 25.7.2000 - Held that: - In the case of Vadapalani Press [2007 (3) TMI 151 - CESTAT, CHENNAI] wherein it was held that In Circular No. 212/96-CX., dated 20-5-1996, the Board simplified the export procedure for SSI units. Where the export of goods cleared from SSI unit was effected through a merchant-exporter, the certificate in "Form-H" issued by the latter was accepted as proof of export and it was provided that, in case clearances from SSI unit for home consumption plus clearance for export, where proof of export was not furnished within 6 months, exceeded exemption limit, they should take Central Excise registration and follow the regular A.R. 4/A.R. 5 procedure. Where proof of export was furnished within 6 months, the clearances made for export were not to be added to clearances for home consumption. It can be observed that not only the goods exported as such, even the goods which was used for packaging of export goods were also treated as removal for export through merchant exporter and the same was held not to be includible in the domestic clearance. With the views taken in the above judgments, the interpretation of the adjudicating authority that in the appellants case the goods were not directly exported from the appellants unit is incorrect and the same cannot be accepted - Appeal allowed - decided in favor of the assessee.

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• 2017 (7) TMI 445
  Manufacture - the appellants are engaged in undertaking works contract which involved supply of material and service for which they procured materials like, aluminum doors, windows, curtain wall, structural glazing, suspended glaze, spider glass, sky lights and canopies, etc. on payment of proper excise duty - case of the department is that the appellants activity is of manufacture of the parts of doors and windows, structural glazing, curtain wall, spider glazing, etc. which is liable to excise duty - Held that: - it is apparent that there is a mistake in quantification of demand. However, the same is subject to verification by the adjudicating authority - We also observed that the learned Commissioner (Appeals) decided the entire case solely on the basis of Larger Bench judgement of Mahindra & Mahindra [2006 (4) TMI 18 - CESTAT, NEW DELHI] - the reliance solely on the basis of Larger Bench decision in the case of Mahindra & Mahindra (supra) is not proper on the part of the Commissioner for confirming the demand. The adjudicating authority shall pass a denovo adjudication order after verifying the quantification as submitted by the appellant and also by analyzing various judgements cited by the learned Counsel - appeal allowed by way of remand.

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• 2017 (7) TMI 444
  SSI exemption - use of brand name - respondents were clearing unbranded cookies and cookies bearing the brand name Cookie Man - Revenue was of the view that that the cookies sold in paper plate and in napkins are also to be treated as branded cookies as the buyer buying such cookies from the outlet are aware that the cookies sold loosely is only Cookie Man cookies and that they are the very same item that are sold in packs, denying the benefit of N/N. 8/2003 dated 01.03.2003 on these cookies - whether the respondents are eligible for the benefit of SSI exemption on the cookies sold loose in their outlets? - Held that: - In the respondent's own case, the Hon’ble Apex Court has held that the respondents would not be eligible for the benefit of SSI exemption even for the cookies sold in loose from their outlets - assessee are having an exclusive shop in Spencer Plaza complex and they are the license holder of the brand Cookie Man outlet as per the agreement with Cookie Man Pty. Ltd., Australia - demand upheld - appeal allowed - decided in favor of Revenue.

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• 2017 (7) TMI 443
  CENVAT credit - removal of defective/rejected/waste components of television receivers - Revenue was of the view that since credit had been availed on inputs the respondents ought to have reversed the credit under Rule 3 (4) of Cenvat Credit Rules, 2002 - scope of SCN - Held that: - assesssee have properly accounted the removal in RG-I register and also in RT-12 returns. The Commissioner (Appeals) has appreciated the facts and found that the SCN has not alleged that the inputs were removed as such. This has necessitated the adjudicating authority to call for report whether the items entered the production line. Therefore, it is apparent that the department has not raised in the SCN the allegation that such goods were cleared as such - In Tata Cumin Ltd. Vs. CCE, JSR [2015 (9) TMI 1079 - CESTAT KOLKATA], it was held that when inputs become damaged during the course of assembling of finished goods, the same being converted to scrap and removed as scrap, the demand of duty/denial of credit is unjustified - appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 442
  Removal of capital goods after use - whether the removal of capital goods after use would attract excise duty in terms of Rule 3(5) of Cenvat Credit Rules, 2004 during the period January 2005 to May 2005? - Held that: - the excise duty is only payable on the capital goods if removed ‘as such’ that means without installation and putting to use - In the present case, since the capital goods were admittedly installed and used for substantial period, only thereafter it was removed, Rule 3(5) of Cenvat Credit Rules, 2004 is inapplicable - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 441
  SSI exemption - use of Brand name of others - It was alleged that they are using the emblem that is being used by M/s. Micro Labs, Hosur - N/N. 01/93 dated 01.03.1993 - Held that: - there is no allegation in the SCN that the emblem wave linesbelongs to Micro Labs and that the respondent has used it is correct. In fact, the allegation raised is only that the emblem embossed indicates a communication in the course of trade between such specified goods and Micro Labs who are using such emblem with or without as indication of the identified by using the emblem of Micro Labs who are not eligible for the grant of exemption under N/N. 1/93 dated 28.02.1993. Thus the allegation raised in the SCN does not make any sense - also, the department has not produced any evidence to show that the alleged trade mark belongs to Micro Labs. The Hon’ble Apex Court in the case of Astra Pharmaceuticals [1994 (12) TMI 77 - SUPREME COURT OF INDIA] has made a distinction between house mark and product mark(trade name). Appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 440
  Valuation - job-work - whether the job worker is required to discharge duty liability on the basis of selling price of the principal manufacturer? - Held that: - issue regarding valuation of goods manufactured on job work basis is no more res integra and the law has been well settled in this regard by the Hon’ble Apex Court in the case of Ujjagar Prints [1988 (11) TMI 106 - SUPREME COURT OF INDIA], where it was held that the job worker is not required to discharge duty liability on the basis of selling price of the principal manufacturer. - the adjudicating authority has rightly dropped the allegation in this regard and the interference by the Commissioner (Appeals) by placing reliance on the N/N. 27/92 dated 09.10.1992 is misconceived - Valuation - includibility - machine rental charges - Held that: - the issue settled by the judgment in the case of COMMISSIONER OF CENTRAL EXCISE, MUMBAI Versus PEPSICO INDIA HOLDINGS (P) LTD. [2009 (1) TMI 53 - SUPREME COURT] wherein it has been categorically held that the charges are not includible in the assessable value. Appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 439
  SSI exemption - order of amalgamation - whether SSI exemption granted therein can be extended till the date of judgment of the Hon’ble High Court when the order of amalgamation has been passed? - time limitation - Held that: - the Hon’ble High Court has given the specific date for amalgamation which is 01.04.1991. However, the scheme of amalgamation was approved by the Hon’ble High Court vide judgment dated 20.02.1992 only. On receiving the information appellants submitted the same to the department. However, the department has issued the SCN only on 27.07.1993 by invoking the extended period - Apart from alleging that the appellant is not eligible for SSI exemption after amalgamation of the two companies, there is no allegation of suppression of facts or mis-declaration - demand is barred by limitation - appeal allowed - decided in favor of appellant.

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• 2017 (7) TMI 438
  100% EOU - waste - During the course of such manufacture of Absorbent Cotton, cotton waste was generated - it was alleged that the excess cotton waste generation took place - Held that: - There are grave inconsistencies on the vital fact, such as the Ld. Commissioner has not considered the raw material imported and indigenously procured, this aspect is very significant to decide the dutiability on the cotton wastes and droppings. Similarly, the various issues raised by the appellant in his submissions was not considered properly by the adjudicating authority - the entire matter requires relook on all the issues - appeal allowed by way of remand.

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• 2017 (7) TMI 437
  Clandestine manufacture and removal - Sponge iron - natural justice - Held that: - the appellants were seeking the cross examination of various persons and the same having not been granted to them, the impugned order is unsustainable on this ground only - there is violation of principles of natural justice and the impugned order needs to be set aside - matter remitted back to the adjudicating authority to reconsider the issue afresh after following the provisions of Section 9D of the CEA, 1944 in respect of the witnesses of whom appellant had sought cross examination - appeal allowed by way of remand.

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• 2017 (7) TMI 436
  Benefit of N/N. 6/2002-CE dated -1.03.2002 - clearance of control panel and bus duct - Revenue is of the view that the control panel and bus duct has been cleared for the purpose of controlling and distribution of power and are not used for devise or for a system of non-conventional energy as mentioned in the notification - Held that: - The appellants have furnished the certificate issued by the Non-conventional Energy Development Corporation of AP Government, wherein it has stated that it is required for the power project of the said corporation. It is well clear from the certificate itself that the goods are intended to be used for non-conventional energy devise. The adjudicating authority has denied the benefit merely holding that the control panel and bus ducts cannot produce energy independently and therefore, is not eligible for the benefit of exemption under N/N. 6/2002. The Commissioner Appeals has rightly analyzed that if this interpretation is to be accepted then the benefit of notification can be claimed only by those manufacturers who are capable of manufacturing the entire non-conventional energy system by themselves. This would not be practically or logically possible that the word device producing energy is not to be interpreted in such a manner to deny the benefit. Appeal dismissed - decided against Revenue.

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• 2017 (7) TMI 435
  CENVAT credit - credit availed on common inputs used for dutiable as well as exempted goods - Windmill Tower - Held that: - The appellants in the present case though have reversed the proportionate credit along with 8% of labour charges, it is contended by the department that they have to reverse 8% of value of exempted goods after including the value of free supply items. In view thereof, we find that it is fit to remand the issue to the adjudicating authority to consider whether the appellants have reversed credit as required under Rule 57CC - matter on remand. Valuation - includibility - charges to the tune of ₹ 59 lakhs in respect of System Engineering charges in the value of Coal Ship Loader - Held that: - this issue requires to be remanded for verification of the appellant's claim that the design element in the manufacture of Ship Loader has already been included for payment of duty. The charges for the System Engineering amounting to ₹ 59.00 lakhs sought to be included by Revenue relates to aspects such as Port layout, Jetty position etc. We are of the view that the appellants should be given an opportunity to produce documents to establish their claim - matter on remand. Appeal allowed by way of remand.

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• CST, VAT & Sales Tax

• 2017 (7) TMI 463
  Whether on facts and circumstances of the case, the Tribunal has rightly held that the transactions in question are consignments or interState transactions and thereby the opponent is entitled to exemption under Section 6A of the Central Sales Tax Act? Held that: - Consignment Agreement’s clause 4 was pressed into service to contend that since the entire sales proceeds were paid immediately and the risk in goods was entirely that of the agent sale was a local sale. Moreover, the Ghee / Butter deposit advance when seen in light of this and deduction and set off of expenses showed / suggested local sale - The Tribunal, on facts found that, in the book of commission agents stock transfers are shown and when sold at Silvasa sales are shown in the returns submitted to the Sales Tax Office at Silvasa / Daman. Further, on receipt of a sale note from such consignment agent necessary adjustments are made. Advance receipts, according to the Tribunal, in such consignment transactions are permissible. Whether the actual movement of goods did take place? - Held that: - the State did not produce any other statements and the Tribunal was therefore right in holding that in probability if other statements were produced it could have disclosed the true nature of transactions of consignment. Since the inquiries visavis these transporters was held behind the back of the assessee, such facts cannot be relied upon by the Revenue. Moreover all such statements related only to one transporter / consignee Bandish Trading Co. In accordance with Rule 12(5) of the Central Sales Tax Rules, 1957, the declaration by a dealer, that the goods did move from one State to another, has to be given in the prescribed form ‘F’. The assessing authority disregarded the claim of such movement of the dealer, though such form ‘F’ were produced, on the ground that they were not complete. The assessee, according to the Revenue’s stand, had not discharged the burden of proof to show that the transfer of goods was in course of interState sale. From the facts on record, that forms ‘F’ for the assessment periods in question were produced, is not disputed. The claim was not disallowed by the assessing authority on the ground that such ‘F’ forms were not produced. The contention that the forms were defective was also taken at the stage of the Second Appeal. The Tribunal, in such circumstances recorded a finding of fact that, 15 years after the transactions having taken place, the plea of production of defective ‘F’ forms cannot be entertained. Tribunal held that all three essential ingredients of interState namely that (1) there was an implied stipulation in the contract regarding interState movement of goods (ii) the goods did actually move from one State to another, (iii) and the sale concluded in another State, were satisfied - appeal allowed - decided in favor of assessee.

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• 2017 (7) TMI 456
  Jurisdiction of Assessment Order passed - inclusion of discount in the taxable turnover of the appellant - The appellant says that since, he had not availed of any Input Tax Credit (ITC), no reversal of the same could have been brought about, as is required under the provisions of Section 19(20) of the 2006 Act, in case, the said provisions is triggered, as was erroneously sought to be done by the respondent - Held that: - A bare reading of the Explanation II(ii) would show that the discount cannot be included in the taxable turnover of an assessee. The Assessing Officer, it appears, has included the taxable turnover by relying upon the circular dated 30.11.2016. Further, the Assessing Officer, in coming to the conclusion that the appellant had sold goods at a price lesser than the price at which the goods were purchased by him, has adverted to the following workings which have been gleaned Form W.W, filed by the appellant for the year 2014-2015. The very basis of the calculation is flawed. The Assessing Officer was required to compare the unit sale price of the goods in issue with the unit purchase price. The inclusion of the opening stock, to our minds, has led to an erroneous conclusion that the appellant has sold the goods at a price lesser than the price at which they had been purchased by him. Before concluding a best judgment assessment, the Assessing Officer is required to reach a satisfaction in this behalf. Clearly, such an exercise has not been carried out by the Assessing Officer. Furthermore, a perusal of the provisions of Section 19(20) would also show that, only if, the Assessing Officer comes to the conclusion that the price of the goods sold is lesser than the price at which they were brought, can he, obtain jurisdiction to adjust the ITC, to the extent the amount of ITC exceeds the output tax on the goods. As indicated herein above, the appellant has not availed of ITC in respect of the subject goods i.e., cement. Therefore, there was no occasion for the Assessing Officer, in any event, to invoke the provisions of Section 19(20) of the 2006 Act. The Assessing Officer is, therefore, directed to redo the assessment - appeal allowed - decided in favor of appellant.

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