TMI Tax Updates - e-Newsletter
July 5, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Insolvency & Bankruptcy
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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Income Tax:
AO can impose penalty for default in making the payment of tax, but the same shall not exceed the amount of tax in arrears. Tax in arrears would not include the interest payable u/s 220(2) - HC
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Income Tax:
Penalty u/s 271B - trading in derivatives transaction - whether the assessee is not liable to get the books of accounts audited u/s 44AB? - bonafide belief - assessee has sufficiently explained the circumstances, as per the provisions of section 273B - No penalty
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Customs:
Penalty - misdeclaration of goods - proceedings against the inspector of customs - the Disciplinary Authority was correct in reaching the conclusion that the respondent was guilty of misconduct - HC
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Customs:
Unjust enrichment - refund claim - bar of unjust enrichment not applicable to imported capital goods used captively by the importer - refund cannot be denied.
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Central Excise:
Extended period of limitation - the expression "suppression of facts", has to take colour from the words whose company, it appears in. A mere non-disclosure of information, when there is no obligation in law to furnish the same, will not amount to, in our opinion, fraud or collusion or even, wilful misstatement and, hence, trigger the extended period of limitation. - HC
TMI Short Notes
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2017 (7) TMI 108
Amount of tax in arrears u/s 221 - addition to the tax inclusion - whether interest component has to be excluded while levying penalty under Section 221(1)? - Held that:- On reading the provisions of Section 221 conjointly with the definition of “tax” as detailed under Section 2(43), the irresistible conclusion that can be drawn is that the phraseology “tax in arrears” as envisaged in Sec.221 of the Act would not take within its realm the interest component. It would be abundantly clear that the Assessing Officer can impose penalty for default in making the payment of tax, but the same shall not exceed the amount of tax in arrears. Tax in arrears would not include the interest payable under Section 220(2) of the Act. In the result, the substantial question of law are answered against the Appellant. The Appeal stands dismissed.
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2017 (7) TMI 107
Charging of interest for the period of delay attributable to the revenue in supplying copies of accounts and relevant record and statements - Held that:- As from the date Section 158BFA has been incorporated in Section 119(2)(a) i.e. with effect from 01.06.2002, the proper remedy would be to apply the circulars/instructions issued by the Board relaxing the circumstances in which the interest payable under the said section could be relaxed. However, in the present case we are concerned for the period prior to June 2002, as the return of income was filed on 26.02.2002. At that time Section 158BFA of the Act was not a part of Section 119(2)(a) of the Act. Therefore, no occasion for the C.B.D.T. to give instructions to liberalise the rigour of Section 158BFA of the Act in respect of interest could arise. Question of law posed for our consideration is answered in the negative i.e. in favour of the appellant-assessee and against the revenue. Although the question as admitted questions the justifiability of the Tribunal in charging interest for the delay attributable in not supplying the copies of accounts and relevant record and statements, the words "copies of account and relevant record and statements" would also include within it, giving inspection of the accounts and relevant record and statements. Therefore, the interest for the delay in filing the return of income in this case has to be computed after excluding the period from the date the inspection was asked for i.e. 24.05.2001 till the inspection was given i.e. 03.01.2002. The Assessing Officer to work out the exact demand for interest in the above terms.
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2017 (7) TMI 106
Allowability of revenue expenditure - guarantee commission paid to the bankers for securing timely repayment of credit facility and loan from Financial Institutions for the purposes of machinery and equipment - Held that:- The Division Bench of this Court in case of Kinetic Engineering Ltd (1997 (7) TMI 63 - BOMBAY High Court) was dealing precisely with the said issue, wherein, in the said case, the Assessee had to pay guarantee commission for securing timely repayment of credit facility obtained for the purpose of machinery and equipments required for running business. This Court considering various judgments of the Apex Court categorically came to the conclusion that the expenditure incurred for payment of guarantee commission is revenue expenditure. The act of borrowing money was incidentally to carrying on business.
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2017 (7) TMI 105
Penalty levied u/s 271(1)(c) - exemption claimed u/s 54 - Held that:- AO failed to crystallize the charge on which the penalty was proposed u/s 271(1)(c) of the Act, which has to be met out by the assessee. Considering the decision of various Superior Courts, Hon'ble Bombay High Court in the case of Shri Samson Perinchery [2017 (1) TMI 1292 - BOMBAY HIGH COURT ], we delete the penalty levied by AO. - Decided in favour of assessee.
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2017 (7) TMI 104
Penalty levied u/s 271B - trading in derivatives transaction - whether the assessee is not liable to get the books of accounts audited u/s 44AB? - bonafide belief - Held that:- The assessee being a Sr. Citizen and engaged in the business of derivative, Future & Option with a tremendous courage and dynamism and on the other hand, he is taking such excuse which is not acceptable. We have seen that the order of ld. CIT (A) is reasoned one and does not suffer from any infirmity or illegality, which requires our interference. In reply to the show-cause notice for initiation of penalty, the assessee has replied that he is a Sr. Citizen; his accounts are looked after by Accountant. The accountant of the assessee is not qualified person. The assessee was under bonafide belief that accounts are not required to be issued u/s 44AB of the Act. The assessee specifically pleaded in the reply that the Guidance note, ‘Note of Tax Audit u/s 44AB’ issued by ICAI that, if the turnover of Future & Option defined as aggregate of favorable and unfavorable transaction exceed ₹ 40,00,000/- than the assessee is liable to get his account audited. As per our view the assessee has sufficiently explained the circumstances, as per the provisions of section 273B of the Income-tax Act. Considering the reply of the assessee the penalty levied by assessing officer under section 271B is deleted. Appeal of the assessee is allowed.
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2017 (7) TMI 103
Penalty levied u/s 271(1)(c) - notional rental income working - Held that:- We have seen that he AO worked out the notional rental income during the assessment on the basis of estimated deemed income from ‘house property’ and added the same in the income of the assessee. The assessee has not filed any appeal against the addition made by AO. The Hon’ble Bombay High Court in DIT Vs Administrator of Late Mr. E.F. Dinshaw (2015 (9) TMI 318 - BOMBAY HIGH COURT) held that if the claim made by the assessee in the return of income, which was rejected by revenue, it would not amount to furnishing of inaccurate particulars or concealment of income. Eligible for Municipal Ratable Value - assessee has NOT offered the notional income on deemed let out property u/s 23(1) of the total investment made - Held that:- We modify the order of ld. CIT(A) and direct the AO to assess the rental income of the properties in accordance with the decision of jurisdictional High Court in Tip Top Typography [2014 (8) TMI 356 - BOMBAY HIGH COURT ].
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2017 (7) TMI 102
Disallowance of notional interest expenses - addition u/s 36(1)(iii)- Held that:- As gone through the facts in entirety and notice that this advance amount of ₹ 85,73,303/- is on margin fund and moreover the assessee is having its interest free funds in the shape of share capital of ₹ 7.15 crore and unsecured loan of ₹ 10.71 crore available with its interest free. Thus no disallowance at all can be attributed to the assessee on account of diversion of funds. Accordingly, this issue of Revenue’s appeal is dismissed. Addition of unexplained cash credit - Held that:- The name of the creditor was not reflected in the records of the Department data base. Accordingly, a letter under section 133(6) was issued by this office asking the company to conform whether it has given the loan to the appellant company. No reply to the enquiry letter was received in spite of a lapse of considerable time. It is to be noted that the letter was duly served at the given address. In view of these facts the appellant has not been able to give satisfactory evidence regarding the existence and creditworthiness of the creditor from home it has taken a loan of ₹ 56 Lacs. The addition made by the AO for this loan under section 68 is therefore, upheld. Disallowance of depreciation of car - Held that:- Car was purchased out of the funds of the assessee company and also used for the business purposes of the assessee company only. To prove this point assessee produced complete audit accounts and balance sheet for the year ended 31-03-2007. The assessee has disclosed this car in the business asset and claimed depreciation. We find in the exactly similar circumstanced coordinate Bench of this Tribunal in the case of Mehta Equities Ltd. v. The ACIT [2016 (11) TMI 358 - ITAT MUMBAI] for the assessment year 2010-11 vide order dated 21-09-2016 has allowed the claim of depreciation wherein the car was purchased in the name of one of the director of the assessee company
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2017 (7) TMI 101
Bogus purchases - GP determination - AO made the disallowance @18% whereas Ld. CIT(A) has reduced it to 12.5%. - Held that:- The assessee has been able to show that purchases made have been sold and sales have been accepted. But when the need arose for confirmation of the transaction, it is noted from the facts of this case that assessee was not able to confirm the transaction beyond doubt. Therefore, even if it is proved that purchases have been made, but the correctness of the amount at which these purchases have been shown is not fully substantiated. Taking all the rate of disallowance adopted by Ld.CIT(A) @12.5% should be reduced to 8%. The AO is directed to grant relief accordingly. We may clarify that this rate has been adopted after taking into account the peculiar facts and circumstances of this case and, therefore, should not be taken as a precedent in any other case as any yardstick. With these directions, appeal filed by the assessee is partly allowed.
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2017 (7) TMI 100
Registration u/s 12A cancelled - denying the exemption u/s 11 and u/s 12 - assessing the income under the normal provisions of Act - Held that:- As find from the copy of the assessment order for the assessment year 2013-14 dated 31.3.2016 that the department has duly allowed the exemption under section 11 and 12 of the Act to the assessee. Thus we are of the view that the deduction under section 11 and 12 of the Act cannot be denied to the assessee especially when the Registration granted by the Commissioner u/s 12A was allowed to be continued meaning thereby that the registration of the trust was continuing retrospectively. Moreover the Revenue itself accepted and allowed deduction u/s 11 and 12 of the Act in the assessment year 2013-14. In view of these facts and circumstances ground no.1 raised by the assessee is allowed.
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2017 (7) TMI 99
Sale of tractors - cash advances received towards purchase of tractors - Held that:- All the three purchasers of the tractors made deposits with the assessee for purchase of tractors which have been ultimately delivery to them against the sale bill and their names have been recorded in the registration certificate. The ld. CIT(Appeals) was, therefore, not justified in holding that tractors have not been supplied to these persons. There is no law to prohibit making cash sale. It is for the businessman to judge as to how he has to make the sales. Since tractors have been sold and supported by all the documents as well as registration certificates in the names of purchasers, it is difficult to believe that these were the ordinary cash credits/deposits with the assessee. The authorities below were, therefore, wholly unjustified in making the addition on this issue. - Decided in favour of assessee. Unexplained credit in the name of Shopneal, daughter of the assessee - Held that:- Assessee failed to establish credit worthiness of the creditor and genuineness of the transaction in the matter. The addition was rightly made by the authorities below. This ground of appeal of the assessee is dismissed. Low household withdrawal - Held that:- Household withdrawals shown by assessee in assessment year 2011 12 are on very lower side and assessee has not disclosed complete details of his household expenditure. Therefore, estimated addition is wholly justified. This ground of appeal of the assessee is dismissed.
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2017 (7) TMI 98
Levy of penalty under section 271(1)(c) - agricultural land purchase - Held that:- This matter was investigated by office of the Director of Income Tax (Investigation) Ludhiana and DDIT (Investigation) Ludhiana vide his report dated 27.08.2009 (PB-24) recommended for dropping of the proceedings because assessee was able to explain source of the money invested in purchase of the agricultural land which is the same explained by the assessee. Therefore, assessee is able to explain the addition of ₹ 14,77,000/- which in the opinion of authorities below, may not be acceptable but it proved that assessee explained this issue and explanation of the assessee appears to be bonafide. Addition on account of agriculture income, the authorities below did not accept contention of assessee regarding ₹ 7,20,000/- on account of agriculture income because agriculture income was not shown in the return of income. But the assessee, time and again explained that agricultural land was held by HUF of which assessee was also one of the co-parcener. The sale proceeds were credited in the account of the assessee. merely because assessee has not shown agriculture income for himself may not be relevant for the purpose of levying the penalty against the assessee. Assessee offered explanation on the additions which were not found to be false. The explanation of the assessee is substantiated through evidence and material on record and assessee is able to prove that his explanation was bonafide and all the facts relating to the same and material to the computation of his total income had been disclosed to the Revenue authorities. Mere making of a claim which is not sustainable in law by itself will not amount to furnishing inaccurate particulars regarding income of the assessee. - Decided in favour of assessee.
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2017 (7) TMI 97
Addition u/s 37 - non recoverable amount of security given for booking premium space for display of its various products - as per assessee due to non recoverability of the said security deposit, a business loss had accrued to the assessee which it had claimed as such by writing off the security deposit in the Profit & Loss Account - Held that:- We find that other than claiming the same to be a business loss no evidence of any sort has been produced by the Ld. counsel for the assessee before us or even before the lower authorities to prove its above contention. In the absence of any such evidence, the write off of security deposit in the Profit & Loss Account cannot be treated as a business loss and we are in complete agreement with the Ld. CIT (Appeals) in this regard.But in the interest of justice we consider it fair to grant the assessee another oppurtunity of proving its claim of incurring business loss by adducing evidences in this regard. - Decided in favour of assessee for statistical purposes. Addition u/s 36(1)(iii) - interest rate difference on advance without appreciating the fact that the advance was given to supplier in the ordinary course of business - Held that:- We find merit in the contention of Ld. counsel for the assessee. Undeniably, the own interest free funds of the assessee in the form of profits earned during the year being ₹ 2.02 crores were more than sufficient to make impugned advances of ₹ 80 lacs and, therefore, the presumption is that the advance has been made out of the own interest free funds and thus there was no occasion to make any disallowance on account of interest under section 36(1)(iii) of the Act as held by the Hon'ble Jurisdictional High Court in the case of Bright Enterprises (P) Ltd. (2015 (11) TMI 342 - PUNJAB & HARYANA HIGH COURT). In view of the same, disallowance made under section 36(1)(iii) of the Act is deleted. - Decided in favour of assessee
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Customs
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2017 (7) TMI 85
Penalty - misdeclaration of goods - the respondent while posted as Inspector at the Indira Gandhi International Airport, Delhi gave a false examination report in respect of Bill of Entry No. 724870 dated 21.12.1998 filed by M/s Intertrade Incorporated, Noida declaring the imported goods to be ‘Plastic Buttons’ valued at ₹ 56,531/- whereas on verification the packet was found to be intact and in its original packing. Goods on examination were found to be cellular phones along with batteries and chargers valued at ₹ 74,80,000/-. whether the respondent once having been acquitted of the charges under the Customs Act, 1962 can then be proceeded against in a departmental enquiry under the CCS (CCA) Rules on the same cause of action i.e. giving the false examination report allegedly entered by the respondent in respect to Bill of Entry No.724870 dated 21.12.1998 submitted by M/s Intertrade Incorporated, Noida? - Held that: - there is no bar in initiating disciplinary proceedings if the charged officer is acquitted of criminal proceedings arising out of the same cause of action. The result of one proceeding does not have a bearing on the other proceedings. The CESTAT might have found that the respondent did not collude with the importer and hence was not liable of a penalty under the Customs Act, 1962 but that does not mean that he is not guilty of misconduct, maintaining absolute integrity and devotion to duty as per Rule 14 of the CCS (CCA) Rules. Whether the non-supply of the original Bill of Entry did in fact violate the principles of natural justice and cause prejudice to the respondent? - Held that: - the Disciplinary Authority and the Appellate Authority did not find any prejudice to have been caused due to the non-supply of the original Bill of Entry. It is well settled law that the technical rules of evidence do not apply to a departmental enquiry and the doctrine of ‘proof beyond reasonable doubt’ has no relevance in a departmental enquiry. All that is needed to establish misconduct is preponderance of probability and some material on record to prove the same. In disciplinary proceedings, a Disciplinary Authority has to see whether after going through the material on record and evidence, a reasonable and prudent man would come to the conclusion that the delinquent officer had indeed committed an act of misconduct. ‘Preponderance of Probability’ is not burdened with the technicalities of the rules of evidence. If after going through the evidence the Disciplinary Authority finds the delinquent officer guilty of misconduct and the delinquent officer is not sufficiently able to rebut this finding, then the order of the Disciplinary Authority would be good in the eyes of law. The findings of the Disciplinary Authority were indeed based on evidence and material. No prejudice was shown because of the non-supply of the original Bill of Entry and circumstantial evidence found against the respondent was not rebutted by him. After applying the test of ‘preponderance of probability’ to the present case we find that the Disciplinary Authority was correct in reaching the conclusion that the respondent was guilty of misconduct - Petition allowed - decided in favor of petitioner.
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2017 (7) TMI 84
Re-assessment of Bills of Entry - Held that: - it is for the respondents, more particularly, the second respondent to consider the petitioner's claim for re-assessment and pass orders on merits and in accordance with law. This Court, at this stage, is not expressing any view on the claim made by the petitioner for re-assessment - this writ petition is disposed of, only with a direction to the second respondent to consider the said representation dated 12.06.2015 and pass orders on the same on merits and in accordance with law - decided in favor of petitioner.
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2017 (7) TMI 83
Release of seized goods - 'Men's shoes (unbranded) - it is contended that there is no impediment for the respondents to release the goods which are imported under the above said Bill of entry - Held that: - the first respondent is directed to consider the representation of the petitioner dated 30.05.2017 and pass appropriate orders on the same on merits and in accordance with law - decided in favor of petitioner.
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2017 (7) TMI 82
Return of confiscated goods - petitioner was being offered metal scrap rather than nickel-silver scrap, which were confiscated - Held that: - At the time of taking release of the materials the petitioner has found that the materials offered for release are not of nickel-silver scrap. They are justified in refusing to receive the materials which were sought to be tendered to the petitioner. The materials offered for release are not the same as those seized - According to the Customs Authorities, 51 lumps are of nickel-silver scrap. If that be so the petitioner is at liberty to receive the delivery of 51 lumps of nickel-silver scrap from the Customs Authorities - petition allowed - decided in favor of petitioner.
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2017 (7) TMI 81
Return of seized goods - difference in weight of goods confiscated and weight of goods returned - At the time of release, the Customs Authorities could make over 926.65 kgs/quintals instead of 1,000 kgs/quintals of the sugar to the petitioner - Held that: - The justification in short delivery is that the goods were kept at the godowns belonging to the petitioner in sealed condition and the when the seal was removed the balance was not found. In the facts of the present case, the justification sought to be canvassed on behalf of the BSF does not inspire confidence. The Customs Authorities had taken provision of 1000 kgs/quintals from the BSF. At no point of time did the Customs Authorities complain that 1000 kgs/quintals of sugar was not made over by the BSF - The Customs Authorities will, therefore, pay the petitioner the value of 73.35 kgs/quintals of sugar taking the same at ₹ 14/- per kg. Interest on account of encashment of bank guarantee - Held that: - The nature of transaction between the parties being commercial, it would be appropriate to direct the Customs Authorities to pay interest on the sum of ₹ 7,00,000/- for the period from April 5, 2008 till January 29, 2010 at the rate of 10% per annum. Petition allowed - decided in favor of petitioner.
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2017 (7) TMI 80
Valuation - misdeclaration of declared value - Finalisation of provisional assessment - jurisdiction - power of adjudicating authority - whether the adjudicating authority was a proper officer of customs? - Held that: - the impugned order refers to the pricelist as that of 2000 in some places and as of 2006 in others; it is, therefore, not clear whether the pricelist is contemporaneous or is of 2000. It would also certainly stretch the limits of reason to countenance what is referred to in the impugned order as 'practice of assessment followed by the department' for justifying resort to pricelist of 2000 - It would also appear that the impugned order has proceeded directly to rule 8 without sequentially applying the rules preceding it. It is also seen from the appeal before us that an agreement for a substantially large order had been contracted with the seller in Singapore who had entered into an agreement for supply by the manufacturer. The impugned order has failed to take notice of this agreement which must be considered relevant, in the absence of any contemporaneous imports, for determining the appropriateness of the declared value. The assessable value had not been mis-declared by the appellant - At the same time, the appellant has not been able to establish that the inconsistencies pointed out are borne out by facts and are not mere inferences. The existence of authenticated pricelist as well as contemporaneous imports with higher declared value cannot be ruled out. Revenue cannot be allowed to be jeopardised owing to less than diligent application of mind in adjudication. Sufficient evidence had been furnished to the appellant in the SCN as to justify the initiation of proceedings. Those proceedings must be brought to culmination by the competent authority after due consideration of the show cause notice the various evidences adduced therein and those produced by the noticee. It would, therefore, be appropriate that this exercise be undertaken with promptitude - appeal allowed by way of remand.
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2017 (7) TMI 79
Valuation - rejection of declared value - the adjudicating authority has placed reliance on import data instead of ascertaining the price of contemporaneous imports - Held that: - the impugned order has not given a fair consideration to the issues raised on behalf of the appellant. Consequently, the impugned order lacks credibility - This needs to be remedied for which purpose we set aside the impugned order and remand the matter back to the original authority to hear the matter afresh - appeal allowed by way of remand.
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2017 (7) TMI 78
Valuation - opportunity of cross-examination - Held that: - Appellant did not dispute any of the finding of adjudicating authority. They only challenge that market enquiry report was not confronted and cross-examination was not allowed - For hearing the prayer of the appellant that cross-examination may reveal otherwise, and also market enquiry report may be confronted, only to this extent, the appeal is remanded to grant fair opportunity of hearing to the appellant only on such count - Appeal allowed by way of remand.
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2017 (7) TMI 77
Confiscation - betel nuts - evidence - Revenue stated that M/s.DCF Ltd.(Noticee No.7) failed to produce any documentary evidence of receipt and storage of the goods - Held that: - there is no material on record of the involvement of the respondents herein. In any event, the respondents are under the Ministry of Consumer Affairs, Govt. of India and therefore it is required to establish direct evidence to involve the respondents in the alleged offence. Revenue failed to produce any such materials in their grounds of appeal - appeal dismissed - decided against Revenue.
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2017 (7) TMI 76
Unjust enrichment - refund claim - Held that: - in support of the refund claim appellant has filed all the documents and also filed a certificate of the CA who has certified that the lamps were recorded in the fixed asset register and fixed in the operation theatre and the same are being used for surgical procedure and not sold. In fact both the authorities have not considered the certificate issued by the CA and have ignored the same by holding that it does not conclusively prove that the incidence of duty had not been passed on to the ultimate consumer - on an identical issue, the Hon'ble High Court of Madras in the case of CC, Chennai Vs. Venkataeswara Hospitals [2009 (4) TMI 925 - MADRAS HIGH COURT] has held that bar of unjust enrichment not applicable to imported capital goods used captively by the importer - refund cannot be denied. Interest - Held that: - the appellant is entitled to interest as laid down in Section 27A in accordance with the rates fixed by the Central Government's notification. Appeal allowed - decided in favor of appellant.
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Insolvency & Bankruptcy
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2017 (7) TMI 74
Application under Section 61 of Insolvency & Bankruptcy Code, 2016 - Held that:- Showing an incorrect claim, moving the application in a hasty manner and obtaining an ex-parte order from the 'adjudicating authority' which admitted such an incorrect claim, the Financial Creditor cannot disprove its malafide intention by stating that the claim submitted is correct amount. The I&B Code does not provide for any such mechanism where post-admission, the applicant financial creditor can modify their claim amount. In some of the cases, an insolvency resolution process can and may have adverse consequences on the welfare of the company. This makes it imperative for the 'adjudicating authority' to adopt a cautious approach in admitting insolvency applications and also ensuring adherence to the principles of natural justice. Admittedly the impugned order is ex-facie illegal and ought to be set aside by the Appellate Tribunal. For the reasons aforesaid, we set aside the ex-parte impugned order dated 17th February 2017 passed by 'adjudicating authority', Mumbai Bench and allow the appeal. In effect the appointment of Interim Resolution Professional, order declaring moratorium, freezing of account and all other order passed by 'adjudicating authority' pursuant to impugned order and action taken by the Interim Resolution Professional, including the advertisement published in the newspaper calling for applications are declared illegal. The 'adjudicating authority' is directed to close the proceeding. The appellant company is released from the rigour of law and allow the appellant company to function independently through its Board of Directors from immediate effect.
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FEMA
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2017 (7) TMI 73
Detention orders - Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (in short “COFEPOSA Act”) against the husband of the petitioner - Held that:- We have discussed the role and position of the detenue in the smuggling ring. The detenue was not a mere carrier and was in-charge of the Delhi operations of the racket as the kingpin Sh.Narendra Kumar Jain was based in Guwahati. It is clear that the activities of the detenue were of a serious nature and perpetrated with a great deal of expertise and coordination. The activities were of a massive scale and had been continuing for about two years. This had led to the detaining authority satisfying itself about the propensity and potentiality of the detenue to further indulge in such activities. Hence, it is clear that the ordinary law of the land was insufficient to curtail the activities of the detenue and the resort to the law of preventive detention was justified.
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Service Tax
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2017 (7) TMI 96
Refund claim - denial on the ground that the appellant has not followed the procedure as provided under Rule 5 of the Export of Services Rules, 2005 and N/N. 11/2005-ST issued thereunder, inasmuch as they filed refund claim in Form-R whereas as per N/N. 11/2005-ST, they were supposed to file the refund/rebate claim in Form ASTR-1 - Held that: - the claim by the appellant as a refund in Form-R is only a technical and procedural breach. For such breach, refund cannot be outrightly rejected - The sanctioning authority can very well treat the refund under N/N. 11/2005-ST and Export of Services Rules, 2005 and should have processed the same under the said provisions - Both the authorities have also not considered the fact that the appellant has charged service tax to their foreign service recipient - appeal allowed by way of remand.
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2017 (7) TMI 95
Business Auxiliary service - consideration as brokerage from the borrowers of the loan amount - Held that: - no consideration is paid by the money lender - there is no allegation to the effect that the appellants promoted the product or services of borrowers of loan amount, which can be brought under the scope of business auxiliary service in terms of Section 65 (19) of the Finance Act, 1994 - similar set of facts came up for consideration by the Tribunal in Fulchand Tikamchand Vs. CCE & C, Nagpur [2016 (2) TMI 772 - CESTAT MUMBAI], where it was held that In view of an equation that is devoid of an agency relationship with the financier and rules out the provision of a service on behalf of the borrower from whom the appellant receives consideration, the activities of the appellant are outside the ambit of “business auxiliary service” - appellant are not liable to service tax - appeal allowed - decided in favor of appellant.
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Central Excise
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2017 (7) TMI 94
MODVAT credit - wrong availment of credit - tin plates having thickness of more than 0.26 mm - it is the case of petitioner that in the absence of any independent finding that these inputs were found to be of thickness exceeding 0.24 mm., the demand made in respect of this amount is not sustainable - Held that: - As per Rule 173G, it was incumbent on the part of respondent no.1 to maintain accounts of production, manufacture, storage, delivery or disposal of goods including the material received for or consumed in the manufacture of excisable or other goods. The purpose of maintaining the accounts of raw material was obviously for checking of evasion of excise duty. Respondent no.1 was required to follow the procedure prescribed in the Rule for maintaining the accounts. The thickness of the tin plates seems to have been deliberately kept ambiguous in Anx.'B2'. However, from Column No.5 of Anx.B2', it is clear that the tin plates having thickness ranging from 0.30 mm. to 0.49 mm. also were purchased by respondent no.1. It was, therefore, necessary for respondent no.1 to specifically classify and state the quantity of the tin plates, which were having thickness below 0.24 mm. as well as above 0.24 mm. The petitioner has rightly held that respondent no.1 has deliberately suppressed the said information. If that be so, respondent no.1 cannot be allowed to take benefit of its own wrong and it will have to be held that the tin plates described in Anx.'B2' were of thickness above 0.24 mm. and were not used by respondent no.1 for manufacturing oval tin cans. Penalty - Rule 173Q of the Rules - Held that: - respondent no.1 has obtained MODVAT credit wrongly in the sum of ₹ 14,50,994/plus ₹ 23,87,575/having total of ₹ 38,38,569/. Consequently, in view of this Rule, respondent no.1 was liable to pay penalty as contemplated under this Rule. Petition allowed - decided partly in favor of petitioner.
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2017 (7) TMI 93
SSI exemption - use of brand name - The Assessee's claim is that, since, its clearances were, always, below the sum of ₹ 30.00 lakhs, there is no need to register itself with the Central Excise Authorities - Whether the Tribunal is correct in dismissing the cross-objection filed by the appellant raising the question of limitation for the Revenue to make a demand? - Held that: - the limit of exempted clearances, increased, in this period, from ₹ 30.00 lakhs to ₹ 50.00 lakhs. The Assessee, therefore, in our view, was entitled to contend that there was no occasion, for it, to disclose the fact that the subject goods were being cleared under the brand name "Micro", (which was also the brand name used by another family/sister concern), since, it had no occasion to file a classification list. Suppression of facts - there was a non-disclosure of information by the Assessee. The Assessee has taken a stand that, since, it was always below the monetary limit fixed for clearances qua SSI Units, it never had an occasion to make any disclosure via a classification list - Held that: - this cannot be construed as suppression of fact, within the meaning of Section 11A(1) of the 1944 Act. Mere non-disclosure of facts, in such like circumstances, cannot constitute suppression of facts. Given the way the Section is framed, the expression "suppression of fact", appears in the company of words and expressions, such as, fraud, collusion, wilful misstatement. Therefore, the expression "suppression of facts", has to take colour from the words whose company, it appears in. A mere non-disclosure of information, when there is no obligation in law to furnish the same, will not amount to, in our opinion, fraud or collusion or even, wilful misstatement and, hence, trigger the extended period of limitation. The Tribunal, in our opinion, wrongly rejected the cross objections filed by the Assessee on the issue of limitation. Since, the extended period of limitation is not applicable, the Revenue would also not be entitled to levy penalty under Section 11AC of the 1944 Act, save and except, demand duty, for a period of of six (6) months, prior to the date of SCN. Appeal allowed - decided in favor of assessee.
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2017 (7) TMI 92
Penalty u/r 96-ZO of the Central Excise Rules, 1944 - Whether the tribunal in reducing the penalty amount is justified in maintaining the penalty of ₹ 1,00,000/- in exercise of power under Rule 96-ZO of the Central Excise Rules, 1994? - Held that: - Rule 96-ZO of the Rules provides for imposing of penalty equal to the outstanding amount of duty or ₹ 5,000/- whichever is greater. The aforesaid rule has been declared to be ultra vires insofar as it postulates to impose penalty equal to the amount outstanding vide Shree Bhagwati Steel Rolling Mills vs. Commissioner of Central Excise [2015 (11) TMI 1172 - SUPREME COURT] - In view of the fact that the upper limit of imposing penalty equal to the amount outstanding has been declared to be ultra vires, a penalty of minimum of ₹ 5000/- or some reasonable higher amount alone can be imposed. The reduction of penalty even to Rs.One lac is unjustified more particularly as there is no material or basis to justify imposition of Rs.One lac as penalty - penalty is liable to be reduced to ₹ 5,000/- - appeal allowed - decided in favor of appellant.
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2017 (7) TMI 91
CENVAT credit - job-work - capital goods transferred to job-worker's premises - whether the CENVAT credit availed on the capital goods sent to their sister unit for job work and not received back within 180 days from the date of removal is recoverable or otherwise? - Rule 4(5)(a) of CCR - Held that: - Rule 4(5)(a) makes it crystal clear that the capital goods removed from the appellant's factory should be received back within 180 days and if not received, the appellant is required to reverse the credit availed on such capital goods. The said Rule also provides to take re-credit on the capital goods when received after 180 days from the initial date of removal - In the present case, even though the capital goods were cleared earlier but no evidence has been adduced by the appellant that the same were received within 180 days or thereafter. In these circumstances, the confirmation of demand is sustainable - penalty under Rule 15(2) of CENVAT Credit Rules, 2004 read with Section 11AC of CEA, 1944 cannot be sustained, as it is a revenue neutral situation - appeal allowed - decided partly in favor of appellant.
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2017 (7) TMI 90
CENVAT credit - duty paying invoices - attested copy of bill of entry - Held that: - after the assessee lost the relevant copy of bill of entry for necessary for availing CENVAT credit, they obtained attested copy of bill of entry from the Customs authority. I find that there is no dispute on the issue of receipt of the goods mentioned under said bill of entry in the factory of the assessee and also its use - credit availed on the duty paid as mentioned in the attested copy of Bill of Entry is admissible to them. Reliance was placed in the case of COMMISSIONER OF C. EX. & CUS., VADODARA-II Versus STEELCO GUJARAT LTD. [2010 (2) TMI 307 - GUJARAT HIGH COURT], where it was held that mere zerox copy by itself should not be made the basis of allowing the credit but where the assessee has made efforts to get the said xerox copy attested by the Range Superintendent of the supplier's end and has established beyond doubt that the duty stands paid on the goods and the goods stand received by him, denial of credit on this procedural irregularity would not be justified. The copy of the report be handed over to the assessee-appellant for providing an opportunity to rebut the observations in the said report - appeal allowed by way of remand.
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2017 (7) TMI 89
Abatement - closure of factory - whether for allowing the abatement under Rule 10 of Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010, the closure of the factory should be in a particular month or if 15 days spill over to the next month, the abatement is available to the assessee or not? - Held that: - Rule 10 of the Rules, 2010 states that it provides the abatement if the production is closed for continuous period of 15 days. In the present case, the factory was closed from 21.01.2011 to 04.02.2011 i.e. for 15 days. In Rule 10, there is no mention that the 15 days closure should be in a particular month. In the absence of such a mention, the revenue cannot import any extraneous words in the rule and interpret that the closure should be in a particular month. The only requirement is the closure should be for a continuous period of 15 days, whether it spills over in the next month or in a particular month. Appeal dismissed - decided against Revenue.
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2017 (7) TMI 88
MODVAT credit - Rule 57(1) of erstwhile CCR - Investigations were carried out in the factory premises of the suppliers and it was detected by the Central Excise officers that those suppliers did not have the manufacturing facilities for the last two years - Held that: - the fact of issuance of gate passes by the suppliers and receipt of the same by the appellant were known to the department during the relevant period - the SCN was issued after a lapse of almost three years from the relevant date, is barred by limitation - appeal allowed - decided in favor of appellant.
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2017 (7) TMI 87
Clandestine removal - DMT Melter Heat Exchanger - Sub Rule (5) of Rule 3 of CCR, 2004 - Held that: - it is not a case that the appellant had suppressed the fact regarding removal of capital goods, with the intention to evade payment of Central Excise Duty. Since, as a registered assessee, the appellant has complied with the requirement of the Central Excise statute on removal of used capital goods from the factory, the charges of suppression, misstatement etc. cannot be alleged, justifying invocation of the extended period of limitation, for issuance of SCN - demand barred by time limitation - appeal allowed - decided in favor of appellant.
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2017 (7) TMI 86
CENVAT credit - M.S. Channels, beams, joys, round, sheets, angles, plates, rails, sheets, squares and coils etc. - denial on the ground that the same are not confirming to the definition of either inputs or capital goods, as defined in the CCR, 2004 - Held that: - the Commissioner (Appeals) has acknowledged receipt of the Chartered Engineer’s Certificate produced by the appellant. However, the contents of the Certificate regarding use of the disputed goods for fabrication/manufacture of the capital goods and their components, described therein were not considered while passing the impugned order - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (7) TMI 75
Termination of services of respondent - The appointment order clearly recited that in case the respondent fails to clear the departmental examination within a period of three years and within three chances, his services would be terminated without any prior notice - interpretation of statute - The respondent was appointed in the year 1997 and by the appointment order itself it was made clear that the respondent would be removed from services, if he does not pass the departmental examination in three attempts and within three years. As per the relevant Rules of the year 1972 an employee was entitled to an additional chance, i.e., a fourth chance only at the discretion of the concerned authority. The departmental examinations are liable to be conducted every year. Since the respondent was appointed in February, 1997, the respondent was liable to take an attempt at the examination scheduled in December 1997, 1998 and 1999 and was required to pass in the examination in at least three attempts. The examination for the year 1997, i.e., the first year, was conducted in June, 1998. Held that: - It would be ridiculous to hold that an employee who had to join the training in December, 1998 could not have appeared at the examination held in June, 1998. If the examination was held more than six months before the respondent was sent for training, it is difficult to gauge as to how the respondent could not have appeared at the examination due to the training. In any case, such is not the stand of the respondent in the original application as in the original application the respondent has stated that he did not appear at the examination for the year 1997 as he had no notice about the said examination. Even assuming that the respondent was sent for training at the same time, which is not the case here, the petitioners cannot be blamed as the respondent had not applied for the examination at all though as per the detailed instructions of the Additional Sales Tax Commissioner issued on 9.12.1997 and 31.3.1998, the employees were duly informed about the consequences of their failure to appear at the examination. Despite the issuance of the two Circulars by the concerned authority, the respondent failed to appear at the examination and hence it was held that the respondent had lost the first chance. Since thereafter the respondent had taken up three chances and failed in the examination, it cannot be said that the petitioners had committed any error whatsoever in removing the respondent from the services. Petition allowed - decided in favor of Revenue.
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