TMI Tax Updates - e-Newsletter
August 16, 2013
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Highlights / Catch Notes
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Income Tax:
Disallowance u/s 14A r.w.r 8D - Dividend income - The language of r. 8D(2)(ii) itself provides the mandate inasmuch as it prescribes or authorizes a disallowance only qua investment, income from which is not taxable, so that in limiting the amount worked out with reference to the total investment; the same also yielding taxable income - AT
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Income Tax:
Special Audit of the Trust under section 142(2A) of the Income Tax Act, 1961 - AO has properly exercised its jurisdiction to order a special audit after obtaining the approval of the Chief Commissioner for the same. - HC
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Income Tax:
Addition u/s. 40A(2)(b) of the Income Tax Act purely on the ground that the assessee has increased remuneration to its Directors - Remuneration of Rs.30,00,000/- considered as taxable under the abovementioned section 40A(2)(b) - Deduction allowed - AT
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Income Tax:
Validity of assessment orders - Assessment orders server after expiry of period of limitation - the assessment orders in these cases though made on December 31, 2009, those were served on the assessee on May 10, 2010, i.e., after 130 days from the date of order - assessments are barred by limitation and non est and ineffective - AT
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Income Tax:
Deemed dividend u/s 2(22)(e) - assessee-firm is holding less than 10 percent of shareholding, irrespective of the fact that the shareholding of the firm to whom advance had been made and the partners of the said firm have shareholding more than 10 percent of the said concern, which had advanced the amount - No Deemed dividend - AT
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Income Tax:
Exemption u/s 11 - it is apparent that the assessee’s funds have not been parted away as the FDRs were lying intact in the bank, the assessee has received interest thereon and got the maturity proceeds in the next year - therefore, assessee is eligible for exemption u/s 11 of the Act - AT
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Customs:
Smuggling of goods - Cut & polished diamonds and Gold jewellery recovered from the baggage/person - Accounting procedures – No evidence had been brought on record by the department which establish that the assessee was involved in the activity of illegal import or smuggling of diamonds - AT
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Customs:
Refund of duty - benefit of refund of the said SAD as per Notification No.102/2007-Cus cannot be denied to them only on the ground that movement of goods is from SEZ and it cannot be construed as import of goods - AT
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FEMA:
Violation of FEMA - Imposition of Penalty - Definition of Person u/s 2(u) - BCCI as well as Governing Council for IPL were persons within the definition of Section 2(u) of the Act - HC
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Corporate Law:
Petition for winding up - The e-mails exchanged between the parties would foreclose the scope of the company to dispute any part of the claim. - Subsequent plea on damage could not be said to be a bona fide one. - HC
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Service Tax:
Ad-hoc Exemption order No.1/1/2010-ST - Service recipient when liable to pay service tax u/s 66A shall be considered as the service provider should apply in terms to the ad-hoc exemption order as well - AT
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Service Tax:
Assessee were rendering a service to the shipping lines and the consideration was received by them by way of mark-up in prices -services rendered by the assesse merits classification under Business Auxiliary Service - AT
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Service Tax:
Authorised Dealer of Foreign Exchange u/s 65 (105) (zm) - Section 65 (105) (12)(a) as also section 65 (12) (a)(ix) specifies services using the expression ‘services namely’ - Such language gives very little scope for an expansive construction of the items enumerated - Commercially bank guarantee and Corporate guarantee were two different financial instruments - AT
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Service Tax:
Business Auxiliary Service, Business Support Service, Cargo Handling Service and Transport of Goods by Road Service – Freight charges towards ocean freight and air freight cannot be included in the value of Business Support Service - AT
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Service Tax:
Levy of service tax on charges collected on dishonoring of cheques - Service being intangible, arguments are raised based on Rule 5 of Service Tax (Determination of Value) Rules, 2006 etc. But the situation is essentially the same as in the case of removal of inputs without reversal of credit taken and prima facie cannot be approved of and full recovery of such amount may be prima facie justifiable - AT
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Central Excise:
Levy of Textile Cess - The textile manufactured out from hand-loom and power-loom industry had been exempted under section 5A, obviously no inspection in respect of textile manufactured by such industry was required and therefore, it was reasonable to conclude that the activity undertaken by an extended hand of these manufacturers will also be not liable to pay the impost of cess - HC
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Central Excise:
There is no difference between the expression credit taken and the credit utilised for the purpose of recovery of wrongly availed credit Rule 14 of Cenvat Credit Rules, and if any credit has been taken wrongly, even though not availed, interest liability would accrue – Interest payable on the wrong availment of Cenvat Credit - AT
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Central Excise:
Manufacture of Jewellary - Exemption - Affixing brand name on Jewellary - Pre-deposit – Stay application - Notification No.5/2006-CE, dated 01.03.2006 stipulates the payment of duty on articles of jewellery on which brand name or trade name is indelibly affixed or embossed on the articles of jewellery itself - Applicant directed to deposit Rs.7 crores - AT
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Central Excise:
Clandestine removal – Merely because in the statement, the Commercial Manager of the petitioners has stated that the goods were manufactured that by itself cannot be a ground for holding that the goods were ready for despatch to the customer - AT
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Central Excise:
Once the officers have audited the records they were supposed to examine each and every issue in respect of appellants for the audit period – Extended period as provided under Section 11A of the Central Excise Act will not be applicable in the present case. - AT
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2013 (8) TMI 457
Disallowance u/s 14A r.w.r 8D - Dividend income - investment in shares - In the instant case, shares, which yield the tax exempt dividend income, interest qua which is to be disallowed, being held as stock-in-trade, also yield share trading income, which is taxable – Held that:- The exempt income falls under Chapter III, which precedes Chapter IV, providing for the heads of income, which is only toward classifying the income forming part of the total income under different heads of income for the purpose of computing the same. The exempt income, on the other hand, does not enter the computation process and, accordingly, does not fall under, nor is required to be allocated to, any specific head of income. That is, the dividend income may well have been in law, in some circumstances, assessable as business income, to no effect or consequence. Likewise, the expenditure to be disallowed could fall under any of the sections, i.e., from section 15 to section 59. The disallowance of expenditure is governed completely by section 14A, which is a separate and complete code in itself, and as long as its ingredients are satisfied, a disallowance in its terms would follow. Expenses are incurred during and in the regular course of business, and with a view to earn income. No direct relationship or correspondence therewith, particularly for costs other than direct costs, on account of a variety of factors, hold. A proximate relationship though exists. Even for direct expenditure, the relationship (with income) cannot be said to be linear, though we are primarily here concerned with allocation of indirect expenditure. All such expenditure is deductible and, therefore, would be required to be apportioned between the taxable and non-taxable incomes where the business generates more than one income stream, at least one of which is not taxable. Clearly, the direct expenditure would stand to be set off against the relevant income/s and the apportionment, in substance, comes into play only for the indirect expenditure. Apportionment of expenses - Rule 8D - Held that:- There could be no quarrel with regard to the allocation of direct expenditure, which in fact states the obvious, and would in any case warrant a disallowance, i.e., even in the absence of the rule. No disallowance thereunder, in any case, has been made by the AO in the instant case. To say that the entire interest relatable to the average share holding is to be attributed to the tax exempt dividend income would be patently incorrect on facts - Shares are bought and held primarily for share trading income, further accentuates the apparent incongruity of the situation arising on the mechanical application of r. 8D(2)(ii). Clearly, therefore, the amount as per r. 8D(2)(ii) would need to be scaled down, bifurcating the expenditure so arrived at between these two incomes - Considering that the dominant objective of the share holding, which in our view should be dispositive of the matter, is the share trading income, we propose a ratio of 20% toward the tax-exempt dividend income - As regards the ratio of such scaling down, no hard and fast rule for the purpose would hold, each fact situation being different - Already explained that an indirect expenditure, including by way of interest, has no direct relation with the income, much less its quantum, allocating it on the basis of the income generated or arising would not be appropriate, and neither does rule 8D support the same - Accordingly, in arriving at the disallowance u/r. 8D, the amount as per r. 8D(2)(ii) qua shares held as stock-in-trade would stand to be restricted to 20% thereof. The language of r. 8D(2)(ii) itself provides the mandate inasmuch as it prescribes or authorizes a disallowance only qua investment, income from which is not taxable, so that in limiting the amount worked out with reference to the total investment; the same also yielding taxable income - The disallowance by the Revenue, per r. 8D, works to ₹ 140.69 lacs, a part of which would, as indicated above, stand to be deleted and the balance confirmed - Decided partly in favor of assessee.
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2013 (8) TMI 448
Special Audit of the Trust under section 142(2A) of the Income Tax Act, 1961 - complexity of the accounts – Held that:- Assessing Officer in his reply affidavit dated 19 June 2013 has in terms denied the assertion of the Petitioner that the books of accounts were not examined and/or verified by him. - Further in the affidavit it is stated that while verifying books of accounts the Assessing Officer came to the conclusion that the audit report and the books of accounts submitted by assessee were faulty and unreliable as auditor had not reported related party transactions - At no stage prior to the filing of this petition, has the petitioner taken up the plea that the Assessing Officer had not examined the books of accounts of the petitioner. In fact, even at the hearing before the Commissioner of Income Tax for purposes of considering grant to approval to carry out Special Audit, the petitioner's only submission as recorded in the approval letter dated 25 March 2013 was only that the accounts are not complex. There is not even a suggestion about the Assessing Officer concluding about the complexity of the accounts without having verified/examined the same - Condition precedent for exercising powers under Section 142(2A) of the said Act, viz: nature and complexity of accounts of the assessee have been satisfied. Reliance is placed upon the decision in the case of Joint Commissioner of Income tax v/s. I.T.C. Ltd., [1999 (7) TMI 68 - CALCUTTA High Court], wherein it was held that it is not possible for an Assessing Officer to look into the accounts and to verify whether each of the entries in the accounts reflects genuine transactions if the transactions are large in number. Therefore, in such a case, looking at large number of the transactions, the Assessing Officer can ask for the approval for the appointment of special auditor - In the present facts also, the transactions are large in number as it cover 10 entities and having turnover of Rs.100 Crores. Thus, the appointment of Special Auditor in terms of Section 142 (2A) of the Act cannot be found fault with – Decided against the Assessee. Effect of amendment to section 142(2A) vide Finance Act, 2013 - Petitioner relied upon the above provisions to contend that prior to 1 June 2013, the volume of accounts and/or doubts about correctness of accounts would not warrant a special audit. - Held that:- In any event, we need not examine the same as we are of the view that even under the unamended provision of Section 142 (2A) of the said Act, the Assessing Officer has properly exercised its jurisdiction to order a special audit after obtaining the approval of the Chief Commissioner for the same. - Decided against the assessee.
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2013 (8) TMI 447
Addition u/s. 40A(2)(b) of the Income Tax Act purely on the ground that the assessee has increased remuneration to its Directors - Remuneration of Rs.30,00,000/- considered as taxable under the abovementioned section 40A(2)(b) – It is submitted that It is an established fact that if working Directors are paid handsomely then only the company will earn more profit. - Held that:- Hon'ble Bombay High Court in case of CIT vs. Indo Saudi Services (Travel)(P.) Ltd. (2008 (8) TMI 208 - BOMBAY HIGH COURT) held that Revenue was not in a position to point out how the assessee evaded payment of tax by alleged payment of higher commission to sister concern since the sister concern was also paying tax at higher rate and held that disallowance of alleged excess commission paid to the sister concern was not justified. - Claim of deduction allowed - Decided in favor of assessee.
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2013 (8) TMI 446
Term ‘make available’ in DTAA - 'Fees for Technical Service' is a consideration received in the hands of the recipient, provided, those technical knowledge or know-how etc – Held that:- 'Make available' means to allow somebody to make use of the know- how or knowledge. This has been further expanded that 'make available' means that the person receiving the services has been enabled to utilise that knowledge or the receiver has become wiser to utilise that knowledge independently – Relying upon the various judgments, mere rendering of services is not enough unless the person utilising the knowledge is able to make use of that technical knowledge by himself for his own benefit independently i.e without the guidance of the said service provider. The term of the agreement is for period of 10 years - In this long period that knowledge shall become part of the system and the persons using that knowledge may themselves become expert. So the technical persons using that knowledge are required to be interrogated - All these questions can only be answered by a thorough investigation at the level of the assessment. The A.O. shall therefore examine the bills and vouchers prepared by the assessee in support of the claim of expenditure to ascertain the nature of services rendered and then find out that whether could have been made available for the business purpose of those parties. Taxing the reimbursement of expenses as 'Fees for technical services' under Article 12 of the India-Netherlands Tax Treaty – Held that:- In the written submission, the learned A.R., MR. Dhinal Shah has submitted that the appellant has received ₹ 95,10,671/- as reimbursement of expenditure from SHGPL in the course of rendering services. The assessee has, therefore, required to establish that those expenditures were first incurred out of pocket expenses then only the question of reimbursement can be decided. The assessee is, therefore, required to furnish the details of the bills through which the reimbursement was claimed since all those facts were not earlier examined by the Revenue Authorities, therefore, the natural justice demands to restore this issue back to the stage of the AO to be decided de novo as per law. Higher of the amounts mentioned in the transfer pricing certificate – Held that:- Information was gathered by AO under Section 133(6) from all those parties and thereafter arrived at a figure - If there was a difference due to foreign exchange fluctuation, the same is a matter of simple rectification. Since, no legal issue has been raised through this ground, therefore, no force is found in this ground of the assessee - Decided against the Assessee.
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2013 (8) TMI 445
Non Deduction of TDS - Nature of payment - Head Office expenditure or Royalty – Held that:- Action of the revenue authorities on treating the amount being in the nature of royalty and hence not allowable under section 40(a)(i) cannot be allowed - By no standard this amount can be considered as royalty as a consideration for the use of the assets specified under Explanation 2 to section 9(1)(vi). This amount is in the nature of head office expenses - It would be in the interest of justice if the impugned order on this issue is set aside and the matter is restored to the file of the AO – direction is given to the AO to consider the deductibility or otherwise of such amount by treating it as head office expenses. Invocation of Section 14A read with exemption under section 10(15) and (33) – Held that:- After noticing that the funds for investment in securities fetching exempt income were out of own funds, it has been held that no disallowance under section 14A on account of interest is called for. As regards the amount of other expenses disallowable, tribunal has upheld disallowance @ 2% of exempt income. Rate of Tax - Article 26 of the DTAA with France - claim of the assessee that tax to imposed as per rate of tax applicable to Indian Banks - Permanent establishment (PE) - Held that:- CIT(A) has sustained the order of the AO by applying rate of tax @ 48%, instead of 35% as asked for by the assessee. Now that the assessee has accepted that the coordinate Bench of Kolkata has dealt with the issue and for the reasons mentioned therein, the AR accepts the rate as applied by the AO. - Decided against the assessee. Allowance of broken period interest as expenditure – Held that:- Similar issue was there in the appeal for the immediately preceding year and the Tribunal, following its decision for assessment year 1991-92, has decided this issue against the Revenue. In view of the fact that the facts and circumstances for the previous year relevant to the assessment year under consideration are similar and no distinguishing feature has been brought to our notice by the learned Departmental Representative, respectfully following the precedent, impugned order on this issue is upheld, by directing that the interest paid in respect of the broken period be set off against the interest received in respect of the broken period. Income tax chargeability on writing off provision of of bad debts - section 41(1) – Held that:- When the provisions for doubtful debts were added back in the computation of income in the respective years, there is no question of taxing them again in the year when they are written back.
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2013 (8) TMI 444
Partial deletion of trading addition - A.O. made trading addition by applying higher profit rate after rejection of books of accounts - CIT partially deleted addition and sustained partial addition by applying other profit rate - Held that:- CIT(A) on the one hand accepted the net profit rate declared by the assessee and on the other hand sustained ad hoc addition without pointing out any specific leakage or shortcomings in the net profit - addition sustained by learned CIT(A) was not justified particularly when he was of the confirmed view that when the assessee had shown better results in the current year, the other related omissions/shortcomings towards books of account became insignificant and redundant, therefore, no trading addition could have been made in such a situation - Decided against Revenue.
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2013 (8) TMI 443
Fees for technical services - Fees received for consulting and engineering services - Article 12 - DTAA with USA - Held that:- Technical services provided by the assessee in the shape of technical plans, designs, projects, etc. are nothing but blueprints of the technical side of mega power projects. Admittedly such services are rendered at a pre-bid stage. It is quite natural that such technical plans etc. are meant for use in future alone if and when L&T takes up the bid for the installation of the power project. When the otherwise technical services provided by the assessee are of such a nature which are capable of use in future alone - there is no infirmity in the impugned order holding that the assessee received consideration for making available technical services within the meaning of Article 12 of the DTAA. - Decided against assessee. Interest u/s 234B - Held that:- assessee is tax resident of USA. Its entire income is liable for deduction of tax at source in India. In that view of the matter, it is obvious that there can be no chargeability of interest u/s 234B of the Act - Following decision of D.I (International Taxation) VS. NGC Network Asia Ltd [2009 (1) TMI 174 - BOMBAY HIGH COURT] - Decided against assessee.
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2013 (8) TMI 442
Determination of the Arm's length price - TPO made addition on account of difference of Arm's length price - Held that:- The adjustment, if any, should be limited to the AE transactions - even applying the mean margin taken by TPO, the difference in the ALP would be much less than 5% of the AE transactions - Decided in favour of assessee. Disallowance under section 43B - Held that:- disallowance under section 43B cannot be made even in respect of employees contribution if the same is paid before due date of filing the return - no part of Provident Fund can be disallowed whether it relates to employees contribution or employers contribution, if the payment is made before due date of filing the return. Here it is the case of the assessee that all the payments have been made before the due date of filing the return. To verify such contention of the assessee the matter is restored back to the file of AO with a direction that if the payments are made before due date of filing the return no disallowance should be made - Decided in favour of assessee.
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2013 (8) TMI 441
Deduction u/s 37 - Provision for PACS Managers’ salary - Allowability of contribution by the Apex Bank for PAC Mangers salary is a statutory liability which is crystallized at the end of every year. The contribution however, once made become at the disposal of Registrar of Cooperative Society which is payable as and when demanded by the Registrar Cooperative Society along with interest on it. Thus, it is not contingent liability but a statutory liability which is crystallized at the end of every year and hence the liability is allowable - amount is to be contributed to a fund and the fund is not being managed by the assessee. The assessee may be trustee of that fund but it cannot apply the fund as per his own will. The interest, if any, earned on this fund is also to be credited to that fund, it is therefore, clear that funds stand diverted at the source and therefore, this cannot be considered as an appropriation of income but it is an expenditure - Following decision of Sri Venkata Satyanarayana Rice Mill Contractors Co. vs. CIT [1996 (10) TMI 2 - SUPREME Court] - Decided against Revenue.
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2013 (8) TMI 440
Disallowance u/s 14A - Expenses incurred for earning exempt income - CIT granted partial relief - Held that:- The appellant had sufficient own funds and internal accruals to meet its investments. The share capital was ₹ 2,55,04,750/- and the set apart as prepaid costs and could not be allowed as expenditure for the year. He arrived the value of such prepaid cost at ₹ 4,93,170/- and disallowance the same as it was not incurred wholly and exclusively in respect of the business carried on during the year. He also stated that the addition was agreed to by the authorized representative of the assessee - Decided against assessee. Disallowance of repairs and replacements - CIT allowed deduction u/s 37(1) - Held that:- repairing and replacing the existing components of portion of the buildings, furniture and buildings cannot at all be stated to be of enduring nature but such expenditure would fall in the category of revenue expenditure allowable as deduction under sec.37 of the I.T. Act - Following decision of CIT v. Ooty Dasaprakash [1998 (2) TMI 77 - MADRAS High Court] - Decided in favour of assessee. Disallowance of annual maintenance charges - Revenue or capital expenditure - Held that:- Disallowed the expenses which pertained to the subsequent period. The rule of taxation rests on the matching principle in which cost incurred to earn revenue is recognized as expense in the period when related revenue is recognized as earned. The A.O. has rightly applied the matching principle and the portion of AMC expenses which does not relate to the maintenance costs for the year was rightly disallowed - Decided against assessee. Deduction under sec. 80IA - CIT granted deduction - Held that:- whether initial assessment year in section 80-IA(5) would only mean the year of commencement and not the year of claim ? - Unabsorbed depreciation - Held that:- Assessee has been setting off the loss against the income of the company for the earlier years. During the assessment year, the assessee exercised the option claim of deduction under section 80-IA of the Act. But the Assessing Officer denied the exemption on the finding that loss or depreciation already allowed and set off against other sources of the income of the assessee has to be notionally carried forward and set off against the current year's income from the units for which the assessee is claiming deduction under section 80-IA. There is no dispute that during the year, there is a profit. Therefore, the assessee claimed deduction under section 80-IA and the Revenue has no authority to notionally bring forward the unabsorbed depreciation and loss of the earlier year which has been already set off as against the current year profit from the unit - Following decision of Velayudhasamy Spinning Mills P. Ltd v. ACIT [2010 (3) TMI 860 - Madras High Court] - Decided in favour of assessee.
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2013 (8) TMI 439
Validity of assessment orders - Assessment orders server after expiry of period of limitation - the assessment orders in these cases though made on December 31, 2009, those were served on the assessee on May 10, 2010, i.e., after 130 days from the date of order. - Held that:- It is found that undisputedly the assessment orders though passed before the period of limitation contemplated under the relevant provisions of law, the copies of the orders were served to the assessee after the expiration of the limitation provided under the relevant provision. - assessments are barred by limitation - appeals of the assessee are allowed on question of law - Following decision of Shanti Lal Godawat v. Asst. CIT [2009 (7) TMI 829 - ITAT JODHPUR] and K. Joseph Jacob v. Agricultural Income-tax Officer [1990 (11) TMI 75 - KERALA High Court] - Decided against Revenue.
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2013 (8) TMI 438
Deemed dividend u/s 2(22)(e) - Computation of shareholding - Whether for applying the provisions of section 2(22)(e) of the Act the cumulative holding of the assessee-firm and its partners is to be considered or the shareholding of the firm in isolation is to be considered - Held that:- assessee-firm holds only 1.07 percent shares of the sister-concern, whereas the partners of the assessee-firm holds 6.64 percent and 6 percent shareholding respectively. The Assessing Officer had observed that the cumulative holding of both partners of the assesseefirm being more than 10 per cent., results in application of the provisions of section 2(22)(e) of the Act. Undoubtedly, the assessee-firm on its own is holding only 1.07 percent of shareholding in the concern - assessee-firm in the present case is holding less than 10 percent of shareholding, any amount advanced by closely held company to the assessee-firm is not to be treated as deemed dividend under the provisions of section 2(22)(e) of the Act, irrespective of the fact that the shareholding of the firm to whom advance had been made and the partners of the said firm have shareholding more than 10 percent of the said concern, which had advanced the amount - Following decision of CIT v. Hotel Hilltop [2008 (3) TMI 310 - RAJASTHAN HIGH COURT] and Asst. CIT v. Bhaumik Colour P. Ltd. [2008 (11) TMI 273 - ITAT BOMBAY-E] - Decided against Revenue.
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2013 (8) TMI 437
Revision u/s 263 - Adjustment made u/s 145A to the closing stock on account of excise duty - Held that:- In respect of the first objection of the Commissioner of Income-tax visa-vis the provisions of section 145A of the Act, the assessee had furnished audit report under which it has been certified that after the so-called adjustment made under section 145A of the Act, there was nil effect under the modvat account - Assessing Officer had not raised any query in respect of the provisions of section 145A of the Act. After the amendment to the said section 145A of the Act certain adjustments on account of excise duty to opening stock, purchases, sales and closing stock have to be made - The powers under section 263 of the Act are to be invoked on satisfaction of twin conditions of the order being both erroneous or prejudicial to the interests of the Revenue. Where the tax effect because of an order passed by the Assessing Officer is nil, such order even if erroneous being not prejudicial to the interests of the Revenue, is not open to revision under section 263 of the Act - Decided in favour of assessee.
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2013 (8) TMI 436
Exemption u/s 11 - Withdrawal of Registration u/s 12A - Creation of FDR - Unspent grant received for specific purpose - CIT granted exemption and registration - Held that:- The assessee can be covered only under clause 13(3)(e) only when the persons mentioned in section 13(3)(a) to 13(3)(d) have substantial interest in the society which is not the case here. Ld. Commissioner of Income Tax (Appeals) has also rightly observed that perusal of the auditor report and audited balance sheet it was seen that fact regarding the pledging of FDRs has been mentioned in the Notes to Account attached with balance sheet which are prepared by the assessee only for the purpose of disclosure. This cannot be said to be disqualification of the auditors in the report. In these circumstances, it is apparent that the assessee’s funds have not been parted away as the FDRs were lying intact in the bank, the assessee has received interest thereon and got the maturity proceeds in the next year - therefore, assessee is eligible for exemption u/s 11 of the Act - Decided against Revenue. Unspent grant received for specific purpose - Held that:- Assessee has maintained separate accounts for each project and grant and has given complete details regarding the same in the audited balance sheet itself. The Assessing Officer did not point out any discrepancy in the said details and brought nothing adverse to prove its allegations - Therefore, unspent grant cannot be taxed as voluntary contribution or income u/s 12 of the Act - Decided against Revenue.
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Customs
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2013 (8) TMI 434
Penalty u/s 112, and Rule 209A of the Central Excise Rules - stay - wrong declarations in the export documents by which the goods exported were liable to confiscation - Held that:- Penalties u/s 112 and Rule 209A of the Central Excise Rules were not imposable because the assessees in that case did not deal with the goods - assesseess had made out a prima facie case for complete waiver of the penalties imposed u/s 112 and Rule 209 A/ Rule 26. Penalty u/s 112A and 114 – department contended that assessees had the knowledge that the goods obtained under duty exemption were not utilized for the manufacture of finished goods which were required to be exported thus penalties had been correctly imposed – Held that:- Assessee had made wrong declarations in the export documents by which the goods exported were liable to confiscation – they were liable to penalty u/s 114 – they had not made out a prima facie case for complete waiver of pre-deposit of penalties imposed u/s 114 for handling such goods. stay petition – waiver of pre deposit - Assesses were directed to pay 50% of the penalties imposed upon them u/s 114 - On payment of the pre-deposit - stay on the remaining amounts of penalties would be granted – appeal decided partly in favour of assessee.
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2013 (8) TMI 433
Smuggling of goods - Cut & polished diamonds and Gold jewellery recovered from the baggage/person - Accounting procedures – penalty u/s 112 r.w.117 - Held that:- accounting procedure adopted by the assessee was proper and correct in the normal course of business and goods were not held liable for confiscation - no penalty was warranted under Section 112 r.w. Section 117 - The method of accounting had been explained by the employees of the said company in their various statements - It was stated that the system of accounting of stock by them was being followed by them since long and that even income tax authorities did not take any objection against this procedure - the allegation that they were having possession of unaccounted diamond was based on method of accounting adopted by them – The system was recognised in Gem & Jewellery trade. The Income Tax authorities which were more acquainted about the accounting procedure had also stated that the accounts of assessee were found to be correct and complete considering the submissions of the assessee and also acceptance method of accounting of revenue in past assessment years and in original assessment years - in all the case diamonds polished ones were entered in the next year - Income Tax office had also given its finding that no material had been found by any authority indicating that the assessee had made any advance for illegally importing diamonds - the diamonds recovered by the customs authorities and paid the customs duty as per the order of Settlement Commission - Thereafter it was found that accounting procedure followed by the assessee were proper and legally correct and there is no discrepancy in the stock of diamonds. Smuggling of goods – Held that:- Proceedings of confiscation of diamonds were dropped - No evidence had been brought on record by the department which establish that the assessee was involved in the activity of illegal import or smuggling of diamonds – no evidence on record to establish that any dutiable or prohibited goods were attempted to be illegally imported or were removed from the customs area to invoke Section 111(d) or 111(j) – Decided in favor of assesse.
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2013 (8) TMI 432
Misdeclaration of goods - of shipping bill was presented samples of the goods contained in the Container were taken and sent to CRCL for testing - Although the goods were declared by the assesse as mud Additive Chemicals that was proved to be 'urea in the form of white Granules' which was prohibited goods u/s 2(33) – Held that:- It appears that fraud was committed against Revenue as was revealed from reasoned and speaking order – there was a mis-declaration in the present consignment and there was attempt to defraud Revenue and surrounding circumstances question conduct of assesse - the adjudication order that the test report remained uncontroverted - Adjudicating authority had brought out the mis-declaration - Authority was quite aware of the character and nature of the goods with the classification of the goods under Customs Tariff Act, 1962 - When he could know that there was a deliberate mis-declaration to willfully export urea from India for undue enrichment he proceeded on the basis of the outcome of the investigation and materials before him. Waiver of pre deposit Penalty u/s 114and 114AA - Assesse failed to avail redemption option against prohibited goods and two years had already expired from the date of seizure - court ordered 30% of the duty to be submitted – on such submission rest of the duty to be waived till the disposal of the issue – decided partly in favor of assesse.
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2013 (8) TMI 431
Amendment in the Shipping bills - In the shipping bills assesse did not file any declaration for claiming the export incentive – they subsequently filed an application with DGFT for duty credit entitlement towards VKGUY Scheme under Chapter 3 of the Foreign Trade Policy 2004-2009 along with all the relevant information - Whether the declaration required to be made in terms of exports after 31.5.08 can be allowed to be made subsequent to the export of the goods. Difference of opinion - matter referred to larger bench to decide the following question - Whether it is proper to make amendments in the shipping bills to include the declaration as desired by the respondent as recorded by Judicial Member? or Whether it is proper to refuse such amendments as held by the Technical Member?
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2013 (8) TMI 430
Refund of duty - whether the assessee were eligible for refund of additional duty of customs leviable u/s 3(5) of the Customs Tariff Act paid at the time of clearance of goods from SEZ to DTA – Held that:- The adjudicating authority was correct in coming to the conclusion that the appellants were eligible for refund of the amount of SAD paid by them – court relied upon the judgement of Industrial Suppliers Pvt. Ltd. vs. Union of India(1980 (8) TMI 197 - SUPREME COURT). whether an assessee was eligible for refund of such duty paid by them on goods under Notification No.102/2007 – Held that:- The intention of the legislature by promulgating Notification No.102/2007-Cus. was to give refund of SAD paid by the importer on goods, on subsequent sale subject that conditions are fulfilled - the appellants had discharged the SAD leviable on the goods when procured from SEZ, and have subsequently sold the same, benefit of refund of the said SAD as per Notification No.102/2007-Cus cannot be denied to them only on the ground that movement of goods is from SEZ and it cannot be construed as import of goods – order set aside – deicided in favour of assessee.
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Corporate Laws
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2013 (8) TMI 429
Petition for winding up - The appellant appointed the respondent as its dealer to deal with computer and other related products belonging to the appellant - There was outstanding as claimed by the appellant - Held that:- an application for winding up could only be resisted by raising a bona fide dispute. - To resist a winding up, the defence of the company must be a bona fide one and on a prima facie view sustainable. The e-mails exchanged between the parties would foreclose the scope of the company to dispute any part of the claim. - Subsequent plea on damage could not be said to be a bona fide one. Whether a dispute is bona fide or not, could be derived from the contemporaneous conduct of the parties. In one of the e-mails the company would suggest, they would make final payment on adjustment. However, such adjustment should certainly relate to a sum less than the claim of the petitioning creditor. In course of hearing we made repeated query as to what sum was in contemplation of the company to be adjusted against the dues of the petitioning creditor. We did not get any reply. The respondent company was directed to secure the claim of the appellant by offering cash security or any other co-lateral security to the satisfaction of the Registrar, Original Side -Such security must be furnished within a period of four weeks from date - In default, the winding up petition would stand admitted for the sum together with interest at the rate of 9% per annum on and from the date of receipt of statutory notice of demand until payment and the petition for winding up would stand revived and appellant would be entitled to approach the learned Company Judge for appropriate direction for advertisement as well as fixation of returnable date - Otherwise, the petition for winding up would remand permanently stayed. Claim being Time Barred - Merely because the debtor was a corporate entity the creditor cannot enforce hid debt as a matter of a right in a winding up proceeding - It can only ask for winding up of the debtor and he becomes successful if the defence taken by the company, according to the Court, prima facie not sustainable – the plea of time barred claim could not be accepted – The law of limitation is enacted to prevent any stale claim to be raised as and when a litigant would desire that would create a tremendous uncertainty to a right and liability preventing any controversy to reach finality- The appeal succeeds in part and is allowed.
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FEMA
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2013 (8) TMI 435
Violation of FEMA - Imposition of Penalty - Definition of Person u/s 2(u) - penalty was imposed on the President of the Board of Control for Cricket in India for the violation of the Act – Held that:- The material on record was sufficient to take the view that the petitioner himself was not in charge of and responsible for opening and operating the bank accounts involving receipts and remittances of foreign exchange to parties outside India, it would be necessary for the adjudicating authority to form an opinion whether the petitioner could at all be considered as covered by the substantive part of Section 42(1) of the Act and further, even if the answer was in the affirmative, whether the petitioner should be called upon to prove that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention - The definition of person U/s 2(u) of the Act was an inclusive one and, therefore, BCCI as well as Governing Council for IPL were persons within the definition of Section 2(u) of the Act. It was the case of the petitioner, which was not contradicted by any person whose statement was recorded at the investigation and in fact it was corroborated by the material which was part of the complaint, that the petitioner had stated in so many words at the BCCI meeting that the permission of the Reserve Bank of India would have to be obtained for opening a foreign exchange bank account - In fact, the resolutions passed at various meetings of BCCI clearly indicate that all operational matters were to be dealt with by the Chairman of the Governing Council for IPL and officers engaged by the said Council and by the Secretary and Treasurer of BCCI. Adjudicating Authority after issuing show cause notice and receiving objections to the notice from the noticee, was required to apply his mind to the objections by recording his reasons for forming an opinion on the file – the recording of reasons was not an appealable order but it would give the noticee a chance during adjudication proceedings to meet the reasons which led the Adjudicating Authority to form an opinion that he must proceed further with the inquiry against notice - This would only result in fair procedure which would be in consonance not only with Rule 4 of the Adjudication Rules but with principles of natural justice. There was nothing on record to indicate that the adjudicating authority had considered the aforesaid aspects before forming the opinion to proceed further with the inquiry under subrule (4) of Rule 4 of the Adjudication Rules. Matter remanded back with direction - Special Director, Directorate of Enforcement first to form his opinion, after recording reasons, whether to proceed against the petitioner with regard to the impugned 11 show cause notices, in light of the observations made in this judgment. If the opinion so formed is adverse to the petitioner, such opinion along with the reasons so recorded shall be furnished so as to reach the petitioner at least 15 days prior to the date of personal hearing. This would meet the requirements of Rule 4(3) of the Adjudication Rules.
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Service Tax
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2013 (8) TMI 455
Stay of Duty Demand - appeal against the order of CESTAT for confirmation of Demand of service tax and cess with interest of statutory levy and the air tickets sold – Held that:- There was no justification to stay the demand of service tax under the order - Prayer for stay to that extent was rejected. Penalty u/s 76 and 78 - Held that:- Until final disposal of appeal, recovery of penalty amount to be stayed - penalty had also been imposed on the appellant u/s 78 of the 1994 Act - That amount had already been paid – if the penalty was payable u/s 78, penalty can not be imposed u/s 76 - The position was admitted by the revenue in the affidavit filed by the concerned Commissioner -in the order in original, a specific finding had been recorded that the appellant had not indulged in fraud, collusion or willful mis-statement nor had the appellant contravened the provisions with intent to evade payment of service tax.
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2013 (8) TMI 454
Ad-hoc Exemption order No.1/1/2010-ST - Online Information or Database Access or Retrieval Service (OIDARS) - Business Support Service (BSS) - Sale of Space or Time for Advertisement on Internet - Revenue considered that these taxable services were provided or received as the case may be by the assesse and in respect whereof the liability to remit tax arises – Held that:- Prima facie the contention urged on behalf of the petitioner was well founded – Service recipient when liable to pay service tax u/s 66A shall be considered as the service provider should apply in terms to the ad-hoc exemption order as well - Under Section 66A of the Act, where any service specified Section 65 (105) was provided by a person, of the description specified in clauses (a) and (b) of sub-section (1) thereof, such service shall, for the purposes of the section, be the taxable service and such taxable service shall be treated as if the recipient had himself provided the service in India and accordingly all the provisions of Chapter shall apply – pre-deposits were waived - stay granted.
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2013 (8) TMI 453
Condonation of Delay - The Revenue had filed the COD application for condonation of delay of 22 days in filing the cross objection – Held that:- Considering the reasons stated as satisfactory the delay in filing the cross objection was condoned - The delay was due to delay in receipt of comments from the lower formations for filing the cross objection. Business Auxiliary Services – Held that:- Assesses were freight forwarders and booking cargo spaces and selling the same to the importers/exporters - They were rendering a service to the shipping lines and the consideration was received by them by way of mark-up in prices -services rendered by the assesse merits classification under "Business Auxiliary Service" - the assesse was promoting the service rendered by the shipping lines JSA Forwarders vs. CST, Chennai [2008 (10) TMI 105 - CESTAT, CHENNAI]. Waiver of Pre-deposit - Prima facie the appellant had not made out a case for complete waiver of pre-deposit of dues adjudged against them – In the absence of any prima facie case and the absence of any financial hardship, the interest of Revenue has to be taken care of – 89Lakhs were ordered to be submitted as pre-deposit – upon such submission rest of the duty to be waived – Stay Granted – Decided partly in favor of assesse.
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2013 (8) TMI 452
Authorised Dealer of Foreign Exchange u/s 65 (105) (zm) r.w. ‘other financial services’65 (12) (a) (ix) - Duty demand – Interest and Penalty – Waiver of Pre-deposit - Revenue was of the view that the service was taxable – Held that:- Section 65 (105) (12)(a) as also section 65 (12) (a)(ix) specifies services using the expression ‘services namely’ - Such language gives very little scope for an expansive construction of the items enumerated - One expression used therein was ‘bank guarantee’ - Commercially bank guarantee and Corporate guarantee were two different financial instruments - This interpretation does not render the expression ‘anybody corporate’ used in section 65 (12) redundant because it still had meaning in respect of other sub-clauses at (i), (iii), (iv), (v) etc - corporate guarantee was given in relation a banking and financial service specified at section 65 (12) - the Show cause Notice or adjudication proceedings do not bring out any such case - there was not much merit in the contention of Revenue - the requirement of pre-deposit of dues to be waived and stay its collection till the disposal.
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2013 (8) TMI 451
Business Auxiliary Service, Business Support Service, Cargo Handling Service and Transport of Goods by Road Service – Duty Demand – Waiver of pre-deposit - The Revenue was of the view that the value of freight will form part of the value of ‘Business Support Service’ being provided by the assesse to the importers and exporters and, thus the assesse should have paid service tax - Held that:- Freight charges towards ocean freight and air freight cannot be included in the value of Business Support Service – Intercontinental Consultants and Technocrafts Pvt. Ltd. Vs Union of India [2012 (12) TMI 150 - DELHI HIGH COURT] - the differential element of consideration between the freight charged by the steamer lines and the freight charged by the assesse to the customers/exporters – no need to deliver any separate quantification in the order – pre-deposit was waived – Decided partly in favor of assesse.
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2013 (8) TMI 450
Levy of service tax on charges collected on dishonoring of cheques - Bank is charging to assessee - assessee is charging to its customers - Assessee is Non-banking Financial Company - Cenvat credit - stay - waiver of pre deposit – Held that:- If the applicant is charging only exactly the same amount as charged by the bank, there will not be any double taxation since Cenvat credit of the amount already paid by the bank will be available for paying service tax to be paid by the applicant. If a higher charge is billed to the customer, the service tax charged to the customer gets increased on account of the differential amount charged by the applicant. - applicant has committed serious irregularity by taking Cenvat credit on a service, the cost of which is separately billed to the customer without service tax component which situation is comparable to a situation where credit of excise duty paid on inputs is taken and utilized for clearance of final product but the input is sold without reversal of the cenvat credit taken when it was received into the factory. Service being intangible, arguments are raised based on Rule 5 of Service Tax (Determination of Value) Rules, 2006 etc. But the situation is essentially the same as in the case of removal of inputs without reversal of credit taken and prima facie cannot be approved of and full recovery of such amount may be prima facie justifiable Waiver of pre-deposit – 1 Crore was ordered to be submitted as pre-deposit – rest of the duty to be waived till the final disposal – decided partly in favor of assesse.
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Central Excise
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2013 (8) TMI 449
Levy of Textile Cess - Textile Cess was demanded from the petitioner which had been further confirmed – Petitioner contended that the job work undertaken by them was not a process of manufacturing textile – Held that:- The petitioners were job workers and were doing bleaching, dyeing etc. on the textile so supplied to them, they will be treated as extended hand of hand-loom and power-loom textile manufacturers - The hand-loom and power-loom textile manufacturers instead of getting work of bleaching etc. done by themselves, have engaged the petitioner on job work basis - The petitioner received the textile and after doing the needful return the textile to such manufacturers - Section 5A imposes cess for the purposes of the Act, 1963, a duty of excise on all textiles and on all textile machinery manufactured in India -The word 'manufacture' is not defined in the Act, 1963 - The Textile Committee had been set up to carry on inspection to enable the exporters to claim replacement entitlements under the registered exporter policy as finds mention in the statement of objects to Amending Act No.51 of 1973 – order of Demand was quashed. The textile manufactured out from hand-loom and power-loom industry had been exempted under section 5A, obviously no inspection in respect of textile manufactured by such industry was required and therefore, it was reasonable to conclude that the activity undertaken by an extended hand of these manufacturers will also be not liable to pay the impost of cess under the Act. - Decided in favor of assessee.
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2013 (8) TMI 428
Interest on wrong availment of Cenvat Credit – Appellant availed ineligible Cenvat Credit – Held that:- As per the Hon'ble apex Court in the case of Ind-Swift Laboratories Ltd. [2011 (2) TMI 6 - Supreme Court], - there is no difference between the expression "credit taken" and the "credit utilised" for the purpose of recovery of wrongly availed credit Rule 14 of Cenvat Credit Rules, and if any credit has been taken wrongly, even though not availed, interest liability would accrue – Interest payable on the wrong availment of Cenvat Credit – Decided against the Assessee.
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2013 (8) TMI 427
Manufacture of Jewellary - Exemption - Affixing brand name on Jewellary - Pre-deposit – Stay application - Notification No.5/2006-CE, dated 01.03.2006 stipulates the payment of duty on articles of jewellery on which brand name or trade name is indelibly affixed or embossed on the articles of jewellery itself – The contention of the Revenue that the alphabets 'I' or 'Q' are brand name. The jewellery demonstrated by the learned senior counsel would show that alphabet 'I' or 'Q' were used with the letters 'A', 'B' and 'H'. According to the applicant, the said alphabets were used to identify the job worker, which is in conformity with illustration referred in the Board's Circular F.No.B-1/1/2005-TRU, dated 04.03.2005. Held that:- As per the case of Austrailian Foods (India) Pvt. Ltd. [2013 (1) TMI 330 - SUPREME COURT], where no brand name was affixed or inscribed on the cookies. In that case, the Hon'ble Supreme Court allowed the appeal of the Revenue as the brand name used the word "cookie man" accompanied with the logo on the plastic pouches/containers in which the goods were sold. In the present case, the notification imposed a pre-condition that "the brand name or the trade name is indelibly affixed or embossed on the articles of jewellery itself'. Thus, the said decision appears to be not applicable to the facts of the present case - Demand is barred by limitation would be looked into at the time of final hearing – Applicant is directed to deposit Rs.7 crores (Rupees Seven Crores only) within a period of four weeks.
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2013 (8) TMI 426
Clandestine removal – Confiscation of goods - Goods were found without entry in the RG-I register - Held that:- Except for finding that the goods were lying in the factory, there is neither any material to show that there was intention to evade duty, on the contrary, the evidence that has come on record only indicates that the goods were not subjected to quality control test and they were kept on hold, they were to be cleared by the quality control department and only thereafter were to be sent to the packing department after the quality control test was concluded - Revenue, in the present case has not acted in a reasonable manner in the matter of enforcing the penal clause against the petitioner. Enforcement of penal clause has to be done subject to strict proof of intention to evade payment of duty. In the present case, neither intention to evade duty is established nor is there any material to establish the same and on the contrary the explanation of the petitioners and the fact that the material was not subjected to quality control test has been totally ignored. Merely because in the statement, the Commercial Manager of the petitioners has stated that the goods were manufactured that by itself cannot be a ground for holding that the goods were ready for despatch to the customer - The confiscation of the goods ordered by the lower authorities is liable to be set aside - Question of imposing penalty either on the appellant-assessee or its partner does not arise – Decided in favor of Assessee.
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2013 (8) TMI 425
Extension of period of limitation - RT-12 returns/ ER-1 returns were regularly being filed by the appellants to the department - Appellants were regularly being audited by the Central Excise officers and no objection on the issue of free supply of goods by the principal manufacturer as well as on amortisation cost was raised by the audit during their visits – Held that:- It is not the case of the department that the documents/ RT-12 returns and other records were not submitted to the officers of the audit team by the appellants. Once the officers have audited the records they were supposed to examine each and every issue in respect of appellants for the audit period – Therefore, finding of the Commissioner that it is not clear whether audit had in fact examined this issue or not is not sustainable - Extended period as provided under Section 11A of the Central Excise Act will not be applicable in the present case. Show cause notice was issued on 05.01.2005 - Demand issued in the show cause notice beyond the period of one year is completely time barred - Since there is no finding from the RUDs 18 and 19 that there is any clearances after 04.01.2004, entire show cause notice is hit by time limitation – Decided in favor of Assessee.
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2013 (8) TMI 424
Wrong availment of Cenvat Credit on input - Cenvat Credit denied and demanded from the appellant by invoking proviso to Section 11A(1) of the Central Excise Act, 1944 (the Act) on the ground that the first appellant had not received the inputs but has taken the credit of the same during the period from April 2004 to October 2007 - Held that:- By denying cross-examination and re-examination of the evidence with regard to the transportation, these submissions have escaped consideration totally - Further, in case where only NOC had been issued by RTO as submitted, it cannot be said that the vehicle may not have been used. In such a case, evidence available to the department becomes only submission of the owner without any documentary evidence - There was a need for consideration as to whether cross-examination of the owners of the vehicles was required in the context of the facts and circumstances in respect of the each vehicle. Further, since the issue relating to SOL is based on data of logbook and statement of Managing Director of the appellant-company, there was a need for consideration of request for cross-examination - On the whole, the request for cross-examination has not been dealt with adequately - Matter is remanded to the original adjudicating authority for fresh consideration of the whole case.
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2013 (8) TMI 423
Penalty uner Rule 173Q - Quantification of the demand of duty - Commissioner rejected assessee's demand of quantification of the demand of duty - Held that:- The demand of duty is required to be re-quantified by treating the entire realization as cum duty price and by excluding the value of bought out monitors - Existence of sales invoices and purchase invoices of the appellants is not disputed, as the annexure to the show cause notice wherein duty calculation has been worked out, indicate the existence of such purchase invoices. Both the lower authorities instead of accepting the chart produced by the appellant has put onus on the appellant to produce the evidences of the value of monitors claimed as deduction by the appellant, instead of accepting the fact that the said value can be ascertained by themselves from the records available in their possession - invoices are not available in one case and not producing in another case itself indicates that department was not serious in arriving at the correct duty liability on the appellants - Following decision of CMS COMPUTERS PVT. LTD. Versus COMMISSIONER OF C. EX., MUMBAI - I [1998 (11) TMI 280 - CEGAT, MUMBAI] - Decided against assessee.
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2013 (8) TMI 422
SSI exemption - Use of trademark - Commissioner set aside penalty - Held that:- brand name or trade name can be any name, symbol, monogram or mark which indicates a connection between a person and the goods being manufactured or traded by him. Such brand name or trade name need not be registered with the trade mark authority. In fact the ‘brand name’ or ‘trade name’ symbolises the goodwill of a manufacturer or a trader or service provider which he has earned over the years so that any goods affixed with that mark are associated with that person. In this case, the mark ‘KPM’ is of M/s. K.P. Manufacturers and there is no dispute that the appellant had an agreement with M/s. K.P. Manufacturers for using the mark KPM on their goods for which a royalty was being paid - the mark ‘KPM’ of M/s. K.P. Manufacturers has to be treated as their unregistered trade mark which they were trying to popularise. Since, KPM is a brand name of M/s. K.P. Manufacturers, the use of this brand name by the appellant would disentitle them for the benefit of SSI exemption - Assessee has been paying the duty on the forgings affixed with the brand name KPM at normal rate and as such, there is no short payment of duty - Decided against Revenue.
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CST, VAT & Sales Tax
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2013 (8) TMI 456
Exemption to Cinema Halls - the petitioner applied for construction of new cinema hall - Exemption granted by the S/G to the new cinema halls for a period of five years - manipulation of the documents by the Asstt. Entertainment Tax Commissioner - Held that:- The entire initiation of the proceedings against the petitioner was with malafide intentions for availing exemption - The District Magistrate was falsely prompted by a manipulated report generated by the Asstt. Entertainment Tax Commissioner, Aligarh, who acted on his own in calling for report from the forensic laboratory on the questions prepared by him and the documents, which were sought to be examined - If the Asstt. Entertainment Tax Commissioner was concerned about the backdating of the document, he should also have sent the order of permission signed by his predecessor and the District Magistrate for examination by the forensic laboratory - Asstt. Entertainment Tax Officer had some score to settle with the petitioner and that he wanted the proceedings to be concluded against him and recovery be initiated. The question of overwriting on the date of the report of the Revenue Inspector was not relevant both on the ground that no such inspection was mandatory under Rule 3 or under the notification and further that the permission was granted by the District Magistrate - the writ petition was allowed and the order passed by the District Magistrate was set aside - the recovery certificate direct the State Government to initiate enquiry the Asstt. Entertainment Tax Commissioner for having acted with malafide intention against the petitioner and putting the petitioner to great harassment and inconvenience.
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