TMI Tax Updates - e-Newsletter
August 29, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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Income Tax:
Reopening of assessment - LTCG - transfer of rights in favour of the Developer (JDA) - year of taxability - assessee contended that, in subsequent years he has paid the taxes and therefore, there was no loss to revenue or escapement of income - re-assessment is void
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Income Tax:
LTCG - gift of immovable property to daughter - it is argued that, mistakenly instead of gift deed, sale deed was made - assessee failed prove that the same is exemption u/s 47(iii) as gift - Addition applying the section 50C confirmed.
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Income Tax:
Addition on unverified purchases - Even though the books of account have not been rejected, since the AO has clearly established that the purchases were bogus, there is no justification for accepting the contentions of the AR that only part of the purchase should be disallowed.
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Income Tax:
Addition u/s 68 - capital contribution by the partners in the partnership firm - the assessee could not be expected to prove the source of source and addition which could be made on this account, could be made in the hands of the respective partners only.
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Income Tax:
Addition u/s 68 - When Appellant is doing business, then it was incumbent on him to maintain proper books and/ or books of account. It may be in any form. Therefore, if he had not maintained it, then he can not be allowed to take advantage of his own wrong - HC
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Income Tax:
Addition u/s 68 - unsecured loan - ITAT, turning a blind eye, has erred in holding that, assessee has discharged his onus merely because the money was advanced through the banking channels - HC
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Service Tax:
Refund claim - service tax paid erroneously under GTA services - though appellant may have a legal claim, the same is not sufficiently substantiated by evidence - though appellant contends to have made the payment of service tax under protest, the appellant has no case that such amount was made on any demand or coercion made from the department - refund not allowed
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Service Tax:
Advertisement Agency Service - in case of free commercial time, selling the time allotted does not fall within the purview of Advertisement Service since the said activity is not connected to making, preparation, display or exhibition of advertisement.
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Service Tax:
Banking and other financial services - cheque return charges, minimum balance violation charges and non-maintenance of Quarterly Average Balance (QAB) received - Naming of such cost recovery as violation charges does not alter the object of taxation - demand confirmed with penalty
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Central Excise:
CENVAT credit - captive consumption - steam produced by appellant used by sister concern - it would be determined whether the end products of the sister concern are cleared on payment of duty and if that is answered in the affirmative, then CENVAT credit cannot be denied to the Respondent - HC
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Central Excise:
Cenvat credit - reversal of credit on removal of capital goods - Penalty - The fact of removal of one Auto Coner to Guna Plant, which took place within 2 days of taking credit, was not brought to the notice of the Central Excise Authorities and it was detected only during the course of audit - demand with penalty confirmed.
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Central Excise:
Capital goods cleared for export - whether duty is payable on the capital goods cleared for exports after use on which Cenvat credit was availed? - no duty is chargeable on the capital goods cleared for export -
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Central Excise:
CENVAT credit - input services - installation, repair and maintenance service of wind mill - a distinct unit and situated at a place away from the factory of manufacture - cenvat credit of services tax paid on various services used in the wind mill for generation of electricity was allowed
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VAT:
Withdrawal of appeals - Amnesty Scheme - In order to get the benefit of the Scheme, the Appeals had to be withdrawn. Once the benefit was such a scheme was not extended, the withdrawal was rendered of no use. Appeals therefore needed to be restored and heard on merits - HC
TMI Short Notes
Articles
Notifications
GST - States-
G.O.Ms. No. 386 - dated
22-8-2017
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Andhra Pradesh SGST
Amendments in the Notification No. G.O.Ms.No. 259, Revenue (Commercial Taxes-II) Department, 29th June, 2017.
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G.O.Ms. No. 385 - dated
22-8-2017
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Andhra Pradesh SGST
Amendment in the Notification No. G.O.Ms. No. 258, Revenue (Commercial Taxes-II) Department, 29th June, 2017.
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G.O.Ms. No. 383 - dated
22-8-2017
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Andhra Pradesh SGST
Amendments in the Notification No. G.O.Ms.No. 256, Revenue (Commercial Taxes-II), Department, 29th June, 2017.
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G.O.Ms. No. 382 - dated
22-8-2017
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Andhra Pradesh SGST
The Andhra Pradesh Goods and Services Tax (Fifth Amendment) Rules, 2017.
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G.O.Ms. No. 375 - dated
18-8-2017
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Andhra Pradesh SGST
The Andhra Pradesh Goods and Services Tax (Fourth Amendment) Rules, 2017.
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06/2017-GST - dated
21-8-2017
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Assam SGST
Amendments in the notification No. CT/GST-10/2017/192 dated 17th August, 2017 (Notification No. 5/2017-GST).
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FTX.90/2016/107 - dated
17-8-2017
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Assam SGST
Assam Goods and Services Tax (Fifth Amendment) Rules, 2017.
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05/2017-GST - dated
17-8-2017
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Assam SGST
Conditions for furnishing the return in FORM GSTR-3B for the month of July 2017.
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23/2017-State Tax (Rate) - dated
22-8-2017
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Bihar SGST
Amendments in the Notification No. 17/2017-State Tax (Rate), dated the 29th June, 2017.
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22/2017-State Tax (Rate) - dated
22-8-2017
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Bihar SGST
Amendments in the Notification No. 13/2017-State Tax (Rate), dated the 29th June, 2017.
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21/2017-State Tax (Rate) - dated
22-8-2017
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Bihar SGST
Amendments in the Notification No.12/2017-State Tax (Rate), dated the 29th June, 2017
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20/2017-State Tax (Rate) - dated
22-8-2017
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Bihar SGST
Amendments in the Notification No. 11/2017-State Tax (Rate), dated the 29th June, 2017
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KA.NI.-1014/XI-9(52)/17 - dated
21-7-2017
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Uttar Pradesh SGST
NOTIFICATION REGARDING E-WAY BILL
Circulars / Instructions / Orders
News
Case Laws:
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Income Tax
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2017 (8) TMI 1138
Addition u/s 68 - unsecured loan - genuineness of the transactions and the creditworthiness - Merely because the transaction was by payments through cheque, the ITAT presumes them to be genuine. - Contradictory statements by the assessee - Held that:- The ITAT has erred in its approach towards dealing with the transactions and has incorrectly held that the Assessee has discharged his onus merely because the money was advanced through the banking channels. The ITAT has ignored all the contradictions and has ignored glaring circumstances such as Shri Amar Singh, not even being an Incometax Assessee, in holding that the transactions are genuine and creditworthiness is established. The explanation for advancing the loans is clearly contradictory in respect of two of the creditors. To accept such explanations would in effect result in turning a blind eye as has been done by the ITAT, to transactions which clearly lacked bona fides. Thus, the ITAT’s order is erroneous and contrary to law and is accordingly, set aside. The transactions in the present appeal are yet another example of the constant use of the deception of loan entries to bring unaccounted money into banking channels. This device of loan entries continues to plague the legitimate economy of our country. As seen from the facts narrated above, the transactions herein clearly do not inspire confidence as being genuine and are shrouded in mystery, as to why the so-called creditors would lend such huge unsecured, interest free loans - that too without any agreement. In the absence of the same, the creditors fail the test of creditworthiness and the transactions fail the test of genuineness. - Additions confirmed - Decided in favor of revenue.
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2017 (8) TMI 1137
Addition u/s 68 - gifts from NRI friend - taking loan by depositing cash - source of credit received - contrary arguments relating to maintenance of books of accounts - Held that:- Appellant has not denied that he has received the said loan amount / cash deposits from those persons whose list has been given in the order of Assessing Officer. He has revealed those names from the Bank account of the Appellant. Now, Appellant intends to say that he has not maintained books of accounts and therefore, those amounts can not be considered. When Appellant is doing business, then it was incumbent on him to maintain proper books and/ or books of account. It may be in any form. Therefore, if he had not maintained it, then he can not be allowed to take advantage of his own wrong. Burden lies on him to show from where he has received the amount and what is its nature. Unless this fact is explained he can not claim or have deduction of the said amount from the income tax. Sec. 68 of I. T. Act provides that where the assessee offers no explanation about the nature and source of the credits in the books of account, all the amounts so credited or where the explanation offered by the assessee is not satisfactory in relation to the same then such credits may be charged to tax as income of the assessee for that particular previous year. When even after giving opportunities, The Appellant had failed to produce relevant documents and explain the nature and source of the amount received by him as narrated above; the order of the Assessment officer and the appellate authorities in respect of those amounts is justified - Decided against assessee.
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2017 (8) TMI 1136
Validity of rejection of application for settlement of case - the petitioner has availed the regular remedy by way of an appeal before the learned Commissioner of Income Tax (Appeals) and the said appeals are said to be still pending - Held that:- The regular assessment procedure has been undertaken by the Assessing Authorities and against the orders passed by the Assessing Authorities, the petitioner has already availed his appellate remedy in accordance with the provisions of the said Act, the challenge to the order passed by the Settlement Commission, rejecting the Application under Section 245-C of the Act, at the threshold on the ground of it being a non-speaking order has out-lived its importance and the matter cannot be now restored back to the Settlement Commission at this stage to hear the merits of the settlement proposals given in the Application by the petitioner –assessee, at that time. Till the said appeals are decided by the CIT(A), it is expected that the Respondent Department will not take precipitation action against the petitioner for recovery of the balance amount of the tax dues from the petitioner as determined under the impugned assessment orders.
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2017 (8) TMI 1135
Entitlement to a registration u/s 80G(5) - rejection of claim as assessee did not have registration u/s 12A - Assessee is availing exemption u/s 10(23C) - Held that:- Respondent/assessee has been granted registration u/s 12A of the Act with effect from 01.04.2008 by the order of the Tribunal. Thus grant of registration under Section 80G(5) of the Act by the impugned order of the Tribunal cannot now be a subject matter of grievance for the Revenue. Also be pointed out that the impugned order of the Tribunal also records the fact that the respondent/assessee would be entitled to be registration under Section 80G(5) of the Act as its income would fall under Section 10(23C) of the Act. Thus, not includable in total income. Therefore, satisfies the pre-condition as stipulated in subsection (5) of Section 80G of the Act for grant of Registration. We find that the same has not been admitted as substantial question of law. Therefore, this would be one more reason why appeal filed by the appellant/Revenue must fail. - Decided in favour of assessee.
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2017 (8) TMI 1134
Disallowing the claim of deduction under section 80IB(10) - assessee failure to produce occupancy certificate of the local authorities i.e. Vasai Municipal Corporation within the prescribed time limit - Held that:- Once architect has given certificate for completion and such certificate is submitted before the Municipal Authority along with application, and deposited the amount for issuance of OC, the delay cannot be attributed to the assessee and it shall be considered as fulfillment of all the conditions as prescribed u/s 80IB(10) of the Act. In the present case before us, we find that the commencement certificate of the project was dated 17-07-2003 and assessee fulfilled all the conditions because he could not have obtained the completion certificate from local authority on or before 31-03-2008 but obtained architect certificate that the project was completed before October 2006 as issued by the architect M/s W N Associates dated 12-10-2006 and submitted before the Vasai Municipal Authority. Even otherwise, the issue is covered by the Tribunal decision in assessee’s own case in the immediate preceding year. - Decided in favour of assessee.
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2017 (8) TMI 1133
Addition u/s 68 - Unexplained capital contribution by the partners in the partnership firm - partners received the gifts - proving source of source - additions, if any, to be made in the hands of the respective partners or in the hands of the assessee firm - Held that:- The gifts are received by the partners who are separate income tax entities as distinct from the assessee firm and therefore, the addition for unaccounted / unexplained money, if any, which was to be made, could be made in the hands of the respective partners only and not in the hands of the assessee firm, since the assessee firm, at the relevant time, was not required to do so in view of the statutory provisions as contained in Section 68. - Decision in the case of Zafa Ahmad & Co. Vs. CIT [2013 (3) TMI 48 - ALLAHABAD HIGH COURT] followed. Revenue is unable to establish the fact that the capital contribution received by the assessee firm was unaccounted money of the assessee firm. Secondly, the assessee could not be expected to prove the source of source and addition which could be made on this account, could be made in the hands of the respective partners only. - additions shall stand deleted - Decided in favor of assessee.
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2017 (8) TMI 1132
Revision u/s 263 - claim of additional depreciation - lack of inquiry by AO - Held that:- We find that the addition to the fixed assets in this case was made in the second half of the preceding previous year relevant to assessment year 2011-12 and the depreciation was claimed at 50% of the normal rate of depreciation as the assets was put to use for less than 182 days. The second aspect is that the assessee claimed depreciation at the rate of 50% of the normal depreciation and carried forward the remaining 50% to the subsequent year 2012-13 and claimed the same in that year which is current year assessment year 2012-13 under the clause (iia) of the section 32 of the Act. We also find that even during the course of assessment proceedings, the assessee specifically submitted all the details and schedule of depreciation along with the bills and vouchers in support of the said claim before the AO and the AO thereafter framed the assessment u/s 143(3) of the Act. AO has necessary details qua the additional claim of depreciation of ₹ 1,82,948/- and allowed the claim of the assessee as per the provisions of section 32(1)(iia) of the Act. Accordingly, we are fully agreed with the arguments of ld.AR that it cannot be presumed that due to lack of inquiry the prejudicel is caused to the revenue when the issue was not discussed in the order of AO. Claim of the assessee, which is as per law under the provisions of section 32(1)(iia) of the Act, cannot be said to be have caused prejudice to the revenue and therefore, the order is not erroneous as no prejudice was caused to the revenue as the assessee has claimed the additional depreciation as per the provisions of Act which is also supported by number of decisions. - Decided in favour of assessee.
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2017 (8) TMI 1131
Reopening of assessment u/s 147 - assessment of the peak deposits in bank account - reasons to believe - Held that:- In this case there is no change in opinion of the Assessing Officer as the matter was never investigated or adjudicated or information on the issue was called or examined by the Assessing Officer. It may be mentioned here that as mentioned by the AO, the Appellant had been issued a letter for verification of the deposits which was however not responded to, therefore the Appellant’s contention that the AO did not verify the deposits before issuing the notice also u/s. 147 cannot be accepted. Therefore, relying on the various case laws as discussed above and facts and circumstances, the issuance of notice u/s. 148 was rightly held to be valid by the Ld. CIT(A), which does not need any interference on my part, hence, uphold the order of the Ld. CIT(A) on the issue in dispute and reject the ground of appeal in dispute raised by the assessee. Addition on cash deposit in saving bank account - While the contention of the Assessee that she was a handicapped widow with no source of income has been considered, however she has been unable to explain the source of cash deposits in her account or provide evidence in the form of confirmations of relatives or persons who have claimed to have given her such amounts for her son’s wedding etc. Therefore in the absence of any evidence or the above explanation being substantiated by even corroborative evidence cannot be accepted. It may be mentioned that since the cash credits are there in her bank account, the onus is on the Assessee to prove the source of the same, Kale Khan Mohd Hanif vs CIT(1963 (2) TMI 33 - SUPREME Court). It is immaterial that she did not have any business activities or known source of income, cash deposits in bank have to be explained by the assessee otherwise they can be added U/S 69 or 66B. AO has already taken a reasonable approach of taking the peak balance of the deposits in her account and benefit of telescoping i.e withdrawals for the same has already been given. Accordingly Ld. CIT(A) has rightly held that the addition made by the AO was justified and the same was confirmed - Decided against assessee.
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2017 (8) TMI 1130
Addition u/s 68 - unsecured loan - genuineness and credit worthiness - Addition on unverified purchases - bogus purchases to suppress the profit - Held that:- Assessee has only emphasized that Income Tax Return, PAN and other details have been filed by the assessee before the AO and therefore the credit worthiness of the parties has been established. However, the AR has not provided the details of returned income of the parties and the explanation for deposit of cash by one person immediately before cheques were issued to the appellant. Establishing the credit worthiness and genuine would imply that the parties would be having sufficient surplus savings and funds backed by capital assets to provide loan to the assessee. Merely by providing the Income Tax Return and PAN number is not enough to establish the creditworthiness and genuineness of the unsecured loans. Accordingly, this addition made by the AO was rightly upheld by the Ld. CIT(A) - Decided against assessee Addition on unverified purchases - Held that:- it appears that these purchases from M/s Haryana Trading Company and M/s Vishal Traders have been used for suppressing the profits of the business. Even though the books of account have not been rejected, since the AO has clearly established that the purchases were bogus, there is no justification for accepting the contentions of the AR that only part of the purchase should be disallowed. In view of the above observations this addition made by the AO was rightly upheld by the Ld. CIT(A), which does not need any interference on my part, hence, uphold the order of the Ld. CIT(A) on the issue in dispute and dismiss the issue in dispute raised by the Revenue.
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2017 (8) TMI 1129
Reopening of assessment - non supply of reason to believe - LTCG - gift of immovable property to daughter - it is argued that, mistakenly instead of gift deed, sale deed was made - claim of exemption u/s 47(iii) - Held that:- The reasons have not been sought by the assessee at assessment stage. After issuance of notice u/s. 148 of the Act, the assessee has filed return of income and participated in assessment proceedings and the assessment has been completed after taking into account the submission of assessee. Had the assessee sought the reasons and had AO denied the same, the matter would have been different. Thus the contentions of the assessee were rightly rejected by the Ld. CIT(A). - Decided against assessee. Computing the long term capital gain - Held that:- The mode of receipt of consideration not mentioned. Since the consideration has not received through cheque, there is no question of it being reflected in the bank account of the daughter. The provisions of section 50C are clearly applicable in this case as it is a case of transfer of property through sale deed at a price lower than the value adopted for stamp duty valuation. Section 47(iii) comes to play only in cases of transfer through gift or will or an irrevocable trust. Transfer in the present case is not through these modes. The transaction has been held to be gift in the hands of the daughter, the transferee, and therefore it should be held so in the case of the assessee also is not tenable because in case of the daughter the consideration as per stamp duty valuation is not taxable as per proviso to section 56(2)(vii). However, the provisions of capital gains taxation and the income from other sources are independent of each other. The income in the hands of the daughter having been held to be exempt, does not absolve the assesee from the capital gain liability. In view of the above, the contention of assessee was rightly been rejected by the Ld. CIT(A), which does not need any interference on my part - Decided against assessee.
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2017 (8) TMI 1128
Disallowance u/s 14A - Held that:- As there was no exempted income earned by the assessee. As such the disallowance made by the AO was rightly deleted by the ld. CIT(A). We, therefore, do not see any merit in this appeal of the department. - Decided in favour of assessee.
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2017 (8) TMI 1127
Penalty u/s 271(1)(c) - deemed dividend addition u/s 2(22)(e) - debate-able issue - advance of loan to shareholders - Held that:- the provisions envisaged by the legislature u/s 271(1)(c) of the Act has two limbs, both the limbs are independent to each other and any one of the ingredients may be the cause for imposition of the penalty u/s 271(1)(c) of the Act, in one limb, the concealment may exist whereas in another there may be furnishing of inaccurate particulars of income. The additions on the basis of which the penalty was levied by the AO u/s 271(1)(c) of the Act was deleted by the ld. CIT(A) and the ITAT upheld the order of the ld. CIT(A). Thereafter, the department preferred an appeal before the Hon’ble Delhi High court wherein the appeal was admitted and a substantial question of law was framed which was decided against the assessee and in favour of the department. Against the said order of the Hon’ble Jurisdictional High Court, the assessee filed SLP which was admitted by the Hon’ble Supreme Court [2012 (2) TMI 619 - SUPREME COURT] saying Pending appeal, there shall be stay as far as penalty or interest is concerned. In the present case, it is clear that the issue relating to the additions on the basis of which the impugned penalty was levied by the AO is highly debatable. In the present case also the issue relating to the additions on the basis of which the penalty u/s 271(1)(c) of the Act was levied by the Act was debatable. - Levy of penalty deleted - Decided in favour of assessee.
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2017 (8) TMI 1126
Reopening of assessment - capital gain addition - transfer of rights in favour of the Developer (JDA) - year of taxability - assessee contended that, in subsequent years he has paid the taxes and therefore, there was no loss to revenue or escapement of income as far as the assessee is concerned. - Held that:- Having gone through the assessment order, we find that the AO, has accepted the assessee’s returned income. For reopening of an assessment even within a period of 4 years, there need to be fresh material for the AO to issue a notice u/s 148. It is not sufficient if the AO believes that there is escapement of income as held by the Hon'ble Supreme Court in the case of Kelvinator India Ltd (2010 (1) TMI 11 - SUPREME COURT OF INDIA). In the case before us, the issue of capital gain was very much before the AO and the capital gain has arisen on account of sale of flats coming to Assessee’s share by virtue of the Development Agreement entered into by the assessee with M/s. JMR Promoters and Builders. Thus, it is clear that the AO while passing the order u/s 147 of the Act had all the material before him to compute the capital gain. The decision of the Hon'ble Supreme Court in the case of Kelvinator India Ltd is, in our opinion, applicable to the facts of the case before us. Therefore, in our opinion, the reopening of the assessment is void as rightly held by the CIT (A). Thus, grounds of appeal No.1 (a) & (b) are rejected. The capital gains would not arise in the A.Y 2009-10 as in the present case also the Development Agreement is dated 12.03.2007 and the HUDA building permissions were obtained in the financial year 2007-08 relevant to the A.Y 2008-09. In view of the same, the Revenue’s grounds of appeal 1(c) and (d) are rejected. Additional ground of appeal raised by the Revenue that in the alternative, the capital gain should be brought to tax in the A.Y 2007-08 is concerned, we are of the opinion that this Tribunal cannot give a direction to the AO to bring to tax any income in the A.Y which is not before us. It is left open to the AO to take remedial action, if any, if the law so permits. The additional grounds of appeal are also thus rejected.
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2017 (8) TMI 1125
Validity of assessment u/s 153C - AO jurisdiction - reliance on statement recorded under Sec. 132(4) - Held that:- As find ourselves to be in agreement with the ld. A.R that the ‘Statement’ of Sh. Abhinandan Lodha (supra) recorded under Sec. 132(4) in the course of search and seizure proceedings conducted in the case of Lodha group (supra) cannot be construed as a ‘seized document’, therefore, the reliance placed by the A.O on the same to justify the validity of jurisdiction assumed under Sec. 153C in the hands of the assessee company, cannot be accepted. We are further of the considered view that even otherwise as the disclosure of additional income of ₹ 110.25 lacs made by Sh. Abhinandan Lodha (supra) in his statement recorded under Sec. 132(4), in the hands of the assessee company is relatable to A.Y. 2011-12, and does not pertain to any of the years in respect of which jurisdiction had been assumed by the A.O under 153C in the case of the assessee company, therefore, the same on the said count also shall in no way go to confer validity to the assumption of jurisdiction by the A.O under Sec. 153C. We thus of the considered view that the A.O had clearly traversed beyond the scope of his jurisdiction u/s. 153C and therein proceeded with and framed assessment u/s. 153A r.w.s. 153C/143(3) in the hands of the assessee company. We thus finding no infirmity in the order of the CIT(A), therefore, uphold the same and dismiss the appeal of the revenue.
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2017 (8) TMI 1124
Addition made u/s. 69C - bogus purchases - Held that:- We are of the considered view that as the assessee before us had miserably failed to substantiate the genuineness of the purchase transactions. We thus in the totality of the facts involved in the case of the present assessee are thus of the considered view that the CIT(A) by restricting the addition to the extent of 5% of the aggregate value of the bogus purchases, had thus taken a liberal view and restricted the addition to the extent of ₹ 10,59,058/- We thus finding no infirmity in the order of the CIT(A), therefore uphold the same.
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2017 (8) TMI 1123
Levy of penalty u/s 271(1)(c) - validity of notice - non application of mind by AO - non struck off all irrelevant portion in the notice so as to charge the assessee whether he proposed to levy penalty on concealment of particulars of income or furnishing of inaccurate particulars of income - Held that:- on perusal of notice issued by the AO u/s 274 r.w.s. 271(1)(c) we find that the notice is issued in a printed form without specifying on which limb the AO is proposed to initiate the penalty. Sending the notice in a printed form of notice where all the grounds mentioned in section 271(1)(c), are mentioned, would not satisfy the requirement of law. Even in the notice issued u/s 274, the AO mentioned both the grounds, i.e. concealment of income or furnishing of inaccurate particulars of income, but he has levied penalty for furnishing of inaccurate particulars of income. From the above, it is clear that the AO has not arrived at a satisfaction before initiation of penalty proceedings. Notice issued by the AO u/s 274 r.w.s. 271(1)(c) is vague in nature which did not specify as to whether penalty proceedings is initiated for concealment of particulars of income or for furnishing inaccurate particulars of income and hence, the notice issued u/s 274 r.w.s. 271(1)(c) is invalid and consequent initiation of penalty proceedings is absurd and redundant. Therefore, the consequent levy of penalty u/s 271(1)(c) in all the cases under appeal is void ab initio; hence the penalty orders are hereby quashed. - Decided in favour of assessee.
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2017 (8) TMI 1122
Revision u/s 263 - AO has not considered the provisions of section 80A(5) before allowing the claim of deduction u/s 80IB(10) - AO has allowed deduction claimed u/s 80IB(10) even though such claim was not made u/s 139 or in the revised returns filed u/s 153A - assessee contended that, the issue of claim of deduction u/s 80IB(10) was subject matter of appeal before the CIT(A) as well as the Hon’ble ITAT have considered the issue and after taking into account the facts of the case and also the provisions of section 80A(5) has directed the AO to examine the issue of deduction claimed u/s 80IB(10). Held that:- Though the Ld.CIT(A) did not allow the claim of the assessee, the ITAT has admitted the additional ground filed by the assessee and directed the AO to examine the other conditions prescribed u/s 80IB(10). The AO, after satisfying with the other conditions, has allowed the claim of the assessee towards deduction u/s 80IB(10) of the Act. Therefore, we are of the view that the claim made by the assessee u/s 80IB(10) is in accordance with law and the AO has rightly allowed the claim made by the assessee. Accordingly, the order passed by the AO is not prejudicial to the interest of the revenue. The assessment order passed by the AO u/s 143(3) r.w.s. 254 of the Income-tax Act, 1961 is neither erroneous nor prejudicial to the interest of the revenue. - revision order set aside - Decided in favour of assessee.
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Customs
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2017 (8) TMI 1088
Jurisdiction - power of DRI to issue SCN - Held that: - the DRI is not a competent authority - I set aside the impugned orders and remand the matter to the original authority to decide the matter keeping in view the decision of Hon’ble Delhi High Court in the case of M/s Mangali Impex Ltd., M/s Pace International And Others Versus Union of India And Others [2016 (5) TMI 225 - DELHI HIGH COURT] - appeal allowed by way of remand.
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2017 (8) TMI 1087
Jurisdiction - power of DRI to issue SCN - Held that: - the DRI is not a competent authority - I set aside the impugned orders and remand the matter to the original authority to decide the matter keeping in view the decision of Hon’ble Delhi High Court in the case of M/s Mangali Impex Ltd., M/s Pace International And Others Versus Union of India And Others [2016 (5) TMI 225 - DELHI HIGH COURT] - appeal allowed by way of remand.
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2017 (8) TMI 1086
Attempt to export Heroin through Courier - Lapse on the part of prosecution to record the information - offence punishable under Section 23(C) and 28 of NDPS Act - Blue Dart Express Office and persons booking the parcel - the decision in the case of DAPHIRA WALLANG Versus INSPECTOR OF CUSTOMS, BANGALORE [2014 (9) TMI 973 - KARNATAKA HIGH COURT] contested, where it was held that The entire proceedings would come to naught, by virtue of the search and seizure conducted being vitiated, as the material gathered at such proceedings form the very basis of the prosecution - Held that: - the decision in the above case upheld - SLP dismissed.
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2017 (8) TMI 1085
Proceedings initiated by issue of Show Cause cum Demand Notice by the officers of Commissioner of Customs(Prev.) - Held that: - the powers of officers working in this organization to issue notice under Customs Act, 1962 as proper officers has been subject matter of decision by various High Courts - I set aside the impugned order and remand the matter to the original authority to decide the question of jurisdiction first and thereafter on merit after the matter is settled by the Hon’ble Supreme Court in the pending appeals by the Revenue against the decision of Hon’ble Delhi High Court in the case of Mangali Impex Vs. Union of India [2016 (5) TMI 225 - DELHI HIGH COURT] - appeal allowed by way of remand.
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2017 (8) TMI 1084
Import of Contraband item - Smuggling - Red colored wooden logs was found concealed below those sanitary goods - Held that: - It can be concluded that Sri K.A. Durai, noticee number 2 had nothing to say against the charges brought against him by the subject Show Cause Notice. Instead of appearing even after issuance of Show Cause Notice, he preferred to go in hiding to save him from the pecuniary penalty, proposed to be imposed on him by the subject Show Cause Notice. His involvement in the act of illegal export of Red sanders wood was detailed in the Show Cause Notice and he had nothing to reply in respect of the charges brought against him. It proves beyond doubt about involvement of Sri K.A. Durai in the illegal export of red Sanders out of India and penalty, as proposed in the subject Show Cause Notice is imposable on him. There is no attempt on the part of the appellant to refute the allegations - appeal dismissed - decided against appellant.
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2017 (8) TMI 1083
Valuation of imported goods - offset printing machine along with standard accessories - enhancement of value - Held that: - customs authorities have rejected the opinion of one expert simply on the basis of opinion by another expert. There is no other sufficient independent reason for such rejection. Such rejection has been held as not valid basis for rejection of Chartered Engineer certificate in the case of Anish Kumar Spinning Mills [2004 (5) TMI 172 - CESTAT, CHENNAI] - reassessment value on the basis of local Chartered Engineer certificate is not valid. Consequently, the declared value backed by the Chartered Engineer certificate from the originator is to be accepted. Confiscation of goods - penalty - Held that: - Admittedly, the imported goods are more than 10 years old in terms of Import Trade Control Regulations in EXIM 2002-07 read with para 3.3 of the Handbook of Procedures of Vol-I. The importers have violated the provisions of Foreign Trade (Development and Regulation) Act, 1992. The goods are therefore liable for confiscation under Section 111 (d) of the Customs Act, 1962 - the importers are liable for imposition of penalty also under Section 112 (a) ibid - however, the redemption fine reduced to ₹ 60,000/- and the penalty imposed reduced to ₹ 30,000/-. Appeal allowed - decided partly in favor of appellant.
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2017 (8) TMI 1082
Penalty u/s 117 - export of contraband item - The stand of the appellant is that the appellant is a partnership concern and for the fault of the employee, the firm shall not be penalized and the appellant also has no animus and accordingly, sought to contend that the reduced amount of penalty viz., ₹ 1,00,000/- is also beyond the power vested as per the provisions of Section 117 of the Customs Act - Held that: - smuggling was detected and therefore, the goods were confiscated under Section 113 of the Customs Act and penalty is imposed under Section 117 of the Customs Act. The appellant, a partnership firm, cannot plead that they do not have personal knowledge and individual liability cannot be fixed, when the banned drug viz., Ketamine Hydrochloride, to the tune of ₹ 70,00,000/- was found to have been concealed along with onion. The quantum of the contraband sought to be exported along with onion clearly reveals the animus to export the contraband by way of smuggling and it is a clear violation of Section 117 of the Customs Act. As such, we do not find any error committed by the respondent authorities in imposing the penalty - having regard to the provisions of the Customs Act, the Tribunal has rightly reduced the penalty to ₹ 1,00,000/- - appeal allowed - decided partly in favor of appellant.
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Corporate Laws
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2017 (8) TMI 1080
Other-Misconduct by chartered accountant - name lending to the prospectus to public issue though resigned as director - Held that:- The Chartered Accountant Satish Kumar Gupta had resigned as Director of BLF before opening of the public issue of BLF irrespective of the fact that his resignation was allegedly accepted on 9.9.1997, in respect whereof no material was brought on record. Having resigned before the commencement of the public issue, his name could not have appeared in the prospectus which in fact was there. This was nothing but lenting his name to the prospectus to the aforesaid public issue and misleading the investors. It is immaterial whether any investor was actually mislead. However, the Act of mis-conduct gets completed. In view of the above, we find that the disciplinary Committee has rightly held him guilty for “other mis-conduct” under Section 22 read with 21 of the Act. We do not even find that the recommendation made for removing the name of the Chartered Accountant from the register of the members for a period of three months is in any way illegal or is otherwise disproportionate to the charge he has been found guilty by the disciplinary Committee. We therefore, answer the reference in affirmative confirming the recommendation that the Chartered Accountant Satish Kumar Gupta is guilty of “other mis-conduct” and his name be removed from the register of members of the Chartered Accountants for a period of three months.
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2017 (8) TMI 1079
Change in the corporate name - RD (as a delegatee of the powers of the Central Government)powers to issue directions to change name - Held that:- The introduction of proviso to Section 22(1) must also be given some meaning; plainly, if the owner of a registered trade mark is not precluded from making a complaint within a period of five years of becoming aware of a company with a deceptively similar name, the power of the RD to examine and address such complaint should be read in the statutory provision. However, it is not necessary to examine the same in view of the provisions of the Companies Act, 2013 which are now in force The name of respondent no.2, Mondelez India Private Limited, too nearly resembles the name of the petitioner, therefore, the RD would be empowered to direct respondent no.2 to change its name. In view of the above, the RD is directed to issue the necessary directions to respondent no.2 to change its name to any other name which is not identical to or resembles the name of the petitioner or any other existing company. Respondent no.2 and its directors are also directed to ensure that respondent no.2 changes its name as indicated above.
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PMLA
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2017 (8) TMI 1076
Prevention of Money Laundering - determinative factors on the basis of which it can be said that whether any person or any property is involved in money laundering - Held that:- The Adjudicating Authority did not mention any reason as to why while passing the impugned order dated 23.03.2016, selective approach was adopted in considering and discussing the grounds submitted by the appellant in its written reply dated 11.01.2016 and on what basis the 14 ground. The said biased approach has caused severe prejudice and resulted in miscarriage of justice. The Adjudicating Authority despite submissions of documentary evidence by the appellant that the respondent had misrepresented the facts and had distorted the same in the Original Complaint for prejudicing the mind of the Adj. Authority accepted the same distorted version as the “Facts & circumstance of the case” in the impugned order. It is evident from the record that the appellant had been following the international standards and norms of collection and distribution of royalty. The amounts of the royalty collected and pending distribution could in no manner be construed as proceeds of cheating. The appellant had been filing all the statutory returns under the Income Tax Act and the Companies Act on time and never ever an iota of suspicion has ever been raised by any of the Statutory Authority in respect of the working of the Appellant or with regard to its financial statements and returns. The balance amount of royalty lying in the investment portfolios in the name of Appellant can in no way be construed as ‘proceeds of crime’ and can be liable for provisional attachment or for any other purpose under the provisions of PMLA, 2002. If for the sake of arguments if it was assumed that that royalty collected was ‘proceeds of crime’ then the amount which has been distributed also will amount to proceeds of crime and all those who have received the same will have to be booked for offence for money laundering along with the persons from whom the said sums of royalty had been collected. That the contention of the respondent that the royalties so collected in legal and lawful manner were ‘proceeds of crime’ was grossly wrong, baseless and without any logic. The Adjudicating Authority failed to appreciate the order of the Hon’ble Bombay High Court in the Notice of Motion wherein it had been held that the operations of the appellant are lawful and legitimate. Accordingly, the impugned order passed by Adjudicating Authority in confirmation being not sustainable, is liable to be set-aside as the same was passed contrary to facts and against the law. We may clarify here that during the course of the hearing, the learned counsel for the appellant has confirmed to us to pay the Royalty to the unpaid Artist without any condition as per law. Under these circumstances, we are of the view that unpaid artists will also be entitled to claim the interest on the amount of Royalty.
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2017 (8) TMI 1075
PMLA - provisional attachment order - property in the present case was attached for value of proceeds of crime involved in money laundering - whether applicant/appellant is a separate and distinct legal entity and its property could not be attached on account of alleged defaults by the KAL and Dr. Vijay Mallaya? - Held that:- In case the provisions of section 8(4) and 8(5) of the PMLA are read together, it is evident that after the confirmation of the attachment by the Adjudicating Authority, the Enforcement Directorate is required to take the possession of the attached property. While the Tribunal, in exercise of its inherent powers of an appellate court during hearing appeals under the related acts, in suitable cases has granted interim relief including by way of stay of action for taking possession of attached properties confirmed in adjudication subject to such conditions as considered suitable in a particular case, for the reasons as mentioned above we do not consider the present case to be one where such discretion can be exercised. The attached property is a vacant property w.e.f. 31.03.2017 as informed by learned counsel for the appellant. The value of the property as as stated in the statement of Shri N.R Padamnabhan, Director in the appellant company appellant is approximately between ₹ 170-200 crores. Admittedly, Dr. Vijay Mallya has not cleared the loan amounts worth thousand of crores. He is declared as absconder. It is also not his case that he is not capable to pay the amounts due to the banks. The amount due in-fact is public money. There is no assurance on his behalf that in a particular period of time, he would clear the loan amount. He has not shown his willingness to join the proceedings pending against him in Indian courts. It also appears from the material placed on record that he was actively involved in the day to day activities of all the businesses carried out by him directly or indirectly when the loan was sanctioned. Merely by alleging that a particular company is an independent entity would not help the case of the appellant because he was the ring master of entire game. Thus the facts in the present case are peculiar than other cases referred on behalf of the appellant. It is also well settled position in law that the party who is absconding and carrying the public money and evading the process of law would not be entitled for discretionary relief from any court. Accordingly, and in the facts of the present case, we are not inclined to exercise the discretion in favour of the appellant who, prima facie , is controlled by Dr. Vijay Mallya. The application for stay is, therefore, dismissed. The respondent would be entitled to take the possession of the property under section 8(4) of the Act in the manner prescribed under the rules.
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Service Tax
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2017 (8) TMI 1121
Business Support Services - Whether ‘infrastructure’ or ‘port’, charges for the space provided by the appellants to private operators enabling them the access of ‘interconnection links’, is covered under ‘Telecommunication Service’, defined in Section 65(104c) of the Finance Act 1994? - Circular dt. 12.3.2007 - Held that: - the tribunal requires to review the complete matter and give a fresh decision in view of the fact that when the earlier decision was rendered it was lost in transit which is not permissible - appeal allowed by way of remand.
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2017 (8) TMI 1120
Refund claim - time limitation - N/N. 41/2012-ST dated 29.06.2012 - Held that: - It is well settled law that when the wordings of a notification are unambiguous, the same have to be adhered to. The expressions used in the notification laying down the date of export as the relevant date cannot be held to be ambiguous, thus requiring any no legal expertise to interpret them. It is well settled that neither any extraneous expressions or wordings can be introduced nor any wordings of notification can be ignored, while interpreting the same. The appellant's claim has to be adjudged in the light of the clear expression used in the notification. As such, I am of the view that the lower authorities have rightly held against the assessee as regards the limitation aspect - refund rightly denied - appeal dismissed - decided against appellant.
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2017 (8) TMI 1119
Refund claim - service tax paid erroneously under GTA services - rejection on the ground that the material evidence by way of documents such as lorry vouchers / consignment notes etc. in support of refund claim is not furnished - Held that: - The appellant has to maintain the accounts properly and the documents supporting the transactions should also be proper. The process of refund sanction cannot be such in a manner of conduct of investigation by the department as in cases where demand of service tax is made. The documents supporting the refund claim as well as how the claim is made should be properly accounted and easily determinable - though appellant may have a legal claim, the same is not sufficiently substantiated by evidence - though appellant contends to have made the payment of service tax under protest, the appellant has no case that such amount was made on any demand or coercion made from the department - refund not allowed - appeal dismissed - decided against appellant.
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2017 (8) TMI 1118
Reverse Charge Mechanism - CENVAT credit - whether for the period prior to 18.04.2006, if the appellant has paid service tax under reverse charge mechanism as per section 66 of the Finance Act, 1994, the appellant is entitled to avail credit or not? - Held that: - the appellant being tax compliant has paid service tax under section 66 although the same was not charging section and Rule 3 of Cenvat Credit Rules, 2004 provided availability of credit of service tax paid on under section 66 of the Finance Act. Therefore, the appellant is entitled to avail credit. Whether the appellant is entitled to avail credit for the service tax paid under reverse charge mechanism after 18.04.2006 in terms of Rule 3 of Cenvat Credit Rules, 2004 or not? - Held that: - the Finance Act, 2011 has got amended with retrospective effect i.e. from 18.04.2006 which provide the appellant is entitled to avail credit under Rule 3 of CCR, 2004. In that circumstance, the appellant is entitled to avail credit with effect from 18.04.2006 on the service tax paid under reverse charge mechanism under Rule 3 of CCR, 2004. Appeal allowed - decided in favor of appellant.
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2017 (8) TMI 1117
Advertisement Agency Service - the appellant rents the space for display of advertisement at various places of the theatre complex in the form of hoardings, neon signs, cinema tickets etc - department was of the view that the activities undertaken by the appellant would fall under the category of Advertisement Agency Service and that were liable to pay service tax - sale of space or advertisement - Held that: - what is being taxed is planning and expertise involved in making, preparing display or exhibiting the advertisement and not simply providing of a place or space to the advertiser. The expression display or exhibit does not mean the physical act of display and exhibit, but relates to the services rendered, as an expert body, to the client, for the purposes of display or exhibit. The same may involve the expertise of the provider of the services to advise the client as to in which manner, the advertisement should be displayed i.e. whether in the newspaper or on TV channel or by way of hoardings or a audio/video advertisement in air or any other medium or at what point of time the same should be exhibited. No such expert services are being provided by the appellant in the present case. They are merely canvassing their clients to make utilize of the space available with them for the purposes of advertisement of their product during the course of matches, which are going to be telecasted and by which they can popularize their products. As such, the activities amount to sale of space and not as regards advertisement. The Board vide Circular No. 78/8/2004-ST dated 23.3.2004 has clarified that in case of free commercial time, selling the time allotted does not fall within the purview of Advertisement Service since the said activity is not connected to making, preparation, display or exhibition of advertisement. The Board clarified that such activity will be covered only under Space Selling and not under Advertising Agency - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 1116
Work Contract Service - It was alleged in the said SCN that construction of pipeline for the purpose of Commerce & Industry covers the activity undertaken by the appellant - Held that: - both SCN and Order-in-Original have presumed that the activity is for the purpose of Commerce & Industry, whereas we do not find any evidence establishing so in the whole proceedings of the case - the said SCN dated 21/03/2013 is totally presumptive in nature and therefore, the Order-in-Original deserves to be set aside - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 1115
CENVAT credit - capital goods - Diesel Generator - Tacho Generator - Luffing Motor - Hoisting Closing Motor - paint - Revenue is of the view that since the said items are used for further fabrication of Floating Crane, which fall under heading 89.05 and are not covered by the definition of capital goods, as defined under Rule 2 (a) of the CCR, 2004 - Held that: - similar issue decided in the case of M/s Omax Auto Limited Versus CCE, Delhi-III [2013 (8) TMI 301 - CESTAT NEW DELHI], where it was held that The purpose for which the goods were used and whether after use the goods became part of plant and machinery fixed to/embedded to the earth is not relevant - credit allowed. As regards paints, reliance placed in the case of COMMISSIONER OF CUS. & C. EX., RAIPUR Versus BHILAI STEEL PLANT [2009 (9) TMI 840 - CESTAT NEW DELHI], where it was held that Cenvat credit in respect of paints are allowed - credit allowed. Appeal dismissed - decided against Revenue.
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2017 (8) TMI 1114
Banking and other financial services - cheque return charges, minimum balance violation charges and non-maintenance of Quarterly Average Balance (QAB) received by the appellant were taxable being the consideration received for providing banking service to its Customers - Penalty - Held that: - The scheme of taxing entry under Section 65(105)(zm) of the Act, envisages taxation of any services provided by a bank and all such services provided in relation to provision of banking services are sought to be taxed by that entry. Accordingly, the scope of services provided in relation to operation of the bank account falls within its ambit. All the three charges stated above were received by the appellant "in relation to" provision of banking service and most particularly operation of bank accounts opened with it by its customers. The receipts made by appellant from its customers for acting for them on their instructions or terms agreed between them are valuable consideration received by the appellant while providing service of maintaining their accounts with it. That is not the penalty realized by the bank from its customers. Penalty as is commonly understood in law is a realization against infraction of law. The appellant bank being a service provider sought to recover cost of services provided to its customers for presenting their cheque for realization or for honouring their cheques presented by drawees. Such cost recovered does not assume the character of penalty since that was sought to be recovered in consonance with the terms agreed between the parties. Similarly, the charges collected by it, in respect of accounts falling below the minimum balance required to be maintained in respect of accounts is a recovery of cost of maintaining such accounts. That cannot also be characterized as penalty. The cost recovered by the appellant bank from the account holders whose quarterly average balance fall, below the agreed amount is nothing but a consideration received by it to provide the service of banking to the customers. Naming of such cost recovery as violation charges does not alter the object of taxation of the receipt made by it in relation to the provision of service of operation of accounts opened by its customers with it. Penalty - Held that: - it is the Revenue's case that there was deliberate intention of the appellant to keep Revenue in dark without disclosure of the aforesaid receipts in its returns required to be filed under law. It may be stated that what that is required by law to disclose to Revenue by an assessee, if not disclosed and such non-disclosure is attributable to the intention of the assessee, that amounts to suppression. It was left to the assessee to include the aforesaid three receipts in its tax return at least under protest. But that was not done. Therefore, it cannot be said that the appellant had honest belief of no taxation of the aforesaid three receipts. Such deliberate non-disclosure and non-payment of tax on aforesaid three receipts calls of levy penalty on the appellant. Appeal dismissed - decided against the assessee.
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Central Excise
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2017 (8) TMI 1113
CENVAT credit - captive consumption - steam produced by appellant used by sister concern - The main unit was using Furnace Oil as fuel for production of steam in the boiler. The steam so produced is consumed captively by the main unit. The steam was also supplied by the Respondent to their adjoining sister concern, namely, M/s. Alkem Laboratories through pipelines - Held that: - the Appellant can in no way be aggrieved by the impugned order of CESTAT since CESTAT has merely remanded the matter back upon the contention of the revenue that it was not known whether the sister concern of the Respondent had cleared the final product in which steam was generated on payment of duty or not. CESTAT has directed verification of the payment of duty by the sister concern by the adjudicating authority and only upon verification, it would be determined whether the end products of the sister concern are cleared on payment of duty and if that is answered in the affirmative, then CENVAT credit cannot be denied to the Respondent - appeal dismissed being not admitted.
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2017 (8) TMI 1112
MODVAT/CENVAT credit - manufacture of paper and paper products falling under Chapter No. 48 of the First Schedule to the Central Excise Tariff Act, 1985 - rejection of application by Settlement Commission - rejection solely on the ground that the petitioner has not made a full and true disclosure of their duty liability - Held that: - Section 32E of the Central Excise Act, 1944 deals with applications for settlement of cases. Sub-section (1) of Section 32E states that, an assessee may, in respect of a case, relating to him make an application, before adjudication, to the Settlement Comission to have the case settled in such form and in such manner as may be prescribed and containing the full and true disclosure of his duty liability, which has not been disclosed before the Central Excise Officer having jurisdiction - the petitioner had rightly approached the Commission on issuance of show cause notice. Whether there has been a full and true disclosure of the duty liability by the petitioner in the application filed before the Commission? - Held that: - the facts of the case are quite peculiar and distinct and the term, full and true disclosure has to be interpreted considering the facts of each case and if such an interpretation is given, in my view, there has been a full and true disclosure by the petitioner, though the manner in which it has been presented may not be appropriate, the reason being that the show cause notice itself was restricted to the period from November, 1997 to June, 2001. It is only after the receipt of the show cause notice that the petitioner had the cause of action to appear before the Commission. The show cause notice admits that the petitioner had paid Central Excise duty to an extent of ₹ 28,00,923/- and that covers the period anterior to the period mentioned in the show cause notice and that is from June 1996 onwards. The show cause notice covered only the period from November 1997 to June, 2001. It is not a case where, though the petitioner failed to make a full and true disclosure of their duty liability, but appeared to have raised a technical plea, which could not have been the reason to throw out the application filed by the petitioner, which is a Public Sector Company wholly owned by the Government of Tamil Nadu. The matter is remitted back to the Settlement Commission for consideration of the petitioner s application on merits and in accordance - petition allowed by way of remand.
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2017 (8) TMI 1111
Restoration of appeal - Sale - presumption u/s 12B of the Act - the impugned order holds that the presumption u/s 12B of the Act is not applicable as the department has no evidence to prove that the appellant has passed on incidence of duty to any other person - Held that: - the definition of 'sale' in Section 2(h) is transfer of possession from one person to another for consideration. In this case, the job work is performed by Unit II of respondent/assessee for its customers on goods received from its customers. After carrying out the process, the goods are again handed over possession of to customers. Therefore, it would be a 'sale' within the meaning of the Act. The person receiving possession of goods back would be similar to the person purchasing goods and would be covered by commonly understood word 'buyer' in terms of Section 12B of the Act. The burden would be upon the respondent/assessee to rebut the presumption that the incidence of duty paid on welding electrodes has not been passed on to its customers - the impugned order of the Tribunal is unsustainable. The issue restored to the Assessing Officer to enable the respondent/assess to rebut the presumption u/s.12B of the Act in respect of duty paid on welding electrodes - appeal allowed being restored.
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2017 (8) TMI 1110
Interpretation of statute - Rule 2(l) of the Cenvat Credit Rules, 2004 - credit of service tax paid on transportation upto customer's destination from the place of removal - Held that: - In the present facts, it is an admitted position before us that the respondent - Assessee had responded to the notices demanding service tax on the basis of interpretation of 2(l) of the Cenvat Credit Rules, 2004 and had not placed any reliance upon the aforesaid CBEC Circular before the Authorities under the Act. It is only now, before us, that the respondents are seeking to rely upon the above CBEC Circular dated 23.08.2008 as it is also adverted to the above decisions referred in the question of law. However, the Revenue did not have any occasion to examine whether or not the conditions precedent provided in the aforesaid Circular of CBEC are satisfied by the Assessee or not to avail of its benefit. We are not deciding the appropriate interpretation of 2(l) of the Cenvat Credit Rules, 2004 in the facts of the present case, as the issue of the applicability of the Circular to the facts is still an unresolved issue - all the issues, both on merits i.e. interpretation of 2(l) Cenvat Credit Rules, 2004 as well as applicability of the CBEC circular are left open for consideration of the Assessing Officer who would pass an appealable order after following the principles of natural justice - matter on remand.
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2017 (8) TMI 1108
CENVAT credit - moulds - Whether Hon’ble CESTAT is legally justified in not denying the Cenvat credit on the moulds on the basis of a Chartered Engineer Certificate whereas relevant Central Excise invoices clearly indicated that said moulds were removed by the assessee? - Held that: - The Adjudicating Authority relied upon the invoices to hold that the moulds had not been removed. The invoices merely evidence a sale. They do not evidence the movement of the goods in respect whereof, they are raised - We will presume that absent anything else an invoice prima facie indicates the delivery of possession of the goods sold. However, in the present case, this presumption is rebutted by the certificate issued by the Chartered Engineer. There is nothing that indicates that the certificate issued by the Chartered Engineer is false. The Tribunal cannot be faulted for having relied upon the certificate issued by the Chartered Engineer. The Tribunal rightly proceeded on the basis of the balance of probabilities - appeal dismissed - decided against Revenue.
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2017 (8) TMI 1107
Cenvat credit - reversal of credit on removal of capital goods - Penalty - Held that: - appellants had admittedly taken 50% of the credit on both the Auto Coners during the year 2001-02 (on 29.01.2002) in terms of the provisions of Rule 4(2)(a) of CCR - Within two days, under invoice no. 1766 dated 31.01.2002, they transferred one Auto Coner to their Guna Plant. The remaining 50% of the Cenvat credit on both Auto Coners was taken during the year 2002-03 despite the undisputed fact that one of the Auto Coners was not available in their Baddi factory during 2002-03 - Hence, after availing the credit on both the machines, if there was transfer of one of the two Auto Coners to Guna Plant during 2001-02, the right course would have been to debit the full credit of ₹ 5,62,949/- pertaining to the transferred of Auto Coner and to take its full credit at the Guna Plant. It is settled position in law that when a particular thing is directed to be performed in a manner prescribed by Rules, it should be performed in that manner itself and not otherwise. I find that after the detection by audit, the appellants have taken the position that both the plants of the assessee have taken the total credit of ₹ 22,51,796/- only (Rs. 11,25,898/- each per Auto Coner), thus making the total credit so availed equal to due amount of credit. However, that proposition is made in disregard of the Cenvat Credit Rules. In this regard, I find force in the contention of Ld. Commissioner that the appellants could not reversal 100% credit of duty paid on one Auto Coner, which would have been violative of Rule 4(2)(a) of CCR, 2001. The fact of removal of one Auto Coner to Guna Plant, which took place within 2 days of taking credit, was not brought to the notice of the Central Excise Authorities and it was detected only during the course of audit. Hence, the order of Commissioner (Appeals) with regard to penalty is also sustainable - Appeal dismissed - decided in favor of the revenue.
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2017 (8) TMI 1106
Search and seizure - Denial of SSI exemption - turnover of the two business entities was clubbed - Held that: - both the business entities are different having distinct and separate entity being the Proprietary concern and Private Limited Company. The assessment of turnover for Income Tax purposes was being made separately and their factory premises are also differently located. Only that the Directors of the Private Limited Company are the sons of the Proprietor of the firm, does not mean that they are the same business entities, especially when in the subsequent assessment year the Department has accepted these facts. Regarding seizure - After considering the totality of the facts and circumstances of the case, it is evident that when the turnover of both the business entities cannot be clubbed, as stated above, then we direct the adjudicating authority to decide the issue afresh but by providing a reasonable opportunity to the assessee-Appellants - Appeal allowed partly.
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2017 (8) TMI 1105
Clandestine removal - SS Flats - clearance of A.S. & M.S. Ingot/Bars of Rods and Ferro Alloys without dispatching any goods to them so that such recipients could avail Cenvat Credit on the invoices without receiving the corresponding goods - Held that: - the contention of the Ld. Advocate that the adjudicating authority did not follow the requirements of Section 9D of the Central Excise Act, 1944 is correct - I find that almost the entire case is built on the statements of these persons and other corroborative evidence requires admission of these statements as evidence. It is settled law that the adjudicating authority cannot straight away rely upon the statements recorded during the investigation unless the conditions set out in Section 9D of the Act are fulfilled - the adjudication order is liable to be set aside and the matter requires to be adjudicated afresh after following the procedure laid down under Section 9D of the Act and by following the principles of nature justice - appeal allowed by way of remand.
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2017 (8) TMI 1104
Clandestine removal of the goods - it was alleged that the appellant has exceeded the SSI exemption limit and therefore, on the excess amount of clearances, after exhausting the SSI limits, demand of duty was confirmed and penalty was imposed - whether the statement of appellant is admissible as an evidence in terms of provisions of Section 9D of the Act or not? - Held that: - Admittedly, in the case in hand, examination in chief has not been conducted, therefore the statements of the appellant during the course of investigation is not admissible evidence - reliance placed in the case of Commissioner of Central Excise, Delhi-I, M/s Kuber Tobacco India Ltd, Shri Dhanpat Singhee, Director, Shri Chatar Singh Baid, Shri Vikas Malu Versus M/s Kuber Tobacco India Ltd, Commissioner of Central Excise, Delhi-I [2016 (4) TMI 622 - CESTAT NEW DELHI], where it was held that there is no requirement in the Act or Rules, nor do the principles of natural justice and fair play require that the witnesses whose statements were recorded and relied upon to issue the show cause notice, are liable to be examined at that stage. Whether the charge of clandestine removal can be proved on the basis of statements of appellant or not? - Held that: - none of the procedure has been followed to allege clandestine removal of the goods against the appellant. Moreover, the 7 Kucha Slips which were recovered during the investigation are the part of the invoices issued by the appellant for clearances of the goods. Admittedly, all the clearances made by the appellant falls within the threshold limit of SSI exemption N/N. 8/2003-CE dated 01.03.2003. Therefore, in the absence of any corroborative evidence, the Revenue has failed to prove the charge of clandestine removal. Appeal allowed - decided in favor of appellant.
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2017 (8) TMI 1103
Valuation - Compounded Levy Scheme - manufacture of pan masala - number of packing machines installed and their speed - Held that: - the only thing revenue found on the date of inspection was that the appellant was having packing material lying in the storeroom having MRP of ₹ 1.50. Accordingly, we find that the revenue have not found anything in contrast to the declaration filed by the appellant on 10th July, 2008 in form-1, as required under the notification for compounded levy - the SCN is wholly illusory and not based on the facts on record. It is neither case of the revenue that they have found more packing machines on the manufacturing floor than the number of packing machines declared nor found more number of packing machines engaged in the manufacture of Pan Masala, Gutkha, nor there is any finding of appellant engaged in manufacture of Pan Masala & Gutkha having MRP of ₹ 1.50 or any other MRP other than the declared MRP of ₹ 1.00 per pouch. In this view of the matter, the SCN is misconceived and not sustainable. Appeal allowed - decided in favor of appellant.
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2017 (8) TMI 1102
Valuation - includibility - various items of expenditure had been incurred for delivery of the goods in addition to freight - Held that: - the appeals filed by M/s. SPIC Ltd., against the order passed by the lower authority for an earlier period had come up before this Tribunal in the case of SPIC LTD. Versus. COMMISSIONER OF C. EX., CHENNAI [2006 (10) TMI 54 - CESTAT, CHENNAI], where it was held that As per Section 4(2) of the Act, it the price of goods for delivery at the place of removal is not known and the value thereof is determined with reference to the price for delivery at a place other than the place of removal, the cost of transportation from the place of removal to the place of delivery shall be deducted from such price - demand upheld - appeal dismissed - decided against appellant.
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2017 (8) TMI 1101
CENVAT credit - fake invoices - case of Revenue is that The AIPL have not supplied the goods to the appellant but only invoices were raised - request for cross-examination denied - Natural justice - Held that: - the request of the appellant for cross examination of the witnesses should have been considered and the cross examination should have been allowed. When the statements of 3rd party are relied upon by the adjudicating authority and if the person against whom the said statements are used, denied those statements, it is obligatory on the part of the adjudicating authority to conduct cross examination in terms of Section 9(d) of the Central Excise Act, 1944. Even if the cross examination is not asked for, and adjudicating authority wants to rely upon the 3rd party statements, then also the said statements cannot be used unless witnesses who have given statements are cross examined - In view of this statutory provision, the adjudicating authority must have allowed the cross examination of the witnesses which he failed to do so - in the present case the adjudicating authority has not followed the principles of natural justice therefore matter needs to be remanded to the adjudicating authority for passing afresh order - appeal allowed by way of remand.
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2017 (8) TMI 1100
Delay in payment of duty - penalty u/r 25(1)(a) of Central Excise Rules, 2002 - Held that: - there is delay in quarterly payment of duty by the appellant. This is not the case of clandestine removal and non-payment or short payment of duty with intent to evade payment of duty. The appellant have recorded their clearances in their book of accounts and declared in quarterly Returns. Therefore they never had any intention to evade this duty, if this is so Rule 25(1)(a) cannot be invoked - reliance placed in the case of M/s. Praweg Conveyors Versus Commissioner of Central Excise, Kalyan III [2016 (8) TMI 238 - CESTAT MUMBAI] - penalty set aside - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 1099
Capital goods cleared for export - whether duty is payable on the capital goods cleared for exports after use on which Cenvat credit was availed? - Held that: - capital goods after use for 3 to 4 years have been cleared for export. Any goods which cleared for exports the taxes and duties are not exported. In the present case duty has been demanded in respect of capital goods which is admittedly exported therefore duty is not payable - reliance placed in the case of Commissioner of Central Excise, Pune-II Versus M/s. Suessan Asia Pvt Ltd Satara [2016 (3) TMI 395 - CESTAT MUMBAI], where it was held that The contention of the department that a manufacturer can export only the goods manufactured in India under bond without payment of duty is not tanable, in view of the fact that while importation of Capital goods, the Countravalling duty to the extent of Excise duty, as if the goods have been manufactured in India, had already been recovered - no duty is chargeable on the capital goods cleared for export - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 1098
CENVAT credit - place of removal - credit denied on the ground that no evidence was produced that the CHA service was used for export of goods and place of removal is not the factory, but it is port of exports therefore place of removal is factory gate - Held that: - in case where place of removal is not place of export the CHA service is not admissible input service - there is no dispute that CHA service received by the appellant is for export of goods from the port of export, hence the same is input service - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 1097
Issuance of SCN beyound time limitaion - recovery of Interest and penalty - sou moto payment of differential duty on revised value - Held that: - the Department has issued two SCN dt. 22.04.2010 and 20.09.2010 for interest on the differential duty voluntarily paid by the appellant on their own. Both the SCN have been issued beyond the period of limitation. However, the extended period has not been invoked in these show cause notices nor is there any allegation in that regard - the issue is squarely covered by the decision in the case of Commissioner, Central Excise Commissionerate Versus M/s VAE VKN Industries Pvt. Ltd. [2013 (10) TMI 30 - PUNJAB & HARYANA HIGH COURT], where it was held that department had absolutely no jurisdiction to issue SCN after expiry of the period of limitation for interest on the delayed payment for the period - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 1096
CENVAT credit - input services - erection and installation, repair and maintenance and also other similar services utilized/used in its Wind Mill site at Jaisalmir - denial on the ground that the wind mill is a distinct unit and situated at a place away from the factory of manufacture of final product and thus, should not be considered as the factory of the manufacture of the appellant for the purpose of availment of cenvat credit - Held that: - Since there is no stipulation contained in either Rule 2 or Rule 3 ibid providing for use of the services exclusively within the factory, the disputed services used in the wind mill for generation of electricity, which in turn, were used for manufacture of the final product in the factory of the appellant, should be considered as input service for the purpose of availment of cenvat credit of service tax paid thereon - similar issue decided in the case of Bajaj Auto ltd. Vs. CCE [2016 (1) TMI 593 - CESTAT MUMBAI], where the cenvat credit of services tax paid on various services used in the wind mill for generation of electricity was allowed - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 1095
Classification of goods - switches, plugs, sockets, fuses lamp holders and ceiling roses - whether the goods conform to Indian Standard and whether the goods manufactured were branded or not - Natural Justice - Held that: - We are not provided with material to appreciate whether the appellant-assessee was the owner of the brand-name. The assignment deed may be of different formats. But its contents are relevant. Therefore, it is primary duty of the adjudicating authority to examine the contents of the assignment deed thoroughly and also enquire as to whether by virtue of the assignment deed, the brand name was owned by the assessee exclusively. On the basis of outcome of his examination and enquiry, he shall be in a position to reach to a proper conclusion and decide notification benefit, if any, admissible. While carrying out such exercise, learned Authority shall also examine minutely all the other conditions specified in the notifications. During the course of scrutiny, appellant is entitled to a fair opportunity of hearing to plead on facts and law as well as adduce evidence, if any. It is surprising to note that while issuing a notice on 29/07/1994, learned Authority had all facts and figures with him for the period beginning from 08/09/1989 till 31/03/1994. He again issued a notice on 27/09/1994 covering the same period from 28/09/1989 to 31/03/1993 although that may be for different goods and different periods are covered. Authority did not stop there. He issued further notice on 30/06/1995 covering the period from 01/08/1994 to 31/03/1995. This has resulted in multiplicity of litigation. He should state the reasons of issuance of such multiple notices specifically against each such notice and covering relevant period in his re-adjudication order. Limitation issue may be considered in the re-adjudication. Matter remanded to the adjudicating authority to afford reasonable opportunity of hearing to both and pass an appropriate order - appeal allowed by way of remand.
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2017 (8) TMI 1094
CENVAT credit - scope of input service - commission paid to the selling agents for causing sale of Kraft Paper & M. S. Ingots - Held that: - sales promotion was already an item defined as an input service - the respondent-assessee is entitled to input credit on sales promotion or commission paid for sale of their dutiable output/products - appeal dismissed - decided against Revenue.
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2017 (8) TMI 1093
Valuation - consumption of gas required for production of steel - it appeared to Revenue that M/s. Rathi Udyog Limited received the balance consideration that is ‘Actual Value Received - Actual Value Declared’ from the customers in cash without reflecting it in the Books of Accounts - Jurisdiction - Held that: - During the relevant period the provisions of assessment were that the assessee was required to file classification list under Rule 173B of Central Excise Rules, 1944, pricelist under Rule 173C of Central Excise Rules, 1944 before the Jurisdictional Assistant Commissioner. It was the duty of the Assistant Commissioner to decide classification of goods on the basis of classification list and assessable value on the basis of pricelist. Decision on pricelist was for arriving at assessable value by the Assistant Commissioner and such decision was treated as adjudication and on such finalization of value, if the Jurisdictional Commissioner disagreed then he was required to review such approved pricelist and give direction to the Divisional Assistant Commissioner to file appeal against such finalization of pricelist before the Jurisdictional Commissioner (Appeals). In the present case the pricelist were admittedly filed by the appellant. The Divisional Assistant Commissioner did not finalize them. Therefore, the Commissioner had no jurisdiction to call upon the assessee for adoption of any other prices, till such time, assessable value through said pricelist was finalized by the Divisional Assistant Commissioner. So far as undervaluation charges are concerned, the Jurisdictional Commissioner did not have jurisdiction to demand duty till such time the pricelists were finalized and if aggrieved appeal was not filed before Commissioner (Appeals) and such appeal was not decided by Commissioner (Appeals). The ruling by Hon’ble Supreme Court in the case of Commissioner of Central Excise, Meerut-I v. R.A. Castings Pvt. Ltd. [2010 (9) TMI 669 - ALLAHABAD HIGH COURT], is squarely applicable in the present case wherein it was ruled that on the basis of consumption of energy required for manufacture of unit quantity of goods quantum of manufacture of goods cannot be arrived at and such conclusion of manufacture shall be treated as presumptive. Demand set aside - appeal allowed - decided in favor of appellant.
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2017 (8) TMI 1092
Compounded levy scheme - Section 3A of the Act read with Rule 96ZP(3)of Central Excise Rules, 1944 - whether the option given earlier in the month of August by the appellant assessee remains valid and good for the amended and/or substituted compounded levy scheme with effect from 1st September, 1997 - Held that: - Admittedly, Rule 96ZP(3) stood substituted with effect from 01/09/1997. Accordingly, the option given under the original Rule 96ZP(3), if any becomes redundant and stale on substitution of Sub-rule (3) of Rule 96ZP. Admittedly, there is no fresh option given as provided in Sub-rule (4) of Rule 96ZP in terms of the substituted Rule 96ZP(3) on or after 30/08/1997 - the appellant have never acted upon in terms of the said declaration, which is found otherwise redundant and stale in terms of the amended provisions as from the very beginning, soon after the implementation of the compounded levy scheme with effect from 01/09/1997, the appellant have opted to pay categorically on the basis of actual production under Section 3 of the Act which is evident from the averments before the Hon’ble Delhi High Court in their writ petition and also evident from their letter dated 21/11/1997 filed before the ld. Commissioner. The appellant is entitled to pay duty under the normal scheme of Section 3 and under the provisions of Section 3A(4) on actual production basis. The appellant will be entitled to consequential benefits of adjustment of duty etc. if any paid in excess in accordance with law - the Adjudicating Authority were directed to determine the duty on the basis of actual production taking into account the returns filed by the appellant and allow adjustment of duty already deposited - appeal allowed by way of remand.
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2017 (8) TMI 1091
Lapsing of credit of duty lying unutilised with the manufacturer from a specified date - decision in the case of M/s SML Isuzu Ltd. & Anr. V.E. Commercial Vehicle Ltd. & Anr. Versus Union of India & Anr [2016 (7) TMI 1074 - DELHI HIGH COURT] contested, where it was held that Scope of judicial review in respect of fiscal legislation is limited to the extent of determining whether it is outside the legislative competence of the legislature to enact such legislation and/or whether such enactment is so unreasonable and irrational so as to violate the rights guaranteed under the Constitution - Held that: - the decision in the above case upheld - SLP dismissed.
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2017 (8) TMI 1090
Non-speaking order - According to the petitioner, the application was complete in all respects and if it was not so, the respondents were duty bound to return the same within 48 hours of filing such application. Admittedly, this having not been done, the petitioner would state that the application for refund was complete in all respects - Entitlement of interest - delayed payment of refund - Held that: - it is too early a stage for this Court to apply these decisions since the factual matrix is yet to be verified which exercise obviously cannot be done in a writ petition especially when the petitioner has an effective alternate remedy by way of an appeal. Therefore, this Court is inclined to direct the petitioner to file an appeal as against the impugned order as the appellate authority has jurisdiction to call for the original files, verify the date of application, whether the application was complete in all respects and if it was not so, why it was not returned within 48 hours, whether the petitioner had sought for time to produce the original challans, whether the original challans were produced along with the application for refund or was it submitted only on 09.09.2014, what was the stage of the matter before the Hon'ble Supreme Court between the date of the Tribunal's order, ie. 04.06.2009 and the judgment of the Hon'ble Supreme Court on 11.03.2014 etc. The writ petition is disposed of directing the petitioner to present an appeal before the Commissioner of Central Excise (Appeals), Chennai.
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2017 (8) TMI 1089
Receipt of application by Settlement Commission - subsection (5) of section 32F of the Act - the Settlement Commission did not grant hearing as envisaged under section 32F of the Central Excise Act, 1944 - it is also alleged that the Settlement Commission committed serious errors in law in not accepting the petitioners' contentions regarding the invoices relied upon - Held that: - Subsection (5) of section 32F undoubtedly provides for a personal hearing being granted to the applicant by the Settlement Commission. It was in this context that the Settlement Commission heard the representatives of both sides on 04.10.2016. Thereafter the Settlement Commission merely permitted both sides to exchange documents. The order dated 04.10.2016 does not envisage any further hearing, nor admittedly the petitioners in any of the further correspondences pleaded before the Settlement Commission that further personal hearing be granted. Subsection (6) of section 32F lays down the time limit for completion of the proceedings before the Settlement Commission and provides that failing completion of the proceedings within such time, the settlement proceedings shall abate and the adjudicating authority before whom the proceedings at the time of making application was pending, shall dispose of the case in accordance with the provisions of the Act as if no application for settlement was made. Subsection (6) of section 32F thus instils sense of urgency in disposal of settlement proceedings. When pending adjudication of proceedings under the Act, the declarant is given an opportunity to approach the Settlement Commission, upon which, such proceedings would be kept under abeyance, the anxiety of the legislature that the proceedings be completed expeditiously can well be appreciated. In the order dated 04.10.2016, the Settlement Commission gave an impression that there shall be further hearing after both sides produce additional documents as envisaged. As noted, in none of the further responses that the petitioners filed before the Settlement Commission or the department, any request was made that a fresh personal hearing be granted - the petitioners now cannot raise a grievance that the Settlement Commission did not grant a further personal hearing, though required. The issue that the Settlement Commission committed serious errors in law in not accepting the petitioners' contentions regarding the invoices relied upon requires closer scrutiny - partly decided against petitioner and part matter on remand.
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CST, VAT & Sales Tax
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2017 (8) TMI 1081
Restoration of appeal which was withdrawn earlier to avail Amnesty Scheme - Held that: - an assessee who wanted to avail the benefit of such Scheme needed to withdraw any appeals pending before the Competent Authorities - The petitioner had sought withdrawal of the appeals, on 28.09.2016, in order to avail the benefit of the Amnesty Scheme. Withdrawal of such appeals was a precondition for the benefit of the Scheme to be extended to the assessee. The application was, therefore, moved before the Tribunal to withdraw the appeals. The Tribunal in exercise of its discretion ought to have permitted revival of the petitioner’s Second Appeals namely Second Appeals Nos. 891 of 2013 and 892 of 2013, in view of the fact that the withdrawal was only prompted as it was so required. In order to get the benefit of the Scheme, the Appeals had to be withdrawn. Once the benefit was such a scheme was not extended, the withdrawal was rendered of no use. Appeals therefore needed to be restored and heard on merits - The petition is disposed of with the direction that Second Appeals No.891/2013 and 892/2013 after being so restored shall be decided on merits. The order of the Tribunal refusing restoration / revival of appeals deserves to be quashed and set aside.
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Indian Laws
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2017 (8) TMI 1109
License for retail outlets - license fees - delayed payment - liquor shops - whether the appellants-writ petitioners were willing to pay the license fee for the period from 01.04.2017 to 30.06.2017 as, in such an event, they would stand on par with the other licensees of the four undisposed A-4 retail outlets who were granted licenses from 01.04.2017 and, at the same time, no loss would be caused to the public exchequer - Held that: - the appellants-writ petitioners, on instructions, would request this Court to decide the Writ Appeal on its merits, and express the appellants-writ petitioners unwillingness to pay the license fees for the three month period from 01.04.2017 to 30.06.2017, as they did not carry on business in these two shops, during the said period. As that would amount to the petitioners retaining control over two A-4 retail outlets simultaneously, and would result in the State Government being deprived of its revenue which they would have otherwise received on granting licenses for these two shops from 01.04.2017 i.e for three months between 01.04.2017 to 30.06.2017, we see no reason to grant the petitioners the relief sought for in the Writ Petition. We see no justification in permitting the petitioners to retain their right over these two A-4 retail shops from 01.04.2017, and in paying license fees three months thereafter i.e., only from 01.07.2017 onwards, as that would result in loss of revenue, to the public exchequer, for the period 01.04.2017 to 30.06.2017 - petition dismissed - decided against petitioner.
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2017 (8) TMI 1078
Conviction under Section 138 of the Negotiable Instruments Act - legally enforceable debt - Held that:- In a trial under Section 138 of the Negotiable Instruments Act, a presumption has to be drawn that every negotiable instrument was made or drawn for consideration and that it was executed for discharge of debt or liability. No sooner the complainant discharges the burden to prove that the instrument was executed by the accused, the rules of presumption under Section 118 and 139 of the Act would ensure that the burden to prove to the contrary would be on the accused. The presumption will survive till the time the contrary is proved by the accused i.e. the cheque was not issued for consideration and in discharge of any debt or liability. Even though the respondent has not led any evidence but the statutory presumption in favour of the appellant/complainant stands rebutted because of the inconsistent plea of the appellant/complainant. The lower Appellate Court rightly took into account the aforesaid facts and additionally the claim of the respondent that he had lost some leaves of the cheque book including the subject cheque and for which a complaint also was lodged earlier. The Lower Appellate Court was absolutely justified in holding that the complainant could not prove her case regarding the existence of any legally enforceable debt against the respondent.
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2017 (8) TMI 1077
Recovery with interest till the date of realization on the basis of a written agreement - Complaint case under section 138 Negotiable Instruments Act - Held that:- The dispute herein being an independent dispute than was amongst directors of M/s SPL in CS (OS) No.1148/2008, would not absolve the defendant of his liability to repay the loan taken by him. If the intention of the parties in CS (OS) 1148/2008 was to absolve the directors of their personal liabilities inter se and with outsiders, the settlement would have mentioned the same. If the IA No. 15482/2008 in CS(OS) No.1148/2008 has taken note of other pending suit numbers, criminal complaints, property particulars, details of the cheques issued, then why these five PDCs of ₹ 45.00 lac each were not brought within the fold of such settlement. The defendant is trying to mix two disputes into one which disputes are obviously distinct. The agreement clearly stipulate that the defendant has taken loan(s) for purchase of land admeasuring 7 bighas in Satbari and that such land is not connected with the business of M/s SPL. In this agreement, the defendant has unequivocally admitted to repay the loan amount within three year lest an action can be taken against him. The cheques also were given in advance and the defendant has also agreed to suffer proceedings if such cheques are not honoured. No linkage can be drawn between the agreement dated 15.11.2008 and with the terms of settlement stated in IA No.15482/2008 in CS (OS) No.1148/2008. As the defence raised in his application for leave to defend is contrary to what the defendant had stated in his application under Section 145(2) Negotiable Instruments Act in proceedings under Section 138 Negotiable Instruments Act, so the defence of the defendant though appear to be illusionary but he is allowed to proceed on his depositing the principal amount of ₹ 2,25,00,000/-(Rupees Two Crore Twenty Five Lacs) with the Registrar General of this Court within four weeks from today. The application stands disposed of in above terms.
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