TIOL Update, Thursday, Oct 27, 2016

NOTIFICATIONS

Prohibition of Benami Property Transactions Act - CBDT notifies jurisdiction of certain officers across India as specified authority

FEMA Notification No 378

Foreign Exchange Management (Foreign Exchange Derivative Contracts) (Amendment) Regulations, 2016

FEMA Notification No 373

Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Eleventh Amendment) Regulations, 2016

MIXED BUZZ

EPFO paired with Common Services Centers for ease of EPF members

World Gold Council floats campaign to drive awareness on availability of Indian Gold Coin

CBDT fears revenue shortfall; calls for fresh strategies & close monitoring

CASE LAWS

2016-TIOL-182-SC-IT + Story

NOORUL ISLAM EDUCATIONAL TRUST Vs CIT: SUPREME COURT OF INDIA (Dated: October 21, 2016)

Income tax - Section 127(2)(a)

Keywords - Agreement between jurisdictional CIT & Transfer of assessment

Whether 'absence of disagreement' can tantamount to 'agreement' as visualized u/s 127(2)(a) which contemplates a positive state of mind of the two jurisdictional CIT, in case of transfer of I-T/assessment file of assessee from AO of one State to another, when the two AOs are not subordinate to the same Director General or Chief CIT - NO: SC

Whether transfer of Income-tax/assessment file of assessee from jurisdictional AO of one State to another, can be sustained, in absence of any agreement between the two jurisdictional Commissioners - NO: SC

The assessee had preferred the present appeal challenging the order of the High Court of Madras, Madurai Bench, whereby, the transfer of the income-tax/assessment file of the assessee from Tamil Nadu to Kerala as made by the jurisdictional CIT, Madurai, had been upheld.

Having heard the parties, the Supreme Court held that,

++ as the Income-tax/assessment file of the assessee has been transferred from one AO in Tamil Nadu to another AO in Kerala and the two AOs are not subordinate to the same Director General or Chief CIT, u/s 127(2)(a) of the Act an agreement between the Director General, Chief Commissioner or Commissioner, as the case may be, of the two jurisdictions is necessary. The counter affidavit filed on behalf of the Revenue does not disclose that there was any such agreement. In fact, it has been consistently and repeatedly stated in the said counter affidavit that there is no disagreement between the two Commissioners. Absence of disagreement cannot tantamount to agreement as visualized u/s 127(2)(a) which contemplates a positive state of mind of the two jurisdictional CIT which is conspicuously absent. In the above circumstances, this court holds that the transfer of the Income-tax/assessment file of assessee from AO, Tamil Nadu to AO, Kerala is not justified and/or authorized u/s 127(2)(a) and the order of transfer is accordingly set aside.

Assessee's appeal allowed

2016-TIOL-2635-HC-MUM-CX

CCE & C Vs M K KOTECHA: BOMBAY HIGH COURT (Dated: October 24, 2016)

CX - Tribunal rendered a finding of fact that the bills were raised by the assessee taking into consideration all costs, including excise duty payable but that would not attract, by itself, Section 11D of the CEA, 1944 - The evidence that is required to be brought with regard to collection of duty from the customers was lacking - Therefore, there was no obligation to deposit or credit the fund with the amount of duty - such a finding of fact and as rendered by the Tribunal does not require interference - Court cannot enter into the domain of appreciation and appraisal of oral and documentary evidence in its further appellate jurisdiction - there is no perversity in the order of the Tribunal, therefore, appeal by Revenue is dismissed: High Court [para 4 to 6]

Appeal dismissed

2016-TIOL-2796-CESTAT-MUM

LENZE MECHATRONICS PVT LTD Vs CCE: MUMBAI CESTAT (Dated: September 7, 2016)

ST - Tax liability arises under the provisions of Section 66A of the Finance Act, 1994 under Reverse Charge mechanism in respect of amounts paid by appellant to distributor appointed in foreign countries for rendering marketing support for products manufactured by them - Demand upheld along with penalties: CESTAT [para 4]

ST - Demand of service tax on the amounts received by the appellant as commission for procurement of orders on behalf of the German company, who directly supplies the finished product manufactured to the person who has placed the order - lower authorities confirming demand based upon rule 3(2) of Export of Services Rules, 2005 holding that services were provided in India but used outside India.

Held: Issue is no more res integra inasmuch as in identical case of Microsoft Corporation - 2014-TIOL-1964-CESTAT-DEL, by a Majority decision, it was held in favour of the assessee by laying down that mere procurement of order on behalf of overseas manufacturer is not taxable in India in the hands of the person who procures the orders and receives a commission - view followed in case of ATE Enterprises - 2015-TIOL-252-CESTAT-MUM - appeal on this point is allowed: CESTAT [para 6, 7]

Appeal partly allowed

2016-TIOL-2795-CESTAT-AHM

NAGRAJ JAIN Vs CCE & ST: AHMEDABAD CESTAT (Dated: September 26, 2016)

Cus – Allegation that duty free material imported and indigenously procured for use in the export of these garments were diverted - In imposing penalty on the respective appellants, Commissioner has referred to the statements of various persons recorded during the course of investigation as reliable evidences in coming to the conclusion that the Appellants were involved in the said evasion of duty – Appellant submitting that even though cross examination of the sole witness was requested, but the same was denied by the Commissoner – appeal to CESTAT.

Held: Supreme Court has in the case of Andman Timber Industries laid down the principle on the issue for cross examination of witnesses by holding that not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected – In view of the same, Appellants are to be allowed cross examination of the witnesses requested by them in their respective reply to the Show Cause Notice; whose statements were relied upon in the Notice and used against the Appellants - question of imposition of penalty would arise only thereafter – Appellant has categorically stated that they would participate in the adjudication proceedings without seeking unwarranted and unjustified adjournment – Appeals disposed of: CESTAT [para 7, 8]

Appeals disposed of