CIRCULAR

excircular1055

Clarification regarding posting of Central Excise officer in Cigarette units

2017-TIOL-197-SC-IT

RYATAR SAHAKARI SAKKARRE KARKHANE NIYAMIT Vs ACIT: SUPREME COURT OF INDIA (Dated: April 28, 2017)

Income tax - Section 40(a)(ia), 194C & 194J

Keywords - payment to transporters - TDS obligation

The Assessee preferred the present petition challenging the judgment, whereby the High Court had held that when the assessee had entered into agreements with the harvesters/transporters and paid money to such harvesters/transporters in terms of such agreement/s, the same was liable for deduction of tax at source u/s 194C and AO had rightly invoked the provisions of section 40(a)(ia).

Having heard the parties, the Supreme Court condoned the delay and issued notices to the respective parties directing their appearences for further hearing on the issue of TDS obligation upon payment of transporters.

Notice issued

2017-TIOL-196-SC-IT

PUNJAB SIND DAIRY PRODUCTS PVT LTD Vs DCIT: SUPREME COURT OF INDIA (Dated: April 25, 2017)

Income Tax - Section 145 & 153A

Keywords - search and seizure - rejection of books of account - estimation of income - undisclosed income

The Assessee preferred the present review petition challenging the order dated Feb 17, 2017 - 2017-TIOL-83-SC-IT whereby the aforementioned special leave petitions were dismissed, concurring with the opinion of the High Court that rejection of books was sustainable, where the Assessee had failed to produce the Registers indicating Production, Issuance and Consumption. The Apex Court in its impugned decision also upheld the action of High Court in confirming the estimation of income on the basis of the material on record and the statements made by the employees and directors during search and survey proceedings.

Having heard the parties, the Supreme Court dismisses the instant review petition by observing that there is no merit in the same.

Assessee's review petition dismissed

2017-TIOL-830-HC-MUM-MISC

KROSS TELEVISION INDIA PVT LTD Vs VIKHYAT CHITRA PRODUCTION: BOMBAY HIGH COURT (Dated: March 23, 2017)

Code of Civil Procedure - Central Board of Film Certification - CBFC - Service of Notice  - TrueCaller - WhatsApp.

Plaintiffs attempted to service notice to the Respondents at their listed address by hand and by courier. Upon failure to locate the addresses & contact the Respondents, the plaintiff attempted contact by phone. Plaintiff further determined the identity of the Respondent using TrueCaller and WhatsApp applications and by then exchanging messages. Plaintiff subsequently served copies of the Plaint, Notice of Motion and an order dt. 17.03.17 to the Respondent on WhatsApp, which was received by the latter, who acknowledged receipt of the same. Moreover, the Plaintiffs also effected service of the aforementioned via email. Respondents challenged such service and claimed to have not received any notice.

On hearing the parties, the High Court held that,

Whether service of Copies of plaint & Notice of Motion over WhatsApp is valid service, where all other methods of serving notice come a cropper - YES : HC

++ the Bench held that the Plaintiff had done all in his stead to serve the plaint and notice of motion to the Respondent and could not reasonably be expected to do anything more. The system is not so rigid where only service by means of antiquated methods such as drum beats and town criers would be considered valid. Where any other mode of service is used & receipt is acknowledged, the Respondent cannot evade proceedings by claiming 'no service'. Moreover, the Respondent has a tainted history of evading court proceedings. Therefore, given that the Plaintiff used every possible means of service and in light of email and message exchanges, service of plaint & Notice of Motion over WhatsApp is valid service.

Notice of motion listed

2017-TIOL-829-HC-MUM-ST

SAI SERVICE PVT LTD Vs UoI: BOMBAY HIGH COURT (Dated: March 27, 2017)

ST - Petitioner, an authorised dealer for sale of cars manufactured by M/s.Maruti Udyog Limited [MUL], purchases these vehicles from MUL and sells the same on its own account to various customers - in terms of the agreement with MUL, MUL offers certain target based incentives to the petitioner -these are in the nature of discount offered to the petitioner either in the form of cash discount or quantity discount - the revenue contended that this amounts to “service” under the Finance Act, 1944 - SCN issued on 22.8.2008 - vide O-i-O dated 22.6.2009, the third respondent observed that the activities cannot be brought within the definition of the term “taxable service” as understood by the Finance Act, 1994 -this order has been accepted by the department - with very same allegations, a fresh SCN has been issued - whether this SCN is maintainable or otherwise.

HELD - The SCN, though referring to the earlier adjudication, its acceptance, has further alleged that after the law was amended, it was necessary to probe and investigate the matter - the investigation and the statements, which were recorded during the course thereof revealed that various incentives were received for achieving commercial success -it may be that there is substance in the contention about the nature of the activity, but the Bench cannot forget and overlook the fact that the law has indeed undergone a change - the Bench does not think that it can go into the factual issues - the projection of the petitioner that the activity is the same and the issue as understood is the same as in the earlier round would require to be probed and in further details on facts - the matter cannot be decided within the limited parameters of writ jurisdiction - this matter does not come within the exceptions carved out - adjudication to proceed in accordance with law: High Court[para 8, 9]

Writ Petition No.3099 of 2016

The petition is filed by the Federation of Automobile Dealers Association - SCN has not been issued to individual dealers and members of this association - the Bench does not think it should entertain a wider challenge and that too in a representative capacity -keeping open the challenge for being raised not only by the association at a later stage, but equally by the individual members, petition disposed of: High Court - [para 10]

Writ Petitions disposed of

2017-TIOL-828-HC-MUM-ST

ALL INDIA ASSOCIATION OF AUTHORIZED MONEY CHANGERS AND MONEY TRANSFER AGENTS Vs UoI: BOMBAY HIGH COURT (Dated: April 3, 2017)

ST - Petitioners, association of authorised money changers and money transfer agents, are aggrieved with circular dated 14.10.2014 essentially because the process of money transfer does not attract the levy of ST -though there is no change in law,still impugned circular has been issued, superceding circular dated 10.7.2012 - revenue justifying that the circular was issued to clarify the legal position - in office memorandum dated 3.2.2017, the revenue reiterates the position that its subsequent circular dated 14.10.2014 is binding on the revenue authorities as it correctly interprets the statutory provisions.

HELD - Central Government cannot direct the assessing officer to take a particular view of the matter as that would be a direct interference with his powers as an assessing officer - he has to exercise the powers in accordance with law - in the event, there are circulars issued and prior to the impugned one, then, they would continue to bind the assessing officer and others unless the revenue officials are able to point out that they are plainly inconsistent or in conflict with the provisions of law - it is, therefore, clarified that the assessing officer should not be influenced by any directions and contents of the office memorandum - he should not go by the subsequent circular dated 14.10.2014 which supersedes the earlier circular of 10.7.2012 - he must allow the assessee to raise all contentions and consider them in accordance with law - writ petition is disposed of accordingly : HIGH COURT [para 15, 16]

Writ Petition disposed of

 

2017-TIOL-827-HC-MAD-ST

INDIA NIPPON ELECTRICALS LTD Vs CESTAT: MADRAS HIGH COURT (Dated: April 11, 2017)

ST - (1) Whether the single Member is at liberty to disagree with the views expressed by the Larger Bench of the Tribunal which is apparently in conflict with the judgment of the Supreme Court in the case of Jindal Dye Intermedia Limited [2006-TIOL-58-SC-CUS] (2) whether the Tribunal is right in disagreeing with the speaking order recently passed by the Larger Bench in the case of GTC Industries which is against the principles laid down by Supreme Court in its judgement in the case of Kamlakshi Finance [2002-TIOL-484-SC-CX-LB] (3) whether the outdoor caterer providing refreshment to the employees of the appellants is eligible to be an input services used by the manufacturer, directly or indirectly, in or in relation to the manufacture of final products (4) whether the manufacturer is entitled to take cenvat credit of ST paid to their outdoor caterer providing food in the factory premises to their employees as input service as decided by the Larger Bench in the case of GTC Industries (5) whether the Tribunal is right in allowing the appeal filed by the revenue on the ground that the outdoor catering services is not eligible to input services as per Cenvat Credit Rules which is in total disregard of the judgment of the Larger Bench in the case of GTC Industries and that of the Bombay High Court judgment in the case of Coca Cola India Private Limited

HELD - Having regard to the judgment of the Division Bench of this Court in the case of I.P.Rings Limited [in C.M.A.No.3185 of 2010], whereby the common impugned order dated 18.6.2010 passed by the Tribunal has already been set aside, questions no.3 and 4 are answered in favour of the assessee in the instant appeal - the Supreme Court in the case of Kamlakshi Finance Corporation Ltd. [2002-TIOL-484-SC-CX-LB]. has clearly held that the orders passed by the Appellate Authorities were binding on the Adjudicating Authority - in effect, the Supreme Court observed that judicial discipline required that orders of the Appellate Authorities were followed, without reserve by Subordinate Authorities - if that principle is applied to questions no.1, 2 and 5, they would have to be answered in favour of the assessee, as, by a logical corollary, a decision of a larger bench would bind a bench of smaller strength of the Tribunal - the appeal is disposed of accordingly : HIGH COURT [para 8, 8.3, 8.4, 8.5, 9]

Appeal disposed of

2017-TIOL-826-HC-AHM-CUS

NEW PENSLA INDUSTRIES Vs UoI: GUJARAT HIGH COURT (Dated: February 10, 2017)

Cus - Claim for Drawback - Aggrieved by the deficiency memo issued by the Deputy Commissioner of Customs (Drawback), petitioner before High Court.

HELD - On a reading of the contents of the deficiency memo, it is evident that the same does not relate to either of the two eventualities mentioned in sub-rule (3) of rule 13 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 [Rules], viz., that the claim is incomplete in any material particulars or any of the documents specified in sub-rule (2) of rule 13 are not furnished - the deficiency memo has been issued on the ground that the Department does not agree to the classification and self-assessment of the exported goods made by the petitioner - from the very nature of the deficiency memo, it is evident that the question of raising a dispute with regard to classification and self-assessment would not arise, inasmuch as a deficiency memo can only be issued pointing out the deficiencies specified in sub-rule (3) of rule 13 of the Rules - evidently, therefore, the deficiency memo travels much beyond the scope of sub-rule (3) of rule 13 of the Rules - drawback claim of the petitioner has been partly allowed and in respect of the remaining part, the deficiency memo has been issued - there can be no question of the respondents partly processing the claim and allowing it to the extent they do not dispute it - if the claim for drawback is deficient, it is required to be returned together with the deficiency memo calling upon the party to remove such deficiency - the approach adopted by the respondents in the present case, therefore, is clearly not in consonance with the provisions of rule 13 of the Rules - the impugned deficiency memo being contrary to the provisions of sub-rule (3) of rule 13 of the rules, cannot be sustained - petition succeeds and is, accordingly, allowed - the impugned deficiency memo is hereby quashed and set aside - respondents directed to forthwith process the drawback claims and release the drawback amount with interest as provided under section 75A of the Customs Act, 1962 : HIGH COURT [para 12, 13, 14]

Special Civil Application allowed

 

2017-TIOL-825-HC-MUM-CUS

CC & CE Vs SESA GOA LTD: BOMBAY HIGH COURT (Dated: March 23, 2017)

Cus - The revenue involved in the appeals is below the monetary limit of Rs.15/20 lakhs prescribed in the instructions/circulars of the CBEC dated 17.12.2015/30.12.2016, to prefer an appeal before High Court– the provisions of section 131BA of the Customs Act, 1962 and the instructions/circulars of the CBEC dated 17.12.2015/30.12.2016, therefore, covers the case of disposal of these appeals on the same ground – all the appeals are disposed of as prayed: High Court [para 6, 8]

Appeals disposed of

2017-TIOL-824-HC-MUM-CUS

AADARSH PRINTS Vs UoI: BOMBAY HIGH COURT (Dated: April 3, 2017)

Cus - Petitioner imported second-hand offset printing machine duty free under an EPCG Licence - the petitioner was required to use the capital goods and fulfil its export obligation - the petitioner fulfilled the export obligation - redemption letter issued on 7.10.2014-on 4.12.2014, the second respondent returned the bank guarantee and the Bond duly cancelled - the revenue, on investigation, has now found that one M/s.Riddhi Enterprises, in collusion with the petitioners, showed third party exports in their shipping bills filed by them on behalf of the petitioners - the goods covered under these ahipping bills were manufactured at the factory premises of M/s.Riddhi Enterprises and not by using the capital goods imported by the petitioners - the factory premises of the petitioner was sealed and the said machine seized - petitioner before High Court challenging sealing of the factory premises, seizure of the machine and refusing any utilisation thereof.

HELD -If the fraud is perpetrated by the petitioners and the capital goods were never utilized by the manufacturer, then, the Bench does not see any reason as to why, after completion of two years, those documents were never questioned, nor the petitioners or third party or any other party interrogated - that is why when in 2017 the Customs Department has woken up and is questioning the export fulfillment, then, the step that it has taken even before concluding that the petitioners are liable to make good the amount of customs duty, interest and penalty of sealing of the premises was drastic - the power of seizure has been exercised purportedly after the documents emanating from the Customs Department themselves were holding the field for two years and more - merely because an affidavit-in-reply has been filed alleging that a fraud has been perpetrated and to the extent indicated, the Bench cannot allow the respondents to disown all the documents of 2014 -the Bench does not now allow them to question the compliance made by the petitioners of condition no.4 of the condition sheet attached to the EPCG Licence -if the compliance is not in accordance with this condition, then, the documents, which have been issued on 7.10.2014 and 4.12.2014 would have to be ignored with their contents by a proper legal procedure -now, adjudication will have to take place -that must follow a demand being raised -the demand being raised means there should be specific allegations -writ petition allowed by directing the respondents that the seized machine shall be released on the petitioners' executing a Bond in favour of the respondents and by imposing an additional condition, namely, until the respondents take recourse to law and for a reasonable period, namely, till 31.7.2017, the petitioners shall not transfer or dispose of the machine, but, it shall be retained by them in safe custody: HIGH COURT [para 20, 21, 22]

Writ Petition allowed

2017-TIOL-823-HC-MUM-CUS

HYUNDAI MERCHANT MARINE INDIA PVT LTD Vs UoI: BOMBAY HIGH COURT (Dated: March 27, 2017)

Cus - Petitioners are agents of Container Shipping Lines/Carriers, who are engaged in the business of international carriage of containerized goods by sea - the petitioners are challenging four public notices and seeking a writ of mandamus directing respondent no.3 to forthwith withdraw these notices : HELD - If the petitioners contend that their business, their activities would not bring them within the purview of the Customs Act, 1962, then, the Bench does not see how by mere issuance of the SCNs and addressed to them, are they precluded from raising this challenge -despite issuance of the Regulations, Circulars of the Board, the public notices and the contents of the SCNs reflecting the version of the authorities of these documents, an adjudication order would have to be passed and would be passed considering all the contentions of the petitioners - an opportunity will have to be given to the petitioners to challenge the jurisdiction and competence of the officials, the maintainability of the proceedings, in which, the issue of applicability of the Customs Act, 1962 [Act] and the Regulations under section 157 of the Act, styled as Handling of Cargo in the Customs Area Regulations, 2009 would arise - the adjudicating authority would have to assign satisfactory reasons at the end of the adjudication while dealing with these contentions and if not inclined to accept them - once these clarifications have come from the authorities themselves and the Additional Solicitor General assures the Court that no recoveries will be effected pending adjudication, then, all the more, the Bench need not entertain these petitions - with the aforesaid clarifications, the petitions are disposed of : HIGH COURT [para 12]

Writ Petitions disposed of

2017-TIOL-822-HC-AHM-CX

ONGC LTD Vs UoI: GUJARAT HIGH COURT (Dated: March 15, 2017)

CX - Petitioners paid Rs.19.15 crores as Education Cess and SHE Cess on Oil Industries Development Cess[OID Cess] under the bona fide belief that OID Cess is a duty of excise and Education Cess and SHE Cess are levied on duties of excise - it is the case of the petitioners that since OID Cess is levied under an Act administered by the Ministry of Petroleum & Natural Gas and collected by the Department of Revenue, Ministry of Finance, in terms of Board's circular dated 7.1.2014, they are not liable to pay Education Cess and SHE Cess on the OID Cess levied on crude oil -the petitioners, therefore, filed refund claim of Rs.19.15 crores - by O-i-O, refund of Rs.4.22 crores was granted and the remaining claim of Rs.14.92 crores was rejected as time barred - the refund of Rs.4.22 crores was ordered to be credited to the Consumer Welfare Fund in terms of sections 12B and 12C read with section 11B of the Central Excise Act, 1944 - on appeal, the Commissioner (Appeals) rejected the same - petitioners before High Court.

HELD - From the facts as emerging from the record, it is evident that the decision of this Court in the case of Joshi Technologies International, INC-India Projects [2016-TIOL-1240-HC-AHM-CX] would be squarely applicable to the facts of the present case - the authorities below did not have the benefit of the said decision - impugned order quashed and set aside and appeal restored to the file of the Commissioner (Appeals) to decide the same in accordance with law, keeping in view the observations made by this Court in the case of Joshi Technologies International, INC-India Projects as well as the other submissions that may be made on behalf of the petitioners : HIGH COURT [para 9, 10]

Special Civil Application disposed of

2017-TIOL-821-HC-P&H-CX

CCE Vs SAINT GOBAIN GYPROC INDIA LTD: PUNJAB AND HARYANA HIGH COURT (Dated: April 18, 2017)

CX - Assistant Commissioner finalised the provisional assessment of Gypsum Board concluding that there had been excess payment of Rs.10.05 lakhs in the provisional assessment period 1.10.2012 to 31.12.2012 - the appellant filed application for refund which was not sanctioned - question was whether or not the respondents had passed the burden of central excise duty to the customers - on appeal, Tribunal allowed the appeal of the respondent - revenue before High Court.

HELD - ribunal satisfied itself that the Chartered Accountants had verified the books and on such verification certified that the refund claimed did not form part of the finished goods - the Tribunal conclusion that the appellant had, therefore, not passed on the duty incidence to the dealers/customers cannot be said to be perverse -the Tribunal also found on facts that the respondent's customers had also issued certificates to the effect that they had not availed any cenvat credit of Central Excise duty charged by the respondents in their invoices and that the final payment of the goods had been made by the respondents after adjusting the amount mentioned in the credit notes raised by them -it is also important to note the Tribunal's observation that the documents in this regard were produced by the respondent before the authorities but that the same had not been considered in the proper prospective while adjudicating the claim for refund - it is clear, therefore, that the appeal raises only disputed questions of fact - accordingly, a substantial question of law does not arise in this appeal - the appeal is, therefore, dismissed : HIGH COURT [para 7, 9, 10]

Appeal of Revenue dismissed