24 July 2017   

2017-TIOL-257-SC-IT

DGIT Vs INDIA TRADE PROMOTION ORGANIZATION: SUPREME COURT OF INDIA (Dated: July 14, 2017)

Income Tax - Section 2(15).

Keywords - charitable institution - collection of fee

The Revenue preferred the present SLP challengingthe judgment, whereby the High Court had held that merely because a fee or some other consideration was collected or received by an institution, it would not lose its character of having been established for a charitable purpose.

Having heard the parties, the Supreme Court condoned the delay and granted leave to the Revenue Department to defend their case on the issue of character of 'collection of fee by a charitable institution'.

Leave granted

2017-TIOL-256-SC-IT

CIT Vs PIX TRANSMISSION LTD: SUPREME COURT OF INDIA (Dated: July 13, 2017)

Income tax - Section 88HHC

Keywords - furnishing of accounts report - deduction u/s 88HHC

The Revenue preferred the present appeal challenging the judgment, whereby the High Court had declined to entertain the ITAT's observation holding that no substantial question of law is involved. The ITAT in its impugned order held that the claim of assessee u/s 88-HHC of Income Tax Act was justified even if he had not furnished the report of an accountant along with the return of income.

Having heard the parties, the Supreme Court set aside the impugned order of the High Court and remand the case back to the High Court to decide the aforesaid question of law after hearing both the parties.

Case remanded

2017-TIOL-255-SC-IT

ENGINEERS INDIA LTD Vs CIT: SUPREME COURT OF INDIA (Dated: July 06, 2017)

Income tax - Section 244A

Keywords - grant of interest - refund - self assessment tax

The Assessee preferred the present appeal challenging the judgment, whereby the issue pertaining to grant of interest u/s 244A of Income Tax Act was decided by High Court against the assessee.

Having heard the parties, the Supreme Court held that,

Whether it would be appropriate to refer the matter to the Larger bench, in case of difference of opinions between the Co-ordinate Benches of High Court - YES: SC

++ the impugned judgment of High Court reveals that another judgment of the Coordinate Bench of the same High Court in the case of Commissioner of Income Tax v. Sutlej Industries Ltd. - 2010-TIOL-203-HC-DEL-IT was cited wherein the view taken was that in such circumstances the assessee would be entitled to interest u/s 244A of Income Tax Act on the refund of the self-assessment tax. It is clear from the above that in the impugned jugment, the Bench has differed with the earlier view expressed by the Coordinate Bench. In the circumstances, the appropriate course of action was to refer the matter to the larger Bench and we fail to understand why it was not done. We are informed that subsequently in the case of Sutlej Industries Ltd. V. Commissioner of Income Tax - 2016-TIOL-83-HC-DEL-IT pending before the High Court, the High Court has referred the matter to a larger Bench. In these circumstances, we set aside the impugned judgment of the High Court and remand the appeal back to the High Court for its afresh decision along with ITA Nos. 493/2003 & 120/2004 by a larger Bench.

Case remanded

2017-TIOL-1381-HC-ORISSA-CX

CX - Assessee firm engaged in manufacture of Pan Masala containing Tobacco (Gutkha), under a brand name owned by another firm - Such “Gutkha” manufactured with the aid of packing machine and packed in pouches was notified u/s 3A of the CEA for levy of duty - The Gutkha was sold at retail sale prices of Rs.1, Rs.1.50 and Rs.2/- per pouch - Under the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008, the assessee declared some particulars, including the number of single track packing machines installed in the factory, which the assessee intended to operate - Later the revenue authorities accordingly determined the annual capacity of production & also conducted physical verification of the factory - Subsequently, the factory was searched by Preventive Unit officials, based on some information that assessee was also manufacturing Gutkha pouches of Rs. 5/- MRP - Subsequent searches of the premises of assessee firm's dealers revealed Gutkha pouches of Rs. 5/- MRP under the same brand name as the assessee - Dealers alleged they received the pouches indirectly from the assessee firm - Later, revenue imposed a huge duty demand with interest.

Held - No Gutkha pouch of Rs. 5/- MRP was seized from the assessee, and that no document/diary/note book/computer printout showing manufacture and clearance, was seized - No machinery supposedly used in manufacturing such pouches was seized - All this is a clear violation of the principles of natural justice - Moreover, the assessee's request to cross-examine the dealers was denied, despite the fact that the case of the revenue rests largely upon the statements of the dealers - Thereby, denial of request to cross-examine material witnesses vitiated the whole proceedings conducted by revenue - Hence impugned order merits being set aside - Matter remanded back to adjudicating authority, to allow assessee right to cross-examine the dealers & then pass a fresh order - No opinion expressed on merits: High Court (Para 2,3,4,5,6,7,8,11,12)

Case Remanded

2017-TIOL-1380-HC-MAD-CX

CX -Assessee is aggrieved by the fact that while it had claimed the refund of unutilized cenvat credit, amounting to Rs.40.26 lakhs, the authorities below sanctioned the refund only to the extent of Rs.39.19 lakhs - appeal to High Court against CESTAT order dated 21.01.2015 2015-TIOL-853-CESTAT-MAD

HELD - The authorities below have committed an error inasmuch as in adjusting the input credit qua stock of raw materials and finished goods, available as on 31.12.2003 -the assessee is entitled to claim refund of unutilised credit in terms of rule 5 of Cenvat Credit Rules, 2002[2002 Rules] read with notification no.11/2002-CE(NT) dated 1.3.2002 [2002 notification] against the amount standing to its credit in the cenvat credit account -there is nothing either in the rule i.e., rule 5 of the 2002 Rules or the 2002 notification, which provides for safeguards, conditions and the limitations so as to conclude that the Revenue could have made the aforementioned adjustments against the closing balance reflected in the assessee's cenvat credit account - the methodology followed by the Revenue is not in consonance, either with the Rules or the notification and, therefore, such adjustment ought not to have been made -impugned order is set aside -the assessee would be refunded the balance amount, equivalent to Rs.77,453/-: HIGH COURT [para 9, 10, 11]

Appeal allowed

2017-TIOL-1379-HC-MAD-CUS

Cus - The petitioner is doing business of trading in jewellery and bullion - in a case of smuggling of gold involving many persons, including the petitioner, the Adjudicating Authority passed the impugned order finding the petitioner guilty of the charge of abetment, thereby imposing penalty of Rs.2 crores in terms of section 112(b) of the Customs Act, 1962 - petitioner in writ before High Court.

HELD - There is no dispute to the legal position that as against the impugned O-i-O, a statutory appellate remedy is available to the petitioner before the CESTAT, Chennai -it is also well settled that in fiscal matters, filing of writ petition cannot be entertained or encouraged against the order passed by the Adjudicating Authority, unless the very jurisdiction of the said authority is questioned or that there is a flagrant violation of principles of natural justice in passing the said order - in nutshell, the crux of the contention of the petitioner is that the quantum of Rs.2 crores arrived at by the Adjudicating Authority, as penalty payable by the petitioner, is without any material details and particulars - his further contention is that he was not given an opportunity to cross examine those two persons, namely, Thameem Ansari and Syed Rehman and therefore, there is a violation of principles of natural justice - perusal of the paragraph nos.24 and 25 of the impugned order would amply show that the AA has dealt with the approximate quantum of smuggled gold bars in the past and its value - it is for the petitioner to canvass the correctness or otherwise of the order passed by the Adjudicating Authority before the Appellate Tribunal by raising all the contentions- regarding denial of cross examination, the petitioner is not justified in raising such objection now, especially, when the order passed by the Adjudicating Authority on 30.11.2015 denying the request of the petitioner to cross examine those two persons, has not been challenged by the petitioner and on the other hand, by accepting the said order, the petitioner appeared further and filed additional written submissions, as required under the said order dated 30.11.2015 -even otherwise, the Adjudicating Authority has dealt with in detail as to why such request is rejected by relying on certain case laws - in any event, as the Appellate Authority is also a fact finding authority, certainly, the petitioner is entitled to canvass before such authority as to how such denial of cross examination of those two persons, has resulted in affecting his interest - the present writ petition is not maintainable as the petitioner has to exhaust the alternative remedy of filing an appeal before the CESTAT - thus, the writ petition is disposed of with liberty to file an appeal before the CESTAT, Chennai : HIGH COURT [para 7, 8, 12, 13, 14]

Writ Petition not maintainable

2017-TIOL-1378-HC-MAD-CUS

Cus - Petitioner and another person were searched, revealing them to be smuggling gold bracelets and gold biscuits - Since both were unable to show any receipts or license for the gold, both were arrested & their statements were taken - Both persons claim to have been involved in such smuggling at the behest of a third person, who was related to one of them - The gold was confiscated & penalty was imposed on both persons and on the third person too - On appeal, the three were required to pre-deposit 7.5% of the amount so imposed, but were delayed in filing appeal - Their request to waive off the pre-deposit requirement was denied & by the time the pre-deposit was made, the condonable period lapsed & their appeals were rejected on grounds of limitation.

Held - Considering the precedents in cases of M/s.Ranjit Impex, and analysing the thin line of difference between the terms 'entertainment' and ' presentation' u/s 128(1) of the Customs Act, 1962, it was incorrect on part of the Commr.(A) to dismiss the appeal on grounds of making pre-deposit beyond the condonable period - Impugned order set aside & Commr.(A) directed to hear matter afresh: High Court (Para 5-13,22-35)

Writ Appeals Allowed

2017-TIOL-1377-HC-DEL-CUS

Cus - Petitioner firm is a private airline operating from India, and paid Inland Air Travel Tax (IATT) for a particular period & later sought refund of IATT paid for the Sky Marshals, travelling with the passengers for security purposes, on grounds that they were not 'passengers' as defined u/s 41(f)(ii) of the Finance Act, 1989 - Vide Notfn. No. 1/2003, the exemption from IATT was extended to all private airlines - However, assessee's claim was only partly granted, while a major part of refund claimed was denied - Such denial was then upheld by the Commr.(A), hence the present appeal.

Held - A perusal of Sections 41,42 & 45 of the Finance Act reveals that all airlines were compulsorily required to collect IATT from all passengers - Moreover, petitioner did not contest or seek a declaration that Sky Marshals were not passengers u/s 41(f)(ii) of the Finance Act & merely sought setting aside of the impugned order - Initially the exemption from IATT was only given to the Indian Airlines, and it was then that the refund claim was denied - The exemption was only later extended to other domestic airlines - Hence the O-i-O could not be faulted - Besides, the petitioner delayed appeal before the Commr.(A) by about 400 days and did not even submit an application for condonation of delay - Hence the impugned O-i-A dismissing the appeal could not be faulted too - Considering the aforestated position, the impugned orders warrant no interference: High Court (Para 1-5,8-16)

Writ Petition Dismissed

2017-TIOL-1376-HC-DEL-CUS

Misc. - Petitioner sought for clubbing of three Advanced Authorizations (AAs) issued - The Policy Relaxation Committee (PRC), a body constituted under the FTP 2009-14, did so but with certain conditions - Petitioner challenged the Public Notice which clubbed the AAs - Meanwhile, the PRC alleged non-compliance with the conditions and listed the petitioner as a defaulter on the websites of the authorities - Petitioner sought clearance of its name from defaulter list - Whether petitioner could have sought clubbing of AAs - Whether the PRC could impose conditions for clubbing of AAs.

Held - It appeared that petitioner sought clubbing of the AAs by invoking a Public Notice No. 79 (RE-2010)/2009-14, issued in this regard, after such notice was amended superseded - Considering that the petitioner could not claim as a matter of right, a benefit from a relaxation policy which was non-existent on the date of its invokation by the petitioner, the authorities were correct in denying the request for clubbing of AAs - In such circumstances, the petitioner approached the PRC seeking its favorable discretion - Now, considering the powers of the PRC given in Para 2.5 of the FTP 2009-14, the PRC had the discretion to impose conditions as it deemed fit - Moreover, the review order of the PRC shows that the conditions were imposed after considerable deliberation - Besides, there is noting to show that the said conditions were grossly unreasonable or unfair - The exercise of discretion to grant exemption is a delicate balance between balancing the hardship of the petitioner and the adverse impact on trade - Hence, the PRC imposed conditions which were neither illegal nor arbitrary: High Court (Para 2,3,4,9,11,12,17-27)

Writ Petition Dismissed