TMI Tax Updates - e-Newsletter
March 30, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
Highlights / Catch Notes
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GST:
Notification No. 01/2024 issued to modify the composition of the Appellate Authority for Advance Ruling in the Union Territory of Dadra and Nagar Haveli and Daman and Diu. Specifically, it substitutes the previous members with the Chief Commissioner of Central Tax, Vadodara Zone, and the Commissioner of Union territory Goods and Services Tax for Dadra and Nagar Haveli and Daman and Diu.
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GST:
Levy of penalty equivalent to the tax on employees - wrongful utilization of Input Tax Credit - The High Court scrutinized the applicability of Sections 122(1A) and 137 of the CGST Act to the petitioners, emphasizing that these sections target "taxable persons" and entities responsible for the conduct of a company's business. It was determined that individual employees, who do not stand to personally benefit from the tax credits or evasion in question, do not fall within the scope of these sections as applied in the show cause notice. - It was clarified that the petitioners, in their capacity as employees, could not be deemed directly responsible for the alleged tax evasion merely based on their roles within the company, especially in the absence of concrete proof of their direct involvement or benefit from the evasion.
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GST:
Imposition of GST on trade payables - challenge on the ground that the impugned order travelled beyond the scope of the show cause notice and the entire trade payables of the petitioner were subject to GST - The court found the imposition of GST on the petitioner's total trade payables prima facie untenable, considering the petitioner's compliance with statutory requirements for availing ITC. The court agreed that there was a case for more detailed reconsideration regarding GST imposition on inward supplies and availed ITC. It ordered the petitioner to remit 10% of the disputed tax demand under all heads, except trade payables, for reconsideration.
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GST:
Short payment of GST on unreconciled sales turnover - non-reversal of Input Tax Credit (ITC) - The assessing officer rejected the petitioner's explanation, citing lethargy in maintaining accounts. However, the High Court found that even if the petitioner was lax in rectifying the mistake promptly, it didn't justify the substantial tax liability imposed solely based on a reporting error. The Court noted that the statute didn't allow rectification until the annual return was filed, and therefore, the petitioner's actions were within legal bounds.
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GST:
Exemption from GST - hostel and residential accommodation extended by the the Applicant hostel - The High court delved into the specifics of the exemption notifications and the definitions of "residential dwelling" and "use as residence." - The respondents, representing the tax authorities, insisted on a narrow interpretation, emphasizing the commercial aspect of providing hostel accommodations and ancillary services. They pointed to the requirement for hostel operators to register under the GST regime and the applicable rates for such services. - However, the court, interpreting the exemption notifications and relevant statutory provisions, sided with the petitioners. It underscored that the purpose of such exemptions was to facilitate affordable housing options for individuals who might not afford independent residential accommodations in urban areas. - Benefit of exemption allowed.
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GST:
Reversal of excess input tax credit availed - bonafide mistake - The petitioner argued that the incorrect claiming of IGST instead of CGST was a bonafide mistake and should not lead to the disallowance of the input tax credit. However, the Court held that since the petitioner failed to move any application within the prescribed time limit for correcting the mistake or claiming the refund of the IGST, it could not intervene to amend the statutory provisions.
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GST:
Reversal of ineligible ITC - The case involved a trader served with a notice to pay/reverse ineligible Input Tax Credit (ITC) due to a discrepancy between GSTR-2A and GSTR-3B filings. The trader argued that they acted in good faith based on invoices from a selling dealer whose GST registration was subsequently cancelled. Legal precedents were cited to challenge the legality of the notice. The High Court determined that the notice was an intimation under Section 74(5), allowing the trader to address the issue before formal proceedings. The Court directed the trader to take necessary actions or file objections, with the adjudicating officer examining objections and relevant documents before initiating formal proceedings.
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GST:
Validity of assessment order - breach of principles of natural justice - During an inspection, the petitioner addressed discrepancies pointed out by the authorities but failed to respond to subsequent notices and participate in assessment proceedings. Despite this, the High Court finds it necessary to interfere with the assessment order, subjecting the petitioner to certain conditions. These include remitting a specified sum towards the disputed tax demand and submitting a reply to the show cause notice within a stipulated period. The Court directs the assessing officer to issue a fresh assessment order within two months, adhering to prescribed procedures.
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GST:
Maintainability of appeal - time limitation - Cancellation of GST registration of petitioner - failure to submit GST returns for a continuous period of six months - Despite the dismissal of the appeal on limitation grounds, the Court asserted its jurisdiction to review the original authority's decision. Recognizing the petitioner's genuine reasons and societal contributions, the Court set aside the cancellation order, directing the authority to reconsider the revocation request with reasonable opportunity for the petitioner.
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GST:
Jurisdiction to issue SCN - Ocean Freight - contention of the petitioner is to the effect that, what has been sought to be invoked the Notification No. 8/2017-Integrated Tax (Rate) dated 28/6/2017 in issuing the show cause notice which itself has been struck down by the Division Bench of Gujarat High Court - The petitioner argued that the notice lacked jurisdiction due to the invalidity of the notification. The High Court upheld the petitioner's arguments, emphasizing the illegality of applying an ultra vires notification and the lack of jurisdiction in the show cause notice. It also reaffirmed the interpretation of GST laws established in previous judgments, supporting the petitioner's case. Overall, the court ruled in favor of the petitioner, setting aside the show cause notice and allowing for a refund of taxes paid under protest.
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GST:
Denial of Input Tax Credit (ITC) erroneously - The supplier made a mistake by filing the return in Form GSTR-1 by specifying total integrated tax (IGST) as zero in the relevant column - The High Court observed that while suppliers may make errors, recipients are equally responsible for rectifying incorrect claims to maintain GST system integrity. However, it noted that in this case, the SGST component did reach the State of Tamil Nadu, contradicting the assessing officer's view. - The Court quashed the impugned order. The matter was remanded to the assessing officer for reconsideration, with directions to issue a fresh assessment order within a specified timeframe.
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GST:
Seeking lifting of attachment of bank account - Given the factual situation and legal precedents, the garnishee order issued to Indian Oil Corporation Limited and the attachment of the appellant's bank account were deemed ineffective. The Court applied the principle established in previous cases and directed the concerned authority to lift both the garnishee order and the bank account attachment.
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GST:
The Appellate Authority for Advance Ruling (AAAR) rejected the classification under SAC Heading 9986 (support services to oil and gas extraction) and SAC Heading 9983 (other professional, technical, and business services relating to exploration, mining, or drilling of petroleum crude or natural gas) as proposed by the Appellant. Instead, it was held that the services provided under the EPC contract fall under SAC Heading 9954, related to construction services, and are thus taxable at 18%. The reasoning was based on the nature of the contract which encompasses comprehensive activities including surveying, designing, installation, commissioning, and handing over of a functional project, indicating the creation of an immovable property, characteristic of construction services. - Given the classification under SAC Heading 9954, the services are subject to GST at 18%.
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Income Tax:
Validity of Settlement Commission orders - The case involved petitions seeking directives for the issuance of formal orders under section 245D (4) of the Income Tax Act, 1961, reflecting settlement terms pronounced by the Settlement Commission. While petitioners asserted the settlement's conclusion, respondent No. 2 contested, citing discrepancies in official records. - Upon review, the High Court found the affidavit of the Vice President and Member of the Settlement Commission to be conclusive evidence of settlement. Despite respondent No. 2's objections, the High Court directed the Interim Board to issue the requested orders, ensuring the proper administration of justice.
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Income Tax:
Assessment u/s 153C - The High court found procedural lapses in invoking Section 153C against the petitioner without concrete evidence of undisclosed transactions for the relevant assessment year. It highlighted the absence of incriminating material specific to the petitioner for the year in question, rendering the invocation of Section 153C unjustifiable. - Reassessment under Section 148: The court clarified that proceedings under Section 148, aimed at reassessing income believed to have escaped assessment, could continue provided they were based on substantive evidence and not merely on the procedural fallout of a search operation targeting a different entity.
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Income Tax:
Addition being 10 percent out of various expenses - books of assessee are duly audited under section 44AB of the Act - The Appellate Tribunal upheld the arguments presented by the assessee. They noted that the books of account were audited under section 44AB of the Income Tax Act and were not rejected by the AO. Therefore, the adhoc disallowance based on presumptions was deemed unsustainable, citing the precedent set by the Supreme Court. - The Tribunal emphasized that the AO's failure to reject the books of account further weakened the basis for the adhoc disallowance.
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Income Tax:
Accrual of income in India - Addition on account of royalty - receipt from Indian customer for subscription to database, sale of e-journals and membership fees - India-US tax treaty - The tribunal sided with the appellant, referencing its own precedents which established that the subscription fees received for access to databases and journals did not constitute royalty. It was clarified that customers did not acquire any copyright but merely access to the copyrighted material, which does not qualify as royalty under the DTAA or the Income-tax Act.
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Income Tax:
Refund of excess dividend Distribution Tax (DDT) paid - The Appellate Tribunal held that DTAA does not apply when a domestic company pays DDT under Section 115-O of the Act. Refund of excess DDT based on DTAA provisions was denied, following a decision by the ITAT Mumbai Special Bench.
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Income Tax:
Disallowance of deduction u/s 10B - The tribunal examined the appellant's claim regarding deductions under Section 10B for miscellaneous incomes like scrap sales and tool development income. It referred to judicial precedents and the Act's provisions, concluding that such incomes, being integral to the business operations of Export Oriented Units (EOUs), qualify for deduction under Section 10B. This interpretation aligns with the legislative intent to encourage exports by offering tax incentives for incomes directly related to the business activity of EOUs.
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Income Tax:
Deduction u/s 80IA(4) on wind mills and solar power plants - Whether each windmill and solar power plant installed by the assessee should be considered as separate undertakings or one undertaking? - The Tribunal, referencing its own previous decisions and the lack of any new material facts or judicial precedents, upheld the Commissioner of Income Tax (Appeals)'s ruling. It was concluded that each windmill and solar power plant must be treated as separate undertakings for the calculation of deductions under section 80IA(4), thereby dismissing the Revenue's appeal on this ground. - Furthermore, on Applicability of Notional Brought Forward Losses and Depreciation, the Tribunal followed the principles laid down by the High Courts, which stated that losses from eligible businesses, once set off against other income, cannot be notionally carried forward to reduce the profits of the eligible business in subsequent years for the purpose of computing deduction under section 80IA.
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Income Tax:
Income deemed to accrue or arise in India - Payments received by the assessee from it Indian customers on account of Centralized Services - Fee for Technical Services as defined u/s 9(1)(vii) of the Income Tax Act, 1961 or “Fee for included Services as defined u/Article 12(4)(a) of the India-US DTAA - The Appellate Tribunal, after considering the submissions and precedents, upheld the decision of the CIT(A), agreeing that the payments received by the assessee were not in the nature of FTS under the Income Tax Act or the DTAA. The Tribunal noted that the issue was squarely covered in favor of the assessee by its own past cases and the rulings of the Hon'ble Delhi High Court.
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Customs:
The amendment modifies the deadline in regulation 15(2) of the Sea Cargo Manifest and Transhipment Regulations, 2018. Originally set to expire on 31st March 2024, the deadline for authorized sea carriers to continue delivering cargo declarations in the legacy formats has been extended to 30th June 2024. - By extending the transitional provisions, the amendment provides additional time for the industry to adapt, ensuring a smoother transition and maintaining the flow of international trade.
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Customs:
Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver - The amendment introduces revised tariff values for several categories of goods under three distinct tables - TABLE-1, TABLE-2, and TABLE-3, replacing the existing ones. These tables include commodities ranging from different types of oils (such as Crude Palm Oil, RBD Palmolein, Crude Soya bean Oil) to metals (like Brass Scrap) and precious metals (Gold and Silver in various forms).
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Customs:
The Trade Notice issued by the Commissioner of Customs introduces significant procedural updates regarding the verification of Free Trade Agreement (FTA) certificates under the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 (CAROTAR Rules-2020). - The notice identifies specific challenges encountered during the verification of FTA certificates related to third-party invoicing. These include the absence of FOB values in FTA certificates, discrepancies in item listings, and CTH mismatches, complicating the verification process. - To address these challenges, the notice prescribes alternative procedures, such as requiring importers to submit the exporter's invoice on which the FTA certificate was issued and amending the bill of entry accordingly.
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Customs:
Legislative Competence to Levy of stamp duty on ‘Bill of Entry’ (BoE) and on Delivery Orders (DO) - goods imported in Maharashtra - seek refund paid on stamp duty - The court held that the levy of stamp duty on DOs by the State of Maharashtra was within its legislative competence and did not encroach upon the Union's legislative domain over imports and exports. The court found that the DO, being distinct from a Bill of Entry or a Bill of Lading, is an instrument liable to stamp duty post the customs clearance process, thus not affecting the course of import as governed by the Union's legislative power.
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Customs:
EPCG Scheme - Benefit of an EXIM scheme - Non fulfilment of the export obligations - The High Court examined the clauses of the bonds executed by the appellant and concluded that the penalty clause in the indemnity cum guarantee bond was valid. This clause mandated payment of 24% interest per annum on the duty saved in case of default. The court differentiated between this penalty and the interest claimed by the Customs Department, affirming the appellant's liability for the penalty outlined in the bonds.
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Customs:
Validity of order of CESTAT - Redemption for home consumption allowed, despite admitting the fact that the condition of para 2.31 of the Foreign Trade Policy are not satisfied - Scope of the CRO, 2012, which covers Multifunctional and Printers/ Devices (MFDs) along with printers and plotters - The High Court dismissed the appeal, citing a previous judgment addressing similar issues. The Court noted that the goods in question had already been released on payment of duty and other dues. Consequently, the High Court upheld the Tribunal's decision while leaving the substantial questions of law open for future adjudication.
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Customs:
Recovery of duty drawback granted earlier with interest - The petitioner claimed non-receipt of the show cause notice and argued that the sale proceeds had been realized, citing the availability of the Bank Realization Certificate online. However, the petitioner did not produce the certificate during the enquiry, leading to the issuance of the impugned order. The High Court, while acknowledging the petitioner's arguments, emphasized the importance of producing relevant documents during the enquiry process. Consequently, the Court remanded the matter back to the authorities.
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Customs:
Validity of Re-determination of Value - Goods have already been cleared from the port of import after examination and enhancement of value - The Appellate Tribunal found that the Department erred in re-determining the value of the imported goods, especially considering that the assessment orders had already been finalized and not challenged. The Tribunal ruled that the Department lacked the authority to subject the same machines to another examination and assessment. - The Tribunal concurred with the appellants’ interpretation of Customs Valuation Rules, particularly regarding the inapplicability of the depreciation method and the impermissibility of re-enhancing value after import clearance.
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Customs:
Misdeclaration of the transaction value - Import of Copper Cathodes - Acceptance of loaded value of the consignments earlier - The tribunal noted that apart from the discrepancy in dates between the invoice and bill of lading, the revenue authority provided no valid reason to reject the declared value. The appellant's explanation regarding the variation in price was considered normal trade practice and was not refuted with evidence or reasoning by the revenue authority. Therefore, the tribunal ruled that the declared value should be accepted. - The tribunal affirmed that past acceptance of loaded values did not bind the appellant to accept the re-assessed value in the current case.
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Customs:
Misdeclaration and undervaluation of the goods - redemption fine and penalty - The appellants declared the goods as 'Stock Lot Polyester Knitted Fabrics', but the department claimed they were knitted fabrics with one side brushing, leading to misdeclaration and undervaluation. The Tribunal found that the expert witness lacked sufficient knowledge about the brushing process, undermining the department's claim. Additionally, the enhancement of value based on NIDB data, without providing details to the appellant or mentioning it in the SCN, was deemed improper. Consequently, the Tribunal set aside the impugned orders, allowing the appeals with consequential relief.
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Customs:
Monetary Limit in filing Revenue Appeal - threshold limit for filing appeals as per Central Board of Indirect Customs (CBIC) circulars - Instruction are binding effect Or not - The Tribunal examined the validity of this monetary limit and its applicability in the case, alongside interpreting relevant provisions of the Customs Act, 1962. - It found that while departmental officers are bound by CBIC instructions, courts, including the Tribunal, prioritize the interest of justice. The Tribunal held that the Commissioner (Appeals) had erred in not remanding the matter back to the proper officer for fresh decision/order as required by law. Additionally, it emphasized that circulars cannot override statutory provisions or judicial decisions and that the impugned instruction should not prejudice the department's rights. - The matter listed for final hearing on a specified date.
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Corporate Law:
Oppression and Mismanagement - The Appellate Tribunal highlighted the absence of reasoning in the impugned order, especially regarding the direction for an independent forensic audit. It emphasized the necessity of recording reasons to support judicial orders, citing legal precedents. Despite oral submissions, the Appellant failed to file a reply affidavit or supporting documents, leaving the interim order based solely on the petitioner's averments. The Tribunal upheld the interim order for a forensic audit, considering allegations of serious lapses and non-compliance in financial statements and statutory compliances.
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Corporate Law:
Seeking restoration of name of the company on ROC - failure to file the Financial Statement and Annual Returns since incorporation - Section 252 of Companies Act, 2013 - The Appellate Tribunal noted that while the appellant had filed financial statements until 2015-16, there was a gap in filings for the subsequent years. However, the appellant had produced independent auditor reports for the missing years, demonstrating substantial assets and indicating a bonafide intention to comply. - Considering the appellant's substantial assets, the Tribunal found it just and equitable to restore the company's name to the Register of Companies. They emphasized that the appellant was not a shell company or engaged in fund siphoning, and the restoration would not prejudice the Registrar of Companies.
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Corporate Law:
Sanction of composite scheme of amalgamation - The appellants contested the order, arguing that it failed to consider certain clauses of the scheme, particularly regarding separability. They sought approval for part D of the scheme, excluding parts B and C, which had been automatically revoked due to non-approval by relevant shareholders. - The Tribunal examined the issues raised and found that the impugned order did not adequately address the separability of the scheme. It recognized the appellants' argument for separability and the Tribunal's discretion to modify arrangements for proper implementation. - Consequently the Tribunal set aside the impugned order and directed the NCLT to reconsider the application for the second motion, taking into account the observations made.
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Corporate Law:
Professional mis-conduct by CA - The NFRA held the individual guilty of professional misconduct under relevant sections of the Companies Act and imposed penalties. The appeal primarily raised concerns about the violation of natural justice due to the alleged non-provision of documents with the show cause notice. However, the Tribunal rejected this argument, citing the appellant's reliance on the firm's reply, which contained the necessary documents. - The Tribunal emphasized that by endorsing the firm's response as their own, the appellant waived the need for separate documents and hence dismissed the appeal.
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IBC:
CIRP - Appellant seeks to modify the project completion date from 03.12.2023 to 03.12.2024, as stated in the subsequent certificate issued by the Real Estate Regulatory Authority (RERA) - correction of error in exercise of inherent jurisdiction of this Tribunal - After considering the submissions of both parties, the Tribunal found that the date mentioned in the judgment accurately reflected the information noticed by the Adjudicating Authority in the impugned order. As such, the Tribunal concluded that there was no mistake or slip in its judgment that warranted correction.
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IBC:
Admission of Section 7 application under IBC - The Appellant contests the admission, citing the submission of a One Time Settlement (OTS) proposal and the Reserve Bank of India (RBI) circular regarding OTS proposals. - The Tribunal acknowledges the OTS proposal and the Bank's 'no objection' for deferring the pronouncement of the order. However, it emphasizes the need for justice and provides an opportunity for the Appellant to deposit the offered amount within 90 days. The Tribunal also addresses the validity of Section 10-A of IBC, directing the deposit of the offered amount within the specified time frame. Overall, the Tribunal focuses on resolving the matter effectively while ensuring fairness and justice.
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IBC:
CIRP - Admission of Section 7 application - The tribunal meticulously assessed evidence, including correspondence, loan agreements, and bank statements, to determine the existence and timing of defaults. It found the appellant's admission of default in correspondence significant and rejected arguments of uncertainty regarding default dates. Additionally, the tribunal clarified that the moratorium applied only to principal amounts, not interest payments, as per restructuring terms. - In conclusion, the tribunal upheld the decision to admit the Section 7 application, dismissing the appeal.
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IBC:
CIRP - Delay in making claim - The case revolved around a Homebuyer's appeal regarding the delay in submitting their claim in an insolvency resolution process. Despite the delay of 544 days, the Tribunal, considering the concession of the Respondent and without delving into the case's merits, allowed the appeal and directed the inclusion of the Appellant's claim. The Tribunal emphasized the timing of claim submission concerning the approval of the resolution plan, highlighting that claims are extinguished only upon the Adjudicating Authority's approval of the plan.
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IBC:
CIRP - Completion of Real estate project during the Proceedings - Appellant filed an application seeking permission for unsecured and secured financial creditors to vote on the Project Completion Proposal - The Appellant sought permission for financial creditors to vote on a Project Completion Proposal, which was granted by the Tribunal. After overwhelming support in the voting process, the Tribunal permitted the Appellant to implement the Proposal under the supervision of the IRP and in accordance with reverse CIRP principles. The appeal was disposed of, with liberty given to parties to approach the Court for any difficulties during project completion.
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IBC:
Calculation of the liquidator's fee in a corporate insolvency resolution process - The Appellate Tribunal finds that the lower Tribunal erred in not considering the various sales made by the liquidator, which are crucial in determining the amount realized. It emphasizes that both the unamended provision of Regulation 4 and the circular by the IBBI support the appellant's interpretation. Therefore, the Tribunal sets aside the previous order and remands the matter for reconsideration.
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PMLA:
Seeking grant of regular bail - Money Laundering - Scheduled Offences - The court found that the principle of parity, while relevant, does not apply mechanically. The specific roles, involvement, and circumstances of each accused must be individually assessed. Despite another accused being granted bail, the court held that the petitioner's involvement in alleged economic offenses warranted a different treatment due to the distinct and substantial allegations against him, including manipulation of property transactions and influence over government officials.
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Service Tax:
Claim of Interest on Refund of pre-deposit - Rejection on the ground that the amount of interest on the refund claim as was already sanctioned to the appellant - The Appellate Tribunal holds that the appellant is entitled to interest on the refund of the pre-deposit amount. It cites various legal precedents and interpretations to support this decision. The Tribunal rejects the department's argument and affirms the appellant's entitlement to interest at a rate of 12% per annum from the date of deposit to the date of payment. - It dismisses the department's reliance on a notification from 2014 and determines the interest rate based on legal precedents and the specific circumstances of the case.
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Service Tax:
Refund of Service Tax - Principles of unjust enrichment - The Appellate Tribunal reviewed a case where the appellant, a service provider, erroneously charged Service Tax, which was later found to be inapplicable due to a Board circular. The appellant issued Credit Notes and sought a refund, which was initially rejected based on the unjust enrichment clause. However, the Tribunal deemed the Credit Notes valid and instructed further verification. - Consequently, the matter was remanded to the Adjudicating Authority for proper examination within a specified timeframe.
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Central Excise:
Refund of duty paid in excess - Admitted tax or not - The Tribunal found that the amounts paid by the appellant were not part of self-assessment and were not reflected in the ER-1 returns. Therefore, they were considered as deposits, and the limitation for refund did not apply. The Tribunal rejected the Revenue's contention that the appellant should have challenged the self-assessment before seeking a refund, as the duty was not part of self-assessment. It was clarified that the freight amount was not included in the assessable value, as per previous decisions.
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Central Excise:
Job-worker or manufacturer - Duty liability - The case revolved around the appellants' role as job workers in the manufacture of machine-made dipped matches, supplied with raw materials by another manufacturer. Despite not following the prescribed job work procedure, the Tribunal deemed it a procedural lapse and emphasized that duty liability rested with the raw material supplier. Citing relevant legal provisions and case law, the Tribunal set aside the demand for duty, interest, and penalties against the appellants. Furthermore, the Tribunal noted the principal manufacturer's participation in the Sabka Vishwas Scheme (SVLDRS), which had already discharged duty on the goods. Consequently, the Tribunal allowed the appeal with consequential relief.
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Central Excise:
CENVAT Credit - The Department contended that since exemption was available under Notification No.17/2009 for these services, the appellant should have opted for the exemption route instead of claiming Cenvat credit. Additionally, the Department argued that the services were utilized after the "place of removal," making them ineligible for Cenvat credit under the amended Rule 2(l) of Cenvat Credit Rules, 2004. - However, the Tribunal concluded that the appellant had the discretion to choose between exemption and Cenvat credit under Notification No.17/2009. Moreover, the Tribunal determined that the services utilized by the appellant at the port fell within the definition of "place of removal," making them eligible for Cenvat credit. Consequently, the Tribunal dismissed the appeal filed by the Revenue.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2024 (3) TMI 1277
Jurisdiction to issue SCN - Levy of penalty equivalent to the tax - wrongful utilization of Input Tax Credit - Section 122(1A) and Section 137 of the CGST Act - whether the invocation of the provisions of Section 122 (1-A) of the CGST Act as also Section 137(1) and 137(2) would stand attracted in their applicability to the petitioner, so as to confer jurisdiction on respondent no. 3, to issue the impugned show cause notice against the petitioner, who is merely an employee of MLIPL and a power of attorney of Maersk? - HELD THAT:- A plain reading of section 122 clearly implies that it provides for levy of penalty for certain offences by taxable person. Such taxable person would render himself liable for a penalty for acts provided in clauses (i) to (xxi) of sub-section (1). Insofar as sub-section (1-A) of Section 122 is concerned, it provides that any person (who would necessarily be a taxable person), retains the benefit of the transactions covered under clauses (i), (ii), (vii) or clause (ix) of sub-section (1), and at whose instance, such transaction is conducted, shall be liable to a penalty of an amount equal to the tax evaded or input tax credit availed of or passed on . This necessarily implies that sub-section (1-A) applies to a taxable person, as it specifically speaks about the applicability of the provisions of clauses (i), (ii), (vii) or clause (ix) of sub-section (1), with a further emphasis added by the words - This clearly depicts the intention of the legislature that a person who would fall within the purview of sub-section(1-A) of Section 122 is necessarily a taxable person as defined under section 2(107) of the CGST Act read with the provisions of section 2( 94) of the CGST Act and a person who retains the benefits of transactions covered under clauses (i), (ii), (vii) or clause (ix) of sub-section (1) of Section 122. Section 122 (1-A) also cannot be attracted qua the person, in a situation when any person does not retain the benefit of a transaction covered under clauses (i), (ii), (vii) or clause (ix) of sub-section (1) and/or it is applicable at whose instance such transactions are conducted, could be the only person, who shall be liable to a penalty of an amount equivalent to the tax evaded or input tax credit, wrongly availed of or passed on. There is no material to support that any of the ingredients as specified in sub-section (1-A) of Section 122 would stand attracted so as to confer jurisdiction on respondent no. 3 to adjudicate any allegations/charges as made under sub-section (1-A) of Section 122. This is abundantly clear from the bare contents of paragraphs 20 and 5.19.1 of the show cause notice. It is clear from the relevant contents of the show cause notice that the basic jurisdictional requirements / ingredients, are not attracted for issuance of the show cause notice under Section 74 of the CGST Act so as to inter alia invoke Section 122 (1-A) and Section 137 against the petitioner. Even otherwise, it is ill-conceivable to read and recognize into the provisions of Section 122 and Section 137, of the CGST Act any principle of vicarious liability being attracted. There could be none. Thus, Respondent no. 3 clearly lacks jurisdiction to adjudicate the show cause notice in its applicability to the petitioner. Thus qua the petitioner, the impugned show cause notice is rendered bad and illegal, deserving it to be quashed and set aside. It is highly unconscionable and disproportionate for the concerned officer of the Revenue to demand from the petitioner an amount of Rs. 3731 crores, which in fact is clearly alleged to be the liability of Maersk, as the contents of the show cause notice itself would demonstrate. The petitioner would not be incorrect in contending that the purpose of issuing the show cause notice to the petitioner who is merely an employee, was designed to threaten and pressurize the petitioner. Petition allowed.
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2024 (3) TMI 1276
Imposition of GST on trade payables - challenge on the ground that the impugned order travelled beyond the scope of the show cause notice and the entire trade payables of the petitioner were subject to GST - Violation of principles of natural justice - HELD THAT:- It appears that the petitioner operates across India and the total trade payables were taken by the respondents from the financial statements of the petitioner. In the reply to the show cause notice, the petitioner had explained that the statutory requirements with regard to availment of ITC had been fulfilled by making payments for goods or services received by the petitioner within the time limit specified in that regard. The petitioner also adverted to returns filed in Form GSTR 1 and GSTR 3B in that regard - the conclusion in the impugned order that GST is payable on the total taxable supply as per the financial statements of the petitioner appears prima facie to be untenable. Since it was concluded earlier that the findings with regard to imposition of GST on trade payables by treating the total tax payables as taxable supplies is prima facie untenable, the petitioner shall remit 10% of the disputed tax demand pertaining to all the other heads of demand under the impugned order as a condition for remand. The impugned order is quashed subject to the condition that the petitioner remits 10% of the disputed tax demand under all heads, except trade payables, within two weeks from the date of receipt of a copy of this order - Petition disposed off.
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2024 (3) TMI 1275
Disregard to petitioner's reply to the intimation - it is alleged that the petitioner had not submitted documents to establish the movement of goods - HELD THAT:- The reply dated 07.05.2023 of the petitioner is on record. In such reply, the petitioner refuted the liability and enclosed copies of the invoice, weighment slips, e-way bills, ledger copy and payment details relating to the relevant supplies. The petitioner also placed on record the evidence that the said reply was uploaded along with attachments. The impugned order is quashed and the matter is remanded to the respondent for reconsideration. The petitioner is permitted to file a reply to the show cause notice dated 14.06.2023 within a period of 15 days from the date of receipt of a copy of this order by annexing all relevant documents once again. Petition disposed off.
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2024 (3) TMI 1274
Validity of garnishee orders - shortfall in amount to fulfil the entire pre-deposit requirement of 30% of the disputed tax demand - HELD THAT:- As regards amounts payable as per the order in original, the documents on record disclose that the entire tax liability was discharged and all that remains is interest and penalty. As regards the order in original corresponding to W.P.No.8178 of 2024, an aggregate sum of Rs. 1,87,374/- has been remitted towards the disputed tax demand leaving a balance of Rs. 1,72,989/- to fulfil the 30% pre-deposit requirement under Section 112(8) of applicable GST enactments. If 30% of the disputed tax demand is remitted, the statute provides for a stay of any recovery or coercive action until the statutory appeal is disposed of. The petitioner is directed to deposit a sum of Rs. 1,72,989/- towards fulfilment of pre-deposit requirements in terms of Section 112(8) of applicable GST enactments. Such remittance shall be made within a maximum period of two (2) days from the date of receipt of a copy of this order - Petition disposed off.
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2024 (3) TMI 1273
Quantum of penalty - Demand of penalty at the higher rate being 100 percent of the value of the goods under Section 129(1)(b) of the U.P. G.S.T. Act, 2017 - HELD THAT:- On query made, learned counsel for the revenue has made a fair statement, it cannot be doubted, the petitioner is the bona-fide owner of the goods. Accordingly, the penalty order is modified to the extent penalty imposed. Quantum is reduced in terms of provisions of Section 129(1)(a) of the Act i.e. equal to twice the amount of tax imposed on the value of the goods, as estimated by the revenue authorities. The writ petition stands disposed of.
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2024 (3) TMI 1272
Short payment of GST on unreconciled sales turnover - non-reversal of Input Tax Credit (ITC) on account of rejection - reversal of ITC as regards the disparity between the GSTR 3B and GSTR 2A returns - short payment of GST on unreconciled sales turnover as declared in Form GSTR 3B - non reversal of ITC on account of rejection of goods received as inputs - HELD THAT:- The impugned order warrants interference albeit by putting the petitioner on terms. By taking note of the heads of tax demand in the impugned order and the submissions made in respect thereof, it is found that a liability of Rs. 64,34,49,053/- was imposed merely on the finding that the petitioner was lethargic in rectifying the error committed while filing the GSTR 3B returns. If this amount is excluded and some allowance is made for the ITC reversal against the head relating to excess availment of ITC, the remittance of a sum of Rs. 5 crore as a condition for remand would safeguard revenue interest pending adjudication of remanded proceedings since it would be equivalent to approximately 10% of the remaining disputed tax demand. The impugned order dated 21.12.2023 is quashed and the matter is remanded for reconsideration subject to the condition that the petitioner remits a sum of Rs. 5 crore towards the disputed tax demand within a period of three weeks from the date of receipt of a copy of this order. Subject to being satisfied that the said sum of Rs. 5 crore was received, the assessing officer is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within three months from the date of receipt of the above amount. Petition disposed off.
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2024 (3) TMI 1271
Exemption from GST - hostel and residential accommodation extended by the the Applicant hostel - specific tariff entry is applicable to hostels under the Tariff Notification, in the event of requirement of registration - in the event of the hostel accommodation being an exempt activity, whether the incidental activity of supply of in-house food to the inmates of the hostel would also be exempt being in the nature of a composite exempt supply or not - applicability of decision in the case of Taghar Vasudeva Ambrish -vs- Appellate Authority for Advanced Ruling, Karnataka [ 2022 (2) TMI 780 - KARNATAKA HIGH COURT ] - Entry 12 of Exemption Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 dated 28.06.2017. HELD THAT:- In the present case, it is not in dispute that the inmates of the respective hostels run by the petitioners are the girl students and the working women who are not registered persons and using the premises as their residence, for which, they are paying fee, which can be termed as rent and it is not the case of the respondents that the inmates are carrying on any commercial activities in the rented premises or using the same for commercial purpose. That apart, the inmates of the room also using the common kitchen and sharing the foods as their own. Admittedly, GST is not applicable if a residential property is rented out to any persons in their personal capacity and for use as their own residence. The hostel rooms are the residential dwelling units for the girl student and working women, etc. The residential dwelling varies from person to person. As far as the homeless people are concerned, the residential dwelling will be wherever they are residing such as public roads, streets or in any other places and except the same, no other places can be provided, unless and otherwise if the Government has accommodated those people in a home, where they are maintaining the same for homeless. Therefore, when for the homeless persons, the residential dwelling will be the places wherever they are residing, where, even they do not have cooking, washing and toilet, etc., facilities by itself it does not mean that their place is not a residential dwelling - Merely because the persons are staying in hostel rooms due to their financial condition, the same will not take away the status of the said hostel room as residential dwelling for the inmates of the room, because after their avocation, they have been staying, sleeping, eating, washing, etc in the hostel rooms alone. This Court is of the considered view that the 'hostel services' provided by the petitioners to the girl students and working women will squarely amount to the 'residential dwelling' and accordingly, the same will be squarely covered under the Entry No.12 of Exemption Notification No.12 of 2017. The Hon'ble Supreme Court, in the case of Collector of Central Excise v. Parle Exports (P) Ltd., [ 1988 (11) TMI 108 - SUPREME COURT ] has suggested that in interpreting the scope of any notification, the authority has first to keep in mind the object and purpose of the notification and all parts of it should be read harmoniously in aid of, and not in derogation, of that purpose. In the present case, the imposition of GST on the Hostel accommodation should be viewed from the perspective of the recipient of service and not from the perspective of service provider. However, the 2nd respondent has dealt with the entire issue as if GST is going to be imposed on the revenue of the service provider and he is going to pay the same from and out of his pocket - the imposition of GST is only on the recipient of service and the GST is going to be collected only from the recipient of the service and not from the service provider. As far as service provider is concerned, he is collecting the GST from the recipient of the service and making deposit with the Central Government. Imposition of GST on hostel accommodation - HELD THAT:- In order to claim exemption of GST, the nature of the end-use should be 'residential' and it cannot be decided by the nature of the property or the nature of the business of the service provider, but by the purpose for which it is used i.e. 'resident dwelling' which is exempted from GST. Therefore, this Court is of the considered view that the issue of levy of GST on residential accommodation should be viewed from the perspective of recipient of service and not from the perspective of service provider, who offers the premises on rental basis. Thus, the renting out the hostel rooms to the girl students and working women by the petitioners is exclusively for residential purpose, this Court is of the considered view that the condition prescribed in the Notification in order to claim exemption, viz., 'residential dwelling for use as residence' has been fulfilled by the petitioners and thus the said services are covered under Entry Nos.12 and 14 of the Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017, the petitioners are entitled to be exempted from levy of GST. The impugned orders passed by the 2nd respondent are hereby set aside - Petition allowed.
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2024 (3) TMI 1270
Refund / Reversal of excess input tax credit availed - bonafide mistake - petitioner submits that the petitioner instead of claiming the CGST/SGST claimed IGST and it was not a bonafide mistake committed by the petitioner - HELD THAT:- Section 54 read with Section 49 prescribes for refund of excess tax etc., paid by the registered dealer by moving an application within the period of two years from the last date of filing the returns for the relevant year. In the present case, the financial year is of 2017- 18 for which the due date for filing the application for correcting the mistake or claiming the refund of the IGST was 23.04.2019 - Admittedly, the petitioner did not move any application within the time prescribed and even the extended time. This Court, in exercise of its limited jurisdiction cannot amend the statute, prescribes different time limit for moving such an application and, therefore, there are no substance in this writ petition. So far as the Judgment of the Karnataka High Court in M/s. Orient Traders v. The Deputy Commissioner of Commercial Taxes Another [ 2023 (1) TMI 838 - KARNATAKA HIGH COURT] relied on by the learned Counsel for the petitioner is concerned, in the said Judgment, the statutory provisions have not been taken - The said Judgment does not have any binding precedent. The present writ petition is hereby dismissed.
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2024 (3) TMI 1269
Violation of principles of natural justice - challenge to Summary Order passed without issuance and service of DRC-01 - opportunity of hearing to the Petitioner not afforded - HELD THAT:- Having regard to the materials produced by the petitioner, the objection raised by Mr. Ashok Kumar Yadav, the learned Senior SC-I as to maintainability of this writ petition must be rejected. This is quite a well-settled preposition that the jurisdiction of the writ petition under Article 226 of the Constitution of India is plenary in nature and without any fetters, much less any technical objection. In WHIRLPOOL CORPORATION VERSUS REGISTRAR OF TRADE MARKS, MUMBAI ORS. [ 1998 (10) TMI 510 - SUPREME COURT] , the Hon ble Supreme Court clearly indicated that in cases where the order has been passed in breach of natural justice or the Authority passing the order lacks jurisdiction the writ petition is maintainable. Even so, statutory remedy to the aggrieved party is not always a ground not to entertain the writ petition. Having regard to the materials on record, it is opined that the matter needs to be remitted back to the State Tax Officer who shall pass an appropriate order after affording an opportunity to the petitioner-Firm to place its defence by filing his reply to the notice dated 20th September 2021. Therefore, summary order dated 9th April 2022 is quashed. The petitioner-Firm shall be at liberty to produce the materials which form part of this writ petition and any other material in support of its defence. Petition disposed off by way of remand.
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2024 (3) TMI 1268
Reversal of ineligible ITC under Section 74 of CGST Act, 2017 - mismatch between GSTR-2A and GSTR-3B submitted by the petitioner for the period 01.09.2023 till 13.09.2023 - HELD THAT:- Whether the transactions were bona fide or not and whether the selling dealer i.e. respondent No. 4 whose registration has been subsequently cancelled is responsible for non-deposit of tax leading to availment of ineligible ITC by the petitioner is not to be gone into by this Court at this stage. The scheme of the GST Act contemplates a pre-adjudication notice for which intimation under Section 74(5) of the Act of 2017 is issued in Form GST DRC-01A read with Rule 142(1A) upon the assessee/taxpayer containing the communication of details of any tax, interest and penalty chargeable upon the person under sub-section (1) of Section 73 or sub-section (1) of Section 74. This intimation is in Part A of Form GST DRC-01A. Petitioner has not enclosed any notice indicating initiation of proceedings under Section 74(1) for wrongful availment of ITC by the proper officer, if the petitioner has not paid or short paid or erroneously refunded or wrongly availed ITC or utilized it by reason of fraud, or any wilful-misstatement or suppression of facts to evade tax - as per the scheme of Section 74(1), particularly provisions of Section 74(5) read with Rule 142 (1A) and 142 (2A), petitioner being the person referred to in the impugned notice is required to either make partial payment of the amount communicated to him or if he desires to file any submission or objection against the proposed liability, he may do so in Part B of Form GST DRC-01A. This Court is of the considered view that petitioner may either make the necessary deposit or reverse the ineligible ITC along with interest and penalty or file his objection(s) in Part B of Form GST DRC-01A - Petition disposed off.
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2024 (3) TMI 1267
Validity of assessment order - breach of principles of natural justice - failure to reply to the show cause notice and participating in assessment proceedings - HELD THAT:- The petitioner responded to each of the '15' discrepancies noticed during inspection. In particular, the petitioner responded to discrepancy '11' by providing an ageing report in respect of sundry creditors. In response to discrepancy '7', the petitioner stated that revenues from Telangana, Andhra Pradesh and Kerala had been included on the basis of the audited financial statement and that such inclusion is untenable. A trial balance was also submitted. Although the petitioner should have responded to the intimation and show cause notice and availed of the opportunity of personal hearing, in the above facts and circumstances, the impugned assessment order calls for interference albeit by putting the petitioner on terms. The impugned assessment order is quashed subject to the condition that the petitioner remits a sum of Rs. 15,00,000/- as agreed to towards the disputed tax demand within a maximum period of two weeks from the date of receipt of a copy of this order. The petitioner is also permitted to submit a reply to the show cause notice within the aforesaid period. Subject to the receipt thereof and upon being satisfied that the above mentioned sum of Rs. 15,00,000/- was received, the assessing officer is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh assessment order within a period of two months from the date of receipt of the petitioner's reply. Petition disposed off.
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2024 (3) TMI 1266
Maintainability of appeal - time limitation - appeal dismissed as barred by limitation since the same was filed beyond the prescribed period of four months - Cancellation of GST registration of petitioner - failure to submit GST returns for a continuous period of six months - HELD THAT:- A perusal of the material on record will indicate that it is no doubt true that the appeal preferred by the petitioner before the Appellate Authority was dismissed as barred by limitation, in this context a perusal of the order of the Appellate Authority at Annexure F dated 27.12.2023 will indicate that the merits of the claim of the petitioner for revocation of the GST cancellation has not been examined by the Appellate Authority, which has proceeded to summarily dismiss the appeal as barred by limitation - if an appeal is dismissed as barred by limitation, the order of the original authority would still remain and would not merge with the order-in-appeal and order of the original authority would be capable of being challenged under Article 226 of the Constitution of India subject to all exceptions known in law. Merely because appeal preferred by the petitioner was dismissed by the Appellate Authority vide impugned order at Annexure F dated 27.12.2023, it cannot be said that this Court is denuded of its power and jurisdiction to examine the claim of the petitioner under Article 226 of the Constitution of India or to examine the legality, validity and correctness of the order of the original authority under Article 226 of the Constitution of India. Whether any indulgence is to be shown to the petitioner in the facts and circumstances of the instant case so as to enable the petitioner to seek revocation of the GST cancellation in its favour? - HELD THAT:- The petitioner is supplying food supplements to Anganwadi Centres and schools and is a society registered under the Karnataka Societies Registration Act. It is also pertinent to note that the petitioner has specifically contended that its inability and omission to file its returns within the prescribed / stipulated period was due to bona fide reasons, unavoidable circumstances and sufficient cause - matter remitted back to respondent No. 2 for consideration of the claim of the petitioner for revocation of GST cancellation after providing sufficient and reasonable opportunity to the petitioner. Petition allowed by way of remand.
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2024 (3) TMI 1265
Jurisdiction to issue SCN - Ocean Freight - contention of the petitioner is to the effect that, what has been sought to be invoked by the Designated Officer is the Notification No. 8/2017-Integrated Tax (Rate) dated 28/6/2017 in issuing the show cause notice which itself has been struck down by the Division Bench of Gujarat High Court in the case MOHIT MINERALS PVT LTD VERSUS UNION OF INDIA 1 OTHER [ 2020 (1) TMI 974 - GUJARAT HIGH COURT ] - HELD THAT:- In Mohit Minerals the petitioner s case before the High Court of Gujarat was a case where the petitioner was importing coal from various countries on FOB (Free on Board) and CIF (sum of Cost, Insurance and Freight) basis, as clearly set out in paragraph 15 of the said decision. This Court had an occasion to consider a similar case in Liberty Oil Mills Vs. Union of India [ 2023 (2) TMI 177 - BOMBAY HIGH COURT] , where a challenge akin to the challenge in the present proceedings, was made to the show cause notice dated 31 March 2019 calling upon the petitioner to show cause as to why Integrated Goods and Service Tax may not be recovered under Section 74(1) of the Central Goods and Services Act, 2017 (for short CGST Act ) alongwith interest and penalty on the ocean trade service. This Court following the decision of the High Court of Gujarat in Mohit Minerals (supra) as also the decision of the Supreme Court in Union of India Vs. Mohit Minerals Pvt. Ltd. [ 2020 (1) TMI 974 - GUJARAT HIGH COURT] allowed the petitioner s proceedings, setting aside the show cause notice. The present petition also needs to be allowed considering the decision in the case of Mohit Minerals. Also, a submission being made on behalf of the respondent is noted namely that the decision in Mohit Minerals needs to be applied only in respect of the cases which involve the contracts on CIF basis and not FOB contracts. It is submitted that in the present case the show cause notice has been issued referring to Notification No. 8/2017-Integrated Tax (Rate) dated 28-6-2017 as the contract was a FOB contract. It is found that such argument is totally untenable inasmuch as the case in Mohit Minerals before the High Court of Gujarat, was a case which involved both categories of contract namely CIF and FOB, which was noted in paragraph 57 of the judgment of the High Court of Gujarat. Petition allowed.
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2024 (3) TMI 1264
Violation of principles of natural justice - denial of Input Tax Credit (ITC) erroneously - non-application of mind - The supplier made a mistake by filing the return in Form GSTR-1 by specifying total integrated tax (IGST) as zero in the relevant column - HELD THAT:- The petitioner has placed on record sample invoices pertaining to the purchases made from the supplier in West Bengal. The petitioner has also placed on record the Forms GSTR-1 and GSTR-3B of the supplier. These returns pertain to August 2017. On comparing the two returns, it is evident that the contention of learned counsel for the petitioner that an error was committed while filing Form GSTR-1 appears to be prima facie correct. At the end of the day, if the supply received by a registered person is genuine and taxes were paid in respect thereof by such supplier, there is no reason to deny the benefit of ITC to the registered person in the next leg of the transaction. The assessing officer was of the view that the tax paid by the supplier reached the respective states without reaching the Tamil Nadu State exchequer. The documents on record prima facie indicate that the SGST component reached the State of Tamil Nadu. Therefore, the impugned order cannot be sustained. The impugned order is quashed and the matter is remanded to the assessing officer for re-consideration - Appeal disposed off by way of remand.
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2024 (3) TMI 1263
Seeking lifting of attachment of bank account - time limitation - Availment of input tax credit in excess of entitlement - HELD THAT:- It will be beneficial to take note of the decisions passed in the cases of Badal Shambhubhai Shah vs. Directorate General of Goods and Service Tax Intelligence [ 2020 (3) TMI 617 - GUJARAT HIGH COURT] and M/s. Futurist Innovation Advertising vs. Union of India Ors. [ 2022 (1) TMI 698 - BOMBAY HIGH COURT] wherein direction was issued to the competent authority to lift the attachment over the bank account wherein the period of one year had elapsed. In the present case the same principle has to be applied to the appellant. Accordingly, the writ petition and the appeal along with the connected application are allowed with a direction to the authority concerned to lift the garnishee order dated 20th July, 2022 by addressing the Indian Oil Corporation and also lift the attachment over the appellant s bank account by addressing his bankers. Appeal allowed.
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2024 (3) TMI 1262
Maintainability of appeal - time limitation - whether the appeal has been filed within stipulated period (i.e. thirty days from the date on which the Ruling sought to be appealed against is communicated to the Appellant) prescribed under Section 100 (2) of CGST Act, 2017 or not? - HELD THAT:- As the Appellant, the date of communication of the Order of AAR, Rajasthan to the Appellant was 21.09.2021 and the appeal was filed on the portal on 19.10.2021 - the Appellant have filed the appeal within statutory period of 30 days of date of communication of the Order of the AAR. Classification of service - activity undertaken by the Appellant by way of supply, survey, designing, installation and commissioning of project under EPC contract - whether the activities undertaken by them are were classifiable either under SAC Heading No. 9986 eligible for rate of tax prescribed vide entry serial number 24(ii) or alternatively under SAC Heading No. 9983 eligible for rate of tax prescribed vide entry serial number 21(ia) of Notification No. 11/2017-CT(R), dated 28.06.2017? or is classifiable under SAC Heading No. 9954? - HELD THAT:- The service in question has to be in the nature of support to the main activity which is that of oil and gas extraction. There is no denying the fact that the activity of oil and gas extraction can be undertaken by using the infrastructure which is already in place. It, therefore, follows that there are three distinct successive stages in the entire gamut of oil and gas extraction which contribute to completion of the work of oil and gas extraction. For the services to be eligible to classification under the instant SAC Heading No. 998621, it is required that the service should support the main activity of oil and gas extraction by the infrastructure put in place for the purpose. From the detailed scope of work as mentioned in the EPC Contract, brief extracts of which have been reproduced above, we observe that M/s Vedanta Limited has planned to undertake major expansion in their production and processing capacity with consequent increase proposed in the sales and the instant EPC Contract has been awarded to the Appellant with mandate to establish the required infrastructure for the expansion proposed. Augmentation of Liquid handling capacity, augmentation of produced water treatment facility, augmenting existing injection water system facility are indicative of the fact that new facilities, in addition to the existing facilities, are being created by M/s Vedanta Limited for enhancement of oil and gas production and sales. The Appellant are Obliged by the contract for satisfactory handover of complete enhancing liquid handling capacity including Non Process Buildings, including roads and drains within MPT Pipeline and approach roads to M/s Vedanta Limited. complete with applicable hook-up tie-in with the existing proposed facilities. This provision of the contract makes it amply clear that the Appellant have been assigned the work of establishment of new facilities for oil and natural gas extraction alongside the already existing facilities at the MPT. Coming to the proposed classification under Heading 998621 it is observed that the said heading covers 'support services to oil and gas extraction' which is self explanatory in as much as the services proposed to be classified under this heading provide support to the main activity of oil and gas extraction and such activity of extraction eventually requires the infrastructure facilities established. These three parts of the entire gamut of oil and gas extraction are clearly distinguished from each other. Since, the Appellant have been tasked with establishment of infrastructure facilities for oil and gas extraction, the activities undertaken by the Appellant in pursuance of the EPC Contract cannot, by any stretch of imagination, be said to be support services to oil and gas extraction. The distinction between the activities undertaken by the Appellant in terms of the EPC contract and the activities included in the definition of SAC Heading No. 998621 is strikingly clear. Therefore the activities undertaken by the Appellant in pursuance of the EPC Contract cannot be classified under SAC Heading No. 998621 as these are not in the nature of support services to oil and gas extraction. SAC Heading No 9954 of the Scheme of Classification covers the overall construction services with SAC Heading No. 995425 the general construction services of mines and industrial plants. The explanatory notes clarify that the said service code includes construction services for mining and related facilities associated with mining operations. Since, oil and gas exploration is also a form of mining; therefore, the construction services proposed to be supplied by the Appellant for constructing facilities for handling the increased production capacity are appropriately classifiable under the SAC Heading No. 9954 - so far as classification of the supplies proposed to be undertaken by the Appellant are concerned, the composite supply in the instant cases shall be treated as supply of service defined as works contract and the pronouncement of the AAR, therefore, needs no interference up to that extent. As already observed by us, entry Sl. No. 3(ii) of Notification No. 11/2017-CT (R), dated 28.06.2017 was omitted with effect from 01.04.2019 and, therefore, the supplies proposed to be undertaken by the Appellant could not have been eligible for the rate prescribed therein. However, it is observed that up to Notification No. 3/2019- CT (R), dated 29.03.2019, major changes have been made in the said entry under Sl. No. 3 of the basic Notification No. 11/2017-CT (R), dated 28.06.2017 to provide for different rates of tax for supplies under the categories of supply of construction services or supply of works contract services. As regards the classification of the impugned services, it is held that the Impugned services of project management consultancy services provided the Appellant would merit classification under the SAC 998349 bearing description Other technical and scientific services nowhere else classified, attracting GST at the rate of 18%.
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Income Tax
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2024 (3) TMI 1261
Validity of Settlement Commission orders - Pronouncement of decision after completion of hearing by Settlement Commission - Commission pronounced the judgement but the same was not reduced in writing - Petitioners have prayed to direct the respondent No. 1-Interim Board of Settlement to pass an order u/s 245D (4) of the Income Tax Act in case of the petitioners in the same terms of settlement as pronounced by the Settlement Commission on conclusion of the hearing on 27/28.01.2021. HELD THAT:- Respondent No. 2 is not ready and willing to confirm the fact of conclusion of the settlement relying upon the official case Diary Notings. However, it is apparent from the record of the affidavit filed by the Vice President and Member of the Settlement Commission in compliance of the order dated 25.03.2021 passed by this Court in [ 2021 (3) TMI 1450 - GUJARAT HIGH COURT ] to the effect that the case was heard on 28.01.2021 and the terms of the settlement were accepted by the Settlement Commission, immunity was granted with regard to interest and penalty and the case was pronounced as settled . Therefore, the affidavit filed by respondent No. 2 relying upon the Case Diary Noting is contrary to what is stated on oath by the Vice President and the then Member of the Settlement Commission. In view of the above this Court shall give credence to the affidavit dated 28.03.2021 filed by the Vice President and Member of the Settlement Commission wherein, in no uncertain terms in para Nos. 2 and 6, the Vice President and the then Member of the Settlement Commission has confirmed that hearing was concluded and the terms of the settlement were pronounced by the Settlement Commission. Therefore, relying upon the decision of Vinod Kumar Singh ( 1987 (11) TMI 385 - SUPREME COURT] we direct respondent No. 1-Interim Board to pass an order under section 245D (4) of the Act accepting the application as settled in terms of the settlement as pronounced by the Vice President and Member of the Settlement Commission on 28.01.2021 as per affidavit dated 28.03.2021 by granting immunity from penalties and prosecutions under Income Tax Act, 1961 to the petitioners. Petition allowed.
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2024 (3) TMI 1260
Assessment u/s 153C - Proceeding u/s 148 was initiated against the petitioner and was pending - Abatement of ongoing proceedings under Section 148 due to the subsequent notice under Section 153C - Exclusion of time between the initiation of the proceedings u/s 153C till the date of receipt of the certified copy of this order - satisfaction note issued by the AO both in the capacity of the AO of the searched person and in the capacity of the AO of the other person i.e., the petitioner herein HELD THAT:- The provisions of Section 153A and 153C are intended and directed against the searched person and the other person like the petitioner respectively. As far as Section 153A is concerned, in case any proceeding for assessment or reassessment is pending on the date of issuance of a notice u/s 153C such proceedings will abate and such assessment has to be completed under Section 153A read with limitation prescribed u/s 153B. The Hon ble Supreme Court in the case of Abhisar Buildwell (P.) Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT ] held that in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition u/s 132A of the IT Act, 1961. The completed/unabated assessments can be re-opened by the AO in exercise of powers u/s 147/148 of the IT Act, 1961 subject to fulfilment of the conditions as envisaged/mentioned u/s 147/148 and those powers are saved. Therefore, the proceedings initiated u/s 148 on 30.03.2021 could abate in view of the notice issued u/s 153C on 20.03.2022, if there incriminating material for relevant Assessment Year. Section 153A of the IT Act, 1961 was introduced along with Section 153B and 153C of the IT Act, 1961 and deleted the special procedure for assessment of search cases under Chapter XIV-B of the IT Act, 1961. As far as the other person like the petitioner who was issued a notice under Section 153C of the IT Act, 1961 is concerned, there is no specific provision that would abate pending proceedings. However, as per Sub-clause (2) to Section 153C of the IT Act, 1961, the Assessing Officer has to issue notice and reassess the total income in the manner proceeded in Section 153A of the IT Act, 1961. As per Section 153(C)(1) of the IT Act, 1961, wherever the Assessing Officer of the searched person and the other person (like the petitioner herein) is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of the other person like the petitioner, the Assessing Officer can proceed to issue notices for six assessment years immediately preceding the assessment year relating to the previous year in which the search was conducted or requisition was made for the relevant Assessment Year or years referred to Section 153(A) of IT Act, 1961. As per proviso to section 153C(1) of the IT Act, 1961 limitation is from the date of receiving the books of accounts or documents or assets seized or requisitioned to the Assessing Officer having the jurisdiction over the other person viz., the petitioner. If the limitation prescribed as per the main provision is construed, the Assessing Officer can issue a notice for the Assessment Year from 10.11.2020, herein the date of search at the premises of the searched person . If the proviso is applied, six years is to be construed from the date of receipt of Books of Account, documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over the other person like the petitioner herein, in which case the proceeding under Section 153(C) of the IT Act, 1962 can be initiated only up to the assessment year 2015-2016. Impliedly, all the pending proceedings for the years for which notices under Section 153C of the IT Act, 1961 can be issued will abate. Therefore, the proceedings initiated against the Petitioner u/s 148 on 30.01.2021 would have abated. The date of Satisfaction Note and the Date of Handing over of the document would coincide as the AO of both searched person and other person is one and the same. When the notice was issued on 20.03.2022 u/s 153C the date of satisfaction note of searched person and the other person petitioner herein would be the same date i.e., 19.03.2022. The six preceding AY from that date would be from 2016-2017 to 2021-2022. The Impugned Order passed by the AO u/s 153C r.w.s. 143(3) of the IT Act, 1961 is liable to be quashed. However, the proceedings pending under Section 148 of the IT Act, 1961 which stood abated on account of the notice issued under Section 153Cof the IT Act, 1961 dated 20.03.2022 cannot be said to have abated. It will stand revived. Incorrect trajectory of the proceedings u/s 153C on 20.03.2022 which has culminated in the Impugned Order dated 31.03.2023 obviously could not abate the proceeding which was initiated u/s 148. Therefore, while quashing this impugned order passed u/s 153C read with Section 143(3) dated 31.03.2023, the reassessment proceedings initiated under Section 148 of the IT Act, 1961 has to be completed. The Impugned Order stands quashed. However, there shall be a direction to the respondent to complete the reassessment proceeding initiated under Section 148 strictly in accordance within the timelines provided under Section 153 (2) of the IT Act, 1961 in terms of the decision of Abhisar Buildwell (P.) Ltd, (SUPRA] excluding the time between the initiation of the proceedings under Section 153C of the IT Act, 1961 on 20.03.20224 till the date of receipt of the certified copy of this order. The time between the initiation of the proceedings under Section 153C of the IT Act, 1961 shall stand excluded for completing the Assessment under Section 147 read with Section 143(3) of the IT Act, 1961.
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2024 (3) TMI 1259
Addition being 10 percent out of various expenses - books of assessee are duly audited under section 44AB of the Act - AO while making adhoc disallowance has not rejected the books of account - HELD THAT:- When books of account maintained by the assessee having been duly audited have not been rejected by the AO the adhoc disallowance made on the basis of surmises is not sustainable in view of the law laid down in case of R.G. Buildwell Engineers Ltd [ 2018 (10) TMI 252 - SC ORDER] . CIT(A) has dully thrashed the facts by perusing the relevant documents to allow the expenses claimed by the assessee qua freight, transport, coolie and cartage, loading/unloading charges, godown expenses, other expenses, brokerage/commission on purchases etc. No doubt the relevant evidence has not been produced by the assessee before the AO hence he proceeded to make the adhoc disallowance. However now the CIT(A) during the appellate proceedings has duly perused the bills, vouchers, balance sheet, tax audit report, ledger copy and bank statement etc. qua the expenses claimed by the assessee in the light of the fact that the assessee is having turnover of Rs. 600 crores and duly audited books of accounts of the assessee have not been rejected by the AO and proceeded to delete the adhoc disallowance. Assessee has also brought on record the comparative chart of gross profit earned by it during the year under consideration vis-a-vis. preceding years which shows that trading results are comparable with the preceding years - We are of the considered view that the CIT(A) has rightly and validly deleted the disallowance made by the AO. Finding no illegality or perversity in the impugned findings returned by the CIT(A) the appeal filed by the Revenue is hereby dismissed.
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2024 (3) TMI 1258
Accrual of income in India - Addition on account of royalty - receipt from Indian customer for subscription to database, sale of e-journals and membership fees - India-US tax treaty - HELD THAT:- During the course of appellate proceedings before us the ld. Counsel has referred various decision of the ITAT on the similar issue and identical fact for earlier years in the case of the assessee itself wherein held that subscription received from customer in India in respect of subscription to database and subscription to journals was not taxable as royalty. With the assistance of ld. representative we have perused the decision of ITAT in the case of the assessee itself for assessment year 2016-17 which was further followed in the other assessment year wherein the ITAT in [ 2019 (4) TMI 1818 - ITAT MUMBAI ] held that subscription fees received by the assessee from its customers for providing access to database and journals were not royalty as customers did not acquire copyright, therefore, such fees were not liable to be taxed in India. Thus following the decision of the ITAT we direct the AO to delete the addition made on account of royalty. Accordingly, ground no. 1 2 are allowed.
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2024 (3) TMI 1257
Refund of excess dividend Distribution Tax (DDT) paid - rate of dividend distribution tax in relation to the dividend paid to its parent company should be circumscribed to 5% against the rate of 20.359% provided for u/s 115-O since the same was covered by the DTAA between Netherland India - HELD THAT:- Since, in the case of the assessee contracting states has not extended treaty protection to domestic company paying dividend distribution tax therefore, after following the decision of Total Oil (P) Ltd [ 2023 (4) TMI 988 - ITAT MUMBAI (SB)] dividend distribution tax would be payable at the rate mentioned in Sec. 115-O of the Act and not at the rate of tax applicable to non-resident shareholders as specified. Therefore, this ground of appeal of the assessee is dismissed. Short grant of credit of Tax Deducted at Source (TDS) - in the order passed u/s 143(3) AO has granted TDS credit less than TDS claimed made by the assessee - HELD THAT:- After hearing both the sides and perusal of the material on record, we restore this issue to the file of the assessing officer for deciding afresh after verification of the detail filed by the assessee. Therefore, this ground of appeal is allowed for statistical purposes.
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2024 (3) TMI 1256
Disallowance of deduction u/s 10B - assessee has 100% export oriented undertakings ( EOUs ) in Bangalore and Noida with respect to which it has been claiming deduction u/s 10B - HELD THAT:- So far as scrap sales are concerned as decided in in assessee s own case for AY 2004-05 [ 2010 (6) TMI 904 - ITAT DELHI ] to hold that the impugned income on account of scrap sales earned by the assessee EOUs at Bangalore and Noida during AY 2010-11 is eligible for deduction u/s 10B of the Act. Accordingly, we direct the Ld. AO to recompute the deduction allowable to the assessee under section 10B in accordance with the applicable provisions contained therein. As regards tool development income and seating facility factual position is not controverted by the Ld. DR. Given the nature of these receipts / income, we tend to agree with the contention of the Ld. AR that these have been earned by the assessee in the process of manufacturing / production of goods at its EOUs. In our view, it thus arises in the ordinary course of the business carried out by the assessee i.e 100% export of goods manufactured by it in its export oriented undertaking at Bangalore, even though not as a direct result of export and is therefore eligible for 100% deduction under section 10B of the Act. Sundries written back represent expenses claimed in the earlier years and credited to the P L account in the relevant AY and thus reversal of the same should be treated as income of the EOU at Bangalore in the relevant AY. In our considered view the claim of the assessee is correct as these amounts represent expenses related to EOU which is credited to P L account and thus becomes part of income of the EOU eligible for deduction under section 10B of the Act. We have also perused various judicial precedents relied upon by the Ld. Representatives of both the parties. In the case of CIT vs. Hewlett Packard Global Soft Ltd. [ 2017 (11) TMI 205 - KARNATAKA HIGH COURT ] while deciding on the allowability of deduction under section 10A/10B discarded the reliance placed by the Ld. AO on the decision in the case of Liberty India and Sterling Foods [ 1999 (4) TMI 1 - SUPREME COURT ] holding that the analogy of Chapter VI deductions could not be telescoped or imported into section 10A or 10B of the Act. The words derived by an Undertaking as appearing in section 10A or 10B are different from derived from employed in section 80-HH etc. and therefore all profits and gains of the undertaking including any incidental income would be entitled to 100% exemption or deduction under section 10A and 10B. The Hon ble Karnataka High Court in Hewlett Packard Global Soft Ltd.[supra] has also affirmed the view expressed in the case of Motorola India Electronics (P.) Ltd. [ 2014 (1) TMI 1235 - KARNATAKA HIGH COURT ] wherein it was held that entire profits and gains of 100% Export Oriented Undertaking including any incidental income would be entitled to 100% exemption or deduction under sections 10A/10B and as such the entire profits derived from the business of the undertaking should be taken into consideration, while computing the eligible deduction under section 10B/10A of the Act, by applying the provisions of section 10B(4). Thus, we hold that the miscellaneous/other income in the form of scrap sales, tool development income, seating facility and sundries written back are eligible for claim of exemption under section 10B of the Act and direct the Ld. AO to re-compute the deduction in terms of section 10B(4) of the Act. Adjustment made to the international transaction of receipt of interest on loans - HELD THAT:- Respectfully following the decision of the Tribunal s order for AY 2007- 08 and 2008-09 and the order giving effect to the Tribunal s order passed by the Ld. AO thereof, we are of the view that the interest rates arrived at by the assessee using EURIBOR is at arm s length and no further TP adjustment is required in respect of the impugned international transaction. Accordingly, the addition made by the Ld. AO pertaining to receipt of interest on the loans given to its AE is hereby deleted. The Ld. AO is directed to amend the assessment accordingly. Ground No. 3 to 3.7 are allowed.
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2024 (3) TMI 1255
Deduction u/s 80IA(4) on wind mills and solar power plants - AO disallowed assessee s claim of deduction on the ground that all wind mills and solar power plants shall be considered as one undertaking , whereas assessee had considered each wind mill as separate undertaking for deduction u/s 80IA(4) - HELD THAT:- As in earlier years [ 2019 (8) TMI 1900 - ITAT PUNE] A.Y. 2012-13, 2013-14 and 2014-15 ITAT has allowed assessee s claim of deduction u/s 80IA(4) treating each wind mill as a separate undertaking and treating solar power plant as a separate undertaking. Accordingly, we hold that each wind mill and solar power plant is a separate undertaking for the purpose of calculation of 80IA(4) deduction - Decided against revenue. Profit from eligible business for purpose of deduction u/s 80IA need not be computed after deduction of the notional brought forward losses and depreciation of eligible business even when the same had been set off against income from non-eligible business in earlier years - HELD THAT:- As can be seen from the above grounds of appeal raised by the Revenue for A.Y. 2012-13, A.Y. 2013-14 the Revenue has not raised any ground related to set-off of losses of earlier years of eligible undertaking and applicability of section 80IA(5) of the Act, though in the assessment orders for A.Y. 2012-13 A.Y. 2013-14, the AO had discussed 80IA(5) and set-off of losses of earlier years of the eligible undertaking. It means Revenue has accepted the decision of ld.CIT(A) and preferred not to file an appeal on the impugned issued before ITAT. Once Revenue has not preferred an appeal on the impugned issue before ITAT for A.Y. 2012-13, A.Y. 2013-14 A.Y. 2014-15, means the impugned issue has attained finality. In these facts and circumstances of the case, Revenue cannot raise the impugned issue for A.Y. 2020-21 as Revenue has accepted the decision of ld.CIT(A) for earlier years as discussed above. Therefore, Revenue s Ground No.3 is not maintainable. As deciding on merits once the earlier years losses of eligible undertakings have been set-off against the profit from another business, then those losses will not be carry forwarded notionally to set-off against the profits of eligible undertakings for the purpose of section 80IA(4) of the Act - Thus respectfully following the case of PCIT Vs. Sterling Agro Industries Limited,[ 2023 (8) TMI 768 - DELHI HIGH COURT] it is held that since there were no actual losses for the eligible undertakings during the year i.e.A.Y.2020-21, there was no question of notional set-off. Accordingly, assessee is eligible for deduction under section 80IA(4) on the profit earned by each undertaking separately. Accordingly, Revenue s Ground No.3 is dismissed.
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2024 (3) TMI 1254
Income deemed to accrue or arise in India - Payments received by the assessee from it Indian customers on account of Centralized Services - Fee for Technical Services as defined u/s 9(1)(vii) of the Income Tax Act, 1961 or Fee for included Services as defined u/Article 12(4)(a) of the India - US DTAA - absence of a PE in India - Assessee Company is a Company incorporated in United States of America (USA) and carries on the business of providing various hotel related services in several countries across the world - HELD THAT:- As decided in assessee own case [ 2023 (9) TMI 1448 - ITAT DELHI] for A.Y. 2018-19 and A.Y. 2019-20 we agree with the decision of learned first appellate authority in declaring the receipts from centralized services to be not in the nature of FTS/FIS. Fee received by the assessee under the Centralized Services Agreement cannot be treated as FIS either under Article 12(4)(a) or 12(4)(b) of the India US Tax Treaty. As a natural corollary, it can only be treated as business income of the assessee. Hence, in absence of a PE in India, it will not be taxable. Decided in favour of assessee.
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Customs
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2024 (3) TMI 1253
Levy of stamp duty on Bill of Entry (BoE) and on Delivery Orders (DO) - goods imported in Maharashtra - seek refund paid on stamp duty - Whether the State of Maharashtra has the legislative competence to levy, impose and collect stamp duty on a Delivery Order, an instrument defined in Section 2(l) of the Maharashtra Stamp Act, 1958, chargeable with duty as mentioned in Article 29 of the First Schedule in the Maharashtra Stamp Act, 1958? - Entries 41 and 83 of List I of Schedule VII of the Constitution of India - ultra vires Article 246(1), 286(1)(b) and 286(2) - HELD THAT:- A plain reading of the taxing provision of the MSA suggests that a DO mentioned in Article 29 is indeed an instrument. It is not excluded from the definition of instrument. It creates an entitlement in the consignee, i.e., the Petitioners herein or any person named by them in the DO, to take delivery of the goods lying in any dock or port, in any warehouse in which the goods are stored, or deposited on rent or hire or upon any wharf etc. The definition of instrument includes every document by which any right or liability is, or purports to be created, transferred, limited, extended, extinguished, or recorded. Certain documents have been specifically excluded from the definition. A DO is not one of them. Once the goods reach the destination port, they are unloaded and stored in a warehouse or storage as directed by transacting parties. In the meantime, the consignee or his agent presents a document called the BoE also containing a description of the goods matching that contained in the BoL and other details to the customs authorities. It is on the basis of the BoE that customs duty payable is computed and paid by the consignee. Upon evidence of payment of customs duty, and also its own charges, the shipper then issues the DO saying that the custodian of the goods may hand the goods over to the consignee (as there is no pending duty, claim or demand). Stamp duty is then paid on the DO and upon verification of payment of the same, the custodian releases the custody of the goods. Whether the DO is an integral part of the chain of events in the course of import of goods or is independent of the import albeit incidental thereto - If it is the latter, and not an integral part of the import, the State is well within its powers to levy stamp duty on it as per the pith and substance rule since the primary object and the essential purpose of Article 29 read with Section 2(l) of the MSA is then identified as distinct and not an integral part of an import but more as consequence of import. The BoE is presented for computation of the customs duty. Once the customs duty is paid, the import process so far as the customs authorities and the Customs Act is concerned ends. The DO is then issued by the shipper upon proof of payment of customs duty and its own charges. The DO does not form part of the chain of the import process and the taxing event occurs beyond the course of import. As Dr Saraf puts it, if a consignee can take delivery without a DO, there would be no question of a stamp duty impost. There is thus, no overlap in the legislative field and, the State and the Centre are both well within their own occupied area of Legislation. The DO in question in this group of cases only springs into being when that frontier has ended, i.e., after the process of assessment and recovery of customs duty is complete. The BoL, a document of title, originates when goods are laden on the vessel. It is the first in point of time. The BoE, as the Gujarat High Court judgments point out, is for the purposes of customs duty assessment. This is second in point of time. The DO comes into existence third in time sequence, after the customs duty, dues, freight, etc., are paid and the goods are lien-free, i.e., available for delivery. The customs barrier is, therefore, not a physical barrier per se, but speaks of a point in time after the role of customs has ended. Thus, a parallel can be drawn between the taxing power of the State in respect of levy of entry tax in the aforesaid decision and levy of stamp duty on a DO in the present case. Article 286(1)(b) of the Constitution restricts the power of the State to impose tax on the supply of goods imported into the country. The imposition of stamp duty on a DO in no manner encroaches upon the parliamentary legislature in Entry 83 of List I of the VIIth Schedule. Shipper s lien on the goods - The DO in the present circumstances has nothing to do with the customs duty nor the clearance by the customs authority for domestic consumption. Dr Saraf candidly says that if the Petitioners are able to bye-pass the requirement of a DO, the State will not have any claim of stamp in such a situation. But the moment there is a DO, the same will not be valid or accepted by the custodian without proof of payment of the stamp duty. DO is not a document of title under Article 29 of the MSA and hence, it is not an instrument - It is a DO which entitles the person named therein to take delivery of the goods after discharging the dues of a shipper. It is only after the shipper s charges are cleared that his lien on the goods is extinguished. A right to possession of the goods is distinct from ownership of the goods. Although title to goods includes ownership and possession, the former may exist without the latter. Ownership denotes de jure possession, but another person may be in de facto possession of the goods. The distinction between title and possession is self-evident. A BoL may, for instance, be transacted in a sale in the high sea. Title would pass. But the new/substituted consignee would not get physical possession of the goods sold, the high seas sale notwithstanding, until the goods were cleared through customs on arrival at the destination port. That possession may happen with or without a DO; and it is for each state government to decide whether or not to levy stamp duty on the DO. Consequently, the DO is not a BoL, nor a BoE, and it is not covered by any exclusion of the BoL or the BoE . As in the present case, even if we were to accept the contention of the Petitioners that the BoL constitutes title to the goods, without a DO, the owner or the consignee may not have possession of the goods without payment of the carrier s charges. Only upon release of the shipper s lien is the consignee entitled to delivery/possession of the goods. Thus, it is not necessary for the DO to be a document of title to fall within the purview of the definition of instrument . Once we have held that the State has not encroached upon the legislative field of the Union, merely because the amount of stamp duty is computed on the valuation of the goods does not preclude a DO from being an instrument chargeable to stamp duty by the State. Thus, we hold that the action of the State of Maharashtra in levying stamp duty on DO as provided in Article 29 of Schedule I of the MSA is well within the legislative competence of the State and does not intrude upon the legislative domain of the Parliament as reserved in Entries 41 and 83 of List I of Schedule VII of the Constitution of India and is not ultra vires Article 246(1), 286(1)(b) and 286(2) of the Constitution of India. The alternative prayer of the Petitioners to read down Article 29 of Schedule I of the Stamp Act of 1958 to not apply to a DO issued in respect of goods imported in Maharashtra is untenable. As held by the apex court in the matter of The Authorised officer, Central Bank of India vs Shanmugavelu [ 2024 (2) TMI 291 - SUPREME COURT] , the rule of reading down is to be used for a limited purpose of making a particular provision workable and to bring it in harmony with other provisions of the statute. It is to be used keeping in view the scheme of the statute and to fulfil its purpose. We have already held that the DO is not an extension of a BoL and both are mutually exclusive documents. Thus, there is no statutory conflict and the requirement of reading down the provision does not arise. Since we hold as such, the further question of granting refund of payments made by the Petitioners towards stamp duty is redundant. All interim applications pending therein also stand disposed.
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2024 (3) TMI 1252
Seeking direction to sanction and grant refund of excess duty - imports networking equipment - Non speaking order - HELD THAT:- Learned counsel for petitioner submits that the order in appeal was passed on 31.10.2022 and till date the adjudicating authority has not disposed of the proceedings. He further submits that the impugned order which records that the Notification dated 10.12.2019 was made effective from 01.01.2020 seems to suggest that the bill of entry lodged by the petitioner was filed after the Notification came into force. He submits that bill of entry was filed on 16.11.2019 before the Notification admittedly came into force on 01.01.2020. Thus, the petition is disposed of directing the adjudicating authority to dispose of the proceedings expeditiously within a period of six weeks from today after giving an opportunity of personal hearing to the petitioner. The petition is disposed of.
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2024 (3) TMI 1251
EPCG Scheme - Benefit of an EXIM scheme - Non fulfilment of the export obligations - Scope and terms of the Bond executed - Duty demand - differential duty - confiscation of the goods imported - fine - penalty - manufacture and export of air purifiers - Import of machinery at concessional rate of customs duty - HELD THAT:- Rule 6 deals with the conditions of licence, Sub Rule (2)(b) of the Rules mandates that an applicant for a licence should execute a bond for complying with the terms and conditions of the licence. The said Rule in clear terms mandates that an applicant for licence should execute a bond for complying with the terms and conditions of the licence. In compliance with the said Rule, the bond had to necessarily be executed by the appellant herein. It is axiomatic that when a person claims certain benefits on certain conditions and if that benefit is extended to a particular individual, he would have to fulfill his obligations on which basis the licence had been granted, or otherwise the executor can be penalised. In this case he had been granted a benefit of reduced customs duty on the promise of bringing in foreign exchange into the country. Since, it had not full filled its part of obligations, definitely it is liable to be penalised. The condition which the appellant counsel seek to be void on the basis of not being supported by any substantive provision would have to fall, since an execution of bond is contemplated under Rule 6 (2) (b) of Foreign Trade (Regulation) Rules 1993 and the reason for the execution of the bond is for the appellant to fulfill its obligation under the licence. Therefore, it is too farfetched for the appellant to content that the said condition would be a void condition. Thus, we are not inclined to interfere with the order passed by the learned Single Judge. In fine, this Writ Appeal fails and is accordingly, dismissed.
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2024 (3) TMI 1250
Validity of order of CESTAT - Redemption for home consumption allowed, despite admitting the fact that the condition of para 2.31 of the Foreign Trade Policy are not satisfied - CRO itself is formulated under the provisions of Bureau of Indian Standards Act - whether CESTAT is right in overlooking the CRO, 2012, which covers Multifunctional and Printers/ Devices (MFDs) along with printers and plotters? - HELD THAT:- It is submitted by both the counsel that the goods have already been released on payment of duty and other dues, as per the order of the Tribunal. This Civil Miscellaneous Appeal stands dismissed, keeping the substantial questions of law involved herein open to be adjudicated in appropriate proceedings.
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2024 (3) TMI 1249
Recovery of duty drawback which was granted earlier with interest - Non-realisation of export proceeds - 100% Export Oriented Unit - exporter of cotton woven powerloom bed covers, pillow covers, cushion covers and bags to France - HELD THAT:- The learned counsel for the petitioner has relied on the web portal of the Directorate General of Foreign Trade and submits that the consignment dated 19.03.2014 was realised in the petitioner's account on 12.05.2014 and he is also having the certificate to that effect. However, the petitioner claims that it could have been verified by the respondent in their portal before passing the impugned order. On the other side, the respondents claim that the certificate ought to have been produced by the petitioner at the relevant point of time. This Court, in order to provide one more opportunity to the petitioner, is inclined to remand this matter back to the authorities to consider the matter afresh. Thus, this writ petition is allowed. The order impugned in this writ petition is hereby set aside and the matter is remanded back to the respondents. The petitioner shall appear before the respondents on 15.02.2024, with the Bank Realization Certificate issued by the Directorate General of Foreign Trade and on such appearance, the respondents shall take a decision afresh after affording opportunity to this petitioner. No costs. Consequently, connected Miscellaneous Petitions are closed.
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2024 (3) TMI 1248
Valuation - Validity of Re-determination of Value - Goods have already been cleared from the port of import after examination and enhancement of value - Valuation based on Chartered Engineer Certificate - Import of second-hand printing machines - No opportunity to cross-examine the Chartered Engineer - seizure - provisionally released on execution of Bond and Bank Guarantee - confiscation - differential duty - penalty - HELD THAT:- We are of the considered opinion that the Department cannot re-assess the impugned goods for the second time. We find that the investigating officers did not question the Chartered Engineer, who issued the certificate on import and have also not questioned the proper officers, who allowed the clearance of Bill of Entry after the initial re-assessment. Department has not brought forth any omission or commission on the part of the Chartered Engineer or the proper officer so as to necessitate the revision of the assessment order passed in respect of the impugned goods. The assessment orders, which have attained finality, have also not been challenged; the same were neither stayed nor set aside by a competent higher forum or authority. Thus, we find that the Department is not within their right to subject same machines to another examination and assessment. We find that Department has seriously erred in re-determining the value of the impugned goods; the value of which is already enhanced at the time of import. We find that CVR 2007 does not give any scope for such re-assessment particularly when there was no challenge to the assessment made at the time of import by way of filing any appeal. Moreover, we find that whatever is construed as evidence in the impugned case pertains to import of some other machine albeit by the same importer. We find that evidence in one case cannot be a basis for confirmation of offence in some other case; such a confirmation defies all established principles of law. The impugned order passed without giving an opportunity to the appellants to cross-examine the Chartered Engineer is a serious violation of principles of natural justice. An order passed in this manner cannot be held to be legal, proper and justified. We find that the Revenue has not made out any case for redetermination of the declared value which was already enhanced at the time of import. Therefore, there is no violation of any of the provisions of the Customs Act by the appellant-importer and thus, the goods are not liable for confiscation and no differential duty is payable by the appellant importer. Consequentially, no penalty is imposable either on the appellant-importer or their directors. Thus, the impugned order is set aside and the all the appeals are allowed, with consequential relief, if any, as per law.
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2024 (3) TMI 1247
Misdeclaration of the transaction value - Confiscation of goods - Recovery of the differential duty - interest and penalty - Import of Copper Cathodes - Acceptance of loaded value of the consignments earlier - HELD THAT:- We find that learned Commissioner finds that the date of invoice is later than the date of bill of lading; the appellants did not submit the original copy of the contract and therefore, there are reasons to believe that the transaction value is liable for rejection. On the other hand, learned Counsel for the appellants submits that, their business model was informed to the Commissioner and have produced the original contract along with bank payment remittance advice on 06/09/2012 and this being so rejection of the transaction value was incorrect; He further submits that none of the conditions illustrated under Rule 12 exist in the instant case and therefore, the rejection was not proper and legal. We find that Learned Commissioner finds that the importer was accepting the loaded value of the consignments cleared earlier and for that reason the importer does not have any reason for not accepting the loading of the value in the instant case. It is also not explained as to how the situations illustrated under Rule 12 are existing and no case of payment of differential amounts through non-banking channels is alleged. Thus, we find that Revenue has not made any case for rejection of the transaction value i.e, the value declared by the importer. Thus, we find that no case has been made for rejection of the declared value in the impugned case and therefore, the consequential redetermination of value, confiscation of the impugned goods and imposition of penalty are not proper and legal. Hence, the impugned order is set aside and the appeal is allowed.
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2024 (3) TMI 1246
Misdeclaration and undervaluation of the goods - redemption fine and penalty - Imports Pile Fabrics declaring the same as Stock Lot Polyester Knitted Fabrics - whether the enhancement of value as well as the allegation that the goods have been mis-declared is legal and proper - HELD THAT:- It can be seen that the textile expert who reported that the goods have brushing on one side does not have knowledge about what is brushing and how it is carried out. The allegation that the goods have been mis-declared is without any factual basis. Further, in para-2 of the SCN dt. 12.3.2008 it has been categorically stated by the department that docks officers have examined and reported that the goods are Stock Lot of Polyester Knitted Fabrics in different colours. We therefore hold that the finding of the department that goods have been mis-declared is without any factual basis and requires to be set aside. Undervaluation of the goods - The appellant has declared the value of the goods as USD 1/kg. However, the department has re-determined the value as Rs.112.18/ kg and Rs.137.47/kg in the de novo orders. In the show cause notice, the enhancement of value has been proposed on the basis of market enquiry. This evidence with regard to the market enquiry was supplied to the appellant along with show cause notice. The appellant then cross examined these traders in the de novo proceedings. None of the traders supported the case of the department. Thereafter, in the de novo proceedings the original authority has completely rejected the evidence of the traders and relied upon the National Import Data Base (NIDB). The details of the NIDB data of which the adjudicating authority has relied for enhancing the value has not been supplied to the appellant. The SCN does not draw any reference of NIDB data and the enhancement was proposed in the SCN on the basis of market enquiry only. The department ought not to have relied on the NIDB data without providing copies to appellant. We therefore find that the enhancement of value is without any legal or factual basis. The same requires to be set aside which we hereby do. Thus, we are of the considered opinion that the demand, interest, redemption fine and penalty imposed cannot sustain.
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2024 (3) TMI 1245
Monetary Limit - Filing of Appeal by the Revenue / Department - threshold limit for filing appeals as per Central Board of Indirect Customs (CBIC) circulars - Instruction are binding effect Or not - Valuation of imported goods - Aluminum Scrap - rejection of declared value - enhancement of assessable value - HELD THAT:- On Persual of the provisions, it is clear that the Instruction/Circulars are mandatory/binding vis-a-vis the Departmental Officers are concerned. However, vis-a-vis the Superior Courts including Tribunals, the objective is different. The Tribunal as well as Superior Courts have to prioritize the interest of justice. It is the mandate for the Courts to see that none shall be condemned un-heard and that none shall be pre-judicially affected. The Courts/Adjudicating Authorities have to see whether any Circular/Instruction of the department is sufficient enough to fulfil the requisite interest of justice in the given set of circumstances. The order of Commissioner (Appeals) under challenge before us is held to have been passed in violation of statutory mandate. Hence it cannot be allowed to attain finality due to Departmental Instructions or Clarifications which have to be within the four corners of parent legislation. The circular was for department to follow and not for the assessee to rely upon, especially when the self assessment of assessee is under shadow of doubt, more so when the department is being denied the proper opportunity to defend its stance. Above all, there cannot be any intention of the Department to issue any instruction which is detrimental to its own interest. As observed above, the only intention of the impugned instruction for fixing monetary limit is to reduce the Department litigation. The instruction cannot be enforced at the cost of prejudice to the issuing authority itself. Rule of law requires a fair opportunity of being heard even to Government Authorities/Department herein. Commissioner (Appeals) has wrongly relied upon the decision of Sanjivani Non-ferros Trading Pvt. Ltd. Vs. Commissioner of Customs, [ 2018 (12) TMI 738 - SUPREME COURT] as in that case, the enhancement has not under Section 17 of the Customs Act, 1962. Instead of counting each Bill of Entry for the purpose of calculating threshold monetary limit for filing appeal, it may be seen that all the 30 Bills of Entry pertain to one importer, namely Century Metal Recycling Private Limited for the same commodity i.e. aluminium scrap imported during more or less same period/time. Further, the Commissioner (Appeals) has passed one Order -in -Appeal for all the 57 Bills of Entry though numbered as 59-115/2019. Against the said OIA, this appeal is filed before this Tribunal (CESTAT). In view of said Rule 6A of CESTAT Procedure Rule, 1982, we hold that the present case to be a fit case for this bench to exercise its power to not accept the CBIC instructions in this particular appeal and hold that CBIC Instruction F. No. 90 dated 17.08.2011 prescribing monetary limit for filing appeals before this Tribunal is not mandatory. Consequently, we hold that the Departmental Appeals shall be heard on merits. List for final hearing on 13th May, 2024.
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2024 (3) TMI 1244
Valuation - import of Old and used Digital Multifunction Printer - enhancement of value - restricted items - Without license - Confiscation - HELD THAT:- We hold that the date of importation in this case is from 19.10.2012 to 22.01.2013, which are prior to issuance of DGFT Notification No.35(RE-2012)/2009-2014 dated 28.02.2013. Therefore, following the decisions in the case of Bhawani Enterprises [ 2017 (11) TMI 974 - CESTAT KOLKATA] , we hold that as the import has been affected prior to 28.02.2013, there is no restriction of import of the subject goods. Hence, no specific license is required for import of the impugned goods. In that circumstances, we hold that for enhancement of value, the Chartered Accountant s Certificate cannot be relied upon unless and until there is corroborative evidence. Therefore, we hold that that the goods are not liable for confiscation. No redemption fine can be imposed and no penalty on the respondent. In the result, the Revenue s appeal is dismissed.
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Corporate Laws
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2024 (3) TMI 1243
Oppression and Mismanagement - denial of inspection of the books of accounts - EOGM not called for - purchase of loan without consent - failure to comply with statutory compliances - Validity of direction for independent forensic audit - HELD THAT:- The appellant was directed to file reply affidavit. Admittedly the appellant neither filed its reply affidavit nor documents as are now filed before us. It is in these circumstances it is needed to examine if the impugned order was wrong. Admittedly if the reply affidavit and documents were not filed before the Ld. NCLT then there was nothing before the Ld. Tribunal except to proceed on submissions made in the petition or in an application for interim relief. Such submissions have been duly noted in the impugned order. Para 9 of the impugned order rather says it is only in view of the averments made by the petitioner in its petition the interim order is passed. There are no infirmity in the impugned order before us, specially in view of the fact only oral submissions were made before the Ld. NCLT as alleged, without support of any documents or reply. Even otherwise conduct of forensic audit does not determine the rights and liabilities of the parties but merely would enable the Ld. Tribunal to appreciate the issues involved. The issues raised in the petition before Ld. NCLT are allegations of siphoning of funds, grave lapses in the appointment of statutory auditors, lack of approval of petition on reserved matter, non-maintenance of proper books of accounts and hence this conduct of forensic audit will only come to the aid of the Tribunal to adjudicate the petition. Thus in view of the allegations of serious lapses and non-compliance in the financial statements, no proper disclosure of related party transactions, non-reporting, non-disclosure and non-compliance of statutory compliances, as alleged in the petition before Ld. NCLT, the interim order passed by the Ld. NCLT is justified and there are no reason to interfere in the impugned order. Appeal dismissed.
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2024 (3) TMI 1242
Seeking restoration of name of the company on ROC - failure to file the Financial Statement and Annual Returns since incorporation - Section 252 of Companies Act, 2013 - HELD THAT:- It is not the case of the respondent that appellant company was ever engaged in the transfer of the funds to its own sister concerns or that it is a Shell company or is engaged in siphoning of funds of another company. Rather the appellant claims to have carried commercial transactions with a view to establish a relationship with DPIL in order to commence its operations in consonance with the objectives of the appellant company and had amassed substantial assets but due to the fact DPIL went into insolvency in the year 2017, the company suffered a loss. On going through the auditor reports for the financial years 2016- 17, 2017-18, 2018-19, 2019-20, 2020-21 which show the Non-Current Liabilities to the tune of Rs.7,36,23,359/-; Current Liabilities to the extent of Rs.88.00 Crores; Non-Current Assets to the extent of Rs.06.00 Crores (approximately), the Current Assets of Rs.25.94 Crores, the Fixed Assets of Rs.56.32 Crores; the Loan Advances of Rs.25.93 Crores etc., and further since it is not a case of RoC the appellant is a Shell company and was at any time engaged in siphoning of the funds, hence, if the company s name is restored it shall cause no prejudice to RoC. Admittedly, Nil revenue from operations cannot be a sole cause for striking of the name. The appellant undertakes to be more cautious and vigilant in future in filing compliances under the applicable Laws and would adhere to all stipulated timelines designated without fail and shall pay cost imposed as per law. An affidavit in this regard be filled within a week from today before this Tribunal. It is just and equitable to restore the name of the appellant company to the record of RoC - the impugned order set aside - RoC, New Delhi is directed to restore the name of the company to the Register of Companies subject to the fulfilment of compliances imposed - appeal disposed off.
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2024 (3) TMI 1241
Sanction of composite scheme of amalgamation - Section 230-232 of the Companies Act read with Companies (Compromises, Arrangements and Amalgamation) Rules, 2016 - The appellants contested the impugned order, alleging it was passed without considering the relevant clauses of the scheme of amalgamation - HELD THAT:- The impugned order doesn t discuss if the scheme of amalgamation was separable as pointed out in clauses no. 1.2.2 and 23.1. The impugned order is completely silent on these clauses. Even otherwise, section 231(1) (b) of the Companies Act duly empowers the Ld. NCLT to exercise discretion to give such directions in regard to any matter or make such modifications in the compromise or arrangement as it may consider necessary for the proper implementation of the compromise or arrangement . The Ld. NCLT was thus duly vested with sufficient powers under the Companies Act, to even partly sanction the scheme. The impugned order dated 23.02.2023 is set aside - the Ld. NCLT, New Delhi Bench is directed to revisit the application of second motion in the light of the observations made by this Tribunal above and after considering the observations/clarifications of Regional Director, may dispose of the petition in accordance with law within six weeks from the date of communication of this order. Appeal disposed off.
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2024 (3) TMI 1240
Professional mis-conduct by CA - SCN was not accompanied with documents relied upon against the Appellant and only a reference to the documents has been made in Annexure A appended with the show cause notice - non-compliance/violation of principle of natural justice by the NFRA - HELD THAT:- The fact remains that the Appellant has relied upon the reply filed by the Firm to the SCN which is pari materia the same in which he was working as engagement partner and shall knock the bottom of his case as now he cannot be allowed to take a different stand. The Appellant was required to file the reply to the show cause notice dated 15.11.2022 within a period of 30 days up to 15.12.2022. No such reply was filed within this period, rather, the Appellant sought extension of time of 45 days to submit his response vide his letter dated 14.12.2022. The NFRA considered the request made by the Appellant and on 03.01.2023 the period was extended till 29.01.2023. The Appellant during this period did not ask for any documents from the Respondent and rather relied upon the reply filed by the Firm which is apparent from the letter dated 30.01.2023, in which the Appellant has categorically stated that the Auditor (firm) has submitted detailed reply dated 24.01.2023 to the SCN issued on the Firm. Since the Appellant himself has relied upon the reply filed by the Firm to whom all the documents had already been served and has made a statement that the reply filed by the Firm shall be considered as his reply to the show cause notice then the nothing remains in this case to raise hue and cry for the alleged violation of principle of natural justice especially when the Appellant also did not ask for a personal hearing as well. No other point has been argued. There are no merit in the submission made by the Appellant and hence the appeal fails and the same is hereby dismissed though without any order as to costs.
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Insolvency & Bankruptcy
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2024 (3) TMI 1239
CIRP - Appellant seeks to modify the project completion date from 03.12.2023 to 03.12.2024, as stated in the subsequent certificate issued by the Real Estate Regulatory Authority (RERA) - correction of error in exercise of inherent jurisdiction of this Tribunal - HELD THAT:- There can be no dispute to the preposition that this Tribunal has inherent power to correct mistake or slip occurred in the order that such power is preserved in the Rule 11 of the NCLAT Rules, 2016 but the power cannot be exercised when there is no mistake or slip in the order or decree. Present is not a case where any mistake or slip occurred in the order passed by this Tribunal. The date 03.12.2023 was a date which was noticed by the Adjudicating Authority in the impugned order and which date is reflected in the order while dismissing the appeal. This is not a fit case to exercise any inherent jurisdiction to correct any error in the judgment - Application is rejected.
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2024 (3) TMI 1238
Admission of Section 7 application under IBC - CIRP initiated against the Corporate Debtor, Personal Guarantor and the Corporate Guarantors - OTS proposal has been accepted by the Bank - HELD THAT:- The settlement agreement is taken on record and the CIRP proceedings against the Corporate Debtor, Corporate Guarantors as well as proceedings under Section 95 against the Personal Guarantors is closed. The orders impugned in these appeals dated 04.07.2023, 08.12.2023 and 06.12.2023 are set aside. CIRP is closed and Corporate Debtor, Corporate Guarantors and Personal Guarantors are freed from CIRP. Liberty is reserved to the Bank to make an application. Learned counsel for the Bank submits that with regard to the Appeals of the Personal Guarantors amount of Rs.2 Lakhs each has been paid to the IRP - In view of the aforesaid amount having been paid, no further amount have to be paid to the IRP. Amount of Rs.5 Lakhs as required to be paid, if not already paid, shall be paid by the Appellant within two weeks. Amount deposited by the Appellant in Company Appeal shall now be handed over to the Bank of India as per the Settlement Terms - appeal disposed off.
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2024 (3) TMI 1237
Admission of Section 7 application - It is the case of the Appellant that after restructuring the debt was not due on alleged default dates claimed by the Respondent, as such the admission of Section 7 application by the Adjudicating Authority was illegal and perverse - HELD THAT:- The Corporate Debtor requested for restructuring benefit being MSME and the Respondent sanctioned the same vide sanction letter dated 30.03.2019 as per their guidelines dated 15.01.2019 applicable to all MSME including the Corporate Debtor. We have taken into consideration the pleadings of the parties and note that for restructured Funded Interest Terms Loan (FITL) and Working Capital Term Loan (WCTL), moratorium was indeed allowed, however the said moratorium was only for principal amounts and not for interests whereas the Appellant has taken the plea that the moratorium was blanket for both principal amount as well as for the interest component and therefore, the moratorium was absolute. As regard, the different date of default as alleged by the Appellant, both the parties during the pleadings, brought out that the Adjudicating Authority had asked the Respondent to file a supplemental affidavit which was filed on 16.04.2019 where the Respondent elaborated that the Corporate Debtor committed first default in 2018 the loan accounts of the Corporate Debtor were classified as NPA on 30.04.2018, however, on payment of over due amount the account of the Corporate Debtor were upgraded to the standard category. The Corporate Debtor, having not deposited the interest from time to time, defaulted and outstanding balance remained continuously in excess of sanction limit, entitling the Respondent bank to classify the loan accounts of the Corporate Debtor as NPA - there are no strength in the arguments of the Appellant regarding alleged wrong date of defaults which has been consciously elaborated in the Impugned Order. Thus, the grounds of the Appellant that there was no default whatsoever is not found to be true in view of various loans agreements, restructuring approvals letters, supplemental terms loan agreements, various statement of accounts provided by the banks w.r.t to the Corporate Debtor. There was clear default on the part of the Corporate Debtor to the Respondent Bank - there are no error in the Impugned Order which has gone into details of all the facts and came to the clear conclusion that there has been default on the part of the Corporate Debtor. Appeal dismissed.
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2024 (3) TMI 1236
CIRP - Delay in making claim by the Homebuyers - Condonation of delay of 544 days in submitting the claim FORM -CA - seeking a direction to the Resolution Professional/ Respondent to accept the claim of the Applicant as Financial Creditor - HELD THAT:- The very fact that effected party in this case has given a concession in so many words that it has no objection if the claim of the Appellant is also entertained and the delay in filing the claim is condoned, therefore, it is not required to go into the merits of this case and decide the appeal only on the basis of concession made by the Mr. Ritesh Jain. The present appeal succeeds and the Impugned Order is set aside. The Respondent/ Resolution Professional shall now accordingly include the claim of the Appellant and submit the updated claim to the Adjudicating Authority - Appeal allowed.
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2024 (3) TMI 1235
CIRP - Completion of Real estate project during the Proceedings - Appellant filed an application seeking permission for unsecured and secured financial creditors to vote on the Project Completion Proposal - HELD THAT:- The Corporate Debtor is allowed to complete the project under the guidance of the IRP, in terms of the affidavit filed on 24.08.2023, 04.09.2023 and 23.12.2023 and also on the principles of reverse CIRP which has been propounded by this Tribunal in the case of FLAT BUYERS ASSOCIATION WINTER HILLS 77, GURGAON VERSUS UMANG REALTECH PVT. LTD THROUGH IRP ORS. [ 2020 (2) TMI 1409 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] . The request has been made by the appellant is hereby accepted and as a result thereof, the present appeal is hereby disposed of.
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2024 (3) TMI 1234
Entitlement to the percentage of fee in respect of the sales effected by appellant (liquidator) - The appellant, who served as the liquidator for over a year, contends that his fee should be based on the total amount realized from asset sales during the liquidation period. The main contention revolves around the interpretation of Regulation 4 of the IBBI (Liquidation Process) Regulation, 2016, and a circular issued by the IBBI clarifying the term amount realized. - HELD THAT:- There is an error in the approach of the Tribunal while rejecting the application filed by the appellant which deserves to be reconsidered in terms of the order being passed herein. The issue in the present case is that the appellant effected various sales during the period he remained the liquidator of the Corporate Debtor which has been set up by the appellant in the claim application filed before the present Liquidator in which it is shown that total amount of sale is Rs. 78,47,31,778/- and the appellant is accordingly entitled to the percentage of fee in respect of the sales effected in the first six months, next 6 months, next one year and thereafter etc. However, this aspect of the matter has not been taken into consideration either by the present Liquidator or by the Ld. Tribunal whereas it is very much clear not only from Regulation 4 (3) (unamended provision) that the amount realized is to be considered but also from Circular dated 28.09.2023 by which the term amount realized has been further clarified. The impugned order is hereby set aside whereby the application filed by the appellant has been dismissed. The matter is remanded back to the Learned Tribunal which restoring the application - Appeal allowed by way of remand.
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PMLA
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2024 (3) TMI 1233
Seeking grant of regular bail - Money Laundering - Scheduled Offences - proceeds of crime - illegal transfer of the land - creation of fabricated documents - twin condition as per section 45 of PMLA satisfied or not - grounds of parity - HELD THAT:- The Hon ble Apex Court in Vijay Madanlal Choudhary and Ors. Vs. Union of India and Ors. [ 2022 (7) TMI 1316 - SUPREME COURT] has been held that the Authority under the 2002 Act, is to prosecute a person for offence of money-laundering only if it has reason to believe , which is required to be recorded that the person is in possession of proceeds of crime . Only if that belief is further supported by tangible and credible evidence indicative of involvement of the person concerned in any process or activity connected with the proceeds of crime, action under the Act can be taken forward for attachment and confiscation of proceeds of crime and until vesting thereof in the Central Government, such process initiated would be a standalone process. This court has reason to believe that prima-facie the involvement of the present petitioner is fully substantiated by the tangible and credible evidences which is indicative of involvement of the present petitioner in activity connected with the proceeds of crime. The conditions enumerated in Section 45 of P.M.L.A. will have to be complied with even in respect of an application for bail made under Section 439 CrPC. That coupled with the provisions of Section 24 provides that unless the contrary is proved, the authority or the Court shall presume that proceeds of crime are involved in money-laundering and the burden to prove that the proceeds of crime are not involved, lies on the appellant. The offence of money-laundering means whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money-laundering and the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever - on the basis of the discussion made the contention of the learned counsel for the petitioner that even if the entire ECIR will be taken into consideration, no offence will be said to be committed so as to attract the ingredients of Sections 3 4 of the P.M.L. Act, 2002, is totally misplaced in the light of accusation as mention in prosecution complaint dated 01.09.2023. Ground of parity - HELD THAT:- Law is well settled that the principle of parity is to be applied if the case of the fact is exactly to be similar then only the principle of parity in the matter of passing order is to be passed but if there is difference in between the facts then the principle of parity is not to be applied - It is further settled connotation of law that Court cannot exercise its powers in a capricious manner and has to consider the totality of circumstances before granting bail and by only simple saying that another accused has been granted bail is not sufficient to determine whether a case for the grant of bail on the basis of parity has been established. The Hon ble Apex Court in Tarun Kumar Vs. Assistant Director Directorate of Enforcement [ 2023 (11) TMI 904 - SUPREME COURT] , where it has been held that parity is not the law and while applying the principle of parity, the Court is required to focus upon the role attached to the accused whose application is under consideration - It has further been held in the said judgment that the principle of parity is to be applied in the matter of bail but equally it has been laid down therein that there cannot be any negative equality, meaning thereby, that if a co-accused person has been granted bail without consideration of the factual aspect or on the ground said to be not proper, then, merely because the co-accused person has been directed to be released on bail, the same will not attract the principle of parity on the principle that Article 14 envisages positive equality and not negative equality. On comparative assessment of the allegation as per the material collected in course of investigation as referred hereinabove, it is evident that against the said Bishnu Kumar Agarwala, the allegation of purchase of the land in question has been alleged and further allegation against him is that he is involved in the activities connected with the acquisition, possession, concealment and use of the proceeds of crime and claiming and projecting the proceeds of crime as untainted property. The twin condition as provided under Section 45(1) of the Act, 2002 is not being fulfilled so as to grant the privilege of bail to the present petitioner - Even on the ground of parity as per the discussion made hereinabove, the same on the basis of the role/involvement of the present petitioner in the commission of crime in comparison to that of the said Bishnu Kumar Agarwala, is quite different. Having regard to the facts and circumstances, as have been analyzed hereinabove as also taking into consideration the statements made in the counter affidavit, the applicant is failed to make out a prima-facie case for exercise of power to grant bail, hence, this Court does not find any exceptional ground to exercise its discretionary jurisdiction under Section 439 of the Code of Criminal Procedure to grant bail - this Court is of the view that the bail application is liable to be rejected. Bail application dismissed.
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Service Tax
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2024 (3) TMI 1232
Violation of principles of natural justice - non-service of impugned order - no proof of service of order - HELD THAT:- On examining the Order-in-Original, it follows that the Special Leave Petition filed by the tax authorities against the order of the Telangana and Andhra Pradesh High Court was dismissed by the Hon'ble Supreme Court in [ 2019 (7) TMI 1975 - SC ORDER ]. Consequently, the judgment of the Telangana and Andhra Pradesh High Court holds the field as on date. In these circumstances, it is just and appropriate that the petitioner be provided with an opportunity to contest the tax demand. It should also be noticed, in this regard, that there is no proof of service of the impugned order on the petitioner. The impugned order is quashed and the matter is remanded for reconsideration by the 1st respondent. The 1st respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within three months from the date of receipt of a copy of this order - Petition disposed off.
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2024 (3) TMI 1231
Levy of service tax - Business Support Service - joint venture - setting up clean development mechanism electricity (CDM) Co-generation plant of 20 MW on Build, Own, Operate and Transfer (BOOT) basis to improve energy efficiency and to reduce steam consumption - HELD THAT:- On going through the definition of the taxable service it appears that the term Infrastructure Support Service includes providing of office along with office utilities, lounge, reception with competent personnel to handle messages, secretarial services etc. A clear takeaway from the definition of Business Support Service is that it is in the nature of outsourced work which necessarily presupposes deployment of services as well as personnel to help the business of the other person. In the instant case, no such outsourcing of work by M/s a2z Ltd to the appellant is visible. It is clear from the wordings of the definition that one party, the provider of the service should render service to support the business of the other party, that is the recipient of the service. However, in the instant case, it is found that no such arrangement is visible. The MOU between the appellants and the M/s a2z is on a principal-to-principal basis and not on the basis of a service provider and the client. We find that while rendering a service may result in the payment of a consideration, monetary or otherwise, the vice versa is not true. Department seriously erred in viewing every consideration to be necessarily for rendering a service. On going through the provisions of the statute, board s clarification and the terms of the MOU, it is opined that deposit of Rs. 50,00,000/- received by the appellants from M/s a2z is not any consideration for the provision of any service. The nature of relationship between the appellant and M/s a2z is on the principal-to-principal basis and therefore, similar to a Joint Venture . The arrangement is mutually beneficial. The impugned order does not stand the scrutiny of law and therefore is not legally maintainable and requires to be set aside - Appeal allowed.
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2024 (3) TMI 1230
Claim of Interest on Refund of pre-deposit (amount as was deposited in terms of Section 35F of the Finance Act) - rejection on the ground that the amount of interest on the refund claim as was already sanctioned to the appellant - HELD THAT:- It is held that Commissioner (Appeals) has wrongly relied upon the pre amended Section 35FF for denying the entitlement of interest to the appellant. The appellant is held entitled for the same. The decision of Hon ble Apex Court in the case of Commissioner of Customs (Import), Raigad vs M/s. Finacord Chemicals (P) Ltd. [ 2015 (5) TMI 371 - SUPREME COURT ] while discussing the liability of the department to pay the interest has referred to Departments' own circular dated 02.1.2002 wherein the Board clarified that the matters of refund other than the amount of duty would not be covered under the provisions of Section 11B of Customs Act or Section 35FF of Central Excise Act. It was held by the Hon'ble Apex Court that in such cases of refund even the concept of unjust enrichment is not applicable. Rate of interest - HELD THAT:- No doubt the department has relied upon a notification of 2014 and as per the Section 35FF also, the rate of interest has to be more than 5% but less than 36%, however, subject to a re-notification. The above decision of Hon ble Apex Court in M/s. Finacord Chemicals (P) Ltd. [ 2015 (5) TMI 371 - SUPREME COURT ] which is subsequent to the said notification. Applying the said matrix, the appellant entitled for interest at the rate of 12%. The decision of Hon ble High Court is found not applicable to the given set of circumstances. The provision involved in the said decision is the Section 129 EE of the Customs Act - the appellant is held entitled for interest from the date of deposit to the date of payment at the rate of 12%. Appeal allowed.
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2024 (3) TMI 1229
Refund of Service Tax - Principles of unjust enrichment - Department took the view that the Appellant has not discharged onus of showing that unjust enrichment clause is not applicable in that case - HELD THAT:- The Credit Notes issued by the Public Limited Company is a proper document wherein the transaction towards credit given to their customers is properly recorded. These Credit Notes form part of their P L Account and Balance Sheet. Therefore, the Credit Notes cannot be taken as a piece of paper as has been held by the Commissioner (Appeals). However, the veracity of the same can definitely be checked and verified before it is accepted as a proper document. As per judgment in COMMISSIONER OF CENTRAL EXCISE, MADRAS VERSUS M/S ADDISON CO. LTD. [ 2016 (8) TMI 1071 - SUPREME COURT] , since the person who has initially bought the goods would have already charged the full amount on the end customer, if subsequent discount is granted to the person, there is no possibility for that discount to be passed on the end customer. Because of this reason, the Supreme Court has held that unjust enrichment clause will be applicable and no refund can be granted in that case - In the present case, the refund is purely on account of erroneously paid Service Tax. The only way unjust enrichment can get attracted is if the receiving client takes the Cenvat Credit. If it is established that no Cenvat Credit has been taken by the client, there would be no case of unjust enrichment. Therefore, it is found that in the present case, the case law of Addison is not applicable. From the documentary evidence produced, it is felt that they should be given an opportunity to produce all these documents before the Adjudicating Authority. In view of the forgoing, the matter remanded to the Adjudicating Authority directing him to follow the principles of natural justice and decide the issue within four months from the dated of communication of this order. Appeal disposed off by way of remand.
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Central Excise
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2024 (3) TMI 1228
Clandestine removal - concealment of information of production capacities of its machines installed in the premises - manufacture and production of cigarettes - Evasion of GST and cess which is payable to the respondents - HELD THAT:- The power of judicial review under Article 226 of the Constitution of India is to ensure whether the processes through which a decision is taken by the competent authority is in consonance with the Act and Rules or not, but not the decision itself. Thus, all disputed facts and circumstances are to be adjudicated before the competent authority or before the appellate authority concerned. This certainly is the reason why the High Courts are not entertaining a writ petition against the show cause notices and competent authorities and notices. The demand notices are issued based on initial determination made by the original authorities. A writ petition need not be entertained at this stage and High Court cannot adjudicate the issues relating to huge economic offence of stealthily procuring raw materials clandestine manufacturing and fraudulent supply of filter cigarettes of various brands during a particular period without payment of taxes, as alleged by the respondents resulting into issuance of show cause notices which were issued after conducting a detailed investigation in the matter by them. Even if the procedures are not followed by the authorities before issuance of show cause notices, they are bound to do so in accordance with the provisions of the Act and Rules. The interim order granted by this Court stands vacated. However, the petitioner would be at liberty to avail the statutory alternative remedy in accordance with law, if so advised - Petition dismissed.
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2024 (3) TMI 1227
Valuation - brake shoes supplied by them to M/s SAL - Job workers of M/s SAL - whether the appellants are job-workers for M/s SAL and whether the valuation of the Brake Shoes manufactured by the appellant needs to be done taking recourse to CEVR,2000? - Rule 10A of the Central Excise Valuation (Determination of Price of Excisable Goods), Rules 2000 or CEVR, 2000 - HELD THAT:- The appellants submitted the correspondence between them and M/s SAL, which indicates that though M/s SAL are making payments to the suppliers of ingots, the same is but on behalf of, the appellants, by debiting to the account of the appellants. It is seen that this is only a financial arrangement and it in itself does not render the appellants to be the job-workers of M/s SAL. There is no indication either in the orders placed by M/s SAL on the appellants or in the invoices issued by the appellants to M/s SAL, that the whole arrangement is of any job-work - the argument of the appellant that if they were job-workers for M/s SAL, M/s SAL would have availed the benefit of notification no. 214/86 - there is no reason for M/s SAL to pay for the full value of Brake Shoes rather than job charges, if the manufacture by the appellant was only on job-work basis. Revenue has not made out any case for rejection of declared value and fixing it at 110% of the cost of production as it is not established the appellants are job-workers of M/s SAL - the impugned order cannot be legally sustained - Appeal allowed.
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2024 (3) TMI 1226
Refund of duty paid in excess - Admitted tax or not - Valuation - freight from the factory of the appellant to the destination (customer s premises) has to be added to the assessable value or not - place of removal - period 2014-15, April 2015, May 2015 and 1.6.2015 to 8.6.2015 - HELD THAT:- It is found that so far the fact of the not including freight in Assessable value is concerned, the same were not disputed by Revenue in the ROM Application. What was disputed by Revenue was that the said amount has been paid by way of admitted tax or self assessed tax and hence, it was not refundable unless the order of self assessment was modified in accordance with law. The said amount of Rs.4,22,85,418/- does not form part of the self assessed tax or admitted tax of the appellant/assessee and accordingly, allowing the appeal of the assessee, it is held that they are entitled to refund of the said amount with interest as per Rules - appeal allowed.
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2024 (3) TMI 1225
Job-worker or manufacturer - Clearance of excisable goods of machine made dipped splints without payment of Central Excise duty and without following the job work procedures - whether the demand, interest and penalties imposed against the appellant is legal and proper? - HELD THAT:- From the facts narrated in the impugned order, it can be seen that the appellant was supplied with raw materials by another manufacturer. The appellant is only engaged in manufacture of machine made dipped matches. They have not manufactured any packing materials. At the time of interference by the department officers at the site of the appellant they have obtained delivery challan which evidences that the goods were being sent to the principal manufacturer. Merely because the procedure adopted for job work as per Notification No.214/86-CE is not followed, the department cannot demand duty from the job worker. The Tribunal in the case of SREE RAYALASEEMA DUTCH KASSENBOUW LTD. VERSUS CCE., TIRUPATHI [ 2006 (6) TMI 505 - CESTAT, BANGALORE] has held that unless it is proved that the raw materials were not supplied by the principal manufacturer, the department cannot demand duty from the job worker. It is also seen that the department had issued preliminary show cause notice to the principal manufacturer viz. M/s.Anja Lucifer Industries. The said party had filed an appeal before the Tribunal. The said party had opted for benefit of the Sabka Vishwas Scheme and had discharged duty as per the scheme. The principal manufacturer was thus issued discharge certificate and the appeal filed before Tribunal was dismissed accordingly. The goods therefore have already suffered duty at the hands of principal manufacturer. The demand against the present appellant cannot sustain and requires to be set aside - Appeal allowed.
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2024 (3) TMI 1224
CENVAT Credit - input services utilized by them at the port of export like Port Services, CHA Services, CHA Services and Clearing Forwarding Services - case of Revenue is that under N/N. 17/2009, the Appellant was eligible to get the exemption from payment of Service Tax on such services - HELD THAT:- There is no compulsion on the part of the appellant to avail the exemption as given under Notification No.17/2009. In the case of M/S. SHYAM METALICS ENERGY LTD. VERSUS COMMR. OF CGST CENTRAL EXCISE, BHUBANESWAR COMMISSIONERATE [ 2023 (2) TMI 1030 - CESTAT KOLKATA] , this Bench has relied on the final order in the case of M/S. ELECTROSTEEL CASTING LTD. VERSUS COMMR. OF CENTRAL EXCISE KOLKATA-III [ 2019 (2) TMI 1023 - CESTAT KOLKATA] and has held that the services rendered was within the definition of Rule 2(l) of Cenvat Credit Rules, 2004. There are no merit in the Appeal filed by the Revenue - appeal dismissed.
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