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2024 (2) TMI 1171
Denial of exemption u/s 11 and 12 - not uploading the Audit Report - delay in filing Form 10B - It is the case of the Assessee that the Assessee had uploaded in its Audit Report in Form No. 10B through its auditor, due to some technical mistake in the software the Audit Report uploaded was neither accepted by the system nor was it rejected immediately and no intimation either through e-mail or any post from the Department has given to the Assessee on this regard
HELD THAT:- As seen from the record that the Form No. 10B was ready as on 29/09/2017 i.e. before filing Return of Income u/s 139 of the Act i.e. 26/10/2017. After coming to know about the said mistake of not uploading the Audit Report, the same has been uploaded on 06/09/2019.
After coming to know about not uploading the Audit Report, the Assessee filed a letter for condonation of delay uploading the Form 10B along with certificate from auditors explaining the reason for delay and hard copy of Form No. 10B was sent through registered post to the Jurisdictional Commissioner of Income Tax (Exemptions). Thus, it can be safely construed that the Revenue has rejected the plea of the Assessee based on mere technicalities and it is not the case of the Revenue that the Audit Report was not ready as on the date of filing of the return or Assessee is not eligible for any other reason for claiming charitable status by claiming application of income for charitable purpose u/s 11 & 12 of the Act.
It is well settled law that the Revenue Authorities have to tax the right person in right manner and shall not disallow the eligible deductions on mere technicalities. The Revenue authorities have not followed the ratio laid down in the case of Pawan Kumar Agarwal [2014 (5) TMI 449 - DELHI HIGH COURT], therefore, in our considered opinion the Revenue Authorities should have allowed the benefit of exemption to the Assessee.
Thus we allow the Grounds of appeal of the Assessee by deleting the addition made by the A.O, which has been confirmed by the CIT(A).
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2024 (2) TMI 1170
Reopening of assessment u/s 147 - profit earned from the commodity transaction was not shown in the return of income - AO jurisdiction to make addition in respect of the item which does not form basis for forming opinion that income escaped assessment of tax especially, in view of the fact that no addition was made in respect of item for which the reasons were issued for by issuance notice u/s. 148 of the Act
HELD THAT:- This issue is no longer res integra by virtue of the judgment of Jet Airways (I) Ltd.,[2010 (4) TMI 431 - HIGH COURT OF BOMBAY], Ranbaxy Laboratories Ltd. vs. CIT, [2011 (6) TMI 4 - DELHI HIGH COURT] and Shri Ram Singh, [2008 (5) TMI 200 - RAJASTHAN HIGH COURT] wherein it is held that it is not permissible for the Assessing Officer to make any other addition, if no addition is made in respect of items of which reasons were recorded for issuance of notice u/s. 148.
Thus law is settled to the extent that it is not permissible for the AO to make any other addition, if the AO had chosen not to make addition in respect of items for which reasons were recorded by issuing notice u/s. 148. As discussed, since the AO had chosen not to make addition in respect of the profit of Rs. 15,884/- earned from the commodity transaction made through Star Commodities, the AO had no jurisdiction to make addition u/s. 69.
The very fact that the AO had sought make addition on the commodity transaction shows that the AO had no doubts about the genuineness of transaction. The addition of profit is separate and independent of addition made by the AO u/s. 69 of the Act. Thus, ratio of decision in the case of Jet Airways(I) Ltd. [2010 (4) TMI 431 - HIGH COURT OF BOMBAY] is squarely applicable to the facts of present case. Therefore, the AO had no jurisdiction to make addition. We, therefore, direct the AO to delete the addition and the appeal filed by the assessee stands allowed.
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2024 (2) TMI 1169
Deduction u/s 80P(2) - interest accrued/earned on fixed/term deposits investment - reasoning given by the tax authorities in denying the claim for deduction u/s 80P(2)(d) is that interest was received from banks - HELD THAT:- Revenue reasoning has no legs to stand as a cooperative bank is principally a cooperative society and holds a banking license to operate on a larger scale under the guidelines of RBI.
This issue was came to consider by Hon’ble Karnataka High Court in ‘CIT Vs Totagars Cooperative Sale Society’, finds reported [2017 (7) TMI 1049 - KARNATAKA HIGH COURT] wherein their lordships referring to the decision of Hon’ble Apex Court in the case of Totgars Co-operative Sales Society Ltd. [2010 (2) TMI 3 - SUPREME COURT] held that the ratio of decision of the Hon’ble Supreme Court in the aforesaid case (supra) not to be applied in respect of interest income on investment as same falls u/s 80P(2)(d) and not u/s 80P(2)(a)(i) of the Act
Thus we hold that the interest income earned by the appellant society from its investment held with other cooperative banks since being a registered co-operative society under respective state laws, qualifies for deductions u/s 80P(2)(d) of the Act. Resultantly, we set-aside the impugned orders and reverse the denial of deduction. Appeal of assessee allowed.
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2024 (2) TMI 1168
Revision u/s 263 - Deduction u/s 80P(2)(d) - PCIT held that the assessee has earned interest income on the FDRs maintained with Co-op. Bank which was not eligible for deduction u/s 80P(2)(d) - HELD THAT:- We note that there is no reference to interest received from Coop Bank. At the time of hearing, the AR before us duly demonstrated that the impugned amount of interest was received from the members only and not from the Co-operative Bank. The argument was also not controverted by the DR on behalf of the revenue.
Even on perusal of the order of PCIT who after pointing out difference in the amount of interest as discussed above, has reached to the conclusion that such difference represents the interest from the cooperative bank but what we find is this that such conclusion of the PCIT was not based on any material.
Therefore, we hold that the PCIT has concluded the assessment order as erroneous in so far prejudicial to the interest of revenue on wrong assumptions of facts and therefore, his PCIT order u/s 263 of the Act is not sustainable. Accordingly, we quash the order passed by the PCIT u/s 263 of the Act. Hence, the ground of appeal of the assessee is allowed.
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2024 (2) TMI 1167
TCS u/s 206C - Sale of tendu leaves at the second stage whereas in the first stage the tendu leaves were sold on the Govt Undertaking - Treating the assessee in default for non-collection of tax at source u/s 206C(6)/206C(7) - CIT(A) dismissed the appeal of the assessee by holding that the assessee is involved in the trades in Tendu leaves and the provisions of section 206C were applicable as the tendu leaves were purchased from Government Undertaking i.e. Orissa Forest Development Corporation Ltd.
HELD THAT:- CIT(A) has wrongly observed that the provisions of Section 206C of the Act were applicable to the assessee even though the assessee has made sale at second stage and the entity involved in the first stage was public sector undertaking. In the present case we also find that the assessee has collected Form no. 27BA as per Rule 37J and form 27C as per rule 37C from all the six parties copies of which are placed stating that they were engaged in business of manufacturing of Bidies and the tendu leaves were to be used for the purpose of manufacturing units and not for the purpose of trading.
In the case of Karnataka Forest Development vs. ITO [2015 (7) TMI 908 - ITAT BANGALORE] the coordinate bench has held that where the assessee has obtained the form 27 to the effect that the buyer would use the tendu leaves in manufacturing process , then the assessee cannot be treated as assessee in default u/s 206C of the Act or liable for interest. Where the declaration is made in terms of section 206C(1A) of the Act , then the liability to collect at source under section 206C(1 ) would not apply
We direct the AO to delete the demand by holding that the provision of TCS u/s 206C of the Act are not applicable to the assessee. The appeal of the assessee is allowed.
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2024 (2) TMI 1166
Assessment u/s 153A - Addition of cash deposits in bank account and savings bank account interest - additions based on the bank account statement furnished by the assessee - HELD THAT:- Considering the fact that assessment for the impugned assessment year did not abate on the date of search and seizure operation, the Assessing Officer could not have made any addition in absence of any incriminating material. This is so because of the ratio laid down by the Hon’ble Supreme Court in case of PCIT vs Abhisar Buildwel (P.) Ltd. [2023 (5) TMI 587 - SUPREME COURT].
Before us, the Revenue was unable to bring on record any material to establish that the aforesaid two additions were made based on any incriminating material found as a result of search. In view of the aforesaid, we delete the additions.
Addition applying peak theory - We find the addition has been enhanced by FAA by applying peak theory. However, how the peak amount was arrived at is not discernible from the order of FAA - we are inclined to restore this issue to the file of the AO for examining afresh and decide it after providing due and reasonable opportunity of being heard to assessee.
Penalty u/s 271(1)(c) - HELD THAT:- While dealing with the quantum appeal of assessee (supra), we have deleted few additions and restored back to the AO for deciding afresh. Thus, at present, there is no surviving additions against the assessee. That being the factual position on record, the penalty imposed u/s 271(1)(c) of the Act cannot survive. Accordingly, we delete the penalty imposed u/s 271(1)(c).
Addition cash deposits in bank account - HELD THAT:- As the proximity between cash withdrawal and deposit is quite close. Further, the Departmental Authorities have not brought any material on record to establish that the cash withdrawals were utilized for any other purpose and not available with the assessee for re-deposit. Thus we hold that the source of cash deposit has been explained by the assessee. Accordingly, we delete the addition.
Penalty imposed u/s 271AAA to be deleted.
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2024 (2) TMI 1165
Disallowance of Advertisement and business promotion expense - addition made as such expenses were not incurred for earning revenue during the year - HELD THAT:- In our view this is not a valid reason having regard to the nature of assessee’s business and the method of accounting followed by it. These expenses have necessarily to be incurred for the purpose of marketing and selling of flats. It is not the case of the Revenue that the said expenses have not been incurred for the purposes of assessee’s business. Genuineness of the said expenses have also not been doubted by the Revenue.
The assessee’s case is that it has followed Accounting Standards in respect of its project and the same has not been disputed by the Revenue authorities.
For the reasons set out above and following the decision of Somnath Buildtech [2022 (11) TMI 250 - DELHI HIGH COURT] we allow Grounds of the assessee and direct the Ld. AO to delete the impugned disallowances.
Denial of credit of TDS as appearing in Form 26AS - HELD THAT:- This needs verification. We, therefore, direct the Ld. AO to verify the assessee’s claim. If found to be correct, he should take remedial action and allow appropriate relief to the assessee.
Appeal of the assessee is allowed.
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2024 (2) TMI 1164
Validity of assessment order not bearing Document Identification Number (DIN) - HELD THAT:- The assessee’s only grievance before us was that the assessment order not bearing Document Identification Number (DIN), the assessment is, in view of CIT v. Brandix Mauritius Holdings Ltd.[2023 (4) TMI 579 - DELHI HIGH COURT] and Board Circular 19/2019, dated 14/8/2019, placing copies of the same on record, invalid.
Even as he was unable to show us the legal basis for the same; s. 292B, with sub-heading “Allotment of Document Identification Number’, being omitted by Finance Act, 2011, w.e.f. 01.04.2011, nor indeed any Rule to that effect, assessment record was called for, allowing Smt. Devi, the ld. Sr. DR, time to do so. She would vide her written submission dated 16/11/2023, place on record a communication dated 30/11/2021, the date of the assessment order, which bears DIN.
Though Appellant would object, stating that the said document is a separate document, titled ‘Intimation letter for order u/s. 143(3) of the Income Tax Act’, we find it as without merit and, rather, appears to have been made without reading the said document, whereby the assessee is informed of being conveyed the order u/s. 143(3) dated 30.11.2021, issued earlier, electronically, i.e., after completion of accounting by CPC. There is no dispute that both the assesssment order and the Intimation were uploaded on 30/11/2021. That apart, notice of demand u/s. 156 of the Act dated 30.11.2021, manually signed, as is the assessment order, forms part of the appeal file itself. This is in complete conformity with the Board Circular supra. What, then, is the assessee’s grievance? Rather, the Intimation and the order being displayed on the Revenue’s portal, the objection is not only invalid but also unfortunate.The assessee’s appeal for AY 2015-16 is accordingly dismissed.
Assessment order has not been signed, either physically or digitally, by the AO - AY: 2016-17 - HELD THAT:- Sec. 282A(2) provides that if the name and office of the designated income tax authority is printed, stamped or otherwise written on any notice or document required to be issued, served or given for the purposes of the Act by any income tax authority, the same shall be deemed to be authenticated. Further, r. 127A provides that the printing of the name and office of the income authority in the body of the email or in the attachment thereto where the notice or other document is transmitted by way of attachment to the email, or is displayed as a part of electronic record, or likewise on the attachment to the electronic record, it would be deemed to be authenticated where the email or, as the case may be, electronic record is sent from the email address of the income tax authority or, as the case may be, displayed on its designated website.
It is clear that the law has provided for deemed authentication in view of the transmission of the documents electronically from a designated email address or per a designated website. The name of the officer, along with designation, is clearly printed on the assessment order. That is, not only is the assessment order signed physically, it is also deemed to be authenticated. There is no case by the assessee that the conditions of r. 127A have not been complied with; the Revenue stating of both uploading as well as transmission through email ID on the date of passing the assessment order, and which aspect is not in dispute.
Adoption of correct profit rate - Adoption of a higher net profit rate of 5% (of sales) for AY 2019-20, as against at 2% for the preceding years - HELD THAT:- For years prior to AY 2019-20, the Revenue was, in the absence of the assessee returning income u/s. 148, constrained to assess the income u/s. 144 of the Act, which obliged the AO to gather material and confront the same to him. That is, the Act throws the burden for making an informed estimate of the assessee’s income for the relevant year/s on the AO. Though the returns voluntarily filed earlier, disclosing profit at 8%, disregarded due to the assessee being a non-resident, could validly be regarded as evidence, the Revenue has not done so.
Board requiring the assessments to be evidence-based, rather than on the basis of the statements, unless corroborated, the Revenue has proceeded on the basis of the reported profit of other firms in the business. It has failed to appreciate that all the returns, filed earlier by the assessee voluntarily, returning profit at 8%, is corroborating material, so that the lower of the two rates, i.e., 5%, as admitted, could have been applied for all the years. Be that as it may, it is not so constrained for the current year, for which the assessment is u/s. 143(3) of the Act. The assessee returning income at Rs. 98,70,252, the AO has accepted the same. The same is consistent with the estimated turnover of Rs. 20 crores, yielding a profit rate of less than 5%.
Appellant was in this regard specifically questioned by the Bench about the turnover per the software for f.y. 2018-19, i.e., the previous year relevant to AY 2019-20, and to which he replied as being not available. There is, in this view of the matter, no scope, factually and, therefore, legally; the ld. CIT(A) emphasizing the latter, for any reduction therein. That is, the assessee stands rightly assessed.
As we have dwelled on the facts of the case as we are, in confirming the assessed income, not in agreement with the ld. CIT(A). There is no law that the assessed income, a product of the law as applied to the facts of a case, cannot be lower than the returned income. Rather, it is only where an assessment fails, that the assessee may not be able to avoid the tax incident on his returned income (CIT v. Shelly Products [2003 (5) TMI 4 - SUPREME COURT]
Assessee’s appeals are dismissed.
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2024 (2) TMI 1163
Disallowance of exemption claimed u/s 54EC - non filling ROI - assessee has neither filed return of income u/s 139(1) of the Act, nor in response to the notice issued u/s 148 - AO in the absence of return filed by the assessee has disallowed the exemption claimed - HELD THAT:- As perused the provisions of section 54EC of the Act r.w.s. 139(1) of the Act and note that it has nowhere been provided that for claiming exemption u/s 54EC of the Act, the assessee has to file the return of income. Even at the time of hearing the Ld. DR has not brought our attention to such provision of the Act, suggesting that it is mandatory, for claiming exemption u/s 54EC of the Act, to file the return of income.
Accordingly, we are not convinced with the findings of the Ld. CIT(A). Thus, we direct the AO to allow the exemption to the assessee on account of investment made in REC Ltd. as per the provision of law even if the assessee does not file the return of income. Ground of appeal of the assessee is allowed.
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2024 (2) TMI 1162
Assessment u/s 153A - Addition based on the valuation report - completed assessment - nature of material found in the course of search which led to impugned additions - whether addition made on the completed assessment when the valuation is made purely based on the statement and view of the building made by the searched? - HELD THAT:- Considering the fact that the year under assessment is a completed assessment and in a search proceeding so far as it relates to the completed assessment only the addition can only be made with any corroborative material found during the search. As it is evidently cleared from the facts recorded and discussed in the orders of the lower authority they have merely based on the outer look and the statement of Shri Bhanwar Lal Soni there is no corroborative material suggest that the assessee has invested the money beyond the cost reflected in the books of accounts.
In support of so assessee submitted that the assessee himself constructed the property which is of family owned and if the rate of State PWD is considered instead of Central PWD then there is no much difference even otherwise and the objections raised by the assessee has not been considered by the lower authority and has made the addition which is nothing but on the presumption and assumption. Such type of addition cannot be made in the post search case as decided by the apex court in the case of Abhisar Buildwell P. Ltd [2023 (4) TMI 1056 - SUPREME COURT]
Merely the statement cannot be made base to make the addition and the decision of the apex court that in search assessment u/s 153A, AO cannot assess or reassess the total income filed under s. 153A of the Act unless some incriminating material was found during the search.
Revenue has not demonstrated the nature of material found in the course of search which led to impugned additions in the absence of any incriminating material. The cost of land incurred and recorded in the books has been duly accepted and reduced from the fair value derived by the valuer in the order passed under section 154 of the Act. The sustained addition is based on the valuation report of the DVO which is also considering the CPWD rates instead of PWD rates. Thus, the addition made towards the alleged difference in cost of construction made in the order of the assessment deserves to be deleted as the addition on cost of construction is based on valuation report which is in the realm of estimations without any nexus to any incriminating documents per se. Hence, in the absence of any incriminating material found, therefore, we see no perceptible reason to confirm the addition and therefore, the same is directed to be deleted. Appeal of the assessee is allowed.
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2024 (2) TMI 1161
Limitation period to file the appeal - Covid period leverage - HELD THAT:- The date of filling the appeal was 27.10.2021 and the date of order is 30.11.2020. The period of exclusion is from 15.03.2020 till 02.10.2021, notwithstanding the actual balance period of limitation remaining all person shall have a limitation period of 90 days from 03.10.2021. Thus the appeal in this case is filed within the 90 days from 03.10.2021 i.e. on 27.10.2021.
Levy of penalty u/s 234E - delay of 484 days in filling Form No. 26Q - technical glitches on the part of the system - HELD THAT:- Assessee has paid tax on 07.05.2019, 07.06.2019 and 04.07.2019. Later on, when it was came to the knowledge to the assessee that the data of same deduction has to file in Form No. 26Q hence immediately trust made efforts to file correction statement. However, due to technically reason Traces has not allowed to make correction in Form 24Q and also not permitted to replace the data in Form No 26Q directly through correction statement.
Therefore, assessee trust compelled to file return in another Form 26Q and the same Form was processed u/s 200A of the Income Tax Act 1961 by the Central processing Cell of TDS treated the same return as a new return. Accordingly, the Central processing Cell of TDS has imposed late fee considering the delay of 484 days ignoring the facts of the case.
The intimation of demand in this regard was received to assessee on 14.07.2021 from the jurisdiction assessing officer. Thus, it is evidently clear that there is no delay in payment of taxes but due to the technical glitches on the part of the system the correct form is uploaded.
Thus we direct the ld. AO to delete the levy of penalty - Decided in favour of assessee.
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2024 (2) TMI 1160
Demand of service tax - Commercial Training or Coaching Services - Franchise Services against Forward Charge - Franchise Services against Reverse Charge - Business Auxiliary Services - Management or Business Consultant Services - Wrong computation of the proposed demands due to invocation of ‘Best Judgment Assessment’ instead of actual value on ‘accrual basis’ - Whether demand could not have been confirmed on merits? - invocation of Extended period of Limitation - levy of penalties u/s 76, 77 and 78 of the Finance Act - Inordinate delay in adjudication.
Inordinate delay in adjudication - HELD THAT:- Appellant placed reliance upon the provisions of section 73(4B) of the Finance Act to contend that the order passed by the Commissioner should be set aside as it was passed beyond the period prescribed in the said section. This ground which is both factual and legal was not taken by the appellant in reply to the show cause notice. Section 73(4B) provides that the Central Excise Officer shall determine the amount of service tax within one year from the date of notice, where it is possible to do so. In the absence of such a ground having been taken in the reply to the show cause notice, it was not considered by the Commissioner. It would, therefore, in the absence of the factual aspect having been brought on record, not be appropriate to decide this issue.
Extended Period of Limitation - HELD THAT:- The proviso to section 73(1) of the Finance Act stipulates that where any service tax has not been levied or paid by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of the Chapter or the Rules made thereunder with intent to evade payment of service tax, by the person chargeable with the service tax, the provisions of the said section shall have effect as if, for the word “one year”, the word “five years” has been substituted.
It would be seen from the show cause notice that the extended period of limitation has been invoked by alleging that facts had been suppressed with intent to evade payment of service tax merely because the appellant did not pay service tax for certain services. The show cause notice also mentions that had the investigation not been conducted by the department, non payment of service would not have come to the notice of the department. The Commissioner, in the impugned order, also after noticing that the appellant had not paid service tax correctly and had failed to bring the correct facts to the knowledge of the department observed that in the era of self-assessment great trust is placed on the assessee by the department, but this trust had been breached by the appellant - The Commissioner, therefore, concluded that the onus for proper assessment and discharge of service tax was on the appellant and as the appellant had failed to discharge the said burden, the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act was correctly invoked.
Whether the extended period of limitation can be invoked merely because service tax is not paid for some services? - HELD THAT:- In the present case, the contention of the appellant is that service tax was not paid as the appellant believed that it was not liable to pay service - It has been repeatedly held by the Supreme Court and the Delhi High Court that mere suppression of facts is not enough. Suppression has to be wilful with an intent to evade payment of service tax.
In PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY [1995 (3) TMI 100 - SUPREME COURT] the Supreme Court examined whether the Department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso to section 11A of the Excise Act. The proviso to section 11A of the Excise Act carved out an exception to the provisions that permitted the Department to reopen proceedings if the levy was short within six months of the relevant date and permitted the Authority to exercise this power within five years from the relevant date under the circumstances mentioned in the proviso, one of which was suppression of facts. It is in this context that the Supreme Court observed that since “suppression of facts’ has been used in the company of strong words such as fraud, collusion, or wilful default, suppression of facts must be deliberate and with an intent to escape payment of duty.
Mere suppression of facts is not enough and there must be a deliberate and wilful attempt on the part of the assessee to evade payment of tax. In the absence of any intention to evade payment of service tax, which intention should be evident from the materials on record or from the conduct of the assessee, the extended period of limitation cannot be invoked. Thus, mere non disclosure of the receipts in the service tax returns would not mean that there was an intent to evade payment of service tax.
In the present case, all that has been stated in the impugned order is that since the appellant suppressed facts, the provisions of the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act would be applicable since such suppression of facts was with an intent to evade payment of service tax. The extended period of limitation could not, in view of the aforesaid decisions, have been invoked in the present case even if the returns were self assessed.
Management consultancy service - HELD THAT:- The entire demand confirmed under this head falls within the extended period of limitation. It has been held that the extended period of limitation could not have been invoked. The confirmation of demand under this head, therefore, deserves to set aside.
Franchise service (forward charge) - HELD THAT:- The appellant has challenged only the amount confirmed for the extended period of limitation. As held above, the extended period of limitation could not have been invoked. The demand of Rs. 5,02,168/- for the normal period is, therefore, confirmed.
Merits – commercial coaching and training services - HELD THAT:- Out of the amount of Rs. 2,11,42,021/-, an amount of Rs. 1,81,41,040/- was set aside as service tax could not be levied. The finding recorded by the Commissioner does not suffer from any error and the learned authorised representative appearing for the department has also not been able to point out any specific error in the finding. It is, because of the discussion on the extended period of limitation, also barred by limitation - Though an amount of Rs. 25,95,804/- has been set aside in the operative part of the order, but while calculating the amount it has included this amount. This is a calculation error and, therefore, the demand for this amount has to be set aside.
Out of the total amount of Rs. 40,71,261/-, the demand of Rs. 28,92,043/- upto February 2010 has been set aside because of the Notification dated 10.09.2004. It is also barred by limitation. The amount of Rs. 4,05,174/- for the period March 2010 is also barred by limitation. Regarding the remaining demand of Rs. 7,74,044/- for the period from April 2010 to March 2011, learned counsel for the appellant stated that the appellant agrees to pay this demand. Since the demand of Rs. 28,92,043/- and Rs. 4,05,174/- is barred by limitation the appeal filed by the department to assail this finding, for the reasons stated while discussing the limitation issue, deserves to be dismissed. So far as the amount of Rs. 7,74,044/- is concerned, payment of this amount is admitted by the appellant.
Franchise service (reverse charge) - HELD THAT:- The franchise service was not provided by the appellant since the agreement in question is a mere revenue sharing agreement - In the present appeal, there is no fixed amount specified to be paid to Centennial College, Canada. Instead for every student enrolled in a course, Centennial College, Canada gets a specified amount as a share of the fees. This is a typical revenue sharing model and in view of the aforesaid decision of the Tribunal in Niraj Prasad, there is no element of service involved. The appellant is, therefore, justified in submitting that franchise service (reverse charge) was not rendered by the appellant since the agreement was a mere revenue sharing agreement. - the appellant was not required to pay any service tax on franchise service on a reverse charge basis.
Penalty under section 78 - HELD THAT:- The Commissioner has imposed penalty under section 78 of the Finance Act for the reason that the ingredients for imposing penalty under this section and for invoking the extended period of limitation are same. It has been found that the extended period of limitation could not have been invoked. Thus, the penalty under section 78 of the Finance Act deserves to be set aside.
Penalty under section 77 - HELD THAT:- Penalty of Rs. 10,000/- has been imposed upon the appellant for the reason that the appellant had contravened the provisions of section 70 of the Finance Act as the correct periodical ST-3 returns had not been filed. The appellant has very fairly stated that it is liable to pay an amount of Rs. 7,74,044/- towards service tax against commercial coaching and training service for the normal period. It has also been found that the demand towards franchise service (forward charge) for the normal period has to be confirmed. Major portion of the demand has been set aside only for the reason that the extended period of limitation could not have been invoked. The penalty under section 77 of the Finance Act has, therefore, been correctly imposed.
Appeal disposed off.
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2024 (2) TMI 1159
Levy of service tax - support of services of business and commerce or not - Consignment Agent carried out the handling job - HELD THAT:- On an identical set of facts, in their own case for an earlier period, this Tribunal in M/S THE TINPLATE COMPANY OF INDIA LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX, JAMSHEDPUR [2023 (9) TMI 1438 - CESTAT KOLKATA] has dropped the demand raised against the appellant and therefore, the same treatment should be given to the present Show Cause Notice and the demands - it was held in the said case that It is evident from the records and the reports submitted by the ld.Commissioner, Jamshedpur that the appellant has not received any amount towards marketing agency agreement, therefore, the question of demanding service tax does not arise.
Following the precedent decision in the appellant’s own case for an earlier period, the demand raised against the appellant is set aside - appeal allowed.
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2024 (2) TMI 1158
Liability of Excise duty equal to Special Additional Duty of customs (SAD) under Section 3(5) of the Customs Tariff Act 1975 - Intraocular Lens cleared to DTA - SCN dated 2-6-2015 issued under Section 11A (1)/ (5) of the Central Excise Act 1944 is without jurisdiction since the said Section 11A (5) stood omitted with effect from 14-5-2015 - Extended period of limitation - suppression of facts or not - HELD THAT:- The exemption under N/N. 23/2003-CE is not required and further that the goods cleared in DTA, if imported, were also exempt from SAD under Sr. No.1 of N/N. 29/2010-CUS dated 27-2-2010 up to 16-3-2012 and thereafter under Sr. No.2 of N/N. 21/2012-Cus dated 17-3-2012 since the same are pre-packaged goods for retail sale to which provisions of Legal Metrology Act and Rules apply. Therefore, excise duty equal to SAD payable under the Proviso to Section 3 (1) of the Central Excise Act 1944, will be NIL. Consequently, the exemption under N/N. 23/2003-CE is not required.
It is thus clear that exemption from Excise duty equal to SAD under Notification No.23/2003-CE is not required since the said goods if imported are exempt from SAD and therefore Excise duty equal to SAD payable under the Proviso to Section 3 (1) of the Central Excise Act 1944, will be NIL.
The Show Cause Notice dated 27-5-2015, which is purportedly issued under Section 11A(1)/A (5) of the Central Excise Act 1944 was barred by time and not maintainable in law. If the Notice is purported to be issued under Section 11A(1), the same is barred by time, having been issued beyond the period of one year then specified in Section 11A (1). If the Notice is purported to be issued under Section 11A (5), the same is not maintainable in law, since the said Section 11A (5) stood omitted with effect from 14-5-2015. The show cause notice having been issued under a non-existing provision is not maintainable in law.
Section 11A (5) read with Section 11A (4) applies in cases of fraud, collusion, wilful mis-statement, suppression of facts or contravention with intent to evade, none of which is present in this case. In the ER-2 Returns it is duly disclosed that the Appellant were availing Notification No.23/2003-CE. The Appellant have been subjected to audit from time to time. The Audit report records that the Appellant were availing Notification No.23/2003. The department was therefore fully aware that the Appellant were availing benefit of Notification no.23/2003. Moreover, No Dues certificate was also issued by the department at the time of exit from EOU. Accordingly, it is not a case of fraud, collusion, wilful mis-statement, suppression of facts or contravention with intent to evade and the larger period of limitation is inapplicable in the present case.
The impugned order is not tenable both on merits and on limitation - appeal allowed.
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2024 (2) TMI 1157
Valuation - taking local Maximum Retail Price (MRP) for calculating the aggregate of Customs duties (Basic, CVD, SAD, Cess) to arrive at the Excise duty payable by 100% EOU under the Proviso to Section 3(1) of the Central Excise Act 1944 - correctness of demanding Education Cess and Secondary and Higher Education Cess once again on the aggregate of customs duties which already includes such Cess on the basic customs duty and CVD - SCN purportedly issued under Section 11A (5) of the Central Excise Act 1944 is without jurisdiction since the said Section 11A (5) stood omitted with effect from 14-5-2015 or not - whether Notice is barred by time and the larger period of limitation apply since the goods were cleared after verification of duty payment and issue of No dues certificate by the central excise officer?
HELD THAT:- It would be evident from the calculation that the Principal Commissioner has wrongly calculated the Basic customs duty on the MRP of the goods, which is contrary to the provisions of Proviso to Section 3 (1) of the Central Excise Tariff Act. As per Proviso to said Section 3 (1), Excise duty on goods manufactured by a 100% EOU and brought to any place in India shall be an amount equal to aggregate of customs duties leviable on like goods when imported into India and the value of such goods shall be as per the Customs Act 1962 and the Customs Tariff Act 1975. The said Acts do not provide for calculating the basic customs duty on the local Maximum Retail price (MRP) but require adoption of the transaction value as per Section 14 of the Customs Act 1962. Instead of taking such value which is mentioned in the Column before the Column of MRP on page 55 of the Appeal, the Principal Commissioner has taken the MRP, which is plainly erroneous. Accordingly, the assessable value taken for calculating the Basic Duty is ex-facie erroneous.
As regards the CVD, the Principal Commissioner has wrongly calculated the same on MRP instead of MRP less abatement under Notification No. 49/2008-CE (NT) dated 24-12-2008. Accordingly, the value taken for calculation of CVD is also ex-facie erroneous.
Further, the Principal Commissioner has wrongly taken Education Cess and Secondary and Higher Secondary Education Cess once again on the aggregate of customs duties, although the same were already considered while calculating the aggregate of customs duties.
Extended period of limitation - HELD THAT:- Even otherwise, the Show Cause Notice dated 27-05-2015, which is purportedly issued under Section 11A (5) of the Central Excise Act 1944 was not maintainable in law since the said Section 11A (5) stood omitted with effect from 14-05-2015. The show cause notice having been issued under a non-existing provision is not maintainable in law. Further the said Section 11A (5) read with Section 11A (4) is applicable in cases of fraud, collusion, willful mis-statement, suppression of facts or contravention with intent to evade, none of which is present in this case. As evident from letter dated 22-5-2012 of the Superintendent, prior to de-bonding, the factory was visited by the Central Excise officers and the stock and calculation of duty were duly verified by the Central Excise officers. It is evident from the letter that the department was fully aware of availing of notification No.23/2003-CE. Therefore, the larger period of limitation is inapplicable in the present case.
The impugned order is not tenable and is liable to be set aside - appeal allowed.
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2024 (2) TMI 1156
Denial of CENVAT Credit - inputs/capital goods or not - HR, MS and SS plates received and utilized during 2003 to 2005 for setting up of Copper III plant - impugned order has disallowed such Cenvat credit on the ground that the plant and machinery so fabricated, are immovable and fixed to earth and cannot be called "capital goods" - HELD THAT:- There is no restriction in Rule 2(k) of Cenvat Credit Rules, 2004, for the availment of the Cenvat credit of the duty paid on goods used for manufacture of capital goods. All that the said rule requires is whether such capital goods are used for manufacture of excisable goods in the factory. Once this requirement is satisfied, the fact that such capital goods came into existence as an immovable property is irrelevant or immaterial to avail Cenvat Credit.
The Appellants have used MS and SS plates used in the fabrication of chimneys. Chimneys are pollution control equipment and are thus specified capital goods under sub-clause (ii) of clause (A) of the definition of "capital goods" under Rule 2(a) of the Cenvat Credit Rules, 2004. The Hon'ble Supreme Court in COMMISSIONER OF CENTRAL EXCISE, JAIPUR VERSUS M/S RAJASTHAN SPINNING & WEAVING MILLS LTD. [2010 (7) TMI 12 - SUPREME COURT] has examined the issue of eligibility of Cenvat credit availed on MS plates items used in the fabrication of chimneys. The Hon'ble Supreme Court has held that, once it is not under dispute that the impugned items are used in the fabrication of chimneys, Cenvat credit availed on the same cannot be denied. Thus, ground in impugned order is also rejected.
Iron and steel items used in the fabrication of supporting structures for capital goods - HELD THAT:- Cenvat credit has been denied on iron and steel items used in the fabrication of supporting structures for capital goods is eligible. The Appellants have availed Cenvat credit on H.R. M.S. & S.S. plates used in the fabrication of supporting structures of capital goods. There are cetena of decision wherein it has been held that the credit of steel used to support capital goods is eligible for credit.
Denial of credit on account of an inordinate delay in availing Cenvat credit in violation of Rule 4(1) of the Cenvat Credit Rules, 2002 and/or 2004 - HELD THAT:- There is no specific time limit prescribed for availment of Cenvat credit on inputs under Rule 4(1) of the Cenvat Credit Rules. The sub-rule which prescribes that "CENVAT credit in respect of inputs may be taken immediately" in Rule 4(1) makes it clear that the said provision is an enabling provision and enables the assessee to avail Cenvat credit immediately on receipt of the inputs.
There are no merit in the impugned order. The same is set aside and the appeal is allowed.
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2024 (2) TMI 1155
Refund claim - rejection of refund on the ground that the assessment order dated 23.08.2012 was not available on the DVAT Portal - HELD THAT:- It is informed by the learned counsel for respondents that petitioner had produced the relevant original documents, certified copy of the order as well as original F- Forms which have been duly verified.
In view of the fact that the basis of the impugned order was non-availability of certain record, which has now been verified by the department, the impugned order dated 24.02.2022 is liable to be set aside and the matter calls for a remit.
The matter is remitted to the competent authority to pass consequential orders in respect of the refund application of the petitioner - petition disposed off.
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2024 (2) TMI 1154
Right to Terminate Agreement - delay in the delivery of possession of the apartment - The jurisdiction and powers of the National Consumer Disputes Redressal Commission (NCDRC) - Scope and interpretation of the terms of the Contract - Purchase of 4BHK apartment, on the sixth floor of the proposed building - Seeking unconditional Refund of amount paid with interest - HELD THAT:- The ‘date of offer of possession’, under Clause 1.14, linked with issuance of the ‘Occupation Certificate’ was distinct and separate from the ‘date of delivery of possession for fit outs’ and Clause 11.3 unequivocally provided the consequences in the event of delay in that regard. The right of election given thereunder to the appellants to either continue or to terminate the Agreement within ninety days from the expiry of the grace period was absolute and it was not open to the NCDRC to apply its own standards and conclude that, though there was delay in handing over possession of the apartment, such delay was not unreasonable enough to warrant cancellation of the Agreement. It was not for the NCDRC to rewrite the terms and conditions of the contract between the parties and apply its own subjective criteria to determine the course of action to be adopted by either of them.
The fact that the appellants were anxious to avoid the additional tax liability, owing to the introduction of the Goods and Service Tax regime, cannot be held against them or be imputed to them as an underhand motive for backing out of the Agreement. Avoidance of tax is neither illegal nor equivalent to tax evasion and, therefore, the urgency shown by the appellants in trying to complete the process quickly so as to avoid an additional tax burden was natural. Further, it cannot be presumed that the appellants, who were willing to spend over 7.5 ₹ Crore for the apartment, would back out at the eleventh hour only because the tax component was increasing by ₹40 lakh or so.
There are no hesitation in holding that the NCDRC overstepped its power and jurisdiction in ignoring the binding covenants in the Agreement and in introducing its own logic and rationale to decide as to what the future course of action of the parties and more particularly, the appellants, should be - as it is informed that the appellants did not choose to act upon the belated offer of the respondent-company, in its letter dated 29.11.2017, and are still intent on terminating the Agreement as per Clause 11.3 of the Agreement, we set aside the order dated 09.11.2022 passed by the NCDRC and allow Consumer Complaint No. 35 of 2018, directing the respondent-company to refund the deposited amount of ₹2,25,31,148/- in twelve equal monthly installments, through post-dated cheques, with simple interest thereon @ 12% p.a., from the date of receipt of the said amount or parts thereof till actual repayment. The first such installment shall be payable on the 5th of April, 2024, and the succeeding installments shall be payable on the fifth of each calendar month thereafter, till fully paid.
Appeal allowed.
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2024 (2) TMI 1153
Contempt application preferred by the appellant alleging non-compliance of order passed by the learned Single Judge of the High Court - entitlement to refund of the excess payment made by the petitioner over and above the notified price - requirement of furnishing all documents relating to refund of the excess amount - HELD THAT:- Suffice it to say that the claim of the appellant for refund pertaining to the third period, i.e. 1st January, 2007 till March, 2008 stands concluded with the rejection of SLP(Civil) No. 21019 of 2010 vide order dated 9th September, 2010 passed by this Court. Admittedly, the appellant has not been refunded the amount for the period running from 1st January, 2007 till March, 2008 and, therefore, the learned Single Judge was not justified in discharging the respondents in the contempt case without ensuring payment of the refund amount with interest to the appellant herein.
Regarding the issue of interest on the refund for the period running from 1st January, 2005 to 11th December, 2005, the learned Single Judge rejected the claim of the appellant herein holding the said demand to be exaggerated. While drawing such inference, the learned Single Judge completely ignored the judgment rendered by this Court in Ashoka Smokeless Coal Industries(P) Ltd. and Ors. [2005 (12) TMI 610 - SUPREME COURT] wherein a pertinent direction had been given to make the refund of the excess amount with interest @ 12% per annum. Admittedly, as per the affidavit filed by the respondents, the interest which has been applied on the refund amount for the period between 1st January, 2005 to 11th December, 2005 is at the bank rate i.e. 3.5% per annum. Evidently thus, the respondents have failed to faithfully comply with the orders passed by the Jharkhand High Court as well as this Court.
Thus, it is hereby directed that the appellant shall be entitled to interest @ 12% per annum on the refund amount for the period running from 1st January, 2005 to 11th December, 2005. The interest @ 3.5% per annum, already paid, shall be deducted from the differential amount. The appellant shall also be entitled to receive refund of the excess amount paid for the period between 1st January, 2007 till March, 2008 with interest @ 12% per annum in the same terms as directed by this Court vide order dated 9th September, 2010. The amount as directed above shall be paid to the appellant within a period of two months from today failing which, the officers concerned shall be made personally liable to pay the interest amount to the appellant.
Appeal disposed off.
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2024 (2) TMI 1152
Access to Technology in Courts - Hearings through hybrid mode or video conferencing - Lack of Uniformity - Infrastructure and Connectivity - Requirement to file affidavit detailing video conferencing hearings taken place in the last three months - whether any courts are declining to permit video conferencing hearings - request to assist the court with data on hybrid hearings in the tribunals under various ministries of the Union Government on the next date of hearing - HELD THAT:- During the course of the hearing, it has emerged that whereas several High Courts do have facilities for video conferencing, very few High Courts are operating through the hybrid mode of hearing. The infrastructure which is required for conducting hybrid hearings may be of a different order as compared to the infrastructure for video conferencing.
Bearing in mind the above situation as it has emerged across the country in the High Courts, Mr Gaurav Agrawal and Mr K Parameshwar, counsel, nominated as amici curiae. The amici curiae are requested to collate all the information which has been provided in the affidavits which have been filed before this Court in a tabulated chart so that further effective orders can be passed by this Court. The amici curiae may also distribute the work in connection with the High Courts between them and individually contact the Registrars General/Registrars (IT) of the High Courts so that necessary information can be placed before this Court in that regard. The amici curiae shall also place before this Court the steps which have been taken by all the High Courts to facilitate e-filing.
The use of technology by the Bar and the Bench is no longer an option but a necessity. Members of the Bench, the Bar and the litigants must aid each other to create a technologically adept and friendly environment. The directions given below must be implemented by all concerned stakeholders in letter and in spirit.
(i) After a lapse of two weeks from the date of this order, no High Court shall deny access to video conferencing facilities or hearing through the hybrid mode to any member of the Bar or litigant desirous of availing of such a facility;
(ii) All State Governments shall provide necessary funds to the High Courts to put into place the facilities requisite for that purpose within the time frame indicated above;
(iii) The High Courts shall ensure that adequate internet facilities, including Wi-Fi facilities, with sufficient bandwidth are made available free of charge to all advocates and litigants appearing before the High Courts within the precincts of the High Court complex;
(iv) The links available for accessing video conferencing/hybrid hearings shall be made available in the daily cause-list of each court and there shall be no requirement of making prior applications. No High Court shall impose an age requirement or any other arbitrary criteria for availing of virtual/hybrid hearings;
(v) All the High Courts shall put into place an SOP within a period of four weeks for availing of access to hybrid/video conference hearings. In order to effectuate this, Justice Rajiv Shakdher, Hon’ble Judge of the High Court of Delhi is requested to prepare a model SOP, in conjunction with Mr Gaurav Agrawal and Mr K Parameshwar, based on the SOP which has been prepared by the e-Committee. Once the SOP is prepared, it shall be placed on the record of these proceedings and be circulated in advance to all the High Courts so that a uniform SOP is adopted across all the High Courts for facilitating video conference/hybrid hearings;
(vi) All the High Courts shall, on or before the next date of listing, place on the record the following details:
(a) The number of video conferencing licences which have been obtained by the High Court and the nature of the hybrid infrastructure;
(b) A court-wise tabulation of the number of video conference/hybrid hearings which have taken place since 1 April 2023; and
(c) The steps which have been taken to ensure that Wi-Fi/internet facilities are made available within every High Court to members of the Bar and litigants appearing in person in compliance with the above directions.
(vii) The Union Ministry of Electronics & Information Technology is directed to coordinate with the Department of Justice to ensure that adequate bandwidth and internet connectivity is provided to all the courts in the North-East and in Uttarakhand, Himachal Pradesh and Jammu and Kashmir so as to facilitate access to online hearings;
(viii) All High Courts shall ensure that adequate training facilities are made available to the members of the Bar and Bench so as to enable all practising advocates and Judges of each High Court to be conversant with the use of technology. Such training facilities shall be set up by all the High Courts under intimation to this Court within a period of two weeks from the date of this order; and
(ix) The Union of India shall ensure that on or before 15 November 2023, all tribunals are provided with requisite infrastructure for hybrid hearings. All Tribunals shall ensure the commencement of hybrid hearings no later than 15 November 2023. The directions governing the High Courts shall also apply to the Tribunals functioning under all the Ministries of the Union Government including CESTAT, ITAT, NCLAT, NCLT, AFT, NCDRC, NGT, SAT, CAT, DRATs and DRTs.
List the proceedings on 6 November 2023.
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