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2025 (3) TMI 1104
Money Laundering - Challenge to detention/arrest of the petitioner - question to validity of the arrest said to be not in consonance with the provision of Section 19 (1) of the PML Act, 2002 since the grounds of arrest has not been supplied at the time of arrest of the petitioner in writing, rather, the grounds of arrest were for the first time supplied on 10.11.2024 along with the counter affidavit filed on behalf of respondent - HELD THAT:- In the first FIR, six charge sheets have been filed. More than 2000 accused have been named in the charge sheets. 550 witnesses have been named. In the case of the second FIR, there are 14 accused named in the chargesheet. In connection with this FIR, 24 witnesses have been cited. In the third FIR, 24 accused have been named in the charge sheet and 50 prosecution witnesses have been cited. The offences alleged in the aforementioned crimes are mainly under Sections 120B, 419, 420, 467 and 471 of the Penal Code, 1860 and Sections 7, 12, 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988. Section 34 of the Penal Code, 1860 has been invoked.
These offences are scheduled offences within the meaning of Section 2(y) of the PMLA. Therefore, relying on the final reports filed in aforementioned scheduled offences, for an offence of money laundering under Section 3 of the PMLA punishable under Section 4, the Enforcement Directorate (ED) registered an Enforcement Case Information Report (for short “ECIR”) bearing ECIR No. MDSZO/21/2021 on 29th July 2021.
Consequently, the appellant was arrested on 14th June 2023 in connection with the said ECIR and was remanded to judicial custody. A complaint was filed for the offence under Section 3 of the PMLA Act, which is punishable under Section 4, on 12th August 2023. The appellant is the only accused named in the complaint. Cognizance has been taken based on the complaint by the Special Court under the PMLA. The scheduled offences cases have been transferred to the learned Assistant Sessions Judge, Additional Special Court for Trial of Criminal Cases related to Elected Members of Parliament and Members of Legislative Assembly of Tamil Nadu (Special MPMLA Court), Chennai.
The Hon’ble Apex Court while taking note of the settled principle that the stringent provisions regarding the grant of bail, such as Section 45(1)(iii) of the PMLA, cannot become a tool which can be used to incarcerate the accused without trial for an unreasonably long time has allowed the appeal and direction has been passed that the appellant shall be enlarged on bail till the final disposal of the case.
The provisions of Section 167(2) of the Code deals with both types of remand i.e. “judicial remand” and “police remand”. The police have been given a right to apply before the Magistrate concerned for giving the accused in police custody and on being satisfied of adequate grounds the Magistrate may grant police remand of the accused for a specific period not beyond first fifteen days and later on, he can authorise only judicial detention of the accused till 90 to 60 days, as the case may be. Sections 209 and 309 of the Code deal with judicial custody during inquiry and trial - So far as authorisation of police custody of accused under Section 167 (2) is concerned it is legislative mandate that in no way the detention of the accused in police custody can be authorised for any time after expiry of the period of first fifteen days' remand. The Magistrate may allow detention other than custody in police till 90/60 days, as the case may be.
The Hon’ble Apex Court in the case of Central Bureau of Investigation, special investigation cell-I Vs. Anupam J. Kulkarni [1992 (5) TMI 191 - SUPREME COURT] has observed that the Magistrate is competent to authorise detention of any accused in police custody for a specific period on adequate grounds only for the first fifteen days and that detention in police custody or judicial custody or vice versa can be authorised only within first fifteen days. After fifteen days' detention the accused cannot be sent to police custody at all except in other cases in which remand of first fifteen days has not yet started.
The purpose of remand as postulated under Section 167 is that investigation cannot be completed within 24 hours. It enables the Magistrate to see that the remand is really necessary. This requires the investigating agency to send the case diary along with the remand report so that the Magistrate can appreciate the factual scenario and apply his mind whether there is a warrant for police remand or justification for judicial remand or there is no need for any remand at all. It is obligatory on the part of the Magistrate to apply his mind and not to pass an order of remand automatically or in a mechanical manner.
Admittedly, the writ petitioner has challenged order dated 09.06.2023 but has not questioned the illegality and propriety of order dated 08.06.2023 meaning thereby the writ petitioner is having no grievance with respect to the issue of remand dated 08.06.2023 otherwise said order would have been challenged by the writ petitioner. It means, the writ petitioner has accepted the remand order and has not challenged the order of remand rather he has chosen to prefer application under Sections 439 and 440 Cr.P.C before the Court of Sessions on merit by denying the allegation as referred in the ECIR by filing Misc. Cri. Application No. 1915 of 2023 for grant of bail, which was dismissed vide order dated 07.07.2023 by learned Special Judge, CBI-cum-Special Judge under PMLA, Ranchi.
The moment the petitioner has shown no grievance with respect to any of the issues even the issue of arrest by raising the ground that he is not knowing as to on what ground he has been arrested rather he in each and every page has endorsed by putting his signature and gave note that he read over the content of the ground of arrest and did not shown any dissatisfaction.
This Court is not hesitant in coming to the conclusion that the writ petitioner was having no grievance with respect to the issue of remand order dated 08.06.2023. Had the remand order dated 08.06.2023 have any infirmities, the writ petitioner would have made objection to that effect showing his dissatisfaction in the application which was filed before the Court having the jurisdiction for the purpose of remand of the present petitioner but admittedly that has not been done.
This Court in the entirety of the facts and circumstances, as has been discussed herein above, is of the view that in view of confinement of prayer, the writ petition is required to be considered only with respect to the propriety/impropriety of order dated 09.06.2023 and in view of discussions made, the petitioner has not been able to make out a case for showing interference in order dated 09.06.2023.
Conclusion - i) The petitioner could not challenge the arrest order after confining the writ petition to the remand order, as recorded in the judicial order dated 04.10.2024. ii) The remand order dated 09.06.2023 was valid, as the petitioner was informed of the grounds of arrest, and the procedural requirements for remand were met. iii) The petitioner failed to establish grounds for interference with the remand order dated 09.06.2023.
Petition dismissed.
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2025 (3) TMI 1103
Levy of service tax on transportation service providers where consignment note is not issued - invocation of extended period of limiattion - penalty - HELD THAT:- Admittedly, the ld.Adjudicating Authority found that the appellant is not the GTA. In that circumstances, the appellant is not liable to pay service tax under Section 66D (p) of the Act., which exempts services by way of transportation of goods by road except the services of goods transportation agency or courier agency. Admittedly, it has been held that the appellant is not the Goods Transport Agency, therefore, the said service falls under negative list as per Section 66D (p) of the Finance Act, 1994.
The appellant is not liable to pay service tax. In such circumstances, the service recipient is liable to pay service tax under reverse charge mechanism, but as the service recipients are not present, therefore, no comments passed against service recipient whether they have paid the service tax or not.
Conclusion - The demand of service tax against the appellant on transportation of goods by road, who has not issued consignment note and being not GTA, is not liable to pay service tax, therefore, whole of the demand of service tax is set aside. Consequently, no penalty is imposable on the appellant.
The impugend order set aside - appeal allowed.
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2025 (3) TMI 1102
Refund of service tax on account of retrospective exemption from payment of Service Tax being accorded by Section 102 of the Finance Act, 2016 with effect from 14.05.2016 - refund claim barred by time limitation or not - HELD THAT:- The order of the Ld. Commissioner (Appeals) dated 10.09.2021, wherein DG MAP was directed to file the refund claim before the adjudicating authority within a period of one month, has attained finality as the said order has been affirmed by the Hon’ble Calcutta High Court. Accordingly, the refund claim has been filed by the Respondent No. 2 within one month, in compliance of the order of the Ld. Commissioner (Appeals) dated 10.09.2021. Therefore, the refund claim filed by the Respondent No. 2 is not barred by limitation. In these circumstances, there are no infirmity in the impugned order.
Conclusion - The Respondent No. 2 viz. DG MAP, is entitled to the claim of refund of Service Tax paid by them to the Respondent No. 1, which is not payable, and the same shall be sanctioned to the Respondent No. 2 within a period of one month from the date of receipt of this order.
Appeal of Revenue dismissed.
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2025 (3) TMI 1101
Levy of service tax - commissions paid to overseas agents for services rendered prior to 18.04.2006, despite the payments being made after this date when the service tax on import of services became applicable on a reverse charge basis - HELD THAT:- It is not in dispute that the services rendered by “overseas agents” became taxable with effect from 18.04.2006.
A Division Bench of the Tribunal in Reliance Industries Ltd. and Commissioner of Central Excise and Service Tax, LTU, Mumbai [2016 (6) TMI 1108 - CESTAT MUMBAI], in connection with the service tax on reverse charge mechanism under “intellectual property services” held that 'The service itself having been rendered prior to the introduction of the levy, the mere fact that payments for the same were made on a staggered basis over a period of time cannot be a ground for levying service tax merely with reference to the date on which payments were being made.'
It is, therefore, clear that what has to be examined is the point of time when the services were actually rendered and not the point of time when the payment was made. It is only upon introduction of the point of Taxation Rule 2011 that the date of receipt would have no relevance. Prior to this, what was relevant was that the date on which services were actually provided.
The Commissioner (Appeals) failed to correctly appreciate the certificate of the Chartered Accountant and, therefore, committed an error in holding that no evidence had been placed by the appellant to show that the services were rendered by overseas agents to the appellant prior to 18.04.2006.
Conclusion - The appellant would not be required to pay service tax on reverse charge mechanism on the service rendered by overseas agents prior to 18.04.2006.
Appeal allowed.
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2025 (3) TMI 1100
Liability of sub-contractor to pay service tax when the main contractor has already discharged the service tax liability on the full contract value - levy of penalty.
Liability of sub-contractor to pay service tax when the main contractor has already discharged the service tax liability on the full contract value - HELD THAT:- The issue of service tax liability on the appellant being a sub-contractor is no more res-integra and has been decided by the Larger Bench in Melange Developers [2019 (6) TMI 518 - CESTAT NEW DELHI-LB]. Considering the scheme of the Service Tax read with the Cenvat Credit Rules and the master Circular dated 28.08.2007 issued by the Government of India, it was held that 'A sub-contractor would be liable to pay Service Tax even if the main contractor has discharged Service Tax liability on the activity undertaken by the sub-contractor in pursuance of the contract.'
Levy of penalty - HELD THAT:- The present case cannot be set to be a case of suppression, willful mis-statement, fraud etc. which are the necessary ingredients for imposing the penalty under Section 78. The penalty of equivalent amount imposed by the Adjudicating Authority set aside.
Conclusion - i) A sub-contractor would be liable to pay Service Tax even if the main contractor has discharged Service Tax liability on the activity undertaken by the sub-contractor in pursuance of the contract. ii) The present case cannot be set to be a case of suppression, willful mis-statement, fraud etc. which are the necessary ingredients for imposing the penalty under Section 78, penalty set aside.
Appeal allowed in part.
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2025 (3) TMI 1099
Levy of service tax - amounts which the respondent had retained from the customers who cancelled their reservation for stay with a shorter period - amounts recovered by the respondents from its own employees towards the food provided to them.
Amounts which the respondent had retained from the customers who cancelled their reservation for stay with a shorter period - HELD THAT:- What is covered under Section 66E (e) of the Finance Act is only a situation where there is a contract itself to tolerate an act. In such a case tolerating the act becomes a consideration from one side and the consideration paid for tolerating so becomes the consideration from other side. However, a situation is dealt where there is no agreement to renege from a contract between the respondent and its guests. Therefore, there was no consideration. The amounts which were paid to the respondent were in the form of damages/compensation.
Thus, no service tax can be charged on the retention charges received by the respondent.
Amounts recovered by the respondents from its own employees towards the food provided to them - HELD THAT:- Labour laws require the respondent to provide subsidized food to its employees and workers. The respondent made an arrangement to cook food and supply it through its own canteen to its employees. It must be noted that the canteen for its employees was different from the restaurant in which it serves the guests - there was no service whatsoever in the respondent supplying food at subsidized rate to its own employees as part of its legal obligations. No service tax can therefore be charged.
Conclusion - The demand of service tax on the retention charges and also amounts collected from its own employees cannot be sustained. Consequently, the demand of interest and penalties also cannot be sustained.
The appeal filed by the Revenue is dismissed.
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2025 (3) TMI 1098
Clandestine manufacture and removal - MS ingots - recovery of incriminating records, seizure of one pen drive, one computer and a hard disk and various other incriminating documents - existence of corroborative evidence or not - admissibility of the printed material under Section 36B of CEA - Mandatory complaince with Section 9D by the Adjudicating Authority or not - non-compliance with the mandate of Section 9D(2) be raised at the Appellate Stage when not raised before the Adjudicating Authority - electronic evidence collected admissible given the absence of certificate issued under Section 36B(4) or not - HELD THAT:- Both S.14 and S.9D of the CE Act are pari-materia with S.108 and S.138B of the Customs Act respectively and therefore judicial pronouncements in respect of these provisions of Customs Act, 1962 would also hold good for the pari-materia provisions of Central Excise Act, 1944.
A three judge bench of the Honourable Supreme Court, in K. I. Pavunny v Asst.Collr.(H.Q).,C.Ex.Collectorate, Cochin, [1997 (2) TMI 97 - SUPREME COURT], had an occasion to consider whether the confessional statement of the appellant therein, given to the Customs officers under Section 108 of the Customs Act, 1962 (for short, the `Act’), though retracted at a later stage, is admissible in evidence and could form basis for conviction and whether retracted confessional statement requires corroboration on material particulars from independent evidence.
The Supreme Court in Ram Bihari Yadav vs. State of Bihar [1998 (4) TMI 578 - SUPREME COURT] itself has observed that more often than not, the expressions 'relevancy and admissibility' are used as synonyms but their legal implications are distinct and different from for more often than not facts which are relevant are not admissible; so also facts which are admissible may not be relevant, for example questions permitted to put in cross examination to test the veracity or impeach the credit of witnesses, though not relevant are admissible. The probative value of the evidence is the weight to be given to it which has to be judged having regards to the fact and circumstances of each case.
Since the adjudicating authority has not followed the mandate of Section 9D (2) in the instant case and had not given an opportunity to the affected party to make submissions post intimation of his intent to rely on such materials duly stating the reasons why he intends to arrive at the said opinion. We are therefore of the considered view that the adjudicating authority has grossly erred in placing reliance on the statements recorded under Section 14 without following the mandate of Section 9D of the CEA. The reliance placed by the adjudicating authority on all these untested statements cannot sustain. This has rendered the case of clandestine removal made against the appellants wholly unsustainable on this ground alone.
Whether the electronic evidence collected during investigation in this case, is admissible given the absence of certificate issued under Section 36B? - HELD THAT:- Given that the Adjudicating Authority, despite noticing the protestations of the appellants regarding noncompliance of Section 36B (4), and even after the law was laid down in P.V. Anvar’s case [2014 (9) TMI 1007 - SUPREME COURT], yet chose not to cure the same, we refrain from embarking on this course of remand as it would tantamount to affording a second opportunity that was undeserved, not to mention the prolongation of the litigation, which the appellants do not deserve. Moreso, since it is conscious that there are balance the rights of the parties before us, and such conscious non-compliance by the adjudicating authority has to be considered adversely to the detriment of the Revenue and the benefit thereof should then enure to the appellants.
The ‘standard of proof’ denotes the level of conviction or the ‘decisional threshold’ that enables the court to decide whether the party who shoulders the burden of proof has discharged the same. In customs and excise matters, where the assessee can be visited with financial penal consequences, Courts have always tried to apply a qualified preponderance of probabilities standard - The allegations of mala fides are often more easily made than proved, and the very seriousness of such allegations demand proof of a high order of credibility.” Thus, while the general standards of proof for civil cases are the preponderance of probability and the standards for criminal cases are beyond reasonable doubt, these standards have also been eschewed in favour of “clear and convincing evidence” when the allegations are of more serious nature and also attract heavy financial consequences.
Having detailed some of the lacunae and shortcomings in the investigation supra as well as the standard of proof required to be adduced by Revenue in clandestine removal matters as aforementioned, we shall now deal with the evidence relied upon qua each of the demands confirmed in the impugned order and examine whether the evidence relied upon meet the standard of “clear and convincing evidence”, to establish the case of clandestine removal and to establish the availment of cenvat credit without actual receipt of inputs.
The Department has not let in any evidence in the form of unaccounted procurement of the other raw materials required for manufacture of MS Ingots, evidence of their procurement, evidence of the quantum of fuel/ electricity, labour etc., used, the examination or test evaluation of the production capability and capacity of the Appellant’s factory etc.
There are no quarrel with the proposition of the Authorised representative in his contention that as per Section 61 of the erstwhile Evidence Act, 1872 it is necessary that the contents of a document has to be proved either by primary or secondary evidence and that the evidence of the contents contained in a document is hearsay evidence unless the writer thereof is examined before the court and further that as per section 67 of the erstwhile Evidence Act, 1872, the signature or handwriting of the person alleged to have signed the whole or part of the documents has to be proved. These contentions are precisely in tandem with our findings supra on the manner in which the adjudicating authority has to evaluate the statement under Section 14 for its relevance as per the mandate of Section 9D(2). However, the reliance placed by the authorised representative on Section 36A (1) and 36A(2) are misplaced in that these presumptions would apply only in a proceedings before the Court, being rebuttable presumptions. However, unlike Section 9D (2) or Section 36B which deems a document to be admissible in any proceedings under the Act when accompanied with the certificate mandated under Section36B(4), Section 36A does not permit the presumption to be drawn in adjudicatory proceedings under the Act and is confined only to Court proceedings.
There is no justification available, either in the show cause notice, or in the impugned order, to explain the absence of statements of most relevant persons or the reasons for delay in conducting follow up searches. The transporters, who actually transported the goods, have also not been questioned. In short, the investigation has failed to establish the allegations raised in the show cause notice and the findings of the adjudicating authority are also decidedly untenable in the light of discussions regarding the lack of demonstrable, reliable and corroborative evidence.
Conclusion - The finding of the adjudicating authority that the main appellant has indulged in clandestine manufacture and clearances of MS ingots during period February 2010 to February 2012 and the consequent demand of duty made is untenable; the demand of cenvat credit availed for the period February 2010 to May 2010 by the main appellant terming it ineligible, is incorrect; the demand made on M/s. SKSRM for clearances of TMT Rods alleged to have been cleared without payment of duty and allegedly made out of MS ingots procured from the main appellant without payment of duty, as confirmed in the impugned Order in Original, is untenable and consequently the penalties imposed on the appellants are unsustainable.
Appeal allowed.
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2025 (3) TMI 1097
Issuance of personal cheque to the extent of refund wrongly availed to the officer of LVO-540 by the then consultant - order passed by predecessor can be altered in the order passed by the Successor in a different direction or not - proceedings instituted pursuant to a notice under section 64 (1) of the KVAT issued in contravention of Rule 154 of the KVAT Rules 2005 can be sustained or not - Validity of consideration of total turnovers as per erroneous monthly returns filed in form VAT-100 in the absence of the books of account ACCT Bidar - Validity of disallowance of deduction claimed towards labour & like charges - HELD THAT:- The indulgence in the matter declined broadly agreeing with the submission of learned AGA. Firstly, the questions of law are haphazardly framed and they lack coherence both in terms of law and language. Secondly, these questions are not of law inasmuch as, to answer them, turning the pages of statute book would not come to aid. Despite taking through the Paper Book of the appeal, it is not shown which finding in the impugned order is perverse that is to say contrary to evidence borne out by record or which of the observations in the impugned order are made without evidentiary basis.
The vehement submission of the learned counsel appearing for the assessee that his client was not given a reasonable opportunity to produce relevant evidentiary material such as books of accounts is liable to be rejected inasmuch as, despite granting opportunity, the assessee failed to avail the same.
The vehement submission of learned counsel for the appellant that for the fraud committed by the Tax Consultant, the assessee should not be made to suffer is too broad a proposition to accept. Ordinarily, as rightly submitted by learned AGA, Tax Consultant is an Agent of the assessee, notwithstanding the professional elements involved in the Act. It is not that the assessee had not put his signatures to the Returns and Records filed before the Revenue, in a normative way.
The last contention of the appellant’s counsel that the respondent had approached the matter with prejudicial mind is too farfetched a submission. Why a high functionary of the State who acts quasi-judicially in deciding the tax liability of the assessee should be presumed to be prejudicial, remains unanswered. Such a contention cannot be countenanced without laying foundational basis. A perusal of the impugned order in the light of other material accompanying the appeal memo leaves no manner of doubt that the respondent has judiciously considered all contentions of the assessee as reflected in the impugned order.
Conclusion - i) The questions presented were not coherent questions of law. The appellant failed to demonstrate any perverse findings or observations in the impugned order without evidentiary basis. ii) The argument that the appellant was not given a reasonable opportunity to present evidence, noting that the appellant did not avail the opportunity provided, rejected. iii) The argument that the tax consultant's fraudulent actions should absolve the appellant of responsibility, highlighting that the consultant acted as the appellant's agent rejected. iv) There are no basis for the claim that the respondent acted with a prejudicial mind, noting the lack of foundational evidence for such a contention.
Appeal dismissed.
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2025 (3) TMI 1096
Completion of an assessment under the Kerala Value Added Tax Act has become barred by limitation under Section 25 (1) of the KVAT Act - mere fact that a notice is issued by the Revenue invoking the provisions of Section 25A of the KVAT Act would enable the Revenue to complete a re-assessment by ignoring the period of limitation under Section 25 (1) of the KVAT Act or not - Whether Section 25A of the KVAT Act fits in the Scheme of assessment under the KVAT Act? - HELD THAT:- Section 25A begins with a non-obstante clause, and it provides for nothing more than an additional ground on which the power to re-assess can be exercised by the Assessing Authority. The scope of that power can be gathered from the words used in the provision to define it. It is a power to proceed to re-assess the dealer and the power is to be exercised only if the Assessing Officer is satisfied that the objection raised by the CAG is lawful. It is in the backdrop of the above analysis of the power conferred under the Section that we must look for the meaning of the words “order passed” that appear in the proviso to the said Section. In our view, the order passed must necessarily be taken as a reference to the expression of satisfaction of the Assessing Officer, as to whether or not the objection raised by the CAG is lawful. Further, that satisfaction of the Assessing Officer must be one that is arrived at only after affording the dealer an opportunity of being heard.
The contention of the Revenue that Section 25A also provides for the procedure for re-assessment cannot be accepted, not only because the provision itself does not say so, but also because procedural due process in a taxing statute cannot be inferred but must necessarily find a place in the statute itself. Article 265 of the Constitution clearly mandates that there shall be no levy or collection of tax save by authority of law. In our view, therefore, once the Assessing Officer arrives at the satisfaction envisaged under Section 25A, he has to proceed to re-assess the dealer in the manner envisaged under the Statute, namely, by following the procedure under Section 25 (1) of the KVAT Act. In that process, he must also ensure that the substantive safeguards envisaged for an assessee, such as the requirement of exercising the power within the time permitted by the Statute, are strictly adhered to.
Conclusion - In cases where the completion of an assessment under the KVAT Act has become time barred by virtue of the limitation provisions under Section 25 (1) of the KVAT Act, the Revenue cannot proceed to re-assess an assessee on the basis of a subsequent report obtained from the CAG.
The O.T. Revisions and Writ Appeal filed by the State dismissed.
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2025 (3) TMI 1095
Exemption from payment of tax under the GST regime and the tax is leviable at the first point of sale - petitioner is the second purchaser of clinker - failure to produce cogent relevant documents before the revisional authority during the revisional proceedings to substantiate their contention so far as claiming exemption from payment of GST - non-payment of sale tax as the seller from whom the petitioner had purchased, having not paid the sale tax for the sales made to the petitioner - HELD THAT:- Though the counsel for the respondent tried to oppose the petition on the ground that the Tribunal’s finding cannot be found fault with as the petitioner had failed to avail the opportunity granted to them at the revisional stage in substantiating their contentions and the Tribunal could not have gone into veracity of the revisional authority’s order relying upon materials which were not produced before the revisional authority and, therefore, the finding given by the Tribunal cannot be found fault with and prays for rejection of the tax revision case, there are not much force in the said argument for the simple reason that the finding of the Tribunal, a portion of which has already been reproduced in the preceding paragraph, clearly reflects that the Tribunal has the power to go into the merits of the case scrutinizing the documents which have been produced before the Tribunal.
Undisputedly, in the instant case, the petitioner has, in fact, produced all relevant documentary proofs and it has also been accepted by the Tribunal as having been produced before them, yet the Tribunal rejected the appeal only on hyper technicality of the documents having not been brought before the revisional authority at the first instance. The findings given by the Tribunal and the arguments advanced by learned counsel for the department both would not be sustainable and the same deserves to be and are, accordingly, set aside.
The matter stands remitted back to the Tribunal for deciding the matter on its own merits both on the aspect of exemption of payment of GST as also so far as the payment of sale tax is concerned.
Conclusion - The Tribunal must consider the merits of a case based on all available evidence, even if not initially presented at the revisional stage, provided there are sufficient reasons for its late submission.
The tax revision case stands allowed and disposed of.
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2025 (3) TMI 1094
Unreasonable delay in completing the reassessment proceedings - manifest arbitrariness, thereby falling foul of Article 14 of the Constitution or not - HELD THAT:- It is trite law that wherever limitation has not been prescribed for taking any action or passing any orders, it has been consistently held that action ought to be taken or orders ought to be passed within a reasonable time.
It may be relevant to note that this Court had held that though the issuance of notice was within the period of limitation, however if the orders are not made within a reasonable time, mere issuance of show cause notice would not by itself provide immunity to the assessment orders being challenged as having been made beyond reasonable period thereby suffering from the vice of arbitrariness.
It is thus clear that even if the notice was issued within the prescribed period of limitation, inordinate/unreasonable delay in completing the proceedings would vitiate the same. In the present case, there is no explanation as to why it has taken more than 16 years after the issuance of the first notice on 12.11.2004 to issue the hearing notice on 08.07.2021 while proceeding to pass the impugned order on 02.09.2021 after almost 16 years from the date of deemed assessment.
This Court in the case of J.M.Baxi [2016 (6) TMI 813 - MADRAS HIGH COURT] found that failure to explain the delay of 5 years after initiation would vitiate the proceeding on the ground of unreasonable delay. In view of the same and following the above orders of this Court and in particular, the case of Kanthimathy Estate vs. The Assistant Commissioner Commercial Taxes [2019 (7) TMI 1991 - MADRAS HIGH COURT], wherein it was held that failure to complete the reassessment proceedings within a reasonable time after initiation of proceedings within the prescribed period would vitiate the reassessment, this Court is of the view that the impugned order of reassessment cannot be sustained and is liable to be set aside.
Conclusion - It is trite law that wherever limitation has not been prescribed for taking any action or passing any orders, it has been consistently held that action ought to be taken or orders ought to be passed within a reasonable time.
Petition allowed.
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2025 (3) TMI 1093
Condonation of delay of around 292 days in preferring the instant appeal - sufficient cause for delay or not - procedural delays within a government enterprise - Dishonor of cheque - HELD THAT:- Any party to an application even if it is a government organization should strictly adhere to the rules of limitation and therefore no relaxation should automatically be granted to a party for being a government organization due to procedural delay. Having regard to the aforesaid principle, the power of the Court to condone a delay varies from case to case and strictly on the basis of sufficiency of cause.
In the case at hand, the appellant/petitioner has given plausible and acceptable explanation regarding the delay in filing the special leave petition. Moreover, the dismissal of the case by the Learned Trial Judge was not on merit but only due to non- prosecution. Therefore, it cannot be said that the fate of the plea raised by the petitioner is decided beyond reasonable doubt.
It cannot be abstained from providing a leeway to the petitioner with regard to delay in filing special leave petition as sufficiency of cause has to be judged in pragmatic manner so as to advance the cause of justice. In the given facts and circumstances and after due consideration of all the available materials on record, it is deemed appropriate to condone the delay of 292 days as it cannot be ignored that if appeals brought by the Government are lost for such defaults, it is the public interest which gets severely affected.
Conclusion - The condonation of the 292-day delay allowed, granting the appellant leave to file the memorandum of appeal within the statutory period.
Application allowed.
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2025 (3) TMI 1092
Retrospective application of amendment to Rule 108 of the GST Rules, 2017, which altered the requirements for submitting a certified copy of the order appealed against - failure to submit a certified copy of the order within the specified period, as per the unamended Rule 108 - differences in various returns - HELD THAT:- It is admitted that the appeal against the order dated 16.08.2022 passed by the Proper Officer was preferred on 15.11.2022. It is also not in dispute that along with the appeal, copy of the order appealed against was also filed. The said fact has specifically been mentioned in paragraph no. 22 of the writ petition, which has not been denied by the State in paragraph no. 11 of the counter affidavit. During the pendency of the appeal, subsequent amendment to rule 108 came on 16.12.2022.
As per the unamended rule 108 (3) of the Rules, the time of filing certified copy of the order appealed against was within 7 days of submission of appeal; whereas, as per the amended rule 108(3) of the Rules, where the decision and order against is not uploaded on the common portal, then the party shall submit certified copy of the said decision within 7 days - Bare conjoint reading of the aforesaid provisions clearly shows that in the event certified copy of the order appealed against is not uploaded along with the appeal through e-mode, then within 7 days of filing of the appeal, a self-certified copy of the order was supposed to be filed within 7 days.
The issue in hand has already been decided by the Delhi High Court in Chegg India Private Limited [2024 (12) TMI 1354 - DELHI HIGH COURT] wherein, the Court has held that the condition for physically filing the certified copy is not mandatory, but procedural in nature. If an appeal is preferred along with all documents and the copy of the appeal, the filing of certified copy is not required.
Similarly, in the case in hand, it is not in dispute that the appeal, which was preferred on 15.11.2022, was without order appealed against. Once this fact is not in dispute, the issue in hand is covered by the judgement of the Delhi High Court in Chegg India Private Limited.
Conclusion - i) The condition for physically filing the certified copy is not mandatory, but procedural in nature. ii) The amendment to Rule 108 is procedural and applies retrospectively, allowing appeals filed electronically within the limitation period to be considered valid despite delays in submitting a certified copy.
The matter is remanded back to the appellate authority, i.e., the Additional Commissioner, Grade - 2 (Appeal), State Tax, Noida, for considering the appeal on merit - petition allowed.
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2025 (3) TMI 1091
Dismissal of appeal on technical grounds - non-constitution of Tribunal - failure to comply with the legal mandate of making the pre-deposit - HELD THAT:- Noting that the petitioner’s appeal has been rejected on technical grounds and at present the Appellate Tribunal under Section 112 of the said Act is yet to be constituted, one more opportunity should be granted to the petitioner to make payment of the pre-deposit as required under Section 107(6) of the said Act.
The order dated 22nd May, 2024 passed by the Appellate Authority rejecting the petitioner’s appeal is set aside - Petition disposed off.
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2025 (3) TMI 1090
Condonation of delay in filing these Special Leave Petitions - HELD THAT:- No reasons to be satisfactory nor sufficient in law so as to condone the delay of 467 days in filing these special leave petitions. Hence, the application(s) seeking condonation of delay is dismissed. Consequently, the Special Leave Petitions are also dismissed.
However, all contentions which are available to the petitioner(s) herein may be advanced before the concerned Magistrate’s Court in accordance with law.
It is needless to observe that if the relevant contentions are advanced by the petitioner(s) herein, the same shall be considered and adjudicated upon by the learned Magistrate.
We also clarify that the observations of the High Court in the impugned order(s) are restricted to the consideration of the case under Section 482 of the CrPC only.
The Court before which the prosecution against the petitioner(s) is/are pending shall endeavour to dispose of the said case as expeditiously as possible with the cooperation of the parties.
Assessment u/s 153A - pendency of re-assessment proceedings - Offence punishable u/s 276CC - unaccounted receipt of money by the petitioner towards remuneration for directing movies - Whether assessment order was barred by limitation? - as per HC [2022 (6) TMI 88 - MADRAS HIGH COURT] this Court is of the considered view that respondent/complainant made out prima-facie case to proceed against the petitioner for the offences alleged in the complaint. Section 278 (e) of the Income Tax Act, 1961, empowers the Court to presume culpable mental state of the accused, unless, the accused shows that he had no such mental state with respect to the act charged as an offence in the prosecution. In this view of the matter, this Court finds that petitioner shall necessarily face the trial. Criminal Original Petitions dismissed - HELD THAT:- As respondent(s) sought some time to file Vakalatnama. Accepting his submission, three weeks’ time is granted to file Vakalatnama.
We dispose of these Special Leave Petitions by reserving liberty to the petitioner(s) herein to take up all contentions regarding the maintainability of the prosecution before the concerned Trial Court.
It is needless to observe that if such contentions regarding the maintainability of the prosecution are raised by the petitioner(s) herein, the same shall be considered in light of the relevant case law and in accordance with law and facts of the present cases.
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2025 (3) TMI 1089
Addition u/s 68 - Addition in respect of share and share premium - ITAT deleted addition - HELD THAT:- Tribunal has elaborately considered the factual position and faulted the manner in which the assessment was completed by observing that it was a cryptic order without discussing the facts of the matter nor the submissions made by the assessee nor the documents produced by the assessee to prove the three factors, namely, identity, genuineness of the transactions and creditworthiness of the subscribers.
Tribunal also found that though such documents were once again produced before the CIT(A), but the same were not referred to nor any defect or discrepancy was pointed out under the said documents.
Apart from that, Tribunal has also pointed out that there are factual mistakes by the CIT(A) while passing the order which are contrary to the conclusion arrived at by the AO.
Tribunal took note of the decision of NRA Iron & Steel (P) Ltd. [2019 (3) TMI 323 - SUPREME COURT] noted that the principles which were summed up in the said decision when a case is considered under Section 68 of the Act. After noting the said decision, Tribunal examined the factual position and found that the initial burden casted upon the assessee has been discharged inasmuch as the assessee had produced the documents to prove the identity of the subscribers, the genuineness of the transaction and creditworthiness of the subscribers - Decided against revenue.
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2025 (3) TMI 1088
Validity of the notice issued u/s 148 - notice issued by non-jurisdictional officer - as argued notice was issued by the one A.O i.e. ITO, Ward-1(3), Raipur who was not having valid jurisdiction over the assessee to issue such notice at the relevant point of time
HELD THAT:- As notice u/s 148 of the Act, dated 30.03.2019 which had been issued by the ITO, Ward-1(3), Raipur who had no valid jurisdiction over the assessee at the relevant point of time, therefore, it is held invalid, bad in law and all subsequent proceedings thereafter are accordingly held as void ab initio, non-est in law.
The re-assessment framed by the ITO-2(1) Raipur passed u/s. 147 r.w.s.143(3) in absence of an order of transfer u/s. 127 of the Act having been passed by the Ld. Pr.CIT and without issuance of notice u/s. 148 of the Act, is held to be without any jurisdiction and thus, held as bad in law and the same is quashed. Decided in favour of assessee.
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2025 (3) TMI 1087
Estimation of income - bogus purchases - AO has treated the purchases declared by the assessee as bogus and proceeded to make the addition on estimate basis @ 10% - HELD THAT:- Assessee is dealing in trading in steel and scraps and in various cases coordinate benches have estimated the income in this line of business @ 5%. Therefore, the assessee has already declared profit @ 3.5% and direct the AO to make the addition of difference of 1.5% on the bogus purchases as income of the assessee.
Unexplained cash deposits u/s 68 - As bank account as well as ledger copies of Goyal Trading Company and Sagar Enterprises and we observe that there is no cash deposits in any of the ledger accounts submitted by the assessee and also there is no cash deposits in any of the bank accounts submitted before us to the extent of Rs. 3 lakh each from both the parties.
In the case of Goyal Trading Company, observe that there is a credit balance of Rs. 3 lakhs and at the same time observe that there was also a debit of Rs. 3 lakhs, which shows that it is a contra entry for dishonour of the cheque deposit by the assessee. Therefore, in absence of any cash deposits and all the transactions recorded in the bank account are only through cheques, therefore, no reason to sustain the addition.
Decided in favour of assessee.
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2025 (3) TMI 1086
TP Adjustment - intra-group services (IGS) received by the assessee - Cost allocation methodology for intra-group services availed by Appellant - HELD THAT:- We observed that similar issue was considered by the coordinate Bench in AYs 2018-19 and 2019-20[2023 (1) TMI 42 - ITAT DELHI] as held service recipient of the assessee is unable to make use of the said technology only by itself in its business or for its own benefit without recourse to the assessee year after year - The receipts of the assessee on account of provision of information technology and other administrative services to its affiliate in India are not in the nature of Fees for Technical Services under the India Singapore Double Taxation Avoidance Agreement and we, accordingly, direct the Assessing Officer to delete the same.
Purchase of fixed assets - HELD THAT:- As assessee purchased similar equipments for the purchase of resale, however a part of the abovesaid capital assets were also used for demonstration purposes. The assets which are used for demonstration purposes were capitalized by the assessee. The transaction is closely inter-linked and aggregated with the trading segment of the assessee for the purpose of determination of ALP, we observed that assessee has also claimed depreciation on these assets on the assessee’s trading margin was determined after claim of the depreciation on abovesaid assets which are used for demonstration purposes. Further it is brought to our notice that the TPO has accepted the ALP of the trading segments which is at arms length. Since the assessee has capitalized the same traded assets, in our considered view, the ALP of the purchase of fixed assets to be determined based on the value of input cost of traded goods which assessee has traded during the year and shown relevant profits. The assessee has submitted a comparative purchase chart of traded and the assets utilized for demonstration purposes which was already reproduced in the submissions of the ld. AR.
Thus, remit this issue back to the file of AO/TPO with a direction to verify the cost of assets utilised for demonstration purposes and also the cost of input of traded goods. We direct TPO to redo the ALP adjustment after giving proper opportunity of being heard to the assessee and determine the ALP as per law. Accordingly, ground allowed for statistical purposes.
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2025 (3) TMI 1085
TP Adjustment - allocation of software cost received from its Associated Enterprises - HELD THAT:- We find considerable cogency in the contention of the Ld. AR that the instant issue is fully covered by the order of the Coordinate Bench of the Tribunal in assessee's own case for A.Y. 2014-15 [2021 (12) TMI 1428 - ITAT DELHI] wherein the coordinate Bench upheld that the reimbursement received at cost does not require any mark-up.
Further it is noted that Hon’ble Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. [2021 (3) TMI 138 - SUPREME COURT] had also upheld the reference to OECD guidelines being persuasive in nature. In view of the aforesaid discussions and respectfully the aforesaid precedents, we deem it fit and proper to direct the AO/TPO to delete adjustments in respect of reimbursement received. Accordingly, Ground are allowed.
Adjustment u/s. 92CA(3) - allocation of reimbursement received from its Associated Enterprises - HELD THAT:- We find considerable cogency in the contention of the Ld. AR that the instant issue is fully covered by the order in assessee's own case for A.Y. 2014-15 [2021 (12) TMI 1428 - ITAT DELHI] wherein upheld that the reimbursement received at cost does not require any mark-up. It is noted that in this case the assessee relied on OECD guidelines which support that no mark-up is chargeable in reimbursements. Thus, we deem it fit and proper to direct the TPO to delete such adjustment in respect of reimbursement received.
Adjustment u/s. 92CA(3) on account of Corporate Guarantee Fee from AE - HELD THAT:- We find considerable cogency in the contention of the Ld. AR that the instant issue is fully covered by the order of the Coordinate Bench of the Tribunal in assessee's own case for A.Y. 2014-15, wherein the coordinate Bench upheld the corporate guaranteed rate @0.25%.
Adjustment on account of Inter unit Transfer – Technical Textile Business, Kashipur Division - assessee submitted that assessee’s methodology was rejected without providing any reason - HELD THAT:- We find considerable cogency in the contention that assessee’s methodology was rejected without providing any cogent reason. In our view, in various judicial precedents, CUP method has been preferred over TNMM.
Segmental margin of TTB segment computed by TPO @6.28% is incorrect as the segmental margin from the segmental results of assessee is 12.14% and hence no adjustment is warranted in any case. Accordingly, we direct the TPO to delete the adjustment.
Adjustment on account of Chemical & Polymer Business - HELD THAT:- Assessee’s methodology was rejected without providing any cogent reason. In various judicial precedents, CUP method has been preferred over TNMM. Segmental margin of CPB segment computed by TPO@ (-) 1.37% is incorrect as the segmental margin from the segmental results of assessee is reported at 33.34%.
As further noticed that the PLI of eligible unit as computed by TPO is 16.32% which is again lower than the CPB segment’s correct PLI. We further find force in the contention of the Ld. AR that DRP erred in computing the adjustment twice Rs. 40.23 lacs on cost side and Rs. 17.82 lacs on revenue side, thus incorrectly applying the TNMM method. This issue needs proper verification by the TPO on the basis information supplied by the assessee, we direct the TPO to determine the ALP on the basis of CUP method.
Transfer of power by Captive Power Plant (CPP) at Bhiwadi - HELD THAT:- Various judicial pronouncements advocated the adoption of SEB rates for benchmarking the electricity transfer and Rule of Consistency has also been followed by the assessee before Ld. DRP. The data of various discom rates obtained u/s 133(6) were not available in public domain, hence cannot be used. It is also noted that no opportunity was given to examine and rebut the data. In view of the Tribunal decision in the case of Technimont ICB P Ltd. [2012 (7) TMI 1172 - ITAT MUMBAI], we observed that assessee's internal CUP to be preferred over an external CUP, which was not done.
It is brought to our notice that in AY 2014-15 and AY 2015-16, similar bench marking was carried by the assessee adopting the CUP method based on SEB rates, which was accepted by the AO in AY 2014-15 and on the basis of CBDT instruction no 3/2016 in AY 2015-16. Hence, for the sake of bench marking the correct ALP on the electricity charges, we are inclined to remit this issue back to the file of AO/TPO to redo the bench marking based on the decision of Jindal Steels and others [2023 (12) TMI 417 - SUPREME COURT] and as per law.
Purchase of Electricity from VRETPL - HELD THAT:- Copy of sample invoices of power purchase by assessee from Tamil Nadu State Electricity Board (SEB) as an evidence to depict that the purchase rate of SEB is way higher than the rate charged by VREPL. We further note that detailed note explaining the basis of pricing of electricity and the benchmarking of the same in contrast to the rate of electricity purchase by the assessee from the SEB and the date of various discom rates obtained u/s 133(6) not available in public domain, hence it cannot be used. Tribunal decision in the case of Technimont ICB P Ltd. [2012 (7) TMI 1172 - ITAT MUMBAI] assessee's internal CUP to be preferred over an external CUP, which was not done, hence no adjustment is warranted in any case.
Hence, for the sake of bench marking the correct ALP on the electricity charges, we are inclined to remit this issue back to the file of AO/TPO to redo the bench marking by following the decision of Hon’ble Supreme Court in the case of Jindal Steel and others [2023 (12) TMI 417 - SUPREME COURT] case and as per law.
Sale of Electricity by WPP unit at Tamilnadu - HELD THAT:- It is brought to our notice that in AY 2013-14 and 2014-15, the assessee had bench marked by adopting CUP method based on EB purchased by assessee for other units from Tamil Nadu State Electricity Corporation, the same was accepted by the TPO and in AY 2015-16 accepted on the basis of CBDT instruction no 3/2016. Hence, for the sake of bench marking the correct ALP on the electricity charges, we are inclined to remit this issue back to the file of AO/TPO to redo the bench marking based on the decision of Jindal Steel and others [2023 (12) TMI 417 - SUPREME COURT] case and as per law. Hence, Ground Nos.40 to 43 are allowed as indicated above.
Disallowance of deduction u/s. 32AC - assessee submitted that there is no requirement of certificate for claiming the deduction u/s 32AC - HELD THAT:- We find that the assessee has submitted the relevant information on the claim of investment in new plant and machinery during the year. We direct the AO to consider the various information de novo after giving the proper opportunity of being heard to the assessee. The claim made by the assessee cannot be rejected mechanically and the assessee has made huge investments in the plant and machinery in order to claim the benefit u/s 32AC of the Act. Therefore, we are remitting these grounds back to file of AO.
Disallowance u/s. 14A - HELD THAT:- We find considerable cogency in the contention of the AR that the instant issue is fully covered by the order of the Coordinate Bench of the Tribunal in assessee's own case for 2006-07, 2007-08, 2008-09, 2010-11 & 2012-13 wherein the Bench deleted the similar additions.
Disallowance of weighted deduction u/s. 35(2AB) - HELD THAT:- Coming to the final assessment order, the AO has wrongly disallowed all the deductions claimed by the assessee including the old 4 approved facilities. Therefore, we direct the AO to allow the genuine claim of the assessee relating to approved facilities and disallow the excess deductions claimed by the assessee for the Gurgaon facility alone. In the result, grounds raised by the assessee are partly allowed.
Disallowance of all the deductions claimed by the assessee including the old 4 approved facilities - HELD THAT:- As we direct the AO to allow the genuine claim of the assessee relating to approved facilities and disallow the excess deductions claimed by the assessee for the Gurgaon facility alone. In the result, grounds raised by the assessee are partly allowed.
Disallowance of depreciation of goodwill - HELD THAT:- We find considerable cogency in the contention of the Ld. AR that the instant issue is fully covered by the order of the Coordinate Bench of the Tribunal in assessee's own case for years 2009-10, 2012-13, 2014-15 & 2015-16 wherein, the Bench upheld that goodwill is an intangible asset and eligible for depreciation.
Disallowance on account of inventories written off - HELD THAT:-The assessee has failed to submit the rationale for claiming separately the write off of inventory. Therefore, the submissions of the assessee are not appealing to us and we are inclined to sustain the additions made by the AO.
Case relied by the assessee are on the facts that the relevant assessee’s claimed the revaluation of inventory for reduction in the value of closing stock and the AO has rejected the same on the basis of non submission of item wise details or for other reasons. The Courts have decided the issues in favour of the assessee. The facts in the present case is distinguishable to facts of those decisions relied by the assessee. In the result, grounds raised by the assessee are dismissed.
Disallowance on account of software expenses - HELD THAT:- We find considerable cogency in the claim of the assessee. It is settled law that the software expenses are allowable expenses, which are recurring in nature and are meant to renew every year. Therefore, we are inclined to direct the AO to delete the above software expenses. In the result, the grounds raised by the assessee are allowed.
Additional claim made with respect to allowance of additional depreciation @ 10% u/s. 32(1)(iia) - HELD THAT:- We find considerable cogency in the contention of the AR that the instant issue is fully covered by the order of the Coordinate Bench of the Tribunal in assessee's own case for different assessment years specifically Assessment Year 2015-16 wherein the Bench remitted back the issue to the file of the AO and AO had allowed / granted its appeal effect order dated 22.03.2023 - we deem it fit and proper to remit back the issue to the file of the TPO with the similar directions.
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