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Showing 421 to 440 of 1484 Records
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2025 (3) TMI 1064
CENVAT credit on service tax paid on input services related to passenger service fee, development fee, and user development fee - appellant is engaged in providing air transportation services - HELD THAT:- The ruling by Hon’ble Bombay High Court in the case of CCE, Pune V/s. Ajinkya Enterprises [2012 (7) TMI 141 - BOMBAY HIGH COURT] was passed in the year 2012 and appellant had not chosen to rely on the same in the year 2016 before original authority.
By following above stated ruling by Hon’ble Bombay High Court, it is held that even if someone has involved in any activity which does not amount to provision of service, still if Service tax paid on such activity is accepted by Revenue then CENVAT credit of service tax paid on input services going into such activity cannot be denied. The contention of appellant that service tax was paid was not denied by the Revenue during the hearing but details of the service tax paid by appellant during the period of dispute is not readily forthcoming from the appeal record. Therefore, it cannot be ascertained as to whether service tax paid by the appellant was more than or equal to cenvat credit availed.
Conclusion - The matter needs to be remanded to original authority with a direction to the appellant to file a copy of ruling by Hon’ble Bombay High Court in the case of CCE, Pune V/s. Ajinkya Enterprises before the original authority who shall verify whether service tax paid by the appellant during the relevant period was equal to or more than the cenvat credit availed by the appellant.
Appeal allowed by way of remand.
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2025 (3) TMI 1063
Refund of the service tax paid under protest - construction project undertaken by the appellant qualifies as a "Residential Complex" under Section 65(91a) of the Finance Act, 1994, thereby subjecting it to service tax or not - HELD THAT:- Perusal makes it clear that ‘Residential Complex’ would be a complex comprising of a building or buildings, having more than twelve residential units, thus, independent buildings having twelve or less than twelve residential units would not be covered by the definition of ‘Residential Complex’. In the present case, the appellant had constructed independent duplex houses having one residential unit only. Thus, even if the appellant had constructed more than 12 independent buildings, the nature of activity would not be ‘Construction of Residential Complex’ and, therefore, the service tax cannot be levied.
This issue is otherwise no more res integra as being already decided by the Principal Bench of the Tribunal in Macro Marvel Projects Ltd. v/s Commissioner of Service Tax, Chennai [2008 (9) TMI 80 - CESTAT, CHENNAI] wherein the demand of service tax was for the period 16 June, 2005 to November, 2005 under “Construction of Complex” service under Section 65(30a) of the Act. The Bench examined the scope of ‘Construction of Complex’ and the meaning of ‘Residential Complex’ under section 65(91a) of the Act and observed 'Admittedly, in the present case, the appellants constructed individual residential houses, each being a residential unit, which fact is also clear from the photographs shown to us. In any case, it appears, the law makers did not want construction of individual residential units to be subject to levy of service tax. Unfortunately, this aspect was ignored by the lower authorities and hence the demand of service tax. In this view of the matter, we are also not impressed with the plea made by the appellants that, from 1-6-2007, an activity of the one in question might be covered by the definition of ‘works contract’ in terms of the Explanation to section 65 (105)(zzzza) of the Finance Act, 1994 as amended. ‘According to this Explanation, ‘construction of a new residential complex or a part thereof’ stands included within the scope of ‘works contract’. But, here again, the definition of ‘residential complex’ given under section 65(91a) of the Act has to be looked at. By no stretch of imagination can it be said that individual residential units were intended to be considered as a “residential complex or a part thereof.'
It is also found that the definition of ‘Residential Complex’ as per Section 65(91a) of the Act is applicable for both the entries under Section 65(105)(zzzza) for works contract. Therefore, there cannot be an argument that the expression ‘Residential Complex’ has to be interpreted in one manner for works contract and in a different manner of levy of tax on construction of a residential complex.
Conclusion - The appellant is entitled for claiming refund of the amount which was deposited under protest specifically for the reason that appellant is not liable to pay tax while constructing independent residential duplex houses.
Appeal allowed.
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2025 (3) TMI 1062
Time Limitation u/s 111 of the Finance Act 2013 - notice served within the statutory period of one year from the date of the declaration filed by the appellant under the Voluntary Compliance Encouragement Scheme (VCES), 2013 or not - HELD THAT:- On going through the show cause notice, it is amply clear that the demand has been raised in terms of provisions under Section 111 of the Finance Act 2013 read with Section 73 of the Finance Act 1994. Therefore, the charge for issuing the show cause notice is Section 111. There is no separate ground or provision which has been relied by the Department to invoke extended period etc., in terms of Section 73 and therefore, the maintainability of the show cause notice has to be examined within the provisions contained under Section 111 of the Finance Act itself. As can be seen that the provision is very clear that where the Commissioner of Central Excise has reasons to believe that the declaration made by the declarant under the Scheme was “substantially false”, he may serve notice in respect of such declaration requiring him to show cause why he should not pay the amount not paid or short paid.
In this case, the date of declaration is clearly and admittedly 31.12.2013 when the appellant had filed their Declaration bearing no. 1500/2013 dated 31.12.2013 for an amount of Rs. 37, 59, 354/-.
When was the notice served on the declaration in respect of such declaration? - HELD THAT:- In this case, as per the factual and admitted position, the notice was served only on 02.01.2015. Further, even though the terms used is serve in the Section 111(1), it has to be covered in terms of statutory provisions cited, supra. Even going by other actions namely issuance of show cause notice, as well as pasting of notice on the factory premises etc., it would not amount to serving of the notice in view of various case laws cited by the appellant. Therefore, the Department has clearly failed to serve the notice within the time limit permissible as per the provisions under Section 111 of Finance Act and therefore any subsequent proceedings including confirmation of demand on the basis of this show cause notice itself would not be maintainable and therefore the order is liable to be set aside.
The appellants have contested the impugned order on two grounds namely that the show cause notice itself is time barred and secondly that there is no substantially false declaration made by them in the facts of the case and submissions made by them and therefore the impugned order is not maintainable - the show cause notice has not been served within the time limit prescribed under the provision under which the show cause notice has been issued. Since, the show cause notice itself is non-maintainable, the other ground taken by the appellant for non-maintainability of the impugned order not examined.
Conclusion - i) No action shall be taken under Section 111 of the Finance Act 2013 after the expiry of one year from the date of declaration. ii) The show cause notice was not served within the statutory period, rendering it time-barred.
Appeal allowed.
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2025 (3) TMI 1061
Nature of transaction - deemed sale or Supply of Tangible Goods service - transaction between the respondent and its customers involves transfer of effective control and possession to the customers or otherwise - HELD THAT:- If these agreements are merely an agreement allowing customers to use their goods and the respondents are keeping effective control of said goods then it would fall within the category of SOTG service, however, if the transfer of goods on lease involves both transfer of effective control and possession to the customer, then it would be covered within the category of ‘deemed sale’ and therefore, not liable to service tax. It is also noted that both the sides have argued that whether the transaction is that of deemed sale or that of service can be decided based on the BSNL judgment [2006 (3) TMI 1 - SUPREME COURT] by Hon’ble Supreme Court and the parameters enumerated therein to come to the conclusion as regards transfer of effective control and possession. While the department has highlighted some provisions to say that effective control rests with the respondents, the respondents have tried to justify the factual position as apparent from the terms and conditions to support their submission that the control and possession is with the customers.
The Chennai Bench in the respondent’s own case, [2020 (11) TMI 14 - CESTAT CHENNAI], keeping in view the judgment of Hon’ble Supreme Court in the case of BSNL and the terms and conditions of the agreement, as also the decision by the Chandigarh Bench in the respondent’s own case, as also the Order-in-Appeal dt.26.12.2017 of the Commissionerate of Hyderabad, which had set aside the demand observing that appellant has actually transferred the possession, right to use and effective control of the workwear and therefore, the activity was not taxable under the category of SOTG service, came to the conclusion that the transaction is not in the nature of service.
There is no dispute that the terms and conditions of the agreement discussed by the Chandigarh Bench as well as Chennai Bench are different than the terms and conditions in the present appeal. It is also not in dispute that in both these orders, the concerned Bench had examined the terms and conditions of the agreement, as also the BSNL judgment, to come to the same conclusion that the transactions are not in the nature of service and therefore, not liable to service tax both prior to 30.06.2012 as well as thereafter. There are no substantive ground to differ with the views expressed by the Coordinate Benches in respect of the similar agreements in respect of same appellant.
Conclusion - The transaction is a deemed sale, not a service, based on the transfer of effective control and possession as per the decision in BSNL case.
The appeal of the department is not maintainable and the impugned order is sustained - Appeal dismissed.
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2025 (3) TMI 1060
Levy of service tax - IPR service or not - "ttk" logo used by the Appellant's group companies was an artistic work registered under the Copyright Act or a trademark? - HELD THAT:- The logo `ttk’ were only used to project the image of the manufacturer generally and did not establish any relationship between the mark and the products manufactured/ distributed by the group companies of the Appellant. It only is a house mark which is usually devised in the form of an emblem, word or both and it is for identification of the manufacturer/distributor. Therefore, this monograph which only identifies the manufacturer/distributor would not make the product patent or proprietary. The “House mark” is used generally as an emblem of the manufacturer/distributor projecting the image of the manufacturer, whereas “Brand name” is a name or trademark either unregistered or registered under the Act. Therefore, it is not necessary that “Brand name” should be compulsorily registered - it is found that the definition of service under ‘IPR’ excludes copyrights and as the ‘ttk’ logo is registered under the copyrights act, service tax demand is questionable.
The issue is settled in favor of the Appellant by this Tribunal’s earlier decision involving the same Appellant for an earlier period following the decision of the Hon’ble Supreme Court in M/s. Astra Pharmaceuticals [1994 (12) TMI 77 - SUPREME COURT] where it was held that the Dextrose injections manufactured by the appellant were not patent and proprietary medicines subject to duty under Tariff Item 14E.
Conclusion - "Intellectual property right" under Section 65(55a) excludes copyrights, and the "ttk" logo's registration under the Copyright Act exempts it from service tax under IPR services.
The impugned order set aside - appeal allowed.
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2025 (3) TMI 1059
100% EOU - duty not paid properly on DTA clearances - it is alleged that the appellant needs to pay CVD on Tariff Rate and not on Effective Rate as per Notification No.01/2011 dated 01.03.2011 - liability to pay interest and penalty thereon - HELD THAT:- A 100% EOU must meet the following conditions : (i) that the unit must be a 100% EOU as defined under Chapter 6 of the Foreign Trade Policy (FTP); (ii) the unit must have obtained the necessary permissions and approvals from the relevant authorities. In this regard, Notification No. 52/2003-Central Excise (NT) outlines the concessional Excise Duty rates applicable to EOUs. Further, clearance of goods into Domestic Tariff Area under Paragraph 6.8 of the Export and Import Policy shall be allowed only when the unit has achieved positive Net Foreign Exchange Earning.
Further, the DTA clearances of finished goods covered under GST, EOUs are required to pay CGST/SGST/UTGST/ IGST, as the case may be, besides payment of whole of the Duty of Customs specified under the First Schedule to the Customs Tariff Act, 1975 (BCD) availed as exemptions on inputs used in manufacture of such finished goods. In respect of DTA clearances of finished goods covered under Fourth Schedule of the Central Excise Act, 1944, the EOUs would be required to pay Central Excise Duty equal to the aggregate of Duties of Customs in terms of proviso to Section 3(1) of the Central Excise Act, the effective rate of such duties being covered by Notification No. 23/2003 – CE, which has also been amended by Notification No.16/2017 – CE dated 30.06.2017. In other words, the excisable goods are liable to effective excise duty as it existed before GST.
It is clear that the EOUs are generally eligible for a concessional rate of excise duty on goods cleared to the DTA, with rates determined based on the effective rate of CVD applicable to similar imports.
Conclusion - The appellants were entitled to discharge CVD on the effective rate of duty as envisaged under N/N.01/2011-CE dated 01.03.2011.
Appeal allowed.
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2025 (3) TMI 1058
SSI Exemption - clubbing of clearances of three firms - M/s. Meena Fire Works Industries, M/s. Meena Fire Works, and M/s. Meena Sparklers should be treated as a single manufacturer under section 2(f) of the Central Excise Act, read with para 2(v) of Notification No.8/2003-CE. or not - denial of cross-examination of the investigating officer by the adjudicator - demand with penalty - delay in adjudication.
HELD THAT:- As per condition (v) and (vii) of para 2 of the exemption notification No.8/2003-CE dated 01-03-2003, there ought to be a manufacturer who has a factory or factories, the clearances of which are to be taken in aggregate for determining the exemption in the event of a manufacturer having clearances from more than one factory. Therefore, for the purposes of clubbing of clearances it is an imperative prerequisite that one unit is identified or determined as the principal entity to which the clearances from the other units or factories then get clubbed and the proposal for demand is then required to be raised on the said principal entity. Evidently, the attempt of the Department here is to deny the benefit of exemption notification individually to the three units, as the Department is of the view that the three brothers have indulged in subterfuge of maintaining separate units while exercising financial and managerial control over all the three.
This Tribunal in Amit Talwar v CCE, Delhi-I [2018 (5) TMI 667 - CESTAT NEW DELHI] has held that it is well-settled that demand cannot be made jointly and severally.
The lack of clarity in determining the ‘manufacturer’ from whom the demand of duty in the event of clubbing of clearances ought to be made and non-identification of any such principal entity and instead embarking on proposing a demand on a department mooted ‘group of persons comprising of the three brothers’ / ‘group of firms’ comprising of the three firms, neither of which proposal has any legal basis in the provisions of Central Excise Act, 1944 or the Rules made thereunder, indicates the indelible taint of non-application of mind that permeates the entire proceedings right from conceptualisation of the demand in the SCN to the confirmation of the demand in the impugned order in original. Such an attempt of foisting a fictional financial entity onto the appellants and pegging a demand thereon, is devoid of any legal backing and vitiates the proceedings in toto.
Since the lacunae of lack of clarity in demand exists in the demand proposal in the SCN as well as its confirmation in the impugned OIO, it is a fundamental flaw that cannot be cured and the impugned order in original is liable to be set aside on this count alone.
Request of the counsel for the appellant for cross examination of the investigating officer and the officers before whom the statements were recorded was denied stating it will delay the adjudication proceedings - HELD THAT:- In the impugned proceedings, the Adjudicating Authority has not observed the mandate of Section 9D while admitting in evidence the statements given under Section 14 of the Central Excise Act, 1944 and has not deposed the deponents who had given such statements and where deposed and cross-examined has not stated any reason why the statements as originally deposed alone is to be relied on or in other words, the adjudicating authority has not given any reason for discarding the deposition made during cross-examination, such as that he is treating the witness as hostile or that the contradiction/inconsistencies are minor enough to be discarded.
The request of the appellant for cross examination of the Investigating Officer, after having given up his request for cross examination of the other Departmental Officer sought, cannot be said to be unreasonable. The denial of cross-examination of the investigating officer by the adjudicator is a violation of the appellant’s right in this regard as held by the Honourable High Court of Allahabad in CCE, Allahabad v. Govind Mills Ltd. [2013 (8) TMI 649 - ALLAHABAD HIGH COURT] and CCE Meerut I v R.A. Castings Pvt Ltd [2010 (9) TMI 669 - ALLAHABAD HIGH COURT].
Also, the appellant’s contentions on quantification of the duty demand have not been controverted by the Adjudicating Authority. Admittedly even the long note books relied for quantifying the alleged unaccounted removal contains entries only for the period from April 2007 to September 2009. Admittedly for the period from October 2009 to March 2010 there was no evidence available pertaining to unaccounted clearances and the show cause notice had proceeded to quantify the same adopting the average value of the preceding year’s clearances, that is clearance from October 2007 to March 2008 and October 2008 to March 2009 to arrive at an average value of clearances per day and then to presumptively quantify the unaccounted clearance for the period October 2009 to March 2010, as is evident from the remarks in the column in the worksheet at Annexure C(i) and para 15.3 of the SCN at page 84-85. Similarly, for the period 2010-11 and 2011-12 the show cause notice has not even an iota of evidence to rely on for determining the quantification of the alleged clandestine removals.
In the instant case the evidence adduced is woefully inadequate, much less ‘clear and convincing evidence’. Apart from the reliance placed on the statements, which is determined as inadmissible, the information found in the long and small note books and other records at best would prima facie create a strong doubt about the unaccounted manufacture and clearance of fireworks and sparklers - mere indication of credit entries is of no avail without any explanation as to the nature of such credits. The SCN alleges that the appellants had deposited Rs.17,00,000/- in TMB and such entries were touted as indication of profit earned out of illicit transactions. The appellant in its reply at para 18.8 has categorically rebutted the same stating that no such deposit was made and in evidence enclosed letter dated 24.03.2012 of the Manager of the said Bank and contended that such wrong averments were made to prejudice the mind of the adjudicating authority. In fact, the adjudicating authority has not controverted the categorical rebuttals of these entries which the appellant has stated is misplaced. The reconciliation statement in respect of the bank accounts provided along with the reply to substantiate their defence was also not controverted by the adjudicating authority.
Delay in adjudication - HELD THAT:- The decision of this Tribunal in Kopertek Metals Pvt Ltd [2024 (12) TMI 269 - CESTAT NEW DELHI], which turns on the peculiar facts and circumstances of that case, cannot be construed as laying down a blanket proposition that any delay in adjudication beyond the time limit prescribed under sub-section 11 of Section 11A of the Central Excise Act would automatically result in the impugned order being vitiated for non-adherence to the time limit stipulated, dehors an examination of the facts and circumstances or insurmountable exigences which made it impracticable for the adjudication to take place, as has been held by the Delhi High Court in Swatch Group [2023 (8) TMI 864 - DELHI HIGH COURT].
Conclusion - i) The finding of the Adjudicating Authority that M/s. Meena Fire Works Industries, M/s. Meena Fire Works and M/s. Meena Sparklers are to be treated as one single manufacturer manufacturing and clearing fireworks from their factories in terms of section 2(f) of Central Excise Act read with para 2(v) of the Notification No.8/2003-CE dated 01.03.2003 as amended, is wholly untenable and cannot sustain. ii) The finding of the Adjudicating Authority that the value of clearances of fireworks including sparklers manufactured and cleared from M/s. Meena Fire Works Industries, M/s. Meena Fire Works and M/s. Meena Sparklers during the period 2007-08 to 2011-12 should be clubbed together in terms of para 2(v) of the Notification No.8/2003-CE dated 01.03.2003 as amended to determine the aggregate value of clearances for demanding duty from the said three firms, is wholly untenable and cannot sustain.
Appeal allowed.
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2025 (3) TMI 1057
Process amounting to manufacture or not - activities undertaken at the Central warehouse, where the activity of packing, re-packing and labelling was carried out by the appellant - demand of excise duty on re-packed spare parts on the ground that these goods were parts of motor vehicles (automobiles) and these parts were covered under Sl. No.100 of the Third Schedule to the Central Excise Tariff Act, 1985 - HELD THAT:- The issue involved in this appeal was decided by the Larger Bench of the Tribunal in ACTION CONSTRUCTION EQUIPMENT LTD. [2023 (6) TMI 1320 - CESTAT MUMBAI (LB)]. The present appeal is also covered by such order of the Larger Bench.
On careful reading of the decision given by the Larger Bench of the Tribunal on the disputed issues, it is found that the amendment carried out w.e.f. 29.04.2010 makes it abundantly clear that a legislature did not intend to tax the parts, components and assemblies of earthmoving equipment etc. under the Head “Automobiles”; therefore, to this extent, the adjudged demands for the period prior to 29.04.2010 cannot be sustained.
Further, it is a fact on record that Third Schedule to the Central Excise Tariff Act, 1985 was retrospectively amended vide Finance Act, 2011 read with Finance Act, 2012, with effect from 29.4.2010. Accordingly, from 29.4.2010, the appellant started discharging the excise duty on activity of packing / re-packing and affixing MRP undertaken on spare parts at warehouse, on the basis of MRP-based assessment. This was also confirmed by the jurisdictional Commissioner of Central Excise, Nagpur vide their letter dated 07.01.2014 submitting therewith the verification report dated 30.12.2013 received from the Assistant Commissioner of Central Excise Division-II, Nagpur that the appellant is discharging the Central Excise duty on MRP basis.
In finally answering the issues on which reference was made to Larger Bench, on account of difference of opinion between two Co-ordinate Benches of the Tribunal and based on the direction given by the Hon’ble Supreme Court, it was held 'The amendment made in the Third Schedule to the Central Excise Tariff Act by Finance Act, 2011 w.e.f. 29.04.2010 by adding serial no. 100A to the Third Schedule is prospective in nature.'
Thus, on the basis of the decision given by the Larger Bench, it is concluded that the adjudged demands for the period October, 2006 to 28.04.2010 is not sustainable.
Conclusion - i) The term "automobile" should be interpreted based on common parlance and dictionary definitions rather than definitions from other statutes. ii) The activities undertaken by the appellant did not amount to "manufacture" for the relevant period, and the classification of the parts as "automobiles" was not applicable. Therefore, the excise duty demands were not legally sustainable.
Appeal allowed.
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2025 (3) TMI 1056
Acquisition of land for Public Purpose - Valid agreement or not - Whether the Board, for whose benefit the land was acquired, could have achieved the equivalent of such withdrawal by entering into an agreement with Bhagwan Devi for returning part of the acquired land? - whether the Board could exercise such power when there was no document of conveyance in its favour in respect of this land? - HELD THAT:- he statutory scheme of the laws applicable to the Board at different points of time, set out speaks to the contrary as it manifests that there must be a document of conveyance for the Board to acquire and hold such land. Admittedly, no such document was ever issued by the Government actually transferring the subject land to the Board, whereby it could claim absolute rights over it.
When the State uses its sovereign power of eminent domain and acquires land for a public purpose, as in the case on hand, i.e., for establishment of a grain market under the control of a statutory Board, such an exercise cannot be set at naught by the beneficiary of such acquisition, viz., the statutory Board, by entering into a private agreement shortly after the acquisition so as to reverse the usage of the power of eminent domain by the State. Validating this dubious enterprise by a statutory beneficiary of a compulsory acquisition would be nothing short of permitting a fraud on the exercise of such sovereign power by the State. Viewed thus, the agreement dated 30.09.1988 was clearly in contravention of the fundamental policy of Indian law and the Arbitral Award dated 10.07.2007, upholding the said agreement, was equally so.
Further, the fact that the preparation of the agreement dated 30.09.1988, by purchase of stamp papers for the same and the drafting thereof, took place even before the matter was considered by the Board in the meeting held on 29.09.1988 clearly revealed that there was something suspect about the transaction. Given the further fact that the only objective of the said agreement was to thwart the compulsory acquisition of the subject land by returning a portion thereof to Bhagwan Devi, the agreement was patently opposed to all tenets of law.
Conclusion - There are no hesitation in holding that the Courts exercising jurisdiction under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, erred grievously in not setting aside the Arbitral Award dated 10.07.2007 that had upheld the agreement dated 30.09.1988.
Appeal allowed.
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2025 (3) TMI 1055
Time limit for taking action by the Chief Metropolitan Magistrate or the District Magistrate under Section 14 of the Act is mandatory or not - Chief Metropolitan Magistrate or the District Magistrate can proceed to dispose of the application under Section 14 of the Act after expiry of the statutory time period - HELD THAT:- The District Magistrate / Chief Metropolitan Magistrate does not become functus officio if steps under Section 14 of the Act cannot be conclusively taken within the stipulated time period of thirty days or the extended time period of sixty days. The aforesaid authorities will still have jurisdiction to take steps under Section 14 and they do not become functus officio as pleaded by the borrower.
The primary object of the Act being recovery of debts owing to banks and financial institutions in a timely manner, a time limit was inserted in the Act by way of an amendment with effect from 1st September, 2016. The secured creditor will be left remediless if the District Magistrate or the Chief Metropolitan Magistrate, for any reason whatsoever, fails to act within the aforesaid time period. The secured creditor will be required to restart the process under Section 14 all over again which, in turn, will lead to further delay in recovery of the loan amount.
There is no reason as to why a secured creditor will be made to suffer financially due to inaction or non-action or delayed action on the part of the statutory authorities. The very purpose and object of the Act will be frustrated if the recovery process fails. The same will aid in unjust enrichment of the borrower and financial loss to the secured creditor.
The Act prescribes a remedy to the secured creditor to recover the unpaid loan amount by taking possession of the secured asset. If the secured creditor is not able to take possession of the mortgaged asset, then the lender will not be in a position to recover the dues. Merely holding the documents of the mortgaged asset, will not serve the purpose. It is only when the mortgaged property is sold, that the lender will get an opportunity to recover the dues unpaid by the borrower - There cannot be two opinions that the Section 14 authorities ought to have taken steps within the stipulated time period, but in the same breath it has to be held that, failure to take steps within the prescribed timeline, cannot be said to be a fatal one. The right of the secured creditor will be severely impacted if any other interpretation is given to the said provision. A borrower is liable to repay the loan taken from the financial institution and he does not have any right to object to any step taken by the lender to recover its dues.
To uphold the sanctity and object of the Act, the writ petition is liable to be allowed and is, accordingly, allowed. The District Magistrate is directed to dispose of the application of the bank made under Section 14 of the Act in accordance with law, at the earliest, but positively within four weeks from the date of communication of this order.
Conclusion - i) The time limit under Section 14 of the SARFAESI Act is directory, not mandatory. Failure to act within the prescribed period does not render the District Magistrate functus officio. ii) The primary objective of the SARFAESI Act is the timely recovery of debts, and this objective should guide the interpretation of procedural timelines. iii) The secured creditor should not suffer due to the inaction of statutory authorities, and the recovery process should not be unduly delayed.
Petition allowed.
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2025 (3) TMI 1054
Debts Recovery Appellate Tribunal (DRAT) was justified in remanding the matter to the DRT for fresh consideration of jurisdiction and other issues or not - claim made by HDFC Bank constitutes a "debt" under Section 2(g) of the Recovery of Debts and Bankruptcy Act, 1993 - HELD THAT:- The issue whether the questions like whether the issue of jurisdiction stood concluded either by earlier orders of DRAT or by the order of Gujarata High Court in an appeal against the order disposed of on 28 February 2014, were legal issues that the DRAT was duty bound to address and decide upon. Similarly, even the issue whether HDFC’s claim constituted a “debt” under Section 2(g) of the said Act, was a legal issue squarely raised before the DRAT and which, the DRAT should have itself decided. The DRAT also had sufficient factual material before it to decide the issue of entitlement of HDFC to claim against Ashima and BBK.
The DRAT was not at all justified in simply remanding the matter to DRT for deciding the issue of jurisdiction and all other issues in the original application “afresh”. The DRAT, without discharging its of an first appellate authority, has simply chosen to remand the matter to DRT without recording any cogent reasons for adopting this easy course of action.
This was admittedly not a case where the DRT had decided on a preliminary point without recording findings on other issues. In such a case if the appellate court reverses the decree on a preliminary point, the appellate court may remand the matter to the trial court to decide other issues and determine the suit. This is what is provided under Order 41 Rule 23 of the Code of Civil Procedure. Under Order 41 Rule 23-A the appellate court can order a remand even in other cases not covered by Order 41 Rule 23. However, by a catena of decisions, the Hon’ble Supreme Court has clarified that the remand cannot be ordered lightly. In a case where the provisions of Order 41 Rule 23 do not apply, the remand can be ordered if considered necessary by the Appellate Court in the interest of justice. The Hon’ble Supreme Court has held that as far as possible the Appeal Court should dispose of the appeal finally unless remand is imperative.
In Ashwinkumar K Patel [1999 (3) TMI 654 - SUPREME COURT], the Hon’ble Supreme Court held that the High Court should not ordinarily remand a case under Order 41 Rule 23 CPC to the lower court merely because it considered that the reasoning of the lower court in some respects was wrong. Such remand orders lead to unnecessary delays and cause prejudice to the parties to the case. When the material was available before the High Court, it should have itself decided the appeal one way or the other. It could have considered the various aspects of the case mentioned in the order of the trial court and considered whether the order of the trial court ought to be confirmed reversed or modified.
The DRAT also failed to appreciate that the original application was filed by HDFC in 2005. The DRT rejected the Respondents’ objection to maintainability on 26 October 2005. The Respondents’s appeals instituted in 2006 and 2007 were disposed of only on 11 July 2014. The DRT allowed HDFC’s original application on 30 June 2017. The impugned common order has been made on 26 April 2024. Thus, the matter is lingering for last almost 20 years. Still, the DRAT has remanded the matter to DRT without recording any cogent reasons to justify such remand.
Conclusion - i) An order of remand prolongs and delays the litigation and hence, should not be passed unless the appellate court finds that a re-trial is required, or the evidence on record is not sufficient to dispose of the matter. ii) The DRAT must now decide the appeals in accordance with law, without remanding them back to the DRT, and all parties' contentions remain open for consideration.
Petition disposed off.
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2025 (3) TMI 1053
Principles of natural justice - rule of audi alteram partem - whether the principle of audi alteram partem which has been read to have not been excluded by the Hon’ble Supreme Court in Rajesh Agarwal [2023 (3) TMI 1205 - SUPREME COURT] in respect of the proceedings drawn under the RBI Directions would mean providing right of personal hearing as well or it would only mean permitting the borrower to file reply to the show cause notice and making representation in writing without any personal hearing thereupon? - HELD THAT:- The nature of procedure to be adopted under the RBI Directions and the consequences of passing final order under the said Directions classifying account of a borrower as fraud, as also the extent of application of principle of audi alteram partem in such proceedings have been discussed at length by the Hon’ble Supreme Court in Rajesh Agarwal.
Underlying the fact that classification of account of a borrower as fraud results in civil consequences against the borrower, it has thus, been concluded in Rajesh Agarwal, that application of principle of audi alteram partem cannot be excluded under the RBI Directions on fraud and that it is reasonably practicable for lender banks to provide for an opportunity of hearing to the borrowers before classifying their accounts as fraud.
The impugned direction by the learned Single Judge, which is under challenge herein, does not warrant any interference in this Letters Patent Appeal.
Conclusion - The rule of audi alteram partem, including the provision of a personal hearing, applies to proceedings under the RBI Directions on fraud classification due to their civil consequences.
The Letters Patent Appeal is hereby dismissed.
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2025 (3) TMI 1052
Demands for income tax that were raised after the date of approval of the Resolution Plan - binding nature of an approved Resolution Plan on statutory dues - HELD THAT:- In view of the declaration of law made by this Court, all the dues including the statutory dues owed to the Central Government, if not a part of the Resolution Plan, shall stand extinguished and no proceedings could be continued in respect of such dues for the period prior to the date on which the adjudicating authority grants its approval u/s 31 of the IB Code.
In this case, the income tax dues of the CD for the assessment years 2012-13 and 2013-14 were not part of the approved Resolution Plan. Therefore, in view of sub-section (1) of Section 31, as interpreted by this Court in the above decision, the dues of the first respondent owed by the CD for the assessment years 2012-13 and 2013-14 stand extinguished.
In view of the above discussion, the Resolution Plan approved on 21st May 2019 is binding on the first respondent. Therefore, the subsequent demand raised by the first respondent for the assessment years 2012-13 and 2013-14 is invalid.
Once the Resolution Plan is approved by the NCLT, no belated claim can be included therein that was not made earlier. If such demands are taken into consideration, the appellants will not be in a position to recommence the business of the CD on a clean slate.
The additional demands made by the first respondent in respect of the assessment years 2012-13 and 2013-14 will operate as roadblocks in implementing the approved Resolution Plan, and appellants will not be able to restart the operations of the CD on a clean slate.
We, therefore, hold that the demands raised by the first respondent against the CD in respect of assessment years 2012-13 and 2013-14 are invalid and cannot be enforced.
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2025 (3) TMI 1051
We are not inclined to entertain this writ petition under Article 32 of the Constitution of India and leave it open to the petitioners to approach the jurisdictional High Court by way of a writ petition under Article 226 of the Constitution of India. However, we make no comment on the merits, either way, of the assertions made by the petitioners.
Petitioners, states that they would be filing a writ petition under Article 226 of the Constitution of India within one week. The respondents are restrained from taking any coercive action against the petitioners for a period of one week.
Recording the aforesaid, the writ petition is disposed of along with pending application(s), if any.
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2025 (3) TMI 1050
Addition u/s 68 - loans taken from friends and relatives - HELD THAT:- On perusal of the returns of income filed by the brother of the assessee, in our view, the creditworthiness of Assessee’s brother stands duly established. Assessee’s brother, also filed confirmation before the AO, giving details of his business, PAN number and Income Tax Return filing details. Accordingly, in our view in the case of Shri Piyush B. Rajput, the assessee has been able to established the identity and creditworthiness of the said party.
Assessee has been able to duly establish the source of the loan amount taken from the parties and has also established their creditworthiness. Therefore, in our considered view, this is a fit case where no addition is called for u/s 69A. Accordingly, addition is hereby directed to be deleted.
Addition u/s 68 - cash deposits unexplained - HELD THAT:- Assessee has not filed certain details like return of income filed by the assessee before the relevant Tax Authorities in Angola declaring income from such incentives. The assessee did not file details of passport before the AO/ CIT(A) for the impugned year under consideration and the assessee has also not furnished copy of bank statement before the Tax Authorities, for their perusal. However, we also note that the assessee had furnished name and address of the concerned person who had exchanged the USD received by the assessee into INR, however, despite this is no independent enquiry was made by the AO to verify the genuineness of such party.
Accordingly, as assessee had furnished employment letter from his employer based out of Angola, letter of confirmation that the assessee had received a sum of Rs. USD 20,190 from his employer and also the details of the person who had exchanged the USD into INR, we are of the considered view that in the interest of justice, the matter may be restored to the file of AO for fresh appreciation of evidence placed on record by the assessee - Ground allowed for statistical purposes.
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2025 (3) TMI 1049
Addition towards profit from sale of immovable property - HELD THAT:- Sum has already been offered to tax, sustaining of the impugned addition in the hands of assessee will only tantamount to double addition and that too when the alleged sum has not been received by the assessee in his bank account and complete details have been filed before us to prove that the alleged sum has been offered to tax by different assessee’s in their income-tax returns at different point of time when they sold the property to other person. We thus fail to find any infirmity in the finding of the CIT(A) deleting the impugned addition. Therefore, all the grounds of appeal raised by the Revenue are dismissed.
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2025 (3) TMI 1048
Special audit u/sec.142(2A) - extended time limit for completion of the assessment - HELD THAT:- AO has made an attempt to extend the time limit for passing the assessment order by a reference to special auditor u/sec.142(2A) whereby, the AO gets extended time limit for completion of the assessment. We are, therefore, of the considered view that, reference to special audit u/sec.142(2A) without satisfying the conditions provided therein, is arbitrary, illegal and void ab initio. Therefore, in our considered view, once the reference to special audit is illegal and void ab initio, then, the Assessing Officer will not get extended time limit for completion of assessment as per sec.153A) of the Act and consequently, the final assessment orders passed by the AO for the assessment years 2014-2015 and 2015-2016 are barred by limitation and thus, we quash the assessment orders passed by the AO for assessment years 2014-2015 and 2015-2016.
Addition u/sec.69 towards payment made as unexplained - HELD THAT:- On perusal of cash flow statement filed by the assessee, AO has recorded a categorical finding that there is time gap of more than 4 years when compared to advance received in the year 2012 and payment made in the year 2016. Even before us, the assessee could not explain the source, except reiterating the very same arguments made before the AO and the CIT(A).
Therefore, we are of the considered view, that assessee could not establish the source of payment to Shri Shoukat Ali from known source of income. CIT(A) after considering the relevant material on record, sustained the addition made by the AO. Thus, we uphold the findings of the learned CIT(A) on this issue and reject the ground taken by the assessee.
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2025 (3) TMI 1047
Addition for suppression of receipts - HELD THAT:- As reason to doubt the version of the assessee that the amounts were carried to the balance sheet as sundry debtors, pending measurements and acknowledgement of the amounts due.
We further note that the Hon'ble Courts have held that where rates of taxes are same, the assessee does not derive any benefit by seeking to offer its receipts to tax in a later year rather than in an immediately preceding year and the Revenue also does not gain any benefit by taxing it earlier than when it is required to be taxed. We also observe that the assessee has disclosed certain amounts as excess on account of enhancement of work. No justification for any addition to be made on account of suppression of receipts without examination of whether the amounts had actually accrued and were unaccounted for.
Estimation of income after rejection of the books of account - decision of the CIT(A) to estimate profit @ 5% of net receipts - HELD THAT:- AO has pointed out several discrepancies in the books of the assessee which would make it evident that the books of the assessee were not complete and correct in all respects. Therefore, his decision to reject the books u/s 145(3) of the Act is upheld.
Keeping in mind this fact and the nature of inconsistencies observed in the books, we believe that the ends of justice would be served if the net profit declared @ 2.87% is increased to 3.5% of contractual receipts (excluding sales, on which there is no controversy). Accordingly, we order that the net profit of the assessee be assessed @3.5% on contractual receipts of Rs. 4, 79, 52, 517/-. For the balance receipts from sale, the declared profits of the assessee can be accepted.
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2025 (3) TMI 1046
Denial of Foreign Tax credit claimed u/s 90/90A - directory v/s mandatory obligation - HELD THAT:- The claim of FTC is allowable to the assessee on the facts of the case as Form No. 67 was filed along with the return of income and the filing of the Form is held to be directory and not mandatory in nature and the provisions of DTAA override the provisions of the Income Tax Act, 1961.
Since the provision of DTAA override the provision of Section 90 of the Act as they are more beneficial to the assessee, in view of judicial pronouncements in this regard and since Rule 128(a) does not preclude the assessee from claiming credit for FTC in case of delay in filing the required Form No. 67 as the credit for FTC is a vested right of the assessee and since Form No. 67 was filed along with the return of income and was available at the time of processing the return of income u/s 143(1)(a) of the Act as contended by the assessee, therefore, there was no justification for not allowing the credit for FTC. Assessee appeal allowed.
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2025 (3) TMI 1045
Addition u/s 68 - penny stock transaction - information emanating from the search action conducted by the Investigation Wing - assessee argued and stated that the assessee has not claimed any short term or long term capital gain related to sale of these scrips - HELD THAT:- In the impugned assessment order AO discussed various analysis made by the investigating wing of Kolkata and SEBI. In none of the statements or reports of Investigation Wing or orders of SEBI the name of the assessee was mentioned for manipulation.
CIT(A) acknowledged the documents filed by the assessee in both the stage which are demat account, contract notes, ledger and details of sales and purchases. None of the documents are duly rejected by the Ld.AO during the assessment proceedings and the veracity of the documents are never been challenged.
Assessee is trading share regularly with huge volume and may be the assessee has dealt with suspicious scrips, merely on the basis of movement of share price and there is nothing on record to prove that the assessee has in no way involved in price rigging or in any irregularities. Decided against revenue.
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