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Showing 141 to 160 of 1564 Records
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2024 (8) TMI 1424
Income taxable in India or not - addition towards reimbursement of cost for providing IT/Support services - addition of fees for included services (FIS) under Article 12 of the India- USA - whether amount received by the Appellant is a cost-to-cost reimbursement and there is no income clement embedded in it? - HELD THAT:- We are of considered view the condition of make available was not satisfied for services when provided by assessee did not enabled the AEs to apply the technology independently, on conclusion of the yearly contract.
As with regard to the observations of tax authorities below treating the services rendered by Assessee as FIS on the basis that the Assessee was providing training to the personnel of Invesco Group and thus the 'make available condition stands satisfied in the present case the Ld. Counsel submitted that the Assessee only supports and administers IT training and same does not lead to transmission of specialized knowledge or skill.
In regard to IT administration services the assessee was providing services where the IT training and facilities training, were of desktop application tools such as Microsoft Word, excel and power point etc to staff of the group.
There is nothing to show in the assessment order that the AO had made any enquiry on his own or relied any provisions of the Master Inter-Company Services Agreement (in short “MSA”) to show that the training as imparted was of such nature that it “made available”, the technology to the associate enterprises so that on conclusion of the training the employees of AE’s will be unable to use technology on their own. Rather we observed that very common softwares used in offices are mentioned for which the training was provided. Then AO has merely relied the assessee’s own submissions to conclude that as the assessee is training personnel of the group. The provisions of make available would become applicable. Thus we are inclined to sustain the contention of the Ld. Counsel.
AO has not made any enquiry to rebut the claim of the assessee that the cost incurred by the assessee company for providing IT support services is allocated to its AE’s without any element of profit. In this context as we consider the copy of a MSA dated 20.05.2019 as made available alongwith the copies of debit note made available on pages-150 to 153 of the paper book. We find that it was agreed that remuneration for the services has been calculated with the objective of determining an arms length price for the services provided by using methodology as set forth under ‘service fee clause”.
In the light of aforesaid were inclined to hold that the tax authorities below have fallen in error in not appreciating that the reimbursement was on cost to cost basis. Accordingly we sustain this argument of the Ld. Counsel also. Assessee appeal allowed.
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2024 (8) TMI 1423
Revision u/s 263 - during survey proceedings excess stock was found which is surrendered by the assessee - HELD THAT:- AO taking cognizance of the finding of the survey team, document found during course of survey, statement of the assessee & the return of income and after examination thereof and due application of mind has accepted that the income surrendered is chargeable to tax as business income of the year under consideration. Thus the view taken by the AO is clearly a plausible view considering the facts & circumstances of the present case and nothing has been pointed out as to how the view so taken is unsustainable in the eyes of law.
As we are of the considered view that the order so passed by the AO cannot be held as erroneous due to lack of inquiry or for that matter requisite inquiry on the part of the AO more particularly when PCIT(Central) has not recorded any finding as to how considering the decision of Rajasthan High Court and other ITAT decisions placed before him, the order passed by AO is erroneous.
Thus, merely stating that there was survey operation at the business premises of the assessee where excess stock is found on which provisions of section 115BBE are attracted, the same cannot be a basis for exercise of jurisdiction u/s 263 of the Act. In view of the same, order so passed by the Ld. PCIT(Central) u/s 263 is set aside by cancelling the order passed by him.
Appeal of the assessee is allowed.
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2024 (8) TMI 1422
Disallowance of depreciation relating to assets held in the name of directors - whether the assessee can claim depreciation on the assets when it did not hold a formal title of ownership but was in possession and used for business purposes? - HELD THAT:- Hon’ble Supreme Court in case of Mysore Mineral Ltd [1999 (9) TMI 1 - SUPREME COURT] noted the legislative intent behind Section 32, emphasizing the words “owned by the assessee.” The ownership is a relative term that can include not just full legal ownership but also various shades of possession and control over the property. The Court recognized the concept of "beneficial ownership" where the person in control and possession of the property could be considered as the owner for tax purposes. The Hon’ble Supreme Court decided in favour of assessee holding that for the purpose of claiming depreciation under Section 32, the term “owner” should be interpreted in a wider sense to include not only legal ownership but also cases where the assessee has acquired dominion over the asset and is in possession and control of the same.
In the present case the assessee is using these assets for the purposes of business of the assessee - AO has not denied the same - AO has allowed all expenses relating to operating of these assets therefore, we allow the claim of depreciation of the assessee. Thus, this ground of the assessee is allowed.
Disallowance of expenditure being 20% of total expenses - AO observed that during the assessment proceedings, the assessee had claimed various office and other expenses, which showed a significant increase compared to the previous year - AO’s disallowance was primarily based on the assessee’s failure to furnish complete documentary evidence for the claimed expenses - HELD THAT:- Tribunal concludes that the disallowance made by the AO was based on assumptions and not on concrete evidence. The assessee’s increased expenses are justified by the corresponding increase in turnover, and the consistency in net profit margin further supports the genuineness of the expenses. Therefore, we direct the deletion of the disallowance of 20% of the total expenditure made by the AO. Therefore, this ground of assessee’s appeal is allowed.
Protective addition - unsecured loan u/s 68 - HELD THAT:- We noted that the assessee had furnished substantial evidence, including bank statements, ITR copies, and confirmations from TIPL. These documents prima facie established the identity, creditworthiness, and genuineness of the share application money received. We also noted that that the AO's primary concern was TIPL not being found at the given address. However, it was emphasized that the AO did not conduct further investigations, such as verifying the bank accounts or pursuing information from the Registrar of Companies.
There was no substantive addition in the hands of TIPL. Protective assessments are primarily made to safeguard the revenue in situations of uncertainty. The protective assessment is inherently linked to the substantive assessment, and without a substantive addition, the protective assessment should also be nullified.
As noted the decision of Pravinkumar Valjibhai Pujara HUF [2021 (7) TMI 1005 - ITAT AHMEDABAD] wherein it was decided that substantive assessment has to precede protective assessment. AO’s action to make protective assessment in the hands of assessee because TIPL has failed in producing it books of accounts at the time of their own assessment is not justifiable.
As assessee has discharged the initial burden of proof by furnishing adequate evidence. The AO's failure to provide further substantial evidence or conduct thorough investigations meant that the protective addition under section 68 was not justified - this ground of assessee’s appeal is allowed.
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2024 (8) TMI 1421
Validity of proceedings u/s. 153C - assessment period beyond the stipulated period/Period of limitation - additions towards share premium u/s. 68 - As argued assessment year falls beyond stipulated six assessment years and four relevant assessment years, considering the satisfaction note recorded by the Assessing Officer of the searched person u/s. 132 and AO of the other persons as required u/s. 153C
HELD THAT:- As following the decision of Hon’ble Supreme Court in the case of CIT vs Jasjit Singh [2023 (10) TMI 572 - SUPREME COURT] we are of the considered view that for the purpose of proviso to section 153C(1) of the Act, in case of such other person, the reference to the date of initiation of search u/s 132 of the Act in the second proviso to section 153A(1) of the Act, shall be construed as reference to the date of receiving the books of accounts or other documents by the AO having jurisdiction over such other person and said date is considered in the present case i.e. on 31.12.2021.
The assessment year before us is beyond stipulated six assessment years and four relevant assessment years and thus, notice issued by the AO u/s. 153C of the Act, dated 31.12.2021 and consequent assessment order passed u/s. 143(3) r.w.s. 153 of the Act, dated 31.03.2022 is barred by limitation and liable to be quashed. Thus, we quash assessment order passed by the AO u/s. 143(3) r.w.s. 153C of the Act, dated 31.03.2022. Decided in favour of assessee.
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2024 (8) TMI 1420
Challenge to impugned order - interim nature - HELD THAT:- As the order impugned is interim in nature, it is not required to interfere with the order passed by the High Court. However, the High Court is requested to dispose of the D.B. Civil Writ Petition No. 315 of 2024 as expeditiously as possible.
In the meanwhile, the petitioner may file a representation before the Jurisdictional Officer along with all the necessary material. Upon filing of the representation, the Jurisdictional Officer should consider the representation with Circular dated 07.06.2023 and dispose of the same within a period of three weeks.
SLP dismissed.
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2024 (8) TMI 1419
Release of consignment of the writ petitioner comprising inter alia, ‘frames’ and ‘slides’ of handguns, which had been seized by the respondents - Whether the import license granted to Syndicate for ‘frames’ and ‘slides’ would include other parts that are pre-fitted into the said ‘frames’ and ‘slides’ under the provisions of the Act and the 2016 Rules?
HELD THAT:- Form X was issued when there was already a lis pending before the Writ Court wherein a specific issue was raised whether a separate import license is required for import of embedded sub-components. Furthermore, the Delhi Police had inspected the import consignments of Syndicate as they had already arrived in India and the appellants were aware that the ‘frames’ and ‘slides’ were pre-fitted with sub-components. Yet, while issuing Form X, the appellants did not object to the fact that the imported ‘frames’ and ‘slides’ were pre-fitted with other parts such as ‘firing pin’, ‘extractor’ and ‘hammer’ which, as per the appellants, required a separate license. Nor did the appellants insist on Syndicate obtaining a separate license for these pre-fitted parts.
The objections raised by the appellants were only in respect of some of the parts that were pre-fitted in the ‘frames’ and ‘slides’ imported by Syndicate, i.e., ‘hammer’, ‘extractor’ and ‘firing pin’. Concededly, the appellants did not raise any objection in respect of other sub-components such as ‘catch magazine’, ‘safety lock’, ‘safety lock support pin’, ‘trigger’, ‘trigger action mechanism part’, ‘spring of firing pin’ and ‘lock of firing pin’, which were pre-fitted inside the ‘frames’ and ‘slides’ and also mentioned in the communication dated 21st June, 2022 sent by the Delhi Police to the DGFT.
The issuance of the aforesaid Form X would also nullify the objection taken by the appellants that Syndicate, as an importer had to compulsorily apply for an import license with the MHA in terms of Rule 88 (2) - the power to issue licenses for import and export of arms and ammunitions under the Act were delegated by the MHA to the DGFT via notification dated 1st November, 2018. This would show that there was no mandatory requirement for an importer to separately apply to DGFT for an import license under Rule 88 (2) of the Rules, once an import license has already been granted by the DGFT, as the issuing authority was the same.
In view of the issuance of Form X to Syndicate, the requirement of permission under Rule 57 (4) of the 2016 Rules would also not survive. The Form X license granted to Syndicate was unconditional and unqualified and did not refer to any permission that may be required under Rule 57 (4) of the 2016 Rules. Once Form X has been issued by the competent authority, it would amount to a deemed clearance of the competent authority under Rule 57 (4) of the 2016 Rules.
Both the objections taken by the respondent with regard to requirement of a Form X as well as permission under Rule 57 (4) of the 2016 Rules were taken as an afterthought. The ex post facto issuance of the aforesaid Form X amounts to a clear admission on the part of the appellants that as long as an importer held an import license for ‘frames’ and ‘slides’, the importer was not required to apply for a separate license under Rule 88 (2), nor did it require a permission under Rule 57 (4) of the 2016 Rules.
The limitation imposed on Syndicate via order dated 6th February, 2023, restraining them from disposing of the goods imported by them via Bill of Entry No.9037350 dated 9th June 2022 and Bill of Entry No.9038081 of even date, shall stand dissolved.
Appeal disposed off.
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2024 (8) TMI 1418
Rejection of discharge application - non-forwarding of bills of user departments for scrutiny - delay in uploading soft copies of the bills - incorrect claim of expenditure towards conveyance of custom officials - HELD THAT:- The material sought to be produced by CBI clearly falls short of the accusations that are sought to be pressed. From the material available on record and in the light of discharge of the SCI officials, it cannot be stated that any grave suspicion can be raised against Petitioners.
As held by the Apex Court in Union of India Versus. Prafulla Kumar Samal and anr [1978 (11) TMI 151 - SUPREME COURT] if the judge is satisfied that only suspicion arises on prima-facie examination of evidence and not grave suspicion, the accused is entitled to discharge.
In absence of prosecution of public servants, it otherwise becomes questionable as to whether CBI can be permitted to carry forward prosecution against Petitioners in the light of ratio of the judgment of the Delhi High Court in Kartongen Kemi Och Farvaltning AB and Ors. Versus. State through CBI [2004 (2) TMI 745 - DELHI HIGH COURT]., holding that once charge of conspiracy against the main public servant is dropped, then the charge of abatement of conspiracy can neither be framed nor can be subjected to trial.
Thus, no case of grave suspicion is made out on the basis of material available on record. Continuation of proceedings against Petitioners would therefore be a mere empty formality, with no chance of prosecution securing conviction. Continuing of prosecution in such circumstances would be abuse of process of law.
The order dated 23 November 2017 passed by the learned Special Judge is set aside and Petitioners are discharged - petition allowed.
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2024 (8) TMI 1417
Request for provisional release of the goods for ‘back to town’ - It is Petitioner’s case that there is no point in keeping the goods in the port anymore because the goods are not going to be exported and unnecessarily detention charges, container rental charges etc. are being incurred - HELD THAT:- Respondent No.3 has annexed documents relating to various other cases where Petitioner has been imposed with penalty which, according to Dr. Kantawala, are under challenge in this Court. In the affidavit-in-reply, it appears that this past history of Petitioner is being narrated to justify insistence of a security by way of bank guarantee / cash security. According to Respondent No.3 since investigation is in progress, the adjudicating authority has allowed provisional release of the goods on execution of bond equivalent to total FOB value of Rs.4,57,67,604/- and furnishing a security cover in form of bank guarantee / cash security of Rs.68,65,140.60/- being 15% of the declared FOB value.
Reliance placed upon paragraph 4 of the Board Circular No.01 of 2011 dated 4th January 2011 - the Circular says endeavour should be to quickly undertake the necessary action and take appropriate legal action there is nothing to indicate this has been achieved.
There is no explanation as to how a Board Circular can be issued in variance with the provisions of Section 110A of the Act - Section 110A only provides for releasing goods to the owner on taking a bond with such security and conditions as the adjudicating authority may require where goods are seized under Section 110A. In this case admittedly there is no seizure of any goods.
The impugned communication dated 18th June 2024 set aside - Respondent No.3 shall release the goods ‘back to town’ within two weeks upon Petitioner submitting (i) a bond in the format as prescribed by the department, (ii) solvency certificate from its bank and (iii) an undertaking from Petitioner’s Director Mr. Yadavendra Kumar Roy to remain present whenever summoned subject to atleast 5 days advance notice being given - petition disposed off.
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2024 (8) TMI 1416
Time lines for filing SCN - failure to follow the time frame in the present proceedings - Mandatory requirement of issuing the show cause notice within 90 days from the date of receipt of offence report not getting fulfilled - HELD THAT:- Regulation 20(7) of the CBLR 2013 is paramateria with the Regulation 17(7) of the present Customs Broker License Regulation, 2018 which is applicable in the present case before - As per the ratio laid down by the Hon’ble High Court in M/S. A.B. AGENCIES VERSUS CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL AND COMMISSIONER OF CUSTOMS [2015 (8) TMI 143 - KERALA HIGH COURT], it is that the time limits set are not mandatory in nature but only directory in nature.
Therefore, the view of the appellant cannot be subscribed that the entire proceeding would get vitiated, since the time limit framework has not been followed by Revenue. However, even if these time limits are taken as directory, still we find that the Department has taken unduly high time to issue the show cause notice and to finalise the Order-in-Original even after the Enquiry Report was received from the Deputy Commissioner, Customs.
Coming to the facts of the case, admittedly, there are no reference to the present appellant in the show cause notices issued to two importers. As a matter of fact, these show cause notices should have brought in the role, if any, played by the present appellant in the alleged clandestine activities, which the Revenue has failed to do so. Thus, the only point on which the Department is relying upon is the alleged offence committed by the H-cardholder employee who is operating at Chennai, whereas the appellant is located at Hyderabad. The fact that the activity was carried out during the COVID period is also required to be considered, wherein the appellant had to operate with very minimum staff and had no direct control over the transactions being carried out by the employee at Chennai.
The revocation of CHA License set aside - the Authorities are directed to immediately restore the CHA License - Though no direct involvement of the appellant is brought out in the entire transaction, but still some part of negligence cannot be ruled out. Therefore, this would call for penalty. However, considering the fact that the appellant has been out of business for more than one year and has suffered loss on account of this, the penalty reduced to Rs. 5,000/-.
Appeal allowed in part.
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2024 (8) TMI 1415
Confiscation - levy of redemption fine and penalty - misdeclaration of imported goods - the entire consignment was not heavy melting scrap but consisted of iron rods - HELD THAT:- The examination report placed on record clearly establishes that the goods imported were partly Heavy Melting Scrap and partly Iron Rods, this fact is not disputed. Based on this examination report, the appellant requested for reassessment and as rightly argued by the Revenue they have not asked for mutilation instead sought reassessment. At the time of reassessment, the classification and valuation undertaken by the Revenue is also not disputed. Having cleared the goods on the basis of the examination report which is not disputed, now in the grounds of appeal cannot challenge the classification of the said goods. In fact, the appellant admits that inadvertently the supplier could have sent the rods along with the scrap.
Taking into account that in similar circumstances this Tribunal in the case of M/S. MINAR ALLOYS AND FORGINGS PVT. LTD. VERSUS THE COMMISSIONER OF CUSTOMS (APPEALS) , COCHIN. [2024 (8) TMI 1320 - CESTAT BANGALORE] had upheld the classification of Iron Rods and valuation based on contemporaneous prices. Hence, there are no reason not to accept the classification and valuation as decided by the Commissioner in the impugned order. However, the fact that all the documents that accompanied the consignment declared the goods only as Heavy Metal Scrap; and there is no dispute that the appellant had also placed the purchase order only for Heavy Metal Scrap; and only after examination part of the goods, it was found to be Iron Rods cannot be alleged as misdeclaration on the part of the appellant - the confiscation of goods under Section 111 (l) and (m) is set aside along with redemption fine and penalty under Section 112 (a) of the Customs Act, 1962.
The demand of duty is confired - the impugned order modified only to the extent of setting aside redemption fine and penalty - appeal disposed off.
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2024 (8) TMI 1414
Amendments made in the Articles of Association in Extra Ordinary General Meeting held on 30.09.2014 amending Article of Association, Article 59 and Article 60 - entrenched Articles as referred to in Section 5, sub-sections (3) and (4) of the Companies Act, 2013 or not - amendment of Articles 59 and deletion of Article 60 could be done by a special Resolution as passed in the AGM dated 03.05.2019 or for amendment of Article 59 and deletion of Article 60, requirement was that all Members of the Company to agree for amendment, i.e., all 12 Members as existing on the relevant date - error in approving the meeting held on 03.05.2019 - nominee under Section 113 of the Companies Act is bound to exercise his powers as per the decision of Board of the Company - reappointment of Deepak as Executive Chairman of the FCL.
Whether the amendments made in the Articles of Association in Extra Ordinary General Meeting held on 30.09.2014 amending Article of Association, Article 59 and Article 60 were to be treated to be entrenched Articles as referred to in Section 5, sub-sections (3) and (4) of the Companies Act, 2013? - HELD THAT:- There was no concept of entrenched articles in 1956 Act, as now has been brought by Section 5, sub-sections (3) and (4). An entrenchment provision in the Articles, which identifies special provisions, which can be altered only, if the conditions or procedure, which are much more restrictive than those applicable in the case of special resolution as is applicable for altering any provision of the Articles are met - The Resolution passed on 30.09.2014, cannot be said to be a Resolution, which was agreed to by all the Members of the Company. In the Meeting held on 30.09.2014, neither Prakash, nor Vijay the brother of Deepak were present. Thus, the Resolution dated 30.09.2014, cannot be said to be agreed to by all the Members of the Company. Hence, the statutory requirement to treat the Articles as entrenched Articles cannot be accepted. The statutory scheme of Section 5, sub-section (4) provides that amendment in the Articles providing for entrenchment shall only be made by an amendment in the Articles agreed to by all the Members of the Company in the case of a private Company. Thus, Articles 59 and 60, which were approved by the Company in the AGM dated 30.09.2014, cannot be held to be entrenched Articles. It goes without saying that entrenched Article within the meaning of Section 5, sub-section (3) can be amended only when its is agreed by all the Members of the Company.
The amendments made in Articles of Association in AGM held on 30.09.2014, amending Articles 59 and 60, cannot be treated to be entrenched Articles as referred to in Section 5, sub-sections (3) and (4) of the Companies Act, 2013.
Whether the amendment of Articles 59 and deletion of Article 60 could be done by a special Resolution as passed in the AGM dated 03.05.2019 or for amendment of Article 59 and deletion of Article 60, requirement was that all Members of the Company to agree for amendment, i.e., all 12 Members as existing on the relevant date? - Whether the Adjudicating Authority committed error in approving the meeting held on 03.05.2019 by the impugned order? - HELD THAT:- The amendment in Article 59 and deletion of Article 60 was made in exercise of power under Section 14 by Special Resolution. The Resolution dated 03.05.2019 was passed as a Special Resolution, which is apparent from the result of the Scrutinizer. Thus, alteration of Article 59 and deletion of Article 60 was fully permissible by Special Resolution and it did not require agreement of all the Members of the Company, Articles 59 and 60 being not entrenched Articles as held above. Thus, it cannot be held that Resolution passed by EOGM on 03.05.2019 was not in accord with the provisions of the Companies Act, 2013 and the Articles of Association.
The amendment of Article 59 and deletion of Article 60 could be done by Special Resolution as passed in EOGM dated 03.05.2019 and there was no requirement of agreement by all the Members of the Company, i.e., all twelve Members, as existing on the relevant date. (Pralhad Prakash Chhabria having died on 05.05.2016, reducing the Member numbers from 13 to 12) - The Adjudicating Authority did not commit any error in approving the EOGM held on 03.05.2019.
Whether nominee under Section 113 of the Companies Act is bound to exercise his powers as per the decision of Board of the Company? - HELD THAT:- Section 113 of the Companies Act is bound to exercise his power as per the decision of the Company or he having been appointed a representative of the Company is free to exercise his right, as per his discretion. Sub-section (2) of Section 113 throws a clear light on the statutory intendment. Sub-section (2) provides that a person authorised by resolution under sub-section (1) shall be entitled to exercise the same rights and powers, including the right to vote on behalf of the body corporate, which he represents as that body could exercise if it were an individual member. What is manner and exercise of a representative of the Corporation at the meeting of Companies is, as per the decision of the Body, which has authorized individual Member to cast his vote. Authorised representative is merely an Agent of the Company and is bound to act as per directions of the Board or Board of Directors.
A representative under Section 113 of the Companies Act, 2013 is bound to exercise his representation as per the decision of the Board of the Company. In event Board has not given any specific decision for exercise of power, the representative is free to exercise his representation as per his will.
Whether the result of the Annual General Meeting held on 29.09.2023 on Resolution No. 4 with regard to reappointment of Deepak as Executive Chairman of the FCL need to be interfered with in this Appeal? - HELD THAT:- The result of AGM held on 29.09.2023 on Resolution No.4 with regard to re-appointment of Mr. Deepak Chhabria as Executive Chairman of the FCL, need no interference in this Appeal.
The relief, if any, to which the Appellant is entitled to in this Appeal? - HELD THAT:- NCLT should proceed to decide the Company Petition No. 47 of 2016 finally. The pleadings by both the parties in the Company Petition having already been completed long ago, we are of the view that ends of justice will be served in observing that NCLT shall endeavour to dispose of Company Petition No. 47 of 2016 as early as possible, preferably within a period of six months from the date of copy of this order is produced.
The impugned order dated 31.12.2019 passed in MA No. 1449 of 2019 is not interfered with - The decision of Annual General Meeting held on 29.09.2023 on Resolution No. 4, which took place during the pendency of this Appeal is not interfered with - The NCLT is requested to finally decide the Company Petition No. 47 of 2016 expeditiously, preferably within a period of six months from the date of copy of this order is produced.
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2024 (8) TMI 1413
Lease hold right in the Tea Gardens - control to be taken by the Resolution Professional under Section 18(f) and Section 25 of the I&B Code - renewal of period of lease - non-payment of Salami as required under West Bengal Estate Acquisition Rules 1954 by the Corporate Debtor while executing the renewal of the lease deed - possession of all the Tea Estates.
Whether the Corporate Debtor has lease hold right in the Tea Gardens, which are assets of the Corporate Debtor which need to be taken control by the Resolution Professional under Section 18(f) and Section 25 of the I&B Code? - HELD THAT:- The Tea Gardens which have been leased out to the Corporate Debtor are Tea Garden which are owned by the State of West Bengal. The Corporate Debtor does not have any Ownership Right in the Tea Garden hence the main sub-Clause (f) of Section 18 does not cover the Tea Garden. However, the definition in Section 18 (f) is inclusive definition which is apparent in the expression “including” occurring in the end of sub-Section (f) and sub-Clause (iv) refers to Intangible Assets including Intellectual Property. The Leasehold Rights are Intangible Assets, which is now a settled proposition of law.
The present is the case where Tea Gardens are owned by State of West Bengal and the Corporate Debtor claimed possession by virtue of Contractual Arrangement i.e., Lease Arrangement. In the present case, thus whether by virtue of explanation to Section 18(1) of the IBC, Tea Gardens had to be excluded from the definition of Assets is a question to be answered.
The submission which has been advanced by the Respondent is that Leasehold Rights of the Corporate Debtor had come to an end by efflux of time on the date, when CIRP commenced, hence the provision of Section 18(1)(f) and Section 25 does not empower the RP to pray for possession and custody and control of the Assets.
Whether with regard to those Tea Gardens where period of lease has come to an end before commencement of the CIRP and application for renewal has been filed by the Corporate Debtor, the lease shall be deemed to be renewed since no decision has yet been taken by the State of West Bengal either accepting or rejecting the application? - HELD THAT:- Case of the Appellant is that Application for renewal was filed before the expiry of the term of the Lease. The Clause 16 of the Lease as extracted above clearly indicates that Lease shall be entitled to renewal for further period of 30 Years subject to the rules and terms and conditions of the Lease and such other terms and conditions as the State Government may from time to time consider it necessary to impose and include in such renewed lease or leases - the Clause itself contemplates that renewal is not automatic nor Clause 16 contains concept of extension of the Lease. Renewal has to be made by the State in such terms and conditions as State Government may impose while renewing the Lease.
The law is well settled that when original Lease Deed contemplates the renewal of the Lease, the renewal has to be in accordance with the terms of renewal as contemplated in the Lease in question. Although, renewal is contemplated for further period of 30 Years, but the said renewal is hedged by the rules and terms and conditions of the Lease and such other terms and conditions as the State Government may from time to time may impose.
Whether renewal of the lease deed of Kilcott Tea Estate w.e.f. 15.11.1995 till 23.08.2025 has to be treated to be valid renewal, similarly, renewal of lease deed of Garganda w.e.f. 08.11.1996 to 18.09.2026 has to be treated as valid renewal and renewal of lease deed of Bagrakote Tea Division-I dated 19.06.1998 has to be treated as a valid renewal? - Whether non-payment of Salami as required to be paid as per West Bengal Estate Acquisition Rules 1954 by the Corporate Debtor while execution of renewal of lease deed shall make the renewal void and inoperative? - HELD THAT:- At the time of renewal, it was open for the State to put terms and conditions and renewal could have been granted on such terms and conditions as the State Government may from time to time consider it necessary to impose. Admittedly, at the time of renewal, which was dated 15.11.1995, the Notification dated 01.06.1994 was already enforced, adding Clause 1-A and 1-B in the Form-1, requiring payment of Salami of Rs.15,000/- per hectare at the time of execution of lease. However, in the renewed Lease Deed, as extracted above dated 15.11.1995, it is clear that although expression Salami has been used in the Lease Deed, but no amount of Salami was mentioned and only rent was mentioned, which was @ Rs.13,180 per annum. It is further relevant to notice that renewed Lease Deed was executed on behalf of State by Additional District Magistrate & Additional Collector, Jalpaiguri - the execution of Lease by Additional District Magistrate and Additional Collector, Jalpaiguri was on behalf of the Governor, who was competent to execute the lease. Earlier, original leases were also executed by District Authority of similar designation.
Renewal of Lease Deed of Kilcott with effect from 15.11.1995 till 23.08.2025 and renewal of Lease Deed of Garganda, with effect from 08.11.1996 to 08.09.2026 and renewal of Lease Deed of Bagarcote from 19.06.1998 till 22.05.2028 are valid renewals and the Corporate Debtor shall have subsisting leasehold rights in the above Tea Gardens on the date of commencement of CIRP, i.e. 05.03.2020 - Non-payment of Salami as required to be paid as per West Bengal Estate Acquisition Rules, 1954 (as Amended) by the Corporate Debtor by execution of lease of renewal, does not make the renewal void and inoperative, whereas the renewal of Lease Deed also uses expression ‘Salami’, but it does not provide for payment of any Salami as condition of renewal of lease.
Whether order dated 28.05.2021 passed by the Adjudicating Authority in IA No.1256/KB/2020 rejecting the application with regard to four Tea Gardens - Dhumchipara, Garganda, Tulsipara and Hantapara deserve to be set aside? - HELD THAT:- The order of Adjudicating Authority dated 28.05.2021, although is liable to be affirmed with regard to rejection of Application, with regard to three Tea Gardens, namely – Dumchipara, Tulsipara and Hantapara, but the Application was not liable to be rejected with regard to Garganda Tea Garden, which lease was renewed by the State of West Bengal by executing a registered renewed Lease Deed dated 08.11.1996. Thus, the order dated 28.05.2201 deserve to be partly set aside, insofar as it related to Tea Garden Garganda. It is held that RP was entitled to take custody and possession of Tea Garden Garganda, whose lease having been renewed on 08.11.1996 and the Corporate Debtor has subsisting right in the Lease Deed till 08.09.2026.
Whether the Adjudicating Authority committed error in relying on order dated 28.05.2021 in IA No.1256/KB/2020 while deciding the subsequent applications filed by the Resolution Professional for taking possession of different Tea Estates? - HELD THAT:- While rejecting other Applications filed by the RP for taking possession of Tea Gardens, reliance has been made on order dated 28.05.2021 passed in IA No.1256/KB/2020. It is to be noted that the possession of all four Tea Gardens, which was subject matter of IA No.1256/KB/2020 was handed over to the Merico by the Corporate Debtor under Bipartite Agreement and hence, the possession of those four Tea Gardens were handed over prior to initiation of CIRP - mechanically relying on the order dated 28.05.2021 in IA No.1256/KB/2020 is not sustainable. While passing the subsequent orders, rejecting the IAs filed by the RP, the Adjudicating Authority was required to consider the Applications. In any view of the matter, we have already considered and held above that the leasehold rights of the Corporate Debtor, subsisting in three Tea Gardens namely – Garganda, Kilcott and Bagarcote. Hence, the Applications filed by the RP, insofar as above three Tea Gardens, deserve to be allowed.
Whether possession taken by the Sammelan and Marico subsequent to order dated 05.03.2020 is in violation of provisions of Section 14 of the I&B Code with respect to Tea Gardens except the four Tea Gardens which were subject matter of IA No.1256/KB/2020? - HELD THAT:- The Corporate Debtor has subsisting rights in three Tea Gardens, i.e., Garganda, Kilcott and Bagracote-I as noticed above. Although, possession of Garganda was taken prior to enforcement of moratorium, but possession of Kilcott and Bagaracote was taken respectively on 03.11.2021 and 01.07.2021 as noticed above. The Corporate Debtor has subsisting rights in the above leases of Bagaracote and Kilcott, which were renewed. Hence, after the enforcement of the moratorium on 05.03.2020, the possession of Tea Estates of the Kilcott and Bagaracote could not have been taken. It is true that the State was the owner of Tea Estates and due to suffering of labour, the Department of Labour, Govt. of West Bengal and Labour Commissioner held various meetings to mitigate the sufferings of the labourers, the possession of different gardens were handed over to Sammelan to the aforesaid two Tea Gardens, but moratorium having enforced, taking possession of aforesaid two Tea Gardens is in clear breach of Section 14 (1) (d).
With regard to other Tea Gardens whose leases have expired, State was owner of all the Tea Estates and it is a case of the Department that lease of Tea Gardens were not renewed and possession was taken. There being no subsisting right of the Corporate Debtor in the Tea Gardens, except the three Gardens, i.e. Garganda, Kilcott and Bagracote. We do not find any infirmity with regard to handing over possession to Marico and Sammelan for running other Tea Gardens after enforcement of moratorium. Thus, violation of moratorium under Section 14(1)(d) has to confine to two Tea Gardens where the Corporate Debtor has subsisting rights, i.e., Kilcott and Bagracote.
Whether Appellants are entitled to be handed over the possession of all the Tea Estates for which applications were filed? - HELD THAT:- It is already observed that the rejection of the Application, IA No.1256/KB/2020 is not sustainable with regard to Tea Estate of Garganda for which lease was renewed on 08.11.1996 as the Corporate Debtor had subsisting leasehold right in Garganda. Hence, the Application filed by RP, ought not to have been rejected for Tea Garden Garganda.
Similarly, coming to IA No.1111/KB/2021, which was filed for possession for Nagaisuree and Kilcott Tea Gardens. We have already held that lease for Kilcott was renewed with effect from 15.11.1995 till 23.08.2025. Hence, the Application, IA No.1111/KB/2021, ought not to have been rejected with regard to Tea Garden Kilcott and the RP was entitled to take possession and custody of Tea Garden Kilcott - Coming to the Application, IA No.665/KB/2021, which was filed for taking possession of Bagracote Tea Estate Div.I, II, III and IV. We have noticed above that with regard to Bagracote Div.I, lease was renewed with effect from 19.06.1998 for 30 years, hence, the Corporate Debtor/ has subsisting right. Thus, the Application, IA No.665/KB/2021, ought not to have been rejected with regard to Bagracote Div.I.
Relief, if any, to which Appellant may be entitled? - HELD THAT:- The leasehold rights of the Corporate Debtor subsist in three Tea Gardens, namely- Garganda, Kilcott and Bagracote, where the lease has been renewed and valid as follows: 1. Garganda valid upto 08.09.2026; 2. Kilcott valid upto 23.08.2025; and Bagarcote Div. I valid upto 22.05.2028.
The orders rejecting the IAs of RP insofar as the aforesaid three Tea Gardens are concerned are unsustainable and deserve to be set aside - appeals disposed off.
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2024 (8) TMI 1412
Seeking grant of regular bail - money laundering - Scheduled Offence - Admissibility of statements - Scope of Inquiry under Section 45 of PMLA -reasonable grounds for believing - foundational facts-under Section 24 PMLA - Admissibility of the Statement of the Appellant - when a person is in judicial custody/custody in another case investigated by the same Investigating Agency, whether the statements recorded (in this case the statements dated 03.08.2023, 04.08.2023, 11.08.2023) for a new case in which his arrest is not yet shown, and which are claimed to contain incriminating material against the maker, would be admissible under Section 50?
HELD THAT:- Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT] though held that the authorities under the PMLA are not police officers, did anticipate a scenario where in a given case, the protection of Section 25 of the Evidence Act may have to be made available to the accused. The Court observed that such situations will have to be examined on a case-to-case basis.
This Court in Vijay Madanlal Choudhary anticipated the myriad situations that may arise in the recording of the Section 50 statement and discussed the parameters for dealing with them. In Rajaram Jaiswal vs. State of Bihar [1963 (4) TMI 68 - SUPREME COURT], a judgment quoted in extenso in Vijay Madanlal Choudhary, this Court observed that the expression "police officer " in Section 25 of the Evidence Act is not confined to persons who are members of the regularly constituted police force.
In the facts of the present case, we hold that the statement of the appellant if to be considered as incriminating against the maker, will be hit by Section 25 of the Evidence Act since he has given the statement whilst in judicial custody, pursuant to another proceeding instituted by the same Investigating Agency. Taken as he was from the judicial custody to record the statement, it will be a travesty of justice to render the statement admissible against the appellant.
There are no hesitation in holding that when an accused is in custody under PMLA irrespective of the case for which he is under custody, any statement under Section 50 PMLA to the same Investigating Agency is inadmissible against the maker. The reason being that the person in custody pursuant to the proceeding investigated by the same Investigating Agency is not a person who can be considered as one operating with a free mind. It will be extremely unsafe to render such statements admissible against the maker, as such a course of action would be contrary to all canons of fair play and justice.
Since the words ‘procedure established by law’ occurring in Article 21 has to be a reasonable and valid procedure, the statement of the appellant under Section 50 cannot be read upon in ECIR No. 5 of 2023 even though the appellant was at that point in custody in ECIR No. 4 of 2022.
Misuse of Jail facilities by the Appellant - HELD THAT:- Elaborate contentions have been made on the conduct of the appellant about certain facilities having been extended to him in jail. It is not rrequired to comment on them and if at all there is any violation of the prison Rules, the Investigating Agency ought to take up with the higher officials of the Jail. On the facts of the present case, they are not reasons enough to deny the appellant his liberty.
The judgment of the High Court of Jharkhand at Ranchi is set aside - the Trial Court is directed to release the appellant on bail on furnishing bail bonds for a sum of Rs. 5 lakh with 2 sureties of the like amount and subject to fulfilment of conditions imposed - appeal allowed.
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2024 (8) TMI 1411
Refusal to grant bail to the appellant (woman) - Applicability of proviso to Section 45(1) of the Prevention of Money-Laundering Act, 2002 (PMLA) for women - appellant indulged herself into tampering with the evidence and influencing the witnesses - HELD THAT:- The proviso to Section 45(1) of the PMLA permits certain category of accused including woman to be released on bail, without the twin requirement under Section 45 of the PMLA to be satisfied. No doubt that, as argued by the learned ASG, in a given case the accused even if a woman may not be automatically entitled to benefit of the said proviso and it would all depend upon the facts and circumstances of each case.
However, when a statute specifically provides a special treatment for a certain category of accused, while denying such a benefit, the Court will be required to give specific reasons as to why such a benefit is to be denied.
The learned Single Judge in the present case, while denying the benefit of the proviso to Section 45(1) of the PMLA, comes to a “heartening conclusion” that the appellant is highly qualified and a well-accomplished person. The learned Single Judge further observed that the appellant has made significant contributions to politics and social work. The learned Single Judge further observed that while deciding her bail application, the Court may appreciate her accomplishment, however, it cannot lose sight of the serious allegations levelled by the prosecution and the evidence collected during the course of the investigation and presented before the Court.
The learned Single Judge thereafter proceeds to observe that the present appellant cannot be equated to a “vulnerable woman” - the learned Single Judge erroneously observed that the proviso to Section 45(1) of the PMLA is applicable only to a “vulnerable woman”.
A perusal of the judgment of this Court in the case of Saumya Chaurasia [2023 (12) TMI 685 - SUPREME COURT] would show that this Court has observed that the Courts need to be more sensitive and sympathetic towards the category of persons included in the first proviso to Section 45 of the PMLA and similar provisions in the other Acts. The Court observes that the persons of tender age and women who are likely to be more vulnerable may sometimes be misused by unscrupulous elements and made scapegoats for committing such crime.
The learned Single Judge of the High Court has totally misdirected herself while denying the benefit of the proviso to Section 45(1) of the PMLA.
The impugned judgment and order passed by the learned Single Judge of the High Court of Delhi at New Delhi are quashed and set aside - Appeal allowed.
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2024 (8) TMI 1410
Grant of regular bail - third bail application filed under Section 439 of the Code of Criminal Procedure, 1973 - Money laundering - scheduled offences - illegal extortion on Coal Transportation - applicability of Section 45 of the PMLA, 2002 - offence punishable under Sections 3 & 4 of the Prevention of Money Laundering Act, 2002 - HELD THAT:- From bare perusal of ECIR as well as observation made by Hon’ble the Supreme Court in case of the present applicant wherein Hon’ble the Supreme Court while rejecting the bail of the applicant has recorded its finding that there is sufficient evidence collected by the respondent Enforcement Directorate to prima facie come to the conclusion that the applicant who was Deputy Secretary and OSD in the Office of the Chief Minister, was actively involved in the offence of Money Laundering as defined in Section 3 of the PMLA, 2002. As against that there is nothing on record to satisfy the conscience of the Court that the applicant is not guilty of the said offence and the special benefit as contemplated in the proviso to Section 45 of the PMLA, 2002 should be granted to the applicant who is a lady.
The order-sheet of the case would demonstrate that the trial could not be proceeded on the count that other accused are not available or various applications were filed by different accused to delay the trial. The order-sheet further reflects that despite the directions issued by the trial Court seeking presence of the accused, the accused have not appeared before the trial Court causing delay in trial, therefore, various steps have been initiated for seeking their presence - the other accused are not seeking their presence before the trial Court, therefore, the trial has not begun, as such it cannot be said that the trial is being delayed without any rhyme and reason. Therefore, the submission made by learned senior counsel for the applicant that there is delay in trial, therefore, the applicant is entitled to be released in bail, deserves to be rejected.
In the present case, considering that the applicant has remained only 1 year & 8 months, the accused are not cooperating with the trial and the applicant has not fulfilled the twin conditions for grant of bail under the PMLA, 2002 - the third bail application filed by the present applicant also deserves to be rejected and accordingly, it is rejected - Application dismissed.
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2024 (8) TMI 1409
Levy of service tax - Road Cutting Charges - Land Application Processing Charges - Street Light Charges - whether nature of service on which demand of service tax has been confirmed are either exempted services or no service element is involved? - determination of differential value of service tax - invocation of extended period of limitation - suppression of facts or not.
Road cutting charges - demand confirmed as no documentary evidence has been produced by the appellant to show that the said amount is actually used for construction or repair of road - HELD THAT:- The case of the revenue is not that the roads are not for use by general public. The objection rather is that in the absence of documentary evidence, it is not clear that this amount is actually used for construction or repair of roads. The appellant has submitted the copy of the ledger which shows that against the total amount of ₹67, 500, the appellant received sum of ₹57,700/- for ‘road cutting charges’ from Gail Gas Dewas and thereafter small amounts of ₹3,000/- have been received from other companies which, according to the appellant have been received for construction of public road, which has been damaged by them on account of their personal work done on the public road at industrial area in Dewas. There is no reason to deny the benefit of the exemption notification and therefore, the demand of service tax is unsustainable.
Land Application Processing Fees - HELD THAT:- The description given by the appellant is that the fees charged for processing the land application form for the allotment of land to industrial units, is actually the ‘purchase of land application form’ for purchase of land for which forms are generally published online and the industrial units submit the required details in the said application along with the land premium which is actually related to the purchase of the land. The processing fees does not relate to any specific activity of processing. The learned counsel for the appellant agreed upon that the term ‘land application processing fees’ has been wrongly interpreted by the revenue without appreciating the nature of activity involved. Hence, there is no service element involved therein and therefore, no service tax is leviable.
Street Light Charges - HELD THAT:- The first and the primary condition is that the person enters into a contractual agreement with the recipient of service to incur expenditure or cost in the course of providing taxable service, however, as noted by the authorities below, the appellant failed to submit the copy of agreement or contract with MPEB to show that he was acting as their pure agent. Further, the appellant has not even submitted any proof of payment or expenses to MPEB, which is specifically provided in the definition that the person receives the actual amount incurred to procure such goods or services. In view thereof, the appellant is not entitle to any relief on that account and is liable to pay the service tax as confirmed by the authorities below.
The differential value of service tax has been included by the revenue on the ground that the appellant had justified sum of ₹25,27,169/- only out of the total taxable value shown as Rs.25,83,338/- and therefore on the amount of ₹56,169/-, service tax is leviable - HELD THAT:- It appears that amount of Rs.25,83,338/- has been directly taken from Note 16 of the balance sheet, whereas the appellant had taken the amount as per the Ledger records. The revenue was required to clarify the service under which the differential amount of ₹56,169/- was chargeable. The appellant has rightly contended that no service tax can be determined without clarifying the category of service under which the said amount can be attributed. Consequently, the service tax on account of differential value cannot be sustained.
Extended period of limitation - suppression of facts or not - HELD THAT:- The revenue has taken the details of the valuation from the balance sheet and the profit and loss account maintained by the appellant. Hence there is no suppression justifying the invocation of the extended period of limitation. Since the demands under the different categories has been confirmed by invoking the extended period of limitation, which is not invokable, the impugned demands are unsustainable.
The impugned order deserves to be set aside - Appeal allowed.
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2024 (8) TMI 1408
Levy of service tax on the amount received as reimbursements towards the expenses incurred for purchase of consumables - demand has been confirmed on the ground that the consumables used by the appellants for providing the MMR services were agreed to be reimbursed to the appellant but the appellant had failed to fulfill the conditions prescribed under Rule 5 (2) of the Valuation Rules.
HELD THAT:- The dispute is with respect to all the consumables supplied by the vendors to the appellants for being used for clients while rendering MMR Service. In the agreements it is expressly agreed that the consumables shall be directly purchased by the appellant on behalf of the clients. The cost of the same is agreed to be recovered from the clients and there is no element of profit involved in it. The recovery of cost of the same should not be the part of the gross value of services provided by the appellant.
The expenses incurred by the Appellant towards consumables, which are reimbursed on actuals by service recipient, are not towards any service provided by the Appellant. The consideration or gross amount charged for the MMR Service of property (mall) is the management fee charged by the Appellant, on which service tax has already been paid by the Appellant. Hence, the said amount cannot be subject to service tax.
There is nothing on record to show that any of the purchase remained unutilized and reverted to the appellant. There is no denial to the fact that the appellant recovers only the amount which has been paid on behalf of the recipient of service that the appellant only charges the cost of consumables and does not recover anything over and above the cost incurred by the appellant for the procurement of the said goods. The expenses incurred in procurement of consumables is recorded as cost/expense, while the amount reimbursed by the service recipient is recorded as income - in case of Bhayana Builders [2018 (2) TMI 1325 - SUPREME COURT] establishes that the amount reimbursed for the goods used in providing MMR service does not quality to be called as consideration of section 67. Hence no tax liability arises on this count.
Thus, it stands established even by the Hon'ble Apex Court that value of reimbursable expenses incurred by the service provider, which are reimbursed by the service recipient, are not to be included in the gross amount charged for the provision of taxable service in terms of Section 67 of the Act, and Rule 5(1) of ST Valuation Rules, stipulating inclusion of such value into the value of taxable service is ultra-vires Section 67 of the Act.
Invocation of extended period of limitation - suppression of facts or not - HELD THAT:- In the instant case, the sole ground for invoking extended period of limitation is that the appellant has not intimated the department of the fact of non-payment of service tax on reimbursable expenses received from service recipient under rule 5(2) of the ST Valuation Rules - Since the service tax was not payable on the said amounts, and there was no requirement to disclose the non-taxable amounts, there is neither a suppression of fact nor any intention to evade payment of service tax is imputable to the Appellant. Once the information is completely and clearly disclosed in the return in respect of taxable service, and there is no requirement to disclose non-taxable amounts, there can be no suppression by the Appellant, since the information is already available with the department - the extended period has wrongly been invoked.
The service tax demand on the reimbursed amount has wrongly been confirmed. Present is not the case where the extended period of limitation should have been invoked. For the same reason penalty is also held to have been wrongly imposed - appeal allowed.
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2024 (8) TMI 1407
Denial of refund of Krishi Kalyan Cess (KKC) not transited as input tax credit to Tran-I GST Register - Transitional provisions for input tax credit under Section 140 of CGST Act - HELD THAT:- In the instant case, Krishi Kalyan Cess (KKC) was allowed to be taken as CENVAT Credit on inputs but was permitted only to be used towards payment taxes on output services or clearance of goods, also as KKC. This being the dictate of the law, framed under the CENVAT Credit Rules 2004, KKC, being collected for promotion and development of agriculture, should not be refunded as specifically denied but this denial has its effect till introduction of CGST Act w.e.f. 01.07.2017, after which the KKC was discontinued.
Now the question would arise as to how the accumulated KKC as input credits could be utilised/adjusted when the CESS itself was discontinued and the existing law had authorises its use only for the purpose of payment of KKC. The answer lies in Section 142(6) and was consciously dealt by the legislature to meet such contingency.
The provision contained in Section 142(6)(a) comes with a non-obstinate clause and it says that even if contrary provision is available in the existing law, then also notwithstanding availability of such provision, cash refund of CENVAT Credit lying in balance could be directed to be made in an appeal proceeding and the only exception to it is Section 11B sub- Section 2, which in the present case would not even dictate the Appellant to justify unjust enrichment, since Appellant can never go back to the existing law, upon introduction of CGST Act, to collect the same from any other person. This being the factual and legal position, there are no hesitation to hold that Appellant is entitled to get cash refund of KKC against which it had appropriately filed the refund application under Section 11B of the Central Excise Act.
The order passed by the Commissioner of CGST & Central Excise (Appeals-II), Mumbai hereby set aside - Appellant is entitled to get cash refund of Krishi Kalyan Cess of ₹28,30,992/- with applicable interest as per law and Respondent-Department is directed to pay the same within two months of receipt of this order - Appeal allowed.
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2024 (8) TMI 1406
Levy of service tax - Business Auxiliary Service - cash discount given by M/s. Reliance Industries Ltd in respect of early payment of the goods sold to the customer - HELD THAT:- It is found that the identical arrangement is their between Reliance Industries Ltd., and many Del-Credere Agent who was similarly placed as the present appellant.
In a similar case of KHANNA POLYMERS VERSUS COMMISSIONER OF CENTRAL EXCISE, NOIDA [2016 (8) TMI 497 - CESTAT ALLAHABAD] the Tribunal held that 'early payment discount in this case are cash discount and received in view of early payments made to the principles and are linked to the number of days by which payment is made early and has no relation with the consideration received for rendering the service in the form of commission under the category of “Business Auxiliary Services”.'
Thus, the demand is not sustainable. Accordingly, the impugned order is set aside - appeal allowed.
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2024 (8) TMI 1405
Liability of appellant to pay service tax - reverse charge mechanism - recovery of service tax twice - eligibility of CENVAT Credit - HELD THAT:- As per the facts, even though the appellant is liable to pay service tax but the same service tax was discharged by the service provider. This has been accepted by the revenue and on that basis the original authority has dropped the proceeding. In this fact, even though any activity liable to service tax but the service tax has been discharged even though by different person other the person liable to pay the recovery of service tax again will amount to recovery of service tax twice of the same Tax which is not permissible under any circumstances.
This very issue has been considered by this Tribunal in the case of Dhariwal Industries Limited [2023 (10) TMI 595 - CESTAT AHMEDABAD] wherein considering the various judgments the Tribunal has held that 'once the payment of service tax was made by the transport agency which has not been altered by taking any action by the department, the cenvat credit of the said amount is also rightly available to the appellant.'
Thus, it has been settled that once the service provider discharged the service tax where the service recipient is liable to pay the service tax, demand of service tax on the same service from the service recipient shall not sustain on the ground that the particular service which already suffered the service tax cannot be suffer the service tax twice on the same service. Accordingly, the service tax paid by the transport agency in the facts of the present case is the payment of service tax and not deposit. Therefore, no demand can be raised from the appellant, for the same reason once the amount paid by the transport agency being service tax amount, the appellant is eligible for cenvat credit.
In the present case also the demand is not sustainable - the impugned order is set aside - appeal allowed.
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