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2024 (12) TMI 1314
Time limitation of Section 95 application filed by the Respondent No. 1 Bank - Section 95 application was filed by a duly authorized person or not.
Whether the Section 95 application filed by the Respondent No. 1 Bank was time-barred? - HELD THAT:- Demand Notice under Rule 7(1) clearly stipulated that the debt was due on 04.06.2021 being the date of Demand Notice under Section 13(2) of the SARFAESI Act. The date of default in the Rule 7(1) notice was clearly shown as 04.08.2021 being 60 days from 04.06.2021. The Section 13(2) Notice was also attached with the Rule 7(1) Notice.
Since the guarantee deed specifically mentioned that the guarantee was in the nature of an on-demand guarantee, the default was to arise on the part of the Guarantor only when the Demand Notice was issued as contemplated in the Deed of Guarantee. Thus, the period of limitation of the Personal Guarantor was to commence once the demand was made on the Guarantor by the Respondent No.1 Bank. Hence, the Notice dated 04.06.2021 issued by the Respondent No.1 Bank to the Personal Guarantor has to be treated to be Notice on Demand as contemplated in the Deed of Guarantee. The Rule 7(1) Notice dated 28.06.2021 had therefore rightly recorded that the debt was due on 04.06.2021 being the date of Demand Notice under Section 13(2) of the SARFAESI Act and that the date of default occurred on 04.08.2021 on the expiry of 60 days from 04.06.2021.
Section 95 petition which was filed on 18.06.2022 was very much within the limitation period since the Personal Guarantee had been invoked on 04.06.2021 and demand qua the Personal Guarantor arose on the expiry of the period specified in the Demand Notice. When the Respondent No.1 Bank has given time to the Guarantor to make payment by 04.08.2021 in terms of the Notice dated 04.06.2021, there can be no default on the part of the Guarantor on any earlier date.
Whether the Section 95 application was filed by a duly authorized person? - HELD THAT:- It is an admitted fact that the Authority Letter authorising the AGM to file the Section 95 application was signed by the Deputy General Manager. It was clarified by the Ld. Counsel for the Respondent No.1 Bank during the oral submissions that the AGM of the Respondent No1 Bank being SMGS-V was statutorily competent to sign any petition by virtue of The Gazette of India Notification dated 02.05.1987 which notified that in pursuance of Regulations 76(1) of the State Bank of India General Regulations, 1955 framed under Section 50 of the State Bank of India Act, 1955 the Executive Committee of the Central Board of the State Bank of India authorized all Officers in the Grade of SMGS-IV and above to exercise Signing Power in respect of documents connected with the current or authorized business of the Bank. Since the Gazette of India Notification lies in the public domain and is subsisting, the plea raised by the Appellant that the Section 95 application signed by an AGM level Officer of the Respondent No.1 Bank to be unauthorized not impressed - Section 95 application filed by the Respondent No.1 Bank is valid and therefore reject this technical plea raised by the Appellant.
All the three impugned orders therefore do not warrant any interference - The Appeals filed by all the three Appellants are devoid of merit and therefore dismissed.
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2024 (12) TMI 1313
Ownership of property - Validity of the Slump Sale Agreement between the Corporate Debtor and the Appellant - no detail of the loan placed on record - dubious and preferential transaction, carried out to defraud the Creditors - HELD THAT:- Although Appellant has vehemently argued that the amount of Rs. 42.86 Crores was an unsecured loan towards the Corporate Debtor, but there is no documentary evidence that the Corporate Debtor has availed such a huge loan from the Appellant. The Tribunal has also categorically observed that there was no registered Sale/Conveyance Deed, executed between the Parties of the Immovable Property, which as per Section 17 of the Registration Act is a mandatory condition as has been held by the Hon’ble Supreme Court in the matter of Suraj Lamp & Industries Pvt. Ltd. Vs. State of Haryana & Anr. [2011 (10) TMI 8 - SUPREME COURT], held that an Immovable Property cannot be transferred merely on the Agreement of Sale, rather there has to be registered Sale Deed in that regard.
Also, the Appellant is asked to refer to the Agreement between the Parties on the basis of which the said loan of Rs. 42.86 Crores has been obtained by the Corporate Debtor to which he could only answer that CA Certificate has been attached in this regard which cannot be taken into consideration to hold that the Corporate Debtor has been given such a huge loan by the Appellant and the said advance has been adjusted as a sale consideration on the basis of a mere Agreement to sell and without a Sale Deed.
There are no error in the Impugned Order and thus the present Appeal is hereby dismissed.
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2024 (12) TMI 1312
Contravention of Section 8(1) - transferring foreign exchange equivalent to Rs. 208 crores without previous, general or special permission of the Reserve Bank of India - appellants, Shri Anil Agarwal, Navin Agarwal and D.P. Agarwal were charged for violation of Section 68 of the FERA, 1973 - HELD THAT:- The main argument of the appellants of putting burden of proof on the respondents even though they discharged their part of burden, cannot be accepted. The appellant Shri D.P. Agarwal was holding position in M/s Twinstar and was summoned but failed to appear and produce the documents. He did not respond to the summons.
It cannot be to his benefit or given premium to non-response. Rather, adverse inference can safely be drawn against the appellant. In the background aforesaid and in the light of the discussion made above, we are unable to accept the argument raised by the counsel for the appellants and otherwise find that against an amount of Rs. 208 Crores, penalty of only Rs. 20 Crores has been imposed on the company and Rs. 5 Crores each on the individuals holding the position in the company. Accordingly, finding no reason to cause interference in the impugned order appeals would fail and are dismissed.
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2024 (12) TMI 1311
Contravention of Section 10(6) of FEMA - Penalty imposed - import of copper scrap in 10 containers but all the containers were found empty carrying no copper scrap - Remittance of the foreign exchange was made by M/s G. Tex Inc. even without receipt of the documents by their banker - HELD THAT:- On the receipt of the consignment of 10 containers, they were found empty and thereby copper scrap was not found therein. It is despite the fact that M/s G. Tex had already effected remittance of US$ 6,56,864 through Bank of India, Bangaluru. Since the sale of copper scrap was made on high seas sale basis M/s G. Tex could receive part consideration from M/s Maruti which could not get copper scrap because the containers were found empty.
We do not find serious efforts to recover the amount from M/s Koya International, rather for that, the appellant should have lodged the claim to recover the amount through Court of Law. The appellant failed to do so.
So far as the appellant Madhusudan Jhan Waris concerned, he was not responsible for conduct of the business and in charge under which foreign remittance was made by the appellant. The penalty of Rs. 7,50,000/- has been imposed without showing his role in the transaction. The material available on record shows it to be at the behest of appellant Rajesh Jhanwar who was mainly looking after the firm M/s G. Tex and made transaction to import the copper scrap.
No reasons to impose penalty on appellant Madhusudan Jhanwar when he was not responsible for conduct of the business for import of copper scrap or for remittance of money. The penalty imposed on him is set aside.
Appellant Rajesh Jhanwar made efforts to recover the amount though it cannot be said to be serious efforts to recover the amount because he did not lodge a claim for recovery of the amount. In the light of the aforesaid, while we find contravention of Section 10(6) of the Act of 1999, we find reasons to reduce the penalty which on the facts of the case seems to be excessive. The amount of penalty is reduced to 25% of the penalty. The amount of penalty to the extent of 25% has already been deposited to satisfy the condition of pre-deposit. We accordingly reduce the penalty and modify the order partially. With the aforesaid, appeal stands disposed of. It is made clear that if the amount to the extent of 25% of the penalty has not been deposited, the respondents would recover the said amount.
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2024 (12) TMI 1310
Contravention of the provisions of section 9(1)(e) along with 64 to of FERA - penalty imposed - Allahabad Bank opened a current account in the name of a non-resident company and sums were placed to the credit of the said non-resident company in form of deposits in the said current account, allegedly in contravention of section 9(1)(e) - HELD THAT:- It was the appellant Bank which was holding the permission/license under the Act subject to compliance with the foreign exchange law and rules and regulations framed thereunder. The same having been contravened, the appellant bank would be deemed to have contravened such provision. On the other hand, contrary to the submission made by the learned counsel for the appellant, the appellant cannot be said to have ‘abetted’ the contravention because the allegation of abetment can arise only against a person other than the one who was holding a license or permission. In this case the Bank itself was holding such license/permission and would be deemed to have contravened the provision.
No merit in the contention of the learned counsel for the appellant that at best the appellant Bank could have been held liable for ‘abetment’. As a result of the deeming provision of Section 49, the appellant Bank had clearly contravened the provisions of FERA, 1999 and rendered itself liable for imposition of penalty. That having been said, I also find certain mitigating factors in favour of the Bank.
deliberate mala fides have also not been alleged in the present case against the Bank. There is little doubt that the orders of both the authorities below are in the nature of ex parte order. No proof has been placed on record by the respondents that the call notices referred to in the impugned order were duly served on the appellant and were wantonly ignored. As regards the KYC norms, considering the period of time the matter relates to, namely, the early 1990s, it would not be wrong to say that the awareness regarding the same at that time was considerably less than what it is today, the requirements were much less stringent and the enforcement thereof even less so.
Ends of justice would be met if the penalty imposed upon the appellant Bank is substantially reduced to Rs. 5,00,000/-. It is ordered accordingly.
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2024 (12) TMI 1309
Confiscation of properties - Money laundering - scheduled offence - appellant would contend that the Special Court without issuing the notice to the appellant has passed the impugned order confiscating the properties of the appellant - violation of principles of natural justice - Applicability of Criminal Procedure Code (Cr.P.C) provisions to the proceedings under PMLA.
Applicability of Criminal Procedure Code (Cr.P.C) provisions to the proceedings under PMLA - HELD THAT:- Except as otherwise provided in the P.M.L.A Act, the provision of Cr.P.C., are made applicable to the proceedings before the Special Court. The order of confiscation of the properties of the accused by the Special Court amounts to disposal of properties under section 452 of Cr.P.C. Against the order of said disposal of the properties passed under section 452 of Cr.P.C, the appeal shall lie to this Court under Section 454 of Cr.P.C. The provision of the P.M.L.A Act does not provide for filing of any appeal against the order of confiscation of properties. Therefore, the appeal shall lie under section 454 of Cr.P.C to this Court as appeal against conviction lie to this Court.
Confiscation of schedule ‘A’ properties - HELD THAT:- The words “such properties involved in money laundering or which has been used for commission of offence of money laundering” would indicate that the disproportionate assets acquired by the accused which had been used for money laundering is subject to be confiscated to the Central Government under Sub Section (5) of Section 8 of the P.M.L.A Act. The scheduled offence alleged against late Sri. G.E. Veerabharappa has been tried in Spl. CC. No. 56/2015. Even though the C.B.I had alleged disproportionate assets to the tune of Rs. 2,91,70,984/-, the Court only directed confiscation of disproportionate asset to the extent of Rs. 1,72,40,951/- in favour of the Central Government. Therefore, the proceeds of crime is to the extent of Rs. 1,72,40,951/-. The said disproportionate assets to the extent of Rs. 1,72,40,951/- is alleged to have been used by late Sri. G.E. Veerabharappa in money laundering. Therefore, the properties to the extent of Rs. 1,72,40,951/- requires to be confiscated to the Central Government under Sub Section (5) of Section 8 of the P.M.L.A Act. Late Sri. G.E. Veerabharappa had furnished the fixed deposit receipts to the tune of Rs. 1,72,40,951/- pursuant to the order of the Hon’ble Apex Court in VEERBHADRAPPA G.E. [2023 (4) TMI 1332 - SUPREME COURT] in favour of C.B.I and E.D. The said fixed deposit receipts in a sum of Rs. 1,72,40,951/- is the properties involved in money laundering and it is said to have been used for commission of the offence of money laundering. The properties worth more than Rs. 1,72,40,951/- cannot be confiscated under Sub Section (5) of Section 8 of the P.M.L.A Act - The option open for the Special Court was to confiscate the fixed deposit to the extent of Rs. 1,72,40,951/- furnished by late Sri. G.E. Veerabharappa with a lien in favour of the C.B.I and E.D. Instead of that, the Special Court has confiscated the properties of the appellant. Therefore, the Trial Court has erred in ordering confiscation of the properties of the appellant which are at Sl.No. 2 of schedule ‘A’ properties in Spl. CC. No. 359/2019 - the said order of confiscation of properties of the appellant requires to be set-aside.
Conclusion - The impugned order dated 24.06.2024 passed in Spl. C.C. No. 359/2019 by the XXXII Additional City Civil and Sessions Judge and Special Judge for C.B.I cases, Bengaluru, sofar as it relates to confiscation of the appellant’s properties ie., Sl. No. 2 of the Schedule ‘A’ properties namely, the land measuring 6 acres 37 guntas, located at Gunjal village, Varthuru Hobli, Bengaluru East Taluk, bearing Survey No.187/3 (28 guntas), Survey No.188/1 (3 acres and 20 guntas) and Survey No. 210/2 (2 acres and 29 guntas) is set-aside - The court recognized the appellant's ownership rights over the properties and ruled that the confiscation order was not justified, as the fixed deposit furnished by late Sri. G.E. Veerabharappa should have been considered the asset involved in money laundering.
Appeal allowed.
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2024 (12) TMI 1308
Money Laundering - scheduled offences - challenge to provisional attachment under Section 5(1) of PMLA, 2002 - Distribution of exorbitant and unjustified compensation to farmers with the intention of getting monetary benefits - misappropriation of government funds by way of granting compensation on acquisition of land at non-agricultural rate for the agricultural land which resulted into loss to Government - Non-completion/concluding of adjudication proceedings within prescribed period of 180 days - No scheduled offence and offence of money laundering is made out as per the observation of Ld. Special Judge (PMLA), Dehradun, Uttarakhand
Non-completion/concluding of adjudication proceedings within prescribed period of 180 days - HELD THAT:- The issue was meticulously considered and decided by the Telangana High Court. It is after taking note of the Judgement of the Apex Court in the case of Prakash Corporates vs Dee Vee Projects Limited [2022 (2) TMI 1268 - SUPREME COURT]. The Judgement in the case of Prakash Corporates [2022 (2) TMI 1268 - SUPREME COURT] has distinguished its earlier Judgement in the case of S. Kasi v. State [2020 (6) TMI 727 - SUPREME COURT]. The Judgement in the case of S. Kasi was discussed therein and found it to be in reference to Article 21 of the Constitution of India whereas the case of attachment of properties is not governed by Article 21 of the Constitution of India.
The attachment would lapse in the present case because the period subsequent to 15.03.2020 is to be eliminated for determination of the period of 180 days and in that case, the impugned order of attachment would not lapse.
No scheduled offence and offence of money laundering is made out as per the observation of Ld. Special Judge (PMLA), Dehradun, Uttarakhand - HELD THAT:- The High Court found a case under the Act of 2002 after considering all the relevant facts which includes the order passed by the Arbitrator - the argument alleging non commission of crime under section 3 of the Act of 2002 would not be made out.
No direct nexus found between scheduled offence and properties in question vis-à-vis principle of value thereof - HELD THAT:- he issue is otherwise covered by the judgement of the Apex Court in the case of Vijay Madan Lal wherein the similar argument that “the value of any such property” would apply only when property is held outside the country was not accepted.
The appellant Dinesh Pratap Singh has even referred to the balance of Rs. 25,51,000/- in his bank account to justify the purchase of property apart from his agriculture income in the different financial years without referring to any document to prove the agriculture income other than the assessment order, if any, because agriculture produced is to be disclosed in the revenue record and otherwise by producing the receipt of amount on sale of the produce. The appellant has failed to submit any document to prove the same and accordingly we find that in the absence of the proof of source to acquire the property and that too worth of crores by the two appellants, it was rightly attached by the respondents. Since, total value of the proceeds was available with the appellant having vanished, the other properties and “the value of any other property” was attached.
There are no substance in the issue and is rejected.
Non-satisfaction of basic ingredients of offence of money laundering - HELD THAT:- The appellant has submitted that basic ingredient of section 3 of the Act of 2002 is not made out whereas according to the respondent and in the opinion of the Tribunal the ingredient of section 3 has been satisfied which would reveal from the Judgement of the Uttarakhand High Court in the case of the appellant himself - the issue has no substance.
Non-recording of "reasons to believe" as prescribed under Section 5 of PMLA, 2002 - HELD THAT:- In the instant case, the procedure aforesaid was applied and therefore only the Adjudicating Authority issued notice to the appellant to disclose the source of income as per section 8(1) of the Act of 2002. The finding has been recorded on the offence and acquisition of the proceeds of crime - the ground is not made out to cause interference in the order.
Non-consideration of merits and demerits of the case by the Ld. Adjudicating Authority - HELD THAT:- The last argument raised by the appellant is that the Adjudicating Authority has failed to make consideration of any of the issue raised by the appellant. Reference to the Judgment of Delhi High Court has been given - The position of the fact is that now this Tribunal has taken up each issue raised by the appellant and the order has been passed in reference to each issue. It is after analyzing the issue separately.
Even the impugned order has been passed by using the technology of "cut-copy-paste" without appreciating the material on record -the impugned attachment order passed by Ld. Adjudicating Authority may be set-aside - the last issue raised by the appellant remains of no consequence.
There are no merit in the appeal - appeal dismissed.
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2024 (12) TMI 1307
Maintainability of the Appeal in reference to Section 26 of the Prevention of Money Laundering Act, 2002 against the Provisional Attachment Order - Writ Petition before the High Court invoking jurisdiction under Article 226 of the Constitution of the India - HELD THAT:- An interim order was passed but ultimately the Delhi High Court relegated the Appellant to approach the Tribunal and for that Writ Petition was order to be treated as an Appeal. The copy of the Writ Petition was accordingly presented by the Appellant and was registered as an Appeal in compliance of the order of the High Court.
The perusal of sub Section (1) and (2) reveals that Appeal can be preferred against the order passed by the Adjudicating Authority or an order under Section 13(2) of the Act of 2002. The Appeal has not been provided against the order of the Provisional Attachment Order - there are reasons to dismiss the Appeal being not maintainable.
The Adjudicating Authority would not be persuaded by the dismissal of the Appeal rather it would independently analyze the issue and more specifically in reference to the earlier order passed by the same Authority denying confirmation of the earlier Provisional Attachment Order arising out of same ECIR though Appeal against that order is pending before the Tribunal. The Authority would be expected to examine whether second Provisional Attachment Order is sustainable.
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2024 (12) TMI 1306
Condonation of gross delay of 408 days in filing the Civil Appeals - sufficient reasons for delay not provided - Classification of services - Supply of Tangible Goods Service - leasing out Power Generating and Heat Recovery Equipments to various parties under various Lease Agreements - it was held by CESTAT that 'The transfer of right to use gas genset/ plant on lease charges basis is a deemed sale in terms of Article 366(29)A of the Constitution, which is exclusive from service. Since the nature of transaction under dispute is deemed sale, no service tax can be demanded.'
HELD THAT:- There is a gross delay of 408 days in filing the Civil Appeals which has not been satisfactorily explained by the appellant - Revenue.
The Civil Appeals are dismissed on the ground of delay.
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2024 (12) TMI 1305
Levy of service tax - security agency service - scope of commercial concern - whether or not the appellant would satisfy the definition of “a commercial concern engaged in the business of rendering services relating to the security of any property, whether movable or immovable, or of any person, in any manner”?
HELD THAT:- It is is clear from reading of the definitions of Security Agency and Taxable service, that to attract the levy of tax as applicable to the security agency services, the service has to be provided by a commercial concern engaged in the business of rendering services relating to security of any property, whether movable or immovable, or of any person, in any manner and includes the services of investigation, detection or verification of any fact or activity, whether of a personal nature or otherwise, including the services of providing security personnel. It cannot be disputed that the activity that the appellant provides is essentially the providing of security personnel, who invariably are its members, being ex-servicemen.
The only other issue that needs to be considered is whether the appellant would satisfy the definition of a “commercial concern” engaged in the business of rendering the security agency services. In this connection, it is noted that a commercial concern albeit not defined under the Act or in the Rules, has been understood by the Central Board of Excise and Customs, as an institution/establishment that is primarily engaged in commercial activities, having profit as the primary aim. The Circular No. 86/4/2006-ST dated 01.11.2006 issued in this connection goes on to clarify that it is not one/few isolated activities which determine whether or not an institution is a commercial concern but it is the totality of its activity and the objective of its existence that determines the commercial nature of an institution as an entity or a concern. The said Circular which basically considers the applicability of service tax to educational institutes like IITs and IIMs, goes on to clarify that the principal activity of institutes like IITs and IIMs being the imparting of education without the objective of making profit, the said institutes cannot be seen as commercial concerns, even if for some of their activities they charged a fee.
Conclusion - The appellant cannot be treated at par with educational institutions, which by their very nature and going by the activities intended to be performed by them, cannot be seen as commercial concerns. It cannot be accepted that the appellant is not a commercial concern for the purposes of levy of service tax - the impugned order need not be interfered.
Appeal dismissed.
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2024 (12) TMI 1304
Levy of service tax on the services of Tour Operator provided for Haj and Umrah - HELD THAT:- The issue with regards to levy of service tax in respect of these services for the period post introduction of Negative List concept for levy of service tax (i.e. from 01.07.2012) is no longer res-integra and has been decided by Hon’ble Supreme Court in the case of ALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATION MUMBAI VERSUS UNION OF INDIA & ORS. [2022 (7) TMI 1233 - SUPREME COURT].
In view of the above decision, the dispute with regards to applicability of service tax (post 01.07.2012) in respect of these services provided by private tour operator in respect of Haj and Umrah has been settled against the appellant. Hon’ble Supreme Court has also held that these services provided by the private tour operators are not exempted by the Mega Exemption Notification.
Conclusion - The demand of service tax on tour operator services for Haj and Umrah confirmed, while allowing the small scale exemption - there are no merits in the impugned order and set aside the same.
Appeal filed by the revenue is allowed.
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2024 (12) TMI 1303
Abatement of appeal - recovery of service tax with interest and penalty - HELD THAT:- It is evident that the Respondent came under Liquidation, as such the proceedings pending in this appeal have become infructuous.
Hon’ble Apex Court in the case of GHANASHYAM MISHRA AND SONS PRIVATE LIMITED THROUGH THE AUTHORIZED SIGNATORY VERSUS EDELWEISS ASSET RECONSTRUCTION COMPANY LIMITED THROUGH THE DIRECTOR & ORS. [2021 (4) TMI 613 - SUPREME COURT] has held that 'once a resolution plan is duly approved by the Adjudicating Authority under subsection (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the Adjudicating Authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan.'
As the NCLT, Chennai has ordered for Liquidation of the Respondent and as no application as per Rule 22 has been made by the Official Liquidator appointed by the NCLT for continuance of the appeal, the appeal should abate in terms of the above referred Rule.
As such the appeal gets abated in terms of Rule 22 of the CESTAT (Procedure) Rules, 1982 and also gets dismissed as being infructuous.
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2024 (12) TMI 1302
Cash Refund of accumulated cenvat credit on account of services exported in terms of Rule 5 of Cenvat Credit Rules (CCR), 2004 read with N/N. 5/2006-CE-NT dated 14.3.2006 - HELD THAT:- There is no dispute about the export of services by the appellant during the said quarter resulting into accumulation of cenvat credit. Assuming that even if the services are of non-taxable service, the issue is covered by the judgment of the Hon’ble Karnataka High Court in the case of MPORTAL INDIA WIRELESS SOLUTIONS (P.) LTD. VERSUS COMMISSIONER OF SERVICE TAX [2011 (9) TMI 450 - KARNATAKA HIGH COURT] which has been consistently followed by the Tribunal in a series of cases. Recently, this Tribunal in the case of M/S. CJK KNOWLEDGEWORKS GLOBAL INDIA PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, BANGALORE [2024 (11) TMI 55 - CESTAT BANGALORE] observed that 'The assessee is a 100% export oriented unit. The export of software at the relevant point of time was not a taxable service. However, the assessee had paid input tax on various services. According to the assessee a sum of Rs. 4,36,985/- is accumulated Cenvat credit. The Tribunal has categorically held that even though the export of software is not a taxable service but still the assessee cannot be denied the Cenvat credit. The assessee is entitled to the refund of Cenvat credit.'
Conclusion - The refund claim cannot be denied. The fact remains is that the services which is exported were ‘Information Technology Enabled Service’. The cash refund of accumulated cenvat credit under Rule 5 of CCR, 2004 allowed.
The impugned order set aside - appeal allowed.
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2024 (12) TMI 1301
Non/short payment of service tax - transportation charges received under C&F services - job charges under business auxiliary service - renting of immovable property service - extended period of limitation - penalties u/s 77 and 78 of FA.
Demand of Rs.44,83,913/- under the category of 'GTA' service - HELD THAT:- The Appellant had been engaged as a consignment agent of M/s. Tata Steels Ltd. and had also provided ‘goods transport agency service’. In this regard, the Appellant produced a letter dated 09.01.2011 issued by M/s. Tata Steels Ltd. wherein M/s. Tata Steels Ltd. have categorically stated that they are paying Service Tax in respect of the services under goods transport agency (GTA) service - the activity undertaken by the Appellant is appropriately classifiable under the category of ‘goods transport agency’ (GTA) service, the Service Tax for which is liable to be paid by the recipient of Service viz. M/s. Tata Steels Ltd. In this case, the above letter clearly indicates that M/s. Tata Steels Ltd. has accepted their liability for payment of Service Tax under GTA services under reverse charge mechanism and discharged their Service Tax liability. In view of the above, the demand of Service Tax of Rs.44,83,913/- from the Appellant under ‘clearing and forwarding agency service’ is not sustainable.
Demand of service tax of Rs.1,07,40,970/- under the category of 'Business Auxiliary Service' - HELD THAT:- The Appellant has been rendering job work at the premises of the principal wherein, after the job work, the final product has been cleared on payment of duty by the principal. However, in the impugned order, the benefit of the above Notification has not been extended to the Appellant on the ground that the job work has not been done at their own premises. In this regard, it is observed that there is no such condition in the notification that the job work has to be done in their ‘own’ premises. Even if the job work is undertaken at the premises of the customer, the benefit of the exemption under N/N. 08/2005-S.T cannot be denied to the appellant. Accordingly, the demand of Service Tax of Rs.1,07,40,970/- confirmed under the category of ‘business auxiliary service’ in the impugned order is not sustainable and thus, the same is set aside.
Demand of Service Tax of Rs.3,43,641/-under the category of ‘renting of immovable property service’ - demand in this case has been raised for the period from 2007-08 to 2011-12 and the Show Cause Notice was issued on 19.10.2012 - Extended period of limitation - HELD THAT:- There was confusion prevalent during the relevant period about the Service Tax liability of an assessee under the category of ‘renting of immovable property service’ and thus the invocation of the extended period of limitation is set aside. Thus, the appellant is liable to pay Service Tax for the normal period of limitation, along with interest.
Imposition of penalty under Section 78 of the Finance Act, 1994 - HELD THAT:- There is no suppression of facts with intention to evade the tax established in this case. Accordingly, no penalty is imposable on the Appellant and hence the same is set aside.
Penalty imposed under Section 77 of the Act - HELD THAT:- The same has been imposed based on the allegation that the Appellant has not reflected the correct service values in their S.T.-3 Return. This allegation is not substantiated. Accordingly, the penalty imposed under Section 77 ibid. is also set aside.
Conclusion - The demands under 'clearing and forwarding agency service' and 'business auxiliary service' were set aside. The demand under 'renting of immovable property service' was upheld only for the normal period, and all penalties were set aside.
Appeal disposed off.
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2024 (12) TMI 1300
Classification of service - activities carried out by the Appellant for the period from 10.09.2004 to 31.01.2009 fall under the category of Erection, Commissioning or Installation service or they fall under the category of Works Contract Service? - invocation of extended period of limitation.
Classification of services - HELD THAT:- The issue is no more res integra, the issue is settled by the judgment of Hon’ble Supreme Court in the matter of COMMISSIONER, CENTRAL EXCISE & CUSTOMS VERSUS M/S LARSEN & TOUBRO LTD. AND OTHERS [2015 (8) TMI 749 - SUPREME COURT] and the activities carried out by the Appellant, which includes supply of goods and materials and when the Appellant had paid VAT as applicable under Works Contract, to consider the gross amount as consideration and to classify the goods under the category of Erection, Commissioning or Installation services is unsustainable.
Conclusion - For the period 10.09.2004 to 01.06.2007, the appellant is not liable to service tax under the category of 'Erection, Commissioning or Installation' services in view of the decision of the Hon'ble Supreme Court in the case of M/s. Larsen and Toubro Ltd. Further for the period 01.06.2007 to 31.01.2009 the activity of the appellant is classifiable under 'Works Contract' service and is eligible for composition scheme under Works Contract (payment of Service Tax Composition Scheme) Rules, 2007.
Appeal alowed.
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2024 (12) TMI 1299
CENVAT Credit - input services availed by the Appellant are in compliance with Rule 2(l) of the CENVAT Credit Rules, 2004 or not -CENVAT Credit on Passenger Boarding Bridge (classified under CETH 9801), Bridge Mount Converter (classified Under CETH 9801) etc. related to project import - CENVAT credit on professional services related to Hotel project - CENVAT credit - Chartered Flights hired by Chairman and Managing Director - Pinnacle Award ceremony - sponsorship service and event management services with respect to events (for celebrating National and State functions such as Kannada Rajyotsava, independence day - Photography service (incurred for various airlines and other promotional events) - Landscaping bills relating to Trumpet flyover, which includes landscape maintenance of landscaping as part of Airport activity in a greenfield airport - immigration services incurred for relocation charges of the expats - Guest House maintenance - Flower Decoration - Hotel accommodation - Membership fees - CENVAT credit on construction services - Denial of CENVAT credit on Mobile Command Post Vehicles, Projection Screens and Advertising Structures.
CENVAT Credit on Passenger Boarding Bridge (classified under CETH 9801), Bridge Mount Converter (classified Under CETH 9801) etc. related to project import - HELD THAT:- It is an admitted fact that the said goods were imported as part of 'Project Import' and in the absence of any such conditions for availing of CENVAT credit as per CENVAT Credit Rules, 2004, as held by various authorities, the same are eligible for CENVAT credit irrespective of the fact that whether it is falling under the category of inputs or capital goods.
CENVAT credit on professional services related to Hotel project - HELD THAT:- The Expenses incurred by the appellant includes professional and consultancy fees paid in relation to arbitration, feasibility study for the investment in the Hotel project - Since these are incurred to know the viability and feasibility for the investment in such project, the same should qualify to be input services - Credit allowed.
CENVAT credit - Chartered Flights hired by Chairman and Managing Director - Pinnacle Award ceremony - sponsorship service and event management services with respect to events (for celebrating National and State functions such as Kannada Rajyotsava, independence day - Photography service (incurred for various airlines and other promotional events) - Landscaping bills relating to Trumpet flyover, which includes landscape maintenance of landscaping as part of Airport activity in a greenfield airport - immigration services incurred for relocation charges of the expats - Guest House maintenance - Flower Decoration - Hotel accommodation - Membership fees - HELD THAT:- Even if the said services are not directly related to output service, considering the activity of the appellant, they are required for the output service, it is held that the appellant is entitled to the CENVAT credit under dispute.
CENVAT credit on construction services - denial on the ground that assessee has not produced any documentary evidence to show that service is in relation to repair/modification work and not towards original construction - HELD THAT:- These services used for repairs of premises of provider of output service is specifically included in the inclusion portion of input service definition, Cenvat credit is eligible.
Denial of CENVAT credit on Mobile Command Post Vehicles, Projection Screens and Advertising Structures - HELD THAT:- It is a special purpose customized motor vehicle designed and the same is neither used to carry passengers nor goods. The vehicle is a special purpose vehicle equipped with satellite telephone and internet communication capabilities to react, if the local and cellular telephone services and broadband internet are not available. This is not a vehicle designed to carry passengers and goods instead is a specially designed vehicle for disaster response and recovery of assets. This kind of motor vehicle finds special mention in the definition of capital goods as per Rule 2(a)(A)(viii) of CENVAT Credit Rules, 2004 - thus, recognized as capital goods due to their specialized nature, thus eligible for credit.
Appeal allowed in part.
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2024 (12) TMI 1298
Liability of assessee to pay penalty - non-application of mind - violation of principles of natural justice - HELD THAT:- The contention of the appellant that the Commissioner had passed order basing on the statements recorded during inspection is not tenable under law on the ground that the Commissioner after verification of the records passed the order. The finding recorded by the Commissioner is not based on the statement recorded during the inspection alone, but is based on other material available on record.
In an appeal under Section 35G of the Central Excise Act, 1944, a finding of fact cannot be interfered with unless and until the same is shown to be perverse. The finding recorded by the authorities under the Act can by no stretch of imagination be termed as perverse.
The substantial question of law is answered against the assessee in favour revenue - there are no merit in the appeal - appeal dismissed.
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2024 (12) TMI 1297
CENVAT Credit - common inputs/ input services used for manufacture of dutiable and exempted goods - non-maintenance of separate account for dutiable and exempted activity as envisaged under Rule 6(2) of CCR, 2004 - non-compliance with the provisions of Rule 6(3) of the CENVAT Credit Rules, 2004 - wilful suppression of facts or not - extended period of limitation.
CENVAT Credit - HELD THAT:- It is found that all the documents were either not produced before the adjudicating authority or adjudicating authority has not recorded any findings on any of these documents in the impugned order. The fact that these documents show is that trading activities were undertaken by the appellant from separate premises located at Kanpur, and separate accounts were maintained for the trading activities undertaken.
Neither in the show cause notice nor in the impugned order we find that the manner of usage of the services alleged to used both for trading activities and manufacture of the goods have been brought out. The basic quest which requires to be examined before invoking Rule 6 of The CENVAT Credit Rules, 2004 is that there should be common inputs/ input services used for manufacture of dutiable and exempted goods or for the provision of both taxable and exempted services. There are nothing recorded in the impugned order to the usage of common services for trading activities and manufacture of dutiable goods.
No evidence has been adduced in the show cause notice to establish the usage of common services for the provision of taxable and exempted service or for the manufacture of dutiable and exempted goodsit is not required to even remand this matter, for examination in light of the documents submitted.
Extended period of limitation - penalty - HELD THAT:- As there are no merits in the demand made, no finding recorded on the issue of limitation raised by the appellant in the appeal. As demand is itself set aside the penalty imposed set aside.
Conclusion - The absence of any finding to the effect of common services usage invalidates the demand under Rule 6(3) of the CENVAT Credit Rules, 2004. No evidence has been adduced to establish the usage of common services for the provision of taxable and exempted service or for the manufacture of dutiable and exempted goods. No finding reorded on time limitation and penalty.
Appeal allowed.
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2024 (12) TMI 1296
Excisability of intermediate goods - Whether sugar syrup having sugar content of 78.2% by weight emerged as an intermediary product, during the course of manufacture of final product viz., Biscuits which is exempted, is excisable and leviable to duty as the benefit of N/N. 67/1995 dated 16.03.1995 would not be available to inputs used in the exempted final product? - extended period of limitation.
Excisability of intermediate goods - HELD THAT:- In Karnataka Soaps & Detergents Ltd. [2017 (10) TMI 660 - SUPREME COURT] explaining the scope of marketability their Lordships observed that 'Marketability’is thus essentially a question of fact to be decided on the facts of each case. There can be no generalisation. The fact that goods are not in fact marketed is of no relevance. So long as the goods are marketable, they are goods for the purposes of Section 3 of the Act. It is also not necessary that the goods in question should be generally available in the market. The marketability of articles does not depend neither upon the number of purchasers nor is the market confined to the territorial limits of this country.'
Thus, the original authority had sufficiently established the test of marketability.
Extended period of limitation - HELD THAT:- The sugar syrup manufactured by the appellant, during the course of manufacture of exempted product namely, biscuits, is stable and marketable; hence, liable to duty being an excisable goods - the issue relates to interpretation of law, therefore, invoking of extended period of limitation cannot be sustained and the demand be restricted to the normal period of limitation.
Conclusion - Revenue’s appeal is partly allowed to the extent of confirming excisability of sugar syrup manufactured at the intermediate stage of manufacture of biscuits, an exempted product, and the demand be limited to the normal period of limitation. No penalty is imposable on the appellant.
Appeal is disposed of.
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2024 (12) TMI 1295
Challenge to order of penalty passed under the APVAT Act, 2005 - without issuing a SCN the order of penalty came to be passed - violation of principles of natural justice - HELD THAT:- It is failed to understand the basis for the revenue to challenge such orders before this Court. It has been fairly conceded before us that the order of penalty was passed without issuing any show cause notice.
What is more disturbing is that instead of accepting the order passed by the High Court and issuing a show cause notice so as to give an opportunity to the assessee to show cause as regards the penalty, the revenue has wasted six years in this litigation which is now coming to end with the dismissal of this petition.
Petition dismissed.
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