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2024 (12) TMI 1154
Inclusion of Freight and Insurance costs in the Assessable Value - price charged by the overseas exporter is on CIF basis or on FOB basis - applicability of MRP / RSP provisions - Extended period of limitation.
Whether the Freight and Insurance costs are to be added or not to arrive at the Assessable Value? - HELD THAT:- The appellant has provided proper documentary evidence to the effect that the freight and insurance has been borne by the foreign party. There is nothing to indicate in these documents that the appellant is required to pay these amounts. Therefore, it gets established that the overseas exporter has exported the goods on CIF basis to the appellant. Accordingly, we hold that the enhancement of Assessable Value by adding the freight and insurance by the Revenue, is legally not sustainable.
Whether the MRP / RSP provisions would apply, thereby calling for higher CVD payment as has been held by the Adjudicating authority? - HELD THAT:- The goods are meant for supply to Govt of Jharkand. The label also clearly states that the goods are not meant for retail sale to any individual but are meant for bulk sale to Govt. of Jharkand Hospitals only.
On going through the Sl. No.40 of Notification No.14/2008-CE (NT) dated 01.03.2008 issued under Section 4A of the Central Excise Act, 1944 on which Department has placed reliance to hold that the goods are liable for MRP based assessment, we find that Sl. No.40 covers goods of Heading 34.02, which are in the form of bars, cakes, moulding pieces or shapes - In the present case, the appellants have imported the goods under CTH 3402 90 99 and are in liquid form and not in the form of bars, cakes, moulding pieces or shapes. Hence, the view of the Revenue that the goods are required to be assessed in terms of Section 4A of the Central Excise Act, 1944, for arriving at the CVD to be paid cannot be subscribed.
Thus, the MRP based Section 4A value cannot be used for calculating the CVD. The Revenue is in error in applying the Section 4A valuation method to arrive at the CVD on the imported goods. Therefore, holding that the enhancement of Duty on this count is legally not sustainable, the impugned order to this extent set aside.
Extended period of limitation - HELD THAT:- In the present proceedings, the Revenue has not brought in any evidence to the effect that they have stumbled upon any new evidence to the effect that the freight and insurance paid by the exporter has been reimbursed to them by the appellant. Nor has the Department brought in any evidence to the effect that the goods in question were not sold in bulk to the Govt of Jharkhand hospitals, but were diverted and sold in retail. All the documents relied upon by the Department are the ones, which were already made available to them by the appellant at the time of imports. Thus, the Department has failed to bring in any evidence to fasten the allegation of suppression / misstatement with an intent to evade the Customs Duty. Therefore, there are no hesitation to hold that the confirmed demand is legally not sustainable even on account of time bar.
Appeal allowed on account of merits as well as on account of limitation.
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2024 (12) TMI 1153
Legality of Articles 13 and 14 of the Concession Agreement - direction to NTBCL to cease the imposition of user fees or toll upon commuters using the DND Flyway - maintainability of Writ Petition purportedly filed in public interest, before the High court - non-floating of tenders - power to levy fees could be delegated to the Appellant or not - excessive delegation - Article 14 of the Concession Agreement, opposed to public policy or not - recovery of Total Project Cost and Returns - recovery of dues from the Appellant, in regards to the display of outdoor advertisements.
Maintainability of the Writ Petition before the High Court - Locus standi of Respondent No. 1 - HELD THAT:- In the instant case, Respondent No. 1 is a Society duly registered under the Societies Registration Act, 1860, with the primary objective of promoting the welfare of NOIDA residents. The society acts as a bridge between the residents and public authorities, catering to the former’s needs for essential civic amenities. Given this object, it is clear that Respondent No. 1 approached the High Court in good faith, with a view to safeguard the interests of NOIDA residents, who had been subjected to the levy of toll at the DND Flyway under the guise of user fees by NTBCL. Consequently, there are no merit in NTBCL’s contention that Respondent No. 1 lacked locus standi in approaching the High Court - As regard to NTBCL’s contentions pertaining to the alleged collusion between Respondent No. 1 and NOIDA, there is not an iota of material on record to substantiate these sweeping insinuations.
Delay and laches - HELD THAT:- The High Court rightly observed that the plea of delay lacks substance, as the commuters, including Respondent No. 1, were justified in trusting that NOIDA would protect their interests. However, in 2012, after learning that they were being misled and subjected to an illegal toll based on an audit report from NTBCL’s Auditor and Chartered Accountant—indicating that as of 31.05.2012, Rupees 2340 crores were still to be recovered from the public, and the recovery period had extended from 30 years to 100 years—they were prompted to immediately approach the High Court - the challenge laid by Respondent No. 1 before the High Court, regarding the levying of toll or user fees, being rooted in public interest and involving en masse potential violations of Fundamental Rights of citizenry, warrants thorough examination.
Scope of judicial intervention - HELD THAT:- The High Court was justified in entertaining the petition filed by Respondent No. 1 in public interest. The continued levy of toll and the Concession Agreement were directly impacting the rights and interests of commuters. NTBCL’s attempts to classify the Concession Agreement as a purely private contractual matter, sequestered from such scrutiny, thus holds no ground. The Project, having been developed for public benefit, cannot escape judicial oversight, particularly when the allegations pertain to the public’s rights and interests, which are being infringed upon by the levying of user fees. The contention of NTBCL seeking dismissal of Respondent No. 1’s petition at the threshold was thus rightly rejected by the High Court.
The contention that there were no suitable companies capable of undertaking such infrastructural development during that period lacks any substantiation or material on record to support such sweeping claims - The selection of NTBCL without following proper procedure and without giving any opportunity to bid, to other competitors, was nothing but an opaque device resorted to, in contravention of Article 14 of the Constitution of India.
Delegation of power to levy fees and its validity - HELD THAT:- NTBCL cannot assert that NOIDA has a genuine 'choice' or the ability to 'withhold consent' from extending the Concession Agreement. NOIDA effectively has no choice and is perversely being browbeaten to continue enforcing the Concession Agreement. Despite the supposed 'choice,' it is burdened with the obligation to repay an exorbitant sum, which we have already established is unreasonably calculated.
This ‘consensual’ extension is solely a show of smoke and mirrors and has been cunningly engineered by NTBCL and IL&FS. They successfully ensured that: first, the formula was designed in such a way that the Total Project Cost and returns would escalate each year; second, inflated and unnecessary expenses could be included in the Total Project Cost, making repayment impossible; third, the Concession Agreement would only terminate upon full repayment of the Total Project Cost and returns, knowing as early as 2007 that 30 years would not suffice for recovery; and finally, NOIDA was left with no real choice but to extend the concession period due to the ultimatum presented in Article 18, masked as ‘consent.’
An exhaustive reading of the CAG Report highlights the extent to which the public has been defrauded. The general public has been forced to part with hundreds of crores by IL&FS and NTBCL, under the guise of providing necessary public infrastructure. This could not have been done but for the collusion of the then officers of the two State Governments and of NOIDA, who closed their eyes while the contractual obligations were incurred. Had Respondent No. 1 not been vigilant of their rights, the public funds would have continued to be misappropriated for private profiteering. Furthermore, the role played by IL&FS in this entire scheme is highly questionable.
Since NTBCL has recovered the costs of the project and substantial profits thereon by virtue of imposition of user fees/tolls and given the existing position of law, there are no error in the High Court’s judgment and its directions in restraining the imposition and collection of user fees/tolls.
Recovery of dues arising out of display of outdoor advertisements - HELD THAT:- The question pertaining to outdoor advertisements does not constitute the subject matter of the present appeal, where the matter assailed by the Respondent Welfare Association before the High Court was restricted to the imposition and levy of user fees or toll by NTBCL and concomitantly, the validity of certain provisions of the Concession Agreement. Regardless, Respondent No. 2, NOIDA, has alleged that NTBCL owes substantial dues to them, accrued through outdoor advertising, for which the license had been granted by NOIDA - NOIDA shall be at liberty to initiate recovery proceedings as per the dispute resolution mechanism outlined in the Delhi Land Lease and NOIDA Land Lease Agreements. Such a process shall be subject to the defence and objections that may be available to NTBCL before the appropriate forum. Consequently, this issue does not fall within the scope of the instant appeal and therefore we have not expressed any opinion on its merits.
Application disposed off.
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2024 (12) TMI 1152
Classification of appellant - ‘Financial Creditors’ within the meaning of sub-section (7) of Section 5 of the Insolvency and Bankruptcy Code, 2016 or not - whether the appellants can be classified as ‘Secured Creditors’ and paid commensurate to their security interest? - HELD THAT:- Section 14(1) imposes an embargo or prohibition on certain acts. However, it does extinguish the claim. If the argument that the claims of all the creditors of the Corporate Debtor are extinguished once the moratorium comes into force is accepted, no creditor would be able to file a claim. For example, if money advanced is secured by a promissory note or a negotiable instrument, a suit for recovery based on the said documents will not lie once a moratorium comes into force. But, the liability under the documents will continue to exist. In fact, after moratorium, no creditor can recover any dues from the Corporate Debtor. But still, there is a provision for making a claim. Hence, the argument based on moratorium deserves to be rejected. The DoH will continue to be valid. However, on the basis of the DoH, something which is prohibited by Section 14, cannot be done. Therefore, Section 14 will be of no assistance to the 1st respondent-Doha Bank. 64. When we are on the interpretation of DoH, we must refer to sub-clause (vi) of clause 16 of the DoH, which provides that every provision contained in the deed shall be severable and distinct from every other such provision.
If the right to payment exists or if a breach of contract gives rise to a right to payment, the definition of ‘claim’ is attracted. Even if that right cannot be enforced by reason of the applicability of the moratorium, the claim will still exist. Therefore, whether the cause of action for invoking the guarantee has arisen or not is not relevant for considering the definition of ‘claim’.
Much capital was made of the fact that the CoC, including the appellants as well as the third-party lenders, have voted for the Resolution Plan. At this stage, it is noted that the NCLAT has not held against the appellants on the ground that if the case of the appellants is accepted, it will amount to modification of the Resolution Plan - The NCLAT observed that the Resolution Plan was rightly approved, subject to the disposal of the pending application. In fact, in paragraph 7, the NCLAT observed that depending upon the outcome of the applications, if the Resolution Plan requires to be reconsidered, the adjudicating authority will do so after hearing the parties. This order has become final.
The sum and substance of the above discussion is that the impugned judgment and order dated 9th September 2022 passed by the NCLAT cannot be sustained, and the order dated 2nd March 2021 of the NCLT deserves to be upheld. Accordingly, the impugned order of the NCLAT is quashed and set aside, and the order dated 2nd March 2021 passed by the NCLT, Mumbai Bench (adjudicating authority) is restored.
The appeals are, accordingly, allowed.
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2024 (12) TMI 1151
Extinguishment of claim - non-implementation of resolution plan - whether the Adjudicating Authority, on the grounds of non-implementation of the plan, could have revived the gratuity dues claims of the Respondent and given directions to pay gratuity dues to the Respondent without consideration by the CoC? - HELD THAT:- After the Corporate Debtor is admitted into CIRP, RP invites claims and after collating and updating the same in the Information Memorandum thereafter invites potential resolution applicants to submit their respective resolution plans before the CoC. The plans are deliberated and the best plan approved by the CoC in exercise of their commercial wisdom is placed before the Adjudicating Authority which then arrives at a subjective satisfaction that the plan conforms to the requirements as provided under Section 30(2) of IBC and thereafter grants its approval to the Resolution Plan. The Adjudicating Authority while approving the Resolution Plan has to see that the plan does not contravene any requirements set out under Section 30(2) of the IBC and also that the Resolution Plan can be carried out efficiently and satisfactorily as per Section 31(1) of the IBC.
Approval of a resolution plan by the Adjudicating Authority is statutorily recognized as a closure to all claims that creditors or other relevant entities may have against a Corporate Debtor unless it is challenged within the statutorily prescribed time-limit. It is significant to note that once the Adjudicating Authority approves the Resolution Plan, the plan becomes binding on Corporate Debtor, its employees, members, creditors, guarantors and other stakeholders involved in the resolution Plan.
Facts on record show that this aspect of the plan was never challenged by the Respondent. Thus, the plan had undisputably attained finality. Further the SRA has already made payments to the stakeholders as per the approved plan. The Appellant have placed reliance on the legal precept laid down by the Hon’ble Supreme Court in Ghanshyam Mishra and Sons Private Limited Vs. Edelweiss Asset Reconstruction Company Limited and Ors. [2021 (4) TMI 613 - SUPREME COURT] to contend that belated claims cannot be taken up for inclusion in the Resolution Plan and after placing reliance thereon asserted that the SRA cannot be saddled with the liability of claims which were not part of the plan.
The Hon’ble Supreme Court has time and again held that it an imperative need to impart finality to the resolution process by protecting an SRA from undecided claims.
In the present case, the plan having been approved by the Adjudicating Authority on 16.04.2019, the stage to challenge the plan approval came to an end long time back. Therefore, the Resolution Plan as approved by the Adjudicating Authority has become binding on the Corporate Debtor, creditors, guarantors and other stakeholders involved in the Resolution Plan. Having noticed the contours of IBC and settled jurisprudence, the derivative is crystal clear that no surprise claims should be flung on the SRA in a belated manner.
In the present case, there has been a lapse of more than 5 years since approval of the resolution plan. After the Adjudicating Authority had approved the resolution plan, the same was not challenged and had therefore acquired finality thereby vesting a right in favour of the SRA to acquire the Corporate Debtor in terms of the resolution plan. The same vested right therefore cannot be taken away except in accordance with law. Allowing any interference with the plan at this stage by introducing new claims would prejudice the SRA and put the Corporate Debtor into the throes of grave and unpredictable uncertainty at a time when the resolution plan has been implemented and the CoC not in existence anymore.
Considering the overall architecture of the IBC and the Court evolved jurisprudence, it is clear that the Adjudicating Authority is not empowered to modify the resolution plan approved by the Committee of Creditors. In the eventuality of the Adjudicating Authority finding that the approved resolution plan requires certain modifications, it can only make suggestions regarding the modification of plan to the CoC but cannot unilaterally modify the plan - There is no material on record to demonstrate any such non-compliance or default or failure or breach attributable on the part of the SRA in the plan implementation for the Corporate Debtor to warrant interference by the Adjudicating Authority.
The Adjudicating Authority has clearly exceeded its jurisdiction - Both the impugned orders are set aside. The Appeals are allowed.
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2024 (12) TMI 1150
Rejection of recall of the admission order - withdrawal of CIRP u/s 12A of the Insolvency and Bankruptcy Code (IBC) - exercise of inherent jurisdiction permitting withdrawal of CIRP proceedings against the CD.
Rejection of recall of the admission order - HELD THAT:- The Adjudicating Authority did not commit any error in rejecting the prayer of the Appellant in IA No.2241 of 2024 for recall of the order dated 08.10.2021. The Adjudicating Authority has also in paragraph 26 has noted the order passed by this Appellate Tribunal and has rightly observed that no case has been made out for recall of the admission order dated 08.10.2021. There are no error in the order of the Adjudicating Authority rejecting the prayer of the Appellant to recall order dated 08.10.2021. The order of Adjudicating Authority to that extent is not interfered with.
Withdrawal of CIRP u/s 12A of the Insolvency and Bankruptcy Code (IBC) - exercise of inherent jurisdiction permitting withdrawal of CIRP proceedings against the CD - HELD THAT:- With regard to withdrawal under Section 12A of the IBC, the law has been settled by Hon’ble Supreme Court in Glass Trust Company LLC v. BYJU Raveendran [2024 (10) TMI 1185 - SUPREME COURT (LB)]. The Hon’ble Supreme Court in the said judgment has noticed the procedure for withdrawal of the CIRP as provided in Section 12A and Regulation 30A of the CIRP Regulations - In the present case, Section 7 Application has been filed by Respondent Nos.6 to 9 and unless an Application is filed by the Applicant, who has initiated Section 7 Application, compliance of Section 12A read with Section 30A, cannot be made. The present is not a case where CIRP can be withdrawn under Section 12A read with Regulation 30A.
There can be no quarrel to the proposition that in a case where Adjudicating Authority comes to the conclusion that ingredients of Section 65 are attracted, i.e. Application has been filed with fraudulent or/ with malicious intent for the purpose other than the resolution of the Corporate Debtor, the Adjudicating Authority may impose on such person penalty. In a case where finding is returned within the meaning of Section 65, the Adjudicating Authority can very well exercise its inherent jurisdiction to close such CIRP proceedings.
While considering the exercise of inherent power by the Adjudicating Authority, it is already noticed the judgment of the Hon’ble Supreme Court in SBI vs. Consortium of Murari Lal Jalan & Florian Fritsch [2024 (1) TMI 1021 - SUPREME COURT], wherein the Hon’ble Supreme Court laid down that in an appropriate case, the Adjudicating Authority very well can exercise its inherent power.
The order passed by Adjudicating Authority rejecting the prayer of the Appellant to recall order of admission is upheld - appeal disposed off.
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2024 (12) TMI 1149
Penalty imposed under FEMA - petitioner was appointed as Vice President of the Board of Control for Cricket in India (“BCCI”), and claims to have been appointed Chairman of the IPL governing body, a subcommittee of the BCCI - relief in this case is firstly against the BCCI on the ground that by-laws require the BCCI to indemnify the petitioner.
HELD THAT:- In Zee Telefilms Ltd. & Anr. Vs. Union of India & Ors.[2005 (2) TMI 773 - SUPREME COURT] as held that the BCCI does not answer the definition of ‘State’ within the meaning assigned to this term under Article 12 of the Constitution of India. Therefore, this petition and the reliefs sought for it are not maintainable.
Though the above decision was delivered in 2005, this petition was instituted in 2018, pleading that the Hon’ble Supreme Court and this Court have consistently held that the BCCI is amenable to writ jurisdiction under Article 226 of the Constitution of India. In matters of alleged indemnification of the petitioner in the context of penalties imposed upon the petitioner by the ED, there is no question of discharge of any public function, and therefore, for this purpose, no writ could be issued to the BCCI.
In any event, the reliefs are wholly misconceived. The adjudication authority under the FEMA has imposed a penalty of Rs. 10,65,00,000/- upon the petitioner. The petitioner now seeks a writ of mandamus on the BCCI to pay this amount to the Enforcement Directorate (ED). No such mandamus can be issued.
This petition is frivolous, and accordingly, we dismiss this petition with costs of Rs. 1,00,000/- payable to Tata Memorial Hospital.
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2024 (12) TMI 1148
Penalty imposed - failure take reasonable steps for repatriation of export proceeds of US$ 5,36,759.50 for the goods exported in the year 1997-98 -
Ground of limitation - It would clearly reflect that respondent No. 2 had in fact issued the first show cause notice to the appellants on 23.01.2001 and the said date is well within the sunset period of two years prescribed u/s 49 (3) of the Act of 1999. The appellants have also submitted reply to the said notice on 01.12.2001, which again is within the sunset period itself, as in terms of Section 49 (3) of the Act of 1999 the proceedings could had been initiated up to 31.05.2002 which in the instant case was initiated on 23.01.2001 to which the appellant has also given his reply on 01.12.2001.
Hence, keeping in view the judgments of Mohd. Mustafa Ahmed Alvi and Others vs. Union of India and Others [2005 (11) TMI 257 - HIGH COURT OF ANDHRA PRADESH] and Binod Agarwal [2006 (12) TMI 587 - DELHI HIGH COURT] and M/s. Kitti Steels Limited and Others [2023 (6) TMI 1458 - TELANGANA HIGH COURT] the ground of proceedings being vitiated on the ground of limitation is not available in the instant case.
Merits of the case RBI’s write off was subject to the condition that the appellants would return the export incentive already availed by them. This in other words means that unless the return of the export incentive was testified by the appellants, the RBI’s write off will not come into play. The entire correspondence of RBI while granting write off has to be read in consonance and in altogether and therefore the claim of the waiver of contravention of Section 18 (2) of the Act of 1973 cannot be accepted on the submissions made by the learned counsel for the appellants on its face value.
What is also reflected is that the Appellate Tribunal has already duly considered the contentions put forth by the appellants as also the Special Director of Enforcement Directorate and have held that since the Special Director of Enforcement Directorate did not point out the actual amount of export incentive availed by the appellants, they are also to some extent reasonable for non-compliance of the order of the RBI so far as the write off is concerned.
Appellate Tribunal had substantially reduced the burden of penalty imposed in the Order in original to 1/3rd of what was imposed. This in the opinion of this Bench also is a sufficient indication of proper consideration of the contentions put forth by the appellants before the Appellate Tribunal.
A plain reading of the order of the Appellate Tribunal would also show that the Appellate Tribunal had passed a reasoned and a speaking order dealing with all the aspects raised before it by the appellants. Since there was a non-compliance on the part of the appellants so far as the condition imposed while granting write off, the appellants undoubtedly have contravened the provisions of Section 18 (2) and (3) of the Act of 1973.
We do not find any substantial merits made out by the appellants calling for an interference to the impugned orders. The three appeals therefore being devoid of merits, deserve to be and are accordingly dismissed.
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2024 (12) TMI 1147
Money Laundering - organized crime - proclaimed offender - whether the captioned Appeals challenging the impugned order should be entertained on the civil side or the criminal side? - HELD THAT:- The power of attachment of the property is therefore, conferred upon the Adjudicating Authority against whose order an Appeal is maintainable before the Appellate Tribunal, but this is a provision which is supplementary to the offence of money laundering created under the statute and with a specific provision prescribing that the confiscation or release of the property upon conclusion of trial, will depend upon whether the offence of money laundering has been made out or not. Upon a finding to that effect being finally rendered in a trial of an offence under PMLA, on conclusion of the trial, it can be rightly assumed that the power to attach the property and its adjudication is in the aid of the Special Court, who shall ultimately pronounce upon the aspect of commission of offence of money laundering.
Since the proceedings for attachment and its adjudication by the Adjudicating Authority, are in aid of the trial of the offence, an Appeal being preferred against an order passed by the Authority before the Appellate Tribunal, is definitely liable to be entertained on the criminal side.
By reading Section 9 of the Act, it was inferred that the proceedings taken therein, following the procedure of Code of Civil Procedure, results either in confirmation of ad-interim order of attachment passed by the Government or varying the same, and sale of property, leading to equitable distribution among depositors of money realised out of such sale, and it was concluded that it would be in form of Civil Appeal.
Reliance placed upon the decision of the Delhi High Court in case of Deputy Director, Directorate of Enforcement, Vs. Axis Bank and Ors. [2019 (4) TMI 250 - DELHI HIGH COURT] where the learned Judge has summarized the conclusion to the effect that the process of attachment (leading to confiscation) of proceeds of crime under PMLA is in the nature of civil sanction which runs parallel to investigation and criminal action vis-à-vis the offence of money laundering, do not determine the issue as to whether the Appeal should be entertained on criminal side or civil side. There can be no difference of opinion that while the proceedings of attachment are conducted by the Adjudicating Authority, in adjudicating the rights of the contesting parties, the Adjudicating Authority shall have the powers vested in a civil court under Code of Civil Procedure and the proceedings shall be deemed to be civil proceedings.
The ultimate test to be applied is, whether the attachment of property was on account of the registration of offence under PMLA, and what has to be done with the property on culmination of the trial, and in this case, since the result of attachment would depend upon the result of the trial of an offence.
Necessarily, the proceedings having criminal element involved, would lie on the criminal side of the High Court - the Appeal is directed to be listed after Christmas Vacation.
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2024 (12) TMI 1146
Money Laundering - challenge to provisional attachment order on the ground of time limitation - challenge to the order has been made mainly in reference to section 5 (3) of the Act of 2002 on the ground that the order of confirmation of provisional attachment order is subsequent to the period of 180 days, thus it should lapse - criminal conspiracy - forging of licenses - attachment of joint property.
Whether the confirmation of the provisional attachment order beyond 180 days should result in its lapse under Section 5(3) of the Prevention of Money Laundering Act, 2002? - HELD THAT:- The impugned orders were passed during the period of Covid-19. Both the orders were passed in the year 2021 which was the period of Covid-19. The Supreme Court extended the period for termination of proceeding under any statute.
Whether the attached property being a joint property without notice to the joint holder invalidates the attachment order? - HELD THAT:- There are no material on record to show that the property attached to be a joint property and in any case, if it is assumed for the sake of argument that the property attached is a joint property, the challenge to the order should have been made by the party holding the property with joint share. The appeal is not preferred by anyone else than the appellant - this ground cannot be accepted as well.
Thus, there are no case to cause interference in the impugned order - appeal dismissed.
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2024 (12) TMI 1145
Reinitiation of adjudication proceedings after a gap of nine years is time-barred u/s 73 (4B) of the Finance Act or not - jurisdiction to issue SCN - issuance of the impugned hearing notice by an officer under the CGST Act is valid or not - HELD THAT:- There is a merit in the contention of the learned counsel for the petitioner that the Revenue / respondents were in knowledge about the proceedings being dropped against the petitioner in respect of the earlier two show cause notices, and also the fact that the appeal of the Revenue had already been dismissed by the learned CESTAT vide judgment dated 15.09.2022 [2022 (9) TMI 853 - CESTAT NEW DELHI], i.e. about two years prior to issuance of impugned hearing notice dated 18.09.2024.
This Court is of the view that Section 73 (4B) was framed and introduced in the Finance Act to ensure effective administration of taxation. While there cannot be denying that the taxation forms the backbone of a nation's economy, any inordinate delay by the Revenue itself in prosecuting its own cases cannot be construed in their favour by stretching the period of limitation to nine years especially when the provision requires the proceedings to be concluded within six months / one year - De hors the aforesaid findings, even if one accepts that the time period of six months/one year as mentioned in Section 73 (4B) of the Finance Act is only suggestive, it would be unreasonable to hold that the same can be extended till a period of nine years in the given facts and circumstances of the case.
The Revenue’s contention that it was justified in keeping the proceedings in this case, in abeyance because an appeal pertaining to similar issue was pending before the learned CESTAT, is unmerited. The filing of an appeal in another case qua the petitioner, though on identical issue, and its pendency before the learned CESTAT cannot be held as a valid reason for not conducting the proceedings in the present case, after a show cause notice has already been issued, within the time frame as laid down in Section 73 (4B) of the Finance Act. Even if the said appeal was pending, the proceedings in this case could have continued and order(s) could have been passed, and if aggrieved, the Revenue could have again approached the learned CESTAT by way of an appeal.
There are no reason for the delay caused in the present case in not concluding the hearing qua the impugned show cause notice dated 21.04.2015 within the stipulated time period, and for issuing the impugned hearing notice dated 18.09.2024 after a period of nine years - it is apposite to quash and set aside the impugned hearing notice dated 18.09.2024 issued by respondent no. 5.
Petition disposed off.
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2024 (12) TMI 1144
Recovery of service tax - Interpretation of Sabka Vishwas Scheme under Article 226 of the Constitution of India - amount already deposited by the petitioner during investigation - HELD THAT:- It is not in dispute that the petitioner had deposited the amount of Rs. 30,36,101/- pending investigation which is also adjusted in the order-in-original passed by the respondent authority after the scheme was over while determining the tax liability under the provisions of the GST Act. Therefore, the amount of Rs. 30,36,101/- ought to have been considered as the amount paid towards the outstanding liability instead of amount of pre-deposit made by the petitioner of Rs. 4,86,851/- for preferring the appeal before the Commissioner (Appeals).
There is a glaring mistake committed by the Designated Committee while computing the amount payable under SVLDRS. The petitioner was always ready and willing to deposit the amount of Rs. 30,82,811/- after considering the amount of Rs. 30,36,101/- deposited by the petitioner. Therefore, by permitting the petitioner to deposit the amount of Rs. 30,82,811/- with interest, it cannot be said that the time period for deposit under SVLDRS would be extended as the Designated Committee has committed an error in computation of the amount payable under the provisions of the SVLDRS without taking into consideration the amount already deposited during the investigation by the petitioner.
The petitioner is directed to deposit amount of Rs. 30,82,811/- within a period of four weeks from today along with interest at the rate of 9% p.a. from 06.03.2020 till the date of payment - Petition allowed.
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2024 (12) TMI 1143
Classification of services provided by the appellants as Works Contract Service - taxability prior to 01.06.2007 - Issuance of two consecutive SCN - Extended period of limitation.
Classification of services provided by the appellants as Works Contract Service - taxability prior to 01.06.2007 - HELD THAT:- The works undertaken by the appellants are “Works Contract” as defined under Heading 65(105)(zzzza) and are taxable only w.e.f. 01.06.2007. This being the position, argument of the Department that the projects were not of commercial nature would not be of any help. Hon’ble Courts and the Tribunals have been continuously holding that such contracts involving service and material components are taxable only from 01.06.2007.
Issuance of two consecutive SCN - Extended period of limitation - HELD THAT:- The first Show Cause Notice covered the period of 10.09.2004 to 31.03.2010 and the second Show Cause Notice covered the period 2007-08 to 2011-12. Revenue has erred not only in issuing two consecutive Show Cause Notices invoking the extended period but also covered a period which was common to both the Show Cause Notices. No particular suppression of facts etc. with intent to evade payment of duty has been evidenced against the appellants - Extended period cannot be invoked.
Appeal allowed.
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2024 (12) TMI 1142
Exclusions made by the Department for the purpose of arriving at the ‘export turnover on the services’ in terms of N/N. 05/2006-CE(NT) dt.14.03.2006, as amended by N/N. 27/2012-CE(NT) dt.18.06.2012 - whether certain exclusions made by the original sanctioning authority for calculating ‘export turnover of services’ are correct or otherwise? - HELD THAT:- These services are intermediary services, viz., outbound call centre services and reimbursement in the nature of foreign exchange received towards services provided to foreign personnel who visit India. It is also noted that against the said exclusion of services for computing the export turnover, the appellant had come before this Bench in appeal and this Bench [2024 (1) TMI 887 - CESTAT HYDERABAD] has already decided the issue and held that 'it is clearly established that there is connection between the visits of the foreign customers and the backoffice support services provided by the appellant, in terms of the subcontracting arrangement, these expenses should qualify as export turnover and be allowed the benefit of export without payment of taxes since the same would be covered in terms of Rule 3 of the POPS, which says that the place of provision of service, would be the location of the recipient, in this case, HGRL, UK.'
The matter can be remanded back to the Original Sanctioning Authority - all these appeals are disposed of by way of remand.
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2024 (12) TMI 1141
Agreement of partnership or otherwise - Joint Venture (JV) - agreement along with the codicil - nature of service being provided by the appellant to M/s GG was classifiable under ‘Business Support Service’ or is rightly classified as ‘Mining Service’ under Section 65(105)(zzzh) of the Finance Act, 1994 w.e.f. 01.07.2007 - Invocation of exetnded period of limitation.
Whether the agreement dt.17.10.2001 along with the codicil can be considered as agreement of partnership or otherwise? - HELD THAT:- There are much force in the contention of the department that this is an agreement between service provider and service recipient and not a partnership agreement, if all the clauses are evaluated holistically. A codicil to the agreement made at a later date, that too unregistered, terming the whole agreement as an agreement of partnership will not be tenable in the light of the fact that the terms and conditions of the agreement dt.17.10.2001 were not changed, except for Income Tax related provisions, since on holistic evaluation of all terms and conditions, it is apparent that it is not an agreement of partnership and thus, there cannot be a service to sell, which appellants are canvassing. Therefore, the agreement dt.17.10.2001 is in the nature of service agreement between M/s GG and the appellant and not a partnership agreement, therefore, there would be liability to discharge Service Tax on the services provided by the appellant to M/s GG.
Whether the nature of service being provided by the appellant to M/s GG was classifiable under ‘Business Support Service’ or is rightly classified as ‘Mining Service’ under Section 65(105)(zzzh) of the Finance Act, 1994 w.e.f. 01.07.2007? - HELD THAT:- In the facts of the case, it is absolutely clear that the scope of the work is quarrying and the fact that M/s GG holds a prospecting license for black granite granted by the Director of Mines and Geology, the entire activity is mining activity only and not ‘Business Support Service’ as contended by the appellant. The appellant tried to highlight some of the clauses in their agreement in support that the activities would more appropriately fall within the category of Business Support Service rather than under Mining service as alleged by the Department. Admittedly, they are also raising invoices, jointly fixing sale price, furnishing periodical statements and returns and constructing rest shed, sanitary conveniences, blaster sheds, etc. However, these activities themselves cannot convert the entire quarrying and mining activities into Business Support services. These services are incidental to their mining services and are intrinsically required to be performed in connection with their mining activities in terms and conditions for providing that mining service to M/s GG - thus, the activities would be more aptly covered within the category of ‘Mining service’ and not under ‘Business Support service’ in the given factual matrix.
Whether, in the facts of the case, the provisions for invoking extended period if justified or otherwise? - HELD THAT:- While the appellants and M/s GG have entered into an elaborate agreement clearly marking the nature of services to be performed, they have not taken enough care to find out the exact nature of services or taxability and merely because they have furnished certain information or copy of agreement to the department, it would not absolve them from the invocation of extended period in the given facts of the case. The fact that they never disclosed codicil to Department or claimed their services as ‘Business Support services’ and not ‘Mining service’ also supports the view that appellants have not come out with clean hands before the Department. Therefore, there are no reason to interfere with the findings of the Commissioner relating to limitation.
Thus, in the present case, the agreement is not that of partnership and is in the nature of service agreement, where the appellants are service provider and are therefore, liable to pay Service Tax - they are providing ‘Mining Services’ and not ‘Business Support Services’ - there is sufficient ground for invoking the extended period for raising the demand - there are no infirmity in the impugned order and therefore any reason to interfere with the Order of the Original Authority.
Appeal dismissed.
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2024 (12) TMI 1140
Classification of services - service of conduction seminars and charging delegate fees - Convention Services or Club or Association Services? - Applicability of the principle of mutuality to the services provided by the appellant - HELD THAT:- The appellant is registered under Club or Association service which specifically excludes any person or body of persons engaged in the activities of Trade Unions. In the instant case, it is seen that the seminars and workshops being held by the appellant is for the benefit of their members only, as is obvious from the nature of these seminars. It is also noted that the appellant is an association of its members, and therefore no service tax can be charged on service to one self, as per the principle of mutuality.
Reliance pplaced in the decision of the Hon’ble Supreme Court in the case of STATE OF WEST BENGAL & ORS. VERSUS CALCUTTA CLUB LIMITED AND CHIEF COMMISSIONER OF CENTRAL EXCISE AND SERVICE & ORS. VERSUS M/S. RANCHI CLUB LTD. [2019 (10) TMI 160 - SUPREME COURT] wherein it was held that the definition of “club or association” contained in Section 65(25a) makes it plain that any person or body of persons providing services for a subscription or any other amount to its members would be within the tax net. However, what is of importance is that anybody “established or constituted” by or under any law for the time being in force, is not included. Consequently, the Hon’ble Supreme Court concluded that companies and cooperative societies and like which are registered under the respective Acts, can certainly be said to be constituted under those Acts, and therefore incorporated clubs or associations constituted prior to 1st July, 2012 are not included in the service tax net.
In the instant case, the appellant was an industry specific body of persons registered under the Trade Union Act, 1926. The main objectives, inter alia, to regulate the relationship between workmen and employers; to promote and regulate and consider all questions affecting them, make representations to local/State/Central government authorities on any matter connected them etc., falling within the parameters defined by the Hon’ble Supreme Court. Consequently, the holding of seminars/workshops by the appellant does not fall within the ambit of Convention Services on the basis of the principle of mutuality. Consequently, the charging of Delegation Fee is not leviable to service tax.
Thus, the demand of service tax on Convention service is liable to be set aside. Once the principle of mutuality is accepted, then all other activities carried out by the appellant on which demand has been confirmed is also set-aside - the impugned order is set aside - appeal allowed.
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2024 (12) TMI 1139
Activity amounting to manufacture or Business Auxiliary services - appellants are engaged in processing of goods of M/s. Varroc Engineering Pvt. Ltd. on job work basis and the said conversion charges are used for doing the said activity - Extended period of limitation.
Activity amounting to manufacture or Business Auxiliary services - HELD THAT:- The department has produced a detailed literature about the processes undertaken by them on the raw material received from the principal manufacturer to explain that the ‘Forged Blastings’ received from the principal manufacturer are being converted into ‘Gear 4th Platina’. The photographs of ‘Forged Blasting’ and the ‘Gear 4th Blatina’ are also placed on record. In fact, both the physical goods were also produced before the bench as sample - Though the product of the appellant is not the final product of M/s. Varroc Engineerig Pvt. Ltd. but the product sent back to the principal manufacture was no more a raw ‘Forging Blast’ supplied by the principal manufacturer. ‘Forged Blasting’ has converted into Gears/shafts except an outer gear cutting to be done at the end of M/s. Varroc Engineering Pvt. Ltd. in order to make them complete ‘Gears and Shafts’. But the fact remains is that after the job work done by the appellant, the ‘Forge Blasting’ as no more the same. It has converted into ‘Gear 4th Platina’ a distinct product known to said trade distinctly. No evidence produced by the department to falsify the same. The burden of proving the allegation was on the department itself.
Thus, the processes of cutting, deburring and broaching on the raw material/Forged Blastings have laid into existence of a new product having gear teeth on its internal ring and the cutting in the centre of the product which can now readily be identified and called as ‘Gear’. Hence it is held that since any process incidental or ancillary to the completion of manufactured product also falls in the definition of manufacture (Section 2(f) of Central Excise Act, already quoted) and that the processes undertaken by the appellant have imparted change of lasting character to the raw material to the extent that a new product had come into existence with a distinguishable identity, the activity done by the appellant is such which amounts to manufacture - the order confirming the demand of service tax alleging the job work done by appellant to be Business Auxiliary Service by provided to M/s. Varroc Engineering Pvt. Ltd. is liable to be set aside.
Extended period of limitation - HELD THAT:- The appellant is alleged to have suppressed the value of taxable services. The entire above discussion has already held that appellant was not providing any taxable services. The question of suppression of such activity becomes absolutely redundant. Since the activity of appellant is held to be an activity amounting to manufacture, question of appellant to seek service tax registration vis-à-vis rendering such activity does not arises. The allegations that ST-3 returns were not filed also becomes redundant. Thus, it has wrongly been held that non-filing of returns amounts to an act of suppression on part of the appellants. Since appellant was not liable to pay any service tax question of having intention to evade the tax payment is also not applicable - irrespective the appellant was processing the raw material as job worker but as already held above, a distinct product with distinct use and character had emerged, the job work was amounting to manufacture. Accordingly it is held that there is no act of alleged suppression on part of the appellant. The show cause notice has wrongly invoked the extended period.
The order under challenge is hereby set aside - Appeal allowed.
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2024 (12) TMI 1138
Application for refund against export of output services namely Information Technology from September 2008 to March 2009 rejected - non-registration of premises - HELD THAT:- After the decision of SPAN INFOTECH (INDIA) PVT LTD P LTD [2018 (2) TMI 946 - CESTAT BANGALORE], statute has been necessarily amended to incorporate provision to the effect that computation of limitation period to grant refund would start from the date of receipt of foreign exchange by the exporter, apart from the fact that section 35A(4) of the Central Excise Act 1944 which is equally applicable to Service Tax matters in view of operation of section 73(5) of the Finance Act 1994, the Commissioner (Appeals) is required to pass his/her order disposing of the appeal in writing by stating the points for determination, the decision thereon and the reasons for such decision, which is admittedly not done in respect of all issues raised before him while disposing of the appeal .
The matter requires a de novo hearing by the Commissioner (Appeals) for which this appeal is required to be remanded back to him for de novo hearing and for giving his finding in accordance with section 35A (4) of the Excise Act, equally applicable to Service Tax matters, while disposing of the appeal - the appeal is allowed by way of remand.
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2024 (12) TMI 1137
Liability of appellant to pay tax on outbound tours and for in bound tours being provided to foreign travelers - liability of appellant to pay service tax on domestic outbound tours - liability to pay service tax on the amount received as web design charges.
Whether appellant is liable to pay tax on outbound tours and for in bound tours being provided to foreign travelers? - HELD THAT:- Since, arrangement of tours outside the territory of India i.e the destination being outside India for outbound tours irrespective the service recipient is located in India or is a foreign traveller, the outbound tour is not liable to service tax. There is no tax activity on outbound tours in terms of Rule 3(2) of Export of Service Rules, 2005 according to which the taxable service which is partly performed in India has also to be considered as the activity performed outside India. Notification No. 09/2005 dated 03.01.2005 also extends exemption from service to outboud tours - reliance can be placed in M/S COX & KINGS LIMITED (FORMERLY KNOWN AS COX AND KINGS (INDIA) LIMITED) VERSUS COMMISSIONER (TAR) -MUMBAI [2023 (10) TMI 1388 - CESTAT MUMBAI - LB] - Issue stands decided in favour of appellant.
Whether the appellant is entitled to pay service tax on domestic outbound tours? - HELD THAT:- The insertion of clause (q) in Section 67 of Finance Act provides that the value of tour operator service will not only include the gross amount charged for the tour but also the charges for accommodation, food or any other facility provided in relation to such tour, we hold that the amount charged by the appellant for arranging domestic tour is liable to be taxed. In terms of TRU clarification No. 43/10/1997 dated 22.08.1997 the service tax on the services rendered by tour operators is only on tour services rendered in India in respect of tour with in Indian Territory (inbound tours). The services rendered by tour operators in respect of outbound tourism i.e. tours abroad do not attract to service tax. In case of composite tour which combined tour with in India and also outside India, the service tax will be leviable only on services rendered for tours within India. Separate billing has to be done by the tour operators for services provided in respect of tours within India. The order under challenge confirming the demand on inbound tours, is therefore, upheld.
Whether the service tax is to be paid by the appellant on the amount received as web design charges? - HELD THAT:- It is observed that the intellectual property right service has been defined under Section 65 (55a) of Finance Act 1994 to mean any right to intangible property, namely, trademarks, design, patent or any other intangible property under any law for the time being in forced. The term trademark is defined under clause 2(b) of Section 2 of Trade Marks Act, 1990 to mean a mark capable to being represented graphically and which is capable of distinguished goods or services of one person from those of others and may include shape of goods, the packing and combination of colours. The definition makes it clear that the trademark indicates relationship between goods or services and proprietor of such trademark.
The domain name is not a trade mark as neither user thereof nor the provider of the services is the proprietor of the domain name. Hence, any amount paid for using the domain name cannot be called as an amount paid for receiving the taxable service of intellectual property right. This observation are sufficient to hold that the demand on Issue No. 3 is not sustainable.
The demand with respect to outbound tours and the demand with respect to web domain charges is hereby ordered to be set-aside, however, the demand with respect to domestic tours provided to Indian travellers and the demand on renting of immovable property is hereby confirmed. The order under challenge is partly set-aside and partly sustained. Consequently, the appeal also stands partly allowed.
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2024 (12) TMI 1136
Liability to pay service tax on erection, commissioning, and installation charges included in the sale of Draw Texturising Machines - HELD THAT:- Similar matter has already been decided by this tribunal in case of C.C.E & S.T. -SILVASA VERSUS AALIDHRA TEXTOOL ENGINEERS PVT LTD [2022 (12) TMI 11 - CESTAT AHMEDABAD] and therefore the matter is no longer res-integra - it was held by CESTAT that 'where an activity so Integrarely related and connected with the manufacturing activity and the purchase orders are for the complete plant ind machineries, duty commissioned, without showing any segregated amount recovered for erection and commissioning and where the entire contract value is taken as an assessable value for the purpose of payment of excise duty, no service tax is liable to be paid by the assessee.'
Appeals of Revenue dismissed.
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2024 (12) TMI 1135
Whether the job worker is liable to pay central excise duty when the job worker has received raw material against challans under Rule 57 F (2) of the Central Excise Rules, 1944? - HELD THAT:- The identical issue was taken up by the Supreme Court after the High Court passed an order in favour of the revenue in Kartar Rolling Mills v. Commissioner of Central Excise, New Delhi [2006 (3) TMI 63 - SUPREME COURT], and the Supreme Court held that 'Since the notification came into effect from 11-4-1994, the benefit of the notification cannot be extended to the appellants retrospectively w.e.f. 1-3-1994.'
The demand for central excise duty ss affirmed by the Commissioner (Appeals) in the impugned order and subsequently upheld by the Tribunal, with a reduction in the penalties imposed upon the assessee - The reference is accordingly answered in favour of the revenue.
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