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2024 (4) TMI 874
Valuation of exported CD ROMS - Import of goods by availing excess export promotion benefits i.e. DEBP/DEEC Credits - intention of fraudulently obtaining excess DEBP/DEEC Credits, which were subsequently utilized for duty free import thereby causing loss of the Customs Duty - mis-declaration of value - suppression of facts - whether the duty foregone amount is liable to recovered from the respondents? - HELD THAT:- The transaction value declared is fair and the exports are genuine, the second allegation that respondents are not eligible for the DEPB entitlements, automatically loses its sanctity. Since the issue is no longer res integra, the instant revenue’s appeals can not be sustained.
The department’s appeal does not allege that the licences had been cancelled by the Additional Directo rGeneral of Foreign Trade in the instant case. Clearly, the facts are on record that the DGFT has not cancelled the DEPB credit scrips and same were valid in the eyes of law. The DGFT has still not cancelled or modified the DEPB licences already granted. So it is clear that DGFT does not agree with the contention of the department.
The allegation of the revenue that the exports have been misdeclared and DEPB scrips have been sought for and obtained fraudulently and imports have been made using invalid DEPB scrips, cannot be agreed upon. If it is the case of the department that DEPB scrips are fraudulently obtained by the respondents, It would have been appropriate that the department and customs authorities should have taken steps to get the DEPB scrips cancelled by making reference to the DGFT authorities who issued the scrips. Without taking any such action, to say that the DEPB scrips issued by competent authorities are invalid and fraudulently obtained is not proper and legal.
The Hon’ble Bombay High Court in the case of PRADIP POLYFILS PVT. LTD. VERSUS UNION OF INDIA [2004 (1) TMI 93 - BOMBAY HIGH COURT] considered the scope of jurisdiction of the customs authorities to question the validity of DEPB licences and held Once the licensing authorities have held that the export product is covered under the DEPB Scheme and have issued the DEPB licence, it is not open to the Customs authorities to hold that the said export product is not covered under the DEPB Scheme and have issued the DEPB licence, it is not open to the Customs authorities to hold that the said export product is not covered under the DEPB Scheme.
As valid DEPB scrips have been used for import of the goods by the respondents, there are no reason for demand of duty or confiscation of the goods, or imposition of penalties. In the light of this, no valid grounds have been brought out to interfere with findings of the Ld. Adjudicating authority.
There is no infirmity in the impugned orders and they need to be upheld - appeals filed by the revenue are dismissed.
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2024 (4) TMI 873
Seeking grant of bail - custody for more than 41 days - Smuggling - Gold - Indian and Foreign currency - HELD THAT:- There is possibility that, there may be more recovery and more involvement of the persons who are yet to be arrested. But it is required to note that as per their statement they themselves were not bringing gold from the Dubai but the part of smuggling. It is not disputed that there is huge recovery of Indian and foreign currency with gold and silver bars. But thereafter no further progress in the investigation is shown. Moreover, no further statement of the accused is recorded on the basis of further investigation. Already there was sufficient time with the respondent to investigate about his further involvement in the alleged smuggling. The prosecution is suspecting that he may again involved himself in similar type of activity. But care can be taken by imposing certain conditions to prevent him from engaging in smuggling activity. Therefore considering all these circumstances and already the seized currency and other goods were with the respondent it is just and proper to enlarge her bail on certain conditions.
Accused is allowed to be released on bail, subject to fulfilment of conditions imposed - bail application allowed.
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2024 (4) TMI 872
Seeking grant of bail - custody for more than 41 days - Smuggling - Gold - Indian and Foreign currency - HELD THAT:- There is possibility that, there may be more recovery and more involvement of the persons who are yet to be arrested. But it is required to note that as per their statement they themselves were not bringing gold from the Dubai but the part of smuggling. It is not disputed that there is huge recovery of Indian and foreign currency with gold and silver bars. But thereafter no further progress in the investigation is shown. Moreover, no further statement of the accused is recorded on the basis of further investigation. Already there was sufficient time with the respondent to investigate about his further involvement in the alleged smuggling. The prosecution is suspecting that he may again involved himself in similar type of activity. But care can be taken by imposing certain conditions to prevent him from engaging in smuggling activity. Therefore considering all these circumstances and already the seized currency and other goods were with the respondent it is just and proper to enlarge him bail on certain conditions.
Accused is allowed to be released on bail, subject to fulfilment of conditions imposed - bail application allowed.
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2024 (4) TMI 871
Violation of Section 233 of the Companies Act, 2013 - requirement of holding at least ninety percent of the total numbers of shares, for approval of scheme of amalgamation - non-application of mind - HELD THAT:- In the present case it is evident that the trial Judge has taken cognizance without any application of judicial mind. The order taking cognizance in this case has been only a formality - There is absolutely no application of mind. Cognizance has been taken casually without any prima facie findings.
There is also no reason for the petitioner to commit fraud by making a false statement as the petitioner has the option to take recourse to Sections 233(5), 233(6) and Section 232 of the Companies Act - The Companies are also at liberty to once again convene a meeting of the shareholders, secured creditors and unsecured creditors to comply with the provision of Section 233(1)(b) of the Act, as per the circular/letter no. 2/31/2013-CAA-CL-V-Pt-2 dated 24.08.2017 of the Ministry of Corporate Affairs, New Delhi.
It is clear from the petition of complaint that neither the Company nor the persons, who were in-charge of the day affairs of the company, have been made parties in the case. Without the Company and the persons responsible for the day to day affairs of the Company, the prosecution of the petitioner alone, who acted on behalf of the company is bad in law and thus clearly an abuse of the process of law.
The proceedings pending before the Learned, 2nd Special Court, Calcutta at West Bengal under Section 448 of the Companies Act, 2013 for alleged violation of Section 233 of the Companies Act, 2013, is bad in law and thus liable to be set aside - revision allowed.
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2024 (4) TMI 870
Arbitral Proceedings - Computation of one-year period for completing the proceedings - Rejection of request of the petitioner to extend the time and proceeded to post the proceedings for issues - exclusion of days during which the proceedings were stayed, for calculation of timeline of twelve months for completion of proceedings - HELD THAT:- From the order sheet of the Arbitral proceedings, it is seen that the petitioner who is respondent before the Arbitral Tribunal, took more than three to four adjournments to file its objection statement and also to file counterclaim. Thereafter, it took several adjournments and also sought extension of time to file surrejoinder. Admittedly, the Arbitral Tribunal entered reference on 17.11.2022, since then, the petitioner has filed six writ petitions challenging different interlocutory orders passed by the Arbitral Tribunal.
It is deemed appropriate to dismiss the present writ petition with costs of Rs. 25,000/-, payable to the ‘Karnataka State Legal Services Authority’. The above cost shall be paid within two weeks from today and shall produce receipt for having paid before the Arbitral Tribunal - the question of maintainability of writ petition raised by respondents need no perusal.
There is no merit in the writ petition - Petition dismissed.
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2024 (4) TMI 869
Rejection of application filed by the Appellant (Suspended Director) before the Adjudicating Authority - Challenging the authority of another director's actions and Approval of Resolution Plan CIRP - The appellant contends that the reply filed by another director on behalf of the Corporate Debtor was unauthorized and vexatious, intended to obscure alleged collusions and mismanagement. - HELD THAT:- The Adjudicating Authority in the impugned order has although noted certain submission of the Appellant made in the application but held that there being no authorization of the Board of Directors to file the application, application appears to be frivolous and seem to have been filed with the view to delay the proceeding. Appellant in the application has not claimed the application is being filed by any authorization of the Board. In the reply which was filed by Respondent No.2, which is also on the record, does not indicate that Respondent No.2 claimed any board resolution for filing reply on behalf of the Corporate Debtor. When reply filed by Respondent No.2 dated 09.05.2023 did not claim any board resolution for filing reply, we fail to see that how the application filed by the Appellant can be rejected on the ground that there is no board resolution supporting filing of the application. Appellant has filed the application as Director of the Corporate Debtor to bring various facts which according to the Appellant indicate that there is collusion between Respondent No.2, 3 and the Financial Creditor and several relevant facts have not been brought before the Adjudicating Authority by Respondent No.2 in his reply. The facts and material brought on the record does indicate that there has been serious dispute between the Directors inter se and a Memorandum of Understanding was also executed on 2901.2022, in which Memorandum of Understanding both the Appellant as well as Respondent No.2 and 3 with other persons were parties.
The observations of the Adjudicating Authority that application has been filed to delay the proceeding also does not commend us. 11.05.2023 was the first date of hearing on which order was reserved. The application was filed within three days i.e. on 14.5.2023, hence, conclusion drawn by the Adjudicating Authority that application has been filed to delay the proceeding is without any basis.
The impugned order set aside - appeal allowed.
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2024 (4) TMI 868
Direction for payment of fees to the Interim Resolution Professional and reimbursement of Rs 9 lakhs as CIRP expenses - wrong fixation of IRP fees - lack of earnestness and proficiency on the part of the IRP - HELD THAT:- There is no dispute over the fact that only three CoC meetings were held. The 1st, 2nd and 3rd meetings of the CoC were held on 24.06.2019, 13.11.2019 and 31.01.2020 respectively and all the three meetings were attended by the Authorised Representatives of the Appellant. However, when the decision-making process is analysed, it is noticed that that there were clear signs of lethargy and tendency on the part of the Appellant to defer decisions.
Coming to the subject matter of ratification of CIRP expenses incurred by the IRP and appointment of legal counsel; to approve fees to be paid to the IRP @ Rs. 2 lakhs per month and appointment of Resolution Professional and to fix his fees, it is found that this had figured in the agenda for discussion in the first CoC meeting itself but remained inconclusive since the Appellant had informed that they would convey the approval only after securing internal approval from their competent authority. The same paralysis in decision-making continued in the second CoC meeting wherein though the extension of the 90 days of the CIRP of the Corporate Debtor was agreed to by the CoC, on the issue of IRP fees and CIRP expenses it was informed that they would convey the approval within 15 days after securing internal approval from their competent authority.
The Appellant which had been delaying the CIRP process by deferring to take decisions in the CoC meetings on the ground that approval of higher authorities was required. There is substance in the contention of the IRP that the Appellant displayed non-responsive behaviour and lackadaisical approach in the CoC meetings inspite of being the sole CoC member.
During the entire CIRP process, the CoC neither approved the fees of the IRP nor did it raise any objection to the quantum of fees claimed by the IRP - when the IRP has on his own reduced his fees by 50% shows that his endeavours has been to keep his fees reasonable, there was no error on the part of the Adjudicating Authority to agree to the reduced quantum of fees. The IRP had also submitted the detailed chart of CIRP expenses before the Adjudicating Authority. Even the CIRP expenses has been reduced from Rs.11.91 lakhs to Rs.9 lakhs. Hence, there are no cogent ground to entertain any doubt on the application of mind on the part of the Adjudicating Authority in finding the IRP fees and CIRP expenses to be reasonable.
There are no reason to interfere in the impugned order passed by the Adjudicating Authority. The Appellant is directed to pay the erstwhile IRP/Respondent No.1 the fees of Rs 33 lakhs within one month from the date of the order - In so far as, payment of Rs 9 lakhs CIRP expenses is concerned, in terms of orders of this Tribunal dated 01.11.2023, any dues thereof which still remain payable maybe made directly to the bank accounts of those who have incurred the expenses as per details to be provided by the IRP.
Appeal dismissed.
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2024 (4) TMI 867
Admission of Section 9 application filed by Operational Creditor - time limitation - Section 10A of IBC - HELD THAT:- Section 10A of the Code prohibited filing an application under Sections 7, 9 & 10 for any default arising on or after 25.03.2020. The prohibition continues for one year from 25.03.2020 i.e., upto 24.03.2021. On looking into the Part IV of the application as well as the statement showing particulars of claim it is clear that apart from lease rental from April 2021, all claim was within the 10A period. For lease rental of April 2021, no CIRP can be commenced since it did not fulfil the threshold.
The Adjudicating Authority was of the view that Company Petition is hit by Section 10A and not maintainable. Despite the above observation, the Adjudicating Authority proceeded to admit Section 9 application by the impugned order. It is further relevant to notice that in paragraph 5 of the order dated 09.02.2024, Adjudicating Authority noted the Operational Creditor’s admission, that amount falls within a period stipulated in Section 10A of the Code - Section 10A came to considered by the Hon’ble Supreme Court in Ramesh Kymal Vs. Siemens Gamesa Renewable Power (P) Ltd. [2021 (2) TMI 394 - SUPREME COURT], Hon’ble Supreme Court after noticing the legislative scheme noticed that Section 10A provides that no application for initiation of CIRP can be initiated for a default occurring on or after 25.03.2020. The Hon’ble Supreme Court held that the expression “shall never be filed with the clear indicator that the intent of legislature is to bar the institution of any application”.
When there is a bar of initiation of an application, the mere fact that in the Reply filed of the Corporate Debtor no plea of the Bar was taken is in consequential. Further, Adjudicating Authority itself is aware of plea of Section 10A and has rejected the Amendment Application filed by the Operational Creditor on the ground that Company Petition is barred by Section 10A. Adjudicating Authority committed an error in proceeding to admit Section 9 application without adverting to the bar under Section 10A. Although in paragraph 5 itself the bar of Section 10A was noted which was admission of the Operational Creditor itself.
The purpose and object of Section 9 sub-Section (1) & Section 10A is entirely different. The scheme of the Sections 8 & 9 clearly indicate that Demand Notice can be issued only when there is a default, thus default has to be prior to Demand Notice. In the present case Demand Notice was issued dated 20.04.2021 and the default in the Part IV mentions from March 2020. The lease rental period which was claimed in the Part IV was from March 2020 till April 2021 - even if the lease rental of April 2021 is excluded, the entire claim of Operational Debt falls within 10A period and no application ever could have been filed for the default of the lease rental during the 10A period.
The application filed by the Operational Creditor was clearly hit by Section 10A and ought not to have been admitted. Adjudicating Authority committed error in admitting Section 9 application disregarding the bar under Section 10A - The application filed by the Operational Creditor under Section 9 was clearly barred by Section 10A, and the Adjudicating Authority committed an error in admitting Section 9 application by the impugned order dated 09.02.2024.
The Corporate Debtor is freed from CIRP. The IRP fee and expenses as fixed by the Adjudicating Authority in the impugned order i.e., ₹2,00,000/- shall be paid by Operational Creditor to the IRP if not already paid - the impugned order is set aside - appeal allowed.
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2024 (4) TMI 866
Approval of Resolution plan - Propriety of the valuation exercise conducted by the RP - lenders of the Corporate Debtor are allowed to pursue the personal guarantees given by the Appellant - Corporate Debtor intended to be kept as a going concern or not - resolution plan was within the contours of Section 30(2) of the IBC or not.
Propriety of the valuation exercise conducted by the RP - HELD THAT:- The RP did not violate the CIRP Regulations in the conduct of the valuation exercise. The RP had followed Regulation 27 to disclose the estimated fair and liquidation value of the Corporate Debtor. Further, we find that the CoC had duly considered and deliberated upon the valuation reports before deciding not to have any report from a third valuer. That being the considered business decision of the CoC, the supremacy of the commercial wisdom cannot be questioned by the Appellants. In fine, there are no infirmity in the conduct of the valuation exercise.
Tenability of the contention of the Appellants that the resolution plan by allowing the lenders of the Corporate Debtor to pursue the personal guarantees given by the Appellant was in violation of law as after the transfer of debts, the liability of the Corporate Debtor would stand extinguished - HELD THAT:- The Appellant was never discharged from its liability qua the personal guarantees under the resolution plan. Moreover, under Section 128 of the Contract Act, the liability of the borrower and guarantor are coextensive and the lender can choose to recover the outstanding shortfall amount from either of them. The contract of guarantee is an independent contract from the Loan Agreement and hence the contract of guarantee does not end if the borrower has failed to discharge the entire liability. Now when we apply the ratio of the judgement of the Hon’ble Supreme Court in Lalit Kumar Jain Vs UOI and Ors [2021 (5) TMI 743 - SUPREME COURT] to the present resolution plan, the personal guarantor is not discharged of his liabilities under the contract of guarantee. The release or discharge of a principal borrower from the debt owed by it to its creditor by operation of law or due to insolvency proceedings or liquidation does not absolve the guarantor of his liability which arises out of an independent contract. There is no specific bar under the IBC that a creditor cannot claim its remaining debt from the guarantor which has not been recovered from the Corporate Debtor - when the CoC in its wisdom has approved the resolution plan which provided for the continued rights of the Financial Creditor against the personal guarantor and did away with the subrogation rights of the personal guarantors, the contention of the Appellant that the liability of the personal guarantors should stand extinguished, not being in sync with the commercial wisdom of the CoC, is clearly devoid of merit.
Allegation that the SRA did not intend to keep the Corporate Debtor as a going concern - HELD THAT:- The SRA did not conceal the fact that he was submitting his plan along with his associates and since there is no bar in bringing other associates as co-applicants, there was nothing irregular in the submission of resolution plan by the SRA along with associates. All that the RP was required to do in such circumstances was to check the eligibility of the associates and this prescriptive requirement of Section 29A of IBC was complied with by the RP. To field response to the third issue raised by the Appellant, it is held that there is no irregularity in the conclusion of the Adjudicating Authority that the RP had carried out the verification exercise in terms of Section 29A of the IBC.
Whether the resolution plan was within the contours of Section 30(2) of the IBC in that it did not contravene the provisions of any law for the time being in force and that no material irregularity was committed by the RP in the CIRP process? - HELD THAT:- The law is thus well settled that commercial wisdom of the CoC approving the Plan cannot be interfered and it can be interfered only when there is statutory non-compliance, i.e., noncompliance of Section 30(2). The Adjudicating Authority has duly analysed the contents of the resolution plan of the SRA which has been approved by the CoC on 26.02.2020 with 99.69% vote share. Furthermore, in the present case, no grounds have been made that resolution plan approved by the CoC and the Adjudicating Authority violates any of the provisions of Section 30(2). Hence the resolution plan passes the muster - Given that the CoC has considered the resolution plan and passed the same with requisite majority and given the well settled legal position that the Adjudicating Authority has limited scope of judicial review available to it and cannot interfere on merits with the commercial wisdom of the CoC, there was no error committed on the part of the Adjudicating Authority in approving the resolution plan.
There are no ground in this appeal to interfere with the impugned order of the Adjudicating Authority approving the Resolution Plan. There is no merit in the Appeal - appeal dismissed.
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2024 (4) TMI 865
Maintainability of the instant petition - Money Laundering - scheduled offences - predicate offence - scope and spirit of Section 482 of the Cr.P.C. - whether the ECIR can be quashed in the exercise of its inherent jurisdiction under Section 482 Cr.P.C. by this Court? - HELD THAT:- On a minute perusal of the observations of Hon’ble the Supreme Court in Vijay Madanlal Choudhary’s case [2022 (7) TMI 1316 - SUPREME COURT], it can be safely culled that an ECIR cannot be kept at the same pedestal as an FIR. It is crucial to note that an ECIR is not registered under the Cr.P.C., unlike a First Information Report (FIR), which is mandatorily registered under Section 154 of the Cr.P.C., and subsequently forwarded to the Illaqa Magistrate as per the provisions of Section 157 of the Cr.P.C.. Additionally, there exists no legal obligation to provide a copy of the ECIR to an accused, and the absence of such provision does not in any manner impinge upon any constitutional or statutory rights of a person. Thus, an ECIR is an administrative document prepared by the officers of the ED. It precedes the commencement of the prosecution against individuals involved in the offence of money laundering, which in turn is governed by special statute i.e. PMLA.
This Court unhesitatingly concurs with the contentions made by the learned counsel for the respondent-ED that the ECIR is an internal administrative document of the ED. Consequently, in the considered opinion of this Court, since the ECIR precedes the stage of criminal prosecution and proceedings, it thus falls outside the purview of the inherent jurisdiction conferred upon this Court by Section 482 of the Cr.P.C. Therefore, the prayer of the petitioner for quashing of the ECIR under Section 482 of the Cr.P.C. cannot be entertained.
The present petition fails on grounds of maintainability itself, and is dismissed as such.
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2024 (4) TMI 864
Classification of services - transporting coal from one location to another - GTA services or cargo handling service - reverse charge mechanism - HELD THAT:- When WCL required a service provider to move the coal from one location to another and for this purpose, engaged the service of the appellant, the essential part of the contract is of transportation. Loading and unloading are incidental to it. Loading and unloading per se are of no use except when they are in conjunction with the transportation. The intention of the WCL is to transport coal and in the process, it also gets loaded on to the truck and unloaded at the destination.
While the activities such as packing, loading, unloading and unpacking may take substantial time and may even take longer than the actual transportation, the main purpose of the contract is to transport the goods from the old to the new residence which is the essential character of the service and packing, loading, unloading and unpacking are mere incidental activities to the main function of transportation.
WCL has already paid service tax on reverse charge basis on the transportation of coal under reverse charge. Therefore, the demand of service tax on the same service again from the appellant classifying it as “cargo handling service’ cannot be sustained.
The impugned order is set aside - appeal allowed.
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2024 (4) TMI 863
Resolution of dispute under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Seeking withdrawal of appeal - HELD THAT:- It is found that no order has been passed by the Appellate Authority on the merits of the case and the appeal has been dismissed as withdrawn for the reasons that Applicant had opted for SVLDRS Scheme. As the issue was not finally settled under the said scheme and no SVLDRS-4 issued, the matter has to be considered on the merits and final decision taken.
Undisputedly the matter was not settled under the SVLDRS Scheme and as the matter has not been settled under the said scheme right to appeal which is enshrined in the Finance Act, 1994 cannot be denied. Right of appeal is a statutory right and could not have been denied/ modified.
The fact about non settlement of the case under SVLDRS, was thus brought to the notice of the Commissioner (Appeal) before the dismissal of appeal. The Right of Appellant to get a decision on merits thus could not have been denied to them just for the reason that they had filed a declaration under SVLDRS, which was not accepted by the revenue authorities, and discharge certificate issued - As the Appellate Authority has not considered the issue on the merits and dismissed the appeal as withdrawn on the basis of submission that Appellant proceeded for settlement of the case under SVLDRS Scheme. The matter needs to be remanded back to the Appellate Authority for appropriate decision after consideration of the issues on merit.
Appeal is allowed and the matter remanded back to the Commissioner (Appeals) for decision on merits.
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2024 (4) TMI 862
Short/non-payment of service tax - Jurisdiction to raise the Demand - amount reimbursed by ABP to the Appellant on actual basis towards the direct cost of ABP operations in terms of the written agreement - relevant period is July 2004 to March 2007 - invocation of Extended period of Limitation - HELD THAT:- The demand is made clearly indicating the Service Tax payable, Service Tax paid and short payment of Service Tax. For the period 2004-2005 and 2005-06, they have held that no Service Tax is paid for the period 2006-2007. They have taken into account the Service Tax paid by the Kolkata unit and have arrived at the short payment of Service Tax. It is seen from the record that the Appellants were not registered at Kolkata during the period 2004- 2005 and 2005-2006 towards the billing done during this period. The Appellants have provided all the Service Tax details to the Department for the transactions carried out by Mumbai Unit. During that period, they have paid the Service Tax and filed their Returns at Mumbai.
In the present case, Kolkata Revenue officials did not have the jurisdiction to demand the Service Tax amount when Service Tax was paid at Mumbai and Returns were being filed over there. In view of the same, the confirmed demand of Rs. 51,43,753/- for the period 2004-2005 and 2005-2006 is legally not sustainable. We set aside the impugned Order and allow the Appeal to this extent.
Service Tax paid/payable during the period 2006-2007 - HELD THAT:- The Agreement very clearly specifies that the consideration to be paid to the Appellants are under different headings and they were to be re-reimbursed the direct cost incorporated by them. Accordingly, they have engaged PP Enterprises and for the payment made to them, the Appellants have raised Debit Note for getting the re-imbursement from ABP. This exact amount paid by Appellant to PPE is being reimbursed by ABP.
It is found from Annexure C of the Show Cause Notice that “Re-imbursement payment is not included in the Trial Balance”. This shows that this amount is not being treated as part of the income (consideration) by the Appellant. Therefore, the amount paid by ABP for PpE transactions are on account of re-imbursement of expenses only. Hence, the entire confirmed demand is not sustainable on merits.
Extended period of Limitation - HELD THAT:- Admittedly, the Appellants were registered with the Central Excise Department either at Mumbai or at Kolkata and they have been paying the Service Tax on the commission amount received by them and also filing their ST-3 Returns. All the transactions have been properly recorded in their Books of Account and the values have been derived by the Department from their Balance Sheet, P & L Account and Trial Balance - the confirmed demand for the extended period is set aside on account of time bar.
Appeal allowed on merits as well as on limitation.
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2024 (4) TMI 861
Refund of Cenvat Credit - 100% EOU / STPI unit - Export of services as well as providing services to Domestic Tariff Area (DTA) units - section 11B of the Central Excise Act, 1944 - disallowance of CENVAT Credit, wrongly taken by the party on ineligible input services - demand alongwith interest and penalty - Time Limitation - HELD THAT:- The manner in which the issue has been handled and decided by the lower authorities is not only unique but is totally alien to the legal provisions outlined by Finance Act, 1994 and the rules made there under. In case the revenue authorities were of the view that certain amount of tax due was not paid by the appellant, then the proper course would have been to confirm the demand under Section 73 of the Finance Act, 1994 and recover the amount so confirmed, from the amounts admissible as refund to the appellants by appropriating the same against amounts confirmed. It could have been adjusted against the amount available in the CENVAT credit as admissible credit. Non payment of some amounts towards due service tax liability cannot be reason for denial of CENVAT Credit or the refund under Rule 5. All operate under separate sphere and needs to be examined as per the parameters laid down as per law.
Time Limitation - HELD THAT:- There are no merits in the impugned order in view of the decision of larger bench in case of CCE & CST, BENGALURU SERVICE TAX-I VERSUS M/S. SPAN INFOTECH (INDIA) PVT. LTD. [2018 (2) TMI 946 - CESTAT BANGALORE] where it was held that in respect of export of services, the relevant date for purposes of deciding the time limit for consideration of refund claims under Rule 5 of the CCR may be taken as the end of the quarter in which the FIRC is received, in cases where the refund claims are filed on a quarterly basis.
Penalty - HELD THAT:- As the demand made in the orders of the lower authorities is not sustainable, the penalty imposed also is set aside.
There are no merits in the impugned order on any count - appeal allowed.
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2024 (4) TMI 860
Reversal of proportional CENVAT Credit - manufacture as well as trading activity - demand on the ground that the sale of tyre tube and flap in set to their depot is a trading activity which as per amendment made on 01.04.2011 such trading activity is a exempted service accordingly proportionate credit is required to be reversed - HELD THAT:- The activity of selling the tyre duly fitted with tube and flap whether a trading activity or otherwise is pending before the Hon’ble Supreme Court in appellant’s own case in SLP (CE) No. 34310-34311/2011 wherein two orders were issued by the Hon’ble Supreme Court dated 14.10.2011 and 08.11.2011. In view of this position unless it is decided that the activity is a trading activity or otherwise the consequential liability of proportionate credit in respect of service tax cannot be concluded.
Moreover the appellant have vehemently argued that the quantification of proportionate credit is incorrect, this is also reason that the matter needs to be reconsidered as regard the correct quantification of the demand. In this position the entire matter on all the issues need to be reconsidered only after the outcome of the Hon’ble Supreme Court judgment in the appellant’s SLP pending.
The impugned order is set aside - Appeal is allowed by way of remand to the adjudicating authority for passing a fresh order.
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2024 (4) TMI 859
Refund claim - rejection on the grounds of unjust enrichment - requirement to be credited to Consumer Welfare Fund constituted under Section 12C of Central Excise Act 1944 - HELD THAT:- It is quite evident that the appellant has categorically stated in the letter that they are charging the central excise duty from their customer, while maintaining the selling price at the same level by increasing the discount given from 40% to 52.10%. Undisputedly appellant himself admits that they are charging the central excise duty from their customers. That being so the burden of duty paid has been passed on the customer. The reason for giving additional discount to the customers can be many including the product competitiveness.
Appellant have argued that they had increased the discount percentage on the goods so that the burden of duty is not passed on. However this argument though attractive is without any merits. From the table in para 4.11 it is evident that for determination of the assessable value they have claimed deduction of 40% or 52.10% whereas the price of the goods to the customer remained the same. What they have recovered from the customers is the price of the goods and not the cum duty price. Above analysis clearly establishes that the appellant has passed on the burden of the duty paid on to their customers.
In case of COMMISSIONER OF C. EX., MUMBAI-II VERSUS ALLIED PHOTOGRAPHICS INDIA LTD. [2004 (3) TMI 63 - SUPREME COURT], Hon’ble Supreme Court has held even on merits, the respondent has failed to make out a case for refund. Since relevant factors stated above have not been examined by the authorities below, we do not find merit in the contention of the respondent that this Court should not interfere under Article 136 of the Constitution in view of the concurrent finding of fact.
If on examination of facts and documents the conclusion is that burden of the duty has been passed on to the customers the refund could not have been directed to the appellants but would have to be credited to the consumer welfare fund.
There are no merits in this appeal - appeal dismissed.
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2024 (4) TMI 858
Levy of Excise Duty - appellant has retained certain portion of freight without paying the same to the transporters on such freight amounts retained - place of removal - Extended period of limitation - HELD THAT:- It is seen from the record that the appellant is paying VAT at their factory gate as is evidenced by the invoices enclosed with the appeal papers. Therefore, ‘the place of removal’ in this case would be the factory gate of the appellant. This issue is no more res integra. The Hon’ble Supreme Court in the case of COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE, NAGPUR VERSUS M/S ISPAT INDUSTRIES LTD. [2015 (10) TMI 613 - SUPREME COURT] has held The fact in the present case 'deliverable state of goods, arises only at the time of safe delivery of goods at the customers' premises specified in the purchase order However, with reference to section 24 of the Sales of Goods Act, it was observed that in the instant case the property in the goods have passed only at the site of buyer. Therefore such place constitutes the 'place of removal of goods for section 4 of the Central Excise Act.
Extended period of Limitation - HELD THAT:- There are substantial force in the appellant’s contention that the issue was that of interpretation and was resolved only after the judgment of the Hon’ble Supreme Court in Ispat Industries case. Therefore, the confirmed demand for the extended period is liable to be set aside on account of limitation also.
The appeal is allowed both on merits as well as on account of limitation.
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2024 (4) TMI 857
Interest on delayed refund - relevant time for calculation of interest - HELD THAT:- Reference may be had to Article 25 of the Schedule to the Limitation Act, which stipulates that the period of limitation for “money payable for interest upon money due from defendant to the plaintiff” is 3 years and the time from which the period begins is when the interests become due.
In terms of Section 30 (4) of Delhi Sales Tax Act, 1975, interest becomes due and payable on delayed refund on expiry of 90 days from the date of making the claim under Sub-Section 3. Accordingly, the period of limitation for claiming interests on the delayed payment would be three years from the expiry of 90 days. Since the refund was delayed, for every passing month the interest accrued @1.5% per month. Accordingly, with every passing month with effect from the commencement of the period of limitation, interest for the preceding one month in the block of three years would extinguish and interest for succeeding one month would accrue.
Petitioner would be entitled to interest for a period of three years immediately preceding the filing of the subject petition till the date payment was made of the petitioner. Since the delay is beyond the period of one month as provided under Section 30 (4), the rate of interest applicable would be 1.5% per month - this petition is disposed off.
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2024 (4) TMI 856
Difference in turnover declared in GSTR 3B on comparison with the GSTR 1 statement - reversal of the Input Tax Credit (ITC) - HELD THAT:- The respondent recognised the fact that the petitioner paid amounts due with regard to the difference between GSTR 1 and 3B on 09.01.2023. In spite of noticing the same, the respondent recorded at page no.23 of the typed set that the taxable person did not pay the tax dues within 15 days of the receipt of the notice dated 17.03.2023. This conclusion is contrary to the documents on record. As regards the reversal of ITC in respect of purchases from Sri Vela Hardware and Paints, it is unclear as to the basis for concluding that the petitioner had purchased paint in view of the petitioner's reply dated 23.09.2023 and the documents annexed thereto.
Since the petitioner's reply and the documents annexed thereto were not taken into consideration, the impugned order is unsustainable as regards these issues.
The impugned order is set aside in so far as it pertains to the issues relating to difference between GSTR 1 and 3B and reversal of ITC with regard to purchases from Sri Vela Hardware and Paints. As a corollary, the matter is remanded for reconsideration only with regard to these two issues. After providing a reasonable opportunity to the petitioner, including a personal hearing, the respondent is directed to issue a fresh order with regard to these two issues within a period of three months from the date of receipt of a copy of this order.
The writ petition is disposed off.
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2024 (4) TMI 855
Cancellation of the petitioner's GST registration - petitioner had not filed returns for a continuous period of six months - HELD THAT:- Section 29(2)(c) of applicable GST enactments, as its stood at the relevant point of time, enabled cancellation of registration for non filing of returns by a registered person for not less than a continuous period of six months.
The petitioner has placed on record proof of filing of GSTR 1 and 3B returns for August and September 2022-23. Such returns were filed in February 2023. The impugned order of cancellation was issued on 15.03.2023, which is subsequent thereto. By the time of cancellation, on account of the filing of the returns for August and September of assessment period 2022-23, it could not have been concluded that the petitioner had not filed returns for a continuous period of six months. In those circumstances, the impugned order of cancellation cannot be sustained.
The impugned order of cancellation dated 15.03.2023 is set aside and, as a consequence, the registration of the petitioner shall stand restored. Such restoration is subject to the petitioner filing returns for all periods commencing from the effective date of cancellation - petition disposed off.
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