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2024 (7) TMI 1462
Clarification of judgment regarding the term "unsecured creditor" in a civil appeal - HELD THAT:- The word "unsecured creditor" referred to in paragraph 20 of the judgment be now read as "secured creditor".
Judgment dated 12.09.2023 is corrected to the above extent only - Miscellaneous application is disposed of accordingly.
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2024 (7) TMI 1461
Priority of debts due to any secured creditor - priority of SARFAESI Act versus FEMA - HELD THAT:- Debts due to any secured creditor shall be paid in priority over all other debts, dues and all revenues, taxes, cesses and other rates payable to the Central Government or State Government or other local authority; it follows therefrom that the provisions of the SARFAESI Act would prevail over the provisions of other earlier enactments, under which, amounts are allegedly due to the Central Government; it is well settled that if there are two special Acts / enactments, it is the later enactment that shall prevail; in the instant case, it cannot be gainsaid that the FEMA (a special law / Act) is an earlier enactment, while the SARFAESI Act (a special law / Act) is a later / subsequent enactment which would prevail over FEMA in the light of the principles laid down by the Apex Court in several judgments including Solidaire India’s case [2001 (2) TMI 968 - SUPREME COURT]
So also, in SBICAP’s case [2023 (3) TMI 1509 - BOMBAY HIGH COURT] held that the provisions of the Prevention of Money Laundering Act, 2002 (for short ‘the PMLA’) would be subservient to the rights of a secured creditor under the SARFAESI Act which would prevail and override the provisions of the PMLA.
In the instant case, in the light of the undisputed fact that the SARFAESI Act, 2002 is a later Act / law, the same would prevail over the earlier Act / law, i.e., FEMA, 1999 and having regard to the language employed in Section 26E of the SARFAESI Act, the provisions contained therein would have a overriding effect over the provisions of the FEMA and the SARFAESI Act would prevail over FEMA; as a natural corollary, the dues payable in favour of the petitioner – Bank which is a secured creditor would prevail over the dues allegedly payable to the respondents 1 and 2 by the 3rd respondent under FEMA and consequently, the impugned order purporting to seize / attach the schedule property for alleged dues under FEMA are clearly without jurisdiction or authority of law, inasmuch as since the schedule property had already been mortgaged in favour of the petitioner – Bank by the 3rd respondent, prior to the impugned order, the 2nd respondent was neither entitled to nor empowered to pass the impugned order of seizure / attachment of the property which had already stood mortgaged in favour of the petitioner prior to the impugned order.
Section 37A, under which the impugned order has been passed by the 2nd respondent being prospective in nature and operation, the said provision could not have been invoked by the 2nd respondent for the purpose of passing the impugned order of seizure / attachment in relation to the schedule property which had undisputedly stood mortgaged in favour of the petitioner – Bank prior to Section 37A coming into force and consequently, the said provision was not applicable to the schedule property and the 2nd respondent did not have jurisdiction or authority of law to invoke or apply Section 37A of the FEMA for the purpose of passing the impugned order which deserves to be quashed on this ground also.
Priority of secured creditors under Section 31B of the RDBI Act - A perusal of Section 31B of the RDBI Act and the principles laid down by the Full Bench of the Madras High Court supra, is sufficient to come to the conclusion that in the proceedings sought to be initiated by the petitioner–Bank under SARFAESI Act, which would be governed by the procedure prescribed under the RDBI Act, the petitioner –Bank being a secured creditor would have priority and the claim of the petitioner would prevail over the alleged dues payable under the FEMA as directed in the impugned order in the light of the overriding effect of the RDBI Act over the FEMA and consequently, viewed from this angle also, it is of the view that the impugned order deserves to be quashed.
Insofar as the contention urged by the respondents that the dues payable to them under FEMA are not specifically covered by either Section 26E of the SARFAESI Act or by Section 31B of the RDBI Act is concerned, in the light of the express language employed in both the provisions which contemplate debts, government dues, revenues, taxes, cesses and rates due to the Central Government etc., the alleged dues under FEMA being payable to the respondents 1 and 2 who represent the Central Government, the same are covered by the aforesaid provisions and as such, the said contention urged by the respondents 1 and 2 cannot be accepted.
Insofar as the contention as regards availability of equally efficacious and alternative remedy by way of an appeal under Section 37A (5) of the FEMA is concerned, in the light of the findings recorded by me hereinbefore that the impugned order is without jurisdiction or authority of law and the same is not only illegal and arbitrary but also contrary to the provisions contained in the SARFAESI Act and RDBI Act and consequently, mere availability of a remedy by way of an appeal cannot be construed or treated as denuding this Court of its jurisdiction under Article 226 of the Constitution of India and the said contention of the respondents 1 and 2 in this regard cannot be accepted.
Petition is hereby allowed. The impugned order at Annexure-A dated 31.03.2022 passed by the 2nd respondent insofar as it relates to the schedule property mortgaged by the 3rd respondent in favour of petitioner – Bank is hereby quashed.The 2nd respondent is hereby directed to release the schedule property mortgaged to the petitioner
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2024 (7) TMI 1460
Levy of service tax - income in the form of “Call Option Fee” - support service of business or commerce or not - period 2007-08 to 2013-14 - extended period of limitation - penalty - HELD THAT:- The “Call Option” is a derivative or a right in securities. Both of which are specifically included in the definition of “securities” in section 2 (h) & 2 (d)of the Securities Contracts (Regulation) Act, 1956 (SCRA). Securities are otherwise regarded as “goods” under normal parlance. Therefore, it is held that a grant of “Call Option’ is a transaction in goods hence cannot be subject to levy of service tax. The imposition of service tax on goods is beyond the scope of Finance Act, 1994.
In Vodafone [2012 (1) TMI 52 - SUPREME COURT] case Hon’ble Supreme Court has considered involving almost same companies as are involved herein. Though the department has taken plea that it is only in 2013 that SEBI granted validity to contracts providing for pre-emptive rights, right of first offer, tag along right, drag-along right and call & put options by revoking notification of year 2000. Hence for the period in question the ‘Call Options’ were not legalized. However, it is observed that in Vodafone case, Hon’ble Supreme Court has discussed and analyzed ‘Call Options’ at length and there seems not even a whiff that the ‘Call Option’ was illegal or not a valid contract. The judgment is prior amendment of 2013 in SCRA, 1956.
The Framework Agreement contemplated the transfer of SBP Shares upon exercise of the Call Option granted to GSPL, the requirement/ obligation on the Appellant to hold the underlying shares which were the subject of the Call Option was ancillary and necessary for the Call Option to be enforceable. Accordingly, the consideration could not be attributed, and was not paid, for such an ancillary requirement as it had no separable commercial value. Therefore, the consideration was not for the restriction contemplated under clause 4.1 but for the grant of the Call Option.
The SCRA further defines securities to include both "rights in securities" and "derivatives", The grant of call option by the Appellant to GSPL results in the transfer of Appellants right in securities, and the creation of a derivative contract which derives its value from underlying securities. Rights in securities and derivatives are specifically included in the definition of securities in the SCRA. Therefore, call options clearly fall within the activities excluded from the scope of the definition of 'service' in Section 65B (44).
Extended period of limitation - HELD THAT:- There is no discussion regarding any specific act on part of appellant which may establish the intent to evade tax. There is no discussion regarding which of the situation listed in clause (a) to (e) of the proviso to section 73 (1) of Finance Act is attracted - it is clear that granting “call option” is not an activity of rendering service. The appellant was of this bonafide belief only, which is why the service tax on “call option fee” was not paid by the appellant. In view of these apparent facts on record and absence of any evidence about the positive act of the appellant to evade duty, the department has wrongly invoked the extended period of limitation.
Penalty - HELD THAT:- The penalty has wrongly been imposed. Reliance placed upon the decision of Hon’ble Supreme Court in the case of UOI vs. Rajasthan Spinning and Weaving Mills [2009 (5) TMI 15 - SUPREME COURT] wherein it has been held that the evidence of deliberate deception by the assessee with an intent to evade duty is necessary for imposing penalty, same has been the observation of Supreme Court in the subsequent decision in the case of CCE, Chandigarh vs. Pepsi Food Ltd. [2010 (12) TMI 15 - SUPREME COURT].
The appellant has wrongly been held to have been a service provider while receiving “call option fee”. The demand of service tax has wrongly been confirmed. The Finance Act has wrongly been invoked and the penalty has also wrongly been imposed. For these reasons the order under challenge is hereby set aside - appeal allowed.
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2024 (7) TMI 1459
Taxability - Goods Transport Operator - Consulting Engineer Services - Department formed the opinion that the effective control and possession of the machines, given on hire by the appellants, remain completely with the appellants, the activity of appellant is covered under the taxable category of “Supply of Tangible Goods” which is not covered under Section 66D - Section 124 and 129 of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 and the Circular No. 1071/4/2019 dated 27.08.2019 - HELD THAT:- The relief as mentioned under the SVLDRS scheme is available to the declarant i.e. only to the person who applies under the scheme and declares as required. Everyone, whether company or its directors are eligble to apply to be called as declarant under the scheme - the discharge certificate shall also be issued to the declarant and after the discharge certificate it is declarant only who is given the benefit of no more being liable to pay any further duty, interest or penalty nor shall be liable to be prosecuted with respect to the matter in time covered in his declaration.
Perusal of the circular reveals that it fixes timelines for the various processes involved which are to be strictly adhered to so that the entire process of filing of declaration to communication of Department’s decision and to payment gets completed within 90 days. Once the declarant produces the proof of payment and withdrawal of appeal, Scheme provides for deemed withdrawal of appeal, a discharge certificate will be issued indicating a full and final closure of the proceedings in question for both the department and the taxpayer. It shall be the declarant only who shall be not be liable to pay any further duty, interest or penalty - the circular itself requires that once the duty demand stands discharged by the main noticees, the co-noticees also have to apply under the scheme to avail the similar benefit of waiver of penalty.
Since the appellant personally has not applied under SVLDRS, 2019, he cannot be called as declarant under the scheme. Hence the benefits flowing out of said amnesty scheme cannot be made available to the appellant. It is an established principle that the company is a separate legal entity and so are the Directors. In light of these observations we do not find any infirmity in the order under challenge.
The order under challenge is hereby upheld - Appeal dismissed.
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2024 (7) TMI 1458
Valuation - Passenger and Third Party Accidental Compensation Policy-2000 - whether the insurance scheme and the surcharge charged by the appellant amounts to premium? - levy of interest and penalty - HELD THAT:- According to popular understanding, insurance is a legal agreement between an insurer (insurance company) and an insured (individual), in which an insured receives financial protection from an insurer for the losses he may suffer under specific circumstances. Under an insurance policy, the insured needs to pay regular amount of premiums to the insurer. The insurer pays a predetermined sum assured to the insured if an unfortunate event occurs, such as death of the life insured, or damage to the insured or his property.
In the instant case, there is no insurance policy issued by Appellant mentioning any conditions and circumstances under which its passengers are assured for its liability to indemnify in case of any loss. In order to issue an insurance policy, the appellant should have to be licensed with the Insurance Regulatory and Development Authority (IRDA), in order to run business of insurance in India. The IRDA is an autonomous statutory body responsible for managing and regulating insurance & re-insurance industry.
In the instant case, there is no insurance policy issued by Appellant mentioning any conditions and circumstances under which its passengers are assured for its liability to indemnify in case of any loss. In order to issue an insurance policy, the appellant should have to be licensed with the Insurance Regulatory and Development Authority (IRDA), in order to run business of insurance in India. The IRDA is an autonomous statutory body responsible for managing and regulating insurance & re-insurance industry - It has to be noted that such a victim/third party has not paid any amount of such 'surcharge'. Consequently, we hold that for the period prior to 1.7.2012, the accident surcharge collected by the appellant is not in the nature of premium and such activity of the appellant is not covered by the term ‘general insurance’, as defined in Section 65(49) of the Finance Act, 1994. Further, the transportation of passengers as stage carriage, was exempted Vide Notification No. 20/2009-ST dated 7th July 2009, for inter-state or intrastate transportation of passengers, excluding tourism, conducted tours, charter or hire service. Hence, no service tax was payable on such service as well.
The main service of stage carriage can be provided by the appellant with or without charging accidental compensation surcharge, which is not the case. It has been submitted before us that these two viz, Cost of Ticket & Accident surcharge are always charged together. There is no option available to the passenger, to not pay and travel - the service of stage carriage being essential character is the main service offered by the appellant, which is not taxable due to its coverage under negative list u/s 66D of the Finance Act, 1994.
As the demand does not survive, no penalty or interest is leviable.
The impugned order is set aside - appeal allowed.
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2024 (7) TMI 1457
Denial of exemption under Section 66D of Finance Act, 1994 - providing long duration courses which are not approved by AICTE - Extended period of limitation - HELD THAT:- It is observed that as per Section 65(105)(zzc) of the Finance Act only such institute rendering Commercial Coaching or Training Centre Services were liable to service tax which were imparting the services and collecting fees as a profit motive as it was clarified by the Department’s Circular No. 86/4/2006 dated 01.11.2006. However, the Finance Act, 2011 has taken away the said exemption by incorporating clause 27 to Section 65 to cover all training centres giving training/coaching for a consideration irrespective of the profit motive of the centre were made liable to tax - there was a service tax liability upon the fee received for rendering education services w.e.f. 01.07.2003 itself, however, only till 01.07.2012 when came into existence the Finance Act, 2012.
For the impugned period irrespective the tax liability was introduced retrospectively, the said liability remained exempted w.e.f. 01.07.2012, the situation stands corroborated for the year 2016. Resultantly, there are no basis for the confirmation of the impugned demand as already - the show cause notice has wrongly been issued and that the appellant has no tax liability.
Invocation of extended period - HELD THAT:- The suppression of facts is wrongly alleged against the appellants, the appellants are already held to have no tax liability towards fees collected by them for imparting PG courses. There remain no possibility of tax evasion that too malafide intent for the same. Accordingly, it is held that the extended period of limitation has wrongly been invoked by department while issuing the impugned both the show cause notices.
The impugned order is set aside - appeal allowed.
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2024 (7) TMI 1456
Clandesine Removal - CTD bars and TMT rods - seizure of cash - addition based on the statements of the employees - discrepancy as regards the excess supply over and above the invoice to Raasi Traders - whether the Department has established the clandestine removal as alleged and upheld in the impugned order?.
Cash seized - addition based on the statements of the employees - HELD THAT:- The cash found and seized from the 1st Appellant has been explained to be the advance received from M/s. Nagaraja Agencies, which is also supported by the statements of the employees as well as the proprietor of M/s. Nagaraja Agencies and hence, the said cash was not attributable to the alleged clandestine sale. In any case, the addition was made solely based on the statements of the employees which statements have been retracted on a later point of time. Thus, a reasonable belief that the said amount did not represent the sale proceeds of the clandestinely removed goods has to be drawn because no incriminating evidence was found during the search, and nor is there any supporting evidence to this effect.
Alleged discrepancy as regards the excess supply over and above the invoice to Raasi Traders - HELD THAT:- The Department has not denied the contention of the 2nd appellant that in the book seized from Raasi Traders, name of the first appellant is not reflected, even in their letter dated 28.8.2012 they have clarified that they did not purchase any goods without invoice from the first appellant. The document seized from Raasi Traders does not contain or show the appellant’s name as alleged by the Revenue and in any case, there is also no corroborative evidence to support the Revenue’s case. The said letter is clearly a retraction to the earlier statement of the Partner and apart from this, there is absolutely no other evidence, much less any incriminating evidence placed on record, that was unearthed by the search team.
The department has nowhere denied the facts as explained by the 2nd appellant that the document alleged to be seized from their premises did not show anywhere the name of the first appellant who is alleged to have supplied goods in excess. It also remains undisputed about the clarification offered by the 2nd appellant as regards the alleged excess stock found vis-à-vis the actuals found in their book and hence, the alleged excess stock was nothing to do with the 1st appellant.
The department has not established clandestine removal or clandestine sale by the 1st appellant and nor has the department succeeded in corroborating the alleged excess supply to Raasi Traders to be of clandestinely sold goods. Hence, there was nothing on record to justify even the levy of penalties and interest and therefore, the interest charged on the appellants and the penalties imposed on them cannot sustain.
The impugned order is set aside - appeal allowed.
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2024 (7) TMI 1455
CENVAT Credit - transportation of goods from their factory to the buyer's premises as well as to their own units which were further used in the manufacture - Disallowance of credit of service tax paid on freight charges incurred by appellant up to the buyer's premises.
CENVAT Credit - transportation of goods from their factory to the buyer's premises as well as to their own units which were further used in the manufacture - Department was of the view that the transportation was beyond the place of removal and therefore, the appellant is not eligible for Cenvat credit of the service tax paid on such freight charges incurred for transportation - periods from July 2011 to November 2011, December 2011 to March 2012, April 2012 to December 2012, January 2013 to September 2013 and October 2013 to September 2014 - HELD THAT:- The very same issue was considered by the Hon’ble High Court, Madras in the appellant's own case in [2019 (9) TMI 328 - MADRAS HIGH COURT]. As per judgment dated 20.08.2019, the Hon’ble High Court categorically held that the appellant is eligible for credit.
Following the decision of the Hon’ble High Court in the appellant's own case, it is held that the credit availed on service tax paid for freight charges incurred for transportation of goods to the appellant's unit at Jamshedpur and Uttarakhand is eligible. The impugned order disallowing the credit, and confirming the demand, interest and imposing penalties on this issue is set aside.
Disallowance of credit of service tax paid on freight charges incurred by appellant up to the buyer's premises - HELD THAT:- The appellant is eligible for credit if the freight charges has been included in the assessable value for payment of central excise duty. The Larger Bench in the case of M/S. THE RAMCO CEMENTS LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, PUDUCHERRY [2023 (12) TMI 1332 - CESTAT CHENNAI-LB], has held that the place of removal has to be ascertained on the basis of the decisions passed by the apex court in the case of COMMISSIONER CENTRAL EXCISE, MUMBAI-III VERSUS M/S. EMCO LTD. [2015 (8) TMI 200 - SUPREME COURT] and COMMISSIONER, CUSTOMS AND CENTRAL EXCISE, AURANGABAD VERSUS M/S ROOFIT INDUSTRIES LTD. [2015 (4) TMI 857 - SUPREME COURT]. The Board’s Circular issued in 2018 also clarifies the same.
In such circumstances, this issue requires to be remanded to the adjudicating authority, who is directed to ascertain the place of removal. The appellant is to be given personal hearing and is at liberty to furnish documents to establish their contention. In case the appellant has included the freight charges in the assessable value for payment of central excise duty, they would be eligible to avail credit of service tax on such freight charges.
The impugned order is modified to the extent of allowing the credit of service tax for outward transportation to the appellant's own unit. The demand, interest and penalties imposed in this regard is set aside - The issue of availment of credit on outward transportation up to the buyer's premises is remanded to the adjudicating authority for fresh consideration.
Appeal allowed in part and part matter on remand.
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2024 (7) TMI 1454
Valuation - incusion of amount of subsidy received by the appellant under the Rajasthan Investment Promotion Scheme, 2010 from the State Government in the assessable value of the goods cleared during the period in dispute - Section 4(3)(d) of Central Excise Act - period during 1.4.2016 to 31.03.2017 - HELD THAT:- Reliance placed on the latest decision in M/S HARIT POLYTECH PVT. LTD. VERSUS COMMISSIONER, CENTRAL EXCISE & CGST- JAIPUR I, GANPATI PLASTFAB LTD., M/S APEX ALUMINIUM EXTRUSION PVT. LTD., M/S MAHA MAYAY STEELS, M/S. TIRUPATI BALAJI FURNACES PVT. LTD., M/S. TRANS ACNR SOLUTIONS PVT. LTD., M/S. FRYSTAL PET PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS & CGST- ALWAR [2023 (3) TMI 1120 - CESTAT NEW DELHI], where on reference the issue was once again settled that in the promotion policy involved in the present case, the subsidy does not reduce the sales tax that is required to be paid by the assessee as the entire amount of sales tax collected by the assessee from the customer is paid. The subsidy amount, therefore, cannot be included in the transaction value for the purpose of levy of central excise duty under Section 4 of the Excise Act.
The principle of law that emerges from series of decisions is that the VAT amount paid by the assessee using VAT 37B challans would be construed as actual payment of VAT and thus will not be included in the transaction value in terms of Section 4(3)(d) of the Act - the impugned order holding otherwise needs to be set aside. In the present case also, the entire amount of sale tax collected from the customer is paid and not retained by the appellant.
The other submissions made on the point of extended period of limitation or the liability towards interest and penalty, not considered, which otherwise do not survive.
The impugned order deserves to be set aside - Appeal allowed.
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2024 (7) TMI 1453
CENVAT Credit - input service - clearing and forwarding agency service - denial of credit on the ground that warehouses and dealers points are not the place of removal - whether the warehouse / depots are the place of removal or not? - HELD THAT:- As apparent from the said definition clause (2) thereof includes warehouse to be a place of removal and clause (3) thereof includes depots as the place of removal. Admittedly, the cement manufactured by the appellant has been transferred to the warehouse/depot. Admittedly, the C & F Agency service is obtained for the transit from factory to warehouse or depot. As already observed from the above definition, the warehouses as well as depot are also the place of removal.
The decision of Bombay High Court in the case of CCE, NAGPUR VERSUS ULTRATECH CEMENT LTD., [2010 (10) TMI 13 - BOMBAY HIGH COURT] as relied upon by the appellant has been upheld by Hon’ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX VERSUS ULTRA TECH CEMENT LTD. [2018 (2) TMI 117 - SUPREME COURT]. The ratio of the decision is that all input services as has been received till the place of removal are eligible for the availment of Cenvat Credit.
Thus, it is clear that the service of C & F agent as received by the appellant since was received till the place of removal; it is held that appellant is eligible for the availment of Cenvat Credit. The denial of said availment is not sustainable. The order under challenge is liable to be set aside - appeal allowed.
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2024 (7) TMI 1452
Challenge to proceedings initiated by the appellant – State Bank of India under the SARFAESI Act, 2002 - HELD THAT:- There being a mortgage and the loan amounts recoverable, the appellant is entitled to proceed under the SARFAESI Act - the liability of the guarantor is joint and several with the principal debtor.
The impugned judgment is set aside. Consequently, the appellant– State Bank of India is entitled to proceed under the SARFAESI Act, including the notice under Section 13(4), which was impugned and quashed vide the impugned judgment - Appeal allowed.
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2024 (7) TMI 1451
Requirement of pre-deposit towards compliance with proviso to Section 43 (5) of Real Estate (Regulation and Development) Act, 2016 (RERA) - liability of the Appellant to pay such interest is not in praesenti but in future - direction to deposit of the entire amount of interest when proviso to sub-Section (5) of Section 43 permits deposit of 30% of the penalty.
Requirement of pre-deposit towards compliance with proviso to Section 43 (5) of Real Estate (Regulation and Development) Act, 2016 (RERA) - HELD THAT:- The requirement of making pre-deposit under Proviso to Section 43 (5) is applicable only in respect of an appeal filed by the promoter. When the flat purchaser/allotee files an appeal, there is no requirement of making any pre-deposit. Since the appeals in the present case are filed by the promoter, Proviso to Section 43 (5) gets attracted. According to the Appellant, ‘the total amount to be paid to the allotee including interest and compensation imposed on him’ within the meaning of the Proviso has to be the amount which is payable on the date of passing of Order by MahaRERA. That such ‘total amount’ does not and cannot mean the amount which is payable to the complainant in future.
It must be borne in mind that the special exemption for deferring the payment of interest by Appellant is given only for the purpose of ensuring that the entire project is not put in jeopardy and that other flat/office purchasers do not suffer. This dispensation is not granted to protect any interest of the promoter. Such deferment would therefore not mean that promoter would get a licence to treat the Order passed by MahaRERA as imposing no obligation as on the date of passing of the Order. If the promoter decides to challenge MahaRERA’s order, the protection of deferment of payment of interest cannot be applied while deciding the issue of pre-deposit under Proviso to Section 43 (5). There is determination of the amount by the Regulatory Authority, the liability on promoter is fastened and only the time for making the payment is postponed. Therefore it cannot be countenanced that no liability is fixed at the present on Appellant.
The objective behind making mandatory pre-deposit under proviso to Section 43 (5) is to put a deterrent on promoters from engaging flat purchasers in endless litigation without any consequences for him. If this objective is borne in mind, permitting Appellant to prosecute Appeals challenging MahaRERA’s order without any consequence of making pre- deposit would destroy the very objective behind incorporation of Proviso to sub Section 5 of Section 43.
Even if liability to pay interest is deferred by MahaRERA in the overall interest of the project, such deferment is granted only if the promoter is willing to be abide by the Order of the Regulatory Authority. Such deferment will have no effect on promoter’s liability to make pre-deposit under Proviso to sub Section 5 of Section 43. Therefore, Appellant must deposit the amount quantified by the Appellate Tribunal as a pre-condition for entertainment of its Appeals.
The Appellant must deposit the amount of interest as directed by MahaRERA as a pre-condition for entertainment of Appeals before the Appellate Tribunal, even though its liability to pay such interest is not in praesenti but in future. This would however be subject to deduction of amount of interest in respect of COVID-19 pandemic period as per Notifications/Order Nos. 13 and 14 dated 2 April 2020 and 18 May 2020.
Deposit of 30% penalty under Proviso to sub-Section 5 of Section 43 - HELD THAT:- It is fairly conceded that what is directed to be paid by MahaRERA is not penalty but interest, which would be covered by the expression ‘the total amount to be paid to the allotee’. In the light of the above, the second question formulated can be answered holding that the entire amount awarded by MahaRERA (subject to minor modification) must be deposited and issue of deposit of any penalty does not arise in the present case.
The Appeals filed by Appellant are partly allowed to the limited extent of directing the Appellate Tribunal to deduct the amount of interest payable during the moratorium period covered by Notifications/Order Nos. 13 and 14 dated 2 April 2020 and 18 May 2020 issued by MahaRERA. The Judgment and Order of the Appellate Tribunal dated 31 October 2022 shall be modified to this limited extent and rest of the Order is maintained.
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2024 (7) TMI 1450
Detention of goods on its onward journey - detention on the ground that the goods were being dispatched on a place different than mentioned in the documents - levy of penalty u/s 129 of the UPGST Act - existence of mens rea or not - HELD THAT:- It is not in dispute that the purchaser was of Chandpur, but the goods were to be consigned to M/s Udit Engineers, Aligarh. When the goods were onward journey, the same were intercepted as in the e-way bill, the place of delivery was mentioned as Chandpur (UP), instead of Aligarh. This error can occur due to human error while filling up the form/e-way bill. Further, there is no finding recorded by any of the authorities below that there was a mens rea for evading payment of tax. Even before this Court, there is no pleading on behalf of the Sate that there was any intention to evade tax.
This Court in Nancy Trading Company [2024 (7) TMI 1303 - ALLAHABAD HIGH COURT] has held that 'The error committed by the petitioner for not generating E Tax Invoice before movement of goods is a human error. It is also not in dispute that prior to 1st August, 2022 the dealers who were having annual turn over of more than Rs. 20 crores was required to issue E Waybill. The said limit has now been reduced with effect from 1st August, 2022 to Rs. 10 crores, hence there was bona fide mistake on the part of the petitioner for not generating E Tax Invoice but in absence of any specific finding with regard to mens rea for evasion of tax, the proceeding under section 129 (3) of the Act should not have been initiated.'
The impugned order dated 30.09.2020 passed by the respondent no. 3 as well as the impugned order dated 21.08.2019 passed by the respondent no. 2 cannot be sustained in the eyes of law - petition allowed.
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2024 (7) TMI 1449
Initiation of proceedings under Section 129 of the TSGST Act - detention of vehicle with goods - movement of taxable goods without E-Way bill - HELD THAT:- The proceedings for violation of the provisions of Section 129 of the TSGST Act have been initiated by respondent No.6 during inspection and detention of the vehicle bearing No. TR-01-AH-1562 on 09.07.2024 allegedly loaded for delivery of consignment from the warehouse of the petitioner at Bypass Road, Dukli, West Tripura to Udaipur, Gomati Tripura after the E-Way bill had expired on 07.07.2024. This fact does not appear to be in dispute even as per the reply submitted by the petitioner at Annexure-13. The relevant MOV-01, MOV-02 and MOV-07 also indicate that there was a mismatch in the number of the vehicle with the vehicle number mentioned in the E-Way bill which had expired.
This Court is not required to interfere in the matter since the proceedings are inchoate. Needless to say, the authorized officer/respondent No.6-Inspector of State Taxes has to conclude the proceedings in accordance with law upon giving opportunity of physical hearing to the petitioner and/or the driver of the conveyance within the stipulated time - Petition disposed off.
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2024 (7) TMI 1448
Doctrine of mutuality - Levy of GST on services in carrying out the activities by the petitioner association - Constitutional Validity of Section 2 (17) (e) and Section 7 (1) (aa) and explanation thereto of the Central Goods and Service Tax Act, 2017 and corresponding provisions of Kerala Goods and Services Act 2017 - vired of Article 246A read with Article 366 (12A) and violative of Articles 14, 19(1) (g), Articles 265 and 300A of the Constitution of India or not - constitutional validity of retrospective effect from 01.07.2017 of Section 7 (1) (aa) - violative of Articles 14, 19 (1) (g) Articles 265 and 300A of the Constitution of India or not.
Interpretation of statute - Whether an amendment is clarificatory or it is a substantive change and mere legislature assertion that the amendment is clarificatory is not conclusive?
HELD THAT:- The Supreme Court in its judgment in the case of Karnataka Bank Ltd v. State of Andhra Pradesh [2008 (1) TMI 605 - SUPREME COURT] deals with the levy of professional tax under Article 276 of the Constitution of India held that the Constitution empowers the State Legislatures to impose professional tax on any person subject to the maximum cap of Rs. 2500/- per person. The Andra Pradesh State Legislature defines the term person under Section 2 (j) of the Act and explanation to Section 2 (j) of the Act provided that every branch of a firm, company, corporation or other Corporation Body, any Society, Club or Association shall be deemed to be a person.
The Supreme Court held that the Legislature should be given the widest power to define the term Person who is to be taxed and a different meaning that the definition in the General Clauses Act can be given for the purposes of taxation and the Legislature in its wisdom can create an artificial unit to define a person for the purposes of levy of tax, and hence, the definition that every branch of a corporate entity would be deemed to be a person and each such branch would be liable for tax independently was upheld.
In the case of State of Madya Pradesh v. Rakesh Kohli [2012 (5) TMI 262 - SUPREME COURT] the Supreme Court held that the Legislature enjoys a greater latitude for classification, and it is open to the Legislature to identify areas of evasion of tax and bring in provisions to plug the loopholes even by deeming fiction or artificial definitions.
The Parliament / State Legislature has amended Section 7 (a) by inserting Section 7(aa) by the Finance Act, 2021. The amendment, as held, is neither beyond legislative competence nor offends any of the fundamental rights guaranteed under Part III of the Constitution of India nor is manifestly arbitrary or capricious. Therefore, the amendment brought in Section 7 (a) by inserting Section 7 (aa) is well within the legislative competence and not ultra-virus.
Whether the petitioner can be asked to pay tax retrospective, i.e., w.e.f 01.07.2017 when the principal of mutuality was in vogue, and GST authorities never issued a notice to the petitioner for payment of GST by them? - HELD THAT:- Before the amendment was brought in inserting Section 7 (aa) by the Finance Act, 2021, the law of mutuality was well established in the principle of taxation in case of supply of goods and services by clubs/associations to its members. The GST is an indirect tax to be paid by the recipient of goods and services. When the law of mutuality, as held in the Calcutta club case, was understood by the authorities as well as the petitioner, the petitioner did not collect the GST. However, once the amendment has been brought into statute by inserting Section 7 (aa) by the Finance Act 2021, the petitioners have become liable to pay the GST on the supply of goods and services to their members. Section 7 (aa) in my view, therefore, should not be given retrospective operation w.e.f 01.07.2017 but it should be given effect from the date when it was notified ie., 01.01.2022.
Whether all the activities undertaken by the petitioner involve the supply of goods and services to its members? - HELD THAT:- The various activities undertaken by the petitioner association have been mentioned in previous paragraphs of the judgment. Therefore, the assessing authority is required to examine each activity independently to arrive at a conclusion as to whether such an activity involves the supply of goods and services so that the tax may or may not be imposed on such activity. However, this court would not like to comment on this aspect, and it is left open to the petitioner to satisfy the assessing authority that the particular activity is not involved in any supply of goods and services.
The present writ petitions so far as the challenge to the constitutionality of Section 7(aa) is concerned are dismissed - However, it is held that the provisions of Section 7(aa) will have prospective operation with effect from 01.01.2022.
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2024 (7) TMI 1447
Cancellation of the petitioner's GST registration - failure to file returns in time on account of ill-health - HELD THAT:- The appellate authority cannot be faulted for rejecting the appeal in view of the language of Section 107 of the Central Goods and Services Tax Act, 2017. At the same time, the petitioner should not be left without remedy.
In Suguna Cutpiece v. The Appellate Deputy Commissioner (ST)(GST) and others, [2022 (2) TMI 933 - MADRAS HIGH COURT], this Court directed restoration of registration subject to certain conditions. In the over all facts and circumstances, the petitioner is entitled to an order on similar lines.
The petitioner is directed to file returns for the period prior to the cancellation of registration, together with tax dues along with interest thereon and the fee fixed for belated filing of returns within a period of forty five (45) days from the date of receipt of a copy of this order - petition disposed off.
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2024 (7) TMI 1446
Seeking reimbursement of GST payment from Municipal Council - grievance of the petitioner as echoed in this petition is that the said order has not been complied with by the Municipal Council, Bhind in letter and spirit and reimbursement is yet to be made to the petitioner - HELD THAT:- Reliance placed upon the judgment of the Coordinate Bench in M/S M.K. ENGINEERS VERSUS THE STATE OF MADHYA PRADESH, PROJECT ENGINEER JABALPUR, MANAGING DIRECTOR M.P. POLICE HOUSING AND INFRASTRUCTURE DEVELOPMENT CORPORATION LTD., SUPERINTENDING ENGINEER OFFICER OF CHIEF COMMISSIONER CUSTOMS [2023 (10) TMI 1419 - MADHYA PRADESH HIGH COURT] in which it was held that 'In case the amount so claimed by petitioner is undisputed and due then the same shall be released or else if there is any legal impediment in releasing the same, then a speaking order shall be passed assigning reason for declining the claim within an outer limits of 30 days from the date of receipt of representation." and petitioner seeks parity with that order.'
On going through the documents annexed with the petition as well as order of the Coordinate Bench dated 06th October, 2023 this writ petition is disposed of with the direction that respondent/ Municipal Council, Bhind shall comply the directions as contained in the above case, mutatis mutandis.
The petition is disposed off.
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2024 (7) TMI 1445
Scope of Advance Ruling application - Liability of recipient of good or services to pay tax on reverse charge basis - exemption under Serial No.18 of N/N.12/2007 Central Tax (Rate) - HELD THAT:- Section 98 provides the procedure to be adopted on receipt of an application for advance ruling. Under sub section 2, the Authority after examining the application, record and providing opportunity of hearing to the applicant and the officer concerned, has to pass an order either admitting or rejecting the application. Proviso to Sub-Section 2 provides that the application for advance ruling shall not be admitted on the question raised, pending or decided in the case of the applicant under any of the provisions of the CGST Act.
The petitioner, if not exempted by the notification is liable to pay tax on reverse charge basis. In other words, the liability to pay tax is of petitioner, inspite of being the recipient. The definition of ‘advance ruling’ relied upon to oust the petitioner from making application, needs to be analyzed in the backdrop that the petitioner being liable to pay tax on reverse charge basis shall be covered under the definition of taxable person - A registered person or a person desirous of obtaining registration under the Act falls within ambit of the ‘applicant’ in Section 95. It is compulsory for the petitioner to get registered, under Section 24 of CGST Act, being liable to pay tax on reverse charge basis.
It cannot be lost sight that Section 95 starts with “in this chapter, unless the context otherwise requires” thereby leaving leverage for an interpretation to be given to the defined word in context it is being used.
The matter needs consideration from another angle. Under Section 9(3) of the CGST Act, the Government on recommendation of the Council notifies the categories of goods or services or both, for payment of tax on reverse charge basis. It is stipulated that all provisions of the Act shall apply to the recipient of the goods or services or both, deeming to be the person liable to pay tax - the fiction under Section 9(3) of the CGST Act has to be given full play, by bringing the dealer liable to pay tax on reverse charge basis within the ambit of Chapter XVII for seeking Advance Ruling.
The appeal against the Advance Ruling is provided under Section 100 of the CGST Act. The concerned Officer, the Jurisdictional Officer or the applicant can prefer an appeal against the ruling given under Section 98(4). No appeal is provided against rejection of the application under Section 98(2) of the CGST Act. The application of the petitioner was ousted at threshold under Section 98(2), as not maintainable. Section is unambiguous that appeal can be filed only against the orders pronounced under Section 98(4) of the CGST Act.
The matter is remitted back to AAR for deciding the application afresh under Section 98(4) of the CGST Act - the impugned order is set aside - petition allowed by way of remand.
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2024 (7) TMI 1444
Maintainibility of petition - Availability of alternative remedy - Challenge to Order-in-Original (OIO) - HELD THAT:- The impugned OIO, at best, can be said to be an erroneous order. No amount of argument is advanced to show that it suffers from any patent lack of jurisdiction. It is trite that despite availability of statutory alternative remedy, interference under Article 226 of the Constitution can be made in certain circumstances. However, this is discretion of the Court and not a compulsion.
In M/s Godrej Sara Lee Ltd. [2023 (2) TMI 64 - SUPREME COURT], the reason for entertaining a petition was point was confined to interpretation of law and there were no disputed questions of fact. The Apex Court recently passed a detailed order against the judgment of this Court in PHR Invent Educational Society Vs. UCO Bank and Others [2024 (4) TMI 466 - SUPREME COURT (LB)] disapproving the action of entertaining the writ petition despite availability of alternative remedy.
In this view of the matter, since the petitioner has a statutory efficacious alternative remedy, it is not required to entertain this petition because the petitioner has not shown any of those ingredients on which interference can be made by bypassing the statutory remedy. Petitioner has not shown that the impugned OIO suffers from jurisdictional error or constitutionality of any provision etc., is under challenge. Mere violation of principles of natural justice etc., cannot always be a reason for interference in a writ petition.
The petitioner is unable to show any such flaw which can form basis for interference in the impugned OIO by this Court. It also could not be established as to what palpable injustice would be caused to the petitioner if he is relegated to avail alternative remedy.
Petition disposed off.
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2024 (7) TMI 1443
Maintainability of petition - availability of alternative remedy - transitional credit - whether in the teeth of Section 140 of the GST Act, was there any bar or prohibition for filing return in the GST portal of Telangana where the petitioner’s branch admittedly exists? - HELD THAT:- Since it is a pure question of law, in view of judgment of the Supreme Court in M/s. Godrej Sara Lee Ltd. [2023 (2) TMI 64 - SUPREME COURT] the petitioner is not relegated to avail the statutory alternative remedy. Justice Dipankar Datta in M/s. Godrej Sara Lee Ltd. [2023 (2) TMI 64 - SUPREME COURT], speaking for the Bench, poignantly held 'What follows from the said decisions is that where the controversy is a purely legal one and it does not involve disputed questions of fact but only questions of law, then it should be decided by the high court instead of dismissing the writ petition on the ground of an alternative remedy being available.' - it is deemed proper to entertain this petition and not throw the petition overboard for availing the alternative remedy.
Section 140 (1) of the Act envisages that a registered person other than a person opting to pay taxes under Section 10 shall be entitled to take, in his electronic credit ledger, the amount of CENVAT credit. Undisputedly, the registration number/Permanent Account Number of the petitioner is same nationwide. Thus, sub-section (1) of Section 140 does not permit the respondents to arrive at a conclusion that the petitioner was obliged to file return electronically only in the GST portal of Maharashtra.
Admittedly, the petitioner had registration under the existing law i.e., Service Tax Law and also got himself registered under the Act. The last proviso to sub-section (8) of Section 140 of the Act leaves no room for any doubt that the credit may be transferred to any of the registered person having same Permanent Account Number for which the centralised registration was obtained under the existing law. The filing of return in the GST portal of Telangana and transfer of credit is squarely covered and permissible under the last proviso to sub-section (8) of Section 140.
The very foundation of show cause notice itself is bad in law and the assumption of respondent No. 2 that return could not have been filed in the GST portal of Telangana is not flowing from Section 140 of the Act. Therefore, the impugned action founded upon such notion is bad in law and deserves interference - Petition allowed.
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