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2024 (10) TMI 1378
Maintainability of appeal - Time limit for passing order u/s 101 of CGST Act, 2017 - appeal barred by limitation or not - failure to follow due procedure - Appellant No. 1 is Proper Authority to file an appeal - Appellant No. 2 is revisiting the stand already taken - Valuation of GTA service - inclusion of value of diesel provided by the customer (service recipient) to the trucks in the freight charged by the Applicant -
Whether time limit for passing order u/s 101 of CGST Act, 2017 stands expired? - HELD THAT:- In the instant case, the intention of the law according to the subsection 2 of the Section 101 of the CGST Act 2017 is to accord a right to the appellant to be heard and to obtain a ruling in respect of the appeal filed within a set time frame. If, the meaning of ‘shall’ is to be taken in a binding or restrictive manner then upon expiry of 90 days, the order cannot be passed by the Appellate Authority, depriving the appellant of the right of getting the order issued in their appeal - the word ‘shall’ in Section 101 of the CGST Act has to be interpreted in an advisory way. Any other interpretation shall have the effect of denying the right of appeal to taxpayers & stake holders which is not the scheme/intention of law. It will be interpreted to convey that the AAAR shall endeavour to pass the order in 90 days. Therefore, the argument of expiry of time limit for passing an order is hereby rejected as a preliminary objection as well as an objection to the grounds of appeal.
Whether the appeal is barred by limitation? - HELD THAT:- The impugned Order was communicated on 15.09.2022 to the Appellant No. 2 and an appeal was filed by them on 14.10.2022 that was within statutory period of 30 days, accordingly, the appeal was filed within time prescribed, hence not time barred - the appeals filed by the Appellants are well within the period of limitation are not barred by it as provided under proviso to Section 100 (2) or Section 100 (2) of the CGST Act, 2017 - the preliminary objection to this effect raised by the Respondent is liable for rejection and is hereby rejected.
Whether due procedure not followed? - HELD THAT:- In view of the express provisions of Rule 107A of the CGST Rules, 2017 manual filing of appeals by the Appellants is in consonance with the legal provisions and, therefore, the preliminary objection raised by the Respondent on this count is liable to be rejected and the same is hereby rejected.
Whether Appellant No. 1 is Proper Authority to file an appeal or not? - HELD THAT:- The term ‘concerned officer’ and ‘jurisdictional officer’ are two different officers distinct from each other. Further, since there are only two officers, one from the Central GST and the other from the State GST, exercising territorial jurisdiction over a taxable person it logically follows that both are entitled to file an appeal against the Advance Ruling pronounced in respect of that taxable person. Thus, the appeal filed by the Central GST authority is well within the scope of Section 100 (1) of the CGST Act, 2017.
Whether Appellant No. 2 is revisiting the stand already taken? - HELD THAT:- The Appellant has revisited the stand taken before the AAR, we note that the Joint Commissioner, State Tax, Suratgarh vide letter dated 08.05.2024 furnished additional submissions in continuation of those made during the Personal Hearing held on 07.05.2024. It is noted that during the course of hearing, representative of the respondent has raised a contention that the appellant (Deputy Commissioner, SGST, Circle Suratgarh) cannot revisit the stand taken before the AAR to the effect that GST is not leviable on free of cost (FOC) materials supplied by service recipient to applicant when such goods are in the scope of service recipient as per contractual terms.
In the instant case, it is observed that Appellant No. 2 filed the appeal proceedings after consideration of the matter by higher authority in the State Tax department, whereas their initial stance was at their own accord sans proper approval from the higher authority. Consequently, we find that an appeal cannot be deemed non-maintainable merely because it contradicts the earlier stance taken by the appellant, under mistaken belief about the jurisdiction and authority. Thus, Appellant No. 2 has rightfully filed the appeal, rendering the issue of revisiting the previously taken stand as incorrect & improper.
The principle of estoppel cannot be made applicable in the instant case. The preliminary objection on this count is, therefore, liable to be rejected and the same is hereby rejected.
The preliminary objections raised by the Respondent against the appeals filed by the department against the Advance Ruling dated 16.06.2022 are not sustainable and the appeals are maintainable and deserve to be decided on merits.
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2024 (10) TMI 1377
Maintainability of advance ruling application - Admissibility of input tax credit - tax paid or deemed to have been paid on construction materials used in the construction of Marriage & Convention hall - tax paid on inward supplies of D.G. Sets, Air Conditioners, Furnitures, Chairs etc., used in the course of business of letting out of Marriage / Convention halls - HELD THAT:- The first proviso to Section 98(2) stipulates that the Authority shall not admit the application where the question raised in the application is already pending or decided in any proceedings in the case of an applicant under any of the provisions of the CGST Act 2017. In the instant case the questions, on which the applicant seeks advance ruling, are already pending in the proceedings of show cause notice under the provisions of the CGST / KGST Act 2017. Thus the instant application is liable for rejection in terms of first proviso to Section 98(2) of the CGST/KGST Act 2017.
The application filed by the Applicant for advance ruling is rejected, in terms of first proviso of section 98(2) of the CGST Act 2017.
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2024 (10) TMI 1376
Classification of supply - GST Rate - supply of affordable and non-affordable apartments under REP - Supply of Affordable residential apartments and residential apartments under REP conjointly - supply of Construction of a complex, building, civil structure or a part thereof, including, commercial apartments (shops, offices, godowns etc.) by a promoter in a RFP other than RREP - Eligibility of Input Tax Credit which will be used in the course of business or for furtherance of business for Construction of Commercial apartments in a Real Estate Project (REP).
GST Rate on supply of affordable and non-affordable apartments under REP - HELD THAT:- The services of construction of affordable and other than affordable apartments under REP provided by the applicant fall within the description of services specified in serial no. (ic), (id) and (if) of Notification No. 3/2019-Central Tax (Rate), dated 293-2019 and accordingly the tax rates as prescribed in the said entries shall be applicable to the said services supplied by the applicant. Accordingly, the applicant is liable to pay GST at the rate of 1.5% in respect of the services of construction of affordable residential apartments as per entry at item No. (ic), at the rate of 7.5% in respect of the services of construction of residential apartments other than affordable residential apartments as per entry at item No. (id) and at the rate Of 18% in respect of the services of construction of complex, building, civil structure or a part including commercial apartments (shops, offices, godowns etc,) as per entry at item No. (if) of Notification No. 3/2019-CentraI Tax (Rate), dated 29-3-2019 subject to the conditions prescribed under the respective entries.
Whether taxpayer can supply of Affordable residential apartments and residential apartments under REP conjointly? - HELD THAT:- The services provided by taxpayer is clearly fall under notification No. 03/2019-CT (rate) dated 29th March, 2019 - the notification bifurcates affordable and non-affordable apartments by area and gross amount charge for the apartment. There appears no bar for a promoter to supply affordable residential apartments and residential apartments conjointly. The only thing is that the taxpayer has to pay the tax according to the size and gross amount charge for the apartment subject to the condition mentioned in the Notification No. 03/2019-CT(Rate) dated 29th March 2019.
GST Rate on supply of Construction of a complex, building civil structure or a part thereof, including, commercial apartments (shops, offices, godowns etc.) by a promoter in a REP other than RREP - HELD THAT:- The applicant is liable to pay GST at the rate of 18% in respect of the services of construction of complex, building, civil structure or a part including commercial apartments (shops, offices, godowns etc.) as per entry at Item No. (if) of Notification No. 3/2019-CentraI Tax (Rate), dated 29-3-2019 subject to the conditions prescribed under the said entry.
Eligibility of input tax credit which will be used in the course of business or for furtherance of business for Construction of Commercial apartments in a Real Estate Project (REP) - HELD THAT:- ITC is restricted in case of construction undertaken on his own account. Clause (d) restricts input tax credit of goods and services used by a person for construction of immovable property (except plant and machinery) on his own account. Thus, if a person purchases construction material and engages a labour contractor to provide the construction services using the purchased material, ITC shall not be available of both the goods purchase and the services of the labour contractor procured - Section 16 of CGST Act, 2017 defines the eligibility and conditions for taking input tax credit wherein section 17 of CGST Act,2017 deals in apportionment of credit and blocked credits hence these sections must be treated simultaneously. Thus, input tax credit is not available for construction of immovable property on its own account even if inputs and input services are used in course or furtherance of business.
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2024 (10) TMI 1375
Validity of assessment order passed u/s 143(3) r.w.s. 144B - disallowance u/s 40(a)(ia) - no notice of an intent of the AO to reject the books of account and to make additions referable to section 40(a)(ia) - As decided by HC [2024 (5) TMI 1480 - DELHI HIGH COURT] from show-cause notice, AO had in clear and unequivocal terms placed the petitioner- assessee on notice with respect to the doubts harboured by it relating to the correctness and completeness of the accounts of the assessee.
AO had further observed that since the expenditure claimed is not verifiable, income was proposed to be assessed at 12 per cent. of the total disclosed revenue after rejecting the books of account. And no specific disallowance u/s 40(a)(ia) has been made nor have any additions consequentially factored in.
HELD THAT:- We are not inclined to interfere with the impugned judgment and, hence, the special leave petition is dismissed.
We clarify that in the event the petitioner files a statutory appeal, the appellate forum, that is, the Commissioner of Income Tax (Appeals), shall examine all issue and contentions on merits without being influenced by any of the observations made by the High Court.
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2024 (10) TMI 1374
Revision u/s 263 - TDS u/s 195 - disallowance of expenditure u/s 40(a)(ia) - HC [2022 (11) TMI 1526 - ORISSA HIGH COURT] held that conclusion reached by the ITAT that the CIT could not have unilaterally directed the AO to add back the aforementioned sum by holding that it was disallowable as expenditure could not have been issued u/s 263 of the Act without the AO again examining the issue. To that extent, the said direction was indeed beyond the jurisdiction of the CIT u/s 263 - HELD THAT:- We have heard learned senior counsel for the petitioner and for the respondent/Assessee. We are not inclined to interfere in the matter.
Special Leave Petition is hence dismissed. Pending application(s) shall stand disposed of.
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2024 (10) TMI 1373
Assessment u/s 153A - incriminating material" found in search or not? - addition made as entire payment through paper/ shell companies for purchase of land measuring 430 acres at Manger, Gurugram and it was assessee who is the ultimate beneficiary of such transactions - as per ITAT additions could not have been made in the hands of the assessee, as such additions had already been made in the hands of bogus entry provider [M/s Peakwood Reality Private Limited] -
Whether warrants of authorization issued u/s 132? - HELD THAT:- The original file containing satisfaction note for issue of consequential warrant of authorization and the satisfaction note prepared after search was also perused. It is noticed that there were two warrants of authorization issued u/s 132 by the Principal Director of Income Tax (Inv.), Chandigarh. The name of the firm assessee is mentioned in the warrants at (Global 3rd Floor) 106-A, Tower-1, DLF Aralias, DLF Golflinks, Gurugram, which is not the registered office of the assessee.
The other warrant which does not contain name of the assessee but contains name of M/s M3M India Holdings Private Limited and registered office of the assessee i.e. C-13, Sushant Lok, Phase-1, Gurgaon. However, the name of the partners of the firm are mentioned. We find ourselves in agreement with learned counsel for the Revenue that mentioning M/s M3M India Holdings Private Limited for the addressee C13, Sushant Lok, Phase-1, Gurgaon would not be a reason to hold that no search operation was conducted at the premises of the assessee because even if the name of other private limited company is mentioned in the warrant, the fact remains that the registered address of the respondent firm was searched and the names of their partners were mentioned. The findings of the ITAT that there was no search conducted at the premises of the respondent-firm is, therefore, found to be erroneous and perverse.
Further contention of the appellant with regard to assertion of incriminating material being found in the premises of the respondent, however, is without any basis. We have carefully gone through the Satisfaction Report and found that only incriminating material which has been made the basis for initiating proceedings u/s 153-A of the Act is the so called laptop of one Bina Shah recovered from Mumbai. We also noticed that recovery of the said Laptop is not from the office belonging to the assessee.
The search operation in which the laptop was recovered was of different firm and it was not during the course of search operation conducted against the respondent-firm or its partners that incriminating material was recovered. If there was any indication of violation of provisions of the Act or suppression of income or any other incriminating material, which may have been recovered from the premises, the proceedings u/s 153-A of the Act can be said to be justified and legal. However, since no such material was collected or found from the premises of the respondent-assessee, we are unable to sustain the proceedings initiated u/s 153-A of the Act.
Substantial question of law to be examined by this Court. All the pleas raised are purely factual.
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2024 (10) TMI 1372
Faceless assessment of income escaping assessment - assessment order was made u/s 143 (3) r.w.s. 260 - as argued assessment order made manually under provisions in section 143 (3) though the assessment was to be done in a faceless manner as per scheme notified on 29th March, 2022 - HELD THAT:- Petitioner seeks interference on strength of notification dated 29th March, 2022. The notification says, it was made in exercise of powers conferred by sub-sections (1) and (2) of section 151-A. The section provides for faceless assessment of income escaping assessment. Accordingly, scope of the scheme, under section 3 thereof is, inter alia, assessment, reassessment or re-computation under section 147. We find from assessment order dated 31st July, 2024, it was made under section 143 (3) read with section 260, pertaining to assessment year, 2021-22. The scheme has no application to the assessment.
Violation of principles of natural justice - Section 144-B appears to be a complete code providing for faceless assessment. We have already noted before that impugned assessment order was made under section 143 (3) read with section 260. Sub-section (1) in section 144-B (1), without the clauses thereunder.
It is clear that the Assessing Officer (AO) found purchases made from suppliers were doubtful. Questions of fact will arise in event petitioner’s contentions are to be gone into. As such, even otherwise we are not inclined to interfere.
Writ petition is dismissed.
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2024 (10) TMI 1371
Seeking release of cash seized illegally - scope of second proviso to Section 132B - amount was seized by the respondent from the bank locker belonging to the petitioners - mandate to return the assets to the assessee - HELD THAT:- Once AO has arrived at a satisfaction with regard to the existing liability and with regard to the return of the assets, then the second proviso would apply and the assets or part of the assets as the case may be shall be released within a period of 120 days. Thus, the second proviso is mandatory and the same would come into play only after the satisfaction of the AO and the determination by him and after approval of the appropriate authorities.
In the present case in hand, the application was filed within thirty days before the AO, but the AO has not passed any order with regard to the liability or with regard to the return of the assets. Thus, the second proviso would not come into play. The first proviso does not give any time line and the second proviso is applicable only when there is an assessment by the AO.
As far as factual aspects of the case are concerned, it is not disputed that the seizure was made on 21.09.2023 and an application for release of the cash seized from the lockers of the petitioners was made on 09.10.2023 and 06.11.2023, which have not been decided by the respondent. Thereafter, prior to the seizure by the respondent, the petitioners vide letters dated 17.01.2023 & 23.08.2023 had disclosed that their bank lockers were having cash to the tune of around Rs. 37 lac.
We are of the considered view that second proviso to Section 132B would apply only after the AOhas determined the liability and has come to the conclusion that the nature and source of acquisiton has been explained by the person concerned. In the present case, since the AO has not decided the application, the second proviso to Section 132B would not come into play.The second proviso is mandatory, however, this will come into play only when the AO has determined the liability. The purpose behind the proviso was that after determination of the liability, the assets and goods should not be retained by the department.
We are of the considered view that the judgment of the Allahabad High Court in Dipak Kumar Agarwal [2024 (3) TMI 1081 - ALLAHABAD HIGH COURT] has dealt with Section 132B(4)(a) & (b) of the Act and has rightly come to the conclusion that the second proviso to Section 132B of the Act does not contemplate automatic release on expiry of 120 days.
The prayer of the petitioners for refund of the amount cannot be granted. However, since cash has been recovered from Bank locker and even prior to recovery, petitioners have informed the income tax authorities about cash lying in locker, we deem it proper to direct the authorities to decide the application of the petitioners within four weeks from the date of receipt of this order by a reasoned and speaking order after hearing the petitioners. It goes without saying that if the petitioners are able to satisfy their source, the amount has to be refunded with interest as provided under Section 132B(4)(a)& (b) of the Act.
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2024 (10) TMI 1370
Reopening of assessment u/s 147 - notice was not received by the petitioner and the petitioner was not provided sufficient and reasonable opportunity to submit his response/reply along with the documents to the aforesaid notice u/s 148A(b) - HELD THAT:- A perusal of the impugned order indicates that except stating that the notice u/s 148A(b) had been issued, the respondents has neither stated nor given the details/particulars regarding service of notice upon the petitioner nor any opportunity has been provided to the petitioner to submit his response/reply to the said notice.
Under these circumstances coupled with the specific assertion on the part of the petitioner that his inability and omission to submit his reply to the notice under Section 148A(b) was due to bona fide reasons, unavoidable circumstances and sufficient cause, adopting a justice oriented approach, we deem it just and appropriate to set aside the impugned order and remit the matter back to the respondents for reconsideration afresh in accordance with law from the stage of notice u/s 142A(b) of the IT Act.
The matter is remitted back to the respondents for reconsideration afresh in accordance with law from the stage of issuance of notice u/s 148 A(b).
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2024 (10) TMI 1369
Penalty u/s 271AAC(1) - no notice u/s 142[1] issued - HELD THAT:- Notice u/s 142[1] of the Act was issued to the petitioner, the first respondent has not stated as to when the said notice was delivered/served upon the petitioner.
The impugned notice, proceedings culminating in the impugned order cannot be said to have been done after providing sufficient and reasonable opportunity to the petitioner thereby violating principles of natural justice and consequently the impugned order deserves to be set aside by adopting justice oriented approach and to provide one more opportunity to the petitioner to submit his reply to the said notice u/s 142 of the Act and with the direction to the respondents to proceed further in accordance with law.
It is to be stated that since indulgence is being shown in favour of the petitioner after a lapse of almost four years from the date of the impugned order, in the event, the first respondent passes an order against the petitioner after remand by virtue of this order, the first respondent would be entitled to claim interest on the amount in terms of the Notice of Demand.
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2024 (10) TMI 1368
Imposition of penalty on the Appellant under Section 112 (a) of the Customs Act, 1962 - cryptic and non-speaking order - Non-consideration of any of the submissions of the Appellant - violation of principles of natural justice - it was held by High Court that 'The finding arrived at by the Commissioner as well as the Tribunal was on facts that appellant had abetted evasion of duty' - HELD THAT:- It is not required to interfere with the impugned order passed by the High Court.
Accordingly, the Special Leave Petitions are dismissed.
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2024 (10) TMI 1367
Restoration of import policy of newsprint - it is submitted that if the earlier policy is to prevail, they may not have any objection for the disposal of the Special Leave Petition - HELD THAT:- The Special Leave Petition stands disposed of, as the petitioner has now decided to discontinue the Notification No. 9 dated 03.06.2016 which, in any case, has also been quashed by the High Court and to restore the import policy of newsprint which prevailed prior to 03.06.2016. In other words, the petitioners are not pressing this Special Leave Petition.
SLP disposed off.
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2024 (10) TMI 1366
Obscene art materials - prohinition on import and confiscation of seven drawings by world-renowned artists, Mr. F N Souza and Mr. Akbar Padamsee - entire case is based on N/N. 1/1964-Customs dated 18 January 1964, issued under Section 11 of the Customs Act, 1962, and it is contended that since such artworks constitute obscene drawings, paintings or representations, importing such artworks is prohibited - HELD THAT:- The views of the writer of a play, the metre of a poet or the sketches of a cartoonist may not be palatable to those who are criticised. Those who disagree have a simple expedient of not watching a film, not turning the pages of the book, or not hearing what is not music to their ears. The Constitution does not permit those in authority who disagree to crush the freedom of others to believe, think and express. The ability to communicate “ideas” is a legitimate area of human endeavour and is not controlled by the acceptability of the views to those to whom they are addressed. When the ability to portray art in any form is subject to extra-constitutional authority, there is a grave danger that a cloud of opacity and arbitrary State behaviour will imperil fundamental human freedoms.
The danger of vesting Customs authorities to decide on obscenity issues was evident about two years ago when the Customs Authorities confiscated and ordered the destruction of Wave Body Massagers by invoking the same Notification No. 1/1964-Customs dated 18 January 1964. The concerned Commissioner reasoned that this Wave Body Massager was “an obscene object because it had the potential to be used as an adult sex toy”. The CESTAT, by its detailed judgment and order dated 11 May 2023 penned by C J Mathew, roundly criticised the Customs Authorities for such a perverse approach. This decision discusses admirably the legal position about obscenity and the power of the Customs Commissioners to determine the same.
The impugned order in the present case ignores most relevant considerations like expert opinions, appeals from experts, artistic value, contemporary community standards, and several legal precedents on the subject. The impugned order is based mainly on irrelevant considerations like the ACC’s individualised standards of morality and decency, his personal opinions and prejudices on the topic of obscenity, the fact that the Petitioner had declared that the goods were “nude paintings”, and some of the artworks depicted sexual intercourse poses. The ACC has brushed aside several legal precedents by trying to distinguish them on frivolous or even jejune grounds. The circumstance that similar artworks are available in the domestic market or displayed in prestigious art galleries nationally and internationally was entirely ignored. The reasoning in the impugned order is quite perverse.
The alternate remedy in the facts of this gross case would not amount to an efficacious remedy for yet another reason. The SCN issued by the ACC, in this case, had required the Petitioner to show cause as to why the works of art by Akbar Padamsee and F N Souza should not be destroyed upon confiscation. Although, the impugned order is unclear on the destruction of these works of art. Still, considering the severe observations made by the ACC, we are not sure whether the ACC might destroy these works of art if the Petitioner were to be relegated to resort to the alternate remedy of departmental appeals, etc. In such circumstances, requiring the petitioner to go through the regular channels of appeals and second appeals is not quite appealing.
Equally unappealing is the argument that the Petitioner applied for re-export when confronted with a customs official who treated not just to confiscate but to destroy the artworks of the world-renowned artists. Discretion was perhaps thought the better part of valour by way of an offer to at least allow re-export. To deny the petitioner relief on such grounds would be a travesty of justice.
The impugned order is set aside - petition allowed.
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2024 (10) TMI 1365
Challenge to holding/impounding/detaining of the rubber process oil stated to have been imported by the petitioner - seeking direction to the respondents to release the said goods and also to pay the compensation - Hazardous Waste or not - HELD THAT:- The record produced by Mr. Vaibhav Sharma, Appraiser, ICT Import, Customs Department, who brought the relevant record reflects that the sample was only tested by Mr. Arun Kumar Maurya, Chemical Examiner GR-2, from the office of the Regional Revenues Control Laboratory, New Delhi-110012, controlled by the Department of Revenue, Ministry of Finance, Government of India but it does not reflect that the said Chemical Examiner GR-2 was recognised in terms of Circular dated 23.02.2009. It is also not reflecting that the test report dated 31.12.2014 was ever supplied to the petitioner. Although, Mr. Harpreet Singh argued whether the information was given to the CHA of the petitioner, who intends to inform about the test report to the petitioner.
It is appearing from the averments made in the petition that the CHA was informed about the test report but it is not reflecting that the test report dated 31.12.2014 was actually supplied to the petitioner to oppose the detention /unclearing of goods i.e. rubber process oil which was not done in accordance with the rules and regulations.
Petition allowed.
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2024 (10) TMI 1364
Provisional attachment of bank accounts of the Petitioners - Section 110 (5) of the Customs Act, 1962 - HELD THAT:- In similar circumstances, this Hon'ble Court in Bharat F. Parmar, Karta of M/s. Kaka Gold vs. Union of India and Ors.[2023 (11) TMI 271 - BOMBAY HIGH COURT], where the value of the alleged purchases were Rs.22 crore. Considering the duty at the rate of 10%, the duty was roughly estimated at Rs.2 crores in paragraph 8. Subsequently, the Hon'ble Court gave directions on page 5, below paragraph 9. The party therein was, inter alia, asked to keep a sum of Rs. 1.5 crores in fixed deposit and mark a lien in favour of the Revenue. The parties have pleaded that similar conditions may be imposed in the facts of the present case.
The Petitioners would execute a bond to protect the revenue from liability arising out of any O-I-O to be passed, subject to its rights to contest the order in accordance with law - On the Petitioners securing the Revenue with the bond and the fixed deposit as stated above, the Respondents would defreeze all the accounts mentioned in the letter dated 11 January 2024 and 11 July 2024.
Petition disposed off.
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2024 (10) TMI 1363
Legality and Jurisdiction of seizure of the gold dust - violation of fundamental rights of the Petitioner - jurisdiction to accost and apprehend Transit passengers, and their detention - misdeclaration - HELD THAT:- Since, in this matter, gold dust is seized from the petitioner. The interest of justice would be met if the direction for not disposing of seized items until adjudication proceedings are concluded must operate.
Petition disposed off.
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2024 (10) TMI 1362
Dismissal of bail application - seizure of commercial quantity of contraband - cognizance of offences allegedly committed by applicant under Sections 8/21/23/28 of the NDPS Act - Improper Sampling Procedure - Delay in filing Section 52A Application NDPS Act - Proforma Notice under Section 50 of NDPS Act - Defective Notice under Section 102, of Customs Act - Delay in Trial.
Improper sampling procedure - HELD THAT:- In the facts of this case, the seizure was made at the airport in a supervised environment where capsules were found to be containing heroin. As noted, there is no prohibition at least pre-December 2022 [when the notification issued by the Ministry of Finance, Government of India came into effect] in drawing the samples at the stage of seizure. Considering that the seized capsules would not comply with the definition of either “package/container”, it would have to be seen whether the process adopted to cut open all 107 capsules and mixing them together in a homogenous mixture would cause any prejudice to the accused - it is mandated that the drugs should be well-mixed to make them homogenous before drawing a sample. Guidelines in terms of multiple packages/containers require an option of bunching them in lots. The phrase used in clause 2.5 of SO 1/89 is “may be carefully bunched in lots”. This is in contrast to the other clauses which use the words “must” and “should” or “shall”. The option of drawing in lots must be provided in order to accommodate for various situations which may arise on the spot - The Court, therefore, does not find any fault, at least prima facie, in the procedure adopted by the Customs.
Delay in Filing Section 52A Application - HELD THAT:- As regards the delay in moving application under Section 52A, NDPS Act, there is nothing in the SO 1/89 which prescribes specific time- period. SO 1/88 requires samples to be dispatched to the FSL not later than 72 hours. In this case the delay claimed in filing the application under Section 52A, NDPS Act, as contended by counsel for the petitioner is 17 days.
In the present case, the application under Section 52A, NDPS Act was preferred 17 days after the seizure of the contraband from the applicant. The applicant may, in accordance with applicable law, could potentially contend prejudice caused on account of this delay, during trial which would be addressed basis evidence led - Although in SOVRAJ VERSUS STATE GOVT. OF NCT OF DELHI [2024 (7) TMI 1538 - DELHI HIGH COURT], this Court had enlarged the accused on bail, same was done inter alia on the issue of absence of independent witnesses and lack of photography or videography of the recovery. Same do not form basis of applicant’s contentions herein and thus, application of law in this case will have to be done in the facts and circumstances of this case. In the present matter, at this stage, this Court is of the opinion that the applicant has failed to overcome the threshold as prescribed by Section 37 of the NDPS Act.
Defective notice - HELD THAT:- Though the signatures of the accused are there of having “received” the notice, with the signatures of the witnesses as well, there is a pre-typed no objection for search to be conducted by a lady customs officer under which the sign is procured of the accused. This practice may not be totally correct considering that Section 50 requires options to be given to the person being searched; in fact an affirmative option is to be exercised for the search being conducted before the nearest Gazetted Officer/Magistrate - A proforma typed notice may ideally have both the options i.e. first that the person requires the personal search to be done before a Gazetted Officer/Magistrate; and second that the person to be searched has no objection to being searched by an officer present (lady officer in case the person to be searched is female).
Delay in Trial/Prolonged Incarceration - HELD THAT:- Assessment of these decisions of the Supreme Court cited above shows that bail has been granted in cases having differing facts, some with incarceration of more than 3 years, and some in cases of seizure of ganja. The assessment, therefore, on prolonged custody and delay in trial will depend of facts and circumstances of the case. Whether 2 or 3 years or more, or any other time period is “prolonged”, is clearly left to the assessment of the Court - In this case, the petitioner has undergone 2.5 years of custody and the trial is progressing. An attempt may be made by the Trial Court to expedite the trial. In the event, that the trial does not proceed ahead expeditiously, needless to state that the applicant will have the right to approach the Court at a subsequent stage.
Taking into consideration four times the commercial quantity of contraband seized from the instance of the applicant, there being no prejudicial infirmity in the process adopted by the respondent, rigours of Section 37, NDPS Act, and progressing trial, this Court is unable to reach a prima facie conclusion that applicant is not guilty of the offences and is unlikely to commit the same if enlarged on bail. The threshold of Section 37, NDPS Act not having been crossed, the application for bail cannot be granted.
Bail application stands dismissed.
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2024 (10) TMI 1361
Benefit of N/N. 52/2003-Cus. dated 31.03.2003 on goods re-imported after one year - re-import of 6000 kg. ‘Coarse Ground Chilli’ which was originally exported - Department was of the view that since said part consignment had been rejected which accordingly would fall under Sr. No.15 of Annexure-I of Notification No. 52/2003-Cus. dated 31.03.2003 and re-import was made after one year of the initial export, hence, the benefit of the said Notification not admissible - HELD THAT:- The difference between the entry at Sr. No.14 and 15 of the notification is that in the former case, the goods could be re-imported for repair or reconditioning, irrespective of whether the overseas buyer rejects or fail to take delivery; the re-import could be within three years or seven years as the case may from the date of import, and also time limit is prescribed for re-export after the process of repair or reconditioning; whereas, under Sr. No.15, the goods could be re-imported if the same is rejected or not accepted by the buyer; within a period of one year from the date of export. It could be cleared to Domestic Tariff Are (DTA), if permissible under law but there is condition for re-export of the same.
Thus, Sr. No.14 and 15 can be applied to the re-imported goods depending on the purpose and circumstances for which different time period prescribed under each of the said entry. Further, it is significant to note that there are two classes of goods prescribed under Sr. No. 14 ; (i) goods that are mentioned under Annexure-VII and (ii) goods falling outside the scope of Annexure-VII, for the purpose of applying the period of limitation to re-imported goods. In these circumstances, there are no merit in the impugned order of the authorities below observing that the goods rejected by the foreign buyer would invariably fall under Sr. No.15 of Annexure-I even though the appellant specifically advanced a request for repair or reconditioning for the purpose of re-export, as permitted to the type of goods (other than goods specified in Annexure VII) under Sr. No.14. Thus the benefit of Notification 52/2003 Cus. dated 31.03.2003 (Sr. No.14(i) of Annexure-I) is admissible on the re-imported goods.
The impugned order is set aside and the appeal is allowed.
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2024 (10) TMI 1360
Levy of penalties u/s 114(i) and/or 114(AA) of the Customs Act, 1962 - appellant was involved in abating the smuggling of red sanders - bona fide belief.
Penalty u/s 114(i) of CA - HELD THAT:- The penalty was imposed on the appellant only for the charge of negligence. In this case, since, the appellant was not aware about the concealment of “red sander” in the container with “feldspar powder”, It cannot be said that the appellant was involved with mala fide intention to abet the smuggling of ‘red sander’. It is found that involvement in abetting the smuggling of ‘red sander’ was not established against the appellant. The case was detected only on the intelligence received by the DRI. In such case in absence of any intelligence, the appellant was not aware about the concealment of red sander under the bags of feldspar powder. It is also found that when Shri Sandeep, Inspector Customs examined the containers after opening it at that time only feldspar powder was found. Therefore, he was of bona fide belief that the goods stuffed in the containers is feldspar powder. In the normal course it cannot be expected by any one that behind the feldspar powder bags some other goods are concealed. Therefore, there are no involvement of the appellant in the abetment in smuggling of Red Sander. Accordingly, the penalty under Section 114(i) of Customs Act, 1962 was wrongly imposed on the appellant - It is also observed that it is not coming out from record that the appellant was aware of the stuffing of red sander in the container. Therefore, even if some negligence has occurred on his part which is not established, the appellant cannot be charged for aiding or abetting the smuggling of ‘red sander’.
Penalty u/s 114(AA) of CA - HELD THAT:- It is found that the appellant had not signed or submitted any document before customs with a prior knowledge about alleged mis-declaration, neither any show cause nor impugned order pointed out any specific documents were made or signed before the customs. Therefore, the appellant is not liable to penalty under the provision of Section 114(AA) also.
The penalties are set aside - appeal allowed.
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2024 (10) TMI 1359
Valuation of imported goods - rejection of declared value - enhancement of value - goods were supplied by the foreign company to the related Indian company at a much lesser price when compared with those supplied to an unrelated buyer in India or not - HELD THAT:- When the imported goods were running into more than 100 items, a reference was made only to 22 items. Whatever the inputs information submitted by the Respondent whether was considered or not is not clear from the orders passed. Further, it is not disputed that the grounds on the basis of which values were enhanced were not intimated to the Respondent-importer. The volumes of imports by the Respondent are far higher when compared to the quantities imported by M/s. Vestas. The provisions of Rule 3(b) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 are very clear as to arriving at the transaction value in respect of imports by the related persons. Both the foreign supplier and the importer-respondent must be having published pricelists for sale of various components being manufactured by them, which were not examined at all.
Thus, it is not disputed that the Original Authority has clearly violated the principles of natural justice by not intimating the grounds on the basis of which enhancement of the values of the imported products was resorted too. As the issue of arriving at appropriate values in terms of CVR, 2007, requires further detailed examination clearly the Original Authority should have examined the values of all the items under import with those values of identical or similar items imported by the independent buyers from the same supplier or other identical or similar contemporaneous imports. The Lower Appellate Authority has also without examining the issue in detail has simply ordered to set aside the order of the Original Authority leaving a vacuum as to the values to be adopted for the imported goods by the related importer-respondent.
The case is to be remanded to the Lower Original Authority for considering the issue afresh in strict observance of the principles of the natural justice. As considerable time has already elapsed, such an order may be passed within three months from the communication of this order.
The appeal filed by the Department is allowed by way of remand to the Original Adjudicating Authority.
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