|
Advanced Search Options
Case Laws
Showing 281 to 300 of 1484 Records
-
2025 (3) TMI 1204
Seeking issuance of an appropriate writ directing return of the goods seized by the Respondent- Customs Department - Possession of 4 old and used iPhone - tiem limitation for issuance of SCN - Petitioner submits that the six-month period has already lapsed and, therefore, the show cause notice is belated in terms of Section 110 of the Customs Act, 1962 - HELD THAT:- The date of the show cause notice is 17th January, 2025. The time prescribed under Section 110 of the Customs Act, 1962, is a period of six months subject to complying with the formalities. The Department is entitled to obtain a further extension of six months in terms of Section 110 (5) of the Customs Act, if needed.
The show cause notice is dated 17th January, 2025 and is, therefore, within the six months period. The question as to whether the same was delivered to the Petitioner within the prescribed period or not or whether the extension was obtained or not, would be a question of fact.
The Petitioner is free to approach the Adjudicating Authority for provisional release of goods, in accordance with law - Petition disposed off.
-
2025 (3) TMI 1203
Maintainability of petition - availability of alternative remedy - Diversion of imported goods - walnut kernels - allegation in the said Show Cause Notice was that the goods which were imported were not exported back and were in fact, diverted to the domestic market - HELD THAT:- The Court is of the view that the Petitioners ought to be relegated to avail of the remedy against the impugned Order-in-Original before the CESTAT, as done in the connected case. In Nitin Nagpal v. Union of India & Anr. [2025 (3) TMI 1149 - DELHI HIGH COURT], this Court had directed 'the Court is of the view that the Petitioners ought to be relegated to avail of the remedy against the impugned Order-in-Original before the CESTAT. This Court has not examined any of the grounds which have been raised by the Petitioners. All objections are kept open. The Petitioners are free to raise all their grounds of challenge to the impugned order before CESTAT.
Accordingly, the Petitioners are relegated to avail of their appellate remedy before CESTAT. The Petitioners are free to raise all their grounds of challenge to the impugned order before CESTAT. This Court has not examined any of the grounds which have been raised by the Petitioners. All objections are kept open. If the CESTAT finds it relevant, the cross-examination of the ICAR scientists before the Principal Commissioner in the connected matters may be taken into consideration for adjudication of the appeals.
Considering the nature of the matter and the submissions made today, in the unique facts and circumstances of these cases, following the order passed in the similar matter involving the same petitioners, the pre-deposit for filing the appeal is reduced to 3.75%. This order shall not be treated as a precedent.
Petition disposed off.
-
2025 (3) TMI 1202
Delay in adjudicating the show cause notice issued in 2014 - proceedings against other co-noticees, when the settlement of duty and interest done by the main firm - HELD THAT:- This case would be clearly covered by the previous decisions of this Court in M/s Vos Technologies India Pvt. Ltd. v. The Principle Additional Director General &Anr. [2024 (12) TMI 624 - DELHI HIGH COURT] where it was held that 'The flexibility which the statute confers is not liable to be construed as sanctioning lethargy or indolence. Ultimately it is incumbent upon the authority to establish that it was genuinely hindered and impeded in resolving the dispute with reasonable speed and dispatch. A statutory authority when faced with such a challenge would be obligated to prove that it was either impracticable to proceed or it was constricted by factors beyond its control which prevented it from moving with reasonable expedition. This principle would apply equally to cases falling either under the Customs Act, the 1994 Act or the CGST Act.'
In terms of the settled legal position, the Order-in-Original dated 30th March, 2024 was passed pursuant to the show cause notice dated 30th December, 2014, which is almost a ten year old notice. In the opinion of this Court, the same cannot be sustained. Accordingly the said Order-in-Original dated 30th March, 2024 is set aside and the proceedings against the Petitioners shall stand quashed.
Petition disposed off.
-
2025 (3) TMI 1201
Seeking for deletion of penalty and redemption fine imposed against the Appellant - Appellant had availed the benefit of Amnesty Scheme by making payment of the entire Customs duty - HELD THAT:- Snce Appellant had sought for deletion of penalty and redemption fine imposed against the Appellant, the part component of which is addressed in the above para and the other part concerning confiscation would no more be valid as the Act or its omission had been regularised through the Amnesty Scheme launched by the Government of India, the order passed by the Commissioner (Appeals) against which appeal has been pending before this Tribunal at the time of availment of such Amnesty Scheme, becomes unenforceable after irregularity, if any, has been remediated and therefore, the same is required to be set aside. Hence the order.
The order passed by the Commissioner of Customs (Appeals), Mumbai-II is hereby set aside - Appeal allowed.
-
2025 (3) TMI 1200
Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - breach of regulation 10(d), 10(e) and 10(f) of Customs Broker Licensing Regulations, 2018 - drawback allegedly claimed in excess of eligibility by several exporters - appellant had failed to brief the exporter on the significance of the declarations owing to which the three regulations were breached.
HELD THAT:- The alleged conspiracy is mere narration of events and episodes leading to the eventual decision to proceed against the appellant, and others, under the Customs Broker Licensing Regulations, 2018. It was necessary for the licensing authority to depict the elements of this conspiracy in terms of the stipulations in Customs Act, 1962 that were breached thereof and attributable, in part at least, to failure in advising the client to comply with the statutory requirements, failure to ascertain information supplied to client owing to which the client had strayed and the failure to communicate the instructions in circulars and public notices. The second of the foundations of the proceedings, viz., the circular [no. 16/2009-Cus dated 25th May 2009] having been overlooked, has no bearing on the first and amenable to being invoked on its own as a factual base for the third charge.
There appears to be an implicit assumption in initiation of the proceedings that each, and every, obligation of customs brokers has been designed to be fulfilled vis-à-vis customs authorities and, therefore, perceivable as inferences that the licencing authority, who is neither the customs authority in the connected incident nor the client of the customs broker, may choose. That breach of obligations is to be visited with proceedings prescribed in Customs Broker Licensing Regulations, 2018 is no ground for such presumption - Some obligations would, therefore, stem from that owed to clients and, hence, the determination of time lines with reference to ‘offence report’ which may originate with client. That perception of cause and effect has to be appreciated and comprehended for proper exercise of authority to punish brokers.
From a reading of the charges, the imputation of misconduct and the findings in the impugned order, none of the facts and circumstances advance the proposition that regulation 10(d) and regulation 10(e) of Customs Broker Licensing Regulations, 2018 had been breached.
Conclusion - The failure to file the declaration may at best, be considered a technical irregularity inasmuch as it was not noticed by the customs authorities either. In any case, the drawback claims in the seven shipping bills, even if ineligible, is not of such magnitude as to warrant imposition of all the penalties and detriments available in the empowerment of the licensing authority. The interest of justice would be met by setting aside the revocation and forfeiture of security deposit under regulation 14 of Customs Broker Licensing Regulations, 2018 while upholding the penalty under regulation 18 of Customs Broker Licensing Regulations, 2018.
Appeal disposed off.
-
2025 (3) TMI 1199
Applicability of rule 8 of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 to the circumstances of import for revision of declared value of imports of ‘cloves’ originating from Indonesia/Tanzania - provisional assessment under section 18 of Customs Act, 1962 - HELD THAT:- It is on record that the importer had failed to furnish any evidence of value being likely to be lower than the prices of contemporary transactions, through preceding invoices, or, through preceding test reports, of quality of the cloves, leaving no option, consequent upon the direction of the Tribunal, but to finalize the assessment on available documents and declaration. In the circumstances, recourse to rule 10A of Valuation (Determination of Price of Imported Goods) Rules, 1988 for discard of the declared value is not exceptionable as upheld in the impugned order. There are no reason to concur with the Learned Counsel that the declared value should not have been rejected in the circumstances.
There is no doubt that rule 8 of the said Rules afforded a flexibility, not available now under the extant Rules notified in terms of section 14 of Customs Act, 1962, but was, yet, subject to conformity with the general principle of value espoused in rule 3 therein and specific exclusions. The impugned order is not reticent in referring to 19 bills of entry which, admittedly, are not in conformity with scheme of ‘surrogate value’ set out in rule 5 of the said Rules - Recourse to rule 10A of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 is required to be brought to a logical conclusion within the signification of rule 5 to rule 8 of the said Rules. Failure to do so, by non-availability of substitute value, rescinds the finding of non - acceptance of the declared value.
Conclusion - The revision in value is without authority of law and on facts which do not find acceptance of substituted value within the framework of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988.
The impugned order is set aside - appeal allowed.
-
2025 (3) TMI 1198
Scope for re-determination of value under Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 and consequential penalty under section 112 of Customs Act, 1962 - no differential duty to be levied - HELD THAT:- The issue decided in Prakash Sancheti [2013 (8) TMI 506 - CESTAT AHMEDABAD] where it was held that 'The extent of over-invoicing is so high that the actual value of the goods was found to be 3.56% of the actual. In fact the learned advocate on behalf of the Hong Kong exporters submitted that the Commissioner has discussed the earlier import and export but since she has not based her conclusions on those transactions, he did not contest those findings nor made any submissions thereon. It would not be fair on our part also to consider the past activity for the purpose of deciding whether goods have to be absolutely confiscated or not.'
The only issue before the Tribunal then was the exercise of discretion by the adjudicating authority insofar as offer of redemption on payment of fine under section 125 of Customs Act, 1962 is concerned. Furthermore, the matter of certification under Kimberley Process Certificate (KPC) was not an issue adjudged by the Tribunal and it was solely on the ground of mis-declaration of value that the confiscation had been upheld. In re Dinesh Dhola and others, the Tribunal took note of failure to have Kimberley Process Certificate (KPC) verified on which was premised the prescription claimed to warrant absolute confiscation.
In circumstances of the taint attached to handling of allegedly ‘conflict diamonds’ that the importer assumed responsibility to re-export, the confiscation of the goods without offer of redemption is held to be inappropriate. The manner in which the value has been determined in accordance with the provisions of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 bears further evaluation to comply with section 2(41) of Customs Act, 1962. Such was not the requirement under section 17 of Customs Act, 1962 on every shipping filed under section 50 of Customs Act, 1962 but also wherever ‘value’ find reference insofar as the handling of the imported goods is concerned.
Conclusion - i) Absolute confiscation of the rough diamonds was inappropriate due to the lack of a valid ground based on the Kimberley Process Certificate mismatch. The goods should have been allowed for re-export. ii) The re-determination of value under the Customs Valuation Rules was flawed and required re-evaluation in accordance with the proper legal framework. iii) The imposition of penalties was contingent upon the re-determination of value and thus required reconsideration. iv) There is a need for proper verification of the Kimberley Process Certificate and cautioned against hasty actions leading to absolute confiscation.
The matter remanded back to the original authority for a fresh decision - Appeal allowed by way of remand.
-
2025 (3) TMI 1197
Breach of regulation 10(d), 10(e), and 10(m) of Customs Brokers Licensing Regulations, 2018 for compromising customs clearance by obtaining ‘out of charge’ on the strength of examination of only three containers - HELD THAT:- The inquiry report found the appellant to have breached regulation 10(d) and 10(e) of Customs Brokers Licensing Regulations, 2018 and, thereafter, Principal Commissioner of Customs (General), Mumbai, the licensing authority, revoked the customs broker licence and forfeiting the security deposit under the authority of regulation 14 of Customs Brokers Licensing Regulations, 2018 while further imposing penalty of ₹ 50,000 under regulation 18 of Customs Brokers Licensing Regulations, 2018 by order impugned here. The licensing authority held breach of regulation 10(d) of Customs Brokers Licensing Regulations, 2018 to be proved for non-compliance with the direction to submit the entire consignment for examination, as evidenced by payment of service fee of only ₹ 3,750 (₹ 1,250 each TEU) and confirmation thereof from ‘closed circuit television cameras’ installed at the examination area, and thus establishing failure to advise the client to comply with the provisions of the Act, allied Acts and Rules and Regulations and failure, upon non-compliance thereof, to bring the matter to the notice of the Deputy Commissioner/Assistant Commissioner as the case may be.
There is no doubt that examination as set out in the ‘handwritten’ directions were not carried out. There is, however, no ascertainment of disinclination on the part of customs official, having granted ‘out of charge’ while cognizant of the directions, to carry out such examination and availability of contingent option to report to higher authorities. The drawal of samples which was sufficient to establish misdeclaration as well presentation of three containers make it abundantly clear that appellant was either not aware of the contents or that there was no intent to conceal the offending goods from action under Customs Act, 1962. The failure to produce the remaining containers or to guide the client in that direction is, at best, a technical violation.
There are no evidence to charge the customs broker with not advising the client on requirement to comply with the statues; nor of participation in compelling customs officials not to carry out examination. There is, thus, no evidence to hold that regulation 10(d) of Customs Brokers Licensing Regulations, 2018 had been breached.
The licensing authority has mis-applied regulation 10(e) of Customs Brokers Licensing Regulations, 2018 which may be invoked only upon complaint from client of having been so misguided by customs broker. The requirements of examination was, admittedly, endorsed on the bill of entry and, in granting ‘out-of- charge’, the customs officials cannot but have been privy to such instruction. Failure of such customs officials to act on the instruction cannot be attributed to the customs broker inasmuch as the latter does not have the authority to enforce compliance on the part of the customs officials - There is passing reference to alleged collusion of employee of the customs broker with customs officials that does not fall within the purview of regulation 10(e) of Customs Brokers Licensing Regulations, 2018. Consequently, the facts alleged has no bearing on this particular obligation or breach thereof.
Conclusion - There is no defence from the appellant about the cause of non-compliance with inspection requirements in full and, in absence thereof, responsibility is to be presumed, at least partially, even if of no serious consequence. Consequently revocation of licence with forfeiting of security deposit is set aside. Imposition of penalty of ₹ 50,000 is sustained.
Appeal allowed.
-
2025 (3) TMI 1196
Breach of regulation 10(d), 10(e), 10(n) and 13(2) of Customs Brokers Licensing Regulations, 2018 - entire case of the licensing authority appears to have been built upon the conclusion that the ‘exporter on record’ were a mere fronts and that the beneficiary of the admitted ‘over-valuation’ were those who controlled the transactions behind the scenes - HELD THAT:- In the impugned order, there is neither hint nor whisper of such grievance on the part of the client and yet that did not deter the licensing authority from holding that the customs broker had deviated from the obligations set out in regulation 10(e) of Customs Brokers Licensing Regulations, 2018 which only the client could be concerned with. The facts relied upon, as well as the conclusion thereupon, in the impugned order are far from that contemplated under regulation 10(e) of Customs Brokers Licensing Regulations, 2018. There are no hesitant in holding that the licensing authority has erred to hold that to be proved.
There is, of course, a fundamental stipulation that it is the responsibility of the customs broker to advice client to comply with all the statutory provisions that applicable to clearance of the goods belonging to the client. It is, however not necessary that every single provision in the several statutes would have to be intricted to the client. Neither is it necessary that it is the owners/officials of the importer/export entity who should be subjected to such education. That well may be impossible and it clearly not the intent of the Regulation that the customs broker should conduct a teachimg course on procedural and legal stipulations pertaining to clearance of the goods. The breach of such obligation would have to be inferred from facts which demonstrate negligence on part of customs broker to advice contextually - There is no evidence to conclude that the licensing authority was correct in determining breach of regulation 10(d) of Customs Brokers Licensing Regulations, 2018.
There is no doubt that the antecedents of the client need verification and, to the extent that the specifics of such verification are set out in the said Regulation, existence of documentation would suffice as compliance. There is no allegation that the client was not in possession of genuine importer-exporter code (IEC) or, for that matter, of GST registration. Nonetheless, the records do show that no operations appeared to have been carried out at the declared address of the exporter. Whether verification of the premises would have prevented overvaluation of goods is moot; however, that the exporter did not operate at the declared address indicates that the verification carried out by the customs broker was but cursory or non-existent. Licences issued to customs brokers is not merely an entry into practice of a trade or profession but is contingent upon expectation on the part of licensing authority that antecedents of importer/exporter are not doubtful - It would, therefore, appear that the appellant had restricted itself to verification of documents to the extent of availability in the public domain. Clearly, undertaking of work on behalf of the exporter without proper knowledge about the activities of the exporter is in breach of the obligation devolving on the customs broker under regulation 10(n) of Customs Brokers Licensing Regulations, 2018. To the extent that the licensing authority has held that the customs broker to be in breach thereof, we find no reason to disagree thereupon. The charge of violation of regulation 10(n) of Customs Brokers Licensing Regulations, 2018, is therefore, upheld.
Conclusion - Only regulation 10(n) of Customs Brokers Licensing Regulations, 2018 stands affirmed, fastening of all the detriments available in the Regulation is clearly disproportionate. The imposition of penalty under regulation 18 of Customs Brokers Licensing Regulations, 2018 suffices to meet the ends of justice. Accordingly, while setting aside the revocation of licence and forfeiture of security deposit, the imposition of penalty of ₹ 50,000/- upheld.
Appeal disposed off.
-
2025 (3) TMI 1195
Denial of rectification of error for finalization of assessment of Shipping Bill under Section 154 of the Customs Act, 1962 - rejection solely on the ground that no arithmetical or clerical errors/mistakes have been noticed in the Final Assessment Order - HELD THAT:- It is an error arose from the accidental omissions on the part of the assessing officer while finalizing the Shipping Bills under Section 154 of the Customs Act, 1962 as held by this Tribunal in the case of M/s Sesa Goa Limited [2010 (9) TMI 948 - CESTAT MUMBAI]. Consequently, finalization of the assessment done by the adjudicating authority for determining of the “Fe” content on DMT instead of WMT basis, is bad in law. Therefore, the said omission is required to be rectified by the adjudicating authority and the consequential benefit is to be given to the appellant by rectifying the omission under Section 154 of the Customs Act, 1962.
Further, in the case of M/s Vedanta Limited [2023 (8) TMI 364 - CALCUTTA HIGH COURT], it is held that the error is perceived from the omission or the accidental slip and therefore, the word “omission” should not be given a restrictive meaning but should be expanded to imbibe within itself an error occurred because of such omission and the same is required to be rectified.
The adjudicating authority is directed to rectify the finalization of provisional assessment of shipping bills for the purposes of calculation of “Fe” content on WMT basis in terms of the order of the Hon’ble Supreme Court in the case of Gangadhar Narsingdas Aggarwal [1995 (8) TMI 73 - SUPREME COURT] and thereafter, to pass a speaking order within a period of one month from the date of receipt of this order.
Conclusion - The assessment should be corrected to reflect the "Fe" content on a WMT basis, and the adjudicating authority was directed to pass a speaking order within one month, providing the appellant with the appropriate relief under the applicable notification.
Appeal allowed.
-
2025 (3) TMI 1194
Denial of rectification of error for finalization of assessment of Shipping Bill under Section 154 of the Customs Act, 1962 - while finalizing the Shipping Bills, no consideration of judicial pronouncements and the circulars cited hereinabove is clerical mistakes/omissions in terms of Section 154 of the Customs Act, 1962, on the part of the proper officer or not? - HELD THAT:- What is the clerical error/mistake apparent on record has been examined by this Tribunal in the case of Sesa Goa Limited [2010 (9) TMI 948 - CESTAT MUMBAI], wherein this Tribunal has observed 'As per the law dictionary “omission‟ means neglect or failure to perform what the law requires and in this case law requires to assess the Bill of Entry after taking note of the decision of TISCO which was omitted by the proper officer. If for such omissions or errors committed by the proper officer, the same is to be corrected while dealing with refund claims filed by appellant, the same will tantamount to be done under Section 154 of the Customs Act, 1962. That is why the legislature incorporated the Section 154 of the Customs Act into the statute book to rectify such omission or error without challenging the assessment.'
As in the case, the decision the Hon’ble Apex Court and the Circular dated 17.02.2012 was in public domain, in that circumstances, it is the duty of the adjudicating authority to take cognizance all the judicial pronouncements and the Circulars and thereafter, to pass the proper order, which the adjudicating authority has failed to do so in the case in hand while finalizing the Shipping Bills.
Conclusion - It is held that it is an error arose from accidental omissions on the part of the assessing officer under Section 154 of the Customs Act, 1962 as held by this Tribunal in the case of M/s Sesa Goa Limited. Consequently, finalization of the assessment done by the adjudicating authority for determining of the ‘Fe’ content on DMT instead of WMT basis, is bad in law. Therefore, the said omission is required to be rectified by the adjudicating authority and the consequential benefit is to be given to the appellant by rectifying the omission under Section 154 of the Customs Act, 1962 and thereafter, to determine the ‘Fe’ content on the basis of WMT basis and pass an appropriate order in accordance with law.
The impugned order is set aside - appeal allowed.
-
2025 (3) TMI 1193
Termination of petitioner’s appointment as developer of a slum rehabilitation project - petitioner’s failure to pay transit rent arrears and to complete the project within the stipulated time - overriding effect of Section 31 of the IBC over Section 13 (2) of the Slum Act.
Does the approval of the petitioner’s resolution plan by the NCLT under Section 31 of the IBC override or nullify the petitioner’s obligations and liabilities arising under the Slum Act and the Slum Rehabilitation Scheme? In particular, is the SRA barred or restricted by the IBC from taking action under Section 13 (2) of the Slum Act due to the resolution plan’s binding effect? - HELD THAT:- Undoubtedly, Section 238 of the IBC gives it overriding effect over inconsistent provisions of other laws. But in the present scenario, the Slum Act's mandate of ensuring timely rehabilitation of slum dwellers is not inconsistent with the objectives of the IBC. Rather, it furthers the very aim of keeping the corporate debtor as a going concern by facilitating the completion of the project that forms the basis of the company’s revival. It must be noted that the IBC is not merely a tool for liquidation or asset-stripping, but a mechanism for holistic revival of viable companies. In a slum redevelopment project, the success and viability of the corporate debtor hinges on cooperation from slum dwellers and compliance with SRA guidelines. If the developer fails to honour its obligations – such as payment of transit rent or timely completion of rehabilitation buildings – the project collapses not only financially but also socially. In such a situation, the SRA stepping in to rescue the project is a necessary regulatory response and a sovereign function exercised in public interest. The principle of public interest penetrates insolvency law.
Certain non-monetary consequences which arise under welfare legislations like the Slum Act cannot be lightly brushed aside merely because insolvency proceedings under the IBC have commenced or concluded. The removal of a developer under Section 13 (2) of the Slum Act is one such consequence. Another example arising in the present case is the proposed acquisition of the project land by the SRA. As per the Slum Act, once a developer is removed due to non-performance, the SRA has the power to acquire the land belonging to the outgoing developer, so that the same land can be handed over to the incoming developer for completing the rehabilitation scheme - the corporate debtor is not being dispossessed without remedy; rather, it is being divested of an asset which it was unable to utilise for the public good, and that too, in accordance with legal process.
In the present case, the SRA’s action of removing the petitioner as developer is a regulatory decision made in furtherance of the statutory scheme under the Slum Act. This decision is not rendered invalid merely because the developer has undergone insolvency or that a resolution plan has been approved. The two statutes operate in distinct spheres — the IBC deals with debt resolution and revival of the corporate debtor, while the Slum Act is aimed at protecting the interests of slum dwellers and ensuring timely completion of rehabilitation projects - The IBC is not a refuge for those who have failed in their public responsibilities. The approval of a resolution plan does not and cannot bind independent statutory authorities like the SRA from discharging their duties under law. The welfare of slum dwellers, the progress of redevelopment schemes, and the broader public interest cannot be made subservient to the financial restructuring of one defaulting entity. In conclusion, therefore, it must be held that the removal of the petitioner as developer and the consequent acquisition of the land by the SRA are lawful, justified, and not inconsistent with the IBC.
The resolution plan approved by the NCLT under the IBC does not override the petitioner’s obligations under the Slum Act — except to the limited extent that financial claims arising before the insolvency commencement date and duly dealt with in the plan cannot be enforced separately.
Is the obligation to pay transit rent to slum dwellers a statutory obligation imposed by the Slum Act/regulations (and thus part of the public law framework), or merely a contractual term of the development agreement between the petitioner and the slum society? - HELD THAT:- The nature and character of the obligation to pay transit rent has been debated before this Court. The petitioner suggests that this obligation is rooted in private agreements, and therefore, like any other contractual obligation, may be modified, waived, or extinguished through insolvency proceedings. On the other hand, the respondents have taken a firm stand that this is not a matter of private negotiation but a statutory duty arising from the scheme sanctioned under the Slum Act.
When a slum rehabilitation scheme is sanctioned under the Slum Act, it is not a mere private arrangement between a builder and slum dwellers. It is a public welfare scheme governed by statutory provisions, detailed guidelines of the Slum Rehabilitation Authority (SRA), and formal conditions set out in the Letter of Intent (LoI) and other regulatory documents such as Annexure II and Regulation 33(10) of the Development Control Regulations (DCR) applicable in Maharashtra. A critical condition of such schemes is that the developer must provide either alternate transit accommodation or monthly transit rent to every eligible slum dweller from the date of vacating their hutments until permanent rehabilitation units are handed over. This is not an optional or negotiable term that can be bargained away.
If the obligation to pay transit rent were viewed as a purely private or contractual liability, it would open the door for each slum dweller to individually file a claim in the corporate insolvency process as an operational creditor. However, this is both impractical and unfair, considering the socio-economic background of the slum dwellers. The insolvency framework was not designed to handle such public welfare claims in this fragmented manner. More importantly, transit rent is not a one-time debt. It is a continuing performance obligation, which accrues monthly until the permanent housing is delivered.
It is true that the petitioner entered into formal agreements with individual slum dwellers or the co-operative housing society to implement the project. These are usually in the form of tri- partite agreements involving the developer, the slum dweller, and the SRA or society - The developer cannot ignore or belittle this obligation merely because it appears in a contract. It is a duty owed not just to an individual, but to a class of beneficiaries protected by a welfare law. Accordingly, even if unpaid transit rent qualifies as an “operational debt” under the IBC for accounting purposes, this classification does not dilute the developer’s continuing obligation to ensure that transit rent is regularly paid going forward. Breach of this obligation is not merely a civil wrong — it is a breach of the statutory framework, attracting regulatory consequences including removal from the project.
The obligation to pay transit rent is essentially a statutory obligation, even though it is implemented through formal agreements.
Was the SRA justified in law in invoking Section 13 (2) and issuing the impugned order terminating the petitioner’s appointment as developer? - HELD THAT:- In the present case, it is evident that the SRA considered all relevant factors. Notably, the authority took into account the petitioner’s defence, including the approval of the resolution plan under IBC, the alleged improvement in financial capacity, and the fresh LoIs issued in 2024. However, the SRA ultimately found that on-ground progress remained unsatisfactory, and more importantly, that transit rent dues remained unpaid, thereby causing hardship to slum dwellers. 103. In such a situation, the authority was justified in taking a pragmatic decision to protect the welfare of slum dwellers, which is the central objective of the Slum Act. The decision to allow the society to appoint a new developer is not punitive, but rather remedial, to break the stagnation and ensure that the scheme is taken to its logical conclusion. This Court finds no perversity, irrationality, or illegality in the impugned order. It cannot be said that the action of the SRA was arbitrary or in breach of procedural fairness. On the contrary, the process followed appears fair, thorough, and in alignment with the statutory scheme’s objective of timely and effective rehabilitation of slum dwellers.
The action initiated by the SRA under Section 13 (2) of the Slum Act is lawful, reasonable, and justified, having regard to the petitioner’s long-standing failure to pay transit rent, the resulting hardship to slum dwellers.
Was the decision-making process of Respondent No. 6 (CEO, SRA) in issuing the impugned order fair and in accordance with law? - HELD THAT:- The petitioner is not merely an implementing agency or contractor, but also the owner of the land on which the slum rehabilitation scheme is being implemented. This dual role brings with it a greater degree of responsibility and accountability. The burden of compliance is higher, especially when the land has been granted for a public welfare scheme under beneficial terms. In such a situation, the SRA was duty-bound to afford the petitioner a conclusive and time-bound opportunity to clear the dues — particularly after revival under the IBC — before proceeding to cancel development rights. The record indicates that the AGRC did not extend such a final opportunity to the petitioner before concurring with the CEO’s decision to terminate the petitioner’s rights. In the respectful view of this Court, this constitutes a procedural lapse — not one that invalidates the SRA’s substantive powers or its overall assessment, but a deficiency in natural justice that warrants correction.
This Court finds no infirmity in the SRA’s decision to invoke Section 13 (2) of the Slum Act. The decision is well-reasoned, supported by facts, and aligned with the objectives of the Act. However, the limited procedural deficiency, namely the failure to grant a final opportunity to the revived petitioner to clear its dues and demonstrate intent, is one that must be remedied to uphold fairness.
Conclusion - i) The resolution plan approved by the NCLT under the IBC does not override the petitioner’s obligations under the Slum Act — except to the limited extent that financial claims arising before the insolvency commencement date and duly dealt with in the plan cannot be enforced separately. ii) The obligation to pay transit rent is essentially a statutory obligation, even though it is implemented through formal agreements. iii) The action initiated by the SRA under Section 13 (2) of the Slum Act is lawful, reasonable, and justified, having regard to the petitioner’s long-standing failure to pay transit rent, the resulting hardship to slum dwellers. iv) This Court finds no infirmity in the SRA’s decision to invoke Section 13 (2) of the Slum Act. The decision is well-reasoned, supported by facts, and aligned with the objectives of the Act. However, the limited procedural deficiency, namely the failure to grant a final opportunity to the revived petitioner to clear its dues and demonstrate intent, is one that must be remedied to uphold fairness.
Petition disposed off.
-
2025 (3) TMI 1192
Seeking to recall order passed by the Adjudicating Authority - whether HUDCO is a related party of the Corporate Debtor or not? - HELD THAT:- Appellant and HUDCO entered into Joint Venture Agreement on 02.05.2006 incorporating Srishti Urban Infrastructure Development Ltd. The shareholding as per the Joint Venture Agreement between the Appellant and the Respondent No. 1 for SUIDL was in the proportion of 60:40. Corporate Debtor was promoted by Appellant and SUIDL. The Corporate Debtor entered into a loan agreement with HUDCO for an amount of Rs.6907.92 Lakhs. Under the loan agreement HUDCO was empowered to appoint a Nominee Director. HUDCO exercised its right and appointed a Nominee Director in the Board of the Corporate Debtor.
The submission which has been pressed by learned counsel for the Appellant is that the Application filed by the Appellant was fully covered on the ground that there was suppression on the part of HUDCO which lead to issuance of order dated 30.08.2023 which was obtained by HUDCO by playing fraud on the Court. The submission is pressed on the ground that Annual Report of the HUDCO was not placed by HUDCO when earlier application was decided on 30.08.2023.
Admittedly, the Appellant is related party of the Corporate Debtor which is an undisputed fact. All aspects of the matter including HUDCO having promoted JV with Appellant where HUDCO has 40% shareholding and Appellant has 60% shareholding has been noticed and examined by the Adjudicating Authority in order dated 30.08.2023.
In the present case suppression of relevant document cannot be accepted since all the document which were relevant for determination of issues raised in I.A. No.514/KB/2022 were filed and relied by both the parties i.e., HUDCO and Resolution Professional. It is not the case of the Appellant that HUDCO was asked to file Annual Report in which it failed to file. 51st Annual Report of HUDCO on which reliance has been placed by the Appellant was filed with the ROC and is matter of public record. When the report is filed with the ROC, there is no question of suppression of the report and submission of the Appellant tat there was any suppression on part of HUDCO is baseless.
Conclusion - HUDCO is not a related party and that the order dated 30.08.2023 was not obtained by fraud or suppression.
Appeal dismissed.
-
2025 (3) TMI 1191
Admission of section 9 application - existence of pre-existing disputes between the parties or not - demand notice validly contested or not - HELD THAT:- Present is a case where demand notice issued under Section 8 was replied and reply notice issued by the corporate debtor dated 28.01.2020 is clearly notice of dispute within the meaning of Section 9(5)(d). The Adjudicating Authority in the impugned order although has noticed the reply dated 28.12.2019 as well as earlier reply sent by the corporate debtor to the legal notice but has brushed aside the said reply relying on reconciliation meeting held on 16.10.2019. The reconciliation meeting is claimed on 16.10.2019 whereas the facility termination was effected on 26.12.2019 and demand notice was issued only on 03.01.2020 which was replied by notice of dispute dated 28.01.2020. The issue raised by the corporate debtor in reply to the demand notice cannot be held to be moonshine defence.
In view of the judgment of the Hon’ble Supreme Court in Mobilox Innovations Pvt. Ltd. vs. Kirusa Software Pvt. Ltd. [2017 (9) TMI 1270 - SUPREME COURT]], the Adjudicating Authority ought not to have admitted Section 9 application. There being pre- existing dispute which existed much prior to issuance of demand notice which is reflected from correspondences between the parties, legal notice issued by the operational creditor dated 01.07.2019 and reply to the legal notice sent by the corporate debtor on 21.08.2019. In the reply submitted by the corporate debtor, relevant materials are brought on the record which clearly reflected a pre-existing dispute between the parties prior to issuance of demand notice.
Conclusion - The Adjudicating Authority ought not to have admitted Section 9 application, there being pre-existing dispute which existed much prior to issuance of demand notice which is reflected from correspondences between the parties.
Appeal allowed.
-
2025 (3) TMI 1190
Effect of Debenture Trust Deed and Non-compliance of its condition, over the proceedings - existence of any validly executed Power of Attorney to initiate Section 7 Proceedings - proceedings would be barred by limitation or not - date of default and its determination - bar of Section 10A of I & B Code could be read in conjunction to the aspect of limitation or not - implications of Section 65 of the I & B Code, 2016 on the proceedings.
What would be the effect of Debenture Trust Deed and Non-compliance of its condition, over the proceedings? - HELD THAT:- On reading of Schedule VIII, it stipulates under its Clause 2 (a), that the event described in para (a) that is the details of the default, which would necessitate the issuance of notice, has had to be as per the events of default contemplated under Clause 7 of the deed and that too in pursuance to the security document which is shown to have become enforceable under the eyes of law. In the absence of satisfaction of any of the conditions as given therein, it is opined that, the entire inception of the proceedings, under Section 7 of the I & B Code, 2016, would be bad because there has been a flagrant and intentional disregard to the content and directives contained in the Debenture Trust Deed, which could have otherwise conferred the powers on the Debenture Trustee only to initiate proceedings under Section 7 of the I & B Code, 2016, when there is a proved and established default or an event of default and in the absence of the same and adoption of procedure under Clause 10.1 (iv) of Debenture Trust Deed, the notices issued on 28.07.2020, alleging that there has chanced a default, that cannot be sustained in the eyes of law, in the absence of established authority.
Whether there was any validly executed Power of Attorney? - HELD THAT:- When the nature of default as given under the Debenture Trust Deed and the debt too as defined therein are almost akin in its reflection. An intention of the legislature as that given under the statutory definition, the term ‘coupon’ which has been sought to be argued by the Ld. Senior Counsel for the Respondent otherwise cannot be read as to be an alternative to determine a debt or a default, so as to exclude the applicability of Clause 7, which would be the act falling under the domain of exercise of powers by the Debenture Trustee.
Once it comes to determining an aspect of a procedure for the purposes of initiation of proceedings under Section 7 of the I & B Code, 2016, we have had to analyze judicially, as the sanctity of the source of power that, should have been normally exercised based on the Debenture Trust Deed, which would be binding inter-se amongst the parties, owing to the binding effect of the Debenture Trustee, as given under the Debenture Trust Deed itself, which provides for, that the Debenture Trustee though its functions has to be regulated upon by majority resolution passed by the Debenture Holder, but the contents of the same would have a binding effect on the parties whose act or actions are likely to be affected by the Debenture Trustee Agreement.
The above question is answered against the Respondent/Applicant, that since the Debenture Trust Deed, is binding on the Respondents, and the procedure for its recovery under Clause 7 of the Deed, it ought to have been initiated, by a grant of authorization to the Debenture Trustee by a majority resolution, as contemplated under the Debenture Trust Deed, and more particularly when the Debenture Trustee itself has been authorized by the Government of India under the notification referred to herein above, which happens to derive source of issuance of notification is, vested under Section 7(1) of the I & B Code, 2016. In the absence of the proceedings being drawn by the Debenture Trustee after its valid procedural authorization, the entire proceedings under Section 7 of the I & B Code, 2016, would be vitiated in the eyes of law, which deserves interference by this Appellant Tribunal.
Whether the proceedings were barred by limitation? - HELD THAT:- The object of limitation, under the Act, was to safeguard the right, or benefit which might have judicially accrued to, a person who is the beneficiary of adjudication, and maturing of right due to an inaction on the part of the person who seeks to, invoke a remedy for a redressal of his any legal rights created under an Act or law, which has been adversely effected by an adjudication made by the courts, which remains unchallenged, is matured for the winning party due to non-initiation of proceedings before a superior forum, within limitation - A rational interpretation has to be given, and the said extension should not be preposterously extended without rationality to deprive the very object of limitation. The limitation should not be extended at the cost of deprivation of a right which had accrued to the beneficiary.
The question of acknowledgment of default, being 30.09.2019 in the instant case, is not in controversy, as Section 18 only deals with the aspect of effect of acknowledgment, which had never been the disputed case of the Respondent, at any stage of the proceedings, because they had persistently argued, that the default stood acknowledged as back as on 30.09.2019 - Once the date of default is not in dispute, the implication of Section 18 of the Limitation Act will have no relevance for the purposes of determining the debt and the date of default and its conjoint reading with Section 238A of I & B Code, 2016.
The proceedings drawn under Section 7 of the I & B Code, 2016, by Respondent/Applicant was barred by limitation, this question too is answered against the Respondent and in favour of the Appellant.
Date of Default and its determination - HELD THAT:- It is a rampant case and not in aspect of debate, that the date of default is on 30.09.2019, and it is not in debate rather admitted by Respondent/Applicant, that the limitation has to be determined as per Article 137 of the Limitation Act from the date of admission of default i.e., 30.09.2019 in the instant appeal. If the limitation is construed under Article 137 of Limitation Act, as per the admitted date of default, it will be ending on 30.09.2022, but if it is determined from the date of the imposition of the restrictions because of COVID-19 and even if the same is permitted to be extended, to the period of 90 days as per Hon’ble Apex Court Suo motu case [2022 (1) TMI 385 - SC ORDER] irrespective of which that would be falling on 29.09.2022. After the extended date of 90 days of limitation as granted by the judgment of the order of the Hon’ble Apex Court, with effect from 01.03.2022, if that be so, there was no legal or factual obstruction for the Applicant/Respondent nor there is any express pleadings for inability to file proceedings between 01.03.2022 till 29.09.2022 and thereafter till 08.09.2023. In that eventuality, they would not be entitled to any benefit of limitations determined on the basis of admitted date of default, even based upon the Suo motu judgment particularly, that has contained under Para 5.3 of the said judgment. The en block exclusion, of the period from 15.03.2020 to 28.02.2022, would not be available to the Appellant, when the Section 7 application was filed after 464 days even after the extended period of 90 days.
Hence at the most, the appeal ought to have been filed, prior to 29.09.2022, and since there happens to be no valid explanation, by the Respondent for the inability to file, the application between 29.09.2022 and 07.09.2023. The limitation, could not be extended as argued by the Ld.Senior Counsel for the Respondent; which would be reckoned from the date of admitted default i.e., 30.09.2019, which was prior the restrictions of COVID-19 situation i.e., prior to 15.03.2020.
Limitation and effect of Section 10A of the I & B Code, 2016 - HELD THAT:- On a simpliciter reading, of the provisions contained under Section 10A it provides for, that the bar which was created for initiation for proceeding, was in relation to the default which was committed on or after 25.03.2020, it not apply to admitted defaults prior subsequent to the insertion of Section 10A. Since there being a specific incorporation of a cut-off date of 25.03.2020 and here in the instant case admittedly the default has been committed on 30.09.2019, Section 10A will have no applicability for the purposes of extension of the period of limitation for initiation of CIRP proceedings owing to COVID-19 situation and more particularly, when the Respondent/Applicant, himself has issued notices for initiation of proceedings on 28.07.2020 after the insertion made by the Act No. 17/2020 with effect from 05.06.2020, that is one month after the insertion. The explanation of Section 10A, has abundantly made quite clear, that the provision under Section 10A would only be applicable when the default is expressly shown to have been committed after 25.03.2020 and it will not be inclusive of any defaults which are committed prior to it.
Under Section 10A of the I & B Code, 2016, will not be attracted in the instant case and in those cases where the default has chanced prior to cut-off as ascribed under Section 10A of the I & B Code, 2016. This Appellate Tribunal too, had an occasion to deal with almost a similar issue in the matter of Company Appeal (AT) (CH) (Ins) No. 95/2024, Mr. Sudhir Bobba versus M/s. TVN Enterprises & Another [2025 (3) TMI 1142 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL AT CHENNAI], the Judgment rendered by this Tribunal is based upon the ratio of Raghavendra Joshi [2023 (8) TMI 1376 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI] as well as that of, Narayan Mangal [2023 (8) TMI 1378 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] had to propound to the same principles that Section10A will not apply in those cases where the default has occurred, prior to the insertion of Section 10A in I & B Code, 2016, and period prescribed therein.
Section 10A will have no applicability for the purposes of extension of the period of limitation in the instant case, as it has been argued by the Ld. Counsel for the Respondent/Applicant to the proceedings. Because of the fact, that the Respondent/Appellant themselves have chosen to issue notice on 28.07.2020, i.e., one month after the exemption contemplated under Section 10A, as made effective by the amending act with effect from 05.06.2020. The Respondent/Applicant will not be entitled to any benefit under Section 10A of the I & B Code, 2016, which would not be applicable - from the conduct of Respondent/Applicant, they have attempted to blow hot and cold simultaneously and take the benefit of the extended period of limitation under Section 10A of the I & B Code, 2016, by knowing the fact that they had issued the notice under Section 8, after almost one month from the date of the insertion of Section 10A of the I & B Code, 2016, and then sitting over the issue and instituting the proceedings, even after the taking off the period of limitation by the Hon’ble Apex Court, with effect from 28.02.2022 to 30.05.2022 and waiting till 07.09.2023, the proceedings drawn by the Respondent would be barred by limitation and Article 137 of the Limitation Act will come into play. Thus, this question is answered, against the Respondent thereby the Section 7 proceedings were barred by limitation.
What implications would Section 65 of the I & B Code, 2016, would have on the proceedings? - HELD THAT:- The plea of malicious prosecution was raised in written submissions, but the Adjudicating Authority did not address it. The Court found this omission significant, rendering the judgment perverse for not considering all relevant pleas.
Conclusion - i) Because of the fact that the default is an aspect not disputed, and its limitation for the purpose of initiation of proceedings, under Section 7 of the I & B Code, 2016, will be expiring on 30.09.2022, after the gracious period granted by the Hon’ble Apex Court, since the Respondent having filed the same on 07.09.2023 would be barred by limitation. Since being in violation to Article 137 of the Limitation Act.
ii) Because of the fact that, the Debenture Trust Deed dated 22.03.2019, it was a self-contained provision, which provided for conferring of a right for initiation of proceedings for insolvency, after a majority decision of the Debenture Holders, which was to be exercised by the Debenture Trustee and since the same was not done in accordance with the covenants of the inter-se binding implications of the Debenture Trust Deed. The entire proceedings would be vitiated, since there being a contravention to the agreed terms of the deed, which is not in dispute.
iii) Because of the fact that, as per the affidavit which was filed in support of the application preferred under Section 7 for initiation of I & B proceedings was by an individual, who on the relevant date was not even holding a valid authority, owing to the cessation of his authority which was vested to him by the Boards Resolution of 05.03.2019. On the date of filing of the proceeding, since the said Boards Resolution stood superseded by the subsequent Boards Resolution of 02.02.2021, where the right set in subsequently conferred an authority to initiate proceedings to Mr. Kaustubh Sudame, by an attorney executed in his favour on 22.02.2022, thus on the date of filing of the proceedings, Mr. Manohar Maddili as he was not holding a valid authority. The proceedings would be vitiated since, having not been instituted under the valid authority.
iv) Since, the entire proceeding was maliciously oriented, as having been instituted on the basis of the notice issued on 28.07.2020, which was falling during the COVID-19 period.
v) Operation of Section 10A will not in any way impact the limitation period in this case since the limitation would start running from the date of the default being 30.09.2019, which was prior to the COVID-19 period and the limitation thereto of three years will be expiring on 30.09.2022 even after taking into account the implication of Suo motu judgment of Hon’ble Apex Court due to COVID-19 situation.
vi) It would be a malicious proceeding and would be barred by Section 65 of the I & B Code, 2016. The plea of Section 65 of the I & B Code, 2016, since having been taken by the Appellant after the leave of the Tribunal and has not been considered, it would vitiate the proceedings.
The application under Section 7 of the I & B Code, 2016 is rejected - appeal allowed.
-
2025 (3) TMI 1189
Money Laundering - proceeds of crime - Scheduled offences - attachment of bank accounts, movable as well as immpovable properties - reasons to believe - When the alleged proceeds of crime already stand seized by another law enforcement authority, i.e., the DRI, and same are in its possession, and therefore wholly outside the control and reach of the appellants, how could the respondent Directorate have justifiably entertained the reason to believe under the Second Proviso to section 5(1) that if such property is not attached immediately, the non- attachment of the property is likely to frustrate any proceeding under the Act? - HELD THAT:- The only offences that have been made out against the appellants are the offences under Sections 135(1)(a)(i)(A) and 135(1)(b)(i)(A) which are in relation to the foreign gold bars and biscuits valued at 13.56 crores which were seized by the DRI. The said value matches exactly with the value of movable properties recovered and seized by DRI. The material on record, therefore, does not reveal that there are any allegations in respect of any other scheduled offence(s) against any of the appellants herein. Insofar as the offences under Sections 135(1)(a)(i)(A) and 135(1)(b)(i)(A) of the Customs Act, 1962 are concerned, the property involved in the said offence is already under seizure by the DRI and attachment by the ED. Further, the confiscation thereof has also been proposed in the Prosecution Complaint under the PMLA, 2002 which remains pending.
As held by the Hon’ble Supreme Court in Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT (LB)], the respondent Directorate could not have assumed that any other scheduled offence(s) were committed by the appellants and proceeds were derived therefrom and attached property over above the seized gold, even if the same were found to out of unexplained sources. Unexplained investment in properties may no doubt be actionable under the Income-tax Act or other laws, but no action under PMLA, 2002 could have been initiated against the same based on assumption that because they were found to in excess of the known sources of income, the same were necessarily derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence.
Conclusion - The attachment under PMLA can extend to properties not directly linked to the scheduled offence and properties of non-accused persons if connected to proceeds of crime. However, attachment cannot exceed the value of the alleged proceeds without evidence of additional criminal activity.
Appeal disposed off.
-
2025 (3) TMI 1188
Condonation of delay in filing appeal - time limits as prescribed u/s 85(3A) of the Finance Act, 1994, as applicable to Service Tax matters - authority of Commissioner (Appeals) to condone delay - HELD THAT:- In the present case the Order-In-Original was undisputedly received by the Appellant on 13.07.2020. They filed the appeal before the Commissioner (Appeal) on 15.02.2023, i.e. after more than 30 months. Even if the benefit of the order dated 10.01.2022 of Hon’ble Supreme Court in Suo Motto Writ Petition [2022 (1) TMI 385 - SC ORDER] is extended to the Appellant than also the appeal was to be filed by the Appellant within two months from 28.02.2022. Commissioner (Appeal) could have condoned delay in filing the appeal if the same was upto one month. The appeal has been filed much after the date by which this appeal could have been filed even after extending the benefit of this order of Hon’ble Apex Court.
Appellant had filed the appeal before the Commissioner (Appeals) beyond the period which could have been condoned by the Commissioner (Appeals) as per Section 35 of the Central Excise Act. Judgment relied upon by Commissioner (Appeals) has clearly laid down that Commissioner (Appeals) has no Authority to condone the delay beyond 30 days. That being so by application of the said provision of the Central Excise Act and the decision of the Hon’ble Supreme Court in the order of Singh Enterprises [2007 (12) TMI 11 - SUPREME COURT] holding 'In the instant case, the explanation offered for the abnormal delay of nearly 20 months is that the Appellant concern was practically closed after 1998 and it was only opened for some short period. From the application for condonation of delay, it appears that the Appellant has categorically accepted that on receipt of order the same was immediately handed over to the consultant for filing an appeal. If that is so, the plea that because of lack of experience in business there was delay does not stand to be reason.'
Conclusion - i) Appeal dismissed as it was filed beyond the permissible time limits set by Section 85(3A) of the Finance Act, 1994. ii) The Commissioner (Appeals) is found to have no authority to condone the delay beyond the statutory period. iii) The Appellant's request for condonation of delay is not supported by sufficient cause, and the decision of the Commissioner (Appeals) to dismiss the appeal, upheld.
Appeal dismissed.
-
2025 (3) TMI 1187
Classification of services - supply of tangible goods service - services of providing material handling equipment to various clients - demand prior to period 16.05.2008 - HELD THAT:- A similar issue has been dealt with by this Tribunal in the appellant’s own case [2018 (12) TMI 785 - CESTAT KOLKATA] wherein this Tribunal has already held that the service rendered by the appellant is not liable to be taxed under the category of “business support services” for the period under dispute.
Conclusion - The service rendered by the appellant is not liable to be taxed under the category of “business support services”.
The demand set aside - appeal allowed.
-
2025 (3) TMI 1186
Levy of service tax on UCT is undertaking marketing of products, procuring customers, effecting sale of such products and getting commission for same - service tax under Reverse Charge Mechanism on alleged import of Management or Business Consultancy Services on the ground that the appellant is using third party software for which they have remitted the royalty outside India - suppression of facts or not - extended period of limitation.
HELD THAT:- The Hon’ble Bombay High Court in the case of IDFC First Bank Ltd. vs. Union of India, [2023 (8) TMI 1153 - BOMBAY HIGH COURT] wherein while deciding whether the time limit as prescribed in S. 73 (4B) of the Act are mandatory or directory in nature, the Hon’ble High Court laid emphasis on the word “shall” used in the provision to hold that the time limit prescribed in S. 73 (4B) of the Act is mandatory and held 'If the interpretation of the provisions as canvassed on behalf of the revenue is accepted, it would tantamount to defeating the well settled principles of law that a show cause notice is required to be taken to its logical conclusion within a reasonable period of time and expeditiously, as a show cause notices issued under any fiscal legislation and concerning recovery of revenue would have a very serious concern and bearing on the public revenue. Hence, there cannot be any laxity much less any lethargic approach on behalf of the officers is delaying adjudication of such notices. The legislative provisions which intend to bring about an expeditious and effective adjudication of a show cause notice cannot be defeated by the officers sitting tight on the show cause notice and/or not expeditiously taking them to the logical conclusion.'
The Section 73 (4B) provision of the Finance Act 1994, is para materia with the provisions of Section 11A (11) of Central Excise Act 1944 and Section 128 (9) under Customs Act 1962. Under all these Acts, the words used are “Shall” and “Where it is possible to do so” and in the Manual “as far as possible”. The importance and significance of these words as well as to whether these are directory or mandatory in nature, have already been interpreted in various case laws - In the Kopertek Metals Pvt Ltd. [2024 (12) TMI 269 - CESTAT NEW DELHI], decided by the Principal Bench – Delhi Tribunal, it has been held that non adjudication of the order, with no reason being given to the effect that the order could not be passed on time due to circumstance beyond the control of the Adjudicating authority, the same would be fatal to the legality of the order.
In VOS judgement, [2024 (12) TMI 624 - DELHI HIGH COURT] the Delhi High Court has also held so and has noted that the delay is required to be viewed from the facts of the case. As per these decisions, when the reason for delay is not explained by way of plausible reasons in the Order in question, it fails to prove that “it was not possible to pass the authority” within the time-frame.
It is found that if the time-frame given in a statute is not fulfilled, the decision as to whether it is correct or erroneous would not depend on the deviation period. The delay, whether it is for one day or one year or ten years are all taken as delay only. Similar is the situation even in case of time-frame given for filing of appeals - The Hon’ble Supreme Court in the case of Singh Enterprises [2007 (12) TMI 11 - SUPREME COURT], has held that in case of such appeals, even the Tribunal and Courts have no power to condone the delay. On a factual matrix, it is found that even in the present case in many cases the delay is to the extent to 2 years. Therefore, there are no merits in the arguments of the Revenue that delay by number of days should be the factor to be considered to apply or otherwise the Tribunal‟s order in the case of Kopertek Metals.
In the Order in Original, there is no mention of the circumstances which proved to be impediment in completing the adjudicating process within one year. Another issue weighing in our mind is that in this case, the appellant is a duly registered assessee. They have been paying Service Tax and filing their Returns. The demand as per the Revenue, emanates from the transactions pertaining to import of service. As submitted by the appellant and also held consistently by the Tribunals and Courts that this is a clear case of revenue neutrality, wherein the suppression clause cannot be invoked. This being the case, in the first place, the Revenue did not have the case in respect of extended period itself. In such a situation, the period for adjudication itself gets shortened to six months. However, since the SCN was issued invoking the extended period, though not invocable, the Adjudicating authority cannot be faulted even if the OIO is passed within one year.
The ratio laid down by the Tribunal in the case of Kopertek Metals, would be squarely applicable.
Conclusion - i) The transactions between the Appellant and UCT are sales, not Business Auxiliary Services, thus not liable for service tax under the reverse charge mechanism. ii) The demand for service tax on alleged consultancy services is not upheld as the use of third-party software did not constitute consultancy. iii) The extended period for demand is not applicable due to lack of suppression and the case being revenue neutral. iv) The adjudication order is set aside for being passed beyond the statutory time limit without justification.
Appeal allowed.
-
2025 (3) TMI 1185
Levy of service tax - income from assigned portfolio, when the said amount represents consideration acting as a ‘Collection agent’ / ‘Servicer’ - extended period of limitation - HELD THAT:- In this case, the Respondent has sold/assigned the portfolio of loan comprising of loans provided to various small borrowers, to the banks/financial institutions by entering into assignment agreements, for the purpose of raising funds. Upon assignment of such loan portfolio, the Respondent immediately receives the principal amount of the loan portfolio or the amount as may be agreed with the assignee and the asset pool is removed from the books of the Respondent as the same becomes the property of the assignee to which the portfolio has been assigned - The Respondent has entered into separate ‘Collection agency agreement’ with the assignee for the same, which is ancillary to the main contract of assignment. Further, a nominal fee has been earmarked for the activities covered under the ‘Collection Agency agreement’. The Respondent is paying service tax on the nominal fees received for collection of the amount. However, the Revenue is of the view that the excess interest spread, i.e. the difference between the interest amount payable by the borrowers in respect of the loans and the yield payable to the assignee, recorded as 'Income from assignment of loan’ is the actual consideration of the Recovery service undertaken by the respondent for the banks/financial institutions.
The contention of the Revenue is that the respondent in the present case is not merely transferring loans but is actively servicing and collecting the principal and interest amount on behalf of respective banks as a recovery agent. There are no merit in the contention of Revenue. It is pertinent to note that borrowers are not a party to the assignment agreements entered by the Respondent with various banks/financial institutions.
The Respondent is collecting the principal and interest amounts in instalments, not in the capacity of a Recovery Agent, but in the capacity of the lender who originally gave the loan to the borrower. Therefore, it is observed that there is no service element involved in this transaction and the interest amount retained by the Respondent cannot be considered as 'consideration' towards rendering the service of collection of the principal and interest for the assignees.
The issue is no longer res integra as a similar issue has already been examined by the Tribunal at Chennai in the case of Commissioner of Central Excise & Service Tax, LTU, Chennai v. Sundaram Finance Ltd. & vice-versa [2017 (11) TMI 1002 - CESTAT CHENNAI] where it was held that 'the tax entries relied upon by Revenue are not squarely covering the activity which are in any case between principal to principal. The cheques and other bills collected by the appellant-assessee are on their own account which are further passed on in terms of agreement with the ICICI bank. The conditions of transaction and schedule of payment will not influence the nature of activity as agreed upon between the two contracting parties. We find no element of Business Auxiliary Service in such arrangement.'
Conclusion - The income from the assignment of loans is interest income exempt from service tax under Rule 6(2)(iv) of the Service Tax (Determination of Value) Rules, 2006.
Appeal of Revenue dismissed.
............
|
9911796707
