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2025 (4) TMI 1602
Money Laundering - proceeds of crime - reasons to believe - arrest of the petitioner complied with the mandatory provisions of Section 19(1) of the Prevention of Money Laundering Act, 2002 (PMLA) or not - twin conditions under Section 45 of the PMLA have been fulfilled to justify bail or not - HELD THAT:- The Hon’ble Apex Court in the said judgment has further laid down that the twin conditions as to fulfil the requirement of Section 45 of the Act, 2002 before granting the benefit of bail is to be adhered to which has been dealt with by the Hon’ble Apex Court in Vijay Madanlal Choudhary and Ors. Vs. Union of India and Ors.[2022 (7) TMI 1316 - SUPREME COURT (LB)] wherein it has been observed that the accused is not guilty of the offence and is not likely to commit any offence while on bail - In the judgment rendered by the Hon’ble Apex Court in Vijay Madanlal Choudhary and Ors. Vs. Union of India and Ors. as under paragraph-284, it has been held that the Authority under the 2002 Act, is to prosecute a person for offence of money-laundering only if it has reason to believe, which is required to be recorded in writing that the person is in possession of “proceeds of crime”. Only if that belief is further supported by tangible and credible evidence indicative of involvement of the person concerned in any process or activity connected with the proceeds of crime, action under the Act can be taken forward for attachment and confiscation of proceeds of crime and until vesting thereof in the Central Government, such process initiated would be a standalone process.
Issue of legality of Arrest - HELD THAT:- It is evident from the record that the Petitioner was informed about the ground of arrest immediately by the Enforcement Directorate with his acknowledgement. Further, it is also an admitted position that within 24 hours of the arrest, the arrestee was supplied with the remand application which virtually contains all the grounds of arrest and therefore the legal requirement of informing the grounds of arrested "as soon as may be" also stood fulfilled both as per the statutory requirement under S. 19 (1) of the PMLA as well as the constitutional mandate under Article 22 (1) of the Constitution of India. The Hon’ble Supreme Court in the case of Pankaj Bansal [2023 (10) TMI 175 - SUPREME COURT] had made the requirement of furnishing grounds of arrest in writing, only prospective, by using the word "henceforth". The same has also been clarified by the Hon'ble Supreme Court in Ram Kishor Arora (supra) at Para 23. Hence, the law as it prevailed on the date of arrest was complied with.
On the basis of discussion made hereinabove it is evident that the remand application was provided to the petitioner’s counsel and there is no objection raised during the time of remand. Further, the law as it prevailed on the date of arrest was complied with by the Respondent. However, it is also an admitted position that within 24 hours of the arrest, the arrestee was supplied with the remand application which virtually contains all the grounds of arrest.
Issue of culpability of the present petitioner - HELD THAT:- It is manifestly apparent from the aforesaid fact that present petitioner has close linkup with the said company i.e. M/s Jagatbandhu Tea Estates Pvt. Ltd. However, the present petitioner is the director of the said company or not, is the matter of trial wherein both the parties are free to lead evidence in this regard - It needs to refer herein that in the case of Rohit Tandon v. Directorate of Enforcement, [2017 (11) TMI 779 - SUPREME COURT], the Hon'ble Supreme Court observed that the provisions of Section 24 of the PMLA provide that unless the contrary is proved, the authority or the Court shall presume that proceeds of crime are involved in money laundering and the burden to prove that the proceeds of crime are not involved, lies on the petitioner.
The ground of custody of 22 months of the petitioner has been taken. There is no dispute that the question of personal liberty is to be taken care of in order to follow the mandate of Article 21 of the Constitution of India but equally it is not in dispute that in a case of like nature, in which the petitioner has been involved, as per the allegation, balance is to be maintained in order to have the message to the society that the thing which has been done by the petitioner, as has been alleged, cannot be considered merely on the ground of long custody rather the nature of allegation is required to be seen.
Conclusion - i) The reason for giving explanation under Section 2(1)(u) is by way of clarification that proceeds of crime include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence. ii) The conditions specified under Section 45 of PMLA are mandatory and need to be complied with even in respect of an application for bail made under Section 439 CrPC.
The instant application stands dismissed.
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2025 (4) TMI 1601
Money Laundering - scheduled/predicate offence - reasons to believe - legality of search and seizure proceedings conducted under Section 17 of Prevention of Money Laundering Act, 2002 - Whether the preconditions set out in Section 17 has been complied with or not? - HELD THAT:- This Court finds it unfortunate that women officers and employees are used as shields to prevent investigations from proceeding. Courts have time and again stressed on gender equality in public service. Women are far more empowered and are more proactive nowadays especially in public service. We see women progressing across different fields.
It is the duty of public officials to aid and assist in investigations and it is also the responsibility of both the investigation agencies and State Government officials in-charge to protect and ensure the safety of women. In spite of that, if the woman as an individual feels that her right has been infringed she is fully within her rights to approach the competent court of law. But let not a government try to discourage a woman from moving towards the path of empowerment - No allegations of violation of fundamental rights or coercion was raised by them in those letters to Directorate of Enforcement. Hence, the Directorate of Enforcement contended that this entire petition filed on behalf of TASMAC company is an abuse of process of law.
This Court feels that there is a strong disconnection between the averments and the relief sought for in the writ petition. It is imperative that a broader view of the issue needs to be taken at times, where the rights of people at large will be affected. It is without doubt that the prima facie allegations and complaints against the Tamil Nadu State Marketing Corporation (TASMAC) are grave in nature. It definitely warrants deeper investigation. But these present writ petitions are filed challenging the very initial step of search conducted based on certain information on record - How can a State Government would file a writ petition stating that an Investigating Agency cannot enter and conduct a search in a Government Company, that too when allegations are so serious in nature. In fact, it is the Tamil Nadu Directorate of Vigilance and Anti-Corruption, which has registered multiple First Information Reports (F.I.Rs) regarding malpractices of corruption ongoing in TASMAC.
A raid or a search by an investigating agency must be discreetly planned and executed to ensure that the offenders are caught off guard. In the present case, it is argued that the petitioner employees were asked to stay and that their mobile phones were seized and hence they were unable to contact their family. But that is how normally a surprise check is conducted - How can such a petition even be maintainable. If there are charges of harassment, how can one file a petition to state that a search must be declared illegal and that in essence prohibits any future searches as well. This is highly alarming and such petitions ought to be dismissed at threshold. It raises pertinent question as to the intention behind filing such writ petitions, whether is it a strategy to prolong and protract the investigation is a legitimate query that arises.
The arguments of officers being detained for hours during search and that the employees being sent home at odd hours when a search is in progress is inadequate and highly disproportional, when compared to the rights of millions of people of our Great Nation. The search conducted is for the interest and benefit of this Nation. Can a few inconveniences which is product of ‘procedure established by law’ as embedded in Article 21 be equated against the economic rights of the people of this country. It is the mandate of the Constitution to secure to all its citizens Economic Justice. And legislations such as PMLA serve this object by ensuring that offences which jeopardise our National economic growth is dealt with strictly in accordance with law.
Conclusion - The judicial review powers of the Courts is limited only to the extent as to whether the reasons to believe is recorded in writing before conducting search. The scope of Judicial review is limited to this alone and cannot go beyond or examine the subjective satisfaction of the investigating officer.
Petition dismissed.
The Directorate of Enforcement is at liberty to proceed with all further actions under PMLA - petition dismissed.
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2025 (4) TMI 1600
Classification of service - Business Auxiliary Service (BAS) or Business Support Service (BSS)? - export of services under the Export of Service Rules, 2005 - extended period of limitation - HELD THAT:- In the instant case, series of show cause notices has been issued on the basis of audit; it is the contention of the appellant that as held by the Hon’ble Apex Court in the case of Nizam Sugar Factory [2006 (4) TMI 127 - SUPREME COURT], extended period cannot be invoked in the subsequent show cause notice.
In the instant case, show cause notice dated 20.10.2009 (covering the period April 2004 to March 2009) was issued to the appellant on the basis of audit conducted. Subsequently, four different show cause notices were issued to the appellant covering various periods; the present show cause notice dated 15.10.2013, covering the periods 2008-09 and 2009-10, was issued demanding service tax of Rs.18,89,406/- and denying credit of Rs.2,45,308/-.
The appellant cannot be penalized for the reason that this issue was not noticed or raised in the show cause notice which was already issued to the appellant. If the Department did not choose to ask for all the details in the audit and chooses not to cover the same in the first show cause notice, this cannot be the reason for invoking extended period in the subsequent show cause notices, more so, covering part of the period already covered. Moreover, in a number of cases, it was held by the various benches of the Tribunal that extended period cannot be invoked when the show cause notice is issued on the basis of the audit - When extended period cannot be invoked in the first show cause notice dated 20.10.2009, there is no way it can be invoked in the subsequent show cause notice dated 15.10.2013.
Conclusion - i) The services rendered by the appellant are Business Support Services and not Business Auxiliary Services. ii) The services do not qualify as export of services under the Export of Service Rules, 2005. iii) The demand under the 6th SCN dated 15.10.2013 is barred by limitation; extended period of limitation cannot be invoked.
The appeal survives on limitation and therefore, the impugned order is set aside - Appeal allowed.
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2025 (4) TMI 1599
Short payment of service tax - entire SCN is based on the difference between the 26AS/ITR data and the gross value reflected by the appellant for their ST-3 returns - HELD THAT:- There is no other evidence on record to suggest that any cogent ground was taken by the department to come to the conclusion as regards the nature of the service which was being provided or whether the service tax was liable to be paid on said service. However, despite this, the appellant on their own have come forward and they have already paid the service tax due along with interest thereon - the show cause notice was issued without invoking proviso to Section 73(1) and OIO has also been confirmed under Section 73(1) and proviso to section 73 (1) has not been invoked while confirming the demand.
There are no substantive or cogent ground for invoking the provisions under Section 78 and there does not appear to be any willful withholding of information or misstatement by them, therefore, on holistic appreciation of the facts of the case and evidence relied upon by the Department, the penalty under Section 78 is not invokable in this case and therefore upholding of imposition of penalty of Rs. 72,500 is set aside.
Conclusion - The entire show cause notice is based on the difference between the 26AS/ITR data and the gross value reflected by the appellant for their ST-3 returns.
The appeal is partly allowed.
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2025 (4) TMI 1598
Absolute owner of both the gas/oxygen plants - levy of service tax on lease rentals received under the taxable category of Renting of immovable property’ service - setting up of gas/oxygen plants by utilizing the equipment supplied by both the appellants as well as ISPAT would be considered as ‘immovable property’, in order to fall within the scope and ambit of ‘Renting of Immovable property’ or not - scope of the phrase ‘immovable property’ as per the Explanation 1 appended to Section 65 (105) (zzzz) of the Act of 1994 - HELD THAT:- Various individual equipment of the plant are erected, installed and commissioned within the premises of ISPAT by way of fastening to the foundation by the help of nuts/bolts and through installation of the base concrete support, which can be dismantled at any time, without causing much damage to the original equipment. Since, those equipment were not permanently attached to the earth, the same seized to be considered as ‘immovable property’ and as such, cannot fall under the scope of the definition provided under 65 (105) (zzzz) of the Act of 1994.
An identical issue about immovability of the plant came up for consideration before the Hon'ble Supreme Court in the case of Solid & Correct Engineering & Ors. [2010 (4) TMI 15 - SUPREME COURT]. The issue arose in that case for consideration was, whether erection of plant at site would be considered as ‘immovable’ or ‘movable’. By referring to the provisions of Section 3(26) and 3(36) of the General Clauses Act, 1897, the Hon’ble Supreme Court had prescribed the test, through which it can be ascertained, whether the plant is ‘immovable’ or ‘movable’.
The ratio of the above judgement is squarely applicable to the facts of the present case. In the present case, the fact that the gas/oxygen plants in question, were not fixed permanently to the earth and are embedded to the earth only for the purpose of providing stability and to keep their operation vibration free, is evident from the affidavits sworn in by the officers of the appellant’s company, certificate of the chartered engineer and shifting of the same plants in case of other buyers to another place(s) upon completion of the contract period. Further, it is also an admitted fact on record that the appellants have been paying VAT on the lease rental charges since 2004-2005, before coming into force of the entry of taxable service of ‘renting of immovable property’. Since, payment of VAT was accepted by the concerned statutory authorities as due discharge of the liabilities, it would not be prudent on the part of another authority to claim the tax amount under different head, considering the transaction as ‘service’.
In Section 65(90a) ibid, the phrase ‘immovable property’ has not been considered to explain, as to which of the properties would fall within its ambit for consideration as the service, under the taxable entry of ‘renting of immovable property’. Similarly, in the sub-clause (zzzz) in clause (105) of Section 65 of the Act of 1994, though the activity of renting of immovable property is finding place, but the constituents of the immovable property have not been spelt out therein. However, the Explanation 1 was appended to such sub-clause (zzzz), providing that various properties cataloged thereunder should be considered as ‘immovable property’ - Since, the sub-clause (zzzz) has not provided as to which of the properties would be contemplated as ‘immovable’, such vacuum was remedied by way of providing the various category of properties for consideration as ‘immovable’ in nature in the said Explanation 1. In view of the fact that the said Explanation clause has considered only a ‘building’, ‘land’, ‘facilities relating thereto’, in our considered view, no other property can be included therein for consideration as ‘immovable property’.
The legislative intent is manifest that the scope of the main section for understanding the meaning of ‘immovable property’, should only be confined to those prescribed properties, which are itemized in the said explanation clause. In other words, any other property(ies) not conforming to the prescribed properties should fall outside the scope and purview of consideration as ‘immovable’ for the purpose of the Act of 1994. Therefore, the type of properties mentioned in the Explanation - 1 were intended to be exhaustive and not extendable to any other properties, which are not appearing therein.
The phrase ‘excisable goods’ has been defined in Section 2(d) of the Central Excise Act, 1944 to mean, ‘goods specified in the Fourth Schedule as being subjected to a duty of excise and includes salt’. An Explanation was added to the said definition clause, providing that ‘for the purposes of this clause, “goods” includes any article, material or substance which is capable of being bought and sold for a consideration and such goods shall be deemed to be marketable’.
Conclusion - i) The appellants are not absolute owners of the entire plant facilities, as the equipment supplied by ISPAT and ownership of land and civil structures vests with ISPAT. ii) The plants erected by the appellants are not immovable property, since they are not permanently fixed to the earth but only fastened to provide operational stability and can be dismantled and relocated without substantial damage. iii) The phrase 'immovable property' as per the service tax statute is limited to buildings, land, and common areas/facilities and does not include plant and machinery. iv) The lease rentals received by the appellants do not attract service tax under the category of 'Renting of immovable property' service.
The impugned orders are set aside and the appeals are allowed in favour of the appellants.
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2025 (4) TMI 1597
Validity of duty demand based on re-classification of the products Benzene and Toluene from chapter 29 to chapter 27 - re-classification is based on test reports dated 29.01.1991 on samples drawn in October, 1990 of which only a gist was provided to the appellant by the respondent vide letter dated 29.01.1991 - test reports can legally form the basis for re-classification of the above products manufactured and cleared during 1991 and 1992 - treating the assessments provisional for the two products Benzene and Toluene for the months of January and February, 1993 in the absence of any order passed under Rule 9B of the Central Excise Rules, 1944 and without executing any B-13 bond.
Whether a duty demand based on re-classification of the products Benzene and Toluene from chapter 29 to chapter 27 is sustainable when such re-classification is based on test reports dated 29.01.1991 on samples drawn in October, 1990 of which only a gist was provided to the appellant by the respondent vide letter dated 29.01.1991? - HELD THAT:- Sub-rule (1) of Rule 56 says that the manufacturer is under an obligation to permit any officer to take samples of any product manufactured in his factory. Sub-rule (2) says that such an officer shall conduct a test from the samples so taken and communicate the result of such test to the manufacturer. Sub-rule (3) is not relevant for the present discourse. However, sub-rule (4) is relevant. According to sub-rule (4) where the manufacturer is aggrieved by the result of the test, he may within 90 days of the date on which the result of the test is received by him, request the Assistant Commissioner that the samples be re-tested.
If at all the department wanted to inquire into the correctness of the classification submitted by the appellant, it could have taken samples of the two products prior to the approval at the stage of Rule 173B itself. Approval of classification list under Rule 173B is not an empty formality. The proper officer has to apply his mind and if he considers it necessary, he may conduct further inquiry to ascertain the correctness of classification. Therefore, such belated sampling and still further belated test reports cast a shadow of doubt about the entire procedure adopted by the respondent. This is further compounded by non-furnishing of the test reports to the appellant - the orders re-classifying the products Benzene and Toluene under chapter sub-heading 2707.10 and 2707.20 respectively and levying consequential differential duty demand cannot be sustained in law. Impugned order of CESTAT justifying such re-classification cannot also be sustained.
Whether such test reports can legally form the basis for re-classification of the above products manufactured and cleared during 1991 and 1992? - HELD THAT:- Rule 9B is the relevant provision dealing with provisional assessment. As per sub-rule (1), where the assessee is unable to determine the value of excisable goods or the correct classification of the goods, he may request the proper officer in writing giving reasons for provisional assessment to duty. The proper officer may direct after making such inquiry as may be considered necessary that the duty leviable on such goods shall be assessed provisionally at such rate or value as may be indicated by him. Such provisional assessment is subject to the assessee executing a bond in proper form binding the assessee for payment of the differential amount of duty as provisionally assessed and as may be finally assessed - If the proper officer is satisfied that the self-assessment made by the assessee is not in order, he may direct the assessee to resort to provisional assessment. In any event, for an assessment to be provisional in terms of Rule 9B, an order is required to be passed.
This Court in Coastal Gases and Chemicals Pvt. Ltd. [1977 (4) TMI 41 - SUPREME COURT] and in Hindustan National Glass & Industries Ltd. [2005 (3) TMI 123 - SUPREME COURT] held that in order to establish that the clearances were of provisional basis, an order under Rule 9B and payment of duty on provisional basis are essential.
There is no order of the proper officer under Rule 9B directing that assessments for the months of January and February, 1993 for the two products Benzene and Toluene were provisional. Neither any bond in proper format was directed nor executed by the appellant. Mere endorsement by the concerned Superintendent on two RT-12 returns cannot make an assessment provisional. On the contrary, the department had issued a number of show cause notices covering the period from September, 1990 to December, 1992. Appellant had contested the show cause notices. All the show cause notices were adjudicated upon by the Assistant Commissioner. It is implausible that assessments which were regular till December, 1992 could become provisional from January, 1993. CESTAT has rightly held that assessments for the period from September, 1990 to December, 1992 were regular but inexplicably held that assessments for the months of January and February, 1993 qua the products Benzene and Toluene were provisional. Such findings of CESTAT cannot be sustained.
Conclusion - The re-classification of Benzene and Toluene based on undisclosed test reports was invalid and the consequent duty demand was unsustainable. The assessments for January and February 1993 were not provisional due to non-compliance with Rule 9B requirements, thereby invalidating the department's extended duty demand for that period.
Appeal allowed.
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2025 (4) TMI 1596
Rejection of rebate claim - entitlement to claim rebate of excise duty paid on exported goods, while simultaneously claiming duty drawback on inputs under the Customs Central Excise Duties and Service Tax Drawback Rules, 1995 - double benefit - HELD THAT:- A double benefit would arise in a case where, for a single incidence, relief is availed more than once i.e. if relief is claimed more than once on the output side or if relief is claimed more than once on the input side. If relief is claimed only once on the output side and once on the input side then the same would not amount to a double benefit to the manufacturer/exporter.
The benefits or reliefs available to the manufacturer/exporter on the input side are (i) rebate of input excise duty paid by the manufacturer/exporter to its vendors on the material purchased by it and used in the manufacture of exported goods in terms of Rule 18 of the Central Excise Rules, 2002 read with Notification No.19/2004; or (ii) drawback i.e. rebate of duty or tax chargeable on any imported material or excisable material or input service used in the manufacture of exported goods under the Drawback Rules of 1995. Rule 18 of the Central Excise Rules, 2002.
A manufacturer/exporter is eligible to avail benefits on both the input side as well as the output side on exported goods. Doing so is not a double benefit. This is because the manufacturer/exporter is claiming reliefs against two separate tax incidences. On the input side, he is claiming relief of the taxes embedded in the inputs purchased by him for use in manufacture of exported goods. On the output side, he is claiming relief of output duty paid by him on the activity of manufacturing the exported goods. A double benefit would arise when a manufacturer/exporter claims multiple input side benefits or where a manufacturer/exporter claims multiple output side benefits - In the present case, the Petitioner has claimed i) output rebate under Rule 18 of the Central Excise Rules of the Excise Duty paid by it on the activity of manufacturing the exported goods and ii) on the input side, drawback at the All Industry Rate of 16% under the category of “Cenvat facility not availed”.
The Petitioner correctly availed on the input side drawback at the All Industry Rate of 16% under the category of “Cenvat facility not available”. Hence, the Petitioner has correctly availed one input side benefit and one output side benefit.
In the case of Spentex Industries Ltd. [2015 (10) TMI 774 - SUPREME COURT], the assessee- manufacturer used duty paid inputs for manufacture of goods which were finally exported after payment of Central Excise Duty. The rebate claims filed in respect of duty paid on inputs and on finished goods were rejected by the Department. This Court had taken a view that out of the two excise duties, Rule 18 of the Central Excise Rules, 2002 permits rebate only qua one of them and not on both the duties. Overruling the said decision of this Court, the Hon’ble Supreme Court was of the view that exporters are entitled to both input side and output side rebate under Rule 18 and not just one kind of rebate - in light of the decision of the Hon’ble Supreme Court in Spentex Industries Ltd., there is no double benefit availed by the Petitioner and the Petitioner has correctly availed one benefit on the input side and one benefit on the output side.
The impugned order has completely conflated input and output side benefits. Drawback is an input side benefit granting to the Petitioner rebate of the duties/taxes embedded in the inputs purchased by it. Further, the Petitioner has claimed only output rebate under Rule 18 of the Central Excise Rules, 2002 and has not claimed any input side rebate under the said Rule 18. There is absolutely no bar in law nor is there a double benefit for the Petitioner to claim drawback on inputs and output rebate of the excise duty paid on the exported goods.
Conclusion - The Petitioner is lawfully entitled to claim rebate on the excise duty paid on exported goods under Rule 18 of the Central Excise Rules, 2002, read with Notification No. 19/2004, while also claiming duty drawback on inputs under the Drawback Rules, 1995, without it constituting double benefit.
Petition allowed.
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2025 (4) TMI 1595
Entitlement to CENVAT credit by a manufacturing unit on inputs, capital goods, and input services that were physically received and used by a separate, though related, manufacturing unit - HELD THAT:- There is no denial to the fact that both the entities though are run by same management but both being separately registered under Excise Laws. However, it is also not disputed that the Karwahi Mines got registered after the coal was made excisable w.e.f 01.03.2011. This observation coupled with the admitted fact the Karwahi Mines are engaged in manufacture of coal is sufficient to hold that there was no need for Karwahi Mines to take Central Excise Registration prior 01.03.2011.
Coming to the demand for the period 01.3.2011 to 30.9.2011 of Rs. 46,21,582/ -, the said demand has been confirmed by the impunged order on the ground that w.e.f. 01.3.2011, M/s. Sarda Energy and Minerals Ltd. and Karwahi mines, Tamnar, Raigarh became a separately registered manufacturers of respective excisable goods and cenvat credit of capital goods, input and input services utilized at mines was admissible to Karwahi Mines Tamnar only and not to the respondent post the final product of Karwahi Mines/ Coal became excisable from 01.03.2011 - This perusal is sufficient to hold that the present appeal filed by the department has become infructuous and the entire demand as was proposed vide impugned Show Cause Notice including the partial demand as has been confirmed vide the impugned Order-in- Original stands already set aside.
Conclusion - The demand relating to the period before 01.03.2011 was rightly dropped as the mines were captive and not separately registered.
The appeal filed by the department is dismissed, as infructuous.
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2025 (4) TMI 1594
CENVAT Credit - inputs or capital goods - M.S. Plates, M.S. Channels, HR Coils, Chequered Plates, Linear Slide Rail, HR Sheets, RS Joists, MS Beams and MS Square Mesh which have been used as components and accessories of the capital goods which were used for manufacturing the final products - HELD THAT:- M.S. Plates, M.S. Channels, HR Coils, Chequered Plates, Linear Slide Rail, HR Sheets, RS Joists, MS Beems and MS Square Mesh are classified under Chapter 72/73 of Central Excise Tariff Act 1985 which are not covered under definition of capital goods under clause (i) of Rule 2(a)(A) of the Cenvat Credit Rules 2004. As defined above only goods falling under Chapters 82, 84, 85 and 90 are treated as capital goods. It is also important that these goods are neither components, spares nor accessories to the capital goods as required by Rules 2(a)(A)(iii) of Cenvat Credit Rules, 2004.
Hon’ble Allahabad High Court, in the case of Upper Ganges Sugar & Industries Ltd., Vs CCE [2013 (8) TMI 501 - ALLAHABAD HIGH COURT] held that “Cenvat Credit on HR/NS/GC sheers plates/angles/channels/supporting structure etc. cannot be allowed as said goods are used for fabrication and construction, and are not covered by definition of Capital Goods. The High Court also held that component is complete goods in itself and ready to use without any further processing”.
The Hon’ble Supreme Court in the case of Saraswati Sugar Mills Vs CCE, Delhi [2011 (8) TMI 4 - SUPREME COURT] has disallowed Cenvat credit on MS Plates, MS Channels, HR Coils etc., which are used in fabricating support structures for installation of equipment’s such as vacuum pan, crystallizers, sugar grader, elevator etc.
The said goods viz M.S. Plates, M.S. Channels, HR Coils, Chequered Plates, Linear Slide Rail, HR Sheets, RS Joists, MS Beams and MS Square Mesh are not “inputs” even before amendment in Explanation 2 of Rule 2(k). Since amendment in explanation is only explanatory/clarificatory.
Learned AR alternatively argued that the Appellant has claimed Cenvat Credit only during November 2009 that is after 07.07.2009. The Department may know about the Cenvat Credit availed only after availment and reflection in statutory returns. The Department may taken action only after Cenvat Credit availed and not before - The Appellant have not shown fabricating of any capital goods in statutory ER-1 Returns to be eligible for availing Cenvat Credit. In this regard, Hon’ble High Court of Allahabad in the case of Balaji Hindustan Ltd. [2013 (9) TMI 24 - ALLAHABAD HIGH COURT], held that in absence of any evidence in ER-1 Returns and intimation to the Department, Cenvat Credit on goods in subject could not be availed.
Conclusion - The appellant is not entitled to Cenvat Credit on the disputed goods as they do not qualify as capital goods or inputs under the CCR.
There is no merit in the appeal and therefore liable to be dismissed - appeal dismissed.
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2025 (4) TMI 1593
Recovery of arrears of sales tax - priority of claims of secured creditor bank's equitable mortgage created in 1991 over the claims of the Commercial Taxes Department arising from sales tax arrears under the Tamil Nadu General Sales Tax Act, 1959 - interpretation and applicability of Section 26E of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) - HELD THAT:- The records make it clear that this arrangement has been on-going since December 1991. The impugned notices/communications have been issued only in December 2002 and hence, the arrangement between the bank and the defaulters was already in place for more than a decade when the impugned notices were received. On a careful perusal of the records of the Commercial tax Department as well as DRT/DRAT, it is concluded that the available documents establish the legitimacy of the factual position of the bank in these writ petitions.
As far as the question of priority is concerned, Section 26E of the SARFAESI Act is a specific provision which states that notwithstanding anything contained in any other law for the time being in force and after the registration of security interest, it is the debts due to the secured creditor that shall have priority over all other debts and revenues, including those payable to the Central or State Government or local authority. Hence, as far as SARFAESI Act is concerned and with respect to the question of priority, it is Section 26E, which is a specialized section, that would apply. The provisions of Section 34 of the RDB Act are, by contrast, general in nature - in the juxtaposition of Section 26E of the SARFAESI Act with Section 34 of the RDB Act, it is Section 26E of the SARFAESI Act that will provide the necessary impetus for determining the priority of a charge of security interest in favour of the Financial Institution, as Section 34 of the RDB Act is, by comparison, only a general provision.
It is very clear that it is the provisions of Section 26E of the SARFAESI Act and Section 34 of the RDB Act would prevail over the provisions of Section 24 of the TNGST Act. Additionally, this is a case where security interest has been created by the bank as early as in 1991, prior to the charge imposed by the Sales tax Department. Section 24 of the TNGST Act does not provide for priority by creation of a first charge in respect of the demands raised under that Act. Hence, Section 26E of the SARFAESI Act and Section 34 of RDB Act would prevail, in public interest.
Conclusion - Section 26E of the SARFAESI Act and Section 34 of the RDB Act would prevail over the provisions of Section 24 of the TNGST Act, in public interest.
The impugned notices and communications are quashed and both writ petitions are allowed.
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2025 (4) TMI 1592
Nature and scope of administrative actions initiated in pursuance of the Master Directions vis-à-vis criminal proceedings initiated, against the respondents - requirement of adherence to the principles of natural justice (audi alteram partem rule) - HELD THAT:- The principles of natural justice are not applicable at the stage of reporting a criminal offence. It has further been clarified that providing an opportunity of being heard prior to the commencement of a criminal action (i.e. registration of an FIR), would frustrate the very purpose of initiating a criminal proceeding, which is to meet the ends of justice. More specifically, para 98.1 of Rajesh Agarwal’s case [2023 (3) TMI 1205 - SUPREME COURT ] explicitly states that no opportunity of being heard is required before an FIR is lodged or registered.
In the cases being dealt with in the instant appeals, where the Appellant-CBI has not been added as a party-Respondent before the High Court despite being a necessary party, it is directed that they be impleaded before the High Court by way of a suo moto order being passed by this Court, since these matters are being remitted for fresh consideration.
Conclusion - High Courts exceeded jurisdiction in quashing FIRs without proper challenge or without impleading investigating agencies.
Appeal allowed.
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2025 (4) TMI 1591
Quashing of FIR - Seeking investigation against alleged dishonest and fraudulent acts of Respondent No. 1/Company and its concerned Directors/Decision makers including Respondent No. 2 - HELD THAT:- No discussion is complete on the use of inherent powers of the High Court under Section 482 of CrPC without referring to the decision of this court in State of Haryana v. Bhajan Lal [1990 (11) TMI 386 - SUPREME COURT] wherein this Court had enumerated certain circumstances where the powers under Section 482 of the CrPC can be exercised to prevent abuse of the process of the court or to secure the ends of justice.
Though the High Court has unfettered powers conferred by the CrPC for exercising its inherent jurisdiction under Section 482., the same is expected to be used very sparingly and only in exceptional circumstances. There cannot be any straight jacket formula as to when the High Court would be justified to exercise jurisdiction under Section 482 of CrPC and each case is required to be dealt with on its own merits.
In the present case, the High Court quashed the proceedings on the premise that there were long business transactions between the parties and initiation of criminal proceedings was an armtwisting tactic to extract the pending dues from Respondent Company - the High Court committed a serious error, in quashing the proceedings on a premise, that there were long business transactions between the parties, and initiation of criminal proceedings was an arm-twisting tactic to extract the pending dues from respondent company. It may not be out of place to state the High Court was apprised with a factum aspect that the directors of the company, established certain dummy/shell companies and the monetary transaction were circulated to these shell/dummy companies.
It is true that there is a growing tendency of parties to rope in their counterparts to harass and extract monetary transaction, it is the duty of the Court to consider the facts of each case, in its proper perspective and then to arrive at the conclusion as to whether the case warrants investigation or the proceedings are required to be quashed. The peculiar facts and circumstances of the present case warrants thorough investigation as there was a huge amount involved. As we have already stated that when the petitioner approached the High Court for quashing of the FIR, the investigation was at its initial stage and subsequent to filing of the present Special Leave Petition in this Court it seems that the investigation was concluded by filing the chargesheet.
Conclusion - The High Court is not justified in exercising its jurisdiction under Section 482 of CrPC.
The appeals are accordingly allowed.
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2025 (4) TMI 1590
Cognizance of an offence under Section 174-A of the Indian Penal Code (IPC) can be taken by the Court without a complaint in writing by the concerned public servant, as mandated by Section 195(1)(a)(i) of the Code of Criminal Procedure (Cr.P.C.) - gravamen of the petitioners’ challenge to the charges framed under section 174-A IPC was that cognizance of offence under the same could only be taken on a complaint in writing by the public servant concerned and the bar under Section 195(1)(a)(i) Cr.P.C. would apply - HELD THAT:- For offences under Section 188 IPC, the Supreme Court in in C. Muniappan [2010 (8) TMI 1091 - SUPREME COURT] reiterated that there must be a complaint by a public servant whose lawful order has not been complied with, which must be in writing, since the provisions of Section 195 C.r.P.C were mandatory. It was stated that Court cannot assume cognizance of the case without such complaint and the trial/conviction was, therefore, void ab initio. Accordingly, it underscored that the law does not permit taking cognizance of an offence under Section 188 IPC, in view of the bar under Section 195 C.r.P.C, in absence of a complaint, as prescribed under the provision. Therefore, logically and fundamentally, Section 188 IPC being cognizable, the same reasoning would also apply to an offence under Section 174-A IPC, which is also cognizable.
It is settled law that one cannot assume a careless omission by the legislature and proceed to fill in by judicial interpretation, a casus omissus. In any event the rule of strict and literal interpretation of statutes will prevail.
It could be argued that, since now the legislature has sought to exclude the equivalent of Section 174-A IPC, the legislative intent even prior to BNS and BNSS was the same, although not specified in the statute in IPC/Cr.P.C. This, however, will remain in the realm of legislative speculation and it would be encroaching upon the legislative function by providing such interpretation by judicial dicta, which is not permissible. Reference may be made inter alia to Supreme Court’s opinion in Sangeeta Singh v. Union of India [2005 (8) TMI 660 - SUPREME COURT].
Conclusion - The petition challenging the framing of charges under Section 174-A IPC without a written complaint under Section 195 Cr.P.C. is allowed. The impugned order dismissing the revision petition is set aside, reaffirming the mandatory requirement of a written complaint for cognizance of Section 174-A IPC offences.
Petition allowed.
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2025 (4) TMI 1589
Maintainability of petition - availability of alternative remedy of appeal - Challenge to assessment order - impugned assessment order has been passed based on mismatches in ITR 26(AS), Input Tax Credit (ITC) in GSTR-2A, and ITC reversal on account of credit notes received - HELD THAT:- Recording the submissions made by the learned Government Advocate that the petitioner is having an appeal remedy before the Appellate Deputy Commissioner (ST) GST Appeal, Tiruchirappalli, under Section 107 of the TNGST Act, 2017, this writ petition is disposed of with liberty to the petitioner to approach the appellate authority and raise all the grounds raised in this writ petition in the appeal.
Petition disposed off.
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2025 (4) TMI 1588
Maintainability of petition - bypassing the statutory appellate remedy and invoking the writ jurisdiction under Article 226 of the Constitution of India - HELD THAT:- In the present case, the petitioner has failed to point out any extraordinary and exceptional circumstance for bypassing the statutory alternative remedy. Neither there has been a failure of principles of natural justice nor it is the case of the petitioner that proceedings were without jurisdiction, which are the grounds under which the bar of statutory remedy does not come in the way of entertaining the petitions under Article 226 of the Constitution of India.
There are no reason to invoke our extraordinary jurisdiction in the present case. The petition is, therefore, dismissed.
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2025 (4) TMI 1587
Challenging an order of the Kerala Administrative Tribunal concerning the general transfer process in the State GST Department - HELD THAT:- The Tribunal proceeded to dispose of the matter in the light of the earlier interim order as well as taking note of the Government Policy (Annexure-A1) for implementing online general transfer. No doubt, the object behind Annexure-A1 is laudable but it's implementation may take time. The Tribunal or the Court cannot force the Government to implement such guidelines within a particular time frame.
Petition disposed off.
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2025 (4) TMI 1586
Challenge to ex-parte order - no reasonable opportunity of hearing was provided - order was not communicated to the Petitioner and therefore the challenge to the same before this Court could not be made within the reasonable time - violation of principles of natural justice - HELD THAT:- Section 146 of OGST Act, 2017 postulates that the Government on the recommendations of the Council may notify the Common Goods and Services Tax Electronic Portal to facilitate the registration, payment of tax, furnishing of returns, computation and the settlement of the integrated tax and to carry out such other functions as may be prescribed. Thus, the creation of common portal as envisaged under Section 146 of the said Act, is to facilitate not only uploading of the returns or registration, but also the payment of tax including the adjudication made by the competent authority and uploading of the order which would be passed. The aforesaid notion can further be corroborated by Section 169 of said Act providing the mode of communication of any decision, order, summons, notice or other communication under said Act. The language used in the section leaves no ambiguity in our mind that the modes contemplated therein for communication of the decision/order or the notice can be resorted to by the authorities.
The Apex Court as well as several High Courts have imposed self-restraint upon themselves in exercising the discretion under Article 226 of the Constitution, if the approach is made belatedly and bereft of any reasonable explanation. The delay and laches attributable to the conduct of the litigant may disentitle him to get the relief and the Court may at times refuse to exercise such discretion vested upon them - The moment the order is uploaded in the common portal and the returns are statutorily required to be uploaded on such portal on periodical intervals, it is inconceivable that there was lack of knowledge of said order to the Petitioner. The order was passed as far back as in the year 2023 and the challenges made to the same in the instant writ petition, filed in the year 2025, is without any explanation except that said order was not within the knowledge of the Petitioner.
There is apparent delay in approaching this Court and therefore, it is refused to exercise the discretion vested upon us under Article 226 of the Constitution.
The writ application is rejected.
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2025 (4) TMI 1585
Violation of principles of natural justice - impugned orders passed by the first respondent, without affording an opportunity of hearing to the petitioner - HELD THAT:- In the case on hand, it is seen that all the communications/notice, which culminated in the impugned orders were uploaded in the GST Portal, that too, not under the usual column, 'Notices and Orders', but under the different column, i.e. ''Additional Notices and Orders'' column, which not only the petitioner but also the petitioner's Accountant was aware - it is crystal clear that the first respondent passed the impugned orders without even affording any opportunity of hearing to the petitioner, which are nothing but ex parte orders, as the same suffers from violation of principles of natural justice. If at all, the petitioner is aggrieved by the impugned orders, the petitioner has an effective and efficacious remedy of filing Appeals before the Appellate Authority, however, before the petitioner could do so, since recovery notice was issued and entire disputed tax has been recovered from the petitioner's bank account, the petitioner is constrained to approach this Court seeking for setting aside the impugned orders.
Once the orders passed in violation of principles of natural justice, this Court cannot impose any condition requiring the petitioner to make any deposit - the matters are remanded to the first respondent for fresh consideration.
Petition allowed by way of remand.
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2025 (4) TMI 1584
Validity of summary order in Form GST DRC-07 - Seeking for issuance of Writ of Certiorarified Mandamus, calling for the records on the file of the respondent and quash the same as illegal, error of law and error on the face of record - denial of opportunity of being heard - violation of principles of natural justice - HELD THAT:- The impugned summary order dated 20.12.2023 was passed calling upon the petitioner to file objections on or before 28.12.2023 while the impugned order was passed under Section 73 of the Act on 30.12.2023, which is not a consequential order or speaking order to the summary of the order in Form GST DRC 07 dated 07.12.2023. When such being the case, this Court is of the view that the impugned order came to be passed without considering the objections which have to be made by the petitioner and that it is just and necessary to provide an opportunity to the petitioner to establish their case on merits and in accordance with law.
The order impugned herein is set aside on condition that the petitioner deposits 25% of the disputed tax amount in respect of the impugned assessment period, as agreed by the petitioner, within a period of four weeks from the date of receipt of a copy of this order - Petition disposed off.
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2025 (4) TMI 1583
Principles of natural justice - assessment order passed by the respondent without providing an opportunity of personal hearing to the petitioner - HELD THAT:- Considering the submissions made by the learned counsel for the petitioner as well as the learned Additional Government Pleader appearing for the respondent, it is evident that though the reply has been filed by the petitioner, without taking into consideration of the reply filed by the petitioner and without providing an opportunity of personal hearing, the assessment order has been passed, which is totally against the provision under Section 75(4) of the Central Goods and Services Tax Act, 2017.
This Court is of the view that the assessment order came to be passed without affording opportunity of personal hearing to the petitioner to establish their case, thereby violating the principles of natural justice and that it is just and necessary to provide an opportunity to the petitioner to establish their case on merits and in accordance with law - Petition allowed.
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