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Showing 41 to 60 of 1551 Records
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2024 (2) TMI 1512
Recovery of service tax with interest and penalty - Business Auxiliary service - lease rent paid by the appellants for ISO Tanks used in a non-taxable territory - Applicability of provision of Section 66A of the Finance Act, 1994 and the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 - applicability of POPOS rules - reverse charge mechanism - extended period of limitation - penalty.
Business Auxiliary service - HELD THAT:- The activity of giving ISO Tanks to the appellant by the foreign service provider for transportation of Aluminium Chloride manufactured by the appellants shall come under Section 65(19)(iv) i.e. ‘procurement of goods or service provided on behalf of the client’, and therefore it can be termed as “Business Auxiliary Service”, and is taxable as such.
Applicability of POPOS rules - HELD THAT:- In the instant case, the tangible goods, ISO tanks were made available by the service provider to the service recipient. Thus, the appellant used such ISO Tanks for storage and transportation of Aluminium Chloride, manufactured by the appellants. Accordingly, the contention of the appellant that Rule 4 is applicable in the present case, does not hold much water. There is no applicability of the Rule 4 (ibid) in the facts of the case and the department’s contention in this regard to apply Rule 3 is correct and proper.
Reverse charge mechanism - HELD THAT:- Since the provider of service is located in Non-taxable Territory and is not having any office in India, the recipient has to discharge the service tax liability under RCM in accordance with Provisions of Section 68 (2) of the Finance Act, 1994 read with Notification No. 30/2012-ST (Srl. No. 10). Hence, there is no infirmity or illegality in the confirmation of the demand by the adjudicating authority and the pleas of the appellant that no service tax is leviable at first place, is not legally sustainable.
Applicability of provision of Section 66A of the Finance Act, 1994 and the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 - HELD THAT:- It has been clearly mentioned that the provision of Section 66A of the Finance Act, 1994 and the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 had ceased to apply w.e.f. 1st July, 2012 and hence, w.e.f. 1st July, 2012, the provision Section 66C of the Finance Act, 1994 read with Rule 3 of the Place of Provisions of Service Rules, 2012 and Rule 7 of Point of Taxation Rules, 2011, shall be applicable to the present case. It has also been mentioned that it is well accepted legal principle that non-mentioning/wrong mentioning of the provisions would not vitiate the proceedings particularly when allegations and charges against the appellant are mentioned explicitly in the Show Cause Notice.
Extended period of limitation - levy of penalty - HELD THAT:- No evidence has been adduced by them that they had ever approached the department for any clarification in the matter. On the contrary, when the EA-2000 Audit was conducted and the impugned transactions were scrutinised, it was revealed that they had not paid the service tax under Reverse Charge Mechanism in accordance with Rule 3 of POPS Rules, 2012 and not paid the service tax on impugned services in Reverse Charge by mis-stating the same as covered under Rule 4 of POPS Rules, 2012 which is not the case on hand as discussed above. Had the audit not pointed it out, they would have continued to enrich themself at the cost of Government Revenue - The extended period has been rightly invoked in the present case and as all the ingredients mentioned in proviso to Section 73 (1) (ibid) and Section 78 of the Finance Act, 1994 are present in the instance case. Therefore, there is no infirmity in the confirmation of the demand of service tax invoking extended period along with interest and imposition of penalty on the appellant as specified in Section 78 of the Finance Act, 1994.
Conclusion - i) The services received in a taxable territory are subject to service tax under RCM, regardless of the service's use in a non-taxable territory. ii) The classification of services under 'Business Auxiliary Service' was upheld, confirming the taxability of services facilitating business operations. iii) The applicability of Rule 3 of the Place of Provision of Services Rules, 2012, was affirmed, emphasizing the location of the service recipient as the determining factor for taxability. iv) There is no infirmity in the confirmation of the demand of service tax invoking extended period along with interest and imposition of penalty on the appellant as specified in Section 78 of the Finance Act, 1994.
Appeal dismissed.
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2024 (2) TMI 1511
Refund of excess service tax paid by mistake - whether the refund claim should be denied based on procedural grounds, such as the failure to include the refund in the returns filed by the appellant? - HELD THAT:- This is a simple clerical error on the part of the appellant. While they were required to pay only Rs. 17,855 for the consideration of Rs.1,27,535 received by them. By mistake, they have added the consideration amount plus service tax and paid total service tax of Rs.145,390. The lower authorities are not denying the fact that Rs.145,390 has been paid by the appellant. The only ground taken by them to deny the refund claim is that this refund being claimed was not being shown as part of the Returns filed by the appellant.
It is a clear case of mistake on the part of the appellant and they have paid excess service tax which should have been refunded to the appellant based on the documentary evidence like the challan and Invoice etc.
Such an issue is covered by the decision of the The Punjab-Haryana High Court in the case of EXECUTIVE ENGINEER, TRANSMISSION SYSTEM, HARYANA VIDYUT PRASARAN NIGAM LIMITED VERSUS CENTRAL EXCISE SERVICE TAX APPELLATE TRIBUNAL, CHANDIGARH AND ANOTHER. [2024 (8) TMI 1151 - PUNJAB AND HARYANA HIGH COURT], which has held 'In the present case, service tax has been paid twice and the service provider has claimed the said amount from the appellant company which cannot be passed on since the appellant company itself has deposited the amount with the state exchequers. It is a case of dual payment. The other party namely TDS Management has not moved any application for refund. In the circumstances, the refund of the appellant-company cannot be denied solely on account of delay which has actually not occurred as it is from the date of knowledge.'
In the present case, the appellant is in a much better footing. They have filed the refund claim in July 2015 for the excess Service Tax paid in June 2015, which is well within the time limit. Therefore, applying the ratio laid down in the cited judgement of Punjab & Haryana High Court, the impugned order set aside and the appeal is allowed.
Conclusion - The taxes collected erroneously should be refunded, and procedural lapses should not defeat a legitimate refund claim.
Appeal allowed.
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2024 (2) TMI 1510
Rejection of stay application - rejection order shows that it is solely based on CBDT OMs - both the parties urge that the point involved in this matter is squarely covered by recent order passed IN GARDENIA VENTURES VERSUS INCOME TAX OFFICER [2025 (1) TMI 876 - TELANGANA HIGH COURT] held respondent No.1 being a quasi judicial authority should apply its independent mind and shall not be bound by the administrative circulars. Prayer that the said rejection order may be set aside and respondent No.1 may be directed to decide the stay application afresh within the stipulated time accepted. Stay application is revived.
HELD THAT:- As per said order supra the impugned order is set aside. The matter is restored in the file of respondent No.1. The petitioner shall appear before respondent No.1 on 10.02.2025 for which no separate notice will be required to be issued. Respondent No.1 shall decide the stay application of the petitioner afresh in accordance with law. It will be open for the petitioner to file another application for lifting of restrictions on the bank account.
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2024 (2) TMI 1509
Classification of 'Receivers' - to be classified under CTH 85177090 or CTH 85181000? - Classification and eligibility of 'Microphones' for exemption under various notifications - Classification of 'Battery Cover, Back Cover, Camera Lens, and Front Cover' and their eligibility for concessional duty.
Classification of 'Receivers' - to be classified under CTH 85177090 or CTH 85181000? - Can an Appellant challenge a matter in appeal which he had earlier acquiesced? - HELD THAT:- The power of the Tribunal to permit a new question of law or fact to be raised before it even if it was not taken up during the initial stage, is a discretionary one. But the question here is that when the appellant deliberately acquiesced or forewent his right to rebut the charge for proper classification of the goods during three stages of the dispute resolution mechanism, can he be allowed to raise it at the Appellate stage. The Tribunal has an inherent power to prevent the right of appeal being abused by an appellant who keeps back till the stage of appeal, points of law or fact which he could have raised before the lower authority, without showing any reason and thus places the other side at a disadvantage. Persons with good causes of action should pursue the remedy with reasonable diligence at every available opportunity. In a literal sense, the term acquiescence means silent assent, tacit consent, concurrence, or acceptance, which denotes conduct that is evidence of an intention of a party to abandon a right and also to denote conduct from which another party will be justified in inferring such an intention - Due to the initial stand taken by the Appellant, including the paying of duty, a complete or effectual adjudication of the proceedings, did not take place on merits before the Original Authority who was also lulled into imposing a light penalty considering the payment of duty. There was no examining of the evidence by the Original Authority, after taking into account the shifting onus of proof depending on the degree of probative evidence adduced by the Appellant and their arguments on facts and law.
Classification and eligibility of 'Microphones' for exemption under various notifications - whether ‘microphones’ are eligible for concessional rate of duty under S. No. 6A of Notification No. 57/2017Cus. dated 30.06.2017 as part of PCBA or should be denied exemption as they are not parts of PCBA’s and are also specifically covered under S. No. 18 of the same Notification, which specifically denied exemption to microphones of cellular mobile phones?.
Whether microphones are inputs or parts for use in manufacture of PCBA? - HELD THAT:- PCBA’s are electronic boards which incorporate fundamental electronic components like resistor, SMD capacitor, processors, diode, ICs etc. to create a functional circuit. It provides for a MIC interphase. PCBA is a part of the cellular phone just as a microphone, camera, LCD etc are. All these items, mentioned are at some stage of manufacture of cellular phones soldered onto the PCBA circuitry, for they require power supply from the battery to function among other things, but that does not make them a part of the PCBA. A microphone is a distinct commodity and is not known in trade parlance as a part of a PCBA. Their integration with the PCBA contributes to the functionality of the cellular phone. Just as typewriter ribbon is not an essential part of a typewriter, microphone is neither a basic construction component or an essential part of a PCBA, and they are commercially not known to be a part of PCBA. They play a crucial role in devices such as cellular phones, headsets, audio recording equipment etc. to capture sound waves and convert them into electrical signals. Just because a microphone is required for functional testing of the PCBA circuitry it does not mean that it is a part of the PCBA.
Goods not defined must be understood in common parlance or commercial parlance - HELD THAT:- In M/s Indo International Industries v. Commissioner of Sales Tax, Uttar Pradesh, [1981 (3) TMI 77 - SUPREME COURT], it has been held that "if any term or expression has been defined in the enactment then it must be understood in the sense in which it is defined but in the absence of any definition being given in the enactment the meaning of the term in common parlance or commercial parlance has to be adopted". Since PCBA’s were not defined for the purpose of Sl no 6A, the commercial parlance test has to be resorted to without going for their scientific and technical meaning.
General description must yield to those of a special one - HELD THAT:- The presumption in law is that the legislature does not intend to enact a law which is contradictory in nature. The burden to prove contra is on the Appellant. The provisions of the notifications are required to be examined carefully to find whether it is purported to have that effect. The issue of the valid prevalence of two contradictory positions in the same notification would fail even if the test for reasonability is that of the "prudent man". One way to resolve the issue is by expanding on the Latin maxim generalia specialibus non derogant which means that general law shall not derrogate from specific law or the provisions of a general statute must yield to those of a special one.
In CCE v. Jayant Oil Mills (P) Ltd., [1989 (3) TMI 132 - SUPREME COURT] the Apex Court has accepted the aforesaid rule as “the basic rule of construction” that is to say “a more specific item should be preferred to one less so.” In this light, the listing of special or declared goods in the very same notification seems to be that as far as cellular phones are concerned the object was to treat microphones which are parts of cellular phones differently as against parts of PCBA. When the Sl no of a notification denies concessional rate of duty to a specific part of a cellular phone, like a microphone, it cannot be held in terms of strict interpretation to be eligible for exemption under another Sl no of the same notification by elaborate discussions on what constitutes inputs or parts of a PCBA.
Whether the insertion in notification is clarificatory and retrospective in nature? - HELD THAT:- N/N. 24/2019 Cus dated 06.07.2019 amending Sl. No 6A of Notification No. 57/2017-Cus. inserted a ‘proviso’ to negativate the inclusion of specific goods under Sl. No. 6A. An insertion clarifying the legal position with respect to goods which was earlier not correctly understood, puts it beyond any possibility of controversy. By describing the given goods with a hard and fast exclusion, whereby no other meaning can be assigned to the goods in dispute, is clarificatory in nature and will be effective from the inception of the notification. In Commissioner of Income Tax, Bombay & Ors. v. Podar Cement Pvt. Ltd. & Ors. [1997 (5) TMI 2 - SUPREME COURT] it was held that a clarificatory statute would be retrospective in nature. If two views on an existing provision were not prevailing or possible, in such a situation the amendment would not be held to be clarificatory.
Since Notification No. 24/2019 Cus. dated 06.07.2019 amending Sl. No 6A of Notification No. 57/2017-Cus. by way of a ‘proviso’ seeks to remove the confusion which pertains to two Sl. Nos. of the same notification it is hence only clarificatory in nature. A harmonious reading of the notification shows that it could never have been intended by the Legislature to have taxed the same goods at two different rates of duty, more so in the very same notification, for the Appellant to choose the Sl. No. which is more beneficial to him - This being so microphones will not be eligible for exemption under Sl. No. 6A of Notification No. 57/2017-Cus. dated 30.06.2017, being part of a cellular mobile phone specifically mentioned under Sl. No. 18 and are also excluded from Sl. No. 6A of the said Notification. The insertion made by Notification No.22/2018-Cus only clarifies this position and would be effective retrospectively.
Onus of proof of fulfilment of condition subject to which an exemption may be admissible lies on the assessee - HELD THAT:- The Learned Adjudicating Authority has stated in the impugned order that microphones are distinct commodities as known in trade parlance and are treated so in various extant notifications. Implicit in that reasoning is the fact that microphones are not part of PCBA’s and are distinct. Further as held by a Constitutional Bench Apex Court in M/s Dilip Kumar and Company [2018 (7) TMI 1826 - SUPREME COURT (LB)], the onus of proof of fulfilment of condition subject to which an exemption may be admissible lies on the assessee or upon a party claiming benefit under the Notification. There is no murmur by the Appellant of having followed the procedure set out in the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 as applicable to the goods imported and claiming exemption as per Sl. No. 6A of Notification No. 57/2017-Cus. dated 30.06.2017. By choosing not to lead evidence on the classification heading of PCBA’s under the Customs Tariff, whether under an independent tariff line/ heading or as a part of cellular phones, the classification of microphones as a part of PCBA or that of a cellular phone is left in doubt.
Boards circulars and the doctrine of contemporanea expositio - HELD THAT:- Boards circulars are not binding on the Tribunal however the doctrine of contemporanea expositio is from time to time evoked by courts to cull out the intendment of the legislature and for removing ambiguity in its understanding of the statute. In Desh Bandhu Gupta and Ors v. Delhi Stock Exchange [1979 (2) TMI 175 - SUPREME COURT] the Apex Court held that this principle can be invoked, though the same will not always be decisive on the question of construction. But the contemporaneous construction placed by administrative or executive officers charged with executing the statute, although not controlling, is nevertheless entitled to considerable weight as highly persuasive - The circular makes it clear that the intention of the amendment was to make explicit what was considered implicit and remove any confusion there may have been in this regard. The TRU’s DO reflects the position as discussed.
Exemption notification should be interpreted strictly - HELD THAT:- Exemption notification should be interpreted strictly. It is noted that both notifications i.e. 50/2017-Cus. and 57/2017-Cus. were issued on the same date. Hence there is some degree of ambiguity in the language used as there could not be an intention to tax the same goods differently on the same day and the notifications should be interpreted in favour of Revenue. Furter in this situation the general description in notification 50/2017-Cus. must yield to those of a specific description in 57/2017-Cus. - it cannot be said that the dispute was one where two equally applicable exemptions were involved and the assessee was eligible to the benefit of that exemption notification which gives him greater relief. As discussed, the impugned goods are not eligible for concessional duty under either of the notifications.
Whether intention of Notification to be understood through declared Government Policy? - HELD THAT:- The microphones were not eligible for exemption under S. No. 6A of Notification No. 57/2017-Cus. dated 30.06.2017 nor under S. No. 427 of Notification No. 50/2017-Cus. dated 30.06.2017. However, it is settled law that the extended period cannot be invoked when the case involves a genuine interpretative issue, which is not merely an excuse given by an Appellant when confronted for non-payment of duty. In such a situation the Appellant is not involved in a blame worthy act and no fine can be levied and penalty imposed. No mis-declaration or suppression of facts can be alleged in such a situation. The demand will have to be confined to the normal period with applicable interest. This view has also been held by the Apex Court in Northern Plastic Ltd. v. Collector of Customs & Central Excise [1998 (7) TMI 91 - SUPREME COURT].
Whether redemption fine can be imposed when goods are not available? - HELD THAT:- In any case the Appellant has not been found committing a blame worthy act and the demand has been restricted to the normal period. Hence the appeal filed by Revenue is rejected.
Classification of 'Battery Cover, Back Cover, Camera Lens, and Front Cover' and their eligibility for concessional duty - HELD THAT:- There is no dispute that the imported goods are parts of cellular phones and unless they are parts which are goods included in any of the specific headings of the Customs Tariff, they merit classification as ‘parts’ as per the relevant Section Notes etc. Even the TRU’s DO refers to the goods being imported as parts or sub-parts or accessories of cellular mobile phones. Revenue has not alleged that the impugned goods are included in any of the specific headings of the Customs Tariff. This being so and cellular phones being classifiable under chapter 85 the classification of the impugned goods cannot be done under Note 2(a) to Section XVI and should be examined in the light of Note 2(b) of the said section, which states that parts suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading are to be classified with the machines of that kind.
Since notification no 50/2017 (Sl no 499) as amended is applicable to parts of cellular phones falling under CTH 851770, the impugned goods are eligible for the benefit of the same. The impugned order hence merits to be set aside.
Conclusion - i) For classification of receivers, the matter may be reexamined by the Adjudicating Authority on merits and a speaking order passed, after affording the Appellant a reasonable opportunity to submit their written submissions if they so desire and after hearing them afresh within ninety days of receipt of this order. The appellant should also cooperate with the Adjudicating Authority in completing the process expeditiously. ii) Microphones were not eligible for exemption under S. No. 6A of Notification No. 57/2017-Cus. dated 30.06.2017 nor under S. No. 427 of Notification No. 50/2017-Cus. dated 30.06.2017. However, it is settled law that the extended period cannot be invoked when the case involves a genuine interpretative issue, which is not merely an excuse given by an Appellant when confronted for non-payment of duty. In such a situation the Appellant is not involved in a blame worthy act and no fine can be levied and penalty imposed. No mis-declaration or suppression of facts can be alleged in such a situation. The demand will have to be confined to the normal period with applicable interest. The impugned order stands modified accordingly. iii) As regards, Battery Cover, Back Cover, Camera Lens, and Front Cover, the department has not been able to prove its charge of classifying the impugned goods under CTH 3920 9999 and hence the classification of the same under CTH 8517 7090 as done by the Appellant holds good. Since notification no 50/2017 (Sl no 499) as amended is applicable to parts of cellular phones falling under CTH 851770, the impugned goods are eligible for the same.
Appeal disposed off.
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2024 (2) TMI 1508
Classification of imported goods - front cover, middle cover and back cover and few other parts of the mobile phones - to be classified under CTH 85177090 or under CTH 39209999? - front lenses and camera lenses imported by the appellants classifiable under CTH 90021100/85177090 (as claimed by the appellants) or under CTH 39209999? - determination of classification of goods by exemption notification issued by the Government under Section 25 of the Customs Act - scheme notified by the MeiTY determine the classification of the goods or not - demand be raised under section 28 by the department without filing an appeal before the Commissioner (Appeals) against the selfassessment, or not - recovery of differential duty - confiscation - interest - penalty.
Assessment of Customs Duty - HELD THAT:- Assessment concludes the determination of the liability of the importer to pay duty and is similar to a decree under the Civil Procedure Code, 1908 CPC Section 2 (2) of CPC defines decree as "It means the formal expression of an adjudication which conclusively determines the rights of the parties with regard to all or any of the matters in controversy in the suit." Assessment differs from decree inasmuch as the determination of what is due from the importer as duty is not made by a Court of law but the duty is determined through a quasi-judicial process by the ‘proper officer‘ who re-assesses the duty or is self-determined by the importer. Just like a decree in Civil suits, there is a provision for appeal against assessment. It is appealable by both sides to the Commissioner (Appeals) under section 128 and also to further higher judicial fora. The Commissioner (Appeals) does not assess but either affirms, modifies or annuls the assessment order. In this process, the Commissioner (Appeals) may also decide the issue of classification of the goods. Similarly, on appeals, the Tribunal or Supreme Court either sustain or set aside the orders of the Commissioner (Appeals) and in the process they may also decide the classification.
The Risk Management System RMS of the Indian Customs Electronic Data Interchange EDI system clears many consignments of imported goods based on selfassessment by the importer without the proper officer ever getting an opportunity to examine the self- assessment and reassess the goods. Some such cases, the Bills of Entry are subject to Post Clearance Audit PCA while others are not even subjected to such audit. A question which arises is if a Bill of Entry which is only self-assessed by the importer without any re-assessment can it also be appealed against to the Commissioner (Appeals) under Section 128.
Demands under Section 28 - HELD THAT:- The power to assess duty lies with the importer and the proper officer. Classification, valuation and applying an exemption notification, are all part of the process of this assessment. Hence, the power to decide the classification lies with the importer during self- assessment, with the proper officer during re-assessment and while issuing an SCN under Section 28 and while adjudicating, with the Adjudicating Authority and with any appellate authority in the judicial hierarchy who deals with the appeals. Classification cannot be decided by anybody else (such as a MeITY in these cases) for two reasons. First, they do not have the authority to assess under Section 17 nor have any appellate powers to modify the assessment. Second, their orders, letters, notifications, etc. are executive actions performed at the discretion of the government and are not quasijudicial or appealable decisions. Therefore, any HSN code indicated against any goods in any policy of MeITY or any other Ministry cannot determine the classification of the goods under the Customs Tariff. Of the three grounds on which the classification is proposed to be changed in these SCNs, the policy of MeITY as a ground cannot, therefore, be sustained.
Exemption notifications - HELD THAT:- During assessment, the goods must be first classified and thereafter it must be examined if the notification applies or not and not the other way round. Issue or withdrawal or modification of a notification cannot determine the classification. The proposals in the SCNs to re-classify the goods relying on a notification are not correct. The reasoning in the SCNs is that since the front cover, middle cover and back cover will be exempted under the notification if they fall under CTH 39209999, it means all front cover, back cover and middle covers fall under CTH 39209999. This logic cannot be accepted because the issue of exemption notification is a quasi-legislative function of the Government (and is not appealable) and is not a quasi-judicial function of assessment, including classification, which is appealable. A plain reading of the exemption notification also does not show that it intends to decide the classification of the goods under any heading. It only says that if the goods which match the description also fall under the tariff heading they will be exempt.
Confiscation of goods under Section 111(m) and consequent penalty under Section 112 - HELD THAT:- The case of the Revenue in this appeal is that the classification of the goods by the importers in self assessment was not correct. Even if the classification was not correct, it does not render them liable to confiscation under Section 111(m). Similarly, there could be cases where, according to the Revenue, the exemption notification claimed during self assessment will not be available to the imported goods. The importer self-assessing the goods must apply his mind when classifying the goods and not predict the mind of the proper officer. Classification of the goods by the importer, even if it is not in conformity with the re-assessment by the proper officer or even if it is held to be not correct in any appellate proceedings does not render the goods liable to confiscation under Section 111(m) - no penalty can be imposed under Section 112 on the appellants for the alleged wrong classification. The appellants cannot be penalized for holding a different view than the proper officer.
Classification of goods - front cover, middle cover battery cover, back cover, front cover housing, middle cover housing and back cover housing of mobile phones - HELD THAT:- In Karnataka Power Corporation [2016 (3) TMI 296 - CESTAT CHENNAI], the dispute was whether imported parts of Hydro Electric Generator i.e., ‘Epoxy insulated single turn half coils with accessories and Epoxy insulated single turn half coils wave stator windings etc.‘ were classifiable under 8503 or under 8544. Applying Section note 2 (b) to Section XVI, it was held that the goods were suitable solely or principally for the generator and hence classified along with them under 8503. This case is on a different issue- whether the parts are to be classified as parts of mobile phones or as articles of plastic under Chapter 39.
In General Mills India [2019 (8) TMI 689 - CESTAT MUMBAI], the dispute was regarding the classification of granola bars and the classification was decided in favour of the importer. In Atul Kaushik the question was about addition of certain elements in the valuation.
The rejection of the appellants’ classification of the front cover, middle cover, battery cover, back cover, front cover housing, middle cover housing and back cover housing of mobile phones under CTH 85177090 in the impugned orders and their re-classification under CTH 39209999 cannot be sustained and needs to be set aside.
Classification of lenses - HELD THAT:- There are no reason to even consider them as being classifiable under 39209999 as plastic sheets, blocks, etc. because, these are not in geometric shapes at all and therefore, cannot be classified under CTH 3920 - The learned Commissioner, however, dismissed the test report and classified them as articles of plastic under CTH 3920 without giving any reasons for doubting the assertion of the appellant that they were made of crystal or the test report produced by the appellant. No samples were drawn or tested by the Customs to demonstrate that they were made of plastic. In the absence of any evidence from the Revenue, the appellant importer’s declaration regarding the nature of the goods and the test reports that it had submitted must be accepted. If Revenue had a doubt regarding the declaration or the reports, it is for the Revenue to produce evidence in support and there is none whatsoever in this case. Thus, there are no justification whatsoever to classify lenses of mobile phones under 39209999 in the impugned orders regardless of which material they are made of. The impugned orders insofar as they relate to classification of lenses also need to be set aside.
Conclusion - i) Classification of the goods is a part of assessment and the importer, the proper officer and appellate authorities alone are competent to decide it. ii)The policy of the MeiTY, which is in the nature of an executive policy decision of that Ministry cannot determine the classification of goods under the Customs Act firstly, because the authority making the policy is not empowered under Section 17 and secondly because the policy is not a quasi-judicial, appealable decision but is a policy decision while classification of goods is a part of assessment and is a quasi-judicial and appealable function. iii) The exemption notification issued by the Government under Section 25 exempts goods and does not determine the classification. If the description of the goods and also the CTH match with the notification, its benefit is available and not otherwise. Therefore, an exemption notification cannot determine the classification but it must be applied after classifying the goods. iv) Based on the Customs tariff and the nature of the goods, we determine the classification of the goods in favour of the appellants and against the Revenue. v) The importer assessees have no obligation under the law to anticipate under which heading the proper officer may classify the goods and match their self-assessment with it. vi) Classification of the goods in the Bill of Entry by the importer is essentially a part of the self-assessment under Section 17 which, even if found incorrect, does not attract confiscation of the goods under Section 111(m) or the consequential penalty under Section 112. vii) The classification of none of the goods in any of the appeals under CTH 39209999 as held by the Commissioner in the impugned orders can be sustained.
Appeal allowed.
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2024 (2) TMI 1507
Process physical return filled - Respondents requested the matter be taken up in the last week of March 2024.
Petitioner states that physical return has been filed. Respondents to process the same in accordance with law.
Petitioner shall file an affidavit in reply and serve a copy thereof on petitioner on or about 2nd March 2024. Rejoinder, if any, to be filed and copy served by 16th March 2024.
Stand over to 26th March 2024.
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2024 (2) TMI 1506
Validity of reopening of assessment - Reasons to believe - addition u/s 68 - whether the notice issued u/s 148 and the order passed disposing of the objection can be said to be legal in eye of law? - HELD THAT:- AO has while issuing notice and recording reasons completely gone into oblivion to the fact that in the present case, the assessment order u/s 143(3) was passed keeping in mind all the details available with regard to transaction done through M/s.Divya Commodities on NMCE platform. However, the Assessing Officer has mechanically recorded that the return was processed only under Section 143(1) of the Act which itself goes to suggest that recording of reasons at the instance of Assessing officer was nothing but in a mechanical manner and with no application of mind.
Also at the time when the assessment order u/s 143(3) was passed, the then AO was in possession of the transaction details through M/s.Divya Commodities and thereby, the same cannot be made subject matter again to assume jurisdiction under Section 148 of the Act for reopening of assessment, as the same has already been concluded.
Thus, reopening on the basis of the same details is nothing but change of opinion and the same is not permissible in the eye of law. Decided in favour of assessee.
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2024 (2) TMI 1505
Classification of goods - rate of GST - Teicoplannin - Caspofungin - HELD THAT:- These goods are taxable at the rate of 2.5% CGST & 2.5% of SGST further the commodity name is enumerated in the lists appended to this schedule. The commodities regarding which the clarification sort are enumerated in this list as follows:
1. Capsofungin acetate - Sl.No. 130 in List – 1 to Schedule-I.
2. Teicoplanin - Sl.No. 216 in List – 1 to Schedule-I.
Thus, the above two (2) commodities are taxable at the rate of 2.5% CGST & 2.5% of SGST.
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2024 (2) TMI 1504
Assignment of the loan - Petitioner's loan account was improperly declared as a Non-Performing Asset (NPA) or a stressed account - HELD THAT:- The assignment of asset to a new entity by the lender need not be on an express consent of the borrower. Knowledge to the borrower would be suffice and knowledge to the petitioner in the case at hand cannot be disputed.
The plea of assignment being contrary to the Master Circulars as is projected is untenable and all submissions shrouded with the plea of it being contrary to Master Circulars are all unsustainable. Assignment or re-assignment by private entities or in the business of banking is best left to bankers, borrowers and the lenders unless it runs contrary to any statutory provision either under the SARFAESI Act or Circulars issued by the Reserve Bank of India which are held to have statutory force - there are no statutory aberration in the case at hand qua Master Circulars issued by the Reserve Bank of India. If there is no statutory aberration, the plea would be reduced to a dispute between the petitioner, a private entity and respondents 4 to 6, a private entity and respondent No.7 another private entity.
This Court would not sit as a supervisor to banking activities between the lender and the borrower except in cases where the dispute between the banker and the lender would touch upon violation of any statutory provision. No such violation though projected with all vehemence is found in the case at hand - any of the prayers sought by the petitioner declined to be granted.
Conclusion - The transfer of stressed assets does not require NPA classification and that banking decisions are generally not subject to judicial review unless statutory violations are evident.
Petition dismissed.
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2024 (2) TMI 1502
Challenge to assessment order issued under the Tamil Nadu Goods and Services Tax Act, 2017 - imposition of GST under the reverse charge mechanism on the seigniorage paid by the petitioner to the Government - HELD THAT:- Reliance placed in TVL. A. VENKATACHALAM VERSUS THE ASSISTANT COMMISSIONER (ST) [2024 (2) TMI 488 - MADRAS HIGH COURT] where it was held that 'It is made clear that there shall be no recovery of GST on royalty until the Nine Judge Constitution Bench takes a decision.'
Petition disposed off.
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2024 (2) TMI 1501
Addition u/s 56(2)(x) - considering the date of acquisition of immovable property as the date of agreement and not the date of allotment letter - whether the exception under the first proviso is applicable since the same mentions the date of agreement to be considered and that in assessee's case whether the letter of allotment is the agreement to sell in order to consider the stamp duty value on that date and not the date of sale?
HELD THAT:- In assessee's case the advance payment is made through account payee check and the allotment letter with the terms of balance payment and other conditions of delivery of flat etc is issued. Therefore above decision of the Hon'ble Tribunal of Parth Dashrath Gandhi [2023 (1) TMI 1253 - ITAT MUMBAI] is applicable to assessee's case also. Accordingly we hold that the addition made by the AO is not sustainable and be deleted. Appeal of the assessee is allowed.
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2024 (2) TMI 1500
Cancellation of GST registration of the petitioner with retrospective effect - SCN was given with a different allegation and the cancellation of the registration has been done on altogether different ground - opportunity of personal hearing not provided - Violation of principles of natural justice - HELD THAT:- On perusal of the impugned order would reveal that the instant cancellation of registration has been passed pursuant to the earlier show cause notice dated 15.12.2023, to which the petitioner had replied on 21.12.2023. The passing of the show cause notice and the impugned order of cancellation of registration clearly indicate that the show cause notice was given with a different allegation and the cancellation of the registration has been done on altogether different ground other than that which is mentioned in the show cause notice.
Further, what is also admittedly evident that before passing of order of cancellation of registration, the petitioners also have not afforded with any opportunity of personal hearing so as to justify their stand in respect of the alleged allegation of any fraud, willful, misstatement and suppression of fact. Neither the show cause notice nor order of cancellation of registration provides for any reason or findings by which the authorities thought of issuance of show cause notice and suspend the operation of the GST registration and also which lead to the cancellation of the GST registration.
This Court, recently, in Sri Avanthika Sai Venkata JV [2024 (2) TMI 416 - TELANGANA HIGH COURT] had allowed the writ petition setting aside the cancellation of registration under similar circumstances and the matter was remitted back for the respondent authorities to pass an order afresh.
Recently, there was yet another decision of the High Court of Bombay under similar circumstances in the case of Nirakar Ramchandra Pradhan v. Union of India and Others [2023 (9) TMI 1176 - BOMBAY HIGH COURT] whereby a show cause notice issued for cancellation of registration and the subsequent cancellation of GST registration was subjected to challenge, wherein, the Division Bench of the High Court of Bombay held 'The impugned action in issuing such show cause notice and passing of the impugned order thereon, has in fact proved counter-productive to the interest of revenue, if the department is correct in its case as put up in the reply affidavit for the first time. The concerned Commissionerate needs to take a serious view of such approach of the concerned Officers who are not following the law in issuing appropriate show cause notices more particularly when the issues are serious. Such deviation by the concerned officers from deviating the following the well settled norms and procedures, in fact would benefit an assessee if there is material that he was committed illegalities.'
Taking into consideration the aforesaid judicial pronouncements and also considering the factual aspects as is evident in the instant case, it is opined that the show cause notice as also the impugned order lacks information and details as to the alleged fraud, willful misstatement or suppression of facts, if any, committed by the petitioner. Therefore, it would be difficult to sustain the said impugned order.
Conclusion - Neither the show cause notice nor order of cancellation of registration provides for any reason or findings by which the authorities thought of issuance of show cause notice and suspend the operation of the GST registration and also which lead to the cancellation of the GST registration. The cancellation order set aside due to procedural defects and lack of substantiated allegations, allowing the respondents to issue a fresh show cause notice if necessary.
Petition allowed.
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2024 (2) TMI 1499
Challenge to SCN - allegation is that the GST registration has been obtained by means of fraud and willful miss-statement and separation of fact - order passed without giving appropriate personal hearing notice - violation of principles of natural justice - HELD THAT:- The earlier round of litigation was W.P.No. 17608 of 2023 and the challenge in the said writ petition was to the earlier show cause notice that was issued on 01.07.2023 which was said to have been passed without giving appropriate personal hearing notice. The said writ petition stood allowed and disposed on 07.07.2023.
Since the matter is already seized by the Department themselves and also keeping in view the earlier decision in the case of the petitioner itself for the same cause of action, we are of the considered opinion that it would be more appropriate in the interest of justice, if the writ petition itself disposed of at this juncture. The order of suspension dated 14.02.2024, to the aforesaid extent is set aside/quashed. The respondents are directed to ensure that the petitioner is permitted to fully participate in the show cause proceedings and he would also be permitted to furnish his GST returns in between. Meanwhile, however, since the show cause proceedings has already been initiated, the petitioner shall be restrained from availing the Input Tax Credit, during the pendency of the show cause proceedings.
Conclusion - The show cause notice was upheld as valid. The suspension of GST registration was set aside with conditions.
Petition disposed off.
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2024 (2) TMI 1498
Proceedings issued u/s 115WE - taxability of fringe benefits - benefits provided to the employees by way of supply of electricity to their residence, township and street lights - whether this so called benefit is one which is for the welfare of the employees or not and whether it is not part of the statutory obligation? - HELD THAT:- As per un-amended “Explanation” to Section 115WB (2) (E) of the Act, it would further make it clear that any expenditure which was incurred in order to fulfill a statutory obligation would not be considered as an expenditure for employees welfare. So also, when we look into the subsequent amendment brought to the “Explanation” to Clause E of Sub-Section 2 of Section 115WB, sub-clause (i) it also clearly excludes expenses incurred or payments made to fulfill any statutory obligation. So, under both the circumstances i.e. even prior to the amendment to the explanation w.e.f. 01.04.2009, the expenditure incurred towards the supply of electricity by the appellant to its employees would be excluded for the purpose of treating it as an expenditure towards the employees benefit is concerned.
We are of the considered opinion that the view taken by the AO, so also by the CIT (Appeals) and Tribunal are not sustainable and the same is accordingly set aside/quashed. It is held that the expenditure so incurred by the appellant towards the supply of electricity would be excluded from being treated as an expenditure towards the employees welfare. Appeal allowed.
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2024 (2) TMI 1497
Challenge to Seizure Memo - seeking provisional release of the goods - HELD THAT:- Today when the matter is taken up, there has been a statement made before the Bench that the issue involved in the instant case has already been considered and decided by this very Bench in two writ petitions of identical nature i.e. W.P.No.843 and W.P. No. 2014 of 2024 [2024 (4) TMI 540 - TELANGANA HIGH COURT]. Both of the writ petitions stood allowed and decided by order dated 08.02.2024.
In view of the fact that identical issues have already been decided by this Bench, it is inclined to allow the instant writ petition also on identical terms. It is ordered that let the respondent authorities pass an order on the application filed by the petitioner for provisional release of the goods subject to fulfilment of conditions imposed.
HELD THAT:- The respondent authorities directed to pass an order for the provisional release of the goods upon payment of enhanced duty by the petitioner - petition allowed.
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2024 (2) TMI 1496
Disallowance of provisions for Lease Rent Expenses - HELD THAT:- On perusal of computation sheet furnished by the Assessee in respect of 127 operational leases we find that, both, upward as well as downward adjustment of lease rental expenses has been made for the relevant previous year. We note that the Assessee has been following this method of accounting for operational lease expenses on a consistent basis over the years. We also note that the aforesaid decision of the Tribunal in the case of the Assessee for the Assessment Year 2010-11 which has also been followed while deciding cross-appeals for the Assessment Year 2011-12.
Therefore, we delete the disallowance made by the AO in respect of provision for operational lease rentals. Ground No. III raised by the Assessee is allowed.
Net disallowance in respect of Enhancement & Customization Expenses and in respect of Facility Management Charges debited to the Profit & Loss Account - HELD THAT:- Assessee is engaged in the business of stock broking. The annual maintenance expenses have been incurred by the Assessee for keeping the software in line with the regulatory requirements and business requirements. Assessee has been incurring the annual maintenance charges on a recurring basis for smooth functioning of business. Vide order [2018 (4) TMI 931 - ITAT MUMBAI] for the Assessment Year 2011-12 the Tribunal had deleted the disallowance of Enhancement & Customization Expenses and allowed deduction for identical annual maintenance expenses paid/payable to TCS as revenue expenditure.
We are not persuaded to take a view, different from the aforesaid view taken by the Tribunal in appeal for the Assessment Year 2011-12. Accordingly, in view of the aforesaid, we direct the Assessing Officer to allow deduction for annual maintenance expenses paid/payable to TCS as revenue expenditure; delete the disallowance and direct the AO to reverse the depreciation @ 25% granted to the Assessee.
Facility Management Charges - As perused the sample invoices and the letters dated 31/03/2011 and 19/10/2011 and find that the same support the stand of the Assessee. Wipro has agreed to provide facility management services to the Assessee for a fixed fee and accordingly invoices were raised by Wipro on the Assessee for the facility management charges. We note that while making the disallowance, the AO has not made any observations regarding the facility management charges. Therefore, order passed by the AO holding Facility Management Charges as capital expenditure cannot be sustained.
Repairs & Maintenance Expenses to be allowed as revenue expenditure.
TDS u/s 194J - disallowance of Data Circuit/Broadband/Multi-Protocol Label Bandwidth Charges u/s 40(a)(ia) - CIT(A) deleted addition - primary contention of the Revenue was that the CIT(A) had deleted the addition without even carrying out basic verification - HELD THAT:- In our view, the order passed by the CIT(A) deleting the disallowance made u/s 40(a)(ia) of the Act cannot be sustained. Given the facts and circumstances of the present case we deem it appropriate to remand this issue back to the file of the CIT(A) who shall adjudicate the same after calling for a remand report from the Assessing Officer in respect of additional evidence furnished by the Assessee as per law and after giving the Assessee opportunity to file response to the same.
Disallowance of various expenses on ad-hoc basis - CIT(A) deleted addition - HELD THAT:- We are not convinced with the submissions advanced by the Ld. Departmental Representative. The Assessee has furnished details of various expenses and had explained the nature and purpose of such expenditure. Without specifying or identifying the infirmity in the specific invoices, bills and vouchers pertaining to expenses furnished by the Assessee, the Assessing Officer proceeded to make a general observation that certain expenses were not supported by proper bills and vouchers. We concur with the CIT(A) that disallowance made on ad-hoc basis cannot be sustained in the facts of the present case. Further, the Assessing Officer has moved on the presumption that the expenses involved personal element without identifying or quantifying such expenses. Accordingly, we do not find any infirmity in the order passed by CIT(A) deleting ad-hoc disallowance.
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2024 (2) TMI 1495
Dependent agent PE (DAPE) in India - nature of transaction between the assessee and ESPN India - HELD THAT:- Appellant had woefully failed to adduce any evidence which may have lent credence to its contention of a fixed place PE.
The case of a DAPE appears to have been raised in the backdrop of Article 12(4)(i) of the India- Mauritius DTAA. However, the contract stipulations would unerringly point towards a manifest absence of a right having been conferred or an authority granted to conclude contracts in the name of ESS Distribution (Mauritius). The ITAT has found that the Indian entities stood conferred with an independent right to enter into contracts with cable operators for channel distribution and that ESS Distribution (Mauritius) was not privy to those agreements. In terms of those agreements, it is the Indian entities which bear associated distribution costs and expenses. The agreements unequivocally establish that ESS Distribution (Mauritius) is in no manner connected with the contracts executed by the Indian entities with cable operators and other intermediaries. Even the right to initiate legal action by the latter is available to be exercised only against the Indian entities.
As far as the additional issue of profit attribution is concerned, we note that since there is no PE, the issue of profit attribution would clearly not arise. This issue, in any case, stands concluded in light of the judgment rendered in E-Funds IT Solution Inc. [2017 (10) TMI 1011 - SUPREME COURT]
Royalty receipt - As manifest from a reading of Article 12(3) that payments would fall within its ambit provided they represent “consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work”. As is evident from a reading of the agreement conditions extracted hereinabove, there was no transfer of copyright. The agreement that ESS Distribution (Mauritius) came to execute conferred no right with respect to copyright upon the Indian entities. This aspect, in any case, is liable to be answered in favour of the assessee bearing in mind the decision of Engineering Analysis Centre of Excellence Private Limited [2021 (3) TMI 138 - SUPREME COURT] and which had clearly held and recognized the distinction between a broadcasting right and a copyright as flowing from Sections 14 and 37 of the Copyright Act, 1957 (1957 Act). This quite apart from the undisputed fact that insofar as the present respondent is concerned, even the question of broadcasting rights does not arise since it was in no manner connected therewith. No merit in the instant appeals.
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2024 (2) TMI 1494
Time limitation on filing petition - Initiation of Corporate Insolvency Resolution Process against Personal Guarantor - service of demand notice - HELD THAT:- Clause 12 r/w Clause L of the recital of the Deed of Guarantee dt. 10.04.2014 makes it clear that this Guarantee was to come into force only upon implementation of CDR package in full and signed by all the lenders in terms of LOA issued. Ld. Counsel for the Personal Guarantor place on record a letter dt. 23.03.2016 having reference No BY.CDR(DAP)No. 749/2015-16, stating that the Company M/s Parekh Aluminex Limited stands exited from the CDR mechanism as failure.
Time limitation - HELD THAT:- It is found that the Financial Creditor invoked the Guarantee on 18.05.2016 by Notice u/s 13(2) of SARFAESI Act, 2002 and the Corporate Debtor came to be admitted into CIRP on 01.02.2019. Since, it is already returned the finding that this Guarantee had not become effective on account of failure in implementation of CDR Package, it is not required to deal with the issue of limitation any further.
Petition dismissed.
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2024 (2) TMI 1493
Condonation of 15 days’ delay in filing the Appeal - HELD THAT:- The aforesaid clearly indicate that the resolution plan was approved by the CoC prior to 03.02.2023 and the claim which was filed by the Appellant was subsequent to approval of the plan by the CoC. When the plan was already approved by the CoC, we are of the view that no error has been committed by the Resolution Professional in refusing to admit the claim. The Adjudicating Authority has rightly rejected I.A. No. 1219 of 2023 filed by the Appellant.
There is no merit in the Appeal - Appeal is dismissed.
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2024 (2) TMI 1492
Rectification of mistake - TP Adjustment - Arm's length price of Advertisement, Marketing, and Promotion (AMP) expenses - Resale Price Method [‘RPM’] as adopted by the appellant/assessee - HELD THAT:- Tribunal has recorded a conclusive finding that application of RPM is appropriate in the instant case. However, thereafter the Tribunal proceeded to determine the arms length price of AMP expenses and directed the TPO to restrict the adjustment
ITAT appears to have felt constrained to not attempt to rectify the apparent inconsistency bearing in mind, and in its estimation, the limited extent and scope of power that stands vested upon it by virtue of Section 254(2) of the Act.
However, and since the inconsistency is apparent on the face of the record, we allow ITA and set aside the order. The matter shall stand remitted to the ITAT for considering the appeal afresh.
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