Reassessment proceedings against non-existent entity - PAN number pertains to the company prior to the order of amalgamation, that is no longer in existence in terms of the order of amalgamation - HELD THAT:- It is to be noticed that the legal position stands settled by virtue of the order in the case of Principal Commissioner of Income Tax, New Delhi v. Maruti Suzuki India Ltd. [2019 (7) TMI 1449 - SUPREME COURT] wherein it is held that the notice and assessment order passed in the name of non-existing company is a substantive illegality and is an order passed without jurisdiction. Same has been followed by this Court in Coffee Day Resorts (MSM) Pvt. Ltd. [2023 (6) TMI 883 - KARNATAKA HIGH COURT]
Thus. the notice pertaining to the petitioner company having been issued to the non-existing company are one without jurisdiction and are set aside. Decided in favour of assessee.
Maintainability of application - default within the meaning of IBC and whether Application can be admitted after restructuring of loans, especially when approval for the Scheme of Arrangement for restructuring of the loans is pending in NCLT - Applicability of the decision of the Ho’ble Supreme Court in Vidarbha Industries Power Ltd. vs. Axis Bank Ltd. [2022 (7) TMI 581 - SUPREME COURT].
Maintainability of the Application - HELD THAT:- The CA No. 120/2019 in CP(IB) No. 330/ALD/2018 filed in this respect has been decide by us by a separate order dated 03.06.2024 holding that the Judgment of the Hon’ble Supreme Court in case of Dharani Sugars and Chemicals Limited vs. Union of India [2019 (4) TMI 230 - SUPREME COURT] is not applicable in the present case and the present Application filed on the direction of the RBI issued vide its letter dated 14.08.2018 in compliance of the order of the Supreme Court in case of Chitra Sharma [2018 (8) TMI 661 - SUPREME COURT], is legally maintainable and accordingly , CA 120/2019 has been dismissed . Therefore, the present Application under consideration is held to be legally maintainable.
Whether there is Debt and Default? - HELD THAT:- In the present case, default has occurred and ICICI Bank’s Section 7 Petition is complete providing all the details of debts and default as required in Part IV of the Application and attaching all the necessary supporting documents including ROD from NeSL along with CIBIL Report and CIRLC Report from RBI portal as required in Part V of the Application and there is no disciplinary proceeding against the proposed IRP. Considering that all the elements are fulfilled as required under IBC, it is found that this Application deserves to be admitted u/s 7 for starting CIRP against the Corporate Debtor.
Applicability of the decision of the Ho’ble Supreme Court in Vidarbha Industries Power Ltd. vs. Axis Bank Ltd. [2022 (7) TMI 581 - SUPREME COURT] - HELD THAT:- If the Corporate Debtor feels about its viability, feasibility and financial health , it would be more beneficial for it after its resolution under IBC is done expeditiously before its assets get depleted. Therefore, it is opined that its fast resolution would be in its best of interest to put it back on feet to enable it to pay its debt fast and revive its business. Therefore , we are not inclined to accept the contention of Feasibility , Viability and Financial Health being good reasons to apply our discretion for not admitting the application u/s 7(5) after we have determined that default has occurred.
On the review petition in case of Vidarbha Industries Power Ltd., the Hon’ble Supreme Court has held in order dated 22.09.2022 that it is well settled that the judgements and observations in judgments are not to be read as provisions of statute and judicial utterances and/or pronouncements are in the setting of the facts of a particular case. Therefore, after clarification by the Hon’ble Supreme Court in the review petition of its decision in the case of Vidarbha Industries Power Ltd., it has been made clear that the decision given by the Hon’ble Supreme Court in the case of Vidarbha Industries Power Ltd. was on the facts of that particular case and no ratio was laid down about Section 7(5) of the I & B Code, 2016 being mandatory or discretionary.
Conclusion - The Applicant/Financial Creditor has proved the debt and the default, which is more than the threshold limit of one lakh at the relevant time and even more than Rs. 1crore the limit applicable at present. The application is also filed within limitation period and complete in all respect and a resolution professional is also proposed as per section 7(3)(b). Accordingly, the present application under Section 7, has been found fit to be admitted as per Section 7(5) of the I & B Code, 2016.
Special Audit passed u/s 142(2A) - CIT exceeding jurisdiction in granting approval for the extension of the time limit for conducting special audit - HELD THAT:-CIT (A) wholly relied on the judgment of ITAT in the case of Soul Space Projects Ltd. [2020 (6) TMI 696 - ITAT DELHI] wherein it was held that a power which has been given to a specified authority has to be discharged only by him. Substitution of that officer/authority by any other officer, may be of higher rank, cannot validate the said order/ action.
CIT (A) held that in terms of Section 142(2C) of the Act, the extension of time period for furnishing the Special Audit Report has to be specified by the AO and not by the CIT.
CIT (A) held in the present case, it is clear from the letters dated 27.03.2018 addressed to the AO by the Addl. CIT and letter dated 27.03.2018 addressed by the AO to the assessee, that the approval for granting extension of the time limit for conducting special audit was sought from and granted by the Pr. CIT only. AO has not extended the said time limit suo-moto. The ld. CIT (A) has also examined, the assessee’s own case for AY 201213 wherein vide order dated 21.09.2020 in Appeal No. CIT(A), Delhi -7/10162/2019-20 on identical facts & circumstances, it was held that the order of the AO as void ab-initio since due procedure as mandated under the provisions of Sec. 142(2A) & Sec. 142(2C) has not been followed.
The order of the AO and the procedure adopted for getting the special audit done u/s 142(2A) of the Act suffers from multiple infirmities. Accordingly, order of the Assessing Officer is held to be void ab-initio and the order of the ld. CIT (A) is hereby affirmed.
Disallowance of CENVAT Credit - wrongful availment of CENVAT Credit on the invoices of service providers pertaining to AMC to whom payments were made after deducting certain amount as `penalty' - wrongful availment of CENVAT Credit of Central Excise duty/ Service Tax on the strength of documents like Cover Notes of Consolidated invoices, Advice of Transfer, Invoices issued by their AMC Service providers on account of reimbursement towards fuel expenditure and invoices issued by M/S C-Dot Clearing House, Delhi for the service, namely `Domestic Roaming' in contravention of Rule 2, 3, 9 of CENVAT Credit Rules, 2004.
Wrongful availing and utilization of CENVAT Credit on penalty deductions from AMC invoices - HELD THAT:- Admittedly the appellant has not paid the amount indicated in the invoices of the service provider. The invoice value has been reduced by the amounts which appellant has claimed to be deductions as “penalty” on the service providers as per the agreement entered between them and the service provider. The value of the service received as rightly observed in the impugned order is relatable to the amount paid as consideration by the service recipient to the service provider. With effect from 2011, the scheme of taxation of services was altered and the service tax became payable on the accrual basis rather than the receipt basis. However the scheme of CENVAT credit has not undergone any change. Rule 4 (7) of the CENVAT Credit Rules, 2004 provides that Credit shall be allowed on or after the day on which payment is made of the value of invoice - The fact that invoices were issued indicated particular taxable value and service tax payable, needs to be verified from the end of service provider as to whether he has in actual paid the service tax on invoice value or on the reduced value after taking into account the deductions made by the appellant towards penalty. Impugned order do not refers to any verification that was essentially required to be made at the end of service provider - matter needs to go back to the original authority for causing a verification from the end of service provider as to on what value of taxable service the service tax was actually discharged by the him.
Wrongful availing and utilization of CENVAT Credit on diesel and electricity charges - HELD THAT:- The appellant has taken credit on the invoices of the service provider providing AMC services. For providing such services he has used “diesel/ electricity” as input. The output service provided by the service provider admittedly is AMC service - It is not even the claim of the appellant that the CENVAT Credit should be allowed to them on the diesel/ electricity by treating them as input under Rule 2 (k) of the CENVAT Credit Rules, 2004. The fact that service provider has paid service tax on the service provided by him consuming these inputs is not in dispute. There are no merits in the findings recorded by the adjudicating authority in respect of this demand and set aside the same. As this demand is set aside the interest and penalty imposed in respect of this demand is also set aside.
Liability to penal action for contravention of CENVAT Credit Rules - HELD THAT:- The issue of penalty kept open and to be determined by the adjudicating authority after determining the issue that is remanded back to him.
Entitlement for benefit of exemption from BCD under N/N. 25/2005-Cus. dated 01.03.2005 as amended by N/N. 15/2012-Cus. dated 17.03.2012 on the imported “Nikon brand digital still image video camera” - period February 2014 to March 2015 - true meaning and scope of the third parameter/function - HELD THAT:- The exemption N/N. 25/2005-Cus. dated 01.03.2005 has been issued pursuant to the said commitment of India in lowering the rate of duty on import of various Information Technology products including the goods in question. Therefore, the argument that Exemption N/N. 25/2005-Cus. dated 01.03.2005 is general in nature and issued in a routine manner cannot be acceptable - It has been issued with an objective, that is, lowering of import duty as committed under the said International Agreement, hence, ascertaining the true meaning and scope of the said Notification keeping in view the understanding of the meaning, scope and classification of the said goods in the International arena may not be out of context.
The alignment of the classification of digital cameras and video camera recorders in the year 2007 was more or less in line with Harmonised System of Nomenclature (HSN), lends support to the aforesaid understanding of the subject. Initially, the Digital Still Image Cameras and Video Cameras were classified under a common Chapter Subheading 8525 40 00 and accordingly, the exemption N/N. 25/2005-Cus. dated 01.03.2005 also made applicable to the said Tariff Entry to all “Digital Still Image Video Cameras”.
In the present case, the imported digital cameras are capable of functioning both as still image cameras and to a limited extent as video cameras. It is capable of recording videos for a limited time restricted by the firmware installed by the manufacturer in the camera. It cannot be denied, also nowhere disputed by the Revenue, that the primary function of the imported digital cameras is for recording still images and recording videos for a limited time of 29 minutes 59 seconds in a single sequence, is an additional feature.
Reading the catalogue enclosed with the paper-book which indicates that continuous recording at a specified resolution and frames per second for more than the specified time would heat up the camera or automatically recording would be terminated. Consequently, we agree with the interpretation recorded by the Referral Bench that recording of video for 30 minutes in a single sequence using maximum storage capacity be construed not to exhaust the entire memory or leaving no space for further recording video or still images laying equal emphasis to the phrase in ‘in a single sequence’. The aforesaid interpretation is in line with the International practice of understanding of the meaning of Digital still cameras and video cameras as reflected in the European Union Explanatory Notes and also the Circular issued by the Board.
In the present case, there is no ambiguity in reading the Explanation of the N/N. 25/2003-Cus. dated 01.03.2005 as amended, in as much as, a literal interpretation of the said Explanation, reveals that all the three parameters/functions of a digital camera should be cumulatively read so as to ascertain whether all the characteristics are above the threshold limit; in that event, the digital camera would not be eligible to the exemption from BCD under the said Notification. In the event any one of the parameter/characteristic is below the threshold limit e.g. recording time is less than 30 minutes in a single sequence using the maximum storage (including expanded) capacity, then the cameras would be eligible to the benefit of the said Notification - The appellant in the present case also fairly established that their case falls within the four corners of the said Notification by adducing evidence.
It can fairly be inferred that the appellants are eligible to exemption from BCD under the said N/N. 25/2005 CE dated 1.3.2005 as amended.
The “digital still image video cameras” would be entitled to BCD exemption under N/N. 25/2005-Cus. dated 01.03.2005 as amended by N/N. 15/2012 dated 17.03.2012 - The interpretation of the Explanation by the Division Bench of the Tribunal in Sony India Pvt.’s case denying the benefit of exemption is a result of incorrect interpretation of the Explanation of the said Notification.
The Reference is answered; accordingly, the appeal is now be listed before the Division Bench for hearing.
Rectification of mistake - CPC Bangalore has taxed the entire excess income over expenditure instead of taxing the excess amount of 15% of the gross receipts as 15% is statutorily available to the assessee - mistake apparent from the record or not? - HELD THAT:- From the perusal of the order passed u/s.154 of the Act i.e. the impugned order, we find that there was no claim with respect of the set off of excess claim made during the preceding years nor is borne out from the records. No such claim was made in the return of income filed by the assessee. Therefore, this claim being out of the purview of mistake apparent from record, should not be accepted. We find that CPC has made an error while taxing the residuary figure i.e. Rs.76,26,863/- being the excess of income over expenditure without allowing deduction of 15% as statutorily available with the assessee.
Further, by Finance Act, 2023, Section 115BBI has been inserted to the statute which provides a special rate of tax at the rate of thirty percent on the aggregate of such specified income accumulated or set apart in excess of fifteen per cent of the income where such accumulation is not allowed under any specific provision of this Act.
Thus the legislature is of the opinion that only the amount in excess of 15% which is not applied and otherwise not allowed to be exempted is only taxed. In view of this discussions, the application of the assessee for rectification for allowing deduction of the amount of 15% of the gross receipts out of total amount of income i.e. Rs.76,26,863/- is a mistake apparent from record and, therefore, we direct the AO to allow that deduction of 15% of the gross receipts and charge the tax on the shortfall of Rs.9,43,500/- only. Appeal of the assessee is partly allowed.
Levy of service tax - insurance premium paid by the Banking Institutions to DICGC to secure deposits of the customer - Service Tax paid on insurance premium to DICGC for insuring deposits is eligible input credit for the Banking Institutions or not - HELD THAT:- This issue was examined at length by a Larger Bench of the Tribunal in South Indian Bank vs. Commission of Customs, C. Ex. & ST., Calicut [2020 (11) TMI 120 - CESTAT BANGALORE] and after a consideration of the provisions of the Finance Act, the CENVAT Rules, the Deposit Insurance Act and the Regulations it was held 'the service rendered by the Deposit Insurance Corporation to the banks would fall in the main part of the definition of “input service”, which is any service used by a provider of output service for providing an output service' - it was further held that 'Having made reversal under Rule 6(3B), the banks have duly complied with the 2004 Rules and hence they are entitled to avail Cenvat credit on the insurance service received from the Deposit Insurance Corporation.'
Thus, the insurance service provided by the Deposit Insurance Corporation to the appellant is an ‘input service’ and CENVAT credit of the service tax paid by the appellant for this service received by the appellant from the Deposit Insurance Corporation can be availed by the appellant for rendering ‘output services’.
The two appeals may now be placed for hearing before the Division Bench of the Tribunal.
Validity of assessment u/s 147 against the dead person- HELD THAT:- When the assessee dies during pendency of the proceedings, proceedings are to be continued through the legal representatives of the deceased. Accordingly, the order, demand notice are set aside.
Consequent to allowing the writ petition and setting aside of the assessment order, the order of freezing the bank account as evidenced at Annexure-'K' is set aside. Matter is remitted to the stage post to the notice issued u/s 148 of the Act. Revenue to take steps in accordance with Section 159(2)(a) of the Act.
Disallowing the claim u/s 11(2) - delay of 03 days in filing Form no.10 - assessee argued that for the year under consideration, the assessee filed Form no.10 on 10/11/2017, i.e., before filing of return of income, as the due date of filing of return of income was extended upto 07/11/2017 - HELD THAT:- We condone the delay in filing Form no.10. Since the assessee has otherwise fulfilled all the conditions of section 11(2) of the Act, the addition of Rs. 15 lakh, has no legs to stand. In effect, the entire addition made by the AO and confirmed by the CIT(A) is hereby quashed. The grounds raised by the assessee in the present appeal are allowed.
Principles of unjust enrichment - time limitation - Refund of Education Cess (EC) and Secondary and Higher Education Cess (SHEC) paid on Oil Industry Development Cess (OIDC) - appellant has not submitted its financial records such as balance sheet, trial balance etc. to prove that they have borne the burden of EC and SHEC on OID Cess - difference of opinion - matter referred to the Third Member - majority order.
Whether a claim for refund of Central Excise Duty paid under a ‘mistake of law’ by the appellant will have to be filed under section 11B of the Central Excise Act, 1944 and are subject to the provisions including the time limit stated there under as per the law declared by the Hon’ble Supreme Court in its judgment of Mafatlal Industries Ltd. Vs. UOL [1996 (12) TMI 50 - SUPREME COURT] and the Larger Bench decision of this Tribunal in Veer Overseas Ltd. Vs. CCE, Panchkula [2018 (4) TMI 910 - CESTAT CHANDIGARH], whereby the refund claim filed by the appellant is time barred.
HELD THAT:- Aanalysis of the relevant provisions of the OIDC Act, 1974, it is clear that the cess has been collected as duties of excise and the provisions of Central Excises and Salt Act, 1944 and the rules made thereunder; particularly the provisions relating to refunds and exemptions from duties have been made applicable. Also, the EC and SHEC levied under the relevant provisions specifically refers to provisions of the Central Excise Act, 1944 relating to refunds, exemptions and imposition of penalty etc. for its administration.
The appellant had discharged EC and SHEC on Oil cess, considering it as duties of excise. Subsequently, applying the circular dated 07.01.2014 issued by the Board, wherein it is clarified that EC and SHEC be payable only on the cess which is administered and collected by Ministry of Financs it is realized by the Appellant that OIDC being administered by the Ministry of Petroleum and only collected by the Ministry of Finance; EC and SHEC are accordingly not payable. Thus, admittedly all these years, the EC and SHEC has been assessed and paid on the OIDC, considering the same as an excise duty under the relevant provisions of the CEA, 1944. The viries or its leviability on the said excise duty(Oil cess) has not been challenged by the Appellant nor the same has been declared as ultra vires levy by any High Court or Supreme court.
It is noted that to ascertain the correctness of certain decisions of the Apex Court, concept of unjust enrichment, interpretation of Article 265 of the Constitution of India and the provisions of the Central Excises and Salt Act, 1944 and the Customs Act and the reference by a Division Bench doubting the judgment of the correctness of the 5 Judges Bench in the case of Sales Tax Officer, Benaras & ors. Vs. Kanhaiyalal Mukundlal Saraf [1958 (9) TMI 57 - SUPREME COURT (LB)], the matters have been placed before the nine Judges Bench.
The EC and SHEC paid by the appellant which by way of misinterpretation of its applicability to Oil cess being administered by Ministry of Petroleum and not by Ministry of Finance(Department of Revenue) be considered as a payment of duty collected initially with authorities of law by a mis-interpretation of relevant provisions of Oil Industry (Development)Act, 1974 read with provisions of Central Excises Act, but later discovered to be not a levy authorised by law. Therefore, there are no hesitation to say that the principle laid down by the Hon’ble Supreme Court at clause (I) of the para 99 is squarely applicable to the facts of the present case.
Applicability of the judgment of the Hon’ble Gujarat High Court in the case of Joshi Technologies International INC-India Projects Vs. UOI [2016 (6) TMI 773 - GUJARAT HIGH COURT] which has been later followed by the jurisdictional High Court of Madras in the case of 3E Infotech Vs. CESTAT, CCE(Appeals-I) [2018 (7) TMI 276 - MADRAS HIGH COURT] - HELD THAT:- While laying down the principle of refund of illegal levy, Hon’ble Supreme Court categorically held that the necessity of pursuing statutory remedy in filing refund claim under the relevant enactment, will not be applicable when a petition has been filed under Article 226 before the Hon'ble High Court or Article 32 before the Hon'ble Supreme Court. In other words, the High Courts or the Hon'ble Supreme Court can consider refund of an illegal levy beyond the provisions of Section 11B of Central Excise Act, in exercise of its extraordinary jurisdiction conferred under Art. 226 or Art.32 of the Constitution, as the case may be.
(i) the refund claim of EC and SHEC paid on OID cess, being an ‘illegal levy’ is governed by the principle laid down in para 99(i) of the judgment of the Hon'ble Apex Court in Mafatlal Industries Ltd.’s case and the Larger Bench judgment in Veer Overseas Ltd.’s case; accordingly the claim have to be filed under Section 11B of the Central Excise Act, 1944 and governed by the said provisions prescribed thereunder. (i) On the second question, the judgment delivered by Hon'ble High Courts in Joshi Technologies case in exercise of Jurisdiction under Article 226 followed in 3E Infotec’s case cannot be applied by the departmental authorities and Tribunal in case of refund of ‘illegal levy” in view of the principle of law laid down by the Larger Bench of Tribunal in Veer Overseas Ltd.’s case.
Majority order - The Third Member has agreed with the view of Member (Technical) that the refund claim is time barred. In view thereof, the impugned order is upheld. The appeal is dismissed.
Estimation of income - addition made on account of accommodation entries -CIT(A) has reduced the amount of disallowance from 100% of payments made to the sub-contractors to 15% of such payments - as per AO Assessee had failed to discharge the onus and establish the genuineness of the payments made to two parties engaged as subcontractors and as well as the commercial expediency of making such payments - HELD THAT:- Revenue has failed to dislodge the factual findings returned by the CIT(A) during the appellate proceedings before us. We find merit in the contention advance on the behalf of the Appellant that the AO has failed to bring any material on record to establish that the work was not actually performed and therefore, disallowance of 100% payments made to sub-contractors is not warranted in the facts and circumstances of the present case.
We are not inclined to interfere with the order passed by CIT(A) restricting the disallowance to 15% of payments made to sub-contractors. There is nothing on record to persuade us to take a view that disallowance at a higher rate was warranted in the facts and circumstances of the present case.
We have already rejected the contention of the Revenue to restore the disallowance at the rate of 100% of payments made to sub-contractors. We also concur with the CIT(A) that in absence of any material to substantiate the allegation that Assessee had paid commission at the rate of 1%, the addition made in respect of commission expenses cannot be sustained merely on assumptions and guess work - Decided against revenue.
Deduction u/s. 80P(2)(a)(i)/80P(2)(d) - interest income earned from cooperative banks - HELD THAT:- The Co-ordinate Bench of the Tribunal in the case of The Ugar Sugar Works Kamgar & Dr. Shirgaokar Shaikshanik Trust Nokar Co-op Credit Society [2021 (11) TMI 1117 - ITAT PANAJI] held in favour of the appellant society.
We are of the considered opinion that even the interest income earned by cooperative society on deposits made out of surplus funds with cooperative banks as well as schedule banks qualify for deduction both under the provisions of section 80P(2)(a)(i) and section 80P(2)(d) therefore, the reasoning given by the lower authorities on this issue cannot be accepted. Thus, we direct the AO to allow deduction u/s 80P(2)(a)(i) and 80P(2)(d) in respect of interest income earned from other cooperative banks. The grounds of appeal filed by the assessee stands allowed.
Service tax on construction of Residential Complex - Payment of service tax on abated value while no abatement was admissible - non-payment of service tax on charges collected towards maintenance and repair service - wrongful availment of Cenvat credit on input services on the basis of inadmissible invoices - non-payment of service tax on the amounts received towards supply of electricity through DG Set under the category of maintenance or repair services.
Demand of service tax on construction of Residential Complex - HELD THAT:- The SCN proposed to disallow the exemption/abatement only on the ground that the Appellants had wrongly availed Cenvat credit on input services. There is no allegation that the gross amount charged did not include the value of land. Here also, the finding of the Commissioner is beyond the scope of SCN. It is the settled law that the order cannot travel beyond the scope of SCN - reliance placed on the decision of Hon’ble Supreme Court in the case of COMMISSIONER OF CUSTOMS, MUMBAI VERSUS TOYO ENGINEERING INDIA LIMITED [2006 (8) TMI 184 - SUPREME COURT] wherein it has been held that the Department cannot travel beyond the scope of the SCN.
Whether the benefit of exemption under Notification No. 01/2006 dated 01-03-2006 in respect of construction of residential complex can be disallowed even if the Cenvat credit availed during the said period has been reversed alongwith interest and penalty? - HELD THAT:- There is no dispute that the Appellants had reversed the entire Cenvat credit relating to Construction of Residential Complex Service even before issuance of SCN. The Hon’ble Supreme Court in the case of CHANDRAPUR MAGNET WIRES (P) LTD. VERSUS COLLECTOR OF C. EXCISE, NAGPUR [1995 (12) TMI 72 - SUPREME COURT] has held that debit entry in Modvat account indicates as if credit was not taken on such inputs - since the Appellants have already reversed the Cenvat credit alongwith interest, the benefit of Notification No. 01/2006-ST dated 01.03.2006 cannot be denied to them - the corresponding demand of service tax of Rs. 3,18,92,385/- set aside.
Disallowance of Cenvat credit Rs. 48.93 lacs - HELD THAT:- Since this demand is completely barred by limitation as it is in respect of the credit availed by the Appellant during the period July to September, 2012 it is refrained from discussing this issue on merits as it is held that demand upto the period of March 2013 is barred by limitation.
Demand of service tax on sinking fund - HELD THAT:- It is found that the issue regarding liability for payment of service tax on sinking fund/interest free maintenance scrutiny is no more res integra. In the case of KUMAR BEHERAY RATHI & OTHERS VERSUS CCE. [2013 (12) TMI 269 - CESTAT MUMBAI], this Tribunal has held that collection of one time deposit on account of maintenance and repair of common areas is not taxable - the demand of service tax on sinking fund set aside - the demand on the said count is set aside alongwith setting aside of penalty.
Demand of service tax on supply of electricity through DG Set - HELD THAT:- The issue regarding liability for payment of service tax on supply of electricity generated through DG set in case of power failure is no more res integra. This Tribunal in the case of M/S ICC REALITY (INDIA) PVT LTD & OTHERS VERSUS COMMISSIONER OF CENTRAL EXCISE [2013 (12) TMI 854 - CESTAT MUMBAI] has held that service tax cannot be charged on electricity charges collected from the tenants - the service tax cannot be demanded on supply of electricity through D G Set. Accordingly, demand on this count is set aside alongwith setting aside of penalty.
Levy of Service Tax under reverse charge mechanism - remuneration (salary+ allowances + commission on profit of company) paid to the directors of the Appellant’s Company - HELD THAT:- There is no dispute about the fact that for all the amount paid as remuneration to the directors of the company and the TDS was deducted under Section 192 of Income Tax Act, 1961 and form 16 was issued for each financial year. It is observed that Income Tax Act, 1961 is concerned with salary paid to the employees. With these facts it is clear that the remuneration paid to the directors is not liable to service tax.
In Allied Blenders and Distillers Pvt Ltd Vs. C.C.E & S.T. Aurangabad [2019 (1) TMI 433 - CESTAT MUMBAI] case this Tribunal considering all the provisions and identical facts of the case decided the matter - On the identical issue this Tribunal following above decision in the case of Supreme Treves Private Limited [2024 (1) TMI 935 - CESTAT AHMEDABAD] also held that similar remuneration paid to the directors are not liable to Service Tax and demand was set aside and appeal was allowed.
It can be seen that the fact being identical in the present case and in the above cited decisions, the ratio of above Judgment are directly applicable and accordingly, the demand is not sustainable - the impugned orders are set aside - Appeal allowed.
Time limitation for filing appeal - petitioner has failed to file appeal within stipulated appeal under Section 107 of TNGST Act, 2017 - petitioner is unable to file statutory appeal - HELD THAT:- The petitioner may have the case on merits, the Court is inclined to dispose of this Writ Petition by directing the petitioner to approach the first respondent with an appeal within 30 days from the date of receipt of a copy of this order along with pre-deposit of 25% of the disputed tax.
In case along with aforesaid appeal and the said deposit, the petitioner approaches the first respondent, the appeal shall be entertained and disposed of on merits and in accordance with law without any reference to the limitation. The respondents are directed to ensure that online facilities are made available to the petitioner to file the appeal - Petition disposed off.
The High Court of Telangana admitted the appeal on the substantial questions of law regarding the justification of dismissing the appeal filed by revenue against an order passed by the Commissioner of Central Excise and Customs. The appeal questions whether the Development Commissioner was justified in allowing bunching of goods under different H.S. codes. The case is set for arguments on 01.07.2024.
Levy of service tax - allocation/auction of natural resources - Water charges paid by the Appellant to the Government of Odisha for supply of water against charges/consideration at a specified rate stipulated in the Agreement - HELD THAT:- The said issue has been examined by this Tribunal in the case of SASAN POWER LIMITED VERSUS COMMISSIONER, CENTRAL EXCISE & CENTRAL GOODS AND SERVICES TAX, JABALPUR [2024 (5) TMI 326 - CESTAT NEW DELHI], wherein this Tribunal has held 'The appellant is, therefore, justified in asserting that the Agreement executed between the appellant and the government is for supply of water for which charges are paid by the appellant on the basis of volume of water drawn and it is not a case of assignment of right to use natural resources of the government.'
As the issue in this case has been examined by this Tribunal in the case of Sasan Power Limited, it is held that the payment made by the appellant for water charges, is not liable to be service tax during the impugned period for allocation/auction of natural resources - the appellant is not liable to pay the service tax on water charges paid by them.
Estimation of business income - adoption of profit percentage rate - HELD THAT:- As we are of the considered opinion that the estimate of net profit of the assessee at 3% of the turnover would meet the ends of justice. We accordingly direct AO to recompute the income of the assessee.
Unexplained deposits in bank in the demonetization period - addition u/s 68 or 69A - HELD THAT:- Undisputedly, in the face of the allegations of AO, section 69A of the Act would be attracted. Mere quoting a wrong section of law will not vitiate the addition. We, therefore, confirmed the findings of the CIT(A).
While computing the business income by estimating it at 3% on the turnover, AO will consider the quantum of SBN deposited during the demonetization period and added separately. This means the learned Assessing Officer will estimate the business income of the assessee at 3% on the turnover reduced by the quantum of SBN deposited during the demonetization period.
Validity of the addition made in assessment u/s 153A without the aid of any incriminating material - whether any addition could be made qua the assessment year under consideration without the aid of incriminating material ?
HELD THAT:- AO has made addition for credit card expenses only on the basis of the Annual Information Return available with the Income Tax Department and there is no reference of any incriminating material found during the course of search action at the premises of the assessee.
Therefore, following the ratio of Continental Warehousing Corporation [2015 (5) TMI 656 - BOMBAY HIGH COURT] and Abhisar Buildwell (P) Ltd [2023 (4) TMI 1056 - SUPREME COURT] no addition could have been made in the year under consideration without the aid of incriminating material. The addition made by the AO and sustained by the CIT(A) is accordingly deleted. Additional Ground No. 1 of the assessee is accordingly allowed.
Addition of commission income merely relying on the statement of the assessee as well as the statements of other parties - HELD THAT:- CIT(A) observed that main motive of the assessee was to bring unaccounted cash of various beneficiaries to the mainstream of books of accounts by claiming the same as long-term capital gain and in this whole process the assessee played a very crucial role by interlinking beneficiaries, brokers, intermediaries and exit provider for which he charged a specific commission. But the analysis of the seized document submitted by the learned departmental representative before us do not indicate any such lead regarding the role of the assessee in interlinking of beneficiaries, brokers, intermediaries and exit provider. In the entire seized documents there is no reference of any commission charged by the assessee. This entire addition made by the Assessing Officer is merely based on the confessional statement of the assessee, statement recorded in earlier search and addition proposed in earlier assessment years. The said statements cannot be held to be incriminating material in view of the decisions of the various Hon’ble High Courts discussed above.
The addition of commission income made by the AO merely relying on the statement of the assessee as well as the statements of other parties, cannot be sustained in absence of an incriminating material corroborating those statements, in view of the decision of Continental Warehousing Corporation [2015 (5) TMI 656 - BOMBAY HIGH COURT] which has been upheld by the Hon’ble Supreme Court Abhisar Buildwell (P) Ltd [2023 (4) TMI 1056 - SUPREME COURT] The additional ground No. 1 of the appeal of the assessee is accordingly allowed.
Maintainability of order passed by the CIT(A) in the second appeal - CIT(A) has dismissed the appeal filed by the assessee by holding that the appeal was already decided by his predecessor and there is no provision under the Act to file another appeal against the same assessment order - CIT(A) held that the appeal filed by the assessee is non-maintainable - as contended by the ld. AR that the fresh/ second appeal was filed before the ld. CIT(A) as per the advice of ld. CIT(A)
HELD THAT:- Admittedly, the first appellate order dated 30/01/2018 was not challenged by the assessee under the bona-fide belief that the assessee has filed another appeal. If assessee wishes to challenge such order dated 30/01/2018, he can do so, as per the provisions of law.
DR also submitted that the appeal filed by the assessee against the second appellate order is not maintainable. In view of the above and after considering the facts in totality, we hold that the appeal filed by the assessee before us against the order of ld. CIT(A) dated 12/02/2024 is non-est and not maintainable. Accordingly, we dismiss the same as infructuous.
In the result, the appeal filed by the assessee is dismissed.
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