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Showing 421 to 440 of 1570 Records
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2024 (5) TMI 1150
Cenvat Credit - Use of Set top boxes for providing Broadcasting Services - Demand and recovery of interest u/r 14 of the CENVAT Credit Rules, 2004 read with Section 75 of the Finance Act, 1994 - Imposition of penalty - Classification of Set Top Boxes as inputs or capital goods - Applicability of extended period of limitation - HELD THAT:- Set top boxes classifiable under Chapter 85 do not find any mention in the exclusion category. That being so, we do not find any reason why these goods could not have been treated as input for provision of the output services by the Appellant. It is a well settled principle in the law that the taxing statute needs to be construed strictly according to the words phrases used in the statute; there can be no other interpretation when literal interpretation is unambiguous.
These set top boxes satisfy the definition of inputs as they are goods used by the output service provider for the provision of the output services. There cannot be any fallacy in the stands taken by the Appellant in taking the entire credit at the time of receipt of these set top boxes as inputs.
Admissibility under capital goods for any inputs and that too on the basis of accountancy practices followed by the Appellant. We do not find any merits in the argument that just because these goods have been capitalized in the books of accounts, they could not have been treated as input.
Thus, we do not find any merits in the demand of interest made.
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2024 (5) TMI 1149
Demand of service tax - Whether the appellant provided "export of service" under the provisions of the Export Rules, 2005 - services delivered and used outside India and the commission income is received in convertible foreign exchange from its group companies - HELD THAT:- In the present case, as noticed, in terms of the agreement between the appellant and group companies situated outside India which did not have any permanent establishment in India, the appellant solicited orders for supply of the products of the group companies for which the appellant received commission in convertible foreign exchange. The Commissioner, in view of the decision of the larger bench of the Tribunal in Arcelor Mittal[2023 (8) TMI 107 - CESTAT MUMBAI-LB], was not justified in holding that since the services were used and provided in India, the same would not constitute ‘export of service’.
The order dated 26.03.2013 passed by the Commissioner, therefore, cannot be sustained and is set aside. The appeal is, accordingly, allowed.
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2024 (5) TMI 1148
Quashment of Notification No. 21/2017 CE dated 18.07.2017 vide which Notification No. 1/2010 CE was rescinded - fixation of special rate of actual value addition in respect of goods manufactured and cleared during the period April 2017 to 07.07.2017 - HELD THAT:- The order passed by the Commissioner Central Excise/Central Goods & Services Tax Commissionerate, Jammu (J&K) is appealable, as admitted in the Writ Petition by the petitioner itself, before the CESTAT in terms of Section 35B of the Central Excise Act, 1944 - the remedy prescribed under the Act for any aggrieved person of the order of Commissioner, is an appeal before the CESTAT and without availing such remedy, the petitioner ought not to have rushed to this court with a writ petition.
In yet another case titled CCT., ORISSA AND OTHERS VERSUS INDIAN EXPLOSIVES LTD. [2008 (2) TMI 607 - SUPREME COURT] the Supreme Court took notice of the quashing of show cause notice by the High Court issued against the respondent under the Orissa Sales Tax Act and observed that the High Court had completely ignored the parameters laid down by this Court in a large number of cases relating to exhaustion of alternative remedy.
The submission of learned counsel for the petitioner that the petitioner is not entering into the merits of the case vis-à-vis challenge to the impugned order is belied by the averments of the writ petition itself which unambiguously enter into the merits of the case by highlighting the legal lacunae’s in the order impugned.
The writ petition is held to be not maintainable against the order impugned having been filed without availing the efficacious alternate remedy provided by the Act - the writ petition is dismissed.
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2024 (5) TMI 1147
Classification of goods - Tobacco supplied in retails pack - classifiable under CTH 2401 as claimed by the appellant or 2403 as claimed by the Revenue - invocation of extended period of limitation.
Classification of goods - HELD THAT:- From the comparison of test report in respect of raw material as well as the final product of the appellant, the nature of product remain exactly same except the packing in as much as the packing of raw material is in bulk and packing of final product is in retail pack. Therefore, the nature of raw material i.e. unmanufactured tobacco in cut leaves form remained as such even after repacking into retail pack - Since the product of the appellant remained unmanufactured tobacco right from the raw material stage up to the finished stage it remains under Chapter heading 2401 and by any stretch of imagination cannot be called as manufactured tobacco. Therefore, since the tobacco has not been converted into manufactured tobacco, taking the same into CTH 2403 is without authority of law. Consequently, the unmanufactured tobacco even though it is consumed as a chewing tobacco since same remained as unmanufactured tobacco cannot be classified under 2403 9910.
Even by application of Note 3 of Chapter 24 the activity amount to manufacture, the impugned good falls under Chapter heading 2401. Therefore, by virtue of chapter Note, the activity though amount to manufacture as per the Central Excise. Hence, the appellant have rightly paid the duty as manufacture goods but since the goods is correctly classified under CTH 2401, the demand of basic Excise duty and NCCD is not sustainable as the same is correctly classified under 2401 and not under 2403 as contemplated by the Revenue. Therefore, on merit itself the demand is not sustainable.
Extended period of limitation - HELD THAT:- The entire activity of re-packings of cut leaves tobacco from bulk to retail pack and classification thereof under Heading 2401 of Central Excise Tariff Act, 1985, was very much in the knowledge of the department. Therefore, there is absolutely no suppression of fact, fraud, mis-declaration, etc. on the part of the appellant therefore, there are no hesitation in holding that the demand of duty adjudged in the impugned order under the extended period is not sustainable also on limitation.
The impugned order is not sustainable. Hence, the same is set aside - Appeal allowed.
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2024 (5) TMI 1146
CENVAT Credit - inputs/capital goods - various steel items used in manufacturing sponge iron - HELD THAT:- As the assessee is able to prove that all the items in question have been used in fabrication of structures for installation of capital goods which were ultimately used in the manufacture of their final product, in the circumstances, as per the decision of the Hon’ble Chhattisgarh High Court in the case of M/s. Vandana Global Ltd. v. Commissioner of C.Ex. & Cus., Raipur [2018 (5) TMI 305 - CHHATTISGARH, HIGH COURT] CENVAT Credit to the assessee is allowed.
The appeal filed by the Revenue is dismissed.
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2024 (5) TMI 1145
Invocation of Section 5 by Petrol Taxation Officer (PTO) - Provisions for Escaped Assessments - Requirement of Monthly vs. Annual Assessments.
Whether on the facts and circumstances of the case, the tribunal is right in law in holding that provisions of section 5 of the act can only be invoked by petrol taxation officer when he is not satisfied with the correctness and completeness of the return filed by Dealer pursuant to rule 15?- HELD THAT:- The provisions of the Act / Rules have to be applied strictly taking into account the intention of the legislature. Section 5 “power to determine certain questions” clearly states that any question as to whether a tax or penalty is recoverable under this Act, the person from whom it is due and the amount recoverable shall be determined by the PTO for the area where the sale takes place.
Rule 15 of the Act of 2005, states that every dealer shall deposit the amount of tax due and to furnish monthly returns of sales in the prescribed forms within the specified period. Rule 15(d) states that on receipt of the return, the PTO may examine the account books and other records of the dealer and such other enquiries, as he may consider necessary for the purpose of satisfaction that the return is correct and complete and the amount of tax and any other sum payable under the act has been paid, if the officer is satisfied in respect of the correctness and return and the dealer having paid the amount of tax on any other sum payable under the Act, he shall issue a certificate in form P-7. The conjoint reading of Section 5 and Rule 15 of the Act of 2005 clearly specifies that section 5 will be made applicable only if the return filed by an assessee before the PTO is held not to be complete and correct.
PTO can exercise his powers under section 5, read with rule 15-D. Section 5 will not be invoked in cases where complete and correct return is filed and P-7 is issued pursuant to Rule 15. This question has been answered in affirmation.
Whether the act and the rules do not contain any specific provision for taking action by the Petrol Taxation Officer in the cases of escaped assessments? - HELD THAT:- Admittedly, there is no specific provision for taking action by PTO in cases of Escaped assessments, whereas under section 7 (11) of the GST, there is a clear provision for reassessment, if the assessing authority has reasons to believe that by reasons of omission or failure on the part of a dealer to make a return under sub section (1) or sub section (3) for any year, to the Assessing Authority or to disclose fully and truly all material facts necessary for his assessment - There is no provision of escaped assessment in the Act of 2005. In the instant case PTO, upon perusal of the assessment record has invoked the power vested in him under section 5 of the Act of 2005 after the report was made by the internal audit party that too after a gap of three years. After receiving the return from the dealer, the PTO had already assessed the completeness and correctness of the return and had issued a certificate. PTO had not taken any action in terms of section 7 (11) of the GST - In absence of any specific provision with respect to escaped assessments, the tribunal was right in law in holding that the act and rules do not contain any specific provision for taking action by the PTO in cases of escaped assessments. this question has also been answered in affirmation.
Whether on facts and circumstances of the case tribunal is right in law holding that the act and the rules provide only for filing of monthly returns and therefore assessment are only required to be made month wise and any annual assessment made shall not be deemed to be an assessment under the act/rules? - HELD THAT:- Once the final assessments were made by the competent authority on monthly assessments as per the Act and Rules applicable, it was not open to the PTO to reassess after three years of filing the return. This question is also answered in affirmative.
The Reference made by the Tribunal is answered in affirmation and disposed of accordingly.
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2024 (5) TMI 1144
Determination of penalty under section 69(1)(k) of the J&K Value Added Tax Act, 2005 - issuance of 35 improper invoices on the same day constitutes a single default or not - justification of levy of penalty of 10 times of the tax payable on the invoices or Rs. 10,000/-, whichever is higher - HELD THAT:- Tax invoice means a particular sale transaction made by the VAT dealer or a casual trader to a consumer. It is a tax invoice which generates default and if that default is proved then it invites penalty, against a defaulting person, equal to ten times of the tax payable on such default or Rs. 10,000/- whichever is higher. A questionable tax invoice, be it sham, false, forged or fake, has no relation with the day on which it is or was generated. If on any given day, a VAT dealer or a casual trader has generated any number of objectionable tax invoices each representing a respective sale transaction, then each invoice will constitute default as envisaged by clause (k) of sub-section 1 of section 69.
When section 69 itself does not hint to any angle of time duration, SSTAT was in error in pressing the time duration into play and reckon that the default envisaged under clause (k) of sub-section 1 of section 69 was referable to the time duration and not to the tax invoice - The penalty envisaged under section 69 (1) (xi), relatable to the default identified in clause (k) of sub-section 1 of section 69 was meant to be a deterrent so that any VAT dealer or a casual trader would not venture and resort to acts of omission or commission which would have the effect of under assessment or evasion of the tax liability resting upon the said VAT dealer or a casual trader.
Clause (xi) of sub-section 1 of section 69 itself decodes that a particular tax invoice may have a tax liability which multiplied by ten times may still fall short of a deterrent effect to a VAT duty evading trader and, therefore, even a penalty of ten times the tax payable may be on a lesser side and, therefore, the other option of penalizing a given defaulting VAT trader on a higher side has been provided for. Therefore, there was no reason to read that the default as envisaged under clause (k) of sub-section 1 of section 69 relatable to time duration of a given day and not to the tax invoice in itself.
Thus, each tax invoice, if afflicted with the default as envisaged under clause (k) of sub-section 1 of section 69, is to bear the penalty in reference to it and not in reference to the accumulation of tax invoices and that it has nothing to do with the collection of tax invoices for a particular day. Each default vis-à-vis each particular tax invoice is to earn the liability as envisaged under section 69 of sub-section 1 of clause (xi) of the VAT Act, 2005.
The reference is returned.
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2024 (5) TMI 1143
Classification of Diagnostic Kits - to be considered as “drugs” which are covered by Entry 48 of Schedule C to SRO 167 or under Entry 87 of Schedule D or Entry 165 of Schedule D - whether these Kits are used for diagnosis, and hence have to be treated as “drugs” within the meaning of Section 3 (b) (i) of the Drugs and Cosmetics Act, 1940? - HELD THAT:- In the definition of “drug” under Section 3 (b) of the Act, as quoted above, it is clearly mentioned under Section 3 (b) (iv) that “drug” includes such devices intended for internal or external use in the diagnosis, treatment, mitigation or prevention of disease or disorder in human being or animals. While sub-section (i) of Section 3 (b) brings within the ambit of “drug”, “medicines” used for diagnosis, sub-section (iv) of Section 3 (b) brings “devices” used for diagnosis within the ambit of “drug”. However, every such “device” cannot be deemed to be a “drug” within the meaning of Section 3 (b) (iv) unless such device is specified as drug by the Central Government by notification in the Official Gazette. Thus, if such “device” used for diagnostic purpose is not specified by the Central Government in the Official Gazette, such device cannot be treated to be a “drug” within the meaning of Section 3 (b) (iv) of the Act.
Can a “Diagnostic Kit” be treated as “medicine” to fall within the definition of “drug” under sub-section (i) of Section 3 (b) as contended by the petitioners or can it considered to be a “device” to bring within the meaning of “drug” under sub-section (iv) of Section 3 (b) of the Act? - HELD THAT:- In the present context, “Diagnostic Kits” bears more resemblance with “devices” rather than “medicines”. Thus, seen from this perspective, “Diagnostic Kits” cannot be considered to be “medicine” and can be considered to be “device”. In such an event, the “Diagnostic Kit” will not come under the definition clause of sub-section (i) of Section 3 (b) but would come under sub-section (iv) of Section 3 (b) of the Drugs and Cosmetics Act, 1940 - “Diagnostic kit” which is a composite device, is a medicinal device, but it cannot be considered or understood to be a “medicine”. Consequently, if “Diagnostic kit” which is undoubtedly a medicinal device is to qualify to be a “drug” within the meaning of sub-section (iv) of Section (3)(b) of the Act, the same will be required to be notified as such by the Central Government in the Official Gazette.
The Diagnostic Kits in issue in the present case cannot be considered to be “drugs” within the meaning of Section 3 (b) (iv) of the Drugs and Cosmetics Act till these are so specified by the Central Government by notification.
What is notable is that the petitioners have not brought to the notice of this Court any material to show that Diagnostic Kits are considered to be “medicines” or “drug” by the medical practitioners, pathologists, patients and in medical literature - That these Diagnostic Kits are manufactured under the Drug License issued by the Drug Controller, does not necessarily make the Diagnostic Kits to be drugs within the ambit of VAT Act, unless these are notified by the Central Government to that effect under Section 3 (b) (iv) of the Act.
If these Diagnostic Kits are notified as “drugs” within the meaning of Section 3 (b) (iv) of the Drugs and Cosmetics Act, 1940 by the Central Government by issuing notifications in the Official Gazette in consultation with the Drugs Technical Advisory Board, these Diagnostic Kits would be liable to be charged only @ 4% as these would then be covered within Entry 48 of Schedule C of SRO 167 of 16th June, 2005.
If the devices namely, (i) Hepatitis HBS Ag Device Card, (ii) HIV Device Card, (iii) Pregnancy Device Card and (iv) VDLR Device Card have been notified by the Central Government in the Official Gazette after consultation with the Drugs Technical Advisory Board as “drugs” within the meaning of Section 3 (b) (iv) of the Drugs and Cosmetics Act, 1940. If it is found to be so, the above mentioned four Diagnostic Kits have to be treated as “drugs” falling within Entry 48 of Schedule C of SRO 167 dated 16th June, 2005 and charged VAT accordingly @ 4% with prospective effect from the date such notification is issued. Otherwise, being not “drugs”, the aforesaid “Diagnostic Kits” would fall under the residuary Entry 165 of Schedule D of SRO 167 of 16th June 2005 and attract VAT at the rate of 12.5%.
Petition disposed off.
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2024 (5) TMI 1142
Dishonour of Cheque - compromise agreement between the accused and the complainant - HELD THAT:- The terms and conditions of compromise mentioned in the affidavit are read over to the parties and they are admitted as true and correct. In a decision reported in - DAMODAR S. PRABHU VERSUS SAYED BABALAL H. [2010 (5) TMI 380 - SUPREME COURT], the Hon‟ble Apex Court held in case of compounding during the pendency of proceedings before a Magistrate's Court or a Court of Session, such costs should be deposited with the District Legal Services Authority.
On being satisfied with the terms and conditions of compromise and in view of the amicable settlement made by both parties, application is allowed and consequently the Criminal Revision Case is disposed of by setting aside the judgment.
The petitioner/accused is acquitted for the offence punishable under Section 138 of N.I. Act - Application disposed off.
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2024 (5) TMI 1141
Validity of limits on tax audits to be done by the Chartered Accountants - mandatory ceiling limit imposed by Clause 6.0, Chapter VI of said Guidelines on the number of tax audits that a Chartered Accountant can accept in a financial year under Section 44AB - numerical restriction on the maximum number of tax audits accepted by CA - Potential Enhancement of the Specified Number of Tax Audits - validity of Clause 6 of Guidelines No. 1-CA(7)/02/2008 dated 08.08.2008 issued by the Institute of Chartered Accountants of India [ICAI] - Liberty as reserved to the respondent-Institute to enhance the specified number of audits that a Chartered Accountant can undertake under Section 44AB of the IT Act, 1961,
Whether the Council of the respondent-Institute, under the 1949 Act, was competent to impose, by way of Guidelines, a numerical restriction on the maximum number of tax audits that could be accepted by a Chartered Accountant, u/s 44AB of the IT Act, 1961, in a Financial Year by way of a Guideline? - HELD THAT:- As perused the impugned Guideline dated 08.08.2008 which is extracted above. The same has to be read in the context of the respondent-Institute functioning under the overall control, guidance and supervision of the Council which means the Council of the Institute has to carry out the duties so as to achieve the objects of the Act as delineated in its various provisions of the 1949 Act, vide Section 15. The power vested in the Council is general insofar as the carrying out the provision of the Act is concerned and in particular and without prejudice to the generality of the aforesaid powers, certain duties have been specifically delineated.
This is evident on a reading of sub-sections (1) and (2) of Section 15 of the 1949 Act. One of the objects of the 1949 Act is to ensure that the profession of the Chartered Accountant in the country maintains high professional ethics and renders quality service inasmuch as Chartered Accountants are absolutely necessary for the efficient tax administration in the country. That on account of their services, the onerous duties cast on the assessing officer as well as the ITD is reduced. This would however depend upon the quality of service that is rendered by the Chartered Accountant as a professional for which regulation of the profession is necessary and the respondent-Institute has been established for, inter alia, such regulation of the profession.
Chapter V of the 1949 Act assumes importance - the deeming provision would imply that with the passage of time, there could be newer misconducts which could be included in the Schedules in the form of regulations or Guidelines. The Schedules are a part of the 1949 Act which has been passed by the Parliament. But bearing in mind the fact that in future, it may not always be possible for the Parliament to go on amending the Schedules to the Act so as to incorporate newer professional misconducts particularly with emerging technology and its applicability to the profession of Chartered Accountancy in India, Part II of Second Schedule by way of a foresight has delegated the power to the Council to make any regulation or Guideline, the breach of which would amount to a misconduct. This delegation to define and enumerate a misconduct by way of a regulation or a Guideline is a legislative device adopted by the Parliament so as to leave it to the discretion of the Council of the respondent-Institute to incorporate, define and insert a Guideline or a regulation, the breach of which would result in a misconduct committed by a Chartered Accountant.
The delegation of this power under Part II of the Second Schedule of the 1949 Act made by Parliament in favour of the Council of the respondent-Institute cannot be faulted with. This is on account of the fact that the 1949 Act itself defines certain types of misconduct vis-à-vis a Chartered Accountant. But in the year 1949, the Parliament could not have envisaged every possible variety or type of commission or omission which could be a misconduct by a Chartered Accountant.
Therefore, the delegation has been made by the Parliament to the Council of the respondent-Institute to make regulations or Guidelines, the breach of which would result in a professional misconduct. The aforesaid delegation of the Parliament to the Council of the respondent-Institute is clearly to define possible types of misdemeanours in the Second Schedule in the form of a regulation or a Guideline, the breach of which would result in a misconduct in futuro. This is in order to avoid the Parliament itself amending the Schedules to the 1949 Act every time a different type of misconduct is to be inserted to the Schedules by way of an amendment to the Act. Therefore, the regulation or Guideline issued by the Council, the breach of which would result in a professional misconduct, being a part of clause 1 of Part II of the Second Schedule have to be read as part and parcel of the 1949 Act itself. The delegation of powers to add newer types of misconducts by way of a regulation or a Guideline is neither excessive nor ultra vires under Section 22 of the 1949 Act which deems any breach of a regulation or Guideline as a misconduct as per Clause 1 of part II of Schedule II to the 1949 Act.
Thus Council of the respondent-Institute had the legal competence to frame the impugned Guideline restricting the number of tax audits that a Chartered Accountant could carry out which was initially thirty and later raised to forty-five and thereafter to sixty in an assessment year. Therefore, the Council of the respondent-Institute having the legal competence to frame the Guidelines, the breach of which would result in professional misconduct, in terms of clause 1 of Part II of the Second Schedule of the 1949 Act cannot be held to be vitiated on account of there being lack of competency or powers to frame the impugned Guideline by the Council of the respondent-Institute. The argument advanced by the petitioners regarding the issuance of the Guidelines dated 08.08.2008 by the respondent-Institute is hit by the vice of excessive delegation, is hence without substance. Accordingly, we answered the point No. 1.
Reasonable restrictions upon the freedom of trade, business, occupation or profession in the interest of the general public - Whether the restrictions imposed are unreasonable and therefore, violative of the right guaranteed to Chartered Accountants under Article 19 (1) (g) of the Constitution? - Whether the restrictions imposed are arbitrary and illegal and therefore, impermissible under Article 14 of the Constitution? - The present petitioners’ assertion that the undertaking of more than a specified number of tax audit assignments would not imperil the integrity and quality of the tax audit does not persuade us because a reasonable possibility of the fall in quality owing to the surfeit of tax audit assignments exists. Therefore, we find it proper to trust the wisdom of the respondent-Institute as it has acted on bona fide and genuine recommendations of the CAG and the CBDT. We find no fault in the endeavour of the respondent-Institute to eliminate the possibility of the conduct of tax audits in an insincere, unethical or unprofessional manner.
Keeping the aforesaid in mind, there is no difficulty in concluding that by virtue of being a licensee, a privilege is conferred on Chartered Accountants. An elaborate and extensive process of recommendations and policy-making preceded the insertion of Section 44AB in order to achieve the public interest of prevention of tax leakages and more efficient tax administration. It is in pursuance of this primary goal of public interest that a further privilege under Section 44AB was extended to Chartered Accountants to conduct quality tax audits, so as to enable the interest of the public exchequer.
This Court must consider the public interest involved not only from the perspective of the Chartered Accountants but rather from the perspective of the general public. In the present cases, it has been contended that public interest manifests as a benefit to the public exchequer in terms of appropriate quality of tax audit reports under Section 44AB.
The restriction placed under Section 224 of the Companies Act, 1956 with regard to the number of companies which could be audited by an auditor or firm of auditors is also an instance of regulation of the profession of Chartered Accountants intended by the Parliament so as to ensure that standard and quality in the audit of accounts of companies as defined under Section 3 of the Companies Act, 1956 are maintained. This is to protect the rights and interest of the shareholders as well as the investors in the companies. Any omission or inadvertence in the auditing of such company accounts would inevitably have an adverse impact not only on the balance-sheets of the companies but also on the potential investments and growth of the companies. There has not been any challenge to the said regulation which is in the form of a restriction. Any breach of the restriction placed on the Chartered Accountants under Section 224 may lead to misconduct under the provision of 1949 Act.
Whether exceeding such specified number of tax audits can be deemed to be ‘professional misconduct’? - It was borne out during the course of arguments and through the submissions made in the Counter Affidavit that the tax audit monitoring mechanism was firstly, self-regulatory, wherein the disciplinary mechanism would kick in only on a complaint made/information received and not otherwise. Furthermore, the Tax Audit Monitoring Cell was created only after the CAG Report No. 32/2014, and even after that, initially notices were sent only selectively to Chartered Accountants who had completed more than two hundred audits not to all who had breached the impugned Guideline.
As a rule of statutory interpretation, we find that the aforesaid principles, in an equitable legal system, should be applicable to the present circumstances. Thereby, for the limited period of uncertainty, the rule against doubtful penalization as a principle could, in the interest of justice and equity, be made applicable and the benefit of uncertainty be given to those subjected to misconduct proceedings in the instant writ petitions and to also those Chartered Accountants who may have received notices from the respondent-Institute and who may not have approached any court of law or to other similarly situated Chartered Accountants who may not have been proceeded against.
We, therefore, find much force in the alternative plea made by the petitioners herein. In these circumstances, due to the uncertainty in law owing to quashing of the earlier Guideline and the pendency of the Special Leave Petition filed by the respondent-Institute before this Court and the enforcement of a fresh Guideline, we quash the disciplinary proceedings initiated against the petitioners herein. This is for the simple reason that only the writ petitioners have been proceeded against, while even according to the respondent-Institute, there were around twelve thousand Chartered Accountants who had breached the Guideline and had undertaken tax audits over and above the specified number but no action whatsoever was initiated against of them.
Respondent-Institute is at liberty to enhance the specified number of tax audits that could be undertaken by practicing Chartered Accountants under Section 44AB of the IT Act, 1961. For that purpose, liberty is reserved to the practising Chartered Accountants to make their suggestions to the respondent.
We dispose of the writ petitions in the following manner:
a) Clause 6.0, Chapter VI of the Guidelines dated 08.08.2008 and its subsequent amendment is valid and is not violative of Article 19 (1) (g) of the Constitution as it is a reasonable restriction on the right to practise the profession by a Chartered Accountant and is protected or justifiable under Article 19 (6) of the Constitution.
b) However, the said clause 6.0, Chapter VI of the Guidelines dated 08.08.2008 and its subsequent amendment is deemed not to be given effect to till 01.04.2024.
c) Consequently, all proceedings initiated pursuant to the impugned Guideline in respect of the writ petitioners and other similarly situated Chartered Accountants stand quashed.
d) Liberty is reserved to the respondent-Institute to enhance the specified number of audits that a Chartered Accountant can undertake under Section 44AB of the IT Act, 1961, if it deems fit.
e) Liberty is also reserved to the writ petitioners or any other member of the respondent-Institute to make a representation in the above context which may be taken into consideration in the event respondent-Institute intends to amend the Guideline as per point No. (d) above.
f) The writ petitions as well as all the transferred cases are disposed of in the aforesaid terms.
g) The Registry to intimate the concerned High Courts regarding disposal of the transferred cases accordingly.
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2024 (5) TMI 1140
Condonation of delay in filing appeal - appeal barred by time as the same was filed beyond the prescribed period of limitation - HELD THAT:- Although, the explanation does not appear to be entirely satisfactory, however, for the ends of justice, the delay in filing the appeal under Section 107 of the said Act should be and is accordingly condoned and the order dated 20th December 2023 issued in Form GST APL-02 stands set aside. The appeal is accordingly restored to its original file and number.
The petition is disposed off.
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2024 (5) TMI 1139
Recovery of tax not paid or short paid or of input tax credit wrongly availed or utilized - Ineligible Input Tax Credit [ITC] - Challenge to Notifications u/s 168A of CGST Act - HELD THAT:- In the Explanation to Section 168A of the CGST Act, 2017, the expression ‘force majeure’ means a case of war, epidemic, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature or otherwise affecting the implementation of any of the provisions of the Act. It is noticed that the time limit under sub-section [10] of Section 73 of the CGCT Act was extended once prior to the Notification dated 31.03.2023.
The Hon’ble Allahabad High Court, the Hon’ble Gujarat High Court, the Hon’ble Punjab & Haryana High Court, the Hon’ble Madras High Court and this Court, have provided interim reliefs to the noticees/assessees by inter alia observing that the proceedings in pursuance of the impugned Show Cause Notice may proceed but no final order shall be passed and if final order is passed already, no recovery is to be effected. The said interim orders are stated to be in operation till date.
Taking note of the fact that similar issues are being examined by different High Courts including this Court; this Court is inclined to provide that till further orders of this Court, the recovery of the amount assessed against the petitioner by the Order-in-Original shall not be enforced.
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2024 (5) TMI 1138
Challenge to an order passed by the respondent under Section 73 of the CGST/TNGST Act - discrepancies in GSTR-1 and GSTR-3B returns filed by the petitioner - HELD THAT:- This Court is inclined to set aside the impugned order dated 12.10.2023 issued on the ground of mismatch with regard to the GSTR-1 and the GSTR-3B returns filed by the petitioner and considering the submission of the learned counsel for the petitioner that he is ready to submit all the documents along with proper explanation before the first respondent.
The impugned order dated 12.10.2023 is set aside and the matter is remanded back to the first respondent for fresh consideration - Petition disposed off by way of remand.
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2024 (5) TMI 1137
Validity of notice by which GST-interest liability on account of delay in payment of GST has been issued - notice has been issued on a pre-judged determination of interest liability without affording any opportunity of hearing - Violation of principles of natural justice - HELD THAT:- The contents of the notice clearly show that in case opportunity of voluntary compliance as suggested was not availed, appropriate action for recovery of interest shall be initiated under Section 79 of the CGST Act, 2017 and corresponding provisions under IGST Act, 2017 and RGST Act, 2017.
Therefore, the notice only gives the petitioner an opportunity to make voluntary compliance. It goes without saying that if the petitioner is not accepting the same and not making voluntary compliance, the respondents would be initiating proceedings under Section 79 of the CGST Act, 2017. There is no reason at this stage to hold that the petitioner would not be given proper opportunity of hearing against proposed recovery.
The petitioner is disposed off.
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2024 (5) TMI 1136
Disposal of petition in absence of constituted Tribunal - applicability of Section 112(8) of Rajasthan Goods and Services Tax Act, 2017 - HELD THAT:- This petition, at this stage, is disposed off with a direction that in case petitioner makes payment as per provisions contained in Sub-section(8) of Section 112 of the Act, further proceedings shall not be drawn for recovery of the balance amount, provided that the petitioner avails statutory remedy of appeal within a period of three months from the date of the constitution of the Tribunal.
Petition disposed off.
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2024 (5) TMI 1135
Permission for prosecution independent of adjudication proceedings - Pre-judging of issues in adjudication order - administrative satisfaction contemplated under Section 134 of the CGST Act - absence of petitioner in adjudication proceedings - HELD THAT:- No useful purpose may be served in keeping this petition pending or calling for counter affidavit at this stage.
This much is clear that the administrative satisfaction contemplated under Section 134 of the CGST Act, 2017 is to be recorded by the Commissioner. It is not to be dictated by any findings recorded in adjudication proceedings - At the same time, the Additional Commissioner who has passed the adjudication order is not the Commissioner. It is also true that the petitioner was not party to the adjudication proceedings and was not heard before adverse observation came to be recorded in the impugned order.
The writ petition is disposed of.
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2024 (5) TMI 1134
Condonation of delay in filing appeal - appeal rejected for being beyond the statutory time limit - extension of time for filing appeals u/s 73 and 74 of the BGST Act - HELD THAT:- An appeal against an order under Section 73 or 74 has to be filed on or before 31.01.2024, and any appeal filed which is pending before the authority could also be considered as properly filed, even if there is delay in such filing.
In the present case, the appeal was filed and was dismissed by the first Appellate Authority. In such circumstances, it is only proper that the appeal be restored to the files of the Authority subject to the conditions under paragraph no. 3 being satisfied - Hence the petitioner would be entitled to satisfy paragraph no. 3 of the aforesaid Notification by paying up the deficient amounts as would be required to maintain the appeal under the notification.
The impugned order dated 03.05.2023 at Annexure-4 is set aside on condition of the assessee satisfying the aforesaid conditions before the time stipulated in Notification; i.e. 31.01.2024, in which event, the appeal would be taken up and considered on merits - petition disposed off.
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2024 (5) TMI 1133
Deduction u/s 80IB - profits derived from repairs and maintenance service of the moulds manufactured in the appellant industrial undertaking - assessee submits that the activity of repairs and maintenance of moulds was closely related to the activity of manufacture of moulds manufactured in the industrial undertaking in question and, as such, deduction u/s 80IB cannot be denied to the appellant
HELD THAT:- The deduction is available for five assessment years beginning with the initial assessment year and thereafter 25% of the profits and gains derived from such industrial undertaking manufacturing or producing any article or thing. Thus, the basic eligibility criteria under the aforesaid sub-sections 80IB is that the assessee must be an industrial undertaking fulfilling all the conditions specified in sub-section 2, it must derive profits and gains from business under subsection 4.
Therefore, an industrial undertaking in an industrially backward State specified in the 8th Schedule, to be eligible for deduction u/s 80IB, must be manufacturing or producing any article or thing and the profits and gains derived from such activity of manufacture or production of any article or things.
In the present set of facts we find that undisputably the receipt on account of repair and maintenance does not relate to profits and gains derived by the industrial undertaking from the business of manufacture or production of any article or thing. It is neither the case of the appellant/assessee that repairs of moulds was a necessary condition of contract of sale of moulds, nor any evidence in the form of such contract of sale or any other documentary evidence were produced by the appellant/assessee at any stage of the proceedings from assessment upto Tribunal stage.
Under the circumstances, receipts from repairs and maintenance of moulds by the appellant/assessee cannot be said to be eligible for deduction under section 80IB of the Act, 1961 particularly when there was no direct nexus to the profits and gains derived from repairs and maintenance, with the manufacturing of moulds by the industrial undertaking.
Thus, on true construction of sub-Sections (1), (2) and (4) of Section 80IB of the Act, 1961 and in view of the law laid down in the case of Saraf Exports [2023 (4) TMI 420 - SUPREME COURT] an industrial undertaking, which becomes eligible for deduction on satisfying sub-Section (2), would be entitled to deduction under sub-Section (1) only to the extent of profits derived from manufacture or production of any article or thing by such industrial undertaking.
Thus, the industrial undertaking eligible for deduction under Section 80IB shall be entitled for deduction only from the profits and gains derived from industrial undertaking by manufacturing or producing article or thing and not from profits attributable to industrial undertaking. There is nothing on record to show that the repairs and maintenance charges have a direct nexus with the business activity of manufacture and sale of moulds by the appellant/assessee.
Therefore, profits and gains derived by the appellant/assessee (industrial undertaking) from repairs and maintenance is not eligible for deduction u/s 80IB since such profits and gains have not been derived by the industrial undertaking from the manufacture or production of any article or thing as provided under sub-Section (2).
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2024 (5) TMI 1132
Penalty proceedings u/s. 271(1)(c) - Estimation of income on Bogus purchases - CIT(A) applied gross profit of 10% on the bogus purchases as against the addition made by the ld. AO of entire purchases and deleted the penalty - HELD THAT:- We find that once it is not in dispute the payments for the purchases have been from the books and trough banking channels and assessee has also shown corresponding utilization in the manufacturing account and same has been accepted, then entire purchases could not have been added u/s. 69C. Accordingly, we do not find any infirmity in applying the profit rate of 10% which is in line with the decision of PCIT vs. Jagdish Thakkar [2022 (9) TMI 307 - BOMBAY HIGH COURT] and in the case of PCIT vs. S V Jiwani [2022 (10) TMI 173 - BOMBAY HIGH COURT] Accordingly, the appeal of the Revenue is dismissed.
Penalty imposed - Once the assessee had declared purchases and produced all the corresponding bills including the delivery challans and the source of the purchases are through books and through account payee cheques and corresponding utilization of purchases and the manufacturing has not been disputed, then there cannot be any furnishing of inaccurate particulars or concealment of income on estimated profit rate of 10%. Accordingly, we hold that ld. CIT(A) has rightly deleted the penalty. Decided against revenue.
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2024 (5) TMI 1131
Computation of commission income on credit entries - Unexplained cash credit u/s 68 - assessee could not substantiate the source of cash deposits - assessee argued that the assessee has only earned commission income on the entries provided by him whether in cash or by in any other mode and he has withdrawn around Rs. 6 Crores in cash from one account and hence the amount of cash credit should not be treated as unaccounted money being part of business of accommodation entry
HELD THAT:- We find that the similar issue has been adjudicated by this Tribunal in the assessee’s own case for the earlier and subsequent assessment years [2022 (7) TMI 1515 - ITAT DELHI] wherein the Tribunal having treated the assessee as a Entry Operator determined commission @0.15%, hence keeping in view the said order, we direct the AO charge commission @0.15% on the amount of Rs. 160,10,097/-.
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