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2024 (3) TMI 1005
Exemption u/s 10(26) - Exemption to individual members of Scheduled Tribes - Whether a partnership firm consisting of individual partners would be entitled to the same exemption u/s 10(26) of the Income Tax Act, 1961 as any or all of the partners would be in their individual capacity? - As submitted that the partners in the firm were related to each other and both the partners belong to Khasi tribe whose income was exempt u/s 10(26) - HELD THAT:- As under the Income Tax Act, a firm has been specifically included in the definition of person and is treated at par with every artificial juridical person.
Under the Income Tax Act, a partnership firm is a separate and distinct “person” assessable to Income Tax. There are separate provisions relating to the rate of Income Tax, deduction and allowances etc. in relation to a firm as compared to an individual. The benefits in the shape of deductions or exemptions available to an individual are not transferrable or inter-changeable to the firm nor the vice versa. The firm in general law may not be treated as a separate juristic person, however, under the Income Tax Act, it is assessable as a separate and distinct juristic person. The Income Tax Act is a special legislation, therefore, the interpretation given in general law cannot be imported when the special law defines the “firm” as a separate person assessable to Income Tax.
Therefore, the contention of the Ld. Counsel that section 2(23) of the Income Tax Act gives meaning to firm, partner and partnership as defined in the Indian Partnership Act, 1932, in our view, does not, in any way, effect, take-away or exclude the “firm” from the definition of “person” as defined u/s 2(31) of the Income Tax Act. Under the relevant provisions of the Indian Partnership Act, 1932, the “partnership firm” has been defined as a relationship between the persons who have agreed to share the profits of the business carried on by all or any of them acting for all and the persons who have entered into partnership with one another is called individually partners and collectively a firm. The contention of the ld. AR is that the partnership is a relation between “persons” and that partnership is not a person in itself. The aforesaid contention of the ld. AR in the light of the specific definition given of the word “person” u/s 2(31) of the Income Tax Act and in view of the discussion made above, in our view, is misconceived and not tenable.
Even under the Negotiable Instruments Act, a firm is treated at par with a company. In explanation to section 141 of the Negotiable Instruments Act it is provided that “ “company” means any body corporate and includes a firm or other association of individuals; and director”, in relation to a firm, means a partner in the firm”. The hon’ble Supreme court in S.P. Mani and Mohan Dairy v. Dr. Snehalatha Elangovan [2022 (9) TMI 846 - SUPREME COURT] has held that for the purpose of Section 141 of the NI Act, a firm comes within the ambit of a company. Therefore, the status of the firm is to traced under the respective special statutes and not under the general law.
In the case in hand, even though the partners of the firm are brothers in one case and Husband and wife in another case, but their relation does not affect either the status of the partnership firm nor its taxability in any manner. Partnership arises out from a legal contract of sharing profits of a business and in that case, even in a case of partnership Firm having partners of a Khasi family only, the mother or wife, as the case may be, being the head named as “ Kur” would not be having any dominant position. All the partners, subject to the terms of the contract between them , will have equal status and rights inter se and even equal duties and liabilities towards firm. The profit of the partnership firm are shared as per the agreement/capital contributed by the partners. Neither the capital, nor the profits of the firm can be held to be the joint property of the family. There is no obligation on the partners being related or to say members of the same family to contribute the profits to the other family members or any other obligation towards them.
There is a separate proforma of information required in case of firm as compared to an individual. The individual members of the Scheduled Tribe whose income is exempt under the Income Tax Act, are even not supposed to file the Income Tax Return subject to the fulfilment of the relevant conditions as prescribed under law. Though, a firm may consist of partners who belong to the exempted category of Scheduled Tribe in their individual capacity, however, there will be not any mechanism available to the Assessing Officer to know that such a firm consists of the individuals whose income is exempt or not.
Thus under the Income Tax Act, the exemption of 10(26) of the Act is available to the individual members of the Scheduled Tribe and that this benefit cannot be extended to a firm which has been recognized as a separate assessable person under the Income Tax Act. The advantages and disadvantages conferred under the Act on separate class of persons are neither transferrable nor inter-changeable. The scope of the beneficial provisions cannot be extended to a different person under the Act, even after liberal interpretation as it may defeat the mechanism and process provided under the Income Tax Act for assessment of different class/category of persons.
Proposed questions are answered in negative by holding that a partnership firm being a separate assessable ‘person’ under the Income Tax Act, would not be entitled to the same exemption u/s 10(26) as any or all of the individual partners would be in their individual capacity and further that the ratio decidendi in the judgment of Mahari & Sons (1991 (12) TMI 51 - GAUHATI HIGH COURT) in context of a ‘Khasi family’ would not be applicable in case of a partnership firm, though consisting solely of partners, who in their individual capacity are entitled to exemption u/s 10(26) of the income Tax Act, 1961. All the captioned appeals of the two assessee-partnership firms are hereby dismissed.
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2024 (3) TMI 1004
Validity of reopening of assessment u/s 147 - Sanction for issue of notice u/s 151 - as alleged illegal approval u/s 151 obtained by AO from inappropriate authority - assessee’s stand is that the AO issued notice after expiry of four years from end of relevant assessment-year which could have been done only after taking approval from Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner u/s 151(1) but since the AO has failed to do so, the notice is violative of section 151(1) but it was obtained from Joint Commissioner.
HELD THAT:- If the AO wants to issue notice after expiry of four years, this can be done only under the approval of Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. The language does not give any scope or flexibility to AO to obtain approval within four years from lower-authority u/s 151(2), keep such approval in file and subsequently issue notice after four years without taking approval from higher authority u/s 151(1).
AR is very much correct in submitting that if such an approach is allowed to AO, this would be a clear circumvention as well as defiance and violation of section 151(1) made by Parliament. We may be hastened to add here that although in present appeal, the Ld. DR is supporting AO’s approach just to save this case of department but otherwise even the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner would not accept such approach of AO and they would certainly say that such approach of AO is unauthoritative and invalid.
We may also add here that the AO was having time to issue notice uptill 31.03.2022, therefore the AO could very well obtain a fresh approval from Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner u/s 151(1) and issue notice to assessee after four years even though he had taken earlier approval u/s 151(2) from Joint Commissioner. In that case, there would have not been any lapse. But the AO has not done so. Therefore, in the present case, we agree with Ld. AR’s pleading that the AO was not having a valid approval from a competent authority as required u/s 151(1), hence the notice issued u/s 148 suffers from an invalidity.
Applicability of Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 dated 31.03.2020 [“TOLA”], there was an extension of time-limit - As relied on JM Financial and Investment Consultancy Services Private Limited[2022 (4) TMI 1446 - BOMBAY HIGH COURT] we are of the considered view that the TOLA is not appliable and in any case, the TOLA has not amended section 151. Hence, the revenue’s claim that its case is protected by TOLA is meritless and liable to rejected.
Protection of section 292BB - Section 292BB has a limited application, it operates in only one of the three situations mentioned in (a), (b) or (c) which are basically situations of ir-regularity in “service” of notice. In present case of assessee, the AO has issued notice u/s 148 without having a valid approval u/s 151(1) which is not at all covered by section 292BB. Therefore, the Ld. DR’s pleading that the revenue has protection of section 292BB is meritless and liable to be rejected.
AO has issued notice u/s 148 without having a valid approval mandated by section 151(1). Being so, we are of considered view that the revenue’s case is suffering from jurisdictional defect and the entire proceeding u/s 148 / 147 undertaken by AO is illegal and unsustainable. Decided in favour of assessee.
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2024 (3) TMI 1003
Deemed dividend u/s 2(22)(e) - amount received as part of salary/remuneration paid to the assessee - as per AO date of survey the said amount was not part of remuneration paid to assessee and no TDS was deducted before the date of survey for such salary as no documentary evidence etc. were produced before the AO for the aforesaid salary amount - double taxation on one receipt - as submitted Junior accountant of the company has made the wrong entries of advance remuneration to assessee in the account of short term loan account by mistake
HELD THAT:- The contention of the appellant is found to be correct with regard to salary received from WaghadInfraprojects Pvt. Ltd. as salary income as evident from the copy of ledger account of Shri Ashok Jain in the books of assessee company. The Ld. DR failed to rebut the contention of the appellant which were found to be factually correct on record. Therefore, the observation made by the AO that claim of the assessee is not supported by the documentary evidences is factually incorrect observation and cannot be acceptable. In view of that matter we hold that it is established by the appellant that the amount incorrectly shown as loan, was in fact an advance towards remuneration which is adjusted later on and TDS was also deducted by the company. Therefore, in our view, this amount cannot be treated as deemed dividend.
As pertinent to mention here that in the present case, there is no loss to the revenue because even if this advance is treated as deemed dividend, then it would be reduced from the salary/remuneration amount being paid to the assessee as the assessee is paying tax at maximum marginal rate and he has not taken any deduction out of salary/remuneration received. It is settled law that there cannot be the double taxation on one receipt/income and therefore, this amount is once treated deemed dividend then it would be reduced from the salary income shown by the assessee in computation of income. In our view, the action of the learned AO was not justified and thus, the addition is rightly deleted by the Ld. CIT(A). Appeal filed by the Revenue is dismissed.
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2024 (3) TMI 1002
Benami transaction - Beneficial owner of property - Provisional attachment order - scope of Amendment Act of 2016 - Constitutional validity - Amendment to Prohibition of Benami Property Transactions Act, 1988 as amended by the Benami Transactions (Prohibition) Amendment Act, 2016 - retrospective or prospective effect - Attachment of property
As decided by HC [2022 (5) TMI 262 - TELANGANA HIGH COURT]Section 2 (9) (A) and Section 2 (9) (C) can only have effect prospectively. Central Government has notified the date of coming into force of the Amendment Act of 2016 as 01.11.2016. Therefore, these two provisions cannot be applied to a transaction which took place prior to 01.11.2016. Admittedly, in the present case, the transaction in question is dated 14.12.2011. That being the position, we have no hesitation to hold that the show cause notice dated 30.12.2019, provisional attachment order dated 31.12.2019 and the impugned order dated 30.03.2021 are null and void being without jurisdiction.
HELD THAT:- Delay of 624 days in filing this special leave petition is condoned.
The issues raised in this petition are squarely covered by a judgment rendered by a three-Judge Bench of this Court in Union of India & Anr. Vs. Ganpati Dealcom Pvt. Ltd. [2022 (8) TMI 1047 - SUPREME COURT] wherein held Section 3(2) of the unamended 1988 Act is declared as unconstitutional for being manifestly arbitrary. Accordingly, Section 3(2) of the 2016 Act is also unconstitutional as it is violative of Article 20(1) of the Constitution.
In rem forfeiture provision under Section 5 of the unamended Act of 1988, prior to the 2016 Amendment Act, was unconstitutional for being manifestly arbitrary. The 2016 Amendment Act was not merely procedural, rather, prescribed substantive provisions. In rem forfeiture provision under Section 5 of the 2016 Act, being punitive in nature, can only be applied prospectively and not retroactively.
Concerned authorities cannot initiate or continue criminal prosecution or confiscation proceedings for transactions entered into prior to the coming into force of the 2016 Act, viz., 25.10.2016.
Hence, the special leave petition is disposed of in the aforesaid terms.
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2024 (3) TMI 1001
Duty demand - Bonded Warehouse - seizure of 264 cases found outside the warehouse - Unauthorisedly clearance of 27 cases from the notified public bonded warehouse - clearance in a clandestine manner - Confiscation - Interest - - Import of second hand steel mill machinery and parts - warehousing period expired - HELD THAT:- Since the imported goods covered by the 264 cases were never warehoused inside the notified public bonded warehouse but were unloaded outside the notified area but within the factory premises of the appellant and kept under a shed on permission granted by the Superintendent which permission was neither cancelled nor revoked, question of warehousing the goods covered by the 264 cases within the notified public bonded warehouse did not arise. As a corollary, the further question of improperly or unauthorisedly removing the 264 cases from the notified warehouse to outside the said area but within the factory premises of the appellant attracting Section 71 and the consequences following the same did not arise. Inference drawn by the respondent that the permission granted by the Superintendent was only temporary and therefore, the rigor of Section 71 would be attracted, in our view, would not be a correct understanding of the situation and the law.
We find that there is no explanation on the part of the appellant qua the missing 27 cases. Therefore, the view taken by the respondent and affirmed by the CESTAT that those 27 cases were improperly or unauthorisedly removed from the notified public bonded warehouse is correct and requires no interference.
Evidently, the circular dated 12.7.1989 would not be applicable to the facts of the present case in as much as it is not the case of the respondent that either the warehousing period had expired or that the warehousing period was extended. As we have seen, the warehousing in the notified public bonded warehouse continued as the Corporation had deposited with the respondent a sum of Rs. 56,10,294.00 in respect of the notified warehouse as custom establishment charges for the period from 1992-1993 to 2007-2008. That apart, we can refer to the fact that respondent had not levied any customs duty on the 304 cases found within the notified area which would mean that the notified warehousing continued. Therefore, this is not a case where Section 15(1)(b) could have been invoked.
Thus, having regard to the discussions, we are of the view that the demand raised by the respondent against the appellant and affirmed by the CESTAT qua the 264 cases including levy of customs duty and interest cannot be sustained. Those are accordingly set aside and quashed.
Demand of customs duty and interest on the 27 cases is concerned, the same is hereby sustained. The decision imposing penalty on the appellant u/s 112 of the Customs Act is also not disturbed in view of the conduct of the appellant in unauthorisedly removing the 27 cases of imported goods not only from the notified public bonded warehouse but also from the industrial/factory premises of the appellant.
Impugned order of CESTAT would stand modified accordingly - Appeal is allowed in part in the above terms.
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2024 (3) TMI 1000
Classification of goods - consignment imported under SKD condition - Exemption for the purpose of assessment for countervailing duty - Import of components for manufacturing colour Doppler SSD-4000 Ultra Sound Scanners - it was held by CESTAT that When the goods are presented in SKD condition, Revenue does not have authority of law to separate different parts and components and classify them differently in view of Rule 2(a) of General Rules for Interpretation of the Customs Tariff - HELD THAT:- The impugned judgment passed by the Customs, Excise and Service Tax Appellate Tribunal, Chennai need not be interfered - The Civil Appeals are dismissed.
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2024 (3) TMI 999
Confiscation of Goods - Penalty - Clearance of goods described as “Caresmith Wave Body Massager” - Commissioner, categorise the item not as a body massager, but an Adult Sex Toy - prohibited for import as per the Customs Notification No. 01/1964-Customs - HELD THAT:- The only relevant portion of the notification is the underscored portion being Clause (ii), as referred by the Commissioner to label the goods as prohibited. Such clause prohibits import of the goods, namely, any obscene book, pamphlet, paper, drawing, painting, representation, figure or article. Necessarily, in our opinion, the different items as set out in Clause (ii) are required to be read ejusdem generis. These machines like massagers certainly cannot be compared with the companion items in the said entries which are in the nature of book, pamphlet, paper, drawing, painting, representation, figure or article, etc.
This apart, we are in complete agreement with the findings as recorded by the tribunal that it was totally unwarranted and in our opinion, perverse for the Commissioner to take recourse to clause (ii) of the said Notification to regard the goods in question as prohibited goods, for more than one reason. Firstly, it was clearly the figment of the Commissioner’s imagination and/or his personal perception that the goods are prohibited items. This was far from the legal consequence as brought about by the notification that the goods could be so categorized. We may add that such thinking of the Commissioner was beyond anybody’s control. The notification also could not have supported such perception of the Commissioner when he regarded the goods as obscene. As rightly observed by the tribunal, and obviously as body massagers being traded in the domestic market, were not regarded as prohibited items, was certainly a relevant consideration.
In the facts of the present case, the Commissioner (adjudicating officer) has failed to act as a prudent official who would be expected to act reasonably in deciding the issues of clearance of goods in question, which ought to have been strictly in accordance with law. Any perverse application of law would fall foul of the rules of legitimacy and fairness expected from a quasi-judicial authority. Such approach of the Commissioner has been rightly criticized by the tribunal. If what was observed by the Commissioner in the order-in-original is accepted to be the only test, it would amount to accepting personal views of the officer which would be something unknown to law. Such approach is certainly not permissible. We also say this in the context of the opinions which were gathered by the Commissioner. These experts invited by the department clearly opined that the goods in question were body massagers which could be subjected to other uses.
Thus, merely because the goods can be subjected to an alternative use, of the nature, as the Commissioner contemplated, this can never be the test to hold that the goods were prohibited, when they otherwise satisfied the test of goods, which could be imported and sold. Thus, there was no material before the adjudicating officer, to categorize the goods under clause (ii) to be any obscene book, pamphlet, paper, writing, drawing, painting, representation, figure or article, and of objectional description, falling under the notification. Such view of the Commissioner was patently perverse.
Thus, we are of the clear opinion that no substantial question of law would arise for our consideration as raised on behalf of the Revenue. The tribunal is correct in its view when it set aside the orders passed by the Commissioner. The appeal is without merit. It is accordingly rejected. Dismissed. No costs.
In view of our aforesaid judgment confirming the order passed by the tribunal in the revenue’s appeal against the firm, the present appeals are also required to be rejected. They are rejected for the reasons we have set out in deciding the aforesaid appeal against the revenue and in favour of the firm. Dismissed. No costs.
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2024 (3) TMI 998
Levy of penalties - smuggling of Gold - baggage rules - petitioner could not produce any licit document in support of the possession/acquisition or legal importation of the said gold - Absolute confiscation of gold weighing 3203.900 gram - HELD THAT:- Petitioner has imported the gold within the Indian customs waters contrary to the prohibition imposed for its import. The Gold was concealed in medicine packets, which were concealed under several layers of packing. The goods were also not declared in the Indian Customs Declaration Form. On the other hand false declaration was made in the said Form - Consequently, the gold was liable to be confiscated under section 111 of the Act. Petitioner has also conceded to the said position and has not objected to the confiscation of the said gold items.
Petitioner has clearly done an act that has rendered the gold liable to confiscation under section 111 of the Act and as such is liable under 112(a) of the Act. Further, Petitioner had carried the gold and had concealed the gold knowing or having reason to believe that the article he was carrying was liable to confiscation under section 111 of the Act and as such he is also liable under Section 112(b) of the Act.
There is no merit in the contention of learned counsel for the Petitioner that he was not aware of the gold. Petitioner was carrying the packet containing gold. The gold items were concealed inside two pieces of Medicine Sachets which were kept inside a Multi coloured zipper jute bag further kept in the Black coloured zipper handbag that was carried by the Petitioner. The manner of concealing the gold clearly establishes knowledge of the Petitioner that the goods were liable to be confiscated under section 111 of the Act. The Adjudicating Authority has rightly held that the manner of concealment revealed his knowledge about the prohibited nature of the goods and proved his guilt knowledge/mens-rea - Admittedly, petitioner would always bring back goods for others. Petitioner, who travels internationally so often cannot be permitted to contend that he was not aware of the law and that he was not aware of the contents of the packets that he was carrying. A person carrying any article on his belonging would be presumed to be aware of the contents of the articles being carried by him.
The Supreme Court of India in STATE OF MAHARASHTRA VERSUS NATWARLAL DAMODARDAS SONI [1979 (12) TMI 78 - SUPREME COURT] has held that smuggling particularly of gold, into India affects the public economy and financial stability of the country.
Penalties - HELD THAT:- For the contravention Petitioner was liable to be imposed penalty not exceeding the value of the goods. Petitioner brought in 24 Karat Gold, collectively weighing 3203.900 gm. totally valued at Rs. 88,42,764/-. Thus the penalty that could be imposed was upto Rs. 88,42,764/- but only a penalty of Rs. 10,00,000/- was imposed on the petitioner. It is found that the penalty imposed is not disproportionate in the facts and circumstances of the case.
There are no merit in the Petition. The same is consequently dismissed.
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2024 (3) TMI 997
Interest on Delayed Refund - Refund of additional duty was allowed in the remand proceedings - benefit of provisions of Section 27A of Customs Act - HELD THAT:- There is substance in the contention as urged of behalf of the Petitioner as certainly Section 27A would provide for payment of interest on delayed payment of the refund amounts, which is the statutory entitlement of the Petitioner and which necessarily was required to be considered by the adjudicating officer in considering the Refund Applications on remand. It clearly appears that although a specific prayer was made before the Commissioner of Appeals and the proceedings were remanded in that regard, the Designated Officer has failed to consider such prayers. Even assuming the Petitioner had not made a prayer for interest, however, the fact remains that it would be a statutory entitlement of the Petitioner to seek the interest on the refund amounts when such applications were allowed.
The Adjudicating Officer/Respondent be directed to decide the interest claim of the Petitioner on the Refund Applications, after granting to the Petitioner an opportunity of a hearing on the quantum. This be done within a period of four weeks from today and accordingly grant appropriate interest to the Petitioner in accordance with law.
Let the Adjudicating Officer call the Petitioner for hearing by issuing seven days notice, so that all the documents whatever necessary can be presented before the Adjudicating Officer so as to enable him to pass appropriate order granting refund to the Petitioner - Petition disposed off.
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2024 (3) TMI 996
Refund of SAD - amount paid by the Appellant was a deposit in lieu of an inquiry or not - applicability of time limitation on the refund of amount of deposit or not - HELD THAT:- The letter dated 20.06.2017 by which refund amount along with interest dated 12/20.06.2017 had been paid by the appellant of amount of erroneous refund along with interest on same having been communicated to them was voluntarily act and which falls within parameter of requirement of Section 28 1(b) and because of which the proper officer was not required to issue any further show cause notice, unless the erroneous refund was found to be short paid. The appropriation of amount of refund and interest once paid voluntarily by appellant is selfappropriation. The amount thus paid was clearly on account of erroneous refund which vide its payment was accepted by the party obviating any necessity of further show cause notice.
If for any reason appellant wanted refund of such erroneous refund amount paid by them, then the same had to be within the prescribed limitation which as per the concurrent findings of the lower authorities was not done and therefore, the claim filed in the year 2021 was clearly barred by limitation.
Impugned order is therefore maintained and appeal is rejected.
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2024 (3) TMI 995
100% EOU - Denial of benefit of exemption under Notification No. 52/2003-Cus - violation of input output norms - excess generation of waste and scrap - HELD THAT:- The present case is entirely covered by the case of Meridian Impex Vs. CCE & ST,[2018 (7) TMI 865 - CESTAT AHMEDABAD], wherein it is held that after segregation of the mixed imported scrap, the segregated scrap, if cleared, cannot be considered as clearance of the 'inputs as such. The same has been affirmed by the Gujarat High Court in the decision of Commissioner of Customs (Preventive) Vs. Monarch Overseas,[2019 (1) TMI 1513 - GUJARAT HIGH COURT].
It was submitted that Chapter 6 of the Foreign Trade Policy ("FTP") nowhere mentions that for the excess generation of waste and scrap, duty equivalent to the duty on proportionate quantity of imported raw material is required to be paid. Chapter 6 of the FTP provides that there should be no duty demand even in case where the waste or scrap is destroyed in EOU. Further, it is also stated that the byproducts included in the LOP can be sold in DTA with the permission of the Deputy Commissioner on the payment of applicable duties.
Thus, nowhere it was mentioned that duty amount on proportionate raw materials is to be paid in case, there is excess clearance of waste and scrap and therefore the same cannot be demanded. Further, the only restriction on the excess clearance of the waste and scrap is that the same can be cleared on the payment of full duty which the appellants have already paid.
Moreover, as per Chapter 10 of the CBEC's Custom Manual of instruction issued on 11.09.2001 duty on bonded goods can only be demanded in certain specified circumstances. Therefore, the appeal is allowed with consequential relief.
Appeal allowed.
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2024 (3) TMI 994
Levy / Demand of Countervailing Duty (CVD). - whether the appellant can be considered as an importer when the software has been imported by SAP India Pvt. Ltd. (subsidiary company) was contentious and reached before the Tribunal? - Validity of show cause notice - limitation - Interest - penalty - intent to evade customs duty or not - HELD THAT:- If the appellant pays CVD on the goods (software imported by them) they would be able to avail credit of such CVD paid by them. The entire situation is revenue neutral and there cannot be any intent to evade payment of duty. Further, the appellant was under bona fide belief that they have not imported the goods as they have only entered into an agreement with SAP India Pvt. Ltd. for purchase of the software.
The issue as to whether they can be considered as the importer was contentious and had travelled upto to the Tribunal. Taking these aspects into consideration, the issue is also interpretational in nature. We find that by the Department has not established any positive act on the part of the appellant in regard to suppression of facts with intent to evade Customs duty. Thus, we find that there are no grounds for invocation of extended period. The demand of CVD along with the interest and the imposition of penalties cannot sustain. The issue on limitation is answered in favour of the appellant. The impugned order is set aside on the ground of limitation. The appeal is allowed with consequential relief, if any, as per law.
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2024 (3) TMI 993
Refund application for refund of 4% SAD payment - Non-compliance with the mandatory condition of Notification No.102/2007 - issued a deficiency memo - Whether the Chartered Accountant certificate, is sufficient to meet the requirement of unjust enrichment and compliance of the conditions of Notification? - HELD THAT:- In the present case, only objection made by the adjudication authority to reject the refund application is that the Appellant failed to show the due amount of refund as receivable in the books of account and it amounts to non-compliance of the Notification. In impugned order it is further held that the onus of unjust enrichment also not complied. The issue was considered by various authorities and this Tribunal from time to time as stated in ibid paragraphs and it is well settled that once the Appellant produced certificate from concerned Chartered Accountant, it is sufficient to meet the requirement of unjust enrichment and compliance of the conditions of Notification.
The Department have no case that the goods were sold without payment of VAT or Sale Tax as applicable. In the absence of any other objection, impugned order rejecting the refund claim is unsustainable. Following the ratio of the decisions in the matter of Customs, Bangalore Vs M/s Apple India Pvt Ltd [2015 (1) TMI 573 - KARNATAKA HIGH COURT], Chartered Accountant certificate produced by the Appellant is sufficient to allow refund.
Appeals are allowed with consequential relief if any in accordance with law.
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2024 (3) TMI 992
Maintainability of Refund claim - order of assessment in appeal not challenged - quantity discount - import of the pre-fixed quantities - foreign supplier for supply of Chrysotile Asbestos Fibre - HELD THAT:- Admittedly, the appellants have not filed any application under Sections 144 & 149 of the Customs Act, 1962 for rectification or amendment of the Bills of Entry, therefore, the “case laws” relied by the appellants mentioned are no help.
Thus, following the decision of the Hon’ble Apex Court in the case of ITC Limited [2019 (9) TMI 802 - SUPREME COURT], the refund claims are not maintainable as neither Bills of Entry were modified nor the assessments of Bills of Entry were challenged by the appellants. Therefore, the appeals filed by the appellants are dismissed by upholding the impugned order.
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2024 (3) TMI 991
Validity of SCN proposing to declare the petitioners as wilful defaulters - Classification of Account as NPA - Impact of CIRP proceedings under IBC - Declaring the petitioners as wilful defaulters in terms of the Master Circular on Wilful Defaulters issued by the Reserve Bank of India (RBI) on July 1, 2015 - whether the injunction order passed by the writ court against the respondent-Bank, on the premise that the NPA classification was de hors the Master Circular, can be a relevant consideration for vitiating the Show-cause Notice? - HELD THAT:- In the present lis, even if the best case of the petitioners is taken into consideration, applying the Pandemic Circulars of the RBI extending the time for making good defaults, on and from November 30, 2020, the petitioner no. 1 was a defaulter. Apparently, no repayment has been made since then. Thus, it cannot be said that merely because the NPA classification is clouded in a writ petition, the respondent-Bank cannot proceed with the wilful defaulter proceeding.
However, it is made clear that the purported communications of the petitioners handed over by the Bank at the time of arguments cannot be looked into at this stage, having not been referred to in the Show-cause Notice. The principle laid down in MOHINDER SINGH GILL & ANR. VERSUS THE CHIIEF ELECTION COMMISSIONER, NEW DELHI & ORS. [1977 (12) TMI 138 - SUPREME COURT] is squarely applicable as well, precluding the respondent from furnishing new grounds which were not there in the original Show cause Notice.
Show-cause Notice contains reference to the assets of the petitioner nos. 2 to 9, who were Directors of the Company, which assets are not part of the assets of the borrower-Company - HELD THAT:- A Show-cause Notice need no plead in detail the full particulars of the requirements of the Master Circular but is required merely to outline the broad spectrum of offences committed by the borrower, its Directors and the guarantors to be labelled as wilful defaulters. The proper stage for consideration of compliance of Clause 2.6 on all other aspects is the order passed by the Wilful Defaulter Identification Committee on consideration of the Show-cause Notice and the reply thereto. Hence, the merits of the said allegation cannot be considered in detail.
Sufficient ingredients to justify the allegations have been spelt out in the Show-cause Notice to bring the same within the broad purview of the Master Circular. The said ingredients, read in conjunction with the FAR and other documents which may be relied on by the Bank, are to be taken in conjunction at the time of consideration by the Wilful Defaulter Identification Committee and not at the show-cause stage. The composite effect of the documents and the broad allegations made in the Show-cause Notice are the subject-matter of adjudication by the said Committee, and thereafter the Review Committee. At the stage of Show-cause Notice, the court cannot adopt a fault-finding approach but such a Notice is to be seen in the perspective of disclosing sufficient ingredients to make the noticee aware of the nature of allegations made against it.
Moreover, it is well-settled that under normal circumstances, courts are loathe to interfere at the show-cause stage since the noticee has the remedy of giving a reply thereto available to it. The merits of the allegations and defences can only be gone into by the first committee while deciding the matter.
Thus, a wilful defaulter proceeding does not come within the contemplation of Section 14 or Section 96 of the IBC, which primarily pertains to legal actions to foreclose, recover or enforce security interest, or recovery of any property of the debt-in-question.
In P. MOHANRAJ & ORS. VERSUS M/S. SHAH BROTHERS ISPAT PVT. LTD. [2021 (3) TMI 94 - SUPREME COURT], the Supreme Court has repeatedly highlighted, particularly in paragraph nos. 35.2 and 35.3, that the moratorium concerns not merely recovery of debt but any legal proceeding even indirectly relatable to recovery of any debt. Hence, the moratorium applies to recovery proceedings and proceedings which directly or indirectly “relatable” to such recovery. A wilful defaulter proceeding cannot, by any stretch of imagination, be said to be even remotely relatable to recovery of debt but is merely an off-shoot of the debt. The corpus of debt is not the subject-matter of a wilful defaulter proceeding, unlike a recovery proceeding, but is a mere stimulus to spur the wilful defaulter proceeding into motion.
Petition is disposed of by directing the respondent-bank to serve a copy of the Forensic Audit Report and/or any other document, on which the bank intends to rely to substantiate the show-cause allegations, on the petitioners within a week from date.
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2024 (3) TMI 990
Declaration of Wilful Defaulter of the petitioner - Liability of Directors - It is argued that in none of the Committee Orders, any cogent ground has been made out under the Master Circular of the Reserve Bank of India (RBI) for declaration of Wilful Defaulters - HELD THAT:- The petitioner admittedly parked some amounts from its sales realizations not in the cash credit account but in a different account opened with a different Bank, that is, the ICICI Bank, Darjeeling Branch. Hence, at a time when the borrower-Company was duty-bound to channelize its entire funds through the respondent no. 1-Bank due to its agreement with the latter, it failed to meet such obligation, which was a condition of the cash credit facility, and routed some money through a different bank account. Such act is sufficient to come within the purview of diversion of funds as contemplated in the Master Circular.
Admittedly, an agreement was entered into in the year 2004 which was much prior to the directions of the Central Government to take over management from the borrower-company. Even the Division Bench order of this Court directed the management to be continued by the borrower-Company. Hence, the lame excuse of the workers’ interest is mere lip-service in the mouth of the petitioner, since the borrower-company, evidently without knowledge or permission of the lender-Bank, had transferred the security, invoking the umbrella of the Central Government directions - The moratoria contemplated in the IBC were introduced for the protection of the corporate debtor in order to facilitate resolution. Such legal fiction, however, was created only in order to sustain the business of the company in the hands of the successful resolution applicant, inter alia, to protect the interests of the workers and the business of the unit in general. However, even if CIRP commences, the Directors, who were the masterminds in control and charge of affairs of the Company at the relevant juncture, cannot be absolved of any wilful default committed by the borrower-Company at the relevant juncture.
In the present case, the petitioner was a Director and at the helm of affairs, responsible for the business operations of the company. The business decisions of the Company are attributable to the Directors, who are the living hands of the company which is a juristic person. Thus, the petitioner cannot be absolved of the wilful default committed by the borrower-Company in his capacity as a director and promoter, irrespective of an ongoing Corporate Insolvency Resolution Process.
There are no patent irregularity or perversity in the impugned decisions or the procedure adopted by the Committees for arriving at the same, sufficient to interfere under Article 226 of the Constitution of India.
The petition is dismissed on contest without any order as to costs.
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2024 (3) TMI 989
Seeking winding up of respondent company - Failure to pay outstanding dues - section 434 of the Companies Act, 1956 - HELD THAT:- The affairs of the respondent company in liquidation appear to be completely wound up. It is not feasible to proceed further in the winding up company. On perusal of OLR No.6/2024 including the documents on record, no other assets are available for realization of the dues of the creditors. All the assets of the company in liquidation had already been sold by the Bank and realized its dues. No secured creditors are available despite the issuance of notice. Therefore, this Court is of the considered opinion that this company petition deserves to be closed under the provisions of Section 481 of the Companies Act, 1956 and Rule 282 of the Companies (Court) Rules, 1959.
Accordingly, it would be just and reasonable in the circumstances to pass the order that the company in liquidation be dissolved from the date of this order. Consequently, the company is in liquidation viz. M/s. STI Phoenix Wear Private Limited stands dissolved - Petition disposed off.
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2024 (3) TMI 988
Rejection of Petitioner’s Settlement Applications - delay on the part of the Petitioner in making compliances of submission of documents and as per the Settlement Regulations, 2018 and more particularly Regulation 6(1)(b) - Petitioner made a representation to the Respondent requesting the Respondent to consider such documents by condoning the delay, which according to the Petitioner was not attributable to the Petitioner and for reasons which where not in Petitioner’s control - HELD THAT:- Certainly there was delay on the part of the Petitioner in not complying with the time lines on submission of the documents, which according to the Petitioner were relevant in regard to the Settlement Applications and as demanded by the Respondent in the course of the proceedings. We also find that the Respondent was required to follow the provisions of the Regulations in question.
Considering the peculiar facts of the case and the reasons which are set out by the Petitioner, in our opinion in not submitting these documents within the prescribed time, the Petitioner would certainly deserve an opportunity of his Settlement Applications being considered by the Respondent and it ought not to become inconsequential on account of a delay of 15 days in submission of the documents. This would certainly cause prejudice to the Petitioner. We are thus inclined to set aside the impugned order passed by the Respondent and restore the proceedings of the Settlement Applications with the Respondent to be decided in accordance with law.
Petitioner submits that the documents are already part of the record of the Settlement Applications, hence, there would not be any impediment for the Respondent to decide the Settlement Applications as filed by the Petitioner expeditiously.
Let the decision on the Settlement Applications be taken as expeditiously as possible within period of eight weeks from the date of copy of the order is made available to the parties.
All contentions of the parties on the adjudication of the Settlement Applications are expressly kept open.
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2024 (3) TMI 987
Approval of Resolution Plan by the Adjudicating Authority - plan was approved by the Committee of Creditors - constitution of CoC. - Group of 77 homebuyers as a class of creditors seeking rejection of plan.
Sustainability of the argument advanced by the Learned Counsel for the Appellant that the constitution of the CoC stood vitiated because of the related party status of the Financial Creditor and Corporate Debtor - HELD THAT:- In view of absence of material placed on record and lack of substantiation of pleadings made by the Appellant of related party status of the Financial Creditor/Respondent No. 2 and the Corporate Debtor, it is not inclined to subscribe to the bogey of related party issue raised by the Appellant. Having failed to adequately demonstrate the related party status of the Financial Creditor/Respondent No. 2, and the Corporate Debtor, there are no irregularity on the part of the RP in constituting the CoC with the Financial Creditor/Respondent No. 2 as a member thereof.
Financial Creditor/Respondent No. 2 was assigned a higher vote share than its entitlement - HELD THAT:- There was discriminatory treatment of the claims made by the Appellant as against what was offered to the Financial Creditor/Respondent No. 2 is clearly misconceived since the RP was diligently updating the claims and the corresponding vote share of the financial creditors. Not having pointed out any irregularity on the part of the RP in constituting the CoC with the Financial Creditor/Respondent No. 2 having majority vote share prior to the CoC approving the resolution plan, it cannot be agitated now at this belated stage when the resolution plan stands approved. Thus, to answer the second issue, the CoC is found to have been validly constituted based on the duly verified claims of the financial creditors, to which no objections were raised by the Appellant, there are no cogent reasons to hold the decisions taken by the CoC to be either irregular or invalid.
Whether the RP was actively following up the TMC reservation issue or not? - HELD THAT:- The CoC was periodically kept apprised of the follow up steps taken by the RP in dealing with this issue which included visit to the TMC office and filing of an RTI application to find out the correct status of the reservation. The Resolution Professional had also taken up the matter through the architect to enquire about the reservation status besides seeking legal opinion on the matter and appointing a legal firm to seek appropriate legal remedy. Thus, the Resolution Professional cannot be held responsible for having suppressed any material fact pertaining to the TMC reservation issue from the CoC members including the AR. Keeping in mind the above-cited multifarious efforts made by the RP, the bonafide of the RP in this regard cannot be doubted. Hence, there are no infirmity or error in the findings recorded by the Adjudicating Authority in respect of the conduct of the Resolution Professional.
The RP at all stages had facilitated the Homebuyers in raising their concerns and objections to the resolution plan through the AR and in fact also provided them the window of opportunity of taking up their issues with the SRA. Under such circumstances, but for bald assertions, there is nothing to show that there has been negligence or dereliction of duties and responsibilities cast on the RP which can be said to have caused any serious miscarriage of justice to the Appellant - thus no cause of action survives on this count.
Whether the approval of the resolution plan by the Adjudicating Authority deserves to be set aside or the CoC approved resolution plan be sent back for the SRA/Respondent No. 3 to make necessary changes to the plan in the order to cater to the needs and demands of the Homebuyers as has been urged by the Appellant? - HELD THAT:- It is an undisputed fact that the resolution plan of the SRA has been approved by the CoC with requisite vote share. This resolution plan duly approved by the CoC with 89.05% vote share was placed before the Adjudicating Authority which has already approved the resolution plan. In the instant case, we find that when the resolution plan came up for consideration and approval before the Adjudicating Authority, the SRA improvised and upwardly revised its offer by way of an affidavit agreeing to pay 100% of the principal amount of the Homebuyers as against refund of approximately 40% of the claim amount admitted by the RP which was initially contained in the CoC approved resolution plan. This amount was acceptable to the Homebuyers and has not been objected to by any of the 77 Homebuyers.
Whether in the given circumstances, the Appellant as a disgruntled solitary homebuyer or at best representing 77 Homebuyers can raise objections against the collective business decision taken by the CoC approving the resolution plan of the SRA? - HELD THAT:- In the present matter at hand, neither any contravention of law nor material irregularity has been brought on record. It is settled law that once the CoC has approved the resolution plan by requisite majority and the same is in consonance with applicable provisions of law and nothing has come to light to show that the RP had committed any material irregularities in the conduct of the CIRP proceedings, the same cannot be a subject matter of judicial review and modification. In any case, quite apart from the fact that the resolution plan is already under implementation it has also not been controverted by the Appellant that all the 77 Homebuyers including the Appellant have accepted the offer of 100% of their principal amount from the SRA.
The intent, objective and purpose of IBC being time bound resolution of insolvency of the Corporate Debtor, it clearly does not provide any leeway or scope to dissatisfied individual Homebuyers in a minority like the present Appellant to override the commercial wisdom of the majority in the CoC. There are no merit in the contention of the Appellant to reject the CoC approved resolution plan which has since been approved by the Adjudicating Authority. Any indulgence shown would tantamount to derailing the resolution process and setting the clock back which we cannot countenance.
There are no sufficient and plausible grounds made which warrant any interference with the impugned order. There is no merit in the appeal - Appeal dismissed.
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2024 (3) TMI 986
Works contract service - entitlement to benefit under the Composition Scheme - requirement of first formally informing the department in writing that the appellant is exercising the option to pay service tax under the Composition Scheme - HELD THAT:- This issue was examined by a Division Bench of the Tribunal in M/S. ABL INFRASTRUCTURE PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NASHIK [2015 (2) TMI 801 - CESTAT MUMBAI] and in connection with rule 3(3) of the Composition Scheme and it was held that the appellant was executing work in a new contract from 5-6-2007 and was therefore eligible under the category of Works Contract Service.
Subsequently, a Division Bench of the Tribunal in CCE, JAIPUR VERSUS M/S ZUBERI ENGINEERING COMPANY AND (VICE-VERSA) [2017 (11) TMI 1334 - CESTAT NEW DELHI], after referring to the decisions of the Tribunal in ABL Infrastructure and Nagarjuna Construction Company, observed when the appellant/assessee did not pay any tax on such works contract service and starts paying tax after availing concession, such payment of tax under the scheme should be construed as exercising the option.
The Calcutta High Court in M/S. LARSEN & TOUBRO LIMITED VERSUS ASSISTANT COMMISSIONER, SERVICE TAX COMMISSIONERATE, DIVISION-III, KOLKATA & OTHERS [2022 (12) TMI 523 - CALCUTTA HIGH COURT] also examined the issue and observed that In the absence of statutory format can the department be heard to say that the option should be exercised in a particular fashion and cannot be by conduct, that is by paying the service tax equivalent to 2% of the gross amount charged for the works contract.
In view of the aforesaid decisions of the Tribunal and judgment of the Calcutta High Court, it has to be held that payment of service tax contemplated under the Composition Scheme and filing the return would be sufficient compliance of exercising the option under the Composition Scheme.
The impugned order dated 29.03.2017 passed by the Commissioner, therefore, cannot be sustained and is set aside - appeal allowed.
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