Taxability surplus on redemption of securities under the head Capital Gain - transfer u/s 2(47) - assessee claimed that the amount was not liable to tax on the ground that redemption does not amounting to transfer, resulting in capital gain - HELD THAT:- We find that similar issue on identical fact has been adjudicated by the coordinate bench of ITAT in the case of assessee itself in favour of the revenue for assessment year 1995-1996 and 1996-1997.
We find that coordinate bench of the ITAT in the above referred decisions have decided the issue in favour of the revenue. Therefore, following the decisions of Co-ordinate Bench assessee as referred above, we do not find any merit in this appeal. This Ground of appeal of the assessee stand dismissed.
Taxability of surplus on redemption of Treasury bills under the head ‘Profits and Gains of Business’ - treasury bills were sold by the Reserve Bank of India on behalf of the Central Government and difference between the amount payable on maturity and the discounted value of the treasury bills at the time of issue was treated as interest on securities - HELD THAT:- We find that in the case of British Bank of Middle East v/s CIT [1998 (6) TMI 82 - BOMBAY HIGH COURT] held that the difference Between the amount payable on maturity and discounted value of the treasury bills at the time of issue is interest on securities. The ITAT, Mumbai in the case of the assessee itself for the A.Y. 1998-99 [2023 (8) TMI 1422 - ITAT MUMBAI]and A.Y. 1997-98 [2023 (4) TMI 1288 - ITAT MUMBAI] has decided the issue in favour of the assessee. The co-ordinate bench of the ITAT in the case of the assessee itself after following the decision of the Hon’ble Supreme Court in the case of CIT v/s Grace Collis [2001 (2) TMI 9 - SUPREME COURT] that surplus on redemption of treasury bills is to be taxed under the head Capital Gains. Therefore, we direct the AO to assessee the same as capital gains. Therefore, this ground of appeal is allowed.
Nature of expenses - Rejecting the claim of deduction of expenditure incurred with respect to Masala Grinder and toaster - HELD THAT:-The aforesaid amount was shown as capital expenditure in the tax audited report and same was also disallowed in the return of income. Therefore, we find that the disallowance of this expenditure is not justified, therefore, we direct the AO to delete addition made towards expenditure of Masala Grinder and Toaster after verification of the claim of the assessee.
Disallowance of Fines and Penalties - HELD THAT:- As we find that similar claim of expenses was decided against the assessee by the co-ordinate bench of ITAT in the case of the assessee itself [2023 (8) TMI 1422 - ITAT MUMBAI][ (A.Y. 1998-99), [2023 (4) TMI 1288 - ITAT MUMBAI](A.Y. 1997-98). Following the decision of the co-ordinate benches this ground of appeal of the assessee stand dismissed.
Deduction in respect of Wealth Tax paid - HELD THAT:- We have perused the decision of the ITAT in the case of the assessee for A.Y. 1998-99 [2023 (8) TMI 1422 - ITAT MUMBAI] after following the decision of the co-ordinate benches held that wealth tax paid by the assessee is not liable to the disallowed. After following the decisions of the co-ordinate benches the AO is directed to delete the disallowance.
Allowing deduction u/s 80 IA on profits after deducting depreciation u/s 32 of the Act from the profit of eligible undertaking - HELD THAT:- We find that identical issue on similar fact in the cases of the assessee itself has been decided against the assessee by the co-ordinate benches of ITAT A.Y. 1998-99 [2023 (8) TMI 1422 - ITAT MUMBAI] and A.Y. 1997-98[2023 (4) TMI 1288 - ITAT MUMBAI] Following the decision of the co-ordinate bench as referred above, this ground of appeal of the assessee stand dismissed.
Disallowing of deduction u/s 80-O in respect of royalty received - HELD THAT:- We find that identical issue on similar fact in the case of the assessee itself has been adjudicated by the co-ordinate bench of ITAT in the favour of the assessee for the A.Y. 1998-99 [2023 (8) TMI 1422 - ITAT MUMBAI]as noticed that in accordance with the agreement that assessee has given license to assemble its scooters models. The assessee permits the same and accordingly supplied the drawings relating to those parts and collects technical knowhow fee. The co- ordinate bench held that the technical knowhow fee received by the assessee would fall under the category of “Royalty” as defined in sec. 80-O of the Act and it is eligible for deduction u/s 80-O. Following the decision of ITAT as referred above, this ground of appeal of the assessee is allowed. The AO is directed to allow the claim of deduction u/s 80-O of the Act.
Computation of deduction u/s 80HHC - While computing indirect cost attributable to export of trading goods for the purpose of computing deduction under section 80HHC, expenses attributable to other income and export incentive estimated at 10% thereof ought to be excluded - HELD THAT:- Identical issue on similar fact has been adjudicated in favour of the assessee by co-ordinate bench of ITAT [2023 (4) TMI 1288 - ITAT MUMBAI] A.Y 1997-98 wherein after examining the issue placed reliance on the decision of Hon'ble Supreme Court of India in the case of Hero Exports [2007 (11) TMI 13 - SUPREME COURT] and the decision of Special Bench of the Tribunal in the case of Surendra Engineering Corporation vs. ACIT [2002 (12) TMI 199 - ITAT BOMBAY-H] and decided the issue in favour of assessee.
Deduction u/s 80HH and 80-IA - Common Expenditure not specifically incurred towards the tax incentive unit ought not to be considered for computing the deduction - HELD THAT:- Following the decision of the co-ordinate bench [2023 (4) TMI 1288 - ITAT MUMBAI] A.Y 1997-98 as held expenses attributable to other unit or head office expenses which have no relevance to the Industrial undertaking cannot be deducted in respect of the said undertaking while computing profit and gains of the said undertaking for the purpose of computing deduction u/s 80HH, 80I and 80IA of the Act. - thus we restore this issue to the file AO for deciding afresh as per the direction of the co-ordinate bench. Therefore, this ground of appeal is allowed for statistical purpose.
Deduction u/s 80HH and 80-IA - inclusion of Duty Drawback and interest received - HELD THAT:- As decied in own case.[2023 (4) TMI 1288 - ITAT MUMBAI] A.Y 1997-98 issue was decided in favour of the assessee after following the decision in favour of the assessee after following the decision of CIT v/s Meghalaya Steels Ltd [2016 (3) TMI 375 - SUPREME COURT] Following the decision of the co-ordinate bench, we direct the AO to allow deduction u/s 80 IA of the Act in respect duty draw back and interest income.
Deduction u/s 35D in respect of GDR issue expenses is to be allowed.
Depreciation in respect of sale and lease back transaction allowed as relying on the basis on own case in which held that the disallowance of depreciation made by the AO has already been reversed. The ld D.R has raised a new contention that the Explanation 4A should be applied to this lease transaction, which is not the case of the AO. Accordingly, we do not find it necessary to consider the new contention raised by Ld D.R. Accordingly, following the decision rendered by the co- ordinate benches in the assessee's own case, we confirm the order passed by Ld CIT(A) on this issue.
Nature of expenses - Allowing deduction in respect of expenditure incurred on dies and mould - revenue or capital expenditure - HELD THAT:- As decided in own case A.Y. 1998-99 . [2023 (8) TMI 1422 - ITAT MUMBAI] the expenditure incurred in purchase of dies and moulds are allowable as revenue expenditure.
Nature of receipt - Allowing penalty charges recovered from suppliers of capital goods as capital receipts and therefore not chargeable to tax - HELD THAT:- As decided in own case [2023 (8) TMI 1422 - ITAT MUMBAI] A.Y. 1998-99 held that the penalty charges received from machinery suppliers is capital in nature. In this regard, the Tribunal has followed the decision rendered in AY 1993-94, wherein it was decided in favour of the assessee following the decision rendered by Hon'ble Andhra Pradesh High Court in the case of Barium and Chemicals Ltd [1987 (2) TMI 18 - ANDHRA PRADESH HIGH COURT]
Deduction of expenditure incurred in respect of jigs and fixtures as revenue expenditure allowed.
Allowing corresponding adjustment in the opening stock under section 145A - HELD THAT:- During the course of appellate proceedings before us the ld. Counsel has also referred the decision of Hon’ble Bombay High Court in the case of CIT Vs. Mahalaxmi Glass Works (P) Ltd. [2009 (4) TMI 182 - BOMBAY HIGH COURT] After considering the judicial pronouncements referred by the ld. Counsel and the judicial pronouncements relied upon by the ld. CIT(A) in his finding we don’t find any reason to interfere in the decision of ld. CIT(A) holding that while making addition of unused modvat credit corresponding adjustment in the opening stock should also be made. Therefore, this ground of appeal of the revenue is dismissed.
Foreign travel expenses of wife of MD - allowable revenue expenditure or not? - HELD THAT:- We find that identical issue on similar fact has been adjudicated by the ITAT Mumbai, in the case of the assessee itself against the assessee for assessment year 1998-99 [2023 (8) TMI 1422 - ITAT MUMBAI] assessee has also not proved existence of any commercial or business expediency in incurring the foreign travel expenses of wife of M D except producing copy of Board resolution, in which also, no reason was given. There should not be any doubt that this is a factual aspect and the facts prevailing in each foreign trip has to be examined. We notice that the Ld CIT(A) has also not brought out the business or commercial expediency in incurring expenses on foreign trips of wife of M D, but deleted the addition on the basis of quantum of expenditure, status of the M D and approval by Board. These are not the proper reasons for allowing this type of expenditure - Decided against assessee.
Disallowance of proportionate interest expense attributable to earning exempt income - CIT(A) has deleted the addition - HELD THAT:- Since, the assessee was having more interest free funds then the amount of investment made on which the exempt income was earned, therefore, no addition need to be confirmed - Decided against revenue.
Allowing deduction for Prior period of expenses - HELD THAT:- We have perused the decision of ITAT or assessment year 1998-99 [2023 (8) TMI 1422 - ITAT MUMBAI] wherein the claim of such expenses pertaining to assessment year 1997-98 were allowed during the assessment year 1998-99 on the ground that same were crystallized during the assessment year 1998-99. Following the decision of ITAT and considering the fact that impugned expenses were crystallised during the year under consideration we don’t find any infirmity in the decision of ld. CIT(A) on this issue, therefore, this ground of appeal of the revenue is dismissed.
Reduction 90% of items from the profit of the business while computing the deduction u/s 80HHC - HELD THAT:- CIT(A) has correctly excluded the aforesaid items [Technical know-how, Insurance claims, Miscellaneous receipts, Sundry Credit Balance, Bill Discounting and Provision no longer required] while computing the profit of the business holding that these items have direct nexus with the business activity of the assessee and are not specifically mentioned in explanation (baa), after following his order for assessment year 1998-99.
Penalty u/s 271(1)(c) - difference between the returned income and the assessed income on account of issue pertaining to reduction of deduction u/s 80HHC - HELD THAT:- As we find that assessee has claimed deduction u/s 80HHC of the Act on the basis of the separate audit report furnished u/s 80HHC(4) of the Act and certified by the auditor as per the tax audit report. CIT(A) has deleted the penalty on the reason that merely that the AO included or excluded certain items within the term indirect cost that should not be a basis for levying penalty u/s 271(1)(c) for concealing particulars of income or furnishing inaccurate of income thereof. As decided in the case of CIT Vs. Reliance Petro Products Ltd. [2010 (3) TMI 80 - SUPREME COURT] held that a mere making a claim which is not sustainable in law by itself will not amount to furnishing of inaccurate particulars in respect of income of the assesse. Considering the above facts and findings we find no infirmity in the decision of ld. CIT(A) in deleting the impugned penalty therefore this ground of appeal of the revenue is dismissed.
Penalty for claiming deduction u/s 80-O - HELD THAT:- We find that in support of its claim of deduction u/s 80-O the assessee has furnished form no. 10HA certified by the tax auditor in the tax audit report. It was also pointed out that in the earlier assessment year i.e 1997-98 the similar claim of deduction has been granted to the assessee in respect of royalty received. In view of the above fact we consider that assessing officer has not brought any material to substantiate that assessee has concealed the particulars of income or furnished inaccurate particulars of income. As considering the similar facts and finding as given above for deleting the penalty levied of claim of deduction u/s 80HHC we don’t find any merit in this appeal of the revenue, therefore, this ground of appeal of the revenue is dismissed.
Exclusion of deduction u/s 80-IB for the purpose of computing deduction u/s 80HHC with respect to profit on traded goods - AO has reduced an amount on the ground that for similar amount deduction has been claimed u/s 80-IB of the Act, therefore, the same lead to double deduction - HELD THAT:- During the course of appellate proceedings before us the ld. Counsel referred the decision of Hon’ble jurisdictional Bombay High Court in the case of Associated Capsules (P) Ltd. Vs. DCIT, Mumbai [2011 (1) TMI 787 - BOMBAY HIGH COURT] wherein it is held that after allowing of deduction computed under various provisions under heading C of chapter VI-A do not exceed 100% of profit of business of the assessee then deduction computed under other provisions under heading C of chapter VI-A has to be restricted the profit of business that remain after excluding profit allowed as deduction u/s 80IA, so that total deduction allowed under heading C of chapter VI-A does not exceed profit of business. In view of the above facts and finding we restore this issue to the file of the assessing officer for deciding afresh.
Deduction u/s 80IA in respect of duty drawback and interest income allowed.
TDS u/s 195 - Allowance of deduction u/s 40(a)(i) in respect of expenditure incurred in foreign currency - HELD THAT:- After perusal of the nature of expenditure and finding of the ld. CIT(A) given that the assessee has made payment for the various expenses as referred above to the non-residents who were having no business connection in India, therefore, no tax was deducted for such payments. During the course of appellate proceedings before us revenue has not brought any material contrary to the finding given by the ld. CIT(A), therefore, we don’t find any merit in this ground of appeal of the revenue and the same stand dismissed.
Interest u/s 234B - HELD THAT:- During the course of appellate proceedings before us the assessee submitted that it has paid the total advance tax of Rs. 204,00,00,000/- whereas assessed tax comes to Rs. 195,36,36,406/- and 90% of the assessed tax comes to Rs. 175,82,72,765/-, therefore, there was no shortfall in payment of advance tax. During the course of appellate proceedings before us revenue has not brought any material contrary to the submission and finding of the ld. CIT(A) therefore, this ground of appeal of the revenue also stand dismissed.
TDS u/s 195 - Validity of the orders passed u/s 201(1)/201(1A) - TDS default on the payments made to the parent company and other overseas AEs - PE in India - AO held that the payments made by the assessee towards purchase of raw-materials, finished goods, capital goods to LG Korea and other non-resident associated companies, are taxable in India, as, all those entities have PE in India, Therefore, the assessee was liable to deduct tax at source under section 195 - HELD THAT:- The basis of attribution of profit to the payee, LG Korea is purely notional as it is the specific case of the assessee that it has not paid any salary cost of expatriate employees to LG Korea. It is the case of the assessee that on the salary cost paid to the expatriate employees, the assessee has deducted tax at source under section 192 of the Act. The aforesaid claim of the assessee remains uncontroverted.
Thus, when the assessee has not made any direct payment to the LG Korea towards the salary cost of expatriate employees, in our view, there was no liability on the assessee to deduct tax on such notional payment. Moreso, when the assessee has already deducted tax under section 192 of the Act in respect of salary cost of expatriate employees. Thus, when the basis of attribution of profit to the PE is a notional income, that too, based on a methodology adopted by DRP in case of payee, the assessee cannot be expected to perform an impossible act of computing TDS on a notional payment, a part of which, is to be attributed towards profit of PE of LG Korea.
As decided in Samsung India Electronics Pvt. Ltd. [2014 (4) TMI 976 - DELHI HIGH COURT] payments made by the petitioner to SEC for the goods are not tax deductible under section 195(2) and hence they were rightly allowed as deduction in the original assessment of the petitioner and (ii) the assessee cannot be treated as one in default under section 201(1) and no interest can be charged under section 201(1A) as no income arose on account of sales in India since the petitioner cannot be held to be its PE in India.
Thus we hold that, there being no obligation of the assessee to withhold tax under section 195 of the Act, the assessee cannot be treated as an assessee in default under section 201 of the Act. Therefore, we direct the Assessing Officer to delete the demands raised under section 201(1)/201(1A) of the Act for the impugned assessment years. Decided in favour of assessee.
Credit for TDS deducted on the mobilization advance extended to the assessee - grant of credit denied by AOand case was selected for scrutiny and the AO accepted the income returned by the assessee in the revised return - Assessee submitted that the mobilization advance is received from Ministry of Surface Transport as advance is in the nature of loan and therefore, is a capital receipt on which tax is deducted at source on which tax has been deduced u/s 194C - HELD THAT:- From the perusal of the above terms of the contract agreement, it is clear that the mobilization advance is in the nature of loan which bears interest @ 10% p.a. and the interest along with the advance payment should be recovered from the assessee. It is also noticed that the said advance is extended to the assessee against the bank guarantee given @ 110% of the amount of advance given. Therefore, we see merit in the contention that the amount received by the assessee is a capital receipt and does not bear the element of income i.e. to be offered to tax with regard to the claim of the assessee that the credit for TDS should be given to the assessee.
As per table submitted by the ld AR that the mobilisation advance is recovered against the billed revenue in the subsequent years. We further notice that the assessee has offered income on gross basis and that the TDS is deducted on the net amount paid which would mean that the advance amount is not treated as revenue that goes to reduce the billed revenue. Therefore in our consider view the CIT(A)'s contention that the amount adjusted goes to reduced the income of the assessee and accordingly is in nature of income is not correct.
This fact is identical to the facts in Patel Engineering [2015 (11) TMI 1665 - ITAT MUMBAI] where the coordinate bench has directed the AO to allow credit for the TDS deducted on the advance. Thua assessee should be allowed credit for the TDS claimed which is deducted from the mobilization advance. Appeal of assessee allowed.
Deduction u/s 35(2AB) - approval by DSIR not taken - HELD THAT:- As per this section 35(2AB) , deduction is allowable if the assessee satisfied condition as stated in the aforementioned provision. The expenditure which is allowable on scientific research qua in-house, R&D facility is approved by the prescribed authority. If the assessee fulfils the conditions as laid in section 35(2AB) of the Act, in that event, deduction of one and half times of such expenditure would be allowable.
However, it is brought to our notice that the related issue to the disallowance of impugned expenditure is otherwise, under challenge before the Hon’ble High Court of Delhi which is pending adjudication and now fixed for hearing on 06.02.2024. The subject matter pending before Hon’ble High Court is also regarding exclusion of R&D Centre at Gurgaon. It is observed that substantial disallowance is related to Gurgaon Centre.
Since the related issue of approval by DSIR, is pending adjudication before the Hon’ble High Court, therefore, for maintaining judicial discipline, we are not expressing our view on the merit of issue, same is kept opened. The AO is hereby directed to re-compute the disallowance after the decision of Hon’ble High Court. Hence, this issue is restored to the AO. Accordingly, Ground No.3 raised by the assessee is allowed for statistical purposes.
Disallowance of depreciation on goodwill under normal provisions - HELD THAT:- As per in assessee’s own case in [2023 (2) TMI 1113 - ITAT DELHI] taking the consistent view, hereby direct the AO to delete the impugned addition and allow the depreciation on goodwill as claimed by the assessee.
Non- allowance of claim of additional depreciation @ 10% made during assessment proceedings - AO did not discuss this claim and Ld.CIT(A) also did not entertain the claim - HELD THAT:- Tribunal was pleased to remit the matter back to the AO in the assessee’s own case for AY 2014-15 [2021 (12) TMI 1428 - ITAT DELHI]as held no distinguishing features in the facts of the case in the year under consideration and that of the earlier years has been pointed out by Revenue. Revenue has also not placed any material on record to demonstrate that the ITAT orders in assessee's own case for earlier years has been stayed/ set aside/ overruled by higher judicial forum. We therefore, following the reasoning of the Co-ordinate Bench for A.Y. 2010-11 and for similar reasons set aside the issue back to the file of AO to consider the same on merits after considering the submissions made by assessee and in accordance with law. The AO shall be free to call for such information and explanations as he deems fit to adjudicate the claim of the assessee.
Addition u/s 69A - cash balance on account of withdrawal from different bank accounts - lower authorities to disbelieve the theory of cash flow as to why the cash remained in hand for long period - Assessee submits source of cash withdrawal is mainly from the loan availed by assessee and once AO accepted that assessee has made withdrawal from his bank accounts and has not brought any evidence that withdrawal of amount was invested elsewhere or incurred on any expense, the cash balance available with the assessee was to be believed - HELD THAT:- From the documents filed before the lower authorities as well as before me the assessee has also proved the cash withdrawal, even such fact is accepted by assessing officer.
The only reason for making addition is as to why such cash was kept by the assessee for a longer period. DR also opposed the submissions of the assessee that despite having bank account, as to why the assessee kept such huge cash in hand.
As assessee argued that there is no limit or restriction of keeping the cash at home, we find merit in his submissions that there is no such restriction in law - cash in hand shown by the assessee is duly explained and recorded in his cash book and source of which is known, which is clearly seen form the withdrawal from the bank on various dates.
AO has not brought any adverse material or evidence on record that the cash in hand was beyond the withdrawal from bank - once the assessee explained the source of cash in hand, the assessing officer was not justified in doubting the availability of such cash in hand for the sole ground of long period of holding, without brining rebutting such contention. Decided in favour of assessee.
Deduction u/s 80IA - main claim of the assessee is that it has started claiming deduction u/s 80IA of the Act from AY 2005-06 onwards. Hence it is eligible for 100% deduction for AYs 2005-06 to 2009-10 and 30% deduction thereafter - AO had rejected the claim for deduction u/s 80IA of the Act on other miscellaneous income - HELD THAT:- We notice that both the issues are covered by the decision rendered by co-ordinate bench in assessee’s own case in AY 2008-09 [2023 (5) TMI 576 - ITAT MUMBAI] held that the assessee started telecommunication services after 01/04/1995 and hence, the assessee is eligible to claim deduction u/s 80IA(4) of the Act.
Deduction in respect of interest income, miscellaneous income, cell site sharing revenue and net foreign exchange gain - As for assessment year 2005-06 [2022 (12) TMI 28 - ITAT MUMBAI], the Tribunal has accepted assessee’s claim of deduction u/s 80IA of the Act on other incomes, viz., interest income and miscellaneous income.
Disallowance of depreciation claimed on “Asset restoration cost” obligation - HELD THAT:- In the earlier years, this issue has been restored back to the file of AO by the Tribunal for examining the assessee’s method of determining provision, since it was not examined by the AO. Following the order so passed by co-ordinate bench in the earlier years, we restore this issue to the file of AO with similar directions.
Disallowance made u/s 14A - AR submitted that the assessee did not earn any exempt income during this year and also in earlier years - HELD THAT:- Since the assessee did not earn any exempt income, the question of making disallowance u/s 14A of the Act will not arise as per the decision rendered by co-ordinate benches in the earlier years. The decision of Tribunal also gets support from the decision rendered in the case of IL & FS Energy Development Company Ltd [2017 (8) TMI 732 - DELHI HIGH COURT] Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete the disallowance made u/s 14A of the Act.
Disallowance of interest relatable to interest free loans given to subsidiaries - HELD THAT:- We notice that an identical disallowance made in AY 2006-07 [2023 (5) TMI 508 - ITAT MUMBAI] has been deleted by the Tribunal as relying on S.A Builders Ltd. case [2006 (12) TMI 82 - SUPREME COURT] as held that once it is established that interest free loans has been advanced to sister concerns on account of commercial expediency, the interest paid on such loans by assessee cannot be disallowed. In so far as the objection of Revenue regarding advancement of loans to a loss making group concern, we hold that it is the assessee who has the exclusive right to take a call regarding advancing of loans to the group concern, the Assessing Officer cannot sit in the arm chair of the assessee and decide to whom loan is to be extended or at what rate of interest loan is to be extended. Once the assessee has been able to establish commercial expediency for extending the loan, which in our considered view the assessee has been successful in the present case, the interest expenditure cannot be disallowed. Thus we set aside the order passed by Ld CIT(A) and direct the AO to delete this disallowance.
Disallowance of interest on Capital Work in Progress - A disallowed a part of interest expenditure relatable to Capital work in progress on the reasoning that the proviso to sec.36(1)(iii) requires disallowance of interest expenses incurred on borrowed capital used to acquire fixed assets - HELD THAT:- We notice that an identical disallowance was made in AY 2006-07 and 2007-08 [2023 (5) TMI 508 - ITAT MUMBAI] respectively) and the said disallowance was deleted as recognized the fact that the new assets have only improved the quality of service and there is no expansion of area of operation. Accordingly, it has accepted the contentions of the assessee that the proviso to sec.36(1)(iii) will not apply to the facts of the present case. It was submitted that there is no change in facts in the current year. We also notice that the above said decision was followed in the assessee’s own case in AY 2008-09 also. Accordingly, following the decision rendered in the earlier years, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete this disallowance.
Disallowance of expenses incurred in connection with raising loans - HELD THAT:- We notice that an identical expenses incurred on raising loans were disallowed in AY 2006-07 and 2007- 08 and the co-ordinate bench has deleted the disallowance by following the decision rendered by Hon’ble Supreme Court in the case of India Cements Ltd [1965 (12) TMI 22 - SUPREME COURT] - Thus we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete this disallowance.
Disallowance of roaming charges u/s 40(a)(ia) of the Act for non-deduction of tax at source - HELD THAT:- As decided in own case [2022 (10) TMI 826 - ITAT MUMBAI] in AY 2008-09 held that the payment of roaming charges does not fall under the ambit of TDS provision either u/s. 194C or 194J of the Act, hence, addition made u/s. 40(a)(ia) of the Act was deleted.
Disallowance of discount extended on pre-paid cards/recharge vouchers u/s 40(a)(ia) for non-deduction of tax at source - HELD THAT:- As brought to our notice that an identical issue was examined by the co-ordinate bench [2023 (2) TMI 1250 - ITAT MUMBAI] relating to AY 2009-10 in the case of M/s Vodafone Idea Ltd (As successor to Spice Communications Ltd) and the Tribunal has held that the TDS is not deductible from the discount paid on prepaid cards.
Thus we hold that the assessee is not liable to deduct tax at source from the discount paid on prepaid sim card/recharge vouchers. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete the disallowance made u/s 40(a)(ia).
TP adjustment on the payment made for technology support services - A.R submitted that the AO took the view that the assessee did not furnish any evidence to justify that the services have been rendered and also did not furnish the details of allocation keys - whether the TPO can determine the ALP of international transactions as NIL? - HELD THAT:- As decided in M/S. CUSHMAN AND WAKEFIELD (INDIA) PVT. LTD. [2014 (5) TMI 897 - DELHI HIGH COURT] TPO is required to determine the ALP of international transactions under any of the methods prescribed under the Income tax Rules, i.e., the TPO is not correct in determining the ALP at Nil without establishing that a third party would not have paid any money under similar circumstances. The TPO is not empowered to disallow the expenses.
Admittedly, in the instant case, the TPO did not examine the ALP of the impugned international transactions under any one of the methods prescribed under the Income tax Rules. Hence, he was not justified in determining the ALP of the impugned international transactions as NIL. We notice that the Ld DRP confirmed the same without proper reasoning. We notice that the Hon’ble Delhi High Court in the above said case has restored the matter of determination of ALP of transactions to the file of AO/TPO.
Accordingly, we set aside the order passed by Ld CIT(A) with regard to the determination of ALP of technology support charges to the file of AO/TPO with the direction to determine the ALP of both the transactions under any one of the methods prescribed under the Rules. The assessee is also directed to furnish all the information and explanations in support of the claim that the payments are at arms length.
TP adjustment - reimbursement of salary and related costs on deputation of personnel to India - HELD THAT:- We notice that an identical issue was examined by the co-ordinate bench in the assessee’s own case in 2008-09 [2023 (5) TMI 576 - ITAT MUMBAI] and the matter was restored to the file of AO/TPO as held once it has been accepted that the five employees were seconded to India by overseas AEs, the relocation of those employees to India is a consequential step. There would be cost attached to relocation of such employees. The said cost has either to be borne by the AE or the assessee. This fact can be determined from the terms and conditions of secondment of employees. In case relocation costs/travel costs are borne by the assessee, the same deserves to be allowed if they are reimbursed on cost to cost or are paid directly to the seconded employees. Taking into consideration entire facts, we deem it appropriate to restore this issue back to the file of Assessing officer for re-examination. The assessee is directed to furnish relevant documents to substantiate that the costs disallowed by the DRP were in fact cost paid by the assessee towards relocation/travel of the seconded employees.
Seeking a direction to the respondent to permit cross-examination of witnesses - HELD THAT:- The petition is disposed of enlarging the time for the petitioner to file final written submissions, as directed by order of the adjudicating authority dated 11.01.2024. Reply, if any, be filed within two weeks from today i.e. on or before 02.02.2024. Thereafter, the adjudicating authority shall fix a date of personal hearing not before one week of 02.02.2024.
Violation of principles of natural justice -SCN different from impugned order - Re-classification of imported goods - micronutrient fertilizers - to be classified under CTH 3105 or under CTH 2921 - HELD THAT:- In the impugned orders, the first appellate authority has relied on an order of this Bench of the Tribunal in the case of CIBA INDIA LTD. VERSUS COMMISSIONER OF CUSTOMS, CHENNAI [2008 (12) TMI 475 - CESTAT, CHENNAI] and the above order is almost identical to the facts of the present case.
In the order of the Ahmedabad Bench i.e., M/S MEGHMANI ORGANICS LTD VERSUS C.C.E. -AHMEDABAD-II [2019 (9) TMI 278 - CESTAT AHMEDABAD] relied upon by the Ld. Assistant Commissioner, the Ld. Bench has distinguished the order in M/s. CIBA India Ltd., but however, it is found that at the threshold that the re-classification attempted by the original authority deserves to be set aside since what was proposed in the Show Cause Notice was under a different CTH, but what was confirmed in the Order-in-Original is under a totally different CTH. This approach of the original authority is not proper and correct since, very clearly, the principles of natural justice have been violated.
The first appellate authority has correctly set aside the orders of the original authority impugned therein, which do not call for any interference - Appeal dismissed.
Concessional rate of Customs Duty - benefit of N/N. 46/2011-CUS dated 01.06.2011 read with N/N. 53/2011 - CUS dated 01.07.2011 - Import of Natural Cocoa Powder (CTH - 18050000) from Malaysia - Certificates of Origin - Onus to prove (shifting burden) - whole case has been made on assumption and presumptions without any evidence against the appellant that their imported Cocoa Powder did not fulfill the condition of 35% RVC - HELD THAT:- The certificate of origin in the present instance was issued by the designated authority i.e ‘Ministry of International Trade and Industry (MITI) Malaysia’ which is competent authority to issue such certificate under ASEAN FTA (AIFTA) mentioning the Regional Value content (RVC) to be much higher than stipulated 35% i.e. 47%. The Free Trade Agreement stands incorporated in the Customs Tariff vide Notification No. 46/2011-Cust., dated 01.06.2011 available to impugned product i.e. Natural Cocoa Power originating from Malaysia. The differential duty of Rs. 6,44,233/- was demanded by the department, denying benefit on the ground that in another investigation taken up by DRI in respect of certificate of origin pertaining to another party in the year 2014, Cocoa Beans were suspected to be derived from Ghana and not Malaysia by that importer.
The company did not provide cost data due to data privacy and since the Board was of the opinion that under AIFTA cost data cannot be denied, therefore, in the present case in the Year-2018, since impugned goods have been supplied by M/s. Guan Chong Cocoa as manufacturer, the proceedings for denial of exemption despite claim of 47% value addition have been initiated even without attempting to verify the documentary evidence by way of the Certificate of Origin by the designated authority issued under the agreement. It is found that this is nothing but attempt to make case on the basis of assumptions and presumptions even without as much as verification having been attempted to be made by the authorities. The same is therefore, not maintainable.
Department has been provided a documentary evidence by way of a stipulated certificate from the designated authority under the agreement. On production of such agreement which is in the nature of the documentary evidence, the onus to prove fakeness of its content or otherwise clearly shifts on the department. Unlike, the course of action adopted in respect of other importers who made imports in the Year-2014, the department has not even attempted to do verification with Government of Malaysia and has proceeded in the instant case, on the basis of following assumptions and presumptions without rebuttal of the documentary evidence procured and produced by the appellant.
In the present case in the face of certificate of origin having been produced and no verification process having been conducted before issuance of show cause notice, the demand of duty cannot be sustained - in absence of burden having been discharged or even having been attempted till such belated stage, the show cause notice cannot be sustained.
The appeal is allowed with consequential relief as far as duty, penalty and interest are concerned.
Valuation of the goods for export - As per the appellant, its total value is Rs.2,51,40,678/- whereas as per the Revenue, the value comes to Rs.1,07,39,500/- - rejection of declared value - Confiscation under Section 113 (ja) of the Customs Act, 1962 - redemption fine - penalties - HELD THAT:- The impugned order passed by the learned Commissioner has mechanically confirmed the lower adjudicating authority’s order by simply placing reliance on the statement of the Manager of the firm and the statement dated 30.09.2022 of the appellant. The lower appellate authority did not take into consideration the following facts and the legal grounds while passing the impugned order.
It is found that the decision of the Tribunal in the case of R. Kishan & Co. [2015 (11) TMI 1456 - CESTAT MUMBAI] is on identical facts wherein also there was allegation of overvaluation and claiming undue benefits by the assessee.
The entire investigation was flawed and faulty and therefore the appellant is also not liable for demurrage and the lower authority is directed to issue the demurrage waiver certificate to the appellant as contemplated under Regulation 6 (1) (L) of the Handling of Cargo in Customs Areas Regulations, 2009.
Confiscation of seized logs - imposition of penalties - Smuggling - Red Sander Wood Logs - prohibited goods or not - reliance placed on confessional statements of the appellant -HELD THAT:- It is on record that appellant has disputed that the statements which the DRI officers used against him were obtained by practicing duress, torture and by way beaten up. When an objection is made that a statements is obtained unfairly, it is for the Adjudicating authority to first decide whether the statement was voluntary and this principle of law is quiet settled and well known now. Further Ld. Adjudicating authority totally ignored the retraction of the statement by the appellant through affidavit and denied their involvement in the offence which was totally overlooked by the Ld. Commissioner in impugned order.
Further, it is found that no cross-examination of certain witnesses viz. Shri Rajesh Subramaniam and Shri Anwar Khan and the officers of the DRI asked for was extended to the appellant. Learned Adjudicating authority cannot brush aside the request for cross-examination of the relied upon witnesses/investigating officers. If for any reason the cross-examination of the witness cannot be extended then the adjudicating authority has to intimate the appellant about such rejection by a separate letter as is now settled legal position. It is well settled that a person cannot be penalized merely on the basis of a circumstantial evidence and assumption and presumption and ignoring the provisions of law.
From the records of the cross-examination of Shri Mahendra Jain, Proprietor of M/s Nidhi Marble, Udaipur, Shri Naresh Bolya, Managing Director of M/s Parth Natural Stones Pvt. Ltd., Udaipur, Shri Sunil Kumar Agrawal, Manager Accounts of M/s Madhusudan Marbles Pvt. Ltd., Udaipur and Shri Mukesh Kabra, Director of M/s Madhusudan Marbles Pvt. Ltd., Udaipur, it is found that the appellant had absolutely no role to play in the alleged smuggling of red sander logs - there is no evidence to show that the appellant had actually assisted in loading red sanders or tampering the container or they were even aware that red sanders had been filled into the container somewhere on the way. Under these circumstances, in this case, apparently penalty has been imposed on the appellant on the ground that he has abetted in stuffing and attempted export of red sanders in the container - thus, penalties imposed on the appellant are not sustainable and the same is set aside.
Absolute confiscation of the cash - HELD THAT:- In the case on hand, there is absolutely no evidence to show that the said sum was relating to the sale proceeds of smuggled goods, which were sold by the appellant, who was having knowledge or reason to believe that the goods are smuggled goods. On going through the observations made by the learned Adjudicating Authority, we are in disagreement with that as in the present case the Adjudicating Authority and revenue has failed to prove that the cash recovered is the sale proceeds of past consignment of smuggled goods. It is observed that appellant produce the records before the adjudicating authority to justify that the cash recovered from the residential premises. Appellant produced the banks statements evidencing withdrawal of cash from his bank accounts. Appellant produced the Bank statements. If the evidence produced by the appellant were not acceptable then the same could have been countered on the basis of some positive evidence and cannot be brushed aside on presumption.
The impugned order qua absolute confiscation of cash seized is contrary to law which shows that the Adjudicating Authority has not applied its mind for absolute confiscation of currency seized during the course of investigation. Therefore, it is held that the seized currency during the course of investigation cannot be confiscated without proving that the said seized currency is the sale proceeds of smuggled goods. Therefore, it is held that absolute confiscation of the seized currency of Rs. 7,50,000/- is not sustainable accordingly, the confiscation is set aside and the Adjudicating Authority is directed to release the said amount to the appellant.
Writ petitions impugning the Revocation Order within the territorial jurisdiction of Delhi High Court - Violation of SEBI’s Minimum Public Shareholding Norms (‘MPS Norms’) and disclosure requirements - SCN provided an option for settlement mechanism under the SEBI (Settlement Proceedings) Regulation, 2018 - SEBI passed a common Settlement Order as stated that certain monetary and non-monetary terms were imposed on the Appellants in the Settlement Order, and steps have been taken by the Appellants to implement the said Settlement Order - Settlement Order stood revoked and withdrawn by SEBI in terms of Regulation 28 of the Regulations of 2018 on the ground of alleged failure of the Appellants to comply with the terms of the Settlement Order.
HELD THAT:- The conclusion that the cause of the action of the Appellants to challenge the legality of the Impugned Revocation Order issued by SEBI at Mumbai has no nexus with the receipt of the said order at Delhi; as this is not the material or integral fact to the said cause of action. The Impugned Revocation Order was admittedly received by the Appellants in multiple jurisdictions and this fact if held to be determinative would enable Appellants to pick and choose jurisdictions which is the mischief that the Full Bench of Kerala High Court has opined should not be permitted and we agree with the same. Therefore, the receipt of the Impugned Revocation Order at Delhi cannot alone be held determinative of the jurisdiction of this Court.
Effect of the Impugned Revocation Order felt at Mumbai - grievance of the Appellants in the writ petitions is that the issuance of the Impugned Revocation Order of SEBI has resulted in re-initiation of the proceedings and hearing at Mumbai pursuant to the SCN dated 28.10.2020; thereby exposing the Appellants to regulatory proceedings - It is the facts pleaded in the grounds, which constitute the material and integral facts, which the Appellants will have to prove, if traversed by SEBI, to seek a judgment of the Court. The challenge to the Impugned Revocation Order has been raised on the grounds of inter-alia non-adherence to the principles of natural justice by SEBI. It has been pleaded that the SEBI failed to provide the Appellants an opportunity of hearing prior to revocation and the order is unreasoned. It is further pleaded that the impugned order is contrary to the extant law. It is the facts pleaded in these grounds which would constitute the cause of action in favour of the Appellants herein. A bare perusal of the grounds would show that each one of them allege acts and omissions by SEBI at Mumbai. Therefore, in our considered opinion as per the grounds set out in the writ petition the cause of action for challenging the impugned order against SEBI has arisen at Mumbai.
In the facts pleaded by the Appellants for invoking the writ jurisdiction of the Courts at Delhi, undoubtedly, it cannot be said that the High Court of Delhi had no territorial jurisdiction for admittedly, the Appellants reside within the jurisdiction of this Court. However, none of the facts pleaded by the Appellants for invoking the jurisdiction of this Court are integral and material fact for challenging the Impugned Revocation Order. The said facts are not sufficient for compelling this Court to hear the matter on merits. For the same reason, the contention of the situs of shares of BNL is not an integral fact.
Forum Conveniens at Mumbai - In the facts of this case, admittedly the High Court of Judicature at Bombay has the jurisdiction as the decision of SEBI to revoke the Settlement Order took place at Mumbai and all events prior thereto with respect to issuing the SCN and passing of the Settlement Order also occurred at Mumbai.
The High Court while exercising its jurisdiction under Article 226 of the Constitution of India to entertain a writ petition, in addition to examining its territorial jurisdiction also examines if the said Court is the forum conveniens to the parties. The issue of forum conveniens is seen not only from the perspective of the writ petitioner but it is to be seen from the convenience of all the parties before the Court. In the facts of this case, as is evident from the record that the forum conveniens for the both the parties is Mumbai. The Appellants since the year 2020 have been appearing in Mumbai before SEBI.
This Court is of the view that the learned Single Judge has rightly concluded that applying the principles of forum conveniens, it would not be appropriate to entertain the writ petitions and the Appellants may approach the appropriate High Court.
Summoning of the record of the SEBI would be necessary for examining the rival contentions of the parties in the writ petition.
Demand of service tax - Valuation -TDS deposited to the Income Tax department in relation to the payment made to the Foreign Service Provider - the TDS is over and above the invoice value of service - Extended period of limitation - HELD THAT:- As per the un-disputed fact the appellant have paid the service tax on the total value of the invoice raised by the Foreign Service Provider under reverse charge mechanisms. As per the Income Tax Act, the appellant have discharged the TDS on the invoice value and the same was borne by the appellant. In this position, since the TDS is not a part and partial of gross value of the service, the same cannot be taxed under Finance Act, 1994. As per Section 67, it is clear provision that the only the gross value towards the service paid or payable shall be chargeable to Service Tax. In this case the gross value is the value of invoice on which service tax was discharged.
It can be seen from Section 67 that it contemplates how the valuation of taxable service for charging Service Tax needs to be arrived and sub-section 1(1) provides for valuation wherein consideration paid in money, be the gross amount charged by the service provider. The phrase "gross amount charged also is explained in the said Section. Reading holistically, it is found that Section 67(1) very clear mandates for discharging the Service Tax liability amount which is charged by the service provider is the amount.
It can be seen that in M/S. HINDUSTAN OIL EXPLORATION CO. LTD. VERSUS COMMISSIONER OF GST & CENTRAL EXCISE [2019 (2) TMI 1248 - CESTAT CHENNAI] in the identical facts it was held that the TDS deposited which is over and above the invoice value cannot be charged to service tax.
Accordingly, the demand in the present case is not sustainable, hence the impugned order is set aside - appeal allowed.
Classification of service - service rendered by the appellant during the period 2004-05 to May 2007 to M/s. Manyata Promoters Pvt. Ltd. & M/s. Golf Link Software Park Pvt. Ltd. - Management Consultancy Service or not - invocation of Extended period of limitation - penalty - CENVAT Credit - HELD THAT:- The fees for rendering the service prescribed under Clause 5.2.1 to be paid to the appellant is 5% of the expenditure incurred on the construction and development of the project; also the computation of the construction and development expenses are prescribed at Clause 5.2.3. of the agreement. Analysing the stipulations of the said Agreement dated 31.3.2005, it cannot be said that the arrangement between the appellant and M/s. Manyata Promoters Pvt. Ltd. for execution of the project as a whole; on the contrary, it reveals that appellant has been engaged to advise/assist M/s. Manyata Promoters Pvt. Ltd. in implementation and completion of the project. Therefore, the claim of the appellant that they have been appointed to execute the project has been rightly rejected by the learned Commissioner as the activities/performance stipulated under the Agreement clearly discloses that the services rendered in the management of the project for its completion by engaging suitable contractors, subcontractors, team of professional, obtaining approvals etc.; thus, in the nature of advice, consultancy or technical assistance. No contrary evidence has been placed by the Appellant to rebut the said finding of the Commissioner.
In the present case, commencing from identification of the contractors, sub-contractors, professional team, day-to-day management of cash flow, completion of the project in accordance with plan, etc., with active participation and advice of the appellant from time-to-time rendered to M/s. Manyata Promoters Pvt. Ltd., fall within the scope of advice, consultancy or technical assistance - The claim of the Appellant that it becomes taxable only with effect from 01.06.2007 under the ‘Management or Business Consultancy Service’ is not sustainable.
Extended period of limitation - Penalty - HELD THAT:- The explanation furnished by the appellant to justify non-payment of service tax is not convincing and hence not acceptable. On the contrary, analysing the statements the learned Commissioner at para 44-45 of the impugned order held that there is mis-declaration and suppression of facts. In these circumstances, invocation of extended period of limitation is sustainable. Consequently, the penalty imposed on the appellant under Section 77 and 78 of the Finance Act, 1994 are also justified. However, penalty imposed under Section 76 along with Section 78 cannot be sustained.
CENVAT credit of the service tax paid on various input services while rendering the taxable service - HELD THAT:- The appellants are eligible to avail CENVAT Credit of service tax paid on input services subject to production of necessary documents which would be scrutinised and CENVAT credit, if any, admissible be allowed. Similarly, the learned Commissioner also though accepted in principle that benefit of cum-tax value can be extended to the Appellant but did not consider the same, as necessary evidence has not been placed indicating the value charged has been inclusive of tax.
Thus the impugned order is modified and the issue of classification of service under Management Consultancy service and confirmation of the demand of service tax with interest for the period in question and penalty under Section 77 and 78 of the Finance Act, 1994 is upheld; penalty imposed under Section 76 is set aside; cum-tax value and CENVAT credit be allowed subject to scrutiny of the documents - The matter is reamended accordingly to recompute the liability.
Input Tax Credit - Eligibility for Service Tax credit - commission paid to its directors, as per the company’s board resolution - case of the Revenue is that the commission paid to directors is nothing but a commission paid to commission agent, hence the credit is not available to the appellant - HELD THAT:- From Circular No. 115/9/2009-ST dated 31.07.2009, it was categorically clarified that even if any amount paid to the director as a commission, the said amount paid by a company to their directors is not commission within the scope of ‘Business Auxiliary Services’. With this clarification also, it is clear that payment made to directors even under the nomenclature of commission, the same is not the commission classifiable under ‘Business Auxiliary Services’. Therefore, in our view the said commission is part of remuneration paid to the directors, hence not a sales commission. Accordingly, the same is eligible for Cenvat Credit to the appellant.
This issue has been elaborately considered by this Tribunal in the case of M/S. RANE BRAKE LINING LTD. VERSUS COMMISSIONER OF GST & CENTRAL EXCISE [2018 (7) TMI 611 - CESTAT CHENNAI], wherein the Tribunal has held that it is the duty of the director to attend the meetings and therefore the service tax paid on such fees is eligible for credit.
Thus, the appellant is legally entitled for the Cenvat credit in respect of the Service Tax paid on commission paid to the directors - the impugned order is set aside - appeal allowed.
Eligibility for Abatement of duty - Notified Goods - Compounded levy scheme - Rule 10 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 - HELD THAT:- From Rule 10, it is clear that abatement is available to appellant on following condition laid therein. As per conditions appellant has to intimate jurisdictional officer in advance regarding sealing and de-sealing of machines.
In the present case, there is no dispute that intimation was given well in advance and Jurisdiction Range Superintendent has de-sealed and re-sealed machine, which was operated only during the period 01-11-2012 to 15-11-2012. From the Rule 10 IBID, we do not find any provision for payment of duty for the whole month and then claim refund on account of abatement of duty. There is no dispute even by department that appellant is not liable to pay duty during period, when machine is not operated. The revenue has demanded duty for days for which the machine was not in operation - In the present case, appellant is eligible for abatement and under no circumstances duty can be demanded for the period of abatement from 16-11-2012 to 30-11-2012, when PPM [Machine] was not in operation and not produced any Notified Goods.
This issue has been considered in various judgments - In the case of THE COMMISSIONER VERSUS M/S THAKKAR TOBACCO PRODUCTS P. LTD. [2015 (11) TMI 319 - GUJARAT HIGH COURT], it was held that Assessee having complied with requirement, entitled to benefit claimed - The Assessee is entitled to abatement of duty, in event of closure of factory for continuous period of 15 days or more, without first depositing duty in terms of Rule 10 ibid. Question of law stand answered in favour of assessee in terms of Rule 10 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty), Rules, 2008.
Penalty u/r 27 of CER - HELD THAT:- Appellant had cleared Notified Goods produced earlier vide Invoice Nos 3571 to 3608, which is a case for imposing penalty under Rule 27 of Central Excise Rules 2002 on Appellant. Such penalty u/r 27 ibid is imposed on Appellant by Adjudicating authority, which is sufficient in the interest of justice in the facts of this case. Hence, the penalty imposed under the Rule 27 of Central Excise Rules, 2002 in O-I-O by original adjudicating authority in this case is upheld.
The Abatement in terms of Rule 10 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty), Rules, 2008 for non-production of notified goods is allowed for November 2012, consequently the duty demand with interest is set aside. However, the penalty imposed under the Rule 27 of Central Excise Rules 2002 is upheld - Appeal allowed in part.
Method of Valuation - section 4 (on the transaction value) or under section 4A (on the RSP minus abatement)? - bulbs sold by the appellant to EESL - what should be reckoned as the RSP- the price at which EESL sold the bulbs to the consumers or the price at which the appellant sold bulbs in the market? - invocation of extended period of limitation.
Are the bulbs sold by the appellant to EESL liable to be charged to excise duty under section 4 (on the transaction value) or under section 4A (on the RSP minus abatement)? - HELD THAT:- If the Metrology Rules are interpreted to include the bulbs sold to EESL, it means that very conditions of the contract of the scheme implemented by the EESL which mandates that the RSP shall not be indicated on the bulbs supplied to it and further, the condition to be printed on the bulb and the packing that it was not meant for retail sale would be violating the requirement of the Metrology Rules which require the RSP to be printed on the goods. Evidently, the purpose of not printing the RSP and further prohibiting their retail sales by printing it on these bulbs is to prevent their diversion and sale in the market. If the retail sale price in the market of a bulb is about Rs. 225/- and it is being supplied by the EESL through its network for about Rs. 75/-, some checks are required to prevent the EESL bulbs from being diverted and sold in the market for profit.
If it is interpreted that the Metrology Rules to cover these bulbs, it would mean that RSP should have been printed on them and the very condition of the contract issued by EESL is illegal. At any rate, it is not in dispute that these bulbs were not sold in the market and were only distributed through EESL (though after collecting some price). If that be the case, to say that the RSP should have been printed is incongruous. How can a retail price be printed on the goods whose retail sale is banned?. It is therefore found that LED bulbs sold by the appellant to EESL were not covered by Metrology Rules and hence section 4A of the Act will not apply and self assessment has been correctly done by the appellant on the basis of transaction value as per section 4.
If the bulbs sold to EESL are liable to be charged to excise duty under section 4A, what should be reckoned as the RSP- the price at which EESL sold the bulbs to the consumers or the price at which the appellant sold bulbs in the market? - HELD THAT:- There is no retail sale but only supply of LED bulbs through EESL, there cannot be a retail sale price. Retail sale of these bulbs is explicitly prohibited. Therefore, these bulbs cannot fall under the same category as the bulbs which can be freely sold in the market and hence have a RSP. It is true that EESL was supplying these bulbs to consumers of electricity as per a scheme and was also collecting an amount from them but in our considered view that does not make it RSP as per Metrology Rules or as per section 4A.
Was extended period of limitation correctly invoked in this case? - HELD THAT:- There can be two or more views on the same issue and the assessee will self-assess the duty as per its view and understanding and is not required to foresee what view the officers may take sometime in the future after consulting other departments. The Excise Rules provide not only for self-assessment of duty and filing of returns by the assessee in ER-1, but also scrutiny of the returns by the officers. Duty of excise is charged on excisable goods manufactured or produced in India but the duty becomes payable on removal (Rule 4). The assessee has to self- assess (Rule 6) the duty and pay it by the fifth day of the following month (Rule 8) and file Returns (Rule 12). The officers have to scrutinize the returns and can, for the purpose call for documents and records which the assessee is bound to produce.
The officer scrutinising the returns can call for any documents and records from the assessee which is bound to provide them. Had the officer, who is an expert in taxation, scrutinised the returns as he was mandated to do and called for any records as he was authorised to call for, the fact that the appellant had paid duty for the bulbs supplied to EESL under section 4 and not under section 4A would have come to light and an SCN could have been issued under section 11A within the normal period of limitation.
The issue is found in favour of the appellant and against the Revenue, both on merits and on limitation - appeal allowed.
The Supreme Court of India dismissed the appeal as withdrawn by the appellant, with all contentions left open. No comments or observations were made regarding the second request. Justices Sanjiv Khanna and S.V.N. Bhatti presided over the case.
Maintainability of petition - appealable order before the Tribunal, but the said forum is not available at present - Validity of impugned order of rectification by the WBGST authority - HELD THAT:- Considering the facts and circumstances of the case that alternative remedy is not available to the petitioner at present, this writ petition is being entertained and will be heard on exchange of affidavits by the parties.
Let the respondents file affidavit-in-opposition within four weeks - List this matter for final hearing in the monthly list of February, 2024.
Validity of grant of anticipatory bail by the lower court - fake bills were made for the purchase of the cigarettes - Reversal of ITC - HELD THAT:- In Choodamani Parmeshwaran Iyer [2023 (7) TMI 1008 - SUPREME COURT], the Supreme Court has observed that if any person is summoned under Section 69 of the CGST Act for the purpose of recording his statement, provisions of Section 438 of the CrPC cannot be invoked. In the said case, the accused persons were not appearing before the authorities despite repeated summons being issued to them and had filed an application seeking anticipatory bail. It was in those circumstances that the Supreme Court made the aforesaid observations.
In the present case, it has rightly been contended on behalf of Jitender Kumar that one of the co-accused persons, Manish Goyal, was arrested by the DGGI and therefore, there was a genuine apprehension of arrest.
From the material on record, it appears that Jitender Kumar was not the main player involved in the GST fraud and was acting on instructions from the main accused Chirag Goel and Chaman Goel. It is the case of the DGGI itself that out of the receipt of GST refund of Rs.198 crores by M/s Harsha International Rs.195 crores were transferred to M/s Radiant Traders. Even otherwise, Jitender Kumar has clean antecedents and has been co-operating in investigation and has given his statement under Section 70 of the CGST Act.
Though, this Court is confirming the anticipatory bail granted to Jitender Kumar, he is warned that in the future, if he does not appear pursuant to summons issued by the DGGI, his anticipatory bail would be liable to be cancelled. However, the DGGI shall give a notice of at least 48 hours to appear pursuant to the issuance of summons - Liberty is given to the DGGI to seek cancellation of anticipatory bail in the event Jitender Kumar fails to appear in a timely manner pursuant to summons issued.
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