TMI Tax Updates - e-Newsletter
January 29, 2024

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Service Tax Central Excise CST, VAT & Sales Tax

TMI Short Notes

1. Analyzing the Threshold for Criminal Prosecution in Cases of Non-Compliance with Income Tax Laws

  Income Tax:

2. The Supreme Court's Interpretation of IBC: Balancing Stakeholder Rights and Procedural Efficiency

  IBC:

3. Timeliness and Validity of Charitable Trust Registrations under Section 80G: A Legal Examination

  Income Tax:

4. Navigating the Nuances of Income Tax Reassessment Post-Finance Act 2021: Resetting the Clock in Tax Reassessments

  Income Tax:

5. Interpretation of Reverse Charge Mechanism in Raw Cotton Purchases: The Role of Kacha Arhtia

  GST:

6. The Source Rule in International Taxation: Tax Implications for Non-Resident Service Providers

  Income Tax:

7. Taxation of 'Success Fees' in International Transactions: The Nexus Doctrine: Situs of residence and Situs of source of income

  Income Tax:

8. TDS and International Transactions: Categorization of Payments under the ambit of "royalty" or "fees for included services (FTS)"

  Income Tax:

9. Assessment u/s 153C and Unexplained Investments: A Case Study in Legal Reasoning

  Income Tax:

10. Delhi High Court Elucidates on the Scope of Section 80IA in the Context of Business Expansion: Interpretation of 'Undertaking'

  Income Tax:

11. Penalty Limitations and Reasonable Cause: Navigating the Nuances of Tax Penalties

  Income Tax:

12. Joint Insolvency Applications in Real Estate and Fulfillment of Threshold under IBC: Limitation and Validity of Claims

  IBC:

13. Digital Authentication in Tax Notices and the Interplay of Sections 61 and 74 in GST Law: Exploring Natural Justice and Verification Processes in GST Compliance

  GST:

14. Confirmation of GST demand by adjudicating Show Cause notice u/s 73: Procedural Requirements and Fair Hearing

  GST:

15. Customs Duty of an EOU and the Fate of Obsolete Imports: Destroying Obsolete Goods without Paying Duty

  Customs:

16. Understanding the Bail Denial: Case Analysis of a Money Laundering Offense

  PMLA:

17. When Taxpayers Make Mistakes in Filing GST Returns: Understanding the Legal Aspect of GST Rectification

  GST:

Articles

1. Issuance of notice u/s 143(2) is mandatory and non-compliance of the same will result in nullifying the assessment orders

   By: Vivek Jalan

2. CONSEQUENCES OF NON FILING OF ANNUAL RETURN UNDER COMPANIES ACT, 2013

   By: DR.MARIAPPAN GOVINDARAJAN

3. Jurisdiction to adjudicate all connected SCNs lies with the Commissionerate that issues the SCN with the highest demandTop of Form

   By: Bimal jain

4. RECENT DEVELOPMENTS IN GST

   By: Dr. Sanjiv Agarwal

5. Providing an Opportunity for a Personal Hearing is mandatory before issuing of Order

   By: Bimal jain

News

1. Women’s inclusion in the workforce to benefit India’s journey towards becoming a developed nation: Sh. Piyush Goyal

2. PM GatiShakti spurs project planning and implementation of Ayodhya Bypass Project

Notifications

Central Excise

1. 04/2024 - dated 25-1-2024 - CE

Seeks to amend No. 11/2017-Central Excise, dated the 30th June, 2017 to extend the applicable date for levy of additional duty on unblended diesel from 1st April, 2024 to 1st April, 2025.

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/AFD/ AFD-SEC-2/P/CIR/2024/8 - dated 25-1-2024

Streamlining of Regulatory Reporting by Designated Depository Participants (DDPs) and Custodians

Highlights / Catch Notes

GST

• Timely GST Payment Discharges Tax Liability; Delays Incur Interest u/s 50(1) of the GST Act.

  Case-Laws - HC : Interest liability on delayed payment GST - The court held that the credit to the Government's account occurs not later than the last date for filing monthly returns as per Section 39(7) of the GST Act. Once payment is made through GST PMT-06, it is initially credited to the Government's account, discharging the tax liability to the extent of the deposit made. For accounting purposes, it is then deemed to be credited to the Electronic Cash Ledger (ECL). The court clarified that as long as the GST collected is credited to the Government's account by the filing deadline, the tax liability is considered discharged from the date of credit to the Government's account. If there is a default in payment post the due date, interest is payable under Section 50(1) of the Act for the delayed period. - HC
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• Bail Denied in Tax Evasion Case Due to Serious Charges, Evidence Concerns, and Applicant's History of Similar Offenses.

  Case-Laws - HC : Seeking grant of Regular Bail - Evasion of tax - false and fabricated documents - The court considered the severity of the accusations, the nature of the evidence, the applicant's past antecedents in similar offenses, and the possibility of tampering with evidence and influencing witnesses. The court held that despite the applicant's arguments based on the Central Goods and Services Tax Act, 2017, the FIR was registered for offenses under the IPC and not under the GST Act. - Bail application rejected - HC
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• Court Rules Penalty for Non-Downloading E-way Bill-02 Unjustifiable, Grants Relief to Petitioner.

  Case-Laws - HC : Levy of Penalty order u/s 129(3) - Neither in the SCN nor in the order u/s 129(3) there was any allegation that non downloading of E-way Bill-02 was done with intention to evade tax - The court noted that there was no allegation of intentional tax evasion in the case of the petitioner, whose goods were detained after completion of the journey. The imposition of the maximum penalty was found unjustifiable, and the court ruled in favor of the petitioner, allowing the writ petition and granting consequential reliefs. - HC
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• Court Allows Rectification for GSTR-1 Filing Error Affecting ITC; Judgment on Legal Challenges Reserved for Future.

  Case-Laws - HC : Rectification of inadvertent error in filing of GSTR-1 - Denial of ITC to the buyer of goods for non-reflection of the invoices in FORM-GSTR-2A - The court granted liberty to the petitioner to file the Rectification Application either online or manually within four weeks. The decision on this application will determine the petitioner's subsequent claims against the department or Mahindra Logistics. The court left all legal contentions, including the challenge to the vires of the provisions, open for future consideration. - HC
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• Petitioner's ITC Claim Re-evaluated Due to Non-payment Issue; State-specific Financials Not Mandatory Under Companies Act.

  Case-Laws - HC : Input Tax Credit (ITC) claim - Non-payment to suppliers exceeding 180 days - Despite the petitioner's response and submission of supporting documents, including a Chartered Accountant's certificate, the assessing authority based its decision on the total trade payables of the petitioner without considering the specific payables related to Tamil Nadu. The court noted that companies are not required to file state-specific financial statements under the Companies Act, 2013. The petitioner agreed to provide invoices related to the sum attributable to Tamil Nadu. - Matter restored back for re-adjudication - HC
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• Copper Trader's Tax Credit Dispute Remanded for Reassessment Due to Overlooked Evidence and Procedural Oversight.

  Case-Laws - HC : Wrong availment and utilization of Input Tax Credit (ITC) - The petitioner, engaged in the business of dealing in copper waste and scrap, provided ledger accounts, tax invoices, and E-way bills as evidence of legitimate purchases, but the Assessing Officer did not consider these documents. The court found that the impugned orders lacked discussion on the petitioner's documents and did not address deficiencies or inadequacies in the evidence provided. Consequently, the matters were remanded for reconsideration, with the second respondent directed to reissue a fresh assessment order after giving the petitioner a reasonable opportunity. - HC
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• Appellate Authority Confirms GST Registration Invalid Due to Forged Documents; Reapplication with Valid Papers Allowed.

  Case-Laws - HC : Cancellation of GST Registration - The Appellate Authority had found that the appellant used a forged electricity payment receipt and rental agreement at the time of obtaining the registration. The court agreed with the Appellate Authority's decision, stating that the use of fraudulent documents vitiated the process and justified the dismissal of the appeal. However, the court noted that this dismissal would not prevent the appellant from applying for a new registration with genuine documents. - HC
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• State GST Audit Proceedings Paused Pending CGST Ruling on Discrepancy Note; Awaiting Adjudication Outcome.

  Case-Laws - HC : The audit wing of the State GST Authority directed to keep in abeyance all proceedings related to discrepancy note no. 3, including the show cause notice dated 29.12.2023. This decision was made because the same discrepancy is already under adjudication by the CGST Authority, following a show cause notice dated 28.03.2023. The court ordered that the State GST Authority's audit wing should not proceed with their actions until the adjudication order by the CGST Authority is passed. - HC
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• Bail Denied in GST Fraud Case: Fake Invoices and Input Tax Credit Misuse Cited as Serious Offenses.

  Case-Laws - HC : Grant of regular bail - availing fraudulent Input Tax Credit without actual receipts of goods - The court rejected the bail application filed u/s 439 of the CrPC by the applicant, who was arrested in connection with a GST fraud involving the issuance of fake invoices and unauthorized Input Tax Credit. The decision was based on the seriousness of the offence, the ongoing investigation, the risk of evidence tampering, and the potential influence on witnesses. - Guidelines framed by the Supreme Court followed. - HC
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• Appellate Authority Can Excuse Delays in Appeals Due to Health Issues; Appeal to Be Heard on Merits.

  Case-Laws - HC : Condonation of delay in filing appeal - Applicability of limitation act - the appellate authority did have the power to condone the delay in filing an appeal beyond the prescribed period under Section 107 of the Act of 2017. This decision was based on the principle that the Act of 1963’s provisions, particularly Section 29(2), were not expressly or impliedly excluded by Section 107 of the Act of 2017. Consequently, the appellate authority must consider the appeal on its merits, giving the petitioner an opportunity for a hearing. The court held that the petitioner's health issues constituted sufficient cause for the delay in filing the appeal. - HC
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• Textbook Printing Classified as Goods; Calendars and Reports as Services, Affecting GST Exemptions Criteria.

  Case-Laws - AAR : The printing and supply of textbooks to JCERT and notebooks are considered supply of goods. However, printing and supply of 'Bilingual Parental Calendar' to JEPC and Comprehensive Report Progress Card to the Assam Government are treated as supply of services. The ruling also discussed the criteria for these classifications and the application of GST exemptions based on the nature of the supply. - AAR
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• Book Adjustments Valid for Input Tax Credit in Sale and Buyback Deals Under GST Act.

  Case-Laws - AAR : Input Tax Credit - sale and buyback transactions - payment is settled through book adjustments against the debt - mutual debt settlement through book adjustments is a recognized and valid mode of payment under the GST Act. Therefore, claiming input tax credit cannot be denied solely on the grounds that consideration for the goods is paid through book adjustment. - AAR
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• Dredging Najafgarh Drain for Delhi's Irrigation Dept Exempt from GST; Recognized as a Public Health Service.

  Case-Laws - AAR : The service provided by the applicant for dredging and desilting Najafgarh Drain, as contracted by the Irrigation and Flood Control Department of the Government of Delhi, is exempt from GST. This exemption applies as per Sl. No. 3A of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017, recognizing the service as a composite supply primarily involving services with a minor component of goods. The work aligns with the functions related to public health, sanitation, conservancy, and solid waste management under the Twelfth Schedule of Article 243W of the Indian Constitution. - AAR
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• Desilting and Cleaning Najafgarh Drain Exempt from GST as Public Health Service per 2017 Tax Notification.

  Case-Laws - AAR : Exemption from GST - services provided by the applicant for desilting and cleaning the Najafgarh Drain -This exemption is granted under Sl. No. 3A of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017. The ruling identified the service as a composite supply, where the goods component is less than 25% of the contract value, and the activity falls within the scope of functions related to public health and sanitation management as per the Constitution. - AAR
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• GST Exemption Denied for Industrial Land Lease Due to Insufficient Government Ownership in Lease Agreement.

  Case-Laws - AAR : Exemption form GST - upfront premium payable towards the services of leasing of the land for industrial purposes - Notification No. 12/2017 Central Tax (Rate) - The applicant argued that the lease met all conditions for exemption under a specific notification. However, WBAAR concluded that SMPK did not qualify as an entity with 20% or more government ownership, a key condition for the exemption. Therefore, the lease service was not considered exempt under the mentioned notification. - AAR
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Income Tax

• Income tax return delay excused due to genuine hardship from AAR ruling; court orders processing after compliance.

  Case-Laws - HC : Condonation of Delay in filing the returns of income seeking refund - delay due to date of ruling of the AAR - genuine hardship - The delay in filing tax returns for AYs 2012-13 and 2013-14 by the petitioner was condoned under Section 119(2)(b) of the Income Tax Act, subject to payment of costs, due to genuine hardship. The assessing officer was directed to process the returns after compliance with the conditional order. - HC
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• Reassessment Notices for 2008-09, 2011-12 Invalidated Due to Unmet Legal Conditions by Assessing Officer.

  Case-Laws - HC : Reopening of assessment u/s 147 - Decision concerning leases was delivered in the year 2014. Till that time neither the assessee nor the Assessing Officer had knowledge that such leases were illegal after 22.11.2007. When assessee was not knowing, there was no occasion for him to make disclosure to that effect. - The reassessment notices under Section 148 of the Income Tax Act for the years 2008-09 and 2011-12 were quashed due to the failure of the Assessing Officer to meet the necessary legal conditions, including the lack of independent verification and inquiry, and the inapplicability of the additional conditions required for reassessment beyond four years. - HC
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• Court Corrects Income Calculation Error, Reduces Compensation in Motor Accident Claim Over Future Prospects Miscount.

  Case-Laws - HC : The Motor Accident Claims Case (MCC) - Computation of income of the deceased for passing award - computation of future prospects - Taking into consideration the Salary income, HRA, Deductions u/s 80C of Income Tax Act - The MCC was resolved by correcting the calculation error in the previous judgment. The modified compensation amount was reduced due to the removal of the double counting of future prospects in the deceased's income. - HC
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• Foreign Agent Commissions for Services Outside India Not Taxable, No TDS Deduction Required Under IT Act Section 40(a)(i.

  Case-Laws - AT : TDS u/s 195 - sales commission expenses paid to agents outside India - The commission income earned by foreign agents for services rendered outside India does not accrue or arise in India and, therefore, is not subject to tax in India. Consequently, there is no requirement for the payer to deduct tax at source on such commission payments under section 40(a)(i) of the Income Tax Act, 1961. This principle is based on the proposition of law laid down by the Supreme Court of India - AT
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• Tribunal Excuses 418-Day Delay in Quantum Appeal, Orders Re-evaluation of Interest Expense Disallowance by CIT(A.

  Case-Laws - AT : Allowability of Interest Expenditure - The Tribunal noted a delay of 418 days in filing the quantum appeal by the assessee, which was condoned as the assessee pursued an alternative legal remedy before the Commissioner of Income Tax (Appeals) [CIT(A)]. - The main issue was the disallowance of interest on the grounds that borrowed funds were utilized for non-business purposes. The Tribunal found that the CIT(A) did not appropriately consider the remand report from the Assessing Officer (AO), which detailed the utilization of borrowed funds. Therefore, the Tribunal restored the quantum appeal to the file of the CIT(A) for re-adjudication in light of the AO's remand report. - AT
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• Loans with Interest Not Deemed Dividends Under Income Tax Act: Tribunal Clarifies Business Transaction Rules.

  Case-Laws - AT : Deemed dividend u/s 2(22)(e) - The Tribunal emphasized that loans and advances received in the ordinary course of business, which involve payment of interest, do not fall within the deeming provisions of Section 2(22)(e) of the Income Tax Act. This principle acknowledges that not all loans or advances from a company to its shareholders should automatically be considered as deemed dividends under the Act, especially when they carry characteristics of commercial transactions, such as the charge of interest. - AT
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• Tribunal Rules No Extra Disallowance for Documented Derivative Losses in Notional Money Transfers.

  Case-Laws - AT : Allowability of Derivative loss - separate addition on account of alleged payment of margin monies on an estimated basis - The Tribunal emphasized that in derivative transactions, the actual transfer of money under the heads 'purchase and sale' is notional, and only the resultant difference paid or received at the end of the transaction is relevant. The Tribunal recognized that losses incurred in derivative transactions, if paid by the assessee through regular banking channels and adequately evidenced, should not lead to additional disallowance on an estimated basis for alleged payment of margin monies. - AT
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• Reassessment Under Income Tax Act Requires New Material, Not Just Opinion Change, Especially After Four Years.

  Case-Laws - AT : Validity of Reopening of assessment u/s 147 - The Tribunal emphasized the principle that for reassessment under Section 147 of the Income Tax Act, the onus is on the revenue to show that there was a failure by the assessee to disclose fully and truly all material facts necessary for assessment. The Tribunal held that mere change of opinion or re-examination of facts already on record without new tangible material cannot justify reassessment proceedings, especially when initiated after the expiry of four years from the end of the relevant assessment year. - AT
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• Tribunal Upholds Company's Compliance with Section 68, Validating Source of Share Capital and Premium from Investors.

  Case-Laws - AT : Addition u/s 68 - AO was not satisfied with the source of source aspect of the investors - The Tribunal agreed with the CIT(A)'s findings that the assessee company had discharged its onus under Section 68 by proving the nature and source of the share capital and share premium received from its directors, shareholders, and their relatives. - AT
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• Tribunal Rules Tax Assessments Void for Non-Compliance with Section 153C Timelines and Conditions in Key Years.

  Case-Laws - AT : Assessment u/s 153C - Relevant Date - date on which the AO of the person other than the one searched assumes the possession of the seized assets - The Tribunal's decision emphasized the principle that for initiating proceedings u/s 153C, it is essential to follow the statutory timelines and conditions prescribed under the Income Tax Act. The Tribunal relied on judgments from the Hon'ble High Court and the Supreme Court to conclude that the assessments made for the Assessment Years 2006-07 and 2007-08, based on a satisfaction note recorded, were outside the scope of Section 153C. This led to the conclusion that these assessments were void ab initio, along with the assessment for A.Y. 2012-13. - AT
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• Tax Tribunal Rules on Bogus Diamond Purchases: Focus on Profit Margin Taxation Over Full Purchase Disallowance.

  Case-Laws - AT : Addition u/s 69C - bogus purchases of diamonds - The decision emphasizes the principle that where the genuineness of purchases is in question, but corresponding sales are not disputed, only the profit element embedded in the transactions should be brought to tax. The Tribunal's ruling aligns with the principle that in cases of alleged bogus purchases, if sales are unaffected, the focus should be on taxing the profit margin rather than disallowing entire purchases. - AT
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• Tribunal Rules TDS Non-Deduction Order Time-Barred, Invalidating 2019 Decision Due to Limitation Period Exceedance.

  Case-Laws - AT : Period of limitation - deeming a person to be an assessee-in-default - Non deduction of TDS - The Tribunal quashed the order dated 31.10.2019 issued u/s201(1) of the Income Tax Act, deeming it to be barred by limitation. The Tribunal followed its earlier decision, which held that amendments made to the statute with effect from 01/10/2014 are prospective, and concluded that the order should have been framed on or before 31.03.2015. As the order was framed on 31.10.2019, it was found to be time-barred. - AT
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• Retrospective Finance Act Amendment Overturns Tax Addition for Non-Scheduled Co-operative Bank's NPA Interest Income.

  Case-Laws - AT : Accrual of income - interest due on NPA accounts - it is not in dispute that the assessee is a Co-operative Bank and covered under Non Scheduled Bank as per the Banking Regulation Act, 1949 and therefore, the amendment brought in by the Finance Act, 2017 which has been held to be retrospective in nature applies in the case of the assessee. Thus the addition so made by the AO and confirmed by the ld. CIT(A) is hereby set aside. - AT
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• Opportunity Denied: Tribunal Dismisses Evidence Due to Lack of Cross-Examination in Share Transaction Case.

  Case-Laws - AT : Bogus share transactions - Reliance on the statement of broker/entry operator - the denial of opportunity for cross-examination by the Assessing Officer was a failure of the principles of natural justice and thus the evidence used against the assessee was discarded. The Tribunal also recognized the assessee's documentation supporting the transactions, including ledger accounts, purchase and sale bills, and bank statements. - AT
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• Co-op Society Interest Income from Statutory Investments Qualifies for Business Income Deductions Under Income Tax Act.

  Case-Laws - AT : Deduction u/s 80P(2)(a)(i) - The decision underscores the principle that interest income earned by co-operative societies, if invested in compliance with statutory requirements, can be classified as 'income from business', qualifying for deductions under the Income Tax Act. It further mandates examination of such income under various provisions (sections 80P(2)(a)(i), 80P(2)(d), and 57) to determine the appropriate tax treatment. The AO is directed to assess the nature of such income and applicable deductions, based on statutory compliance and relevant judicial pronouncements. - AT
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Customs

• Customs Broker's License Suspension Revoked; No Breach of Licensing Regulations Found After Import Classification Inquiry.

  Case-Laws - AT : Revocation of suspension of the Customs Broker Licence - The broker was initially accused of failing to advise proper classification of imported goods. However, the inquiry found that the broker classified goods as per importer's directions and existing practice, not independently. The CESTAT upheld the Commissioner's decision, agreeing there was no violation of Customs Brokers Licensing Regulations by the broker, and noted the classification was ultimately accepted by judicial authorities. - AT
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• Tribunal Annuls Remand Order, Directs Reassessment for Lack of Statutory Compliance in Customs Appeal Process.

  Case-Laws - AT : Validity of remand order passed by the Commissioner (Appeals) - The tribunal found that the Commissioner (Appeals) erred in remanding the case without meeting specific statutory conditions under Section 128A(3)(b) of the Customs Act, 1962. The tribunal set aside the impugned remand order and directed the Commissioner (Appeals) to re-examine and dispose of the matter afresh on merits, emphasizing the importance of adhering to legal provisions in appellate proceedings. - AT
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• Tribunal Rules on Revaluation: Infrared Thermometers Appeal Allowed, Fingertip Pulse Oximeters Appeal Dismissed.

  Case-Laws - AT : Re-valuation of imported goods - The tribunal found that the first appellate authority violated principles of natural justice by not providing the appellant an opportunity to rebut the contemporaneous imports used for revaluation of infrared thermometers. However, the tribunal dismissed the appeal concerning the revaluation of fingertip pulse oximeters, as no specific arguments were advanced by the appellant on this aspect. - AT
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• Tribunal Overturns Order Due to Insufficient Evidence in Goods Value Revaluation Case.

  Case-Laws - AT : Valuation of imported goods - contemporaneous imports - The tribunal observed that the Revenue had not provided adequate evidence or a proper comparison with contemporaneous imports to justify the revaluation of the imported goods' declared value. The lack of such comparison and evidence in revaluation matters was a key factor in the tribunal's decision to set aside the impugned order and allow the appellant's appeal. - AT
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Corporate Law

• Winding-Up Application Transferred to NCLT Under IBC 2016 for Pre-Admission Cases, No Irreversible Actions Taken.

  Case-Laws - HC : Transfer of pending application for winding up of the respondent company to the NCLT under IBC - The decision reflects the principle that winding up petitions pending before High Courts, which have not progressed to an advanced stage, should be transferred to the NCLT, in line with the Insolvency and Bankruptcy Code, 2016 and the Companies Act, 2013. The Supreme Court's judgment in Action Ispat and Power Limited v. Shyam Metalics and Energy Limited was cited, emphasizing that winding up proceedings at a pre-admission stage or those where no irreversible actions (like the sale of assets) have occurred are compulsorily transferable to the NCLT. - HC
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Service Tax

• Court Rules Strict Adherence to "SUBKA VISHWAS" Scheme; No Jurisdiction to Extend Time Limits Due to Technical Glitches.

  Case-Laws - HC : SUBKA VISHWAS” [Legacy Dispute Resolution] Scheme Rules, 2019 - petitioner was unable to make payment due to technical glitch - The judgment reiterates the principle that a scheme must be followed strictly according to its terms and conditions. In this case, the "SUBKA VISHWAS" Scheme, being a complete code in itself, required adherence to specific time limits for filing and payment, which the petitioner failed to meet. The court emphasized that extending the time limit for compliance with the scheme’s provisions is beyond its jurisdiction under Article 226 of the Constitution of India. - HC
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Central Excise

• Interest on Education Cess for Export Units Excluded from Duty Calculations for Domestic Tariff Clearances.

  Case-Laws - AT : Demanded of interest for the delayed payment of education cess - Education cess and secondary and higher education cess should not be included in the aggregate value for duties on DTA (Domestic Tariff Area) clearances by 100% EOUs (Export Oriented Units). The decision emphasized the principle of not charging a cess on the same tax base more than once, adhering to judicial discipline and the precedential value of the Larger Bench's ruling. - Demand set aside - AT
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VAT

• Tribunal's Appeal Handling Flawed: Failure to State Decision Reasons Breaches U.P. V.A.T. Rules, Case Sent Back for Review.

  Case-Laws - HC : Non-compliance of the mandatory provisions laid down under Rule 63(5) of the U.P. V.A.T. Rules, 2008 read with Section 57(8) of the U.P. V.A.T. Act, 2008 - manner and procedure of appeal / summary disposal of appeal - it clearly emerges that learned Tribunal has patently erred in neither noting the points for determination nor giving the reason for such decision thereon. - Matter restored back - HC
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Case Laws:

• GST

• 2024 (1) TMI 1111
  Liability to pay interest of the GST amount, which was routinely deposited into the Electronic Cash Ledger (ECL) within the due date - the case of the Department is that the deposit of tax in Electronic Cash Ledger would not amount to payment of tax and would tantamount to failure to remit GST in time, for which interest liability would be attracted. - HELD THAT:- A reading of the above provisions will reveal that every registered person, who is required to furnish the returns under Sub- Section (1) of Section 39 of the Act, shall pay the tax dues to the Government as per such return not later than the last date, on which he is required to furnish such return. Thus, it is clear that not later than the last date of filing of Form GSTR-3B, i.e., on or before 20th of every month, the tax should have been paid to the Government. The last date for payment of tax to Government would be the date not later than the last date on which he is required to furnish the monthly return. Thus, for payment of tax to Government filing the monthly returns is not the matter but the last date for furnishing the monthly return is important. Thus, whether the monthly return is filed in time or not but the GST has to be remitted not later than the last date for filing the monthly returns. How the tax to be paid to the Government? - HELD THAT:- For the payment of tax to the account of Government, the filing of GSTR-3B is immaterial, which means either with or without filing of monthly returns, the tax can be remitted to the Government. Therefore, no interpretation can be made as held in the judgement of the Hon ble Division Bench of Jharkand High Court rendered in M/S. RSB TRANSMISSIONS INDIA LIMITED VERSUS UNION OF INDIA THROUGH THE SECRETARY, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NEW DELHI THE COMMISSIONER OF CENTRAL GOODS AND SERVICES TAX CENTRAL EXCISE, JAMSHEDPUR THE SUPERINTENDENT OF CENTRAL GOODS AND SERVICES TAX CENTRAL EXCISE, ADITYAPUR V RANGE, JAMSHEDPUR GOODS AND SERVICES TAX NETWORK THROUGH ITS CHAIRMAN, NEW DELHI [ 2022 (11) TMI 483 - JHARKHAND HIGH COURT] stating that no payment of tax can be made until the filing of GSTR-3B, which is against the provisions of Section 39(1) and 39(7) of the Act and thus, the said finding would render a disastrous consequences in utilisation of GST collections by the exchequers. Merely, for the default on the part of a registered person in filing the GSTR-3B, the utilisation of tax amount, which was already deposited into the account of Government, cannot be postponed. In the present case, the GST amount has been paid by generating GST PMT-06 before the due date without any delay. If any amount is deposited after due date, for the said amount alone, the payment of interest would arise in terms of provisions of Section 50(1) of the Act. Once GSTR-3B is filed, the total amount of tax would be quantified, by which it would be ascertained about the discharge of tax liabilities. In terms of Rule 61(1), the registered person has to file the monthly return on or before 20th of succeeding month - the interpretation, which was made with regard to the deposit made to the PLA, is squarely applicable to the present case, since in the present case, the issue is with regard to the ECL, which is equivalent to PLA. The impugned letter issued by the 1st respondent impugned order passed by the 1st respondent are liable to be quashed - petition allowed.

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• 2024 (1) TMI 1110
  Validity of an assessment order imposing tax liability, interest and penalty - Seeking an opportunity to be heard - HELD THAT:- The petitioner did not respond either to the intimation in Form GST ASTM- 10 or to the show cause notice in Form GST-DRC-01. In addition, the petitioner did not attend the personal hearing. The explanation of the petitioner is that the consultant did not keep the petitioner informed. The consultant, in turn, states that the notices were not available on the tab relating to regular returns and were instead accessible only through the tab relating to additional notices. While these explanations are not wholly convincing, the fact remains that a registered person carrying on a small business did not have the opportunity to respond to the claim made by the tax department with regard to the discrepancy between the returns in Form GSTR-1 and Form GSTR-3B. Solely for the purpose of providing an opportunity to the petitioner, the impugned order calls for interference. The impugned order is quashed and the matter is remanded for re-consideration - Petition disposed off.

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• 2024 (1) TMI 1109
  Seeking grant of Regular Bail - compounding of offences - criminal conspiracy of evasion of tax - false and fabricated documents - HELD THAT:- A strong apprehension has been shown by prosecution that if the applicant is released on bail then, there is possibility of tampering with the evidence and fleeing away from the trial. The present application is filed before submission of the chargesheet and the investigation is not yet completed and the apprehension has been shown by prosecution that if the applicant is released on bail then, there is possibility of tampering with the evidence and hampering with the witnesses, which would affect the trial. Therefore considering the nature of offence, role attributed to the applicant, played by him and past antecedents of the applicant similar in nature, the present application deserves to be rejected. Accordingly, the present application is rejected.

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• 2024 (1) TMI 1108
  Violation of principles of natural justice - reasonable opportunity not provided to petitioner - Exemption from payment of GST - services provided in relation to hotel accommodation if the tariff is below Rs. 1,000/- - petitioner is an intermediary - HELD THAT:- The non-consideration of the reply to the show cause notice certainly prejudices the petitioner and denies the petitioner a reasonable opportunity to establish its position. On that sole ground, the respective impugned order calls for interference. Accordingly, without expressing any opinion on the merits of the matter, the orders impugned herein are quashed. As a corollary, these matters are remanded for reconsideration by the assessing officer. Petition disposed off by way of remand.

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• 2024 (1) TMI 1107
  Levy of Penalty order u/s 129(3) of the Uttar Pradesh Goods and Service Tax Act, 2017 - evasion of tax - Quantum of penalty - HELD THAT:- It is found that neither in the show cause notice nor in the order under Section 129(3) there was any allegation that non downloading of E-way Bill-02 was done with intention to evade tax. In spite of the same, the respondent authorities have chosen to impose maximum penalty whereas the law provides for lesser penalty under Section 122 of the Act. No case is made out with regard to evasion of tax. The impugned order dated December 23, 2018 and the order dated January 10, 2018 are quashed and set-aside - Petition allowed.

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• 2024 (1) TMI 1106
  Levy of penalty - evasion of tax - Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 - HELD THAT:- It is found that neither in the show cause notice nor in the order under Section 129(3) there was any allegation that non downloading of E-way Bill-01 was done with intention to evade tax. In spite of the same, the respondent authorities have chosen to impose maximum penalty whereas the law provides for lesser penalty under Section 122 of the Act. No case is made out with regard to evasion of tax - petition allowed.

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• 2024 (1) TMI 1105
  Seeking permission for withdrawal of petition - petitioner submits that the time limit for filing the appeal against the impugned assessment order in Exhibit P-1 has been extended till 31.01.2024 and the petitioner would like to withdraw the writ petition and take recourse to remedy of appeal under Section 107 of the CGST/KGST Act, 2017 against the impugned order. HELD THAT:- The present writ petition is dismissed as withdrawn with liberty as prayed.

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• 2024 (1) TMI 1104
  Recovery of tax paid - Rectification of inadvertent error in filing of GSTR-1 - ITC could not have been disallowed to Mahindra Logistics on the ground of non-reflection of the invoices in FORM-GSTR-2A of Mahindra Logistics - HELD THAT:- There appears to be an inadvertent error on the part of the petitioner in filing return in FORM-GSTR-01 and due to such defective return being filed, the Petitioner contends that it is not in a position to recover the amount from Mahindra Logistics. The appropriate course of action for the Petitioner is to file an Application for rectification of the returns which were filed in FORM GSTR- 01 and, more particularly, considering the observations as made by the Division bench in STAR ENGINEERS (I) PVT. LTD. VERSUS UNION OF INDIA, STATE OF MAHARASHTRA AND DEPUTY COMMISSIONER OF STATE TAX-GST. [ 2023 (12) TMI 729 - BOMBAY HIGH COURT] , and after an order is passed on the Rectification Application, the inter-se issue between the Petitioner and Mahindra Logistics can be taken up by the Petitioner and appropriate claim can be raised subject to the outcome of the Rectification Application. Petition is disposed off with liberty to the Petitioner to approach the department by filing a Rectification Application so as to seek rectification of FORM-GSTR-01 for the period in question, which is permitted to be filed either through online or manual means within a period of four weeks from today.

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• 2024 (1) TMI 1103
  Input Tax Credit (ITC) claim - Denial of ITC for non-payment to suppliers exceeding 180 days - petitioner submits that the impugned order came to be issued on the basis of the total trade payables of the petitioner - HELD THAT:- Under the Companies Act, 2013, every company is required to file financial statements in respect of its entire operations and there is no provision for filing State-specific financial statements. However, the petitioner has submitted a certificate from a Chartered Accountant stating that the trade payables attributable to the State of Tamil Nadu are Rs. 1816.48 millions. Learned counsel for the petitioner also submits that the petitioner would provide all the invoices issued by the suppliers with regard to the aggregate sum of Rs. 1816.48 millions. The assessing authority has clearly not applied its mind before drawing the conclusions - the impugned order is liable to be and is hereby quashed. Consequently, the matter is remanded for reconsideration by the assessing authority. Petition allowed by way of remand.

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• 2024 (1) TMI 1102
  Initiation of proceedings under section 74 of CGST Act - Wrong availment of Input Tax Credit (ITC) - violation of principles of natural justice - HELD THAT:- When the appeals were taken up for consideration, after making some arguments, the learned counsel for the appellant ultimately, submitted that it would suffice, if the appellant is granted liberty to file statutory appeals before the appellate authority within a period of four weeks from the date of receipt of a copy of this judgment. Granting such liberty to the appellant, both the appeals stand disposed of.

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• 2024 (1) TMI 1101
  Wrong availment and utilization of ITC - ITC claim was rejected for non submission of documents - HELD THAT:- The petitioner did not submit any documents relating to movement of goods, mode of transport and physical movement of goods, and that the proposal for levy of tax, penalty and interest is found to be in order as a consequence. The petitioner has placed on record invoices and E-way bills relating to the relevant purchases. The E-way bills contain details of not only the products purchased by the petitioner but also the vehicles used for the movement of goods. The impugned order does not contain any discussion on the documents produced by the petitioner to corroborate the assertion that legitimate purchases were made and point out deficiencies or inadequacies. On that ground, the impugned order calls for interference. Therefore, the impugned orders dated 03.07.2023 are quashed. These matters are remanded for re-consideration. The second respondent is directed to re-consider the matter and issue a fresh assessment order after providing a reasonable opportunity to the petitioner - Petition allowed by way of remand.

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• 2024 (1) TMI 1100
  Grant of regular bail - wrongful gain by input tax credit - HELD THAT:- As per prosecution story, applicant is having a firm namely Surajmal Chandmal and he has evadeded payment of tax of Rs. 7,11,953.61/-. Applicant is in jail since 07.10.2023. During course of argument, it cannot be pointed out that firm Agrawal Axim belongs to applicant. Applicant is ready to deposit Rs. 7,11,953/- under protest before the trial Court. Applicant is an income taxpayer. There is no likelihood that applicant will abscond from law. Investigation is complete and charge sheet has been filed. It is directed that the applicant shall be released on bail on aforesaid condition on furnishing personal bond of Rs. 50,000/- with one solvent surety in the like amount to the satisfaction of the trial Court concerned for his regular appearance before Court on all such dates as may be fixed in this regard during pendency of trial - bail application allowed.

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• 2024 (1) TMI 1099
  Refusing to revoke revocation of licence granted to the appellant under the GST Act - HELD THAT:- There is a categorical finding that at the time when the registration was obtained, the appellant had uploaded the electricity payment receipt, which was found to be a forged document and as also the rental agreement. Those fraud vitiate every solemn act. Therefore, the Appellate Authority was well-justified in dismissed the appeal petition and there are no grounds to interfere with the same order. The appeal as well as the writ petition are dismissed.

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• 2024 (1) TMI 1098
  Denial to grant any interim relief - audit authority has failed to take note of the submission made by the assessee - subject matter is pending adjudication by the CGST Authority - HELD THAT:- The audit wing of the State GST Authority ought to keep the matter abeyance so far as the discrepancy note is concerned. The authority now has issued a show cause notice dated 29.12.2023 since the discrepancy note no. 3 pointed out by the Audit Wing of the State GST authority is the subject matter of adjudication of CGST Authority. Pursuant to the show cause notice dated 28.03.2023 the audit wing of the SGST Authority should not proceed. The appeal along with the connected application and the writ petition are disposed of by directing the audit wing of the SGST Authority to keep in abeyance all proceedings in respect of the discrepancy note no. 3 alone including the show cause notice dated 29.12.2023 and abide by the adjudication order to be passed by the CGST Authority, namely, the fourth respondent on the show cause notice dated 28.03.2023.

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• 2024 (1) TMI 1097
  Grant of regular bail - availing fraudulent Input Tax Credit without actual receipts of goods - HELD THAT:- Hon ble Supreme Court in the case of SANDEEP GOYAL VERSUS UNION OF INDIA [ 2020 (5) TMI 240 - SC ORDER] considering the submission of learned counsel for applicant in that case that the applicant therein has already been undergone one year and eight months imprisonment, the maximum sentence to be awarded is of five years, has refused to allow the application/appeal filed by applicant therein and disposed of the SLP observing that the State shall make endeavour to complete the investigation within three months. In the case at hand, the applicant was arrested only on 30.09.2023, the matter is still under investigation. Considering the facts and circumstances of the case, allegations made against the applicant, evidence collected by the prosecution, seriousness of the offence and further considering the law laid down by the Hon ble Supreme Court in the matter of Sandeep Goel, present case is not found to be a fit case to enlarge applicant on bail. This application filed under Section 439 of CrPC is rejected.

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• 2024 (1) TMI 1096
  Condonation of delay in filing appeal - Applicability of limitation act - Power of Appellate authority to condone the delay - appeal rejected on the ground of delay upon holding that there is no scope under the provisions of WBGST Act, 2017 read with the corresponding Chapter and Section of the CGST Act, 2017 for condoning the delay in submitting the appeal beyond four months - HELD THAT:- This court is of the considered view that it was well within the power of the appellate authority to consider the prayer of the petitioner for condonation of delay. The impugned order passed by the appellate authority that there is no scope to condone the delay beyond four months suffers from infirmity. This court has to consider whether the petitioner has made out sufficient cause for presenting the appeal beyond the statutory period of limitation - After going through the reasons for the delay as evident from the annexure to FORM GST APL-01, this court is of the considered view that the petitioner was prevented by sufficient cause for not preferring the appeal within the statutory period. This court, therefore, holds that the appellate authority failed to exercise its jurisdiction in the case on hand - the delay in presenting the appeal before the appellate authority is condoned.

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• 2024 (1) TMI 1095
  Scope of supply - supply of goods or services in terms of the Circular 11/11/2017 dated 20.10.2017 - printing activities undertaken by them are eligible for exemption under Serial No. 3,3A of the Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 as amended - HELD THAT:- The process of conducting examination includes pre-examination works, the examination itself and post-examination works and for that purpose, printing of comprehensive report progress card may be treated as services relating to conduct of examination. However, in the instant case, the supply is provided to Education Department, Government of Assam and not to an educational institution - the instant supply shall not be covered under the aforesaid entry for exemption. Supply of notebooks - HELD THAT:- The applicant has been awarded a contract by Jharkhand Education Project Council for printing/supply of 80 pages notebooks (including cover) for the academic session 2023-24. The notebooks are meant for free distribution among the children under School Kit Scheme of State Government. The acceptance letter issued by JEPC speaks that the multicolour matter for printing on inner and front cover pages of the notebooks will be provided at the time of work order in soft copies. On due consideration of the nature of contract, in the instant supply, predominant supply is that of goods and the supply of printing of the content [supplied by the recipient of supply] is ancillary to the principal supply of goods and therefore such supplies would constitute supply of goods falling under respective headings of Chapter 48 or 49 of the Customs Tariff. Whether the printing activities undertaken by the applicant are eligible for exemption under Serial No. 3/3A of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended? - HELD THAT:- The term pure services has not been defined under the Act. However, a bare reading of the description of services as specified in serial number 3 above denotes that supply of services which does not involve any supply of goods can be regarded as pure services. The said entry serial, therefore, specifically excludes works contract services or other composite supplies involving supply of any goods - to qualify to be a supply under serial number 3A, a composite supply, subject to fulfilment of other conditions as specified in the said entry, would be such that the maximum value of involvement of goods is less than 25% of the total value of the said composite supply. As the supplies of printed text books, notebooks, activity calendar and comprehensive progress report card involves supply of paper, ink, binding and packing materials etc., such supplies would not come under serial number 3 of the notification supra. Further, the applicant has not furnished any documents wherefrom the value of goods involved in the supply can be ascertained.

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• 2024 (1) TMI 1094
  Input Tax Credit - sale and buyback transactions - goods purchased from outsourced vendors, when payment is settled through book adjustment against the debt created on outward supplies to these vendors - HELD THAT:- The second proviso to sub-section (2) of section 16 of GST Act restricts credit of input tax to the recipient unless he pays the consideration to the supplier for inward supplies received by him along with tax payable thereon within the stipulated time of one hundred and eighty days from the date of issue of invoice. The term consideration has been defined in clause (31) of section 2 of the GST Act in an inclusive manner that extends the scope and range for mode of payment. Further, as per the said definition, it is immaterial whether the payment is made by the recipient or by any other person. Further, when there is barter of goods or services, the same activity constitutes supply as well as a consideration. For example, when a barber cuts hair in exchange for a painting, hair cut is a supply of services by the barber. It is a consideration for the painting received. Similarly, supply of painting is supply by painter and the painting is the consideration for hair cut. Thus, the settlement of mutual debts through book adjustment is a valid mode of payment under the GST Act. Recipient can pay the supplier by way of setting book debt since the provision of the Act has not put any restriction in this regard. Therefore, claiming credit of input tax cannot be denied on the sole ground that consideration is paid through book adjustment.

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• 2024 (1) TMI 1093
  Scope of supply - Composite supply or not - Government of Delhi removal of hump (silt/ earth/ manure/ sludge etc.) by dredging at Najafgarh Drain as awarded by the Irrigation and Flood Control Department - comes under the purview of Union Territory - Exemption from GST under Sl. No. 3 of Notification No. 9/2017 Integrated Tax (Rate) dated 28.06.2017- or Sl. No. 3A of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 as amended from time to time? - rate of GST - HELD THAT:- The instant work falls within the ambit of matter listed at Sl. No. 6 of the Twelfth Schedule of 243 W of the Constitution of India, i.e. Public health sanitation conservancy and solid waste management . The records submitted by the applicant also includes certificate dated 07.08.2023 under No. F.22(113)/2022-23/AB-CD-I/3889, issued by the Executive Engineer, Civil Division-I, Irrigation Flood Control Department, Government of NCT of Delhi, New Delhi, wherein he has certified that the works contract constitutes mainly of dredging and earthwork excavation which is pure service work and the cost of material transferred and consumed for execution and completion of the work contract is less than 5 (five) percent of the total work order value, if any required . This clearly establishes that there is an element of goods also in the supply, although in a small percentage - the instant supply is found to be a composite supply of goods and services in which the value of supply of goods constitutes not more than 25 per cent of the value of the said composite supply. Entry at Sl No. 3A of Notification No. 9/2017-Integrated Tax (Rate) dated 28.06.2017, as amended [Sl. No. 3A of Notification No. 12/2017-Central Tax (rate) dated 28.06.2017, as amended] describes that Composite supply of goods and services in which the value of supply of goods constitutes not more than 25 per cent of the value of the said composite supply provided to the Central Government, State Government or Union territory or local authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution is exempted.

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• 2024 (1) TMI 1092
  Scope of supply - Composite supply or not - Government of Delhi - services provided by the applicant for desilting and cleaning the Najafgarh Drain, awarded by the Irrigation and Flood Control Department - comes under the purview of Union Territory - Exemption from GST under Sl. No. 3 of Notification No. 9/2017 Integrated Tax (Rate) dated 28.06.2017- or Sl. No. 3A of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 as amended from time to time? - rate of GST - HELD THAT:- The instant work falls within the ambit of matter listed at Sl. No. 6 of the Twelfth Schedule of 243 W of the Constitution of India, i.e. Public health sanitation conservancy and solid waste management . The records submitted by the applicant also includes certificate dated 07.08.2023 under No. F.22(113)/2022-23/AB-CD-I/3889, issued by the Executive Engineer, Civil Division-I, Irrigation Flood Control Department, Government of NCT of Delhi, New Delhi, wherein he has certified that the works contract constitutes mainly of dredging and earthwork excavation which is pure service work and the cost of material transferred and consumed for execution and completion of the work contract is less than 5 (five) percent of the total work order value, if any required . This clearly establishes that there is an element of goods also in the supply, although in a small percentage - the instant supply is found to be a composite supply of goods and services in which the value of supply of goods constitutes not more than 25 per cent of the value of the said composite supply. Entry at Sl No. 3A of Notification No. 9/2017-Integrated Tax (Rate) dated 28.06.2017, as amended [Sl. No. 3A of Notification No. 12/2017-Central Tax (rate) dated 28.06.2017, as amended] describes that Composite supply of goods and services in which the value of supply of goods constitutes not more than 25 per cent of the value of the said composite supply provided to the Central Government, State Government or Union territory or local authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution is exempted.

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• 2024 (1) TMI 1091
  Exemption form GST - upfront premium payable by the applicant towards the services of leasing of the land for industrial purposes by SMPK - entry 41 of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 - HELD THAT:- On due consideration of the reply given by SMPK and in light of the discussions detailed herein above including scope of audit of CAG, it cannot be concluded that SMPK may be regarded as an entity having 20 percent or more ownership of Central Government merely on the ground that its books of accounts are audited by CAG - it cannot be held that being registered as a deductor of tax at source under section 51 of the GST Act can be equated with the supplier of services specified in entry number 41 of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 i.e., an entity having 20 percent or more ownership of Central Government. The services of leasing of the land for industrial purposes by SMPK to the applicant is found not to be covered under entry 41 of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 and therefore cannot be treated as an exempt supply.

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• Income Tax

• 2024 (1) TMI 1081
  Condonation of delay in filing the returns of income seeking refund - delay due to date of ruling of the AAR - genuine hardship for purposes of Section 119(2)(b) - petitioner explained the delay up to 16.08.2016, which is the date of ruling of the AAR in the matter relating to the G.R.Engineering Private Limited project, by pointing out that its applications for advance ruling may have been rejected otherwise - whether it is desirable or expedient to condone the delay so as to avoid genuine hardship? - Whether the petitioner had a reasonable basis for asserting that it was under the bona fide belief that it would lose the valuable right of receiving an advance ruling if the returns of income had been filed? - HELD THAT:- Upon examining the relevant provisions and the precedents cited in this regard, it is of the view that the petitioner s assertion that it believed bona fide that it could lose the valuable right of requesting for an advance ruling by filing the returns of income while the applications are pending before the AAR cannot be disregarded as lacking credibility. As returns of income were filed on 04.03.2017, which is more than six months after the AAR ruling, another question arises, namely, whether the delay between 16.08.2016 and 04.03.2017 was adequately explained? - In the affidavit in support of the petition, the petitioner referred to the earlier rulings of the AAR in respect of previous projects of the petitioner to the effect that the income of the petitioner was not taxable in India and asserted that this led to the bona fide belief that returns need not be filed. The petitioner also averred that taxes were deducted and remitted in respect of income earned by the petitioner. The petitioner asserted that it did not file the returns of income on the due dates in these circumstances. If the petitioner had filed the returns of income prior to the due dates, it is likely that the applications for advance ruling would have been held to be not maintainable as per the proviso to Section 245R(2). Therefore, the filing of applications before the AAR after the due dates for filing returns of income does not lead to the conclusion that the petitioner has not made out a case of genuine hardship for purposes of Section 119(2)(b). Thus the applications to condone delay in filing returns of income and seeking refund are liable to be condoned on terms since such applications fall within the scope of the expression genuine hardship in Section 119(2)(b) - no opinion is expressed herein on the merits of the refund claims - orders impugned herein are quashed and the delay is condoned subject to payment of a sum of Rs. 50,000/- as costs.

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• 2024 (1) TMI 1080
  Reopening of assessment u/s 147 - notice was issued beyond period of four years - reasons to believe - reliance on third report of Shah Commission by which it was observed that there were illegal export particularly by means of under invoicing on the part of mining lessees and the exporters - HELD THAT:- AO claimed that assessee failed to disclose fully and truly all the material at the time of filing the returns that income derived was from the illegal mining activities. First of all such observations are incorrect as though the leases were declared as illegal from 22.11.2007, there is absolutely no finding or observation of the Apex Court that mining activities or business activities continued after 23.11.2007 till the same were stopped as per orders of the Supreme Court, were also illegal. Decision concerning leases was delivered in the year 2014. Till that time neither the assessee nor the Assessing Officer had knowledge that such leases were illegal after 22.11.2007. When assessee was not knowing, there was no occasion for him to make disclosure to that effect. In Mr. Teofilo Fernando Antonio Pinto Vs Union of India and anr. [ 2023 (9) TMI 625 - BO MBAY HIGH COURT ] the Coordinate Bench of this Court while considering all the earlier decisions including decisions in case of Aroni Commercial Limited [ 2014 (2) TMI 659 - BOMBAY HIGH COURT] and CIT Vs Kelvinator India Limited 2010 (1) TMI 11 - Supreme Court ] observed that twin conditions must be satisfied when the reopening is beyond the period of four years. Justification offered while rejecting objections of the petitioner cannot be regarded as valid defence of the impugned notice. Such justification/reason given for the first time at the time of disposal of the objections filed by the assessee objecting to reopen the assessment. Such reasons must exist and recorded at the time of issue of notice under Section 147/148 of the Act. In the present matters, notices issued for reopening of the assessment failed to satisfy twin conditions and thus the Assessing Officer could not have exercised jurisdiction for reopening of the assessments which were concluded way back. First of all placing reliance only on opinion in the third Shah Commission Report without independently assessing or recording reasons by the Assessing Officer is itself considered to be jurisdictional error on the part of such officer. Secondly when the notice was issued beyond period of four years, conditions regarding disclosure to be made fully and truly is also not established for the simple reason that the fact that such lease was illegal beyond 22.11.2007 was not to the knowledge of the assessee while submitting returns for the Year 2008-09 and also for the year 2011-12. The Apex Court in the year 2014 for the first time declared that the mining leases in Goa beyond 22.11.2007 were illegal. Thus prior to 2014 i.e. declaration by the Apex Court neither the assessee nor the Assessing Officer had knowledge that such leases were illegal, the question of making such declaration in the year 2008-09 or 2011-12 while submitting returns would not arise. Thus notice for reopening failed to satisfy twin conditions and therefore, both these notices under Section 147 of the Act need to be quashed and set aside. Decided in favour of assessee.

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• 2024 (1) TMI 1079
  The Motor Accident Claims Case (MCC) - Computation of income of the deceased for passing award - computation of future prospects - Tribunal while passing award had taken income of the deceased adding 15% towards future prospects - Tribunal had considered gross salary of the deceased @ Rs. 53,728/- and after making deduction for HRA treated gross salary @ Rs. 53,200/- per month or Rs. 6,38,400/- per annum HELD THAT:- Tribunal computed Income Tax @ Rs. 40,180/- overlooking the facts that standard deduction and Professional Tax is to be deducted, so also amount exempted under Section 80(c) of the Income Tax Act are to be exempted. Thus, out of deduction is to be of Rs. 50,000/- towards standard deduction. Another sum of Rs. 72,000/- will be deducted under Section 80(c) of the Income Tax Act on account of monthly contribution of Rs. 6000/- per month towards GPF and thereafter Professional Tax of Rs. 2500/- is to be deducted. Thus, total taxable income comes out to Rs. 5,13,900/-. Tribunal has note that first sum of Rs. 2,50,000/- is exempted from payment of Income Tax and thereafter, further sum of Rs. 2,50,000/- is taxable @ 5% i.e. Rs. 12,500/- and on the remaining amount Income Tax would be payable @ 20% therefore, total Income Tax liability comes out to Rs. 15,280/- 3% cess. making it Rs. 15,738.40/-. Net income on which dependency is to be calculated after deduction of Income Tax comes out to Rs. 6,22,662/-. 15% is to be added towards future prospects which comes to Rs. 7,16,061.30/- from which 1/4th is to be deducted towards living expenses of the deceased as he survived by five legal heirs and then when multiplier of 09 (nine) is applied, then total pecuniary compensation comes out to Rs. 48,33,414/- against a sum of Rs. 46,24,119/-. Thus, there will be enhancement to the tune of Rs. 2,09,295/- under the head of pecuniary compensation which will be admissible in favour of the claimants and not Rs. 4,83,174/- awarded by this Court. Thus, there being a mistake of computation of future prospects twice, there will be reduction and actual enhancement will come out to only Rs. 2,09,295/- which will be admissible in favour of the claimants alongwith interest @ 6% from the date of filing of the claim petition.

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• 2024 (1) TMI 1078
  Reopening of assessment u/s 147 - reason to believe - notice issued beyond the period of 4 years - assessee is a non-filer of return of income - HELD THAT:- Reasons recorded by the AO clearly established the assessee is a non-filer of return of income in spite of taxable income in his hand, which clearly falls under the provisions of Clause (a) of Explanation 2 of Section 147 of the Act. The AO has also brought on record the cash deposits as made by the assessee in his bank account. Therefore, we do not find any infirmity in the reasons recorded by the AO for reopening of assessment. Therefore, the reopening of assessment is hereby upheld. Validity of sanction granted u/s 151 by the PCIT-2, Rajkot - As noted here that the reopening of assessment is beyond the period of 4 years, wherein the Sanctioning Authority u/s 151 is the PCIT. Therefore, the PCIT has recorded his approval in Sl. No.13 of the above format and not the JCIT. So, this argument of the assessee is against the provisions of the Act - Thus, the reopening of assessment is held to be good in law and Ground No.1 raised by the assessee is hereby rejected. Addition on account of long term capital gain - As stated by the assessee that the above property was purchased by the assessee s father on 17.01.1985 for a sale consideration of Rs. 11,200/- only and the assessee claim of Rs. 3,48,000/- as land development charges without even proper evidences which is not sustainable in law. The registered sale deeds also does not describe that the plots were being surrounded by compound walls as on the date of sale in 2010. In the absence of any such details, we do not find any infirmity in the computation made by the AO and the assessee also failed to produce proper evidence in support of the claim of expenses incurred by the assessee. Therefore, this ground no.2 raised by the assessee is hereby rejected. Unexplained cash deposit - CIT(A) confirmed this addition solely on the ground that the sale agreement was entered by the assessee not in a stamp paper, but only in a white paper without even any witnesses and without mentioning the date of receipt of cash - HELD THAT:- As evidence from the registered sale deeds, the very same two plots were sold to two different parties for a consideration by the assessee and his family members on 23.08.2010. Thereafter, the sale consideration alongwith assessee s mother past savings were deposited in assessee s bank account on 31.08.2010 of Rs. 18,50,000/-. Thus, it cannot be said that the explanation offered by the assessee is not genuine, since, the very same two plots were sold to two different persons on 23.08.2010. Therefore, in our considered view, the addition made being unexplained income of the assessee is hereby liable to be deleted. Therefore, we direct the AO to delete the addition as unexplained cash deposit in the hands of the assessee.

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• 2024 (1) TMI 1077
  Revision u/s 263 - taxability of interest on enhanced compensation - assessee argued that revision merely based on audit objection - whether AO has validly held that interest under section 28 of Land Acquisition Act, 1894 granted by the court is an integral part of enhanced compensation and exempt u/s 10(37) in case of the assessee? - HELD THAT:- Record reveals that the order of the Ld. PCIT was prompted solely by the audit objection. Hon ble P H High Court has held in CIT vs. Sohana Woollen Mills [ 2006 (9) TMI 157 - PUNJAB AND HARYANA HIGH COURT] that mere audit objection cannot lead to an inference that the order of the Ld. AO is erroneous or prejudicial to the interest of the Revenue. Since the order of the Ld. AO is based on the decision of the Hon ble Supreme Court in Ghanshyam HUF[ 2009 (7) TMI 12 - SUPREME COURT] on the issue of taxability of interest received by the assessee under section 28 of Land Acquisition Act, it can at best be said to be a debatable issue on which two views are possible and the Ld. AO accepts one of the views. In this view of the matter too, the Ld. PCIT cannot assume revisional jurisdiction as held in CIT vs. Hindustan Coca Cola Beverages P Ltd. [ 2011 (1) TMI 138 - DELHI HIGH COURT] Thus we hold that the order of the Ld. PCIT is not sustainable - Decided in favour of assessee.

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• 2024 (1) TMI 1076
  Revision u/s 263 - assessee received interest of enhanced compensation u/s 28 of the Land Acquisition Act, 1894 and the A.O. did not conduct enquiry on the said issue - HELD THAT:- After considering the reply given by the assessee, A.O. satisfied that the amount so received under the Land Acquisition Act, 1894 has not been brought to the tax. By going through the above facts and circumstances, it is found that in the original assessment proceedings, the A.O. has already examined the issue of the refund claim which includes the issue of amount received by the assessee under the Land Acquisition Act. From the above, it is observed that it is not a case wherein the AO failed to conduct enquiry rather it is the case wherein the AO has conducted an elaborate enquiry and adopted one of the two views which was plausible view. The question would be as to whether in such circumstances the power u/s 263 of the Act would be invoked or not. The above said question is no longer res-integra and the said issue is well settled in several decisions. In the case of Malabar Industrial Co. Ltd. vs. Commissioner of Income Tax, [ 2000 (2) TMI 10 - SUPREME COURT] Hon ble Supreme Court in the case of Pr. CIT vs. Canara Bank Securities Ltd. [ 2019 (10) TMI 1512 - SC ORDER] dismissed the Department s appeal affirming the view taken by the Bombay High Court [ 2019 (2) TMI 2020 - BOMBAY HIGH COURT] wherein the High Court held that the question whether the income should be taxed as business income or has arisen from other source was a debatable issue and the Assessing Officer had taken the plausible view that it was a business income after due enquiries and therefore not open for the Commissioner to take such an order in revision. Even in the present case, whether the receipt of interest related to the additional compensation granted under Land Acquisition Act, 1894 is a part of exempt u/s 10 (37) of the Act or not is a debatable issue, therefore, following the ratio laid down in Malabar Industrial Co. Ltd. [ 2000 (2) TMI 10 - SUPREME COURT] and other decisions mentioned above, we are of the considered opinion that the impugned order of the Ld. PCIT is found to be erroneous, accordingly, order impugned of the PCIT is hereby quashed. Appeal filed by the Assessee is allowed.

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• 2024 (1) TMI 1075
  TDS u/s 195 - addition u/s 40(a)(i) - sales commission expenses paid to agents outside India for non-deduction of tax at source - HELD THAT:- We find that the assessee had sufficiently demonstrated that services rendered by the foreign agents were all outside India for procuring the sale orders for the assessee with the agreement clearly pointing out that foreign agents required to procure sales from the respective territories outside India for the assessee. Certificates furnished by these agents demonstrated that they had no place of business in India and invoices of exports, as also invoices raised by the commission agents sufficiently proved that they had paid commission for the export orders procured by them for the assessee. Thus, all the documentary evidences, placed before us and noted by us, have been sufficiently proved, we hold that the agents were remunerated by way of commission for procuring sale orders for the assessee outside India; that there is no evidence on record to show that any services by these agents was rendered in India. As considering in the case of Toshoku Ltd. [ 1980 (8) TMI 2 - SUPREME COURT] commission income earned by such agents cannot be termed to have incurred or arisen in India, and therefore, was not taxable in India - there was no liability on the assessee to deduct any TDS of such commission income. The disallowances therefore made are uncalled for - Decided in favour of assessee.

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• 2024 (1) TMI 1074
  Allowability of Interest Expenditure - disallowance on the ground that the borrowed funds were utilized for non-business purposes - Condonation of delay of 418 in filing the appeal - AO observed that the assessee had claimed deduction on account of interest expenditure - AO proceeded to disallow the entire interest u/s 14A of the Act on the ground that borrowed funds were utilized for making investments in securities and shares which had yielded exempt income to the assessee and completed the assessment - CIT(A) however, addressed the entire dispute on the ground that the borrowed funds were utilized for non business purpose in terms of section 36(1)(iii) HELD THAT:- The assessee was pursuing an alternative remedy available with him legally before the ld. CIT(A) by waiting for disposal of rectification application. - The reasons adduced by the assessee for the delayed filing of appeal is sufficient cause - Delay condoned. The assessee had furnished the complete details of borrowed funds together with its utilization thereon before the ld CIT(A) and pleaded that the interest paid on borrowed funds would be eligible for deduction. CIT(A) sought for a remand report from the ld AO who indeed submitted the remand report, clearly giving the details of utilization of borrowed funds. This remand report has not been properly appreciated by the ld CIT(A) while dismissing the appeal of the assessee. Considering the fact that the ld AO had given the remand report and that remand report was very much available before the ld CIT(A), CIT(A) ought to have considered the observations given by the ld AO in the remand report. Hence, we deem it fit and proper to restore this quantum appeal to the file of ld CIT(A) qua the issue in dispute before us with regard to disallowance of interest for re-adjudication in the light of remand report submitted by the ld AO. Accordingly, the grounds raised by the assessee are allowed for statistical purposes.

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• 2024 (1) TMI 1073
  Reopening of assessment u/s 147 - Reason to believe - notice issued beyond the period of 4 years - as alleged assessee was one of the beneficiary of Client Code Modification (CCM) by some broker - HELD THAT:- The assessee filed objections for the reasons recorded and these objections were not disposed of by the speaking order by the AO thereby violating the guidelines provided by the Hon ble Supreme Court in the case of GKN Driveshafts Ltd [ 2002 (11) TMI 7 - SUPREME COURT] . AO had initiated the re-assessment proceedings way back on 31.3.2016 itself and had been waiting for the assessee to file a return in response to notice u/s 148 of the Act by offering the alleged profit earned by the assessee due to CCM . There is no information provided in the reasons as to in whose hands, a survey u/s 133A of the Act was conducted by Ahmedabad Investigation wing. The reason only speaks that some survey in Ahmedabad conducted revealted that some broker was involved in misusing the CCM facility of NSE and engaged in providing non-genuine losses and profits. The reason does not specify whether the broker through whom the assessee had carried out the transaction of trading of shares and securities was involved in such malpractices. Infact during the course of re-assessment proceedings, the ld. AO even sought to examine the broker of the assessee M/s S S Corporate Securities Ltd u/s 133(6) of the Act and that the said broker had duly replied directly to the ld. AO confirming the fact of CCM being carried out by them for their clients due to punching errors committed by their staff but had never confirmed that their actions had enabled the assessee to shift the losses or profits. Dispute is squarely covered by the decision of Globus Power Generation Ltd [ 2023 (5) TMI 215 - ITAT DELHI] as held there is no material to infer that such client code modification has been done with malafide purpose of shifting of the profit or evasion of the tax. There is no material before the Assessing Officer to form such a belief that income had escaped due to such client code modification and thus there is no live link between the material before the Assessing Officer and inference made. Hon ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers (P) Ltd [ 2007 (5) TMI 197 - SUPREME COURT] has held that for validity of reason recorded it is essential that there should be a relevant material on which a reasonable person could make requisite belief. Assessment cannot be reopened validly on the basis of the above reasons recorded in absence of any tangible material to infer that income escaped in the case of the assessee. Also see Coronation Agro Industries Ltd [ 2017 (1) TMI 904 - BOMBAY HIGH COURT] Decided against revenue.

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• 2024 (1) TMI 1072
  Validity of assessment u/s 153C - Period of limitation - Date of recording of satisfaction - calculation of six assessment years - whether CIT(A) is correct in holding that assessment made for assessment year 2013-14 is invalid as 6 previous assessment years from the year of search has to be reckoned from the date when the books of accounts or seized documents were handed over to the Assessing Officer or when the satisfaction was recorded? HELD THAT:- We are guided by the judgment of RRJ Securities Ltd. [ 2015 (11) TMI 19 - DELHI HIGH COURT] proviso to Section 153C(1) of the Act expressly indicates that reference to the date of initiation of search for the purposes of second proviso to Section 153A shall be construed as a reference to the date on which valuable assets or documents are received by the AO of an Assessee (other than a searched person). Thus, by virtue of the second proviso to section 153A of the Act, the assessments/reassessments that were pending on the date of receiving such assets, books of accounts or documents would abate - date on which the AO of the person other than the one searched assumes the possession of the seized assets would be the relevant date for applying the provisions of Section 153A of the Act. We, therefore, accept the contention that in any view of the matter, assessment for AY 2003-04 and AY 2004-05 were outside the scope of Section 153C of the Act and the AO had no jurisdiction to make an assessment of the Assessee s income for that year. Also see Jasjit Singh case [ 2023 (10) TMI 572 - SUPREME COURT] as held that in the case of the other person, which in the present case is the petitioner herein, such date will be the date of receiving the books of account or documents or assets seized or requisition by the Assessing Officer having jurisdiction over such other person. In the case of the other person, the question of pendency and abatement of the proceedings of assessment or reassessment to the six assessment years will be examined with reference to such date Thus we have no hesitation to hold that the Assessments made for A.Y. 2013-14 u/s. 153C consequent to the satisfaction note recorded on 26.03.2021 (A.Y. 2021-22) is beyond the time limit prescribed and hence, treated as void ab initio. Appeal of the Revenue is dismissed.

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• 2024 (1) TMI 1071
  Deemed dividend u/s 2(22)(e) - transactions of advancing of money by the company to appellant and earning interest on it is not amounted to business transactions - HELD THAT:- The factum of interest and deduction of TDS thereon is also reflected in the ledger account and the confirmation thereof by the corresponding party. Hence, the advances made by the lender company to the assessee is not a loan/advance simplicitor but is beset with the character of quid pro quo owing the charge of interest for the benefit of lender company. In the circumstances, in the case of Pradip Kumar Malhotra [ 2011 (8) TMI 16 - CALCUTTA HIGH COURT] has observed that advances given by lender firm was not for the individual benefit of the share holder but for business purposes and therefore, such transaction could not fall within the sweep of deeming fiction created under section 2(22)(e) of the Act. This reason, on a standalone basis, is sufficient to exclude the applicability of section 2(22)(e) of the Act on the money received by the assessee. Similar view has been expressed in PCIT vs. Mohan Bhagwatprasad Agrawal [ 2020 (1) TMI 1139 - GUJARAT HIGH COURT] and JAYSON INDUSTRIES [ 2022 (8) TMI 217 - ITAT DELHI] We see considerable force in the plea of the assessee for exclusion of loan and advances in question from the ambit of deeming fiction provided in section 2(22)(e) of the Act. Appeal of assessee allowed.

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• 2024 (1) TMI 1070
  Revenue recognition - interest on bank deposits - Business Income OR income from other sources - proof of commencement of business - As per AO assessee has not commenced its business, thus interest earned on bank deposits was liable to be charged to Income tax as income from other sources - HELD THAT:- A perusal of the balance sheet show that the assessee was having inventories of Rs. 37.88 crores as on 31.03.2014 which was increased to Rs. 80.50 crores as on 31.03.2015. The assessee has purchased a land in Gautam Budh Nagar measuring 222.58 sq. yds. for construction of group housing duly approved by the Yamuna Expressway on 12.12.2012, which means that the business of the assessee commenced in F.Y. 2012-13. Therefore, the observation of the Assessing Officer that the assessee has not commenced its business is factually incorrect and on proper appreciation of facts, we decline to interfere with the findings of the ld. CIT(A). Ground No. 1 is dismissed. Addition u/s 68 - failure on part of assessee to submit the confirmation from the lender, proof of source of income outside India, proof of residential status or copy of passport of the lender for proving identity, genuineness and creditworthiness of the lender to pay the huge money - CIT(A) deleted addition - HELD THAT:- We have carefully perused the bank statement of Kotak Mahindra Bank belonging to Shri Owais Usmani and we find that Shri Owais Usmani is having more than sufficient balance in his bank account to make the impugned investment. Since he is 100% share holder in the company, there is no question of doubting his identity. The entire money has been remitted through proper banking channel with the approval of RBI. Therefore, the same can be safely concluded to have established the genuineness of the transaction and bank statements are showing the capacity of Shri Owais Usmani. No error or infirmity in the findings of the ld. CIT(A). Appeal of the Revenue is dismissed.

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• 2024 (1) TMI 1069
  Allowability of Derivative loss - Business loss or speculative transaction - AO denied the set off of the derivative loss against the profits of the wine shop. - Estimation of income on the basis of alleged payment of margin monies - AO concluded that the assessee had not carried out the derivative transactions through a stock broker or sub-broker or intermediary registered u/s 12 of the SEBI Act and accordingly treated the said derivative transaction as a speculative transaction in terms of section 43(5) of the Act and disallowed the same. HELD THAT:- It is not in dispute that transactions were entered by the assessee with three sub brokers - The maximum amount of investment on one date of derivative transaction was Rs 1,27,20,985/- considering in aggregate of all the three parties. It is not in dispute that the assessee had incurred total loss in derivative transactions amounting to Rs 14,43,040/- which was separately disallowed by the ld. AO in the assessment. This point was not agitated by the assessee before the ld. CIT(A). Plea of the assessee is that she had not deposited any margin money with the sub-brokers - We find that the ld. AR placed on record the ledger account copies of the three sub-brokers along with contract notes of their respective brokers. - The total loss incurred by the assessee out of doing transactions with aforesaid three parties which has been paid by the assessee on the following dates from her bank account maintained with State Bank of India The sources for making the aforesaid payments are drawn from the books of accounts regularly maintained by the assessee and in any case, the same is not disputed by the revenue before us. Considering the various evidences submitted by the assessee as stated supra, we are inclined to accept to the contentions of the assessee and the loss of Rs 14,43,040/- alone had to be disallowed which had already been done by the ld. AO in the assessment and accepted by the assessee by not filing any appeal. Hence there is no need to make any separate addition on account of alleged payment of margin monies on an estimated basis and accordingly, the addition made in the sum is hereby deleted. Decided in favour of assessee.

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• 2024 (1) TMI 1068
  Validity of Reopening of assessment u/s 147 - proceedings initiated after the expiry of 4 years - reasons to believe - scope of change of opinion - loss claimed by assessee company towards foreign exchange loss on transaction and translation - HELD THAT:- As there was no failure on the part of the Assessee to make full and true disclosure of the primary facts. Relying upon the judgment of New Delhi Television Limited [ 2020 (4) TMI 133 - SUPREME COURT] the CIT(A) had concluded that the Assessee, having disclosed truly and fully the primary facts, was not under obligation to communicate to the Assessing Officer the possible inferences which could have been drawn from the primary facts disclosed. We concur with the aforesaid view taken by the CIT(A). Further, in our view Explanation 1 to Section 147 of the Act could be not attracted in the facts and circumstances of the case as the primary facts were apparent from the details and documents submitted by the Assessee. CIT(A) had noted that specific queries were raised by the AO in relation to Foreign Exchange Loss/(Gain) in response to which the Assessee had provided relevant financial statements, documents, details and submissions. CIT(A) had further noted that in the reasons recorded the AO had drawn inference that income has escaped assessment on the basis of facts already on record and not on the basis of any new material which came in the possession of the Assessing Officer subsequent to the conclusion of the assessment proceedings. CIT(A) had concluded that reassessment proceedings were initiated on re-appraisal and re-examination of the assessment records without bringing any tangible material to show that income has escaped assessment on account of failure on the part of the Assessee to furnish true and full facts. We do not find any infirmity with the aforesaid conclusion drawn by the CIT(A). In our view, on the basis of the primary facts disclosed by the Assessee, the Assessing Officer drew inference in favour of the Assessee and accepted Assessee s claim for deduction for Net Loss/(Gain) on account of Foreign Currency Transaction Translation of INR 604.35 Crores . Subsequently, reassessment proceedings were initiated on account of change of opinion formed on re-appraisal of the facts already on record and examined during the regular assessment proceedings which was contrary to the judgment of CIT Vs. Kelvinator India Ltd [ 2010 (1) TMI 11 - SUPREME COURT] . As have already concluded that there was no failure on the part of the Assessee to disclose the primary facts and therefore, in view of the provisions contained in First Proviso to Section 147 of the Act re-assessment proceedings could not have been initiated in the case of the Assessee after the expiry of 4 years for the end of relevant assessment years. CIT(A) was correct in quashing the Assessment Order passed u/s 147 read with Section 144B of the Act of the Act. Ground No. 1 to 4 raised by the Revenue are dismissed.

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• 2024 (1) TMI 1067
  Addition u/s 68 - AO was not satisfied with the source of source aspect of the investors - assessee has failed to prove the credit worthiness and genuineness of parties who have paid the loan amount to the share subscribers of assessee company - CIT(A) deleted addition - HELD THAT:- When the order of learned CIT(A) is considered it establishes that on account of exempt income declared from the sale of equity shares of the alleged penny stock of SCTL, no addition was made in the hands of Dinesh Gupta HUF in assessment u/s 143(3) or in the hands of Rajesh Gupta HUF. The addition was made in the hands of Dinesh Gupta in assessment u/s 143(3). However, the same was deleted by learned CIT(A)-26, New Delhi and the order stands sustained [ 2021 (4) TMI 258 - ITAT DELHI] . Lastly, there was no allegation of Renu Gupta having source arising out of disinvestment of alleged penny stock and primarily her source was refund of loan in certain companies or sale of equity shares of Mangal Kalas Services Pvt. Ltd. Thus, learned CIT(A) has not erred in not finding substance in the conclusion of learned AO that the source of source is tainted. CIT(A) has taken into consideration all the relevant information about the identity of the investors, their bank statements, another financials which were duly filed to give details of the financial credibility of the investors. In the absence of any allegation of any cash deposits in the bank accounts of the investors so as to draw inference that it was assessee s own money which was accounted back by the investors, AO certainly had fallen in error in stretching the principles of test of improbability too far to hold that the transactions were created to mask the apparent as real. We are of the considered opinion that merely because of some sort of control of Gupta family into companies transacting in the alleged penny stock cannot be basis to question the source of source in the hands of the assessee company without any direct evidence or circumstantial evidence giving a complete link of circumstances. Mere inference of Ld. AO, out of valid and reported transactions to question the source of source for addition u/s 68 could not have been sustained by learned CIT(A). Decided against revenue.

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• 2024 (1) TMI 1066
  Validity of assessment u/s 153C - Relevant Date - Period of limitation - Date of recording of satisfaction - calculation of six assessment years - whether CIT(A) is correct in holding that assessment made for assessment year 2013-14 is invalid as 6 previous assessment years from the year of search has to be reckoned from the date when the books of accounts or seized documents were handed over to the Assessing Officer or when the satisfaction was recorded? HELD THAT:- We are guided by the judgment of RRJ Securities Ltd. [ 2015 (11) TMI 19 - DELHI HIGH COURT] proviso to Section 153C(1) of the Act expressly indicates that reference to the date of initiation of search for the purposes of second proviso to Section 153A shall be construed as a reference to the date on which valuable assets or documents are received by the AO of an Assessee (other than a searched person). Thus, by virtue of the second proviso to section 153A of the Act, the assessments/reassessments that were pending on the date of receiving such assets, books of accounts or documents would abate - date on which the AO of the person other than the one searched assumes the possession of the seized assets would be the relevant date for applying the provisions of Section 153A of the Act. We, therefore, accept the contention that in any view of the matter, assessment for AY 2003-04 and AY 2004-05 were outside the scope of Section 153C and the AO had no jurisdiction to make an assessment of the Assessee s income for that year. Also see Jasjit Singh case [ 2023 (10) TMI 572 - SUPREME COURT] as held that in the case of the other person, which in the present case is the petitioner herein, such date will be the date of receiving the books of account or documents or assets seized or requisition by the AO having jurisdiction over such other person. In the case of the other person, the question of pendency and abatement of the proceedings of assessment or reassessment to the six assessment years will be examined with reference to such date Thus we have no hesitation to hold that the Assessments made for A.Y. 2013-14 u/s. 153C consequent to the satisfaction note Assessments made for A.Y. 2006-07 and A.Y. 2007-08 u/s 153C consequent to the satisfaction note recorded on 18.11.2013 are outside the scope of Section 153C of the Income Tax Act, 1961 and hence, the assessments are treated as void ab initio. Consequently, the assessment made u/s 143(3) for A.Y. 2012-13 shall also be treated as void. Decided in favour of assessee.

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• 2024 (1) TMI 1065
  Estimation of income - Addition u/s 69C - bogus purchases of diamonds - HELD THAT:- We find force in the contention of the assessee that the Ld. CIT(A) erred in sustaining the 100% disallowance of purchases from M/s. Mohit Enterprises and thus, erred in confirming the addition u/s 69C of the Act. Therefore, as per the ratio laid down in Nitin Ramdeoji Lohia [ 2022 (11) TMI 480 - BOMBAY HIGH COURT] profit embedded in the transaction only need to be brought to tax particularly when the tax authorities have not disturbed the sales declared by the assessee in this year as well as balance shown as closing stock. And since we have noted that the assessee had itself offered gross profit of 3.95% this year and 17.59% in AY. 2014-15, therefore, in this year only profit element of gross profit @ 2% of the purchases from M/s. Mohit Enterprises would be just and reasonable and it is ordered accordingly. Appeal of the assessee is partly allowed.

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• 2024 (1) TMI 1064
  Validity of Order u/s 201(1) and 201(1A) - period of limitation - deeming a person to be an assessee-in-default - Non deduction of TDS - bone of contention is the order u/s. 201(1) of the Act which is dated 31.10.2019. The TDS return was filed by the assessee on 07.05.2013, therefore, the contention of the assessee that the impugned order is barred by limitation as it expires after two years which means that the order ought to have been framed on or before 31.03.2015 and as the order has been framed on 31.10.2019 it is barred by limitation - HELD THAT:- Similar issue was considered by this Tribunal in M/s. Cantabil Retail India Ltd. Versus ACIT Circle 73 (1) New Delhi [ 2023 (7) TMI 462 - ITAT DELHI ] as the time limitation for passing an order under sub-section (1) to Section 201 i.e deeming the present assessee before us, as an assessee-in-default under sub-section (1) to Section 201 of the Act could have validly been done within a period of 2 years from the end of the financial year in which the statement u/s. 200 was filed by the assessee, i.e., latest by 31.03.2014, as per the law as was then available on the statute, therefore, the order passed by the AO u/ss. 201(1) /201(1A) of the Act, dated 29.03.2018 is clearly barred by limitation. Appeal of assessee allowed.

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• 2024 (1) TMI 1063
  Accrual of income - interest due on NPA accounts - Urban Co-operative Bank - assessee s not accepted by the AO stating that since the assessee was following mercantile system of accounting, the interest income on NPA need to be included in its total income and has referred to the CBD T Instruction No.17/2008 dated 26.11.2008 issued in the context of Section 145 - HELD THAT:- As decided in Kangra Central Co- operative Bank [ 2022 (12) TMI 449 - HIMACHAL PRADESH HIGH COURT ] although the amendment in section 43D was sought to be made effective w.e.f 1/04/2018 but it was liable to be treated as retrospective in nature and has upheld the view taken by the Tribunal that the assessee was required to tax the interest on the sticky loans/NPAs on receipt basis. We, therefore, find that the matter is squarely covered in favour of the assessee by the decision of the Hon ble jurisdictional High Court. The amendment whether to be read as retrospective or prospective being a question of law where so decided by the Hon ble Jurisdictional High Court is binding on all the authorities under its jurisdiction and we see no reason but to respectfully follow the said decision. In the instant case, it is not in dispute that the assessee is a Co-operative Bank and covered under Non Scheduled Bank as per the Banking Regulation Act, 1949 and therefore, the amendment brought in by the Finance Act, 2017 which has been held to be retrospective in nature applies in the case of the assessee. Thus the addition so made by the AO and confirmed by the ld. CIT(A) is hereby set aside. Appeal of assessee allowed.

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• 2024 (1) TMI 1062
  Bogus share transactions - disallowance of loss in respect of transaction of the shares - Reliance on the statement of broker/entry operator - exemption u/s 10 (38) with respect to alleged income under the head Long Term Capital Gain on sale of shares of penny stock - as argued by assessee statement as been recorded from entry operator by the DDIT (Investigation) Kolkata was not provided to be cross examined - HELD THAT:- It is trite law that if any evidence is available with the Revenue and the same is going to be used against the assessee, it is compulsory that such evidence must be put to the assessee for assessee s cross examination or rebuttal. The denial of opportunity of cross examination by the AO itself is absolute failure of principles of natural justice and this itself will make the evidence to be discarded. Other than the statement of Shri Sanjay Vora, the Assessing Officer is not in possession of any evidence to show that the transaction entered into by the assessee in respect of purchase and sale of shares of Shreenath Commercial and Finance Ltd., as colourable device, is available. The assessee on the contrary has produced ledger accounts, purchase bills, sale bills and even bank account statement in respect of the transaction. It was very much open to the AO to invoke his powers u/s. 133(6) of the Act or to call for information from the stock brokers. This has not been done. AO has blindly relied upon the statement recorded from one stock broker who has given names of various companies and Shreenath Commercial and Finance Ltd., is also one of them. The shares purchased by the assessee and sold by the assessee are on Bombay Stock Exchange. STT has also been clearly paid on both the transactions. These are not off-line transactions. AO has also not considered the fact that the assessee had to sell the shares of Maa Tarini Industries Ltd., to protect itself from the financial loss caused on account of loss incurred in the transactions of shares of Shreenath Commercial and Finance Ltd. This being so, respectfully following the principles laid down in the case of Smt. Bimala Devi Singhania ( 2023 (10) TMI 1351 - ORISSA HIGH COURT] the disallowance of loss in respect of transaction of the shares of Shreenath Commercial and Finance Ltd., in the case of the assessee as made by the AO and as confirmed by the ld CIT(A) stands reversed. Decided in favour of assessee.

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• 2024 (1) TMI 1061
  Deduction u/s 80P(2)(a)(i) - i nterest income received on investments made with District Co-operative Bank - as per AO interest income received from Kanara District Co-operative Bank was not entitled to deduction - HELD THAT:- On identical factual situation, the Bangalore Bench of the Tribunal in the case of Canara Bank Staff Credit Co-operative Societies Ltd [ 2023 (10) TMI 1350 - ITAT BANGALORE] had restored the matter to the AO to examine whether the amounts invested with the Co-operative Banks are out of compulsion under the Karnataka Co-operative Societies Act and the relevant Rules. It was further held by the Tribunal that if the investments are out of compulsion under the Act and the relevant Rules, the interest income received out of the investment made under such compulsion would be liable to be taxed as income from business which would entail the benefit of deduction under section 80P(2)(a)(i) of the Act. In the event it is found that assessee is not entitled to get the benefit under section 80P(2)(a)(i) of the Act, the AO shall also examine whether it is entitled to deduction u/s 80P(2)(d) in light of the recent judgment of Kerala State Co-operative Agricultural Rural Development [ 2023 (9) TMI 761 - SUPREME COURT] If the assessee is not entitled to benefit of deduction either under section 80P(2)(a)(i) or under section 80P(2)(d) of the Act, the AO shall consider the claim of deduction under section 57 of the Act in respect of the cost of funds for earning such interest income which is assessed as income under the head income from other sources . For the direction to grant deduction for the cost of funds, we rely on the judgment of Totgar s Co-operative Sales Society Ltd [ 2017 (1) TMI 1100 - KARNATAKA HIGH COURT] Appeal filed by the assessee is allowed for statistical purposes.

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• Customs

• 2024 (1) TMI 1090
  Revocation of suspension of the Licence of the Customs Broker-respondent - inappropraie classification of imported goods - HELD THAT:- In the impugned order, the Commissioner has observed that it was not the case of the Department that the Customs Broker had given a different description than what was given in the import invoice. The above observation is of utmost relevance since the import invoice is issued by the vendor / foreign supplier to the importer. Further, the Commissioner has also accepted the pleading of the respondent-Customs Broker that the classification under CTH 8518 was made as per the directions of the importer, which fact stood duly supported by the Show Cause Notice issued by the DRI to the importer. The Commissioner has thus concluded that there was no violation of any of the Regulations, as alleged in the Show Cause Notice, by the respondent-Customs Broker and being satisfied, has proceeded to drop the proposed proceedings. Other than filing the present appeal, the Revenue has not been able to dislodge the above findings of the lower authority, nor has it even denied the said findings as incorrect. The classification declared by the importer itself has been accepted and thus, there is no reason still to hold that there was wrong classification, any more. Hence, the charge against the respondent-Customs Broker for being hand in glove with the importer inviting such a hugely disproportionate action of suspension of its very Customs Broker Licence and forfeiture does not hold water. There are no infirmity in the impugned order of the Commissioner of Customs (Imports) and hence, the appeal filed by the Revenue is dismissed.

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• 2024 (1) TMI 1089
  Validity of remand order passed by the Commissioner (Appeals) - The appellate authority has accepted the prayer of the revenue to remand the matter back but failed to consider the cross objection filed by the appellant - declared value was accepted as the transaction value for the purposes of assessment of duty under Rule 3(3)(b) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 HELD THAT:- The contentions of the Ld. Additional Commissioner cannot be accepted since, as recorded by the Commissioner (Appeals) himself at pages 4 and 5 of the impugned order, the appeal was filed with a prayer to remand, that is to say, the same must have been requested / prayed for during the course of arguments and hence, the word remand finds place at two places in the impugned order. In any case, even the order of the Commissioner (Appeals) as to allowing the Department appeal and prayer , satisfy that what is passed by the Commissioner (Appeals) is a remand order, for which the appellant before the said authority had not made out any specific case as to violation of any of the conditions under Section 128A(3)(b) ibid. The order of the Commissioner (Appeals) is clearly in violation of the statutory provisions, for which reason the impugned order becomes unsustainable in law. He should have, after making such enquiry as may be necessary, passed such order as he thinks just and proper by disposing of the dispute before him. The ld. Commissioner (Appeals) may examine and dispose of the matter afresh on merits after hearing the appellant and allowing it to submit a written submission, if it so desires - The impugned order is set aside and the appeal is partially allowed.

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• 2024 (1) TMI 1088
  Re-valuation of imported goods - re-determination/enhancement of value of both the Infrared Thermometer as well as Fingertip Pulse Oximeter Blue Colour in terms of Rule 5 of the Customs Valuation Rules, 2007 - rejection of declared value - HELD THAT:- The principles of natural justice have not been followed by the first appellate authority insofar as the Infrared Thermometers are concerned, instances of imports relied upon have not been furnished to the appellant, but the same have been used against the appellant. There is no denial by the Revenue on the above facts. Hence, it appears that at least insofar as valuation of the thermometer in question is concerned, the re-determination of the value is not proper. The contemporaneous imports relied upon by the first appellate authority having not been put across for rebuttal, the impugned order suffers from serious legal infirmity, being violative of the principles of natural justice. The first appellate authority has undoubtedly proceeded beyond the scope of the appellate jurisdiction as prescribed under the statute and therefore, the impugned order to this extent cannot sustain. Insofar as the enhancement of value of Fingertip Pulse Oximeter is concerned, no specific arguments were advanced - the appeal insofar as the enhancement of value of the oximeter is concerned, is dismissed. The appeal is partly allowed and partly dismissed.

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• 2024 (1) TMI 1087
  Valuation of imported goods - PTFE Thread Seal Tape - correctness of the declared value which were alleged to be not on par with the contemporaneous imports in other ports - HELD THAT:- Nothing is said about the commercial level and the quantity involved in those transactions to conclusively establish that the so-called contemporaneous imports were in fact of similar goods within the meaning of Rule 2(f) ibid. Having alleged about the contemporaneous imports, the adjudicating authority could have at least brought on record or in the Order-in-Original the details of the alleged contemporaneous imports, mere mentioning of dates and Ass. Value is not a sufficient compliance with the requirements of the statute. So also, with regard to the so-called market survey done behind the back of the appellant, nothing apparently is placed on record and hence, both the so-called alleged contemporaneous imports and the market survey is to be ignored. Moreover, the requirements of the statute are that the imports should be of identical or similar goods and such imports should be at or about the same time as the import in question. This Bench in the case of COMMISSIONER OF CUSTOMS VERSUS M/S. SREE RAJENDRA TEXTILES [ 2023 (8) TMI 265 - CESTAT CHENNAI] has considered in depth the issue of re-valuation of imported goods on the basis of contemporaneous imports and held the lower adjudicating and assessing authorities have to necessarily consider all the commercial factors to arrive at contemporaneous prices of identical or similar goods before resorting to enhancement of the declared transaction values in terms of Rule 4 or Rule 5 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The ratio of the above order is clear, the re-valuation attempted by the Revenue has been set at naught for lack of merits by the Bench. There are no justifiable reasons to sustain the impugned order - appeal allowed.

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• 2024 (1) TMI 1086
  Jurisdiction - proper officer to issue SCN - power of Directorate of Revenue Intelligence (DRI) to issue SCN - HELD THAT:- As and by way of ad-interim relief, the impugned Order-in-Original dated 5th December 2023 passed by the respondent is stayed, with liberty to the respondents to make an application for vacating the said orders in the event, the respondents are of the opinion that the same ought not to be continued and / or after the decision of the Supreme Court in the pending Review/Writ Petition in the case of M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] . Petition disposed off.

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• 2024 (1) TMI 1085
  Delayed adjudication of the show cause notice - Jurisdiction to issue SCN - SCN issued by the Directorate of Revenue Intelligence - HELD THAT:- No different view can be taken from what has been taken in the case FARMICO COMMODITIES PRIVATE LIMITED (FORMERLY KNOWN AS WADHWANI COMMODITIES TRADING PVT. LTD.) VERSUS THE UNION OF INDIA THROUGH THE SECRETARY, DEPARTMENT OF REVENUE ORS. [ 2023 (9) TMI 1413 - BOMBAY HIGH COURT] , that is to admit the present petition. This Court had directed adjudication of the show cause notice, keeping open the contentions of the petitioners to be urged on such issues before the adjudicating authority. In so far as the interim reliefs are concerned, the impugned show cause notices dated 20 June 2007 and 24 May 2010 shall remained stayed. However, the respondents are at liberty to move this Court for vacating of the interim stay if the respondents are of the opinion, that such orders ought not to be continued and / or after the decision of the Supreme Court on the review proceedings filed in M/s Canon India Pvt. Ltd. and of the final adjudication on the challenge to the Finance Act 2022.

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• 2024 (1) TMI 1084
  Appropriate petition not filed - no pleadings on the fact as to how the petitioners are aggrieved - HELD THAT:- If the individual petitioners are aggrieved, they need to file appropriate petitions - these petitions cannot be entertained. Petition disposed off.

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• 2024 (1) TMI 1053
  Jurisdiction - Power of DRI to issue Show Cause Notice (SCN) - HELD THAT:- It is not in dispute that the issue involved in the present petition would also stand covered by the decision of the Supreme Court in the case of M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT] , which is the subject matter of pending review proceedings in the Supreme Court. It is enough say that the proceedings are pending in the Supreme Court. As and by way of ad-interim relief, the impugned order is stayed, with liberty to the Respondents to make an application for vacating of the said order in the event the Respondents are of the opinion that the same ought not to be continued and / or after the decision of the Supreme Court in the pending Review / Writ Petition in the case of Canon India Pvt. Ltd.

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• Corporate Laws

• 2024 (1) TMI 1060
  Transfer of pending application for winding up of the respondent company to the NCLT under IBC - non-payment of dues arising out of a contract for services entered into between the parties - Section 433(e) read with Sections 434 and 439(1)(b) of the Companies Act, 1956 - HELD THAT:- Reliance may be placed on the decision of the Supreme Court in the case titled ACTION ISPAT AND POWER PVT. LTD. VERSUS SHYAM METALICS AND ENERGY LTD. [ 2020 (12) TMI 535 - SUPREME COURT] , whereby it was held that those winding up proceedings pending before High Courts, which have not progressed to an advanced stage, ought to be transferred to the NCLT. It is the opinion of this Court, that since no substantive proceedings have been undertaken towards winding up of the company, the present petition does not deserve to be continued before this Court. The present company petition is at a very nascent stage and no effective orders as such have been passed towards the winding up of the company. Before parting with this matter, it would be suffice to state that the three decisions [ WEST HILLS REALTY PRIVATE LTD. RAVI GHAI AND ANOTHER VERSUS NEELKAMAL REALTORS TOWER PVT. LTD. [ 2016 (12) TMI 1253 - BOMBAY HIGH COURT] , COMMISSIONER OF INCOME TAX-8, MUMBAI VERSUS REGISTRAR OF COMPANIES, MUMBAI, MR. KESAVAN VARADARAJAN DIRECTOR, MOTECH SOFTWARE PVT. LTD., MR KAUSHIK VRAJDAS VED [ 2017 (5) TMI 315 - BOMBAY HIGH COURT] , THE JAYABHARAT CREDIT LIMITED VERSUS JALGAON RE-ROLLING INDUSTRIES LTD. [ 1996 (10) TMI 527 - BOMBAY HIGH COURT] ] have no bearing on the matters in issue in view of categorical directions of the Supreme Court in the above noted case of Action Ispat and Power Limited. The instant petitions are transferred to the NCLT. Parties to appear before the NCLT on 01.04.2024. The interim orders passed by this Court in these petitions, if any, shall continue till the said date. Petition disposed off.

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• Service Tax

• 2024 (1) TMI 1059
  SUBKA VISHWAS [Legacy Dispute Resolution] Scheme Rules, 2019 - petitioner was unable to make payment due to technical glitch - HELD THAT:- The SUBKA VISHWAS [Legacy Dispute Resolution] Scheme Rules, 2019, is self contained code. The SVLDRS-1 was to be uploaded online and SVLDRS-3 was also to be uploaded online within 60 days from the date of receipt of the SVLDRS-1. A declarant was required to make payment online within 30 days from the date of uploading of SVLDRS-3. Petitioner knew the provision as he had chosen to take benefit of the scheme by uploading SVLDRS-1. He knew that within 60 days from the date of uploading of SVLDRS-1, SVLDRS-3 would be uploaded and he would be required to make the payment within 30 days from the said date. Therefore, the petitioner s contention that he could notice the SVLDRS-3 only on the website of the CBIC on or around 15.6.2020, and thereafter, he tried to make the payment but he failed for technical glitches is not convincing. The petitioner s allegation that there were technical glitches is not supported by any cogent and credible evidence. The petitioner ought to have made the payment within 30 days from 19.02.2020 or till the extended time, which he failed to do so. Once the petitioner failed to comply with the provisions of the scheme, which is a complete code in itself, this court would not like to extend the limitation for making the payment under the scheme in exercise of its jurisdiction under Article 226 of the Constitution of India. In an identical matter, the Supreme Court has dismissed the Special Leave petition against an order of the jurisdictional High Court refusing to extend the time under the scheme for making payment as per SVLDRS-3. The present writ petition is dismissed.

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• 2024 (1) TMI 1058
  Eligibility for abatement of 67% of gross value under the Notification No. 1/2006-ST - Classification of services - Commercial and Industrial Construction Service - Finishing and Completion work or not - works executed by the appellant in the nature of false ceiling, partitions, flooring, modular systems, painting, carpeting, electrical connected works wall paneling, supply and fixing of various furniture, brick works etc. - HELD THAT:- There is ample evidence to show that the appellant has used goods and materials in construction service which are composite in nature. So also, from the different work orders we have no confusion to conclude that these are not completion and finishing service so as to get excluded from the ambit of Notification No. 1/2006-ST. It also requires to be mentioned that the Tribunal in its earlier Final Order dated 02.07.2014, had remanded the matter with specific direction to the Adjudicating Authority to verify and scrutinize documents furnished by the appellant with regard to their claim of abatement in spite of such directions, the Adjudicating Authority has denied the benefit of abatement with observing that appellant has not produced details of site-wise/ bill-wise for the purchase of materials. This observation is highly erroneous and not acceptable. The Tribunal while analyzing a similar situation in the case of M/S. OCEAN INTERIOR LIMITED VERSUS COMMISSIONER OF G.S.T. CENTRAL EXCISE, CHENNAI [ 2019 (11) TMI 124 - CESTAT CHENNAI ] observed that when there is sufficient evidence to establish that the appellant has purchased materials for execution of work and also paid VAT on such goods, the department cannot deny abatement and demand service tax on entire gross amount received. In the present case also, the appellant has produced VAT returns to show that they have paid VAT on the materials used in the execution of work orders. Similarly in the case of M/S RAJ INTER DECOR PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, AND SERVICE TAX, DELHI-III [ 2023 (7) TMI 1180 - CESTAT CHANDIGARH ] the Tribunal while considering the eligibility of abatement of 67%, as per Notification No. 01/2006-ST held that in case of construction services of composite nature, abatement has to be granted. Thus, appellant has used goods and material for execution of construction work. The allegation of the department that the works are entirely Completion and Finishing service is factually and legally incorrect - the appellant is eligible for abatement. Following the ratio of decisions cited, it is opined that the demand raised cannot sustain. Accordingly the impugned order is set-aside. Appeal allowed.

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• 2024 (1) TMI 1057
  Demand of Service Tax for extended period, not extending cum duty benefit - Imposition of penalties under Section 77 and 78 of the Finance Act, 1994 - demand in respect of services provided to Indian Railways - HELD THAT:- In the case of M/S. MUKESH KALWAY VERSUS COMMISSIONER OF CENTRAL EXCISE, BHOPAL [ 2017 (3) TMI 615 - CESTAT NEW DELHI] , SAROVAR HOTELS PVT. LTD., VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, HYDERABAD IV [ 2018 (8) TMI 816 - CESTAT HYDERABAD] and M/S DYNAMIC ENTERPRISES VERSUS CCE ST, JAIPUR [ 2018 (5) TMI 787 - CESTAT NEW DELHI] , the Tribunal has held that service tax is payable in respect of cleaning services provided to railways. In view of above, there are no merit in the order of the Commissioner dropping the demand in respect of cleaning services provided to railways and the order to that extent is set aside and appeal of Revenue to that extent is allowed. Extended period of limitation - penalties - HELD THAT:- The Commissioner himself has held that no duty was payable in respect of the services provided to railways under the belief that the said services are not chargeable to tax for various reason cited in the impugned order. In those circumstances, it will not be out of place to hold that the assessee could also have harbored similar beliefs in respect of services provided to railways. Thus, extended period of limitation cannot be invoked in respect of the amount demanded as service tax in respect of supply of services of railways. Benefit of cum tax calculation for the purpose of demand - HELD THAT:- Section 67(2) of the Finance Act 1994 clearly stipulates that gross amount charged by service provider should be treated as inclusive of Service Tax payable. In the instant case, the entire calculation stand made on the basis of gross amount charged by the appellant and therefore, the benefit of cum tax has to be granted to the appellant. The appeal of revenue is partly allowed to the extent that the demand for the period within the limitation is up held in respect of the services provided to railways. No penalty under section 78 or 77 can be imposed in respect of this demand.

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• 2024 (1) TMI 1056
  Disallowance of Cenvat credit - residential telephones provided to employees - HELD THAT:- This issue is no longer res integra as the tribunal, Kolkata in the case of M/S INDIAN BANK VERSUS COMMISSIONER OF SERVICE TAX, KOLKATA [ 2023 (9) TMI 569 - CESTAT KOLKATA] has allowed the Cenvat Credit on telephone bills in respect of the telephones which were installed at the residence of employees - As per the definition of input services during the material period, all activities relating to business should qualify as input service within its ambit. Thus, by relying on the definition of input services and the decision of the Tribunal Kolkata, it is held that the appellant is eligible for the Cenvat Credit of service tax paid on telephone bills in respect of the telephones installed at the residence of employees. Accordingly, we set aside the demand of Rs. 15,95,552/- confirmed in the impugned order. Demand pertaining to services rendered to mutual fund operators, which has already paid by the Appellant - HELD THAT:- The Appellant could not produce any evidence regarding the payment of interest for the delay in payment of this amount. Accordingly, out of the demand of Rs.21,65,286/-, the demand of Rs.15,95,552/- is set aside and the confirmation of the demand of Rs.5,69,734/- is upheld. The matter is remanded back to the adjudicating authority for the limited purpose of payment of interest for the delay in payment of this amount of service tax of Rs.5,69,734/. Demand of service tax (including Education Cess and Secondary and Higher Education Cess) of Rs. 9,60,92,082/- under Banking and other Financial Services - HELD THAT:- As a part of its normal banking activities, the Appellant invests in various government securities. Such investments in government securities are undertaken to comply with the requirements of maintaining the CRR and SLR as per the directives of Reserve Bank of India (RBI) issued from time to time. On several occasions, the Appellant purchases and sells these securities at cum-interest price. Thus, it is found that the Appellant pays and receives interest at the time of purchase and sale of securities respectively. It is observed that there is no element of service involved in purchases and sales of Govt. securities which is purely an investment activity - no service tax can be levied on interest income pertaining to investment made in Govt. securities and the demand confirmed in the impugned order on this count is liable to be set aside. Appropriation of Rs. 4,67,42,500/- against the aforesaid demand of Rs. 9,60,92,082/- - HELD THAT:- The demand itself has been held as not sustainable. Hence, the question of appropriation, if any, does not arise. Accordingly, the Appellant would be eligible for the consequential benefit of appropriation made against the said demand. Penalty imposed under Section 76 of the Finance Act, 1994 - HELD THAT:- As the delay in payments were unintentional and the Appellant always paid the service tax voluntarily with interest acting with bonafide belief, it is held that penalty imposed under Section 76 on this count is not justified. Thus, this is a fit case for invoking Section 80 of the Finance Act 1994 to waive the penalty. Therefore, the penalty imposed under Section 76 in the impugned order is set aside by invoking the provisions of Section 80 of the Finance Act, 1994. Penalty imposed under section 78 of the Finance Act, 1994 - HELD THAT:- It is observed that penalty under this Section can be imposed only under exceptional circumstances marked by fraud, collusion, willful misstatement, suppression of facts, contravention of any of the provisions of the Act or Rules, made there under with the intent to evade payment of service tax. As none of the said conditions justifying the imposition of penalty under Section 78 exists in the instant case, the penalty imposed under section 78 of the Finance Act, 1994 is not sustainable and the same is set aside. Appeal disposed off.

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• Central Excise

• 2024 (1) TMI 1055
  Demanded of interest for the delayed payment of education cess, but refrained from vacating the protest for payment of differential duty. - third time cess payable on clearance of imported goods from 100% EOU to DTA - Principles of natural justice - HELD THAT:- It is very clear that the appellant has deposited the money primarily to buy peace with the department. Hence the amount has been paid under protest so that his disagreement on the issue is registered with the department and the amount remains protected from being hit by time bar at a later stage while seeking a refund. In such a situation it was incumbent on the part of the department to vacate the protest through a speaking order at the earliest, after following the procedure as prescribed and following the principles of natural justice. This is because the amount deposited by the Appellant in good faith gets blocked until a decision is rendered in the matter which is a heavy cost for him. Its only after an order is passed vacating the protest that he can move forward by filing a refund claim, if the order is in his favour, or if held against him the Appellant can take up the matter in further appeal. The Hon ble Apex Court in THE STATE OF JHARKHAND AND ORS. VERSUS BRAHMPUTRA METALLICS LTD. AND ORS. [ 2020 (12) TMI 1241 - SUPREME COURT] held that a decision taken in an arbitrary manner contradicts the principle of legitimate expectation. An authority is under a legal obligation to exercise the power reasonably and in good faith to effectuate the purpose for which power stood conferred. The issue whether educational cess and secondary and higher education cess are chargeable on DTA clearance made by 100% EOU even if such cess were added while calculating the aggregate duties of customs payable under the Customs Act, 1962 or under any other law in force, has been answered by the Larger Bench of the Tribunal in KUMAR ARCH TECH PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II [ 2013 (4) TMI 482 - CESTAT NEW DELHI - LB] where it was held that the education cess and S H cess would be chargeable only once under Section 93 of Finance Act, 2004 and Section 138 of Finance Act, 2007 on the sum of basic customs duty and Additional customs duty. The impugned order set aside - appeal allowed.

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• CST, VAT & Sales Tax

• 2024 (1) TMI 1083
  Validity of assessment proceedings - time limitation - HELD THAT:- Section 9(2) of the Central Sales Tax Act, 1956 makes the provisions of the relevant state sales tax law applicable to proceedings for assessment, reassessment, recovery and enforcement . Therefore, the provisions of the TNVAT Act become applicable. Section 27 of the TNVAT Act enables the Tax Department to undertake reassessment in respect of escaped assessment of tax provided such reassessment is undertaken within six years from the date of assessment. Sub-section (2) of Section 22 of the TNVAT Act provides for deemed assessment. The proviso thereto prescribes that assessment shall be deemed to have taken place on 30.06.2012 with regard to specific assessment years, including assessment years 2006-2007 and 2007-2008, with which we are concerned. The question of limitation should be determined on the basis that the limitation period is six years from the date of assessment. Assessment year 2006-2007 - HELD THAT:- The respondent relies on pre-assessment notice dated 19.11.2012. Although the pre-assessment notice bears an endorsement, on the basis of the said endorsement, it is not possible to ascertain as to who acknowledged receipt. The said endorsement does not contain the name of the person who purportedly acknowledged receipt or bear the rubber stamp of the petitioner. It should also be noticed that the reminder notice dated 12.07.2018, which appears to be the next notice for the relevant assessment year, was issued after the period of limitation expired in June 2018. On the basis of documents placed on record in these proceedings and in view of the petitioner s assertion that he did not receive notice dated 19.11.2012, it is concluded that proceedings relating to assessment year 2006-2007 have not been shown to be within the period of limitation prescribed by statute. Proceedings relating to assessment year 2007-2008 - HELD THAT:- In the absence of any evidence that the assessee received assessment order dated 16.10.2012 and in the absence of proof of service of any notices within the limitation period of six years computed from 30.06.2012, the assessment order for assessment year 2007-2008 also warrants interference. The writ petitions are allowed.

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• 2024 (1) TMI 1082
  Input tax credit - denial in respect of the export transaction - power of suo motu revision against an order of the Assistant Sales Tax Officer or Sales Tax Officer - HELD THAT:- This issue has become academic. More so, when as against the assessment order the writ petitioner had filed an appeal and when the matter was fixed at the appellate stage, an authority who is junior than the appellate authority can obviously not exercise this power of suo motu revision. Above all a Senior Commissioner who is none other than the Commissioner of Sales Tax being a superior authority has sufficient jurisdiction to exercise the power of suo motu revision - the said ground raised by the writ petitioner does not appear consideration and accordingly stands rejected. Input Tax Credit - denial on account of payment made to third party on behalf of the selling dealer - HELD THAT:- It is a well settled legal principle that Input Tax Credit is a form of concession provided by the legislator and it is available only if the conditions stipulated are fulfilled. Sub-rule(8) of rule 19 makes it clear that the payment has to be made to the selling dealer by means cheque or demand draft or by means of electronic mode. Therefore, the writ petitioner is precluded from adding words to a stature to state that he will be entitled to the benefit of Input Tax Credit though he is not paid the amount to the selling dealer but to a third party based on certain instructions. The concession can always comes with conditions and if the conditions are not fulfilled the concession is not available. Therefore, the conclusion arrived at by the tribunal in this regard deserves to be confirmed. Thus, no grounds have been made out by the petitioner to interfere with the order passed by the learned tribunal - the writ petition fails and stands dismissed.

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• 2024 (1) TMI 1054
  Non-compliance of the mandatory provisions laid down under Rule 63(5) of the U.P. V.A.T. Rules, 2008 read with Section 57(8) of the U.P. V.A.T. Act, 2008 - manner and procedure of appeal / summary disposal - whether principle of best judgement assessment can be resorted to on the basis of presumption and surmises, without any material on record or not? - HELD THAT:- From perusal of Section 57 of the Act, 2008 it emerges that the same pertains to Commercial Tax Tribunal. Section 57(5) of the Act 2008 provides that the manner and procedure of summary disposal of appeal shall be as may be prescribed. Section 57(8) of the Act, 2008 provides that the Tribunal after calling for and examining the relevant records and after giving the parties reasonable opportunity of being heard or as the case may be after following the procedure prescribed in Section 57(8)(a) of the Act, 2008 may confirm, cancel or vary such order or (b) set aside the order and direct the assessing or appellate or revising authority or the Commissioner to pass a fresh order or (c) order such amount of tax, fee etc realized in excess to be refunded - the provisions of Order 41 Rule 31 Code of Civil Procedure are akin to Rule 63(5) of the Rules 2008. From perusal of the judgement of this Court in the case of Ved Ram [ 2004 (7) TMI 704 - ALLAHABAD HIGH COURT] it emerges that this Court has held the provisions of Order 41 Rule 31 Code of Civil Procedure to be mandatory and that the first appellate court while delivering the judgement is required to set out the points for determination, record the decision thereon and give its own reason for the said decision. This Court has further held that failure to comply with these provisions would not be a mere irregularity but would render the judgement nugatory. Accordingly, when the impugned judgement of learned Tribunal is seen in the context of the law laid down by this Court in the case of Ved Ram vis a vis the provisions of Section 57(8) and Section 57(5) of the Act, 2008 read with Rule 63(5) of the Rules, 2008 it clearly emerges that learned Tribunal has patently erred in neither noting the points for determination nor giving the reason for such decision thereon. The order impugned dated 19.03.2008 is set aside - the revision is allowed.

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