TMI Tax Updates - e-Newsletter
October 23, 2023

Case Laws in this Newsletter:

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

Articles

1. Can GST Amount credited in Cash Ledger be considered as cash payment or not? Commissioner shall follow High Court directions or appeal against but cannot act in contempt

   By: Vivek Jalan

2. Advertisement Tax not leviable on signboards displaying Business information

   By: Bimal jain

News

1. Price and Financial Stability: Managing Complementarities and Trade-Offs (Plenary Address by Shri Shaktikanta Das, Governor, Reserve Bank of India - October 20, 2023 - Delivered at the Kautilya Economic Conclave Organised by the Institute of Economic Growth and Ministry of Finance, Government of India, New Delhi)

2. Union Finance Minister addresses the Inaugural Plenary session at the Kautilya Economic Conclave -2023

Notifications

GST - States

1. 17/2023- State Tax (Rate) - dated 19-10-2023 - Bihar SGST

Amendment in Notification No. 1/2017-State Tax (Rate), dated the 29th June, 2017

2. 16/2023- State Tax (Rate) - dated 19-10-2023 - Bihar SGST

Amendment in Notification No. 17/2017- State Tax (Rate), dated the 29th June, 2017

3. 15/2023- State Tax (Rate) - dated 19-10-2023 - Bihar SGST

Amendment in Notification No. 15/2017-State Tax (Rate), dated the 29th June, 2017

4. 14/2023- State Tax (Rate) - dated 19-10-2023 - Bihar SGST

Amendment in Notification No. 13/2017-State Tax (Rate), dated the 29th June, 2017

5. 13/2023- State Tax (Rate) - dated 19-10-2023 - Bihar SGST

Amendment in Notification No. 12/2017- State Tax (Rate), dated the 29th June, 2017

6. 12/2023- State Tax (Rate) - dated 19-10-2023 - Bihar SGST

Amendment in Notification No. 11/2017- State Tax (Rate), dated the 29th June, 2017

Circulars / Instructions / Orders

Income Tax

1. 18/2023 - dated 20-10-2023

Order under section 119 of the Income-tax Act

Central Excise

2. ORDER NO. 10/2023 - dated 13-10-2023

Appointment of Common Adjudicating Authority in respect of SCNs issued to M/s Ind-Aust Maritime Pvt. Ltd

Highlights / Catch Notes

GST

• Court Upholds Tax Penalty for Incomplete E-Way Bill; Petitioner Failed to Explain Missing Part B in Writ Petition.

  Case-Laws - HC : Demand of tax alongwith penalty - part B of the e-way bill accompanying with the goods, was not filled - The petitioner has not submitted any explanation up to the stage of this Court that under what circumstances, part B of the e-way bill was not filled. - Once the finding of fact, which has been recorded against the assessee has not been assailed in the present writ petition, the petitioner cannot be permitted to argue the case beyond the pleadings. - HC
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• Aluminium foil containers are classified under heading 7615 with a GST rate of 12%.

  Case-Laws - HC : Classification of goods - Aluminium Foil Container / Aluminium Foil in Roll Form and Plastic Articles - the product Aluminium Foil Container is classifiable under 7615 with GST 12%. - HC
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Income Tax

• Unexplained Cash Addition u/s 69A for Household Expenses Overturned; Assessment Officer's Decision Deemed Incorrect.

  Case-Laws - AT : Addition u/s 69A - Unexplained Cash - household expenses - It is pertinent to mention that in the cash flow the assessee has also shown household expenses for her livelihood even in a situation when she is living with her family. Accordingly, have no hesitation to hold that the AO was not correct in making addition u/s. 69A and CIT(A) was also not justified in upholding the addition- AT
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• No Penalty for Income Misclassification: Assessee's Rental Income Reclassification u/s 270A Deemed Valid Explanation.

  Case-Laws - AT : Penalty u/s 270A - “under reporting” of the income - The assessee has not under reported any income. The addition has arisen on account of change in head of income. We notice that the assessee has offered an explanation as to why it reported the rental income under the head Income from House property and the said explanation is not found to be false. - No penalty - AT
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• Tribunal Rules No Permanent Establishment in India; No Profits Attributable for Relevant Years.

  Case-Laws - AT : Income deemed to accrue or arise in India - existence or otherwise of a Permanent Establishment (PE) in India - In fact, even at the stage of Tribunal, no contrary material has been brought on record by the Revenue to rebut the claim of the assessee that no PE existed in these years. - No profit shall be attributable - AT
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• India's MFN Clause: Taxation on Dividends, Interest, Royalties in Treaties Needs Section 90(1) Notification to Enforce.

  Case-Laws - SC : Most Favoured Nation (MFN) - rate of taxation at source on dividends, interest, royalties or fees for technical services (hereafter ‘FTS’) - bilateral treaties in question are between India and Netherlands, France, and Switzerland, respectively - Upon India entering into a treaty or protocol does not result in its automatic enforceability in courts and tribunals; the provisions of such treaties and protocols do not therefore, confer rights upon parties, till such time, as appropriate notifications are issued, in terms of Section 90(1). - SC
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• TDS and IGST claims rejected due to section 143(1)(a) additions; further verification required per Form 3CD audit report.

  Case-Laws - AT : Claim of the TDS and IGST payments rejected - additions u/s 143(1)(a) for the reason that the same has been shown in column no. 26B(b) for Form 3CD of the audit report - Matter restored back for verification - AT
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Customs

• Quota Allocation for Broken Rice Exports Focused on Humanitarian Food Security; Exporters' Responsibility Ends at Loading in India.

  Case-Laws - HC : allocation of quota for export of broken rice on humanitarian food security grounds - In the present case, the export of rice from this country does not entail distribution of rice in the country importing foodgrains. In most cases, the exporter’s obligation is discharged on loading the goods in question on a vessel in India (if the export is by sea). There is not even a suggestion that export of rice to the countries in question involves any special procedure or would yield any special experience - HC
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• "Upgraded Beneficiated Ilmenite" Classified Under Tariff Code 28230090, Eligible for Drawback Under Customs Tariff Act.

  Case-Laws - HC : Classification of export goods - Upgraded Beneficiated IImenite - The product “Upgraded Beneficiated Ilmenite” will fall under 28230090 under the Customs of Tariff Act. Consequently the petitioner is entitled to drawback and the same shall be granted to the petitioner - HC
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• IGST Classification of Imported Supplements Under Serial No. 453; No Differential Customs Duty Demand Upheld.

  Case-Laws - AT : Classification of imported goods - Rate of IGST (CVD) - Nutritional Supplements, which are preparations of substances such as Creatine, Nitrates, Glutamine and Amino Acids - Consequently the goods of the appellant will fall under Serial No. 453 of Schedule III of the Notification 1/2017-IGST, therefore, the demand of differential custom duty shall not sustain. - AT
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• Demurrage Charges Excluded from Transaction Value of Imported Goods, Confirmed by Customs Valuation Case Law.

  Case-Laws - AT : Valuation - inclusion of ship demurrage charges - it is settled that the demurrage charges cannot be included in the transaction value of imported goods. - AT
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Corporate Law

• NCLAT Upholds Asset Freeze Order: IL&FS Rent Assignment to HDFC Confirmed Under Transfer of Property Act.

  Case-Laws - SC : Scope of an asset and security freeze order - assignment or not - The reference to pledge, in some places in the documents, did not undermine the fact that the rents payable to and receivable by the lender (IL&FS) stood absolutely assigned to HDFC. The provisions of the TPA and the discussion of the various authorities support the conclusion that there can be a transfer of debts, which are defined as actionable claims. In the present case, the rents payable by IL&FS tenants, lessees and licensees are debts, which stood transferred to the creditor, i.e. HDFC Bank. Therefore, the NCLAT’s conclusions are unexceptionable; the challenge to its correctness, therefore fails. - SC
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Indian Laws

• Arbitral Award Overturned: High Court Sets Aside Decision Due to Arbitrator's Ignoring Evidence and Judicial Instructions.

  Case-Laws - SC : Validity of Arbitral Award - In the remand back case, the Arbitrator was warned not to be influenced by the factors that weighed in his mind while making the First Award. The Arbitrator was also required to proceed only on the basis of the evidence on record. Yet, regrettably, what we find is that the Arbitrator went on to ignore the judicial decision of the High Court with impunity. - The arbitral award in question is patently illegal in that it is based on no evidence and is, thus, outrightly perverse - High Court rightly set aside the award - SC
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• Court to Decide if Petitioners' Cheques Exceed Debt Owed; Presumption Favors Complainants Per Sections 118(a), 139 NI Act.

  Case-Laws - HC : Dishonour of Cheque - whether the amount due and payable on the part of petitioners towards the complainants, even as per the case of complainants, was less than the amount of cheques in question? - the presumption under Section 118(a) and 139 of NI Act shall be in the favour of complainants, since the issuance of cheques is not disputed and it has to be presumed that the cheques in question had been issued towards some legally enforceable debt. - The issue raised by the accused to be decided by the Trial Court - HC
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IBC

• Appellants Recognized as Financial Creditors u/s 5(8)(f) of IBC; Await Equal Treatment in Resolution Plan.

  Case-Laws - SC : CIRP - Home Buyers - Financial Creditors or not - scope of Financial Debt - The appellants are declared as financial creditors within the meaning of Section 5(8)(f) (Explanation) and entitled to be treated as such along with other home buyers/financial creditors for the purposes of the resolution plan which is awaiting final decision before the adjudicating authority. - SC
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Central Excise

• CENVAT Credit Approved for Rejected Inputs: Manufacturing Processes Qualify for Credit on Duty Paid Inputs.

  Case-Laws - AT : CENVAT Credit on rejected inputs - suo moto credit - the processes carried by the appellant in their premises result into manufacture and accordingly, CENVAT Credit availed on the duty paid on inputs received is admissible to the appellant. - AT
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• Supplier's Excise Duty Payment on Exempt Product Allows Recipient to Claim CENVAT Credit.

  Case-Laws - AT : CENVAT Credit - Denial of credit on the ground that supplier has paid Duty on exempt product - it is settled that even if Excise duty is not payable on the product for any reason but the assessee paid the excise duty and said payment of duty is not challenged or questioned at the manufacturers end, no question can be raised as regard availment of the credit by the recipient of the goods. - AT
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VAT

• Court Finds No Specific Cutoff Date for Tax Exemption Incentives in IT Sector, Contradicting Respondents' Claims.

  Case-Laws - HC : Determination of period for Grant of incentives of exemption from Tax - Had the State intended to confine the benefit granted to New Information Technology Industrial Units only upto 31.03.2013 as is contended by the respondents the language in para-4 would have been different, and it would have stated that for such units the period of incentive is only up to 31.03.2013, but that is not the case. Para-4 specifically says that total period of incentive in case of New Information Technology Industrial Units also would not exceed 6 years and 8 months - HC
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Case Laws:

• GST

• 2023 (10) TMI 987
  Direction on the respondent no. 1 and 4 to pay the liability of GST incurred on works contract executed and completed after 1st July, 2017 - contracts awarded in the pre-GST regime or post-GST regime - HELD THAT:- It appears the respondent authorities concerned have to bear the additional tax liability for execution of subsisting Government contract either awarded to the petitioner during pre-GST regime or in post-GST regime without updating the Schedule of Rates (SOR) incorporating the applicable GST while preparing Bill for payment. This writ petition is disposed of by giving liberty to the petitioner to file appropriate representations stating all the facts and provision as referred in preceding paragraph of this judgment, before the Additional Chief Secretary, Finance Department, Government of West Bengal within four weeks from date. On receipt of such representations the Additional Chief Secretary, Finance Department shall take a final decision within four months from the date of receipt of such representations after consulting with all other relevant departments concerned.

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• 2023 (10) TMI 986
  Payment of liability of GST incurred on works contract executed and completed after 1st July, 2017 - contracts were awarded in the pre-GST regime or post-GST regime - HELD THAT:- It appears the respondent authorities concerned have to bear the additional tax liability for execution of subsisting Government contract either awarded to the petitioners during pre-GST regime or in post-GST regime without updating the Schedule of Rates (SOR) incorporating the applicable GST while preparing Bill for payment. This writ petition is disposed of by giving liberty to the petitioners to file appropriate representations stating all the facts and provision as referred in preceding paragraph of this judgment, before the Additional Chief Secretary, Finance Department, Government of West Bengal within four weeks from date. On receipt of such representations the Additional Chief Secretary, Finance Department shall take a final decision within four months from the date of receipt of such representations after consulting with all other relevant departments concerned.

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• 2023 (10) TMI 985
  Demand of tax along with penalty - part B of the e-way bill accompanying with the goods, was not filled - Arguing the case beyond the pleadings - demand of tax along with penalty - HELD THAT:- Admittedly, the goods were intercepted during transportation from New Delhi to Telangana at Agra, U.P. and after verification of the documents produced, it was found that part- B of the e- way bill was left blank thereafter a show cause notice was issued to the petitioner but the petitioner has not submitted any explanation for the same. But on deposit of amount of tax along with penalty, the goods were released on 27.8.2019. The petitioner has not submitted any explanation up to the stage of this Court that under what circumstances, part B of the e-way bill was not filled - petitioner has not assigned any reason, whatsoever, for not complying the provisions under Rule 138. On perusal of the aforesaid judgement of Apex Court in Bachhaj Nahar Vs.Nilima Mandal and another [ 2008 (9) TMI 967 - SUPREME COURT] , it has been held that the petitioner cannot be permitted to argue the case without there being any pleading in support of his arguments. No rebuttal / rejoinder affidavit has been filed by the petitioner controverting the said assertions made in the counter affidavit and on the other hand on 16.10.2023, a statement was made on behalf of the petitioner that the petitioner did not propose to file any rejoinder affidavit - Once the finding of fact, which has been recorded against the assessee has not been assailed in the present writ petition, the petitioner cannot be permitted to argue the case beyond the pleadings. No interference is called for by this Court in the impugned order. The writ petition fails and is dismissed.

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• 2023 (10) TMI 984
  Constitutional Validity of Rule 117 of the Central Goods and Service Tax Rules, 2017 - seeking permission to file FORM TRAN-1 and to allow Petitioner to carry forward credit to its electronic credit ledger under the GST regime - to allow the revision of the last return under the service tax law in order to comply with the provisions of Section 140(1) of the CGST Act - seeking to declare the para 2(1)(d)(i) (EEC) of the Service Tax Rules, 1994 substituted by the Notification No. 16/2017-ST dated 13th April, 2017 ultra vires the Finance Act, 1994 as well as Constitution of India. HELD THAT:- These petitions ought to be disposed of with liberty to the Petitioner to file a fresh consolidated petition so that all issues of challenge intended to be urged by the Petitioner which are required to be gone into can be subject matter of one proceeding instead of having a piecemeal adjudication on both these petitions.

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• 2023 (10) TMI 983
  Classification of goods - Aluminium Foil Container / Aluminium Foil in Roll Form and Plastic Articles - to be classified under Chapter heading 7067 or 7615? - HELD THAT:- The issue is considered by the Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS HINDALCO INDUSTRIES LTD. [ 2023 (6) TMI 844 - SC ORDER] , where it was held that the said product is classifiable under 7615. And the issue raised by the petitioner is settled by the Hon ble Supreme Court in favour of the petitioner and against revenue. Therefore, this Court is of the considered opinion that the product Aluminium Foil Container is classifiable under 7615 with GST 12%. Hence the impugned order is liable to be quashed and accordingly quashed. Petition allowed.

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• 2023 (10) TMI 982
  Violation of principles of natural justice - contention of the respondent is that the petitioner has not responded the notice - HELD THAT:- After receipt of the impugned order only, the petitioner came to know that the notice was sent to e-Mail I.D. and the said e-Mail I.D. is not belonging to the petitioner. Therefore, this Court is of the considered opinion that there it is clear violation of principles of natural justice. The impugned order, dated 27.04.2022, is hereby quashed. The petitioner is directed to submit his objections, within a period of three weeks from the date of receipt of a copy of the order - Petition allowed.

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• Income Tax

• 2023 (10) TMI 981
  Enforceability of treaty - Necessary notification not issued by the Government for brining the treaty into force - Most Favoured Nation (MFN) - Indian treaties with countries that are members of the Organisation for Economic Cooperation and Development ( OECD ) - protocol for changing terms or conditions in treaty - lowering of rate of taxation at source on dividends, interest, royalties or fees for technical services (hereafter FTS ) - bilateral treaties in question are between India and Netherlands, France, and Switzerland, respectively - whether there is any right to invoke the MFN clause when the third country with which India has entered into DTAA was not an OECD member yet (at the time of entering into such DTAA) - whether the MFN clause is to be given effect to automatically or if it is to only come into effect after a notification is issued? HELD THAT:- The legal position discernible from the previous discussion, therefore is that upon India entering into a treaty or protocol does not result in its automatic enforceability in courts and tribunals; the provisions of such treaties and protocols do not therefore, confer rights upon parties, till such time, as appropriate notifications are issued, in terms of Section 90(1). The interpretation of the term is - Expression is has a present signification and it derives meaning from the context. Given this interpretation, the conclusion is that when a third-party country enters into DTAA with India, it should be a member of OECD, for the earlier treaty beneficiary to claim parity. Treaty practice of India, in relation to DTAAs and their Protocol, and practices of Netherlands, France and Switzerland - The status of treaties and conventions and the manner of their assimilation is radically different from what the Constitution of India mandates. In each of the said three countries, every treaty entered into the executive government needs ratification. Importantly, in Switzerland, some treaties have to be ratified or approved through a referendum. These mean that after intercession of the Parliamentary or legislative process/procedure, the treaty is assimilated into the body of domestic law, enforceable in courts. However, in India, either the treaty concerned has to be legislatively embodied in law, through a separate statute, or get assimilated through a legislative device, i.e. notification in the gazette, based upon some enacted law (some instances are the Extradition Act, 1962 and the Income Tax Act, 1961). Absent this step, treaties and protocols are per se unenforceable. International perspectives and practices - There is no dispute that treaties constitute binding obligations upon their signatories. Yet, like all compacts, how the parties to any specific instrument view them, give effect to its provisions, and the manner of acceptance of such conventions or compacts are in the domain of bilateral relations and diplomacy. Much depends upon the relationship of the parties, the mutuality of their interests, and the extent of co-operation or accommodation they extend to each other. The issue of treaty interpretation and treaty integration into domestic law is driven by constitutional and political factors subjective to each signatory. Therefore, domestic courts cannot adopt the same approach to treaty interpretation in a black letter manner, as is required or expected of them, while construing enacted binding law. The role of practice which is, as the previous discussion demonstrates, not bilateral or joint practice, but practice by one, accepted generally by the international community as operating in that particular sphere, which is relevant, and at times determinative. Treaty practice of Switzerland, Netherlands and France is dictated by conditions peculiar to their constitutional and legal regimes. Could it conceivably be argued that in the event of failure of the Swiss Confederation to secure the requisite majority in a referendum or approval by the Swiss Parliament, or in the absence of approval by both houses of the States General in Netherlands, a DTAA provision or trigger event could nevertheless be assimilated into executive decrees? The answer is obviously in the negative. Likewise, the treaty practice in India points to a consistent pattern of behaviour when the signatory to an existing DTAA, points to the event of a third state entering into OECD membership, and a resultant trigger event, the beneficial effect given to the later third-party state has to be notified in the earlier DTAA, as a consequential amendment, preceded by exchange of communication (and perhaps, negotiation) and acceptance of that position by India. The essential requirement of a notification under Section 90 of the consequences of the trigger (or causative) event cannot be undermined. ORDER: (a) A notification under Section 90(1) is necessary and a mandatory condition for a court, authority, or tribunal to give effect to a DTAA, or any protocol changing its terms or conditions, which has the effect of altering the existing provisions of law. (b) The fact that a stipulation in a DTAA or a Protocol with one nation, requires same treatment in respect to a matter covered by its terms, subsequent to its being entered into when another nation (which is member of a multilateral organization such as OECD), is given better treatment, does not automatically lead to integration of such term extending the same benefit in regard to a matter covered in the DTAA of the first nation, which entered into DTAA with India. In such event, the terms of the earlier DTAA require to be amended through a separate notification under Section 90. (c) The interpretation of the expression is has present signification. Therefore, for a party to claim benefit of a same treatment clause, based on entry of DTAA between India and another state which is member of OECD, the relevant date is entering into treaty with India, and not a later date, when, after entering into DTAA with India, such country becomes an OECD member, in terms of India s practice. Reasoning and findings in the impugned orders cannot survive; they are set aside. The revenue s appeals, therefore, succeed and are allowed. There shall be no order on costs. Pending applications, including those seeking intervention for impleadment, are disposed of.

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• 2023 (10) TMI 980
  Validity of assessment u/s 153C - As argued Notice issued u/s 153C has not mentioned/specified the satisfaction note recorded by the 2nd respondent of the searched person and satisfaction notes do not bear the DIN number - HELD THAT:- The satisfaction notes recorded by the Assessing Authority, which have been placed on record would suggest that the Assessing Authority has examined the documents and recorded satisfaction for issuing notices u/s 153C. The petitioner has demanded the satisfaction note, and the letter issued by the ACIT whereby the satisfaction notes have been provided to the petitioner on his demand, would disclose that the letter bears the DIN number. The satisfaction note need not bear the DIN number, and this Court does not find any substance in the submission of the learned Counsel for the petitioner that since the satisfaction notes do not bear the DIN number, whole proceedings are invalid. The satisfaction note is a document prepared by the Assessing Authority which is kept in the file, and unless an assessee demands the satisfaction note, it is not required to be provided to the assessee. Therefore, there is no requirement to have a DIN number in the satisfaction note recorded by the Assessing Authority. Thus it cannot be said that the impugned notices and assessment orders are without jurisdiction as submitted by the learned Counsel for the petitioner.

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• 2023 (10) TMI 979
  Reopening of assessment - Nature of expenses - entrance and subscription fees to Willington Sports Club (WSC) - whether benefit of the above payment is long term in nature and should have been considered as Capital Expenditure and should not have been claimed as Revenue expenditure in P L account ? - HELD THAT:- We are unable to accept the submissions of the revenue because first of all there is no basis on which the assessing officer has formed a reason to believe that amount was paid towards entrance and subscription fees to WSC. Schedule 9 of the profit and loss account only enumerates membership and subscription and does not disclose anywhere which club it was. Moreover, petitioner has, in its reply to the notice u/s 148 of the Act, given a breakup of the amount towards entrance fees and towards subscription fees for 1 year and it is incurred for the purpose of business. Even if, we accept what has been stated in the order disposing objection that petitioner did not produce the bill to substantiate its claim, schedule 9 of the profit and loss account itself discloses that membership and subscription is recurring annual expenditure. In the schedule, it is mentioned for the year ended 31st March 2007 the amount was Rs. 2,05,639/- and for the year ended 31st March 2006 the amount was Rs. 1,98,326/-. It, therefore, shows that it was an annual expenditure and certainly of a recurring nature and has to be allowed as revenue expenditure. As decided in Lubrizol India Ltd. [ 2015 (8) TMI 134 - BOMBAY HIGH COURT] court was pleased to answer that expenses incurred in obtaining club membership is allowable as revenue expenditure. Thus the expenditure incurred towards entrance fees and annual membership would be a revenue expenditure because it has been incurred wholly and exclusively for the purposes of business and not towards capital account. Such expenditure only facilitates the smooth and efficient running of the business enterprise and does not add to the profit earning apparatus of the business enterprise. The impugned notice is quashed and set aside - Decided in favour of assessee.

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• 2023 (10) TMI 978
  Reopening of assessment u/s 147 - refusal to grant the benefit u/s 11 and 12 - total receipts is to be treated as an income of the petitioner as per Section 164 since the petitioner is not registered under Section 12 AA - HELD THAT:- Principal Chief Commissioner of Income Tax has proceeded to pass an order u/s 148A(d) rejecting the objection of the petitioner to the show cause notice u/s 148A(b) on the ground that information exists to suggest that the transaction needs to be verified. Hence the reply of the assessee has been considered but the same is not found to be satisfactory. The assessee has not offered his unaccounted unexplained income for taxation purpose in his return of income. It is precisely evident that the office of the respondent is possessed of certain information which strongly suggests that the income chargeable to tax has escaped assessment for AY 2017-18. Thus, in our opinion, the impugned order u/s 148A(d) and notice u/s 148 would not warrant any interference under Article 226 of the constitution of India as challenge to such order would be available to an assessee while challenging the order passed in reassessment proceedings consequent to the notice issued u/s 148 - WP dismissed.

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• 2023 (10) TMI 977
  Reopening of assessment - Taxability of Vessel handling charges in India - HELD THAT:- The undisputed position that emerges is that the assessee assailed the final assessment order for AYs 2012-13, 2013-14, 2016-17 2017- 18 before this Tribunal wherein the appeals have been allowed by the Tribunal on legal grounds as well as on merits vide [ 2023 (5) TMI 1207 - ITAT CHENNAI] Reassessment proceedings as well as consequential assessment framed therein are unsustainable in law and accordingly, liable to be quashed. The issue, on merits, as finally been held that the assessee would be entitled for the benefit of Article-8 of the treaty and the impugned charges would not be taxable in India in the hands of the assessee. Therefore, facts and circumstances being the same, taking the same view, we allow the legal grounds as well as grounds on merits.

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• 2023 (10) TMI 976
  Addition u/s 69A - Unexplained cash - assessee had sufficient accumulated cash in hand which was deposited during demonetization period to her bank account - HELD THAT:- Merely, because the assessee was holding big amount of cash in her hand, the accumulation of cash from declared income, cash rental and salary income cannot be disbelieved unless the AO establishes that the assessee had used the amount of the income accrued to her during earlier period, for some other purposes and there was no cash in hand at the time when the cash by deposited to her bank account. It is pertinent to mention that in the cash flow the assessee has also shown household expenses for her livelihood even in a situation when she is living with her family. Accordingly, have no hesitation to hold that the AO was not correct in making addition u/s. 69A and CIT(A) was also not justified in upholding the addition to the extent of Rs. 9 lakh ignoring the entire facts and circumstances, cash flow statement and income shown and returned by the assessee during immediately preceding seven years and for present AY 2017-18. Assessee appeal allowed.

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• 2023 (10) TMI 975
  Reopening of assessment - deemed dividend addition - AO invoked the provisions of section 150 for issuing the impugned notices - as argued assessment made by AO in the assessment order in the hands of the assessee is invalid without giving any opportunity of being heard to the assessee - HELD THAT:- As higher appellate forums have upheld the findings of the CIT(A) that addition u/s 2(22)(e) can be made only in the hands of the registered shareholders. If the addition has to be done in the hands of other persons, as per the directions of CIT(A), the prescription of law has to be followed. In the present case, admittedly, the directions have been issued without giving any opportunity to the assessee as contemplated by Explanation of Section 3 of Section 153 and as observed in [ 2022 (4) TMI 346 - BOMBAY HIGH COURT] Hence, assessee s appeals stand allowed.

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• 2023 (10) TMI 974
  Claim of the TDS and IGST payments rejected - additions u/s 143(1)(a) for the reason that the same has been shown in column no. 26B(b) for Form 3CD of the audit report - claim of the appellant rejected by CIT(A) as assessee has only filed revised Form 3CD but not filed revised computation of total income for revised return of income and hence, there is no change in the income of the assessee firm - HELD THAT:- Admittedly, the appellant assessee has objected payments of IGST and TDS as per the copy of challan - CIT(A) was required to verify the payments of the IGST and TDS as per the documentary evidences produced before him under the co-terminus powers. Merely, stating that the assessee has not filed revised return or revised computation is not valid reason is rejecting the claim of the assessee without rebuttal of the documentary evidence filed on record. In our view, this is a fit case to be remanded back to the AO to examine the claim of the appellant in respect of all the said payments towards in respect of IGST and TDS after granting proper opportunity of being heard to the appellant assessee and considering documentary evidences filed on record. On verification of the copy of the challan of the payments of IGST and TDS, the AO would liable to give credit for the said payments and issue refund if any due to the assessee thereof. Accordingly, the matter is restored to the file of the AO. Assessee appeal allowed for statistical purpose.

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• 2023 (10) TMI 973
  Exemption u/s 11 - rejection of u/s 12A - date of filing the application for fresh registration under Form 10A was extended till 25.11.2022 - HELD THAT:- An application dated 16.10.2023 stating therein that the appellant trust has filed the application for fresh registration on 29.09.2022 by resorting to Circular No. 22 of 2022 dated 01.11.2022 vide which the date of filing the application for fresh registration under Form 10A was extended till 25.11.2022. In view of the aforesaid circular, the appellant trust has filed an application in Form No. 10A and the registration of the trust u/s 12AA was granted to the trust in Form No. 10AC for the period of Assessment Year 2022-23 to 2026-27 on 21.07.2023. Accordingly, the appellant trust now does not want to pursue the matter further in the appeal filed before the Hon ble Bench, since the registration is granted to the trust for which the said appeal was preferred. Therefore, the appellant trust requested to withdraw the said appeal filed before the Tribunal by treating the said application as withdrawn.

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• 2023 (10) TMI 972
  TP Adjustment - notional interest on receivable - TPO held that the delayed payment are being treated as unsecured loan advance to the AE and charged the interest at 12.51% i.e. 6 months labor + 400 basic point for commuting notional interest for the delayed period - HELD THAT:- By respectfully following the above order of the Co-ordinate Bench in assessee s own case for AY 2016-17 [ 2021 (7) TMI 831 - ITAT DELHI] we are of the considered opinion that since the assessee found to be debt free company , the action of the revenue making adjustment on account of notional interest on the receivable cannot be justified. Consequently, Ground of the assessee are allowed.

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• 2023 (10) TMI 971
  Penalty u/s 270A - under reporting of the income - change in the head of income for assessing the rental income - addition made by the AO pertained to the statutory deduction allowable u/s 24(a) of the Act while computing income under the head income from house property HELD THAT:- We noticed that the assessee had offered rental income under the head Income from House Property , but the assessing officer has assessed the same under the head Income from business. The standard deduction @ 30% allowable u/s 24(a) while computing income under the head Income from house property will not be available when it is assessed under the Income from business. Thus, it is not a case that the assessee has suppressed or under reported any income. The assessee has not under reported any income. The addition has arisen on account of change in head of income. We notice that the assessee has offered an explanation as to why it reported the rental income under the head Income from House property and the said explanation is not found to be false. Accordingly, we are of the view that the case of the assessee is covered by clause (a) of sub. sec. (6) of sec. 270A of the Act. We notice that as held in the case of S Saroja [ 2023 (5) TMI 1262 - ITAT CHENNAI] that bonafide mistake committed while computing total income, the penalty u/s 270A of the Act should not be levied. Decided in favour of assessee.

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• 2023 (10) TMI 970
  Apportioning of project expenses - Interest, selling and marketing expenses, and other expenses - as per AO finance cost has a direct nexus with the specific projects and once the interest is attributable to the project, the same is allowable as business expenditure in the ratio of revenue offered from the project - such expenses should have been allowed only to the extent attributable to the revenue offered and the rest amount capitalized to the Work-in-progress - CIT(A) deleted the addition - HELD THAT:- CIT(A) deleted the addition made by the AO by transferring the expenses to the work in progress. During the hearing, AR submitted that CIT(A) has noted the facts of some other case. Both sides pointed out that in assessee s own case, for the assessment years 2012-13 and 2013-14 [ 2022 (11) TMI 1409 - ITAT MUMBAI] the coordinate bench of the Rustomjee Constructions Private Limited [ 2023 (4) TMI 1152 - ITAT MUMBAI] has restored this issue to the file of the learned CIT(A) for de novo adjudication. Accordingly, both sides agreed that the issue arising in the present appeal be also restored to the file of learned CIT(A) for a fresh adjudication. Therefore, in view of the above, we set aside the impugned order and restore the matter to the file of the learned CIT(A) for de novo adjudication. As a result, the sole ground raised by the Revenue is allowed for statistical purposes.

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• 2023 (10) TMI 969
  Adjustment u/s 143(1) - inadmissible interest paid to partners in terms of Section 40(b) as reported in the Tax Audit Report filed by the assessee u/s 44AB - HELD THAT:- As not disputed by the DR that this amount of interest paid to partners was shown both as admissible and inadmissible in the Tax Audit Report itself takes the issue out of the purview of Section 143(1) of the Act, more particularly Section 143(1)(a)(iv) of the Act which has been invoked in the present case. As pointed out by assessee, the provisions of Section 143(1)(a)(iv) of the Act permits adjustment to the income of the assessee on account of expenses which are indicated as disallowable in the Tax Audit Report, but not disallowed while computing the total income of the assessee. In the present case, the Tax Audit Report indicates the amount as both admissible and inadmissible. Therefore, the provisions of Section 143(1)(a)(iv) of the Act were not attracted. Even otherwise, the purport of intimation u/s 143(1) is to make a preliminary assessment of the income of the assessee based on the documents filed along with the return of income, permitting the adjustment to be made only on those counts which are apparently liable to be made. Also find that the assessee has given a plausible explanation for this reporting in the Tax Audit Report pointing out that since in the computation of income this impugned amount of interest paid to partners was first added to the income and then claimed as deduction; therefore, inadvertently in the Tax Audit Report it was reported as both admissible and inadmissible. Grounds raised by the assessee are allowed.

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• 2023 (10) TMI 968
  Assessment u/s 153A - incriminating material found to sustain the addition or not? - HELD THAT:- In the entire assessment order there is no reference or discussion if any specific incriminating material was found during the search, even in the remand report no such incriminating material found during the search has brought on record so as to connect the same with the addition made in the assessment years under consideration. Merely on the basis of the fact that the assessee when confronted with facts disclosed by one Shri Sandip Jain particularly question No. 26 in search proceedings in his statement recorded on 19.02.2017, he has agreed that these expenses are booked to inflate expenses, this is not sufficient to fasten the liability of the assessee while framing assessment under section 153A of the Act, particularly when there is no incriminating material found during the search operation. When the AO has failed to bring on record any incriminating material during the course of search which were competed assessment under section 143(3) of the Act addition made is not sustainable in the eyes of law on the ground that there was absolutely no incriminating material on record. Decided in favour of assessee.

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• 2023 (10) TMI 967
  PE in India - Income deemed to accrue or arise in India - existence or otherwise of a Permanent Establishment (PE) in India - HELD THAT:- Departmental authorities have turned a blind eye to all the submissions and facts brought on record by the assessee. Merely following the decision taken by the appellate authorities and Hon ble High Court in past assessment years, the departmental authorities have concluded the existence of PE without looking into or examining the facts and evidences brought on record, which are very much relevant for deciding the existence of PE in the impugned assessment years The departmental authorities have failed to controvert either the submission or the materials and evidences brought on record by the assessee to demonstrate that they did not have any PE in India in these assessment years. In fact, even at the stage of Tribunal, no contrary material has been brought on record by the Revenue to rebut the claim of the assessee that no PE existed in these years. That being the factual position emerging on record, we hold that the decision taken in case of Nuovo Pignone International SRL Vs. DCIT [ 2023 (6) TMI 1321 - ITAT DELHI] would squarely apply to the facts of the present appeals. Accordingly, we hold that the assessee did not have any PE in India in the assessment years under dispute so as to attribute profit to such PE. The departmental authorities have failed to controvert either the submission or the materials and evidences brought on record by the assessee to demonstrate that they did not have any PE in India in these assessment years. In fact, even at the stage of Tribunal, no contrary material has been brought on record by the Revenue to rebut the claim of the assessee that no PE existed in these years. That being the factual position emerging on record, we hold that the decision taken in case of Nuovo Pignone International SRL [ 2023 (6) TMI 1321 - ITAT DELHI] would squarely apply to the facts of the present appeals. Accordingly, we hold that the assessee did not have any PE in India in the assessment years under dispute so as to attribute profit to such PE.

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• Customs

• 2023 (10) TMI 966
  Conditions of eligibility and procedure for allocation of quota for export of broken rice on humanitarian food security grounds - Conditions restricting the eligibility for securing allocation of quota to only those exporters, who had exported rice to the countries in question (Senegal, Gambia and Indonesia) in the three preceding financial years. Whether restricting the allocation of quota for export of broken rice to only those exporters that had exported rice to the respective countries in question prior to such exports being prohibited, bears a nexus to the object of ensuring capacity and quality ? HELD THAT:- The Court is neither required to ascertain the best classification for achieving the objective of such classification nor evaluate the efficacy of the same. The Court is merely required to ascertain whether the classification has any rational nexus with the object sought to be served. It is also well settled that a classification is not required to be scientifically perfect or logically complete - The classification need not be mathematically accurate and cannot be called into question merely because it is disadvantageous to certain individuals or class of persons. However, it is equally well settled that the intelligible differentia to support the classification must be real and substantial . In the present case, there is no material on record, which would even remotely suggest that persons who have exported broken rice to the respective countries would have a higher capacity to export rice or the quality of broken rice to be exported by them would in any way be superior than that which may be exported by rice exporters who had exported to other countries in the past. There is also no material to indicate that the channels of export to the countries in question are different from the channels of export to other countries. The underlying assumption of the classification is that the rice exporters who had exported rice to the countries in question in part have comparatively assured capacity to export broken rice and to ensure their quality. This assumption is not founded on any material or rational basis. In the present case, the export of rice from this country does not entail distribution of rice in the country importing foodgrains. In most cases, the exporter s obligation is discharged on loading the goods in question on a vessel in India (if the export is by sea). There is not even a suggestion that export of rice to the countries in question involves any special procedure or would yield any special experience - The counter affidavit filed by the respondents also does not set out any material to suggest that the rice exporters having a past experience of exporting rice in a particular country, would be better placed to service the export orders from that country in comparison with other exporters with established track record. It is apparent that the policy of canalizing exports of manganese ore had a clear nexus with the object sought to be achieved. Established miners and shippers were also permitted to continue exporting ore to ensure that existing export arrangements were not impacted. In the facts of the present case, the respondent has not produced any material to establish any rational nexus between the restricting the export quote to rice exporters that had exported rice during the three financial years preceding prohibition of export of broken rice, and the object of ensuring capacity and quality. The impugned trade notice set aside - respondents may re-evaluate the criteria for allocation of quota for export of broken rice - application disposed off.

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• 2023 (10) TMI 965
  Classification of export goods - Duty Drawback - Upgraded Beneficiated IImenite - to be classified under Customs Tariff Item No.28230090 under the Customs Tariff Act or under classification Customs Tariff Item No.28230090? The specific contention of the petitioner is that it is not Titanium Ores and Concentrates in its natural form, after manufacturing process it is a value added product as Upgraded Beneficiated Ilmenite . HELD THAT:- The respondents had issued periodical 16 show cause notices for the subsequent exports. After the Tribunal s order the said 16 show cause notices were considered by the respondents in Order-in-Original No.38/2023, wherein it is held that the Tribunal had classified the product under 28230090, therefore on review, the same was accepted by the Commissioner of Customs followed by the Chief Commissioner of Customs, Trichy vide letter F.No.CCO/LGL/MISC/ 211/2023-LGL dated 02.09.2023. And based on the Principles of Judicial Discipline the respondents have dropped the proceedings initiated in the said 16 show cause notices. The product Upgraded Beneficiated Ilmenite will fall under 28230090 under the Customs of Tariff Act. Consequently the petitioner is entitled to drawback and the same shall be granted to the petitioner - Petition allowed.

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• 2023 (10) TMI 964
  Classification of imported goods - Nutritional Supplements, which are preparations of substances such as Creatine, Nitrates, Glutamine and Amino Acids - classifiable under CTSH 2106 9099 or not - liable to IGST at 28% under Sr.No.9 of Schedule IV of Notification No.1/2017-IGST-Rate or at 18% under Sr. No.453 of Schedule III of the said Notification - demand barred by time limitation or not - suppression of facts or not. HELD THAT:- From tariff entry of 2106, it can be seen that the entry covers various food preparation not elsewhere specified or included. However, out of the many items provided under tariff item 2106, the serial No. 9 described only some of those goods. This also establish that Serial No. 9 is not a general entry which covers entire entry of 2106 but only some of the goods which are specified in the description of goods are provided under serial no. 9 of Schedule IV,. This fact also strengthens the claim of the appellant that their goods are not covered under serial no. 9 of the schedule IV of Notification 1/2017-IGST-Rate and correctly falls under Serial No. 453 according to which the rate of IGST is 18%. From decision in CASTROL INDIA LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, CALCUTTA-I [ 2005 (2) TMI 847 - SUPREME COURT] , it is clear that the word that is to say is mutatis mutandis applies in respect of the expression i.e. in the present case. Accordingly, the word used i.e. at serial number 9 of schedule IV of Notification it is fixed, specific and clear that only the description given in such entry shall be covered by serial no. 9. Consequently the goods of the appellant will fall under Serial No. 453 of Schedule III of the Notification 1/2017-IGST, therefore, the demand of differential custom duty shall not sustain. Time Limitation - HELD THAT:- In the present case for the clearance for the period July 2017 to November 2017, the show cause notice was issued on 09.07.2022 - since there was no suppression of fact on the part of the appellant, the demand is also hit by limitation. There are force in the submission of the learned counsel that whatever IGST needs to be paid by the appellant, it was available as an input tax credit to them, therefore, the present case is involved revenue neutrality. Accordingly, the malafide intention cannot be attributed to the act of the appellant. For this reason, the demand for the extended period is not sustainable also on time bar. The impugned order is not sustainable - Appeal allowed.

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• 2023 (10) TMI 963
  Valuation - inclusion of ship demurrage charges paid by the respondent to the owner of the vessel/ ship in which the goods are imported on account of vessel/ ship having to wait at the Port in the Transaction value of the imported goods - entire case based on explanation added to Rule 10 of Custom Valuation Rules, 2007 - HELD THAT:- The very same issue has been considered by the Hon ble Orissa High Court in the case of Tata Steel Limited [ 2019 (10) TMI 226 - ORISSA HIGH COURT] wherein the Hon ble Court has held that the contentions raised by the petitioner that the relevant provisions in the Principal Act is silent about the demurrage ; thus, it was beyond the legislative power to include it in the Rules is accepted and thus the explanation to sub-rule-(2) of Rule 10 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 is held to be bad and hence declared ultra vires the Constitution/provision of Section 14 of the Customs Act, 1962, and hence the same is struck down. From the above order, it is settled that the demurrage charges cannot be included in the transaction value of imported goods. The entire case of the Revenue is that as per the explanation added to Rule 10 of Custom Valuation Rules, 2007, the cost of transportation of imported goods should be included in the transaction value - HELD THAT:- This Provision was not provided in the Customs Act, 1962 with regard to the Valuation of goods. However the same was brought under the rule by way of explanation. The Hon ble Orissa High Court in above case has held that the said provision in the Rule is ultra virus to the Customs Act, 1962. Therefore, when the explanation to Rule 10 to Customs Valuation Rules was held ultra virus, the entire basis of the Revenue case falls. The impugned order passed by the learned Commissioner is just and proper and the same does not suffer from any infirmity - Accordingly, the same is upheld and Revenue s appeal is dismissed.

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• Corporate Laws

• 2023 (10) TMI 962
  Scope of an asset and security freeze order - assignment or not - documents executed by IL FS by which rents were made over to the respondent, Housing Development Finance Corporation Ltd (HDFC or the lender) - HELD THAT:- The Lease Rental Discounting (LRD) arrangement - a new kind of financial agreement by which a banker allows credit facilities to a commercial property owner, has the flexibility of ensuring that the asset owner is given access to credit. The dominant condition is that a substantial portion or the entire rent or receivables which the owner would be entitled to are made- sold or assigned, absolutely to the creditor bank. This is with the intention that the borrower s liabilities are discharged automatically from the proceeds payable in respect of the property. Such amounts virtually are by way of unsecured debts. In other words, future rent payable is actually an unsecured debt that the owner/borrower would have been otherwise entitled to claim, but for the assignment or transfer, to the lender/creditor. The borrower is correct in arguing that the expression LRD is nowhere used in any of the documents executed at the time - An application of the rule that all the contemporaneous documents are to be read together, to discern the true purport of the contract, it is evident that what the parties intended was the assignment of the debt, i.e., the rents payable. The reference to pledge, in some places in the documents, did not undermine the fact that the rents payable to and receivable by the lender (IL FS) stood absolutely assigned to HDFC. The provisions of the TPA and the discussion of the various authorities support the conclusion that there can be a transfer of debts, which are defined as actionable claims. In the present case, the rents payable by IL FS tenants, lessees and licensees are debts, which stood transferred to the creditor, i.e. HDFC Bank. Therefore, the NCLAT s conclusions are unexceptionable; the challenge to its correctness, therefore fails. This court holds that there is no merit in the appeal - Appeal dismissed.

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• Insolvency & Bankruptcy

• 2023 (10) TMI 949
  CIRP - Home Buyers - Contention that, Resolution Professional (RP) treated them differently from other home buyers allottees - Financial Creditors or not - scope of Financial Debt - HELD THAT:- With the introduction of the explanation home buyers and allottees of real estate projects were included in the class of financial creditors - because financial debt is owed to them. On a plain reading of Section 5 (8)(f) no distinction is per se made out between different classes of financial creditors for the purposes of drawing a resolution plan. Consequently, the reasoning of the Mumbai Bench of NCLT Mr. Natwar Agrawal(HUF) is correct in the opinion of this Court. The Resolution Professional s view appears to be that once an allottee seeks remedies under RERA, and opts for return of money in terms of the order made in her favour, it is not open for her to be treated in the class of home buyer. This Court is unpersuaded by the submission. It is only home buyers that can approach and seek remedies under RERA no others. In such circumstances, to treat a particular segment of that class differently for the purposes of another enactment, on the ground that one or some of them had elected to take back the deposits together with such interest as ordered by the competent authority, would be highly inequitable. As held in MR. NATWAR AGRAWAL (HUF) VERSUS MS. SSAKASH DEVELOPERS BUILDERS PVT. LTD. [ 2023 (8) TMI 1362 - NATIONAL COMPANY LAW TRIBUNAL MUMBAI] by the Mumbai Bench of National Company Law Tribunal the underlying claim of an aggrieved party is crystallized in the form of a Court order or decree. That does not alter or disturb the status of the concerned party, in the present case of allottees as financial creditors. Furthermore, Section 238 of the IBC contains a non obstante clause which gives overriding effect to its provisions. The appellants are declared as financial creditors within the meaning of Section 5(8)(f) (Explanation) and entitled to be treated as such along with other home buyers/financial creditors for the purposes of the resolution plan which is awaiting final decision before the adjudicating authority. Appeal allowed.

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• Service Tax

• 2023 (10) TMI 961
  Condonation of delay of 1471 days in filing the appeal - it was held by HC that it is difficult to accept that the appellant was handicapped in any manner in ascertaining the jurisdiction of the relevant Commissionerate. In any view of the matter, this Court is unable to accept that it would be apposite to condone the delay of more than four years on the aforesaid ground. HELD THAT:- The special leave petition is dismissed.

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• 2023 (10) TMI 960
  Recovery of irregularly availed ineligible cenvat credit - reverse charge mechanism - expenditure incurred in foreign currency in respect of contribution towards social security for employees of their overseas holding company - HELD THAT:- In the present case, service tax was not payable on the contribution towards social security which was part of salary paid by the employer to the employee. It is found that though the service tax which was not payable was paid, Revenue has not refunded the said tax paid by the appellant. It is also noted that the appellant has taken cenvat credit of equal amount. Therefore, there is no loss to the exchequer. On going through the ruling by Hon ble Bombay High Court in the relied upon case of THE COMMISSIONER OF CENTRAL EXCISE, PUNE VERSUS AJINKYA ENTERPRISES [ 2012 (7) TMI 141 - BOMBAY HIGH COURT] it is found that Once the duty on final products has been accepted by the department, CENVAT credit availed need not be reversed even if the activity does not amount to manufacture. - In the present case, Revenue has retained service tax which was not to be paid and the appellant has availed cenvat credit of equal amount and utilized the same for payment of service tax for other services. Demand set aside - Appeal allowed.

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• 2023 (10) TMI 959
  Refund of CENVAT Credit - Interest as per Section 11BB - Denial of refund on the ground that credit which has been claimed as refund claim under Rule 5 was not admissible to them - Pest Control Service - HELD THAT:- In absence of any proceedings under Rule 14 of Cenvat Credit Rules, 2004 observations recorded by the Assistant Commissioner in above paras 8.1 to 8.10 of the order in original are only in nature observation cannot be taken as denial of the credit. Even Assistant Commissioner has nowhere said so she only find this amount to ineligible for refund, but even after holding them to be ineligible for refund has allowed the refund claim filed by the appellant in toto. Appellant filed an appeal before the Commissioner (Appeals) not against the order of the Assistant Commissioner but against these observations made in the discussions and findings of the order. Commissioner (Appeals) modified these findings without any change in order portion which in any case was in accordance with the claim made by the appellant - Revenue has not filed any appeal either before Commissioner (Appeals) or before this Tribunal for seeking modification of the refund of Rs.19,00,00,000/- (rupees Nineteen Crores only) allowed by the Assistant Commissioner. As the show cause notice issued involved in this appeal has not invoked the provision of Rule 14, therefore, any finding regarding admissibility of CENVAT credint in the impugned Order-in-Original, the impugned Order-in-Appeal or in this Final Order will not have any effect on any proceedings, if any, regarding the admissibility of Cenvat credit. Interest as per Section 11BB - HELD THAT:- As per Section 11BB interest is to be paid after expiry of three months from the date of filing the claim to the date of claim. In the present case refund claim was filed on 27.12.2012 the period of three months will be over on 26.03.2013. They would be entitled to the interest for the period beyond 26 March, 2013 to the date of payment i.e. 21.05.2013, which is about 55 days. To that extent appeal is allowed in favour of the appellant. Appeal is partly allowed for grant of interest for 55 days.

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• Central Excise

• 2023 (10) TMI 958
  CENVAT Credit on rejected inputs - suo moto credit - process amounting to manufacture or not - goods received in their factory and subjected to various processes like blackening, buffing, final inspection, packing etc. which were subsequently exported, without payment of duty. Admissibility of CENVAT Credit of Rs. 2,40,75,746/- on the inputs/goods subjected to various processes viz. blackening, buffing, final inspection, packing etc. in the factory and the resultant the finished goods were exported - HELD THAT:- No evidence has been placed by the Revenue in support of the allegation that without subjecting the received inputs to various processes by the appellant, these goods be considered as marketable and could be exported as it is. The processes undertaken by the appellant are necessary to put the product in marketable condition as per the requirement of the customers; the appellants, on the other hand, adduced evidence in the form of rejection letters of the customers rejecting the goods supplied by the Appellant as it did not meet their requirement as per the order placed. Hence, various processes blackening, buffing, final inspection, packing etc. carried out on the inputs be considered as processes amounting to manufacture. More or less similar principle has been laid down by the Hon ble Apex Court in the case of FLEX ENGG. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2012 (1) TMI 17 - SUPREME COURT] where it has been observed In the absence of the revenue having adduced any such evidence or contorted the assessee s claim that the machines cannot be sold unless testing is done with some alternative evidence as to their marketability, the stand of the revenue cannot be accepted. Therefore, the processes carried by the appellant in their premises result into manufacture and accordingly, CENVAT Credit availed on the duty paid on inputs received is admissible to the appellant. Suo moto credit - HELD THAT:- The credit of Rs. 28,700/- is irregular in view of the judgment of Larger Bench of this Tribunal in the case of BDH INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX. (APPEALS) , MUMBAI-I [ 2008 (7) TMI 78 - CESTAT MUMBAI-LB] . The impugned Order is modified to the extent of setting aside demand of CENVAT credit of Rs.2,40,75,746/- with interest and penalty, however, the recovery of suo moto credit of Rs.28,700/- with interest and penalty is confirmed - Appeal disposed off.

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• 2023 (10) TMI 957
  Time limitation - SSI Exemption - Submersible Pumps falling under CETH 8413 7010 - though the product of the appellant was claimed in confirmation to the standards of Bureau of Indian Standards (BIS) but the Certificate was obtained subsequently - HELD THAT:- It is the appellant s claim that the goods manufactured by them is in conformation to standards of BIS. This claim of the appellant gets reinforced on the basis that for the same product subsequently, the appellant were issued certificate by the BIS certifying that the product manufactured by the appellant is as per the standards prescribed under BIS. On this basis the bonafide belief of the appellant is found factually correct. As per the claim of the appellant, the same product which was subsequently certified by BIS was in conformation to the standards of BIS, therefore, the appellant have rightly entertained the belief that their product is exempted under N/N. 8/2003. There is no malafide on the part of the appellant with intent to evade payment of duty. For the demand under extended period in the present case for the period 01.01.2007 to 18.03.2009, the show cause notice was issued on 04.04.2012 which is much after the normal period of one year. Since the appellant had no malafide intention the entire demand raised by invoking the extended period will not sustain on the ground of time bar itself - the demand is hit by limitation - Appeal allowed.

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• 2023 (10) TMI 956
  CENVAT Credit - Denial of credit on the ground that supplier has paid Duty on exempt product - Gravure Printing Cylinders received by the appellant - Printing Blocks and Printing Types covered in the ambit (exempt) the Printing Cylinders or not - HELD THAT:- It prima facie appears that Printing Cylinders received by the appellant duly duty paid is not exempted. Therefore, the entire basis of the department fails. However, without going into this issue in detail, the appeal can otherwise be disposed of only on the ground that the assessment of the duty payment at the supplier s end has not been questioned or challenged by the jurisdictional departmental officer of the suppliers. As there is no evidence available on record that the payment of duty by the supplier was questioned/ challenged / disputed by their jurisdictional officer, in such case, the payment of duty is found to be legal and correct and consequently, the appellant s cenvat credit cannot be denied. This issue has been considered time and again. In the case of COMMISSIONER OF CENTRAL EX. CUS., SURAT-III VERSUS CREATIVE ENTERPRISES [ 2008 (7) TMI 311 - GUJARAT HIGH COURT] , the Hon ble Gujarat High Court in the facts that whether the activity of the manufacturer amounts to manufacture or otherwise to arrive at a conclusion that whether the goods are dutiable and it was held that The Tribunal is justified in holding that if the activity of the respondent-assessee does not amount to manufacture there can be no question of levy of duty, and if duty is levied, Modvat credit cannot be denied by holding that there is no manufacture. Thus, it is settled that even if Excise duty is not payable on the product for any reason but the assessee paid the excise duty and said payment of duty is not challenged or questioned at the manufacturers end, no question can be raised as regard availment of the credit by the recipient of the goods. Accordingly, in the present case also, being the similar fact involved, the cenvat credit cannot be denied merely on the ground that the supplier was not required to pay the duty. Appeal allowed.

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• 2023 (10) TMI 955
  Reversal of CENVAT Credit distributed by its head office prior to its registration as Input Service Distributor - HO (registered as ISD) of the appellant while distributing 100% of the credit to a single unit has contravened the mandate under Rule 7 (d) of CENVAT Credit Rules, 2004 (as existed during the relevant period) or not. Whether the appellant can avail the CENVAT Credit on ISD invoice which was issued by their head office without having ISD registration is correct or otherwise? - HELD THAT:- There is no dispute about the payment of Service Tax on the service received by the appellant. Therefore, merely because the ISD invoice was issued without having registration of the appellant s head office, the fact of the payment of Service Tax will not get extinguished. Hence the credit cannot be disallowed. This issue has been considered by the Hon ble Jurisdictional Gujarat High Court in the case of M/s. Dashion Ltd [ 2016 (2) TMI 183 - GUJARAT HIGH COURT ], wherein the Hon ble Court has held Tribunal, in our opinion, rightly did not disentitle the assessee from the entire Cenvat credit availed for payment of duty. Before the amendment was carried out in the year 2016, the assessee was given the option to distribute the CENVAT Credit to one unit or also to other unit, and provision for proportionate credit was brought only post amendment of 2016. Therefore, it is at the option of the head office whether it wanted to distribute the credit to the appellant only or to distribute it to other units. Therefore, in view of existing provisions of CENVAT Credit Rules, 2004 during relevant period, the 100% credit availed by the appellant is in order in terms of Rule 2007, existing at the relevant time. Therefore on this count also the adjudicating authority has wrongly denied the credit. The impugned order is set aside. The appeal is allowed.

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• 2023 (10) TMI 954
  Denial of CENVAT Credit on capital goods to the extent of 50% thereof - appellant procured the capital goods and have not availed any cenvat credit of duty paid in the financial year 2006-07 and took whole of the cenvat credit in the financial year 2007-08 - HELD THAT:- The appellant has complied with the condition of Rule 4(2)(b) of the Cenvat Credit Rules, 2004 as they were entitled to take 50% of the credit in the financial year 2006- 07, where they have not taken any cenvat credit and balance amount credit they were entitled to take in the financial year 2007-08 which they have taken. There are no merit in the impugned order and the same is set aside - appeal allowed.

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• CST, VAT & Sales Tax

• 2023 (10) TMI 953
  Exemption on commencement of commercial production - Grant of incentives of exemption from State Sales Tax to existing and new Information Technology Industrial Units - Notification dt. 05.08.2002 - HELD THAT:- Since the petitioners units commenced commercial production on 31.03.2010 (between the dates 01.08.2006 upto 31.03.2013), they would be entitled to the incentives contained in the Notification dt. 05.08.2002. The Supreme Court in Jugalkshore Saraf vs. Raw Cotton Company Limited [ 1955 (3) TMI 38 - SUPREME COURT] declared that the cardinal rule of construction of statutes is to read the statute literally, that is by giving to the words used by the legislature their ordinary, natural and grammatical meaning; if, however, such a reading leads to absurdity and the words are susceptible of another meaning, the Court may adopt the same. But if no such alternative construction is possible, the Court must adopt the ordinary rule of literal interpretation. Had the State intended to confine the benefit granted to New Information Technology Industrial Units only upto 31.03.2013 as is contended by the respondents the language in para-4 would have been different, and it would have stated that for such units the period of incentive is only up to 31.03.2013, but that is not the case. Para-4 specifically says that total period of incentive in case of New Information Technology Industrial Units also would not exceed 6 years and 8 months - the specific language used in para-4 cannot be ignored on the basis of minutes of a meeting said to have been held between the Secretary (Information Technology) to the State Government of Himachal Pradesh and the Excise Taxation Commissioner on 31.05.2006 or the proposal placed before the Council of Ministers, as has been done by the Tribunal. Therefore, since the petitioners fall within the plain terms of the exemption granted in para-3 having commenced production on 31.03.2010, which is between 01.08.2006 and 31.03.2013 (as mentioned in para-3), they are entitled as per Para 4 for the incentive mentioned in the Notification dt. 05.08.2002 for a period not exceeding 6 years and 8 months, i.e. up to 30.11.2016 - this apart, Section 60 authorizes the Assessing Authority to undertake scrutiny of returns filed for any return/tax period under Section 16 (3 4) and to interalia check correctness of application and calculation of rates of tax etc. The statutory procedure of scrutiny of returns filed to check correctness of application an calculation of rates of tax, penalty and interest, and issuance of notice enacted under Section 60(2) if a mistake is detected, read with Rule 44 (1) (2), and the recommendation for audit under Rule 44(2) are mandatory requisites of procedure of scrutiny of returns under the Act and this fact had not been appreciated by the Tribunal. The substantial questions of law are answered in favour of the assessee - the Revision Petitions are allowed.

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• 2023 (10) TMI 952
  Contractual dispute or not - security being insisted to be furnished by the Petitioner s members by way of a bank guarantee - requirement of filing of Form C within a span of three months - monthly compliance not required - amicable settlement of the dispute - HELD THAT:- There certainly appears to be a friction which is caused between the parties although the relation between the parties is contractual in view of the statutory mechanism, which is in operation under the Central Sales Tax Act and, more particularly, in respect of release of Form C, which are required to be furnished by the Petitioner to the IOCL, to avail the benefit of the tax paid. The Petitioners are admittedly the dealers of the petroleum products as supplied by the Respondent IOCL. In the peculiar facts of the case, it would be appropriate that the statutory mechanism is required to be discussed between the parties and appreciated in its proper perspective so that the dispute in this regard as asserted in the present proceedings can be resolved amicably. The present petition needs to be disposed of by directing the Respondent - Deputy General Manager, IOCL, to hear the Petitioner and after appreciating the contentions of the Petitioner on the statutory canvass as involved, take an appropriate decision by passing a reasoned order on such representation by keeping open all contentions of the parties - petition disposed off.

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• Indian Laws

• 2023 (10) TMI 951
  Dismissal of the appellant s claim for compensation relating to loss of profits - Setting aside of Arbitral Award to the extent it awarded loss of profit to the appellant - section 37 of the Arbitration and Conciliation Act, 1996 - High Court set aside the award - HELD THAT:- It is undeniably established that the appellant s claim for loss of profit stems from the delay attributed to the respondent in completing the project. It is further evident that the loss of profit sought in the present case is primarily based on the grounds that the appellant, having been retained longer than the period stipulated in the contract and its resources being blocked for execution of the work relatable to the contract in question, it could have taken up any other work order and earned profit elsewhere. The contentions advanced on behalf of the appellant tasks us to resolve a recurring issue which, while not unprecedented, has consistently confronted the courts leading it to navigate various circumstances under which a claim for loss of profit may be allowed in cases of delay simpliciter in the execution of a contract - However, the contentions so raised, need not detain the case for too long. Quite apart from the appeal raising the question as to whether a claim on account of loss of profit is liable to succeed merely on the ground that there has been delay in the execution of the construction contract, attributable to the employer, the question that first needs to be answered on facts and in the circumstances is whether the Second Award is in conflict with the public policy of India. Having read the Second Award, there are no hesitation to hold that it fares no better than the First Award, for, it is equally in conflict with the public policy of India. We have noticed from the order dated 20th May, 2002 of the learned Single Judge that while remitting Claim No.12 for reconsideration, the Arbitrator was warned not to be influenced by the factors that weighed in his mind while making the First Award. The Arbitrator was also required to proceed only on the basis of the evidence on record. Yet, regrettably, what we find is that the Arbitrator went on to ignore the judicial decision of the High Court with impunity. In the wake of authority of judicial determination made by the Courts of law, any award of an arbitrator or a tribunal that seeks to overreach a binding judicial decision, does conflict with the fundamental public policy and cannot, therefore, sustain. The arbitral award in question is patently illegal in that it is based on no evidence and is, thus, outrightly perverse; therefore, again, it is in conflict with the public policy of India as contemplated by section 34(2)(b) of the Act - appeal dismissed.

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• 2023 (10) TMI 950
  Dishonour of Cheque - discharge of any legally enforceable debt or not - rebuttal of presumption - whether the amount due and payable on the part of petitioners towards the complainants, even as per the case of complainants, was less than the amount of cheques in question? HELD THAT:- The essentials to constitute an offence under Section 138 of NI Act were discussed by Hon ble Apex Court in case of DASHRATHBHAI TRIKAMBHAI PATEL VERSUS HITESH MAHENDRABHAI PATEL ANR. [ 2022 (10) TMI 424 - SUPREME COURT ] where it was held that For the commission of an offence under Section 138, the cheque that is dishonoured must represent a legally enforceable debt on the date of maturity or presentation. Thus, there is no dispute regarding the arguments raised by learned counsel for respondent that to constitute an offence under Section 138 of NI Act, the cheque in question should have been issued in discharge of some legally enforceable debt. However, it is also well-settled through precedents of Hon ble Apex Court that the issue as to whether or not a cheque was issued in discharge of legally recoverable debt is to decided during the course of trial and the proceedings under Section 138 of NI Act ought not to be quashed on such grounds at pre-trial stage. In this regard, this Court deems it appropriate to refer to the decision of Hon ble Apex Court in case of Rathish Babu Unnikrishnan v. State (NCT of Delhi) [ 2022 (4) TMI 1434 - SUPREME COURT] wherein it was observed Based upon a prima facie impression, an element of criminality cannot entirely be ruled out here subject to the determination by the trial Court. Therefore, when the proceedings are at a nascent stage, scuttling of the criminal process is not merited. This Court notes that in the present case, the petitioners herein have not disputed the issuance of cheques in question including the signatures on the cheque, date on the cheque as well as the amount mentioned in the cheques, though they have disputed the purpose or reason behind issuance of cheques, which as per the petitioners, was not to discharge any liability or pay any legally enforceable debt. In these circumstances, there is merit in the argument of learned counsel for complainants that the presumption under Section 118(a) and 139 of NI Act shall be in the favour of complainants, since the issuance of cheques is not disputed and it has to be presumed that the cheques in question had been issued towards some legally enforceable debt. This Court is of the opinion that the issues raised before this Court can only be decided by the learned Trial Court at appropriate stage, on their own merits. Since a prima facie case exists against the petitioners under Sections 138/141 of NI Act, there are no reasons to quash the impugned complaint cases and orders framing notice against the petitioners. Petition dismissed.

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