TMI Tax Updates - e-Newsletter dated: October 13, 2023 - with Direct Tax, Indirect Tax and GST Updates and Updates on FTP, FEMA, IBC & Corporate Laws etc. published on TMI with Latest Case Laws

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TMI Tax Updates - e-Newsletter October 13, 2023 Case Laws in this Newsletter: GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Highlights / Catch Notes GST: Allegation of taking GST registration by the third party - Petitioner claimed that, respondent have misused the address of his property - Certainly these are disputed questions of fact qua the rights inter se between the petitioner and respondent No. 3. The same cannot be adjudicated in the proceedings of this writ petition. - Petitioner may make representation before the GST officers for consideration - HC Visit to Get Source GST: Blocking of Input Tax Credit - construction of their new administrative office - Electrical fittings not for civil construction - Solar Plant - Fire Safety Extinguishers - Since these items become part of immovable property, benefit of ITC not available - AAAR Visit to Get Source GST: Restriction of Input Tax Credit (ITC) - Supply or not - goods disposed of by way of gift - applicant's obligation to issue gold coins and white goods to the dealers / customers upon they achieving the stipulated lifting of the material / purchase target during the scheme period - IT is a Supply, liable to GST and eligible for ITC - AAR Visit to Get Source GST: Time of supply of the work executed from September 2010 to June 2017 - The time of supply is the date on which such consideration / payment is received - The applicant shall receive a supplementary invoice or debit note, within thirty days of such price revision and such supplementary invoice or debit note shall be deemed to have been issued in respect of an outward supply made under CGST/SGST Acts. - AAR Visit to Get Source GST: Exemption from GST - collections from member of Resident Welfare Association / housing societies - even if the annual turnover of the RWA is greater than Rs. 20 lakhs but the monthly maintenance charged per person is less than Rs. 7500/-, then such RWA need not pay tax on the amounts so collected - Therefore they are taxable if the total amount collected by the RWA equal or exceeds Rs. 7500/-. - AAR Visit to Get Source Income Tax: Nature of expenses - repair and maintenance - revenue or capital expenditure - current repair u/s 30 - treatment of expenses incurred on renovation and refurbishment of Hotel - Tribunal was wrongly burdened by the fact that the renovation, refurbishment and repairs were carried out over several years and that the total amount incurred was Rs. 35 crores, which was much more than the cost at which the hotel had been constructed. - Claim allowed as revenue expenditure - HC Visit to Get Source Income Tax: Business promotion expenses - The nature of business activity of the assessee was such which required extensive involvement of individuals and on that account certain expenditures if made on the support of self drawn vouchers, the same cannot be doubted when otherwise there is no defect in the books and the business turnover. - AT Visit to Get Source Income Tax: Deduction u/s 10AA - Income from gold dust - the AO himself has not denied the fact that the income from sale of gold dust is part of the business income of the assessee. Once the income has been accepted to be part of the business income of the assessee then the same needs to included for computation of deduction as per the provisions of subsection (7) of section 10AA. - AT Visit to Get Source Income Tax: Addition based on retracted statement recorded on oath u/s 132(4)/133A - Statement taken even u/s 132(4) of the Act cannot be used as conclusive evidence if it is not backed by credible evidence - AO not having any fresh information/material in his possession, merely on retracted statement formed his belief about escapement of income which is not sustainable in law. - AT Visit to Get Source Income Tax: Income accrued in India - engineering package fee and on-site man-day charges - the service rendered by the assessee is in connection with installation/erection of plant and machinery involved in mining of natural resources - Scope of Article 5(2)(g) of India-Portugal DTAA is not merely limited to mining or extraction of natural resources but also covers installation or structure used for exploration and exploitation of nature resources. - The amount paid would not qualify as FTS. - Demand set aside - AT Visit to Get Source Income Tax: TP Adjustment - Interest on trade receivables - there was no agreement provided by the assessee to show that there was an agreement between the assessee and its AE wherein the time for making the payment was provided as 30 days. In our view, the Assessing Officer is right for granting 30 days as a grace period and beyond that the Assessing Officer / lower authorities have held that the assessee is liable to pay the interest as outstanding amount for the said period. - AT Visit to Get Source Income Tax: Levy of penalty u/s. 271B - Audit Report as required u/s. 44AB of the Act, was not filed on or before due date - The assessee, although, filed Tax Audit Report beyond due date prescribed under the Act, but such Audit Report has been filed before the AO completes the assessment - No penalty - AT Visit to Get Source Income Tax: Scope of prima facie adjustment u/s 143(1) by CPC - debatable issue - In this very case, although in one year the same amount was treated as stipend exempt u/s 10(16) of the Act and in year two said amount was treated to be taxable income. Hence, issue was not simple but a debatable one - Revenue was clearly in error in making aforesaid adjustments. - AT Visit to Get Source Income Tax: Addition by way of adjustment u/s 143(1) by CPC - Procedure - Unlike the old scheme of ‘prima facie adjustments’ u/s 143(1)(a), the scheme of present section 143(1) does not involve a unilateral exercise. The very fact that an opportunity of the assessee being provided with an intimation of 'such adjustments' [as proposed u/s143(1)], in writing or by electronic mode, and "the response received from the assessee, if any" to be "considered before making any adjustment" makes the process of making adjustments u/s 143(1), under the present legal position, an interactive and cerebral process. - CPC has to dispose of the objections before proceeding further - AT Visit to Get Source Customs: Reversal of Duty Drawback - Advance Licence and duty drawback are mutually exclusive or not - The Circular proceeds on the basis that the inputs that are duty exempt constitute only a fraction of the over-all inputs used, as otherwise, the very purpose of the DD Scheme would become redundant. Abuse of the position, as recognized even under Circular No.19/2005 is not an impossibility. - The indigo blue used in the goods claiming duty drawback, is only a fraction. - Revenue appeal dismissed - HC Visit to Get Source Customs: Absolute Confiscation - Seeking redemption of prohibited goods - The appellant being an ineligible passenger could not have brought gold and clear after declaration on payment of duty. As, at that relevant time even an eligible passenger can bring only 1 Kg gold - The smuggling of gold by the appellant is proved beyond any doubt. So, it was rightly confiscated absolutely by the original adjudicating authority. - AT Visit to Get Source Customs: Valuation of imported goods - contemporaneous imports of similar goods - The quantity of import is much higher than the quantity of import in respect of the contemporaneous imports. Hence, so-called contemporaneous imports were in fact incomparables, due to which the rejection of the value of import as declared by the appellant is without any basis. - AT Visit to Get Source Customs: Valuation of imported goods - Wet Dates - The rejection of transaction value even when based upon NIDB data cannot be done without disclosing materials, as well as identical nature of the goods, and transaction value rejecting through reasoned order. In absence of the same on the part of proper office rejection of transaction value without complete disclosures is invalid. - AT Visit to Get Source Indian Laws: Dishonour of Cheque - retirement from the partnership firm prior to the issuance of the cheque in question - vicarious liability - A bare perusal of Section 141(1) of the NI Act, would reveal that only that person who, at the time the offence was committed, was in charge of and was responsible to the company for the conduct of the business of the company, as well as the company alone shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished. - SC Visit to Get Source Indian Laws: Constitution of Competition Commission - coram of the commission - binding nature of final judgment, which was signed and pronounced by only three members against six members who began hearing the matter - - The Impugned Order set aside - AT Visit to Get Source Service Tax: Delayed adjudication after lapse of more than 7 years from the date of show cause notice (SCN) - In the instant case period of more than 7 years from the issuance of impugned Show Cause Notice on 24-12-2014 cannot be said to be reasonable period for taking up/concluding adjudication proceedings. Section 73(1)/ 73(4) of Chapter V of the Finance Act, 1994 provides 5 years as a maximum period which in any case should be taken as reasonable period within which the adjudication should be completed. - HC Visit to Get Source Service Tax: Refund of Service Tax - time limitation - The time-limitation for refund application under Section 11B in the case on hand is to be reckoned from the date of original filing of such application. Hence, the issue of time-bar does not arise in the case on hand and to this extent, therefore, the impugned order cannot sustain. - AT Visit to Get Source VAT: Classification of goods - tinted glass sheets - There is no vagueness in the notification dated 07.09.1981 and the entry No. 4 is clear and unambiguous namely it has brought within the sweep “all goods and wares made of glass” exigible to tax but not including “plain glass panes” and the exemption being the creation of the statute itself, it has to be construed strictly and even if there is any vagueness in the exemption clause must go to the benefit of the revenue. - SC Visit to Get Source VAT: Legality and validity of the Notice of Assessment of Value Added Tax (VAT) - When this provision has been declared unconstitutional by this Court, we are at a loss as to why respondent No.4 had issued the impugned notice based on such a provision. - HC Visit to Get Source Articles CLAIM OF ARBITRAL AWARD, PENDING IN APPEAL - CAN BE INCLUDED AFTER RESOLUTION PLAN HAS BEEN APPROVED BY ‘CoC’? Input Tax Credit can’t be denied for declaration of wrong GSTIN without giving relief as per Circular No. 183 Procedure for Lower TDS u/r 28AA streamlined; Consumption Statement to be available online to deductors Extension of Limitation cannot be invoked when there is no intention to evade payment of Service Tax Writ Petition dismissed as alternative remedy available and directs department to decide payment of GST Dues in Instalments Notifications DGFT 35/2023 - dated 11-10-2023 - FTP Amendment in import policy condition of silver Covered under Chapter 71 of Schedule –I (Import Policy) of ITC (HS), 2022 GST - States 38/1/2017-Fin(R&C)(263)/3299 - dated 5-10-2023 - Goa SGST Seeks to amend Notification No. 38/1/2017-Fin(R&C)(255)/3219, dated the 30th August, 2023 F. A. 3-68-2017-1-V(45) - dated 6-10-2023 - Madhya Pradesh SGST Amendment in Notification No. F-A 3-68-2017-1-V (151) dated 5 November 2017 CT-8-0018-2023-Sec-1-V (CT) (44) - dated 6-10-2023 - Madhya Pradesh SGST Supply of online money gaming, supply of online gaming other than online money gaming and supply of actionable claims in casinos under section 15(5) of MPGST Act notified - effective date 1st day of October, 2023 CT-8-0017-2023-Sec-1-V (CT) (43) - dated 6-10-2023 - Madhya Pradesh SGST Seeks to bring in force provision of Madhya Pradesh Goods and Services Tax (Amendment) Ordinance, 2023 1076/XI-2-23-9(47)-17-T.C. 225-U.P. Act-1-2017-Order (279)-2023 - dated 26-7-2023 - Uttar Pradesh SGST Amendment in Notification No. KA.NI.-2&843/XI-9(47)-17-U.P.Act-1-2017-Order-(10)-2017, dated June 30, 2017 1074/XI-2–23-9 (47)-17-T.C.-223-U.P.Act-1-2017-Order(277)-2023 - dated 26-7-2023 - Uttar Pradesh SGST Amendment in Notification No. KA.NI.-2-836/XI-9(47)/17-U.P. Act-1-2017-Order-(06)-2017, dated June 30, 2017 Circulars / Instructions / Orders DGFT - 33/2023 - dated 12-10-2023 Suspension of SION E-125 for export product Shea Stearine Customs - PUBLIC NOTICE NO. 25 / 2023 - dated 26-9-2023 Calling Application for Empanelment of Chartered Engineer for Valuation of Second-hand Machinery and other Machinery items/Goods-reg. News Chairperson, NCLAT, Justice Ashok Bhushan, inaugurates 8th BRICS International Competition Conference 2023 in New Delhi Finance Minister Smt. Nirmala Sitharaman participates in the 108th Meeting of the Development Committee Plenary of the World Bank in Marrakech, Morocco Dr. Vivek Joshi, Secretary, Department of Finance Services (DFS) chairs stakeholders meeting on Rural Infrastructure Development Fund (RIDF) in New Delhi Income Tax Department Conducts Search and Seizure Operation In Jammu and Kashmir Case Laws: GST 2023 (10) TMI 484 Maintainability of petition - availability of alternative remedy - Cancellation of GST registration of petitioner - HELD THAT:- Admittedly, it is not in dispute that the petitioner no.1 was registered under the GST Act and GSTIN No.09BZAPK7818J1Z0 was granted to it, but due to unavoidable circumstances, the mother and sister of petitioner no.2 expired after prolonged serious illness due to which, the petitioner no.2 not only suffered financially but also mentally, due to which, the petitioner no.2 could not deposit the tax as well as filed is returns consecutively for for more than six months. Further, the petitioners in para 13 themselves mentioned and shows their will to deposit the entire dues along with interest. In the case in hand, the petitioner, in a peculiar circumstances, the petitioner no.2 could not deposit the amount of tax but the petitioner no.2, as stated above, is ready and willing to deposit the amount of tax. The respondent no.2 is directed to restore the registration of petitioner no.1 forthwith within a period of one week from the date of production of certified copy of this order. The petitioner no.2 is directed to deposit a sum of Rs. 6,00,000/-, after restoration of registration within a week - petition allowed. 2023 (10) TMI 483 Violation of principles of natural justice - hearing was granted to the petitioner during the assessment proceedings and during the appellate proceedings or not - HELD THAT:- In terms of mandate of Section 75(4) of GST Act, it is incumbent upon the respondents to grant a hearing, which admittedly has not been granted, as the date, venue or time of hearing was not mentioned in the reminder notice sent to the petitioner and thus, the order contained in Annexure - 2 passed under Section 73 of GST Act is clearly in violation of principles of natural justice. As against the appellate order, learned counsel for the petitioner argues that the same is also without consideration or application of mind. He places reliance on a judgment of the Supreme Court in the case of KAJAL DUTTA. VERSUS ASSISTANT COMMISSIONER OF STATE TAX, SURI CHARGE ORS. [ 2023 (1) TMI 1097 - CALCUTTA HIGH COURT] wherein the Supreme Court had the occasion to consider the statutory provisions governing the limitation under Section 107(1) read with 107(4) of GST Act and the Court was of the view that even in the cases where the appeal is filed beyond the condonable period, the Court while exercising the jurisdiction under Article 226 of the Constitution of India can examine the factual circumstances and grant appropriate relief as the appellate remedy is a valuable remedy since an appellate authority can re-appreciate the factual position. The original order suffers from the vice of not following the mandatory provisions under Section 75(4) of GST Act and thus, is clearly contrary to the mandate cast by virtue of Section 75(4) of GST Act and is also in violation of principles of natural justice, thus, it is deemed appropriate to quash both the orders contained in Annexure - 1 2 i.e. 20.02.2023 31.07.2023 and remand the matter to the assessing authority to pass fresh orders after giving an opportunity of hearing to the petitioner. Petition allowed by way of remand. 2023 (10) TMI 482 Principles of natural justice - cancellation of GST registration of petitioner - no cogent reason given for cancelling the GST registration of the petitioner - HELD THAT:- From the perusal of the impugned order, it transpires that the same has been passed without recording any cogent reason for cancelling the GST registration of the petitioner and appellate authority has also dismissed the appeal filed by the petitioner summarily without assigning any reason. An order without valid reasons cannot be sustained. To give reasons is the rule of natural justice, highlighting this rule, Hon'ble Supreme Court held in the case of SECRETARY CURATOR VICTORIA MEMORIAL HALL VERSUS HOWRAH GANATANTRIK NAGRIK SAMITY ORS. [ 2010 (3) TMI 1059 - SUPREME COURT] held that it is evident that the recording of reasons is principle of natural justice and every judicial order must be supported by reasons recorded in writing. It ensures transparency and fairness in decision making. The person who is adversely affected may know, as why his application has been rejected. Providing of reasons in orders is of essence in judicial proceedings. Every litigant who approaches the Court with a prayer is entitled to know the reasons for acceptance or rejection of such request. Either of the parties to the lis has a right of appeal and, therefore, it is essential for them to know the considered opinion of the Court to make the remedy of appeal meaningful - It is the reasoning which ultimately culminates into final decision which may be subject to examination of the appellate or other higher Courts. It is not only desirable but, in view of the consistent position of law, mandatory for the Court or Authority to pass orders while recording reasons in support thereof, however, brief they may be. It is a settled canon of legal jurisprudence that the Courts/Authorities are vested with discretionary powers but such powers are to be exercised judiciously, equitably and in consonance with the settled principles of law. Reason is the heart beat of every conclusion. In the absence of reasons the order becomes lifeless. Non recording of reasons renders the order to be violative of principles of natural justice. Reasons ensures transparency and fairness in decision making. It enables litigant to know reasons for acceptance or rejection of his prayer. It is statutory requirement of natural justice. Reasons are really linchpin to administration of justice. It is link between the mind of the decision taker and the controversy in question. Thus failure to give reasons amounts to denial of justice. Petition allowed. 2023 (10) TMI 481 Seeking grant of Regular Bail - illegal Input Tax Credit by entering into large scale financial transactions - HELD THAT:- This Court is of the opinion that, discretion is required to be exercised to enlarge the applicant on regular bail - this Court, prima facie, is of the opinion that, this is a fit case to exercise the discretion and enlarge the applicant on regular bail. Hence, present application is allowed and the applicant is ordered to be released on regular bail subject to the conditions imposed. 2023 (10) TMI 480 Cancellation of petitioner s GST registration - SCN do not mention any reason for cancellation - violation of principles of natural justice - HELD THAT:- The SCN did not mention the quantum of wrongful availment of ITC or any refund claimed on the said account - It is also seen that the impugned order cancelling the petitioner s GST registration does not mention any reason for cancellation of GST registration, except that no reply to the SCN had been submitted. There is merit in the contention that the SCN is bereft of any particulars, and that the impugned order is unreasoned. The SCN as well as the impugned order is liable to be set aside to the extent it cancels petitioner s GST registration retrospectively. Since it is stated that the petitioner has closed down the business with effect from March, 2021, we direct that the impugned order cancelling the petitioner s GST registration shall take effect from April, 2021. This is also for the reason that the SCN did not mention that the petitioner s GST registration would be cancelled with retrospective effect. Thus, the petitioner had no opportunity to object to the same. In the event, the respondents propose to take any action for cancellation of petitioner s GST registration with retrospective effect, it would be open for the respondents to do so, albeit, in accordance with the law, the respondents would require to issue a proper SCN and take an appropriate decision after affording the petitioner a reasonable opportunity to be heard - Petition disposed off. 2023 (10) TMI 479 Maintainability of appeal - appeal dismissed as being beyond limitation - opportunity of hearing - violation of principles of natural justice - HELD THAT:- Section 75(4) of the GST Act mandates the granting of an opportunity of hearing where an adverse decision is contemplated against a person. This provision was also interpreted by this Court in the case of PARTY TIME HOSPITALITY PROP. SMT. PUNITA GUPTA LKO. VERSUS STATE OF U.P. THRU PRIN. SECY. TAX AND REGISTRATION LKO AND 2 OTHERS [ 2023 (9) TMI 48 - ALLAHABAD HIGH COURT] and the Court was of the view that compliance of Section 75(4) of GST Act is mandatory; while doing so, this Court had also considered the earlier judgments of this Court. Considering the fact that the original order is contrary to the mandate of Section 75(4) of GST Act and is also violative of principles of natural justice, the order dated 29.08.2022 is liable to be quashed and is accordingly quashed - As the impugned order has been quashed, order dated 02.09.2023 is also quashed. Matter is remanded to respondent no.3 to pass fresh orders after giving an opportunity of hearing and after permitting the petitioner to file a reply to the show-cause notice, in accordance with law - Petition allowed by way of remand. 2023 (10) TMI 478 Blocking of Input Tax Credit - HELD THAT:- The petitioner has remedy of filing an appeal after the adjudicating order is passed and even if he is required to file an appeal, he is to deposit only 10% of the penalty amount assessed. Hence, in this backdrop, the account of the petitioner cannot be blocked beyond 10% of the penalty amount assessed. The present writ petition is allowed and orders dated 10.08.2023 and 25.08.2023 (Annexures P-3 and P-4) are being set aside and the account of the petitioner be unblocked forthwith after retaining 10% of the penalty amount assessed which would fulfill the condition of pre-deposit of 10%. 2023 (10) TMI 477 Seeking disbursal of amount of refund as claimed by the petitioner - reluctance of the respondents to comply with the order passed by the Appellate Authority - right to appeal - HELD THAT:- Notwithstanding that the respondents may have a right to appeal the order dated 07.04.2021 before the Appellate Tribunal, it cannot be accepted that the respondents can ignore the said order and not comply with the same, without a competent authority or court staying the said order. The issue involved in this petition is covered by the earlier decision of this Court in the case of Alex Tour and Travel Private Limited v. Assistant Commissioner, CGST, Division-Janakpuri [ 2023 (5) TMI 505 - DELHI HIGH COURT] where it was held that It cannot be accepted that the Revenue can ignore the orders passed by the appellate authority mainly on the ground that it proposes to file an appeal. The respondents are directed to forthwith disburse the refund as sanctioned by the Appellate Authority - Petition allowed. 2023 (10) TMI 476 Allegation of taking GST registration by the third party - Petitioner claimed that, respondent have misused the address of his property - Rejection of plaint by invoking the provisions of Order 7 Rule 11 of the Code of Civil Procedure - HELD THAT:- It is on a contention that respondent No. 3 does not have any subsisting legal right to occupy and / or utilize the petitioner s premises and avail the GST registration on the address of the said premises, the petitioner has approached respondent Nos. 1 2 under the Central Goods and Service Tax Act, for cancellation of the registration of respondent No. 3, insofar as it is granted on the address of the petitioner s premises. The prayer in the present proceedings is also similar. Certainly these are disputed questions of fact qua the rights inter se between the petitioner and respondent No. 3. The same cannot be adjudicated in the proceedings of this writ petition. However, if the grievance as made by the petitioner is correct from the perspective of the CGST/MGST Acts, in that event, in our opinion, it is appropriate that the petitioner makes a detailed representation by making specific prayers, to the appropriate / designated officer i.e. respondent No. 1. The learned advocate for the petitioner states that such representation shall be made by the petitioner within a period of two weeks from today. Let a copy of the representation be also served on respondent No. 3. On such representation of the petitioner, the designated officer / respondent No. 1, shall hear both the parties and pass appropriate orders in accordance with law, on the requests / reliefs as may be prayed by the petitioner in such representation. Application disposed off. 2023 (10) TMI 475 Maintainability of petition - availability of alternative remedy - time limitation for filing appeal - non-filing of returns for a period of six months - HELD THAT:- Although this Court has taken different view in DDA TYRES AND SERVICES VERSUS DEPUTY COMMISSIONER OF GST, DEPUTY STATE TAX OFFICER, OFFICE OF THE DEPUTY STATE TAX OFFICE, DHARMAPURI. [ 2023 (10) TMI 381 - MADRAS HIGH COURT] by relegating the party to file an appeal, Court is of the view that no useful purpose will be served by keeping the petitioner outside the purview of the GST regime, as the petitioner will continue to carry on business. This view has also been taken by this Court in M/s.Suguna Cutpiece Center Vs. Appellate Deputy Commissioner (ST) (GST) and another [ 2022 (2) TMI 933 - MADRAS HIGH COURT] . The Court is inclined to dispose this writ petition by quashing the impugned order subject to the petitioner depositing all the tax due for the period from April 2022 to July 2023 together with interest - petition disposed off. 2023 (10) TMI 474 Availment of irregular input tax credit - Not genuine supplier - issuance of bogus tax invoices - specific case of the petitioner is that the petitioner has responded to the notice and it has been found in the Web Portal. HELD THAT:- The petitioner appears to have tax invoices and other collateral evidence to substantiate that the supplier namely, Tvl. Sree Mangalmoorthi Starch Industries, 1st Floor, H-19, Periyar Nagar, Erode 638 009 had indeed supplied goods. The registration was valid as on date of supply, the matter would require a detailed consideration by the Authority. The petitioner has paid the disputed tax that has been confirmed vide impugned order dated 10.02.20233 on 02.09.2023. The impugned order is set aside - the case is remitted back to the respondent to pass a fresh orders on merits and in accordance with law , within a period of eight weeks from the date of receipt of copy of this order - Petition allowed by way of remand. 2023 (10) TMI 473 Blocking of Input Tax Credit - construction of their new administrative office - Central Air-conditioning Plant - Lift - Electrical fittings not for civil construction - Solar Plant - Fire Safety Extinguishers - Architect Service Fees - Interior Designing Fees. Central Air Conditioning Plant - HELD THAT:- As the construction of central air conditioning plant via a works contract service, makes it an immovable properly, it ceases to be a plant and machinery - the ITC on the supply of Central Air Conditioning Plant, ceases to be a plant and machinery hence, is blocked under Section 17(5)(c) of CGST Act, 2017 as the same is works contract services for construction of an immovable properly. Lift - HELD THAT:- On examining the agreement for supply of lift, it is found that the same falls under the category of works contract service as defined under section 2(119) of CGST Act, 2017, as it fulfills the description of the works contract service. The lift would become an immovable property after being erected and installed, as it is attached to the building itself - As the erection, installation and commissioning of lift via a works contract service as pointed out above, makes it an immovable property, it ceases to be a plant and machinery. Thus, in terms of section 17 of the CGST Act, the appellant is not entitled to ITC of GST paid on supply of Lift/Elevator. Electrical fittings such as Cables, Switches, NCB and other Electrical consumables materials - HELD THAT:- The electrical fittings are mostly concealed into the wall/floor of the building. They are concealed or fitted on to the building through pipes as it serves the dual purpose of safety and aesthetics. The supply of electrical fittings involves its installation also, The supply therefore falls under the category of Works Contract Service , further on installation of the electrical fittings it becomes part of the building and thereby an immovable property - the supply of electrical fittings after installation and commissioning becomes part of the building i.e. immovable property and thus in terms of section 17 of the CGST Act, the appellant is not entitled to ITC of GST paid on Electrical fittings. Roof Solar Plant - HELD THAT:- The roof solar plant, affixed to foundation via nuts and bolts and which has the flexibility of 4 different angles is not an immovable properly but a plant and machinery, The applicant has further stated that they have capitalized the roof solar plant in their books of accounts, the Roof Solar Plant, as is evident is not permanently fastened to the building. Thus, it qualifies as a plant and machinery and is not an immovable property, hence, it is not covered under blocked credit as mentioned in 17(5)(d) of the CGST Act, 2017. Therefore the applicant is eligible for input tax on roof solar plant. Fire Safety Extinguishers - HELD THAT:- There is an intention to install the Fire Safety Extinguishers permanently to the building. The Fire Safety Extinguishers once fitted, no longer remains movable goods as it gets assimilated in a permanent structure i.e. the administrative building of the appellant. As the supply and installation of fire safely extinguishers as pointed out above, makes it an immovable properly, it ceases to be a plant and machinery - the appellant is not entitled to ITC of GST paid on Fire Safety Extinguishers in view of the provisions of section 17(5)(c) of the CGST Act, 2017. Architect Service Fees - Interior Designer Fees - HELD THAT:- It is undisputed that the services of an Architect and Interior Designer availed is with regard to construction of an immovable properly i.e. the new administrative/office building of the appellant. As is evident, AS 10, prescribes capitalization of professional fees, meaning thereby that in this case both these services viz. architect service fees and interior designer Fees, should in terms of the accounting standards be capitalized. The averment therefore that since they are booking a capital expense under Profit and Loss account will make them eligible for ITC, is not a legally tenable argument - the appellant is not entitled to ITC of GST paid on Architect Service Fees and Interior Designing Fees in view of the provisions of Section 17(5)(d) of the CGST Act, 2017. Appeal dismissed. 2023 (10) TMI 472 Restriction of Input Tax Credit (ITC) - supply or not - goods disposed of by way of gift - applicant's obligation to issue gold coins and white goods to the dealers / customers upon they achieving the stipulated lifting of the material / purchase target during the scheme period - applicant's obligation to issue gold coins and white goods to the dealers/ customers upon they achieving the stipulated lifting of the material / purchase target during the scheme period - permanent transfer or disposal of business assets where ITC has been availed on such assets. HELD THAT:- Seen in light of the fundamental statutory position the transaction in the case of the applicant is one of supply of goods to his dealers in exchange for consideration. The Consideration is the monitory value of the act of attaining a level of business indicted in the incentive scheme by the applicant. The applicant is inducing his dealers / stockiest to attain a particular level of business as a consideration for the goods to be supplied by him. The applicant is making supply of white goods and gold to his dealers or stockiest in return for the dealers or stockiest attaining a threshold of sales indicated in the scheme and therefore, the value of white goods and gold supplied by him are for the act of achieving this threshold and therefore taxable in his hands. The value of the goods supply is determined under Section 15 of the GST Act read with Rule 30 of the CGST Rules. 2023 (10) TMI 471 Time of supply of the work executed from September 2010 to June 2017 - Issuance of tax invoice - works contractor executing works for the State Government - HELD THAT:- The Applicant has received consideration for the works executed by him prior to the appointed day i.e., 01-07-2017 due to upward revision. Therefore this situation falls under clause (a) of sub sec (2) of sec (142) of the CGST Act 2017. The time of supply is the date on which such consideration is received as enumerated under Section 13(c)(a) of the CGST Act - The applicant shall receive a supplementary invoice or payment debit note, within thirty days of such price revision and such supplementary invoice or debit note shall be deemed to have been issued in respect of an outward supply made under CGST/SGST Acts. 2023 (10) TMI 470 Maintainability of application - information requested could not be filed by the applicant - Government Entity as per N/N. 11/2017 31/2017 or not - works contract executing civil works for Central Government Employees Welfare Housing Organization (CGEWHO) - whether the tax rate of 12% is applicable to the contract entered into by the applicant with CGEWHO or not? HELD THAT:- It is observed by the AAR that the information requested could not be filed by the applicant till date. The said information is crucial to forming an opinion by the AAR therefore in the absence of the said material the AAR is not in a position to gives its clarification on the questions raised before it by the applicant. Hence the application is dismissed. 2023 (10) TMI 469 Exemption from GST - common area electricity charges are collected from the members on actual basis - Collection of advance maintenance charges from members - electricity charges being collected and totally paid to the electricity department - threshold limit for collection of GST in case of collections from member of Resident Welfare Association - N/N. 12/17-CT dated 28.06.2017. Common area electricity charges are collected from the members on actual basis - electricity charges being collected and totally paid to the electricity department - HELD THAT:- A combined reading of the N/N. 02/2017 dated: 28.06.2017 and the rule 33 of CGST Rules reveals that the cost of electrical energy supplied by the applicant to its members as a pure agent is not taxable at the hands of the applicant. So also by the notification cited above the electrical energy as such remains exempt from taxation and cannot be combined with others supplies being made by the applicant as a composite supply because a composite supply by definition should consist of two or more taxable supplies. Collection of advance maintenance charges from members - HELD THAT:- The Section 13 (2) of the CGST Act enumerates that the time of supply of services shall be the earliest of the date of issue of invoice or the date of receipt of payment. Section 31 (2) states that a registered person supplying taxable services shall issue a invoice either before or after the provision of service. A combined reading of both would make it clear that as an invoice can be issued even prior to provision of a service a time of supply of service will be the date of receipt of advance. Further, vide notification no. 66/2017 Central Tax dated 15th November, 2017, specific exemption from the payment of GST on advance receipt has been granted to the supplier of goods - advances received towards the supply of a service have to be reported in the GSTR-1/GSTR-3B for the relevant tax period and the liability needs to be discharged in GSTR-3B. Threshold limit for collection of GST in case of collections from member of Resident Welfare Association is Rs. 7500/- - HELD THAT:- The Serial No. 77 of Notification No. 12/2017 as amended vide Notification No. 02/2018 dt: 25.01.2018 states that service by an unincorporated body or a non-profit entity to its own members is exempt upto an amount of Rs. 7500 per member for sourcing goods or services from a 3rd person for the common use of its members in a housing society or a residential complex. Therefore where the aggregate turnover of a Residents Welfare Association (RWA) exceeds Rs.2 0 lakhs in a financial year and the amount collected for maintenance per member exceeds Rs. 7500/- then the entire amount is chargeable to GST at the rate of 18%. For example: if the maintenance charges are Rs .9000 per month per member, GST @18% shall be payable on the entire amount and not on the difference amount. Further even if the annual turnover of the RWA is greater than Rs. 20 lakhs but the monthly maintenance charged per person is less than Rs. 7500/-, then such RWA need not pay tax on the amounts so collected - Therefore they are taxable if the total amount collected by the RWA equal or exceeds Rs. 7500/-. 2023 (10) TMI 468 Profiteering - purchase of flat - Respondent had not passed on the benefit of ITC to him by way of commensurate reduction in prices after implementation of GST - violation of of Section 171 of the CGST Act, 2017 - HELD THAT:- This Commission has carefully considered the Report dated 26.02.2021 furnished by the DGAP and the other material brought on record and it has been revealed that the Applicant No. 1 has received ITC benefit of Rs 8,608/- which is more than the additional ITC benefit of 0.24% of the taxable turnover - The Applicant No. 1 vide email dated 20.09.2023 in response to personal hearing notice dated 06.09.2023 has stated that from his side he has no comments. It is apparent from the above email that Applicant No. 1 does not want to pursue the matter further as he has already received the benefit of ITC from the Respondent as is also stated in the Report of the DGAP. It is also revealed that the Respondent has passed on an amount of Rs. 17,26,772/- to the 56 home buyers whereas he was required to pass on benefit of Rs. 1,03,143/- only. The instant case does not fall under the ambit of Anti-Profiteering provisions of Section 171 of the CGST Act, 2017 as the benefit of ITC has already been passed on to the Applicant No. 1 and other home buyers - the present proceedings launched under Section 171 of CGST Act, 2017 are not maintainable and are hereby dropped. Income Tax 2023 (10) TMI 518 Nature of expenses - renovation and repair expenses incurred on account of improvisation and better conduct of the existing business - whether not the revenue expenditure admissible u/s 37? - treatment of expenses incurred on renovation and refurbishment of Hotel - HELD THAT:- Having regard to the judgment rendered in [ 2023 (10) TMI 467 - DELHI HIGH COURT ] the instant appeal is disposed of with the following directions, as the view taken in the said appeal will apply mutatis mutandis to the instant case as well: Appellant/assessee will be entitled to claim the deduction, as, in our opinion, it is in the nature of revenue expenditure as incurred on renovation, refurbishment and repairs. 2023 (10) TMI 517 Nature of expenses - renovation and repair expenses partly capitalized in the books of account of the Assessee and payment made to consultancy and supervision of interior d cor of the existing hotel of the Assessee under renovation and refurbishment - whether not the revenue expenditure admissible u/s 37? - treatment of expenses incurred on renovation and refurbishment of Hotel - HELD THAT:- As expenses initially capitalized and was claimed as revenue expenditure for the first time before the Tribunal and forms part of the additional grounds raised by the assessee in its appeal preferred before the Tribunal, it would stand remanded to the AO for examination of the character and nature of the expenses incurred, having regard to the principles adverted to [ 2023 (10) TMI 467 - DELHI HIGH COURT ] the instant appeal is disposed of with the following directions, as the view taken in the said appeal will apply mutatis mutandis to the instant case as well Appellant/assessee will be entitled to claim the deduction, as, in our opinion, it is in the nature of revenue expenditure. 2023 (10) TMI 516 Nature of expenses - renovation and repair expenses partly capitalized in the books of account of the Assessee and payment made to consultancy and supervision of interior d cor of the existing hotel of the Assessee under renovation and refurbishment - whether not the revenue expenditure admissible u/s 37? - HELD THAT:- As expenses initially capitalized and was claimed as revenue expenditure for the first time before the Tribunal and forms part of the additional grounds raised by the assessee in its appeal preferred before the Tribunal, it would stand remanded to the AO for examination of the character and nature of the expenses incurred, having regard to the principles adverted to [ 2023 (10) TMI 467 - DELHI HIGH COURT ] the instant appeal is disposed of with the following directions, as the view taken in the said appeal will apply mutatis mutandis to the instant case as well Appellant/assessee will be entitled to claim the deduction, as, in our opinion, it is in the nature of revenue expenditure. 2023 (10) TMI 515 Nature of expenses - renovation and repair expenses partly capitalized in the books of account of the Assessee and payment made to consultancy and supervision of interior d cor of the existing hotel of the Assessee under renovation and refurbishment - whether not the revenue expenditure admissible u/s 37? - treatment of expenses incurred on renovation and refurbishment of Hotel - HELD THAT:- As expenses initially capitalized and was claimed as revenue expenditure for the first time before the Tribunal and forms part of the additional grounds raised by the assessee in its appeal preferred before the Tribunal, it would stand remanded to the AO for examination of the character and nature of the expenses incurred, having regard to the principles adverted to [ 2023 (10) TMI 467 - DELHI HIGH COURT ] the instant appeal is disposed of with the following directions, as the view taken in the said appeal will apply mutatis mutandis to the instant case as well Appellant/assessee will be entitled to claim the deduction, as, in our opinion, it is in the nature of revenue expenditure. 2023 (10) TMI 514 Nature of expenses - Renovation and repair expenses - whether not the revenue expenditure admissible u/s 37? - treatment of expenses incurred on renovation and refurbishment of Hotel - HELD THAT:- Having regard to the judgment rendered in [ 2023 (10) TMI 467 - DELHI HIGH COURT ] the instant appeal is disposed of with the following directions, as the view taken in the said appeal will apply mutatis mutandis to the instant case as well: Appellant/assessee will be entitled to claim the deduction, as, in our opinion, it is in the nature of revenue expenditure as incurred on payment of fees to GEL. 2023 (10) TMI 513 Disallowance u/s 14A r.w.r. 8D - assessee did not earn any exempt income during the year - Scope of amendment of section 14A - HELD THAT:- Respectfully following the decision of Era Infrastructure (India) Ltd. [ 2022 (7) TMI 1093 - DELHI HIGH COURT] we hold that the operation of explanation to provisions u/s 14A by way of Finance Act, 2022 is only prospective in nature and cannot be made applicable to the year under consideration. Since it is an undisputed fact that there is no dividend income earned in the relevant previous year, by respectfully following case of Cheminvest Ltd [ 2015 (9) TMI 238 - DELHI HIGH COURT] we hold that Section 14A read with Rule 8D applies only in relation to an assessee s exempt income and not otherwise. Decided against revenue. 2023 (10) TMI 512 Levying interest for delayed payment of TDS to Central Government account - CIT(A) confirmed denying the claim of assessee as deduction - HELD THAT:- CIT(A) in order to come to such conclusion placed reliance on the decision of Hon ble High Court of Madras in the case of Chennai Properties Investment Ltd. [ 1998 (4) TMI 89 - MADRAS HIGH COURT] which held the interest paid u/s. 201(1A) of the Act by the assessee does not assume the character of business expenditure and also cannot be regarded as compensatory payment. AR did not dispute the same. Therefore, we hold the interest paid on delayed payment of TDS to Central Government account is not eligible for allowance as business expenditure , consequently, the deduction claimed by the assessee is liable to be denied - No infirmity in the order of CIT(A) in holding the same. Thus, the order of CIT(A) is justified and ground No. 1 raised by the assessee is dismissed. Penalty imposed by the RBI - non adherence to certain directives issued by the RBI - CIT(A) remanded the issue to the file of AO to consider and allow the penal interest if the payment relates to first default, if not but deny the claim of the impugned order - HELD THAT:- CIT(A) has no jurisdiction to remand the issue to the file of AO as provided under the provisions of section 251 of the Act. We note that it is settled principle that the CIT(A) has to dispose off an appeal against the order of assessment either he may confirm, reduce, enhance or annul the assessment, but however, no jurisdiction is conferred by the statute in remanding the issue to the file of AO. As there was no finding by the CIT(A), in our opinion, the issue requires adjudication by the CIT(A) and pass an order, in accordance with law - Appeal of assessee allowed for statistical purpose. Employees Stock Expenses (ESOP) - assessee claimed as business expenditure - assessee bank issued equity shares to its employees under ESOP Scheme at discount - HELD THAT:- CIT(A) held the issue of employees stock option is an allowable deduction in computing the income under the head profits and gains of business and profession. DR did not bring on record any contrary to the finding of the CIT(A) in placing reliance on the order of Special Bench of Bangalore, ITAT in the case of Biocon Ltd. [ 2013 (8) TMI 629 - ITAT BANGALORE] and SSI Capital Ltd. ([ 2004 (12) TMI 680 - ITAT CHENNAI] - No infirmity in the order of CIT(A) and it is justified. Broken period interest paid on Held to Maturity (HTM) as an allowable deduction - AO disallowed interest levied between the time gap of actual disbursal of the first installment of the loan and the time of the commencement of EMIs is broken period interest as expenditure - HELD THAT:- CIT(A) correctly by placing reliance on case of Prathamik Shikshan Sahara Bank Ltd.[ 2017 (5) TMI 1695 - ITAT PUNE] held that the assessee is entitled to claim same as business expenditure. 2023 (10) TMI 511 Levy of penalty u/s. 271(1)(c) - gross profit estimated @ 5% on alleged unproved purchases - HELD THAT:- Appellate authorities have found that at the most there could be element of suppression of gross profit on the purchases, but such estimated addition alone cannot be the basis for levy penalty u/s.271(1)(c). The penalty proceedings being separate and distinct from the assessment proceedings and the assessee can explain on the basis of same material facts on record that he has not concealed any particulars of income or furnished any inaccurate particulars of income. The explanation of the Assessee and all the evidences filed before the authorities below have neither been rebutted nor has been found to be incorrect or assessee has failed to substantiate the explanation. Thus, levy of penalty on such estimated gross profit cannot be sustained and accordingly, in all the years penalty levied by the AO and sustained by the CIT(A) is directed to be deleted. Appeal of assessee allowed. 2023 (10) TMI 467 Nature of expenses - repair and maintenance and payment to GEL - revenue or capital expenditure - current repair u/s 30 - treatment of expenses incurred on renovation and refurbishment of Hotel - HELD THAT:- Tribunal misdirected itself in law by not applying the correct principles enunciated by the courts while ascertaining whether a particular expense should be treated as revenue or capital expenditure. Tribunal was wrongly burdened by the fact that the renovation, refurbishment and repairs were carried out over several years and that the total amount incurred which was much more than the cost at which the hotel had been constructed. In coming to its conclusion, the Tribunal, in our opinion, gave undue weight to the director's report, which, inter alia, alluded to the fact that they were carrying out a comprehensive renovation which would ultimately result in the hotel attaining the first rank in the country by bringing into existence a New Hyatt . Tribunal committed an error in disregarding that expenses were incurred concerning an ongoing hospitality business. None of the statutory authorities returned a finding that the expenses incurred by the appellant/assessee had resulted in the acquisition or bringing into existence an asset. Expenses incurred by the appellant/assessee did not result in conferring upon it an advantage of enduring benefit. The advantage of enduring benefit has to be considered from the point of view of business expediency. The fact that the pressurisation of lift shafts resulted in the safety of the lifts being enhanced could not have led to the expenses being incurred in that behalf being characterised as capital expenditure. The expenses incurred were for preserving and protecting existing assets. The categorisation of expenses under various heads, such as renovation, refurbishment or repair, are not necessarily determinative of the nature of the expenditure i.e., whether or not it is on capital or revenue account. The segregation can be carried out by applying the principles enunciated in that behalf to the facts obtaining in each case. The broad-brush approach adopted by the Tribunal concerning expenses which had been capitalised in the books of account and were sought to be claimed as revenue expenditure for the first time before the Tribunal was, undoubtedly, not the right approach. Also renovation and refurbishment of the rooms, including washrooms and other facilities in the hotel, only improved, if at all, the efficiency of the source of profit or income and hence, in our opinion, the expenses incurred for that purpose could not be categorised as capital expenditure. Tribunal overlooked the principle that when an expenditure is incurred to make the profit-earning structure work more efficiently, leaving the structure of the source of profit or income intact, it can only be treated as revenue expenditure, although its impact may last for an extended period. Thus we are inclined to sustain the view taken by the CIT(A) that amount spent on renovation, refurbishment and repairs had to be treated as revenue expenditure. The contrary view taken by the Tribunal cannot be sustained and, hence, is overruled. Treatment of fees paid to GEL - Tribunal has linked its conclusion regarding the treatment of fees paid to GEL with its conclusion arrived at qua categorisation of expenses incurred on renovation, refurbishment and repairs. According to us, this view, on the same logic, cannot be sustained for the reason that if GEL was called upon to plan and supervise the execution of the work involving renovation, refurbishment and repairs (which, as noticed above, should be treated as revenue expenditure), the fees paid in that behalf should also be treated as revenue expenditure. The nature of the expenses incurred, as noticed by the CIT(A), is not suggestive of the fact that they were incurred on the capital account. It is well-established that the manner in which the expense/income is reflected in the books of accounts of the appellant/assessee or in some cases omitted, is not determinative of its true nature, although it may provide a clue. The safest and the surest way to arrive at the true nature of the expense/income in issue is by having regard to the provisions enunciated either in the statute and/or the principles enunciated by the courts. See Kedarnath Jute Mfg. Co[ 1971 (8) TMI 10 - SUPREME COURT ] Thus the appellant/assessee was correct in contending before the Tribunal that the expenses which had been capitalised and were sought to be treated as revenue expenditure under the provisions of the Act would require examination by the AO. Current repair u/s 30 - Tenability of the deductions claimed u/s 37 which, inter alia, provides that an expenditure which is not described in Sections 30 to 36 of the Act and is expended wholly and exclusively for the purposes of business or profession, not being in the nature of either capital expenditure or personal expense, can be claimed by the Assessee in computing his income chargeable under the head profits and gains of business or profession . Tribunal, in our view, has correctly mentioned in para 35 of the impugned order that if, for any reason, the owner of a building which is used for business incurs expenditure in the nature of current repairs and the Assessee is not able to claim expenses for current repairs under the provision of 30(a)(ii), he could still lay a claim for deduction under Section 37(1) of the Act provided the conditions stipulated therein are fulfilled. Thus appellant/assessee will be entitled to claim deductions, in the nature of revenue expenditure - as incurred on renovation, refurbishment and repairs. Equivalent to Section 10(2)(xv) of the 1922 Act, expenses incurred on pressurisation of lift shafts and on payment of fees to GEL. And expenses of renovation, refurbishment and repairs of its hotel which was initially capitalised and was claimed before the Tribunal for the first time as revenue expenditure and forms part of the additional grounds raised by the appellant/assessee in its appeal preferred before the Tribunal, it would stand remanded to the AO for examination of the character and nature of the expenses incurred, in the light of the principles adverted to hereinabove. - Matter on this issue restored back to AO. 2023 (10) TMI 466 Faceless assessment - Exception for entertaining the writ petition despite availability of alternate efficacious remedy - Petitioner seeking time again and again for uploading written submissions and documentary evidence in support thereof - as per DR petitioner was granted enough opportunity to upload his written submissions and documentary evidences in support first notice Exhibit P-4 dated 20.07.2023 issued providing time to the petitioner till 31.07.2023 for furnishing the written submissions and documentary evidence, which he failed and on last date i.e. on 31.07.2023 he made a request for fifteen days further time for furnishing written submissions and supporting documentary evidence. The petitioner did not upload the documents and written submissions even within the time asked by him and in fact the time has extended till 18.08.2023 HELD THAT:- Considering the ratio laid down by the Supreme Court in the aforesaid Judgment of MS Radha Krishan Industries [ 2021 (4) TMI 837 - SUPREME COURT] regarding the exception for entertaining the writ petition despite availability of alternate efficacious remedy, we are of view that the case of the petitioner does not fall within the exceptions carve out for entertaining the writ petition despite availability of alternative remedy. ITAT can examine all the evidence which may not have been produced before the assessing authority or the appellate authority and also would consider all the submissions which may not have been taken before the appellate authority or the assessing authority to decide the second appeal u/s 253 of the Income Tax Act. The question regarding the Income Tax Appellate Tribunal being not efficacious forum for deciding appeals is also not called for inasmuch as the provisions of Section 253 is not in challenge before this Court. Thus dispose of this writ petition with a direction to the petitioner to file an appeal before the ITAT against the impugned order within a period of one month from today and the petitioner may take all the grounds which are available to him and produce all evidence in support thereof. ITAT shall consider the documents and grounds of the petitioner while disposing of the appeal in accordance with law expeditiously. Petitioner may also file an application for the stay of the demand in pursuance to the assessment order and the appellate authority shall consider the same expeditiously. If the petitioner deposits 20% of the assessed tax, the stay application shall be decided within a period of one month from the date of filing of the appeal and stay application. 2023 (10) TMI 465 Business promotion expenses - CIT (A) treating the business promotion as eligible expenses u/s 37 - HELD THAT:- CIT(A) has extensively dealt with the issue on the basis of nature of business of the assessee. The whole model of the business of assessee is dependent upon the agents or distributors who are given incentives and there is a business expediency with promotion of the business of assessee due to these expenditures as in A.Y. 2013-14 so in the present assessment year also, as assessee had brought on record the effect of business promotion expenses in the increase of the turn over and net profit. AR during the course of arguments has demonstrated that all the relevant details of the business promotion expenditure including a list of persons to whom such items has been given was produced. He also demonstrated that the area of interest of assessee company being FMCG distribution/ advertisement expenses form substantial part of the expenditure for which the comparative detail with other company was also filed. Thus, we are not inclined to interfere in the decision of Ld. CIT(A) in following his findings in assessee s own case for A.Y. 2013-14. The ground is dismissed. Disallowance of packing expenses and office expenses - CIT(A) deleted the addition - HELD THAT:- The nature of business activity of the assessee was such which required extensive involvement of individuals and on that account certain expenditures if made on the support of self drawn vouchers, the same cannot be doubted when otherwise there is no defect in the books and the business turnover. Ld. CIT(A) has been reasonable to hold that such adhoc disallowances are not justified and the findings require no interference. The grounds are decided against the revenue. 2023 (10) TMI 464 Addition u/s 69C - bogus purchases - Two accommodation entry providers have admitted in their statements that the said two companies were controlled by them and by using these companies for providing bogus accommodation entries to various persons including the assessee - HELD THAT:- From the first appellate order, we note that the CIT(A) had not only considered the findings of the AO but also considered explanations and documentary evidences submitted by the assessee and thereafter, held that there was no merit in the submissions of appellant company as appellant had taken the accommodation entry in the form of bogus purchases from said two dummy companies controlled by Shri Himanshu Verma. With these observations,CIT(A) upheld the addition under section 69C of the Act in respect of bogus purchases and had also upheld the addition on account of unexplained expenditure on commission paid for arranging impugned accommodation entries of bogus purchases. We are unable to see any valid reason to interfere with the findings arrived by the learned CIT(A) while confirming both the additions made by AO. Therefore, sole grievance of assessee being devoid of merits is dismissed. 2023 (10) TMI 463 Addition u/s 68 - unsecured loan receipts - assessee has failed to discharge the onus of establishing creditworthiness of lenders/creditors and genuineness of transactions of unsecured loan viz-a-viz payment of interest thereon - CIT(A) confirmed addition - HELD THAT:- As CIT(A) noted that since the source of companies was doubtful, therefore, the same was rightly added by the AO u/s 68 of the Act. The learned CIT(A) while confirming the second part of addition also concluded that since the loans has been treated as bogus, the interest also rightly disallowed by the AO. CIT(A) has right to relied on the judgment of Mihir Kanti Hazra [ 2015 (5) TMI 319 - CALCUTTA HIGH COURT] wherein it was held that it is now well settled that the creditworthiness of the alleged creditors and the source of the source are relevant enquiries. We unable to see any valid reason to interfere with the findings recorded by the CIT(A) while confirming both the additions. Decided against assessee. 2023 (10) TMI 462 Unexplained investment by way of unsecured loan - deemed income u/s. 69 - HELD THAT:- No improvement in his case was made by the assessee-appellant, while the Revenue relied on the orders by the Revenue authorities, tabulating, date-wise, the cash deposits in the bank account and the corresponding bank transfers to the company (Manko), which are for the period (01.04.2013 to 11.10.2013) and (01.04.2013 to 04.01.2014) respectively. The OD account, never really utilized, had been, as rightly inferred by the Assessing Officer (AO), deployed as a ruse, a cover-up so to speak, the source of bank transfers to and, thus, investment in Manko by the assessee being the unexplained cash deposits in his bank (OD) account. Why, rather, we wonder did the AO, then, not make addition for the same, i.e., for Rs. 97.64 lakhs instead, which would obviate the need for a separate addition for Rs. 70.50 lakhs toward investment in the company or, making it, regard it as on protective basis, while that for Rs. 97.64 lakhs would be on substantive basis. Even allowing credit for Rs. 21.40 lakhs, withdrawn cash from the OD account, i.e., assuming it being recycled, which would though have to be shown so, would reduce the addition qua unexplained cash deposit to Rs. 76.24 lakhs. Be that it as may, we confirm the impugned addition. Unexplained investment in immovable property (IP) - Apart from a bald statement as to the investment in property being made out of cash withdrawals from the bank account of self and wife, not produced at any stage, the assessee has not brought any material on record to substantiate his case. In fact, as found the bank accounts were used for channelizing unaccounted money, so that nothing turns on their having been not produced, perhaps also explaining their non-furnishing. We, accordingly, finding no infirmity in the impugned order, confirm the addition sustained. Gain on sale of shares - LTCG OR STCG - sale of 42,500 shares in Manko (including 500 held in the name of his wife), constituting 50% of the 85,000 shares therein; the balance 50% being held, similarly, by Sh. Ittoop and his wife, Lissy Ittoop - manner of discharge of the sale consideration determine the said consideration - difference between the transfer consideration of a property, moveable or immovable, i.e., with reference to its fair market value (FMV) as on the date of transfer, as income from other sources of the recipient of the property - HELD THAT:-No long term capital gain arises to the assessee inasmuch as the entire shareholding of 42,000 shares sold during the year stands acquired during the year, with there being nothing on record to exhibit acquisition of 500 shares earlier. The assessee is liable to be assessed u/s. 56(2)(vii)(c) of the Act at Rs. 337.50 lakhs, the fmv of 42000 shares in Manko acquired by him during the relevant year, less the cost shown to have been incurred on their acquisition, representing thus the price differential between the two. No short term capital gain would arise to the assessee on the sale of 42,000 shares during the year for Rs. 337.50 lakhs in view of the same, the sale value agreed upon between the parties, at around the same time, in a transaction between unrelated parties, being, under the circumstances, also their deemed cost u/s. 49(4). Inasmuch as we have found the assessee s unsecured loan account being used as a conduit for receipt of sale consideration, he shall, on account of double tax, be allowed a reduction of Rs. 70.50 lakhs separately assessed u/s. 69 of the Act, i.e., while assessing income u/s. 45 or, as the case may be, section 56(2)(vii)(c) of the Act; OR alternatively, no separate addition for Rs. 70.50 lacs u/s. 69 is called for. The assessee shall also explain the apparent difference of Rs. 5 lacs in his loan account with Manko, which shall, where unexplained, deemed as income u/s. 69. However, if the said funds stand transferred during the year thereto, the assessee shall be entitled to like deduction as for Rs. 70.50 lacs. Thus an appellate authority has the jurisdiction as well as the duty to correct all errors in the proceedings under appeal, and to issue, if necessary, appropriate directions to the authority against whose decision the appeal is preferred to dispose of the whole or any part of the matter afresh, unless forbidden by the statute from doing so. 2023 (10) TMI 461 Deduction claimed u/s 10AA - Claim denied as conditions prescribed for claiming the deduction has not been fulfilled - HELD THAT:- AO in the order giving effect has passed orders for AY 2007-08 to AY 201-12 pursuant to the orders of the Tribunal, wherein he has allowed the deduction u/s 10AA. We also notice that the AO having gone through the various details submitted by the assessee with respect to claim of deduction u/s 10AA has himself held that the assessee is eligible or deduction u/s 10AA. As noticed that the year under consideration is not the first year in which the assessee has claimed the deduction under section 10AA and that it is well settled position that once the eligibility of deduction u/s 10A or 10B or 10AA has been accepted in the initial assessment year, then it cannot be withdrawn in the subsequent years for a breach of certain conditions which are required to be seen or examined in the first year of claim.. Therefore, we see merit in the contention of the Ld.AR that section 10AA deduction cannot be denied to the assessee for the said reason. Accordingly, we hold that the assessee is entitled for deduction u/s 10AA. Interest income to be considered for deduction u/s 10AA - AR submitted that the interest income cannot be excluded for the purpose of deduction u/s 10AA - DR argued there should be nexus between the interest income and the business of the assessee - HELD THAT:- In assessee s case, we notice that the fixed deposits are held as margin money with the banks and that there is nexus between the interest earned and the business of the assessee. Therefore, respectfully following the above decision of Jardine Lloyd Thompson Private Limited [ 2023 (5) TMI 701 - ITAT MUMBAI] we hold that the interest income earned by the assessee from fixed deposits held for the purpose of margin money is eligible or deduction u/s 10AA of the Act. Income from gold dust to be considered for deduction u/s 10AA - CIT(A) held that the gold dust is generated only during the manufacturing activity of the assessee as a by-product and, therefore, intrinsically linked to the eligible business of the assessee - HELD THAT:- Plain reading of the computation mechanism as provided in subsection (7) of section 10AA leads to the conclusion that for the purpose of deduction u/s 10AA, it is the profits of the business that needs to be considered. In assessee's case we notice that the Assessing Officer had not disputed the fact that the interest on deposits being part of profits from business of the assessee and therefore there is merit in the contention that while computing the deduction as per subsection (7) of section 10AA, the same is to included as part of the profits of the business. In assessee s case, AO has treated the income from sale of gold dust as part of the business income of the assessee (refer the statement of assessed income in assessment order) and, therefore, the AO himself has not denied the fact that the income from sale of gold dust is part of the business income of the assessee. Once the income has been accepted to be part of the business income of the assessee then the same needs to included for computation of deduction as per the provisions of subsection (7) of section 10AA. Accordingly we hold that income from sale of gold dust also to be considered for the purpose of arriving at the profits eligible for deduction u/s 10AA. The Assessing Officer is directed to re-compute the deduction u/s 10AA. Appeal of the assessee is allowed. 2023 (10) TMI 460 Reassessment proceedings u/s 147 - Scope of fresh material to initiate reopening - Change of opinion - Addition based on statement recorded on oath u/s 132(4)/133A relied upon which were later on retracted - HELD THAT:- Admission of the assessee in survey statements should have been considered as fresh material since such fact was not before the then AO at the time of original assessment u/s 143(3), however, since the issue was already dealt with at length in the assessment u/s 143(3) and an opinion was formed by the Ld AO, moreover the reopening was beyond a period of 4 years from the end of the relevant assessment year, 1st proviso to section 147 was very much triggered and accordingly it was the required to satisfy the twin conditions i.e. (i) Ld AO have reason to believe that income chargeable to tax has escaped assessment; and (ii) have reason to believe that such income has escaped assessment by reason of the omission or failure on the part of the assessee to make a return under section 139 for the assessment year under consideration or to disclose fully and truly all material facts necessary for his assessment for that year. In the present case since a new fact was admitted by the assessee by way of statement which was not there before the Ld AO when the original assessment u/s 143(3) was framed, thus, the twin conditions mandated in 1st proviso to section 147 are satisfied and we hold that reopening u/s 147 was validly initiated by the Ld AO. We therefore are not in concurrence with the finding of Ld CIT(A) on this aspect that the reopening was illegal as no fresh material was available with the AO to do so. In the result Ground no 2 of the revenue is allowed. Addition when the assessee had retracted from the statements given during the survey operations - assessee first admitted and surrendered a sum as unexplained / undisclosed income - submission of assessee that the combined retraction of the assessee for 3 AY s was accepted by the Ld AO which is evident from the assessment order for one of the AY i.e. 2018-19 wherein no addition was made by the Ld AO on the basis of survey statements recorded on oath u/s 133A - As it is the fact that the reopening was done on the basis of statement recorded during the survey operations and the same were later retracted by the assessee. AO had relied upon the information available with him without dislodging the retraction of the assessee by way of any material evidence on record. A view taken by the AO in the original assessment proceeding on the basis of certain documents have been seen with a different eye is considered to be a change of opinion only. Section 147 do not allow an AO to have a second look on the evidence which were already examined by the then AO when the assessment under section 143(3) was framed. Hon ble Bombay High court in the case of Ananta Landmark (P) Ltd [ 2021 (10) TMI 71 - BOMBAY HIGH COURT] held that Duty of the assessee is to fully and truly disclose all primary facts necessary for the purpose of assessment it is not part of his duty to point out what legal inference should be drawn from the facts disclosed where on consideration of material on record, one view is conclusively taken by the AO, it would not be open to reopen the assessment based on the very same material with a view to take another view. Under such scenario, we are of the considered opinion that the AO has failed to explain how the appellant has not discharged the onus cast upon it u/s 68 of Act, while the primary information was already made available by the assessee, no new fact could be brought on the record by the department, the basis for reopening i.e. statement of the assessee was available only till the assessee had retracted from the same. Departments plea, relying upon the judgment in the case of Bannalal Jat Constructions (P) Ltd [ 2019 (7) TMI 137 - SC ORDER] that retraction of the assessee should be supported by strong evidence that the earlier statement was under duress and coercion cannot be accepted, when the department is obligated to follow circular of CBDT 286/2/2003-IT (inv) dated 10.03.2003 regarding confession of the assessee during search and seizure and survey operations, if not based on credible evidence are later retracted do not serve any purpose. Another CBDT circular 286/98/2013-IT (Inv.11) 18.12.2014 states that Statement taken even u/s 132(4) of the Act cannot be used as conclusive evidence if it is not backed by credible evidence. Since department was not able to dislodge the retracted statement of assessee with the support of any fresh evidence or material, the addition made was bad in law. It is also the fact emanated from the order of Ld CIT(A) that the assessee had disclosed the true and primary facts during original assessment proceedings even when the subject issue on the basis of which reassessment proceeding were initiated was fully verified and examined by the AO during original assessment proceeding. Thus, there exists a serious lacuna in the findings of the AO. AO not having any fresh information/material in his possession, merely on retracted statement formed his belief about escapement of income which is not sustainable in law. With such observation, after a thoughtful consideration of all the material aspect of the case, in absence of any cogent evidence, addition made on the basis of statement of the assessee which have been retracted later, the additions made by the Ld AO do not hold good in the eyes of law. We therefore direct to vacate the addition made in terms of our observations herein above. Appeal of revenue is partly allowed. 2023 (10) TMI 459 Disallowance u/s 14A r.w.r. 8D - AO observed that in the instant case the assessee has not maintained any separate account and nor furnished any documentary evidence of expenses towards earning exempt income - HELD THAT:- As in view of the judgment of Maxopp case [ 2018 (3) TMI 805 - SUPREME COURT] wherein it has been held that when the shares are held as 'stock-in-trade', by virtue of Section 10 (34) of the Act, this dividend income is not to be included in the total income and is exempt from tax, which triggers the applicability of Section 14A which is based on the theory of apportionment of expenditure between taxable and non-taxable income as held in Walfort Share Stock Brokers (P.) Ltd. case [ 2010 (7) TMI 15 - SUPREME COURT] Therefore, to that extent, depending upon the facts of each case, the expenditure incurred in acquiring those shares will have to be apportioned. Accordingly, in view the above observations by Hon ble Supreme Court in Maxopp case (supra) and in the case of Gajanan Enterprises [ 2020 (2) TMI 17 - ITAT MUMBAI] we are of the considered view that Ld. CIT(Appeals) has not erred in facts and in law holding that the provisions of section 14A of the Act are applicable and thereby restricting the disallowance to the extent of dividend income earned by the assessee. Decided against assessee. 2023 (10) TMI 458 Income accrued in India - engineering package fee and on-site man-day charges - whether can be treated as FTS under the treaty provisions? - assessee is a non-resident corporate entity incorporated in France and a tax resident of that country - assessee claiming benefit of the Most Favoured Nation ( MFN ) clause in paragraph 7 of Protocol to India France DTAA has claimed benefit by taking shelter under the definition of FTS as provided under Article 12(4) of India Portugal DTAA - HELD THAT:- As observed that the amount of Rs. 10,35,94,783/- was received by the assessee for providing basic site data lists, which included flow sheets, specifications, drawings, layouts, operating manuals, procedures to build/construct/install/assemble these smelter plants. It is not a simple case of loading a technology solution/software as observed by Commissioner (Appeals). The smelter plant certainly requires installation of multiple plants and machineries. It involves on-site planning and supervision of erection and installation of not only civil work but also the plant and machinery. There cannot be any dispute that the installation/erection process has to be taken up as per the flowsheets, equipments, specifications, drawings, layouts, operating manuals, procedures etc., without which, the installation process cannot be carried out. Therefore, in our view, the service rendered by the assessee is in connection with installation/erection of plant and machinery involved in mining of natural resources. Moreover, scope of Article 5(2)(g) of India Portugal DTAA is not merely limited to mining or extraction of natural resources but also covers installation or structure used for exploration and exploitation of nature resources. Therefore, in our considered view, the amounts received would fall within the exceptions provided under Article 12(5)(f) and 12(5)(g) of India Portugal DTAA, hence, not taxable at the hands of the assessee. Balance amount out of the engineering package fee, it is observed from the facts on record that they are not part of the TLA, but in pursuance to two independent purchase orders. In fact, learned first appellate authority has accepted the aforesaid factual position in paragraphs 5.2.12 and 5.2.13 of the order passed under section 154 of the Act. Therefore, they cannot be treated as fall out of the TLA so as to qualify as FTS under Article 12(4)(a) of the tax treaty. In fact, learned first appellate authority has treated it as FTS under Article 12(4)(b) of India Portugal DTAA by stating that it comes within the ambit of second limb of Article 12(4), which does not require fulfillment of make available condition. However, on a reading of Article 12(4)(b) as a whole, it certainly appears that even the second limb that consists of development and transfer of technical plan or technical design , also requires the satisfaction of make available condition, as such words are qualified by which enables the persons acquiring services to apply the technology contained therein . The assessee has received the amount for providing drawings to enable HIL to study and comment on specific proposal involving process specification, equipment lists for paste plant and anode recycling shops of green anode based on RHODAX Technology. Facts on record reveal that the primary purpose of providing such documents, designs and drawings was for the appraisal of the contractee. It does not per se mean transfer of technology. There is nothing on record to suggest that the assessee is also the owner of RHODEX Technology. There is no evidence brought on record by the Revenue to establish that the drawings, designs etc. provided by the assessee has enabled the recipients to apply the technology contained therein independently. Thus, in our considered opinion, the amount included in the engineering package services would not qualify as FTS under Article 12(4)(b) of India Portugal DTAA. On-site man-day fee though, it is in pursuance to TLA and may qualify for FTS under Article 12(4)(a), however, in our view, the receipts fall within the exceptions provided under Article 12(5)(f) and 12(5)(g) of India Portugal DTAA, hence, would not qualify as FTS. Thus, we hold that the receipts in dispute are not taxable as FTS at the hands of the assessee. Assessee appeal allowed. 2023 (10) TMI 457 TP Adjustment - Interest on trade receivables - trade receivables outstanding by the assessee from it s Associated Enterprise - as contented that assessee has a trade outstanding payable to its AE which is higher than the trade outstanding receivables from it s AE and lower authorities have applied SBI short term deposit rate for short term fixed deposits interest to bench mark and compensate the interest to the assessee for the outstanding due - whether the Libor + 200 basic points are required to be applied? - HELD THAT:- The assessee has supplied the services to it s AE and the AE is due to make the payment for the services / goods received by it to the assessee. Assuming, the assessee gives the same kind of services to the third party, then the assessee would charge interest from the third party. Moreover, if the advances were given by a person, then the prices of the product would be less as the assessee would have availability of funds at disposal for the purpose of carrying out its activities. Because of withholding of funds in case of outstanding receivables, there would be deficit of funds and would be required to borrow the funds to carry out day-to-day activities, albeit those funds would be available to the assessee at the prevailing rate of interest in India. Hence, the SBI short term rate would be the appropriate rate for the purpose of determining the ALP on the outstanding amount. Now, in light of the above, we do not find any reason to take a contrary view as we have taken in the case of Apachi Footware India Private Limited ( 2023 (4) TMI 521 - ITAT HYDERABAD ). As submitted that the AO has not been given any grace period for making the payment - We notice that in AO s order, it is mentioned that the assessee has failed to provide any service agreement / invoice to the Assessing Officer. Therefore, in the absence of any such contemporaneous evidence showing the grace period, the Assessing Officer has granted 30 days. In our view, the normal trend to be followed is 30 days. However, in the case of Apache Apache Footware India Private Limited (supra), based on the agreement, we have accepted it to 60 days. In the present case, there was no agreement provided by the assessee to show that there was an agreement between the assessee and its AE wherein the time for making the payment was provided as 30 days. In our view, the Assessing Officer is right for granting 30 days as a grace period and beyond that the Assessing Officer / lower authorities have held that the assessee is liable to pay the interest as outstanding amount for the said period. In the light of the above, we do not find any reasons to interfere with the order of TPO. Thus, the appeal of the assessee is dismissed. 2023 (10) TMI 456 Levy of penalty u/s. 271B - assessee did not file the Audit Report as required u/s. 44AB of the Act, on or before due date - HELD THAT:- Admittedly, it is a well settled principle of law by the decision of P. Senthil Kumar v. [ 2019 (1) TMI 222 - MADRAS HIGH COURT] where considering the decision of Hindustan Steel Ltd. [ 1969 (8) TMI 31 - SUPREME COURT] held that non-filing of Audit Report on or before due date, is a technical breach and admittedly, when such Tax Audit Report has been filed before assessment was passed by the AO, the question of levy of penalty u/s. 271B of the Act, does not arise. The ITAT Chennai Benches in the case of Rajendran Sreedharan [ 2023 (4) TMI 1253 - ITAT CHENNAI] had considered an identical issue and held that when the Tax Audit Report was made available to the AO before he completes assessment u/s. 143(3) of the Act, then penalty u/s. 271B of the Act, cannot be levied for delay in filing of such Audit Report. In this case, there is no dispute with regard to the fact that the assessee, although, filed Tax Audit Report beyond due date prescribed under the Act, but such Audit Report has been filed before the AO completes the assessment. Therefore, we are of the considered view that the AO is erred in levying penalty u/s. 271B of the Act, for non-furnishing of Tax Audit Report, and thus, we direct the AO to delete the addition made towards penalty levied u/s. 271B of the Act. Decided in favour of assessee. 2023 (10) TMI 455 Condonation of delay of 963 days before ITAT - Sufficiency of reasons for delay - HELD THAT:- As there is no deliberate delay at the end of the assessee because the assessee was not going to gain anything from delaying this appeal. It is also pertinent to note that the Hon ble Supreme Court in the case of N.Balakrishnan Vs. M. Krishnamurthy [ 1998 (9) TMI 602 - SUPREME COURT] has observed that period of delay does not matter. It is the quality of the explanation. If some valid reason is there, then any period can be condoned. In this case delay was caused due non-receipt of intimations by the assessee on his registered e-mail id. Taking into consideration all these factors, we condone the delay of 963 days and admit this appeal for adjudication. Revision u/s 263 - unsecured loan taken - as per CIT reasons for which the case of the assessee was selected for scrutiny under CASS has not been examined by the AO properly and most of the issues have not been addressed by the assessee - HELD THAT:- A copy of the order sheet has been filed wherein also AO has firstly referred to the date of issuing notice u/s 142(1) - Thereafter, a reply has been filed by the assessee on 14/07/2017 and on the very same day assessee was asked to produce the books of accounts and other bills and vouchers. Then on 19/07/2017, the A/R of the assessee appeared and submitted the documents which were filed on record and also produced the books of accounts, bills and vouchers etc., which were test checked and returned back to the assessee and finally on 25/07/2017, case was completed as assessed. From the reply given by the assessee we notice that the complete detail of the unsecured loan taken from M/s. Aakansha Tradevin Pvt. Ltd. has been filed along with copy of the income tax return which clearly contradicts the finding of the ld. Pr. CIT stating that no evidence of filing the return of income of M/s. Aakansha Tradevin Pvt. Ltd., is available on record. Similarly, all the remaining issues including TDS mismatch has also been duly addressed. AO has raised specific queries to all of the issues referred in the show cause notice u/s 263 and they have been replied by the assessee in detail providing various documents in order to explain the transactions which were referred in the notice u/s 142(1). Even the unsecured loan taken from M/s. Aakansha Tradevin Pvt. Ltd., has been addressed to by the assessee by filing the relevant details and creditworthiness of the cash creditor and genuineness of the transactions and the nature and source of the said cash credit was duly explained to the Assessing Officer to his satisfaction. Thus, we find that the detailed enquiries were made by the AO during the course of assessment proceedings with regard to the various issues including those referred to u/s 263 and once the AO has applied his mind on the details called for by him and has taken a view permissible under the four corners of law, and ld. Pr. CIT has not carried out any independent enquiry to support the finding given in the impugned order, CIT ceases to exercise jurisdiction on the very same issues which have already passed through a complete enquiry during the assessment proceedings. Thus we uphold the contention of the assessee that the exercise of powers by the ld. Pr. CIT u/s 263 of the Act, is bad in law. Decided in favour of assessee. 2023 (10) TMI 454 Addition by way of adjustment u/s 143(1) - Treating stipend receipts as salary income - assessee had filed rectification application u/s 154 - HELD THAT:- The issue is not simple but is debatable one and moreover no reason was assigned by the CPC for adjustment. Considering these facts, the Bench noticed that the assessee had filed rectification application u/s 154 of the Act for rectification of mistake apparent on record i.e. adjustment of debatable issue u/s 143(1) was without assigning any reason for doing so. Mechanism of application of Section 143(1) finds that the first proviso to Section 143(1) mandates that no such adjustment shall be made unless an intimation is given to the assessee of such adjustment either in writing or in electronic mode and, under the second proviso to Section 143(1), the response received from the assessee, if any, shall be considered before making any adjustment and in a case where no response is received within thirty days of the issue of such intimation, such adjustment shall be made . Thus, Bench is of the view that scope of permissible adjustment u/s 143(1)(a) is thus much broader, and, as long as an adjustments fits the description u/s 143(1)(a)(i) to (v) read with Explanation to Section 143(1), such an adjustment, subject to compliance with first and second proviso to Second provisos to Section 143(1), is indeed permissible. It is however, important to take note of the fact that unlike the old scheme of prima facie adjustments u/s 143(1)(a), the scheme of present section 143(1) does not involve a unilateral exercise. The very fact that an opportunity of the assessee being provided with an intimation of 'such adjustments' [as proposed u/s143(1)], in writing or by electronic mode, and the response received from the assessee, if any to be considered before making any adjustment makes the process of making adjustments u/s 143(1), under the present legal position, an interactive and cerebral process. Thus, as per the considered view of the Bench when an assessee raises objections to proposed adjustments u/s 143(1), AO CPC has to dispose of such objections before proceeding further in the matter-one way or the other, and such disposal of objections is a quasi judicial function. Clearly, AO CPC has the discretion to go ahead with the proposed adjustment or to drop the same. The call that the Assessing Officer CPC has to take on such objections has to be essentially a judicious call, appropriate to facts and circumstances and in accordance with the law, and the Assessing Officer CPC has to set out the reasons for the same. Whether there is a provision for further hearing or not, the Bench is of the view that once objections are raised before the AO CPC and the Assessing Officer, CPC has to dispose of the objections before proceeding further in the matter, this is inherently a quasi judicial function that he is performing and in performing a quasi judicial function, he has to set out his specific reasons for doing so. Disposal of objections in my view cannot be such an empty formality or meaningless ritual that he can do so without application of mind and without setting out specific reasons for rejecting the same. In this very case, although in one year the same amount was treated as stipend exempt u/s 10(16) of the Act and in year two said amount was treated to be taxable income. Hence, issue was not simple but a debatable one and since the assessee filed rectification application u/s 154 of the Act for rectification of mistake apparent on record i.e. adjustment of debatable issue u/s 143(1) without assigning any reason for doing so. Hence, in view of the above discussions, the Bench is of the view that the addition by way of adjustment and intimation u/s 143(1) of the Act on debatable and controversial issue is beyond the scope of Section 143(1) of the Act and thus the Revenue was clearly in error in making aforesaid adjustments. Therefore, the Bench directs the Revenue to delete the addition so made and consequently the Ground No. 2 of the assessee is allowed. Customs 2023 (10) TMI 510 Valuation of imported goods - Tin plates defective rejected sheets scrolled - re-determination of import value - rejection of declared value - reliance placed on contemporaneous imports of similar goods - HELD THAT:- While there is a reference made to contemporaneous imports of allegedly similar goods cleared through Group-4, there are also references made to distinguishing factors like numerable types of descriptions, grades, country of origin, place of exportation and importation, etc. This clearly throws a doubt as to the admissibility of such alleged contemporaneous imports and the very basis to treat the same as comparables with the goods in question that were imported. Moreover, the officer has relied on alleged contemporaneous imports which were never put across to the appellant for rebuttal, but however, that such reliance on the contemporaneous imports itself has been doubted by the adjudicating authority when he holds that the value of the imported goods could not be determined under Rule 4 and Rule 5 due to variable factors like numerable types of descriptions, grades, country of origin, etc.; Rules 7 and 8 also could not be applied for want of quantifiable data at the place of exportation and importation respectively. The quantity of import is much higher than the quantity of import in respect of the contemporaneous imports. Hence, so-called contemporaneous imports were in fact incomparables, due to which the rejection of the value of import as declared by the appellant is without any basis. The re-determination of the import value by the Revenue is without any basis and certainly not in accordance with the spirits of law, for which reasons the same deserves to be set aside - Appeal allowed. 2023 (10) TMI 509 Valuation of imported goods - Urea - rejection of the declared import values - primary observation in the Show Cause Notices appears to be that by virtue of the Government of India being a shareholder to the extent of 50% in the joint venture, the same had influenced the import value of urea - HELD THAT:- In its latest order in INDIAN FARMERS FERTILIZERS CO OPERATIVE LIMITED VERSUS C.C. -KANDLA [ 2023 (8) TMI 561 - CESTAT AHMEDABAD] the Ld. Ahmedabad Bench of the CESTAT in the respondent s own case has held that it is apparent that the appellant importer and the foreign base exporter cannot be the treated as related parties. There are no infirmity in the impugned orders passed by the Commissioner of Customs, Tiruchirappalli and the Commissioner of Customs, Tuticorin - appeal filed by Revenue dismissed. 2023 (10) TMI 508 Valuation of imported goods - Wet Dates - rejection of declared value based on NIDB data of similar/ identical goods - enhancement of value of the imported goods without passing any speaking order - violation of principles of natural justice - HELD THAT:- In the instant case the Commissioner (Appeals) while accepting the departmental appeal against the order which was in favour of the appellant erred by not considering various legal requirements. The proper officer was required to indicate the basis of his reasonable doubts about the truth for the accuracy of the value that was declared and also as to why he was not satisfied with transaction value indicated by the appellants. Further the Commissioner (Appeals) did not address the issue that re-assessment under Section 17(4) of the Customs Act, 1962 was done without assigning any reason and without taking consent in writing from aggrieved appellants. Further while agreeing with the re-assessment done by the proper officer, Learned Commissioner (Appeals) has failed to appreciate that the proper officer had not passed any order indicating as to why the NIDB data should be accepted by the party and which one in particular and why transaction value was rejectable. The reliance on the decision of UNITED COPIER SYSTEMS VERSUS COMMISSIONER OF CUSTOMS, DELHI-III [ 2009 (7) TMI 973 - CESTAT, NEW DELHI] and RAKESH KUMAR AGARWAL VERSUS COMMISSIONER OF CUSTOMS, TUTICORIN [ 2008 (7) TMI 738 - CESTAT, CHENNAI] by the appellants has been correctly placed in which it has been properly laid down that without putting before the party, the NIDB data for rebuttal and without bringing cogent evidence and reasons, transaction value cannot be rejected. It has been properly appreciated and relied upon by the original authority. Further we find that the adjudicating authority has also correctly pointed out that the misdeclaration can also be the basis for rejection of transaction value, but the same is absent in the instant case. Further, there are force in various cases law cited by the appellants as well as relied upon by the original authority that sanctity cannot alone be placed on NIDB data for rejecting invoice value. The rejection of transaction value even when based upon NIDB data cannot be done without disclosing materials, as well as identical nature of the goods, and transaction value rejecting through reasoned order. In absence of the same on the part of proper office rejection of transaction value without complete disclosures is invalid. There is nothing on record to indicate that the proper officer having doubted the transaction value on the basis of NIDB data, sought any further information from the appellant/importer by way of documents or evidence or even in the absence of such information had applied its mind to the truth or accuracy of the value declared as per above requirement - The truth or accuracy and communication of the same even when requested at the de novo remand stage of litigation by the appellants importers. Further it is also for the proper officer to given opportunity of hearing before deciding transaction value in terms of Valuation Rules 2007. What has been desired by settled law is woefully lacking in the present proceeding, while rejecting transaction value. Rejection is therefore improper - Appeal allowed. 2023 (10) TMI 507 Imposition of personal penalty u/s 112(a) of FA - seizure of cigarettes of Indonesian origin imported by concealment inside a consignment declared as Dining Sets - HELD THAT:- The Appellant has deployed his employees to look after the clearance of the import consignment. We also observe that the Appellant has admitted that they have assisted the CHA in clearance of the consignment of cigarettes of Indonesian origin which were concealed inside a consignment declared as Dining Sets. Thus, penalty is imposable on the Appellant for the abetting the commission of the Offence. The adjudicating authority has imposed a personal penalty of Rs.1,00,000/- in the impugned Order-in-Original dated 26.12.2014, which appears reasonable and commensurate with the offence committed. Accordingly, there are no reason to interfere with the impugned order imposing penalty on the Appellant. The penalty imposed on the Appellant in the impugned order upheld - appeal filed by appellant rejected. 2023 (10) TMI 453 Jurisdiction/authority/power of Appellate Tribunal to entertain an appeal against an order passed under Section 137 of the Customs Act, 1962 - application for compounding an offence - HELD THAT:- From a plain perusal of the statutory provision under Section 137 of the Customs Act, it would clearly reveal that an application for compounding of any offence under this chapter has to be placed before the Chief Commissioner of Customs. The intention of the law makers while enacting the law or any authorized officer or a competent authority who has been entrusted with a power to decide or adjudicate, automatically becomes an adjudicating authority. Sub- section 1 of Section 129-A in this regard would clearly mean that an adjudicating authority is one who has passed a decision or an order. They would be an authority competent and thereby would become an adjudicating authority - on an application which stands decided under Section 137 (3), the Chief Commissioner becomes the adjudicating authority or a competent authority under the Act to take a decision on an application bringing him under the purview of an adjudicating authority. No provision under the Act envisages that decision taken under Section 137 (3) or for that matter, a decision taken by the Chief Commissioner would not be an appealable order and that his order would be final, so as to accept the contention of the learned counsel for the appellant that it is only a writ remedy that is available to him. There are no infirmity in the order passed by the Tribunal, nor does this Court find sufficient force in the arguments of the learned counsel for the appellant. Moreover, the order of the Tribunal also is not in any manner adverse to the interest of the Department - appeal dismissed. 2023 (10) TMI 452 Reversal of Duty Drawback - Advance Licence and duty drawback are mutually exclusive or not - goods imported duty free under advance licence scheme can be utilized in the manufacture of goods exported under duty draw back (All Industry Rate) or not - Rule 3(1) of the Customs and Central Excise Duties Drawback Rules 1995 r/w General notes No.2(b) to the Notification No. 26/2003 Cus (NT) dated 01.04.2003. HELD THAT:- Circular No.19/2005 dated 21.03.2005 concedes to the position that duty drawback is sought by manufactures who use exempted/duty free inputs. The rates in such cases are the AIR. To be noted that Clause 4.1.14 of FTP does not specifically talk of either Brand rate or AIR and thus, it is the submission of the assessee that it would apply only to those cases where brand rates apply. This is for the reason that it is only in such cases that a bifurcation of the individual components and consequent apportionment would at all, be possible - A perusal of the Circular makes it clear that AIR duty is to be allowed in full in cases where a portion of inputs would qualify to be non-duty paid. Thus, the absolute position under the 1995 Rules has stands modified somewhat by clause 4.1.14 of FTP and Circular No. 19/2005. The substantial questions of law are thus answered in favour of the assessee and adverse to the revenue - The Circular proceeds on the basis that the inputs that are duty exempt constitute only a fraction of the over-all inputs used, as otherwise, the very purpose of the DD Scheme would become redundant. Abuse of the position, as recognized even under Circular No.19/2005 is not an impossibility. In the present case, there is a finding of fact by the Tribunal to the effect that the indigo blue used in the goods claiming duty drawback, is only a fraction. This finding of fact has not been challenged as perverse in this appeal and has become final. Thus, our answer to the questions of law is premised on this factual finding - Appeal dismissed. 2023 (10) TMI 451 Absolute Confiscation - Seeking redemption of prohibited goods - levy of penalty u/s 112 (a) and (b) of the Customs Act, 1962 and u/s 114AA of the Customs Act, 1962 - Gold of foreign origin - denial of opportunity to declare the goods and to pay Customs duty - retraction of statements - HELD THAT:- There is no bar on the Adjudicating Authority allowing redemption of prohibited goods. The reason for such discretion left to the adjudicating authority is evident. In case of prohibited goods, the nature of the goods and the nature of the prohibition vary and cases have to be dealt with exercising discretion. For instance, spurious drugs, arms, ammunition, food which does not meet the food safety standards, etc. are harmful to the society if released to the owner and they find their way into the market - There is absolutely no bar in Section 125 on the adjudicating authority releasing any goods whatsoever, which are prohibited or restricted on payment of redemption fine. The adjudicating authority can allow redemption under Section 125 of any goods which are prohibited either under the Customs Act or any other law on payment of fine but he is not bound to so release the goods. The appellant in his statement recorded in his own hand writing has informed that the gold was handed over by an unknown person in Dubai as arranged by Shri Mubash who also hails from his native place Thalasserry, Kerala and he has agreed to carry the gold due to his family financial conditions for a consideration of Rs.25,000/-. There was no retraction of the above statement recorded under Section 108 of the Customs Act, 1962, till the case came up for hearing before the Tribunal. The appellant being an ineligible passenger could not have brought gold and clear after declaration on payment of duty. As, at that relevant time even an eligible passenger can bring only 1 Kg gold in terms of Notification No. 12/2012-Cus dated 17.03.2012. The smuggling of gold by the appellant is proved beyond any doubt. So, it was rightly confiscated absolutely by the original adjudicating authority. Penalties under Section 112 and also 114AA of Customs Act, 1962 - HELD THAT:- A reading of these provisions make it clear that there is no bar for imposition of penalties under both these Sections. Penalty is imposable for rendering the goods liable for confiscation by one s acts of omission and commission under Section 112 of the Customs Act, 1962. Whereas, penalty under Section 114AA is imposable if any person knowingly or intentionally makes, signs or uses or causes to be made, signed or used any declaration, statement or document which is false and incorrect - Having rendered the gold liable for confiscation penalty under Section 112 of the Customs Act, 1962, penalty is imposable and has been rightly imposed. In the Customs Declaration Form which has been filed in, he had written nothing against the column of total value of goods imported . So, penalty under Section 114AA is imposable. As such penalties imposed under Section 112 114AA of the Customs Act, 1962 are in accordance with the legal provisions in the instant case. The penalties imposed are harsh as he accepted and acted to smuggle gold for a consideration of Rs.25,000/-. So, penalty imposed under Section 112 of Customs Act, 1962 is reduced to Rs.2,00,000/- and penalty imposed under Section 114AA of the Customs Act, 1962 is reduced to Rs.1,00,000/- - appeal allowed in part. Insolvency & Bankruptcy 2023 (10) TMI 450 Condonation of Delay in filing Appeal - Certified Copy was prepared on 27.04.2023 and was delivered on 03.05.2023 - present Appeal was e-filed on 10.05.2023. HELD THAT:- Sub- Rule (2) of Rule 22 of the National Company Law Appellate Tribunal Rules, 2016, regarding presentation of Appeal provides that every Appeal shall be accompanied by a Certified Copy of the Impugned Order. NCLAT Rules framed under Section 469 of the Companies Act, 2013 also bind the litigants under the IBC. The litigant s efforts to apply for a Certified Copy before filing Appeal cannot be faulted. It is clear from the provision of Section 12(2) that the period taken in obtaining the copy of the Order appealed against is to be excluded in calculating the limitation period in filing for any legal proceedings. Excluding the period spent in obtaining Certified Copy of the Impugned Order, the present Appeal has been filed within the period of 30 days. Considering the provisions of Section 12(2) of the Limitation Act, 1963, the delay in filing of the company appeal condoned, by allowing benefit of exclusion of period spent in obtaining paid Certified Copy of the Order from AA (National Company Law Tribunal, New Delhi). Aplication allowed. Service Tax 2023 (10) TMI 506 Legality of impugned proceedings - non-service of SCN - alleged suppression of facts under Proviso to Section 73(1) of the Finance Act, 1994 - invocation of extended period of limitation of five years for initiation of proceedings - willful suppression of facts or fraud - Order-in-Original has been passed after the delay of 02 months 11 days from the last date of personal hearing - violation of the Circulars issued by the Central Board of Indirect Taxes and Customs. HELD THAT:- In the instant case, it is admitted that the Impugned Order/ Adjudication Order was not communicated to the Petitioner within one month from the closure of the personal hearing and there are no reasons recorded by the Respondent for the delay in communicating the Impugned Order beyond the stipulated period of one month after closure of the personal hearing. Consequently, the Impugned Order is in clear contravention of the said circulars of the Revenue Department. So far as the quantification of delay in communication of the Impugned Order is concerned, there are two scenarios. One is considering the alleged date of last personal hearing as provided in the Impugned Order. Other is considering the valid and lawful date of last personal hearing. As per the alleged date of last personal hearing i.e., 08.03.2022 as provided in the Impugned Order is concerned, the Impugned Order was communicated to the security guard of the building, where the Petitioner has its office, on 27.05.2022 i.e., after 2.5 months against the required period of 1 month. In the present case since there was no prior notice served to the Petitioner for the alleged personal hearings on 20.01.2022 and 08.03.2022, therefore both the alleged personal hearings are in contravention to Clause 14.3 of the said Circular. Thus, both the alleged personal hearings cannot be considered to be valid personal hearings. The last personal hearing, as provided in the Impugned Order, for which notice was served to the Petitioner was on 23.12.2021. Cconsidering 23.12.2021 as the last date of valid personal hearing, the Impugned Order dated 19.05.2022 which was communicated to the petitioner on 27.05.2022, has thus been communicated to the Petitioner six months after the last valid personal hearing. Accordingly, the Impugned Order is in violation to Clause 14.10 of the Master Circular dated 10.03.2017 read with Clause 4.3 of the Instruction dated 18.11.2021 issued by CBIC which provides for communication of the adjudication order within one months from the conclusion of personal hearing. Thus, interest of justice would be sufficed by remitting this case back to the Respondent No. 4 to pass a fresh order after giving an opportunity of hearing as the impugned order has been passed against the prescribed period as indicated in aforesaid Circular. Consequently, the matter is remitted back to the respondent No. 4 to pass a fresh order after giving opportunity of personal hearing to the petitioner and pass a fresh order. Application allowed. 2023 (10) TMI 505 Eligibility for Sabka Vishvas (Legacy Dispute Resolution) Scheme, 2019 - issuance of direction to respondent No. 4 to accept the declaration dated 13.12.2019 filed by the petitioner. The grievance of the petitioner is that the application of the petitioner could not be rejected under Sabka Vishvas (Legacy Dispute Resolution) Scheme, 2019 on the ground that investigation was pending and the amount of duty was not quantified in the case of the petitioner on or before 30.06.2019. HELD THAT:- Section 2 (6) of the scheme defines quantified as a written communication of the amount of duty payable under the indirect tax enactment. It is clarified that such written communication will include a letter intimating duty demand or duty liability admitted by the person during enquiry, investigation or audit or audit report etc. - Since the amount of Rs. 2,70,18,141 was quantified before 30.06.2019, the petitioner was eligible to file a declaration under the Amnesty Scheme. The matter is remanded back to respondent No. 4 to pass fresh order under the Sabka Vishvas (Legacy Dispute Resolution) Scheme, 2019 (P-15) by treating the taking into consideration the letter dated 13.05.2019 (P-13) making the petitioner eligible under the scheme - petition allowed by way of remand. 2023 (10) TMI 504 Levy of Service tax - amount of electricity charges and water charges collected by the Appellant from its tenants/concessionaires - Cenvat credit on Outdoor Catering services and Club Membership - period of dispute is from 2008-09 to 30.06.2010. HELD THAT:- On going through the concessionaire agreement it appears that this is mainly in relation to renting of space/premises within the Airport to independent concessionaire with whom they have different revenue sharing agreement, etc., in lieu of rent. The actual consumption of electricity and water by these concessionaires is part of the same agreement but the same cannot be treated as part of MMRS, in view of the fact that it is an independent activity which they have to provide within the Airport premises, as they have no other option to get the water and electricity from somebody else. The Revenue has tried to classify this as MMRS, however, mere supply of water and electricity cannot become in itself MMRS in the facts of the case, when the entire agreement is seen in totality. There is also force in the argument by the Appellant that Department has mainly relied on Notification No. 31/2010-ST dated 22.06.2010, which, inter alia, provided for exemption of services relating to supply of water and electricity, in support that prior to this, the same was liable to service tax - if the Government felt that supply of water and supply of electricity were not chargeable to service tax, either under some exemption or interpretation, they have continued to give that exemption by virtue of Notification No. 31/2010-ST. There is another aspect of Notification No. 12/2003 dated 20.06.2003, which provided for exemption to the extent of value of goods and materials sold by the service provider to the recipients of service subject to certain conditions. Therefore, under this notification also, even if the entire contract is to be treated as MMRS, the value of goods sold would have to be excluded, meaning, there won t be any service tax liability to that extent - supply of water and electricity is essentially a sale of goods and therefore not chargeable under provisions of service tax. By virtue of this interpretation also, there was no liability for payment of service tax on supply of water and electricity in view of the Notification No. 12/2003 dated 20.06.2003. Thus, appellant are not required to discharge any service tax on supply of water and electricity to their concessionaires, who were paying for these two utility services on actual basis plus markup of 10%. Denial of credit on account of Outdoor Catering service - HELD THAT:- It is service in relation to business and not excluded as such for period prior to 01.07.2011. Denial of CENVAT Credit in the case of Club Membership - HELD THAT:- In the case of Club Membership, also admittedly is for membership of the Appellant, with various professional associations/bodies and not for individual club membership, therefore, it is again to be considered as relating to business. Therefore, both these services were eligible for Cenvat credit during the relevant period. The impugned order set aside - appeal allowed. 2023 (10) TMI 503 Refund of Service Tax - export of services - place of provision of services - failure to upload revised ST-3 return for the period from October 2012 to March 2013 and that for the period from October 2012 to March 2013 - HELD THAT:- The appellant is providing guidance to Indian students without charging any consideration from them. In view of the definition of service, the appellant is not providing any service to prospective students in India. The appellant is providing service to universities located in foreign countries who are paying consideration to the appellant - the services covered by these proceedings are export of services. Reliance placed in the the decision of this Tribunal in the case of M/S SUNRISE IMMIGRATION CONSULTANTS PRIVATE LIMITED VERSUS CCE ST, CHANDIGARH [ 2018 (5) TMI 1417 - CESTAT CHANDIGARH] decided by Chandigarh Bench of this Tribunal - It is noted that this Tribunal has held that such organisations cannot be treated as intermediaries under the definition of Rule 2(f) of Place of Provision of Service Rules, 2012. The contention of Revenue that the appellant is an intermediary is not in accordance with law. It is further noted that the appellant has foregone the refund of Rs.26,43,969/-. Therefore, now the refund claim works out to the tune of Rs.24,30,172/- - It is noted that the appellant has not provided all the foreign inward remittance certificates covering the transactions involving service tax of Rs.24,30,172/-. Matter remanded to the original authority with a direction not to rake up any other issue but to collect foreign inward remittance certificates from the appellant in respect of those transactions which involve refund of Rs.24,30,172/- out of the refund claim of Rs.50,73,141/- and allow the refund out of Rs.24,30,172/- in respect of such transactions where FIRCs get produced by the appellant before the original authority - appeal allowed by way of remand. 2023 (10) TMI 502 Refund of Service Tax - time limitation - claim in accordance with Section 11B of the Central Excise Act, 1944 or not - HELD THAT:- The refund application was filed as early as in March i.e., 18.03.2011, sent by registered post and the Revenue now cannot dispute the same since, apparently, the same was returned for re-submission after pointing out mistakes in the said application. The appellant had thereafter vide letter dated 31.03.2011 re-submitted the refund claim. The Hon ble Gujarat High Court in APAR INDUSTRIES (POLYMER DIVISION) VERSUS UNION OF INDIA [ 2015 (12) TMI 1255 - GUJARAT HIGH COURT] has held in the above case that the time-limitation under Section 11B is to be reckoned from the date of original application for refund, which is 18.03.2011 in the case on hand. Further, it has been held that when the petitioner re-presented such rebate applications in correct form, backed by necessary documents, the same should have been seen as a continuous attempt on part of the petitioner to seek rebate. Thus seen, it would relate back to the original filing of the rebate applications, though in wrong format. Admittedly, the date of the original refund claim is within one year as stipulated under Section 11B ibid. The Department has accepted the said decision of the Hon ble Gujarat High Court vide Circular No. 1063/2/2018-CX dated 16.02.2018, by which act the said judgement of the Hon ble Gujarat High Court has attained finality and so has the decision therein. The time-limitation for refund application under Section 11B in the case on hand is to be reckoned from the date of original filing of such application. Hence, the issue of time-bar does not arise in the case on hand and to this extent, therefore, the impugned order cannot sustain. Section 11B refers to any person and admittedly, the appellant before us is the person who has borne the incidence of tax and hence, any person appearing in the said section clearly covers the appellant as well. This is also for the reason that, as admitted by the builder, the builder had only remitted the tax portion paid by the appellant to the Department, and as admitted by his certificate, as having included the tax portion in the consideration received - the appellant was very much within her right to have claimed the impugned refund and further that she was also entitled for the same. If the construction is for the self-use of the builder, then perhaps there may not be any liability on its part to pay Service Tax, but still the Revenue consciously accepted such payment just to deny the refund to the appellant. Hence, the denial, as made by the adjudicating authority, which was subsequently upheld, is unsustainable for the reason that the same is without any basis, for which reason the impugned order is set aside. The appeal is allowed. 2023 (10) TMI 501 Levy of service tax - outdoor catering service - appellant entered into the agreements with Indian Institute of Technology (IIT), Kanpur for providing the mess services - extended period of limitation - HELD THAT:- On reading of the statutory provisions of Section 73 of FA, it is amply clear that proposal for recovery of service tax in normal circumstances should be confined to eighteen months only; whereas, under exceptional circumstances, the said period can be extended upto a period of five years, subject to fulfilment of the conditions that the ingredients itemized in the proviso clause were satisfied. The issuance of the notice within the normal period is the rule and invoking the extended period is the exception and in such an event, the onus entirely lies with the department to prove that in fact the notice can be issued by invoking the extended period of limitation. In the present case, the entire modus operandi adopted by the assessee-appellant of providing the mess facilities at IIT, Kanpur were known to the department through the exchange of various communication between both the sides. Further, the contents of the agreements, referred supra, were also known to the department well in advance. Since, no additional documents were relied upon by the department for confirmation of the adjudged demands beyond the normal period, we do not find any substance in the appeal filed by the Revenue that the show cause proceedings are not barred by limitation of time. The Hon ble Supreme Court, in the case of PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY [ 1995 (3) TMI 100 - SUPREME COURT] have ruled that when the Revenue authorities were aware of the facts about the assessee s activities, then issuance of show cause notice should be confined to the normal period. The above referred judgement, though were delivered in context with Section 11A of the Central Excise Act, 1944, but the ratio is squarely applicable to the case in hand, inasmuch as Section 11A ibid, is pari materia with the provisions of Section 73 ibid. The show cause proceedings initiated by the department for the period 2006-2007 to 2010-2011 are barred by limitation of time. Therefore, appeal filed by Revenue on such ground is dismissed. The assessee-appellant is liable to pay the adjudged demand of service tax along with interest and penalties for the services provided during the period 01.04.2012 to 30.06.2012. Therefore, the impugned order to such extent is set aside and the appeal is allowed in favour of the assessee-appellant. 2023 (10) TMI 500 Invocation of Extended period of Limitation - SCN issued by way of change of opinion - short payment of service tax - HELD THAT:- The Revenue had adequate notice of the affairs of the appellant, as they were registered with the Department and were filing regular returns. Further, there was audit by Revenue during Feb., 2016 and no such objection was raised. Further, upon requisition by the Revenue, the appellant have filed the requisitioned documents like copy of the IT Return, Form 26 AS, Balance Sheet, etc. during June, 2016, but thereafter, Revenue slept over the matter. Apparently the show cause notice is issued by way of change of opinion. The extended period of limitation is not invokable in the facts and circumstances - Appeal allowed. 2023 (10) TMI 499 Levy of Service tax - certain expenses reimbursed by the principal during the period October, 2009 to March, 2010 - appellant providing clearing and forwarding agent services and are registered with the Department - HELD THAT:- The issue herein is arising by way of periodical SCN. Earlier also the same issue of the same Appellant has been considered by this Bench in M/S CRYSTAL MARKETING CORPORATION VERSUS COMMISSIONER OF CENTRAL TAX [ 2019 (6) TMI 1496 - CESTAT HYDERABAD] , where the Tribunal held In the present case, the show-cause notice clearly indicates that the disputed amounts are reimbursable expenses, therefore no service tax can be levied on such reimbursable expenses. In view of the precedent Order of this Tribunal in favour of the Appellant on the same issue, the appeal is allowed. 2023 (10) TMI 498 Levy of Service Tax - notional interest towards security deposit taken by the appellant against the renting of safe deposits and private lockers - period from April, 2006 to March, 2012 - HELD THAT:- A perusal of the decision of the Tribunal in MURLI REALTORS PVT. LTD., MAGRPATTA TOWNSHIP DEVELOPERS CONSTRUCTION CO. LTD., JAIN CONSTRUCTION, SAI CONSTRUCTION PVT. LTD., INDIA LAND INFRASTRUCTURE DEVELOPMENT PVT. LTD., RVS HOSPITALITY DEVELOPMENT PVT. LTD., VANSUM INDUSTRIES AND THE MANJRI STUD FARM PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE PUNE-II [ 2014 (9) TMI 461 - CESTAT MUMBAI ] reveals that since the consideration for leasing of the property is rent, so what can be levied to service tax is only rent and notional interest on the security deposit cannot be subjected to levy of service tax. From decision of the Tribunal, it has to be held that service tax could not have been levied on the notional interest calculated by the department on the interest fee security deposit collected by the appellant. The five orders passed by the Commissioner (Appeals) that have been assailed in the five appeals cannot be sustained and are set aside - Appeal allowed. 2023 (10) TMI 497 Exemption from payment of service tax - services provided in SEZ units - denial on the ground that prescribed Form A1/A2 under the service tax notification, was not obtained prior to provision of service - HELD THAT:- This Tribunal following the Ruling in the case of GMR Aero Space Engineering Ltd., [ 2019 (8) TMI 748 - TELANGANA AND ANDHRA PRADESH HIGH COURT] observed that it is on record that required documentation was not available for the entire period of the dispute, but at the same time, it cannot be denied that at some point, the eligibility did exist. Further, observed that, procedural infirmities for a shorter and longer time, does not in any way frustrate the exemption accorded to the impugned supply of services. The appeal was allowed granting the benefit of exemption. Admittedly appellant have rendered services in the SEZ premises to the SEZ Units/Developer - the appellant is entitled to exemption - the impugned order set aside - appeal allowed. 2023 (10) TMI 496 Wrongful availment of CENVAT Credit - inputs and inputs services used in construction of the reservoir - work order was issued prior to April 01, 2011 - HELD THAT:- In the present case, the documents on record clearly establish that not only was the construction of water storage reservoir and the repair work completed prior April 01, 2011, but even the invoices were issued prior to April 01, 2011 and the payments were made prior to April 01, 2011 - The finding recorded by Commissioner (Appeals) that the work was executed and the invoices were raised after April 01, 2011 is perverse as it is not borne out from the records. It is, however, correct that the entry was made in the ledger of the appellant in March, 2012, but this is not the material date. Rule 4(7) of the CENVAT Credit Rules, as it existed prior to April 01, 2011, provides that the CENVAT credit in respect of input service shall be allowed on or after the date which the payment is made of the value of the input service and the service tax is paid. It is not in dispute that the payment was made prior to April 01, 2011 and service tax was also paid prior to April 01, 2011. Such being the position, the impugned order dated August 30, 2017 passed by the Commissioner (Appeals) deserves to be set aside and is set aside - Appeal allowed. 2023 (10) TMI 495 Non-payment of service tax - club and association service - Membership Fee and other fee collected from the Members - letting out space for advertisement and hoardings - receiving rental income from the shop leased out for commercial purpose - penalties. Club and association service - HELD THAT:- Since there is no dispute that in the present case the Appellant is a club having no shareholders and neither declaring any dividends nor distributing any profits, the same is to be treated as an association of their Members. Respectfully following the decision of the Hon ble Supreme Court in STATE OF WEST BENGAL ORS. VERSUS CALCUTTA CLUB LIMITED AND CHIEF COMMISSIONER OF CENTRAL EXCISE AND SERVICE ORS. VERSUS M/S. RANCHI CLUB LTD. [ 2019 (10) TMI 160 - SUPREME COURT ], the confirmed demand of Rs.16,27,627/- is set aside. Letting out space for advertisement and hoardings - receiving rental income from the shop leased out for commercial purpose - HELD THAT:- The Appellant is not able to bring any evidence or case law in his support to argue that the confirmed demands are not legally sustainable. Therefore, their Appeal is rejected in respect of confirmed demand of Rs.1,52,786/- on account of hoarding services and Rs.29,775/- on account of renting of immovable property services. These amounts are required to be paid along with interest. Penalties - HELD THAT:- Considering the fact that the entire issue is that of interpretation of applicability or otherwise of the Service Tax on a club, all the penalties are set aside. Appeal disposed off. 2023 (10) TMI 449 Legality and validity of the impugned show cause notice - legality and validity of notice of personal hearing - delayed adjudication after lapse of more than 7 years which is contrary to provisions of Sub-section (4B) of Section 73 of erstwhile Chapter V of the Finance Act, 1994 - HELD THAT:- It transpires that the impugned show cause notice was issued vide letter dated 24.12.2014, thereafter the petitioner filed its reply to the said notice vide letter dated 04.10.2016 and the respondent No. 2 fixed the matter for personal hearing on 05.10.2016, on which date the petitioner duly appeared and made submissions. Thereupon, the adjudication of impugned show cause notice was kept in suspended animation for more than 7 years and now again the petitioner received a notice for personal hearing dated 21.06.2022 for adjudication of the show cause notice dated 24.12.2014. It further transpires that Section 73(4B) provides for determination of service tax liability and adjudication of the show cause notices within period of six months, where it is possible to do so in case where the show cause notice is issued under the main section 73(1) involving no suppression of facts etc. and within a period of one year where the show cause notice is issued under proviso to Section 73(1) of Chapter V of the Finance Act, 1994, where it is possible to do so - Sub-Section (4B) was inserted in Section 73 of Chapter V of the Finance Act, 1994 w.e.f. 06.08.2014 by Finance (No. 2) Act, 2014. Similar provisions exist under Section 11A (11) of the Central Excise Act, 1944 and Section 28(9) the Customs Act, 1962. The period of limitation of 6 months or 1 year under Section 73(4B) of the Chapter V of the Finance Act, 1994 be extended to more than seven years as is done in the instant case. In the case of KM SHARMA VERSUS INCOME TAX OFFICER [ 2002 (4) TMI 7 - SUPREME COURT ] it is held by the Hon ble Apex Court that the provisions of a fiscal statute more particularly one regulating the period of limitation must receive a strict construction as the law of limitation is intended to give certainty and finality to legal proceedings. In the case of SIDDHI VINAYAK SYNTEX PVT LTD. VERSUS VERSUS UNION OF INDIA 2 [ 2017 (3) TMI 1534 - GUJARAT HIGH COURT ] it is held by the Hon ble Gujrat High Court that delay in deciding the proceedings without bringing it to the notice of the Petitioner that the case was transferred to the call book and was therefore pending causes immense prejudice and hence revival of proceedings after long gap without disclosing any reason of delay is in complete breach of the principles of natural justice. Alternatively, where no time limit has been prescribed the action should be completed within a reasonable time period. The reasonable time period U/s 73 is 5 years under Chapter V of the Finance Act 1994. In the instant case the matter is pending adjudication for more than 7 years - In the instant case period of more than 7 years from the issuance of impugned Show Cause Notice on 24-12-2014 cannot be said to be reasonable period for taking up/concluding adjudication proceedings. Section 73(1)/ 73(4) of Chapter V of the Finance Act, 1994 provides 5 years as a maximum period which in any case should be taken as reasonable period within which the adjudication should be completed. At this stage, it is worth mentioning that the objection of the Revenue with regards to alternative remedy and/or the judgments cited by the Revenue is not applicable in the instant case, inasmuch as, in the case at hand, now it would not be possible for the petitioner to defend its case effectively by culling out relevant records, evidences, producing its witness etc. thus, remitting the matter back would cause serious prejudices to the petitioner at this belated stage. There are no hesitation in quashing the impugned show-cause notice dated 24.12.2014 (Annexure-1) and impugned notice dated 06.06.2022 (Annexure-2) and the same are hereby quashed and set aside - the instant application stands allowed. Central Excise 2023 (10) TMI 494 Concessional rate of duty - cement cleared for self-use and free issue to the contractor - benefit of N/N. 4/2006-CE dated 01.03.2006 as amended - HELD THAT:- The Mumbai Bench of the Tribunal in the case of ACC Ltd. [ 2017 (8) TMI 1168 - CESTAT CHENNAI] considered the similar issue and held that the duty demand cannot sustain holding that we are unable to accept the argument of the adjudicating authority that these two types of clearances amounting to 26434.30 MTs fall foul of the Notification No. 4/2006-C.E. These clearances, in our considered view, cannot be considered as retail sales and hence benefit of the said notification cannot be denied to them. In the appellant s own case for the earlier period, the Tribunal has applied the said decision to set aside the demand and also dismissed the appeal filed by the Department - the demand cannot sustain and requires to be set aside - appeal allowed. CST, VAT & Sales Tax 2023 (10) TMI 493 Classification of goods - tinted glass sheets - to be taxed as goods or wares made of glass under the Notification No.5784 dated 07.09.1981 being Entry No.IV or as unclassified item? The plea of assessee that tinted glasses manufactured by it falls under clause (c) of sub-section (1) of Section 3A namely residuary clause and as such tax is to be levied @ 10%; whereas revenue is contending that it would fall under Entry No.4 of the notification No.5784 dated 07.09.1981 which Notification has been issued in exercise of the power conferred under clause(d) of Sub-section (1) of Section 3A of the Act. HELD THAT:- This Court in ATUL GLASS INDUSTRIES LTD. VERSUS COLLECTOR OF CENTRAL EXCISE [ 1986 (7) TMI 90 - SUPREME COURT ] has held the test commonly applied to determine whether an article after subjecting to manufacturing processes becomes a different article or remains the same is: how is the product identified by the class or section of the people dealing with or using such product - In the aforesaid Judgment, the question that arose for consideration was under what tariff item glass mirror would fall, and glass screens fitted in motor vehicles as wind screens, rear screens, window screens would fall under which competing tariff item. Adjudicating this question, this Court held that glass sheet after successive stage of processing undergoes a complete transformation to become a glass mirror and a different commercial product with a reflective surface. There is no vagueness in the notification dated 07.09.1981 and the entry No. 4 is clear and unambiguous namely it has brought within the sweep all goods and wares made of glass exigible to tax but not including plain glass panes and the exemption being the creation of the statute itself, it has to be construed strictly and even if there is any vagueness in the exemption clause must go to the benefit of the revenue. The impugned judgments would not call for interference and accordingly the appeals are dismissed. 2023 (10) TMI 492 Challenge to assessment and levy of tax - application for supply of documents - variations in physical stock in comparison to the stock in record - goods transferred from the Delhi branch to the Faridabad and Ghaziabad branches on receiving orders from certain dealers - demand of Central Sales Tax computed by treating 10% of the stock transfer as inter-State sale. HELD THAT:- There are no illegality, perversity or incorrect approach adopted by the Assessing Authority in its order dated 31 December 1999 as regards unaccounted sales as also variations in the physical stock. The findings on merits in so far as the conclusion which was drawn with regard to transactions at pages 14 and 15 of the diary that was seized at the time of search cannot be re-appreciated at this stage particularly when the learned DVATT has taken a balanced view of the matter that the Assessing Authority was not justified as regards taking into consideration the entry at page No. 35 of the diary as transaction of sale in the absence of better evidence. There is no gainsaying in pointing out that as per Section 6 of DST Act, the burden of proving that sale was not effected and that no tax was liable to be paid, was upon the appellant. The assessing authority took a fair, just and reasonable view of the matter in proceeding to carry out a best judgment assessment thereby enhancing sales by 10% of the net GTO after deducting the stock transfer figure of GTO, and accordingly, the levy of tax with interest cannot be said to be unpalatable or an unconscionable exercise of powers. On a conjoint reading of the provisions of Section 2(g) of CGST Act, it is clearly brought out that sale is transfer of property in goods from one person to another for cash or deferred payment or for any other valuable consideration. In other words, sale is transfer of ownership in the goods as per any contract between seller and the buyer, and it is pursuant to a contract of sale that when goods move from one State to another that Section 3 of the CST Act comes into play - no presumption in law is invited merely because the goods moved from Delhi to the depots/warehouses or storage facilities of appellant outside Delhi. There are no hesitation in holding that the impugned order dated 02 May 2022 insofar as it pertains to second limb of demand, namely, the levy of tax under CST Act, cannot be sustained in law. However, there are no legal infirmity, perversity or incorrect approach adopted by the learned DVATT in dismissing the application under Section 73(8) read with Section 75 of the DVAT Act read with Regulation 21 of the DVAT (Appellate Tribunal) Regulation, 2005 as we find that there was no prejudice caused to the appellant and objections with regard to non supply or sharing of documents were not taken at the opportune time before the Assessing Authority. The appeal partly dismissed thereby sustaining the demand for local tax insofar as it is levied by the impugned order under Section 3 read with Section 23 of the DST Act. 2023 (10) TMI 491 Recovery of dues - Priority of charge of secured creditors as against the Sales Tax, Commercial Tax and Income Tax dues - Section 26E of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - HELD THAT:- The Full Bench of the Bombay High Court. In the case of Jalgaon Janta Sahakari Bank Ltd. and Anr vs Joint Commissioner of Sales and Anr [ 2022 (9) TMI 163 - BOMBAY HIGH COURT ] held that the secured creditor would have the priority charge, as contemplated under Section 26E of the SARFAESI Act, 2002, in case the same is registered under Section 26B of the SARFAESI Act, 2002. The secured creditors, in these petitions claims that their security is registered under Section 26B of the SARFAESI Act, 2002. In view of the Full Bench judgments, it is held that the secured creditor has priority charge over the claims of the Sales Tax, Commercial Tax and Income Tax - In case auction is held by the secured creditors and the sale certificates are not placed and/or registered, then the Registering Authority may register the same, notwithstanding the attachment of Sales Tax, Income Tax or Commercial Tax Departments. In case the auction sale is conducted by the secured creditor and they have received excess amount than their dues, then they are liable to remit the excess amount to the Departments. However, if they have not received the amount in excess of the amount due and payable to them, then they are not required to remit any amount to the Departments and the Departments cannot sustain prosecution against the Authorised Officer or the Officer of the secured creditor for not remitting the amount. Petition disposed off. 2023 (10) TMI 490 Rejection of challenge to the impugned orders of assessment for the assessment years 2006-07 and 2007-08 - rejection on the premise that the appellant is bound to prefer an appeal and the filing of the rectification petition is only to circumvent the filing of a statutory appeal, which mandates pre-deposit. HELD THAT:- It is trite law that the Court in exercise of its power of judicial review under Article 226 of the Constitution of India, would not direct a statutory authority to exercise its discretion in a particular manner, but would only command the statutory authority to perform its duty by exercising the discretion according to law. In the instant case, the learned Judge has proceeded to examine and reject the rectification petition, which is a discretion vested with the assessing authority and has thus substituted his views as that of the assessing officer, which is impermissible in law. In such view of the matter, the order of the learned Judge passed in the writ petitions is liable to be set aside and is thus, set aside. As a sequel, the respondent is directed to pass orders on the rectification petition filed by the appellant on 30.01.2014, on merits and in accordance with law, after affording an opportunity of personal hearing to the appellant, without being influenced by any of the observations made by the learned Judge. Appeal disposed off. 2023 (10) TMI 489 Legality and validity of the Notice of Assessment of Value Added Tax (VAT) - extension of period of assessment to six years by the Telangana Value Added Tax (Second Amendment) Act, 2017 - HELD THAT:- This enactment was struck down by this Court as being unconstitutional in M/S. SRI SRI ENGINEERING WORKS AND OTHERS VERSUS THE DEPUTY COMMISSIONER (CT) , BEGUMPET DIVISION, HYDERABAD, AND OTHERS. [ 2022 (7) TMI 420 - TELANGANA HIGH COURT] where it was held that the Second Amendment Act is unconstitutional being devoid of legislative competence. It is accordingly declared as such. Consequently, the notices issued and orders passed under Section 32 (3) of the VAT Act which have been impugned in the present batch of writ petitions are hereby set aside and quashed. From a perusal of the impugned notice dated 21.06.2023, it is found that the said notice is clearly beyond the limitation period of four years from the end of the assessment period. Evidently, respondent No.4 has invoked the extended period of limitation of six years provided by Act 26 of 2017 though not specifically mentioned in the impugned notice. When this provision has been declared unconstitutional by this Court, we are at a loss as to why respondent No.4 had issued the impugned notice based on such a provision. Writ Petition is accordingly allowed. 2023 (10) TMI 488 Time Limitation - Point of initiation of re-assessment/revision of assessment under the provisions of Section 27 of the Tamil Nadu Value Added Tax Act, 2006 - HELD THAT:- The judgement in Bhatinda District Co-ooperative Milk Producers Union [ 2007 (10) TMI 300 - SUPREME COURT] was rendered in the context of the exercise of power of suo motu revision under Section 21 of the Punjab General Sales Tax Act, 1948. No time limit had been set out for exercise of suo motu revision. However, in view of the provision for completion of assessment within three years in cases falling under sub-section 11(1) or 11(3) and within 5 years in cases falling under subsection 11(6), the Bench held that revisional jurisdiction should ordinarily be exercised within three years and, in no circumstance, beyond five years. The Allahabad High Court in Mass Awash Private Limited [ 2017 (7) TMI 664 - ALLAHABAD HIGH COURT] ] considered the question relating to limitation for completion of proceedings under Section 201(1)/201(1A) of the Income Tax Act, 1961. No period of limitation was prescribed under Section 201 for exercise of power thereunder and the argument of the assessee was that if no period was prescribed, then such power could be exercised only within reasonable time and not thereafter. Several decisions were cited in support of that proposition. In those decisions, the Court had held that limitation of four years should be taken as reasonable for exercise of power under Section 201(1) / 201 (1A). An assessment under the sales tax laws relates to the period commencing from the 1st of April of a particular year till 31st of March of the next year. The usage of the phrase after completion of that year in Section 22(4) means that an assessment under that Section shall be completed only after the 31st of March of the assessment period. Any such assessment, if framed after 31.10.2017 would supersede the assessment deemed to have been made under Section 22(2) on or before 31.10.2017. This is for the reason that an assessment under Section 22(4) is one framed after enquiry in line with the principles of natural justice - Such an assessment would have to be preferred to a deemed assessment passed under Section 22(2) deeming the returns and annexures to be in order. Under Section 27, the authority may, at any time within a period of six years from the date of assessment, determine to the best of his judgment, turnover which has escaped assessment and assess the tax payable on such turnover after making such enquiry as he may consider necessary. The reference to assessment in section 27 includes a re-assessment, and can, in my considered view, connote either (i) a speaking, written order of assessment under Section 22(2) (ii) a deemed order of assessment under Section 22(2) (iii) a best judgement assessment under Section 22(4) or (iv) a revision under Section 27 of the Act in respect of subjects different from those dealt with in previous reassessments. These writ petitions are disposed off. Indian Laws 2023 (10) TMI 487 Dishonour of Cheque - retirement from the partnership firm prior to the issuance of the cheque in question - vicarious liability under Section 141 (1) of the N.I. Act - HELD THAT:- In the light of the dictum laid down in Ashok Shewakramani s case [ 2023 (8) TMI 599 - SUPREME COURT ], it is evident that a vicarious liability would be attracted only when the ingredients of Section 141(1) of the NI Act, are satisfied. It would also reveal that merely because somebody is managing the affairs of the company, per se, he would not become in charge of the conduct of the business of the company or the person responsible to the company for the conduct of the business of the company. A bare perusal of Section 141(1) of the NI Act, would reveal that only that person who, at the time the offence was committed, was in charge of and was responsible to the company for the conduct of the business of the company, as well as the company alone shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished. The averments in the complaint filed by the respondent are not sufficient to satisfy the mandatory requirements under Section 141(1) of the NI Act. Since the averments in the complaint are insufficient to attract the provisions under Section 141(1) of the NI Act, to create vicarious liability upon the appellant, he is entitled to succeed in this appeal. The appellant has made out a case for quashing the criminal complaint in relation to him, in exercise of the jurisdiction under Section 482 of Cr.PC. Appeal allowed. 2023 (10) TMI 486 Conversion of foreign exchange rate of awarded sum money - Relevant date for conversion of the awarded sum from USD to Indian rupees - Whether the award contained any stipulation of making the payment in Indian currency? - HELD THAT:- The terms of the agreement are to be looked into for the purposes of deciding the question regarding the date of conversion. In the entire agreement, the relevant paragraphs dealing with the payments and advances and the payments of work in progress is laid down in paragraphs 31 and 32 and its sub-paragraphs. Paragraph 32.6 of the agreement states that payments against monthly account bills shall be made in Iraqi Dinars and US Dollars out of which 35 percent would be in Iraqi Dinars and 65 percent would be in US Dollars. Further, paragraph 32.8 defines the exchange rate for the purposes of conversion of Iraqi Dinars to US Dollars and the exchange rate being 01 Iraqi Dinar equivalent to 3.37778 US Dollars. There are no mention of payment being made in the Indian Currency i.e. INR from the agreement. Once there is no contract between the parties of making payment in Indian Currency INR, then, there would be no question of determining or finding out any date of conversion. Whether the award contained any stipulation of making the payment in Indian currency? - HELD THAT:- The agreement had stipulated that the Iraqi Dinar would be convertible to US Dollars at the following rate i.e. 1 Iraqi Dinar = 3.37778 US Dollars. The award does not permit or grant the liberty to the appellant to make the amount payable in Iraqi Dinars to be converted into Indian Currency (INR) - Apart from the amount of Bank Guarantee which had been encashed by the NPCCL of Rs.20 Lakhs, the other amount awarded is in Iraqi Dinars only. Whether the agreement, award or the judgment of this Court dated 24.02.2015 provided for payment of the awarded amount in Indian currency? - HELD THAT:- The award does not permit payment of the awarded amount in Indian currency except the amount of Rs. 20 lacs with admissible interest against the encashment of bank guarantee. As a necessary corollary, there would be no question of the amount awarded in Iraqi Dinars to be converted in Indian currency. The only conversion permissible was in US Dollars. In the above back drop, the question referred by the impugned judgment to be answered by this Court may not arise at all. Thus, there is no occasion or requirement for determining or fixing any date for conversion of the US Dollars into Indian Currency (INR). The payment has to be made in the foreign currency only along with computed interest. It would be open for the parties to pay and the other parties claiming to accept the Indian currency either at the current rate or at the agreed rate but this Court cannot meddle with the terms of the agreement or the award or the directions contained in the judgment of this Court dated 24.02.2015. Appeal disposed off. 2023 (10) TMI 485 Constitution of Competition Commission - coram of the commission - binding nature of final judgment, which was signed and pronounced by only three members against six members who began hearing the matter - requirement to provide opportunity of oral hearing to the parties while considering the Supplementary Investigation Report of the DG - principles of natural justice. Whether the body of the Competition Commission, which started oral hearing in the matter, should have remained constant, and whether the final judgment, which was signed and pronounced by only three members against six members who began hearing the matter, is legally in order? Whether the Competition Commission should have provided an opportunity of oral hearing to the parties while considering the Supplementary Investigation Report of the DG, and also at the stage of imposition of penalty under section 27 of the Competition Act the Competition Commission was required to provide an opportunity of oral hearing to the Opposite Parties regarding the quantum of penalty? HELD THAT:- It is correct that when the final judgment/order in the present matter was passed by the Competition Commission on 18.9.2018, Mr. S.L. Bunker, Member and Mr. D.K. Sikri (Chairperson) had retired and therefore, it was not possible for them to sign and authenticate the Impugned Order, and in such a situation, only Mr. Sudhir Mital, Chairperson, Mr. U.C. Nahta, Member and Mr. Augustine Peter, Member signed the Impugned Order. It is noted that Justice G.P. Mittal, who was a member on 18.9.2018 (the date of the Impugned Order), did not sign and authenticate the Impugned Order. It is noted that Justice G.P. Mittal did not hear the case from 2.8.2017 onwards, and so we may assume that since he did not hear the case in full, he did not participate in decision making and sign and authenticate the Impugned Order. On the basis of the ratio in judgments in Global Energy Private Limited v. Karnataka Electricity Regulatory Commission Ors and Damodar Valley Corporation v. Central Electricity Regulatory Commission, it is found that the possibility of a different opinion being held by the body of members hearing the case is distinctly possible if all the members were to jointly apply their mind and come to a conclusion - It is noted that the above-mentioned judgments of Hon ble APTEL (Global Energy Private Limited and Damodar Valley Corporation) unambiguously lay down that the final judgment in a matter should be rendered by the same set of members as those who heard the case. In the present case, it is found that one member Justice G.P. Mittal did not participate in four hearings, and therefore, he may have chosen not to sign the Impugned Order, even though he continued to be a member on the date the Impugned Order was pronounced - It is also considered that Justice G.P. Mittal, Member did not form part of the coram , who heard the case and therefore, the other five members heard the case on all the dates of hearings before the final order was pronounced. In view of the ratio in the judgments of Hon ble APTEL (Global Energy Private Limited and Damodar Valley Corporation), it would be definitely legally required that all these five members should sign and authenticate the Impugned Order. From two judgments in matters of Anil Rai vs. State of Bihar [ 2001 (8) TMI 1330 - SUPREME COURT ] and Ram Bali v. State of U.P. [ 2004 (4) TMI 532 - SUPREME COURT ], it is quite clear that the issue of delayed delivery/pronouncement of judgment is a serious issue on which Hon ble Supreme Court had occasion to apply is mind. Regulation No. 32 of the CCI (Meeting for Transaction of Business) Regulations, 2009 also stipulates that the Competition Commission may deliver final judgment within 21 days from the date the Competition Commission reserved the matter for final judgment. Therefore, it is trite to infer that the matter of timely delivery/pronouncement of judgment is an important one and therefore, even in the CCI (General) Regulations, 2009 a specific stipulation has been made under sub-regulation 2 of Regulation 32. Of course, this sub-regulation also contains a rider which states that the order or decision of the Competition Commission shall be made within 21 working days from the date of conclusion of final arguments, insofar as it is practicable. In the present matter, the final order was delivered after almost 13 months from the date the matter was reserved for orders, after conclusion of final arguments. This period is definitely a very long period, and it may be entirely possible that the members, who did not sign the judgment may have held a different point of view, or that, when they participated in collective deliberation and discussion while preparing the final order, the final order may have gone in a different direction - the long delayed delivery of final order/judgment was completely overlooking the desirability of pronouncing final judgment. All the above analysis point to the necessity, much rather the desirability of timely pronouncement of judgment, and also the necessity of the same set of members, who heard the final arguments, to be party in the decision making and then sign and authenticate the final judgment. The delay of about 13 months in the pronouncement of the Impugned Order so that only three members could sign and authenticate it instead of five members who heard the case on all the dates leads to two infirmities in the Impugned Order. The first infirmity that the same coram of members, who heard the matter, did not sign the order was a major infirmity. It was compounded by the fact that there was inordinate delay in the pronouncement of the final order - the Impugned Order was not pronounced by following the spirit of the principle of natural justice as was required by section 36 of the Competition Act, 2002. The Impugned Order does not comply with the requirement of adherence to the principle of natural justice for the reason that the coram of CCI that heard the final arguments did not pass the necessary orders within reasonable period of time, and by the time, the orders were pronounced in the case, one member was not present in at least four later hearings and two members had demitted office and therefore they did not participate in the decision making nor sign and authenticate the final order. Thus the delay in pronouncing the impugned order also resulted in serious infirmity in that one who hears must decide was not followed in letter and spirit - the Impugned Order does not satisfy the basic tenet of adherence to the principle of natural justice which was ingrained in section 36 of the Competition Act. The Impugned Order set aside - appeal disposed off.
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