TMI Tax Updates - e-Newsletter
October 21, 2023

Case Laws in this Newsletter:

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

Highlights / Catch Notes

• GST:

  Wrong availment of input tax credit - In the case in hand, the petitioner has only brought on record the tax invoices, e-way bills, GR and payment through banking channel, but no such details such as payment of freight charges, acknowledgement of taking delivery of goods, toll receipts and payment thereof has been provided. Thus in the absence of these documents, the actual physical movement of goods and genuineness of transportation as well as transaction cannot be established - Proceedings initiated for verification cannot be stopped - Writ petition dismissed - HC
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• GST:

  Input Tax Credit denied - availment and utilisation of ITC by the petitioner against invoices issued without actual receipt of goods - According to the dictum of the Apex Court, the purchasing dealer, over and above the invoices and the particulars of payments, has to produce further material like the name and address of the selling dealer, details of the vehicles which has delivered the goods, payment of fright charges, acknowledgement of taking delivery of goods including actual physical movement of the goods, alleged to have been purchased from the concerned dealers. - Petition dismissed for want of alternative remedy - HC
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• GST:

  Cancellation of GST registration of petitioner - non-conduct of any business from the declared place - The petitioner did not file any document for the change of his business place nor he supported his claim that he was running the business from the given address by producing any documentary or oral evidence. The enquiry conducted by the competent officer is not a trial, but it is summary proceedings to find out whether the registered dealer is conducting any business from his declared place of business or not. - Petition dismissed - HC
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• GST:

  Violation of principles of natural justice - requirement of pre show-cause notice consultation - From the material placed before this Court, the proper officer had issued pre show-cause consultation notices dated 09.02.2023 and 12.07.2023 in compliance with the directions given by this Court - Petition dismissed - HC
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• GST:

  Cancellation of the petitioner's GSTN Registration - The object of any Government is to promote the trade and not to curtail the same. The method which is adopted by the department as on today is like strangulating the neck of the small scale entrepreneurs. The cancellation of registration certainly amounts to a capital punishment so for as the traders are concerned. If they are not filing an appeal within the statutory period, then his entire business comes to stance - the department of GST has to think of the consequences and relax the rules and also find the modalities of conveying the show cause notice by way of SMS and also in the regional languages. This court expects the department of GST to take appropriate action by amending the relevant provisions considering the consequences on traders. - HC
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• GST:

  Blocking of the Electronic Credit Ledger (ECL) by the State Tax Officer (respondent no. 3) - Whereas the power was deleted to the Assistant Commissioner - proper officer - the action on behalf of the respondent No. 3 in blocking the Electronic Credit Ledger of the petitioner cannot be sustained and the same is hereby quashed and set aside. - HC
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• GST:

  Refund of excess availed/utilised Input Tax Credit - violation of Rule 36(4) of the CGST Rules, 2017 - Documentary proof of availing ITC - Belated filing of return - For the relevant period, though there is no extention of date of filing of GSTR Return, all that was done by means of subsequent Notifications was to waive/reduce late filing fee, interest, and penalty liabilities. - For the period to which the said proviso applies, the administrative instruction dated 11.11.2019 must survive in complete hibernation. Else, it may lose life to the higher statutory law. - HC
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• GST:

  Refund of GST in case of inverted duty structure - Imitation zari thread or yarn made out of Metallised polyester film /plastic film - no refund of unutilised input tax credit shall be allowed u/s 54(3) - Notification No 20/2023 issued.
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• Income Tax:

  Doctrine of mutuality - satisfaction of three tests - Fees for technical services - assessee is an association (Verein), established in Switzerland, with its members being Chartered Accountant firms situated across the world - All three tests of mutuality having been satisfied as aforesaid, we are of the considered view that the receipts of the respondent/assessee Verein from its members were not in the nature of fees for technical services and that the same were exempt from tax having regard to the principle of mutuality. - HC
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• Income Tax:

  Artificial capital gains loss - colourable device to evade tax - Allegation of transfer of agricultural land to LLP to generation artificial loss to set off with capital gain - LLP created after conversion of Limited Company into LLP - The capital losses said to have been incurred by the assessee are only notional and introduced artificially. Authorities below rightly disallowed the same. - AT
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• Income Tax:

  TDS liability u/s 194A - assessee in default - principle of Res-judicata - In the assessee’s own case for the proceeding in respect of the Assessment Year 2014-15, CIT(A) NFAC has accepted nominal members as members and held that interest paid to them is not liable for TDS u/s. 194 - the CIT/NFAC has acted against Res Judicata. - Order set aside - AT
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• Income Tax:

  Exemption u/s. 10(23C)(iiiab) - Applicability of Rule 2BBB - Percentage of Government Grant for considering university, hospital etc. as substantially financed by the Government - assessee had received grant at 33.5% of the total receipt - The Rule 2BBB was not applicable during the impugned assessment year. - AT
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• Income Tax:

  Deduction u/s. 80IC - Allowability of interest from FDR’s - AO himself noted that the interest received by the assessee from four entities was due to FDR’s kept with electricity board, environment board, for opening LC therefore, the impugned amount of interest has to be held derived from the eligible business entitle for deduction u/s. 80IC. However, amount of Rs. 54,680/- interest received on insurance claim cannot be held as derived from eligible business thus this part is should be reduced for the claim u/s. 80IC - Accordingly, ground no. 2 of assessee is partly allowed. - AT
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• Customs:

  Classification of imported goods - Cotton Polyester Fabrics - Fabrics having the characteristics of Denim fabric cannot be equated with the Denim fabric itself, if it does not otherwise satisfy the requirements of Chapter Note 52 - In the present case, the sample fabric satisfy the requirements of Denim fabrics in the warp yarp yarn, but does not satisfy the requirement in the weft yarn as its composition contains 4% of elastomeric material. - AT
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• Customs:

  Revocation of Customs Broker License - There has to be some evidence on record to show that either the Customs Broker was aware of such misdeclaration and suppressed the same with a mala fide mind or he has taken efforts to get the goods cleared from the Customs on the basis of wrong declaration made by him or has connived with the importer so as to aid and abet the wrong declaration which is not the case here. - Order against the CB set aside - AT
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• FEMA:

  Foreign contribution utilized for undesirable purposes - Suspension of certificate - seeking Release/permit the Petitioner to utilize 25% of the total foreign contribution amount/funds - There is nothing in the said Section which restricts that only the amounts lying in the current account can be permitted to be utilized, this Court is inclined to allow the Petitioner to utilize the 25% of the total FCRA funds held it in fixed deposits, government bonds etc. pending consideration of the cancellation of registration under Section 14 of the FCRR. - HC
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• Indian Laws:

  Dishonour of Cheque - abuse of the process of the court - Legal process can be undertaken to advance or vindicate the grievance, but it should not be permitted to be taken as an act of aberration, abuse and that too by any legal practitioner. - HC
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• IBC:

  Initiation of CIRP u/s 7 - NCLT / NCLAT admitted the application - time limitation - A request for one time settlement (OTC) was made - The NCLT treated this letter to be an acknowledgement of debt - The argument of the appellant about maintainability of the application out of which this appeal arises on the ground of the application being barred under limitation, is not satisfying. The application with respect to the two recovery certificates issued in the year 2017 is maintainable. - SC
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• IBC:

  Initiation of CIRP - time barred debt or not - Corporate Debtor had tacitly ‘Acknowledged’, its ‘Debt’ / ‘Liability’, in its ‘Balance Sheets’, for the Year ending 2013-14 dated 16.08.2014, for the Year ending 2014-15 dated 27.08.2015 and for the Year ending 2015-16 dated 27.08.2016, the same being ‘not Barred by Time’, taking note of the entire conspectus of the facts and circumstances of the present case, in an encircling manner, and exercising its subjective discretion, comes to a resultant conclusion that the aspect of ‘Debt and Default’, committed by the ‘Corporate Debtor’, have been duly proved by the ‘1st Respondent / Bank’. - NCLT rightly admitted the application - AT
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• Service Tax:

  Service Tax Audit - Post GST era - Power of Officers of the CGST Audit to conduct audit as per Section 174 (2) (e) & (f) of the Act of 2017 read with the Act of 1994 - In view of coming into effect the CGST Act of 2017, if any audit is carried out for the purpose of verification or investigation, the same has to be done in terms with Chapter- XIII of the CGST Act of 2017. At the cost of repetition, Chapter-XIII of the CGST Act of 20017 has two Sections, i.e. Section 65 which relates to audit by Tax Authorities and Section 66 which relates to Special audit. - HC
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• Service Tax:

  Permanent transfer of the lease hold rights - service of renting of immovable Property or not - It is observed that after the execution of Deeds of Assignment and permanent transfer of leasehold rights by the Appellant in favour of the Assignees, the Title of the land which has been assigned to the Appellant has also been transferred in the name of the said three parties and lands have already been mutated in the name of the respective parties. This is evident from the clarification issued by the DLLRO. Therefore, the transaction must be treated as 'sale of leasehold rights' and service tax would not be applicable on the outright transfer of rights for a period of 99 years. - AT
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• Service Tax:

  Sale and supply of food as well as beverages in the multiplex theatre premises - declared services or not - having regard to the fact that validity of payment of Service Tax on supply of food in air condition ambiance in a Restaurants being held to have assumed predominance over sale of food, Appellant is liable to pay Service Tax on the service component determined through abatement procedure. - AT
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• Central Excise:

  Clandestine removal - data on pen drive and statements recorded during investigation - The department has miserably failed to substantiate the allegation of clandestine manufacture and clearance by any tangible or corroborative evidence. The diaries or pen-drive from a third party cannot be said to be sufficient proof of such allegation and the department has failed to make out a case beyond any doubt. - AT
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• VAT:

  Recovery of tax dues - priority of charges - Right of auction purchase of property - Auction by the Secured Creditors - the inaction or negligence or non-performance on the part of the State Authorities cannot be the basis for prejudicing or putting the petitioner-auction purchaser to a disadvantage or position, by fastening the business liability of others, on the petitioner-auction purchaser is impermissible. - HC
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Articles

• LEVY OF GST ON GUARANTEES
• OFFENCES UNDER SECTION 276B READ WITH SECTION 278B UNDER INCOME TAX ACT, 1961
• RECENT NEW ADVISORIES FROM GSTN ON GST

Notifications

• Customs

• 77/2023 - dated 20-10-2023 - Cus (NT)
  Revised All Industry Rates of Duty Drawback.

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• 76/2023 - dated 19-10-2023 - Cus (NT)
  Rate of exchange of one unit of foreign currency equivalent to Indian rupees - Supersession Notification No. 73/2023-Customs(N.T.), dated 5th October, 2023

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• GST

• 20/2023 - dated 19-10-2023 - CGST Rate
  Inverted duty structure - Imitation zari thread or yarn made out of Metallised polyester film /plastic film - no refund of unutilised input tax credit shall be allowed u/s 54(3) - Notification No 05/2017- Central Tax (Rate) dated 28.06.2017 as amended

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• 19/2023 - dated 19-10-2023 - CGST Rate
  Reverse charge on certain specified supplies of goods u/s 9(3) - Ministry of Railways (Indian Railways) excluded from Central Government ambit - Notification No 04/2017- Central Tax (Rate) dated 28.06.2017 as amended.

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• 18/2023 - dated 19-10-2023 - CGST Rate
  Exemption on intra-State supplies - Food preparation of millet flour, in powder form, containing at least 70% millets by weight, other than pre-packaged and labelled” - Notification No 02/2017- Central Tax (Rate) dated 28.06.2017 as amended.

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• 17/2023 - dated 19-10-2023 - CGST Rate
  CGST Rate Schedule u/s 9(1) - Amendments as per GST Council Decision - Notification No 01/2017- Central Tax (Rate) dated 28.06.2017 as amended.

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• 16/2023 - dated 19-10-2023 - CGST Rate
  Categories of services the tax on intra-State supplies of which shall be paid by the electronic commerce operator (ECO) - entries inserted - Notification No 17/2017- Central Tax (Rate) dated 28.06.2017 as amended.

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• 15/2023 - dated 19-10-2023 - CGST Rate
  Supplies not eligible for refund of unutilized ITC under CGST Act - Notification No 15/2017- Central Tax (Rate) dated 28.06.2017 as amended.

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• 14/2023 - dated 19-10-2023 - CGST Rate
  RCM on Services supplied by the Central Government, State Government, UT or local authority to a business entity - Ministry of Railways (Indian Railways) excluded from certain entries - Notification No 13/2017- Central Tax (Rate) dated 28.06.2017 as amended

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• 13/2023 - dated 19-10-2023 - CGST Rate
  List of Exempted supply of services under the CGST Act -after serial number 3A entries added - Notification No 12/2017- Central Tax (Rate) dated 28.06.2017 as amended.

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• 12/2023 - dated 19-10-2023 - CGST Rate
  Rates for supply of services under CGST Act - Serial no. 8,10 and 34 amended - Notification No 11/2017- Central Tax (Rate) dated 28.06.2017 as amended

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• 23/2023 - dated 19-10-2023 - IGST Rate
  Imitation zari thread or yarn made out of Metallised polyester film /plastic film - no refund of unutilised input tax credit shall be allowed Notification No 05/2017- Integrated Tax (Rate) dated 28.06.2017 as amended.

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• 22/2023 - dated 19-10-2023 - IGST Rate
  Reverse charge on certain specified supplies of goods under section 5 (3) - Ministry of Railways (Indian Railways) excluded from Central Government ambit - Notification No 04/2017- Integrated Tax (Rate) dated 28.06.2017 as amended.

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• 21/2023 - dated 19-10-2023 - IGST Rate
  Absolute Exemption from IGST on inter-State supplies of Food preparation of millet flour, in powder form, containing at least 70% millets by weight, other than pre-packaged and labelled - Notification No 02/2017- Integrated Tax (Rate) dated 28.06.2017 as amended.

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• 20/2023 - dated 19-10-2023 - IGST Rate
  IGST Rate Schedule u/s 5(1) - IGST @ 5%, 12%, 18%, 28%, 3% and 0.25% on supply of goods - Notification No 01/2017- Integrated Tax (Rate) dated 28.06.2017 as amended.

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• 19/2023 - dated 19-10-2023 - IGST Rate
  Categories of services the tax on inter-State supplies of which shall be paid by the electronic commerce operator - Notification No 14/2017- Integrated Tax (Rate) dated 28.06.2017 as amended.

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• 18/2023 - dated 19-10-2023 - IGST Rate
  Supplies not eligible for refund of unutilized ITC under IGST Act - Construction of a complex, building, civil structure or a part thereof - Notification No 12/2017- Integrated Tax (Rate) dated 28.06.2017 as amended.

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• 17/2023 - dated 19-10-2023 - IGST Rate
  Services on which integrated tax will be payable under RCM under IGST Act - Ministry of Railways (Indian Railways) added and excluded - Notification No 10/2017- Integrated Tax (Rate) dated 28.06.2017 as amended.

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• 16/2023 - dated 19-10-2023 - IGST Rate
  Exemptions on supply of services under IGST Act - Certain services provided to Governmental Authority exempted - Ministry of Railways (Indian Railways) excluded from certain items - Notification No 9/2017- Integrated Tax (Rate) dated 28.06.2017 as amended.

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• 15/2023 - dated 19-10-2023 - IGST Rate
  Rates for supply of services under IGST Act - Serial no. 8, 10 and 34 amended - Notification No 8/2017- Integrated Tax (Rate) dated 28.06.2017 as amended.

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• 20/2023 - dated 19-10-2023 - UTGST Rate
  Imitation zari thread or yarn made out of Metallised polyester film /plastic film no refund of unutilised input tax credit shall be allowed - Notification No 05/2017- Union Territory Tax (Rate) dated 28.06.2017 as amended.

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• 19/2023 - dated 19-10-2023 - UTGST Rate
  Reverse charge on certain specified supplies of goods - Excluding Ministry of Railways (Indian Railways) from Central Government ambit - Notification No 04/2017- Union Territory Tax (Rate) dated 28.06.2017 as amended.

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• 18/2023 - dated 19-10-2023 - UTGST Rate
  UTGST exempts Food preparation of millet flour, in powder form, containing at least 70% millets by weight, other than pre-packaged and labelled - Notification No 02/2017- Union Territory Tax (Rate) dated 28.06.2017 as amended.

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• 17/2023 - dated 19-10-2023 - UTGST Rate
  UTGST Rate Schedule u/s 7(1)- notifying rates of UTGST @ 2.5%, 6%, 9%, 14%, 1.5% and 0.125% on Supply of Good for new items - Notification No 01/2017- Union Territory Tax (Rate) dated 28.06.2017 as amended.

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• 16/2023 - dated 19-10-2023 - UTGST Rate
  Categories of services the tax on intra-State supplies of which shall be paid by the electronic commerce operator (ECO) - entries substituted - Notification No 17/2017- Union territory Tax (Rate) dated 28.06.2017 as amended.

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• 15/2023 - dated 19-10-2023 - UTGST Rate
  Supplies not eligible for refund of unutilised ITC under UTGST Act construction of a complex, building or a part thereof, intended for sale to a buyer, wholly or partly - Notification No 15/2017- Union territory Tax (Rate) dated 28.06.2017 as amended.

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• 14/2023 - dated 19-10-2023 - UTGST Rate
  Services on which union territory tax will be payable under RCM under UTGST Act - Ministry of Railways (Indian Railways) as added - Notification No 13/2017- Union territory Tax (Rate) dated 28.06.2017 as amended.

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• 13/2023 - dated 19-10-2023 - UTGST Rate
  Exemptions on supply of services under UTGST Act - entries added - Notification No 12/2017- Union territory Tax (Rate) dated 28.06.2017 as amended.

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• 12/2023 - dated 19-10-2023 - UTGST Rate
  Rates for supply of services under UTGST Act - conditions added - Notification No 11/2017- Union territory Tax (Rate) dated 28.06.2017 as amended.

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• Income Tax

• 91/2023 - dated 19-10-2023 - IT
  New Rule 16D - Form of report for claiming deduction u/s 10AA added in Income-tax (Twenty Sixth Amendment) Rules, 2023.

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• 90/2023 - dated 19-10-2023 - IT
  Exemption from specified income U/s 10(46) – ‘Punjab Dental Council, Mohali’ notified

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Circulars / Instructions / Orders

• SEBI - SEBI/HO/IMD/IMD-TPD-1/P/CIR/2023/173 - dated 20-10-2023
  Guidelines for Business Continuity Plan (BCP) and Disaster Recovery (DR) of Qualified RTAs (QRTAs)
• SEBI - SEBI/HO/DDHS/DDHS-RACPOD1/P/CIR/2023/172 - dated 19-10-2023
  Ease of doing business and development of corporate bond markets – revision in the framework for fund raising by issuance of debt securities by large corporates (LCs)
• GST - 51st GST Council Meeting - dated 2-8-2023
  Minutes of the 51st Meeting of GST Council held on 02nd August, 2023
• DGFT - Trade Notice No. 31/2023-24 - dated 19-10-2023
  Discontinuation of Issuance of Physical copy of Restricted Import Authorisation with effect from 19.10.2023

News

• Minutes of the Monetary Policy Committee Meeting, October 4 to 6, 2023 [Under Section 45ZL of the Reserve Bank of India Act, 1934]

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• DFS Secretary Dr. Vivek Joshi chairs review meeting on progress of Financial Inclusion Schemes with heads of PSBs and senior executives of NABARD, SIDBI, Mudra Ltd. and NPCI

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• Union Minister of State (MoS) for Finance Dr. Bhagwat Kisanrao Karad chairs review meeting on progress and performance of Financial Inclusion Schemes

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Case Laws:

• GST

• 2023 (10) TMI 948
  Violation of principles of natural justice - opportunity of hearing not provided - Doctrine of merger - original order does not get merged with the appellate order - appeal dismissed as being beyond the prescribed period of limitation - HELD THAT:- From the perusal of the records, it is clear that after the petitioner had sought adjournment, a reminder notice was sent to the petitioner on 10.02.2021 wherein the date by which the reply was to be submitted was indicated as 17.04.2021, however, in the column of date of personal hearing, the time of personal hearing and venue of personal hearing, the words 'NA' were transcribed. From the order impugned passed under section 74 also, it transpires that no opportunity of hearing was granted to the petitioner. The order passed against the petitioner under section 74 is quashed. As the main order has been quashed, the order dated 26.12.2022 also losses its efficacy and is quashed. The respondent no.3 may pass a fresh order after giving an opportunity of hearing in accordance with law. Petition allowed.

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• 2023 (10) TMI 947
  Wrong availment of input tax credit - demand of tax alongwith penalty - HELD THAT:- Admittedly, the concept of input tax credit has been introduced in the tax regime prior to G.S.T. which is being followed in the current regime also. The scheme of input tax credit is being introduced with an object to avoid cascading effect of tax. The purchasing dealer can avail the input tax credit on tax paid on its purchase whereas manufacturer can avail the same on purchase of its raw material used for manufacturing or selling of its final product which will avoid double taxation. The benefit of concession / I.T.C. under the tax statute can be availed only on fulfilment of certain conditions or restrictions as stipulated under the Act. In the event of breach of any of the conditions as enumerated under the Act, no benefit can be conferred to the dealer. On brief reading of the sections 16 and 74, it is evident that in the event of wrong availment of input tax credit, the proceedings can be initiated against the registered person or registered dealer but at the same time, restrictions has been imposed upon the authorities that without putting notice to the dealer, no adjudication proceeding can be initiated. In the case in hand, the petitioner has only brought on record the tax invoices, e-way bills, GR and payment through banking channel, but no such details such as payment of freight charges, acknowledgement of taking delivery of goods, toll receipts and payment thereof has been provided. Thus in the absence of these documents, the actual physical movement of goods and genuineness of transportation as well as transaction cannot be established and in such circumstances, further no proof of filing of GSTR 2 A has been brought on record, the proceeding has rightly been initiated against the petitioner. The Apex Court in the case of State of Karnataka Vs. M/s Ecom Gill Coffee Trading Private Limited [ 023 (3) TMI 533 - SUPREME COURT ] while considering the pari materia of section 70 of the Karnataka Value Added Tax Act, 2003, where the burden was upon the dealer to prove beyond doubt its claim of exemption and deduction of ITC, Hon ble the Apex Court has held that primarily burden of proof for claiming the input tax credit is upon the dealer to furnish the details of selling dealer, vehicle number, payment of freight charges, acknowledgement of taking delivery of goods, tax invoices and payment particulars etc. to prove and establish the actual physical movement of the goods. Further by submitting tax invoice, e-way bill, GR or payment details is not sufficient. Similarly, this Court in the case of the Commissioner Commercial Tax Vs. M/s Foods Ltd. [ 2023 (8) TMI 1130 - ALLAHABAD HIGH COURT ] has held that the primary responsibility of claiming the benefit is upon the dealer to prove and establish the actual physical movement of goods, genuineness of transactions, etc. and if the dealer fails to prove the actual physical movement of goods, the benefit cannot be granted. Thus, no interference is called for by this Court in the impugned orders - petition dismissed.

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• 2023 (10) TMI 946
  Violation of principles of natural justice - cancellation of GST registration - no cogent reason recorded for such cancellation - 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 no.3 and appellate authority has also dismissed the appeal filed by the petitioner (s) summarily without assigning any reason. In the recent judgment of this Court passed in the case of Namo Narayan Singh [ 2023 (10) TMI 482 - ALLAHABAD HIGH COURT] , on an identical sets of fact held that 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. Looking to the facts and on perusal of the above-quoted judgment, it is clear that the facts of the present case is squarely covered in the aforesaid judgment, hence the impugned orders cannot sustain. The matter is remitted back to the the first appellate authority who shall pass a fresh reasoned and speaking order in accordance with law - petition allowed by way of remand.

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• 2023 (10) TMI 945
  Claiming ITC without authorization - allegation founded on the basis that the firm, based on whose supplies the ITC was availed, was not in existence - HELD THAT:- On perusal of the records, it is clearly revealed that along with the memo of appeal, the petitioner had filed the documents to demonstrate that the transactions based upon which the ITC was claimed, were through the banking channels and the documents were duly uploaded on the GST portal. None of the said aspect has been considered in the appellate order, which is impugned in the present writ petition. It is settled that a non speaking order is violative of Article 14 of the Constitution of India, thus, on the limited ground of not considering any material whatsoever and the order being a non-speaking order, the order dated 04.07.2023 is quashed. The matter is remanded back to the appellate authority to pass an order on the appeal of the petitioner after giving opportunity of hearing and considering the material on record, in accordance with law - Petition disposed off by way of remand.

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• 2023 (10) TMI 944
  Freezing of Bank Accounts of petitioner - Opportunity to file objections - HELD THAT:- It will be appropriate for the Petitioners to take recourse to the provisions of sub-rule (5) of Rule 159 of the Central Goods And Service Tax Rules (CGST Rules) whereby an opportunity is available to the Petitioners to file its objections in regard to the attachment of the Petitioner s/Assessee's property. In somewhat similar circumstances, a similar course of action is permitted in the case of ASHOK KUMAR VISHWAKARMA VERSUS UNION OF INDIA ORS. [ 2023 (10) TMI 715 - BOMBAY HIGH COURT ] where it has been held that The appropriate remedy for the Petitioner would be to invoke sub-rule (5) by raising an objection to the orders of attachment in question as the rule itself would permit. Thus, considering such stage of the proceedings, in the facts and circumstances of the case, the discretionary jurisdiction under Article 226 of the Constitution of India not exercised to interfere in the impugned attachment orders. This petition is disposed off permitting the Petitioners to make a representation/raise an objection against the attachment as permitted by sub-rule (5) of Rule 159 of the CGST Rules.

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• 2023 (10) TMI 943
  Principles of natural justice - denial of opportunity of oral hearing before the Assessing Authority - HELD THAT:- Once it has been laid down by way of a principle of law that a person/assessee is not required to request for opportunity of personal hearing and it remained mandatory upon the Assessing Authority to afford such opportunity before passing an adverse order, the fact that the petitioner may have signified 'No' in the column meant to mark the assessee's choice to avail personal hearing, would bear no legal consequence. Even otherwise in the context of an assessment order creating heavy civil liability, observing such minimal opportunity of hearing is a must. Principle of natural justice would commend to this Court to bind the authorities to always ensure to provide such opportunity of hearing. It has to be ensured that such opportunity is granted in real terms. The matter is remitted to the respondent no.2/Deputy Commissioner, State Tax, Sector-17, Lucknow to issue a fresh notice to the petitioner within a period of two weeks from today - Petition allowed by way of remand.

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• 2023 (10) TMI 942
  Validity of proceedings u/s 129 of CGST Act - mis-declaration in E-way bill - processed White Red Betel was being transported, whereas the E-waybills and E-invoices was shown of Dried Areca Nuts and value of both the seized articles were different. The petitioner submits that once the notice itself may be quashed, goods may not be treated undervalued and the authority is neither the Assessing Authority nor the Adjudicating Authority to impose tax and, therefore, the order impugned is bad in the eyes of law and same may be quashed. HELD THAT:- The matter is remitted to respondent no.2 to pass orders afresh under Section 129(1)(a) of the State Goods and Service Tax Act, 2017 within a period of one week from the date of receipt of certified copy of this order, after affording due opportunity of hearing to the petitioner. Petition disposed off.

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• 2023 (10) TMI 941
  Cancellation of GST registration of petitioner - Failure to furnish returns for a continuous period of six months - order passed without application of mind - violation of principles of natural justice - HELD THAT:- In the present case from the perusal of the order dated 23.12.2022, clearly there is no reason ascribed to take such a harsh action of cancellation of registration. In view of the order being without any application of mind, the same does not satisfy the test of Article 14 of the Constitution of India, as such, the impugned order dated 23.12.2022 (Annexure - 3) is set aside. The petition is accordingly allowed.

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• 2023 (10) TMI 940
  Cancellation of GST registration of petitioner with retrospective effect - petitioner had denied that it was involved in any fraud or made any misstatement and suppressed any facts - no opportunity to object to cancellation of his GST registration provided to petitioner - violation of principles of natural justice - HELD THAT:- The impugned order is also not informed by reason, it merely states that the reply submitted by the petitioner was unsatisfactory. Neither the Show Cause Notice nor the impugned order provides any clue as to why the petitioner s GST registration was cancelled. The Show Cause Notice and the impugned order are liable to be set aside. It is also relevant to note that the Show Cause Notice did not propose that the petitioner s registration would be cancelled from the date it was granted. Thus, the petitioner had no opportunity to object to cancellation of his GST registration with retrospective effect. The impugned order and the Show Cause Notice are set aside - Petition allowed.

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• 2023 (10) TMI 939
  Validity of demand raised u/s 74 of the GST Act - opportunity of hearing not provided - violation of principles of natural justice. It is alleged that the SCN contains a stipulation, 'NA' in the place of date of hearing which is required to be specified in the show cause notice. HELD THAT:- Learned counsel appearing for the Department does not dispute the assertion that issues raised in this writ petition are squarely covered by the adjudication made in MOHINI TRADERS [ 2023 (6) TMI 531 - ALLAHABAD HIGH COURT ], where it was held that The stand of the assessee may remain unclear unless minimal opportunity of hearing is first granted. Only thereafter, the explanation furnished may be rejected and demand created. This petition is disposed off.

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• 2023 (10) TMI 938
  Cancellation of GST registration of petitioner - HELD THAT:- Sri Ankur Agrawal for the Department does not dispute the fact that the factual issues raised in this petition are similar to the petition already decided by this Court in M/S SAKSHI ENTERPRISES VERSUS STATE OF U.P. AND ANOTHER [ 2023 (7) TMI 1306 - ALLAHABAD HIGH COURT ] where it was held that petition is disposed of permitting the petitioner to approach before the respondent No. 2 and to obtain the fresh notice, within 15 days from today and in turn, petitioner would file the reply to the fresh notice within the stipulated time fixed by the respondent No. 2. This petition also stands disposed of in terms of the order passed by this Court on 31.07.2023.

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• 2023 (10) TMI 937
  Refund of Input Tax Credit - Rejection on the ground that the petitioner s application was filed beyond the period as stipulated under Section 54(1) of the Central Goods Services Tax Act, 2017 - HELD THAT:- Section 54(1) of the CGST Act stipulates that an application for refund may be filed within the period of two years from the relevant date. The expression relevant date is defined in Explanation (2) to Section 54 of the CGST Act - In the present case, the statement filed by the petitioner clearly indicates the date on the shipping bills and the invoices. Thus, there is no ambiguity for computing the period of limitation in reference to the relevant date. The respondents have filed the counter affidavit, however, the same is not on record - the respondents are directed to process the petitioner s claim for refund along with applicable interest, if any, within a period of two weeks from today - Petition allowed.

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• 2023 (10) TMI 936
  Availment of Input Credit - Denial of benefit of the Circular dated 2.1.2023 - Respondent submitted that the benefit of circular dated 2.1.2023 cannot be accorded to the petitioner as the matter has already been adjudicated up to the first stage of first appellate authority - HELD THAT:- On perusal of the circular dated 2.1.2023 with regard to the input availment in FORM-3B clearly shows that the supplier has to file GSTR-1 as well as in the return of GSTR-3B for the tax period but he has to declare the supply but if he has declared the supply with the wrong GSTIN of the recipient in the Form of GSTR-1, in such cases, difference in GSTR claimed by the registered person in his return in form of GSTR- 3B and that available in form of GSTR-2A may be only by the procedure provided in para 4 in the aforesaid circular. Any circular or notification issued during the pendency of the litigation, the benefit cannot be denied. The Hon'ble Apex Court in the case of Mathew M. Thomas and others Vs. Commissioners of Income Tax, [ 1999 (2) TMI 7 - SUPREME COURT] has held that if a a benevolent Circular has come into existence during the pendency of an appeal, the benefit of the same should not be denied to the assess. Further, adopting the similar view, this Court in the case of Commissioner of Sales Tax Vs. S/s. Agrawal Rolling Mills, Mirzapur, [ 2003 (4) TMI 550 - ALLAHABAD HIGH COURT] has held that the benefit of circular, which came into existence during the pendency of the appeal, even up to the stage of revision, the benefit of same cannot be denied to the assessee. The matters are remanded back to the respondent no.2 to pass a fresh order within a period of one month from the date of production of certified copy of this order taking into consideration the Circular dated 2.1.2023 as well as judgments relied upon by the counsel for the petitioner in support of his contention of his cases - petition allowed by way of remand.

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• 2023 (10) TMI 935
  Issuance of summons for procuring the presence of the noticee as a witness in the proceedings initiated - HELD THAT:- As has been held by the Division Bench of the High Court of Delhi [ 2022 (1) TMI 554 - DELHI HIGH COURT ], Section 6 of SGST or UGST Act or the Circular does not reckon all situations, which would arise in the course of an investigation. As has been rightly pointed out by the learned ASG and the learned Government Advocate in the present case, the investigation is not against the petitioner herein. The investigation by the State Tax Authority in Maharashtra is against one M/s. Vedam Enterprises, who is an assessee within the State of Maharashtra, whose registration has been found to be fictitious. The investigation initiated by the State Tax Authority within Bihar, at Patna is with respect to an assessee M/s. Arti Plastics, who is registered within the State of Bihar. The investigation reveals that both the said assessees, one registered in Maharashtra and the other in Bihar had dealings between themselves, based on which input tax credit was claimed by the assessee in Bihar. There are absolutely no application of the Section 6(2)(b) or the Circular and the petitioner should appear before the respective tax authorities, pursuant to the summons issued under Section 70 of the respective enactments. Considering the totality of the circumstances the State Tax authority within the State of Maharashtra are directed to issue a notice for appearance some time in the month of December, 2023 and the State Tax Authority in Patna to issue a notice some time in the month of November, 2023. If any documents are requisitioned, the petitioner would be entitled to produce it before the authority, who first requisitions it and such authority shall enable authenticated copies to be issued, at the expense of the petitioner, for production before the other authority, if so required. Petition dismissed.

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• 2023 (10) TMI 934
  Refund of Integrated Goods and Service Tax - telecom services provided by the petitioner to inbound subscribers of FTOs - Export of services or not - claims preferred were beyond the period of two years from the relevant dates and therefore, were barred by limitation. Whether the claims made by the petitioner are barred by limitation? - HELD THAT:- In the present case, the petitioner claims that it had received payments in all cases after the invoices were raised. Thus, the date on which payments had been received from FTOs would be the relevant date for the purpose limitation under Section 54(1) of the CGST Act. The petitioner had also furnished a tabular statement clearly indicating the invoices raised and the dates of receipt of payments. However, the authorities had rejected the claim by mentioning that payments in respect of some of the invoices were received in advance. It is material to note that there is no specific reference to the invoices in respect of which payments are held to have been received in advance, that is, prior to the date of their issuance - Undisputedly, in case the payments had been received after the invoices were raised, the date on receipt of payments would be relevant for the purposes of computing the limitation for filing claims for refund. Whether the services in question constitute export of services within the meaning of Section 2(6) of the IGST Act? - HELD THAT:- It is apparent that the provisions for ascertaining the place of supply of services under Rule 6A of the ST Rules are similar to Section 2(6) of the IGST Act inasmuch as the services will be treated as export of services when (a) the provider of service is located in the taxable territory, (b) the recipient of the service is located outside India, and (d) the place of provision of the service is outside India. There is no cavil that the decisions rendered on the question of export of services in the context of Rule 3 of the Export of Services Rules, 2005 are also applicable to the controversy in question. The present petition is allowed and the respondents are directed to refund the amounts as claimed by the petitioner - Application disposed off.

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• 2023 (10) TMI 933
  Maintainability of petition - availability of alternative remedy - Input Tax Credit denied - availment and utilisation of ITC by the petitioner against invoices issued without actual receipt of goods - inadmissibility in terms of Section 16 of the CGST Act - HELD THAT:- The Assessing Authority has passed a detailed order considering the objections/reply of the petitioner filed to the Show Cause and has returned the finding that the petitioner has availed the ITC and further utilized the same against tax invoices issued by suppliers without actual receipt of the goods and has accordingly held the petitioner to be liable. There is no dispute about the legal position that availability of an alternative remedy is not an absolute bar for exercise of jurisdiction under Article 226 of the Constitution of India, where there is clear violation of the procedure established by law or in violation of the elementary principles of natural justice However in the case at hand the impugned order is a reasoned and speaking order passed after affording opportunity of hearing to the petitioner and considering it objection/reply. The Apex Court recently in the case of THE STATE OF KARNATAKA VERSUS M/S ECOM GILL COFFEE TRADING PRIVATE LIMITED [ 2023 (3) TMI 533 - SUPREME COURT] while dealing with similar issue as raised in the instant writ petition observed that ITC can be claimed only on genuine transactions of sale and purchase. For claiming ITC, genuineness of the transaction and actual physical movement of the goods are the sine qua non and the aforesaid can be proved only by furnishing the name and address of the selling dealer, details of the vehicle which has delivered the goods, payment of freight charges, acknowledgement of taking delivery of goods, tax invoices and payment particulars etc. According to the dictum of the Apex Court, the purchasing dealer, over and above the invoices and the particulars of payments, has to produce further material like the name and address of the selling dealer, details of the vehicles which has delivered the goods, payment of fright charges, acknowledgement of taking delivery of goods including actual physical movement of the goods, alleged to have been purchased from the concerned dealers. This is not a fit case where the efficacious alternative remedy available to the petitioner can be bye passed - the writ petition is dismissed on the ground of alternative remedy.

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• 2023 (10) TMI 932
  Cancellation of GST registration of petitioner - non-conduct of any business from the declared place of business - issuance of invoice or bill without supply of goods or services - Right of cross-examination allowed - no violation of principles of natural justice - HELD THAT:- In the present case, the petitioner was afforded an opportunity to support his case. However, he did not produce convincing proof that he was, in fact carrying on any business from the declared place of his business. The Supreme Court in the case of State of Kerala v K.T. Shaduli and Nallakandy Yusuff [ 1977 (3) TMI 160 - SUPREME COURT] opined that the opportunity to prove the correctness or completeness of return would carry the right to examine the witnesses and the right to cross-examine the witnesses examined by the Sales Tax Officer. In the present case, the landlord s statement was taken into account wherein the landlord stated that Room No. IX/205 is owned by him and was rented to the petitioner for conducting iron and steel business from 2012 to May 2017. However, after May 2017, no business activity was carried out from there, and the building was rented out to another person since 18th August 2017. The petitioner did not file any document for the change of his business place nor he supported his claim that he was running the business from the given address by producing any documentary or oral evidence. The enquiry conducted by the competent officer is not a trial, but it is summary proceedings to find out whether the registered dealer is conducting any business from his declared place of business or not. There has been no infraction of principle of natural justice or the authority has acted arbitrarily as contended or otherwise. Petition dismissed.

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• 2023 (10) TMI 931
  Violation of principles of natural justice - jurisdiction - non-issuance of pre show-cause notice consultation - non-conducting of pre-consultation hearing - HELD THAT:- Admittedly, on an earlier occasion, when show-cause notice was issued by the Assistant Commissioner of Central Tax, petitioner filed W.P.No.15871 of 2023, primarily on the ground of jurisdiction. The said writ petition was disposed of in NEKTAR THERAPEUTICS (INDIA) PVT LTD VERSUS UNION OF INDIA [ 2023 (6) TMI 1318 - TELANGANA HIGH COURT] , wherein, the Hon ble Division Bench of this Court categorically made it clear that if proper officer intends to issue fresh show-cause notice, he shall hold consultation with the petitioner. Consequently, fresh show-cause notice dated 21.07.2023 was issued by the Additional Commissioner of Central Tax i.e., 5th respondent, who according to the petitioner, is proper officer. Therefore, the principal ground agitated by the petitioner that the officer lacks jurisdiction is not available to the petitioner. Secondly, the Hon ble Division Bench had directed the respondents 2 to 6 that if the respondents intend to issue fresh show-cause notice, the proper officer shall hold pre show-cause consultation. From the material placed before this Court, the proper officer had issued pre show-cause consultation notices dated 09.02.2023 and 12.07.2023 in compliance with the directions given by this Court in NEKTAR THERAPEUTICS (INDIA) PVT LTD. The writ petition is devoid of merits and thus, liable to be and is accordingly dismissed.

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• 2023 (10) TMI 930
  Violation of principles of natural justice - notices in Form GST DRC-01A and Form GST DRC-01 were not issued to the petitioner prior to the passing of the impugned Assessment Order - HELD THAT:- This Writ Petition is disposed of at the time of admission by giving liberty to the petitioner to file a statutory appeal within a period of thirty days from the date of receipt of a copy of this order, considering the fact that the disputed tax has also been recovered from the petitioner - statutory appeal shall be filed by the petitioner within a period of thirty days from the date of receipt of a copy of this order. The Appellate Authority shall dispose the appeal on merits and in accordance with law within a period of six months thereafter provided, such an appeal is filed by the petitioner within such time. Petition disposed off.

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• 2023 (10) TMI 929
  Rejection of application for revocation of cancelled GST registration - Ex-parte order - HELD THAT:- This Court in TVL. SUGUNA CUTPIECE CENTER VERSUS THE APPELLATE DEPUTY COMMISSIONER (ST) (GST) , THE ASSISTANT COMMISSIONER (CIRCLE) , SALEM BAZAAR. [ 2022 (2) TMI 933 - MADRAS HIGH COURT] wherein it was held that no useful purpose would be served keeping the petitioners out of the Goods and Service Tax regime as such the assessee would still continue to his businesses and supply goods and services. The Central Goods and Service Act was enacted in the year 2017 with an object of levy and collection of tax on intra state supply of goods or services or both by the Central Government, it is not the interest of the government to curtail the right of the entrepreneurs like the petitioner. The petitioner must be allowed to continue his business and to contribute to the State's revenue, in the absence of GST Registration number a professional cannot raise a bill, if the petitioner is denied a GST registration number, it affects his chances of getting employment or executing works, which ultimately affects his right to livelihood, embodied under Article 21 of the Constitution. The object of any Government is to promote the trade and not to curtail the same. The method which is adopted by the department as on today is like strangulating the neck of the small scale entrepreneurs. The cancellation of registration certainly amounts to a capital punishment so for as the traders are concerned. If they are not filing an appeal within the statutory period, then his entire business comes to stance - the department of GST has to think of the consequences and relax the rules and also find the modalities of conveying the show cause notice by way of SMS and also in the regional languages. This court expects the department of GST to take appropriate action by amending the relevant provisions considering the consequences on traders. These writ petitions are disposed of in terms of the guidelines provided in the order in Suguna Cutpiece 's case - Petition closed.

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• 2023 (10) TMI 928
  Error on uploading GST TRAN-1 order on the GST portal - though GST TRAN-1 order dated 2.3.2023 has been passed but instead of uploading it on the GST Portal of the petitioner, another order of a different party has wrongly been uploaded on it. HELD THAT:- In view of the fair statement made by the counsel for the Revenue, the petition is disposed of expecting the Revenue Department to correctly upload the order dated 2.3.2023 on the GST Portal of the petitioner.

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• 2023 (10) TMI 927
  Disallowance of Input Tax Credit (ITC) - difference in ITC claimed by the registered person in his return in Form of GSTR-3B and that available in Form GSTR-2A - HELD THAT:- The matter is remitted back to respondent no.2 to pass fresh orders within a period of one month from today, taking into consideration the circular as well as any other material relied upon by the petitioner in support of its case. Petition disposed off.

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• 2023 (10) TMI 926
  Validity of assessment order and recovery notice - input tax credit denied merely on the difference of GSTR 2A and 3B - HELD THAT:- This Court, in DIYA AGENCIES VERSUS THE STATE TAX OFFICER, THE STATE TAX OFFICER, UNION OF INDIA, THE CENTRAL BOARD OF INDIRECT TAXES CUSTOMS, THE STATE OF KERALA [ 2023 (9) TMI 955 - KERALA HIGH COURT] after taking note of the judgment of the Supreme Court in the case of THE STATE OF KARNATAKA VERSUS M/S ECOM GILL COFFEE TRADING PRIVATE LIMITED [ 2023 (3) TMI 533 - SUPREME COURT] as well as Calcutta High Court judgment in SUNCRAFT ENERGY PRIVATE LIMITED AND ANOTHER VERSUS THE ASSISTANT COMMISSIONER, STATE TAX, BALLYGUNGE CHARGE AND OTHERS [ 2023 (8) TMI 174 - CALCUTTA HIGH COURT] has held that the input tax credit of the assessee under the GST regime cannot be denied merely on the difference of GSTR 2A and 3B. The matter is remitted back to the file of the Assessing Authority to examine the evidence of the petitioner irrespective of the Form GSTR 2A for petitioner's claim of the input tax credit. After examination of the evidence placed by the petitioner/assessee, the Assessing Authority shall pass fresh orders in accordance with the law. Petition allowed.

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• 2023 (10) TMI 925
  Blocking of the Electronic Credit Ledger (ECL) by the State Tax Officer (respondent no. 3) - Whereas the power was deleted to the Assistant Commissioner - proper officer having authority of such blocking - HELD THAT:- A perusal of Rule 86A of the Central Goods and Services Tax Rules, 2017, indicates that such a blocking can be done by the Commissioner or an officer authorized by him in this behalf, not below the rank of Assistant Commissioner. Admittedly, the respondent No. 3 does not fall within that category and is an Officer of the rank below that of the Assistant Commissioner. Though the Notification dated 24/1/2020 has been relied upon to contend that the power has now been delegated by the Commissioner to the respondent No. 3 (page 104), the same is under the State GST Act, whereas Rule 86-A of the aforesaid Act would contemplate a delegation by way of amendment to the Rule. The Notification dated 24/01/2020, would be of no assistance to the respondents. In that view of the matter the action on behalf of the respondent No. 3 in blocking the Electronic Credit Ledger of the petitioner cannot be sustained and the same is hereby quashed and set aside. Petition allowed.

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• 2023 (10) TMI 924
  Refund of excess availed/utilised Input Tax Credit - violation of Rule 36(4) of the CGST Rules, 2017 - HELD THAT:- As to the merits, the language of the first proviso to Rule 36(4) is plain and clear. Read along with the main part of sub-Rule 4, it only provides an exception to the scheme contained in that sub-Rule. Thus, in the first place Rule 36(4) is complete and provides for a functional rule to avail ITC. It contemplated (during the relevant period) that the eligible ITC for each month would not exceed 10% of the eligible ITC available in respect of the Tax Invoices or Debit Notes, details of which stood furnished by the suppliers under sub-Section 1 of Section 36 in Form GSTR-1 or using Invoice Furnishing Facility (IFF). Therefore, if the first proviso to Rule 36(4) had not been introduced, the petitioner would stand non-suited. In fact, the dispute itself would not have arisen as neither party before us offers any different reading to the main part of Rule 36(4) of the Rules. To that extent, the learned Additional Advocate General is right in his submission that for the purpose of computation of eligible ITC in terms of Rule 36(4), the date of filing of GSTR-1 would remain relevant. No departure thereto may have been made so long as the first proviso to Rule 36(4) did not interject. Coming to the core issue of the language used, the proviso first contemplates that the condition prescribed under Rule 36(4) shall apply cumulatively. The word cumulative has not been defined under the Act or the Rules. However, plainly it conveys increase or addition to size (here quantum) with successive additions without corresponding losses (here deductions). It may be useful to refer to a few dictionary meanings given to the word cumulative - the condition contained in sub-Rule 4 of Rule 36 that the eligible ITC would not exceed 10% of the eligible credit as per Tax Invoice or Debit Note etc., filed on GSTR-1 would have to be seen cumulatively i.e., with all additions made, taken together. The period for which such cumulative effect was to be given has also been specified in that proviso, being for the months of February 2020 to August 2020. To that extent, there is no dispute between the parties. If the effort and intent of the legislature had only been to delay the computation of eligible ITC in terms of Rule 36(4), all that was required to be done was to extend the date of filing of return for the months of February 2020 to August 2020, to September 2020. As rightly submitted by the learned Additional Advocate General, that date of filing of monthly returns was never extended. All that was done by means of subsequent Notifications was to waive/reduce late filing fee, interest, and penalty liabilities. On the contrary, the date of filing of monthly returns remained unchanged. Though the Circular letter no. 113 dated 11.11.2019 was valid, it cannot be enforced contrary to the first proviso to Rule 36(4). It lost its efficacy and force and to that extent its relevance, for a limited period of February 2020 to August 2020. For that period, the law intervened and ruled otherwise. That is the plain effect in law caused by the first proviso to Rule 36(4). For the period to which the said proviso applies, the administrative instruction dated 11.11.2019 must survive in complete hibernation. Else, it may lose life to the higher statutory law. The revenue authorities have erred in relying on the said Circular letter to read a condition - as on date of filing the return in GSTR-I, all the suppliers for the said tax period . For that period, the said condition otherwise enforceable in law [by virtue of the language of Rule 36(4)], stood absolutely relaxed. To the extent the Circular dated 11.11.2019 is contrary to the first proviso to Rule 36(4) of the Rules, it would remain unenforceable in law. That principle is well settled. Insofar as the present petitioner had offered amount of ITC reconciliation by way of its explanation furnished in its reply dated 17.01.2021 and such facts are also stated in the writ petition which again have not been contradicted or denied as may support the objection being now raised, it is not appropriate to remit the matter to the assessing authority, for that purpose. The entire amount recovered may be returned to the petitioner within a period of six weeks from the date a copy of this order is served on the proper officer, by the petitioner. At the same time, the petitioner would remain entitled to interest that we provide @ 6% on the amount of excess recovery of Rs. 11,00,69,010/-, from the date of that excess recovery to the date of its actual refund. The impugned order is quashed - petition allowed.

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• 2023 (10) TMI 864
  Demand of interest - delayed filing of GSTR-3B returns - illegal suo moto migration effected by the respondent-Department - HELD THAT:- There is no dispute with regard to the directions issued by this Court in W.P. No. 27336 of 2022 [ 2022 (6) TMI 1437 - TELANGANA HIGH COURT ] , wherein this Court specifically directed the 3rd respondent i.e., Commissioner of Central Tax and Customs, Hyderabad GST Commissionerate, Hyderabad, to consider the representations of the petitioner after giving an opportunity of hearing to the petitioner and decide the same within a period of 30 days from the date of receipt of copy of this order. It is also an admitted fact that impugned order dated 24.11.2022 is not passed by the 3rd respondent i.e., Commissioner of Central Tax and Customs, Hyderabad GST Commissionerate, Hyderabad, but was passed by the 4th respondent i.e., Assistant Commissioner of Central Tax, on the direction of the 3rd respondent, which is per se contrary to the specific direction issued by this Court. The impugned order passed by the 4th respondent, who passed the impugned order despite specific objection taken by the petitioner in his written submissions that 4th respondent lacks legal authority to consider the representations in the light of specific directions issued by this Court to the 3rd respondent. Petition allowed.

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• Income Tax

• 2023 (10) TMI 923
  Doctrine of mutuality - satisfaction of three tests - Assessment of Verein registered as not-for-profit entity under the Swiss laws - Fees for technical services - framework of the Verein vis a vis its member firms - assessee is an association (Verein), established in Switzerland, with its members being Chartered Accountant firms situated across the world - whether recoveries made by the respondent/assessee Verein from its members could not be held to be in the nature of trading receipts? - HELD THAT:- As in the present case, as reflected from various Articles of Verein, it has been established with domicile in Zurich, Switzerland and consists of members that are Chartered Accountant firms engaged in rendering professional services in the fields of accounting, audit, insolvency, law, management, consulting etc. There are elaborate provisions in the Articles of Verein which prescribe the duties of member firms to Verein and vice versa as well as obligations of member firms to each other. Merely because members of Verein are able to avail various technological services and license to use goodwill of Verein, their contributions cannot be regarded as quid pro quo. The Articles of Verein clearly show that all member firms of Verein come together and contribute to a common fund for achieving common objectives, which objectives qua Verein are non-commercial objectives and that all member firms contribute towards budgeted operating expenses of Verein and are entitled to proportionate share in the surplus lying with Verein in case of dissolution. Nothing in the Articles of Verein even feebly indicates any commercial nexus between the contributions and benefits enjoyed by its member firms. There is, thus, a complete identity between contributors and participants. Consequently, the first test of mutuality stands satisfied. Second test of mutuality is non-profiteering - As held in the case of Yum Restaurants [ 2020 (4) TMI 827 - SUPREME COURT] the mutuality and non-profiteering character of the concern are to be determined in the light of its actual working structure; and the factum of corporation or incorporation or the firm in which it is clothed is immaterial. Therefore, one has to examine the actual framework of the Verein vis a vis its member firms. Read in entirety, the Articles of Verein clearly convey that it is formed for the benefits of the members by allowing them to be identified as members of the Verein so as to assure their respective clients of certain standards. The ultimate object of Verein is to benefit its member firms with the goodwill of the Verein as a whole, to which they add with their individual professional excellence on the basis of shared information and expenses in the field of their profession. Thus, the sole objective of the Verein is to benefit its members in lieu of subscription to evolve better professional practices.That being so, non-profiteering, the second test of mutuality also stands satisfied. Third test of mutuality is obedience to the mandate of the association for convenience and benefit of its contributors and participators - The expression mutuality flows from the expression mutual , which indicates reciprocity of arrangement in which the concerned parties have reciprocal rights or understanding or arrangement to abide by the mandate of the group for benefit of other members. And such arrangement is unlike an arrangement in which one member would be subjected to the absolute discretion of another in such a manner that the entire liability may fall upon one whereas benefits are reaped by all or all others. In a mutual concern, an obligation to pay may or may not be there but at the same time, an over ridding discretion of one member over others cannot be sustained in order to preserve the real essence of mutuality. In other words, the association created should operate only for the convenience and benefit of its members. Article 6.2(a) of the Articles of Verein mandates that in addition to all obligations, each member firm under the Articles, the supplemental regulation or otherwise shall support and adhere to the purposes and policies of the Verein; align national plans, strategies and operations with global plans strategies and operations in consultation with Verein Management; conduct itself in such a manner as to advance the reputation of the Verein; be bound by the requirements contained in resolution and protocols adopted by the Board of Directors or the governing bodies consistent with the Articles of Verein and supplemental regulations qua professional standards and methodologies, governance of the Verein and systems for quality control and risk management and other matters specified in or pursuant to the supplemental regulations. Article 6.2(b) stipulates that if due to local laws, any member firm is unable to comply with any of the provisions of the Articles or supplemental regulations or any other obligation undertaken in connection with membership of Verein it shall promptly inform the Verein of the particulars so that Verein may waive compliance or establish alternate requirement. Thus, third test of mutuality also stands satisfied in the present case. All three tests of mutuality having been satisfied as aforesaid, we are of the considered view that the receipts of the respondent/assessee Verein from its members were not in the nature of fees for technical services and that the same were exempt from tax having regard to the principle of mutuality . Accordingly, the substantial question of law framed above is answered in favour of the respondent/assessee and against the appellant/revenue. The order of the Tribunal, impugned in the present appeals is upheld and accordingly, the appeals stand disposed of.

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• 2023 (10) TMI 922
  Revision u/s 263 - Reference to dispute resolution panel not adhered - procedural compliance of Section 144C(1) flawed mandatory requirement of Section 144C(1) of the Act and pass a draft assessment order not followed - whether the failure to pass a draft assessment order before the final assessment, as required for a foreign company such as the Petitioner, invalidates the impugned order and the ensuing proceedings? - HELD THAT:- The provisions of Section 144C(1) of the Act provides that in case of an eligible assessee , an AO proposing to pass an assessment order, shall at the first instance, forward a draft assessment order to the assessee, in case they wish to make variations prejudicial to the interest of the assessee. On receipt of the draft assessment order, the eligible assessee has a remedy of filing objections before the DRP. It is undisputed and manifestly clear that no draft assessment order, as envisioned by Section 144C(1) of the Act, was ever framed in the present case. While the CIT exercised the revisionary powers enshrined u/s 263 this action was primarily rooted in the belief that the original assessment was erroneous and potentially detrimental to the revenue s interests. However, on remand, the AO passed the impugned order, revising the Petitioner s income, and increased its tax liability. Thus, the impugned order is clearly prejudicial to the interest of the assessee and a draft order should have been made available to the assessee. The mention of schematic and teleological method of interpretation underscores the significance of understanding the larger purpose behind a provision, rather than adopting a strictly literal interpretation. It must therefore be ascertained whether bypassing the procedures of Section 144C(1) would align with such an interpretative approach. In our opinion, the answer has to be in the negative. The process outlined in Section 144C(1) of the Act is not discretionary, but mandatory. It must be adhered to even when the assessment order is issued in line with directions from a higher authority. While Respondents argued that the provisions of Section 144C shall not apply to orders issued under Section 263, in our opinion, the exercise of revisionary powers does not dilute the requirement of compliance with Section 144C of the Act. The exception carved out in Section 144C(14A) extends to assessment/ re-assessment orders passed by the AO with the prior approval of the Principal Commissioner or Commissioner, as per Section 144BA(12) of the Act. The nature of proceedings initiated under Section 144BA differs from the ones commenced under Section 263 - Section 144C(14A) does not dispense with the AO s obligation to intimate a draft order to an eligible assessee, which term includes foreign companies like Petitioner. Respondent No. 1 s omission to pass a draft assessment order is not merely a procedural oversight, but a substantive lapse, which renders the subsequent impugned order devoid of jurisdiction. The question whether the final assessment order stands vitiated for failure to adhere to the mandatory requirement of first passing the draft assessment order in terms of Section 144C(1) of the Act is no longer res integra; there is a long series of decisions where the Court has explained the legal provision/ position. See TURNER INTERNATIONAL INDIA PVT. LTD [ 2017 (5) TMI 991 - DELHI HIGH COURT] , AND NOKIA INDIA PRIVATE LIMITED [ 2017 (9) TMI 1838 - DELHI HIGH COURT ] We hold that failure by Respondent No. 1 to adhere to the mandatory requirement of Section 144C(1) of the Act and pass a draft assessment order, would result in invalidation of the final assessment order and the consequent demand notice and penalty proceedings.

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• 2023 (10) TMI 921
  Limited scrutiny u/s 143(2) - AO jurisdiction in completing the assessment on grounds which were not subject matter of the limited scrutiny - HELD THAT:- Tribunal rightly allowed the assessee s appeal on the said issue. This Court had an occasion to consider a somewhat similar issue in the case of Sukhdham Infrastructures LLP [ 2023 (8) TMI 888 - CALCUTTA HIGH COURT] held that scheme of assessment as provided under Section 143 of the Act is a complete code by itself and the circumstances under which the power under sub-section (2) of Section 143 could be invoked has been clearly spelt out and on a reading of sub-section (3) of Section 143, it s evidently clear that on the day specified in the notice issued under sub-section (2), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points, and after taking into account all relevant material which he has gathered, the Assessing Officer shall, by an order in writing, make an assessment of the total income or loss of the assessee, and determine the sum payable by him or refund of any amount due to him on the basis of such assessment. Therefore, the question of part of the provision being procedural is an incorrect interpretation of the scheme provided u/s 143 of the Act. Decided against revenue.

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• 2023 (10) TMI 920
  Revision u/s 263 - deduction claimed u/s 35(2AB) not allowable - assessee had not submitted necessary documentary evidence i.e. Form 3CL issued by the prescribed authority (DSIR, New Delhi) which is mandatory to be filed on or before the due date of filing of return of income and has submitted only a certificate of recognition for in house R D unit - Tribunal setting aside the exercise of jurisdiction u/s 263 by Ld. PCIT as applying unamended Rule 35AC of the Income Tax Rules - HELD THAT:- Assessee filed certificate of the auditor certifying the expenditure during the course of assessment proceedings. With regard to Form 3CL, the same was issued by the prescribed authority on 20.07.2021 which was after passing of the assessment order under section 143(3) of the Act, and therefore, the assessee could not produce the same on or before the assessment order. Further, Form 3CL was duly filed by the assessee during the course of assessment vide letter dated 09.10.2019. Since the assessee has filed Form 3CL certifying his Research and Development (R D) facility approved by the prescribed authority in proper format, merely because the authority failed to send the intimation during the course of assessment proceedings could not be the reason for denying the claim deduction under section 35(2AB) of the Act. ITAT in our opinion is correct in holding that the order of the A.O. is not erroneous and prejudicial to the interest of revenue. Decided in favour of assessee.

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• 2023 (10) TMI 919
  Validity of assessment u/s 144B - violation of principles of natural justice - HELD THAT:- Prima facie, there are indications that the petitioner's reply dated 19.09.2022 has not been considered while passing the impugned order. Petitioner had also successfully made a request for video conferencing on 19.09.2022. However, the impugned order has been passed with two days thereafter i.e., on 21.09.2022. Thus, there is a clear violation of principles of natural justice. The impugned order is set aside and the case is remitted back to the respondent to pass a fresh order on merits and in accordance with law within a period of eight weeks from the date of receipt of a copy of this order after giving the petitioner an opportunity of being heard through video conferencing. The petitioner shall file a copy of reply dated 19.09.2022 before the date is fixed for a hearing through video conferencing.

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• 2023 (10) TMI 918
  Addition u/s. 56(2)(viib) - excess consideration received against issue of shares exceeding the fair market value of shares - case of the assessee company was selected for limited scrutiny for verifying the applicability of Section 56(2)(viib) as regards the large share premium received during the year under consideration - HELD THAT:- Addition made u/s. 56(2)(viib) which, as stated by the Ld. AR and, rightly so, is primarily based on the valuation of the land at Village Karanja, Bhilai. Although it is the claim of the Ld. AR that the land under consideration had been converted into diverted land, i.e., non-agricultural land for industrial usage (Dal Mill), which fact he had tried to justify by referring to the valuation report of the government approved valuer, but the said factual position had not been appreciated by the A.O while framing the assessment. The matter in all fairness requires to be revisited by the A.O who shall, in the course of set-aside proceedings, verify the aforesaid claim of the assessee, i.e., as to whether or not the 1.82 hectares of land which was originally purchased by it at Village Karanja, Bhilai on 18.06.2013 as an agricultural land, had thereafter, been converted by diversion letter dated 09.05.2014 into land for an industrial purpose (Dal Mill.). If the claim of the assessee company is found to be in order, then the A.O. shall determine the FMV of the said land by making reference to the District Valuation Officer (DVO). Maintainability of the claim of the assessee, that as per government guidelines (Rule 7), the value of the agricultural land at Vill. Karanja, Bhilai, as per the said rule, was to be subjected to a multiple factor of 2.5 for arriving at the value of the land in case the same is converted into diverted land shall also be looked into by the lower authorities in the course of the set-aside proceedings. Set aside the order of the CIT(Appeals) and restore the matter to the file of the A.O. for fresh adjudication. Grounds of appeal raised by the assessee company are allowed for statistical purposes in terms of the aforesaid observations.

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• 2023 (10) TMI 917
  Disallowance of interest paid on borrowed capital - interest paid on money borrowed which was capitalized under inventory' in books and claimed through Computation - Interest paid on money borrowed was claimed through computation of income as period cost, being revenue in nature and as per provisions of Section 36(1)(iii) read with Section 43-B - HELD THAT:- As Interest on money borrowed was paid to Banks and Financial Institutions, interest paid is allowable as deduction as per provisions of Section 36(1)(iii) read with provisions of Section 43-B of Income Tax Act, 1961 in the year in which payment is made irrespective of its treatment in books of accounts. The assessee has filed working to show that it has not claimed double benefit in any of earlier years or during the year under consideration in AY 2016-17 and in any of later years as in none of the years, total deduction claimed in respect of interest paid under various heads exceeds total interest paid in those relevant years. To disallow the interest paid under proviso to Section 36(1)(iii) it is necessary to show that the borrowed capital was utilized for the purposes acquiring new assets or for the extension of existing business or profession. The assessing officer has not made any case here that the borrowed capital was utilized for the purposes of new unit, land or capital asset and proviso to Section 36(1)(iii) is applicable. Similar claim of the assessee was allowed in respect of AY 2011-12, AY 2012-13, AY 2013-14, AY 2014-15, AY 201718 and in AY 2020-21. No evidences has been brought on record to justify the change in stand in this particular year. There is no finding given in the assessment order for upholding different view taken by the AO in the Assessment Order for AY 2016-17 as compared to view taken by him in AY 2014-15. Assessee appeal allowed.

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• 2023 (10) TMI 916
  TP adjustment - interest received by the assessee from the AEs - domestic PLR rate application - CIT(A) deleted the addition - HELD THAT:- We find that an identical issue has been decided by the Tribunal in assessee s own case for the assessment year 2010-11 [ 2023 (2) TMI 1197 - ITAT DELHI] affirming the order of the ld. CIT (Appeals) in deleting the TP adjustment on interest received by the assessee as held that domestic PLR cannot be applied to benchmark the rate of interest charged on foreign currency loans advanced to AEs located in foreign countries. The rate of interest on loans advanced by the assessee to AEs have to be in accordance with the rate of interest prevailing in the country of residence of the AEs wherein the loan was availed . This is the view expressed in case of CIT vs. Cotton Natural (I) Pvt. Ltd. [ 2015 (3) TMI 1031 - DELHI HIGH COURT] and many other decisions. Therefore, domestic PLR rate cannot be applied in respect of loans advanced in foreign currency to AEs situated in USA and Europe. As regards, the submission of learned Departmental Representative that certain guiding principles laid down by the Hon'ble jurisdictional High Court have not been followed, we are not convinced. Decided in favour of assessee. Disallowance made towards interest paid to subsidiary - HELD THAT:- As decided in assessee own case [ 2021 (10) TMI 276 - ITAT DELHI] AY 2009-10, deleted addition stating it is true that the loan was given in earlier F.Y and the assessee had sufficient own funds to give the loan. It is equally true that no disallowance was made in the earlier Assessment Year though the DRP 19 has observed that rest judicata is not applicable under Income Tax proceedings but, in our considered opinion, when the facts are same, and the law has not changed, then the rule of consistency ought to have been followed. Decided in favour of assessee. Disallowance u/s 14A r.w.r. 8D - assessee has not earned any exempt income - HELD THAT:- Admittedly there is no dividend income received by the assessee during the year under consideration. Thus, following the decision of Era Infrastructure (India) Ltd. [ 2022 (7) TMI 1093 - DELHI HIGH COURT] we hold that there cannot be any disallowance in the absence of any dividend income earned during the assessment year under consideration by the assessee. The ground raised by the Revenue is dismissed.

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• 2023 (10) TMI 915
  Validity of assessment u/s 144C - time limit for completing the assessment - HELD THAT:- We find that the issue is covered in favour of the assessee by the order of the Tribunal in the case of S.A. Chitra Ventures Ltd. [ 2022 (7) TMI 1474 - ITAT DELHI] wherein the co-ordinate bench on similar facts considering the decision of IPF India Property Cyprus [ 2020 (2) TMI 1500 - ITAT MUMBAI] held that the assessment order passed is barred by limitation. There is no dispute that if no draft assessment order was to be issued in this case, the assessment would have been time barred on 31 st December 2017 - Once we hold that no draft assessment order could have been issued in this case, as the provisions of Section 144C(1) could not have been invoked in this case, the time limit of completion of assessment was available only upto 31st December 2017. The mere issuance of draft assessment order, when it was legally not required to be issued, cannot end up enhancing the time limit for completing the assessment under section 143(3). We, therefore, uphold the plea of the assessee on this point as well. Thus we hold that the assessment order passed under section 143(3) read with section 144C(13) is barred by limitation for both the assessment years 2015-16 and 2016-17 - Decided in favour of assessee.

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• 2023 (10) TMI 914
  Artificial capital gains loss - colourable device to evade tax - Allegation of transfer of agricultural land to LLP to generation artificial loss to set off with capital gain - LLP created after conversion of Limited Company into LLP - Transfer as capital contribution at a value less than the cost of acquisition - HELD THAT:- Firstly, according to the learned AR, the transfer of shares was to LLP wherein the assessee and her relative have stake each whereas transfer of land was to Smilax Corporate Services LLP where the assessee and some others had a stake and, therefore, similar treatment has given in both the cases. It means that if the capital gains arising out of transfer of shares is accepted, the capital loss arising out of transfer of land should also be accepted. This argument is not convincing because, the composition of the LLPs, need, motive and other attendant circumstances of sale of shares need not be identical to the transfer of land. Parties having stakes in both the LLPs are not the same parties. We do not know what considerations weighed the sale of shares. There were no suspicious circumstances attending such a transaction of sale of shares. Authorities, however, delineated certain circumstances raising suspicion in respect of the transfer of land to Smilax Corporate Services LLP and such suspicion needs to be dispelled by the assessee with cogent reasons. Merely because the sale of shares is accepted, that by itself does not absolve the assessee from the need to explain the transaction of transfer of land. There is no such rule that one genuine transaction and one suspicious transaction, if any, have to be set-off against each other on the sole ground that in both the LLPs the assessee is a common partner. Such a concept is alien to law. We, therefore, brush aside this argument. One of the factors that provoked the suspicion of AO is in respect of the transfer of land to Smilax Corporate Services LLP is the conversion of Smilax Corporate Services Pvt. Ltd. into Smilax Corporate Services LLP just before the transfer of land at a value less than the cost of acquisition by the assessee. He held that such a transfer did not bring about any change either from the point of Smilax Corporate Services LLP or from assessee. This factor on an analysis led him to conclude that the conversion is only to bring the transaction within the purview of section 45(3) of the Act, recording of lesser value in the books of LLP in respect of such land than her cost of acquisition is only to introduce the artificial capital loss, and in that way, it is not a case of tax avoiding by proper tax planning, but it is a case of tax evading through a colourable devise. We can understand the genuineness of either conversion of company into LLP or the transfer of land if such conversion/transfer happens in the proximity of such a need. Except to introduce a colourable device, no other meaning is indicated in this transaction. Question here is, therefore, not whether the percentage of stake holding either in company or in the LLP changes the character of a transaction, but it throws some light to view the things in their proper perspective. Having regard to the common course of natural events, human conduct and public and private business, in their relation to the facts of this particular case, we are of the considered opinion that the capital losses said to have been incurred by the assessee are only notional and introduced artificially. Authorities below rightly disallowed the same. With this view of the matter, we do not find any illegality or irregularity in the findings of the authorities below and the same are upheld. Grounds of appeal are accordingly found devoid of merits. Decided against assessee.

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• 2023 (10) TMI 913
  Provision of expenses claimed as revenue expenditure - Claim disallowed by AO on the ground that assessee has not provided any evidences which prove that the expenditure debited are actually incurred for the business of the assessee - HELD THAT:- As the assessee has been consistently following this methodology for claiming expenses on a year to year basis and this practice has been accepted by the Department. CIT(A) has allowed the appeal of the assessee on identical set of facts for Assessment Years 2013-14, 2015-16 and 2016-17. Further, in the case of Novartis India Ltd. [ 2022 (12) TMI 168 - ITAT MUMBAI ] ITAT held that disallowance of excess / short year in provisions in current year and allowing in subsequent year is a revenue neutral exercise. ITAT Mumbai held that provisions made on best estimate basis is allowable as deduction as disallowance of excess and short year in provisions in the current year and allowing the same in the subsequent year is a revenue neutral exercise. Further, in the case of CIT vs. Triveni Engineering and Industries Ltd. [ 2010 (11) TMI 90 - DELHI HIGH COURT ] held that when admittedly, the expenditure incurred by the assessee on project was admissible deduction and only dispute was regarding the year of allowability of expenditure, considering that assessee was a company assessed at uniform rate of tax, entire exercise of seeking to disturb the year of allowability of expenditure would, in any case to a tax revenue neutral exercise. In our considered view, the Ld. CIT(A) has not erred in facts and in law in allowing the appeal of the assessee on this issue. Allowability u/s 40(a)(ia) - TDS provisions applicability when the recipient of such sum / income payable by the assessee is not identifiable - HELD THAT:- As in principle we agree with the aforesaid proposition laid down in the assessee s own case, however, we also observe that the assessee has taken a consistent position that such provision of expenses has been made by the assessee on the basis of actual services availed by the assessee during the year under consideration and such provision is made on a scientific basis. Therefore, it is not possible to accept the proposition that the recipients of income / payees are not identifiable at all by the assessee, since assessee has consistently maintained the position the provision for expenses has been made by the assessee on the basis of services which have been availed by the assessee during the year under consideration. This provision is reversed in the subsequent year, upon receipt of final bill / invoices which has been raised by the service provider and the actual amount is being booked by the assessee as expenses in the subsequent year. Accordingly, it cannot be accepted that the assessee is not aware about the identity of the recipients / payees when provision for expenses have been booked on the basis of services availed by the assessee. matter is being restored to the file of the AO with a direction to verify to ascertain in which specific cases the payees / recipients are not ascertainable and the amount payable to these recipients / payees cannot be determined and thereafter decide the issue in accordance with law, after giving due opportunity to the assessee of being heard. Accordingly, the matter is restored to the file of the Assessing with the aforesaid directions.

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• 2023 (10) TMI 912
  Cash sales during the demonetization period - unexplained cash credit u/s 68 - non-verification of sales during demonetization period as in most of the cases addresses are insufficient and the sales could not be verified - HELD THAT:- It is an admitted fact that there is an increase in cash deposit in the bank account of the assessee but this sudden spike in the cash deposit is attributable to two reasons. Firstly the recovery from the debtors and some special offers by the assessee to clear its stock by making cash sales. There is a sudden is increase in transactions during the demonetization. But then announcement of such a scheme is also not a regular feature and once such scheme is announced there has to be counter effects to such schemes and business concerns have to arrange their affairs accordingly. For instance normally the period of receiving outstanding amount from debtors is 2 to 3 months but when such scheme is announced each person tries to get free from the liabilities and available cash in hand. There is a chain reaction when such scheme is announced and there has to be an increase in the cash transactions of a business entity. On going through the sample purchase and sale bills, VAT audit reports, month -wise cash deposit and banks month wise cash receipt during the year, we do not find any reason to doubt the genuineness of the cash sale transactions made during the demonetisation period. Since all the cash transactions have duly been reflected in the gross sales during the year, purchases are not in dispute, net profit has been offered as per the past trend, no other defect has been pointed out by the AO in the books except the cash sales made during the demonetisation period, we thus do not find any reason to doubt the genuineness of the cash sale transactions - Decided in favour of assessee.

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• 2023 (10) TMI 911
  Deduction u/s 36(1)(viia) in respect of provision of the bad and doubtful debt - HELD THAT:- Tribunal in appeal arising from regular assessment order [ 2023 (8) TMI 630 - ITAT MUMBAI ] has already allowed the claim of deduction under section 36(1)(viia) as the assessee was carrying a provision at the year end, which being more than the claim of deduction U/s 36(1)(viia) of the Act, therefore no disallowance was required to be made and accordingly deleted the addition. Since, the Tribunal (supra) has already allowed claim of deduction of the assessee u/s 36(1)(viia) of the Act, accordingly, following the finding of the Tribunal (supra) , we direct the Assessing Officer to allow the claim of the deduction under section 36(1)(viia) to the extent of provision for bad and doubtful debt available at the year end. Inclusion of standard asset and restructured debt as part of non-performing assets (NPA) - Since now the assessee has forgone this claim for the year under consideration, we direct the Assessing Officer to verify this fact and exclude the standard asset and restructured debt as part of provision for bad and doubtful debt and allow the claim of the assessee for deduction under section 36(1)(viia) as discussed above. Liability for interest u/s 234B - HELD HAT:- As it is matter of verification whether the refund granted to the assessee u/s 143(1) exceed the refund granted on regular assessment. Before us no details of refund claimed and allowed u/s 143 (1) of the Act and refund which was due and allowed under regular assessment / reassessment , has been provided. Therefore, no infirmity in the direction of CIT(A) issued for verification. We again direct the Ao to comply with the direction of ld CIT(A), if not already complied. Accordingly, the ground of appeal of the assessee is allowed for statistical purpose. Interest u/s 244A - On perusal provisions of section 244A of the Act, we observe that legislature has provided for computation of the interest for every month or part of the month comprised in the period. Therefore, the finding of the Ld. CIT(A) that interest u/s 244A was to be calculated on annual basis is incorrect. Accordingly, we set aside the finding of the Ld. CIT(A) on the issue in dispute and restore the matter back to the file of the Assessing Officer for computing of the interest under section 244A of the Act in view of the provisions of section 119A(b) of the Act. The ground of the appeal of the assessee is accordingly allowed for statistical purposes.

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• 2023 (10) TMI 910
  MAT applicability on Debenture Redemption Reserve - deduction from the book profits of the appellant company computed as per section 115JB - HELD THAT:- As the assessee has been claiming Rs.100 Cr. as Debenture Redemption Reserve for the purpose of redemption of debenture worth Rs.500 Cr. and after going through the judgment of Srei Infrastructure Finance Ltd. [ 2015 (2) TMI 545 - DELHI HIGH COURT ] wherein in the case National Rayon Corporation [ 1997 (7) TMI 113 - SUPREME COURT ], Vazir Sultan Tobacco Company [ 1981 (9) TMI 105 - SUPREME COURT ], Molasses Storage Fund DCM Ltd. [ 2004 (10) TMI 578 - DELHI HIGH COURT ], Salem Co-operative Sugar Mills Ltd [ 1996 (9) TMI 40 - MADRAS HIGH COURT ], Pandavapura Sahakara Sakkare Kharkane Ltd. [ 1991 (9) TMI 38 - KARNATAKA HIGH COURT ], Somaiya Orgeno-Chemicals Ltd. [ 1993 (12) TMI 3 - BOMBAY HIGH COURT ] we hold that the provisions of Section 115JB(b) are applicable to the facts of the instant case. Addition u/s 41 - irrecoverably written off amount receivables from the assessee - assessee continued to claim the same as sundry creditors in their books of accounts - The facts proves that the assessee is absolved of their liability of Rs.16 .09 lacs and hence, we hold that the ld. CIT(A) has rightly confirmed the addition made by the AO.

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• 2023 (10) TMI 909
  Deduction u/s 80IA(4) - HELD THAT:- Landfill-I and Landfill-II as separate and independent undertakings. The Co-ordinate Bench in AY 2008-09 in [ 2021 (12) TMI 1292 - ITAT SURAT] clarified that Landfill-II is eligible to claim deduction u/s 80IA of the Act from AY 2008-09 being a separate infrastructure facility. It is relevant to note here that the Tribunal orders in AY 2007-08 [ 2017 (2) TMI 1493 - ITAT AHMEDABAD] and for AY 2008-09 [ 2021 (12) TMI 1292 - ITAT SURAT] were passed subsequent to the impugned order. Thus, the CIT(A) did not have the benefit of Tribunal orders for AY 2007-08 and AY 2008-09. In the light of decision of Co-ordinate Bench, ground no. 1 and 2 of appeal are allowed. Deduction u/s 80IA of the Act in respect of Incinerator-II - assessee for the purpose of safe storage/management/disposed of toxic waste has also set up incinerator - We find that the CIT(A) in the impugned order has rejected the claim of assessee by merely placing reliance on the order of his predecessor in AY 2011-12. The Co-ordinate Bench [ 2023 (4) TMI 1258 - ITAT SURAT] has reversed the findings of CIT(A). Taking into consideration the documents furnished by the assessee, we are of the view that the Incinerator Project-II is a separate undertaking eligible for deduction u/s 80IA(4) of the Act starting from AY 2012-13. The assessee succeeds on ground no. 3 of appeal. Disallowance made u/s 14A r.w.r. 8D under normal provision as well as u/s 115JB - It is an admitted position that in the period relevant to the assessment year 2012-13, the assessee has not earned any exempt income. It is no more res-integra that where the assessee has not earned any income exempt from tax, no disallowance u/s 14A of the Act is to be made. Hence, ground no. 4 of appeal is allowed. Disallowance of provision for post closure care expenditure under normal provision and u/s 115JB - In AY 2007-08, the Tribunal in appeal of the assessee [ 2017 (2) TMI 1493 - ITAT AHMEDABAD] deleted the disallowance placing reliance on earlier order of Tribunal in assessee s own case. In assessment year 2008-09, [ 2021 (12) TMI 1292 - ITAT SURAT] followed the decision of Tribunal in assessee s own case for AY 2007-08. No material has been brought on record by the Revenue to substantiate that there has been any change in the facts in the impugned assessment year. We see no reason to deviate from the consistent view taken by the Tribunal on this issue. Hence, assessee s claim of provision for post closure expenditure is allowed. Addition in respect of advances received from customers for treatment of waste as income of the assessee - AO added closing balances of the advances as income of the assessee - HELD THAT:- We find that Hon ble jurisdictional high court's decision in CIT vs. Unique Mercantile Services Pvt. Ltd. [ 2015 (1) TMI 525 - GUJARAT HIGH COURT] decides a similar question pertaining to membership fee spreading over to a time span of more than one assessment year to be taxable on prorata basis. We adopt the same reasoning herein as well and direct the Assessing Officer to assess the above stated non-refundable receipts by adopting similar proportionate computation formula. This Revenue's ground is accordingly accepted for statistical purposes. MAT computation on addition u/s 14A - A perusal of the impugned order shows that the CIT(A) has deleted disallowance u/s 14A of the Act while computing Book Profit u/s 115JB of the Act. Following the decision of the Special Bench in the case of ACIT vs. Vireet Investments [ 2017 (6) TMI 1124 - ITAT DELHI]

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• 2023 (10) TMI 908
  TDS liability u/s 194A - assessee in default - principle of Res-judicata - tds liability on interest payments to the nominal members - HELD THAT:- Law is settled on the issue of nominal members are to be considered as members of the cooperative society. Meaning thereby, the assessee was not required to deduct tax at source on interest payments to the nominal members. On parity of facts, following the judgment of CIT vs. Punjab State Co-operative Bank Ltd. [ 2008 (3) TMI 45 - HIGH COURT PUNJAB AND HARYANA ], has also held that the assessee was not required to deduct tax at source on interest payments to the nominal members, who are members of the society. As in the case of The Jalgon District Central Bank Vs Union of India and Ore [ 2003 (9) TMI 56 - BOMBAY HIGH COURT ] have adjudicated upon the question of whether the exemption granted to the co-operative society under Section 194A(3)(v) can be taken away be creating a distinction between duly registered member and a nominal member, which is unknown to the exemption clause contained in Section 194A(3)(v), gave a clear opinion that CBDT has no authority to make a crack in the exemption clause contained in Section 194A(3)(v) by issuing the impugned circular and that the CBDT cannot usurp the powers of Parliament by virtue of Section 119 of the IT Act, 1961. Meaning thereby that the CBDT, under the garb of Section 119 of the IT Act, 1961, cannot exercise wider powers than the powers bestowed on it. CBDT has no power to introduce a substantial change or alteration in the provisions of the IT Act. 1961, by importing the ideas unknown to the IT Act. 1961. The impugned circular, therefore, does not stand to the legal test. Accordingly, the impugned Circular No. 9 of 2002 dt. 11 th Sept., 2002 [F. No. 275/106/2000/IT(B)--Annexure A] was quashed and set aside. Thus, in our view, the reliance of the Worthy CIT(A) NFAC, Delhi on this circular is against law. Hon ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd. [ 2021 (1) TMI 488 - SUPREME COURT ] has also observed that the expression member is not defined in the Act. Since a cooperative society has been established under the provisions of the law made by the State Legislature in that regard, the expression member in section 80-P(2)(a)(i) must therefore, be construed in the context of the provisions of the law enacted by the state Legislature under which the cooperative society claiming exemption has been formed. Also in the assessee s own case for the proceeding in respect of the Assessment Year 2014-15, CIT(A) NFAC has accepted nominal members as members and held that interest paid to them is not liable for TDS u/s. 194 of the Income Tax Act, 1961 (Copy of Order filed on record). In view of the matter, we hold that the CIT/NFAC has acted against Res Judicata. We accept the grievance of the assessee genuine.

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• 2023 (10) TMI 907
  Revision u/s 263 - as per CIT AO accepted the claim of assessee regarding exemption u/s. 10(23C)(iiiab) wrongly - Applicability of Rule 2BBB - Percentage of Government Grant for considering university, hospital etc. as substantially financed by the Government - assessee had received grant at 33.5% of the total receipt - HELD THAT:- For adjudication for A.Y 2012-13, the ld. CIT(E) had utilised the power beyond jurisdiction. The Rule 2BBB was not applicable during the impugned assessment year. No prospective effect is allowed related to this Rule. Thus implementation of section 263 is beyond the jurisdiction for the revenue. The ld. CIT(E) has no power to implement the Rule 2BBB against the assessee. We fully relied on the order of the Tolani Education Society, [ 2013 (2) TMI 268 - BOMBAY HIGH COURT] DR had not placed any contrary fact against the assessee. The assessee is eligible for the exemption. The order passed u/s 263 is quashed. Assessee filed two returns u/s. 139(1) and 139(4) - Two different intimations u/s. 143(1) were emanated and the appeals were filed by the assessee against the two intimations for redressal of its grievance - A.Y. 2015-16 - CIT(A) was erred to reject the appeal without considering the merit of the case - interest of justice would be sub served if the impugned order is set aside and the matters are remitted back to the ld. CIT(A) for consideration thereof afresh. Form No. 10BB could not be filed along with the return of income - CBDT extended time for filing the Form No. 10BB. Accordingly delay caused by the assessee for filing the Form No. 10BB for assessment year 2016-17 is duly condoned. We remit back the matter to ld. CIT(A) for considering the issue in the light of the CBDT circular no. 19/2020. The said circular is applicable during impugned assessment year. The issue is first time agitated before the ITAT. The ld. DR had not made any objection against the submission of assessee. We accept the grounds of appeal of the assessee

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• 2023 (10) TMI 906
  Deduction u/s. 80IC - Allowability of interest from FDR s kept in four entities on account of power/electricity connection taken to run the factory, FDR against bank guarantee to Uttarakhand Environment Protection Pollution Control Board to get permission to run the plant, FDR for opening LC for import of goods, interest recovered from customers for credit term allowed against LC and bills were discounted on which interest were also paid - HELD THAT:- As earning of interest income by the assessee when we consider the preposition render in the case of CIT vs Seshasayee Paper Board Ltd. [ 1993 (8) TMI 46 - MADRAS HIGH COURT] then we clearly find that their Lordship speaking for High Court held that the interest received on deposit kept with electricity board has to be considered and should not be deducted from gross total income while computing deduction admissible u/s. 80I. In the present case the AO himself noted that the interest received by the assessee from four entities was due to FDR s kept with electricity board, environment board, for opening LC therefore, the impugned amount of interest has to be held derived from the eligible business entitle for deduction u/s. 80IC. However, amount of Rs. 54,680/- interest received on insurance claim cannot be held as derived from eligible business thus this part is should be reduced for the claim u/s. 80IC - Accordingly, ground no. 2 of assessee is partly allowed. Disallowance of deduction claimed u/s 80IC - late filling of income tax return - non-filing of return within prescribed time limit u/s. 139(1) - HELD THAT:- As the return of income of the assessee for AY 2015- 16 was filed beyond the prescribed time limit u/s 139(1) - CIT(A) has recorded a categorical finding that the assessee was prevented by sufficient cause in filing the return within the prescribed time limit perhaps due to illness of executive partner of assessee. Even in a situation the return of income of the assessee for AY 2015-16 is treated as belated return beyond the prescribed time limit provided u/s 139(1) then also, as per the judgement of case of G.M. Knitting Industries Pvt. Ltd. [ 2015 (11) TMI 397 - SC ORDER] which was followed by Krushi Vibhag Karmchari Vrund Sahakari Pat Sanstha [ 2022 (10) TMI 348 - ITAT NAGPUR] the assessee is very well entitled to claim deduction u/s 80IC of the Act. Therefore, we reach a logical conclusion that the assessee is entitled to get deduction u/s. 80IC of the Act, as the claiming such deduction, which is part of Chapter VI-A of the Act, in the return of income filed within prescribed time limit is not mandatory but directory. Therefore Assessing Officer is directed to allow claim of assessee u/s. 80IC - Decided in favour of assessee.

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• Customs

• 2023 (10) TMI 905
  Seeking grant of Bail - Smuggling - foreign origin gold - HELD THAT:- Considering the facts and circumstances of the case and the fact that the nothing has been recovered from the house or possession of the petitioner and his name transpired in this case on the basis of disclosure made by the apprehended persons from the spot, let the, above named, petitioner be released on bail on furnishing bail bond of Rs. 10,0000/- with two sureties of the like amount each to the satisfaction of learned Presiding Officer, Economic Offences Court, Patna in connection with Economic Offence P.S. Case No. 45(o) of 2023 arising out of Unit Case No. 01 of 2023 with the conditions imposed. Application allowed.

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• 2023 (10) TMI 904
  Jurisdiction - proper officer to issue SCN - Smuggling - beneficial owner - Violation of principles of natural justice - none of the relied upon documents in the Show Cause Notice were furnished to the petitioner by the respondent - HELD THAT:- The Customs Department is not handicapped. It is open to the Customs Department to trace the location from where the payment of the amount was made and the person who made such payment to the petitioner. It appears that there is either an attempt to shield the persons who were actually involved in the smuggling of the imported consignment of 2,01,13,000 pieces of sewing machine needles of various sizes of Brand Organ and Flying Tiger and 70,200 pieces of measuring tapes of various sizes or there is no will to trace out such a person. Therefore, the impugned order is unsustainable - there are no direct materials to infer that the petitioner was marketing or dealing in the smuggled goods. Therefore, the petitioner cannot be declared as the beneficial owner of the smuggled goods within the meaning of Section 2(3A) of the Customs Act, 1962. Unless, the petitioner himself imported the goods and exercised effective control over the smuggled imported goods, the petitioner cannot be called as the beneficial owner . Therefore, while it cannot be construed that the impugned Order-in-Original was passed without a proper authorization from an officer senior in rank to the officer who has passed the impugned Order-in-Original, the petitioner cannot be treated as a beneficial owner of the smuggled goods. The case is remitted back to the respondent to re-do the exercise for imposing penalty on the petitioner in proportion with the role played by the petitioner in the alleged attempt to smuggle 2,01,13,000 pieces of sewing machine needles of various sizes of Brand Organ and Flying Tiger and 70,200 pieces of measuring tapes of various sizes - Petition disposed off.

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• 2023 (10) TMI 903
  Validity of SCN - perceived statutory requirement of pre-notice consultation being undertaken before the issuance of a SCN - HELD THAT:- The concept of pre-notice consultation stands incorporated only in Section 28 of the Act and more particularly in terms of the First Proviso appended to sub-section (1) of that provision. The action which is proposed to be taken in terms of the SCN, however, rests on the provisions of Section 124 and the 1995 Rules. Those provisions neither mirror nor adopt the principles of pre-notice consultation. There are no merit in the challenge raised to the impugned SCN - petition dismissed.

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• 2023 (10) TMI 902
  Permission for withdrawal of present petition - Seeking grant of anticipatory bail - HELD THAT:- The petition is dismissed as withdrawn with liberty as sought for.

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• 2023 (10) TMI 901
  Classification of imported goods - Cotton Polyester Fabrics - classifiable under Customs Tariff Heading (CTH) 52113190 or classifiable under CTH 52114200 - goods imported having characteristics of Denim fabrics or not - Confiscation - redemption fine - penalty - HELD THAT:- There is no procedural error in the drawal of the samples and sending the remnant samples for retest as directed by this Tribunal. Accordingly, this objection raised by the Appellant is not sustainable. No material in the show cause notice to show that there was an assessment done in respect of all the four Bills of Entry - HELD THAT:- In the absence of any assessment so made, the question of short levy under section 28 would not arise. It is observed that Notice has been issued by the department proposing reclassification of the goods imported under the said four Bills of Entry. On adjudication, the Commissioner has reclassified the fabrics under the CTH 52114200. The classification dispute is further on appeal before this tribunal - During the course of this process, Notice can be issued for reclassification demanding duty as per the proposed new classification. The demand will be finally confirmed only when the classification dispute attains its finality. Thus, there is no infirmity in the demand issued under Section 28 of the Customs Act, 1962 . Accordingly, the objection raised by the Appellant on this count is not sustainable. Fabrics having the characteristics of Denim fabric cannot be equated with the Denim fabric itself, if it does not otherwise satisfy the requirements of Chapter Note 52 - In the present case, the sample fabric satisfy the requirements of Denim fabrics in the warp yarp yarn, but does not satisfy the requirement in the weft yarn as its composition contains 4% of elastomeric material. Also, the weft yarn does not satisfy the requirement in the chapter note unbleached, bleached or dyed, grey or coloured a lighter shade of the colour of the warp yarns . Thus, the fabric cannot be called ,Denim' fabric as per the Chapter Note 52, as it does not fulfill all the requirements of the chapter Note 52. For classifying the fabrics, it is found from the Test Report that the sample fabrics contains Cotton yarn: 79.2% Polyester Yarns - 16,8% and rest 4% being elastomeric material. The CTH 52113190 deals with Cotton Polyester Fabric. As per the Test Report, The fabric contains both Cotton and polyester in the ratio of 79.% and 16.8% respectively. Thus, the fabric is rightly classifiable under the CTH 52113190 as Cotton Polyester fabric. Accordingly, the classification declared by the Appellant in the Bills of entry is upheld and the department's reclassification of the fabric is rejected. Since, the fabric is classifiable under the CTH 52113190, the demand of differential duty of customs in the impugned order, is not sustainable. Since there is no misclassification of the goods imported, the confiscation of the goods is not warranted. Accordingly, the redemption fine imposed is not sustainable. For the same reason, the penalty imposed on the Appellant is also not sustainable. Appeal allowed.

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• 2023 (10) TMI 900
  Refund of SAD paid at the time of importation - rejection on the ground that the appellant did not pay VAT/Sales Tax while selling the goods in the domestic market - non-fulfilment of conditions as stipulated in the Notification No.102/2007 dated 14.09.2007 - appeal is barred by limitation as they have filed the appeal beyond the period of limitation as prescribed under section 128 of the Customs Act, 1962. HELD THAT:- On limitation the Ld.Commissioner(Appeals) observed that the adjudication order was dispatched on 02.04.2014 through Speed Post whereas in reply to the RTI, it is stated by the department that the adjudication order has been received by one Shri Puroshattam Giri on 01.04.2014. In that circumstances, there is contrary observations made by the Ld.Commissioner(Appeals). Moreover, the Ld.Commissioner(Appeals) mentioned the letter dated 09.06.2014 as 09.04.2014 and to that effect the appellant has filed an affidavit before this Tribunal stating that Shri Puroshattam Giri neither an employee of the appellant nor the appellant has authorized any person to collect the adjudication order and that affidavit is filed on oath, therefore, the benefit of doubt goes in favour of the appellant that they have received the adjudication order on 09.06.2014 as claimed and against the said order the appeal has been filed before the Ld.Commissioner(Appeals) on 19.08.2014, which is well within the condonable period in terms of Section 28 of the Customs Act, 1962. The appeal filed by the appellant before the Ld.Commissioner(Appeals) is not time barred. On that ground the appellant succeeds. The Ld.Commissioner(Appeals) has held that the refund claims are not maintainable on merits, as the same are time barred - It is found that there is no allegation in the show cause notice issued to the appellant that why not the refund claims be rejected as time barred. The adjudicating authority as well as the Ld.Commissioner(Appeals) has gone beyond the allegation in the show cause notice, which is not permissible in law, therefore, on merit also, the refund claim cannot be rejected as time barred as there is no allegation in the show cause notice - the impugned orders set aside - appeal allowed.

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• 2023 (10) TMI 899
  Confiscation of certain goods - imposition of redemption fine - penalty under Section 112(a) of the Customs Act - liability and claims pertaining to (ESIL) after approval of the Resolution Plan - HELD THAT:- The original case was booked against (ESIL) Essar Steel India Ltd. During the pendency of this case (ESIL) Essar Steel India Ltd underwent Corporate Insolvency Resolution Process (CIRP) under Insolvency and Bankruptcy Code, 2016 (IBC). The appellants were earlier known as Essar Steel India Ltd (ESIL). The appellant had imported certain scrap and paid duty thereon. However, later on, it was found that there was an excess of 1300 MTS as against declared quantity of 29307.318 metric tons. The said goods were confiscated under Section 111(m) of the Customs Act, and redemption fine of Rs.16.5 Lakhs, penalty of Rs. 3.5 Lakhs was imposed by original adjudicating authority under Section 112(a) of the Customs Act. The matter was challenged before the Commissioner (Appeals), and the Commissioner (Appeals) reduced the redemption fine from 16.5 to 5 Lakhs, and penalty from Rs. 3.5 Lakh to Rs. 1 Lakhs. In a similar situation in appellants own case, Tribunal in ARCELOR MITTAL NIPPON STEEL INDIA LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, SURAT-I [ 2023 (7) TMI 1303 - CESTAT AHMEDABAD] has observed that resolution plan has been approved by NCLT vide order dated 08.03.2019 according to which any government dues as on date of the NCLT order stand extinguished. In this position, we are of the view that the present appeal is liable to be disposed of as infructuous. The appeal becomes infructuous and the same is dismissed as infructuous - Appeal disposed off.

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• 2023 (10) TMI 898
  Revocation of Customs Broker License - forfeiture of security deposit - levy of penalty - contravention of conditions of re-export bond and instead of re-exporting, they diverted the goods for home consumption - HELD THAT:- The Custom Broker has a limited role of filing the bills of entry as per the instructions of importer and the authority of deciding the admissibility of any Exemption Notification was exclusively bestowed on Assistant/ Deputy Commissioner concerned as the Proper Officer under Section 143 of the Customs Act, 1962. In case of any violation of terms and conditions of the Exemption Notification by the importer, invocation of the terms and the conditions of Bond including that of re-export Bond is the exclusive liability of the Departmental Officer and in no way the responsibility can be shifted to the Customers Broker. The appellant as the customs broker at no stretch of imagination can be held liable for violation for the post import conditions of the Exemption Notification against which the consignment was cleared since no such authority has been bestowed on the appellant. Thus, the Appellant cannot be held responsible for the violation, if any, committed by the importer. Attention drawn to Tribunal s decision in the case of MR. G.N.D. CARGO MOVERS VERSUS COMMISSIONER OF CUSTOMS (GENERAL) , NEW DELHI [ 2017 (4) TMI 1160 - CESTAT NEW DELHI ] wherein it has been held that the requirement of Customs Broker to exercise due diligence to ascertain the correctness of any information which he imparts to clients with reference to work relating to clearance of cargo would arise only when the Customs Broker is aware of the importer s motive to mis-declare. In that case in each and every case of mis-declaration by the exporter, it can be concluded that Customs Broker did not suitably inform his clients. There has to be some evidence on record to show that either the Customs Broker was aware of such misdeclaration and suppressed the same with a mala fide mind or he has taken efforts to get the goods cleared from the Customs on the basis of wrong declaration made by him or has connived with the importer so as to aid and abet the wrong declaration which is not the case here. The impugned order revoking the Appellant s Custom Broker License and forfeiture of the Security Deposit, amounting to Rs. 75,000 under Regulation 18 of the Customs Brokers Licensing Regulations, 2013, is not sustainable - appeal allowed.

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• Corporate Laws

• 2023 (10) TMI 897
  Prayer for recall of the order dated 21.08.2023 - by order dated 21.08.2023, Appeals filed by the Appellant were dismissed on the ground of delay in filing the Appeals - HELD THAT:- When the Appellants themselves filed an application which was also disposed of by this Tribunal on 14.02.2023, they cannot be heard to say that they are not served the order. Thus, as per Section 421, Appeals were barred by limitation. In the judgment of Sagufa Ahmed [ 2020 (9) TMI 713 - SUPREME COURT] , it was held that till the free of cost copy is not supplied, the limitation will not commence. In the said case, the certified copy was also applied and then the Court held that when certified copy is applied, the claim on the basis of that till the free of cost copy is received limitation will not run, was rejected. The said judgment does not in any manner help the Appellant. Moreso, present is an application for recall of the judgment. The order passed by this Tribunal was passed after hearing the counsel for the Appellant. The ground for recall has already been settled by Five Member Bench s Judgment of this Tribunal in Union Bank of India (Erstwhile Corporation Bank) vs. Dinkar T. Venkatasubramanian Ors. [ 2023 (7) TMI 209 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] where grounds for recall are clearly laid down. There is no ground for recall of the judgment. Applications are rejected.

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• 2023 (10) TMI 896
  Grant of Interim Order - stay order on the implementation of the resolutions approved in the EGM - balance of convenience. Whether the Appellants were able to make out a case in their favour for interim order regarding the EGM dated 3.5.2019, and since the EGM took place on 3.5.2019, for granting stay order on the implementation of the resolutions approved in the EGM? HELD THAT:- It is clear from the ad-interim injunction given by NCLT vide order dated 18.11.2016 that EGM dated 21.11.2016 was allowed to be conducted to discuss only the ordinary business of Orbit Electricals and to only take necessary steps connected with statutory compliances required to be made urgently. Further, Orbit Electricals and other Respondents were restrained from not alienating the moveable assets as listed in the agenda of EGM scheduled to be held on 21.11.2016. The essence of this ad-interim injunction, even though granted only till the next date of hearing, is that Ld. NCLT, after considering and noticing relevant facts and arguments of the parties, allowed the EGM dated 21.11.2016 to be conducted to only discuss the ordinary business and take necessary approvals connected with the filing of the statutory compliances. The ad-interim injunction also restrained the Respondents from alienating the moveable assets to those that were enlisted in the agenda of the EGM to be held on 21.11.2016. The Learned Senior Counsel for Respondents has argued that the Articles 59 and 60 were not designated as entrenched articles as neither a specific notice under section 5(5) was given and moreover, only four out of thirteen members attended the EGM of Orbit Electricals Pvt. Ltd. held on 30.9.2014, which does not fulfil the requirement of section 5(4) - we are satisfied after considering the arguments and averments that Articles 59 and 60 can in a prima facie manner be considered as entrenched articles and therefore, their amendment/deletion in the EGM dated 3.5.2019 could have been done, after satisfaction of the provisions of sub-sections (3) and (4) of section 5 of the Companies Act, 2013. In particular, sub-section (4) of section 5 of the Companies Act, 2013 makes it necessary that an amendment in the Articles should be agreed to by all the members of the company, in the case of a private company. In order to consider whether a prima facie case has been made out in favour of the Appellants regarding the EGM dated 3.5.2019 and the implementation of the Resolutions passed in this EGM, we also look at the voting share of members present and voting in the EGM. It is noted that the shareholding of Prakash Pralhad Chhabria in R-1 company became 70.1% resulting in his having achieved majority shareholding in R-1 Company, was due to the fact that a Gift Deed was executed in his favour by his father Pralhad P. Chhabria on 28.3.2019, and subsequently, the Securities Transfer Form was also signed and executed on the same date i.e. 28.3.2019. The prima facie view that the Gift Deed, Securities Transfer Form and the holding of Board meeting on 31.3.2016 are all under a cloud of suspicion, especially since they sought to override the stated view and intention of PPC to apportion the business of the Finolex Group companies between his own children and nephews. Of course, the non-holding of Board Meeting on 31.3.2016 will be decided by the NCLT in CP 47/2016 which is pending - the balance of convenience lies in favour of Deepak Chhabria, the appellant who by virtue of being AR of Orbit Electricals in FCL has been able to continue as Chairman of FCL. The issue decided in favour of the Appellants by directing that, since EGM dated 3.5.2019 has taken place, the resolutions passed in the said EGM may not be acted upon and such an interim order should continue till the time CP No. 47/2016 is finally decided. Appeal disposed off.

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• Insolvency & Bankruptcy

• 2023 (10) TMI 895
  Initiation of CIRP u/s 7 - NCLT / NCLAT admitted the application - time limitation - A request for one time settlement (OTC) was made - The NCLT treated this letter to be an acknowledgement of debt - composite claims of the banks - NPA - long history of litigation before DRT - non-revival of right to sue - HELD THAT:- This Court has construed the purpose of the said provision to include bringing an action under the IBC on the strength of Section 19(22) and (22A) of the 1993 Act. In the said provision, however, so far as bringing a winding-up action is concerned, the right of a recovery certificate-holder as a deemed-decree holder has been confined to companies registered under the Companies Act, 2013 and certain other entities with which we are not concerned here. But in relation to initiating proceeding under the IBC or making a claim under the said Code, the restriction does not remain confined to the Companies Act, 2013. The corporate debtor in this proceeding was incorporated under the Companies Act, 1956. In the case of Kotak Mahindra [ 2022 (8) TMI 329 - SUPREME COURT ], credit facilities were extended to the borrower entities in the years 199394. It is obvious that the three corporate entities involved in that case were incorporated under the Companies Act that prevailed prior to coming into operation of 2013 Act. The position of law to guide the subject proceeding should be the same. In the event a financial creditor wants to pursue a recovery certificate as a deemed decree, he would get twelve years time. The argument of the appellant about maintainability of the application out of which this appeal arises on the ground of the application being barred under limitation, is not satisfying. The application with respect to the two recovery certificates issued in the year 2017 is maintainable. In the event the Appellate Tribunal is of opinion that the CIRP could not lie so far as the recovery certificate of 2015 is concerned, as the decree would be still alive, the claim based on the said recovery certificate could be segregated from the composite claim and the Committee of Creditors shall, in that event, treat the sum reflected in the said recovery certificate as part of the claims made in pursuance of the public announcement. This direction issued in exercise of our jurisdiction under Article 142 of the Constitution of India. Appeal dismissed.

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• 2023 (10) TMI 894
  Jurisdiction to extend the limitation for completion of the Corporate Insolvency Resolution Process (CIRP) beyond the statutory period as prescribed under Section 12 of IBC of 2016. HELD THAT:- Hon ble the Supreme Court in COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS [ 2019 (11) TMI 731 - SUPREME COURT] while striking down the word mandatorily , was of the view that if the CIRP is on the verge of being settled, then in such exceptional cases, the time for completion of the process may be extended even beyond the period of 330 days as stipulated in second proviso to Section 12(3) of IBC of 2016. Thus, any proposal for extension of CIRP beyond 330 days should clearly reflect that the extension was being granted on account of the fact that the CIRP was nearing completion and grant of one further extension would result to a positive outcome so that the Corporate Debtor could be put back on its feet. However, bare perusal of the order dated 25.08.2022, passed by the NCLT, Guwahati Bench makes it clear that there is no such indication in the order that the extension was being granted for the reason that the resolution plans submitted on record, were likely to revive and bring the Corporate Debtor back on its feet. Rather a perusal of the order would indicate that the same has been rendered in gross ignorance to the mandate of first proviso to Section 12(3) of the IBC of 2016. Appeal dismissed.

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• 2023 (10) TMI 893
  Maintainability of section 7 application - Initiation of CIRP - time barred debt or not - Amended Application filed beyond the statutory period of 3 years. The clear cut stand of the Appellant, is that, the Adjudicating Authority / Tribunal, had failed to appreciate that there was no authorisation to and in favour of Mr. J. Vijay Kumar, Asst. General Manager, who had signed the amended Petition, indeed, the requirement of specific authorisation, is mandatory, to prefer an Application, under Section 7 of the I B Code, 2016. HELD THAT:- An Application, under Section 7 of the Code, is not to be turned down, by an Adjudicating Authority / Tribunal , just on technical grounds . The reason for inability of a Corporate Debtor , to pay its Debt , is not to be looked into, by an Adjudicating Authority / Tribunal , while dealing with an Application (Filed by a Financial Creditor , under Section 7 of the I B Code, 2016). To put it differently, the situation / circumstances , under which, a Corporate Debtor , could not repay , the Financial Debt , need not be taken as a Defence , in a proceeding, under the Code - The Adjudicating Authority / Tribunal , need not wait for the determination, to be made by the Debt Recovery Tribunal . Although, Debt , is Disputed , if the Amount , is more than Rs.1 Lakh ( Rs.1 Crore , after amendment , to the Code ), the Application , under Section 7 , is maintainable in Law . It cannot be gainsaid that if a Debtor , acknowledge , receiving the Payment , but, chose to amuse itself, by denying the liability , the document , would still be one , that would keep the claim alive , within the ambit of Section 18 of the Limitation Act, 1963 . Also that, if the Sum , borrowed by the Respondent, is shown in the Balance Sheet , it may amount to an acknowledgement , and the Creditor , might have a fresh Period of Limitation , on the date on which, an acknowledgement , was made. As a matter of fact, the Balance Sheets of the Corporate Debtor , dated 16.08.2014, 27.08.2015 and 27.08.2016, the 1st Respondent / Bank, unerringly points out the admission of acknowledgment of liability , and therefore, it is established on the part of the 1st Respondent / Bank that its Claim , made in Section 7 Application , in CP (IB) No. 645 / 7 / HDB / 2018, dated 06.09.2018, but filed on 12.09.2018 (before the Adjudicating Authority / Tribunal ), is not a Time Barred one - In the instant case on hand, this Tribunal , points out on 31.08.2018, going by the Application (Filed by the 1st Respondent / Financial Creditor / Bank / Petitioner, under Section 7 of the Code, vide CP (IB) No. 645 / 7 / HDB / 2018), the Sum claimed to be in Default , was Rs.327,03,72,501.81/- (vide Page 76 of the Appellant s Appeal Paper Book, Vol-I, Form-I, Part IV - Particulars of Debt , at Page 79), from the Corporate Debtor / Vibha Agro Tech Limited . According to the 1st Respondent / Bank, the Outstanding Sum , claimed before the Interim Resolution Professional , is Rs.1,061.15 Crores. One cannot remain in oblivion of a vital fact that to commence a Corporate Insolvency Resolution Process proceedings, by the Financial Creditor , against the Corporate Debtor (under Section 7 of the I B Code, 2016), the twin requirements, (a) Debt and (b) Default, are to be proved and once they are established, then, the Application , which is complete in all respects, is to be admitted , by the Adjudicating Authority / Tribunal . In the present case on hand, the 1st Respondent / Bank, had claimed a Sum of Rs.327,03,72,501.81/- as Debt , due and payable , by the Corporate Debtor , as on 31.08.2018 (vide in its Application in CP (IB) No. 645 / 7 / HDB /2018, before the Adjudicating Authority / Tribunal ), this Tribunal , keeping in mind of the primordial fact(s) the Corporate Debtor , had tacitly Acknowledged , its Debt / Liability , in its Balance Sheets , for the Year ending 2013-14 dated 16.08.2014, for the Year ending 2014-15 dated 27.08.2015 and for the Year ending 2015-16 dated 27.08.2016, the same being not Barred by Time , taking note of the entire conspectus of the facts and circumstances of the present case, in an encircling manner, and exercising its subjective discretion, comes to a resultant conclusion that the aspect of Debt and Default , committed by the Corporate Debtor , have been duly proved by the 1st Respondent / Bank . The impugned order passed by the Adjudicating Authority ( National Company Law Tribunal , Bench I, Hyderabad) in admitting the Section 7 Application (Filed by the 1st Respondent / Bank / Financial Creditor / Petitioner), is free from any Legal Infirmities . Accordingly, the instant Appeal fails. Appeal dismissed.

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• 2023 (10) TMI 892
  Correctness of approved Resolution Plan - only 16% of the Dues of the Contractors / Operational Creditors has been allowed in the said Resolution Plan - violation of Section 30(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- This Tribunal while dealing with the batch of Appeals filed by the Employees of the Corporate Debtor Company in MRS. C.G. VIJYALAKSHMI VERSUS SHRI KUMAR RAJAN, RESOLUTION PROFESSIONAL, HINDUSTAN NEWSPRINT LIMITED, (CORPORATE DEBTOR) , COMMITTEE OF CREDITORS OF THE CORPORATE DEBTOR THROUGH RBL BANK LTD., RESOLUTION APPLICANT [ 2023 (3) TMI 18 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI] , challenging the very same Resolution Plan and the Order of the Adjudicating Authority, dated 29.01.2021, has allowed the Appeals in Part - it is specifically observed that this Tribunal, did not find any material irregularity in the Approval of the Resolution Plan, except for directing the Successful Resolution Applicant to make payment of the unpaid Provident Fund and Gratuity Fund and pending dues to the Employees, till the date of Corporate Insolvency Resolution Process, after deducting the amounts already paid. Regarding the rest of the allegations raised by the Appellants, this `Tribunal , did not find any evidence to support their contentions. As the Resolution Plan has already been implemented way back in the year 2021, specifically keeping in view that this Tribunal has confirmed the Approval of the Resolution Plan by the Adjudicating Authority, except for payment of unpaid Provident Fund and Gratuity Fund, this Tribunal does not find any merit in these Appeals. Appeal dismissed.

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• FEMA

• 2023 (10) TMI 891
  Foreign contribution utilized for undesirable purposes - Suspension of certificate - seeking Release/permit the Petitioner to utilize 25% of the total foreign contribution amount/funds held by the Petitioner u/s 13(2)(b) of the Foreign Contribution (Regulation) Act - HELD THAT:- Section 13(2) of the FCRA permits utilization of foreign contribution which is in custody of the person whose certificate has been suspended. There is no occasion to restrict the term his custody only to the current account. The amounts which are held in fixed deposits or in government bonds etc. are also unutilized foreign contributions which can be made available to the person whose account has been suspended pending the inquiry u/s 14 of the FCRA. There is no reason for this Court to disbelieve the statement that the Petitioner has already utilized the figures given by it regarding the expenses to be incurred for its survival pending consideration of the cancellation of registration u/s 14 of the FCRR. There is nothing in the said Section which restricts that only the amounts lying in the current account can be permitted to be utilized, this Court is inclined to allow the Petitioner to utilize the 25% of the total FCRA funds held it in fixed deposits, government bonds etc. pending consideration of the cancellation of registration under Section 14 of the FCRR. The outward disbursement of the amounts shall only be for the purpose of carrying out the day-to-day activities and for no other expenses. A complete statement of the Petitioner s FCRA account and the amounts deposited in fixed deposits and government bonds etc. along with expenses incurred from the date of suspension shall be submitted to the Respondent periodically.

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• PMLA

• 2023 (10) TMI 890
  Maintainability of petition - Availability of remedy under section 438 Cr.P.C. - Issuance of summons u/s 50(2) and (3) of the PMLA - Illegal detention/arrest by the Respondents and he will be made a scapegoat in order to protect the interest of the main promoters/alleged main beneficiaries of the company. HELD THAT:- The power to arrest is conspicuously absent in section 50 of the PMLA - Though section 19 of the PMLA empowers designated officers of the ED to arrest any person, subject to satisfying the conditions mentioned in that provision, it is clear that the power to arrest does not reside in section 50 nor does it arise as a natural corollary of summons issued under section 50. The power under section 50 of the PMLA to issue summons to a person and to require the production of documents and record statements, which is akin to the powers of a civil court, is different and distinct from the power under section 19 to arrest a person. These are two separate and distinct provisions. The exercise of the powers under one, cannot be restrained on the apprehension that it could lead to the exercise of powers under the other - this court would be loath to simply brushing aside the petitioner s contention that apart from filing the present petition, he has no other way of protecting himself from possible unlawful arrest at the hands of the ED and that he is remediless in law. This court is clear that if it is indeed true that the petitioner is remediless in relation to his grievance, a writ petition invoking the extraordinary plenary jurisdiction of this court under Article 226 of the Constitution would always lie. Availability of remedy under section 438 Cr.P.C. - HELD THAT:- A meaningful reading of the decision in Vijay Madanlal Choudhary [ 2022 (7) TMI 1316 - SUPREME COURT ], when it says that the underlying principles and rigours of section 45 of the PMLA, viz. the requirements of satisfying the additional twin conditions prescribed therein for obtaining bail, would apply equally to grant of bail under section 438 Cr.P.C., makes it clear that the remedy of applying for anticipatory bail under section 438 Cr.P.C. is available to the petitioner if he apprehends arrest under the PMLA. Though section 71 of the PMLA contains a non-obstante clause, there is nothing in the PMLA which restricts the court from granting relief under section 438 Cr.P.C. in an appropriate case. The only rider being that the twin conditions in section 45 of the PMLA will also have to be satisfied - In the opinion of this court therefore, there is no requirement in law for a prosecution complaint to have been filed for a person to maintain an application under section 438 Cr.P.C. Save for the stringent twin-conditions contained in section 45 PMLA, there is no provision in the PMLA which modifies the provisions of section 438 Cr.P.C. In fact it is the respondent s stand that the petition is not maintainable since the petitioner has no locus standi to seek quashing of an ECIR or the prosecution complaint in which he is not an accused. The respondent has also said that there is an alternate, efficacious remedy available to the petitioner, by way of an application seeking anticipatory bail under section 438 Cr.P.C., which remedy he would be entitled to seek at the appropriate stage. This court does not deem it necessary to entertain the present writ petition seeking quashing of the impugned ECIR, since the petition is premature - Once this court has held that an application seeking anticipatory bail is maintainable notwithstanding that the petitioner is not named as an accused in the ECIR or in the prosecution complaint, this court cannot delve into whether the concerned court before whom the application under section 438 Cr.P.C. is filed would, or would not, grant relief to the petitioner. Petition dismissed.

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• Service Tax

• 2023 (10) TMI 889
  Service Tax Audit - Post GST era - Power of Officers of the Central Goods and Service Tax Audit to conduct audit as per Section 174 (2) (e) (f) of the Act of 2017 read with the Act of 1994 - HELD THAT:- W.e.f. 01.07.2017, i.e. the date on which the CGST Act of 2017 came into force, all such powers which were vested upon the authorities in respect to the period prior to 01.07.2017 pertaining to inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication or other legal proceedings etc. were saved as if the Act of 1994 had not been amended or repealed. How the authorities would exercise their powers which were saved in respect to the period prior to 01.07.2017? - HELD THAT:- A perusal of Section 174 (2) (e) of the CGST Act, 2017 shows that the various powers of the authorities were saved including the power to scrutiny and audit. However, the procedure in which the power of audit is to be exercised which is Section 72(A) of the Act of 1994 is not saved - Reference in this regard is made to the observation of the Supreme Court in the case of Vivek Narayan Sharma and Others vs. Union of India and Others, [ 2023 (1) TMI 337 - SUPREME COURT] wherein at paragraph No.148, the Supreme Court observed that an interpretation which advances the purpose of the Act and which ensures the smooth and harmonious working should be chosen. Now coming into the facts involved in the instant case, it would be seen that for the period from April, 2012 to March, 2015, audit was duly completed. Subsequent thereto, on 17.08.2017, there was initiation of audit for the period from April, 2015 to 30.06.2017 - the provision of Section 73 of the Act of 1994 empowers the Central Excise Officer to issue demand-cum-show cause notice within a period of 30 months from the relevant date and if it falls within the proviso to Sub-Section (1) of Section 73 of the Act of 1994 within 5 years. This power to do so has been saved under Section 174 (2) (e) of the Act of 2017. It is also seen from Section 174 (2) (e) of the Act of 2017 that not only the said power to make recovery is saved, but to carry out investigation, enquiry and verification (including scrutiny and audit) have also been saved. In view of coming into effect the CGST Act of 2017, if any audit is carried out for the purpose of verification or investigation, the same has to be done in terms with Chapter- XIII of the CGST Act of 2017. At the cost of repetition, Chapter-XIII of the CGST Act of 20017 has two Sections, i.e. Section 65 which relates to audit by Tax Authorities and Section 66 which relates to Special audit. The question for interference with the said demand-cum-show cause notice as well as the impugned audit so carried out is devoid of any merit - Petition dismissed.

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• 2023 (10) TMI 888
  Relevant time for calculation of interest on delayed refund - interest is payable after three months from the date of filing of refund application in terms of Section 11BB of the Central Excise Act, 1944 or from the date of order of this Hon ble Tribunal allowing the refund claim? HELD THAT:- As per the section 11BB the assessee is entitle for the interest on the refund after three months from the date of filing of application for refund. In the present case there is no dispute that after making suo-moto payment of Service Tax, the appellant first time filed the refund application on the various dates as given in the respective refund claims filed first time. It is these dates on which the refund applications were filed. Accordingly, as per the Section 11BB the appellant are entitled for the interest after three months from such dates of filing the refund applications. The contention of the Revenue which is based on sub clause (ec) of clause (B) of Sub Section (5) of the Section 11B of the Central Excise Act, 1944 shall apply only in a case where there is a demand case where initially the demand is confirmed by the lower Authority, and when the same is set aside by the Tribunal /High Court /Supreme Court then only refund arises. In such case only, after setting aside the demand the refund arises out of such order by which demand was set aside and in that case only the interest is payable from the three months after the date of order of Tribunal/High Court/Supreme Court as the case may be. However, the contention of the revenue does not apply in a case where there is no demand but the case is of refund of suo-moto payment of service tax - Accordingly, the appellant is legally entitled for the interest after three months from the date of application for refund made first time. This issue has been considered in various judgments particularly in the Apex Court judgment of Ranbaxy Laboratories Ltd. [ 2011 (10) TMI 16 - SUPREME COURT ], wherein it was held that the liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made - The fact of the present case is identical to the facts in the aforesaid Hon ble Supreme Court judgment, in the above judgment also it was the department s contention that the interest is payable from the date of refund order. Hence the ratio of the aforecited Apex Court judgment is directly applicable. In the present case also the department is considering the date after the Tribunal has passed the order - there is absolute no doubt that the appellant is entitled for the interest after three months from the date of refund applications as mentioned in respective refund applications filed first time after suo-moto payment of Service Tax and interest thereon. In the facts of the present case this Tribunal can order for grant of interest only in terms of section 11BB and not beyond that. Needless to say that the Appellant have liberty to approach the Hon ble High court for the interest from the date of deposit till the date which is after three months from the date of filing of application. Appeal allowed.

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• 2023 (10) TMI 887
  Levy of service tax - service of renting of immovable Property or not - permanent transfer of the lease hold rights by the Appellant to the Business entities - to be termed as sub-lease to bring it under the ambit of levy of service tax or it can be termed as sale of leasehold rights which is not liable to service tax? - time limitation. HELD THAT:- The terms and conditions of the Deeds of Assignment clearly indicate that it is not a lease or sub-lease as alleged in the impugned order. In the instant cases, from the Deed of Assignment, it is observed that the Appellant does not have any reversionary right of the property after the after the permanent transfer of their leasehold rights to the three Business Entities. It is only the assignees who have the right to get the lease renewed in their favour after completing the formalities directly with the Govt. of West Bengal and the Appellant does not have any role in this regard. The permanent assignment of land cannot be called as 'lease' and hence it would not fall under the definition of taxable service as defined under Section 65(105)(zzzz) of the Finance Act,1994 - It is observed that once the Appellant executed the Deed of Assignment in favour of the three business entities, the 'Title' of the land which has been assigned to them has been transferred in the name of the said three parties. Subsequently, lands have also been mutated in the name of the respective parties. Therefore, the transaction must be treated as 'sale of leasehold rights' and service tax would not be applicable on the outright transfer of rights. Further, after the transfer, the 'rent' was payable by the three Business Entities directly to the DLLRO and not to the Appellant - the transaction undertaken by the Appellant cannot be termed as 'lease' or 'sub-lease' for the purpose of levy of service tax.\ It is observed that after the execution of Deeds of Assignment and permanent transfer of leasehold rights by the Appellant in favour of the Assignees, the Title of the land which has been assigned to the Appellant has also been transferred in the name of the said three parties and lands have already been mutated in the name of the respective parties. This is evident from the clarification issued by the DLLRO. Therefore, the transaction must be treated as 'sale of leasehold rights' and service tax would not be applicable on the outright transfer of rights for a period of 99 years. In the instant case, the Appellant has not received any 'rent' from the assignees and the rent is payable by the assignees to the state of West Bengal through DLLRO. Accordingly, the premium or salami paid to the Appellant for transfer of interest in the property, is not exigible to the service tax as held by the Tribunal in the case of Greater Noida Industrial Development authority vs Commissioner of Central Excise and Service Tax, Noida [ 2014 (9) TMI 306 - CESTAT NEW DELHI ]. Time Limitation - HELD THAT:- The Appellant has furnished all information regarding the Deeds of assignment executed by them vide letter dated 26.08.2013. The Notice was issued on 11.06.2015, more than two years after all information was furbished by them to the investigating officers. Even otherwise, all information regarding the receipts from the said Business Entities are available in their profit and loss account. They were filing returns regularly and disclosed the rent income in which they have paid service tax. If the department has any doubt about the service tax paid by them, they could have clarified the same with the Appellant. Even after knowing the details, the officers took almost two years to issue the Notice. In view of the above, there is no suppression involved in this case and the entire demand issued in this case is barred by limitation. Accordingly, the demand is not sustainable on the ground of limitation also. The demands of duty along with interest and imposition of penalty in the impugned order is not sustainable - Appeal allowed.

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• 2023 (10) TMI 886
  Levy of service tax along with interest and penalties - sale and supply of food as well as beverages in the multiplex theatre premises - declared services or not - Constitutional validity of the provision introduced under Section 66E of the Finance Act, 1994 - vires of Rule 2C of the Service Tax (Determination of Value) Rules, 2006 - extended period of limitation. HELD THAT:- A bare reading of sub sub-section (i) and (ii) of Section 65B(44)(a) would clearly indicate that transfer of goods by way of sale etc. as well as transfer, delivery or supply of goods as explained under Clause 29A of Article 366 as deemed sale are not services within the definition of Section 65B(44) of the Finance Act, 1994. Having gone through the definition of service, one would be tempted to find out the provisions contained in Clause 29A of Article 366 of the Constitution that explained as to what kind of transfer, delivery or supply of goods were treated as deemed sale and not subjected to Service Tax. To ensure that for both sale of food/drinks and its associated services required to be extended in a Restaurant but the payments collected by way of sales tax would go to the State Exchequers and primarily for this reason Composite activity of both sale and service were put under the category of deemed to be sale . The issue of taxability on food items has covered a checkered path and no definite reason can be attributed to it as to why the item is sometimes considered as sale of goods or service offered during supply of goods - introduction of Section 66E(i) in Finance Act, 1994 w.e.f. 1st July, 2012 read with mega exemption Notification No. 25/2012-ST dated 20th June, 2012 that exempted payment of Service Tax by Restaurants, eating joints or mess providing service in relation to food or beverages other than those having facilities of air conditioning or central air heating at any part of the establishment and subsequent Circular No. 334/3/2011 Circular No. 173/8/2013 on Service Tax that had pin pointed on the exact nature of service offered in specific type of Restaurant, so as to cover them under Service Tax network would go to say that sale of food is completely separated from the rest of services associated with it to make the same complete and thereby the deeming provision attached to such sale is taken away without making any alteration or amendment in the Constitutional provision. There are two other legal issues raised by the Appellant that would be dealt in determining the legality of the levy of Service Tax on it. Appellant has contended that when VAT on the entire value has been discharged by the Appellant, Service Tax is not leviable - having regard to the fact that validity of payment of Service Tax on supply of food in air condition ambiance in a Restaurants being held to have assumed predominance over sale of food, Appellant is liable to pay Service Tax on the service component determined through abatement procedure. The other contention of the Appellant is that the subsequent show-cause notices issued by the jurisdictional Commissioner for the remaining period were issued wrongly under Section 73(1)A of the Finance Act, 1994 by referring to and relying on the earlier show cause notice originally issued by the DGCI which is not in conformity to the wordings available in Section 73(1A) that pre-supposes that the same Central Excise Officer is authorised to issue subsequent notice under Section 73(1A) and, therefore, the entire proceeding was initiated by an authority having no jurisdiction to issue showcause notice - It is refrained from given any finding on the issue as the Appellant was not able to substantiate that in such a circumstances the entire proceeding would be vitiated except placing reliance on the decision of the Hon'ble Supreme Court in DEEPAK AGRO FOODS VERSUS STATE OF RAJASTHAN AND OTHERS [ 2008 (7) TMI 553 - SUPREME COURT] where in it was observed that the said issue is required to be decided at the first instance, apart from the fact that allegation in detail is also found reflected in the subsequent show-cause notice issued on 27.09.2018 and show-cause notice dated 06.04.2016 issued by the Commissioner, which were apparently based on showcause notice dated 08.10.2014 while no indication is available in show-cause notice dated 06.04.2015 that it was issued U/s 73(1A) of the Finance Act, 1994. Time limitation - Appellants has urged limitation as a ground for non-sustenance of the allegations raised in the show cause notice - HELD THAT:- Having regard to the submissions and points urged by the Appellant before the Adjudicating Authority which would go clearly to justify non-payment of Service Tax for the past period was not intended for tax evasion as after introduction of Section 66E(i) of the Finance Act, 1994, representation had been filed not only by Multiplex Association of India but by the Appellant himself in its individual capacity on 26.03.2013 before the CBEC seeking clarification as regards to applicability of Service Tax on food and beverages sold by the Appellants and the same representation remained unanswered till Appellant received the show-cause notice for the period October, 2015 onwards (para - 1.11 and para - 1.12) of the Order-in-Original). Therefore, the charge of suppression of fact with intention to evade payment of tax cannot be fastened against the Appellant even though it was diligently pursuing the matter before a wrong forum like CBEC and not before the concerned Commissionerate - extended period cannot be invoked. Penalties - HELD THAT:- No penalty against CFO Mr. Upen Shah could be made out from the order of the Commissioner since it is not found from the said order about the exact nature of allegation concerning his involvement or his personal knowledge about the same as could be noticed from his order, besides the fact that they were waiting for the CBEC response to their query on taxability of sale of food made by them - Penalties against the Appellants company under Section 75 76 could also not stand for the reason aforesaid. Appeal allowed in part.

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• 2023 (10) TMI 885
  Validity of SCN - SCN issued on the basis of the earlier order of the Adjudicating Authority - earlier remand not yet been completed - Levy of Service Tax - warranty service provided to the customers - Appellant claims it to be free service as no amount was recover from the customers towards warranty - HELD THAT:- The present show-cause notice being issued on the basis of the earlier order of the Adjudicating Authority, with consent and concurrence of both the parties, having regard to the fact that de novo adjudication in respect of earlier remand has not yet been completed, it is considered proper to remand the matter back to the Commissioner for re-adjudication in terms of the direction contained in Hon'ble Bombay High Court in Tata Motors Ltd. [ 2023 (7) TMI 952 - BOMBAY HIGH COURT ] in respect of the previous period. Appeal allowed by way of remand.

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• 2023 (10) TMI 884
  Violation of principles of natural justice - impugned order passed without properly appreciating the facts and law - non-appreciation of complete facts - SSI Exemption - Business Auxiliary Service - Invocation of Extended period of limitation - Penalty - HELD THAT:- The demand of service tax for the period from 1st April 2003 to March 2005 is prima facie wrong because the appellant has started rendering services to M/s IBP Co. Ltd. from 01.09.2005 as is clear from the agreement dated 01.09.2005 which has been accepted in the order-in-original. The appellant is entitled to SSI exemption for the period 2005-2006 because their turnover was less than 4.00 lacs in that financial year which entitles them for SSI exemption in terms of Notification No. 06/2005-ST dated 01.03.2005. In the case of Commissioner of Central Excise, Chandigarh vs. Loan Zone [ 2015 (12) TMI 269 - CESTAT NEW DELHI ] wherein identical facts were involved and it was held that the service is not provided to independent persons but to service recipient who is itself brand name owner. Invocation of Extended period of limitation - Penalty - HELD THAT:- In the present case, invoking the extended period of limitation is not justified simply on the ground that there was no payment of tax and no return was filed as held in the case of Punjab Technical University [ 2016 (1) TMI 162 - CESTAT NEW DELHI] - imposition of penalty under Section 76 and 77 are bad in law as per the judgement of the Hon ble Punjab and Haryana. The entire demand is barred by limitation - the appellant was entitled to the SSI exemption in view of the facts of this case - Appeal allowed.

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• 2023 (10) TMI 883
  Principles of natural justice - facts not verified properly - appellant have claimed abatement and also have taken the Cenvat Credit and utilized the same towards payment of Service Tax - HELD THAT:- The Appellant claims that since they were not put to notice on this count, they could not address the same while filing their reply before the Adjudicating Authority - Since the factual details are required to be properly verified, the Appeal has to be remanded to the Adjudicating Authority. Appeal allowed by way of remand.

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• 2023 (10) TMI 882
  Classification of services - Business Auxiliary Service or not - commission received in convertible foreign currency - export of services - exemption from service tax or not - Board Circular No. 111/5/2009-ST dated 24.02.2009 - penalties - HELD THAT:- Business Auxiliary Service rendered by the Appellant falls under category of Rule 3(1)(iii) mentioned above. As per the clarification cited, the services rendered by the Appellant would be considered as export of service, if they are provided in relation to business or commerce to a recipient outside India and the consideration is received in foreign exchange. The Circular further clarifies that in respect of the services falling under Rule 3(1)(iii), ie, for services such as BAS, the relevant factor to determine whether it is export or not is the location of the service receiver and not the place of performance - In the present case, the Appellant as an agent of Wacker, Germany procured orders and passed it on to the principal in Germany. Thus, the benefit accrued to the principal in Germany. Thus, as per the clarification cited, the services rendered by the Appellant would be 'Export of Service' and hence not liable to service tax. The demand of service tax along with interest is not sustainable in this case - there is no suppression involved in this case and penalty imposed in the impugned order set aside - The department is fully aware of the fact of the Appellant receiving Commission from Wacker, Germany as is evident from the Spot Memo dated 15.09.2009 and also from the 'Agency Agreement'. thus, no penalty imposable in this case. Appeal allowed.

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• 2023 (10) TMI 881
  Refund of amount paid under protest - Reversal of cenvat credit - Part of the demand was confirmed - amount under section 35F of Central Excise Act, 1944 - period of limitation. Whether the amount has rightly been denied to be an amount under section 35F of Central Excise Act, 1944 wrongly (CEA)? - HELD THAT:- Hon ble Apex Court in the case of MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1996 (12) TMI 50 - SUPREME COURT] has held that amount paid during pendency of investigation/adjudication shall be treated as the amount paid under protest akin to the amount of pre-deposit under section 35F (CEA) - it is observed that there is no denial to the fact that Rs.8,49,545/- was deposited under section 35F in addition to impugned amount has already been refunded to the appellant. Hence irrespective the amount in question being the amount paid under protest has acquired the character of amount pre-deposit, but the said amount cannot be called as amount deposited under section 35F. Hence the question of applicability of section 35FF does not arise. Whether the period of limitation has wrongly been applied? - HELD THAT:- Once it is and held that the refund is under section 11B of the Act, the time limit of one year is applicable to the said refund. The relevant date in the given circumstance is held to be the date of Order-in-Original dated 23.10.2020. The refund claim was filed on 03.09.2021. It becomes clear that the refund claim was well within the limit prescribed by the Statute. Hence, the refund claim has wrongly been barred by limitation. Admittedly an amount of Rs.5,25,141/- alongwith amount of interest (Rs.2,45,515/-) was already deposited with the department. After appropriating the same to the extent of demand confirmed, the balance amount of Rs.4,22,832/- plus Rs.2,45,515/- i.e.Rs.6,65,347/-, is to be refunded. The department cannot retain the same for want of any authority with them to retain. Hence they are held liable to refund the same alongwith the interest @ 6% from the date of order dated 23.10.2020 till the date of payment thereof. Appeal allowed.

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• 2023 (10) TMI 880
  Appropriation of amount of Rs. 1,50,00,000/-, which the appellant had deposited during the investigation itself - time limitation - HELD THAT:- As far as the assertion that part of the demand was issued beyond the normal period of limitation is concerned, as is evident from the dates indicated, the SCN has not been issued for any period beyond 18 months from the relevant date, which was the normal period of limitation during the period of the SCN. Therefore, there is no case to reduce the demand as prayed for by the appellant. Consequently, there is no case to reduce penalty proportionately. As far as the appropriation of Rs. 1,50,00,000/- admittedly deposited by the appellant during the investigation is concerned, it is seen that this amount should have been appropriated in the impugned order. Appeal allowed in part to the extent that an amount of Rs. 1,50,00,000/- deposited by the appellant stands appropriated against the confirmed demand. The remaining part of the impugned order is upheld.

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• Central Excise

• 2023 (10) TMI 879
  Violation of principles of unjust enrichment - failure to prove that duty burden has not been passed ignoring the evidence of records in the form of Books of Accounts, certificate from Oil marketing PSUs, especially in the backdrop of presumptive statutory provisions under Section 12B of Central Excise Act, 1944 - HELD THAT:- The assessee has shown duty element in the invoices as per the provisions of S.12-A of the Act. It is also stated that the same has not been recovered from their customers and the excess paid amount of Rs.32,65,057/- is shown as outstanding balance as receivables in their balance-sheet - Nonetheless, nothing concrete has been placed on record that the duty element shown in the invoices issued to customers has not been recovered from the customers. Under such circumstances, the concurrent finding of Tribunal that it is a case of unjust enrichment cannot be faulted with and the assessee has rightly been held not entitled to refund of Rs.32,65,057/- as excess amount of excise duty. In none of the documents viz. Books of Accounts or certificate from Oil marketing PSUs, as mentioned in the substantial question framed, the assessee has shown to have not actually recovered the excess excise duty from the buyers. The substantial question of law is answered in the affirmative and in favour of the revenue - Appeal dismissed.

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• 2023 (10) TMI 878
  Entitlement to avail the credit of duty paid by the input supplier - correctness of denial of credit on the ground that the activity as the input supplier end was a non-manufacturing activity and thus the input supplier should not have paid the duty. HELD THAT:- In the present case, the Tribunal has rightly allowed the appeal of the assessee by observing that even if the activity at the end of the input supplier has been held to be a non-manufacturing activity, the input recipient would be entitled to the credit of the duty so paid by the input manufacturer and rightly set aside the order dated 21.01.2013 passed by the Commissioner of Central Excise Delhi-III Commissionerate, Gurgaon, for recovery of inadmissible Cenvat Credit of Rs.43,55,22,721/- alongwith interest (Annexure A-7). No substantial question of law arises for consideration. The present appeal is dismissed.

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• 2023 (10) TMI 877
  Exemption when the goods are used elsewhere other than the factory of production - product Danazol which is a bulk drug or medicine - appellant had cleared the product Danazol to other manufacturers like M/s. Arvind Remedies - Sl. No. 47A of the Notification No. 4/2006-CE dated 1.3.2006 - Rule 6(3) of CENVAT Credit Rules, 2004. Whether the product Danazol which is a bulk drug would fall under Sl. No. 47A of Notification No. 4/2006-CE dated 1.3.2006 or it has to be considered as drug or medicine which falls under Sl. No. 47B of the said Notification? - HELD THAT:- In case the goods fall under Sl. No. 47A of Notification No. 4/2006-CE dated 1.3.2006 and are unconditionally exempted, whether the common input credit used in the exempted product would be reversible / duty payable to the percentage of value of the exempted goods as per Rule 6(3) of CENVAT Credit Rules, 2004? - HELD THAT:- The judgments in AUROBINDO PHARMA LTD. VERSUS COMMISSIONER OF C. EX., HYDERABAD-I [ 2009 (3) TMI 810 - CESTAT, BANGALORE ] and DR. REDDY S LABORATORIES LTD. VERSUS COMMISSIONER OF C. EX., HYDERABAD [ 2009 (8) TMI 580 - CESTAT, BANGALORE ] have held that since the term bulk drugs and drug and medicines have not been defined in the Notification, the definition as per Drugs (Price Control) Order, 1995 is relevant. As per Drugs (Price Control) Order, 1995, the term drug have been defined to include bulk drug and formulations. Thus, the said judgments put in mathematical terms could be understood as meaning that while drug is a superset, bulk drugs is the subset, whereby bulk drugs are covered by the term drugs . Hence, it is for the appellant to choose which ever Sl no of the exemption is more favourable to him. Judicial discipline requires to follow the ratio of the above judgments - the appellant is entitled to the benefit of unconditional exemption from tax as per Sl. No. 47A of Notification No. 4/2006-CE dated 1.3.2006. In case the goods fall under Sl. No. 47A of Notification No. 4/2006-CE dated 1.3.2006 and are unconditionally exempted, whether the common input credit used in the exempted product would be reversible / duty payable to the percentage of value of the exempted goods as per Rule 6(3) of CENVAT Credit Rules, 2004? - HELD THAT:- It is seen that the department had followed a two-pronged strategy. Initially Show Cause Notices were issued to the appellant denying unconditional exemption for Danazol under Sl. No. 47A of Notification No.4/2006-CE. Subsequently, they took the stand that the appellant is entitled for the benefit of Sl. No. 47A of Notification No. 4/2006-CE dated 1.3.2006, however, the appellant is required to reverse the credit/ pay the amount demanded as a percentage of sale value of the exempted goods Danazol , as per law during the relevant period, under Rule 6(3) of CENVAT Credit Rules, 2004 - it is found that there has been some confusion in the minds of the department and they have blown hot and cold on the same issue at different points of time. The exemption has been correctly availed by them. The department is permitted to verify the mathematical accuracy of the claims of reversal made by the appellant and demand the excess credit taken or refund the excess reversal of credit made by the appellant if any. Needless to say that in case of a demand, the appellant may be given an opportunity to explain the reversal of credit made by them. The benefit of Sl. No. 47A of Notification No. 4/2006-CE dated 1.3.2006 for the product 'Danazol is allowed - Credit reversed by the appellant under Rule 6(3) of CENVAT Credit Rules, 2004 is subject to verification by the department - appeal disposed off.

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• 2023 (10) TMI 876
  CENVAT Credit - manufacture of sugar and molasses - Clearance of bagasse and pressmud (exempted products), emerging during the manufacture of the final product (sugar) - non-maintenance of separate accounts for the common input services used in the manufacture of both dutiable and exempted products contravention of provisions of Rule 6 of the CENVAT Credit Rules, 2004 - HELD THAT:- In terms of Explanation 1 to Rule 6 of the CENVAT Credit Rules, which was inserted with effect from 01.03.2015, the appellant has to reverse the credit or pay 6% of the value of the exempted products in case non-excisable goods are cleared for a consideration. The Board had also issued a Circular in line with the above Explanation. However, the said Circular came to be challenged before the Hon ble High Court of Allahabad in the case of Balrampur Chini Mills Ltd. [ 2019 (5) TMI 972 - ALLAHABAD HIGH COURT ] and the same was held to be invalid and quashed. The Tribunal in a recent decision in the case of Khedut Sahakari Khand Udyog Mandli Ltd. [ 2022 (4) TMI 1360 - CESTAT AHMEDABAD] has followed the above decision of the Hon ble Allahabad High Court to set aside the demand. The demand cannot sustain and requires to be set aside - Appeal allowed.

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• 2023 (10) TMI 875
  Valuation - liquidated damages paid or payable would form the part of the price of the cars for the purpose of payment of duty or not - Section 4(3)(d) of the Central Excise Act, 1944 - HELD THAT:- The sum and substance of the decision in SKODA AUTO VOLKSWAGEN INDIA PRIVATE LTD VERSUS COMMISSIONER OF CENTRAL EXCISE AURANGABAD [ 2023 (2) TMI 658 - CESTAT MUMBAI ] is that in the event of rejection of the invoice value as transaction value, it is not open to the adjudicating authority to re-determine value without recourse to Central Excise (Determination of Price of Excisable Goods) Rules, 2000 and more particularly Rule 6 ibid. The issue involved herein is no more res integra and there are no reason to deviate from view taken by us in the aforesaid decision. From the case records it is clear that the said Rule has not been invoked either in the show cause notice or in the order under challenge. Therefore on this ground alone the impugned order is liable to be set aside. Appeal allowed.

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• 2023 (10) TMI 874
  Clandestine removal - 3635.715 MT of MS bars of various sizes - demand based on the documents recovered allegedly from the said pen drive and statements recorded during investigation - corroborative evidences or not - cross-examination not permitted - violation of principles of natural justice - HELD THAT:- Although the cross-examination of the author of the diaries i.e. Mr.Suresh Mohata, entries in which to a large extent have been the basis of the issuance of show cause notice and confirmation of demand, was allowed by the adjudicating authority but the department failed to produce him for cross-examination - The appellants have asked for the cross-examination of those alleged six actual buyers but were not permitted. The demand was confirmed by the Adjudicating Authority on the basis of the documents allegedly retrieved from the said pen drive coupled with some statements recorded during investigation as well as u/s. 14 ibid. Admittedly the cross-examination was not granted to the appellants as according to the adjudicating authority that was not relevant despite the fact that the charges in the show cause notice are based on the evidence emanating from the seized documents and statements recorded during the course of investigation. Not allowing cross-examination is violative of the principle of natural justice. In catena of decisions it has been held that such statements cannot be relied upon. Denial of cross-examination by the adjudicating authority is a clear violation of the mandate of Section 9D ibid. - In the matter of Hi- Tech Abrasives Ltd. [ 2018 (11) TMI 1514 - CHHATTISGARH HIGH COURT ] Hon ble Chhattisgarh High Court has held that statements recorded u/s. 14 of the Act cannot be relied upon as evidence without following the rigour of Section 9D of the Act since the provisions of Section 9D are mandatory in nature. Mere recovery of private records, that too from the third party, is not sufficient to prove clandestine removal and a concrete and clinching evidence is required to prove such allegations and it is for the department to discharge the burden and prove the charges of clandestine removal against the appellants. It is settled position that the statements of witnesses cannot be relied upon unless they are corroborated with cogent evidence and when there is no corroborative evidence to support statements of witnesses those statements cannot be relied upon without offering a chance of cross-examination to the person charged. Denial of cross-examination vitiates entire proceedings as it amounts to violation of principle of natural justice - It is no doubt true that there is no right of cross- examination if sufficient corroborative evidence exists, but in the present case we are unable to find the sufficient corroborative evidence against the appellants and therefore the appellants were justified in asking for cross-examination. The Hon ble High Court of Judicature at Allahabad in the matter of COMMISSIONER OF CENTRAL EXCISE, MEERUT-I, MEERUT ANOTHER VERSUS M/S PARMARTH IRON PVT. LTD., BIJNOR. [ 2010 (11) TMI 109 - ALLAHABAD HIGH COURT ], while relying upon the law laid down by the Hon ble Supreme Court in cases of ARYA ABHUSHAN BHANDAR VERSUS UNION OF INDIA [ 2002 (3) TMI 54 - SC ORDER ] and SWADESHI POLYTEX LTD. VERSUS COLLECTOR OF CENTRAL EXCISE, MEERUT [ 2000 (7) TMI 85 - SC ORDER ] and of the Hon ble High Court of Judicature at Bombay in case of GYAN CHAND SANT LAL JAIN VERSUS UNION OF INDIA [ 1975 (10) TMI 33 - HIGH COURT OF JUDICATURE AT BOMBAY ], has held that at the stage of adjudication, it is the right of an assessee to seek cross-examination of the witnesses whose statements are sought to be relied upon by the Revenue and that cross-examination is necessary so that it could be established whether the statements recorded had been voluntarily given and/or are relevant for the issue or based on personal knowledge or hearsay and the like. The department has miserably failed to substantiate the allegation of clandestine manufacture and clearance by any tangible or corroborative evidence. The diaries or pen-drive from a third party cannot be said to be sufficient proof of such allegation and the department has failed to make out a case beyond any doubt. Appeal allowed.

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• 2023 (10) TMI 873
  Process amounting to manufacture - activity of repacking and relabelling of imported and indigenously procured spare parts of Dumpers (Mechanical Drive and Electrical Drive), Water Sprinklers and Motor Graders at their marketing division - from January 2008 to February 2010 and March 2010 to March 2011 - Extended period of limitation. HELD THAT:- The Larger Bench was constituted pursuant to a direction of the Hon ble Supreme Court, as there were conflicting views expressed by the Mumbai Bench of the Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS M/S JCB INDIA LTD [ 2014 (2) TMI 632 - CESTAT MUMBAI] and Chandigarh Bench of the Tribunal in the case of M/S ACTIN CONSTRUCTION EQUIPMENT LTD., SHRI VIJAY AGGARWAL AND SHRI P.K. BANSAL VERSUS CCE, DELHI-IV [ 2016 (10) TMI 473 - CESTAT CHANDIGARH] . After analysing the scope of Sl. No.100 of the Third Schedule to the Central Excise Act, 1944, relevant material it has been observed by the Larger Bench in M/S. ACTION CONSTRUCTION EQUIPMENT LTD, SHRI P.K. BANSAL, SHRI VIJAY AGARWAL, COMMISSIONER OF CENTRAL EXCISE, M/S. JCB INDIA LTD., TATA HITACHI CONSTRUCTION MACHINERY CO. LTDM, LARSEN TOUBRO LIMITED, J. KUMAR, M/S. PROFICIENT EQUIPMENT SOLUTIONS VERSUS COMMISSIONER, CENTRAL EXCISE, CUSTOMS, DELHI-IV, M/S. JCB INDIA LTD., THE COMMISSIONER, CENTRAL EXCISE, AND CUSTOMS, NAGPUR [ 2023 (6) TMI 1320 - CESTAT MUMBAI (LB)] that The amendment made in the Third Schedule to the Central Excise Act by Finance Act, 2011 w.e.f 29.04.2010 by adding serial No.100A to the Third Schedule is prospective in nature. Distinguishing the said ratio, the Revenue has argued that the equipment considered in the said judgment are different and hence, the principle laid down in the said judgment cannot be made applicable to the facts of the present case. It was argued that the Mumbai Bench of the Tribunal specifically considered parts of the dumpers in M/s. Komatsu India Pvt. Ltd., therefore, the said judgment be followed and applied to the present case. The said approach of the Revenue is incorrect in as much as the judgment of M/s. Komatsu India Pvt. Ltd. case rests on the principle settled by the Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS M/S JCB INDIA LTD [ 2014 (2) TMI 632 - CESTAT MUMBAI] which was referred to Larger Bench when the Chandigarh Bench of the Tribunal expressed doubt about the correctness of the said judgement in M/S ACTIN CONSTRUCTION EQUIPMENT LTD., SHRI VIJAY AGGARWAL AND SHRI P.K. BANSAL VERSUS CCE, DELHI-IV [ 2016 (10) TMI 473 - CESTAT CHANDIGARH] . Secondly, the Larger Bench also in laying down the principles has held that the meaning of the word automobile occurring in Air (Prevention and Control of Pollution) Act, 1981 or the Motor Vehicles Act, 1988 cannot be adopted but the meaning has to be understood is in general sense and as used in common parlance. Further, emphasizing the said meaning as in common parlance, the Larger Bench opined that the scope and meaning of automobiles be understood as the conveyances for transportation of passengers and goods on road; also in the same manner, it has been understood by the department in various Circulars issued from time to time. Sl. No. 100 of the Third Schedule shall not be applicable to parts and spares of Dumpers repacked and relabelled by the Appellant for the period from January 2008 to February 2010. Also, the said activities do not fall within the scope of manufacture under either clause (i) or (ii) of Section 2(f) of CEA,1944, hence, not leviable to excise duty. However, for the period from March 2010 to March 2011, the said activities be considered to be deemed manufacture being covered under the amended entry at Sl. No.100 of the Third Schedule. Extended period of limitation - HELD THAT:- This Tribunal in M. PITCHIAH, DIRECTOR (FINANCE) BEML LTD. AND OTHERS VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX BANGALORE-I [ 2014 (8) TMI 135 - CESTAT BANGALORE] examined all aspects on the applicability of extended period for the said activities relating to Mysore Division and following the principle laid down by the Hon ble Supreme Court in JK. COTTON SPINNING AND WEAVING MILLS LTD. AND ANOTHER VERSUS UNION OF INDIA AND OTHERS [ 1987 (10) TMI 51 - SUPREME COURT] held that invoking extended period of limitation for demanding duty in implementing a retrospective operation of the law for the period from April 2010 cannot be sustained - there are no reason in not following the judgment of the Tribunal in appellant s own case more or less for a similar period and show-cause notice issued in the same month i.e., April 2013. In the result, invoking of extended period of limitation is bad in law. Thus, invoking of extended period of limitation is bad in law. Accordingly, the demand be confined to the normal period of limitation. Consequently, the penalties imposed on the appellants, in the facts and circumstance of the case is unwarranted. Consequently, penalty imposed on all the appellants are set aside. Appeal disposed off.

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• 2023 (10) TMI 872
  Exemption for Captive Consumption - quantity of coal captively used for further production/manufacture of coal within the mines - denial of benefit of N/N. 67/95 on the ground that the coal is produced and not manufactured - HELD THAT:- The grounds of denial of Cenvat credit very strange. The Appellant has opted for payment of Central Excise Duty at the normal tariff rate of 5% with CENVAT credit facility , which is not in dispute. Having allowed the CENVAT credit facility, which is available on inputs used in the manufacture of final product, the Authorities have inprinciple accepted that the activity of coal mining amounts to manufacture . The department has not raised any objection to payment of duty by the Appellant by treating the process as amounting to manufacture . In fact, the very demand in the Notice has been raised by charging duty at the rate of 5%, which is applicable along with Cenvat facility. For the purpose of demanding duty on coal, the Department considers that the Coal mining activity would amount to manufacture . But, the very same coal mining activity has been considered as not amount to manufacture for the purpose of consideration of exemption under Notification No. 67/95. Thus, there is no merit in the impugned order that has denied the benefit of Notification No. 67/95 to the Appellant for the coal consumed captively. The Appellant is eligible for the benefit of Notification No. 67/95 for the coal consumed captively to generate steam to be used as power for the purpose of lifting coal within the mines - the demand confirmed in the impugned order is not sustainable - Appeal allowed.

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• 2023 (10) TMI 871
  Valuation of excisable goods transferred to other units - same products are also sold by the Appellant to unrelated buyers from its depots/ stockyards - to be valued at 110% of cost of production under Rule 8 of the Central Excise Valuation Rules, 2000 or not - HELD THAT:- The issue is no longer res integra as as the issue has already been decided in favour of the Appellant in the case of ISPAT INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., RAIGAD [ 2007 (2) TMI 5 - CESTAT, MUMBAI] , wherein it has been held that the provisions of Rule 8 of Central Excise Valuation Rules will not apply in a case where some part of the production is cleared to the independent buyers. The submission of the Appellant agreed upon that it is a settled position that Rule 8 of Excise Valuation Rules will not be applicable if apart from captive consumption, independent sales are also taking place directly from the factory gate or the depot of the manufacturer - Rule 8 of Central Excise Valuation Rules will not be applicable in this case and hence the demand of duty confirmed in the impugned order is not sustainable. Since the duty demand is not sustainable, the question of demanding interest and imposing penalty does not arise. The impugned order set aside - appeal allowed.

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• 2023 (10) TMI 870
  Reversal of CENVAT Credit - Ms Angles, MS Beam and other MS Items which have gone into the capital goods used in factory premises - inputs used in the High Mast Tower on account of capital goods - address has by mistake been given as HPCL, Mumbai (their Head Office) - HELD THAT:- It is seen from the Certificate issued by the Chartered Engineer that the MS Items have been used within the factory premises for completion of the EPC Project within the factory premises. The Tribunal in the case of M/S. MADRAS CEMENTS LTD. VERSUS CCE, HYDERABAD [ 2016 (6) TMI 761 - CESTAT HYDERABAD ] has held credit is admissible on MS items used for fabrication of structural supports. Such supports and fixation is necessary for functioning of the plant/machinery/equipment without movement and vibration without which the process of manufacturing could not be done. In the case of COMMISSIONER OF C. EX., TIRUNELVELI VERSUS INDIA CEMENTS LTD. [ 2006 (1) TMI 445 - CESTAT, CHENNAI ], the Tribunal has held The ratio arrived at in various decisions/judgments referred to by the ld. Counsel for the Respondents has made it clear that the components spares etc. used for Generator set, cursher plant, conveyor system etc. are eligible capital equipment and credit in respect of them is admissible under Rule 57Q(1) of the C.E. Rules, 1944. In the case of COMMISSIONER OF C. EX., TIRUNELVELI VERSUS INDIA CEMENTS LTD. [ 2005 (8) TMI 274 - CESTAT, CHENNAI ] , the Tribunal has held there is no dispute of the fact that the capital goods in question were used as parts/components of cement-manufacturing plant. During the material period, parts and components of plant were recognised as eligible capital goods for Modvat credit under clause (b) of Explanation (1) to Sub-rule (1) of Rule 57Q of the Central Excise Rules, 1944. The lower appellate authority has rightly allowed capital goods credit to the respondents. Following the ratio of the cited case law, the Cenvat Credit of Rs.62,82,025/- on MS Angles, MS Beam and other items on which the Cenvat Credit has taken is allowed. On the same ground, the Cenvat Credit of Rs.26,201/- taken on inputs used for fabrication of High Mast Tower is allowed. In respect of Rs.10,146/- since the Invoice has been made in the name of HPCL, Mumbai (the Head office), this is only a clerical error and does not prevent the Appellant from taking the Cenvat Credit, since there is no dispute about their usage by the Appellant - In respect of Radha Krishna Transport, there is no necessity of the transporter to indicate the Service Tax Registration Number. As a matter of fact, in case of GTA services, the Service Tax has to be paid on Reverse Charge basis by the recipient of the service. Therefore, the Cenvat Credit on 33,900/- is allowed. The impugned order towards the confirmed demands along with interest and penalties set aside - appeal allowed.

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• 2023 (10) TMI 869
  Appropriation of refund of pre deposit sanctioned to the Respondent, against another demand where stay has been granted and pending for more than 180 days - HELD THAT:- The issue is no loner res integra as per the decision of Hon ble Punjab and Haryana High Court in the case of PML INDUSTRIES LTD. VERSUS CCE. [ 2013 (4) TMI 101 - PUNJAB AND HARYANA HIGH COURT] , which has been affirmed by the Hon ble Supreme Court in COMMISSIONER VERSUS PML INDUSTRIES LTD. [ 2016 (10) TMI 728 - SC ORDER] , wherein the Hon ble High Court held that The condition of vacation of stay for the inability of the Tribunal to decide the appeal is burdening the assessee for no fault of his. Such a condition is onerous and renders the right of appeal as illusory. An order passed by a judicial forum is sought to be annulled for no fault of assessee. Thus, there are no arrears against the Respondent so as to appropriate the refund. Hence, the appeal filed by the department has become infructuous and is accordingly dismissed.

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• 2023 (10) TMI 868
  Levy of Excise Duty - sale of fixed asset (plant and machinery) - applicability of Sub Rule (5) of Rule 3 of CCR, 2004 - time limitation - HELD THAT:- Rule 3(5) makes it abundantly clear that it shall apply to such inputs or capital goods on which Cenvat Credit has been taken and that such capital goods have been sold as such. There is no denial to the fact that the goods which have been sold by the appellant were such assets which have been used by the appellants since its purchase till the date of those were sold. Resultantly, one condition of the above quoted provision i. e. goods are removed as such stands un-complied with the meaning of the expression as such has been clarified by the Larger Bench of this Tribunal in the case of MODERNOVA PLASTYLES PVT. LTD. VERSUS COMMISSIONER OF C. EX., RAIGAD [ 2008 (10) TMI 51 - CESTAT, MUMBAI] . The other condition for the applicability of rule 3 (5) of Cenvat Credit Rules, 2004 is that the appellant would have availed the Cenvat Credit on the capital goods in question. The said condition is the bone of contention for the impugned appeal - it is observed that merely from the balance-sheet entries the department has presumed that the appellant would have availed the Cenvat Credit on the capital goods as were removed in the afore-mentioned financial years. Thus, the initial burden was of the Department / Revenue to prove the said presumption. Department has not placed on record any such document nor there is any specific allegation about any specific amount to ever been availed by the appellant as Cenvat Credit. The capital goods which are shown adjusted in the financial year 2015-16 are mentioned to have been purchased in the year 1986-89 and that they could not have been sold even as scrap. There is no evidence produced by the department to rebut or falsify the said submission - the allegations of the Department in the Show Cause Notice were merely presumptive and Department could not produce any evidence to prove those presumptions. The order has wrongly held the purchase invoices as sales invoices. Time Limitation - HELD THAT:- The Show Cause Notice is miserably silent about any allegation of malafide, willful suppression etc. on the part of appellant to evade the impugned amount. Hence any basis for invoking the extended period of limitation is found absolutely missing in the present case. Resultantly, the Show Cause Notice itself gets hits by the time limitation. Appeal allowed.

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• CST, VAT & Sales Tax

• 2023 (10) TMI 867
  Recovery of tax dues - priority of charges - Right of auction purchase of property - Auction by the Secured Creditors - Requirement to deposit an additional sum on account of the unearned premium i.e. the differential amount of Industrial Plot which existed at the time of execution of initial lease deed vis- -vis the market value existing on the date of auction/ sale - HELD THAT:- The issue as to whether the dues of secured creditor under SARFAESI Act shall have priority over the dues of Central Excise Department has been answered by the Hon ble Apex Court, in PUNJAB NATIONAL BANK VERSUS UNION OF INDIA ORS. [ 2022 (2) TMI 1171 - SUPREME COURT] by recording a finding that secured creditor will have a first charge on secured assets and the provisions of SARFAESI Act shall have overriding effect on the provisions of Central Excise Act 1944 or on all other laws, in view of Section 35 of the SARFAESI Act. The issue of sanctity of public auctions and the rights of an auction purchaser which had fructified on issuance of the sale certificate cannot be nullified, defeated, obstructed, frustrated, restricted nor curtailed, whittled down or extinguished in any manner has been approved by the Hon ble Apex Court in the case of K. Kumara Gupta v. Sri Markendaya and Sri Omkareswara Swamy Temple Ors [ 2022 (2) TMI 1388 - SUPREME COURT] . The Hon ble Apex Court in Shakena Anr versus Bank of India Ors, [ 2019 (8) TMI 904 - SUPREME COURT ], has been held that after incorporation of amended Section 13(8) of the SARFAESI Act, 2002 w.e.f. 1.9.2016 that the rights of an auction purchaser crystallize on issuance of sale certificate and registration of such certificate is not essential and the borrower can only redeem its mortgaged property before the date of the publication of sale notice by depositing amount and such right was not available thereafter when the rights title and interest of the auction purchaser-subsequent purchaser have matured. Whether the petitioner-auction purchaser of the secured assets-industrial plots under SARFAESI Act could be fastened with the liability of State taxes which had accrued and were connected with and were solely attributed to the business of the original lessee? - HELD THAT:- Once the petitioner has only purchased the Industrial Plots-Immovable Properties, which had been leased out to the Original Lessee by department of industries and the petitioner has never purchased the past or ongoing business of the original lessee therefore, the petitioner-auction purchaser cannot be fastened with the liability of State taxes, which had accrued and were connected with and were solely attributable to the business of the original lessee only. Whether Business liability (past or ongoing) of original lessee (erstwhile owner of business) could be fastened on an Auction purchaser? - HELD THAT:- While discussing the ambit of recovery of dues of the original lessee from the transferee dealer under the Karnataka Sales Tax Act, which is akin to Section 39 of the Himachal Pradesh Value Added Act, 2005, it has been held by Hon ble Apex Court that the subsequent purchaser can be held liable if the ownership of business is transferred to such auction purchaser and not otherwise, in view of the mandate laid down by the Hon ble Apex Court in the case of STATE OF KARNATAKA AND ANOTHER VERSUS SHREYAS PAPERS P. LTD. AND OTHERS [ 2006 (1) TMI 243 - SUPREME COURT ]. Enforcement of charge, dues, taxes etc if preconditions in section 26-B (4) w.e.f 24.01.2020 complied - HELD THAT:- A perusal of Section 26-B (2) provides that from the date of issuance of the notification dated 24.01.2020 the transactions pertaining to the creation, modification and satisfaction of any security interest over properties was to be registered with the Central Registry i.e. CERSAI. It is mandatory that under Section 26-B(4) that every authority or officer of the Central Government or any other State Government or local authority entrusted with the function of recovery of taxes or other Government dues against any person shall have to file an attachment order with the Central Registry - once the State authorities were negligent and had slept over their claims, interests or rights in neither registering its recoverable claim with CERSAI nor have they obtained and registered the attachment orders with CERSAI in accordance with the mandate of Section 26B of the SARFAESI Act read with Enforcement Rules 2002 then, Respondents-State Authority cannot fasten the business liability of the original lessee on the petitioner. Moreover, the respondents cannot be permitted to penalize and prejudice the petitioner for inaction of the respondents in not resorting to the remedy available under Section 26B of SARFAESI w.e.f. 24.1.2020 and therefore, the condition so inserted to the disadvantage of petitioner is arbitrary and illegal. Legal position: Section 26-E of SARFAESI Act and section 26 of HP VAT Act - HELD THAT:- Reference to Section 26E of SARFAESI Act and Section 26 of HPVAT Act, reveals that the words priority in Section 26E of the SARFAESI Act and first charge in Section 26 of the VAT Act are of utmost significance. As per the Black s Dictionary, the word priority in Section 26E of SARFAESI Act means precedence or going before meaning thereby, that the word priority would mean right to enforce the claim in preference to others. That being so, the word first charge in Section 26 of the HPVAT Act cannot take precedence over the word priority in Section 26E of SARFAESI Act. Reading these provisions in the context of present case reveals that once the State Authorities have neither created a charge and have not made such charge known to the petitioner -auction purchaser nor have the respondents obtained the attachment orders under Section 26(B)(4) of the Act then, the outstanding tax liability of original lessee cannot be fastened on the petitioner. The petitioner-auction purchaser cannot be fastened with the outstanding liability of dues and taxes, which had accrued and were connected with and were solely attributable to the business of Original Lessee. Moreover, the outstanding liability of an Original Lessee cannot be fastened on the auction purchaser when, the Bank has nowhere stipulated in sale notice that the business liability of Original Lessee was put to sale under Rule 6 of Enforcement Rules. Such liability cannot be fastened when, the auction purchaser has never purchased the business liability of original lessee - once the Bank has failed to disclose the known encumbrances of state taxes/dues of the original lessee in sale notice, despite knowledge, vide Annexure R-5 and R-6 and the Bank had acted contrary to Rule 8(7)(a) of the Security Interest Enforcement Rules which came into force w.e.f. 18.10.2018 and had also not complied with Rule 8(7)(f) of the Security Interest (Enforcement) Rules then, any such undisclosed liability cannot be fastened on an auction purchaser. The Respondents-State Authorities cannot nullify, defeat, obstruct, restrict, frustrate, curtail, take away or extinguish the rights, title and interest acquired by the auction purchaser after issuance of the Sale Certificate in his favour and such an auction purchaser has every right to get the benefit of the auctioned-scheduled immoveable property to be entered in the revenue records as lessee in the present case (or as owner as the case may be) and for all intends and purposes and in such an eventuality, any coercive or red entry, made by the revenue authorities on such auctioned property cannot operate to the disadvantage of the auction purchaser, alike the petitioner, in the instant case. Whether the Condition no 7 in letters dated 11.10.2022 and 13.12.2022 vide Annexure P-7 and Annexure P-9, could be imposed on the petitioner when, the outstanding business liability of the Original Lessee was not disclosed in the Sale Notice dated 10.12.2021, Annexure P-3, as mandated by Rule 8 (7) (a) of the Security Interests (Enforcement) Rules 2002 - HELD THAT:- Any adversial condition, imposed, after the date of the issuance of the sale certificate as in the impugned orders, cannot nullify, frustrate or extinguish the rights, title and interest acquired by the auction purchaser except in case of fraud or collusion of an auction purchaser, which are non-existent and not borne out from the facts of the instant case. Accordingly, the impugned order and the adversial condition so imposed against the petitioner-auction purchaser, being illegal and arbitrary is set-aside. Whether adversial condition can be enforced against the petitioner when, Respondents-State Tax Authorities have failed to recover its outstanding encumbrances-tax liability, which was attributable to the business of the Original Lessee or its Directors in-accordance with the Himachal Pradesh Value Added Tax Act, 2005? - HELD THAT:- Notably, once the original lessee, being a Company was the dealer, who carried on its business from these industrial plots then, the original lessee was bound in law to pay the taxes relatable to his business. In case the taxes or outstanding dues of taxes were not forthcoming from original lessee then, the State authorities were under an obligation to recover such taxes from the Company and its Directors as the arrears of land revenue under Section 25 and Section 53 of the VAT Act - in the present case, once the original lessee and its Directors had failed to file returns or has failed to pay the taxes, interest and penalty in terms of Section 16 and 19 of the HPVAT Act and had contravened the provision of Section 50 of HPVAT Act then, the State authorities were under an obligation to resort to the criminal prosecution of the Original Lessee-Company and its Directors but the inaction or negligence or non-performance of functions and legal obligations by the Respondents under the Statute cannot be the ground to fasten the liability of the outstanding state taxes, which had accrued, were connected with and solely attributable to the business of the Original Lessee-Company and its Directors under the HP VAT Act on the petitioner-auction purchaser. Once the State Tax Authorities under the HPVAT Act have neither invoked, nor resorted to statutory remedial action for recovery of taxes, interest or penalty and arrears under VAT Act which had accrued and was connected with and was solely attributable to the business of the Original Lessee-Company and its Directors then, the inaction or negligence or non-performance on the part of the State Authorities cannot be the basis for prejudicing or putting the petitioner-auction purchaser to a disadvantage or position, by fastening the business liability of others, on the petitioner-auction purchaser is impermissible. Petition allowed.

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• Indian Laws

• 2023 (10) TMI 866
  Smuggling - recovery of contraband - Charas - acquittal of accused - prosecution had failed to prove its case against the accused beyond a reasonable doubt - conviction for the offence under Section 20 of the NDPS Act - applicability of Section 50 of the NDPS Act. Whether the High Court committed any error in holding the appellant herein guilty of the offence punishable under Section 20 of the NDPS Act? HELD THAT:- The only idea with which have beenreferred to the various decisions of this Court starting with Balbir Singh [ 1994 (3) TMI 173 - SUPREME COURT] till DAYALU KASHYAP VERSUS THE STATE OF CHHATTISGARH [ 2022 (1) TMI 1400 - SUPREME COURT] is to highlight that Section 50 of the NDPS Act has been tried to be interpreted and understood in many ways. As noted earlier, in some of the decisions of this Court, the concept of inextricably linked to person was applied. In other words, if the bag, etc. is in immediate possession of the accused and the search is undertaken of such bag, etc., even then, according to those decisions, Section 50 would be applicable. It could legitimately be argued that the interpretation of Section 50 restricting its scope only to the search of a person of the accused would frustrate the object as the apprehension of the person concerned may continue to subsist that he may still be implicated by the police or any other person for more stringent punishment of carrying commercial quantity by getting rid of the rigor of the mandatory provision of Section 50 by implanting the contraband in a vehicle, bag, etc. accompanying the person. The statute clearly declared that for burglary to happen, the defendant should be physically present. In this case, although the defendant never entered the house, yet he did extend his tree snips through the window. The Court held that, there is no meaningful difference between the snips and his arm because the penetration by the snips was merely an extension of Klein s person. Therefore, in the said case, the object which a person was carrying was held to be part of his body. A similar view could also have been adopted while interpreting the term personal search . However, in view of plain and unambiguous statutory provision, there is no scope of interpreting Section 50 in any other manner than the interpretation explained in Baldev Singh and Pawan Kumar. It is a well-settled principle in law that the Court should not read anything into a statutory provision which is plain and unambiguous. A statute is an edict of the legislature. The language employed in a statute is the determinative factor of the legislative intent. The first and primary rule of construction is that the intention of the legislation must be found in the words used by the legislature itself. The question is not what may be supposed and has been intended but what has been said - While interpreting a provision, the Court only interprets the law and cannot legislate it. If a provision of law is misused and subjected to the abuse of process of law, it is for the legislature to amend, modify or repeal it, if deemed necessary. Two principles of construction one relating to casus omissus and the other in regard to reading the statute as a whole appear to be well settled. Under the first principle a casus omissus cannot be supplied by the Court except in the case of clear necessity and when reason for it is found in the four corners of the statute itself but at the same time a casus omissus should not be readily inferred and for that purpose all the parts of a statute or section must be construed together and every clause of a section should be construed with reference to the context and other clauses thereof so that the construction to be put on a particular provision makes a consistent enactment of the whole statute. This would be more so if literal construction of a particular clause leads to manifestly absurd or anomalous results which could not have been intended by the legislature. As such, there is no direct conflict between SK. Raju [ 2018 (9) TMI 845 - SUPREME COURT] and STATE OF PUNJAB VERSUS BALJINDER SINGH AND ORS. [ 2019 (10) TMI 1574 - SUPREME COURT] . It is pertinent to note that in SK. Raju (supra) the contraband was recovered from the bag which the accused was carrying, whereas in Baljinder Singh the contraband was recovered from the vehicle. This makes a lot of difference even while applying the concept of any object being inextricably linked to the person . It has been observed in Baldev Singh [ 1999 (7) TMI 630 - SUPREME COURT] that drug abuse is a social malady. While drug addiction eats into the vitals of the society, drug trafficking not only eats into the vitals of the economy of a country, but illicit money generated by drug trafficking is often used for illicit activities including encouragement of terrorism. It has acquired the dimensions of an epidemic, affects the economic policies of the State, corrupts the system and is detrimental to the future of a country - It is, therefore, absolutely imperative that those who indulge in this kind of nefarious activities should not go scotfree on technical pleas which come handy to their advantage in a fraction of second by slight movement of the baggage, being placed to any part of their body, which baggage may contain the incriminating article. The High Court was justified in holding the appellant guilty of the offence under the NDPS Act and at the same time, the High Court was also correct in saying that Section 50 of the NDPS Act was not required to be complied with as the recovery was from the bag. Appeal dismissed.

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• 2023 (10) TMI 865
  Dishonour of Cheque - no contractual document has been filed by the respondent to show the terms between the petitioner and himself - legal practitioner's abuse of the process of the court - HELD THAT:- Absolutely, no contractual document has been filed by the respondent to show the terms between the petitioner and himself to show all the litigations defended by him a consolidated fee was agreed to pay by the petitioner. In the absence of such primary document, or even the statement and the complaint, then mere issuing of the cheque in the facts and circumstances of the case will not create any legal liability. This is a classical case of legal practitioner's abuse of the process of the court. So the continuation of proceedings amounts to illegal. Legal process can be undertaken to advance or vindicate the grievance, but it should not be permitted to be taken as an act of aberration, abuse and that too by any legal practitioner. So, the entire process is liable to be quashed - Petition allowed.

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