TMI Tax Updates - e-Newsletter
November 18, 2024

Case Laws in this Newsletter:

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

Articles

1. Key focus areas for suppliers in the wake of new Invoice Management System

   By: CA ShivKumarBhasin

2. The Supreme Court’s Canon Review - Understanding Its Impact with Real-World Examples

   By: DrJoshua Ebenezer

3. VIOLATIONS OF PRINCIPLES OF NATURAL JUSTICE IN GST CASES

   By: DR.MARIAPPAN GOVINDARAJAN

4. UNDERSTANDING AMNESTY FOR WAIVER OF INTEREST / PENALTY U/S 128A OF GST LAW (Part-1)

   By: Dr. Sanjiv Agarwal

5. SCN lacking reasons is liable to be set aside

   By: Bimal jain

News

1. CBDT launches Compliance-Cum-Awareness Campaign for AY 2024-25 to assist taxpayers in accurately completing Schedule Foreign Assets and reporting income from foreign sources in ITR

Notifications

GST - States

1. F.12(1)FD/Tax/2024-102 - dated 25-10-2024 - Rajasthan SGST

Corrigendum to Notification No. F.12 (1) FD/Tax/2024-99, dated 9th October, 2024

2. F.12(1)FD/Tax/2024-98 - dated 9-10-2024 - Rajasthan SGST

Amendment in Notification No. F.12(56)FD/Tax/2017-Pt-I-50, dated the 29th June, 2017

3. F.12(1)FD/Tax/2024-97 - dated 9-10-2024 - Rajasthan SGST

Amendment in Notification No. F.12(56)FD/Tax/2017-Pt-I-49, dated the 29th June, 2017

4. F.12(1)FD/Tax/2024-96 - dated 9-10-2024 - Rajasthan SGST

Amendment in Notification No. F.12(56)FD/Tax/2017-Pt-I-43, dated the 29th June, 2017

5. F.12(1)FD/Tax/2024-95 - dated 9-10-2024 - Rajasthan SGST

Amendment in Notification No. F.12(56)FD/Tax/2017-Pt-I-40, dated the 29th June, 2017

6. F.12(1)FD/Tax/2024-101 - dated 9-10-2024 - Rajasthan SGST

TDS on supply of metals scrap by registered person to registered person (B to B supply)

7. F.12(1)FD/Tax/2024-93 - dated 27-9-2024 - Rajasthan SGST

Rajasthan Goods and Services Tax (Second Amendment) Rules, 2024

Circulars / Instructions / Orders

Customs

1. Instruction No. 29/2024 - dated 14-11-2024

Requirement of Registration of Foreign Food Manufacturing Facilities as per Food Safety and Standards (Import) First Amendment Regulations, 2021, dated 03.11.2021

Highlights / Catch Notes

GST

• Dismissal of petition against tax recovery notice; adjudication on suppression, misstatement facts reserved for later stage.

  Case-Laws - HC : Entertainability of petition challenging show cause notice for recovery of taxes, determination of value of supply u/s 15(3)(b) of CGST Act. Allegations of suppressing facts, misstatement regarding non-furnishing outward supplies u/s 37, intention to evade GST from July 2017 to March 2022. Invocation of extended period of limitation based on suppression, misstatement with intent to evade GST. Adjudication on factual issues of suppression, misstatement, onus of proof u/s 15(3)(b) cannot be undertaken in writ jurisdiction. No challenge to circular in prayer. Petition dismissed, time granted till 15 December 2024 to file reply. Personal hearing, reasoned order by 31 January 2025 directed.
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• Delayed GST refund interest payable from 60 days after shipping bill till actual refund, despite interim red-flagging.

  Case-Laws - HC : Interest on delayed refund of tax u/s 56 of Central Goods and Services Tax Act, 2017 is payable from expiry of 60 days from date of filing shipping bill till date of actual refund, irrespective of any interim period where assessee's name was red-flagged on department's portal. Section 56 provides for period of interest payment, commencing from date of receipt of refund application till refund grant. Shipping bill is considered refund application, hence interest accrues after 60 days from its filing. Denying interest by excluding contingent period of red-flagging would amount to rewriting Section 56, which is impermissible. Assessee is entitled to interest for entire period from 60 days after shipping bill till date of refund grant.
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• Cancelled GST registration revived on filing pending returns, paying dues.

  Case-Laws - HC : Proviso to sub-rule (4) of Rule 22 of CGST Rules 2017 allows revocation of GST registration cancellation u/s 29(2)(c) of CGST Act 2017 if pending returns are filed and tax, interest and late fees paid. Petitioner's GST registration was cancelled for non-filing returns for 6 months. High Court set aside cancellation order, directing petitioner to approach authority within 1 month for revocation upon filing pending returns and paying dues, following precedents. Petition disposed accordingly.
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• Petitioner's appeal dismissed for procedural lapses, but order quashed over respondent's verification failure. Fresh consideration ordered.

  Case-Laws - HC : The court dismissed the petitioner's appeal due to non-compliance with statutory requirements, specifically the failure to submit valid proof of payment of the mandatory pre-deposit and the absence of valid documents establishing the petitioner's authority as an authorized signatory under the Companies Act. However, the court found that the respondent erred in not verifying the petitioner's authorization on the GSTN portal. Citing a precedent case, the court quashed the impugned order and remanded the matter to the respondent for fresh consideration, emphasizing the importance of adhering to due process and verifying relevant facts before rendering a decision.
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• Penalty Reduced for Technical E-Way Bill Violation; No Tax Evasion Intent Found; Original Rs. 11,08,150 Penalty Cut to Rs. 25,000.

  Case-Laws - HC : Challenge to penalty order u/s 129(1) of CGST Act for non-generation of Part-B of E-way bill. Petitioner accepted notice and paid Rs. 11,08,150 penalty voluntarily without objection. Respondent justified in passing penalty order for violating Section 129(1). However, petitioner had no intention of tax evasion, transporting goods from port after customs clearance. Part-A of e-way bill generated, only Part-B not accompanying goods when intercepted. Petitioner liable for penalty equivalent to 200% of tax payable, but since IGST already paid, subjected to 200% of tax paid. Contravention of Rule 138 technical as goods not accompanying Part-B. Penalty u/s 129(1)(a) modified to Rs. 25,000 instead of Rs. 11,08,150 to justify technical violation of not having Part-B. Impugned penalty order modified to Rs. 25,000.
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• New CGST provision on input tax credit for 2018-19 invoices submitted before Nov 2021.

  Case-Laws - HC : Amendment to Central Goods and Services Tax (CGST) Act, 2017 introduced sub-section (5) in Section 16 regarding input tax credit. Petitioner submitted invoice/debit note for financial year 2018-19 prior to November 30, 2021, falling under the purview of sub-section (5). High Court directed respondent authorities to consider the matter and pass appropriate order considering the provision of Sub-Section (5) of Section 16 of CGST Act, 2017, as amended by Finance Act, 2024 dated August 16, 2024. Appeal disposed of.
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• Natural Antioxidant Water classified under HSN 2202 1090 for flavored goods with sweeteners; subject to 28% tax and 12% cess.

  Case-Laws - AAR : Natural Antioxidant Water with natural Betel Leaf extract and natural Ajwain extract cannot be classified under HSN 2202 9920 as it does not contain any fruit juice or fruit pulp. The product is essentially 'Paan flavored water' with menthol crystals dissolved in propylene glycol as a flavoring additive. It is not classifiable under HSN 2201 1010 due to the exclusion clause of "nor flavoured" in the goods description. The product is rightly classifiable under HSN 2202 1090 as "All goods (including aerated waters), containing added sugar or other sweetening matter or flavoured", taxable at 28% under Sl. No 12 to Schedule IV of the Notification No 1/2017, Central Tax (Rate) dated 28.06.2017, and compensation Cess at 12% under Sl. No 4 of Notification No 1/2017-Compensation Cess (Rate) dated 28.06.2017.
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Income Tax

• Effluent treatment co. not taxable on surplus income due to mutuality, members' nominal interest on dissolution.

  Case-Laws - HC : Tribunal rightly applied principle of mutuality in assessee company's case, following Sports Club of Gujarat and Secunderabad Club judgments. Assessee formed to treat effluents as per court's directions, surplus not distributed to members, members contribute for services. On dissolution, members get only Rs. 100. Hence, assessee's income/surplus not taxable based on mutuality principle. Disallowance of depreciation and 80IA deduction not required if income not taxable due to mutuality. No substantial question of law arises from Tribunal's order in assessee's favor.
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• Retention Money Included in Contract Receipts for Section 80-IA Deductions, ITAT Rules; Assessee's Appeal Allowed.

  Case-Laws - AT : The Income Tax Appellate Tribunal (ITAT) held that retention money should be included in contract receipts for computing deduction u/s 80-IA for profits from construction activities. Section 43CB, effective from April 1, 2017, clearly provides that for percentage completion method, project completion method or straight-line method, contract revenue shall include retention money. The retention money cannot have different characteristics than the principal contract amount, as both are part of revenue received for construction activities eligible for Section 80-IA deduction. The ITAT relied on Section 43CB and allowed the assessee's appeal, setting aside the CIT(A)'s order disallowing deduction on retention money to the extent of Rs. 11,36,37,740.
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• Trust Denied Tax Exemption for Late Audit Report Filing; ITAT Recommends Leniency and Remands for Reconsideration.

  Case-Laws - AT : Exemption u/s 11 denied - Trust failed to e-file Audit Report in Form 10BB before filing return of income - application for condonation of delay rejected u/s 119(2)(b). Assessee argued delay less than 365 days excluding COVID period, hence petition should have been filed before CIT(Exemption), not DGIT(Inv.). CBDT circular ambiguous on condonation process beyond 3 years. ITAT opined authorities should have taken lenient view on belated filing when conditions otherwise satisfied. Matter remanded to AO for fresh consideration after CBDT decision on condonation application. On assessment of gross receipts as income, ITAT held once exemption lost, income assessable as AOP and only surplus/profits taxable, not gross receipts. AO directed to assess income/profits, not gross receipts, if exemption finally denied.
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• Offshore Unit's Profits Taxable; ITAT Allows Depreciation on Goodwill from Amalgamation, Disallows Excess on Furniture.

  Case-Laws - AT : Offshore unit in Dubai treated as proprietary concern, profits taxable in assessee's hands. AO's addition disallowed based on ITAT's consistent rulings favoring assessee. Excess depreciation on furniture and fittings disallowed by AO, CIT(A) directed deletion following ITAT's earlier decisions favoring assessee. Depreciation on goodwill generated on amalgamation disallowed by AO, CIT(A) upheld without examining assessee's contentions. Assessee relied on Urmin Marketing case, where ITAT allowed depreciation on goodwill arising from amalgamation, as provisions cited by AO apply to transferred assets, not goodwill generated. ITAT allowed assessee's claim for depreciation on goodwill, following Supreme Court's Smifs Securities ruling, as goodwill was acquired under amalgamation scheme approved by High Court after tax department's no-objection.
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• Penalties for Cash Transactions Overturned; ITAT Finds Transactions Genuine with No False Entries or Unaccounted Money.

  Case-Laws - AT : The case pertains to penalty proceedings u/s 271D for violating Section 269SS and Section 271E of the Income Tax Act. The assessee received Rs. 18 lakh from a trustee and security deposits from employees, utilized for construction activities. The Assessing Officer, JCIT, and CIT(A) levied penalties despite the assessee providing notarized affidavits and documents proving the genuineness of transactions. The ITAT held that penalties cannot be levied mechanically without establishing unaccounted money or false entries. Regarding Section 271E penalty for repaying deposits in cash, the ITAT observed that not all deposits were repaid in cash, and cash payments were made due to employees' insistence and to avoid hardship. The assessee provided ledger accounts and affidavits supporting the transactions' genuineness. The ITAT ruled that penalties u/ss 271D and 271E were not warranted as the assessee substantiated the transactions' validity, and no unaccounted money or false entries were established.
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• Taxpayer Favored: Bad Debt, Exempt Income Deductions Upheld; Wage Provisions Reconsidered; Payments to NPCI, Visa Approved.

  Case-Laws - AT : Disallowance of deduction claimed u/s 36(1)(vii) was set aside, allowing bad debts relating to non-rural branches without adjusting against provision for bad and doubtful debts (PBDD) account, since PBDD relates to rural advances only. Addition u/s 14A for expenditure in relation to exempt income to book profit u/s 115JB was dismissed in favor of the assessee. Addition of provisions for wage arrears, ex-gratia, and bonus while computing book profits u/s 115JB was remitted back to the CIT(A) for fresh decision. Disallowance u/s 14A read with Rule 8D was rejected, as dividend income cannot be treated as expenditure. Deduction u/s 36(1)(viia) for rural branches was remitted back to the AO to consider the latest/provisional census. Payments to National Payments Corporation of India and Visa Worldwide for switch charges, ATM charges, and fees were directed to be allowed, following earlier decisions.
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• Reassessment Invalid Without New Evidence; Original Assessment Stands Due to Full Disclosure and Documented Transactions.

  Case-Laws - AT : Reopening of assessment after four years is invalid as the recorded reasons do not mention any failure by the assessee to fully and truly disclose all material facts necessary for assessment. This is covered by the Supreme Court's decision in Canara Bank, where reopening beyond four years was held bad in law when the AO did not allege non-disclosure of material facts. Similar view in ACIT vs Virbac Animal Health India, dismissing the SLP against the High Court order that reopening after four years due to change of opinion was invalid. Regarding bogus purchases, the entire sales turnover is reflected in books, considered for profit determination, and subjected to taxation. VAT returns and output tax paid support the transactions. The assessee provided materials showing the goods purchased were sold to a company, which further sold them to contractors for a thermal plant project. The AO examined these purchase-sale details during original assessment but found no defects. Based on merits and legal aspects, the reassessment initiated after four years without pointing out non-disclosure of material facts, and the addition for bogus purchases, are unjustified and invalid. Decided in favor of the assessee.
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• Tax Tribunal Upholds Long-Term Capital Gains Exemption, Rejects Bogus Claim Due to Lack of Contradictory Evidence.

  Case-Laws - AT : The assessee provided documentary evidence supporting the purchase and subsequent sale of shares leading to long-term capital gains (LTCG). The evidence included purchase bills, bank statements showing payment, demat account reflecting share holdings, online sale through a recognized broker with contract notes, and receipt of sale proceeds in the bank account. The Assessing Officer (AO) treated the LTCG as bogus based on statements from third parties involved in providing accommodation entries, denying exemption u/s 10(38). However, the AO failed to produce any incriminating material or evidence contradicting the assessee's documents. Mere uncorroborated statements from third parties cannot render a transaction bogus without cogent contrary evidence. Following judicial precedents, the Income Tax Appellate Tribunal (ITAT) held that the claim for LTCG exemption u/s 10(38) is valid, and the addition made by the AO was deleted. Consequently, the addition u/s 69C for alleged notional commission paid was also rejected.
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• Tax Tribunal Rules in Favor of Investor; Criticizes Tax Officer for Lack of Independent Verification in Stock Gains Case.

  Case-Laws - AT : The Assessee, a regular investor in shares, made investments and sold a particular script when prices were high, resulting in Long Term Capital Gains (LTCG). The Assessing Officer (AO) treated the LTCG as bogus and made an addition u/s 68, relying solely on the report and statements recorded by the Investigating Wing, without conducting an independent inquiry or corroborating the evidence. The ITAT held that merely identifying a script as a penny stock does not render all transactions in it as bogus. The Assessee had produced documents showing genuine transactions, and there was no adverse report from SEBI or other authorities against the script. The AO erred in denying the Assessee's request for cross-examination of the person alleging accommodation entries through LTCG. The ITAT ruled in favor of the Assessee, emphasizing the need for an independent inquiry by the AO and corroboration of evidence from other sources before treating transactions as bogus.
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• Reassessment Notices for Tax Years 2013-16 Quashed by ITAT Due to Expired Limitation Periods Post-TOLA Amendment.

  Case-Laws - AT : The Income Tax Appellate Tribunal (ITAT) held that the reassessment notices issued u/s 148 of the Income Tax Act for the assessment years 2013-14, 2014-15, and 2015-16 were barred by limitation and quashed them. The Tribunal relied on the Supreme Court's judgment in Union of India vs. Ashish Agarwal, which clarified the applicability of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA). The TOLA extended the time limit for issuing reassessment notices until June 30, 2021, for proceedings pending between March 21, 2020, and March 31, 2021. However, in the present case, the reassessment notices were issued after June 30, 2021, for the assessment years 2013-14 and 2014-15, and after the expiry of the limitation period u/s 149(1) for the assessment year 2015-16. Consequently, the ITAT dismissed the Revenue's appeals and upheld the quashing of the reassessment notices.
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Customs

• Factory's release denied over unpaid customs duty interest.

  Case-Laws - HC : The High Court held that u/ss 28AA(1) and 28(10) of the Customs Act, there is no requirement for a demand for interest to be made in the original assessment order. Interest liability arises automatically if the duty demand raised u/s 28 is not paid within the specified time. The court rejected the petitioner's contention that interest cannot be demanded when there is no mention of it in the assessment order. The respondents raised the interest demand within three months of the duty demand, which was not paid, and therefore the demand for interest was valid and not time-barred. The petitioner's factory was rightly not released due to the pending interest liability.
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• Dispute Over Customs Duty Due to SEZ to DTA Goods Undervaluation; Case Remanded for Comprehensive Review.

  Case-Laws - AT : The matter pertains to the demand for differential customs duty on the undervaluation of goods cleared from a Special Economic Zone (SEZ) unit to the Domestic Tariff Area (DTA). Penalties were imposed on the appellant's SEZ unit and its DTA buyers. The key issues are: determining whether the SEZ unit or DTA buyer is liable for duty payment under SEZ and Customs Acts; verifying the costing methodology in the CAS-4 certificate submitted by the SEZ unit; considering factors like manufacturing facility size, turnover, clearance quantum, and product quality for applying comparable goods' pricing; and addressing the time-bar issue raised by the appellant. The Tribunal found the adjudicating authority's findings inadequate on these aspects and remanded the matter for reconsideration, directing the authority to provide elaborate findings addressing each defense raised by the appellants.
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• Imported goods for SEZ warehousing eligible for relaxed security for re-export, no duty levy despite alleged offense.

  Case-Laws - AT : Imported goods meant for warehousing in SEZ unit are eligible for relaxation from security demanded in provisional release order for re-export. Re-export of imported goods into SEZ is not subject to customs or excise duty levy, irrespective of any alleged offense. In cases of re-export, redemption fine was set aside and minimal penalty imposed, as per precedents. SEZ operations governed by SEZ Act and Customs Act, hence no mala fide intention to evade duty can be expected. Bond for total value of goods sufficient for releasing seized goods for re-export. Judgments cited by revenue not applicable to SEZ unit or warehouse. Observation limited to provisional release for re-export only, not influencing adjudication under show cause notice.
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• Tribunal Rules Aroma Chemical TF Classified Under Chapter 29 Due to Lack of Solvent Evidence for Reclassification.

  Case-Laws - AT : The appellant imported goods known as Tetramethyldodehdronaphto Furan (TF), classified as Aroma Chemicals. The show cause notice sought change in classification on grounds of its use as raw material for manufacturing synthetic perfumery compounds, fragrances, and flavour formulas. The Tribunal held that classification must be determined based on description in tariff headings, chapter and section notes, and rules of interpretation. The imported product, being a mixture of two isomers, is classifiable under Chapter 29 as per Chapter Note 1(b). The order relied on Chapter Note 1(e) to assert that when a product is dissolved in solvents making it suitable only for specific use, it can be taken out of Chapter 29. However, no evidence was produced regarding presence of solvents or suitability for single use. Consequently, the impugned order was set aside, and the appeal was allowed.
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• Import Violations: Marbles & Mosaics Priced Below DGFT Minimum, CESTAT Upholds Duty but Overturns Confiscation & Penalties.

  Case-Laws - AT : The case pertains to the import of restricted goods, specifically marbles and mosaics, under the Import Policy at a value lower than the Minimum Import Price notified by the Directorate General of Foreign Trade (DGFT). The importer violated DGFT Notifications by importing these items below the prescribed minimum prices of US$ 60 per SQM for marbles and US$ 80 per SQM for mosaics, rendering the imports liable for confiscation under the Customs Act and the Foreign Trade (Development and Regulation) Act, along with penalties. The Adjudicating Authority initially ordered confiscation and penalties, but the importer agreed to enhance the value as per the Minimum Import Price. The CESTAT upheld the demand for duty at the enhanced value based on the Minimum Import Price but set aside the confiscation and penalties, partially allowing the appeal. The CESTAT held that once the value was enhanced as per the Notifications, there was no legal necessity to treat the imports as contravening the Acts.
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• Exported Tea Rejected & Returned: Re-import Benefits Allowed, Duty Demand Set Aside Per Supreme Court Precedent.

  Case-Laws - AT : The appellant had initially exported Indian tea to Netherlands, which was rejected and recalled to India. Upon re-importation, no DEPB claim was advanced. The goods were then imported against a Bill of Entry dated 17.03.2005 for re-export, claiming the benefit of Notification No.158/95. After processing, the goods were re-exported within the prescribed period under the said Notification, with proper declarations in the shipping bills. The allegation of non-compliance with procedures in identifying goods at the time of export or producing relevant reprocessing certificates was found unsustainable. The appellant was entitled to the benefit of Notification No.94/96-Cus. The Supreme Court's decision in Share Medical Care Vs. UOI established that an applicant is not barred from claiming the benefit of a notification at a later stage. Consequently, the impugned order demanding duty on the re-exported goods was set aside, and the appeal was allowed with consequential relief.
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• Importing Used Computer Parts into SEZ Allowed; Confiscation and Penalty Under Customs Act Overturned.

  Case-Laws - AT : Goods imported into a Free Trade and Warehousing Zone (FTWZ) by an entity based in Hong Kong were alleged to be non-compliant with Foreign Trade Policy (FTP) and other laws. The Tribunal held that import of 'old and used computer parts' is not barred from being brought into a special economic zone (SEZ). No bill of entry was filed, and there was no evidence of intent to clear goods into the domestic tariff area (DTA) inappropriately. SEZs are deemed outside the customs territory under the Special Economic Zone Act, 2005. The Customs Act, 1962 applies only for imports contrary to authorized operations or upon removal from SEZ without paying duty or violating import prohibitions. The Special Economic Zone Act prevails in case of conflict. The finding of confiscation u/s 111 of Customs Act and penalty u/s 112 were erroneous. The impugned order was set aside, and the appeal was allowed.
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• Importers' dilemma: 'infrared contactless thermometers' classification conundrum.

  Case-Laws - AT : Classification dispute regarding import of 'infrared contactless thermometers' under Customs Tariff. Lack of clarity on conformity standards used to classify goods as 'digital thermometers' under sub-heading 902519. Onus on proper officer to establish goods aptly classifiable against proposed description. Mere enumeration of characteristics insufficient without benchmark. Definition or assistance from notes not provided. Valuation revised based on past imports and rule 5 of Customs Valuation Rules 2007, though process justified, finality awaits fresh classification consideration. Applicability of Valuation Rules to be redetermined if classification changes.
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• Importer Wins Refund: Tribunal Overturns Denial of SAD Refund for Irrigation Parts Sold with Nil VAT Rate.

  Case-Laws - AT : The appellant imported parts on which Special Additional Duty (SAD) was paid, but these parts were not sold as such. Instead, they were used for installation of an irrigation system and sale of goods. The appellant claimed a refund of SAD under Notification No. 102/2007-Cus, which was rejected by the revenue authorities on two grounds: (1) the parts were not sold as imported, and (2) the appellant did not pay Value Added Tax (VAT) as the goods attracted a nil rate of VAT. The Tribunal held that although the appellant gave a different nomenclature while reselling the goods, no further process was carried out, and the parts were sold individually. The contract had separate portions for sale of goods and installation of the irrigation system. Therefore, the rejection of the refund claim on the first ground was incorrect and illegal. Regarding the second ground, it is settled law that even if the goods attract a nil rate of VAT, it is treated as VAT being paid appropriately. Hence, the refund cannot be rejected on this ground either. The Tribunal relied on its earlier decisions in similar cases, holding that the refund is admissible under Notification No. 102/2007-Cus even if the goods attract a nil rate of VAT.
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• Tribunal directs reconsideration of denied duty remission for goods destroyed by fire after procedural lapse.

  Case-Laws - AT : Appellate Tribunal set aside orders denying remission of excise duty on indigenous goods and customs duty on imported goods destroyed in factory fire. Tribunal found no dispute regarding fire incident and destruction of goods, appellant received insurance claim, no evidence of mischief or carelessness by appellant. Commissioner raised deficiencies in remission application without giving appellant opportunity to explain. Matter remanded to Commissioner for reconsideration of remission application after giving proper opportunity to appellant to address queries raised. Consequential demands of duty also set aside for fresh adjudication along with remission application by competent authority.
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• ELISA Test Kits for Food Testing Ineligible for Customs Exemption as Diagnostic Kits, Tribunal Confirms.

  Case-Laws - AT : The appellant imported ELISA Test Kits for food testing but classified them under 3822 00 90 as diagnostic kits to claim exemption under customs notifications. The Tribunal held that ELISA kits for food testing cannot be treated as diagnostic kits eligible for exemption. Explanatory notes clarify that diagnostic reagents covered under 3822 are for evaluating processes in humans/animals, not for food testing. The exemption notification must be construed strictly, and its intent is to cover medical products. Appellant failed to prove the imported kits fell within the exemption parameters. The term "food testing" cannot be implied or added to "diagnostic kits" in the notification. Therefore, the imported ELISA kits for food testing did not qualify for exemption as diagnostic reagents/kits.
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• Unauthorized diversion of imported goods leads to confiscation and penalties.

  Case-Laws - AT : Imported material diverted to unit other than permitted unit, resulting in contravention of import-export policy provisions. Goods held liable for confiscation u/s 111 and importer penalized u/s 112 of Customs Act. Appellant claimed permission for Wada unit valid for Panipat unit, refuted by Ministry's clarification. Confiscation and penalty upheld, but redemption fine reduced to Rs.3 lakhs and penalty to Rs.2 lakhs considering total value of Rs.22 lakhs. Appellate Tribunal's order regarding diversion of imported goods to unauthorized unit and consequent penalties.
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IBC

• Interim Relief Denied Due to Complex Issues; Court Emphasizes Cause of Action Timing and Procedural Irregularities.

  Case-Laws - HC : The High Court declined to grant interim relief, emphasizing that the amended writ petition raised numerous complex grounds which cannot be adjudicated fully at the interim stage. The Court clarified that a detailed examination of substantive grounds on merits would not be undertaken, and the assessment of contentions, particularly regarding merits, must necessarily be prima facie at this interim stage. Regarding the time limitation under Regulation 3(4) of the IBBI Regulations, the Court held that while the Regulation stipulates a strict time limit for filing a complaint, the critical issue is determining when the cause of action arose. In the present case, the allegations against the Petitioner in the Show Cause Notice dated 2nd April 2024 revolve around improper constitution and functioning of the Committee of Creditors (CoC), raising concerns about procedural irregularities and potential breaches of duty. The Court applied the principle of statutory interpretation u/s 13(2) of the General Clauses Act, 1897, to prima facie interpret the term "whole-time members" in Section 220(1) of the IBC to include a scenario with only one member, ensuring the disciplinary committee's effective operation. Ultimately, the Court found no ground to grant an interim stay on the impugned order and dismissed the present application.
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• Corporate debtor shielded, but directors face prosecution for pre-resolution offences.

  Case-Laws - HC : The corporate debtor cannot be prosecuted for prior liability after the approval of the Resolution Plan, as per Section 32-A of the Insolvency & Bankruptcy Code (IBC). However, the protection u/s 32-A is limited to the corporate debtor and does not extend to its Directors who were in charge when the offence was committed or were signatories to the cheque. The Supreme Court in Ajay Kumar Radheshuyam Goenka case clarified that in proceedings u/s 138 of the Negotiable Instruments Act, if the plan is approved or the company dissolved during the pendency, the Directors and other accused cannot escape liability by citing dissolution. They will have to continue facing prosecution. The High Court allowed the Criminal Original Petitions.
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• Municipal Corporation Can't Claim Pre-Resolution Property Tax Dues Not Filed in Insolvency Process; Interim Stay Granted.

  Case-Laws - HC : A resolution plan was approved for the petitioner on 26.03.2021 under the Insolvency and Bankruptcy Code (IBC). The Municipal Corporation of Delhi (MCD) demanded property tax from the petitioner for the period prior to the approval date. The court relied on Ghanashyam Mishra case, which held that upon approval of a resolution plan, all statutory dues owed to government authorities prior to the approval date stand extinguished if not included in the plan. MCD did not lodge its claim during the corporate insolvency resolution process (CIRP). Consequently, MCD cannot demand property tax dues prior to 26.03.2021. The Rainbow Papers case is distinguished as the statutory authority there had lodged its claim during CIRP. An interim stay was granted on MCD's demand for pre-approval period, while directing the petitioner to pay property tax after 26.03.2021. The matter was listed for further hearing.
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• Appeal Dismissed: NCLAT Upholds E-Auction Quashing, Emphasizes IBC Over Companies Act in Insolvency Cases.

  Case-Laws - AT : The NCLAT dismissed the appeal challenging the quashing of the e-auction conducted on 31.01.2024 for the sale of the Corporate Debtor as a going concern and the rejection of the appellant's proposed Scheme of Arrangement u/s 230 of the Companies Act, 2013. The Tribunal held that with the enactment of the IBC, the significance of Section 230(1) in addressing insolvency has diminished. The follow-up process u/s 230(1) is necessary only when the Liquidator fails to sustain the Corporate Debtor as a going concern. Regulation 32A mandates the Liquidator to prioritize selling the Corporate Debtor as a going concern to maximize value. Minor discrepancies during the bid process were deemed inconsequential as the Successful Bidder is operating the Corporate Debtor as a going concern, fulfilling the IBC's objective. The appeal lacked merits and was dismissed.
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• Creditors' Committee Can Choose Liquidation Without Resolution Efforts if Recovery is Unlikely, Court Upholds Decision.

  Case-Laws - AT : The Committee of Creditors (CoC) with 100% vote share can directly proceed for liquidation of the Corporate Debtor without taking steps for resolution, as the power given to the CoC to decide liquidation is wide and can be exercised immediately after constitution of the CoC. The CoC is not required to complete all resolution steps before liquidation, as the legislative intent allows liquidation "at any time" even before inviting resolution plans. The CoC found no positive signs for revival and good grounds to prolong the CIRP process, considering the Corporate Debtor's unfavorable financial position. The Resolution Professional faced difficulties in obtaining records and information from the suspended management, hindering preparation of the Information Memorandum (IM). The CoC's decision to liquidate was not abrupt, hasty or arbitrary. The Adjudicating Authority cannot adjudicate the merits of the CoC's commercial wisdom to liquidate with requisite majority. No infirmity was found in the Adjudicating Authority's order approving the CoC's liquidation decision, and the appeal was dismissed.
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• Court Confirms Timely Filing of Application Against Guarantor, Dismisses Appeal and Upholds Bank's Right to Proceed.

  Case-Laws - AT : The court examined whether the application filed by the State Bank of India against the personal guarantor u/s 95 was barred by limitation. It was held that even if no plea regarding limitation was raised, the court is obliged to examine the issue. The bank's pleadings clearly contained the extension of limitation u/s 18 of the Limitation Act. Since the pleadings were on record providing for extension, no error was committed by the Adjudicating Authority in admitting the Section 95 application against the personal guarantor. The application was not barred by limitation. Regarding the admission of the application, the court held that the notice of demand was clearly given to the personal guarantor. The contention that fresh notices were required before filing the Section 95 application was rejected. Once the guarantee was invoked, the bank was entitled to initiate proceedings. Since the application was well within time, this ground could not be a reason to interfere with the impugned order. The Appellate Tribunal found no error in the Adjudicating Authority's order admitting the Section 95 application, and the appeal was dismissed.
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Indian Laws

• Court Reinstates High Court Decision, Grants Specific Performance for Immovable Property Breach, Citing Legal Errors.

  Case-Laws - SC : The Court held that the petitioner was ready and willing to perform the contract u/s 16(c) of the Specific Relief Act, having paid a substantial portion of the consideration. It was a fit case for directing specific performance u/ss 10 and 16, as compensation in money would not afford adequate relief for breach of contract to transfer immovable property. The doctrine of lis pendens u/s 52 of the Transfer of Property Act bars transfer of suit property during pendency of litigation, except under court's authority. Pendency commences from the date of institution until disposal, and the doctrine applies to third-party purchasers once the suit is instituted. The Court recalled its earlier judgment due to errors apparent on the face of record regarding limitation and specific performance, and restored the High Court's judgment, allowing the review petitions.
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• Supreme Court reinstates summoning order, clarifies complaint timeline under Negotiable Instruments Act Section 138.

  Case-Laws - SC : The appellant challenged the summoning order on the ground that the complaint was not premature, as it was filed within the limitation period of one month from the cause of action u/s 138 of the Negotiable Instruments Act, 1881. The SC held that the cause of action for the complainant arises when there is no payment of the dishonored cheque amount within fifteen days from the receipt of the notice. In this case, the legal notice was received on 01.10.2019, and the reply was given on 16.10.2019 without payment. Therefore, the complaint filed on 23.10.2019 was within the one-month limitation period from 16.10.2019 as per Section 142(1)(b) of the Act. The HC erred in construing the limitation period from the reply date instead of the non-payment date. The SC set aside the HC order and revived the summoning order, allowing the appeal.
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• Dismissal of Challenge Against Conviction for Bounced Cheque Despite Cash Repayment Claim.

  Case-Laws - HC : Pertaining to a challenge against conviction and sentence u/s 138 of the Negotiable Instruments Act, the court observed that the petitioner's defense of repaying the loan amount in cash without acknowledgment was rightly rejected by the lower courts. The petitioner failed to provide cogent evidence to discharge the presumption against him u/s 139 of the NI Act read with Section 118 of the Evidence Act. The objection regarding the loan being taken in cash, violating the Income Tax Act, does not absolve the petitioner's liability u/s 138. The revision petition lacked merit for interference with the conviction and sentence, leading to its dismissal.
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• SBI's Transfer of NPA to ARC Valid; Web Notice Date Crucial for Sale, Overrules Previous Judgment, Complies with RBI Directions.

  Case-Laws - HC : The account of the borrower was classified as a Non-Performing Asset (NPA) on the relevant date. The transfer of the financial asset by the State Bank of India (SBI) to the Asset Reconstruction Company (ARC) is valid. The High Court's impugned judgment and order dated October 5, 2023 is set aside, and the appeal is allowed. The date on which the account should be considered as NPA for a sale u/s 5 of the Act of 2002 would be the date of publication of the web notice, not the date of NPA mentioned in the notice u/s 13(2). SBI's action in putting up the financial assets for sale and ultimately assigning them to the ARC cannot be faulted, as it did not violate any binding Reserve Bank of India (RBI) Directions. The borrower, who did not respond to the notice u/s 13(2), failed to discharge the burden of proof rebutting the presumption that the account became NPA on the date of the web notice.
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SEBI

• Court Upholds SEBI Regulations on Share Acquisition Allegations; Dismisses Settlement Claims, Emphasizes Balanced Approach.

  Case-Laws - HC : Validity of SEBI Settlement Proceedings Regulations, specifically Regulations 6(1)(f) and 13(2)(ba) of the SEBI (Settlement Proceedings) Regulations, 2018. It examines allegations against noticees of acting in concert while acquiring shares without required disclosures, creating false trading appearances, and manipulative trading practices. The court held that the allegations in the show cause notice, if proven, are grave. It observed that the petitioners' objective was to stall adjudication proceedings by filing settlement applications and refusing to cooperate. The court rejected arguments of excessive delegation and manifest arbitrariness in the Regulations, stating they conform to the parent Acts and do not lack logical consistency or determining principles. It upheld the rejection of the petitioners' settlement proposal, finding the conditions imposed reasonable considering the allegations. The court criticized attempts to stall proceedings through constitutional challenges and interim relief pleas, emphasizing a pragmatic approach balancing defaulters' and public interests.
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Service Tax

• Petitioner Eligible for Tax Amnesty Under Sabka Vishwas Scheme; Discharge Certificate to Be Issued in Four Weeks.

  Case-Laws - HC : The High Court held that the petitioner was eligible to apply under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, for resolving legacy tax disputes. The scheme aimed to liquidate legacy cases locked in litigation and provide amnesty for those who failed to correctly discharge their tax liability. The circular issued by the Central Board of Indirect Taxes and Customs clarified that in cases where tax was paid by utilizing input tax credit (ITC) and the matter is under dispute, the tax already paid shall be adjusted by the designated committee when determining the final payable amount under the scheme. The court found that the petitioner's case fell under this category, and the revenue was bound to adjust the ITC claimed by the petitioner, leaving the balance tax payable as nil. Consequently, the High Court directed the revenue authorities to issue the discharge certificate (SVLDRS-4) within four weeks.
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• Food Takeaway/Home Delivery = Sale, Not Service: Exempt from Service Tax.

  Case-Laws - AT : The CESTAT held that the sale of food items through "Take Away" or "Home Delivery" does not involve any service element, and is clearly an activity of sale of food. Following the ratio of previous judgments, such activity is not liable to service tax. Consequently, the impugned order was set aside, and the appeal was allowed, ruling that service tax cannot be levied on the sale of food over the counter or through takeaway/home delivery channels.
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Central Excise

• FOR sales make assessee eligible for CENVAT credit on outward freight to avoid tax cascading.

  Case-Laws - AT : Appellant's eligibility for CENVAT credit on service tax paid for outward transportation under reverse charge mechanism in cases where the sale of excisable goods is on FOR basis. It cites favorable judgments from the CESTAT and High Courts of Gujarat and Kerala, which held that when freight is an integral part of the assessable value on which excise duty was paid for FOR sales, the assessee is eligible for CENVAT credit on outward transportation. The judgments establish that permitting CENVAT credit in such cases aligns with the scheme's objective of avoiding tax cascading effects and preventing ultimate burden on consumers. Consequently, the impugned order is set aside, allowing the appeal with consequential relief.
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• Partial CENVAT Credit Allowed: Construction Material Excluded, Post-Production Services Approved, Penalty Removed.

  Case-Laws - AT : Disallowance of CENVAT credit claimed by the appellant on various inputs and input services. The key points are: The credit was denied as the inputs and services did not qualify u/rs 2(k) and 2(l) of the CENVAT Credit Rules, 2004, due to the exclusion clauses. The decisions cited by the appellant were not relevant. The Bombay High Court and Supreme Court affirmed that goods/services excluded under the definition cannot be covered by referring to the main clause. Regarding construction materials, they fall under the exclusion clause for goods used for building construction. The appellant failed to prove the activities were for renovation/repair of an existing factory, as required for the inclusion clause. The credit on security and manpower services after production commenced was allowed, as it could not be attributed to factory setup. The demand needs re-determination, and the penalty u/r 15(1) was set aside, with the appeal partly allowed.
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• Manufacturer entitled to CENVAT credit on services for production/clearance of final goods.

  Case-Laws - AT : Input services like clearances charges, consultancy charges, insurance charges, GTA charges and erection/commissioning charges used by a manufacturer, directly or indirectly, in relation to manufacture of final product or clearance of final product up to place of removal, are eligible for CENVAT credit u/r 2(l)(ii) of CENVAT Credit Rules, 2004. Even though the term "setting up" was deleted from the inclusion clause, these services are covered under the main clause as input services. The Tribunal relied on the Piramal Glass Ltd case, allowing CENVAT credit on such services used for installation of a new furnace, being directly related to manufacture. The impugned order denying credit was set aside, and the appeal was allowed.
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Case Laws:

• GST

• 2024 (11) TMI 786
  Entertainability of the present petition at the stage of the show cause notice - recovery of taxes - determination of the value of the supply as per Section 15 (3) (b) of the CGST Act, 2017 - HELD THAT:- In the show cause notice, a specific allegation is made on suppressing facts and misstatement regarding non-furnishing details of outward supplies under Section 37 of the CGST Act. There is also an allegation that the facts have been suppressed with the intention to evade the payment of GST. It is further stated in the show cause notice that if the investigation had not been conducted, evasion of GST would not have come to light. The respondents in the show cause notice have invoked the extended period of limitation based on the allegations of suppression of facts and misstatement with an intention to evade the payment of GST from July 2017 to March 2022. The show cause notice also deals with the onus of proof and its extent of compliance for the purpose of Section 15 (3) (b) of the CGST Act. The issue of whether there is a suppression of facts or misstatement to invoke an extended period of limitation would require a determination on the factual matter which this Court, in its extraordinary jurisdiction under Article 226 of the Constitution of India, certainly cannot enter into. The issue of shifting of onus also involves adjudication on facts - the contention of the petitioner that the show cause notice has been issued only on the ground of retrospective application of the Circular is also ill-founded. There is no challenge to the said circular in the prayer clause of the petition. The petition to challenge the show cause notice dated 2 August 2024 is dismissed. However, the petitioner is granted time up to 15 December 2024 to file its reply to the show cause notice. Respondent no. 3 to give a personal hearing to the petitioner and, after considering the petitioner s submissions, pass a reasoned and speaking order on or before 31 January 2025.

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• 2024 (11) TMI 785
  Interest on delayed payment of refund of tax as per Section 56 of the Central Goods and Services Tax Act, 2017 - interest for the period starting from the expiry of 60 days from the date of filing the shipping bill up to the date of grant of refund, although during the interregnum, the Petitioner s name was red flagged on the respondents portal - HELD THAT:- Section 56 of the CGST Act provides for the period for which the interest is to be granted, and the said period starts from the date of receipt of an application for refund till the date of refund of such tax. In the instant case, the shipping bill is considered as an application for refund and, therefore, the period for grant of interest would begin on expiry of 60 days from the date of the shipping bill and would continue till the date of refund of such tax. In the absence of any provision in Section 56 to exclude the contingency with which we are faced, the denial of interest by the Respondents cannot be justified. If the submissions of the Respondents is accepted, then the same would amount to rewriting the provisions of Section 56 of the CGST Act by this Court, which certainly is not permissible. The Petitioner is entitled to interest under Section 56 of the CGST Act for the period beginning with the expiry of 60 days from the date of the shipping bill up to the date of grant of refund - petition allowed.

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• 2024 (11) TMI 784
  Cancellation of GST registration due to non-furnishing of returns for a continuous period of 6 months - HELD THAT:- It is discernible from a reading of the proviso to sub-rule [4] of Rule 22 of the CGST Rules 2017 that if a person who has been served with a show cause notice under Section 29[2][c] of the CGST Act, 2017, is ready and willing to furnish all the pending returns and to make full payment of the tax itself along with applicable interest and late fee, the officer, duly empowered, can drop the proceedings and pass an order in the prescribed Form i.e. Form GST REG-20. Having regard to the fact that the GST registration of the petitioner has been canceled under Section 29[2][c] of the CGST Act, 2017 for the reason that the petitioner did not submit returns for a period of 6 [six] months and more; the provisions contained in the proviso to sub-rule [4] of Rule 22 of the CGST Rules, 2017 and the orders passed by the coordinate benches of this Court as well as by this Court in similar matters whereby the matters have been disposed of with a direction to the respondent authorities to revoke the cancellation of registration upon due payment of all statutory dues payable by the petitioners, this Court is of the considered view that no purpose will be served by keeping this writ petition pending and the present writ petition can be disposed of in similar terms, as had been made in similar other writ petitions. The impugned order dated 09.12.2021 is hereby interfered with and set aside. The petitioner is directed to approach the concerned authority within a period of 1 [one] month from today, seeking revocation of cancellation and restoration of his GST registration - petition disposed off.

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• 2024 (11) TMI 783
  Seeking release of goods - only prayer made by the petitioner is that in the event the amount is deposited to the satisfaction of the authorities, the goods may be released in favour of the petitioner - HELD THAT:- The petitioner shall deposit the entire amount as contemplated under Section 129(1)(a) of the GST Act to the satisfaction of the authorities within a period of one week from today. In event the amount is deposited, the goods and vehicles be released in favour of the petitioner immediately thereafter. Petition disposed off.

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• 2024 (11) TMI 782
  Cancellation of petitioner s GST registration due to lack of natural justice - non-application of mind - HELD THAT:- The impugned order in the very first sentence refers to the petitioner s reply to the show cause notice dated 10 November 2020, filed on 25 November 2020. However, after this, it is stated that no reply to the show cause notice has been submitted. This appears to be in contradiction in terms and indicative of non-application of mind. Admittedly, the petitioner had filed a reply dated 25 November 2020 to the show cause notice dated 10 November 2020. This does not appear to have been considered before making the impugned order dated 09 April 2021. Besides, it is admitted by Ms Chavan, learned Addl. GP that no hearing had been given to the petitioner before the impugned order dated 09 April 2021 was made. The impugned order dated 09 April 2021 was made without due compliance with the principles of natural justice and fair play. Ordinarily, the rule of exhaustion of alternate remedies is not strictly enforced when petitions against such orders are entertained. The impugned order dated 09 April 2021 is quashed - the respondents will immediately restore the petitioner s registration so that the petitioner can file necessary returns, make payments and comply with other formalities by 11 December 2024 - petition disposed off.

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• 2024 (11) TMI 781
  Dismissal of Petitioner s appeal - Petitioner has not submitted any valid proof regarding payment of the mandatory pre-deposit equal to 10% of the disputed amount as required under Section 107 (6) of the CGST Act, 2017 - Petitioner has not submitted any valid documents, such as Board Resolution, to establish that he is the authorised signatory to sign the appeals under the Companies Act, 1956 - HELD THAT:- To be registered on the GSTN portal as an authorized signatory, the person must submit the relevant board resolution or power of attorney authorizing him. If Respondent No. 2 had taken a few seconds to check the GSTN portal, he would have found that Mr. Deepak Kokate is duly authorised to sign the appeal documents. In a similar matter in TATA CONSUMER PRODUCTS LTD. VERSUS UNION OF INDIA, [ 2024 (9) TMI 396 - BOMBAY HIGH COURT] , this Court had, by an order dated 13th August 2024, set aside the order passed by the Appellate Authority and remanded it for de novo consideration. The impugned order is quashed - matter remanded to Respondent No. 2 for de novo consideration.

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• 2024 (11) TMI 780
  Denial of benefit of input tax credit on account of the provisions contained in Sub Section (4) of Section 16 of the CGST/SGST Acts, for the financial year 2018-19 through Ext.P5 order dated 18.04.2024 - HELD THAT:- Having regard to the assertion of the learned counsel appearing for the petitioner that on account of notification of Sub-Section (5) of Section 16 of the CGST/SGST Acts, the petitioner will be entitled to input tax credit, which has been denied to the petitioner by Ext.P5 order, the writ petition will stand disposed of, setting aside Ext.P5 to the extent that it denied input tax credit to the petitioner on account of the provisions of Sub Section (4) of Section 16 of the CGST/SGST Acts and directing the competent authority to pass fresh orders, after taking note of the provisions contained in Section 16(5) of the CGST/SGST Acts and after affording an opportunity of hearing to the petitioner, within a period of three months from the date of receipt of a certified copy of this judgment. Petition disposed off.

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• 2024 (11) TMI 779
  Violation of principles of natural justice - It is the case of the petitioner that the reply submitted by the petitioner where the petitioner had claimed the benefit of Circular No.183/15/2022-GST dated 27-12-2022 has not been considered by the officer while issuing Ext.P6 - HELD THAT:- According to the petitioner the declarations required to be produced in terms of the aforesaid Circular was also produced before the officer. However, while considering the reply the officer has considered only one issue pointed out by the petitioner which is the recommendation of the 53rd GST Council Meeting and has not considered any other issue including the question as to whether the declaration submitted by the petitioner in terms of the Circular referred to above can be accepted or not. The officer does not also appear to have considered the contention taken by the petitioner that certain amounts covering the demand for which declarations could not be produced have also been remitted by the petitioner. Therefore, there are no option but to set aside Ext.P6 and to remit the matter for fresh consideration of the 1st respondent who shall pass fresh orders after affording a further opportunity of hearing to the petitioners after considering all the contentions taken by the petitioner in the reply / replies submitted by the petitioner. Petition disposed off.

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• 2024 (11) TMI 778
  Seeking quashing of order rejecting the appeal of the petitioner for assessment year 2017-18 - grievance raised in this petition is that the petitioner had already deposited tax under the IGST Act - Vires of Section 19 (1) of IGST Act and Section 77 (1) of CGST and RGST Act of 2017 - HELD THAT:- Considering determination of the factual aspects is required to be done at first instance before the vires of the provisions can be gone into, the petition is disposed of relegating the petitioner to the remedy of appeal before the GST Tribunal - It is clarified that the issue of challenge to the vires is kept open. No further proceedings for recovery of the balance amount shall be taken against the petitioner in case of the authorities being satisfied that the condition of pre-deposit for filing the appeal has been complied with. The petitioner shall also deposit the refunded amount received on these transactions under IGST. The GST Tribunal has not been constituted till date, the petitioner shall file an appeal within three months from the date of constitution of the Tribunal. The Tribunal shall consider the appeal on merits after being satisfied that the condition of pre-deposit has been complied with.

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• 2024 (11) TMI 777
  Challenge to order passed under Section 107 of the Central Goods and Services Tax Act, 2017 - penalty imposed under Section 129(1) of the CGST Act due to non-generation of Part-B of the E-way bill - HELD THAT:- It appears that it is not in dispute that in response to the show cause notice in Form GST MOV-07 dated 03.03.2022, the representative of the petitioner without any demur accepted the notice and paid the amount of Rs. Rs.11,80,150/- as penalty voluntarily without any objections. The respondent No. 1 was therefore justified in passing the impugned order-in-original in Form GST MOV-09 for levy of the penalty of Rs. Rs.11,80,150/- upon the petitioner for violation of the provisions of Section 129 (1) of the CGST Act. However, the fact remains that the petitioner had no intention to evade the tax as the petitioner was transporting the goods in question from the Port after clearance of the same by the Custom Authorities to the place of the manufacture. It is also emerging from the record that the petitioner had generated Part-A of the e-way bill and only the Part-B of the e-way bill was not accompanying the goods in the conveyance, when the same were intercepted at 6:05 p.m. on 01.03.2022. In the facts of the case, as the petitioner has paid the penalty pursuant to the notice after detention or seizure of the goods in question in response to the notice issued as per Sub-section 3 of the Section 129 of the CGST Act, the petitioner was liable to pay the penalty equivalent to two hundred per cent of the tax payable or however, in the facts of the case, as the IGST was already paid on the goods, the petitioner was subjected to the penalty of two hundred per cent of the tax paid, but, at the same time, considering the fact that the contravention of the Rule 138 is venial and technical as the goods in question were not accompanying with the Part-B of the e-way bill, the penalty as prescribed in Clause (a) of Section 129 (1) of the CGST Act is required to be modified and the lesser penalty of Rs. 25,000/- as stated in the said Clause would justify the contravention of the Rule 138 of the Rules committed by the petitioner for not having Part-B of the e-way bill in the facts of the case. The impugned order of penalty passed by Respondent No. 1 therefore stands modified to Rs. 25,000/- instead of Rs. Rs.11,80,150/- levied and confirmed by the respondent authorities.

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• 2024 (11) TMI 776
  Amendment of the Central Goods and Services Tax (CGST) Act, 2017, particularly by insertion of sub-section (5) in Section 16 - input tax credit - HELD THAT:- Admittedly, the petitioner has submitted its invoice/debit note pertaining to the financial year 2018-19 and, that too, prior to 30.11.2021 and, therefore, the case of the petitioner very well comes under the provisions of sub-section (5) of Section 16. The respondent authorities are directed to consider the matter and pass an appropriate order taking into consideration the provision of Sub-Section (5) of Section 16 of the Central Goods and Services Tax Act, 2017, vide Amendment (Finance Act, 2024) dated 16.08.2024. Appeal disposed off.

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• 2024 (11) TMI 775
  Classification of goods - Natural Antioxidant Water with natural Betel Leaf extract and natural Ajwain extract - to be classified under HSN 2202 9920 or not - taxable @ 12% for the products manufactured from end or not - HELD THAT:- The comments offered by both Central and State jurisdictional authorities that both the authorities have stated categorically that the HSN classification 2202 9920 adopted by the applicant is wrong as the product does not comprise of any Fruit Juice and Fruit Pulp . Hence, the description of goods falling under the Tariff item 2202 99 20 of the Customs Tariff Act, 1975 reveals that the said Tariff entry is relating to Fruit pulp or fruit juice based drink. Whereas the ANTIOXIDANT WATER manufactured by the applicant, does not contain any Fruit Pulp or Fruit Juice. The raw materials utilized in the manufacturing process are extracts of betel leaves/Ajwain seeds dissolved in propylene glycol and Menthol crystals. As observed from the process description furnished by the Applicant and on the facts and circumstances of the case, we are of the view that the classification 2202 99 20 adopted by the applicant is not correct. Whether the Rate of Tax @12% adopted by the applicant on the above said product is correct? - HELD THAT:- It is clear that the ANTIOXIDANT WATER manufactured by the applicant is nothing but Paan flavored water , wherein Menthol crystals dissolved in propylene glycol is also added as a flavouring additive, for which the CSIR-CFTRI has licensed the applicant to undertake commercial production of the product. Hence, the view of the State Jurisdictional authority that the antioxidant water (i.e. Paan Flavored water) manufactured by the applicant is classifiable under HSN 2201 1010 is not correct, because of the exclusion clause of nor flavoured find place in the goods description under the tariff 2201 of the Customs Tariff Act 1975. The Anti-Oxidant water, i.e., the Paan Flavored water , as certified by the CSIR-CFTRI is rightly classifiable under HSN 2202 1090 as All goods (including aerated waters], containing added sugar or other sweetening matter or flavoured, and taxable @ 28%, vide Sl. No 12 to Schedule IV of the Notification No 1/2017, Central Tax (Rate) dated 28.06.2017, and compensation Cess at 12% vide Sl. No 4 of Notification No 1/2017-Compensation Cess (Rate) dated 28.06.2017.

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• Income Tax

• 2024 (11) TMI 774
  Deduction u/s 80IA - Application of the principle of mutuality - Disallowance of depreciation - as submitted that where non-members are offered facilities on payment of charge then the assessee is liable to be taxed on the income generated therefrom but there is no liability in respect of the profits made by the assessee company from the members who avail themselves of the facilities provided for members - HELD THAT:- Tribunal has rightly followed the decision of this Court in the case of Sports Club of Gujarat Limited [ 1987 (10) TMI 21 - GUJARAT HIGH COURT ] which now stands fortified by the Hon ble Apex Court in the case of Secunderabad Club [ 2023 (8) TMI 925 - SUPREME COURT] by remanding the matter to the Assessing Officer to verify the claim of the assessee company as to whether any outsider is provided service or not so as to tax accordingly. In the facts of the case, the assessee company has received the contribution from its members for the services to be provided for the treatment of the effluent. The company is formed pursuant to the directions/suggestions made by this Court so as to reduce the pollution which is in the public interest and therefore, the form in which the company is incorporated is irrelevant. The objects of the company also makes it clear that the surplus, if any, would not be paid to its members and in case of dissolution of the respondent company, only Rs. 100/- would be paid to its members. Thus, the submissions made by the learned advocate for the appellant revenue relying upon the findings arrived at by the CIT (Appeals) are contrary to the settled legal position and the Tribunal has rightly therefore held in favour of the assessee by applying the principle of mutuality by holding that the income/surplus of the respondent assessee company would not be liable to tax on principle of mutuality. We are therefore, of the opinion that no question of law much-less and substantial question of law has arisen from the impugned orders passed by the Tribunal. Disallowance of depreciation - Tribunal has also rightly held that if the entire income/surplus of the respondent assessee company is not liable to be taxed on the principle of mutuality, the disallowance of depreciation and deduction under section 80IA of the Act is not required to be considered. The questions are answered accordingly against the revenue and in favour of the Assessee.

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• 2024 (11) TMI 773
  Reopening notice to issued in a faceless manner or the Jurisdictional AO - Proceedings against company whose name has been struck off - the notice as required to be issued in a faceless manner in terms of Section 151A but has been issued by the Jurisdictional Assessing Officer which renders the said notice bad. HELD THAT:- Having heard the learned advocates appearing for the respective parties, by keeping the point of maintainability open, since the jurisdictional issue has been raised, the present writ petition should be heard upon exchange of affidavits. Taking note of the prima facie case and the order of the Hon ble Division Bench of this Court in the case of Girdhar Gopal Dalmia v. Union of India,[ 2023 (9) TMI 1555 - CALCUTTA HIGH COURT] the impugned notice dated 1st May 2023 issued by the Jurisdictional Assessing Officer under Section 148 of the said Act, is required to be stayed till December 2024 or until further orders whichever is earlier. Let affidavit-in-opposition to the present writ petition be filed within a period of six weeks from date. Reply thereto, if any, be filed within four weeks thereafter.

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• 2024 (11) TMI 772
  Rectification of mistake apparent on record u/s 154 - addition of GST amount and non-payment of taxes u/s 43B - HELD THAT:- It is fact on record that assessee has failed to withdraw the appeal but, in the meantime, CIT (A) has adjudicated the issue based on the information available on record. Basically, he has accepted the fact that GST amount was not to be added in the hands of the assessee. However, he proceeded to sustain the addition to the extent of non-payment of GST u/s 43B. However, this is not the issue contested by the assessee before the CIT(A). Leaving that as it may, the grievance raised by the assessee before the CIT (A) was already addressed by the CPC by rectifying the order passed u/s 154 of the Act, there is no grievance to the assessee. The impugned order passed by CIT (A) becomes infructuous. Accordingly, we direct the AO not to proceed with the order giving effect to the findings of CIT (A).

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• 2024 (11) TMI 771
  Deduction u/s 80-IA on retention money offered to tax in the original return of Income - HELD THAT:- CIT(A) for the assessment year 2017-18 has deleted the disallowance made by the Assessing Officer for retention money to the extent of Rs. 11,36,37,740/-. Therefore, the finding of the ld.CIT(A) is not correct to that extent. In our view, the Revenue should take a consistent view unless there is a change of fact or law. We do not approve the approach of the ld.CIT(A) for deciding the issue when the issue has already been considered and examined by the ld.CIT(A) in the earlier assessment year i.e., 2017-18. CIT(A) while deciding the issue against the assessee, has relied upon the decision of M/s. McNally Bharat Engineering Co. Ltd, Kolkata [ 2017 (3) TMI 207 - ITAT KOLKATA] - Section 43CB as reproduced hereinabove which was inserted in the statute book w.e.f 01.04.2017 provides the how the retention money was required to be treated while computing the profit and gains arising from the construction contract. Section 43CB(2)(i) clearly provides that for the purposes of percentage completion method, the project completion method or straight-line method, the contract revenue shall include retention money. In view of the clear provision of law, the assessee was right in including the retention money in contract receipts. It is consistent case of both the parties that the retention money was retained by the contractor pertaining to the construction activities for which the assessee was eligible for section 80IA of the Act. The retention money cannot have a different characteristics than that of the principle amount of the contract as both are part and parcel of the revenue which would be received by the assessee or was received by the assessee for carrying out the construction activities. In view of the above, the order passed by the ld.CIT(A) is without any merit and therefore, the appeal of the assessee is required to be allowed. In the present case, the reliance of the ld.CIT(A) in the case of DCIT, Circle 1 Vs. M/s. McNally Bharat Engineering Co. Ltd (supra) form basis of deciding the issue against the assessee. However, we find that Section 43CB, which came into the statutue w.e.f. 01.04.2017 clearly provides for considering the retention money as a contract receipt for computing the profit and gains arising from the construction contract. In light of the above, the appeal of the assessee is allowed.

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• 2024 (11) TMI 770
  Reopening of assessment u/s 147 - notice issued beyond 4 years - escaped assessment on account of under assessment of Long-Term Capital Gain represents excess indexed cost allowed while computing capital gain from sale of property - HELD THAT:- As going by the reasons recorded by the Assessing Officer, and the basis for such reasons, the Assessing Officer refers to only evidences filed by the assessee during the course of original assessment proceedings, which was held on record before the Assessing Officer, when the assessment order has been passed u/s 143(3) of the Act. Therefore, in our considered view, the assessee has made disclosure of all necessary facts for completion of his assessment, for that A.Y and thus, unless the Assessing Officer allege that, the assessee has failed to disclose fully and truly all material facts necessary for his assessment, the assessment cannot be re-opened beyond 4 years from the end of the relevant A.Y. The reopening of the assessment in the facts of the present case is bad in law, because the Assessing Officer has reopened the assessment beyond 4 years from the end of the relevant A.Y without any allegation, on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. The learned CIT (A) without considering the relevant facts, simply upheld the reopening of the assessment. Thus, we set aside the order of the learned CIT (A) and quash the re-assessment and passed by the Assessing Officer u/s 143(3) r.w.s. 147 - Decided in favour of assessee.

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• 2024 (11) TMI 769
  Exemption u/s 11 denied - Trust had not e-filed the Audit Report in Form 10BB on or before filing of the return of income - appellant filed application for condonation of delay in filing Form 10BB before the DGIT and application filed by the assessee has been rejected vide order u/s 119(2)(b) HELD THAT:- The argument of the assessee is that although the delay in the present case is more than 365 days, in general, but if we exclude the delay covered by the Covid period, then the delay is less than 365 days and accordingly, the appellant ought to have filed petition before the CIT (Exemption) but not before the DGI(Inv.). Further, in the circular issued by the CBDT, there is no clarification as to who will condone the delay, if delay is beyond 3 years. Since there is an ambiguity in the process of condonation of delay in filing of audit report, the assessee has filed further application before the CBDT seeking clarification and also condonation of delay in filing Form 10BB for both the A.Ys. We find that in the Board s Circular No.15 of 2022, dated 19/07/2022, there is a provision for the authorities to condone the delay up to 3 years and there is no provision for condonation of delay or there is no clarification as to who will condone the delay, if delay is beyond 3 years. Since there is an ambiguity in the Circular issued by the CBDT on the issue of condonation of filing of Form 10BB and further the appellant submitted that it has filed a further application before the CBDT for condonation of delay, in our considered view, there is a merit in the argument of the assessee that the learned CIT (A) should have waited till the CBDT finally decides application filed for condonation of delay. Further, in our considered view, when the appellant is otherwise entitled for exemption under the Act, having satisfied all the conditions, the authorities should have taken a lenient view on belated filing or late filing of Form 10BB of the Act. Since the appellant claims that it has filed further application before the CBDT for considering the condonation of delay in Form 10BB for both the A.Ys, in our considered view, the matter needs to be kept alive till such time, the CBDT takes a final decision on the delay in filing Form 10BB. Therefore, we are of the considered view, that the issue needs to go back to the file of the Assessing Officer for fresh consideration. Thus, we set aside the order passed by the learned CIT (A) for both the A.Ys and set aside the issue to the file of the AO and also direct the Assessing Officer to decide the issue of exemption u/s 11 of the Act, for both the A.Ys after the outcome of the application, if any, filed by the assessee, before the CBDT for condonation of delay in filing Form 10BB for both the A.Ys. Assessment of gross receipts as income of the appellant derived from property held under the Trust - Once any Trust/Institution loses its of exemption u/s 11 for any reason, including withdrawal of exemption granted u/s 12AA of the Act, the income of the Trust should be assessed as an AOP and only surplus/profits needs to be taxed. In the present case, it was the contention of the assessee before us that, the Assessing Officer has taxed gross receipts for both the A.Ys without allowing deduction towards various expenditure/application of income towards charitable purposes. If at all, the claim of the assessee is correct, then, in our considered view, the Assessing Officer is grossly erred in taxing gross receipts because in any case, the appellant needs to be assessed as an AOP on surplus/profit only. Therefore, we direct the AO to verify the claim of the assessee and in case as claimed by the assessee, if the gross receipts are brought to tax, then the Assessing Officer is directed to assess only income/profit to tax for both the A.Ys, in case finally the Assessing Officer holds that the assessee is not entitled for exemption u/s 11.

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• 2024 (11) TMI 768
  Addition in respect of unsecured loans received - As argued appellant satisfied all the ingredients viz. identity, genuineness and creditworthiness - HELD THAT:- AO and the CIT(A) have not accepted the creditworthiness of the lender but to rebut the said finding, the Ld. AR has stated that the lender was staying at Bhulabhai Desai Road in the upmarket Breach Candy locality of South Mumbai. Further, he was treated at Breach Candy Hospital which is a very expensive hospital. His legal heir and wife also migrated to London after his death. The lender was also operating a diamond factory at Kandivali, Mumbai. Therefore, it would be wrong to infer that the lender was not a man of means and lacked creditworthiness. Assessee has given PAN, ITR and confirmation of the lender to show that the loan was genuine. The loan was also undisputably advanced through account payee cheque. The immediate source of the fund was the repayment received by the lender in cheque and not in cash from one M/s Pranjal Star, who has given the confirmations from AY.2013-14 to 2015-16. Bank extracts of loan receipt and loan repayment by M/s Pranjal Star are enclosed at pages 35 and 44 of the paper books. Since the lender expired on 29.06.2016 in Breach Candy Hospital, he was not able to respond to the notices issued to him u/s 133(6) of the Act. This fact alone cannot negate the overwhelming factual and circumstantial evidences advanced by the appellant. In view of this fact discussed above, we are of the considered view that the appellant has satisfactorily explained the nature and source of the credit of Rs. 25,00,000/- in its books for the subject assessment year. Accordingly, the order of CIT(A) is set aside and the AO is directed to delete the addition made u/s 68 of the Act. Disallowance of interest paid to creditor - AR submitted that interest was paid through banking channel and assessee has made TDS wherever interest was paid - HELD THAT:- As we have already deleted the addition of cash credit u/s 68 of the Act of the impugned loan. Hence, disallowance of interest is also deleted and the ground is allowed.

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• 2024 (11) TMI 767
  Rejection of Rectification application u/s 154 - Charging of interest under sections 234A, 234B, and 234C - return processed by CPC u/s 143 (1) holding that the due date for filing the return falls on 05.08.2013 and wrongly charged interest u/s 234A, 234B and 234C - case of the assessee was selected for scrutiny and notice u/s 143(2) was issued to the assessee. The rectification rights were then transferred from CPC Bangalore to the AO - HELD THAT:- As decided in Pankaj Bansal case [ 2024 (4) TMI 1199 - ITAT DELHI] . As per provisions of section 139(1) of the Act, the due date for the partnership firm not liable for tax audit would be 05.08.2013 for the year under consideration end the due date for partnership which is eligible for tax audit would be 31.10.2013. This is very clear from Explanation to section 139 of the Act, which defines the expression due date . Hence, the department in the hands of the firm holding had accepted the fact that it is liable for tax audit and accordingly had accepted the due date of filing of return of income u/s 139(1) to be 31.10.2013. Hence, the department cannot take the divergent stand for the assessee herein by holding that the firm in which assessee is a partner is not liable for tax audit u/s 44AB of the Act and consequently, the due date for assessee would get advanced to 05.08.2013, instead of 31.10.2013. In view of this, we have no hesitation to direct the AO to delete the chargeability of interest u/s 234A and u/s 234B - Decided in favour of assessee.

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• 2024 (11) TMI 766
  Penalty u/s 271(1)(c) - allegation of defective notice - non specification of clear charge - assessee has held that assessee concealed particulars of income of deposited cash in the bank account without satisfactory explanation - HELD THAT:- As decided in Manjunatha Cotton and Ginning Factory [ 2013 (7) TMI 620 - KARNATAKA HIGH COURT ] when the Assessing Officer proposes to invoke the first limb being concealment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard proforma without striking of the relevant clauses will lead to an inference as to non-application of mind. It is important to mention here that decision of the Hon ble Karnataka High Court has been upheld in the case of CIT vs. SSA S Emerald Meadows [ 2016 (8) TMI 1145 - SC ORDER ] wherein the Hon ble Apex Court has held no penalty can be levied without specifying which limb of Section 271(1)(c) of the Act would be applicable in case of the assessee. Thus, as AO has passed an order u/s 271(1)(c) of the Act on two limbs; (i) concealed particulars of income and (ii) furnishing inaccurate particulars of income. Accordingly, we are in this opinion that penalty notice issued in this case suffers from infirmity that lack of satisfaction and lack of notice being issued in making the assessee aware regarding exact charge against him and hence, the same is liable to be quashed. Decided in favour of assessee.

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• 2024 (11) TMI 765
  Reopening of assessment - Bogus LTCG - Addition u/s 68 - HELD THAT:- During the assessment proceedings, the Assessee stated that he is a regular investor and making investments in the shares and the said fact has not been denied by the A.O. while passing the assessment order. Merely because alleged script to be a penny stock does not mean that actually that script is a penny stock as it is not the case where the Assessee had invested only in the said script. In the present case, the Assessee has produced the document to show that he has made a genuine transactions of the aforesaid script and sold the same when the prices are high and there is no allegation from the Department that there is any adverse report from SEBI or any other authorities against the said script. A perusal of the assessment order shows that the A.O. has relied on the report of the Investigating Wing during the assessment proceedings. The A.O. has not made any enquiry from relevant parties or independent source or evidence, but the A.O. heavily relied upon the statement recorded by the Investigating Wing as well as information received from the Investigating Wing. Even the statement recorded by the Investigating Wing has not been confirmed or corroborated by the person during the assessment proceedings. In our opinion, the A.O. ought to have conducted a separate and independent enquiry and any information received from the Investigating Wing is required to be corroborated and confirmed during the assessment by the Assessing Officer by examining the concerned persons who can affirm the statement already recorded by any other authority or the Department. No allegation in the assessment order or the order of the CIT(A) that the Assessee was involved in any price rigging or price increase. Merely because a particular scrip is identified as a penny stock by the income tax department, it does not mean all the transactions carried out in that scrip would be bogus. So many investors enter the capital market just to make it a chance by investing their surplus monies. They also end up with making investment in certain scrips based on market information and try to exit at an appropriate time the moment they make their profits. In this case, no adverse inference in regard to the scrip of M/s Wagend Infra Venture Ltd in context of SEBI report etc, finds place in the reassessment order or the CIT (A) order and thus the transaction carried out by the assessee cannot be termed as bogus. Assessee has specifically asked for cross examination of the person who alleged that he has provided accommodation entries through Long Term Capital Gain, but the said request has been turned down by the A.O. stating that in these type cases, the spread of the network of the entry operators and the number of persons taking accommodation entries are large and therefore, it is not possible for every A.O. to summon every entry operator/broker and record his statement. The entry operator in this case before the Investigation wing. Income tax department has accepted oath that M/s Wagend Infra Venture Ltd. was being used for the purpose of providing bogus entries of LTCG. A.O. committed grave error in denying the opportunity of cross examination by the Assessee. Decided in favour of assessee.

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• 2024 (11) TMI 764
  Income from lease rental eligible for deduction u/s 80HHC - HELD THAT:- We are of the view that when a certain profit or gain has already been granted deduction under section 80-IA, to extent specified in first part of sub-section (9) of section 80-IA, claim of deduction under other provisions, including section 80HHC of the Act, would not be available for lease rental income in view of Section 80IA(9) of the Act. This also finds support from a concurrent reading of the orders of Ahmedabad Tribunal in the case of Madhusudhan Industries [ 2023 (6) TMI 726 - ITAT AHMEDABAD] , the decision of Supreme Court in the case of E.I.H. Ltd. [ 2019 (2) TMI 2118 - SC ORDER] - Accordingly, on this issue, we find no infirmity in the order of Ld. CIT(A) so as to call for any interference.

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• 2024 (11) TMI 763
  Validity of notice u/s. 148 /148A as barred by limitation - main contention of the revenue is that the notices issued u/s. 148 have been deemed to be extended by Section 3 of TOLA, therefore, all the notices sent are within time limit and same is in consonance of the judgment of Union of India vs. Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT] - HELD THAT:- Firstly, after 01/04/2021, the Income Tax Act has to be read alongwith substituted provisions of TOLA will continue to apply after 01/04/2021 if any action or proceedings provided under the substituted provision of the Income Tax falls for completion between 21/03/2020 to 31/03/2021 and Section 3(1), overrides Section 149 - Similarly, TOLA will extend the time limit for grant of sanction by the authorities specified u/s.151 and if the time limit of three years falls between 21/03/2021 and 31/03/2021 then the specified authority u/s. 151(i) has extended time limit till 30/06/2021. The direction of Shri Ashish Agarwal will extent to all re-assessment notice issued in old regime i.e. from 01/04/2021 to 30/06/2021 and finally Court held that ld. AO was required to issue re-assessment notice u/s. 148 under the new regime within the time limit surviving u/s. 148 of the Income Tax Act r.w. TOLA. Thus, in all such instances for the relevant assessment years under question the time limit was extended only up to 30/06/2021 for issuance of notice u/s. 148. Now here in this case as noted above for A.Y.2013-14 after 148A (b), notice u/s. 148 was issued on 29/07/2022; for A.Y. 2014-15 it was issued on 31/07/2022; and for A.Y.2015-16 it was issued 28/07/2022. Thus, in all these years as noted above the original time limit for six years for A.Y.2013-14 was upto 31/03/2020; for 2014-15 it was 31/03/2021; and for A.Y. 2015-16 it was 31/03/2022. Even under the TOLA, the time limit for issuance of notice u/s 148 had expired on 30/06/2021 both for A.Y. 2013-14 A.Y. 2014-15. For the A.Y.2015-16, the Revenue itself has contended before the Hon ble Supreme Court as noted above, all the notices issued on or after 01/04/2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA. Here notice u/s. 148 for the A.Y. 2015-16 has been issued on 28/07/2022 which is admittedly barred by limitation under the new provision of Section 149(1) and it is not covered under TOLA. Accordingly, all the notices are quashed being barred by limitation on the reasons given above and we are not going on the reasons given by the ld. CIT (A) for quashing the notice. Appeals of the Revenue are dismissed.

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• 2024 (11) TMI 762
  Addition made on account of an offshore unit in Dubai - Unit treated as a proprietary concern of the assessee and all its profits were held to be taxable in the hands of the assessee by the AO - HELD THAT:- As pointed out from the order of the CIT(A) that this issue had been consistently arising in the case of the assessee right from the AY 2006-07 and had been consistently ruled and decided in favour of the assessee by the ITAT. That the CIT(A), taking note of these facts, had accordingly decided the issue in favour of the assessee and directed deletion of the addition made. Disallowance of excess depreciation claimed on furniture and fittings - DR was unable to distinguish the present case with that relating to the preceding assessment years decided in favour of the assessee by the ITAT, therefore we have no hesitation in confirming the order of the CIT(A) directing deletion of both the additions/disallowances made in the hands of the assessee by the AO. Disallowance of depreciation on goodwill generated on amalgamation - HELD THAT:- CIT(A) has dismissed all the contentions raised by the assessee before him in a cryptic manner by simply stating that the AO has rebutted all the submissions of the appellant diligently. CIT(A) has not passed a speaking order pointing out how all the contentions of the assessee are rebutted by the AO. The fact we note is to the contrary. The assessee in his detailed submissions filed to the CIT(A) has countered every basis with the AO for holding the claim of depreciation not allowable as per law. CIT(A) without noting any fallacy in the contention of the assessee has upheld the order of the AO. Assessee has also pointed out that the issue stands covered in favour of the assessee by the decision of Urmin Marketing Pvt. Ltd. [ 2020 (11) TMI 47 - ITAT AHMEDABAD ] wherein ITAT notes that once the scheme of amalgamation is approved by the Hon ble High Court after receiving no objection from the Income Tax Department, the consideration for the value of goodwill cannot be taken as Nil in terms of 6th proviso to Section 32(1), Explanation 7 to Section 43(1), Explanation 2(b) to Section 43(6)(c), Section 55(2)(a)(ii) and Section 49(1)(iii)(e), since they applied only to assets actually transferred from the amalgamating company to amalgamated company and goodwill resulting due to amalgamation was not an asset which was transferred from an amalgamating company to the amalgamated company. That such goodwill represents only the difference between the purchase consideration and the net asset value of the assets acquired by the amalgamated company and was not on account of any asset acquired by the amalgamating company or transferor-company. Therefore, the ITAT held that the provisions of 6th proviso to Section 32(1), Explanation 7 to Section 43(1), Explanation 2(b) to Section 43(6)(c), Section 55(2)(a)(ii) and Section 49(1)(iii)(e) cannot be applied in such facts situation. The ITAT, therefore, held that depreciation on such goodwill, therefore, was allowable in view of the proposition laid down by the Hon ble Supreme Court in the case of Smifs Securities Ltd. [ 2012 (8) TMI 713 - SUPREME COURT] DR was unable to distinguish the said case before us. Thus, he goodwill generated in the scheme of amalgamation is acquired by the assessee. Thus, in our considered view the assessee has complied all the conditions provided under section 32 - Decided in favour of assessee.

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• 2024 (11) TMI 761
  Penalty proceedings u/s. 271D - violating provisions of sec.269SS - Assessee had received a sum of Rs. 18 lakh from its trustee by way of bank transfer - other amounts were received from the employees of the trust as security deposits and the said amounts were utilized in the construction activities carried out by the trust - HELD THAT:- In the present case before us, the jurisdictional Assessing Officer as well as the JCIT and the CIT(A) had not doubted about the transactions and to that effect no addition or nothing has been made by the AO while framing the assessment. To prove that the transactions are genuine, the assessee also filed various documents including notarized affidavit to show that the security deposits are genuine and would not attract provisions of sec.269SS and consequently sec.271D- jurisdictional AO had not made further inquiries to ascertain the genuineness of the security deposits and in fact the CIT(A) also not considered the notarized affidavit filed before him, but relied on the findings of the JCIT and affirmed the levy of penalty u/s. 271D of the Act. Further, the dispute involved in this appeal is only penalty which was levied mechanically without giving any contra evidences to show that the assessee is indulging in the mischief and also without proving that the said security deposits are unaccounted money, the penalty could not be sustained. In respect of the levy of penalty, the Hon ble Supreme Court in the judgment reported in Hindustan Steel Ltd. v. State of Orissa [ 1969 (8) TMI 31 - SUPREME COURT] wherein the Hon ble Supreme Court had elaborated the circumstances under which the penalty need not be levied. By taking into account of the facts and the various documents filed by the assessee before the ld.CIT(A) and also considering the fact that there is no unaccounted money or some false entries in the books of account, we are also of the view that the penalty needs not be levied in this case. Further, in support of the case of the Revenue, the Revenue had not established that there is some unaccounted money and for which false entries were made in the books of account. Assessee appeal allowed. Penalty u/s 271E - returning the deposits by cash - As already discussed the assessee received the deposits by way of security from the newly appointed employees and the same deposits were returned back to the employees when they left the service. The payments were made by cash since they insisted for cash. Also perused the details furnished by the assessee as annexure 1 and from which we are able to find that not the entire deposits were repaid in cash. A sum of Rs 28.50 lakhs were paid through bank and a sum of Rs 29 lakhs were paid by cash to the assessee s ex-employees. In order to reduce their genuine hardships the assessee had repaid their deposits by cash at the time of their retirement or resignation which can not be found fault with. Even the payment by cash was because of their insistence. Further the ledger account produced by the assessee would support the case of the assessee. Moreover the assessee also filed affidavits in support of their claim from their ex employees to show that the transactions are genuine. The department has no other documents to disprove the claim of the assessee except relying on the provision. There is not even a single allegation about the unaccounted money or false entries in the books of accounts. The object for the introduction of the provision was not defeated since the assessee had established the facts in detail and therefore we are of the view that it is not a fit case for imposing the penalty u/s 271 E of the Act. Decided in favour of assessee.

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• 2024 (11) TMI 760
  Deemed income on unsold stock as house property income - units vacant completed unsold units in various projects developed by the assessee - HELD THAT:- As per decision of Co-ordinate Bench in assessee s own case [ 2019 (5) TMI 1689 - ITAT MUMBAI] , following the rule of consistency, we delete the addition made by AO for deemed income on unsold stock under the head Income from house property . Disallowance u/s. 43CA - owing to difference in agreement value and value determined by the ld. Departmental Valuation Officer (ld. DVO) - difference between the actual consideration and the value arrived at by the ld. DVO is less than 10% of the ld. DVO value - HELD THAT:- We are in agreement with the submissions of the ld. Counsel that the issue is no longer res integra and has been dealt with by several Co-ordinate Benches. Ld. Counsel had referred to a recent decision of the Co-ordinate Bench of ITAT, Mumbai in the case of Ravi Development [ 2023 (3) TMI 1539 - ITAT MUMBAI] wherein also amendment made to Section 43CA is held to be retrospective in nature and the tolerance band of 10% was taken into consideration for allowing the appeal of the assessee on account of difference between the reported consideration and value arrived at by ld. DVO. We un-hesitantly delete the addition made by the ld. Assessing Officer. Accordingly, ground is allowed.

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• 2024 (11) TMI 759
  Disallowance of deduction claimed u/s 36(1)(vii) - HELD THAT:- The co-ordinate bench of the Tribunal has decided this issue in favour of the assessee [ 2024 (2) TMI 1036 - ITAT BANGALORE] in which decision of the assessee in its case for the AY 2014-15 [ 2022 (5) TMI 1537 - ITAT BENGALURU] order dated 26.05.2022 relied as held that the assessee has claimed deduction towards PBDD under clause (a) to sec. 36(1)(viia) of the Act, meaning thereby, the clause (a) is applicable to rural advances only as per the decision given by Hon ble Supreme Court in the case of Catholic Syrian Bank [ 2012 (2) TMI 262 - SUPREME COURT] Hence the bad debts relating to non-rural branches are not required to be adjusted against PBDD allowed under clause (a) of sec. 36(1)(viia) of the Act in terms of the proviso to sec. 36(1)(vii) and sec. 36(2)(v) of the Act. We are unable to agree with the view expressed by Ld CIT(A) on this issue. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to allow the bad debts relating to non-rural branches u/s 36(1)(vii) of the Act without adjusting the same against the PBDD a/c, since the said PBDD a/c relates to rural advances only. Addition u/s.14A being expenditure in relation to exempt income to the book profit u/s. 115JB - AO has calculated the disallowance u/s. 14A and this issue was raised before the CIT(A) and the CIT(A) has also decided the issue in favour of the assessee. Against the deletion by the CIT(A), the revenue has raised this issue before us in ground no.2 to 9 of revenue s appeal. After considering the submissions we have dismissed the appeal of the revenue on this issue observing that there should not be disallowance u/s. 14A and decided this issue in favour of assessee, therefore no question arises for adjudication u/s. 115JB. Addition being provision for wage arrears and towards Ex-gratia and Bonus while computing book profits computed u/s. 115JB - AO noted that while computing taxable income these provisions has been added back by the assessee, however, while computing the book profit, these provisions have not been added back and the assessee s view is that the provisions made were not unascertained liability - AO further noted that while computing the income of the subsequent year the actual arrears of salary has been claimed as expenses, therefore the amount remained contingent liability. This would not alter the nature of provision and accordingly required to be added back to the book profits. AO noted from the submissions that the provisions have been computed on approximate basis on the basis of previous wage revision and the quantification pending discussion with unions. Accordingly it cannot be said that it is ascertained liability. The claim of future liability is to be held as unascertained liability and not being capable of quantification with certainty. Accordingly these amounts were added back to the book profit. This issue was raised before the CIT(A), however, the CIT(A) has observed that the income under normal provisions as per the return itself is higher than the book profit calculated u/s. 115JB. During the course of hearing, both the parties agreed that the CIT(A) should have decided the issue in detail, therefore we are remitting this issue back to the file of the CIT(A) for fresh decision. Disallowance u/s. 14A r.w.s. 8D - HELD THAT:- We note that this issue was considered by this Tribunal in the case of Canara Bank (erstwhile Syndicate Bank) [ 2023 (11) TMI 1146 - ITAT BANGALORE] as held the assessee has admittedly not incurred any expenditure. This case pertains to income on dividend, which by no stretch of imagination can be treated to be an expenditure to attract the provisions of Section 14A of the Act. Deduction u/s. 36(1)(viia) in the computation of income filed - As per assessee s case [ 2024 (2) TMI 1036 - ITAT BANGALORE] for AYs 2016-17 2017-18 we hold that for claiming deduction u/s. 36(1)(viia) in respect of rural branches, the latest/provisional census available should be considered. Accordingly this issue is remitted back to the AO. The assessee is directed to provide the latest/provisional census which was available for the respective assessment year. This ground is allowed for statistical purposes. Payments to National Payments Corporation of India managed by Reserve Bank of India and the company is registered u/s. 25 of the Companies Act being switch charges and ATM charges and ATM usage charges paid to Visa Worldwide - HELD THAT:- Tribunal in assessee s own case for AY 2013-14 [ 2022 (1) TMI 583 - ITAT BANGALORE] uphold the order of ld CIT(A) in deleting the disallowance of payments made to NFS and Cash Tree. We also set aside the order passed by ld CIT(A) inspect of payment to Visa International towards visa fee, as the same is not liable to tax deduction at source as per the decision rendered by Hon ble Supreme Court in the case of Kotak Securities Management [ 2016 (3) TMI 1026 - SUPREME COURT] Accordingly we direct the AO to delete the said disallowance also.

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• 2024 (11) TMI 758
  Reopening of assessment - Estimation of income - bogus purchases - HELD THAT:- After completion of assessment u/s 143(3), this case is sought to be reopened after four years, and there is no mention in the recorded reasons that there has been any failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment year for formation of belief that income has escaped assessment. On this aspect of the matter also the case is covered in favour of the assessee by the decision of Canara Bank [ 2023 (9) TMI 1043 - SC ORDER] where the Hon ble High Court observed that where the AO had not even stated or alleged that there was failure on the part of the assessee to disclose fully and truly all material facts in respect of claim of deduction under section 36(1)(viia), Tribunal rightly held that reopening assessment initiated beyond four years was bad in law - Whether SLP filed by revenue against said impugned order was to be dismissed - Held YES. In favour of assessee. Similar views has been taken in the case of ACIT Vs Virbac Animal Health India (Pvt.) Ltd [ 2023 (5) TMI 554 - SC ORDER] where special leave petition filed against the order of the High Court was dismissed, where the High court held that there was no failure on the part of the assessee to truly and fully disclose all material facts necessary for purpose of assessment which were carefully scrutinized by AO during original assessment and thus reopening notice issued after four years on account of change of opinion was to be set aside. Bogus purchases - The entire sales are considered as part of gross turnover and duly reflected in books of accounts and considered for determination of disclosed profits, and the entire turnover of sales has been subjected to taxation, which are also supported by VAT returns, and the output tax on such sales (after adjustment of input credit) has been deposited to credit of state revenue. Assessee has travelled a step further and explained with materials on record that the goods purchased from both the sellers, has been sold to M/s AVN Construction Company, who in turn sold the same to various contractors, the ultimate destination and utilization of the goods being the Thermal Plant, and the entire details of purchase and sales has been examined by the AO in course of original assessment, in course of proceedings u/s 143(3) and no defects has been found. The entire facts of the case both on merits as well as on legal aspects of the matter, we hold that the reassessment proceedings initiated by the AO are not legally valid being commenced on the basis of wrong reasons recorded which are factually incorrect flowing from non-application of mind by the concerned officer, that too after a period of four years without pointing out as to how the assessee has failed to disclose truly and fully material facts necessary for assessment and on merits also we are of the opinion that purchases and supply of construction materials made by the assessee are genuine in nature, because the ultimate destination and utilization of the goods are fully transparent apart from other facts already discussed in paragraphs above. Addition on account of bogus purchase as unjustified and uncalled for. Decided in favour of assessee.

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• 2024 (11) TMI 757
  Non disposal of appeal on merits by CIT(A) - as alleged CIT(A), NFAC decided the issue on ex-parte basis without considering the merits of the issue - HELD THAT:- In the present case, admittedly, the conduct of assessee cannot be taken at a par with a compliant assessee. The assessee remained absent before Ld. AO as well as before the Ld. CIT(A). Ld. AO was compelled to complete the assessment u/s 144, wherein certain additions / disallowances were made and the same were approved by the Ld. CIT(A) in absence of any further explanations / supporting corroborative evidence furnished by the assessee. However, Ld. CIT(A) have not decided the issues on merits also the information regarding rectification of assessee s assessment for which, though the order of rectification dated 12.02.2019 could not be placed before us by the either party, Ld. CIT(A) would have inquired on this issue from the Ld. AO to clarify as to what was the fate of the said rectification order. Since, the original demand imposed on the assessee as per order u/s 144 has been reduced to Rs. 4.73 Crore by the Ld. AO on account of rectification carried out, as emanating from Ld. AO s letter dated 09.04.2019, the entire addition / disallowances confirmed by the Ld. CIT(A) found to be misconceived and under improper appreciation of facts on record. The order of Ld. CIT(A) has no discussion on merits of the issues rather, his attention was totally on the non-compliance on the part of the assessee, shows that Ld. CIT(A), NFAC has decided the issue on ex-parte basis without considering the merits of the issue, in light of the settled judicial precedents on the issue that to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. , therefore, we are of the considered view that the order of Ld. CIT(A) is suffering with error which needs to be corrected by fresh adjudication. Thus as CIT(A) has not disposed of the appeal of the assessee on merits, then the matter requires to be restored back to the files of Ld. CIT(A) to decide the same after due deliberations on the merits.

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• 2024 (11) TMI 756
  Addition u/s 68 and 69C - bogus LTCG - denial of exemption u/s 10(38) concluding that the case was within the ambit of Penny Stocks - transaction of purchase and sale were of shares were not genuine - HELD THAT:-Assessee has furnished various documentary evidences in support of purchase and subsequent sale of the shares leading to earning of LTCG by the assessee, as mentioned in brief herein above and mentioned in detail in the submission of the ld. AR. The assessee has purchased 265 shares for Rs. 53,000/- and made payment through banking channel which stood debited in the bank account of the assessee. These shares were dematerialized on 22.01.2011 and deposited in the D- MAT account maintained by Zuari Investments Ltd., an independent third party. Thus, it is clear that 265 shares were purchased by the assessee and same is quite evident not only from the books on accounts of the assessee but also D- MAT account of the assessee maintained by independent third party, duly recognized by the concerned authorities. The amount of purchase consideration stood debited in the bank account of assessee. These facts and evidences more particularly the shares being reflected in D-MAT account of the assessee, maintained by independent third party, clearly lead to infer the holding of the share and consequently also the purchase of these shares by assessee cannot be disputed. Now coming to the sale of share, it is seen that assessee has sold these shares (shares of Bakra Pratisthan Ltd.) through online transaction via recognized stock broker M/s Fix Fit Securities Pvt. Ltd. Transaction of sale is supported by contract note and as per the contract note, these shares were sold on 30.03.2012. The contract note is having time stamped, trade number, order time and trade time etc. As the sale of shares have been made through online system on stock exchange, obviously same has been made at the prevailing market rate of the shares. Accordingly, the sale rate so shown by the assessee cannot be doubted. Once the assessee has produced all the supporting evidences not only of sales but also of the purchase of the shares which include purchase bill, bank account showing payment of the purchase consideration, DMAT account reflecting holding of the shares in the D-MAT account of the assessee, sale of shares through online on stock exchange which are also reflected in the D-MAT account, contract notes for sale and receipt of sale consideration in the bank account of the assessee as is evident from the bank account, then in absence of any contrary material or evidence brought on record by the ld. AO, the transaction of purchase and sale of shares in question cannot be held as bogus merely on the basis of investigation carried out by the department in some other case behind the back of the assessee where some persons were found to be indulged in providing accommodation entry and more particularly when even those persons have not specifically stated anywhere in their statement that the assessee is one of the beneficiary of arrangement of accommodation entry provided by them. In the entire assessment order the AO has not made any reference to any documentary evidence which can be said to be an incriminating material against the assessee which may reflect that the assessee has availed the accommodation entry of bogus long term capital gain. Mere uncorroborated statement of third person with which assessee has not at all dealt with in purchase and sale of share and even the person has not named the assessee being beneficiary from him / them or through his / their companies cannot be a ground for treating the transaction of purchase and sale of shares so made by the assessee as bogus, in absence of any cogent evidence or material brought on record by the AO. The statement of those third person about accommodation entry may be the starting point for doubting the transaction (though it is evident that assessee has not carried out any transaction through these persons or their companies) but for converting a doubt into certainty, the AO is required to produce the contrary material evidence and evidence produced by the assessee need to be controverted, but the AO has failed to do so - Thus, as per Pooja Agarwal [ 2017 (9) TMI 1104 - RAJASTHAN HIGH COURT] and Pramod Jain ORs. [ 2018 (7) TMI 2161 - RAJASTHAN HIGH COURT ] it is held that claim of long term capital gain of exemption u/s 10(38) of I.T. Act does not suffer from infirmities and cannot be held as bogus and accordingly, the addition so made by the AO and confirmed by the CIT(A) is hereby deleted. Decided in favour of assessee. Addition u/s 69C - As the transaction of purchase and sale of shares and consequent long term capital gain so earned has been held to be not bogus, therefore, addition made by the AO on account of notional commission allegedly paid, is not sustainable too.

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• Customs

• 2024 (11) TMI 755
  Demand of interest in the assessment order - refusal to de-seal and release the petitioner s factory on the ground the petitioner is liable to pay an additional amount towards interest liability - inordinate delay in resisting the demand for interest - HELD THAT:- Based on a reading of Section 28AA (1) and 28 (10) of the Customs Act, there is no requirement of any demand being made in the original assessment order for interest u/s 28AA. Suppose the demand raised u/s 28 is not paid within the specified time. In that case, interest starts running against the assesses on the expiry of the said date, and, therefore, the question of raising any demand of interest in the assessment order would not arise. The liability of the interest would arise only on default of payment of duty within the time specified under Section 28. There cannot be any question of interest being demanded in the Order-in-Original. We cannot accept the learned senior counsel s submission that the petitioner is not liable to pay interest u/s 28AA when there is a default or delay in payment of duty. The learned senior counsel also fairly accepts that the interest is automatic, but only the contention that there must be a demand in the order, which, in our opinion, is not correct. Respondents raised the demand calling upon the petitioner to pay for the demand so raised. However, since the payment was not made within the time specified in the said demand notice, an order of attachment dated 18th January 2013 was passed for failure to make the payment demanded on 18th October 2012 and interest payable under Section 28AA for the period commencing after that date, i.e. after 18th October 2012 was demanded. In our view, the demand for interest was raised on 18th January 2013 for non-payment of demand made on 18th October 2012, which is within three months of raising the demand. Therefore, the petitioner s contention that the demand of interest has been made after more than 10 years from the date of Order-in-Original is misconceived.

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• 2024 (11) TMI 754
  Challenges to show cause cum demand notice and the Order-in-Original - averment to bypass the rule of exhaustion of alternative remedies - HELD THAT:- The averments are blissfully vague, and based on such averments, we do not deem it appropriate to entertain the present petition where, admittedly, the Petitioners have alternative and efficacious remedies available to them. No case is made to bypass the normal rule of exhaustion of alternative remedies. Recently, this Court, in the case of Oberoi Constructions Ltd. [ 2024 (11) TMI 588 - BOMBAY HIGH COURT] has considered several precedents on the subject and held that unless good grounds are made out, there is no question bypassing alternative remedies available under Act. As noted above, based on vague allegations that the show cause notice / impugned orders are without jurisdiction or that some impropriety is involved, the rule of exhaustion of alternative remedies cannot be bypassed. Therefore, we decline to entertain this petition. However, we leave it open to the Petitioners to avail themselves of the alternative remedies available under the Act. Further, suppose the Petitioners file an appeal against the impugned order dated 23 January 2024 within four weeks from today by complying with the necessary legal formalities. In that case, we direct the Appellate Authority to consider such appeal on its merits, given that this petition was instituted on 21 May 2024 and was pending to date.

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• 2024 (11) TMI 753
  Arrest and detention order u/s 135 of the Customs Act, 1962 - recovery of the articles and cash from the two detained co-accused - HELD THAT:- The applicant is dealing with sale of gold jewellery through his firm M/s. R.L. Jewels. The said firm is a proprietorship and is duly registered with the GST and MSME. The documents filed by the applicant including his bank statement, income tax returns, GST returns, stock register and other business related documents, prima-facie, indicate that the applicant is a businessman dealing with gold and gold jewellery. The statement given by the applicant also reflects that two persons who were apprehended namely Lalmohan Panja and Harekrishna Parai were the employees of the applicant and his brother. They too gave the statement that the jewellery and the cash belonged to the applicant and his brother. It is also reflected from the records that the flat situate in chowk Lucknow was rented by the brother of the applicant and his firm and was also utilized by the applicant for his business purposes including keeping the gold ornaments. Record further indicates that despite filing various affidavits by the applicant either in support of the bail application or in rejoinder affidavit to the counter affidavit filed by the DRI, yet there is no plausible explanation insofar as cash recovered from the co-accused is concerned, except that the said cash belonged to the applicant and his brother as it was generated from the sale of jewellery. Prima-facie record reflects that the quantum of business generated by the applicant through his firm can give rise to the turnover as suggested and the applicant may have the necessary resources to justify the availability of the quantity of gold and jewellery. It is also not the case of the DRI that the aforesaid gold/jewellery/cash was recovered from the airport or from a railway station near a border town from where the gold of foreign origin could be smuggled. Except for the incriminating statement made by the two co-accused namely Lalmohan Panja and Harekrishna Parai, there is nothing to indicate with clarity that the gold or gold jewellery which has been recovered and seized had any foreign origin. In such circumstances, the issue of reverse burden at this stage, where the Court is considering the bail, is not relevant in this given case rather it would be a matter to be considered by the trial Court during trial. Apart from Section 135 of the Customs Act, the applicant has not been charged with any other sections either under the Customs Act or any other Act for having committed an offence. It is also not disputed that the applicant does not have any other criminal history except for the case at hand. The applicant has been in jail since more than 4 months and apparently the DRI has not demonstrated any reason or purpose for which the custody of the applicant is required any more. It is also not disputed that the maximum sentence as prescribed under Section 135 of the Customs Act is upto 7 years and is triable by Magistrate and the complaint has already been filed. Also informed by the learned counsel for the applicant that the co-accused, namely, Ramkrishna Jaladhar Parai had already been enlarged on bail by this Court. Considering the nature of allegations and accusation against the applicant, the severity of the punishment if convicted including the fact that the applicant is not at flight risk nor it has been apprehended by the DRI that the applicant is in a position to tamper with evidence or influence any witness and that the charge under Section 135 of the Customs Act is yet to be established in trial also noticing the period of incarceration as well as the fact that the personal liberty of the applicant is a precious fundamental right which has to be balanced in the context with the punishment which may finally be awarded upon conclusion of trial, hence, at this stage, without expressing any opinion on the merits of the case, this Court is of the view that the applicant is entitled to be released on bail. Let the applicant Laxman Chandra J. Parai involved in Complaint Case/DRI Case No.6/2024 under Section 135 of the Customs Act, 1962, Police Station DRI, District Lucknow be released on bail on his furnishing a personal bond with two reliable sureties each in the like amount to the satisfaction of the court concerned.

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• 2024 (11) TMI 752
  Department s appeal before Commissioner (A) against consequential Order of refund which was found due on finalization of assessments was maintainable, when no appeal was filed by department against finalization of assessments - Whether, in any event, in the case of import of Liquid Bulk Cargo viz. Petroleum Crude Oil, the quantity as per Ship Ullage measurement at Port of Discharge can be taken to be the quantity imported for assessment of duty although it does not represent the actual quantity unloaded in India? - Whether, when the quantity ascertained as per Ship Ullage measurement at Port of Discharge is only marginally in excess of the Bill of Lading and Invoice quantity by 0.30%, whether extra duty on such marginal excess is payable, when the transaction value remained unchanged. HELD THAT:- We find that irrespective of any dispute raised by the department by issuing a show cause notice and further proceedings against the refund order, but the fact remains that the refund has arisen out of the final order on bill of entry passed by the assessing authority and due to which the refund was rightly sanctioned by the sanctioning authority. It is also a fact on record that the Revenue has not challenged the final assessment order which is the genesis for granting the refund. In such situation the entire proceeding of issuing a show cause notice, adjudication and passing the appellate order, in our view is clearly infructuous. On this ground itself, the impugned order passed by Commissioner (Appeals) is not sustainable. Similar view was taken in the case of ITC Limited [ 2019 (9) TMI 802 - SUPREME COURT (LB)] wherein it was categorically held that unless the assessment order is challenged, no consequential effect can be given. We are therefore, of considered view that since the final assessment order which is undisturbed attained finality and refund has arisen out of such order, at a later stage before Commissioner (Appeals), Revenue cannot made an allegation contrary to the final assessment order, therefore, the impugned order passed by Commissioner (Appeals) is not sustainable, accordingly, the same is set aside. The appeal is allowed with consequential relief.

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• 2024 (11) TMI 751
  Demand of differential custom duty - enhancement of the valuation of goods cleared from SEZ Unit to the DTA - under valuation has been confirmed against the appellant s SEZ unit along with penalty and also imposed penalties on co-appellant who are appellant s DTA buyers of the goods - value of the goods cleared by SEZ unit is not proper and correct - HELD THAT:- Whether the appellant being a SEZ Unit is required to pay the duty or the DTA buyer is required to pay the duty is a very contentious issue which needs to be dealt with applying the SEZ Act and Customs Act intendum. We find that the adjudicating authority has not given a proper finding on this issue. Second it is also observed that the Revenue has disputed the CAS-4 Certificate submitted by the appellant SEZ Unit in support of their declared value however the adjudicating authority has raised the dispute that certain expenditure such as R D etc. were not taken into consideration to arrive at the cost of the product in CAS-4, therefore he rejected the price arrived at on the basis of CAS-4 Certificate. We find force in the discussion of adjudicating authority however the appellant shall be granted an opportunity to explain the costing of the product arrived at in the CAS-4 Certificate. Therefore, on this count also, the matter needs to be reconsidered. Appellant have vehemently submitted that though the price of third party clearance was applied in the present case however the various factors such as the size of the manufacturing facility, turn over, quantum of clearance and the quality of products have to be considered to apply the price of comparable goods which in our view the adjudicating authority has not properly verified such factors, therefore, on this count also the matter needs to be reassessed. The appellant have also raised the issue of time bar, therefore, on all the issues, the adjudicating authority must give elaborate finding dealing with each and every defense made by the appellants. Thus, entire matter needs to be re-considered on all the issues.

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• 2024 (11) TMI 750
  Re-export of the imported goods - Eligibility of relaxation from the security demanded in the provisional release order or otherwise - HELD THAT:- We find that undisputedly, the appellant s imported goods are meant for warehousing in SEZ unit and the bills of entry were filed for warehousing of goods in the SEZ. The appellant have sought to re-export of these goods imported from abroad. In case of the of the imported goods into the SEZ and thereafter, re-export of the same is not subject to levy of any duties either custom duty or excise duty. Therefore, irrespective of any nature of alleged offence, if any, on the part of the appellant, will not involve any duty implication. On the identical fact where the goods were proposed to be re-exported, the redemption fine was set aside and penalty either was set aside or reduced to very minimal amount As decided in Regal Impex [ 2015 (10) TMI 2259 - CESTAT NEW DELHI] and Lalkamal Enterprises, [ 2018 (2) TMI 657 - CESTAT CHENNAI] in case of re-export of the goods the redemption fine was set aside and minimal amount of penalty was imposed. The case of the appellant is on better footing for the reason that in all the cases cited above are in respect of the DTA importer whereas, in the present case the goods were meant for warehousing in SEZ. The SEZ is governed by the SEZ Act along with Customs Act because any movement of the goods into and from SEZ is controlled by officers. Therefore, it cannot be expected that any person operating in the SEZ or warehousing in the SEZ can have malafide intention to evade duty. Therefore, in our considered view Bond for the total value of the goods is sufficient for releasing the seized goods for re-export thereof. As regard the judgments cited by the revenue, we find that none of the judgments is related to the SEZ unit or SEZ warehouse. Therefore, the ratio of those judgments is not applicable in the facts of the present case. Having observed above, we make it clear that the above observation is limited to the decision for provisional release of the goods that too only for re-export of the goods and the said observation shall not be used or influenced the adjudication of the case under show cause notice No. I/1358283/2023, DIN No.20230871MO000000D75F dt.18.08.2023. Appellant is allowed to re-export the goods only on execution of Bond for the value of the goods without any bank guarantee or any other security. The appeal is allowed in the above terms.

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• 2024 (11) TMI 749
  Classification - appellant imported goods known as Tetramethyldodehdronaphto Furan (TF) - sole reason given in the show cause notice for seeking change in classification is that the same are used as raw material for manufacturing synthetic perfumery compound and in fragrances and in flavour formulas - counsel pointed out that the goods imported by them are Aroma Chemicals which on their own cannot be called perfume base - HELD THAT:- The classification has to be determined in terms of description in various tariff headings read with chapter and section notes read with rules of interpretation. It is seen that no reliance has been placed either on the description in the tariff heading or on chapter and section notes or on the rules of interpretation. Rules of interpretation are very clear that in so far as the goods are specifically covered under specific heading read with the chapter notes and section notes then the classification is to be made in the said heading. The Order-in-original comes to a conclusion that goods are a mixture with a basis of ode-ferrous substances and is used as raw material in industry and therefore it would be classifiable under heading 33.02 of the Custom Tariff. It is seen that note 1(b) prescribes that products containing two or more isomers of same compound remain classifiable in Chapter 29 itself. The product is admittedly a mixture of two isomers and thus classifiable in Chapter 29 in term of Chapter Note 1(b). The impugned order relies on Chapter Note 1(e) to Chapter 29 to assert that when a product mentioned in clause 1(a), 1(b) or 1(c) is dissolved in other solvents making it suitable for only a specific use then it can be taken out of chapter 29. We find that in the instant case there is no evidence produced that any solvent was part of imported product. Moreover even if it contains any solvent, no evidence has been produced that it makes suitable only for a single use. Thus Chapter Note 1(e) is not applicable to the facts of the case. Thus no merit in impugned order. The same is set aside and appeal is allowed.

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• 2024 (11) TMI 748
  Import of restricted goods under the Import Policy - Enhancement of the value equivalent to the Minimum Import Price notified by the DGFT - Imposition of redemption fine and penalty - import of Marbles and Mosaic involving CIF value less than US$ 60 per SQM and 80 per SQM respectively, in violation of the import policy - contravening conditions stipulated under DGFT Notifications No. 38(RE-2013) dated 26.08.2013 and 65 (RE-2010)/2009-2014 dated 04.08.2011, thereby rendering the imports liable for confiscation under Section 111(d) of the Customs Act,1962 read with Section3(3) of the Foreign Trade (Development and Regulations) Act,1992 (FTDR) and imposition of penalty under Section 112(a) HELD THAT:- The Minimum Import Prices of Marble and Mosaic have been fixed at US$ 60 and US$ 80 respectively in terms of above DGFT s Notifications and the Appellant by importing these specified items at much below these prices have contravened the provisions of Foreign Trade (Development and Regulations) Act, 1992, thus, rendering these imported Marble and Mosaic as restricted goods for import. Arguments of the Ld. Advocate that the policy condition imposed by the DGFT in exercise of powers under Section 5 of the Foreign Trade (Development and Regulations) Act, 1992 is not legal or valid and the Notification has not specified that the import value if less than the MSP are to be regarded as restricted are not acceptable. The Original Adjudicating Authority in his Order-in-Original has observed that the importer has agreed for enhancement of the value in line with the Minimum Import Price as fixed in terms of DGFT Notification No. 38 (RE-2013) dated 26.08.2013. We are of the view that once the value of the imported goods have been enhanced on the basis of Minimum Import Price fixed in terms of DGFT s Notifications No. 65 (RE-2010)/2009-2014 New Delhi dated 04.08.2011 and No. 38 (RE-2013) dated 26.08.2013, we do not find any legal necessity to treat the imported goods having contravened the provisions of the Customs Act, 1962 read with Foreign Trade (Development and Regulations) Act, 1992. As such, the confiscation and penalties are not justified. The impugned Order-in-Appeal passed by Commissioner of Customs (Appeals), Chennai II is upheld to an extent of demand of duty at the enhanced value on the basis of Minimum Import Price fixed in the aforesaid Notifications, but, we order to set aside the confiscation and imposition of fine and penalty imposed. Thus, the appeal of the party is partly allowed on the above terms with consequential relief, if any, as per the law.

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• 2024 (11) TMI 747
  Reassessment of Bills of Entry by enhancing the value to USD 400 for all bills of entry - values were rejected by the AO to enhance the value from $4 per MT based on the data available with the NIDB - Appellant has imported shredded scrap during the period from 17.02.2015 to 05.03.2015 under 10 bills of entry declaring the value between USD 325 to 360 per MT.- HELD THAT:- NIDB is the data of the Customs Department which gives values of various commodities based on various transaction values of different goods. Whether the invoice value can be rejected and the duty can be charged as per NIDB data without any specific evidence that the invoice values do not reflect actual transaction value ? - It has been held that the NIDB data can be a guideline for the customs to arrive at the value of the goods but the NIDB data cannot be applied directly unless the value given therein falls within the parameters of identical goods or similar goods. Relying on the decisions in the cases of Topsia Estates Pvt Ltd [ 2015 (1) TMI 750 - CESTAT CHENNAI] , Nath International [ 2013 (12) TMI 1042 - CESTAT NEW DELHI] , Impex Steel Bearing Co. [ 2014 (2) TMI 627 - CESTAT NEW DELHI] and Eicher Tractors Ltd [ 2000 (11) TMI 139 - SUPREME COURT] it has been decided that the department cannot reject the declared value and assess the goods as per the NIDB data. Assessee appeal allowed.

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• 2024 (11) TMI 746
  Dismissal of appeal before the Ld. Commissioner (Appeals) as belated - Appeal filed beyond the period of limitation of ninety days - HELD THAT:- Bills-of-Entry were filed by the Appellant, but out-of-charge was given on 07th and 09th August, 2019. Against the order of out-of-charge dated 07th August, 2019 and 09th August, 2019, appeals were filed before the Ld. Commissioner (Appeals) on 05th November, 2019, which is well within the condonable period for filing the appeal in terms of Section 128(1) of the Customs Act, 1962. Thus, we find that the appeals filed by the Appellant before the Commissioner (Appeals) are in time. Consequently, the appeals cannot be dismissed as time-barred. Therefore, we remand the matter back to the Ld. Commissioner (Appeals) to pass an appropriate order on merits.

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• 2024 (11) TMI 745
  Exported goods received back and reexported - allegation of Non following the procedure in identifying goods at the time of export nor produced relevant certificate of reprocessing from the authorities - no Compliance with export obligations and re-importation of goods for reprocessing - benefit of Notification No.94/96 - appellant had initially exported a total of 20592 kgs. of Indian tea to Netherlands and on rejection of the same, the cargo was recalled to India on which no DEPB claim was advanced even though mentioned in the shipping bill HELD THAT:- As goods were imported against Bill of Entry dated 17.03.2005 for re-export claiming benefit of Notification No.158/95 dated 14.11.1995. It is also not in dispute that after processing the goods, the same were re-exported within the prescribed period of limitation under Notification No.158/95 dated 14.11.1995 against shipping bills dated 20.04.2005 and 23.04.2005. Also, in each of the shipping bills, against which re-export was done, the appellant had specifically mentioned as Returned cargo Used-10452 kgs (cleared vide B/E No.156633 dt. 17.03.2005) . The goods have been exported after due verification by the Customs authorities. In these factual scenarios, allegation that the appellant had not followed the procedure in identifying goods at the time of export nor produced relevant certificate of reprocessing from the authorities, in our view, would not be sustainable. Besides, we find that the appellant are also entitled to the benefit of Notification No.94/96-Cus dated 16.12.1996. It is held in the case of Share Medical Care Vs. UOI [ 2007 (2) TMI 2 - SUPREME COURT] that even if an applicant does not claim benefit under a particular notification at initial stage, he is not debarred, prohibited or estopped from claiming such benefit at a later stage. The goods have been duly exported after proper declaration in the shipping bills, we do not find justification in demanding duty from the appellant on the goods re-exported. In the result, the impugned order is set aside and the appeal is allowed with consequential relief, if any, as per law.

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• 2024 (11) TMI 744
  Competence of the customs authorities to proceed against goods imported into a Free Trade and Warehousing Zone (FTWZ) for non-compliance with the prescriptions in the Foreign Trade Policy (FTP) and other laws - Assessee is an entity based in Hong Kong and had availed warehousing facility offered by a unit issued with Letter of Approval (LoA) by the jurisdictional Development Commissioner to operate in Ashriya Free Trade and Warehousing Zone, established under the Special Economic Zone Act, 2005 - HELD THAT:- It is not the case of lower authorities that import of old and used computer parts is not within the authorized operations of the unit or, for that matter, even barred from being brought into a special economic zone (SEZ). It is on record that no bill of entry had been filed under rule 47 of Special Economic Zone Rules, 2006 and, hence, the intendment of clearance of goods inappropriately into the domestic tariff area (DTA), even if such intendment sufficed to invoke section 111 of Customs Act, 1962, was unevidenced. As per section 53 of Special Economic Zone Act, 2005, such zones are deemed to be outside the customs territory. The jurisdiction of the Customs Act, 1962 comes into play either in connection with import contrary to requirement for undertaking authorized operations or upon removal from the special economic zone without payment of duty or in contravention of any prohibition on import into India. There is no evidence on record; even preponderance of probability does not offer such. Also clear from section 51 of Special Economic Zone Act, 2005 that, in the event of conflict, the provisions of Special Economic Zone Act, and 2005 will prevail. In these circumstances, the finding of the lower authorities that the goods are liable to confiscation under section 111 of Customs Act, 1962 is patently erroneous. The imposition of penalty under section 112 of Customs Act, 1962 is, therefore, not correct. We set aside the impugned order and allow the appeal.

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• 2024 (11) TMI 743
  Classification and valuation - Import of 2000 pieces of infrared contactless thermometer - HELD THAT:- The impugned order is unclear about the manner in which the impugned goods fit the description of digital thermometers and while the characteristics of the imported goods as obtained from the product catalogue are enumerated, the standards by which the imported goods were to be evaluated for conformity with the description as digital thermometers has not been set out. The heading itself comprises several types of measuring instruments and thermometers, themselves, are found to be corresponding to sub-heading under 902511 and 902519 of First Schedule to Customs Tariff Act, 1975 implying that a range of thermometers would fall under either sub-heading. That the impugned goods are not covered by sub-heading 902511 is not in dispute inasmuch as this sub-heading deals with liquid filled measuring instruments while the alternative sub-heading is a residuary one including digital thermometers and pyrometers but there is no description either in the notes to the chapter or in section notes and no reference been made to Harmonized System of Nomenclature (HSN). It would thus appear that the resort to classification has been done without any basis for the standard by which the comparison was to be made. Onus of proper officer to establish that the goods are aptly classifiable against the proposed description. The enumeration of the characteristics of the impugned goods are meaningless in the absence of such benchmark or is used in common parlance as description of the product. From the submissions of Learned Consultant, it appears that the impugned goods are intended for measuring temperature from a distance by subjecting the forehead to exposure by infra read rays and for the reading to be displayed. To the extent of display in digital mode, there cannot be doubt that the impugned goods could be prescribed as digital thermometer but the similarity appears to end with that. In any case, in such circumstances of lack of any definition or assistance from the notes referred supra, it was incumbent upon the lower authorities to ascertain the description intended by the several expressions below the sub-heading 902519. That exercise has not been carried out to and requires remedying. On the issue of valuation, it would appear that reliance has been placed on certain imports that were available in records of the customs formation. It is also seen that rule 5 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 has been resorted to. Though resort to different rules on each occasion besides lack of certainty, it cannot be said that the notice was not alerted to the possibility of revision by one or other of the prescribed method inasmuch as the declared value was proposed to be discarded. We find no infirmity in the process by which the original authority justified the revision; however, with the issue of classification requiring fresh consideration, revision in valuation, as a consequence, does not acquire finality. It would, therefore, be appropriate for the applicability of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 to be redetermined only if warranted by change of classification.

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• 2024 (11) TMI 742
  Rejection of refund claim - parts on which SAD was paid were not sold as such but in a different form for the purpose of installation of irrigation system and for sale of goods appellant have not paid the VAT as the said goods attracts NIL rate of VAT - HELD THAT:- As we find that though the appellant have given a different nomenclature while reselling the goods imported on which SAD was paid but no further process was carried out. Moreover, the parts was sold as individual by raising invoice giving details of individual parts. Under the contract of the buyer there are separate portion for sale of goods and installation of irrigation system. This claim shows that the appellant have sold the parts as such in the form it was imported therefore on this ground the rejection of refund claim is absolutely incorrect and illegal. As regard the second ground that the appellant have not paid the VAT, it is admitted fact that the goods attracts NIL rate of VAT. It is a settled law that even if the goods attracts NIL rate of VAT it is to be treated as VAT was paid appropriately therefore on this ground also the refund cannot be rejected. The appellant have not carried out any process on the parts imported which was sold as it is. In the identical case where after import of plant under project import the same was used for exhibition of EPC contract. In the case of PMC Project India Pvt Ltd., [ 2019 (4) TMI 1712 - CESTAT AHMEDABAD] this Tribunal held that notwithstanding a composite contract with recipient assessee decides being EPC contract also supplier of all equipments for project for which goods imported, Thus, provisions of project import regulation cannot be used to interpret Notification No. 102/2007-CUS which allows refund of SAD on imported goods if same are sold subsequently on payment of VAT/Sales Tax. Accordingly, the impugned order in that case allowing refund was held sustainable. Thus the refund is admissible under Notification No. 102/2007-CUS. Contention of the department that the appellant have not paid the VAT as it attracts NIL rate of VAT - We find that this has issue been decided in number of judgments that even though the NIL rate of VAT attracts on the imported goods. The same is treated as tax paid and the condition of Notification no. 102/2007/-CUS stands complied with. In this regard following decisions support the appellant s case. In the case of Gazal Overseas this tribunal dealing with the case of goods attracts NIL rate of VAT [ 2015 (12) TMI 427 - CESTAT NEW DELHI ] held so long as appropriate VAT/Sales tax was paid, SAD refund was admissible even if the appropriate rate of sales tax/VAT was NIL then the appropriate sales tax/VAT paid will also be NIL. Thus even if the goods on which refund under Notification No. 102/2007-CUS is sought by the assessee attracts NIL rate of VAT the same is treated as payment of appropriate VAT/Sales tax therefore and condition of the Notification no. 102/2007-CUS stands complied with. As per our above discussion and findings the rejection of refund claim of the appellant by the revenue is incorrect of both the points.

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• 2024 (11) TMI 741
  Remission of duties of excise on indigenous goods and custom duty on imported goods - goods lost and destroyed in fire - HELD THAT:- We find that there is no dispute of the fact that the fire incident has occurred in the factory of the appellant and it is also not in dispute that the goods imported as well as the indigenously procurement raw materials were destroyed in fire. The appellant were also sanctioned the insurance claim by the insurance company. From the record it is not coming out that there is any mischief on the part of the appellant in the incident of fire in the factory. Moreover, there is also no evidence that the fire accident is occurred due to carelessness of the appellant. Commissioner has raised various deficiency for deciding the remission application however, it appears that the appellant had no occasion to explain the above queries of the learned Commissioner before the adjudication, therefore in our considered view this matter should go back to Commissioner for reconsideration of the appellant s remission application the appellant should be given proper opportunity to explain their case and the queries raised by the learned Commissioner in the impugned order. As regard other appeals, since, in those appeals the demand of duties were confirmed consequential to the rejection of remission application, we are of the view that all the three matters should be decided by the learned Commissioner who is competent to decide the remission application. We set aside the impugned orders and allow the appeals by way of remand to the adjudicating authority for passing fresh orders.

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• 2024 (11) TMI 740
  Correct description/classification of the goods - Import of ELISA Test Kits for food testing - Appellant had classified their products under 3822 00 90 as the goods were food testing kits and reagents - eligibility of exemption under Notification No. 12/2012-Cus dated 17.03.2012, subsequently under Notification No. 50/2017-Cus dated 30.06.2017 - Main allegation is of importing goods ELISA Test Kit for food testing but declaring them as ELISA Test Kit for diagnostic use only Whether the imports made by the appellant of ELISA kits for food testing can be treated as ELISA test kits for diagnostic use so as to be eligible to claim the benefit of S.No. 167 (A) of Notification No. 50/2017-Cus dated 30.06.2017 specifying BCD at Nil? - HELD THAT:- It is a settled principle of law that explanatory notes to HSN is a safe guide to determine the classification of goods and in order to determine the true scope of the tariff heading, the relevant Explanatory Notes of HSN pertaining to CTH 3822 as says such reagents are used in the evaluation of physical, biological or biochemical processes and states in animals and humans, of the nature of prepared diagnostic reagents that are to be administered to patients in vivo applications. In other words, the reagents or kits which are for the purpose other than for diagnostic purposes on human and animals are not covered within the meaning of diagnostic kits or diagnostic reagents on a backing, i.e, kits. The contention of appellant that the diagnostic purpose can be for food testing also is unsustainable in the context of the exemption notification which has to be construed and interpreted in the light of the words/expressions used therein. Referring to the various decisions of the Supreme Court, the learned Authorised Representative reiterated the principle that the exemption notification has to be construed strictly and therefore, no benefit can be granted to the appellant under the exemption notifications as they do not fulfil the criteria specified therein. Appellant has failed to discharge the burden that ELISA kits imported by the appellant falls within the parameters of the exemption notification. Moreover, as discussed above, the expression used in the Notification is limited to medicines/drugs, etc. and diagnostics kits specified in List 4 which are basically for medical purposes. The intent of the notification is to extend the exemption to products related to medical treatment. No ambiguity in the contents of the notification which are plain and simple and even, if there is any, the benefit of such ambiguity cannot be claimed by the appellant and hence we interpret the same in favour of the Revenue. The term food testing can neither be implied nor added to the expression diagnostic kits as provided in the notification. Thus we conclude that ELISA kits imported by the appellant were not used in the evaluation of physical, biophysical or biochemical processes and states in animals and humans, and as a result, they were not diagnostic reagent/kits rather they were meant to be used for food testing and, therefore, did not fulfil the criteria to avail the benefit of expression as per the notification.

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• 2024 (11) TMI 739
  Imported material on the permission issued for a particular unit diverted to other - Contraventions of the provisions of import and export policy for which goods became liable for confiscation under Section 111 and for imposition of penalty on importer - two consignments of old and used cut tiers in 2 . 3 Pcs. (arisen from old/used tyres) for clearance to their Panipat Unit - permission which is in respect of Wada unit OR Panipat unit. HELD THAT:- Undisputedly, the goods have been sought to be cleared for Panipat unit. On the basis of the letter issued by Ministry of Environment, Forests and Climate Change in respect of Wada unit as per the import and export policy issued by DGFT, this letter is part and appellant availed permission for Panipat unit, the conditions of DGFT license has been valid for importation of these goods. Accordingly, the goods being not really importable or prohibited and has been rightly held liable for confiscation under Section 111 (d) of the Customs Act, for the above violation penalty imposed on the appellant under Section 112 of the Act. Validity of permission issued in respect of Wada Unit, for the Panipat Unit we find that the concerned Ministry has clarified contrary to the said submission - No error in the impugned orders as the concerned Ministry has in respect of the same consignment has clarified contrary to the stand taken by the appellant in this regard that the permission granted in respect of Wada unit in Maharashtra would be valid for the imports to be made for consumption in Panipat Unit in Haryana. The impugned order has taken note of the above clarification issued by the administrative ministry. While upholding the order in relation to confiscation of the impugned goods and the penalty imposed, we take note of the facts that total value of the goods was Rs.22 lakhs for which redemption fine of Rs.6 lakhs and penalty of Rs.4 lakhs has been imposed. These seem to be on higher side. We reduce the redemption find imposed to Rs.3 lakhs and penalty imposed to Rs.2 lakhs.

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• Securities / SEBI

• 2024 (11) TMI 738
  Validity of SEBI Settlement Proceedings Regulations - scope of Regulations 6(1)(f) and 13(2)(ba) of the SEBI (Settlement Proceedings) Regulations, 2018 - Communication by which the petitioners settlement proposal came to be rejected - non following specific condition precedent(s) that they would have to comply with for consideration of their settlement applications - allegation of petitioners conduct of stalling or delaying the adjudication of the SCN. Allegations about the noticees acting in concert while acquiring shares of Abans Enterprises Ltd. (AEL) without making the required disclosures under the SAST Regulations. There are allegations about the noticees creating false and misleading appearance of trade and contributing to price rise by manipulative trading practices leading to inflated contribution of net market Long Term Plan (LTP) during the prescribed patches. HELD THAT:- The SCN dated 29 August 2023 issued to 8 noticees, including the petitioners, gives a glimpse into the allegations against the noticees. Since the adjudication of the SCN is in progress, it would be premature to comment one way or the other on the various allegations contained therein. We cannot help observing that the allegations in the SCN, if proven, are indeed grave. Mr Daruwalla was justified in contending that the main objective of the petitioners, and perhaps the other noticees, was to stall, as long as possible, the adjudication on the SCN dated 29 August 2023. Regulation 8 of the Settlement Regulations provides that filing an application for settlement of any specified proceedings shall not affect the continuance of the proceedings save that the passing of the final order shall be kept in abeyance till the application is disposed of . Thus, as long as the settlement applications remained pending, no final order could be made on the SCN dated 29 August 2023. The record shows that the petitioners made all kinds of applications and even refused to cooperate with the personal hearing offers. Requests in the applications, at times, contradicted each other. From the record, we cannot dismiss Mr Daruwalla s contention about the petitioners are attempting to stall the proceedings in the SCN, including by way of filing settlement applications and then even insisting that no orders be passed on the settlement applications until the preliminary or other issues raised by them in the SCN were first resolved. From the above perspective, the conduct of the present petitioners is no different from that of the petitioners in Binny Limited V/s. Securities and Exchange Board of India [ 2023 (7) TMI 1491 - BOMBAY HIGH COURT] There, Binny Limited, by submitting a settlement proposal and insisting that the same should have been considered on merits had sought a restraint on the proceedings in the Show Cause Notice issued to them alleging massive diversion of funds of several crores leading to loss to investors and an adverse impact on the integrity of the market. Excessive delegation and manifest arbitrariness in the SEBI Settlement Regulations - Considering the scope and the actual provisions of the SEBI Act, 1992, it is too much to suggest that there is any case of excessive delegation involved in vesting the SEBI with the powers to frame regulations for dealing with proposals for settlement by defaulters. Section 15-JB specifically empowers the SEBI to determine the settlement terms and procedure for settlement. The SEBI or its Board must consider the nature, gravity, and impact of defaults. These, coupled with the very purpose of enacting the SEBI Act, offer more than sufficient guidelines for formulating the Settlement Regulations and their implementation. Accordingly, the argument based upon any alleged excessive delegation is liable to be rejected and is hereby rejected. Applying the test in the context of Settlement Regulations, which is subordinate legislation, there is nothing to suggest any failure to account for vital facts required by the SEBI Act or the Constitution to be considered. The impugned Regulations conform with the parent Acts. There is no serious charge for the regulations defying constitutional values or lacking logical consistency. Therefore, the charge of manifest arbitrariness cannot stick. The Constitution Bench has also held that a provision can be struck down as manifestly arbitrary if its determining principle does not align with constitutional values and lacks logical consistency. The standard laid down is that the courts, while testing the validity of a law on the grounds of manifest arbitrariness, must determine if the statute is capricious, irrational, and without an adequate determining principle or excessive and disproportionate. Again, nothing in the impugned provisions suggests they lack any determining principle or logical consistency. The impugned provisions are not capricious, irrational and/or excessively disproportionate. In Franklin Templeton Trustee Services (P.) Ltd. V/s. Amruta Garg And Ors. [ 2021 (7) TMI 751 - SUPREME COURT ] explained that the principle of manifest arbitrariness requires something to be done in exercise in the form of delegated legislation, which is capricious, irrational or without adequate determining principle. Delegated legislations that are forbiddingly excessive or disproportionate can also be manifestly arbitrary. These observations were made in the context of a challenge to the constitutional validity of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996. Hon ble Supreme Court, while upholding the constitutional validity of the SEBI, 1996 Regulations, held that since the Regulations are like economic regulations while exercising the power of judicial review, the Court would exercise restraint unless clear grounds justify interference. The Court reiterated that manifest arbitrariness requires something to be done in the form of delegated legislation, which is capricious, irrational, or without an adequate determining principle. Delegated legislations that are forbiddingly excessive or disproportionate can also be manifestly arbitrary. The Court concluded that the SEBI 1996 Regulations did not suffer from the vice of manifest arbitrariness. Incidentally, the decision of the Division Bench of Gujarat High Court in Alka Synthetics Ltd. [ 1998 (12) TMI 452 - HIGH COURT OF GUJARAT] was also approved in this case. Thus, applying the above principles, we think a challenge based on excessive delegation or manifest arbitrariness has no merit. We detect no infirmity whatsoever regarding the impugned rejection letter. The condition precedent(s) did not prevent the petitioners proposal from being considered by the HPAC and, finally, the panel of WTMs. We see nothing unreasonable, irrational or capricious in the conditions itself. Merely because such conditions may not be to the liking of the petitioners, such conditions cannot be styled as arbitrary or unreasonable. The conditions must be considered in the backdrop of the allegations in the SCN about the petitioners acting in concert with the other noticees. There are allegations about common directors or employees, trustees, common bank accounts, common signatories and manipulations. The question at this stage is not whether those allegations are correct. However, from the show cause notice, it is difficult to state that the allegations are based on no prima facie material. Therefore, to say that the conditions should never have been imposed, particularly the condition regarding the other noticees joining in the settlement proposal, cannot be accepted. As noted earlier, it is not the petitioners right to insist that their settlement proposal be accepted on the terms they deem most appropriate. The scope of judicial review in examining counterproposals by experts is minimal. It is not for the Courts to second-guess or suggest counterproposals. There is discretion vested in the authorities. This does not appear to be a case where such discretion has been exercised unreasonably, capriciously, or irrationally. Fairness is not a one-way street; litigation is not a chess game. The settlement regulations need to be pragmatically construed, having regard to their objective and balancing the interests of the defaulters and the public interest. The scheme of the settlement regulations contemplates exchange proposals and counterproposals to see if some settlement could be reached without compromising the public interest. Therefore, there is nothing wrong if the IC suggests terms, adding that it would not favourably recommend a settlement should such terms not be agreed to. Petitioners have even declined to furnish proper information about the disclosures to the waivers or undertakings by arguing that the same would prejudice their case in the SCN. The proceedings in the SCN are also stalled for one reason or another. At least, prima facie, even the settlement application appears to have been made only to benefit from the provisions of Regulation 8, which requires that the final order in the SCN be kept in abeyance until the settlement application is disposed of. Petitioners perhaps expected to benefit from the tremendous pressure on the Court s docket and the consequent inability to decide issues of constitutionality or ultra vires on a priority basis. Often, the strategy is to challenge the constitutional validity of some provision, launch long-winded arguments and, in an alternate, insist on interim relief until the Court can cull out some time despite the tremendous pressure on its docket - As in Binny Limited [ 2023 (7) TMI 1491 - BOMBAY HIGH COURT] noticed and adversely commented upon this tendency. In this case, however, Mr Gaurav Joshi, the learned Senior Advocate for the petitioners, was focused and precise. Thus no merit in this petition and consequently dismiss the same.

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• Insolvency & Bankruptcy

• 2024 (11) TMI 737
  Seeking an order of this Court at the instance of this RP staying an acquisition process under the Slum Rehabilitation Act, 1995 - Preferential right to self-redevelop - it was held by High Court that A preferential right to an owner is available only when someone other than the owner is being preferred and the owner has never before been given or availed of a right to develop. and the petition was rejected - HELD THAT:- It is not required to entertain the Special Leave Petition under Article 136 of the Constitution of India. SLP dismissed.

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• 2024 (11) TMI 736
  Preferential and fraudulent transaction - Seeking avoidance of certain preferential and fraudulent transactions carried out by the suspended directors of the Corporate Debtor - Sections 43 and 66 of the IBC - it was held by NCLAT that The Adjudicating Authority has erroneously dismissed the application filed by the Resolution Professional under Sections 43 and 66 of the IBC. - HELD THAT:- After having heard the learned counsel appearing for the appellants, the view taken by the National Company Law Appellate Tribunal concurred upon. There is no merit in the Civil Appeal and the same is accordingly dismissed.

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• 2024 (11) TMI 735
  Seeking grant of interim relief - failure to consider the preliminary objections raised by the Petitioner concerning the maintainability of the Show Cause Notice - Time limitation - HELD THAT:- It is important to note that the amended writ petition is exhaustive and voluminous, raising numerous grounds of challenge. Given the breadth and complexity of these issues, it is neither practical nor appropriate to adjudicate them fully at this interim stage. It is also pertinent to observe that Mr. Krishnan, Senior Counsel for the Petitioner, appropriately chose not to delve deeply into the merits of the grounds for suspension. Instead, his arguments primarily focused on the jurisdictional issues noted above, which forms the core of the challenge against the impugned order. Thus, it should be made clear that a detailed examination of the substantive grounds on merits is not being undertaken, since at this interim stage, the assessment of contentions particularly in terms of the merits of the case must necessarily be only on a prima facie basis. Time Limitation - Regulation 3(4) of the IBBI (Grievance and Complaint Handling Procedure) Regulations, 2017 - HELD THAT:- The Regulation clearly stipulates that a complaint must be filed within forty-five days of the occurrence of the cause of action. A complaint filed after the aforesaid period can be entertained only if there are sufficient reasons justifying the delay, but such period shall not exceed 30 days. Thus, the proviso to Regulation 3(4) indeed sets a strict time limit for filing a complaint, hence, the critical issue here is determining when the cause of action for the grievance or complaint actually arose. In the instant case, the allegations against the Petitioner in the Show Cause Notice dated 2 nd April, 2024 are serious and revolve around the improper constitution and functioning of the CoC. Specifically, it is alleged that Axis Bank, a Financial Creditor of the corporate debtor, had not filed its claim at the time, yet the Petitioner proceeded to form a CoC comprising only the sole operational creditor - the Petitioner took no action to notify Axis Bank about the initiation of the CIRP. This raises serious concerns about the Petitioner s conduct in ensuring that all relevant creditors were duly informed and included in the CoC, as required under the IBC. These allegations, if substantiated, point to significant procedural irregularities and potential breaches of duty on the part of the Petitioner. Under Section 13(2) of the General Clauses Act, 1897, it is provided that in all Central Acts and Regulations, unless there is anything repugnant in the subject or context, words in the singular shall include the plural, and vice versa. This principle of statutory interpretation allows for flexibility and adaptability in the application of the law, ensuring that the legislative intent is not frustrated by a narrow or literal interpretation - Applying this principle to the present case, on a prima facie view of Section 220(1) of the IBC, it is noted that the term whole-time members can reasonably be understood to also include a scenario where there is only a singular member of the committee. This interpretation is in consonance with the functional necessity of ensuring that the disciplinary committee can be constituted and can operate effectively, even if there is only one whole-time member available. The Court finds no ground to grant any interim stay on the impugned order - the present application is dismissed.

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• 2024 (11) TMI 734
  Dishonour of cheque - prosecution of Corporate Debtor - whether, the existing criminal liability of the Company and its erstwhile Directors will get extinguished in view of the resolution plan approved by NCLT? - HELD THAT:- After insertion of Section 32-A in the IBC by way of amendment with effect from 28/12/2019, the liability of the corporate debtor for prior offences is restricted. In Ajay Kumar Radheshuyam Goenka case [ 2023 (3) TMI 686 - SUPREME COURT ], the Hon ble Supreme Court, after considering the effect of the Section 32-A of IBC in respect of prior liability of the Company and its directors, particularly in proceedings under Section 138 of Negotiable Instrument Act, had vividly clarified the legal position holding where the proceedings under Section 138 of the NI Act had already commenced and during the pendency the plan is approved or the company gets dissolved, the Directors and the other accused cannot escape from their liability by citing its dissolution. What is dissolved is only the company, not the personal penal liability of the accused covered under Section 141 of the NI Act. They will have to continue to face the prosecution . Thus, it is clear that the corporate debtor cannot be prosecuted for the prior liability after the approval of the Resolution Plan. At the same time, it is to be bear in mind the protection under Section 32-A of Insolvency Bankruptcy Code, 2016 is restricted only to the corporate debtor and not to its Directors who were in-charge of the affairs of the Company when the offence committed or the signatory of the cheque. The Criminal Original Petitions are allowed.

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• 2024 (11) TMI 733
  Demand of property tax by the Municipal Corporation of Delhi (MCD) for the period prior to the effective date of the resolution plan - Section 123D of DMC Act, 1957 - HELD THAT:- In Ghanashyam Mishra [ 2021 (4) TMI 613 - SUPREME COURT] , it was noticed that the mischief that was sought to be remedied by the legislature by amending Section 31(1) of IBC was that despite the legislative intent to extinguish debts upon approval of the resolution plan, there were instances where State/Central Government authorities continued to pursue proceedings for the recovery of debts owed to them - It was held that all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the adjudicating authority grants its approval under Section 31 could be continued. In the present case, the MCD did not lodge its claim in respect of property tax dues against the petitioner during the CIRP. Admittedly, the claim of the MCD is not a part of the approved resolution plan. Consequently, prima facie, any statutory dues owed to the MCD by the petitioner prior to the date on which the resolution plan is approved i.e. 26.03.2021, cannot be demanded/recovered. The decision of Rainbow Papers [ 2022 (9) TMI 317 - SUPREME COURT] does not detract from the above inasmuch as unlike in the said case, the concerned statutory authority (MCD) did not lodge its claim before the resolution professional during the CIRP initiated qua the petitioner. Further, MCD has not challenged the approval of resolution plan by the Adjudicating Authority. An ad-interim order is passed staying the operation of the impugned Common Assessment Order dated 02.03.2024 (to the extent it relates to Flat Nos. 109 to 112 owned by the petitioner). However, the petitioner is directed to pay the property tax for the period after 26.03.2021 - List on 25.07.2024.

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• 2024 (11) TMI 732
  Quashing of e-auction of 31.01.2024 - Seeking consideration of the Scheme submitted by the Appellant - Rejection of the application, thus preferred by the Appellant, whereby his prayer to declare the e-auction conducted on 31.01.2024 as null and void - confirmation of sale of the Corporate Debtor, as a going concern in favour of the Successful Bidder - rejection of prayer for consideration of the Scheme of Arrangements proposed by him under Section 230 of the Companies Act, 2013, without considering its merits - contravention of Section 230 (1) of the Companies Act, 2013 - HELD THAT:- With enactment of IBC, the process of Insolvency Resolution has been fast tracked and therefore, the significance of Section 230(1) in addressing the issue of insolvency / sickness has diminished. The follow up process which has been provided under Sub Section (1) of Section 230, would only be necessary to be complied with when the process of Compromise or Arrangement, as envisaged under the Companies Act, 2013, becomes necessary and needs to be carried out. But, that would be only in a situation, when there is a failure on the part of the Liquidator in his attempt to sustain the functioning of the Corporate Debtor as a going concern, as sufficient provisions have been provided under the I B Code, 2016, and the IBBI (Liquidation Process) Regulations, 2016. Further, Regulation 2B under the Liquidation Regulations provides for Compromise / Arrangement within a limit of 90 days from the date of Order of Liquidation. The intent behind such provision is to give a chance for Compromise / Arrangement, before resorting to competitive bidding process for sale of the Corporate Debtor in the manner laid down in Regulation 32 of the said Regulations. In that light, it is only one more instrument in the hand of the Liquidator to keep the Company under Liquidation as a going concern. More important and relevant for the purposes of the instant case, would be the provisions contained under Regulation 32A, which provides for that, where the Committee of Creditors, has recommended the sale of the Corporate Debtor, under Clause (e) or (f) of the Regulation 32 or where the Liquidator is of the opinion that the sale of the Corporate Debtor under 32(e) or 32(f) will maximize the value of the Corporate Debtor, he shall endeavour to sell under such clauses - while taking action under Chapter 6 of Liquidation Process Regulations, dealing with realizations of assets of the Corporate Debtor, selling the Corporate Debtor as a going concern, will have to be the first priority for the Liquidator, in order to meet the objective of the I B Code, 2016, i.e. the Corporate Debtor is to be kept, as a going concern after resolution of the insolvency. As far as the objection raised by the learned counsel for the Appellant with regards to the non-compliance of Clause 12 of Schedule I of the IBBI (Liquidation Process) Regulations, 2016, during the bid process is concerned, it is seen that the same has been taken into consideration by the learned Adjudicating Authority, by recording that minor discrepancies which might have chanced in the process due to inadvertent omission, will not have a very vital bearing over the entire proceedings of e-auctioning, which was held particularly when the Corporate Debtor was being sold as a going concern, and such the inadvertent errors or omissions ought to be ignored when it does not defeat the very object of the provisions contained under the said Regulations 2016 - as it has been reflected by the learned counsel for the Respondent No. 1, that as a consequence of conclusion of the e-auction process, the Successful Bidder, is now in the helm of affairs of the Corporate Debtor and he is operating the Corporate Debtor as a going concern. Accordingly, no cause as such prevails for the purposes of the appellant in the instant appeals. Appeal lack merits and the same are accordingly dismissed.

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• 2024 (11) TMI 731
  Liquidation of the Corporate Debtor as approved by the Committee of Creditors - whether the CoC with 100% vote share could have directly proceeded for liquidation of the Corporate Debtor without taking any steps for resolution of the Corporate Debtor? - whether in the given factual matrix there were good reasons for the CoC to initiate liquidation of the Corporate Debtor in the exercise of its commercial wisdom? - whether the Adjudicating Authority had failed to apply its mind in passing the impugned order approving the proposal of the CoC to initiate liquidation? HELD THAT:- The power given to the CoC to take decision for liquidation is of a wide amplitude which can be exercised immediately after constitution of the CoC. In terms of the statutory construct of IBC, it is therefore not required for the CoC to complete all the steps relating to resolution of the Corporate Debtor prior to the liquidation of the Corporate Debtor and any interpretation to the contrary would clearly be antithetical to the spirit of Section 33(2) and Explanation appended to it wherein the legislature has consciously used the words any time for liquidation even before inviting resolution plans - the legislative fiat of Section 33(2) read with the explanation clause empowers the CoC for deciding to initiating liquidation even before inviting resolution plans. Whether there were good and cogent grounds noticed by the CoC to recommend liquidation or whether their reasoning was flawed and ex-facie arbitrary? - HELD THAT:- It is found that the health of the Company was not favourable for revival. In such circumstances, the CoC had come to the conclusion that there were no positive signs for revival and that there were no good grounds to prolong the process of CIRP. This decision of the CoC was taken keeping in view the financial position of the Corporate Debtor and does not reflect any arbitrariness. It was also noticed by the CoC that the RP had furnished a long list of documents required to comply with the various formalities for conducting CIRP and in particular to prepare the IM. Though the RP had sent several communications to the suspended management of the Corporate Debtor for handing over the records including custody of assets, no reply had been received from the suspended management. However, the suspended management could only provide the Pan Card details only. It is pertinent to note that the suspended Director was under arrest and out on temporary bail during the 1st CoC meeting and hence the CoC committed no mistake in concluding that he would not be always available for giving the information for preparation of IM - the scenario was dim for coming up with a holistic and comprehensive IM sans which the issue of Form-G becomes a meaningless exercise. Accordingly, the second CoC meeting after due deliberations had decided not to publish Form- G. CoC s decision to liquidate cannot be looked upon as abrupt and hasty or arbitrary. The contention of the Appellant that the decision of the CoC to liquidate the Corporate Debtor as arbitrary therefore lacks merit. The only grounds on which a liquidation order passed under Section 33 can be challenged are on grounds of material irregularity or fraud as provided under Section 61(4) of the IBC. The commercial wisdom of the CoC in deciding whether an entity can be revived or the debtor can be restructured or the Corporate Debtor needs to be liquidated being a business decision of the CoC needs to be accorded primacy - It is a well settled proposition of law that the Adjudicating Authority has been bestowed with limited jurisdiction as specified in the IBC while dealing with matters relating to resolution and liquidation of the Corporate Debtor and cannot enter upon adjudicating into the merits of a decision taken by the CoC with requisite majority in its commercial wisdom to liquidate a corporate debtor. Thus, no infirmity is found in the order of the Adjudicating Authority approving the decision of the CoC to liquidate the Corporate Debtor - there are no good ground to interfere with the impugned order passed by the Adjudicating Authority at the instance of the Appellant - there is no merit in the appeal. The Appeal is dismissed.

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• 2024 (11) TMI 730
  Admission of Section 95 application filed by the State Bank of India against the Appellant the Personal Guarantor - debt and default to the personal guarantor - report the application has been admitted under Section 100 - Respondent contended that all facts pertaining to the limitation relevant dates and pleadings for extension of limitation were made in the application itself - Time limitation. Whether the application is barred by time or not? - HELD THAT:- It is well settled that even if there is no plea raised regarding limitation, the court is to oblige to examine the question of limitation before proceeding further in an application - pleadings made by the State Bank of India clearly contains the extension of limitation under Section 18 of the Limitation Act when the pleadings are on the record which provide for extension of limitation no error can be said to be committed by Adjudicating Authority in admitting Section 95 application against the personal guarantor. The application filed under Section 95 was not barred by limitation and on this ground no error can be found. Admission of application - HELD THAT:- The notice of demand was clearly given to the Personal Guarantor. The submission of the Appellant that after the said notice further fresh notices were required for filing Section 95 application does not appeal here. When by the notice guarantee was invoked by the bank, bank was entitled to initiate proceedings and present is the case where bank is claiming extension of limitation under Section 18 thus it is not satisfied that invocation of guarantee was to be repeatedly done by the bank before filing the application under Section 95. When the application under Section 95 is well within time the said ground cannot be a ground to interfere with order impugned. There are no error in order of Adjudicating Authority admitting Section 95 of the application - The Appeal is dismissed.

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• 2024 (11) TMI 729
  Challenge to Judicial propriety of the Impugned Order - Resolution Professional has rejected the claim of the Applicants, in its entirety - HELD THAT:- When the Appeal after the exchange of the pleading was taken up yesterday, it was pointed out by the Learned Counsel for the Respondent, that during the period of pendency of the Appeal, the order of liquidation had already been passed by the Learned Adjudicating Authority on 19.02.2020. Thus, in fact the Respondent Counsel contended, that owing to the passing of the order of liquidation, the instant appeal for all practical purposes has been rendered infructuous until or unless the challenge is given by the Appellant to the order of 19.02.2020 appointing the liquidator. The matter was debated upon yesterday and was carried forward today for arguments. The only liberty sought from this Tribunal is with regard to the aspect of limitation which is self-contained under section 42 of I B Code, which obviously will be dealt by the NCLT, in consonance of the provisions contained under section 238. Subject to the above liberty of preferring an Appeal under section 42 of I B Code, the Company Appeal would stand dismissed as having been rendered infructuous. Appeal dismissed.

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• 2024 (11) TMI 728
  Tenability of Affidavit of Rejoinder filed by the Financial Creditor - HELD THAT:- Along with the Rejoinder documents which were sought to be filed by the Financial Creditor were financial statement of the Corporate Debtor and OTS related documents. There are no reason to interfere with the order by which above documents has been accepted on record. The mere fact that the said documents were not referred to in the Section 7 application cannot disentitle the Financial Creditor to bring on record the said documents when plea was raised in the Reply by the Corporate Debtor that application is barred by time. The power of the Court to accept the rejoinder and document is not being questioned. When the issue of limitation is raised, it is duty of the Court to decide the question of limitation even if no defence is raised and for deciding the question of limitation party are at liberty to file relevant documents. When the Corporate Debtor questioned the application as barred by time, it was open for the Financial Creditor to bring on record the relevant documents claiming acknowledgment of the Corporate Debtor. There are no error in the order of the Adjudicating Authority accepting Rejoinder on record - appeal dismissed.

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• 2024 (11) TMI 727
  Implementation and viability of the Resolution Plan - Section 31, and Section 30, sub-section (2) (d) as well as Regulation 38(3) of the IBBI (CIRP) Regulations - HELD THAT:- The requirement of the law is that the Plan contains provision for effective implementation. It is not the case that Plan does not contain effective provision for implementation. The Adjudicating Authority in the impugned order specifically noticed the provisions of the Resolution Plan, which provides for implementation. It is not the case that there are no provisions in Resolution Plan for effective implementation. The submission of the Appellant that in view of lapse of more than five years and the deterioration of the financial status of the Corporate Debtor, the Plan is no more implementable, cannot be accepted as a ground to withdraw from the Resolution Plan. It is further relevant to notice that before the Hon ble Supreme Court in Ebix Singapore, the SRA has raised similar contentions, including that position has changed manifestly in relation to the financial conduct of Educomp. It is reflected from the record that an affidavit was filed on 22.09.2023 before the Adjudicating Authority by RP stating that CD is a going concern. The RP, who has been running the Corporate Debtor after initiation of CIRP, has stated in the affidavit that the CD is a going concern - The Adjudicating Authority in paragraph 35, as extracted above has noticed that revenue for the year 2021-22 reflects the impact of the pandemic Covid-19 and it was further noticed that revenue of the CD could rise to Rs.40 million in the year 2021-22. There are no substance in the submission of the Appellant that Corporate Debtor was not a going concern. Insofar as, feasibility and viability of the Resolution Plan is concerned, the feasibility and viability of a Resolution Plan is in the domain of commercial wisdom of CoC. The Plan having been found feasible and viable and approved by the CoC, the Appellant cannot ask the Adjudicating Authority to enter into feasibility and viability of the Plan. Thus, no valid grounds are raised by the Appellant, before the Adjudicating Authority to reject the Application filed by the RP for approval of the Resolution Plan - No error has been committed by the Adjudicating Authority in allowing IA No.195 of 2018 and approving the Resolution Plan. There is no merit in the Appeal. The Appeal is dismissed.

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• Service Tax

• 2024 (11) TMI 726
  Wrongly availement of Input Tax Credit (ITC) - Scope of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - HELD THAT:- Section 120 introduced the scheme. It was duly notified to come into force. Pursuant thereto by circular dated 27th August, 2019, Central Board of Indirect Taxes and Customs elaborated on it. Petitioner relies on declaration of law made by the Supreme Court in Merino Panel [ 2022 (12) TMI 453 - SUPREME COURT] that circulars issued by revenue are binding on it. The circular says, dispute resolution and amnesty are the two components of the scheme. It is aimed at liquidating the legacy cases locked up in litigation at various forums, whereas the amnesty component gives an opportunity to those who have failed to correctly discharge their tax liability, to pay the tax dues. The circular also says, it may be appreciated that ambit of the scheme is very wide. Section 125 (1) in the Finance Act provides for eligibility of persons to make a declaration under the scheme. There has been no submission made to effect petitioner was or is ineligible to have applied under the scheme. The allegation against petitioner is, it did not make the deposit. That is the effect of forms SVLDRS-2 and 3. So in considering petitioner s contention, of application of the scheme to it and liquidation of the legacy tax demand in the prior period by adjustment of its ITC, we have to adjudicate whether it is entitled to issuance of discharge certificate SVLDRS-4. There has been demonstration that the exact amount demanded under the SCN, petitioner claimed to have paid by adjustment of the ITC. Contention of revenue is omission of required deposit of the wrongly availed ITC, as had been intimated by issuance of SVLDRS-2 and 3. Only then can there be determination of final amount payable under the scheme. There is no dispute that petitioner was entitled to the accumulated credit. Application of it for utilisation to pay tax on outward services was disputed by revenue as ineligible or partially so. Going by clause (c) in said circular dated 27th August, 2019, petitioner s contention fits as a certain matter, where tax was paid by utilizing input credit and the matter is under dispute. The circular requires that in such cases, the tax already paid shall be adjusted by the designated committee at the time of determination of the final amount payable under the scheme. In the circumstances revenue is bound to cause the adjustment, which will leave balance tax to be paid, under the scheme, as nil. Writ petition is allowed. Opposite party no.1 is directed to issue SVLDRS-4 within four weeks of communication of certified copy

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• 2024 (11) TMI 725
  Non discharge of service tax liability on Manpower Recruitment Agency Services, Business Auxiliary Service Maintenance and Repair Service - whether the appellant had rendered Manpower Recruitment and Supply Agency Services Business Auxiliary Service during the period in question i.e. from 16.06.2005 to 31.03.2006 and 09.07.2004 to 31.03.2006 respectively? HELD THAT:- We find that the Commissioner(Appeals) has mechanically endorsed the order of the adjudicating authority and not discussed as to how the appellants are liable to discharge service tax under the category of Manpower Recruitment and Supply Agency Services Business Auxiliary Service as per the definitions provided under the Finance Act, 1994. The order appears to be cryptic and unreasoned one, which cannot be sustained in view of the principle laid down in Shukla Brothers [ 2010 (4) TMI 139 - SUPREME COURT] - Therefore, the impugned order is set aside and the appeal is remanded to the learned Commissioner(Appeals) to pass a well-reasoned order.

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• 2024 (11) TMI 724
  Admissibility of exemption from service tax on the services of maintenance provided to Railway site under FCI - FAA held that since the activities of the Appellant are provided for use of FCI and hence are not Railways for public carriage of passenger or goods. Therefore, the exemption under Notification No.24/2009-ST dated 27.07.2009 as amended is not available HELD THAT:- We find that the issue is no more res integra and has been decided by the Tribunal in the case of KVR Rail Infra Projects Pvt. Ltd. [ 2019 (5) TMI 376 - CESTAT HYDERABAD ] wherein the demand of service tax under Commercial or Industrial Construction Service or Works Contract Service for the period from October 2004 to June 2007 and August 2007 to October 2009 respectively for construction of railway sidings/tracks cannot sustain and require to be set aside. Thus demand of service tax is set aside and penalty imposed under Section 78 is also set aside. The appeal filed by the Appellant is partly allowed in the above terms.

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• 2024 (11) TMI 723
  Refund of service tax paid on the input services - Claim of Notification Nos. 52/2011-S.T. dated 30.12.2011 and 41/2012-S.T. dated 29.06.2012 - HELD THAT:- The appellants in this case had availed the insurance service for insuring the building, plant and machinery, storage of raw material etc. As regards storage warehousing services, the same were used/utilized by the appellants for procuring and movement of raw materials etc. Similarly, with regard to courier agency service, the conditions itemized in the table had not been fulfilled by the appellants inasmuch as the IEC code, nature of courier, name and address of recipient etc. were not forthcoming from the documents submitted for verification. Since, the said disputed services were not used / utilized for exportation of the goods, in our considered view, rejection of the refund claim by the lower authorities is in conformity with the Notification dated 30.12.2011. The Notification dated 30.12.2011 was superseded by Notification No. 41/2012-S.T. dated 29.06.2012 and effect such supersession, inter alia, is that in the case of excisable goods, taxable services that have been used beyond the place of removal, for the export of such goods, should be considered for grant of refund/rebate of service tax paid thereon. It is an admitted fact on record, that the appellants are the manufacturer of excisable goods and for that purpose, got themselves registered with the Central Excise authorities. Insofar as grant of refund/ rebate of service tax is concerned, the notification dated 29.06.2012 (supra) has provided that the services used beyond the place of removal (i.e., the factory gate, in the case of a manufacturer of excisable goods), should alone be considered and not otherwise. The manner of use/utilisation of the disputed services, as discussed in the respective orders passed by the lower authorities, makes the position amply clear that such use/utilisation are not beyond the place of removal and also the appellants had not submitted adequate documentary evidences to prove the case in their favour, that they are falling under the scope and purview of such notification, entitling them for grant of refund/rebate of service tax paid on such services. Since, there is no ambiguity in reading of the contents in the notifications referred supra, we are of the considered view, that there is no infirmity in the impugned order passed by the learned Commissioner (Appeals). The law is well settled that the wordings used in the exemption notification have to be strictly interpreted and the benefit provided therein should be available to the claimant, upon fulfilment of the conditions itemised therein. We find that for non-fulfilment of the conditions prescribed in the earlier notification No.14/2009-S.T. dated 07.07.2009 (rescinded vide notification No.52/2011-S.T. dated 30.12.2011), in the case of Magsons Exports [ 2013 (4) TMI 523 - CESTAT NEW DELHI] has rejected the appeal filed by the assessee.

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• 2024 (11) TMI 722
  Entitlement for abatement of 70% from the gross value of the purpose of paying service tax on ocean freight or otherwise - Lower authorities have confirmed the demand of differential duty attributed to the abatement portion on the ground that the appellant have not fulfilled the condition for availing the exemption under Notification No. 26/2012-ST dated 26.06.2012 (Serial No. 10). HELD THAT:- Levy of service tax itself on ocean freight was held ultravirus in the case of SAL Steel Ltd. [ 2019 (9) TMI 1315 - GUJARAT HIGH COURT] therefore, for this reason when the entire service tax is not sustainable the differential service tax demand is also not sustainable. In the appellant s own case for the earlier period this Tribunal [ 2024 (9) TMI 1174 - CESTAT AHMEDABAD] remanded the matter to the adjudicating authority for passing a fresh order. Thus this matter should go back to the adjudicating authority for deciding afresh keeping in mind the observations made supra.

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• 2024 (11) TMI 721
  Service tax on the foods sold on counter/taken away - Adjudicating Authority held that sale of food over the counter is not service and, therefore, there is no ground to levy service tax on the same - HELD THAT:- As decided in M/s Bikanervala Foods Pvt. Ltd. 2024 (6) TMI 504 - CESTAT NEW DELHI] give rise to the issue of taxability of sale of food items through Take Away or Home Delivery , the activity is clearly of sale of food and does not involve any service element and, therefore, following the ratio of the judgements referred above, the activity of sale of food items by Take Away or Home Delivery by the appellant is not liable to service tax. Accordingly, the impugned order deserves to be set aside and the appeal is allowed.

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• 2024 (11) TMI 720
  Valuation of services - sale of coal rejects - Rejection of refund claim as barred by limitation - HELD THAT:- Tribunal in the case of Earth Minerals Company Limited [ 2024 (5) TMI 1487 - CESTAT KOLKATA] wherein it has been held that on the sale of coal rejects the appellant is not liable to pay service tax. Admittedly, the value of sale rejects recovered by the appellant are not liable to be taxed, therefore, they are not liable to pay service tax, hence, the refund claim filed by the appellant is to be entertained which has been paid by them inadvertently. Period of limitation - We find that in this case for the period April 2012 to June 2012 the appellant filed refund claim on 21.05.2013. It means that except April, 2012, the refund claim filed by the appellant is within time. The Ld. Counsel conceded the refund claim for April, 2012 at this stage, therefore, we hold that the appellant is not entitled for refund for the period April, 2012. Therefore, for the period May 2012 to June 2012 the refund claim was required to be entertained by both the authorities and cannot be rejected as barred by limitation. We set aside the impugned order and remand the matter back to the Ld. Commissioner(Appeals) to deal with the issue of unjust enrichment and pass an appropriate order in accordance with law within 60(sixty) days from the date of receipt of this order.

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• Central Excise

• 2024 (11) TMI 719
  CENVAT in respect of service tax paid on outward transportation under reverse charge mechanism in the admitted fact that the sale of excisable goods is on FOR basis - HELD THAT:- It is admitted fact even by the adjudicating authority in the impugned order that the sale of excisable goods is on FOR basis and in respect of supply of such excisable goods the appellant have availed the service of transportation on which the appellant have paid the service tax which has been availed as Cenvat Credit. On the identical facts, this Tribunal has decided the matter in favour of the assessee in the case of M/S ULTRA TECH CEMENT LTD. VERSUS CCE ST, ROHTAK [ 2014 (10) TMI 679 - CESTAT NEW DELHI] . In the said judgment, in the case of sale of goods on FOR basis,whenthe freight is integral part of the assessable value on which excise duty was paid, it was held that in this condition the assessee is eligible for the Cenvat Credit on outward transportation. Recently, on the identical issue and under the same set of facts, the Hon ble Kerala High Court in the case of TRANSFORMERS AND ELECTRICALS KERALA LTD. VERSUS THE COMMISSIONER OF CENTRAL TAX AND CENTRAL EXCISE KOCHI, THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, BANGALORE. [ 2024 (10) TMI 623 - KERALA HIGH COURT] also taken the same view and held that In the instant cases, however, we find that it is the admitted case that the appellant did not include the transportation costs in the assessable value of the goods for the purposes of payment of Central Excise duty. Under such circumstances, we fail to see how the appellant can claim input tax credit in respect of the transportation services availed by it for the purposes of transporting the goods from the place of removal to the buyer s premises. In our view, permitting the appellant to avail input tax credit in such circumstances would militate against the very Scheme of CENVAT credit, which is designed to avoid the cascading effect of tax and an ultimate burden on a consumer. We therefore see no reason to interfere with the order of the Tribunal impugned in these appeals. In view of the above judgments of the Hon ble High Court of Gujarat and Kerala High Court, the issue is no longer res-integra. Hence, applying the above judgments in the present case also, the appellant is eligible for Cenvat Credit on outward GTA service. The impugned order is set aside, the appeal is allowed with consequential relief.

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• 2024 (11) TMI 718
  Failure to follow Rule 7 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - discrepancy in calculation of duty by Revenue - HELD THAT:- In the instant case, it is noticed that the issue regarding documents and the manner of calculation has been specifically raised before the first appellate authority. Even in terms of the Tribunal order, the issue could have been raised before Commissioner (Appeals). In view of above, it is found that facts are not identical to the earlier proceedings, in so far as in the instant case, the appellant agitated issues regarding evidence in the shape of invoices before Commissioner (Appeals) which was not done in the earlier proceedings. The only dispute before Commissioner (Appeals) in the instant case was that while applicability of Rule 7 had not been challenged the manner of calculation was challenged. There are no infirmity in the order of Commissioner (Appeals) remanding the matter back to the original adjudicating authority for fresh adjudication - The appeal filed by Revenue is therefore, dismissed.

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• 2024 (11) TMI 717
  Disallowance of CENVAT Credit - input/ input service - Manpower Supply Services - Anti-termite/ Pesticide treatment (Pest Control) - Security Services - Project management consultancy - Equipment hiring - contravention of provisions of Rule 2,3,4 9 of the Cenvat Credit Rules, 2004 - Credit denied for the reason that the credit is in respect of inputs and input services received by the appellant prior to the commencement of production - HELD THAT:- There are no such allegation in the show cause notice or any such thing in the impugned order. The credit has been sought to be denied for the reason that the inputs and input services received by the appellant do not qualify as input or input services as per the Rule 2 (k) and 2 (l) of the CENVAT Credit Rules, 2004. Appellant has placed reliance on series of decisions on this account only to mislead the bench. These decisions are not on the subject in dispute. Hence the decisions relied on this aspect do not merit any consideration. In the impugned order after considering the inputs and input services against which the appellant have claimed the credit in light of the definitions of inputs and input services as per Rule 2 (k) and 2(l) respectively Commissioner have recorded the finding to effect that these inputs and input services fall within the exclusion clause of the said definition, and hence have denied the said credit. In certain decisions relied upon by the appellant it has been held that though these goods and services are covered by the exclusion clause, but the credit should be allowed as it gets covered by the definition clause. In case of SOLAR INDUSTRIES INDIA LTD. VERSUS COMMISSIONER OF CE CUSTOMS NAGPUR [ 2018 (7) TMI 768 - CESTAT MUMBAI] , Mumbai Bench while explaining the scope of exclusion clause observed Something which may be covered has got to be excluded by way of exclusion. In view of the exclusion clause the arguments with regard to the coverage, the services under the definition clause first part would not be correct. This decision of Mumbai bench was affirmed by Hon ble Bombay High Court as reported at SOLAR INDUSTRIES INDIA LIMITED. VERSUS THE COMMISSIONER, CENTRAL EXCISE, CUSTOMS AND SERVICE TAX, NAGPUR [ 2021 (12) TMI 1047 - BOMBAY HIGH COURT] observing It was found by the Tribunal that by virtue of the amendment dated 1-4-2011 rent-a-cab service had been excluded from the definition of the term input service . The same was in three limbs and the material basis for denying such Cenvat credit was in view of Clause (B) to Rule 2(l) of the said Rules. We find that the Tribunal was justified in disallowing Cenvat credit for the reasons mentioned in the impugned order. Affirming this decision Hon ble Supreme Court in SOLAR INDUSTRIES INDIA LIMITED VERSUS COMMISSIONER, CENTRAL EXCISE CUSTOMS AND SERVICE TAX, NAGPUR-II [ 2022 (9) TMI 1155 - SC ORDER] observed In that view of the matter, it cannot be said that the High Court has committed any error in denying the Input Tax Credit and holding that such a service is excluded from the input service. Thus in view of the above decisions the goods or services which have been excluded by way of exclusion clause in the definition, could not have been said to be covered by the definition, by referring to the main clause of the definition. As observed in case of Solar Industries all such decisions which have held so are per incuriam and have no precedent value. From the submission made by the appellant in appeal also it is evident that these chemicals were used proper construction of floor and hence would fall under the excluded category. As per Clause (B) of the exclusion clause to Rule 2 (k), Any goods used for- construction of a building or a civil structure or a part thereof; or laying of foundation or making of structures for support of capital goods have been excluded. Hence there are no anomaly in the impugned order denying this credit. Modernization or renovation or repairs of a factory - HELD THAT:- The activities of Modernization or renovation or repairs of a factory will be covered by the inclusion clause of the definition and those in relation to the setting up of the factory will be covered by the exclusion clause. It is settled law that the while interpreting a Fiscal Statute the statute should be interpreted strictly on the basis of the words used in the statute - Despite being given ample opportunities, the appellant failed to provide evidence to the effect that the appellant was undertaking repair, modernization or repair of existing factory. They were asked to provide the evidence in respect of the closure of the factory in 2007 on account of labour unrest, or the returns filed by them during the prior period to show that they factory was existing and producing goods and clearing the same. As it is observed they have produced returns for the period from September 2011 onwards where in the production and clearance was indicated as Nil till February 2012. First time any production and clearance has been show is in Month of March 2012. Thus it cannot be accepted that the contention raised by the appellant to the effect that the works undertaken by them were in relation to repair, modernization or renovation of the existing factory. The only issue that needs to be examined in present case and on the basis of various decisions sited by the appellant is whether these activities were in relation to setting up of the factory or in relation to renovation, repair or modernization of existing unit - In absence of any evidence we are not in position to agree with the claim made by the appellant to effect that these activities were in relation to renovation, modernization or repair of ongoing factory. In case of COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI VERSUS M/S. DILIP KUMAR AND COMPANY ORS. [ 2018 (7) TMI 1826 - SUPREME COURT] , Hon ble Supreme Court has specifically held that any person claiming any exemption has to establish that he falls within the four corners of exemption notification. The appellant have failed to comply with the test laid down by the Hon ble Supreme Court and establish that all these activities were in relation to repair, modernization or renovation of factory we are not in position to agree the contention raised by the appellant for first time in appeal, contrary to their own admissions and submissions before the investigating and adjudicating authority. Manpower Supply Services - Anti termite/ Pesticide Treatment Services - credit has been sought to be denied for the reason that these services were used by the appellant in relation to the construction activities of setting up of the manufacturing unit - HELD THAT:- In absence of any evidence to the contrary being made available, a contrary view cannot be taken. It is found that appellant has availed CENVAT credit in respect of the Manpower Supply Services (April 2012 to December 2012) and Security Services (April 2012 to November 2012). This credit has been availed by the appellant after the commencement of production activities. As these services have been received by the appellant during the period after commencement of production, the denial of credit by attributing the same to setting up of the manufacturing unit cannot be justified. Thus, credit of Rs.2,94,243.66/- taken by the appellant against security services and the credits taken by the appellant towards man power supply services from April 2012 onwards is held admissible. The appellant had even prior to issue of the show cause notice debited the entire amount of inadmissible credit which has been admitted by the adjudicating authority. He has also set aside the demand for interest. In our view this was a fit case where the proceedings should have been closed following the dictum of sub-section (2) of Section 11A of Central Excise Act, 1944. Thus, there are no merit in the penalty imposed on the appellant under Rule 15 (1) of the CENVAT Credit Rules, 2004. Thus, quantum of demand needs to be re-determined by the original authority - Penalty imposed under Rule 15 (1) is set aside - appeal allowed in part.

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• 2024 (11) TMI 716
  Cenvat credit - input services - imported capital goods clearances charges, consultancy charges (other than civil), insurance charges, input GTA (only machinery related) and erection and commissioning charges (only machinery related) etc used during the setting up of their manufacturing unit i.e. prior to starting of their first commercial production - Revenue denied the Cenvat credit in the above services on the ground that these services are related to and used in setting up of the factory and since the setting up wording was deleted from the inclusion clause of the definition in Rule 2 (l) of the Cenvat Credit Rules, 2004, appellant are not eligible for Cenvat credit - HELD THAT:- From the reading of the above rule, it can be seen that as per the main clause of the definition given in Rule 2 (l)(ii) any service used by a manufacturer, whether directly or indirectly, in or in relation to manufacture of final product and clearance of final product up to the place of removal are considered as input service. In the present case all the services described above are undisputedly used in the factory of the manufacturer. Therefore, the same are clearly covered under the Rule 2 (l)(ii) of the definition of input services. Similar issue has been dealt with by the Ahmedabad bench in the case of Piramal Glass Ltd [ 2019 (10) TMI 1032 - CESTAT AHMEDABAD] wherein the tribunal has held that In the present case, installation of new furnace is directly used in relation to manufacture of final product. Therefore, even as per the main clause of the definition of the input service, these services are input services and credit is rightly availed by the appellant. In view of the above judgment, even though the wording setting up was deleted from the inclusion clause of the definition but all the services are covered under the main clause of definition of input services as per Rule 2 (l) of Cenvat Credit Rules, 2004 so far these services were used by the manufacturer, directly or indirectly in or in relation to the manufacture of the final product. Therefore the cenvat credit on the subject input services are admissible. The impugned order is set aside. Appeal is allowed.

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• 2024 (11) TMI 715
  Eligibility of respondent (ship breaking company) to avail cenvat credit of CVD on fuel oil, High Speed Oil and lubrication oil inside the engine room bunker available on the ship imported for breaking - the said goods form part of ship and input service under Rule 2 (a) of CCR, 2004 used in process of manufacture of final excisable product in breaking of ship - HELD THAT:- The Commissioner (Appeals) has relied upon the case of PRIYA HOLDING (P) LTD VERSUS COMMISSIONER OF CUSTOMS, PREVENTIVE [ 2012 (11) TMI 532 - GUJARAT HIGH COURT] wherein it was held that the fuel oil lying in the engine room is part and parcel of the ship which is imported for breaking which means the fuel oil cannot be given different treatment than the entire ship. Consequently, for the purpose of cenvat also no discrimination can be made between the entire ship and the bunker lying in the engine room. Therefore, the case of Priya Blue holding directly supports the case of the respondent. Moreover, on a very identical issue, the tribunal in the case of Navyug Ship Breaking Co. [ 2023 (3) TMI 636 - CESTAT AHMEDABAD ] held that Learned Commissioner (Appeals) has rightly held that in view of para 6 of the circular no. 1014/2/2016-CX., dated 1-2-2016, that cenvat credit of CVD paid on fuel oils cannot be denied to the Respondent. The issue in hand has already been decided in the favour of the assessee. Therefore, following the ratio of the above judgment, there is no reason to deviate from the view taken therein - the impugned order is upheld. Revenue s appeal is dismissed.

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• 2024 (11) TMI 714
  Reversal of CENVAT credit - availment of credit of the duty earlier paid under Rule 16(1) of the Central Excise Rules, 2004 as if it is an input - credit sought to be reversed on the ground that machine was not subjected to the process of manufacture - whether the availment of differential cenvat credit of Rs.1,59,543/- and Rs.3371/- by the appellant under Rule 16(2) of Central Excise Rules, 2002 is justified? - Admissibility to credit on demurrage charges. Credit sought to be reversed on the ground that machine was not subjected to the process of manufacture - HELD THAT:- The appellant after receipt of the machine, in response to the Department s query submitted that the lathe machine is a customised capital goods and it is fabricated according to the required specifications of the customer. They contended that after the machine was received from the Pune customer, it was remanufactured by dismantling and thereafter adding certain materials / inputs enhancing its features and assembled it to make it customer-worthy. These works carried out on the lathe machine cannot be termed as process of repairing of rejected machine but results into manufacture. The said goods has been cleared to another customer after customising it according to his specifications. Also, on going through the list of materials appended with the appeal paper book, it is seen that certain features of the earlier machine after dismantling it had been added and as a new commodity with distinct use had emerged as a result of the processes; therefore, bringing out a new machine. Hence, the processes resulted into manufacture. In these circumstances, the payment of the duty on the transaction value of remanufactured machine is justified. Admissibility to credit on demurrage charges - HELD THAT:- It is seen that the same was taken on proper tax paid invoices and leviability of tax and its classification was is not disputed; hence, availment of credit cannot be disputed. The impugned order is set aside and the appeal is allowed.

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• 2024 (11) TMI 713
  Reversal of CENVAT Credit - denial of credit on the ground that the drawback is admissible on the exported goods and the conditions that no Cenvat Credit of input and input services is availed in respect of the goods exported - Time limitation. Whether demand is barred by period of limitation or not? - HELD THAT:- The department was aware fully about the facts of the matter since 28.04.2008 as the appellant has informed them in detail regarding reversal of Cenvat Credit done by them on various inputs as mentioned in the annexure to their letter dated 28.04.2008. These facts categorically establish that it was well within the knowledge of the department regarding the reversal of Cenvat Credit by the appellant. The impugned show cause notice came to be issued on 29.03.2013 invoking the extended time proviso under section 11A(4) of the central excise act 1994 read with rule 14 of the Cenvat Credit rule 2004 which is not legally sustainable we are therefore are of view that the show cause notice is hit by period of limitation and we hold that extended time proviso is not invokable in this case as the department was in know of facts since 28.04.2008. The show cause notice has been issued in the month of March, 2013 much beyond the normal period of limitation. The impugned show cause notice as well as impugned order-in-original are bared by period of limitation. The impugned order-in-original is without any merit and therefore same is set aside - appeal allowed.

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• 2024 (11) TMI 712
  Recovery of the cenvat credit availed by the appellant against three supplementary invoices pertaining on the differential duty paid by the job worker - Rule 9(1)(b) of Cenvat Credit Rules, 2004 - HELD THAT:- The job worker after payment of differential duty issued supplementary invoices to the appellant who have availed cenvat credit on the said documents. Even though initially adjudication order confirmed the demanded amount with interest invoking suppression of facts against the job-worker, later on appeal, the same was set aside. On appeal by the job-worker against the confirmation of demand, it has been now held by the Tribunal in favour of the job-worker by dropping the demand and upheld by the Hon ble Supreme Court holding that the method of valuation adopted by the job worker is in order. Since the demand being not sustainable against the job-worker, the recovery of cenvat credit on the ground of suppression in making the differential duty payment from the appellant is unsustainable. The impugned order is set aside and the appeal is allowed.

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• CST, VAT & Sales Tax

• 2024 (11) TMI 711
  Challenge to order of the Sales Tax Appellate Tribunal (STAT/Tribunal) - rate of tax - quantification of penalty under Section 23 of TNGST Act - HELD THAT:- On the quantification itself, it is seen that it is an admitted position that the Circular is clarificatory and retrospective in nature. Thus, though it is dated 05.01.200,1 it would apply to all pending assessments, including the present assessment relating to the period 1998-99. The reason for issuance of the Circular appears to an incorrect thinking on the part of the assessing officers that the penalty under Section 23 of the Act must mandatorily of 150% only. What the Commissioner has sought to clarify that the provision allows for discretion to be exercised by the assessing officer under Section 23 to levy penalty of a sum not exceeding one and a half times the tax payable . Hence, the authorities may impose penalty at any rate upto amount from one to 150%. Despite the officer used to as a matter of rote and mechanically levy penalty only 150%. The admitted position is that the levy of penalty is attracted qua the present proceedings. However, the officer has erred in not examining as to the quantification of the same and has proceed to automaticaly impose penalty at the rate of 150%. Hence, the matter stands remanded to the file of the assessing authority to determine only the quantification of penalty. Petition allowed in part.

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• Indian Laws

• 2024 (11) TMI 710
  Review Jurisdiction - error apparent on the face of record or not - Suit for specific performance was partially decreed by directing the registration of the suit property in favour of the petitioner proportionate to the extent of the consideration paid - Doctrine of Lis pendens - HELD THAT:- The petitioner was ready and willing to perform the contract in terms of Section 16(c) of the Specific Relief Act. The first agreement to sell noted that the purchaser paid a sum of Rs.11,30,00 as earnest money. Subsequently, the petitioner paid Rs. 13,00,000 on the same day by cheque and paid another Rs. 5,00,000 by Demand Draft on 9 April 1997. If the petitioner was unwilling to perform the contract, he would not have paid nearly 75 percent of the sale consideration. Thus, the petitioner with the payment of the additional sum above the earnest money, has proved his readiness and willingness to perform the contract. Further, this aspect must be analysed in the backdrop of the explanation to Section 16(c) of the Specific Relief Act which states that if the contract involves the payment of money, it is not necessary that the plaintiff actually tenders the money. It cannot be concluded that the petitioner was not ready or willing to perform his part of the contract merely because the balance sale consideration was due to be paid. Section 10, before the amendment in 2018 stated that the Court can exercise its discretion to award specific performance of contract where (a) there exists no standard for ascertaining the actual damage caused by the nonperformance of the act agreed to be done; or (b) when the act agreed to be done is such that compensation in money for its non-performance would not afford adequate relief. The Explanation provided that unless there is anything to the contrary, the court shall presume that the compensation in money is not an adequate relief for the breach of a contract to transfer immovable property. There is nothing in the agreements to sell to rebut this statutory presumption. On an application of the facts to the principles in Sections 10 and 16 of the Specific Relief Act, it is opined that this is a fit case for this Court to exercise its discretion to direct specific performance. Doctrine of Lis pendens - HELD THAT:- The doctrine of lis pendens that Section 52 of the Transfer of Property Act encapsulates, bars the transfer of a suit property during the pendency of litigation. The only exception to the principle is when it is transferred under the authority of the court and on terms imposed by it. Where one of the parties to the suit transfers the suit property (or a part of it) to a third-party, the latter is bound by the result of the proceedings even if he did not have notice of the suit or proceeding. The purpose of lis pendens is to ensure that the process of the court is not subverted and rendered infructuous. In the absence of the doctrine of lis pendens, a defendant could defeat the purpose of the suit by alienating the suit property. This purpose of the provision is clearly elucidated in the explanation clause to Section 52 which defines pendency . Amending Act 20 of 1929 substituted the word pendency in place of active prosecution . The Amending Act also included the Explanation defining the expression pendency of suit or proceeding . Pendency is defined to commence from the date of institution until the disposal . The argument of the respondents that the doctrine of lis pendens does not apply because the petition for review was lying in the registry in a defective state cannot be accepted. The review proceedings were instituted within the period of limitation of thirty days. The doctrine of lis pendens kicks in at the stage of institution and not at the stage when notice is issued by this Court. Thus, Section 52 of the Transfer of Property Act would apply to the third-party purchaser once the sale was executed after the review petition was instituted before this Court. Any transfer that is made during the pendency is subject to the final result of the litigation. Having concluded that the errors apparent on the face of the record identified above go to the root of the reasoning on both the issues of limitation and specific performance, the judgment of this Court dated 25 August 2022 is recalled. The judgment of the High Court dated 23 April 2021 is restored. The review petitions are allowed.

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• 2024 (11) TMI 709
  Dishonour of Cheque - challenge to summoning order - appellant contended that the complaint filed was not premature, as it was within the limitation period of one month from the cause of action - Section 138 of the Negotiable Instruments Act, 1881 - HELD THAT:- On reading of proviso (c) to Section 138 as well as clause (b) of sub-section (1) of Section 142 of the N.I. Act, it becomes clear that the cause of action for the complainant to maintain a complaint arises when within fifteen days from the receipt of the notice issued by the complainant, there is no payment of the amount stated in the cheque which has been dishonoured. On the said cause of action arising, a complaint would be maintainable within a period of one month as per clause (b) of sub-section (1) of Section 142 of the N.I. Act. In the instant case, the legal notice was issued on 30.09.2019 which was received by the respondent No.2 on 01.10.2019, but a reply was given on 16.10.2019. There was no payment of the amount which was stated in the cheque which was dishonoured. Consequently, within a period of one month from 16.10.2019, the appellant had the right to maintain the complaint. In the instant case, the complaint was filed on 23.10.2019, which is within the period of limitation as prescribed in clause (b) of sub-section (1) of Section 142 of the N.I. Act. The High Court, therefore, fell in error in holding that the complaint was premature by construing the date 16.10.2019, on which the reply was sent by respondent No.2-accused as the date from which limitation period of one month had to be calculated. This is contrary to clause (b) of sub-section (1) of Section 142 of the N.I. Act. The impugned order passed by the High Court is set aside and the summoning order dated 09.12.2019 is revived - Appeal allowed.

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• 2024 (11) TMI 708
  Dishonour of Cheque - challenge to conviction and sentence under Section 138 of the Negotiable Instrument Act - it is alleged that judgment is based on conjectures and surmises - contradictions in the Complaint and the evidence - only defence that has been put forth by the petitioner is that he had returned the loan amount in cash though, without any acknowledgment - HELD THAT:- The learned Metropolitan Magistrate as well as the learned ASJ, have rightly observed that though a plea of having return the amount in cash, has been taken but the petitioner has not able to prove it by any cogent evidence. He admittedly has no acknowledgement of repayment of loan from the respondent and has also not been able to explain why he did not take back the cheques from the respondent No. 2, at the time when he made the alleged repayment. It has been rightly held that the petitioner has not been able to discharge the presumption against him under Section 139 of N.I. Act read with Section 118 of the Indian Evidence Act. So far as the objection taken in regard to the loan being taken in cash being violative of the Income Tax Act is concerned, it is the respondent No. 2 may be liable for prosecution under Income Tax Act but in view of the categorical admissions of the petitioner of having taken a cash of Rs. 15,00,000/-, he cannot avoid his liability under Section 138 of N.I Act. The petitioner in the present Revision Petition, has not been able to agitate any ground which entitles him to any interference in his conviction and sentence. There is no merit in the present Revision, which is hereby dismissed. Revision dismissed.

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• 2024 (11) TMI 707
  Classification of the account of the borrower as NPA - Was the account of the borrower NPA as on the date of classification of the same? - Is the transfer of the financial asset by the State Bank of India (SBI) to the Asset Reconstruction Company (ARC) valid? - What reliefs are the parties entitled to? - HELD THAT:- The date on which the account should be considered as NPA or not for a sale under Section 5 of the Act of 2002, in the facts and circumstances of the present case, would be the date of publication of the web notice and need not be pinned to the date of NPA mentioned in the notice under Section 13 (2) - the action of SBI in putting up the financial assets for sale and ultimately assigning the same in favour of the ARC cannot be faulted. It did not violate any binding Directions of RBI in doing so. In the facts and circumstances of the present case, the borrower did not reply to the notice under Section 13 (2) of the Act of 2002 dated July 8, 2022. Section 13 (3-A) of the Act of 2002 has obliged the secured creditor to consider the representation or objection of a borrower to a notice under Section 13 (2) of the Act of 2002 and if the secured creditor concludes that such representation or objection is not acceptable, to communicate within 15 days of the receipt of such representation or objection the reason for non-acceptance of the representation or objection of the borrower - Unlike a civil suit filed under Order 37 of the Code of Civil Procedure, 1908, or a suit filed for compensation on account of storage, which does not statutorily empower the recipient of a demand notice to respond to and the issuer of such demand notice to deal with the response within a specified time, a notice under Section 13 (2) of the Act of 2002 can be responded to by the borrower and the secured creditor who has issued such notice is obliged to inform the reasons as to non-acceptance or non-tenability of the objection within the specified period of 15 days from the date of receipt of the response. Not responding to a notice under Section 13 (2) of the Act of 2002 raises a rebuttable assumption that the borrower has accepted the default in repayment of secured debt and the classification of the account as NPA. This presumption being rebuttable, the borrower can do so by making a representation or raising an objection under Section 13 (3-A) of the Act of 2002. The borrower who has not responded under Section 13 (3-A) can nonetheless rebut the presumption in a proceeding under Section 17 of the Act of 2002. When a measure under Section 13(4) is taken. A measure under Section 13(4) can be taken only after a notice under Section 13(2) has been issued and a response given by the lender to a reply of the borrower under Section 13(3-A) of the Act of 2002. The borrower has to rebut the presumption that the account was not NPA after the secured creditor has issued a notice under Section 13 (2) of the Act of 2002, for it to succeed in any action taken by the Bank or financial institution under the Act of 2002. In the facts and circumstances of the present case, SBI has proceeded under Section 5 of the Act of 2002 and not under Section 13(4) thereof. In any event, the borrower has failed to discharge the burden of proof rebutting the presumption that the account became NPA on the date of the web notice which is February 10, 2023. The account of the borrower was classified as a Non-Performing Asset (NPA) on the relevant date - the transfer of the financial asset by the State Bank of India (SBI) to the Asset Reconstruction Company (ARC) is valid - the impugned judgement and order dated October 5, 2023 set aside - appeal allowed.

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• 2024 (11) TMI 706
  Seeking quashing and setting aside of the Look Out Circular (LOC) - petitioner has not been arraigned as an accused by the SEBI - HELD THAT:- The petitioner is the son of an accused Late Sudhir Moravekar. It is not in dispute, that the E.O.W has registered an FIR as against the petitioner s father and others (not the petitioner) and that after investigation, E.O.W has filed charge-sheet in the said case, as against the petitioner s father and other accused on 30th October 2021. Admittedly, the petitioner has not been arraigned as an accused in the said case registered by the E.O.W. It also appears that the SEBI has filed several prosecution complaints in the matter of Pancard Clubs Limited in 2019. Admittedly, the petitioner has not been arraigned as an accused by SEBI in any of the said complaints - It is not in dispute that the petitioner has abided by the terms and conditions stipulated in the said orders. It appears that the petitioner has businesses overseas, as a result of which, he is required to regularly travel overseas. It also appears that the petitioner is involved in business of short-term rental service apartments in Thailand and Dubai, requiring him to travel often. It also appears that the petitioner s mother, a senior citizen, his wife and one school going child are dependent on him and that he is a resident of Mumbai and as such has roots in the society. It is also not in dispute that the SFIO has filed a prosecution complaint in February 2024 and till date, the trial Court has not taken cognizance of the said complaint. In order to assail the fear of the learned counsel for the respondent No.1, that the petitioner would not be available, when the Court takes cognizance of the prosecution case, we directed the learned counsel for the petitioner to file an affidavit of the petitioner undertaking to co-operate with the trial Court. Accordingly, learned counsel for the petitioner has tendered an affidavit of the petitioner dated 12th July 2024. The said affidavit is taken on record and marked X for identification. In the said affidavit, the petitioner has undertaken to remain present as and when summoned by the learned Special Court or the offices of the respondent Agency and has voluntarily ensured full compliance with the respondent Agency i.e. SFIO. Thus, the petitioner has undertaken to abide by the undertaking given by him in the affidavit i.e. to remain present before the trial Court, as and when summoned and even before the respondent Agency i.e. SFIO - The petitioner has roots in the society and has also tendered an undertaking as stated aforesaid. In this light of the matter, the apprehension of the respondent No.1-SFIO, does not appear to be valid and bonafide. The impugned LOC issued as against the petitioner, at the behest of the respondent No.1-SFIO, is quashed and set aside - The petitioner to abide by his undertaking given to this Court dated 12th July 2024 - Petition allowed.

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• 2024 (11) TMI 705
  Challenge to Lookout Circular issued against the Petitioner by the Bureau of Immigration at the request of the State Bank of India - Fundamental Right to travel abroad under Article 21 of the Constitution of India - parties have arrived at a One Time Settlement and the proposal has been accepted by the lead member of consortium, i.e., the State Bank of India - HELD THAT:- Clause L of the Office Memorandum of 2021 states that in exceptional cases, an LOC can be issued at the instance of the Bank if the authorities are of the view that letting the person to depart from the country will be detrimental to the economic interests of India. The Courts have also laid down the scope of the term detrimental to the economic interest of India used in Office Memorandum bearing No.25016/10/2017-Imm (Pt.) dated 22.02.2021, which is the last of the guidelines issued by the Ministry of Home Affairs for issuance of Lookout Circulars, which cannot be resorted in every case of Bank default and the citizen s right to travel abroad, which is a Fundamental Right guaranteed under Article 21 of the Constitution of India, cannot be taken away and persons cannot be deprived of their liberty and right to travel abroad only because of their inability to repay the amounts due to Banks. It is well settled that merely because the Office Memorandum permits the issuance of a lookout circular in exceptional circumstances, even when an individual is not involved in any offence under the IPC or any other penal law, the said power should be used in exceptional circumstances and not as a matter of routine - It is well settled that mere inability to pay money without there being a criminal case cannot be a reason to take away the Fundamental Right guaranteed under Article 21 of the Constitution of India. Right to travel abroad has been held to be a Fundamental Right under Article 21 of the Constitution of India which cannot be taken away in an arbitrary and illegal manner. The issuance of lookout circular cannot be resorted to in every case of bank loan defaults or credit facilities availed for business and the Fundamental Right of a citizen of the country to travel abroad cannot be curtailed only because of failure to pay a bank loan more so when the person against whom the lookout circular is opened has not been even arrayed as an accused in any offence for misappropriation or siphoning off the loan amounts. In view of the fact that an amicable settlement has been arrived at and the Petitioner has already deposited a sum of Rs. 113.50 crore with the State Bank of India, which is the lead member of the consortium, and in view of the fact that there is no criminal case pending against the Petitioner, this Court is of the opinion that the Lookout Circular issued against the Petitioner which has the effect of taking away the Fundamental Right guaranteed under Article 21 of the Constitution of India cannot be permitted to sustain and the same is hereby quashed. Petition allowed.

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