TMI Tax Updates - e-Newsletter
November 2, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Securities / SEBI
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Exemption from GST on Education services - demand of GST on affiliation fee and inspection fee - Exemption notification specifically enumerates the specific nature of service rendered by the educational institutions which would stand exempted. Inspection and affiliation fees however is not part of the said notification granting exemption. - Writ petition dismissed - HC
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Income Tax:
Revision u/s 263 - period of limitation - It is indisputable that the limitation period for assessment warrants strict interpretation; however, the facts presented to us confirm conclusively that the search concluded on 29th April, 2021. Therefore, it is implausible to assert that the assessment order of 31st March, 2023 notified under Section 153A of IT Act exceeds the twelve-month limitation period. - HC
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Income Tax:
Validity of notice issued u/s 143(2) with 142(1) - Period of limitation - Relevant Date - Date of filing of original return to be considered or date of removal of defect u/s 139(9) is to be taken into account - Undoubtedly, the notice issued u/s 143(2) is time-barred. Consequently, the notice u/s 142(1) will also collapse. - HC
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Income Tax:
Reopening of assessment - reasons to believe - Interestingly, in the ‘reason to believe’, there is no reference to the original assessment order dated 14.01.2015. Had the AO looked at the assessment order and the record concerning the petitioner’s/assessee’s case, the explanation given by the petitioner/assessee would have come to light. - HC
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Income Tax:
Computation of capital gain - FMV determination - addition u/s 50C - tolerance band for variations between stated sale consideration vis-ŕ-vis stamp duty valuation - The rate of 10% of tolerance limit is applicable with effect from 1/4/2003 itself, no addition could be made in the hence of the assessee. - Additions deleted - AT
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Income Tax:
TDS u/s 195 - professional fees paid outside India - it cannot go to the article of ‘other income’ only because of the reason that FTS article is not there in the Double Taxation Avoidance Agreement. - To bring it under article “ other Income “, it has to be established first that income stream does not fall in any other article of DTAA. Undisputedly, all the recipient are in the business of the services. Therefore there income first classify under article of Business income. - No TDS liability - AT
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Income Tax:
Addition u/s 68 - assessee company, during the year under consideration, unsecured loan had been taken by the company from The Director of the company - Since the amount has already assessed in the hands of the company, additions in the hands of company would be tantamount to double taxation. - AT
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Income Tax:
TP Adjustment - Reduction of economic adjustment on foreign exchange fluctuation loss - in principle, the foreign exchange fluctuation loss adjustment has to be given being a non-operating expenses and the AO/TPO will recomputed the PLI after considering the details and facts of foreign exchange fluctuation loss claimed by assessee. - AT
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Income Tax:
Validity of assessment order - Amalgamation - transfer pricing order u/s. 92CA(3) was passed against non-est (amalgamated) company - assessment order though passed in the name of the amalgamated company is held to be invalid for the reason that the draft assessment order and the transfer pricing order passed by the A.O./TPO was in the name of the non existing company. - AT
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Customs:
Re-import of goods - Denial of exemption - Since the goods exported are already held to not to be ‘Goods Supplied’ but for exhibition, the goods exported on LUT bond gets apparently out of the scope of entry 1(d) of the notification dated 30.6.2017. Thus shall fall under entry 5 of the said notification to which applies ‘Nil’ duty. - AT
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Customs:
Re-export - Rejection of request for provisional release of the seized goods - Mis-declaration of goods - The pleading of the appellant as to the acceptance by the foreign supplier on the wrong shipment as well as taking back the goods in question clearly shows the bona fides of the appellant, which are not at all doubted anywhere by the authorities below. - provisional release of the seized goods allowed - AT
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Customs:
Classification of goods proposed to be imported - Data Projector - Projectors in question are machines working in conjunction with an automatic data processing machine and performing a specific function other than data processing, thus the same merit classification in the headings appropriate to their respective function i.e. 85286200. - Benefit of exemption available - AAR
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Customs:
Maintainability of petition before HC - High Court has rejected the contention on alternate remedy because Respondent No.2 (Adjudicating authority) has not even examined the merits of the case when there was a binding order of CESTAT - On facts, the High Court was right in exercising the extraordinary jurisdiction under Article 226 of the Constitution of India, notwithstanding the availability of statutory remedy. - SC
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Customs:
Classification of imported goods - Frequency Converter (variable speed drive) - Based on the Section Notes absolutely there is no confusion as to the classification of the product. - The essential character is that of inverter and hence, they are rightly classifiable under specific entry under Chapter 8504 as per the Interpretative Rules - AT
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Indian Laws:
Dishonor of Cheque - legally enforceable debt or not - Transaction in violation of Section 269-SS of Income Tax Act - The same can be permitted to be enforced by instituting proceedings u/s 138 of the Act of 1881 in view of the presumption u/s 139 of the Act of 1881 that such cheque was issued by the drawer for the discharge of any debt or other liability, execution of the cheque being admitted. - HC
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Service Tax:
Valuation - air travel agent service - addition of amount of fuel surcharge to the air fare for the purpose of determining the “basic fare” - The appellant had produced the BSP statements which conclusively show that the commission was received only on the air fare and not on air fare plus fuel surcharge. - Demand set aside - AT
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Central Excise:
Recovery of CENVAT Credit - proper procedure u/s 9D not followed - the 35 statements relied upon in the SCN are not relevant and hence also not admissible. - The assessee is not required to launch an investigation. At any rate, as discussed above, Revenue itself was ambiguous about the existence of these units from the time they were registered until and including when the impugned order was issued - there are no grounds to deny Cenvat credit to the assessee. - AT
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Central Excise:
Penalty u/r 26 of the Central Excise Rules, 2002 - appellant was Director during relevant period - Since the demand of the duty has already been settled under SVLDRS Scheme and there is no cause for imposition of penalty under Rule 26 of the Central Excise Rules, 2002 on the director of the company who has been a paid employee - AT
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Central Excise:
CENVAT Credit - removal of 'moulds' as such or deployment with the vendors / job workers - removal of ‘epoxy moulds’ to manufacturer of ‘parts of automobile’ seats as such - matter remanded back to the original authority for fresh determination on ascertainment of facts relating to the transactions - AT
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VAT:
Benefit of Group Insurance purchased by the State for "Registered Dealer" under VAT - Application for cancellation of registration before the death of registered dealer - If the registration did not stand cancelled on the date of occurrence of his death, the status of the deceased would remain to be of a registered dealer for the purpose of Group Insurance Policy. - HC
Articles
Notifications
Central Excise-
37/2023 - dated
31-10-2023
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CE
Reduce SAED on export of Diesel - Seeks to further amend No. 04/2022-Central Excise, dated the 30th June, 2022.
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36/2023 - dated
31-10-2023
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CE
Change in SAED on production of Petroleum Crude and export of ATF - Seeks to amend No. 18/2022-Central Excise, dated the 19th July, 2022.
Customs-
79/2023 - dated
31-10-2023
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Cus (NT)
Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver
GST - States-
S.O. 475 - dated
13-9-2023
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Jammu & Kashmir SGST
Amendment in Notification S.O. No. 384/2023- Tax, dated the 24th of July, 2023
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S.O. 474 - dated
13-9-2023
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Jammu & Kashmir SGST
Seeks to extend amnesty for GSTR-9 non-filers
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S.O. 473 - dated
13-9-2023
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Jammu & Kashmir SGST
Seeks to extend amnesty for GSTR-10 non-filers
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(20/2023) FD 16 CSL 2023 - dated
20-10-2023
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Karnataka SGST
Amendment in Notification (05/2017) No. FD 48 CSL 2017, dated the 29th June, 2017
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(19/2023) FD 16 CSL 2023 - dated
20-10-2023
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Karnataka SGST
Amendment in Notification (04/2017) No. FD 48 CSL 2017, dated the 29th June, 2017
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(18/2023) FD 16 CSL 2023 - dated
20-10-2023
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Karnataka SGST
Amendment in Notification (02/2017) No. FD 48 CSL 2017, dated the 29th June, 2017
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(17/2023) FD 16 CSL 2023 - dated
20-10-2023
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Karnataka SGST
Amendment in Notification (01/2017) No. FD 48 CSL 2017, dated the 29th June, 2017
Income Tax-
94/2023 - dated
31-10-2023
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IT
Amendment in Form ITR-7[Appendix II] - Income-tax (Twenty-Seventh Amendment) Rules, 2023
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2023 (11) TMI 50
Validity of adjudication notice - misuse of E-way Bills by the consignor - inherent lack of jurisdiction - HELD THAT:- Once allegations of infraction of law arise, adjudication proceedings may not be interjected in exercise of extra ordinary jurisdiction of the writ court. Limited scope of challenge may be preserved for cases involving inherent lack of jurisdiction or grounds of like nature. Reference made to certain other facts narrated in the show cause notice would also remain to be examined in the adjudication proceedings. Accordingly, inference claimed is declined, in face of alternative statutory remedy available to the petitioner - the writ petition is dismissed.
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2023 (11) TMI 49
Exemption from GST on Education services - demand of GST on affiliation fee and inspection fee together with arrears from July, 2017 onwards - HELD THAT:- On reading of the provisions of G.S.T. law, the notification No. 11 of 2017, dated 28.06.2017, emphatically holds education service to be one which is liable to tax. The relaxations granted vide Notification No. 12 of 2017 is confined to the services rendered by the educational institutions to the students, faculty and staff. It also grants exemption in respect of collection of fees relating to entrance examination and other fees chargeable from the students for admission or any such purpose. The fact that the Notification No. 11 of 2017, dated 28.06.2017, has a broader subject when it prescribes education service and Notification No. 12 of 2017, dated 28.06.2017, specifically enumerates specific services which stand exempted and inspection and affiliation fees not reflected in the Notification No. 12 of 2017, dated 28.06.2017, the relief sought for by the petitioners or the issue raised by the petitioners would not be sustainable - Notification No. 12 of 2017, dated 28.06.2017, which stood amended further vide Notification No. 2 of 2018, dated 25.01.2018, specifically enumerates the specific nature of service rendered by the educational institutions which would stand exempted. Inspection and affiliation fees however is not part of the said notification granting exemption. There are no substance in the contentions raised by the learned counsel for the petitioners - petition dismissed.
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Income Tax
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2023 (11) TMI 48
Revision u/s 263 - period of limitation - whether the assessment order for AY 2015-16, issued on 31st March, 2023, was barred by the limitation prescribed in Section 153B? - restraint and revocation orders pertaining to Locker - HELD THAT:- Petitioner has sought to mislead the Court, arguing that status of last panchnama remains unchanged despite the subsequent searches on 29th and 30th April, 2021 of Lockers 299, 2070, and 1320. While, there is strength in Petitioner s argument that panchnamas logging nil recovery from the scrutiny of Lockers 2070 and 1320 on 30th April, 2021, which were also searched previously in March, 2021, cannot be classified as last panchnama ; however, the restraint and revocation orders pertaining to Locker 299 (extracted above) unequivocally establish that Locker 299 underwent its initial search on 29th April 2021, even though it resulted in no recoveries. This date marks the onset of the limitation period prescribed under Section 153B of IT Act. The Petitioner s assertion, which suggests that the searches spanning through 02nd to 06th March, 2021, as logged in the panchnamas, should be viewed as the execution of last authorization u/s 132 of IT Act, does not align with the factual reality. Search operation was an ongoing process that definitively concluded on 29th April, 2021, when Locker 299 was inspected. This renders the assessment under Section 153A, which culminated on 31st March, 2023, within the time limit prescribed u/s 153B of IT Act. Consequently, the basis for Petitioner s challenge to the invocation of revisional jurisdiction under Section 263, is untenable. It is indisputable that the limitation period for assessment warrants strict interpretation; however, the facts presented to us confirm conclusively that the search concluded on 29th April, 2021. Therefore, it is implausible to assert that the assessment order of 31st March, 2023 notified under Section 153A of IT Act exceeds the twelve-month limitation period. Since there is no jurisdictional error in the assessment order dated 31st March, 2023 pertaining to AY 2015-16, on the ground of limitation, we are not inclined to entertain the present petition.
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2023 (11) TMI 47
TP Adjustment - comparable selection - HELD THAT:- Infobeans Technologies Ltd rejected on functional dissimilarity between the assessee and Infobeans, the said comparable. Cybercom is the business of providing technical services. Based on this finding, the Tribunal has excluded Cybercom as a comparable. Infosys BPO is a riskbearing entity having diversified activities. The respondent/assessee, on the other hand, which has a turnover of only Rs. 96 crores in the BPO sector and hence cannot be compared. Clearly, the findings returned by the Tribunal above for each comparable are findings of fact, and that no question is proposed by the appellant/revenue that the findings are perverse. Therefore, in our view, Infobeans, Cybercom and Infosys were rightly rejected as comparables. Adjustment on account of interest on receivables - as argued by assessee that once working capital adjustment is allowed, then no adjustment on account of interest on receivables is required to be made - HELD THAT:- Tribunal has noted the assertions made on behalf of the respondent/assessee that it permitted a ninety (90) days credit period. On behalf of the appellant/assessee, it had been emphasized that once the credit period exceeded ninety (90) days, interest had to be charged. It is on this account that adjustment was ordered with regard to the receivables. Tribunal has relied upon its decision [ 2021 (11) TMI 1148 - ITAT DELHI] and concluded that the said issue needed to be restored to the Assessing Officer (AO) for verifying the respondent/assessee s claim, keeping in view its aforementioned decision, albeit, after providing reasonable opportunity of hearing to the respondent/assessee. 20. In our view, on this score as well, no interference is called for with the order of the Tribunal. Also in support of her submission that once working capital adjustment is made, no further adjustment is required to be made on account of interest received on receivables has correctly relied upon the judgment of Kusum Health Care Pvt. Ltd. [ 2017 (4) TMI 1254 - DELHI HIGH COURT] as held with the Assessee having already factored in the impact of the receivables on the working capital and thereby on its pricing/profitability vis- -vis that of its comparables, any further adjustment only on the basis of the outstanding receivables would have distorted the picture and re-characterised the transaction. No substantial question of law arises
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2023 (11) TMI 46
Validity of reopening of assessment - allegation against the petitioner that it has received bogus entry from an entry provider i.e., one Mr Ramesh Kumar Bagri - HELD THAT:- A mistake has been made in triggering reassessment proceedings against the petitioner as correspondence from the Office of the Deputy Director of Income Tax (Investigation). Unit-II. Faridabad, as now evident that during the financial year under reference, no transactions have been carried out by the assessee with Sh. Ramesh Kumar Bagri and his name was inadvertently mentioned by the Investigation Wing in the report due to similarity in the names. Thus reassessment against the petitioner cannot continue. Decided in favour of assessee.
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2023 (11) TMI 45
Disallowance u/s 14A r.w.r.8D - whether only investments made to earn exempt income should be taken into account excluding other investments while calculating the disallowance? - HELD THAT:- As in Cargo Motors (P.) Ltd. case [ 2022 (10) TMI 571 - DELHI HIGH COURT] ruled that the disallowance calculated under Rule 8D of 1962 Rules should factor in only investments made by an assessee to earn exempt income. Therefore, the said proposed question of law need not be considered by us. Disallowances of expenses u/s 37(1) - HELD THAT:- As decided in assessee own case [ 2017 (7) TMI 172 - ITAT DELHI] .The opinion of the AO that though there was no income to the assessee from these businesses, still it was incurring expenses for them, is unfounded. On a specific query, the ld. DR failed to draw our attention towards any specific expenditure incurred by the assessee qua these businesses withdrawn by the holding company. The AO made disallowance simply by means of a mathematical exercise carried out by him. If he found the expenditure incurred by the assessee to be on higher side, it was incumbent upon him to specifically point out as to which expenses were not incurred for the purposes of business. No such exercises worth the name has been carried out. In our considered opinion, the Ld. CIT(A) was fully justified in deleting this addition made by the AO on ad hoc basis. This ground is therefore, not allowed Rationale adopted by the Tribunal in the earlier AYs, which was accepted by the coordinate bench of this court [ 2017 (7) TMI 172 - ITAT DELHI] . The deletion of disallowance was rightly ordered by the Tribunal. The said expenditure was claimable by the respondent/assessee under Section 37(1) of the 1961 Act. Depreciation on software - @25% OR 60% - HELD THAT:- As decided in own case [ 2017 (7) TMI 172 - ITAT DELHI] . Once it is found that the software used by the assessee were of standard nature to be used in computer hardware and not meant for any independent usage, such software qualify for depreciation @ 60%. We consider Appendix I to the Income-tax Rules containing rates of depreciation available for the purposes of income-tax, it becomes manifest that the computer software which are necessary and integral for the working of hardware are eligible for depreciation @ 60%, as was claimed by the assessee. Nature of expenses - software charges/software expenditure - HELD THAT:- Treatment of this disallowance ordered by the AO will depend on whether software expenditure is treated as money expended on revenue or on capital account. The coordinate bench of this court in in Times Internet Ltd. [ 2017 (9) TMI 1355 - DELHI HIGH COURT] has concluded that the such expenditure is in the nature of revenue expenditure.
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2023 (11) TMI 44
Validity of notice issued u/s 143(2) with 142(1) - Period of limitation - Relevant Date - Date of filing of original return to be considered or date of removal of defect u/s 139(9) is to be taken into account - Scrutiny / Regular assessment - Assessee submitted that return date relates back to the date on which the original ROI was filed seems to have been the yardstick that the AO applied in the instant case - HELD THAT:- By logical extension, if the date of the ROI originally filed on 14.10.2016 is taken into account, then, the impugned notices served on the petitioner/assessee would be time-barred, as the first proviso appended to Section 143(2) stipulated, at the relevant point in time, that the notice under the said Section could not have been served on the assessee, in this case, the petitioner, after the expiry of six (6) months from the end of the financial year in which the ROI is filed. The financial year, in the case of the petitioner s/assessee's original return, would have ended on 31.03.2017. Six (6) months, as mandated by the proviso, would have ended on 30.09.2017. Undoubtedly, the notice issued u/s 143(2) is time-barred. Consequently, the notice u/s 142(1) will also collapse. The impugned notices are, accordingly, quashed.
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2023 (11) TMI 43
Validity of assessment order passed u/s 143(3) r.w.s.144B - notice of demand u/s 156 and notice for initiation of penalty proceedings u/s 274 r.w.s. 270A - as argued no personal hearing was granted - respondent has returned with instructions on the specific query raised with instructions that seem to suggest that at the relevant point in time, the respondents/revenue were working with the help of demo servers provided by the National Informatics Centre (NIC). HELD THAT:- As stated that after respondents/revenue deployed its servers, it lost access to the information stored on the demo servers, and therefore, the record of the hearing held by the AO cannot be recovered. The petitioner, as noted on 10.03.2022, has asserted on affidavit that no personal hearing was granted. In the absence of relevant material, this assertion would have to be accepted. In our view, the best way forward would be to set aside the impugned assessment order with liberty to the AO to pass a fresh order after adhering to the principles of natural justice.
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2023 (11) TMI 42
Reopening of assessment - reasons to believe - borrowed satisfaction or independent application of mind - AO had obtained information from the Kolkata Division of the Investigation Directorate regarding the booking of LTCG which was relatable to trade in shares of Blue Print Securities Limited by the petitioner/assessee - HELD THAT:- The petitioner, in the letter, had indicated that he had purchased 800 equity shares at the face value of Rs. 10/- each, of a company going by the name Ranisati Commotrade Pvt. Ltd. on 05.04.2010. These shares, according to the petitioner s/assessee s explanation, were transferred to him on 28.04.2010. Also asserted by the petitioner/assessee that the said company was amalgamated with Blue Print Securities Limited, and that the amalgamation was sanctioned by the Calcutta High Court via order dated 25.11.2010. Petitioner/assessee had taken a stand that, against 800 shares held by him in Ranisati Commotrade Pvt. Ltd., he had received 32,000 shares of Blue Print Securities Ltd. at a face value of Rs. 10/-. It is these shares that the petitioner had sold and, thus, earned a long-term capital gain amounting to Rs. 94,85,882.78/-. Interestingly, in the reason to believe , there is no reference to the original assessment order dated 14.01.2015. Had the AO looked at the assessment order and the record concerning the petitioner s/assessee s case, the explanation given by the petitioner/assessee would have come to light. AO being unable to tie up the information received by him, with the alleged failure on the part of the petitioner to fully and truly disclose all material facts, attains criticality in the instant case. There is a non-application of mind by the AO. The AO appears to have solely proceeded based on the general information received by him. The AO, in a sense, has taken recourse to borrowed satisfaction. There is nothing in the reason to believe that would show how the AO has reached a figure of Rs. 1,04,38,000/-. The only clue concerning that figure is in the information that he had received from the Kolkata Division of the Investigation Directorate. Also noted AO verily believed, for some strange reason, that the petitioner s/assessee s case was the one which fell within four (4) years, which is why he had adverted to Section 151(2) rather than Section 151(1) of the Act. Reassessment set aside - Decided in favour of assessee.
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2023 (11) TMI 41
Stay of Recovery proceedings - appropriate Application for stay - violation of principles of natural justice - dual remedy against the same Assessment order [one before this Court and another before the Appellate Commissioner] - petitioner submits that the impugned Assessment order preceded a notice which was also replied by the petitioner, however, without considering the same, impugned Assessment order has been passed against the petitioner as in appeal - as submitted that the petitioner has to pre deposit the amount as per the circulars/Notifications issued u/s 119 and the Show Cause Notice u/s 272A(1)(d) imposing penalty issued HELD THAT:- The petitioner has an option to file application to stay further recovery proceedings and the impugned Assessment order before the Authority. Decision of LG Electronics India Pvt Ltd Vs. The State of Tamil Nadu and others [ 2022 (5) TMI 1359 - MADRAS HIGH COURT] is invited, wherein, held that in appropriate case, the Authority is empowered to grant suitable relief as far as pre-deposit. No merits in the present writ petition. Therefore, the writ petition is dismissed with liberty to the petitioner to file appropriate Application for stay of all recovery proceedings pursuant to the impugned Assessment order against which the petitioner is in Appeal before the CIT Appeals. If such application is filed, the Authority concerned shall dispose the same in the light of the decision of the Hon'ble Supreme Court in LG Electronics India Pvt Ltd[supra].
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2023 (11) TMI 40
Adjustment of refund against demand raised - revenue have adjusted demands not only for AY 2018-19, which was one of the proposals, but also for AY 2017-18 - Petitioner s case that there has been a breach of principles of natural justice inasmuch as the respondents/revenue have moved away from what was proposed in the two emails - HELD THAT:- The infraction of principles of natural justice is also sought to be buttressed by emphasising the point that although the petitioner was given twenty-one (21) days to respond to the first of the above-captioned emails concerning adjustment qua demand concerning AY 2021-22, the impugned order was passed within four (4) days. There are several other issues as well, which Mr Jain has raised before us, including the fact that the demand for AY 2022-23 has been stayed by this court vide [ 2023 (8) TMI 1370 - DELHI HIGH COURT] Therefore, in our view, the best way forward would be to set aside the impugned order dated 01.09.2023, with liberty given to the concerned officer to take the next steps in the matter, albeit, as per law. WP dispossed of.
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2023 (11) TMI 39
Bad debts u/s 36(1) acquired from predecessor-in-interest - acquisition of commercial vehicle division in a scheme of demerger - HELD THAT:- This very issue has been decided by us today in an appeal concerning the respondent/assessee in VE Commercial Vehicles Ltd. [ 2023 (10) TMI 1283 - DELHI HIGH COURT ] ruled issue in favour of the respondent/assessee as not disputed that the predecessor-in-interest had offered for imposition of tax the subject debts at a relevant point in time. See T. Veerabhadra Rao [ 1985 (7) TMI 2 - SUPREME COURT ] and Times Business Solution Ltd. [ 2013 (4) TMI 370 - DELHI HIGH COURT ] Nature of expenses - training expenses treated as a third kind of expense, i.e., deferred revenue expenditure - Tribunal holds that u/s 37 the entire expenditure would have to be allowed - HELD THAT:- According to us, the view taken by the Tribunal is correct. Also see CIT(A) vs. Samsung India Electronic Limited [ 2013 (7) TMI 365 - DELHI HIGH COURT ] has taken the same view. Revenue appeal dismissed.
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2023 (11) TMI 38
Reopening of assessment u/s 147 - reason to believe - assessee had deposited large cash amounts and entered into high value financial transactions - HELD THAT:- What is evident from the annexures produced together with the petition is that pursuant to summons issued to the petitioner u/s 131(1A) asking the petitioner to show how he has deposited large amount of cash in the account of the Ahmedabad Mercantile Co-operative bank, the petitioner had responded as submitting the explanation indicating that the amount was deposited in the bank account and it was pertaining to daily cash as well as of petrol, diesel deposited every day in the bank. A statement of reconciliation containing details of cash deposits and cash for the period from 09.11.2016 to 31.12.2016 was placed on record. The audited accounts are also produced along with the petition indicating that there was fresh and plausible explanation tendered by the petitioner in context of these cash deposit. Assessment order passed after due inquiry on 17.12.2019 also indicates that there was full and complete disclosure of income at the hands of the assessee. Apparently reasons supplied by the respondent in its communication and the order disposing the objections are without jurisdiction for the reason that it is the case of change of opinion on the part of the respondent with regard to the source of cash deposits made in the banks. It is well settled in the case of Kelvinator of India [ 2010 (1) TMI 11 - SUPREME COURT] that reason must have a link with the formation of the belief. Decided in favour of assessee.
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2023 (11) TMI 37
Reopening of assessment u/s 147 - no specific details regarding the availability of MAT credit was submitted - HELD THAT:- MAT credit as per return of income was Rs. 5,37,51,517/- whereas as per assessment order u/s 143(3) r.w.s 144C that the fact that MAT credit of Rs. 5,37,517 was granted. Therefore, all details were furnished and were verified. Copy of the audited accounts showing tax credit under Section 115JB gave details of the claim. What also was pointed out was that there was error in calculating and the reasons were factually incorrect. Evidently, the assessment year in question was assessment year 2012-13. Regular assessment u/s 143(3) was finalised on 23.03.2016. Four years had gone by from the end of the relevant period as the notice is dated 25.03.2019. There was therefore no failure on the part of the petitioner to disclose fully and truly all material facts necessary for the its assessment. Even from the record, it is evident that it is aptly demonstrated that as per statement of income MAT credit details were filed. No details or further inquiry was made on the claim. Having accepted the claim in absence of any other reason reassessment on the very issue was a change of opinion. There is therefore live link between the reasons recorded and formation of belief. Appeal of assessee allowed.
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2023 (11) TMI 36
Reopening of assessment - Assessee entered into high value transactions, inter alia, concerning the subject immovable property - petitioner s assertion was that he had not earned any other income, apart from the amounts indicated hereinabove, from sale of property and interest - Petitioner submitted that if the acquisition price of the subject property is taken into account, the escaped income will be less than Rs. 50,00,000/-. and as reassessment proceedings have been commenced beyond three (3) years from the end of relevant AY, i.e., AY 2016-17, and, therefore, are time-barred. HELD THAT:- We would have accepted the submission of Petitioner but for the fact that, concededly, the petitioner did not file his Income Tax Return. Therefore, according to us, the matter may require further inquiry. As said, before the AO proceeds further, he will give an opportunity to the petitioner to submit further documents in support of his defence (to which, we have made a broad reference hereinabove). AO will also deal with the stand of the petitioner that the subject property which was sold, was bought in and about 2010, at the price indicated hereinabove. AO will, in any event, deal Petitioner's submission that notwithstanding the fact that Return of Income (ROI) had not been filed, the escaped income would not exceed Rs. 50,00,000/-. This exercise will be undertaken before passing an assessment order. The petitioner is given leeway to file the ROI within the next thirty(30) days.
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2023 (11) TMI 35
Request of the petitioner for adjournment not been considered - respondent submits that several notices were issued to the petitioner from 2020 onwards, but he failed to respond to all the notices - ld' counsel further submits that the request made by the petitioner for adjournment has not been brought to the notice of the respondent - HELD THAT:- As seen from the screenshot produced by the petitioner of the typed set of papers, he made a request to the respondent, seeking 15 to 20 days time for gathering certain documents in support of his appeal. When the petitioner made a request electronically though e-Filing portal of the Department, it is deemed his request is brought to the notice of the respondent. Therefore, the submission made by respondent that the petitioner's request was not properly brought to the notice of the respondent cannot be accepted. Since the impugned order is passed without giving opportunity to the petitioner to produce the documents in support of his appeal as requested by him, the same is set aside. The matter is remanded back to the file of the respondent for fresh consideration by giving sufficient opportunity to the petitioner. Petitioner is directed to submit all the documents in support of his appeal before the respondent within a period of one week from the date of receipt of a copy of this order. The respondent is directed to pass fresh order on consideration of the materials submitted by the petitioner within a period of twelve weeks from the date of submission of the documents by the petitioner.
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2023 (11) TMI 34
Computation of capital gain - FMV determination - difference of 10% between value adopted by department valuer and actual transaction value - addition u/s 50C - tolerance band for variations between stated sale consideration vis- -vis stamp duty valuation - scope of Amendment made in scheme of section 50C(1) - HELD THAT:- Admittedly, assessee has sold a property at the transaction value of ₹ 130 lakhs. The valuation by the departmental valuer comes to ₹ 13,930,000/ . Therefore, the difference between the transaction value and the value of property as denied by the departmental valuation officer is ₹ 930,000. We find that the tolerance limit provided under section 50 C (1) was 5%, which was enhanced to 10% with effect from 1/4/2021, and therefore apparently for assessment year 2016 17 it was not available. It has been held that Amendment made in scheme of section 50C(1), by inserting third proviso thereto and by enhancing tolerance band for variations between stated sale consideration vis- -vis stamp duty valuation from 5 per cent to 10 per cent are effective from date on which section 50C, itself was introduced, i.e. 1-4-2003 in [ 2021 (4) TMI 1160 - ITAT DELHI ]. Therefore rate of 10% of tolerance limit is applicable with effect from 1/4/2003 itself, no addition could be made in the hence of the assessee. Accordingly, we direct delete the addition u/s 50C - Appeal of assessee allowed.
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2023 (11) TMI 33
TDS u/s 195 - disallowance u/s 40 (a) (i) being professional fees paid outside India without deduction of tds - CIT- A has referred to the several judicial precedent of BSR and Co LLP on identical issue wherein it has been held that no tax is required to be deducted at source on various payments to the foreign consultant because of the reason that the services do not make available those services to the assessee - HELD THAT:- Wherever the Double Taxation Avoidance Agreement did not contain the article of Fees For Technical Services, we are of the opinion that it cannot go to the article of other income only because of the reason that FTS article is not there in the Double Taxation Avoidance Agreement. To bring it under article other Income , it has to be established first that income stream does not fall in any other article of DTAA. Undisputedly, all the recipient are in the business of the services. Therefore there income first classify under article of Business income. In absence of permanent Establishment, it cannot be taxed in source country [India]. Therefore it goes out of the residuary article of Other income . Revenue could not point out that those entities income is not business income. Revenue also could not show that why those decisions do not apply to the facts of the case of the assessee wherein the identical jurisdiction and identical services are involved. Disallowance of contribution and reimbursement of expenses paid by the assessee to KPMG International cooperative, Switzerland without deduction of tax at source - HELD THAT:- As the coordinate bench in assessee s own case for assessment year 2001 02 [ 2017 (4) TMI 869 - ITAT MUMBAI] has already held that contribution paid by the assessee to KPMG cooperative, Switzerland is covered by Mutuality concept i.e. mutual Association on its receipts would not constitute income chargeable to tax. The learned departmental representative could not controvert the above decision of the coordinate bench in assessee s own case, therefore disallowance for non-deduction of tax at source is correctly deleted. Revenue appeal dismissed.
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2023 (11) TMI 32
Estimation of income - bogus purchases - CIT(A) confirmed the addition at the rate of 5% - HELD THAT:- ITAT Surat in more 100 appeals, wherein the similar assessees were beneficiaries of similar bogus purchases, this combination has restricted the similar addition to the extent of 6% of bogus purchases, shown in Rajendra Jain / Bhanwer Lal Jain cases groups vide judgment, in the case of Pankaj K. Choudhary [ 2021 (10) TMI 653 - ITAT SURAT] wherein the Tribunal sustained the addition at the rate of 6% of bogus purchases. We find that CIT(A) has sustained the addition at the rate of 5% of bogus purchases. Tribunal does not have power to enhance the addition. Hence we note that assessee got sufficient relief at the first appellate stage and therefore does not deserve further relief, hence we dismiss the appeal of the assessee. Condonation of delay - delay of 547 days - out of total delay 223 days delay is attributable to Covid-19 Pandemic - HELD THAT:- For balance delay of 324 days, (547 - 223) has occurred mainly because the assessee was feeling severe problem of kidney and doctors have given medical treatment of kidney failure and the kidney was made transplant, and after that the assessee was living in a separate room with supervision of Doctor for more than twelve months, therefore assessee could not take decision to file the appeal before Tribunal. Thus the reasons given in the affidavit for condonation of delay were convincing and accpetable.
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2023 (11) TMI 31
Disallowance u/s 14A r.w Rule 8D - mandation of recording satisfaction - addition made as assessee did not establish the nexus between interest free funds and investment yielding exempt income - CIT(A) deleted the addition - HELD THAT:- It is not in dispute that the assessee on its own made disallowance u/s 14A - as observed that the AO has not recorded his satisfaction regarding correctness of self disallowance made by the assessee under section 14A as is mandatory in terms of sub-section (2) of section 14A to invoke and take recourse to Rule 8D. In such a scenario as held in Pr. CIT vs. Keshav Power Ltd.[ 2019 (8) TMI 811 - SC ORDER] that disallowance is not sustainable. The Revenue filed SLP before the Hon ble Supreme Court against the order (supra) of the Hon ble Delhi High Court which stands dismissed reported. [ 2018 (11) TMI 645 - DELHI HIGH COURT] . Similar is the view expressed in Pr. CIT vs. Reliance Capital Asset Management Ltd. [ 2018 (9) TMI 883 - SC ORDER] - Moreover, CIT(A) recorded the finding that sufficient own funds were available with the assessee to make investment in shares on which no interest was being paid and that interest bearing funds were utilised only for purposes of business. The above finding could not be controverted by bringing on record any material by the Ld. DR. If that be so, the decision of South Indian Bank Ltd. [ 2021 (9) TMI 566 - SUPREME COURT] squarely applies to the facts of the assessee s case wherein it is held that if interest free funds available with the assessee exceeded their investment in tax free securities, investments would be presumed to be made out of assessee s own funds and no disallowance is warranted. It may be stated that there is no requirement of law either under section 14A or Rule 8D that the assessee should establish nexus between interest free funds and investment which yields exempt income. Decided in favour of assessee.
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2023 (11) TMI 30
Revision u/s 263 - validity of order passed by the TPO - treatment to ESOP expenses, foreign exchange fluctuation loss and loss on investments in subsidiaries - As per CIT TPO has wrongly calculated the total operating expenses ignoring the ESOP expenses issued by the parent company to the employees of the subsidiary company and debited expenses to the P L account of Rs. 4,054 million - Also foreign exchange fluctuation loss of Rs. 110 million and loss on investment in subsidiaries of Rs. 118 million was to be treated as operating expenses - TPO has not treated these as operating expenditure and accepted the TP study of the assessee - HELD THAT:- TPO has issued show cause notice to the assessee and the assessee has duly replied. AR submitted that as per the disclosure policy, ESOP expenses are required to be disclosed as per the requirement of Ind-AS 102, therefore it was debited to P L account by the assessee. While calculating the taxable income of the assessee, it has been added back to the total income as per computation filed by the assessee. As gone through the judgments relied on by the ld. AR in this regard noted supra where it is held that ESOP expenditure is not to be treated as operating expenditure. Therefore we hold that ESOP expenses is non-operating expenditure for the purpose of computation of operating margin. Accordingly, the ld. CIT is not justified in treating it as operating expenses. Foreign exchange fluctuation loss and loss on investments in subsidiaries CIT has himself noted that these do not prima facie constitute operating expenses . However, CIT has directed the AO for fresh consideration of all the above three issues. In respect of foreign exchange fluctuation loss and loss on investments in subsidiaries of Rs. 228 million, when the ld. CIT himself observed that these are not operating expenses, he cannot direct the TPO for fresh examination of the same issue. Accordingly, we hold that the order passed by the TPO is not erroneous and prejudicial to the interests of the revenue and the impugned order of the ld. CIT is quashed. Decided in favour of assessee.
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2023 (11) TMI 29
Revision u/s 263 - Provision for bad debts/ Bad-debts - As per CIT AO has not gone through into the write off of Desire Pen and Stationery where even the PAN number is not given by the assessee-company - HELD THAT:- Hon`ble Supreme Court in the case of TRF Ltd [ 2010 (2) TMI 211 - SUPREME COURT] has stated that the position of law is well settled After 1 April 1989, for allowing deduction for the amount of any bad debt or part thereof under section 36(1)(vii) of the Act, it is not necessary for assessee to establish that the debt in fact has become irrecoverable, it is enough if bad debt is written off as irrecoverable in the books of accounts of assessee . Therefore, we note that assessing officer has taken a possible view to allow this claim, therefore order passed by the assessing officer is neither erroneous nor prejudicial to the interest of revenue so far issue of bad debts is concerned. Examine the new issue - Additions to the fixed assets during the financial year which have been shown along with work in progress - From the above judgment of Amitabh Bachchan [ 2016 (5) TMI 493 - SUPREME COURT] it is vivid that what is contemplated by Section 263, is an opportunity of hearing to be afforded to the assessee. Failure to give such an opportunity would render the revisional order legally fragile not on the ground of lack of jurisdiction but on the ground of violation of principles of natural justice. We note that to examine the new issue, namely, the additions to the fixed assets, the ld PCIT has issued notice to the assessee, u/s 263 - In compliance to the said notice, the assessee has replied, however, PCIT did not consider the reply of the assessee at all, and ignored the reply of the assessee. Therefore, without giving an opportunity of hearing to the assessee, ( in respect of said new issue) the CIT has passed the order, hence order passed by the ld PCIT is not in accordance with the mandatory provisions of section 263 of the Act, therefore we quash the order of ld PCIT. Appeal filed by the Assessee is allowed.
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2023 (11) TMI 28
Deduction u/s. 80P(2)(d) - interest income from investment in Co-operative bank - assessee is a Primary Agricultural Credit Society registered under the Tamil Nadu Cooperative Societies Act, 1983 carrying on the business of banking or providing credit facilities to its members - HELD THAT:- Hon ble Supreme Court has considered the identical issue in the case of Kerala State Co-operative Agricultural and Rural Development Bank Ltd [ 2023 (9) TMI 761 - SUPREME COURT ] wherein as stated that the Central Co-operative Bank is a Co-operative Society which is registered under the Kerala State Co-operative Societies Act, then it is not a bank per se governed by RBI. Similarly in the present case before us, the Erode District Central Co-operative Bank also governed by Tamil Nadu Co-operative Societies Act and once it is governed by Co-operative Societies Act, the assessee is eligible for claim of deduction u/s. 80P(2)(d) - Claim of assessee allowed.
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2023 (11) TMI 27
Reopening of assessment u/s 147 - change in 'reason to believe' - additions in respect of other income - HELD THAT:- Re-assessment has been made on altogether different grounds than what is recorded in the reasons for reopening the assessment. As per the reasons recorded, allegation of escapement is with reference to income claimed as exempt under Section 10(38) in relation to trading in the scrips of a concern Amulya Leasing and Financing Ltd. However, a perusal of the re-assessment order shows that the additions have been made by invoking Section 68 holding the same to be unexplained cash credit. Thus, the reason to believe which in the first instance, impelled the Department to reopen the proceedings has undergone a complete change. As well settled that once the Assessing Officer assumes jurisdiction to reopen the proceedings under Section 148, he cannot independently make additions in respect of other income which escapes assessment unless the Assessing Officer makes some additions based on allegations in the reasons recorded. See JET AIRWAYS (I) LTD. [ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] and Living Media India Ltd.[ 2013 (6) TMI 128 - DELHI HIGH COURT ] In the instant case, the foundation of reopening has been knocked out and additions have been made on unrelated grounds which is not permissible in law. Thus, the additions under challenge are not permissible in law. Hence, such impugned additions are liable to be quashed. Decided in favour of assessee.
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2023 (11) TMI 26
Addition u/s 68 - assessee company, during the year under consideration, unsecured loan had been taken by the company from The Director of the company - HELD THAT:- CIT(A), while confirming the addition, has observed that the assessee did not furnish copies of ITR of Director of the company from whom loan is taken and that no explanation regarding the source of credits in his bank account was furnished. We find that the ITR in the case of director was filed on 30.03.2023, i.e., after the passing of the order of the ld. CIT(A), on 18.01.2023, in the case of the assessee. In pursuance of the ITR, assessment order in the case of director stands independently passed on 30.05.2023, where the ITR was filed on 30.03.2023. The amount stands assessed in the hands of Director of the assessee company. Therefore, there is no occasion for assessing the same in the hands of the assessee as this would amount to double taxation, which is impermissible in law.mAccordingly, the addition in the hands of the assessee is deleted. Addition u/s 37 - disallowance of claimed Employee Benefit Expenses, other expenses and Finance Cost - HELD THAT:- We find the grievance of the assessee to be justified despite the fact that the assessee did not carry out any business activity during the year, the fact remains that the was in existence during the year. It is also undisputed that the expenditure in question was incurred as normal expenditure during the year. That the salary of the Accountant and Peon had to be paid. The running and maintenance expenses, audit fees and ROC fees were also a necessary concomitant. Thus, the Employee Benefit Expenses and other expenses are allowed and the addition in this regard is deleted. However, no details of finance cost having been furnished, the addition to this extent, as confirmed by the ld. CIT(A), is upheld.
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2023 (11) TMI 25
TP Adjustment - working capital adjustment - contention of the Revenue is to restrict the adjustment to the difference in agreed credit period between the AO and the assessee and that of comparables - As submitted assessee had not established the need for working capital adjustment by showing that the credit period agreed between the assessee and its AE are more than the agreed period availed by the comparables - Revenue argued CIT(A) failed to understand the issue that only difference in the days of credit between that of comparable and the agreed credit period as per invoice / agreement with the AE should be taken into account and not the availed credit period - HELD THAT:- Assessee drew our attention to OECD guidelines which provides for considering the availed credit period rather than agreed credit period. OECD guidelines of July, 2010, wherein it is mentioned that making working capital adjustments involves the selection of the appropriate interest rate (or rates) to use. The rate (or rates) should generally be determined by reference to the rate(s) of interest applicable to a commercial enterprise operating in the same market as the tested party. We uphold the order of CIT(A) and this issue of Revenue s appeal is dismissed. Reduction of economic adjustment on foreign exchange fluctuation loss, non-cenvatable custom duty adjustment - HELD THAT:- The assessee has tried to show the details of higher custom duty incurred but no comparable was cited but ld.counsel for the assessee stated that his mater can go back to the file of AO for verification whether the assessee is paying higher custom duty i.e., non-cenvatable custom duty and the comparables are either procuring indigenous raw material or buying lesser custom duty which could be set-off against cenvat. We noted that the authorities below have not adjudicated this issue by comparing the custom duty paid by the assessee and its comparable. Hence, this issue needs verification at the level of TPO/AO. Needless to say, the assessee will file all the details before the AO/TPO and the matter is restored back to the file of the AO/TPO, who will examine the facts in detail and then decide this issue Also noted that in principle, the foreign exchange fluctuation loss adjustment has to be given being a non-operating expenses and the AO/TPO will recomputed the PLI after considering the details and facts of foreign exchange fluctuation loss claimed by assessee. In term of the above, this issue is also set aside to the file of the AO/TPO and allowed for statistical purposes.
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2023 (11) TMI 24
Assessment order in the name of a non existing company - transfer pricing order u/s. 92CA(3) of the Act and the draft assessment order u/s. 143C(1) after company amalgamated - HELD THAT:- AO cannot pass the assessment order in the name of a non existing company despite the receipt of information of amalgamation from the assessee. The present case in hand pertains to the draft assessment order and the transfer pricing order passed in the name of the amalgamating company, we would like to place our reliance on the decision of FedEx Express Transporation and Supply Chain Services (India) Private Limited [ 2019 (7) TMI 1554 - ITAT MUMBAI ] wherein on identical facts, the Tribunal has held that the transfer pricing order u/s. 92CA(3) of the Act and the draft assessment order u/s. 143C(1) of the Act passed in the name of the amalgamating company which was non existing on the date of the passing of such order was illegal and bad in law and the Tribunal in this case had quashed the entire assessment proceeding to be illegal. Thus assessment order though passed in the name of the amalgamated company is held to be invalid for the reason that the draft assessment order and the transfer pricing order passed by the A.O./TPO was in the name of the non existing company. Decided in favour of assessee.
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Customs
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2023 (11) TMI 23
Maintainability of petition - availability of alternative remedy - Classification of imported goods - Glucometer - High Court has rejected the contention on alternate remedy because Respondent No.2 (Adjudicating authority) has not even examined the merits of the case when there was a binding order of CESTAT in the case of Bayer [ 2015 (11) TMI 943 - CESTAT MUMBAI ] and allowed the writ Petion - HELD THAT:- On facts, the High Court was right in exercising the extraordinary jurisdiction under Article 226 of the Constitution of India, notwithstanding the availability of statutory remedy. The Special Leave Petition is dismissed.
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2023 (11) TMI 22
Denial of exemption under Sr.5 of Notification No.45/2017 dated 30.6.2017 - re-import of goods exported earlier for participation in exhibition or on a consignment basis - requirement of exported goods to be brought back within six months of the removal - Imposition of penalty upon the appellant - HELD THAT:- Perusal of the said notification and circular No.108/27/2019-GST dated 18.7.2019 read with circular No.21/2019-Customs dated 24.7.2019 makes it clear that where the goods exported either under the Scheme of refund of integrated tax paid on export of goods or under bond without payment of integrated tax, on being re-imported, that too within six months of export, the same shall not amount to supply of goods - As per Section 5(1) of the IGST Act levy of the integrated tax is on inter-state supply of goods or services or both. Thus, for levy of integrated tax there must be supply of goods or services or both. In the present case, the goods are sent either for exhibition or on consignment basis. The goods which are re-imported are the once which are not sold in the Exhibition or are not approved by the buyer. The ownership of the goods does not transfer to the buyer/consignee to whom the goods i.e. appellant. In case of Exhibition, the appellant only takes the goods out of India and brings the same back after Exhibition - in case of goods taken for exhibition both are same person. It is well settled principle that sale cannot be made to oneself only, similar concept is applicable in case of supply as well. Further, there is no consideration paid when the goods are re-imported by the appellant. Thus, at the time of re-import there is no supply of goods as per Section 7 (1) (a) of the CGST Act. Since the goods exported are already held to not to be Goods Supplied but for exhibition, the goods exported on LUT bond gets apparently out of the scope of entry 1(d) of the notification dated 30.6.2017. Thus shall fall under entry 5 of the said notification to which applies Nil duty. Thus, the demand has wrongly been confirmed with respect to these 3 bills of entry. Imposition of penalty upon the appellant - HELD THAT:- The issue in the present case is of the interpretation of a particular notification. The appellant are held to have rightly availed the benefit of Notification No.45/2017-Customs dated 30.6.2017 - there are no evidence on record produced by the department which may prove alleged mens rea for the appellant to evade payment of customs duty. Though one Bill of Entry is held as not eligible for exemption from full customs duty but for want of evidence of alleged intent to evade, there are no justifying reason for imposition of penalty upon the appellant. Hence, the order imposing penalty upon the appellant is set aside. The order under challenge is hereby set aside except for the amount of duty to be paid with reference to bill of entry No.6830735 dated 16.6.2018. Consequent thereto, appeal stands partly allowed.
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2023 (11) TMI 21
Re-export - Rejection of request for provisional release of the seized goods - Mis-declaration of goods - Evasion of Anti-dumping duty - rejection on the ground that the investigation was still under progress - It is submitted that order was placed for Polyester Coated Fabric (Polymeric Compound), but wrong goods dispatched by the foreign supplier - HELD THAT:- It is not the case of the Revenue that the imported goods were either prohibited or forbidden or banned by any Foreign Trade Policies. Even if it is proved that it is a case of mis-declaration, the interest of the Revenue is always safeguarded by the undisputed fact of deposit of over Rs.2.37 crores by the appellant and in any case, there is no scope for re-valuation since the goods in question are not requested for clearance for home consumption, rather for re-export. The pleading of the appellant as to the acceptance by the foreign supplier on the wrong shipment as well as taking back the goods in question clearly shows the bona fides of the appellant, which are not at all doubted anywhere by the authorities below. There are no justifiable case made out by the authorities for not permitting the bona fide request for re-export of the seized goods and hence, we set aside the impugned order - the adjudicating authority is directed to accede to the request for provisional release of the seized goods forthwith after taking suitable bond and Bank Guarantee - appeal disposed off.
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2023 (11) TMI 20
Classification of imported goods - Frequency Converter (variable speed drive) - to be classified under Chapter Heading 9032 89 90 or under Chapter Heading 8504 4010? - HELD THAT:- As rightly observed by the Commissioner (A) in the impugned orders, the products under Chapter 9032 refers to instruments and apparatus for automatically controlling the flow, level, pressure or other variables of liquids or gases, or for automatically controlling temperature, while the product under dispute undisputedly converts alternating current to different frequency which are entirely different from an automatic regulator. Therefore, the question of classifying the Frequency converter imported by the appellant under 9032 is ruled out. As per the literature of the imported item, essential character is that of inverter and hence, they are rightly classifiable under specific entry under Chapter 8504 as per the Interpretative Rules specified above. Moreover, they are more akin to the description given under Chapter 8504 and as per Clause (4) above of General Rules for the Interpretation of Import Tariff they are to be classified under Chapter Heading 8504 only - Admittedly, the principal function of the imported item is of an inverter and it is also not under dispute that these drives are being used in those machinery which are classifiable under Chapter 84 or 85. Therefore, based on the above Section Notes absolutely there is no confusion as to the classification of the product. It also says that the machine refers to the machines classifiable under Chapter 84 or 85 so the question of classifying the product under Chapter 90 does not arise. The WCO also for which India is a member decided the classification of the frequency converter under Chapter 8504. The goods are rightly classifiable under Chapter Heading 8504 as against the classification under Chapter Heading 9032 as claimed by the appellant - appeal dismissed.
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2023 (11) TMI 19
Classification of goods proposed to be imported - Data Projector Model (i) ZH 350, (ii) ZW 350e (iii) ZX 350e - to be classified under Sub-heading 85286200 or under Sub-heading 85286900? - eligibility for exemption from duty vide Serial No. 17 of the Notification No. 24/2005-Cus. dated 1-3-2005, as amended - HELD THAT:- As per technical features stated in the leaftlets of the subject goods, computer compatibility features and input/output connections mentioned therein indicate that subject goods are fitted with connectors characteristics of data processing system. Thus, the subject goods do not merit classification under Sub-heading 85286900. The applicant vide their declaration in the application for advance ruling has stated that projectors in question are not of a kind used as home theatre projectors or video projectors, even going by the resolution output. Further, under Sub-heading 85286200, projectors which are capable of directly connecting to and designed for use with an automatic data processing system of 8471, merit classification therein. Therefore, reference is drawn to Chapter Note of Chapter 84 of the Customs Tariff. Chapter Note 6(C) of Chapter 84 lays down conditions for a unit to be regarded as being part of an automatic data processing system - Note 6(E) of Chapter 84 lays down that machines incorporating or working in conjunction with an automatic data processing machine and performing a specific function other than data processing are to be classified in the headings appropriate to their respective functions or, failing that, in residual headings. Sub-heading 85286200 classify projectors capable of directly connecting to and designed for use with an automatic data processing machine of heading 8471. It is evident that the projectors in question are designed for use with an automatic data processing machine. It also appears that the subject goods has got additional ports which may make it capable of being a video projector, classifiable under 85286900. In this regard, it may be mentioned that rule 3 of General Rules for Interpretation of Import Tariff states that, the heading which provides the most specific description shall be preferred to headings providing a more general description - as regards applicability of exemption notification, it is noted that under Sl. No. 17 of Notification No. 24/2005, as amended, all goods of a kind solely or principally used in an automatic data processing system of heading 8471, falling under Sub-heading 852842, 852852 or 852862 are given exemption. Thus, projectors in question are machines working in conjunction with an automatic data processing machine and performing a specific function other than data processing, thus the same merit classification in the headings appropriate to their respective function i.e. 85286200. Moreover, subject goods are eligible for exemption from duties vide Sl. No. 17 of Notification No. 24/2005-Cus. dated 1-3-2005, as amended.
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Securities / SEBI
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2023 (11) TMI 18
Ex-parte ad interim order - Appropriation of a fixed deposit - squaring off the loans of related parties - diversion of funds and its circuitous routing which was solely for the benefit of the promoter group as the appellant was the Managing Director and was not only in control over ZEEL but, being a key managerial personnel, was also in control of the seven associate entities - investigation revealed that Axis Bank instead of squaring off the credit facility of EGML had adjusted the fixed deposit against the credit facility given to seven related entities of ZEEL - restraint order passed by the respondent pursuant to the ad interim order and the confirmatory order restraining the appellant to function as a Managing Director HELD THAT:- As round tripping of funds happened in a few minutes. Can it be said that each of the transaction was a sham or a fictitious transaction? There was a reason for making the payments. Everyone owed someone, the receptionist paid his debt, the chef paid his debt, the wife paid her debt and the milkman paid his debt. Everything works on credit and through the aforesaid payments everyone was happy. This is how the system works. Can it be said that the entire transaction done by the aforesaid entities was a sham transaction on account of proximity of time? We find that the transaction between the ZEEL and the first entity was validly explained and therefore, at this stage, it was not necessary to go into the context of a larger transaction involving the circular rotation of funds. The decisions cited by the respondent in this regard are not applicable at this stage. Chairperson has proceeded on the presumption that the appellant was involved in the affairs of the Essel Group companies including the borrower entities other than ZEEL. We find that this finding is based on pure surmises and conjectures. There is no material whatsoever which would demonstrate that the appellant was involved in the alleged transactions. The finding that Essel Group companies were involved in the layering of the funds transactions and were under the influence / control of the appellant by virtue of its shareholding and shareholding of his family members is patently erroneous. There is nothing on record to show that the appellant had participated in the affairs of the borrower entities or any other Essel Group entity. We find that the appellant is neither an authorized signatory nor a director in the borrower entities and was not involved in the operation, financing or day to day management of the affairs of the borrower entities. In the absence of any active role of the appellant in Essel Group companies / borrower entities, the presumption drawn by the Chairperson that the appellant had exercised control over borrower entities is patently erroneous. The word control has been mostly used by the Chairperson to show that the appellant had an active role in the borrower entities Essel Group companies which is based on presumptions. Finding that the appellant exercised control over the borrower entities / Essel Group companies was based on presumptions in the absence of any material evidence to show that the appellant was actually in positive control of the Essel Group companies / borrower entities. The finding that the appellant had exercised control over Sprit Infrapower Multiventures Private Limited Churu Enterprises LLP through shareholding interest and designated partners is again stretching the matter a bit too far in the absence of material evidence to show that the appellant was actively involved in the day to day management of these two entities. We further find that the direction that if the appellant is allowed to continue as the Managing Director in ZEEL it would impede or tamper with the investigation is erroneous in as much as we do not find any single incident to show that the appellant has obstructed in the investigation conducted so far. We are also of the opinion that the impugned order relies upon the bank statement which cannot be tampered and which cannot be changed and therefore the presumption that if the appellant is allowed to continue as Managing Director in ZEEL it would impede or tamper with the investigation is patently erroneous. The finding that the appellant should be kept away from the helm of affairs of ZEEL so that the appellant may not exercise his influence over relevant entities to misdirect the course of investigation is patently erroneous. We also find that the Chairperson has applied different yardstick regarding the alleged transaction arising out of ZEEL. On one hand the Chairperson has based its finding on a preponderance of probability while on the other hand has refused to accept the evidence filed by the appellant and has rejected the same on the ground that the documents do not prove the genuineness of the transaction beyond a reasonable doubt. This contrary stand taken by the Chairperson is, in our opinion, arbitrary. In any case, an incorrect application of the principles of preponderance of probability has been applied. Whether a proper balance has been made by the impugned directions on the rights, liberties or interest of the person keeping in mind the purpose which it was intended to serve? - Doctrine of proportionality has not been correctly applied and a correct balance has not been made. Considering the genuineness of the documents so produced by the appellant, the first leg of the transaction was validly explained which indicates that the funds moved pursuant to a long standing commercial business relationship. The entries in the bank statement are not fictitious or sham transactions and therefore proceeding and issuing directions on the basis of preponderance of probabilities is, in our opinion, at this stage arbitrary and excessive. The directions ex facie, is punitive and not preventive and is based on incorrect apprehensions and on the basis of preponderance of probabilities. Ex-parte ad interim order could have been passed in extreme urgent cases and that such power should be exercised sparingly and should not be exercised in a routine manner. Considering the facts and circumstances of the present case, we do not find that any extreme urgent situation existed in 2023 which warranted the WTM to pass an ex-parte ad interim order with regard to a certain set of transactions which occurred in the year 2019. We find that 99.97% of the shareholders of ZEEL had reposed complete faith in the appellant as recent as into 2022 to continue as Managing Director and Chief Executive Officer of the merged entity between ZEEL and Sony. Pursuant to the ex-parte ad interim order NCLT has approved the scheme of amalgamation in which the appellant would hold the post of a Managing Director of the merged entity. This aspect has wrongly been construed by the Chairperson that it will wield substantial power of management of the affairs of the merged company upon the appellant which he cannot be permitted to do so. In our opinion such approach is unwarranted apart from the fact that there is no evidence to show that the appellant exercised positive control over the borrowed entities. The fact that greater responsibility (if any) has come upon the appellant pursuant to the merger, then all the more reason that the appellant should be allowed to continue rather than putting the merger to continue headless when 99.97% of the shareholders reposed faith in the appellant to continue as Managing Director of the merged entity. Structure of the merged entity is that Sony Group would have the majority shareholding in the merged entity and will also have majority members in the board of directors and would have right to appoint key managerial personnel like Chief Financial Officer, Chief Compliance Officer, Company Secretary etc. the appellant would be just one of the nine directors of the merged entity. Hence, his continuation as the Managing Director in the merged entity would have no impact on the investigation. Chairperson while confirming the ad interim order directed the investigation to be completed in eight months. No reason was given as why eight months is required to complete the investigation especially when only bank transactions are to be looked into. During the course of arguments, it has been stated by the respondent that other LoCs given by the promoter group of the appellant including the LoC given by the father of the appellant to the tune of Rs. 4210 crore are now being scrutinized and therefore comprehensive investigation is being done and consequently these five transactions which is impugned in the order is only part of the wider investigation. In view of the aforesaid, we are of the view that prima facie the diversion of funds has not as yet been proved. Sufficient explanation backed by genuine document have been shown by the appellant and having validly discharged their burden. The investigation is going on and considering the track record of SEBI for which we take judicial notice, no investigation is completed within the stipulated period. We have seen that on numerous occasions whenever this Tribunal or the superior Court has directed SEBI to complete the investigation within a stipulated period, the same has not been done and applications after applications are being filed by SEBI seeking time to extend the period of investigation. The impugned order cannot be sustained and is quashed insofar as it relates to the appellant. The restraint order passed by the respondent pursuant to the ad interim order and the confirmatory order restraining the appellant to function as a Managing Director and as directed in paragraph 108(ii) of the impugned order is set aside. The appeal is allowed. The appellant shall, however, cooperate in the investigation.
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Service Tax
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2023 (11) TMI 17
Entitled for exemption Notification No 04/2004- ST dated 31.03.2004 - sponsorship service received by the appellant can be considered as wholly consumed by the SEZ in their SEZ unit or not - HELD THAT:- There is no dispute that even though the service was provided from outside SEZ but the same was received by the appellant in relation to their overall operation of SEZ unit. It is also undisputed that the appellant did not have any operation outside their SEZ unit. Therefore, the sponsorship service even though provided from outside SEZ but the same was used exclusively for the operation of SEZ unit. The term wholly consumed in SEZ means the service should not be used for SEZ as well as in any SEZ unit. It does not mean that service should be provided within the SEZ. This Tribunal in the case of identical service though provided outside SEZ i.e. event management service in the case of M/S. VISION PRO EVENT MANAGEMENT VERSUS CCE ST, CHENNAI [ 2018 (7) TMI 334 - CESTAT CHENNAI] , has held that The department then cannot contend that these services are not eligible for refund since these are not consumed within SEZ. The appellant is eligible for the exemption in respect of the sponsorship service received from outside SEZ - the impugned order is set aside. Appeal is allowed.
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2023 (11) TMI 16
Valuation - air travel agent service - addition of amount of fuel surcharge to the air fare for the purpose of determining the basic fare - Extended period of limitation - HELD THAT:- The Commissioner was required to record a finding based on the evidence. The BSP statements, on which reliance has been placed by the Commissioner, clearly show that the fuel surcharge is not added to the air fare for the purpose of determining the commission amount. The Commissioner was also obliged, in terms of rule 6(7) of the 1994 Rules and the observations made by the Tribunal in its earlier order dated 14.10.2014, to determine that part of the air fare on which commission is normally paid by the airlines. The appellant had produced the BSP statements which conclusively show that the commission was received only on the air fare and not on air fare plus fuel surcharge. The finding recorded by the Commissioner that commission was paid on the air fare plus fuel surcharge cannot, therefore, be sustained and is set aside. Extended period of limitation - HELD THAT:- It would not be necessary to examine whether the extended period of limitation was correctly invoked by the Commissioner. The order dated 30.01.2017 passed by the Commissioner cannot be sustained - Appeal allowed.
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2023 (11) TMI 15
Time Limitation - suppression of facts - non-furnishing of information - overlapping demands - HELD THAT:- A perusal of the Show Cause Notice makes it clear, and admittedly, that there is no specific service alleged against the appellant, as having been rendered by it; rather, a consolidated tax liability has been worked out, which makes it indefensible. Moreover, after going through the reply and explanation filed by the assessee to the Show Cause Notice, it is found that the Revenue has not properly answered the arbitrariness in proceeding further, in an unfair manner thereby recording that which is convenient rather than placing proper facts on record as to the earlier Show Cause Notices, earlier audits in 2010 and 2012 - It is not only about the overlapping demands, it mainly highlights the fact that the activities of the appellant were in the knowledge of the Department and that there was nothing that the appellant suppressed, which fact has been conveniently ignored by the lower authority. Hence, on this ground alone, it becomes very difficult to sustain the demand invoking the extended period of limitation. The demand in the impugned order cannot sustain, for which reason the same is set aside - Appeal allowed.
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2023 (11) TMI 14
Taxability of GTA Services on Reverse Charge basis received by TNEB, Mettur - invocation of extended period for demand of Service Tax - imposition of penalties - HELD THAT:- M/s. TNEB is engaged in generation and distribution of electricity and all the Services relating to generation or distribution are exempted in terms of Notification No. 11/2010-ST dated 27.02.2010 and Notification No. 45/2010-ST dated 20.07.2010. In terms of the above Notifications, all taxable services relating to transmission and distribution of electricity are exempted. It is an admitted fact that GTA services have been availed by the appellant for transportation of Line materials and Tower parts to various distribution circles. In the case of KEC International Ltd. Vs. Commissioner of CGST (CESTAT Chandigarh) [ 2022 (8) TMI 992 - CESTAT CHANDIGARH] , has opined that the expression relating to is very wide in its amplitude and its scope and such taxable service rendered in relation to transmission / distribution of electricity would be eligible for the benefit of exemption under Notification dated 20.07.2010 and 27.02.2010 - in the case of M/S KEDAR CONSTRUCTIONS VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLHAPUR [ 2014 (11) TMI 336 - CESTAT MUMBAI ] it was held that the expression for would cover a wide gamut of activities and the activities undertaken by the appellant would be eligible for the benefit of the Notification as was held by the Tribunal in Noida Power Company Limited. Considering the decision and as GTA Services were availed for transport of Line materials and Tower parts which are related to transmission of electricity are eligible for the benefit of the exemption Notification No. 11/2010-ST dated 27.02.2010 and also Notification No. 45/2010-ST dated 20.07.2010. As the Service Tax demanded is meagre and also major portion of the Service Tax paid before the issuance of the Show Cause Notice, the issue should have been settled as the Revenue has realized the entire tax. Demand of the tax again from TNEB would tantamount to double taxation which is not legally permissible. Various decisions of the judicial fora have laid down the principle that double taxation for the same service activity is not in accordance with law. Extended period of limitation - HELD THAT:- All the services relating to transmission of generation of electricity are exempted including by Notification No. 11/2010-ST dated 27.02.2010 and also Notification No. 45/2010-ST dated 20.07.2010 making the intention of the Government very clear regarding charging of Service Tax from the entities involved in generation or transmission of electricity. As the issue is of interpretational in nature, invoking the extended period is not justified. As the entire Service Tax demanded has been paid to the credit of Government account, the impugned order is not sustainable and accordingly set aside - appeal allowed.
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2023 (11) TMI 13
Levy of service tax - Business Auxiliary Service - incentive/commission for exceeding the target of the sale of air tickets - HELD THAT:- The matter is no longer res integra as the issue has already been decided by the Larger Bench in case of KAFILA HOSPITALITY TRAVELS PVT. LTD. VERSUS COMMISSIONER, SERVICE TAX, DELHI [ 2021 (3) TMI 773 - CESTAT NEW DELHI (LB)] , in favour of the appellant where it was held that incentives paid for achieving targets cannot termed as consideration and, therefore, are not levaible to service tax under section 67 of the Finance Act. Following the above decision of the Larger Bench it is held that the impugned Order-In-Appeal is without any merit and therefore, set aside - appeal allowed.
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Central Excise
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2023 (11) TMI 12
Reversal of CENVAT Credit - manufacture of dutiable as well as exempted medicaments - eligibility of the cenvat credit should be considered as on the date of receipt of the service or on taking the credit in the books - HELD THAT:- It is a settled law that the eligibility of the cenvat credit has to be considered as on the date of receipt of the services for the reason that the moment appellant received the service along with invoices on that date the cenvat credit stand accrued to the appellant. As per the excel sheet submitted by the appellant in respect of all the invoices related to the credit of Rs. 1,58,66,384/-, it is observed that all the invoices are pertaining to the period prior to 01.04.2011. As it is opined that the eligibility of the credit to be considered as on date of receipt of service but in the present case the Adjudicating Authority has not examined the actual date of receipt of service. Therefore, for this limited purpose matter needs to be remanded back to the Adjudicating Authority. The Adjudicating Authority opinion that only for the reason that the credit was availed after 01.04.2011 when Rule 6(5) was omitted, the appellant are not eligible for cenvat credit on 16 services as prescribed in the said Rule cannot be agreed. Even though the Rule 6 (5) was omitted from 01.04.2011, if it is proved that services were received prior to 01.04.2011, the credit taken after 01.04.2011 shall be admissible to the appellant. The appeal allowed by way of remand to the Adjudicating Authority.
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2023 (11) TMI 11
Excisability - spent solvent (DMF) arising during course of manufacturing of dutiable Sucralose - reversal of CENVAT Credit as per the provisions of Rule 3 (5A) of the CENVAT Credit Rules, 2004 - clearance of waste and scrap arising out of items on which CENVAT Credit was not availed at the time or purchase and on items which were packing material of inputs which were used in the manufacture of dutiable goods - Personal penalties imposed under Rule 26 of Central Excise Rules, 2002. HELD THAT:- So far as the dutiability of the spent solvent is concerned same has already been decided by Hon ble Apex Court in decision of COMMISSIONER VERSUS AUROBINDO PHARMA LTD. [ 2011 (5) TMI 925 - SC ORDER] , the Hon ble Supreme Court s decisions has endorsed the findings given by Hon ble Andra pradesh High Court in case of above mentioned party s case in COMMISSIONER OF C. EX., HYDERABAD-I VERSUS AUROBINDO PHARMA LTD. [ 2010 (10) TMI 175 - ANDHRA PRADESH HIGH COURT] where it was held that the department accepted the assessee s contention that at the relevant period the spent solvent is not a marketable product after process of manufacture. Thus, the waste solvents is not dutiable and therefore the demand of Central Excise duty amounting to Rs. 2,02,242/- is not sustainable. Dutiability of the waste scrap cleared by the appellant - HELD THAT:- The department has not produced any evidence to contradict the submissions which have been made by the appellants that the waste and scrap which have been cleared without payment of duty has arisen from the materials on which CENVAT Credit has not been availed by the appellant - Similarly for the waste of drums and packaging material which have been cleared without payment of duty. It is found that matter is no longer res integra as Hon ble Supreme Court in case of COMMISSIONER OF CENTRAL EXCISE VERSUS WEST COAST INDUSTRIAL GASES LTD. [ 2003 (4) TMI 110 - SUPREME COURT] has already decided the matter holding that waste in form of drums/ barrels in which the raw material has been received by the manufacturer could not be treated as waste arising out of processing of the inputs for which the credit has been taken and therefore no duty can be demanded on the same. Personal penalties imposed under Rule 26 of Central Excise Rules, 2002 - HELD THAT:- Since the issue on merit is being decided in favour of the appellant as in the foregoing paras the cause of penalizing the appellants get extinguished automatically and therefore we hold that no penalty is imposable on the appellants. Accordingly the appeals are allowed. The demand on the above mentioned two issues are not maintainable and therefore impugned order set aside - appeal allowed.
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2023 (11) TMI 10
Recovery of CENVAT Credit alongwith interest and penalty - availing credit without actually supplying the goods - proper procedure under Section 9D of CEA followed or not while recording statements of various persons - HELD THAT:- Evidently, the statements will be relevant under certain circumstances and these are given in clauses (a) and (b) of sub-section (1). There is no assertion by either side that the circumstances indicated in (a) existed in the case. It leaves us with (b) which requires the court or the adjudicating authority to first examine the person who made the statement and form an opinion that having regard to the circumstances of the case, the statement should be admitted in evidence - all the statements are not relevant to the proceedings. It has been held in a catena of judgments including M/S JINDAL DRUGS PVT. LTD. AND ANOTHER VERSUS UNION OF INDIA AND ANOTHER [ 2016 (6) TMI 956 - PUNJAB HARYANA HIGH COURT ] that section 9D is a mandatory provision and if the procedure prescribed therein is not followed, statements cannot be used as evidence in the proceedings under Central Excise Act. Therefore, the 35 statements relied upon in the SCN are not relevant and hence also not admissible. Once the registration is issued by the department, the buyer of goods can procure goods from such a registered trader and take credit on the strength of such invoices. The case of the Revenue is that the traders and the manufacturers never existed but they issued Cenvatable invoices only on paper and had not supplied duty paid scrap at all and they could have supplied bazar scrap (post consumer scrap) against such invoices - As per the SCN, the manufacturers and traders did not exist and for that reason Cenvat credit taken by the assessee needed to be reversed but the manufacturers and traders also existed at the addresses indicated therein and they were asked as to why penalties should not be imposed on them - according to the impugned order, while these entities did not exist at all and for that reason, Cenvat credit is inadmissible on the basis of the second stage dealer s invoices issued on the basis of the invoices issued by these manufacturers and first stage dealers on the one hand, they did exist and had been served the SCN and notices of personal hearing but such opportunities were not availed. The appellant, as the buyer, cannot be expected to investigate if the departmental officers had issued the registrations correctly or not and take business decisions accordingly. The appellant is also neither required nor is competent to launch an investigation to see if the registered dealer who was issuing to him an invoice had, in fact, maintained the records properly and that he had procured the goods from a first stage dealer who existed at his address and further that first stage dealer had, in fact, procured the goods from a manufacturer and that such manufacturer (who is registered with the department) existed, manufactured the goods, accounted for them properly and issued a correct CENVATABLE invoice to the first stage dealer. The reasonable precautions which the appellant or any other assessee is expected to take is placing orders on a registered manufacturer or dealer and receiving goods along with a Cenvatable invoice indicating all required details. The assessee is not required to launch an investigation. At any rate, as discussed above, Revenue itself was ambiguous about the existence of these units from the time they were registered until and including when the impugned order was issued - there are no grounds to deny Cenvat credit to the assessee. Consequently, the penalties imposed on Drolia and Choudhary also cannot be sustained. The impugned order is set aside - Appeal allowed.
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2023 (11) TMI 9
Levy of penalty - Evasion of central excise - wrongful claiming of SSI exemption - abetting M/s. Micro Spares to show separate clearances of goods on paper as units having a separate legal entity - HELD THAT:- It was found that the main noticee M/s. Micro Spares has already settled the matter under SVLDR Scheme and were issued Form SVLDRS IV dated 15.6.2020 (discharge certificate for full and final settlement of tax dues). Based on the said certificate, the appeal filed by M/s. Micro Spares was dismissed as settled under SVLDR Scheme. This is a case in which the main noticee has settled the dispute under the SVLDRS Scheme and the issue cannot now been re-opened and examined on merits. Further the co-noticees who were subjected to penalties only, have not filed a declaration under the SVLDRS Scheme before the scheme s closure. Having not done so, their appeal continues to lie before this Tribunal pending disposal. Considering the facts and circumstances of the cases, the discharge given to the main noticee and the clarification given by CBIC regarding co-noticees under the SVLDR Scheme, 2019, it is felt that a reduction in penalty would serve the ends of justice. The impugned order is modified with respect to the appellants and reduce the penalty to Rs.50,000/- (Rupees fifty thousand) each only - appeal allowed in part.
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2023 (11) TMI 8
Invocation of provisions of Section 11AC of the Central Excise Act to impose equivalent penalty on the appellant - Valuation of goods - Heat Exchangers - related parties or not - Applicability of Transaction value' under Section 4(1)(a) of CEA - HELD THAT:- HELD THAT:- In the present case the period involved is prior to 29.08.2012 the date of judgment of the Hon ble Apex Court in COMMISSIONER OF CENTRAL EXCISE, MUMBAI VERSUS M/S FIAT INDIA PVT LTD ANR [ 2012 (8) TMI 791 - SUPREME COURT] and in accordance with the Board s circular, extended period of limitation could not have been invoked in the present case. If that is so the penalties under Section 11 AC could not have been imposed on the appellant. In view of the decision of Hon ble Supreme Court in the case of UNION OF INDIA VERSUS M/S RAJASTHAN SPINNING WEAVING MILLS AND COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE VERSUS M/S. LANCO INDUSTRIES LTD. [ 2009 (5) TMI 15 - SUPREME COURT] . Accordingly, the penalty is imposed under Section 11AC are set aside. The appellant have themselves on the basis of their own assessment, paid the duty, which might have been available as credit to the OEM manufacturers. Accordingly, the merits of the duty already paid and confirmed by the impugned order, not dealt upon. In the show cause notice was not to be issued in the present case - In case of M/S. STEEL AUTHORITY OF INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIPUR [ 2019 (5) TMI 657 - SUPREME COURT] a three judges bench of Hon ble Supreme Court observed The assessee volunteered and made payment in October 2006. We find merit in the finding by the authority that this is a case where therefore the payment made by the assessee is to be treated as one falling under Section 11A(2)(b). This meant also that there was no need for determination of the duty within the meaning of Section 11A(2)(a) or issuance of notice under Section 11A. Following the decision, no penalty proceedings in terms of Section 11AC could have been initiated against the appellant and the same needs to be set aside. Appeal allowed in part.
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2023 (11) TMI 7
Clandestine removal - Chhakkdo Rickshaw - evasion of payment of Central Excise Duties by suppressing their production - penalty under Rule 26 of the Central Excise Rules, 2002 for certain omissions and commissions will laid to evasion of Central Excise duty - HELD THAT:- The appellant was having a registration with Automotive Research Association of India (ARAI-Pune) for production of vehicles in name of his firm namely Hakikat Auto Industries, Rajkot- Bhavnagar Highway Road, Chanvand, Amreli. He was also aware that manufacturer of the Chhakkdo Rickshaw cannot get their product registered with the RTO without ARAI certificate/registration. The appellant have facilitated registration of the Chhakkdo Rickshaw manufactured by M/s Shree Rajshakti Automobiles, Ahmedabad by providing his ARAI registration and thus facilitating sale and sale of Chhakkdo Rickshaw which was cleared without payment of Central Excise Duty. From the facts of the matter and as per the provision of the Rule 26 of the Central Excise Rules, 2002, it can easily be inferred that the appellant though may not have physically handle the transportation, sale, purchase of Chhakkdo Rickshaw which was cleared without payment of the duty. However, he was fully aware that same are getting cleared without proper invoices and the manufactures of the Chhakkdo Rickshaw were not having required ARAI registration - The appellant has conscientious by provider his ARAI registration to the manufacturer/ buyers of non-duty paid Rickshaw for getting the same registered with RTO. Thus he has dealt with non-duty offending good in any other manner . Thus, he has facilitated the clearance of excisable goods without the payment of duty which ultimately resulted into evasion of the Central Excise Duty by manufacturer of Chhakkdo Rickshaw . The appeal is without any merit and is set aside - appeal dismissed.
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2023 (11) TMI 6
Penalty u/r 26 of the Central Excise Rules, 2002 - appellant was Director during relevant period - denial of benefit of exemption notification for Magnesium Sulphate which was being manufactured by the main appellant firm - HELD THAT:- Since the demand of the duty has already been settled under SVLDRS Scheme and there is no cause for imposition of penalty under Rule 26 of the Central Excise Rules, 2002 on the director of the company who has been a paid employee and issue of the demand was primarily of interpretation of the exemption notification. The decision in case of SHRI V.K. AGGARWAL AND SHRI J.K. AGGARWAL VERSUS COMMISSIONER OF CENTRAL TAX, CGST AND CENTRAL EXCISE, NEW DELHI [ 2023 (9) TMI 178 - CESTAT NEW DELHI] followed where it was held that The judgements so referred clearly says that when the demand of duty has been settled under SVLDR Scheme, the imposition of penalty would fail on simple ground that if the appellants had applied under the said scheme, they would have paid 'nil' duty, in view of the relief available to them under Section 124(1)(b) of the Finance Act. Appeal allowed.
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2023 (11) TMI 5
Recovery of duties of central excise - validity of order beyond the direction in the remand proceedings - activity of manufacture in accordance with note 6 in section XVI of schedule to Central Excise Tariff Act, 1985 on welding machines imported - exemptions available to small scale industrial (SSI) units in terms of notification no. 8/2003-CE dated 1st March 2003 - HELD THAT:- The impugned order, insofar as it relates to the first issue contributing to substantial portion of the demand, contains frequent reference to the order that had been set aside by the Tribunal with a direction to be remanded afresh. It does not bear elaboration that it is beyond the scope of remand proceedings before an adjudicating authority to refer to an order that had ceased to exist by order of appellate authority and thus strictly barred from either relying on findings therein or drawing upon assertions therein in denovo proceedings. Further, the order now impugned before us appears to be replete with defence of findings in the order that had been set aside by the Tribunal. This is not the intent of a remand by the Tribunal and exemplifies a casual disregard for the nicety of adjudication proceedings and lack of diligence in complying with the orders of appellate authority. Such an order is not amenable to appellate resolutions for those reasons. Matter remanded back to the original authority to undertake fresh proceedings and issue an order that ultimately reflects the application of known law to establish facts by the adjudicating authority in office - appeal allowed by way of remand.
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2023 (11) TMI 4
CENVAT Credit - removal of 'moulds' as such or deployment with the vendors / job workers - removal of epoxy moulds to manufacturer of parts of automobile seats as such - permissibility of such transfers without reversal of CENVAT credit prior to such incorporation - rule 3(5) of CENVAT Credit Rules, 2004 - HELD THAT:- It is found that rule 9(3) of CENVAT Credit Rules, 2004, relating to inputs or capital goods removed as such requires issue of invoice referred to in rule 9 of CENVAT Credit Rules, 2004 which does not apply to the present facts inasmuch as moulds are not sold to the vendors. The removal of such moulds to job-worker admittedly governed by rule 4(5) of CENVAT Credit Rules, 2004, permits retention of credit for a time and reversal upon completion of deadline till such time when the goods are not returned to the principal manufacturer - the submission cannot be accepted that the incorporation of 2010 to cover removal to another manufacturer or job-worker is not clarificatory in nature especially as rule 4(5)(a) of CENVAT Credit Rules, 2004, intended for such clearance to the job-worker, finds mention again in rule 4(5)(b) to cover situations of such not being returned to the principal manufacturer. The impugned order set aside - matter remanded back to the original authority for fresh determination on ascertainment of facts relating to the transactions - appeal disposed off by way of remand.
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CST, VAT & Sales Tax
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2023 (11) TMI 3
Benefit of Group Insurance purchased by the State for Registered Dealer under VAT - Application for cancellation of registration before the death of registered dealer - Consideration of claim for insurance money being paid to the petitioner - HELD THAT:- It appears that the respondent-authorities have misdirected themselves in not looking at the application dated 18.03.2013 without considering the fact of the pre-existing registration, that stood in the name of the deceased. If the deceased held a registration certificate prior to the occurrence of his death and that registration did not stand cancelled on the date of occurrence of his death, the status of the deceased would remain to be of a registered dealer for the purpose of Group Insurance Policy. Since the respondents have not applied their mind on this aspect of the matter, the writ petition is disposed off with the direction upon the respondent no. 3 to examine the correct facts in light of the observations made and issue appropriate reasoned communication to the petitioner within a period of one month from today.
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2023 (11) TMI 2
Maintainability of petition - Jurisdiction of Revision proceedings under Section 32 of the AP VAT Act - classification of goods - iron and steel items - HELD THAT:- In the case of POTLAPELLI RAVINDER RAO VERSUS STATE OF TELANGANA [ 2022 (10) TMI 1212 - ANDHRA PRADESH HIGH COURT] , a Division Bench of this High Court set aside the earlier revision proceedings in R.F.No.18/2019-20 dated 12.01.2021 passed by the 1st respondent and remanded the matter back to 1st respondent with a direction to issue notice to the petitioner, in which case the petitioner shall appear with his documents if any and thereupon the 1st respondent shall hear both parties and pass an appropriate order on merits in accordance with governing law and rules expeditiously. The impugned revisional order is set aside and matter is remitted back to the 1st respondent with a direction to afford an opportunity of hearing to the petitioner - Petition allowed.
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Indian Laws
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2023 (11) TMI 1
Dishonor of Cheque - legally enforceable debt or not - Transaction in violation of Section 269-SS of Income Tax Act - unaccounted cash - Can such tranaction be permitted to be enforced, by institution of proceedings under Section 138 of the Negotiable Instruments Act ? - HELD THAT:- Acceptance of an amount exceeding Rupees Twenty Thousand in cash attracts penalty under Section 271-D of the Act of 1961 but such acceptance does not nullify the transaction. Infact, the penalty can be waived on showing reasonable cause. Hence, violation of Section 269-SS by the drawer of the cheque would not render the amount in question non-recoverable. A transaction not reflected in the books of accounts and/or Income Tax returns of the holder of the cheque in due course can be permitted to be enforced by instituting proceedings under Section 138 of the Act of 1881 in view of the presumption under Section 139 of the Act of 1881 that such cheque was issued by the drawer for the discharge of any debt or other liability, execution of the cheque being admitted. Violation of Sections 269-SS and/or Section 271-AAD of the Act of 1961 would not render the transaction unenforceable under Section 138 of the Act of 1881. The decisions in Krishna P. Morajkar [ 2013 (7) TMI 1163 - BOMBAY HIGH COURT] , Bipin Mathurdas Thakkar and Pushpa Sanchalal Kothari [ 2015 (2) TMI 1351 - BOMBAY HIGH COURT] lay down the correct position and are thus affirmed. The decision in Sanjay Mishra [ 2009 (2) TMI 901 - BOMBAY HIGH COURT] with utmost respect stands overruled.
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