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TMI Tax Updates - e-Newsletter November 25, 2023 Case Laws in this Newsletter: GST Income Tax Customs Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws Highlights / Catch Notes GST: Scope of deficiencies in the GST refund application - Documents / Evidences to be submitted with the refund application - the petitioner’s application for refund cannot be termed as deficient if it is in accordance with Rule 89(2) of the CGST Rules and is accompanied with the documents specified therein. Although, the concerned officer is at liberty to call for further documents to process the claim, the fact that such further documents are not annexed with the application does not render the same deficient. - HC Visit to Get Source GST: Rejection of claim for interest, on the refund of GST already granted - calculation of relevant period - If such application for refund filed by the person consequent to succeeding before the Appellate Authority, Appellate Tribunal or court, is not processed within a period of sixty days of filing the application, the applicant would be entitled to a higher rate of 9% per annum commencing from the date immediately after the expiry of sixty days of his application filed pursuant to the appellate orders. However, this does not mean that the rate of 6% per annum is not payable for the period commencing from the date immediately after expiry of sixty days from his first application till sixty days after filing of his second application pursuant to the appellate orders. - HC Visit to Get Source GST: Blocking the Input Tax Credit (ITC) of the petitioner in the electronic cash ledger without any reasons - In the given factual matrix of the case, this Court is inclined to allow the writ petition and declare the action on the part of the respondent No. 2 in blocking the ITC available to the petitioner in the electronic cash ledger to be arbitrary, bad in law and also in violation of the principles of natural justice. Therefore, the said impugned action is set aside/quashed holding it to be illegal - HC Visit to Get Source GST: Validity of order passed u/s 74 and GST demand - Requirement of scrutiny of GST returns u/s 61 first - mismatch between GSTR-7 and GSTR-3B - An assessee cannot choose to ignore all notices and steps taken by the respondent authorities who are now bound to act in a time bound manner under the Act and thereafter take the plea of natural justice. - There is no illegality nor perversity nor infraction of law nor procedural impropriety - HC Visit to Get Source GST: Refund of IGST - entitlement of refund while claiming duty drawback - GST authority directed to process refund along with applicable interest in accordance with law in light of the cited decisions. - However, the concerned officer is also required to make the requisite adjustments where necessary in respect of duty drawback while processing the petitioner’s refund claim. - HC Visit to Get Source GST: Refund claim - Export of services - intermediary services or not - - The activities performed by the petitioner are original activities and for doing the same, it has been charging costs from FKDG. Therefore, it cannot be stated to be intermediary of FKDG and the services provided by it to FKDG cannot be stated to be intermediary services. Thus, a wrong observation has been made by the respondents in this regard. - Refund directed to be processed and allowed - HC Visit to Get Source GST: Supply or not - subsidized deduction made from the Employees who are availing food in the factory - GST on nominal amount deducted from the salaries of its employees - since the Appellant had no explicit contractual agreement with regard to the canteen facility, the same cannot be equated to perquisites - the supply of food even at subsidised cost, is a supply within the meaning of Section 7 of the CGST Act, 2017 - AAAR Visit to Get Source Income Tax: Assessment of trust - corpus donation receipts - addition u/s 68 - Nothing was brought on record that they were actually functioning at the time of donations and when they were struck off. In such circumstances, we are of the considered opinion that the genuineness, identity and creditworthiness of these companies was rightly doubted by the AO and in such circumstances, the additions had been made - Additions confirmed - HC Visit to Get Source Income Tax: Delay in filing the appeal u/s 260A - condonation of delay of 79 days - exclusion of certain period while computing period of limitation - the time spent by the applicant while pursuing the review proceedings deserves to be excluded even under principles analogous to Section 14 of the Limitation Act because the applicant in good faith was prosecuting the challenge to the impugned order before the Tribunal with due diligence but the Tribunal was unable to entertain the review on account of defect of jurisdiction. - HC Visit to Get Source Income Tax: Assessment u/s 153A - Difference in scope of proceedings for abated assessment and for a completed assessment - Jurisdiction u/s 153A to make additions in case of completed assessment if no incriminating material found during search - ITAT rightly deleted the additions - HC Visit to Get Source Income Tax: Validity of assessment u/s 153A - date of expiry of time limit for issuance of notice under section 143 (2) - Assessment year 2015 – 16 is not a concluded assessment year and therefore shall abate and assessing officer can make addition even in absence of incriminating material found during the course of search - AT Visit to Get Source Income Tax: Revision u/s 263 - The Pr. CIT while passing the order u/s 263 cannot remand the matter back to the AO for passing the fresh order as it will lead to the conclusion that the Pr. CIT himself was not sure about the correctness of the claim of the assessee which was accepted by the AO. Even otherwise when the assessment order passed by the AO cannot be held as erroneous for want of inquiry then it is essential on the part of the Pr. CIT to give conclusive finding that order passed by the AO is not sustainable either it is contrary to the facts or to the law. - AT Visit to Get Source Income Tax: Reopening of assessment - Correct head of income - LTCG or business income - disallowing indexation on cost of acquisition and treating LTCG as business income - assessee contributed in the form of land in the Joint Development Agreement - the reasons recorded by the Ld AO u/s 148(2) treating the income to chargeable under the head Business and Profession are found to be under wrong appreciation of facts and erroneous application of law, which is not permissible. - AT Visit to Get Source Income Tax: Computation of capital gain - sale of land in two parts [different AYs] - We agree with the contention of assessee that when a part of the land i.e. 5.74 acres out of the total area of 8.66 acres was sold in A.Y 2013-14 and the remaining part of 2.92 acres of land was sold in A.Y 2014-15, the AO instead of taking the value of the land in acres could not have taken the value per sft which is for developed land with internal roads etc. - AT Visit to Get Source Income Tax: Deemed income u/s 69/69A/69B r.w.s.115BBE - Higher rate of tax u/s 115BBE confirmed on Excess Found during survey since assessee failed to prove the connection with business - However, on other additions, payment of tax at normal rate confirmed. - AT Visit to Get Source Income Tax: Validity of initiation of reassessment proceedings - provision made for slow/non-moving inventory - when the assessee is paying tax at the same rate as in the year under consideration and rather declared more than three times of income to tax in the subsequent year then this issue is revenue neutral and is entirely academic in nature. - AT Visit to Get Source Customs: Redetermination of duty in the matter of anti-dumping duty imposed on imports of ‘Natural mica-based pearl industrial pigments excluding cosmetic grade’ - Seeks to further amend notification No. 47/2021-Customs (ADD), dated 26th August, 2021, to modify the existing duty table - Notification Visit to Get Source Customs: Classification of imported goods - Bakery Shortening - Having regard to the change in the scenario in the light of the amendment and the change from 6 digit level to 8 digit level, the appellants were entitled to ‘nil’ rate of BCD since its claim was correct in classifying “Bakery Shortening” under heading 1517. - AT Visit to Get Source Customs: EOU - Destruction or disposal of obsolete imported raw material and components - the adjudication authority ought to have allowed the request of the appellant for destruction of such goods either within the unit or destroyed outside the unit when it is not possible to destroy the same within the unit without insisting for payment of custom duty especially when respondent have allowed destruction of obsolete goods subject to payment of scrap value earlier. - AT Visit to Get Source Customs: Project Import - fulfillment of post import conditions - In the first place issuance of Show Cause Notice in itself is grossly misplaced and misdirected. Moreover, this has been compounded by the Ld. Adjudicating Authority by adjudicating the matter against the appellants. Despite clearly taking note of the factual position, disallowing the benefit of the project import regulations and the concessional rate of duty is certainly an error of judgement - AT Visit to Get Source Customs: Levy of ASEAN India Free Trade Preferential Tariff rate of duty - The appellants have submitted that as the original consignment was split up into five smaller imports, therefore, common invoice number had to be split up into five sets as A, B, C, D and E - A clerical error, if at best any, would not merit rejection of the said original certificate in its entirety and thereof deprive the benefit thereof to the person availing the same.- AT Visit to Get Source IBC: Approval of Resolution Plan - NCLAT / NCLT kept the application pending and Directed the Official Liquidator (OL) to carry out a re-valuation of assets - if after repeated negotiations, a Resolution Plan is submitted, as was done by the appellant (Resolution Applicant), including the financial component which includes the actual and minimum upfront payments, and has been approved by the CoC with a majority vote of 88.56%, such commercial wisdom was not required to be called into question or casually interfered with - Order quashed - Plan approved - SC Visit to Get Source IBC: Right to get registered as RP - Rejection of application of the Petitioner herein for registration as a Resolution Professional - Even though the Petitioner can be registered as an Insolvency Resolution Professional but for determining as to whether the Petitioner is fit and proper candidate it is for the Board to take account of any consideration as it deems fit, including but not limited to the criteria of integrity, reputation and character. - HC Visit to Get Source IBC: Seeking direction for rejection of Resolution Plan - The Appellant has failed to point out any material irregularity or contravention of any provision of law by the CoC in approving the plan. That being the case, the Adjudicating Authority with the limited powers of judicial review available to it, cannot substitute its views with the commercial wisdom of the CoC in rejecting the resolution plan unless it is found it to be contrary to the express provisions of law or there is sufficient basis which establishes material irregularity. - AT Visit to Get Source PMLA: Money Laundering - Scheduled offences - seeking grant of bail - With the advancement of technology and Artificial Intelligence, the economic offences like money laundering have become a real threat to the functioning of the financial system of the country and have become a great challenge for the investigating agencies to detect and comprehend the intricate nature of transactions, as also the role of the persons involved therein. Lot of minute exercise is expected to be undertaken by the Investigating Agency - Bail not granted - SC Visit to Get Source PMLA: Money Laundering - seeking grant of bail - bogus product bookings - the entire transaction of the company is on website and the mode of payment is also by Bank. None of the customers were claiming any default by the company prior to freezing of the account of the company by Bank. Therefore, there is absolutely no material against the petitioner. - Bail Granted - HC Visit to Get Source Service Tax: Classification of services - intermediary services or not - export of service or not - the appellant is the service provider and the overseas buyer is the service recipient and there is no oral or written agreement between the appellant and the vendors/exporters of garments. - The appellant does not satisfy the conditions to be an ‘intermediary’ for his services - AT Visit to Get Source Service Tax: Seeking service tax refund for payment of VAT liability - he petitioner had made the payment of the service tax for the periods in question voluntarily and had never challenged the authority of the Service Tax Authorities - It is only at a belated stage when the VAT authorities raised a demand on the basis of the law as decided by the Apex Court that the petitioner, for the first time, raises a claim for refund of the service tax paid or seeks payment of the VAT demanded by the Service Tax Authorities - Demand of the petitioner cannot be accepted - HC Visit to Get Source Central Excise: Refund of duty - doctrine of unjust enrichment - duty was paid under compounded levy scheme - the principle of the unjust enrichment, which is ordinarily applicable only on the goods manufactured and removed under the scheme of levy and more appropriately under Section 3 of the Act, the said principle cannot by any logically and economical be justifiable as legally tenable principle be extended to the manufactures working under compounded levy scheme under Section 3A. - AT Visit to Get Source Articles HOW TO INTERPRET NOTIFICATIONS IN TAX LAWS Transitional Credit cannot be disallowed just by serving a summary of Show Cause Notice WHETHER THE CO-OPERATIVE SOCIETY IS ENTITLED FOR DEDUCTION FOR THE INTEREST RECEIVED FROM CO-OPERATIVE BANK? Sufficient reasons are required to sustain the charge of abatement Notifications Customs 13/2023 - dated 22-11-2023 - ADD Redetermination of duty in the matter of anti-dumping duty imposed on imports of ‘Natural mica-based pearl industrial pigments excluding cosmetic grade’ - Seeks to further amend notification No. 47/2021-Customs (ADD), dated 26th August, 2021, to modify the existing duty table 85/2023 - dated 23-11-2023 - Cus (NT) Appointment of Common Adjudicating Authority GST - States S.O. 357 - dated 23-11-2023 - Bihar SGST Notify a special procedure for condonation of delay in filing of appeals against demand orders passed until 31st March, 2023 S.R.O. No. 1258/2023 - dated 23-11-2023 - Kerala SGST Amendment in Notification No. 135/2018/TAXES dated 18th August, 2018 17/2023-State Tax (Rate) - dated 3-11-2023 - Mizoram SGST Amendment in Notification No. 17/2023-State Tax (Rate) dated 03-11-2023 16/2023-State Tax (Rate) - dated 3-11-2023 - Mizoram SGST Amendment in Notification No. 17/2017- State Tax (Rate), dated the 7th July, 2017 F.12 (11) FD/Tax/2023-Pt-I- 60 - dated 20-10-2023 - Rajasthan SGST Amendment in Notification No. F.12 (56) FD/Tax/2017-Pt-I-44, dated the 29th June, 2017 G.O.Ms.No. 128 - dated 15-11-2023 - Tamil Nadu SGST Amendment in Notification No. II(2)/CTR/532(d-8)/2017, dated the 29th June, 2017 News Agricultural and Processed Food Products Development Authority (APEDA) facilitates Cashew Exports on National Cashew Day to Bangladesh, Qatar, Malaysia and USA National Academy of Customs, Indirect Taxes and Narcotics (NACIN) and National Academy of Direct Taxes (NADT) sign a Memorandum of Understanding (MoU) for sharing of resources Changing Paradigms in the Financial Landscape (Remarks delivered by Shri M. Rajeshwar Rao, Deputy Governor, Reserve Bank of India – November 23, 2023 - at the FIBAC 2023 conference organised jointly by FICCI and IBA at Mumbai) Case Laws: GST 2023 (11) TMI 962 Exemption from GST - outward supplies made to a Polytechnic (Vocational Institution) in terms of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - HELD THAT:- A plain reading of the final audit observations, as approved by the Monitoring Committee, indicates that the demand was founded on the basis that the petitioner was not entitled to the benefit of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. The impugned corrigendums only purported to correct the quantification of the tax recoverable on the aforesaid basis. Any alteration in the amount of tax on account of a computational error may not require specific approval of the Monitoring Committee. Prima facie, the impugned corrigendums or the impugned SCN are not liable to be set aside on the aforesaid ground. The premise on which the present petition is founded, does not hold good - Petition dismissed. 2023 (11) TMI 961 Attachment of the bank account of the petitioner - expiry of a period of one year from the date of the order - HELD THAT:- In terms of Section 83(2) of the CGST Act, any order passed under Section 83(1) of the CGST Act would be inoperative after expiry of a period of one year from the date of the said order. The learned counsel appearing for Respondent Nos. 2 and 3 fairly states on instruction that the orders dated 04.08.2022 and 24.08.2022, provisionally attaching the aforesaid bank accounts, are no longer operative by virtue of Section 83(2) of the CGST Act - it is considered apposite to direct the concerned banks not to interdict the operation of the aforesaid bank accounts on the basis of the orders dated 04.08.2022 and 24.08.2022 passed under Section 83(1) of the CGST Act. Petition disposed off. 2023 (11) TMI 960 Documents / Evidences to be submitted with the refund application - Validity of communication informing the petitioner regarding deficiencies in its application for refund of unutilized Input Tax Credit (ITC) - officer issuing the impugned communication is authorized to issue the communication or not - deficiency in the refund application preferred by the petitioner or not - HELD THAT:- It is important to note that the implication of the impugned communication is that the petitioner would be required to file a fresh application for refund in terms of Rule 90(3) of the CGST Rules. Indisputably, the petitioner s application for refund cannot be termed as deficient if it is in accordance with Rule 89(2) of the CGST Rules and is accompanied with the documents specified therein. Although, the concerned officer is at liberty to call for further documents to process the claim, the fact that such further documents are not annexed with the application does not render the same deficient. Respondent does not controvert that the documents referred to in the file noting and also reflected in the GST portal are not covered under Rule 89(2) of the CGST Rules. Concededly, the petitioner had filed all relevant documents that were mandatory in terms of Rule 89(2) of the CGST Rules. The impugned communication is set aside - the concerned officer is directed to issue the acknowledgement in terms of Rule 90 of the CGST Rules and process the petitioner s application for refund in accordance with law - petition disposed off. 2023 (11) TMI 959 Extension of time period for payment of balance amount demanded by the respondent towards interest in instalments - HELD THAT:- This Court feels that the time period of 2 days is not sufficient to make the payment of demanded amount by the petitioner. Hence, this Court is inclined to grant a period of 3 months time to the petitioner for payment of balance amount demanded by the respondent towards interest - It is made clear that if the petitioner had failed to make payment of amount on the due dates, the respondent is granted liberty to initiate the recovery proceedings. This writ petition is disposed of. 2023 (11) TMI 958 Rejection of claim for interest, on the refund of GST already granted - calculation of relevant period - refund was initially denied but subsequently allowed. Whether the period for which the interest is payable under Section 56 of the DGST Act commences from the date immediately after expiry of sixty days from the receipt of an application for refund or from a later date, in case the refund is initially denied but subsequently allowed by the Appellate Authority, Appellate Tribunal, or a court? HELD THAT:- It is clear from a plain reading of Section 56 of the CGST Act that whereas the main provision of Section 56 of the CGST Act refers to the rate of interest applicable on the amount of refund due, which remains unpaid even after sixty days from the date of application for refund; the proviso provides for an increased rate of interest for the period that commences from the date immediately after the expiry of sixty days from the date of application which is filed pursuant to the claim for refund attaining finality in appellate proceedings. Section 56 of the CGST Act, thus, works as follows. The applicant claiming a refund is entitled to interest at the rate of 6% per annum from a date immediately after the expiry of sixty days from making an application under Section 54(1) of the CGST Act. However, if a person s claim is denied (or if granted is not accepted by the Revenue) and the order of the Adjudicating Authority is carried in appeal to the Appellate Authority or to the Appellate Tribunal/High Court, which finally upholds the claim, the applicant may have to file a second application to secure the refund - the proviso merely enhances the interest payable to a person for the period commencing from the date immediately after sixty days from the date of his application filed pursuant to its entitlement to refund claim attaining finality. Once an application for refund under Section 54(1) of the CGST Act has been filed, the same requires to be carried to its logical conclusion. If the said claim is denied by the Adjudicating Authority and the applicant prevails before the Appellate Authority, the order of the Appellate Authority is required to be implemented. However, in one sense, the subsequent application filed by a person pursuant to succeeding before the Appellate Authority, is solely for the purposes of giving a nudge to the process of disbursal of the refund claim and for the proper officer to determine and disburse the interest as payable. The Adjudicating Authority is directed to process the petitioner s application for refund filed on 16.05.2023 - Petition allowed. 2023 (11) TMI 957 Violation of principles of natural justice - Blocking the Input Tax Credit (ITC) of the petitioner in the electronic cash ledger without any reasons - non-service of SCN - HELD THAT:- On looking into the documents produced by the learned counsel for the respondent-Department, it would reveal that there is not much cogent substantial material available to show that the order/decision on the part of the authority concerned in blocking the ITC available in the electronic cash ledger of the petitioner is without primarily issuing an order in this regard or such an official communication being communicated/served upon the petitioner. From the records that have been placed before this Court and also on perusal of the documents would also reflect that the manner in which the authority concerned was required to record the reasons to believe was also lacking except for a vague reference in this regard in the note sheets. In the given factual matrix of the case, this Court is inclined to allow the writ petition and declare the action on the part of the respondent No. 2 in blocking the ITC available to the petitioner in the electronic cash ledger to be arbitrary, bad in law and also in violation of the principles of natural justice. Therefore, the said impugned action is set aside/quashed holding it to be illegal - the matter stands remitted back to the respondent No. 2 for taking a fresh decision so far as the blockage of ITC available to the petitioner in the electronic cash ledger is concerned. Petition allowed. 2023 (11) TMI 956 Validity of order passed u/s 74 and GST demand - Intimation of tax liability read with a show cause notice issued u/s 74 of the WB GST Act, 2017 - Requirement of scrutiny of GST returns u/s 61 first - mismatch between GSTR-7 and GSTR-3B - HELD THAT:- On a reading of the section 74, it is ex facie evident that verification under section 61 of the Act is neither a pre-condition nor a sine qua non for initiation of proceedings under section 74 of the Act. The opening words where it appears to the proper officer clarifies that it is the appropriate officer who has to form a prima facie opinion prior to initiation of proceedings. In this case, from the records itself it appears that there is an apparent mismatch between FORM GSTR-7 and FORM GSTR-3B filed by the petitioner - The practice of entertaining writ petitions challenging legality of show cause notices inevitably result in stalling enquiries and retarding the investigative process meant to find the real facts with the participation and presence of the parties is to be deprecated. An assessee cannot choose to ignore all notices and steps taken by the respondent authorities who are bound to act in a time bound manner under the Act and thereafter take the plea of natural justice. The unreported decision cited in Prabhu Dayal Jajoo vs. The Deputy Commissioner, State Tax, Budge Budge Charge and Ors. [ 2023 (6) TMI 830 - CALCUTTA HIGH COURT] is inapposite. In this case, the show cause notice had been uploaded on a different portal and this fact was unknown to the petitioner. However, in the facts of this case the impugned notices had been uploaded in the same portal under the link Additional Notices and Orders which the petitioner was deemed to have knowledge of. There is no illegality nor perversity nor infraction of law nor procedural impropriety which warrants any interference with any of the impugned orders and steps taken pursuant thereto - Application dismissed. 2023 (11) TMI 955 Validity of order passed u/s 74 and GST demand - Intimation of tax liability read with a show cause notice issued u/s 74 of the WB GST Act, 2017 - Requirement of scrutiny of GST returns u/s 61 first - mismatch between GSTR-7 and GSTR-3B - HELD THAT:- On a reading of the section 74, it is ex facie evident that verification under section 61 of the Act is neither a pre-condition nor a sine qua non for initiation of proceedings under section 74 of the Act. The opening words where it appears to the proper officer clarifies that it is the appropriate officer who has to form a prima facie opinion prior to initiation of proceedings. In this case, from the records itself it appears that there is an apparent mismatch between FORM GSTR-7 and FORM GSTR-3B filed by the petitioner - In this case, the petitioner despite having received notice as regards the intimation of tax GST DRC-01A and the subsequent show cause notice failed to respond to the same. An assessee cannot choose to ignore all notices and steps taken by the respondent authorities who are now bound to act in a time bound manner under the Act and thereafter take the plea of natural justice. The unreported decision cited in Prabhu Dayal Jajoo vs. The Deputy Commissioner, State Tax, Budge Budge Charge and Ors. [ 2023 (6) TMI 830 - CALCUTTA HIGH COURT] is inapposite. In this case, the show cause notice had been uploaded on a different portal and this fact was unknown to the petitioner. However, in the facts of this case the impugned notices had been uploaded in the same portal under the link Additional Notices and Orders which the petitioner was deemed to have knowledge of. There is no illegality nor perversity nor infraction of law nor procedural impropriety which warrants any interference with any of the impugned orders and steps taken pursuant thereto - Application dismissed. 2023 (11) TMI 954 Seeking release of amount resumed/seized by respondent no. 2 - power to seize cash under Section 67 of the CGST Act - HELD THAT:- The present petition is required to be allowed and the respondents are liable to refund the money seized - The respondents state that the amounts so seized has been kept in a fixed deposit bearing interest. Respondent no. 2 is, accordingly, directed to remit the amount of ₹14,50,000/- along with accrued interest to the bank account of petitioner no. 1, and remit ₹1,00,50,000/- along with accrued interest to the bank account of petitioner no. 2 - Petition allowed. 2023 (11) TMI 953 Extension of time period for payment of balance amount demanded by the respondent towards interest in instalments - HELD THAT:- This Court feels that the time period of 2 days is not sufficient to make the payment of demanded amount by the petitioner. Hence, this Court is inclined to grant a period of 3 months time to the petitioner for payment of balance amount demanded by the respondent towards interest - It is made clear that if the petitioner had failed to make payment of amount on the due dates, the respondent is granted liberty to initiate the recovery proceedings. This writ petition is disposed of. 2023 (11) TMI 952 Refund of IGST - entitlement of refund while claiming duty drawback - goods exported out of India during the transition period after the rollout of the GST Regime (from 01.07.2017 to 30.09.2017) - Constitutional validity of Paragraph 11(d) read with 12A(a)(ii) of the Notes and Conditions of Notification No. 131/2016-Cus. (N.T.), dated 31.10.2016 (as amended by Notification No. 59/2017-Cus. (NT) dated 29.06.2017 and Notification No. 73/2017-Cus.(NT) dated 26.07.2017) - constitutional validity of Circular No.37/2018-Customs dated 09.10.2018. HELD THAT:- Reliance placed in the case of M/S AMIT COTTON INDUSTRIES THROUGH PARTNER, VELJIBHAI VIRJIBHAI RANIPA VERSUS PRINCIPAL COMMISSIONER OF CUSTOMS [ 2019 (7) TMI 472 - GUJARAT HIGH COURT] where it was held that respondents are directed to immediately sanction the refund of the IGST paid in regard to the goods exported, i.e. 'zero rated supplies', with 7% simple interest from the date of the shipping bills till the date of actual refund. The respondents are directed to process the petitioner s claim for refund along with applicable interest in accordance with law in light of the aforesaid decision - petition disposed off. 2023 (11) TMI 951 Liability of tax on petitioner-firm - inadmissible ITC claimed from bogus firms - no opportunity of hearing provided - HELD THAT:- The precise grievance of the petitioner before this Court is that respondent No. 4 has already issued a show cause notice dated 09.03.2018 (P-4) for the same transaction and for the same period. But now again a fresh show cause notice has been issued to the petitioner in Form GST DRC-01 dated 23.11.2022 (P-8) and without opportunity of personal hearing, the impugned order has been passed on 25.01.2023 confirming the tax liability of Rs. 24,60,526/-along with interest amounting to Rs. 19,55,560/- and penalty amounting to Rs. 12,30,264/- under Section 74 (11) of the CGST/SGST Act, 2017. The impugned order dated 25.01.2023 (P-1) is set aside - petition allowed. 2023 (11) TMI 950 Refund claim - services exported by the appellant fulfilled the conditions of export under Section 2 (b) (v) of IGST Act, 2017 or not - intermediary services or not - HELD THAT:- It is not in dispute that the petitioner is a public limited company incorporated in India, in consonance with the Indian Companies Act, 1956. The petitioner is also registered with the department under GST vide Registration No. 06AABCD7720L1ZM dated 01.07.2017 whereas FKDG is a company incorporated in Germany. The petitioner does not carry out any marketing of the products of FKDG nor any product is delivered by FKDG to it. The activities performed by the petitioner are original activities and for doing the same, it has been charging costs from FKDG. Therefore, it cannot be stated to be intermediary of FKDG and the services provided by it to FKDG cannot be stated to be intermediary services. Thus, a wrong observation has been made by the respondents in this regard. The orders dated 13.09.2019 (Annexure P-10) dated 04.03.2021 (Annexure P-12) are set aside and the writ petitioner is entitled to seek refund for the period from July 2017 to March 2019 from the respondents. The respondents are accordingly directed to release the refund amount to the petitioner within a period of four weeks. Petition allowed. 2023 (11) TMI 949 Supply or not - subsidized deduction made by the Appellant from the Employees who are availing food in the factory - GST on nominal amount deducted from the salaries of its employees - GST on the nominal amount deducted from the Manpower supply contractor in case of contractual employees - Section 7 of Central Goods and Service Tax Act, 2047 and Himachal Pradesh Goods and Service Tax Act, 2017 - Input Tax Credit (ITC), on the GST charged by the Canteen Service Provider. HELD THAT:- Any activity, which supports the main activity or necessary to carry out the principle activity, is an activity or transaction in connection with or incidental to or ancillary to the principle activity. The Appellants has pleaded that he is providing food in compliance to the provisions of the Factories Act, 1948 and therefore, even going by his own pleading, supply of food is in connection with and ancillary to his main activity of manufacture and supply of automotive components - Further, in terms of Section 2(17) (c), the volume of transaction is immaterial for the purpose of coverage under Business , therefore, even if supply of food is quite insignificant activity in terms of volume of transaction, still in terms of clause (c) of the aforesaid section ibid, the activity of supply of food, is a supply within the meaning of supply under Section 7 of the CGST Act. 2017. In other words, clause (b) and (c) of definition of business covers the activity of supply of foods, within the definition of business . Employment Agreement lists out the compensation which is agreed to be granted by the employer to the employees towards their services. If any perk is mentioned in the employment contract, then it becomes binding for the employer to provide the same to the employees, otherwise such an employer can be sued in the court of law for the breach of condition of employment contract. Therefore, anything provided beyond the employment contract, is a part of sweet will or largesse on the part of employer and cannot be insisted upon by an employee. Viewed from this angle, a perk, which is not specified in the employee contract, is not in lieu of services, supplied by the employer to the employee but the largesse or matter of good will on part of such employer. Therefore, absence of mention about supply of subsidised food, in employment contract, cannot be equated with perk mentioned in the employment contract as talked about in Circular No. 172/04/2022-GST dated 06.07.2022 of CBIC. From the reading of provisions of Section 46 of the Factories Act, 1948. it is clear that in a factory where more than 250 workers are ordinarily employed, there provisions for canteen is a must, however, it does not provide for any provision for exemption from levy of any taxes. In fact tax in the case of supply of food-leverages is leviable in terms of the provisions of the GST Iaw; and is not covered by any exemption, at all - the supply of food even at subsidised cost, is a supply within the meaning of Section 7 of the CGST Act, 2017 [value of such supplies to be determined under Section 15 of the CGST Act, 2017 read with provisions of Chapter IV of the CGST Rules, 2017] and do not qualify as perk as considered in terms above Circular dated 06.07.2022 ibid. The Appellant has relied upon the Circular dated 06.07.2022 and, to strengthen his claim, has also further stressed that it is settled law that circulars issued by CBIC arc binding on and to be followed by revenue. But, the fact of the matter is that, since the Appellant had no explicit contractual agreement with regard to the canteen facility, the same cannot be equated to perquisites mentioned in the said Circular. Hence, even as per the Circular ibid, and cited by the Appellant, the canteen facility goes out of the purview of perquisites as the canteen facility was not provided in terms of contract between the employer and employee. Whether input tax credit (ITC) is available to the Appellant on GST charged by the service provider on the canteen facility provided to employees working in the factory or otherwise? - HELD THAT:- The provisions of blocked credit under Section 17(5)(b), inter-alia on food and beverages, do not apply only where, it is obligatory for an employer to provide goods and services or both to the employee under any law for the time being in force. Since, the proviso carves out an exception to the Rules/ Provisions, a strict interpretation is required to be adopted for examining its applicability. Since the contract workers are not employees of the Appellant, therefore, the benefit of the above proviso will not be applicable in respect of contract workers but will be limited only with respect to the employees. As second proviso to Section 17(5)(b) inserted vide CGST Amendment Act, 2018, effective from 1.2.2019, is applicable to the whole of clause (b) of sub-section (5) of Section 17 of the CGST Act, 2017, therefore, Input Tax Credit will be available to the Appellant in respect of food beverages as canteen facility, is obligatorily to be provided under the Factories Act, 1948, to its employees working in the factory . Input Tax Credit will be available in respect of such services provided by canteen facility to its direct employees but not in respect of other type of workers including contract employees/Workers, visitors etc. From the facts of the case, it is clear that Canteen Contractor is providing Restaurant Service to the Appellant which is chargeable to GST @5% rate in terms of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017, as amended, without availment of ITC. Under explanation to the aforesaid entry, it has been clarified that the concessional rate is mandatory rate and availing the normal rate of tax will not apply and that is the reason the amended Notification No. 20/2019-C.T. (Rate) dated 30.09.2019 has been issued exercising power under Section 16(1) and Section 148 of the CGST Act, 2017, so as to come out of the provisions of permitting availment of ITC. In other words, a Taxpayer providing Restaurant Service has no option of taking ITC and providing Restaurant Service at normal rate. Though the Section 17(5) of the CGST Act. 2017 does not debar availment of ITC in entirety, however, in the present case availment of ITC is debarred in terms of provisions of Notification No. 11/2017- Central lax (Rate) dated 28.06.2017 as amended vide Notification No. 20/2019-C.T. (Rate) dated 30.09.2019. Thus, to conclude, i) Supply of food to the employees and contract workers is a supply under the provisions of Section 7 of the CGST Act, 2017 and the Himachal Pradesh Factories Rules, 1950 and accordingly, it is leviable to the GST. ii) Input Tax Credit will not be available to the Appellant on GST charged by the canteen service provider, in terms of provisions of the Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017, as amended vide Notification No. 20/2019-C.T. (Rate) dated 30.09.2019. Income Tax 2023 (11) TMI 948 Short deduction of TDS - TDS u/s 194C OR 194J - testing and commissioning of technical works - primary/dominant object of the contract - To set up that thermal power plant, the assessee entered into two sets of contracts - admissibility of divide an otherwise indivisible/composite contracts executed by the assessee with the BHEL and CIPL - principle of indivisibility of a composite contract - contracts for the works done under the head of services of Transportation, Insurance, Erection, Installation, Testing and Commissioning of BTG , awarded to BHEL and also the work done under the head of Erection, Installation and Commissioning of BOP , awarded to CIPL - HELD THAT:- Essence the contract involved in the present case and that involved in the case of The Senior Manager (Finance), Bharat Heavy Electricals Ltd., Jhajjar [ 2016 (12) TMI 955 - PUNJAB AND HARYANA HIGH COURT] were similar-to set up a thermal power plant. In both cases, the dispute arose upon a survey. That inconsequential similarity apart, it is undisputed that in both cases, the element of testing and commissioning of technical works etc. were part of the main contract-to set up a thermal power plant including therein the work of Transportation, Insurance, Erection, Installation, Testing and Commissioning of BTG and also Commissioning of BOP. As decided in The Senior Manager (Finance), Bharat Heavy Electricals Ltd., Jhajjar (supra) the contract entered into between the respondent and each of the contractors, therefore, did not involve the supply of professional or technical services at least within the meaning of section 194J. The consideration paid under the contracts, therefore, was hot for the professional or technical services rendered by the contractors to the respondent. Section 194J is, therefore, not applicable to the present case. In view of our finding that the contract does not fall within section 194J, the dismissal of the appeal would follow in any event. The respondent has not denied that the present case falls under section 194C. Had the respondent contended that section 194C is also not applicable, it would have been necessary to consider whether the contract falls within the ambit of section 194C. Thus work of testing etc. had to be performed by the contractor not by way of independent work awarded to it but by way of execution of the whole contract that was to set up a thermal power plant. Thus, Punjab and Haryana High Court has principally reasoned that the primary/dominant object of the contract would govern or subsume the other object/clause therein. In absence of any internal tool shown to exist (in the contract), we are unable to reach an inference that the contracting parties i.e. assessee on one hand and BHEL and CIPL on the other, had intended to treat the work of Testing and Commissioning, separate/independent of the contract to set up BTG and BOP by those contracting parties. Further, in absence of any enabling law, it never became open to the taxing authorities to overlook the dominant object of the contract and reach to a conclusion, because part of the contract involved Testing, Commissioning etc., necessarily, there would exist component of fees for technical services , by necessary implication. Then in Bangalore Metro Rail Corporation Ltd [ 2022 (7) TMI 336 - KARNATAKA HIGH COURT] has further reasoned that an indivisible/composite contract may not be bifurcated to cull out any indivisible component of such contract, to make a higher deduction of tax at source. Thus, that Court applied the principle of indivisibility of a composite contract. It may not be bifurcated to subject a part of the contract to higher TDS. Thus, that Court applied the principle of indivisibility of a contract, that may not be artificially dissected at the hands of a taxing authority, to the prejudice of the assessee. On plain reading, the contracts executed by the assessee with BHEL and CIPL were indivisible contracts for BTG and BOP, respectively. The taxing authorities exist to apply the taxing statute to the proven facts of a case. Such facts are not for the taxing authority to imagine or presume or assume. Therefore, the burden existed on the revenue authorities to establish that they were enabled in law and also that the proven facts of the case permitted them divide an otherwise indivisible/composite contracts executed by the assessee with the BHEL and CIPL. Unless that exercise had been carried out by the assessing authority, no presumption was available in law. Decided in favour of assessee. 2023 (11) TMI 947 Assessment of trust - corpus donation receipts - addition u/s 68 - corpus donation had been received by the petitioner-Company from entities as struck off the record of the registered companies and therefore, they had to be treated as shell companies - as donors identity was doubtful and the provisions of Section 115BBC of the Act were invoked - Tribunal, is justified in concurring with the findings of CIT (A) and in confirming the impugned income under the provisions of 115BBC, section 68 read with section 115BBE being perverse and against the statutory provisions. HELD THAT:- As the companies at West Bengal had sought to give the details of the donations from Mumbai and it was in such circumstances the Assessing Officer came to the conclusion that the explanation given was not bona fide. Opportunity was given to produce the Directors which was not done due to which the authorities below have noted that companies are no longer functional and are defunct and struck off by the Registrar of Companies. Nothing was brought on record that they were actually functioning at the time of donations and when they were struck off. In such circumstances, we are of the considered opinion that the genuineness, identity and creditworthiness of these companies was rightly doubted by the AO and in such circumstances, the additions had been made. The matter had also been taken before the Appellate Authority and the Commissioner had duly granted the benefit by thoroughly enquiring into the matter qua the other donations that had been received. The question of law thus which is sought to be framed does not arise keeping in view the above facts and circumstances as before the authorities the appellant could not produce sufficient material to dispel the suspicion which had been raised about the donations received from the companies which were not even based geographically close to the educational institution and the reason to grant the donation was never properly explained - Appeal dismissed. 2023 (11) TMI 946 Offence u/s 276CC - Assessee not submitting the return for the assessment year 2009-2010 even after the expiry of the assessment year by 31.03.2010 - petitioner submits that before initiating criminal prosecution, the authority ought to have rejected the reply of the petitioner but without considering and rejecting the reply of the petitioner, launching of the criminal prosecution cannot be countenanced for the reason that the petitioner had taken a stand in his reply that on account of ill health, lack of knowledge, the return could not be filed on time and non-filing of the return was not willful. HELD THAT:- The Court concurs with the submission of the learned counsel for the petitioner. The order dated 31.03.2011 though records that the reply of the assessee is not satisfactory but then does not assign any reason for arriving at that conclusion when petitioner had taken stand that on account of his ill health the return was not filed on time and delayed filing was not willful nor intentional. Considering the submission made by the learned counsel for the petitioner, the order dated 11.08.2022 passed in Complaint Case by the learned Special Judge, Economic Offence, Patna whereby the petition filed by the petitioner under Section 245 Cr.P.C. seeking discharge has been rejected, is hereby quashed. 2023 (11) TMI 945 Delay in filing the appeal u/s 260A - condonation of delay of 79 days - exclusion of certain period while computing period of limitation - whether Sufficient cause of delay proved? - revenue pleaded that the actual delay in filing the appeal is of 1471 days and not 79 days, for which the appellant has failed to set up a sufficient cause - HELD THAT:- Broadly speaking, the applicant/assessee has explained that the delay in filing the appeal occurred because firstly, the applicant was never informed about the fate of its appeal before the Tribunal after conclusion of final arguments, till the appellant sent a written communication and secondly, the applicant/assessee under good faith initiated and continued to prosecute the review remedy but met failure in view of the judgement of the Supreme Court in the case of Reliance Telecom. [ 2021 (12) TMI 211 - SUPREME COURT] On the other hand, the respondents/revenue largely contended that the delay in filing the appeal was on account of extreme laxity on the part of the applicant/assessee. There is also no serious challenge to the contention of the applicant/assessee that its Director who had been addressing arguments in person had resigned and got settled abroad while the remaining Directors were not conversant about the proceedings before the Tribunal till their auditors pointed out. There is nothing on record to even feebly suggest any lack of good faith on the part of the Directors of the applicant/assessee in their having filed review application before the Tribunal. A litigant cannot be expected to be conversant with the complex technicalities of law pertaining to the exercise of review and appeal, in which many a time even the experienced lawyers fall in error. We cannot ignore the admitted situation that immediately upon coming to know about dismissal of appeal by the Tribunal, the applicant applied for certified copies of the impugned order and promptly filed review application. Similarly, on coming to know about dismissal of the review application also the applicant promptly applied for certified copies and soon thereafter filed the present appeal. These circumstances clearly show that there were no lack of bona fides on the part of the applicant. Besides, the time spent by the applicant while pursuing the review proceedings deserves to be excluded even under principles analogous to Section 14 of the Limitation Act because the applicant in good faith was prosecuting the challenge to the impugned order before the Tribunal with due diligence but the Tribunal was unable to entertain the review on account of defect of jurisdiction. As quoting the expression of the Hon ble Supreme Court in the case of Sheo Raj Singh [ 2023 (11) TMI 814 - SUPREME COURT] we find the case set up by the applicant to be an explanation and not an excuse . Most importantly, we would prefer in the facts and circumstances of this case to be guided by cardinal principle of justice that disputes should be decided on merits and not defaults, so the applicant having brought before us a cause with sufficient explanation concerning the delay, cannot be shown door. The application under consideration is allowed and accordingly the delay in filing the appeal is condoned. 2023 (11) TMI 944 Assessment u/s 153A - Difference in scope of proceedings for abated assessment and for a completed assessment - Jurisdiction u/s 153A to make additions in case of completed assessment if no incriminating material found during search - unexplained share application money received in the books of the assessee and being unexplained share money received had been added back to the returned income of the assessee - HELD THAT:- Keeping in view the fact that no incriminating material had been found during the search, the Revenue had been precluded from considering any other material derived from any other source. See Abhisar Buildwell P. Ltd [ 2023 (4) TMI 1056 - SUPREME COURT] as held if no assessment proceeding is pending on the date of initiation of the search, the AO may consider only the incriminating material found during the search and is precluded from considering any other material derived from any other source. As decided in Kabul Chawla case [ 2015 (9) TMI 80 - DELHI HIGH COURT] no addition can be made in respect of completed assessment in absence of any incriminating material Assessing Officer gets jurisdiction to assess or re-assess the total income in respect of each assessment year falling within six assessment years. As per the proviso s, if any assessment or re-assessment is pending on the date of initiation of the search for making requisition under Section 132A of the Act, as the case may be, shall abate. It was thus held that the intention of the legislature was that in the case of a search, only the pending assessment/ re-assessment proceedings shall abate and the Assessing Officer could assess or re-assess for the entire set of 6 years for the period/block assessment period until any incriminating material was found. The intention could not be given to reopen the completed unabated assessment. Thus we are of the considered opinion that no question of law arises in the present set of appeals in view of the fact that the same has been settled by the Apex Court and a factual finding was recorded which has not been rebutted by counsel for the appellant . ITAT was right in holding that no addition can be made u/s 153A in respect of completed assessment if no incriminating material is found during search. 2023 (11) TMI 943 Disallowances of unsecured loans obtained from 8 parties and certain unverifiable purchases - rationale on the part of the AO in accepting the purchase and sale but rejecting the outstandings of such purchase - ITAT deleted addition - HELD THAT:- AO had taken the shorter route of considering the purchase creditors to be bogus merely on the basis of their non-response verification letters issued under the provisions of Section 133(6). Resultantly, he set aside the action of the AO since there was already specific material adduced by the company and came to the conclusion that there is no rationale in accepting the purchases and the sale, but rejecting the outstandings of such purchases. In such circumstances, the addition was directed to be deleted. A perusal of the order of the assessment would also go on to show that in his comments, at one place, AO has mentioned that the ITR is not legible and the bank statement is difficult to read and resultantly came to the conclusion that the creditworthiness and genuineness of transaction is not proved. Similar observations have also been made for rejecting the entries without any reasons given. The Appellate Authority thereafter has, thus, applied its mind to the material which was on record and had allowed the appeal. The said appeal was never contested on merits before the Tribunal but only on the technicality that there was additional evidence produced, which does not come forth from the above facts and circumstances and neither any material has been produced. Revenue appeal dismissed. 2023 (11) TMI 942 Proceedings against Agents(representative assessee) u/s 163(1) - violation of principle of natural justice - petitioners have challenged the orders passed by the respondent on the principle ground that no opportunity of personal hearing has been provided to the petitioner before passing the impugned orders - HELD THAT:- When the respondent-Department had initiated proceedings u/s 163 (1) of I.T. Act, by treating the petitioners as Agents of WBC, they ought to have provided an opportunity of personal hearing to the petitioners, since, in terms of Section 163 (2), provision of personal hearing is mandatory. As rightly pointed out by petitioner, the show cause notices issued by the respondent-Department requiring the petitioners to appear in person and file their replies could be deemed to be a notice providing an opportunity of personal hearing, since, by means of show cause notice, the petitioner can only be expected to file reply or objections to the query or any other issues raised in the show cause notices, and though even by means of such show cause notice, petitioners have been called upon to appear in person along with reply, that would be only for the purpose of enabling the Officer to arrive at a preliminary conclusion and thereafter, AO has to ascertain the facts with regard to the genuineness of documents, if any, produced by the Assessee, for which purpose, the assessee has to be heard. However, I find that, in the instant case, the petitioners have not been heard before passing the impugned orders and this is sufficient to hold that the impugned orders are unsustainable in the eye of law. Writ Petitions are allowed, the impugned orders are set aside and the matters are remanded back to the respondent for re-consideration, in which case, the respondent shall provide an opportunity of personal hearing to the petitioners by fixing a specific date for hearing. 2023 (11) TMI 941 Allowability of Brokerage expenses - AO disallowed the claim of brokerage paid by the assessee for enabling it to lease part of the SEZ premises to three parties - Assessee provided names and addresses of the parties along with invoices. However, AO was not satisfied - HELD THAT:- As decided in the case of M/s. Candor Gurgaon Two Developers and Projects Pvt. Ltd [ 2023 (7) TMI 400 - ITAT DELHI] invoices produced by appellant mentions details of the premises let out and the party to whom the lease was made. The copies of lease deed have also been placed on record. Ld. Tax Authorities have fallen in error in want of more evidences. When assessee is engaged in the business of rental of the properties then engaging brokers for procurement of the tenants is a common practice and the expenses of brokerage thus, have to be considered to have been incurred in ordinary course of business.Decided in favour of the assessee. Deduction u/s 80-IAB - AO disallowed deduction on car parking income, income from health club, income from food court and interest income. Ld. CIT (A) confirmed the disallowance - HELD THAT:- Notification of the Government of India dated 27th October 2006, certain operations were listed to be used by the Board of Approval while approving authorised operations in the SEZ. This list included parking, club house, shopping arcade, convention centre, etc. As decided in the case of M/s. Candor Gurgaon Two Developers and Projects Pvt. Ltd.[ 2023 (7) TMI 400 - ITAT DELHI] has allowed 80-IAB deduction in similar circumstances by holding that the issue is covered in favour of the assessee by case of Meghalaya Steels Ltd.[ 2016 (3) TMI 375 - SUPREME COURT] . In the same order ITAT has allowed deduction towards section 80-IAB towards car parking rental in favour of the assessee. We find that the above instances are assessee s group cases and cover the issue in favour of the assessee. Accordingly, we hold that assessee is entitled to deduction u/s 80-IAB towards car parking income, income from health club, income from food court and interest income. This issue is decided in favour of the assessee. 2023 (11) TMI 940 Addition u/s 68 - bogus unsecured loan - genuineness of identity and creditworthiness of lender questioned - AO while passing the assessment order solely relied on the report of Investigation Wing and the statement of Manohar Lal Nanglia[as allegedly controlling lender and other companies] - HELD THAT:- As in reply to show cause notice, the assessee while filing its reply prayed for supply of material relied by AO including the statement of Manohar Lal Nanglia and report of investigation wing. Admittedly no such material was provided to assessee. There was no such finding of AO that required details were provided to assessee. We find that assessee in response to show cause notice furnished confirmation of lender s PAN, bank statement, ITR with computation of income and audited report with relevant schedules.AO has not made any adverse comment on such evidence and no investigation of fact was carried out by the AO. As before Ld.CIT(A), the assessee in addition to objections raised before Assessing Officer, specifically stated that assessee has made the repayment of loan in subsequent year and furnished his bank statement and ledger account of lender. The Ld.CIT(A) instead of getting the fact verified either by himself or from AO confirmed the addition without giving any finding of such submission made by assessee. We find that no adverse view, if taken by department in subsequent year on repayment of loan, is brought to our notice, therefore following the ratio of decision of Ayachi Chandrashekhar Narsangji [ 2013 (12) TMI 372 - GUJARAT HIGH COURT] that once the repayment was made in subsequent year no addition u/s 68 be made, against the assessee. Once, we have accepted the contention of ld AR for the assessee about repayment of loan, therefore all other submissions against this addition have become academic - Decided in favour of assessee. 2023 (11) TMI 939 Validity of assessment u/s 153A - date of expiry of time limit for issuance of notice under section 143 (2) - HELD THAT:- We hold that assessment year 2010 11 to assessment year 2014 15 are unabated assessment years, which has been disturbed by the learned assessing officer, based on the incriminating material found during the course of search. For all these unabated assessment years, the addition is made with respect to the undisclosed income, income from house property and bogus long-term capital gain which are all based on the independent incriminating material found during the course of search relevant to those assessment years. Assessment year 2015 16 is not a concluded assessment year and therefore shall abate and assessing officer can make addition even in absence of incriminating material found during the course of search. Accordingly, we dismiss ground no 1 of the appeal. No notice u/s 143 (2) was issued by the new incumbent AO i.e. Deputy Commissioner of Income Tax Central Circle 5 (2) within the permitted time - transfer u/s 127 - HELD THAT:- No provision of law was shown to us by the learned authorized representative. We drew attention of the learned authorized representative to the provisions of section 129 of the income tax act which provided that Whenever in respect of any proceeding under this Act an income-tax authority ceases to exercise jurisdiction and is succeeded by another who has and exercises jurisdiction, the income-tax authority so succeeding may continue the proceeding from the stage at which the proceeding was left by his predecessor. AR referred to his written submission and the various judicial precedents cited. We find that the provisions of section 129 of the act is clear in this case and there is no scope for taking the interpretation as pointed out before us by the learned authorized representative. It is not the case of the assessee that he has not been heard by the new incumbent prior to making the assessment order. Therefore, the argument of the learned authorized representative is in clear violation of the provisions of section 129 of the income tax act and therefore it is dismissed. Accordingly, ground number 5 of the appeal is dismissed. Levy of interest u/s 234B - claim of the learned authorized representative is that no continuity of hearing was given by the assessing officer before the levy of interest and no interest can be levied in special assessment proceedings u/s 153A - HELD THAT:- Levy of interest u/s 234B of the income tax act is chargeable in special assessment under section 153A of the act, as no judicial precedents are shown that in such proceedings, no interest is chargeable. There is no provision in the income tax act to grant an opportunity of hearing before charging of interest u/s 234B of the income tax act. It is not the case of the assessee that no interest can be charged under section 234B of the income tax act or no opportunity is given for hearing during assessment proceedings. Accordingly, ground of the appeal of the assessee is dismissed. Determination of the total income - argument of the assessee is that assessee was assessed at ₹ 335,486,417/ against the returned income of ₹ 24,438,590 by making an addition of ₹ 311,047,827 - HELD THAT:- We find that this ground is general, no arguments were advanced by the learned authorized representative, and hence, it is dismissed. Violation of the natural justice - No summons under section 131 or notices under section 133 (6) to the various parties whose statements have been relied upon issued - addition with respect to the denial of exemption u/s10 (38) of the act has been denied on the stated statement of Mr. Vipul Bhatt who has retracted the statement, therefore such statement cannot be relied upon - AO has also relied upon the appraisal report for making an addition and that too without making any enquiry whatsoever to ascertain the reliability or veracity of such a report and to examine the evidences produced by the assessee. The copy of the appraisal report was not furnished to the assessee in spite of the specific request made - HELD THAT:- With respect to the claim of the assessee that assessee requested for issue of summons under section 131 or notices under section 133 (6) to the various parties whose statements have been relied upon by the learned assessing officer, fact clearly shows that the assessing officer has referred to the statement of Mr. Bhatt, which was in the knowledge of the assessee. Therefore, the assessee produced the retraction statement and affidavit of the same person. Therefore so far as the cross examination of Mr. Bhatt is concerned, when assessee is aware about his retraction statement and his statement originally given implicating the assessee, the assessee could have himself produced Mr. Bhatt. Even otherwise, there is a statement recorded of that person during the course of assessment proceedings, which is also known to the assessee. The assessee does not make any request for cross-examination when his statement was recorded. Later on assessee makes a request for his cross-examination. Therefore there is no violation of principle of natural justice in not giving the cross examination of Mr. Vipul Bhatt. There is no provision in the income tax act to give an internal communication to the assessee such as appraisal report. Therefore, we reject this argument also. However while deciding the issue on the merits of the case; we will deal the same once again. Accordingly ground of the appeal to that extent stated above, is dismissed. Addition of annual value with respect to the house properties - HELD THAT:- As there is no change in the facts and circumstances of the case of the assessee and the daughter of the assessee except the amount of taxation determined with respect to each of the property, we following the decision in case of Mrs. Priya Gurnani [ 2023 (11) TMI 822 - ITAT MUMBAI] direct the learned assessing officer to grant deduction of standard deduction at the rate of 30% of annual value under section 24 of the act and upheld the action of the learned assessing officer in taxing the income of the above properties on all other issues Bogus LTCG - Addition u/s 68 on account of sale proceeds of shares - Exemption claimed u/s 10(38) denied - statement given by the accommodation entry provider and his retraction later on - HELD THAT:- We find that identical issue has been dealt with by the coordinate bench in case of the daughter of the assessee Mrs. Priya Gurnani [ 2023 (11) TMI 822 - ITAT MUMBAI] set-aside ground of the appeal back to the file of the learned assessing officer with a direction to the assessee to show the genuineness of the trade and unsecured loan with respect to the documents found as stated in the statement of various parties, exit entry providers details, Demat agencies and the cash trail found. It is also the duty of the assessee to produce before the AO of her chartered accountant (who statement is not retracted), Ms. Rukhsana who is stated to have been involved in transferring the cash for the long-term capital gain and conversion of loan entries, for further examination. It is also the duty of assessee to produce Mr. Vipul Bhatt before the ld AO to be examined specifically with respect to documents in annexure 1 to 17 , his each of the reference in 90 questions referring to Moraj Group. The learned assessing officer on appraisal of all the details furnished by the assessee may carry out further enquiry with respect to the observation made above and decide the issue afresh considering the standard operating procedure of investigation of penny stock. The LD AO may also consider the inquiry pending before him from BSE etc. LD AO may carry out the inquiries with respect to exit providers looking at date and time stamp of trades executed and sources of the fund of the exit providers tearing the layering where it is stated that in some of the case funds are out of RTGS made by assessee for repayment of loan. 2023 (11) TMI 938 Nature of expenditure - remuneration paid to various fields/sales organizers - revenue or capital expenditure - HELD THAT:- As in assessee s own case for the AY 2007- 08 [ 2021 (8) TMI 422 - ITAT DELHI] which is the order for immediately preceding assessment year, submits that ground no.1 is decided in assessee s favour Disallowance of temple maintenance and puja expenses as well as amount paid to staff recreation clubs - HELD THAT:- As for AY 2006-07 wherein the Ld.CIT(A) deleted the above disallowance relying upon the decision of the coordinate bench in assessee s own case for earlier years. There are no changes in the facts and circumstances of the case pointed out before us. As the issue is squarely covered in favour of the assessee by the decision of the coordinate bench which is been relied upon by the Ld.CIT(A), we do not find any infirmity in his order in deleting the above disallowance. Allowance of deduction u/s 80IA as relying assessee own case 2006-07. Power charges paid by the assessee to Keshav Power Ltd. are allowable as deduction to the assessee. It is also demonstrated that the rates paid to Keshav Power Ltd. are comparable and beneficial to the assessee. The issue has been decided in the favour of the assessee for AY 2006-07 and the Ld. DR fairly agreed that there is no change in the facts and circumstances of the case. Disallowance u/s 14A r.w.r. 8D - Mandation of recording satisfaction - Suo moto addition made by assessee - HELD THAT:- Since the share capital and reserve and surplus are more than the investments there cannot be any disallowance u/s 14A read with Rule 8D(2)(ii).We hold that there cannot be any disallowance u/s 14A read with Rule 8D while computing the income under normal provisions of the Act by the AO in the absence of recording any satisfaction as to why the suo moto disallowance made by the assessee is incorrect. Disallowance made u/s 14A r.w.r. 8D while computing the book profits u/s 115JB - HELD THAT:- We find that the issue is squarely covered by the decision of Vireet Investments Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] wherein it has been held that the computation under clause (f) of Explanation 1 to section 115JB(2) is to be made without resorting to the computation as contemplated u/s 14A read with Rule 8D of the Income Tax Rules, 1962. Thus, respectfully following the Spl. Bench decision, we restore the issue of disallowance u/s 14A while computing the book profits u/s 115JB to the AO with a direction to decide the issue afresh Disallowance of expenditure incurred on advertisement in newspapers requesting the Debenture warrant holders to convert their warrants to equity shares of the company - whether such expenditure is capital or Revenue in nature? - HELD THAT:- CIT(A) following the decision of Broke Bond India Ltd. [ 1997 (2) TMI 11 - SUPREME COURT] held that such expenditure is capital in nature. The Hon ble Supreme Court in the case of CIT Vs. Broke Bond India Ltd. (supra) held that the expenditure incurred by a company in connection with issue of shares with a view to increase a share capital is directly related to the expansion of capital base of the company and expenditure is capital expenditure. We hold that the Ld.CIT(A) has rightly held that the advertisement expenditure is capital in nature. Thus, reject the ground of appeal of the assessee. Nature of expenditure - Capital or revenue expenditure - Expenditure in respect of laying transmission line and tower was allowed as Revenue expenditure following the decision of Saw Pipes Ltd. [ 2007 (1) TMI 101 - DELHI HIGH COURT] and Dot Manufacturing India Pvt. Ltd. [ 2008 (8) TMI 19 - HIGH COURT DELHI] Addition u/s 37(1) - payment made to AP TRANSCO for the purpose of laying service lines - crystallization of liability - year of assessment - HELD THAT:- We observe that the Ld.CIT(A) held that the said expenditure was crystallized in the FY 2007-08 relevant to the AY 2008-09 and, therefore, cannot be allowed as deduction in the current assessment year i.e. 2009-10. Since, we have held that the said expenditure is Revenue expenditure allowable as deduction u/s 37(1) of the Act the claim of the assessee for deduction of this amount should be considered in the AY 2008-09 as the liability is held to be crystallized in the said assessment year. Thus, we direct the AO to consider the claim of the assessee in the AY 2008-09. Disallowance of depreciation on UPS and printers - HELD THAT:- The issue is covered in favour of the assessee by the Hon ble Delhi High Court in the case of CIT Vs. BSES Yamuna Powers Ltd. [ 2010 (8) TMI 58 - DELHI HIGH COURT] which decision was applied by the Ld.CIT(A) in holding that claim for depreciation allowance at 60% on UPS printers is held to be justified. 2023 (11) TMI 937 Revision u/s 263 - AO has completed the assessment take up through CASS for limited scrutiny - CIT held that AO has not properly made verification of identity and genuineness of the unsecured loans taken by the assessee - HELD THAT:- As decided in Naga Dhunseri Group Ltd. [ 2023 (5) TMI 418 - CALCUTTA HIGH COURT] instruction issued by CBDT to explain the manner in which limited scrutiny to be completed by the AO and therefore, once the AO has completed the assessment take up through CASS for limited scrutiny then the Pr. CIT cannot make a roving inquiry in guise of a limited scrutiny and as such instruction issued by the CBDT is binding on the department. When the issue of examination of the identity, creditworthiness of the creditors and genuineness of the transactions was not subject matter of the limited scrutiny then the order of the AO cannot be held as erroneous so far as prejudicial to the interest of revenue on the ground that lack of inquiry. Accordingly we hold that the impugned order of Pr. CIT passed u/s 263 is invalid for want of jurisdiction. CIT justification passing the impugned order and remanding the matter back to the AO for fresh order to establish the identity and creditworthiness of the creditor as well as genuineness of the transaction - From the balance sheet of M/s Nikita Multi Trade Pvt. Ltd. it is manifest that the said company was having sufficient funds in the reserves and surplus of more than Rs. 50 crore to lend the money of Rs. 3.8 crores to the assessee. The transactions of the loan is duly reflected in the bank account of the assessee as well as bank account of M/s. Nikita Multi Trade Pvt. Ltd. which shows that there was no prior deposit of any cash in the bank account of the said lender company. Therefore, there is nothing on record to doubt the genuineness of the transactions. All these records were before the Pr. CIT as it is clear from the impugned order that the Pr. CIT has referred to the trading account of the lender company wherein the said company has claimed depreciation which was disallowed by the AO. It is pertinent to note that the disallowance of depreciation by the AO in the scrutiny assessment of the lender company would not epso facto lead to the conclusion that the transactions of loan between the lender company and assessee is not genuine. CIT has not even verified the balance sheet and bank account statement of the lender company to come to prima facie conclusion that the transactions are not genuine. Once the relevant evidences produced by the assessee discharge its onus to prove the identity and creditworthiness of the creditor as well as genuineness of the transactions then in absence of any contrary fact or material brought on record the acceptance of the said transactions by the AO is a plausible view based on the documentary evidence. Once the AO has taken a plausible and possible view which is not found to be contrary to the facts/record or to law then the Pr. CIT is not permitted to exercise the revisionary powers u/s 263 of the Act just to set aside the order of the AO for re-adjudication of the same. Though the issue of verification of unsecured loan was not subject matter of limited scrutiny however, it is evident from the show cause notice issued u/s 142(1) that the AO has raised queries about this issue which was duly replied by the assessee with supporting evidence and therefore, it is not a case of complete lack of inquiry on the part of the AO. In fact the AO has conducted an inquiry and verified the relevant details and material produced by the assessee in support of the transactions of unsecured loan. Thus the Pr. CIT while passing the order u/s 263 cannot remand the matter back to the AO for passing the fresh order as it will lead to the conclusion that the Pr. CIT himself was not sure about the correctness of the claim of the assessee which was accepted by the AO. Even otherwise when the assessment order passed by the AO cannot be held as erroneous for want of inquiry then it is essential on the part of the Pr. CIT to give conclusive finding that order passed by the AO is not sustainable either it is contrary to the facts or to the law. Accordingly the impugned order passed by the Pr. CIT without giving finding to the effect that the claim of the assessee is not acceptable due to failure of the assessee failed to prove the identity and creditworthiness of the creditor as well as genuineness of the transactions is not sustainable and liable to be quashed. Decided in favour of assessee. 2023 (11) TMI 936 Disallowance u/s 14A r.w.r. 8D - Sufficiency of own funds - HELD THAT:- The investments made by the assessee are funded out of the own funds of the assessee. It is a settled principle that when the own funds are more than the investments, no disallowance is warranted towards operating cost and therefore, we see no infirmity in the order of CIT(A) deleting the disallowance made under section 8D(2)(ii) read with section 14A. Adjustment of book profit on Disallowance u/s 8D(2)(iii) read with section 14A - As in the case of Vireet Investments Private Ltd ( 2017 (6) TMI 1124 - ITAT DELHI ) wherein it has been held that only those investments which yielded exempt income during the year are to be considered for computing the average value of investment. Respectfully following it, we see no merit in the ground raised by the Revenue. We also notice that the issue of disallowance under section 14A made to book profit under section 115JB is considered by the co-ordinate bench in assessee's own case [ 2023 (5) TMI 153 - ITAT MUMBAI] held that disallowance under section 14 A of the act cannot be added to the book profit under section 115JB. Disallowance of Director s Salary handover facilities - AO disallowed 50% of the expenses towards capitalization to the cost of project - HELD THAT:- As decided in own case [ 2023 (4) TMI 190 - ITAT MUMBAI] held as considering the accounting standard - 1 and 7, the guidelines issued by the Institute of chartered accountants of India and after considering the provisions of section 145A of the act held that such expenses are to be allowed in the year in which they are incurred and not to be included in the cost of work in progress. Expenditure pertaining to employee cost, administrative expenses and selling and marketing expenses debited to the profit and loss account are to be allowed in the year in which those are incurred. TP Adjustment of Guarantee Commission -TPO rejected the bench marking done by the assessee and proceeded to make TP adjustment by applying the guarantee commission rate of 1.25% - As per CIT(A) addition @ 0.3523% is reasonable - HELD THAT:- We notice that the issue of guarantee fees has been considered by the co-ordinate bench in [ 2023 (4) TMI 190 - ITAT MUMBAI] no infirmity in the order of the learned CIT A in holding that arm's-length price of the guarantee commission is 0.3523 percentage. Depreciation on sample flat - asset put to use - AO held that since the gestation period of the project is four year from it inception as per the submissions of the assessee the depreciation on the overall cost incurred towards the sample structure should be claimed over four years - AO accordingly allowed depreciation at 25% - CIT(A) has allowed the claim stating that the depreciation claim in terms rate etc., can be questioned only in the first year of claim and once allowed in the first year cannot be disturbed in the subsequent year - HELD THAT:- From the perusal of the assessment order we notice that the assessing officer has not disputed the fact that the sample flat is a temporary structure since the AO himself is holding that the gestation period is four years based on the assessee's submission that the sample flat is demolished in 2020. Taking note of the fact that temporary structures are entitled to depreciation at the rate of 100% as per the depreciation rates under Income-tax Rules,1962, as per rule 5, Appendix-I, and considering the fact that the structure being temporary not controverted by the Revenue, we see no infirmity in the claim of the assessee to the entire amount of expenditure on construction of temporary flat as sample flat is eligible for depreciation at 100% . Revenue has allowed the claim of 50% of the depreciation claimed by the assessee in the first year when the sample flat was put use for less than 180 days and nothing has been brought on record to show that the said claim is disputed by the revenue. Considering the facts that the revenue has not disputed the fact that the sample flat is a temporary structure and no contrary findings being brought on record in present case we hold that the assessee's claim of 50% of the cost of construction for the year under consideration be allowed. The disallowance made in this regard is deleted. Capitalization of foreign exchange loss to work-in-progress - AO held that in assessee's case the material purchased form part of the cost of construction which is added to the cost of project and not to the P L A/c and therefore, the foreign exchange loss attributable to purchase of material should also be added to the cost of construction - HELD THAT:- As relying on own case [ 2023 (5) TMI 153 - ITAT MUMBAI] we hold that the foreign exchange loss cannot be included in the cost of project and accordingly should be allowed as a deduction. The ground of the revenue in this regard is rejected. 2023 (11) TMI 935 TP adjustment - downward adjustment to the aggregate value of international transactions of the appellant with its associate enterprise - Comparability - Inclusion of Victor Gaskets India Ltd as comparable - HELD THAT:- The major product line of Victor Gaskets is gaskets only. Since, the appellant has itself shortlisted Talbros Automative Component and the products manufactured by Victor Gasket India Limited are similar to Talbros Automative Component, in our considered view, the TPO has rightly included Victor Gasket India Limited, in the list of final set of comparables. Further, TNMM is resistant to product profile/functional difference. Even, in OECD guidelines it has stated that net profit indicators are less affected by transactional difference as compared with other methods. Further, net profit indicators also may be more tolerant to some functional difference between the control and uncontrolled transactions than gross profit margins. Therefore, we are of the considered view that, there is no error in the reasons recorded by the ld. DRP to uphold inclusion of Victor Gaskets India Ltd as comparable and thus, we reject grounds taken by the assessee. Exclusion of Banco Gaskets (India) Ltd - It is very clear that the appellant could not give any valid reasons to exclude Banco Gaskets (India) Ltd, except for the reason of higher margin. It is well established principle of law that for higher margin, the company cannot be excluded. Further, TNMM method is resisted the product line/functional difference and this fact has been reiterated in OECD guideline. Therefore, we are of the considered view that there is no merit in arguments of the Ld. Counsel for the assessee for exclusion of Banco Gaskets (India) Ltd and thus, we reject grounds taken by the assessee. Comparability of Minda Corporation with appellant company - On comparison appellant company and Minda Corporation Ltd are similar. Further, in the TNMM method net profit indicators are less affected by transactional difference as compared with other methods. Further, TNMM is resistant to product profile/functional difference. Therefore, we are of the considered view that there is no merit in arguments taken by the Ld. Counsel for the assessee for exclusion of Minda Corporation Ltd and thus, we reject ground taken by the assessee. Talbros Automotive Components as a comparable company - As objections raised by the assessee for exclusion of Talbros Automotive Components needs to be rejected. Be that as it may. Assessee itself chosen the comparable and included the same in the TP study. The assessee has not given any valid ground for excluding Talbros Automotive Components from the list of comparables. It appears that the assessee somehow want to exclude Banco Gaskets (India) Ltd and Victor Gaskets India Ltd, both of which are included by the TPO based on Talbros Automotive Components. In absence of valid and cogent reasons, the arguments of the assessee for exclusion of any comparable cannot be accepted. Therefore, we are of the considered view that there is no error in the reasons given by the ld. DRP to reject arguments of the assessee for exclusion of Talbros Automotive Components and thus, we reject ground taken by the assessee. Rejecting the Transfer Pricing documentation maintained by the appellant and not applying multiple year data for comparable companies while determining arm s length price - HELD THAT:- During TP proceedings, the TPO has issued show cause notice proposing single year data as prescribed in the Income Tax Rules, 1962, as against multiple year data used by the assessee to include certain additional filters and modify certain filters used by the assessee in its TP study, for the purpose of proper selection of comparable companies. From the above, it is very clear that, the TPO was not satisfied with ALP determined by the assessee in the TP study based on the comparables selected by using certain filters and computing three years weighted average margin of comparable companies. In our considered view, the TP documentation maintained by the assessee is not in accordance with section 92C(1) (2) and Rule 10B and 10C of I.T. Rules, 1962. Therefore, we are of the considered view that there is no error in the reasons given by the TPO/DRP to reject TP study conducted by the assessee and use of multiple year data for comparable company and thus, we reject ground taken by the assessee. Re-computation of operating margin of the assessee - re-computing operating margin of the assessee by considering foreign exchange loss as operating in nature - HELD THAT:- Relevant reasons given by the TPO/DRP to reject arguments of the assessee for treating foreign exchange loss as non-operating in nature. Generally foreign exchange loss/gains incurred on trading account is operating in nature, which is directly linked to business operations of the assessee and also operating margin of any company. Coordinate bench of ITAT, Chennai in the case of GE Healthcare Bio-Sciences Ltd [ 2016 (5) TMI 252 - ITAT CHENNAI] has held that, foreign exchange loss is operating in nature. Therefore, we are of the considered view, that there is no merit in arguments of the Ld. Counsel for the assessee, to treat foreign exchange loss as non-operating in nature and thus, we reject ground taken by the assessee. Working capital adjustment - These opening and closing figures are the balances, as they existed on the opening and closing day of the year respectively. They do not show the movements in their accounts during the year. Working capital requirements are not uniform during the entire period of the year. The disclosure of the figures of Debtors and Creditors which are important for computing the working capital adjustment does not provide the breakup of trade and non-trade nature of such balances. Further, the appellant has failed to provide such data and also resistant to provide working capital adjustment when compared to working capital levels of the assessee and working capital levels of the comparables. In absence of necessary details and also resistant for providing working capital adjustment, a general and vague argument of the assessee for providing working capital adjustment cannot be acceded. Therefore, there is no merit in arguments of the assessee for providing working capital adjustment, and thus, we are inclined to uphold the findings of the ld. DRP and reject ground taken by the assessee. TP Adjustment - custom duty adjustment - HELD THAT:- Assessee has not provided any adjustment for custom duty in its own TP study. Further, the appellant had not make out a case for providing adjustment towards un-cenvatable custom duty with necessary evidences. Further, the appellant has also failed to prove that the non-cenvatable customs duty is not factored in the cost of goods manufactured and sold. In absence of any evidence, a general argument of the assessee in light of certain judicial precedents cannot be accepted. Therefore, we are of the considered view that, there is no merit in the ground taken by the assessee for custom duty adjustment and thus, we reject ground taken by the assessee. Disallowance of warranty expenses - assessee has provided for warranty on estimate basis without any scientific basis - HELD THAT:- In the present case, the assessee itself has admitted that warranty has been provided on the basis of agreement with original equipment manufacturer on fixed percentage basis without scientific basis. Further, no evidence has been filed to prove as to whether such liability is crystallized or not. From the above, it is undoubtedly clear that provision for warranty expenses is contingent in nature and there is no scientific basis for working out said warranty expenses. Since, the appellant could not explain how provisions made for warranty expenses is on scientific basis and crystallized, in our considered view there is no error in the reasons given by the Assessing Officer/DRP to disallow provision for warranty expenses. Thus, we are inclined to uphold the findings of ld. DRP towards disallowance of warranty expenses and reject ground taken by the assessee. Disallowance of Pooja expenses - assessee submitted that AO erred in not considering the evidence submitted by the assessee to prove expenditure incurred towards Pooja expenses is for the benefit of employees - HELD THAT:- We find that out of total expenditure, a sum claims to have been paid towards gift coupons issued to staff and workers as bonus. If the argument of the assessee is correct, then said payment needs to be examined in light of payment of the Bonus Act and provisions of section 36(1)(va) r.w.s. 43B of the Act. In so far as balance amount although the assessee claims that said expenditure was incurred for Ayudha Pooja, but no evidence has been filed to substantiate the claim. Therefore, we are of the considered view that the issue needs to go back to the file of the AO for further verification. Thus, we set aside the issue to the file of the Assessing Officer and direct the AO to reexamine the claim in light of our discussion given herein above and also any evidence that may be filed by the assessee to justify its claim. Admission of additional grounds filed by the assessee - The petition filed by the assessee for admission of additions grounds is not admissible, because if you go through the facts narrated by the assessee in their petition and ground taken in light of certain additional evidences is purely a factual issue, but not a legal issue which can be raised at any stage of proceedings. It is a well settled principle of law by the decisions of various courts, including the decision of Hon ble Supreme Court in the case of National Thermal Power Co Ltd [ 1996 (12) TMI 7 - SUPREME COURT] that if facts with regard to any legal ground are already on record before the Assessing Officer at the time of proceedings, then said legal grounds can be admitted at any stage of proceedings. In the present case, as we have already noted, the grounds taken by the assessee in its petition are purely a factual issue, which is solely dependent on subsequent order passed by the Customs Authorities on valuation of goods declared under the Customs Act, 1962. Therefore, we are of the considered view that the petition filed by the assessee for admission of additional grounds cannot be admitted at this stage 2023 (11) TMI 934 Reopening of assessment - Correct head of income - LTCG or business income - disallowing indexation on cost of acquisition and treating LTCG as business income - assessee contributed in the form of land in the Joint Development Agreement - as argued assessee itself has converted its investment into stock in trade, therefore, the income generated from transfer of such investment should be considered as business receipt and not the income chargeable under the head capital gains - HELD THAT:- In the present case since the assessee company as the owner has agreed to sell and transfer its rights, title, and interest in the land in favour of the developer as per the requirement of Developer, thus has contributed in the form of land in the Joint Development Agreement, in turn the assessee as consideration towards the extinguishment of rights in the land has received 29% of the properties constructed apart from cash consideration. In such a case taxability of the income which the assessee has credited on accrual basis and offered for taxation in the relevant assessment years requires to be worked out under the provisions of section 45(2) r.w.s. 48, i.e. long-term capital gain for the sale of the land as well as profit from the sale of the developed property would be computed in accordance with the provisions of s. 45(2) r.w.s. 48 of the Act and under the head Income from business respectively. Thus, the reasons recorded by the Ld AO u/s 148(2) treating the income to chargeable under the head Business and Profession are found to be under wrong appreciation of facts and erroneous application of law, which is not permissible. This aspect is covered by the judgment relied upon by the assessee, in the case of Prakriya Pharmacem [ 2016 (1) TMI 946 - GUJARAT HIGH COURT] wherein as categorically held that, under the circumstances, the reasons recorded by the Assessing Officer to form belief that the income chargeable to tax had escaped assessment lack validity for the simple reason that an attempt was as made by the AO to apply certain provisions of the Act, which were not apply in the case on hand.Thus, the notice u/s 147 for reopening is set aside. Thus the belief formed by the Ld. AO was misconceived, which lead to recording of reasons without considering the provision of sections 45(2) r.w.s. 2(47) and section 48 of the Act, therefore, such proceedings for initiating the reopening assessment under the provisions of section 147/148 to charge the income escaped assessment was bad in law, thus, can not be held as valid. Decided in favour of assessee. 2023 (11) TMI 933 Revision u/s 263 - Non making disallowance u/s 14A when assessee has made huge investment in shares and securities which can generate exempted income u/s 10(34) - As per CIT assessee has not made any disallowance under the provision of section 14A r.w.Rule 8D of Income-tax Rules which was compulsory to have been made in pursuance to the CBDT Circular No. 05/2014 dated 11/02/2014, even in a situation when the assessee has not earned any exempted income - HELD THAT:- In revising the Assessment Order u/s 263 of the Act, the twin conditions need to be satisfied being erroneous in so far prejudicial to the interest of revenue. If any of the condition is missing, then the assessment cannot be revised u/s 263 of the Act. Admittedly, in the given case, there is no exempted income u/s 10(34) of the Act for the year under consideration. The Hon ble Courts time and again held that there cannot be any disallowance under the provision of section 14A r.w.Rule 8D of Income tax Rules in a situation where there is no exempt income earned by the assessee. Now it has become law of the land by virtue of the findings of the Hon ble SC that there cannot be any disallowance u/s 14A r.w. Rule 8D of Income-tax Rules in a situation where the assessee has not earned any exempted income until and unless there is some change under the provisions of law. The fact that the assessee has not earned exempt income has nowhere been disputed by the Ld. DR appearing on behalf of the revenue. Accordingly, we hold that there is no error causing any prejudice to the interest of revenue in the assessment framed u/s 143(3) of the Act. Scope of amendment under the provision of section 14A by way insertion of an explanation clarifying that the disallowance needs to be made u/s 14A even there is no exempt income earned by the assessee - We find that such amendment is not applicable for the year under consideration by virtue of the order of the ITAT in the case of DCIT Vs. M/s CLP India Pvt. Ltd [ 2022 (11) TMI 422 - ITAT AHMEDABAD] - Appeal of assessee allowed. 2023 (11) TMI 932 Computation of capital gain - sale of land in two parts [different AYs] - basis of the SRO s letter to ascertain the guideline value of the land sold by the assessee - AO determined such Long-Term Capital Gain as per provisions of section 50C - CIT (A) while upholding the action of the AO in adopting the SRO s stamp duty value of the property @ 1200 per sft, however, directed AO to exclude the area allotted for roads, parks and open places which could not be plotted as they are pledged to the Govt.- HED THAT:- We agree with the contention of assessee that when a part of the land i.e. 5.74 acres out of the total area of 8.66 acres was sold in A.Y 2013-14 and the remaining part of 2.92 acres of land was sold in A.Y 2014-15, the AO instead of taking the value of the land in acres could not have taken the value per sft which is for developed land with internal roads etc. The final agreement and the receipt dated 28.03.2014 did not alter the nature of land in the hands of the assessee nor did it alter the sale value fixed in the agreement. Assessee cannot be fastened with liability by adopting higher rate of valuation of the land which was developed by Developers in the year 2014 since the assessee had given up all her rights in land on 10.01.2013 itself when the Registered GPA was given to Developers and the guideline value on that date was Rs. 90 lakhs per acres. Under these circumstances when the assessee has sold the land at Rs. 1.05 crores as against the guideline value of Rs. 90 lakhs per acres, therefore, we are of the considered opinion that the Assessing Officer is not justified in applying the rate of Rs. 1200 per sft which in our opinion is the rate applicable for developed land. Under these circumstances we are of the considered opinion that in view of the proviso to section 50C where the date of agreement fixing the consideration and date of registration and transfer of capital asset in question are not the same, the value adopted or assessed or assessable by the stamp valuation authority on date of agreement is to be taken for purpose of full value of consideration. Also it has been held in various decisions that the amendment to section 50C introduced by the Finance Act 2016 for determining the full value of consideration in the case of immovable property is curative in nature and will apply retrospectively. As decided in Vummudi Amarendran ( 2020 (10) TMI 517 - MADRAS HIGH COURT ) decided an identical issue and has held that provisions of section 50C should be taken retrospectively from the date when the proviso exists. Where the date of agreement fixing the amount of consideration and the date of registration of property is different, value adopted by stamp valuation authority on the date of agreement has to be taken for purposes of computing full value of consideration of such transfer. Since in the instant case, admittedly, the guideline value on the date of agreement is Rs. 90,000/- per cent i.e. Rs. 90 lakh per acre and the assessee has sold the land @ Rs. 1,05,00,000/- per acre, therefore, the AO, in our opinion, is not justified in adopting the guideline value as on 31.3.2014 that to in sq. foot. Assessee appeal allowed. 2023 (11) TMI 931 Deemed dividend u/s. 2(22)(e) - nature of transactions between appellant and company - As per AO appellant is holding more than prescribed percentage of beneficial interest in shareholding of the company, AO treated debit balance of above three dates as deemed dividend - Also assessee has received a sum from the company and this payment is not reflected in the current account of the assessee with the company - HELD THAT:- We find that, it is not a solitary transaction of loan or advance to the assessee. In fact, there are number of transactions between the assessee and the company, where various payments are routed through current account of the assessee, including remuneration and other expenses reimbursed to the appellant. Further, in most of the days, except few days, account always shows credit balance in the books of the company. Therefore, the transactions need to be examined in light of peculiar nature of transactions of the assessee with the company. If the claims of the assessee are true and the debit balance is only because of an inadvertent error and the same has been squared off within short period, then same cannot be treated as deemed dividend u/s. 2(22)(e) of the Act and this principle is supported by the decision of M/s. V. Sriram (HUF) vs ACIT (OSD) [ 2023 (3) TMI 91 - ITAT CHENNAI] Similarly, AO has considered the payment on 31.12.2010 and according to the Assessing Officer the appellant has received a sum from the company, but said payment is not reflected in the current account of the assessee. Assessee explained that, the company has owed to Smt. Sundaravalli, mother of the appellant and her account shows a credit balance 0 The company suppose to make payment to Smt. Sundaravalli and as per the instructions of the payee, the amount has been paid to the appellant on 31.12.2010 and debited the payment to Smt. Sundaravalli account. The appellant has furnished ledger extract of Smt. Sundaravalli to prove his arguments. If the arguments of the Ld. Counsel for the assessee is correct, then said payment cannot be considered as payment of loan to appellant within the provisions of section 2(22)(e) of the Act. But, fact remains that, these facts need to be verified by the AO in light of our observations given herein above. Therefore, we set aside the order of the ld. CIT(A) and restore the issue back to the file of the AO. AO is directed to verify the claim of the assessee in light of various evidences and also decide the issue in light of our findings given herein above and decide the issue. In case, the Assessing Officer finds that the claim of the assessee is correct, then the AO is directed to delete additions made towards deemed dividend u/s. 2(22)(e) of the Act. Assessee appeal allowed for statistical purposes. 2023 (11) TMI 930 Exemption u/s 11 - Assessment of trust - income of the assessee from sale of property during the year under consideration - assessee taken advances from certain specified persons - amount taken from the assessee as a loan was converted into advance on the basis of the MOU and the said fund has been further advanced to other companies wherein the trustees and the relative are directors - as alleged funds of the trust were diverted and used for the benefit of specified person as covered within the provision of section 13(1)(c)(ii) section 13(2)(a) r.w.s. 13(3)(cc) - appellant was chargeable to tax on notional income held as chargeable income HELD THAT:- As learned Charity Commissioner directed the purchasers to pay enhanced consideration considering the rates of the property as per the Ready Reckoner published for the year 2021 by the Government of Maharashtra. Thus, from the above, it is evident that the sale of flats to Mrs. Arundhati Shelgikar, Mogra family, and the developer were approved by the learned Charity Commissioner in the financial years 2019-20 and 2020-21 at a higher consideration than initially agreed amongst the parties. Thus in view of the provisions of the Bombay Public Trust Act, 1950, we do not find any merits in the findings of the AO that even prior to the aforesaid orders passed by the learned Charity Commissioner the flats were sold by the assessee in the year under consideration and the advance received can be added in the hands of the assessee as income from the sale of property. Further, the agreed cost of renovation of the Mandir and hall of Rs. 1 crore and Rs. 50 lakhs was also treated as the sale consideration by the AO without any basis. We are of the considered view that the AO not only considered the incorrect amount of sale consideration in respect of the flats sold by the assessee but also erred in taxing the advance in the year under consideration, particularly when the sale can only be considered to be valid after the sanction by the learned Charity Commissioner in view of the provisions of Bombay Public Trust Act, 1950, which in the present case was granted in the financial years 2019-20 and 2020-21. Since the flats were not sold by the assessee in the year under consideration, therefore, no addition can be made in this year. No infirmity in the impugned order passed by the learned CIT(A) in deleting the addition made by the AO. However, it will be open to the AO to consider the issue of taxability of the sale consideration, as per law, in the year in which the sale transaction was concluded pursuant to the order passed by the learned Charity Commissioner. Accordingly, the impugned order passed by the learned CIT(A) on this issue is upheld and the appeal by the Revenue is dismissed. Loan given by the assessee to Specified persons/M/s Ramgopal Ganpatrai Co. Pvt. Ltd - We find that no information has been brought on record to dispute the findings of the AO that the trustees of the assessee were having shareholding of 12.92% and 12.97% (conjointly more than 20%) in the said company. As per the AO, since the trustees of the assessee had more than 20% shareholding in M/s Ramgopal Ganpatrai Co. Pvt. Ltd., the grant of loan to the said company has violated the provisions of section 13(1)(c). Exemption u/s 11 is applicable to a trust that is wholly charitable or wholly religious and since the assessee is partially charitable and partially religious trust, the benefit of section 11 is not available to the assessee - It is evident from the record that the submission now made by the learned DR before us was not the basis of the AO for the denial of exemption under section 11 of the Act to the assessee in the present case. As decided in Mahindra and Mahindra Ltd [ 2009 (4) TMI 207 - ITAT BOMBAY-H] AO has no jurisdiction to go beyond the order passed by the Assessing Officer. He cannot raise any point different from that considered by the Assessing Officer or CIT(A). His scope of arguments is confined to supporting or defending the impugned order. He cannot set up an altogether different case. As only consequence of the case which falls within the four corners of section 13 is the denial of exemption under section 11 of the Act. Section 13(2)(a) of the Act also does not authorise the Revenue to compute the notional interest, in case no such interest is charged by the trust. Thus, in a case when no real interest was accrued or received nor the same was recorded by the assessee in its books of accounts, we find no merits in the findings of the learned CIT(A) in upholding the addition made by the AO by computing the notional interest and adding the same to the total income of the assessee. Accordingly, AO is directed to delete the addition - Assessee appeal allowed. 2023 (11) TMI 929 Addition u/s 43B - liability of service tax not discharged before due date of filing return of income - assessee is a Chartered Accountant Firm, follows exclusive method of accounting with regard to service tax - Adjustment on the basis of column 26 of audit report wherein amount of such expenses was disallowed, not reflected in the return for this year - alternative submissions vehemently submitted that the assessee applied for the benefit of SVLDRS and only 40% was payable, which stand paid - HELD THAT:- Assessee has filed copy of relevant challan in respect of 40% of liability on record. AR of the assessee during her submission also prayed for giving suitable direction that in case remaining addition is sustained, the assessee may be allowed deduction in A.Y. 2020-21. Considering the submission of assessee and considering the fact that the assessee availed/went for SVLDRS and was liable to pay 40% of service tax, therefore, AO is directed to verify the contention of ld. AR of assessee and allow relief to that extent in accordance with law. So far as remaining 60% of the liability is concerned, assessee claimed that they have already offered 60% of the amount as per scheme of SVLDRS in audited account for A.Y. 2020-21, which is reflected in the audited accounts and allegedly includes this amount. Hence, the assessing officer is also directed to verify facts for AR 2020-21 and grant relief to the assessee in accordance with law. Grounds of appeal raised by the assessee are allowed for statistical purposes. 2023 (11) TMI 928 Addition u/s 43CA - agreement price is lower than the stamp duty value on the first date of payment made by purchaser by any other mode other than cash - HELD THAT:- Assessee s sale price and market value does not exceed in this case more than 10% hence no addition against the transaction with Gaurav Samruddhi, Flat No. SAM/A/103 can be made. Same is the situation for Flat No. EXC/3/204, Serial No. 4, Table-2, Project Name Gaurav Excellency , No addition can be made The view of the High Court of Punjab Haryana in Chandani Bhuchar [ 2010 (1) TMI 731 - PUNJAB AND HARYANA HIGH COURT] with respect to the deeming provision of section 50C of the Act is that onus of proof lies on the Department/Revenue to bring on record any evidence to the effect that higher amount of sale consideration had passed on to the seller from the buyer in addition to the amount of sale consideration recorded in the deed. The amount at which valuation has been done by the stamp authorities could not be taken as actual sale consideration and the value shown in the sale deed has to be accepted. The circle rates as stipulated u/s 50C of the Act cannot be sole concluding reason to hold that there is an understatement of sale consideration and adopt the valuation done for the purpose of stamp duty. In view of above discussions revenue has failed to discharge its burden of proof that higher amount of sale consideration had passed on to the seller from the buyer in addition to the amount of sale consideration recorded in the deed. On the other hand, it is also found that assessee also did not come forward with relevant documents which can help in establishing the fact that no cash payment element is involved to take the advantage of position as provided in section 43CA (3) r.w.s. 43CA (4) of the Act. In view of this, we store the matter back to the file of Jurisdictional AO for verification of balance transactions of Table-2 at Page No.6, i.e., at serial no. 1, 2, 3, 5, and 6. Ground Nos. 1, 2, 3, 4 and 5 are partly allowed for statistical purposes. Taxability of deemed rent u/s. 22 r.w.s. 23 of the Act. AO by deputing an Income Tax Inspector determined ALV as prescribed in section 23 of the Act for the purposes of section 22 - HELD THAT:- As per this sub-section, any property which has been held as stock in trade and has not been let-out during the year, then the Annual Value of such property shall be taken as Nil up to a period of one year from the end of the financial year in which the certificate of completion of construction is obtained. The appellant has submitted that the said amendment is applicable w.e.f. A.Y. 2018-19 and therefore the income can be charged only from A.Y. 2018-19 onwards. CIT (A) and AO relied upon following case laws to substantiate their view on the taxability of deemed rent on unsold stock of flats hold by assessee as relying on ANSAL HOUSING CONSTRUCTION LIMITED VERSUS ASSISTANT COMMISSIONER OF INCOME TAX [ 2018 (1) TMI 805 - DELHI HIGH COURT] , M/S ANSAL HOUSING AND CONSTRUCTION [ 2016 (11) TMI 208 - DELHI HIGH COURT] and M/S. SANE DOSHI ENTERPRISES [ 2015 (4) TMI 882 - BOMBAY HIGH COURT] - As assessee was liable to pay income tax on the annual letting value of unsold flats owned by it under the head 'income from house property' - Decided against assessee. 2023 (11) TMI 927 Addition u/s 68 - unexplained share application money - identity and creditworthiness of the shareholder and genuineness of transaction questioned - how can the shareholder make sign on application-form and make investment on 05.03.2003 when he had already died on 07.02.2003? - HELD THAT:- Receipts from Shri M.B. Deshmukh - Firstly, we find that the assessee has shown a receipt of Rs. 5,00,000/- in cash from shareholder which is a hefty sum. We also find that there is no identity proof of shareholder submitted by assessee. Also we find that the assessee has filed a copy of SHARE- APPLICATION FORM on a date after his death, even if the revised date of death i.e. 07/02/2003 is taken as correct, then also this date precedes 05.03.2003 i.e. the date on which the shareholder has signed the share application form.The signature at the right side of seal of notary, appearing in the scanned copy of revised-affidavit re-produced above, is a signature of assessee s counsel for certification of documents filed in Paper-Book and not of deponent of affidavit. Thus, without making any more comment from our side, we only suffice to conclude that the assessee has miserably failed to prove the identity of the shareholder much less the elements of creditworthiness and genuineness. In these circumstances, we are not inclined to accept the impugned receipt as satisfying the requirements of section 68. Receipts from Shri Vijay Singh Rajput - Assessee has given a complete address of shareholder. Then, the assessee has filed an affidavit of shareholder himself before his death which contains full address of shareholder and clear confirmation that he invested in shares of assessee. The assessee has also given PAN of shareholder. Lastly, the amount of investment is Rs. 1,00,000/- only. Therefore, there are sufficient evidences to support the requirement of section 68. Hence, the authorities are not justified to disbelieve submissions of assessee without bringing anything adverse on record. Receipts from Mayank Welfare Society - As shareholder is a registered society, we find merit in the submission of Ld. AR that the AO is not justified to link the investment made by shareholder with gross-receipts of shareholder in current year alone; the investment could have been well-made out of accumulated funds. We also find a strong merit in the submission of Ld. AR that even if the investment in shares of assessee by the shareholder-society is a violation of section 10(23C) or 11(5), such violation can permit the department to take any action against the shareholder-society but cannot be a basis for addition u/s 68 in the hands of assessee. Receipts from Mayank Club - Observation made by Ld. AO that the shareholder is a low-profile club which cannot make investment of Rs. 3,00,000/- in assessee s share, is only a conjecture not based on any fact. Therefore, we do not find any justification in the basis adopted by lower-authorities for making addition in the hands of assessee. Receipts from Shri Sanjay Gupta - As there is a strong merit in the submission of Ld. DR that the shareholder is having a meagre annual income of Rs. 47,967/- and after his household expenses would be left with a very small saving. Therefore, the shareholder cannot make investment as high as Rs. 1,30,000/- which is manyfold of his saving. No other source available with the shareholder for making investment in assessee is submitted before lower-authorities or even before us. Therefore, we are not in position to find creditworthiness of the shareholder and genuineness of transaction. Appeal of assessee partly allowed. 2023 (11) TMI 926 Accrual of income - Revenue recognition - accrued interest on the ICDs - Whether entry is made about a 'hypothetical income', which does not materialise? - AO has been dealt with based on the mercantile system of accounting followed by the assessee in respect of ICDs and regular business activities - main thrust of the assessee is on this that the assessee is not following dual accounting system and all its accounting including the accounting of interest on ICDs was under the mercantile accounting system - HELD THAT:- There is no dispute in respect of the accrual of the interest and that assessee had followed mercantile system of accounting for the ICDs. Further the Ld.AO has not questioned that the ICDs was not made in the regular course of the business. It is a settled position that the levy of income tax on the income is directed either on the accrual or on its receipt. See Shoorji Vallabhdas Co [ 1962 (3) TMI 6 - SUPREME COURT] As observed by Coordinate Bench for the preceding assessment years [ 2018 (12) TMI 278 - ITAT BANGALORE] verification needs to be carried out whether the interest is income has arisen or accrued in the present facts. Further the assessee also will have to establish that the interest has become irrecoverable before its accrual. In the event the assessee is able to establish the above fact, the interest income cannot be notionally brought to tax. On the contrary, if the assessee is establishing that the amount has become irrecoverable after accrual, then the same will have to be considered in the year of accrual and appropriate deduction will have to be computed as per section 36(1)(vii) in any years afterwards by writing of its same in its books of account. With the above directions and respectfully following the view taken by this Tribunal in assessee s own case, we remit the issue back to the Ld.AO to verify the interest on ICDs based on the real income theory observed by this Tribunal in para 23 herein above. 2023 (11) TMI 925 Deemed income u/s 69/69A/69B r.w.s.115BBE - income surrendered and offered to tax by the assessee on account of excess stock, advances and excess-cash found during survey - while filing return of income assessee faithfully honoured his surrender and disclosed additional income as Income from Business u/s 28 and paid taxes @ normal rate of tax as applicable to business income - assessee s main contention was such he was aged about 72 years at the time of survey and his sole source of income was the manufacturing business of footwear for more than 35 years and the excess-stock, advances and cash were the outcome of suppressed business income over the years; no other source of income except the same business had been found during survey HELD THAT:- Excess-Stock - Once the facts emerging from record shows that the excess stock found during survey was a part of entire lot of stock of assessee, part of which is recorded in books of account and part of the same was not found recorded and therefore, treated as excess stock at the time of survey and consequently surrendered by the assessee and also offered to tax in the return of income then the excess stock cannot be treated as deemed income u/s 69 or 69B of the act in view of the judgment of Bajarang Traders [ 2017 (11) TMI 388 - RAJASTHAN HIGH COURT] and Anoop Neema [ 2022 (1) TMI 683 - ITAT INDORE] . The lower-authorities are not justified to hold excess-stock as something which was not business income and thereby invoke deeming provisions of section 69 or 69B read with section 115BBE. The orders of the authorities below qua this issue is set aside. The assessee succeeds to this extent. Advances for purchase of raw-material - CIT(A) has clearly mentioned that the assessee admitted the advances as unaccounted business income during survey. Then, we also find that acting upon such admission, the assessee has recorded income in books of account and offered in income-tax return. Then in such a situation, we do not find any reason to tinker with the nature of income declared by assessee in the survey, more particularly when the advances are related to and part of business of assessee and the revenue has no evidence to prove otherwise. Therefore, we do not find any justification on the part of lower-authorities in invoking section 69 read with section 115BBE of the act. The orders of the authorities below qua this issue is set aside. The assessee succeeds to this extent. Excess-Cash - We find that the assessee is an individual who can have cash from any source. Even if the cash is physically kept at business premise, it cannot be said that it was part of business income. We further find that the CIT(A) has given contemporary findings and also rightly relied upon decision of ITAT, Indore in Shyam Lal Goyal (supra). It is to be noted that the Ld. AR has not proved by means of statement recorded during survey or by any other evidence that the impugned excess-cash represented business income of assessee. Therefore, we have no basis to interfere with the conclusion taken by CIT(A) holding excess-cash as deemed income u/s 69A attracting higher rate of tax u/s 115BBE. The assessee fails to this extent. Appeal of assessee is partly allowed. 2023 (11) TMI 924 Validity of initiation of reassessment proceedings - notice issued after expiry of four years - notice issued if four years, but not more than six years - case was selected for scrutiny through CASS and assessment order u/s 143(3) was passed - provision made by the assessee for the year under consideration for slow/non-moving inventory - HELD THAT:- In response to notice u/s 148 the assessee filed objections to the reopening of the assessment which were disposed of by the assessing officer against which the assessee filed which was dismissed by the Hon ble High Court [ 2016 (12) TMI 1294 - MADHYA PRADESH HIGH COURT] and declined to admit the writ petition on the issue of validity of reopening of the assessment as there was failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment and consequently declined to admit writ petition filed by the assessee stating stating notice has been served within six years from the end of the relevant assessment year and the tax effect is in crores of rupees and therefore, the Assessing Officer was justified in initiating proceedings and in rejecting the objections raised by the petitioner. Therefore, the objection of the assessee against validity of reopening on the ground that there is no failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment has been considered by the Hon ble jurisdictional High Court and decided against the assessee. Hence, we are of the considered opinion that this issue is covered by the judgment of Hon ble High Court in assessee s own case whereby the objection raised by the assessee against reopening of the assessment has been rejected. Decided against assessee. Addition on account of slow and non-moving inventory - assessee has changed the method during the year which has resulted in reduction of profit before tax - inventory written off by the assessee on the basis of net realization value worked out by following consumption pattern of the stock from 0 to 50 weeks, 51 to 100 weeks, 101 to above weeks taking percentage of provisions up to 50 weeks 0%, 51 to 100, 50% and 101 to above, 100% provision - HELD THAT:- It is pertinent to note that there is no change of accounting policy of the assessee for the year under consideration so as the valuation of the closing stock is concerned as the assessee is following consistent policy of valuation of the closing stock at cost or net realization value whichever is less in accordance with accounting standard accepted u/s 145A. The only change for the year under consideration is shifting the basis of net realization value from the age of the stock to consumption pattern. In any cases the reduction in the value of the closing shall have consequential effect of reduction in the opening stock of the subsequent year and therefore, this exercise is revenue neutral when the assessee has been paying the tax at the maximum marginal rate. There is increase of more than three times in the total income reported by the assessee in the subsequent assessment year and the AO has passed scrutiny assessment u/s 143(3) on 28.02.2014 whereby the total income of the assessee was assessed at Rs. 70,77,31,246/-. There is no adjustment made on account of this enhanced value of closing stock for the year under consideration to the opening stock of the subsequent year i.e. A.Y. 2010-11. Thus, this addition made by the AO for the year under consideration has resulted double taxation of the said income. Therefore, when the assessee is paying tax at the same rate as in the year under consideration and rather declared more than three times of income to tax in the subsequent year then this issue is revenue neutral and is entirely academic in nature. Accordingly in the facts and circumstances of the case when the assessee has explained the reasons for change in the basis of making the provision from age of non-moving inventory to consumption pattern which is more realistic so far as the realization value is concerned and this change has no revenue effect as the reduction in the closing stock of inventory shall have consequential effect of reduction the opening stock of the subsequent year then the addition made by the AO is not justified. As relying on Excel Industries Ltd. [ 2013 (10) TMI 324 - SUPREME COURT] the addition made by the AO is deleted. Appeal of assessee is partly allowed. Customs 2023 (11) TMI 923 Value of imported goods - adjudicating authority enhanced the value - it was held by CESTAT that only basis for rejecting the transaction value was noticing of contemporaneous imports at higher prices, the transaction value was required to be accepted, order of rejection of transaction value set aside and loading of value - HELD THAT:- No substantial question of law arises in this appeal filed against the order dated 12-1-2011 passed by the Commissioner of Customs (Appeals), Cochin. Appeal dismissed. 2023 (11) TMI 922 Seeking grant of bail - Smuggling of Gold Biscuits - occupants of the vehicle failed to give satisfactory answers as to the possession of such gold biscuits without any valid documents - HELD THAT:- The allegation of the prosecution that the accused person in question is involved in smuggling activities, has not been definitely ascertained as far as the present progress of investigation is concerned. Prima facie, it appears that the sections of law quoted in the case registered pursuant to the filing of the FIR may also have no relevance to the facts and circumstances of the case, though, it is too early at this stage to come to any definite conclusion. Since the Customs Act is not in the picture as far as this case is concerned, all the authorities relied upon by the learned counsel for the petitioner has no relevance for consideration by this Court - Be that as it may, on a general appraisal of the facts and circumstances of this case, and looking into the nature and gravity of the alleged offence, this Court is of the considered opinion that the accused person can be enlarged on bail provided he fulfills certain conditions to be imposed by this Court. This Court is inclined to allow this petition and to direct release of the accused person Shri. Sadeep Kumar Sunar on bail on the conditions imposed - bail application allowed. 2023 (11) TMI 921 Seeking issuance of detention certificate for waiver of demurrage and container detention charges in terms of Regulation 6 (1) of Handling of Cargo in Customs Areas Regulations, 2009 - import of apples from Turkey - HELD THAT:- In terms of the notification No.5 of 2023 dated 08.05.2023 issued by the respondent Department, no importer can import the goods at CIF value less than or equal to Rs. 50 per kg. However, in the present case the petitioner has imported apples at the rate ranging from Rs. 32 to 35. Therefore, according to the respondent Department, it is not in accordance with law and since the CIF value mentioned in the Bills of Entry is not in terms of the notification No.5 of 2023, the Bills of Entry are kept pending, without ordering clearance from the Port. Since the above said notification has been challenged before various High Courts including this Court vide W.P.No.24343 of 2023, wherein this Court has granted interim stay of the notification No.5 of 2023 dated 08.05.2023 and directed the respondent to assess and release the imported goods. Against the said order, the 2nd respondent has preferred an appeal in W.A.No.2626 of 2023 dated 18.10.2023 [ 2023 (11) TMI 74 - MADRAS HIGH COURT] wherein the Division Bench of this Court has directed to release the goods subject to execution of Bank Guarantee for the differential rate of duty, i.e. the price determined by virtue of notification i.e. Rs. 50 per kg. minus the price shown in the Bills of Entry (Rs.50 Rs. 32 to Rs. 35). This Court directs the respondents to release the goods within a week's time, upon execution of Bank Guarantee by the petitioner for the differential duty, on the same line as held by the Hon'ble Division Bench of this Court - In the event, if the notification No.5 of 2023 dated 08.05.2023 is upheld by the Hon'ble Division Bench, certainly the respondents are entitled to encash the Bank guarantee executed by the petitioner. The respondents shall also consider waiver of the charges, in the event of request, if any, being made by the petitioner, in accordance with law. Petition disposed off. 2023 (11) TMI 920 No reply to SCN filed - Petitioner did not give any response to the show cause notice in spite of the liberty being reserved by the High Court - HELD THAT:- Once when this Court had directed the petitioner to respond to the show cause notice, it was required for the petitioner to have responded to the same and participated in the entire show cause proceedings and thereafter, to take appropriate legal recourse available under the Act - The petitioner cannot be permitted to approach the Writ Court at every stage or as a matter of routine. From plain reading of the contents that is reflected in the show cause notice (Exhibit P2), it would be evidently apparent as regards the allegations levelled against the petitioner which on due consideration is of very serious nature. The instant writ petitions deserve to be and are accordingly rejected, reserving the right of the petitioner to participate in the show cause proceedings and to lead appropriate evidence in support of his contentions - petition dismissed. 2023 (11) TMI 919 Principles of natural justice - non-speaking order - Denial of the benefit of S1.No.530 of Notification No.152/2009-Cus, dated 31.12.2009 - HELD THAT:- Considering the facts and circumstances of the case, it is the duty of the Officer to deal with the same in a proper perspective and provide reasons for denying the benefit of the exemption claimed. Therefore, this Court is of the view that the orders appear to be a non speaking order and the same is liable to be set aside. While setting aside the order of the respondents, the matter is remitted back for re-adjudication by the 1st respondent taking into consideration the exemption under Notification No152/2009-Cus dated 31.12.2009 as claimed in the bill of Entry dated 02.10.2020 - petition disposed off by way of remand. 2023 (11) TMI 918 Classification of imported goods - Bakery Shortening - to be classified under Customs Tariff Heading (CTH) 1517 9010 or not - entitlement for benefit of N/N. 6/2002? - HELD THAT:- It is found from the perusal of the orders of lower authorities that there is lack of discussion, specifically on the entry at Sl. No. 246 in the Central Excise Notification No. 6/2002 in the context of change in the statue book up to 28.02.2005, especially when 8 digit codes were not incorporated in the Central Excise Tariff. There are no doubt that in Sl. No. 246 of Notification No. 6/2002 (supra), heading 1517 was required to be substituted for 1508.90. This is also clear on looking at the sub-heading in CETH 1508 prior to amendment, which was only for Linoxyn and Other and after amendment, the sub-heading for Other was spread over to cover all tariff items except 1517 10 22 (Linoxyn) - Further, the interpretation of the above Notification would be clear when Notification No. 5/2005-C.E.(N.T.) is read together with the note underneath the same wherein, it has been explained that the said Notification is intended to take care of technical changes adopted in the Central Excise Tariff numbering scheme. This crucial aspect appears to have been clearly missed by both the lower authorities. When Sl. No. 246 was inserted, the Central Excise Tariff Heading 150890 was based on 6 digit code, but the corresponding Customs Tariff was based on 8 digit code; Chapter 15 of the Central Excise Tariff contained Headings up to 1508 as against the revised Central Excise Tariff with 8 digit code having Headings up to 1522 00 90. Hence, CTH 150890 at Sl. No. 246 of Notification No. 06/2002 is to be considered in the light of the 6 digit code as per the old tariff heading alone. Having regard to the change in the scenario in the light of the amendment and the change from 6 digit level to 8 digit level, the appellants were entitled to nil rate of BCD since its claim was correct in classifying Bakery Shortening under heading 1517. The denial by the lower authorities is, therefore, not justified and hence, the impugned order which is liable for setting aside, is set aside - appeal allowed. 2023 (11) TMI 917 Refund of CVD duty (SAD) in terms of Notification No. 102/2007-Cus dated 14.9.2007 as amended - rejection on the ground that the declaration of endorsement/stamping made on the invoices are not as per the Circular issued by the Board - also alleged that sale invoices do not mention the name of the appellant herein - HELD THAT:- It is found that the refund claim is sought to be denied on technical grounds that the wordings of the endorsement made in the sales invoice are not strictly as per the Circular issued by the Board and that the sale invoices do not mention the name of the appellant on the invoice. However, there is a clear endorsement on the invoice that the goods have been imported by the consignor vide Bill of Entry No. 618526 date 24.5.2010 and that in respect of the goods no credit of additional duty of customs has been availed. Any doubts regarding the importer could have been ascertained from the details given in the BE. As per Board Circular No. 16/2008-Cus dated 13.10.2008, it has been clarified that in case of sale of imported goods by importer through consignment agent / stockist, the refund of 4% CVD shall be granted by customs field formation subject to the condition that the consignment agent / stockist has been authorized to sell the imported goods in terms of the agreement entered into between the importer and consignment agent / stockist. The minor non-compliance of procedure pointed out in the impugned order could otherwise have been verified with contemporary documents and on physical enquiry should not have led to the denial of substantial benefit especially in this era of trade facilitation - the Larger Bench of the Tribunal in CHOWGULE COMPANY PVT LTD VERSUS COMMISSIONER OF CUSTOMS CENTRAL EXCISE [ 2014 (8) TMI 214 - CESTAT MUMBAI (LB)] has examined the similar issue and held that in respect of a commercial invoice, which shows no details of the duty paid, the question of taking of any credit would not arise at all. Therefore, non-declaration of the duty in the invoice issued itself is an affirmation that no credit would be available and would satisfy the conditions prescribed under Notification No. 102/2007-cus. Thus, the appellant is eligible for refund and it would be improper to deny the same on minor procedural grounds which are otherwise verifiable - the impugned order set aside - appeal allowed. 2023 (11) TMI 916 EOU - Destruction or disposal of obsolete imported raw material and components - Direction to destroy or dispose the goods only after payment of duty on the assessable value at the time of import with interest till date of payment of duty. Whether the raw materials/components procured without payment of duty under notification 52/2003-cus dated 31.03.2003 can be permitted to be destroyed without payment of duty when the goods become obsolete and unfit for manufacture? HELD THAT:- As per the Circular dated 10.9.1999, the supplier of such defective/damaged or otherwise unfit for use, goods, does not insist on re-export of such goods, the same may not be re-exported subject to the condition that such goods shall be either destroyed with the permission of the Assistant Commissioner in-charge of the unit or cleared into DTA on payment of full Customs duty - It is an admitted fact that appellant vide letter dated 01.09.2010 sought permission from the Department for destruction of obsolete imported raw material and components. They have also informed that destroyed goods would be sold as scrap and duty discharged on the scrap value of the obsolete raw materials. Thus, the adjudication authority ought to have allowed the request of the appellant for destruction of such goods either within the unit or destroyed outside the unit when it is not possible to destroy the same within the unit without insisting for payment of custom duty especially when respondent have allowed destruction of obsolete goods subject to payment of scrap value earlier. In the instant case, there is no dispute that the appellant had vide letter dated 29.11.2010 had requested the Department for permission to destroy the goods that were obsolete and unfit for use and they had also agreed to pay duty on the scrap value of the goods. The Hon ble High Court in the case of COMMISSIONER OF C. EX., DELHI-V VERSUS PURE RICE LTD. [ 2007 (4) TMI 270 - HIGH COURT OF PUNJAB HARYANA AT CHANDIGARH] relying upon the Notification 60/99 dated 10.9.99 has category been held that in case the goods supplied are unfit for use in the supplier does not insist on re-export when such goods are required either to be distracted with the permission of the resident Commissioner of Customs Central Excise in charge of the unit or cleared into DTA on payment of full customs duty the circular appear to have been issued on account of difficulties being faced by the export oriented units like the petitioner in regard to replacement of goods imported or exported which have been found to be damaged or defective or otherwise unfit for use. Therefore, there arises no substantial question of law warranting admission of the appeal. There are no merit in the impugned orders. Appeals are allowed. 2023 (11) TMI 915 Levy of anti-dumping duty - Reflective Glass - applicability of 4/2009 dated 06.01.2009 - whether the importer is eligible for the benefit of exemption from anti-dumping duty during the relevant period i.e., from 06.01.2009 to 22.05.2009? - HELD THAT:- Though the Notification No.165/2003-cus. dated 12.11.2003 and Notification No.51/2009-Cus. dated 22.5.2009 excluded reflective glass from the levy of anti-dumping duty whereas the Notification No.4/2009-Cus. dated 06.01.2009 did not exclude Reflective Glass. As claimed by the appellant, there could be an omission but that omission cannot be set right by the Customs authorities in as much as the Customs Notifications are issued only on the basis of the findings of the DGAD and their notifications. The Supreme Court of India in the case of STATE OF GUJARAT VERSUS ARCELOR MITTAL NIPPON STEEL INDIA LIMITED [ 2022 (1) TMI 1013 - SUPREME COURT] held that so far as the submission on behalf of the respondent that prior to 14-11-2000, there was no demand of the purchase tax and/or the exemption from payment of purchase tax was made available in the earlier assessment years and, therefore, in the subsequent assessment years also, the respondent-assessee shall be entitled to the exemption is concerned, the aforesaid has no substance. In the taxation matters, every assessment year/period is a different year/period. In view of above observations of the Supreme Court, the question of interpreting the exemption Notification has to be done in the manner specified in the Notification. In the present case, since Reflective Glass is not found in the Notification No.4/2009-Cus. dated 06.01.2009 for exempting them from anti-dumping duty, question of extending the benefit does not arise. The Commissioner (Appeals) has rightly held that no attempt can be made to infer the motive or meaning of the Notification other than what is emanating from the plain language of the Notification. The order of the Commissioner (Appeals) upheld - appeal dismissed. 2023 (11) TMI 914 Project Import - finalization of provisional assessment under section 18(2) of the Customs Act read with Regulation 17 of the Project Import Regulations, 1986 - non-compliance of the post import conditions of the Project Import Regulations - confiscation - HELD THAT:- Pursuant to repeated requests from the appellant for reconciliation and for reconsideration and finalization of the project import, the department however issued Show Cause Notice dated 20.10.2014, despite rendering copies of file notes of the communication regarding essentiality certificates, contract and other import related documents required to be furnished for finalizing the Project Import assessment undertaken. The importer s repeated requests for the release of the Security Deposit therefore failed to fructify. The department, with reference to the re-conciliation statement pointed out the anomalous position with regard to the project registered for Dus Nallah not being located at the given site and charged with diversion of import goods. In the first place issuance of Show Cause Notice in itself is grossly misplaced and misdirected. Moreover, this has been compounded by the Ld. Adjudicating Authority by adjudicating the matter against the appellants. Despite clearly taking note of the factual position, disallowing the benefit of the project import regulations and the concessional rate of duty is certainly an error of judgement - it is also noted that the appellant has repeatedly written to the department with regard to the refund of the Security Deposit, post completion of the project and submission of the required documents. As is evident from the exchange of correspondence between the department and the importer, in respect of return of Security Deposit, it is noted that the department initially for several years took the plea of first having lost the file and thereafter has grossly delayed the matter by over 6-7 years. The impugned order is set aside. The department is directed to undertake and complete the reconciliation process within two months of the receipt of this order - Appeal allowed. 2023 (11) TMI 913 Revocation of Customs Broker License of the appellant - levy of penalty - non-compliance with the conditions of the Circular No.25 dated 14.08/2013 read with CBIC Circular No.34/2013 dated 04.09.2013 or not - HELD THAT:- To initiate proceedings against the appellant under Customs Broker Licensing Regulations, 2018 are based on a case booked against the importer M/s. Shree Ganesh Jewellery House (I) Ltd. for which the appellant filed 5 Bills of Entry and cleared the goods. In that case, after post-importation importer could not fulfill the conditions of imports, therefore, the proceedings were initiated and the appellant was penalized for a penalty of Rs.25.00 Lakhs. Further, the proceedings against the appellant in the impugned order has been initiated based on the penalty imposed on the appellant which has been set aside by this Tribunal in M/S INDO FRIENDS AGENCY, M/S OCEAN SHIPPING CLEARING AGENCY AND M/S BRINK S INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS (AIRPORT ADMN.) , KOLKATA [ 2023 (7) TMI 1070 - CESTAT KOLKATA] , in that circumstances, it is held that the impugned proceedings under the Customs Broker Licensing Regulations, 2018 are not sustainable against the appellant. The order of revocation of Customs Broker License and imposing penalty of Rs. 50,000/- on the appellant under the said Regulation is set aside - Appeal allowed. 2023 (11) TMI 912 Levy of ASEAN India Free Trade Preferential Tariff rate of duty - benefit of Notification No.46/2011-CUS dated 01.06.2011 (Sl.No.440) - HELD THAT:- The appellants have submitted that as the original consignment was split up into five smaller imports, therefore, common invoice number had to be split up into five sets as A, B, C, D and E - it is found that this argument of the appellant to carry substantive force and be meaningful. Particularly when collectively the quantity of the five import invoice (72 MTs each) total up to the impugned quantity (360 MTs) and all other particulars of the import invoices are in sync with the details furnished in the impugned certificate - It is settled law that procedural lapses, if any, cannot come in the way of disallowing a substantive benefit to the party, as long as there was no prejudice caused to the contents and the intentions of the documents. As long as the language of the Notification is clear and unambiguous, it is not for the courts to go behind its prescription. Further, in a taxing statute there is no room for any intendment and regard has to be given to the plain language and clear meaning of the words. In accordance with the provisions of Customs Tariff (Determination of Origin of Goods) Rules 2009 under the Preferential Trade Agreement between the Governments of member states of the Association of South East Asian Nations (ASEAN) and the (Republic of India), we note, that the appropriate authority has issued the certificate upended with the case records and referred to by the Ld. Commissioner (Appeals). A clerical error, if at best any, would not merit rejection of the said original certificate in its entirety and thereof deprive the benefit thereof to the person availing the same. The Ld. Commissioner (Appeals) order is bereft of any merit and is liable to be set aside - the impugned order set aside - appeal allowed. 2023 (11) TMI 911 Seeking grant of bail - evasion of Customs Duty - misdeclaration of year of manufacturing in order to under value the goods to evade applicable customs duty - HELD THAT:- The investigation relating to misdeclaration of year of manufactured of old and used crane is based on the documents which are with respective RTO's and called by the prosecution. On behalf of applicant/accused it is submitted that, he is ready to cooperate for investigation and submit document which are available with him. Therefore considering that, it is just and proper to enlarge him on bail on certain terms and conditions. It is directed that accused be released on bail on fulfilment of conditions imposed - application allowed. 2023 (11) TMI 877 Refund of SAD - Authenticity of certificate issued by the Chartered Accountant - HELD THAT:- It is found that no ulterior motive of the appellant towards production of the earlier certificate has been proved. They have produced a fresh Chartered Accountant s Certificate dated 06.10.2023. The matter is remanded to the adjudicating authority - He is directed to check the veracity of the Certificate and if all other related documents are found to be in order, pass a necessary order allowing the refund claim filed by the appellant. If the refund is held as eligible, the present confirmed demand against the appellant along with interest and penalty would get set aside. Appeal disposed off. Insolvency & Bankruptcy 2023 (11) TMI 910 Approval of Resolution Plan - NCLAT / NCLT kept the application pending - Application seeking approval of a Resolution Plan for ACIL Limited (ACIL or Corporate Debtor) was kept in abeyance while directing the Official Liquidator (OL) to carry out a re-valuation of the assets of the Corporate Debtor and to provide exact figures/value of the assets and exact valuation details - HELD THAT:- In the case at hand, there was no occasion before the Adjudicating Authority- NCLT to be swayed only on the per se ground that the hair-cut would be about 94.25% and that it was not convinced that the fair value of the assets have been projected in proper manner as the bid of the appellant was very close to the fair value of the assets of ACIL. Ordering revaluation of the assets, by the OL, Ministry of Corporate Affairs, Government of India, in-charge of the particular area, cannot be justified. As explained in M/S. INNOVENTIVE INDUSTRIES LTD. VERSUS ICICI BANK ANR. [ 2017 (9) TMI 58 - SUPREME COURT] and SWISS RIBBONS PVT. LTD. AND ANR. VERSUS UNION OF INDIA AND ORS. [ 2019 (1) TMI 1508 - SUPREME COURT] , the Code was specifically introduced by Parliament for ensuring quick and time-bound resolution of insolvency of corporate entities in financial trouble, by first attempting to revive the Corporate Debtor, failure whereof would entail liquidation of the Corporate Debtor s assets, and no unnecessary impediment should be created to delay or derail the CIRP. In the present case, both the NCLT and NCLAT erred to fully recognise that under the Resolution Plan, the Corporate Debtor was set to be revived and not liquidated. Thus, the minimum mandatory component in the Resolution Plan was only a reflection of the actual money, including upfront payment, which would go towards the FC(s). As discussed previously, the final Resolution Plan provided for the monetization proceeds of the land as also the avoidance amounts to go to the FC(s) of the Corporate Debtor. At this juncture, it also cannot be lost sight of that it is for the FC(s) who constitute the CoC to take a call, one way or the other. Stricto sensu, it is now well-settled that it is well within the CoC s domain as to how to deal with the entire debt of the Corporate Debtor. In this background, if after repeated negotiations, a Resolution Plan is submitted, as was done by the appellant (Resolution Applicant), including the financial component which includes the actual and minimum upfront payments, and has been approved by the CoC with a majority vote of 88.56%, such commercial wisdom was not required to be called into question or casually interfered with - It is worthwhile to note that the Adjudicating Authority has jurisdiction only under Section 31(2) of the Code, which gives power not to approve only when the Resolution Plan does not meet the requirement laid down under Section 31(1) of the Code, for which a reasoned order is required to be passed. Under the circumstances, while this Court could have adopted the course of remanding the matter back to the NCLT for fresh/de novo consideration, but being conscious of the fact that such course would impede quick resolution as the CIRP is in a stalemate right from 01.09.2021 and after having applied our minds to the factual aspects also, it is not found that remand for consideration afresh, now, would serve the purpose of justice or aid the objects of the Code. The order dated 01.09.2021 of the NCLT and the Impugned Judgment dated 19.01.2022 of the NCLAT are set aside - appeal allowed. 2023 (11) TMI 909 Right to get registered as RP - Rejection of application of the Petitioner herein for registration as a Resolution Professional - rejection on the ground that she is not a fit and proper person to be appointed as an Insolvency Professional - HELD THAT:- An Insolvency Professional performs very important functions in the insolvency resolution process of a company. An Insolvency Professional virtually takes over the company during the period it goes through the insolvency resolution process. An Insolvency Professional in fact becomes the heart and brain of the company under the insolvency resolution process and a person having slightest of disqualification cannot be permitted to be appointed as an Insolvency Professional otherwise the entire purpose of the IBC will get vitiated. Keeping in mind the functions and obligations of an Insolvency Professional, the Board has taken a decision that the Petitioner is not eligible to be registered as an Insolvency Professional because she is not a fit and proper person to be appointed as Insolvency Professional - As rightly contended by the learned Counsel for the Board, an Insolvency Professional is vested with the responsibility of managing the operations of the company undergoing the insolvency resolution process and all the assets of such a company are looked after by the Insolvency Professional. A reading of the Regulations indicates that the Board can take a decision that a person who has been involved in any kind of financial irregularity cannot be appointed as an Insolvency Professional. The fact that the financial irregularity occurred 11 years ago and that the Petitioner has already paid the penalty for the same. Though the Petitioner might be eligible to be considered to be appointed as an Insolvency Resolution Professional but the decision of the Board not to permit the Petitioner to function as an Insolvency Professional cannot be said to be arbitrary - The question of adjudging as to whether a person is suitable for a particular job or not should be left to the appointing authority and more particularly when the appointing authority consists of experts. It is for the experts to decide as to who is best and most qualified for a particular job. The antecedents of a person is an important criterion to decide as to whether the said person is suitable for the post or not. Even though the Petitioner can be registered as an Insolvency Resolution Professional but for determining as to whether the Petitioner is fit and proper candidate it is for the Board to take account of any consideration as it deems fit, including but not limited to the criteria of integrity, reputation and character. The Petitioner has been found guilty of fraudulent practices of violating market integrity and the decision of the Respondent Board to refuse the registration of the Petitioner as an Insolvency Professional cannot be said to be so perverse or irrational warranting interference under Article 226 of the Constitution of India. This Court is of the opinion that the decision taken by the Board does not suffer from any irregularity which requires interference by this Court under Article 226 of the Constitution of India - Petition dismissed. 2023 (11) TMI 908 Liquidation of Corporate Debtor - section 33 of IBC - HELD THAT:- It is an admitted fact that there was no Resolution Plan which was approved by the CoC, prior to the expiry of the CIRP Period and therefore, the Adjudicating Authority passed the Liquidation Order as mandated under Section 33 (2) of the Code. Having regard to the fact that the CIRP period of 270 days was over and the CoC had voted in favour of Liquidation of the Corporate Debtor Company with a 100 % majority, there are no substantial reasons in the argument of the Learned Counsel for the Appellant that their Plan ought to have been considered. The material on record establishes that Section 33 (1) (a) (i) and Section 33 (2) of the Code have been satisfied, IBC is a time bound process and the commercial wisdom of the CoC is to be given paramount importance for approval/rejection of a Resolution Plan. The Hon ble Supreme Court in a catena of Judgments namely, KALPRAJ DHARAMSHI ANR. VERSUS KOTAK INVESTMENT ADVISORS LTD. ANR. [ 2021 (3) TMI 496 - SUPREME COURT ], K. SASHIDHAR VERSUS INDIAN OVERSEAS BANK OTHERS [ 2019 (2) TMI 1043 - SUPREME COURT ] has laid down that the Judicial review of the Tribunals is limited in terms of impeding the commercial wisdom of the CoC except when a Plan is not in adherence to Section 30 (2) of the Code. In the instant Case, there is no Resolution Plan in the offing, and the CoC has approved the Liquidation with a 100 % Voting as mandated under Section 33 of the Code, and there being no possibility of sale of the Corporate Debtor as a Going Concern , there are no substantial grounds to interfere with the well-considered Order of the Adjudicating Authority and hence, this Company Appeal is dismissed accordingly. 2023 (11) TMI 907 Prayer for certain reliefs and concession consequent to going concern sale in the liquidation proceeding of Corporate Debtor - prayer to stay the e- Auction process/ sale process of the Corporate Debtor till fresh bids are invited for re-auction - direction to liquidator for maintenance of status quo - waterfall mechanism - HELD THAT:- Appellant, who was stakeholder of only 0.734% in the total value of stakeholders of the Corporate Debtor, was part of the Committee of Creditors and participated in the liquidation process by filing its claim, which was accepted. The Appellant has been distributed the proceeds of the liquidation as per the entitlement under Section 53 of the IBC. At no point of time, prior to holding of auction, i.e., 04.04.2022, any kind of objection was raised by the Appellant to the reserve price or against valuation obtained in the liquidation process by the Liquidator. It was only after the auction was over and Successful Bidder was declared, for the first-time letter dated 26.05.2022 was written to the Liquidator by the Appellant calling for relevant information. It is clear that all that Appellant wanted was to stay the process of auction and sale of the Corporate Debtor. Auction having already completed on 04.04.2022, there was no occasion to stay the auction. Further process of Sale was to be undertaken as per the Liquidation Regulations. when the Successful Resolution Applicant has deposited the entire amount, issuance of Sale Certificate was as per the Liquidation Regulations, in which no objection can be raised by the Appellant. There are no merit in any of the substance raised by learned Counsel for the Appellant in this Appeal to question the impugned order dated 11.11.2022. It is further relevant to notice that order dated 11.11.2022 is an order granting reliefs and concessions to Successful Auction Purchaser, when the sale of the Corporate Debtor is as going concern, the Successful Auction Purchaser is entitled to receive certain reliefs and concessions to run the Corporate Debtor as going concern. Appeal dismissed. 2023 (11) TMI 906 Calculation of interest on revocation of settlement - whether the rate of interest applicable for determining the claim of the ARCIL in CIRP proceeding is 22% or the rate of interest has to be 14.85%? - HELD THAT:- The application filed by the ARCIL for amending the rate of interest as 22% from 14.85% was rejected by the DRT which order was also affirmed by the DRAT. Writ Petition was filed by ARCIL against the order passed by the DRAT and DRT rejecting the Amendment Application. In the said Writ Petition, the High Court expressed its opinion that Amendment Application which was filed by the ARCIL for 22% interest was based on the Sanction Letter dated 28.02.2011. The High Court observed that when the Sanction Letter was itself revoked on 17.06.2013, there is no question of enforcement of rate of interest of 22% by carrying out amendment in the Original Application. The said observation made by the High Court fully support the submission raised by counsel for the Appellant - the fact cannot be lost sight that the Hon ble Supreme Court by order dated 03.01.2019 while dismissing the SLP, clarified that the Tribunal shall, if it considers appropriate having regard to the circumstances of the case, decide on the appropriate rate of interest after hearing both sides. Thus, the determination of rate of interest was left open to the Tribunal after hearing both the sides. The reason for the Adjudicating Authority for taking the decision for rate of interest as 22% essentially rest on the letter of the Corporate Debtor dated 10.02.2011, Sanction Letter dated 28.02.2011 and Modification Agreement dated 29.09.2011 as well as the Revocation Letter dated 17.06.2013. We now again revert to the aforesaid letters to find out the true import of the decision of the Adjudicating Authority. There is no dispute that the Corporate Debtor himself submitted the letter dated 10.02.2011 offering to pay 22% interest from 01.07.2010 - Settlement Agreement has also noticed due amounts payable to respective lenders as on 30.06.2010. What is the consequence of Revocation Letter dated 17.06.2013 on the rate of interest of 22% is the question which has arisen for consideration. Emphasis has been laid by learned counsel for the Respondent is that what was revoked by the letter dated 17.06.2013 was only Sanction Letter dated 28.02.2011 and Modification Agreement dated 29.09.2011 was not revoked. When the Sanction Letter dated 28.02.2011 which for the first time provided for rate of interest of 22% p.a. with compounding at monthly rest from 01.07.2010 itself was revoked, it is difficult to see now Modification Agreement dated 29.09.2011 shall be operative. Modification Agreement dated 29.09.2011 is nothing but modification agreement in continuation of the Sanction Letter dated 28.02.2011 and when the original sanction letter itself was revoked, modification of agreement cannot survive. There is no final determination of the rate of interest and the observations made by the Hon ble High Court were on the basis of Revocation Letter dated 17.06.2013. The Financial Creditor has sanctioned the settlement of dues on fulfilment of terms as condition precedent as contained in letter dated 28.02.2011 that Rs.10 Crore was to be made upfront payment and rest of the amount was to be paid till 31.09.2011 - Modification Agreement itself has referred to Sanction Letter dated 28.02.2011, where terms and conditions which also have been reiterated in the Modification Agreement were noted. The Adjudicating Authority has not correctly appreciated the consequence of the Revocation Letter dated 17.06.2013. By Revocation Letter dated 17.06.2013, the Settlement Agreement dated 28.02.2011 which provided for 22% rate of interest from 01.07.2010 came to an end. The Financial Creditor on the one hand revokes the Settlement Agreement and on the other hand wants to enforce 22% rate of interest which was agreed by Sanction Letter dated 28.02.2011 - thus, 22% rate of interest cannot be charged by the Financial Creditor and the determination of rate of interest by the Adjudicating Authority by the impugned order dated 21.07.2023 is erroneous and unsustainable. In the facts of the present case, the Resolution Professional may re-verify the claim of the ARCIL as per the rate of interest of 14.85% within two weeks and submit it before the CoC as well as to the Successful Resolution Applicant who shall prepare an Addendum to be placed before the CoC within a period of two weeks thereafter. The Resolution Professional should compute the claim of the ARCIL on the basis of rate of interest as indicated above. The Addendum after approval, if any, be placed before the Adjudicating Authority to be considered along with the application for approval of the Resolution Plan - The Resolution Professional as well as CoC to complete the process, within a period of 60 days from today. Extension in CIRP process is granted for further 60 days from today to complete the process. Appeal allowed. 2023 (11) TMI 905 Seeking direction for rejection of Resolution Plan - sole financial creditor being related party to the Corporate Debtor - Appellant being under undue and coercive influence of Sunaina Singh which in turn purportedly vitiated the CIRP proceedings - Appellant not challenged the CIRP admission order or the constitution of CoC within 30 days from the date of the passing of the relevant orders by the Adjudicating Authority - challenging the order approving the resolution plan. With the previous adjudication of IA 344 of 2020; IA 728 of 2020 and in the light of the decision of this Tribunal in CA (AT) (Ins.) 1065 of 2021 dated 14.07.2022 upholding the constitution of CoC and this matter having attained finality, whether the issue of sole financial creditor being related party to the Corporate Debtor can be raised again at this stage? - Whether the benefit of findings of the Hon ble Delhi High Court in its order dated 29.07.2022 in CS(OS) 589/2021 regarding the Appellant being under undue and coercive influence of Sunaina Singh which in turn purportedly vitiated the CIRP proceedings was not available before the Adjudicating Authority and the Appellate Authority? - HELD THAT:- It is amply clear that this Tribunal on 14.07.2022 came to the categorical conclusion that Sunaina Singh was not a related party having resigned much before the filing of Section 7 application and that her case was not covered by the exception carved out in Phoenix (supra) judgment - it is also noted that this order of 14.07.2022 was not challenged by the Appellant and to that extent has attained finality. The only issue at hand is the allegation raised by the Appellant that the benefit of findings of the Hon ble Delhi High Court dated 29.07.2022 was not available to this Tribunal while passing its orders. Be that as it may, this contention lacks substance as we find that the Adjudicating Authority while passing the second impugned order in IA No. 1394/2022 has dwelled at length on the findings of the Hon ble Delhi High Court dated 29.07.2022 before coming to the conclusion that the financial creditor in the present case is not a related party of the corporate debtor. Having regard to the material facts on record which shows that Sunaina Singh resigned as Director of the Corporate Debtor on 25.03.2019 while the Section 7 application was filed on 25.09.2019 and CIRP of the Corporate Debtor commenced on 07.02.2020, we are satisfied with the above findings in the second impugned order that Sunaina Singh was not a related party of the Corporate Debtor having resigned much before the filing of section 7 application - the Adjudicating Authority while passing the second impugned order was fully abreast of the findings of the Hon ble Delhi Court and has recorded detailed findings as to why these findings are distinguishable and inapplicable in determining the issue of Financial Creditor being a related party of the Corporate Debtor. There is no force in the contention of the Appellant that the findings of the Hon ble Delhi High Court in the context of related party allegation have been missed out by the Adjudicating Authority. The issue of sole financial creditor not being a related party to the Corporate Debtor has been well settled with due consistency both by the Adjudicating Authority and this Tribunal after noticing the relevant provisions of IBC and Phoenix judgment and cannot be reagitated at this stage now. Whether the Appellant not having challenged the CIRP admission order or the constitution of CoC within 30 days from the date of the passing of the relevant orders by the Adjudicating Authority is now entitled to raise these issues belatedly at this stage when the resolution plan came up for approval? - Whether cogent grounds have been made out by the Appellant in terms of Section 61(3) of IBC for challenging the order approving the resolution plan and whether the Appellant under the pretext of contesting the approval of the resolution plan has attempted to indirectly challenge the CIRP admission order dated 07.02.2020? - HELD THAT:- It is trite law that under the IBC, once a debt becomes due or payable, in law and in fact, and there is incidence of non-payment of the said debt in full or part thereof, CIRP may be initiated by the Financial Creditor. The Adjudicating Authority only has to determine whether a default has occurred, i.e., whether the debt was due and remained unpaid. Once this is established, the CIRP has to be initiated against the Corporate Debtor. The Adjudicating Authority following this mandate of Section 7(5) of IBC had admitted the section 7 application on 07.02.2020 and initiated the CIRP against the Corporate Debtor. The CIRP admission order could have been challenged and an appeal filed within 30 days from the date of passing of the order. Admittedly, the Appellant never challenged the CIRP order - The statutory scheme of the IBC makes it clear that though the erstwhile Board of Directors are not CoC members, yet they have a right to participate in each and every meeting held by the CoC including right to discuss all the resolution plans presented in such meetings. In the present case too, pursuant to the constitution of CoC, notice of meetings of the CoC were duly sent to the Appellant. Despite service of notices upon the Appellant, it is clear that the Appellant chose neither to attend the meetings of the CoC and participate in the deliberations therein but never raised any objection on the CIRP process in spite of having knowledge of the ongoing CIRP. The rival submissions made is that the Appellant has attempted to indirectly challenge the CIRP admission order dated 07.02.2020 under the pretext of contesting the approval of the resolution plan - The present prayer of the Appellant to set aside the order approving the resolution plan submitted by the SRA can only be sustained if grounds mentioned under Section 61(3) of the IBC are met. In the present case, the CoC after considering the viability and feasibility of the resolution plan has approved the same with 100% vote share thereby fairly and squarely meeting the conditionalities laid down in Section 30(4) of the IBC. In the present case, the Resolution Professional after approval of the plan by the CoC filed an application before the Adjudicating Authority seeking approval of the Resolution Plan under Section 31 of the IBC. The CoC has done due diligence and evaluated the matrix in approving the resolution plan of the SRA and the sole member of CoC having 100% voting share has already approved the plan in their commercial wisdom as contemplated under the law. The Appellant has failed to point out any material irregularity or contravention of any provision of law by the CoC in approving the plan. That being the case, the Adjudicating Authority with the limited powers of judicial review available to it, cannot substitute its views with the commercial wisdom of the CoC in rejecting the resolution plan unless it is found it to be contrary to the express provisions of law or there is sufficient basis which establishes material irregularity. The scope of interference with an order approving the resolution plan is very limited. The approved resolution plan can only be challenged before the Appellate Authority on limited grounds in terms of Section 61 (3) of the IBC. However, the Appellant has failed to make out a case of applicability of any such limited grounds. The IBC provides for an initiation of timely resolution of the corporate debtor and in the instant case the resolution plan of the SRA having already been approved by the CoC and the Adjudicating Authority, it cannot now be open to interference on the ground that the CoC was not properly constituted. When the Appellant did not challenge the CIRP admission and constitution of CoC at the right point of time, it cannot raise the matter belatedly and make it a ground for rejection of the duly approved resolution plan. There are no error in the first impugned order dated 12.04.2023 approving the Resolution Plan and in the second impugned order of the same date dismissing IA No. 1394 which sought rejection of the Resolution Plan - appeal dismissed. PMLA 2023 (11) TMI 904 Money Laundering - Scheduled offences - seeking grant of bail - twin conditions for the grant of bail contained in Section 45(1) of PMLA satisfied or not - HELD THAT:- It is trite that the court while considering an application seeking bail, is not required to weigh the evidence collected by the investigating agency meticulously, nonetheless, the court should keep in mind the nature of accusation, the nature of evidence collected in support thereof, the severity of the punishment prescribed for the alleged offences, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witness being tampered with, the larger interests of the public/State etc. Though, the findings recorded by the Court while granting or refusing bail would be tentative in nature, nonetheless the Court is expected to express prima facie opinion for granting or refusing to grant bail which would demonstrate an application of mind, particularly dealing with the economic offences. So far as facts of the present case are concerned, as transpiring from the supplementary complaint filed against the appellant, apart from the statements of witnesses recorded under Section 50 of the PML Act, there has been sufficient material collected in the form of documents which prima facie show as to how the appellant was knowingly a party and actually involved in the process and in the activities connected with the proceeds of crime, and how he was projecting/ claiming such proceeds of crime as untainted and how he was the beneficiary of the proceeds of crime acquired through the criminal activities relating to the scheduled offences. As well settled by now, the conditions specified under Section 45 are mandatory. They need to be complied with. The Court is required to be satisfied that there are reasonable grounds for believing that the accused is not guilty of such offence and he is not likely to commit any offence while on bail - Such conditions enumerated in Section 45 of PML Act will have to be complied with even in respect of an application for bail made under Section 439 Cr.P.C. in view of the overriding effect given to the PML Act over the other law for the time being in force, under Section 71 of the PML Act. With the advancement of technology and Artificial Intelligence, the economic offences like money laundering have become a real threat to the functioning of the financial system of the country and have become a great challenge for the investigating agencies to detect and comprehend the intricate nature of transactions, as also the role of the persons involved therein. Lot of minute exercise is expected to be undertaken by the Investigating Agency to see that no innocent person is wrongly booked and that no culprit escapes from the clutches of the law. When the detention of the accused is continued by the Court, the courts are also expected to conclude the trials within a reasonable time, further ensuring the right of speedy trial guaranteed by Article 21 of the Constitution. Appeal dismissed. 2023 (11) TMI 903 Money Laundering - seeking grant of bail - bogus product bookings - conditions specified under Section 45 of the Prevention of Money Laundering Act, 2002 satisfied or not - HELD THAT:- In the present case, it is pertinent to mention here that the trial of both CBI case and ECIR lodged by Enforcement Directorate have been clubbed. Since charge sheet has already been submitted and documents have already been seized, there is no chance of tampering evidence. The petitioner was cooperative during investigation and never misused his liberty of not being arrested during investigation. It is also mentioned here that the petitioner is a permanent resident of his locality, having his family members and ancestral property. Therefore, there is no scope for his absconding, if enlarged on bail. The petitioner is a blind person. This fact has been recorded by the Supreme Court while granting bail. Thus, the petitioner is entitled to bail under Section 45 of the PMLA Act. It is well settled that the court is only required to look at the prima facie case and is not required to look into the test of guilt. It is required to maintain a delicate balance between the judgment of acquittal and conviction and an order granting bail before commencement of trial - In the present case, the entire transaction of the company is on website and the mode of payment is also by Bank. None of the customers were claiming any default by the company prior to freezing of the account of the company by Bank. Therefore, there is absolutely no material against the petitioner. As such, the petitioner who has no role in the alleged crime is entitled to be released on bail. This Court is inclined to grant bail to the petitioner with conditions imposed - Accordingly, it is directed that the court in seisin over the matter shall release the Petitioner on bail in the aforesaid case on stringent terms and conditions imposed - application disposed off. Service Tax 2023 (11) TMI 902 Seeking interest on reimbursement of service tax from the service recipient (Port Authority) - HELD THAT:- The defendant has reimbursed the service tax paid by the plaintiff on 10th March, 2017, as per the direction passed by the Hon ble High Court in the writ proceeding dated 24th February, 2017, after submission of discharge certificate by the plaintiff. The plaintiff has submitted discharge certificate as per the direction passed by the Hon ble Court - The plaintiff admittedly not paid the service tax during the subsisting of contracts. The plaintiff has paid service tax firstly on 31st December, 2013 and secondly on 31st December, 2014 with interest. Admittedly, at the time of claim of reimbursement of service tax, the plaintiff has not submitted discharge certificate in Form VCES-3. In the present case, the plaintiff has paid part of the service tax on 31st December 2013 and subsequently the balance amount was paid on 31st December 2014 with interest. After payment of service tax in both occasions, the plaintiff has applied for reimbursement of the said amounts enclosing debits notes as documentary evidence but admittedly, the plaintiff has not submitted discharge certificate in both the occasions. The plaintiff has disclosed the discharge certificate in the writ proceedings. This Court finds that the plaintiff has paid service tax in two instalments and in both occasions, the plaintiff has applied for reimbursement of service tax by enclosing debit notes and has not submitted the original discharge certificate issued by the service tax department in Form VCES-3. Petition dismissed. 2023 (11) TMI 901 Direction to Assessing Authority to complete the assessment afresh - direction to respondents 4 and 5 to deposit the amount of service tax erroneously collected from the petitioner to the 1st respondent to discharge the VAT liability - rejection of request for refund of the service tax paid - HELD THAT:- The imposition of any tax has to be with the authority of law. In the instant case, the petitioner apparently proceeded on the assumption that the activity carried out by it was a service contract and proceeded to remit service tax in respect of its entire turn over. However, the question whether a pest control contract is a works contract by reason of there being an element of sale of the materials used for pest control was considered by the various High Courts as well as the Apex Court. It is an admitted fact that the said question has found a quietus in as much as the Apex Court has held that the contract of pest control has an element of sale of chemicals involved and is, therefore, a works contract and is amenable to tax as such. The Appellate Tribunal has directed the reworking of the assessments on the basis of the findings of the Apex Court. Even going by the decision of the Appellate Tribunal, the petitioner had been relegated to the Assessing Authority for passing an order of assessment in the light of the decision of the Apex Court. Nothing precludes the consideration of the contentions of the assessee at the hands of the Assessing Authority. I, therefore, find that the Assessing Authority is duty bound to consider the contentions of the assessee on facts before proceeding with the modification of the assessment as directed in Ext. P5. A person whether a manufacturer or importer must fight his own battle and must succeed or fail in such proceedings. Once the assessment of levy has become final in his case, he cannot seek to reopen it nor can he claim refund without reopening such assessment/order on the ground of a decision in another person's case. In the instant case, the petitioner had made the payment of the service tax for the periods in question voluntarily and had never challenged the authority of the Service Tax Authorities. It is also not in dispute before me that the levy was under the provisions of an enactment which the petitioner still maintains is applicable to the transaction in question. It is only at a belated stage when the VAT authorities raised a demand on the basis of the law as decided by the Apex Court that the petitioner, for the first time, raises a claim for refund of the service tax paid or seeks payment of the VAT demanded by the Service Tax Authorities - The instant case is not one where the levy of service tax was under any provision found to be constitutionally invalid. The levy was under the provisions of a valid statute and the petitioner had raised no objection or appeal as against the assessment. There is no specific contention raised by the petitioner that the burden of the service tax that he had paid to the appropriate authorities had not been passed on to the end customer - the petitioner cannot place any reliance on the doctrine of unjust enrichment as against the revenue. The Assessing Authority shall consider the issue afresh with notice to the petitioner with regard to the nature of the contracts entered into by the petitioner with its customers and pass a reasoned order in continuation of Ext. P5. It is made clear that further assessments can be made and demands raised on the basis of the findings of the Assessing Authority - Application disposed off. 2023 (11) TMI 900 Direction to first respondent to consider the payment made by the petitioner dated 1.3.2021 as payment under SVLDRS Scheme - direction to first respondent to issue discharge certificate in form SVLDRS 4 to the petitioner - HELD THAT:- Since the Central Government was delegated with power to fix the time limit for availing the scheme and for making the payment, the Central Government came with the Notifications and provided time limit for the same and the said time limit was extended from time to time due to COVID pandemic situation. Even according to the petitioner, the said scheme was extended upto 30.09.2020 for making the payment by virtue of the Notification dated 27.06.2020. The provisions under the Finance Bill, with regard to the fixation of time limit for availing the scheme and with regard to the extension of time for making payment of tax, is directory in nature. If it is mandatory, there will not be any delegation with regard to the Central Government to fix the time limit for availing the scheme and payment of tax. Since there is delegation with regard to the Central Government, it will only be directory in nature and that is the reason why the Central Government depends upon the situation prevailing in the country and extended the time limit from time to time. Further, there is no doubt that if the provisions are mandatory in nature, this Court normally will not interfere and pass orders against the said provisions. As far as if the provisions are directory in nature, certainly the prevailing situation and the inability of the petitioner due to the said pandemic would be the factors that have to be considered by this Court to pass an appropriate order. In the present case, no doubt that the petitioner had paid the amount on 02.03.2021 during the pandemic period. Therefore, under these circumstances, certainly, this Court can interfere and look into the grievances of the petitioner and if this Court is satisfied, this Court will consider the same and pass appropriate orders. This Court is of the view that the application, filed on 13.02.2023 consequent to the payment made by the petitioner, has to be accepted under the scheme by the respondent and in such view of the matter, this Court has no hesitation to direct the respondent to issue Form SVLDRS-4 to discharge the tax liabilities within a period of 30 days from the date of receipt of copy of this order. The respondents are directed to accept the payment of Rs. 14,98,836/- made by the petitioner under SVLDRS-3 on 01.03.2021. The petitioner is directed to pay interest at 15% p.a. on 14,98,836/- from 01.07.2020 till the date of payment, within a period of four weeks from the date of receipt of a copy of this order, failing which, the benefit granted under this order will automatically cease to operate - Petition allowed. 2023 (11) TMI 899 Direction to respondents to issue discharge certificate in Form SVLDRS-4 determining the amount paid as determined under SVLDRS Form-3 - HELD THAT:- It is clear that the provisions under the Finance Bill, with regard to the fixation of time limit for availing the scheme and with regard to the extension of time for making payment of tax, is directory in nature. If it is mandatory, there will not be any delegation with regard to the Central Government to fix the time limit for availing the scheme and payment of tax. Since there is delegation with regard to the Central Government, it will only be directory in nature and that is the reason why the Central Government depends upon the situation prevailing in the country and extended the time limit from time to time. There is no doubt that if the provisions are mandatory in nature, this Court normally will not interfere and pass orders against the said substantive provisions of law. Since the provisions are directory in nature, based on the prevailing situation and the inability of the petitioner due to the said pandemic would be the factors that have to be considered by this Court to pass an appropriate order - In the present case, no doubt that the petitioner had paid the amount on 25.06.2021 during the pandemic period by virtue of the Court order. Under these circumstances, certainly, this Court can interfere and look into the grievances of the petitioner and if this Court is satisfied, this Court will consider the same and pass appropriate orders. This Court is of the view that the application, filed on 13.02.2023 consequent to the payment made by the petitioner, has to be accepted under the SVLDRS scheme by the respondent and in such view of the matter, this Court has no hesitation to direct the respondent to issue Form SVLDRS-4 to discharge the tax liabilities within a period of 30 days from the date of receipt of copy of this order - Petition allowed. 2023 (11) TMI 898 Classification of services - intermediary services or not - export of service or not - place of provision of services - extended period of limitation - penalties - HELD THAT:- It is an admitted fact that remuneration for the services rendered to the foreign client is computed on the basis of FOB value of the garments exported and that itself would not make the appellant an intermediary. All these services were rendered to the foreign client on principal-to-principal basis. Selection of vendors or making of the garments by these vendors are incidental services for procurement goods and as per the direction of the foreign client, who is the recipient of the services provided by the appellant. Thus, the appellant is the service provider and the overseas buyer is the service recipient and there is no oral or written agreement between the appellant and the vendors/exporters of garments. Also, the appellant had not received any consideration for the services provided in relation to export of goods from the vendors in India. The appellant does not satisfy the conditions to be an intermediary for his services and as such, the impugned order 08.07.2019 cannot sustain and is required to be set aside. Extended period of limitation - penalties - HELD THAT:- Since the services of the appellant are not to be categorized as intermediary services, it is opined that there is no need to discuss regarding the invocation of extended period or imposition of penalties. Appeal allowed. 2023 (11) TMI 897 Levy of service tax - GTA Services - services consumed within the SEZ area - applicability of N/N. 4/2004 - Reverse charge mechanism - HELD THAT:- On perusal of the Show Cause Notice, it is seen that the demand is raised as if the appellant has rendered the GTA Services. In fact the appellant has availed GTA Services for clearances of goods from the SEZ zone to the DTA area. The appellant would be liable to pay the Service Tax only under Reverse Charge basis. There is a factual error in the Show Cause Notice in raising the demand itself. The appellant being a SEZ unit is not liable to pay any taxes and duties as per the provision under Section 26 of the SEZ Act. Further, Section 51 of the said Act has an overriding effect - The decision in the case of M/S. SRF LTD. VERSUS C.C.E., INDORE [ 2018 (6) TMI 387 - CESTAT NEW DELHI] has considered the very same point, where it was held that It was held that consumption of services within Special Economic Zone is intended to bear the utilization by the entities within the special economic zone. By no stretch it can be stated that it intends to restrict such exemption only to the extent that its consumption to be within the geographical boundaries of Special Economic Zone. The Tribunal in the case of M/S. VISION PRO EVENT MANAGEMENT VERSUS CCE ST, CHENNAI [ 2018 (7) TMI 334 - CESTAT CHENNAI] had also considered the issue whether exemption from Service Tax is eligible when the services are availed outside to the SEZ zone, where it was held that The event was held outside the SEZ unit. Even if the event is held outside, since the services were for advertisement of product of SEZ, the services provided is to be considered as consumed within SEZ. It also needs to be mentioned that for availing the services, the SEZ has to get these services approved by the Development Commissioner. The department then cannot contend that these services are not eligible for refund since these are not consumed within SEZ. From the above discussions, we are of the considered opinion that the denial of benefit is unjustified. The impugned order is set aside - Appeal allowed. 2023 (11) TMI 896 Levy of service tax - Business Auxiliary Service - appellants were appointed franchisees by M/s Bharat Sanchar Nigam Limited (BSNL) for providing services of sale and purchase of sim cards - extended period of limitation - HELD THAT:- This issue has been considered by this Tribunal in the latest decision in the case of M/S S.R. MEDICAL AGENCIES VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH-II [ 2023 (8) TMI 1150 - CESTAT CHANDIGARH] and after considering the various decisions of the Tribunal, this Tribunal has observed the commission paid to appellants is also included in the value on which tax has been collected from the customer. The customer is, consequently, the recipient of the full value of services from none other than M/s. Bharat Sanchar Nigam Ltd.; thus, it is no different from the other two products. Further, this Tribunal in the case of M/S. DEVANGI COMMUNICATIONS, M/S. BOOPALAM ELECTRONICS, INDEPENDENT ASSOCIATES, M/S. SOMAYA MARKETING, M/S. VINAYAKA AGENCIES, M/S. MAGNUM VISION, M/S. BHOOPALAM MARKETING SERVICES PVT. LTD. VERSUS THE COMMISSIONER OF SERVICE TAX, THE COMMISSIONER OF CENTRAL EXCISE BANGALORE-II AND CCE VERSUS SHRI V.M. NAYAK BENNE [ 2018 (8) TMI 960 - CESTAT BANGALORE] held that when the telecom operators are discharging service tax on the whole MRP value of SIM cards and recharge cards, then there could be no further service tax liability on the persons who are dealing/selling the said SIM cards or recharge cards to the public. Besides, it is also found that the entire demand is barred by limitation also. The impugned order is not sustainable in law and is set aside - appeal allowed. 2023 (11) TMI 895 Seeking clarity regarding the payment of service tax - APTS had neither taken registration nor paid services tax on amounts received for providing various taxable services - Mandap Keeper Services - Manpower supply services - Commercial Coaching - Business Auxiliary services - suppression of facts or not - invocation of extended period of limitation. Mandap Keeper Service - HELD THAT:- At the outset, to qualify under Mandap Keeper services, there must be a service of letting out any immovable property including furniture, fixtures, light fittings etc., and which are let out for consideration for organising any official, social or business functions. From perusal of the records, it is seen that APTS is only providing computer labs to National Institute of Information Technology and other organisations, such as APTEC, who impart training to personnel of the Government and its organisations in computer awareness, it would be highly incorrect to hold that, they are providing Mandap Keeper Services - According to common parlance and dictionaries, a function involves a ceremony or a social gathering . The activity of temporary letting out of computer lab for the purposes of training programme is a business activity and not a business function . Hence the activity of letting out the computer lab cannot be held to be a Mandap Keeper Services . Therefore, the demand under mandap keeper cannot sustain. Commercial Coaching or Training - HELD THAT:- For the periodical appeals, the demand for commercial coaching was confirmed by the impugned order for the period 10.09.2004 to 31.03.2007. As can be seen from the records, the coaching services are provided by NIIT and APTEC. APTS had no role in providing the coaching services, except letting out or providing their computer lab for conducting training or coaching by other external organisations. Hence the demand of Rs. 55,745/- for the period 10.09.2004 to 31.05.2006 and Rs. 1,711/- for the period 2007-08 under Commercial Training or Coaching Services is not sustainable in law. Business Auxiliary Services - HELD THAT:- The Adjudicating Authority categorises the activities carried out by the appellant on which the Service tax was demanded under BAS. As can be seen from such categorisation, all the activities are related IT Services only. It can be seen from the definition of Business Auxiliary Service, information technology services is specifically excluded, during the entire period of demand in the instant case. Thus, the entire demand of Service tax confirmed under BAS is liable to be dropped on this count as well - It is further seen that the activities of the Appellant appeared as commission agent to classify them under Business Auxiliary Service - A perusal of the said categorisation of services would clearly reveal that, the Appellant would only assist the Government Departments/Organisation for availing/procuring various IT related hardware/services, and for such assistance, they collect certain administrative charges. Therefore, the services of the Appellant do not satisfy the definition of commission agent so as to bring them under the category of Business Auxiliary Services . Further, with respect to exemption claim rejected on income such as, sale of tender forms, xeroxing and printing and digital software and certificates, which are not covered under business auxiliary services. This claim was not allowed on the ground that the appellant had not produced any evidence in support of the claim. However, as can be seen, they are identified clearly in the Show Cause Notice itself, therefore, the denial of exemption is incorrect. Manpower Supply Service - HELD THAT:- The issue is no longer res-integra as the Hon ble Supreme Court have settled the issue of re-imbursement to rest - the view is further strengthened by the decision of MALABAR MANAGEMENT SERVICES PVT. LTD. VERSUS COMMR. OF ST, [ 2007 (10) TMI 135 - CESTAT, CHENNAI] which was affirmed by the Hon ble Supreme Court COMMISSIONER OF SERVICE TAX, CHENNAI, TAMIL NADU VERSUS M/S MALABAR MANAGEMENT SERVICES PVT. LTD. [ 2019 (7) TMI 1161 - SC ORDER] and VIDARBHA IRON STEEL CO. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NAGPUR [ 2015 (8) TMI 593 - CESTAT MUMBAI] . This view was also followed by the Principle Bench in the case of M/S RAJCOMP INFO SERVICE LIMITED VERSUS THE COMMISSIONER, OFFICE OF THE COMMISSIONER, CGST AND CENTRAL EXCISE COMMISSIONERATE (VICE-VERSA) [ 2022 (2) TMI 955 - CESTAT NEW DELHI] . Extended period of limitation - HELD THAT:- It is settled law that when all the relevant facts are in the knowledge of the department, there cannot be a case for the Department alleging wilful misstatement for invoking extended period of limitation. Further, it is clearly evident from the responses given by the Appellant to the communications received from the Department, that the Appellant have entertained a bona fide belief that their activities were either exempted or not liable for Service tax. Both the SCN and impugned order failed to demonstrate that the Appellant acted either deceitfully or fraudulently to evade taxes. The Appellant being a Government Company, cannot be alleged to have entertained any intention to evade payment of Service tax. The issues are purely of interpretation and from 2004 onwards the department is aware of the activities of the appellant - thus, on grounds of limitation also, the impugned orders need to be set aside. The impugned order set aside - appeal allowed. 2023 (11) TMI 894 Levy of service tax - Commercial Construction Services - composite contract - appellant provided services without taking any ST registration number, nor filed ST-3 returns as prescribed under the Finance Act, 2004 - prior to 01.06.2007 - HELD THAT:- After considering the submissions of both the parties and perusal of material on record, it is found that the period involved in both the appeals is prior to 01.06.2007 and the service tax has been confirmed under Commercial Construction Services whereas both the Revenue authorities have admitted that it was works contract service which involves construction activity and supply of material, thus, making the contracts as composite contract - this issue has been settled by the Hon ble Apex Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] wherein it has been categorically held by the Hon ble Apex Court that composite contract were not taxable under service tax prior to 01.06.2007. In the present case, it was a composite contract involving service and material and therefore, could not have been taxed before 01.06.2007 i.e. before enactment of works contracts service. The impugned order is not sustainable in law and therefore set aside - appeal allowed. 2023 (11) TMI 893 Refund of service tax on input services - export of goods - dates of issue of cheques by the appellants to their service providers - Revenue was of the opinion that the invoices of the input services claimed are dated after the date of export - HELD THAT:- It is found that whereas the Department claims that the invoices of the service availed is later than the date of export, the appellants submit documentary proof to the effect that the services were availed before the date of export and that the Department has mistakenly considered the date of issue of cheque to the service provider as the date of availing of the service or the date of issue of invoice by the service provider. Further, it is found that the services availed are that of the CHA whose services are required at the Port of export and therefore, the services are bound to be later than the date of removal of goods from the factory and before the actual export. For this reason, the services are availed before export. Therefore, the contention of the Department is incorrect. The wrong mentioning of the number of the notification does not take away the right of the appellant. The Department has not made out any case for rejection of the refund claimed by the appellant. Therefore, the impugned order is not sustainable - Appeal allowed. 2023 (11) TMI 892 CENVAT Credit - input service - construction services availed for construction of commercial complex, for earning rent - levy of service tax - electricity and water charges recovered from the tenants by way of reimbursement on actual basis - invocation of extended period of limitation. CENVAT Credit - HELD THAT:- The same has been held to be eligible input service for the period prior to 01.04.2011 in the recent judgement of this Tribunal in L T Infocity and K. Raheja - Similar view was also taken by Hon ble Andhra Pradesh High court in COMMR. OF C. EX., VISAKHAPATNAM-II VERSUS SAI SAHMITA STORAGES (P) LTD. [ 2011 (2) TMI 400 - ANDHRA PRADESH HIGH COURT] and by Division Bench of this Tribunal in OBEROI MALL LTD. VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI -II [ 2016 (3) TMI 854 - CESTAT MUMBAI] . Accordingly the Appellant is entitled to the Cenvat Credit on receipt of input services under dispute. Levy of service tax on reimbursement of electricity and water charges - HELD THAT:- This very Bench have held that no service tax is chargeable on the amount of recovery of water and electric charges on actual basis, in the appeals of L T Infocity and K. Raheja. Similar view was also taken by co-ordinate Bench at Allahabad in M/S LOGIX SOFT TEL PVT. LTD., M/S IT ENFRA SERVICES PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NOIDA-I, COMMISSIONER OF SERVICE TAX, NOIDA [ 2018 (4) TMI 1503 - CESTAT ALLAHABAD] . Accordingly, following the precedents, the demand on this score also set aside. Extended period of limitation - HELD THAT:- No case for invocation of extended period is made out. Accordingly, the show cause notice is held to be bad on this score also. The impugned order set aside - appeal allowed. 2023 (11) TMI 891 Disallowance of CENVAT Credit - recovery of service tax with penalty and interest - neither the appellant appeared for personal hearing nor any reply to the show cause notice was filed by the appellant - HELD THAT:- Though, learned counsel for the appellant submitted that the issues can be decided by the Tribunal, but it is opined that it would be appropriate to remand the matter to the adjudicating authority to decide these issues in the first instance as we are satisfied that not only had the appellant filed replies to the show cause notice but had also filed written submissions and additional written submissions and had also appeared on some dates before the adjudicating authority. The impugned order mistakenly records a finding that a reply was not filed by the appellant. The matter is remitted to the adjudicating authority to decide it afresh after taking into consideration the reply submitted by the appellant as also the written submissions and after providing adequate opportunity of hearing to the appellant - appeal allowed by way of remand. 2023 (11) TMI 890 Levy of Service Tax - act of providing corporate guarantees to the subsidiary units for grant of loan from financial institutions without any consideration - HELD THAT:- It is not in dispute that such corporate guarantees were provided by the appellant without any consideration. This is also clear from the show cause notice dated October 18, 2016 which, in paragraph 5.6, also mentions that since no commission or interest or fee was charged by the appellant from the associate enterprises for providing corporate guarantee, the amount corresponding to the commission received by banks has been taken into consideration. The Commissioner (Appeals) relying upon the decision of the Delhi High Court in DELHI CHIT FUND ASSOCIATION VERSUS UNION OF INDIA AND ANOTHER [ 2013 (4) TMI 630 - DELHI HIGH COURT] as confirmed by the Supreme Court in UNION OF INDIA VERSUS DELHI CHIT FUND ASSOCIATION [ 2014 (3) TMI 306 - SC ORDER] , has allowed the appeal filed by the respondent. In view of the decision of the Supreme Court and in view of the decisions relied upon by the Commissioner (Appeals) in the impugned order, this appeal would have to be dismissed and is dismissed. Central Excise 2023 (11) TMI 889 CENVAT re-Credit on inputs, provisionally written off in the books of accounts - Rule 3(5B) of CENVAT Credit Rules, 2004 - invocation of extended period of limitation - interest - penalty. It appeared to the department that the CENVAT credit on Obsolescent material which was earlier debited, was taken back on 30.06.2017, without utilising the same in the manufacture of final products. HELD THAT:- The Appellant have availed CENVAT re-credit of Rs.34,84,905/- on 30.06.2017 on the inputs which were provisionally written off earlier and carried forward the same in ER 1 return filed prior to introduction of GST in terms of Section 140(1) of the Act as transitional credit. It is pertinent to note that the material on which CENVAT credit was availed was not fully written off. In terms of provisions of Rule 3(5B) of erstwhile CENVAT Credit Rules, 2004, any assessee is entitled to take re-credit if the said inputs/ capital goods are subsequently put to use in the manufacture of final products and which have not been fully written off - In the instant case, the Appellant has provided documents pertaining to the utilisation of inputs in the manufacture of final products. The provisions of Rule 3(5B) of erstwhile CENVAT Credit Rules, 2004 are very clear which states that when said inputs or capital goods are subsequently used in the manufacture of their products, the manufacturer is entitled to take the credit of the amount equivalent to the CENVAT Credit paid earlier. Extended period of Limitation - HELD THAT:- In the instant case, the appellant has provided sufficient documentary evidence pertaining to the utilisation of inputs in the manufacture of their final products. As such, the demand of alleged ineligible CENVAT Credit cannot sustain. As the issue is of interpretational in nature, invocation of extended period is not justified as the ingredients required for extending the limitation are not satisfied in this case. Interest and penalty - HELD THAT:- As the demand cannot sustain, imposition of penalty and demand of interest also cannot survive. However, it is to be observed that the Departmental authorities are free to verify the utilisation of the impugned inputs whether used or not in the manufacture of their finished products by the appellant. The impugned order set aside - appeal allowed. 2023 (11) TMI 888 Clearance of some goods on payment of duty while availing the benefit of exemption - Benefit of exemption specified with a cap of maximum quantity - exemption under N/N.4/2006-CE dated 1.3.2006 as amended by N/N. 4/2008-CE dated 1.3.2008 with effect from 1.4.2008 - HELD THAT:- A plain reading of the said Notification reveals that paper and paper board articles thereof were eligible for clearance at Nil rate of duty, with effect from 1.4.2008, subject to fulfilment of Condition No.10 prescribed under the said Notification - For the present purpose, clause (i) of the Condition No.10 is relevant. It is stipulated under the said clause (i) of Condition No.10 that the exemption shall apply only for clearances made for home consumption from a factory in any financial year up to first clearances of aggregate quantity not exceeding 3500 MTs. There are no other stipulation under the said subclause. The learned Commissioner reading the said Notification along with Section 5A(1A) came to the conclusion that since, it is an absolute exemption, therefore, payment of duty before completion of the stipulated quantity of 3500 MTs, is incorrect and thereby the condition of the Notification is violated, hence, the appellant would not be eligible to the benefit of the Notification - the said interpretation of the learned Commissioner would not stand the scrutiny of law. Firstly, neither Section 5A(1A) is applicable to the present scenario, since Notification No.4/2006-CE dated 1.3.2006 is a conditional, quantity-based exemption; and admissibility to Nil rate of duty is only to the first clearances of 3500 MTs; there is no other condition stipulated in the said Notification. On a plane reading of the condition as it is, it is opined that the appellants are entitled to avail Nil rate of duty for the first clearances of 3500 MTs in a financial year, irrespective of whether they discharged duty for 500 MTs in between the said clearance - Since, the benefit of Notification has been denied by demanding duty and no demand has been raised for availing credit irregularly, there are no reason to analyse applicability of Rule 11(2) of the CENVAT Credit Rules, 2004 to the facts of the present case which would be an academic exercise. The impugned order is set aside - Appeal allowed. 2023 (11) TMI 887 Refund of duty - doctrine of unjust enrichment - duty was paid under compounded levy scheme - Refund was sanctioned but credited to the Consumer Welfare Fund under erstwhile Section 12B of the Central Excise Act, 1944 - HELD THAT:- It is astonishing to note that the department is missing a simple thing to notice that the company was paying excise duty liability on compounding basis i.e. its liability was fixed on the basis of no. of machines. Accordingly, the company was responsible to pay excise duty even if it had not produced a single pouch of scented tobacco jarda or branded chewing jarda as the case may be and if this was so it is beyond comprehension that how the company could take excise duty as component of cost for fixing price as mentioned in the order at several places. Since the company was paying excise duty on compounding basis and none of its part was treated as manufacturing expense therefore, it was deducted directly from Revenue from Operations as per guidelines given under Companies Act 2013. It may be noted that no Chartered Account can change the format of Balance Sheet or Profit and Loss Account as given under Schedule III of Companies Act 2013, and since the format specifically mandates that excise duty paid should be specifically deducted from Revenue from operations, then every Chartered Accountants is bound to follow the same format - the company had to pay excise duty irrespective of sale/production under compounding scheme, therefore, it has correctly debited entire amount to profit and loss account. The refund amount constitutes the entitlement of the company on account of excess excised duty paid and mere change in nomenclature i.e. called pre-deposit or deposited under protest etc. does not change the essence of transaction. Under no circumstance compoundable excise duty can be shown anywhere else but as a reduction from Revenue from Operation. recovery of excise duty is not possible. It is found that there is no set mechanism or opportunity available to the manufacturers working under compounded levy scheme in terms of Section 3A and the Assessee necessarily have to pay the prescribed duty in advance, irrespective of the number of days the machines are operative and irrespective of the quantity of the goods manufactured - the principle of the unjust enrichment, which is ordinarily applicable only on the goods manufactured and removed under the scheme of levy and more appropriately under Section 3 of the Act, the said principle cannot by any logically and economical be justifiable as legally tenable principle be extended to the manufactures working under compounded levy scheme under Section 3A. The impugned order cannot be sustained and is accordingly set aside. The doctrine of unjust enrichment is not applicable to the facts and circumstances of the present case and accordingly it is directed that the refund of Rs.6,95,52,000/- appropriated in favour of the Consumer Welfare Fund be credited to the account of the Appellant. Accordingly the appeal filed by the Appellant is allowed. 2023 (11) TMI 886 Validity of confirmation of demand towards reversal of Cenvat Credit - - Benefit of exemption - confirmation of demand against services provided to National Financial Corporation which was not listed in schedule to Section (3) of United Nations (Privileges and Immunities) Act, 1947 - HELD THAT:- Tribunal while deciding the appeal for earlier period has stated In para 7 of M/S ICRA MANAGEMENT CONSULTING SERVICE LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE S.T., GHAZIABAD [ 2019 (3) TMI 1230 - CESTAT ALLAHABAD] demand upholding the reversal of credit of Rs 2,12,309 the penalty imposed equal to this amount has been set aside. Appellant vide his letter dated 07/11/2023 informs that they has reversed the Cenvat credit amounting to Rs.2,65,723/- in terms of provisions of Rule 6 of the Cenvat Credit Rules, 2004. Further, it is informed that the said reversal of credit had already been intimated to the Service Tax Department vide letter(s) dated 29.06.2015 and 23.06.2016. However it is also noted that taking note of the above revenue has not given any demand in respect of this amount in the present statement of demand, nor any penalty has been imposed corresponding to this amount. There are no reason to differ from the above order, as the show cause notice also do not give any ground except that it was an statement of demand on the basis of earlier show cause notice. Impugned order is set aside - appeal allowed. 2023 (11) TMI 885 Wrongful availment of exemption as per the notification 6/2002 dt.1.3.2002 by accounting bogus/excess fly ash receipts - invocation of extended period of limitation - period 2003 to 2005. It is the case of the department that the Appellant has not satisfied the condition in the Notification No. 06/2002 to clear the asbestos sheets at Nil rate of duty since the asbestos sheets (finished products) did not contain not less than 25% fly ash. HELD THAT:- The adjudicating authority has not recorded any finding as to whether this contention of the appellant is acceptable or not. The adjudicating authority is seen to be silent or has conveniently avoided recording a finding as to the quantity said to have been procured from Chettinad Cements Corporation. In page 504 of the appeal paper book, the letter dt. 25.3.2004 issued by Chettinad Cements Corporation to the appellant is enclosed. This letter shows the lifting of 748 MTs of dry fly ash from MTPS by appellant which is the allotted quota of Chettinad Cements Corporation - Out of the 2162 MTs on two bills raised by M/s.Karthikeyan Transport on M/s.NEC, a quantity of 1322.235 MTs has been sold by M/s.NEC to appellant. This evidence has not been accepted by the adjudicating authority by observing that appellant has not produced copies of allotment order to these brick companies. The adjudicating authority has not been satisfied by the document showing the source but has rejected this by saying the document of source s source is not produced. The appellant has been able to establish that they have procured fly ash from sources other than MTPS. The Ld. Counsel for appellant submitted that the appellant is able to establish the source of the source also. In response to a RTI application for furnishing the list of Cement and ASC sheet companies which use MTPS dry fly ash, the name of appellant is seen mentioned. In the said list the name of Sakthiguhan Construction, Erode is also mentioned. This would prove that Sakthiguhan is also getting MTPS dry fly ash. In this document, the list of small scale industries which uses MTPS fly ash is also given. This list mentions the name of the six brick making units (Sun Hollow Bricks, Cheran Bricks, Sindhu FA Products, Sankar, Emerald FLAG Bricks, ERK Concrete, RM concrete) from whom Shri Karthikeyan Transports has sourced the fly ash, and supplied to appellant. Similarly, SIAR Traders, Salem is listed at Sl.No.18 in this document. These documents which are reply to RTI supports the contentions of the appellant. After appreciation of the facts, evidence established by documents, the appellant has been able to successfully establish that the alleged bogus quantity of fly ash was actually received in their factory and used in the manufacture of final product. In such circumstances, the allegation that appellant has contravened the condition of the notification 6/2002 dt. 1.3.2002 in as much as their final products did not contain 25% of fly ash is without any factual basis. The demand therefore cannot sustain and requires to be set aside - the allegation of bogus quantity is factually wrong, the penalty imposed on the appellant in E/40390/2021, NEC alleging that NEC abetted / connived in creating bogus receipts also cannot sustain and requires to be set aside. The issue on merits is found in favour of appellants and against the department. Time Limitation - HELD THAT:- The entire case is set up on the basis of facts. It is alleged that appellant accounted bogus quantity with intention to wrongly avail the exemption benefit of the notification. As it is already held that the issue on merits that the quantity accounted is not bogus and that the appellant is eligible for benefit of exemption of notification 6/2002 dt.1.3.2002, there are no ground to hold that the appellant has suppressed facts with intent to evade payment of duty. The issue on limitation is also answered in favour of appellant and against the department. The impugned order is set aside - Appeal allowed. 2023 (11) TMI 884 Classification of goods - Salmonella Antigens - classifiable under Central Excise Tariff 3822 or 3002? - HELD THAT:- The issue involved in the present case has been settled in the favour of the appellant s own case RECKON DIAGNOSTICS P LTD VERSUS C.C.E. S.T. -VADODARA-I [ 2023 (11) TMI 718 - CESTAT AHMEDABAD] , wherein the Tribunal has held that As the issue of the classification of appellant s product has already been decided under CETH 3002 therefore, the present appeal filed by the appellant is allowed. The impugned order is set aside - Appeals are allowed. CST, VAT & Sales Tax 2023 (11) TMI 883 Enhancement of turnover - Best Judgement assessment - rejection of account books - no basis of fixing the turnover - enhancement of turnover under the Central Sales Tax Act merely on the basis of surmises and conjunctures - HELD THAT:- Merely because books of account under local sales have been rejected, the same will not necessary to led the ground for rejecting the books of account under Central Sales Tax Act also in the absence of any cogent material available on record - From perusal of the impugned order, neither any reference nor any material have been brought on record sustaining the enhancement of disclosed turnover under Central Sales Tax Act. This Court in the case of M/s R.D. Gupta has held that the books of accounts and disclosed turnover under Central Sales Tax Act cannot be rejected merely because books of account under local tax have been rejected and it has been further observed that the enhancement of turnover cannot be justified - The case is in hand none of the authorities below have recorded any finding or disclosed any material which would necessarily led to the conclusion that the assessee had infact made any central sales. The enhancement of turnover made by the impugned order cannot be sustained in the eyes of law - revision allowed. 2023 (11) TMI 882 Maintainability of petition - barred by limitation under Section 8(5) of the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act 1990 or not - HELD THAT:- The Hon ble Court in M/S. SRI BALAKRISHNA TRANSPORT VERSUS THE COMMERCIAL TAX OFFICER, TAMBARAM I ASSESSMENT CIRCLE, CHENNAI. [ 2003 (9) TMI 827 - MADRAS HIGH COURT] has held that when express provision is not there then the authority is not having power to impose. Infact in other taxing statues like Income Tax Act there are provisions to take action if the assessee has not filed any return. The income tax authorities are empowered to take action, impose interest and to impose penalty, if returns are not filed. Such provisions are not available in the Entry Tax Act. The Act is silent in case if return not filed. The Act is not empowering the authorities to take action for not filing returns. This Court is of the considered opinion that the Balakrishna s case has more precedential value. This Court is of the considered opinion that the three years limitation is applicable, even if return is not filed. This Court is of the considered opinion that the impugned order is liable to be quashed and accordingly quashed - the writ petition is allowed. Indian Laws 2023 (11) TMI 881 Acquiring of assets disproportionate to known source of income - public servant - HELD THAT:- It is a settled preposition of law that in case of disproportionate assets acquired by the Public Servant, the initial burden is on the prosecution to prove objectively the property found in possession of the accused were disproportionate to his known sources of income. After meticulous examination, this Court able to find that, if at all any benefit in error of assessment regarding the value of assets acquired during the check period to be given, it can only be to a tune of Rs. 1,99,260/- rounded off to Rs. 2 lakhs which is in respect of Architect fees and the value of household articles claimed to be received as gift. Even, if concession of Rs. 2 lakhs is given to the value of assets acquired during check period, the disproportionality will be reduced to only marginally and not to the extend to fall outside the scope of the offence under section 13(1)(e) of the P.C Act or Section 109 r/w 13(1)(e) of P.C Act. Thus, it is evident that the deceased first accused being a Public Servant had acquired wealth above 400% of his known source of income. From undeclared source, the properties been acquired by the public servant (A1) in his name and in the name of his wife (A-2) also in the name of his minor children. A-2 have lend her name for purchasing the property through source undeclared. Therefore, the trial Court judgement of conviction dated 15/11/2000 is hereby confirmed. The offence being acquiring wealth by a public servant beyond his known source of income and A-2 for aiding the public servant, had been sentenced for one year R.I being the minimum sentence prescribed under the law. So there cannot be further reduction of sentence. In such circumstances, the appellant/A2 has to be sentenced to undergo atleast the minimum sentence which is one year. Accordingly, the judgment of the trial Court in Special stands confirmed. The trial Court is directed to secure the appellant/accused-2 and commit her to the prison to undergo the remaining period of sentence. Any period of imprisonment if already undergone by the accused shall be set off under Section 428 of Cr.P.C. - Appeal dismissed. 2023 (11) TMI 880 Dishonour of Cheque - conviction of appellant - Seeking acquittal from the charge under Section 138 of N.I. Act - HELD THAT:- From perusal of the record, it reveals that the statement of the complainant Jagdish Gupta (PW-1) is well supported by the cheque (Ex.P-1), notice (Ex.P-2 and P-3), postal receipt (Ex.P-4), letter (Ex.P-5). Applicant did not examined any witness before the trial Court and he did not reply the notice (Ex.P-2 and P-3), therefore, there is no reason to disbelieve the statement of Jagdish Gupta (PW-1) and the documentary evidence available on record, therefore, on the basis of the aforesaid evidence, the trial Court has rightly held that the applicant has committed offence under Section 138 of N.I. Act. On perusal of the record, the submission of the learned counsel for the applicant appears to be just and proper. Hence, finding force in the contention raised by the learned counsel for the applicant and the fact that the applicant is facing trial since 2014 i.e. for a period of almost 09 years and has already undergone two months jail incarceration, this Court finds it appropriate to partly allow this revision petition by affirming the conviction of the applicant, however, reducing his jail sentence to the period already undergone. This revision petition is partly allowed by maintaining the conviction, but reducing the jail sentence to the period already undergone by the applicant. Since the applicant is already on bail, his bail and surety bonds stand discharged. 2023 (11) TMI 879 Dishonour of Cheque - rebuttal of presumption u/s 139 of NI Act - HELD THAT:- While exercising the powers under Section 482 Cr.P.C. and from perusal of the complaint under Section 138 Negotiable Instruments, Act, prima facie case is made out against the applicant herein in view of the presumption under Section 139 Negotiable Instruments, Act and the conditions of Section 138 Negotiable Instruments, Act are satisfied, therefore, there is no ground for interfering in the summoning order passed by the learned Magistrate, hence, the instant application is devoid of merit and is hereby dismissed. Since, the instant complaint case is pending since 2019, learned Magistrate is directed to proceed with the matter in accordance with law and particularly, in accordance with the provisions of Section 143 of Negotiable Instruments Act and try to conclude the said proceeding, expeditiously. Application dismissed. 2023 (11) TMI 878 Allegation against the officials of four public sector oil companies viz. IOCL, HPCL, BPCL and IBP - Respondent Accused were discharged by the CBI Court - Sale of High Speed Diesel (HSD) to various private industries of three States viz. Gujarat, Maharastra and Madhya Pradesh at concessional rates of sales tax - non-compliance with the mandatory requisite permission from the Ministry of Petroleum Natural Gas - Revenue loss to Government - HELD THAT:- In the case of MOHD. HADI RAJA VERSUS STATE OF BIHAR AND ORS. [ 1998 (4) TMI 576 - SUPREME COURT] , the Apex Court observed that the importance of the public undertaking should not be minimised. It is observed that the government's concern for the smooth functioning of such instrumentality or agency can be well appreciated but on the plain language of Section 197 of the Code of Criminal Procedure, the protection by way of sanction is not available to the officers of the public undertaking because being a juridical person and distinct legal entity such instrumentality stands on a different footing than the government departments. Here, in the case on hand, the aspect of sanction by the authority concerned would bear not of much importance. The issue is whether C.B.I. had any case to even lodge a prosecution. Admittedly CVC too had not found any case against the accused to grant sanction. The compilation and circulation by OCC on 08.07.1991, of the Guidelines for Release of Petroleum Products and Lubricants to Direct Consumers have not been denied, which suggests that the same was in force and all oil companies were following the guidelines since 1991. The chargesheet has been filed for period between 1997-2000. The guidelines of OCC dated 08.07.1991 had not found any change. The letter of the OCC dated 04.12.1996 to the under Secretary MoP NG, New Delhi, for the requirement of HSD/ HF HSD/LSHF and NGL/Naphtha for M/s. Shaynoa Petrochem Ltd. for manufacture of speciality solvent and lubricants, reflects that the TEC was required to evaluate the requirement, and submit the recommendation to MoP NG and based on the recommendation of the TEC, it was noted that, MoP NG, may consider to release of HSD/HF-HSD/LSHF for processing use ex-Koyali refinery, while the supply of NGL ex-Hazira was ruled out, as the only possibility was of supplying Naphtha ex-Koyali refinery of IOC - While observing the TEC by the Circular dated 27.03.2002, it was specifically noted by the under Secretary, Government of India that the matter was reviewed by the Ministry and on dismantling of the APM from 01.04.2002, in the circular, it was noted that the price of diesel would be also decontrolled, and under such circumstances, the specific objective and role of the TEC had lost its purpose and relevance, and were informed that the TEC stood dissolved with effect from 01.04.2002. This Court finds that the Special Judge, CBI Court No. 2 Ahmedabad has not committed any error in discharging the accused by allowing their Criminal Revision Applications preferred against the orders of rejection of their discharge applications by orders dated 27.05.2019 below different Exhibits in 36 applications and by the orders dated 13.03.2018 below different Exhibits in 3 applications by the Learned Additional Chief Judicial Magistrate, Special CBI Court No. 1, Ahmedabad in Special Case arising out of FIR RC No. 12(A)-2000-GNR. No sanction has been granted for prosecuting the officers of the oil companies. The assessment made by the Special Judge discharging the accused is consistent with the record. The orders passed by the learned Special Judge, CBI Court No. 2, Ahmedabad allowing the Revision Applications and discharging the accused respondents herein are just and correct, the findings are in accordance to the documents on record, the accused are rightly discharged, as there are no sufficient grounds for proceedings against them - Application dismissed.
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