TMI Tax Updates - e-Newsletter
November 9, 2024

Case Laws in this Newsletter:

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

Highlights / Catch Notes

GST

• Unfair adjudication quashed; hearing opportunity denied. HC directs fresh probe upholding natural justice.

  Case-Laws - HC : Order quashed due to violation of principles of natural justice. Petitioner not afforded opportunity of hearing after supply of documents. Directions issued by HC not followed. Finding on fraud allegation ipse dixit. Matter remanded to Joint Commissioner for fresh adjudication after providing opportunity of hearing, following HC directions, and dealing with fraud allegation appropriately.
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• Tax Penalty Order Remanded: Court Rejects Denial Based on Clarification, Seeks Fresh Order.

  Case-Laws - HC : The High Court held that the denial by the respondents to apply Section 129(1)(a) of the CGST/IGST Act based on the clarification dated 31.12.2018 and previous judgments was unjustified. The finding of the authority in Para-4 of its order was essentially factual and solely based on communication from CGST, Delhi regarding initiation of cancellation proceedings, without any evidence on record. The GSTIN status produced by the petitioner indicated a different status from what was claimed by the Delhi authority. Consequently, the impugned demand of penalty order dated 27.09.2024 passed by Respondent No.2 was set aside, and the matter was remanded to the competent authority to pass a fresh order. The writ petition was allowed by way of remand.
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• Faulty service of order quashed, pay 25% tax; file objections after hearing.

  Case-Laws - HC : The High Court addressed the violation of principles of natural justice. The impugned order of assessment was not properly served on the petitioner, as it was merely uploaded on the common portal instead of being tendered or sent via RPAD. Consequently, the impugned order was set aside. The petitioner was directed to deposit 25% of the disputed tax within two weeks from receiving the order's copy. Upon complying, the impugned assessment order shall be treated as a show cause notice. The petitioner must submit objections within four weeks from receiving the order's copy, along with supporting documents. If objections are filed, the respondent shall consider them and pass orders in accordance with law after affording a reasonable opportunity of hearing to the petitioner.
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• GST assessment order set aside for violating natural justice; petitioner to deposit tax, submit objections & evidence.

  Case-Laws - HC : The court found merit in the petitioner's submission that the impugned order of assessment violated principles of natural justice by traversing beyond the show cause notice, denying the petitioner an opportunity to present their case. Regarding the discrepancy between GSTR-2A and GSTR-3B, the court held that the order proceeded without considering the petitioner's reply and supporting documentary evidence. Concerning the denial of ITC on discounts, finance charges, and depreciation, the court granted the petitioner an opportunity to submit objections and supporting documents before the adjudicating authority. The impugned order was set aside, and the petitioner was directed to deposit the tax liability for the three issues within four weeks. Upon compliance, the impugned order shall be treated as a show cause notice, and the petitioner shall submit objections with supporting documents for all four issues within four weeks for reconsideration by the respondents after a reasonable opportunity of hearing.
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• Reversal of ITC by GST authorities quashed for lack of personal hearing; remanded for fresh decision after hearing.

  Case-Laws - HC : The High Court set aside the impugned order passed by the respondent in Form GST DRC-07, reversing the ITC availed by the petitioner. The respondent had passed the order without affording an opportunity of personal hearing to the petitioner, violating Section 75(4) of the CGST Act and principles of natural justice. The matter was remanded to the respondent for fresh consideration after issuing a 14-day notice to the petitioner for personal hearing, considering the reply already filed, and deciding the matter in accordance with law.
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• Order set aside due to lack of proper notice; fresh hearing to be given to establish case.

  Case-Laws - HC : The petitioner was not served with notices/communications, resulting in their failure to file a reply within the stipulated time. As per the proviso to Rule 86B of the GST Rules, the petitioner is not liable to pay any tax amount. However, the petitioner, being unaware of the show cause notice, failed to appear for personal hearing before the respondent authority. Consequently, no opportunity of personal hearing was provided to the petitioner prior to passing the impugned order, violating the principles of natural justice. The High Court set aside the impugned order dated 26.03.2024 and remanded the matter to the respondent authority for fresh consideration, allowing the petition through remand, as it is just and necessary to provide an opportunity to the petitioner to establish their case on merits.
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• Ride-hailing app liable for GST on transportation services facilitated through its platform.

  Case-Laws - AAR : The e-commerce operator's nature of supply is conceptualized u/s 9(5) of the CGST Act, 2017, read with Notification No. 17/2017. The operator is liable to collect and pay GST on the supply of services provided by drivers/service providers to customers identified on the platform, under the proposed business model. The applicant falls within the definition of an electronic commerce operator, and the supply of passenger transportation services through auto-rickshaws, radio-taxis, motorcabs, maxicabs, and motorcycles is facilitated through their platform. By virtue of Section 9(5), the applicant is liable to pay tax on the supply of passenger transportation services by radio-taxis, motorcabs, maxicabs, and motorcycles.
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• Ready-to-eat items classified under HSN 2004 10 10 due to preparation & preservation process.

  Case-Laws - AAR : The process involved in preparing pre-packed ready-to-eat items is not merely cooking but also includes preservation through retort technology. The appropriate classification for these items is under HSN 2004 10 10, as both preparation and preservation are applicable. According to the rules for interpretation of the Tariff, when goods cannot be classified by reference to specific criteria, they shall be classified under the heading that occurs last in numerical order among those which equally merit classification. Based on this rule, the items merit classification under HSN 2004 10 10. All other items, except for the one at serial number 27, are classified under HSN 2106 90 99. The ruling pertains to the classification of pre-packed ready-to-eat items and the applicable rate of GST.
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• Contractor retains control, services classified as leasing/rental without operator; 18% GST applicable.

  Case-Laws - AAR : The applicant's services do not constitute a transfer of the right to use goods, as substantial control remains with the contractor and is not handed over to the user. The contracts in question are leasing or rental services without an operator, falling under Sl. No. 17 (viii) of Notification No. 11/2017 Central Tax (Rate) dated 28-06-2017. Such services attract GST at the rate of 18%, as per the Advance Ruling Authority's decision.
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• Halwa branded by applicant classified as "sweetmeat" under GST, not "namkeen" despite same HSN code.

  Case-Laws - AAR : Packed halwa purchased from an outsourced manufacturer and marketed under the applicant's brand name is classifiable under HSN Code 2106 90 as "sweetmeats" and taxable at 2.5% CGST under Entry No. 101 of Schedule I of Notification No. 1/2017 Central Tax (Rate), dated 28-06-2017. Despite the same HSN 2106 90 appearing in Schedule II covering "Namkeens," when a specific item like sweetmeat is named and covered under Schedule I, it should be classified accordingly, irrespective of its HSN code appearing in both schedules. The Advance Ruling Authority held that when sweetmeat is specifically named under Schedule I, there is no reason to classify it under Schedule II, even if the same HSN code is present in both schedules.
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Income Tax

• Income Tax officer's charge-sheet set aside due to delay after addition deletion in appeal.

  Case-Laws - HC : Tribunal set aside charge-sheet against Income Tax Commissioner for deleting addition while deciding appeal hastily. Order initially reversed by ITAT but later remanded by High Court to ITAT for fresh decision after hearing assessee. ITAT remanded matter to Assessing Officer for deciding issue afresh. Premise for charge-sheet vanished as gravity of charge diluted. Department aware of alleged negligence but delayed initiating disciplinary proceedings till ITAT's fresh order pursuant to High Court's direction. Delay fatal, rendering charge-sheet liable to be set aside. Supreme Court dismissed State's challenge in similar circumstances. Petition dismissed as lacking merit.
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• Tax authorities illegally retained business records beyond mandated period without citing reasons.

  Case-Laws - HC : Respondent-authorities failed to communicate reasons for retaining books of accounts and documents beyond statutory period of 30 days from assessment order as mandated u/s 132(8). Petitioner was deprived of opportunity to raise objections before Central Board of Direct Taxes u/s 132(10). Court held that non-communication of reasons for retention renders further retention illegal and invalid as per precedents. Respondents directed to return seized books and documents forthwith to petitioner.
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• Old PAN notice disputed despite new PAN filing. Court grants reply chance, quashes assessment & demands.

  Case-Laws - HC : Ex parte order passed based on old PAN number challenged. Society contended all transactions accounted for in audited books, returns filed with new PAN. Department issued notice to old PAN. Held, department issued notice to PAN on record, petitioner unable to reply due to old PAN. Opportunity to reply to Section 148 notice granted. Assessment order, penalty order, demand notices set aside for remand. Writ of certiorari issued quashing order u/ss 147, 144, 144B and demand u/s 156.
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• Income tax reassessment order quashed for exceeding statutory time limit.

  Case-Laws - HC : The High Court held that the reassessment order dated 12.05.2023 and subsequent proceedings were invalid as they were beyond the statutory limitation period prescribed u/s 153(2) of the Income Tax Act. For notices issued u/s 148 on or after 01.04.2019, the reassessment must be completed within twelve months from the end of the financial year in which the notice was issued. Since the notice was issued on 29.03.2021, the reassessment should have been completed by 31.03.2022. However, the reassessment order was passed on 12.05.2023, well beyond the twelve-month period, rendering it non-est and invalid. The Court rejected the Revenue's contention regarding the applicability of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, as the notice was issued within the extended limitation period under that Act. Consequently, the Court ruled in favor of the assessee.
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• Unexplained foreign credit card expenses treated as income.

  Case-Laws - AT : The Assessing Officer (AO) made additions u/ss 69C and 68 for undisclosed credit card expenditures in foreign currencies based on material found during a survey. The assessee possessed various international credit cards belonging to friends and relatives, enabling utilization without their presence. Despite requests, the assessee failed to provide details or explanations. The AO reopened the assessment and issued a notice u/s 143(2) to investigate further. In the absence of any material or evidence from the assessee or card owners, the AO treated the funds as unexplained income u/ss 68 and 69C. The CIT(A) upheld the additions, distinguishing the case from cited decisions. Regarding the protective addition for unexplained money received through Ananda Heritage Hotels P. Ltd., the ITAT observed that the investment was made through Wilton Investment Ltd., and the substantive addition was made in Ananda Heritage Hotels P. Ltd.'s hands. The CIT(A) deleted the protective addition in the assessee's hands, which the ITAT upheld, dismissing the Revenue's appeal.
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• Software usage fees not taxable as royalty, no TDS required.

  Case-Laws - AT : The assessee company made payments for IT service charges to a foreign entity without deducting tax at source (TDS) u/s 195. The Assessing Officer treated these expenses as fees for technical services/royalty and disallowed them u/s 40(a)(ia) for non-deduction of TDS. However, the Coordinate Bench of the Tribunal, in the assessee's own case for the assessment year 2012-13, had already decided the issue in favor of the assessee. It held that the payments for software usage did not constitute "use of, or the right to use, any copyright of software" under Article 12(3) of the applicable tax treaty. Consequently, Article 12(4)(a) was not attracted, making the payments immune from taxation in India under the beneficial treaty provisions compared to the domestic law. Therefore, there was no requirement for the assessee to deduct TDS, and the disallowance u/s 40(a)(i) was incorrect. The Tribunal decided the issue against the Revenue.
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• Expenses, depreciation, revenue recognition, grants, fees, disallowances - a legal tussle.

  Case-Laws - AT : Disallowance of prior period expenses pertaining to expenditure crystallized or details received after completion of earlier years' audits. Genuineness not doubted, remitted to AO for verification of non-claim in prior years. Addition of depreciation on estimated 10% cost towards stamp duty/registration charges on properties with pending lease/sub-lease execution remitted to AO for de novo verification as per jurisdictional High Court order. Revenue de-recognition issue remanded to AO based on Supreme Court decision and application u/s 158A(1). Administrative charges on Andrews Ganj Project disallowed based on High Court ruling of no accrual of income. Grants-in-aid expenditure allowed as wholly and exclusively for business. Revenue recognition of loan fees on realization basis upheld based on certainty of realization, C&AG directives, and High Court decision. Disallowance u/s 14A rejected as no exempt income claimed. Correct TDS credit remitted to AO for factual verification. Financial charges written off allowed as deduction based on High Court decision. Prior period expenses disallowed due to lack of evidence of crystallization. Disallowance u/s 14A limited to 1% of dividend income pre-Rule 8D. CSR expenses pre-April 1, 2015 allowed based on High Court ruling. Prior period expenditure.
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• Taxpayer wins on loan credibility, interest disallowance, business loss write-off.

  Case-Laws - AT : Section 68 addition deleted - Assessee discharged onus to explain identity, creditworthiness of loan creditors and genuineness of transactions by providing voluminous evidence. Loans received were repaid during the year or subsequent year. Non-payment of interest alone cannot justify addition u/s 68. Section 14A disallowance deleted - Investments made from own funds and non-interest borrowings, following Supreme Court and High Court precedents. Interest disallowance on advances deleted - Advances given from own funds and non-interest borrowings, relying on High Court judgment. Write-off of advance on project abandonment allowed as business expenditure based on High Court decision. Revenue appeal dismissed by ITAT.
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• IT assessment order corrected by corrigendum, valid under Kalyankumar Ray judgment.

  Case-Laws - AT : The Assessing Officer (AO) issued a corrigendum correcting the total income in the original assessment order. The AO has the power to withdraw, modify or substitute an assessment order with another. The corrigendum rectified an error in the preamble of the original assessment order, making it legally valid. The corrected assessment order matched the computation sheet and demand notice accompanying the original order. The Supreme Court's decision in Kalyankumar Ray supports the Revenue's case, as the AO rectified a mistake by issuing the corrigendum, which is a valid assessment order. The CIT(A)'s finding was reversed, and the matter was restored to the CIT(A) for adjudication on merits after allowing the assessee a reasonable opportunity of being heard.
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• Income tax reassessment order revised by Commissioner on new grounds not based on original reasons.

  Case-Laws - AT : The Appellate Tribunal held that the issues on which the reassessment order was passed u/s 147 read with Section 143(3) and the issues on which the revision order was passed u/s 263 were entirely different. The Assessing Officer had made inquiries during the reassessment proceedings in line with the recorded reasons and accepted the returned income without making any additions. Section 263 does not empower the Commissioner to circumvent provisions by directing an inquiry on an independent issue when no addition was made based on the grounds for reopening. The Tribunal applied the legal maxim 'sublato fundamento cadit opus,' meaning 'the foundation being removed, the superstructure falls.' If the initial action is not in consonance with law, all subsequent proceedings would fail as illegality strikes at the root. The exercise of suo motu revision power is a quasi-judicial act based on the formation of an opinion regarding the existence of adequate material to satisfy that the Assessing Officer's decision is erroneous and prejudicial to revenue interests. The revision of the order passed u/s 147 read with Section 143(3) by the Commissioner u/s 263, being contrary to the mandate of law, could not be sustained and was liable to be struck down.
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• Tax Issues: Proper TDS, Exempt Income Expenses, Notional Interest, VAT Penalty & Advances Evaluation.

  Case-Laws - AT : The key points covered are: Non-deduction of TDS on export commission paid to non-resident agents was held as correct since the services were rendered outside India and the income did not accrue or arise in India as per Section 9, hence TDS provisions u/s 195 were not attracted. The addition made u/s 14A for disallowance of expenditure related to exempt income was deleted as no borrowings were made for investments and no exempt income was earned. Reliance was placed on relevant judicial precedents. The disallowance of notional interest on advances given by the assessee was set aside, and the Assessing Officer was directed to ascertain the availability of own funds exceeding the advances to grant relief accordingly. The VAT penalty imposed on the assessee was held to be compensatory in nature, not penal, based on judicial precedents cited, and the addition was deleted. The disallowance of interest on application money paid and advances made was deleted as the funds were from the assessee's current account representing non-borrowed funds, following the principle laid down for the previous year. The addition of advances from the current account was remanded back to the Assessing Officer to verify the availability of funds exceeding the advances to grant relief as per law.
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• Forex losses wrongly disallowed; penalty on tax assessee overturned as advice not "inaccurate particulars.

  Case-Laws - AT : This case deals with the penalty u/s 271(1)(c) of the Income Tax Act, imposed for disallowance of losses on forex derivatives treated as speculative losses and disallowance of foreign exchange fluctuation loss claimed by the assessee. The Tribunal held that the advice given to the assessee by the consultant cannot be termed as furnishing inaccurate particulars of income attracting penalty u/s 271(1)(c). Relying on the Supreme Court's decision in Reliance Petroproducts Pvt. Ltd., the Tribunal ruled that the penalty levied was not justifiable and deleted the penalty imposed on the assessee, allowing the assessee's appeal.
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• Reopening of capital gain assessment for land sale faces scrutiny on valuation, cost determination, and exemption claim.

  Case-Laws - AT : Reopening of assessment u/s 147 for assessing Long Term Capital Gain on sale of land in Financial Year 2005-06. Assessing Officer (AO) adopted full value consideration u/s 50C(1) without issuing show cause notice or allowing cost of acquisition. Assessee claimed exemption u/s 54B. Appellate Tribunal held AO unjustified in making addition without allowing cost of acquisition or ascertaining fair market value as on 01.04.1981. Registered valuer reported guideline value lower than value adopted by AO, requiring verification. Fair market value to be determined u/s 50C(2). Matter remanded to AO for fresh adjudication considering cost of acquisition, fair market value u/s 50C(2), and exemption claim u/s 54B after giving assessee opportunity of hearing.
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• Improper invocation of revisionary power by tax authorities over allowance of investment-linked deduction.

  Case-Laws - AT : The assessee was allowed deduction u/s 54/54F without proper examination of relevant details and materials. The Assessing Officer (AO) framed the assessment u/s 143(3) after considering the details of assets sold and cost of acquisition, allowing the deduction u/s 54F. The assessee furnished investment details and bills/vouchers in response to the notice u/s 142(1). The AO/NFAC, after examining the relevant details, concluded on the allowability of deduction u/s 54F. The Principal Commissioner of Income Tax (PCIT) noted that the assessee furnished investment details of a huge amount, out of which deduction was claimed without specifying the expenses against which Section 54F deduction was claimed. However, it cannot be said that there was no enquiry or inadequate enquiry regarding the Section 54F exemption. The notice u/s 263 issued by the PCIT was vague and aimed at making deeper enquiry and re-considering the evidence already on record, claiming fresh facts emerged subsequent to the assessment order, which was factually incorrect and untenable. The conditions enabling the PCIT to invoke jurisdiction u/s 263 were not satisfied. The PCIT's discretionary power u/s 263 cannot be assumed arbitrarily, and something should be brought on record to show the error and prejudice to revenue caused by.
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• Cash seizure leads to tax addition; can't rectify lapse. 60% rate on undisclosed income upheld. Interest remitted for adjustment.

  Case-Laws - AT : Rectification application rejected as assessee failed to raise issue of CIT(A)'s order lacking DIN before ITAT; assessee cannot rectify their own lapse. Addition upheld based on cash seized, not mere statement; CBDT instruction considered. Tax rate of 60% u/s 115BBE on undisclosed income upheld following precedent. Interest u/s 234A remanded to AO to allow adjustment of seized cash against tax liability before due date as per circular; interest u/s 234B decided. Relevant legal provisions, precedents, and reasoning provided.
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Customs

• A police constable's appeal for exoneration in a gold smuggling case involving his brother-in-law.

  Case-Laws - AT : Seizure of gold and a vehicle by police authorities from the appellant and others. The police handed over the seized goods to customs authorities. The appellant is the brother-in-law of the co-accused, who was coming from Riyadh. The appellant went to receive the co-accused at the airport, being a close relative. There is no confessional statement from the appellant about being aware of the gold. The Bombay High Court has held that goods seized by police and handed over to customs are not "goods seized" u/s 123 of the Customs Act, making it inapplicable in this case. The co-accused stated the appellant was unaware of the foreign marked gold (FMG) in his luggage. The allegation of taking a longer route to evade authorities lacks evidence. The appellant, a police constable, stated he went to receive his brother-in-law and was unaware of the items in his baggage. There is no substantive evidence against the appellant, and the appeal is liable to be allowed.
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• Customs duty adjudication delayed due to unamended provisions & COVID, appellant's delayed reply.

  Case-Laws - AT : The show cause notice issued on 17.10.2017 was governed by the unamended provisions of section 28(9) of the Customs Act. The unamended section provided time limits of six months or one year for determining duty/interest, where possible. The Commissioner recorded that despite issuing the notice, the appellant delayed filing a reply and sought documents, filing an interim reply only on 07.04.2021. Covid restrictions delayed proceedings till February 2021. After providing documents in March 2021 and a personal hearing on 03.06.2021, the matter was adjudicated on 29.06.2021. The Commissioner gave cogent reasons for inability to adjudicate within the unamended time limits. The appellant argued adjudication should have been within stipulated time despite no reply, but this aspect was examined. As no submissions were made on merits, only the limitation issue was considered. No infirmity was found in the Commissioner's order, and the appeals were dismissed.
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• Multiple customs bills, one appeal? No way! File separate appeals for each order, rules the Tribunal.

  Case-Laws - AT : Rule 6(A) requires filing separate appeals for each order-in-original. In a case involving multiple Bills of Entry, if a common order-in-appeal disposed of appeals covering 13 Bills of Entry, the Revenue is required to file 13 separate appeals challenging each Bill of Entry, which is an assessment order itself. The Tribunal held that the present single appeal filed by the Revenue against 13 Bills of Entry is not maintainable. The Revenue is directed to file 13 separate appeals if they wish to challenge the order, as per the interpretation of Rule 6(A) by the Ahmedabad Bench in CMR Nikkie India Pvt Ltd case.
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• Duty assessment dispute: Tribunal orders review of aluminium scrap import valuation after flawed appeal process.

  Case-Laws - AT : The Appellate Tribunal examined the case concerning the valuation of imported aluminium scrap and the re-determination of its assessable value. The respondent had self-assessed the duty, but the Assessing Officer (AO) rejected the transaction value, citing discrepancies with contemporary import data available in the National Import Database (NIDB). However, the Commissioner (Appeals) failed to consider the reasons provided by the AO for re-determining the assessable value. Instead, the Commissioner addressed issues not considered by the AO in the speaking order and did not examine the relevant Bills of Entry that formed the basis for rejecting the transaction value. Consequently, the Appellate Tribunal held that the order passed by the Commissioner (Appeals) cannot be sustained and directed the Commissioner to pass a fresh order within four months, considering the AO's reasons for re-determining the assessable value.
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Corporate Law

• Merger exempt from stamp duty for wholly-owned subsidiaries of common parent.

  Case-Laws - HC : The doctrine of merger was examined concerning the jurisdiction of the respondent to adjudicate stamp duty u/ss 31 and 33 of the Indian Stamp Act, 1899. The respondent's power u/s 47A(3) to examine instruments for correctness of value or duty payable is barred by the two-year limitation period from the instrument's registration date. The petitioner filed the merger order on 07.12.2011, but the respondent issued a show-cause notice on 20.03.2014, beyond the two-year period. The Delhi Towers Ltd. case held that court orders are subject to stamp duty, and the definition of 'conveyance' u/s 2(10) is inclusive. However, as the petitioner and ACIPL were wholly-owned subsidiaries of a common parent company, the merger order was exempt from stamp duty under Notification no. 13 dated 25.12.1937. The show-cause notice and impugned order were quashed, and the petition was allowed.
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• Tribunal overrules NCLT order on employee transfer under Scheme, upholds proper implementation in 2011 with union consent.

  Case-Laws - AT : The Appellate Tribunal allowed the appeal and set aside the NCLT's impugned order, which had erroneously directed the Board to take over employees from the ATM and Cash Management Division of Respondent No.2 under the garb of interpreting the Scheme of Arrangement. The Scheme was fully implemented in 2011 with the knowledge of Respondent No.1 union, and multiple wage settlements were entered into without objections. Respondent No.1's application seeking modification of the Scheme's express terms was impermissible and barred by limitation. Only the ATM and Cash Management businesses were transferred, not all employees of the Transferor Company. Interpreting the Scheme to mean all employees stood transferred to the Appellant on the Effective Date was impractical and inconceivable.
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IBC

• Lack of repayment plan leads to insolvency resolution termination despite no hearing opportunity.

  Case-Laws - AT : Violation of principles of natural justice, wherein the appellant was not provided an opportunity for a hearing before terminating the insolvency resolution process of the personal guarantor and discharging the resolution professional (RP). The key points are: Section 106 requires the RP to submit a report on the repayment plan within 21 days from the last date of submission of claims u/s 102. Section 105 mandates the debtor to prepare the repayment plan in consultation with the RP. However, the debtor failed to prepare or submit any repayment plan, and there was no communication from the appellant after August 24, 2022. Consequently, no meeting of creditors could be convened. The adjudicating authority rightly concluded that in the absence of a repayment plan, the consequence of rejection u/s 115 must ensue. The RP's application and prayers were in accordance with the statutory scheme. The appellant consistently challenged every action unsuccessfully but never submitted a repayment plan. The appellant remained silent for years and raised grievances about not being heard only after the consequential order u/s 115 was passed. Regulation 19, concerning the filing of the repayment plan by the RP, is inapplicable as no plan was submitted or finalized. The appellant failed to demonstrate substantial grounds for interference with the imp.
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Indian Laws

• Director not liable for company's bounced cheques unless actively involved in operations.

  Case-Laws - HC : Non-executive director's vicarious liability u/s 138 of the Negotiable Instruments Act for dishonor of cheques issued by the company examined. Specific averments and evidence required to establish director's active role and responsibility for the offense. Mere designation as Chairman insufficient to attribute day-to-day charge. Complaint lacking necessary averments against petitioner non-executive director quashed to prevent abuse of court process.
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PMLA

• Public servants can't be prosecuted under money laundering law without prior sanction.

  Case-Laws - SC : Section 197(1) of the Code of Criminal Procedure (CrPC) requires prior sanction for prosecuting public servants under the Prevention of Money Laundering Act (PMLA). The allegations against the respondents involve acts committed while discharging official duties, satisfying the conditions for Section 197(1)'s applicability. The PMLA's Section 65 makes CrPC provisions applicable unless inconsistent with the PMLA. Section 71 cannot override CrPC provisions applied through Section 65. Cognizance against the respondents under PMLA without prior sanction u/s 197(1) CrPC is incorrect. The Supreme Court upheld the High Court's view, dismissing the appeal while allowing proceedings against other accused.
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• Court grants bail citing first proviso of Section 479 BNSS for 3-year max sentence under Customs Act.

  Case-Laws - SC : The case pertains to money laundering and the applicability of the first or second proviso to sub-section (1) of Section 479 of the BNSS (Biological Diversity Act) in a case involving the smuggling of Red Sanders. It is undisputed that the maximum sentence for the scheduled offence under the relevant sections of the Customs Act, 1862 is three years. The Supreme Court held that this is not a case where the court should exercise powers under the second proviso to sub-section (1) of Section 479 of the BNSS and deny the benefit of the first proviso. Consequently, the appellant was ordered to be enlarged on bail in terms of the first proviso of sub-section 1 of Section 479 of the BNSS, with directions to produce the appellant before the Special Court within a maximum period of one week. The appeal was allowed.
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VAT

• Hierarchy of Remedies: High Court Rules on Maintainability of VAT Appeals.

  Case-Laws - HC : The High Court ruled on the maintainability of appeals under the Delhi Value Added Tax Act, 2004. It held that the obligation to approach the Appellate Tribunal for drawing up a 'statement of case' for the High Court's consideration is a prerequisite, and appeals directly instituted without this step would not be maintainable. The hierarchy of remedies under the Act requires the assessee to first appeal to the Appellate Tribunal, and then approach the High Court by establishing a 'substantial question of law.' The obligation to petition the Tribunal for a statement of case is a procedural matter and does not impair the right of appeal, as the Tribunal's refusal is subject to review. Consequently, the appeals instituted before the High Court u/s 81 of the DVAT Act were held maintainable.
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• Windmill Parts Tax Exemption Dispute: Obsolete Notification Superseded, Compliance Required.

  Case-Laws - HC : Notification dated 31.03.2000 exempted dealers from payment of tax on wind mill parts and accessories brought into local area. Petitioner, not registered as dealer under the Act, entered supply contract with Gamesa which included entry tax component, indicating consensus on tax liability. Notification dated 18.12.2010 superseded earlier notification. Petitioner failed to produce documents establishing eligibility for exemption as renewable energy project. Petitioner cannot claim benefit of obsolete notification after availing new notification. Petitioner granted time to comply with procedure for exemption, failing which tax and interest recoverable. Petition dismissed for lack of merit.
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Service Tax

• Proper Service of Orders Crucial: Tribunal Upholds Strict Compliance with Central Excise Act Provisions.

  Case-Laws - AT : The case pertains to the interpretation of Section 37C of the Central Excise Act, 1944, regarding the method and manner of service of an order. The Commissioner (Appeals) considered the service of the order through the GSTIN registered email. The Tribunal, in the case of Ratan Coal Traders, held that the provisions of Section 37C must be followed strictly. Consequently, the Tribunal set aside the impugned order and remanded the matter to the Commissioner (Appeals) to decide the appeal on merits without further considering the limitation aspect. The summary highlights the legal issue of proper service of orders under the Central Excise Act and the Tribunal's stance on adhering to the statutory provisions.
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• Foreign bank charges & finance costs not taxable in India; no service provider-recipient relation.

  Case-Laws - AT : Service tax liability on foreign bank charges and finance costs paid in foreign currency. It discusses the absence of a service provider-recipient relationship between the foreign bank and the appellant, as the foreign bank provided services to the buyer who had a letter of credit facility. The appellant received services, if any, from its bank in India where the documents were negotiated. Since the service provider (foreign bank) and recipient (buyer) were both located outside India, there is no question of taxing such service in India as it was provided outside the taxable territory. Previous rulings and circulars support that no service tax is leviable when the place of provision is outside India. If the appellant is required to pay service tax under the reverse charge mechanism, it would be entitled to avail CENVAT credit. The extended period of limitation was wrongly invoked as there was no suppression of facts by the appellant, who had clearly reflected such payments in its financial statements. Relevant case laws were cited regarding the interpretation of "suppression" and the non-imposition of penalties for interpretation of law.
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Articles

• Income from Renting under ‘House Property Income’ or ‘PGBP’
• Technical Consultancy for Project Development and Management Support Services to MJP are taxable under GST at the rate of 18%
• Common Mistakes to Avoid When Selecting from the Trademark Class List
• Application of GST registration cancellation cannot be rejected based on scrutiny proceeding against Assessee for determining tax liability of past period
• CONTRAVENTION OF SECTION 3(c) OF FOREIGN EXCHANGE MANAGEMENT ACT, 1999
• RECENT DEVELOPMENTS IN GST

News

• ADVISORY FOR WAIVER SCHEME UNDER SECTION 128A

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• Advisory related to ‘Other Territory’ applications

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• CBIC introduces relaxations for Customs Cargo Service Providers (CCSPs) by reducing number of days for insurance of storage goods and withdrawal of licence renewal process for AEO-compliant CCSPs

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Notifications

Customs

• 75/2024 - dated 7-11-2024 - Cus (NT)
  Handling of Cargo in Customs Areas (Amendment) Regulations, 2024.

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GST - States

• S.R.O. No. 996/2024 - dated 30-10-2024 - Kerala SGST
  Special procedure for rectification of demand order issued for contravention of section 16(4) of Kerala State Goods and Services Tax Act, 2017

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• S.R.O. No. 995/2024 - dated 30-10-2024 - Kerala SGST
  Notification under section 128A to notify date under sub-section (1) of section 128A of Kerala State Goods and Services Tax Act, 2017

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• 20/2023- State Tax (Rate) - dated 7-11-2024 - Telangana SGST
  Amendment in Notification No. 5/2017-State Tax (Rate), Dt. 29-06-2017

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• 19/2023- State Tax (Rate) - dated 7-11-2024 - Telangana SGST
  Amendment in Notification No. 4/2017-State Tax (Rate) Dt. 29-06-2017

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• 18/2023- State Tax (Rate) - dated 7-11-2024 - Telangana SGST
  Amendment in Notification No. 2/2017-State Tax (Rate), Dt. 29-06-2017

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Circulars / Instructions / Orders

Customs

• 22/2024 - dated 8-11-2024
  Clarification on Insurance Amount and Bond Value for CCSPs and validity of Bond for AEO-LO

Case Laws:

• GST

• 2024 (11) TMI 338
  Violation of principles of natural justice - without providing any further opportunity and in violation of the directions issued by this Court in the previous writ petition, the order impugned was passed - HELD THAT:- A perusal of the order impugned and the record of personal hearing indicates that personal hearing was held on 19.02.2024, 20.03.2024, 23.04.2024 and 22.05.2024, the order was passed by this Court on 30.05.2024, whereafter hearing was held on 07.06.2024 and 12.07.2024. On 12.07.2024, a prayer was made on behalf of the petitioner to keep the show cause notice in abeyance, as the matter was under investigation on an FIR lodged by the petitioner qua the bank officials. Qua the aspect raised by the petitioner also apparently, no specific finding has been recorded and reliance has been placed by indicating that the Hon'ble Court has acknowledged the fraud in GST whereas a reading of the order passed by this Court, it cannot be said that the Court had indicated anything which can foreclose the argument of the petitioner, the Court had only noticed the allegations regarding fraud as alleged by the petitioner. In view of the overall fact situation of the matter, it is apparent that after supply of the documents, the petitioner was not afforded any further opportunity of hearing, the directions issued by this Court in its order dated 30.05.2024, have not been followed and the finding which has been recorded pertaining to the fraud, is ipse dixit . The order dated 16.08.2024 (Annexure-14) is quashed and set aside. The matter is remanded back to the Joint Commissioner (Adjudication), Central GST Commissionerate, Ghaziabad, who would provide an opportunity of hearing, follow the directions given by this Court in its order dated 30.05.2024 and deal with the issue of fraud, as alleged by the petitioner appropriately and pass a fresh order. Petition allowed by way of remand.

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• 2024 (11) TMI 337
  Demand of penalty order under the provisions of CGST/ IGST Act and Rules - HELD THAT:- The denial by the respondents to apply provisions of Section 129(1)(a) of the Act in light of the clarification dated 31.12.2018 and judgments of this Court are based on the finding as indicated by the authority in Para-4 of its order. A perusal thereof indicates that the said finding essentially is factual and only based on the communication received from the CGST, Delhi regarding the initiation of cancellation proceedings. However, apparently, nothing was available on record of Respondent No.2 to indicate as to whether at all proceedings in this regard were initiated by the authority at Delhi. Further the GSTIN status produced by the petitioner indicates a status different form what is being claimed by the authority at Delhi wherein return has been filed on 20.10.2024 by the petitioner. The impugned demand of penalty order dated 27.09.2024 (Annexure-1) passed by Respondent No.2 is set aside. The writ petition is allowed. The matter is remanded back to the competent authority to pass a fresh order - Petition allowed by way of remand.

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• 2024 (11) TMI 336
  Violation of principles of natural justice - service of notices issued u/s 73 of GST Act - petitioner being unaware of issuance of the notices as well as passing of the order, could neither appear before the authority nor question the validity of the impugned order within the period of limitation - HELD THAT:- In the case of OLA FLEET TECHNOLOGIES PRIVATE LIMITED VERSUS STATE OF UP AND 2 OTHERS [ 2024 (7) TMI 1543 - ALLAHABAD HIGH COURT] a co-oridiante Bench of this Court inter alia observed that ' At present, it does appear that the petitioner is entitled to a benefit of doubt. No material exist to reject the contention being advanced that the impugned order was not reflecting under the tab view notices and orders . On merits, as noted in the earlier orders an other dispute exists whether all replies and annexures to the replies as filed by the assessee were displayed to the assessing officer and whether those have been considered. We find, no useful purpose may be served for keeping this petition pending or calling for a counter affidavit or even relegating the petitioner to the available statutory remedy.' In view of the submissions made and the judgement in the case of Ola Fleet Technologies Pvt. Ltd the writ petition filed by the petitioner is allowed. The order impugned dated 23.08.2024 passed by the Deputy Commissioner, State Tax, Azamgarh (Annexure-1 to the writ petition) is quashed and set aside. Petition allowed.

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• 2024 (11) TMI 335
  Violation of principles of natural justice - neither the show cause notice nor the impugned order of assessment has been served on the petitioner by tender or RPAD, instead it had been uploaded in the common portal under the tab Additional Notices/Orders - HELD THAT:- The impugned order is set aside and the petitioner shall deposit 25% of the disputed tax within a period of two (2) weeks from the date of receipt of a copy of this order. On complying with the above condition, the impugned order of assessment shall be treated as show cause notice and the petitioner shall submit its objections within a period of four (4) weeks from the date of receipt of a copy of this order along with supporting documents/material. If any such objections are filed, the same shall be considered by the respondent and orders shall be passed in accordance with law after affording a reasonable opportunity of hearing to the petitioner. The petition is disposed off.

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• 2024 (11) TMI 334
  Violation of principles of natural justice - Challenge to impugned order on the premise that the impugned order of assessment traverses beyond the show cause notice and also made without granting the petitioner an opportunity to place on record the documentary evidence in support of their objections/submissions/reply - discrepancy between GSTR-2A and GSTR-3B - Denial of ITC on discounts - finance charges - depreciation. Discrepancy between GSTR-2A and GSTR-3B - HELD THAT:- There is merit in the submissions of the learned counsel for the petitioner that the same is made in violation of principles of natural justice, inasmuch as the impugned order of adjudication traverses beyond the show cause notice. It is trite law that show cause notice forms the foundation of the order and an order, which traverses beyond the show cause notice, results in violation of principles of natural justice inasmuch as the party is denied an opportunity to put forth his case. Denial of ITC on discounts - finance charges - depreciation - HELD THAT:- The impugned order proceeds on the basis that the reply filed by the petitioner is not supported by documentary evidence. The learned counsel for the petitioner would submit that the petitioner may be granted one final opportunity before the adjudicating authority to enable them to submit the relevant documentary evidence in support of their objection. The impugned order is set aside. The petitioner shall deposit the tax liability in respect of other three issues, viz., denial of ITC on discounts, finance charges and depreciation, within a period of four (4) weeks from the date of receipt of a copy of this order. On complying with the above condition, the impugned order of assessment shall be treated as show cause notice and the petitioner shall submit its objections in respect of all the four issues, viz., discrepancy between GSTR-2A and GSTR-3B, denial of ITC on discounts, finance charges and depreciation, along with supporting documents/material, within a period of four (4) weeks from the date of receipt of a copy of this order. If any such objections are filed, the same shall be considered by the respondents and orders shall be passed in accordance with law after affording a reasonable opportunity of hearing to the petitioner. Petition disposed off.

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• 2024 (11) TMI 333
  Challenge to proceedings of the respondent in Summary of the Order in Form GST DRC-07 dated 29.04.2024 - reversal of ITC availed by the petitioner - petitioner had availed ITC from tax payer, who did not pay tax on outward supply made to the petitioner - respondent, without affording any opportunity of personal hearing to the petitioner, passed the impugned order - violation of principles of natural justice - HELD THAT:- The petitioner, upon receipt of such show cause notice, filed reply dated 16.04.2024 in Form GST DRC-06, however, the respondent, without affording any opportunity of personal hearing to the petitioner, passed the impugned order, thereby, confirming the proposals contained in the show cause notice. In terms of Section 75 (4) of the CGST Act, it is mandatory on the part of the respondent to provide an opportunity of hearing to the assessee before passing any adverse order, whereas, in the present case, no such opportunity was granted to the petitioner before confirming the demand made in the show cause notice, therefore, the impugned order is not only against the provisions contemplated under the Section 75 (4) of CGST Act but also suffers from violation of principles of natural justice. Hence, this Court is inclined to set aside the impugned order. The impugned order is set aside - the matter is remanded to the respondent for fresh consideration, in which case, the respondent is directed to issue a clear 14 days notice, thereby, affording an opportunity of personal hearing to the petitioner and after considering the reply that has already been filed by the petitioner and hearing the petitioner in full, shall decide the matter in accordance with law - Petition allowed by way of remand.

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• 2024 (11) TMI 332
  Challenge to GST Notice on fish meal supply exemption - Circular No.80/54/2018-GST, dated 31.12.2018 - levy of tax on fish meal - HELD THAT:- This Writ Petition is closed, directing the appellate authority, namely, the first respondent to keep the appeal in abeyance and await the outcome of the decision of the Supreme Court relating to classification of fish meal in PEARL CITY MARINE PRODUCTS PVT. LTD. VERSUS UNION OF INDIA ORS. [ 2024 (3) TMI 1368 - SC ORDER] . Petition closed.

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• 2024 (11) TMI 331
  Violation of principles of natural justice - service of notices/communications - petitioner was not aware of the notices, and they failed to file their reply within the time - HELD THAT:- In the case on hand, as per the proviso to Rule 86B of the GST Rules, the petitioner is not liable to pay any tax amount. However, the petitioner, being unaware of the show cause notice, had failed to appear for personal hearing before the 1st respondent. In such case, it is clear that no opportunity of personal hearing was provided to the petitioner prior to the passing of impugned order. Therefore, this Court is of the view that the impugned order was passed in violation of principles of natural justice since it is just and necessary to provide an opportunity to the petitioner to establish their case on merits. The impugned order dated 26.03.2024 is set aside and the matter is remanded to the 1st respondent for fresh consideration - Petition allowed by way of remand.

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• 2024 (11) TMI 330
  E-commerce operator or not - nature of supply as conceptualized in Section 9 (5) of CGST Act, 2017 read with notification No. 17/2017 dated 28.06.2017 - liability of appellant to collect and pay GST on the supply of services supplied by the drivers/service provider (person who has subscribed to online Uber platform in relation to proposed business model) to their customers (person who has subscribed to online Uber platform) identified on the Uber s platform) under the proposed business model. HELD THAT:- The applicant is squarely covered in the definition of electronic commerce operator and the supply of services by way of transportation of passengers in the proposed commission free monetization model by an auto-rickshaw, radio-taxi, motorcab, maxicab and motor cycle is supplied through them. Further, by virtue of Section 9 (5) the applicant is liable to pay tax on the supply of the services of transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle.

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• 2024 (11) TMI 329
  Classification of pre-packed ready to eat items - Rate of GST - HELD THAT:- The process involved herein is not cooking per se, but the application says that it is 'prepared through cooking by boiling in water and preserved through retort technology'. Thus it is found that the apt classification is 2004 10 10, since both preparation and preservation is applicable to the vegetable). Further, as per rules for interpretation of Tariff-3. (c), when goods cannot be classified by reference to (a) or (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit classification. On account of this rule as well, the item merits classification under 2004 10 10. All items, other than item at Sl.No. 27 merits classification under HSN 2106 90 99.

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• 2024 (11) TMI 328
  Classification of services rendered by the applicant - fall under the chapter 99, heading 9973 and service code 997311 or not? - applicable rate of GST - rate provided in notification no 11/2017-Central Tax Rate dated 28.6.2017 as amended vide notification No 20/2019 Central Tax (Rate) under the Sl no 17 (viii) - HELD THAT:- Transfer of right of goods requires transfer of effective control over such goods, which is not present in this case. Prior permission of the applicant has to be obtained regarding the places where the vehicle is being used. The vehicle remains under the overall control of the applicant. Repairs required, if any, are carried out by the applicant. The applicant remains the one responsible to abide by all the laws relating to motor vehicles, including damage to third parties, insurance etc. Thus, it emerges that substantial control remains with the contractor and is not handed over to the user, and therefore it cannot be said to be a transfer of the right to use the vehicle. The contracts in question do not tantamount to transfer of right to use. Accordingly, we find that the service is leasing or rental services, without operator, which falls under Sl. No. 17 (viii) of Notification No 11/2017 Central Tax (Rate) dated 28-06-2017. Such services attract GST at the rate of 18%.

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• 2024 (11) TMI 327
  Classification of packed halwa purchased from an outsourced manufacturer and marketed under the applicant s brand name - whether the same are classifiable as Namkeens etc.. and are covered by HSN Code 2106 90 and taxable under Entry 46 of Schedule II of Notification No. 1/2017 Central Tax (Rate), dated 28-06-2017? - HELD THAT:- Entry No 101 in Schedule I of Notification No 1/2017 Central Tax (Rate), dated 28-06-2017, specifically covers sweetmeats under HSN 2106 90 against 2.5% CGST. The same classification applies when halwa is purchased from a supplier and packed at the applicant's facility and marketed under applicant's brand name. The HSN code 2106 90 falling under Schedule II covers items such as Namkeens. When sweetmeat is specifically named and covered under Schedule I of Notification No 1/2017 Central Tax (Rate) dated 28-06-2017, we find no reason to classify it under Schedule II irrespective of the fact that the same HSN, viz., 2106 90 appears in both the schedules.

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• 2024 (11) TMI 326
  Levy of GST - revenue paid by the principals outside India - HELD THAT:- It is found that the revenue is earned on different services provided in different situations and needs to be answered separately. GST is applicable on the intermediary services provided by the applicant in India and Sri Lanka. However, the intermediary service rendered in Sri Lanka stands exempt under Notification No. 20/2019-Integrated Tax (Rate) dated 30-09-2019 subject to conditions of the notification. If those conditions are satisfied by the applicant, they would stand eligible for the same. The installation service provided by the applicant in India is taxable - The installation services done by the applicant in Sri Lanka merit to be treated as an export of service, subject to satisfaction of all the conditions laid down in section 2 (6) of the IGST Act for it to be treated so.

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• Income Tax

• 2024 (11) TMI 325
  Central Administrative Tribunal's (CAT) decision to set aside the charge-sheet against the Commissioner of Income Tax (Appeal) Kolkata/respondent - Charge against the respondent is to the effect that he has deleted an addition of while deciding an appeal in the hasty manner - order passed by the respondent in the appeal filed by the assessee, though once reversed by the ITAT but later on, pursuant to the direction given by the High Court at Calcutta, the ITAT has decided the issue regarding disallowance of sales commission and purchase commission to the assessee afresh and has remanded the matter to the Assessing Officer for deciding the issue afresh. HELD THAT:- Though the petitioners has submitted that the said deletion was ultimately reversed by the ITAT in the appeal filed by the Revenue in the year 2011, however, it is to be noticed that the said order of the ITAT was interfered by the High Court at Calcutta and the matter was again remanded to the ITAT for deciding afresh the appeal filed by the Revenue after providing opportunity of hearing to the assessee and the ITAT has remanded the matter to the Assessing Officer to decide the issue afresh. In such circumstances, the whole premise of issuance of charge-sheet against the respondent has vanished. Though the Department was aware about the alleged negligent act of the respondent since the beginning but has not taken any action against the respondent till passing of a fresh order by the ITAT, pursuant to the direction issued by the High Court at Calcutta. It is not the case of the petitioners that the Department was not aware about the said negligent act of the respondent, if any, and came to know about it only in the year 2017 when the memorandum of charges were issued against the respondent. As observed earlier, the gravity of charge against the respondent has been diluted when the ITAT has remanded the matter to the AO for deciding the issue afresh and in such circumstances, the delay in initiation of the disciplinary proceedings against the respondent, in the present case, is fatal and on this ground alone, the memorandum of charges issued against the respondent is liable to be interfered with. The Hon ble Supreme Court in State of Madhya Pradesh Vs. Bani Singh Anr., [ 1990 (4) TMI 286 - SUPREME COURT ] in somewhat similar circumstance, has dismissed the challenge made by the State. No merit in this writ petition and the same is, therefore, dismissed.

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• 2024 (11) TMI 324
  Retention of books of accounts and other documents contrary to the provision of section 132 (8) - Validity of recovery proceedings as well as the retention of the books of accounts and other documents seized during the course of search by the respondent-authority beyond the statutory period - HELD THAT:- Respondent-authorities are required to return the books of accounts and other documents within 30 days from the date of passing of the assessment order to the petitioner unless the reasons are recorded in writing for retention of the same with the approval of the higher authority specified in the said provision. On perusal of the facts on record, it is apparent that the respondent-authorities have never communicated the reasons recorded to the petitioner and as such, the petitioner was not aware about the reasons for retention of the books of accounts and other documents which has prevented the petitioner from raising the objections before the Central Board of Direct Taxes as provided under sub-section (10) of section 132 of the Act. The respondents by not providing reasons for almost two years has deprived the petitioner from raising objections for such retention. This itself is enough to hold that the respondents are not authorized to continue retention in spite of the fact that such retention is extended upto 30.04.2025. This Court in case of Cowasjee Nusserwanji Dinshaw [ 1987 (3) TMI 106 - GUJARAT HIGH COURT] after analyzing the provisions of section 132 of the Act and conjoint reading of the provisions of sub-sections (8), (10) and (12) held that the assessee must be communicated reasons recorded by the Authorized Officer on the basis whereof the Commissioner granted necessary approval . Thereafter, considering the decisions of Oriental Rubber Work [ 1983 (11) TMI 1 - SUPREME COURT] it was held that failure to communicate the reasons recorded would render further retention of the account books and documents seized udder sub-section (8) of section 132 illegal, invalid and unlawful. Thus, the respondent-authorities are not justified in continuing the retention of books of accounts and other documents contrary to the provision of section 132 (8) of the Act and the petitioner is entitled to receive the same forthwith from the respondent-authorities. This petition succeeds and the respondent-authorities are directed to return the books of accounts and other documents seized during the course of search under section 132 (1) of the Act forthwith.

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• 2024 (11) TMI 323
  Reopening of assessment u/s 147 subsequent to insolvency proceedings - HELD THAT:- As in view of clear provisions of law no person would be entitle to initiate or continue any proceedings in respect of any claim for any dues relating to the period prior to approval of resolution plan. In view of approval of resolution plan, all liabilities of all stakeholders including that of Government/ Statutory Authority shall stand extinguished after approval of the resolution plan. We therefore, deem it appropriate to quash and set aside the notices issued u/s 148 of the Act as well as the impugned order passed under Section 148A (d).

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• 2024 (11) TMI 322
  Ex-parte order passed based on old PAN number - as argued all the transactions of the Society have been accounted for in the books of accounts and audited reports and income tax returns have been filed with new PAN number. However, the department has issued notice to the old PAN number. HELD THAR:- Suffice it to note that the department has issued a notice to the PAN which is available in their record. However, the petitioner contends that the notice was issued by mentioning the old PAN number, it could not give reply to the notice. Hence, this Court considers it proper to provide an opportunity for the petitioner to give reply to the 148 notice. Hence, the matter requires a remand. The assessment order, penalty order and demand notices are liable to be set-aside, so they are set-aside. Writ of Certiorari is ordered. The order passed by the first respondent u/s 147 R/w Section 144 R/w Section 144B and the demand notice issued under Section 156 quashed.

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• 2024 (11) TMI 321
  Validity of Income tax assessment order - department has mechanically passed the order without considering the reply submitted by the petitioner from the proper perspective - HELD THAT:- The society has specifically contended that it is not registered under Section 12AA for the year 2018-19, hence provisions of Sections 11 to 13 of the Income Tax Act are not applicable. It has also claimed exemption under Section 10 (23) (iiiad) of the Act and placed reliance on the decision of M/s. CHILDREN s EDUCATIONAL SOCIETY [ 2013 (7) TMI 519 - KARNATAKA HIGH COURT] . However, the respondent has failed to consider the reply from the right perspective and has mechanically passed the untenable order. Hence, the matter requires a remand. The order and the notice are liable to be set aside and so they are set aside. The matter is remanded to the respondents to the stage of reply to the 142 (1) notice. The petitioner is at liberty to file an added/ additional reply

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• 2024 (11) TMI 320
  Validity of reassessment proceedings beyond period of limitation - whether the assessment order dated 12.05.2023 and the consequent proceedings taken thereafter could have been so done when the notice u/s 148 was issued on 29.03.2021? - HELD THAT:- A perusal of sub-section (2) of Section 153 would indicate that assessment, reassessment, or recomputation shall not be made after the expiry of nine months from the end of the financial year in which the notice under Section 148 was issued. The proviso, however, provides that in respect of notices under Section 148 served on or after first day of April 2019, the period of nine months as aforesaid will be substituted by twelve months. In the present case, notice has been issued on 29.03.2021, thereby making applicable the provisio to sub-section (2) of Section 153 requiring the reassessment to be made within twelve months from that date. Thus, we find credence in the submission made the petitioner that the reassessment was required to be completed by 31.03.2021. In the present case, the reassessment having been done by way of assessment order dated 12.05.2023 is beyond the period of twelve months indicated above. Respondents submission as regards the TOLA , would be applicable to the present case would be liable to be rejected for the simple reason that the said Act was applicable to the period from 01.04.2020 to 30.06.2021. In the present case, the notice having been issued u/s 148 on 29.03.2021, is within the period of extended limitation and therefore, the notice having been issued under Section 148, the rigor of proviso to sub-section (2) of Section 153 would be equally applicable. Thus the reassessment order dated 12.05.2023 and all actions taken pursuant thereto would be non-est. Decided in favour of assessee.

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• 2024 (11) TMI 319
  TP Adjustment - comparable selection - excluding Infosys BPO Ltd. and TCS E-serve Ltd. from the list of comparables - HELD THAT:- As decided in Transcend MT Services Pvt. Ltd [ 2024 (7) TMI 1548 - DELHI HIGH COURT ] as for Infosys BPO Ltd. and TCS E-Serve Ltd. is concerned, it could not be disputed before us that they were mega entities and could not have been included in the list of comparables bearing in mind the judgment rendered by the Court in CIT v. Agnity India Technologies Pvt. Ltd. [ 2013 (7) TMI 696 - DELHI HIGH COURT] No substantial question of law.

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• 2024 (11) TMI 318
  Addition u/s 69C and 68 - undisclosed credit card expenditures in foreign currencies - material found during the course of survey proceedings - AO proceeded to make the addition u/s 69C by converting the amount of foreign currency spent by the assessee utilising 1 US $ = Rs. 55 1 UK Pound = Rs. 82 and made the addition HELD THAT:- AO being the jurisdictional officer to the respective assessee has to make the investigation on receipt of those information s whether these information s are pertained to the assessee and has to form an opinion and reasons for reopening of the assessment. Whereas, in the present case, a survey proceeding was initiated in the case of the assessee itself and not the information passed on by DIT (Inv.) from a third person. The survey conducted in the case of the assessee revealed that assessee was in possession of various credit cards and the information contained in the mobile of those credit cards enabled the assessee to utilize the same wherever he is. Assessee being a resident in India holding various international credit cards of various friends and relatives and the assessee was able to utilize the same wherever he is. When the Investigation Wing asked for details, the assessee was not able to provide the same nor submitted any information during the investigation. The same was forwarded to the AO and AO having jurisdiction over the assessee and after verification of the information available on record, the information forwarded by the Investigation Wing was not reflected anywhere in the information available with the AO - AO has no option but to reopen the assessment to make further investigation. Accordingly, the AO also issued notice u/s 143(2) of the Act to collect the information. In response only, assessee attended the proceedings and submitted the relevant information. Therefore, the submissions of the assessee and relying on the decision of Hon ble Delhi High Court are distinguishable to the facts on record. Accordingly, grounds raised by the assessee are dismissed and also we observed that ld. CIT (A) has elaborately discussed the above points and rightly dismissed the grounds raised by the assessee. Addition u/s 68 and 69C - As observed that assessee was found with the information in his mobile relating to several credit cards in US $ and UK Pound which belongs to assessee, his friends/relatives including his wife. Since the information relating to these credit cards are in the mobile of the assessee, as the assessee was able to utilize the same without the presence of any of the relatives and friends. Therefore, when the details were called for from the assessee and the assessee was not in a position to explain the same before the DIT (Inv.) and before the Assessing Officer, it clearly indicates that assessee has utilised the funds through these credit cards for his personal use and none of the parties or friends who are the owners of the credit cards never filed any proof/documents or affidavit to claim the same as belong to them. In absence of any material before the AO, the AO has no option but to make the addition in the hands of the assessee. Therefore, we do not see any reason to disturb the findings of the ld. CIT (A). Accordingly, grounds raised by the assessee are dismissed. Unexplained money received through Ananda Heritage Hotels P. Ltd. on a protective basis - Coming to the appeal preferred by the Revenue, we observed that the investment was made in Ananda Heritage Hotels P. Ltd. through M/s. Wilton Investment Ltd. and it is a fact on record that these investments were made through Wilton Investment Ltd. and the transaction is of share application money. Ananda Heritage Hotels P. Ltd. being an independent person accordingly Assessing Officer has made substantive addition in the hands of Ananda Heritage Hotels P. Ltd. and made the addition protectively in the hands of the assessee. We observed that ld. CIT (A) has observed the above facts on record and deleted the same in the hands of the assessee. Therefore, we do not see any reason to disturb the same. Accordingly, the appeal filed by the Revenue is dismissed.

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• 2024 (11) TMI 317
  Ad hoc disallowance @ 10% of the personnel expenditure - HELD THAT:-AO noticed from the Profit and Loss account statement that assessee has claimed expenditure of personnel expenditure, however he has mistook that assessee has claimed personal expenditure without providing any documentary evidences. Addition made by the AO is nothing but elementary mistake by presuming the expenses claimed by the assessee as personal expenditure instead of personnel expenditure. Since the assessee has brought to our notice details of payment of salaries and wages to various employees and even AO failed to ask for any details before making such ad hoc disallowances, we are inclined to delete the addition made by the AO which is a mistake apparent on record and clearly mistaken presumption. Decided in favour of assessee.

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• 2024 (11) TMI 316
  Reopening of assessment u/s 147 - notice beyond four years - HELD THAT:- We are of this opinion that conditions precedent for reopening of the assessment beyond four years are not satisfied. There is no allegation of suppression of material fact. Accordingly, this issue is decided in favour of the assessee thereby holding that reopening after four years is bad in law. On this score only, the assessment proceedings and further proceedings of the ld. CIT(A) cannot be said to be valid, accordingly set aside. Jurisdiction passed by ITO, Ward-2(1), Patna for Issuance of notice - We have gone through the disposal of objection with regard to the jurisdiction passed by ITO, Ward-2(1), Patna that reflects that the issue of jurisdiction has been denied only on this ground that earlier jurisdiction lies with AO, Patna since issue of the PAN and as per the AO since no objection whatsoever has been raised by the earlier, hence, jurisdiction lies on the AO, Patna. We hereby hold that the issuance of notice by the AO, Patna is bad in law and on this score also, order passed by the ld. AO as well as ld. CIT(A) is against the law and accordingly, both the orders are hereby set aside. Appeal filed by the assessee is allowed.

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• 2024 (11) TMI 315
  TDS u/s 195 - addition of expenditure for IT service charges u/s 40(a)(ia) - treating such expense incurred by the assessee company as fees for technical services/royalty - HELD THAT:- We find that in the case of assessee itself for assessment years 2012-13, identical additions were made but the Co-ordinate Bench of this Tribunal has already decided the issue in favour of the assessee [ 2020 (1) TMI 1641 - ITAT PUNE ] held payment for use of software made by the assessee to CMA CGM, France does not satisfy the requirement of use of, or the right to use, any copyright of software . Once it is held that para 3 of Article 12 is not attracted, as a sequitur, the application of clause (a) of para 4 of Article 12 of the DTAA with Portuguese would automatically be ousted, thereby making the amount paid by the assessee to CMA CGM, France for use of LARA, DIVA and Ocean software as immune from taxation in India. Going by the beneficial provision in the DTAA vis- -vis the Act, it is held that there was no requirement on the part of the assessee to deduct tax at source which should have called for any disallowance u/s. 40(a)(i) of the Act - Decided against revenue.

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• 2024 (11) TMI 314
  Addition as on-money payment made for the purchase of property - CIT(A) deleted addition - DR submitted that based on the seized material found in the form of Excel Sheet which was created on the date of Registration of the sale deed certain cash transactions were recorded by the sellers of the property - HELD THAT:- AO has not brought on record any corroborative evidences against the assessee apart from the Excel Sheet seized from the third party or by relying on the return of income filed by the sellers of the property. On perusal of the seized annexure in the form of Excel Sheet, we find that the contents does not have any nexus to the assessee such as name of the assessee or details of the property purchased by the assessee. Except, the seized document in the form of Excel sheet, the Ld. AO has not related the entries in the Excel sheet by way of independent corroborative evidences involving the nexus of the buyer and the property details, we are of the view that Ld. AO has erred in considering the amount as on-money payment by the assessee. Excel Sheet was found in the premises of M/s. Meenakshi Agro Chemicals for which the assessee is not at all related. We also observe from the order of the Ld. AO that no incriminating material has been seized from the premises of the assessee. We also find that Ld. AO has not conducted any independent enquiry on the contents of the Excel Sheet by linking it to the assessee and bringing any material on the record that the assessee has transferred cash to the sellers. As relying on the case of K.V. Lakshmi Savitri Devi [ 2012 (12) TMI 1111 - ANDHRA PRADESH HIGH COURT] we find that the CIT(A) has rightly concluded by deleting the addition made by the AO we find no reason to interfere with the order of the Ld. CIT(A) on this ground - Decided in favour of assessee.

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• 2024 (11) TMI 313
  Disallowance of prior period expenses - Expenditure not pertaining to the year under consideration - HELD THAT:- AR before us fairly submitted that let the details given by the assessee be examined by the ld AO as no finding whatsoever has been given by the ld AO with regard to each of such expenditure. It was always the case of the assessee that this expenditure get crystallized during the year or the details of the incurrence of the said expenditure were received after the completion of the audit of the earlier years. Both these categories of the expenditure were booked by the assessee as prior period expenditure. We find that the genuineness of the said expenditure is not doubted by the lower authorities. The prayer made by the ld AR before us is very fair and hence we deem it fit and appropriate to restore this issue to the file of the ld AO for verification of the fact as to whether the assessee had not claimed the very same expenditure in earlier year - Ground No. 1 raised by the assessee is allowed for statistical purposes. Addition of depreciation on estimated increase in cost of properties - AO observed that the assessee has accounted for estimated cost of 10% towards stamp duty/ registration charges in respect of properties where lease/ sub lease is yet to be executed and has provided depreciation on this addition - HELD THAT:- We find that the issue is no longer res integra in view of the decision in assessee s own case where the very same issue has been remitted back to the file of the ld AO for de novo verification for AY 2003-04. We find that the Hon ble Jurisdictional High Court had restored the issue for verification by the ld AO. AR made a statement from the bar that no addition was made by the ld AO up to AY 2009-10 thereof. However, in the interest of justice, we feel it appropriate to restore this issue to the file of the ld AO - Ground No. 2 raised by the assessee is allowed for statistical purposes. Addition on account of revenue de-recognition in the books of the assessee - HELD THAT:- The issue in dispute has been decided in favour of the assessee by the Hon'ble Supreme Court in the case of Vashisht Chay Vyapar [ 2018 (3) TMI 56 - SUPREME COURT] But considering the application preferred by the assessee u/s 158A(1) of the Act dated 08.07.2020 in Form 8 which is maintainable, we deem it fit and appropriate to restore this issue to the file of the ld AO to decide based on the final outcome of Hon'ble Supreme Court in assessee s own case on the said issue. In our considered opinion, this would keep the interest of both the parties alive. Accordingly, Ground No. 3 raised by the assessee is allowed for statistical purposes. Addition on account of administrative charges of Andrews Ganj Project - assessee has not shown any income on account of administrative charges of Andrews Ganj Project - HELD THAT:- We find that the issue is subject matter of consideration by the Hon ble Jurisdictional High Court in Income Tax Appeal [ 2014 (11) TMI 17 - DELHI HIGH COURT] in assessee s own case for AY 2002-03 answered issue in favour of the appellant-assessee and against the Revenue as held it is an accepted position that the appellant-assessee had never received 1.5% administrative expenses in respect of the residential quarters in Andrews Ganj project. Clearly, therefore, the stand of the appellant-assessee that the notes of the meeting held on 7th September, 1995 related to the development of community centre complex at Andrews Ganj, New Delhi and not to residential quarters is correct. The aforesaid document has been misread. There was no accrual of income in case the Government of India had not agreed to pay any overhead expenses or administrative charges @ 1.5% in respect of residential quarters at Andrews Ganj Complex, New Delhi. Addition on account of expenditure on grants-in-aid - main contention of the ld AO is that expenditure incurred towards grant-in-aid are akin to donation paid by the assessee. Hence, the same cannot be treated as having been incurred wholly and exclusively for the purpose of business of the assessee, and hence not allowable as deduction - HELD THAT:- We hold that assessee would be entitled for deduction in respect of grant-in-aid expended by it on the ground that same are to be construed as wholly and exclusively incurred for the purpose of business of the assessee. Accordingly, ground No. 5 raised by the assessee is allowed. Addition on account of revenue recognition on realization basis in respect of loan application fees, front-end fees, administrative fee and processing fees of loans as against accrual basis - HELD THAT:- First of all loan processing/ front-end fees becomes payable to the company only when the loan is actually disbursed and not when the loan is sanctioned. There is no certainty as to when the concerned borrower would draw the loan amount from the assessee. Hence, taxing the loan processing fee, front-end fee etc on accrual basis would be wrong as there is no certainty of its realization. Further, C AG had also directed the assessee to recognize income respect of these services on realization basis instead of accrual basis by duly appreciating the fact that there is no certainty of its realization. Further, this is done only for Government borrowers by the assessee because the Government may choose not to draw the disbursement from the assessee, even though the loan is sanctioned to it. Depending upon the political climate, financial need and the financial strain that could be managed or tolerated by the particular Government, the decision to draw the sanctioned amount from the assessee company would be taken by the respective Government borrowers. All these factors are certainly beyond the reach and control of the assessee company. Hence, it could be safely concluded that there is no certainty of realization of the fees in the form of loan processing fees, application fee, front-end fee etc. Hence, we find that C AG had directly directed the assessee to recognize income on receipt basis in respect of these services qua Government borrowers. Further, we find that the issue in dispute is no longer res integra in view of the decision of the Hon ble Jurisdictional High Court in assessee s own case for Assessment Year 2007-08 reported in [ 2020 (2) TMI 372 - DELHI HIGH COURT] . We find that there is no absolutely no basis at all for the revenue to tax a sum as it is made purely only on ad hoc basis - Ground raised by the assessee is hereby allowed. Disallowance u/s 14A - HELD THAT:- We find that the assessee had derived exempt income and had duly offered the same to tax in the return of income itself. Hence, there was no exempt income claimed by the assessee at all warranting application of application of provision of Section 14A of the Act. See Era Infrastructure (India) Ltd [ 2022 (7) TMI 1093 - DELHI HIGH COURT] Accordingly Ground raised by the assessee is allowed. Seeking correct TDS credit - This matter requires factual verification by the ld AO and accordingly the ld AO is directed to decide this issue in accordance with law after considering all the explanations and documents submitted by the assessee in support of its contention. Accordingly, Ground allowed for statistical purposes. Addition on account of capitalization of financial charges written off - assessee submitted that these financial expenses were incurred by it on account of deferred expenditure on the issue of bonds and term loans in its books of account whereas, the same were fully claimed as deduction in the year on incurrence for the purpose of computing the taxable income - HELD THAT:- The issue in dispute is squarely covered by the decision of IRFC Ltd [ 2014 (6) TMI 224 - DELHI HIGH COURT] held that respondent-assessee was/is a Government of India undertaking and was engaged in the business of leasing and financing to Indian Railways. It procured funds from various sources and acquired rolling stock which was leased to Indian Railways. The expenditure which was incurred on bonds was for ensuring finance and availability of funds for carrying out the business of finance and leasing. To procure and get funds in the form of bonds etc, some expenditure had to be incurred. These funds, when procured, were used for the business activities to earn income. It is not a case wherein the respondent-assessee was yet to set up or commence their business. The business, it is accepted, had commenced much earlier and not during the year in question. Disallowance made by the AO on account of prior period expenses - AR submitted additional evidences in terms of Rule 29 of the ITAT Rules, giving the complete break up of the prior period expenses together with an affidavit supporting the Rule 29 petition - HELD THAT:- we find that these additional evidences at the first instance are required to be admitted as it would be relevant for adjudication of the appeal and moreover we find that all these correspondences are pertaining to year 2007 i.e. the additional evidences submitted by the assessee constitutes internal correspondences between officers of the assessee company giving certain authorization to book certain expenses. But we find that these authorization dates are in the year 2007 whereas the appeal before us pertains to AY 2004-05. Hence, it is very clear that the authorization were indeed obtained by the assessee company after the claim of deduction was made. Hence, there is no evidence has rightly pointed out by the ld DR that the liabilities had indeed crystallized during the year. Hence, the disallowance made by the ld AO on account of prior period expenses and confirmed by the ld CIT(A) is in order - Decided against assessee. Disallowance made u/s 14A - AO estimated 25% of the dividend income and made a disallowance u/s 14A of the Act on the assumption that it was the expenditure incurred by the assessee for the purpose of earning income - HELD THAT:- We find that the year under consideration is prior to the introduction of Rule 8D of the Income Tax Rules, hence the computation mechanism provided in Rule 8D cannot be applied in the instant case - we direct the ld AO to disallow 1% of the dividend income as expenditure u/s 14A - Ground raised by the assessee is partly allowed. Disallowance on account of expenses on Corporate Social Responsibilities (CSR) - HELD THAT:- The issue in dispute is clearly covered by the decision of PEC Ltd [ 2022 (12) TMI 759 - DELHI HIGH COURT] wherein, it was held that amendment by way of Explanation 2 to section 37(1) of the Act w.e.f. 01.04.2015 was prospective in nature and thus CSR expenditure incurred prior 01.04.2015 was to be allowed. Disallowance of prior period expenditure - AO had disallowed this prior period expenditure as the assessee had not proved with cogent evidence with the said expenditure had been crystallized during the year so as to make it eligible for claiming deduction - HELD THAT:- Before us, no arguments were advanced by the ld AR on the said issue. Hence, we hold that there is no further submission that is required to be made by the assessee with regard to this issue. Hence, we do not deem it fit to interfere in the order of the ld CIT(A) in this regard. Accordingly, ground raised by the assessee is dismissed. Disallowance of expenses u/s 14A - The law is very well settled by the decision of Maxopp Investments Ltd [ 2018 (3) TMI 805 - SUPREME COURT] wherein, it has been held that the disallowance cannot be exceed exempt income. Since, the exempt income is only Rs. 21,06,000/-, the disallowance of expenditure cannot exceed the same. We direct the ld AO accordingly. Accordingly, ground is partly allowed. Addition on account of accrued interest receivables on account of advance paid on property tax to MCD - CIT(A) held that the assessee is a agency of the Govt of India and was held not liable to pay property tax in respect of community centre developed by the Govt and therefore, the interest recoverable from the property tax from the MCD becomes the assessee s income - HELD THAT:- Before us, the ld AR stated that in AY 2006-07 the very same addition was deleted by the ld CIT(A) and the revenue did not prefer any appeal before this Tribunal. Having accepted this situation in AY 2006-07 the revenue cannot have any grievance on the same issue in the year under consideration. Applying the principles of consistency as decided by the Hon'ble Supreme Court in the case of PCIT Vs. Maruti Suzuki India Ltd [ 2019 (7) TMI 1449 - SUPREME COURT] we hold that the interest income cannot be brought to tax in the sum in the hands of the assessee. Accordingly, ground raised by the assessee is allowed. Disallowance of expenses u/s 14A of the Act read with Rule 8D of the Rules, with regard to investment in bonds - We find that the ld CIT(A) had directed the ld AO to consider only those investments which yielded exempt income while computing the disallowance in terms of Rule 8D(2) of the Income Tax Rules, 1962. Admittedly the investment in bonds made by the assessee had yielded interest income to the assessee which is taxable receipt. Hence, the provisions of section 14A per se cannot be made applicable for the same. The error committed by the ld AO in this regard has been duly rectified by the ld CIT(A) in his order. Hence, we do not find any infirmity in the order of the ld CIT(A). Accordingly, the ground raised by the revenue is dismissed.

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• 2024 (11) TMI 312
  Unexplained cash credit u/s 68 - onus to prove - CIT(A) deleted addition relying on the fact that four (4) out of the six (6) loans were repaid by the assessee during the relevant year and the other two loans were repaid by the assessee during the subsequent financial years - HELD THAT:- CIT(A) has considered the entire remand report and appreciated the observation of the Assessing Officer correctly and no fault could be found with the order of the CIT(A) while deleting the addition made by the AO. Assessee has correctly pointed out that the AO has made addition of ₹ 850 lakh out of total loan of ₹ 45.53 crore in the case of the assessee. In respect to loans on receipt of information under section 133(6) of the Act the Assessing Officer has considered it to be sufficient compliance to explain the credits by accepting the transaction of loan creditors. Similar evidence having come on record in remand proceedings, it is not appropriate for the AO to object the deletion of addition made. It is also noted that the AO even though noted that interest has been not paid on unsecured loan has accepted the majority of such unsecured loan in the assessment framed on receipt of information u/s 133(6) - Non-payment of interest thus could be no valid justification for making addition under the provisions of section 68 - assessee having satisfactorily discharged its onus by placing on record voluminous evidence, CIT(A) has correctly appreciated the facts and evidence on record and thus the deletion of addition made by CIT(A) is reasonable and correct. Also loan received by the assessee have been repaid during the year under consideration and in respect to one loan it has been repaid in the subsequent accounting year. Repayment of loan by the assessee is evident from evidence placed on record and is undisputed fact on record. Repayment of loan accepted by the Revenue Authorities is not controverted by the learned D.R Thus, we are of the considered opinion that the assessee has discharged its onus to explain identity and creditworthiness of loan creditors as well as genuineness of transaction. There remains no scope for invoking provisions of section 68 on the facts and evidence on record. The addition has been correctly deleted by the learned CIT(A) on the facts and evidence on record. Decided in favour of assessee. Addition u/s 14A - expenditure incurred earning exempt income - CIT(A) deleted addition - HELD THAT:- It is undisputed fact on record that the assessee has own funds and non-interest borrowing fund at ₹ 62.55 crore. Investment made in securities as computed by the AO is ₹ 31.79 crore. Entire investment could be considered as explained out of available fund comprising on own fund and non-interest borrowing. As relying on Reliance Industries Ltd[ 2019 (1) TMI 757 - SUPREME COURT] and HDFC BANK LTD.[ 2016 (3) TMI 755 - BOMBAY HIGH COURT] learned CIT(A) has correctly deleted the addition made. Respectfully following the same, we find no merit in the ground no.3, raised by the Revenue. Addition of claim of interest paid on borrowed funds - CIT(A) deleted addition - HEDL THAT:- It is undisputed fact on record that the assessee has own funds and non-interest borrowing fund at ₹ 62.55 crore. Advances given interest free are noted at ₹ 17.85 crore. Entire advances could be considered as explained out of available fund comprising of own fund and non-interest borrowing. Case of Reliance Utilities Power Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] is squarely applicable to the facts in the case of the assessee. In our opinion, the learned CIT(A) has correctly deleted the addition made by the Assessing Officer. Addition being sundry balances written-of - as argued advance was given in the course of business and on abandonment of project which was written-of in its books of account - CIT(A) deleted addition - HELD THAT:- On perusal of decision of learned CIT(A) and judgment of Binani Cement Ltd. [ 2015 (3) TMI 849 - CALCUTTA HIGH COURT] we are of considered opinion that the amount written-of in the books of account on abandonment of project is allowable as business expenses. We do not find any fault or infirmity in the impugned order passed by the learned CIT(A). Revenue appeal dismissed.

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• 2024 (11) TMI 311
  AO power either to withdraw or modify or substitute one assessment order passed by him earlier with another assessment order - AO issued a corrigendum correcting the total income - HELD THAT:- As corrigendum issued in rectifying the error in preamble of the assessment order as legal and valid. Considering the facts of the present case before us, we noted that the AO while issuing original assessment order has wrongly noted the details of some other assessee as is apparent from the assessment order issued on 20.12.2019. The fact is that the corrigendum issued thereafter i.e., immediately on next day on 21.12.2019 carries the correct assessment order which was issued as a correct assessment order. Admittedly, the assessment order issued vide corrigendum is matching with the computation sheet and demand notice issued along with the original assessment order dated 20.12.2019. The decision of Hon ble Supreme Court Kalyankumar Ray [ 1991 (8) TMI 291 - SUPREME COURT ] rather support the case of Revenue for the reason that the ITNS 65 and ITNS 50 i.e., Form for determination of tax payable and demand notice (in old scheme), now in computerization the computation sheet and demand notice is generated on the system which was created itself on 20.12.2019. In our view, the AO has made mistake in issuing original assessment order and subsequently rectified the mistake by issuing corrigendum which is a valid assessment order and hence, we reverse the finding of CIT(A) on this issue. Since the CIT(A) has not adjudicated the issues on merits, the matter is restored back to the file of the CIT(A) for adjudication on merits after allowing reasonable opportunity of being heard to the assessee.

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• 2024 (11) TMI 310
  Revision u/s 263 on issues which were never the subject- matter of the assessment in a proceeding initiated under section 147 - HELD THAT:- We find that the issues on which re assessment order was passed under section 143(3) r/w section 147 of the Act and the issues on which revision order passed under section 263 of the Act are entirely different. The assessee had filed Paper Books containing documents filed during re assessment proceedings under section 147 and revision proceedings under section 263. We also find that during the re assessment proceedings, a notice dated 10/12/2021 under section 142(1) was issued along with a questionnaire. The assessee furnished reply along adducing documentary evidences exhibited. Thus, we find merit in the submission of assessee that the Assessing Officer had made the enquiry during re-assessment proceedings in line with the reasons recorded and after verification had accepted the returned income of the assessee. Thus, no additions were made based on the reasons recorded. Assessing Officer was prohibited from making additions in respect of other issues which were not part of reasons recorded. Thus when no addition is made on account of grounds of re opening. There is no scope to make any other addition. Section 263 does not empower indirectly to circumvent the provision by directing to make an enquiry on some other independent issue. DR is incorrect to invoke Explanation 3 to section 149 of the Act. In view of the aforesaid discussions, we are of the considered opinion that the impugned order passed by the learned Commissioner is bad in law and is hereby quashed. Therefore, ground of appeal no.2, stands allowed. AY 2017 18 - We find that in the present facts and circumstances, the legal maxim 'sublatofundamentocaditopus' is applicable, meaning thereby 'a foundation being removed, the superstructure falls'. Once the basis of a proceeding is gone, the action taken thereon would fall to the ground. If initial action is not in consonance with law, all subsequent proceedings would fail as illegality strikes at the root. Thus, in the absence of valid foundation, exercise of a suo motu power is impermissible. It should not be presumed that initiation of power under suo motu revision is merely an administrative act. It is an act of a quasi judicial authority and based on formation of an opinion with regard to existence of adequate material to satisfy that the decision taken by the Assessing Officer is erroneous as well as prejudicial to the interests of the revenue. Revision of order passed by learned Assessing Officer under section 147 r/w section 143(3) by the learned Commissioner under section 263 being not as per mandate of law could not be sustained and is liable to be struck down.

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• 2024 (11) TMI 309
  TFDS u/s 195 - Non deduction of TDS on export commission paid by the assessee to NRIs - addition u/s 40(a)(ia) - CIT(A) deleted addition as remittance made to a non-resident for services rendered abroad, which services are not of the nature specified in Section 9, cannot be brought to tax in India - HELD THAT:- The remittance to the agents was in foreign currency, i.e., in the currency of the respective country of the agent. The remittance, it is note worthy, was made directly to the agents and no deposit was made in their accounts. As such, there was no question of the remittance having either been received in India or being deemed to have been received in India, as correctly held by the ld. CIT(A), to which there is no rebuttal. Then, since the services were rendered outside India, it does not amount to a case of income either accruing or arising in India. So, it only remains to be seen as to whether the ld. CIT(A) has correctly held the income of the non-resident to be not accruing or arising in India as per the provisions of Section 9. The first requirement is that of a business connection in India or any property in India or any asset or source of income in India or the transfer of a capital situated in India. It is evident on record and not disputed that the matter does not concern the income in question to have accrued or arisen, whether directly or indirectly through or from any business connection in India or any property in India or any asset or source of income in India or through the transfer of a capital asset situated in India. Then, since the payments were not by way of either salary, or dividend, or interest, or royalty or technical services, other provisions of Section 9 do not get attracted. This being so, the remittance in question cannot be taxed in India. The Department, again has not been able to refute this. As a necessary corollary, then, since the income of the non- residents is not exigible to tax in India, the provisions of Section 195 do not get attracted and there was no liability on the assessee to make TDS on the payment made. Therefore, despite referring to and relying on the provisions of Sections 5 and 9 of the Act, as stated in Ground No. 2, the Department has not been able to make out a case as to how the matter at hand gets covered within the provisions of these two Sections. The findings of the ld. CIT(A) on this issue remains un-hinged and firm. These findings are, therefore, confirmed. Addition u/s 14A - CIT(A) deleted addition - HELD THAT:- As no borrowings were made for making the investments and, therefore, no expenditure had been incurred to earn any income and no dividend or other exempt incomes were earned for the investment. The stress of the AO has been on the fact that the provisions of Section 14A of the Act are applicable despite no income having been earned. This, as held in Lakhani Marketing Inc [ 2014 (7) TMI 44 - PUNJAB AND HARYANA HIGH COURT] is not sustainable. Further, since surplus funds were available with the assessee, the reliance by the assessee on the following decisions is found to be well placed, decision of Winsome Textile Inds Ltd. [ 2009 (8) TMI 220 - PUNJAB AND HARYANA HIGH COURT] wherein also, it was held that the assessee had admittedly not made any claim for exemption and, therefore, Section 14 A could have no application. Moreover, as contended on behalf of the assessee and not disputed by the Department, in the assessee's own case for assessment year 2011-12 CIT(A) has itself deleted the addition made under Section 14 A under similar facts and circumstances. Thus action of the ld. CIT(A) deleting the addition made by the AO by invoking the provisions of Section 14 A of the Act found to be justified and the same is confirmed. Disallowance of interest @ 12% per month on notional basis, on the three advances given by the assessee - HELD THAT:- As we find that the availability of own funds of the assessee more than the advances for the year needs to be ascertained. Thus, a presumption of the advances having been made from such own funds/ surplus, cannot be denied in case of such availability of funds executing advances. AO is, accordingly, directed to ascertain the position of availability of the funds of the assessee exceeding the advances, as alleged and to grant relief to the assessee in accordance with law. Addition made on account of VAT penalty - compensatory v/s penal nature - assessee submitted that this expenditure was compensatory in nature but AO, however, held the VAT penalty to be penal in nature, having arising due to a penalty on the part of the assessee for not making deposit within the stipulated time - CIT(A) deleted addition and held the penalty to be in the nature of a fine which is compensatory - HELD THAT:- Before us, the Department has not been able to make out any case as to how the ld. CIT(A) is wrong in holding the penalty in question to be compensatory payment. No decision contrary to those relied on by the ld. CIT(A) has been cited before us. Therefore, finding no error therein, the Commissioner s action of deleting the addition is confirmed. Addition on account of application money paid by the assessee and advances made - CIT(A) deleted addition - HELD THAT:- CIT(A) observed that since the funds had been invested from the assessee's Current Account, in which, the assessee's own funds were deposited, it could not be said that borrowed funds were used for making the advance; that no interest was payable by the assessee of this money; and that therefore, the disallowance of interest on this score had not been correctly made by the AO. The ld. CIT(A) deleted the addition. While doing so, the ld. CIT(A) found no difference in the facts for both the years, i.e., assessment year 2013- 14 and 2014-15.For assessment year 2013-14, the above deletion of disallowance of application money paid to HUDA was not challenged by the Department before the Tribunal - Decided in favour of assessee. Addition of advances from the Current Account - CIT(A) deleting the addition as observed that the assessee made representing the non-interest bearing funds, ignoring that the Current Account is mixed kitty account where interest bearing and interest free funds can be parked for further payment - HELD THAT:- This position can well be verified and the AO is directed to ascertain the position of availability of the funds of the assessee exceeding the advances as alleged and to grant relief to the assessee in accordance with law.

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• 2024 (11) TMI 308
  Penalty u/s 271(1)(c) - addition in respect of disallowance of loss on Forex Derivatives treating it as speculative loss and disallowance of Foreign Exchange Fluctuation loss which was claimed by the assessee as per the assessee s understanding - HELD THAT:- The advice given to the assessee by the Consultant cannot be termed as furnishing of inaccurate particulars of income as envisaged under Section 271(1)(c) of the Act for penalty provisions. The decision of Hon ble Apex Court in the case of Reliance Petroproducts Pvt. Ltd [ 2010 (3) TMI 80 - SUPREME COURT] is categorically applicable in the assessee s case and, therefore, the penalty levied under Section 271(1)(c) of the Act is not justifiable on the part of the Assessing Officer. Thus, the penalty is deleted. Appeal of the assessee is allowed.

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• 2024 (11) TMI 307
  Reopening of assessment u/s 147 - Assessment of Long Term Capital Gain on sale of land - transaction of transfer of the land in question took place in Financial Year 2005-06 relevant to the A.Y. 2006-07 which was rejected by the AO - Adoption of full value consideration by AO - Claim of exemption u/s 54B - HELD THAT:- From the assessment order it is manifested that after rejecting the objection against issue of notice u/s 148 AO has not issued any show cause notice to the assessee for adopting the full valuation consideration u/s 50C(1) of the Act and hence, it appears that the assessee was not given an opportunity before adopting the full valuation consideration as per Section 50C(1) and consequent addition by the A.O on account of Long Term Capital Gain arising from sale of land in question. Though the assessee challenged the order before the CIT(A) however, still the assessee did not raise any specific ground regarding full valuation consideration or allowing the cost of acquisition or exemption u/s 54B. So far as assessing the entire sale consideration u/s 50C(1) of the Act is concerned the A.O is not justified in making the addition of the entire sale consideration without allowing the cost of acquisition. Even the AO has not made any attempt to ascertain the cost of acquisition or fair market value as on 01.04.1981 while assessing the Long Term Capital Gain in the hands of the assessee therefore, to that extent the order of the A.O is not sustainable. Assessee has also disputed the fair market value of the land in question as adopted by the A.O being full valuation consideration u/s 50C(1) of the Act in view of the fact reported by the registered valuer in the valuation report that the guideline value of the land situated at the main road is Rs. 5 crores per hectare whereas the A.O has adopted the full value consideration for a land measuring 0.101 hectare which is prime facie more than the guideline prescribed for the land in question reported by the registered valuer. Thus, in the facts and circumstances when the registered valuer has reported the guidelines value which is less than the full valuation consideration adopted by the A.O this aspect is required to be properly verified and examined by ascertaining the correct fact from the record. Even otherwise once the assessee has questioned the adoption of full value consideration, the fair market value is required to be determined as per Section 50C(2) of the Act. Accordingly, in the facts and circumstances of the case and in the interest of justice the matter is set aside to the record of the A.O for fresh adjudication after considering the cost of acquisition of the land in question as well as the fair market value in terms of Section 50C(2) of the Act. The assessee has also raised the claim of exemption u/s 54B of the Act which is also required to be verified and adjudicated by the A.O after giving an opportunity of hearing to the assessee. Assessee appeal allowed for statistical purpose.

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• 2024 (11) TMI 306
  Revision u/s 263 - deduction u/s. 54/54F has been allowed without proper examination of relevant details and materials - difference between no enquiry and inadequate enquiry - HELD THAT:- AO framed assessment u/s 143(3) and he has taken a conscious decision that the assessee entitled for deduction u/s 54F of the Act on going to the details of assets sold during the financial year 2016-017 relevant to assessment year 2017-18 and its cost of acquisition of said property. Assessee has furnished details of investment in new residential property vide notice u/s 142(1) - assessee has furnished the bills/vouchers. AO/NFAC after examining all the relevant details concluded on the allowability of deduction u/s 54F of the Act. It is also be seen that as noted by ld. PCIT assessee has furnished the details of investments in huge amount of Rs. 6,66,50,852/-, out of which deduction has been claimed amounting to Rs. 4,64,71,744/- without specifying the details of expenses against which deduction u/s 54F of the Act has been claimed. Once the ld. PCIT himself has noted that assessee has furnished the details of expenditure it cannot be said that there is no enquiry or inadequate enquiry on the issue of exemption u/s 54F of the Act. We note that notice u/s. 263 of the Act issued by the Pr. CIT is vague and only for making deeper enquiry and re-considering the evidences already on record duly considered during assessment proceedings based on purported proposal that fresh facts have been emerged subsequent to the order of assessment which is factually incorrect and untenable and the conditions or the factors enabling the Ld. Pr. CIT to invoke his jurisdiction u/s 263 have not been satisfied. Though Explanation provides for an extra discretionary power to the Commissioner in his revisionary powers under section 263 of the Act. This discretion cannot be assumed arbitrarily by the ld. PCIT. At least something he should bring on record to show the error and the prejudice to revenue caused by that error while assuming jurisdiction under section 263 of the Act. This can be done to the least by him by making independent inquiry/ investigation to conclusively bring on record such error and also the prejudice. In view of this we hold that exercising of jurisdiction u/s 263 of the Act is not justified. Accordingly, we quash the order passed by PCIT u/s 263 of the Act for the assessment year 2017- 18. Assessee appeal allowed.

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• 2024 (11) TMI 305
  Rectification application u/s 254 - first mistake claimed by assessee is such that the order of first- appeal passed by CIT(A) was without DIN and therefore non-est - HELD THAT:- As submitted that if the assessee was aggrieved by CIT(A) s order not having DIN, it was for the assessee to raise this issue either in Form No. 36 or during hearing of original appeal by ITAT. But the assessee did not raise any such grievance. Therefore, the assessee was not having grievance or alternatively it was a mistake/lapse on the part of assessee in not raising issue before ITAT but certainly there is no mistake in ITAT s order much less any apparent mistake. Therefore, in the garb of rectification of ITAT s order, the assessee cannot set right his own mistake or lapse. Ld. DR strongly requested to reject assessee s claim. On a careful consideration, we find full merit in the submissions of Ld. DR for revenue. We agree that the assessee has not raised any claim before ITAT that the order of first-appeal passed by CIT(A) was non-est for want of DIN and therefore the ITAT had no occasion to deal such an issue. Now, the assessee is trying to set right his own lapse/ mistake and for that matter going to upset the impugned order of ITAT. When the issue did not form part of appeal of assessee, how can there be a mistake apparent from record in the impugned order? Therefore, we do not find any merit in the claim of assessee; the same is hereby rejected. ITAT upholding the addition made by AO as ITAT has not considered CBDT Instruction No. 3 of 2017 dated 21.02.2017 read with Press Release dated 18.11.2016 wherein the CBDT allowed household savings of ladies upto Rs. 2,40,000/- - A careful consideration, we find that the ITAT has extensively dealt assessee s issue and thereafter taken a reasoned decision.assessee s claim that the ITAT has not dealt Instruction dated 21.02.2017 is wrong. So far as the decision of Chetnaben J. Shah Vs. ITO [ 2016 (7) TMI 973 - GUJARAT HIGH COURT ] there is no quarrel with the proposition that the authorities cannot make any addition on the basis of mere statement. In fact, this view is time and again accepted by various courts and ITAT, Indore Bench itself and we all are very much aware. But in present case, the AO has made addition on the basis of cash found and seized from assessee in the form of demonetized notes and not merely on the basis of statement of assessee. Therefore, there is no merit in Ld. AR s submission that the AO has made addition on the basis of mere statement. Being so, we do not find any mistake in the impugned order as being projected by assessee. Consequently, this issue is also rejected. ITAT upholding the levy of tax at a higher rate of 60% u/s 115BBE on the undisclosed income - ITAT followed the solitary available decision Maruthi Babu Rao Jadav [ 2021 (1) TMI 481 - KERALA HIGH COURT ] wherein it was categorically held that the amendment though made on 15.12.2016, would apply to the whole previous year 2016-17 relevant to AY 2017-18. Then, Ld. DR also submitted that in Shri Krishan Kumar Verma [ 2024 (3) TMI 1018 - MADHYA PRADESH HIGH COURT ] relied by Ld. AR, the undisclosed income of assessee was found not taxable u/s 69A and consequently section 115BBE itself was not applicable whereas in present case of assessee, the undisclosed income in the form of demonetized currency was found taxable u/s 69A and section 115BBE was also held to be applicable. Therefore, the case of Shri Krishan Kumar Verma (supra) had different facts and the assessee cannot take any benefit out of it. On a careful consideration, we find merit in the submissions made by Ld. DR for revenue. Levy of interest u/s 234A and 234B was challenged but the ITAT has decided the issue of interest u/s 234B only and missed to decide the issue of interest u/s 234A - We agree that the ITAT has missed to decide the issue of interest u/s 234A which needs to be rectified. As per Board Circular No. 2/2015 and case Nitin Kumar [ 2018 (4) TMI 338 - ITAT KOLKATA ] we find that the cash-seized by department in present case on 14.11.2016 and agreed by assessee to be adjusted against tax liability of assessee, is in the nature of self-assessment payment before due date of filing of return for AY 2017-18 which deserves to be allowed in computation of interest u/s 234A. Therefore, we remit this issue also back to the AO with a direction that the AO shall give benefit of cash seized and available with department in calculation of interest and re-compute interest u/s 234A.

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• Customs

• 2024 (11) TMI 304
  Maintainability pf appeal on low tax effect - HELD THAT:- As appellant submitted that in view of the Notification bearing No. 380/Miscellaneous/30/2023-JC (Instruction) dated 2.11.2023 and monetary threshold for filing of cases before this Court being enhanced and there being low tax effect in these appeals, appropriate orders may be made. In the circumstances, the appeals are dismissed having regard to the low tax effect.

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• 2024 (11) TMI 303
  Seizure of gold and vehicle by police authorities - Police authorities have intercepted the vehicle in which appellant and others were travelling and handed over the seized goods to the customs authorities - HELD THAT:- The appellant Mr. P. Narasimhulu is the brother-in-law of Mr. Y.M. Naseer Hussain, who was coming from Riyad. Appellant being brother-in-law has gone to receive Mr. Y.M. Naseer Hussain from the Chennai Airport. No any confessional statement of appellant that he is aware from gold. It is natural that being a close relative i.e., brother-in-law, the appellant has gone to receive Mr. Y.M. Naseer Hussain. The police authorities have intercepted the vehicle in which appellant and others were travelling and handed over the seized goods to the customs authorities. The Hon ble High Court of Bombay in the case of Union of India Vs Kasambhai Umerbhai Kureshi [ 1979 (2) TMI 216 - BOMBAY HIGH COURT] held that goods handed over to the customs authority by the police after seizing from the accused are not goods seized within the meaning of Section 123 of the Customs Act. Therefore, Section 123 of the Customs Act is not applicable against the appellant in the present case. In this case, it is important to note that there is no any confessional statement against the appellant by co-accused Mr. Y.M. Naseer Hussain. Co-accused Mr. Y.M. Naseer Hussain stated that appellant Mr. P. Narasimhulu came to pickup and was not aware that he was carrying the FMG in his luggage. AR also argued that vehicle is going through the longer route to the destination and alleged that since the appellant is a police constable and is able to escape from other authorities, they intentionally took the longer route so as to avoid the police authorities. Although no any evidence or statement regarding in this point. In my opinion, no one can be convicted or punished only on basis of assumptions. The appellant may have chosen the other route due to being in congestion or so many reason. Appellant Mr. P. Narasimhulu stated in his statement that he is working as constable in Proddutur PS. As his brother-in-law was coming to India, he engaged a car and went to receive his brother-in-law at Chennai Airport. He does not know anything about the items brought by his brother-in-law in his baggage and he went to Chennai Airport only to pickup him by hiring car. Therefore, no any confessional statement of appellant. No substantive evidence against the appellant is found. Hence the appeal is liable to be allowed.

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• 2024 (11) TMI 302
  Show cause notice adjudicated upon beyond the time contemplated u/s 28 (9) of the Customs Act - scope of amended provisions of section 28(9) - HELD THAT:- The show cause notice dated 17.10.2017 issued to the appellant would be governed by the unamended provisions of section 28(9) of the Customs Act. The unamended section 28(9) of the Customs Act provides that the proper officer shall determine the amount of duty or interest under sub-section (a) within six months from the date of notice, where it is possible to do so, or under sub-section (b) within one year from the date of notice, where it is possible to do so. The Commissioner, in the impugned order, has recorded a finding that despite the issuance of the show cause notice dated 17.10.2017, the appellant for a long period of time did not file any reply and, in fact, sought copies of the relied upon documents and annexures. Thereafter, he filed an interim reply dated 07.04.2021. Commissioner, further noticed that due to covid related restrictions, the adjudication proceedings were taken up only in February 2021. Thereafter, the appellant again sought a copy of the show cause notice through an advocate which was made available to the appellant in March 2021. The personal hearing took place on 03.06.2021 and the matter was adjudicated on 29.06.2021. Commissioner has given good and cogent reasons for holding that it was not possible to adjudicate the show cause notice within time as stipulated under the unamended section 28(9) of the Customs Act. All that has been pointed out by appellant is that even if the appellant had not filed any reply to the show cause notice, the Commissioner should have adjudicated the show cause notice within the stipulated time. This aspect has already been examined in the earlier part of this order. Appellant has not made any submissions on the merits of the order and, therefore, only the limitation aspect has been considered. Thus, for all the reasons stated above, there is no infirmity in the order passed by the Commissioner. The appeals, therefore, deserve to be dismissed.

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• 2024 (11) TMI 301
  Maintainability of one appeal filed by Revenue against 13 Bills of Entry - HELD THAT:- In a case where there are numbers of Bills of Entry and for all Bills of Entry, if one common order-in-original is passed, then only one appeal is sufficient; however as per the Explanation of the Rule 6(A) ibid, it is clear that when more than one order-in-original are passed, then appellant or assessee is required to file numbers of appeals as many as numbers of order-in-original. But in the present case, the Commissioner (Appeals) passed a common order-in-appeal disposed of the appeals covering 13 Bills of Entry; therefore, as per Rule 6(A) ibid the Appellant-Revenue is required to file 13 appeals challenging each Bill of Entry which is an assessment order in itself. We find that the Ahmedabad Bench in the case of CMR Nikkie India Pvt Ltd [ 2021 (6) TMI 270 - CESTAT AHMEDABAD] has also interpreted Rule 6(A) and has held that the number of appeals which the department is required to file, will be equivalent to the number of Bills of Entry filed by the importer/assessee. Thus, we are of the considered opinion that the present appeal filed by the Revenue is not maintainable. Revenue is directed to file 13 appeals instead of one appeal, if they are so advised.

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• 2024 (11) TMI 300
  Valuation of import of Aluminium Scrap - re-determining the assessable value - respondent self-assessed the duty, but the AO prima facie did not accept the value and put a query to the respondent that the value of the aluminium scrap did not match the contemporary import data available on NIDB - HELD THAT:- As transpires from the speaking order passed by the AO and the order passed by the Commissioner (Appeals) that the reasons given by the AO for re-determining the assessable value have not been considered by the Commissioner (Appeals) at all. In fact, the Commissioner (Appeals) has addressed issues which were not even considered by the AO in the speaking order. Commissioner (Appeals), has not even examined the Bills of Entry referred to by the AO which formed the basis for rejection of the transaction value and the re-determination of the assessable value. The order passed by the Commissioner (Appeals) cannot be sustained. The Commissioner (Appeals) shall pass a fresh order as expeditiously as is possible and preferably within a period of four months from the date a copy of the order is produced.

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• Corporate Laws

• 2024 (11) TMI 299
  Doctrine of Merger - Jurisdiction of the respondent to adjudicate stamp duty under sections 31 and 33 of the Indian Stamp Act, 1899 - challenge to impugned order on the grounds that the respondent misinterpreted and misapplied Delhi Towers Ltd. while passing the impugned order - HELD THAT:- The meaningful reading of section 47A reflects that it pertains to instruments which can be registered under the Registration Act, 1908. Section 47A (3) confers suo-motu power on the respondent to call for and examine any instrument to satisfy himself as to the correctness of its value or consideration and the duty payable thereon. However, such suo-motu power can only be exercised within two years from the date of registration of the instrument. In the present case, the petitioner filed Form 21 with the Registrar of Companies for registration of the merger order on 07.12.2011 and the respondent issued the show-cause notice on 20.03.2014 which is beyond the period of limitation of two years as provided under section 47A (3). There is legal force in the argument advanced by the learned Senior Counsel for the petitioner that the exercise of power conferred upon the respondent by section 47A (3) is appearing to be barred by limitation. A Coordinate Bench of this Court in Delhi Towers Ltd. observed that the Supreme Court in HINDUSTAN LEVER VERSUS STATE OF MAHARASHTRA [ 2003 (11) TMI 335 - SUPREME COURT] held that orders passed by courts have been subjected to levy of stamp duty in several situations. It was also observed that the thing which is liable to stamp duty is the instrument and it is not a transaction of purchase and sale which is struck at. The Court also observed that merely because the legislature has not amended the existing statutory provision as applicable to Delhi to specifically include transfer of property under an order approving a scheme of amalgamation in the definition of conveyance, it is of no consequence at all. The same does not amount to exclusion from applicability of the Indian Stamp Act and chargeability to stamp duty thereon. It was also observed that the statutory definition of conveyance under section 2 (10) of the Act is an inclusive definition of wide import which cannot be confined to specific instruments mentioned in the statute. The argument advanced by the Standing Counsel for the respondent that the Notification no. 13 dated 25.12.1937 has been repealed and is not applicable, does not have any legal force and is accordingly rejected. The petitioner and ACIPL were wholly owned subsidiaries of a common parent company Holderind and therefore, the scheme of amalgamation and the merger order are squarely covered under the Notification no. 13 dated 25.12.1937 which exempts the said instruments from payment of stamp duty. The show-cause notice dated 20.03.2014 and the impugned order dated 07.08.2014 issued by the respondent are quashed and set aside along with all consequential proceedings - Petition allowed.

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• 2024 (11) TMI 298
  Sanction of scheme of Arrangement - transfer of employees - takeover of employees of the ATM and Cash Management Division of Respondent No.2 as the appellant s employees - HELD THAT:- The records reveals the Scheme was fully implemented in April 2011 to the knowledge of Respondent No.1 union and thereafter there have been multiple wage settlements entered into for benefit of Respondent No.1 after the implementation of the Scheme and there were no objections to the implementation thereafter. As stated the entire problem started in 2015 when the Members of Respondent No.1 resorted to flash strikes without any justifiable reasons and without any notice at four undertakings of the Appellant in Mumbai and resorted to several unfair labour practices which resulted in several clients of the Appellant terminating their contracts with the Appellant. This led to the appellant losing all its business. The facts reveal under the garb of interpreting the Scheme the Respondent No.1 is seeking a modification of the Scheme which in fact is impermissible. By way of the impugned order, the Ld. NCLT had rather modified the express terms of the Scheme and had erroneously directed the Board of Directors to take the employees of ATM and Cash Management Division of Respondent No.2 as on appointed date provided such employees also continue to remain in employment on the effective date - it is relevant to note only the ATM and Cash management businesses of the Transferor Company were transferred to the Appellant, while the remaining businesses remained with the Transferor Company. Therefore, it is impractical and inconceivable to interpret the Scheme to mean that all employees of the Transferor Company stood transferred to the Appellant on the Effective Date. The Miscellaneous application was barred by limitation as was filed after about five years of the implementation of the Scheme in 2011. The impugned order is set aside - Appeal allowed.

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• Insolvency & Bankruptcy

• 2024 (11) TMI 297
  Violation of principles of natural justice - Appellant was not given an opportunity of hearing - termination of Insolvency Resolution Process of Personal Guarantor and discharging the RP - HELD THAT:- Section 106 contemplate Report of RP on Repayment Plan. Section 105 required the Debtor to prepare in consultation with the RP Repayment Plan. As per Section 106, the Report which requires to be submitted within 21 days from the last date of submission of claims under Section 102. The facts brought on the record indicates that there has been no communication from the Appellant after 24.08.2022. No Repayment Plan having prepared by the Debtor or submitted, no Proceeding for convening of the Meeting of Creditors or conduct of Meeting could take place. The Adjudicating Authority took the view that when the Repayment Plan has not been received, the effect and consequence of rejection of Plan has to ensue by virtue of Section 115. The Application I.A. 449/2024, which was filed by RP, and the Prayers made thereunder were in accordance with Statutory Scheme under Section 115. Repayment Plan having not been submitted by Debtor, natural consequence was Creditors to file an Application for Bankruptcy under Chapter IV - The present is the case where Appellant right from very beginning has been challenging every action of the Adjudicating Authority and acts of Resolution Professional unsuccessfully. Appellant has never submitted any Repayment Plan to be finalised by the RP. From the facts and sequence of the event which has been brought on the record, it is clear that at no point of time, subsequent to receiving request from the RP for submitting a Repayment Plan, Appellant raised any grievance or filed any proceeding before the Adjudicating Authority, raising his grievances and grounds for not being able to submit a Repayment Plan. The Appellant kept silence for years together and when consequential Order under Section 115 has been passed by the Adjudicating Authority, he is raising grievance of not being heard by the Adjudicating Authority. Regulation 19 refers to filing of Repayment Plan by RP and Repayment Plan has to be submitted within 120 days from the Resolution Process commencement date. Resolution Process commencement date is 16.06.2022 and 120 days came to an end in the Year 2022 itself. Copies of the documents filed before the Adjudicating Authority which was required to be given to the Guarantor as contemplated in Regulation 19(2) relates to the documents which are filed along with the Report submitted by RP under 106 112. In the present case, when Repayment Plan has not been submitted by Debtor, nor was finalised by the RP and no Report has been submitted by RP to the Adjudicating Authority, the question of submitting or giving any documents along with the Report regarding Repayment Plan does not arise, hence, Regulation 19 is not applicable in the facts of the present case nor Appellant can rely on Regulation 19. In the Appeal also Appellant has not been able to show any substantial ground to interfere with the Order impugned, except on harping on the argument that he was not given opportunity - there are no ground to interfere with the Impugned Order passed by the Adjudicating Authority - appeal dismissed.

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• PMLA

• 2024 (11) TMI 296
  Requirement of prior sanction under Section 197(1) of the Code of Criminal Procedure, 1973 (CrPC) for prosecuting the respondents, who are public servants, under the Prevention of Money Laundering Act, 2002 (PMLA) - HELD THAT:- The allegation against the second respondent is of allocating an additional 10 lakh litres of water to India Cement Ltd. Taking the averments made in the complaint against him as it is, the act alleged against him has been committed by him while purporting to act in the discharge of his official duties. The allegation against the first respondent is of the allotment of land measuring 250 acres to M/s. Indu Tech Zone Private Ltd. Taking the averments made in the complaint as correct, the act alleged against him has been done by him purporting to act in the discharge of his official duties. In the case of both respondents, the acts alleged against them are related to the discharge of the duties entrusted to them. It is not even the allegation in the complaints that the two respondents were not empowered to do the acts they have done. There is a connection between their duties and the acts complained of. The second condition for the applicability of Section 197(1) also stands satisfied, and therefore, in this case, Section 197(1) of CrPC applies to the respondents, assuming that Section 197(1) of CrPC applies to the proceedings under the PMLA. Considering the object of Section 197(1) of the CrPC, its applicability cannot be excluded unless there is any provision in the PMLA which is inconsistent with Section 197(1) - the provisions of Section 197(1) of CrPC are applicable to a complaint under Section 44(1)(b) of the PMLA. Section 71 gives an overriding effect to the provisions of the PMLA notwithstanding anything inconsistent therewith contained in any other law for the time being in force. Section 65 is a prior section which specifically makes the provisions of the CrPC applicable to PMLA, subject to the condition that only those provisions of the CrPC will apply which are not inconsistent with the provisions of the PMLA. Therefore, when a particular provision of CrPC applies to proceedings under the PMLA by virtue of Section 65 of the PMLA, Section 71 (1) cannot override the provision of CrPC which applies to the PMLA. In this case, the cognizance of the offence under Section 3, punishable under Section 4 of the PMLA, has been taken against the respondents accused without obtaining previous sanction under Section 197(1) of CrPC. Therefore, the view taken by the High Court is correct - The order of cognizance against the other accused will remain unaffected - Appeal dismissed.

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• 2024 (11) TMI 295
  Seeking permission to withdraw the present petition at this stage - HELD THAT:- The permission to withdraw is granted. The Special Leave Petition is dismissed as withdrawn.

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• 2024 (11) TMI 294
  Money Laundering - scheduled offences - smuggling of Red Sanders - applicability of first provisio or second proviso to sub-section (1) of Section 479 of the BNSS? - HELD THAT:- It is not in dispute that the maximum sentence for the scheduled offence under Sections 132, 135(1)(a)(ii) and 135(1)(b)(ii) read with Section 140 of the Customs Act, 1862 is three years. On facts, this is not a case where this Court should exercise powers under second proviso to sub-section (1) of Section 479 of the BNSS and deny the benefit of the first proviso. The appellant is ordered to enlarged on bail in terms of the first proviso of sub- Section 1 of Section 479 of the BNSS. For that purpose, we direct that the appellant shall be produced before the Special Court within a maximum period of one week from today - Appeal allowed.

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• 2024 (11) TMI 293
  Seeking grant of bail - Money Laundering - proceeds of crime - scheduled offence - partners of M/s Vikas Construction had encroached on public property by falsification of records - it was held by High Court that 'This Court is unable to persuade itself to form a, prima facie, satisfaction in terms of Section 45 of the PMLA, at this stage, that the applicant is not guilty or that he may not commit an offence on bail. Thus, for all the aforesaid reasons, the bail application is rejected.' HELD THAT:- Taking into consideration the peculiar facts and circumstances of the case along with the period of incarceration, the impugned order is set aside and bail is granted to the appellant, subject to the terms and conditions that may be imposed by the Trial Court. The Trial Court shall also, additionally, impose the conditions that the appellant shall fully cooperate with the trial, and shall not make any attempt or endeavour to influence the witnesses and also that he will not leave the country without the leave of the trial court. Appeal allowed.

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• 2024 (11) TMI 292
  Confirmation of provisional attachment order - HELD THAT:- It will be open to the petitioner, Piyali Dutta Roy, to challenge the same by way of an appeal as provided by law. SLP dismissed.

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• Service Tax

• 2024 (11) TMI 291
  Service tax under the category of business auxiliary service - profit earned at a difference between purchase of cargo space and selling the same to their client - HELD THAT:- When the freight forwarder acts as an agent of an airline/carrier/ocean liner, the service of transportation is provided by the airline/carrier/ocean-liner and the freight forwarder is merely an agent and the service of actual transportation will not be liable for service tax. The freight forwarders may also act as a principal who is providing the service of transportation of goods, where the destination is outside India. In such cases the freight forwarders are negotiating the terms of freight with the airline/carrier/ocean liner as well as the actual rate with the exporter. The invoice is raised by the freight forwarder on the exporter. In such cases where the freight forwarder is undertaking all the legal responsibility for the transportation of the goods and undertakes all the attendant risks, he is providing the service of transportation of goods, from a place in India to a place outside India. He is bearing al the risk and liability for transportation. In such cases they are not covered under the category of intermediary, which by definition excludes a person who provides a service on his account. It follows therefore that a freight forwarder, when acting as a principal, will not be liable to pay service tax when the destination of the goods is from a place in India to a place outside India We find that in an identical case, in the case of Phoenix International Freight Service Pvt Ltd [ 2016 (9) TMI 585 - CESTAT MUMBAI] Tribunal has held that buying and selling space on ships does not amount to rendering a service and any profit or income earned through such transactions is not leviable to service tax. We find no reason to deviate from this view taken by the Tribunal which view is also supported by the CBEC circular cited above. In conclusion, the demand of service tax, interest and penalties are liable to be set aside and we do so.

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• 2024 (11) TMI 290
  Service tax demand along with interest and penalty u/s 75 and 78 of the Finance Act,1994 - difference in figures between Trial Balance and ST-3 Returns - difference in the two set of figures indicated the value of taxable services on which due service tax was not paid by the appellant - These values pertained to the Works Contract Services, Legal Consultancy Services and Security Services received by the appellant, where they were liable to pay service tax under the Reverse Charge Mechanism and also the renting of immovable property service rendered by them - HELD THAT:- The issue whether service tax can be demanded on the basis of the difference in the figures as reflected in the Trial Balance and ST-3 Returns is no longer res-integra referring to the decisions in Go Bindas Entertainment Private Limited [ 2019 (5) TMI 1487 - CESTAT ALLAHABAD] and M/s Kush Constructions [ 2019 (5) TMI 1248 - CESTAT ALLAHABAD] where it has been held that no demand can be confirmed by comparing the ST-3 Returns with balance sheet figures in the absence of any evidence to prove the same that income in the balance sheet reflects the providing of taxable services. Since it is the Revenue, who is making the allegations as such the onus to prove the said allegation lies heavily upon the Revenue. We may also refer to the decision of SBI Life Insurance Company Ltd [ 2024 (1) TMI 1161 - CESTAT MUMBAI] where also the Tribunal reiterated the principle that demand or penalty on the basis of difference between ST-3 Returns and Income Tax Returns of any period without further examination to establish the differences on account of consideration received towards the charge of services cannot be sustained. Following the said principles, Tribunal in the case of the appellant titled as South Eastern Coalfields Ltd [ 2024 (3) TMI 14 - CESTAT NEW DELHI] decided the issue observing that mere difference in figures appearing in the Trial Balance as compared to the ST-3 Returns without any corroborative evidence that taxable services had indeed been provided by the appellant cannot be upheld. We accordingly conclude, that no service tax demand can be raised on the appellant on this account. Invoking extended period of limitation - As the entire demand proposed in the show cause notice falls within the extended period of limitation and, therefore, is liable to be set aside. The show cause notice has been issued for the period April 2015 to June 2017, and hence, the entire demand is beyond the normal period of limitation, however, the extended period of limitation has been invoked on the ground that the non-payment would not have come to knowledge had the audit not been conducted. Reference has been made to the decision in M/s Vandana Global versus Commissioner (Appeals) CGST, Central Excise and Customs, Raipur, where it has been held that it is not correct to say that had the audit not been conducted, the alleged errors in assessment would not have come to light because they would have come to light if the officers had scrutinised the returns and called for any data or records which they needed. The fact that audit has pointed out the alleged mistakes only shows that the officers have not scrutinised the Returns properly. Thus, the extended period of limitation cannot be invoked in the present case, and therefore the demand being barred by limitation is unsustainable. Appellant has challenged the imposition of penalty u/s 78 of the Act on the principle that there is a presumption that Public Sector Undertakings do not have any intention to evade the payment of tax as held in Burn Standard Company Ltd [ 2007 (5) TMI 435 - CESTAT, CHENNAI] and Chennai Petroleum Corporation Ltd [ 2007 (4) TMI 4 - SUPREME COURT] The same principle is applicable in the case of the appellant which is Public Sector Undertaking and hence, no penalty can be imposed under Section 78 of the Act.

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• 2024 (11) TMI 289
  Method/Manner of service of the order - interpretation of Section 37C of Central Excise Act, 1994 - Commissioner (Appeals) considering the service of the order through GSTIN registered email - HELD THAT:- We find that the Order-In-Original dated 24.02.2023 was dispatched by registered post but the same was returned undelivered and this fact has been recorded by the Commissioner (Appeals) in the impugned order at Para 4.1.1. Subsequently, a copy of the order was sent through GSTIN registered email on 27.10.2023. However, on request of the Appellant, a photocopy of the impugned order was sent on 05.02.2024. Thus, find that the Tribunal in the case of Ratan Coal Traders V[ 2015 (10) TMI 1803 - CESTAT NEW DELHI] held that the provision of Section 37C of Central Excise Act, 1944 have to be followed in letter and spirit and accordingly allowed the appeal by way of remand to the learned Commissioner (Appeals) to consider the appeal on merits. We find it appropriate to set aside the impugned order and remand the matter to the learned Commissioner (Appeals) to decide the appeal on merits without further going into the aspect of limitation.

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• 2024 (11) TMI 288
  Demand of service tax - cost of raw material utilized in providing services was not included - invoking extended period for issuing SCNs - Commissioner (Appeals) held that value of material consumed in providing the services is not includable for the purpose of charging service tax - HELD THAT:- We note that whereas the Tribunal in the case of Sood Studio Pvt. Ltd. [ 2008 (11) TMI 57 - CESTAT, NEW DELHI ] has held that such value is not includable, while in the case of Aggarwal Colour Advance Photo System [ 2011 (8) TMI 291 - CESTAT, NEW DELHI (LB) ] the Larger Bench of the Tribunal has held otherwise. The fate of the departmental appeal on the same issue before this Bench is not known. However, under the circumstances, we find that when the different benches of the Tribunal can have different opinions necessitating the constitution of a larger bench, it is quite reasonable for the appellant to have bona fide reasons to entertain an opinion that the cost of materials used in photography services is not includable. Therefore, without going into the merit of the issue, we are of the considered opinion that extended period cannot be invoked and therefore, the impugned order cannot be sustained. Moreover, the submission of the appellant that if seen in totality, the service tax paid by them is an excess of the demand, also weighs in their favour; therefore, we hold that appeal is liable to be allowed on limitation. Demand of service tax alongwith interest and penalties on the allegation that the appellant have evaded service tax on the photographic services in respect of activities undertaken by them in printing the photographs and creating photo books/photo albums - We find that the issue is no longer res integra as has been decided by the Tribunal in the case of Venus Albums Co. Pvt. Ltd. [ 2018 (11) TMI 754 - CESTAT CHANDIGARH ]. We also find that recently this Bench in the case of Thomson Press India Ltd. [ 2024 (9) TMI 1546 - CESTAT CHANDIGARH ] has decided the case involving identical facts in favour of the appellant-assessee. Therefore, we have no hesitation in allowing this appeal. Change the name and address of the respondent - Allow the miscellaneous application and direct the Registry to change the name and address of the Respondent from Commissioner of Central Excise Service Tax, Chandigarh-I to Commissioner of Central Goods Service Tax, Chandigarh, Central Revenue Building, Plot No. 19, Sector 17-C, Chandigarh 160017 .

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• 2024 (11) TMI 287
  Service tax liability on foreign bank charges and finance cost paid in foreign currency - Demanding Service Tax u/s 73 (1) alongwith interest u/s 75 and penalty u/s 77 (2) and 78 of the Finance Act, 1994 - appellant is a holder of service tax registration for payment of service tax on Work contract Service, Manpower Supply and Recruitment Service, Security/Detective Agency Service and GTA etc - HELD THAT:- Service provider and service recipient relationship exist between the foreign bank and the buyer and not between the foreign bank and appellant. Appellant has not received any service from the foreign banks as no relationship exists between the foreign bank and the appellant. Appellant has not received any service from the foreign banks as no relationship exists between the foreign bank and the appellant. If at all any service provider and service recipient relationship exists with the appellant then it is between appellant and its banker in India and not with foreign bank located outside India and in which case the liability of service tax if any is on the Indian bank of the appellant company providing the 'banking and financial service' to the appellant. It is the business understanding of the appellant with its buyer as to who will bear the bank charges. Thus we hold that in the instant case no service has been provided within the taxable territory. Foreign Bank of the buyer had provided service to its client i.e. Buyer who is having letter of credit facility with it Foreign bank after retaining its charges and commission remits the net amount to appellant's bank in India where the appellant has facility of letter of credit. Appellant had received service if any from its bank in India with whom all the documents were negotiated. It does not have any direct connection/ nexus with the Foreign Bank of the Buyer When the provider of service i.e. 'the Foreign Bank' and recipient of service i.e. 'the Buyer' both are located outside India, there is no question of taxing such service in India as the said service has been provided outside the taxable territory and outside the purview of Section 66B which is the charging section for levy of service tax. Hon'ble Tribunal in the case of Greenply Industries Ltd. [ 2015 (12) TMI 80 - CESTAT NEW DELHI ] has been held that there is no document showing foreign banker charging any amount directly from assessee and the assessee cannot to be treated service recipient and Service Tax not to be charged under Section 66A of Finance Act, 1994 read with Rule 2(1)(2)(iv) of Service Tax we ort from: Rules, 1994. As per Circular No. 180/06/2014-S.T., dated 14-10-2014, no service tax is leviable as place of provision of service is outside India. It has been clarified that no service tax is payable per se on the amount of foreign currency remitted to India from overseas for the reason that the remittance comprises money and does not in itself constitute any service in terms of the definition of 'Service' as contained in Section 65B of the Finance Act, 1994. Conversion charges or fee levied for sending such money would also not be liable to service tax as the person sending money and the company conducting the remittance are both located outside India. Otherwise also if appellant is legally required to pay the amount of service tax under reverse charge mechanism then the appellant would be entitled to avail CENVAT credit of the amount of service tax so paid and utilize it against payment of excise duty in respect of its clearances of final products. We rely upon the judgment in the case of JET Airways (I) Ltd. [ 2016 (8) TMI 989 - CESTAT MUMBAI ] Thus issue is no more res-integra. It stands decided in favour of the assessee. The Commissioner (Appeals) is held to have wrongly ignored the decisions as quoted above. Invoking extended period of limitation - We observe that SCN has been issued on 20.10.2015 for the period FY 2010-11 to 2014- 15. The normal period of limitation is eighteen months from the relevant date . Hence, the demand for the period prior to 31.03.2014 in respect of Finance Cost paid to foreign banks in foreign currency is time barred. Demand in respect of bank charges is for the period 2010-11 to 2012-13, is completely hit by time limitation. Suppression means not providing information which the person is legally required to state, intentionally or deliberately with intent to evade payment of tax. Appellant had clearly reflected such payments in its notes to financial statements based on which SCN has been issued. Hon'ble Supreme Court has held in the case of Continental Foundation Jt. Venture [ 2007 (8) TMI 11 - SUPREME COURT ] that since the expression suppression in proviso to Section 11A is accompanied by very strong words such as fraud or collusion , it has to be construed strictly and mere omission to give information is not suppression of facts unless it was deliberate act to evade payment of tax. Supreme Court's in the case of Collector Vs. Champhar Drugs [ 2007 (8) TMI 11 - SUPREME COURT ] has held that mere inaction or failure on the part of manufacturer will not amount to suppression of facts. Conscious or deliberate withholding of information when the manufacturer knew otherwise is required to be established before saddling the manufacturer with liability for a period beyond one year. For the bonafide belief neither extended period is applicable nor is penalty imposable. Also no penalty is imposable where there is interpretation of law. SCN does not bring out any evidence to show any positive act of suppression on the part of the appellants. In the case of Uniworth Textiles Ltd. [ 2013 (1) TMI 616 - SUPREME COURT ] held that mere non-payment of duty does not amount to collusion, or willful misstatement or suppression of fact and that it demands proof of a high order of credibility. All these decisions are sufficient for us to hold that the extended period has wrongly invoked. Resultantly, the SCN is held to be barred by time.

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• 2024 (11) TMI 286
  Suppression of Service tax on 'Guarantee Fee' - liability of the appellant had came to notice of the Department only pursuant to the investigation, appellant kept suppressed his liability till then - Imposition of penalty has also been proposed for the aforesaid alleged suppression HELD THAT:- As observed to be an admitted fact that the appellant is fully State owned company and that is registered under Service Tax liability. The appellant is not disputing that they were liable under reverse charge mechanism to pay service tax on the amount of Guarantee Fee as has been paid by them to the State Government of Madhya Pradesh during the impugned period. It is the contention that till it was brought to their notice by the Department, the appellant was completely ignorant about their liability on the said amount of Guarantee Fee paid. Hon ble Supreme Court in the case of M/s. Cosmic Dye Chemical Vs. Collector of Central Excise, Bombay[ 1994 (9) TMI 86 - SUPREME COURT] wherein it has been held that there can be no suppression or mis-statement of fact for the purposes of invoking extended period of limitation, if the same is not willful. From the record it is observed that except the verbal allegations for the reason that the tax was not paid prior the investigation got conducted by the Department. Proof of conscious and deliberate withholding of the information is necessary to involve the extended period of limitation. There is no evidence to prove the alleged suppression. Otherwise also appellant admittedly being a Government authority there seems no reason with the appellants to evade the tax causing loss to the Government Exchequer nor any reason to withhold the information consciously. Penalty imposed - In the present case, the moment appellant was informed about its liability vide letter dated 17.03.2020, the entire amount demanded was paid by the appellant in three installments dated 30.05.2020, 06.06.2020 and 29,06,2021 on 29.06.2021. it is a meager amount of Rs.14,332/- out of Rs.1,12,18,568/- as was not paid by the appellant. In view thereof, hold that the impugned Show Cause notice itself should not have been issued. No circumstances, arise for imposition of penalty upon the appellants. Hon ble Supreme Court in the case of Union of India Vs Rajasthan Spinning and Weaving Mills [ 2009 (5) TMI 15 - SUPREME COURT] has held that penalty under section 11 AC of the Act is punishment for an act of deliberate deception by the assessee with the intent to avoid duty by adopting any of the means as mentioned in the section. Section 11 AC is paramateria to section 73 of the Service Tax Act. It has been held that penalty can be imposed only if the Department has proved that the tax has not been paid or short paid by the reason of fraud, collusion etc. As already observed above, the appellant being a State owned company cannot have the malafide intent and that the department has not produced any other evidence except the oral allegations that the appellant has suppressed the relevant facts with a willful intent to not to pay the Service Tax. Hence, it is held that penalty has wrongly been imposed upon the appellant. The Presumption of bonafide is in favour of the Government Company. There is nothing on record produced by the Department to rebut the said presumption. Hence hold that the case law quoted in para 19 of the Order-in-Original are not applicable to the facts of the present case. With the entire above discussion, hereby hold that the penalty upon the appellant has wrongly been confirmed. The Show Cause Notice has wrongly involved the extended period of limitation. However, appellant has acknowledged its liability towards the impugned demand, and has deposited the entire amount of service tax, as demanded, refrain myself from ordering any consequential relief. Resultantly, the order under challenge is set aside to the extent of imposing of penalty. Rest of the order stands upheld.

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• Central Excise

• 2024 (11) TMI 285
  Requirement of pre-deposit to be made pending disposal of the appeal - HELD THAT:- In the peculiar facts and circumstances of the case and without having any implication on the statutory provision, the interim order is confirmed and the Customs Excise and Service Tax Appellate Tribunal are directed to dispose of the appeal on merits. The appeal is disposed of.

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• CST, VAT & Sales Tax

• 2024 (11) TMI 284
  Maintainability of appeal under Delhi Value Added Tax Act, 2004 - obligation to approach the Appellate Tribunal for drawing up a statement of case for the consideration of this Court and that the appeals which have come to be directly instituted would not be maintainable - HELD THAT:- As is evident from a reading of Section 45 of the DST Act, a person desirous of challenging an order passed by the Appellate Tribunal, was required to submit a request to that Tribunal to refer a question of law arising out of such order for the consideration of the High Court. In terms of Section 45 (2), if the Appellate Tribunal were to refuse to state the case on forming the opinion that no question of law arose, both the dealer as well as the Commissioner stood enabled to apply to the High Court against such refusal. The hierarchy of remedies as created under the DST Act, insofar as appeals are concerned, is essentially replicated and re-enacted by the DVAT Act. Under the DVAT Act, the assessee stands accorded the remedy of preferring an appeal to the Appellate Tribunal which stands constituted. The DVAT Act further enables an aggrieved person to approach the High Court by way of an appeal in respect of every order passed by the Appellate Tribunal. The appeal to the High Court, however, is subject to the appellant establishing that the case involves a substantial question of law . The obligation to petition the Tribunal for drawal of a statement of case cannot be construed as a liability accrued or incurred. It was merely a matter of procedure and which did not impair the right of appeal. This more so since a referral by the Tribunal to draw a statement of case was subject to review and correction. The appeals as instituted before this Court in accordance with Section 81 of the DVAT are, consequently, held to be maintainable - let these matters be listed on 17.12.2024.

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• 2024 (11) TMI 283
  Challenge to reassessment order - disallowance of ITC - bone of contention in the case at hand is non production of books of accounts for the assessment period of 2010-11 - appeal is dismissed solely on the score that the appeal is preferred beyond period of limitation - HELD THAT:- The original order is passed without hearing the petitioner, and is in violation of principles of natural justice. In that light, the petitioner preferring an appeal after six years cannot be pointed against him, for the reason that original order was an ex parte order. On the sole ground that the original order passed by Assistant Commissioner was without hearing the petitioner, as it was an ex parte order, it is deemed appropriate to set aside the order and remit the matter back to the hands of the Assistant Commissioner - writ petition is allowed by way of remand.

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• 2024 (11) TMI 282
  Levy of Entry tax - benefit of the exemption notification dated 31.03.2000 - applicability of notification dated 18.12.2010 - notification dated 31.03.2000 was superseded by the notification dated 18.12.2010 or not - HELD THAT:- Under Section 11A of the KTEG Act, 1979, the State Government is entitled to exempt specified class of persons or Class of dealers or Goods or Class of goods or All or any goods or class of goods from the tax payable under the KTEG Act, 1979. A perusal of the notification dated 31.03.2000 shows that exemption was granted to dealers with effect from 01.04.2000 from payment of tax on all kinds of Wind Mills Parts and Accessories thereof , brought into a local area for consumption, use or sale therein. A perusal of the supply contract between the petitioner and Gamesa shows that the price quoted by Gamesa included entry tax, if any, payable. There is nothing placed on record to establish that either the petitioner or Gamesa were registered as dealer under the provisions of the Act, 1979 when the supply contract was entered between the petitioner and Gamesa - the petitioner was not entitled to the benefit of the notification dated 31.03.2000 and claim exemption. This Court by Order dated 03-07-2024 called upon the petitioner to place on record the certificate issued by the Department of Energy, Government of Karnataka, certifying that the petitioner is a renewable energy project, its date of commencement, its date of commercial generation and its eligibility for exemption from tax. Unfortunately, the petitioner has failed to produce any of the above documents. A perusal of the clauses of the supply contract establish beyond doubt that the petitioner and Gamesa were consensus-ad-idem over the liability of payment of entry tax, in as much as they agreed that the cost of WTGs included the entry tax, if any. The petitioner has also claimed the benefit of the notification dated 18.12.2010, when it filed its reply to the notice issued by the authorities under the KVAT Act, 2003. Therefore, the petitioner cannot now contend that it was entitled to claim the benefit of notification dated 31.03.2000 and claim total exemption from payment of entry tax. Having regard to the Renewable Energy Project of State Government and the purpose of granting exemption from payment of entry tax, the petitioner is granted three months time from the date of receipt of a copy of this order, to comply with the prescribed procedure to claim the exemption. If the petitioner fails to avail the opportunity, the respondents are at liberty to proceed to recover the tax and interest payable by the petitioner in accordance with law. This petition lacks merit and is dismissed.

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• Indian Laws

• 2024 (11) TMI 281
  Scope of the power of the State Legislatures under Entry 8 and the meaning of the phrase intoxicating liquor - Doctrine of Occupied Field - whether intoxicating liquor in Entry 8 only includes potable alcohol, such as alcoholic beverages or also includes alcohol which is used in the production of other products? - Entry 52 of List I of the Seventh Schedule to the Constitution overrides Entry 8 of List II or not - expression intoxicating liquors in Entry 8 of List II of the Seventh Schedule to the Constitution includes alcohol other than potable alcohol or not - notified order under Section 18G of the IDRA is necessary for Parliament to occupy the field under Entry 33 of List III of the Seventh Schedule to the Constitution or not. As held by the Judges, CJI [Dr Dhananjaya Y Chandrachud], J [Hrishikesh Roy], J [Abhay S Oka], J [J B Pardiwala], J [Manoj Misra], J [Ujjal Bhuyan] and J [Satish Chandra Sharma]:- a. Entry 8 of List II of the Seventh Schedule to the Constitution is both an industry-based entry and a product-based entry. The words that follow the expression that is to say in the Entry are not exhaustive of its contents. It includes the regulation of everything from the raw materials to the consumption of intoxicating liquor ; b. Parliament cannot occupy the field of the entire industry merely by issuing a declaration under Entry 52 of List I. The State Legislature s competence under Entry 24 of List II is denuded only to the extent of the field covered by the law of Parliament under Entry 52 of List I; c. Parliament does not have the legislative competence to enact a law taking control of the industry of intoxicating liquor covered by Entry 8 of List II in exercise of the power under Article 246 read with Entry 52 of List I; d. This Court in THE STATE OF BOMBAY AND ANOTHER VERSUS FN. BALSARA [ 1951 (5) TMI 3 - SUPREME COURT] and SOUTHERN PHARMACEUTICALS CHEMICALS TRICHUR ORS. VERSUS STATE OF KERALA [ 1981 (9) TMI 275 - SUPREME COURT] did not limit the meaning of the expression intoxicating liquor to its popular meaning, that is, alcoholic beverages that produce intoxication. All the three judgments interpreted the expression to cover alcohol that could be noxiously used to the detriment of health; e. The expression intoxicating liquor in Entry 8 has not acquired a legislative meaning on an application of the test laid down in THE STATE OF MADRAS VERSUS GANNON DUNKERLEY CO. (MADRAS) LTD. [ 1958 (4) TMI 42 - SUPREME COURT] ; f. The study of the evolution of the legislative entries on alcohol indicates that the use of the expressions intoxicating liquor and alcoholic liquor for human consumption in the Seventh Schedule to the Constitution was a matter well-thought of. It also indicates that the members of the Constituent Assembly were aware of use of the variants of alcohol as a raw material in the production of multiple products; g. Entry 8 of List II is based on public interest. It seeks to enhance the scope of the entry beyond potable alcohol. This is inferable from the use of the phrase intoxicating and other accompanying words in the Entry. Alcohol is inherently a noxious substance that is prone to misuse affecting public health at large. Entry 8 covers alcohol that could be used noxiously to the detriment of public health. This includes alcohol such as rectified spirit, ENA and denatured spirit which are used as raw materials in the production of potable alcohol and other products. However, it does not include the final product (such as a hand sanitiser) that contains alcohol since such an interpretation will substantially diminish the scope of other legislative entries; h. The judgment in SYNTHETICS CHEMICALS LTD., ETC. VERSUS STATE OF UP. [ 1989 (10) TMI 214 - SUPREME COURT] is overruled in terms of this judgment; i. Item 26 of the First Schedule to the IDRA must be read as excluding the industry of intoxicating liquor , as interpreted in this judgment; j. The correctness of the judgment in CH. TIKA RAMJI OTHERS, ETC. VERSUS THE STATE OF UTTAR PRADESH OTHERS [ 1956 (4) TMI 55 - SUPREME COURT] on the interpretation of word industry as it occurs in the legislative entries does not fall for determination in this reference; and k. The issue of whether Section 18G of the IDRA covers the field under Entry 33 of List III does not arise for adjudication in view of the finding that denatured alcohol is covered by Entry 8 of List II. The reference is answered in the above terms. The Registry is directed to obtain administrative instructions from the Chief Justice for placing the matters before an appropriate Bench. The order of above judges have been differed in few points by NAGARATHNA, J. - The decision as given by him are as follows:- a. Entry 8 List II deals with intoxicating liquors . The misuse, diversion or abuse of industrial alcohol as intoxicating liquors can also be controlled and prevented under Entry 8 List II by the State Legislatures having regard to Article 47 of the Constitution. It is also made clear that the IDRA which has been enacted by the Parliament by virtue of Entry 52 List I has taken control of Fermentation Industries as a scheduled industry. Such Fermentation Industries would exclude intoxicating liquors . b. Parliament can occupy the field of the entire industry by merely issuing a declaration under Entry 52 List I and the State Legislature s competence under Entry 24 List II is denuded to the field of the entire industry and specifically to the extent of the field covered by the law of Parliament under Entry 52 List I. c. The decision as given by above judges agreed. d. The context of the controversy must be borne in mind in the said cases. The aforesaid decisions in substance limited the meaning of the expression intoxicating liquors to its popular meaning i.e. alcoholic beverages that produce intoxication. Therefore, in the context of prohibition of intoxicating liquor as a beverage, there could not have been prohibition of production of alcohol used for medicinal and toilet preparation as well as industrial alcohol or non-potable alcohol. e. The expression intoxicating liquor in Entry 8 has acquired a legislative and judicial meaning over the decades. f. The members of the Constituent Assembly were clear in what they envisaged within the scope and ambit of the expression intoxicating liquors in Entry 8 List II. This is also evident from Item 26 of the First Schedule of the IDRA. Intoxicating liquors is only a segment of the Fermentation Industries , namely, potable alcohol. There was no intention on the part of the members of the Constituent Assembly to read within the expression intoxicating liquors non-potable or industrial alcohol . Further, in order to have a consistency between what was envisaged under Entry 84 List I and Entry 51 List II in the context of alcoholic liquors for human consumption, the taxing Entry in List II which is within the legislative competence of the States follows the regulatory Entry in Entry 8 List II. Therefore, the use of the expression industrial alcohol or non-potable alcohol in Synthetics and Chemicals (7J) was only to crystallise all variants of alcohol which were non-potable and to distinguish the same from potable alcohol meant only for human consumption as a beverage. g. The entire controversy cannot be viewed from the point of view of alcohol being used as a raw material and final product such as hand sanitizer containing alcohol. The potential misuse of alcohol cannot be the basis for interpreting an Entry such as Entry 8 List II. Ultimately, the Fermentation Industries have to be borne in mind which takes within its canvas only non-potable / industrial alcohol . The aspect of public health having a corelation to Entry 8 List II dealing with intoxicating liquor and the misuse of alcohol cannot be a guide while interpreting the content of the said Entry and therefore, its scope and ambit being amplified beyond what it really envisages as a field of legislation for the States to legislate upon. h. The judgment in SYNTHETICS CHEMICALS LTD. need not be overruled in relation to Section 18G of the IDRA and it continues to be good law in the context of what is comprised in the expression industrial alcohol and intoxicating liquors except what has been clarified above in Entry 8 List II. i. Item 26 of the First Schedule of the IDRA must be read excluding only what is contained in the expression intoxicating liquors as interpreted above in Entry 8 List II. j. Tika Ramji is held to be not good law insofar as the requirement of issuance of a notified order as a condition precedent for the field to be occupied, has been mandated therein. k. Denatured alcohol belongs to the family of industrial alcohol and therefore, Section 18G of the IDRA has a bearing on the said product. Section 18G occupies the field under Entry 33(a) List III and, thereby, only Parliament is competent to legislate on all articles or class of articles related to a scheduled industry i.e. Fermentation Industries .

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• 2024 (11) TMI 280
  Dishonour of Cheque - Liability of a non-executive Director - vicarious liability - Section 138 read with Sections 141/142 of the Negotiable Instruments Act, 1881 - HELD THAT:- The law as regards the liability of a Director for an offence under Section 138 NI Act committed by a company is no longer res integra. In SMS PHARMACEUTICALS LTD. VERSUS NEETA BHALLA [ 2005 (9) TMI 304 - SUPREME COURT] , the Supreme Court while dealing with the aforesaid, discussed in detail the role of a Director in a company as well as their liability. It is a well-settled principle in law that if any Director seeks quashing of a complaint under Section 138 NI Act or any process issued therein, then one must show that the complaint is bereft of the appropriate pleadings/averments which would bring him into the fold of the rigours of Section 141 NI Act and in this regard, one must bring on record, certain sterling and incontrovertible evidence showing that the accused is not concerned with issuance of the said cheques, which can only be seen by the High Court exercising powers under Section 482 Cr.P.C. In the present case, as discernible from the complaint, there is a dearth of any specific averments and only a general mention of accused Nos. 3-8 as the Directors of accused company and being in charge and responsible for the conduct, affairs, and business of the company, is alleged. The petitioner is not even a signatory to the subject cheques. It is in fact the Managing Director i.e., accused No. 2, who is deemed in-charge of the day to day affairs of the company and is actively involved and responsible for the affairs of the company, who has also signed the subject cheques. Indisputably, the other accused persons, who were also Directors of the company, have been dropped from the list of accused. Additionally, the petitioner, being designated as Chairman as per the 27th Annual Report, cannot be deemed to be in-charge of the day to day as per the principles established in the judgment of YASHOVARDHAN BIRLA VERSUS CECIL WEBBER ENGINEERING LTD. ORS. [ 2023 (4) TMI 706 - DELHI HIGH COURT] , in absence of any additional material on record. In view of the uncontroverted fact that the subject complaints lack the necessary averments to endorse as to what was the active role of the petitioner and as to how the petitioner was guilty or responsible for the offence, this Court is of the opinion that continuance of the present proceedings qua the petitioner would amount to abuse of the process of the Court. Petition allowed.

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