TMI Tax Updates - e-Newsletter
December 13, 2023

Case Laws in this Newsletter:

GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise Indian Laws

Articles

1. COACHING SERVICES HELD TO BE COMPOSITE SERVICES: APPELLATE ADVANCE RULING 

   By: Dr. Sanjiv Agarwal

2. PAN card becomes inactive as per new rule 114AAA

   By: Legatobs Business

3. BENEFICIAL NOMINEE v. COLLECTOR NOMINEE

   By: DR.MARIAPPAN GOVINDARAJAN

4. Central AC Plant, Lift, Electrical Fittings, etc., were categorized as immovable property, ineligible for GST ITC

   By: Bimal jain

News

1. Total digital payment transactions volume increased from 2,071 crore in FY2017-18 to 13,462 crore in FY2022-23 at a CAGR of 45%

2. Tax evasion by lottery distributors

3. Auction for Sale (re-issue) of (i) ‘7.37% GS 2028’, (ii) ‘7.18% GS 2033’ and (iii) ‘7.46% GS 2073’

Notifications

Customs

1. G.S.R. 887 (E) - dated 11-12-2023 - ADD

Corrigendum - Notification No. 12/2023-Customs(ADD), dated the 21st November, 2023

2. 14/2023 - dated 11-12-2023 - ADD

Seeks to levy anti-dumping duty on Synthetic Grade Zeolite 4A imported from Thailand and Iran for 5 years pursuant to Final Findings issued by DGTR.

DGFT

3. 52/2023 - dated 12-12-2023 - FTP

Amendment in Policy condition of Sl. No. 55 & 57, Chapter 10 Schedule-2, ITC(HS) Export Policy, 2018

GST - States

4. 2153-F.T. - dated 7-12-2023 - West Bengal SGST

Seeks to amend Notification No 1139-F.T. dated 28.06.2017 relating to restriction of refund u/s 54(3) for services of construction of a complex, building intended for sale.

5. 2152-F.T. - dated 7-12-2023 - West Bengal SGST

Seeks to amend Notification No 1137-F.T. dated 28.06.2017 to levy tax on services provided by the Ministry of Railways (Indian Railways) under forward charge mechanism.

6. 2151-F.T. - dated 7-12-2023 - West Bengal SGST

Seeks to amend Notification No 1136-F.T. dated 28.06.2017 to exempt some services if provided to a Governmental Authority, and to remove exemptions on certain supplies of services by the Ministry of Railways (Indian Railways).

7. 2150-F.T. - dated 7-12-2023 - West Bengal SGST

Seeks to amend Notification No 1135-F.T. dated 28.06.2017 relating to rates of taxable services which inter alia seeks to restrict ITC on supply of passenger transportation service and renting of any motor vehicle to 2.5%.

8. 2149-F.T. - dated 7-12-2023 - West Bengal SGST

Seeks to notify a special procedure for condonation of delay in filing of appeals against demand orders passed under section 73 or section 74 until 31st March, 2023.

9. 2148-F.T. - dated 7-12-2023 - West Bengal SGST

West Bengal Goods and Services Tax (Sixth Amendment) Rules, 2023

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/187 - dated 12-12-2023

Upstreaming of clients’ funds by Stock Brokers (SBs) / Clearing Members (CMs) to Clearing Corporations (CCs)

2. SEBI/HO/AFD/PoD1/CIR/2023/186 - dated 11-12-2023

Credit of units of AIFs in dematerialised form

Customs

3. PUBLIC NOTICE NO. 48/2023 - dated 9-12-2023

Subject : Regular Operation of Drive Through Container Scanner (Road) at Chennai (DTCS) - Reg.

Highlights / Catch Notes

GST

• Student and Working Women Accommodations Subject to GST; Not Exempt as Residential Dwelling Rentals.

  Case-Laws - AAR : Exemption from GST - renting of residential dwelling to the students and working women for residential purpose - the service provided by applicant are unit accommodation for residence and not renting of residential dwelling - the services being provided by the applicant do not qualify for exemption - AAR
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• Early Sub-Lease Termination Damages Classified as Supply u/s 7 of Central GST Act, 2017.

  Case-Laws - AAR : Classification of supply - rate of GST - Supply or not - The damages received by the applicant from the tenant towards the termination of sub-lease before the agreed upon lock-in period as per the sub-lease deed agreements tantamount to supply as per Section 7 of Central GST Act, 2017 and the amount received towards damages as per the settlement agreement is to be construed as Consideration for the above supply - AAR
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• Two-wheeler seat covers classified under CTH 87149990; subject to 14% CGST and 14% SGST tax rates.

  Case-Laws - AAR : Classification of goods - rate of tax - Two wheeler seat covers - the Two wheeler seat covers are specifically covered under CTH 87149990 and are taxable (@ 14% CGST + 14% SGST - AAR
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• Subsidized Employee Meals Classified as Service, Subject to GST Under New Regulations.

  Case-Laws - AAR : Levy of GST - supply or not - recovery of subsidised value from employees for providing canteen facility - The supply of the food/beverages, although at subsidized rates, by the Applicant to their employees is certainly an activity amounting to supply of service and attracts levy of GST on that part of the consideration being charged for such supply. - AAR
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• Petitioner Allowed to Correct Tax Credit Mistake on Form GSTR-3B, Adjusting IGST to SGST and CGST Liabilities.

  Case-Laws - HC : Rectification of mistake in Form GSTR-3B by accounting input tax credit as IGST instead of SGST and CGST credit - permission to petitioner to refund IGST Input tax credit and thereafter, adjust the same towards SGST and CGST liability - Directions issued to consider application for allowing rectification - HC
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• Right to Personal Hearing Upheld: CGST Act Requires Adjudicating Officer to Provide Hearing Opportunity.

  Case-Laws - HC : Violation of principles of natural justice - In the absence of the petitioner waiving its right of a personal hearing, the provisions of Section 75(4) of the CGST Act were squarely applicable and accordingly, an obligation was cast on the adjudicating officer to grant an opportunity of hearing to the petitioner. - HC
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• GST Authorities Ordered to Allow Rectification and Upload of GSTR-1 for Specified Months Due to Input Tax Credit Issues.

  Case-Laws - HC : Rectification of uploaded GSTR-1 statement in GST portal for the periods August 2017, November 2017, December 2017 and January 2018 which involves Input Tax Credit - GST officers / department directed to permit the petitioner to upload the rectified GSTR-1 statement within a period of four weeks from the date of receipt of a copy of this order. - HC
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Income Tax

• Dispute Over Bank Interest Classification: Assessee Challenges CPC's Mechanical Processing of Interest Income and Expenses.

  Case-Laws - AT : Income from other sources - the assessee has shown bank interest under the head income from other sources and net difference of interest income earned and interest income incurred is reduced from business income. Thus, find merit in the written submission that the CPC has not considered or unable to consider the allowability of interest income earned and interest incurred due to mechanical working. - AT
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• Carry Forward of Losses Requires Future Set-Off Potential; Tribunal's Observations Do Not Alter Revenue's Position.

  Case-Laws - HC : B/F losses not allowed to be carry forward - There is, in our opinion, no practical efficacy in the assessee carrying forward business losses, unabsorbed depreciation, and capital losses unless there is a possibility of setting off those losses in the future, albeit subject to the provisions of the Act. These are the aspects, in our opinion, that the concerned AO would examine in the relevant AY in which such set off is claimed. - Mere fact that the Tribunal has expunged the impugned observations, in our view, cannot impact the stand of the appellant/revenue. - HC
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• Tax Officer's Conclusion on Share Sale Loss Deemed Speculative, Lacking Evidence, and Based on Assumptions.

  Case-Laws - AT : Bogus short-term capital loss on sale of shares - AO simply proceeded on the basis of the financials of the company to come to the conclusion that the transactions were accommodation entries, and thus, fictitious. The conclusion drawn by the AO, that there was an agreement to convert unaccounted money by taking fictitious LTCG in a pre-planned manner, is therefore entirely unsupported by any material on record. This finding is thus purely an assumption based on conjecture made by the AO. - AT
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• Arm's Length Price Not Needed for Transactions with Specified Persons in Domestic Tax Adjustments.

  Case-Laws - AT : TP Adjustment - valuation of Arms Length Price (ALP) - No Arm's Length Price is required to be determined for a transaction with specified persons in section 40A(2)(b) of a domestic transaction. If no Arm's Length Price is required to be determined, then, no reference was required to be made. - AT
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Customs

• Claims of Coercion in Statement Recording u/s 108 Face Early Investigation and Prima Facie Doubts.

  Case-Laws - HC : Procedure for recording statement u/s 108 - When the petitioners’ case is verified with reference to the available material on record, it creates prima facie suspicion on the version projected by the petitioners. Further, the investigation is in the nascent stage and not yet completed. In these circumstances, it is not apposite to rush to the conclusion that the statements of the petitioners 2 to 5 were recorded by the authorities by applying threat or coercion. - HC
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• Customs Act Section 137: Authority of Excise Commissioner to Sanction Prosecution Upheld, Petitioners' Claims Dismissed.

  Case-Laws - HC : Jurisdiction - Power to accord sanction for prosecution proceedings - Section 137 of the Customs Act, 1962 - there is valid appointment of the Commissioner of Central Excise to be the Commissioner of the Customs. Hence, appointment of the officer officiating as the Commissioner of Customs could validly accord sanction. The petitioners cannot be heard to contend that such an officer did not have the power to discharge the functions and duties of the Commissioner of Customs u/s 137 of the Customs Act. - HC
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• Commissioner Must Conduct Inquiry Before Modifying Order; Changes Without Party Input Deemed Improper.

  Case-Laws - AT : Jurisdiction - power of Commissioner (Appeals) u/s 128A (3), to modify order after inquiry - change of heading by the Commissioner (Appeals), without affording opportunity is improper, and same can only be done after conducting proper inquiry and following natural justice. - Matter restored back - AT
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• Department Not Required to Prove Hydrocarbon Oil Classification with Mathematical Precision in Import Case.

  Case-Laws - AT : Classification of imported goods - mixed hydro carbon oil - department is not required to prove its case with mathematical accuracy and beyond reasonable doubt - the observations in the instant case are to be followed, where 10 out of 21 parameters have been tested but conclusion arrived. - AT
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IBC

• RERA's Right to Appeal Under IBC Affirmed, Strengthening Consumer Protection in Real Estate Sector.

  Case-Laws - AT : Admissibility of section 9 application - locus of Real Estate Regulatory Authority and Aquacity Consumer and Societies Welfare Society to file Company Appeal u/s 61 of IBC - - Appeal filed by the RERA cannot be thrown out on the ground of locus. The RERA held to be aggrieved person within the meaning of Section 61 of the Code - the question has to be answered in affirmative holding that RERA has locus to file Company Appeal. - AT
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Service Tax

• Penalties Under Cenvat Credit Rules Not Applicable Due to Prior Notice; Revenue's Appeal Dismissed.

  Case-Laws - AT : Non imposition of penalty under Rule 15 (3) of Cenvat Credit Rules, 2004 - The Adjudicating Authority after discussion that since the department was aware of availing the cenvat credit by the respondent and the present show cause notices were issued subsequent to the first SCN therefore, there is no suppression of fact. Hence, the penal provision under Rule 15 (3) is not invokable - Appeal of the revenue dismissed - AT
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• Appellant Confirmed as Pure Agent, Collected Biometric Registration Fees for Bestinet, No Additional Charges Involved.

  Case-Laws - AT : Pure agent - The appellant acted as an agent of the Bestinet in collecting the fees of US$ 30 which was paid on periodical basis to M/s. Bestinet. The invoices raised by the appellant did not indicate collection of any other amount over and above US$ 30 payable by each foreign worker. In view of the above findings, the nature of services rendered by the appellant were in the nature of a pure agent as far as the fees for biometric registration is concerned. - AT
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• Institute's Degree Programs Exempt from Service Tax as Non-Commercial Training Under Tax Law Guidelines.

  Case-Laws - AT : Commercial Training and Coaching Services - Course as recognized by the law - the institute is acting as a learning centre for Punjab Technical University and as a result of the same a degree or a diploma is awarded to the students for participating in the offered programs. Once that being by the definition as is exists during the relevant period, they are out of this definition as the definition clearly stated that it was with the purpose of issuance of occasional commercial teachings not a degree or a diploma granted by the university. - AT
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Central Excise

• Special Purpose Bulletproof Vehicles Classified for Tax Exemption Under Central Excise Tariff Heading 8705 0000.

  Case-Laws - AT : Classification of goods - Special Purpose Bullet Proof Armoured Vehicles - The impugned vehicles are classifiable under CETH 8705 0000 and thus, eligible for exemption. - AT
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• Valuation Error: Direct Rule 8 Application in Bulk Drug Clearance by EOU into DTA Deemed Unacceptable.

  Case-Laws - AT : Valuation - 100% EOU - clearance of bulk drugs made in DTA under Advance Release Order (ARO) - in the present case the Adjudicating Authority straight away jumped to Rule 8 without making any effort to determine the value in terms of Rule 4 to 7 of Customs Valuation Rules. Therefore, the valuation determined by the department under Rule 8 cannot be accepted. - AT
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• Refund Denied: Malafide Intent and Fact Suppression in Duty Claim on Unmanufactured Goods and Cenvat Credit Valve.

  Case-Laws - AT : Entitlement for refund - malafide intent - suppression, of facts or not - The appellant knowingly paid the duty and claimed the refund of unmanufactured goods which itself is malafide intention. Secondly, the appellant have not disclosed that the valve on which the cenvat credit was availed has not undergone into the manufacturing process of the finished product. Therefore, there is clear suppression of fact on the part of the appellant. - AT
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Case Laws:

• GST

• 2023 (12) TMI 514
  Release of detained goods alongwith vehicle - owner of the goods - proceeding initiated under Section 129 of the CGST Act - whether the goods may be released by the authorities under Section 129(1)(a) or 129(1)(b) of the CGST Act? - HELD THAT:- In the present case, goods were found with proper tax invoice and E-way bill belonging to the petitioner. Hence, Circular dated December 31, 2018 would apply and the petitioner would be deemed to be the owner of the goods. Ergo, the goods would have to be released in terms of Section 129(1)(a) of the CGST Act. The order passed by the authorities dated October 19, 2023 is quashed and set aside. The authorities are directed to carry out the exercise in terms of Section 129(1)(a) of the CGST Act within a period of three weeks from today - Petition allowed.

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• 2023 (12) TMI 513
  Rectification of mistake in Form GSTR-3B by accounting input tax credit as IGST instead of SGST and CGST credit - permission to petitioner to refund IGST Input tax credit and thereafter, adjust the same towards SGST and CGST liability - reconsideration of Exhibit.P3 or P6 by considering evidences produced by petitioner, especially in the fact that, IGST credit and liability towards CGST and SGST are same - Exhibts.P3 and P6 are just and legal or not - seeking to dispense with the production of translation of vernacular documents. HELD THAT:- The present writ petition is disposed of with a direction to the 3rd respondent to consider Ext.P4 and Ext.P5 as a rectification application filed by the petitioner/assessee and pass necessary orders expeditiously in accordance with the law, after giving an opportunity of hearing to the petitioner.

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• 2023 (12) TMI 512
  Violation of principles of natural justice - impugned order is passed without an opportunity of a personal hearing being granted to the petitioner - contrary to Section 75(4) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The impugned order is passed contrary to the principles of natural justice as recognised by the provisions of Section 75(4) of the CGST Act and, therefore, it satisfies one of the parameters for exercising discretion of this Court to entertain the petition inspite of there being an alternate remedy of an appeal. This is a clear case where the adjudicating officer was required to take into consideration the specific request as made by the petitioner that an opportunity of personal hearing be granted to the petitioner. When such specific plea was taken, a mechanical approach was adopted by the adjudicating officer in only noticing the box where inadvertently the petitioner had put a tick mark on No . Thus, this was not a case where the petitioner had expressly waived its right of personal hearing. In the absence of the petitioner waiving its right of a personal hearing, the provisions of Section 75(4) of the CGST Act were squarely applicable and accordingly, an obligation was cast on the adjudicating officer to grant an opportunity of hearing to the petitioner. Thus, the petitioner having not been granted hearing, the impugned order would be required to be held to be in breach of the principles of natural justice and ex-facie contrary to the provisions of Section 75(4) of the CGST Act. Respondent no. 3 shall grant an opportunity of personal hearing to the petitioner and after considering all contentions of the petitioner, pass an appropriate order in accordance with law. The aforesaid exercise be undertaken by respondent no. 3 within a period of four weeks from the date of hearing - impugned order set aside - petition allowed.

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• 2023 (12) TMI 511
  Rectification of uploaded GSTR-1 statement in GST portal for the periods August 2017, November 2017, December 2017 and January 2018 which involves Input Tax Credit - HELD THAT:- This Court in similar case in DEEPA TRADERS VERSUS PRINCIPAL CHIEF COMMISSIONER OF GST CENTRAL EXCISE CHENNAI, TAMIL NADU, SUPERINTENDENT OF GST, CENTRAL EXCISE, COIMBATORE GOODS AND SERVICES TAX NETWORK (GSTN), NEW DELHI [ 2023 (3) TMI 628 - MADRAS HIGH COURT ] has allowed the petitioner to file the corrected GSTR-1 statement and upload the rectified GSTR-1 in GST portal. By following the same, this Court also directs the respondent to permit the petitioner to upload the rectified GSTR-1 statement within a period of four weeks from the date of receipt of a copy of this order. Petition disposed off.

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• 2023 (12) TMI 510
  Exemption from GST - renting of residential dwelling to the students and working women for residential purpose along with amenities and facilities such as food, furniture, appliance, cleaning, security, pest control etc., on monthly rental basis - exemption under entry No. 12 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - rate of GST - claim of ITC on input used for providing taxable service. HELD THAT:- The term residential dwelling is neither defined in the Notification nor in the CGST Act 2017/ rules made there under. However the Education guide on Taxation of services, issued by the CBIC under erstwhile Service Tax Law, at para 4.13.1 while answering the question What is a residential dwelling ? directed to interpret the term residential dwelling in terms of the normal trade parlance, as per which it is a residential accommodation, but does not include hotel, motel, inn, guest house, camp-site, lodge, house boat, or like places meant for temporary stay. Therefore it could be inferred from the above that residential dwelling is a residential accommodation meant for permanent stay and does not include guest house, lodge or like places. A residential accommodation to qualify for permanency of stay would typically have at least one room for exclusive use, a kitchen or facility to cook, essentials like electricity, water provided through metered/sub-metered connections or charged on actual usage, among others. The resident/inhabitants are offered a unit i.e a portion of a room with a cot on monthly rental basis. Further monthly rent also is charged and collected for the unit only but not for the residential dwelling. Thus the impugned accommodation being provided does not qualify to be a residential dwelling. Further it is seen that units are shared by one or more unrelated inhabitants. Applicant charges all the inhabitants of a room individually and not for a room as a whole. It is apparent that the accommodation provided to each of the inhabitant is not a residential dwelling but a cot / a unit in the room; un-related people share the said room and invoices are raised per bed on monthly basis are not characteristic of a residential dwelling - Further, it is also an admitted fact that the accommodation being provided by the applicant, out of the immovable property claimed as residential dwelling, does not have individual kitchen facility to each of the inhabitant and also cooking of food by inhabitants is not allowed, which are an essential characteristic for any permanent stay. On this count as well, the impugned accommodation being provided does not qualify to be a residential dwelling and thus the question of using the same as residence does not arise. The impugned accommodation being provided by the applicant are akin to provision of unit of accommodation in a paid guest house or a hostel and does not qualify to be a residential dwelling. Also the facilities such as food, furniture, appliance, cleaning, security, pest control etc., being provided by the applicant to the resident are not optional and the resident cannot choose the service provider. These facilities are mandatorily provided by the applicant and included in the monthly charges. Also the essentials like electricity and water are not charged based on usage, but a fixed amount is charged. Thus the service provided by applicant are unit accommodation for residence and not renting of residential dwelling - the services being provided by the applicant do not qualify for exemption under SI No. 12 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended. If applicant transaction is not exempt, then what is the GST rate? - HELD THAT:- In the instant case the applicant is providing accommodation services consisting of rooms or units, without kitchens with daily housekeeping services on a single or multi occupancy basis and thus merits classification under SAC 996311. Further the applicant is an establishment that provides the services that are akin to the services provided by Hotels, INN, Guest houses, Clubs other similar establishments. The rent being charged per person per unit per day is less than rupees seven thousand five hundred and thus the impugned services, covered under SAC 9963, attract GST @ 12%, in terms of entry number 7(i) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended. If applicant transaction is taxable, whether applicant can claim ITC on input used for providing taxable service? - HELD THAT:- The applicant can claim ITC on inputs used for providing the impugned taxable services subject to fulfilment of the conditions stipulated under Sections 16 17 of the CGST Act 2017 and the rules made thereunder.

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• 2023 (12) TMI 509
  Classification of supply - rate of GST - Supply or not - damages received by the applicant from the tenant towards the termination of sub-lease before the agreed upon lock-in period as per the sub-lease deed agreements - amount received towards damages as per the settlement agreement to be construed as Consideration for the above supply or not? - HELD THAT:- Amounts paid for early termination of lease as contemplated by the contract as part of commercial terms agreed to by the parties, constitute consideration for the supply of a facility, namely, early termination of a lease agreement. Therefore, such payments, even though they may be referred to as fine or penalty, are actually payments that amount to consideration for supply, and are subject to GST, in cases where such supply is taxable. Since these supplies are ancillary to the principal supply for which the contract is signed, they shall be eligible to be assessed as the principal supply. In view of CBIC circular No. 178/ 10/2022, it is clear that amount paid for termination of lease constitute consideration for the supply of a facility and are subject to GST and they shall be eligible to be assessed as the principal supply. In the impugned case the principal supply is sub letting of a commercial property which is a taxable supply of service and is classified under chapter heading 9972 - Real Estate Services. The damages received by the applicant from the tenant towards the termination of sub-lease before the agreed upon lock-in period as per the sub-lease deed agreements tantamount to supply as per Section 7 of Central GST Act, 2017 and the amount received towards damages as per the settlement agreement is to be construed as Consideration for the above supply - The services provided by the Applicant are classifiable under Chapter heading 9972 and is liable to GST at 18% (9% CGST and 9% SGST).

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• 2023 (12) TMI 508
  Classification of goods - rate of tax - Two wheeler seat covers - to be classified under HSN code 9401 2000 or 87089900 or under or 87149990? HELD THAT:- The commodity manufactured by the Applicant i.e., Two Wheeler seat cover does not merit classification either under CTH 8708 or 9401 and if the Seat covers are cleared under CTH 87149990 the GST applicable is not 5% as collected by some of the taxpayers - Motorcycles are classified under CTH 8711 and on the seats of such Motorcycles, the seat covers are fitted. Hence, these seat covers are nothing but part and accessories of Motorcycles and fall under CTH 8714, and more specifically under CTH 87149990. Thus, the Two wheeler seat covers are specifically covered under CTH 87149990 and are taxable (@ 14% CGST + 14% SGST vide entry no. 174 of Schedule IV of Notification No. 1/2017- CT(Rate), dated 28.6.2017, as amended.

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• 2023 (12) TMI 507
  Levy of GST - supply or not - recovery of subsidised value from employees for providing canteen facility - HELD THAT:- In the case at hand establishing a canteen facility in the unit is an activity incident to the running of their business. Factory Act, above mandates establishing canteen, bearing certain mandatory costs in running of the canteen by the employer in as much as the number of workers ordinarily employed (workers contract labourers) are above 250 per unit, which is the case in hand as per their submissions. Accordingly, the applicant has established the canteen in their premises and bears certain running cost while collecting the nominal rate as fixed by the Managing Committee, which is an activity in furtherance of their business - Thus supply made by a taxable person in the course or furtherance of business is an Outward supply . It was also the contention of the Applicant that the amount received from the employees is in the nature of reimbursement of the cost incurred by the Applicant and there is not enforceable reciprocal obligations. However, the running of canteen in the premises of the Applicant is in the course of furtherance of business. It is also clear that in running of such a canteen, the employer, i.e., the Applicant is mandated to bear certain costs. Provision of canteen facility and bearing certain costs in running of canteen are mandated on the part of the employer as per the Factories Act. Accordingly, such canteens are provided. It has been established that the supply of food in the canteens are Supply of Service by the Applicant - In the instant case, the Appellant had established the canteen in their premises and has been bearing a part of the cost for providing the food/beverages to their employees and a part of the cost is being collected from employees, by adopting subsidized rates. The supply of the food/beverages, although at subsidized rates, by the Applicant to their employees is certainly an activity amounting to supply of service and attracts levy of GST on that part of the consideration being charged for such supply. Whether subsidized food is a perquisite to employees forming a part of the wage agreement and HR policy of the Applicant? - HELD THAT:- The intention of the Circular no. 172/04/2022-GST dated 06.07.2022 of CBIC is to clarify that tax is not applicable on perquisite which is part of the employee agreement and which may be free of cost for the employees. Accordingly, in case where a recovery is made against a supply, even if it is subsidised, the same will be subjected to tax. We find that the benefit of the non-levy of GST could be extended only to the extent of the consideration being borne by the Applicant out of the total cost for supply of the food/Beverages, but not to the extent of the consideration being collected at the subsidized rates, by the Applicant from their employees. Thus, GST is to be levied on the amount recovered by the Applicant from the employees towards canteen provision.

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• Income Tax

• 2023 (12) TMI 506
  Refund due adjustment against the demand raised - recourse to a statutory remedy for payment of interest and the balance refund claimed - HELD THAT:- As revenue, has returned with instructions, which indicate that the respondents/revenue have computed the amount refundable to the petitioner/assessee. As pointed out by Respondents that Rs. 44.60 lakhs has been computed as the amount which is refundable to the petitioner/assessee. Petitioner/assessee says that the amount claimed by way of refund is Rs.46 lakhs, as indicated in the prayers made in the writ petition. Petitioner also says that the petitioner/assessee should also be granted interest. To be noted, in the application interest at the rate of 18% per annum has been claimed, which is way beyond the statutory rate of interest. As a matter of fact, at the time when the writ petition was filed, interest at the applicable rate was claimed. As would be evident upon perusal of the extract of the order date 27.09.2023, in the instant writ action, counsel for the petitioner had clearly indicated that he would not be claiming interest if the amount is paid forthwith. Writ petition is disposed of with the following directions- (i) The respondents/revenue will remit to the petitioner/assessee the amount of refund already crystallized [i.e., Rs.44.60 lakhs] within the next two (2) weeks. (ii) The petitioner will be at liberty to take recourse to a statutory remedy for payment of interest and the balance refund claimed by him. The order passed today or those passed on previous dates will not come in the way if such a remedy is taken recourse to. (iii) The concerned authority will decide the matter concerning interest and the balance principal amount by the petitioned/assessee in accordance with the law.

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• 2023 (12) TMI 505
  B/F losses not allowed to be carry forward - Tribunal allowed the appeal and directed the AO to expunge the concluding remark brought forward loss is not allowed to be carry forward - Tribunal for expunging the remark was that the AO was only required to notify the assessee about the amount of loss, as computed by him for the relevant AY and held that the question of whether the loss, incurred in any year, could be carried forward to the following year, and set off against the profits had to be decided by the AO who would deal with the assessment concerning the subsequent year. HELD THAT:- Section 79 of the Act prohibits carry forward and set off of losses that occurred in a period before the previous year, when in a previous year, there has been a change of shareholding unless the case fits in any of the provisos referred to therein. Tribunal, in sum, concluded that it was not within the remit of the AO, dealing with the AY in issue, to make an observation concerning an aspect that would fall within the jurisdiction of the AO, when the aspect concerning carry forward and set off losses would come to the fore A textual reading of Section 79 makes it evident that it does not empower an AO, who exercises jurisdiction qua a particular AY, to place limitations on the adjudicatory powers of the AO who would be called upon to deal with the matter in subsequent years. A perusal of Section 79 of the Act would show that unabsorbed depreciation and capital losses do not fall within its scope and ambit. There is, in our opinion, no practical efficacy in the assessee carrying forward business losses, unabsorbed depreciation, and capital losses unless there is a possibility of setting off those losses in the future, albeit subject to the provisions of the Act. These are the aspects, in our opinion, that the concerned AO would examine in the relevant AY in which such set off is claimed. Mere fact that the Tribunal has expunged the impugned observations, in our view, cannot impact the stand of the appellant/revenue.

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• 2023 (12) TMI 504
  Validity of order passed Direct Tax Vivaad Se Vishwas, Act - penalty imposed u/s 271 AAB - amicable settlement in terms of the Act seeked - settlement over litigation - appeal was filed carrying a delay of 1261 days - designated authority rejecting that application/ declaration for reason of second appeal not filed before the cut off date 01.04.1919 to 31.01.2020 - revenue would submit not only the petitioner did not file any appeal within limitation, he also did not file such appeal with delay within the cut off time. Had such delay condonation application being filed, the revenue authorities would have remained enabled to consider the application/ declaration on merits HELD THAT:- We find no good ground to offer any interference. In the first place, settlement of disputes outside courts/ judicial process is not a fundamental or inherent right of any litigant. That right was created by the statute i.e. the Act. Being a statutory right, the same may have been availed strictly in accordance with the statutory conditions and it was a stipulation that the application/ declaration may be maintainable only if there was pending a litigation between the parties before the cut off date, it remained from the petitioner to satisfy that condition. Not only the petitioner did not file the appeal before the Tribunal, within time it also remained from him to file any defective proceeding seeking condonation of delay in filing such appeal before the cut off date. Therefore, no right vested or accrued to the petitioner to seek a settlement in terms of the conditions prescribed by the Act. For that reason, we find no error in the order passed by the designated authority. Further submission of petitioner is concerned based on the objects and reasons of the Act, while objects and reasons may never defeat specific provisions of enactment, here we also note that the petitioner is not at loss inasmuch as his right of appeal before the Tribunal, against the order passed by the first appellate authority has been preserved upon condonation of delay of 1261 days in filing the second appeal. Writ petition lacks merits and is dismissed.

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• 2023 (12) TMI 503
  Validity of faceless assessment proceedings - as argued petitioner did not receive the draft assessment order and notice - violation of principles of natural justice - HELD THAT:- It is not in dispute that all other notices issued to the petitioner during the faceless assessment proceedings were served on him and he filed responses to the said notices. It would be hard to believe that the petitioner did not receive the draft assessment order and notice. Violation of principles of natural justice - As argued Sufficient time to the petitioner for filing reply/objection to the draft assessment order not provided assessee was afforded only three days time to file objection to the draft assessment order - Submission of the petitioner is also unsustainable, because violation of principles of natural justice would come only if the petitioner asked for extension of time to file reply/objection to the draft assessment order dated 24.9.2021, Ext.P11(b), or the notice dated 23.9.2021 and the authority denied such request for further time for filing reply/objection. In the present case, the petitioner did not choose to file reply to the notice dated 23.9.2021, nor objection to the draft assessment order. Therefore, the alleged violation of principles of natural justice does not exist. Thus it would be hard to believe that the petitioner did not receive draft assessment order and therefore, the decision in the case of Ellathkandi Khaleel Ahammad [ 2022 (8) TMI 139 - KERALA HIGH COURT] is of no use to the petitioner in the present case. No substance in the submission of the learned counsel for the petitioner that notice and draft assessment order were not served on the petitioner. Accordingly, the present writ petition is hereby dismissed.

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• 2023 (12) TMI 502
  Bogus short-term capital loss on sale of shares - assessee, an individual, claimed to be engaged in the activity of trading of shares securities -principle of surrounding circumstantial evidence relied upon - lower authority treated the transaction carried out by the assessee as sham transaction based on certain general facts like the company company was not finically viable in which general public should show interest. The price of the scrip was unusually skyrocketed without any financial or economic basis and unusually decreased and script in that period were traded in bulk and most people who indulged in bulk trading were from Ahmedabad city only HELD THAT:- AO in its order has stated nowhere that any enquiry or investigation was carried out with any concerned authority or income tax department regarding rigging up of the price of M/s Looks Health Services Ltd or by the assessee s broker. AO predominantly proceeded to hold the price of the shares was rigged up merely on analysis of trade data of impugned script and financial strength of the company. Thus, the AO based on sweeping observation held that the assessee entered a prearranged transaction to set off the long-term capital gain earned by him during the year. As such, there is no information or finding based on corroborative material available with the AO that the price of impugned script was rigged up or the assessee along with his broker have rigged up the price or prearranged the transaction. The principle of surrounding circumstantial evidence is also not as strong to draw adverse inference against the assessee especially considering the fact that the transaction of purchases and sales were made on the BSE platform where seller and buyer do not know each other, and transaction entered on the basis of current market scenario. Assessee during the year under consideration has earned LTCG of Rs. 2,46,90,000/- whereas claimed setoff of STCL of Rs. 1,78,23,848/- only, had the assessee prearranged the transaction to set off the gain then he might have setoff entire capital gain. It is also pertinent to mention that the assessee during the year entered into share trading on short term basis in 48 different scripts and he incurred losses as well as earned profit which were not doubted. We find it necessary to refer to the judgment of the Krishna Devi [ 2021 (1) TMI 1008 - DELHI HIGH COURT] wherein High court decided the issue in favour of the assessee as held that reliance placed on the report, without further corroboration on the basis of cogent material, does not justify his conclusion that the transaction is bogus, sham and nothing other than a racket of accommodation entries. We do notice that the AO made an attempt to delve into the question of infusion of Respondent s unaccounted money, but he did not dig deeper. AO simply proceeded on the basis of the financials of the company to come to the conclusion that the transactions were accommodation entries, and thus, fictitious. The conclusion drawn by the AO, that there was an agreement to convert unaccounted money by taking fictitious LTCG in a pre-planned manner, is therefore entirely unsupported by any material on record. This finding is thus purely an assumption based on conjecture made by the AO. Thus following same we direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is hereby allowed.

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• 2023 (12) TMI 501
  Revision u/s 263 - Reopening of assessment u/s 147 - sale of the immovable property and the resultant capital gain arising from such sale - claim of deduction u/s 54 - HELD THAT:- AO has clearly stated that assessee s counsel has furnished written reply, sale deed, copy of purchase of property and computation of capital gain. In the said order sheet, AO has also called upon the assessee to furnish the details of exemption claimed under section 54 with supporting evidences. Thus, as could be seen from the order-sheet entries in the assessment record, the Assessing Officer has duly examined the issue relating to capital gain from sale of property as well as assessee s claim of deduction under section 54 of the Act. A perusal of the showcause notice issued u/s 263 of the Act as well as the order passed under the said provision clearly reveal that the revisionary authority has not expressed any doubt regarding the quantum of capital gain arising at the hands of the assessee and also the fact that such capital gain was invested in purchase/construction of residential house within the time limit prescribed u/s 54(1) of the Act. Only because the capital gain was not deposited in the capital gain account scheme, the revisionary authority has treated the assessment order to be erroneous and prejudicial to the interest of Revenue. In our view, learned PCIT has adopted a hyper-technical approach while dealing with the issue. When the basic conditions of section 54(1) has been satisfied, in our view, the assessee remains entitled to claim the deduction under section 54 of the Act. In any case of the matter, there is no prejudice caused to the Revenue as the assessee in terms of section 54(1) of the Act is entitled to deduction. We hold that exercise of power under section 263 of the Act to revise the assessment order in the instant case is invalid. Accordingly, we quash the order passed under section 263 of the Act and restore the assessment order.

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• 2023 (12) TMI 500
  Reopening of assessment - Addition u/s 68 - introduction of the assessee s unaccounted funds in the guise of share capital/premium and such a transaction was to launder its own unaccounted fund - HELD THAT:- As in Aroni Commercials Ltd. [ 2014 (2) TMI 659 - BOMBAY HIGH COURT] as observed that once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the assessing officer while completing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. And further their Lordship observed that if an assessing officer has to record the consideration bestowed by him on all issues raised by him during the assessment proceedings even where he is satisfied, it would be impossible for the assessing officer to complete all the assessments which are required to be scrutinized u/s 143(3) of the Act. In the light of the inquiry made by AO regarding the share capital/premium allotted/received by assessee during the original/abated/scrutiny assessment, the impugned action of AO again to examine the same alleging escapement of income tantamount to review of his own action which is not permissible; and therefore, the action of the AO to reopen the assessment by issuance of notice u/s 148 merely on the basis of change of opinion , cannot satisfy requirement of law u/s 147 of the Act to validily reopen the assessment. We find that AO in the reasons recorded had no tangible material in his possession to reopen the assessment, and he has resorted to reopening only after perusal of balance-sheet of the assessee regarding shares allotted on premium, which action itself vitiates the impugned reopening of assessment. Thus we find that the issue regarding share capital/premium allotted to M/s. Balaji Universal Tradelink Pvt. Ltd from whom assessee collected in the year under consideration was subjected to inquiry by AO during the original assessment and thereafter, he framed the assessment order on 30.12.2011 after consideration assessee s reply and the AO s action of not making any adverse finding on this issue, implies that AO has accepted the explanation of assessee on this issue. Right or Wrong the action of AO could not have been reviewed by AO himself after reopening the assessment u/s 147 of the Act. May be the Ld. PCIT could have initiated revisional proceeding u/s 263 of the Act. And moreover, we note that year under consideration is AY 2009-10 and share /premium could not have been brought to tax because share premium was brought to tax only w.e.f. 01.04.2013 as held in the case of Gagandeep Infrastructure Pvt. Ltd [ 2017 (3) TMI 1263 - BOMBAY HIGH COURT] wherein held that share premium can be brought to tax only w.e.f. 1st April, 2013. Therefore, the action of AO to reopen the assessment of assessee cannot be sustained. Decided in favour of assessee.

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• 2023 (12) TMI 499
  TP Adjustment - valuation of Arms Length Price (ALP) of the various Specified Domestic Transactions (SDTs) between the assessee and its Associated Enterprises (AEs) - AO had made a reference to Transfer Pricing Officer u/s. 92CA of the Act to determine ALP with respect to SDT u/s. 92BA(1) - HELD THAT:- We are of the view that Coordinate Benches have taken a view that since clause (i) of section 92BA stands omitted from the provision and omission of such is to be construed as if it never existed in the Statute Book and if it never existed in the Statute Book, then, no Arm s Length Price is required to be determined for a transaction with specified persons in section 40A(2)(b) of a domestic transaction. If no Arm s Length Price is required to be determined, then, no reference was required to be made. As relying on Texport Overseas Pvt. Ltd [ 2019 (12) TMI 1312 - KARNATAKA HIGH COURT] we allow the Cross Objection of the assessee resulting into deletion of the adjustments made in respect of the SDTs by the Ld. AO.

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• 2023 (12) TMI 498
  Addition u/s 40(a) - withholding of TDS - assessee submits that the ground of the Department for disallowance of the gross fee paid to FOWC already stands decided against the Department by the Tribunal in assessee s own case - as regards the disallowance of fee paid to FOM it is rightly deleted by the Ld.CIT(A) for both the reasons: (i) there was no chargeable sum in the gross fee and (ii) FOM had filed their returns and had paid their tax dues. HELD THAT:- In so far as the fee paid to Formula One World Championship Ltd. to UK (FOWC), we find that the issue stands covered in favour of the assessee by the order of the Tribunal [ 2023 (3) TMI 609 - ITAT DELHI] for the assessment years 2012-13 to 2014-15 as held no part of the RPC fee paid by the assessee is liable to be disallowed under clause(i) of s.40(a) because the second proviso clause (i) of Section 40(a) has been inserted w.e.f. 1.4.2020. The said proviso essentially provides that where the relevant income has been declared by the payee and tax thereon has been paid by him then no disallowance shall be made in the hands of the payer. This proviso is similar to the second proviso to clause(ia) of s.40(a) which was inserted w.e.f. 1.4.2013. Both these provisos were inserted to remove an anomaly and were therefore curative and declaratory in nature. Hence they had to be given retrospective effect. Fee paid to Formula One Management Ltd. of UK (FOM) - On careful observation of Ld.CIT(A), we noticed that the disallowance was deleted on the ground that the assessment made in FOM it was found that the chargeable sum resulted in loss therefore no withholding was required by the assessee the disallowance was rightly deleted. Grounds of Revenue on this issue are rejected. TDS u/s 194H - Disallowance of bank guarantee Commission - As decided in own case [ 2017 (9) TMI 241 - ITAT DELHI] no tax is required to be deducted on bank guarantee Commission u/s 194H of the Act was accepted. Respectfully following the decision of the Tribunal, we reject the grounds raised by the Revenue on this issue.

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• 2023 (12) TMI 497
  Reopening of assessment - Addition made u/s.69A - difference between agreement value and market value - HELD THAT:- Assessee has purchased the premises in question by virtue of the sale agreement from M/s. Trincas Agencies Commerce Pvt. Ltd. reopening in case of the assessee for A.Y. 2011-12 is not sustainable in the eyes of law. Even on merits the assessee has proved on record the ledger account of M/s. Trincas Agencies Commerce Pvt. Ltd. showing payment through banking channel. The assessee has also brought on record his bank statement available wherein payment of the sale consideration is shown to have been made through Union Bank of India from his bank account. When we examine sale agreement between M/s. Trincas Agencies Commerce Pvt. Ltd. and the assessee for a consideration of Rs. 9,92,00,000/-. From the document available it is proved that the assessee has purchased the property in question more than the fair market value - Assessee has nothing to do with M/s. Sunshine Housing Infrastructure Pvt. Ltd. rather purchased the property in question in A.Y. 2013-14 in second sale from M/s. Trincas Agencies Commerce Pvt. Ltd. at the rate more than the fair market value. Reopening made on the basis of search conducted at the M/s. Sunshine Housing Infrastructure Pvt. Ltd. and the statement of Shri N.K. Vora recorded under section 132(4) of the Act reopening of the assessment in A.Y. 2011-12 is invalid and not sustainable in the eyes of law. Even on merits the addition made in the hands of the assessee in A.Y. 2011-12 in which no such property was purchased by the assessee is sustainable in the eyes of law, hence ordered to be deleted. Appeal filed by the assessee is allowed.

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• 2023 (12) TMI 496
  Excess claim of deduction u/s 35(2AB) - partial disallowance by the ld. AO in the re-assessment - As submitted although in the said approval letter, the R D facility was approved for the purpose of section 35(2AB) from 20.11.2012 to 31.3.2015, yet it did not assign any reason for curtailing the period from 1.4.2012 to 19.11.2012 - no reply was received from DSIR when seeked reason for curtailing approval - as submitted that once a R D facility is approved by DSIR, then the expenditure incurred thereon would be eligible for weighted deduction u/s 35(2AB) of the Act for the whole year irrespective of the fact that the approval was granted only from the period commencing from 20.11.2012 onwards - HELD THAT:- As decided in SANDAN VIKAS (INDIA) LTD. [ 2011 (2) TMI 66 - DELHI HIGH COURT] The provisions nowhere suggest or imply that research and development facility is to be approved from a particular date and, in other words, it is nowhere suggested that date of approval only will be cut-off date for eligibility of weighted deduction on the expenses incurred from that date onwards. A plain reading clearly manifests that the assessee has to develop facility, which presupposes incurring expenditure in this behalf, application to the prescribed authority, who after following proper procedure will approve the facility or otherwise and the assessee will be entitled to weighted deduction of any and all expenditure so incurred. Tribunal has, therefore, come to the conclusion that on plain reading of section itself, the assessee is entitled to weighted deduction on expenditure so incurred by the assessee for development of facility.Tribunal has also considered Rule 6(5A) and Form No. 3CM and come to the conclusion that a plain and harmonious reading of Rule and Form clearly suggests that once facility is approved, the entire expenditure so incurred on development of R D facility has to be allowed for weighted deduction as provided by Section 35(2AB). No scope for any other interpretation and since the approval is granted during the previous year relevant to the assessment year in question, we are of the view that the assessee is entitled to claim weighted deduction in respect of the entire expenditure incurred under Section 35(2AB) of the Act by the assessee. Thus we hold that the assessee would be entitled for deduction u/s 35(2AB) of the Act for the expenditure incurred from 1.4.2012 to 31.3.2013. Assessee appeal allowed.

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• 2023 (12) TMI 495
  On-money received towards sale of property and offered during the course of survey - AO based on the impounded MOU and sworn statement of the assessee completed the assessment by adding Rs. 1 Crore to the total income of the assessee - HELD THAT:- We find from the financial statements filed by the assessee for the A.Y 2011-12 that additional income offered during the course of survey towards on-money received from sale of property amounting to Rs. 1,00,00,000/- has been offered to tax and credited to profit and loss account under the head other income business . Further, the appellant has filed an affidavit and confirmed income offered during the survey is subjected to tax. From the details filed by the assessee, we find that the appellant has declared amount of Rs. 1,00,00,000/- offered as additional income during the course of survey and paid necessary taxes. In fact, the A.O and Ld. CIT(A) are also not disputed the fact that the assessee has offered Rs. 1,00,00,000/- for tax which is evident from the findings of the Ld. CIT(A) in their order dated 23.03.2016. Since, the appellant has already offered and paid taxes additional income of Rs. 1,00,00,000/- declared during the course of survey, further addition on very same amount by the A.O amount should double additional which is not permissible under the law. Therefore, we are of the considered view that the A.O is erred in making separate addition of Rs. 1,00,00,000/-, even though the appellant has already credited said additional income in the profit and loss account and paid taxes. CIT(A) without appreciating the facts simply sustained the additions made by the A.O. Thus, we set aside the order of the CIT(A) and direct the A.O to delete additions of Rs. 1,00,00,000/- made towards on-money received towards sale of property and offered during the course of survey. Appeal of the assessee is allowed.

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• 2023 (12) TMI 494
  Addition on the basis of entries found in form No. 26AS - addition under the head income from other sources - CPC compared the interest income reflected in Form No. 26AS and net interest income shown in the computation of income and added the difference - HELD THAT:- On examination of computation of income which, is made a part of order by ld. CIT(A), we find that the assessee has shown bank interest under the head income from other sources and net difference of interest income earned and interest income incurred is reduced from business income. Thus, find merit in the written submission that the CPC has not considered or unable to consider the allowability of interest income earned and interest incurred due to mechanical working. As also find merit in the written submission that no addition on 26AS alone can be a basis for making addition without verification of fact as has been held by various Benches of the Tribunals, therefore, the addition/adjustment made by AO and confirmed by ld. CIT(A) is deleted. In the result grounds of appeal raised by the assessee are allowed.

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• Customs

• 2023 (12) TMI 493
  Recovery of customs duty forgone proportionately with respect to the utilization of the licence - non-fulfilment of export obligation - appellant had engaged third party exports - HELD THAT:- The Circular No.7/2002 dated 11.7.2002 was issued by the Ministry of Commerce and Industry, Directorate General of Foreign Trade, New Delhi, on the basis of the representations given from various exporters for condonation of procedural lapse of not mentioning the EPCG licence number and the date on the shipping bills relating to the exports for fulfillment of EO under EPCG scheme. A decision was taken under para 2.5 of the EXIM policy that such procedural lapse may be condoned in relaxation of the existing policy provisions subject to submission/verification of the documents as enumerated therein. In the present case, the contention of the respondents nned not be considered that the appellant had not fulfilled the export obligation within the stipulated period. The same was not the ground in denying the benefit to the appellant. It is worth noting that the appellant even failed to place on record the shipping bills. Moreover, the appellant admitted that it did not mention the names of third parties and the licence holder on the shipping bills. It would be difficult for the respondents to verify the genuineness of the claim in the absence of the names of third parties on the shipping bills so also the names of the licence holder. Paragraph 5.7.1 of the Hand Book of Procedures prescribes that EPCG licence number and date shall be endorsed on the shipping bills which are proposed to be presented towards discharge of export obligation. The appellant did not comply with the same. Moreover, the shipping bills were not placed before the respondents so as to enable the respondents to verify the same. There are no error in the order passed by the respondents negativing the claim of the appellant - the writ appeal stands dismissed.

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• 2023 (12) TMI 492
  Smuggling - Gold Bullion - procedure contemplated under Section 108 of the Customs Act, 1962 not followed - retraction of statements of petitioner - violation of principles of natural justice - HELD THAT:- When the petitioners case is verified with reference to the available material on record, it creates prima facie suspicion on the version projected by the petitioners. Further, the investigation is in the nascent stage and not yet completed. In these circumstances, it is not apposite to rush to the conclusion that the statements of the petitioners 2 to 5 were recorded by the authorities by applying threat or coercion. This aspect and the truth or falsity of petitioners case can be determined only after completion of investigation and when the matter is taken up for trial by the concerned court. It is not considered apt to order release of the seized gold to the petitioners. Thus, at the outset, there are no merits in the case of petitioners. The Writ Petition is dismissed, however with an observation that respondent authorities shall proceed with investigation and complete the same without being influenced by our observation in this order.

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• 2023 (12) TMI 491
  Requirement of previous sanction as contemplated in Section 137 of the Customs Act, 1962 for taking cognizance of the alleged offences - petitioners submits that when such specific authorities are empowered to accord sanction; even by excluding superior officers like Principal Commissioner of Customs or Chief Commissioner of Customs, the sanction accorded in this case by an officer who held only charge and not by the officer empowered by the statutory provision is illegal. HELD THAT:- Section 4(2) governs only authorisation of the officers enlisted therein by the Board to appoint officers below the rank of Assistant Commissioner or Deputy Commissioner of Customs; whereas notification dated 07.03.2002 was issued to classify the officers and appoint Commissioner of Customs. Before amending Section 4(1) on 11.05.2002, it was the Central Government and not the Board the authority to appoint officers of Customs. Hence, the notification dated 07.03.2002 issued by the Central Government is quite valid. The notification dated 07.03.2002 says that the Commissioner of Central Excise to be the Commissioner of Customs (Appeals) within their respective jurisdiction as specified under Rule 3 of the Central Excise Rules, 2002. Thus there is valid appointment of the Commissioner of Central Excise to be the Commissioner of the Customs. Hence, appointment of the officer officiating as the Commissioner of Customs could validly accord sanction. The petitioners cannot be heard to contend that such an officer did not have the power to discharge the functions and duties of the Commissioner of Customs under Section 137 of the Customs Act. In that view of the matter, the contention of the learned counsel for the petitioners that the sanction accorded for prosecution in this case is illegal cannot be prima facie accepted. The criminal revision petition is dismissed.

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• 2023 (12) TMI 490
  Refund of the Clean Energy Cess paid by them in cash in addition to the debits made through DEPB scrips - Power of Commissioner (Appeals) to remand. Refund of the Clean Energy Cess paid by them in cash in addition to the debits made through DEPB scrips - HELD THAT:- It is noticed that revenue has field cross objections on the ground that the Commissioner (Appeals) has no power to remand. The Commissioner (Appeals) has not dealt with the issue on merits. While remanding the Commissioner (Appeals) has observed I find that the adjudicating authority had concluded that their application for revalidating the DEPB licence is lying alive before the PRC. I find the aforesaid facts and issues need proper verification and re examination by the original authority - thus, It is seen that the Commissioner (Appeals) has not examined the issue on merits and therefore the said order cannot be sustained. Power of Commissioner (Appeals) to remand - HELD THAT:- The issue becomes infructuous, as there was no need to remand the matter. The Commissioner (Appeals) to decide the issue on merit - the order ser aside and matter remitted back to the Commissioner (Appeals) to decide the issue of the refund on merits. Appeal disposed off.

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• 2023 (12) TMI 489
  Jurisdiction - power of Commissioner (Appeals) under Section 128A (3), to modify order after inquiry - change of heading by the Commissioner (Appeals), without affording opportunity - Classification of imported goods - Malvern Master Sizer - HELD THAT:- While Commissioner (Appeals) is within its powers to confirm the decision or order appealed against or modify the same, but there is an initial requirement that he should make further inquiry as may be necessary and pass such order i.e just and proper. In the present instance, no inquiry it appears was conducted about the product or details and the matter has been decided without opportunity to the appellants. Appellants too are agreeable and seek remand, but with rider of opportunity about correct classification on (even of third head). Thus, change of heading by the Commissioner (Appeals), without affording opportunity is improper, and same can only be done after conducting proper inquiry and following natural justice. Matter therefore is remanded in the interest of settling classification at the earliest - Appeal is allowed by way of remand.

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• 2023 (12) TMI 488
  Classification of imported goods - mixed hydro carbon oil - classifiable under 2707 5000 or under 2710 1990? - whether one test report in which 10 out of 21 parameters which have been tested can be held as good enough to hold the same against the party? - HELD THAT:- The Hon ble High Court in COMMISSIONER OF CUSTOMS, KANDLA VERSUS RAJKAMAL INDUSTRIAL PVT. LTD. [ 2022 (2) TMI 264 - GUJARAT HIGH COURT] said that department is not required to prove its case with mathematical accuracy and beyond reasonable doubt - the observations in the instant case are to be followed, where 10 out of 21 parameters have been tested but conclusion arrived. It is opined that the Chemical analyst to which there is no serious challenge by way of any other report produced by the party is correct - appeal of the appellant is dismissed.

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• Corporate Laws

• 2023 (12) TMI 487
  Professional Misconduct - failure to disclose material facts known to him, which is not disclosed in a financial statement, but disclosure of which is necessary in making such financial statement, where he is concerned with that financial statement in a professional capacity - failure to report material misstatements known to him to appear in a financial statement with which the EP is concerned in a professional capacity - failure to exercise due diligence, and being grossly negligent in the conduct of professional duties - failure to obtain sufficient information which is necessary for the expression of an opinion, or its exceptions are sufficiently material to negate the expressions of an opinion - failure to invite attention to any material departure from the generally accepted procedures to audit applicable to the circumstances - penalties and sanctions. HELD THAT:- The EP has made a series of serious departures from the Standards and the Law, in the conduct of the audit of DHFL for FY 2017-18. Based on the discussion, it is proved that EP had issued an unmodified opinion on the Financial Statements without any basis. The poor quality of the audit, incomplete documentation and attempt to mislead through baseless replies further compound the professional misconduct on the part of the EP. He demonstrated a lack of awareness and disregard for the mandatory provisions of the SAS and the law throughout the replies. Based on the discussion and analysis, it is concluded that the EP has committed Professional Misconduct as defined in the Act, as below: a. CA Jignesh Mehta committed professional misconduct as defined by Section 132 (4) of the Companies Act, 2013, read with Section 22 and Clause 5 of Part I of the Second Schedule of the Chartered Accountants Act, 1949 (No. 38 of 1949) as amended from time to time, which states that a Chartered Accountant is guilty of professional misconduct when he fails to disclose a material fact known to him which is not disclosed in a financial statement, but disclosure of which is necessary in making such financial statement where he is concerned with that financial statement in a professional capacity . This charge is proved as the EP failed to disclose in his report the material non-compliances of the Company regarding branch audits, consolidated financial statements and ICFR as explained in sections D. 1, D.2 and D.7 above. b. CA Jignesh Mehta committed professional misconduct as defined by Section 132 (4) of the Companies Act, 2013, read with Section 22 and Clause 6 of Part I of the Second Schedule of the Chartered Accountants Act) 1949 (No. 38 of 1949) as amended from time to time, which states that a Chartered Accountant is guilty of professional misconduct when he fails to report a material misstatement known to him to appear in a financial statement with which he is concerned in a professional capacity . This charge is proved as the EP failed to disclose in his report the material noncompliances of the Company regarding branch audits and consolidated financial statements as explained in sections D. 1 and D.2 above. c. CA Jignesh Mehta committed professional misconduct as defined by Section 132 (4) of the Companies Act, 2013, read with Section 22 and Clause 7 of Part I of the Second Schedule of the Chartered Accountants Act, 1949 (No. 38 of 1949) as amended from time to time, which states that a Chartered Accountant is guilty of professional misconduct when he does not exercise due diligence or is grossly negligent in the conduct of his professional duties . This charge is proved as the EP, conducted the Audit of a Public Interest Entity in total disregard of his statutory duties, evidenced by multiple critical omissions and violations of the standards. The instances of failure to conduct the audit in accordance with the SAS and applicable regulations, and failure to report the material misstatements in the financial statements and non-compliances made by the Company are as explained in Paras D. 1 to D.8 above. d. CA Jignesh Mehta committed professional misconduct as defined by Section 132 (4) of the Companies Act, 2013, read with Section 22 and Clause 8 of Part I of the Second Schedule of the Chartered Accountants Act, 1949 (No. 38 of 1949) as amended from time to time, which states that a Chartered Accountant is guilty of professional misconduct when he fails to obtain sufficient information which is necessary for expression of an opinion or its exceptions are sufficiently material to negate the expression of an opinion . This charge is proved as the EP failed to conduct the audit in accordance with the SAS and applicable regulations as well as due to his total failure to report the material misstatements and non-compliances made by the Company in the financial statements as explained in Paras D. 1 to D.8 above. e. CA Jignesh Mehta committed professional misconduct as defined by Section 132 (4) of the Companies Act, 2013, read with Section 22 and Clause 9 of Part I of the Second Schedule of the Chartered Accountants Act, 1949 (No. 38 of 1949) as amended from time to time, which states that a Chartered Accountant is guilty of professional misconduct when he fails to invite attention to any material departure from the generally accepted procedure of audit applicable to the circumstances . This charge is proved since the EP failed to conduct the audit in accordance with the SAS as explained in Paras D. 1 , D.3, D.4, D.5 and D.8 above but falsely reported in his audit report that the audit was conducted as per SAS. Thus, it is concluded that the charges of professional misconduct in the SCN, as detailed above, stand proved based on the evidence in the Audit File, the audit reports on the standalone financial statements and consolidated financial statements for the FY 2017-18 dated 30th April 2018, the submissions made by the EP, the audited financial statements of DHFL and other material on record. Sanctions and penalties - HELD THAT:- The professional misconduct has been detailed and proven on various counts in the body of this Order. Considering the nature and seriousness of violations and principles of proportionality, sanctions ordered as follows: a. Imposition of a monetary penalty of Rupees Five Lakh upon CA Jignesh Mehta. b. In addition, CA Jignesh Mehta has been debarred for Ten years from being appointed as an auditor or internal auditor or from undertaking any audit in respect of financial statements or internal audit of the functions and activities of any company or body corporate.

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• Insolvency & Bankruptcy

• 2023 (12) TMI 486
  Admissibility of section 9 application - application filed under Section 9 by the Operational Creditor was an application filed in collusion with the Corporate Debtor or not - locus of Real Estate Regulatory Authority and Aquacity Consumer and Societies Welfare Society to file Company Appeal u/s 61 of IBC - Barter Agreement has already been declared as unfair practices by RERA - forged invoices - time limitation. Whether Real Estate Regulatory Authority has locus to file Company Appeal challenging the order dated 05.08.2022 under Section 61 of the I B Code? - HELD THAT:- RERA on various complaints received from the allottees in the year 2021 has registered proceedings against the Corporate Debtor. A show cause notice dated 09.09.2021 was issued to the promoter of the project Aakriti Aquacity under Section 7 of the 2016 RERA Act as to why allottees should not be refunded deposit amount and compensation need to be paid and why action cannot be taken to revoke the registration of the project Aquacity for non-compliance of the Orders. Reply was submitted by the Corporate Debtor in October, 2021. Investigation Report from Financial Advisor was also obtained which report mentioned that the amount received by the promoter has not been deposited in the prescribed bank account and order dated 28th January, 2022 was passed by RERA against the Corporate Debtor and its Directors Mr. Raju Soni and Mr. Hemant Kumar Soni. In view of the sequence and events of the facts which took place and various proceedings drawn by RERA much prior to issuance of notice under Section 8 of the Code by the Operational Creditor, it is satisfied that Appeal filed by the RERA cannot be thrown out on the ground of locus. The RERA held to be aggrieved person within the meaning of Section 61 of the Code - the question has to be answered in affirmative holding that RERA has locus to file Company Appeal. Whether Aquacity Consumer and Societies Welfare Society, Appellant in Company Appeal has locus to file Appeal within the meaning of Section 61 of the I B Code? - HELD THAT:- Appellant being association of the home-buyers of Real Estate Project who has already initiated proceedings for direction of the interest of the home-buyers is aggrieved person within the meaning of Section 61 of the Code and the Appeal filed by the Appellant cannot be dismissed on the ground of locus - question answered in affirmative holding that Aquacity Consumer and Social Welfare Society has a locus to file an Appeal under Section 61 of the Code against the Order dated 05th August, 2022. Whether the Corporate Debtor owed operational debt to the Operational Creditor on the basis of Barter Agreements and consequent invoices to enable the Operational Creditor to initiate proceedings under Section 9 of the I B Code? - HELD THAT:- On the basis of Barter Agreement and consequent invoices, non-discharge of Barter Component by the Corporate Debtor shall not lead to any operational debt on basis of which payment of money can be demanded by the Operational Creditor from the Corporate Debtor. No operational debt was owed to the Operational Creditor in the facts of the present case hence initiation of proceedings under Section 9 by the Operational Creditor was contrary to the provisions of the IBC. Whether the application under Section 9 filed by the Operational Creditor was filed in collusion with the Corporate Debtor to save the Corporate Debtor from carrying out its statutory obligations? - Whether invoices which were filed along with the Section 9 application by the Operational Creditor were manufactured and forged invoices prepared for the purposes of the case, which were not genuine invoices? - HELD THAT:- There was no Operational Debt due on the Corporate Debtor and the proceedings initiated by the Operational Creditor being wholly outside Section 8 and 9 of the Code, there are no necessity to enter into the above question for the purpose of the present case. Thus, Application filed under Section 9 by the Operational Creditor alleging Operational Debt was non-maintainable since there was no operational debt on basis of which payment of money could have been demanded by the Operational Creditor from the Corporate Debtor on account of non-discharge of Barter Component by the Corporate Debtor. At best, the Applicant was entitled for claiming allotment of units as per the Barter Agreement between the parties for which it was open for the Operational Creditor to take such remedy as permissible. However, Section 9 Application was clearly not maintainable, the Adjudicating Authority committed error in admitting Section 9 Application without adverting to the real nature of the transaction between the parties, which is the very basis of the Section 9 Application, the Order of the Adjudicating Authority just is unsustainable. The Order dated 05th August, 2022 admitting Section 9 Application set aside - appeal allowed.

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• 2023 (12) TMI 485
  Doctrine of merger - Application for condonation of delay in filing of the Appeal - Preferential Transaction - Appellant contends that since the Appellant has already filed an application, the time taken during the period Application was pending should be excluded - by virtue of subsequent order dated 17th August, 2023, the earlier order shall merge and limitation should be counted from 17th August, 2023 or not? - HELD THAT:- The Judgment which has been relied by Learned Counsel for the Appellant in Ashok Tiwari [ 2023 (11) TMI 313 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ] was case where Appeal was filed against the subsequent order dated 12th May, 2023 which was an order passed on application filed by the Appellant for rectification of the earlier order dated 15th February, 2023. The rectification application was decided on 12th May, 2023 and the Appeal which came for consideration before the Tribunal was considered against the subsequent order dated 12th May, 2023. Observations were made by the Court were in reference to that context. Present Appeal is not against the subsequent order i.e. 17th August, 2023 rather the present Appeal is against the earlier order dated 02nd May, 2023. Hence the Judgment of this Tribunal in Ashok Tiwari does not render any help to the Appellant. In the case of DSR Steel Pvt. Ltd. [ 2012 (5) TMI 592 - SUPREME COURT ], the Hon ble Supreme Court was considering question of review application which review application was filed under the provisions of Electricity Act, 2003. There was power of review conferred on the commission as has been noticed in the Judgment of the Hon ble Supreme Court. In the above context, the Hon ble Supreme Court laid down preposition as noted in paragraph 25. Present is a case which is covered by Paragraph 25.3 of the above judgment where the Hon ble Supreme Court has clearly held that even a case of rejection of review the original order has to be challenged within time stipulated by law and original decree not the order requesting the review can be taken for the purpose of limitation. Present is not a case where there was any modification of the Order dated 2nd May, 2023 more so present is not a case of review because the Tribunal does not have jurisdiction to review its Judgment, in the clarification order issued on 17th August, 2023, it is opined that this Appeal having been filed beyond 15 days after expiry of the limitation and our jurisdiction to condone only 15 days hence the Delay Condonation Application is dismissed. Appeal dismissed.

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• Service Tax

• 2023 (12) TMI 484
  Interest on refund denied - relevant date - HELD THAT:- Hon ble Apex Court s decision in the case of SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS [ 2006 (1) TMI 55 - SUPREME COURT] , relied upon by the various judgments cited by the appellants, is distinguishable on the facts that in the case of Sandvik Asia, the refund was granted inordinately in a delayed manner i.e. after 20 years. The provisions regarding interest as provided in the Central Excise Act prevail and this Tribunal cannot intervene as regards the date from which the interest is payable or as regards the rate of interest, so far as refunds under Central Excise Act, 1944 are concerned. Appeal dismissed.

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• 2023 (12) TMI 483
  Import of service or not - reverse charge mechanism - Pure agent - service received from M/s. Bestinet, Malaysia - Appellants are authorised by Malaysian Government to conduct screening tests and bio metric registration of the persons seeking employment in Malaysia and upload the results in the web portal Foreign Workers Centralised Management Scheme (FWCMS) maintained by M/s. Bestinet SDN BHD, Malaysia - suppression of facts or not - invocation of extended period in terms of Section 73(1) of the Finance act, 1994. HELD THAT:- The appellant was collecting Rs.2000/- for each prospective employee who are the service receivers which is inclusive of US$ 30 which is paid to M/s. Bestinet upon raising of periodical invoices on the appellant. The total demand confirmed of Service Tax during the period from September 2014 to June 2017 worked out to Rs.36,36,856/- after giving exemption for the amounts collected towards diagnostic / medical screening tests. The Service Tax liability was computed on this US$ 30 which is the fees collected by the appellant for biometric registration of the candidates on FWCMS. The appellant acted as an agent of the Bestinet in collecting the fees of US$ 30 which was paid on periodical basis to M/s. Bestinet. The invoices raised by the appellant did not indicate collection of any other amount over and above US$ 30 payable by each foreign worker. In view of the above findings, the nature of services rendered by the appellant were in the nature of a pure agent as far as the fees for biometric registration is concerned. The amount alleged to have been collected by the appellant over and above US$ 30 is only towards screening test conducted by the appellant which was already held to be exempt in the impugned Order-in-Original dated 30.06.2021 under Notification No. 25/2012-ST dated 20.06.2012. As such, the demand of Rs.36,36,856/- collected by the appellant as fees for biometric registration of foreign workers who are the ultimate service recipients and which was paid to M/s. Bestinet, cannot be sustained. As the appellant succeeds on merits there is no need to discuss about the invocation of extended period. The impugned order is ordered to be set aside - Appeal allowed.

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• 2023 (12) TMI 482
  CENVAT Credit - inputs/capital goods - MS items like angles, channels, beams, etc., falling under Chapter 72 73 of CETA - Chargeability of interest under Rule 14 of CCR on the amount of Cenvat credit taken and reversed - extended period of limitation. Credit on MS items - HELD THAT:- Hon ble High Court of AP in COMMR. OF C. EX., VISAKHAPATNAM-II VERSUS SAI SAHMITA STORAGES (P) LTD. [ 2011 (2) TMI 400 - ANDHRA PRADESH HIGH COURT] have held that inputs like cement, steel, etc., used for construction of warehouses from which taxable services under the head renting of immovable property are performed, the inputs are eligible for Cenvat credit - credit allowed. Chargeability of interest under Rule 14 of CCR on the amount of Cenvat credit taken and reversed - it is claimed that there has been subsequent amendment in Rule 14, wherein it has been provided that interest is chargeable on Cenvat credit taken and utilized - HELD THAT:- In view of the ruling of Hon ble Apex Court in UOI AND ORS. VERSUS IND-SWIFT LABORATORIES LTD. [ 2011 (2) TMI 6 - SUPREME COURT] and as the period falls prior to the amendment of Rule 14, and there is no specific mention in the amending Act that amendment shall apply retrospectively, the charging of interest is upheld. The Appeal allowed in part to the effect that Cenvat credit has been rightly taken and also hold that interest is rightly charged. All penalties imposed are set aside, in the facts and circumstances of the case.

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• 2023 (12) TMI 481
  Non-payment of service tax - service tax registration not obtained - Commercial Training and Coaching Services - institute is acting as a learning centre for Punjab Technical University and as a result of the same a degree or a diploma is awarded to the students for participating in the offered programs - HELD THAT:- It is evident that the Institute who fall under this category should be imparting skill, knowledge or lessons or any subject other than sports, with or without issuance of certificate and includes coaching or tutorial classes. In the present case, the institute is acting as a learning centre for Punjab Technical University and as a result of the same a degree or a diploma is awarded to the students for participating in the offered programs. Once that being by the definition as is exists during the relevant period, they are out of this definition as the definition clearly stated that it was with the purpose of issuance of occasional commercial teachings not a degree or a diploma granted by the university. After 01.07.2012 the definition of service was amended and concept of negative list is brought. It is undisputed that Punjab Technical University has been constituted by the Act of State Legislature. The degree is conferred by the said university on the students who undergo the courses offered by the said university either by attending the residential programs or attending the courses through distance Education Program. The clarification or circular issued by the UGC do not bar the conferment of the degree by Punjab Technical University to the students who undertake the degree programmes offered by the university through distance education programme - Once the degree has been conferred by the university duly constituted under a State Act or a Central Act, the institute offering such programmes will, go out of the ambit of the Commercial Coaching and Training Services. Delhi bench has in case of Punjab Technical University [ 2016 (1) TMI 162 - CESTAT NEW DELHI] after examining the Memorandum of Understanding etc has held that such centres are franchisee of the PTU and has held that service tax will be leviable under the category of Franchisee Services. From the above decision it is evident that the transactions between the appellant have been held to be taxable under the category of Franchisee Services. If the service tax is now levied under the category of Commercial Coaching and Training Centre Service again the same will amount to double taxation under two different categories. Thus the decision holding that the services provided by the appellant are classifiable under the category of Commercial Coaching and Training Center Services is contrary to the above decision of Delhi Bench. It is already held that the degree provided by the Punjab Technical University is recognized by the law and hence the deletion of the said phrase will not have any impact on findings recorded by us to the effect that the prior to introduction of Negative List, the services provided by the appellant are not covered by the definition of Commercial Training or Coaching Services. There are no merits in the impugned order and the same is set aside - appeal allowed.

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• 2023 (12) TMI 480
  Benefit of Cum duty price denied - services of Management, Maintenance or Repair Service - Erection Commissioning and Installation Services - allegation that services were provided clandestinely. The issue which has to be decided by this court is whether there is any conflict between the decision of Hon ble Supreme Court as relied upon reported by the Learned Commissioner (Appeals) in AMRIT AGRO INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., GHAZIABAD [ 2007 (3) TMI 14 - SUPREME COURT ], and which distinguished the decision of COMMISSIONER OF CENTRAL EXCISE, DELHI VERSUS MARUTI UDYOG LTD. [ 2002 (2) TMI 101 - SUPREME COURT ], or both operate in different domains. On same issue of cum duty price is another decision in COMMISSIONER OF C. EX; JAIPUR VERSUS DUGAR TETENAL INDIA LTD [ 2008 (3) TMI 50 - SUPREME COURT ], which also had the benefit of referring to the decision of COMMISSIONER OF CENTRAL EXCISE, DELHI VERSUS MARUTI UDYOG LTD. [ 2002 (2) TMI 101 - SUPREME COURT ]. HELD THAT:- This Court finds that in the decision of Maruti Udyog Ltd, that the cum duty price realised by the assesse was entire price inclusive of Excise duty. Therefore by not separately charging nor intending to charge assesse had taken upon itself to discharge the liability to pay taxes on the good sold, therefore cum duty benefit will be available to it, was the decision of the Hon ble Court. As against this, in the matter of Amrit Agro Industries Ltd Vs. Commr of C.Ex Ghaziabad cited (supra), the Apex Court held that in peculiar circumstances of matter when classification of roasted Peanuts was changed from chapter 21 to chapter 20 of the C.Ex. and an exemption granted of Notification No. 4/97 was being availed earlier and therefore duty charged was nil in effect. And when with change of classification to chapter 20 some duty became payable without the exempted rate (nil), same also should be considered as price inclusive of tax. Therefore further benefit was not required to be given to the assesse, consequent upon change of classification of the goods. Thus, it is apparent that there is no conflict between various decisions cited supra of the Hon ble Apex Court and there is a consistency that whenever matter pertains to clandestine removals or invocation of Section 11A, in cases where no duty on invoice was charged or no invoices issued in which the benefit is generally sought to be derived by evader by capturing market through lower price vis a vis., the general tax paying competitors, in such a case cum duty benefit will be afforded to such assesseee as it did not charge or intended to charge duty, whereas in other cases which pertain to classification disputes or there was an indication to the contrary indicting the price was cum duty or not cum duty, even if Nil there the benefit shall be suitably altered. In the instant case, this court finds that services have been rendered by the appellant, but without registration or filing returns. Therefore, under the circumstances it could not be said in the facts of the case that cum duty benefit was deniable to the party. Commissioner (Appeals) having thus wrongly interpreted the decision of the Apex Court, and having ignored other decisions is directed to re-work the duty by allowing cum tax benefit to the assesse. Needless to say the interest and penalty, if any will also be reworkable accordingly. Appeal is allowed by way of remand.

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• 2023 (12) TMI 479
  Nature of transaction - service or not - payment of fees paid to USFDA for approval of their medicaments - levy of service tax or not - applicability of reverse charge basis under Section 66A or not - whether the remand ordered by the commissioner (Appeals) is correct or otherwise? HELD THAT:- It is found that the activity is a service or otherwise that depends on the issue that whether the USFDA should be treated as Government in terms of Negative List under Section 65B(37). Therefore, the activity is service or otherwise is a consequential to the decision, whether the Service provider to the government or other then the Government. Therefore, the appellant cannot be agreed upon that the decision of the activity as service attained finality as per original order, which was not challenged by the department before the Commissioner (Appeals). Accordingly, there are no infirmity in the impugned order in appeal whereby the matter was remanded to the commissioner (Appeals). The appellant is at liberty to raise any of the issue in their defense before the Adjudicating authority. Therefore, the remand is not prejudicial to the interest of the appellant. The impugned order is upheld and the appeal filed by the appellant is dismissed.

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• 2023 (12) TMI 478
  Non imposition of penalty under Rule 15 (3) of Cenvat Credit Rules, 2004 - HELD THAT:- From reading of the above Rule 15(3) it is clear that penalty under the aforesaid rule can be imposed only when the credit has been taken or utilized wrongly by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of these rules or of the Finance Act or of the rules made thereunder with intent to evade payment of service tax - In the facts of the present case all the show cause notices were issued on the same issue subsequent to the show cause notice related to the case which was decided by the Hon ble Gujarat High Court in the appellant s own case reported at MUNDRA PORTS AND SPECIAL ECONOMIC ZONE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE CUSTOMS [ 2015 (5) TMI 663 - GUJARAT HIGH COURT ]. The Adjudicating Authority after discussion that since the department was aware of availing the cenvat credit by the respondent and the present show cause notices were issued subsequent to the first SCN therefore, there is no suppression of fact. Hence, the penal provision under Rule 15 (3) is not invokable - Considering the facts and circumstances of the present case, the Adjudicating Authority agreed upon, in as much as the penalty under Rule 15 (3) of CCR, 04 was not imposed. The penalty under Rule 15 (3) is not imposable not only for the reason the demand does not exist but also independently on its merit. Accordingly, the revenue s appeals are not maintainable hence the same are dismissed.

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• 2023 (12) TMI 477
  Classification of service - activities of textile processing of the appellant in the factory of the service recipient - levy of service tax - activity of transportation of goods. Classification of service - Manpower Recruitment or Supply Agency Service or not - activities of textile processing of the appellant in the factory of the service recipient - HELD THAT:- It is found that as per the contract with Valson Industries the salient terms of the contract is that the contract is a job work contract which includes the activity of warping, weaving, mending, knitting and packaging of grey and finished fabrics and texturizing, twisting, reeling, coning, rebinding and packing of grey and dyed finished yarn for different qualities - From the nature of job work and the service charge therefore it is clear that the contract remotely does not indicate that the activity of the appellant is of Manpower supply or recruitment service. As per the contract the appellant is supposed to carry out various textile processing activities and for which the payment is fixed on per metre basis irrespective of the number of manpower is deputed for the said job work. - It is observed that the appellant have fulfilled all terms and conditions as prescribed under Para 3 of the Board Circular 190/2015 ST dated 15.12.2015. Accordingly the activity of the appellant clearly does not fall under the service of Manpower supply or recruitment service. Therefore, the demand on this count is not sustainable. Levy of service tax - supply of tangible goods for use service - activity of transportation of goods - HELD THAT:- It is found that the appellant has merely acted as transporters of goods and issued consignment notes/LR one sample LR - From the above LR it is clear that the appellant has acted as transporter of goods for which the consignment note was issued accordingly the activity of the appellant on this count clearly not classifiable as supply of tangible goods for use hence the demand on this count is not sustainable. The demand of service tax on both the counts is not sustainable - the impugned order is set aside - Appeal allowed.

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• Central Excise

• 2023 (12) TMI 476
  Valuation - inclusion of incentive/industrial subsidy of 75% of Sales Tax/VAT/CST paid on the sale of goods, received from the Government of Madhya Pradesh under the Industrial Promotion Policy, 2010 in the transaction value under section 4 of the Central Excise Act, 1944 or not - whether the same to be treated as an additional consideration flowing directly or indirectly from the buyers to the assessee or not - HELD THAT:- This issue was considered in favour of the appellant in the interim order in M/S HARIT POLYTECH PVT. LTD. VERSUS COMMISSIONER, CENTRAL EXCISE CGST- JAIPUR I, GANPATI PLASTFAB LTD., M/S APEX ALUMINIUM EXTRUSION PVT. LTD., M/S MAHA MAYAY STEELS, M/S. TIRUPATI BALAJI FURNACES PVT. LTD., M/S. TRANS ACNR SOLUTIONS PVT. LTD., M/S. FRYSTAL PET PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS CGST- ALWAR [ 2023 (3) TMI 1120 - CESTAT NEW DELHI ] on a difference of opinion having arisen between two learned Members of the Division Bench of the Tribunal, where it was held that The subsidy amount, therefore, cannot be included in the transaction value for the purpose of levy of central excise duty under section 4 of the Excise Act. Thus, the contention of the learned counsel for the appellant that incentive/capital subsidy received from the State Government cannot be included in the transaction value has to be accepted - the order dated 31.12.2018 passed by the Principal Commissioner, therefore, deserves to be set aside and is set aside. Appeal allowed.

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• 2023 (12) TMI 475
  Classification of goods - Special Purpose Bullet Proof Armoured Vehicles - classified under CETH 8710 0000 or under CETH 8705 9000? - principle of Ejusdem Generis - Penalty - HELD THAT:- The issue is no longer res integra having been decided by this Bench in their own case. It is also found strength from the decision of this Bench in the case of Metaltech Motor Bodies Pvt. Ltd. [ 2023 (11) TMI 413 - CESTAT CHANDIGARH ] - it is found that that in the above case, the special purpose nature of the vehicles was considered and the fact that VRDE has certified the vehicles to be special purpose vehicles is also taken into account. Therefore, the issue stands decided squarely in favour of the appellants. The impugned vehicles are classifiable under CETH 8705 0000 and thus, eligible for exemption. As the duty is not payable on the impugned goods, discussion on the valuation of the same is of no consequence. Penalty - HELD THAT:- When duty is not demandable, the case for imposition of penalty does not arise. The impugned order is set aside and both the appeals are allowed.

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• 2023 (12) TMI 474
  Clandestine removal - Confiscation of seized goods - Levy of redemption fine and penalties - ingots and angles found excess in the premises of the factory without any entry in the statutory records. Confiscation of goods - Redemption fine - HELD THAT:- There is no doubt that some stock was found in excess over the declared stock and were not found entered in the daily stock account of the appellant, but whether or not it was a deliberate act of the appellant within intent to remove the unrecorded goods without issue of invoice or without payment of duty has to be decided based on cogent evidence. This burden needs to be discharged by the Department. Whether a mere violation of Rule 10 of the Central Excise Act amounts to deliberate intention to evade is again to be proved by the Department - there is no such evidence which has been led by the Department - Even improper accounting is denying the mean clandestine removal, in the absence of circumstantial evidence proving the same. In view of the above, the redemption fine imposed on the goods set aside. Imposition of penalty on appellant No. 1 - HELD THAT:- The essential ingredient that is required to be satisfied for invoking Section 11AC and Rule 25(1) is suppression, collusion etc. which has to be established with an intent to evade payment of duty. In the instant case, it is noted that excess quantity of MS Ingots and MS Angles were found which had not been entered in the statutory books, which is liable for penalty. However, other than the statement, no other corroborative evidence has been brought on record to show that there was an intent to evade. There is also no evidence brought out to establish that the appellant No.1 had indulged in similar evasion earlier - the Learned Counsel has submitted that no malafide intention of clandestine removal of excess goods had been established, and sufficient corroborative evidence has not been established to prove the intention to evade. This contention is agreed upon. Tribunal in the case of NILESH STEEL ALLOYS PVT. LTD. VERSUS COMMR. OF C. EX., AURANGABAD [ 2008 (3) TMI 572 - CESTAT, MUMBAI ] observed that penalty should not have been imposed merely because the stock of finished goods are found in the factory without entry in the production register especially, when there is no evidence of clandestine removal. In view of the above settled position, the levy of penalty under Rule 25(1) on the appellant in the instant case cannot be upheld. It is noted that the essential ingredients to invoke this Rule is if the person is involved in actual evasion or abets in any manner is consequently liable for penalty. No such evidence is brought on record to support the imposition of penalty under this Rule - it is noted that this Tribunal had in the case of Carpenter Classic Exim Pvt. Limited [ 2005 (12) TMI 185 - CESTAT, BANGALORE] had taken a view that personal penalty on the employee need not be imposed as he is acting under the direction of his employer - In the case in hand, there is nothing on record to show that the employee had benefitted by the activities of the appellant No. 1 during the visit of the officers. Therefore, the penalty imposed on appellant No.2 is set aside. The impugned order set aside - appeal allowed.

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• 2023 (12) TMI 473
  100% EOU - clearance of bulk drugs made in DTA under Advance Release Order (ARO) - goods cleared to own DTA and its subsidiaries on payment of Excise duty - 110% of the cost of production in terms of Rule 8 of Central Excise Valuation Rules, 2000 - case of the department is that the method opted by the appellant is not correct and legal and according to the department the valuation of the goods cleared in DTA should be done in terms of Rule 3 (3)(b),4 and Rule 8 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - extended period of limitation - revenue neutrality. HELD THAT:- In the present case, taking the case of bulk drug- PHH it is admitted fact that among various sale price to unrelated parties the lowest price is Rs. 9,050/- per Kg, and similar facts in other identical drugs. Therefore, as per the unambiguous statutory provision in terms of Rule 4(3) reproduced above only the lowest of such values of the identical goods shall be taken to determine the value of goods cleared to the related party. Therefore, since the appellant have cleared their bulk drugs to their related parties undisputedly at a lower price than the price adopted by department, clearly establish that there is no reason to disturb the value of goods to determine the value of the goods cleared by the appellant to their related person. In view of the decision in Autoline India Ltd. [ 2015 (4) TMI 772 - CESTAT NEW DELHI ], it is settled that even in case of clearance of identical goods by an EOU to a related party the value of imported identical goods has to be applied, in absence of the same the method adopted by the revenue by applying the same price of the goods sold in India by EOU is incorrect and illegal. Thus, in cases where the goods is cleared to related DTA parties which is identical to the goods sold to the unrelated party, the value adopted by the appellant is correct and legal and on the basis of price of goods cleared to unrelated DTA parties demand of differential duty is incorrect and illegal. The revenue was supposed to find out the value of identical goods imported into India and if at all it is found that the price declared by the appellant is lower than the price of imported goods than price of identical imported goods could have been applied. However, in the present case the Adjudicating Authority straight away jumped to Rule 8 without making any effort to determine the value in terms of Rule 4 to 7 of Customs Valuation Rules. Therefore, the valuation determined by the department under Rule 8 cannot be accepted. As discussed above, since the department has not brought the value of identical imported goods. in the present case also the value declared by the appellant cannot be disturbed. Extended period of limitation - revenue neutrality - HELD THAT:- It cannot be said that the appellant have suppressed any fact from the department with intent to evade payment of duty. It is further observed that since the supplies made under ARO and in other cases the Cenvat credit was available in respect of CVD/SAD portion to the recipient of goods, the entire issue was of revenue neutral. Therefore, for this reason also no mala fide intention can be attributed to the appellant for short payment of duty, if any. Therefore, there are no doubt in mind that looking to the facts of this case the appellant have not suppressed from or mis-declared the information to the department with intent to evade payment of duty. Accordingly, the extended period is not available in the present case. The demand of excise duty in the present case is not sustainable - the impugned orders are liable to be set aside - Appeal allowed.

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• 2023 (12) TMI 472
  100% EOU - eligibility for benefit of exemption available under Notification No. 8/97-CE dated 01.03.1997 and Notification No. 23/2003-CE dated 31.03.2003 to pay duty on DTA clearance of Open End Yarn - case of the revenue is that Open end yarn was manufactured by the appellant out of imported raw cotton hence not eligible for exemption - suppression of facts or not - time limitation. HELD THAT:- The appellant has manufactured Ring Spun Yarn and Open End Yarn. The Ring Spun Yarn was manufactured out of imported raw cotton as well as locally procured raw cotton and in the process of production of the same, cotton waste was generated. The open end cotton yarn was manufactured from cotton waste. The sole basis on which the exemption is sought to be denied by the revenue is that Open End Yarn cleared in the DTA is produced out of the cotton waste allegedly arose of the imported cotton. Whereas it is found that the Notification only provides that finished goods should be manufactured or produced from raw materials manufactured or produced in India - In the present case, cotton waste is indeed produced in India. The goods cleared to DTA in the present case are Open End Yarn which is manufactured wholly out of cotton waste generated at the time of manufacture of Ring Spun Yarn in the factory premises of appellant. The entire quantity of imported cotton or domestic cotton used as raw materials for the manufacture of Ring Spun Yarn and not for the Open End Yarn - In the present matter imported cotton are raw material for Ring Spun Yarn , it cannot be said that the same are raw materials as envisaged in Notification No. 8/97 for Open End Yarn. The expression raw materials is a material used in manufacture of goods; in the case in hand Open End Yarn is manufactured from cotton waste and not from the imported cotton. The Supreme Court in the decision in COMMISSIONER OF CENTRAL EXCISE, SURAT-I VERSUS M/S FAVOURITE INDUSTRIES [ 2012 (4) TMI 65 - SUPREME COURT ] upheld the judgment of this Tribunal in Favourite Industries and ruled that the benefit of exemption under Notification No. 8/97-C.E. is available where raw materials supplied by another 100% EOU are used by a 100% EOU and that such raw materials or goods belonging to 100% EOU would constitute raw materials or goods produced or manufactured in India. In view of the aforesaid Apex court judgment, it is clear that goods manufactured in EOU is duly considered to be manufactured in India. In the present matter the cotton waste was manufactured in Appellant factory and the same was used for Open End Yarn accordingly the condition of the Notification stand satisfied by the appellant - It therefore, also follows that when further goods are manufactured out of such cotton waste, which is an indigenous product, such further goods viz. Open End Yarn in this case, shall be goods which are manufactured wholly out of indigenous raw material and therefore, eligible for the benefit of the Notification. Clearly, in the present matter revenue has failed to consider the provisions of Section 2(d) and Section 3 of the said Act and erred in holding that cotton waste is not manufactured product. Time Limitation - suppression of facts or not - HELD THAT:- It is on records that department was fully aware about the activity of appellant and all the facts were in the knowledge of the department at the time of issuance of first show cause notice dated 31.01.2005. In this fact when the department was in complete knowledge regarding the use of raw material and clearance of finished goods in DTA, however, the department has not raised any objection at the relevant time. Therefore, there is absolutely no suppression of fact or mis-declaration with intent to evade payment of duty on the part of the appellant. Therefore, extended period of demand cannot be invoked. Hence the demand for extended period is not sustainable on limitation also. The demand of duty is not sustainable on merit as well as on limitation. Accordingly, the impugned order is set aside - Appeal allowed.

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• 2023 (12) TMI 471
  Entitlement for refund on the valve which is not a manufactured goods and the same was received and cleared as such - malafide intent - suppression, of facts or not - extended period of limitation - HELD THAT:- The Notification No. 39/2001-CE dated 31.07.2001 is undisputedly applicable for the refund of duty paid on the manufactured goods - In the present case, valve has not undergone the manufacturing process. The appellant also admitted that the valve was cleared as such and the duty was paid in terms of Rule 3(5) of the Cenvat Credit Rules, 2004. In this fact it is clear that the valve which is cleared as such without involving manufacturing process and duty paid there on is treated as duty paid on removal of inputs in terms of Rule 3(5) of the Cenvat Credit Rules, 2004. Therefore, the refund granted to the appellant under Notification No. 39/2001-CE dated 31.07.2001 which is not applicable to the removal of input as such, the said refund is correctly recoverable from the appellant. Notification No. 39/2001-CE dated 31.07.2001 clearly prescribes that the refund mechanism is provided only in respect of manufactured goods. The appellant knowingly paid the duty and claimed the refund of unmanufactured goods which itself is malafide intention. Secondly, the appellant have not disclosed that the valve on which the cenvat credit was availed has not undergone into the manufacturing process of the finished product. Therefore, there is clear suppression of fact on the part of the appellant. Hence, the submission of the appellant cannot be agreed upon, that the extended period was wrongly invoked. Accordingly, the recovery of the demand of erroneous refund was rightly made. Hence there are no infirmity in the impugned order. The impugned order is upheld. Appeal is dismissed.

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• Indian Laws

• 2023 (12) TMI 470
  Validity of settlement deed executed by the first defendant, his wife in favour of the second defendant, his son - Abatement of the suit for non substitution of the legal heir of the deceased / plaintiff - Order XXII Rule 3 read with Section 151 C.P.C to implead the petitioners therein as legal heirs of the deceased / plaintiff in the suit - sum and substance of the arguments of the learned counsel for the revision petitioners is that the daughters are seeking to implead themselves claiming under the Will of their father and therefore, the original cause of action in the suit cannot survive to the benefit of the daughters and therefore, they cannot be permitted to be impleaded in the suit. HELD THAT:- Admittedly, though the respondents 1 and 2 are the daughters of the plaintiff, their applications to the Court is only to implead them in the capacity of their being legal representatives of the plaintiff. It may be a different aspect altogether that the defendants 1 and 2 are the legal heirs of the deceased plaintiff along with the respondents 1 and 2, being the daughters, who are also legal heirs of the deceased plaintiff. However, on a conjoint reading of Section 2 (11) and Order XXII Rule 3 C.P.C., it is clear that the persons claiming to be legal representatives of the deceased plaintiff are also entitled to make an application under Order XXII Rule 9 C.P.C. Here, the daughters are claiming only as legal representatives having become entitled to estate of their father. Therefore, it cannot be said that the respondents 1 and 2, are not entitled to maintain the application under Order XXII Rule 9 C.P.C. Order XXII Rule 9(1) C.P.C makes it abundantly clear that when a suit is dismissed under Order XXII C.P.C., no fresh suit can be brought under the same cause of action. Here, admittedly, the plaintiff approached the Court to set aside the settlement deed executed by his wife in favour of their son on the strength of a Will that had not even taken effect. Admittedly the suit has been dismissed, whether on the ground of default or as abated. Therefore, challenge to the settlement deed automatically goes with the dismissal of the suit. The core issue in the suit revolves around the factum of the execution of the settlement deed, based on a Will that never came to effect as the executant of the Will was very much alive. That being the position driving the defendants to another round of litigation will not subserve the cause of justice. Rules and procedures are always meant to be only to aid and be a handmaid of justice and not intended to destroy or defeat the cause of justice. Objecting to the application on technical/ hyper technical ground and driving the parties to multiply litigation will not in any way serve the interest of the parties themselves, leave alone justice. The Courts have always endeavoured to do substantial justice, ignoring technical objections raised by one of the parties to the litigation. In Ambalika Padhi s case [ 1991 (12) TMI 293 - SUPREME COURT ], the Hon ble Supreme Court held that when the substituted and transposed plaintiffs were claiming under the original plaintiff and continuing the suit, it cannot be said that their cause of action is different from the cause of action of the original plaintiff, merely because, they are claiming to be legal representatives under settlement under Will. Therefore, the ratio laid down by the petitioners, it actually detrimental to the case of the revision petitioners. There are no infirmity in the order of the trial Court - Both the Civil Revision Petitions fail and accordingly dismissed.

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