TMI Tax Updates - e-Newsletter
December 14, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Validity of search and authorization for conducting search - It is clear from the record that apart from the directions issued in terms of the order dated 05.04.2023, there were no reasons for the respondent to initiate the search against the petitioners under Section 67(1) of the CGST Act. The authorization issued is thus, patently erroneous as none of the grounds as set out in the said authorization are borne out from the information or material on the record of the respondent. - HC
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GST:
Stay of demand of GST - The petitioner shall deposit 20% of the disputed tax liability in addition to the earlier deposit before the assessing authority (which is 10% of the disputed tax amount). Subject to the aforesaid deposit, the recovery proceedings of the balance amount shall remain stayed till the decision of this writ petition - HC
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GST:
Valuation - business of assembly, manufacture and supply of aircrafts - supply under the contract between the applicant & Airbus - the value to be adopted for the purpose of payment of GST in respect of 40 aircraft will include the supply made free of cost by Airbus i.e. will include the value of FIMs also. - AAR
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Income Tax:
Levy of late filing fee u/s 234E - The submission of petitioner that the amendment in Section 200A has been brought into effect w.e.f. 01.06.2015 and, therefore, the impugned notices issued way back in 2013 and 2016 are incorrect is liable to be rejected at the threshold. The law on the date when the impugned notices were issued was as provided under Section 234E which had been inserted by the Finance Act, 2012 w.e.f. 01.07.2012. - HC
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Income Tax:
Stay of demand - Recovery of outstanding demand - pre-condition for stay of demand - The respondents/revenue already hold refunds due to the petitioner/assessee that exceed 20% of the disputed amount. Therefore, in our opinion, the AO is obligated to stay the demand created by the assessment order dated 30.12.2019. - HC
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Income Tax:
Capital gains exemption u/s 54EE - Non-issuance of notification notifying the fund/long term specified asset - Issuing particular notification under the provisions of the Act lies in the domain of the executive to carry out the object and purpose of the said provision. Issuing the notification is in the exclusive domain of the executive, and a legislative function. This Court is not empowered to go behind the reasons for not issuing the notification u/s 54EE. - HC
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Income Tax:
Unexplained cash credit - share application money received from the group companies - In the instant case before us assessee has furnished all the evidences proving identity and creditworthiness of the investors and genuineness of the transactions but AO has not commented on these evidences filed by the assessee. - Additions deleted - AT
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Income Tax:
Penalty u/s 271D - acceptance of in cash in contravention to the provision of section 269SS - Satisfaction must be recorded in the original assessment order for the purpose of initiation of penalty proceedings - Penalty deleted - AT
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Income Tax:
Income taxable in India - AO has attributed 60% of the receipts towards FTS and 40% towards price of goods/materials. - In fact, AO has not given any reason for quantifying 60% of the receipts towards FTS, as no such bifurcation has been provided in the contract documents. In any case of the matter, the price paid by the contractee for supply of goods and equipments, design and testing etc. is certainly part of the manufacturing activities and cannot be considered de hors such activity. Thus, in our view, the artificial segregation of receipts between supply of goods and FTS is without any basis, hence, unacceptable. - AT
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Income Tax:
Condonation of delay in filing of appeal before CIT(A) - delay of approximately 33 months - If one consider the facts and circumstances in its entirety, then the claim of the Assessee seems to be genuine which requires lenient view; hence we, by considering the peculiar facts and circumstances as the assessment order dated 27/12/2019 was passed as ex-parte U/s 144 read with section 147 of the Act and thereafter from March 2020 onwards Covid-19 period was started - Delay condoned - AT
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Income Tax:
Methods of accounting for recognizing the revenue - when the Department has not pointed out any distortion in the profit arrived at for the year under consideration by adopting Project Completion Method, then the Revenue arrived at has to be revenue neutral and the Department cannot insist on the assessee to adopt Percentage Completion Method. - AT
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Income Tax:
Revision u/s 263 - benefit of first and second proviso to Section 56(2)(x)(b) - while accepting returned income considered by Assessing Officer has not committed any error. Therefore, the assessment order cannot be branded as erroneous. Thus, twine condition, for invoking Section 263 of the Act are not met out in the present case - AT
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Customs:
Levy of penalty u/s 114(iii) of the Customs Act, 1962 and Section 114AA of the Customs Act, 1962 - export of goods at highly over invoiced values - availing undue export incentives - In a catena of decisions of the Tribunal in respect of cases of over valuation of export goods for benefit under export incentive schemes, the imposition of penalties u/s 114 has been upheld. - AT
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Customs:
Doctrine of Merger - the original order dated 26.08.2013 was merged with the order dated 01.04.2014 passed by the Tribunal - the doctrine of merger applies to the case in hand and since the order dated 26.08.2013 is no more in existence, in our considered view, the appeal filed by Revenue against such original order cannot be sustained for judicial scrutiny. - AT
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Customs:
Amendment of Bills of entry - Essentiality Certificate was not in existence at the time of clearance of the goods - Denial of benefit of exemption by the department is contrary to the legislative intent behind issuance of such notification, which was specifically designed in the public interest to grant the benefit provided thereunder. - Amendment allowed - Original authority directed to verify the ‘Essentiality Certificate’ - AT
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Customs:
Rejection of application for remission of duty in respect of imported raw-material destroyed in fire, in the appellant’s SEZ unit - The insurance company has satisfactorily granted the insurance claim that itself is evidence to establish that the fire incidence was beyond the control of the appellant. Therefore, the ground that the appellant was negligent in the matter of fire incident cannot be accepted. - remission of duty allowed - AT
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Indian Laws:
Dishonour of Cheque - vicarious liability - though the petitioner, along with her brother, is a Director, shareholder and authorised representative of an entity (company), however, the respondent has not filed any complaint against the said entity. In view thereof, the petitioner has hardly any role to play qua the cheque involved in the present dispute. Thus, the petitioner ought not to have been made an accused in the complaint by the respondent. More so, whence no vicarious liability can be fastened upon the petitioner. - HC
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PMLA:
Money Laundering - proceeds of crime - double jeopardy - prosecuting the person accused of an offence under Section 13(1)(e) of the Prevention of corruption Act and for an offence u/s 3 of PMLA - Both the Criminal Revision Case and the Criminal Original Petition are liable to be dismissed and accordingly, dismissed. - HC
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Service Tax:
Discharge of service tax liability by ‘book adjustment’ - Railway Board - since the data provided by the appellant has been taken from the website of Controller General of Accounts, Ministry of Finance, the directions contained in the Instructions dated 21.03.2023 stand fulfilled. The appellant, therefore, made payment of service tax by book adjustment. - AT
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Central Excise:
Reversal of CENVAT Credit - clay (by-product) is exempted from excise duty and arises during the course of excavation and production of the dutiable final product lignite - The appellant is not required to maintain separate records for utilisation of input service in the manufacture of these products - rule 6(3) of the CENVAT Rules not attracted - AT
Articles
Notifications
GST - States-
52/2023-State Tax - dated
25-11-2023
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Himachal Pradesh SGST
Himachal Pradesh Goods and Services Tax (Fourth Amendment) Rules, 2023
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20/2023-State Tax (Rate) - dated
25-11-2023
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Himachal Pradesh SGST
Amendment in Notification No. 5/2017-State Tax (Rate), dated the 30th June, 2017
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19/2023-State Tax (Rate) - dated
25-11-2023
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Himachal Pradesh SGST
Amendment in Notification No. 4/2017-State Tax (Rate), dated the 30th June, 2017
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ERTS(T)65/2017/Pt-III/Vol.I/601 - dated
29-9-2023
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Meghalaya SGST
Amendment in Notification No. ERTS (T) 65/2017/Pt/65, dated 15th November, 2017
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2155-F.T. - dated
7-12-2023
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West Bengal SGST
Seeks to amend notification No. 1125-F.T. dated 28th June, 2017 which inter alia prescribes change of rate of taxes in respect of molasses, spirits for industrial use, etc.
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2154-F.T. - dated
7-12-2023
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West Bengal SGST
Seeks to amend Notification No 1141-F.T. dated 28.06.2017 to provide for exclusion of companies supplying passenger transport services by an omnibus from the category of services, the tax on which is required to be paid by the ECOs.
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2023 (12) TMI 559
Validity of search and authorization for conducting search - Recalling of records of the search authorization issued by the respondent, for conducting the search at the premises of the petitioner - issuance of summons u/s 70 - HELD THAT:- The record does not indicate that any further investigation was conducted prior to authorizing the inspection under Section 67(1) of the CGST Act. On 22.08.2023, the Commissioner, Central Tax GST issued an authorization (in FORM GST INS-01) for conducting inspection under Section 67(1) of the CGST Act at the premises of the petitioners - It is clear from the record that apart from the directions issued in terms of the order dated 05.04.2023, there were no reasons for the respondent to initiate the search against the petitioners under Section 67(1) of the CGST Act. The authorization issued is thus, patently erroneous as none of the grounds as set out in the said authorization are borne out from the information or material on the record of the respondent. Concededly, the inspection was conducted pursuant to the order dated 05.04.2023, passed by the learned Special Judge. Petitioners prayer that the documents be returned to the petitioners - HELD THAT:- It is stated on behalf of the respondent that no documents have been seized, however, certain photocopies of the documents / documents were collected. Clearly, since the conditions for inspection under Section 67(1) of the CGST Act were not satisfied, the said documents are required to be returned to the petitioners. It is so directed. Summons issued under Section 70 of the CGST Act - HELD THAT:- It is not considered apposite to issue any directions. The GST authorities are not precluded from continuing or initiating proceedings in accordance with the provisions of the CGST Act. Thus, if any information is available with the Department that requires an inquiry to be conducted against the petitioners, the respondent authorities are not impeded to do so. However, it is clarified that no further inquiries or action is required to be conducted or taken by the GST authorities, for complying with the order dated 05.04.2023 passed by the Special Judge. Petition disposed off.
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2023 (12) TMI 558
Validity of SCN issued - noncompliance of rule 142 (1) (a) and rule 142 (1A) of the CGST rules 2017 - seeking restraint from proceeding with the adjudication proceedings of the impugned SCN during the pendency of the present writ petition - HELD THAT:- The present petition is disposed of by directing the proper officer to issue summary of the notice and demands electronically in FORM GST DRC-01 FORM GST DRC- 02 as expeditiously as possible and preferably within a period of one week from today, if not already done. Petition disposed off.
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2023 (12) TMI 557
Inconsistency of some interim orders passed by this Court as regards the amount of pre-deposit - Right of second appeal - petitioner contends that the ingredients of Section 74 of the U.P.GST Act, 2017 are not made out from the show cause notice as well as orders passed by the revenue authorities as prerequisites of Section 74 of the U.P.GST Act are not satisfied - HELD THAT:- The Uttar Pradesh Goods and Services Tax Act as well as the Central Goods and Services Tax Act contemplate pre-deposit of certain amounts i.e. 10% of the of the disputed tax liability before the first appellate authority. In addition to that, 20% of the disputed tax liability is liable to be deposited before the second appellate authority at the time of institution of the appeal. The purpose of grant of interim orders in a lis and the need for consistency in granting orders in similar cases was underlined in SILIGURI MUNICIPALITY AND OTHERS VERSUS AMALENDU DAS AND OTHERS [ 1984 (1) TMI 63 - SUPREME COURT ] where it was held that the main purpose of passing an interim order is to evolve a workable formula or a workable arrangement to the extent called for by the demands of the situation keeping in mind the presumption regarding the constitutionality of the legislation and the vulnerability of the challenge, only in order that no irreparable injury is occasioned. The Court has therefore to strike a delicate balance after considering the pros and cons of the matter lest larger public interest is not jeopardized and institutional embarrassment is eschewed. In congruent facts, identical interim orders are liable to be granted, otherwise an anomalous situation will be created where similarly situated persons will be accorded differential treatment leading to discrimination and violation of Article 14 of the Constitution of India. The second aspect which requires to be given weight is that the assessee cannot be faulted for what is essentially a failure of the Government. The statute contemplates deposit of 10% plus 20% of the disputed tax liability before the first and second appellate authorities respectively. By imposing a demand of 50% in these matters, the assessees will be penalized for no fault of theirs - The grant of interim orders in the aforesaid manner made in the said orders passed by this Court balances the interests of revenue as well as the rights of the assessees. However, it needs to be clarified that it is always open to the Court to grant interim orders which are at variance with the aforesaid orders in peculiar facts and circumstances of a particular case while exercising writ jurisdiction in the interests of justice. The petitioner shall deposit 20% of the disputed tax liability in addition to the earlier deposit before the assessing authority (which is 10% of the disputed tax amount). Subject to the aforesaid deposit, the recovery proceedings of the balance amount shall remain stayed till the decision of this writ petition - The application for interim relief is finally disposed of.
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2023 (12) TMI 556
Exemption from GST - solid waste disposal work - Validity of assessment order - works contract - stay of recovery on payment of 20 per cent of the amounts disputed which remains to be paid - HELD THAT:- There is no supply of goods in the solid waste management disposal work awarded to the petitioner. In the above circumstances, the activity of the petitioner regulated by the work order produced as Annexure-5 and the consideration received for the same would be exempt from the BGST Act. It is also crystal clear that on similar circumstances, by Annexure-6 order, the Appellate Authority had allowed the appeal in the case of a different assessee, who had been carrying on the very same work of solid waste disposal in the very same Municipality. The assessment orders produced as Annexure-3 series, the demand notices and Annexur-4 series orders in appeal are set aside. The assessee petitioner is directed to produce the details of the tax deduction at source made by the Municipality under the Income Tax Act and provide the evidence, of the consideration made by the Municipality on which the tax deductions were effected under the Income Tax Act, being one for solid waste disposal work. The assessee shall appear before the Assessing Officer within a month from the date of receipt of the certified copy of this judgment and produce materials in substantiation. The writ petition is allowed.
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2023 (12) TMI 555
Levy of penalty under Section 125 of the GST Act - petitioner was asked to furnish the returns within 15 days, which was duly complied with, inspite of which penalty is imposed - non-application of mind - HELD THAT:- Admittedly since the petitioner had complied with the terms of the show cause notice by furnishing the returns, there was no lawful justification to impose the penalty. The impugned orders dated 10.02.2023 and the order dated 14.03.2023 are contrary to law and passed on non application of mind and are set aside - Petition allowed.
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2023 (12) TMI 554
Input Tax Credit - credit availed on the basis of invoices issued by the suppliers whose registrations were cancelled retrospectively - interest not paid while tax payment in cash during the months of April, May, July and November 2018 and March 2019 was delayed - HELD THAT:- Revenue though tried to justify the impugned notice, but did not produce any document to demonstrate that the registration of any of the firms was ever cancelled during the assessment year 2018-19 either in the form of averments or in the form of attached documents. During the course of arguments it is transpired that admittedly there is no express/physical letter by the respondents on record showing cancellation of the registration of any of the dealers / suppliers in question retrospectively particularly for relevant assessment year 2018-19. Under such circumstances, nothing survives in the show cause notice to address upon on merits - the impugned notices (Annexure P/1 and P/3) to that extent are hereby quashed - petition disposed off.
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2023 (12) TMI 553
Maintainability of petition - availability of alternative remedy - confiscation of the goods and conveyance for realisation of penalty and fine - HELD THAT:- In the light of the submission that same order may be passed, petition is disposed of reserving liberty to the petitioner to challenge the impugned order in terms of Section 107 of the Karnataka Goods and Services Tax Act, 2017. It is further observed that time spent during the pendency of the present proceedings can be sought to be excluded while calculating the period of limitation. The petition is disposed of granting liberty to the petitioner to avail substantive remedy as against the impugned order subject to the above observation.
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2023 (12) TMI 552
Nature of supply - supply of goods or supply of service - business of assembly, manufacture and supply of aircrafts - supply under the contract between the applicant Airbus - appropriate classification - rate of tax - value to be adopted for the purpose of payment of GST - time of supply for payment of GST. Whether the nature of the supply under the contract entered into between the applicant and Airbus would qualify as supply of goods or otherwise? - HELD THAT:- The supply of aircrafts provision of support services are naturally bundled supplied in conjunction with each other in ordinary course of business hence in terms of section 2(30) of the CGST Act, the aforesaid said supply is a composite supply - Even otherwise in the instant case, the applicant s supply involves goods i.e. aircrafts and maintenance etc. which is a service. The contractual agreement between the applicant and Airbus requires the applicant to supply the aircrafts and provide for its maintenance etc. The applicant therefore is engaged in two taxable supplies. What is pivotal is that the supply of service is possible only when the goods i.e. aircrafts are supplied. Hence, the contract is a composite supply which are naturally bundled and supplied in conjunction wherein the principal supply is that of aircrafts. What will be the appropriate classification and rate of tax of the said supply? - HELD THAT:- Since it is already held that the contract with Airbus for supply of aircraft is a composite supply, and that the principal supply being supply of goods viz aircraft, it is held that aircrafts are classifiable under CTH 8802 will attract GST @ 5% in terms of notification No. 1/2017-IT (Rate) dated 28.6.2017 entry no. 244. Value to be adopted, for the purpose of payment of GST - HELD THAT:- In this case, the applicant relying on clause 1 [which defines FIM] and clause 4.2 of the contract and clauses 1.3 and 2.3.7 of the SoW, is of the view that since the FIM were supplied free owing to a contractual obligation and also on account of the difficulty laced in indigenization, this will not form part of the value of supply - However, the issue of valuation of free supplies under GST has been decided by the Honbl Chhattisgarh High Court in the case of M/s. Shree Jeet Transport [ 2023 (11) TMI 206 - CHHATTISGARH HIGH COURT] where it was held that though the diesel was provided free of cost by the service recipient, it would nevertheless be added to the value for the purpose of GST. The issue therefore is no longer res Integra having been decided by the Hon ble High Court of Chhattisgarh, following the judgement of the Honbl High Court, it is held that the value to be adopted for the purpose of payment of GST in respect of 40 aircraft will include the supply made free of cost by Airbus i.e. will include the value of FIMs also. Time of supply for payment of GST - HELD THAT:- A conjoint reading of section 12 with notification No. 66/2017-CT, clearly leads one to a conclusion, that provision on payment of tax on advances received on supply of goods, stands deleted vide notification No. 66/2017-CT dated 15.11.2017. Therefore, the contention of the applicant is agreed upon that they are not required to pay GST on the receipt of advance in the case of supply of goods.
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2023 (12) TMI 516
Exemption from GST - leasing of residential premises as hostel to students and working professionals - it was held by High Court that The service provided by the petitioner i.e., leasing out residential premises as hostel to students and working professionals is covered under Entry 13 of Notification No.9/2017 dated 28.09.2017 namely 'Services by way of renting of residential dwelling for use as residence' issued under the Act. The petitioner is held entitled to benefit of exemption notification. HELD THAT:- Leave granted. List on 24.01.2024.
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Income Tax
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2023 (12) TMI 551
Levy of late filing fee u/s 234E - not filing statements in respect of the TDS collected by the petitioner within the time prescribed in Sub Section 3 of Section 200 - petitioner has approached this Court after more than ten years impugning the said intimations - HELD THAT:- This writ petition is liable to be dismissed only on the simple ground of inordinate delay and laches in filing the writ petition impugning the intimations in Exhibits P-1 to P-5 which are issued way back in 2013 and 2016. Section 234E as inserted by the Finance Act, 2012 w.e.f. 01.07.2012 is specifically provides that for failure to deliver the statement within the time prescribed under Sub-Section (3) of Section 200 or the proviso to Subsection (3) of section 206C to charge the assessee with a late fee, a sum of Rs. 200/- for every day during which the failure continues - When the impugned notices were issued, this was the law in respect of the payment of the late fee. It cannot be denied that what was to be considered when the notices were issued was the law prevailing on the said date. Subsequent amendment, unless it has retrospective effect, cannot be considered. The submission of petitioner that the amendment in Section 200A has been brought into effect w.e.f. 01.06.2015 and, therefore, the impugned notices issued way back in 2013 and 2016 are incorrect is liable to be rejected at the threshold. The law on the date when the impugned notices were issued was as provided under Section 234E which had been inserted by the Finance Act, 2012 w.e.f. 01.07.2012. This writ petition is to be dismissed on the ground of gross delay and laches as well as on merits.
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2023 (12) TMI 550
Stay of demand - Recovery of outstanding demand - pre-condition for stay of demand - outstanding demand, as determined by the assessment order was disputed before the CIT(A) by taking recourse to appeal - HELD THAT:- AO ought to have granted a stay in the matter, as the outstanding demand, as determined by the assessment order dated 30.12.2019, was disputed before the CIT(A) by taking recourse to appeal Instruction No. 1914 dated 21-3-1996 contains guidelines issued by the Board regarding procedure to be followed for recovery of outstanding demand, including procedure for grant of stay of demand. Thus when the outstanding amount is disputed before the first appellate authority, i.e., the CIT(A), the AO shall grant a stay on demand till disposal of the first appeal on deposit of a certain percentage of the disputed demand with the respondents/revenue. The change that was brought about by the OM dated 31.07.2017 was that the percentage of the disputed demand required to be deposited for a grant of stay was increased from 15% to 20%. In the instant case, the assessment order dated 30.12.2019 has created an outstanding demand amounting to Rs 36,69,10,379/-. This amount has been disputed before the CIT(A) via appeal dated 27.01.2020. The respondents/revenue already hold refunds due to the petitioner/assessee that exceed 20% of the disputed amount. Therefore, in our opinion, the AO is obligated to stay the demand created by the assessment order dated 30.12.2019. Thus, the AO is directed to stay the demand captured in the order dated 30.12.2019, while retaining 20% of the disputed demand. A necessary consequence of such direction would be that the petitioner/assessee would be entitled to a refund of the remaining amount.
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2023 (12) TMI 549
Capital gains exemption u/s 54EE - Non-issuance of notification notifying the fund/long term specified asset - expectation for issuing the notification specifying the long term asset/fund for investment of capital gain arising out of transfer of long term capital asset - Capital Gain arising out of slump sale - petitioner had computed capital gains as per Section 50B as the petitioner opted for 'slump sale' and approached this Court for a writ, order or direction in the nature of mandamus commanding Union of India to notify 'long term specified assets' for availing capital gains exemption u/s 54EE - whether the failure to notify the 'long term specified asset' by the Central Government under clause-b of explanation (2) to Section 54EE is arbitrary and in violation of Article 14 of the Constitution of India? - HELD THAT:- As it cannot be said that since Section 54EE though has been kept alive but has not been given effect to by not notifying the 'long term specified asset/fund', the Central Government has acted arbitrarily. We not find much substance in the submission that in not notifying the 'long term specified asset/fund' for investment of proceeds from transfer of long term capital asset, the Government has acted arbitrarily and the decision of the Government is justiciable for issuing a writ of mandamus for notifying the 'long term specified asset'. If a public authority has a legal duty to do an act and fails to discharge that function, mandamus can be issued to the said authority to perform its duty and it would be within the power of judicial review of an administrative action by the Court. A direction to the Government to issue a notification under Section 54EE of the Income Tax Act, 1961 specifying 'long term asset' would amount to taking a policy decision in a particular manner. Such a direction is impermissible. Issuance of notification under Section 54EE of the Income Tax Act Act, 1961 is in the nature of sub-ordinate legislation. Where a statute vests a discretionary power in an administrative authority, the Court should not interfere with the exercise of such a discretion unless it is made with an oblique end or extraneous purposes or upon extraneous considerations. As decided in the case of Mangalam Organics Ltd. v Union of India [ 2017 (4) TMI 1223 - SUPREME COURT] while considering the nature of duty of the Central Government to issue a notification under Section 11C of the Central Excise Act, 1944 requiring that no duty shall be payable or lesser duty shall be payable on the goods manufactured when condition stipulated in Section 11-C of the Excise Act, is satisfied by the assessee and the Government chooses not to exercise the 'power', held that Court cannot issue a mandamus to the Central Government to issue a notification exercising its power under Section 11-C of the Excise Act. Thus it is neither a case of discrimination nor the petitioner would have a right under Articles 14 and/or 19 (1)(g) of the Constitution of India which has been violated by non-issuance of notification under section 54EE of the IT Act, and therefore, no writ of mandamus can be issued to the Central Government to issue a notification under Section 54EE of the Income Tax Act, 1961. Promissory Estoppel - whether the Central Government can be held to be bound by the doctrine of promissory estoppel and direction be issued for notifying the long term specified asset u/s 54EE? - case of the petitioner is that on the faith of solemn assurance given by the Government of India at the time of introduction of the Finance Act, 2016 and subsequent to the press release as well as the answer to a question given by the Hon'ble Minister on the floor of Lok Sabha, the petitioner had arranged its tax liability accordingly and therefore, the Government of India was bound to notify the 'long term specified asset/fund' for investment of proceeds from sale of long term capital asset of the petitioner to an extent of Rs. 50 lakhs - HELD THAT:- Here, it is not a case that the petitioner had made investment on a specified long term asset as notified by the Government, and thereafter the Government had withdrawn the said notification. Therefore, the argument of the learned counsel for the petitioner that the Central Government should be held bound by its promise made for notifying the specified long term asset/fund is not meritorious and is rejected. In Case of State of Gujarat v Arcelor Mittal Nippon Steel India Ltd. [ 2022 (1) TMI 1013 - SUPREME COURT] as held that the doctrine of promissory estoppel is an equitable remedy and has to be moulded depending on the facts of each case. It has been held that in tax matters, doctrine of promissory estoppel as such is not applicable. The Revenue cannot be directed to take a decision which is unmandated under the law. The principle of promissory estoppel is based on equity, it requires a valid promise based on which the promisee had changed its position. Whereas the principle of legitimate expectation is rooted in fundamental ideas like reasonableness, fairness and non-arbitrariness. Petitioner would have been entitled for exemption on capital gain under Section 54EE only when he would have invested the proceeds from the transfer of capital gain in the notified long term specified asset/fund by the Government. The petitioner should know that unless such an asset is specified and fund is notified, he would not be entitled for exemption on capital gains arising out of transfer of long term capital asset. The Union Government had not issued the notification despite Section 54EE having been incorporated by Finance Act, 2016, and in absence of such a notification for specified long term asset/fund, the petitioner could not make investment for claiming benefit under Section 54EE. Non-issuance of notification, cannot be said to be arbitrary, unfair or unreasonable. Issuing particular notification under the provisions of the Act lies in the domain of the executive to carry out the object and purpose of the said provision. Issuing the notification is in the exclusive domain of the executive, and a legislative function. This Court is not empowered to go behind the reasons for not issuing the notification under Section 54EE. No substance that the petitioner has legitimate expectation for issuing the notification specifying the long term asset/fund for investment of capital gain arising out of transfer of long term capital asset by him. In view thereof, I do not find substance in the present writ petition, hence, it is hereby rejected.
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2023 (12) TMI 548
Unexplained cash credit - share application money received from the group companies - Addition made as summons u/s 131 were not complied with - AR submitted that the it s is not open to the AO to make addition simply on the basis of non-compliances of summons issued u/s 131 of the Act when the assessee has filed all the evidences in respect of money raised and AO has failed to carry out any further verification or point out any defects or deficiencies in those evidences - HELD THAT:- As decided in case of Crystal Networks Pvt. Ltd. [ 2010 (7) TMI 841 - KOLKATA HIGH COURT] wherein it has held that where all the evidences were filed by the assessee proving the identity and creditworthiness of the loan transactions , the fact that summon issued were returned un-served or no body complied with them is of little significance to prove the genuineness of the transactions and identity and creditworthiness of the creditors. Also see CIT Vs Orchid Industries (P) Ltd [ 2017 (7) TMI 613 - BOMBAY HIGH COURT] by holding that provisions of section 68 of the Act cannot be invoked for the reasons that the person has not appeared before the AO where the assessee had produced on records documents to establish genuineness of the party such as PAN ,financial and bank statements showing share application money . In the instant case before us assessee has furnished all the evidences proving identity and creditworthiness of the investors and genuineness of the transactions but AO has not commented on these evidences filed by the assessee. Besides the investors have also furnished complete details/evidences before the AO which proved the identity , creditworthiness of investors and genuineness of the transactions. Thus we are inclined to set aside the order of Ld. CIT(A) by allowing the appeal of the assessee. Disallowance u/s 14A r..w.r. 8D - expenditure incurred on earning income - Whether exempt income was earned or not? - Scope of explanation to Section 14A by Finance Act, 2022 w.e.f 01.04.2022 as added- HELD THAT:- This is a settled position that no disallowance is to be made u/s 14A read with Rule 8D where there is no exempt income as has been decided in the case of PCIT Vs State Bank of Patiala [ 2018 (11) TMI 1565 - SC ORDER] and CIT Vs Joint Investment Pvt Ltd [ 2015 (3) TMI 155 - DELHI HIGH COURT] . No disallowance is made u/s 14A prior to AY 2022-23 as the explanation to Section 14A vide Finance Act, 2022 w.e.f 01.04.2022 is prospective and not retrospective. Accordingly we set aside the order of Ld. CIT(A) on this issue and direct the AO to delete the addition. This ground of assessee is allowed.
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2023 (12) TMI 547
Income taxable India - Considering management support services as Fees for Technical services - India-Singapore DTAA - HELD THAT:- On perusal of the final assessment order and also DRP directions we observe that the facts in the current assessment year are identical to the facts for the assessment years 2013-14 to 2015-16. Therefore, as there is no change in the facts respectfully following the decision of the Tribunal for the assessment years 2013- 14 to 2015-16 [ 2023 (4) TMI 1160 - ITAT DELHI] we hold that the fee for management support services received from Cameron Manufacturing India Pvt. Ltd. is not in the nature of FTS - Decided in favour of assessee.
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2023 (12) TMI 546
Assessment u/s 153A - addition on account of unsecured loan on the ground that the assessee was not in position to prove the creditworthiness and genuineness of loan - Assessee argued these additions are not sustainable as there is no incrimination material found, as a result of search and the assessment attained finality - HELD THAT:- A perusal of the assessment order clearly reveals that these additions are not based upon incriminating material found during the search. This aspect was fairly conceded by the Ld. CIT-DR. Accordingly, these addition made dehors incriminating material found during the search which are liable to be deleted on the touchstone of the decision of the Hon ble Supreme Court in the case of PCIT vs Abhisar Buildwell Pvt. Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT] they are directed to be deleted as such. Thus additions are liable to be deleted on account of lack of incriminating material. Deemed dividend u/s 2(22)(e) - AO contended that Assessee is a common director and substantial shareholder in both the companies and therefore the provisions of section 2(22)(e) of the Act get attracted and made addition - Assessee submitted that the assessee was not a registered shareholder in the concerned company from which the loan was obtained - HELD THAT:- Assessee referred to the decision of Madhur Housing and Development Company [ 2017 (10) TMI 1279 - SUPREME COURT] and Ankitech (P) Ltd.[ 2011 (5) TMI 325 - DELHI HIGH COURT] for the proposition that addition for deemed dividend made u/s 2(22)(e) of the Act can be done in the hands of the shareholder only. Since, the assessee is not registered shareholder in the loan given company, the addition on the touchstone of above case laws is not sustainable. Hence, we delete the same. Advance payment without TDS - CIT(A) correctly deleted addition as AO has not looked into nature of the payments made by the appellant and has made the addition in a mechanical manner, without application of mind.
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2023 (12) TMI 545
Revision u/s 263 - share capital and share premium undisclosed - second round of revision u/s 263 on the ground that the AO has not conducted any enquiry into the issues as pointed out by the ld. Pr. CIT - HELD THAT:- This is not a case of no enquiry or lack of enquiry as the AO has made in enquiry and taken a view on the basis of examination of the evidences furnished by the assessee as well as by the subscribers. In our opinion, the PCIT cannot exercise the revisionary jurisdiction to set aside the assessment where the AO has conducted enquiries and taken a plausible view accepting the contentions of the assessee. Where the PCIT was of the view that AO has not conducted enquiry to come to the conclusion on the issue, then the ld. PCIT is duty bound to make an enquiry and reach a conclusion that order is erroneous and prejudicial to the interest of the revenue. The case of the assessee is squarely covered by the decision of Hon ble Delhi High Court in the case of D G Housing Projects Ltd. [ 2012 (3) TMI 227 - DELHI HIGH COURT] Twin conditions have to be satisfied as envisaged in section 263 of the Act in absence of which the revisionary jurisdiction is not available to the Pr. CIT . Even if one of the two condition is satisfied the jurisdiction is not available. However in the present case the twin conditions were not satisfied as the order is neither erroneous nor prejudicial to the interest of the revenue as all the facts were examined by the AO on the basis of details and explanation of the assessee before the AO and he has taken a correct view based on his examination of records furnished by the assessee as well as by the subscribers. The case of the assessee squarely covered by the decision of Hon ble Supreme Court in the case of Malabar Industrial Co. Ltd [ 2000 (2) TMI 10 - SUPREME COURT] wherein it has been held that the jurisdiction is not available to the Pr. CIT where the twin conditions as envisaged by section 263 of the Act were not satisfied. The Hon ble Court has even held that where one of the two conditions are satisfied, the provisions of section 263 of the Act cannot be invoked. We also find merit in the second plea of the assessee that revisionary jurisdiction u/s 263 of the Act is not available on the same issue for the second time and this has been held in a series of decisions of Bhagwati Vintrade Pvt Ltd. [ 2022 (11) TMI 1324 - CALCUTTA HIGH COURT] and PCIT Vs M/S Intent Dealers Pvt Ltd[ 2022 (11) TMI 1432 - CALCUTTA HIGH COURT] - Appeal of assessee allowed.
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2023 (12) TMI 544
Assessment order passed in the name of the company (assessee) as struck off by MCA - dissolution of the company - name of the assessee company has been struck off from the register and the company was dissolved from that date - HELD THAT:- Appellant entity is not in existence since 18th March, 2011, as per the certificate issued by the Registrar of Companies, Maharashtra, Mumbai as its name has been struck off under Section 560 (5) of the Companies Act, 1986, in easy exist Scheme, 2010. The co-ordinate Benches in assessee s own case [ 2022 (7) TMI 1485 - ITAT MUMBAI] for A.Y. 2011-12 and [ 2018 (2) TMI 1936 - ITAT MUMBAI] for A.Y. 2007-08 has already quashed the assessment orders. The issue is now also squarely covered by the decision of Hon'ble Jammu and Kashmir and Ladakh High Court M/S. RAINAWARI FINANCE INVESTMENT COMPANY PVT. LTD. [ 2023 (11) TMI 812 - JAMMU AND KASHMIR AND LADAKH HIGH COURT] wherein it has been categorically held that once a company is dissolved under Section 560(5) of the Companies Act, it ceases to exist and therefore, no order of assessment could be validly passed against it under the Income Tax Act and if it is so passed, it would be a nullity. Thus assessment orders passed in the name of non existing company are not sustainable and correctly quashed by ld CIT (A). Decided against revenue.
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2023 (12) TMI 543
Unexplained cash deposits u/s 68 - Addition made invoking provisions of Section 115BBE - time gap between the withdrawal and the deposit of cash withdrawal - addition made during demonetization period - contention of assessee that the assessee was regularly making withdrawal from bank for incurring some expenses so they will not keep such huge cash in safe from October, 2012 and to deposit during demonetization period only - HELD THAT:- The only basis for doubting is the long period, therefore, keeping in view the return of income offered by assessee and the cash deposit during demonetization period, the assessee is given benefit of doubt to the extent of 50% of cash deposit made available with the assessee as no adverse material is brought on record by the AO - also explanation offered by the assessee is also not cogent and does not find suitable space in human probabilities. Therefore, keeping in view the entire fact and circumstances, the addition to the extent of 50% is deleted and rest of the addition is confirmed/upheld. In the result, ground No.1 of the appeal is partly allowed. Addition under amended provisions of Section 115BBE - Division Bench of this Tribunal in Samir Shantilal Mehta [ 2023 (5) TMI 1279 - ITAT SURAT] , Arjunsinh Harisinh Thakor [ 2023 (6) TMI 770 - ITAT SURAT] and in Jitendra Nemichand Gupta [ 2023 (6) TMI 1338 - ITAT SURAT] and Punjab Retail Pvt. Ltd [ 2021 (11) TMI 405 - ITAT INDORE] and Sandesh Kumar Jain [ 2022 (11) TMI 126 - ITAT JABALPUR] held that applicability of amended provision of section 115BBE is not retrospective. Thus, the Assessing Officer is directed to tax the remaining addition @ 30% and applicable surcharges if any. In the result, the ground of appeal raised by the assessee is partly allowed.
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2023 (12) TMI 542
Penalty u/s 271D - acceptance of in cash in contravention to the provision of section 269SS - whether without satisfaction being recorded in the assessment order, penalty can be levied under section 271D of the Act? - HELD THAT:- This question has directly and substantially been dealt with by the Hon ble jurisdictional High Court in the case of Srinivasa Reddy Reddeppagari [ 2022 (12) TMI 1446 - TELANGANA HIGH COURT] wherein as referring to the decision of Jai Laxmi Rice Mills [ 2015 (11) TMI 1453 - SUPREME COURT] held that the provisions under section 271E and 271D of the Act are in pari materia and since in terms of the decision in Jai Laxmi Rice Mills (supra), satisfaction must be recorded in the original assessment order for the purpose of initiation of penalty proceedings under section 271E of the Act, the same is equally applicable for initiation of penalty proceedings under section 271D of the Act. Hon ble High Court further observed that when there is a decision of the Supreme Court, it is the bounden duty of an adjudicating authority, be in an income tax authority or any other civil authority or for that matter any court in the country, to comply with the decision of the Supreme Court - Penalty deleted - Decided in favour of assessee.
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2023 (12) TMI 541
Disallowance u/s 14A - suo-moto addition made by assessee - CIT(A) upheld the contention of assessee that disallowance under Rule 8D(2)(iii) of the Rules should be made only on investment which yielded exempt income by referring to case law of Vireet Investment (P) Ltd [ 2017 (6) TMI 1124 - ITAT DELHI] and further directed AO to re-compute the disallowance u/s 14A of the Act by taking the average investment of those investment that have yielded the exempt income - HELD THAT:- We agree with the action of Ld. CIT(A), firstly because he has followed the ratio laid in Vireet Investment (supra) wherein it was held that for computing the average investment for the purpose of Rule 8D(2)(iii) of the Rules, the investment that yielded exempt income during the year only have to be considered and not the investment which did not yield any exempt income. And for such a preposition, we also rely on the decisions of ACB India Ltd. [ 2015 (4) TMI 224 - DELHI HIGH COURT] and we find nothing wrong in the direction given by the Ld. CIT(A) and therefore, reiterate the direction of Ld. CIT(A) to assessee to submit before AO the value of investment which yielded exempt income and then the AO to compute disallowance u/s 14A of the Act taking average investment of those investment that have yielded the exempt income. And if the assessee is able to demonstrate that suo-motto disallowance made by assessee is in consonance with the aforesaid discussion, then no more disallowance is warranted. With the aforesaid observation, AO is directed to re-compute disallowance in accordance to law. For completeness, we do not find any merit in the contention of Ld. DR that in the light of amendment/explanation inserted by Finance Act, 2022, the disallowance made by AO is justified. We find that this issue is also no longer res-integra. The explanation inserted by Finance Act, 2022 w.e.f. 01.04.2022 is applicable from AY. 2022-23 onwards as held by Hon ble Delhi High Court in Era Infra Structure (India) Ltd. [ 2022 (7) TMI 1093 - DELHI HIGH COURT] Therefore, this contention of Ld. DR is also rejected. Nature of expenses - ESOP expenses - Revenue or capital expenditure - as decided by CIT(A) ESOP is allowable deduction u/s 37(1) - HELD THAT:- We note that Ld. CIT(A) has allowed the ESOP expenses by relying on the decision of his predecessor in assessee s own case as well as the decision of Tribunal dated 31.10.2022 in assessee s own case for AY. 2013-14 [ 2022 (11) TMI 1164 - ITAT MUMBAI] In such a scenario, we will be able to interfere only if the revenue is able to show that there is change in facts or law which warrant interference. Since revenue could not point out any change in facts or law vis- -vis the decision of ours in assessee s own case for earlier years, we have no other alternative but to uphold the impugned action of Ld. CIT(A). Revenue appeal dismissed.
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2023 (12) TMI 540
Income taxable in India - taxability of certain amounts received by the assessee towards offshore supplies of goods and equipment - existence or otherwise of permanent establishment (PE) and attribution of profits to the PE - assessee is a non-resident corporate entity incorporated in China involved in offshore supply of goods/equipments to the Indian contractees - HELD THAT:- Merely because there is crossfall breach clause in some of the contracts, it will not tantamount to making distinct and separate contracts composite contract and to tax the income accruing outside India taxable in India. When, there is no dispute over the fact that transfer of title over the goods have passed outside India, which in fact has passed, the receipts certainly cannot be taxed in India. Mode and manner in which the receipts from offshore supplies are brought to tax - AO has attributed 60% of the receipts towards FTS and 40% towards price of goods/materials. This, in our view, is totally irrational and perfunctory. On what basis, AO has bifurcated the receipts between FTS and business income is unknown. When the price payable by the contractee is for design, manufacture, testing and CIF supply and is a consolidated price, the basis for allocation of 60% towards FTS is not understood. In fact, AO has not given any reason for quantifying 60% of the receipts towards FTS, as no such bifurcation has been provided in the contract documents. In any case of the matter, the price paid by the contractee for supply of goods and equipments, design and testing etc. is certainly part of the manufacturing activities and cannot be considered de hors such activity. Thus, in our view, the artificial segregation of receipts between supply of goods and FTS is without any basis, hence, unacceptable. Though, AO has made an attempt to link the supply of goods to the alleged PE in the form of ZTT India Private Limited, however, such inference drawn by the AO is not based on any evidence at all. There is nothing on record to suggest that ZTT India Private Limited has undertaken or was in any way involved with the design, manufacturing and testing of supplied goods. Thus, even assuming that ZTT India Private Limited constitutes a PE, however, in our view, it is in no way involved with the supply of goods and equipments from China. Receipts from onshore contracts - There is no dispute that they have been taxed in India at the hands of ZTT India Private Limited. Thus, in our considered opinion, the sale incident in respect of supply of goods having completed outside India and the transfer of title over the goods, having passed from the assessee to the contractees outside India in terms with the contract, the receipts from such supply of goods and equipments cannot be made taxable in India. Accordingly, we direct the Assessing Officer to delete the additions. Assessee appeals are allowed.
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2023 (12) TMI 539
Condonation of delay in filing of appeal before CIT(A) - Assessment order passed ex-parte u/s 144 r.w.s. 147 - delay of approximately 33 months in filing the appeal before the Ld. Commissioner - Assessee mainly claimed that its director, who was mainly operating the business of the Assessee company was in fact detained by the Police in the jurisdiction of United Kingdom - HELD THAT:- Considering as the Assessee s main Director/shareholder who was operating the Assessee company, in fact, was entangled in various litigations including detention in the jurisdiction of United Kingdom from March, 2018 to October, 2021 and, therefore, could not pursue the assessment proceedings, which resulted into passing the assessment order dated 27/12/2019 as ex-parte u/s 144 r.w.s. 147 of the Act. As the director, was in detention during the year 2019, 2020 2021 upto October, therefore, could not file the appeal before the Ld. Commissioner upto October, 2021. Further, after coming to India, took stock of the various proceedings and started pursuing the legal remedies and consequently on 22/12/2022 filed the appeal electronically before the Ld. Commissioner. Though there is gap of one year as the Assessee s director returned back to India in the month of October, 2021, but the appeal was filed only on 22/12/2022, therefore, the Assessee through tried to demonstrate the reasons for not filing the appeal in time before the Ld. Commissioner, however, something is lacking in the said claim of the Assessee, as the gap of one year is not convincing. If one consider the facts and circumstances in its entirety, then the claim of the Assessee seems to be genuine which requires lenient view; hence we, by considering the peculiar facts and circumstances as the assessment order dated 27/12/2019 was passed as ex-parte U/s 144 read with section 147 of the Act and thereafter from March 2020 onwards Covid-19 period was started and the Hon ble Apex Court excluded the period from March 15, 2020 to February 28, 2022 while computing the period of limitation for filing of any suit, appeal, application, or proceeding ; Ld. Commissioner decided the appeal filed by the Assessee in limine but not on merit; even otherwise no prejudice shall be caused to the Revenue Department if the case is directed to be decided on merit; substantial justice also demands that proper adjudication of the case is required to be done; hence, we are inclined to set aside the ex-parte order passed by the Ld. Commissioner and consequently, remanding the instant case to the file of the Ld. Commissioner or decision on merit, but subject to deposit of Rs. 51,000/- in the Prime Minister s National Relief Fund (PMNRF) within 30 days of receipt of this order
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2023 (12) TMI 538
Validity of order framed u/s 144/147 as barred by limitation - HELD THAT:- After going through the proposition of law laid down by the Hon ble High Court in the case of Smt. Parveen Amin Bhathara ( 2022 (6) TMI 1283 - MADRAS HIGH COURT] the case is similar to the present case before us and it is clearly covered in favour of the assessee. Therefore, the impugned notice in the present case u/s 148 of the Act in relation to A.Y. 2009-10 is beyond permissible time limit as prescribed under the Act. Therefore, the notice in the present case is liable to be treated as illegal and without any jurisdiction. Appeal of the assessee is allowed.
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2023 (12) TMI 537
Payment of interest in cash - Addition relying on the order passed by the Income Tax Settlement Commission in the case of unrelated third party - HELD THAT:- We find the AO considering the proceedings before the Income Tax Settlement Commission made addition in the hands of the assessee on account of interest payment in cash. In view of the same, we directed the ld. DR to furnish a copy of order of the Income Tax Settlement Commission regarding M/s. Wellbuild Merchants Pvt. Ltd. of the Damale Group[unrelated third party]. DR furnished the same which is on record by way of covering letter and we note that the said Damale Group representing 04 applicants filed applications u/sec. 245C before the ITSC. In turn, the ITSC sought reports from PCIT as required u/sec. 245D (2B) of the Act and also under Rule 9 of the Income Tax Settlement Commission Procedure Rule 1997. On perusal of the statement of CIT-DR representing Pr. CIT before the Income Tax Settlement Commission of the said order argued taking reference to Question that the cash expenses out of which already claimed and allowed at the time of search action were claimed on estimation basis without any supporting evidence or documents. He submitted the claim of cash expenses is a pure imaginary figure without any basis and argued to reject the claim in the case of M/s. Wellbuild Merchants Pvt. Ltd.. Further, taking reference to seized document concerning the assessee before us as referred by the AO in his order, we note that the CIT DR argued that the applicant furnished a common reply regarding evidences of cash receipts in seized documents stating that entry pertain to cash loan/ repayment. Further, he vehemently argued that the claim of interest payment of Rs. 7,80,00,000/- out of Rs. 8,00,62,029/- is not verifiable in the absence of mention of its payment and also in absence of conformity of nature of funds which is evident from para 5A(ii) of Page No. 25 of Income Tax Settlement Commission order. However, the assessee therein got relief towards business expenditure. Therefore, in our opinion, that the information by way of a seized loose papers in the case of third party cannot be said to be tangible material without a further enquiry falling which the addition made in the hands of the assessee fails and, is not justified . Thus, the order of CIT(A) in confirming the order of AO is not maintainable and set aside. Thus, the grounds raised by the assessee are allowed.
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2023 (12) TMI 536
Methods of accounting for recognizing the revenue - assessee has been following Project Completion Method adopted by the assessee BUT in search admitted that company will adopt Percentage Completion Method then-onwards - AO applied the percentage completion method on the ground that the appellant firm through its managing partner had agreed to follow the said method during search operation and had filed its return of income for A.Y. 2016-17 by following percentage completion method - HELD THAT:- As decided in Bilahari Investment (P) Ltd [ 2008 (2) TMI 23 - SUPREME COURT] the rule of law in adopting the accounting standard in case of builder and developer is absolutely clear and precise, so that it is only in those case where the Department records a finding that the method adopted by the assessee results in distortion of profit, the Department can insist on substitution of the existing method. Reverting to the facts of the present case before us there is no reason recorded by the AO nor the ld. CIT(A) that the Project Completion Method which the assessee has adopted for recognition of revenue and the profit elements distorts the profits for the year under consideration. In absence of any such finding either by the AO or by the ld. CIT(A), the Department therefore cannot insist the assessee to substitute the Percentage Completion Method in place of Project Completion Method which the assessee has adopted for the year under consideration. There is another decision in M/s. Prestige Estate Projects Pvt. Ltd. [ 2020 (5) TMI 239 - KARNATAKA HIGH COURT] where their Lordships have observed when the Department has accepted in the previous years, in the light of guidance note applicable to developers a certain method of accounting and the profit arrived at is revenue neutral, then in such scenario, the substantive question of law has to be answered in favour of the assessee and against the Revenue. Therefore, in the case of the assessee for A.Y. 2015-16 when the Department has not pointed out any distortion in the profit arrived at for the year under consideration by adopting Project Completion Method, then the Revenue arrived at has to be revenue neutral and the Department cannot insist on the assessee to adopt Percentage Completion Method. More so, because the Revenue has already accepted Project Completion Method for the assessee for the previous consecutive A.Ys. 2013-14 2014-15. Thus addition made in the case of the assessee is unjustified unwarranted and invalid in the eyes of law. Decided in favour of assessee.
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2023 (12) TMI 535
Revision u/s 263 - assessee was not a party to the original agreement to sale assessee - As per CIT AO passed his assessment order without examining the applicability of Section 56(2)(x) of the Act for non-examination of the said issue - assessee along with other persons purchased immovable property - assessee is having 7% share in the said sale deed out of ten co-owners - CIT revised the assessment order only by taking view that since the assessee was not the party to the original agreement and no payment / part payment at the time of execution of agreement was given therefore assessee is not eligible for the benefit of first and second proviso to Section 56(2)(x)(b) - Whether if a person who was not a party to the agreement to sale and has not paid any consideration or part consideration by way of cheque other than cash at the time of execution of such agreement can still be eligible for the benefit of first and second proviso of Section 56(2)(x)(b) of the Act.? - HELD THAT:- We find that Co-ordinate Benches of Mumbai Tribunal in the case of Sulochana Saijan Modi [ 2023 (5) TMI 1099 - ITAT MUMBAI] while considering almost similar set of facts, wherein part payment of transaction was made by son of the assessee, who was joint holder of the property, the Tribunal accepted the submission for granting benefit of first and second proviso to Section 56(2)(x)(b) - We further find that in the present case, the part sale consideration was paid by Shri Umeshbhai P Patel, Sanjaybhai Tulshibhai Mangukiya and Karamshibhai Khimjibhai Mangukiya. We find that one of the assessee in these appeal that is Rajesh Bhai is the son of Parshottambhai C Patel. And Nayan Bhai is the cousin of Rajesh Bhai. Admittedly part consideration of the transaction was either paid by family members or by close relatives. Therefore, we are also of the considered view that while accepting returned income considered by Assessing Officer has not committed any error. Therefore, the assessment order cannot be branded as erroneous. Thus, twine condition, for invoking Section 263 of the Act are not met out in the present case. This ground of assessee s appeal is allowed.
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2023 (12) TMI 515
Unexplained cash deposit from undisclosed sources u/s 69A r.w.s. 115BBE - assessee has made cash deposit during demonetization period in her bank account - HELD THAT:- As perused the orders of the lower authorities, find that the assessing officer recorded that in the return of A.Y. 2015-16, the assessee shown gross receipt of Rs. 3,78,000/- and profit of Rs. 3,62,780/- and under the column of cash balance mentioned at Zero. Such finding of the assessing officer is not countered by ld AR for the assessee by showing any adverse evidence. AO itself held that for A.Y. 2016-17 the assessee filed return of income on 24.12.2016 i.e. after demonetization the assessee has shown gross receipt under Section 44AD of the Act of Rs. 12,45,600/- and net income of Rs. 10,00,180/-. The assessee also claimed deduction under Chapter VIA of Rs. 1,75,560/- and paid tax of Rs. 96,130/-. Thus, out of total Rs. 10,00,180/-, the assessee incurred Rs. 2,71,690/- as per return of income and considering the household expenses of assessee at Rs. 1.00 lacs, the assessee was hardly having cash balance of Rs. 6.00 lacs. From the aforesaid observation of assessing officer, find that the assessing officer has accepted the case balance of Rs. 6.00 lacs with assessee and disbelieved the remaining cash balance. Thus, the assessing officer accepted the availability of cash of RS. 6.00 lacs with the assessee. Since, the assessee was showing business income from several years, for the year under consideration the assessee has shown income of about Rs. 10.00 lacs (Approx) therefore, the assessee is also given benefit benefits of Rs.200 lacs, thereby the additions to the extent of Rs. 8.00 lacs are deleted and remaining addition of Rs. 2.90 lacs is upheld. Taxing of the addition under amended provisions of section 115BBE we find that division bench of this Tribunal in Samir Shantilal Mehta [ 2023 (5) TMI 1279 - ITAT SURAT] , Arjunsinh Harisinh Thakor Vs [ 2023 (6) TMI 770 - ITAT SURAT] and in JItendra Nemichand Gupta (supra)[ 2023 (6) TMI 1338 - ITAT SURAT] and Indore Bench in DCIT Vs Punjab Retain Pvt Ltd [ 2021 (11) TMI 405 - ITAT INDORE] and Sandesh Kumar Jain [ 2022 (11) TMI 126 - ITAT JABALPUR] held that applicability of amended provision of section 115BBE in not retrospective. Thus, the assessing officer is directed to tax the remaining addition @ 30% and applicable surcharges if any. In the result, the ground of appeal raised by the assessee is partly allowed.
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Customs
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2023 (12) TMI 534
Denial of interest on the refund (of SAD) sanctioned - HELD THAT:- The effect of Section 11BB is that when any duty ordered to be refunded, is not refunded within three months from the date of receipt of application, then there shall be paid interest at the applicable rates from the date immediately after the expiry of three months from the date of receipt of application for refund until the date of refund of such duty. The appellants are entitled to the interest on refund since the claim of the appellants is relatable to the date of its applications, and not the date of compliance with the query raised by the Revenue. Going by the said dates of applications, the refund sanctioned vide Orders-in-Original dated 01.04.2013 are clearly beyond the prescribed period of three months. There are no reasons to sustain the impugned orders of the first appellate authority, for which reason the impugned Order-in-Appeal Nos. 135 136/2013 dated 16.07.2013 and Order-in-Appeal Nos. 141 142/2013 dated 30.07.2013 are set aside - appeal allowed.
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2023 (12) TMI 533
Levy of penalty u/s 114(iii) of the Customs Act, 1962 and Section 114AA of the Customs Act, 1962 - export of goods at highly over invoiced values - availing undue export incentives - HELD THAT:- All merchandise entering or leaving the country must do so through authorised entry/exit ports, report to Customs, and follow all applicable laws and regulations, including paying any customs that may be due. Infractions are also subject to civil and criminal fines, according to the Customs Act. Criminal liability can result in incarceration and financial penalties, while civil liability can result in monetary fines and the seizure of property. The nature of the punishment depends on the gravity of the offence, with penalties for improper import or export of goods outlined in Sections 112 and 114 of the Customs Act. A perusal of the provisions of section 114 and 114AA makes it clear that any action by any person which renders imported or exported goods to confiscation is liable for penal action under section 114 of the Customs Act. In addition, any person who has signed a false or incorrect document is liable for penalty under section 114AA of the Customs Act. The Customs Act deals with the Confiscation of goods and conveyances, and imposition of penalties . It is further significant to note that the Legislature has simplicitor used the word any person to fasten the liability of a penalty. The Customs Act has not defined the word person and, therefore the definition and rules of interpretation contained in the General Clauses Act, 1897, can be taken recourse to. Hon'ble Apex Court in the case of OM PRAKASH BHATIA VERSUS COMMISSIONER OF CUSTOMS, DELHI [ 2003 (7) TMI 74 - SUPREME COURT] dealt with the over invoicing of export goods, and held that, when the importation or exportation, of the goods are subjected to certain prescribed conditions to be fulfilled either before or after clearance of the goods, and if those conditions are not fulfilled, the said goods would be considered as prohibited goods and Sections 2(23), 11 and 113(d) of the Customs Act, 1962 would come into play and the exporters would be liable for penalty - In a catena of decisions of the Tribunal in respect of cases of over valuation of export goods for benefit under export incentive schemes, the imposition of penalties under Section 114 of the Customs Act, 1962 has been upheld. Delay in adjudication - HELD THAT:- It is noted that there were several noticees in the show cause notice, which by itself would lend to the delay in adjudication. We are not inclined to accept this contention of the learned counsel. The impugned order is upheld - appeal dismissed.
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2023 (12) TMI 532
Doctrine of Merger - merger of original order with the appellate order - Benefit of duty exemption provided under Notification No. 52/2003-Customs dated 31.03.2003 availed - denial of benefit on the ground that such benefit was not available to the respondent in terms of the permission granted by the Inter-Ministerial Standing Committee (IMSC) - HELD THAT:- From the sequence of events, it transpires that the original order dated 26.08.2013 was merged with the order dated 01.04.2014 passed by the Tribunal and the said order of the Tribunal was also upheld by the Hon ble Bombay High Court in COMMISSIONER OF CENTRAL EXCISE, PUNE III VERSUS KUMAR HOUSING CORPORATION LTD. [ 2018 (2) TMI 820 - BOMBAY HIGH COURT] . Thus, under the circumstances of the case, the doctrine of merger applies to the case in hand and since the order dated 26.08.2013 is no more in existence, in our considered view, the appeal filed by Revenue against such original order cannot be sustained for judicial scrutiny. Further, the prayer made by Revenue in this appeal cannot also be sustained inasmuch as the order dated 26.08.2013 was passed by the learned Commissioner of Central Excise, pursuant to the limited remand directions made in the Order dated 29.06.2012 by the Tribunal. There are no merits in the appeal filed by Revenue and therefore, the same is dismissed.
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2023 (12) TMI 531
Amendment of Bills of entry - Essentiality Certificate was not in existence at the time of clearance of the goods - Section 149 of the Customs Act, 1962, to deny the benefit of duty exemption provided under notification No.84/1997-Customs dated 11.11.1997 - HELD THAT:- On reading of the above provisions, it transpires that amendment of the documents filed for the import or export goods is permissible under the statute. The proviso clause appended to section 149 provides that amendment of the documents are permissible on the basis of evidence in existence at the time of clearance of the goods from the customs station. In this case, it is not the case of Revenue that the impugned capital goods were not imported by the appellants for accomplishing the purpose mentioned in the notification dated 11.11.1997. This fact is evident from the application dated 10.10.2019 filed by the appellants before the competent authorities for issuance of the DEC. Since, the B/Es in question were filed much after the date of such application, seeking for availment of duty exemption, it cannot be said that the department was ignorant about the entitlement of the appellants for such benefit provided in the notification. It is also an admitted fact on record that the application dated 10.10.2019 filed by the appellants were favorably considered by the competent authority for the duty exemption entitlement viz. Essentiality Certificate. Since, such certificate was issued upon subjective analysis that the goods are meant for use in the designated project(s), spelt out in the notification, denial of such benefit by the department is contrary to the legislative intent behind issuance of such notification, which was specifically designed in the public interest to grant the benefit provided thereunder. The impugned orders are set aside and the appeals are allowed by way of remand to the original authority for the limited purpose of verification of the Essentiality Certificate dated 08.05.2020 and thereafter, for grant of the benefit of duty exemption provided under the notification No. 84/1997-Customs dated 11.11.1997 - Appeal allowed by way of remand.
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2023 (12) TMI 530
Rejection of application for remission of duty in respect of imported raw-material destroyed in fire, in the appellant s SEZ unit - Application of Section 23 for remission of duty in the SEZ unit - customs duty along with the value of the goods not insured - HELD THAT:- It is found that there is no dispute that the fire incident has taken place in the appellant s factory located in SEZ units. As per survey report, it is clear that there is no negligence on the part of the appellant as the fire broken out suddenly beyond the control of the appellant. Therefore, the allegation that the appellant have not taken the proper precaution to avoid fire incident is absolutely baseless and imaginary. Moreover, it is the appellant who has to be most careful about their goods as it is not only the duty but the huge stake of value of the goods is involved. Therefore, it cannot be imagined that the appellant was careless and negligent due to which fire incidence has taken place. It is found that once after carrying out thorough inspection and survey, the insurance company has satisfactorily granted the insurance claim that itself is evidence to establish that the fire incidence was beyond the control of the appellant. Therefore, the ground that the appellant was negligent in the matter of fire incident cannot be accepted. Application of Section 23 for remission of duty in the SEZ unit - HELD THAT:- In the present case the grant of remission in respect of customs duty in terms of Section 23 does not contradict any of the provision of the SEZ Act. Therefore, the contention of the Adjudicating Authority about non-applicability of the Section 23 of the Customs Act, is not sustainable. Appellant have not insured the customs duty along with the value of the goods - HELD THAT:- It is obvious that only the value of the goods is liable to be insured, which is appearing in the invoices. If the invoice contain any taxes or duties, obviously the gross value inclusive of all these elements shall be taken for the purpose of insurance. However, in the case of SEZ, when the goods are imported and entered into SEZ, the value of goods remain the only principle value and since no duty was payable, question of inclusion of duty does not arise. However, this cannot be the reason for denying the remission of duty - appellant has made out very strong case of remission of customs duty in respect of the destroyed goods in fire. The impugned order set aside - appeal allowed.
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2023 (12) TMI 529
Classification of export goods - Iron Oxide Powder - to be classified under chapter 28211010 or under Tariff Heading 26011119? - It is claimed by the appellants that processes carried out by them make it fit for use in oilfield chemicals - HELD THAT:- There was a definite claim by the party by virtue of above flow chart that they had subjected the Iron Ore to various processes, that no more allowed it to be considered product of metallurgical industry. Learned Commissioner (Appeals) while dealing with the proposition extended the scope of the same by using expression manufacturing processes - It is found that in the statute only the requirement of processes having been under taken is existing in Section note to Chapter 26, so as to make it no more a metallurgical item. However, both the lower authorities have not considered the processes as above in the flow chart and whether processes done by them have made item it fit for oilfield industry as claimed. In which case it will be an item of Chapter 26, but of Chapter 28. Matter remanded back to the Commissioner (Appeals) to consider the processes, which are stated already on record and the outcome of such processes. Appeal is allowed by way of remand.
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PMLA
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2023 (12) TMI 528
Money Laundering - proceeds of crime - double jeopardy - prosecuting the person accused of an offence under Section 13(1)(e) of the Prevention of corruption Act and for an offence u/s 3 of PMLA - mandatory inquiry under Section 202 (2) Cr.P.C., not conducted, before issuing the summons - HELD THAT:- The point raised by the petitioner has been answered by the Hon'ble Supreme Court in Vijay Madan Lal Choudhary's case [ 2022 (7) TMI 1316 - SUPREME COURT] case where it was held that the offence under the PMLA is a distinct offence and it concerns only with the proceeds of crime which had been derived as a result of the criminal activity in relation to a scheduled offence. Therefore, the possession of proceeds of a crime is still an offence and therefore, is not hit by Article 20(1) of the Constitution of India - the question whether the petitioner has indulged in dealing with the proceeds of the crime (scheduled offence) is factual and is a matter for trial. Whether the prosecuting the petitioner for an offence under Section 3 of the PMLA would amount to double jeopardy? - HELD THAT:- The offence under Section 13(1)(e) PC Act, which is possession of disproportionate assets, can arise even if a public servant spends the entire money derived illegally while holding office as a public servant. However, the ingredients of the offence under Section 3 of the PMLA are different - The ingredients of Section 3 of PMLA would indicate that the offence under Section 3 of PMLA has nothing to do with the criminal activity / commission of a scheduled offence. If a person indulges or continues to indulge in dealing with proceeds of crime, he is liable to be prosecuted under the PMLA. Even in the case of holding disproportionate assets punishable under Section 13(1)(e) of the PC Act, if the offender continues to possess or conceal the proceeds of crime, after the check period, the offence of money laundering is made out. Therefore, the two offences are distinct and different and it cannot be said that the offence under PMLA is subsumed within the PC Act - the submission of the learned counsel for the petitioner that prosecuting the person accused of an offence under Section 13(1)(e) of the PC Act and for an offence under Section 3 of PMLA would amount to double jeopardy, is untenable. Both the reasons cited by the learned counsel for the petitioner for issuance of a certificate for appeal to the Hon'ble Supreme Court, are not sustainable. The instant case does not involve any unanswered substantial question of law and hence, we are not inclined to grant the certificate for appeal, as prayed for by the learned counsel for the petitioner. As regards the Criminal Original Petition, the primary contention of the learned counsel for the petitioner is that Section 202 (2) Cr.P.C was not followed because the Special Court is deemed to be a sessions Court - this argument cannot be countenanced. Section 44 of PMLA is an exception to Section 190 of Cr.P.C., which provides for cognizance only by the Magistrate. Section 193 of Cr.P.C., provides that the Sessions Court can take cognizance of any case only if the Code or any other law permits it to do so. Both the Criminal Revision Case and the Criminal Original Petition are liable to be dismissed and accordingly, dismissed.
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Service Tax
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2023 (12) TMI 527
Levy of service tax - mark-up on freight charges - ocean freight - air freight - activity of the appellant in arranging transportation of the cargo - service or not - HELD THAT:- On perusal of the Annexure to the Show Cause Notice, it is seen that the demand is raised not only on the mark-up but also on the ocean freight and air freight. These charges are not subject to levy of Service Tax during the disputed period. The mark-up received by the appellant on the freight charges is due to the difference in the freight charges collected from the shipper and paid to the shipping / airliners. The issue is no longer res integra, the Tribunal in the case of M/S. TIGER LOGISTICS (INDIA) LTD. VERSUS COMMISSIONER OF SERVICE TAX-II, DELHI [ 2022 (2) TMI 455 - CESTAT NEW DELHI] held that the activity is trading of cargo space and there is no rendering of service. The demand of Service Tax on mark-up / differential of ocean freight was set aside. In the case of M/S. DIRECT LOGISTICS INDIA PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX BANGALORE SERVICE TAX- I [ 2021 (9) TMI 500 - CESTAT BANGALORE] , the demand was raised on the mark-up received on the difference between the freight charges collected and paid to the shipping liners where it was held that no service tax is chargeable on the difference between the ocean freight collected from the clients and the ocean freight paid to the shipping lines. The Tribunal in the case of M/S. EMU LINES PVT. LTD. VERSUS COMMISSIONER OF CGST CE, BELAPUR [ 2023 (6) TMI 64 - CESTAT MUMBAI] had considered the very same issue where the demand of Service Tax was raised under Business Auxiliary Services. It was held by the Tribunal that the activity does not amount to rendering of service and it is merely trading of cargo space. The said decision was upheld by the Apex Court in COMMISSIONER OF CGST AND CE BELAPUR VERSUS M/S EMU LINE PVT. LTD. [ 2023 (2) TMI 1155 - SC ORDER] . Thus, the demand of Service Tax on ocean freight / air freight or the mark-up on the above received by the appellant cannot be subject to levy of Service Tax - the impugned orders set aside - appeal allowed.
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2023 (12) TMI 526
Discharge of service tax liability by book adjustment - Instructions dated 21.03.2023 issued by the Central Board of Indirect Taxes and Customs - HELD THAT:- It would be seen from the Instructions that the Board had directed that in all cases pending adjudication where the duty/tax had been demanded only on account of the fact that amount due as tax/duty had not been paid as per the procedure laid down but by book adjustment, the adjudicating authority may focus on the reconciliation of duty/tax paid by book adjustment - It is, therefore, clear from the aforesaid Instructions that payment of service tax by book adjustment has been accepted by the Board. Whether reconciliation was provided to the adjudicating authority? - HELD THAT:- It is seen that the Principal Commissioner, in view of the decision of the Tribunal in M/S. FA CAO, ECR, HAJIPUR VERSUS COMMISSIONER OF CGST CX, PATNA-II COMMISSIONERATE [ 2021 (7) TMI 1407 - CESTAT KOLKATA] , noted that the accounts have not been audited by Comptroller and Auditor General of India. It is apparent that the words Comptroller and Auditor General in the aforesaid order of the Tribunal have been mistakenly written for the words Controller General of Accounts . This fact is also clear from the Instructions of the Board wherein reference has been made to Controller General of Accounts. In the present case, the details of book transfer of the service tax was submitted to the Principal Commissioner from the site of the Controller General of Accounts and the communication dated 13.10.2022 of the Railway Boards clearly provide evidence of transfer of service tax - since the data provided by the appellant has been taken from the website of Controller General of Accounts, Ministry of Finance, the directions contained in the Instructions dated 21.03.2023 stand fulfilled. The appellant, therefore, made payment of service tax by book adjustment. The impugned order dated 31.10.2022, therefore, cannot be sustained and is set aside - Appeal allowed.
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2023 (12) TMI 525
Levy of Service tax - Club or Association Service - doctrine of mutuality - management and maintenance of Sumel Business Park-2 of commercial scheme comprising various commercial buildings owned by the member of the appellant society - HELD THAT:- It is found that in the absolutely identical issue involved in the identical facts in the appellant s own case for a different society i.e. Sumel Business Park-3 Corporative Service Society Limited, this Tribunal in THE SUMEL BUSINESS PARK 3 CO OPERATIVE SERVICE SOCIETY LTD VERSUS C.S.T. -SERVICE TAX - AHMEDABAD [ 2023 (10) TMI 740 - CESTAT AHMEDABAD] decided the matter in favour of the appellant, holding that In the present case since there is a doctrine of mutuality between the appellant s corporative society and its members, it cannot be said that a person had provided service to another person. There is no difference between the corporative society and its members that means both are one. Accordingly, there is no service provision by one person to another person. Therefore even as per the definition of service provided under section 65B(44) with effect from 01.07.2012, the activity between the appellant and it's members does not fall under the definition of service. From the above decision of this Tribunal, it can be seen that the facts and the legal issue involved in the present case is same as in the above case. Therefore, the ratio of the above decision is squarely applicable in the present case - the impugned order set aside - appeal allowed.
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Central Excise
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2023 (12) TMI 524
Legality of issue of show-cause notice to the Appellant in invoking extended period and justifying the demand - Suppression of facts or not - CENVAT Credit - input services - services taken for laying down Railway siding used for material handling equipment within the factory premises and construction of rainwater harvesting plant through earth excavation and land development works - HELD THAT:- On perusal of the order passed by the Commissioner, it is noticed that the ground stated in invocation of extended period was not convincing for the reason that he said that had Audit not scrutinised the record, the fact of availment of inadmissible credit would not have come to the knowledge of the Department and, therefore, suppression to evade payment of tax was established - such an observation is not convincing for the reason that the Tribunal has consistently held in various orders that Audit report can t alone from the basis of invocation of extended period. It is worthwhile to reproduce a portion of judgment passed in the case of M/S THYSSENKRUPP INDUSTRIES INDIA PVT. LTD. VERSUS CCE ST, PUNE-I [ 2018 (11) TMI 1041 - CESTAT MUMBAI] concerning the purpose of Audit and its resultant effect holding that it cannot be said that only because audit party had found some credit availed as inadmissible, suppression of fact is made out. It cannot also be established that appellant had any malafide intention to suppress its duty liability from the department. The order passed by the Commissioner of CGST CX, Nagpur-II, to the extent of denial of credit, is hereby set aside - Appeal allowed.
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2023 (12) TMI 523
Levy of Central Excise duty - clearance of goods received for job work - applicability of rule 10A read with Rule 8 of the Central Excise Valuation, (Determination of Price of Excisable Goods) Rules, 2000 in job-work - interest - penalty - extended period of limitation - HELD THAT:- The first thing to be appreciated is that as per Section 3 of Central Excise Act, 1944, the excise duty is leviable on manufacture and the goods here are manufactured by the appellant so the liability to pay duty is that of the appellant. However, by virtue of the exemption notification no. 83/94, the liability of central excise duty has been shifted from the job worker to the principal manufacturer, however, subject to the conditions specified therein. In the present case, M/s Aditya being SSI unit is availing exemption from excise duty under notification no. 8/2003- CE, however the exemption under notification no. 83/94-CE is available only on furnishing of an undertaking by M/s Aditya to the proper officer having jurisdiction over the factory of the job worker, (a) that the specified goods received from the job worker will be used in the factory of the supplier in or in relation to the manufacture of specified goods which are exempt from the whole of the duty of excise leviable thereon under the small scale exemption notification or in terms of condition number (b) the SSI unit shall undertake to pay central excise duty, if any, payable on the said goods. However, it appears that the principal manufacturer has not furnished any such undertaking either in terms of condition number (a) or (b). Consequently, the liability to pay excise duty shall be on the job worker, i.e., the appellant herein. There are no infirmity on the findings arrived at by the authorities below. Computation of the aggregate value of the clearances in respect of the unit who are availing the SSI exemption - HELD THAT:- The authorities below have rightly observed that in the present case, the valuation of the manufactured goods is to be determined under Rule 10A(iii), whereby Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 will be applicable, which provides: Where the excisable goods are not sold by the assessee but are used for consumption by him or on his behalf in the production or manufacture of other articles, the value shall be one hundred and ten per cent of the cost of production or manufacture of such goods. Interest - penalty - Extended Period of Limitation - HELD THAT:- In the present case, the appellant was also manufacturing the said goods on its own and were clearing the same on payment of excise duty but deliberately avoided paying duty on the goods manufactured on job work, knowing that the principal manufacturer has failed to comply with the condition of furnishing the undertaking. The evasion of duty came to the knowledge of the department only on audit. Thus, it being a clear case of suppression of facts with intent to evade payment of duty, the extended period of limitation is invokable and the appellant is liable to pay the interest as well as penalty under the Act. There are no infirmity in the impugned order and therefore the same deserves to be affirmed. The excise duty along with penalty and interest as determined is leviable on the appellant - appeal dismissed.
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2023 (12) TMI 522
Reversal of CENVAT Credit - clay (by-product) is exempted from excise duty and arises during the course of excavation and production of the dutiable final product lignite - manufacture of clay as final product, taking place or not - liability to pay an amount in terms of rule 6(3)(b) of the CENVAT Rules @ of 6% of the value of clay. HELD THAT:- The issue involved in this appeal stands decided in favour of the appellant by the Tribunal in GUJARAT MINERAL DEVELOPMENT CORPORATION LTD VERSUS C.C.E. S.T. -VADODARA-II [ 2021 (10) TMI 307 - CESTAT AHMEDABAD] . The issue was whether Gujarat Mineral Development Corporation was required to pay an amount under rule 6 of the CENVAT Rules in respect of exempted product namely Silica Sand and Ball Clay when the input service was used for mining of lignite and it was held that it is clear that any input/input services contained in any by-product/waste/refuse, Cenvat Credit cannot be varied or denied. With this logic demand under Rule 6 in respect of by-product is not applicable. In the present case also, the appellant has only been authorised to excavate lignite which is a raw material used by the appellant in the generation of power. The appellant had engaged KSK to mine lignite and the consideration that was to be paid by the appellant to KSK was on the basis of per metric ton of lignite supplied at delivery point. For mining of lignite, it was imperative for KSK to remove the overburden, including clay. Clay which arises as a technical necessity in the course of excavation of lignite is, therefore, not a manufactured commodity. It is a by-product arising in the course of manufacture and is waste so far as the appellant is concerned. In view of the aforesaid decision of the Tribunal in Gujarat Mineral Development Corporation, it cannot be said that the appellant had manufactured two products namely lignite and clay out of which one is exempted or chargeable to nil rate of duty and the other is dutiable as a result of which the appellant had to maintain separate records for utilisation of input service in the manufacture of these products, thereby attracting rule 6(3) of the CENVAT Rules - the order dated 26.02.2019 passed by the Commissioner, therefore, cannot be sustained and is set aside - appeal allowed.
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2023 (12) TMI 521
Time Limitation - Levy of Automobile Cess - impugned order passed without appreciating the facts of the case and the law - impugned order is beyond the allegation in the SCN - principles of natural justice - Suppression of facts or not - time limitation - HELD THAT:- The appellant imported E-bike in CKD condition and E-Bike parts falling under heading 8711 8714 respectively. The appellant assembled E-Bike imported in CKD condition and cleared the same without payment of duty as E-bike were exempt vide notification No. 25/2008-CE dated 29.04.2008. Further, E-bike imported in CKD condition after assembling were cleared without payment of duty as the goods were imported and cleared fall under the same sub-heading and processes undertaken does not amount to manufacture as per section 2(f) of the Central Excise Act being no new/distinct product came into existence. Further, it is found that the classification at the time of importation and at the time of clearance for home consumption are the same - the appellant is not required to pay automobile cess because he has already paid the same at the time of import which has been shown in the Bill of entry 531 dated 11.07.2008. Time Limitation - HELD THAT:- It is found that the entire information regarding the clearance of E-bike were reflected in ER-1 return submitted to the department periodically and the department never raised any objection regarding non deposit of automobile cess which clearly shows that automobile cess were paid as per concurrence of the department - the entire demand in this case is time barred because for the period September, 2006 to September, 2008 show cause notice was issued on 19.11.2010 which is beyond the normal period of limitation. The department has invoked the extended period of limitation without showing that the ingredients for invoking the extended period of limitation is present in the case. The demand is barred by limitation - the impugned order set aside on merit as well as on limitation - appeal allowed.
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2023 (12) TMI 520
Rejection of request of the appellant to transfer unutilized cenvat credit - closure of factory - Rule 10 of CCR 2004 - HELD THAT:- The appellant vide letter dt. 15.12.2011 intimated the department that their Puducherry unit is being closed down and that they intend to transfer the unutilized cenvat credit to Sriperumbudur, Kanchipuram District - The very same issue was considered by the Hon ble High Court of Madras in the case of THE COMMISSIONER OF CENTRAL EXCISE VERSUS M/S. FEATHERLITE PRODUCTS PVT. LTD. [ 2017 (6) TMI 814 - MADRAS HIGH COURT ]. The assessee in the said case had requested for transfer of assets, stocks as well as cenvat credit from Hosur unit to their unit at Bangalore, after closure of the factory situated at Hosur. The Hon ble High Court after considering the Rule 10 of CCR 2004 observed Thus, having regard to the purpose behind the rule, which is, broadly, to enable an assessee to use unutilised Cenvat credit, we see no difficulty in holding that an assessee will be able to transfer his unutilised Cenvat credit, even in a situation, where he shifts his factory from one site to another. The decision of Hon ble High Court of Madras in the case of M/s. Feartherlite Products Pvt. Ltd. was appealed by the Department before the Hon ble Supreme Court. The appeal was dismissed by the Hon ble Supreme Court in [ 2018 (7) TMI 614 - SC ORDER] - The Hon ble Apex Court observed that there are no grounds to interfere with the order passed by the Hon ble High Court. The decision of the Hon ble jurisdictional High Court being affirmed by the Hon ble Supreme Court, ratio of the judgment is squarely applicable. The rejection of request to transfer unutilized cenvat credit owing to closure of factory, is not justified. The impugned order is set aside - Appeal allowed.
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2023 (12) TMI 519
Enhancement of installed capacity by more than 25% after 24/12/1997 - substantial expansion of more than 25% took place or not - entitlement for exemption under N/N. 33/99 dated 08/07/1999 - HELD THAT:- The Appellant has heavily relied on the Certificate issued by the Chartered Engineer vide their Report dated 25/06/2004 - the Commissioner (Appeals) has considered the Chartered Engineer Certificate and all the factual details in a detailed manner and has held that it appears that the Appellant has intentionally excluded this capacity from being considered for inclusion in the installed capacity of the factory in the pre-increase stage, and concealed material information from the Department. Consequently, considering this factor, the resultant increase in installed capacity after the expansion ( increase ) was found to be mere Four percent (4%), which is not sufficient. There are no necessity to interfere with the detailed findings and the Order passed by the Commissioner (Appeals), wherein he has considered all the factual details and Chartered Engineer s Certificate and the statutory provisions. Appeal filed by appellant dismissed.
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CST, VAT & Sales Tax
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2023 (12) TMI 518
Classification of goods - rate of tax - mobile phone chargers sold along with mobile phone in a composite pack - it was held by High Court that question answered in favour of the assessee and against the Revenue holding that definition contained in the Notification issued under the KVAT Act includes the Charger which is sold along with the mobile phone in one set and accordingly taxable at 5%. HELD THAT:- No case for interference is made out in exercise of our jurisdiction under Article 136 of the Constitution of India. The Special Leave Petitions are, accordingly, dismissed.
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Indian Laws
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2023 (12) TMI 517
Dishonour of Cheque - scope of section 138 of NI Act - vicarious liability on petitioner or not - whether the petitioner herein would come within the ambit of Section 138 of the Act and be impleaded as an accused in the complaint before the learned MM? - HELD THAT:- As per Section 138 of the Act, if the drawer of the cheque fails to make the payment on receipt of the legal notice, he is liable to be prosecuted under Section 138 of the Act. In the present proceedings, admittedly, the impugned cheque has not been issued/ drawn by the petitioner and it has been issued by her brother from his bank account wherein the petitioner is not an account holder. As such, in view of the provisions of Section 138 of the Act, the petitioner, under the present circumstances, cannot be held liable for something not concerning her. Further, though the petitioner, along with her brother, is a Director, shareholder and authorised representative of an entity, namely, A.R. Restaurant India Pvt. Ltd., however, the respondent has not filed any complaint against the said entity. In view thereof, the petitioner has hardly any role to play qua the cheque involved in the present dispute. Thus, the petitioner ought not to have been made an accused in the complaint by the respondent. More so, whence no vicarious liability can be fastened upon the petitioner. It is trite law that penal provisions should be construed strictly and the emphasis is on the words, such person‟ which relates to the person, who has drawn the cheque in favour of the payee. The complaint is quashed - petition allowed.
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