TMI Tax Updates - e-Newsletter
December 7, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Securities / SEBI
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Levy of penalty u/s 129(3) - detention of goods - E-way bill yet to expire - Change of vehicle (truck) in between - e-way bill in respect of the goods transported was yet to expire when, the new vehicle had been detained. The explanation given by the appellant that, the driver of the old vehicle did not know the law and therefore did not comply with the same and did not inform the appellant about the same, should have been evaluated, in the facts and circumstances of the present case - Matter restored back - HC
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GST:
Initiation of recovery proceedings of Tax u/s 62 of the Land Revenue Act - It appears that the Petitioner has been labouring under a misconception that the Tehsildar Recoveries is not a competent authority to recover the tax amount from him by issuing writ of demand/ summon to the Petitioner as defaulter and, in default, to issue nonbailable warrant. - Recovery proceedings to continue - HC
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GST:
Determination of Tax / GST - Validity of order passed u/s 75(4) - This is the problem the assessees throughout India are facing, i.e. when it is uploaded as “Yes, it shows as “No” in the downloaded printout. The specific request made by the petitioner in the reply by way of prayer was, to provide opportunity of personal hearing, in the event of passing any adverse order against the petitioner. - Matter restored back - HC
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GST:
Rectification of mistake in GSTR-1 return - Details of export supplies are also to be furnished in Form GSTR-1 - the time of revising the Form GSTR-1 got expired on 31.03.2019 and the petitioner had approached GST Help Desk. Without making correction in Form GSTR-1, the petitioner could not get refund under the Central GST Act, 2017. - HC
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GST:
Benefit of exemption - Supply of Services by RWA - Whether tax would be charged over and above Rs. 7,500/- or the entire amount collected from members is exigible to tax? - There is no merit in contention that tax is payable only on the differential amount - Tax is payable on full amount including sinking fund and reimbursement of electricity charges for common area - AAR
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Income Tax:
Exemption from specified income U/s 10(46) – ‘Godavari River Management Board, Hyderabad’ notified - Notification
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Income Tax:
Accrual of income u/s 2(24) - Scope of Amendment to Section 2(24) by the insertion of sub-cause (xviii) - taxability of incentives given by the Government - the amendment to Section 2(24) by the insertion of sub-cause (xviii) of the Finance Act, 2015, is a perfect example of a legislative endeavour to align the definition of “income” with the evolving economic landscapes and judicial precedent of it being an inclusive and elastic term. - HC
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Income Tax:
Offence u/s 276CC - petitioner failed to file his return of income u/s 139 - as to whether there was wilfulness in not filing the returns on time and not paying the tax on time is only a matter of fact, which can be ascertained only through appreciation of evidence before the trial court - the respondent rightly initiated prosecution against the petitioner - HC
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Income Tax:
Capital gain - real owner of property - Addition in the hands of AOP or members of AOP - once the share of the respective member is allotted by the AOP then the AOP cease to be the owner of the property in question from the year 1999 with respect to the shares which were allotted by issuing the allotment letter. - HC
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Income Tax:
Condonation of delay of one day in filing the income tax return - Power of Principal Commissioner/the Principal Chief Commissioner of Income Tax to condone the delay in filing return, on consideration given to the application filed by an assessee for not filing return on time - PCIT directed to pass the fresh order in view of the CBDT circular - HC
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Income Tax:
Revision of ITR - All period of limitations has been over - ultimately justice has to be rendered as nobody's income has to be taxed twice. Only re-course available in this case is by filing the revised Income Tax Returns, which is available under Section 139 (5) of the Income Tax Act, 1961. However the petitioner has not chosen to file the same in time. He has to file the revised returns instead, he had filed the application for rectification before the second respondent, revision petition before the first respondent and two writ petitions before this Court. Because of the wrong guidance and ill advise, the petitioner should not be penalised. - Permission granted to file revised return - HC
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Income Tax:
Denial of natural justice - Assessee to be reheard when there is change of AO - it is evidently clear that after the petitioner filed reply dated 22.07.2022 to the clarification sought for by the respondent finally vide letter dated 19.07.2022, the petitioner has not been afforded with any opportunity of personal hearing and in these circumstances, the impugned order came to be passed, which would per se prove that the order has been passed in clear violation of principles of natural justice. - HC
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Income Tax:
Validity of reassessment proceedings - New regime u/s 148A - The impugned notice dated 30.03.2021 ought to have been decided in accordance with the new provisions with effect from 01.04.2021 in terms of decision of Ashish Agarwal [2022 (5) TMI 240 - SUPREME COURT] as it has been admittedly served on the petitioner only on 07.04.2021 in terms of annexure to Section 142(1) notice dated 16.08.2021. - HC
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Income Tax:
Approval u/s 80G - CSR activity - Commerical objective or not - the assessee earned income only from donations, sale of scraps, and sale of finished goods and no such service was rendered to any entity. In any case, it is to be noted that such a service even if it is rendered by the assessee, the same will only be for the preservation of environment and thus is a charitable activity. It is evident from the record that no other objection was raised by the learned CIT(E) while denying the approval u/s 80G of the Act to the assessee. - approval u/s 80G directed to be allowed - AT
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Income Tax:
Penalty u/s. 271D - receipt of cash in relation to transfer of immovable property - The objective of the amendment proposed in 269SS of the Act is to curb generation of black money. In the instant case the fact is that cash received by the assessee has been deposited by the assessee into the bank account, hence does not attract the provisions of section 269SS - No penalty - AT
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Income Tax:
Income taxable in India - Taxability of the receipts as “Royalty" - telecom services comprising of interconnectivity services - Once the situs is outside India, then in order to determine whether the payments made by a resident of India to a non resident involves element of income is to be examined u/s 9 and in the present case, the Assessing Officer has examined the applicability of section 9(1) (vi) & 9(1)(vii) i.e. the payments involve royalty as well as fee for technical services. - Revenue appeal dismissed - AT
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Income Tax:
Nature of expenses - annual licence fee - Capital or revenue in nature - It was the primary duty of the assessee to establish whether the expenditure incurred was not enduring benefit and it was recurring expenditure with credible evidence. But the assessee has failed to do so by merely submitting the copy of agreements, TDS certificate and benefit received. The assessee is also not eligible for claim of deduction u/s. 35(1)(iv) of the Act since it has not fulfilled the conditions as specified in the section. - Not allowed as Revenue expenditure - However, depreciation to be allowed - AT
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Income Tax:
Revision u/s 263 - nature/scope of offshore services were not examined - the relief under the provisions of tax treaty has been granted to the Appellant without inquiring into the nature and scope of offshore services. AO has also failed to make necessary enquiry/verification regarding the income attributable to the Project offices in India. In our view, the CIT had jurisdiction to exercise power of revision u/s 263 - AT
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Customs:
Recovery of customs duty / dues - Perior over secured creditors - Validity of order of attachment - Admittedly the bank had executed mortgage of deposit of title deeds on 31.07.1997, which is prior to the attachment of the Customs Department which was passed on 01.11.2004. Therefore, financial institution is having 1st charge as secured creditor than the crown debt. Hence, the impugned attachment cannot sustain the scrutiny of law. - HC
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Customs:
Seeking release of goods - goods imported freely or not - Second hand Multifunction Print and copying machines - In the Notification No.5/2015-2020, dated 07.05.2019, only two clauses are available viz., (a) and (b), but, in the case of Foreign Trade Policy 2023, there are four clauses under Sl.No.I. This Court is of the considered view that as per Foreign Trade Policy, 2023, the petitioners' goods would not fall under the category I(b), but it falls under the category I(d) which indicates that other than goods mentioned in I(a), I(b), I(c), all other second-hand capital goods can be imported freely without any restriction. - Goods to be released provisionally - HC
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Customs:
Jurisdiction of Customs authorities - Claim of benefit of AIFTA - fraudulently obtaining Country of Origin certificate by the supplier - The suppression of facts is evident - When AIFTA Article 24 is not part of State law and Indian law making body has not recognised it for its implementation by excluding it from statutory law and rules, the proceedings taken out against the petitioner under the substantive provision of Customs Act, cannot become bad or stand illegal on their count. - HC
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Customs:
Revocation of CB license - the importer had violated the conditions prescribed in the FTP by import of cashew kernels below the threshold MIP, and the appellants had no role in the said violations of MIP. - The appellants as a Customs Broker associated with such imports may be responsible for the omission and commission which had led to import of prohibited goods in violation of the Customs Act, 1962 read with relevant Rules and Regulations - there cannot be a case for taking action against violations of CBLR - AT
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Customs:
Quantum of penalty u/s 114 of CA - Power of Commissioner (Appeals) to reduce the penalty - It is not the case that penalties imposed under the provisions is a mandatory penalty that needs to be reduced. Commissioner (Appeals) in exercise of discretion have reduced the penalties imposed as indicated in his order. Nothing has been stated in the appeal to show that the discretion as exercised was in a malafide manner. - AT
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Customs:
Confiscation of goods - Smuggling - foreign origin Betel Nuts - Impugned goods namely betel nuts are not specified under Section 123 of the Customs Act, 1962 and the burden to prove the smuggled nature of the same is on the Custom Authorities. - Cancellation of registration under GST may be for violation of the provisions of that Act, and non existence of consignor etc., at specified address do not establish the case of the revenue for holding the goods to be of foreign origin and smuggled into India. - Authorities failed to discharge such burden - Order of confiscation and penalty set aside - AT
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Customs:
Misue of high positions of “Commissioner” - Provisional release of seized goods - It seems that the Additional Commissioner, while passing this order has not acted as quasi judicial authority but an agent of investigating team of DRI officers and have instead of implementing the rule of law has decided to implement the will of the investigating authorities. Such an approach or interference in quasi judicial functioning by the investigating authorities is totally uncalled for and is condemned. - AT
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Customs:
Valuation and assessment of imported goods - The revenue has not doubted the importers invoice submitted at the time of assessment. No re-valuation of the goods imported can be directed in law without first rejecting the transaction value. - No orders as warranted in terms of Section 17(5) were issued by the department in the present matter. Moreover, no show cause notice was also issued to the appellant. - Revenue appeal dismissed - AT
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Indian Laws:
Dishonour of Cheque - Vicarious liability - petitioner is an Independent Non-Executive Director - - the petitioner was appointed as Additional Director and resigned as Director from the accused no. 1 and was one of the Director when the cheque in question was issued, the petitioner cannot be absolved from vicarious liability arising out of cheque in question by pleading that he was not a party to the execution of Inter Corporate Deposit Agreement, Memorandum of Settlement, and the cheque in question was not issued under his signature - Proceedings to continue - HC
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Indian Laws:
Dishonour of Cheque - challenge to reversal and acquittal of the accused - The presumption of law pursuant to the provisions under Section 139 of the Negotiable Instruments Act, 1881, would not release the prosecution from burden of proving the fact that the relevant point of time there existed a legally enforceable debt as against the accused persons - the appellant had failed in discharging his such burden - HC
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SEBI:
Failure of SEBI to provide documents to the appellant being minority shareholders - SEBI from 23 October 2023 has not complied our order directing that the documents be furnished to the petitioners. As pointed out on behalf of the petitioners, SEBI has resorted to all possible efforts, not to comply with the order dated 23 October, 2023. - Moreover, not providing such documents, merely on the ground of the subsequent development that the settlement orders now stands revoked, would completely be an untenable proposition and contrary to our orders - Directions issued - HC
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Service Tax:
Refund of service tax paid on the input services - Export of services - If availment or utilization of the credit is not in conformity with the CENVAT statute, then Rule 14 ibid provides that such irregularly availed or utilized CENVAT credit can be recovered from the assessee and for effecting such recovery, the provisions of Section 11A of the Central Excise Act, 1944 or Section 73 of the Finance Act, 1994 shall apply mutantismutandis - Refund cannot be denied under rule 5 - AT
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Service Tax:
CENVAT Credit - input service - there is no justification for holding that the direct shop at Kolkata from where the bikes were finally sold by the appellant is not the place of removal as per Rule 2 (qa) of the CENVAT Credit Rules, 2004 - the expenses incurred on rent, repair and maintenance of the direct shop cannot be excluded from the assessable value for the payment of Central Excise Duty and for the same reason the service tax paid in respect of these services received at depot cannot be denied. - credit allowed - AT
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Service Tax:
Nature of transaction - Sale of software or service - The software imported by the appellant was customized according to the need of the individual DCS, supplied the same along with hardware being a condition of the of sale of said DCS. The said software cannot be used by anybody else other than the customer to whom the same are supplied along with the hardware. - It should be considered as ‘excisable goods’ and not as ‘service’, precisely, ITSS. - AT
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Central Excise:
Restoration of appeal - non payment of necessary pre-deposit - The question of law must be answered in favour of the Revenue that the Tribunal had no jurisdiction and would have become functus-officio once the amounts had never been deposited inspite of the directions in the SLPs - HC
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VAT:
Deemed sale - transfer of right to use the cranes - The work order/contract clearly indicates the intention of parties that the custody and effective control of the cranes was to remain with Respondent. In these circumstances, it would be incorrect to contend that there was a transfer of right to use the cranes. - HC
Articles
Notifications
Income Tax-
102/2023 - dated
5-12-2023
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IT
Exemption from specified income U/s 10(46) – ‘Godavari River Management Board, Hyderabad’ notified
SEZ-
S.O. 5166 (E) - dated
4-12-2023
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SEZ
De-notification of entire area of SE for Electronic Hardware and Software including Information Technology Enabled Services SEZ at Sriperumbudur, Kanchipuram District, Chennai, in the State of Tamil Nadu; - Central Government rescinds the Notification No. S.O. 2118(E) dated 11th December, 2007
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S.O. 5165(E) - dated
4-12-2023
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SEZ
De-notification of entire area of SEZ for Information Technology and Information Technology Enabled Services at Sy. No, 53/ Paiki/Part, Gachibowli Village, Serilingampally, Mandai, Ranga Reddy District - Central Government rescinds the Notification No. S.O. 3113 (E) dated 15th September, 2017
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S.O. 5164 (E) - dated
4-12-2023
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SEZ
Central Government de-notifies an area of 44.9231 hectares, thereby making resultant area as 21.5819 hectares at Jagir Ammapalayam Village, Salem Taluk, Salem District in the State of Tamil Nadu
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2023 (12) TMI 239
Valuation - reimbursement of expenses - includibility - Rule 5 of the Service Tax (Determination of Value) Rules, 2006 - HELD THAT:- The issues which arise in these appeals are covered by the judgment of this Court in UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] where it was held that only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax. The Civil Appeals are dismissed.
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2023 (12) TMI 238
Refund of amount deposited by the petitioner during the course of inspection/search conducted at his premises - seeking that the order authorizing the search/inspection under Section 67 the Central Goods and Services Tax, 2017 read with Rule 139 (1) of the Central Goods and Services Tax Rules, 2017 be set aside - legality of search of business premises and seizure. The petitioner impugns the proceedings initiated under Section 67 of the CGST Act, inter alia, on the ground that the authorization for search is vague and imprecise. Whether the search conducted in the premises of the petitioner under Section 67 of the CGST Act was illegal? - HELD THAT:- In the present case, the proper officer has issued the authorization in Form INS-01 setting out all the reasons as stated in Section 67(1)(a) of the CGST Act and all the reasons (except the taxpayer claiming refund in excess of his entitlement) as set out in Clause A for issuing such authorization. Thus, there may be some merit in the grievance of the taxpayer that the proper officer has not set out any specific reason but has merely reproduced all reasons on the basis of which an authorization under Section 67(1)(a) of the CGST Act could be issued. However, it is seen that the reasons as set out are connected - The respondents have not referred to any specific reason for initiating the proceedings under Section 67 of the CGST Act, in their counter affidavit, except to state that the reasons to believe were duly recorded on the file prior to conducting the search and the inspection. Thus, it cannot be accepted that the authorization for conducting search or inspection under Section 67 of the CGST Act is illegal for want of reasons to believe that the grounds for conducting the said search as set out in Section 67(1)(a) of the CGST Act, exist. Whether the petitioner is entitled to reversal of the ITC that was debited from his ECL? - HELD THAT:- Undisputedly, a taxpayer has an option to voluntarily pay tax on a self-ascertainment basis prior to issuance of a show cause notice. In terms of Section 73(5) of the CGST Act, a person chargeable to tax may before service of a notice under Section 73(1) of the CGST Act or prior to the statement under Section 73(3) of the CGST Act, pay an amount of tax along with interest payable thereon under Section 50 of the CGST Act and inform the proper officer of such payment in writing - the provisions of Sub-sections (5) and (6) of Section 73 of the CGST Act are for the benefit of a taxpayer who voluntarily pays tax on his own ascertainment prior to issuance of any show cause notice and thus, absolves himself of liability to pay penalty in respect of the tax paid. Sub-section (5) of Section 74 of the CGST Act is in somewhat similar terms except that the taxpayer is also required to pay penalty equivalent to 15% along with tax deposited on the basis of his own ascertainment. The provisions of Sub-sections 73(5) and 74(5) of the CGST Act are not provisions under which the Department can compel a taxpayer to deposit tax - The respondents are directed to reverse the ITC of ₹18,72,000/- deposited by the petitioner on 08.10.2022 and forthwith credit the same in his ECL. Petition disposed off.
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2023 (12) TMI 237
Doctrine of merger - Refund of IGST - zero rated supply - export of services - reverse charge mechanism - adjustment of interest amount - time limitation. Adjudicating Authority had allowed the petitioner s claim for the refund of IGST of ₹24,33,20,306/- but, had adjusted an amount of ₹5,08,03,767/- on account of interest liability. Whether, in the given facts, the stipulated time for filing the appeal is required to be reckoned from 24.09.2019? - HELD THAT:- The said question is required to be answered in the negative - It cannot be accepted that the appeal filed by the Revenue against the Order-in-Original dated 24.10.2018 was within the period of limitation for several reasons. First, it is found difficult to accept the Revenue s explanation regarding delayed communication of the Order-in-Original dated 24.10.2018. As noted above, there is no explanation as to how the concerned officer became aware of the Order-in-Original dated 08.08.2019. It is also relevant to note that although, the Revenue had placed on record orders seeking certified copies of the Orders-in-Original dated 24.10.2018 and 08.08.2019 from respondent no. 2, there is no communication, issued by the Principal Commissioner (respondent no. 1), either protesting or calling for an explanation as to why the Orders-in-Original dated 24.10.2018 and 08.08.2019 were not communicated to the Commissioner by respondent no. 2. The petitioner had filed an appeal against the said Order-in-Original dated 24.10.2018. The Revenue had notice of the said appeal but no one had appeared on behalf of the Revenue at the hearing held by the Appellate Authority on 29.03.2019. There is no allegation that the Order-in-Appeal dated 30.04.2019 disposing of the appeal was passed without affording the Revenue any opportunity to contest the same. The Revenue had taken no steps to challenge the Order-in-Appeal dated 30.04.2019 passed by the Appellate Authority. Whether the order-in-original dated 24.10.2018 merges with the appellate order? - HELD THAT:- It is apparent that the Appellate Authority had upheld the admissibility of the petitioner s claim for refund of IGST as well as the order adjusting the interest on delayed payment of IGST on inputs and IGST on exports. The matter ought to have concluded at that. However, the matter was remanded to the Adjudicating Authority. The Appellate Authority has found no fault with the admissibility of the petitioner s claim for refund, the matter was remanded to the Adjudicating Authority for a limited purpose and the proceedings before the Adjudicating Authority on remand were confined to the examination of the provisions of law under which any adjustment on account of any unadjudicated interest liability was permissible - there is no doubt that the Order-in-Original dated 24.10.2018 stood merged with the Order-in-Appeal dated 30.04.2019. The Revenue s contention that the matter was set at large in view of the remand order is unmerited. Consequently, the Revenue appeal in respect of matter determined in the Order-in-Appeal dated 30.04.2019 was not maintainable. Whether adjustment of interest liability is permissible? - HELD THAT:- In case there are contentious issues, which require to be adjudicated, a proper notice is required to be issued to the taxpayer and the quantum of interest payable is required to be adjudicated. In the present case, the adjudicating officer has adjudicated the interest payable and there is no dispute as to the material facts on the basis of which said interest is calculated. In these circumstances, the principles of natural justice are satisfied and there was no requirement for the Adjudicating Authority to issue any further notice. The petitioner has also availed of remedy of an appeal under Section 107 of the CGST Act - there are no infirmity with the process of adjusting interest as payable on the admitted tax against the amount refundable to a tax payer. Whether the petitioner is liable to pay interest as determined by adjudicating authority - HELD THAT:- The assumption that since the transaction of imports and exports is revenue neutral, the same would absolve the petitioner from payment of GST or any interest thereon is contrary to law. It is not open for the assessee to plead that since the supply imported was required to be exported, the petitioner was absolved from the statutory levy under the IGST Act. Refund of unutilized ITC or GST is available only in terms of the relevant statutory provisions. A claim for refund of tax collected in accordance with law is a statutory right and is circumscribed by the statutory provisions. There is little scope for imputing principles of equity in matters of tax, which are covered by the statutory provisions. The interest liability on delayed payment of IGST is the statutory consequence of the assessee s claim that the exports made by it were on payment of IGST. There is no dispute that the IGST on the exports during the months of July, 2017 to March, 2018 was liable to be paid on various dates in August, 2017 to April, 2018 as mentioned in the tabular statement as set out by the Adjudicating Authority in the Order-in-Original dated 24.10.2018 - It is evident that the petitioner has been mulcted with the huge interest liability on delayed payment of IGST, which in one sense is unwarranted, however, that is the consequence of the course adopted by the petitioner. Denial of refund in entirety an account of amendment in return/invoices is impermissible? - HELD THAT:- The revenue s contention that any claim for refund of ITC would be barred is also not persuasive. If the refund of IGST on exports was rejected on the ground that petitioner could not amend the invoices, it would follow that its claim would be required to be considered for the ITC utilised to pay such IGST. It is difficult to accept the Revenue s contention that the petitioner had forfeited its right to claim refund on account of an attempt to amend its option as available under Section 16(3) of the IGST Act, as in force at the material time - It is not necessary for this Court to examine the aforesaid contentions in any further detail as the same relate to the appeal filed by the Revenue, which as stated above, was beyond the period of limitation. It is directed that the refund sanctioned by the Adjudicating Authority in terms of the Order-in-Original dated 08.08.2019 be disbursed to the petitioner along with applicable interest - petitioner s claim that the adjustment of interest amounting to ₹5,08,03,767/- is illegal is rejected - impugned Order-in- Appeal dated 14.10.2020, to the extent it denies the petitioner s claim for refund in entirety is set aside - petition disposed off.
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2023 (12) TMI 236
Levy of penalty u/s 129 (3) of the West Bengal Goods and Services Tax Act, 2017 - detention of goods - E-way bill yet to expire - non-speaking impugned order - violation of principles of natural justice - HELD THAT:- In the facts of the present case, the appellant had suffered a notice under Section 129 (1) of the Act of 2017 to which, there was a response dated June 22, 2022. The notice in Form GST Mov - 07 being a notice under Section 129 (3) of the Act of 2017, was undated. The response dated June 22, 2022, thereto, has referred to a subject of GST Mov - 2 dated June 19, 2022. However, GST Mov 2 dated June 19, 2022 is not an order of detention. The order of detention is Form GST Mov -07 which has been undated in its soft version and a date of June 26, 2022 written on the left hand top corner on the hard copy thereof served on the driver of the vehicle. Sub-Section (3) of Section 129 of the Act of 2017 has a requirement of issuance of notice with sub-Section (4) thereof, mandating the Adjudicating Authority not to pass an order of penalty without affording an opportunity of hearing to the defaulter. Compliance of principles of natural justice is inherent in any adjudicating proceedings unless specifically ousted by a statute. In the present case, Section 129 (3) and (4) of the Act of 2017 require compliance with the provisions of principles of natural justice prior to pronouncement of an order of penalty. Requirement of compliance with the principles of natural justice before passing an order of penalty ipso facto means that, the Adjudicating Authority has the jurisdiction to evaluate the merits of the defence taken and speak thereon. The mechanism provided under Section 129 of the Act of 2017 allows the Adjudicating Authority to accept the explanation given by a defaulter in given facts and circumstances and not to impose a penalty. By virtue of the authoritative pronouncement of the Supreme Court in Shriram Mutual Fund and Another [ 2006 (5) TMI 191 - SUPREME COURT ], Guljag Industries [ 2007 (8) TMI 344 - SUPREME COURT ] and Saw Pipes Limited [ 2023 (4) TMI 761 - SUPREME COURT ] the department has been relieved of the burden of proof of mens rea or motive in respect of a statute imposing penalty as a civil obligation for violating a tax regime. However, absence of requirement to establish mens rea by the department cannot be equated with an automatic imposition of penalty under the scheme of Section 129 of the Act of 2017 in view of the provisions of Section 129 (3) and (4) thereof. In the facts of the present case, e-way bill in respect of the goods transported was yet to expire when, the new vehicle had been detained. The explanation given by the appellant that, the driver of the old vehicle did not know the law and therefore did not comply with the same and did not inform the appellant about the same, should have been evaluated, in the facts and circumstances of the present case, by the Adjudicating Authority in light of the e-way bill being valid till then in respect of the first vehicle - Appellate Authority had the jurisdiction and in fact was obliged to deal with the grounds of appeal pressed at the hearing of the appeal. Respondent has not contended that, the defence canvassed in the show cause notice and the grounds pressed in the appeal were not canvassed or pressed by the appellant at the time of hearing before the Adjudicating or the Appellate Authority. The impugned order of the Adjudicating Authority as upheld by the Appellate Authority to have violated the principles of natural justice, inasmuch as it has not spoken on the defence taken - the impugned judgement and order of the learned Single Judge is set aside. Application disposed off.
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2023 (12) TMI 235
Initiation of recovery proceedings - issuance of notice under Section 62 of the Land Revenue Act - Petitioner had been asked to appear before the Tehsildar on 4th of October, 2023 to deposit the default amount along with two percent of recovery charges. HELD THAT:- Since, the State Taxes (Recovery) Officer had taken up the matter with the District Collector, Srinagar for recovery and, it appears that he had assigned the matter to Special Tehsildar, Recoveries, Srinagar for further proceedings in the matter. Rule 155 of the Goods and Services Tax Rules provides as to how the Land Revenue Authority has to recover the amount. It provides that where an amount is to be recovered in accordance with the provisions of clause (e) to Sub-Section (1) of Section 79 of the Goods and Services Tax Act, the Proper Officer shall send a certificate to the concerned Deputy Commissioner, vested with the power of Collector under the Jammu Kashmir Land Revenue Act, Samvat 1996, in form GST DRC-18 to recover from the person concerned, the amount specified in the certificate, as if it were an arrear of land revenue. As, the Proper Officer of the Taxes Department had moved the Deputy Commissioner, Srinagar, who is the Collector of the District in form GST DRC-18 in his communication dated 25th of March, 2023, therefore, there does not seem to be any illegality as to how the Petitioner is aggrieved of the recovery proceedings against him initiated through the office of Special Tehsildar Recoveries, Srinagar. The arrest and detention of the defaulter is provided under Section 63 of the Jammu Kashmir Land Revenue Act, authorizing the Revenue Officer, not below the rank of Tehsildar, to issue a warrant directing to arrest the defaulter and bring him before the Revenue Officer and, on such production, the Revenue Officer may cause him to be taken before the Collector or may order that he be confined to civil jail for a period not exceeding six days and then, if the arrear is still unpaid, cause him to be taken before the Collector and, for the continued default, the Collector can confine the defaulter in jail for such period not exceeding one month from the date of the order, as the Collector thinks fit. The contention of the learned Counsel for the Petitioner that the non-bailable warrant dated 19th of August, 2023 has been issued to him and has not been recalled, though applied for, seems to be an incorrect statement in view of the summons issued on 22nd of September, 2023 to the Petitioner for appearing before the Court of Special Tehsildar Recoveries, Srinagar on 4th of October, 2023. It appears that the Petitioner has been labouring under a misconception that the Tehsildar Recoveries is not a competent authority to recover the tax amount from him by issuing writ of demand/ summon to the Petitioner as defaulter and, in default, to issue nonbailable warrant. The instant Petition seems to be misconceived and, therefore, the proceedings initiated by the Respondent No.4 against the Petitioner do not call for any interference by this Court - Petition dismissed.
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2023 (12) TMI 234
Levy of penalty u/s 129 of the Central Goods and Services Tax Act, 2017 - bill of entry mentioned on the e-way bill was erroneous - HELD THAT:- Since the present petition has been pending here for over two years, we were inclined to hear the present petition. However, it is pointed out that the notice of the present petition was incorrectly accepted by the counsel and the fact that this petition was filed was not communicated to the concerned department for over two years. The learned counsel appearing for the respondents also earnestly contends that the department could not be faulted for not raising this issue at an earlier stage. The present petition cannot be entertained - it is left open for the petitioner to avail its alternative remedies including the remedy of an appeal under Section 107 of the CGST Act - petition disposed off.
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2023 (12) TMI 233
Refund of IGST - Ocean Freight Charges by the respondent - Reverse Charge Mechanism (RCM) - time limitation - HELD THAT:- Recently, this Court had passed an order in M/S. LENOVO (INDIA) PVT. LTD., REP. BY ITS AUTHORIZED SIGNATORY MR. SEIYADOU AHAMADOU VERSUS THE JOINT COMMISSIONER OF GST (APPEALS-1) O/O. THE COMMISSIONER OF GST CENTRAL EXCISE (APPEALS-I) , THE ASSISTANT COMMISSIONER OF GST AND CENTRAL EXCISE, DIVISION I, PUDUCHERRY COMMISSIONERATE, THE CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS, REP. BY ITS CHAIRMAN, UNION OF INDIA [ 2023 (11) TMI 774 - MADRAS HIGH COURT] , wherein it has been held that the fixation of limitation for making refund application is only directory in nature and the same is not mandatory. Accordingly, the limitation of 2 years, which was provided under Section 54(1) of the Goods and Services Tax Act, 2017, is directory in nature. In such case, if any reasons were provided for delay in filing the refund application, the same shall be considered and the said delay shall be condoned by the respondent. Thus, this Court is of the view that the impugned order dated 24.09.2023 is liable to be set aside - petition disposed off.
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2023 (12) TMI 232
Determination of Tax / GST - Validity of order passed u/s 75(4) - Violation of principles of natural justice - impugned order is passed without providing an opportunity of personal hearing to them and also without considering the written submissions and documents filed by the petitioner - HELD THAT:- This is the problem the assessees throughout India are facing, i.e. when it is uploaded as Yes, it shows as No in the downloaded printout. The specific request made by the petitioner in the reply by way of prayer was, to provide opportunity of personal hearing, in the event of passing any adverse order against the petitioner. Considering the provision under Section 75 (4) of the Central Goods and Services Tax Act, 2017 which mandates the respondents to provide an opportunity of personal hearing, where any adverse decision is contemplated against the assessee, irrespective of any request of personal hearing from the petitioner. Further, the petitioner has also stated in the reply filed to the show cause notice that they may be provided an opportunity of personal hearing, in the event of passing any adverse order against them. This Court is of the considered view that at any cost, the respondents ought to have afforded the opportunity of personal hearing to the petitioner considering the statement that the respondent is going to determine the turn over and should have complied the provisions of the Act strictly. Otherwise, this defect could not be rectified which would cause loss of revenue to the Department. This Court is inclined to set aside the impugned order passed by the first respondent. Accordingly, the impugned order in Assessment Order is set aside - Petition allowed.
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2023 (12) TMI 231
Seeking direction to respondents to allow the petitioner to correct the details filled in Form GSTR-1 for the month of December, 2017 - Details of export supplies are also to be furnished in Form GSTR-1 - HELD THAT:- Reference, at this stage, can be made to the judgment passed by the High Court of Madras in M/S. SUN DYE CHEM VERSUS THE ASSISTANT COMMISSIONER (ST) , THE COMMISSIONER OF STATE TAX [ 2020 (11) TMI 108 - MADRAS HIGH COURT ] wherein the Court was examining the issue with regard to grant of permission to correct the Form GSTR-1 for the periods from August, 2017 to December, 2017. In that case, an error was committed while filing the details relating to the credit. After examining Sections 37 and 38 of the Central GST Act, 2017, the writ petition was allowed by granting permission to the petitioner to re-submit Form GSTR-3B with correct distribution of credit between IGST, SGST and CGST within a period of four weeks. In the facts of the present case as well, on account of technical grounds, the application for correction of Form GSTR-1 has been dismissed by the respondent-department. Moreover, the time of revising the Form GSTR-1 got expired on 31.03.2019 and the petitioner had approached GST Help Desk. Without making correction in Form GSTR-1, the petitioner could not get refund under the Central GST Act, 2017. The petitioner(s) are permitted to re-submit the corrected Form GSTR-1 for the aforesaid period. The respondents can receive the application(s) manually and thereafter, the corrected Forms and details will be uploaded by the Department on the web portal. The directions given by this Court be carried out within a period of four weeks - Petition allowed.
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2023 (12) TMI 230
Benefit of exemption - Supply of Services by RWA - Contribution charged to a member exceeds INR 7500 per month - Benefit of Notification No. 12/2017 dated 28-6-2017 (Sl. No. 77) read with Notification No. 2/2018 dated 25-1-2018 - tax on amount charged over and above Rs. 7,500/- or the entire amount collected from members is exigible to tax? - Liability of GST on the amounts collected for corpus fund from members - CGST/ SGST on collection of common area electricity charges from the members when the same is recovered on actual basis. Whether tax would be charged over and above Rs. 7,500/- or the entire amount collected from members is exigible to tax? - HELD THAT:- The Government intends to provide the exemption only in cases where contribution received from a member per month is below the specified limit of Rs. 7500/-. In other words, where the contribution exceeds the limit, taxability of such services by RWA shall not get covered by entry number 77 of the aforesaid notification. We are, therefore, unable to accept the contention of the applicant that in the event of the monthly contribution charged to a member exceeding Rs. 7,500/- per month, tax is payable only on the differential amount. Liability of GST on the amounts collected for corpus fund from members - HELD THAT:- A sinking fund is created in order to meet future contingencies e.g., to meet the expenses for structural repairing, reconstruction work etc. RWA creates a sinking fund which serves as a backup fund for supply of specific services. A member contributes to the sinking fund with an agreed condition that the RWA will provide some specific services in future, as and when required out of the said fund - the amount collected by the applicant from its members towards sinking fund is only meant for meeting expenses for future supply of services and therefore such contribution cannot qualify as a deposit - thus it is held that the amount collected by the applicant from its members for setting up a sinking fund is an advance payment towards future supply of services and such payment comes under the definition of consideration under clause (31) of section 2 of the GST Act. The applicant is, therefore, liable to pay tax on such supply in terms of sub-section (2) of section 13 of the GST Act. It would be pertinent to mention here that we are not in agreement with the view expressed by the officer concerned from the revenue on this issue. Whether the applicant is liable to pay CGST/ SGST on collection of common area electricity charges from the members when the same is recovered on actual basis? - HELD THAT:- In the instant case, admittedly the applicant collects the electricity charges consumed for common area from its members on pro-rata basis. In course of hearing, the authorized representative of the applicant has furnished copy of one tax invoice in support of Common Area Maintenance issued to a member - electricity is being supplied bundled with supply of goods and services sourcing from a third person for the common use of its members. Thus supply of electricity forms a part of composite supply where the principal supply is the supply of common area maintenance services. The applicant is therefore liable to pay tax on collection of common area electricity charges if the services for common area maintenance fails to qualify for exemption under serial number 77 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended and as discussed earlier.
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2023 (12) TMI 229
Profiteering - Respondent had not passed on the benefit of reduction in the GST rate - non-reduction of selling price commensurately - contravention of provisions of section 171 of CGST Act - HELD THAT:- The profiteered amount is determined as Rs. 6,58,523/- as has been computed in Annexure-1 2 of the DGAP's Report dated 29.01.2021. Accordingly, the Respondent is directed to reduce his prices commensurately in terms of Rule 133 (3) (a) of the above Rules. Further, since the recipients of the benefit, as determined above are not identifiable, Respondent is directed to deposit an amount of Rs. 6,58,523/- in two equal parts of Rs. 3,29,261.50/- each in the Central Consumer Welfare Fund and the Uttar Pradesh State Consumer Welfare Fund as per the provisions of Section 171 read with Rule 133 (3) (c) of the CGST Rules 2017, along with interest payable @ 18% to be calculated from the dates on which the above amount was realized by the Respondent from his recipients till the date of its deposit. The above amount of Rs. 6,58,523/- shall be deposited, as specified above, within a period of 3 months from the date of passing of this order failing which it shall be recovered by the concerned CGST/SGST Commissioner. Penalty - HELD THAT:- The Respondent has denied the benefit of tax reduction to the customers in contravention of the provisions of Section 171 (1) of the CGST Act, 2017 and he has thus committed an offense under Section 171 (3A) of the above Act and therefore, he is liable for imposition of penalty under the provisions of the above Section. However, since the provisions of Section 171 (3A) have come into force w.e.f. 01.01.2020 whereas the period during which the violation occurred is w.e.f. 01.07.2017 to 30.06.2019, hence the penalty prescribed under the above Section cannot be imposed on Respondent No. 1 retrospectively. Accordingly, Show Cause Notice directing him to explain why the penalty prescribed under Section 171 (3A) of the above Act read with Rule 133 (3) (d) of the CGST Rules, 2017 should not be imposed on him is not required to be issued.
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Income Tax
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2023 (12) TMI 228
Estimation of income - Bogus purchases - As decided by HC [ 2023 (1) TMI 835 - GUJARAT HIGH COURT] AO has chosen not to reject the books of accounts of the assessee and had made the estimated additions of the pieces of the purchases. Both, the CIT (Appeals) and the Tribunal, have concurrently and rightly held to make the additions, which the CIT (Appeals) had done @ 12.5% of the impugned purchases, which have been reduced and restricted to 6%. HELD THAT:- In view of the dismissal [ 2023 (12) TMI 144 - SC ORDER] following the said order, this special leave petition is also stand dismissed. Pending application(s), if any, shall stand disposed of.
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2023 (12) TMI 227
Accrual of income u/s 2(24) - Scope of Amendment to Section 2(24) by the insertion of sub-cause (xviii) - incentives given by the Government - eligible unit under the ultra mega project - scheme being, Package Scheme of Incentives, 2013 effective from 1st April 2013 for a period of five years - constitutional validity of sub-clause (xviii) to Section 2(24) of the Act - whatever purpose of objective are to be treated as income, irrespective of the fact as to whether or not the same is in the nature of capital assistance and or revenue assistance? - Petitioner s argument regarding the violation of Article 14 stems from the assertion that the amendment to Section 2(24)(xviii) of the Act, which brings various subsidies under the ambit of taxable income, is discriminatory and arbitrary HELD THAT:- As held by the Apex Court in Union of India V/s. Exide Industries Limited and Anr. [ 2020 (4) TMI 792 - SUPREME COURT ] relied upon the approach of the Court in testing the constitutional validity of a provision is well settled and the fundamental concern of the Court is to inspect the existence of enacting power and once such power is found to be present, the next examination is to ascertain whether the enacted provision impinges upon any right enshrined in Part III of the Constitution. In the present case, the legislative power of the Parliament to enact sub-clause in the light of Article 245 of the Constitution is not doubted at all. Now to the next step of examination, i.e., whether the said clause contravenes any right enshrined in Part III of the Constitution, either in its form, substance or effect. It is no more res integra that the examination of the Court begins with a presumption in favour of constitutionality. This presumption is not just borne out of judicial discipline and prudence, but also out of the basic scheme of the Constitution wherein the power to legislate is the exclusive domain of the legislature/Parliament. This power is clothed with power to decide when to legislate, what to legislate and how much to legislate. Thus, to decide the timing, content and extent of legislation is a function primarily entrusted to the legislature and in exercise of judicial review, the Court starts with a basic presumption in favour of the proper exercise of such power. The time-tested principle of checks and balances does not empower the Court to question the motives or wisdom of the legislature, except in circumstances when the same is demonstrated from the enacted law. In the very nature of taxing statutes, the legislature holds the power to frame laws to plug in specific leakages. Such laws are always pin-pointed in nature and are only meant to target a specific avenue of taxability depending upon the experiences of tax evasion and tax avoidance at the ground level . The general principles of exclusion and inclusion does not apply to taxing statutes with the same vigour unless the law reeks of constitutional infirmities. No doubt, fiscal statutes must comply with the tenets of the Constitution. The imposition of tax on these subsidies under the amended provision does not constitute taking away of a benefit but rather represents a recalibration of fiscal advantages in line with broader economic and policy considerations. Profits, by their nature, are subject to fluctuations resulting from various factors, taxation being but one. Section 2(24)(xviii) of the Act is an example of this balancing act, and its imposition is a reflection of a subsidy's life cycle coming to its fiscal fruition. Petitioner's argument, is ostensibly rooted in concerns over profitability. This does not, in substance, however, provide a tenable basis to impugn the constitutional validity of the amended provision. Hence, petitioner s argument of eroded profitability due to taxation lacks constitutional merit. An extension of this logic could open floodgates of untenable demands from loss-incurring entities seeking tax exemptions to improve profitability. This could potentially create a taxing standard that is inconsistent and prone to manipulations. In Nazeria Motor Service etc. [ 1969 (8) TMI 88 - SUPREME COURT ] the Apex Court held that even on the assumption that the profits would be diminished or greatly reduced, it cannot be held that there is any infringement of Article 19(1)(g) under Part III of the Constitution of India. The chronology of events is pivotal in assessing the merits of petitioner's arguments against the constitutional validity of Section 2(24) (xviii) of the Act. When petitioner applied for the subsidy, the amendment to the Act specifically the inclusion of sub-clause (xviii) to Section 2(24), had been in effect for more than two years. Therefore, petitioner, at the time of application, was having full knowledge or ought to have had full knowledge of the tax treatment of such subsidies post-amendment. Secondly, the act of applying for a subsidy after the amendment came into force indicates an acceptance of the prevailing tax regime. It is reasonable to infer that by choosing to partake in the subsidy scheme, petitioner implicitly acknowledged and consented to the accompanying tax obligations as legislated by the amendment. Thirdly and furthermore, it is a well-settled principle that ignorance of the law is no excuse. Petitioner cannot claim ignorance of the amendment or its implications. The legislative change was not done surreptitiously but was the result of a transparent legal process, providing ample opportunity for all stakeholders to acquaint themselves with the new provisions. A retrospective annulment of this provision would cause a state of chaotic disarray. Individuals and entities that have availed of subsidies and concessions and complied with the tax obligations thereof stand to face an untenable situation. They have acted in good faith under the existing legislative policy, and to dismantle this retrospectively would be to penalize compliance and create an environment of uncertainty and unpredictability in tax matters. Moreover, such a judicial step would likely instigate a flood of claims and litigations for refund of taxes paid under the provision, straining the administrative machinery and judicial resources. This would not only disrupt the revenue stream but also place an undue burden on the exchequer. Hence we are not inclined to strike down Section 2(24)(xviii). Amendment to Section 2(24) by the insertion of sub-cause (xviii) of the Finance Act, 2015, is a perfect example of a legislative endeavour to align the definition of income with the evolving economic landscapes and judicial precedent of it being an inclusive and elastic term. The submissions of petitioner though appear to be of fiscal concern were, in our view, more an argument of diminished profits and a narrow interpretation of income which the Apex Court has time and again expanded. The submissions of petitioner fall short of appreciating the overarching legislative intent to foster a comprehensive and equitable taxation regime. The amendment to Section 2(24) by insertion of the impugned sub-clause that includes various subsidies and concessions only indicates the well established jurisprudential path ensuring that the income tax laws remain attuned to the economic realities and continue to serve as a vital cog in the nation's fiscal machinery. As submitted by ASG, it is the duty of the legislature to ensure that taxation policy reflects a balance between incentivizing economic activity and ensuring the equitable distribution of fiscal resources. Petition dismissed.
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2023 (12) TMI 226
Validity of assessment order u/s 144C - non adherence to DRP directions - Whether assessment in accordance with the prescribed procedure? - AO mandation to pass the final order including the view expressed by the DRP - HELD THAT:- This Court is in agreement with the view expressed in Sulzer Pumps [ 2021 (12) TMI 891 - BOMBAY HIGH COURT ] decision. Once the objections have been filed by the assessee against a draft assessment order within the time limit prescribed under Section 144C(2)(b), the rest of the procedure should be followed as prescribed and the final assessment order ought to be passed by the Assessing Officer in accordance with the directions issued by the DRP. This Court is further of the view that no prejudice will be caused to the Respondent-Department if the present petition is allowed and the impugned assessment order is set aside as Respondent-Department would be well within its rights to pass a fresh assessment order post the receipt of direction from the Respondent No. 3-DRP. Accordingly the impugned assessment order, the computation sheet as well as all the subsequent notices are set aside and the writ petition is allowed.
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2023 (12) TMI 225
Offence u/s 276CC - petitioner failed to file his return of income for the assessment year 2013-2014 as required under Section 139 - only contention raised by the petitioner is that the search conducted was premature since the tax due was only on 30.09.2013 - HELD THAT:- Search was conducted on 03.09.2013. Though the search was conducted on 03.09.2013, it is not an impediment for the petitioner to file his return of income on or before 30.09.2013. Filing return of income is mandatory as contemplated u/s 139(1) - mere search conducted by the authority concerned would not preclude the petitioner to file his return of income. Further, it is mandatory in nature and further expanded that if the returns are not filed within the stipulated time, then a presumption as to the culpable mental state can be drawn u/s 278E - The non filing of return of income within the time as stipulated under Section 139(1) and 153 of Act, offence stands complete and there can be a presumption for existence of mens rea and it is for the accused to prove the contrary beyond reasonable doubt, only before the trial court during the trial. Therefore, the issue as to whether there was wilfulness in not filing the returns on time and not paying the tax on time is only a matter of fact, which can be ascertained only through appreciation of evidence before the trial court. Therefore, these grounds cannot be considered by this Court, that too under Section 482 of Cr.P.C since onus is upon the petitioner to rebut the presumption and that can be done only before the trial court during the trial by letting in evidence. Petitioner vehemently contended that once notice issued u/s 153A of the Act, it overrides all other provisions such as Sections 139, 147, 148, 149, 151 and 153 of the Act - If a person wilfully fails to furnish in due time, the return of income which he is required to furnish under sub section (1) of Section 139 or by notice given by sub section (1) of Section 142 or Section 148 shall be punishable. Therefore, the search under Section 132 and subsequent notice under Section 153A are completely different from filing the return of income as contemplated under Section 139(1) of the Act. At any point of time, a search can be made under Section 132 of the Act if any incriminating material to show that the assessee evaded certain income in his return of income, notice under Section 153 will be issued to file his return of income for the concealed income. It is true as per search u/s 132 or requisition under Section 132A, the assessment officer assessed or re-assessed the total income in respect of each assessment year falling within six assessment years, taking into consideration of the incriminating materials collected during the search and other material pending would abate. It is nothing to do with the mandatory provision u/s 139(1) of the Act to file his return of income. Admittedly, in the case on hand, the petitioner failed to file his return of income on or before 30.09.2013. Further, there was not even an attempt by the petitioner to file his return of income till 29.01.2014 as contemplated under Section 139 sub clause (4) of the Act till the notice under Section 153A. That apart, the petitioner also failed to file his return of income even after receipt of the notice under Section 153A of the Act within the period of 30 days from the date of receipt of the notice under Section 153A of the Act. Therefore, the respondent rightly initiated prosecution against the petitioner and this Court finds no grounds to quash the same. Accordingly, this criminal original petition is dismissed. Consequently, connected miscellaneous petition is closed.
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2023 (12) TMI 224
Estimation of income - unexplained purchases - ITAT restricted the disallowance at the rate of 6% - HELD THAT:- This Court in case of Pankaj K. Choudhary [ 2023 (3) TMI 1402 - GUJARAT HIGH COURT] when the Tribunal has thought it fit to reduce the disallowance at 6% from 12.5%, the Tribunal had before it the facts which were duly analysed by it. No interference is called for in the said conclusion and findings of the Tribunal in the present appeal by this court. No substantial questions of law can be said to have arisen in the facts of the present case.
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2023 (12) TMI 223
Capital gain - real owner of property - Addition in the hands of AOP or members of AOP - whether the respondent-assessee members of the AOP were taxed in their respective hands and not the respondent- AOP with regard to the sale of property in question in the year 2007 relevant to the assessment year 2008-09 ? - Tribunal upheld the order passed by the CIT (A), holding that the members of the AOP were the real owners of the property in question and therefore, the income was liable to be taxed in the members hands HELD THAT:- As the facts are clear in as much as though it is true that the respondent-AOP purchased the property in auction from the Income Tax Department in the year 1994 and the conveyance deed was executed in the year 2005 but in the meanwhile the respondent-assessee allotted the share in the property in question to its members for the contribution made by it in the year 1999. This fact is not disputed by the appellant-Revenue and accordingly, the members of the AOP became the owner of the property in question qua their respective shares in which the allotment was done by the AOP. Therefore it cannot be said that the AOP continued to be the owner of the property as Association of Person is formed by the members for their joint interest in the property and accordingly, once the share of the respective member is allotted by the AOP then the AOP cease to be the owner of the property in question from the year 1999 with respect to the shares which were allotted by issuing the allotment letter. No substantial question of law arising out of the impugned order passed by the Tribunal. No substantial question of law arises.
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2023 (12) TMI 222
Bogus LTCG - Penny stock transaction - proceedings initiated against the petitioner only based on the statement of one Naresh Jain - As argued respondent had not provided any opportunity to the petitioner to cross-examine the said Naresh Jain - as contented the oral statement of Naresh Jain was not relied upon by the respondent, however, only the documents, which were obtained based on the statement of Naresh Jain was relied upon - HELD THAT:- As the respondent had only relied upon the documents, which were obtained based on the statement of Naresh Jain. Hence, this Court is of the view that the petitioner is entitled to get a copy of those documents, which were obtained from various sources based on the statement of Naresh Jain, since furnishing the said documents will enable the petitioner to file her detailed reply. In the present case, the learned Senior Standing counsel for the respondent had fairly submitted that though the respondent had relied upon very many documents to substantiate the case against the petitioner, some of the documents were not provided to the petitioner and the same will be provided at the earliest. Hence, after receipt of the said documents, the petitioner shall file her detailed reply. If no reply is filed, there is no doubt that it will go against the petitioner.
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2023 (12) TMI 221
Condonation of delay of one day in filing the income tax return - Power of Principal Commissioner/the Principal Chief Commissioner of Income Tax to condone the delay in filing return, on consideration given to the application filed by an assessee for not filing return on time - HELD THAT:- On a perusal of Section 119(2)(b) of the Act, it is evident that the said Section only empowers the Board to admit an application or claim for exemption, deduction, refund or any other relief under the Act, after the expiry of the period specified by or under the Act for making such application or claim and deal with the same on merits, in accordance with law. The Board has delegated such power to the Principal Chief Commissioner of Income Tax/the Principal Commissioner of Income Tax vide its circular No. 9/2015 dated 9.6.2015. A Division Bench of this Court had an occasion to consider the provisions of Section 119(2)(b) of the Act and the said circular in the case of Daisy [ 2023 (10) TMI 1323 - KERALA HIGH COURT] wherein the Court has been of the opinion that the Circular empowers the Principal Chief Commissioner/the Principal Commissioner of Income Tax to consider the merits of the refund claim while exercising the delegated power under Section 119(2)(b) of the Act, which would amount to circumvent the provisions of the Act. It has been further held that the Principal Chief Commissioner or the Principal Commissioner of Income Tax has no power to consider the merits of the refund application and what is required to be considered is the merits of the application for condonation of delay only. Considering the provisions of Section 119(2)(b) of the Act and the Circular dated 9.6.2015 aforesaid, the order impugned herein, Ext. P7, is unsustainable and the same is hereby set aside. The writ petition stands allowed. The matter is remitted back to the file of the Principal Commissioner of Income Tax to pass fresh orders on the application of the petitioner-assessee for condonation of delay in filing the return.
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2023 (12) TMI 220
Rectification of mistake - Income Tax Returns were filed showing the rental income as income under two heads - assessee shown rental income in his returns under two heads, i.e. one under the heading Business Income and another under the heading Income from House Property , so the same was assessed twice and accordingly the income tax was paid double the amount of actual tax - petitioner also filed a revision application u/s 264 and the same came to be dismissed by the first respondent HELD THAT:- A reading of the Division Bench judgment Annamallais Agencies [ 2002 (9) TMI 62 - MADRAS HIGH COURT ] referred to by the learned Senior Counsel for the petitioner would go to show that in the event, if the Assessing Officer has not taken anything into consideration which are mentioned in the returns, in such cases, the rectification can be carried out. It is not that in the returns, if something is wrongly mentioned, the Assessing Officer can make correction and pass orders. This court is of the view that the AO is justified in rejecting the rectification application and also the revision petition which requires no interference. The issue that the assessee / petitioner has committed an error in filing the returns and by virtue of the said error, the assessee has shown the income under two heads and thereby his income was taxed twice under two heads and this error is apparent on the Income Tax return. The said fact was admitted by the respondent and even the respondent submitted that it is a mistake purely on the part of the petitioner. Thus ultimately justice has to be rendered as nobody's income has to be taxed twice. Only re-course available in this case is by filing the revised Income Tax Returns, which is available under Section 139 (5) of the Income Tax Act, 1961. However the petitioner has not chosen to file the same in time. He has to file the revised returns instead, he had filed the application for rectification before the second respondent, revision petition before the first respondent and two writ petitions before this Court. Because of the wrong guidance and ill advise, the petitioner should not be penalised. This Court is inclined to grant permission to the petitioner/assessee to file the revised return, within 15 days from the date of receipt of a copy of this order. Upon filing of the revised returns by the petitioner, the Assessing Officer shall process the returns in accordance with law.
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2023 (12) TMI 219
Assessee to be reheard when there is change of AO - Denial of natural justice - non-provision of opportunity of personal hearing - HELD THAT:- No notice, subsequent to the receipt of reply from the petitioner, was issued to the petitioner and further, no evidence has been produced by the respondent to show that the notice was issued to the petitioner for personal hearing before passing the impugned order and the opportunities, that were stated to have been provided to the petitioner were only for the purpose of calling forth certain details/reply from the petitioner, those opportunities, cannot be deemed to be an opportunities of hearing to the petitioner since the question of affording opportunity of personal hearing would come into picture only after the receipt of reply/objections from the petitioner. Thus, in the present case, it is evidently clear that after the petitioner filed reply dated 22.07.2022 to the clarification sought for by the respondent finally vide letter dated 19.07.2022, the petitioner has not been afforded with any opportunity of personal hearing and in these circumstances, the impugned order came to be passed, which would per se prove that the order has been passed in clear violation of principles of natural justice. Even assuming that the impugned order is passed by an incumbent Officer, who continued the proceedings in the place of earlier Assessing Officer and even the earlier AO, who existed before the incumbent Officer has not issued any notice for personal hearing after the petitioner's filed reply. Therefore, the contention of the learned Senior Standing Counsel for the respondent-Department that the petitioner has failed to make a use of the opportunity granted under Section 129 I.T.Act, as he has not sought for an opportunity of rehearing is untenable and it would only means to putting the cart before horse. Writ Petition is allowed, the impugned order is set aside and the matter is once again remanded back to the respondent for re-consideration of the assessment proceedings after providing an opportunity of personal hearing to the petitioner.
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2023 (12) TMI 218
Validity of reassessment proceedings - Authentication of notices and other documents u/r 127A - Scope of new regime u/s 148A - two notices issued - as argued notice issued u/s 148 are unsustainable as they are neither signed and have been simply uploaded and transmitted to the petitioner for the first time on 15.04.2021 after Section 148A was inserted of the Income Tax Act, 1961 with effect from 01.04.2021 - new procedure under the new regime under Section 148A of the Income Tax Act, 1961 ought to have been followed - HELD THAT:- There are two notices issued u/s 148 for the same Assessment Year 2013-2014. The first notice issued to the petitioner is dated 30.03.2021. It is not digitally signed. Same notice has been issued in time. It is beyond the limitation under Section 147 of the Income Tax Act, 1961 as it stood till 31.03.2021. The second notice issued to the petitioner is dated 07.04.2021. If notice issued on the later dated on 07.04.2021 is considered valid, the trajectory of the Assessment has to be completed in accordance with the new regime with effect from 01.04.2021 in terms of the decision of the Hon'ble Supreme Court in Union of India vs. Ashish Agarwal, [ 2022 (5) TMI 240 - SUPREME COURT] On the other hand, if the notice was issued to the petitioner on 31.03.2021, the question of either challenging the notice dated 30.03.2021 issued u/s 148 or the consequential Assessment Order dated 30.03.2022 cannot be countenanced and therefore the Writ Petitions have to be dismissed. Therefore, the argument of petitioner that the notice issued on 30.03.2021 under Section 148 of the Income Tax Act, 1961 cannot be construed to be a notice in the eye of law because it was not signed cannot be countenanced in the light of Rule 127A of the Income Tax Rules, 1962. In the annexure to the notice issued under Section 142(1) to the petitioner on 16.08.2021, it is confirmed that the notice was served on the petitioner on 07.04.2021. Although the reference to the date of the notice has been given as 31.03.2021, it is evident it refers to 30.03.2021. It has to be therefore construed that the reference to the date 31.03.2021 in annexure to Section 142(1) notice dated 16.08.2021 refers to impugned notice dated 30.03.2021 issued under Section 148 of the Income Tax Act, 1961, as it stood prior to its substitution with effect from 01.04.2021. Considering the above, the proceedings should have been decided in accordance with paragraph Nos.7 to 10 of the decision of the Hon'ble Supreme Court in Union of India vs. Ashish Agarwal, case supra . Thus, the impugned notice dated 30.03.2021 ought to have been decided in accordance with the new provisions with effect from 01.04.2021 in terms of decision of Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT] as it has been admittedly served on the petitioner only on 07.04.2021 in terms of annexure to Section 142(1) notice dated 16.08.2021. Consequently, the impugned Assessment Order dated 30.03.2022 pursuant to impugned notice dated 30.03.2021 is liable to be quashed for passing a fresh order under the new regime as expeditiously as possible, preferably within a period of six (6) months from the date of receipt of a copy of this order. Considering the fact that the dispute pertains to the Assessment Year 2013-2014, issuing of the second notice dated 07.04.2021 under Section 148 of the Income Tax Act, 1961 was unnecessary. Therefore, impugned noticed dated 07.04.2021 under Section 148 of the Income Tax Act, 1961 is quashed. Accordingly W.P. is allowed.
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2023 (12) TMI 217
Validity of Reopening of assessment u/s 147 - condition precedent for invoking the extended period of six years for re-assessment u/s 147 - assumption of jurisdiction in the absence of a finding that the income chargeable to tax has escaped assessment by reason of the failure to fully and truly disclose material particulars - gain on sale of land - LTCG or business income - HELD THAT:- Failure to render a finding that income chargeable to tax has escaped assessment by reason of failure on the part of the assessee to fully and truly disclose the material facts necessary for assessment is a condition precedent to invoke the extended period beyond four years under section 147 of the Act. Absence of such finding would vitiate the reassessment proceeding. As relying on this court case M/S. Seshasayee Paper And Board Limited Rep. By Its Director (Finance) Secretary Sri V. Pichai [ 2023 (3) TMI 1111 - MADRAS HIGH COURT ] the impugned notice and consequential proceedings invoking the extended period of limitation beyond 4 years for making a reassessment under Section 147 read with Section 148 of the Act in the absence of any finding as to the existence of the condition precedent viz., that income chargeable to tax has escaped assessment by reason of failure on the part of the assessee to fully and truly disclose the material particulars vitiates the entire proceedings and thus liable to be set aside. Assessee appeal allowed.
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2023 (12) TMI 216
Reopening of assessment u/s 147 - Reason to believe - notice beyond four years - change of opinion - whether there is change of opinion or otherwise is a question of fact which ought to be examined by the statutory authority? - assessee sold two land properties and received the sale consideration by way of cash and has offered the same under short term capital gains - HELD THAT:- Whether absence of a finding that the income chargeable to tax has escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment would vitiate / prove fatal to a reassessment invoking the extended period of limitation under Section 147 of the Act is no longer res-integra. It has been decided by the Division Bench of this Court in the case of ACIT vs. Seshasayee paper and Board Ltd. [ 2023 (3) TMI 1111 - MADRAS HIGH COURT ] and Durr India (P.) Ltd. [ 2022 (8) TMI 1340 - MADRAS HIGH COURT ] that finding as to failure on the part of the assessee to disclose fully truly material particulars is a condition precedent for invoking extended period and in the absence of such finding, initiation of invoking extended period would stand vitiated. Thus finding that income chargeable to tax has escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment is a sine qua non and a condition precedent to invoke power of reassessment under Section 147 read with Section 148 of the Act beyond 4 years from the relevant assessment year and failure to render such a finding would prove fatal to the validity of such proceeding. Assessee appeal allowed.
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2023 (12) TMI 215
Reopening of assessment - notice issued beyond the period of four years - income earned out of the sale of the agricultural land undisclosed - HELD THAT:- For the specific request of the respondent, the sale deed was produced. Hence, it cannot be construed as that it would fall under the explanation (1) of Section 147 of the Act. Sale deed is not a Books of accounts . Upon perusal of the exempted income, since the details furnished in the category with regard to sale of agricultural property were not fully disclosed, these details were called for. Therefore, the respondent's contention that in terms of explanation (1) to Section 147 that merely producing the Sale deed would not amount to providing the entire material facts fully and truly cannot be accepted. Further, he would submit that the explanation also provides other evidences . It is not that without specific request, these evidences were furnished. In order to justify whether the sale of property comes under capital gain income or not, the specific request was made calling upon the petitioner to file the sale deeds. The petitioner had disclosed the information with regard to the sale of the agricultural land and all the particulars with regard to sale of agricultural land was disclosed before the Assessing officer in full extent. Further, a perusal of the materials placed before this Court would suffice to arrive at a conclusion that there is no failure on the part of the petitioner with regard to providing material facts and the notice issued under Section 148 and 149 of the Act for re-opening assessment for the Assessment Year 2013-14 is not sustainable and the same is liable to be set aside - Decided in favour of assessee.
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2023 (12) TMI 214
Approval u/s 80G - denial of claim as assessee is established for spending Corporate Social Responsibility ( CSR ) funds of Huhtamaki India Ltd. and the material produced by the assessee is again sold in the market which is a commercial activity and thus it doesn t come under the purview of charitable activities - HELD THAT:- The assessee was settled as an irrevocable trust, vide Trust Deed dated 09/10/2019, with the main object to work in the area of preservation of environment. The assessee is registered under the Bombay Public Trusts Act, 1950. Further, the assessee has also received a Registration Certificate for recycling plastic waste issued by the Maharashtra Pollution Control Board under the Environment (Protection) Act, 1986 read with the Plastic Waste Management Rules, 2016. From the perusal of the financial statements of the assessee for the financial years 2020-21, 2021-22, and 2022-23, we find that the assessee earned income only from donations, sale of scraps, and sale of finished goods and no such service was rendered to any entity. In any case, it is to be noted that such a service even if it is rendered by the assessee, the same will only be for the preservation of environment and thus is a charitable activity. It is evident from the record that no other objection was raised by the learned CIT(E) while denying the approval u/s 80G of the Act to the assessee. Further, no doubt has been raised by the Revenue regarding the genuineness of the activity conducted by the assessee. Accordingly, we are of the considered view that the assessee satisfies all the conditions for the grant of approval under section 80G - the impugned order dated 30/03/2023 denying the grant of approval u/s 80G of the Act is set aside and the grounds raised by the assessee are allowed.
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2023 (12) TMI 213
Estimation of income - Bogus purchases - HELD THAT:- We find force in the contention of the assessee that the CIT(A) erred in sustaining the 100% disallowance of purchases from two concerns and thus, erred in confirming the addition u/s 69C of the Act. Therefore, as per the ratio laid down by the Hon ble Courts, profit embedded in the transaction need to be brought to tax particularly when the tax authorities have not disturbed the sales declared by the assessee. We note that the assessee had himself offered profit element @ 6% from purchases from the named parties, thus AO is directed to restrict the addition @ 6% of the disputed purchases. Appeal of the assessee is partly allowed.
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2023 (12) TMI 212
Estimation of income - estimating the profit @ 7.5% on sale of Imlo of old constructed building materials - assessee admitted that he has purchased old buildings on a due basis and he sold the imlo of demolished part of building to local ceramic manufacturer and scrapper in cash. Out of such cash, generated from the sale of imlo, cheque and demand draft were purchased from Angadiya to make payment - CIT(A) considering assessee has not maintained the books of account for the business carried by him and considering the deeming provision under section 44AD etc, estimated the profit of the assessee @ 7.5% only HELD THAT:- The assessee has not discharged the onus imposed upon him for estimating the income based on comparable cases. Admittedly, the revenue has also estimated the income but without referring to the comparable cases. However, the revenue had to estimate the income in the absence of documentary evidence which was supposed to be provided by the assessee. Indeed, for estimating the income, the element of guesswork is always involved but the same should not be unrealistic. Primary onus lies upon the assessee which he failed to fulfil and therefore we are of the view that the income estimated by the learned CIT-A in the given facts and circumstances is reasonable and commensurate if the other facts of the assessee are seen in aggregation. As such, the assessee in the later years has purchased expensive cars and has also shown borrowed money but the assessee failed to justify the source of money for the purchase of cars as well as justifying the source of deposits in the bank. Thus, we are of the view that the profit estimated by the learned CIT-A is reasonable and commensurate with the activities carried on by the assessee. Hence the ground of appeal of the assessee is hereby dismissed. Estimating the household expenses from undisclosed sources - HELD THAT:- AO and the learned CIT(A) found that the assessee has earned income from the sale of demolished material of building (imlo). As such the assessee claimed that that he earned net profit at ₹ 25 lakh after making payment of 6.5 crores whereas AO and CIT(A) estimated the profit @ 10% and 7.5% of ₹ 6.5 crore respectively. In either case, the assessee had sufficient income from the sale of imlo to meet his household expenses. Therefore, making separate addition on account of household expense in the given fact and circumstances will lead to double taxation which is not desirable under the provision of the Act. Thus, we hereby set-aside the finding of the learned CIT(A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is hereby allowed. AO and the learned CIT(A) found that the assessee has earned income from the sale of demolished material of building (imlo). As such the assessee claimed that that he earned net profit at ₹ 25 lakh after making payment of 6.5 crores whereas AO and CIT(A) estimated the profit @ 10% and 7.5% of ₹ 6.5 crore respectively. In either case, the assessee had sufficient income from the sale of imlo to meet his household expenses. Therefore, making separate addition on account of household expense in the given fact and circumstances will lead to double taxation which is not desirable under the provision of the Act. Thus, we hereby set-aside the finding of the learned CIT(A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is hereby allowed. Unexplained credit in bank account - Assessee argued deposits in the bank represent brokerage income and loans from friends and therefore no addition in the given facts and circumstances is warranted - HELD THAT:- Admittedly, there were deposits in the bank account of the assessee and therefore the onus lies upon the assessee to justify the source of the same. But the assessee has not justified the same based on the documentary evidence. Accordingly in the absence of any explanation by the assessee about the source of money in the bank account, we have no other alternative except to confirm the order of the authorities below. Hence the ground of appeal of the assessee is hereby dismissed. Purchase of a car from undisclosed sources - assessee has purchased a Ford Car making a payment of the same by purchasing cheque from Angadiya in lieu of cash - HELD THAT:- The revenue has not brought any iota of evidence suggesting that the earlier years income suffered to tax has been used for some other purposes either by way of making some investment or expenditure. Thus, in the absence of such information, it can be presumed that the amount of income which has suffered tax in the earlier year has been utilized for the purchase of the car. The earlier income after adjusting household expenses stands at ₹ 42.75 lakhs and the cost of the car purchased in the year comes at ₹ 21.25 lakhs only. Still the balance income available with the assessee stands at ₹ 21.50 Lakhs ( ₹ 42.75 lakhs - ₹ 21.25 lakhs). In view of the above, we hold that there was sufficient tax paid money available with the assessee which has been used for acquiring the car on hand. Therefore, no separate addition on account of purchase of car is required to be made. Hence, the ground of appeal of the assessee is hereby allowed.
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2023 (12) TMI 211
Penalty u/s. 271D - receipt of cash in relation to transfer of immovable property - Violation of proviants of section 269SS - assessee sold an immovable property out of which the assessee received an advance partly through cheque and the remaining amount by cash - HELD THAT:- Any person is barred from receiving from any amount otherwise by cheque or through banking channels in relation to transfer of the immovable property. Section 269SS of the Act prohibits receipt of any amount by way of cash in relation to the transfer of any immovable property. The objective of the amendment proposed in 269SS of the Act is to curb generation of black money. In the instant case the fact is that cash received by the assessee has been deposited by the assessee into the bank account, hence does not attract the provisions of section 269SS of the Act since there is no suppression of cash receipts by the assessee. The assessee has also offered the capital gains to tax. Further, the explanation given by the assessee for receipt of sale consideration of Rs. 29,65,000/- constitutes a reasonable cause as contemplated in section 273B of the Act and the assessee has accepted the cash under inevitably unavoidable circumstances as explained by the Ld. AR in his arguments and immediately on receipt of the cash, the assessee deposited the same in the bank account which contemplates the genuineness of the transaction and moreover the assessee has paid the capital gain tax thereon. We are of the considered view that the penalty levied by the Ld. AO-NFAC U/s. 271D and confirmed by Ld. CIT(A)-NFAC is unsustainable in law - Decided in favour of assessee.
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2023 (12) TMI 210
Validity of Revision u/s 263 - two parallel proceedings for the same assessment year - validity of proceedings initiated by notice u/s. 148 and the consequential order u/s. 147 is bad in law notice issued u/s. 148 during the pendency of set aside assessment proceeding - as per CIT AO has not examined the source of share capital and share premium properly and has failed to note that the share capital is introduced by rotating the money to dummy companies which have been created solely for this purpose - HELD THAT:- Second revision order passed u/s. 263 dated 12.03.2019 has been quashed by the Coordinate Bench making the second effect giving assessment order dated 06.12.2019 as non-est. Reference made by the Ld. AO in the impugned assessment order of this proceeding and basing it to arrive at the assessed total income is not justified. From the perusal of the reasons to believe recorded by the Ld. AO and as contended by the Ld. Counsel in respect of the contents mentioned therein, we are in agreement with the facts narrated by AO never disclosed the details of layers through which alleged money has been routed into the bank account of the assessee. AO has also never shared the information in respect of documentary evidence for the alleged transactions of accommodation entry. We also do not find conduct of any examination of the allegd layering of the transaction to unearth sequencing of the flow of money alleged by the Ld. AO escaping assessment. We also find ourselves in agreement with the contention of the Ld. Counsel that there is nothing specific stated in the reasons to believe as to the nature of the transaction of accommodation entry as alleged by the Ld. AO as to whether it is an income or an expense or an allowance or share capital or loan etc. Before the Ld. AO, assessee has evidently demonstrated by furnishing its books of account and bank statement that there is no such transaction or such amount of money which has routed into the books of the assessee or into the bank account from the alleged accommodation entry provider Mr. Sandeep Roy, proprietor of M/s. Sarika Trding Co. AO has merely on a wrong belief made such an addition without conducting any verification of any sort of any material or examining the persons involved. We also take note of the approach adopted by the incumbent Ld. AO, who was already seized with an assessment proceeding pursuant to the second revisionary order even though it has been subsequently quashed by the Coordinate Bench. Until the outcome of the appeal before the Coordinate Bench, the Ld. AO had an assessment proceeding pending before him to give effect to the set aside revisionary order. However, with this pendency in hand, he initiated another proceeding by taking note of information received from the Investigation Wing to record the reasons to believe and issue notice u/s. 148. It is important to note that within a period of ten days, the same incumbent AO has passed two assessment orders, first on 06.12.2019 pursuant to revisionary order u/s. 263 and the second one which is the impugned reassessment order u/s. 147/143(3) dated 16.12.2019. Certainly such an act by the Ld. AO of having two parallel proceedings for the same assessment year is contrary to the decision taken in the cases of S. M. Overseas Pvt. Ltd. [ 2022 (12) TMI 702 - SC ORDER] and Trustees of HEH Nizam Supplemental Family Trust [ 2000 (2) TMI 4 - SUPREME COURT] - Accordingly, notice issued u/s. 148 during the pendency of set aside assessment proceeding and subsequent reassessment order passed is bad in law. On the merits as undisputed fact that there is no change in short term borrowings and the revenue from operations is a small/meagre amount of Rs. 1,23,960/-. Thus, the alleged amount of accommodation entry received by the assessee cannot in any way pertain to loan or revenue received by the assessee during the year. As far as share capital and share premium is concerned which has been raised during the year, elaborate detailed examination and verification exercise has already been conducted by the Ld. AO and has been accepted vide first effect giving assessment order u/s. 263/143(3). The Coordinate Bench has already taken note of factual findings given in this assessment order and remains uncontroverted. Thus, on the merits of the case also, we do not find any reason to sustain the addition made by the Ld. AO. Accordingly, the grounds taken by the assessee are allowed.
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2023 (12) TMI 209
Revision u/s 263 - benefit of exemption under the order issued under the repealed Act - validity of order issued under the 1922 Act granting exemption to incomes earned in Part-B - as per CIT(A) AO had allowed the assessee s claim of deduction u/s 80P(2)(c)/(d) of interest income and rental income without making proper verification/inquiry - whether the assessee was entitled to exemption of the aforestated two incomes in terms of order made under the provisions of the 1922 Income Tax Act, i.e Part-B States (Taxation Concessions) Order, 1950 amendment to Notification No.SRO 998 dated 2.12.1950? As per assessee contention being that after repeal of the 1922 Act, the entitlement to the exemption of the assessee in view of the aforestated order passed under 1922 Act, still existed, since the said order was not rescinded subsequently, and therefore, by virtue of provisions of section 297 (2)(k)/(l) of the Income Tax Act, 1961, the benefit of exemption under the order issued under the repealed Act still persisted. HELD THAT:- CIT found that an identical plea taken in Sri Gopal Gram Seva Sahakari Mandali Ltd. [ 2014 (12) TMI 766 - GUJARAT HIGH COURT] directed the AO to examine the allowability of assessee s claim to deduction under section 80P of the Act, holding that the assessee did not continue to enjoy the exemption by virtue of order issued under the 1922 Act. Copy of the order was placed before us, and we have noted that identical plea of the assessee of continuing to enjoy the benefit of the order issued under the 1922 Act by virtue of section 297 (k)(l) of the 1961 Act was rejected by the Hon ble High Court, and the Hon ble Court had directed the AO to examine the assessee s eligibility to claim deduction under section 80P(2) of the Act, 1961 Act. The ld.counsel for the assessee agreed with the same but at the same time has countered by stating that the Hon ble Apex Court in the case of Maharao Bhim Singh of Kota Vs. CIT [ 2016 (12) TMI 418 - SUPREME COURT] had reversed this proposition of law laid down by the jurisdictional High Court holding that the exemption allowed under the order issued under 1922 Act persisted and applied even under 1961 Act. But as gone through the order of the Hon ble Apex Court in the said case, and we find that it is entirely distinguishable on facts, and the Hon ble Apex Court has not laid down any such proposition that the order issued under the 1922 Act granting exemption to incomes earned in Part-B States would continue to subsist even under the 1961 Act. In the case before the Hon ble Apex Court, the Issue for consideration was the interpretation of section 10(19A) of the Act which provided for exemption of annual value of any one palace in the occupation of a Ruler. The dispute arose in the factual background that the palace was partly self occupied by the Ruler and partly let out earning rental income. The claim of the Revenue was that the entitlement to exemption u/s 10(19A) of the Act was to be confined only to the portion of the palace in the occupation of the Ruler. The Hon ble apex court interpreted the provisions of section 10(19A) of the Act to state that it granted exemption to the annual value of any one palace which fulfilled the following conditions, viz. (i) which in the occupation of the ruler, and (ii) whose annual value was exempt from income tax before the commencement of the Constitution (Twenty-sixth Amendment) by virtue of the provisions of the Merged States (Taxation concessions) Order, 1949 or the Part B States (Taxation Concessions), Order 1950. Noting so, the Hon ble Apex Court found that the assessee fulfilled both the conditions in the case before it, and therefore was entitled to exemption of the entire annual value of the property. It is abundantly clear, therefore, that the Hon ble Apex Court in the said decision did not lay down any proposition, as canvassed by the ld.counsel for the assessee before us that the exemption granted under the order issued under section 60A of the Income Tax Act, 1922, subsisted since it was not repealed. Therefore, we do not find any merit in the arguments of the ld.counsel for the assessee that the decision relied upon by the ld.Pr.CIT of the jurisdictional High Court was reversed by the Hon ble Apex Court. The order of the ld.Pr.CIT is therefore confirmed, and the grounds of the appeal of the assessee are dismissed.
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2023 (12) TMI 208
Short term Capital gain / long term capital gain - separation of value of land and building, since depreciation claimed on building - application of the provisions of section 50C - transfer of leasehold rights in the plot of land allotted to the appellant assessee - rejection of claim of cost of construction - whether the provision of section 50C of the Act per se could be applied for transfer of lease hold rate possessed by the assessee? - HELD THAT:- As decided in M/s. Green Hotels and Estate Pvt. Ltd [ 2016 (12) TMI 353 - BOMBAY HIGH COURT ] S ection 50C is not applicable while computing capital gains on transfer of leasehold rights in land and buildings. Hence, we hold that the sale consideration of transfer of lease hold rate should be considered only Rs. 75 lakhs. Further, we find that the industrial plot of land has been allotted to the assessee on 30.03.2005. The assessee has been making super structure incurring cost of construction in FY 2006-07 onwards. The entire property has been sold by the assessee on 08.10.2009. Hence, the land taken on lease is hold by the assessee for more than 3 years and consequentially eligible for benefit of indexation thereon. Hence, the resultant gain arising on its transfer would be long term capital gain. The building taken by the assessee been held less than three years and deprecation is also claimed by the assessee thereon. Hence, the building taken would be determined based on dimming provision of section 50 of the Act. The facts of assessee incurring expenses towards cost of construction and claiming depreciation thereon is reflected in the financial statement of the assessee itself commencing from 2006-07, 2007-08 and 2008-09. Hence, there is no scope for rejection of claim of cost of construction. Disallowance of business expenses - Addition made as assessee has not carried on any business activity which is also evident from the profit and loss account whether sale or gross receipts shows at Rs. Nil. - HELD THAT:- As decided in Mokul Finance Pvt. Ltd. [ 2007 (7) TMI 351 - ITAT DELHI-I ] unless there is some material on record to show that the assessee has completely abandoned the share dealing business, merely because there are no business transactions in the relevant previous year cannot be reason enough to come to the conclusion the business has come to an end. Assessee appeal allowed.
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2023 (12) TMI 207
Addition u/s 14A r.w.r. 8D - Addition on the entire average value of current and non-current investments - assessee pleaded before the CIT(A) that no disallowance can be made because the assessee had own funds more than the investments made and no administrative expenditure was incurred - HELD THAT:- We observe from the financial statements that the assessee has received dividend income only on current investments and the computation of disallowance submitted by the ld. AR comes to Rs. 7,65,072. However, we note from the order of the AO that during the course of assessment proceedings the assessee itself submitted that dividend is earned on equity shares and mutual funds, but in the computation of disallowance submitted before us, only the average value of investments made in mutual funds has been considered. Disallowance under Rule 8D(2) (iii) should be made on the basis of average value of those investments in which the assessee has yielded exempt income. The Hon ble High Court in the case of Cargo Motors (P.) Ltd. [ 2022 (10) TMI 571 - DELHI HIGH COURT] has settled this issue in favour of the assessee. Thus we remit this issue to the file of the AO for fresh computation of disallowance under Rule 8D(2)(iii). The assessee is directed to provide necessary documents in support of its claim and avoid seeking unnecessary adjournment for early disposal of the case. Disallowance of interest u/s 36(1)(iii) - Interest paid to IDFC has been capitalized by the AO by observing that the capital asset (land) purchased for which loan was taken, was not put to use in the business of the assessee and the assessee is not in the business of trading of land and this land has been purchased as investment, and therefore it should be capitalized u/s. 36(1)(iii) - HELD THAT:- As interest bearing funds have not been utilized for the purchase of land and the assessee had sufficient interest free funds and also observed by the coordinate bench in the assessee s own case for earlier AYs 2013-14 2014-15 [ 2019 (4) TMI 512 - ITAT BANGALORE] The case law relied by the ld. AR of the assessee in his written synopsis supports the case of the assessee. After analysis of the above, we hold that the assessee has not utilized the borrowed fund for the purchase of land. The assessee has also sufficient opening cash balance as per Note No.17 and cash flow statement. Further, the assessee s submission that no interest bearing funds have been utilized is supported by the case laws referred by the assessee. Considering the entire facts and submissions, we hold that the land purchase by the assessee is out of non-interest bearing funds. Therefore the disallowance of interest u/s 36(1)(iii) is not warranted and the same is deleted. We therefore allow ground No. 03 of the assessee.
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2023 (12) TMI 206
Income taxable in India - Taxability of the receipts as Royalty - HELD THAT:- The Bangalore Bench of the Tribunal in the case of Telefonica De Espana S. A, [ 2023 (9) TMI 280 - ITAT BANGALORE] had decided all the issues raised on merits in favour of the assessee i.e., with regard to taxability as royalty/FTS and alternatively under section 5(2) of the Act. The Bangalore Bench of the Tribunal had followed its earlier order in the case of Telefonica De Espana S. A [ 2023 (8) TMI 1375 - ITAT BANGALORE] as well as the judgment of the Hon ble jurisdictional High Court in the case of VSL, [ 2016 (8) TMI 422 - KARNATAKA HIGH COURT] wherein held Revenue authorities have erred in construing that the income has accrued or arisen in India. The situs of the source of income in respect of payment received by a non resident i.e. NTOs would be the place where the non resident carries on its business and perform the business activities pursuant to which it received income. Once the situs is outside India, then in order to determine whether the payments made by a resident of India to a non resident involves element of income is to be examined u/s 9 and in the present case, the Assessing Officer has examined the applicability of section 9(1) (vi) 9(1)(vii) i.e. the payments involve royalty as well as fee for technical services. - Decided in favour of assessee.
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2023 (12) TMI 205
TP Adjustment - comparable selection - HELD THAT:- Following the order of M/s. Sonus Networks India Pvt. Ltd. [ 2020 (10) TMI 663 - ITAT BANGALORE] we direct exclusion of (i) M/s Bodhtree Consulting Ltd, (ii) Tata Elxsi Ltd., (iii) Persistent Systems Ltd. and (iv) Infosys Ltd. from the list of comparables. Sasken Communication Technologies Ltd.and L T Infotech Ltd. are to be excluded from the comparables because this company fails the turnover filter. Disallowance of provision for warranty - Appellant had debited a sum towards warranty expenses which included an amount of actual claim by the customers made during the year and amount of provision for warranty - AO disallowed the provision for warranty contending the same to be contingent liability/ created on estimate basis - HELD THAT:- In the present case the assessee is providing warranty for 24 months on automotive products sold by it on the basis of percentage on sales as fixed by the quality centre for each product. The assessee has not produced any credible evidence/calculation as to how the provision for warranty has been arrived relating to different products before the authorities below. A specific query was asked to the ld. AR regarding the unutilised provision for warranty in the books of accounts to which the ld. AR replied that in such case it represented increase in the closing balance of the year adjusted in future warranty claims and no separate entry is made for unutilized warranty provision and he referred to the details of provision for warranty in the table extracted above. Before us, the ld. AR produced the basis for calculation of provision for warranty extracted hereinabove and he also submitted that that in remand proceedings by the co-ordinate bench for the assessment year 2010-11, the AO has accepted the provision for warranty expenses debited into profit loss account. Further in assessee s own case the co-ordinate bench of the Tribunal has decided the issue [ 2022 (3) TMI 1522 - ITAT BANGALORE] as held provision for warranty created is based on past experience and historical trend of each product and at a percentage. The claim made by the Assessee that the method followed for creating provision for anticipated liability on account of warranty stands vindicated by the fact that the actual liability on account of warranty expenses is always on the higher side. The reasons given by the DRP for not accepting the claim of the Assessee is that the provision is created as a percentage of sale, ignoring the fact that past experience is also the basis for creation of provision for warranty. We are therefore of the view that the provision for warranty has to be allowed as a deduction, as the provision created satisfies the requirements for claiming provision as a liability. Nature of expenses - annual licence fee - AO did not allow the claim of assessee u/s. 37(1) as revenue expenditure and also the depreciation for want of genuineness of expenses - payments of annual license fees by entering into an agreement with its group company - AO disallowed the above contending it to be capital in nature and also that it is not a genuine expenditure while passing the draft order, on the basis that no evidences were submitted supporting the same - HELD THAT:- The agreement was made on 1st January, 2009 for one year and it was automatically renewable unless terminated. This is the second round of proceedings. There is nothing to show that there is termination of the agreement and hence the agreement is still in force. Further on perusal of the order of the ld. DRP assessee could produce only the copy of agreement with it AEs. It was the primary duty of the assessee to establish whether the expenditure incurred was not enduring benefit and it was recurring expenditure with credible evidence. But the assessee has failed to do so by merely submitting the copy of agreements, TDS certificate and benefit received. The assessee is also not eligible for claim of deduction u/s. 35(1)(iv) of the Act since it has not fulfilled the conditions as specified in the section. From the above, we are of the view that the ld. DRP has examined the issue in detail and we do not find any infirmity in the order of the ld. DRP. The AO is directed to grant depreciation as per the order of the ld. DRP. Short grant of credit for Tax Deducted at Source and foreign tax credit - as submitted that the Appellant had filed an application for rectification before the AO along with the TDS certificates - HELD THAT:- DRP has given direction to the AO for giving TDS credit after verification. We direct accordingly.
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2023 (12) TMI 204
Disallowance u/s 14A - non recording any satisfaction note the AO made disallowance u/s 14A - suo-moto addition made by assessee ignored - HELD THAT:- The tax authorities below have not at all taken into consideration the fact of suo moto disallowances and giving any reasons for not accepting the same. As fresh investment have been made out of the own funds raised by issuance of fresh equity and that accumulated balance of reserve and surplus of the assessee company or the borrowed funds have not been utilized for the purpose of investment. Consequently the issue needs to be restored to the files of Ld. AO, to take into consideration the principles of law recognized in Maxopp Investments Ltd. Case [ 2018 (3) TMI 805 - SUPREME COURT] and assessee s own case by Hon ble Delhi High Court in [ 2018 (3) TMI 1718 - DELHI HIGH COURT] and pass a fresh order for claim of disallowance of assessee u/s 14A of the Act. These grounds are decided in favour for statistical purposes. Allowability of deduction u/s 36(1)(vii) - interest free loans to subsidiary companies - Assessee contended that when there are funds available, both interest free or loan taken, then a presumption would arise that investments would be out of interest free funds generated or available with the company provided said funds are sufficient to meet investments - HELD THAT:- Primarily questioning the commercial expediency of interest free loans allowability of deduction u/s 36(1)(vii) of the Act was examined. However, it transpires from record and as discussed above the assessee had sufficient surplus funds and had raised capital during the year by issuance of shares. Thus, merely because the assessee had also raised loans or paid interest against loans that does not justify the disallowance. The investment in subsidiary and related entities has to be made for commercial purpose to earn future profits. It is not the case of revenue that investment were made in any entity not having any nexus with the principal object of assessee company. The judgment of South Indian Bank Ltd. vs. Commercial of Income Tax [ 2021 (9) TMI 566 - SUPREME COURT] also comes to the assistance of assessee where Hon ble Supreme Court recognized the principle that if interest free own funds are available with the assessee or exceeds investment, investment would be presumed to be made out of assessee s own fund. Thus, the Bench is convinced that the disallowance was not justified the same deserves to be deleted. The grounds are sustained.
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2023 (12) TMI 203
Revision u/s 263 - as per CIT foreign payments made directly by the Indian Project Owners to Head Office, and the nature/scope of offshore services were not examined either by the TPO or by the AO during the assessment proceedings - HELD THAT:- The foreign payments made directly by the Indian Project Owners to Head Office, and the nature/scope of offshore services were not examined either by the TPO or by the AO during the assessment proceedings. TPO, accepted the domestic payments made by the Indian Project Owners to Project Offices to be at arm s length and thereafter, on 30/05/2021 the AO passed Assessment Order u/s 143(3) of the Act accepting the retuned income as assessed income. It is clear that after initial query, no further follow-up query or information was sought by the Assessing Officer. In our view, the AO should have enquired into both the payments made to Project Offices as well as the Head Office. On perusal of notice issued by the Assessing Officer and reply filed by the Appellant, it is clear that only the issue pertaining to domestic payments made by the Indian Project Owners to the Project Offices were examined by the Assessing Officer and by the TPO. According to Explanation 2 to Section 263 of the Act assessment order is deemed to be erroneous in so far as prejudicial to the interest of the Revenue in case in the opinion of CIT such assessment order has been passed allowing any relief without enquiring into the claim. When the material on record reflects that the assessment proceedings were concluded without enquiry/investigation into the scope of services provided by the Head Office, apportionment of payments between Project Office and Head Office as per contract, and the consequent payments made by the Indian Project Owners directly to the Head Office, the question of inferring with these issues would have been examined by the Assessing Officer/TPO during the assessment proceedings does not arise. Therefore, the judicial precedents relied by both the sides relating to computation/allowance/disallowance of deduction do not apply to the facts of the present case. In the present case, the relief under the provisions of tax treaty has been granted to the Appellant without inquiring into the nature and scope of offshore services. AO has also failed to make necessary enquiry/verification regarding the income attributable to the Project offices in India. In our view, the CIT had jurisdiction to exercise power of revision u/s 263 of the Act since AO had failed to carry out necessary enquiry and verification warranted in the facts and circumstances of the present case triggering provisions of Explanation 2 to Section 263 - Thus, we concur with the CIT that the Assessment Order, dated 30/05/2021, passed under section 143(3) of the Act was erroneous insofar as prejudicial to the interest of Revenue, and therefore, we hold that the CIT was justified in setting aside the same. Assessee appeal dismissed.
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2023 (12) TMI 202
Revision u/s 263 - as per CIT there is another possible view of the matter - as per CIT AO ought to have taxed deemed annual letting value @5% of the value of closing stock of unsold flats u/s 23(1)(a) of the Act - HELD THAT:- As decided in AMITABH BACHCHAN [ 2016 (5) TMI 493 - SUPREME COURT] , M/S. FUTURE CORPORATE RESOURCES LTD. [ 2021 (10) TMI 175 - BOMBAY HIGH COURT] and MEPCO INDUSTRIES LIMITED. [ 2006 (11) TMI 164 - MADRAS HIGH COURT] when two views are legally possible and Assessing Officer adopts one view the Assessment Order cannot be said to be erroneous for the Ld.CIT to invoke jurisdiction u/s. 263 of the Act. In the case under consideration the AO has adopted one of the legally possible views qua Unsold Flats shown as closing stock. Therefore, the Assessment Order is not erroneous qua unsold flats shown as Stock. Accordingly, the Ground Number 3 of the assessee is allowed. TDS on payment made to Silk Route Communications - It is observed that the assessee during the assessment proceedings had filed details of TDS deducted on the payments made to Silk Route Communications. We have verified the fact that the assessee had deducted the TDS and the details were filed before the AO during the assessment proceedings. In the facts and circumstances, the assessment order is not erroneous qua TDS on payment made to Silk Route Communications. Therefore, the order u/s. 263 qua the issue of TDS on payment made to Silk Route Communications is set aside. Therefore, the Ground of the assessee is allowed. Interest on TDS - AO had not carried out any inquiry. The AO had not called for any details on this issue. Thus, we agree with the Ld.CIT that the AO failed to carry out necessary inquiry. Hence, the assessment order is erroneous and prejudicial to the interest of revenue qua the issue of Interest on TDS. Accordingly, the order u/s 263 is upheld qua the issue of interest on TDS. Accordingly, the Ground of the assessee is dismissed. Assessee appeal is partly allowed.
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2023 (12) TMI 201
Addition u/s 69B - difference in valuation of cost of construction as reported by the assessee and the estimate made by the DVO - non disposal of objections raised by the assessee on the Valuation Report of the DVO - Assessee counsel has taken objection that the DVO did not have jurisdiction over the case of the assessee, and hence the valuation report and the consequential assessment order passed by the Ld. AO and subsequently confirmed by the Ld. CIT(A) is bad in law and the same may be quashed - HELD THAT:- CIT(A) has not disposed of the objections raised by the assessee on the Valuation Report of the DVO without appreciating the facts, brought on record by the assessee and confirmed the addition made by the Ld. AO in respect of difference in Valuation of construction as computed by the assessee and as estimated by the DVO amounting to Rs. 7,37,200/- without appreciating the facts of the case. CIT(A) has not addressed the objections raised by the assessee on the Valuation Report of the DVO with the support of documentary evidences brought on record by the assessee and without adjudicating on the merits of the case, the CIT(A) has proceeded to pass the order on the basis of legal principle, but while doing so, has not discussed the objections filed by the appellant and the relevant documents which they had brought on record in their defence, including the valuation report. That s being the position, we see no reason to reject the claim made by the petitioners, on the contrary, we are satisfied that the order passed is in gross violation of the principles of natural justice. Under the circumstances, we consider it deem fit to remand the matter back to the file of the CIT(A) to adjudicate the issue of determination of value of investment in construction afresh after considering the submissions of the appellant assessee and all other relevant documents that he may propose to file before the CIT(A) and on the same being filed, the CIT(A) shall proceed to decide the question in accordance with law at an earlier date. No doubt, the assessee shall cooperate in the fresh proceedings before the CIT(A). Thus, the matter is restored to the Ld. CIT(A) for adjudication as per law. Appeal is allowed for statistical purpose.
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Customs
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2023 (12) TMI 200
Invocation of extraordinary jurisdiction - HELD THAT:- The relief prayed by the petitioner not granted, for quashment of FIR as the petitioners/company is not an accused in the FIR and they have no locus to seek quashment of FIR. In regard to the relief for custody of vehicle and goods, the remedy lies to the petitioners, to apply for custody of the vehicle and goods under Section 451 Section 457 of Cr.P.C. The said prayer cannot be considered in a writ jurisdiction when the remedy is available to the petitioners. However, the liberty is granted to the petitioners to file an application under Section 451 457 of Cr.P.C before the competent Court of law and if such application is filed, the Court shall consider the said application in accordance with the law without being influenced by the order dated 6/11/2023 rejecting the application for custody of vehicle and goods, filed by accused driver. The petition is dismissed.
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2023 (12) TMI 199
Recovery of customs duty / dues - Perior over secured creditors - Validity of order of attachment - Seeking removal of entry of attachment made by the 4th respondent on the property of the petitioner company - overriding effect of SARFAESI Act than any other Act including Customs Act under Section 26E under Chapter IV-A - HELD THAT:- In the present case, if the plea of the respondents ought to be considered that deposit of title deeds is not registered, then at the same breath, it ought to be considered that the attachment is also not registered. Then the bank and the Customs Department are standing on the same footing. Moreover, there is no provisions in the Customs Act granting 1st charge to its dues under its Act. In such circumstances, when both the parties are standing on the same footing and when there are no provisions of 1st charge to Customs Department then it ought to be seen which proceedings is first. A similar issue was considered by the High Court of Andhra Pradesh and Telangana in the case of ICICI Bank Limited Vs. Tax Recovery Officer [ 2019 (3) TMI 701 - TELANGANA AND ANDHRA PRADESH HIGH COURT ]. The challenge in the said judgment is an attachment order 14.03.2018, issued by the Tax Recovery Officer under Rule 48 of second schedule. After considering section 281 and rule 48, the Court has elaborately dealt with the issue and has held that there is no provision in the Income Tax Act by which a first charge is created automatically on the properties of the assesses. And also held it is now well settled that wherever the statute does not create a first charge over the property, the crown's debt does not take precedents over the claim of the secured creditor - In the present case also, there is no provisions in the Customs Act creating 1st charge on the property of the defaulter and the above judgment is applicable to the present case. Admittedly the bank had executed mortgage of deposit of title deeds on 31.07.1997, which is prior to the attachment of the Customs Department which was passed on 01.11.2004. Therefore, financial institution is having 1st charge as secured creditor than the crown debt. Hence, the impugned attachment cannot sustain the scrutiny of law. Hence, the impugned attachment is liable to be quashed. Petition allowed.
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2023 (12) TMI 198
Seeking release of goods - goods imported freely or not - Second hand Multifunction Print and copying machines - materials imported by the petitioners falls under Clause 2.31 of the Foreign Trade Policy 2023 effective from 01.04.2023 under the category second hand goods or not - HELD THAT:- Sl.No.(b) of Notification No.5/2015-2020, dated 07.05.2019, states that all electronics and IT goods notified under the Electronics and IT Goods (Requirement of Compulsory Registration) Order, 2012, as amended from time to time are restricted . Therefore, they are supposed to get authorization from the DGFT. When the said policy was in force, at that point of time also several imports have been made for importing second hand multi-function devices and similar issue was raised that these are all the multi function devices coming under Sl.No.(b). Therefore, unless otherwise authorization is obtained from the DGFT, the same cannot be imported. In the Notification No.5/2015-2020, dated 07.05.2019, only two clauses are available viz., (a) and (b), but, in the case of Foreign Trade Policy 2023, there are four clauses under Sl.No.I. This Court is of the considered view that as per Foreign Trade Policy, 2023, the petitioners' goods would not fall under the category I(b), but it falls under the category I(d) which indicates that other than goods mentioned in I(a), I(b), I(c), all other second-hand capital goods can be imported freely without any restriction. Therefore, if the petitioners not fall under clause I(b) automatically they fall under I(d). The Supreme Court has taken note of the said fact and stayed the confiscation of goods in a similar matter. Further, this Court, on a comparison of Notification No.5/2015-2020, dated 07.05.2019 and Foreign Trade Policy 2023, does not find any new changes brought in so that prohibited multi function devices should get authorization from DGFT. This Court is inclined to allow these writ petitions to the extent of releasing the goods provisionally - petition allowed.
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2023 (12) TMI 197
Seeking provisional release of goods - two gold chains weighing 360 grams - Section 110A of the Customs Act, 1962 - HELD THAT:- This Court is of the view that it would be appropriate to direct the respondents, if the petitioner files a proper application under Section 110A of the Act, to release the seized goods. Therefore, by granting liberty to the petitioner to file an application under Section 110A of the Act, this Court is inclined to dismiss the present writ petition. In the event, if an application is filed by the petitioner under Section 110A of the Act, the same shall be considered by the Customs Authorities and release the seized goods provisionally in accordance with law. Further, the petitioner is intend to deposit the entire duty and also execute a bond for the release of the seized goods. The same shall be considered by the respondents and take appropriate decision in accordance with law with regard to the release of the seized goods. Petition disposed off.
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2023 (12) TMI 196
Jurisdiction of Customs authorities - Claim of benefit of AIFTA - Wrongful availment of benefit of exemption of basic customs duty under Notification No. 46/2011 - fraudulently obtaining Country of Origin certificate by the supplier - submitting incorrect declaration while presenting the bills of entry under Section 46(4) of the Customs Act, 1962 - recovery of differentail duty alongwith interest and penalty. It is the case and the contention of the petitioners in alia that the proceedings initiated by the respondent customs authorities and the orders consequently passed are without jurisdiction. HELD THAT:- It is well settled that the Directive Principle provisions of Part IV of the Constitution are not enforceable in the Court of law, however, it is true that they are guiding principles fundamental to the governance of the country and that in interpretation of the fundamental rights, and in constitutional interpretation in any area, the Directive Principles become an aid to play their role, however, for noncompliance of any of the Directives in Part IV, a citizen cannot seek remedy through courts. The Court also cannot compel the State to implement the Directives. Looking to the language of Article 24 juxtaposed with the aspects of the present dispute and the controversy about the contents of RVC in the Country of Origin Certificate, it is debatable and doubtful whether the provisions of Article 24 would apply. What the Article contemplates is that a dispute concerning origin determination, classification of products or other related matters, the Government authorities of the exporting and importing parties may consult each other. In the present case, the origin of goods to be of Malaysia is not in dispute - Nor the dispute relates to classification of products or other related matters. However, the contention of the petitioner that Article 24 mechanism should have been resorted to by the respondents may be dealt with irrespective of and independent of the above aspect and consideration. In Entertainment Network (India) Limited [ 2008 (5) TMI 671 - SUPREME COURT] , the Supreme Court when observed that in interpreting the municipal laws, the international norms can be relied on for the purpose including to fill up the gaps in law, the Supreme Court speaks of gaps to be filled up in the interpretational process only. The Court cannot apply treaty provision not forming part of the State law and fill the gap. Filling of the gap is not to be perceived in this way which otherwise would be contrary to the basic principle that without competent legislation at the sovereign State level, the treaty provision cannot be enforced. When AIFTA Article 24 is not part of State law and Indian law making body has not recognised it for its implementation by excluding it from statutory law and rules, the proceedings taken out against the petitioner under the substantive provision of Customs Act, cannot become bad or stand illegal on their count. The suppression of facts is evident from the findings recorded by the Director of Revenue Intelligence which provided the basis for the Customs authorities to act and exercise the powers, was in respect of contents of wrongfully showing of RVC of the goods. The details for arriving at RVC was misleading and there was suppression of due and correct facts - The facts of the instant cases could attract the provisions of section 28 (4) and attendant provisions. Due to wrongful availment of the concession in the duty(0%), there was non-payment or short levy of the Customs duty in the goods and the exemption notification benefit was not available. The suppression of fact is clearly attributed to the petitioners inasmuch as what was required to be disclosed and proof of contents of the Bills of Entry was to be subscribed in form of declaration under Section 46 of the Act. The petitioners had been in regular course of business of import and acted in such course - In the present case, the Origin Certificate containing the RVC value details was part and parcel of the documents for which truthfulness was declared. Procedural provisions cannot override the substantial statutory provisions of the Customs Act. It is trite that non-compliance of procedural law would not automatically vitiate the legally permissible action taken under the substantive legal provisions - It is the substantive law which would govern and override. This Court is exercising jurisdiction under Article 226 of the Constitution. In that view, the finding of facts stands binding. Even otherwise, having regard to the cogent nature of the findings, they do not warrant any interference by the Court. The action initiated and the impugned order passed needs to be upheld. The Order-in-Original dated 29.05.2020 challenged in Special Civil Application No. 14028 of 2020 and in Special Civil Application No. 13365 of 2020, as also Order-in-Original dated 24.06.2020 impugned in Special Civil Application No. 14937 of 2020 passed by Additional Commissioner, Customs House, Kandla and by Assistant Commissioner, Customs House, Mundra, respectively could not be said to be without jurisdiction - application dismissed.
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2023 (12) TMI 195
Confiscation of imported goods - redemption fine and penalty - old and used Digital Multi Function Printer - permission and No Objection Certificate (NOC) from the concerned Ministry not obtained - Bill of Lading dated 13.02.2013 - Restricted goods or not - HELD THAT:- As the Bill of Lading is in this case is 13.02.2013, which was issued prior to 28.02.2013 and this Tribunal in the case of COMMISSIONER OF CUSTOMS (PORT) , KOLKATA VERSUS BHAWANI ENTERPRISES [ 2017 (11) TMI 974 - CESTAT KOLKATA] , has observed upto 28-2-2013, there was no restriction on import of subject goods. As in this case also, it is held that the Bill of Lading is prior to 28.02.2013 for import of the identical goods as in the case of Bhawani Enterprises, wherein it has been held that there was no restriction on import of the subject goods, therefore, it is held that the appellant is not required to obtain any specific license for import of the impugned goods - further it is held that the enhancement of value on the basis of Chartered Engineer s certificate cannot be a ground for treating declared value as mis-declared unless there is other corroborative evidence. The value declared by the appellant is correct and no license is required by the appellant for import of the said goods - the impugned order set aside - appeal allowed.
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2023 (12) TMI 194
Revocation of CB license - forfeiture of entire security deposit - levy of penalty - illegal import of cashew kernel broken/whole into India by mis-declaration of the description and value of the goods, with intention to evade the legitimate Customs duty - HELD THAT:- The detailed examination under Panchnama proceedings 25/26.02.2022 revealed that imported goods in the above consignment actually contained only 2487 Kg. of declared goods i.e., raw cashew nuts and the rest of 24,753 kg. were undeclared broken cashew kernel commercially known as cashew baby bits . It is seen that DGFT had issued a notification No.08/2015-2020 dated 12.06.2019, whereby the import policy conditions in respect of Cashew Kernel, broken classifiable under Exim code 0801 3210 and Cashew Kernel, whole 0801 3220, prescribed as Free was amended to be notified as Prohibited ; along with revision of the minimum CIF value condition by enhancing it from Rs.288/per Kg. to Rs.680/- per kg. and Rs.400/per Kg. to Rs.720/- per kg., respectively - During the enquiry proceedings, as the importer had stated that a similar consignment with mis-declaration is arriving at JNCH, Nhava Sheva, the import of raw cashew nuts in B/E No. 7614852 dated 23.02.2022 with mis-declaration of goods, which was handled by another customs broker M/s Shiv Kumar Gupta, was put on hold by JNCH Customs. Detailed examination of the said imported goods also revealed that declared goods of 27,000 kgs. of Raw Cashew Nuts in shell , the physical examination of the goods by SIIB(I), JNCH Customs revealed that it actually contained 2500Kg. of raw cashew nuts and the rest of 24,500 kg. were undeclared broken cashew kernel commercially known as cashew ba by bits.The above details indicate that the said Shri Krishnat Shankar Kadam, Proprietor of importer M.s K.K. Traders, had in collusion with some persons planned about the illegal activities in import of the prohibited cashew kernel from Vietnam and one Shri Chetan Yadav, working in M/s Ninai Shipping Agency had played major role in this modus operandi, and the appellants were not involved. The mis-declaration of imported goods is limited to the extent that the CIF prices of imported goods were not conforming to the permitted higher threshold limits under the DGFT Notification. In other words, the imported goods of value below threshold limit had been imported, which is prohibited by prescribing Minimum Import Price (MIP). The Foreign Trade Policy (FTP) notified by the Ministry of Commerce Industry, Directorate General of Foreign Trade provide under para 2.07, the Principles of Restrictions for which DGFT may, through a Notification, impose Prohibition or Restriction for various purposes specified therein - the importer M/s K.K. Traders, Satara, had violated the conditions prescribed in the FTP by import of cashew kernels below the threshold MIP, and the appellants had no role in the said violations of MIP. It is true that as an individual person Shri Chetan Yadav, of M/s Ninai Shipping Agency who assisted the importers in the violation, and the appellants as a Customs Broker associated with such imports may be responsible for the omission and commission which had led to import of prohibited goods in violation of the Customs Act, 1962 read with relevant Rules and Regulations - there cannot be a case for taking action against violations of CBLR. Hence, the impugned order does not sustain on grounds of factual matrix of the case as detailed therein and also as explained in the SCN dated 08.12.2022. Thus, it is factually incorrect to state that the appellants had for their acts of omission and commission in dealing with importer in misdeclaration of imported goods have failed to adhere to the responsibilities expected in terms of Regulations 10(e), 10(n), 13(3) and 13(4) of CBLR, 2018. Thus, the conclusions arrived at by the Principal Commissioner in the impugned order is contrary to the factual position and thus it is not legally sustainable. The impugned order is modified by setting aside the same in respect of revocation of CB license of the appellants and for forfeiture of security deposit as there was no violation of Regulations 10(e), 10(n), 13(3) and 13(4) of CBLR, 2018. Further, by modifying the impugned order for imposition of penalty, a penalty of Rs.10,000/- imposed on the appellants under Regulation 18 ibid on account of their failure to supervise their employee for compliance with the law in examination of goods as per provisions of Regulation 13(12) ibid. The appeal is partly allowed.
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2023 (12) TMI 193
Quantum of penalty u/s 114 of CA - penalty imposed is around ten times the value of the impugned goods - misdeclaration of export goods - appellant in collusion with his DTA supplier (appellant-2) attempted to export the impugned goods which were liable for confiscation. It is contention of revenue that Commissioner (Appeals) has decided the appeal in favour of respondents without discussing departmental views on merits. HELD THAT:- The Commissioner (Appeals) has discussed the relevant portion of show cause notice and has concluded for deduction of the penalties imposed upon the respondents. He has discussed in his order that why he do not find respondents guilty of mis-declaration etc. and imposition of penalties under Section 114 and specifically under Section 114AA is a discretionary power whereby penalty could have been imposed up to the value as declared or to the value as determined under the Customs Act. It is not the case that penalties imposed under the provisions is a mandatory penalty that needs to be reduced. Commissioner (Appeals) in exercise of discretion have reduced the penalties imposed as indicated in his order. Nothing has been stated in the appeal to show that the discretion as exercised was in a malafide manner. In case of COMMISSIONER OF CUSTOMS (IMPORTS), MUMBAI VERSUS RA SPINNING MILLS (P) LTD. [ 2004 (4) TMI 405 - CESTAT, MUMBAI] Mumbai bench held Section 112 of the Customs Act does not provide for a mandatory penalty and the discretion to impose penalty or not to impose penalty depends upon each case. In COMMISSIONER OF CENTRAL EXCISE, CUS. S.T. VERSUS BARNWAL CARPET MFG. CO. [ 2017 (11) TMI 1046 - ALLAHABAD HIGH COURT] Hon ble Allahabad High Court has held When the adjudicating authority is empowered to impose lesser penalty than the maximum provided it cannot be said that the Tribunal is not vested with the same power. The Tribunal having exercised the above discretion for the reasons recorded which do not appear to be arbitrary or whimsical, in any way, we are of the view that the said discretion is not liable to be interfered with and the Tribunal was justified in reducing the penalty imposed under Section 114(iii) of the Act . There are no merits in the appeal - appeal dismissed.
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2023 (12) TMI 192
Confiscation of goods - Smuggling - foreign origin Betel Nuts - specified or notified goods? - Burden to prove - consigner appellant firm M/s Ganga Enterprises was found to be non-existent at the address mentioned in the invoice number - HELD THAT:- The impugned goods i.e. Betel Nuts are not the goods specified or notified under Section 123 of the Customs Act, 1962. Thus the burden to prove the smuggled nature of these goods lies on the Custom Authorities as held by the Tribunal in the case of BABOO BANIK VERSUS COMMISSIONER OF C. EX. CUS., LUCKNOW [ 2004 (7) TMI 482 - CESTAT, KOLKATA] . Tribunal in the case of BIJOY KUMAR LOHIA VERSUS COMMISSIONER OF CUSTOMS (PREV.), PATNA [ 2005 (11) TMI 306 - CESTAT, KOLKATA] has held that the local trade opinion cannot take the place of the legal evidence. No case has been made out for the seizure and confiscation of the Betel Nuts is made out as no evidence has been placed on record to establish the foreign origin of these goods, or of illegal importation of the same. These goods were seized when they were being transported within the country, which do not cross any international border from the place of origin to destination. Impugned goods namely betel nuts are not specified under Section 123 of the Customs Act, 1962 and the burden to prove the smuggled nature of the same is on the Custom Authorities. If the evidences on the basis of which foreign origin of the goods are found unsatisfactory as per the above said decision, it is not found that the Custom Authorities have discharged the burden cast on them under Section 123, ibid. Cancellation of registration under GST may be for violation of the provisions of that Act, and non existence of consignor etc., at specified address do not establish the case of the revenue for holding the goods to be of foreign origin and smuggled into India. There are no merits in the impugned order of Commissioner (Appeals) - appeal allowed.
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2023 (12) TMI 191
Classification of imported goods - EDTA Zinc 12% - to be classified under CTH 3105 9090, with exemption from CVD vide Notification No. 04/2006-CE dated 01.03.2006 or it would fall under CTH 2921 2100 and thereby, not entitled to the CVD exemption, by considering the said product as Ethylenediamine and its salts ? Whether the product in question can be considered as separate chemically defined compound as Revenue is arguing or otherwise? - HELD THAT:- From the manufacturing process, as well as expert opinion, it is apparent that Nitrogen is added deliberately in the process simultaneously, along with Zinc Oxide, as also EDTA acid. Therefore, Nitrogen is not an in situ development rather it is part of the manufacturing process and Nitrogen remains in the product even after the reaction is over, as confirmed by the test report of the final product. Therefore, even if it is a micronutrient or plant growth regulator essential for providing Zn, since it also contains fertilizing element i.e., Nitrogen also, it would be more appropriately classifiable as other fertilizers . Whether nitrogen is used as fertilizer or otherwise or whether it is intended to be used as fertilizer or otherwise? - HELD THAT:- Admittedly, it is an agriculture grade product, where the Revenue has also provided the IS standard meant for agriculture grade Zinc-EDTA. IS standard for chelated Zinc for agricultural use (IS 13921:1994), inter alia, provides for certain minimum requirements of Zinc i.e., 12% which is satisfied in this case. Similarly, the Fertilizer (Control) Order also classifies chelated Zinc i.e., Zn-EDTA, as micronutrient, where the minimum content should be 2%. Therefore, when the chelated Zinc is treated as fertilizer or micronutrient and when the same is also having other fertilizing component like Nitrogen in substantial proportion (here 6.5%), this needs to be classified as micronutrient fertilizer or other fertilizer in terms of Chapter Note 6 to Chapter 31. The Commissioner (Appeals) had rightly decided the classification of EDTA Zinc 12% under CTH 3105 9090. Accordingly, there are no merit in interfering with the Impugned Order - appeal dismissed.
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2023 (12) TMI 190
Violation of principles of judicial discipline - Seeking provisional release of seized goods - Smuggling - foreign origin gold and cash - release denied on the ground that respondent was not cooperating with the investigation proceedings - HELD THAT:- From the plain reading of Section 110A of the Customs Act, 1962, it is quite evident that provisional release of the seized goods in terms of Section 110A goods, document and things seized, pending adjudication has been allowed as a right to the person who claims ownership of the said goods, documents and things. The only requirement is that at the time of release the bond in proper form with security and conditions as adjudicating authority may impose, should be taken from him. The only grounds stated by the Additional Commissioner in Order-in-Original for not allowing the provisional release of the seized goods and Indian currency is that respondent was not cooperating with the investigation proceedings. The ongoing investigation cannot be ground for the denial of right to the provisional release of seized goods conferred on the respondent by the Customs Act, 1962. It seems that the Additional Commissioner, while passing this order has not acted as quasi judicial authority but an agent of investigating team of DRI officers and have instead of implementing the rule of law has decided to implement the will of the investigating authorities. Such an approach or interference in quasi judicial functioning by the investigating authorities is totally uncalled for and is condemned. It is not understood as to how officers responsible for implementing a Central Law - Customs Act, 1962, holding high positions of Commissioner in the justice delivery system as per the Act, ibid, direct contrary to the provisions of the law as have been interpreted by the Higher Judicial Forums including the Jurisdictional High Court. The appeal filed itself goes contrary to the principles of judicial discipline which are so sacrosanct for establishing rule of law. It is directed that copy of this order should be given to the Chief Commissioner of the zone and Member Investigation/ Member Customs for taking necessary action and to ensure that such practices is avoided - appeal dismissed.
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2023 (12) TMI 189
Smuggling - Betel Nuts being of foreign origin - no documentary evidences could be produced with regards to legal import - burden to prove - appeal filed without application of mind - HELD THAT:- The appeal are filed in routine manner without any application of mind. The Form CA-5 which has been filed is incomplete and fails to record even the basics of the cases as per the impugned orders of the lower authorities. Commissioner (Appeal) has in appeal filed by four of the aggrieved persons against the order in original set aside the entire Order-in-Original even against the persons whose appeal was not under consideration by him, and revenue files this appeal even without uttering a single word about the same. Might be the revenue is only aggrieved by the setting aside of the order against the respondent and not against setting aside of the entire order in original without any appeal. On going through the impugned order of Commissioner (Appeals), it is noted that he has primarily gone by the fact that betel nuts are not notified under Section 123 of the Customs Act and the onus to prove that the same are smuggled is on the Revenue as held by the Tribunal in the case of BABOO BANIK VERSUS COMMISSIONER OF C. EX. CUS., LUCKNOW [ 2004 (7) TMI 482 - CESTAT, KOLKATA ]. Further, the Tribunal in the case of BIJOY KUMAR LOHIA VERSUS COMMISSIONER OF CUSTOMS (PREV.), PATNA [ 2005 (11) TMI 306 - CESTAT, KOLKATA ] has held that the local trade opinion cannot take the place of the legal evidence. It is noted that the reliance on the opinion of Arecanut Research Development Foundation (ARDF), Mangalore as regards the country of origin by the Original Adjudicating Authority was not proper inasmuch as the said organization in reply to an RTI query has stated that it is not possible to determine the place of origin of betel nuts through test in laboratory. As such, the Appellate Authority is agreed upon that the said report can only be treated as an opinion and not as scientific test report regarding the country of origin. There are no infirmity in the impugned order of the Commissioner (Appeals) to the extent it pertains to the respondent in this appeal and the same is upheld - appeal of Revenue dismissed.
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2023 (12) TMI 188
Valuation and assessment of imported goods - Artificial PU, and leather cloth of varied thickness - Enhancement of value on the basis of NIDB data as well as contemporaneous evidence available in the EDI system - enhancement without disclosing any reason or passing any speaking order under Section 17(5) of the Customs Act - principles of natural justice - HELD THAT:- The law is amply clear in the matter and that any rejection of declared value and its re-determination has to be qualified by way of a speaking order issued in terms of Section 17(5) of the Customs Act - It goes without saying that the issuance of a speaking order is the basic minimum for adherence and compliance with the principles of natural justice. In the absence of any order in writing regarding reassessment and revaluation, the same can at best be cryptic and arbitrary with no cogent justification for rejection of the declared value. It is an admitted position that no orders as warranted in terms of Section 17(5) were issued by the department in the present matter. Moreover, no show cause notice was also issued to the appellant. There are no illegality in the impugned order passed by the learned Commissioner (Appeals). We note that the appeal filed by the revenue is bereft of substance and merit, in as much as no reasonable opportunity has been given to the respondents to present their case. The revenue has not doubted the importers invoice submitted at the time of assessment. No re-valuation of the goods imported can be directed in law without first rejecting the transaction value. Therefore, the Commissioner (Appeals) has rightly rejected the order passed by the lower authority, enhancing the transaction value declared, without spelling out any reasons thereof. There are no merit in the appeal filed by the department - appeal of Revenue dismissed.
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Corporate Laws
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2023 (12) TMI 187
Rectificatory jurisdiction - Willful violation of Orders of Hon'ble Company Law Board - transfer of shares - rectification of Register of Members of Respondent No. 1 Company - whether the rectificatory jurisdiction under Section 59 of the Act, which is summary in nature can be exercised where there are contested facts and disputed questions? HELD THAT:- Since, the Tribunal has relied upon the decision in the case of Ammonia Supplies [ 1998 (9) TMI 427 - SUPREME COURT ] and IFB Agro [ 2023 (1) TMI 257 - SUPREME COURT ] which has also been relied upon by Counsel for the Respondent, therefore, it would be apt to deal with two decisions to find out as to whether these decisions would apply? In the case of Ammonia Supplies, Section 155 of the Act of 1956 was in question which deal with the power of company court to rectify the register of members maintained by a company. The word rectification has been defined as something what ought to have been done but by error not done and what ought not to have been done was done requiring correction. In this case, the question was framed as to whether in the proceedings under Section 155 of the Act of 1956, the court has exclusive jurisdiction in respect of all the matters raised herein or has only summary jurisdiction? The Hon ble Supreme Court held that the company court under Section 155 has to adjudicate in the facts and circumstance whether the dispute raised really pertains to rectification or under the garb of rectification questions of fact involving contentious issues are raised and if dispute found to be relating to the peripheral field of rectification, then the company court under Section 155 will have exclusive jurisdiction but if finding is otherwise then the civil court s jurisdiction is not excluded. In the case of IFB Agro, the Hon ble Supreme Court was considering the question in regard to the scope of the rectificatory jurisdiction of the NCLT under Section 59 of the Act and was called upon to determine the appropriate forum for adjudication and determination of violations of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations 1997 and Securities and Exchange Board of India (prohibition of insider trading) Regulations 1992 framed under the Securities and Exchange Board of India Act, 1992. It was held that under Section 59 of the Act, in view of the Ammonia Supplies (Supra) the jurisdiction is summary in nature and not intended to be exercised where there are contested facts and disputed questions and in regard to the second issue it was held that transactions falling within the jurisdiction of Regulatory bodies created under a statute must necessarily be subjected to their ex-ante scrutiny, enquiry and adjudication. Thus, once the legislature has created a complete bar of the jurisdiction of the Civil Court by enacting Section 430 in the Act as per which no civil court shall have the jurisdiction to entertain any suit or proceedings in respect of any matter which the Tribunal or Appellate Tribunal is empowered to determine by or under this Act or any other law for the time being in force and no civil court has the jurisdiction to grant injunction in respect of any action taken or to be taken in pursuance of any power conferred by or under the act or any other law for the time being in force by the Tribunal or Appellate Tribunal, there is no shred of doubt that the jurisdiction to decide the rectificatory jurisdiction under Section 59 of the Act shall be available to be exercised even where there are contested facts and disputed questions and regard may be had to the decision in the case of Shashi Prakash Khemka [ 2019 (2) TMI 971 - SUPREME COURT ] as decided by the Hon ble Supreme Court while referring to Section 430 of the Act. The impugned order set aside - appeal allowed.
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Securities / SEBI
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2023 (12) TMI 186
Violation of SEBI Act - validity of settlement orders, which according to the petitioners were patently illegal being beyond the authority and power of the SEBI to accept any settlement - petitioners in writ petitions are minority shareholders - case of the petitioners is to the effect that there is a severe prejudice caused to the petitioners due to several illegalities committed by BNL, at the instance of the majority shareholders who are respondent Nos. 3 to 9 - petitioners have contended that they are the victims of BNL not being listed on a recognized stock exchange, which has severely affected their interest as investors in BNL - before the show cause notice(s) could be taken to its logical conclusion, respondent No. 2 to 9 had moved an application for settlement of the show cause notice(s), by invoking the provisions of 2018 Regulations - petitioners had urged that the SEBI be directed to provide documents to the petitioners as prayed for and directed that the documents, subject matter of prayer clause (g) of the petition be provided to the petitioners. This Court [ 2023 (10) TMI 1173 - BOMBAY HIGH COURT] observed, that by no stretch of imagination, could it be said that the petitioners in the present case, who were minority shareholders and in such capacity, being part owners of the company (BNL), to the extent of their shareholding, were not outsiders / alien to the company, and that they were integral to the company, having an inextricable concern and interest in the functioning and management of the company. Special Leave Petition of respondent no. 2 - BNL and respondent No. 9-Vineet Jain was dismissed by the Supreme Court, as also a decision being taken by the SEBI to assail our order dated 23 October, 2023 before the Supreme Court, what has happened at SEBI s end in regard to the SEBI s proceedings against BNL, is not only interesting but quite intriguing. HELD THAT:- On perusal of the show cause notice, a copy of which is produced for perusal of the Court on behalf of the SEBI, we find that non-compliance interalia of the Rules and Regulations of SEBI are subject matter of the show cause notice, and any plea in opposition as may be urged by BNL and respondent Nos. 3 to 9 (the majority shareholders), would fall for consideration in the adjudication of the show cause notice. This would, however, not mean that the petitioners in their capacity as shareholders, would be dis-entitled or would cease to have any locus to have information / documents in regard to such affairs of BNL and to seek compliance of the Rules and Regulations and the norms of the SEBI by respondent No. 2 and those controlling BNL. SEBI now needs to resort to a lawful course of action, to adjudicate the show cause notice, so as to reach to a conclusion, whether respondent Nos. 2 to 9 have violated the provisions of the Act, Rules and Regulations, as alleged in the show cause notice and the complaints of the petitioners. We are thus of the opinion that in the facts and circumstances of the case, it would be appropriate that the SEBI expeditiously takes forward the show cause notice and comes to an appropriate conclusion, in accordance with law, in regard to the allegations as made in regard to respondent Nos. 2 to 9 in the show cause notice. SEBI from 23 October 2023 has not complied our order directing that the documents be furnished to the petitioners. As pointed out on behalf of the petitioners, SEBI has resorted to all possible efforts, not to comply with the order dated 23 October, 2023. Even after the Special Leave Petitions of BNL and Vineet Jain - respondent No. 9 were dismissed by the Supreme Court, the documents were not furnished to the petitioners. SEBI thereafter assailed the orders dated 23 October 2023 before the Supreme Court resulting in dismissal of its Special Leave Petition. Now the SEBI is before the Court taking a stand that the documents need not be furnished and the petitions be disposed of as they are rendered infructuous. We wonder, as what can weigh with the SEBI, in not complying our order dated 23 October, 2023 and not furnishing the documents to the petitioners, except to benefit respondent Nos. 2 to 9. Even such plea that the SEBI would have a legal right or an entitlement, not to furnish documents to the petitioners as ordered by us, was the core issue under our orders, being urged by the SEBI before the Supreme Court, apart from the plea of interpretation of Regulation 29 of the 2018 Regulation. Considering all these circumstances, we are of the clear opinion that the entitlement of the petitioners to our order dated 23 October 2023, would certainly subsist and the petitioners need to be provided such documents by the SEBI. Moreover, not providing such documents, merely on the ground of the subsequent development that the settlement orders now stands revoked, would completely be an untenable proposition and contrary to our orders dated 23 October 2023, as confirmed by the Supreme Court. Although respondent Nos. 2 to 9 in their business interest may overlook the solemnity of the orders passed by this Court, however, SEBI in its public character cannot take the same approach. In these circumstances, the order dated 23 October 2023 cannot be rendered nugatory. The SEBI is required to holistically consider such orders and not merely in the context of the settlement proceedings, as such order considers the substantive rights of the petitioners, who are shareholders of respondent No. 2 BNL, having equal rights to that of respondent nos. 3 to 9. SEBI cannot have different yardstick between shareholders. We therefore, direct that our order dated 23 October 2023, which has attained finality, needs to be forthwith complied by SEBI. On the issue whether the Court should adjudicate prayer (c) and (d) of the petitions, taking an overall view of the matter, and that, now the show cause notice is required to be taken forward, we are of the opinion that in so far as such reliefs are concerned, the same needs to be kept open to be agitated by the petitioners at the appropriate time in appropriate proceedings in the context of the decision which may be taken by the SEBI on the show cause notice. We accordingly, propose to dispose of these petitions by the following order:- ORDER (I) The petitioners are entitled to the benefits of the order dated 23 October 2023 as confirmed by the Supreme Court, by rejection of the Special Leave Petitions of respondent Nos. 2 and 9 and thereafter, by rejection of the Special Leave Petition filed by the SEBI. (II) The order dated 23 October 2023 passed by this Court, be forthwith complied by SEBI. (III) All the contentions of the petitioners and of the respondents on issues in regard to prayer clauses (c) and (d) are expressly kept open to be agitated at appropriate time in appropriate proceedings.
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Insolvency & Bankruptcy
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2023 (12) TMI 185
Approval of Resolution Plan - failure to submit the Bank Guarantee as per RFRP - whether condition for requiring to submit Rs. 50 Lakhs Bank Guarantee was contrary to Regulation 36B (4) and (4A)? - HELD THAT:- Regulation 36-B (4) only provides for request of resolution plan shall not require any non-refundable deposit. In RFRP there is no such clause which requires that Resolution Applicant has to submit any non-refundable deposit. With regard to Regulation 36B (4A), RFRP itself contains a condition as extracted above. Therefore, the RFRP was fully in compliance with Regulation 36B (4A). Learned Counsel for the Resolution Professional has rightly submitted that requirement of Bank Guarantee was only for the purpose to consider seriousness of the Resolution Applicants who are able to submit the Bank Guarantee of Rs. 50 Lakhs. Appellant has never complied the said and has not challenged the RFRP at any stage, cannot be allowed to contend that the said condition is not correct. It is further noticed in 09th COC Meeting that Appellant has made a request to CoC to waive the requirement of Bank Guarantee which was not accepted by the CoC and Appellant having not complied with the terms of the RFRP in submitting the plan, there are no illegality in the decision of the CoC in not considering the Resolution Plan of the Appellant. There are no reason to entertain this Appeal, the Appeal is dismissed.
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Service Tax
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2023 (12) TMI 184
Denial of benefit of exemption for the value of Inputs used - Notification No. 39/2009 ST dated 23.09.2009 and Notification No. 43/2009 ST Dated 02.12.2009 - Business auxiliary Service - manufacture and sale of alcoholic liquor (Beer) for human consumption - period from 1.09.2009 till 30.06.2012 and the show cause notice dated 05.08.2014 - extended period of limitation - HELD THAT:- The appellants have produced an affidavit by way of undertaking in relation to Notification No. 39/2009-ST dated 23.09.2009 read with Notification No. 43/2009-ST dated 02.12.2009. The affidavit was filed at the instance of this bench, so as to comply with condition that was found lacking by the adjudicating authority. The appellants have now categorically stated that, they have not taken any Cenvat Credit nor intend to take the same, as per requirement of the aforesaid notifications - It is found that this affidavit and undertaking should make them eligible for the benefit of notification as other conditions were not found to be unfulfilled by the adjudicating authority. Accordingly, the affidavit is allowed to be taken on record and direct the adjudicating authority to consider the same and allow the benefit of exemption notification as claimed by the appellants. The adjudicating authority shall appropriately consider the benefit of the notification to be allowed to the appellant in the light of affidavit having been filed with undertaking of not availing the credit, which has been stated to be not taken till date by the appellant - appeal allowed.
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2023 (12) TMI 183
Levy of service tax - security agency service or not - providing services to private persons, for companies for activities like escort of cash, security services to private/ public sector banks , security to individuals, Securities and others - appellant is a police department of Government - HELD THAT:- The identical issue has already been considered in DY. INSPECTOR GENERAL OF POLICE VERSUS COMMISSIONER OF C. EX., BHOPAL [ 2017 (11) TMI 346 - CESTAT NEW DELHI] where it was held that CESTAT in the case of Dy. Commissioner of Police Others v. CCE, Jaipur Others, [2016 (12) TMI 289 - CESTAT NEW DELHI] concluded that the police department which is in the agency of State Government cannot be considered to be a person engaged in the business of running security services. The issue in hand has already been settled in the aforesaid decision - in the present case also, the demand of service tax is not sustainable - Appeal allowed.
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2023 (12) TMI 182
Levy of service tax - inclusion of value of bought out software supplied to the clients along with STM software in the assessable value. The principal argument of the appellant is that the software supplied by them construed goods and the same do not attract levy of service tax. HELD THAT:- The decision of Hon ble Apex court in the case of COMMISSIONER OF SERVICE TAX DELHI VERSUS QUICK HEAL TECHNOLOGIES LIMITED [ 2022 (8) TMI 283 - SUPREME COURT ], becomes relevant - It can be seen from the above decision that when such software is supplied (preloaded) in a medium like hardware in the instant case, the same cannot be treated as provision of service. The said supply would amount to sale of goods. The demand of service tax on the value of bought out software by the appellant cannot be sustained. The demand to that extent is set aside. Appeal is allowed.
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2023 (12) TMI 181
CENVAT Credit - input services - Life Insurance Service and Management of Investment under ULIP Plan services - providing both taxable services and exempted services without maintaining separate records - HELD THAT:- The Tribunal in the case of HDFC STANDARD LIFE INSURANCE CO LTD AND BIRLA SUN LIFE INSURANCE COMPANY LTD VERSUS COMMISSIONER OF CENTRAL EXCISE MUMBAI [ 2020 (10) TMI 578 - CESTAT MUMBAI] ; followed subsequently in the case of LIFE INSURANCE CORPORATION OF INDIA VERSUS COMMISSIONER OF CENTRAL EXCISE MUMBAI II [ 2020 (10) TMI 580 - CESTAT MUMBAI] expresses the same view observing that the portion of the premium earmarked for savings(investment) is not an exempted service. Thus, it can safely be concluded that since no other service is provided by the appellant except life insurance service, a part of the premium collected towards savings(investment), cannot be considered as an exempted service and demand of 6% of the value of the premium attributable to other than risk coverage be confirmed under Rule 6(3(i) of CENVAT Credit Rule, 2004. The impugned orders are set aside - Appeal allowed.
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2023 (12) TMI 180
Levy of service tax - business auxiliary service - commission received from Amway for the period July, 2003 to March, 2005 - HELD THAT:- Perusal of the material on record and also the judgment of the Tribunal in the case of Paramjit Kaur Others [ 2015 (6) TMI 585 - CESTAT NEW DELHI ] vide which the Tribunal disposed of 83 appeals by remanding the matter to original authority for de-novo adjudication. The present appeal remanded to original authority for de-novo adjudication on the same lines as was given in the bunch of appeals. The present appeal is disposed of by way of remand.
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2023 (12) TMI 179
Refund of service tax paid on the input services - Export of services - appellant did not produce the copy of invoices for examination by the learned Commissioner (Appeals) - The appellant has assailed the impugned order on the ground that the authorities below cannot question the manner of availment of CENVAT credit. - HELD THAT:- Rule 3 ibid is the enabling provision, which entitles a manufacturer or a service provider to avail CENVAT credit of Central Excise duty paid on the inputs and service tax paid on the input services. The manner of availment and utilization of CENVAT credit is contained in the CENVAT statute. If availment or utilization of the credit is not in conformity with the CENVAT statute, then Rule 14 ibid provides that such irregularly availed or utilized CENVAT credit can be recovered from the assessee and for effecting such recovery, the provisions of Section 11A of the Central Excise Act, 1944 or Section 73 of the Finance Act, 1994 shall apply mutantismutandis - Since, Rule 5 ibid is a self-contained rule, which provides for grant of refund of accumulated CENVAT credit in case of exportation of the services, while dealing with such provision, the department cannot take recourse to the other provisions in the statute to say that availment of credit or utilization of credit is not in conformity with the statutory provisions. Rule 5 refund is permissible in case of observance of the formula laid down therein, which the appellant in this case has complied with. Since, the output services were exported by the appellant, the un-utilized CENVAT credit availed on the input services should be available to the appellant. There are no merits in the impugned order, insofar as it has denied the refund benefit to the appellants - appeal allowed in favour of appellant.
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2023 (12) TMI 178
Non-payment of service tax - service provided to G. P. Pant Hospital (GPPH) and Maulana Azad Institute of Dental Sciences (MAIDS) located in New Delhi - benefit of Notification No. 25/2012-ST dated 20.06.2012 (Sr. No. 25) availed - non-payment of service tax in respect of the taxable services provided to M/s Cummins Technology India Ltd. SEZ Unit as well - Services provided to Government, a local authority or a governmental authority - Public health services. Service provided to G. P. Pant Hospital (GPPH) and Maulana Azad Institute of Dental Sciences (MAIDS) located in New Delhi - HELD THAT:- The period of dispute involved in this case is from 2009-10 to 2014-2015. In exercise of the powers conferred under Section 93 of the Finance Act, 1994, the Central Government had issued the Notification No.25/2015-S.T. dated 20.06.2012 in exempting various taxable services from payment of Service Tax. The two hospitals in this case viz., GPPH and MAIDS are run by the Government of N.C.T. We have examined the agreements entered into between the Appellant and G. B. Pant Hospital, Government of N.C.T., New Delhi. Such agreement was entered into by the service recipient on behalf of the President of India, meaning thereby that the said hospital is a Government Hospital. Since, the appellant is a provider of the taxable service, and has provided services to the government authority, such services were exempted in view of the Notification dated No.25/2015-S.T. dated 20.06.2012. However, for the subsequent period w.e.f. 11.07.2014, there was confusion inasmuch as the phrase provision of service to the Government was not specifically finding place in such amended Notification. The recipient of service in this case since is a Government body, the services provided by the Appellant, should also be considered for exemption in terms of both the un-amended Notification dated 11.07.2014 and the subsequent Notification dated 11.07.2014. Services provided by the Appellant to M/s Cummins Technology India Ltd - HELD THAT:- It is an undisputed fact that such unit is located in the Special Economic Zone (SEZ). In respect of claiming exemption for payment of service tax on the services provided to SEZ Unit/Developer, the Notification No. 09/2009-S.T. dated 03.03.2009 as amended, in explicit terms provides that the services provided to the SEZ should be considered to grant of the benefit of exemption - In the case in hand, since the appellant had in fact provided the services to an unit of SEZ unit, in our considered view the benefit of the exemption provided under the Notification dated 03.03.2009 should also be available. Thus in this connection, there are no merits in the impugned order passed by the learned Commissioner (Appeals). The impugned order passed by the learned Commissioner (Appeals) is set aside - Appeal allowed.
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2023 (12) TMI 177
Denial of CENVAT Credit - nexus of output service with the input services availed - services availed from sub-contractor - HELD THAT:- It is found that the Commissioner (Appeals) has given no logical justification for denying the CENVAT Credit. One of the reason given by the Commissioner (Appeals) is that the work of installation has been carried out by somebody else on behalf of the appellant. It is not understood as to how this can be a reason for denying the CENVAT Credit. Obviously when the work is sub contracted a different person will carry out the work. Another reason given is that he does not find any name of the sub-contractor in the purchase order. It is not mandatory for the appellant to provide the name of the sub-contractor in the purchase order. There are no justification for denial of CENVAT Credit - the appellant has given details of co-relation of the input services and the out put services and the reasons given by the Commissioner (Appeals) for denying the credit are without any merit. The impugned order is set aside - The appeal is allowed.
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2023 (12) TMI 176
CENVAT Credit - input service - interpretation of Rule 2 (l) of the Cenvat Credit Rules, 2004 - place of removal - HELD THAT:- Rule 2 (l) provides that the input service is the services used directly or in-directly, in or in relation to manufacture and clearance of the finished products up to the place of removal. Undisputedly, the place of removal in the present case is the direct shop in Kolkata and the claim of appellant that the duty is paid on the value determined on the basis of sale value from the direct shop is not disputed in the impugned order. Interestingly, Commissioner (Appeals) says in his order that adjudicating authority in his earlier order states that direct shop at Kolkata belongs to M/s Frostees Export India Pvt. Ltd. and for that reason it cannot be place of removal while doing so Commissioner (Appeals) has failed to examine the basic question whether the goods were sold by the appellant from the direct shop which may be owned by M/s Frostees Export India Pvt. Ltd. or any other person. Once it is established that the appellant were paying duty on the value at which the bikes were sold from the direct shop at Kolkata then there cannot be any reason for not allowing the Cenvat Credit in respect of the services received at depot. Thus, there is no justification for holding that the direct shop at Kolkata from where the bikes were finally sold by the appellant is not the place of removal as per Rule 2 (qa) of the CENVAT Credit Rules, 2004 - the expenses incurred on rent, repair and maintenance of the direct shop cannot be excluded from the assessable value for the payment of Central Excise Duty and for the same reason the service tax paid in respect of these services received at depot cannot be denied. There is no justification for not allowing the credit in respect of input services received at the direct shop in Kolkata from where the goods are finally sold by the appellant after clearance from the factory. There is no merit in the impugned order and the same is set aside. As the demand for duty is set aside the demand for interest and penalty imposed is also set aside - Appeal allowed.
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2023 (12) TMI 175
Nature of transaction - sale of excisable goods or service - imported software, customized and sold/cleared by the Appellant along with DCS - goods classified under Chapter sub-heading 85238090 of CETA, 1985 (by availing exemption under Notification No. 6/2006CE dt.01.3.2006 and No. 12/2012-CE dt. 17/03/2012 as amended, as the case may be) - sale or service under the taxable category of Information Technology Software Services (ITSS)? HELD THAT:- There is no dispute on the clearance/sale of customized software under separate excise invoices along with DCS classifying the same under Chapter sub-heading 85238090 of CETA, 1985 and availing benefit of exemption Notification No. 6/2006-CE dt. 01/03/2006 prior to 16/05/2008. It is also not is dispute that Canned software/Customized software as goods being held in a series judgments accepted by both sides. But, the dispute arose only after introduction of the service tax on Information Technology Software Service w.e.f. 16/05/2008. It is to be noted that even after introduction of the service tax on the Information Technology software Service more or less on similar line of definition of Information Technology software already present under supplementary note of Chapter 85 of CETA, 1985 and the classification of the said software under Chapter Heading 8523 of CETA, 1985 continued in the Central Excise Tariff Act without any amendment or alteration to the same. In other words, the intention of the Legislature was continuation of levy of excise duty on the activity of manufacture and sale of Information Technology software and also levy service tax for providing Information Technology Software service. Whether the same activity of supply/sale of customized software by the Appellant could be chargeable to Excise duty and/or also service tax post 16.5.2008 as admittedly there is no change in the facts and circumstances of the case? - HELD THAT:- It is found that more or less similar question has come up before the Hon ble Supreme Court in the case of BHARAT SANCHAR NIGAM LTD. (BSNL) VERSUS UNION OF INDIA [ 2006 (3) TMI 1 - SUPREME COURT] . The question raised was whether supply of sim cards in rendition of telephone service by Telegraph authority to a subscriber resulted in sale and leviable to State VAT/Sales tax or a pure service chargeable to service tax under the relevant entry of Finance Act, 1994. Their Lordships analysing the Constitutional provisions of levy of service tax and the scope of deemed sale , observed In the present case, as no goods element are involved, the transaction is purely one of service. There is no transfer of right to use the goods at all. Thus, what is necessary in a given case is to examine the true nature of transaction between the parties to the contract to ascertain whether the transaction is a sale or service. The learned senior counsel for the appellant argued by referring to various Purchase Orders enclosed with the appeal paper book that the intention of the parties to the transaction is that of a sale of the software as goods before and after 16.5.2008. The appellant has not retained any title to the software after it is customized and sold by putting the same in the form of CD along with DCS. The software imported by the appellant was customized according to the need of the individual DCS, supplied the same along with hardware being a condition of the of sale of said DCS. The said software cannot be used by anybody else other than the customer to whom the same are supplied along with the hardware. This clearly indicate that the intention of the appellant in supplying the software to their customers, is for its use along with the hardware; it does not indicate that the ownership of the software is retained by the Appellant. On the contrary, it is transferred to the customers in a media i.e. CD and the price of the said software separately indicated in the Appendix B to the purchase Order. Hence, the presence of an element of pure service as alleged by the Revenue and confirmed by the Commissioner is not the intention of the parties to the transaction. Thus, the sale of customized software by the Appellant is excisable goods and classifiable under Chapter subheading 85238090; hence leviable to excise duty, and subject to the exemption notification No. 6/2006-CE dt. 1.3.2006 and 12/2012-CE dt. 17.03.2012, as the case may be, on fulfilment of laid down conditions as claimed by the appellant. In the present case, the Purchase Orders placed by the customers on the appellant reveal that the transaction between the appellant and their customers are not for supply of software as that of a service , but it is sale of the customized software on a CD as part of the DCS; accordingly, the same should be considered as excisable goods and not as service , precisely, ITSS. The impugned orders are set aside - Appeal allowed.
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2023 (12) TMI 174
Liability of service tax - sale value of the unfinished flat, for which the agreement of sale/sale deed was entered and thereafter vide separate agreement, the appellant builder completed the construction for separate consideration - HELD THAT:- The appellant is not liable to service tax on the value of the unfinished flat including the value of undivided share in land as on the date of sale or Agreement of sale entered by the appellant builder with the prospective buyer - it is clarified that appellant is liable to service tax only for the receipts received towards finishing of the unfinished flat(s) on or after the date of sale - it is further made clear that appellant is not liable to service tax on other receipts like-towards electricity installation, maintenance charges, towards maintenance security, etc. Thus, the appellant is only liable to service tax under WCS on the amount attributed to construction activity, after the agreement of sale/execution of sale deed. Learned Counsel has also clarified that in the impugned order learned Commissioner has given credit by way of appropriation for the amount of tax already paid i.e. Rs 34,32,328/-, which does not include the amount of CENVAT credit and also some challans, which were not considered at that time, and if these are considered, the tax payable by the appellant comes to Rs 34,32,328/-. The impugned order set aside - appeal allowed.
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Central Excise
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2023 (12) TMI 173
Restoration of appeal - non payment of necessary pre-deposit under the provisions of Section 35 of the Central Excise Act, 1954 - HELD THAT:- The applicants-Directors themselves were filing the applications for restoration of the appeals which had already been dismissed by the Tribunal after noticing the non-compliance of the order not only of the Tribunal but also the order of this Court dated 10.10.2013 (Annexure A-6) whereby only Rs. 6 crores was to be deposited. As noticed above, the Apex Court had reduced the amount further to Rs. 4 crores and the appeal was only to be restored subject to the said deposits. The said amounts had never been deposited. The Directors could not hide behind the legal shield that the company had been directed to pay the amount and they were the persons who were agitating before this Court and the Apex Court that the company was functioning through them. The Tribunal in such circumstances has over-stepped its jurisdiction by allowing the application for condonation of delay and restoration of the appeals and thereafter proceeded ahead with the matter for the reasons best known to it. We do not wish to comment on the orders passed by the Tribunal in the present facts and circumstances. The question of law must be answered in favour of the Revenue that the Tribunal had no jurisdiction and would have become functus-officio once the amounts had never been deposited inspite of the directions in the SLPs dated 21.08.2015. The applications filed at the belated stage by the Directors themselves in the year 2018 for condoning the delay on 10.08.2018 was apparently time-barred and there was no sufficient cause to condone the delay also which had been done by the Tribunal. Appeal allowed.
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2023 (12) TMI 172
CENVAT Credit - intimation/declaration regarding exercise of option in terms of Rule 6(3A) of the said Rule was not given to the jurisdictional officer - HELD THAT:- Enough, while acknowledging separate location of both the premises and separate maintenance of account for both manufacturing and trading activities, the Commissioner has apparently reached at a finding that common input services were being used by the Appellant for both trading and manufacturing activities as Appellant had been maintaining common Balance Sheet for its manufacturing as well as trading activities, despite the fact that Balance Sheet of the Company records the financial transactions including Profit Loss, Assets Liability of the entire Company and it has got nothing to do with availment of services which are recorded in the accounting package, as such, separately. The issue is no more res integra in view of consistent decisions of this Tribunal that has attained finality with the approval of various Appellate Courts that Rule 6(3)(i) ibid cannot be made automatically applicable on failure to intimate in writing about options to be availed by the assessee but here the facts are completely different in the sense that Appellant disputed the demand saying that it had not availed any common input services for its trading activity, but accepted the observation of Audit without challenging the legality of the issue only to set the dispute at rest. Therefore, proportionate reversal, when made it in compliance to Audit report, is well within the knowledge of the Respondent- Department. Such a paper work in putting a written intimation would have added no additional advantages to the Appellant. In view of the settled principle of law that in the absence of such intimation in writing Rule 6(3)(i) cannot be applied to confirm the demand by taking 5%/6% of the entire credit amount. The order passed by the Commissioner of Central Excise, Pune-I is hereby set aside - Appeal allowed.
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2023 (12) TMI 171
Valuation - Inclusion of value of scrap in the assessable value determined on the basis of sale price of the manufacturer or not - HELD THAT:- The plethora of decision being passed after the judgment of P.R. ROLLING MILLS PVT. LTD. [ 2010 (9) TMI 1072 - SC ORDER] in which consistent findings was that value of scrap need not be included in the assessable value. Appellant had rightly placed the following judgments namely SRF LTD. VERSUS COMMISSIONER OF C. EX., CHENNAI-I [ 2007 (3) TMI 613 - CESTAT, CHENNAI ] Affirmed by Supreme Court in SRF LTD. VERSUS COMMISSIONER [ 2016 (4) TMI 1068 - SC ORDER ], GHATGE PATIL INDS. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE [ 2005 (7) TMI 648 - CESTAT MUMBAI ], M/S AUTOMOTIVE STAMPINGS AND ASSEMBLIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE PUNE-I [ 2019 (5) TMI 1169 - CESTAT MUMBAI ], AD-MANUM PACKAGING LTD. VERSUS CCE, INDORE [ 2016 (9) TMI 630 - CESTAT NEW DELHI ], CCE AHMEDABAD-II VERSUS M/S RECLAMATION WELDING LTD. [ 2014 (8) TMI 186 - CESTAT AHMEDABAD ], to support his stand apart from the fact that in the Appellant s own case, for two other periods pre and post 2007, demand against the Appellant has been set aside for the reason that value of scrap need not be included in the assessable value. The impugned order set aside - appeal allowed.
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2023 (12) TMI 170
Levy of Central Excise Duty - aluminum dross and skimming generated while processing aluminum ingots - HELD THAT:- Reliance placed in the decision of Tribunal, in dispute for the period May 2008 to December 2011 at the Taloja unit and Daheli unit, had, in HINDALCO INDUSTRIES LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, NAVI MUMBAI AND NAGPUR [ 2022 (12) TMI 1295 - CESTAT MUMBAI] where the demands set aside. There are no reason to uphold the impugned order - appeal allowed.
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2023 (12) TMI 169
Provisional clearances or not - Valuation - inter-unit transfer - Re-determination of liability as finalization of provisional assessment - HELD THAT:- In the absence of exercise of option by the assessee for provisional assessment , it is not open to central excise authorities to deem the clearances to have been provisional and to proceed with final assessment for each year. The impugned order set aside - appeal allowed.
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2023 (12) TMI 168
Export of readymade garments - procuring the packing material from domestic market duty-free as per Rule 19(2) of Central Excise Rules, 2001 - Violation of Condition No. 8 of the Notification No.94/2004-Cus. dated 10.9.2004 - eligibility for the exemption Notification No.43/2001-CE(NT) dated 26.6.2001 or not - HELD THAT:- In the present case, the appellant had complied with the procedures laid down under Notification No.43/2001-CE(NT) dated 26.6.2001 in procuring the packing materials which are being used in the manufacture of readymade garments and the finished goods are ultimately exported under the scheme. Also, in these circumstances, denying the benefit of Notification No.43/2001-CE(NT) dated 26.6.2001 in procuring the packing materials duty-free alleging violation of Condition 8 of the Notification No.94/2004-Cus. dated 10.9.2004 cannot be sustained. The impugned order is set aside - the appeal is allowed
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2023 (12) TMI 167
Quantum of cash refund - Refund of wrongly paid Central Excise duty on the goods supplied - how much cash refund is to be given to the appellant? - HELD THAT:- Since different amounts have been shown Central Excise duty paid in cash both by the department as well as by the appellant - it will be appropriate to remand the matter back to the Adjudicating Authority to re-determine the amount of cash after taking into consideration the submissions which have been made by the appellant with regard to claim of cash payment of Central Excise duty amounting to Rs. 76,57,238/- and decide the matter after due verification of facts of cash payment of Central Excise duty and accordingly decide the refund claim again after taking into consideration the claim of the appellant. Appeal allowed by way of remand.
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CST, VAT & Sales Tax
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2023 (12) TMI 166
Interpretation of statute - Deemed sale - transfer of right to use the cranes - proper construction of Section 2(24) of Maharashtra Value Added Tax Act, 2002 - right to transfer the cranes - transaction entered into by the Respondent with its customers with specific reference to the discernible and distinguishing contract clauses amount to sale under the Maharashtra Value Added Tax Act, 2002 or not - HELD THAT:- The Tribunal has compared the attributes of transfer of the right to use goods as discussed in General Cranes [ 2015 (5) TMI 32 - BOMBAY HIGH COURT ] with those in the present matter, i.e., the clauses of the contracts in both matters. The Tribunal has observed that the clauses in both the cases are substantially similar. No clause in the contract in this case can be construed so as to conclude that there was intention to transfer the right to use the cranes in favour of SISL. Every clause in contract and in particular the emphasized portion as quoted above, unmistakably lead to the conclusion that the cranes were under effective control and possession of Respondent herein and during the contract period, the same were in the custody of SISL. It indicates there was no transfer at all, let alone transfer of the right to use. It was a clear case of giving on hire of cranes. The corresponding provision under the Act is the definition of sale in Section 2(24) of the Act. Comparing the two corresponding provisions, the Tribunal has found full support in the contention of Respondent that the same are in pari materia . Hence the Tribunal has held that the decision in General Cranes is totally applicable to the present case and thus, the ultimate control over the cranes being retained by Respondent, there is no question of transfer of right to use. Thus, the Tribunal allowed the Appeal of Respondent. All the clauses indicate that the effective control and possession have always remained with Respondent and what was being provided to SISL was only the deployment of the cranes on hire. The work order/contract clearly indicates the intention of parties that the custody and effective control of the cranes was to remain with Respondent. In these circumstances, it would be incorrect to contend that there was a transfer of right to use the cranes. Appeal of the revenue dismissed.
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2023 (12) TMI 165
Direction to the 3rd respondent to furnish the shipping document or best evidence in respect of the supplies made by the petitioner to the Union Territory of Lakshadweep Administration for the purpose of availing concessional rate of tax - Rejection for want of copies of the shipping documents - HELD THAT:- In the counter affidavit filed on behalf of the 3rd respondent, the Administrator, Union Territory of Lakshadweep it is stated that the petitioner is seeking shipping documents from the Administrator after lapse of several years. the petitioner never claimed or insisted for shipping documents at the time of delivery/supply of goods. The purchases were made during 2005 to 2010 and once the petitioner s claim for concessional rate of tax @ 4% was rejected, the petitioner started litigation. Considering the fact that at the earlier round of litigation before this Court, this Court has not granted similar reliefs as sought for in this writ petition, the present writ petition is not maintainable. The Union Territory of Lakshadweep Administration may be correct in saying that for supplies made during 2005 to 2010, at this point of time documents may not be available. There are no ground to issue direction as sought in this writ petition - Therefore, the present writ petition is hereby dismissed.
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2023 (12) TMI 164
Impugned notice dated 13.12.2019 issued for the assessment year 2007-2008 under the TNVAT Act - barred by limitation or not - HELD THAT:- Although a faint attempt was made by the learned counsel for the respondent that the assessments are related to Section 22(4) of the Act. On a reading of the impugned order, it is evident that the Assessing Authority has himself understood that the impugned order as having been made in exercise of the power under Section 27 of the Act, in which case the limitation of six years from the date of assessment provided under Section 27 of the Act must be reckoned from the date of deemed assessment i.e., 30.06.2012 and thus any proceeding under Section 27 of the Act must be initiated within six years thereof i.e.,30.06.2018. The impugned proceedings under Section 27 is initiated only on 30.12.2018 thus barred by limitation. An order barred by limitation is a nullity and lacking jurisdiction. The impugned notice dated 13.12.2019 is set aside - Petition allowed.
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Indian Laws
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2023 (12) TMI 163
Dishonour of Cheque - Vicarious liability - petitioner is an Independent Non-Executive Director - petitioner within the ambit of Section 141 of the NI Act or not - HELD THAT:- Section 141 NI Act extends criminal liability in case of a company to every person who at the time of the offence, was in charge of and was responsible for the conduct of the business of the company. A company is a juristic person and every person who at the time of commission of offence is in charge and responsible for the conduct of the business of the company is liable for the offence stated to be committed by the company. The criminal liability arises when the offence was committed and not on the basis of merely holding a designation or office in a company. Section 141 of the NI Act mandates that a person is criminally liable when at the time of commission of offence was in charge and responsible for the conduct of the business of the company and person connected with the company may not fall within the ambit of section 141 of the NI Act. The Supreme Court in Siby Thomas V M/s Somany Ceramics Ltd., [ 2023 (10) TMI 487 - SUPREME COURT ] observed that it is the primary responsibility of the complainant to make specific averments in the complaint, so as to make the accused vicariously liable. It is the primary responsibility of the complainant to make specific averments in the complaint so as to make the accused vicariously liable. If the basic averment is made in the complaint under section 138 of NI Act that the Director was in charge of and responsible for the conduct of the business of the company at the relevant time when the offence was committed then Magistrate can issue process against such Director. The complaint should specifically spell out how and in what manner the Director was in charge of or was responsible to the accused company for conduct of its business and mere bald statement that he or she was in charge of and was responsible to the company for conduct of its business is not sufficient. Section 141 of the NI Act provides for a constructive liability which is created by a legal fiction - The petitioner as per Form 32 was appointed as Additional Director on 29.06.2001 and resigned as Director with effect from 10.11.2012. Form 32 appears to be a declaration regarding appointment of a director etc. in the company or any change thereto as per section 303(2) of the Companies Act, 2013. It reflects that when the cheque in question was issued, the petitioner was a director in the accused no 1. The petitioner was not shown as Independent Non-Executive Director of the accused no. 1 in Form 32 as pleaded and alleged by the petitioner. It is reflecting that the petitioner was not a party to the execution of Inter Corporate Deposit Agreement, Memorandum of Settlement dated 27.05.2003 and Consent Award dated 21.07.2003 and the cheque in question was not issued under his signature. However the petitioner was appointed as Additional Director and resigned as Director from the accused no. 1 and was one of the Director when the cheque in question was issued, the petitioner cannot be absolved from vicarious liability arising out of cheque in question by pleading that he was not a party to the execution of Inter Corporate Deposit Agreement, Memorandum of Settlement dated 27.05.2003 and Consent Award dated 21.07.2003 and the cheque in question was not issued under his signature. The arguments advanced by learned Senior Counsel on above legal and factual propositions are without any force. There is no legal and factual infirmity in the order dated 11.10.2018 passed by the trial court and impugned order passed by the revisional court - Petition dismissed.
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2023 (12) TMI 162
Dishonour of Cheque - challenge to reversal and acquittal passed by the Additional Sessions Judge - discharge of a liability or debt or not - rebuttal of presumption - appellant failed to discharge his burden - HELD THAT:- Section 138 of the Negotiable Instruments Act, 1881, has provided for punishment regarding an offence of dishonour of cheque which was delivered in discharge in whole or in part of any debt or other liability and for the reasons of insufficiency etc. of the funds in the account of the drawer. The statutory presumption as enumerated under Section 139 of the said Act in favour of the holder of the cheque is that the holder has received the same in due discharge of the whole or part of any debt or other liability. The Supreme Court in the case of Bir Singh Vs. Mukesh Kumar [ 2019 (2) TMI 547 - SUPREME COURT] has held that presumption is a rule of evidence and do not conflict with the presumption of innocence which requires the prosecution to prove it beyond reasonable doubt. It has been held in a catena of judgment of various constitutional Courts including the Apex Court that the presumption under Section 139 of the Act is rebuttable presumption in nature, since the accused issuing the cheque is at liberty to prove to the contrary. The presumption of law pursuant to the provisions under Section 139 of the Negotiable Instruments Act, 1881, would not release the prosecution from burden of proving the fact that the relevant point of time there existed a legally enforceable debt as against the accused persons, in this case also the Court has to ascertain if such a initial burden is discharged by the prosecution appropriately or not. Only then the Court should apply the presumption as above against the accused persons to expose them for rebuttal of the same. Considering the nature of transaction as shown by the exhibit 1 , I find that the decision of the first appellate Court that money if at all changed hands, was pursuant to the business undertaken by the present appellant and the cheque was handed over as a security in lieu of obtaining the amount. This is more so, when there is no doubt in view of exhibit 1 that the parties have agreed for paying interest over the amount, for over a considerable period of time - the prosecution in this case has not been successful in discharging its initial burden that the cheque was issued by the present respondents in discharge of their legally enforceable debt towards the appellant. The initial burden of prove lied on the appellant himself to come up with the adequate material before the Court to show that on the particular date he had a legally enforceable debt recoverable from the respondents. As elaborately discussed above, the appellant had failed in discharging his such burden. The rest of the questions raised in this appeal would only be unnecessary for discussion any further. This Court finds no irregularity or illegality in the impugned judgment of the first appellate Court - Appeal dismissed.
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