TMI Tax Updates - e-Newsletter
February 18, 2023

Case Laws in this Newsletter:

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

Articles

1. DRESS CODE FOR ADVOCATES TO APPEAR BEFORE NCLT

   By: DR.MARIAPPAN GOVINDARAJAN

2. CLAUSE BY CLAUSE AMENDMENTS IN GST- FINANCE BILL, 2023

   By: Dr. Sanjiv Agarwal

3. Assessee cannot claim supplementary refund based on fresh calculation, after the original refund application has already been processed

   By: Bimal jain

4. GST officers have no power to seize cash during search operations

   By: Bimal jain

News

1. 43rd meeting of the Network Planning Group (NPG)

2. First PM GatiShakti NMP Regional Workshop for Central & Western Zone to be Held in Goa

3. Income Tax Department carries out survey operations in Delhi & Mumbai

Notifications

Customs

1. 10/2023 - dated 16-2-2023 - Cus (NT)

Rate of exchange of one unit of foreign currency equivalent to Indian rupees - Supersession Notification No. 08/2023-Customs(N.T.), dated 2nd February, 2023

Income Tax

2. 06/2023 - dated 16-2-2023 - IT

Disclosure of information respecting assessees - Central Government specifies ‘Secretary (Information Technology & Digital Service Department), Directorate of e-Governance, Government of Tamil Nadu’ in connection with sharing of information regarding income-tax assessees u/s 138(1) of IT Act 1961.

Highlights / Catch Notes

GST

• Authorities Can Detain Goods in Transit for Document Non-Compliance; Pay Tax & 100% Penalty to Conclude Under GST Act.

  Case-Laws - HC : Detention of goods alongwith conveyance - If the goods are intercepted during transit and the documents accompanying the goods are not in compliance with the provisions of the Act, authorities are within their power to detain the goods and demand payment of tax and 100% penalty under the provisions. - The payment u/s 129(3) of the CGST/SGST Act, 2017 has been made - Keeping in view the bare provision of Section 129 (5) all proceedings in respect to the notice are deemed to have been concluded - HC
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Income Tax

• Supreme Court declines to entertain Article 32 petition on regulating income tax for personal car sales, advises legal channels.

  Case-Laws - SC : Seeking effective income tax regulation on sale of personal cars in order to prevent misuse of tax regulations - The issues which are raised in the petition under Article 32 of the Constitution of India in the present case pertain to the policy domain. Hence, we are not inclined to entertain the Petition. The petitioners are at at liberty to pursue their grievances before the authorities in accordance with law. - SC
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• Court Grants Full Interest Waiver u/s 220(2A) of Income Tax Act, Overturning Partial 20% Waiver Decision.

  Case-Laws - HC : Waiver of interest u/s 220(2A) - The first respondent under the impugned order has granted partial waiver of interest to the petitioner at 20% without giving any reason as to how they arrived at that rate - This Writ Petition is partly allowed by modifying the impugned order by granting full waiver of interest to the petitioner u/s 220 (2A) - HC
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• Section 50C Income Tax Act: Clarifying "May" vs. "Shall" in Capital Loss on Property Sales Interpretation.

  Case-Laws - AT : Capital loss on sale of property - addition u/s 50C - Lot of emphasis has been laid on interpretation of the word “may” occurring in section 50C(2) of the Act ignoring that the word “may” also be interpreted as “shall” if the context so requires. We are, therefore of the considered view that a fresh look needs to be given to both the issues. - AT
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• Taxpayer's Surrendered Income Accepted as Business Income; Section 115BBE Misapplied by AO, No Additions Made u/s 69A.

  Case-Laws - AT : Addition u/s 69A - amount surrendered during survey - application of section 115BBE - AO without making any addition u/s. 69A or any other provision of the Act has accepted returned income of the assessee wherein the assessee has included surrendered amount on account of excess stock and excess cash as business income - AO was not right in observing that the assessee is liable to be taxed as per provision of section 115BBE. - AT
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• No Penalty Imposed for Delayed Audit Report Submission u/s 271B as AO Accepted Returned Income.

  Case-Laws - AT : Penalty u/s 271B - delay in furnishing a report of such audit as required u/s 44AB - The very object behind enactment of the provisions of section 44AB is only to enable the AO to determine the correct taxable income in accordance with the provisions of the Act. The fact that the returned income was accepted by the AO goes to show that no prejudice was caused to the AO on account of delay in submission of tax audit report. - No penalty - AT
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• Set-Off of Current Year Losses Allowed Against Income Additions u/s 68 Before April 1, 2017 Changes.

  Case-Laws - AT : Set-off of current year losses against the addition made u/s 68 - going through sub-Section (2) of Section 115BBE of the Act, the words “set off of any loss” appearing in second line was inserted from 01/04/2017. Before this insertion, there was no bar on setting off of any losses incurred during the year against the income referred to in Section 68, 69, 69A, 69B, 69C or 69D of the Act. - the assessee is entitled to claim of set-off of losses in the income determined u/s 115BBE of the Act. - AT
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• Court Reviews Income Validity u/s 68; Assessee Submits Extensive Documentation to Prove Commodity Profit Authenticity.

  Case-Laws - AT : Addition u/s 68 - genuineness of the income - The complete details including the contract notes, financial ledgers, bank statement showing the relevant transactions and the audited financial statements of the broker, assert this fact that the assessee has earned a genuine commodity profit. - AT
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Customs

• Bombay High Court's Ruling on Anti-Dumping Duty Benefits All Aluminium Alloy Coil Importers Equally.

  Case-Laws - AT : Levy of anti-dumping duty on the imported goods - import of Aluminium Alloy coils - Applicability of ruling of Bombay High Court in favor of importer - It is evident that it was not a relief provided to the petitioner but it is a ruling regarding interpretation of the notification. Therefore, its benefit will equally apply to anybody else. - AT
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• Commissioner (Appeals) Approves Interest on CVD Refund; Revenue's Appeal Dismissed by Tribunal.

  Case-Laws - AT : Interest on Refund of excess paid CVD - interest was denied to the respondents/assessees on the ground that the matter was sub-judiced before the CESTAT and the refund claims were disposed of within the period of three months of the said order - Commissioner (Appeals) allowed claim of interest - Revenue appeal dismissed - AT
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• Import Classification: Portable Solar Lights Ruled as Accumulators Under CTH 8507, No Customs Duty Refund Granted.

  Case-Laws - AT : Classification of imported goods - Portable Solar Home Electric Light – they deserve to be classified as accumulators under CTH 8507 - the essential nature of the imported goods to be that of accumulators, the appellant’s contention that they should be classified under CTH 85013120 as DC generators cannot be accepted and consequently no refund of customs duty is admissible to the appellant. - AT
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• Lithium Ion Cells for Emergency LED Lights qualify for customs duty exemption; no distinction between LED and Emergency LED.

  Case-Laws - AAR : Exemption from duty of customs - import of Lithium Ion Cell (Captive Consumption - For LED) - Emergency LED Light is fundamentally a type of LED light, albeit a value-added one. Further, Emergency LED light cannot be excluded from scope of entry referring to LED Light for want of anything specific anywhere in the law providing that LED Emergency Light is distinct from LED light. Further, Li-Ion cells are integral part of LED Emergency Light. when specifically designed for use therein. - Benefit of exemption allowed - AAR
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Indian Laws

• Court Rejects 737-Day Delay in Revenue Appeal Due to Insufficient Cause; Imposes Rs. 25,000 Cost on Applicant.

  Case-Laws - SC : Condonation of delay of 737 days in filing civil appeal - Revenue appeal - This is certainly not a sufficient cause to condone the delay but an endeavor to save the back of the officers who did not work when they were so expected to work. It is clear wastage of judicial time and thus we must follow the same path as followed earlier and dismiss the application for condonation of delay with a costs of Rs. 25,000/- - SC
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Service Tax

• Court Dismisses Petitioner's Claim of Discrimination in Vivad se Vishwas Scheme; Decision on Continuing Appeal Pending.

  Case-Laws - HC : Vivad se Vishwas Scheme - Petitioner may opt after weighing benefits or may opt to continue with pending appeal. The argument raised by senior counsel for the petitioner that the same will be discriminatory to the petitioner as the assessee who has not deposited more than the pre-deposit will have a march over an assessee like petitioner who has deposited more than pre-deposit is misconceived. - HC
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• Service Tax Already Paid on Slot Fees for TV Ads; Revenue Fails to Justify Extended Limitation u/s 73(1.

  Case-Laws - AT : Valuation - inclusion of the fixed cost component - cost received from the advertising agency - slot fee payable to the television channels for telecasting the programme - The appellant has claimed that the advertising agency has paid the applicable Service Tax on the impugned service, which has not been disputed either by the advertising agency or even by the Revenue and this is precisely the reason for the Revenue not to urge that the Service Tax was not paid, but for only quoting Section 73(1) - Revenue has not justified the invoking of the extended period of limitation - AT
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• CENVAT Credit Allowed: Rule 6(5) Exempts Mixed Use of Consultancy Services for Taxable and Tax-Free Outputs.

  Case-Laws - AT : Disllowance of CENVAT Credit - Rule 6(5) of CCR provides that the provisions of Rule 6(1), (2) and (3) are not applicable, where input service received is used both for providing taxable and tax free output service. Admittedly, in the facts of the present case, appellant have utilised the input consultancy engineering service both for providing tax free output service of passenger transport and taxable output service of consultancy engineering service. - Credit allowed - AT
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Central Excise

• Appellant's Duty Remission Denied; Must Pay Duty on 138 CFC Cigarettes, Not 25 Recovered Cartons.

  Case-Laws - AT : Denial of remission claim on goods lost (stolen) - Cigarettes - clandestine removal - The appellant is liable to pay duty only for the proportionate goods finally lost and is not liable to duty on the 25 CFC cartons of cigarettes recovered by the Police. The appellant is liable for duty only on the balance quantity of cigarettes being 138 CFC cigarettes. - AT
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Case Laws:

• GST

• 2023 (2) TMI 652
  Violation of principles of natural justice - non-speaking orders - no reasons have been given for rejecting the petitioner s replies in the impugned assessment orders - HELD THAT:- This Court is of the considered view that the principles of natural justice has been violated by the respondent before passing of the impugned assessment order for the following reasons: a) No reasons have been given by the respondent for rejecting the petitioner s objections raised in the replies all dated 19.10.2022; b) Personal hearing was afforded to the petitioner even before the replies were received by the respondent; c) They are non-speaking orders. Only after receipt of the reply and only in cases where the respondent contemplates an adverse decision against the petitioner, a personal hearing will have to be granted and not before a reply is received from the petitioner, that too when the reply has been duly acknowledged in the impugned orders. The matters are remanded back to the respondent for fresh consideration on merits and in accordance with law - Petition allowed by way of remand.

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• 2023 (2) TMI 651
  Seeking release of blocked funds in the petitioner s Bank Account - alleged non-payment of GST in respect of certain transactions - excess availment of ITC - HELD THAT:- Since a specific request has not been made by the petitioner for release of the blocked funds in the petitioner Bank Account, maintained with the fourth respondent, the petitioner will have to give a fresh representation to the second respondent seeking for release of the blocked funds in the petitioner s bank account, maintained with the fourth respondent Bank. No prejudice would be caused to the respondents if the petitioner s representation seeking for release of the blocked funds in the petitioner s Bank Account, maintained with the fourth respondent is considered, on merits and in accordance with law, after giving due consideration to the submissions made by the petitioner in the affidavit filed in support of this writ petition, which have been narrated supra, within a time frame to be fixed by this Court. This Court directs the petitioner to submit a fresh representation to the second respondent stating their grievance that have been raised in the affidavit filed in support of this writ petition, within a period of one week from the date of receipt of a copy of this order - On receipt of the said representation, the second respondent shall pass final orders, on merits and in accordance with law, after giving due consideration to the grievances raised by the petitioner in their representation, within a period of four weeks from the date of receipt of the said representation. Petition disposed off.

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• 2023 (2) TMI 650
  Cancellation of GST registration of petitioner - it is contended that the registration has been obtained by means of fraud, willful misstatement or suppression of facts - HELD THAT:- This Court has followed AGGARWAL DYEING AND PRINTING WORKS VERSUS STATE OF GUJARAT 2 OTHER (S) [ 2022 (4) TMI 864 - GUJARAT HIGH COURT] in various decisions, wherever there is a violation of principles of natural justice, the order of cancellation of GST registration is frowned upon and also viewed seriously. Relying on these decisions, the show cause notice dated 09.05.2022 and the order of cancellation of registration dated 24.06.2022 are quashed and set aside with a direction to respondent No.2 to restore the registration forthwith. Liberty is granted to respondent No.2 to issue fresh notice with all particulars of reasons incorporated with details and, thereafter, to provide reasonable opportunities to the parties representing the case and also for personal hearing in accordance with law. Thereafter to pass a speaking order on merits and in accordance with law. It shall be open for the petitioner to respond to such notice without seeking adjournment. Petition disposed off.

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• 2023 (2) TMI 649
  Rejection of refund claim - rejection on the ground that it was filed beyond the period of two years as stipulated under Section 54(1) of the Central Goods and Services Tax Act, 2017 - time limitation. HELD THAT:- The learned Counsel appearing for the parties have drawn attention to a notification dated 05.07.2022, whereby the period commencing from 01.03.2020 to 28.02.2022, was directed to be excluded for computing the period of limitation, for filing a refund application under Sections 54 or Section 55 of the Act. It is apparent that the said notification was issued in view of the order passed by the Hon ble Supreme Court in IN RE: COGNIZANCE FOR EXTENSION OF LIMITATION [ 2021 (3) TMI 497 - SC ORDER ]. The impugned orders cannot be sustained as the benefit of the relaxation in the period of limitation has not been accorded to the petitioner - Petition disposed off.

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• 2023 (2) TMI 648
  Detention of goods alongwith conveyance - Conclusion of proceedings on paying of tax u/s 129(5) - Part-B of the E-Way bill was not entered as contemplated under provisions of Section 20 of the Integrated Goods and Services Tax Act, 2017 - intent to evade tax, present or not - HELD THAT:- The counsel for the petitioner is wrong in contending that since there was no intend to evade tax the impugned orders passed under Section 129 of the CGST/SGST Act, 2017 cannot be sustained. For the purpose of Section 129 of the CGST/SGST Act, 2017 there is no requirement that there should be intention to evade tax. The authorities are not required to establish intention to evade payment of tax. Section 129 of the CGST/SGST Act, 2017 has been enacted to check evasion of tax. If the goods are intercepted during transit and the documents accompanying the goods are not in compliance with the provisions of the Act, authorities are within their power to detain the goods and demand payment of tax and 100% penalty under the provisions. Moreover, the petitioner does not deny that payment under Section 129(3) of the CGST/SGST Act, 2017 has been made. Keeping in view the bare provision of Section 129 (5) all proceedings in respect to the notice are deemed to have been concluded - there is no ground to interfere in the impugned order. Petition dismissed.

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• 2023 (2) TMI 647
  Seeking grant of anticipatory bail - default of tax evasion under the SGST Act alleged against the petitioner - HELD THAT:- The material on record produced in the case diary does not reveal that the case against petitioner is a false one. Prima facie it appears that allegations made against the petitioner need to be investigated and since a lot many Institutions and their office bearers/ proprietors/Directors are involved and the money trail has to be traced to its origin, the requirement shown by the prosecution for custodial interrogation of petitioner does not appear to be unreasonable. The amount of tax evasion is more than 15 crores, for which though the maximum punishment prescribed is 5 years but considering the fact that the said allegations cast adverse shadow upon the financial health of various institutions including the Bank thereby belying the trust of common man in the even tempo of economic growth, this Court declines to interfere. This Court prima facie feels from the complexity of allegations where very large tax evasion is involved and the money trail has to be traced to its origin, the demand of prosecution for custodial interrogation of petitioner appears to be reasonable - bail application dismissed.

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• Income Tax

• 2023 (2) TMI 646
  Seeking effective income tax regulation on sale of personal cars in order to prevent misuse of tax regulations - Allow only one personal car per person or allow second car after imposing some environment CESS - Considering air pollution a Pan India disease in an epidemic form - writ of mandamus under Article 226 of constitution of India to direct the respondents to initiate an effective National Program against air pollution in order to get special attention, priority and better co ordination amongst States and Centre with better utilization of budget, etc. Pass an order to health authorities to release some advisories for vulnerable class i.e. pregnant ladies regarding what to do what not to do to safeguard themselves from air pollution - HELD THAT:- The issues which are raised in the petition under Article 32 of the Constitution of India in the present case pertain to the policy domain. Hence, we are not inclined to entertain the Petition. The petitioners are at at liberty to pursue their grievances before the authorities in accordance with law. Subject to the aforesaid, the Petition is disposed of.

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• 2023 (2) TMI 645
  Waiver of interest u/s 220 (2A) - declared income of the petitioner included income of his minor son and the petitioner also claimed credit of prepaid taxes - demand raised non considering the payment of advance tax paid by the petitioner for the same income in the PAN number of his minor son - first respondent has granted only partial waiver of interest viz., 20% and has directed the petitioner to pay the balance 80% - HELD THAT:- In the case on hand, excepting for stating that the assessee had not approached the AO for rectification with regard to shortfall of credit, instead a separate return in the hands of the minor son was filed which resulted in total refund (including interest under Section 244A) which compelled the respondents to pay an excess refund to the petitioner, the contentions of the petitioner as raised in the petitions filed under Section 220 (2A) of the Income Tax Act both dated 25.02.2021 have not been considered. The petitioner has certainly suffered genuine hardship and for no fault of his, interest cannot be levied under Section 220 (2) when the advance taxes were infact paid on time though mistakenly in the petitioner s minor son s PAN number. It is also not the case of the respondents that the petitioner did not cooperate in any enquiry relating to the assessment or any proceedings for the recovery of amount due from him. The first respondent under the impugned order has granted partial waiver of interest to the petitioner at 20% without giving any reason as to how they arrived at that rate. When the first respondent has granted partial waiver at 20%, this Court is of the considered view that too when there is no finding given by the first respondent under the impugned orders that the petitioner has not satisfied the three conditions required for waiver of interest under Section 220 (2A) viz., a) payment of such amount has caused or would cause genuine hardship to the assessee; b) default in the payment of the amount on which interest was payable under the said Sub-Section was due to circumstances beyond the control of the assessee; and c) the assessee has not cooperated in any inquiry relating to the assessment or any proceeding for the recovery of any amount due from him; the first respondent ought to have granted full waiver of the interest to the petitioner, but, instead, erroneously has granted only 20% waiver by passing non speaking orders. This Court will also have to take note of the fact that the petitioner has already got the benefit of interest while the respondents had refunded a sum of Rs.3,59,300/- and Rs.1,59,500/- under Section 244A of the Income Tax Act. Certainly that amount has to be adjusted from and out of the waiver of interest under Section 220(2A) of the Income Tax Act. The petitioner had sought for waiver under Section 220 (2A) of the Income Tax Act which has been partially allowed by granting 20% waiver to the petitioner under the impugned orders and the balance 80% amount - This Writ Petition is partly allowed by modifying the impugned order by granting full waiver of interest to the petitioner under Section 220 (2A) and by directing the petitioner to pay a sum which he has received towards refund of interest under Section 244A of the Income Tax Act from the respondents within a period of four weeks from the date of receipt of a copy of this order.

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• 2023 (2) TMI 644
  Reopening of assessment u/s 147 - Notice issue to non-existing company - notice to amalgamating company having ceased to exist - HELD THAT:- According to this Court, the facts applicable to the present case are those which existed in case of Maruti Suzuki [ 2019 (7) TMI 1449 - SUPREME COURT] and not as were before the Apex Court in case of Mahagun Realtors (P.) Ltd. [ 2022 (4) TMI 347 - SUPREME COURT] . Here of-course, the intimation was given in reply to the notice under Section-142 in the month of March, 2018 by specifically intimating to the concerned officer of the factum of amalgamation by the petitioner and of its having acquired both the companies viz.Kaizen Stocktrade Pvt. Ltd. and Kaizen Finstock Pvt. Ltd. Again, it is the very officer who after three years of such amalgamation has issued notice which is impugned in the name of that company, which no longer existed on 30.03.2021 for the A.Y. 2016-17 and therefore, the grievance on the part of the petitioner requires to be sustained and the action of the respondent authority warrants interference. Income-tax Department had already been issued the notice by this Court at the time of considering the request for approving the scheme of amalgamation, however, that would in no manner absolve any party of its obligation to intimate the final order of amalgamation, as is otherwise expected under the law. The statute since has not provided any format nor has any specified format otherwise prescribed this intimation in response to the notice under Section-142 of the Income Tax Act should be construed as a sufficient compliance and hence, all the petitions deserve to be allowed, quashing and setting aside the show-cause notices with consequential reliefs.

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• 2023 (2) TMI 643
  Estimation of income - best judgment assessment - Tribunal upholding the order of the CIT (Appeals) estimating the income of the assessee at 4% of the turn-over on the basis of the earlier year assessment orders - assessee has not maintained the Books of Accounts and has not audited his accounts by a Chartered Accountant - HELD THAT:- The estimation is by way of best judgment assessment and it has been consistently held that there is bound to be an element of guess work and there cannot be any rigid formula for estimation based on best Judgment, no interference is warranted unless and until it is shown that the estimation / best Judgment is palpably arbitrary or perverse. No reason to interfere with the findings of the Tribunal on estimation, which is essentially a question of fact/discretion, more so, in the absence of challenge to the estimate as being arbitrary or perverse.

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• 2023 (2) TMI 642
  Capital loss on sale of property - Additions u/s 50C - Business Expenditure - claim disallowed as no business activity was carried out during the year - Disallowance of expenses incurred by the assessee to keep its corporate entity -HELD THAT:- Case of the assessee for its claim of loss is that the business activity of the assessee has been temporarily suspended. The assessee incurred the expenses on account of wages and salary to staff and other financial expenses related to the business in order to keep the corporate entity intact which is a going concern. Was it a case of temporary lull in the business requires verification? On the issue of addition u/s 50C the Ld. DR agreed that due procedure prescribed for valuation of FMV has not been followed. Lot of emphasis has been laid on interpretation of the word may occurring in section 50C(2) of the Act ignoring that the word may also be interpreted as shall if the context so requires. We are, therefore of the considered view that a fresh look needs to be given to both the issues. We, therefore set aside the order of the Ld. CIT(A) and restore both the issues to the file of the Ld. AO to decide them afresh in accordance with law after allowing adequate opportunity of hearing to the assessee. Appeal of the assessee is treated as allowed for statistical purposes.

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• 2023 (2) TMI 641
  Reopening of assessment u/s 147 - unexplained Loan transactions - HELD THAT:- The provisions of Section 148 clearly shows that if the information is received by the AO which is a tangible material, AO should apply the independent mind by making necessary enquiries and thereafter after satisfying himself about escapement of income reopened the case. Here in the impugned order, the reopening was made on very vague information. There is no reference that how and when the intermediary bank accounts of two lenders and from whom the money was received. It was merely sated that deposit through RTGS was made in the bank account of the lender companies from the entities controlled by accommodation entry provider and from those entities; the loan has been given to the assessee. There is no finding that whether these two lender companies are also operated by the accommodation entry provider or not. Further, whether the companies who have given a loan to the assessee is a beneficiary themselves or are merely pass through entities when the loans are repaid whether the source of the loans from which it is received are also has gone to the source from which it emanated. Merely mentioning circular transaction does not show that the entities to provide the loan to the assessee company are shell companies. As held by the decision relied up of Honourable Bombay High court in case of Shodiman Investments [ 2018 (4) TMI 1287 - BOMBAY HIGH COURT] and DRM ENTERPRISES [ 2014 (12) TMI 1114 - BOMBAY HIGH COURT] clearly covers the issue as far as reopening is concerned. On the merits also, we find that assessee has provided the confirmation, the audited financial statements, the bank statements, the income tax return and the proof of repayment of the above loan taken from these two entities before the learned AO. Section 133(6) notices were issued on ITBA portal as well as by speed post . Based on information supplied by the assessee, AO did not carry out any further independent enquiry. AO has merely relied upon the statement of the accommodation entry provider and analyzes the annual accounts of the lender companies. Despite having the huge turnover and huge current assets, the learned Assessing Officer itself discredited those financial statements. When the assessee discharges its initial onus cast upon him by producing the confirmation, the bank statement, the annual accounts, the income tax returns as well as the details of repayment which is also confirmed by production of the bank account of the lender, the learned assessing officer is duty-bound to make an independent enquiry. Unless an independent enquiry is made by the learned assessing officer, onus does not travel back to the assessee. If the learned AO failed to throw onus back on the assessee, the addition cannot be made by him u/s 68. Reliance merely on the statement cannot be used for making an addition under section 68 of the act. In such situation, evidence on which the AO has relied, opportunity to rebut the same has not been given to the assessee, such evidence should be disregarded. Therefore, in all fairness the statement made by the accommodation entry provider before the investigation wing Kolkata deserves to be ignored. Other than that statement there is no evidence against the assessee to support the addition. In the result on the issue of reopening of the assessment as well as the addition on the merit deserves to be decided in favour of the assessee.

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• 2023 (2) TMI 640
  Deduction u/s 80HHC - reducing the amount eligible for deduction u/s.80IB from profits gains of business while computing deduction u/s.80HHC - HELD THAT:- Deduction claimed u/s.80IA as well as the provisions of section 80HHC of the Act does not exceed the profits and gains of the undertaking i.e., profit declared under the head profits and gains of business or profession . In the present case before us, the assessee claim u/s.80IB of the Act was Rs.1,34,38,583/- and the claim of deduction u/s.80HHC of the Act was Rs.62,01,535/- as against total profit and gains declared from business or profession at Rs.2,48,98,022/-. According to us, the issue is squarely covered by the decision of SCM Creations [ 2008 (3) TMI 223 - MADRAS HIGH COURT] and case of Associated Capsules (P) Ltd. [ 2011 (1) TMI 787 - BOMBAY HIGH COURT] Respectfully following the same, we allow this issue of assessee s appeals and direct the AO to recompute the deduction accordingly. Deduction of DEPB u/s.80IB of the Act - We direct the AO to allow the claim of deduction as the amendment brought in by the legislature in the provisions of section 80HHC(3) of the Act by introducing 3rd 4th proviso is quashed and recompute the deduction accordingly. Hence, this appeal is remitted back to the file of the AO for recomputation of deduction. Therefore, both the appeals of the assessee are allowed in term of the above.

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• 2023 (2) TMI 639
  Addition u/s 69A - amount surrendered during survey - application of section 115BBE - excess stock found during the course of survey and surrendered made - HELD THAT:- As in the present case the assessee has successfully explained the source of excess stock and excess cash found during the course of search survey operation and surrendered during the said operation. CIT(DR) has not disputed or controverted very factual position that the assessee filed return of income including the surrendered amount and which was accepted by the AO without any dispute and without making any further addition in the hands of assessee u/s. 69A or any other section of the Act. As the assessee has successfully explained and established the source of excess stock and excess cash as his business activity and of trading in jewellery and gems and activity of Adat/dalali thus the benefit of proposition rendered in the case Kim Pharma (P.) Ltd. [ 2013 (1) TMI 495 - PUNJAB AND HARYANA HIGH COURT] is not available for the department in the present case. AO without making any addition u/s. 69A or any other provision of the Act has accepted returned income of the assessee wherein the assessee has included surrendered amount on account of excess stock and excess cash as business income and has successfully explained the source from where the said surrendered excess stock and excess cash was earned, which was business activity of assessee of trading in jewellery gems and Adat/dalali in the same field. The coordinate bench of the Tribunal in the various orders including order in the case of Shri Lovish Singhal [ 2018 (5) TMI 1646 - ITAT JODHPUR] by following the judgment of Bajrang Traders ( 2017 (3) TMI 1828 - ITAT JAIPUR] observed that the excess stock found during the course of survey and surrendered made thereof was found to be taxable as business income under the head Income from business profession . Identical facts and circumstances as noted above have been found to be existing in the present case then the Ld. CIT(A) was correct and justified in dismissing the contention of the AO and holding that the AO was not right in observing that the assessee is liable to be taxed as per provision of section 115BBE. Therefore, we too have no hesitation in concluding that the facts of present case do not bring the impugned income in the clutches of section 69/69A/69B and therefore do not warrant application of section 115BBE at all. - Decided against revenue.

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• 2023 (2) TMI 638
  Reopening of assessment u/s 147 - addition being cash deposited in the bank account; salary income and interest earned on the deposit - HELD THAT:- It is seen that before the Assessing officer there was no effective representation on behalf of the assessee. Therefore, in the interest of natural justice, we deem it proper to set aside the orders of the authorities below and restore the assessment to the file of the AO, who would verify the correctness of the claim of the assessee regarding gift received from her father and thereafter frame the assessment afresh. Grounds raised in this appeal are allowed for statistical purposes.

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• 2023 (2) TMI 637
  Reopening of assessment u/s 147 - cash deposits unexpalined - as submitted cash deposited by the assessee in his bank account payments were made for purchase of vegetables - HELD THAT:- As in order to prove the bona fides of the business transaction, the assessee submitted the entire books of accounts before the AO during the course of assessment proceedings as well as before the ld. CIT(A) and no defect was pointed out by the lower authorities in the books of account produced by the assesse. It is a trite law that once the assessee has offered income u/s 44AD of the Act on presumptive basis then assessee is not required to maintain books of account on a regular basis but the assessee produced the books of account before the lower authorities As noted from the assessment order that the assessee had paid interest on the outstanding balance of the bank account maintained by the assessee and it can be seen assessee was having cash balance with him. It is noted that the AO had considered certain percentage at which interest had been paid by the assessee i.e. 22.20% but the AO has not given any basis of arriving at such interest percentage. The Bench finds from the available records that during the course of hearing the assessee had supplied all the details before the lower authorities like books of accounts, details of financial statement and bank account etc. but it was ignored. It is also noted that the assessee had made elaborate submissions before the ld. CIT(A) which were also not controverted by the ld. CIT(A) in his order. In view of the above facts and circumstances of the case, the Bench finds that the addition sustained amounting by the ld. CIT(A) is deleted. - Decided in favour of assessee.

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• 2023 (2) TMI 636
  Assessment u/s 153A - Period of limitation - whether the dispatch to dispatch register within the department would suffice so as to state that the assessment order has gone out of control of the AO for any possible change or modification? - HELD THAT:- Unless and until, the assessment order is received by the postal authority (3rd party/agent of the department) for dispatch within the limitation period, the same cannot be said to be dispatch with the limitation period (i.e 31.03.2015 in this case), though the actual service of the order may be beyond that period. As in the instant case, the evidence on record clearly point out that dispatch of the assessment order was not within period of limitation so as to go beyond the control of the AO. For the aforesaid reasoning and judicial pronouncement we hold that the assessment order is barred by limitation.

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• 2023 (2) TMI 635
  Penalty u/s 271B - delay in furnishing a report of such audit as required u/s 44AB - HELD THAT:- It is pertinent to note that w.e.f. 01.07.1995, it obligatory on behalf of the assessee that tax audit report has to be got completed by specified date, as specified in clause (ii) of section 139(1) and tax audit report has to be furnished by such specified date. Admittedly, in the present case, it is the case of the appellant that the tax audit report as required to be filed along with return of income though the tax audit report was obtained before the specified date. The submission of the assessee that the audit report was obtained before the specified date remains uncontroverted. The very object behind enactment of the provisions of section 44AB is only to enable the AO to determine the correct taxable income in accordance with the provisions of the Act. The fact that the returned income was accepted by the AO goes to show that no prejudice was caused to the AO on account of delay in submission of tax audit report. The delay in submission of the tax audit report is mere only technical breach of law, which, in our considered opinion, does not warrant levy of penalty u/s 271B of the Act. In the circumstances, we direct the AO to delete the penalty levied u/s 271B - Appeal of assessee allowed.

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• 2023 (2) TMI 634
  Addition on account of commission pay to sole selling agent - commission expenses claimed was disallowed by the AO after making reference to the AY 1992-93 wherein commission to sole selling agent was disallowed - HELD THAT:- Since, the dispute for the allowability of commission expenses in the year under consideration was connected to the A.Y. 1992-93 which has been settled in favour of the assessee, therefore, the judgment delivered by the Hon ble Gujarat High Court in the case of the assessee for A.Y. 1992-93 [ 2009 (12) TMI 1052 - ITAT AHMEDABAD] will squarely be applicable in the case on hand. The relevant extract of the judgment of Hon ble Gujarat High Court has already been reproduced in the finding of the Ld. CIT(A) somewhere in the preceding paragraph. Accordingly, respectfully following the judgment of Hon ble Gujarat High Court in the case of the assessee, we do not find any reason to interfere in the order of Ld. CIT(A). Hence, the ground of appeal of Revenue is hereby dismissed.

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• 2023 (2) TMI 633
  Addition u/s 68 - assessee has received share capital and share premium fund - assessee has obtained accommodation entries from S.K. Jain group of companies - HELD THAT:- Assessee has received bogus share capital and share premium from S.K. Jain group of cases. Assessee has not submitted any cogent material to dislodge the findings of the AO and ld. CIT (A). CIT (A) has passed a very elaborate order considering all facets of the case. In our considered opinion, there is no infirmity in the same, hence we uphold the same. Appeal filed by the assessee stands dismissed.

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• 2023 (2) TMI 632
  Assessment order u/s 153A - Addition of cash deposit in the bank account of the assessee - HELD THAT:- It is an undisputed fact that the addition was made by the Assessing Officer pursuant to the details of bank account furnished by the assesseeThere is not even a whisper of any incriminating material to justify the addition. The facts of the case are squarely covered by the decision of Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT and Meeta Gutgutia Prop. M/s. Ferns N Petals 2017 (5) TMI 1224 - DELHI HIGH COURT holding that the invocation of Section 153A by the Revenue was without any legal basis as there was no incriminating material qua each of those AYs. - Decided in favour of assessee.

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• 2023 (2) TMI 631
  Benefit of TDS deducted from the advance received from the party in the year in which such advance was offered to tax - HELD THAT:- There is no dispute to the fact that the assessee has shown advance of Rs.3.50 crores in the year in respect of which TDS was deducted by the corresponding party. Admittedly, the assessee is not eligible of the amount of TDS deducted on the amount of advance received by the assessee as the corresponding income was not offered to tax. Up to this, there is no dispute raised by the assessee. When the assessee can claim the benefit of TDS i.e. the year in which it offers corresponding income in the income tax return. As per the assessee, it has shown the advance money as income in the Financial Year 2016-17 corresponding to 2017-18. In this regard, we note that sub-rule (3) to the rule 37BA of Income Tax Rule r.w.s. 199 of the Act provides that Credit for tax deducted at source and paid to the Central Government, shall be given for the assessment year for which such income is assessable. Accordingly assessee should be allowed the benefit of TDS credit in the AY 2017-18 subject to the verification. Hence, the ground of appeal of the assessee is allowed in the terms of the above direction.

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• 2023 (2) TMI 630
  Addition u/s 68 - disallowance of sundry creditors - assessee company has gone into liquidation, order passed by Ld. NCLT - Effect of proceedings before Ld. NCLT - CIT-A deleted addition - HELD THAT:- As decided by CIT-A entire information as sought by the AO has been furnished and, no discrepancy has been pointed by the AO and merely non-compliance of section 133(6) by the concerned creditors is not valid in the eyes of law - if purchases have been accepted and the opening balance of these accounts are also not in dispute as the previous year assessment i.e. A.Y. 2010-11 was completed u/s 143(3), thus, if does not attract any adverse action u/s 68 - opening balance of the concerned creditors are also not in dispute, Sales, Gross Profit and Net Profit are better than earlier years thus, an estimated addition made by the AO is not justified. The addition made deserves to be deleted. No reason to interfere in the finding on fact recorded by Ld.CIT(A), the same is hereby affirmed. Thus, grounds raised by the revenue are dismissed. Moreover, now it is brought to our notice that the assessee company has already gone into liquidation. Therefore, in view of the provision of section 238 of CIRP code, the proceedings before Ld. NCLT would have over-riding effect. Therefore, it is made clear that the parties shall be at liberty to exercise their remedies available under Insolvency and Bankruptcy Code, 2016 ( IBC ). Appeal of the Revenue is dismissed.

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• 2023 (2) TMI 629
  Unexplained income u/s 68 - Deposit of cash to the bank during the period of demonetization - AR submitted that during the demonetisation period, assessee deposited cash that were received from its members that are verifiable - assessee ought not to have accepted SBN s which were no longer a legal tender - HELD THAT:- It is very important to note that whether the case of the assessee falls into statistical analysis, which suggests that there is a booking of sales, which is non-existent and thereby unaccounted money of the assessee in old currency notes (SBN) have been pumped into as unaccounted money. The instruction dated 21/02/2017 that the assessing officer basic relevant information e.g. monthly sales summary, relevant stock register entries and bank statement to identify cases with preliminary suspicion of back dating of cash and is or fictitious sales. The instruction is also suggested some indicators for suspicion of back dating of cash else or fictitious sales where there is an abnormal jump in the cases during the period November to December 2016 as compared to earlier year. It also suggests that, abnormal jump in percentage of cash trails to on identifiable persons as compared to earlier histories will also give some indication for suspicion. Non-availability of stock or attempts to inflate stock by introducing fictitious purchases is also some indication for suspicion of fictitious sales. Transfer of deposit of cash to another account or entity, which is not in line with the earlier history. Therefore, it is important to examine whether the case of the assessee falls into any of the above parameters are not. The assessee is directed to establish all relevant details to substantiate its claim in line with the above applicable instructions. We are aware of the fact that not every deposit during the demonetisation period would fall under category of unaccounted cash. However the burden is on the assessee to establish the genuineness of the deposit in order to fall outside the scope of unaccounted cash. Appeal filed by the assessee stands allowed for statistical purposes.

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• 2023 (2) TMI 628
  Relief u/s. 90 - assessee is an individual citizen of India and for A.Y. 2018-19 was on deputation to Netherlands by his employer - assessee revised return of income assessee declared the salary received in Netherlands and claimed relief u/s 90 - reason why the foreign tax credit was denied to the assessee is that the assessee submitted the certificate of his employer and without submitting any detail of the payment of taxes in Netherlands - HELD THAT:- Claim of the assessee is now supported by the letter by the Dutch Tax authorities. The assessee has submitted the English translation. As find that the employer has deducted whatever tax has been held to be correct by that authority. Even otherwise, the form no.67 of furnished by the assessee also clearly shows what is the amount of salary received by him from Netherlands and what is the amount of withholding tax paid by him through his employers in Netherlands. Therefore, there is no doubt that assessee has paid tax in Netherlands and assessee is entitled to deduction of such tax u/s 90 of the income tax Act. The only dispute is with respect to the quantum of deduction. The assessee has clearly submitted that now there is an assessment by Dutch tax authorities and correct tax paid therein is available. In view of this, we direct the AO to grant credit of Dutch tax paid by the assessee after proper verification and obtaining necessary information from the assessee. Accordingly, the appeal of the assessee is allowed for statistical purposes.

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• 2023 (2) TMI 627
  Denying deduction u/s 54 - treating the Long Term Capital Gain arising on sale of old property as Short Term Capital Gain - whether the date of acquisition of the property is to be considered from the date of allotment issued by the builder? - HELD THAT:- We find that the issue squarely covered in the favour of the assessee by the decision in case of principal Commissioner of income tax vs Vembu Vedhyanathan [ 2019 (1) TMI 1361 - BOMBAY HIGH COURT] wherein the honourable High Court after considering the circular issued by the central board of direct taxes has held that the allotment letter by the builder is the date of acquisition of the property as the period of holding for the purpose of determining whether the asset is a long-term capital asset or a short-term capital asset, is to be taken therefrom. Honourable Supreme Court has dismissed the special leave petition filed by the by the revenue [ 2019 (7) TMI 1111 - SC ORDER] Therefore, we direct the AO to consider the date of acquisition of the property sold on 4/1/2014 from the date of allotment letter i.e. 20/7/2009 and consider the asset transferred as a long-term capital asset. Accordingly, the assessee is also eligible for deduction u/s 54 of the act.- Decided in favour of assessee.

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• 2023 (2) TMI 626
  Addition u/s 68 - assessee has not produced documentary evidences in support of cash deposits made into the bank account during the demonetisation period - HELD THAT:- When the ld. AO has accepted the said cash book and part of cash deposited in the bank account out of the cash available in the cash book maintained by the assessee and books of account have not been rejected, then in such circumstances fail to find any justification at the end of the revenue authorities of not accepting the source of alleged cash sum, which is out of the cash in hand available with the assessee. It is also worth noting that even on 30-11-2016 and 31- 12-2016 cash in hand available with the assessee is at Rs. 29,15,918/- and Rs.31.81,449/- respectively. Therefore, under the given facts and circumstances, since the assessee has successfully/satisfactorily explained the source of sum of Rs. 10 lakhs, we fail to find any justification in the addition being made u/s. 68 - therefore we reverse the findings of the ld. CIT(A) and delete the addition made u/s. 68 - Decided in favour of assessee.

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• 2023 (2) TMI 625
  Addition u/s 68 - genuineness of the income earned by the assessee in the form of commodity profit - whether the Assessing Officer was justified in making the addition u/s 68 - HELD THAT:- We notice that the assessee is mainly into the business of manufacturing of TMT bars. During the year it entered into transactions of purchase and sale of commodities and earned a profit - These transactions were carried out through a broker, namely, Sidhsilver Commodities Pvt. Ltd.. AO doubted the transactions of the said profit on account of linkage of the broker with Universal Commodity Exchange of India Ltd.. However, we find that apart from referring to the said investigation, no other concrete evidence have been put forth by the revenue authorities to prove that the commodity profit was an accommodative profit. The complete details including the contract notes, financial ledgers, bank statement showing the relevant transactions and the audited financial statements of the broker, assert this fact that the assessee has earned a genuine commodity profit. Set-off of current year losses against the addition made u/s 68 - We have held above that the assessee has earned genuine commodity profit but even for academic discussion if it is presumed that the action of the Assessing Officer is found to be correct and the alleged commodity profit is treated as unexplained cash credit u/s 68 of the Act, even then the losses for the year which have not been disputed by the revenue authorities deserves to be setoff against the unexplained income u/s 68 of the Act. The restriction for setoff has been brought into the Act by the Finance Act, 2016 w.e.f. 01/04/2017. Now, going through sub-Section (2) of Section 115BBE of the Act, the words set off of any loss appearing in second line was inserted from 01/04/2017. Before this insertion, there was no bar on setting off of any losses incurred during the year against the income referred to in Section 68, 69, 69A, 69B, 69C or 69D of the Act. Further to remove the confusion, the CBDT has come out with a Circular being no. 11/2019 dated 19/06/2019. Going through the above Circular, there remains no ambiguity regarding interpretation that prior to 01/04/2017, the assessee is entitled to claim of set-off of losses in the income determined u/s 115BBE of the Act. Delay in depositing the employees contribution to PF ESI before the due date as prescribed under the relevant Acts governing PF ESI - HELD THAT:- Recently, the Hon ble Supreme Court in the case of Checkmate Services (P.) Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] dealing with this issue has settled down the controversy deciding in favour of the revenue holding that strict compliance with Section 36(1)(va) r.w.s. 2(24)(x) is a must to claim deduction and provisions of Section 43B of the Act cannot be applied on employees contribution to PF ESI and further held that the High Court rulings favouring the assessee had not laid down the correct law and further held that the position of law stands well settled and such employees contribution towards PF ESI if not deposited before the due date prescribed under the relevant Act governing PF ESI, then in view of the provisions u/s 36(1)(va) r.w.s. 2(24)(x) of the Act, all such amounts shall be added to the income of the assessee. Therefore, we uphold the findings of the ld. CIT(A) in this respect and dismiss Ground No. 3 raised by the revenue.

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• 2023 (2) TMI 599
  Non-prosecution of appeal by Assessee - HELD THAT:- This writ petition petitioner is challenging the original order passed by ITAT on [ 2015 (7) TMI 1424 - ITAT INDORE] as well as order passed in miscellaneous application against which writ petition does not lie before this Court. Accordingly, the same is hereby dismissed. The petitioner has remedy to file I.T.A. before this Court. Certified copy of the impugned order be returned back to the petitioner by keeping the photocopy of the same on record. The writ petition is disposed of with liberty to file I.T.A.

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• 2023 (2) TMI 598
  Addition u/s. 69B - difference of stock is the nature of business - undisclosed stock was generated from the business income - Tax levied u/s. 115BBE - AO had assessed by taking the stock as an income from other sources and addition was made u/s. 69B - HELD THAT:- Assessee has confirmed the identity of investment in the difference of stock which was generated from business income. During the assessment and in appeal, both the revenue authorities had not been able to bring any such contrary findings against the assessee that the source of investment on undisclosed stock which was not from business income. In the recorded statement, the assessee had declared that the undisclosed stock was generated from the business income. After that the revenue had not made any queries to prove that the said investment is in nature other than business. Only on the basis of the legal view, the identity of the items cannot be changed. In referred case, DR is trying to prove that the investment in jewellery was out of income from other sources. But the assessee is the trader of jewellery and nature of investment was out of income generated from business. No contrary judgment was placed by the ld. DR against the submission of assessee. We fully rely on the orders of Ragavs Diagnostic Research Centre Pvt. Ltd. [ 2022 (9) TMI 584 - ITAT BANGALORE] Accordingly, the application of 69B on the assessee is not warranted. So, the tax levied by the revenue on the assessee u/s. 115BBE is liable to be rejected. We order accordingly.

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• Customs

• 2023 (2) TMI 624
  Non-Release of goods - Classification of imported goods - GTL Light Paraffin - to be classified under Tariff Heading 27101990 or not - whether is GTL Light Paraffin or it is Light Diesel Oil? - correctness of the expert two reports rendered by evenly placed Test Laboratories of Custom House Laboratory,Kandla and CECL, Vadodara - Seeking to clear the subject imported goods forthwith on payment of applicable duty. HELD THAT:- It is clear from the reports, which have been produced from the Central Revenue Control Laboratory, PUSA, New Delhi that all the samples sent to ascertain eleven parameters by the Directorate of Revenue Intelligence are said to be the GTL Light Paraffin with a clear opinion that it is other than the Light Diesel Oil and other than Automotive Diesel Fuel or Diesel Fuel. The inquiry of the DRI and the serious concern on the part of the DRI of use of the imported material as a Automotive Diesel Fuel or Diesel Fuel or Light Diesel Oil had resulted into the seizure of the goods and also continuing with this inquiry. The import has been made in the month of September, 2022. There were two test reports, one from CRCL, Kandla is in favour of the petitioner, however, the Kandla Laboratory having expressed its limitation on opining on all eleven parameters, the matter had been referred to the CECL, Vadodara which opined other than what the CRCL, Kandla had and hence, the directions were issued by this Court for the report to be obtained from the Central Revenue Control Laboratory, New Delhi, it is being a appellate laboratory in all respect, its opinion shall need to weigh with the Court. We also notice that in case of M/s. Gujarat Ambuja Exports, whose cargo is said to have been commingled, release has already been given. The serious dispute had been raised with regard to the storage. Prima facie, the version put forth by the petitioner of commingling of the cargo on the strength of this material shall need to be accepted. More than that, the reports given by the Central Revenue Laboratory, New Delhi without semblance of doubt opines on the sample being the GTL Light Paraffin and not the Diesel Oil nor the Automotive Diesel Oil nor Light Diesel Oil. That being the case, the clearance of the balance quantity of 1360 MTs and as per the directions issued by this Court in the case of M/s.Alka Chemical Private Limited where also the issue was whether the sample was Light Diesel Oil or not. It is deemed appropriate to follow the same by permitting the release of the seized quantity of goods 1360 MTs GTL Light Paraffin stored in Tank Nos.57, 58 and 117 and 1366.83 MTs GTL Light Paraffin stored in Tank Nos.57, 58 with respondent No.4. This balance quantity of goods being 1360 MTs and 1366.83 MTs of GTL Light Paraffin are released on the writ applicant furnishing an appropriate undertaking to the Commissioner, Customs to the effect that the petitioner will cooperate with the inquiry. The inquiry shall proceed further as the importer has executed bond while getting the goods released. The request on the part of the respondent to insist on the bank guarantee is not to be acceded to considering the case of M/s. Gujarat Ambuja, in which, even no action has been initiated. The Court has already directed the petitioner to give an undertaking (before this Court) as well as furnish bond (before the Commissioner) which they are ready to furnish where its total asset can be declared by the petitioner. Petition disposed off.

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• 2023 (2) TMI 623
  Sanctioned amount of refund has been rightly credited to the Consumer Welfare Fund or not - Amount was deposited under protest - principles of unjust enrichment - HELD THAT:- The order of court below is erroneous and in the teeth of the ruling of Hon ble Supreme Court in the case of U.O.I. VERSUS SUVIDHE LTD. [ 1996 (8) TMI 521 - SC ORDER ]. Admittedly, the amount under refund claim were deposited partly during investigation and partly during pendency of the 1st appeal. Further, it is evident that the Appellant did not agree with revenue and have contested the SCN as well as the adjudication order. The amount deposited are found to be deposited under protest, ipso facto. Further, these amounts are also in the nature of pre-deposit - the burden of unjust enrichment is not attracted. The Adjudicating Authority is directed to grant the refund with interest @ 12% per annum from the date of deposit till the date of refund - Appeal allowed.

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• 2023 (2) TMI 622
  Levy of anti-dumping duty on the imported goods - import of Aluminium Alloy coils - N/N. 23/2017-Cus (ADD) dated 16.5.2017 - Applicability of ruling of Bombay High Court in favor of importer - HELD THAT:- The disputed goods were described as Aluminium alloy foils while the goods under consideration by the Bombay High Court in MAHLE ANAND THERMAL SYSTEMS PRIVATE LIMITED VERSUS THE UNION OF INDIA, THROUGH JOINT SECRETARY, MINISTRY OF COMMERCE, DEPARTMENT OF COMMERCE ORS. [ 2022 (8) TMI 844 - BOMBAY HIGH COURT] were Silico-Manganese-Aluminium alloy foils. The goods imported through Gandhinagar were described as Aluminium alloy foil. Learned authorised representative submitted that the nature of goods has to be seen and the disputed goods are different from the goods under consideration of the Bombay High Court and also the goods imported through Gandhinagar - This submission of the learned authorised representative for the Revenue cannot be accepted. Firstly, the composition of the disputed goods is not in question that they were an alloy of aluminium and so it cannot be presumed that the alloy had a different composition than the alloy under consideration before the Bombay High Court. Secondly, clause (vii) nowhere specifies that it excludes alloys of particular composition. Neither does the letter of the DG stipulate that the exclusion under clause (vii) was available only to a particular type of alloys. It is evident that it was not a relief provided to the petitioner but it is a ruling regarding interpretation of the notification. Therefore, its benefit will equally apply to anybody else. The impugned order cannot be sustained - Appeal allowed.

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• 2023 (2) TMI 621
  Interest on Refund of excess paid CVD - interest was denied to the respondents/assessees on the ground that the matter was sub-judiced before the CESTAT and the refund claims were disposed of within the period of three months of the said order - Commissioner (Appeals) allowed claim of interest - HELD THAT:- As per the law laid down by the Hon ble Apex Court in the case of M/s Ranbaxy Laboratories Ltd [ 2011 (10) TMI 16 - SUPREME COURT ] wherein Hon ble Apex Court has held that the Revenue is liable to pay interest under Section 11BB of the Act and the period commences from the date of expiry of three months from the date of receipt of the application for refund under Section 11B(1) of the Act and not on the expiry of said period from the date on which the order of refund is made.s per the law laid down by the Hon ble Apex Court in the case of M/s Ranbaxy Laboratories Ltd (supra) wherein Hon ble Apex Court has held that the Revenue is liable to pay interest under Section 11BB of the Act and the period commences from the date of expiry of three months from the date of receipt of the application for refund under Section 11B(1) of the Act and not on the expiry of said period from the date on which the order of refund is made. Further, It is found that the ld. Commissioner (Appeals) in the impugned order came to the conclusion that the respondents/assessees are entitled to interest as per Section 27(A) of the Customs Act, 1962 at the applicable rate of interest as prescribed vide notification issued under Section 27(A) from time to time after expiry of three months from the date of receipt of refund application till the date on which the refund has actually been paid. There is no infirmity in the impugned order and there is no need of any interference in the impugned order - Appeal dismissed.

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• 2023 (2) TMI 620
  Smuggling - Gold - recovery of contraband - cross-examination of statements - burden to prove - Appellants denied recovery of any gold from their possession and demanded cross-examination of the panch witnesses - failure to comply with the provision of Section 155(2) of Customs Act, 1962 - entire case of Revenue is based upon the allegation of recovery of gold from Shri Amit Ghosh and Shri Ajay Kumar Gond and the statements all dated 07.03.2017 of the first three Appellants - levy of penalty u/s 112 (a) and (b) of Customs Act, 1962. HELD THAT:- The burden is on Revenue to establish the voluntary nature of the statements all dated 07.03.2017 recorded from the first three Appellants in the present case. The Revenue has failed to adduce any evidence to that effect. On the contrary, the facts and circumstance, including the fact of prolonged detention of the Appellants at the office of DRI prior to their first production before the Ld. Magistrate and non-recording of any subsequent statement of the Appellants in spite of having ample opportunities, establishes the non-voluntary nature of said initial statements all dated 07.03.2017 of the said Appellants. Hence, the said initial statements cannot be basis of any penal consequence in the present case. Though Section 138B of Customs Act, 1962 provides for examination of the makers of any statement, the Adjudicating authority did not exercise such power with respect to the first three Appellants herein before taking cognizance of such initial statements which were retracted before the Ld. Magistrate. Moreover, from the impugned Order-in-Original it would be evident that in course of adjudication, the fact of retraction was also duly brought before the Adjudicating authority by the Ld. Advocate appearing for the Appellants, but the Ld. Adjudicating authority simply ignored the same while arriving at his findings with respect to the statements dated 07.03.2017 of the Appellants and proceeded on the basis of such statements as being voluntary in nature and has mis-directed himself by arriving at a finding at para 4.17(xii) of Order-in-Original that the retraction was in reply to Show Cause Notice and hence, such finding is not maintainable in law. As such, the position of law is no more res integra that the retracted statements cannot be the sole basis of penalty under Section 112 of Customs Act, 1962. In the present case, if the said initial statements all dated 07.03.2017 of the first three Appellants, which were retracted on 14.03.2017 before the Ld. Magistrate, are taken out of record, there would be nothing to implicate the Appellants herein as liable for any penal action under Section 112 of the Act. In such circumstance, imposition of penalties upon the Appellants on the basis of such retracted statements, all dated 07.03.2017, is liable to be quashed. Opportunity of cross examination of the panch witnesses - HELD THAT:- When the Appellants denies the allegation of recovery of gold from their possession, it was incumbent upon the Revenue to produce the Panch witnesses for cross-examination to unearth the facts before the Adjudicating authority. In other words, it was for the Revenue to establish the fact of recovery of contraband from the possession of the two of the Appellants herein upon cogent evidence, which they have failed to do more particularly when the place of interception and search-seizure was admittedly different in the present case. Having not done so, the Revenue cannot derive any adverse conclusion against the Appellants on the basis of the alleged recovery. In the present case, it is the claim of the Revenue that the contrabands were recovered from the two of the Appellants and the initial statements of first three Appellants were voluntary in nature. In such circumstance, the burden of proof in this regard was on the Revenue, which they failed to discharge on both account. The argument that since gold is notified under Section 123 of Customs Act, 1962, the burden of proof will be on the noticee/ Appellants, cannot be appreciated since Section 123 ibid provides for burden of proof with respect to legal procurement and possession of gold by it s owner and it nowhere provides that the burden of proof w.r.t. non-voluntary nature of statement and/or non-recovery of contraband from the possession, is on the noticee/ appellants. Levy of Penalty u/s 112(a) and (b) - HELD THAT:- The imposition of penalty upon the fourth Appellant under Section 112(a) (b) of the Customs Act, 1962 on the basis of retracted initial statements all dated 07.03.2017 of the first three Appellants herein, is also perverse in nature inasmuch as apart from such retracted statements of the co-accused, there is nothing on-record to implicate the fourth accused in the alleged act of smuggling of the seized gold. Hence, in absence of any independent corroborative evidence against the fourth Appellant, penalty upon him is not imposable. Further, single penalty under both the clauses (a) (b) of Section 112 of Customs Act, 1962, is erroneous in law in as much as both such clauses operates at separate domain altogether - the imposition of single penalty upon the fourth Appellant i.e. Akash Jagdish Issrani by the Adjudicating authority under both clauses (a) and (b) supports the contention on behalf of the said Appellant that the Adjudicating authority was not sure about the alleged role of the said Appellant in the alleged act in want of specific allegations against him in the Show Cause Notice, but mechanically imposed the penalty on him. Such imposition of penalty is liable to be quashed. Appeal allowed.

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• 2023 (2) TMI 619
  Rejection of Classification of imported goods - Portable Solar Home Electric Light HANS 300 and HANS 150 - classification of imported goods under Customs Tariff Heading, CTH No. 85131010 and IGST S. No. 234 of Schedule I of Notification No. 1/2017-IGST (Rate) dated 28.06.2017 was rejected and the imported goods were held to be classifiable under CTH 85076000 and covered under S. No. 139 of IGST Schedule IV of Notification No. 1/2017-IGST (Rate) dated 28.06.2017 - case of the Revenue is that the imported goods should be classified as per their main function which is that of an accumulator - recovery alongwith interest and penalty - HELD THAT:- The imported goods in question are designed for the purpose of performing several complementary or alternative functions viz. (a) generation of electricity solar energy; (b) storing the electricity so generated or collected through four other different means; and (c) supplying electricity to the in-built LEDs as well as for charging mobiles and running electrical devices. Principal Function - HELD THAT:- Evidently, their heart is the storage which can be done by five different means, one of which is charging using in-built solar panel. The power so generated can be used for several purposes and not only for using the LED lamps built into it the goods. Thus, they have multiple inputs and multiple output options. The imported goods can be used regardless of which input source is used or what the output purposes are but they cannot be used without the accumulator. Therefore, in our considered view, they deserve to be classified as accumulators under CTH 8507. Whether the classification of the imported goods under IGST. S. No. 234 of Schedule I of the IGST Notification 1/2017 covers solar power based devices is correct? - HELD THAT:- The notification does not place any restriction of the Customs Tariff Heading and it applies so long as such devices fall under Chapter 84 or 85 of the Customs Tariff. Evidently, the goods falling under 8507 would also be entitled to classification under Schedule I at S. No. 234 if they are solar power based. There can be no manner of doubt that they are solar power based. The reason this classification was not accepted by the adjudicating authority is that they are not SOLELY based on solar power and other power can also be used charged the devices - the adjudicating authority has erred in coming to this conclusion because the Notification does not say devices based solely on solar power but says solar based devices . It does not in any way forbid the alternative sources of power to support them. Simply because there are four other alternative means through which they can be charged, it does not mean that the imported goods are not solar power based devices. Therefore, the imported goods merit classification under 234 of Schedule I of Notification 1/2017. Consequently, the demand for IGST differential duty along with interest cannot be sustained. The essential nature of the imported goods to be that of accumulators, the appellant s contention that they should be classified under CTH 85013120 as DC generators cannot be accepted and consequently no refund of customs duty is admissible to the appellant. As the demand for differential IGST itself is not sustainable, the question of interest or imposition of penalty under Section 112 or 117 also do not arise - the impugned order confirming the demand for differential IGST along with interest under Section 112 117 on the appellant is set aside. Appeal disposed off.

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• 2023 (2) TMI 618
  Exemption from duty of customs - import of Lithium Ion Cell (Captive Consumption - For LED) - for use in manufacture of LED Emergency Bulb/ Light - Benefit under Sr. No. 471 of Exemption Notification No. 50/2017-Cus. dated 30.06.2017, as amended by Notification No. 02/2021-Cus. dated 01.02.2021 - whether the said provisions cover the authority to revisit the scope of the exemption notification already determined by the jurisdictional port officer? HELD THAT:- This Authority is not competent to examine the scope of the said rule 7, and merely notes that at the present juncture, the concerned jurisdictional port officer has allowed availment of exemption notification and the investigation initiated by the Principal Commissioner of Customs (Preventive), New Delhi has not resulted in issue of any show cause notice atleast as yet. An application may be considered pending before any officer of customs only if it is pending before an officer in formal manner before an officer who is competent to answer the said question in terms of specific powers vested with the officer under the Customs Act 1962. An illustrative list of such situations would include cases wherein a Show Cause Notice has been issued; bill of entry has been provisionally assessed under Section 18 of the Act ibid; the matter is pending before the Special Valuation Branch of the Customs Commissioner for the purpose of valuation of the goods in question; or the proper officer has held the pre-notice consultation with the applicant in terms of the proviso of subsection (a) of Section 28(1) of the Customs Act, 1962. Therefore, in cases, such as the extant case, wherein an officer of customs is engaged in an investigation that may result in formulation of a question that would be posed before another competent officer would not qualify as pending before an officer . The contention of the Principal Commissioner of Customs (Preventive), New Delhi is rejected. Eligibility for taking benefit of Customs Notification No. 50/2017-Cus. dated 30.06.2017 - HELD THAT:- Emergency LED Light is fundamentally a type of LED light, albeit a value-added one. Further, Emergency LED light cannot be excluded from scope of entry referring to LED Light for want of anything specific anywhere in the law providing that LED Emergency Light is distinct from LED light. Further, Li-Ion cells are integral part of LED Emergency Light. when specifically designed for use therein. The applicant is eligible for taking benefit of S. No. 471 of Customs Notification No. 50/2017-Cus. dated 30.06.2017., as amended on Li-Ion cells to be used in the manufacture of LED emergency light, subject compliance with the provisions of IGCR Rules, 2017.

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• Corporate Laws

• 2023 (2) TMI 617
  Seeking restoration of the name of the Appellant Company in the register maintained by the Registrar of Companies (RoC), NCT of Delhi and Haryana - HELD THAT:- The Appellant Company was in some internal disputes among the shareholders and management of the Company. Further, the Income Tax Department had also taken action against the Company which further defaults the Company in filing the statutory records before the Registrar of Companies. The Balance Sheet shows that the Appellant Company is having an immovable property situated at Sirsa. Hence, we are of the view that the order passed by the National Company Law Tribunal (New Delhi Bench, Court-II) as well as Registrar of Companies, NCT of Delhi Haryana is not sustainable in law. The name of the Appellant Company be restored to the Register of Companies subject to the compliances imposed. Application allowed.

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• 2023 (2) TMI 616
  Seeking restoration of the name of the Company in the Register maintained by the Registrar of Companies (RoC), NCT of Delhi and Haryana - HELD THAT:- In view of the fact that the Financial Statements for the Financial Years of 2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11, 2011-12, 2012-13, 2013-14, 2014-15, 2015-16, 2016-17 2017-18 shows that the Appellant Company is having substantial movable as well as immovable assets. Therefore, it cannot be said that the Appellant Company is not carrying on any business or operations. Hence, the order passed by the National Company Law Tribunal (Court-V, New Delhi) as well as Registrar of Companies, NCT of Delhi Haryana is not sustainable in law. The name of the Appellant Company be restored to the Register of Companies subject to the compliances imposed.

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• PMLA

• 2023 (2) TMI 615
  Appropriate forum - Validity of provisional attachment order - petitioner approached this court on account of non-availability of the Appellate Tribunal under the PMLA - HELD THAT:- In the present petition, since the Appellate Tribunal under the PMLA Act has now been constituted, in the opinion of this Court, the entire issue would have to be comprehensively considered by the Appellate Tribunal in the two appeals which are pending before the said tribunal. Therefore, the entertaining of this writ, at this stage, when the Tribunal stands constituted could result in multiplicity of proceedings and also there is a possibility of conflicting rulings, which ought to be avoided. The appeals challenging the show cause notice dated 13th July, 2021 and the appeal of the ED challenging the order dated 20th June, 2018 passed by the adjudicating authority shall now be considered together by the Appellate Tribunal - The challenges and the grounds raised against the impugned PAO dated 7th June, 2021 as part of this writ petition shall also be considered by the Appellate Tribunal under the PMLA Act. The Petitioner is thus permitted to approach the PMLA to raise its challenge to the impugned PAO dated 7th June 2021. The Appellate Tribunal would then adjudicate the appeals and pass a decision in accordance with law. Petition disposed off.

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• 2023 (2) TMI 614
  Maintainability of petition - non-constitution of appropriate forum - Validity of provisional attachment order - It is the submission of Respondents that the Appellate Tribunal under the PMLA Act has now been constituted and the Petitioner ought to be relegated to the Appellate Tribunal - HELD THAT:- In the present petitions before the Court, since the Appellate Tribunal under the PMLA Act has now been constituted, in the opinion of this Court, the entire issue would have to be comprehensively considered by the Appellate Tribunal. There are already two pending appeals filed by the ED in respect of the earlier order of the AA. The present PAO is now challenged before this Court. Therefore, the entertaining of this petition, at this stage, when the Tribunal stands constituted could result in multiplicity of proceedings and also there is a possibility of conflicting rulings, which ought to be avoided. Considering that the impugned provisional attachment order by the ED was of 27th November, 2020 and the present writ petition was filed way back in September, 2021. The Supreme Court in M.A. No. 21 of 2022 of Suo Moto Writ Petition (C) No. 3/2020 titled In Re: Cognizance for Extension of Limitation [ 2021 (11) TMI 387 - SC ORDER ] had held that the period between 15th March, 2020 to 28th February, 2022 would not be counted for the purpose of limitation. It is accordingly directed that the present writ petition shall be treated as an appeal challenging the PAO dated 27th November, 2020. This appeal to the PAO shall be considered by the Appellate Tribunal under the PMLA Act in accordance with law along with the two pending appeals filed by the ED. The stay application filed before this Court shall be considered as a stay application before the Appellate Tribunal under the PMLA Act. Petition disposed off.

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• Service Tax

• 2023 (2) TMI 613
  Taxability - Works Contract Service or Construction of Complex service? - construction activities for development of residential complexes and flats in southern India - invocation of extended period of limitation - suppression of facts or not - Whether the proviso to Section 73(1) of the Act was applicable on account of any wilful mis-statement or suppression of facts? - HELD THAT:- There was no suppression as to the activities being carried out by the respondent. It is also relevant to note that the respondent s contention that its services were covered under the Works Contract Services is not insubstantial. In cases where another interpretation is plausible and an assessee proceeds to file a return on that basis, it would not be apposite to conclude that the assessee has made any mis-statement or suppressed any fact merely because the Revenue interprets the statutory provision differently. This is notwithstanding that the Revenue may finally prevail in its interpretation of the statutory provisions and the assessee may not. Mis-statement and suppression of facts must necessarily be examined from the perspective of sufficient disclosure or statements of facts and not contentious interpretations of statutory provisions. Once an assessee has truly disclosed the facts, it would not be apposite to invoke the provisions of Section 73(1) of the Act only on the ground that the assessee has classified its services under a head which the revenue considers erroneous. However, if such classification is, ex facie, untenable and done with the intent of evading any liability, the provisio to section 73(1) of the Act, would be applicable. In Pushpam Pharmaceutical Company v. Collector of Central Excise, Bombay [ 1995 (3) TMI 100 - SUPREME COURT ], the Supreme Court had interpreted the proviso to Section 11A of the Central Excise Act, 1944, which was similarly worded as the proviso to Section 73(1) of the Act, and held that Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression. In view of the authoritative decisions rendered by the Supreme Court, the learned Tribunal held that the Commissioner had erred in holding that the respondent had suppressed information from the Department regarding payment of service tax. Thus, in the given facts, the proviso to Section 73(1) of the Act could not be applied. The respondent had filed its return of service tax on the basis that its services were taxable as Works Contract Services. It had availed the Cenvat Credit to the extent of Rs.2,44,48,095/- and had paid the balance amount in cash in discharge of the liability, which was computed on the aforesaid basis. There is no allegation that the respondent had concealed that it was carrying on the activity of construction and selling residential flats. Appeal of Revenue dismissed.

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• 2023 (2) TMI 612
  Seeking direction to second respondent to consider the petitioner s application under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 - petitioner s grievance in this writ petition is that even though they had paid the estimated amount as determined by the respondents as per the aforementioned scheme on 30.06.2020 which is the deadline fixed under the scheme, the respondents have not till date considered the petitioner s application as the said amount was credited into the account of the respondents only on 01.07.2020 i.e., one day beyond the deadline. HELD THAT:- Having produced proof before this Court in the form of payment details dated 30.06.2020 which is timed at 18.33.54 hours (6.33 pm), the statement of the petitioner that the payment of a sum of Rs.19,18,967/- which is the estimated amount payable by the petitioner under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 as per form SVLDRS-3 dated 27.02.2020 has been made to the respondents on 30.06.2020, has to be believed as no contra evidence has been produced by the respondents to disprove the said statement made by the petitioner. However, insofar as the challenge made to the impugned order in original dated 13.01.2020 is concerned, at this stage, this Court cannot interfere with the same as there are other terms and conditions which the petitioner have to fulfil for acceptance of their application under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019. Once the petitioner is able to succeed in their application submitted under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019, automatically the impugned order in original will go. This writ petition is disposed of by directing the second respondent to process the application submitted by the petitioner under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 and consider issuance of Form SVLDRS-4 in favour of the petitioner on merits and in accordance with law within a period of four weeks from the date of receipt of a copy of this order.

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• 2023 (2) TMI 611
  Vivad se Vishwas Scheme - whether the scheme is discriminatory to the petitioner Seeking direction to the respondents to allow adjustment of the amounts already paid by the petitioner while considering their case under Vivad se Vishwas Scheme notified by way of Finance Act, 2019 - also seeking refund of excess amounts already paid - HELD THAT:- In the present case, a bare reading of the Act would reveal that though it has been enacted with reference to a fiscal statute, it does not create or exempt levy of tax. It has been enacted with the objective to reduce legacy litigation involving disputed levies of indirect taxes. The object of the scheme is to liquidate the legacy dispute and not to grant any kind of amnesty. It is a legislation to reduce the legacy litigation against positive payment of a part of the disputed dues of tax to encourage voluntary disclosures of undisclosed evaded taxes with an intent to end old or pending indirect tax disputes. As per settled law statutes are not to be construed as theorems of Euclid but with some imagination of the purpose which lie behind them. The interpretation cannot be too literal in meaning of words that it misses the soul and sees the skin only. With respect to the fiscal statutes, it is trite law that the tests of vice of discrimination in the taxating law is less rigorous. The provisions contained in Sections 124 and 130 of the Act have close nexus and are in consonance with the objective sought to be achieved by the legislature in enacting the Act. The object sought to be achieved is to end the disputes without creating liabilities. Legislature in its own wisdom in order to achieve the objective of encashing the disputes has reiterated the underlying condition i.e. no refund has to be granted. The scheme is optional. The petitioner is under no obligation to opt for the same. Petitioner may opt after weighing benefits or may opt to continue with pending appeal. The argument raised by senior counsel for the petitioner that the same will be discriminatory to the petitioner as the assessee who has not deposited more than the pre-deposit will have a march over an assessee like petitioner who has deposited more than pre-deposit is misconceived. Petition dismissed.

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• 2023 (2) TMI 610
  Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - eligibility of petitioner to apply for the scheme or not - HELD THAT:- Section 125 of the Act states that all persons shall be eligible to make a declaration under this Scheme except ones specified in the said section. The Petitioner had applied under the Voluntary Disclosure category. Section 125(1)(f) refers to a person making a voluntary disclosure after being subjected to any enquiry, investigation or audit, as not eligible. Even though Section 125(1)(f) does not make a specific reference to any date, the Division Benches of this Court in M/S. NEW INDIA CIVIL ERECTORS PRIVATE LIMITED VERSUS UNION OF INDIA AND OTHERS [ 2021 (3) TMI 545 - BOMBAY HIGH COURT] and UCC INFRASTRUCTURE PVT. LTD., VERSUS UNION OF INDIA REPRESENTED BY THE SECRETARY, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS, NEW DELHI, JOINT COMMISSIONER CGST AND CX NAVI MUMBAI, COMMISSIONER CGST AND CX, NAVI MUMBAI, ASSISTANT COMMISSIONER CGST AND CX, NAVI MUMBAI [ 2022 (2) TMI 94 - BOMBAY HIGH COURT] have interpreted Section 125 to mean that the investigation must be pending as of 30 June 2019 to disentitle the declarant under voluntary disclosure category. From the affidavit in reply filed by the Respondents, it is clear that even the basic process of issuing notice had commenced after 30 June 2019. Absolutely nothing is placed on record as regards the cut-off date of 30 June 2019 qua the Petitioner. In light of the position that emerges on record, the Petitioner is entitled to the benefit of the legal position laid down by this Court in New India Civil Erectors Private Limited and UCC Infrastructure Pvt.Ltd. since the date 30 June 2019 is relevant even for the voluntary disclosure category. On that date the Petitioner was not subjected to any inquiry/ investigation prior to 30 June 2019. Thus, it cannot be held that the Petitioner was not eligible to apply under the Scheme. Petition allowed.

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• 2023 (2) TMI 609
  Valuation - inclusion of the fixed cost component - appellant had only paid the Service Tax on the variable cost which was nothing but the cost received from the advertising agency - case of Revenue is that appellant had excluded the fixed cost collected from the advertising agency, which was nothing but the slot fee payable to the television channels for telecasting the programme and that therefore it was sought to be recovered - extended period of limitation - revenue neutrality. HELD THAT:- Section 73(1) of the Finance Act, 1994 prompts for issuing a Show Cause Notice for the recovery of Service Tax not levied or paid or short-levied or short-paid or erroneously refunded; but however, neither in the Show Cause Notice nor even in the impugned Order-in-Original do we see any allegation as to the Service Tax not levied or not paid or short-levied or short-paid or erroneously refunded. Further, there is also no dispute either in the Show Cause Notice or in the impugned Order-in-Original of the fact that the advertising agency had remitted the Service Tax component to the Government Exchequer. Section 73(1) could be invoked when the conditions prescribed in the proviso thereunder are satisfied - From a perusal of the Show Cause Notice or even the Order-in-Original, it is not found that the concerned authorities have justified the issuance of Show Cause Notice by invoking the extended period of limitation, but for a mere allegation that there was suppression. It is very much the settled position of law that allegations, howsoever strong, cannot take the place of proof. When, therefore, the Government is not deprived of its dues, that is to say, when for a particular service on which the Service Tax was liable to be paid, the same has been paid, it makes no difference as to who has paid the tax. The appellant has claimed that the advertising agency has paid the applicable Service Tax on the impugned service, which has not been disputed either by the advertising agency or even by the Revenue and this is precisely the reason for the Revenue not to urge that the Service Tax was not paid, but for only quoting Section 73(1). It is worthwhile here to note the observations at paragraph 9.3 of the Order-in-Original wherein the Adjudicating Authority himself has acknowledged that the Service Tax having been paid by the advertising agency, the appellant could enjoy the facility of CENVAT Credit. The appellant has to succeed on both the legal grounds and the Revenue has not justified the invoking of the extended period of limitation and also not been able to dislodge that it is the case of revenue neutrality. Appeal allowed.

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• 2023 (2) TMI 608
  Classification of services - works contract service or construction of a new residential complex service - Recovery of Irregularly availed CENVAT Credit - period November 2006 to September 2010 - appellant claims that the entire tax liability on the taxable value was discharged by it in cash and by utilization of CENVAT credit. - Invocation of extended period of limitation HELD THAT:- It is seen from the records that the nature of service provided by the appellant would fall under the works contract service which became taxable w.e.f. 01.06.2007. The Commissioner has recorded a finding that since the appellant had got itself registered under the category of construction of complex service and had filed the service tax returns also under construction of complex service, it would not be open to the appellant to contend that the services should appropriately be classified under works contract service. This is what has also been contended by the learned authorised representative for the department. This submission cannot be accepted - If the service actually falls under works contract service, then mere registration under a different category and payment of service tax under that category would not be sufficient to hold that the service was actually rendered under that category. The reasoning adopted by the Commissioner, therefore, cannot be sustained. The demand of service tax, therefore, would not sustain. Whether the appellant had correctly availed CENVAT credit of Rs. 1.73 crores? - HELD THAT:- The availment of CENVAT credit by the appellant requires a proper examination by the adjudicating authority afresh and the claim of the appellant cannot be brushed aside merely on the statement made in the affidavit filed by the department that Annexure-5 containing the statement of CENVAT credit availed is not available in the adjudication file. From the facts available on record, it does appear that the appellant had furnished the documents as also the Certificate of the Chartered Accountant. It would, therefore, be necessary to remit the matter to the adjudicating authority to determine this issue regarding availment of CENVAT credit afresh, for which purpose the department shall provide an opportunity to the appellant to furnish the documents. The confirmation of demand of service tax in the impugned order dated 30.04.2012 passed by the Commissioner is set aside - In regard to the availment of CENVAT credit by the appellant, the matter is remitted to the adjudicating authority to take a decision on this issue afresh after providing an opportunity to the appellant to furnish documents - Appeal allowed in part and part matter on remand.

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• 2023 (2) TMI 607
  Disllowance of CENVAT Credit - duty paying documents - invoices issued to the offices of the appellant situated in other cities, which are unregistered - corelation of the input consultancy engineering service received by the appellant with the output consultancy service rendered to others - HELD THAT:- Admittedly, appellant have provided taxable output service of engineering consultancy service to other metro projects located in other cities like Hyderabad, Chennai, Pune, Kolkata etc. For providing this service, appellant have also set up offices in those cities. Rule 2(l) of CCR provides input service means any service used by provider of output service for providing an output service. This rule further provides that such input service may have been used by the manufacturer/service provider either directly or indirectly. Thus, one to one co-relation is not required for taking Cenvat credit under Rule 3 of CCR. Once credit have been rightly taken, there is no restriction in use of such credit for payment of either central excise duty or service tax or any other specified tax liability. Further, Rule 6(5) of CCR provides that the provisions of Rule 6(1), (2) and (3) are not applicable, where input service received is used both for providing taxable and tax free output service. Admittedly, in the facts of the present case, appellant have utilised the input consultancy engineering service both for providing tax free output service of passenger transport and taxable output service of consultancy engineering service. Accordingly, the demand of disallowance of Cenvat credit of Rs. 6,17,84,781/- is set aside. Disallowance of Cenvat credit with regard to input service received at the unregistered offices of the appellant located in other cities like Hyderabad, Chennai, Pune etc. - HELD THAT:- It is admitted fact that such offices were opened by the appellant for providing output taxable service of engineering consultancy service. Further, Admittedly, appellant have accounted for the receipt of output taxable service provided from those offices which have been accounted for at the Delhi office and subjected to service tax. Further, condition of being registered is not essential for taking Cenvat credit, as have been held by Hon ble Karnatka High Court in mPortal India Wireless Solutions Pvt Ltd. vs. Commissioner of Service Tax, Bangalore [ 2011 (9) TMI 450 - KARNATAKA HIGH COURT ] - Demand set aside. As the appeals are allowed on merits, in favour of the appellant-assessee, the penalty imposed under Section 78 r/w Rule 15 of CCR set aside. Appeal allowed.

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• 2023 (2) TMI 606
  Levy of Service tax - gross amount/consideration being received by the Appellant for execution of IT projects for the Government of Rajasthan - amount deducted in the name of liquidated damages for violating the terms of Agreement. HELD THAT:- The present appeal filed is against a periodical show cause notice issued to the appellant, consequent to an Audit of the records of the assessee. An identical issue stand decided by this Tribunal in M/S RAJCOMP INFO SERVICE LIMITED VERSUS THE COMMISSIONER, OFFICE OF THE COMMISSIONER, CGST AND CENTRAL EXCISE COMMISSIONERATE (VICE-VERSA) [ 2022 (2) TMI 955 - CESTAT NEW DELHI ] wherein the previous demands made have been set aside - The impugned Order-in-Original has demanded service tax on two issues. The audit of the record of the appellant reveal that they were providing taxable service to various Government departments in which supply, installation of various hardware and /or software or provision of service was involved. M/s. Rajcomp was found paying service tax only on the service charges so received from the concerned Department, instead of paying the service tax on the gross value of the amount so received - it was held that the appellant acted as a pure agent as a result of which the amount collected by the appellant from the State Government for payment to the vendors cannot be subjected to service tax. Whether the appellant is liable to pay service tax on the amount deducted from the payment of various service providers /vendors in the name of liquidated damages for violating terms of agreement entered into? - HELD THAT:- This issue was examined at length by the Division Bench of the Tribunal in M/S SOUTH EASTERN COALFIELDS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RAIPUR [ 2020 (12) TMI 912 - CESTAT NEW DELHI ] and it was held that It is, therefore, not possible to sustain the view taken by the Principal Commissioner that penalty amount, forfeiture of earnest money deposit and liquidated damages have been received by the appellant towards consideration for tolerating an act leviable to service tax under section 66E(e) of the Finance Act - CBIC Circular No. 178/10/2022-GST dated 03.08.2022 has clarified that liquidated damages cannot be said to consideration received for tolerating the breach or non- performance of contract. They are rather payments for not tolerating the breach of contract. Thus, the service tax levied on the amount received from the Departments of the State Government and which has been paid to the vendors cannot sustain. The demand of service tax on amount received as liquidated damages also does not sustain. Appeal allowed.

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• Central Excise

• 2023 (2) TMI 605
  Invocation of extended period of limitation - in spite of repeated proceedings before adjudication and Appellate Authorities, there is no finding to said aspect - Recovery of CENVAT Credit - HELD THAT:- While considering the issue in similar case M/S. NEPA LTD. VERSUS CCE, INDORE [ 2013 (11) TMI 776 - CESTAT NEW DELHI ], the Tribunal held that the assessee being a Public Sector Undertaking, there can be no mala fide intention to avail irregular and non-available CENVAT credit and non-payment of duty with intent to evade payment of duty and held that lower period of limitation and imposition of penalty are not imposable. Once there is no averment either in the SCN or impugned orders regarding the availment of benefits by suppression of fact or fraud, invoking extended period of limitation is not proper. The appeal is allowed on the ground of limitation without going into the merits of the case.

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• 2023 (2) TMI 604
  Denial of remission claim on goods lost (stolen) - Cigarettes - denial on the ground that this is a case of clandestine removal and not of burglary - demand of duty raised against the appellant company - imposition of penalty on the Director - HELD THAT:- The allegation of clandestine removal against the appellant is not established. It is evident on the face of the record that the appellant have taken all steps as a person of ordinary prudence, to cooperate with the Department and have taken effective steps for getting the FIR registered and have pleaded before the Police Department repeatedly including the higher officers to investigate the matter. This is also corroborated by the fact that the appellant suo moto appeared before the Court of Judicial Magistrate in complaint case No.1 of 2010 of P.S. Kotwali, Bhopal and they also pleaded to give directions to the Police to investigate. Thus, no case of clandestine removal is made out. The appellant is liable to pay duty only for the proportionate goods finally lost and is not liable to duty on the 25 CFC cartons of cigarettes recovered by the Police. The appellant is liable for duty only on the balance quantity of cigarettes being 138 CFC cigarettes. Further, penalty imposed under Rule 25 read with Section 11 AC on the appellant company and on the Director under Rule 26 of Central Excise Rules are set aside. Appeal allowed.

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• CST, VAT & Sales Tax

• 2023 (2) TMI 603
  Demand of pre-deposit - petitioner is aggrieved by the fact that it has a good case on merit and the orders of the Assessing Officer and the First Appellate Authority are based on assumption and presumption and lacks the factual basis - grievance on the part of the petitioner is that the VAT Tribunal decided the entire Revision Application and the Second Appeal at the pre-deposit stage of hearing - HELD THAT:- Here, as can be noticed from the order of the First Appellate Authority it has while quantifying the amount of Rs.30.75 Lakh already given the reasoning for such an amount to be paid by the petitioner. However, when it came to the Tribunal in the Second Appeal, it has directed the petitioner to deposit Rs.7.12 Crore which is the sum on higher side. The petitioner has pleaded his limitation to pay the amount and the pandemic due to Covid-19 virus is also another reason for him to show his inability to deposit the amount of pre-deposit. Noticing the fact that the base order has been passed exparte and thereafter, the challenge had been made to the First Appellate Authority and then there is a pendency of Second Appeal before the Second Appellate Authority, the matter would require adjudication at the hands of the Appellate Forum and at the same time the requirement of deposit of predeposits in accordance with the law as quantified by the First Appellate Authority is already deposited before the Authority concerned. Without endorsing to the action of the Tribunal the amount of Rs.7.12 Crore directed to be deposited as predeposit may not be insisted upon in wake of these glaring facts, the property which is attached is valued at Rs.61 Crore and therefore also, the revenue s interest is protected aptly. Petition allowed.

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• 2023 (2) TMI 602
  Attachment of property - recovery of dues - order of pre-deposit had not been complied with - HELD THAT:- Here, as can be noticed from the order of the First Appellate Authority it has while quantifying the amount of Rs. 60,64,430/- already given the reasoning for such an amount to be paid by the petitioner. However, when it came to the Tribunal in the Second Appeal, it has directed the petitioner to deposit Rs.3 Crore which is the sum on higher side. The petitioner has pleaded his limitation to pay the amount and the pandemic due to Covid-19 virus is also another reason for him to show his inability to deposit the amount of pre-deposit. These petitions are allowed quashing and setting aside the order dated 17.01.2022 of the VAT Tribunal. As rightly held by the Tribunal the asset value of approximately Rs.61 Crore is attached by the department and the payment of Rs.60,64,430 /- at the stage of First Appellate Authority is already deposited. No further predeposit would be necessary to be imposed. The amount of predeposit, which has already been deposited by virtue of the First Appellate Authority s direction shall continue to be retained by the State and will be adjusted against the tax liability which shall be decided after affording opportunity to the parties in accordance with the law. The pending Second Appeal being Second Appeal No. 593 of 2021 be co-operated by the petitioner and the same shall be completed within a period of three months from the date of receipt of a copy of this order - Petition allowed. Noticing the fact that the base order has been passed on the basis of presumption and assumption and then thereafter the challenge had been made to the First Appellate Authority and then there is a pendency of Second Appeal before the Second Appellate Authority, the matter would require adjudication at the hands of the Appellate Forum and at the same time the requirement of deposit of pre-deposits in accordance with the law as quantified by the First Appellate Authority is already deposited before the Authority concerned. Without endorsing to the action of the Tribunal the amount of Rs.3 Crore directed to be deposited as pre-deposit may not be insisted upon in wake of these glaring facts, the property which is attached is valued at Rs.61 Crore and therefore, also the revenue s interest is protected aptly.

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• Indian Laws

• 2023 (2) TMI 653
  Compensation sought by deceased writ petitioner, who suffered a head injury as a result of the Bank s sign board falling on his head - HELD THAT:- Since the Bank, had control over the signboard which fell on the deceased writ petitioner s head, causing serious injuries and it had neither periodically inspected nor put in place a protocol for monitoring the maintenance of the signboard which was fixed on the fa ade of the building, the occurrence of the accident, in law, was attributable, in this case to the defendant. Furthermore, the coming off of the signboard, given its size and location, had the potentiality of causing harm and injury to a passer-by who crossed the public pathway which abutted the building. In that sense, the Bank owed a duty of care to every passer-by, which was breached as it failed to aver that it had periodically carried out inspections and monitored the maintenance of the signboard - Besides this the defence of act of God/vis major available to ward off the strict liability cast under the common law principle was also not available since the hazard presented by a signboard coming off the fa ade of the building was a foreseeable event given the fact that Delhi experiences high-velocity winds, in May, each year. There are no merit in the appeal preferred by the Bank - appeal dismissed.

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• 2023 (2) TMI 601
  Condonation of delay of 737 days in filing civil appeal - Revenue appeal - sufficient cause for delay present or not - it is stated that on acting upon the opinion of the Advocate of the Department a mail was sent to the DGT headquarters which took two months to respond - HELD THAT:- This is certainly not a sufficient cause to condone the delay but an endeavor to save the back of the officers who did not work when they were so expected to work. It is clear wastage of judicial time and thus we must follow the same path as followed earlier and dismiss the application for condonation of delay with a costs of Rs. 25,000/- with the Supreme Court Group C (Non-Clerical) Employees Welfare Association to be recovered from the officers responsible for the delay. Consequently, the civil appeals are dismissed as time barred.

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• 2023 (2) TMI 600
  Proceedings against the Police officer - misconduct and is violative to the provisions of Section 3(1)(i), (iii) and 5(1) of Madhya Pradesh Civil Services (Conduct) Rules, 1968 -charge-sheet issued to the petitioner - Assessment u/s 153A - loose papers containing alleged unaccounted cash transaction was found and only on the basis of such entries, an undue inference was drawn that the petitioner had handed over an amount of Rs.7.5 Crore to Shri Prateek Joshi and on that foundation, the respondents initiated disciplinary proceeding against the petitioner - HELD THAT:- From a bare look to the very foundation made for issuance of the charge-sheet, it emerges that there is insufficiency of gleaned material to show the nexus between the petitioner and the entries contained in a loose paper, nor does it imply the same meaning as has been presupposed by the respondents to bring home the charges against the petitioner. Not only this, but in the developed circumstances, it can also be seen that when assessment of income, consequential to search-drive made against Prateek Joshi has been done by not referring those entries, then dragging the petitioner in disciplinary proceeding unnecessarily would obviously tantamount to causing injustice with him and such exercise and the charge-sheet can be held purely illegal. It a fit case where this Court while exercising jurisdiction under Article 226 of the Constitution of India, can quash the charge-sheet - charge-sheet (Annexure-P/2) is purely illegal, based on vague charge bereft of foundation and issued only on assumption and suspicion, therefore, is not sustainable. Obviously, the issuance of such charge-sheet causes prejudice to the petitioner because he being a young police officer, would be deprived from further promotion on mere pretext of pending disciplinary proceeding. We deem it apposite to emphasize on the enunciation of law in re V.C. Shukla [ 1998 (3) TMI 675 - SUPREME COURT] wherein the Supreme Court has categorically observed that if there is no evidence that the prosecution except the diaries, handbook and loose sheets with regard to alleged payments but on the basis of those evidence, nothing can be proved against the delinquent and therefore the Court has to see as to how the charges can be framed against the petitioner. In the fact-situation, finding this case as one of the exceptional cases wherein the view formed by this Court can be materialized only by interfering in disciplinary proceeding while exercising power under Article 226 of Constitution of India, Indubitably, the view of this Court gets credence from the verdict of Apex Court in re Kunisetty Satyanrayana [ 2006 (11) TMI 543 - SUPREME COURT] which elucidates that the High Court in very exceptional case can quash the charge-sheet or show cause notice if it is found to be wholly without jurisdiction or for other reason if it is wholly illegal. The writ petition is allowed.

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