TMI Tax Updates - e-Newsletter
February 1, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
Highlights / Catch Notes
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GST:
Profiteering - Constitutional validity of Section 171 CGST Act and state GST Acts - The High Court views Section 171 as falling within the Parliament's law-making power under Article 246A, which empowers both the Parliament and state legislatures to enact laws on GST. This includes all ancillary, incidental, and necessary matters related to GST legislation. The Court also finds that Section 171 does not delegate any essential legislative function, as it sets out clear legislative policy and guidelines. - Moreover, the High Court points out that any ambiguity in the functioning of the National Anti-Profiteering Authority (NAA) established u/s 171, which may lead to inconsistent decisions, would not invalidate the section or the rules framed under it.
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GST:
The final decision in this case by the Odisha Appellate Authority for Advance Ruling (AAAR) was set aside due to procedural irregularities and violation of principles of natural justice. The AAAR's order, which reversed the initial ruling of the Authority for Advance Ruling (AAR), was based on a report that was not disclosed to the petitioner, denying them a fair opportunity to respond. The case was remitted back to the AAAR for a fresh decision, ensuring adherence to the principles of natural justice. - High Court
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GST:
Seeking restoration of the GST registration of the petitioner that has been cancelled - Considering the circumstances, the High court decided to grant the petitioner an opportunity to file a detailed response to the show cause notice. The cancellation order dated 21.07.2023 was set aside, and the petitioner was given one week to submit a detailed response. The authority was directed to re-adjudicate the show cause notice within 30 days, and the petitioner was to be given a chance for a personal hearing.
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GST:
Levy of penalty u/s 129(3) - non filling up of Part 'B' of the e-Way Bill - Referencing the judgment in M/s Citykart Retail Pvt. Ltd.'s case, the Court observed that the sole allegation was the non-filling of Part 'B' of the e-Way Bill without any tax evasion intent. The explanation provided by the petitioner, supported by Ministry of Finance Circulars addressing issues in filling Part 'B', suggested no intent to evade tax. - Observing the absence of tax evasion intent, the High Court quashed and set aside the orders.
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Income Tax:
Validity of Judgement of High Court - While admitting the appeal of the Revenue, the High Court has framed 10 question of laws - However, while disposing the appeal, the High Court observed that, no substantial question of law arises out of the judgment rendered by the Income Tax Appellate Tribunal. - While allowing the Appeal of the Revenue, Supreme Court restored the matter before the High Court.
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Income Tax:
Unexplained gifts - Donee denied to make gifts - burden to prove - The High Court has held that, gifts are not genuine and Tribunal has deleted the addition merely only on the ground that no opportunity was provided for cross-examination,but fact remains that assessee never availed it - It was observed by the HC that, transaction is not genuine but colorable as money is routed indirectly from the firm to the assessee's account under the garb of the gifts. - Supreme Court declined to interfere into the matter.
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Income Tax:
Reopening of assessment u/s 148 - period of limitation - High Court [2022 (11) TMI 1443 - ALLAHABAD HIGH COURT] has quashed the notice and assessment order once it is found that, impugned notice under Section 148 of the Income Tax Act, 1961 was issued to the petitioner on 01.04.2021 i.e. after expiry of limitation on 31.03.2021 - Supreme Court declined to interfere with the impugned judgment and order passed by the High Court.
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Income Tax:
Reopening proceedings against deceased assessee - proceedings against legal representatives of the deceased assessee - The High court observed that the legal representative of a deceased assessee is liable for any tax the deceased would have been liable to pay. After the death of an assessee, the legal representatives must register themselves on the Income Tax Portal, submitting the deceased's PAN and their PAN as the legal representative, along with a death certificate and legal heirship certificate. Only then can an appeal against an assessment order be properly numbered and heard.
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Income Tax:
Approval u/s 80G(5) - eligibility - The tribunal had considered whether the law required significant charitable activities to be carried out to be eligible for registration under Section 80G(5)(vi) of the Act.- It was found that while the law had conditions for eligibility, it did not explicitly mandate a specific volume of charitable activities to be carried out within a certain timeframe. - The High Court also dismissed the appeal, affirming the tribunal's decision - Now, the Supreme Court has chosen not to intervene or overturn the judgment passed by the High Court while keeping the "question of law open.".
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Income Tax:
Reopening of assessment u/s 147 - Notice issued on the basis of statement recorded during survey u/s 133A - The High court observed that the survey conducted led to several factual findings essential for initiating the proceedings u/s 148A. It was noted that the statement of one of the partners, was not the sole basis for the proceedings and that other evidence arising from the survey was also considered. The court also acknowledged that a statement was recorded under Section 131, which has the same powers as a civil court, including examining individuals under oath. - Consequently, High Court refused to interfere.
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Income Tax:
Reopening of assessment - prior period of expenses - mercantile system of accounting - The petitioner argued that the reliance on the assessment order for AY 2010-2011 was unjustified since the Commissioner of Income Tax (Appeals) [CIT(A)] later allowed the prior period expenses for that year, and the Revenue accepted the CIT(A)'s order. The Income Tax Appellate Tribunal (ITAT) also upheld this position in a similar case. - The High court agreed with the petitioner and quashed the reassessment proceedings.
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Income Tax:
Application for NIL rate TDS deduction certificate u/s 197 - The High court noted that the project was in Bangladesh, and no part of it was situated in India. The payments to ICT for the project were made in Bangladesh, and the services rendered by the petitioner to ICT were governed by the DTAA (Double Taxation Avoidance Agreement) between the USA and India. Under Article 12 of the DTAA, only fees for 'included services' are taxable in the source state, not the fees for technical services in question. - Since no material showed the involvement of the petitioner's Indian PE in the project, the court inferred no taxable event had occurred in India. - Respondents directed to consider granting a nil rate TDS deduction certificate.
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Income Tax:
Maintainability of appeal in writ Court - Validity of re-assessment order passed u/s 147 - The High court, after hearing both parties and reviewing the submissions and relevant case law, concluded that the appellant did not challenge the initial stages of the re-assessment process and, therefore, could not question the correctness of the order passed under Section 148A(d) at this stage. The court also noted that the appellant participated in the re-assessment proceedings and had the opportunity to present their case. - The court dismissed the appeal.
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Income Tax:
Validity of Revision u/s 263 by CIT - The tribunal, after examining the factual aspects and noting that full details of the stock were furnished, found that the revenue failed to demonstrate any shortage or undervaluation in the stock. It also observed that the CIT did not specifically address whether these details were available to the assessing officer during the original proceedings. - Ultimately, the High court was satisfied with the tribunal's findings and reasoning, dismissed the revenue appeal.
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Income Tax:
Assessment u/s 153A - The word “incriminating” has not been defined under the Act where it refers to those documents, materials, information which were collected during the search proceedings and simultaneously these documents had bearing on the total income of the assessee. The Tribunal, in the impugned order, has categorically observed that nothing was brought on record contrary to the findings of the CIT(A) and accordingly, no addition of the regular items which were disclosed by the assessee in the regular books of accounts can be made. - Consequently, the High court found that no substantial question of law arose from the Tribunal's order and dismissed the appeal.
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Income Tax:
Revenue or capital receipt - sales tax subsidy/incentive under the Package Scheme of Incentives Scheme, 1993 - The High Court held that the sales tax subsidy/incentive received under the 1993 Scheme should be treated as a capital receipt. The principle evolved in this judgment emphasizes the importance of the "purpose test" in determining the nature of subsidies or incentives received by an assessee, focusing on the purpose and object of the scheme under which the subsidy is granted.
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Income Tax:
Prosecution u/s 276C (2) - petitioners had delayed to pay self-assessment tax - The High Court held that delayed payment of income tax does not amount to tax evasion if the tax is eventually paid. In this case, since the tax and interest were paid prior to the issuance of the show cause notice, the court found that there was no evasion of tax. Consequently, the court allowed the petition and quashed the Complaint and all subsequent proceedings arising from them.
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Income Tax:
Validity of reopening u/s 147 r.w.s. 148 - The Tribunal found that the reasons recorded by the Assessing Officer (AO) for reopening the assessment under section 147/148 were based on incorrect assumptions and information. Specifically, the AO erroneously believed that the assessee, an individual, had entered into a transaction of sale of immovable property, whereas the transaction was actually between two partnership firms. - The Tribunal noted that the AO should have issued a notice to the partnership firm involved instead of the individual assessee. - Consequently, entire proceedings u/s. 148 is held to be invalid.
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Income Tax:
Eligibility for deduction u/s 80IA - The Tribunal held that a joint venture undertaking engaged in developing a new Domestic Arrival Block at an airport, is eligible for a deduction under Section 80-IA(4) of the Income Tax Act. This decision was based on the finding that the contract with the Airports Authority of India (AAI), a statutory body, meets the criteria for development work and not just a works contract.
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Income Tax:
Applicability of section 56(2)(viib) and valuation of shares in cases of Right Issues - Revision order u/s 263 - The Tribunal disagreed with the Pr. CIT's valuation of the fair market value of shares, aligning with the assessee's contention and the precedent set by the ITAT Bench, which held that section 56(2)(viib) is not applicable to Right Issues. - The tribunal set aside the revision order.
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Customs:
Right of the accused for cross-examination of parties, whose statement has been relied upon - In the writ appeal, while acknowledging that cross-examination is a part of natural justice, the High Court noted that there is no absolute right to cross-examination, and it depends on each case's facts - Supreme Court refused to interfere into the matter.
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Customs:
Levy of penalty on Customs Broker - The tribunal concluded that the classification is a question of law and cannot be treated as misdeclaration or misstatement. Therefore, it was held that imposing a penalty on the appellant for the violation of Regulation 10 (d) and 10(e) of CBLR 2018 was not legally sustainable. Consequently, the tribunal set aside the penalty imposed on the appellant.
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Customs:
Absolute Confiscation of the seized gold and foreign currency - Prohibited item or not - Baggage Rules - The appellant claimed that he was misdirected at the airport and was not given a chance to declare his goods properly. He alleged mistreatment by the officers - The Tribunal found that absolute confiscation of the gold chains was not legally correct, as gold is not a prohibited item and can be imported under certain conditions. - Tribunal set aside the order of absolute confiscation and allowed the appellant to redeem the gold chains on payment of a redemption fine.
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Customs:
Classification of imported goods - Encoder/Multiplexer under different Model - the Tribunal held that the goods are correctly classifiable under CTH 85 17 6290. - The revenue's appeal was dismissed, both because the Tribunal had already decided the classification and because the revenue proposed a new classification in their appeal that was beyond the scope of the original show cause notice.
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FEMA:
Foreign Exchange Management (Nondebt Instruments) Amendment Rules, 2024 - Various amendments made.
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Corporate Law:
Companies (Listing of equity shares in permissible jurisdictions) Rules, 2024 - Amendment in various rules.
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IBC:
Initiation of CIRP - Date of default - Existence of restructuring proposals - NCLT admitted the application u/s 7 - The Tribunal found that the restructuring proposals dated 21.02.2020 and 29.09.2020 were not binding as they were not effectively implemented due to non-fulfillment of pre-implementation conditions by the Corporate Debtor. - It was also held that unilateral conditions imposed by the Appellant in their payments could not be construed as a revival or extension of the restructuring approvals.
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Service Tax:
Validity of the decision High Court deciding the appeal on admission state itself on merit - The Supreme Court observed that while the High Court had framed certain substantial questions of law, it should not have precluded the substantial questions of law concerning the extended period of limitation and penalty at the admission stage. The Supreme Court held that not allowing these questions to be raised could prejudice the appellant's case during the final adjudication. - Matter restored back before HC for to consider the matter afresh.
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Service Tax:
The petitioner challenged a communication demanding a sum under the Sabka Viswas (Legacy Dispute Resolution) Scheme, 2019, related to arrears on renting immovable property services - The High court found the demand unjustified, as the case was treated under "arrears of tax" instead of "litigation." - The categorization of the petitioner’s case from "Litigation" to "Arrears" in the SVLDRS-3 form was deemed incorrect.
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Central Excise:
Clandestine removal - tobacco pouches - The Tribunal had set aside the impugned order of the Original Authority, which had demanded excise duty and imposed penalties based on the presumption that the presence of packing machines indicated their use for illicit packing of excisable goods. - Later High Court confirmed the order of tribunal. - Now the supreme court has dismissed the revenue appeal (SLP) - However, Apex Court kept the question of law open for being considered in another case.
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Central Excise:
The limitation of six months for availing Cenvat credit, as per the 3rd Proviso to Rule 4 of Cenvat Credit Rules, 2004, effective from 18.09.2014, does not apply to duty-paying documents issued prior to 18.09.2014. This is established by various judicial precedents - The Tribunal held that, the appellant is entitled to Cenvat credit.
TMI Short Notes
Articles
Notifications
Customs-
09/2024 - dated
30-1-2024
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Cus
Seeks to amend Notification No. 57/2017-Customs dated 30.06.2017 so as to change the applicable BCD rate on specified parts/sub-parts of cellular mobile phone
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08/2024 - dated
30-1-2024
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Cus
Seeks to amend Notification No. 50/2017-Customs dated 30.06.2017 - Effective rates of customs duty and IGST for goods imported into India.
GST-
05/2024 - dated
30-1-2024
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CGST
Amendment in Notification No. 02/2017-Central Tax, dated the 19th June, 2017 - Jurisdiction of Central Tax Officers - CGST officers
GST - States-
01/2024-State Tax (Rate) - dated
16-1-2024
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Maharashtra SGST
Seeks to amend Notification No 1/2017- State Tax (Rate) dated 29th June, 2017
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30951-FIN-CT1-TAX-0005/2023 - dated
9-11-2023
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Orissa SGST
A Special Procedure For Condonation Of Delay In Filing Of Appeals Against Demand Orders Passed Until 31st March, 2023.
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S.O. 103/P.A.5/2017/S. 54/2023 - dated
22-12-2023
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Punjab SGST
Amendment in Notification No. S.O.19 /P.A.5/2017/S.54/ 2017, dated the 30th June, 2017
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S.O. 102/P.A.5/2017/S.9/2023 - dated
22-12-2023
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Punjab SGST
Amendment in Notification No. S.O. 35/P.A.5/2017/S.9/ 2017, dated the 30th June, 2017
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S.O. 101/P.A.5/2017/Ss. 9, 11, 15 and 148/2023 - dated
22-12-2023
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Punjab SGST
Amendment in Notification No. S.O 37/P.A.5/ 2017/S.11/2017 dated the 30th June, 2017
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169-F.T. - dated
25-1-2024
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West Bengal SGST
Seeks to notify supply of online money gaming, supply of online gaming other than online money gaming and supply of actionable claims in casinos under section 15(5) of WBGST Act
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168-F.T. - dated
25-1-2024
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West Bengal SGST
Seeks to notify different dates on which the different provisions of the WBGST (Second Amendment) Act, 2023 shall come into force
Income Tax-
18/2024 - dated
30-1-2024
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IT
‘M/s Prayoga, Bengaluru as ‘Other Institution’ under the category of ‘University, College or Other Institution’ for ‘Scientific Research’ for the purposes of clause (ii) of sub-section (1) of section 35
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2024 (1) TMI 1248
Profiteering - Constitutional validity of Section 171 of the Central Good and Services Tax Act, 2017 and Rules 122, 124, 126, 127, 129, 133 and 134 of the Central Good and Services Tax Rules, 2017 - legality of the notices proposing imposition or orders imposing penalty issued by the National Anti-Profiteering Authority (NAA) under Section 122 of the Act, 2017 read with Rule 133(3)(d) of the Rules, 2017 - Direction to pass on the commensurate benefit of reduction in the rate of tax or the Input Tax Credit to its consumers / recipients along with interest. Principles for adjudicating the constitutionality of an enactment - HELD THAT:- A Statute can be declared as unconstitutional only if the Petitioners make out a case that the Legislature did not have the legislative competence to pass such a Statute or that the provisions of the Statute violate the Fundamental Rights guaranteed under Part-III of the Constitution of India or that the Legislature concerned has abdicated its essential legislative function or that the impugned provision is arbitrary, unreasonable or vague in any manner. D.D. Basu in Shorter Constitution of India (16th Edn., 2021) has enumerated the grounds on which a law may be declared to be unconstitutional as follows:- ( i) Contravention of any fundamental right, specified in Part III of the Constitution. (ii) Legislating on a subject which is not assigned to the relevant legislature by the distribution of powers made by the Seventh Schedule, read with the connected articles. (iii) Contravention of any of the mandatory provisions of the Constitution which impose limitations upon the powers of a legislature e.g. Article 301. (iv) In the case of a State law, it will be invalid insofar as it seeks to operate beyond the boundaries of the State. (v) That the legislature concerned has abdicated its essential legislative function as assigned to it by the Constitution or has made an excessive delegation of that power to some other body. It must also be kept in mind that there is always a presumption in favour of constitutionality of an enactment and the burden to show that there has been a clear transgression of constitutional principles is upon the person who attacks such an enactment. Whenever constitutionality of a provision is challenged on the ground that it infringes a fundamental right, the direct and inevitable effect/consequence of the legislation has to be taken into account. Court's Approach while dealing with tax or economic laws - HELD THAT:- The Courts have consistently held that the laws relating to economic activities have to be viewed with greater latitude than laws touching civil rights and that the Legislature has to be allowed some play in the joints because it has to deal with complex problems. The Supreme Court in its recent judgment in UNION OF INDIA ORS. VERSUS VKC FOOTSTEPS INDIA PVT LTD. [ 2021 (9) TMI 626 - SUPREME COURT] has reiterated the approach that the Courts have to adopt while dealing with tax or economic regulations - It was held that The Court must therefore adjudge the constitutionality of such legislation by the generality of its provisions and not by its crudities or inequities or by the possibilities of abuse of any of its provisions. If any crudities, inequities or possibilities of abuse come to light, the legislature can always step in and enact suitable amendatory legislation. That is the essence of pragmatic approach which must guide and inspire the legislature in dealing with complex economic issues. Act, 2017 marks a paradigm shift in the field of indirect taxes - HELD THAT:- The Act, 2017 levies a single tax on the supply of goods or services on the value addition at each stage of the supply chain from purchase of raw materials, manufacture of product or import, till the finished good reaches the hands of the consumer - The Goods and Service Tax is a destination-based tax and is levied at the point of consumption. Accordingly, the taxes get accumulated with the original price and due to the effect of Input Tax Credit, the cascading effect i.e. tax on tax is removed - Consequently, the intent of the Act, 2017 is to provide a common national market, boost productivity, increase competitiveness, broaden the tax base and make India a manufacturing hub. Section 171 mandates that tax foregone has to be passed on as a commensurate reduction in price - HELD THAT:- Section 171 of the Act, 2017 mandates that whatever is saved in tax must be reduced in price. Section 171 of the Act, 2017 incorporates the principle of unjust enrichment. Accordingly, it has a flavor of consumer welfare regulatory measure, as it seeks to achieve the primary objective behind the Goods and Services Tax regime i.e. to overcome the cascading effect of indirect taxes and to reduce the tax burden on the final consumer. Consequently, the judgments of AHMEDABAD URBAN DEVELOPMENT AUTHORITY VERSUS SHARAD KUMAR JAYANTIKUMAR PASAWALLA AND OTHERS [ 1992 (5) TMI 175 - SUPREME COURT] , M/S. SHREE BHAGWATI STEEL ROLLING MILLS VERSUS COMMISSIONER OF CENTRAL EXCISE ANOTHER [ 2015 (11) TMI 1172 - SUPREME COURT] , relied on by the Petitioners, are not applicable as they deal with the validity of delegated authority imposing tax/fee or charging interest on delayed payment of tax in the absence of empowering provision in the statute. Section 171 falls within the law-making power of the Parliament under Article 246A - HELD THAT:- This Court is of the view that the anti- profiteering mechanism as incorporated in Section 171 of the Act, 2017 is in the exercise of the Parliament s power to legislate on ancillary and necessary aspects/matters of Goods and Services Tax apart from being a social welfare measure as it amplifies and extends the earlier concept of barring persons to undertake exercise of collecting monies from the consumers by false representation - this Court is of the view that Section 171 of the Act, 2017 falls within the law-making power of the Parliament under Article 246A of the Constitution dealing with the ancillary and necessary aspects of Goods and Services Tax and is not beyond the legislative competence of the Parliament. Section 171 lays out a clear legislative policy and does not delegate any essential legislative function - HELD THAT:- Section 171 of the Act, 2017 lays out a clear legislative policy. This Court is of the view that the necessary navigational tools, guidelines as well as checks and balances have been incorporated in the provision itself to guide any authority tasked with ensuring its workability. Consequently, Section 171 of the Act 2017 neither delegates any essential legislative function nor violates Article 14 of the Constitution of India - on a conjoint reading of Sections 171(2) and 171(3) of the Act, 2017, it is evident that the powers conferred on NAA by the Central Government under Rule 126 of the Rules, 2017 were intended by the Legislature to be exercised by the NAA itself. In fact, in exercise of its powers under Rule 126 of the Rules, 2017, NAA has issued the National Anti-Profiteering Authority: Methodology and Procedure, 2018 dated 28th March, 2018. The Supreme Court in SAHNI SILK MILLS (P) LTD. VERSUS ESI. CORPN. [ 1994 (7) TMI 312 - SUPREME COURT] while discussing the maxim of delegatus non potest delegare has held that, The basic principle behind the aforesaid maxim is that a discretion conferred by statute is prima facie intended to be exercised by the authority on which the statute has conferred it and by no other authority, but this intention may be negatived by any contrary indications found in the language, scope or object of the statute . Therefore, the principle of delegatus non potest delegare is not applicable to the present batch of matters. Further, Section 166 of the Act, 2017 provides that every rule made by the Government in exercise of its powers under Section 164 of the Act, 2017 shall be laid before each house of the Parliament and that if both Houses agree to make any modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect as the case maybe - the Executive by framing Rule 126 of the Rules, 2017 has in no manner encroached upon the jurisdiction of the Parliament. The Petitioners, throughout the hearing of the case, have repeatedly pointed out that the NAA has adopted varied approaches with regard to entities dealing with similar products in identical circumstances. If that is the case, then, it may make the orders passed by NAA bad, but would not invalidate either Section 171 or the Rules framed thereunder. Further, as the substantive mandate under Section 171(1) is itself a sound guiding principle for the framing of Rules and the functioning of NAA, the argument that Rule 126 suffers from excessive delegation is untenable in law. Impugned provisions are not a price fixing mechanism - they do not violate either Article 19(1)(g) or Article 300A of the Constitution - HELD THAT:- Section 171 of the Act, 2017 has been incorporated with the intent of creating a framework that ensures that the benefit reaches the ultimate consumer. There cannot be any room for allowing unjust retention of benefit of reduction in rate of tax or benefit of input tax credit with the manufacturer/supplier/distributor. The reliance placed by the petitioners on the judgment of COMMISSIONER OF INCOME-TAX, BANGALORE VERSUS BC SRINIVASA SETTY (AND OTHER APPEALS) [ 1981 (2) TMI 1 - SUPREME COURT ] is completely misconceived as both these judgments were passed specifically in the context of levy of taxes. As held hereinabove, Section 171 of the Act, 2017 does not levy any tax on supplies and hence these judgments do not apply to the present batch of matters. Consequently, the impugned provisions are not a price fixing mechanism and they do not violate either Article 19(1)(g) or Article 14 or Article 300A of the Constitution of India. Reference to Anti-Profiteering provisions of Australia and Malaysia is misconceived - HELD THAT:- The price aspect comes into play in the context of Section 171 of the Act, 2017 only when it comes to the manner in which the principal obligation of passing on benefits as aforesaid, is to be carried out i.e., by way of commensurate reduction of prices. Consequently, in the case of Section 171, there is no intent of any over- riding regulation on price exploitation like in the case of the Australian Trade Practices Act referred to by the petitioners - the reference made by the petitioners to the Malaysian Price Control and Anti-Profiteering Act, 2011 is also misplaced as the said Act, according to the petitioner s own submission, prohibits suppliers from making unreasonably high profit . By its very nature, the Malaysian Act controls pricing unlike Section 171 of the Act, 2017 which does not seek to regulate the pricing of the goods and services or the profits of the suppliers. Consequently, the reference to Anti-Profiteering provisions of Australia and Malaysia is misconceived. No fixed/uniform method or mathematical formula can be laid down for determining profiteering - HELD THAT:- The expenses in a real estate project are not uniform throughout the life cycle of the project and the eligibility of credit depends on the nature of the construction activity undertaken during the particular period. As it is an admitted position that neither the advances received nor the construction activity is uniform throughout the life cycle of the project, the accrual of Input Tax Credit is not related to the amount collected from the buyers. This Court is in agreement with learned counsel of the petitioners that one needs to calculate the total savings on account of introduction of Goods and Services and Tax for each project and then divide the same by total area to arrive at the per square feet benefit to be passed on to each flat buyer. This would ensure that flat-buyers with equal square feet area received equal benefit. The Court, while hearing the present batch of matters on merits, shall take the aforesaid direction/interpretation into account. It is the prerogative of the legislature to decide how the benefit is to be passed on the consumers - HELD THAT:- It is settled law that it is the prerogative of the Legislature to decide the manner as to how the reduction in rate of tax or the benefit of Input Tax Credit is to be passed on to the consumer - In cases for period prior to 31st December, 2017, the erstwhile Rule 2(m) of the Legal Metrology (Packaged Commodities) Rules, 2011 which provided detailed instructions for rounding off of the MRP would be applicable. Similarly, Rule 6(1)(e) of the above Rules as amended in 2017 with effect from 01st January, 2018 to 31st March, 2022 provides that the retail price of the package shall clearly indicate that it is the MRP inclusive of all taxes and the price in rupees and paise be rounded off to the nearest rupee or 50 paise would be applicable. Consequently, there would be no legal impossibility in reducing the MRP even in such cases. There is nothing inconsistent in Section 171 with such rounding off. Act 2017 rightly does not fix a time period durng which price-reduction has to be offered - HELD THAT:- If, conceptually, the reduction of tax rate has taken place on a specified date and there are no justified variations in the cost price or other factors for offsetting such reduction in the prices for a particular period of time, clearly for that period a reduced price must govern the transaction. This Court is of the view that providing for a particular period of time for operation of the provisions would be not be in conformity with the scheme and intent of the Act, 2017 itself. Section 64A of the Sale of Goods Act is not applicable to the obligation under section 171 - HELD THAT:- Tax reduction is given by sacrificing tax revenue and hence the Governments are legally competent to direct the suppliers to pass on the benefit of such tax reduction to the consumers after its notification. Any contract made in violation of public policy of passing on the benefit would be void. Consequently, all contracts (a) whether they are pending to be performed or (b) executed after tax reduction and/or (c) have already been concluded before tax reduction, have to implemented keeping in view the mandate enshrined in Section 171 of the Act, 2017. A statutory provision cannot be struck down on the ground of possibility of abuse - HELD THAT:- During the course of hearing, learned counsel for the petitioners advanced a number of hypothetical situations to suggest that there is a possibility of abuse of Section 171 of the Act, 2017. However, it is settled law that Acts and their provisions are not to be declared unconstitutional on the fanciful theory that power would be exercised in an unrealistic fashion or in a vacuum or on the ground that there is an apprehension of misuse of statutory provision or possibility of abuse of power. It must be presumed, unless the contrary is proved, that administration and application of a particular law would be done not with an evil eye and unequal hand . To not compare taxes levied after the introduction of the Act, 2017 with a basket of distinct indirect taxes applicable before the operation of the Act would go against the intent and objective of Act, 2017 - HELD THAT:- There was multiplicity of taxes as they were levied on the same supply system. This had a cascading effect as there was no provision for set off. The Hon ble Prime Minister at the launch of Goods and Services Tax stated If we take into consideration the 29 states, the 7 Union Territories, the 7 taxes of the Centre and the 8 taxes of the States, and several different taxes for different commodities, the number of taxes sum up to a figure of 500! Today all those taxes will be shred off to have ONE NATION, ONE TAX right from Ganganagar to Itanagar and from Leh to Lakshdweep . Additionally, a plethora of non-tariff barriers like octroi, entry tax, check posts etc. hindered free flow of trade throughout the country and this entailed a high compliance cost for taxpayers. The Act, 2017 has subsumed the earlier catena of indirect taxes (Central as well as State indirect taxes), inasmuch as, it levies a single tax on the supply of goods and services. Consequently, the submission of learned senior counsel for the Petitioner in W.P.(C) 1171/2020 that Section 171(1) of the Act, 2017 does not contemplate a comparison of the taxes levied after the introduction of the Act, 2017 with a basket of distinct indirect taxes applicable on goods and services before the operation of the Act goes against the grain, intent and object of the Act, 2017. There is no vested right of appeal and an appeal is a creature of the statute - HELD THAT:- It is well settled that there is no vested right of appeal and an appeal is a creature of the Statute. Right of appeal is neither a natural nor an inherent right vested in a party. It is a substantive statutory right regulated by the Statute creating it. To provide for an appeal or not under a Statute is a pure question of legislative policy - a robust mechanism in conformity with the constitutional requirements is in place for dealing with grievances of breach of Section 171(1) of the Act, 2017 and hence, it cannot be said that there is no judicial oversight over the decisions of NAA. There is no requirement of Judicial member in NAA - HELD THAT:- While this Court is in agreement with the submission of the Petitioners that the provision of a second or casting vote to the Chairman in the event of a tie/equality of votes as was given in Rule 134(2) of the Rules, 2017 is impermissible, yet as the Respondents have stated that the said provision has never been used, this Court does not deem it necessary to delve into a detailed discussion of the same - the Petitioners have challenged the validity of the constitution of the NAA on account of absence of a gazette notification as allegedly required under Section 171(2) of the Act, 2017. This Court is of the opinion that this issue does not affect the constitutional validity of the impugned section which is presently under consideration and so this issue is not being dealt with in the present judgment. Rule 124 is in consonance with Article 50 - there is no scope for Governmental interference in functions exercised by NAA - HELD THAT:- This Court is of the view that Rule 124 of the Rules, 2017 is in consonance with Article 50 of the Constitution, inasmuch as, selection to NAA is made on the recommendation by a Selection Committee constituted by the Goods and Services Tax Council which is a constitutional body. Similarly the services of the Chairperson and members of NAA can be terminated only with the approval of the Chairman of the Goods and Services Tax Council. Consequently, the members of NAA are free to carry out their function as they deem fit and there is no scope whatsoever for any Governmental interference in the functions exercised by NAA. Rule 133 to the extent it provides for levy of interest and penalty is within the rule making power of the Central Government - HELD THAT:- This Court is of the view that Section 171 of the Act, 2017 is broad enough to empower the Central Government to prescribe penalty and interest to ensure that the suppliers are deterred from pocketing the benefits meant for the consumers when taxes are foregone by the Government. Merely empowering NAA to direct returning of the amounts so pocketed by the supplier/registered person would not have a sufficient deterrent effect on deviant behavior unless interest and penalty are levied to prevent such actions from taking place in the first place. The width and amplitude of Section 171 by which the authority is empowered to ensure that reduction in tax rate or the Input Tax Credit availed results in commensurate reduction in the price of goods or services clearly encompasses within it the power to ensure that such conduct which leads to profiteering does not take place. Rule 133(3)(b) (d) of the Rules, 2017 which empower the authority to levy interest @ 18% from the date of collection of the higher amount till the date of the return of such amount as well as imposition of penalty are intra vires and within the Rule making power of the Central Government. GST collected on the additional realization has a rightly been included in the profiteered amount - HELD THAT:- Both the Central as well as the State Government had no intent of collecting additional Goods and Services Tax on the higher price as they had sacrificed their revenue in favour of the buyer. By compelling the buyers to pay the additional Goods and Services Tax on a higher price, the supplier has not only defeated the intent of the Governments but has also acted against the interest of the consumer and therefore, the Goods and Services Tax collected by him on the additional realization has rightly been included in the profiteered amount. Time limit for furnishing of report by DGAP is directory and not mandatory - HELD THAT:- The anti-profiteering provisions in the Act, 2017 and the Rules, 2017 are in the nature of a beneficial legislation as they promote consumer welfare. The Courts have consistently held that beneficial legislation must receive liberal construction that favors the consumer and promotes the intent and objective of the Act. That being the scenario, it cannot be said that the proceedings as a whole abate on lapse of time limit of furnishing of report by DGAP. The Supreme Court in P.T. RAJAN VERSUS T.P.M. SAHIR ORS. [ 2003 (9) TMI 765 - SUPREME COURT] has held that It is well-settled principle of law that where a statutory functionary is asked to perform a statutory duty within the time prescribed therefore, the same would be directory and not mandatory. and that a provision in a statute which is procedural in nature although employs the word shall may not be held to be mandatory if thereby no prejudice is caused. Consequently, the time limit provided for furnishing of report by DGAP is directory in nature and not mandatory. Expansion of investigation beyond the scope of the complaint is not ultra vires the statute - HELD THAT:- Section 171 of the Act, 2017 is widely worded and does not limit the scope of examination to only goods and services in respect of which a complaint is received. The scope of powers of the DGAP is provided for in Rule 129 of the Rules, 2017. From a reading of the said Rule especially the expression any supply of goods or services used in sub-rule (2) of Rule 129, it is apparent that the scope of the DGAP s powers is very wide and is not limited to the goods or services in relation to which a Complaint is received. The word any includes within its scope some as well as all - In any event, the ignorance of the consumer or lack of information or surrounding complexity in the supply chain cannot be permitted to defeat the objective of a consumer welfare regulatory measure and it is in this light that the subject provision is required to be construed. Conclusion - The constitutional validity of Section 171 of Act, 2017 as well as Rules 122, 124, 126, 127, 129, 133 and 134 of the Rules, 2017 is upheld. This Court clarifies that it is possible that there may be cases of arbitrary exercise of power under the anti-profiteering mechanism by enlarging the scope of the proceedings beyond the jurisdiction or on account of not considering the genuine basis of variations in other factors such as cost escalations on account of which the reduction stands offset, skewed input credit situations etc. However, the remedy for the same is to set aside such orders on merits. What will be struck down in such cases will not be the provision itself which invests such power on the concerned authority but the erroneous application of the power. List the matters before the Division Bench-I for appropriate directions on 8th February, 2024.
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2024 (1) TMI 1247
Violation of principles of natural justice - gross violation of the established position of law - whether the ruling of the AAAR rendered in the appeal by utilising the report containing adverse material against the petitioner in absence of confrontation is vitiated? - HELD THAT:- The principles of natural justice are those rules which have been laid down by the Courts as being the minimum protection of the rights of the individual against the arbitrary procedure that may be adopted by a judicial or quasi-judicial authority while making an order affecting those rights. These rules are intended to prevent such authority from doing injustice. Law is well-settled that in the applicability of the doctrine of natural justice there can be no distinction between the quasi-judicial function and an administrative function inasmuch as the aim of both is to arrive at a just decision and to prevent miscarriage of justice. In STATE OF ORISSA VERSUS DR. (MISS) BINAPANI DEI ORS. [ 1967 (2) TMI 96 - SUPREME COURT] , the Supreme Court observed that even an administrative order or decision in matters involving civil consequences have to be made consistently with the rules of natural justice. The purpose of the rules of natural justice is to prevent miscarriage of justice, the rules should be made applicable to administrative enquiries also. On examination of contention of learned Senior Advocate appearing for the petitioner and taking note of concession made by the learned Senior Standing Counsel defending the order of the AAAR, it is found that the Order dated 27.07.2021, which is sought to be set aside invoking extraordinary jurisdiction under Article 226/227 of the Constitution of India for want of confrontation, as one of the facets of the principles of natural justice, does not transpire that the AAAR has disclosed the material contained in the report submitted by the Superintendent of CGST Central Excise, Sambalpur-I Range to the Assistant Commissioner, CGST Central Excise, Sambalpur-I Division vide Letter dated 27.04.2021, to the petitioner. Therefore, it is safe to say that the petitioner had been deprived of reasonable and fair opportunity to submit its explanation. While it is not deniable that the authority is entitled to conduct enquiry and collect material behind the back of the petitioner and even the authority need not disclose to the petitioner the source of any adverse material in his possession, which he seeks to utilize against the petitioner, yet the petitioner is expected to meet such adverse materials and thereby save himself. Therefore, confrontation of such adverse material intending to be used to the detriment of the petitioner was required to be confronted to the petitioner by the AAAR. This Court, therefore, sets aside Order dated 27.07.2021 passed by the Odisha Appellate Authority for Advance Ruling (Annexure-8) being absolutely indefensible and, therefore, it does warrant interference. Hence, said Order is set aside and the matter is remitted to the Odisha Appellate Authority for Advance Ruling for taking fresh decision after due compliance of the principles of natural justice. The writ petition stands disposed of.
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2024 (1) TMI 1246
Seeking restoration of the GST registration of the petitioner that has been cancelled - registration was obtained by mis-statement or suppression of facts - no opportunity of hearing granted - violation of principles of natural justice - HELD THAT:- In the facts of the present case since petitioner has responded to the show cause notice and filed a reply which is not in commensurate with the reasons mentioned for the cancellation, an opportunity needs to be granted to the petitioner to file a detailed response to the show cause notice and thereafter for the authorities to re-adjudicate the show cause notice. The cancellation order dated 21.07.2023 is set aside. Petitioner is granted one week s time to file a detailed response to the show cause notice. Thereafter, the authority shall dispose of the show cause notice within a period of 30 days. Petitioner shall also be afforded an opportunity of personal hearing. Petition disposed off.
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2024 (1) TMI 1245
Levy of penalty u/s 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 - non filling up of Part 'B' of the e-Way Bill - HELD THAT:- In the present case, the facts are quite similar to one in M/S CITYKART RETAIL PVT. LTD. THRU. AUTHORIZD REPRESENTATIVE VERSUS THE COMMISSIONER COMMERCIAL TAX U.P. GOMTI NAGAR LKO. AND ANR. [ 2022 (9) TMI 374 - ALLAHABAD HIGH COURT] and there are no reason why this Court should take a different view of the matter, as the invoice itself contained the details of the truck and the error committed by the petitioner was of a technical nature only and without any intention to evade tax. Once this fact has been substantiated, there was no requirement to levy penalty under Section 129(3) of the Act. The orders dated May 24, 2022 and October 15, 2022 are quashed and set aside - The petition is allowed.
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2024 (1) TMI 1244
Maintainability of appeal - availability of alternative remedy - contravention to sub-sections (1) (4) of Section 107 of the GST Act - HELD THAT:- Since the petitioner wants to avail the remedy under the provisions of law by approaching 2nd appellate tribunal, which has not yet been constituted, as an interim measure subject to the Petitioner depositing entire tax demand within a period of fifteen days from today, the rest of the demand shall remain stayed during the pendency of the writ petition. Application disposed off.
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2024 (1) TMI 1243
Maintainability of petition - seeking to avail statutory remedy of appeal against the impugned order before the Appellate Tribunal under Section 112 of the Bihar Goods and Services Tax Act - HELD THAT:- Due to non-constitution of the Tribunal, the petitioner is deprived of his statutory remedy under Sub-Section (8) and Sub-Section (9) of Section 112 of the B.G.S.T. Act - the petitioner is also prevented from availing the benefit of stay of recovery of balance amount of tax in terms of Section 112 (8) and (9) of the B.G.S.T Act upon deposit of the amounts as contemplated under Sub-section (8) of Section 112. The respondent State authorities have acknowledged the fact of non-constitution of the Tribunal and come out with a notification bearing Order No. 09/2019-State Tax, S. O. 399, dated 11.12.2019 for removal of difficulties, in exercise of powers under Section 172 of the B.G.S.T Act, which provides that period of limitation for the purpose of preferring an appeal before the Tribunal under Section 112 shall start only after the date on which the President, or the State President, as the case may be, of the Tribunal after its constitution under Section 109 of the B.G.S.T Act, enters office. Subject to deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, if not already deposited, in addition to the amount deposited earlier under Sub-Section (6) of Section 107 of the B.G.S.T. Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the B.G.S.T. Act. The petitioner cannot be deprived of the benefit, due to non- constitution of the Tribunal by the respondents themselves - Petition disposed off.
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2024 (1) TMI 1242
Permission to petitioner to operate his bank account - HELD THAT:- Mr. Satish Aggarwala, learned counsel for the respondent, seeks time to take instructions as to the statutory provisions under which the said communication was issued and whether the same is still operative. List on 26.07.2023.
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Income Tax
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2024 (1) TMI 1241
Validity of Judgement of High Court - While admitting the appeal of the Revenue, the HC [ 2008 (9) TMI 1035 - CALCUTTA HIGH COURT] has framed 10 question of laws - However, while disposing the appeal, the High Court [ 2015 (12) TMI 1896 - CALCUTTA HIGH COURT] observed that, no substantial question of law arises out of the judgment rendered by the Income Tax Appellate Tribunal. HELD THAT:- A combined reading of the above referred orders is sufficient to explain the reason for setting aside the judgment of the High Court. There is no option except to set aside the impugned judgment of the High Court and remand the matter to High Court for hearing the appeal. Accordingly, we allow this appeal, set aside the impugned judgment of the High Court and restore the appeal on the record of the High Court. High Court shall now hear both the parties and decide the case on merits.
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2024 (1) TMI 1240
Unexplained gifts - Donee denied to make gifts - burden to prove - As decided by HC [ 2014 (8) TMI 692 - ALLAHABAD HIGH COURT] gifts are not genuine and Tribunal has deleted the addition merely only on the ground that no opportunity was provided for cross-examination,but fact remains that assessee never availed it - transaction is not genuine but colorable as money is routed indirectly from the firm to the assessee's account under the garb of the gifts. HELD THAT:- We are not inclined to interfere with the impugned judgment and order passed by the High Court. Hence, the Special Leave Petition is dismissed.
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2024 (1) TMI 1239
Exemption u/s 11 - Charitable activity u/s 2(15) - assessee receives fee by way of commission from the Government for purpose of construction of building for Government - as per HC [ 2021 (12) TMI 602 - KERALA HIGH COURT] reason being the construction activity by itself does not advance any other object of general public utility. General public utility from such construction is derived as fact with the facilities constructed by the assessee are put to utility. Activity undertaken by the assessee on one hand and on another hand with the ultimate purpose or user of buildings constructed by the Government shall not be mistaken with one another. Assessee is interpreting proviso by excluding one of the important limbs, viz. involves the carrying on of any activity in the nature of trade, commerce or business, thus substantial question decided against the assessee HELD THAT:- All the parties are in agreement about the issue being covered by the judgment of this Court in Assistant Commissioner Of Income Tax (Exemptions) vs. Ahmedabad Urban Development Authority [ 2022 (10) TMI 948 - SUPREME COURT] In terms of the judgment of this Court, the matter should be remanded to the Assessing Authority for determination of the commercial activity and for considering the benefit of Section 12A of the Income Tax Act and for passing appropriate orders. In view of the above Civil Appeal is disposed of.
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2024 (1) TMI 1238
Disallowance of the deduction u/s 80HHC relating to the interest income - As decided by HC [ 2016 (11) TMI 727 - RAJASTHAN HIGH COURT] assessees have thoroughly failed to establish beyond doubt that the interest earned on the deposit or advance was income from the export business. Hence, extending the benefit of deduction as per computation provided in Clause (baa) to Explanation to section 80HHC cannot be made available to the assessees. HELD THAT:- We are not inclined to interfere with the impugned judgment and order passed by the High Court. Hence, the Special Leave Petition is dismissed.
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2024 (1) TMI 1237
Reopening of assessment u/s 148 - period of limitation - High Court [ 2022 (11) TMI 1443 - ALLAHABAD HIGH COURT] has quashed the notice and assessment order once it is found that, impugned notice under Section 148 of the Income Tax Act, 1961 was issued to the petitioner on 01.04.2021 i.e. after expiry of limitation on 31.03.2021 HELD THAT:- We are not inclined to interfere with the impugned judgment and order passed by the High Court. Hence, the Special Leave Petition is dismissed.
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2024 (1) TMI 1236
Approval u/s 80G(5) - eligibility - Whether applicant has not commenced significant charitable activity as per its objects? - as per HC [ 2018 (7) TMI 1729 - RAJASTHAN HIGH COURT] granted approval u/s 80G(5) - HELD THAT:- We are not inclined to interfere with the impugned judgment passed by the High Court. Special Leave Petition is dismissed keeping the question of law open.
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2024 (1) TMI 1235
ACIT assuming jurisdiction - transfer of cases - Interpretation of provisions of Section 124(3)(a) - absence of reference to an incorrect provision per se cannot invalidate the authority conferred in the present case u/s 120(2) instead of Section 120(4)(b) - HELD THAT:- As petitioner submitted he has instructions to withdraw the special leave petition, in view of the settlement arrived at between the parties under the Direct Tax Vivad Se Vishwas Act, 2020 . Copy of the settlement arrived at between the parties has been filed and the same is taken on record. The special leave petition stands dismissed as withdrawn.
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2024 (1) TMI 1234
Reopening of assessment u/s 147 - notice issued on the basis of statement recorded u/s 133A - HELD THAT:- As decided in in Khader Khan [ 2007 (7) TMI 182 - MADRAS HIGH COURT ] wherein as compared and contrasted Sections 132(4) and 133A and concluded that Section 133A does not empower the officer conducting the survey to record statements under oath. On that basis, it was further concluded that such statement does not have evidentiary value. On examining the impugned notice, it is clear that a survey was conducted and that several factual findings were made on such basis. These findings inter alia relate to sales in cash which were not reflected in the books of account, availability of undisclosed or excess stock; and payment for a property being made partly from undisclosed profits. In the impugned notice, it is recorded that the statement of Sri.S.Ravichandran was not the only basis for initiating proceedings under Section 148A, and that such proceedings were initiated on the basis of the entire set of findings arising from the survey. In the impugned notice, it is further recorded that a statement was recorded not only under Section 133A, but also under Section 131. Section 131, on a plain reading, confers the powers of a civil court on the relevant officers. Such powers include the power to examine even a third party under oath. The above discussion leads to the conclusion that no case is made out to interfere with proceedings initiated by the respondent for alleged escaped assessment. It is needless to say, however, that it is open to the petitioner to participate in such proceedings and resist any liability in respect of such escaped assessment.
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2024 (1) TMI 1233
Reopening of assessment - reason to believe - disallowance prior period of expenses - revenue submitted that when petitioner is following the mercantile system of accounting, prior period expenses claimed in profit and loss account is not allowable and that issue has been taken by the AO for a later year and that would be a fresh tangible material - HELD THAT:- We would agree with Petitioner that if the basis for reopening to disallow prior period of expenses was the assessment order for AY-2010- 2011, that assessment order for AY-2010-2011 having been set aside by CIT(A) in his order dated 18th February 2015 and Revenue having accepted the order, it cannot be said that there was any tangible material to reopen the assessment for AY 2008-2009. Moreover, as decided by this court [ 2011 (7) TMI 1210 - BOMBAY HIGH COURT ] one of the question of law raised was whether the ITAT was justified in deleting the disallowance on account of prior period expenses which did not pertain to the year under consideration when the assessee was following mercantile system of accounting. The court was pleased to hold that the expenditure would be allowable. In the affidavit in reply, none of the averments in the petition has been specifically denied, save and except, it states that the notice has been issued after obtaining prior permission of the concerned authority. Thus in view of the above, we are satisfied that the reopening cannot be sustained. Assessee appeal allowed.
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2024 (1) TMI 1232
Application for NIL rate TDS deduction certificate u/s 197 - Taxability of income in India - income accruing/arising or deemed to accrue/arise in India - taxability in source state - taxability of income from the Bangladesh project - PE in India - expenditure regarding the consultancy services rendered by the petitioner in Bangladesh - as petitioner is rendering services to the Indian lead Partner and hence, the Assessing Officer has come to the conclusion that the payments in foreign currency by the Indian entity i.e., ICT to the petitioner is the fees for technical services received in India as contemplated under Section 5(2) of the Act, 1961 and that such amounts would be deemed to be income accruing in India under Section 9(1) of the Act. HELD THAT:- Subject project is being undertaken in Bangladesh and no part of the said project is situated in India. The amounts payable to ICT in respect of above project are being paid in Bangladesh by the Government of Bangladesh. The services for the said project are being rendered by the petitioner herein to ICT and the same is governed by DTAA. As per Article 12 of the DTAA, only fees for included services are taxable in the source State and not the fees for the technical services, which is in question in the present proceedings. Further, as per Article 7(1) of the DTAA, the business profits of an enterprise of a contracting State shall only be taxable in the State unless the enterprise carries out the business in other contracting State through a PE. In the present case, no material is placed on record to show that PE of the petitioner company, having office at Hyderabad, is involved in any manner in the above project. In the above factual background, and in the absence of any material placed before this Court, it can be inferred that no taxable event has taken place in India and thus, petitioner company cannot be subjected to TDS for payments made by ICT to the petitioner company. Though, petitioner has got an alternative remedy of revision before the appellate authority under Section 264 of the Income Tax Act against the impugned order, this Bench is not inclined to relegate the petitioner to appellate authority in the absence of any strong material warranting to hold the petitioner liable to pay TDS. Writ Petition is allowed and the respondents are directed to consider granting nil rate TDS deduction certificate to the petitioner under Section 197 of the Income Tax Act, 1961, within a period of eight weeks from the date of receipt of copy of this order.
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2024 (1) TMI 1231
Maintainability of appeal in writ Court - seeking action as an AO or an appellate authority - Validity of re-assessment order passed u/s 147 - correctness of the order passed u/s 148A (d) - scope of alternate remedy - as argued error has crept in commencing from the stage of issuance of notice un/s 148A (b) and even thereafter, while passing the re-assessment order there has been violation of principle of natural justice as the elaborate reply given by the assessee to the notice issued u/s 142(1) as well as the show-cause notice had not been considered and brushed aside in a single line HELD THAT:- The appellant did not question the initiation of the reopening of the assessment by issue of notice u/s 148A (b) nor the appellant challenged the order passed u/s 148(d). Therefore, at this distance of time, the appellant is precluded from questioning the correctness of the order passed u/s 148A (d) of the Act. After the said order, the re-assessment proceedings have commenced and notice under Section 148 has been issued. The assessee has participated in the proceedings, submitted their reply and the assessing officer has considered the reply and passed an order setting out certain reasons. To test the correctness of those reasons, facts have to be gone into much of which are being disputed by the appellant assessee. Therefore, the learned Single Bench was fully justified in holding that the re-assessment order being an appealable order, the same can be challenged before the appellate authority . That apart, whether the replies given by the assessee has been properly appreciated or not appreciated is also a ground which can be canvassed before the appellate authority. That apart, whether the appellant is entitled to seek cross-examination of certain third parties is also a ground which can be urged by the appellant before the appellate authority. Therefore, the learned Single Bench was justified in relegating the appellant to avail the alternate remedy. Thus no ground to interfere with the order impugned. In result, the appeal is dismissed.
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2024 (1) TMI 1230
Validity of Revision u/s 263 by CIT - ITAT set aside revision proceedings as CIT could not establish order u/s 143(3) as erroneous and prejudicial to the interest of the revenue - Under statement in closing stock - HELD THAT:- As tribunal examined the factual aspects as well and noted that the assessee has furnished full details of the stock and the revenue was not able to point out that there is a shortage of stock or how the value declared by the assessee is less in terms of the value as well as in the terms of the quantity. Further the tribunal has also noted that the CIT has not dealt with the aspect as to whether the details were not available before the assessing officer or not during the course of the original proceedings. Secured loan and Commission - Taking note of the aspect that the stock statement submitted by the bank and the stock as per the stock register were exactly matching with each other, the tribunal agreed with the assessee s submission that the assessing officer has conducted due enquiry and thereafter completed his scrutiny assessment. The tribunal also noted that the CIT in his order under Section 263 has only observed that there is a possibility of understatement in the closing stock without a specific finding on the said aspect. Thus, the case on hand is not one such case where no enquiry was conducted by the assessing officer. Thus due enquiry was conducted by the assessing officer and after perusal of the documents, stock register etc. the assessment was completed. The tribunal also re-appreciated the factual position and found that the CIT while exercising power under Section 263 of the Act has not recorded a specific finding that it is as case of no enquiry by the assessing officer rather the observation was there could be a possibility of understatement of the closing stock. Thus, we are satisfied that the tribunal rightly interfered with the order passed by the CIT and allowed the appeal of the assessee. - Decided against revenue.
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2024 (1) TMI 1229
Assessment u/s 153A - disallowance of interest u/s. 36(1)(iii) - incriminating material found during the course of search u/s. 132(1) or not? - HELD THAT:- The issues arising in this Appeal is no more res integra in view of the decision of this Court in case of Principal Commissioner of Income Tax-4 v. Saumya Constructions Limited [ 2016 (7) TMI 911 - GUJARAT HIGH COURT] wherein it is held that there cannot be any addition of regular item shown in the books of accounts until and unless certain materials of incriminating nature found during the course of search. The word incriminating has not been defined under the Act where it refers to those documents, materials, information which were collected during the search proceedings and simultaneously these documents had bearing on the total income of the assessee. The Tribunal, in the impugned order, has categorically observed that nothing was brought on record contrary to the findings of the CIT(A) and accordingly, no addition of the regular items which were disclosed by the assessee in the regular books of accounts can be made. Also decided in Abhisar Buildwell P. Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT] in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A - No substantial question of law.
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2024 (1) TMI 1228
Characterization of receipts - nature of the benefit received - sales tax subsidy/incentive under the Package Scheme of Incentives Scheme, 1993 - revenue or capital receipt - submission of revenue was that merely the fact that the sales tax subsidy under the 1993 Scheme was received based on the eligibility certificate issued after the commencement of the production would not render the receipt as one on capital account HELD THAT:- The common thread running through various incentives provided under the scheme (to which we have referred above) was the setting up a new unit or large-scale investment in fixed capital. The fact that the eligibility certificate was to be issued by the agency implementing the scheme after the commencement of commercial production by the eligible unit appears to have been incorporated in the 1993 Scheme to ensure that the object and the purpose of the 1993 Scheme, which was to industrialise underdeveloped and developing areas was fulfilled. Thus, in our opinion, the argument advanced on behalf of the appellant/revenue that a perusal 1993 Scheme would show that the incentives were tied in with production is untenable. The complete focus of the 1993 scheme was to achieve the object, as noticed above, engrafted in its preamble. Assessee was entitled to avail of sales tax subsidy/incentive under two eligibility certificates dated 13.12.1994 and 15.10.1996 [as amended] for 14 years and 13 years 11 months, respectively, subject to a maximum entitlement of 110% of capital investment made in setting up of the industrial units. Investment in capital assets such as land, buildings, plant and machinery was only a measure adopted for calculating the sales tax subsidy/incentive [which in this case was availed by the respondent/assessee by retaining the sales tax it had levied on its goods]. A perusal of the eligibility certificate dated 13.12.1994 would show that it was issued for setting up a new unit , while the eligibility certificate dated 15.10.1996 was given to a pioneer unit which had undertaken expansion. Therefore, the argument that the sales tax subsidy/incentive was granted to assist in carrying on business operations and thereby help make the industries more profitable, both on facts and in law is untenable. The sole purpose of the 1993 Scheme was to set up new units and/or expand existing units in underdeveloped and developing areas The question of law, as framed is answered in favour of the respondent/assessee and against the appellant/revenue. The sales tax subsidy/incentive received by the respondent/assessee under the 1993 Scheme was a capital receipt.
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2024 (1) TMI 1227
Prosecution u/s 276C (2) - petitioners had delayed to pay self-assessment tax - whether delayed payment alongwith the interest could be termed as evasion of tax? - HELD THAT:- The judgments in Confident Projects (India) (P.) Ltd [ 2021 (2) TMI 75 - KARNATAKA HIGH COURT] , S.P. Velayutham [ 2022 (2) TMI 50 - MADRAS HIGH COURT] and M/s Health Bio Tech Ltd. others ( 2023 (9) TMI 1229 - PUNJAB AND HARYANA HIGH COURT] have categorically held that delayed payment of income tax would not amount to evasion of tax. In the instant case Return for the total income for the year 2012-13 was filed on 29.09.2012 for amount of Rs. 8,20,53,544/-. The tax was self-assessed for an amount of Rs. 2,10,91,150/-. On account of the financial state of the company which remains debatable, the tax alongwith interest was paid on 10.07.2013. However, the show cause notice for delayed payment was sent only on 11.02.2014 and 24.02.2014 pursuant to which the complaint came to be instituted. Therefore, by no stretch of imagination can it be held that there was any evasion of tax on the part of the petitioners, though there was a delay in the payment of the tax for which interest stands levied and paid. Petition allowed.
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2024 (1) TMI 1226
Reopening proceedings against deceased assessee - proceedings against legal representatives of the deceased assessee - Writ Petition challenging the notice issued u/s 148 in the name of the deseased assessee, the wife of the petitioner - as submitted that the deceased assessee had not filed return of Income in her name as she had no income of her own. As after the death of the deceased assessee, the Permanent Account Number of deceased assessee was no longer valid. It is submitted that although the legal heirs of the deceased assessee are deemed to be the assessee as per Section 159 the appeal filed is not getting linked with the PAN Card and Aadhar Card number of the deceased assessee and therefore the petitioner as the Legal Representative is remediless. HELD THAT:- After the death of an assessee, the respective Legal Representatives must register themselves in the Income Tax Portal by submitting the PAN of the deceased assessee along with their PAN as the Legal Representative of deceased assessee and produce a death certificate of the deceased assessee together with their legal heirship Certificate. It is only after such compliance, appeal against an assessment order passed in the name of a deceased person can be numbered and heared. The petitioner as legal heir of the deceased assessee ought to have complied with the same along with other legal representatives of the deceased assesse Mrs. Nirmala Subramanian. Petitioner as the legal representative of the deceased assessee along with the other legal representatives thus ought to have to filed an appeal against the Assessment Order dated 14.03.2023 by following the prescribed procedure. The petitioner has however filed a defective appeal on 14.06.2023 before the Commissioner of Income Tax (Appeals). Having, opted to correctly challenge the Assessment Order dated 14.03.2023 before the Commissioner of Income Tax (Appeals) by filing an appeal though with defects, it is not open to the petitioner to challenge the assessment order and/or the notices that preceded the impugned assessment order and/or the subsequent notice issued under section 221(1) of the Income Tax Act, 1961 in the name of the deceased assesse. This writ petition is therefore without any merits and is therefore liable to be dismissed. However, liberty is given to the petitioner to work out the remedy before the Commissioner of Income Tax (Appeals) by curing the defect in the appeal filed on 14.06.2023. Defects pointed out shall be cured by the petitioner within a period of 45 days of receipt of a copy of this order. The Office of the Commissioner of Income Tax (Appeals) is to be suo moto impleaded as third respondent and is directed to number the appeal subject to the petitioner and other legal representatives complying with other statutory requirements for the filing of appeal as the legal representatives of the deceased assessee namely Mrs.Nirmala Subramanian. On the appeal being numbered, it shall be disposed on merits within a period of six (6) months from the date of receipt of a copy of this order. Needless to state petitioner/legal representatives or their Authorsised representatives shall be heard. Recovery proceedings against the petitioner and legal representatives of the deceased assessee namely Mrs.Nirmala Subramanian shall be kept in abeyance for a limited period of six (6) months from today.
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2024 (1) TMI 1225
Validity of reopening u/s 147 r.w.s. 148 - addition as income from business by treating sale consideration in respect of property owned by the firm which was given for the development and addition on account of deposits made in the bank account - HELD THAT:- AO despite taking note of the fact of the sale deed which was between the two partnership firms and not by the assessee in his individual capacity nor anything pertain to the assessee in his individual capacity qua the said transaction, he still proceeded to entertain his reason to believe . Even the partnership deed and the PAN of M/s. Sai Developers were also filed during the course of assessment proceedings, which AO has ignored. Once, assessee has brought the facts on record, then ld. AO could not have proceeded to tax the above transaction in the hands of the assessee, because the agreement and transaction was not with the assessee, albeit between two partnership firm. In fact, AO should have issued notice u/s. 148 to the partnership firm. He has simply gone by ITS records, i.e., information from the individual transaction statement and that there is no return of income filed by the name of Sai Developers. Therefore, he presumed that all the transactions belong to assessee. Once the sale deed or the agreement is between the two partnership firms, then how the transaction can be viewed in the individual hands by the ld. AO, is beyond comprehension. Even the reasoning given by the AO as incorporated above is not based on rationale reasoning either on facts or in law. Thus, reasons recorded by the ld. AO based on certain information that assessee has entered into transaction of immovable property itself is incorrect and based on such incorrect assumption of facts, notice u/s. 148 cannot be issued nor the same amount can be taxed in the hands of the assessee. At least when assessee has raised this objection and has filed all the documents like partnership deed, PAN of the partnership firm and more specifically the developer s agreement entered between two different parties. When all these documents were filed before him then how the assessment can be made u/s. 148 in the hands of the assessee. Accordingly, the reasons recorded itself in the case of the assessee do not give jurisdiction to the ld. AO to make any assessment or issue notice u/s. 148 and accordingly, same is quashed. Accordingly, the entire proceedings u/s. 148 is held to be invalid. Appeal of the assessee is allowed.
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2024 (1) TMI 1224
Eligibility for deduction u/s 80IA - contracts entered with Airports Authority of India (AAI) - constitute as a Central / State Government or not? - HELD THAT:- The Government of India constituted the International Airports Authority of India (IAAI) in 1972 to manage the nation's international airports while the National Airports Authority of India (NAAI) was constituted in 1986 to look after domestic airports. Both the above organizations were merged in April 1995 by an Act of Parliament, namely, the Airports Authority of India Act, 1994 and has been constituted as a Statutory Body and was named as Airports Authority of India (AAI). Therefore, AAI is a statutory body and in terms of the plain language of Section 80-IA(4) and if other conditions of eligibility are satisfied by the assessee, it would be eligible for claim of deduction u/s 80-IA(4) of the Act, if the assessee has entered into an agreement with any statutory body for carrying out development work. Therefore, in our considered view, claim of deduction u/s 80-IA(4) cannot be denied to the assessee only on the ground that since the assessee has entered into a contract with AAI, which does not constitute as a Central / State Government, the assessee is not eligible for claim of deduction under Section 80-IA(4) of the Act. Satisfaction of other conditions for eligibility of claim - qualifying as a developer - whether the assessee qualifies as a developer or the assessee is a works contractor within the meaning of Explanation to Section 80-IA of the Act? - Evidently the contract has not been awarded to the assessee for carrying out any repairs, maintenance or upkeep etc. of existing airport facility, but the assessee has been awarded contract for bringing into existence a new infrastructural facility in place being new domestic arrival block at Sardar Vallabhbhai Patel International Airport. Accordingly, the assessee in our view is has been entrusted the responsibility of bringing into existence and new infrastructure facility being a new domestic arrival block at Sardar Vallabhbhai Patel International Airport. Assessee has undertaken to bring into existence a new infrastructure facility being new domestic arrival block at Sardar Vallabhbhai Patel International Airport, Ahmedabad and further the assessee is also undertaken various financial and entrepreneurial risks required to be borne by a Developer of a project viz. providing bank guarantee to AAI, procurement of certain materials by the assessee at it s own cost during the construction phase, preparation of various architectural designs relating to the project for approval of AAI etc. which all support the fact that the assessee is in the instant facts is a developer within the meaning of Section 80-IA of the Act and is eligible for claim of deduction u/s 80-IA(4). We observe that Ld. CIT(A) undertook a detailed analysis of the scope of work undertaken by the assessee and the various risks and responsibilities undertaken by the assessee and then came to conclusion that assessee qualifies as a developer and is eligible to claim of deduction u/s 80-IA(4), thus confirmed. Assessee appeal allowed.
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2024 (1) TMI 1223
Revision u/s 263 by CIT - Right Issue of shares - invocation of provisions of section 52(2)(viib) by debunking the calculation of fair market value of shares done by the assessee and accepted by the AO, under Rule 11UA of IT Rules - addition on account of the shares being issued at a value less than its fair market value - CIT set aside the assessment order passed by the ld.AO u/s 143(3) holding it as erroneous and prejudicial to the interest of the Revenue as AO had failed to make proper inquiries regarding valuation of fair market value of shares issued by the assessee during the year at a premium, which valuation as per the ld. Pr. CIT was not in accordance with law as done by the assessee - assessee argued CIT held that the assessment order was erroneous without dealing with the arguments made by the assessee before him. HELD THAT:- We are not in agreement with the contention of assessee that the contentions made by the assessee before the ld. Pr. CIT were not dealt with by him while holding the assessment order to be erroneous. He has specifically referred to the contentions made regarding non-applicability of section 56(2)(viib) to the Right Issue issued, that there is no mala fide intention involved in the Right shares which is said to be brought in the ambit and scope of the deeming provision of section 56(2)(viib) of the Act. As for the decision cited in the case of Sudhir Menon HUF [ 2014 (3) TMI 534 - ITAT MUMBAI] we have noted from the ld. Pr. CIT order, that the issue in the said case related to the invocation of the provisions of 56(2)(vii) which relates to the receipt of any money or property without any consideration or without adequate consideration. While in the present case, the issue relates to the provisions of section 56(2)(viib) of the Act which deems the amounts received in lieu of the issue of shares in excess of their FMV as income of the assessee. CIT, therefore, has rightly found the facts of the case to be different and distinguishable from that in the present case before us. Therefore, we do not agree with the assessee that the ld. Pr. CIT has held the assessment order erroneous without dealing with averments made by the assessee before it. Now coming to the aspect of the decision of Chhatisgarh Metaliks and Alloys P.Ltd [ 2023 (4) TMI 74 - ITAT RAIPUR] holding the provision of the section 56(2)(viib) of the Act not applicable on Right Issue, and its impact on revisionary order passed in the present case, it is evident that in the absence of any contrary decision cited by the Revenue before us, the entire exercise of revision in the present case on identical set of facts fails considering the categorical finding of the ITAT that section 56(2)(viib) of the Act cannot be invoked on a Rights Issue. The finding of the error in the assessment order by the ld. Pr. CIT on account of an identical issue clearly does not survive. Thus the impugned order of the ld. Pr. CIT passed under section 263 of the Act is set aside, and the appeal of the assessee is allowed.
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2024 (1) TMI 1222
Validity of assessment orders without quoting DIN - validity of subsequent generation of the DIN - Application of Board s circular - principles of functional or purposeful interpretation - HELD THAT:- As decided in Abhinav Chaturvedi and others[ 2023 (8) TMI 378 - ITAT DELHI] forwarding of the intimation of generation of the DIN in ITBA is only a subsequent action and that is not part of assessment order. The manner in which the word 'communication' is defined shows every notice, order, summons, letter and any correspondence from Tax authorities should have a DIN quoted and it is for this reason that the Intimation issued about the DIN of assessment order itself has a DIN quoted on it Board s circular application - Argument raised is against now crystallized proposition of law that as far as the Circulars of the Board are concerned, they are binding upon the officers of the Revenue Department without any exceptions whatsoever. Once it is concluded that the Circular of the Board is binding upon the Revenue Authorities, then, its non-compliance brings the consequences which the Board Circular itself manifests and it is that the communication , which in the present case is assessment order will be deemed to have been never issued. Thus, when Board lays down what shall be the format of any such communication and also provides that if the communication is not in that format the same will be considered as not issued at all, then it is not a mere technical flaw liable to be corrected but it vitiates the communication, i.e the assessment order in the present form. Once assessee has a statuary right to be conveyed such communication , as far as the immediate consequences of the communication not bearing DIN is concerned, as the same is presumed to have never been issued, such communication has no legal foundation left and becomes a voidable communication at the instance of the assessee, irrespective of assessee establishing the plea of prejudice. The difference pointed out in the passing of an order and issuing communication of order is very much clarified by the Circular as the word communication has been primarily used in the sense of a Noun , specifying what all sorts of orders, notices etc. will require DIN on the body. It is not used in the form of a verb indicating the mode of transmission of information or delivery or transmitting a copy thereof as service of the notice referred u/s 282 of the Act. Thus to say that there is merely an improper manner of service and such rigour is mitigated by Section 292BB is quite misconceived. See BRANDIX MAURITIUS HOLDINGS LTD. [ 2023 (4) TMI 579 - DELHI HIGH COURT] This ground is allowed as the assessment order in question is invalid and is deemed to have never been issued as per the CBDT Circular dated 14/08/2019(supra) for non-mentioning of DIN on the body of the order.
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Customs
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2024 (1) TMI 1221
Violation of principles of natural justice - appellant's request for cross-examination of parties, whose statement has been relied upon, has not been considered - In the writ appeal, while acknowledging that cross-examination is a part of natural justice, the High Court noted that there is no absolute right to cross-examination, and it depends on each case's facts. - However, High Court permitted the appellant to file appeal before the Appellate Authority, within a period of 30 days from the date of receipt of a copy of this judgment - HELD THAT:- There are no reason to interfere with the impugned judgment passed by the High Court. Hence, the Special Leave Petition is dismissed without prejudice to any other alternative remedy that the petitioner may seek to avail. The time granted by the High Court to avail the remedy is extended by 30 days from the date of this order.
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2024 (1) TMI 1220
Levy of penalty under Regulation 18 (1) of the CBLR 2018 - failure to comply with the obligations mandated under Regulation 10 (d) and 10 (e) of CBLR 2018 - misclassifying Match Skillets exported by them under CTH 36050090 instead of under CTH 48192010 - HELD THAT:- The stand of the appellant from the very beginning was that CTH adopted by the appellant was based on the assessment practice for Match Skillets made out of white board. The appellant has also given justification for the said classification. Further, it is found that the assessing officers were well aware of the classification and they allowed the said classification without any objection. The respondent did not raise any objection to the adopted classification even though the description of the export goods was correctly declared. Further, it is not only the appellant who has followed this classification with regard to impugned goods rather other exporters were also adopting the same classification which was followed at Tuticorin port during the period from April 2015 to October 2020. The Commissioner in the impugned order has held that the appellants are not directly benefited by their contravention hence there is no mens rea on the part of the appellant and therefore the imposition of penalty on the appellant for violation of Regulation 10 (d) and 10 (e) of CBLR 2018 is not warranted. Further, it is settled law that the classification is a question of law and cannot be treated as misdeclaration or misstatement. Once it has been observed by the learned Commissioner that there is no mens rea on the part of the appellant then in that case imposition of penalty of Rs.25,000/- for violation of Regulation 10 (d) and 10(e) of CBLR 2018 is not sustainable in law. Therefore, the penalty imposed on the appellant is set aside - appeal allowed.
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2024 (1) TMI 1219
Absolute Confiscation of the seized gold and foreign currency - Prohibited item or not - Baggage Rules - appellant denied having any dutiable goods, his body and baggage were screened - first proviso to sub-clause (a) of clause (1) to Section 129A of the Customs Act, 1962 - HELD THAT:- Any passenger entering into India is required to make a declaration of his baggage before entering into India as provided under Section 77 of Customs Act, 1962. Further if it is found that the goods accompanying him which are also called as baggage, import of which is prohibited and in respect of which true declaration has been made under Section 77 the proper officer may at the request of the passenger detain such articles for the purpose of being returned to him on his leaving India under Section 80 of Customs Act, 1962 - In the instant case, the passenger is neither a habitual offender nor carrying the said goods for smuggling purpose. In this circumstance the Order of the Ld. Commissioner for absolute confiscation of gold chains legally not correct. Further the gold is not a prohibited item. It can be imported only with certain conditions as prescribed under Exim Policy as well as guidelines laid down by the RBI. In the case of YAKUB IBRAHIM YUSUF VERSUS COMMISSIONER OF CUSTOMS, MUMBAI [ 2010 (10) TMI 650 - CESTAT, MUMBAI] , it has been held that prohibited goods refers to goods like arms, ammunition, addictive drugs, whose import in any circumstance would danger or be detriment to health, welfare or morals of people as whole, and makes them liable to absolute confiscation. It does not refer to goods whose import is permitted subject to restriction, which can be confiscated for violation of restrictions, but liable to be released on payment of redemption fine. The gold does not fall under the prohibited category and therefore it cannot be absolutely confiscated. In the present case considering the facts and circumstances, the order of absolute confiscation is not sustainable in law and therefore the order of absolute confiscation is set aside and an option given to the appellant to redeem the Gold Chains on payment of redemption fine of Rs.3,00,000/-. Confiscation of foreign currency worth USD 11,325 - HELD THAT:- Section 111 of the said Act, under which the impugned foreign currency has been confiscated, which provides for confiscation of improperly imported goods. Thus, unless the improper importation is proved with evidence, the said section is not applicable, there is no evidence on record to prove that the impugned foreign currency was improperly imported. Mere improper procurement, if at all, in contravention of FEMA, will not attract Section 111 of the said Act. In the present matter Revenue has not advanced any evidence to show that the foreign currency, in question, was smuggled into the country by the appellant. In the absence of such evidence, confiscation of the same cannot be upheld. Hence the confiscation of the currency is set aside. Accordingly the revenue shall release the currency of $11,325/- to the appellant. Penalties imposed on appellant under Section 112(a) and Section 114AA - HELD THAT:- Having regard to the totality of the facts and circumstances of the impugned matter the penalty imposed is reduced to a sum of Rs. 1,00,000/- under Section 112(a) of the Act and the penalty of a sum of Rs. 50,000/-, under Section 114AA of the Act. The appeal is partly allowed.
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2024 (1) TMI 1218
Classification of imported goods - Encoder/Multiplexer under different Model - classifiable under Tariff Heading No. 85 17 6290 as declared by appellant or under 85 28 of Customs Tariff Act, 1975, as claimed by the revenue? - entitlement for exemption Notification No. 24/2005-CUS (Sr.No.13) dated 01.03.2005 - HELD THAT:- This issue in the appellant s own case has been decided by this Tribunal in M/S MODERN COMMUNICATIONS BROADCAST SYSTEMS P. LTD VERSUS C.C., - AHMEDABAD [ 2018 (12) TMI 172 - CESTAT AHMEDABAD] where it was held that it is clear that as the impugned goods are having the function of transmission of data and other functions and hence the same would merit classification under CTH 8517. Accordingly, we hold that the goods are classifiable under CTH 8517. From the above decision, it can be seen that this Tribunal has decided the classification of the goods in question under CTH 85 17 6290. Following the above decision in the present appeal also appellant s goods are correctly classifiable under CTH 85 17 6290. Moreover, in the revenue s appeal, the revenue has proposed to classify the goods under CTH 85 28 7100. However, in the show cause notice, it was proposed to classify under CTH 85 28 7390. Therefore, the new grounds in the appeal cannot be made which is beyond the scope of show cause notice. The impugned order is set aside - Assessee s appeal is allowed and revenue s appeal is dismissed.
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Insolvency & Bankruptcy
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2024 (1) TMI 1217
Initiation of CIRP - Date of default - Existence of restructuring proposals - NCLT admitted the application u/s 7 - pre-implementation conditions as stipulated in the restructuring proposals were mandatory or not - failure in its compliance tantamounted to non-execution of the restructuring approvals automatically or not - date of default was covered under Period stipulated under Section 10A of the Code or not - payments of Rs. 50 Crores made by the Corporate Debtor to the financial creditors i.e., the Respondent No. 2 and PFC resulted in automatic extension of restructuring approvals or not - financial viability of the Corporate Debtor as claimed by the Appellant would have impacted the impugned order in deciding the application filed under Section 7 of the code by the Respondent No. 2 or not. Existence of restructuring proposals - pre-implementation conditions as stipulated in the restructuring proposals were mandatory or not - failure in its compliance tantamounted to non-execution of the restructuring approvals automatically or not - HELD THAT:- The period from the date 25.03.2020 to 24.03.2021, is the period which is required to be excluded for the purpose of initiation of CIRP under Section 7, 9 and 10. Section 10A of the Code also clearly mandates that no application shall ever be filed for initiation of CIRP of a Corporate Debtor for the said default occurring during the said period. It is significant to note that the explanation provided under Section 10A of the Code stipulate that provision of Section 10A shall not apply to any default committed under the said Sections before 25.03.2020. Hence, date of default become critical. On the failure of the Corporate Debtor to fulfil its obligation to the original common loan agreement and subsequently, further failure to comply with the first restructuring proposal dated 21.02.2020 and further failure to comply with the second restructuring approval dated 29.09.2020, the Appellant, at this stage, cannot take the plea of continuation of all agreements/proposals. Normally, when the restructuring proposal is agreed upon, the same is in supersession to the previous loan agreement/restructuring proposal. Here, it is critical to understand that pre-implementation condition are conditions precedent, which are meant to be followed and it cannot be the case of the borrower that despite his failure to fulfil the conditions precedent, the restructuring proposal should be deemed to be valid, continuing and further deemed to be converted into agreement - In the present case, undisputedly the Corporate Debtor could not make the required payments to the lenders i.e. the Respondent No. 2 as well as PFC and also could not meet with pre-implementation conditions and therefore, the restructuring approval ceased to remain alive and the only valid agreement which survived was the common loan agreement dated 19.06.2013. Default period falling within period specified under Section 10A of the Code or otherwise? - HELD THAT:- It is evident that the Respondent No. 2 clearly indicated date of default to be 31.03.2018, which is not covered under Section 10A of the Code. Incidentally, the Respondent No. 2 also gave date of NPA of Corporate Debtor i.e., 30.06.2018, which is also out of purview of Section 10A of the Code - the date of default as indicated in Part IV by the Appellant is 31.03.2018 based on first default as per original common loan agreement. The Adjudicating Authority has considered 31.03.2021 as a date of default based on the second restructuring approval dated 29.09.2020. We have already noted that as per Section 10A of the Code, the period is specified is from 25.03.2020 to 24.03.2021. Thus, either of the dates i.e., 31.03.2018 or 31.03.2021 are clearly out of purview of Section 10A of the Code. Payments of Rs. 50 Crores made by the Corporate Debtor to the financial creditors i.e., the Respondent No. 2 and PFC resulted in automatic extension of restructuring approvals or not - HELD THAT:- The plea of the Appellant regarding existence and continuation of default under first restructuring proposal is wrong as the Corporate Debtor itself has submitted in I.A. No. 1020/KB/2020 filed by the them before the Adjudicating Authority in which the Corporate Debtor sought reliance solely on the Second Restructuring Proposal submitting that the Corporate debtor was required to make payment from 31.03.2021, without contending that there was any payment obligations or default continuing from first restructuring proposal - there are no force in the pleading of the Appellant on this issue. Financial viability of the Corporate Debtor as claimed by the Appellant would have impacted the impugned order in deciding the application filed under Section 7 of the code by the Respondent No. 2 or not - HELD THAT:- It is recaptured from pleadings of the appellant that the Corporate Debtor has raised bills of Rs. 916.95 Crores from WBSEDCL and during Financial Year 2022-23, the Corporate Debtor earned EBITDA of Rs. 308 Crores and therefore, the company was solvent. During averments, the Appellant also agreed to pay outstanding amounts as per restructuring approvals around Rs. 103 Crores lying in the credit of TRA account - there has been continuous and repeated failure on the part of the Corporate Debtor to meet its obligation in making payment of principals and interest as per original common loan agreement and also failure to meet obligations as per first and second revised Restructuring Approvals. In backdrop of all these information, it is not found that so-called claim made by the Appellant about viability of the Corporate Debtor has any legal or factual force to impact the outcome of Section 7 application as contained in the Impugned Order. Appeal dismissed.
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Service Tax
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2024 (1) TMI 1216
Validity of the decision High Court deciding the appeal on admission state itself on merit - Substantial question of law - not permitting to raise the additional questions related to extended period of limitation to the appellant-Department for recovery of dues and for receiving penalties imposed by the Adjudicating Authority - HELD THAT:- The High Court ought to have raised the substantial questions of law as sought for by the appellant herein in the first instance and thereafter considered the same on merits by answering the same one way or the other. This is said for the reason that when the appeals were admitted and the main appeals are pending adjudication before the High Court, it was unnecessary for the High Court to have passed detailed reasons as to why the aforesaid two substantial questions of law would not arise for consideration, at the stage of admission. No prejudice would have been caused to any of the parties if the substantial questions of law, as raised by the appellant, had been considered and answered by the High Court on merits at the time of final adjudication of the appeals. Sometimes substantial questions of law may have a bearing on each other and if a particular substantial question of law is not permitted to be raised at the stage of admission of the appeal, it may prejudice the case of the appellant while considering the case on merits. The portion of the order of the High Court declining to raise the substantial questions of law as sought for by the appellant-Revenue herein is set - aside and the High Court is now requested to hear the parties by raising the substantial questions of law on the issue of extended period of limitation as well as on the issue of imposition of penalty. The appeals are disposed off.
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2024 (1) TMI 1215
Sabka Viswas (Legacy Dispute Resolution) Scheme, 2019 - case falling under arrears of tax within the meaning of section 121(c)(i) is correct or not as the petitioner had admittedly filed a statutory appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) - HELD THAT:- The change in the category of case from Litigation in Form SVLDRS-1 to Arrears in Form SVLDRS-3 is impermissible as admittedly appeal before Customs and Excise, Service Tax Appellate Tribunal (CESTAT) was filed on 29.08.2019. As per Sabka Viswas (Legacy Dispute Resolution) Scheme, 2019 read with Sabka Viswas (Legacy Dispute Resolution) Scheme Rules, 2019, if the amount of duty is more than Rs. Fifty Lakhs where the tax dues are relatable to a show cause notice or one or more appeals arising out of such notice which is pending as on the 30th day of June 2019, the relief available to a declarant under the Scheme shall be calculated at fifty percent of the tax dues - A reading of SVLDRS-3 indicates that the petitioner has been given 40% relief on Rs. 88,04,491/- to arrive at the tax due of Rs. 34,32,590/- and on the same, a further relief of 60% has been given to arrive at Rs. 20,59,554/- and the amount payable by the petitioner has been estimated as Rs. 13,73,036/-. The impugned communication in SVLDRS-3 dated 28.04.2020 is set aside with the direction to the respondents to issue Form SVLDRS-3 quantifying the above amount of Rs. 22,17,857/- as payable by the petitioner. Petition disposed off.
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2024 (1) TMI 1214
Levy of service tax - services on which service recipients have discharged tax liability - main contractors have already paid the tax on their behalf - time limitation - HELD THAT:- The Tribunals / Courts have been accepting tax payment by the service recipient as valid payment as the same was revenue neutral exercise till 2020, thereafter, the issue stands settled and it is service provider / sub-contractor to pay tax even if the main contractor / service recipient has discharged the tax liability on his behalf (Appellant) - this was a legal dispute which involved interpretation of law and mala-fide intention or suppression with intent to evade payment of service tax cannot be attributed to the Appellant. Extended period of limitation - HELD THAT:- The Court has observed that extended period of 5 years is not invokable when there is no willful misstatement or suppression involved. Mere failure to pay duty without any collusion, fraud or willful misstatement not sufficient to invoke extended period of limitation. Thus matter was in the knowledge of the department in 2010 when the first audit was conducted and thereafter regular audit was conducted every year, but the show-cause-notice was issued in 16.10.2014 without carrying out any investigation and without adducing any new corroborative evidence for invoking any suppression in the show-cause-notice in as much as service tax was also demanded on the exempted services valued at Rs.11,67,04,375/- pertaining to construction of PMGSY roads. The impugned order holding that the extended period has been correctly invoked, therefore, cannot be sustained and is set aside. It would, in such circumstances, not be necessary to examine the issues on merits that have been raised by the learned counsel for the Appellant. Appeal allowed.
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2024 (1) TMI 1213
Rejection of refund of the appellant being time barred - claim filed after stipulated period of one year as prescribed under the law - HELD THAT:- Admittedly, the appellant has filed the refund claim beyond the stipulated period of one year as prescribed under the law and consequently, the Original Authority as well as the Appellate Authority have rejected the refund claim only on the ground of limitation. Further, both the Notification No. 52/2011-ST dated 30.12.2013 and the subsequent Notification No. 41/2012-ST dated 29.06.2012 clearly provides that the refund claim shall be filed within one year from the date of export of goods and in the present case, admittedly, the refund has been filed after the limitation period is over. The prayer of the Learned Counsel for the appellant that he may be allowed to take the cenvat credit at this stage, cannot be entertained because it would amount to allowing rebate which is not provided in the notification. There are no infirmity in the impugned order which is upheld by rejecting the appeal of the appellant - appeal dismissed.
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Central Excise
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2024 (1) TMI 1212
Clandestine removal - Whether the Hon ble CESTAT is correct in holding that confirmation of demand of duty on impugned goods was not sustainable merely on the basis of presence of machines and certain statements of laboureres and accountants whereas there were evidences in form of verification and still photography of machines and confessional statement of Shri Rajesh Goyal, Director? - HELD THAT:- The impugned judgment and order passed by the High Court upholding the decision of the CESTAT, need not be interfered in view of the long pendency of the matter inasmuch as the show cause notice relates to the year 2011. SLP dismissed.
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2024 (1) TMI 1211
Excisable goods or not - Soap Stock arising during the manufacture of groundnut refined oil - period April 2006 to February 2015 - benefit of the Notification No. 89/95 CE dated 18.05.1995 - HELD THAT:- The Larger Bench of this Tribunal in the case of M/S RICELA HEALTH FOODS LTD., M/S J.V.L. AGRO INDUSTRIAL LTD., M/S KISSAN FATS LIMITED VERSUS CCE, CHANDIGARH, ALLAHABAD [ 2018 (2) TMI 1395 - CESTAT NEW DELHI ] had considered the issue as to whether the fatty acids, Waxes and gum arising in the manufacture of refined vegetable oil are to be treated as WASTE for the purpose of exemption under Notification No. 89/95 CE or otherwise. The Larger Bench held that it is clear that the value that the product may or may not fetch cannot be a determinative factor to decide whether the same as manufactured final product/byproduct or a waste/refuse arising during the course of manufacture of final products. Relying on the judgement of the Apex Court in COMMISSIONER OF CENTRAL EXCISE VERSUS INDIAN ALUMINIUM CO. LTD. [ 2006 (9) TMI 6 - SUPREME COURT ], the larger bench held that removal of unwanted material resulting in products like gum, wax, and fatty acid cannot be called as process of manufacture of such items. As such, incidental products are nothing but waste arising during the course of refining of rice bran oil and on applying the ratio of the Apex Court, this cannot be considered as manufactured excisable goods. The impugned order set aside - appeal allowed.
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2024 (1) TMI 1210
CENVAT Credit - Time limitation of Six months for availing the Cenvat credit in terms of 3rd Proviso to Rule 4 of Cenvat Credit Rules, 2004 brought into effect from 18.09.2014 - applicability to duty paying documents issued prior to 18.09.2014 - Cenvat credit of renting of immovable property service in respect of warehouse located outside the factory - denial on the ground that the invoice from which the credit was availed at the address of head office and hence was not in accordance with Rule 9(1) of the Cenvat Credit Rules, 2004. Whether the limitation of Six months for availing the Cenvat credit in terms of 3rd Proviso to Rule 4 of Cenvat Credit Rules, 2004 brought into effect from 18.09.2014 is applicable to duty paying documents issued prior to 18.09.2014? - HELD THAT:- In view of the judgment in AALIDHRA TEXTOOL ENGINEERS PVT LTD VERSUS C.C.E. S.T. -DAMAN [ 2020 (1) TMI 1617 - CESTAT AHMEDABAD] and ROQUETTE RIDDHI SIDDHI PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX, BELGAUM [ 2022 (3) TMI 358 - CESTAT BANGALORE] , it is settled that the provision for limitation of Six months/ One Year for availment of credit from the date of invoice, is applicable only in respect of the invoices issued after 18.09.2014. In the present case, since the invoices are prior to 18.09.2014, the limitation of six Months/ one year shall not apply. Hence, the credit on this issue is admissible to the appellant. Whether the Cenvat credit of renting of immovable property service in respect of warehouse located outside the factory is available to the appellant? - HELD THAT:- From the judgments in SAURASHTRA CEMENT LIMITED VERSUS C.C.E. S.T. - BHAVNAGAR [ 2018 (8) TMI 460 - CESTAT AHMEDABAD] and SWISS GLASCOATE EQUIPMENTS VERSUS C.C.E. S.T. -VADODARA-I [ 2022 (3) TMI 47 - CESTAT AHMEDABAD] , it can be seen that even though services were provided outside the factory premises but the same is in relation to the manufacture of the final product of the appellant the credit was allowed. Following the said judgments, in the present case also the appellant are entitled for the Cenvat Credit in respect of renting of immovable of property i.e. warehouse located outside the factory premises. Whether the Cenvat credit can be denied on the ground that the invoice from which the credit was availed at the address of head office and hence was not in accordance with Rule 9(1) of the Cenvat Credit Rules, 2004? - HELD THAT:- There is no dispute that the service was received by the appellant in their factory. Even though the address of head office is mentioned but so long the input service was received by the appellant for their factory, the credit cannot be denied. There is no case of the department that the credit on such invoice has been taken in appellant s other unit. This issue has been considered by this Tribunal in the case of M/S. MADHYA PRADESH CONSULTANCY ORGNISATION LTD. VERSUS CCE, BHOPAL [ 2017 (4) TMI 954 - CESTAT NEW DELHI ] where it was held that denial of credit only on the ground that the address of branch office or head office was mentioned instead of appellant s address cannot be the ground for denial of otherwise eligible Cenvat credit - thus, it is settled that merely because the invoice is bearing the address of head office credit to the appellant s unit cannot be denied. The appellant succeeds on all the three issues and the credit on all the three issues are admissible to the appellant. Accordingly, the impugned order is set aside - appeal is allowed.
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