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TMI Tax Updates - e-Newsletter February 23, 2021 Case Laws in this Newsletter: GST Income Tax Customs Corporate Laws Insolvency & Bankruptcy Service Tax Central Excise CST, VAT & Sales Tax Highlights / Catch Notes GST: Doctrine of promissory estoppel - Impact of migration to GST from erstwhile area back exemption / incentive scheme in Central Excise - the Excise duty Exemptions availed by the Petitioner by way of refund in the pre GST regime, for both the Units were curtailed by the Respondent No.1 through the Budgetary Support Policy thereby reducing the benefit granted to the Petitioner, as the Petitioner is not allowed to take refund of full amount of CGST paid from electronic cash ledger and the refund of 50 per cent of the IGST paid from electronic cash ledger. - Since the question has been already answered by the Apex Court, writ petitions dismissed - HC Visit to Get Source GST: Job Work - Classification of Supply - rate of GST - coatings of pure metal alloys which include plasma spray, HVOF spray, powder flame spray, wire flame spray - Taxable as supply of services - The applicable rate of tax depends on the aspect whether the principal (owner of the goods on which job work is done) is registered under CGST/KGST Act 2017 or not. - AAR Visit to Get Source Income Tax: Exemption u/s 10(23BBA) - Exemption from income-tax in the case of statutory bodies or authorities for the administration of public religious or charitable trusts or endowments, etc. - Petition relating to Vaithyanathaswamy Devasthanam is allowed, but it is made clear that the individual constituent temples, endowments and charities are liable to tax in the light of the proviso to Section 10(23BBA). It is open to the income–tax authorities to proceed accordingly qua the constituents of the devasthanam, in accordance with law. - HC Visit to Get Source Income Tax: Depreciation on intangible assets - a reading the words 'any other business or commercial rights of similar nature' in clause (b) of Explanation 3 indicates that goodwill would fall under the expression 'any other business or commercial right of a similar nature'. The principle of ejusdem generis would strictly apply while interpreting the said expression which finds place in Explanation 3(b). 'Goodwill' is an asset under Explanation 3(b) to Section 32(1) - AT Visit to Get Source Income Tax: Disallowance of weighted deduction u/s 35(2AB) - Courts have held that for deduction under section 35(2AB) of the Act, first step was the recognition of facility by the prescribed authority and entering an agreement between the facility and the prescribed authority. Once such an agreement has been executed, under which recognition has been given to the facility, then thereafter the role of Assessing Officer is to look into and allow the expenditure incurred on in-house R&D facility as weighted deduction under section 35(2AB) - AT Visit to Get Source Income Tax: Penalty u/s 271D - co-operative bank has accepted deposits in cash exceeding ₹ 20,000/- from its members - Bona-fide belief of the assessee that the transactions were exempted from the requirements of Sec.269SS of the Act and, there being no material to show that the transactions have been carried out with any intention to avoid or evade taxes, in our opinion, the assessee has been successful in showing that there was a reasonable cause for his failure to comply with the provisions of Sec.269SS - AT Visit to Get Source Income Tax: Disallowance of the interest expenditure u/s 43B(d)/(e) r.w ‘Explanation 3D’ - As observed by the A.O, as the interest debited/charged by the bank got converted into further liability wherein the existing debit balance would be further increased in the overdraft account thus, any payment of an amount towards interest would partake the character as that of repayment of the existing amount of the principal loan and not the interest claimed by the assessee. - Claim cannot be denied - AT Visit to Get Source Income Tax: Transfer pricing (TP) adjustment - the learned TPO was not justified in comparing the gross margin in export segment vis-a-vis gross margins in domestic segment. - There are different characteristics and contractual terms in the two segments and further geographical and marked differences are also present. Thus, we are of the view that it is very difficult to make suitable adjustments for these differences, hence the CMA method is not appropriate method for determining the ALP - AT Visit to Get Source Income Tax: Deduction u/s 80IA - operation and maintenance activities - The important aspect to be taken note of is the use of the expression 'or'. Therefore, an enterprise, carrying on the business of developing or operating and maintaining or developing, operating and maintaining any infrastructure facility, which fulfills the conditions set out under Sub-section 4, will be entitled to claim deduction. - HC Visit to Get Source Customs: Applicability of time limitation on demand of Customs Duty - The mere delay on the part of the Authorities to detect the violation of export obligation and issue show cause can not be construed as a permissive violation - The Suppression of Facts and materials is very much visible from the conduct and the pattern in which the Appellants caused the disappearance of the raw materials. - HC Visit to Get Source Customs: Condonation of delay in filing this Anti-Dumping Appeal - The appellant concealed material relevant facts from the Tribunal since the appellant has not stated that four Anti-Dumping Appeals had been filed to assail the Customs Notification. The appellant was impleaded as a respondent and these appeals had been dismissed by the Tribunal and the Special Leave to Appeal filed before the Supreme Court was also dismissed. - The Delay Condonation Application, therefore, deserves to be rejected and is rejected- AT Visit to Get Source Customs: Classification of imported goods - Big Cola - Big Orange Cola - Big Lemon etc. - In our view neither carbonated beverage alone nor fruit juice alone gives the essential character of the products in question; both contribute to its essential character. The issue cannot be resolved as per Rule 3(a) and 3(b) of the Rules of Interpretation and therefore we need to resort to Rule 3(c). - Since Customs tariff heading 22029920 comes last in the order, it prevails and the goods are classifiable under this heading. - AT Visit to Get Source IBC: Initiation of CIRP - A perusal of the contents of the reply to the Demand Notice, this Tribunal is unable to find any ‘Dispute’. It is seen from the record that at the earliest point of time, the Corporate Debtor did not raise any dispute that existed between the parties. For all the reasons assigned in this instant Appeal, we do not find any illegality or infirmity in the Order passed by the Learned Adjudicating Authority warranting our interference - AT Visit to Get Source IBC: Initiation of CIRP - Section 3(10) of The Insolvency and Bankruptcy Code 2016 defines ‘Creditor’ and even in the said definition a ‘Decree Holder’ cannot be excluded to file an Application under the Code. Going by the definition 3(10) of ‘Creditor’, it includes ‘Financial Creditor’, ‘Operational Creditor’. - AT Visit to Get Source Service Tax: Classification of services - Banking and other Financial Services or otherwise? - CESTAT has returned a clear finding that hire purchase is but loan and that hirer obtains goods from the seller and the banking and financial institution finalised the purchase of the goods with the title firmly resting with the hirer with the financial institution vested with the right to acquire possession of the goods through judicial intervention - Order of tribunal setting aside the demand confirmed - HC Visit to Get Source Service Tax: Levy of Service Tax - amount of liquidated damages/penalty collected by the appellant for non-compliance of the terms of the procurement contracts - - Explanation to sub-section (1) of section 67 clearly provides that only an amount that is payable for the taxable service will be considered as “consideration”. - demand of service tax on the amount collected towards liquidated damages and theft of electricity cannot sustain - AT Visit to Get Source Central Excise: Seeking for restitution of amount deposited by petitioner - it cannot be said that it is clear case of remand - the deposit made during the course of investigation and before the issuance of the show-cause notice or for hearing of the appeal, the assessee is entitled for the refund in the event of the appeal being allowed and remanded to the Adjudicating Authority for de novo consideration. - directions are necessitated for early decision in the adjudication proceeding - HC Visit to Get Source Central Excise: Interest on delayed refund of Central Excise duty paid - Mere bald and omnibus submissions of the respondents that the petitioners are not entitled to interest on delayed refund on Excise Duty cannot be sustained - The Board’s Circular cannot alter the position and ascribe any contrary view which will be in conflict with the Judicial Pronouncements, - HC Visit to Get Source VAT: Levy of penalty u/s 10-A of the Central Sales Tax Act, 1956 - It was therefore stated that the dyeing units were not engaged in any manufacturing activity - job work/works contract or not - They are merely service provider. If a liberalized interpretation is given in the light of the above decisions, they will be entitled to the benefit of Section 8(3)(b) of the Central Sales Tax Act, 1956 as was claimed by the petitioner - However, the scheme of the concession is specific under Section 8(3)(b) of the Central Sales Tax Act, 1956. Therefore, the Courts cannot aid evasion of tax by reading down the express language of Section 8(3)(b) of the Central Sales Tax Act, 1956. - HC Visit to Get Source Articles RECENT DEVELOPMENTS IN GST Notifications GST - States 197–F.T. - dated 12-2-2021 - West Bengal SGST Appointment of West Bengal Authority for Advance Ruling News Minutes of the Monetary Policy Committee Meeting February 3-5, 2021 [Under Section 45ZL of the Reserve Bank of India Act, 1934] Income Tax Department conducts searches in Pune Income Tax Department conducts searches in Bhopal Income Tax Department conducts searches in J & K Case Laws: GST 2021 (2) TMI 837 Profiteering - vires of Section 171 of the Central Goods and Services Act, 2017 and Rules 122, 126, 127 and 133 of the Central Goods and Services Tax Rules, 2017 - HELD THAT:- Keeping in view the orders passed by this Court in PHILLIPS INDIA LIMITED VERSUS UNION OF INDIA ORS. [ 2020 (6) TMI 626 - DELHI HIGH COURT] , M/S. SAMSONITE SOUTH ASIA PVT. LTD. VERSUS UNION OF INDIA ORS. [ 2020 (10) TMI 1031 - DELHI HIGH COURT] , M/S. PATANJALI AYURVED LTD. VERSUS UNION OF INDIA ORS. [ 2020 (7) TMI 614 - DELHI HIGH COURT] , TATA STARBUCKS PRIVATE LIMITED VERSUS UNION OF INDIA ORS. [ 2021 (2) TMI 831 - DELHI HIGH COURT] , LE REVE, NEEVA FOODS PVT. LTD. VERSUS UNION OF INDIA ORS. [ 2021 (2) TMI 563 - DELHI HIGH COURT] , subject to the Petitioner depositing the entire principal profiteered amount as levied, excluding the GST amount already deposited, within six months, in equal monthly instalments, there shall be a stay, as far as the direction of recovery is concerned. As far as the direction in the impugned order regarding the reduction of prices is concerned, it is deemed appropriate that the Respondents file a reply to the application for interim relief - A separate date for hearing qua the said direction, be sought on 15th February, 2021; till then, there shall be stay of the said direction. List on 15th February, 2021. 2021 (2) TMI 838 Seeking grant of stay - Vires of Section 171 of the Central Goods and Services Act, 2017 and Rules 122, 126 and 133 of the Central Goods and Services Rules, 2017 - HELD THAT:- Keeping in view the orders passed by this Court in Philips India Limited vs. Union of India [ 2020 (6) TMI 626 - DELHI HIGH COURT] , Samsonite South Asia Pvt Ltd vs. Union of India [ 2020 (10) TMI 1031 - DELHI HIGH COURT] , Patanjali Ayurved Ltd. Vs. Union of India [ 2020 (7) TMI 614 - DELHI HIGH COURT] and Cilantro Diners Pvt Ltd Vs. Union of India [ 2020 (8) TMI 570 - DELHI HIGH COURT] we are not inclined to grant stay subject only to deposit of the amount computed qua power banks. Subject to the petitioner depositing the entire principal profiteered amount i.e. ₹ 1,91,21,441/- excluding the GST amount already deposited, within four months, in equal monthly instalments, there shall be stay of recovery. List on 15th February, 2021. 2021 (2) TMI 831 Profiteering - Vires of Section 171 of the Central Goods and Services Act, 2017 and Rules 122, 126 and 133 of the Central Goods and Services Rules, 2017 - HELD THAT:- Keeping in view the orders passed by this Court in Philips India Limited vs. Union of India [ 2020 (6) TMI 626 - DELHI HIGH COURT] , Samsonite South Asia Pvt Ltd vs. Union of India [ 2020 (10) TMI 1031 - DELHI HIGH COURT] , Patanjali Ayurved Ltd. Vs. Union of India [ 2020 (7) TMI 614 - DELHI HIGH COURT] and Cilantro Diners Pvt Ltd Vs. Union of India [ 2020 (8) TMI 570 - DELHI HIGH COURT] , subject to the petitioner depositing the entire principal profiteered amount i.e. ₹ 1,04,70,664/- as levied excluding the GST amount already deposited, within four months, in equal monthly instalments, there shall be a stay, as far as the direction for payment is concerned. It is deemed appropriate that the respondents file a reply to the application for interim relief - List on 15th February, 2021. 2021 (2) TMI 869 Job Work - Classification of Supply - rate of GST - coatings of pure metal alloys which include plasma spray, HVOF spray, powder flame spray, wire flame spray - Applicability of N/N. 20/2019-Central Tax (Rate) dated 30.09.2019 - HELD THAT:- Section 2 (68) of CGST Act, 2017 defines job work as, any treatment or process undertaken by a person on goods belonging to another registered person . Further Schedule II, in relation to Section 7 of the CGST Act 2017, prescribes the activities or transactions to be treated as supply of goods or supply of services. Clause 3 of the said Schedule II prescribes that any treatment or process which is applied to another person s goods is a supply of services - In the instant case the applicant undertakes thermal spray / metal or metal alloy coating on the goods / material belonging to another person i.e. the principal. Therefore the work undertaken by the applicant amounts to job work and is a supply of services. Classification of the job work being provided by the applicant - HELD THAT:- It is an admitted fact that the job-work being provided by the applicant is nothing but metal coating of the goods belonging to other persons in different methods i.e. thermal spray, plasma spray, HVOF spray, Powder flame spray wore flame spray. The Explanatory Notes to the Scheme of Classification of Services specifies that SAC 9988 covers Manufacturing services on physical inputs owned by others and SAC 998873 covers Other fabricated metal product manufacturing and metal treatment services which includes metal treatment and coating services, general machining services, cutlery, hand tool and general hardware manufacturing services and other fabricated metal product manufacturing services not elsewhere covered. In the instant case the applicant s services are indubitable metal treatment/coating services and hence merit classification under SAC 998873. The Notification No. 20/2019-Cental Tax (Rate) dated 30.09.2019 specifies the rate for job work in relation to diamonds, bus body building and all other rest of the items - Circular No. 126/45/2019-GST dated 22.11.2019 clarifies on scope of the notification entry at item (id), related to job work, under heading 9988 of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, at para 4 has been issued, which stipulates that entry at item (iv) covers only such services which are carried out on physical inputs (goods) which are owned by persons other than those registered under the CGST. The applicant, in the instant case has not furnished required information so as to decide whether the goods received by them for job work belong to an unregistered person or not. Thus the job work undertaken by the applicant gets covered under item (id) of SL.No.26 of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 in case the owner of the goods (Principal) is registered under CGST and attract GST @ 12% and if the principal is unregistered the impugned job work gets covered under item (iv) of SL.No.26 of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 and attracts GST @ 18%. 2021 (2) TMI 829 Doctrine of promissory estoppel - Impact of migration to GST from erstwhile area back exemption / incentive scheme in Central Excise - Validity of restrictions imposed by the Scheme of Budgetary Support, issued under the Goods and Services Tax regime vide Notification F.No.10(1)/2017-DBAII/NER, dated 05.10.2017, by the Respondent No.1, reducing the quantum of benefits earlier availed by the Petitioner - benefit of N/N. 56/2003-C.E., dated 25.06.2003 - alleged curtailment of 100 per cent Excise duty exemption granted vide the earlier Policies of the Government, which underwent a sea change under the new Tax regime in 2017 - whether the ratio in V.V.F. Limited [ 2020 (4) TMI 669 - SUPREME COURT] would be applicable to the facts and circumstances of the instant case or does this matter require independent examination by this Court? - HELD THAT:- The 100 per cent Excise duty exemption by way of refund availed by the Petitioner prior to the Tax Reform of 2017, was curtailed by the Respondents under the GST regime through the Budgetary Support Schemes reducing the benefits earlier granted inasmuch as the Budgetary Support for specified goods manufactured by the eligible Unit is 58 per cent of CGST and 29 per cent of IGST paid through debit in cash ledger account maintained by the Unit after full utilization of the input Tax Credit of the Central Tax and Integrated Tax. The Petitioner in W.P.(C) No.41/2015, W.P.(C) No.08/2017, W.P.(C) No.27/2017 and W.P.(C) No.40 of 2017 had in sum and substance, the same grievances. Promissory Estoppel has been agitated previously, as also in this Writ Petition. In W.P.(C) No.41/2015, the challenge to the impugned Notifications therein was for the reason that the benefit of exemption was sought to be reduced to the prescribed percentage of value addition amount i.e. 56 per cent applicable to pharmaceutical products mentioned in the respective Notifications and applicable Chapter. In the instant Petition, it is contended that the amount of Budgetary Support under the Scheme for specified goods manufactured by the eligible Unit is specified as the sum total of 58 per cent of the Central Tax paid through debit in cash ledger account maintained by the Unit after full utilization of the input Tax Credit of the Central Tax and Integrated Tax and 29 per cent of the Integrated Tax paid through debit in cash ledger account maintained by the Unit after full utilization of the input Tax Credit of the Central Tax and Integrated Tax. That, hence the Excise duty Exemptions availed by the Petitioner by way of refund in the pre GST regime, for both the Units were curtailed by the Respondent No.1 through the Budgetary Support Policy thereby reducing the benefit granted to the Petitioner, as the Petitioner is not allowed to take refund of full amount of CGST paid from electronic cash ledger and the refund of 50 per cent of the IGST paid from electronic cash ledger. The grievances of the Petitioner raised in the matter at hand is soundly quelled by the Hon ble Supreme Court in all aspects by the ratio in V.V.F. Limited (supra) and this Court does not intend to venture further - Petition dismissed. 2021 (2) TMI 827 Release the goods as well as the conveyance - Section 130 of the Central Goods and Services Act, 2017 - HELD THAT:- The writ applicant availed the benefit of the interim order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount. The proceedings, as on date, are at the stage of show cause notice, under Section130 of the Central Goods and Services Act, 2017. The proceedings shall go ahead in accordance with law. It shall be open for the writ applicant to point out the recent pronouncement of this Court in the case of Synergy Fertichem Pvt.Ltd Vs. State of Gujarat [ 2019 (12) TMI 1213 - GUJARAT HIGH COURT] where it was held that It is now for the applicant to make good his case that the show cause notice, issued in Form GSTMOV10, deserves to be discharged - this writ application stands disposed of. Income Tax 2021 (2) TMI 855 Disallowance of brokerage expenses - assessee claimed the brokerage expenses @ 3% paid to broker on the sale consideration received from sale of immoveable property - HELD THAT:- On going through the records find that the brokerage was paid through account payee cheque and copy of bank statement is filed. Complete detail of broker including his address, mobile number were filed along with confirmation letter before the Ld. A.O. In our view the assessee has duly discharged his onus to prove the genuineness of the expenses. Ld. A.O failed to find any adversities in these evidence nor he made any effort to call the broker. In these given facts and circumstances of the case the action of the Ld. A.O is unjustified, we therefore set aside the finding of Ld. CIT(A) and delete the disallowance of brokerage expenses. Addition u/s 50C - difference between the actual sale consideration received and the valuation done by the DVO - HELD THAT:- Property being leased and also disputed, which is not commanding the guideline rate in the open market and this fact is further supported by the report of DVO who has valued the property in question much lower than the guideline rate are sufficient enough to prove that the claim of assessee having received the sale consideration at ₹ 1.20 crore is correct and thus making the addition for ₹ 14,11,600/- u/s 50C of the Act is uncalled for. We therefore set aside the finding of Ld. CIT(A) and delete the addition made by Ld. A.O u/s 50C - Decided in favour of assessee. 2021 (2) TMI 851 MAT computation u/s 115JB - disallowance of provision for bad and doubtful debts for computing the book profit u/s 115JB - HELD THAT:- As decision in Syndicate Bank [ 2018 (12) TMI 1769 - KARNATAKA HIGH COURT] relied on by the Ld. counsel is applicable to the instant case, wherein the Hon ble Karnataka High Court by following the judgment of the Hon ble Supreme Court in Vijaya Bank [ 2010 (4) TMI 46 - SUPREME COURT] has held that where the AO while computing book profit u/s 115JA, added back provision for Non-performing Assets , matter was to be remanded back with a direction to look into records and to record a finding as to whether bad and doubtful debts were reduced from loan and advances of debtors from asset side of balance sheet and thereafter, recompute income u/s 115JA. Accordingly, we set aside the order of the Ld. CIT(A) and restore the matter to the file of the AO to re-compute income u/s 115JB by following the above ratio laid down in Vijaya Bank (supra) and Syndicate Bank (supra) after giving reasonable opportunity of being heard to the assessee.We direct the assessee to file the relevant accounts/documents before the AO. Thus the 1st ground of appeal along with the additional ground is allowed for statistical purposes. Disallowance paid to Tata Sons Limited towards the subscription paid for The Brand Equity and Business Promotion(BEPB) Agreement - HELD THAT:- In the wake of new competitive environment and radical transformation of the business scene created by liberalization and globalization of trade and industry, it was felt that all Tata Companies should come under one umbrella and hence an agreement titled TATA Brand Equity Business Promotion Agreement was signed on 01.01.1999 and the assessee-company subscribed to the Brand Equity Scheme by paying premium @ 0.25% per annum. The said agreement was entered into between Tata Sons and Tata Chemicals (the assessee-company) to pool their resources and make a co-operative effort to promote a unified common Tata Brand which, collectively would match the Brand Equity of well known international brand names. Explaining the above, the Ld. counsel submits that the ITAT H Bench, Mumbai in assessee s own case for AY 2002-03 on similar facts has dismissed the appeal filed by the Revenue. Disallowance u/s 80M/section 14A with a direction to rework the same in respect of indirect expenses - HELD THAT:- There is no dispute that in the instant case, the assessee-company has not incurred any expenses for earning dividend income. Surplus funds time to time are invested in shares, securities, units etc. of reputed company. In the impugned assessment year, there is merit in the contentions of the Ld. counsel that for earning income from investments, the assessee-company has not incurred any expenses as evident from facts mentioned at para 13 hereinabove, which is reflected in the audited accounts. In fact the Reserve Surplus as at 31st March 2003 is ₹ 1,455.16 crores, whereas the Investment is ₹ 569.02 crores, as evident from the audited accounts for the year under consideration.Further, on identical facts, the Tribunal for AYs 1992-93, 1993-94 and 1994-95 has decided the issue in favour of the assessee. Deduction u/s 80(IB) in respect of the fertilizer unit of Haldia - HELD THAT:- Section 80IB claim of ₹ 7.59 crores was made in respect of its 3 new industrial undertakings located in category B industrially backward district i.e. in Midnapore, West Bengal; the effective date of amalgamation was 01.06.2004 and the appointed date of amalgamation was 01.04.2002 i.e. HLCL amalgamated with the assessee-company w.e.f. 01.04.2002 ; after the amalgamation, the assessee-company filed its revised return of income for the year under consideration incorporating the working results of HLCL. Also it is the contentions of the assessee that during the course of assessment proceedings, vide letter dated 30.11.2005, section 80IB claim of ₹ 7,59,59,000/- (same as that claim in original return of HLCL) @ 30% of the profits (this being the 4th year of claim) in respect of erstwhile HLCL was made. Fertilizer price concession from the Government - It is the contentions of the assessee that to support industries, certain portion of price is reimbursed by Central Government in the name of fertilizer concession ; while selling the fertilizer, the assessee-company recovers part cost from farmers and part cost through Government by way of concession; the subsidy is related to the business activity of the assessee as the subsidy claim arises only upon sale of the fertilizer to the farmers ; the subsidy is nothing but a difference between cost of sales and MRP indicated by the Government; it is the subsidy amount which alone permits the manufacturer, like the present assessee to recover is uncovered cost of production including distribution cost and minimal margin allowed; it is only pursuant to the sale of fertilizer to the farmers would the assessee be eligible to receive subsidy; the fertilizer concession received by the assessee is nothing but part of sales proceeds, which cannot be excluded while working out profit u/s 80IB of the Act. Sales tax remission - it is the contentions of the assessee that it sold its products at notified prices and charged sales tax in the invoices ; in the books of accounts, sales tax collected was shown as sales tax incentive and not deposited the Government as per the Industrial Development Policy of the State; sales tax remission/subsidy is arising only on account of sales from fertilizers to the farmers, which clearly indicates that the sales tax remission has direct nexus with the activities of the industrial undertaking Having examined the materials available on record, we find that the AO has not examined in proper perspective the above contentions of the assessee. As the above contentions have a direct bearing on the above ground of appeal, we set aside the order of the Ld. CIT(A) on the above issue and restore the matter to the file of the AO to pass an order afresh. 2021 (2) TMI 850 Reopening of assessment u/s 147 - A.O. received information from Investigation Wing - whether incorrect, wrong and non-existing reasons are recorded by the A.O. for reopening of the assessment? - HELD THAT:- Section 147(b) does not exist in the Statute for the assessment year under appeal i.e., 2010-2011. It is also a fact that assessee did not maintain any such Bank Account with Mahamegha Urban Cooperative Bank, Ghaziabad. It is also a fact that no amount of ₹ 1.37 crores alleged to have been escaped assessment belonging to the assessee. The A.O, therefore, recorded wrong, incorrect and non-existing reasons in the reasons for reopening of the assessment. Thus, the reopening of the assessment have been done without application of mind and liable to be quashed. Same view have been taken by ITAT, Delhi E-Bench, Delhi in the case of Shri Natarajan Monie, Gurgaon vs., ITO, Ward-2(5) [ 2020 (12) TMI 345 - ITAT DELHI] after following several decisions of different High Courts and quashed the reopening of the assessment in the matter. - Decided in favour of assessee. 2021 (2) TMI 860 Exemption u/s 10(23BBA) - Exemption from income-tax in the case of statutory bodies or authorities for the administration of public religious or charitable trusts or endowments, etc. - whether the petitioner Devasthanams fall within the structure of Section 10(23BBA)? - devasthanams had made cash deposits - non filing of return of income - HELD THAT:- The Sri Vaithiyanathaswamy Devasthanam was under the supervision and administration of the British till, in 1842, its management was handed over to the Pandarasannadhi of Dharmapuram Adheenam, who has been managing the same since then, through a Kattalai Thambiran. The handing over is pursuant to the enactment of the Religious Endowments Act, 1863. The scheme sets out a framework for governance and administration of the assets and receipts of the devasthanam and constituent temples by the Pandarasannadhi, who was named as trustee. Suffice it to say that the Supreme Court set aside the appointment of the Executive Officer confirming the scheme as framed originally. Thus, the temples, endowments and charities comprising the Vaithiyanathaswamy or Velur Devasthanam continue to be administered and managed till date by a Kattalai Thambiran appointed periodically by the Pandarasannathi in his capacity as trustee under a scheme of administration framed in a scheme suit filed under Section 92 of the Civil Procedure Code 1908 in line with the provisions of the Madras Hindu Religious Charitable Endowment Act, 1951 ( 1951 Act ) and its precursor enactments, in the year 1919. In light of the above facts, the requirements of Section 10(23BBA) appear to be satisfied in this case (i) the body or authority being the Devasthanam, (ii) the required enactments being the Civil Procedure Code 1909 (Central) and the Madras Hindu Religious Charitable Endowment Act, 1951 (State) and precursor State enactments (iii) the devasthanam holding within its fold several constituent temples as detailed in paragraph 2 of this order. The argument of the Sri Amirthakadeswaraswamy Devasthanam to the effect that it should be deemed to have been constituted under the 1863 Central Act is, in my view, not liable to be accepted as the link is too circuitous and indirect. While one could take a purposive view on the meaning of established, constituted or appointed in Section 10(23BBA), the object and spirit of the provision is to bifurcate the managerial entity from the temple/religious establishment that it manages, in order that the roles, functions and two income-generating apparatus, are clearly demarcated. This is not possible in the absence of a scheme as there is no clarity on the bifurcation of assets or functions. The intention of the exemption under Section 10(23BBA) is to benefit only those entities whose role is managerial or administrative and not commercial, engaged with the purpose of income generation. In the case of the Sri Vaithyanathaswamy devasthanamhe role of the Pandara Sannidhi is as a trustee, and that of the Kattalai Thambiran is as a Manager. All incomes earned by the constituent temples vest in the respective deities. Thus, the apparent division of roles enables the grant of exemption to the managerial entity leaving the constituent temples to bear the brunt of taxation, subject to any claim for exemption that may be made by the latter, to be considered in accordance with law. This enabling feature is absent in the case of the Sri Amithakadeswaraswamy devasthanam and for this reason, we reject its arguments. As regards the argument of the revenue to the effect that body or authority referred to in Section 10 (23BBA) would be the HR CE Board, this argument is misconceived as the Hindu Religious and Charitable Endowments Department constitutes an arm of the State Government which is, in any event, not liable to tax. The reference in Section 10 (23BBA) to body or authority cannot thus be the HR CE Department but an independent authority constituted under a Central, State or Provincial Act. The argument that the Central Wakf Board is equitable to the HR CE department is rejected. Petition relating to Vaithyanathaswamy Devasthanam is allowed, but it is made clear that the individual constituent temples, endowments and charities are liable to tax in the light of the proviso to Section 10(23BBA). It is open to the income tax authorities to proceed accordingly qua the constituents of the devasthanam, in accordance with law. Petition relating to Sri Amirthakadeswarasamy Devasthanam is dismissed. 2021 (2) TMI 854 Deduction under 80P(2)(a)(i) - assessee is a cooperative society providing credit facilities to its members - HELD THAT:- Since the Hon ble Supreme Court has settled many issues in the decision rendered by it in the case of Mavilayi Service Co-operative Bank Ltd.[ 2021 (1) TMI 488 - SUPREME COURT] and since the facts prevailing in the instant case needs to be examined afresh in the light of the principles enunciated by Hon ble Supreme Court in the above said case, we are of the view that the issue of deduction u/s 80P(2)(a)(i) of the Act requires fresh examination at the end of the A.O. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue in both the years under consideration and restore them to the file of the A.O. in both the years for examining it afresh as discussed above. Deduction claimed u/s 80P(2)(d) in respect of interest income earned from fixed deposits kept with bank - AO assessed the interest income received on bank deposits under the head Income from other sources and denied deduction claimed u/s 80P(2)(d) - HELD THAT:- Tribunal was not right in coming to the conclusion that the interest earned by the appellant is an income from other sources without allowing deduction in respect of proportionate cost, administrative expenses incurred in respect of such deposits. Accordingly, the Ld. A.R. prayed that the A.O. may be directed to allow deduction of proportionate cost, administrative and other expenses, if the A.O. proposes to assess the interest income earned from bank deposits as income under the head other sources . We find merit in the prayer of the assessee, since it is supported by the decision rendered by Hon ble High Court of Karnataka in the case of Totgars Co-operative Sale Society Ltd. Vs. ITO [ 2015 (4) TMI 829 - KARNATAKA HIGH COURT] . Accordingly, we direct the A.O. to allow deduction of proportionate cost, administrative and other expenses, if the A.O. proposes to assess the interest income earned from bank deposits as income under the head other sources . Disallowance of provision for bad debts and provision for centenary fund - Admission of additional evidence - HELD THAT:- We notice that the A.O. had made the above said disallowances in assessment year 2015-16, but the assessee had omitted to challenge the above said additions before Ld. CIT(A). Hence the assessee has raised the above said issues before us by way of additional grounds. We are of the view that both the above said issues require fresh consideration at the end of the A.O., since the main issues have been restored to the file of the A.O. and the decision taken on them may have impact on the above said two additions. Accordingly, we restore both the above said issues to the file of the A.O. for examining them afresh. 2021 (2) TMI 825 Disallowance of the interest expenditure u/s 43B(d)/(e) r.w Explanation 3D - HELD THAT:- Any sum inter alia payable by the assessee on any loan or advances from a scheduled bank in accordance with the terms and conditions of the agreement governing such loan or advances shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in Sec. 28 of that previous year in which such sum is actually paid by him. As per the Explanation 3D it has been clarified that a deduction of any sum, inter alia being interest payable on any loan or advance from a scheduled bank shall be allowed if such interest has been actually paid and any interest which had been converted into a loan or advance shall not be deemed to have been actually paid. In our considered view, the controversy in hand had emerged from the different manner in which Sec. 43B(d)/(e) r.w Explanation 3D had been construed by the assessee and the revenue. As observed by the A.O, as the interest debited/charged by the bank got converted into further liability wherein the existing debit balance would be further increased in the overdraft account thus, any payment of an amount towards interest would partake the character as that of repayment of the existing amount of the principal loan and not the interest claimed by the assessee. We find that the aforesaid issue had been looked into by the Hon ble High Court of Madras in CIT Vs. Prakash Food Feed Mills Pvt. Ltd. [ 2014 (11) TMI 1232 - MADRAS HIGH COURT] .wherein not finding favour with the view taken by the A.O had observed, that as the interest amount paid by the assessee through overdraft/cash credit account was not similar to loan accounts, thus, the Explanation 3C or Explanation 3D to Sec. 43B would not be applicable insofar the interest amount had been actually paid by the assessee through overdraft/cash credit account and the same has not been converted into loan or advance, as the case may be. Backed by its aforesaid observation the Hon ble High Court had dismissed the appeal of the revenue. We find that following the aforesaid judgment of the Hon ble High Court of Madras, a coordinate bench of the Tribunal i.e ITAT, Bench I , Mumbai in the assessee s own case for A.Y: 2011-12 [ 2016 (12) TMI 1839 - ITAT MUMBAI] had vacated a similar disallowance of interest paid by the assessee on its overdraft/cash credit account under Sec. 43B(d)/(e) r.w Explanation 3D to Sec. 43B - Decided against revenue. 2021 (2) TMI 858 Assessment against non-existent company - amalgamating company, assessee in this case, has ceased to exist by virtue of the approved scheme of amalgamation - HELD THAT:- When the amalgamating company, assessee in this case, has ceased to exist by virtue of the approved scheme of amalgamation w.e.f. 31.03.2010 by the order passed by the Hon ble Delhi High Court, AO was not within his jurisdiction to frame the assessment in the name of non-existent company, consequently assessment orders dated 27.03.2015, 30.03.2015 30.03.2015 for Assessment Years 2008-09, 2009-10 2010-11 respectively are liable to be quashed being not sustainable in the eyes of law, hence finding no illegality or perversity in the impugned orders passed by the ld. CIT (A) in the aforesaid appeals quashing the assessment orders passed by the AO, present appeals filed by the Revenue are hereby dismissed. 2021 (2) TMI 845 Penalty u/s 271D - assessee was contravening the provisions of section 269SS - Accepting cash deposits exceeding permisible limit - Scope of 'reasonable cause' - Bona-fide belief of the assessee - HELD THAT:- In the present case, the assessee being the co-operative bank has accepted deposits in cash exceeding ₹ 20,000/- from its members which was prohibited under the provisions of section 269SS of the Act. The assessee did not dispute the applicability of the provisions of section 269AA but contended that the mistake was committed under the bona-fide belief and thus, sought the immunity under the provisions of section 273B of the Act. Provisions of section 273B of the Act prescribes that penalty shall not be imposable for any failure referred to in Sec.271D of the Act, if the assessee proves that there was reasonable cause for such failure. Therefore, in the instant case, what is required to be examined is as to whether the assessee had a reasonable cause for its failure to comply with the provisions of Sec. 269SS r.w.s. 271D of the Act. Admittedly, it was first mistake committed by the assessee in the year under consideration as evident from the affidavit filed by it. Further, the Revenue in the assessment framed under section 143(3) of the Act for the assessment year 2008-09 has not pointed out to the assessee for the contravention of the provisions of section 269SS of the Act. All these contentions of the assessee have not been controverted by the authorities below. Accordingly, we can draw an inference that the assessee has accepted the cash as deposits exceeding ₹ 20,000/- under the bona-fide belief. Bona-fide belief of the assessee that the transactions were exempted from the requirements of Sec.269SS of the Act and, there being no material to show that the transactions have been carried out with any intention to avoid or evade taxes, in our opinion, the assessee has been successful in showing that there was a reasonable cause for his failure to comply with the provisions of Sec.269SS of the Act. Accordingly, the order of the learned CIT(A) is set aside and the AO is directed to delete the penalty imposed under Sec. 271D - Decided in favour of assessee. 2021 (2) TMI 863 Recovery proceedings - Short payment of TDS - It is the case of the writ applicant that, in spite of the fact that, the writ applicant has not received any order under Sections 201(1)/201(1A) of the Act, 1961, the recovery notices are still being issued by the Assessing Officer for the recovery of the short payment - HELD THAT:- It appears that, although the stance of the respondent herein is that the outstanding demand in subject is under the verification and the correction/deletion of the outstanding demand is under the process at the level of CPC, Ghaziabad (U.P). The Commissioner of Income Tax (CPC), Ghaziabad (U.P) is not before us as one of the party respondents. However, as the controversy is in narrow compass, we dispose of this writ application with a request to the Commissioner of Income Tax (CPC), Ghaziabad (U.P) to effect the necessary correction/deletion of the outstanding demand shown online within a period of four weeks from the date of receipt of this order. Registry shall forward one copy of this order to the Commissioner of Income Tax (CPC), Aaykar Bhavan, Sector-3, Vaishali, Ghaziabad, Uttar Pradesh. 2021 (2) TMI 857 Disallowance of depreciation on intangible assets - Depreciation on Goodwill - depreciation on Customer Relationship (CR) Vendor Relationship (VR) considering them to fall under Any other business or commercial rights of similar nature - treatment as asset under Explanation 3(b) to Section 32(1) - HELD THAT:- We notice that an identical issue has been considered in the assessee's own case by the coordinate bench in AY 2011-12 [ 2019 (7) TMI 25 - ITAT BANGALORE] a reading the words 'any other business or commercial rights of similar nature' in clause (b) of Explanation 3 indicates that goodwill would fall under the expression 'any other business or commercial right of a similar nature'. The principle of ejusdem generis would strictly apply while interpreting the said expression which finds place in Explanation 3(b). 'Goodwill' is an asset under Explanation 3(b) to Section 32(1) - Decided against revenue. TPA - question of bench marking the AMP expenses - Whether Residual profit split method is not appropriate method to bench mark AMP transactions? - HELD THAT:- The question of bench marking the AMP expenses has been examined and decided by Hon Tale Delhi High Court in the case of Sony Ericsson [ 2015 (3) TMI 580 - DELHI HIGH COURT] and Maruti Suzuki Ltd. [ 2015 (12) TMI 634 - DELHI HIGH COURT] . The bright line test adopted by the TPO has been specifically rejected in the case of Sony Ericsson (supra). The Hon'ble Delhi High Court has held in the case of Maruti Suzuki Ltd. (supra) that the revenue needs to establish the existence of international transaction before undertaking benchmarking of AMP expenses. Hence, the approach of the TPO cannot be upheld. Since the TPO has combined Royalty payments also along with AMP expenses while making Transfer pricing adjustments by adopting Residual Profit Split Method, since the existence of international transactions in AMP expenses is required to be shown separately, we are of the view that this issue requires fresh examination at the end of AO/TPO. Accordingly, we set aside the order passed by the AO on AMP expenses and restore the same to the file of AO/TPO for examining it afresh. After affording adequate opportunity of being heard, the AO/TPO may take appropriate decision in accordance with law. Appeal of the assessee is treated as allowed. 2021 (2) TMI 856 Deduction u/s. 10B - Deduction after set off of income/loss from other units/heads of income OR allowing the said deduction on standalone basis - whether the Revenue is right in law in holding that assessee is not entitled to the benefit of deduction given by the Act under S. 10A/10B as amended with retrospective effect by the Finance Act, 2003 with effect from 01.04.2001 qua individual eligible undertaking? - HELD THAT:- We find that identical issue arose before Hon'ble Supreme Court in the case of Yokogawa India Ltd. [ 2016 (12) TMI 881 - SUPREME COURT] as held though s. 10A/10B were amended by FA 2000 w.e.f. 01.04.2001 to change their tenor from exemption to deduction , the deduction contemplated is S. 10A/S. 10B qua the eligible undertaking of an assessee standing on its own and without reference to the other eligible or non-eligible units or undertakings of the assessee. The benefit of deduction is given by the Act to the individual undertaking. The deduction of the profits and gains of the business of an eligible undertaking has to be made independently and before giving effect to the provisions for set off and carry forward contained in s. 70, 72 and 74. It was further held by the Hon'ble Supreme Court that the deductions u/s. 10A/10B are prior to the commencement of the exercise to be undertaken under Chapter VI of the Act for arriving at the total income of the assessee from the gross total income. While examining the issue, the Hon'ble Supreme Court has also considered the provisions of Section 10A of the Act (pari materia with S. 10B of the Act) as it stood prior to the amendment made by Finance Act, 2000 with effect from 01.04.2001 as well as the amended Section 10A thereafter and also the amendment made by Finance Act, 2003 with retrospective effect from 01.04.2001. Hence, the CBDT Circular being in conflict with the judgment of Hon'ble Supreme Court cannot be taken in reckoning. Governed by the judicial fiat, the stage of deduction would be while computing the gross total income of the eligible undertaking under Chapter IV of the Act and not at the stage of computation of total income under Chapter VI. All consequences under sections 70, 72 and 74 of the act would consequently flow unit wise. In view of the resounding conclusion drawn in favour of the assessee. 2021 (2) TMI 849 Disallowance of Section 80-IB deduction - assessee s case all along appears to be that the alleged eligible unit(s) at Yanam had stopped production during the period from 7th November, 1996 to 21st December, 1996 - factual position is no different in the other years as well as pin-pointed from the departmental side - HELD THAT:- We find in this backdrop that the taxpayer has also sought to place on record a certificate coming from the office of the Superintendent of Customs and Central Excise, Yanam range dt.11-07-2014 regarding its above stated unit(s) having stopped production by way of additional evidence. As argued in favour of the lower authorities findings that this assessee has not co-operated all along from assessment till date. The fact, however, remains that clinching fact has prima-facie emerged as per the excise authorities certificate giving an altogether a new direction to the case . We thus deem it appropriate to restore the assessee s identical solitary substantive grievance raised in all these appeals back to the CIT(A) than the Assessing Officer keeping in mind the relevant assessment year involved herein is 1998- 99 onwards. It is made clear that the assessee or its authorised representative shall appear before the CIT(A) on or before 31st July, 2021 along with all the relevant evidence for necessary factual verification; at its own risk and responsibility, to be followed by three effective opportunities of hearing failing which our instant remand directions shall be deemed to have been vacated. Appeals of assessee are treated as allowed for statistical purposes. 2021 (2) TMI 848 Disallowance u/s 14A r.w.r. 8D - HELD THAT:- As decided in own case [ 2019 (10) TMI 987 - ITAT MUMBAI] if there is no exempt income there cannot be any disallowance. Respectfully following the said decision, we direct the Assessing Officer to delete the disallowance made u/s. 14A of the Act. Ground raised by the assessee is allowed. Upward adjust of interest on Share Application Money to RLSI and RLSBV through which share capital was subscribed - HELD THAT:- As decided in own case [ 2019 (10) TMI 987 - ITAT MUMBAI] revenue has raised grounds on upward adjustment of interest on optionally convertible loan given to its subsidiaries, the coordinate bench in assessee s own case for AY 2009-10 and AY 2010-11 adjudicated in favour of the assessee, when the loan was subsequently converted into share capital, the interest adjustment cannot be made. Hence, These issues are settled in favour of the assessee. Disallowance of weighted deduction u/s 35(2AB) due to short approval in Form 3CL - HELD THAT:- Looking into the provisions of rules, it stipulates the filing of audit report before the prescribed authority by the persons availing the deduction under section 35(2AB) of the Act but the provisions of the Act do not prescribe any methodology of approval to be granted by the prescribed authority vis- -vis expenditure from year to year. The amendment brought in by the IT (Tenth Amendment) Rules w.e.f. 01.07.2016, wherein separate part has been inserted for certifying the amount of expenditure from year to year and the amended form No.3CL thus, lays down the procedure to be followed by the prescribed authority. Prior to the aforesaid amendment in 2016, no such procedure / methodology was prescribed. In the absence of the same, there is no merit in the order of Assessing Officer in curtailing the expenditure and consequent weighted deduction claim under section 35(2AB) on the surmise that prescribed authority has only approved part of expenditure in form No.3CL. We find no merit in the said order of authorities below. Courts have held that for deduction under section 35(2AB) of the Act, first step was the recognition of facility by the prescribed authority and entering an agreement between the facility and the prescribed authority. Once such an agreement has been executed, under which recognition has been given to the facility, then thereafter the role of Assessing Officer is to look into and allow the expenditure incurred on in-house R D facility as weighted deduction under section 35(2AB) - We reverse the order of Assessing Officer in curtailing the deduction claimed under section 35(2AB). 2021 (2) TMI 847 Nature of expenditure - revenue or capital expenditure - amount paid by it to ITC Ltd. at the time of termination of the agreement with ITC Ltd. - second round of litigation before the Tribunal - HELD THAT:- We find merit in the arguments advanced by the ld. Counsel that when there was no addition to the capital asset and no change in the capital structure and there was no asset of any enduring nature involved, but, only an alteration in the mode of earning the money from the hotel, therefore, such compensation paid had arisen out of business necessity and should be allowed as revenue in nature. The assessee, in our opinion, in the instant case, has acquired nothing new of enduring nature as it always held the asset of enduring nature. It was not a case where the assessee was acquiring for the first time something which it did not otherwise own or possess. It was, thus, a change in the method of earning profits from the hotel and not a transfer of any asset. We find merit in the argument of the ld. Counsel that the agreement was terminated on business considerations and as a matter of commercial expediency. The various other decisions relied upon by the ld. Counsel in his synopsis also support his case to the proposition that the payment made to ITC Ltd. is allowable as revenue expenditure u/s 37 of the IT Act. The answer to the question referred to by the Hon ble High Court to the Tribunal is accordingly answered in the affirmative, i.e., in favour of the assessee. 2021 (2) TMI 846 TP Adjustment - comparable selection - HELD THAT:- Exclusion of companies functionally not similar with that of assessee who provides software development services to its parent company and also if as they fail the turnover filter. Working capital adjustment on the average margin at 1.98% - HELD THAT:- Rule 10B(3) of the Income-tax Rules, 1962, supports the said action of the TPO in granting a working capital adjustment M/S. NTT DATA GLOBAL DELIVERY SERVICES LTD. [ 2016 (4) TMI 1221 - ITAT BANGALORE] ,M/S BEARING POINT BUSINESS CONSULTING PRIVATE LTD. [ 2014 (4) TMI 997 - ITAT BANGALORE] AND APIGEE TECHNOLOGIES (INDIA) PVT. LTD. [ 2015 (9) TMI 1547 - ITAT BANGALORE] it has been held that adjustment towards working capital differences between the assessee and the comparables should be considered and appropriate adjustment granted in arriving at the profit margins of comparable companies for the purpose of comparison. 2021 (2) TMI 862 Characterization of receipt - Sales tax subsidy under Industrial Investment Promotion scheme - Revenue or capital subsidy - HELD THAT:- The Purpose of subsidy received by the assessee during the year is towards meeting out the capital investment made to set up the Unit-II project in a backward area and the subsidy so received during the year is capital subsidy. Thus, no interference is called for in the finding of the Ld. CIT(A). See VINDHYA TELELINKS LTD. AND VICE-VERSA [ 2015 (2) TMI 1345 - ITAT JABALPUR] , UNIVERSAL CABLES LTD. AND OTHERS VERSUS DEPUTY COMMISSIONER OF INCOME-TAX AND OTHERS [ 2015 (5) TMI 650 - ITAT KOLKATA] - All grounds raised by the Revenue are dismissed. 2021 (2) TMI 859 Levy of late fees u/s. 234E - delay in filing of TDS statement - scope of section 200A r.w.s 200(3) - main thrust of Ld. A.R. of the assessee is that levy of late fees u/s. 234E cannot be made before 1.6.2015 - HELD THAT:- As decided in TB and ID Hospital vs. ITO [2018 (8) TMI 1550 - ITAT CUTTACK] all matters, the intimation given in purported exercise of power under Section 200A are in respect of fees under Section 234E for the period prior to 1.6.2015. As such, it is on account of the intimation given making demand of the fees in purported exercise of power under Section 200A, the same has necessitated the appellant-original petitioner to challenge the validity of Section 234E of the Act. In view of the reasons recorded when the amendment made under Section 200A of the Act which has come into effect on 1.6.2015 is held to be having prospective effect, no computation of fee for the demand or the intimation for the fee under Section 234E could be made for the TDS deducted for the respective assessment year prior to 1.6.2015. Hence, the demand notices under Section 200A by the respondent authority for intimation for payment of fee under Section 234E can be said as without any authority of law and the same are quashed and set aside to that extent. Decided in favour of assessee. 2021 (2) TMI 834 Lease rentals income - AO held the lease transaction as operating lease and made such an addition on account of capital recovery of the assets to lease income, treating it as on operating lease - CIT-(A) held that lease transaction as finance lease and allowed the appeal of the assessee - HELD THAT:- The issue that arises for our consideration in this appeal is directly and substantially dealt with and decided by a coordinate Bench of this Tribunal in assessee's own case for the assessment year 2010-11 [ 2017 (8) TMI 417 - ITAT DELHI] accepted the lease transaction of the assessee as 'finance lease' transaction and restored the matter to the Assessing Officer for verification of facts of lease charges. - Decided in favour of the assessee. 2021 (2) TMI 833 TP Adjustment in respect of Regional Management Charges - TPO concluded that the assessee has failed to provide documents in support of various services availed and determined the Arm's Length Price (ALP) of Regional Management Services at nil, thereby making adjustment - HELD THAT:- Considering the fact that in the impugned assessment year the services were rendered by AE in pursuance to the same Regional Services Agreement dated 23/11/2010 and there has been no change in the nature of services rendered by AE and method of remuneration, we see no reason to take a different view. Therefore, in the facts of the case and the decisions of Co-ordinate Bench in assessee's own case for assessment year 2011-12 and assessment year 2013-14, the transfer pricing adjustment on account of Regional Management Charges paid to foreign A.E is deleted for parity of reasons. To amplify the services rendered the assessee has filed copies of debit notes supporting Regional Management Charges, cost benefit analysis of Regional Management Charges, reasons for availing intra group services, nature of services availed, basis of charges, etc. The ld. Departmental Representative has not disputed that the nature of expenditure in respect of Regional Management Charges in the impugned assessment year is in any manner different from that in the preceding assessment year.[ 2021 (2) TMI 773 - ITAT MUMBAI] .- Appeal by the assessee is allowed. 2021 (2) TMI 868 Deduction u/s 80IA - rejecting the claim on the ground never urged or argued before the authorities below - Tribunal stated that the Appellant has not carried on operation and maintenance activities? - Revenue was largely aggrieved on account of non-fulfillment of the mandate under Rule 12(2) of the amended Income Tax Rules - HELD THAT:- There are long line of decisions which hold that a substantive right cannot be denied or taken away by virtue of a rule which is only a machinery provision. In any event, the benefit granted under Section 80IA is a special benefit bearing in mind that industrial undertakings would undertake infrastructural projects. In the case on hand, the claim made by the assessee was under Section 80IA(4), by executing a project with the Government of India Organization. Therefore, we are of the view that the CIT(A) was right in rejecting such a plea raised by the Revenue. Tribunal did not go into the question as to the effect of the mandate under Rule 12(2), but proceeded to hold that the assessee Company has not derived any profits from the activities of developing or operating and maintaining any infrastructure facilities. There are absolutely no examination of the factual position in the case on hand. The Tribunal did not go through the Concession Agreement based on which the assessee Company had been granted the development work. Section 80IA(4) would apply to any enterprise carrying on business of (i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any infrastructure facility which fulfills all the conditions, which are set out in clause (a), (b) and (c), to be read along with the provisos thereunder. The important aspect to be taken note of is the use of the expression 'or'. Therefore, an enterprise, carrying on the business of developing or operating and maintaining or developing, operating and maintaining any infrastructure facility, which fulfills the conditions set out under Sub-section 4, will be entitled to claim deduction. Therefore, the Tribunal, failed to make any endeavour as to whether the assessee was entitled to claim deduction under any one of the these heads, made a sweeping observation that the assessee has not derived any profits from the activities of developing or operating and maintaining any infrastructure facilities. Scope of the Concession Agreement as set out in Article 12 of the Concession Agreement would be very relevant, more particularly Clause 12.2, which mandates that the assessee shall maintain, at its cost, the existing lanes of the project. Therefore, to state that the existing four lanes would not fall within any one of the clauses under Sub-section 4 of 80IA is factually incorrect, as the assessee develops the fifth and sixth lane and would also operate and maintain the same and so far as the existing lanes, namely 1 to 4, in terms of the Concession Agreement, the assessee has to operate and maintain the same, so that the traffic worthiness and safety are at no time materially inferior as compared to its existing condition prior to the execution of the agreement. Therefore, we are of the clear view that the finding rendered by the Tribunal is utterly perverse and calls for interference. - Decided in favour of assessee. 2021 (2) TMI 861 Exemption under Section 10(22) - whether the Assessee who is entitled to exemption under Section 10(22) can claim the benefit thereof for the purpose of income deemed to be chargeable to tax under Section 68? - HC held se of the word 'income' in sub-section (22) of Section 10 of the Act is wide enough to include deemed income under Section 68 of the Act - HELD THAT:- Civil appeal is dismissed on the ground of low tax effect. Question of law is kept open. 2021 (2) TMI 865 TDS u/s 194A - deposits of HIMURJA - tds liability - HELD THAT:- We find that the said claim of the Revenue cannot be allowed because the alternate prayer of the assessee relying upon the decision rendered by the Apex Court in the case of Hindustan Coca Cola Beverages P. Ltd. [ 2007 (8) TMI 12 - SUPREME COURT ] was in the context where the assessee could demonstrate that the deductees had paid tax thereon which evidences were required to be demonstrated and in some cases were available, however in the facts of the present case the foundational fact itself is to be established namely whether in the case of HIMURJA was there any legal mandate on facts in terms of the aforesaid notification in pursuance to Section 194A(3) (iii) (f) of the Act to deduct TDS. Once the foundational fact is established, the consequences as per law and facts shall follow. Accordingly, accepting the prayer of the parties before the Bench, the issues are restored back to the file of the AO with direction to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. The assessee in its own interests is directed to ensure that full facts with supporting evidences are placed before the said authority to take a view. Appeal of assessee allowed for statistical purposes. 2021 (2) TMI 867 Disallowance of depreciation and additional depreciation claimed - Plant Machinery or Furniture and fixtures - Application of functional test for determining what constitutes plant - HELD THAT:- As decided in assessee's own case AY 2013-14 certain items of assets are in the nature of Plant and machinery. It is the claim of the assessee that other items are also used as part of Plant and Machinery. Hence, we are of the view that this issue requires fresh examination at the end of the AO in accordance with the decision rendered by the Hon'ble Karnataka High Court in the case of Hindustan Aeronautics Ltd [ 1992 (8) TMI 13 - KARNATAKA HIGH COURT] . Accordingly, we restore this issue to the file of the AO for examining the same afresh. Disallowance made out of Sales Promotion expenses - assessee had incurred expenses on giving of gifts/product information items to Ayurvedic doctors and general chemists - AO noticed that the gifts so given by the assessee consisted of product literature, medical test apparatus apart from small gifts with brand names embossed like wallet, flask, pen stand, note pads etc. - AO disallowed 20% of the amount spent on gifts given to doctors HELD THAT:- Identical orders of revenue authorities were considered and decided by the Tribunal in assessee s own case for AY 2013-14 income tax officer cannot sit on the arms chair of a business man and could decide the quantum of expenses. So long as it is seen that the expenses have been incurred for business purposes on commercial considerations, the same is allowable as deduction - . When the AO is accepting 80% of the expenditure, we do not find any justification for disallowing the remaining 20%. Hence, we are unable to sustain the estimated disallowance made by the AO. Transfer pricing adjustment relating to sale/export of goods to associated enterprises - assessee selected Transaction Net Margin Method (TNMM) as most appropriate method - validity of reference made to TPO u/s 92CA - action of TPO in treating the foreign companies as Associated Enterprises of the assessee - HELD THAT:- Both the parties agreed that the issue relating to validity of reference made to TPO has been decided against the assessee by the co-ordinate bench in assessee s own case [ 2018 (7) TMI 1964 - ITAT BANGALORE] . Also The issue relating to AE relationship raised in Gr.No.8.6 8.7 was declined to be examined by the co-ordinate bench in the above said year and it appears that the assessee has not objected to the same. Adoption of Cost Plus Method as most appropriate method by the TPO - In assessee s own case [ 2018 (7) TMI 1964 - ITAT BANGALORE] .TPO while adopting CPM has failed to appreciate several material aspects of the issue as discussed above. In our view, the learned TPO was not justified in comparing the gross margin in export segment vis-a-vis gross margins in domestic segment. There are various differences in the functions performed and the risk assumed in these two segments and therefore, the same cannot be considered as comparable cases for determining the ALP. There is no marketing risk in the export segment, no risk of bad debts, no product liability risk in export segments whereas the assessee has to bear all these risks in the domestic segment. The contractual statements also defer in the domestic segment vis-a-vis export segments. There are different characteristics and contractual terms in the two segments and further geographical and marked differences are also present. Thus, we are of the view that it is very difficult to make suitable adjustments for these differences, hence the CMA method is not appropriate method for determining the ALP. Thus in the case on hand reasonably accurate adjustments cannot be made to determine the adjusted profit mark up as per Rule 10B(1)(c), CPM cannot be considered as the MAM. TP Adjustment - As the assessee has declared net profit margin rate @ 1.19% for Domestic Personal care division and @ 12.60% for Exports to AE division . Admittedly, the net profit margin rate of Exports to AEs division is more than the uncontrolled comparable selected by the assessee/TPO. Hence price charged for export of finished goods to AEs is at arms length. In AY 2010-11 also, the coordinate bench has given a finding that the price charged for export of finished goods to AEs is at arms length, since the net profit margin rate was higher in that division vis- -vis the Domestic Personal care division. Accordingly, the co-ordinate bench held that the TP adjustment made in this regard is liable to be deleted. The facts available in this year also are identical and accordingly we hold that the T.P adjustment made by the AO in respect of international transaction of Export to AEs is liable to be deleted. Accordingly we direct the AO to delete the same. Transfer pricing adjustment made in respect of Advertisement and Marketing Promotion (AMP) expenses - HELD THAT:- As decided in assessee's own case [ 2018 (7) TMI 1964 - ITAT BANGALORE] AMP transaction is not an international transaction in the absence of specific agreement between assessee and its AE on the matter of incurring of AMP expenses and hence there was no requirement for determining the ALP of the said expenses. Transfer Pricing adjustment relating to royalty - TPO noticed that the assessee is having a Research Development unit in India and accordingly developing all its products - HELD THAT:- The product registration/licensing are requirement of statute, without which the said products could not be marketed in those countries. As noticed earlier, such kinds of product registration/license could be obtained by the manufacturer only, in normal circumstances. The traders should have obtained separate license for trading in the drugs/beauty items. Hence, it cannot be said that the traders have exploited the registration/license obtained by the suppliers under the various statutes. Further, the manufacturers and other suppliers of the products sell them at profit and the practice or presumption is that the supplier has determined the selling price by taking into account all relevant costs. Assessee would have collected royalty amount for finished goods exported to unrelated parties. However, the Ld A.R pointed out that the assessee has not collected any amount over and above the selling price either from domestic customers or from non-AEs. Hence, the basic premise of the TPO, which formed the basis for determining ALP of alleged royalty fails here. Accordingly, we are of the view that, in the facts and circumstances of the case, it cannot be taken that the AEs have exploited the product registration/license obtained by the assessee from various Governments. Hence the question of payment of royalty does not arise. Thus we delete the addition made by the AO. 2021 (2) TMI 866 Penalty u/s. 271(1)(c) - concealment of income - Defective notice - non specification of charge - income which was disclosed by assessee only on the basis of seized material and shown in return filed in response to notice u/s. 153A - HELD THAT:- On perusal of the above show cause notice it is evident that the Ld. A.O. has mentioned both the charges as provided in Section 271(1)(c) of the Act. Ld. A.O. has not striked off one of the charge not applicable on the assessee. In the assessment order framed on 30.11.2017 Ld. A.O. initiated the penalty proceedings against the assessee for concealment of income. However in the penalty notice both the charges are mentioned. Under these given facts where specific charges have not levelled against the assessee in the notice issued u/s. 274 of the Act, we in view of settled judicial principles as well as following the judgment of Hon'ble Jurisdictional High Court in the case of PCIT V/s. Kulwant Bhatia 2018 (5) TMI 960 - MADHYA PRADESH HIGH COURT ] are treating such type of notices as bad in law since they are not meeting the specific requirement of law. AO. was not justified in levying the penalty for the alleged concealment of income even when the income was duly disclosed in the original return of income, no incriminating material was found during search u/s. 132 of the Act relating to this transaction of sale of equity shares and assessee suo moto offered it to tax under other head of income. Thus the finding of Ld. CIT(A) deleting the penalty u/s. 271(1)(c) of the Act needs no interference - Decided in favour of assessee. 2021 (2) TMI 864 Offence punishable u/s 276(C)(1) and 276CC - petitioner has failed to submit the return for the assessment year 2013-14 - HELD THAT:- On perusal of the returns filed by the petitioner that the total tax with interest payable by the petitioner. Total tax amount paid by the petitioner including advance tax TDS, TCS and also self assessment tax. Therefore, the petitioner has also claimed refund of the income tax - Further, the Principal Commissioner of Income Tax, Madurai, accorded sanction by order, dated 29-7-2016, to prosecute the petitioner for the offence punishable under section 276CC of the Income-tax Act. Whereas on perusal of the complaint, the respondent has lodged a complaint for the offence punishable under sections 276(C)(i) and 276CC of the Income-tax Act. Even according to the defacto complainant, the petitioner has failed to file the Income-tax return for the assessment year 2013-14 within time. Therefore, he can be prosecuted for the offence under section 276CC of the Income-tax Act. Whereas Section 276(C)(i) related to if a person wilfully attempts in any manner whatsoever to evade any tax, penalty or interest chargeable or imposable. Admittedly, the petitioner has failed to pay the tax in time and subsequently, he has filed Income-tax return on 29-3-2016. Therefore, the respondent without application of mind mechanically filed a complaint that too without any allegation for the offence punishable under section 276(C)(i) of the Income-tax Act. Section 276CC proviso (ii)(b) provides that a person shall not be proceeded against under this section for failure to furnish in due time the return of fringe benefits under Sub Section (i) of 115 WD or return of income under section 139(1) if the tax payable by him and the total income determined on regular assessment does not exceed ₹ 3,000/- as reduced by advance tax paid and any tax deducted at source. On perusal of the return filed by the assessment year 2013-14 revealed that the tax payable by the petitioner is nil and he also claimed for refund of the tax after adjusting the other payment made under as advance TDS, TCS and self assessment tax and claimed a sum of ₹ 1,070/-. Therefore, the entire complaint is nothing but clear abuse of process of law and it cannot be sustained as against the petitioner. Customs 2021 (2) TMI 852 Seeking a direction to the respondents to allow the petitioner to have an advocate in the event of interrogation of the petitioner at a visible but not audible distance - seeking permission for videography of the proceedings pertaining to interrogation of the petitioner - HELD THAT:- On the prayer made by the petitioner, it is stated that customs department has no objection to permit presence of advocate at visible but not audible distance and to allow videography of the proceeding at the cost of the petitioner - In view of the statement made by the Principal Commissioner of Customs, the apprehension and grievance expressed by the petitioner has been redressed. It is directed that in the event of petitioner being subjected to interrogation by the respondents, he shall be allowed to have an advocate at a visible but not audible distance and the process of interrogation shall be videographed at the cost of the petitioner - petition disposed off. 2021 (2) TMI 841 Condonation of delay in filing this Anti-Dumping Appeal - no reliefs have been claimed for setting aside the Customs Notification dated September 12, 2017 issued by the Central Government or the final findings dated August 1, 2017 issued by the Designated Authority - section 9C of Customs Tariff Act - HELD THAT:- The appellant, for no justifiable reason, did not challenge the Customs Notification dated September 12, 2017 within the time stipulated in section 9C of the Tariff Act nor did the appellant take immediate steps for implementation for the first corrigendum issued by the Designated Authority on December 19, 2017. This does not reflect the normal behaviour of a person having all the resources to take recourse to legal proceedings. In fact, Euro Chem group, which is the parent group of the appellant, in beginning of 2018 had threatened going to Court for elimination of the anti-dumping duty, but still for a long period of two years, the appellant kept quiet. The appellant has been thoroughly negligent and there is no good reason as to why the delay should be condoned on the mere asking the appellant. It needs to be noted that even after having been informed by the Designated Authority that the representation filed on behalf of the appellant for specifying Nil rate of duty could be accepted for the reason that the final findings had dealt with the issue, the appellant repeatedly filed representations. These representations were for the same relief which had been denied to the appellant by the Designated Authority and, therefore, the said explanation offered for the delay cannot be accepted. The appellant concealed material relevant facts from the Tribunal since the appellant has not stated that four Anti-Dumping Appeals had been filed to assail the Customs Notification. The appellant was impleaded as a respondent and these appeals had been dismissed by the Tribunal and the Special Leave to Appeal filed before the Supreme Court was also dismissed. The facts stated leave no manner of doubt that the appellant has not been able to satisfy the Tribunal that the appellant was prevented by sufficient cause from filing the appeal in time - The Delay Condonation Application, therefore, deserves to be rejected and is rejected - COD Application dismissed. 2021 (2) TMI 842 Applicability of time limitation on demand of Customs Duty - invocation of extended period of limitation when there is no suppression of facts - Jurisdiction to levy of penalty u/s 112 of CA - invocation of section 112 for the first time - HELD THAT:- The demand of duty for violating the post importation condition of an exemption notification is not confined to any period of limitation and hence there is no relevancy in the argument of the Appellants that they did not suppress any material facts. Just because the Tribunal has wrongly interpreted the order passed in the BOMBAY HOSPITAL TRUST VERSUS COMMISSIONER OF CUSTOMS, SAHAR, MUMBAI [ 2005 (10) TMI 112 - CESTAT, MUMBAI] Case or the Revenue was indifferent to such wrong interpretation and the resultant effect, this Court can not make an unnecessary exercise by analyzing the fact whether or not there was or any suppression of facts in the context of Sec. 28(4). Sec.28(4) refers only about those cases for which limitation is applicable but because of certain aggravating circumstances like suppression of facts, the limitation gets extended to 5 years - Even if the point on suppression of fact is analysed for the sake of completion, the records would show that the First Appellant had sold the Mulberry Raw Silk imported on Exemption Certificate, in the local market through the second and third appellants. After Inspection the First Appellant remitted ₹ 17,00,000/- under challan dated 03.02.1999 and 17.02.1999 towards the appropriation of the duty liability. Knowing fully well about the export obligations on Exemption Certificate and having violated it , the First Appellant had sold them in the local market through the Appellants 2 and 3. The mere delay on the part of the Authorities to detect the violation of export obligation and issue show cause can not be construed as a permissive violation - The Suppression of Facts and materials is very much visible from the conduct and the pattern in which the Appellants caused the disappearance of the raw materials. Had the Tribunal rightly interpreted the the dictum laid down in Bombay Hospital Trust case on the point of limitation for cases falling under post import obligations, it would not have occasioned the Appellants to make a claim on the point of limitation by referring to sec. 28(4) of the Act. Hence the claim of the Appellants on the point of limitation does not deserve merit. Imposition of the penalty under Section 112 against the first Appellant has never been contemplated in the show cause notice and that it has been ordered for the first time by the Tribunal - HELD THAT:- The First Appellant imported the Mulberry Raw Silk on Exemption Certificate under DEEC Scheme, since the exemption of customs duty given vide the notification Nos. 203/1992 and 204/1992. The post import condition as prescribed in the above documents was not complied by the first appellant - During the inspection also the unused raw materials were not found to be available for confiscation. If the post import conditions of Exemption Certificate are not complied, the character of the goods which have been imported duty free revert back to goods duty bound prohibited goods and hence they are liable to be confiscated. The penalty for importation of goods by breaching the conditions prescribed under Section 112. The various clauses of Section 112 set out the method in which the penality should be quantified. In the show cause notice dated 10.03.1993 issued to the Appellants, in para 17 it has been mentioned that the Fourth Appellant failed to utilize the raw materials as per the terms of the conditions of the Advance Licence and the Customs Notification and he has disposed off the said raw materials through Appellants 2 and 3 in contravention of the provisions of the said notifications and hence he is liable to be imposed with penalty under Section 112(a)(ii) of the Customs Act 1962. Since both sec.114-A and the amendment to sec.112(b)(ii) were in not in force during the relevant period, the order of the Tribunal modifying the penality by using the discretion vested under sec.112 (prior to amendment) is correct only. In fact the modification has put the Appellants in a more advantageous situation and it was not prejudicial to their interest. The Appellants did not suffer any new penality other than the one mentioned in the show cause despite a right provision which was in force at the relevant point of time was employed by the Tribunal. The process for imposing penality under sec. 112 has been initiated (though a more stringent provision is mentioned in the concluding portion of the show cause) from the time when show cause was issued and the Appellants have also been given with the opportunity to defend themselves - Hence the Appellant cannot claim that the order of the Tribunal which modified and reduced the penality under sec. 112 is altogether a new one or that they were not given with any opportunity of hearing. Appeal dismissed - decided against appellant. 2021 (2) TMI 830 Smuggling - prosecution has mixed all the packets and thereafter, sent to FSL for examination - offences under Sections 8/22/23/29 of Narcotic Drugs and Psychotropic Substances Act, 1985 - HELD THAT:- In Basant Rai [ 2012 (7) TMI 1115 - DELHI HIGH COURT] , while dealing with a case where accused was found carrying a polythene bag containing 8 similar polythene bags having brown colour substance and Investigating Officer took small pieces of charas from each packet, mixed the same and drew two sample parcels which were sent to FSL for analysis and it was held that if the 08 packets were allegedly recovered from the appellant and only two packets were having contraband substance and rest 6 packets did not have any contraband; though all may be of the same colour, when we mix the substances of all 8 packets into one or two; then definitely, the result would be of the total quantity and not of the two pieces. Therefore, the process adopted by the prosecution creates suspicion. In such a situation, as per settled law, the benefit thereof should go in favour of the accused. The fact of the present case is that prosecution has mixed all the packets and thereafter, sent to FSL for examination, which is contrary to the procedure prescribed under the law - This Court is informed that the petitioner is a Somalian National resident and his Refugee Certificate issued by UNHCR (United nation High Commissioner for refugees) was valid till 20/12/2019. Hence, he has a valid document to stay in India at the time of his arrest. He is in judicial custody since 04.02.2019. No doubt the recovered substance in the present case is of commercial quantity, however, the procedure prescribed is contrary to the dictum of this Court. This court is informed by learned counsel for the petitioner that petitioner is not a habitual offender and is not likely to get involved in any other case during bail. Thus, petitioner has qualified twin conditions of Section 37 of NDPS Act. The petitioner deserves bail - petitioner is directed to be released on bail forthwith on his furnishing personal bond in the sum of ₹ 25,000/- with one surety in the like amount, to the satisfaction of the Trial Court - petition allowed. 2021 (2) TMI 826 Provisional release of seized goods - imported old and used digital multifunction print, copying and scanning machines of A3 size - Section 110 A of Customs Act. Interim release of goods - HELD THAT:- The Bench has stated that in such circumstances, it would not be appropriate to take a different view only in the case of some assesses while others have obtained the benefit of release. The present petitioners are also equally entitled to the benefit of release of goods, as sought. Whether the condition imposed by MeitY is mandatory and whether non-compliance of the same would lead to confiscation? - HELD THAT:- The question as to whether the condition imposed by MeitY is mandatory and whether non-compliance of the same would lead to confiscation, has been decided by the High Court of Telangana at Hyderabad in RR Marketing V. The Union of India and others [ 2020 (1) TMI 1404 - TELANGANA HIGH COURT] in favour of the petitioner. Though the SLP filed by the revenue has been admitted by the Supreme Court, provisional release has been permitted in this very case by order dated 18.09.2020 - Thus the Apex Court is clearly of the view that the goods in question are liable to be released in spite of the issue pending consideration on merits. The Hon ble Supreme Court has consistently taken a view in favour of provisional release in such cases, noticing that in identical cases, release has been ordered and there would be no justification to take a contra view in a few cases alone - The issue on merits has been held in favour of the assesse by a Division Bench of the High Court of Telangana at Hyderabad in the case of RR Marketing [ 2020 (1) TMI 1404 - TELANGANA HIGH COURT] and there is no stay of this order by the Supreme Court. Rather provisional release has been ordered in this case as well. Petition allowed. 2021 (2) TMI 822 Classification of imported goods - Big Cola - Big Orange Cola - Big Lemon etc. - goods are described as carbonated beverage with fruit juice - whether classifiable under Customs Tariff Heading 22021090 and 22021020 as claimed by the Revenue or are classifiable under 22029920 as claimed by the respondent/importer? - HELD THAT:- There is no dispute regarding the facts of the case. The goods are sold as carbonated beverage with fruit juice . In the case of lime, the fruit juice content is 2.5% whereas in the case of other fruit, such as, apple the content is 5%. There are also products named Big Orange which has orange flavour but contains 5% apple juice and no orange juice but has only pictures of cut orange. Similarly, Big Kids Jeera does not appear to have any Jeera but only apple juice. To that extent, the representation on the labels appears to be inaccurate but this does not affect the classification of the products since there is no dispute that all these are carbonated beverages with fruit juice . The products in question are not fruit or vegetable juices themselves which would be classifiable under Heading 2009. It is also not in dispute that the Customs Tariff is relevant for determining the rate of IGST payable on the imported goods. The Schedule to the Customs Tariff Act, 1975 (commonly referred to as Customs Tariff) is based on, although it is not identical to, the Harmonised System of Nomenclature (HSN)-an internationally recognised scientific method of classifying all goods. Sometimes there are differences between the HSN and the Customs Tariff in which case, the latter is relevant for determining the duty liability under the Customs Act. In view of the explanation to this effect in the IGST Notification specifying the rates of IGST chargeable on different goods, IGST is also to be charged as per the classification under the Customs Tariff. Customs Tariff, groups goods into Sections, each of which is further divided into Chapters with a two digit Chapter number. Within each Chapter, there are four digit headings which are further divided into six digit and still further divided into eight digit tariff headings - Further, in the Customs Tariff, groups of articles are prefixed by a Single dash (-) or Double Dash (--) or triple dash (---). Wherever there is a single dash, it is to be read as a sub-classification of the article or group of articles covered by the heading preceding it. Similarly, a double dash is to be taken as a sub-classification of the goods covered by a single dash preceding it. A triple dash is a further sub-classification of the goods covered by a double dash preceding it. Within the first Single dash, there are three categories of products Aerated waters (22021010), Lemonade (22021020) and other (22021090). Revenue wants to classify the Carbonated beverage with fruit juice containing lime imported by the respondent under Lemonade (22021020) and classify the Carbonated beverage containing other fruit juices under others (22021090) - Under the second Single dash (-) other , under which the respondent assessee classifies the product, there are two subcategories, viz., non-alcoholic beer (22029100) and other (220299). Undisputedly, the goods in question are not non-alcoholic beer. Within the other (220299), there are four further sub-categories -those containing soya, those containing milk, fruit pulp or fruit juice based drinks and others. The Respondent assessee classified their product under 22029920 --- fruit pulp or fruit juice based drinks. The question which falls for consideration in the present case is how to view the products in question- (a) as carbonated beverages treating the fruit juice as a secondary character as the Revenue views them or (b) as fruit juice based drinks as the Respondent assessee views them. In our considered view, a decision on this could be made by examining how they are being sold. They are being sold as Carbonated beverages with fruit juice - neither as fruit juice based drinks nor as carbonated beverages although the fruit juice content is only 5% (or 2.5% in case of lime). This gives the products their unique characteristic distinct from both carbonated beverages and fruit juices. The FSSAI regulation (2.3.30 clause 3A) also conceives of such a category of products in the market. Thus, they form a separate specie of products known to the market and are recognised as such by FSSAI. The Customs Tariff, however, does not have a separate entry for such products. We do not agree with the Revenue s contention that the essential character of the products is only carbonated drinks and not the fruit juices. In our view both components are important. As carbonated beverages, they can be classified under 2202 10 20/ 22021090 (as claimed by the Revenue). As fruit juice based drinks, they could as well be classified under 2202 99 20 (as claimed by the assessee). In our view neither carbonated beverage alone nor fruit juice alone gives the essential character of the products in question; both contribute to its essential character. The issue cannot be resolved as per Rule 3(a) and 3(b) of the Rules of Interpretation and therefore we need to resort to Rule 3(c). Since Customs tariff heading 22029920 comes last in the order, it prevails and the goods are classifiable under this heading. Hon ble Supreme Court in the case of Parle Agro [ 2017 (5) TMI 592 - SUPREME COURT] examined the classification of appy fizz which was a drink containing apple juice as well as carbonated water and held that the product is correctly classifiable under 22029920. While deciding the matter, the Hon ble Apex Court has referred to the Regulation 2.3.30 of FSSAI too, inter-alia, found that the product appy fizz met with the conditions in Clause 2 of this Regulation. Revenue s argument is that the appy fizz contained 10% of the apple juice whereas the present products contained only 5% fruit juice (2.5% in the case of lime). It is true that in view of this difference in the composition these goods do not fall under Clause 2 of FSSAI Regulation 2.3.30 but they do fall under Clause 3A - Identical view has been taken by the Larger Bench of the Tribunal in the case of Brindavan Beverages [ 2019 (10) TMI 762 - CESTAT ALLAHABAD (LB)] . The products, in question, have been correctly classified under 22029920 by the learned Commissioner (Appeals) in the impugned order and the same calls for no interference - Appeal dismissed - decided against Revenue. Corporate Laws 2021 (2) TMI 843 De-activation of the Director Identification Number - Section 164(2) of the Companies Act, 2013 - HELD THAT:- Similar issue decided in the judgment of the Gujarat High Court in [ 2019 (1) TMI 27 - GUJARAT HIGH COURT ] where it was held that The writ petition for challenge to the de-activation of the Director Identification Number are allowed. It was de-activated on account of dis-qualification in one company effecting Director Identification Number for the other companies. The opposite parties are directed to activate the Director Identification Number for use for other company. The opposite parties would however be at liberty to take legal action against the petitioner for any statutory default or non-compliance of the provisions of the Act of 2013. Insolvency & Bankruptcy 2021 (2) TMI 839 Recalling of approved Resolution Plan - Whether a Resolution Plan approved by the Adjudicating Authority can be recalled and an order of Liquidation be passed? - HELD THAT:- In the matter Committee of Creditors of Educomp Solutions Ltd. vs. Ebix Singapore Pte. Ltd. Anr. [ 2020 (8) TMI 338 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] , it was held that this Tribunal cannot exercise its powers under Section 60(5) of I B Code and recall its own orders, as there is a provision of Appeal in such matters. The plea raised by the applicant in IA/IBC/16/KOB/2021 to get back the EMD amount of ₹ 25,00,000/- also cannot be entertained at this stage because after approval of the Resolution Plan by this Tribunal, a Resolution Applicant cannot come forward and state that due to their ignorance about the provisions regarding Asset Reconstruction Companies they are withdrawing the Resolution Plan, as the Resolution Applicant should have examined all the provisions/ rules before submitting a Resolution Plan and depositing the E.M.D. As per Regulation 36B (4A) of IBBI (Insolvency Resolution Process for Corporate persons) Regulations, 2016, the Request For Resolution Plans (RFRP) shall require the Resolution Applicant (if the resolution plan is approved under Sub-Section (4) of Section 30), to provide a performance security within the time specified therein and such performance security shall stand forfeited if the Resolution Applicant of such plan, after its approval by the Adjudicating Authority, fails to implement or contributes to the failure of implementation of that plan in accordance with the terms of the plan and its implementation schedule. Thus, it is clear that when a Resolution Plan is admitted, in case the party withdraws its Resolution Plan by not remitting the requisite amount, surely the EMD amount paid will be forfeited as per the aforesaid provisions in the IBBI Regulations. Hence, this Tribunal cannot direct the Resolution Professional to refund the EMD of the Resolution Applicant - Since the Resolution Applicant has withdrawn the Resolution Plan for the reasons stated in their request for withdrawal of Resolution Plan and that the EMD amount is still available with the Resolution Professional, it is a matter for the parties to approach the appropriate forum seeking directions as per the IBBI Regulations. This Tribunal cannot either order liquidation or to direct the refund of the EMD, as this Tribunal has become functus officio after approval of a Resolution Plan with the consent of both the parties - Application dismissed. 2021 (2) TMI 824 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - whether there is any Existence of a Dispute , and whether the Appellant has raised a plausible contention requiring further investigation which is not a patently feeble legal argument or an assertion of facts unsupported by evidence and whether the Dispute is Pre-Existing ? HELD THAT:- It is clear that the existence of Dispute must be pre-existing i.e. it must exist before the receipt of the demand notice or invoice. If it comes to the notice of the Adjudicating Authority that the operational debt is exceeding rupees one lakh and the Application shows that the aforesaid debt is due and payable and has not been paid, in such case, in absence of any existence of a Dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of the demand notice of the unpaid operational debt , the Application under Section 9 cannot be rejected and is required to be admitted. This Tribunal without going into the merits of the Dispute holds that the documentary evidence furnished with the Application read with the email communication shows that the debt is due and payable and has not been paid and there is no plausible contention which requires further investigation and that the Dispute raised is only a patently feeble argument unsupported by evidence. Hence, this Tribunal is of the considered view that the ratio of the Hon ble Supreme Court in M/s. Mobilox Innovations Pvt. Ltd., [ 2017 (9) TMI 1270 - SUPREME COURT] squarely applies to the facts of this case as the Hon ble Apex Court has laid down that the Dispute , if any, should be Pre-Existing and also that it cannot be a feeble argument. Merely contending that accounts were not reconciled for almost a year in our considered opinion, can be construed as a feeble and spurious argument . A perusal of the contents of the reply to the Demand Notice, this Tribunal is unable to find any Dispute . It is seen from the record that at the earliest point of time, the Corporate Debtor did not raise any dispute that existed between the parties. For all the reasons assigned in this instant Appeal, we do not find any illegality or infirmity in the Order passed by the Learned Adjudicating Authority warranting our interference - Appeal dismissed. 2021 (2) TMI 840 Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- It is clearly established that the default in payment of the Operational debt has occurred by the corporate debtor. Though the corporate debtor has raised dispute with regards the payments of invoices on grounds of substandard quality of goods but has not placed on record any document which proves the pre-existing dispute between the parties. There is no merit in the so-called dispute raised by the corporate debtor as mere reply filed by the corporate debtor to the present application, is unable to establish any pre-existing dispute of genuine nature. This leaves no doubt that the default has occurred for the payment of the operational debt to the applicant and the so called dispute raised by the corporate debtor is merely a moonshine dispute as laid down in Mobilox Innovative Private Limited vs. Kirusa Software Private Limited [ 2017 (9) TMI 1270 - SUPREME COURT ]. The present application is complete and the Applicant has established its claim which is payable and due by the corporate debtor - Application admitted - moratorium declared. 2021 (2) TMI 823 Initiation of CIRP - consent decree / Decree Holder - whether decree comes under the definition of Corporate Debt or not - Corporate Debtor failed to make repayment of its dues - existence of debt or not - Operational Creditor - capacity as a person who is a proprietor of a firm is an Individual - HELD THAT:- In the instant case, the Appellant/Petitioner has come out with a plea that the Respondent/Corporate Debtor had admitted to pay a sum of ₹ 7,50,000/- towards the Principal sum in respect of goods received by the Respondent/Corporate Debtor, as per Settlement Agreement dated 16.8.2018 etc. Furthermore, ₹ 1,35,000/- towards Penalty of ₹ 5,000/- per instalment per month as per Undertaking given by the Respondent/Corporate Debtor and the same was recorded by the Learned Additional District Judge, Saket Court, New Delhi in Civil Suit No.6912 of 2016 in the case of Ashok Agarwal v. Amitex Polymers Pvt.Ltd.(Respondent/Corporrate Debtor) and Another. Therefore the total dues claimed by the Appellant/Operational Creditor as per Consent Decree passed by the Competent Court of law is ₹ 8,85,000/- as seen from Part IV of Application wherein the Particulars of Operational Debt were mentioned - Even a person who is a proprietor of a firm is an Individual as per Section 3(23) inclusive definition of The Insolvency and Bankruptcy Code 2016, in the considered opinion of this Court. As such, the Appellant is not incompetent in his Individual capacity as proprietor of M/s Shree Marketing, New Delhi. The Principal Bench had come out with a plea that the Respondent/Corporate Debtor owes a sum of ₹ 8,85,000/- and for which a demand notice dated 11.3.2019 was issued to the Respondent/Corporate Debtor for which no reply was issued by the Respondent/Corporate Debtor to the Appellant/Operational Creditor and this Tribunal taking note of the prime fact that the Appellant/Operational Creditor is a Decree Holder as per the Consent Decree passed on 25.10.2018 in Civil Suit No.6912 of 2016 by the Learned Additional District Judge, Saket Court, New Delhi, this Court comes to an irresistible and inescapable conclusion that a Decree Holder is no way excluded from the purview of the ambit of the term Operational Creditor as per Section 5(20) of The Insolvency and Bankruptcy Code 2016 and the contra view taken by the Adjudicating Authority in the impugned order is clearly held by this Tribunal as an unsustainable one in the eye of Law - In the present case, the Appellant/Operational Creditor supplied the goods based on invoices beginning from 19.2.2011 to 26.3.2011 amounting in all to a sum of ₹ 7,28,072/- and in due discharge of legal liability/lawful debt towards payment of dues/Invoices by the Respondent/Corporate Debtor had paid a sum of ₹ 1,10,221/- as mentioned by the Appellant/Operational Creditor in the Application in Part IV under caption of Particulars of Operational Debt . The other aspect of the matter to be significantly pointed out is that the Respondent/Corporate Debtor through its purchase orders had offered to make payment to the Appellant/Corporate Debtor within a period of 45- 60 days and in fact the payment was agreed to be made within 30 days from the date of Invoice. As a matter of fact, the Respondent/Corporate Debtor had not made any payment in respect of the due amount even after the Consent Decree passed by the Competent Court of law. Section 3(10) of The Insolvency and Bankruptcy Code 2016 defines Creditor and even in the said definition a Decree Holder cannot be excluded to file an Application under the Code. Going by the definition 3(10) of Creditor , it includes Financial Creditor , Operational Creditor . The impugned order passed by the National Company Law Tribunal, New Delhi Bench is set aside by this Tribunal for the reasons assigned in the instant Appeal - Appeal allowed. 2021 (2) TMI 832 Seeking extension of CIRP period by 90 days more beyond 180 days after excluding the lockdown period - Section 12 read with Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The Hon'ble National Company Law Appellate Tribunal in Suo Moto-Company Appeal [ 2020 (6) TMI 495 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] has held that the period of lockdown ordered by the Central Government and the State Governments including the period as may be extended either in whole or part of the country, where the registered office of the Corporate Debtor may be located, shall be excluded for the purpose of counting of the period for 'Resolution Process under Section 12 of the Insolvency and Bankruptcy Code, 2016, in all cases where 'Corporate Insolvency Resolution Process' has been initiated and pending before any Bench of the National Company Law Tribunal or in Appeal before this Appellate Tribunal. The Insolvency and Bankruptcy Board of India, inserted Regulation 40C to the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, vide notification dated 29.03.2020 held that Notwithstanding the time-lines contained in these regulations, but subject to the provisions in the Code, the period of lockdown imposed by the Central Government in the wake of COVID-19 outbreak shall not be counted for the purposes of the time-line for any activity that could not be completed due to such lockdown, in relation to a corporate insolvency resolution process - Similarly, the Insolvency and Bankruptcy Board of India, vide notification dated 20.04.2020, inserted Regulation 47 A to the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 and the said regulation reads as Subject to the provisions of the Code, the period of lockdown imposed by the Central Government in the wake of Covid-19 outbreak shall not be counted for the purpose of computation of the timeline for any task that could not be completed due to such lockdown, in relation to any liquidation process. In view of the orders of the Hon'ble Supreme Court of India, National Company Law Appellate Tribunal and in view of the Regulations issued by Insolvency and Bankruptcy Board of India, instant application is allowed and the period of CIRP extended by 90 days more, beyond 180 days after excluding the period from 25.03.2020 to 31.07.2020 - application allowed. Service Tax 2021 (2) TMI 836 Classification of services - Banking and other Financial Services or otherwise? - entire interest component collected as equated monthly installments on transactions relating to Financial Leasing Services including equipment leasing and hire-purchase - absence of any mechanism to bifurcate the processing or management charges - period prior to 01.03.2006 - HELD THAT:- Explanation 1 to section 67 of the Finance Act prior to 18.04.2006 contained a specific exclusion vide sub clause (viii) excluding interest on loans. Though section 67 was substituted by Finance Act 2006 w.e.f. 18.04.2006, the corresponding Service Tax Determination of Value Rules 2006 vide rule 6(2)(iv) again excluded interest on loan from the purview of valuation of taxable services. However, the Board vide circular No.80/10/2004-ST dated 17.09.2004 clarified that interest on loan would stand excluded. Respondent has been discharging service tax regularly on processing charges and also filing returns regularly. Respondent gives loan to its customers / borrowers for the purpose of hire purchase agreement for purchasing the vehicles and this lending is in the nature of a loan. Since it is in the nature of loan consequently interest on loans stands excluded from the value of taxable services. Board circular dated 09.07.2001 referred to by the appellant in fact supports the case of the respondent. In view of the settled law and in exercise of the legislative and rule making power once parliament has excluded interest on loans from the purview of taxable service, it is not open to the authority to hold that the exemption notifications would not apply. Further in view of the decision of the Apex Court in the case of Association of Leasing and Financial Service Companies and Bajaj Auto Finance Ltd. [ 2010 (10) TMI 4 - SUPREME COURT] and [ 2008 (4) TMI 39 - SC ORDER] re-affirming the legal position that the respondent is not liable to pay service tax in respect of the interest on loan advanced as the same stands excluded from the purview of the taxable services, we find no reason to interfere with the impugned order. CESTAT was correct in holding that for the period prior to 01.03.2006 interest on loan is not taxable in the absence of mechanism for bifurcation of service. Therefore, recovery of service tax on interest for the period to 01.03.2006 is without authority of law as there is a presumption of attributing the entire amount to interest in the absence of any mechanism to isolate the processing or management cost even if that were collected by way of equated monthly installments - CESTAT has returned a clear finding that hire purchase is but loan and that hirer obtains goods from the seller and the banking and financial institution finalised the purchase of the goods with the title firmly resting with the hirer with the financial institution vested with the right to acquire possession of the goods through judicial intervention - appellant has not been able to show any illegality or perversity in the aforesaid findings rendered by the CESTAT. There are no error or infirmity in the view taken by the CESTAT qua the ground raised by the appellant. No question of law, much less any substantial question of law as pleaded by the appellant arises from the order of the CESTAT - appeal dismissed. 2021 (2) TMI 853 Principles of Natural Justice - respondent herein has merely inform the petitioner that on verification of the records it was found that the petitioner was not registered for paying service tax - Construction of Residential Complex Service - HELD THAT:- There is no order that has been passed by the 3rd respondent for it to be quashed or set aside. It further appears the 3rd respondent sent several reminders to the petitioner on 26.2.2013, 04.03.2013 and thereafter issued summons to the petitioner. Meanwhile, the petitioner has furnished some of the details and has applied for a centralised registration on 13.1.2013 under the category for Construction of Residential Complex Service . Since the petitioner is admittedly liable to tax and has obtained centralised registration, it is for the department to investigate and issue appropriate notice and in case there was non-payment of tax by the petitioner. Petition dismissed. 2021 (2) TMI 821 Levy of Service Tax - amount of liquidated damages/penalty collected by the appellant for non-compliance of the terms of the procurement contracts - amount collected towards theft charges from consumers for un-authorized use of electricity or for tampering of meters - period of dispute is from July, 2012 to March, 2016 - whether the appellant is providing a declared service contemplated under section 66E(e) of the Finance Act, which service became taxable w.e.f July 1, 2012? - HELD THAT:- Liability has been fastened upon the appellant under section 65B read with section 66E(e) of the Finance Act for the period from July 2012 till March 2016 for the reason that by collecting the said amount the appellant had agreed to the obligation to refrain from an act or to tolerate the non-performance of the terms of the contract by the other party - Section 65B (44) defines service to mean any activity carried out by a person for another person for consideration, and includes a declared service. Under section 66E (e), a declared service shall constitute agreeing to the obligation to refrain from an act, or to tolerate an act or situation, or to do an act. Section 66 B provides that service tax shall be levied at the rate of 12 per cent on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed. Section 66D contains a negative list of services, while section 66E contains a list of declared services. Section 68 provides that every person providing taxable service to any person shall pay service tax at the rate specified in section 66B in such manner and within such period as may be prescribed - It is, thus, clear that where service tax is chargeable on any taxable service with reference to its value, then such value shall be determined in the manner provided for in (i), (ii) or (iii) of subsection (1) of section 67. What needs to be noted is that each of these refer to where the provision of service is for a consideration , whether it be in the form of money, or not wholly or partly consisting of money, or where it is not ascertainable. In either of the cases, there has to be a consideration for the provision of such service. Explanation to sub-section (1) of section 67 clearly provides that only an amount that is payable for the taxable service will be considered as consideration . This apart, what is important to note is that the term consideration is couched in an inclusive definition. This precise issue was considered by a Division Bench of this Tribunal in M/S SOUTH EASTERN COALFIELDS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RAIPUR [ 2020 (12) TMI 912 - CESTAT NEW DELHI] wherein certain clauses providing penalty for non-observance/breach of the terms of the contract entered during the course of business came up for consideration. The case of Department was that the amount collected by the appellant towards compensation/penalty was taxable as a declared service under section 66E(e) of the Finance Act. After considering the decision of a Larger Bench of the Tribunal in M/S BHAYANA BUILDERS (P) LTD. OTHERS VERSUS CST, DELHI OTHERS. [ 2013 (9) TMI 294 - CESTAT NEW DELHI (LB)] and the decisions of the Supreme Court in COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT] and UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] where it was held that What follows from the aforesaid decisions of the Supreme Court in Bhayana Builders and Intercontinental Consultants , and the decision of the Larger Bench of the Tribunal in Bhayana Builders is that consideration must flow from the service recipient to the service provider and should accrue to the benefit of the service provider and that the amount charged has necessarily to be a consideration for the taxable service provided under the Finance Act. Any amount charged which has no nexus with the taxable service and is not a consideration for the service provided does not become part of the value which is taxable. It should also be remembered that there is marked distinction between conditions to a contract and considerations for the contract . A service recipient may be required to fulfil certain conditions contained in the contract but that would not necessarily mean that this value would form part of the value of taxable services that are provided. The issue that arose for consideration in M/S LEMON TREE HOTEL VERSUS COMMISSIONER, GOODS SERVICE TAX, CENTRAL EXCISE CUSTOM [ 2019 (7) TMI 767 - CESTAT NEW DELHI] was whether forfeiture of the amount received by a hotel from a customer on cancellation of the booking would be leviable to service tax under section 66E(e). The Tribunal held that the retention of the amount on cancellation would not attract service tax under section 66E (e). Learned Authorized Representative has, however, referred to the decision of the Delhi High Court in XL ENERGY LIMITED VERSUS MAHANAGAR TELEPHONE NIGAM LIMITED.[ 2018 (5) TMI 2036 - DELHI HIGH COURT] . This decision refers to the decision of the Supreme Court in Oil Natural Gas Corporation Ltd. Vs. Saw Pipes Ltd., which in turn referred to a decision of the Supreme Court in Fateh Chand. The decision of the Supreme Court in Fateh Chand was also relied upon by learned Authorized Representative of the Department in M/S SOUTH EASTERN COALFIELDS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RAIPUR [ 2020 (12) TMI 912 - CESTAT NEW DELHI] but it was found not to applicable to the facts of the case. Likewise, the decision of the Delhi High Court in XL ENERGY LIMITED VERSUS MAHANAGAR TELEPHONE NIGAM LIMITED, would not help the Department. Thus, it is not possible to sustain the order passed by the Principal Commissioner confirming the demand of service tax on the amount collected towards liquidated damages and theft of electricity - appeal allowed. Central Excise 2021 (2) TMI 844 Seeking for restitution of amount deposited by petitioner - petitioner had voluntarily deposited the amount only with a view to avoiding the amount of interest, penalty etc. - HELD THAT:- There is no quarrel to the proposition that if any payment is made by the assessee, as a condition precedent for hearing an appeal, the same does not bear the character of duty, but has the character only of security deposit and the same is required to be refunded the day appeal is disposed of by the authorities inasmuch as, the parties are put back to the situation of a show cause notice against the assessee being adjudicated by the authority. Therefore, the deposit made during the course of investigation and before the issuance of the show-cause notice or for hearing of the appeal, the assessee is entitled for the refund in the event of the appeal being allowed and remanded to the Adjudicating Authority for de novo consideration. It is well settled proposition of law that there is always peril in treating words of a judgment as though they are words in a legislative enactment; it is to be remembered that judicial pronouncements are made only stating all facts of a particular case. It has been settled in catena of decisions of the Apex Court that circumstantial flexibility, one additional or different fact may make a difference between conclusion in two cases. Disposal of cases by merely placing reliance on a decision is not desirable. Precedent should be followed only so far as it marks path of justice - The Apex Court, in the case of Haryana Financial Corporation and Another vs. Jagdamba Oil Mills [ 2002 (1) TMI 1266 - SUPREME COURT ] has held that placing reliance blindly on the judgment is not proper. Factual situation between the decided cases and the case at hand are required to be gone into. M/s. Balaji Enterprises appears to have exported 221 consignments of the goods manufactured by it during November, 2003 to September, 2004 and has claimed rebate of excise duties paid by it on the exported goods. The Central Excise authorities, after scrutinizing the rebate claims, sanctioned the same as well as paid the rebate for all the 221 exported consignments. Regular orders, sanctioning the rebate to the tune of ₹ 7,06,66,186/- (Rupees seven crore six lac sixty six thousand one hundred eighty six only) have been passed by the officer concerned having jurisdiction. This led to the inquiries against M/s. Balaji Enterprises on the basis that rebate claims were erroneously paid to it inasmuch as, it is alleged that M/s. Balaji Enterprises had not received any duty paid inputs and materials from its suppliers, including the petitioner. The said inquiry/investigation led to issuance of the show cause notice dated 15.2.2007 by Directorate General of Central Excise Intelligence (DGCEI) to M/s. Balaji Enterprises as well as others, including the petitioner, inter alia, proposing imposition of penalty. The show cause notice dated 5.2.2007 was issued by the DGCEI to M/s. Balaji Enterprises and other ten noticees, including the petitioner, which was adjudicated by the Adjudicating Authority and M/s. Balaji Enterprises, M/s. MSN Enterprises and M/s. Krishna Impex were jointly and severally held liable. This Court is conscious of the fact that vide order dated 10.7.2019, the appeal filed by the petitioner has been allowed quashing the order dated 30.3.2011 qua the petitioner and two others, however, the fact remains that the order dated 30.3.2011 of the Adjudicating Authority cannot be said to have been quashed in its entirety. Owing to the failure on the part of M/s. Balaji Enterprises in depositing the amount and consequent rejection of appeal, the order dated 30.3.2011 passed by the Adjudicating Authority, attained finality so far as M/s. Balaji Enterprises and M/s. Krishna Impex are concerned. Further, as emerges from the order, common findings have been recorded by the Adjudicating Authority of holding, M/s. Balaji Enterprises, M/s. MSN Enterprises and Krishna Impex, jointly and severally liable for taking the benefit of rebate. Therefore, it cannot be said that it is clear case of remand. This Court is of the opinion that in the interest of all the concerned, directions are necessitated for early decision in the adjudication proceeding. Accordingly, the petitioner is directed to fully co-operate with the proceedings before the Adjudicating Authority. It is also directed that the Adjudicating Authority shall complete the proceedings as expeditiously as possible; without any further loss of time and preferably within a period of six months from the date of receipt of the copy of this order - Petition dismissed. 2021 (2) TMI 828 Interest on delayed refund of Central Excise duty paid - Whether interdepartmental communication or departmental circulars in respect of an interpretation of a statutory provision will have any effect even when the interpretation sought to be projected is in conflict and/or contrary to law declared by the jurisdictional High Court? - N/N. 33/99 dated 08-07-1999. Notification No. 33/99 dated 08-07-1999 - HELD THAT:- It is seen that once the judicial pronouncement is made by the High Court or by the Supreme Court, unless the same is subsequently interfered with by judicial means, the same will have a binding effect on all Subordinate Authorities including the quasi judicial authorities like the respondent in the present case. Unless the respondent Department come up in any appeal and seek to reagitate the issues already decided by this Court, they cannot, by referring to departmental circulars seek to arrive at a contrary view and/or even attempt to disregard the judgment of the jurisdictional High Court holding the field at the moment. The judgment of the Apex Court rendered in Commissioner of Custom (import) vs- Dilip Kumar and Co. [ 2018 (7) TMI 1826 - SUPREME COURT] is pressed into service by Mr. S.C. Keyal, learned standing counsel appearing for the respondent to refer to the principle of interpretation of taxing statute. In this judgment the Apex Court has held that where there is an ambiguity in an exemption notification or exemption clause, then the benefit of such ambiguity cannot be extended to the subject/assessee by applying the principle that obscure and/or ambiguity or doubtful fiscal statute must receive a construction favouring the assessee. I respectfully concur with this judgment of the Apex Court. But in the facts of the present case, ambiguity has been lead to rest by a ruling of a Division Bench of this Court, as discussed above, in the case of Amalgamated Plantation (P) Limited [ 2013 (11) TMI 589 - GAUHATI HIGH COURT] . In view of the judgment of the Amalgamated Plantation (P) Limited [ 2013 (11) TMI 589 - GAUHATI HIGH COURT] , this Court held that interest is payable on delayed refunds on excise duty and the same is equally applicable in respect of refunds made under notification no. 33/99 dated 08-07-1999. Although as submitted by the learned standing counsel, the question of law has been kept open while dismissing the SLP preferred by the Revenue on the ground of limitation, the Revenue even in the present proceeding did not refer to the Board s Circular dated 19-12-2002 and 08-12-2006 which according to the Revenue was not considered by this Court while rendering the judgment in the case of Amalgamated Plantation (P) Limited vide judgment and order dated 08-11- 2012. In the absence of any such pleadings and submissions made before this Court to substantiate such claim it is not required to embark on any interpretation in respect of Board s said Circular vis- -vis the applicability of the present provision of Section 11B and Section 11 BB of the Central Excise Act in respect of refunds made in terms of notification no. 33/99 dated 08-07-1999. Mere bald and omnibus submissions of the respondents that the petitioners are not entitled to interest on delayed refund on Excise Duty cannot be sustained - The Board s Circular cannot alter the position and ascribe any contrary view which will be in conflict with the Judicial Pronouncements, in view of the law declared in Amalgamated Plantations (P) Limited. The impugned order dated 31-12-2018 is set aside and quashed and the Revenue is directed to examine the claim of interest on delayed refund as agitated by the petitioners and after due calculation release the claim of interest on delayed refund - Petition allowed. CST, VAT & Sales Tax 2021 (2) TMI 835 Levy of penalty under Section 10-A of the Central Sales Tax Act, 1956 - alleged offence committed by the petitioner under Section 10(b) and Section 10(d) of the said Act - concessional rate of tax against Form C under Section 8(3)(b) of the Central Sales Tax Act, 1956 - it was alleged that the dyeing units were dyeing the yarn or fabric supplied by their customers. It was therefore stated that the dyeing units were not engaged in any manufacturing activity - job work/works contract or not - HELD THAT:- In the present case, the endorsement in certificate of registration given to the petitioner in Form B under Central Sales Tax Act, 1956 is confined for re-sale and/or for manufacture or processing of goods sale. Admittedly, there was no re-sale of the goods purchased by the petitioner. The petitioner was also not engaged in mining or in the generation or distribution of electricity or any other form of power - Therefore, to justify the use of Form C, the activity of the petitioner should come within the purview of the expression manufacture or processing of goods for sale in Section 8(3)(b) of the Central Sales Tax Act, 1956. In Union of India Vs. J.G. Glass Industries Ltd., [ 1997 (12) TMI 110 - SUPREME COURT ] , the Hon ble Supreme Court laid down the test as to when an activity amounts to manufacture and when an activity amounts to processing of goods. If the test laid therein is applied, the activity undertaken by the petitioner would amount to processing of goods. The petitioner has provided a taxable service within the meaning of Finance Act, 1994. The service provided as a Common Effluent Treatment Plant Operator for treatment of effluent was exempted from Service Tax w.e.f. 01.04.2015 vide Notification No.6/2015-ST dated 01.03.2015. The exemption was added to entry mega exemption Notification No. 25/2012-ST dated 20.06.2012 . Prior to this exemption, services provided by an association of dyeing units in relation to common effluent treatment plants was exempted from payment of Service Tax vide Notification No. 42/2011- ST dated 25.07.2011. The scope of the exemption was expanded with retrospective effect from 16.06.2005 vide Section 145 of the Finance Act, 2012. It validated exemption given to clubs or association including co-operative societies engaged in provision of service in relation to projects, i.e., common facility set up for treatment and recycling of effluents and solid wastes, with financial assistance from the Central Government or State Government. Today, the presence of Common Effluent Treatment Plant is a must in areas where there are clusters of industries which have the propensity to discharge effluents and pollute environments and water bodies and land - It is not only propagated and encouraged under various laws to protect the environment but also assiduously encouraged by the Government and the Courts to deal with the menace of water pollution due to rampant discharge of effluent into water bodies by polluting industries and local bodies. In Paryavaran Suraksha Samiti Vs. Union of India , [ 2017 (2) TMI 1476 - SUPREME COURT] , the Hon ble Supreme Court recognised the importance of Common effluent Treatment Plant and the duty cast on the local bodies to preserve the environment. Coming to the facts of the case, the activity undertaken by dyeing unit is a part of the manufacturing activity for textile units. It is one of the intermediate stage process, whereby, grey yarn or grey fabrics as the case may be are sent for dyeing to such units before they are sent back for being used in the further manufacturing process of textile products. The business model followed by textile units appears to be outsource the dyeing process to dyeing units. However, dyeing units are mostly small units and are rarely endowed with the capital to install Common Effluent Treatment Plants. This is where the demand for persons like petitioner had arisen in absence of Common Effluent Treatment Plants. Independent Common Effluent Treatment Plants are neither manufacturer nor processors of goods for sale. They are merely service provider. If a liberalized interpretation is given in the light of the above decisions, they will be entitled to the benefit of Section 8(3)(b) of the Central Sales Tax Act, 1956 as was claimed by the petitioner - However, the scheme of the concession is specific under Section 8(3)(b) of the Central Sales Tax Act, 1956. Therefore, the Courts cannot aid evasion of tax by reading down the express language of Section 8(3)(b) of the Central Sales Tax Act, 1956. The petitioner obtained registration under the provisions of the Tamil Nadu General Sales Tax Act, 1959 and later under Tamil Nadu Value Added Tax Act, 2006 and under the provisions of the Central Sales Tax Act, 1956 only for the purpose of taking unfair advantage of concession available under these enactments by making it seem as if the petitioner was engaged in processing of goods for sale when indeed it was not engaged in such activity of sale - Even otherwise, it was also not open for the petitioner to transfer the goods procured at concessional rate of tax against Form C to its sister concerns contrary to the requirements of Certificate. If the goods cleared against invoices in Annexure II(A),( B) and (C) were exempted, the petitioner was not required to issue Form-C. There is no proper explanation forthcoming either in the reply or in the affidavit filed in support of the present writ petition as to why the petitioner issued Form-C No.TN-2006-C-BB-728640 (Annexure I) to the supplier. It shows complicity on the part of the petitioner to facilitate evasion of Central Sales Tax - As the petitioner was not entitled to issue Form C to the supplier, there is no error in the impugned order seeking to impose penalty under Section 10-A of the Central Sales Tax Act, 1956. The petitioner was not entitled to procure goods at concessional rate of tax under Section 8(3)(b) of the Central Sales Tax Act, 1956. The respondent has however not proposed to impose penalty on the petitioner for facilitating evasion of tax on the entire value of goods procured against Form C. The imposition of penalty is confined to diversion of the goods to the petitioner s sister concerns alone in the impugned order. The imposed penalty is upheld and is not required to be increased - In so far as the imposition of penalty under Section 10-A of the Central Sales Tax Act, 1956 on the proportionate tax on the goods cleared to its sister companies is concerned, there are no infirmity in the impugned order imposing penalty on the petitioner on proportionate value of goods diverted. Petition dismissed.
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