TMI Tax Updates - e-Newsletter
February 4, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Levy of tax with penalty - validity period of the E-Way bill stood expired - where a statute provides extension of time to a transporter, the Adjudicating Authority before imposition of tax and penalty ought to have communicated to the transporter about his right to extend the period but the Adjudicating Authority failed to perform and the appellate authority failed to consider. - So it is the discretion of the Adjudicating Authority to extend the period of E-Way Bill up to 8 hours from the time of its expiry. - HC
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GST:
Refund of tax - Tax / GST paid under protest in order to release the detained vehicle or not - Adjudicating authority requiring to produce the proof - The Petitioner has by his own conduct disabled himself from availing the remedy available to him in law, if indeed the payment was made under protest. - HC
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GST:
Penalty for claiming input tax credit based on bogus tax invoices / debit notes - The SCN issued u/s 74 is bald and cryptic and the exact details of the violations committed by the petitioner have not been disclosed in the said show cause notice. The show cause notice has simply extracted the ingredients of Section 74 of the Act but the same does not disclose the details of the violations committed by the petitioner. - HC
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GST:
Cancellation of registration of the petitioner firm - The notice, which even is presumed to have reached on 17.05.2022, the order of cancellation of registration is of 25.05.2022. The acknowledgment receipt of the post sent through the register A.D. post is not on record. The respondent has failed to bring it on the record as the State has woken up at a belated stage and the postal department would not retain it beyond the period of three months - this petition is allowed solely on the ground of violation of the principles of natural justice. - HC
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Income Tax:
Amendment in definition of 'Specified Person' for the purpose of higher deduction of tax in case of Non-filers shall exclude a person who is not required to furnish the return of income for the AY relevant to the said PY (For ex:- Non-Resident).
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Income Tax:
Assistance to authorized officer during search and seizure - For the purpose of search AO now take services of any person, entity as approved by PCC or CC or PDGIT or DGIT to assist him in search. Further, during and post search enquiries, the authorised officer may make reference to any person or entity or any valuer registered by or under any law for the time being in force, who shall estimate the fair market value of the property in the manner prescribed and submit a report of the estimate to the authorised officer or the Assessing Officer within sixty days from the receipt of such reference.
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Income Tax:
For the benefit of TDS deduction on later date - As assessee filed ROI on accruals basis and TDS deducted on subsequent FY - On an application made by assessee within 2 FY from the end of FY in which ROI filed he can avail the benefit of TDS as per the section 155(20)
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Income Tax:
Rationalisation of Appeals to the Appellate Tribunal - as per the amendment to sec 253 revisional order passed u/s 263 by PCC or CC or an order u/s 154 are now appealable to Appellate Tribunal. Also, Memorandum of cross objection has been introduced for the revenue where in case respondent files appeal against the order of Commissioner (Appeals), like Principal Commissioner or Commissioner or Principal Director or Director etc. AO would be able to file a cross objection to such appeal which cannot be filed presently.
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Income Tax:
TDS on accumulated balance of EPF u/s 192A - In case of low paid employees not furnishing PAN, TDS will be deducted at 20% instead of MMR as earlier.
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Income Tax:
Amendment made in case of TDS of Non-Resident- In respect of units of Mutual Fund u/s 10(23D) or from specified companies u/s 10(35) has to deduct 20% or if treaty u/s 90(1) or 90A(1) provides lower rate.
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Income Tax:
Deduction of interest u/s 94B shall exclude certain class of NBFC as specified which were included in the definition of banking units earlier.
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Income Tax:
Reducing the time provided for furnishing TP report - Now any information, documents required by AO for international transaction U/s 92D has to be furnished within 10 days instead of 30 days as earlier. Also, Assessee on an application to AO or the Commissioner (Appeals) may extend period of 10 days to further period of not exceeding 30 days.
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Income Tax:
Government analyzed the wrong information reported in the SFT - Government aim not fullfill of transparency between taxpayer and department - introduce a penalty on a person, who is liable to furnishing SFT or reportable account.
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Income Tax:
Introduction of the authority of Joint Commissioner (Appeals) - In order to reduce burden or bottleneck of small cases with small amount of disputes and demand from commissioner of Appeals as it is first authority of appeal, it is proposed to be created at Joint Commissioner/ Additional Commissioner level. Such authority has all powers, responsibilities and accountability similar to that of Commissioner (Appeals) with respect to the procedure for disposal of appeals.
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Income Tax:
Defining the cost of acquisition in case of certain assets for computing capital gains - 'Cost of acquisition’ and ‘cost of improvement’ of certain assets like intangible assets or any sort of right for which no consideration has been paid for acquisition shall be 'nil'.
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Income Tax:
Extension the scope of area of Penalty and prosecution provisions - if assessee fails to deduct TDS in u/s 194R, u/s 194S, u/s 194BA Penalty u/s 271C & Prosecution u/s 276B shall be levied
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Income Tax:
Double claim of Interest Paid on Capital Borrowed for purchase of Property - Ist U/s 24 under House Property income, 2nd deductions under chapter VI-A and 3rd u/s 48 as part of cost of acquisition - Amendments proposed to allow only one benefit as per the choice of the assessee.
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Income Tax:
TDS u/s 194-IC on Capital gain in case of Joint Development Agreement (JDA) u/s 45(5A) - the full value of consideration shall be taken as the stamp duty value of his share as increased by any consideration received in cash or by a cheque or draft or by any other mode.
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Income Tax:
Increase in rate of TCS of certain remittances - To promote domestic tourism and to flow of money within India TCS rate on Overseas tour package & other foreign remittance (excluding Education and Medical purposes) has been increased to 20% from 5% earlier.
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Income Tax:
Amendment in special tax regime for REIT & INVIT - To avoid dual Non-taxation in the hands of unit holders as well as business trust on any income distributed by such business trust therefore the amendment proposed for REIT/InVIT related to distribution by manner of 'Repayment of debt' to the unitholders is now covered under the ambit of taxation as other income (net of cost of acquisition of the unit) which earlier was not captured.
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Income Tax:
For the purpose of inquiry u/s 142- Valuation of inventory has to be done through cost accountant now. Also, for the purpose of section 144 amended to exclude the period u/s 153 for valuation of inventory by Cost Accountant.
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Income Tax:
Market Linked Debentures now included in the definition of securities and transfer of such market linked securities is taxable under as short term capital gain as well, Earlier they were taxed as long term only @10% (without indexation).
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Income Tax:
Presumptive income - enhancement of threshold limits - U/s 44AD if 95% of gross receipts and payments through no-cash mode than limit of presumptive taxation increased to ₹10 cr in case of trading concerns - Further U/s 44ADA if cash receipts are not more than 5% than presumptive taxation limit for professionals having gross receipts up to ₹75 Lakhs.
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Income Tax:
Life Insurance Policy - In order to prevent the misuse it is proposed that premium or aggregate of premiums (other than ULIP) in a year exceeding ₹5 Lakh shall be exempt if income from policy received on the death of the insured person. Otherwise shall be taxable u/h other sources such amendment has been made by adding a proviso to sec 10(10D).
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Income Tax:
Introduction of new section 115BAE for newly incorporated Co-operative society - For new manufacturing cooperative societies incorporated on or after 1st day of April, 2024 with certain conditions stipulated same as manufacturing companies. And extending of time limit u/s 115BAD for co-operative society for concessional tax rate of 15% if production/manufacturing begin upto 31.3.2024 instead of 31.3.2023.
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Income Tax:
LTCG - Exemption u/s 54 and 54F - Imposing the restriction on claiming high value deduction taken by high-net-worth assessees - Maximum deduction can be claimed upto 10 crore of capital gain u/s 54 or cost of new asset u/s 54F as the case the may be.
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Income Tax:
To cover all types of Online gaming in the ambit of tax deduction section 194BBA has proposed for deduction of tax on 'net winnings' from online gaming and sec 115BBJ has also introduced for the rates of tax on such net winnings from online gaming without any threshold limit. Also, corresponding changes has been made u/s 194BB & 115BB to exclude online gaming from these section.
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Income Tax:
Facilitating certain strategic disinvestment - Definition of "strategic Investment" has been amended to include sale of sharholding by CG/SG/PSU in a Public company or a company which results in (i) reduction of its shareholding below fifty-one per cent, and (ii) transfer of control to the buyer. Further sec 72AA also amended to allow carry forward of accumulated losses and unabsorbed depreciation allowance in the case of amalgamation of one or more banking company with any other banking institution or a company subsequent to a strategic disinvestment, if such amalgamation takes place within 5 years of strategic disinvestment.
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Income Tax:
Section 44BB and 44BBB - Benefit of opt-in or opt-out from presumptive taxation to certain assessee has been now limiting through insertion of proviso for no set off of unabsorbed depreciation and brought forward loss.
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Income Tax:
Clause (ix) of TDS deduction u/s 193 - on payment of any interest payable on any security issued by a company, where such security is in dematerialized form and is listed on a recognized stock exchange in India to resident has been removed.
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Income Tax:
Benefits for Development Authority [W.e.f. 1st April, 2024] • Insertion of the new clause (46A) of section 10 of IT Act to exempt any income arising to a body or authority or Board or Trust or Commission, established under CG/SG Act with one or more of the specified purposes thereunder - amendment proposed in section 10(23C) & 11(7) of the Act.
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Income Tax:
Stay of Demand of tax raised u/s 143(3)/144B - Additions u/s 68 - Since it is apparent that the demand raised is untenable, we find that the present petition is a fit case for staying the impugned demand in its entirety. - HC
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Income Tax:
Exemption u/s 54B - agriculture land or not - land was just adjacent to the sea - To carry agricultural operation water is very much required and sea water is not useful for carrying any agricultural activities or to raise any agricultural crop - we are of the considered opinion that the assessee has not carried any agricultural activities - AT
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Income Tax:
Scrutiny assessment - Non-issuance of statutory notice u/s 143(2) - Addition u/s 68 - Notice was issued by Ld. AO and the service was effected through speed post. The receipts of same were on record. The presumption of truth is attached to the official records and the same is required to be rebutted by evidences. There is no evidences of the assessee to controvert the same. - AT
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Income Tax:
Late fee u/s. 234E - intimation u/s. 200A - delay in filing the above TDS statement - Financial Years 2012-13 to 2014-15 - the levy of interest u/s.234E of the Act in the present case cannot be sustained and the same is directed to be deleted - AT
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Customs:
Refund - Period of limitation - duty paid under protest or not - Importer had preferred an appeal challenging the enhancement of the value of the goods - The decision of learned Tribunal that the duty paid by the respondent on the enhanced value of the goods is required to be accepted as duty paid under protest, is agreed upon. - HC
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Customs:
Revocation of Customs Broker License - misdeclaration of goods by the exporter - any error on the part of the appellant to inform the exporter regarding the classification of the goods cannot be considered as sufficiently grave so as to forfeit the appellant’s license. The learned Tribunal had not examined the material facts of the present case to ascertain whether an action under Regulation 14 was justified.- HC
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Customs:
Grant of reward under the Merchandise Exports from India Scheme - amended shipping bills not transmitted online - The Policy Relaxation Committee has correctly pointed out that in the computerized environment, when the governance of MEIS is online, it is difficult to proceed unless amended shipping bills are transmitted online - It is thus necessary for the Respondents- Customs Department to come up with a solution so that an issue such as the one presented does not recur and the parties entitled to the benefits of MEIS are not required to come to the Court for such trivial issues- HC
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Indian Laws:
Tax Incentives to International Financial Services Centre - (i) Time limit for exemption on Transfer of assets of the original fund, or its wholly owned SPV to a resultant fund in case of relocation to an IFSC increased to 31st March 2025 [w.e.f. 1st April 2023] (ii) Exemption to Non Resident offshore derivative instrument holders on transfer of such instruments as well as any income distributed by IFSC Banking Unit ehich has taxed u/s 115AD in hands of such IFSC Banking Unit [w.e.f 1st April 2024] (iii) Change in the definition of 'Specified Fund', 'Resultant Fund', and 'Investment Fund' to include reference of IFSCA (fund Management) Regulations, 2022 in the Act [w.e.f. 1st April 2023].
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Indian Laws:
Dishonor of Cheque - amicable settlement of dispute - This is a very clear case of the parties entering into an agreement and compounding the offence to save themselves from the process of litigation. When such a step has been taken by the parties, and the law very clearly allows them to do the same, the High Court then cannot override such compounding and impose its will - SC
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Service Tax:
SVLDRS - Rejection of declaration - Petitioner was subjected to audit as on the relevant date - There is no challenge to the audit proceedings before us. It is not possible to give a declaration in this Petition that the audit proceedings had deemed to have lapsed on 30 June 2019 as such a declaration is outside the scope of this proceeding, even assuming that such declaration can be given. - HC
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Central Excise:
100% EOU - Denial of refund of Terminal Excise Duty (TED) paid on the inputs - Since the Supreme Court has held that EOU is additionally eligible to avail of the entitlement of the DTA even though no duty was paid by them being ab initio exempt from payment of such duty subject to a suitable disclaimer from the DTA supplier and subject to compliance of other necessary formalities, in view of the change in law, the matter can be remanded to the concerned Commissioner for consideration. - HC
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Central Excise:
Refund - Amount deposited during proceedings before the Settlement Commission - Period of time limitation - In this case the amounts have not been appropriated and therefore they can only be considered as deposits and cannot be considered as duty. Since, no show-cause notice was issued to recover the differential duty, the amounts in dispute can only be considered as deposits. For this reason, the limitation prescribed under Section 11B for refund does not apply to this case. - AT
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VAT:
Jurisdiction of Revisional Authority to revise an order - The decision of the Tribunal may not be acceptable to the Revisional Authority, but that cannot furnish any ground to such authority to perceive that it is either not bound by the same or that it need not be followed. The first proviso, in such a case, gets activated and would operate as a bar to the exercise of powers by the Revisional Authority. - SC
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VAT:
Dealer or Commission Agent or Importer? - the Petitioner, is a person who brings goods within the limits of the Corporation for the purpose of their delivery to the buyer who buys the goods independently from different seller by using internet platform provided by Flipkart and thus, the Petitioner acts like courier or a postman or a delivery person. Therefore, the Petitioner could not be said to be an agent, either of the seller or the buyer much less a commission agent. - HC
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VAT:
Interpretation of Statute - Scope of overriding provisions - when two or more laws or provisions operate in the same field and each contains nonobstante clause stating that its provision will override those of any other provisions of the law stimulating an intricate problem of the interpretation arises - The conflict here is with the State Act and the Central Act. - Section 26A of the SARFAESI Act, which came to be enacted later shall be applicable - HC
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2023 (2) TMI 94
Levy of tax with penalty - validity period of the E-Way bill stood expired - Section 129(3) of the GST Act - HELD THAT:- In the instant case, the consignment (GSV) transported from Pune, Maharashtra to Malli Bazar, Darjeeling. There was delay of only 41 minutes in delivering the consignment. The petitioner has made out a ground that the destination, Malli Bazar in Darjeeling is situated at a hilly terrain. Therefore, it is obvious that there might be few minutes delay in delivering the consignment - In the instant case, imposition of tax was made by the Adjudicating Authority within 40 minutes from the expiry of E-Way Bill. Having heard the learned Counsels for the parties and on careful perusal of the materials on record as well as the relevant rules, it is found Rule 138 of the CGST Rule 2017 clearly provides that the validity of the E-Way Bill may be extended within 8 hours from the date of its expiry. The submissions made by the learned Government Advocate cannot be accepted on the ground that where a statute provides extension of time to a transporter, the Adjudicating Authority before imposition of tax and penalty ought to have communicated to the transporter about his right to extend the period but the Adjudicating Authority failed to perform and the appellate authority failed to consider. So it is the discretion of the Adjudicating Authority to extend the period of E-Way Bill up to 8 hours from the time of its expiry. The Adjudicating Authority failed to exercise its discretion. On this score, the order passed by the Adjudicating Authority and affirmed by the Appellate Authority are liable to be set aside - petition allowed.
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2023 (2) TMI 93
Refund of tax - Tax / GST paid under protest in order to release the detained vehicle or not - Adjudicating authority requiring to produce the documents related to stock retention and vehicles used in generation of e-way bills for inward and outward supplies - Section 73 (5) of the Odisha Goods and Service Tax Act (OGST Act) - period October 2018 to March 2019, April 2019 to February 2020 and April 2020 to March 2021 - HELD THAT:- If the Petitioner wanted to contest the demand raised, he ought to have adopted the procedure already outlined under Rule 142 (1A) of the OGST Rules. For reasons best known to him, he did not opt for that procedure. Also, till date, he has actually not registered any protest with the Department which ought to have been made contemporaneous with the making of the payment. Three months after making such payment, he has sent a vague letter contending that the liability is not acceptable which is neither here nor there since the Petitioner had already made the full payment of the tax demanded. The Petitioner has by his own conduct disabled himself from availing the remedy available to him in law, if indeed the payment was made under protest. Since, there is no material to support the contention of the Petitioner that he made payment of the demanded tax under protest, the Court is not persuaded to accept such submission at this stage. Petition dismissed.
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2023 (2) TMI 92
Validity of SCN - SCN challenged on the ground that the same has been issued in violation of Section 6(2)(b) of the TNGST Act, 2017 - HELD THAT:- This Court is of the considered view that necessarily the petitioner will have to submit a detailed reply to the impugned show cause notice to the respondents to enable the respondents to consider the petitioner's grievance that no fresh proceedings can be initiated against them under the TNGST Act, 2017, in view of the fact that the Central Authority has already initiated action against the petitioner for the very same subject matter under the show cause notices dated 29.07.2022 and 31.12.2022. When the respondents have undertaken before this Court that they shall consider the grievance of the petitioner as raised in this Writ Petition, the question of entertaining this Writ Petition at this stage and granting relief to the petitioner will not arise. The only limited relief that can be granted to the petitioner is to permit them to file a detailed reply to the impugned show cause notice, stating all their objections that have been raised in this Writ Petition including the objection with regard to Section 6(2)(b) of the TNGST Act, 2017 and on receipt of the said reply, a direction can be issued to the respondents to consider the said reply on merits and in accordance with law within a time frame to be fixed by this Court. This Writ Petition is disposed of by directing the petitioner to submit a reply to the impugned show cause notice within a period of three weeks from the date of receipt of a copy of this order and on receipt of the said reply, the first respondent shall pass final orders on merits and in accordance with law.
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2023 (2) TMI 91
Seeking grant of pre-arrest bail - production of fraudulent documents and fraudulent NOC while obtaining the registration itself - Sections 132(1)(e), (1)(f) and 132(1)(iv) of the Maharashtra Goods and Services Tax Act, 2017 - HELD THAT:- It is after the statement of the Chartered Accountant was recorded that the involvement of the present applicant came to light. The persons who are shown to be directors namely Dilkhush Abdul Jabbar and Vijay Singh Naruka are factually working as gas cylinder delivery boy and welder in whose accounts the transaction worth Rs.1,35,00,000/- is shown to have taken place. According to the prosecution, it is the applicant who is the person behind Sneheshwara Enterprises Private Limited operating the affairs with these two Directors as fronts. The statement of the Chartered Accountant reveals that it is the applicant who had approached him for the work relating to the formation of the company. This is not a fit case to grant relief of pre-arrest bail to the applicant. The anticipatory bail application is rejected.
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2023 (2) TMI 90
Penalty for claiming input tax credit based on bogus tax invoices / debit notes - Section 74 of the TNGST Act, 2017 - sufficient opportunity to send the reply to the show cause notice not provided - principles of natural justice - HELD THAT:- This Court is of the considered view that the grounds raised by the petitioner stating that the petitioner has not been granted sufficient opportunity to send the reply to the show cause notice, which is dated 22.11.2022, has to be accepted. Under the impugned order, the reply dated 08.12.2022 has not been considered by the respondents. On a prima facie consideration, the show cause notice sent to the petitioner by the respondents is also bald and cryptic and the exact details of the violations committed by the petitioner have not been disclosed in the said show cause notice. The show cause notice has simply extracted the ingredients of Section 74 of the Act but the same does not disclose the details of the violations committed by the petitioner. This Court is of the considered view that the impugned order has been passed by total non application of mind to the reply dated 08.12.2022 submitted by the petitioner and therefore, the impugned order has to be necessarily quashed and the matter will have to be remanded back to the respondents for fresh consideration on merits and in accordance with law after affording a fair hearing to the petitioner, including granting them the right of personal hearing - Petition disposed off.
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2023 (2) TMI 89
Validity of SCN issued - Cancellation of registration of the petitioner firm - it is alleged that the SCN had not been sent to the petitioner physically nor any notice has been received by the petitioner by post or at his registered address - principles of natural justice. HELD THAT:- This notice which has been given under Section 29 Rule 22(1) of the GST Rules is required to be uploaded. Every action under the GST, the State expects the assessee to upload. Here, on the ground of the technical glitch could not be uploaded. For taking the action against the person or assessee, who is acting against the law ample powers have been given under the GST Act to the officers. However, the procedures which are required to be followed shall need to be followed in accordance with law. This Court in AGGARWAL DYEING AND PRINTING WORKS VERSUS STATE OF GUJARAT 2 OTHER (S) [ 2022 (4) TMI 864 - GUJARAT HIGH COURT] has in no uncertain terms deprecated the action of the respondent authority in issuing a cryptic notice, which is either one liner or of half a line . This weak foundation is made the reason for the cancellation of registration of the petitioner. This Court notices that the receipt of registered post is dated 12.05.2022. The notice is originally of 10.05.2022, however posted on 12.05.2022 it may take about three to four days, seven days is prescribed under the law for the assessee to reply from the date of receipt of notice. This is a notice, which even is presumed to have reached on 17.05.2022, the order of cancellation of registration is of 25.05.2022. The acknowledgment receipt of the post sent through the register A.D. post is not on record. The respondent has failed to bring it on the record as the State has woken up at a belated stage and the postal department would not retain it beyond the period of three months - the service is said to have been effected through the registered A.D.post in wake of the glaring circumstances and more particularly, extremely weak foundation of the content of the notice, which this Court in Aggarwal Dying has not sustained. Following the Coordinate Bench s decision in case of Aggarwal Dyeing Printing Works, this petition is allowed solely on the ground of violation of the principles of natural justice.
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Income Tax
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2023 (2) TMI 88
Stay of Demand of tax raised u/s 143(3)/144B - HELD THAT:- Since it is apparent that the demand raised is untenable, we find that the present petition is a fit case for staying the impugned demand in its entirety. We also consider it apposite to direct the Appellate Authority (through National Faceless Appeal Centre) to consider the petitioner s appeal and dispose of the same as expeditiously as possible, and in any event, within a period of four weeks from today.
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2023 (2) TMI 87
Deemed divided u/s 2(22) - CIT(A) was convinced that the assessee had availed advance pursuant to business transaction, and, therefore, was outside the ambit of provisions of section 2(22)(e) - HELD THAT:- The first appellate authority, while deleting the addition, has drawn support from the decision of the Calcutta High Court in the case of Pradeep Kumar Malhotra [ 2011 (8) TMI 16 - CALCUTTA HIGH COURT] and also in the case of Creative Dyeing and Printing [P] Ltd [ 2009 (9) TMI 43 - DELHI HIGH COURT] . Since the first appellate authority has deleted the addition in true appreciation of the facts supported by judicial decisions, we do not find any reason to interfere with the findings of the ld. CIT(A). Decided against revenue.
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2023 (2) TMI 86
Rectification of mistake u/s 154 to withdraw the excess interest granted u/s 244A to the assessee - HELD THAT:- There are more than one opinion on the meaning of regular assessment which is critical issue for deciding whether or not the assessee was eligible for interest u/s 244A of the Act. In such scenario the scope of rectification proceedings u/s 154 of the Act spells out that only mistake apparent from record can be rectified. The Hon‟ble Apex Court in the case of T.S. Balram, ITO v Volkart Bros [ 1971 (8) TMI 3 - SUPREME COURT] held that mistake apparent on record must be obvious and patent mistake and not something which has to be established by a long drawn process of reasoning on the points on which there may be conceivably two opinions. A.O was wrong in resorting to section 154 of the Act to withdraw the excess interest granted u/s 244A of the Act to the assessee as it was not something mistake apparent from record. Hence, the ld. CIT(A) dismissed the order of the A.O passed u/s 154 of the Act. We do not find any infirmity with the findings of the ld. CIT(A) and the relief provided to the assessee is sustained. The grounds of appeal of the Revenue are dismissed.
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2023 (2) TMI 85
Revision u/s 263 - validity of Assessment u/s 153A - disallowances on account of court case fine and motor car depreciation - HELD THAT:- We are of the considered opinion in the absence of any incriminating materials seized by the Department during the course of search action u/s. 132, no addition can be made by the Assessing Officer in 153A proceedings. Thus the above proposed additions made by the Ld. PCIT in his Revision order, has no link or nexus with any seized materials recovered in the premises of the assessee during the course of search. Thus the entire Revision proceedings initiated by the Ld. PCIT is against the provisions of law and therefore the same is quashed. - Decided in favour of assessee.
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2023 (2) TMI 84
Condonation of delay - huge delay of more than 2500 days in filing of the appeals before the Ld.CIT(A) - Levy of late fees u/s.234E - HELD THAT:- No doubt, as per the judgments of various Courts, while a liberal approach is to be normally taken in considering the application for condonation of delay, because substantial justice deserves to be preferred over technical consideration, but it is equally true that a person invoking the discretion of the appellate authority in inordinately belated appeals is required to show compelling cause, the operation of which was beyond its control. In this case, as per facts available on record, we find that the delay is not for a month or two, but is for a significantly large period of 2500 days. It is well settled that a distinction must be made between a case where the delay is inordinate and where the delay is of few days only. In our considered view, these appeals fall within the former category. The quantum of delay makes it manifestly evident that these appeals were not prosecuted with due care. Therefore, no error in the reasons given by the Ld.CIT(A) to dismiss appeals filed by the assessee unadmitted for delay in filing of the appeals - Appeals filed by the assessee are dismissed.
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2023 (2) TMI 83
Exemption u/s 54B - case of the assessee is that the assessee has inherited a piece of land and the same was sold in which assessee s share of sale consideration and the assessee has claimed exemption u/s 54B on the ground that the land was used for agricultural purposes for many years - AO concluded that the property sold by the assessee was not an agricultural land and no agricultural activity was carried on the said land - HELD THAT:- The piece of land sold by the assessee is within the purview of Coastal Regulation Zone [CRZ] adjoining to sea. The case of the assessee is that he has carried agricultural operation. Except adangal, there was no evidence bought on record that the assessee carried agricultural operations. The adangal filed by the assessee shows that there were few coconut trees. Simply because, there are coconut trees, it does not mean that the assessee carried agricultural operation, particularly, when the assessee has not reported any agricultural income. Apart from that, the said extent of land was just adjacent to the sea not useful for any agricultural purposes, whereas, the assessee s statement is that he has carried agricultural operation. To carry agricultural operation water is very much required and sea water is not useful for carrying any agricultural activities or to raise any agricultural crop - we are of the considered opinion that the assessee has not carried any agricultural activities and thus, we find no infirmity in the orders of authorities below and accordingly, the appellate order passed by the CIT(A) is confirmed. Various case law relied on by the assessee have no application to the facts of the case. Appeal filed by the assessee is dismissed.
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2023 (2) TMI 82
Cash deposits made in the bank account - As confronted to explain the source of cash deposits, the assessee explained that it had declared a sum of Rs 6 crores as income under Income Declaration Scheme which was utilized for depositing cash in bank accounts. The assessee company further explained that on money received from various customers in the Amar Harmony Project which were offered to tax is also available for explaining the cash deposits made by the assessee - HELD THAT:- AO erred in understanding the meaning of the term utilise as spent , which is factually incorrect, as is evident from the entry passed in the cash book supra. Hence we hold that the assessee company indeed had sufficient cash balance to make cash deposits in the bank account. We find that the assessee had actually disclosed Rs 18,12,40,800/- (6,00,00,000 + 12,12,40,800) in IDS 2016 and in survey. Out of this, a sum of Rs 12,12,40,800/- represent on money received from various customers in the project Amar Harmony at Taloja at the rate of Rs 400 per square feet for 303102 square feet sold. Hence only a sum of Rs 7,35,70,750/- was utilized by the assessee company for making advances to various parties as is evident from the balance sheet of the assessee company and remaining sum of Rs 10,76,70,050/- on 22/09/2016 was very much available in the form of cash balance with the assessee company which explains the total cash deposits made during 22/09/2016 to 31/03/2017 which includes the demonetization period of 09/11/2016 to 31/12/2016 also. We have no hesitation to hold that the entire cash deposits made by the assessee company stood properly explained by way of available cash balance and hence there is no scope of making any addition towards unexplained cash deposits. AO is hereby directed to delete the addition made in the sum. Accordingly, the Ground No.2 raised by the assessee is allowed. Addition made u/s.68 of the Act in respect of unsecured loans - HELD THAT:- AO did not resort to make any verification of the evidences filed by the assessee by way of issuing notice u/s 133(6) of the Act to the lender company. In this scenario, the only logical conclusion that could be derived is that the assessee company had duly discharged its onus by furnishing all the requisite documentary evidences proving the three necessary ingredients of Section 68 of the Act and that the ld. AO had not drawn any adverse inference on the same. In view of this, we direct the ld. AO to delete the addition made. Ground raised by the assessee is allowed.
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2023 (2) TMI 81
Scrutiny assessment - Non-issuance of statutory notice u/s 143(2) - Addition u/s 68 - certain information received from Directorate of Investigation, Kolkata regarding bogus entries of LTCG took into consideration the modus operandi and held the long term capital gain claim of assessee to be outcome of accommodation entries - assessee challenged addition as no notice u/s 143(2) of the Act was issued and not giving assessee an opportunity of hearing - HELD THAT:- The bench observes that the notice u/s 143(2) were issued by Ld. AO and the service was effected through speed post. The receipts of same were on record. The presumption of truth is attached to the official records and the same is required to be rebutted by evidences. There is no evidences of the assessee to controvert the same. Thus, in regard to the issue of non-issuance of statutory notice u/s 143(2) of the act the assessee has no case. Not giving assessee an opportunity of hearing - As there appears to be substance as Ld. AO seems to have taken into cognizance the detailed investigation report of the Investigation Wing and the modus operandi providing LPCG/STCL. Certainly the assessee needed an opportunity to explain that the investments in the scrips were outcome of wisdom and financial expediency. Thus, on that basis the issue requires to be restored to the files of Ld. AO and further determination of grounds is not necessary. The issue is restored to the files of Ld. AO to give an opportunity of hearing to the assessee to explain the material with Ld. AO of the Investigation wing and explain the transactions of LTCG - assessee will also be at liberty to also take the legal question that no addition in income can be made under the provisions of Section 68 of the Act, where assessee is not maintaining any books of accounts. The appeal is allowed for statistical purposes.
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2023 (2) TMI 80
Addition u/s. 69A - cash deposits made by an appellant treating it as unexplained money - declaration made by the assessee u/s. 44AD as offered 8% on the cash deposits - HELD THAT:- We find that considerable force in the arguments made by the assessee counsel as the assessee filed her Return of Income declaring profit u/s. 44AD of the Act. The assessee has not maintained proper books of accounts and the assessment also being a reassessment for the assessment year 2010-11 completed in 2017, the assesse could not maintain proper records. On the various case laws relied by the assessee were consistently held that addition by estimating for profit @5% on sale of unregistered dealers/purchases which has been reduced to 1.25% by Ld. CIT(A), Jamnagar which were being upheld by Co-ordinate Bench of this Tribunal. It is demonstrated by the assessee before us in various six other assessee s cases, the additions made by the Assessing Officer were reduced to 5% by the Ld. CIT(A). In the present case, the assessee has offered 8% on the cash deposits made in her bank account, which we found a reasonable declaration made by the assessee u/s. 44AD of the Act. Thus the grounds raised by the assessee is hereby allowed and the additions made by the lower authorities are deleted. Appeal filed by the Assessee is hereby allowed.
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2023 (2) TMI 79
TP Adjustment - exclusion of comparable companies - HELD THAT:- M/s.Shyama Power India Ltd. - Assessee is providing steel fabrication and construction services to L T Construction and Samsung which are engaged in commercial and residential work. Therefore, we are of the considered view that M/s.Shyama Power India Ltd., is not a good comparable when it comes to functions carried by the assessee. Therefore, we direct the TPO to exclude M/s.Shyama Power India Ltd., from the list of comparables. M/s.Sunil Hitech Engineers Ltd - As gone through various details filed by the assessee including annual report of M/s.Sunil Hitech Engineers Ltd., we find that functions carried out by the assessee and M/s.Sunil Hitech Engineers Ltd., are altogether different and further, M/s.Sunil Hitech Engineers Ltd., is predominantly carrying out construction works for power projects, whereas, the assessee is carrying out steel structural fabrication and erection works for commercial and residential structures. Therefore, we are of the considered view that M/s.Sunil Hitech Engineers Ltd., cannot be a good comparable to the assessee company and thus, we direct the TPO to excluded. M/s.Everest Infra Energy Ltd - functions carried out by the assessee and M/s.Everest Infra Energy Ltd., are broadly similar in nature, although, the client base is different. Therefore, we are of the considered view that there is no error in the reasons given by the TPO and the DRP to include M/s.Everest Infra Energy Ltd., in the list of comparable and thus, we reject the ground taken by the assessee. Consideration of foreign exchange loss as operating in nature - HELD THAT:- As question whether foreign exchange loss is operating or non-operating is depending upon the nature of loss incurred by the assessee and treatment of said loss in the books of accounts by the assessee. The assessee has treated foreign exchange loss as other income and further, excluded foreign exchange loss for computing operating margin on the ground that it is non-operating in nature. On perusal of details filed by the assessee and also observation of the TPO, we find that the assessee has incurred foreign exchange loss on account of creditors for purchase and debtors for sales and services. In our considered view, said loss is having bearing on operating margin on the assessee. Therefore, we are of the considered view that there is no error in the reasons given by the TPO/DRP to include foreign exchange loss as operating in nature for the purpose of computing PLI and thus, we reject the ground taken by the assessee. Working capital adjustment while determining the net profit margin of the assessee - HELD THAT:- When assessee seeks adjustment for working capital considering the amount of working capital employed in their business consisting of own funds and borrowed funds in light of working capital position of comparable goes, then it is the duty of the TPO to provide necessary working capital adjustment while computing operating margin of the assessee and this position is supported by the decision of ITAT Chennai Benches in the case of M/s. Doosan Power Systems India Pvt. Ltd [ 2021 (3) TMI 1262 - ITAT CHENNAI] where similar decision has been reiterated by the Tribunal. Therefore, by following the decision of ITAT, we direct the TPO to reconsider the issue of working capital adjustment in light of various averments made by the assessee and also evidences placed on record. Adjustment for underutilization of capacity - assessee submitted that the TPO/DRP is not appreciating the fact that the fixed cost to sales ratio to the assessee is 26.62% as against 13.01% of the comparable companies selected in TP order. Therefore, suitable adjustment needs to be provided - HELD THAT:- There is no merit in ground taken by the assessee for providing capacity utilization adjustment, because, the assessee has failed to make out a case of underutilization of capacity when compared to comparable companies selected in TPO order, except stating that fixed cost ratio to sales is higher in the case of the assessee when compared to comparable companies. Therefore, we reject the ground taken by the assessee for capacity utilization adjustment. Rejecting the application of multiple year data for the purpose of bench marking the international transaction - HELD THAT:- When the data available in the public domain in respect of comparable companies, the question of going into the multiple year data does not arise and thus, we are of the considered view that there is no error in the reasons given by the TPO / DRP in rejecting application of multiple year data for the purpose of bench marking of international transaction entered during the year. Disallowance of reimbursement of expenses u/s.40(a)(i) - HELD THAT:- Admittedly, the issue of disallowance of reimbursement of expenses u/s.40(a)(i) of the Act, is not before the TPO. For the first time, the DRP on the basis of international transaction reported by the assessee in Form No.3CEB, opined that payment towards reimbursement of expenses, is in the nature of FTS. The assessee, although, claimed before the DRP that reimbursement of expenses is on cost to cost basis without any mark-up, but no details or explanation was submitted by the assessee - issue needs to go back to the file of the TPO for further verification. Hence, we set aside the issue of disallowance of reimbursement of expenses u/s.40(a)(i) of the Act, and direct the TPO to re-examine the claim of the assessee in accordance with law. Depreciation on UPS - assessee had claimed 60% depreciation on UPS, Printers and other accessories - AO has restricted depreciation on UPS printers @15% which is applicable to normal block of plant machinery - HELD THAT:- This issue is covered in favour of the assessee by the decision of Sundaram Asset Management Co. Ltd.[ 2014 (2) TMI 224 - ITAT CHENNAI] where it has been clearly held that UPS and Printers are part of a computer systems and eligible for higher depreciation of 60%. A similar view has been taken by Macawber Engineering System (India) Pvt. Ltd.[ 2013 (11) TMI 131 - ITAT MUMBAI] . Therefore, we are of the considered view that the assessee is entitled for 60% depreciation on UPS and Printers and thus, we direct the AO to allow 60% of depreciation on UPS and Printers as claimed by the assessee.
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2023 (2) TMI 78
Late fee u/s. 234E - intimation u/s. 200A - delay in filing the above TDS statement - Financial Years 2012-13 to 2014-15 - HELD THAT:- Hon ble Supreme Court in the case of CCI Vs. M/S.Dilip Kumar Co [ 2018 (7) TMI 1826 - SUPREME COURT] brought out distinction between interpretation of a charging section of a taxing statute and of an exemption notification / clause. The Court held that any ambiguity in a taxing statute should enure to the benefit of the subject / assessee. On the contrary, any ambiguity in the exemption clause must be conferred in favour of revenue and such exemption should be allowed to be availed only to those subjects / assesses who demonstrate that a case for exemption squarely falls within the parameters enumerated in the notification and they satisfy all the conditions precedent for availing exemption. Levy of late fee u/s.234-E of the Act, cannot be said to be an exemption clause but can be construed only as a charging section, in the sense that imposes a burden on an Assessee. In that view of the matter, we are of the view that the reliance placed by the NFAC, on the decision of Hon ble Supreme Court in the case of M/S.Dilip Kumar Co. (supra) to sustain the levy of interest u/s.234-E of the Act, cannot be sustained. We are of the view that the levy of interest u/s.234E of the Act in the present case cannot be sustained and the same is directed to be deleted and the appeals of the Assessee are allowed.
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Customs
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2023 (2) TMI 77
Seeking for provisional release of the imported goods - Import of Supari from Thailand - prohibited goods or not - Section 110A of the Customs Act, 1962 - HELD THAT:- As seen from section 110-A of the Customs Act, 1962, an independent decision will have to be taken by the Customs Authorities with regard to the request made by any importer seeking for provisional release of the detained goods which has been detained under section 110-A of the Customs Act, 1962 as in the present case. Whether the petitioner has responded to the Show Cause Notice issued by the Customs Authorities or not is immaterial for the purpose of deciding the application seeking for provisional release of the detained goods under section 110-A of the Customs Act, 1962. As seen from Section 110-A of the Customs Act, 1962, pending the order of the Adjudicating Authority, the goods may be provisionally released to the owner or the bank holder on taking a bond from him in a proper form with such security and conditions as the Adjudicating Authority may require. Thus, no prejudice would be caused to the respondents, if the petitioner is allowed to submit an application under section 110-A of the Customs Act, 1962 seeking for provisional release of the detained goods and a direction is issued to the respondents to consider the said application on merits and in accordance with law, in the light of the contentions raised by the petitioner in these writ petitions within a time frame to be fixed by this Court. This Court directs the petitioner to submit an application to the second respondent under section 110-A of the Customs Act, 1962, within a period of one week from the date of receipt of a copy of this Order, seeking for provisional release of the goods in respect of the stated Bills of Entries - petition disposed off.
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2023 (2) TMI 76
Refund - Period of limitation - duty paid under protest or not - Importer had preferred an appeal challenging the enhancement of the value of the goods - whether the respondent s claim for refund of tax was beyond the period of limitation as prescribed under Section 27 of the Customs Act? HELD THAT:- It is difficult for this Court to accept that the payment of custom duty imposed pursuant to an order while appealing the same can be construed as payment of duty without protest. The very act of filing an appeal against an order imposing customs duty is a protest against the duty as assessed. The entire purpose of such an appeal is to seek reduction of the levy. It is, thus, obvious that the assessee does not accept the said levy and, payment of the same would necessarily have to be construed as payment under protest. In view of the authoritative decision of the Supreme Court in Mafatlal Industries Ltd. v. Union of India [ 1996 (12) TMI 50 - SUPREME COURT ], the question whether payment of duty while appealing its imposition, is required to be construed as payment under protest, is no longer res integra. Although the said decision was rendered in the context of Section 11B of the Central Excise Act, 1944, the second proviso to Section 11B of the Central Excise Act, 1944 is pari materia to second proviso of Section 27(1) of the Customs Act. The decision of learned Tribunal that the duty paid by the respondent on the enhanced value of the goods is required to be accepted as duty paid under protest, is agreed upon. Appeal dismissed.
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2023 (2) TMI 75
Revocation of Customs Broker License - forfeiture of security deposit - penalty - guilty of misconduct - misdeclaration of goods by the exporter (M/s Balaji International) and attempted to facilitate export of goods otherwise restricted at the material time - classification of export consignment of Glucose Test Strips - N/N. 59/2015 -20 dated 04.04.2020 - HELD THAT:- It is material to state that the consignment of Glucose Test Strips was held up at the material time on the ground that the items were restricted. In this regard the exporter and the Department had exchanged correspondence. It is not disputed that the consignment was finally cleared. Admittedly, the goods in question were correctly described as Glucose Test Strips in the Shipping Bills and these goods were exported after the initial hold up. It is, thus, not difficult to accept that at the material time, there may have been some confusion as to the classification of the goods as has been contended by the appellant. In the present case, the exporter had classified the goods in question under CTH 90279090. It is the exporter s stand that the said classification was a correct one. The appellant had candidly stated that there was some confusion at the material time. In his statement, he had also candidly admitted that the shipping bill was filed during the period of lock down and that there was a mistake. He had also stated that he was not aware that the goods in question, namely, glucose tested strips contained reagents. He had also stated that they always took due care before filing shipping bill, but due to shortage of staff during the lock down period, a mistake had occurred - it is apparent that the appellant had been remiss, however, the appellant s candid admission must also be read along with his statement that he was not aware that the goods in question contained reagents. It is apparent in the given facts that it cannot be held that the appellant had misconducted itself, thus, the only ground on which the appellant s licence is revoked was failure to comply with the regulations, which would follow in case there was a failure to comply with the obligations under regulation 10 of CBLR, 2018. However, it is also material to note that Regulation 14 confers a discretion on the Principal Commissioner whether to revoke the license and forfeit the security deposit - In this case the exporter was fully aware of the issue regarding classification and, the exporter had also corresponded with the department and had asserted that the goods in question were not restricted. Undisputedly, the goods in question were correctly described in the Shipping Bill as glucose testing strips . Further, the appellant had explained that there was confusion on his part and had candidly admitted his mistake. In the given facts, any error on the part of the appellant to inform the exporter regarding the classification of the goods cannot be considered as sufficiently grave so as to forfeit the appellant s license. The learned Tribunal had not examined the material facts of the present case to ascertain whether an action under Regulation 14 was justified. The impugned order as well as the order dated 11.06.2021 passed by the Commissioner of Customs to the extent that it revokes the appellant s license and forfeits the security deposit is set aside - Appeal allowed in part.
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2023 (2) TMI 74
Grant of reward under the Merchandise Exports from India Scheme - acceptance of amendment of 12 shipping bills - period from December 2017 to July 2019 - HELD THAT:- The shipping bills duly amended under section 149 are legitimate in the eyes of the law. However, even though the law permits amendment to the shipping bills under section 149 of the Act, it has no functional effectiveness for claiming benefit under MEIS as per the stand of DGFT. This would render the power under section 149 of the Customs Act to amend the shipping bills to correct the declaration and reward item field, nugatory. Such a position would cause extreme hardship to the persons claiming benefits of the scheme. When a software regulates the entire process, the DGFT may have a reasonable objection in processing the copies of the amended shipping bills not transmitted online to it. The Policy Relaxation Committee has correctly pointed out that in the computerized environment, when the governance of MEIS is online, it is difficult to proceed unless amended shipping bills are transmitted online - It is thus necessary for the Respondents- Customs Department to come up with a solution so that an issue such as the one presented does not recur and the parties entitled to the benefits of MEIS are not required to come to the Court for such trivial issues. The Petition be listed on board under the caption For Directions on 27 February 2023 for reporting compliance on this aspect.
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Insolvency & Bankruptcy
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2023 (2) TMI 73
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- When we look into the Part-IV of Section 7 Application, in the Application the Financial Debt as was originally claimed in the earlier application has been claimed. The Application is not founded only on the default of the consent terms rather application is founded on the original financial debt which was extended by the financial creditor to the corporate debtor. Present is not a case where Section 7 Application has been filed only on the ground of default in the settlement agreement rather section 7 application has been filed on the basis of original financial debt which was extended by the Financial Creditor to the Corporate Debtor. The mere fact that in earlier company petition, consent terms was arrived, which consent terms was breached by the corporate debtor, the financial debt which was claimed by the financial creditor would not be wiped out nor the nature and character of financial debt shall be changed on account of breach of the consent terms. Permitting such interpretation shall be giving premium to the corporate debtor who breach the consent terms. It is relevant to notice that in clause 9 of the consent terms there was clear stipulation that financial creditor shall be entitled to revive the company petition, the mere fact that instead of reviving company petition, a fresh company petition has been filed under section 7 shall not be reason to reject the company petition and not to entertain the said company petition. The second submission of Learned Counsel for the appellant that the application could not have been filed under section 7 by the financial creditor, there is no dispute that financial creditor has extended financial benefits to the corporate debtor - HELD THAT:- The mere fact that the majority debenture holders have not initiated any section 7 application shall not preclude the financial creditor who was entitled to initiate section 7 application on its own right. There are no substance in the submission of learned counsel for the Appellant. It shall be open for the appellant, in event, settlement is entered between the parties, to file Application under Section 12-A of the I B Code, 2016 - appeal dismissed.
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PMLA
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2023 (2) TMI 72
Seeking grant of anticipatory bail - allegations of laundering a massive sum of money in connivance with main accused - petitioner argued that the custodial investigation would serve no purpose whatsoever, and the pre-trial incarceration would cause an irreversible injustice to the petitioner and family. HELD THAT:- The petitioner is directed to join the investigation as and when called by the Investigator. The petitioner shall be in deemed custody for Section 27 of the Indian Evidence Act. The petitioner shall join the investigation as and when called by the Investigating Officer or any Superior Officer; and shall cooperate with the investigation at all further stages as required. In the event of failure to do so, it will be open for the prosecution to seek cancellation of the bail. Whenever the investigation occurs within the police premises, the petitioner shall not be called before 8 AM, let off before 6 PM, and shall not be subjected to third-degree, indecent language, inhuman treatment, etc. - The petitioner shall not influence, browbeat, pressurize, make any inducement, threat, or promise, directly or indirectly, to the witnesses, the Police officials, or any other person acquainted with the facts and the circumstances of the case, to dissuade them from disclosing such facts to the Police, or the Court, or to tamper with the evidence. The bail bonds shall remain in force throughout the trial and after that in Section 437-A of the Cr.P.C., if not canceled due to non-appearance or breach of conditions. Any Advocate for the petitioner and the Officer in whose presence the petitioner puts signatures on personal bonds shall explain all conditions of this bail order in any language that the petitioner understands - If the petitioner finds bail condition(s) as violating fundamental, human, or other rights, or causing difficulty due to any situation, then for modification of such term(s), the petitioner may file a reasoned application before this Court, and after taking cognizance, even to the Court taking cognizance or the trial Court, as the case may be, and such Court shall also be competent to modify or delete any condition. There would be no need for a certified copy of this order for furnishing bonds, and any Advocate for the Petitioner can download this order along with case status from the official web page of this Court and attest it to be a true copy. In case the attesting officer wants to verify the authenticity, such an officer can also verify its authenticity and may download and use the downloaded copy for attesting bonds. Petition allowed.
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Service Tax
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2023 (2) TMI 71
Rejection of declaration of Sabka Vishwas (Legacy Dispute) Resolution Scheme, 2019 - rejection on the ground that Petitioner was subjected to audit as on the relevant date and therefore falls in the class of declarants who were ineligible to make declaration under the Scheme under Section 125 of the Finance Act, 2019 - HELD THAT:- The Scheme is clear that the declarant making voluntary disclosure, is ineligible for applying under the scheme, if it was subjected to audit as of 30 June 2019. Since it is demonstrated that the Petitioner was subjected to audit commenced earlier to 30 June 2019 the Petitioner was within the class declarants excluded from the Scheme, as referred to under Section 125 of the Act of 2019. There is no challenge to the audit proceedings before us. It is not possible to give a declaration in this Petition that the audit proceedings had deemed to have lapsed on 30 June 2019 as such a declaration is outside the scope of this proceeding, even assuming that such declaration can be given. There is therefore no error committed by the Respondents in rejecting the Petitioner s declaration - Petition dismissed.
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2023 (2) TMI 70
CENVAT Credit of service tax paid - Management or Business Consultancy Services - services were used for taxable as well as non-taxable/exempt services or not - power of jurisdictional Officers of the Appellants to question the correctness or change the classification of service adopted by the provider of such service - suppression of fact, willful mis-statement etc. - suppression of fact, willful mis-statement etc. - extended period of limitation - penalty - disputed issue pertains to interpretation of law. HELD THAT:- In the present case the cenvat credit was denied in respect of service received by the appellant from M/s. Indian Hotels Co.Ltd. on the pretext that the same is classifiable under Business Auxiliary Service which is not specified under Rule 6(5) of Cenvat Credit Rules, 2004. The contention of the appellant is that the service provider M/s. Indian Hotels Co. Ltd. has provided the services under the head of Management or Business Consultancy Services, accordingly, the classification of service cannot be challenged at the service recipient end. Moreover, the classification of same service was challenged by the department and proceedings were initiated against M/s. Indian Hotel Co. Ltd., the matter was decided by this tribunal in PIEM HOTELS LTD. case [ 2016 (4) TMI 290 - CESTAT MUMBAI ]. It can be seen that the same services provided by IHCL to M/s. Piem Hotels Ltd. was held classifiable under Management or Business Consultancy Services and not under Business Auxiliary Service accordingly, the Management or Business Consultancy Services clearly specified under Rule 6(5) of Cenvat Credit Rules, 2004 therefore, the appellant have correctly taken 100% credit in respect of such input service. As per this judgment, the entire foundation of the revenue s case gets demolished therefore, the demand cannot be sustained on merit. Appeal allowed.
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2023 (2) TMI 69
Interest on refund already sanctioned - Calculation of relevant time - entitlement for the interest after expiry of three months from the date of filing refund claim which in the present case is 13.06.2011 - HELD THAT:- The learned Commissioner (Appeals) has gravely erred in misinterpreting the overall provision and clarification of board circular. The provision of Section 11BB is very clear, according to which the claimant shall be entitled for the interest after expiry of three months from the date of refund application - In the present case, the refund application was admittedly filed on 13.06.2011 and it is this case which was under litigation up to the tribunal and subsequently, the appellant succeeded in this refund case only. In this case, the refund application was filed on 13.06.2011 shall be treated as refund application as mentioned under Section 11BB. The appellant stand entitled for the refund right from the date of application i.e. 13.06.2011 accordingly, the appellant is legally entitled for the interest after the expiry of three months from the date of refund application i.e. 13.06.2011 - The judgment of Hon ble Supreme Court in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [ 2011 (10) TMI 16 - SUPREME COURT] is directly applicable in the facts of the present case, where it was held that liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made. There are no ambiguity on the position that if the refund is not sanctioned within three months from the date of filing, the appellant is entitled for the interest on the refund sanctioned - also, in the present case also the appellant is legally entitled for the interest on refund. Appeal allowed.
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Central Excise
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2023 (2) TMI 68
100% EOU - Denial of refund of Terminal Excise Duty (TED) paid on the inputs purchased by the Petitioner and used in the manufacture of the final products exported by the Petitioner - deemed exports - paragraph No.6.11 (c)(ii) of the FTP - HELD THAT:- The Hon ble Supreme Court in the case of Sandoz Private Limited [ 2022 (1) TMI 225 - SUPREME COURT ] has considered Chapter 8 of the FTP, including paragraph 8, as well as the policy circular dated 15 March 2013 and has held that EOU entities who had procured and imported specified goods from DTA supplier are entitled to do so without payment of duty having been ab-initio exempted from such liability under paragraph No.6.11 (c)(ii) of the FTP being deemed exports. Since the Supreme Court has held that EOU is additionally eligible to avail of the entitlement of the DTA even though no duty was paid by them being ab initio exempt from payment of such duty subject to a suitable disclaimer from the DTA supplier and subject to compliance of other necessary formalities, in view of the change in law, the matter can be remanded to the concerned Commissioner for consideration. The communications dated 12 September 2014 annexed at Exhibit F (collectively) are quashed and set aside, and the refund claims submitted by the Petitioner on 10 December 2012 stands restored to file of Respondent No.2 to be forwarded to Respondents No. 3 and 4, as the case may be - petition disposed off.
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2023 (2) TMI 67
Classification of goods - Super Mix Oil (first final product) - Super C-9 Plus (second final product) - classifiable under CET 27101990 as claimed by the appellant or under CET 27101190 as claimed by the department - SCN dated 15.11.2011 covering the period from December, 2006 to March, 2008 is barred by limitation, or not - liability to pay penalty equal to the duty amount under Rule 25 read with Section 11AC - levy of penalty on partner Shri Snehal Shah under Rule 26 of the Central Excise Rules, 2002. HELD THAT:- The appellant have raised the very vital issue that it is an admitted fact by the department that by mixing of thermol and the input namely Mixed oil does not alter the nature of the product. If this be so, then how the activity amounts to manufacture however, the adjudicating authority without considering this vital issue jumped to the conclusion about the classification of the resultant goods. The classification will come into picture only once it is established that there is manufacturing however, in the present case the department itself is of contention that by entire process of mixing of thermol and mixed oil and any other product and thermol and C-9 Plus, there is no change in the nature of the product therefore, this aspect needs to be considered elaborately by the adjudicating authority. It is also a fact on record that input received by the appellant from IPCL Nagothane the classification was made under 27101990 then in such case how the resultant product attributed to the oil of IPCL Nagothane will be classified at par with the product arising out of oil of IPCL Dahej. This issue also needs to be reconsidered - It is the submission of learned counsel that there was chain of correspondence mentioned above in his submission therefore, there is no suppression of fact. This issue also to be reconsidered by the adjudicating authority therefore, the appeal of M/s. Shah Petroleums needs to be remanded. Penalty on partner of M/s. Shah Petroleums, Shri Snehal Shah - HELD THAT:- Once a case was made out against partnership firm, no separate penalty can be imposed on the partner of such firm - penalty imposed on partner Shri Snehal A. Shah is not sustainable accordingly. Appeal allowed.
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2023 (2) TMI 66
CENVAT Credit - input service - Business Auxiliary Services - Housekeeping services - sub-rule (1) of Rule 3 of the Cenvat Credit Rules, 2004 - levy of interest and penalty. HELD THAT:- The Ld. Commissioner (Appeals) has dismissed the appeal of the appellant solely on the ground that the demand on a similar issue in the appellant s own case was confirmed against the appellant by the Principal Bench of this Tribunal in COMMISSIONER OF C. EX., DELHI-III VERSUS MARUTI SUZUKI INDIA LTD. [ 2015 (10) TMI 113 - CESTAT NEW DELHI] . Further, it is found that the Ld. Commissioner (Appeals) has failed to consider the subsequent rectification order dated 18.03.2016 passed by this Tribunal, allowing the rectification of mistake by recalling the order in MARUTI SUZUKI INDIA LTD. Further, on the analysis of the definition of input service as provided in Rule 2(l) of Cenvat Credit Rules, 2004 that the computer networking is specifically included in the includes clause of the definition of input services. The impugned order is not sustainable in law - Appeal allowed.
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2023 (2) TMI 65
Refund - Amount deposited during proceedings before the Settlement Commission - Period of time limitation - Valuation - non-inclusion of value of freight between factory and the buyer s premises while paying central excise duty - The issue was decided in favor of appellant - HELD THAT:- Of the total amount claimed in the appeal only an amount of Rs 4,22,85,418 paid through four challans is being pressed by the appellant. Undisputedly, these amounts were not paid in the normal course of self-assessment and were not reflected in the ER-1 returns but were paid as differential duty of excise through those challans after being pointed out by the department. If any duty is not levied, not paid, short paid, or short paid or erroneously refunded, the procedure to recover the amount is prescribed under Section 11A of the Central Excise Act which requires a notice to be issued to the assessee within the time limits prescribed. If the non-payment of duty is due to fraud, collision or willful misstatement or suppression of facts or violation of Act or Rules with an intent to evade payment of duty such notice can be issued within an extended period of limitation of 5 years. In this case the amounts have not been appropriated and therefore they can only be considered as deposits and cannot be considered as duty. Since, no show-cause notice was issued to recover the differential duty, the amounts in dispute can only be considered as deposits. For this reason, the limitation prescribed under Section 11B for refund does not apply to this case. Keeping in view the judgement of Tribunal in MY HOME INDUSTRIES PVT LTD. VERSUS COMMISSIONER OF CENTRAL TAX, VISHAKHAPATNAM [ 2022 (12) TMI 133 - CESTAT HYDERABAD] in appellant s own case holding that amount of freight to buyer s premises is not includible in the assessable value. The amount of Rs 6,35,36,825/- as paid by the appellants was not their duty liability. However, the amount of Rs 2,12,51,407/- has been accede to have been settled before settlement commission. The impugned order needs to be modified and the appeal is allowed partially to the extent of sanction of refund of Rs 4,22,85,418/- to the appellant.
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CST, VAT & Sales Tax
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2023 (2) TMI 64
Jurisdiction of Revisional Authority to revise an order - Maintainability of petition - availability of an alternative remedy of appeal to the appellant under section 33 of the VAT Act - whether to remit the writ petition to the High Court for hearing it on merits or to examine the correctness or otherwise of the orders impugned before the High Court? HELD THAT:- where the controversy is a purely legal one and it does not involve disputed questions of fact but only questions of law, then it should be decided by the high court instead of dismissing the writ petition on the ground of an alternative remedy being available. Jurisdiction of Revisional Authority to revise an order - Clarification of goods - Not Accepting the decision of Tribunal - HELD THAT:- The sine qua non for exercise of power under section 34 is the satisfaction of the Revisional Authority that an order has been made by a taxing authority in any proceeding prejudicial to the interests of the State, the legality or propriety of which appears to him to be prima facie vulnerable. Nevertheless, such power cannot be exercised if the issue involved is pending before or has been settled by an appellate authority. It cannot be disputed that the Tribunal is comprehended within the meaning of appellate authority as defined in section 2(b) of the VAT Act - These being the contours of section 34, as it then stood, it needs to be seen how far the Revisional Authority was justified in drawing power from such provision and exercising it. Having regard to the specific entry, i.e. Entry 129, dealing with mosquito repellents, this Court overruled the contention of the appellant therein that Jet Mat would not come within the ambit of Entry 129 since one of its constituents happens to be an insecticide. It was also held that the product manufactured by the appellant therein, viz. Jet Mat , which was commercially known as Mosquito Repellent Mat is a mosquito repellant notwithstanding the fact that it not only repels mosquitoes but is also capable of killing mosquitoes. For the reasons assigned in the decision, it was held that Jet Mat is not an insecticide which would be entitled for partial exemption under Entry 98 of the Sales Tax Act - It is, therefore, clear that because of the specific entry dealing with mosquito repellents, this Court held Jet Mat to be covered under Entry 129. What stares at the face of the respondents is that the aforesaid decision of the Tribunal, quoted in the order of the Assessing Authority, has attained finality. Once the issue stands finally concluded, the decision binds the State, a fortiori, the Revisional Authority. The decision of the Tribunal may not be acceptable to the Revisional Authority, but that cannot furnish any ground to such authority to perceive that it is either not bound by the same or that it need not be followed. The first proviso, in such a case, gets activated and would operate as a bar to the exercise of powers by the Revisional Authority. The Revisional Authority might have been justified in exercising suo motu power to revise the order of the Assessing Authority had the decision of the Tribunal been set aside or its operation stayed by a competent Court. So long it is not disputed that the Tribunal s decision, having regard to the framework of classification of products/tax liability then existing, continues to remain operative and such framework too continues to remain operative when the impugned revisional orders were made, the Revisional Authority was left with no other choice but to follow the decision of the Tribunal without any reservation - Unless the discipline of adhering to decisions made by the higher authorities is maintained, there would be utter chaos in administration of tax laws apart from undue harassment to assesses. There is nothing on record to justify either illegality or (procedural/moral) impropriety in the proceedings before the Assessing Authority or the orders passed by him, as such. The Assessing Authority was bound by the order of the Tribunal and elected to follow it having no other option - it is not the Assessing Authority s orders but those passed by the Revisional Authority, which suffer from a patent illegality. There are no other option but to invalidate the impugned final revisional orders dated 2nd March, 2009 for the Assessment Years 2003-04 and 2004-05 - appeal allowed.
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2023 (2) TMI 63
Restoration and validation of cancelled Statutory Form C issued to the Petitioner - validity of Statutory Form 9C - denial of benefit of the said C-forms to the petitioner on the ground that the said forms were cancelled by the Delhi VAT Authorities. HELD THAT:- It is relevant to state that the respondent has not questioned the petitioner s claim that it is a subsidiary of Louis Dreyfus Commodities Asia Pvt. Ltd, a reputed company dealing in agri-based commodities, and is engaged in processing of edible oil and coffee. The petitioner has offices and operations in twenty-one States. In JAIN MANUFACTURING (INDIA) PVT. LTD. VERSUS THE COMMISSIONER VALUE ADDED TAX ANR. [ 2016 (6) TMI 304 - DELHI HIGH COURT] this court had held that C-forms cannot be cancelled retrospectively. Further, this Court has disposed of several writ petitions involving the similar issue by following the decision in Jain Manufacturing (India) Pvt. Ltd. It is not disputed that the respondents had not appealed the decision in the case of Jain Manufacturing (India) Pvt. Ltd. The said decision is binding on this Court and thus, the benefit of the C-Forms cancelled retrospectively cannot be denied to the petitioner - Insofar as the remaining 9 C-forms are concerned, it is conceded that the said forms had not been cancelled. The counter affidavit is silent as to the reasons for denying the benefit of the said C-forms to the petitioner - A plain reading of the counter affidavit indicates that it proceeds on the basis that the matter is sub judice in the appealpreferred against the decision of this court in M/S JAI GOPAL INTERNATIONAL IMPEX PVT. LTD VERSUS COMMISSIONER OF DELHI VALUE ADDED TAX ANR. [ 2018 (7) TMI 1861 - DELHI HIGH COURT] . There is no reason for denying the benefit of C-forms to the petitioner as there is no allegation that the petitioner had not supplied the goods in question - Petition allowed.
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2023 (2) TMI 62
Levy of local body tax - Dealer or Commission Agent or Importer? - it is submitted that the Petitioner is not liable under the provisions of Local Body Tax Rules and as such is not required to register himself under these rules to pay any local body tax - Maharashtra Municipal Corporation (Local Body Tax) Rules, 2015, r/w. relevant provisions of the Municipal Corporation Act, 1888 - HELD THAT:- In the present case, the goods which are brought from outside by the Petitioner into the limits of Pune Municipal Corporation, as can be seen from the operations carried out by the Petitioner, are not for his own use or for earning commission or sale, but are for the purpose of being delivered at the door step of the individual buyer. In other words, what the Petitioner is doing here is import of goods for the purpose of delivery to some other person and for this purpose, the Petitioner acts like a courier or postman or delivery person. Thus, activity of the Petitioner would not be covered by the definition of the word importer . If the Petitioner cannot be called to be a person who imports goods into the city limits for use or consumption or sale and if the Petitioner is also not the person who is alleged to be selling or buying goods for commission or remuneration or otherwise in the city, the Petitioner would not be a dealer within the contemplation of Section 2(16A). If this is so, then the Petitioner would not be liable for any registration for the purpose of LBT under rule 3 of the LBT Rules. In the present case, the Petitioner is not a dealer within the contemplation of the Maharashtra Municipal Corporation Act and therefore would not be a dealer as envisaged under Rule 3 of LBT Rules. As regards commission agent, or any other agent, we must say that the impugned order considers the Petitioner as a commission agent but, having regard to activity carried out by the Petitioner and service rendered by it, we have already found that the Petitioner, is a person who brings goods within the limits of the Corporation for the purpose of their delivery to the buyer who buys the goods independently from different seller by using internet platform provided by Flipkart and thus, the Petitioner acts like courier or a postman or a delivery person. Therefore, the Petitioner could not be said to be an agent, either of the seller or the buyer much less a commission agent. All these aspects of the matter which are very critical for the purpose of assessment and levy of local body tax have not been considered by the Municipal Commissioner, Pune. The impugned order is illegal and bad-in-law. Such an order cannot be sustained in the eyes of law and deserves to be quashed and set aside - Petition allowed.
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2023 (2) TMI 61
Recovery of dues - Priority of charge - creation of charge on the property - Seeking extraordinary jurisdiction to delete the charge created under Gujarat Value Added Tax Act for the property owned by the petitioner as per the private treaty under the provisions of the SARFAESI Act - SARFAESI Act have an overriding effect over the provisions of the VAT Act and the secured creditors shall have priority over the dues of Central Excise Department or not. Whether the charge created under the Gujarat Value Added Tax over the property in question would have an overriding power over the charge created under the provisions of the SARFAESI Act and the Security Interest Rules, 2002? HELD THAT:- The answer shall need to be in negation. It is quite clear from the provisions contained in SARFAESI Act that this Act would have an overriding effect over the provisions of the Gujarat Value Added Tax Act. The law on the subject requires consideration. Firstly, this Court in the case of KALUPUR COMMERCIAL CO-OPERATIVE BANK LTD. VERSUS STATE OF GUJARAT [ 2019 (9) TMI 1018 - GUJARAT HIGH COURT] held that the plain reading of section 48 of the VAT Act indicates that it starts with nonobstante clause and this provision creates first charge on the property. The issue as regards the claim of the property of the secured creditors vis-a-vis the first charge of the property under the State legislation was considered by the Apex Court in the case of CENTRAL BANK OF INDIA VERSUS STATE OF KERALA AND OTHERS [ 2009 (2) TMI 451 - SUPREME COURT] , where the apex Court had held that if the State acts to create the first charge on the property, then the secured creditors cannot have the claim against the statutory provision. While so holding, it took into consideration section 100 of the Transfer of Property Act, 1882. The Court held that when two or more laws or provisions operate in the same field and each contains nonobstante clause stating that its provision will override those of any other provisions of the law stimulating an intricate problem of the interpretation arises while relying on such problems of interpretation, no settled principles can be applied, except to refer to the object and purpose of each of the provisions containing non obstante clause. Two provisions in the same Act, each containing a non obstante clause requires harmonious interpretation of the two seemingly conflicting provisions of the same Act. The conflict here is with the State Act and the Central Act. On considering the true purport and effect of section 26A of the SARFAESI Act, which came to be enacted later in point of time and also the effect of section 31B of the RDB Act, the Court considered in detail necessity for introduction of these two provisions in two enactments. The petition stands allowed deleting and removing noting of all the charges and encumbrance created under the Act on land located at Revenue Survey No.277, Village: Kamod, Taluka: Vatva, District: Ahmedabad with consequential relief.
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Indian Laws
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2023 (2) TMI 60
Dishonor of Cheque - amicable settlement of dispute - Compoundable offence or not - Compounding by mutual consent between the parties - HELD THAT:- The terms and conditions of the settlement entered into by the parties binds them to settle the dispute amicably, or through an arbitration as has been stated in clause 8 of the Memorandum Of Understanding - the Appellants cannot be convicted on the basis of the orders passed by the courts below, as the settlement is nothing but a compounding of the offence. In the case of M/S. METERS AND INSTRUMENTS PRIVATE LIMITED ANR. VERSUS KANCHAN MEHTA [ 2017 (10) TMI 218 - SUPREME COURT ], this court held that the nature of offence under section 138 of the N.I Act is primarily related to a civil wrong and has been specifically made a compoundable offence. This is a very clear case of the parties entering into an agreement and compounding the offence to save themselves from the process of litigation. When such a step has been taken by the parties, and the law very clearly allows them to do the same, the High Court then cannot override such compounding and impose its will - It must also be noted that the Respondent No.2 was duty bound to file a compromise petition before the High Court, and by not doing the same has withdrawn key information from the High Court, which has led to an unwarranted confirmation of the Appellants conviction. The order of conviction passed by the trial court is set aside - appeal allowed.
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