TMI Tax Updates - e-Newsletter
March 2, 2023

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:

  Detention of goods alongwith vehicle - Misuse of E-Way Bill - The Chart given in para 7 of the counter affidavit reflects movement of the vehicle through various Toll Plazas on relevant dates and is a establishment of fact that number of trips were made from Delhi to other places through one and the same document and also through one and the same vehicle. - there has been a complete misuse of statutory provision of the Act and Rules by the dealer. - HC
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• GST:

  Refund of IGST - Refund to the SEZ when it is not required to actually fulfill the supplier’s obligation as has been reiteratively contended before this Court - Refund to IGST allowed - the respondent directed to grant the refund of ITC to the petitioner after proper verification and by obtaining a specific undertaking / bond from the petitioner where by stating that if the supplier at any point of time has taken refund and it comes to the notice of the department, then department will be in a position to recover it with interest. - HC
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• GST:

  Classification of supply - rate of tax - supply of ice cream from ice cream parlour - Ice cream sold by the outlets of the applicant are already manufactured ice-cream; that it is not their case that the ice cream were manufactured/cooked/prepared by them; that the applicant is on record that their ice cream division was sold way back in the year 2017 & therefore ice cream sold by the applicant’s outlet would not fall within the ambit of ‘restaurant service’ and is supply of goods and hence would attract GST at the rate of 18%. - AAR
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• Income Tax:

  Reopening of assessment u/s 147 - validity of order u/s 148A(d) - Here is the case, where, by total non application of mind to the fact that in respect of subsequent Assessment Years 2016-17, 2017-18, 2018-19, it has been accepted by the respondent that the petitioner is a Section 10(23C)(iiiab) institution and is entitled for exemption, the impugned Assessment Order has been passed. However, the re-opening of the assessment pertains to the Assessment Year 2015-16, which is arbitrary and illegal. - HC
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• Income Tax:

  Exemption u/s 11 - rejection of its application filed u/s 12 A(1)(ac)(iv) - Since there is no dispute regarding the fact that the assessee is still holding registration under section 12A of the Act, therefore, the issue of the validity of rejection of assessee's application u/s 12A(1)(ac)(iv) of the Act becomes solely academic in the facts of the present case.The grounds raised by the assessee are rendered academic in nature and therefore, are dismissed as infructuous. - AT
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• Income Tax:

  Penalty u/s 271FA - Appellant failed to file the SFT [Statement of Financial Transaction] by due date - no malafides could be attributed to assessee so as to invoke penalty proceedings under section 271FA and DIT should have taken note that breach was only technical or venial breach of provisions and such breach could have flown from bonafide ignorance of assessee that he was liable to act in manner prescribed by statute, and should not have invoked penalty proceedings. - AT
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• Income Tax:

  Denial of TDS credit - Credit deferred to next year - To rest the adjudication, it suffice to voice that, the combined reading of Section 199(3) r.w. Rule 37BA(3) makes the position of law clear that, credit for TDS is available in the year in which the income is reported and as a corollary, credit of TDS (deducted therefrom) cannot be deferred to some other assessment year. In the instant case, the Revenue proposed to allow the credit in the subsequent AY 2021-22 i.e. when the TDS is shown to have been credited in the form 26AS. - Credit allowed - AT
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• Income Tax:

  Disallowance of swap contract loss - whether the loss is not real but a notional loss for the reason that there was no actual transaction carried out by the assessee - We find no infirmity in the impugned order of the CIT(A) allowing the claim of the assessee for deduction on account of Mark-to Market Exchange Loss in respect of Foreign Currency Derivatives Contracts and upholding the same, we dismiss of the Revenue’s appeal. - AT
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• Income Tax:

  Addition u/s 40A(3) - cash payment in excess of prescribed limit - Genuineness or otherwise of payment is not a criteria to exclude cash payment in excess of prescribed limit from the provisions of Sec.40A(3) of the Act. - The assessee had also failed to make out a case of business exigency in making cash payment, because, it was the claim of the assessee that cash has been directly credited into bank accounts of sub-contractors and said bank accounts are maintained in one bank - AT
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• Income Tax:

  Revision u/s 263 by CIT - if the AO has adopted one of the two or more courses permissible in law and it has resulted in loss of revenue, or where two views are possible and AO has taken one view with which the Pr. CIT does not agree, it cannot be treated as an erroneous order and it is prejudicial to the interest of the Revenue, unless the view taken by the AO is totally unsustainable in law. - AT
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• Customs:

  Revocation of Customs Broker License - It is not permissible to revoke the Customs Broker’s licence of the appellant with nothing more than some suspicion. The suspicion can be ground to start an investigation and if evidence is found against the Customs Broker, action must be initiated but SCN issued without any evidence whatsoever is bad in law. The inquiry report and the impugned order based on such SCN cannot be sustained - AT
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• Customs:

  Seeking provisional release of seized goods - prohibited goods or not - coal imported by the Respondent (RPC) having sulphur - There is no harm to release the goods provisionally and merits of the case are to be dealt at the time of final adjudication of the matter. - the Adjudicating authority is directed to allow the request of the Respondents for re-testing of the goods in question from a recognized notified Environment Laboratory. - AT
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• Customs:

  Refund of Customs Duty - Rectification / amendment of Bill of Entry - Computation of Period of limitation - It would be seen that the Bombay High Court held that the question of refund would arise only when the assessment order is rectified - AT
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• Corporate Law:

  Seeking winding up of company - if an applicant is not in a position to satisfy on the point of just and equitable ground, the tribunal may refuse to make an order for winding up. Moreover in a situation the Tribunal is of the opinion that some other remedy is available to the applicant and applicant are acting unreasonably in seeking the company to be wound up instead of pursuing other remedy, the Tribunal may refuse to exercise its discretion in favour of such applicant. - AT
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• IBC:

  CIRP admitted - locus of shareholder of the Corporate Debtor - prima-facie there is no specific law which allows any shareholder of the Corporate Debtor to challenge the admission of Corporate Insolvency Resolution Process of the Corporate Debtor, once the debt due and default is established by the Adjudicating Authority, in an application made by the Financial Creditor filed under Section 7 of the I & B Code, 2016 before the Adjudicating Authority. - AT
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• IBC:

  Approval of the Resolution Plan - whether ‘PF’, ‘Gratuity’ and ‘Workmen/Employees dues’ have to be paid in full. - Section 30(1) - ‘PF’ and ‘Gratuity’ is to be paid in full as per the provisions of EPF and NP Act, 1952 and payment of Gratuity Act, 1972. Since admittedly the amounts paid are only 35.13% having treated them as ‘Secured Creditors’, we are of the considered view that indeed there was a violation of the provisions of Section 30(2) of the Code, with respect to the payment of ‘PF’ and ‘Gratuity’ only. - AT
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• Service Tax:

  Liability of appellant to pay service tax - works contract services - There is a reason for a bona fide belief in such arrangement regarding non-liability of sub-contractor when the main contractor is liable to discharge full service tax. Though the said principle is not applicable against the tax liability but the question of invoking extended period is to be answered in favour of the appellant - AT
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• Service Tax:

  Denial of CENVAT Credit - duty paying documents - In respect of some of the invoices, the Adjudicating Authority has observed that the same were computer generated, which did not contain any signature/s and that some of the invoices were photocopies - the input Service Tax credit cannot be denied just because computer generated invoices or photocopies of invoices were produced. - AT
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• Service Tax:

  CENVAT Credit - Levy of interest and penalty - the appellant after receipt of orders from the department relating to erroneous credit taken by them as per Rule 6 of CCR 2004, cannot continue to plead ambiguity in the interpretation of the said provision and claim that having reversed wrongly taken credits, that too as per their interpretation of the Rule, the imposition of interest and penalty is unsustainable. - AT
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• Service Tax:

  Refund of the unutilized input service credit of input services - intermediary services or not - in cases where a person supplies the main supply either fully or partly, on principal to principal basis, the said supply cannot be covered under the scope of ‘intermediary’. - AT
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• VAT:

  Classification of goods - KINLEY WATER - “water” - “mineral water” - “packaged drinking water” - sale of packaged drinking water in the brand name KINLEY WATER falls within the expression “water but not aerated or mineral water sold in bottles or sealed containers” vide Entry No.39 of Tax-free - HC
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Articles

• NON MENTION OF INVOICE NUMBER IN THE CERTIFICATE OF ORIGIN
• Condoned the delay in period of limitation for filing the appeal by the assessee
• Section 206AA of the Act cannot have overriding effect on DTAA: TDS on payment made to NRI who did not furnish PAN can be made as per rate in DTAA
• Alternative remedy against order not applicable when SCN is issued in violation of principles of natural justice

Notifications

• Customs

• 14/2023 - dated 28-2-2023 - Cus
  Custom Exemption to containers of durable nature - Exemption for device such as tag, tracking device or data logger already affixed on the container at the time of import - Seeks to amend notification no. 104/94-Customs, dated 16.03.1994

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• 11/2023 - dated 28-2-2023 - Cus (NT)
  Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver - Amendments in the notification No. 36/2001-Customs (N.T.), dated the 3rd August, 2001.

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• GST

• 04/2023 - dated 28-2-2023 - CGST Rate
  Exemption to intra-State supplies of goods - Seeks to amend notification no. 2/2017-Central Tax (Rate), dated 28.06.2017

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• 03/2023 - dated 28-2-2023 - CGST Rate
  CGST Rate Schedule u/s 9(1) - Notifies the rate of the central tax levied on intra-State supplies of goods - Seeks to amend notification no. 1/2017-Central Tax (Rate), dated 28.06.2017

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• 02/2023 - dated 28-2-2023 - CGST Rate
  Categories of services on which tax will be payable under reverse charge mechanism (RCM) under CGST Act - notify change in GST with regards to services as recommended by GST Council in its 49th meeting held on 18.02.2023 - Seeks to amend notification No. 13/2017- Central Tax (Rate).

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• 01/2023 - dated 28-2-2023 - CGST Rate
  List of Exempted supply of services under the CGST Act - Notify change in GST with regards to services as recommended by GST Council in its 49th meeting held on 18.02.2023 - Seeks to amend notification No. 12/2017- Central Tax (Rate)

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• 01/2023 - dated 28-2-2023 - GST CESS Rate
  Notify Rates of goods and services tax compensation cess under Goods and Services Tax (Compensation to States) Act, 2017 - Seeks to amend notification no. 1/2017- Compensation Cess (Rate), dated 28.06.2017

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• 04/2023 - dated 28-2-2023 - IGST Rate
  Absolute Exemption from IGST on inter-State supplies of goods - Entries related to Rab, other than pre-packaged and labelled inserted - Seeks to amend notification no. 2/2017-Integrated Tax (Rate), dated 28.06.2017.

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• 03/2023 - dated 28-2-2023 - IGST Rate
  IGST Rate Schedule u/s 5(1) - Integrated tax levied on inter-State supplies of goods - Seeks to amend notification no. 1/2017-Integrated Tax (Rate), dated 28.06.2017.

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• 02/2023 - dated 28-2-2023 - IGST Rate
  Categories of services on which integrated tax will be payable under reverse charge mechanism (RCM) under IGST Act - notify change in GST with regards to services as recommended by GST Council in its 49th meeting held on 18.02.2023 - Amending notification No. 10/2017.

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• 01/2023 - dated 28-2-2023 - IGST Rate
  Exemptions on supply of services under IGST Act - notify change in GST with regards to services as recommended by GST Council in its 49th meeting held on 18.02.2023 - Seeks to amend notification No. 9/2017- Integrated Tax (Rate).

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• 04/2023 - dated 28-2-2023 - UTGST Rate
  Exemption to intra-State supplies of goods - Exemption to goods notified under section 8 (1) u/s UTGST Act - Seeks to amend notification no. 2/2017-Union Territory Tax (Rate), dated 28.06.2017.

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• 03/2023 - dated 28-2-2023 - UTGST Rate
  Rate of the Union territory tax on intra-State supplies of goods - UTGST Rate Schedule u/s 7(1) - Seeks to amend notification no. 1/2017-Union Territory Tax (Rate), dated 28.06.2017.

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• 02/2023 - dated 28-2-2023 - UTGST Rate
  Categories of services on which union territory tax will be payable under reverse charge mechanism (RCM) under UTGST Act - for the words “and State Legislatures” the words “State Legislatures, Courts and Tribunals” shall be substituted - Seeks to amend notification No. 13/2017.

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• 01/2023 - dated 28-2-2023 - UTGST Rate
  Exemptions on supply of services under UTGST Act - notify change in GST with regards to services as recommended by GST Council in its 49th meeting held on 18.02.2023 - amend notification No. 12/2017- Union Territory Tax (Rate) so as to .

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• Income Tax

• 08/2023 - dated 28-2-2023 - IT
  Income-tax (First Amendment) Rules, 2023 - Corrigendum - Notification No. 04/2023 dated 10-02-2023

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Circulars / Instructions / Orders

• Service Tax - 214/1/2023 - dated 28-2-2023
  Leviability of Service Tax on the declared service “Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act" under clause (e) of section 66E of the Finance Act, 1994
• DGFT - 60/2015-2020 - dated 1-3-2023
  Discontinuation of Tariff Rate Quota for Import of Crude Sunflower Seed Oil w.e.f. 01.04.2023
• DGFT - 59/2015-2020 - dated 28-2-2023
  Amendments in Para 4.42 of the Handbook of Procedures 2015-2020
• Customs - 06/2023 - dated 1-3-2023
  Authorization of Booking Post Offices and their corresponding Foreign Post Offices in terms of the Postal Export (Electronic Declaration and Processing) Regulations, 2022
• Customs - Instruction No. 07/2023 - dated 28-2-2023
  Completion of Data Entry in DIGIT

News

• ₹1,49,577 crore gross GST revenue collected in February 2023; 12% higher than GST revenues in same month last year

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• Government e-Marketplace (GeM) commemorates the success of “SWAYATT”, an initiative to promote Start-ups, Women and Youth Advantage through e-Transactions on GeM

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• Directorate General of Foreign Trade (DGFT) further Simplifies the process of levying Composition Fee for Export Obligation Extension to include more cases under Advance Authorization Scheme

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• Spices Board celebrates 36th Anniversary 

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• Monthly Review of Accounts of Union Government of India upto January 2023 for Financial Year 2022-23

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Case Laws:

• GST

• 2023 (3) TMI 58
  Detention of goods alongwith vehicle - Misuse of E-Way Bill - Cancellation of E-way Bill - once the goods were not dispatched on the same day - Rule 139(9) of CGST Rules - evasion of GST taking place or not - HELD THAT:- From the findings recorded by the taxing authorities it is clearly evident that vehicle no.NL01N/6504 was not only used by Bombay Kandla Transport (P) Ltd. through which goods were sent by the petitioner-dealer, but also by Bombay Kolkata Logistics for sending fruits and vegetable to Panchkula and by Delhi Hemkunt Logistics for sending rice to Darbhanga (Bihar). Once, the vehicle was not available on 08.04.2018 and was used for transporting fruits and vegetable and its journey commenced on 07.04.2018, the case set up by the petitioner cannot be accepted and has rightly been denied by the authorities. It is clear that the goods were sent on 07.04.2018 to West Bengal through the vehicle in question and thereafter, on 12.04.2018 to Darbhanga (Bihar). Filling the details of the vehicle and transporter in Part-B of Form GST EWB-01 completely belie the story set up by the petitioner before the authorities - Moreover, the finding recorded by the Appellate Authority that Darbhanga Dealer to whom it is alleged that rice was sent had denied such transaction as the firm having already closed down two months prior to the transactions which corroborates the facts that through tax invoice and E-Way Bill generated on 08.04.2018, the dealer has made several transactions and evaded tax. The Chart given in para 7 of the counter affidavit reflects movement of the vehicle through various Toll Plazas on relevant dates and is a establishment of fact that number of trips were made from Delhi to other places through one and the same document and also through one and the same vehicle. This Court therefore, finds that there has been a complete misuse of statutory provision of the Act and Rules by the dealer. The inference drawn by the taxing authorities after interception of goods on 18.04.2018 needs no interference by this Court - Petition dismissed.

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• 2023 (3) TMI 57
  Seeking grant of regular bail - petitioner has already faced incarceration for more than 1 year and 4 months and the maxmium sentence otherwise even if it is more than Rs. 5 crores is five years - HELD THAT:- The quantum of amount which the petitioner is involved is yet to be decided at the time of trial. Under Section 132 of the GST Act even if the amount is more than Rs. 5 crores, the maximum sentence is five years as per the learned counsel for the parties. The petitioner has already faced incarceration for more than 1 year and 4 months. The complaint is still at the summoning stage. The other two accused have already been extended the benefit of bail. During the course of arguments, learned counsel for the respondent has stated that regarding recovery from the petitioner a separate show-cause notice is yet to be issued. Considering the total custody of the petitioner which is more than 1 year and 4 months, this Court deems it fit and proper to grant regular bail to the petitioner - Petition allowed.

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• 2023 (3) TMI 56
  Refund of IGST - Refund to the SEZ when it is not required to actually fulfill the supplier s obligation as has been reiteratively contended before this Court - Export of Goods/Services without payment of tax - It is the case of the petitioner that CGST Act does not make any distinction between a SEZ unit and other registered persons so far as eligibility of ITC is concerned - according to the petitioner, the appellate authority erred in holding that Section 54(3) of the CGST Act read with Rule 89(1) and Rule 89(2)(f) of the CGST Rules mandates only the supplier to claim the refund of ITC - HELD THAT:- There is no express denial of refund of output tax or ITC to a SEZ under Section 54. Therefore, the averment that since the supply to SEZ unit is a zero rated, the units situated in SEZ are not eligible for refund under Section 54 of the Act is not sustainable. The SEZ since is considered as zero rated supply in terms of 16 of the IGST Act, such supplier is exempted from IGST. The notification No.15 of 2017 integrated tax dated 30th June, 2017 provides that the suppliers supplying the goods at SEZ can supply under the bond or electronic undertaking without payment of IGST and claim credit of ITC or can supply on payment of IGST or claim refund of taxes paid - It is an additional burden on the administration, the respondents authorities to verify whether the supplier has claimed the refund or not and whether the SEZ unit has actually paid the taxes to the supplier. A system since is not geared up for the same, the concern has multiplied. Any inadvertent payment of the amount of taxes to the supplier in wake of thousands of such transactions happening everyday in the SEZ, it is urged that no exceptions be made. An attempt is made to distinguish the matter on the facts and particularly, since the petitioner is non- SEZ by pointing out that the one which is decided in M/s. Britannia Industries [ 2020 (9) TMI 294 - GUJARAT HIGH COURT ] is in relation to the credit of IGST distributed by ISD for the services pertaining to the SEZ unit, as it was not possible for a supplier to file refund application to claim the refund of ITC distributed by the ISD. It is also the stand of the department that the matter is pending in the form of SLP No.13431 of 2021 before the Apex Court. It is fairly admitted that no stay has been granted. Not only this decision but also M/s.IPCA Laboratories versus Commissioner in [ 2022 (2) TMI 947 - GUJARAT HIGH COURT ] covers this issue squarely with a specific undertaking having been tendered along with the application for the refund that the supplier has not claimed any refund and any eventuality of the supplier having been given the refund, the petitioner is taking the responsibility to make good the amount which may have been given will need to be borne in mind and accordingly, this petition is allowed, quashing the order passed by the Commissioner (Appeals) for the period of September, 2018 to December, 2019 and Assistant Commissioner for the period of 2020 to November, 2021 that the respondent grant the refund of ITC to the petitioner after proper verification and by obtaining a specific undertaking / bond from the petitioner where by stating that if the supplier at any point of time has taken refund and it comes to the notice of the department, then department will be in a position to recover it with interest. Petition disposed off.

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• 2023 (3) TMI 55
  Seeking permission to withdraw the appeal - Exemption from GST - services provided by the applicant in affiliation to/ partnered with Gujarat University and providing education for degree courses to students under specific curriculum as approved by the Gujrat University, for which degrees are awarded by the Gujarat University - Exempt under Entry No. 66 of the Notification No. 12/ 2017- Central Tax (Rate) dated 28th June, 2017 or not. The applicant has requested to permit him to withdraw the appeal filed for determination, on the grounds that their contract with Gujarat University was not renewed and that they would like to rely on the case of M/s. C Ramappa [ 2020 (4) TMI 689 - AUTHORITY FOR ADVANCE RULING KARNATAKA ], M/s. S K Properties [ 2020 (8) TMI 489 - AUTHORITY FOR ADVANCE RULING, KARNATAKA ] and Sampada Caterers [ 2018 (9) TMI 439 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA ] - existence of restriction or any time line prescribed for withdrawal or not. HELD THAT:- The application filed by the applicant for advance ruling is dismissed as withdrawn. The application for rectification of order dated 9.10.2020 in view of the foregoing has become infructuous.

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• 2023 (3) TMI 54
  Classification of supply - rate of tax - supply of ice cream from any of the outlets of HRPL - to be considered as supply of restaurant services or not? - applicable rate of tax thereon in accordance with notification No. 11/2017-CT(Rate) dtd 28.6.2017 as amended from time to time. If not the restaurant services, supply of ice cream from any of the outlets of HRPL can be considered as supply of ice cream from ice cream parlour chargeable to GST @ 18%? HELD THAT:- The outlets of the applicant selling already manufactured ice-cream, do not engage in any form of cooking. As already discussed above, restaurant service involves the aspect of cooking/preparing during the course of providing service. Hence, as recommended by the Council, supply of ice-cream [not prepared, cooked] by the outlets of the applicant, stands on a different footing than restaurant service. Further, their activity entails supply of ice cream as goods [a manufactured item] and not as a service, even if certain ingredients of service are present. Ice cream sold by the outlets of the applicant are already manufactured ice-cream; that it is not their case that the ice cream were manufactured/cooked/prepared by them; that the applicant is on record that their ice cream division was sold way back in the year 2017 therefore ice cream sold by the applicant s outlet would not fall within the ambit of restaurant service and is supply of goods and hence would attract GST at the rate of 18%. When an ice cream is ordered as a desert along with cooked or prepared food at their outlets - whether it would be treated as supply of goods or supply of services? - HELD THAT:- Under GST, a composite supply mean a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. Here, principal supply means supply of goods or service which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary. Likewise, a mixed supply means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply. Supply of ice cream, as a desert by the outlets of the applicant along with cooked or prepared food is therefore, naturally bundled and supplied in conjunction with the principal supply i.e. cooked/prepared food, in the ordinary course of business. Thus, the supply of ice cream along with cooked or prepared food, falls within the ambit of restaurant service.

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• Income Tax

• 2023 (3) TMI 53
  Estimation of income - Bogus purchases - 25% addition upheld by the CIT(A) - HELD THAT:- In the present case, as can be seen from the faits narrated hereinabove, the Tribunal had already passed the order before the specified date and, therefore, disputed tax had to be calculated in terms of section 2(1)(j)(B) of the Ait of 2020. Designated authority had only to calculate the disputed tax by giving effect to the orders of the Tribunal. FAQ No.7 would, in our opinion, be applicable if it was a case of remand by an appellate authority to the AO, where a reasonable opportunity of being heard was not given by the Assessing Officer to the assessee or the Appellate Authority wanted the AO to carry out a fresh examination of the issue with a specific direction. In the present case, the order of the Tribunal is certainly not the one where the AO had been directed to carry out a fresh examination on any issue rather the Tribunal had clinched the issue by holding that the addition would only be made to the extent of difference between the gross profit rate on genuine purchases and gross profit rate on hawala purchases. The Tribunal remitted the matter to the file of AO for applying the ratio laid down in the case of Mohommad Haji Adam Co. [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT ] The reason why the Tribunal did not specify the amount based upon the afore-stated principle was that specific details were not readily available from various ARs/DRs for facilitating the calculation of such rates.

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• 2023 (3) TMI 52
  Reopening of assessment u/s 147 - validity of order u/s 148A(d) - Petitioner was unable to prove that it is substantially financed by the Government in order to claim exemption under Section 10(23C)(iiiab - HELD THAT:- When the respondent themselves have accepted that the petitioner is a Section 10(23C)(iiiab) institution entitled for exemption in respect of the subsequent Assessment Years 2016-17, 2017-18 and 2018-19, they cannot now contend that the petitioner has not been able to establish that they are an educational institution solely for the purpose of education and not for the purpose of making profits. Admittedly, the petitioner is a Deemed University in existence from 1957 onwards which is catering to the needs of several lakhs of students and is having a huge infrastructure. Therefore, the reasons given by the respondent for passing the order under Section 148A(d) are arbitrary and illegal and has been passed by total non application of mind. Here is the case, where, by total non application of mind to the fact that in respect of subsequent Assessment Years 2016-17, 2017-18, 2018-19, it has been accepted by the respondent that the petitioner is a Section 10(23C)(iiiab) institution and is entitled for exemption, the impugned Assessment Order has been passed. However, the re-opening of the assessment pertains to the Assessment Year 2015-16, which is arbitrary and illegal. Therefore, the Anshul Jain decision [ 2022 (10) TMI 3 - SC ORDER] relied by the learned Standing counsel for the respondent has no applicability for the facts of the instant case. As per judgment Red Chilli International Sales [ 2023 (1) TMI 674 - SC ORDER] it is very clear that this Court is having the power to consider a challenge being made to an order passed under Section 148 A(b) of the Income Tax Act. For the foregoing reasons, the impugned order passed u/s 148A(d) and the consequential notice have to be quashed and the writ petition will have to be allowed. Decided in favour of assessee.

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• 2023 (3) TMI 51
  Deduction claimed u/s 80IA(4) - Necessity of certificate from the concerned Port Authority certifying that the structure was a part of the Port - assessee is a State Government undertaking which had set up an Inland Container Depot (ICD) and Container Freight Station (CFS) in the vicinity of Jawaharlal Nehru Port Trust (JNPT) - AO denied the benefit on the ground that the assessee had failed to furnish a certificate from the concerned Port Authority certifying that the structure was a part of the Port, which it considered mandatory in view of the Board s notification dated 23rd June 2000 followed by Circular No.10 of 2005 dated 16 th December 2005 - ITAT allowed deduction - HELD THAT:- Tribunal, in reference to the assessment year 2009-10, allowed the appeal of the assessee by placing reliance upon the judgment in the case of Assistant Commissioner of Income-tax Vs. JWC Logistics Park P. Ltd. [ 2014 (8) TMI 975 - ITAT PUNE ] This finding of the Tribunal was followed even for the instant assessment year 2011-12. It needs to be mentioned that an appeal filed by the revenue against the order of the Tribunal [ 2016 (5) TMI 1487 - ITAT PUNE ] in regard to the assessment year 2009-10, also came to be dismissed [ 2019 (9) TMI 1692 - BOMBAY HIGH COURT] following the views expressed in Container Corporation of India Ltd. Vs. Asstt. Commissioner of Income Tax [ 2012 (5) TMI 260 - DELHI HIGH COURT ] and this Court in Commissioner of Income Tax Vs. Continental Warehousing Corporation [ 2015 (5) TMI 656 - BOMBAY HIGH COURT ] Since a view has already been taken in Continental Warehousing Corporation (Supra) on the same issue and since there is no change in either the facts or the law, we are of the opinion that the questions proposed do not given rise to any substantial question of law.

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• 2023 (3) TMI 50
  Revision u/s 263 - deduction for creation of special reserve from the profit of eligible business as per Section 36(1)(viii) - HELD THAT:- The detailed working of computation of deduction u/s 36(1)(viii) of the Act had been furnished by the assessee along with giving scientific and cogent basis for the same. The basis of allocation of all elements of income and expenses ,both direct and indirect was given,pointing out that it was in accordance with fundamental principles of cost apportionment as laid down by Cost Accounting Standards issued by the Institute of Cost Accountants of India. CIT having not pointed out any infirmity in the same to the assessee, and even the infirmities pointed out in his order u/s 263 of the Act not addressing this explanation of the assessee, there is no error in the order of the AO found by the PCIT. Even otherwise, we have noted that this assessee s basis of calculating claim of deduction u/s 36 (1)(viii) has been consistently accepted and approved by the CIT(A) in preceding assessment years, i.e. AYs 2014-15 and 2012-13. AO therefore, accepting the assessee s claim of deduction in the impugned year, has taken a plausible view. We hold that there was no error in the order of the AO accepting the assessee s claim of deduction under Section 36(1)(viii) of the Act and the order passed by the Ld. Pr. CIT under Section 263 of the Act is, therefore, set aside. Appeal of the assessee is allowed.

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• 2023 (3) TMI 49
  Deduction u/s. 80P(2)(d) - Interest income earned from such Cooperative Society - HELD THAT:- Section 80P(2)(d) provides that deduction shall be allowed in respect of any income by way of dividend derived by the Co-operative Society from its investment with any other Co-operative Society . The only requirement for claiming deduction under this provision is that the interest or dividend should be derived by the assessee s Co-operative Society by making investment in any other Co-operative Society. In the aforestated decision of Pune Tribunal the Pune District Central Co-operative Bank [ 2022 (8) TMI 1291 - ITAT PUNE ] has already been held to be a Co-operative Society and the assessee before us also has invested and earned interest and dividend income from the same Pune District Central Co-operative Bank. Since, it is a Co-operative Society, the interest earned from investment made in Pune District Central Co-operative Bank are eligible for deduction u/s. 80P(2)(d) of the Act. We set aside the respective NFAC orders for all the three appeals before us and direct the Ld. AO for granting deduction u/s. 80P(2)(d) of the Act to the assessee. The grounds of appeal are allowed.

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• 2023 (3) TMI 48
  Disallowance of commission on the sale value - commissions payment which is more than the reasonable rate of commission in the real estate business - AO disallowed in excess of 2% of the sale value of flats - CIT(A) confirming the addition being paid over and above @ 2% of agreement value of sale of flats - HELD THAT:- CIT(A) upheld the addition by concurring the action of assessing officer. Before us, assessee has not given any convincing factor for making payment of such commission, which is not the prevailing in the real estate business, except making submissions that it was incurred/ paid wholly and exclusively for the purpose of business. In our view the assessing officer rightly disallowed the commissions payment which is more than the reasonable rate of commission in the real estate business. Thus, the ground No. 1 of the appeal is dismissed. Disallowance of commissions expenses - such commission was paid for purchase of land, however, no such land is shown in the asset side in the balance sheet - HELD THAT:- We find that ld CIT(A) that confirmed the addition by holding that no land was purchased by assessee during the year. The plea of typographical error commission paid for land is self-serving statement of assessee and made to wriggle out of situation when the assessing officer pointed out the discrepancy. As noted earlier, before us, the ld AR for the assessee has vehemently argued that when genuineness of such expenses were not in doubt and expenses incurred wholly and exclusively for the purpose of assessees business, same should be allowed and reasonableness of the expenditure has to be checked from the point of view of businessman. We are not convinced with the submissions of the ld AR for the assessee, when the commissions expense is wholly unreasonable and the assessee has taken such stand that the alleged commission was paid for purchase of land and in fact no such land was admittedly purchased during the year, the revenue authority cannot examine the reasonableness of the expenses on peculiar facts of the case. Therefore, we do not find any reason to interfere with the finding of the present case. In the result, this ground of appeal is also dismissed. Appeal of the assessee is dismissed.

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• 2023 (3) TMI 47
  Exemption u/s 11 - rejection of its application filed u/s 12 A(1)(ac)(iv) - Income from property held for charitable or religious purposes - CIT(E) rejected the application filed by the assessee u/s 12A(1)(ac)(iv) in terms of 2nd proviso to section 11(7) inter-alia, on the basis that the registration granted to the assessee u/s 10(23C) was provisional in nature and therefore, same is not identical to the approval granted under section 10(23C) for the purpose of section 11(7) - HELD THAT:- CIT(Exemptions) has rejected the submission of the assessee to treat provisional approval under section 10(23C) identical to approval u/s 10(23C) for the purpose of section 11(7) - Therefore, in view of the above, once the 1st proviso to section 11(7) is not triggered there is no question of the registration granted under section 12A of the Act becoming inoperative. Since there is no dispute regarding the fact that the assessee is still holding registration under section 12A of the Act, therefore, the issue of the validity of rejection of assessee's application u/s 12A(1)(ac)(iv) of the Act becomes solely academic in the facts of the present case.The grounds raised by the assessee are rendered academic in nature and therefore, are dismissed as infructuous. During the hearing, it was submitted that the assessee had filed an application in Form 10A as per section 12A(1)(ac)(i) of the Act on 23/11/2022, and consequent thereto, registration in Form 10AC has been granted on 01/12/2022, as per section 12AB(1)(a) for the period being assessment years 2022-23 to 2026-27. Our findings in the present appeal will not and cannot have any consequence, in case, the assessee at any time is found to be at fault for violation of any condition specified under the Act in respect of registration granted to it, in which case the Revenue can take appropriate action as per law. Appeal by the assessee is dismissed.

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• 2023 (3) TMI 46
  Denial of deduction u/s 80P(2)(d) - interest income received from various co-operative banks - HELD THAT:- Revenue denied the deduction under section 80P(2)(d) on the basis that the interest income earned from co-operative bank is not covered under the aforesaid provisions and the said provision only grants deduction in respect of interest earned from co-operative society. In this regard, it is pertinent to note that all co-operative banks are co-operative societies but vice versa is not true. We find that the coordinate benches of the Tribunal have consistently taken a view in favour of the assessee and held that even the interest earned from the co-operative banks are allowable as deduction u/s 80P(2)(d). As regards the decision of in Mavilayi Service Co-operative Bank Ltd. [ 2021 (1) TMI 488 - SUPREME COURT] on which reliance has been placed by the learned CIT(A) as well as by the DR, we find that the said decision only clarifies the aspect that section 80P(4) is a proviso to the main provision and excludes only co-operative banks, which are co-operative societies and also possesses a licence from RBI to do banking business - we are of the considered view that the aforesaid decision is of relevance only in a case where the assessee, who is a co-operative bank, claims a deduction u/s 80P of the Act - such is not the facts of the present case. Therefore, in view of the above and respectfully following the decision of the coordinate bench, we uphold the plea of the assessee and direct the AO to grant deduction u/s 80P(2)(d) to the assessee in respect of interest income earned from investment with co-operative banks. Accordingly, we set aside the impugned order passed by the learned CIT(A). As a result, ground No. 1 raised by the assessee is allowed.

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• 2023 (3) TMI 45
  Deduction u/s 54B - AO had concluded that the land which was sold by the respondent-assessee was not used for agricultural purposes in 2 years immediately preceding the year of the sale of land - NFAC admitting the additional evidence and after calling for remand report, allowed the claim of the respondent-assessee u/s 54B - HELD THAT:- NFAC extracted the submissions made by the respondent-assessee, thereafter, simply jumped to the conclusion that the Assessing Officer was not justified in denying the claim for deduction u/s 54B without examining in detail the facts and the evidence brought on record by the Assessing Officer in the form of statement of Talathi and the 7/12 extracts etc, in-fact, no reasons whatsoever were given by the NFAC in support of the conclusion reached by it. The order passed by NFAC is bereft of any factual discussion of case nor met the reason given by Assessing Officer while denying claim for deduction u/s 54B of the Act. The Hon ble Supreme Court in the case of Siemens Engg. vs. UOI [ 1976 (4) TMI 204 - SUPREME COURT ] held that the rule requiring reasons to be given in support of an order is like the principle of audi alteram partem, a basic principle of natural justice, which must inform every quasi-judicial process and this rule must be observed in its proper spirit and mere pretence of compliance with it would not satisfy the requirement of law. In M/s Woolcombers of India Ltd. v. Woolcombers Workers Union and others [ 1973 (8) TMI 158 - SUPREME COURT ] as well settled by now that reason is the life of law. It is an indispensable component of a decision making process. A nonspeaking and non-reasoned order smacks arbitrary exercise of judicial or quasi-judicial or even administrative power. In the present case NFAC has merely extracted the contention of the assessee and accepted without giving any independent, cogent and convincing reasons for accepting the claim of the assessee.The Hon ble Supreme Court in the case of Pankaj Garg vs. Meenu Garg [ 2013 (2) TMI 924 - SUPREME COURT ] reiterated the settled position of law an order which does not contain any reason is no order in the eyes of law. Therefore, the order passed by the NFAC does not meet the requirements of being a reasoned order as enunciated by the Hon ble Supreme Court in the decisions referred to above supra and cannot be sustained in the eyes of law. However, in order to meet the ends of justice, we remit the matter to the file of the NFAC for de novo adjudication of issue in appeal in accordance with law. Thus, the grounds of appeal filed by the Revenue stand partly allowed.

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• 2023 (3) TMI 44
  TDS on Works Contract u/s. 40(a)(ia) - Auditor s Report itself the Auditor himself has given a statement that the assessee has not deducted tax at source on payment made towards works contract - assessee submitted copy of challan for payment of Rs.30,426/- made under the MVAT Rules - HELD THAT:- The assessee has absolutely taken a new stand by submitting that they have made payment under MVAT Rules and provisions of TDS are not applicable. But, the assessee has failed to establish that even if some amount has been paid under MVAT Rules, how the assessee is absolved from liability of paying TDS as per Act. There is a categorical finding also by the Ld. CIT(A) that nothing has been brought on record by the assessee in the form of any documentary evidences/circular/Rules whereby if the assessee has paid an amount as per MVAT Rules then it was not required to make TDS payment. Even before us also, this was not established. Rather, assessee submitted that the provisions u/s. 40(a)(ia) of the Act is not applicable so far as the transactions of the assessee taken place in the relevant year. Department should be given an opportunity in this regard to verify the contentions of the assessee and readjudicate the issue as per law. In view thereof, we set aside the order of CIT(A) and remand the matter to the file of Ld. AO for readjudication as per law complying with the principles of natural justice. Appeal of the assessee is allowed for statistical purposes.

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• 2023 (3) TMI 43
  Commission paid on sales - Allowable business expenses or not? - CIT(A) concluded that the assessee has not file any cogent reply to controvert the finding of Assessing Officer and he merely stressed that the payments were made for the purpose of business whereas enquiry concluded by Assessing Officer disproved the claim of assessee - HELD THAT:- We find merit in the submissions of the ld AR for the assessee that commission was not paid to his father and brother rather it was paid for smooth and timely execution of the orders/ contracts. Such facts are not controverted by the assessing officer. Also in the reply in response to notice u/s 133(6) Sumitomo chemicals India Pvt. Ltd. in response to question No. 2 they specifically stated that Kishore Shah and he was instrumental in sourcing purchases made from Shah Industrial Products during the F.Y. 2013-14, similar reply was given by Khalpana Industries(India) Limited in response to notice under Section 133(6) replied that they know Mr. Chintan Shah, who was instrumental in sourcing purchase from Shah Industrial products, copies of such replies are available - thus find that the assessing officer has given contrary finding. There is no finding of AO that the commissions paid to both the parties are excess or unreasonable. No comparable stances are given by the assessing officer. Commission payment is ranging from 3 % to 5% is not unreasonable keeping in view the alleged assistance rendered by the persons to whom such commission is paid as they were having sufficient experience in the business of assessee. Similar commission payment was allowed in subsequent assessment year. Thus, no justification in making disallowance of entire commission expenses - we direct AO to delete the entire commission payment disallowances - Grounds of appeal raised by the assessee is allowed.

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• 2023 (3) TMI 42
  Assessment against assessee company as undergoing Corporate Insolvency Resolution Process (CRIP) - HELD THAT:- Assessee company is going through the resolution process before the Hon ble NCLT for which the Resolution Personnel (RP) was appointed in order to manage the FS of the company - AR submitted that a resolution plan dated 21.09.20220 was submitted by the Jalan Fritsch consortium which was amended on several occasion and was passed by a majority votes and was approved by Hon ble NCLT. It is observed that the assessee has failed to make compliance with the notices issued by the lower authorities inspite of several opportunities. Considering the nature of the addition, we are of the considered view that the assessee may be given one last opportunity to present its case before the A.O. As also evident that the considerable amount of time and revenue has been spent by Exchequer in carrying out the assessment proceedings followed the appellate proceedings. The assessee is directed to pay a cost of Rs.25,000/- each in both these appeals for being delinquent before the lower authorities and the same is to be paid towards Prime Minister s Relief Fund within 30 days from the date of this order. The assessee is also directed to appeal and fully co-operate with the A.O. to present its case without any further delay.

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• 2023 (3) TMI 41
  Revision u/s 263 by CIT - deposit of huge cash during the demonetization period in various installments in several bank accounts - assessment proceedings were initiated under limited scrutiny assessment under CASS for the reason default in TDS and disallowance for such defaults - HELD THAT:- The fact that cash deposits were made in the bank account held by the assessee during the demonetization period, does not, by itself lead to the conclusion that there was an understatement of income on part of the assessee or there was unexplained income on the part of the assessee and therefore, this alone cannot be a reason for converting limited scrutiny to full/complete scrutiny - we observe that the AO called for details of deposits made in the bank accounts held by the assessee and in response thereto, the assessee also submitted details of cash deposits made in the bank accounts held by him during the demonetization period. During the course of assessment, the above details were scrutinized by the AO and no infirmity was found with respect to the same. Whether scope of limited scrutiny assessment can be expanded by PCIT in 263 proceedings? - Since the assessee s case was selected for limited scrutiny on certain issues and Ld. AO has examined these issues and framed the assessments and the issue of examination of payment to contractors was not a part of the limited scrutiny reasons, in our considered view, Ld. Pr. CIT erred in assuming jurisdiction u/s 263 of the Act and also erred in holding that assessment order is erroneous and prejudicial to the interest of revenue. In the case of Balvinder Kumar [ 2021 (3) TMI 649 - ITAT DELHI ] the ITAT held that in case of limitedscrutiny, Assessing Officer could not go beyond reason for which matter was selected for limited scrutiny thus, it would not be open to Principal Commissioner to pass revisionary order under section 263 on other aspects and remit matter to Assessing Officer for fresh assessment. Thus we hold that Ld. Pr. CIT erred in assuming revisionary powers u/s 263 of the Act and the impugned order of Ld. Pr. CIT is hereby set aside. Decided in favour of assessee.

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• 2023 (3) TMI 40
  Addition u/s 68 - deposit of SBN during demonetization period by the AO on the ground that it would not have been humanly possible for the assessee to provide consultancy to patients when he is in full employment - as per DR consultancy receipts have been high from 1.4.2016 to 31.10.2016 i.e.pre-demonitisation period and that after this period the consultancy charges have substantially reduced - HELD THAT:- CIT(A) while confirming the addition partially has done so for the reason that there has not been adequate withdrawals for personal expenses - as noticed that the revenue has not recorded any adverse factual finding with regard to the source for the cash deposited whereas the source for impugned addition is adequately evidenced by the assessee by way of patient wise list of daily receipt from consultation in order to support that it derived from the professional income. It is also noticed that the amount of consultancy receipts is already offered to tax by the assessee by reflecting the same in the P L Account which are duly audited and this fact is not doubted by the lower authorities. In that case, if the cash deposits are added under section 68 of the Act, then it would result in taxing the impugned amount twice, once as a consultancy income and secondly as an addition under section 68 of the Act. In assessee s case we notice that the assessee has offered the impugned income to tax and that the lower authorities have not rejected the books of accounts. AR during the course of hearing submitted the returns filed for AY 2018-19 where the assessee has offered a similar amount to tax to substantiate that the assessee is receiving the income from consultation in the same range post retirement and that has been regularly offering the same to tax. Given the facts of the assessee s case and considering the above decision of the coordinate bench of the Tribunal we are of the view that the assessee has discharged the onus by providing the necessary evidences and by offering the income to tax. Accordingly we hold that the addition made u/s 68 cannot be sustained and is therefore deleted. - Decided in favour of assessee.

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• 2023 (3) TMI 39
  Rectification u/s 254 - Delayed payment of employee s contribution to ESI and PF - non-consideration of the decision of the jurisdictional high court/Supreme Court - Payment beyond the due date as prescribed under the relevant law relating to ESI and PF for deposit of employees share of contribution - HELD THAT:- We are of the view that the Hon ble Supreme Court in the case of CIT Vs. Saurashtra Kutch Stock Exchange case [ 2008 (9) TMI 11 - SUPREME COURT ] has held that non-consideration of the decision of the jurisdictional high court/Supreme Court constitutes mistake apparent from record and is rectifiable within the meaning of section 254(2) of the Act Article 141 of the Constitution of India provides that the law declared by Supreme Court shall be binding on all courts within the territory of India. The law laid down by Supreme Court operates retrospectively and is deemed to the law as it has always been unless, the Supreme Court, says that its ruling will only operate prospectively. There is a mistake apparent on record in view of the decision of the Hon ble Supreme Court in the case of Checkmate Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT ] though rendered subsequent to the order passed by the Tribunal and has to be rectified by holding that the disallowance made by the revenue authorities u/s.36(1)(va) of the Act was justified. The orders of the Tribunal will stand modified/rectified accordingly. MP stands allowed.

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• 2023 (3) TMI 38
  Proceedings against corporate debtor - financial creditor Application u/s 7 of Insolvency and Bankruptcy Code 2016 against the assessee before NCLT allowed - HELD THAT:- No proceedings can be initiated against the corporate debtor, i.e., assessee company including the present proceedings before this Tribunal, or the income tax proceedings and recovery of demand or giving effect of any order. It is well settled now that, IBC has overriding affect on all the acts including Income Tax Act which has been specifically provided u/s 178(6) of the I.T. Act as amended w.e.f. 01.11.2016. Thus, in view of moratorium declared by NCLT, all the proceedings in the Court of Law, Tribunal etc. cannot continue in view of Amendment to Section 178(6) of the Act, therefore, no useful purpose is going to be served in continuing the present proceedings. In view of the above, we dismiss the appeal in limine.

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• 2023 (3) TMI 37
  Deduction u/s 54 - construction of residential house at Nelambur village, Thirukalukundram, Kanchipurram District and the claim u/s 54 are bogus - HELD THAT:- We find that the assessee has filed certain evidence including approved plan for building house, copy of VAO certificate certifying existence of building in the above address and also copy of VAO certificate for agricultural income. The assessee had also filed bill of quantities of construction of building obtained from Shri. K.M. Rajan. The assessee claimed that she had constructed new house property, however, due to heavy rain and floods during the period, the house was damaged. The inspector, when visited the site he could not ascertain the construction, therefore, gave a report that there was no proof of construction of building. Even when the DVO visited the site, he could not identify the construction. Therefore, he had reached to a conclusion that there was no construction. If you go by various evidences filed by the assessee, it is difficult to reject the claim of the assessee that she had constructed a house property at Nirambur Village, Thirukazhukundram Taluk, Kancheepuram District. If you go by findings recorded by the AO and the Ld. CIT(A), there is no dispute that the claim of the assessee is incorrect, because the assessee could not adduce proper evidence. Facts are contradicting with each other. The assessee claims to have constructed new residential house property, whereas the authority claims that there is no proof of new construction. Therefore, we are of the considered view that the matter needs reexamination from the AO. Thus, we set aside the order passed by the CIT(A) and restore the issue back to the file of the AO and direct the AO to re-examine the claim of the assessee in light of various averments including evidence filed by the assessee - Appeal filed by the assessee is treated as allowed for statistical purposes.

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• 2023 (3) TMI 36
  Penalty u/s 271FA - Appellant failed to file the SFT [Statement of Financial Transaction] by due date and also to avail the opportunity granted u/s 285BA(5) and failed to provide any explanation for its default - reasons of delay given was that the assessee bank was working with 15 branches at different places in Jhalawar district and in some cases branches are situated in rural areas where due to network connectivity problem the report which was required for filing SFT could not be generated within the due time and thus the said SFT return was filed after due date - HELD THAT:- We cannot lost sight of the fact that it is acknowledged and judicially recognized fact that tax laws of this country are complex and complicated and often required for compliance, there with assistance of tax practitioners specializing in this field, is well-known fact and it is equally well-known fact that legislation in this field underwent so frequent changes and amendments that it was not possible for even person specializing in this field, including tax administrator, to claim that he knew what exactly law was on particular given day or period without making references to history of enactments. Thus in these circumstances no malafides could be attributed to assessee so as to invoke penalty proceedings under section 271FA and DIT should have taken note that breach was only technical or venial breach of provisions and such breach could have flown from bonafide ignorance of assessee that he was liable to act in manner prescribed by statute, and should not have invoked penalty proceedings. See Durgapur Steel Peoples Cooperative Bank Ltd vs. Director of Income-tax [ 2016 (11) TMI 207 - ITAT KOLKATA] And even if some default was found to be there in filing the SFT, the same at the best was merely a technical and venial breach of law and the conduct of the assessee in the particular has not been shown to be contumacious and no deliberate defiance of law is established on record by the revenue authorities. See Hindustan Steels vs. State of Orissa [ 1969 (8) TMI 31 - SUPREME COURT] . Thus we delete the penalty and allow the grounds of the assessee.

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• 2023 (3) TMI 35
  Denial of TDS credit - Return of income as processed by CPC u/s 143(1) - mis-match of year of reporting of TDS by the tenant deductor - HELD THAT:- Credit for tax deducted and paid to the Central Government shall be allowed to the deductee assessee for the assessment year for which such income is assessable or assessed. We find force in the contention of the appellant that, the TDS credit is available in the assessment year where the corresponding income has been offered to tax by the assessee, and as such the TDS credit cannot be postponed to a different assessment year on the basis of reporting by the deductor, when the accrued income from such transaction has been reported in the present impugned AY. To rest the adjudication, it suffice to voice that, the combined reading of Section 199(3) r.w. Rule 37BA(3) makes the position of law clear that, credit for TDS is available in the year in which the income is reported and as a corollary, credit of TDS (deducted therefrom) cannot be deferred to some other assessment year. In the instant case, the Revenue proposed to allow the credit in the subsequent AY 2021-22 i.e. when the TDS is shown to have been credited in the form 26AS. As stated by the Ld. AR, the corresponding income will not be found to be recorded in the subsequent AY and therefore such action would belie the letter and spirit of Section 199(3) and Rule 37BA(3) thereto. Thus, on first principles, we are inclined to agree with the stand taken on behalf of the assessee for eligibility TDS credit in the Assessment Year 2020-21 itself when income has been claimed to have accrued/arisen, included for determination to taxable income and offered to tax undisputedly. And we find that, a similar view has been taken by the co-ordinate bench in Mahesh Software System Pvt. Ltd. [ 2019 (10) TMI 624 - ITAT PUNE] Thus, no hesitation to accept the plea of the appellant against the denial of TDS credit in contradiction of provisions of Section 199 r.w.r 37BA is clearly in the league of apparent error deserves to be reversed, ergo we set aside the orders of Ld. NFAC and direct the Ld. CPC to allow the TDS credit pertaining corresponding income of rent maintenance accrued / received / received from M/s Bosch Limited and offered to Tax in the impugned AY. Appeal of the appellant is Allowed.

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• 2023 (3) TMI 34
  Disallowance of swap contract loss - assessee during the year under consideration to refinance its project availed external commercial borrowing at the rate of LIBOR + 4.4% - AO held that mark to market loss on the derivative instrument held by the assessee as on balance sheet is not real but a notional loss for the reason that there was no actual transaction carried out by the assessee - assessee to hedge itself from the fluctuation interest rate entered into derivative contract in the nature of interest rate swap with Standard Chartered Bank on which assessee incurred loss - HELD THAT:- We note that identical issue came up before this tribunal in case of sister concern of the assessee namely Adani Petronet (Dahej) Port Pvt. Ltd for A.Y. 2011-12 [ 2022 (6) TMI 121 - ITAT AHMEDABAD] as relying on M/s. Adani Hazira Port Pvt. Ltd, [ 2022 (4) TMI 850 - ITAT AHMEDABAD] where the issue has been decided in favour of the assessee and against the Revenue as relying M2M loss on SWAP contract was allowable where loans were converted into foreign currency loan to take benefit of low interest rate and loss recognized on account of foreign exchange fluctuation as per notified Accounting Standard 11 was an accrued and subsisting liability and not merely a contingent or hypothetical liability. DR, on the other hand, has not been able to cite any judicial pronouncement in support of the Revenue s case on this issue. We, therefore, find no infirmity in the impugned order of the CIT(A) allowing the claim of the assessee for deduction on account of Mark-to Market Exchange Loss in respect of Foreign Currency Derivatives Contracts and upholding the same, we dismiss of the Revenue s appeal.

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• 2023 (3) TMI 33
  Depreciation on Non-compete Fee - HELD THAT:- Respectfully following the ITAT Chennai Bench s decision in assessee own case for A.Y.2001-02 we hold that assessee is eligible for depreciation on non-compete fee. Accordingly, as far as ground regarding non-compete fee is concerned, the Revenue s Ground is dismissed. Depreciation on Effluent Treatment Plant - DR submitted that ld.CIT(A) has admitted additional evidence without giving opportunity to the AO. On perusal of the ld.CIT(A) s order, it is observed that CIT(A) has not called for any remand report from the AO. It is an admitted fact by the AR that the assessee had submitted Chartered Engineers certificate which was not submitted before AO. The said certificate contains list of machinery. Therefore, the ld.CIT(A) has violated Rule 46A of the Income Tax Rules. Accordingly, the Ground related to Deprecation on Effluent Treat Plant is set-aside to the file of Assessing Officer. The AO is free to conduct necessary enquiries and assessee is given liberty to file all the documents before the AO. The AO shall pass order after giving opportunity of being heard to the assessee. Therefore, of the Revenue for the A.Y. 2010-11, 2011-12 2012-13 is allowed for statistical purposes. Employee s Contribution towards PF - AO has disallowed us.36(1)(va) - AO has observed that the assessee had not deposited the employee s contribution towards Provident Fund within the due date mentioned in the The Employees Provident Funds and Miscellaneous Provisions Act, 1952 - HELD THAT:- The issue of delayed payment of employee s contribution of Provident fund has been decided by Hon ble SC in the case of Checkmate Services (P.) Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] held that the employee s contribution towards PF has to be deposited before the due date mentioned in the respective statute. In this case it is an admitted position by the assessee in the Audit Report that the amount was not deposited before the due date mentioned in The Employees Provident Funds and Miscellaneous Provisions Act, 1952. Hence, the impugned amount has been rightly disallowed by the AO. Disallowance on Account of Management Services - TPO for determination of Arm s length price of the international transactions. The TPO analyzed the International transaction of Management Services in the Order u/s 92CA - HELD THAT:- It is a self serving document as it is prepared by parent company and the subsidiaries had to agree. As mentioned there are 16 receiving parties located at different geographical locations. However, it is presumed in the agreement that all of them have requirement of the so called services mentioned in the agreement irrespective of the geographical difference.The services provided were to be billed at a fee Calculated at Budgeted Cost plus 5% mark up. It is important to mention here that the assessee has not provided any documents to prove the budgeted cost. Rather the assessee has not provided What was the budgeted cost for various services separately We have gone through the invoices which are enclosed in the paper book, none of the invoices mentions the Budgeted Cost. The assessee has not submitted which services were utilized by more than one AEs, and what was the Budgeted cost of these services, and what was the turnover of all these AEs and how these were allocated. We have gone through the invoices and these invoices does not contain any of these details. Rather all the invoices are vague. The onus is on the assessee to prove it. Therefore, the TPO was right in holding the value at NIL. We have analyzed all the copies of emails submitted by the assessee as evidence of the So-called services provided by the AE to the assessee. We have observed that none of the emails establish any service being provided by the AE to the assessee. Therefore, we are of the opinion that the assessee has failed to substantiate by documentary evidence, any services provided by the AE to the assessee. Therefore, on facts and circumstances of this case we are of the opinion that no services were provided by the AE to the assessee. Since, there are no services, there is no question of benchmarking them. One can analyze the ALP if there are any services, but in the case of the assessee there is no service by the AE to the assessee. Hence, the TPO has rightly held value of the so called services as NIL because there are no services. Thus we uphold the order of the TPO on the issue of Management Services .

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• 2023 (3) TMI 32
  Addition u/s 40A(3) - cash payment in excess of prescribed limit - HELD THAT:- Assessee had admitted the fact that it has paid cash to sub-contractors for hiring lorries and such payment has been directly credited to bank account of sub-contractors. The only arguments of the assessee was that payment made to sub-contractors are genuine in nature which are required to be made in cash for business exigency. The assessee has explained the reasons for making cash payment and according to the assessee, the subcontractors were in need of money under urgent circumstances, for which, the assessee has deposited cash into their bank account. We find that although the assessee tries to make out a case of business exigency, but reasons given by the assessee to make cash payment does not come under any exception as provided u/r.6DD of IT Rules. Genuineness or otherwise of payment is not a criteria to exclude cash payment in excess of prescribed limit from the provisions of Sec.40A(3) of the Act. In this case, there is no dispute that the assessee has made cash payments in excess of prescribed limit and further reasons given by the assessee for making cash payment does not come under any exception as provided under u/r.6DD of IT Rules. The assessee had also failed to make out a case of business exigency in making cash payment, because, it was the claim of the assessee that cash has been directly credited into bank accounts of sub-contractors and said bank accounts are maintained in one bank Assessee could have made payment through one of the of the modes provided u/s.40A(3) of the Act. Since, the assessee has paid in cash in excess of prescribed limit, the AO has rightly disallowed cash payment u/s.40A(3) - Decided against assessee.

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• 2023 (3) TMI 31
  TP Adjustment - Upward adjustment towards notional interest made in respect of outstanding receivables - Upward adjustment towards notional mark up on a transaction in respect of the Liason Support services - AR submitted that approximately 179 days delay was incurred in realization of sale invoices beyond the credit period extended by the assessee company and therefore, CIT(A) has rightly deleted the upward adjustment - HELD THAT:- It is pertinent to note that the CIT(A) has given a detail finding that the copy of invoices clearly shows that terms of delivery and payment is 180 days from the date of appeal of lading. Therefore, interest is not to be charged up to outstanding period less than 180 days. CIT(A) has further observed that the TPO has charged interest for 335 days which is not correct but at the same time the TPO has rightly applied the rate at 3.05% which is LIBOR + Foreign Fluctuation Adjustment (FFA) and accordingly the adjustment was confirmed. As per RBI policy credit of 180 to 360 days the assessee has to be granted the upward adjustment. No fault pointed out by the DR in respect of delay period which is less than 180 days. There is no need to interfere with the findings of the CIT(A). Appeal of the Revenue is dismissed.

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• 2023 (3) TMI 30
  Revision u/s 263 by CIT - As per CIT AO has failed to make proper enquiry on Computation of disallowance of expenditure u/s 14A and deduction of employee's contribution for the purpose of Section 36(1)(va) - HELD THAT:- AO has already analyzed the issues, sought explanation from the assessee and taken a plausible view. There cannot be a gauge that the enquiry conducted is sufficient or not when the specific issue has already been considered in the assessment proceedings before her. As regards the disallowance u/s. 14A the specific detailed working and explanation along with the evidence that the sufficient fund was available with the assessee company to make the investment even though the disallowance under section 14A r.w.r 8D was made by the assessee company. AR submitted that all the relevant information was also placed on record to decide the issue on hand by the AO. The same is supported by a detailed submission before the assessment proceedings. Thus, the issue was considered by the ld. AO based on the submission and material placed on record. For employee's contribution for the purpose of Section 36(1)(va) following the jurisdictional high court the ld. AO has allowed the deduction of the payment made before the due date of filling return for PF and ESI which is also a one of the views based on the submission made by the assessee company. So, on both the issue the ld. AO has given his attention and sufficient enquiry was conducted by the ld. AO. On the contrary PCIT has not specified what enquiry should have been done by the ld. AO. In the absence such clear finding how the order is prejudicial and erroneous. The ld. PCIT cannot gauge that what the specific level up to which the ld. AO has ask the details so as to reach the level of enquiry which that the PCIT deem it fit. AO has not violated any direction or instruction of the board. The order also not violates any binding judicial decision. He further submitted that the issue raised by the PCIT has already been raised and the relevant aspect of the facts on the same very issue is seen by the AO. The ld. AR demonstrate before us that the AO has raised which the PCIT is contending in the proceeding under section 263 of the Act. He has also demonstrated before us that the AO has made necessary enquiry on the issue based on the submission made by the assessee. The ld. AO has taken the plausible view on both the issue as per the submission placed on record. This action of the AO is not proved to be prejudicial or erroneous on any of the angel by the PCIT while issuing the show cause notice to the assessee company. In that circumstance the provision of section 263 and its explanation 2 will not apply. An incorrect assumption of the fact or an incorrect application of law will satisfy the requirement of the order being erroneous. The phrase 'prejudicial to the interest of the Revenue has to be read in conjunction with an erroneous order passed by the AO. Every loss of revenue as a consequence of the order of the AO cannot be treated as prejudicial to the interest of the Revenue. It is pertinent to mention that if the AO has adopted one of the two or more courses permissible in law and it has resulted in loss of revenue, or where two views are possible and AO has taken one view with which the Pr. CIT does not agree, it cannot be treated as an erroneous order and it is prejudicial to the interest of the Revenue, unless the view taken by the AO is totally unsustainable in law. Thus issue has already been raised in the assessment proceedings and was after deliberation was considered. Based on the contentions and judicial precedent cited by the assessee the assessing officer satiated himself and has taken a plausible view. Based on the set of evidence before him the AO has taken a view which is also one of the views and there is no clear finding of the ld. Pr. CIT as to why and how the view taken by the assessing officer is not legally correct when he has asked the relevant information and taken a view in the matter. - Decided in favour of assessee.

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• Customs

• 2023 (3) TMI 29
  Seeking for provisional release of goods - Section 110A of the Customs Act, 1962 - Since the representations filed under Section 110A of the Customs Act 1962 have not been considered, till date, writ petitions are filed - HELD THAT:- When Section 110A of the Customs Act, 1962 enables any person seeking for provisional release of goods, necessarily, the respondents will have to take a decision on the petitioner's application seeking for provisional release as per the said section - Admittedly, no final orders have been passed by the respondents with regard to the requests made by the petitioner seeking for provisional release of the imported goods by its representations, dated 06.02.2023 and 24.01.2023. This Court is not expressing any opinion on the merits of the matter. However, necessarily the respondents will have to consider the petitioner's representation seeking for provisional release of the imported goods and decide the said representation on merits and in accordance with law, within a time frame to be fixed by this Court - however, since the respondents contend that the representations submitted by the petitioner seeking for provisional release of the goods is not in accordance with the format prescribed, no prejudice would be caused to the petitioner, if they are directed to submit a fresh application under Section 110A of the Customs Act, 1962 seeking for provisional release of the imported goods and a direction is issued to the respondents to consider the same on merits and in accordance with law, within a time frame to be fixed by this Court. These writ petitions are disposed of.

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• 2023 (3) TMI 28
  Validity of SCN - SCN issued within jurisdiction or not - SCN is issued within authority under law or not - pre-determinaton of the issue - HELD THAT:- As seen from the impugned show cause notice, the respondents have stated that the parts supplied by the petitioner can also be used for other purposes and only on that ground, the show cause notice has been issued stating that the classification will fall under Chapters 84 and 85 of the Customs Tariff Act 1975. The impugned show cause notice has given reasons as to why the classification of the goods will fall under Chapters 84 and 85 of the Customs Tariff Act and not under Chapter 86. If the petitioner is aggrieved by the same, necessarily the petitioner will have to respond to the same stating their objections and producing evidence to show that the classification will fall only under Chapter 86 of the Customs Tariff Act 1975. Even without responding to the impugned show cause notice, the petitioner has approached this Court prematurely challenging the said show cause notice, which in the considered view of this Court is not maintainable, after this Court had given a careful consideration to the contents of the impugned show cause notice. The judgment of the Hon'ble Supreme Court in WESTINGHOUSE SAXBY FARMER LTD. VERSUS COMMR. OF CENTRAL EXCISE CALCUTTA [ 2021 (3) TMI 291 - SUPREME COURT ] relied upon by the learned counsel for the petitioner cannot be considered at this stage in view of the categorical assertion made by the respondents that after making minor alternations, the goods sold by the petitioner to the Railways, can be used for other purposes as well. Therefore, only after a reply is sent by the petitioner to the impugned show cause notice, the real truth can be unearthed. Petition disposed off.

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• 2023 (3) TMI 27
  Revocation of Customs Broker License - forfeiture of the Security deposit - levy of penalty - order passed merely based on suspicion - HELD THAT:- The SCN does not rely on anything but an email said to be sent by the DGARM indicating a list of suspicious exporters. While analysis of data to identify suspicious exporters is a good method to begin investigations, but such suspicion, however strong, cannot be a substitute for evidence. In this case, the SCN was issued without any further enquiry and without producing any evidence documentary or otherwise. It simply jumped to the conclusion that the appellant must have violated Regulation 10(n). The logic was rather simplistic. Since DGARM sent a list of suspicious exporters identified based on data analysis and since the exporters whose exports the appellant handled formed part of the list, such exporters do not exist and also did not exist at the time the exports were made and since they did not exist, the appellant must not have conducted the verification as obligated under Regulation 10(n) and therefore, must have violated it. Therefore, the appellant s Customs Broker licence is liable to be revoked and penalty is liable to be imposed on it. It is not permissible to revoke the Customs Broker s licence of the appellant with nothing more than some suspicion. The suspicion can be ground to start an investigation and if evidence is found against the Customs Broker, action must be initiated but SCN issued without any evidence whatsoever is bad in law. The inquiry report and the impugned order based on such SCN cannot be sustained - there is no evidence to support the allegation that the Customs Broker violated Regulation 10(n). As it is found that there is no evidence of violation of Regulation 10(n) by the appellant, the revocation of its licence, forfeiture of the Security deposit and imposition of penalty cannot be sustained - appeal allowed.

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• 2023 (3) TMI 26
  Seeking provisional release of seized goods - coal imported by the Respondent (RPC) having sulphur content within the prescribed limit or not - prohibited goods or not. The sole contention of the Revenue against the provisional release of the impugned goods is that the said goods having sulphur content more than 4% and the same cannot be used by aluminium manufacturing industry, but Revenue has not disputed the fact that the Respondents are calciner and used the impugned goods as feedstock for making CPC from RPC for their customers with sulphur content ranging from 0.8% to 3.5%. HELD THAT:- There is no harm to release the goods provisionally and merits of the case are to be dealt at the time of final adjudication of the matter. We further take note of the fact that the Ld.Commissioner(Appeals) in his order has considered the request of the Respondent for re-testing of the goods by any recognized and notified laboratory as the Customs Lab is not a recognized laboratory under Environment Protection Act - the Adjudicating authority is directed to allow the request of the Respondents for re-testing of the goods in question from a recognized notified Environment Laboratory. There are no infirmity in the impugned orders, therefore, the said orders are confirmed - the Adjudicating authority are directed to release the goods provisionally to the Respondents immediately - appeal of Revenue dismissed.

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• 2023 (3) TMI 25
  Refund of Customs Duty - Rectification / amendment of Bill of Entry u/s 149 - Computation of Period of limitation - refund claims filed by the respondent were barred by time or not - HELD THAT:- In the present case, the order carrying out an amendment in the Bills of Entry under section 149 of the Customs Act attained finality, as the department did not challenge these orders in appeal. It is only during the course of refund applications that the department took a stand that since the order of the assessment was not assailed by the respondent in appeal under section 128 of the Customs Act, the refund applications could not be allowed. Such a stand could not have been taken by the Department. If the department felt aggrieved by the order seeking an amendment in the Bills of Entry under section 149 of the Customs Act, it was for the department to have assailed the order by filing an appeal under section 128 of the Customs Act. This plea could not have been taken by the department to contest the claim of the respondent while seeking refund filed as a consequence of the reassessment of the Bills of Entry or amendment in the Bills of Entry - The Commissioner (Appeals), therefore, committed no illegality in taking a view that refund has to be granted to the respondent as the order for amendment in the Bills of Entry had attained finality. Whether the refund claims were barred by time? - HELD THAT:- The Commissioner (Appeals) held that if section 149 of the Customs Act relating to amendment in the Bills of Entry is made applicable, the cause of action for claiming refund would arise only after the amendment is made and so the limitation for claiming refund would start from that date. In coming to this conclusion, the Commissioner (Appeals) placed reliance upon the decision of the Bombay High Court in KESHARI STEELS VERSUS COLLECTOR OF CUSTOMS, BOMBAY [ 1996 (9) TMI 154 - HIGH COURT OF JUDICATURE AT BOMBAY ], wherein what was examined was whether the rejection of the refund claim on the ground of limitation contemplated under section 27 of the Customs Act was justified. It was held by the Bombay High Court that the refund was within time from the date the rectification was carried out and limitation was not to be counted from the date of assessment. This decision has been affirmed by the Supreme Court in COLLECTOR VERSUS KESHARI STEELS [ 1997 (12) TMI 643 - SC ORDER ]. It would be seen that the Bombay High Court held that the question of refund would arise only when the assessment order is rectified - the Commissioner (Appeals), therefore, committed no illegality in holding that the refund claims were not barred by time. Appeal dismissed.

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• Corporate Laws

• 2023 (3) TMI 23
  Seeking winding up of company - appellant after lapse of several years from the date when company/industry was declared sick to the reasons best known to it claiming to be contributory under Section 272(1)(b) of the Companies Act, 2013 preferred application for winding up of company - Section 271 (e) and 272(1)(b) of the Companies Act, 2013 - HELD THAT:- Admittedly the appellant before the NCLT had claimed to be contributory under Section 272(1) (b) and invoked the jurisdiction of the NCLT under Section 271(e). On examination of Section 271(e) it is evident that under this provision the Tribunal was having discretionary jurisdiction. Had the Tribunal was of the opinion that it was just and equitable to pass order of winding up of the company, this jurisdiction would have been exercised by the Tribunal. This power is not similar to the power given to the Tribunal under Section 271(a)(b)(c) and (d). Similarly sub-section (2) of Section 273 clearly indicates that if such petition is filed i.e. petition filed under Section 271(e) read with Section 272 (1)(b) of the New Act, onus is on the applicant to satisfy that there is just and equitable ground for winding up of a company. Meaning thereby that if an applicant is not in a position to satisfy on the point of just and equitable ground, the tribunal may refuse to make an order for winding up. Moreover in a situation the Tribunal is of the opinion that some other remedy is available to the applicant and applicant are acting unreasonably in seeking the company to be wound up instead of pursuing other remedy, the Tribunal may refuse to exercise its discretion in favour of such applicant. On perusal of the impugned order it is difficult to infer that the appellant herein was in a position to satisfy the Learned Tribunal that there was just and equitable ground for passing winding up order. Moreover, the appellant may not deny that other remedies were also available to the appellant. Besides this on examination of the order impugned it is evident that one of the secured creditor namely Cargil India Pvt Ltd had filed an objection petition against the application filed by the appellants. Thus, Learned NCLT has committed no error in passing the impugned order - appeal dismissed.

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• Insolvency & Bankruptcy

• 2023 (3) TMI 24
  Liability of the guarantor / surety upon approval of the Resolution Plan - liability limited to the extent of the balance recoverable / remaining amount of default, or not - HELD THAT:- The liability of the Guarantor, if any, is limited to the balance amount remaining post approval of Resolution Plan, which is neither disclosed nor determined by Respondent No. 1. in the event the Principal Borrower enters CIRP and a Resolution Plan has been approved in its favour, the claim of the creditors against the Guarantee is strictly limited to the balance outstanding, that too in terms of the Guarantee Deed executed between parties. The standard of examination of default, as adopted by the Adjudicating Authority, is erroneous and reflects non-application of mind. The impugned order has been passed in gross violation of the principles of natural justice as the impugned order has been passed by the Adjudicating Authority without providing an opportunity of hearing to the Corporate Debtor. As evident from the Order dated 03.08.2021, the hearing in the matter was interrupted due to a technical glitch. However, the Adjudicating Authority has proceeded to reserve its judgment on the said date. There are no merit in the Appeal to interfere with the order impugned passed by the Adjudicating Authority - appeal dismissed.

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• 2023 (3) TMI 22
  CIRP admitted - locus of shareholder of the Corporate Debtor in Section 7 application filed by the Financial Creditor - Fraudulent and malicious initiation of proceedings under Section 7 of the I B Code, 2016 - Both the Appellants and the Respondents have alleged that they have become Shareholder / Financial Creditors respectively for a paltry sum of few crores and trying to grab the Corporate Debtor whose investment in form of shares in other companies have been valued more than Rs. 1000 crores - both the Appellants and the Respondents have alleged each other that they are acting on behalf of the Ex-Promoter Mr. Vijay Mallya is group companies and trying to take over the company at the behest of Ex-Promoter. Whether the Respondent No. 2 (Corporate Debtor) is a Non- Banking Financial Company (NBFC) having assets of more than Rs. 500 crores and therefore exempted from the Corporate Insolvency Resolution Process ordered by the Adjudicating Authority? - Appellants are related parties of the suspended management as claimed by the Respondents or not - Respondents are related parties of the suspended management of the Corporate Debtor or not. Whether the Adjudicating Authority committed an error in admitting the CIRP of the Corporate Debtor - Whether, the shareholder of the Corporate Debtor has any locus in Section 7 application filed by the Financial Creditor? - HELD THAT:- In the present case, undisputedly, the 1st Respondent became Financial Creditor since the assignment was created with all requisite formalities and the Corporate Debtor has not denied the financial transaction. In such case, the Adjudicating Authority is supposed to admit Section 7 Application - It is the case of Appellant that Section 7 Application was filed by the Financial Creditor in collusion with the Corporate Debtor. After reading Section 61(1) of the I B Code, 2016, it becomes clear that any person aggrieved by the order of the Adjudicating Authority may prefer an appeal to National Company Law Appellate Tribunal. It infers that the Appellants even as shareholders cannot be aggrieved merely by the admission of the Corporate Debtor into Corporate Insolvency Resolution Process. Such objection may render the object of I B Code, 2016 illusory since any shareholder of any Corporate Debtor against which Insolvency proceedings have been initiated can then seek to maintain a derivative action and sabotage a valid Corporate Insolvency Resolution Process initiated by the Adjudicating Authority - prima-facie there is no specific law which allows any shareholder of the Corporate Debtor to challenge the admission of Corporate Insolvency Resolution Process of the Corporate Debtor, once the debt due and default is established by the Adjudicating Authority, in an application made by the Financial Creditor filed under Section 7 of the I B Code, 2016 before the Adjudicating Authority. Having considered all the averments made by the Appellants as well as the Respondents, including various Written Submissions made available to this Appellate Tribunal and after careful consideration of various judicial pronouncements of the Hon ble Supreme Court of India as well as this Appellate Tribunal, comes to concrete conclusion without any hesitation that in the present Appeals, the Appellants do not have any Locus, and therefore the present Appeals, are not maintainable. This Appellate Tribunal, therefore, does not find any Error / Legal Infirmity, in the impugned order, on this issue. Appeal dismissed.

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• 2023 (3) TMI 21
  Seeking direction to refer the matter to conciliation - Petition admitted u/s 7 of IBC - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial creditors - existence of debt and dispute or not - HELD THAT:- The reasons assigned by the Adjudicating Authority is fully agreed upon, whereby objection raised by the Respondent (before the Tribunal) / Appellant so far authorized representative of the Financial Creditor is concerned, the Adjudicating Authority rightly found that on 18.10.2019 a board resolution was passed by Invesco Trustee Pvt. Ltd., whereby, Ms. Nupur Tainwala, Assistant Vice President-Legal of Invesco Asset Management (India) Pvt. Ltd. is authorised to file any case/suit etc. before any court of law, tribunal, quasi-judicial process etc. which contained the detail power/authorization provided to Ms. Nupur Tainwala by one Ms. Deepti Dave being authorized signatory of Invesco Trustee Pvt. Ltd. There are no merit in the Appeal to interfere with the order impugned passed by the Adjudicating Authority - impugned order affirmed - appeal dismissed.

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• 2023 (3) TMI 20
  Rejection of application filed under Section 7 of the Insolvency Bankruptcy Code, 2016 - rejection primarily on the ground of not meeting the required minimum number of allottees as per amendment in Section 7 of the IBC - rejection also on the ground of contractual dispute - HELD THAT:- On going through the investment agreement, there is no difficulty in coming to the conclusion that appellants had invested money for a specified period and that too for some period they received interest as admitted by the Respondent/Corporate Debtor in para 4(j) of it affidavit in reply. The investment agreement was unambiguous for 24 months and in lieu charge was created to the plots. In such situation there was no reason for the adjudicating authority to treat the appellants as allottees. The Adjudicating Authority has further misunderstood the observation of the Hon ble Supreme Court in Manish Kumar case [[ 2021 (1) TMI 802 - SUPREME COURT] ]. It is evident that the fact remains that after the amendment in section 7 was introduced appeal was filed before the Supreme Court and Hon ble Supreme Court by its order dated 13.01.2020 while issuing notice directed to maintain status quo with respect to pending applications. Though the Hon ble Supreme Court finally upheld the amendment, the Hon ble Supreme Court further extended time to cure the defects within two months from the date of order of Hon ble Supreme Court. On examination of the aforesaid direction of the Hon ble Supreme Court it is clear that the impugned order of the Adjudicating Authority fortfeits the right of the appellant to cure the defect in compliance with the order of Hon ble Supreme Court. It is not in dispute that before amendment under Section 7 was brought by the Govt of India, the application under section 7 filed by the appellant was pending and during pendency of the said application the amendment travelled upto the Hon ble Supreme Court. Initially Hon ble Supreme Court directed to maintain status quo and finally on 19.01.2021 while upholding the amendment provided two months time from the date of the order of Hon ble Supreme Court for curing the defect. However, the Adjudicating Authority before expiry of two months has passed the impugned order on 23.02.2021. Accordingly there is no reason to allow the impugned order to continue. Contractual dispute - HELD THAT:- In view of specific averment made in the Investment Agreement and non-raising of dispute by the Corporate Debtor on debt, there was no reason to record that there was contractual dispute - on this issue also the finding of the Adjudicating Authority is erroneous. The impugned order is hereby set aside and the matter is remitted back to the Adjudicating Authority to hear the parties afresh and pass appropriate order in accordance with law particularly considering the time extended by the Hon ble Supreme Court in Manish Kumar case and unequivocal Investment Agreement entered in between appellants and the Corporate Debtor - Appeal allowed.

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• 2023 (3) TMI 19
  Seeking direction to Respondent to provide copy of the Resolution Plan submitted before the Tribunal for approval to enable the Appellant to make submission/objection - HELD THAT:- The judgment of this Tribunal in Jet Airways [ 2022 (2) TMI 17 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI ] which has been relied by the Appellant was a case where Resolution Plan was approved by the Adjudicating Authority and Appeal was filed challenging and an I.A. No. 1700 of 2021 was filed seeing direction to provide copy of the Resolution Plan, where this Tribunal has directed that part of the Resolution Plan which deals with the claim of workmen and employees shall be provided to the Appellant by Successful Resolution Applicant. The Appellants are entitled for inspection of the records of the Adjudicating Authority as per the NCLT Rules, 2016 - there are no reason to interfere with the order impugned - appeal disposed off.

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• 2023 (3) TMI 18
  Approval of the Resolution Plan - whether PF , Gratuity and Workmen/Employees dues have to be paid in full. - Section 30(1) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Limited enquiry which can be made by the Adjudicating Authority/this Tribunal while examining the Plan is to see whether the Plan complies with requirements as provided for in Section 30(2) of the Code. The minimum that is required to be paid to Operational Creditors under a Resolution Plan said to be under Section 30(2)(b) of the Code as being the amount to be paid to such creditors in the event of liquidation of the Corporate Debtor under Section 53. Hon ble Apex Court in Ebix Singapore Private Limited Vs. Committee of Creditors of Educomp Solutions Ltd. [ 2021 (9) TMI 672 - SUPREME COURT ] has held that the Resolution Applicant has no jurisdiction to withdraw from the Resolution Plan or modify the Plan. The Adjudicating Authority has ample jurisdiction only to interfere with the Resolution Plan in the event that the Plan violates, or does not adhere to any of the provisions of Section 30(2) of the Code. It is categorically mentioned by the Resolution Professional that the Secured Financial Creditors and workmen were treated equally under the Plan with the allocation of 35.13 % of the admitted claim amounts and therefore the claims of workmen were fully considered. Having regard to the ratio of the Judgement in Jet Aircraft Maintenance Engineers Welfare Association [ 2022 (11) TMI 332 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI ] of this Tribunal, upheld by the Hon ble Apex Court, this Tribunal is of the earnest view that PF and Gratuity is to be paid in full as per the provisions of EPF and NP Act, 1952 and payment of Gratuity Act, 1972. Since admittedly the amounts paid are only 35.13% having treated them as Secured Creditors, it is opined that indeed there was a violation of the provisions of Section 30(2) of the Code, with respect to the payment of PF and Gratuity only. Undervaluation - scope and performance of SRA in taking over the unit are sans evidence - HELD THAT:- This Tribunal, does not find any other material irregularity, in the Approval of the Resolution Plan. Appeal allowed in part.

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• Service Tax

• 2023 (3) TMI 17
  Exemption from service tax - right to use mining of minerals, oil or gas in respect of sand ghats of Patna, Bhojpur and Saran of the State of Bihar - applicability of Mega exemption Notification Sl.No.61 dated 13th April, 2016 - HELD THAT:- On examination of the said Notification, right to use assigned by the Government or the local authority before the 1st April, 2016, is entitled for exemption from payment of service tax - Admittedly in the instant case, the right to use of natural resources (Sand) were assigned on 29.12.2014, which has no concern with the terms of payment. There are no infirmity in the impugned order - appeal of Revenue dismissed.

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• 2023 (3) TMI 16
  Valuation of services - Business Auxiliary Services - undervaluation by not including the taxable value of the amounts of reimbursements received by them for their services - whether service tax can be demanded on reimbursable expenses? HELD THAT:- From the show cause itself it is clear that the demand is made for the non-inclusion of reimbursable expenses in the taxable value for discharge of service tax liability. The issue is settled in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [ 2018 (3) TMI 357 - SUPREME COURT] . Following the same, it is held that the demand cannot sustain and requires to be set aside. The impugned order is set aside. Appeal allowed.

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• 2023 (3) TMI 15
  Levy of service tax - Export of services or not - consideration received for repair works done by the appellant on the rig / drill ship - case of appellant is that the services were rendered in a non-designated area and therefore they are not liable to service tax - applicability of N/N. 1/2002-ST dated 1.3.2002 - HELD THAT:- The provisions of Chapter V of Finance Act, 1994 applies only to designated areas in the continental shelf and exclusive economic zone of India. It is clear from the SCN as well as the OIO that the repair works were performed in the non-designated area of continental shelfs and exclusive economic zone. The provisions of Chapter V of the Finance Act, 1994 can only apply to the areas to which the Act is specifically extended. Therefore when the drill ship is located in an area which is outside the territorial purview of the Finance Act, 1994, there is no question of payment of service tax in respect of the maintenance and repair works carried out by the appellant on rig/drill ship. Similar issue was discussed in the case of M/S. GREATSHIP (INDIA) LTD. VERSUS COMMISSIONER OF SERVICE TAX, OIL AND NATURAL GAS COMPANY LTD. [ 2015 (4) TMI 1006 - BOMBAY HIGH COURT ], where it was held that the said service cannot be said to be a service rendered to the installations, structures and vessels. Not only this, but the Respondent also in the order- in-original has noted that the appellant is discharging applicable service tax on the services received by installations, structures and vessels in the Continental Shelf and Exclusive Economic Zone of India but was not discharging the service tax on services consumed by the seabed of Continental Shelf of India. The territorial application of the service tax and the commencement of its application from 01.07.1994 and the change brought forth in the application w.e.f. 07.07.2009 has been discussed in the case of Reliance Industries Vs Commissioner of Service Tax, LTU Mumbai [ 2014 (1) TMI 257 - CESTAT MUMBAI ], where it was held that Appellant had not provided any service regarding which the appellant had paid service tax on reverse charge mechanism in respect of any service provided or to be provided by or to such installations, structures and vessels or for supply of any goods connected with such activity to installations, structures and vessels within the continental shelf and the exclusive economic zone of India. Undisputedly, the repair, and maintenance work has been carried out in the non-designated area. From the discussions made, the demand cannot sustain and requires to be set aside - appeal allowed.

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• 2023 (3) TMI 14
  Liability of appellant to pay service tax - works contract services - Commercial or Industrial construction service - appellant worked as sub-contractor and the principal contractor has paid the Service tax on such work - time limitation - suppression of facts or not - HELD THAT:- There are force in argument of Ld. Counsel that since the works performed by the appellant was along with material the demand of service tax should have been raised under the taxable category of works contract services. The demand of service under the head of Commercial or Industrial construction service is not sustainable. It is noted that the appellant s activity of construction also involved supply of goods/ material. The Appellate Tribunal in the matter of M/S. ASWINI APARTMENTS VERSUS COMMISSIONER OF GST CENTRAL EXCISE CHENNAI SOUTH [ 2018 (10) TMI 404 - CESTAT CHENNAI ] had held that the composite contact involving supply of materials and rendition of services not taxable either prior to 1-6-2007 or w.e.f. 1-6-2007 under Commercial or Industrial Construction service. However, such composite contracts are taxable only w.e.f. 1-6-2007 under Works Contract service. Prior to 1-6-2007 or w.e.f. 1-6-2007, only those contracts which are purely for services, are taxable under Commercial or Industrial Construction service - the demand of service tax under commercial or industrial construction service in the present matter also not sustainable. Extended period of limitation - HELD THAT:- There were contrary judgments on the issue that whether the sub-contractor is liable to service. Subsequently the matter was referred to Larger Bench. On the disputed issue, it is not only the larger bench decision which settled the law but there were contrary circular of the Board on the issue of payment of service tax by the sub-contractor. In view of this position, there is no suppression of facts or any mala fide intention to evade payment of service tax on the part of appellant. Further, the ground of bona fide belief can be invoked in the present case as the main contractor who entered into agreement with the ultimate client were charging such client along with service tax as claimed by the appellant. There is a reason for a bona fide belief in such arrangement regarding non-liability of sub-contractor when the main contractor is liable to discharge full service tax. Though the said principle is not applicable against the tax liability but the question of invoking extended period is to be answered in favour of the appellant - there is no case of fraud, misstatement etc. in the non-payment of tax on this activity by the appellant and, we hold that extended period of limitation is not attracted. Appeal allowed.

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• 2023 (3) TMI 13
  Denial of CENVAT Credit - duty paying documents - denial on the ground that some of the invoices were without signature and conditions under Rule 4A of the Service Tax Rules, 1994 were not fulfilled in certain cases - refund of link advance, which the appellant has claimed as a refundable deposit - demand alongwith penalty - HELD THAT:- The appellant had claimed CENVAT Credit to the extent of Rs.34,31,074/-, but however, the lower authority has allowed input Service Tax credit to the extent of Rs.4,56,032/-. It is observed that certain invoices were computer generated, which did not have the signature. We find that various Benches of the CESTAT have taken a consistent view that in respect of computer generated invoices, signature was not required and consequently, have directed the authorities not to deny the input Service Tax credit in M/S MAMMON CONCAST PVT. LIMITED VERSUS COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX, CUSTOMS CENTRAL EXCISE - ALWAR (RAJASTHAN) [ 2021 (6) TMI 619 - CESTAT NEW DELHI ] - the input Service Tax credit should not be denied merely because the invoices are computer generated, which did not have signatures. Consequently, to this extent, the impugned order is set aside and this ground of the appeal stands allowed. Denial of input Service Tax credit on the allegations of non-fulfilment of the conditions in Rule 4A of the Service Tax Rules, 1994 - HELD THAT:- The Adjudicating Authority has, in the impugned Order-in-Original, clearly brought out on record that some of the invoices had different names altogether, which did not even contain the name of the appellant and when the same was brought to the notice of the appellant, the appellant did not explain; and that in respect of certain other invoices, the same were issued on 03.04.2011 for the services provided during September 2009 to June 2010. In respect of some of the invoices, the Adjudicating Authority has observed that the same were computer generated, which did not contain any signature/s and that some of the invoices were photocopies - the input Service Tax credit cannot be denied just because computer generated invoices or photocopies of invoices were produced. Mismatch of name, date, etc. - HELD THAT:- There are no infirmity in denying the input Service Tax credit since, clearly, the appellant has not bothered to produce appropriate invoices. Hence, no interference is called for and consequently, this ground of the appeal is partly allowed. Link advance, which the appellant has claimed as a refundable deposit - HELD THAT:- Even before this forum, appellant have not made any efforts to place on record any supporting documents like, agreement, contract, etc., to buttress their arguments. Hence, we do not feel it proper to interfere with the findings of the lower authority and consequently, this ground of the appeal stands dismissed. Penalty levied under Section 78 of the Finance Act, 1994 - HELD THAT:- The appellant had entertained a bona fide doubt as to the Service Tax liability and there is also no finding that the appellant had intentionally evaded the payment of Service Tax. Moreover, from the facts which have been brought on record, there is no scope for any fraud or intent to evade the payment of Service Tax. Hence, it is deemed proper to delete the penalty levied under Section 78 ibid. by invoking the provisions of Section 80 ibid. and accordingly, the impugned order to this extent is set aside and this ground of the appeal stands allowed. Appeal disposed off.

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• 2023 (3) TMI 12
  CENVAT Credit - input services used for taxable as well as exempt service - time period within which the assessee must inform the department about exercising the option under Rule 6(3) of CCR - non-intimation of option under Rule 6(3) is at best a procedural lapse for which substantial benefit ought be denied? - whether retrospective effect can be given to the option filed by the taxpayer on 14.10.2010 under Rule 6(3)(ii) of CENVAT Credit Rules, 2004? Taxpayer has claimed that they are maintaining separate set of accounts for exempted and taxable services as per the option under Rule 6(2) of CENVAT Credit Rules, 2004, and are taking credit of only those input services used in taxable services for discharge of duty related to taxable services, they cannot simultaneously avail the option under Rule 6(3) for credit of common input services used for both exempted and taxable service. HELD THAT:- The sequence of Rule 6 and the procedure and conditions stated therein, clearly bring out that the assessee can only avail the facility under Rule 6 after following the provisions of the said Rule which should be as on the date of exercising the option. Hence a harmonious reading of Rule 6(3)(ii) and Rule 6(3A) of CCR, 2004 leads to the conclusion that the intimation given to the department is effective only prospectively. It must be stated that, Rules made under the Statute must be treated for all purposes of construction or obligation exactly as if they were in the Act and are to be of the same effect as if contained in the Act and are to be, judicially noticed for all purposes of construction or obligation. The service provider has to calculate and pay, provisionally, for every month, the amount attributable to exempted services, as per the formula given under Rule 6(3A)(b) of CCR, 2004. This is not an empty formality to term the provision as procedural. Credit taken into their books by assessee s are as good as liquid cash for the purpose of payment of duty and requires a system of checks and balances to ensure their proper and lawful utilization as per the scheme of the Act and Rules. Allowing every assessee the freedom to make the declaration whenever he chooses, even retrospectively after the statutory monthly returns are filed and then reversing credit at will to claim compliance with the Rules will lead to lack of finality in assessments, encourage attempts to evade duty and create administrative difficulties in effectively monitoring and implementing the CENVAT scheme. In the circumstances it is difficult to hold that non-compliance with the procedures and conditions of Rule 6 as non-mandatory. The Hon'ble Supreme Court while examining a similar issue, in its judgement in the case of EAGLE FLASK INDUSTRIES LIMITED VERSUS COMMISSIONER OF C. EX., PUNE [ 2004 (9) TMI 102 - SUPREME COURT ], relating to the making of a declaration and giving an undertaking by the assessee to avail the benefit of exemption given by a notification, held that it cannot be said that these are procedural requirements, with no consequences attached for non-observance. Whether the option under Rule 6(2) and Rule 6(3) can be availed simultaneously? - HELD THAT:- The matter has already been examined by this Bench in M/S. SIFY TECHNOLOGIES LTD. VERSUS COMMISSIONER OF SERVICE TAX, LTU, CHENNAI [ 2018 (9) TMI 317 - CESTAT CHENNAI ] where it was held that an assessee cannot avail of the options under Rule 6(2) and 6(3) simultaneously. The obligations under Rule 6 are in the form of various alternatives and the assessee is free to choose any option. The assessee is under no compulsion to choose one option over the other. But once having chosen a particular option he cannot avail of the other option simultaneously. Hence this question is also answered in favour of the decision of the Lower Authority in the impugned order. Whether interest or penalty are liable to be demanded from the assessee, as proportional reversal of credit has been done by them? - HELD THAT:- The provisions of Rule 6 are very clear and without any ambiguity. The appellant has been suo moto taking credits even after the issue of previous show cause notices. In a few cases relating to Rule 6 of CCR 2004, orders have also been passed by the department deciding the matter, as is observed from the Appeal Memorandum filed by the appellants. The Hon ble Supreme Court in a seven Judge Bench judgement in the case of Smt. Ujjam Bai Vs State of Uttar Pradesh [ 1962 (4) TMI 90 - SUPREME COURT ] have held that the binding force of a decision which is arrived at by a taxing authority acting within the limits of the jurisdiction conferred upon it by law cannot be made dependent upon the question whether its decision is correct or erroneous. For, that would create an impossible situation - the appellant after receipt of orders from the department relating to erroneous credit taken by them as per Rule 6 of CCR 2004, cannot continue to plead ambiguity in the interpretation of the said provision and claim that having reversed wrongly taken credits, that too as per their interpretation of the Rule, the imposition of interest and penalty is unsustainable. Their plea in this regard also fails. Appeal dismissed.

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• 2023 (3) TMI 11
  SCN is time-barred or not - Department issued SCN by invoking the extended clause on the ground that the services provided for the clients at Jammu and Kashmir would be exempted services - HELD THAT:- Since the Appellant is not pressing their Appeal on account of merits, I confine myself to issue of time bar alone. As rightly pointed out by the Ld. Advocate, there are various decisions of the co-ordinate Benches of Tribunal on this issue, therefore the Appellant cannot be fastened with the burden of any demand pertaining to the extended period. Accordingly, the demand pertaining to the extended period is required to be set aside. As the Appellant is not contesting the Appeal on merits, the demand confirmed and interest thereon for the normal period sustains. The penalties imposed under Section 78 and 77 are set aside - Appeal disposed off.

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• 2023 (3) TMI 10
  Levy of Service Tax - manufacturer of parts for paper mill machinery and are also registered under the category of Consulting Engineer Service - HELD THAT:- In various cases, it has been held that there was no record available to show the manner in which the activities of repair work were carried out by the taxpayer since there was no contract or agreement. The Delhi Bench of the CESTAT in the case of M/s. Crimpson Electronics [ 2009 (7) TMI 80 - CESTAT, NEW DELHI ] has held that There is nothing on record to show the manner how activities were carried out by the appellant to conclude that repair and maintenance charges were received instead of job work charges. Also there is no contract document available on record to explain the nature of repair and maintenance carried out. In this case, further, the Learned Deputy Commissioner for the Revenue was unable to distinguish the above orders nor was he able to contradict the contentions of the appellant as to the non-existence of contract / agreement. The demand cannot sustain, for which reason the impugned order is set aside - Appeal allowed.

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• 2023 (3) TMI 9
  Refund of the unutilized input service credit - intermediary services or not - export of service or not - input services used by the respondent to export information technology software service to Jindal LLC located in New York, USA under the contracts - place of provision of services. According to the department, since the service provider i.e. the respondent is an intermediary, the place of provision of service by the respondent would be the location of the service provider under rule 9(c) of the 2012 Rules - According to the respondent, the place of provision of service shall be the location of the recipient of service as provided under rule 3 of the 2012 Rules. HELD THAT:- An intermediary is a person who arranges or facilitates provision of the main service between two or more persons. The respondent is not involved in the arrangement or facilitation of the supply of service. In fact, the respondent had entered into agreement with Jindal LLC for providing telecommunication services and other services on a principal to principal basis. The telecommunication service and other services provided by the respondent qualify for export service since it is providing services to Jindal LLC which is located outside India and is receiving convertible foreign exchange for such services. The Commissioner (Appeals) relied upon the decision of the Delhi High Court in VERIZON COMMUNICATION INDIA PVT. LTD. VERSUS ASSISTANT COMMISSIONER, SERVICE TAX, DELHI III, DIVISION-XIV ANR. [ 2017 (9) TMI 632 - DELHI HIGH COURT ] to hold that the respondent is not an intermediary. It is seen from a perusal of the aforesaid judgment that Verizon India had entered into a Master Supply Agreement with Verizon US for rendering connectivity services for the purpose of data transfer. Verizon US was engaged in the provision of telecommunication services for which it entered into contracts with the customers located globally. Since Verizon US did not have the capacity to provide such services across the globe, it utilized the services of Verizon India to provide connectivity to its customers. The issue, therefore, that arose before the Delhi High Court was whether the telecommunication services provided by Verizon India during the period April 2011 to September 2014 to Verizon US would qualify as export of services . The department believed that the said services would not qualify as export of services . The Delhi High Court noted that in the process of gathering the data from the entities in India for transmission to Verizon US, Verizon India availed services of Indian telecommunication service providers like Vodafone and Airtel. These service providers raised invoices on Verizon India and Verizon India paid these service providers the requisite charges. Verizon India thereafter raised an invoice on Verizon US for the export of services provided by it to Verizon US. Since the recipient of the service (Verizon US) was outside India, Verizon India treated it as an export of service and understood that it was exempted from service tax under the Export of Service Rules 2005. Verizon US, in turn, raised invoices on its customers in the US - The Delhi High Court pointed out that the recipient of services is determined by the contract between the parties and this would depend on who has the contractual right to receive the services and who is responsible for the payment for the services provided to the service recipient; there was no privity of contract between Verizon India and the customers of Verizon US; such customers may be the users of the services provided by Verizon India but were not its recipients; Verizon India may have been using the services of a local telecom operator but that would not mean that the services to Verizon US were being rendered in India; and the place of provision of such service to Verizon US remains outside India. The Commissioner (Appeals) correctly appreciated the position in the impugned order in holding that the respondent was not an intermediary and was involved in export of service to Jindal LLC. Circular dated September 20, 2021 issued by the Central Board of Indirect Taxes and Customs also emphasizes that an intermediary essentially arranges or facilitates another supply (the main supply ) between two or more other persons and, does not himself provide the main supply. It also clarifies that in cases where a person supplies the main supply either fully or partly, on principal to principal basis, the said supply cannot be covered under the scope of intermediary . There are no illegality in the order dated July 14, 2018 passed by the Commissioner - appeal of Revenue dismissed.

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• 2023 (3) TMI 8
  Refund of the unutilized input service credit of input services - intermediary services or not - export of Management or Business Consultant Service - place of provision of services. According to the department, since the service provider i.e. the respondent is an intermediary, the place of provision of service by the respondent would be the location of the service provider under rule 9(c) of the 2012 Rules - According to the respondent, the place of provision of service shall be the location of the recipient of service as provided under rule 3 of the 2012 Rules. HELD THAT:- It would also be appropriate to refer to the decision of the Tribunal in M/S VERIZON INDIA PVT. LIMITED VERSUS COMMISSIONER OF SERVICE TAX [ 2019 (8) TMI 384 - CESTAT NEW DELHI ]. The Tribunal held that as the appellant had provided services under a contract to Verizon US which was located outside India and had raised invoices for such services and received remittance in foreign exchange, the appellant would satisfy the conditions set out in rule 6A of the 1994 Rules. Circular dated September 20, 2021 issued by the Central Board of Indirect Taxes and Customs regarding the scope of intermediary , also emphasizes that an intermediary essentially arranges or facilitates another supply (the main supply ) between two or more other persons and, does not himself provide the main supply. It also clarifies that in cases where a person supplies the main supply either fully or partly, on principal to principal basis, the said supply cannot be covered under the scope of intermediary . There are no illegality in the order dated March 02, 2020 passed by the Commissioner (Appeals) - appeal of Revenue dismissed.

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• Central Excise

• 2023 (3) TMI 7
  Reversal of proportionate input tax credit - whole quantity of inputs used in the manufacture of dutiable as well as exempted products - non-maintenance of separate records - requirement to pay an amount equal to 8% of the price of the exempted goods, charged by it for sale of exempted goods at the time of their clearance from its factory as per Rule 57CC (1) of the Rules, 1944. HELD THAT:- The Rules, 1944 were subsequently amended vide Section 69 of the Act, 2010 and Rule 57 CCC was inserted. As per Section 69 sub-Section 1 of the Act, 2010, the Rules, 1944 shall stand amended and shall be deemed to have been amended retrospectively, in the manner specified in Column (3) of the Fourth Schedule, on and from and up to the corresponding date specified in column (4) of that Schedule. As per sub-Section 2, where a person opts to pay the amount in accordance with provisions of Rules, 1944 as amended by Sub-Section (1), he shall pay the amount along with interest specified thereunder and make an application to the Commissioner of Central Excise along with documentary evidence and a certificate from a Chartered Accountant certifying the amount of input credit attributable to the inputs used in or in relation to the manufacture of the final products, which are exempted from whole of the duty of excise leviable thereon or chargeable to nil rate of duty, within a period of six months from the date on which the Finance Bill, 2010 receives the assent of the President. The respondent was admittedly maintaining a common inventory/account of receipt and use of the said common inputs. The dispute related to maintenance of separate accounts and inventory of the inputs meant for exempted final products as well as dutiable final products. The respondent reversed the modvat credit amounting to Rs.4,51,574/- on proportionate basis in respect of the inputs used in the manufacture of exempted final products and also paid interest @24% per annum on the amount of reversed credit during the pendency of the appeal pending before the Tribunal earlier. By way of amendment in the Act, 2010, the Rules, 1944 were amended and Rule 57 CCC was inserted for reversal of actual credit by the manufacturer availing the credit of specified duty in respect of inputs used for manufacture of final product, which was chargeable to duty or chargeable to nil rate of duty by payment of amount equivalent to amount of credit attributable to inputs used in the manufacture of such final products. Undoubtedly, the respondent herein had not moved any application while opting to reverse the proportionate credit within six months of enactment of Finance Bill, 2010 along with documentary evidence and certificate from Chartered Accountant as required under Rule 57 CCC of the Rules. However, since all this happened during the pendency of the proceedings while the respondent had been still prosecuting its remedies, therefore, it cannot be stated that the respondent had not complied with the requirement of scheme of retrospective amendment of Section 69 (2) of the Act, 2010. As such, the learned Tribunal had rightly set aside the demand of the appellant of tax of 8% of value of exempted goods. Appeal dismissed.

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• CST, VAT & Sales Tax

• 2023 (3) TMI 6
  Classification of goods - KINLEY WATER - falls within the scope of Entry No.4 of Taxable List or within the ambit of Entry 39 of Tax-free List - dealer had collected sales tax from its customers/consumers - whether the finding of fact by the learned Odisha Sales Tax Tribunal is based on no evidence and/or erroneous appreciation of evidence and the conclusion arrived at by the Tribunal is untenable in the eye of law? HELD THAT:- It is admitted by the Revenue that the dealer-company has added only sodium and magnesium salts to the treated water. The description of commodity as is given by the opposite party-company shows that the water is the potable water which is subject to treatment such as decantation, filtration, demineralization, re-mineralisation, reverse osmosis. These processes are as per the requirements of specification of the Bureau of Indian Standards as also the Prevention of Food Adulteration Act. On comparison of definitions of mineral water and packaged drinking water as defined in the Prevention of Food Adulteration Rules, 1955, it is but clear that the process undertaken by the opposite party conforms to the packaged drinking water . Mere addition of sodium and magnesium salts may not convert water into mineral water unless other ingredients as specified in the Prevention of Food Adulteration Rules, 1955 are demonstrated to be present. The Revenue has utterly failed to bring on record that the product which is sold by the opposite party does contain other contents as enumerated in Appendix-B to the said Rules - If the Revenue could bring on record the fact that the product in question contained the ingredients specified for water to fall within the comprehension of mineral water as per A.32 of Appendix-B appended to the Prevention of Food Adulteration Rules, the matter would have been different. On the contrary, the opposite party-company having demonstrated that it has produced packaged drinking water in conformity with the specification of A.33 of Appendix-B of said Rules, it has discharged its onus. The Hon ble Delhi High Court in Bottled Water Processors Association Vrs. Union of India, [ 2010 (5) TMI 956 - DELH HIGH COURT ], held that it is mandatory for packaged drinking water to be manufactured, sold or exhibited for sale only with a BIS Certification Mark. Packaged drinking water has to conform to the stipulated Indian Standards Specification as per IS 14543:2004. Rule 37 of the Prevention of Food Adulteration Rules requires the label to state that it is packaged drinking water and the label shall not contain any statement, claim, design, device, fancy name or abbreviation which is false or misleading in relation to the place of origin of the drinking water - Consequently, if packaged drinking water is sold without the usage of the BIS Mark, then the offence under Section 14 read with Section 33 of the Bureau of Indian Standards Act, 1986 stands attracted, which prescribes for the punishment. Test commonly applied to such cases where the statute is silent in respect of definition of a particular commodity, is how the product gets identified by the class or section of people dealing with or using the product. This is a test, which is attracted whenever a statute does not contain any definition. It is a matter of common experience that the identity of an article is associated with its primary function. When a consumer buys an article, he buys it because it performs a specific function for him. There is a mental association in the mind of the consumer between an article and the need it supplies in his life. It is the functional character of the article, which identifies it in his mind. The competing entries, viz., Entry 39 of the Tax-free List vis-a-vis Entry 4 of Taxable List, do not confine the item to water simpliciter for classification. This Court is called upon to adjudicate whether packaged drinking water sold in the brand name KINLEY WATER falls within the sweep of expression water but not aerated or mineral water sold in bottles or sealed containers . The key words are sold , aerated water and mineral water . The word sold in the entry is indicative that it is the trade circle in which the commodity is traded or understood by the manufacturer, the trader and the consumer. In the trade mineral water and packaged drinking water are understood in the same sense in which Bureau of Indian Standards and the Prevention of Food Adulteration Act have specified/defined. Thus considered, the contention of the petitioner-Revenue deserves to be rejected. Only conclusion that can be arrived at when Entry 39 of Tax-free List and Entry 4 of the Taxable List are pitted against each other is that what is taxable is sale of aerated water or mineral water. The scope of taxability cannot be expanded by giving the extended meaning to the excepted expressions for the purpose of narrowing down the exemption granted to water which falls within the ken of Entry 39 of Tax-free List - it is held that sale of packaged drinking water in the brand name KINLEY WATER falls within the expression water but not aerated or mineral water sold in bottles or sealed containers vide Entry No.39 of Tax-free List. The issue is answered in the negative, i.e., in favour of the opposite party-assessee and against the Revenue.

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• 2023 (3) TMI 5
  Constitutional Validity of Entry No.25 of the 6 Schedule to the Karnataka Sales Tax Act, 1957 - assessment order, reopening of assessment, barred by limitation or not - time limitation as per Section 12-A(1) of the KST Act - whether the proviso to Section 12-A(2) of the KST Act is applicable to the facts of the instant case? HELD THAT:- The proviso to Section 12-A(2) of the KST Act is not applicable to the instant case and the impugned assessment orders are barred by limitation. It is a matter of record that the petitioner was not one of the parties in PRO Lab s case [[ 2015 (2) TMI 388 - SUPREME COURT] ] and consequently, would not come under the expression assessee contained in the proviso to Section 12-A(2). The petitioner can also not be considered, construed or treated as any person as contemplated in the said proviso since the same means, only a person who is intimately connected or interlinked or has a nexus to the parties in PRO Lab s case and not to anyone else, much less, the petitioner herein, who was neither a party to PRO Lab s case nor had any connection / link / nexus with the parties to the said case; to put it differently, in order to apply the judgment of the Apex Court in PRO Lab s case, which would enable the respondents to initiate the impugned re-assessment proceedings, pursuant thereto, it is absolutely essential that the petitioner herein has to be any person within the meaning of the proviso to Section 12-A(2); it follows there from that if the petitioner cannot be construed, considered or treated as any person in terms of the said proviso, the same would be inapplicable to the petitioner and the benefit of exclusion of the period of 8 years prescribed in Section 12-A(1) would not be available to the petitioner. In ITO, Sitapur vs. M/s.Muralidhar Bhagwan Das case [[ 1964 (1) TMI 5 - SUPREME COURT] ], the Apex Court held that the said proviso would not save the time limit prescribed under sub-section (1) of Section 34 of the Act in respect of an escaped assessment of a year other than that which is the subject-matter of the appeal or the revision, as the case may be. It follows that the notice under Section 34(1) of the Act issued in the present case was clearly barred by limitation. In Mysore Cements Ltd., case [[ 1999 (7) TMI 641 - KARNATAKA HIGH COURT] ] , the coordinate Bench of this Court while dealing with proviso 12- A(2) of the KST Act, under identical circumstances, held that Section 12-A(2) has extended the time-limit during which the stay was granted by any court or any other authority. It is only the time during which the stay granted is extended. But in a case where the stay is not granted and ultimately the matter is decided against the assessee requiring to make the assessment on the basis of the ultimate order or judgment given then the proviso further extends the time but, if a judgment is given in other case, then it would justify reopening of the assessment only within the time prescribed under section 12-A(1) and if it is in the case of the same assessee or person then, proviso to sub-section (2) of section 12-A thereof extends the time-limit for initiation of the assessment/reassessment of that assessee. The impugned re-assessment orders for the years 1998-99 to 2004-05 dated 15.04.2016 and consequent demand notices dated 15.04.2016 passed by the 3rd respondent at Annexures-K, L, M, N, P, Q and R respectively - petition allowed.

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• 2023 (3) TMI 4
  Validity of assessment order - sufficient opportunity of hearing has been provided or not - scope of the word 'reasonable opportunity of hearing' under Section 31 of the Tripura Value Added Tax Act, 2004 - respondents has contended that since a show cause notice was given, the same itself was sufficient in respect of providing of reasonable opportunity of hearing - HELD THAT:- The Assessing Officer cannot pass an order on the basis of pure suspicion and surmised without giving reasonable opportunity of hearing the case which is sought to be made out in the assessment order. In other words, though the Assessing Officer can make such inquiries, he must give an opportunity of being heard which is not an empty formality or ritual or a pretence. It is a valuable right granted to the assessees and, in fact, is an important safeguard against arbitrary assessments. It cannot be taken lightly by the authorities. The opportunity must be real and reasonable. If an assessee, who is asked to furnish certain particulars or submit explanations within a specified time, prays for further time stating his difficulties or reasons, his prayer should be considered judiciously. Sometimes, as in the present case, for assessment for a number of years are taken up together and the assessee is asked to appear and produce evidence in support of his returns. On consideration of the evidence produced by the assessee, the Assessing Officer might require some further particulars or information which might not be possible for the assessee to submit instantaneously, for various reasons. The Assessing Authority cannot pass an order merely on the basis of pure guess and suspicion and surmises - the petitioner in this case was asked to furnish certain information for which he wanted time on the ground that assessments for four years were being taken up at a time and it was not possible during COVID period to bring the original invoices from Mumbai and thus his prayer was rejected. The petitioner was thus denied reasonable opportunity of hearing and on that score itself, the impugned order of assessment cannot be sustained as the same being made in violation of principles of natural justice. The impugned orders of assessment dated 26.03.2021 as well as the notice of demand for the assessment years 2015-16 to 2017-18 stands set aside and the matter is remanded back to the concerned authorities to issue a fresh proceeding in accordance with law - Petition allowed by way of remand.

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