TMI Tax Updates - e-Newsletter
March 8, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
Service Tax
Central Excise
Indian Laws
Highlights / Catch Notes
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GST:
Levy of penalty - document/invoice number has wrongly been mentioned in the e-way bill - no intent to evade tax - The court concludes that the penalty imposition in this case, based on a typographical error in the e-way bill, lacks jurisdiction and is illegal. - Orders imposing penalties, are quashed and set aside.
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GST:
Refund of unutilized Input Tax Credit - Seeking withdrawal of the deficiency memos - The High Court observed that Section 54(8)(b) allows the refundable amount to be paid to the applicant without the necessity of a certificate from a Chartered Accountant, under certain circumstances. - The court noted the requirements of Rule 89(2), which mandates documentary evidence to establish refund eligibility, with exceptions for specified cases.
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GST:
Refund of IGST paid on goods exported - claim of higher duty drawback - The court found merit in the petitioner's contentions regarding entitlement to the refund of IGST paid on exported goods during the transitional period. - Relying on precedents and legal provisions, the court allowed the petition and directed the respondent authorities to refund the IGST amount, after deducting the differential duty drawback.
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GST:
Cancellation of GST registration of the Petitioner with retrospective effect - The High court underscores the need for the proper officer to justify retrospective cancellation based on objective criteria, rather than mechanical or subjective reasons. - Considering that the petitioner no longer wishes to continue business, the court modifies the order for cancellation, setting the effective date as 29.08.2019, aligning with the petitioner's application for cancellation.
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GST:
Violation of principles of natural justice - petitioner was not provided with an adequate opportunity to defend SCN - The Delhi High Court ruled in favor of the petitioner, highlighting procedural irregularities and the lack of fair consideration in the adjudication process. It emphasized the importance of affording parties due process rights, including a meaningful opportunity to present their case and respond to allegations. - The matter remitted to the GST Officer for re-adjudication after granting the petitioner a proper opportunity of personal hearing.
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GST:
Eligibility for tax exemption under GST Act - mixed supply - ticket charges collected in relation to an Agricultural exhibition - The Advance ruling authority concluded that the applicant is eligible to claim exemption from GST on ticket charges collected for the agricultural exhibition. - However, this exemption is subject to the condition that the services provided during the exhibition are related to functions entrusted to a Panchayat under Article 243G of the Constitution. - Activities unrelated to these functions are taxable at the standard GST rate of 18%.
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GST:
Exemption from GST - Educational institute or not - Seeking clarification as to whether the educational courses which are conducted by the 'Additional Skill Acquisition Programme Kerala' falls under the taxable service or not - The Authority for Advance Ruling evaluated ASAPK's status as an educational institution and the approval status of its vocational education courses. The Authority emphasized the requirement for registration with the Directorate General of Training, Ministry of Skill Development and Entrepreneurship, for availing exemption. Citing a Supreme Court ruling, the Authority stressed the strict interpretation of exemption notifications and the burden of proof on the assessee. Due to ambiguity and lack of supporting evidence, ASAPK's claim for exemption denied.
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GST:
Blocking of credit - Reversal of Input Tax Credit - services supplied by Larsen and Toubro Ltd in connection with the construction of runway and passenger terminal building of the applicant - scope of the provisions of Sections 17(5)(c) and (d) of the CGST Act in conjunction with the explanations provided therein - The Authority for Advance Ruling, Kerala, concluded that the applicant is not eligible for input tax credit on certain supplies of goods/services listed in their submission.
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GST:
Classification of goods - rate of GST - The authority ruled that outboard motor engines and spare parts supplied for use in fishing vessels fall under Customs Tariff Heading 8902, attracting a GST rate of 5% (2.5% CGST + 2.5% SGST) - The authority clarified that the supply of goods or services during the warranty period, without consideration, in discharge of the warranty obligation, is not liable to GST. Additional consideration, if received, for such supplies, will be liable to GST at the applicable rate. - Repair or maintenance services of fishing vessels, being a composite supply, were classified under SAC 998714 and subjected to GST at 5% (2.5% CGST + 2.5% SGST)
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Income Tax:
Validity of assessment order passed u/s 144C - due to oversight/inadvertence Petitioner did not inform the AO within 30 days period prescribed under Sub-section (2) of Section 144C that it had filed objection by way of an email - The court disposes of the petition, setting aside the assessment order and remitting the matter to the DRP for consideration of the petitioner's objections. The Assessing Officer is directed to take further steps in accordance with the law after the DRP passes its order.
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Income Tax:
Reopening of assessment - as alleged Petitioner was a beneficiary of accommodation entries - Notices under Section 148A(b) were issued, alleging escaped income, followed by a subsequent notice clarifying errors. - Petitioner's response, supported by evidence, was rejected for failure to submit documents not initially requested. - The High Court quashed the rejection order and remanded the matter for reconsideration. The assessing officer was directed to provide a reasoned decision and justify the rejection of petitioner's evidence.
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Income Tax:
Exemption u/s 10(10AA) - exemption from income tax from the leave encashment amount at the time of retirement of the employees other than government employees - as argued employees of the Bank as also the Public Sector Undertakings cannot be treated differently holding the equality clause of Article 14 of the Constitution of India - The High Court dismissed the writ petition, affirming the constitutionality of Section 10(10AA) of the Income Tax Act, 1961. It upheld the classification made in the provision, considering the distinct status and privileges enjoyed by government employees compared to employees of other sectors.
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Income Tax:
Disallowance u/s 40(a)(ia) - External Development Charges(EDC) paid to HUDA without deduction of tax at source - TDS on EDC u/s 194C/194I - The tribunal concluded that since the EDC payment to HUDA was deposited in the consolidated Fund of the State, no tax deduction was required, thereby affirming the deletion of the disallowance. - The tribunal dismissed the revenue's appeal, upholding the CIT(A)'s order regarding the disallowance of EDC expenditure.
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Income Tax:
Income deemed to accrue or arise in India - addition on account of LTCG to be taxed u/s 112 - Scope of holding Tax Residency Certificate of Mauritius (TRC) - The Tribunal allowed the appeal, holding that investments made prior to April 1, 2017, are grandfathered under the India-Mauritius DTAA and not subject to capital gains taxation in India. The Tribunal followed the principles laid out in the case of Bid Services Division (Mauritius) Ltd. vs. Authority for Advance Rulings and other relevant CBDT circulars and press releases, confirming that the assessee is entitled to the DTAA benefits.
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Income Tax:
Rectification u/s 154 - Chargeability of interest u/s 234B and 234C - income returned u/s 115JB - The return was assessed under section 143(3) of the Act, and no interest was charged under sections 234B and 234C as per the prevailing law. - Subsequently, a search and seizure operation was conducted, leading to proceedings under section 153A. The CIT(A) deleted all additions made in the assessment order under section 153A. - However, while giving appeal effect to the CIT(A)'s order, the Assessing Officer introduced a new issue of charging interest under sections 234B and 234C, which was not part of the original assessment or appeal. - The ITAT held that the Assessing Officer exceeded his jurisdiction by introducing a new issue of charging interest under sections 234B and 234C during appeal effect.
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Income Tax:
Accrual of income in India - PE in India or not? - UK DTAA - Taxability of receipts from offshore supply on presumptive basis u/s 44BB - Dispute Resolution Panel (DRP) upheld applicability of section 44BB without addressing PE issue - Tribunal considered submissions and material on record, noting assessee's absence of presence for onshore activities and referring to previous decision in assessee's favor for A.Y. 2020-21 - Tribunal ruled in favor of the assessee, holding that section 44BB cannot be invoked to tax offshore supply receipts on a presumptive basis in absence of established PE.
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Income Tax:
Taxability of receipts from offshore supply of equipments - offshore supply made to Indian PSU’s which the assessee had claimed to be not chargeable to tax under Indian Taxation - Assessee company is tax resident of China - The Tribunal analyzed the terms of the contracts and previous tribunal decisions, which indicated that the transfer of title over the goods occurred outside India, making the receipts non-taxable in India. The court emphasized that the Assessing Officer's bifurcation lacked a rational basis and evidence, rendering it impermissible.
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Income Tax:
Deduction u/s 80G - Corporate Social Responsibility (CSR) donations - expenditure was disallowed u/s 37(1) - The Tribunal partly allowed the appeal for statistical purposes, directing the Assessing Officer to verify the claim for deduction under section 80G of the Act. However, other grounds of appeal were dismissed based on legal precedents and amendments to the Act.
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Income Tax:
Penalty u/s 271(1)(c) - disallowances in the quantum assessment order - whether any concealment or furnishing of inaccurate particulars proved? - Tribunal directs deletion of penalty concerning disallowance under section 40(a)(ia) as the quantum appeal resulted in deletion of the addition. - Penalty in relation to unexplained investment and capital expenditure is remanded to the Commissioner of Income Tax (Appeals) for reconsideration post-quantum appeal decision. - Tribunal upholds penalty on foreign traveling expenses and commission payments, citing lack of evidence to establish business purpose or compliance with tax regulations.
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Income Tax:
Income from undisclosed sources - addition of agricultural income - Assessment of agricultural income declared by the assessee for various assessment years was questioned by the Assessing Officer, leading to additions to total income as income from undisclosed sources. - The tribunal observed that on looking at the holding of the agricultural records of land holding, the agricultural produce mentioned there in and some of the bills of APMC produced before us clearly show that assessee is engaged in agricultural activities. - Additions made to the total income regarding the cash found in the locker and agricultural income were deemed unsustainable based on the evidence presented.
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Income Tax:
Addition u/s 68 - bogus LTCG - share capital and share premium were merely paper credit entries - receipt of accommodation entries in lieu of commission paid - The Tribunal found that the amounts received by BCPL were passed through various entities without actual business transactions, acting merely as accommodation entries. It was determined that these funds should not be treated as income of BCPL. Instead, only the commission income received for facilitating these transactions should be taxed.
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Income Tax:
Correct head of income - treatment of income from sale and purchase of shares - business income or income from capital gains - high volume of transactions and frequently investment in shares - The High Court remitted the matter back to the Tribunal to consider the nature of the transaction concerning the sale and purchase of shares and the treatment of legal expenses afresh. - The Tribunal considered various tests laid down by the High Court and other judgments to determine the nature of the transaction. It found that the appellant had purchased shares with the intention of being an investor and held them as investments, thus treating the gains as capital gains.
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Customs:
CBIC issues notification to makes amendments to the notification No. 50/2017-Customs to reduce the BCD on imports of meat and edible offal, of ducks, frozen, subject to the prescribed conditions, with effect from 07.03.2024.
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Customs:
CBIC revises tariff values for various goods, including crude palm oil, RBD palm oil, crude soybean oil, and brass scrap, among others, with the changes taking effect from March 7, 2024.
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Customs:
Classification of import of goods - Ethyl Alcohol Absolute having purity - The High court observes that the goods in question have been regularly assessed under CTH 98.02 and orders provisional release based on the petitioner's long-standing importation history and compliance with marking requirements. - The court orders the provisional release of the Ethyl Alcohol Absolute on execution of a bond by the petitioner.
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Customs:
EOU - Non-fulfilment of export obligations - reasons beyond the control - The tribunal held that the appellant having not fulfilled the export obligation and not used the raw materials for manufacture of finished products for export, the exemption of the notification is not available. - The CESTAT partially allows the appeal, setting aside the demand for Special Additional Duty prior to a specific date pending verification. However, it upholds the duty liability and interest demands, except where modifications are specified.
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Customs:
Customs Cargo Service Provider (CCSP) - Suspension of their CCSP approval and imposing a penalty - Demand of value of pilfered goods - custodian of Speedy CFS - Cigarette sticks were found stolen / Pilfered from the safe custody - The CESTAT held that the suspension, subject to facilitating existing consignments, is valid under Handling of Cargo in Customs Areas Regulations (HCCAR), 2019. However, the specific suspension period had expired, making the order non-implementable. - The appellant violated obligations under Regulations 5(1)(i)(n), 6(1)(f), and 6(1)(i) of HCCAR, justifying the penalty under Regulation 12(8) and Section 117 of the Customs Act, 1962.
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Customs:
Misclassification and Wrongful Claim of MEIS Benefits - Exports of quilts containing cotton/polyester - Levy of penalties - The CESTAT found the appellant guilty of willful misdeclaration and misclassification to avail higher MEIS benefits, violating the provisions of the Customs Act, 1962, and Foreign Trade (Development & Regulation) Act, 1992. - The Tribunal upheld the principle of self-assessment and confirmed that M/s FA's actions constituted a deliberate contravention of customs laws, making them liable for penalties. - While penalties were justified for the firm due to the deliberate misclassification, the penalties against the individual managers were revoked, acknowledging their passive role in following the firm's instructions without evidence of personal gain or active connivance.
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DGFT:
The DGFT announces an amendment to the import policy conditions for Duck Meat under ITC (HS) 2022, Schedule–I (Import Policy), specifying that the import of Premium Duck Meat for supply to Hotels and Restaurants is now 'Restricted', while other imports under the specified ITC(HS) codes remain 'Free'. This amendment is effective from the notification date, March 6, 2024.
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DGFT:
DGFT issues a notification which amends the Import Policy for Raw Petroleum Coke (RPC) and Calcined Petroleum Coke (CPC) under Chapter 27 of the ITC (HS), 2022, Schedule-I (Import Policy). The revised policy allows for the total import of 1.9 Million MTs of RPC for CPC manufacturing and 0.5 Million MTs of CPC for the Aluminium Industry in FY 2024-25, with adjustments in the following years, subject to specific conditions including usage restrictions and domestic needs. The amendment aligns with the recommendations of the Commission for Air Quality Management issued on 14.02.2024.
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Corporate Law:
Restoration of struck name of the company from its register - default in non-filing of the Financial Statements and Annual Returns - The NCLAT observed that the act of the Respondent in striking off the appellant from the rolls of ROC had caused a grave prejudice to the appellant herein, more specifically when the public notice issued by ROC was aimed at weeding out shell companies.- The National Company Law Appellate Tribunal (NCLAT) concludes that it is just and equitable to restore the name of the appellant company to the register of companies. The Tribunal orders the Registrar of Companies, New Delhi, to restore the company's name subject to certain conditions, including payment of costs, filing of overdue documents, and compliance with statutory requirements.
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Indian Laws:
Disciplinary proceedings - allegation of misconduct - Proceedings against ex-Superintendent of Central Excise - Reliance on confessional statements made by accused persons during the investigation - The High court underscored that disciplinary proceedings require evidence that meets legal principles, and reliance on confessional statements from a separate criminal investigation fails to satisfy this criterion. - It was concluded that the punishment orders were based on improper grounds, as the disciplinary actions were not supported by evidence that could logically prove the charges against the employees according to principles applicable to departmental inquiries. Thus, the punishment orders and the appellate decisions affirming them were quashed, and the employees were entitled to consequential benefits.
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Indian Laws:
Dishonor of cheques - Condonation of delay of 1259 days in filing the complaint for an offence punishable u/s 138 of the Negotiable Instruments Act, 1881 - Exercise of Discretion by Lower Courts- sufficient reason to condone the delay or not - The High courts uphold the discretion exercised by the lower courts, emphasizing the importance of balancing procedural requirements with substantive justice. - Various legal principles and precedents are cited and analyzed throughout the proceedings, including the liberal interpretation of the concept of "sufficient cause" for condonation of delay and the significance of balancing substantive justice with procedural requirements. - Ultimately, the court dismisses the petition, affirming the lower courts' exercise of discretion to condone the delay.
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IBC:
Rejection of Application for Pre-Packaged Insolvency Resolution Process (PPIRP) based on Ineligibility or Deficiency in Application - The NCLAT found the application was indeed complete and compliant with the IBC requirements, indicating an error in the NCLT's rejection based on the merits of the base resolution plan, which was premature and outside the scope of examination at the application stage. - The NCLAT clarified that the statutory scheme of the IBC does not envisage consideration of the base resolution plan's merits at the application stage. The Tribunal emphasized that the scheme mandates examination of the resolution plan's approval by the Committee of Creditors (CoC) post the initiation of PPIRP, with the base resolution plan neither being final nor requiring adjudicatory approval at the application stage.
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IBC:
Admission of Section 7 application filed by the Financial Creditor - invocation of guarantee - application filed by the Financial Creditor is barred by Section 10A of IBC or not - The NCLAT found that the invocation of the guarantee on 22.02.2020, which preceded the 10A period, allowed for the initiation of insolvency proceedings under Section 7. Therefore, the tribunal held that Section 10A did not bar the application.
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IBC:
Dismissal of Section 9 for initiation of CIRP - Period of limitation - The Adjudicating Authority held that the debt was time-barred as per the Limitation Act. It noted that 26 out of 27 invoices submitted by the Operational Creditor were more than three years old from the date of filing the Section 9 application, and no subsequent acknowledgment of liability was provided to extend the limitation period. - The Tribunal (NCLAT) dismissed the appeal, affirming the Adjudicating Authority's order.
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SEBI:
The SEBI circular dated March 5, 2024, updates the list of goods under the SCRA, 1956, with the inclusion of thirteen new goods and alloys for five metals, expanding the total to one hundred and four. It advises stock exchanges and clearing corporations with commodity derivatives segments to amend relevant bye-laws and regulations accordingly.
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Central Excise:
CENVAT Credit - waste/by-product generated i.e. Aluminium dross during the manufacture of Aluminium products from Alumina in the appellant's factory which is sold by the appellant without payment of duty - exempt goods or not - The Tribunal allowed the appeal, holding that the appellant is not liable to pay excise duty on the clearance of "Aluminium dross" based on several grounds. - The order under challenge erred in applying Rule 6 of CCR, 2004 based on the rescinded circular, and the Commissioner (Appeals) failed to consider the implications of the Supreme Court's decision in Sucrose India (supra) and the Circular dated 07.07.2022.
Articles
Notifications
Customs-
13/2024 - dated
6-3-2024
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Cus
Seeks to amend notification No. 50/2017- Customs dated 30.06.2017, in order to reduce the BCD on imports of meat and edible offal, of ducks, frozen, subject to the prescribed conditions, with effect from 07.03.2024.
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17/2024 - dated
6-3-2024
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Cus (NT)
Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver
DGFT-
69/2023 - dated
7-3-2024
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FTP
Enabling provisions for import of inputs that are subjected to mandatory Quality Control Orders (QCOs) by Advance Authorisation holders and EOU
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68/2023 - dated
7-3-2024
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FTP
Amendment in Import Policy condition for Raw Pet Coke and Calcined Pet Coke under Chapter 27 of Schedule-I (Import Policy) of ITC (HS) 2022
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66/2023 - dated
6-3-2024
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FTP
Amendment in import policy condition for Duck Meat Chapter 2 of ITC (HS) 2022, Schedule–I
(Import Policy)
GST - States-
11/2023 – State Tax (Rate) - dated
5-3-2024
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Jharkhand SGST
Amendment in Notification No. 1/2017-State Tax (Rate), dated the 29th June, 2017
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F. 12 (1) FD/Tax/2024-73 - dated
7-3-2024
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Rajasthan SGST
Seeks to notify "Public Tech Platform for Frictionless Credit" as the system with which information may be shared by the common portal based on consent under sub-section (2) of Section 158A of the Rajasthan Goods and Services Tax Act, 2017
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2024 (3) TMI 339
Validity of assessment order - alleged mismatch between the GSTR-3B and GSTR-1 return and the alleged mismatch between the GSTR-3B and GSTR-7 returns - inadvertent error in categorizing the nature of transaction in the returns - opportunity of hearing not provided to petitioner - violation of principles of natural justice - HELD THAT:- The documents on record clearly indicate that the petitioner was negligent in not contesting the tax demand. However, it is equally clear that the impugned assessment order was issued without hearing the petitioner and, consequently, without considering the petitioner's explanation and any documents in support thereof. In these circumstances, albeit by putting the petitioner on terms, the petitioner should be provided an opportunity to contest the tax demand. The impugned assessment order is quashed subject to the condition that the petitioner remits 10% of the disputed tax demand as a condition for remand. The petitioner is also submitted to file a reply to the show cause notice within a maximum period of two weeks from the date of receipt of a copy of this order along with 10% of the disputed tax demand. Subject to receipt of the aforesaid, the assessing officer is directed to provide a reasonable opportunity, including a personal hearing, and issue a fresh assessment order in accordance with law within a maximum period of two months thereafter. Petition disposed off.
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2024 (3) TMI 338
Violation of principles of natural justice - case of petitioner is that the impugned order does not take into consideration the reply submitted by the petitioner and is a cryptic order - demand including penalty - HELD THAT:- Perusal of the Show Cause Notice shows that the Department has given separate headings under declaration of output tax, excess claim Input Tax Credit [ITC], under declaration of ineligible ITC and ITC claim from cancelled dealers, return defaulters and tax nonpayers. To the said Show Cause Notice, a detailed reply was furnished by the petitioner giving full disclosures under each of the heads. The impugned order, however, after recording the narration, records that the reply uploaded by the taxpayer is not satisfactory - The observation in the impugned order dated 27.12.2023 is not sustainable for the reasons that the reply filed by the petitioner is a detailed reply. Proper Officer had to at least consider the reply on merits and then form an opinion whether the reply was devoid of merits. He merely held that the reply is devoid of merits which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner. The impugned order records that petitioner has not furnished the requisite details. Proper Officer is directed to intimate to the petitioner details/documents, as maybe required to be furnished by the petitioner. Pursuant to the intimation being given, petitioner shall furnish the requisite explanation and documents. Thereafter, the Proper Officer shall re-adjudicate the show cause notice after giving an opportunity of personal hearing and shall pass a fresh speaking order in accordance with law within the period prescribed under Section 75(3) of the Act - matter is remitted to the Proper Officer for re-adjudication. Petition disposed off.
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2024 (3) TMI 337
Violation of principles of natural justice - case of petitioner is that the impugned order does not take into consideration the reply submitted by the petitioner and is a cryptic order - demand including penalty - HELD THAT:- Perusal of the Show Cause Notice shows that the Department has given separate headings under declaration of output tax, excess claim Input Tax Credit [ITC], under declaration of ineligible ITC and ITC claim from cancelled dealers, return defaulters and tax nonpayers. To the said Show Cause Notice, a detailed reply was furnished by the petitioner giving full disclosures under each of the heads. The impugned order, however, after recording the narration, records that the reply uploaded by the taxpayer is not satisfactory - The observation in the impugned order dated 28.12.2023 is not sustainable for the reasons that the reply filed by the petitioner is a detailed reply. Proper Officer had to at least consider the reply on merits and then form an opinion whether the reply was devoid of merits. He merely held that the reply is devoid of merits which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner. The impugned order records that petitioner has not furnished the requisite details. Proper Officer is directed to intimate to the petitioner details/documents, as maybe required to be furnished by the petitioner. Pursuant to the intimation being given, petitioner shall furnish the requisite explanation and documents. Thereafter, the Proper Officer shall re-adjudicate the show cause notice after giving an opportunity of personal hearing and shall pass a fresh speaking order in accordance with law within the period prescribed under Section 75(3) of the Act - matter is remitted to the Proper Officer for re-adjudication. Petition disposed off.
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2024 (3) TMI 336
Violation of principles of natural justice - case of petitioner is that the impugned order does not take into consideration the reply submitted by the petitioner and is a cryptic order - demand including penalty - HELD THAT:- Perusal of the Show Cause Notice shows that the Department has given separate headings under declaration of output tax, excess claim Input Tax Credit [ITC], under declaration of ineligible ITC and ITC claim from cancelled dealers, return defaulters and tax nonpayers. To the said Show Cause Notice, a detailed reply was furnished by the petitioner giving full disclosures under each of the heads. The impugned order, however, after recording the narration, records that the reply uploaded by the taxpayer is not satisfactory - The observation in the impugned order dated 24.12.2023 is not sustainable for the reasons that the reply filed by the petitioner is a detailed reply. Proper Officer had to at least consider the reply on merits and then form an opinion whether the reply was devoid of merits. He merely held that the reply is devoid of merits which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner. The impugned order records that petitioner has not furnished the requisite details. Proper Officer is directed to intimate to the petitioner details/documents, as maybe required to be furnished by the petitioner. Pursuant to the intimation being given, petitioner shall furnish the requisite explanation and documents. Thereafter, the Proper Officer shall re-adjudicate the show cause notice after giving an opportunity of personal hearing and shall pass a fresh speaking order in accordance with law within the period prescribed under Section 75(3) of the Act - matter is remitted to the Proper Officer for re-adjudication. Petition disposed off.
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2024 (3) TMI 335
Levy of penalty - document/invoice number has wrongly been mentioned in the e-way bill - no intent to evade tax - HELD THAT:- There is definitely an error with regard to typing of the document/invoice number and there is a difference of four digits instead of the permitted two digits (as per the government circular) as submitted by the learned Additional Chief Standing Counsel. However, law is not to remain in a vacuum and has to be applied equitably in appropriate cases. A typographical error in the e-way bill without any further material to substantiate the intention to evade tax should not and cannot lead to imposition of penalty. In the case of M/s. Varun Beverages Limited [ 2023 (2) TMI 133 - ALLAHABAD HIGH COURT] there was a typographical error in the e-way bill of 4 letters (HR 73). In the present case, instead of 0401 , 2224 was incorrectly entered into the e-way bill which clearly appears to be a typographical error. In certain cases where lapses by the dealers are major, it may be deemed that there is an intention to evade tax but not so in every case. Typically when the error is a minor error of the nature found in this particular case, the imposition of penalty under Section 129 of the Act is without jurisdiction and illegal in law - petition allowed.
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2024 (3) TMI 334
Maintainability of petition - availability of remedy of appeal under Section 107 of UPGST Act - Denial of opportunity of hearing to the assessee - violation of principles of natural justice - HELD THAT:- Before any adverse order passed in an adjudication proceeding, personal hearing must be offered to the noticee. If the noticee chooses to waive that right, occasion may arise with the adjudicating authority, (in those facts), to proceed to deal with the case on merits, ex-parte. Also, another situation may exist where even after grant of such opportunity of personal hearing, the noticee fails to avail the same. Leaving such situations apart, we cannot allow a practice to arise or exist where opportunity of personal hearing may be denied to a person facing adjudication proceedings. The impugned order cannot be sustained in the eyes of law. It has been passed in gross violation of fundamental principles of natural justice. The self imposed bar of alternative remedy cannot be applied in such facts. If applied, it would be of no real use. In fact, it would be counter productive to the interest of justice. Here, it may be noted, the appeal authority does not have the authority to remand the proceedings. The impugned order dated 9.11.2023 passed by the respondent no.1 - Deputy Commissioner, State Tax, Ghaziabad is, hereby, set-aside - Petition allowed.
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2024 (3) TMI 333
Cancellation of GST registration of the petitioner with retrospective effect - SCN does not put the petitioner to notice that the registration is liable to be cancelled retrospectively - Violation of principles of natural justice - HELD THAT:- The impugned Show Cause Notice and the impugned order are also bereft of any details and accordingly the same cannot be sustained. Neither the impugned Show Cause Notice, nor the impugned order spell out the reasons for retrospective cancellation. In terms of Section 29(2) of the Act, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer s registration with retrospective effect is that the taxpayer s customers are denied the input tax credit availed in respect of the supplies made by the taxpayer during such period. Although, it is not considered apposite to examine this aspect but assuming that the respondent s contention in required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer's registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. In view of the fact that Petitioner does not seek to carry on business or continue the registration, the impugned order dated 08.08.2023 is modified to the limited extent that registration shall now be treated as cancelled with effect from 29.10.2021 i.e., the date when the Show Cause Notice was issued. Petitioner shall make the necessary compliances as required by Section 29 of the Central Goods and Services Tax Act, 2017. Petition disposed off.
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2024 (3) TMI 332
Cancellation of GST registration of petitioner with retrospective effect - petitioner had no opportunity to even object to the retrospective cancellation of the registration - violation of principles of natural justice - HELD THAT:- The Show Cause Notice and the impugned order are bereft of any details and accordingly the same cannot be sustained. Further, neither the Show Cause Notice, nor the order spell out the reasons for retrospective cancellation. In terms of Section 29(2) of the Act, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer s registration with retrospective effect is that the taxpayer s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, it is not considered apposite to examine this aspect but assuming that the respondent s contention in required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer's registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. In view of the fact that Petitioner does not seek to carry on business or continue the registration, the impugned order dated 10.06.2022 is modified to the limited extent that registration shall now be treated as cancelled with effect from 30.11.2021 i.e., the period upto which the Petitioner has filed its GST returns. Petitioner shall comply with the requirements of Section 29 of the Central Goods and Services Tax Act, 2017. Petition disposed off.
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2024 (3) TMI 331
Claim of Input Tax Credit from a dealer whose registration had been cancelled - demand alongwith penalty - non-application of mind by the proper officer - violation of principles of natural justice - HELD THAT:- The observation in the impugned order is not sustainable for the reasons that the reply filed by the petitioner is a detailed reply. Proper officer had to at least consider the reply on merits and then form an opinion whether the reply was vague or failed to counter the demands made. He merely held that the reply is vague which ex-facie shows that proper officer has not applied his mind to the reply submitted by the petitioner. Further, if the Proper Officer was of the view that reply was vague and further details were required, the same could have been specifically sought from the petitioner, however, the record does not reflect that any such opportunity was given to the petitioner to clarify its reply or furnish further documents/details. The impugned order records that petitioner has not furnished the requisite details. Proper Officer is directed to intimate to the petitioner details/documents, as maybe required to be furnished by the petitioner within a period of one week from today. On such intimation being given, petitioner shall furnish the requisite explanation and documents within one week thereof. Thereafter, the Proper Officer shall re-adjudicate the show cause notice after giving an opportunity of personal hearing - matter is remitted to the Proper Officer for re-adjudication. Petition disposed off.
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2024 (3) TMI 330
Cancellation of registration of petitioner - time limitation - order for cancellation of registration has been passed without any application of mind - violation of principles of natural justice - HELD THAT:- In the present case, the facts are similar to one in Surendra Bahadur Singh's case [ 2023 (8) TMI 1262 - ALLAHABAD HIGH COURT] , wherein the appeal was barred by time under Section 107 of the Act. However, the Division Bench in Surendra Bahadur Singh's case took into consideration the original order and set aside the same being non-reasoned and allowed the petitioner therein to file reply to the show cause notice. The orders impugned herein are liable to be set aside. Accordingly, the order in original dated March 2, 2022 and the appellate order dated August 1, 2023 are quashed and set aside. The petitioner is directed to file its reply to the show cause notice within three weeks from date and the adjudicating authority is directed to proceed de novo and pass order after granting opportunity of hearing to the petitioner. The writ petition is allowed.
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2024 (3) TMI 329
Refund of unutilized Input Tax Credit - Seeking withdrawal of the deficiency memos issued by the respondent in response to the refund claim of the petitioner for the period May, 2019 to July, 2019 - Requirement of furnishing a certificate of the Chartered Accountant - HELD THAT:- Admittedly, case of the petitioner is covered under Section 54 (8) (b), which is one of the excepted provisions in the proviso to 89 (2) (l) and (m). Consequently, the deficiency memos issued to the petitioner, requiring the petitioner to furnish a certificate of the Chartered Accountant are not sustainable. They are accordingly set aside. Since part of the amount was denied on account of deficiency memos, which are not found to be sustainable in view of the proviso to Rule 89 (2) (l)(m), it is held that petitioner is entitled to interest on the delayed refund in terms of Section 56 of the Central Goods and Service Tax Act, 2017 at the rate notified by the Government within a period of four weeks from today. As per the petitioner, in view of pendency of the present petition, further claims could not be lodged. Accordingly, on petitioner filing such refund applications, the Department shall not reject the same solely on the ground of limitation. Petition disposed off.
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2024 (3) TMI 328
Refund of IGST paid on goods exported - claim of higher duty drawback - Constitutional validity of Paragraph 11(d) read with 12A(a)(ii) of the Notes and Conditions of the N/N. 131/2016- Cus. (N.T.), dated 31.10.2016 - Circular No. 37/2018-CUSTOMS dated 09.10.2018 - HELD THAT:- There are substance in the contentions as urged on behalf of the Petitioner that the Petitioner would be entitled to the refund of IGST paid by the Petitioner during the transitional period, after deducting the differential amount of duty drawback, in terms of what has been placed on record at Exhibit-G (at page 120 of the Petition). It is found from the Reply Affidavit that, on the factual matrix, no dispute has been raised in regard to the dis-entitlement of the Petitioner in regard to the quantum as described, in the Shipping Bills itself, which, in terms of Rule 96 of the CGST Rules would amount to applications for refund. Reference made to the observations of this Court in similar circumstances in the case of SATYEN POLYMERS PVT. LTD. VERSUS THE UNION OF INDIA AND ORS. [ 2023 (9) TMI 1238 - BOMBAY HIGH COURT] where it was held that The Circular on which reliance is placed by the Respondents is dated 9th October, 2018, whereas the export was made on 25th July, 2017 and 5th September, 2017, which is much before the date of Circular. It is a settled position that the circular cannot be made applicable retrospectively. Even otherwise, the circular proceeds on a footing of claim of higher duty drawback and not where the rate of drawback is same and further more the circular also dose not deal with the rectification of mistake if suffix (A) is mentioned instead of suffix (B), while mentioning the HSN Code, which the facts in the instant case. The Respondent Authorities are directed to grant refund of IGST paid on goods exported by the Petitioner during the Transitional Period, after deducting the differential amount of duty drawback, i.e. grant refund of Rs. 30,04,591/- [Rs. 36,47,039 (Rs. 7,13,830 Rs. 71,382)], along with appropriate interest on such refund from the date of the shipping bill till the date of actual refund - the amount be released with simple interest, at the rate of 7%, to the Petitioner within three weeks from the date an authenticated copy of this order is presented before the concerned officer - petition disposed off.
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2024 (3) TMI 327
Cancellation of GST registration of petitioner with retrospective effect - notice does not specify any cogent reason - violation of principles of natural justice - HELD THAT:- The SCN and the impugned order are bereft of any details accordingly the same cannot be sustained and neither the show cause notice, nor the order spell out the reasons for retrospective cancellation. In terms of Section 29(2) of the Act, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. Registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer s registration with retrospective effect is that the taxpayer s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, it is not considered apposite to examine this aspect but assuming that the respondent s contention in required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer's registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. In view of the fact that Petitioner does not seek to carry on business or continue the registration, the impugned order dated 13.02.2024 is modified to the limited extent that registration shall now be treated as cancelled with effect from 03.02.2022 i.e., the date when the Show Cause Notice was issued. Petitioner shall comply with the requirements of Section 29 of the Central Goods and Services Tax Act, 2017 - petition disposed off.
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2024 (3) TMI 326
Maintainability of petition - availability of alternative remedy of appeal - non-constitution of the Appellate Tribunal - HELD THAT:- The petitioner is desirous of availing the statutory remedy of Appeal under the said provisions. Apparently, acknowledging the absence of constitution of Appellate Tribunal, in exercise of the power conferred under section 172 of the CGST Act, 2017, the Government of India based on the recommendation made by the G.S.T. Council, has issued Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 on 03.12.2019 - In tune with the said Removal of Difficulties Order dated 03.12.2019, the Central Board of Indirect Taxes and Customs, GST Policy Wing vide Circular No. 132/2/2020-GST Dated 18th March, 2020 has come out with the clarification in respect of appeal having regard to non-constitution of the Appellate Tribunal. Taking into account the aforesaid Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019 issued by the Government of India and subsequent clarification issued by the Central Board of Indirect Taxes and Customs (GST Policy Wing) vide Circular No.132/2/2020 dated 18th March, 2020, it is deemed proper in the interest of justice to dispose of this writ petition - petition disposed off subject to verification of the fact of deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, or deposit of the same, if not already deposited, in addition to the amount deposited earlier under Sub Section (6) of Section 107 of the CGST/OGST Act, the petitioner must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the CGST/OGST Act, for the petitioner cannot be deprived of the benefit, due to non-constitution of the Tribunal by the respondents themselves. The recovery of balance amount, and any steps that may have been taken in this regard will thus be deemed to be stayed.
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2024 (3) TMI 325
Maintainability of appeal - appeal dismissed on the ground of time limitation - power of Commissioner Appeals to condone delay - HELD THAT:- Since in the present case the appeal was filed on 02.09.2023, the appeal was filed with a delay not exceeding one month and as such the Commissioner Appeals was empowered to consider the application seeking condonation of delay. As the Commissioner Appeals has erroneously not considered the application seeking condonation of delay solely on the ground that appeal same was beyond the period prescribed under Section 107 (4) of the Act and thus beyond the powers vested in the Commissioner Appeals, the said order set aside and matter remitted to the Commissioner Appeals to consider the application seeking condonation of delay in accordance with law. Petition disposed off.
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2024 (3) TMI 324
Cancellation of GST registration of petitioner with retrospective effect - notice does not specify any cogent reason - violation of principles of natural justice - HELD THAT:- The show cause notice and the impugned order are bereft of any details accordingly the same cannot be sustained. In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. The registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer s registration with retrospective effect is that the taxpayer s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, it is not considered apposite to examine this aspect but assuming that the respondent s contention in this regard is correct, it would follow that the proper officer is also required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. There is no reasoning in the said show cause notice and in the impugned order as to why the cancellation has been done retrospectively - the matter is relegated to the proper officer to re-adjudicate the Show Cause Notice dated 06.01.2023 in accordance with law - petition disposed off.
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2024 (3) TMI 323
Cancellation of GST registration of the Petitioner with retrospective effect - petitioner had no opportunity to even object to the retrospective cancellation of the registration - violation of principles of natural justice - HELD THAT:- The GST registration of the Petitioner was cancelled by order dated 25.08.2021, however, the said order does not give any reasons for cancellation of the registration. It merely states that the registration is liable to be cancelled for the following reason whereas no reply to notice to show cause has been submitted . Neither the show cause notice nor the order spell out the reasons for cancellation. In fact, order dated 29.01.2021 does not qualify as an order of cancellation of registration. On one hand, it states that the registration is liable to be cancelled and on the other, in the column at the bottom there are no dues stated to be due against the petitioner and the table shows nil demand. In terms of Section 29(2) of the Central Goods and Services Tax Act, 2017, the proper officer may cancel the GST registration of a person from such date including any retrospective date, as he may deem fit if the circumstances set out in the said sub-section are satisfied. The registration cannot be cancelled with retrospective effect mechanically. It can be cancelled only if the proper officer deems it fit to do so. Such satisfaction cannot be subjective but must be based on some objective criteria. It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer s registration with retrospective effect is that the taxpayer s customers are denied the input tax credit availed in respect of the supplies made by the tax payer during such period. Although, it is not considered apposite to examine this aspect but assuming that the respondent s contention in this regard is correct, it would follow that the proper officer is also required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. In view of the fact that Petitioner does not seek to carry on business or continue the registration, the impugned order dated 25.08.2021 is modified to the limited extent that registration shall now be treated as cancelled with effect from 29.08.2019 i.e., the date when the Petitioner had submitted the application for cancellation of GST registration - Petitioner shall comply with the requirements of Section 29 of the Act and furnish the requisite details to the Department - petition disposed off.
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2024 (3) TMI 322
Violation of principles of natural justice - petitioner was not provided with an adequate opportunity to defend SCN - Under declaration of output tax - excess claim Input Tax Credit [ITC] - under declaration of ineligible ITC and ITC claim from cancelled dealers, return defaulters and tax non-payers - HELD THAT:- The impugned order, however, after recording the narration, records that the reply uploaded by the taxpayer is not satisfactory. It merely states that And whereas, after analyzing, examining and evaluating the reply filed by the taxpayer and details available, as on date on the GST portal, reply of the taxpayer is found to be vague and miserably fails to counter the demands mentioned in the DRC-01. In case the GST Officer was of the view that reply was vague or further details were required, the same could have been sought from the petitioner, however, the record does not reflect that any such opportunity was given to the petitioner to clarify its reply or furnish further documents/details - Further petitioner was not provided with an adequate opportunity to defend the show cause notice by way of a hearing. The impugned order records that petitioner has not furnished the requisite details. The GST Officer is directed to intimate to the petitioner details/documents, as maybe required to be furnished by the petitioner and petitioner shall furnish the same - Impugned order set aside - matter is remitted to the GST Officer for re-adjudication after giving an opportunity of personal hearing.
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2024 (3) TMI 321
Eligibility for tax exemption under GST Act - mixed supply - ticket charges collected in relation to an Agricultural exhibition - applicant Regional Agricultural Research Station, Pilicode falls under the definition of Governmental Authority or not - HELD THAT:- Entry no. 1 of the Eleventh Schedule of the Constitution covers Agriculture, including agricultural extension. Therefore, Agriculture and its extension is a function entrusted to Panchayat under Article 243G of the Constitution - it can be seen that the Kerala Agriculture University and its Regional Agricultural Research Stations are established under the KAU Act for the purpose of extension of Agriculture in the State of Kerala and the Government has more than 90% control over the University and its research institutions. Accordingly, the applicant Regional Agricultural Research Station, Pilicode falls under the definition of Governmental Authority . The ticket charges collected by the applicant is for admission to the said Carnival. Thus it can be seen that the above activities provided in the Carnival by the applicant are the activities in relation to agriculture and its extension. As such, if the ticket charges collected by the applicant, a Governmental Authority, is exclusively meant for admissions to the aforementioned exhibitions in the Carnival which is in relation to the functions enlisted under Article 243G of the Constitution then only it is exempted from payment of GST by virtue of SI. No. 5 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended from time to time. The amount collected from tickets will be taxable @ 18% in accordance with clause (b) of section 8 of the CGST Act as the supply is a mixed supply of service as defined under sub-section (74) of section 2 of the CGST Act. The applicant is eligible to claim exemption from payment of GST on ticket charges vide SI. No. 5 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended from time to time, subject to the condition that the services provided by the applicant on receipt of ticket charge shall be the activities in relation to the functions enlisted under Article 243G of the Constitution.
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2024 (3) TMI 320
Exemption provided under Entry number 66 of the Notification 12/2017- Central Tax (Rate) dated 28/06/2017 - Educational institute or not - Seeking clarification as to whether the educational courses which are conducted by the 'Additional Skill Acquisition Programme Kerala' falls under the taxable service or not - N/N. 12/2017-Central Tax (Rate) dated 28/06/2017 - HELD THAT:- To be qualified as an Educational Institution under para 2(y) (ii), the applicant is required to establish that the courses provided are part of a curriculum for obtaining a qualification recognised by any law for the time being in force. In this regard, the applicant has not produced the required details/documents in support of their contention that the courses are recognised by law. In the absence of relevant facts or materials, the claim of the applicant to consider them to cover under this definition may not be appropriate. Further, as per para 2(h) of the Notification No. 12/2017- Central Tax (Rate) dated 28/06/2017, an approved vocational education course means, -(i) a course run by an industrial training institute or an industrial training centre affiliated to the National Council for Vocational Training or State Council for Vocational Training offering courses in designated trades notified under the Apprentices Act, 1961 (52 of 1961); or (ii) a Modular Employable Skill Course, approved by the National Council of Vocational Training, run by a person registered with the Directorate General of Training, Ministry of Skill Development and Entrepreneurship. On going through the above entry it is evident that the applicant is eligible for exemption, only when the services provided by them are in relation to either of the items listed under clause 2 (h) (i) or (ii) above. Further, as per para 1.2 of the said agreement, the Awarding Body is an entity duly recognised by NCVET which awards or proposes to award certification to trainees for an NCVET approved qualification by ensuring quality training and reliable assessments. As per para 8.1.7 of the agreement, the 'Awarding Body' shall enter into an agreement with the training bodies to offer Vocational Education and Training in the National Skill Qualifications Committee (NSQC) approved qualifications. However, the exemption under clause 2 (h) (ii) of the notification is available only to the Modular Employable Skill Courses, approved by the National Council of Vocational Training (NCVT), run by a person registered with the Directorate General of Training, Ministry of Skill Development and Entrepreneurship. Though the applicant has been recognised by NCVET, the benefit of the said notification could not be availed by them as they have not registered with the Directorate General of Training, Ministry of Skill Development and Entrepreneurship. In the absence of supporting documents proving that they are registered with the Directorate General of Training, as required under the exemption notification, their claim cannot be considered to be covered under this definition. The issue raised by the applicant do not sustain to avail exemption under entry no. 66 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended from time to time.
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2024 (3) TMI 319
Blocking of credit - Reversal of Input Tax Credit - services supplied by Larsen and Toubro Ltd in connection with the construction of runway and passenger terminal building of the applicant - ineligible credits that the applicant has taken in respect of certain supplies specifically listed in the statement of relevant facts in Annexure-1 or not - HELD THAT:- The provisions of Section 17(5)(c) and 17(5)(d) of the CGST Act relate to blocking of ITC in relation to goods or services or both used for construction of immovable property. The provisions of both the said sub-sections are to be read along with the explanations given after section 17(5) (d) and section 17(6). The provisions of both clauses (c) and (d) are inter-linked to each other and are to be read conjointly. The applicant has entered into two common contracts with L T; the first one being EPC contract for construction of Runway with Basic Strip, Turning Pads, Taxiways, Apron, Access Roads, Drainage System, Related Retaining Structures, Formation of Platforms for Landslide Facilities, and installation of Airfield Ground Lighting System, Visual Aids for Navigation and Bird Hazard Reduction System etc and the other being for construction of Passenger Terminal Building [PTB] with ATC, substations, installation of HVAC system, Plumbing, Fire Alarm, Fire Fighting System, CCTV, PA system, Flight Information Display system, Interior Design, internal and external finishing, Building internal access control system, Hydro pneumatic pumping system for buildings, STP, and rain water harvesting system etc. - the predominant and principal supply involved in both the contracts is construction of immovable property hence the contract cannot be artificially vivisected to consider it a contract for supply of various goods / services as contended by the applicant and the eligibility of input tax credit determined accordingly. The supply of goods/services are integral part of the overall contract for supply of works contract services for construction of immovable property and hence the entire input tax credit of tax paid on the works contract services as per the Running Bills of L T are not eligible being blocked credit in terms of provisions of Section 17 (5) (c) of the CGST Act, 2017.
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2024 (3) TMI 318
Classification of goods - rate of GST - Outboard Motor Engines coming under HSN Code 8407 21 00 and its spare parts exclusively used as part of fishing vessel of heading 8902 or not - collection made towards supply of materials and labour charges towards repair of fishing vessel of heading 8902 or not - marine engine coming under HSN Code 8407 supplied to the Defense Department for patrol, flood relief and rescue operations or not - solar or battery-operated electric boat motor and spare parts used for fishing purpose - solar or battery-operated electric boat motor and spare parts used for tourism purpose - levy of GST on supply of materials and labour charges incurred during the warranty period, free of cost. Outboard motor engines [marine engines] - HELD THAT:- If the marine engines are supplied for use as part of fishing vessel falling under Customs Tariff Heading 8902, then the marine engine as part of fishing vessel will only attract GST at the rate of 5% as per the entry at SI No. 252 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017 - the marine engine and its spare parts supplied for use in fishing vessels falling under Customs Tariff Heading 8902 shall attract GST at the rate of 5% as per entry at SI No. 252 of; Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017. Applicability of GST on the supply of materials and labour during repair works within warranty period to the marine engines and spare parts supplied by the applicant - HELD THAT:- The consideration received for the original supply includes the consideration for promise to repair or replace. Hence separate consideration is not charged for warranty repairs / replacement. The supply of goods and services for warranty repairs / replacement is incidental to the original supply and the value of supply made earlier includes the charges for the warranty supply also. Therefore, the supply of goods or services or both during warranty period without consideration in discharge of the warranty obligation is not liable to GST. However, if any additional consideration is received in respect of such supplies of goods or services or both it will be liable to GST at the rate applicable for the goods / services as per the rate schedule. Applicability of the GST on the repair or maintenance work of fishing vessels falling under Customs Tariff Heading 8902 wherein supply of spare parts and service [labour] is involved - HELD THAT:- In the instant case the applicant has submitted that they are raising invoice for supply of repair or maintenance service of fishing vessels or marine engines for the value of spares transferred and for value of services showing separately the value of goods transferred and the service charges (labour). Hence, it is possible to ascertain the value of supply of spare parts and services (labour) separately. Therefore, in view of the clarification of CBIC in Circular No. 47/21/2018 - GST dated 08.06.2018 in cases where repair or maintenance services are supplied and the value of spare parts and services are separately charged in the invoice raised for the supply, the spare parts and the services shall attract GST respectively at the rates applicable to such spare parts and service as per the GST rate schedule as the supply of the spare parts and repair service are distinct and separately identifiable. In such cases the spare parts being supplied for use as part of fishing vessels will attract GST at the rate of 5% [2.5%-CGST + 2.5%-SGST] as per entry at SI No. 252 of Schedule I of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 and the services [labour] was liable to GST at the rate of 18% as per SI No. 25 (ii) of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as it existed till 02.06.2021 and the services [labour] will also be liable to GST at the rate of 5% with effect from 02.06.2021 as per entry at SI No. 25 (ib) - Maintenance, repair or overhaul services in respect of ships and other vessels, their engines and other components or parts of the Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as inserted by Notification No. 02/2021 Central Tax (Rate) dated 02.06.2021. Rate of tax on marine engine coming under HSN Code 8407 supplied to the Defence Department for patrol, flood relief and rescue operations - HELD THAT:- The vessels used by the Defence and other agencies for patrol, relief and rescue operations fall under Customs Tariff Heading 8906 - Other vessels including warships and lifeboats other than rowing boats. The ships /boats / vessels falling under CTH 8906 are liable to GST at the rate of 5% as per entry at SI No. 250 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017. As per entry at SI No. 252 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017 parts of goods of headings 8901, 8902, 8904, 8905, 8906 and 8907 falling under any chapter of the Customs Tariff attracts GST at the rate of 5 %. Therefore if the marine engines are supplied for use as part of vessel falling under Customs Tariff Heading 8906, which are used by the Department of Defence and other agencies for patrol, relief and rescue operations then the marine engine as part of such vessel will only attract GST at the rate of 5% as per the above entry. Rate of tax applicable for the solar or battery-operated electric boat motor and spare parts when supplied for use in fishing vessels - HELD THAT:- Fishing vessels, factory ships and other vessels for processing or preserving fishery products fall under Customs Tariff Heading 8902. As per entry at SI No. 252 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017 parts of goods of headings 8901, 8902, 8904, 8905, 8906 and 8907 falling under any chapter of the Customs Tariff attracts GST at the rate of 5 %. Therefore, if the solar or battery-operated electric boat motor and spare parts are supplied for use as part of fishing vessel falling under Customs Tariff Heading 8902, then the solar or battery-operated electric boat motor and spare parts as part of fishing vessel will only attract GST at the rate of 5% as per the entry at SI No. 252 of Schedule I of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017. Rate of tax applicable for the solar or battery-operated electric boat motor and spare parts when supplied for use in boats for tourism purpose - HELD THAT:- The cruise ships, excursion boats, ferry boats, cargo ships, barges and similar vessels for transport of persons or goods fall under Customs Tariff Heading 8901 and is liable to GST at the rate of 5% as per entry at SI No. 246 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017. As per entry at SI No. 252 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017 parts of goods of Headings 8901, 8902, 8904, 8905, 8906 and 8907 falling under any chapter of the Customs Tariff attracts GST at the rate of 5 %. Therefore, if the solar or battery-operated electric boat motor and spare parts are supplied for use as part of such ships /boats / vessels falling under Customs Tariff Heading 8901, then the solar or battery-operated electric boat motor and spare parts as part of such ships / boats /vessels will only attract GST at the rate of 5% as per the entry at SI No. 252 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017.
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2024 (3) TMI 299
Maintainability of appeal - time limitation - Cancellation of GST registration of petitioner - application passed without any application of mind - violation of principles of natural justice - HELD THAT:- In the present case, the facts are similar to one in SURENDRA BAHADUR SINGH VERSUS STATE OF U.P. THRU. PRIN. SECY. COMMERCIAL TAX (GST) LKO. AND 2 OTHERS [ 2023 (8) TMI 1262 - ALLAHABAD HIGH COURT] , wherein the appeal was barred by time under Section 107 of the Act. However, the Division Bench in Surendra Bahadur Singh's case took into consideration the original order and set aside the same being non-reasoned and allowed the petitioner therein to file reply to the show cause notice. The orders impugned herein are liable to be set aside. Accordingly, the order in original dated January 17, 2023 and the appellate order dated August 2, 2023 are quashed and set aside. The petitioner is directed to file its reply to the show cause notice within three weeks from date and the adjudicating authority is directed to proceed de novo and pass order after granting opportunity of hearing to the petitioner. The writ petition is allowed.
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Income Tax
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2024 (3) TMI 317
Credit of TDS denied - HELD THAT:- The documents on record indicate that the total amount deducted as TDS was Rs. 18,53,863/-. Since credit was provided only in respect of Rs. 10,88,863/- and not in respect of the differential amount of Rs. 7,65,000/-, the petitioner is entitled to refund in respect thereof. Hence, the impugned orders are quashed and the respondents are directed to take all necessary steps to refund the sum to the petitioner. This exercise shall be completed within a maximum period of two months from the date of receipt of a copy of this order.
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2024 (3) TMI 316
Validity of assessment order passed u/s 144C - due to oversight/inadvertence Petitioner did not inform the AO within 30 days period prescribed under Sub-section (2) of Section 144C that it had filed objection by way of an email - AO unaware of Petitioner having filed objection before the DRP after expiry of prescribed period of 30 days proceeded to pass the assessment order - HELD THAT:- Since Petitioner had already filed a reference raising its objections to the DRP within the 30 days period and Section 144C(4) of the Act requires the AO to pass a final order including the view expressed by the DRP, we set aside the order of the AO impugned in this petition. We find support for this view in Sulzer Pumps India Pvt. Ltd [ 2021 (12) TMI 891 - BOMBAY HIGH COURT] - We shall also observe that the AO cannot be faulted for passing the impugned order. At the same time, the AO will also have the benefits of considering the views of the DRP while passing a fresh assessment order. AO shall take further steps in the matter after the DRP passes its order on the objection filed by Petitioner, in accordance with law.
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2024 (3) TMI 315
Reopening of assessment - as alleged Petitioner was a beneficiary of accommodation entries - Notices under Section 148A(b) were issued, alleging escaped income, followed by a subsequent notice clarifying errors - Petitioner's response, supported by evidence, was rejected for failure to submit documents not initially requested - HELD THAT:- Petitioner is correct in stating that these details were never asked for in the notice issued u/s 148A(b) of the Act or later. Petitioner is also correct in submitting that for the first time in this order there is even an allegation that investigation by Central Goods and Service Tax Department revealed that KMPL was indulging in non-genuine transactions and was merely passing accommodation entries. Therefore, the business that Petitioner had with KMPL was only on paper. There is an observation that Assessee has shown sales to KMPL in its books of account which is non-genuine. There is nothing to indicate how the AO has come to such a conclusion notwithstanding accepting the fact that Petitioner had submitted copy of financial statement, ledger details, ledger account details of GST sales in respect of tax invoices of all parties and copy of bank statement of HDFC Bank through which KMPL had made payment. Petitioner also pointed out that the AO in his order impugned has stated Petitioner failed to submit E-way bills whereas in the letter dated 20th March 2023 at Annexure A is a copy of the tax invoices and E-way bills. Mr. Deshpande also submits that perhaps the toll booth receipts may not be available because that would be paid by the transporter, but nevertheless an attempt will be made to submit the same. Therefore, we have no hesitation in quashing and setting aside the impugned order passed u/s 148A(d) of the Act and remand the matter for de novo consideration. Mr. Deshpande states that the documents alleged to have not been submitted in the impugned order shall be filed within two weeks from today.
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2024 (3) TMI 314
Capital gain - calculation of cost of acquisition - method of valuation of unquoted shares - FMV determination - stand of assessee is that no capital gain arose to him as a result of selling of his shares as the fair market value of such shares as on 01.04.1981 had far exceeded the amount of consideration received on such selling/transfer of shares - Assessee computed the fair market value of the asset of the company as per the report of registered valuer - what method of valuation of unquoted shares, held by the assessee in a private company, should be adopted for determining the market value as on 31.03.1981? HELD THAT:- A perusal of the file reveals that on one hand the AO computed the value of shares as per the breakup method, as approved method, after accepting the fair market value of building as per the report of the approved valuer, but excluded the value of land on the ground that the said land belongs to Vikramaditya Singh, whereas, on the other hand, the AO in the case of Shri Vikramditya Singh though had made the assessment but did not include the value of land. Therefore, we are in agreement with the learned Tribunal that the action of AO was apparently erroneous and unsustainable in law. CIT(A) has rightly deleted the addition made by the AO after analyzing that the cost of acquisition of shares was higher than the value at which the shares were transferred. As on the date of sale of shares, the lease period of beyond 20 years was still left with M/s. Jyoti Pvt. Ltd. Hence, the land value in the hand of lessor was practically nil and for all practical purpose M/s. Jyoti Pvt. Ltd. was de facto owner of the underlying land, as such the value of leasehold land cannot be excluded for calculating the Fair Market Value of shares of M/s. Jyoti Pvt. Ltd. Tribunal, while rejecting the plea of revenue to adopt the value of assets as reflected in the balance sheet as provided under Rule 11 of the Wealth Tax Rules, has rightly held that the AO had himself applied the Fair Market Value of buildings and other assets while computing capital gain in the assessment order. Also, it is the fair market value, and not book value, of an asset which is relevant for determining the cost of acquisition as envisaged under Section 55(2)(b)(ii) for determining capital gain under Section 45 of the Act. The fair market value is defined under Section 2(22B) of the Act as the price that such asset would ordinarily fetch on sale in open market on 01.04.1981. Therefore, for the purposes of computation of capital gain, the fair market value has to be determined and not the value of shares, the valuation of shares is to be made under Rule 1D of the Wealth Tax Rules. We are also in agreement with the learned Tribunal that the lease hold interest in the land is an asset of the company and is capable of valuation; as such the same is to be included in the value of asset of M/s. Jyoti Private Limited so as to determine the fair market value of shares held by the assessee as well as other shareholders. No substantial question of law arises for our consideration out of the judgment rendered by the Income Tax Appellate Tribunal.
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2024 (3) TMI 313
Exemption u/s 10(10AA) - exemption from income tax from the leave encashment amount at the time of retirement of the employees other than government employees - as argued employees of the Bank as also the Public Sector Undertakings cannot be treated differently holding the equality clause of Article 14 of the Constitution of India - contention of the petitioner is that the impugned section 10(10AA) of the Act does not place any cap on the period of leave and amount of leave salary which will be out of income tax net at the time of retirement in the case of government employees whether they are in Central or State Services HELD THAT:- Petitioner contention is unfounded and fit to be rejected as two different set of employees who are not situated equally and form a class different cannot be equated under Article 14 of the Constitution of India. The distinction made between the Central and State Government employees vis-a-vis others is/are definitely a reasonable classification which having been found to be proper in various cases decided by Hon ble the Apex Court. Though we accept that a taxation law cannot claim immunity from the equality clause that finds enshrined in Article 14 of the Constitution of India and it has to pass the test, this Court is also conscious of the fact that considering the intrinsic complexity of fiscal adjustments of diverse elements, the State has wide discretion in the matter of classification for the taxation purposes. The legislature must have the freedom to select and classify persons, properties and income which it would tax and/or not tax. Thus, the differentiation made by the State between the employees of the Central and State Governments on the one hand and the other employees on the other in Section 10 (10 AA) in our view is neither discriminating nor violative of the Article 14 of the Constitution of India. Even in the case of Union of India and others [ 2015 (8) TMI 97 - SUPREME COURT] cited by the learned counsel for the petitioner do not come to his rescue as in the said case too, Hon ble Apex Court held that the State undoubtedly enjoys greater latitude in the matter of taxing statute. It may impose a tax on a class of people whereas it may not do so in respect of the other class. 2003 (4) TMI 406 - SUPREME COURT] We are guided by the decision of the Hon ble Apex Court in A.K. Bindal Anr. ( 2003 (4) TMI 406 - SUPREME COURT ) wherein it was held that identity of government company remains distinct from the government. It is not identified with the Union but has been placed under a special system of Centre and conferred certain privileges. It further held that since the employees of government companies are not government servants, they have absolutely no right to claim parity. This Court also takes note of the case of S.K. Dutta, ITO ( 1967 (11) TMI 2 - SUPREME COURT ) in which the Hon ble Supreme Court held that State has wide discretion in selecting persons or objects it will tax and that a statute is not open to attack on the ground that it taxes some persons or objects and not others. Hon ble Apex Court further held that the State is allowed to prefer and choose districts, objects, persons, methods and even rates of taxation if it does so reasonably. Again in the case of Government of Andhra Pradesh ( 2001 (8) TMI 1396 - SUPREME COURT] the Hon ble Apex Court observed that if there is equality and uniformity in each group, the law will not become discriminatory, though due to some fortuitous circumstance arising out of peculiar situation, some included in a class get an advantage over others so long as they are not singled out for special treatment. We are thus of the view that classification made in the Section 10 (10AA) of the Act has withstood the judicial scrutiny again and again and there is no need to give a re-look to it. The petitioner, a retired employee of the State Bank of India cannot claim parity with the employees of the Central and State Government and in that background, the deductions so made cannot be interfered with. We have taken note of the fact that subsequently the amount/limit of leave encashment has been raised to Rs. 25,00,000/- effective 01.04.2023. We must record that it has been a belated exercise as the last revision took place in the year 2002. However, this does not benefit the petitioner as he has already retired in the year 2017. WP dismissed.
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2024 (3) TMI 312
Accrual of income in India - Permanent Establishment in India - HELD THAT:- As per the order of the Hon ble Supreme Court for A.Y. 2020-21 in assessee s own case [ 2023 (8) TMI 165 - SC ORDER] , the assessee constitutes a fixed place PE under Article 5(1) of India-Spain Tax Treaty. Attribution of Profits Since, the assessee constituted PE in India, with regard to the attribution of profits derived from such PE, the ld. AR argued that the income derived from such PE was completely consumed by distribution and other expenses attributable and hence no income survives for taxation. The Hon ble High Court has held that 15% of the revenue earned by the appellant is taxable in India, hence, the AO is directed to examine the profits earned, determine the available profits and tax the amount after examining the P L account. Disallowance of Expenses - AO disallowed distribution fee expenses on the ground that as per the invoices raised by AIPL, the description of services is Export of Processed Data/ software and not Distribution fee and also disallowed development cost and marketing costs incurred for earning revenue from bookings made from India - It may be pertinent to note that similar expenditure has been allowed deduction since inception, i.e., assessment years 1996-97 to 2006-07 and in view of there being no change in facts or law, no disallowance is warranted in the present year, too. The aforesaid position has been upheld by the Tribunal in appellant s own case for assessment years 2007-08 to 2020-21. This issue has attained finality since revenue has accepted the said aforesaid findings of Tribunal. Respectfully following the earlier orders of the Tribunal, the addition is directed to be deleted. CRS Income-Royalty This issue is intra-polated on the issue of PE and attribution of profits as dealt above. Payment made to Altea System The Co-ordinate Bench of Tribunal in assessee s own case for the assessment years 2007-08 to 2020-21 held that payment received by the appellant from the airlines for the Altea system cannot be characterized as royalty either under the Act or under the Treaty. Respectfully following the earlier orders of the Tribunal, the addition is directed to be deleted. Interest u/s 234A In view of the extension of due date for filing of the return vide Circular No. 01/2022 dated 11.01.2022, no interest u/s 234A is leviable. Interest u/s 234B This issue stands covered by the orders of the Co-ordinate Bench of Tribunal for assessment years 2007-08 till 2019-20. The AO is directed to follow the same ratio.
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2024 (3) TMI 311
Disallowance u/s 40(a)(ia) - External Development Charges(EDC) paid to HUDA without deduction of tax at source - TDS on EDC u/s 194C/194I - HELD THAT:- We find that the issue in dispute is no longer res integra in view of case of Regards Developers P Ltd 2023 (2) TMI 501 - ITAT DELHI] wherein it was held that where assessee paid external development charges to Haryana Urban Development Authority (HUDA) without deduction of tax at source, since such payment to HUDA was deposited in consolidated Fund of State and consequently assessee was not required to deduct tax on such payment, levy of penalty under section 271C upon assessee was not sustainable. The entire order of the Tribunal is already reproduced in the order of the ld. CIT(A) and hence the same is not reiterated herein for the sake of brevity. Since the relief is granted by the ld. CIT(A) by following the order of this Tribunal referred supra, we do not find any infirmity in the said order of the ld. CIT(A). Accordingly, the grounds raised by the revenue are dismissed.
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2024 (3) TMI 310
Income deemed to accrue or arise in India - Scope of holding Tax Residency Certificate of Mauritius (TRC) - admissibility of Benefit of Article 13(4) of DTAA between India and Mauritius treaty - addition on account of LTCG to be taxed u/s 112 - Grandfathering of capital gains on sale of investment made before 1 April 2017 - whether the long term capital gain on sale of shares is liable to tax in India? - HELD THAT:- The assessee undoubtedly made investments in Indian company namely M/s Pearl Retail Solutions Pvt. Ltd. in AY 2011-12 and 2012-13. During the impugned assessment year i.e. 2018-19 assessee company being a resident of Mauritius and holding a valid TRC has sold its part shareholding to LEI Singapore Holdings Pte Ltd. and reported long term capital gain and this long term capital gain claimed as exempt in view of Article 13(4) of DTAA between India Mauritius. Therefore, applying the ratio of the decision BID SERVICES DIVISION (MAURITIUS) LIMITED [ 2023 (3) TMI 563 - BOMBAY HIGH COURT] since the investments were made by the assessee a Mauritius company holding a valid TRC prior to 01.04.2017 the resultant capital gain is not liable to be taxed in India. Respectfully following the decision (supra) we allow the grounds of appeal of the assessee.
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2024 (3) TMI 309
Rectification u/s 154 - Chargeability of interest u/s 234B and 234C - income returned u/s 115JB - assessment order framed u/s 153A held as barred by limitation by the CIT(A) - while giving appeal effect to the CIT(A)'s order, the Assessing Officer introduced a new issue of charging interest under sections 234B and 234C, which was not part of the original assessment or appeal. - HELD THAT:- There is no dispute that while giving appeal effect the Assessing Officer introduced a new issue of charging of interest which was never there in the earlier orders of the appellate authority. Therefore, we fail to understand how the AO can assume jurisdiction for introducing a new issue while giving appeal effect to the order of the appellate authority. AO processed the revised return on 31.03.2010 u/s 143(1) of the Act wherein he charged interest u/s 234B and 234C of the Act. This intimation was challenged before the ld. CIT(A) who set aside the order holding that after section 143(3) of the Act, section 143(1) cannot be done and the Revenue was not in appeal. Therefore, this order has attained finality. Subsequently, after search assessment u/s 153A of the Act was completed vide order dated 31.03.2015 which was rectified u/s 154 on 16.01.2017 and income was assessed u/s 115JB - In this rectification also, no interest was charged u/s 234B and 234C of the Act. Appeal against the order u/s 153A of the Act on account of additions made in normal income was deleted by the ld. CIT(A) vide appellate order dated 31.03.2017. The appeal effect was given vide order dated 06.07.2017. Now the Assessing Officer wants to rectify this order giving appeal effect by introducing a new issue of charging interest u/s 234B and 234C of the Act. Thus Assessing Officer has exceeded his jurisdiction by rectifying appeal effect order for charging interest u/s 234B and 234C of the Act when the same was not material issue in order u/s 153A of the Act and also not in appellate order of the ld. CIT(A). No reason to interfere with the findings of the ld. CIT(A). Revenue appeal dismissed.
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2024 (3) TMI 308
Accrual of income in India - PE in India or not? - UK DTAA - project office situated in India treated as fixed place PE in terms of Article of DTAA - receipts from offshore supply on presumptive basis u/s 44BB - AO observed that the contract with ONGC is a integrated contract for offshore supply as well as onshore activities and the consortium member is working on behalf of the assessee hence, forms the PE of the assessee in India - whether assessee s income is to be computed u/s 44BB? - HELD THAT:- The information given by ONGC in pursuance to notice u/s 133(6) of the Act makes it very clear that the assessee was only engaged in manufacturing and supply and support of components including manufacture and supply of subsea and top side control system. Thus the material on record clearly indicate that the assessee was not in any way involved in onshore activities including installation at the site of ONGC. It appears, just to show that facts in the impugned assessment year are different from A.Y. 2020-21, the Assessing Officer has attempted to project the facts in a different manner. In the process, has completely misconceived the facts. Not a single piece of evidence has been brought on record by the Assessing Officer to establish that the assessee had any kind of PE in India in the year under consideration. As in assessee s case in A.Y. 2020-21 [ 2023 (6) TMI 351 - ITAT DELHI] held that the AO has failed to specify how the PE came into existence and made the offshore supply of components attributable to PE. Assessing Officer has failed to establish how the consortium member constitutes PE in India. Referring to the decision of E-Funds [ 2017 (10) TMI 1011 - SUPREME COURT] Coordinate Bench has further held that burden of establishing existence of PE is on the Revenue, which has not been discharged. Thus ultimately, Coordinate Bench has held that since there is no PE of the assessee in India, section 44BB of the Act would not apply. Thus section 44BB of the Act cannot be invoked to tax the receipts from offshore supply on presumptive basis as the Revenue has failed to establish existence of PE in India. Assessing Officer is directed to delete the addition. - Assessee appeal allowed.
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2024 (3) TMI 307
Taxability of receipts from offshore supply of equipments - offshore supply made to Indian PSU s which the assessee had claimed to be not chargeable to tax under Indian Taxation - Assessee company is tax resident of China - DRP bifurcated the said receipt into business income and Fee for technical services FTS (in ratio of 60%:40%) taxable in India - HELD THAT:- In the light of view taken by the Co-ordinate Bench [ 2023 (12) TMI 540 - ITAT DELHI] the receipt from offshore supply of goods cannot be regarded as taxable in India. Also, the bifurcation of receipts between business income and FTS is not permissible in the light of view taken in earlier years as expressed above. In sync with view taken in the earlier years as noted above, the Assessing Officer is directed to delete the addition in question. Appeal of the assessee is allowed.
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2024 (3) TMI 306
Deduction u/s 80G - Corporate Social Responsibility (CSR) donations - expenditure was disallowed u/s 37(1) - assessee claimed that though the expenditure was disallowed in the computation of income following section 37(1) however, since the institutions to whom the assessee had donated the funds are eligible u/s 80G assessee is entitled for deduction of 50% of the amount expended in terms of section 80G - assessee is a residential corporate entity stated to be engaged in the business of providing services in terms of operating and supporting the network, development and delivery of software based solutions for telecommunication industry - HELD THAT:- Undisputedly, expenditure incurred towards CSR is specifically prohibited from being allowed as deduction towards business expenditure by insertion of Explanation 2 to Section 37(1) of the Act by Finance Act, 2014 w.e.f 01.04.2015. However, there is no such corresponding amendment to section 80G of the Act. Only condition for claiming deduction u/s 80G as per the existing provision is the institute to which donation is made must have been registered under section 80G - Once the aforesaid condition is fulfilled, the donor is entitled to avail the deduction. This is also the view expressed by the Co-ordinate Bench in case of Honda Motorcycle and Scooter India Pvt. Ltd.[ 2023 (8) TMI 1179 - ITAT DELHI] Before us, it is the specific contention of assessee that the institutes to whom the assessee has donated the CRS fund are registered u/s 80G of the Act. Thus we direct the AO to allow assessee s claim of deduction under section 80G of the Act, subject to, factual verification of assessee s claim that the donee institutions are registered under section 80G of the Act and other conditions of section 80G of the Act are fulfilled. Ground is allowed for statistical purposes. Lower rate of Dividend Distribution Tax (DDT) as per the provisions of DTAA as against applicability of rate of tax u/s 115-O - HELD THAT:- We find, issue in dispute is squarely covered by the decision of the Special Bench of ITAT in the case of Total Oil India (P.) Ltd. [ 2021 (6) TMI 855 - ITAT MUMBAI] - Hence, respectfully following the ratio laid down therein, we reject assessee s claim. Deduction of Education Cess ( EC ) and Secondary Higher Education Cess ( SHEC ) levied on income tax payable on the total income - HELD THAT:- As in view of amendment u/s 40(a)(ii) of the Act by Finance Act, 2022 with retrospective effect from 01.04.2005, the claim of the assessee is not allowable. This is so because as per the amended provision, Education Cess and Secondary Higher Education Cess partake the character of income tax. In this context, we refer to decision of M/s. Chambal Fertilisers and Chemicals Ltd. [ 2022 (12) TMI 1098 - SC ORDER] - Accordingly, ground raised is dismissed.
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2024 (3) TMI 305
Assessment u/s 153C - agreement depicting the payment was found and seized during the search seizure operation was carried out u/s 132 - real beneficiary v/s facilitator - Addition u/s 56 as income from other sources made with the remark since the assessee has not furnished any cogent explanation with respect to the cash received and the same has been received as an advance in respect of the immovable property and the transaction has not materialized as far as the assessee is concerned, the amount is being added to the income of the assessee - HELD THAT:- Since the said property was never owned by the assessee, it was not eligible /entitled to keep the money having been received by way of earnest money part sale consideration in respect of the said property from the prospective buyer. The assessee has also filed an affidavit before the ld. CIT(A) stating that after having received of the aforesaid payment as an advance, the said payment was handed over to one of the Owner i.e. Mr. Aseem Doomra, as Mr. Narender Kapoor was in Auckland (Newzealand).The assessee was not the real beneficiary and he had acted like a facilitator only. Since the money which was received by it from M/s Kritunairu, actually belonged to Mr. Narender Kapoor Mr. Aseem Doomra, there was no reason for the assessee to record such transaction in its books of account. The contents of the seized document being agreement to sell purchase were required to be considered in entirety, not in piece meal. Hence, the view formed by the lower authorities to treat the assessee as real beneficiary is arbitrary and cannot be affirmed. Decided in favour of assessee.
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2024 (3) TMI 304
Disallowance of total commission paid on booking of space - CIT(A) deleted addition - HELD THAT:- AO made enquiries from various persons by issuing notices u/s. 133(6) and obtained confirmations and documents without giving any basis of doing so, however in response to section 133(6) some of the buyers have stated that the space was booked through broker but did not pay brokerage to broker. Hence, Ld. CIT(A) observed that AO s conclusion that payment of commission to brokers bogus, is not correct appreciation of facts and drawing conclusion simply on the basis of solitary statement of Sh. Ravinder Yadav without conducting any further enquiry, is not sufficient to accept the finding of the AO. CIT(A) has rightly deleted the addition in dispute - Ground No. 1 raised by the Revenue deleted. Disallowance u/s. 40(a)(ia) - interest payable and fit out charges received from buyers - CIT(A) deleted addition - HELD THAT:- CIT(A) observed that fit out charges received is part of the agreement signed with the customers who opted for fit out by the assessee. Therefore, simply on the basis of inadvertent mistake by the auditor by grouping certain liability in a different head in the balance sheet, cannot be the basis for sustaining the addition, therefore, in our considered opinion, the Ld. CIT(A) has rightly deleted the addition in dispute, which needs no interference - We dismiss the Ground No. 2 raised by the Revenue. Disallowance of amount paid towards assured return - only grievance of the AO that the assessee has given more assured return than it advertised initially - CIT(A) deleted addition - HELD THAT:- CIT(A) has observed that AO is not correct in questioning the business necessity of the assessee for offering more assured return than the advertised through initial advertisement and relied upon the decision of the Hon ble Delhi High Court in the case of SA builders vs. CIT [ 2006 (12) TMI 82 - SUPREME COURT] wherein it has been held that once it is established that there was nexus between the expenditure and the purpose of the business, the Revenue cannot justifiably claim to put itself in the arm-chair of the businessman or in the position of the board of directors and assume the role of decide how much is reasonable expenditure having regard to the circumstances of the case. In view of above, in our considered opinion, CIT(A) has rightly deleted the addition in dispute, which does not need any interference on our part, hence, we uphold the same and dismiss the Ground No. 3 raised by the Revenue.
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2024 (3) TMI 303
Penalty u/s 271(1)(c) - disallowances in the quantum assessment order - whether any concealment or furnishing of inaccurate particulars proved? - Disallowance under section 40(a)(ia) on commission expenses - HELD THAT:- We find that the coordinate bench of the Tribunal in assessee s quantum appeal in Marvel Drugs Pvt. Ltd for the assessment year 2006-07, deleted the aforesaid disallowance. Thus, since the addition has been deleted by the coordinate bench in the quantum proceedings, we find no basis in sustaining the penalty in relation to the aforesaid disallowance. Accordingly, the same is directed to be deleted. Penalty levied in relation to unexplained investment in capital work in progress and in relation to capital expenditure claimed as Revenue expenses - AR submitted that the impugned additions are arising on account of the reconciliation of certain details pertaining to M/s JAES Construction, through whom the assessee claims to have carried out work in progress at its Taloja factory site - As submitted that pursuant to remand by the coordinate bench, the issue is still under consideration before the learned CIT(A) and no order has been passed till date. Accordingly, we deem it appropriate to restore the issue of levy of penalty in respect of the aforesaid additions to the file of the learned CIT(A). Penalty levied in relation to Foreign travelling expenses and commission and brokerage paid to foreign agent - It is an admitted position that in the quantum appeal before the Tribunal, the assessee did not press its ground challenging the aforesaid addition. During the hearing, no material was brought on record to controvert the findings of the AO that the expenditure incurred on foreign tours of the family members is wholly and exclusively for the purpose of the business of the assessee. Accordingly, we find no infirmity in the findings of the learned CIT(A), vide impugned order, in upholding the penalty in relation to the aforesaid addition. Validity of the penalty order due to not striking off one of the limbs while initiating the penalty under section 271(1)(c) - From the perusal of the notice issued u/s 274 r/w section 271 we find that the AO has placed the tick against the option have concealed the particulars of your income . Since the assessee was duly put to notice under section 274 about the basis of initiating penalty proceedings under section 271(1)(c) of the Act, we are of the considered view that no prejudice has been caused to the assessee and there is no violation of the principles of natural justice. As a result, ground raised in assessee s appeal is dismissed.
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2024 (3) TMI 302
Income from undisclosed sources - addition of agricultural income - HELD THAT:- Undoubtedly, the assessee has 1/7th share in agricultural land situated at village Rajdev Tehsil Dungargarh, District Bikaner, Rajasthan. The total land holding pertaining to the assessee is ₹33.24 acres. This land holding is undisputed. In the land records there are certain agricultural produce mentioned with respect to each of the year for past six years. The assessee has shown agricultural income in the range of ₹1.68 lacs to ₹1.98 lacs. With respect to the proof of sale of agricultural produce the assessee has also submitted the agricultural produce marketing committees receipts on sample basis. Undisputedly, assessee has not submitted complete details of the agricultural produce for all these years. On looking at the holding of the agricultural records of land holding, the agricultural produce mentioned there in and some of the bills of APMC produced before us clearly show that assessee is engaged in agricultural activities. Now the only issue remains is whether in absence of complete details of sale of agricultural produce the income shown by the assessee is acceptable or not. We find that on the basis of land holding, the assessee has shown annual agricultural income of ₹6000/- per acre. Thus we find that such income cannot be excessive and cannot be considered as income from undisclosed sources. Therefore, the addition made by AO of agricultural income shown by the assessee as undisclosed income for A.Y. 2013-14 to 2018-19, is unsustainable and deserves to be deleted. Coming to the A.Y. 2019-20, where the additions of ₹14 lacs is made, the source is explained by the assessee being ₹ 12 lacs out of past savings - On looking at the income offered by the assessee for A.Y. 2013-14 till 2019-20, it is apparent that assessee has disclosed total income of commission and bank interest for all these years of approximately ₹10 lacs. Even after accounting for all expenditure out of this sum, the savings of only ₹1,60,000/- being 5% of his other income cannot be disbelieved. Therefore, the additions to the extent of ₹12 lacs in the hands of the assessee out of ₹14 lacs are explained. Remaining sum which assessee has stated to be belonging to her sisters is supported by an affidavit. AO hough issued notice u/s 133(6) of the act to her which were not replied to. But that does not go against the assessee. Therefore, looking at the smallness of the amount and the affidavit of her sisters stating her Permanent Account Number the addition of ₹ 2 lakhs comprising in total addition of Rs 14 lacs in the hands of the assessee is not sustainable. The reason of the AO that the above sum was found in the locker in the denomination of new notes of ₹2000/-. However, there is no evidence available with the Revenue authorities that new notes were placed in the locker. Therefore, solely on that basis, in view of the explanation supported with the evidence which is provided by the assessee, addition cannot be made. Further, it is apparent that for A.Y. 2013-14 till A.Y. 2018-19, no incriminating evidence is found during the course of search. On that basis also, there cannot be any addition in the hands of the assessee for those years where the addition is made, considering agricultural income as undisclosed income. Decided in favour of assessee.
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2024 (3) TMI 301
Addition u/s 68 - bogus LTCG - share capital and share premium were merely paper credit entries - receipt of accommodation entries in lieu of commission paid - HELD THAT:- There is a concept of real income which has to be ascertained and taxed and not the hypothetical income which has never accrued to the assessee Except in these cases where statute expressly provides for taxing the income on deemed basis. This is further corroborated by the fact that the very first day during the course of recording statement u/s 132(4) of the Act Shri Bajrang Lal Agarwal have stated that he is engaged in providing accommodation entries in lieu of commission through the assessee meaning thereby that money did not belong to him as it is only pass through entity. The case of the assessee finds support from the decision of Coordinate Bench of Delhi in the case of ITO vs. M/s Angel Cement Pvt. Ltd [ 2021 (4) TMI 162 - ITAT DELHI] Since Shri Bajrang Lal Aggarwal was providing accommodation entries to either intermediaries or the ultimate beneficiaries through paper companies including the assessee and the assessee is only a conduit for channelizing the unaccounted funds of beneficiary companies, therefore, in our opinion, the order passed by the Ld. CIT(A) appears to be incorrect and cannot be sustained. Accordingly we set aside the order of ld. CIT(A) and direct the AO to delete the addition. However the AO is directed to assess the commission income on accommodation entries @ 20 paisa on Rs. 27,63,46,000/- which comes to Rs. 6,90,865/-. Consequently the Appeal of the assessee is party allowed. Addition of payment made under MOU while computing the income of the assessee - HELD THAT:- We find that undisputedly the assessee entered into MOU for transfer of land measuring 85.51 acres which belonged to Paul Brothers. Since the Paul brothers could not hand over the possession of the impugned land to the assessee due to on going legal disputes and therefore the assessee made payment only as advance on the date of signing of MOU on 31.03.2012. We note that Rs. 1,01,000/- was paid out of their personal sources and the same was covered in the disclosure of additional income made by them in the course of search proceedings. Therefore we are not in a position to concur with the findings of the Ld. CIT(A) on the upholding the assessment order on this issue. Consequently we set aside the order of Ld. CIT(A) on these cases and direct the AO to delete the addition. Unexplained cash credit - Deposits in bank account - HELD THAT:- We note that the deposit of money in the bank account of the assessee has been advanced by these individuals out of their personal sources and have been admitted as additional income and offered to tax in their respective returns of income filed in various assessment years as is evident from table A B infra. We note that the said amount was assessed in various years in the hands of these individuals and therefore the action of Ld. CIT(A) in confirming this addition on account of unexplained cash credit cannot be sustained as the same stood offered to tax in their individual assessments and if confirmed, would result in taxing the same amount twice. Accordingly we set aside the order of Ld. CIT(A) and direct the AO to delete the said addition. Addition of expenses incurred in connection with the Renguni land - HELD THAT:- No separate addition can be made in the hands of the assessee on account of expenses/investments as stated above particularly when the same is offered by the above individuals in their respective assessments. Accordingly we set aside the order of the Ld. CIT(A) and direct the AO to delete the addition. The Ground no. 2 is accordingly allowed. Addition u/s 69B - payment made as unexplained investments - HELD THAT:- We observe that the said payment made by Sri Yogendra Kumar Agarwal to Sri Vivek Agarwal has been added on substantive basis in the hands of Sri Yogendra Kumar Agarwal in the assessment order framed u/s 153A. Therefore the impugned payment cannot be once again considered in the hands of the assessee company. In view of the above facts, we are inclined to set aside the order of Ld. CIT(A) on this issue and direct the AO to delete the addition. Consequently ground is allowed. Undisclosed investments u/s 69B - HELD THAT:- As the authorities below have not brought on record any evidence substantiating the fact that the consideration was paid outside the books of accounts. In the instant case the consideration for which the impugned land was purchased was fully accounted for in the books as asset and the outstanding part of the sales consideration was shown as liabilities. In view of this fact, we are not in a position to sustain the order passed by the Ld. CIT(A) on this issue and consequently we set aside the order of Ld. CIT(A) and direct the AO to delete the addition. The ground is allowed. Unexplained investment/purchases of land - HELD THAT:- The consideration payable to Sri Tarun Kanti Ghoshal was shown as outstanding and was duly shown in the liability side under the head current liabilities and therefore we are not in a position to approve the conclusion drawn by the authorities that the consideration was understated by the assessee whereas as a matter of fact there was no understatement of value of impugned land. Moreover the authorities below have not brought on record any evidence substantiating the fact that the consideration was paid outside the books of accounts. In the instant case the consideration for which the impugned land was purchased was fully accounted for in the books as asset and the outstanding part of the sales consideration was shown as liabilities. In view of this fact, we are not in a position to sustain the order passed by the Ld. CIT(A) on this issue and consequently we set aside the order of Ld. CIT(A) and direct the AO to delete the addition.
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2024 (3) TMI 300
Correct head of income - treatment of income from sale and purchase of shares - business income or income from capital gains - HELD THAT:- In the present case, mere high volume of transactions and frequently investment in shares could not alter assessee's consistent treatment of shares purchased on delivery basis as investment duly accounted for in its books of account and shown in its Balance Sheet as investment, which was even accepted by revenue for proceeding years and subsequent years. Thus we are of the considered view that the appellant assessee has purchased the shares with the intention of investment. Respectfully, following the Later judgment of the Hon'ble Gujarat High Court in the case of Pr. CIT v. Bhanuprasad D Trivedi, HUF [ 2017 (9) TMI 840 - GUJARAT HIGH COURT] we hold that the assessee had purchased shares with clear intention of being an investor and held shares by way of investment, and gain arising out of transfer of shares would be treated as capital gains and not business income. Accordingly, the AO is directed to treat the income of the assessee arising out of transfer of shares as capital gains. Nature of expenses - Disallowance of legal expenses - HELD THAT:- In the Present case of the Assessee, the facts are similar to that of CIT vs. Delhi Safe Deposit Co. Ltd [ 1982 (1) TMI 2 - SUPREME COURT] Appellant being holding the Chairmanship in M/s AB Hotels nothing but a profit earning asset of the Assesses. Thus, the expenditure incurred by the Assessee in order to protect the same would be an allowable expenditure. Respectfully, following the Hon ble Apex Court in the case of CIT vs. Delhi Safe Deposit Co. Ltd. , (supra) we hold that in the present case, the legal expenses claimed by the assessee are allowable expenses u/s 37 of the Act.
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Customs
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2024 (3) TMI 298
Refund - Unjust enrichment - appropriation of the amount in the Consumer Welfare Fund in terms of Section 27 (2) - HELD THAT:- The impugned orders dated 24.07.2023 are set aside to the limited extent and the matter is remitted to the competent authority for re-adjudication of the issue of alleged unjust enrichment and appropriation of the amount in the Consumer Welfare Fund in terms of Section 27 (2) of the Custom Act 1962. The competent authority shall grant an opportunity of personal hearing to the petitioner prior to passing the order, with regard to credit of the amount in Consumer Welfare Refund.
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2024 (3) TMI 297
Classification of goods - Ethyl Alcohol Absolute having purity - to be classified under CTH 22.07 or under CTH 98.02 - Demand duty - Seeking provisional release of goods - interest - penalty - HELD THAT:- Admittedly, there is no dispute that the Petitioner has been importing Ethyl Alcohol Absolute for the last many years and the classification under CTH 98.02 has been accepted by the Respondents, except in respect of Bill of Entry No. 7568895, which is the subject matter of the present Petition. The Petitioner is a regular importer of Ethyl Alcohol Absolute and not a fly by night operator. The Ethyl Alcohol Absolute is in bottles of 500 ml and confirms to the marking requirement as per Chapter 98 of the Customs Tariff Act. In our view, the Respondents would not be justified in not permitting provisional release of Ethyl Alcohol Absolute on the basis that some investigation is being conducted. The classification has to be seen at the time of import by the Petitioner and not the use to which it is put by the buyers of the goods from the Petitioner. There is no condition in the Customs Tariff under chapter 98, which imposes such an obligation on the Petitioner. Thus, the Respondents are not justified in refusing to release the Ethyl Alcohol Absolute provisionally. As correctly submitted by the Petitioner, in similar circumstances, this Court, by its Judgement in M/s. K. Raj and Co. Vs. the Union of India [ 2023 (11) TMI 531 - BOMBAY HIGH COURT] and M/s. K. Raj and Co. Vs. the Union of India [ 2024 (2) TMI 34 - BOMBAY HIGH COURT] has ordered provisional release of the seized goods on execution of a bond. We see no reason as to why similar orders ought not to be passed in the present matter. Thus, Petitioner is entitled for provisional release of the Ethyl Alcohol Absolute under Bill of Entry No. 7568895 on execution of a bond by the Petitioner to secure the differential duty and consequential amount, if any. The Writ Petition is disposed of.
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2024 (3) TMI 296
Smuggling - confiscation - fine - penalty - security towards the redemption fine - Seeking release of gold bars - offence punishable u/s 2(33) - HELD THAT:- In the present case, the first appellant had given an option to be exercised by the respondent by issuing a show cause notice dated 16.08.2022. Even though the respondent sent a reply dated 02.09.2022, without waiting for the conclusion of adjudication proceedings, he has filed the present writ petition, which was also erroneously allowed by the learned Judge, by order impugned herein. In view of the limited relief now sought by the learned counsel on either side and also considering the fact that the learned Judge, following the earlier orders passed in the writ petitions referred to above, and without examining the order-in-original passed by the adjudicating authority, has partly set aside the same, when the writ petition was filed only for a mandamus to release of the gold seized, this court, without going into the merits of the case, sets aside the order dated 23.08.2023 passed by the learned Judge in Writ Petition No. 29618 of 2022 and remands the matter to the learned Judge for considering the issue afresh, on merits and in accordance with law. We request the learned Judge to take up the writ petition and pass appropriate orders, as expeditiously as possible. In the mean while, the respondent / writ petitioner is directed to file a miscellaneous petition to amend the prayer made in the writ petition. Accordingly, this writ appeal stands disposed of.
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2024 (3) TMI 295
Demand duty - imported capital goods, raw materials and consumables - EOU Exemption Notifications No.13/81-Cus. and No.53/97-Cus.- Non-fulfilment of export obligations - reasons beyond the control - pre-condition for issuing a No Due Certificate in order to debond and exit from EOU scheme - interest and penalty - demand of Special Additional Duty - HELD THAT:- It is the argument of the appellant that though the raw materials were imported by them, the finished goods could not be exported due to technology failure. It is submitted that the goods at the time of import were intended to be used in finished products which were intended for export and therefore the demand of duty on raw materials cannot be sustained. We are afraid that the said argument is not tenable. The appellant having not fulfilled the export obligation and not used the raw materials for manufacture of finished products for export, the exemption of the notification is not available. Demand of Special Additional Duty - We remand this issue to the original authority who is directed to verify the date of imports made by the appellant and in case, such goods have been imported prior to 1.6.1998, the demand of Special Additional Duty cannot be sustained and will be set aside by the original authority. The appellant is not liable to pay Special Additional Duty for the imports which are made prior to 1.6.1998. Demand of interest - It can be seen that although the Section 28AB was omitted with effect from 8.4.2011, the same has been substituted by Section 28AA. Wherever there is duty liability, the assessee is liable to pay duty along with interest. Mere quoting of a wrong section cannot be a ground to set aside the demand of interest. We do not find any merit in the contention of the appellant with regard to demand of interest. Thus, the impugned order is modified to the extent of setting aside demand of SAD prior to 1.6.1998 after the verification by the original authority. The impugned order is sustained in all other respects. The appeal is appeal is partly allowed with consequential relief, if any, in the above manner.
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2024 (3) TMI 294
Customs Cargo Service Provider (CCSP) - Suspension of their CCSP approval and imposing a penalty - Demand of value of pilfered goods - custodian of Speedy CFS - Cigarette sticks were found stolen / Pilfered from the safe custody - violation of HCCAR and the Customs Act, 1962, by issue of SCN No.282/2021-22 CCSP/CAC/ JNCH - penalty - Suspending the operation of appellants CFS as CCSP - HELD THAT:- We are of the view that the action in the impugned order demanding the value of the seized goods that were pilfered from the custody of CCSP in terms of the action to safeguard interest of Revenue in respect of the seized goods, and thus recovery of the above amount under HCCAR and under the general powers vested with the Central Government u/s 142 ibid, is valid in law. The facts of the case and the customs, as well as police investigation brings out clearly the conclusion that the appellants facilities at Speedy CFS, particularly the trailer truck, entry/exit gates were used for pilferage of customs seized goods contained in container No.GESU-4913126. We find that it is clearly proved by the above factual reports arising out of the investigation conducted by Customs that the appellants CFS had violated the obligations cast upon them under Regulations 5(1)(i)(n), 6(1)(f) and 6(1)(i) of HCCAR, and hence we do not have any hesitation in arriving at the conclusion that the appellants did not fulfil the conditions of Regulation 5(1)(i)(n), 6(1)(f) and 6(1)(i), by their failure to restrict unauthorized access into the premises and allowing the pilferage of goods and by their failure to provide safe and secure storage facility of customs seized goods kept in the containers within Speedy CFS premises and allowed certain unauthorized persons to remove the customs seized goods. Hence, we are of the considered view that imposition of penalty on the appellants under Regulation 12(8) of HCCAR and Section 117 of the Customs Act, 1962, is sustainable. The HCCAR apply to the custodian under the provisions of Section 141(2) of the Customs Act, 1962 which interalia prescribe the manner in which the goods shall be handled in a customs area and the responsibilities have been framed accordingly. Besides this, the responsibility of the custodian u/s 45(2) is to keep the imported goods in safe custody, maintaining of records and not to permit its removal without any authorization from Customs. The absence of proper system of security, control and maintenance of records in the present case of seized imported goods mutatis mutandis apply to the imported goods which are seized. Hence the appellant cannot escape from the responsibilities and obligations cast upon them as CFS operator under HCCAR for proper handling of import/export goods. In view of this, we find that the appellants have failed to fulfil the responsibilities entrusted on them under Regulation 6(1)(a) and 6(1)(b) of HCCAR. The serious violations on security of the CFS and the goods stored inside the CFS, established through inquiry report under HCCAR and Police investigation, have led to the action to safeguard government interest on the seized goods, and thus recovery of the above amount. Hence, we find that there is no illegality in the impugned order in seeking recovery of the value of the goods which were pilfered from the custody of the appellants as CCSP, due to aforesaid act of negligence and improper handling of cargo in customs area. Hence, we find that there is no illegality in the action taken by Customs department. As the period for which the suspension of 15 days was ordered was in terms of specific dates, i.e., from 16.04.2023 to 30.04.2023, which had expired during the process of this appeal, and stay of the order given by the Hon ble High Court of Bombay vide judgement dated 19.06.2023 in Writ Petition No. 5415 of 2023, no precipitative action was taken by the Customs pending this appeal, and the impugned order to this extent has become infructuous. Thus, even the illusory adversity of closure of the appellants CONCOR-DRT CFS has not happened in reality and hence there is no ground for entertaining the appeal on this ground. The detailed discussions, clearly prove that the appellants not only failed to fulfil the conditions and to abide by the responsibilities reposed on them as CCSP, but also failed to rectify the situation as one another attempt was made again for illegal removal of seized red sanders, which was identified by Customs and on which the Commissioner of Customs had passed an order on 18.11.2020. Hence, there are clear violations of the HCCAR and Section 141(2) of the Customs Act, 1962 by the appellant and thus we do not find any infirmity in the impugned order imposing penalty u/s 117 ibid on the appellants. Thus, the appeal filed by the appellants is dismissed - The miscellaneous application stands disposed of.
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2024 (3) TMI 293
Levy of penalties - Misuse of such MEIS Scrips/licenses by mis-classification of their export goods - Exports of quilts containing cotton/polyester - exemption Notification No. 24/2015 Customs dated 08/04/2015 - contravention of Foreign Trade Policy - issued Show Cause Notice - Seeking waiver of penalties on the ground of voluntarily deposited along with due interest - It is claimed that The Appellant has paid the differential amount immediately on raising objection by DRI on its own before issuance of SCN along with interest as it have absolute respect for the process of law and to avoid litigation. - Levy of penalties on Partners of the firm and its employees HELD THAT:- We find that the benefit having been reversed indicates wrongful use of MEIS Scheme and the conduct of differential treatment to same exports at different ports justifies the penalty as has been imposed by the department through well reasoned order of the Commissioner of Customs, Kandla, which is impugned before us. Proceedings by DGFT authorities under a different statute, cannot absolve appellant of penal consequences to be visited for their acts under Customs Act, 1962. We therefore, find the order is maintainable as far as the penalty of M/s. FASHION ACCESSORIES is concerned. Levy of penalty on Employees - HELD THAT:- The role of Jile Singh Manager export and Pardeep Arora Manager Shipping has been found to be not showing any knowledge and connivance, so as to warrant penalty u/s 114 (iii), 112 or 114AA of the Customs Act, 1962. It has been stated that their role in improper importation and exportation was not found. For the same reasons penalty u/s 117 cannot be imposed on them for stated passive role in the case as Section 117 being residuary penal provision requires existence of provision as well as no specific penalty for the same. We find that remaining passive has not been shown to be violation of any specific provision. Even otherwise it is not alleged that they drew any benefit for themselves by obeying directions of theirs master. Thus, the penalties on these appellants are dispensed with. Levy of penalty on Partners of the Firm - HELD THAT:- Since penalty has been imposed on firm, we do not consider it justified to impose separate penalty on the partner, same, therefore against the partner Shri. Anoop Thatia is dispensed with in the facts and circumstances of this matter. Ordered accordingly. Penalty on the firm is maintained. Appeals of individuals are allowed. Appeals are partly allowed.
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Corporate Laws
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2024 (3) TMI 292
Restoration of struck name of the company from its register - default in non-filing of the Financial Statements and Annual Returns - Section 248(5) of the Companies Act, 2013 - HELD THAT:- Admittedly the impugned order was passed since the appellant had failed to produce documents to show it was still in possession of the asset and it had paid all water bills, electricity bills and rent receipt(s). It is submitted the financial statement could not be filed with the ROC inadvertently since father of the present directors was old and ill and it being a joint family set up with an incomplete professional/legal guidance and even their Chartered Accounts had unfortunately expired - the act of the Respondent in striking off the appellant from the rolls of ROC had caused a grave prejudice to the appellant herein, more specifically when the public notice issued by ROC was aimed at weeding out shell companies. Though the annual accounts of the years stated above though were duly prepared but could not be filed, for the reasons stated above, the non-compliance appear to be inadvertent, non-deliberate and unintentional. Admittedly the appellant is ready to comply with all the statutory provisions once the name of the company is restored by the ROC. Thus there are no reason why its name should not be restored as no prejudice would be caused to the ROC if its name is restored. It is not the case of the ROC that the appellant is a shell company or was at any time engaged in syphoning of funds. It is deemed just and equitable to restore the name of the appellant company to the record of ROC and thus the impugned order set aside to restore the name of the company to the Register of Companies subject to the compliances fulfilled - appeal alowed.
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Insolvency & Bankruptcy
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2024 (3) TMI 291
Rejection of application filed u/s 54C of the Insolvency and Bankruptcy Code, 2016 (IBC) read with Rule 4 of the Insolvency and Bankruptcy (Pre-Packaged Insolvency Resolution Process) Rules, 2021 - rejection of application by entering into base Resolution Plan - HELD THAT:- On looking into sub-section (4) of Section 54C, it provides that Adjudicating Authority shall, within a period of fourteen days of the receipt of the Application, by an order - (a) admit the application, if it is complete; or (b) reject the application, if it is incomplete. Further, the proviso provides that the Adjudicating Authority shall, before rejecting an Application, give notice to the Applicant to rectify the defect in the Application within seven days. The Adjudicating Authority in the impugned order itself has noticed the details of the Application and statutory compliances of the Application. The provisions of Section 54A and 54C, where under Section 54C, sub-section (4), the Adjudicating Authority is required to admit the Application, if it is complete or reject the Application, if it is incomplete. In paragraphs 10 to 16 of the impugned order, the Adjudicating Authority itself has noticed that all necessary compliances are fulfilled by the Corporate Debtor in filing Application under Section 54C. Thus, when accordingly to the Adjudicating Authority itself, all necessary compliances have been completed by the Corporate Applicant, whether the Adjudicating Authority could have entered into issue of Base Resolution Plan and reject the Application on the ground that Base Resolution Plan is not acceptable is a question to be answered. In the present case, the Adjudicating Authority has rejected 54C Application after entering into the merits of the Base Resolution Plan, which is not contemplated by statutory Scheme. The order of Adjudicating Authority, thus, rejecting the Application under Section 54C entering into Base Resolution Plan, is thus, contrary to the statutory Scheme of Chapter III-A and on this ground itself the order becomes unsustainable. Whether M/s WZ Enterprises Pvt. Ltd. could not have submitted the Base Resolution Plan along with the Corporate Applicant? - HELD THAT:- Base Resolution Plan can very well be submitted by a Corporate Applicant individually or jointly with any other person. Thus, there are no illegality in submission of Resolution Plan by Corporate Applicant along with M/s WZ Enterprises Pvt. Ltd. the Financial Creditor of the corporate applicant. The Adjudicating Authority committed error in rejecting Application filed under Section 54C and the impugned order is unsustainable - appeal allowed.
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2024 (3) TMI 290
Admission of Section 7 application filed by the Financial Creditor - invocation of guarantee - application filed by the Financial Creditor is barred by Section 10A of IBC or not - first submission is that notice dated 22.02.2020 was not notice for invoking guarantee of the Corporate Guarantor and guarantee of the Corporate Debtor was only invoked by notice dated 12.02.2021 - non-service of notice dated 22.02.2020 - HELD THAT:- The notice clearly indicates that by the notice Borrower and Guarantors were asked to pay the outstanding amount and the notice clearly mention that in event of failure of payment within seven days, the Financial Creditor shall initiate proceedings under SARFAESI Act including proceedings under the I B Code - the notice dated 22.02.2020 was notice by which guarantee stood invoked and submission of the Appellant that said notice was not notice of invocation of guarantee, cannot be accepted. In so far as, subsequent notice which was given to the Financial Creditor being notice dated 12.02.2021, it has been submitted by the Financial Creditor that since no payment was made in pursuance of the notice dated 22.02.2020 another letter was issued on 12.02.2021 - Section 7 application filed by the Financial Creditor has been brought on record, which clearly mentioned the notice date as 22.02.2020 which has been referred as Recall Notice issued by the Financial Creditor. When Recall Notice has been issued by the Financial Creditor, the Principal Borrower and Guarantors, liability to pay arises on all and the submission of the Corporate Debtor relying on subsequent notice dated 12.02.2021 cannot affect the right of the Financial Creditor to initiate proceeding on the basis of notice dated 22.02.2020. Even though subsequent notice dated 12.02.2021 was during 10A period but Recall Notice having been issued on 22.02.2020, the Financial Creditor was entitled to initiate Section 7 proceedings against the Principal Borrower as well as the Guarantors. From the facts brought on the record, it is clear that after April, 2018 no payments have been made either by the Principal Borrower or the Corporate Guarantor towards the loan. Certificate issued by NeSL was also brought on the record in support of Application under Section 7 where default has been proved. It is true that date of default i.e. 15.04.2018 was initially date of default of Principal Borrower but Loan Recall Notice had been issued on 22.02.2020 which was addressed to Principal Borrower as well as all Guarantors including the Corporate Debtor M/s Earthbuild Greencity Private Limited. The application filed by the Financial Creditor cannot be held to be barred by Section 10A. There are no grounds have been made out to interfere with the impugned order passed by the Adjudicating Authority admitting Section 7 application - Appeal is dismissed.
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2024 (3) TMI 289
Dismissal of Section 9 petition filed by the Appellant - Period of limitation - seeking to bring the Corporate Debtor under the rigours of Corporate Insolvency Resolution Proceedings (CIRP) - Appeal was dismissed on the ground of time limitation - HELD THAT:- There are no document/agreement between the two parties which evidences running account payment underlying their business operations. In the absence of any documentary evidence which provides foundational basis to the claim of the Appellant that there was a running account, the reliance placed on the judgment of this Tribunal in SHRI ABHINANDAN JAIN, DIRECTOR RISA INTERNATIONAL LTD. VERSUS TANAYA ENTERPRISES PVT. LTD. [ 2021 (3) TMI 939 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH , NEW DELHI] does not come to the aid of the Appellant. Furthermore, on perusal of the reply to the Section 8 Demand Notice sent by the Corporate Debtor on 07.01.2020, as placed at pages 127-136 of APB it comes to notice that it has been categorically denied that any operational debt was due qua the Operational Creditor - there are no merit in the argument advanced by the Learned Counsel for the Appellant that since the last invoice did not attract limitation, the other 26 invoices which have been submitted alongwith it also escapes the bar of limitation on the unsubstantiated pretext of running account of payments. Reliance placed in the decision of the Hon ble Supreme Court in the matter of B.K. EDUCATIONAL SERVICES PRIVATE LIMITED VERSUS PARAG GUPTA AND ASSOCIATES [ 2018 (10) TMI 777 - SUPREME COURT] wherein after considering the statutory provisions of the IBC and the Limitation Act, it has been settled that for filing application under Section 9 of the IBC, Article 137 is attracted. The Adjudicating Authority has therefore not erred in holding that the Appellant cannot rely on the 26 other invoices wherein the default occurred over three years prior to date of filing Section 9 application to cross the threshold mark in claiming an outstanding amount of Rs. 1,57,06,741 / - in their Section 8 Demand Notice and Section 9 application - the principal legislative intent behind the IBC is insolvency resolution so as to bring the Corporate Debtor to its feet and in view of this clear legislative fiat, the IBC forum cannot be allowed to be used as a substitute for money recovery proceedings. There are no convincing reasons to interfere with the order of the Adjudicating Authority. The appeal being devoid of merit, there are no reasons to entertain it. In the result, the appeal is dismissed.
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Service Tax
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2024 (3) TMI 288
Application filed by the petitioner under the Sabka Vishwas Legacy Disputes Resolution Scheme-3 (SVLDRS-3) - petitioner contends that the categorization of the petitioner's application as arrears was incorrect because the final hearing of the original adjudication took place after 30.06.2019 - HELD THAT:- The admitted position is that no hearing was held thereafter. While learned counsel for the petitioner points out that the adjudicating authority waited for one month thereafter, the fact that the adjudicating authority waited for one month before issuing orders does not mean that the final hearing took place after 30.06.2019. Hence, the conclusion that the petitioner's case falls within the category arrears and not within the category litigation contains no infirmity. The other aspect on which the order was challenged was non-consideration of interest. As contended by learned counsel for the petitioner, sub-section 2 of Section 124 uses the expression any amount paid as pre-deposit . This provision was interpreted by this Court in M/S. VAMSEE OVERSEAS MARINE PRIVATE LIMITED VERSUS THE COMMISSIONER OF SERVICE TAX, DESIGNATED COMMITTEE [ 2021 (2) TMI 801 - MADRAS HIGH COURT] wherein it was held that the applicant under the Scheme is entitled to credit in respect of interest payment also. In order to claim credit for interest, it is necessary for the petitioner to place on record relevant documents and establish the claim. This exercise cannot be undertaken by this Court. However, in order to enable the petitioner to place relevant documents before the respondents, the impugned order calls for interference. The impugned order is set aside only with regard to the computation of pre-deposit amount and the matter is remanded for reconsideration - Petition disposed off.
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2024 (3) TMI 287
Non-payment of service tax - Laying of pipelines under WCS/CICS - Construction of reservoirs, CNG stations and fire stations etc. - Extended period of Limitation. Work of laying pipelines under the head works contract service done for Gas Authority of India Ltd (as the subcontractor) - HELD THAT:- The amount received prior to 01.06.2007 is not taxable. Further, the Appellant is entitled to abatement of 67% from the gross value towards material component. Further, the Appellant has demonstrated that the main contractor has adjusted the amount of service tax from the bill(s) of the Appellant subcontractor. Thus, the Appellant is entitled to set-off of the tax deposited by the main contractor and admittedly adjusted from their bills. Also the Appellant is entitled to pay tax under the composition scheme and the same cannot be denied for having not opted for. Construction of the reservoirs, CNG stations and fire stations - HELD THAT:- The activity of construction of fire stations is of non-commercial nature and hence the same is held as exempt. So far the activity of construction of reservoirs and CNG stations is concerned, the demand is bad for the period prior to 01.06.2007. After 01.06.2007, Appellant shall be entitled to abatement of 67% of the gross value and also be entitled to the benefit of paying tax under the composition scheme - also, free supply of material, if any, from the service receiver cannot be added to the gross turnover of the Appellant, as held by the Apex Court in the case of COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [ 2018 (2) TMI 1325 - SUPREME COURT] . Extended period of limitation - HELD THAT:- The Appellant was registered with the department and have been filing the returns regularly and also maintains proper records of the transactions. The issue involved is wholly attributable to interpretation of the tax provisions. Accordingly, the extended period of limitation is not available to revenue. The impugned order set aside - appeal allowed.
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2024 (3) TMI 286
Classification of services - Commercial Construction or Works Contract Services or not - activity of construction of roads for the period 1.07.2012 to 2013 14 - availability of exemption on construction of roads under notification no. 25/2012-ST - Extended period of limitation - Penalty - interest on delayed payment of service tax - HELD THAT:- The construction of roads is covered more specifically under Section 65(25b) defining commercial or industrial construction service and section 65(105)(zzzza) defining Works Contract Service , however, the same excludes the levy of service tax on construction of roads - N/N. 25/2012-ST dated 20.06.2013 w.e.f. 01.07.2012 granted exemption on services, provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of road, bridge, tunnel, or terminal for road transportation for use by general public. By virtue of the said notification the exemption on payment of service tax in respect of services relating to the construction of roads was limited only in respect of those roads which were meant to be used by general public. In other words the utility of the roads was linked with general public. The very clause of the exemption notification when it uses the words road, bridge, tunnel or terminal for road transportation implies the common services to be used by the general public and cannot be restricted which is constructed for development of any township or residential complexes by a builder/developer/coloniser for the utility of the occupants therein. There are no doubt on the intent and the scope of the notification exempting the construction of roads for use by general public and as per the Rules of interpretation the exemption notification has to be construed strictly. Considering the activity of construction of roads by the appellant for the development of the township/residential complexes on behalf of the builders/ developers is specifically meant for the buyers of the plots/residential/commercial complexes and the same cannot be termed for the use of the general public in the sense it has been provided in the notification. Hence the appellant is not entitle to claim exemption from levy of service tax under the notification. Appellant had rendered all the services of construction with material, though in some case they issued separate bills for labour charges and raw material for the same work and charged VAT in the bills of raw material. Therefore, the services executed being works contract were rightly classified under the category of Work Contract Services , as defined under Section 65(105) (zzzza) of the Act. Extended period of limitation - penalty u/s 77 and 78 - HELD THAT:- The appellant did not assess the correct amount of service tax and did not reflect the same in ST-3 Returns and hence violated the provisions of the Act. The non-disclosure of these facts would have gone unnoticed, if the same were not unearth by the department at the time of Audit. The adjudicating authority had rightly observed that the appellant wilfully suppressed the facts with intent to evade payment of service tax and therefore the invocation of the extended period of limitation and imposition of penalty is justified. Thus, no interference is called for in the present case invoking the extended period of limitation and imposing penalty under section 77 and 78 of the Act. Interest on delayed payment of service tax - HELD THAT:- The imposition of interest on delayed payment of service tax is of mandatory nature and consequently , the liability to pay interest has been correctly imposed on the appellant. From the chart given in the order the adjudicating authority agreed upon that the service tax returns were filed after the due date and hence the liability to pay late fee under section 70 read with rule 7C of the Service Tax Rules, 1994 is upheld. There are no reason to interfere with the impugned order - appeal dismissed.
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2024 (3) TMI 285
Levy of service tax - Support Services of Business or Commerce - receipt collected from the clients towards ocean freight - eligible documents under Rule 9 of Cenvat Credit Rules, 2004 or not - imposition of consolidated penalties under Section 76, 77 78 of the Act - extended period of limitation - HELD THAT:- The issue in dispute is no longer res integra. Mere purchase and sale of booking cargo space is not a Service and the surplus income/receipts earned is not consideration towards rendition of any BSS to their client and hence not liable to service tax. Neither the transaction is amenable to Service Tax under the category oBusiness Auxiliary Service nor under 'Business Support Service' and thus, the demand of service tax confirmed vide the impugned Order is not sustainable and is liable to be set aside. Further, in the case of M/S. CONSOLE SHIPPING SERVICES INDIA PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, DELHI-II [ 2023 (5) TMI 192 - CESTAT NEW DELHI] , the Tribunal held that the income/receipts under the head of airline commission and airline incentive was not taxable under BAS as the Appellant assessee was not buying and selling space on the airline on behalf of their client but on their own account as the they were directly buying themselves and thereafter selling the same to the exporters. Therefore, the said activity cannot be considered as BAS since the statute requires at least three parties to be involved in the transaction namely the service provider, service recipient and the client which was not the case involved. Hence, Service Tax was not payable. Extended period of limitation - Penalties - HELD THAT:- It is imperative to state that the Appellant assessee had discharged their tax liability towards terminal handling services, documentation service, Bill of Lading service, etc., even when they were not required to do so under the existing law during the relevant period. This further establishes bona fide intent of the Appellant assessee - the Appellant assessee cannot be alleged to have suppressed facts with mala fide intention. Once the demand is not sustainable on merits as elaborated above, for the same reasons the imposition of penalties upon the Appellant assessee under Section 77 and Section 78 of the Finance Act, 1994 are liable to be set aside. Furthermore, considering that the demand itself has no foundation, the benefit of Section 80 of the Finance Act permitting waiver of penalty is extendable and no interest is recoverable under Section 75 of the Finance Act when it has been established that demand is not sustainable. The impugned order cannot be sustained and is therefore set aside - Appeal allowed.
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2024 (3) TMI 284
Classification of service - Commercial or Industrial Construction Service or Works Contract Service? - Supply of Tangible Goods Service - extended period invoked merely on the basis that service tax has not been paid and periodical Returns were not filed - intent to evade or not. Commercial or Industrial Construction Service - HELD THAT:- The issue is settled in favour of the appellants HP SINGH CHADHA AND DP SINGH CHADHA VERSUS COMMISSIONER OF CGST, LUDHIANA [ 2024 (1) TMI 680 - CESTAT CHANDIGARH] by this very Bench relying on the Hon ble Apex Court judgment in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] Supply of Tangible Goods Service - HELD THAT:- It is found that neither the show - cause notice nor the impugned order records any proof of the possession and effective control of the machinery, supplied by the appellants to M/s L T, was with the appellant themselves. In the absence of such evidence, demand can be sustained only on the basis of averment on the part of the appellant that they have also supplied the operators of the machinery. It is not coming forth in the impugned order as to whether the appellant was paying the wages to the operators and were having effective control of the goods supplied by them. In the absence of the same, demand cannot be sustained. Extended period of limitation - intent to evade or not - HELD THAT:- The fact that the show-cause notice has been issued based on the financial records maintained by the appellants; extended period has been invoked on the grounds that the appellants did not obtain registration; paid the tax as applicable and file the Returns; in addition to this, no other express evidence was put forth to show any mala fide intent on the part of the appellants to evade payment of tax. Under these circumstances, Revenue has not made out any case for invocation of extended period - the Revenue has not made out any case for invocation of extended period. The demand cannot be sustained on merits and on limitation also. Accordingly, the appeal stands allowed.
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2024 (3) TMI 283
Levy of service tax - Catering services - declared service or not - supply of meals and other food items by the respondent to the airlines - SCN dated 15.02.2017 for the period is from 01.07.2012 to March 2016 - HELD THAT:- It would be seen that section 65B (44) defines service to mean any activity carried out by a person for consideration, and includes a declared service, but shall not include, amongst others, an activity which constitutes merely such transfer, delivery or supply of any goods which would be deemed to be a sale within the meaning of clause (29A) of article 366 of the Constitution - Section 65B (51) of the Finance Act defines a taxable service to mean any service on which service tax is leviable under section 66B. Though the notification dated 20.06.2003 was rescinded on the introduction of the negative list regime, but the legal position would not change in view of the definition of service under section 65B(44) of the Finance Act and the provisions of article 366(29A) of the Constitution. This is also clear from the Education Guide issued by CBEC on 19.06.2012. Paragraph 2.6.4 clarifies the reason for deletion of the notification dated 20.06.2003. It would also be pertinent to refer to the decision of the Tribunal in HALDIRAM MARKETING PVT. LTD. VERSUS COMMISSIONER, CENTRAL GOODS AND SERVICE TAX, GST DELHI EAST COMMISSIONERATE, NEW DELHI [ 2023 (2) TMI 783 - CESTAT NEW DELHI] . The Division Bench held that activities of preparation of food items by engaging chefs, packaging and delivery and selling them as take-away food items over the counters would amount to sale and, therefore, not be leviable to service tax. In INDIAN RAILWAYS CATERING TOURISM CORPORATION LTD VERSUS GOVT OF NCT OF DELHI ORS [ 2010 (7) TMI 174 - HIGH COURT OF DELHI] , the Delhi High Court examined whether service tax could be leviable on foods and beverages supplied on board the trains and it was held that the transaction between the petitioner-company and Indian Railways for providing food and beverages to the passengers, on board the trains, is a transaction of sale of goods by the petitioner-company to Indian Railways. It is neither a contract for providing services nor a composite contract for supply of goods and providing of services. In the present case also, the respondent supplies foods to the airlines. The food is loaded in the aircraft at the airport but the respondent does not provide any catering service, which in fact is provided by the airline crew - service tax would not be leivable on the supply of food items to the airlines. The impugned order dated 31.01.2018 passed by the Commissioner, therefore, does not call for any interference in this appeal - appeal dismissed.
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2024 (3) TMI 282
False declaration under Service Tax Voluntary Compliance Encouragement Scheme of 2013 - appellant is involved in the construction activities and has declared their tax dues by wrongly availing the abatement on the value of construction work and on the advance money received for flat booking respectively - Non-inclusion of amount of liability under reverse charge mechanism for obtaining legal consultancy and with respect to the remunerations paid to their Director - failure to mention income with the service tax liability of Rs.2,28,08,414/- for the period from April, 2011 to December, 2012 - recovery alongwith interest and penalties. Demand of service tax for constructing educational institutes - HELD THAT:- For any organisation or institutions to qualify as having been established solely for educational, religious, charitable, help, sanitation or philanthropic purposes, for non-commercial status, it is required that same fulfils the condition of being run without any profit making. None of the educational Institutes were observed to have a non-commercial status. There are no reason to differ from these findings because there is no denial apparent on record that the educational institutions for whom appellant constructed the complex, were charging fees from the students. None of these educational Institutes are Government owned institutes. Also there is no evidence to prove that despite collection of fee, there was no profit to these institutes and that these educational institutes were non-profit driven. Hence the demand of service tax pertaining to construction of educational institute activity confirmed. Demand with respect to construction of residential complexes - HELD THAT:- There is nothing in agreement to suggest that these houses were the part and parcel of the same complex. Hence there is no evidence produced by the Department that these 18 agreements were 18 different residential units (more than 12 units) in a common area with several common facilities, as is the requirement in terms of section 65(91a) of Finance Act, 1994 which defines the residential complex. Once the construction does not qualify to be called as a residential complex, question of any services rendered for constructing the same to be taxable does not at all arises. Hence, the findings of the adjudicating authority below confirming the demand alleging the construction of individual house as a taxable service, service of construction of Residential Complex are liable to be set aside. Value of service tax which has been alleged to have been concealed in the VCES by the appellant that is with respect to remuneration paid to the Directors and with respect to the amounts spent for legal and professional consultancy - HELD THAT:- Director remuneration refers to the compensation which a company gives to its Directors for the services rendered by him either in the form of fees, salary or by use of company s assets. But the mere fact of payment of remuneration is not sufficient to hold that there exists an employer employee relationship between the company and the Director in which situation only the remuneration paid could have been taxable. The Revenue has not produced any evidence that on the amount of remuneration TDS in terms of section 192 of Income Tax Act was ever deducted. Hence, there arises no Service Tax liability qua the amount of said remuneration. Order under challenge is liable to be set aside qua this demand - the value for legal and professional services the same is very much taxable, as it qualifies to be called as service for post negative list period it is not covered under the exclusion clause of section 66 D of Finance Act. Hence, there are no infirmity while the demand on this count, has been confirmed. Appeal allowed in part.
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2024 (3) TMI 281
Levy of Service Tax - Declared service or not - collection of late delivery charges with respect to their finished goods, from the customers during the year 2012-13 2013-14 - act of collecting said charges amounts to the act of agreeing to obligation to refrain an act, or to tolerate an act or a situation, or to do an act which is covered under the definition of declared services introduced in section 66 (E) (e) of Finance Act, 1994 with effect from 01.07.2012 or not - Invocation of Extended period of limitation - suppression of facts or not - HELD THAT:- Though appellant is also registered with Service Tax Commissionerate for rendering services as that of GTA and supply of manpower. Apparently and admittedly, none of these services are in question. It is further observe that the amount on which the demand in question has been confirmed is apparently and admittedly an amount in lieu of sale of finished goods manufactured by the appellant, that too, on the account of delay in receiving the payment from the buyers thereof. From no stretch of imagination, the said amount can be connected to be an amount towards rendering any service, not even the declared service. The amount is definitely an amount towards the sale of goods and shall be the part of value of the goods only these particular observations are sufficient to hold that findings in the order under challenge are without any reasonable basis. Invocation of extended period - Suppression of facts or not - HELD THAT:- The case has been made out based upon the appellant s own record. It is not the case of the Department that the requisite returns where not filed by the appellant. In such circumstances, suppression or facts as is alleged in the Show Cause Notice is not sustainable. In addition to the decisions relied upon by the appellant, support drawn from the decision in the case of NIZAM SUGAR FACTORY VERSUS COLLECTOR OF CENTRAL EXCISE, HYDERABAD [ 1999 (10) TMI 123 - CEGAT, NEW DELHI] where it was held that the date of knowledge by the department is not relevant according to the provisions of Section 11A and the notice issued beyond the period of six months from the date of knowledge will not be barred by limitation. In view thereof, proposing the impugned Show Cause Notice itself is held barred by limitation. As a consequence of entire above discussion, the order under challenge is hereby set aside - appeal allowed.
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Central Excise
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2024 (3) TMI 280
Evasion of duty- demand confirmed on the ground that units floated and controlled by two persons and materials and capital goods exchanged and cash seized - the Tribunal has remanded the matter to the Adjudicating Authority - HELD THAT:- The finding by Tribunal is just and proper and appropriate, having regard to the reasons assigned for the same. As far as the aspects on which the remand has been made, it is found that the Adjudicating Authority would now have to reconsider the said aspects in accordance with law and in light of the observations made by the Tribunal in the impugned order. Appeal dismissed.
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2024 (3) TMI 279
100% EOU - benefit under Notification No. 2/95 C.E. dated 04.01.1995 availed - failure to achieve a positive NFEP - invocation of extended period of limitation - HELD THAT:- The Appellant is a 100% EOU engaged in the manufacture of excisable goods and has availed benefit under Notification No. 2/95 C.E. dated 04.01.1995 which provides exemption on 50% of the export goods allowed to be sold in DTA upon fulfillment of terms as provided under EXIM Policy. The entire demand for custom duty has been raised out of the Audit Objections by the Audit conduct by the CERA Officials in 2008 for the transactions pertaining to the time period October 2000 December 2000. It cannot be denied that the Department had sufficient time to conduct investigations pertaining to the issues raised before the lapse of ten years for that is for the time period for which the show cause notice has been issued. It is further noted that the lower authorities have only relied on B-17 Bond executed by the Appellants to invoke larger period of limitation thereby going beyond the scope of issues raised in the Show cause Notice that the Department was unable to provide cogent reason to invoke the same. The fact that the adjudicating authority has dropped the penalty as proposed in the Show Cause Notice shows that the demand is patently time barred and there in no evidence on record to establish suppression of facts or malafide intention to evade duty. Therefore the entire demand in this case is time barred as for the period of October 2000 December 2000 show cause notice was issued on 15.02.2010 which is not only beyond normal limitation but also that the Department has incorrectly invoked extended period of limitation without adducing evidence or cogent reason in support of their claim. The demand is barred by limitation - the impugned order set aside - appeal allowed.
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2024 (3) TMI 278
Clandestine removal of goods - wrongful availment of Cenvat Credit - demand on the basis of statements recorded of the Appellants - corroboration of tangible evidence or not - appellant submits that demand confirmed by the Department is an extrapolated figure based on the calculation of production by taking the standard production per batch and simply that by the number of batches appearing in the Finished product analysis Dilatometer Register. HELD THAT:- The Department has not adduced any evidence in support of their claims. The Department has relied on the theoretical calculation of production and multiplying such assumed standard with no. of batches so appearing in the FDADR Register furthermore relying on some chits apparently indicating proportion of raw material to be used for production process and drawn inference that the Appellants are removing goods in a clandestine manner. Clandestine removal of goods is a serious allegation and the reliance of Department on such incorporeal data to support their claim is perverse. Furthermore, no evidence has been brought on record to show any excess procurement of raw material for the alleged differential production by the Appellants. Corroborative evidence such as evidence of other inputs required for manufacture, transportation, details of buyers etc. have not been provided by the Department. The Tribunal took note of the decision in KAMAL BIRI FACTORY VERSUS COLLECTOR OF CENTRAL EXCISE, MEERUT [ 1997 (7) TMI 593 - CEGAT, NEW DELHI] wherein view has been taken that the allegations of clandestine removal of the goods will not stand established when based on the entries made by the assessee s employee in a diary or on the basis of third party s record in the absence of any corroborative evidence. Similar stance has been taken by this Tribunal in the case of M/S AMBICA ORGANICS, SHRI ANIL KUMAR GUPTA, SHRI VINOD KUMAR GUPTA VERSUS COMMISSIONER, CENTRAL EXCISE CUSTOMS, SURAT-I [ 2015 (3) TMI 825 - CESTAT AHMEDABAD] wherein it was held that statements relied on to establish clandestine removal of goods should hold evidentiary value and with no adequate material available on record, clandestine removal of goods cannot be established. Thus, the existence of corroborative evidence is essential in order to establish clandestine removal of goods and the same cannot be merely based on assumptions and presumptions. In the present case the Department has not adduced such well-fortified evidence that strengthen the claims of the Department. CENVAT Credit - ground for denying Cenvat Credit has been made without recording any statement of the Appellant s staff/directors and without adducing corroborative documentary evidence pertaining to non - utilization of imported Zir Flour - HELD THAT:- There is no dispute as regards import of material for which credit was taken, took place and goods reached the job worker at their premises for which transportation charges were paid, bills were raised by the job workers post which goods were received by the Appellant at their premises. It is observed that it is apparent on record that the Cenvat Credit availed by the Appellant was post such receipt from the job worker. There is no material on record to show that the goods were not utilized as inputs therefore there is no wrongful availment of Cenvat Credit when the records of the Appellant reflect due compliance towards all requirements as prescribed under the Cenvat Credit Rules, 2004 for availing such Credit. Under the present facts and circumstances there is no merit in the claim of the Department towards clandestine removal of goods and wrongful availment of Cenvat Credit - the impugned order is set aside - appeal allowed.
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2024 (3) TMI 277
CENVAT Credit - input services or not - warranty free services - HELD THAT:- The identical issue in the appellant's own case has been considered at length by this Tribunal and thereafter, this Tribunal has allowed the appeals of the appellant - Reliance can be placed in the case of JCB INDIA LTD. VERSUS CCE- DELHI-IV [ 2023 (5) TMI 133 - CESTAT CHANDIGARH] where it was held that The appellant has correctly availed cenvat credit on the amount of service tax paid for the services provided by the dealers to the customers on behalf of the appellant for fulfilling the warranty obligations of the appellant. The impugned orders are not sustainable in law and therefore set aside - appeal allowed.
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2024 (3) TMI 276
Clandestine Removal - process loss - yield of 79% on deployment of 228584 kgs of raw materials in 2006-07 for production of 146295 kgs of finished product leaving 48002 kgs unexplained - recovery alongwith penalty - HELD THAT:- The appellant had deployed various raw materials in different proportions for manufacture of finished goods. The lower authorities, without considering the material mix and reaction loss of each separately, have merely presumed that weight of raw materials should be found to match that of finished goods and that, in the event of gap if any, the difference should be explained. There are no provision in Central Excise Act, 1944 that authorises duty recovery in such circumstances. There is no allegation of clandestine removal in the show cause notice let alone any evidence thereon. Even if such gap was ascertained, and explanation not found acceptable, this could, at best, be used to corroborate alleged illicit removal which is not alleged here. Effectively, duty is sought to be collected on what be alleged to be inefficiency which the statute does not envisage. There are no reason to sustain the demand, interest and penalty - the impugned order set aside - appeal allowed.
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2024 (3) TMI 275
CENVAT Credit - waste/by-product generated i.e. Aluminium dross during the manufacture of Aluminium products from Alumina in the appellant's factory which is sold by the appellant without payment of duty - exempt goods or not - requirement to pay an amount of duty equal to 6% of the value of exempted goods as stipulated under Rule 6(3) of Cenvat Credit Rules, 2004 - applicability of Rule 6 of CCR, 2004 - HELD THAT:- It is observed that the issue was initially settled by the Hon'ble Apex Court in the case titled as UNION OF INDIA VERSUS DSCL SUGAR LTD. [ 2015 (10) TMI 566 - SUPREME COURT] wherein the Hon'ble Apex Court while examining the issue of excisability of waste product/by-product arising during the course of manufacture of the excisable product (bagasse in sugar mills in the said case) had affirmed that such waste is not a manufactured product. Subsequent to said decision, the Board vide the aforesaid Circular dated 25.04.2016 had acknowledged that the said judgement applies to both the periods i.e the period pre as well as post insertion of explanation in Section 2(d) of Central Excise Act, 1944 (CEA, 1944) on 10.5.2008. It has been brought to the notice that this Circular was again challenged and the decision in UNION OF INDIA ORS. VERSUS M/S INDIAN SUCROSE LIMITED [ 2022 (7) TMI 353 - SC ORDER] by the Hon'ble Supreme Court has rescinded the said Circular re-affirming the findings in DSCL Sugar Ltd. Ors. case. Pursuant thereto the aforementioned Circular dated 25.04.2016 was withdrawn vide Circular No. 1054/2005 dated 07.07.2022. Perusal thereof clarifies that the decisions by Hon'ble Apex Court considering that the waste/by-product arising during the manufacture of excisable goods are not the result of the activity of manufacture have been accepted. Rule 6 of Cenvat Credit Rules talks about the obligation of the manufacturer who deals in manufacturing of exempted as well as excisable goods. The occurrence of a by-product/waste is not an activity of manufacture, the question of applicability of Rule 6 of CCR, 2004 does not at all arise. The findings in the order under challenge since are based on applicability of said Rule 6 of CCR, 2004 and the Circular of 2016 which stands already been rescinded by the Hon'ble Apex Court, the order is not sustainable. The decision of Hon ble Supreme Court in Sucross India has been accepted by the Department itself by their subsequent circular. Applying the rescinded circular that too to fasten a wrong excise duty liability is definitely an error apparent on record the order for the said reason and in view of entire above findings is not sustainable. It is apparent from record that Supreme Court s decision in Sucrose India as well as the Circular dated 07.07.2022 were brought to the notice of Commissioner (Appeals). Ignoring the outcome thereof is held to be an act of serious judicial indiscipline. The Board be notified of such act on part of Commissioner (Appeals) with a liberty to take appropriate action if deemed fit. Appeal allowed.
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Indian Laws
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2024 (3) TMI 274
Disciplinary proceedings - Reliance on confessional statements made by accused persons during the investigation - Petitioner, who at the relevant point of time, was working as Superintendent of Central Excise - Landing of smuggled explosives, arms and ammunitions which were used in conducting bomb blast in Mumbai during the year 1993 - Penalty of compulsory retirement from Government service in terms of Rule 11(vii) of the Central Civil Services (Classification, Control Appeal) Rules, 1965 - entitled to only 65% of the full compensation of pension and gratuity under Rule 40 of the Central Civil Services (Pension) Rules - contravention of provisions of Rule 3(1), (i), (ii) and (iii) of the Central Civil Services (Conduct) Rules 1964 - principles of judicial review. Whether the confessional statements made by accused persons during the course of investigation of a criminal case where the employees were not tried as co-accused and the accused persons retracted from the confessional statements in their deposition during the course of trial, forms sufficient evidence to bring home the charges in departmental proceedings? - Whether there is any evidence on record of the departmental proceedings drawn and conducted against the employees in these cases other than the confessional statements made by certain co-accused persons in the criminal case during the course of investigation before the Investigating Agency/Officer, on the basis of which the charges leveled against them can be said to be proved or it is a case of no evidence? HELD THAT:- The legal principle which emerges as per cumulative reading of Sections 25 and 26 of the Indian Evidence Act and Sections 161 and 162 of the Cr.P.C. is that any statement made before a Police Officer cannot be proved during the course of a criminal trial and accordingly no confession made by any person in custody of Police Officer shall be proved against such person. The statement recorded under Section 161 of the Cr.P.C. can, during the course of trial, be used only for the purpose of contradiction. Since in the instant matters, the Disciplinary Authority has relied upon the confessional statement made during the course of investigation by the Investigating Officer of a criminal case pertaining to TADA, it is also noted that Section 15 of the TADA Act which carves an exception to the provisions of the Indian Evidence Act and the Cr.P.C., however, the exception is circumscribed by certain conditions. According to Section 15 of the TADA Act, a confession made by a person before a Police Officer not below the rank of a Superintendent of Police and recorded by such Police Officer, shall be admissible in trial of such person or co-accused, abettor or conspirator for an offence under the TADA Act - However, so far as the admissibility of confessional statement under Section 15 of the TADA Act against co-accused or abettor or conspirator is concerned, the proviso appended to Section 15 needs to be noticed, according to which, for such confessional statement to be admissible against co- accused, such co-accused should be charged and tried in the same case together with the accused whose confessional statement is relied upon as an evidence against co-accused. Analyzing the evidence available on record of the disciplinary proceedings, it is found that the department has relied upon the confessional statements made by four accused persons during the course of investigation of criminal case and these accused persons are (i) Uttam Potdar (smuggler) (ii) Mohd. Sultan Sayyed, Superintendent, Customs Officer (iii) R. K. Singh, Assistant Commissioner and (iv) Dawood M. Phanse (smuggler). These persons were not examined during the course of departmental proceedings; rather, to prove the confessional statement Police Officers were examined. Smt. Meeran Chadha Borwankar, Superintendent of Police was examined before the Inquiry Officer as witness in the departmental proceedings. This witness in the departmental proceedings has only stated she had recorded the confessional statement of Uttam Potdar during the course of investigation of the criminal case conducted by her and that the confessional statement was made by Uttam Potdar without any duress. The principle that any punishment order passed in disciplinary proceedings can be subjected to judicial review in a case where the punishment order is based on no evidence, is already well established. From these discussions, it is apparent and well established that it is a case where despite existence of no evidence to prove the charge in the departmental proceedings, the employees have been punished by the Disciplinary Authority. The evidence available on record is only the confessional statements made by the accused persons during the course of investigation of the criminal case which, for the reasons already stated, could not be made basis of inflicting the punishment upon the employees in this case. In absence of any evidence, it is not even a case where guilt of the employees in the departmental proceedings can be said to have been proved even on preponderance of probabilities. There are no hesitation to hold that the Tribunal, while passing the impugned judgment and order dated 13th June 2013 in Original Application No. 465 of 2010 was in error in dismissing the said Original Application - petition allowed.
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2024 (3) TMI 273
Dishonor of cheques - Condonation of delay of 1259 days in filing the complaint for an offence punishable under Section 138 of the Negotiable Instruments Act, 1881 - sufficient reason to condone the delay or not - HELD THAT:- The nature of the proceedings in a complaint under Section 138 of the Act, assumes significance. Learned Counsel for the Petitioner made an earnest endeavour to draw home the point that the prosecution for an offence under Section 138 of the Act, entails punishment, and, therefore, a strict interpretation is the norm. The courts below could not have, therefore, condoned the delay in a light manner. Chapter XVII came to be inserted in the N.I. Act by the Amendment Act, 1988 with the object of enhancing the acceptability of the cheques for the settlement of liabilities. The primary object of visiting the penal consequences to the dishonour of the cheque is not mere penal, but also to maintain the efficiency and value of a negotiable instrument in commercial transactions by making the accused to honour the negotiable instrument and pay the amount for which such instrument had been drawn. The object of provisions contained in Chapter XVII has thus been described as both punitive and compensatory. The Supreme Court in P. MOHANRAJ ORS. VERSUS M/S. SHAH BROTHERS ISPAT PVT. LTD. [ 2021 (3) TMI 94 - SUPREME COURT] delved into the question as to whether the proceedings under Section 138 of the Act, are quasi criminal in nature. In paragraph No. 84 of the said judgment, the Supreme Court concluded that given the hybrid nature of a civil contempt proceeding, described as quasi-criminal by several judgments of the Supreme Court, there was nothing wrong with the same appellation quasi-criminal being applied to Section 138 proceeding for the reasons given by the Supreme Court on an analysis of Chapter XVII of the Act, 1888. Another three Judge Bench of the Supreme Court again had an occasion to consider the nature of the proceedings under Chapter XVII of the Act, 1888 in the case of M/S GIMPEX PRIVATE LIMITED VERSUS MANOJ GOEL [ 2021 (10) TMI 378 - SUPREME COURT] . The Supreme Court observed that the nature of the offence under Section 138 of the NI Act is quasi-criminal in that, while it arises out of a civil wrong, the law, however, imposes a criminal penalty in the form of imprisonment or fine. The purpose of the enactment is to provide security to creditors and instil confidence in the banking system of the country. In the case of DAMODAR S. PRABHU VERSUS SAYED BABALAL H. [ 2010 (5) TMI 380 - SUPREME COURT] the Supreme Court has observed that it is quite obvious that with respect to offence of dishonour of cheques, it is compensatory aspect of the remedy which should be given priority over the punitive aspect. The aforesaid being the nature of the proceedings under Section 138 of the Act, 1881, the circumstances in which the complainant could not lodge the complaint, within the prescribed period, deserves to be apprised in a slightly different perspective than a case where the prosecution is under an enactment, the primary object of which, is punitive. The conduct of the parties also becomes relevant. In the case at hand, there are documents which indicate that after the service of the demand notice, the accused had not only acknowledged the liability, but also expressly requested the complainant not to act on the demand notice. Subsequently, again a MOU was executed acknowledging the liability and promising to pay the amount in five installments. There are number of messages exchanged between the parties on Whatsapp, which lend prima facie credence to the claim of the complainant that he was made to believe the representations of the accused and forebear from lodging the complaint. The learned Magistrate cannot be said to have committed an error in exercise of discretion to condone the delay. The Revisional Court was justified in refraining from interfering with the exercise of discretion by the learned Magistrate. As the courts below cannot be said to have exercised the discretion in the manner which could be termed perverse and the discretion has been exercised positively to condone the delay which promotes the cause of substantive justice, this Court does not find any reason to interfere with the impugned orders - Petition dismissed.
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