TMI Tax Updates - e-Newsletter
March 9, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
PMLA
Service Tax
Central Excise
Highlights / Catch Notes
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GST:
Violation of principles of natural justice - Seeking proportionate refund of cess i.e., cess paid on coal which was utilized in zero-rated supplies - The High Court noted that the fixing of the personal hearing date before the expiry of the 15-day period for submitting a reply to the show-cause notice deprived the petitioner of adequate time to respond effectively. The court highlighted the necessity of allowing parties sufficient time to prepare and present their case. - The rejection order of the refund claim was criticized for being a non-speaking order, as it failed to provide reasons for the rejection, which is a mandatory requirement under Rule 92(3) of the Rules. - Matter restored back for re-adjudication.
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GST:
Opportunity for extension for filing response to the show cause denied = Recovery of Tax Dues - Consideration for rejection of an application for extension was that more than six adjournments were granted - The High court found that the proper officer was obliged to consider the petitioner's application for extension and should not have passed the final order without doing so. - The court held that the failure to grant an extension and offer a personal hearing despite the petitioner showing sufficient cause amounted to a violation of natural justice. - The court quashed the recovery notice issued by the respondents, directing the petitioner to file its response to the show cause notice and ordering the respondents to communicate the date of personal hearing.
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GST:
Refund of ocean freight paid under protest - unconstitutional levy or not - The respondent's argument that refund claims based on unconstitutional levies should be pursued through a suit or writ petition was rejected. - The Court reiterated the principle of unjust enrichment, emphasizing that the petitioner had not passed on the tax burden and therefore, is entitled to the refund. - Consequently, the Court ruled in favor of the petitioner, directing respondent No. 2 to verify and grant the refund of IGST paid on ocean freight within eight weeks from the date of the order, along with statutory interest.
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GST:
Maintainability of two parallel proceedings in respect of the same period, 2017-2018 - Parallel proceedings for the same period under both SGST and CGST Acts - Section 6 of the respective Acts. - The High court has directed notices to be issued and suspended the operation of one of the Orders-in-Original until the specified returnable date.
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Income Tax:
CBDT notifies that, no tax shall be deducted for certain payments made by payers to units in International Financial Services Centres (IFSC), as detailed in the provided list. It outlines conditions, definitions, and applicable provisions under the Income-tax Act, 1961, aiming to regulate financial transactions within these centres effectively. - The notification will come into force on April 1, 2024.
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Income Tax:
Ex-post facto extension of due date for filing Form No. 26QE for TDS u/s 194S - CBD issued a circular extending the due date for filing Form No. 26QE, related to tax deductions on the transfer of virtual digital assets, for the financial year 2022-23. This extension applies to deductions made from 01 July 2022 to 28 February 2023, due to the unavailability of the form, with waivers for certain fees and interest up to 30 May 2023.
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Income Tax:
Levy of tax on income derived from sale of saplings - Charging Section 3 of the Bengal Agricultural Income Tax Act, 1944 - The High Court held that Saplings are not considered "tea" based on common parlance and dictionary meanings. - The Tea Act, 1953's definition of "tea" is not applicable to the Act of 1944. - Income from saplings is not subject to tax under Section 3.
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Income Tax:
Reopening of assessment u/s 147 - Non-disclosure of the cost of purchase of penny shares - The High Court noted that To our query as to whether there was any evidence that Petitioner had paid brokerage, or who was paid and the quantum, it was met with silence. We are not happy with the stand of the Revenue or the reasons. - The Bombay High Court ultimately held that the notice issued under Section 148 of the Act cannot be sustained, as there was no failure on the part of the petitioner to disclose material facts, and the reassessment was based on a change of opinion rather than new evidence or facts. Consequently, the order rejecting the petitioner's objections was also deemed unsustainable.
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Income Tax:
Validity of Proceedings u/s 144C - Eligible assessee - Original ITR filed declaring the status as "Resident" - In the revised ITR the status declared as "Non-Resident" - Later the assessee has withdrawn/ abandoned his revised return - DRP rejected the petitioner's objections and maintained the Draft Order - In light of the incorrect application of Section 144C proceedings and the principle of estoppel, the Bombay High Court set aside the Draft Order and subsequent orders issued by the tax authorities. The court directed the Assessing Officer to assess the petitioner's original tax return to determine tax liability based on the petitioner's established residential status as a resident in India.
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Income Tax:
Revision u/s 263 - applicability of section 56(2)(x) - assessee acquired leasehold/freehold land and building from the BDMC - The ITAT found that the revisionary jurisdiction under Section 263 was exercised based on the Assessing Officer's proposal, rather than an independent examination by the PCIT. This approach was deemed incorrect and against the provisions of law, leading to the quashing of the revisionary order as invalid. - The ITAT held that the provisions of Section 56(2)(x) were not applicable to the acquisition of leasehold/freehold interests in land and building by the assessee.
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Income Tax:
Addition u/s 69A - unexplained cash deposits in the saving bank - The tribunal found the orders of the Revenue authorities to be arbitrary, with a failure to consider the appellant's submissions and evidence. - The tribunal found that the AO had erroneously attributed cash deposits to a bank account not belonging to the appellant, and despite being made aware of this error, the ld. CIT(A) confirmed the addition. Furthermore, the tribunal noted that the appellant had disclosed her business income under section 44AD, yet the authorities failed to provide any reasoned basis for rejecting her claim regarding the cash deposits.
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Income Tax:
Exemption u/s 11 - application filed by the assessee in Form No.10AB for registration u/s 12AB rejected finding that the objects of the assessee were for the benefit of a particular religious community or caste i.e. “Muslims” - The High Court emphasizes the need for consistency in granting exemptions and highlights relevant precedents supporting the appellant's case. - The Court delves into the application of Section 13(1)(b) and concludes that the trust's objectives primarily serve charitable purposes for the general public, rather than exclusively benefiting a particular religious community. - The HC affirmed that the trust's activities align with charitable purposes for the broader public interest.
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Income Tax:
MAT computation u/s 115JB - whether the receipt on account of surrender of gift of shares is per se a capital receipt or a revenue receipt? - The tribunal ruled that the transaction involving the receipt of shares constituted a capital receipt and should not be taxed as per section 115JB. - It held that the assessing officer lacked authority to tinker with audited financial statements unless the items fell under specified provisions, as clarified by the Supreme court in Apollo Tyres Ltd v. CIT.
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Income Tax:
Limitation Period for issuance of notice u/s 143(2) - Scrutiny Assessment - Relevant date - after filing of the return of income, defect notice u/s 139(9) had been sent to the assessee which was cured by the assessee - The ITAT allowed the appeal, holding that the notice issued under Section 143(2) beyond the prescribed time limit rendered the assessment order without jurisdiction and thus, it was quashed. The decision emphasized that the limitation for issuing such a notice runs from the year in which the return of income is filed and not from when a defect, if any, is rectified by the assessee.
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Customs:
CBIC updated rates of exchange for converting various foreign currencies into Indian currency (and vice versa), For Imported Goods and For Export Goods, effective from March 8, 2024
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Customs:
The CBIC announces the removal of Valayankulam Village, Madurai from the list of Inland Container Depots, which was previously designated for unloading imported goods and loading export goods.
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Customs:
CBIC issues instruction, detailing the designation of specific officers for certifying commercial imports of premium frozen duck meat into India, following Customs and DGFT notifications. It emphasizes the need for compliance with the prescribed standards and encourages the communication of any implementation difficulties to the Board.
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Customs:
Special drive announced for the cancellation of Bond/Bank Guarantee for EPCG/DEEC Licence Holders upon submission of EODC/Redemption Letters issued by DGFT Authorities. The initiative aims to facilitate trade and increase transparency, scheduled from 4th March 2024 to 18th March 2024.
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Customs:
Delay in finalization of Provisional Assessment - The mandatory Pre-SCN consultation as mandated under proviso to Section 28(1)(a) of the Customs Act, 1962 read with Pre-Notice Consultation Regulation, 2018 are not complied with while issuing the impugned SCNs - The High court agreed, holding that finalization of provisional assessments well beyond the reasonable period is barred by limitation. The court underscored that procedural directives under the CBIC Manual of Instructions are binding on the customs authorities and must be followed. The delay in finalization, thus, invalidated the subsequent demands for differential customs duty and penalties.
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Customs:
Liability to collect Terminal Handling Charges (THC) - Validity of Public Notice issued by the Commissioner to direct AEO and DPD clients to pay Terminal Handling Charges directly to terminal operators - The High Court held that the Public Notices were in pursuit of the "Ease of Doing Business" policy and facilitated by Section 143AA of the Customs Act, which empowers the Board to prescribe procedures to reduce transaction costs for imports and exports. - The Court found that the Public Notices only provided an option to the exporters/importers regarding the payment of THC, without mandating a direct payment to terminal operators. This did not infringe upon or disrupt existing contractual relationships between shipping lines and their clients.
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Customs:
Challenging the legality and validity of the seizure memo - mis-classification - imported Ethanol Absolute assessed as “Laboratory Chemical” under Customs Tariff Heading 98.02 (CTH 98.02) - The court finds no justification for withholding the goods, especially in the absence of a show cause notice or provision of the investigation report to the petitioner. - Based on the discussions and findings, the court orders the provisional release of the seized Ethanol Absolute upon the petitioner executing a bond to secure the differential duty and any consequential amounts.
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Customs:
Imposition of Penalty - Delay in filing the bill of entry - EPCG Licence - the court found that there was no justification for imposing the penalty of Rs. 12,15,000/- as there was no intention on the part of the appellant to delay the process. The delay was caused due to the third container being held up at Mundra port because of excess weight, which was subsequently resolved by according permission to transport the container to ICD, Ludhiana.
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Customs:
Classification of goods based on use - Goods imported ground glass described as ‘BIOMIN F-Ground Glass (Fluoro Calcium Phospho-Silicate)’ and ‘BIOMIN C-Glass (Chloro Calcium Phospho-Silicate) - The Tribunal concluded that the goods ('BIOMIN F-Ground Glass' and 'BIOMIN C-Glass') are appropriately classifiable under Customs Tariff Item 3207 40 00, not under 3824 99 90 as claimed by the Revenue, and that no separate classification for the plastic pallets was required.
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Customs:
100% EOU - Debonding - Demand of differential duty - Penalty - EXIM policy - switching over from 100% EOU Scheme to the EPCG Scheme - - The Tribunal found that the appellant was granted permission to exit from the 100% EOU status to the EPCG Scheme but faced delays in receiving the necessary No Objection Certificate (NOC) from the Excise/Customs Department. - It was concluded that the delays in issuing the final debonding order by the Directorate General of Foreign Trade (DGFT) were solely attributable to the Customs/Excise Department.
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Customs:
Extended Period of limitation u/s 28 - Demand duty - confiscation - penalty - ab initio cancellation of the scrip - Forged Shipping Bills - The CESTAT held that the extended period of limitation under section 28 of the Customs Act could only be invoked if the non-payment or short payment of duty is on account of ‘collusion, wilful misstatement or suppression of facts’ by the importer, which were not present in this case. As a result, the demand for Customs duty, confiscation of goods, and penalties imposed on the appellant were set aside.
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Customs:
Classification of goods - Goods imported as “Nut tie Bar, Screw, Screw Tip, Locking ring, etc.” from China - the CESTAT noted that the appellant's claim that the imported goods were specifically designed for their use and could not be used as general items was supported by expert opinions and technical documentation. - Neither the Adjudicating Authority nor the First Appellate Authority found fault with the appellant's claims. - The Revenue failed to provide substantial evidence to justify the reclassification under CTH 7318.
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Customs:
Classification of goods - benefit of exemption - Import of Flexi tanks - containers of durable nature - The CESTAT observed that the term 'durable' encompasses the endurance capability of a product and is not solely based on its capacity for reuse. They observed that durability is a relative term and should be determined based on the materials used and the intended purpose of the product. Therefore, they opined that the issue needed to be re-examined by considering the factual matrix and technical literature. - Consequently, the Tribunal remanded the matter to the adjudicating authority for further consideration.
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Customs:
Demand duty - Allegation of import Portland Pozzolana Cement without payment of customs duty - No evidence for actual import of the goods - The CESTAT held that the Department could have conducted investigation to find out the purpose for which the money was transferred or they could have transferred the case to the concerned department to investigate on the money laundering angle. Without initiating any such action, demanding customs duty only based on the money transfer to the Exporter's Bank Account is not supported by any evidence. - Demands cannot be based solely on financial transactions without corroborating evidence of import.
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Customs:
Country of origin of copper cathodes - mis-declared the country of origin (COO) of goods as Zambia instead of Iran - False/ fabricated/ un authentic COO Certificate - import of goods under Non-Ferrous Metal Import Monitoring System - The CESTAT found the department's evidence insufficient to prove the goods were from Iran or that the appellant knowingly used incorrect Certificates of Origin. Consequently, the Tribunal set aside the penalties and fines imposed. The authenticity of the documents cannot be doubted due to lack of evidence.
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PMLA:
Petition for grant of Bail - The court held that the petitioner failed to meet the twin conditions mandated under Section 45 of the PMLA, emphasizing the severity of the accusations, the nature of the evidence against him, and the potential risk of tampering with evidence or influencing witnesses. The court also underscored the larger public interest and the significant influence the petitioner held, even after resigning from his ministerial position, thereby denying the bail and directing the Special Court to expedite the trial.
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Service Tax:
Condonation of delay in filing of the appeal by the appellants before the Commissioner (Appeal) - The appellants argued that there were genuine and reasonable causes for the delay in filing the appeal. - The CESTAT observed that, when an issue had not been examined in detail by the original authority, and when such matter was preferred in an appeal before the Commissioner (Appeals), in case if such appeal is filed beyond the time limit provided in law, and the first appellate authority is unable to entertain the appeal on account of timebar, the course of option available to the person aggrieved is to appeal before the next appellate authority i.e., the Tribunal in this case. - . The Tribunal set aside the impugned order and directed the original authority to reconsider the case
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Service Tax:
Levy of service tax - row houses constructed in a gated community - scope of residential complex - The Revenue contended that the activities of the respondent constitute a residential complex due to the provision of common facilities in the gated community - The Tribunal concludes that the construction of individual houses in a gated community by the respondent assessee is exempt from service tax both before and after 01.07.2012.
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Service Tax:
Reverse charge mechanism (RCM) - Liability of recipient of service to pay service tax - deemed services - The Appellants have received goods from entities located outside India whereas the services in respect of the said goods have been provided to the Appellants by the parent company’s branch in India -The CESTAT ruled that appellants engaged in exporting cut and polished diamonds were not liable to pay Service Tax under Reverse Charge Mechanism for services received from a foreign country, as the services were provided through their Indian subsidiary, establishing a permanent establishment in India under Section 66A of the Finance Act, 1994.
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Service Tax:
Levy of service tax - affiliation fees collected by the appellant is towards rendering of service - The Tribunal noted the decision of the Karnataka High Court, which held that universities, through their affiliated colleges, provide education services by collecting affiliation fees. This activity was deemed to be a part of the curriculum for obtaining qualifications recognized by law, and therefore exempt from service tax. - The Tribunal further observed that the appellant university, as an educational institution, provided services to its affiliated colleges, which were also educational institutions. - Benefit of exemption allowed.
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Service Tax:
Liability of service tax under Reverse charge mechanism (RCM) - Import of services or not - Commissioning and Installation activity was carried out by the independent entity on behalf of the foreign supplier of Plant and Machinery - concluded that even if it is assumed that the appellant received the services, it was from an Indian-based entity, which did not fulfill the conditions for charging service tax under reverse charge mechanism as per Section 66A
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Central Excise:
Valuation - treatment of the trade discount as additional consideration - The Tribunal noted that the transaction value should be determined based on commercial considerations, especially when the buyer and seller are not related. - The Tribunal distinguished the case from previous decisions involving oil marketing companies (OMCs) and upheld the appellant's contention that the transactions with OMCs were on a principal-to-principal basis. It was observed that there was no evidence of a service contract between the appellant and OMCs.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2024 (3) TMI 395
Cancellation of GST registration of the petitioner with retrospective effect - SCN does not give reasons of cancellation - 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 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 is 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 13.02.2021 is modified to the limited extent that registration shall now be treated as cancelled with effect from 03.02.2021 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 394
Validity of notice issued to the petitioner - petitioner was completely denied opportunity of oral hearing before the Assessing Authority - violation of principles of natural justice - HELD THAT:- Relying on Section 75(4) of the U.P. GST Act, 2017 as interpreted by a coordinate bench of this Court in Bharat Mint Allied Chemicals Vs. Commissioner Commercial Tax 2 Ors., [ 2022 (3) TMI 492 - ALLAHABAD HIGH COURT] , it has been then asserted, the Assessing Authority was bound to afford opportunity of personal hearing to the petitioner before he may have passed an adverse assessment order. Insofar as the assessment order has raised disputed demand of tax about Rs. 19 lacs, the same is wholly adverse to the petitioner. In absence of opportunity of hearing afforded, the same is contrary to the law declared by this Court in Bharat Mint Allied Chemicals. There are complete agreement with the view taken by the coordinate bench in Bharat Mint Allied Chemicals. Once it has been laid down by way of a principle of law that a person/assessee is not required to request for opportunity of personal hearing and it remained mandatory upon the Assessing Authority to afford such opportunity before passing an adverse order, the fact that the petitioner may have signified 'No' in the column meant to mark the assessee's choice to avail personal hearing, would bear no legal consequence. Principle of natural justice would commend to this Court to bind the authorities to always ensure to provide such opportunity of hearing. It has to be ensured that such opportunity is granted in real terms - Not only such opportunity would ensure observance of rules of natural of justice but it would allow the authority to pass appropriate and reasoned order as may serve the interest of justice and allow a better appreciation to arise at the next/appeal stage, if required. The matter is remitted to the respondent no.2/Deputy Commissioner, State Tax, Sector-14, Lucknow to issue a fresh notice to the petitioner within a period of two weeks from today - petition allowed by way of remand.
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2024 (3) TMI 393
Violation of principles of natural justice - Seeking proportionate refund of cess i.e., cess paid on coal which was utilized in zero-rated supplies - Respondent No. 3 did not accept the show-cause reply filed by the petitioner and issued a rejection order rejecting the petitioner s claim pertaining to cess paid on inputs - HELD THAT:- The learned appellate authority has misdirected itself in giving finding that personal hearing was given to the Assessee. However, the fact remains that P.H. was given on 15.01.2021 (during appellate proceeding), but not during original proceeding. Thus, the main ground of principle of natural justice has not at all been dealt with by the appellate authority and it went on giving the entire order on merits. Further, from perusal of the impugned rejection order of refund dated 31.07.2020 (Annexure-6), it transpires that the same is also non-speaking order i.e., without recording any reasons, though the same is mandatory under Rule 92(3) of the Rules, 2017, and therefore unsustainable and is fit to be quashed, inasmuch as, none of the submissions made by the petitioner has been considered and the claim of refund was rejected on the ground that P.H. scheduled on 30.07.2020, in this case, was not attended and no documents were uploaded/submitted to clarify/resolve the discrepancies as pointed in the SCN uploaded dated 15.07.2020 in form RFD-08 (Annexure-3). The principles of natural justice have not been followed in the instant case. As such, interest of justice would be sufficed by remitting the case to the respondent no. 3, to start proceeding from the stage of personal hearing. The instant writ application is allowed.
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2024 (3) TMI 392
Cancellation of GST registration of petitioner with retrospective effect - SCN does not give reasons of cancellation - 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. Neither the show cause notice, nor the order spell out the reasons for retrospective cancellation. 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 taxpayer 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. The order dated 31.07.2023 cannot be sustained and is accordingly set aside. The GST registration of the petitioner is restored. The petitioner shall, however, make all necessary compliances and file the requisite returns and information inter alia in terms of Rule 23 of the Central Goods and Services Tax Rules, 2017. Petition disposed off.
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2024 (3) TMI 391
Opportunity for extension for filing response to the show cause denied - Recovery of Tax dues - Consideration for rejection of an application for extension was that more than six adjournments were granted - HELD THAT:- Admittedly, in this case the show cause notice under Section 73(1) of the said Act had been issued on 12th September, 2023. Although, the petitioner had duly applied before the respondents seeking for an adjournment on the ground noted therein, on 11th October, 2023 within the due date to respond, the proper officer had purportedly rejected the same on the consideration that more than six adjournments had been granted. In this context, it may be relevant to consider the general provisions as regards grant of an opportunity to respond, to a show cause notice issued under section 73(1) of the said Act. Once, the petitioner had sought for an extension, the respondent no. 1 was obliged to consider the application for extension and ought not to have passed the final order holding that more than six adjournments had been granted to the petitioner. There is no finding on the part of the respondent no. 1 that the petitioner did not make out sufficient cause for being denied the extension. Consideration for rejection of an application for extension was that more than six adjournments were granted - the reasoning provided for rejection of the extension application cannot be accpeted. Admittedly, the provisions of Section 73 and its sub sections are independent provisions. Having regard to the aforesaid, the manner in which the respondent no. 1 had proceeded to pass the final order without granting extension to the petitioner to file its response or to be offered personal hearing, despite the petitioner showing sufficient cause, appears to be a colourable exercise of power by the said authority. Consequently, directions issued for recovery of tax by the respondent no. 2, vide communication dated 15th February 2024 also cannot be sustained. The same is accordingly, quashed - petition allowed in part.
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2024 (3) TMI 390
Cancellation of GST registration certificate of the petitioner - cancellation because of not filing of GST returns as stipulated in law - HELD THAT:- Since the matter involves a question of law as to whether a person can be rendered remediless, particularly, for earning his livelihood due to not uploading of his GST details within the stipulated time frame, therefore, the same requires consideration. This Court is also conscious of the fact that the validity of Section 107 of the Act of 2017 is pending consideration. The matter is listed in the fresh category, therefore, the writ petition deserves to be admitted - Issue notice - List the matter on 29.04.2024.
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2024 (3) TMI 389
Seeking exemption from payment of pre-deposit as a condition for entertaining the appeal - time limitation - HELD THAT:- The right to appeal flows from the statute and can only be exercised subject to conditions specified therein. In these circumstances, a mandamus cannot be issued to direct the respondent to deviate from statutory prescription - The order sought to be appealed against was issued on 14.09.2023. The period of limitation is 90 days and the appellate authority is empowered to condone a delay up to 30 days for sufficient cause. Consequently, the appellate authority would have been in a position to condone delay if the appeal had been filed up to mid January 2024. Since the period of further delay is less than one month and the petitioner had invoked the jurisdiction of this Court, it is just and appropriate to direct the appellate authority to receive and dispose of the appeal on merits. Petition is disposed of by permitting the petitioner to file a statutory appeal.
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2024 (3) TMI 388
Refund of ocean freight paid under protest - unconstitutional levy or not - Rejection on the ground that refund as a result of levy being held unconstitutional can be claimed only by way of suit or writ petition and that the same cannot be granted under Section 54 of the GST Act - HELD THAT:- The petitioner is entitled to the refund of ocean freight paid under protest in view of the decision of the Apex Court in case of UNION OF INDIA ANR. VERSUS M/S MOHIT MINERALS PVT. LTD. THROUGH DIRECTOR [ 2022 (5) TMI 968 - SUPREME COURT] since the impugned Notification has already been declared as ultra vires and accordingly, the present petition deserves to be allowed. The claim for refund of the petitioner towards ocean freight is required to be favourably considered and respondent No. 2 is directed to verify the amount of refund and grant such refund of the amount of IGST paid on ocean freight by the petitioner pursuant to the Entry No. 10 of the above notification within eight weeks from the date of receipt of copy of this order along with the statutory rate of interest. Petition allowed.
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2024 (3) TMI 387
Maintainability of two parallel proceedings in respect of the same period, 2017-2018 - Section 6 of the CGST Act, 2017 and SGST Act, 2017 - HELD THAT:- Having regard to the provisions contained in Section 6 of the CGST/SGST Act, more particularly, Section 6[2] which inter alia indicates that once a proceeding is initiated either of the above two Acts, another proceeding for the same period under the other Act is not to be initiated, the operation of the Order-in-Original dated 11.12.2023 [Annexure-F] passed by the respondent no. 3 shall remain suspended till the returnable date. Issue notice, returnable on 18.03.2024.
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2024 (3) TMI 386
Seeking revocation of cancellation of registration - appeals were not received on the ground of limitation - HELD THAT:- The order issued in Suguna Cutpiece v. The Appellate Deputy Commissioner (ST) (GST) and others [ 2022 (2) TMI 933 - MADRAS HIGH COURT] , was a conditional order and that the respective petitioner should be directed to comply with all conditions stipulated therein. The respective petitioner herein is directed to file returns for the period prior to the cancellation of registration, together with tax dues along with interest thereon and the fee fixed for belated filing of returns within a period of forty five (45) days from the date of receipt of a copy of this order - these writ petitions are disposed of by issuing the directions imposed - petition disposed off.
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Income Tax
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2024 (3) TMI 385
TDS u/s 194H - Principal-Agent relationship - discount given on sale of prepaid services, SIM and recharge vouchers by the cellular operator (assessee) to its distributors - As decided by HC [ 2021 (9) TMI 1273 - KARNATAKA HIGH COURT] section 194H of the Act is attracted to the facts of the case is unsustainable HELD THAT:- In view of the judgment titled Bharti Cellular Limited (Now Bharti Airtel Limited) vs. Assistant Commissioner of Income Tax, Circle 57, Kolkata Anr. [ 2024 (3) TMI 41 - SUPREME COURT] wherein held that assessees would not be under a legal obligation to deduct tax at source on the income/profit component in the payments received by the distributors/franchisees from the third parties/customers, or while selling/transferring the pre-paid coupons or starter-kits to the distributors. Section 194-H of the Act is not applicable - Thus the present special leave petitions are dismissed.
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2024 (3) TMI 384
Proceedings pending on the file of Additional Chief Metropolitan Magistrate for the offence punishable u/s 277 - under-reporting the sales and expenses - accused approached before Settlement Commission who had granted immunity from prosecution under the Income Tax Act and as per Section 245I the order passed by the Settlement Commission shall be conclusive. As decided by HC [ 2023 (11) TMI 1234 - MADRAS HIGH COURT] admittedly, the petitioners filed an application before the Settlement Commission as per Section 245C of the Income Tax Act, on 22.01.2018. Whereas, the prosecution was initiated two years before viz., 17.11.2016 itself. Therefore, the provisions u/s 245I of the Income Tax Act is not applicable and petitioners concealed the fact of such pending prosecution for the offence u/s 277and obtained immunity in respect of prosecution as the same was not brought to the knowledge of the Settlement Commission - this Court is not inclined to quash the proceedings pending on the file of Additional Chief Metropolitan Magistrate (E.O.II) Egmore, Chennai. HELD THAT:- No ground for interference is made out in exercise of our jurisdiction under Article 136 of the Constitution of India. The Special Leave Petitions are accordingly dismissed. The petitioner has challenged the very authority of the Deputy Director (Investigation) to initiate the proceedings in this case. The petitioner would be at liberty to raise this point before the Trial Court. Pending application(s), if any, stand(s) disposed of.
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2024 (3) TMI 383
Transfer of case u/s 127 - proposal to transfer the assessment jurisdiction of the petitioner from Kanpur to Mumbai - whether Principal Chief Commissioner of Income Tax, U.P. (West) and Uttrakhand appear to have given his consent? - HELD THAT:- It cannot be denied at this stage that the show cause notice issued to the petitioner was rather non-speaking. Other than containing the proposal to transfer the assessment jurisdiction of the petitioner from Kanpur to Mumbai occasioned by the search conducted against it, it makes no reference of the necessity to transfer the same for reason of parallel search proceedings against Ravi Omprakash Agarwal. Again, petitioner is right in his contention, since consent to transfer the case from Kanpur to Mumbai was desired from the Principal Chief Commissioner, Uttar Pradesh (West) and Uttrakhand, it is that authority that may have given the consent after issuing appropriate show cause notice to the petitioner after considering its reply thereto. In any case, it may not have been opened either to the Chief Commissioner of Income Tax, Mumbai or the Principal Chief Commissioner Uttar Pradesh (West) and Uttrakhand to delegate that function to the Principal Commissioner of Income Tax, Kanpur. The language of Section 127 (2) (a) of the Act is pretty much clear in that regard. The consent has to emerge amongst two superior officers heading two different Commissionerate etc. with respect to the transfer sought. It is in that context that the designations have been expressed in the plural in the first part of Section 127 (2) (a) and in the singular in the later part. Thus, for the purpose of obtaining the views of the assessee , notice is required to be issued by the appropriate authority i.e. the officer who may express his consent to his counterpart being the officer under whose jurisdiction the case may eventually be transferred. At the same time, by virtue of first part of the Section 127 (2) (a) the consent must emerge amongst officers of equal rank. In the hierarchy of officers provided under Section 116 of the Income Tax Act, once the request is received from the higher ranked officer even if outside the jurisdiction ( of the officer from whom the case is to be transferred) indifference to that higher authority (making the request), the officer placed lower in rank may feel compelled to express his consent. Similarly, within the jurisdiction if the consent is accorded by the higher rank officer and the function of obtaining the assessee's objection is delegated to a subordinate officer, that opportunity to the assessee may remain an illusory remedy, of no avail. Once the consent may have been expressed by the higher ranked officer within the jurisdiction, his subordinate may not look to take a different view and render infructuous the consent given by his superior. Thus both on the plain language used by the statute as also for functional test, noted above, it commends acceptance that the consent sought by the Chief Commissioner of Income Tax Mumbai ought to have been considered and if necessary granted by an officer of equal rank, here the Principal Chief Commissioner of Uttar Pradesh (West) and Uttrakhand. For that reasons it is that authority that may have issued the show cause notice to the petitioner and considered its reply before granting consent. Order - The order dated 10.01.2024 and 11.01.2024 is set aside.The petitioner may treat the impugned order to be the final show cause notice issued to it by the Principal Chief Commissioner of Income Tax Uttar Pradesh (West) and Uttrakhand. The petitioner may file its final reply to the said show cause notice within a period of ten days from today.
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2024 (3) TMI 382
Levy of tax on income derived from sale of saplings - Charging Section 3 of the Bengal Agricultural Income Tax Act, 1944 - Petitioner contended that Tea saplings are not tea and thus not subject to taxation u/s 3 - Calculation of depreciation in accordance with Section 7A of the Bengal Agricultural Income Tax Act, 1944 - HELD THAT:- Entry 46 of List II-State List under Schedule VII to the Constitution of India provides field of Legislation on Taxes on Agricultural Income . Thus, in view of the provisions of Article 246(3) read with aforesaid Entry 46 of List-II under Schedule VII to the Constitution of India, the State Legislature has exclusive power to enact a law with respect to Tax on Agricultural Income in exercise of power so conferred, the Bengal State Legislature has enacted the Bengal Agricultural Income Tax Act, 1944 (Bengal Act IV of 1944). Section 3 of the Act of 1944 is the charging Section and Sections 7 and 7A provides for computation of tax and allowances under the head Agricultural Income from Agriculture . The findings of the tribunal in the impugned order holding that saplings are included in tea for the purposes of tax under the Act of 1944, is wholly erroneous and baseless. In paragraph 19 of the impugned order the tribunal has held that non-obstante Section 7A, being silent about the allowances to be made from such income for computation of tax; the deduction on account of depreciation is required to be made as per stipulation of Section 7 of the Act of 1944 - The tribunal has incorrectly held that Section 7A does not provide for allowances or depreciation for computation of agricultural income of an assessee which is a company or a firm or other association of persons. Bare reading of Section 7A of the Act of 1944 makes it clear that agricultural income of such assessee (a company or a firm or other association of persons) shall be computed in accordance with method of accounting regularly employed by such assessee for such computation. Therefore, agricultural income of the petitioner company is liable to be computed in accordance with the method of accounting regularly employed by it provided that, if, in any case, the method of accounting as aforestated is such that in the opinion of the Agricultural Income Tax Officer, the agricultural income cannot be computed, the computation shall be made on such basis and in such a manner as the Agricultural Income Tax Officer may determine. Matter is remitted back to the Agricultural Income Tax Officer/competent authority to pass afresh an assessment order for the year 2002- 03 in accordance with law, in the light of the findings/directions recorded above, within four months from the date of submission of a certified copy of this judgment, after affording reasonable opportunity of hearing to the petitioner assessee - Petition allowed by way of remand.
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2024 (3) TMI 381
Reopening of assessment u/s 147 - Non-disclosure of the cost of purchase of these penny shares - Petitioner has disclosed net long term capital gains under the IDS, 2016 under protest, thus shares of SAL is one of the penny shares as identified by the Income Tax Department and the entire long term capital gains realized by Petitioner by the purchase and sale of the penny shares should be taxed in the hands of Petitioner - brokerage/commission paid to the brokers - HELD THAT:- To our query as to whether there was any evidence that Petitioner had paid brokerage, or who was paid and the quantum, it was met with silence. We are not happy with the stand of the Revenue or the reasons. We would agree with Petitioner that reliance placed on the declaration made under the IDS, 2016 is against the principles of natural justice and is not valid. Moreover, Respondents having issued a certificate under the IDS, 2016 after verifying the details filed by Petitioner, the declaration cannot be the basis to reopen the assessment of Petitioner. The reopening merely by deeming commission expenses of 5% of total sale consideration of the shares and arbitrarily and in an adhoc manner fixing 5% of the total sale consideration as commission expenses cannot be accepted. Ad-hoc disallowances without pointing out any specific defects cannot accepted. In fact, there is not even an allegation in the reasons to believe escapement of income that Petitioner had in fact paid any commission to any broker or operator. The AO proceeds on a surmise that there was no such free service available and, therefore, Petitioner would have paid brokerage. The AO having observed that the brokerage/commission varied between 0.5% to 5% does not even explain why he takes into account 5% as the brokerage paid and not 0.5% or any other figure in that band. We are also satisfied that there has been no failure on the part of Petitioner to disclose any material fact. By notice u/s 142(1) Petitioner was called upon to give details of long term capital gain on sale of shares and short term capital gain of office premises and in response, vide letter dated 10th March, 2016, Petitioner gave the entire details relating to the transactions in shares of SAL and even in the assessment order, long term capital loss, short term capital loss, etc. are discussed. It is also recorded in the assessment order dated 26th April, 2016 that capital gain was nil. Thus the subject matter of capital gains in the shares of SAL was certainly a subject matter of consideration of the AO during the original assessment proceedings. As held by this Court in Aroni Commercials Limited [ 2014 (2) TMI 659 - BOMBAY HIGH COURT] once a query is raised during the assessment proceedings and Assessee has replied to it, it follows that the query raised was a subject of consideration of the AO while completing the assessment. It is also not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. Therefore, the reopening of the assessment, in our view, is merely on the basis of change of opinion of the AO from that held earlier during the course of assessment proceedings and this change of opinion does not constitute justification and/or reason to believe that income chargeable to tax has escaped assessment. The impugned notice issued u/s 148 cannot be sustained. Decided in favour of assesee.
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2024 (3) TMI 380
Validity of Proceedings u/s 144C - Eligible assessee - Original ITR filed declaring the status as Resident - In the revised ITR the status declared as Non-Resident - Later the assessee has withdrawn/ abandoned his revised return - petitioner requested the DRP to rule on the issue of jurisdiction since the petitioner now claimed that he was not the eligible assessee as defined under Section of the IT Act - DRP rejected the petitioner's objections and maintained the Draft Order - HELD THAT:- Unless it was established that an assessee is an eligible assessee as defined under Section of the IT Act, there was no question of any reference to any DRP. There can be no estoppel against the law. Admittedly, this is not a case where the petitioner is a person in whose case variation referred to in sub-section 1 of Section 144C arises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of Section 92CA. Secondly, though the petitioner in his revised return had claimed that he was a non-resident, the Draft Order made by the first respondent upon considering the material on record has categorically held that this claim was incorrect and the petitioner was a resident in India and not a non-resident . This is the Department's finding, and the Department cannot distance itself from it merely because the Petitioner may have claimed otherwise in his revised returns. The petitioner has also now accepted the position that he is a resident in India and, based upon such acceptance, submitted that the authorities need not consider his revised return because the same proceeded on an erroneous premise that the petitioner was a non-resident . Accordingly, the petitioner cannot now be held as an eligible assessee as defined u/s 144C(15) of the IT Act. If the petitioner is not an eligible assessee, then there is no question of applying the procedure u/s 144C to the petitioner. Thus considering the clear and categorical conclusion recorded in the draft order that the Petitioner was not a non-resident in India, the provisions of Section 144C, including in particular the provisions of Section 144C (15)(b) we will have to hold that the proceedings u/s 144C against the petitioner who was a resident in India, are incompetent. As a consequence, the Draft Order(to the extent it initiates proceedings under 144C of the IT Act) and the order dated will have to be set aside and are hereby set aside.
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2024 (3) TMI 379
Validity of reassessment proceedings against non-existent firm - petitioner was a partnership firm and was converted as a Private Limited Company - respondent has submitted that the petitioner had used the old PAN in making the transaction and although the firm was dissolved, the PAN of firm dissolved was utilized for transaction and thereby there was escape of tax by the petitioner. HELD THAT:- After the Firm was dissolved on 14.07.2010, a fresh IE Code was issued in the name of petitioner company with the same IEC number. The documents that have been filed by the petitioner in respect of which the proceedings were initiated with the issuance of Notice dated 28.03.2021 u/s 148 for the Assessment Year 2015-2016 pertains to exports made by the petitioner with the same IE Code. Copies of the export shipping bills shows that the PAN Number of the company with the above IE Code has been declared. Similarly, some of the copies of the Bill of Entries filed by the petitioner before this Court also indicate that the Bills of Entry also contain the PAN number of the petitioner company with the same IE Code and not the PAN number of the Partnership Firm which seems to expire with effect from 14.07.2010. The petitioner has also filed Copy of Form 15 CA acknowledgement with respect to Remittance to non-resident or foreign company which also indicate the name of the petitioner Company with the petitioner's PAN number. On the other hand, the impugned order itself has been passed in the name of the non-existing firm based on a notice that was issued in the name of non-existing Firm. All along the petitioner has replied to the Department. Department has failed to take note of the same and has thus confirmed the demand. The consequences in the impugned order is thus unsustainable. That apart for the subsequent Assessment Year, namely the Assessment Year 2016-2017, a notice was issued u/s 148A(b) of the Income Tax Act, 1961, which was issued under the same circumstances. The Assistant Commissioner of Income Tax NON CORP WARD 11(3) CHE has also rightly dropped the proceedings by an order dated 30.03.2023 under Section 148A(d) of the Income Tax Act, 1961. Although the Court would have been justified in referring the petitioner to workout the remedy before the Appellate Commissioner, Court is of the view that this is a fit case for interfering with the order passed by the respondents as it is arbitrary and shows the clear non-application of mind. Impugned Order and the impugned notice u/s 147/148A are set aside. Writ Petition stands allowed.
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2024 (3) TMI 378
Revision u/s 263 - applicability of section 56(2)(x) - assessee acquired leasehold/freehold land and building from the BDMC - HELD THAT:- We have perused the provisions of section 56(2)(x) of the Act and note that the provisions of section are not applicable to acquisition of leasehold rights in land and building and therefore, the direction of the ld. PCIT requiring the AO to examine the transactions of acquisition in light of section 56(2)(x) of the Act is ex-facie untenable and contrary to the provisions of law. We observe that the provisions of section 56(2)(x) of the Act are applicable in a case where transfer of land and building or both, but not to the leasehold rights. The case of the assessee finds support from the decision of Green Fields Hotels Estates [ 2016 (12) TMI 353 - BOMBAY HIGH COURT] wherein a ratio has been laid down that in respect of leasehold rights, the provisions of section 56(2)(x) of the Act are not applicable. Therefore, the exercise of jurisdiction by the ld. PCIT is unsustainable in the eyes of law. Allowing deduction in respect reversal or writing back of provision for liabilities u/s 43B created in the earlier assessment years - As we observe from the facts before us that the assessee has filed complete and detailed reconciliation of reversals/writing back of provisions before the ld. PCIT explaining that the deduction which represented reversal of provisions, was not claimed as expenses in the earlier assessment years when these were created except to the extent of payments made. We observe from the said chart that the assessee has not claimed the deduction as an expense in the year of creation of these provisions meaning thereby that these provisions stood disallowed while computing the income to the extent not paid in the respective assessment years. Therefore, the ld. PCIT has not given any objective finding on the basis of the reconciliation of the total provisions written back during the year which is not correct and the jurisdiction is not available u/s 263 of the Act. The case of the assessee finds support from the decision of Eveready Industries India Limited ( 2021 (12) TMI 105 - CALCUTTA HIGH COURT] , Samundra Shoes Overseas Limited ( 2016 (7) TMI 916 - MADRAS HIGH COURT] and K.S. Diesels Limited ( 2021 (10) TMI 106 - ITAT MUMBAI] wherein it has been held that statutory liabilities, which were earlier disallowed under section 43B of the Act are to be excluded and allowed as deduction in the year of reversal/write back. As also examined the facts of the case qua claim of written back provisions along with supporting documents, we are of the view that the assessee has been rightly allowed the deduction in respect of reversed provisions created in the earlier assessment years while computing the income. Further, in our opinion, the ld. PCIT has simply restored the issue to the file of ld. Assessing Officer without giving any finding on the issue as to how the deduction of the provisions written back would amount to adjustment rendering the assessment as erroneous. We note that the ld. PCIT without doing any exercise/examination of the documents filed by the assessee simply set aside the issue back to the file of NFAC directing to ascertain the liability. In our opinion, the revisionary jurisdiction exercised by the ld. PCIT is invalid and so is the order passed u/s 263 of the Act and can not be sustained. The case of the assessee finds support from the decision of DG Housing Projects Limited ( 2012 (3) TMI 227 - DELHI HIGH COURT] and Jyoti Foundation ( 2013 (7) TMI 483 - DELHI HIGH COURT) , have held that before setting aside the issue to the file of Assessing Officer, the ld. PCIT did not mention as to how the issue proposed has rendered the assessment framed by the A.O. as erroneous then the jurisdiction u/s 263 of the Act cannot be invoked. Appeal of the assessee is allowed.
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2024 (3) TMI 377
Addition u/s 69A - unexplained cash deposits in the saving bank account of the assessee - real owner of bank account - HELD THAT:- This is a most casual and arbitrary order passed by the authorities below on a serious aspect of assessment of income of an assessee, on which he was burdened with the liability to pay tax. There could not have been a more lax attitude exhibited by the Revenue authorities in framing an assessment, as in the present case. The reasons for the same are that the AO notes the bank account belonging to the assessee attributing cash deposited in the same to him, which actually never belonged to the assessee, and despite this fact having been pointed out to him in the remand proceedings and the same remaining uncontroverted by the AO, CIT(A) still goes on to treat the cash deposited as the income of the assessee. When the assessee had fairly revealed the correct bank account belonging to him, and had come out clean that the cash deposits in his actual bank account, it is a glaring case of totally ignoring the facts pointed out by the assessee, and passing order in appellate proceedings in an arbitrary manner. Besides this, we have also noted that the assessee had stated the cash deposited in bank account as pertained to his turnover of his business, and had also stated to have returned the same to tax under section 44AD of the Act. The orders of the Revenue authorities reveal that, while this contention of the assessee was rejected for whatever reasons, but at the same time, they had accepted the business income so returned by the assessee. Another glaring instance of passing orders without application of mind to the pleadings and the facts before the Revenue authorities. Having accepted the business income returned by the assessee, we fail to understand how the Revenue authorities could have taken a stand that the cash deposited in his bank account were not in relation to the same, without assigning any reason, and added the same to the income of the assessee - Decided in favour of assessee.
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2024 (3) TMI 376
Exemption u/s 11 - application filed by the assessee in Form No.10AB for registration u/s 12AB rejected finding that the objects of the assessee were for the benefit of a particular religious community or caste i.e. Muslims - HELD THAT:- CIT(Exemption), in the present case, we find, has only picked a portion of the order of the Hon ble Apex Court, wherein it has been held that the provisions of section 13(1)(b) of the Act would be applicable to a trust with mixed objects i.e. both charitable and religious. But he has failed to take note of the finding of the Hon ble Apex Court that section 13(1)(b) would apply only at the time of grant of exemption under section 11, and not at the time of grant of registration u/s 12A of the Act. Our view is further supported by the decision of CIT Vs. Bayath Kutchhi Dasa Oswal Jain Mahajan Trust [ 2016 (9) TMI 8 - GUJARAT HIGH COURT ] wherein on the issue of denial of grant of registration u/s 12A of the Act by invoking section 13(1)(b) of the Act, it was categorically held that the provisions of section 13 would be attracted only at the time of assessment and not at the time of grant of registration. We find that the CIT(Exemption) notes that otherwise the objects are charitable in nature except for the aforestated object. As per section 13(1)(b) exemption u/s 11 is denied if the trust is created or established for the benefit of a particular religious community. With majority of the objects found to be not catering to a particular community and no finding of the assessee actually catering for the benefit of a particular community, there is no case for invoking section 13(1) (b) of the Act in the present case. Therefore, we hold that even on merits the CIT(Exemption) was wrong in holding that section 13(1)(b) was applicable in the facts of the present case. We hold that the objects of the trust are not wholly for the benefit of a particular religious community, but are largely charitable in character for general public at large, and for the purpose of granting registration under section 12A, the provision of section 13(1)(b) cannot be referred to, which is to be applied only when granting the exemption to the trust. The order of the CIT(Exemption) denying grant of registration is accordingly set aside, and the Ld. CIT (Exemption) is directed to grant the assessee-trust registration u/s 12A of the Act. Appeal of the assessee is allowed.
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2024 (3) TMI 375
Rectification u/s 154 - double addition made by CPC - Partners Interest Income offered both in the share income from the firms as well as any other income namely commission, bonus and interest income from Firm offered by the assessee - HELD THAT:- Even it is an exparte order, the Authorities are expected to pass order on merits of the case. Here the prima facie mistake of Partners Interest Income offered both in the share income from the firms as well as any other income namely commission, bonus and interest income from Firm offered by the assessee amounts to double taxation, which is not permissible in law. Both the Lower Authorities failed to consider the above submissions of the assessee which is liable to be set aside and demand raised by the CPC is liable to be deleted. Thus the Ground raised by the Assessee is hereby allowed.
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2024 (3) TMI 374
MAT computation u/s 115JB - whether the said receipt on account of surrender of gift of shares is per se a capital receipt or a revenue receipt? - HELD THAT:- We find that admittedly, the receipt of shares due to surrender of gift during the year under consideration is a capital receipt. There is absolutely no quarrel on this point. The orders of the lower authorities also does not even suggest that the same is a revenue receipt. It is not in dispute, the total income of the assessee is determined u/s 115JB of the Act for Asst Year 2015-16. It is not in dispute that the assessee had not sought any benefit with regard to the subject mentioned receipt on account of surrender of gift of shares while computing its income under normal provisions of the Act for Asst Year 2015-16. However, in order to tinker with the audited financial statements read together with the notes thereon, the ld. AO would be empowered to do the same only in respect of items that are specifically mentioned in Explanation 1 to section 115JB(2) of the Act. The law in this regard is very well settled by the decision in the case of Apollo Tyres Ltd [ 2002 (5) TMI 5 - SUPREME COURT] As stated earlier, the mistake committed by the assessee which stood subsequently endorsed by the revenue was in Asst Year 2012-13 wherein the cost of investment of gift of shares should have been added back in the computation of book profits u/s 115JB of the Act. Even if this item does not fall under any of the items mentioned in Explanation 1 to section 115JB(2) of the Act, still the same ought to have been added back for the purpose of computation of book profits u/s 115JB of the Act for the simple reason that the accounts per se were not in accordance with provisions of section 227(1A) of the Companies Act, 1956 as Capital Expenditure has been debited to Revenue Account . But since revenue had missed the bus in Asst Year 2012-13, the correct treatment given by the assessee in Asst Year 2015-16 which is in accordance with the provisions of the Companies Act and the said receipt not falling under any of the items reflected in Explanation 1 to section 115JB(2) of the Act, the said receipt cannot be taxed u/s 115JB of the Act in Asst Year 2015-16. Accordingly, the ground no.2 raised by the assessee is allowed. Disallowance of long term capital loss - sale transaction is to be considered as ingenuine or sham - as submitted when the prevailing market price is very much available to the assessee to effect the sale transaction through a registered stock broker in a recognized stock exchange, whether it is justified in ignoring the same and effect an off-market trade at a mutually agreed price - HELD THAT:- The assessee had chosen to transact the huge volume of sale transactions which is quite abnormal when compared to the average trade that had happened in the last 11 months, by way of off-market by considering the average market price of shares that prevailed in the last 11 months of the same year. Infact the assessee had carried out this transaction with its group company in the larger interest of retail shareholders by ensuring that there is no dilution/reduction of wealth maximization in the hands of retail shareholders. Considering the totality of the facts and circumstances of the case and viewing it from a holistic angle, we do not find any infirmity in the said basis of determination of market price of shares by the assessee. Moreover, the revenue in the instant case had sought to adopt the fair market value of shares in respect of impugned sale transaction. Though the revenue is permitted to do so, it should first find defects in the workings adopted by the assessee, reject the same and thereafter proceed to determine the fair market value. We find that the entire issue has been addressed by the revenue with utmost suspicion by trying to treat the part of the sale transaction as ingenuine and sham as the transaction had happened between group companies, which is totally unsustainable in the eyes of law. In view of the aforesaid observations, we hold that the lower authorities erred in disallowing the long term capital loss.
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2024 (3) TMI 373
TP Adjustment - international transaction of receipt of intra-group services with its Associated Enterprises ( AEs ) - Analysis of the documents /evidence furnished with regard to services rendered - HELD THAT:- We find that the issues involved in the appeal before us have been squarely covered in the assessee's own case for the past eight years. The orders of the Tribunal in the case of the assessee for assessment year 2007-10 to 2012-13 and for assessment year 2014-15 to 2016-17 have been perused [ 2016 (1) TMI 933 - ITAT DELHI] , [ 2015 (12) TMI 1620 - ITAT DELHI] , [ 2016 (9) TMI 1334 - ITAT DELHI] , [ 2018 (10) TMI 1504 - ITAT DELHI] , [ 2018 (6) TMI 1501 - ITAT DELHI] , [ 2017 (7) TMI 1040 - ITAT DELHI] as held it is not the case of no evidence, on the contrary, it is a case where voluminous evidences are being brushed aside holding that no evidence has been filed or are general in nature without appreciating that the services are integral part of the business carried on by the Appellant and it could not have been carried out business in India without the help of these services . - The Hon'ble Supreme Court has also dismissed the Special Leave Petition (Civil) filed by the Revenue [ 2023 (8) TMI 1439 - SC ORDER] for assessment year 2009-10. In view of the factual contents and the decision of the Hon'ble Supreme Court in the SLP filed by the Revenue (supra), the appeal of the assessee is hereby allowed.
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2024 (3) TMI 372
Limitation Period for issuance of notice u/s 143(2) - Scrutiny Assessment - after filing of the return of income, defect notice u/s 139(9) had been sent to the assessee which was cured by the assessee - case of the Revenue is that the limitation for issuance of notice u/s 143(2) of the Act was to be determined from the date when the defect was removed by the assessee, i.e. 19.08.2018 and therefore, in the present case, the notice u/s 143(2) of the Act was issued within the limitation prescribed HELD THAT:- As per Section 139(9) of the Act which deals with the defective returns and on going through the same, we find that the said section itself amply and clearly brings out that the removal of defect is no bar to the Assessing Officer from proceeding with his assessment proceedings. That, he does not have to wait for the removal of the defects to proceed with the regular assessment. As per Section 139(9) of the Act, the assessees on being intimated of defects in their returns are required to remove the defects within the prescribed time limit. However, the proviso provides that if the defect is removed after the expiry of the time, but before the assessment is made, the Assessing Officer can condone the delay and treat the return as valid return which means in clear terms and very clear language that the assessee can cure/remove defects upto to the framing of the assessment. This clearly implies that the Assessing Officer can proceed with the assessment without waiting for the removal of defects, which as per law can be removed upto or before the assessment is made. This is further clarified from the fact that the defects which can be cured are in relation to non-filing of documents corroborating the return of income filed by the assessee like computation of income , proof of tax deducted at source , financial statements audited/ unaudited, personal accounts and such other financial data of assesses. These are not such grave defects to invalidate the return of income on the occurrence of such defects, but are curable and hence opportunity is given to the assessee to cure the same and only when it remains uncured despite opportunity given that the return is treated as invalid. It is abundantly clear therefore that as per law there is no bar in proceeding with assessment where returns are found defective and therefore the limitation for issuing notice u/s 143(2) of the Act for assuming jurisdiction to frame assessment will logically run from the year in which return is filed and not when the defect is removed by the assessee. Even the Hon ble jurisdictional High Court in the case of Kunal Structure (India) (P.) Ltd. ( 2020 (2) TMI 725 - GUJARAT HIGH COURT ) noted the same from the reading of section 139(9) of the Act, finding that a defect in a return does not requiring any fresh return to be filed but only the defect to be removed. Notice u/s 143(2) of the Act was to be issued within the time prescribed from the date of filing return of income and not from the date of removal of defect u/s 139(9) of the Act. Thus we find that in the facts of the present case the jurisdictional notice u/s 143(2) of the Act having been issued beyond the limit prescribed under the Act, the assessment framed is without jurisdiction and, therefore, directed to be quashed. As for the argument of the ld. DR that the assessee had not cured the defect within the period prescribed u/s 139(9) of the Act and therefore the original return was to be treated as invalid and limitation for issuing notice u/s 143(2) of the Act be determined from the date of removal of defect, we find, is a self-defeating argument. Going by this argument, if the original return is to be treated invalid since the defect was not cured in time, then considering the fact that no other return was filed by the assessee, we fail to understand how notice for framing assessment, u/s 143(2) of the Act, could be issued in the absence of any valid return of income. Even otherwise as per the proviso to the section 139(9) AO is empowered to condone the delay in the removal of the defect which, we have noted, he has done by accepting the defect removed by the assessee and subsequently processing the return u/s 143(1) and issuing refund to the assessee. So much so that as per the case of the Revenue itself, after removal of the defect, the AO went on to issue notice u/s 143(2) of the Act. Meaning thereby that he had condoned the delay in removal of defect, which he was empowered to do in terms of Section 139(9) of the Act. Appeal of the assessee is allowed.
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Customs
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2024 (3) TMI 371
Writ Petitions - Delay in finalization of Provisional Assessment - barred by limitation - Challenged the Order of Appellate court - Validity of Show cause notices(SCNs) issued without Pre-SCN consultation - delayed passing of the Order-in-Originals - Penalties - Goods imported as Steam Coal from outside the territory of India - demand duty - Confiscation of Steam Coal - Redemption of Fine - Penalty - HELD THAT:- From the facts, it is clear that the case of the Petitioner is barred by limitation of 6 months as per Para 3 of Chapter 7 of CBIC Manual and not as per Rule 5 of 2018 Regulation. The Commissioner (Appeal) in the Appellate Order dated 01-08-2022 has held that the finalization of provisional assessment is barred by limitation. Para 3.1 of the CBIC Instruction; the limitation under Rule 5 of 2018 Regulation is applicable prospectively w.e.f. 14-08-2018, is not applicable to present case as the Bills of Entries are assessed provisionally in 2011-12 and 2012-13 i.e. much before 14-08-2018. It is not out of place here to mention that Rule 5 of Customs (Finalization of Provisional Assessment) Regulation, 2018 (the 2018 Regulation) applies only to provisional assessment made after 14-08-2018; hence, in the case at hand it cannot be applied on the provisional assessments of the 4 Bill of Entries as they are made in the year 2012. The limitation for finalization to the case at hand would be governed by Para 3.1 of the CBIC Instruction as per which the finalization of provisional assessment is to be made expeditiously, well within 6 months whereas in the instant case the finalization is done after 6 years to 9 years. We hold that the 1st Appellate Order dated 10-08-2022 which is challenged along with validity of aforesaid two show cause notices both dated 20-04-2018 and two adjudication Orders, both dated 19-11-2018, u/s 28 [against Bill of Entry No. 260/HC/2011-12 and Bill of Entry No. 261/HC/2011-12 respectively] is not sustainable in the eye of law and legal proposition settled by the Hon ble Apex Court and various High Courts on the ground that both the adjudication orders dated 19-11-2018 are passed after expiry of mandatory period limitation of 6 months as provided under Section 28(9)(a) of the Customs Act, 1962; further, the impugned two SCNs dated 20-04-2018 are issued without Pre-SCN consultation as mandated under proviso to Section 28(10)(a) of the Customs Act, 1962. Thus, we are having no hesitation in holding that the impugned Order-in-Originals both dated 19-11-2018 should have been passed within limitation period of 6 months in accordance with Section 28(9)(a) which is mandatory in character particularly after omission of the words where it is possible to do so . In the instant case for absence of collusion, wilful mis-statement or suppression of fact, no penalty u/s 114A have been imposed, hence, extended period of one year is not attracted in the instant case. Further, the mandatory Pre-SCN consultation as mandated under proviso to Section 28(1)(a) of the Customs Act, 1962 read with Pre-Notice Consultation Regulation, 2018 are not complied with while issuing the impugned SCNs both dated 20-04-2018, hence, the subsequent Order-in-Original both dated 19-11-2018 and the impugned 1st Appellate Order dated 10-08-2022 are bad in law being void ab initio and a nullity in the eyes of law.
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2024 (3) TMI 370
Refund of duty paid - Illegal imposition of Agricultural Infrastructure Development Cess (AIDC) - denial of exemption benefit under TRQ for import of crude soyabean oil - Seeking the Notification dated 10.05.2023, issued by the Custom Authorities be made applicable retrospectively with effect from 01.04.2023 - HELD THAT:- Counter affidavit has been filed by the Union of India in W.P. (C) 5510/2023, wherein reference is drawn to Notification issued by the Department of Revenue dated 10.05.2023, extending the benefit under TRQ till 30.06.2023. By Public Notification dated 11.01.2023, the TRQ was discontinued with effect from 01.04.2023, however, by the Notification dated 10.05.2023, the same has been made coterminus with the Public Notice issued by the DGFT dated 11.01.2023, which extends the benefit upto 30.06.2023. Accordingly, as per the counter-affidavit, benefit under TRQ stands extended till 30.06.2023. Thus, petitions are disposed of holding that the benefit under TRQ being extended till 30.06.2023, the imports made in terms of the extant policy where the Bills of Lading are dated on or before 31.03.2023, would be covered under the said policy if the goods had landed before 30.06.2023. Consequently, the consequential relief of refund of duty if any paid by the petitioners be also granted in accordance with law, subject to petitioners making the necessary compliances in law.
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2024 (3) TMI 369
Liability to collect Terminal Handling Charges (THC) - Challenged the communication issued by the Commissioners of Customs from different Commissionerate s in the country - Validity of Public Notice issued by the Commissioner - Facility of paying terminal handing charges and other charges of the port terminal directly to the terminal operators instead of shifting through the Shipping Lines - Importers having AEO status availing DPD facility for containerized cargo - Power exercised by the Commissioners of different Commissionerate contrary to the letter and spirit of Section 143AA of the Customs Act, 1962 - Contractual relationship of Shipping Lines - violation of principles of natural justice - forum shopping - HELD THAT:- A bare reading of the Section 143 AA of the Customs Act, 1962 would indicate that the Board may take such measures or prescribe separate procedures for fulfilling the conditions prescribed u/s 143AA of the Customs Act, 1962. The letter dated 13.01.2020 bearing reference: D.O.No.CH(IC)/02/2020 as set out that above indicates that decision of the Board to implement the object of Section 143AA of the Customs Act, 1962. To implement Section 143AA of the Customs Act, 1962 delegation u/s 152 of the Customs Act, 1962 is not required, although the Central Government can also to delegate the power to officers u/s 152 of the Customs Act, 1962. Section 143AA of the Customs Act, 1962 is an independent provision and confers independent power. Any decision of the Board has to be in consonance with the Rules under Section 4(1) of the Central Board of Revenue Act,1963. As per Section 4(1) of the Central Board of Revenue Act,1963, the Central Government has to make Rules for the purpose of regulating the business of the Board and every order made or act done in accordance with the such rules by the Board shall be deemed to be order or act, as the case may be of the Board. Therefore, there is no requirement for delegation of powers as the Commissioners are merely carrying out the instructions of the Board to implement the policy decision of 'ease of doing business. The Board cannot function independently. It has to strictly act in accordance with the Rules of Transaction as is contemplated u/s 4(1) of the Central Board of Revenue Act, 1963. As a matter of fact, the Cabinet Secretariat has issued Government of India (Allocation of Business) Rules, 1961. Department Of Revenue is specifically vested with the Central Board of Indirect Taxes and Customs and with the Central Board of Direct Taxes. The impugned Public Notices have been issued in public interest. The impugned Public Notices merely extends the facility/option to importers and exporters. They are not bound to avail the said option. The impugned Public Notices has been issued in view of the Government's avowed policy decision for facilitating Ease of Doing Business in the country. The impugned Public Notices motivated with the object to implement Section 143AA of the Customs Act, 1962. However, it has not been demonstrated that the above communication dated 13.01.2020 bearing reference D.O.No.CH(IC)/02/2020 of Chairman of the Board was issued in violation of the Government of India (Allocation of Business) Rules, 1961 or any other Rule framed under Section 4(1) of the Central Board of Revenue Act, 1963. The decision of the Board has been implemented uniformly by All the Commissionrates in unison. The purposes for which the impugned public notices have been issued are in line with the object of section 143AA of the Customs Act, 1962. Therefore, the impugned Public Notices is / are not arbitrary. Unless, the Amendment to Customs Act, 1962 vide section 97 of the Finance Act, 2018 is itself struck down as ultra vires either the Constitution or any of the other provisions of the Customs Act, 1962, the impugned public notices cannot be struck down on the grounds raised in these writ petitions even if there was a minor infraction of the procedure under the Government of India (Allocation of Business) Rules, 1961. In my view, there are no merits in these Writ Petitions. That apart, having filed before the High Court of Kerala on the same cause of action and having failed and having filed before the Hon ble Division Bench of the Kerala High Court, these Writ Petitions have to fail. The filing of Writ Petitions before this Hon'ble High Court and the High Court of Kerala on the very same cause of action would amount to forum shopping. It is not proper. Therefore, on the ground of shopping also these batch of Writ Petitions are liable to be dismissed as the challenge before both the High Courts are very same. These writ petitions have to therefore fail and are liable to be dismissed. Therefore, these writ petitions are dismissed.
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2024 (3) TMI 368
Challenging the legality and validity of the seizure memo - imported Ethanol Absolute assessed as Laboratory Chemical under Customs Tariff Heading 98.02 (CTH 98.02) - mis-classification of the goods - HELD THAT:- Admittedly, there no dispute that the Petitioner has been importing Ethanol Absolute for the last few years and the classification under CTH 98.02 has been accepted by the Respondents, except in respect of Bill of Entry No. 7515045, which is the subject matter of the present Petition. The Petitioner has not been issued any Show Cause Notice till date. According to the Petitioner even the Investigation Report has not been provided to him. The Petitioner is a regular importer of Ethanol Absolute and not a fly by night operator. The Ethanol 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 Ethanol 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, it imposes such an obligation on the Petitioner. In our view, in the light of these facts, the Respondents are not justified in refusing to release the Ethanol Absolute provisionally. The Ethanol Absolute under consideration is not prohibited goods but the only dispute between the Petitioner and the Respondents relates to classification, which, as observed above, has been permitted to be cleared since last many years under CTH 98.02 by the Respondents. 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, we pass the following orders:- a) The Petitioner is entitled for provisional release of the Ethanol Absolute under Bill of Entry No. 7515045 on execution of a bond by the Petitioner to secure the differential duty and consequential amount, if any. b) The Respondents are directed to release the goods within a period of two weeks from the execution of such a bond by the Petitioner. c) All contentions of the parties with regard to classification are kept open to be considered in appropriate proceedings. d) The Writ Petition is disposed of.
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2024 (3) TMI 367
Imposition of Penalty - remanding matter back to the original authority - delay in filing the bill of entry - EPCG Licence - import of Machinery as YIYOU MAKE HMI SCREW PRESS - MODEL EPC 1600 PRESS WITH PARTS AND ACCESSORIES 3 2 STATION DIE BOLSTER, TOOLING GRAPHITE LUBRICATION MACH - Benefit of Notification No. 16/2015-CUS - third container held at Mundra port due to excess weight in actual - HELD THAT:- From the records, it is clear that there was no intention on the part of the appellant for delaying the taking of delivery from ICD, Ludhiana. The fact of the matter is that out of three containers mentioned (Supra) two containers reached earlier and one container was held up at Mundra port on account of excess weight which was subsequently resolved by according the permission to carry the third container to ICD, Ludhiana. Further, once the Ld. Commissioner has recorded the findings that there is no basis as apparent on record to impose the penalty then it was incumbent for the Ld. Commissioner to set aside the same and there was no reasons to remand the same to the original authority. Further, the remand order of the Ld. Commissioner (Appeals) has not been complied with by the original authority till date without any reason. Thus, there is no justifiable reasons for imposition of penalty and to this extent upheld the order of the Ld. Commissioner (Appeals) and to set aside the impugned order to the extent of remanding the matter back to the original authority. The appeal is accordingly, allowed on above terms.
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2024 (3) TMI 366
Classification of goods on the basis of use - Goods imported ground glass described as BIOMIN F-Ground Glass (Fluoro Calcium Phospho-Silicate) and BIOMIN C-Glass (Chloro Calcium Phospho-Silicate) - used in the manufacture of toothpaste - classified under Customs Tariff Item (CTI) 3207 4000 Or under CTI 3824 9990. Whether the plastic pallets which have been used for packing the imported goods, requires to be classified separately? Whether the imported goods along with packing material is liable to be confiscated for alleged violations of the Customs Act, 1962? HELD THAT:- As the product under dispute is ground glass described as BIOMIN FGround Glass (Fluoro Calcium Phospho-Silicate) and BIOMIN C-Glass (Chloro Calcium Phospho-Silicate), it could be made out that these are covered more specifically by the description of CTI 3207 4000 as glass frit and glass in the form such as powder, granules or flakes . Further, the contending classification under CTI 3824 9990 as other under the residual entry of other chemical products and preparations of the chemical or allied industries , which is not elsewhere specified or included, residual entry. Further, in terms of the explanation given by the appellants the imported goods are being used in the manufacture of toothpaste, and thus these are not related to chemical or allied industry. Thus, we are of the considered view that for legal purposes, as per GIR-1, the classification of impugned goods under CTI 3207 4000 is appropriate. Classification of plastic pallets - In the present case, the imported goods have been presented along with the plastic pallets as packing containers, and thus there appears to be no requirement for a separate classification in terms of GIR-5 above. Further, the finding in the impugned order that the packing containers in this case are of repetitive use, is also contrary to the facts. In this case, the plastic pallets has been claimed in the impugned order and by original authority as packaging containers for repetitive use and hence are rightly classified separately under CTH 39 23. However, we do not find any document or detail in the Bill of entry to indicate that the plastic pallets are of durable containers for repetitive use. The CBEC in its clarification vide Circular No. 69/2002-Customs had clarified that any goods/containers used for packaging or transporting other goods, and capable of being used several times, would fall in the category containers of durable nature , which are exempt from import duty under Notification No.104/94-Customs. Thus, we do not find any merits in the impugned order on this aspect and hence the same is not sustainable. Imposition of penalty - We do not find any material evidence placed during the adjudication proceedings by the authorities below, to arrive at the conclusion that there was mis-declaration in the description of the goods or in classification of the goods, in order to claim that the appellants have violated the provisions of Section 111(m) ibid. Thus, we conclude that the products under consideration i.e., (i) BIOMIN F-Ground Glass (Fluoro Calcium Phospho-Silicate) and (ii) BIOMIN C-Glass (Chloro Calcium Phospho-Silicate) would appropriately be classifiable under Customs Tariff Item (CTI) 3207 40 00 and not under CTI 3824 99 90, as claimed by Revenue. Further, we also conclude that there no separate classification required to be adopted in respect of (iii) plastic pallets used as packing container or packing material, when presented along with the imported goods. Therefore, by setting aside the impugned order, we allow the appeal in favour of the appellants.
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2024 (3) TMI 365
100% EOU - Debonding - Demand of differential duty - Penalty - EXIM policy - switched over from 100% EOU Scheme to the EPCG Scheme - delay in getting permission from the Development Commissioner and without obtaining a No Dues Certificate - contravention of Notification No. 23/2003-CE - Export of Hydrogen Peroxide - classifiable under Chapter Sub Heading 28.47 - HELD THAT:- We find that appellant was granted permission to exit from 100% EOU status to EPCG Scheme by in-principle permission to exit on 20.11.2003. Thereafter, it seems the Excise/Customs Department did not issued the necessary No Objection Certificate within the reasonable time of 2 to 3 months. The validity of the period for in-principle permission was extended upto 18.11.2004 by the Development Commissioner. Jurisdictional Superintendent issued the demand directing payment of customs and excise duty after assessing, only on 25.03.2005, in pursuant thereto appellant have within a weeks time deposited the necessary and the requisite duty/taxes on 29.03.2005 and 30.03.2005 under intimation of Revenue, and also furnished the details of duty payment and execution of bond to the Assistant Commissioner, Nellore Division. In the meanwhile, Development Commissioner had issued no due certificate on 04.11.2004 for conversion of existing EOU Scheme into EPCG Scheme. Thereafter, after delay of several months, no dues is issued by the Jurisdictional Commissioner on 03.01.2006. All throughout the period from April 2005 to 3, January 2006, the appellant was pursuing the Excise Department to issue necessary no objection/no due certificate which was issued after much delay on 03.01.2006. Thereafter, the appellant was allowed exit finally from the 100% EOU scheme to switch over to EPCG scheme, from the date of discharge of its duty liability i.e. 30.03.2005 in terms of para 6.16(d) of FTP read with para 5.4 of HBP 2004-09. We find that DGFT who are the competent authority have allowed the de-bounding from 100% EOU to switch over to EPCG Scheme with effect from 30.03.2005 and admittedly had discharged all the dues as assessed by the excise/customs department, being pre-condition for de-bonding. We further find that the delay occurred in the final de-bonding order to be issued by DGFT, due to delay wholly attributable to Customs/Excise Department, who have taken a time of almost one year or 11 months in issuing the no dues certificate. We hold that the appellant have rightly paid tax/duty on the goods cleared with effect from 01.04.2005 as a DTA unit under EPCG Scheme. Accordingly, we allow the appeal and set aside the impugned order. Appellant is entitled to consequential benefits as per law.
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2024 (3) TMI 364
Extended Period of limitation u/s 28 - Demand duty - confiscation - penalty - ab initio cancellation of the scrip - Forged Shipping Bills - DEPB Scrips issued to exporters as an incentive by the DGFT - goods claiming exemption no. 97/2009 - home consumption - HELD THAT:- We find that the position of law is that extended period of limitation u/s 28 can only be invoked only if the non-payment or short payment of duty is on account of collusion, wilful misstatement or suppression of facts by the importer. None of these aggravating factors which will make extended period of limitation invokable in the case were alleged, let alone, established against the importer either in the SCN or in the order in original or the impugned order. Therefore, extended period of limitation could not have been invoked in this case and the demand itself is hit by limitation. It cannot therefore be sustained. Since the demand is not sustainable on limitation itself, it is not necessary for us to examine the demand on merits. The demand needs to be set aside along with the consequential order holding the imported goods liable to confiscation and the penalty imposed on the appellant. Thus, the appeal is allowed and the impugned order is set aside insofar as it pertains to the appellant herein.
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2024 (3) TMI 363
Classification of goods - Goods imported as Nut tie Bar, Screw, Screw Tip, Locking ring, etc. from China - whether the revenue is correct in re-classifying the goods under CTH 7318 instead of the declared classification CTH 84779000? - demand for differential duty - HELD THAT:- Admittedly, the claim of the appellant that the consignment in question was specially designed for its use alone and that the same could not be used as a general item was supported by the expert opinion in the form of tech-write-up and neither the original authority nor the FAA finds fault with the same, nor does they disagree with the same. Also, other than the audit objection by the audit team, there is absolutely nothing made available on record by the revenue to justify classification under CTH 7318, nor is there any whisper about the claims of the appellant being wrong. No fault found with the nature or even the usage of the goods in question, nor is there any counter to the technical write-up as to the design and usage of the goods in question. Hence, this is clear case where the revenue has alleged wrong classification based on nothing and thus the consequent SCN proposing to demand differential duty lacks a concrete foundation. Thus, we hold that the Revenue is not able to establish or satisfy in its attempt to re-classify the goods in question under CTH 7318 and hence, the impugned order lacks merit. Resultantly, the impugned order is set aside and the appeal is allowed with consequential benefits, if any, as per law.
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2024 (3) TMI 362
Classification of goods - benefit of exemption - Import of Flexi tanks - containers of durable nature - Demand duty - fine and penalty - Notification No. 104/94 Cus - HELD THAT:- We are of the view that the Department has not appreciated the nature and characteristics of the imported goods and have relied only on the Statements recorded during investigation to conclude that the said goods are not durable and therefore not eligible for exemption under the said scheme. It is the claim of the Appellant that the adjudicating authority has not produced any evidence in support of their claim and have only relied on Board Circular No. 69/2002 Customs to allege that the goods of the Appellant are not durable. We find that the term durable containers needs to be understood in the context in which they are used with reference to the type of materials of which the container is and the purposes for which it is intended to be used. We observe that durability is a relative term and given the advancement of technology materials are capable of providing strength and resistance towards normal wear and tear and can be attributed with persistent utility when in terms of the notification such goods are to be re-exported. Therefore, we are of the view that the issue needs to verified from the factual matrix given that the nature and characteristics of the product need to be examined in order to determine whether Flexi Tanks will be considered durable or not. Hence, the nature of the goods need to be determined by way of proper test/ technical literature for which the matter is remanded for re-consideration to the adjudicating authority. Thus, no findings have been recorded on merits and are leaving the issue open. Appeal is allowed by way of remand to the adjudicating authority.
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2024 (3) TMI 361
Demand duty - Allegation of import Portland Pozzolana Cement without payment of customs duty - No evidence for actual import of the goods - Remittance of the money to the exporter's bank at Bangladesh through the Appellant's Axis Bank/IndusInd Bank at Agarthala - importer failed to produce self-certified import documents - interest - penalty - HELD THAT:- In the absence of any such evidence of actual import of the goods, it is not known how the Revenue has presumed that import of the said goods have taken place. We observe that Customs duty cannot be demanded from the importer without filing of the Bills of Entry. Accordingly, we hold that the demand cannot be made only on the ground of transfer of money from the Appellant's Bank Account to the Exporter in Bangladesh. The Department could have conducted investigation to find out the purpose for which the money was transferred or they could have transferred the case to the concerned department to investigate on the money laundering angle. Without initiating any such action, demanding customs duty only based on the money transfer to the Exporter's Bank Account is not supported by any evidence. Accordingly, we hold that the demand of customs Duty only based on the evidence of money transfer is not sustainable and hence, we set aside the same. Since the demand of customs duty is not sustainable, there is no question of demanding interest or any penalty. Accordingly, we set aside the penalties imposed on the Appellant u/s 114A and 112(b)(ii) of the Customs Act, 1962. Thus, we set aside the impugned order and allow the appeal filed by the Appellant.
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2024 (3) TMI 360
Country of origin of copper cathodes - mis-declared the country of origin (COO) of goods as Zambia instead of Iran - False/fabricated/un authentic COO Certificate - import of goods under Non-Ferrous Metal Import Monitoring System - confiscation - imposed heavy penalties on the Appellant and its directors along with redemption fine - burden of proof - HELD THAT:- In our view country of origin cannot be determined basis the movement of goods or the country where the same were inspected. As has been discussed, nothing stopped the department from reaching out to National Iranian Industries Co. to ascertain if the goods originated from Iran. Accordingly, we have no hesitation in holding that goods are not liable for confiscation as there is no contravention of Sections 111(d) and (m). We have found that no evidence has been produced by the Department to remotely show that there was wilful involvement of the Appeallant in the issuance of COO certificates. The submission of the Appellant that the COO certificates have not been cancelled by the Zambian Authorities cannot be overlooked or brushed aside just because the department has formed a view that the same were not authentic. We have already observed that the said view is without any basis and unsupported by any evidence. Department has not made any effort to check the correctness of the COO certificates and if any attempt is made the documents proving the same have not been annexed to the SCN or placed on record. Furthermore, the Department choosing to not investigate the Iran entities viz., National Iranian Industries Co. and Coppernium International FZE goes on to show the incomplete nature of investigation. Therefore as held by us the authenticity of the documents cannot be doubted due to lack of evidence. Thus, penalty u/s 112(a) and 114AA of the Act cannot be imposed on both the Appellant and its directors and the same deserves to be set aside. Penalty On Appellant - In cases where there is absolutely no involvement of assessee and where there is no evidence produced to show their role in the alleged fraud/mis-declaration, then imposition of penalty in our view will amount to injustice as far as the assessee is concerned. Penalty generally is imposed as a penal consequence of a person enjoying benefits of a thing which it is not entitled to or the said benefits are obtained by him due to fraud or mis representation. In Akbar Badruddin Jiwani vs Collector of Customs [ 1990 (2) TMI 50 - SUPREME COURT] has held that mens rea is to be established even in case for imposition of penalty u/s 112 (a) of the Act. No evidence has been produced by the department showing any role of Appellant and its directors in the alleged mis-declaration Penalties as confirmed by the impugned order are required to be set aside. We have provided detailed findings in relation to failure on the part of the department to either prove that goods had originated in Iran or prove role of the Appellant or its Directors in the alleged Mis-declaration. Penalty u/s 114AA also in our view cannot be imposed in the facts of the present case. Individual Penalties imposed on the directors - We have gone through the statement of both the directors and note that nothing incriminating is found therein. None of the other witnesses have stated anything against the directors. No document has been produced that shows any involvement of either of them in the alleged mis-declaration which in any event department has not been able to prove. Mr. Satish Amlani was not even looking into import related transaction. Given the above we are loss to understand as to how department has imposed penalties u/s 112(a) and 114AA on two directors. Thus, we set aside the impugned order and allow the Appeals with consequential relief, if any, in accordance with law.
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Corporate Laws
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2024 (3) TMI 359
Seeking grant of Anticipatory bail - maintainability of application under Section 438 of the Cr.P.C. - reasons to believe - non-bailable offences contained in Sections 437, 438 and 439 of the Cr.P.C. - HELD THAT:- Section 437 and Section 439 of the Cr.P.C. relate to grant of Bail to any person who has been arrested or is in custody . Section 438 of the Cr.P.C., on the other hand, gives a power to the Court to grant Anticipatory Bail to a person who is yet to be arrested or taken into custody . In BHARAT CHAUDHARY AND ORS. VERSUS STATE OF BIHAR AND ORS. [ 2003 (10) TMI 692 - SUPREME COURT] the Supreme Court has held that the power under Section 438 of the Cr.P.C. is available to the High Court and the Court of Sessions, even when cognizance is taken or a chargesheet has been filed. In RAVINDRA SAXENA VERSUS STATE OF RAJASTHAN [ 2009 (12) TMI 1063 - SUPREME COURT] , the Supreme Court reiterated that Anticipatory Bail can be granted to an accused at any time, so long as the accused has not been arrested. The High Court or the Court of Sessions cannot refuse to exercise its powers under Section 438 of the Cr.P.C. and leave the matter to the Magistrate only on the ground that the challan has now been presented. Coming to the principles that would be applicable while considering the application of the Applicant(s) for grant of Anticipatory Bail, there is no gainsay that the Applicant(s) would have to show that they have reason to believe that they may be arrested - As held by the Supreme Court in GURBAKSH SINGH SIBBIA VERSUS STATE OF PUNJAB [ 1980 (4) TMI 295 - SUPREME COURT] , the belief that the Applicant(s) may be so arrested must be founded on reasonable grounds and not on mere fear or a vague apprehension . In the present case, the applicant(s) have met the above test. The learned counsel(s) for the Applicant(s) have placed reliance on various judgments of this Court wherein the accused, who had been similarly summoned by the same Magistrate, were taken into custody and had to suffer the ignominy of being in jail for a long period of time before they were granted Bail by this Court. As far as merit is concerned, in SATENDER KUMAR ANTIL VERSUS CENTRAL BUREAU OF INVESTIGATION ANR. [ 2022 (8) TMI 152 - SUPREME COURT] , the Supreme Court had placed cases where additional conditions of compliance of provisions of Bail are to be met, including Section 212 (6) of the Act, in Category C . It was held that where the accused has not been arrested consciously by the prosecution, there is no need for further arrest of the accused at the instance of the Court. In the entire process of investigation leading to the filing of the complaint, the Applicant(s) were never arrested by the respondent and it is not disputed that the Applicant(s) have cooperated in the investigation. Applying the test as laid down by the Supreme Court in Satender Kumar Antil, therefore, the Applicant(s) are entitled to grant of Anticipatory Bail. It is, therefore, ordered that in case of arrest, the Applicant(s) be released on bail subject to fulfilment of conditions imposed - bail application allowed.
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PMLA
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2024 (3) TMI 358
Seeking grant of Default bail - case of petitioner is that on the date of filing of the prosecution complaint, the investigation was incomplete - complaint was not accompanied by the FSL report - ED after filing of the complaint has issued summon to one director of Supertech - HELD THAT:- The right to default bail has been recognised as a statutory right. This right accrues in favour of an accused, if the chargesheet or complaint as the case may be, is not filed within the stipulated period. The Courts have also in no uncertain terms held that filing of an incomplete chargesheet/complaint would not come in the way of this indefeasible right of the accused - In the present case indisputably, the respondent had filed its complaint within the period of 60 days. The application for default bail came to be filed approximately 30 days after filing of the complaint. In the present case, the respondent has already submitted the requisite documents for obtaining expert opinion from FSL. Preparation of the FSL report is not in the control of investigating agency, though it can take steps for expediting the process - it is the categorical stand of the respondent that investigation against the present petitioner is complete. Mere issuance of summons to another person or seeking leave of the Court to file additional evidence, without there being any other sufficient material to challenge, the petitioner cannot be held to be entitled to a default bail. There are no merit in the petition and the same is accordingly dismissed.
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2024 (3) TMI 357
Petition for grant of Bail - Money Laundering - proceeds of crime - specific case of the respondent is that the petitioner in his official capacity as a Transport Minister of State of Tamil Nadu, conspired with his brother Ashok Kumar, Assistants - Shanmugam and Karthikeyan and officials/personal assistants of Transport Department and orchestrated a strategy to exchange cash for job selections under various categories in the Transport Department - HELD THAT:- The learned Senior Counsel for the petitioner submitted that the entire files should have been analysed and there is no question of selecting certain files and analysing the same. This Court is not able to agree with this submission. It is always left open to the prosecution agency to select the relevant files and seek for the analysis report. Hence, the investigation agency in the predicate offence thought it fit to select the relevant files numbering 284 and the same was analysed and a report was given by TNFSL. In any case, this Court cannot come to a conclusion that the differences pointed out is as a result of manipulation. That would tantamount to an extreme presumption which is not warranted at this stage. It must be borne in mind that these materials and reports were collected by the investigation agency, who investigated the predicate offences and the respondent is merely relying upon the same in order to prosecute the petitioner for offence under Section 3 of PMLA. It is not necessary for the respondent to rely upon all the materials collected in the predicate offence and it is always left open to the respondent to select the relevant materials to make out a case under Section 3 of PMLA. The seized digital evidence is in the custody of the Special Court dealing with MP/MLA cases and what the respondent has done is that they have obtained a copy of the digital evidence in printout form which has been certified by the Court. It must be borne in mind that this Court cannot conduct a roving enquiry or a mini trial to test the probative value of the electronic record relied upon by the respondent. What is required is to see as to whether there is prima facie genuineness in the materials that are sought to be relied upon by the respondent. If on going through the materials, this Court is convinced that there is no doubt on the genuineness of the materials relied upon by the respondent, there is no question of doubting the probative value of those documents at the stage of dealing with the bail petition. The submission made by the learned Senior Counsel for the petitioner as if, 284 files had increased to 472 files and therefore, there is manipulation of pen drive, is totally unsustainable. The file path has been explained at paragraph no.14.5.8 of the complaint and when this is read along with relied upon documents 28 to 33 filed along with the complaint, it becomes clear that the excel sheet is very much a part of CF-27/21. To add strength to the same, it is also seen that the relevant document has been certified by the Special Court and this document is a print out of what is contained in the file. These documents, prima facie establishes that the entire recruitment process in the Transport Corporation was manipulated by fixing specific rates for various posts and based on the payment of money, the marks were manipulated and the recruitment had taken place. It is seen that there was a large scale manipulation resorted to which has been explained at paragraph no.11 of the complaint and which shows that payments have been made by many job aspirants for jobs either directly or through the associates to B.Shanmugam and M.Karthikeyan, who were the unofficial personal assistants of the petitioner during the relevant point of time - If there is a prima facie material to show that the amount has been received by misusing the position of the petitioner who was the then Transport Minister, that by itself will be construed as proceeds of crime and it is not necessary for the respondent to further establish that such proceeds of crime was projected as untainted money subsequently. The next submission that was made was that most of the statements that were recorded under Section 50 of PMLA are that of the co-accused or the suspects. There are only six independent witnesses available and none of them implicate the petitioner - The above submission made by the learned Senior Counsel for the petitioner does not hold water. As on date, the petitioner alone has been made as an accused and the complaint has been filed only as against the petitioner. None of the other persons from whom statements have been recorded under Section 50 of PMLA are shown as accused or suspects. The petitioner resigned from the post of Minister without a portfolio just one day prior to the hearing of this bail petition. The fact that the petitioner continued to hold the position as a Minister for nearly eight months and that to without a portfolio when he was inside the jail, shows the tremendous influence of the petitioner and the importance that is given to him by the State Government. Even if the petitioner had resigned from his position as a Minister, he continues as a MLA belonging to the same party which is running the Government in the State of Tamil Nadu and therefore, without any hesitation, this Court holds that the petitioner continues to wield a lot of influence on the Government. When such is the position, the witnesses who are mostly the officials belonging to the MTC and the prospective job seekers who had paid the money, will be influenced/tampered with - This Court is also taking into consideration the larger interest of the Public/State since the petitioner was involved in a cash for job scam by misusing his position as a Transport Minister and thereby, genuine aspirants for the job were deprived of level playing field and in their place, persons who paid money were accommodated. In this process, the respondent has identified the proceeds of crime at Rs. 67.74 crores. If the petitioner is let out on bail in a case of this nature, it will send a wrong signal and it will be against larger public interest. Therefore, this Court holds that even under Section 439 Cr.PC, the petitioner is not entitled to be considered for enlargement on bail. This Court does not find any merits in this bail petition and accordingly, the same is hereby dismissed.
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2024 (3) TMI 356
Maintainability of petition - proceeds of crime - provisional attachment of immovable properties appear to have been confirmed without any knowledge of the petitioner - alternative appellate remedy - HELD THAT:- Appeals under Section 26 of PMLA lie against an order of the Adjudicating Authority 'under this Act' - On a careful reading of Section 26 of the PMLA, 2002 and Rule 2 of the Rules of 2005, it is clear that any person aggrieved by the order, even if a person is not a party to the order can file an appeal u/s 26 of the PMLA, 2002 before the Appellate Tribunal. Taking into consideration, the aforesaid provisions, this Court is not inclined to entertain this petition - Petition dismissed.
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2024 (3) TMI 355
Attachment of property - It is the specific case of the petitioner that the department instead of proceeding with Resurvey No.47/6A2, which stands in the name of the seventh respondent, has wrongly included Resurvey No.47/6B2 owned by the writ petitioner - HELD THAT:- The persons involved in the prize chits and money circulation were all arrayed as accused and on completion of investigation, final report was filed and the same was taken on file by the respective Metropolitan Magistrate (Sub Sessions Court, Egmore, Chennai). After filing the final report, the Enforcement Directorate found that the offence alleged to have been committed also attracts the provisions of Prevention of Money Laundering Act (PMLA Act) and therefore, the case was registered under PMLA Act against the persons, who were managing M/s.Oakdale Properties Private Limited and its sister concerns. This case was taken on file in C.C.No.7 of 2018 on the file of the Special Court constituted under PMLA Act. The Enforcement Directorate also thought fit to invoke the provisions of interim attachment as contemplated under the PMLA Act and the properties of Ms/Oakdale Properties Private Limited came to be attached. While so, the writ petitioner herein claiming that her property, which falls under Resurvey No. 47/6B2 had been wrongly attached. Therefore, the petitioner has filed this writ petition seeking to quash the provisional attachment order dated 05.04.2017 and to correct the survey number in the impugned provisional attachment order. As stated by the learned counsel for the respondents 1 to 3 since the entire proceedings initiated against the seventh respondent has been quashed, both predicate offence as well as the offence under PMLA Act, this Court is of the view that the relief as prayed for in the writ petition has become infructuous and the error of including the property of the petitioner in the attachment proceedings herein has to be rectified. The sub registrar/sixth respondent is directed to delete any entry in respect of Resurvey No.47/6B2, which were made pursuant to the proceedings of the Enforcement Directorate - Petition dismissed.
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2024 (3) TMI 354
Money Laundering - Scheduled offences or not - attachment of properties - Court had quashed the entire complaint - HELD THAT:- Since the complaint itself is not maintainable, the respondent has no jurisdiction to attach the properties of the petitioners and therefore the order of attachment passed under Section 5(5) of the Prevention of Money Laundering Act, 2002 dated 30.09.2022 impugned in this writ petition, is liable to be quashed and hence, quashed. Petition allowed.
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Service Tax
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2024 (3) TMI 353
Condonation of delay in filing appeal - Appeal filed by the Appellant dismissed on the ground that they have filed the Appeal with a delay of about 5 months - HELD THAT:- Commissioner (Appeals) has held that Since the appeal has been filed on 15.06.2018 i.e. after lapse of more that 5 months from the date of issuance of the impugned Order-in-Original, I conclude that the instant appeal has been filed even after lapse of extended time limit of one month and so the same is barred by limitation by virtue of section 85(3A) of the said Act. There are no necessity to interfere with the impugned Order - appeal dismissed.
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2024 (3) TMI 352
Condonation of delay in filing of the appeal by the appellants before the Commissioner (Appeal) - whether the case merits consideration of the Tribunal for directing the authorities below for fresh adjudication of the case on merits? - HELD THAT:- The maximum period within which the Commissioner (Appeals) can entertain an appeal before him is three months. As in the present case the appeal has been filed by the appellants beyond the prescribed maximum period of three months, there is no legal provision under which the same could be obtained by the Commissioner (Appeals). Hon ble Supreme Court in the case of SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [ 2007 (12) TMI 11 - SUPREME COURT] , even though dismissed the appeal filed by the party, however had held that the Commissioner of Central Excise (Appeals) and the Tribunal being creatures of Statute are vested with the jurisdiction to condone the delay beyond the permissible as provided under the respective Statute. Further, it was also held that there cannot be any straitjacket formula for accepting or rejecting the explanation furnished for delay caused in taking steps, and it has to be decided on merits of the case after taking note of the peculiar background facts of each of the case. It is a well settled principle that the statue must be read as a whole in its context to understand its true meaning and intent. When the question arises as to the meaning of a certain provision in the statue, it is not only legitimate but proper to read that provision in its context. The context here means, the statute as a whole, the previous state of the law, other statues pari materia, the general scope of the statue and the mischief that it was intended to remedy - when an issue had not been examined in detail by the original authority, and when such matter was preferred in an appeal before the Commissioner (Appeals), in case if such appeal is filed beyond the time limit provided in law, and the first appellate authority is unable to entertain the appeal on account of timebar, the course of option available to the person aggrieved is to appeal before the next appellate authority i.e., the Tribunal in this case, who could consider such a case in terms of the legal provisions of the respective Acts and pass such order as it thinks fit, in confirming, modifying or annulling the decision or order appealed against or refer the case back to the authority which passed such order or direct for fresh adjudication of the case. Similar matter the Co-ordinate Bench of this Tribunal in the case of M/S HAIKO LOGISTICS INDIA PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX- DELHI 3 AND COMMISSIONER OF CENTRAL GST AUDIT-II (VICE-VERSA) [ 2023 (8) TMI 539 - CESTAT NEW DELHI] have held that no demand of service tax can sustain merely on the basis of the difference in figures in ST-3 and Form 26AS as there is difference in the methodology in preparing both the records and Form No. 26AS is not a statutory document for determining the taxable turnover under the service tax law. There are no strong grounds to hold that the appellants did not pay service tax in respect of the differential amount demanded in the show cause proceedings, owing to the reason that the Audit Report No.ST/104/2014-15 of the Department determining the service tax liability of the appellants after verification of the records relating to the period July, 2010 to March, 2014, have been duly paid by the appellants and the same has been accepted by the Department - the merits of the case have not been examined by the authorities below and by the Principal Commissioner (Appeals), as he had rejected the appeal filed by the appellants only on the basis of limitation of time. The ends of justice would be met, if the case of the appellants was examined on merits by allowing the case to be heard by the original authority in fresh adjudication of the case, by taking into account all the relevant facts and by following the legal provisions of the Finance Act, 1994 - case remanded for de novo consideration of this case by the original authority in fresh adjudication of the case, after taking additional evidence and documents to be submitted by the appellants, if any - appeal allowed by way of remand.
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2024 (3) TMI 351
Levy of service tax - row houses constructed in a gated community - scope of residential complex - HELD THAT:- There is no significant change in the definition of residential complex as defined in Section 65(91a) of the Act both before and after 01.07.2012. Admittedly, the Respondent have sold developed plots to the buyers. Thereafter they have entered into agreement with the buyer/owner of plot to construct single house or residential unit. The house plan is also approved in the name of owner/buyer of the plot. Thus the activity is excluded or exempt both before and after 01.07.2012. Further, it is found that the said issue is no longer res integra, in view of the ruling of this Tribunal in MACRO MARVEL PROJECTS LTD. VERSUS COMMR. OF SERVICE TAX, CHENNAI [ 2008 (9) TMI 80 - CESTAT, CHENNAI] and which have been approved by the Apex Court - it was held by Tribunal that construction of residential complex/building having not more than 12 residential units, is not sought to be taxed under service tax. For the levy it should be a residential complex comprising of more than 12 residential units. It is evident that the law makers did not want construction of individual residential units to be subject to levy of service tax. There are no merit in these appeals by Revenue - appeal dismissed.
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2024 (3) TMI 350
SCN issued solely on the basis of 26 AS statement - noticee failed to provide complete information about their tax liability on certain services rendered - Extended period of limitation - HELD THAT:- The contention of the department that they came to know of the appellant s activities only through the 26 AS statement is nothing more than plainly frivolous, as the appellant had been regularly submitting the ST-3 returns and paying tax as leviable on the manpower service rendered. There is nothing to show from the records that the appellant was not properly maintaining the books of account or had not recorded the various transactions. The department has nothing to substantiate its case, except for some bland statements that are essentially presumptive in nature. Moreover, 26 AS is not a prescribed statement/document for purpose of determination of service tax liability. It was for the department to lead its case with cogent evidence. The said 26 AS statement is maintained in respect of various receipts as applicable for the Income Tax Department for purpose of tax deducted TDS as relevant under the Income Tax Act. Service Tax would have to essentially depend on the value of the taxable service rendered and is unlike the taxability under the IT laws. The issuance of the show cause notice solely on the basis of the figures indicated in 26 AS cannot be sustained. Extended period of limitation - HELD THAT:- The appellant was entitled to the exemption under N/N. 15/2012-ST dated 17.03.2012 and in view of the department not being specifically able to point out any of the essential ingredients for invocation of the larger period of limitation, the same is not applicable in the present case. The order of the learned appellate authority cannot be sustained and is, therefore, liable to be set aside. The impugned order of the lower authority is, therefore, set aside - Appeal allowed.
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2024 (3) TMI 349
Levy of service tax - Construction of Complex service for the period 01.04.2006 to 31.05.2007 - Works Contract service for the period 01.06.2007 to 31.03.2011 - Renting of Immovable Property service for the period 01.06.2007 to 31.03.2011 - Management, Maintenance or Repair service during the period 01.04.2006 to 31.03.2011 - Transport of goods by Road service during the period 01.04.2006 to 31.03.2011 - Extended period of limitation - suppression of facts or not - penalties. Construction of complex service for the period 01.04.2006 to 31.05.2007 - HELD THAT:- Construction of complex service is not taxable for the period prior to 01.07.2010 as clarified vide Board Circulars read with amendment in the definition of construction of complex service Sec 65(105)(zzzh) read with Sec 65(91a) of the Finance Act, particularly, Circular No. 108/02/2009-ST dt.29.01.2009. In this Circular, it has been clarified that in spite of agreement of sale entered into between the developer/builder and the prospective buyer, no right accrues to the buyer till the time sale deed for transfer of property is entered or executed - the construction of residential complex, under whichever head i.e., Construction of Complex or WCS is taxable only when pursuant to a contract, amount is received by the builder/developer from the intended buyer during construction stage, i.e., prior to grant of completion certificate by the competent authority. In other words, a sale, post construction (after grant of completion certificate) will not come within the scope of service tax. Accordingly, the demand of Rs.2,12,03,687/- is set aside. Works Contract service for the period 01.06.2007 to 31.03.2011 - HELD THAT:- No service tax is payable for the period up to 30.06.2010. So far the demand for the period 01.07.2010 to 31.03.2011 is concerned, the Appellant states that they dispute the reclassification of the same service under the head WCS. However, as per the Notification No. 29/2010 amending the earlier Notification No. 01/2006-ST, keeping in view the value of land also involved, which is being transferred, 75% abatement of the gross value has been prescribed. Accordingly, the Appellant is required to pay service tax on only 25% of the gross value, after abatement. As the effective rate of service tax was 10.3%, thus, 25% of the same works out to 2.575%. The Appellant has already deposited service tax of Rs.1,42,75,289/- Thus, on the gross value relating to this period i.e., Rs.24,88,85,692/-, tax works out to Rs.64,08,807/-. Thus, Appellant has already paid more tax than payable - As the Appellant has already paid the tax in accordance with law for the period 01.07.2010 to 31.03.2011 on the gross value as aforementioned, this ground is allowed and the demand of Rs.8,16,39,119/- set aside. The payment of tax is also supported by the appropriation made from the deposits already made, in the Impugned Order. Renting of Immovable Property - Appellant has urged that they have already paid the admitted service tax of Rs.3,21,680/- prior to the issue of SCN, which has been appropriated - HELD THAT:- The Adjudicating Authority has erred by not considering that the amount of rent, being the gross amount, includes service tax amount also. Evidently, during the relevant period, levy of service tax under this head was highly disputed and had been declared ultra vires by the Hon ble Delhi High Court in the case of Home Solutions Retail (India) Ltd and Others [ 2011 (9) TMI 46 - DELHI HIGH COURT] . Thereafter, the said tax was again levied with retrospective effect by re-enacting the provisions. When the amount actually received is considered as gross amount and no other amount is admittedly collected towards service tax, then the gross amount becomes cum-tax value as provided under Sec 67(2) of the Finance Act, 1994. The Adjudicating Authority has erred in not giving cum-tax benefit. If the gross amount is taken as cum-tax value and service tax is calculated on this basis, the amount already paid as tax, tallies - Learned AR has not been able to dispute this contention - the demand in excess of Rs.3,21,680/- set aside. Demand of Rs.3,31,699/- on Goods Transport Agency service - HELD THAT:- As the Appellant has not paid the freight, they are not liable to pay any service tax on the same under Sec 68(2) of the Finance Act read with Rule 2(1)(d)(v) of Service Tax Rules. Some times, in case of business exigency, freight amount has been paid by the Appellant on behalf of the supplier initially, which has been remibursed by the supplier or reduced from the amount of the bill for purchase - Revenue has not disputed the factual aspect in this matter and accordingly, the ground taken is correct and thus, the demand of Rs.3,31,699/- set aside. Extended period of limitation - suppression of facts or not - HELD THAT:- The Appellant is registered with the Department and has maintained proper Books of Accounts, which is evident from the list of relied upon documents in the SCN. Further, there is no allegation of suppression, misdeclaration or other act for evading payment of service tax. Accordingly, extended period of limitation is also not available to the Revenue. Penalties - HELD RHAT:- The issue herein is wholly interpretational in nature and SCN has been issued by way of change of opinion, without finding the ST3 Returns filed to be wrong or erroneous. Accordingly, all penalties imposed are set aside. The impugned order set aside - appeal allowed.
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2024 (3) TMI 348
Seeking adjustment of interest amount paid - levy of penalty u/s 78 - demand with interest paid before issuance of SCN - HELD THAT:- Department was having full knowledge that out of the demanded amount of Rs. 18,47,186/-, the Jurisdictional AC himself has sanctioned refund of Rs. 7,96,757/-. The Adjudicating Authority has erroneously applied the interest rate of 18%, 24% and 30% the Appellant was a small party with annual turnover of less than Rs. 60 lakhs. From the Table given at Page 8 of the OIA (Page 25 of the Appeal Book), it is seen that the turnover of the Appellant was less than Rs.60 Lakhs. Therefore, the Appellant is required to pay 18% interest less 3% concession given to them (Net interest @ 15%) - the Appellant has correctly calculated and shown the interest payable in the Table at Page No. 11 12 of the Appeal Book. As per this Table, the interest payable is only Rs. 2,24,600/-.Admittedly, the Appellant has paid Rs. 94,462/- on 09/06/2017. Therefore, the Appellant is directed to pay the balance interest amount of Rs. 130,138/- on or before 15th April 2024. Penalty imposed under Section 78 - HELD THAT:- It is found that the Appellant has carried a bonafide belief that they were providing Service Tax to the Government of Tripura. They did not collect any Service Tax from them. Immediately on being pointed out, they have paid the entire Service Tax which resulted in excess Service Tax of Rs. 7,96,757/-. Even to get this refund of this excess payment, they had to run from pillar to post. Considering these facts, there are no case has been made out against the Appellant towards suppression. Therefore, the penalty of Rs. 10,49,587/- imposed under Section 78 set aside. The Appellant is required to pay the balance interest of Rs. 130,138/- on or before 15/4/2024 - penalty imposed under Section 78 is set aside - appeal disposed off.
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2024 (3) TMI 347
Seeking adjustment of excess payment against future liability, if not adjusted already - demand of interest and penalty as well - extended period of limitation - HELD THAT:- The assessee has submitted a statement of actual receipts made by them in each month. After adjusting the excess and short payment, the audit has arrived at the short-payment of Service Tax of Rs.3,83,042/- for the period 2007-08 to 2008-09. Accepting the demand of the Department, the appellant paid the amount of Rs.3,83,042/- on 08.04.2010 vide Challan No.06 through e-payment. However, the Show Cause Notice was issued later, demanding Service Tax of Rs.73,92,587/- on 13.01.2012. The appellant has not suppressed any information from the Department. They have been filing returns regularly. The audit has examined all the accounts and found only a short payment of Rs.3,83,042/- for the years 2007-08 to 2008-09. Hence, there is no suppression of facts with intent to evade payment of duty established in this case. Accordingly, the demand of Service Tax confirmed in the impugned order by invoking the extended period of limitation is not sustainable. The demand of Service Tax, if any, beyond the normal period of limitation, is not sustainable. The appellant is liable to pay Service Tax for the normal period of limitation, if not already paid by them - Appeal disposed off.
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2024 (3) TMI 346
Short payment of service tax - demand alongwith interest on delayed payment - HELD THAT:- It is evident that the appellant s claim of payment of Service Tax for the Financial Year 2008-09 has not been taken into account while reconciling the net Service Tax payable by the appellant. Accordingly, it is required to remand the matter back to the ld. adjudicating authority to verify the above claim of the appellant and arrive at the actual Service Tax payable by the appellant, if any, for the periods 2004-05, 2005-06, 2006-07 and 2008-09. Matter remanded back to the adjudicating authority for the purpose of reconciling the actual payment made by the appellant and to arrive at the liability, if any, for the periods 2004-05, 2005-06, 2006-07 and 2008-09 - appeal disposed off by way of remand.
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2024 (3) TMI 345
Issuance of two SCN - Short payment of service tax - Security Agency Services - cleaning services - recovery of service tax based on best judgment assessment under section 72 of the Finance Act - demand made on credit notes (i.e., the amounts returned by the appellant service provider to the service recipients) mistakenly treating them as debit notes (i.e., as amounts received by the appellant from the service recipients). Security agency service rendered to the Mauritius High Commission by the appellant - cleaning services - HELD THAT:- It is true that at the time the SCN was issued, the appellant was registered with the service tax department for providing security agency service . When information was called for, it had not supplied the complete information sought by the department. Hence, a notice was issued invoking section 72 (Best Judgment assessment). Therefore, at that stage, the Commissioner may not have had a clear idea of the exact nature of the services provided. However, once all the information was provided in the reply to the SCN including the contracts which the appellant had entered into with its clients, it was incumbent on the Commissioner to classify the services appropriately and confirm service tax. In the process, the Commissioner might have found that service tax is not chargeable or chargeable for rendering security agency service (invoked in the SCN) or for rendering some other taxable service which the appellant may have rendered. However, there is no justification for the Commissioner to confirm a demand without specifying any head. This vagueness in the impugned order makes it impossible for the appellant to defend itself against the confirmed demand - this part of the demand cannot be sustained and needs to be set aside. Issuance of second SCN - Demand on account of the credit notes issued by the appellant which, the Commissioner considered as the amounts received by the appellant towards providing taxable services and hence confirmed the demand of service tax - HELD THAT:- In this case, the appellant was the service provider and was liable to pay service tax on any amounts which it received as consideration. If it issues a debit note, it means it received some money and if it issues a credit note, it means it paid someone. The Commissioner has, clearly erred and mis-understood the credit notes as amounts which the appellant had received when, in fact, these are the amounts which the appellant had paid and therefore, service tax cannot be charged from the appellant on the amount which it had paid to other parties. Learned counsel for the appellant submits that some of the clients of the appellant had cancelled their orders and hence it had returned the amounts paid by them by issuing credit notes. Since this is a simple case of alleged wrong calculation, it is found that this is a fit case to be remanded to the Commissioner to consider the credit notes and redetermine service tax, if any, is payable for the period covered by this SCN. The appeal is partly allowed, partly rejected and partly remanded.
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2024 (3) TMI 344
Reverse charge mechanism - Liability of recipient of service to pay service tax - deemed services - foreign service provider has supplied services to the Appellants through the service provider s Indian subsidiary and such subsidiary is therefore treated as having establishment in India under Section 66A (Explanation 1) of the Finance Act 1994 - Invocation of extended period of limitation for issuance of show cause notice - revenue neutrality - HELD THAT:- Given the facts and circumstances of the present case it is asserted by the Appellants that service tax was not payable by them under the scope of Section 66A [Explanation 1] of the Finance Act 1994 as Reverse charge mechanism cannot be made applicable to them in the event a permanent establishment of the foreign company exists in India. It is worthwhile to look into the provisions of Section 66A as with satisfaction of the said provision only the rules containing taxable services provided from outside India and received in India could be scrutinized. In the instant case the Appellants have received goods from entities located outside India whereas the services in respect of the said goods have been provided to the Appellants by the parent company s branch in India by the nature of the services rendered like placing processing of order, negotiation done with customers by Sarin India on behalf of Sarin Israel, installation of the HASP software etc. it can be observed that Sarin India are entrusted with providing such services of higher order that are integral to the smooth functioning of the machines used by the Appellants. As it is entrusted with such crucial responsibilities it cannot be denied that Sarin India operates in the capacity of an Agent/ Branch office of that of Sarin Israel. The Tribunal in the case of M/s Lakshmi Electrical Drives Ltd. v Commissioner of CCE ST, Coimbatore [ 2023 (4) TMI 610 - CESTAT CHENNAI] has held a similar view while discharging the Appellants liability involving issue under similar circumstances wherein the Department had confirmed the demand against the Appellants under reverse charge mechanism when a 100% owned subsidiary of the parent company was already established in India rendering all such services as directed by the parent company situated in Canada. It was erroneous conclusion on the part of the department to allege that Sarin India will not be considered a Permanent Establishment of Sarin Israel. It can be observed from the records that Sarin had head office in Israel and that Sarin India Technology Ltd. was operating as an agency to carry out business of trading in a different country that in the instant case is, India and by flow of that it is opined that by way of Section 66A discharge of liability of service tax cannot be made applicable to the Appellants. Therefore there is no second thought required to be arrived at the conclusion that the Appellants had received goods from a foreign country and services in its extension from service provider in India through the said foreign company s Branch office at that time one of which is located in India thereby sufficiently establishing that they have a permanent establishment hence the Appellants cannot be fastened with the liability of service tax for being a recipient of service under section 68(2) of the Finance Act read with rules 2(1)(d) as a deemed service provider in India. Revenue neutrality - time limitation - HELD THAT:- The statements authorized signatory were recorded from time to time. The statements were exculpatory in nature to the extent that no one stated that the Appellant had any intention to evade the liability for payment of Service Tax. In such circumstances, when the Appellant has no malafide intention to evade the payment of Service Tax, larger period of limitation is not invocable - there are force in the submissions on behalf of the appellants that the issue involved is an interpretational issue and the bonafide interpretation of the Appellants was that they were not liable to pay Service tax as the suppliers were providing service through their Indian arm having a fixed establishment in India and therefore, based on a strict reading of the provisions of law, the Appellant was not liable to pay Service Tax. Thus, there are no merit in the claim of the Department that there was willful suppression of facts on the part of the Appellants. Therefore, demand beyond normal period in those show cause notices issued invoking extended period cannot sustain. Hence the Appellants succeed on limitation as well. Thus, under the purview of Section 66A of the Finance Act,1994 when a permanent establishment of the foreign service provider exists in India the recipient of service in India cannot be made liable to pay service tax under reverse charge mechanism - the impugned orders are not sustainable in law and in fact - appeal allowed.
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2024 (3) TMI 343
Levy of service tax - affiliation fees collected by the appellant is towards rendering of service - scope of section 66D of Chapter V of the Finance Act, 1994 - HELD THAT:- The Karnataka High Court has gone into the leviability of service tax on the affiliation fee collected by the universities in the case of M/S. RAJIV GANDHI UNIVERSITY OF HEALTH SCIENCES, VERSUS PRINCIPAL ADDITIONAL DIRECTOR GENERAL DIRECTORATE GENERAL OF GST INTELLIGENCE BENGALURU [ 2022 (8) TMI 707 - KARNATAKA HIGH COURT ] and have concluded that important education by university buy itself are through affiliated colleges by collecting an affiliation fee has to be considered as the service by way of education as a part of curriculum for obtaining qualification recognized by any law for the time being enforced and that the said service rendered by universities fall under the exemption contained under Clause I (of section 66D of the Act). The High Court of Karnataka has considered the provision of service tax vis- -vis important education in the new Service Tax Regime that is w.e.f. 01.07.2012. The impugned show cause notice to be issued covers the period 2014-2015 to 2017-2018 which squarely falls under the negative list regime. Therefore, there are no hesitation whatsoever to conclude that the impugned order cannot be sustained and is liable to be set aside. The affiliation fee collected by the appellants from the affiliated colleges is to be considered for providing the service to institution in relation to education, which is exempt by virtue of sub-clause (ii) of Clause L of section 66D of the Finance Act, 1994. Moreover as per Entry No. 25/2012-ST dated 20.06.2012, as amended by Notification No. 6/2014-ST dated 11.07.2024 services provided by an educational institution to its students, faculty and staff as well as certain services received by educational institution are exempt - In the instant case, the appellant themselves are a university and the services, if any, provided by the appellants and received by the affiliated colleges which are none other than educational institutions. This should leave no scope for any doubt as to the exigibility of the services rendered by the appellant to the affiliated colleges in consideration to application fee collected. The impugned order is not sustainable and the same is set aside - appeal allowed.
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2024 (3) TMI 340
Reverse charge mechanism - Liability of service tax - installation and commissioning provided by the supplier s technician at the place of the appellant - case of the department is that the appellant have received the service of Erection, Commissioning and Installation Service of the imported machinery and as per the Notification No.1/2006-ST dated 01.03.2006, 33% of the total value of import represent the service portion - suppression of facts or not - time limitation - HELD THAT:- There is no dispute that there is composite contract for sale of machinery by a foreign supplier and total value represented the sale value of the machine even though it includes Erection, Commissioning and Installation Service. Therefore, the total value is a sale value and in case sale-purchase transaction, no service tax can be demanded. Moreover, it is also an admitted fact that the service was not provided by the supplier of machine whereas the Erection, Commissioning and Installation activity was carried out by the independent entity on behalf of M/s. Ashling Impex Pvt. Limited therefore, even if by imagination it is considered that the appellant have received Erection, Commissioning and Installation Service it is from Indian based Company. In such a case the ingredient for charging service tax under reverse charge mechanism in terms of Section 66A are not fulfilled. Accordingly, the service tax under reverse charge mechanism, under Section 66A and Rules thereunder, cannot be demanded. Extended period of limitation - suppression of facts or not - HELD THAT:- There is no suppression of facts as the import of machine was made through Customs channel and customs duty was discharged at the total value, the objection was raised by the audit party from the record of the appellant, therefore there is no suppression of fact on the part of the appellant. The machine was imported in March 2012 whereas the show cause notice was issued invoking extended period on 29.01.2016 therefore, the entire demand is time-barred. The demand is not sustainable on merit as well as on limitation - Appeal allowed.
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Central Excise
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2024 (3) TMI 342
Scope of SCN - no demand for penalty - Default in making the payment beyond thirty days from the due date of payment - bar to utilize the CENVAT Credit account for payment of duty - Rule 8(3A) of the Central Excise Rules, 2002 - HELD THAT:- It is found that in the Show Cause Notice, there is no proposal to impose penalty of Rs.7,43,28,193/-. The Show Cause Notice has not even demanded the said amount as duty from the respondent. The appeal filed by the Revenue is not maintainable before this Tribunal since the appeal has been filed in a cyclostyled manner without appreciating the facts of the case and without examining the impugned order. The appeal filed by the Revenue is dismissed.
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2024 (3) TMI 341
Valuation - Exclusion of trade discount that was contracted for supply to stations of Thane Municipal Transport (TMT) from assessable value - to be included as additional consideration or not - HELD THAT:- The contractual arrangement includes facilitation of the appellant by their customer and that it is the appellant who has foregone consideration to the extent of trade discount which the lower authorities have convinced themselves to be costs of such facilitation. In thus loading this cost to the assessable value, the original authority has failed to determine the value thereof by reference to Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 which is essential for validity in law. Moreover, the issue was considered by the Tribunal in their own case [ 2016 (9) TMI 782 - CESTAT MUMBAI] on sale effected to oil marketing companies (OMC) and it was held that appellants case is squarely covered under new Section 4(1)(a) of CEA which essentially permit different transaction values, unlike normal sales price existed prior to 1-7-2000, which has also been explained by C.B.E. C., vide its Circular No. 354/81/2000-TRU, dated 30-6-2000 in Para 5. The reliance placed by Learned Authorized Representative on the decision in re re Bharat Petroleum Corporation Ltd [ 2009 (6) TMI 166 - CESTAT, MUMBAI] does not advance the case of Revenue inasmuch as the two transactions therein were held to be akin to barter. Here, it is alleged that money value of the facilities, treated as equivalent to trade discount , be added back to the transaction value. These fall under different provisions of the Rules supra and the lower authorities have not amplified the lack, and remedy, which was sought to be invoked. The impugned order lacks validity and must be set aside - Appeal allowed.
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