TMI Tax Updates - e-Newsletter
May 2, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Scope of SCN - impugned order proceeds on a completely different basis from the SCN - Entitlement to ITC - The High Court observed a clear disparity between the initial show cause notice and the final order. While the notice alleged sales suppression and proposed a specific tax liability, the order imposed a significantly higher amount without justification. Notably, the impugned order did not rely on sales suppression as a basis for its decision, raising questions about the rationale behind the increased tax liability. Consequently, the Court set aside the impugned order.
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GST:
Determination of time limit for filing of Appeal before the Appellate Authority - Delay due to the online system's failure to upload the Order-in-Original with the appeal. - Condonation of delay - The High Court found that the appeal was filed within the three-month limitation period, contrary to the Appellate Authority's ruling. The Court noted that the Order-in-Original was indeed uploaded with the appeal, contrary to the earlier technical glitch claimed by the respondents. The High Court upheld the petitioner's argument regarding the interpretation of Rule 108(3) and deemed the appeal filed on the date of online submission, i.e., 12.11.2022. In applying Section 12 of the Limitation Act, the Court excluded certain periods, ultimately concluding that the appeal was within the limitation period.
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GST:
Violation of principles of natural justice -cryptic order - Considering the circumstances and the cryptic nature of the impugned order, the High Court set aside the order and remitted the Show Cause Notice back to the proper officer for re-adjudication. The High Court directed the petitioner to file a reply to the Show Cause Notice within 30 days. Subsequently, the Proper Officer was instructed to re-adjudicate the matter after providing the petitioner with an opportunity for a personal hearing.
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GST:
Extinguishment of liability as per order of NCLT - challenge to order issued u/s 73 of the SGST/CGST Act 2017 - The High Court noted the NCLT order's explicit directive regarding the extinguishment of liabilities of the acquired company post-acquisition. The court emphasized the importance of honoring the NCLT's orders in such matters. The court relied on a previous decision and a Gujarat High Court judgment, both emphasizing the extinguishment of liabilities post-acquisition, to support its decision.
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GST:
Garnishee order - long delay of about more than a year in filing these writ petitions - The High Court acknowledged the substantial delay in filing the writ petitions. Despite the petitioner's argument that the impugned orders of garnishee were appealable under statute, the Court emphasized the importance of adhering to statutory timelines. Consequently, the Court was disinclined to grant relief to the petitioner due to the inordinate delay. Instead, the Court denied relief to the petitioner but allowed them to file appeals under certain conditions. These conditions included making a pre-deposit in each appeal, paying a cost of Rs. 1 lakh for delays.
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GST:
Exemption supply or not - services of leasing of the land for industrial purposes by SMPK to the applicant - The Appellate Authority for Advance Ruling finds that while the WBAAR ruled on the ownership aspect, it failed to consider all conditions required for exemption under entry 41. They note that the WBAAR's ruling was limited to a single condition and did not provide a comprehensive analysis of the case. As a result, the Appellate Authority deems it necessary to remand the case back to the WBAAR for a fresh decision, considering all aspects of the matter.
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GST:
Classification of service - Supply of services including transportation, packing, loading, unloading & unpacking - GTA service or not - transport of goods by road - The Authority for Advance Ruling clarify that if the agreement for transport, packing, unpacking, loading, and unloading pertains to the same goods, then the activity falls under the category of Goods Transport Agency. However, if the services are in relation to different goods, they do not qualify as a Goods Transport Agency.
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GST:
Classification of goods - paper cups - The Authority determined that disposable paper cups fall under HSN Code 48234000, attracting a tax rate of 18%. This decision was supported by the observation that the invoice provided by the applicant did not accurately describe the product. The Authority did not address the question regarding the refund of excess input.
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GST:
Supply of Goods or services - Sale of Demo Cars - Reimbursement of Loss on Sale of Demo Car - The AAR noted that the classification of the demo vehicle at the point of sale remains consistent with its classification at the point of purchase. The tax rate applicable at the time of sale would be the same as that applied at the time of its inward supply, aligning with Sections 8702 and 8703 of the Customs Tariff Act, 1975. - The Authority held that the reimbursement amount for the loss on the sale of demo cars from Mercedes Benz constitutes a supply of services. Specifically, this reimbursement is considered a service of 'agreeing to tolerate an act' under GST, which is taxable.
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GST:
Entitlement to Input Tax Credit (ITC) - Inward supply of Car / Demo cars - Car used for demonstration purpose to the potential customer interested in buying Mercedes Benz Car - The Authority ruled that the applicant is entitled to claim ITC on the inward supply of demo cars. The key rationale is that the demo cars, while initially used for demonstration purposes, are later sold, which qualifies as a 'further supply of such motor vehicles.' This decision underscores that demo vehicles are not merely for display but are an integral part of the sales and business strategy, thereby meeting the criteria set under Section 16 of the GST Act for claiming ITC.
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GST:
Taxable supply or not - Entry fee collected from the visitors/ devotees/ pilgrim by the applicant - Service provided i.e darshan/visit of Temple Hall - The Authority for Advance Ruling (AAR) acknowledges that the trust collects entry fees for providing darshan of Temple Hall, which constitutes a supply of service in the course or furtherance of business, thus falling under the scope of GST. However, the AAR concludes that the entry fee collected from visitors/devotees/pilgrims is exempt from GST under the provisions of Notification No. 12/2017, Central Tax (Rate), dated 28th June 2017.
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GST:
Retrospective cancellation of GST registration - The show cause notice issued to the petitioner did not specify any cogent reason for cancellation but merely stated the non-filing of returns for six months. Moreover, it failed to indicate the date and time for the petitioner's appearance for a personal hearing. The High Court emphasized that the cancellation of GST registration, especially with retrospective effect, must be based on objective criteria and not merely because of non-filing of returns. The court modified the impugned order to cancel the registration with effect from the date the petitioner filed the application for cancellation. - However, it allowed the respondent to take appropriate steps for recovery of taxes, penalties, or interest as per the law.
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Income Tax:
Stay of demand - The High Court acknowledged that the grant of stay is within discretionary jurisdiction, and it does not sit in appeal over such discretion. The Court noted that the appellate authority did not examine whether the petitioner established a prima facie case. The petitioner's assertion regarding limited resources and potential inability to provide services, though not conclusive evidence, warranted consideration. The order was set aside, and the stay application was remanded for reconsideration by the appellate authority, emphasizing the application of classical principles.
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Income Tax:
Revision u/s 263 - scrutiny assessment was completed on the return of income filed - The High Court considered the arguments presented by both parties. It noted that a survey was conducted under Section 133A of the Income Tax Act, 1961, and the petitioner had declared certain amounts under a government scheme. The scrutiny assessment order dated 30.12.2019 was distinct from the impugned order dated 24.03.2022 passed under Section 263. The Court found no merit in the petitioner's contentions and determined that the impugned order was valid. - The Court granted the petitioner liberty to file a statutory appeal before the Appellate Tribunal within 45 days from the date of receipt of the order.
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Income Tax:
Levy of penalty u/s 271C - Period of limitation - Failure to deduct TDS - The Appellate Tribunal analyzed the facts and submissions of both parties. It was observed that the assessee had not deducted TDS as reported by the Tax Auditor, leading to a reference made by the Assessing Officer (AO) to the Joint Commissioner of Income Tax (JCIT). The Tribunal delved into the interpretation of the limitation period under Section 275(1)(c) of the Act. It considered the date of completion of quantum proceedings and the initiation of penalty proceedings. Referring to a relevant judicial precedent, the Tribunal concluded that the penalty order was indeed barred by limitation.
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Income Tax:
Validity of reopening of assessment u/s 147 - no notice u/s 143(2) of the Act was issued by the AO for taking case under scrutiny - The Tribunal meticulously examined the issues raised by the assessee, including the validity of the reassessment and the addition to income. It delved into legal precedents and statutory provisions to arrive at a decision. Ultimately, the Tribunal found a jurisdictional defect in the reassessment proceedings, rendering them invalid. Consequently, the entire reassessment process was quashed, and the orders of the lower authorities were set aside.
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Income Tax:
Foreign Tax Credit u/s. 90 - Assessee did not file Form 67 at the time of filing of her return of income - Referring to established case law, the Tribunal affirmed that Rule 128 of the Income Tax Rules, which prescribes Form 67, is directory and not mandatory. Therefore, the delay in filing this form should not be a ground for rejecting the Foreign Tax Credit claim. Considering the submission and the legal standpoint, the Tribunal concluded that the rejection of the Foreign Tax Credit claim solely based on the delay in filing Form 67 was not justifiable.
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Income Tax:
Revision u/s 263 - source of cash found in the course of search remains unexplained and additions u/s 69A r.w. Section 115BBE - The Tribunal found merit in the appellant's defense regarding the source of cash found during the search. It noted that the appellant had provided reasonable explanations, including references to previous years' balances, which were accepted by the Assessing Officer (AO). - Regarding the issue of jewellery, the Tribunal highlighted the lack of opportunity provided to the appellant by the Pr.CIT to address this matter. It emphasized that principles of natural justice were breached, as the appellant was not given a chance to defend against the allegations related to jewellery. Ultimately, the Tribunal set aside the revisional order and upheld the appellant's appeals.
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Income Tax:
Addition u/s 69A r.w.s. 115BBE - assessee deposited cash during demonetization period - The Appellate Tribunal found the appellant's claim backed by sufficient documentary evidence, concluding that no addition could be made solely based on suspicion. As the cash generated from sales was duly reflected in the books of accounts, the provisions of Sec. 69A were not applicable. Ultimately, the Tribunal allowed the appellant's appeal, overturning the additions made by the assessing authority.
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Income Tax:
Estimation of income - Bogus purchases - Reliance on retracted statement - The ITAT, after reviewing the case, noted discrepancies in the reliance on these statements for making disallowances. They observed that subsequent affidavits retracted these statements, diminishing their evidentiary value. Additionally, documentary evidence such as invoices and bank statements corroborated the assessee's claims of genuine purchases. For several assessment years, the tribunal decided to delete the disallowances concerning bogus purchases, arguing that the AO's assessments were based on inadequate grounds and, in some cases, relied excessively on ad-hoc estimates.
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Income Tax:
New scheme for Tax on income of individuals and Hindu undivided family u/s 115BAC - Assessee had not filed Form 10-IE for opting the new tax regime within the stipulated time - The Appellate Tribunal referred to Section 115BAC of the Income Tax Act, which states that if an individual fails to satisfy certain conditions for opting the new tax regime, the option becomes invalid for the relevant assessment year, and the income is computed as per the old scheme. Since the assessee filed the return after the due date, the Tribunal upheld the AO's decision to assess the income under the old scheme. - Regarding denial of Deductions: the Tribunal allowed the appeal for statistical purposes, directing the assessing officer to re-examine the issue based on evidence and submissions provided by the assessee, ensuring a fair opportunity for the assessee to present their case.
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Customs:
Export of Goods - Mis-declaration of Mud additive chemicals for oil well - Confiscation - The Tribunal found that the Commissioner's decision to confiscate the goods was based on evidence that did not adhere to proper procedural requirements. Specifically, the statements relied upon were not subjected to the process prescribed under section 138B of the Customs Act, rendering them irrelevant. Additionally, the denial of cross-examination regarding the test report further weakened the case. Consequently, the Tribunal set aside the order of confiscation. Since the confiscation of goods was deemed invalid due to procedural lapses, the penalties imposed on the appellants were also overturned.
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Customs:
Classification - Import of ‘Accordion springs’ - The Tribunal rejected the appellant's reliance on expert opinions, stating that classification is a quasi-judicial process and cannot be decided by experts. It emphasized that classification must be based on the common parlance test, considering how the goods are commonly understood and sold. The Tribunal concluded that since the Accordion springs did not fit the descriptions of leaf springs or helical springs, they should be classified under the residual category of "others" under CTI 7320 90 90.
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Customs:
Jurisdiction of the First Appellate Authority - amendment of shipping bills - The Commissioner of Customs rejected the request, citing time limitations specified in a CBIC circular. The appellant appealed this decision before the Commissioner of Customs (Appeals), which was dismissed on jurisdictional grounds. The Appellate Tribunal upheld the dismissal, emphasizing that the decision to reject the request was made by the Commissioner of Customs, making it outside the purview of the First Appellate Authority.
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Customs:
Smuggling - Absolute confiscation of the twelve gold biscuits of foreign origin - The Tribunal noted a lack of conclusive evidence showing the gold was of foreign origin or smuggled. The purity levels indicated were below international standards for pure gold, which further cast doubt on the claim that it was of foreign origin. The Tribunal highlighted that the appellant's statements, which were crucial to the prosecution's case, were retracted and claimed to be made under duress. Without other corroborative evidence, these statements were deemed unreliable for convicting the appellant. - The Tribunal set aside of the order for confiscation and penalty.
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Customs:
Re-classification of Thorn - The Tribunal upheld the reclassification of the imported goods to CTI 76020090, agreeing with the authorities that the original classification was a mistake. - The Tribunal concurred with the absolute confiscation of the goods under the discussed sections of the Customs Act. However, it adjusted the penalties, allowing for the redemption of the confiscated goods upon payment of a fine, acknowledging that while the importer lacked a necessary license, there was no hazardous material in the goods that would pose a risk to society. - Penalties under section 114AA were set aside due to the lack of intentional misdeclaration.
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Customs:
Undervaluation - Imports of high-end foreign cars - The appellate tribunal noted that the assessable value was determined using various sources, including the car manufacturer's website and internet values. However, crucial information, such as Alberto's retracted statement and documentary evidence, was not adequately considered. The tribunal observed discrepancies in the invoices and highlighted the lack of evidence supporting the revenue's allegations of under-valuation. As the burden of proof rested with the revenue, the tribunal found the valuation unsustainable and set aside the impugned order.
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Indian Laws:
Interest on the penalty amount - for the period when the initial order was stayed - The High Court observed that the regulations explicitly required the issuance of a demand notice after the penalty order's stipulated payment period had passed. The court found that this procedural step was not merely directory but mandatory, thus affecting the legality of the interest imposed without following due process. Additionally, the court noted analogous principles from tax law, where the issuance of a demand notice is a precondition for the recovery of sums due under the law. Drawing from these principles, the court underscored that proper legal procedures cannot be bypassed under the guise of procedural simplicity or regulatory power. The impugned order was set aside.
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IBC:
Liquidation of the Corporate Debtor - SRA has not made the payments within the timeline - The tribunal noted that the impugned order was based on the premise that not proceeding with liquidation would modify the resolution plan, which it deemed impermissible under the Code. However, the tribunal observed that extending payment timelines does not inherently modify the resolution plan and thus cannot justify liquidation. - The tribunal upheld the commercial wisdom of the CoC, which had a majority vote against liquidation. It emphasized that such decisions should not be disregarded lightly by the Adjudicating Authority.
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IBC:
Appointment of the Appellant as the liquidator - The Tribunal found that the Appellant failed to comply with Regulation 31A(11) by not submitting the mandatory written consent on Form AA of Schedule II before the Adjudicating Authority or the SCC. Despite the alleged consent dated 29.08.2023, there was no evidence of its submission to the relevant authorities. - The Tribunal upheld the Adjudicating Authority's decision to appoint Respondent No. 2 as the liquidator, citing the authority's power to replace the liquidator for justifiable reasons. - Agreeing with the Respondent, the Tribunal concluded that the Appellant lacked locus standi to file the appeal as they were merely a proposed/prospective liquidator without inherent rights to the appointment.
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IBC:
Approval of a resolution plan - The Tribunal dismissed objections raised by dissenting homebuyers, citing that since the homebuyers as a class assented to the plans, individual challenges to the resolution plan were not maintainable. - Previous applications challenging the validity of the sub-lease agreement were dismissed by the Tribunal, as the transaction occurred prior to the initiation of Corporate Insolvency Resolution Process (CIRP), without evidence of fraud or intent to deprive homebuyers' rights. - The Tribunal upheld the preliminary objection regarding the competence of maintaining the appeal by the appellants, emphasizing that dissenting homebuyers must follow the decision of the majority within their class.
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IBC:
Initiation of CIRP - Relevant date of default - The Tribunal noted the appellant’s arguments about defaults prior to the RBI’s COVID-19 moratorium guidelines but also observed that the application for CIRP and the recall notice came after the implementation of these guidelines. The Tribunal concluded that while the initial default might have occurred before the pandemic, the formal procedures for CIRP were only initiated after the pandemic began, thereby falling within the protective scope of Section 10A of the IBC. Consequently, the Tribunal dismissed the appeal, upholding the adjudicating authority's decision not to initiate CIRP, but noted that the appellant retains the right to pursue other legal remedies to recover the debt.
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Service Tax:
Challenging the validity of show cause notice (SCN) - Recovery of Swachh Bharat Cess - service provided by the petitioner by putting in rail linings - The High Court found the Writ Petition premature and directed the petitioner to respond to the detailed Show Cause cum Demand Notice within 30 days. The court instructed the second respondent to adjudicate the matter within 30 days thereafter, ensuring the petitioner's opportunity to be heard and strict compliance with the law. The Writ Petition was disposed of with no costs.
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Service Tax:
Eligibility to make adjustment of excess service tax paid against future service tax liability - Claim of Excess service tax paid due to issuance of revised invoice - The Tribunal affirmed the eligibility of the appellant to adjust excess service tax paid against future liabilities. It noted that the appellant had availed credit for the excess tax paid on the original invoices and used a portion of it to pay service tax in subsequent periods. The Tribunal rejected the argument that the appellant could not have filed a refund claim while using a part of the excess service tax for future liabilities.
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Service Tax:
Nature of activity - manufacture or service - Activity amounting to manufacture or not - crushing of lumps - Transformation processes - Transformation of goods in new commodity commercially known as distinct commodity - The Tribunal noted that according to Chapter Note 2 under Chapter 25, the crushing and processing of products to specific forms like powder or small-sized pieces constitute manufacturing activities. Consequently, the Tribunal held that such activities are exempt from being taxed under the business auxiliary service category, as the Finance Act explicitly excludes manufacturing activities from this category.
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Central Excise:
Recovery of rebate claim - Adjusted rebate claims towards their existing liabilities - The High Court confirmed that the petitioner was eligible for rebate on their exports as per the impugned orders. Although previous orders had upheld adjustments, the High Court noted that these orders had been set aside. Consequently, there was no current demand enforceable against the petitioner, rendering the adjustment unjustified. The High Court ruled that the adjusted amounts must be refunded to the petitioner along with interest.
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Central Excise:
CENVAT Credit - Allegation of receipt of only invoices without receipt of duty paid goods - non-existent certain manufacturers and 1st stage dealers - While the respondent (Revenue) pointed out the alleged non-existence of suppliers, the Tribunal considered the registration and operational status of these suppliers as verified by the central excise authorities at the time. The Tribunal highlighted that the appellant had taken reasonable precautions as expected under the law, and it was not their duty to verify the existence of upstream suppliers beyond the immediate seller. The Tribunal set aside the orders denying Cenvat credit and imposing penalties.
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Central Excise:
Recovery of wrongly utilized credit - utilization of Cenvat Credit availed on Basic Excise Duty (BED) for payment of EC and SHEC - Period between April 2013 and January 2014 - The tribunal found that the EC and SHEC, while not traditionally excise duties under the Central Excise Act, are considered excise duties when it comes to the utilization of Cenvat Credit for payment. The tribunal followed the pivotal case of M/s. Vedanta Ltd. vs CCE, where it was held that EC and SHEC could be treated as excise duties for the purpose of CENVAT credit utilization.
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Central Excise:
Reversal of CENVAT credit - Investment in shares - Exempt service or not - The Appellate Tribunal concurred with the appellant's argument that investment activities do not constitute a service. They emphasized that trading in securities does not qualify as a service, let alone an exempted service. Therefore, the demand for tax on investment income was deemed erroneous, and the impugned order was set aside.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2024 (5) TMI 52
Violation of principles of natural justice - petitioner did not have a reasonable opportunity to contest the tax proposal on merits - error made while reporting outward supplies and Input Tax Credit (ITC) in the month of November 2017 - HELD THAT:- On perusal of the impugned order, it is evident that the tax proposal was confirmed on the ground that the petitioner failed to file written objections to the show cause notice or attend personal hearing. Since the petitioner asserts that the inadvertent error was rectified both in Form GSTR 9 and in the GSTR 3B return from March 2020, the interest of justice warrants that the petitioner be provided another opportunity to contest the tax proposal by putting the petitioner on terms. The impugned order dated 27.07.2023 is set aside and the matter is remanded for reconsideration on condition that the petitioner remits 10% of the disputed tax demand as agreed to within a period of two weeks from the date of receipt of a copy of this order - petition disposed of by way of remand.
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2024 (5) TMI 51
Scope of SCN - impugned order proceeds on a completely different basis from the SCN - Entitlement to ITC - HELD THAT:- On perusal of the intimation and show cause notice, it is evident that the petitioner was called upon to show cause with regard to a sum of Rs. 8,27,252/-, which was arrived at on the assumption that there was sales suppression. By contrast, the impugned order imposes tax liability of Rs. 14,97,072/- and an equal amount by way of penalty. It is also clear that the impugned order does not proceed on the basis of sales suppression. If the respondent intended to modify the tax proposal in light of the petitioner's reply, a fresh show cause notice should have been issued. It is also noticeable that the petitioner's electronic credit ledger was debited to the extent of Rs. 7,52,047/-. In these circumstances, the impugned order cannot be sustained. The impugned order dated 23.06.2023 is set aside by leaving it open to the respondent to initiate fresh proceedings by issuing a show cause notice to the petitioner. Petition disposed off.
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2024 (5) TMI 50
Violation of principles of natural justice - impugned order does not take into consideration the reply submitted by the Petitioner and is a cryptic order - HELD THAT:- The observation in the impugned order dated 30.12.2023 is not sustainable for the reasons that the reply dated 23.10.2023 filed by the Petitioner is a detailed reply with supporting documents. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is incomplete, not duly supported by adequate documents, unable to clarify the issue which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner. Further, if the Proper Officer was of the view that any further details were required, the same could have been specifically sought from the Petitioner. However, the record does not reflect that any such opportunity was given to the Petitioner to clarify its reply or furnish further documents/details. The impugned order dated 30.12.2023 cannot be sustained and is set aside. The show cause notice is remitted to the Proper Officer for re-adjudication - Petition disposed off.
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2024 (5) TMI 49
Determination of time limit for filing of Appeal before the Appellate Authority - Delay due to the online system's failure to upload the Order-in-Original with the appeal. - Rejection of refund claim on the ground of time limitation - HELD THAT:- In terms of Section 12(1) of the Limitation Act, in computing the period of limitation for an appeal, the day from which such period is to be reckoned, is to be excluded. Further, in terms of Section 12(2) of the Limitation Act, in computing the period of limitation, the day on which the judgment complained of was pronounced, is also to be excluded. Accordingly, even if it is assumed that the order was uploaded/communicated on the day it was signed i.e. 12.08.2022, said date of 12.08.2022 is to be excluded while computing the period of limitation. Accordingly, the period of three months is to commence from 13.08.2022. Thus petitioner was liable to file the appeal by 12.11.2022. It is an admitted position that the appeal was filed alongwith a copy of the order, through the online mode on 12.11.2022, i.e. within the period of three months. The appeal was within time and the impugned order erroneously rejects the appeal on the ground of limitation. Consequently, the impugned order dated 18.10.2023 is set aside. The appeal is restored on the records of the Appellate Authority. The Appellate Authority is now directed to decide the appeal on merits in accordance with law. Petition disposed off.
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2024 (5) TMI 48
Rectification application - tax proposals confirmed on two discrepancies - rectification application of the petitioner was not uploaded on the portal - HELD THAT:- On perusal of the impugned order and the rectification application, it appears that the confirmed tax proposals pertain to discrepancies between the petitioner's turnover as per the financial statement and the auto populated GSTR 2A as also discrepancies between the petitioner's annual return in Form GSTR 9 and the monthly returns in Form GSTR 3B. From the enclosures to the rectification application, it appears that the petitioner has enclosed relevant documents to endeavor to reconcile the differences. In these circumstances, it is just and appropriate to direct that such application be considered expeditiously. Petition is disposed of by directing the respondent to consider and dispose of rectification application dated 26.02.2024 within two months from the date of receipt a copy of this order.
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2024 (5) TMI 47
Parallel proceedings under Section 73 of the TNGST Act, 2017 - Challenge to impugned Assessment order - petitioner has not participated in the proceedings - HELD THAT:- Having considered the fact that the petitioner failed to respond to the notices issued in DRC-01 dated 28.09.2023, which is culminated in the impugned order dated 20.12.2023 and having considered the fact that the respondent has recovered the substantiate portion of the tax, which was confirmed vide the impugned orders dated 20.12.2024 for a sum of Rs. 7,62,834/-, the impugned order is set aside and the case is remitted back to the respondents to pass fresh orders on merits in accordance with law. The impugned order, which stands quashed, shall be corrigendum to the impugned order issued to the petitioner in DRC-01 dated 28.09.2023 - Petition allowed.
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2024 (5) TMI 46
Violation of principles of natural justice - impugned order does not take into consideration the reply submitted by the Petitioner and is a cryptic order - HELD THAT:- The impugned order, however, after recording the narration records that no proper reply/ explanation have been received from the Taxpayer. It states that And whereas, the Taxpayer was allowed opportunity to explain Tax deficiencies during Personal Hearing before Proper Officer on the given date and time - The Proper Officer has opined that no proper reply/explanation has been received from the Taxpayer. The observation in the impugned order dated 31.12.2023 is not sustainable for the reasons that the reply dated 20.10.2023 filed by the Petitioner is a detailed reply with supporting documents. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the no proper reply/explanation has been received which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner. The impugned order dated 31.12.2023 cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 31.12.2023 is set aside and the matter is remitted to the Proper Officer for re-adjudication. Petition disposed of by way of remand.
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2024 (5) TMI 45
Cancellation of GST registration - condonation of delay in preferring the appeal against the order of cancellation - HELD THAT:- The appellate authority cannot be faulted for not considering the appeal in view of the language of Section 107 of the Central Goods and Services Tax Act, 2017. At the same time, the petitioner should not be left without remedy. The reasons set out in the order of cancellation is non payment of collected taxes for a continuous period of three months. In the decision in the case of TVL. SUGUNA CUTPIECE CENTER VERSUS THE APPELLATE DEPUTY COMMISSIONER (ST) (GST) , THE ASSISTANT COMMISSIONER (CIRCLE) , SALEM BAZAAR. [ 2022 (2) TMI 933 - MADRAS HIGH COURT] , this Court directed restoration of registration subject to certain conditions. In the over all facts and circumstances, the petitioner is entitled to an order on similar lines. The impugned order passed by the third respondent dated 25.8.2023 is set aside. Consequentially, the order, if any, passed by the second respondent rejecting the appeal filed by the petitioner against the order dated 25.8.2023 passed by the third respondent, is also set aside - petition disposed off.
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2024 (5) TMI 44
Violation of principles of natural justice - impugned order does not take into consideration the reply submitted by the Petitioner and is a cryptic order - demand with penalty u/s 73 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The observation in the impugned order dated 28.12.2023 is not sustainable for the reasons that the reply dated 07.11.2023 filed by the Petitioner is a detailed reply with supporting documents. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is not found to be satisfactory, which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner - Further, if the Proper Officer was of the view that any further details or documents were required, the same could have been specifically sought from the Petitioner. However, the record does not reflect that any such opportunity was given to the Petitioner to clarify its reply or furnish further documents/details. The impugned order cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, impugned order is set aside and the matter is remitted to the Proper Officer for re-adjudication.
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2024 (5) TMI 43
Violation of principles of natural justice - impugned order does not take into consideration the request submitted by the Petitioner for extension of time - cryptic order - HELD THAT:- Section 75(5) of the Act stipulates that, if sufficient cause is shown, the proper officer shall adjourn the hearing, however, not more than three adjournments may be granted - Though in terms of Section 75(5) of the Act three adjournments maybe granted, it is not mandatory for the proper officer to grant three adjournments. Adjournment is not a right. Said provisions empowers the proper officer to grant upto three adjournments, if sufficient cause is shown. It would be dependent on the facts of each case whether sufficient cause has been shown or not for exercise of the discretion to adjourn. In the present case, it is noticed that the order is a cryptic order and a prayer is made on behalf of petitioner for one opportunity to file reply, accordingly the impugned order dated 19.12.2023 is set aside and the show cause notice is remitted to the proper officer for re-adjudication - Petitioner shall file a reply to the Show Cause Notice within a period of 30 days from today. Thereafter, the Proper Officer shall re-adjudicate the Show Cause Notice after giving an opportunity of personal hearing and shall pass a fresh speaking order in accordance with law within the period prescribed under Section 75(3) of the Act. Petition disposed off.
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2024 (5) TMI 42
Extinguishment of liability as per order of NCLT - challenge to order issued u/s 73 of the SGST/CGST Act 2017 - extinguishment of liability which was acquired on account of auction purchase - HELD THAT:- It would now be relevant to take note of the decision of the Hon ble Supreme Court in the case of GHANASHYAM MISHRA AND SONS PRIVATE LIMITED THROUGH THE AUTHORIZED SIGNATORY VERSUS EDELWEISS ASSET RECONSTRUCTION COMPANY LIMITED THROUGH THE DIRECTOR ORS. [ 2021 (4) TMI 613 - SUPREME COURT ], where it was held that once a resolution plan is duly approved by the Adjudicating Authority under subsection (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. There are no hesitation in holding that the order under Section 73 (Annexure P1) issued by respondent No. 1 in the three writ petitions is totally without jurisdiction and the same therefore deserves to be and are accordingly set aside/quashed. The writ petitions are allowed.
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2024 (5) TMI 41
Garnishee order - long delay of about more than a year in filing these writ petitions and time to file appeals against the adjudication orders have also expired long back - HELD THAT:- In view of the fact that the impugned orders of garnishee arise out of the adjudication orders which are appelable under the statute, no relief can be granted to the petitioner except granting liberty to the petitioner to file appeals against the impugned orders in original /adjudication order in accordance with law by making pre-deposit in each appeal on condition that petitioner shall pay a cost of Rs. 1 lakh in each appeal for inordinate delay in approaching this writ court and by making a long delay after the statutory period of filing the appeal. The appeal should be filed by the petitioner within two weeks from date of complying the statutory formalities as well as by making payment of cost of the WBGST authority concerned within the time stipulated herein. The petition is disposed off.
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2024 (5) TMI 40
Exemption supply or not - services of leasing of the land for industrial purposes by SMPK to the applicant - upfront premium payable by the applicant towards the services of leasing of the land for industrial purposes by SMPK, exempt or not - entry 41 of N/N. 12/2017-Central Tax (Rate) dated 28.06.2017 - WBAAR held that ' services of leasing of the land for industrial purposes by SMPK to the applicant is found not to be covered under entry 41 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and therefore cannot be treated as an exempt supply' - HELD THAT:- It is found that the WBAAR would have adopted a more comprehensive approach in rendering its ruling in the present case if it had documented its observations and findings regarding satisfaction of all the conditions required for deciding the eligibility for the exemption under entry 41 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. The WBAAR would have adopted a more comprehensive approach in rendering its ruling in the present case if it had documented its observations and findings regarding satisfaction of all the conditions required for deciding the eligibility for the exemption under entry 41 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. The WBAAR order requires modification as while pronouncing the Advance Ruling in the instant case ruling/order issued is restricted to a single condition of the pertinent notification - it is deemed appropriate to remand the case to the Authority for Advance Ruling, i.e. the WBAAR for fresh decision. The WBAAR will take into consideration all aspects of the matter and decide the case afresh. Matter on remand.
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2024 (5) TMI 39
Classification of service - Supply of services including transportation, packing, loading, unloading unpacking - GTA service or not - transport of goods by road - single bundled supply or not - whether the principal supply in this transaction is transportation? - HELD THAT:- The Hon ble High Court of Kerala in the case of ABBOTT HEALTHCARE PRIVATE LIMITED VERSUS THE COMMISSIONER OF STATE TAX KERALA, THE COMMISSIONER, CGST, KERALA, UNION OF INDIA, STATE OF KERALA, THE KERALA AUTHORITY FOR ADVANCE RULING, THE KERALA APPELLATE AUTHORITY FOR ADVANCE RULING [ 2020 (1) TMI 338 - KERALA HIGH COURT] held that a composite supply must take into account supplies as affected at a given point in time on as is where is basis. The Hon'ble Supreme court of India in a catena of case law has ruled that illustrations in a statute are part of the statute and help to elucidate the principle of the Section in DR. MAHESH CHAND SHARMA VERSUS SMT. RAJ KUMARI SHARMA [ 1995 (12) TMI 395 - SUPREME COURT] . Therefore a composite supply should be similar to a supply mentioned in the illustration to the definition in Section 2(30), where two or more taxable goods or services are supplied along with each other to constitute a composite supply. The entry in the notification enumerates Services in relation to transport of goods by road. Thus all services rendered in relation to transportation of goods including packing, loading, unloading unpacking fall under this entry provided that such services have a direct and immediate link with the covanent/agreement for transport of goods i.e., the contract shall be for transport, packing , loading, unloading and unpacking of the same goods. Therefore, if the transactions made by the applicant are in substance contracts for transport, packing, loading, unloading of the same goods entrusted by their customers, then such services fall under Entry 9(iii) of notification 11/2017-CT (R) dt. 28-06-2017 i.e., goods transport Agency
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2024 (5) TMI 38
Classification of goods - paper cups - to be classified under HSN Code 48236900 or not - SGST @ 2.5% rate is rightly charged or not - refund of excess input accumulated in credit ledger due to rate difference of input and outward supply - HELD THAT:- A disposable paper cup is made out of paper and often coated with plastic or wax to prevent liquid from leaking out or soaking through the paper. It may be made of recycled paper. It is known that paper cups consist of approximately 95% high-degree cellulose paper board. Generally, disposable paper cups are composed of 5% inner polyethylene (PE) coatings to prevent leakage. It is found that goods under following description falling under Chapter / Heading / Sub-heading / Tariff item 4823 is specified in entry serial number 157 of Schedule-III of Notification No. 1/2017-Central Tax (Rate) dated 28-6-2017 (as amended) and corresponding W.B. State Tax Notification No. 1125 F.T. dated 28.06.2017(as amended) and therefore would attract tax @ 18%.
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2024 (5) TMI 37
Entitlement to claim input tax credit charged and paid on inward supply of car from Mercedes Benz India which are used for demonstration purpose to the potential customer interested in buying Mercedes Benz Car, commonly known as Demo cars - classification and rate of tax at the time of sale of demo car - amount received by the applicant from Mercedes Benz INDIA towards reimbursement of Loss on Sale of Demo Car constitute as supply or not. Admissibility of input tax credit on purchase of motor vehicles which are initially used by the applicant for demonstration purpose and thereafter supplied by him - HELD THAT:- The applicant is not engaged in trading of motor vehicles. In the case in our hand now, the applicant has entered into an agreement with MB INDIA to provide facilitation services for sale of motor vehicles where the applicant acts as a self-employed commercial agent with the responsibility of brokering the sales of vehicles on behalf of MB INDIA. Admittedly, the supply of motor vehicles to the end-customers is made by MB INDIA. The applicant maintains the stock of the demo vehicles for a specified period of time and thereafter supplies the same which may be made at a price lower than the purchase value of the said vehicle. However, the provisions of the GST Act nowhere specifies that input tax credit shall not be available in respect of any outward supplies which is made at a price lower than its procurement value - the fact that the condition of a demo vehicle at the time of its further supply has undergone some deterioration does not detract from the reality that the vehicle when supplied by the applicant has ceased to be such vehicle that was purchased. The demo vehicles are purchased all along for further supply with the condition that they will be kept for a specific period of time. The restriction of input tax credit as imposed in section 17(5)(a)(A) of the GST Act is not applicable on purchase of demo vehicles which are supplied by the applicant after the specified time for providing test drive facility. Classification and rate of tax at the time of sale of demo car - HELD THAT:- Chapter 87 of the CUSTOMS TARIFF ACT, 1975 deals with vehicles other than railway or tramway rolling-stock, and parts and accessories thereof . Further, Chapter 8702 covers motor vehicles for the transport of ten or more persons, including the driver . Furthermore, Chapter 8703 covers motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 8702), including station wagons and racing cars - there would be no change of classification of the demo vehicle, at the point of sale by the applicant. Rate of tax of demo car - HELD THAT:- The outward supply of demo car would attract same rate of tax of its inward supply subject to the provision of section 14 of the GST Act. Whether the amount received by the applicant from MB INDIA towards reimbursement of Loss on Sale of Demo Car would constitute as supply or not? - HELD THAT:- In the case at hand, the applicant has entered into an agreement with MB INDIA with a specific condition towards Demo Car Loss Sharing knowing very well that it may suffer a loss at the time of selling of demo vehicle since the vehicle would have undergone some deterioration while providing test drive facility to the prospective buyers. In other words, MB INDIA enters into the agreement with a promise to compensate where the applicant would suffer a loss on sale of demo vehicle - the applicant has entered into the agreement to tolerate the act of suffering loss for a consideration. Undisputedly, the applicant has chosen to tolerate the act for a consideration as per the agreement and has agreed to tolerate the act in the course or furtherance of the business - agreeing to tolerate an act having SAC 999794 is classifiable under Other Miscellaneous services and is taxable @ 18% vide serial number 35 of Notification No. 11/2017-Central Tax I(Rate) dated 28.06.2017, as amended.
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2024 (5) TMI 36
Taxable supply or not - entry fee collected from the visitors/ devotees/ pilgrim by the applicant - charitable activity or not - applicant is Religious Trust provisionally registered under Section 12AA of Income Tax Act, 1961 - HELD THAT:- The sewa service provided i.e darshan/visit of Temple Hall by the applicant is in the course or furtherance of business. Hence it is covered under the scope of Supply. Since it is covered under the definition of Supply, the amount received by the applicant can be considered as consideration for supply of service. As the service provided by the applicant in question is Supply, it is taxable under GST Act. On perusal of order of provisional registration of the applicant dated 28.05.2021, it is found that they are provisionally registered under Section 12AA of Income Tax Act, 1961 from AY 2022-23 to AY 2026-27 subject to the conditions mentioned therein - the applicant is engaged in service of darshan of Temple Hall and provide insight into principles of Jainism and teachings of the Thirthankar to the visitors, which can be considered as advancement of religion, the benefit of this Notification No. 12/2017-CT (Rate) dated 28.06.2017 in term of Serial No. 1 is available to them and the applicant is not required to pay any Tax under GST Act. The entry fee, being collected by the applicant from the visitors/devotees/pilgrims, is covered under charitable activities relating to advancement of religion which is not taxable under the provisions of GST Act, 2017.
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2024 (4) TMI 1128
Retrospective cancellation of GST registration - SCN does not give any reasons for cancellation - Violation of principles of natural justice - HELD THAT:- 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. Merely, because a taxpayer has not filed the returns for some period does not mean that the taxpayer s registration is required to be cancelled with retrospective date also covering the period when the returns were filed and the taxpayer was compliant. 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. It is clear that both the petitioner and the respondent want the GST registration to be cancelled, though for different reasons. In view of the above that the Petitioner does not seek to carry on business or continue the registration, the impugned order dated 28.10.2021 is modified to the limited extent that registration shall now be treated as cancelled with effect from 20.06.2020 i.e., the date when petitioner filed an application seeking cancellation of GST registration - petition disposed off.
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2024 (4) TMI 1127
Maintainability of appeal - appeal dismissed on the ground of non-filing of certified copy and the same has already been filed by the petitioner - requirement of proving opportunity of hearing - HELD THAT:- This Court, taking into consideration the fact the petitioner has already filed reply to the notice dated 10.05.2022 on 17.05.2022, directs that the authority may consider the same and rehear the appeal by giving opportunity of hearing to the petitioner. Consequentially, the order dated 02.06.2022 under Annexure-1 is hereby quashed. The matter is remitted to the appellate authority for rehearing of the appeal. Petition disposed off.
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Income Tax
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2024 (5) TMI 57
Validity of reopening of assessment against the ex-promoters - notice u/s 148 against petitioner company after the approval of the resolution plan for a period prior to closing - liability of previous management - HELD THAT:- As we find all these petitions will be covered by the judgment of this Court in Alok Industries Limited [ 2024 (3) TMI 1083 - BOMBAY HIGH COURT] wherein held that Section 148 read with Section 147 of the Act only deals with a situation where any income chargeable to tax has escaped assessment for any assessment year. We are unable to fathom as to how the provisions of Section 148 of the Act can be applied for collection of evidences of third party, ex-promoters etc., and we say this because there are separate provisions under Section 133(6) of the Act in which, such evidences can be collected. We are also unable to understand how the provisions of Section 148 of the Act can be used when the proceedings are not for recovery of tax. Both Petitioner and respondent agreed. Petitioner at the same time states that Revenue s doors should not be closed and they must be permitted to take such steps as advised against the ex-promoters because the purpose of passing the orders or issuance of notices under Sections 148A/143C/143(3)/148 of the Income Tax Act, 1961 were only to take action against the ex-promoters of Respondent-company.At the same time we make it clear that if Revenue wants to take any steps as they proposed to, it may do so in accordance with law. We express no opinion.
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2024 (5) TMI 56
Eligibility for deduction u/s. 80P(1) r/w s. 80P(2)(a)(i) - assessee is registered as a Primary Agricultural Credit Society (PACS) - HELD THAT:- The assessee/s, satisfying the primary condition of s. 2(19) of the Act defining a society, is, thus, a cooperative society, a pre-requisite for deduction u/s. 80P(1). The resolution of the dispute as to whether the assessee is therefore eligible for deduction u/s. 80P(1) r/w s. 80P(2)(a)(i) and, where so, its extent, thus rests solely on the assessee being, or not being, a co-operative bank, a term again defined under BRA, which stands adopted for the purpose of s. 80P, determining the issue. The copy of the bye-laws, only a certified translated copy of which, in full, can be taken cognizance of and regarded as a part of the record, is not on record. As also noted by the Tribunal in it s orders afore-referred, what value the restriction on the area for it s members, if the assessee-society is otherwise eligible to accept deposits from non-members as well - Under the circumstances, we, for the reasons aforenoted, as also the cases referred to, set aside the orders by the Revenue authorities, and restore the matter back to the file of the AO to determine the assessee s eligibility for deduction u/s. 80P(1) r/w s. 80P(2)(a)(i) on the basis of it being or, as the case may be, not being, a co-operative bank, i.e., on the basis of it s bye-laws read with the Kerala Act and the BRA, as well as the quantum of the deduction there-under, which we clarify would be in full where the assessee is a cooperative bank, with it s entire income arising from the business of banking. Assessee s appeal is allowed for statistical purposes.
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2024 (5) TMI 55
Deduction u/s. 80P(2)(a)(i) - denial of deduction as assessee being, in substance, not a PACS inasmuch as the bulk of it s lending is not for agriculture and allied purposes - as submitted assessee, that it is, registered as a Primary Agricultural Credit Society (PACS) under the Kerala Cooperative Societies Act, 1969 (Kerala Act), is admittedly in the business of banking - HELD THAT:- As explained therein, where and to the extent the assessee-society accepts deposits from non-members; rather, is entitled to, being permitted by it s bye-laws, it is in the business of banking notwithstanding the area restrictions for it s operations inasmuch as the same are applicable only qua it s members. Rather, in such a case, being in the business of banking, even income on provision of credit to non-members would stand to be deductible u/s. 80P(2)(a)(i). The bye-laws of the assessee-society are not on record, neither stand referred to in their orders by the Revenue authorities. It is only with reference thereto would it stand to be determined as to if: (a) the assessee is a co-operative bank; and (b) the assessee is in the business of banking. The matter, accordingly, is restored to the file of AO for, on a perusal of it s bye-laws, and after affording due opportunity of hearing to the assessee, issue specific finding/s on the two aspects afore-stated, and decide accordingly, allowing or, as the case may be, disallowing wholly or partly, the assessee s claim for deduction u/s. 80P(1) r/w s. 80P(2)(a)(i) of the Act. We make it clear that the assessee shall be allowed deduction u/s. 80P only if it is not a cooperative bank, i.e., as per the definition provided in Explanation below s. 80P(4). Two, where it s bye-laws permit it to accept deposit from non-members, it is by definition in the business of banking and, accordingly, entitled to deduction on it s profit in full, as opposed to that attributable to the provision of credit to it s members. Assessee appeal allowed.
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2024 (5) TMI 54
Deduction u/s. 80P - assessee, a cooperative society in existence since 1961, and registered under the Kerala Cooperative Societies Act, 1969 (Kerala Act) as a primary agricultural credit society (PACS) - denial of deduction even as the assessee is registered as a PACS, it is actually undertaking banking business, providing the services, with in fact only a small fraction (close to 10%) of it s lending being to the agricultural sector, so that it is not a PACS - HELD THAT:- The assessee s lending being admittedly not primarily for agricultural purposes, it is not a PACS by definition and, two, is a cooperative bank, i.e., a cooperative society in the business of banking, even as clarified by the Hon'ble Courts time and again, as in Mavilayi SCB Ltd. [ 2021 (1) TMI 488 - SUPREME COURT] , THE CITIZEN CO-OPERATIVE SOCIETY LIMITED [ 2017 (8) TMI 536 - SUPREME COURT] AND MUHAMMED USMAN [ 2002 (11) TMI 686 - HIGH COURT OF KERALA] Why, the provision itself recognizes banking as an eligible activity for a cooperative society, entitling it to deduction of the profits derived therefrom (s. 80P(2)(a)(i)). It being not a PACS would thus not carry the Revenue s case far. Firstly, for the reason that exemption u/s. 80P(1) r/w s. 80P(2)(a)(i) is, as afore-noted, equally applicable to income derived from the business of banking, even as that from credit to members is not confined to that for agricultural purposes only. Two, inasmuch as the tax statutes are to be strictly construed, the term cooperative bank is it be, for the purpose of s. 80P(4), excluding cooperative banks from the benefit of s. 80P, strictly construed, i.e., as defined therein. The assessee, per it s Ground 4 before the first appellate authority, has made a specific claim as to it s bye-laws permitting admission of other cooperative societies as members and, therefore, of not being a primary cooperative bank in terms of s. 56 r/w s. 5(ccv) of BRA. There is no finding by the ld. CIT(A) thereon, which clearly has a direct bearing on the assessee being, or not being, a primary cooperative bank and, thus, a cooperative bank for the purposes of s. 80P of the Act. Copy of the byelaws is not on record. Even the two pages (in English) thereof, forming part of the paper-book, to which Shri Narayanan would refer during hearing, are not by an authorized translator for us to place reliance thereon; the original, as explained, being in vernacular. The matter, accordingly, is restored to the file of the AO to examine if the assessee falls under the definition of a cooperative bank under BRA, construed strictly, which definition stands adopted for the purpose of s. 80P(4) of the Act, i.e., whether as a primary cooperative bank or district/state cooperative bank. As afore-noted, it being in the business of banking or not a PACS is not detrimental to it s claim u/s. 80P(1) r/w s. 80P(2)(i)(a). The AO shall, upon hearing the assessee and examining such material as it may adduce in substantiation of it s claim/s, and causing such verification as he may deem fit, issue a definite finding as to if it is, or is not, a cooperative bank as defined under BRA, determining it s entitlement to exemption u/s. 80P(1) r/w s.80P(2)(a)(i) accordingly. We make it further clear that despite being not a PACS under the Act, it is yet a cooperative society under the Kerala Act, satisfying thus the requirement of s. 2(19) of the Act, which only is relevant for claiming deduction u/s. 80P(1) - Assessee s appeals allowed for statistical purposes.
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2024 (5) TMI 53
Estimation of income - bogus purchases - HELD THAT:- As held in case of Mohmd. Haji Adam company (s 2019 (2) TMI 1632 - BOMBAY HIGH COURT] where sales are not disputed, no discrepancy between purchases shown by the assessee and the sales declared; only the addition should be restricted to the extent of bringing the gross profit on purchases at the same rate of other genuine purchases. On this mandate, it was found that assessee has given the quantitative sales corresponding to the quantitative purchase, which is from alleged bogus suppliers. The resultant gross profit from alleged bogus purchase and sales is 5.096%. The gross profit ratio without alleged bogus purchase and corresponding sales is 5.407%, which will result into addition of 0.3% of alleged bogus purchases of ₹1,15,86,557/-which would be minuscule. Looking at the minuscule amount of addition to be retained, we find it a reasonable and just to delete the addition and allow appeal of the assessee.
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2024 (5) TMI 35
Delay in filling appeal before SC - Claim of long-term capital gains on shares in terms of Section 10(38) - Assessee not claiming exemption u/s 10(38) at the stage of the assessment proceedings but turned around and make such claim of wanting to cross-examine persons - Denial of principles of natural justice - denial of an opportunity to cross examine the entry providers HELD THAT:- There is gross delay of 309 days in filing the special leave petition. The explanation offered is not sufficient in law to condone the delay. Hence, the application seeking condonation of delay is dismissed. Consequently, the special leave petition is also dismissed keeping open the question of law, if any.
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2024 (5) TMI 34
Stay of demand - disposal of the first appeal subject to the condition that the petitioner pays 20% of the disputed tax demand - whether grant of stay is in exercise of discretionary jurisdiction? - HELD THAT:- Appellate authority did not examine whether the petitioner has made out a prima facie case. The petitioner asserted in the request letter that it has limited resources and would not be able to provide services to the public if directed to make the pre deposit. Although this does not qualify as evidence of financial stringency, this aspect warranted consideration. It should also be noticed that office memorandum dated 31.07.2016 (Instruction No.1914) does not make it mandatory that the assessee should remit 20% of the disputed tax demand. Solely for the purpose of enabling a reconsideration of the stay application by applying the classical principles of prima facie case, balance of convenience and irreparable hardship, including financial stringency, the impugned order calls for interference. The impugned order is set aside and the stay application is remanded for reconsideration by the appellate authority / first respondent in accordance with the observations set out herein. First respondent may exercise its discretion in accordance with law. In relation to the consideration of the stay application, it is open to the petitioner to file an additional affidavit and supporting documents.
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2024 (5) TMI 33
Revision u/s 263 - scrutiny assessment was completed on the return of income filed - petitioner had an alternate remedy before the appellate Tribunal u/s 253(1)(c) of the Income Tax Act - HELD THAT:- A survey was conducted under Section 133A of the Income Tax Act, 1961 on 14.03.2017. The petitioner had declared sum under Pradhan Mantri Garib Kalyan Yojana Scheme [PMGKYS] 2016. It is thereafter, the petitioner filed return on 03.11.2017 declaring a total loss which culminated in the scrutiny assessment order dated 30.12.2019 under Section 143(3) of the Income Tax Act, 1961, for the Assessment Year 2017-2018. It is, in this background, the show cause notice was issued under Section 263 of the Income Tax Act, 1961. The scrutiny assessment order passed under Section 143(3) of the Income Tax Act, 1961, cannot be confused with the impugned order pursuant to invocation of power under Section 263 of the Income Tax Act, 1961. Therefore, there is no merit in this Writ Petition. Further, the issue involves disputed question of facts, liberty is given to the petitioner to file a statutory appeal before the Appellate Tribunal u/s 253(1)(c) of the Income Tax Act, 1961, within a period of 45 days from the date of receipt of a copy of this order. The petitioner is also at liberty to move suitable appeal under the same proviso against the assessment order passed u/s 144 r/w section 263 and144B of the Income Tax Act, 1961, within such time. The petitioner is also at liberty to move suitable application for staying the operation of the impugned order as also the assessment order passed on 24.03.2023 under Section 144 read with Section 263 read with Section 144B of the Income Tax Act, 1961, along with the proposed appeal.
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2024 (5) TMI 32
Addition u/s 69A r.w.s. 115BBE - assessee failed to establish that the cash deposited during demonetisation period - non rejection of books of accounts - assessee explained that assessee was engaged in one of the businesses of running of a petrol pump which was the main source of cash sales that were deposited in the bank from time to time throughout the year - HELD THAT:- It is a matter of fact that the all figures were taken from the table on the basis of statement of profit and loss by the assessee. The statements were duly verified by independent auditors report. Hon ble Supreme Court in the case of Lalchand Bhagat Ambica Ram [ 1959 (5) TMI 12 - SUPREME COURT] has held that when entries in books of account in regard to cash balances were held to be genuine, there was no escape from conclusion that assessee had offered reasonable explanation as to source of all high denomination notes which it encashed on 19th January 1946 and it was not open to ITAT to accept genuineness of those books and accept assessee s explanation in part and reject same in regard to balance sum. It was observed that the ITAT in arriving its conclusion indulged in suspicions, conjectures and surmises and acted without any evidence or upon a view of facts which could not reasonably be entertained or finding was perverse which could not be sustained and Supreme Court was entitled to interfere with such findings and therefore the addition was deleted. Thus from perusal of above material fact especially treating the cash deposit as unexplained cash on basis of books of account without rejecting the same is legally not permissible as per ratio of judgment in Lalchand Bhagat Ambica Ram s case (supra) - Appeal of assessee allowed.
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2024 (5) TMI 31
Levy of penalty u/s 271C - period of limitation - proper meaning for the expression expiry of 6 months' - Failure to deduct TDS - Whether 6 months expiry should be reckoned from the date of which reference was made by AO who passed the quantum assessment order to ld. JCIT (TDS) or the date on which JCIT (TDS) issued notice to the assessee for the first time - whether the penalty order passed u/s 271C by the ld. JCIT would be barred by limitation as per section 275(1)(c)? - HELD THAT:- We find that this dispute has been directly addressed in JKD CAPITAL FINLEASE LTD. [ 2015 (10) TMI 1281 - DELHI HIGH COURT] wherein held Additional CIT ought to have been conscious of the limitation u/s 275 (1) (c), i.e., that no order of penalty could have been passed under Section 271-E after the expiry of the financial year in which the quantum proceedings were completed or beyond six months after the month in which they were initiated, whichever was later. In a case where the proceedings stood initiated with the order passed by the AO, by delaying the issuance of the notice under Section 271- E beyond 30th June 2008, the Additional CIT defeated the very object of Section 275 (1) (c). Thus it could be safely concluded that the penalty order framed by the ld. JCIT(TDS) on 25.02.2016 is squarely barred by limitation and hence penalty is required to be deleted. Appeal of the assessee is allowed.
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2024 (5) TMI 30
Validity of reopening of assessment u/s 147 - no notice u/s 143(2) of the Act was issued by the AO for taking case under scrutiny - HELD THAT:- We find that the Hon ble Delhi High Court in the case of Pr. CIT v. M/s Paramount Biotech Industries Ltd. [ 2017 (11) TMI 127 - DELHI HIGH COURT] held that even in the reassessment proceedings issue of notice u/s 143(2) of the Act is mandatory. The proposal to reopen an assessment under Section 147 of the Act is to be based on reasons to be recorded by the AO. Such reasons have to be communicated to the Assessee. However, merely because the Assessee participates in the proceedings pursuant to such notice under Section 148 of the Act, it does not obviate the mandatory requirement of the AO having to issue to the Assessee a notice under Section 143(2) of the Act before finalising the order of the reassessment. Hon ble High Court has also considered the decision of Hotel Bluemoon [ 2010 (2) TMI 1 - SUPREME COURT] - thus there being a jurisdictional defect in completing, the reassessment proceedings hence same are held to be invalid. The reassessment proceedings u/s 147 hereby quashed. Decided in favour of assessee.
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2024 (5) TMI 29
Foreign Tax Credit u/s. 90 - denial of taxes paid by the assessee outside India merely on the ground that the assessee did not file Form 67 at the time of filing of her return of income - directory/procedural or mandatory default - HELD THAT:- Revenue would hardly dispute the clinching fact that the assessee had indeed submitted the Form 67 before the CPC s processing dated 09.01.2023 i.e. on 05.02.2021. This being the clinching fact herein, it is of the considered opinion that both the learned lower authorities could not have rejected the assessee s impugned Foreign Tax Credit claim for the above stated sole ground. Case law Duraiswamy Kumaraswamy [ 2023 (11) TMI 1000 - MADRAS HIGH COURT] had already settled the issue that Rule 128 of the Income Tax Rules prescribing Form 67 hereinabove, is directory and not mandatory in nature. Faced with this situation, hereby accept the assessee s instant sole substantive grievance in principle and direct the CPC, Bangalore to finalize assessee s afresh computation in above terms as per law. Assessee appeal allowed.
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2024 (5) TMI 28
Exemption u/s 80P(2)(a)(i) or u/s 80P(2)(d) - interest income earned by a cooperative society from the scheduled banks - appellant is a cooperative society engaged in the business of providing credit facilities as it does not enjoy any license to carry on the business of banking from Reserve Bank of India - HELD THAT:- Referring to various contradictory judgments as following the case of Ratnatray Gramin Bigar Sheti Sah. Pat Sanstha Maryadit [ 2018 (12) TMI 1926 - ITAT PUNE] taken view in favour of the assessee following the judgment of Tumkur Merchants Souharda Credit Cooperative Ltd [ 2015 (2) TMI 995 - KARNATAKA HIGH COURT] .the interest income earned on fixed deposits with cooperative bank/scheduled bank partakes character of the business income, which is eligible for deduction u/s 80P(2)(a)(i) of the Act. Therefore, direct the Assessing Officer to allow the exemption u/s. 80P(2)(a)(i) and section 80P(2)(d) of the Act. Decided in favour of assessee.
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2024 (5) TMI 27
Addition u/s 69A - cash deposited from alleged unexplained sources - Whether cash deposited is duly explained from the cash withdrawals made by assessee and her husband? - assessee did not explain the reasons for withdrawal of cash from his bank account, cannot be the basis to hold that the source of deposit of cash was not explained by the assessee - HELD THAT:- Appellant has shown cash deposited was out of cash in hand available which was withdrawn by the assessee and her late husband during the year 2019-20 to 2021-22 - reference is made to date wise withdrawal of money by the assessee and her husband. The date wise cash withdrawals from the bank by assessee and her husband was held to be not justifiable by holding that cash withdrawals must have been used for incurring personal expenses. The deposit of cash on multiple occasions and no evidence was furnished that the same cash was deposited in assessment year 2021-22. The assessee had not given any plausible explanation in respect of transactions. As evident that cash withdrawals by the assessee and her husband from assessment years 2018-19 to 2021-22 are not disputed by the AO and CIT(A). Once the cash withdrawals are in excess of the cash deposits, then it is amply clear that the cash deposits in the bank account were out of the available sources of the assessee. The burden lies on the revenue to bring material on record to suggest that the money withdrawn by the assessee was utilized elsewhere for personal purposes or the money so withdrawn was not available with the assessee as per the mandate of CIT vs. Kulwant Rai [ 2007 (2) TMI 185 - DELHI HIGH COURT] well settled principle of law the passing of impugned orders is not just fair and reasonable and deserved to be set aside. Appeal of assessee allowed.
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2024 (5) TMI 26
Revision u/s 263 - source of cash found in the course of search remains unexplained and additions u/s 69A r.w. Section 115BBE - CIT proceeded on the premise that AO has also failed to make cogent inquiries with reference to investments in jewellery found in the course of search in terms of Sections 69 / 69A r.w. Section 115BBE - HELD THAT:- Source of cash available, we take note of the contentions raised on behalf of the assessee that an opportunity of barely three working days in aggregate has been given to assessee to defend the allegations. Despite such extremely short time made available, assessee has attempted to comply with the show cause notice in the best possible manner and has pointed out that search team itself was prima facie satisfied with the source of cash available in the course of search and did not choose to seize the cash. The source of cash was shown to be arising from the earlier balances as well as some accumulation thereafter to the satisfaction of the AO. A specific inquiry was directed by the AO and the source was found to be satisfactory. While seeking to dislodge the action of AO, no inquiries were made by the CIT in the course of revisional proceedings. CIT without giving any effective opportunity, has decided the issue against the assessee with a degree of finality disregarding the vital facts such as opening balances available in the F.Y. 2016-17 to the tune which was admitted and accepted as closing balance of cash in the preceding A.Y. 2016-17 and also has attained finality. CIT has adjudicated the issue against the assessee without giving any allowance for any cash in hand which, a common person would ordinarily possess having regard to the construct of the Indian society. An amount of Rs. 10 lakh cannot be stated to be highly implausible having regard to the postulations which define Indian socio-eco structure. Business model of the assessee and need of cash for running business was also disregarded by the CIT. We find substantial merits in the ardent defense raised on behalf of the assessee on both counts. Assessee has demonstrated the existence of cash in hand. The relevant facts were placed before the AO which suggests the view taken by the AO in its quasi judicial capacity to be plausible while framing the assessment. Assessee has not declared any cash in hand in its return of income filed prior to search since it was not compulsory for the assessee to do so owing to presumptive taxation scheme availed by the assessee. The cash in hand was however declared for different assessment years in the return filed u/s 153A. Pursuant to search, the opening cash in hand for F.Y. 2016-17 declared has been accepted by the Revenue and has attained finality in the absence of any pending proceedings. This itself gives rise to a somewhat plausible explanation towards cash found - revisional action has been taken at a ferocious speed and in unprecedented hurry apparently to meet the limitation period denying any opportunity to the assessee to objectively explain the factual position to the CIT. CIT has merely rejected the plea of the assessee with preconceived notions and without countering the assessee in any manner. When the facts are collated, the view taken by the AO cannot be branded as without any enquiry. The direction of the CIT to make additions on account of cash found in the course of search with aid on the contour of Section 69A r.w.s. 115BBE without effective opportunity, thus cannot be countenanced in law. Such directions are thus required to be set aside and the action of the AO is required to be restored. Directions of the Pr.CIT setting aside the assessment order to make inquiry on source of jewellery is clearly marred by total lack of opportunity and is in contravention of the statutory enactment codified u/s 263 of the Act. A revisional directions given without any opportunity to assessee is a complete non starter. The impugned revisional order passed u/s 263 is thus set aside and quashed. Assessee appeal allowed.
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2024 (5) TMI 25
Addition u/s 69A r.w.s. 115BBE - assessee deposited cash during demonetization period - AO rejected the claim of the assessee and held that there were no cash sales since the assessee failed to disclose the identity of the persons to whom cash sales were made on 08.11.2016 - assessee submitted that due to announcement of demonetization by GOI, there was huge demand for investment in gold and due to rush, the assessee failed to collect the identity of the person to whom sales were made - HELD THAT:- When the sale has been reflected in the books of accounts and offered to tax, adding the same again would amount to double taxation which is impermissible in law. The cash sales proceeds have been credited in the books of accounts and the same form part of assessee s cash book. On these facts, it could very well be said that the assessee s claim was backed up by sufficient documentary evidences. The allegation of AO is that such abnormal sales could not be achieved by the assessee immediately upon announcement of demonetization by the Government. However, such allegations are bereft of any concrete evidence on record. It is trite law that no addition could be made merely on the basis of suspicion, conjectures and surmises. In the present case, the assessee has duly discharged the burden of establishing the source of cash deposit and the onus was on Ld. AO to disprove the same. However, except for mere allegation and few statistics, there is nothing on record to support the conclusions drawn by Ld. AO that the cash deposited by the assessee was her unaccounted money. There is no finding by Ld. AO that any particular sales affected by the assessee exceeded threshold limit which cast an additional obligation on the assessee to obtain requisite particulars from the customers. Since cash generated out of sales has been credited in the books of accounts, the provisions of Sec.69A could not be invoked in the present case. Therefore, on the given facts, the impugned additions are not sustainable. Interest disallowance - assessee has advanced loan to her son only at the fag-end of this year . In fact, initially the assessee has obtained interest free funds from her son. Subsequently, she has repaid the loan in excess leaving closing balance of Rs. 70.15 Lacs. Further, the fact that the assessee has sufficient capital balance has also not been disputed by lower authorities. No nexus of borrowed funds vis- -vis loans granted by the assessee has been established by Ld. AO. Therefore, considering all these facts, the interest disallowance is not justified. We delete the same.
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2024 (5) TMI 24
Estimation of income - Bogus purchases under the head fuel/diesel purchased from three parties - CIT(A) sustained the disallowance to the extent of 10% of total purchase from three parties - HELD THAT:- There is no rational behind restricting disallowance to 10% when the complete list of bills and delivery location along with vehicle numbers used for supplying goods/materials were provided to the AO during the assessment proceedings. In our opinion, the CIT(A) is not justified in sustaining 10% diesel/fuel expenses as bogus merely for the reason that 10% disallowance has been made in respect of bogus purchases by the Assessing officer. In the case of PCIT Mumbai v. JK Surface Coatings Pvt. Ltd. [ 2021 (10) TMI 1323 - BOMBAY HIGH COURT] relied upon by the ld CIT(A), the bogus purchases were undisputedly confirmed and only issue was of the percentage of disallowance. In said case delivery of material was not established whereas in the instant case the AO has neither doubted delivery nor doubted consumption of the diesel and therefore, sustaining ad-hoc disallowance, merely on the basis of the presumption, cannot be upheld and accordingly, we set aside the finding of the Ld. CIT(A) on the issue in dispute and delete the addition sustained by him. Decided in favour of assessee. Disallowance on account of alleged bogus tyre purchase bills - disallowance of 10% of expenses out of expenses on purchase of tyres shown from M/s Om Shree Siddhivinayak tyres during year under consideration - HELD THAT:- In view of the observations during the course of the survey, the director of the assessee company Shri Satish Mandhania admitted fact of the bogus purchase. The cashier of the assessee company also stated of receipt of cash back from M/s Om Shree Siddhivinayak tyres. In view of those statements coupled with failure on the part of the assessee in providing complete details of delivery challans of the bills in respect of M/s Om Shree Siddhivinayak tyres, the Assessing Officer held 10% of the purchases as bogus and accordingly disallowed. The assessee also failed to produce details of delivery challans in respect of purchase bills where tyre numbers and size were not mentioned in the invoices before the ld CIT(A). Before us, also no such details to support that goods were actually delivered in respect of bills where tyre numbers and sizes were not mentioned. In absence of any such supporting documents, the statements get corroborated that part of the purchases from M/s Om Shree Siddhivinayak tyres are in the nature of bogus. In absence of complete details provided, the AO is justified in making estimated disallowance @ 10% of total expenses on tyre purchase. Accordingly, we uphold the finding of the Ld. CIT(A) on the issue in dispute and dismiss the ground No. 2 of the appeal of the assessee. Disallowance for unsubstantiated expenses - HELD THAT:- We find that the sufficient documentary evidences have been produced by the assessee in respect of rent paid for RMC plant and labour supply at Pune before the lower authorities. In our opinion, once the CIT(A) is satisfied with the documentary evidences maintained in respect of those expenses, particularly when he himself mentioned that no lacuna or defect has been found in documents filed during assessment proceedings, then he is not justified in sustaining disallowance to the extent of 10% of the expenses for the reason that those parties did not respond to the notice u/s 133(6) of the Act. It is not the case that those parties have not been found that their address because, the notice issued u/s 133(6) of the Act has not been claimed to be returned unserved. Once, notice were served it was the duty of the AO to enforce their attendance or carry out inquiry by sending Inspector at their site. In absence of any such evidence of non-existence of those parties, the action of the Ld. CIT(A) in sustaining addition @ 10% of the total expenses purely on ad-hoc basis is not justified. The finding of the Ld. CIT(A) on the issue in dispute is accordingly set aside. Addition for the share application money u/s 68 - HELD THAT:- Assessee has submitted during the appellate proceedings that said company has been stricken off by the Registrar of Companies (ROC) ,therefore, no reply was received. CIT(A) is justified in accepting this explanation of the assessee and therefore, no adverse view could be taken on this account. Secondly, CIT(A) has further rejected the argument of the Assessing Officer in the original assessment order that director of the assessee was a non-filer. In our opinion the status of the director of company as non-filer is not relevant while deciding the identity, creditworthiness and genuineness of the transaction of a company. Thirdly, the AO in assessment order mentioned that cash deposits were made in bank account of said party, however, the ld CIT(A) has pointed out that not a single instance has been brought on record by the AO. Before us also no such instance has been brought by the ld Departmental Representative. In our opinion, once the AO in the remand report has accepted the identity and creditworthiness of the share subscriber and genuineness of the transaction, then, filing of further appeal before the Tribunal on the said issue, is not justified. Ground of appeal of the Revenue dismissed. Addition of share application money received from one party - CIT(A) deleted addition - AO has doubted the creditworthiness of M/s Kasturi only for the reason source of money in the hands of said party was share application money from other 13 companies, whose credential were not verified - HELD THAT:- The assessee has already filed a copy of ITR and other document in respect of said party. The identity of M/s Kasturi has not been doubted by the AO. Regarding creditworthiness, the ld CIT(A) observed that the Assessing officer has not mentioned as what happened in the assessment in the case of Kasturi and those 13 parties, which had been termed as shell companies by the investigation wing of Kolkatta. The ld CIT(A) opined that if source of money is not explained in their hand, then addition warrants in their case and not in the case of assessee. We are of opinion that if addition has been already made in the case of Kasturi, then no further addition is required in the case of the assessee. In view of above, in principle we do not find any error in the order of the Ld. CIT(A) on the issue in dispute but for verification of the fact addition in respect of source of money has been already done in assessment of Kasturi, we restore the matter back to the AO - Revenue ground allowed for statistical purpose. Disallowance of depreciation on unaccounted sales of old vehicles - As per AO assessee company had unaccounted sales of vehicles - CIT(A) deleted addition - HELD THAT:- We find that only evidence of unaccounted sale of old vehicles has been found in respect of assessment year 2018-19 and no documentary evidences have been found for the year under consideration. The Assessing Officer has merely extrapolated such unaccounted sale on the basis of presumption that assessee would have earned unaccounted cash on the sale of old vehicle during the year under consideration. The Ld. CIT(A) has rejected this contention of the Assessing Officer and deleted the addition made merely on the basis of the extrapolation of the figures of the subsequent year. In our opinion, finding of the Ld. CIT(A) on the issue in dispute is well reasoned and no interference is required on our part. Decided against revenue. Bogus loan u/s 68 - deposit received from two parties unexplained - CIT(A) deleted addition - HELD THAT:- We find that the sums of money received from those parties against the sales have not been doubted by the AO and therefore, we do not find any reason for specifying the sum received from those two parties against the deposits for the distribution agreement as unexplained cash credit. Both the parties have filed all the documents to support the identity, creditworthiness and genuineness of the transaction. Further, in respect of statement by the director of the respective parties the Ld. CIT(A) has recommended for taking action of reassessment in their hand. In our opinion there is no infirmity in the finding of the Ld. CIT(A) on the issue in dispute and accordingly, we uphold the same - Decided against revenue.
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2024 (5) TMI 23
New scheme for Tax on income of individuals and Hindu undivided family u/s 115BAC - Assessee had not filed Form 10-IE for opting the new tax regime within the stipulated time - denial of benefit of new scheme as assessee has not filed the return of income within the time period allowed for filling the return of income - whether the other deduction as per the old scheme is allowable to the assessee or not? - standard deduction not allowed which is available under the old tax regime. HELD THAT:- As per provision of section 115BAC so as to understand the allowability of deduction on the return of income filed after the due date prescribed, in this case since, the assessee has not filed the return of income as per the due date prescribed, then as per the proviso given in the above section the assessee is not eligible to get the benefit of the new scheme. Thus, as per the proviso of the aforesaid section the option the option shall become invalid in respect of the assessment year relevant to that previous year under consideration and other provisions of this Act shall apply, as if the option had not been exercised for the assessment year relevant to that previous year. Since the assessee in this case though filed the return after the due date which was not processed under the new tax regime but the said return is required to be proceeds as per the old provision of the Act and after considering the provision of section 80AC - Since, the standard deduction, deduction u/s 80C and 80TTA is required to be tested as per the evidence that the assessee is supposed to produced. Since the assessee was not provided an opportunity of being heard before processing the return of income, we feel it in the interest of the natural justice that the assessee shall provide the details connected to the claim before the ld. AO on merits a fresh in the interest of equity and natural justice. Thus we hold to remand the matter back the matter to the file of the AO who will decide the issue based on evidence and submission of the assessee. Appeal filed by the assessee is allowed for statistical purposes.
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Customs
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2024 (5) TMI 22
Mis-declaration of Mud additive chemicals for oil well - Confiscation - Valuation - Payment of redemption fine - Penalty - denial of the cross examination by the Commissioner - Relevancy of statements u/s 138B - HELD THAT:- It is a well-settled legal position that unless the statements have been put through the process prescribed u/s 138B, they are not relevant at all to prove the case. By not following the procedure prescribed in section 138B, the Commissioner has rendered all the six statements (RUD- 4 to RUD-9) irrelevant to prove the case. The only other important document is the test report of the CRCL. Shri Singhal s assertion was that what was attempted to be exported was Mud Additive Chemical and according to the CRCL, it was urea. Therefore, if Shri Singhal wanted to cross examine the chemical examiner who had tested the sample and said that it was urea, it is but just and proper. However, the Commissioner denied cross examination. Once all the statements and the test report of CRCL are ignored, nothing survives in this case and the impugned order cannot be sustained. To sum up: (a) By not following the procedure prescribed under section 138B, the Commissioner rendered all the six statements relied upon in the SCN irrelevant to the case; (b) By denying cross examination the Commissioner has also rendered the test report of CRCL irrelevant to prove the case of the department. (c) De hors the statements and the test report of the CRCL, nothing survives in the impugned order. Thus, all three appeals are allowed and the impugned order is set aside insofar as it pertains to Shri Singhal, Shri Bharadwaj and Shri Jindal.
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2024 (5) TMI 21
Classification - Import of Accordion springs - Demand duty - Interest - Penalty - benefit of exemption Notification - Whether the Accordion springs imported by the appellant are leaf springs classifiable under Customs Tariff Item [CTI] 7320 10 11 as claimed by the appellant or as other springs under CTI 7320 90 90 - HELD THAT:- We find that Accordion Springs imported by the appellant are neither helical springs nor leaf springs and are a category of springs in themselves. They are also sold as Accordion springs only and not as leaf springs or helical springs. Therefore, they fall under the Customs six digit heading of 7320 90 Other . Under this, there are three eight digit Customs Tariff Items and since these do not fall under the categories of coil springs for railways (7320 90 10) or spring pins (7320 90 20), they fall under the residual category of CTI 7320 90 90. We, therefore, find in favour of the Revenue and against the appellant on the question of classification. Thus, the appeal is dismissed and the impugned order is upheld.
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2024 (5) TMI 20
Seeking amendment of the Shipping Bills in terms of Section 149 of the Customs Act, 1962 - Jurisdiction of the First Appellate Authority - Whether decision or order passed by an officer of Customs, lower in rank than a Commissioner of Customs, can only be appealed against before the Commissioner (Appeals) and not otherwise - HELD THAT:- On perusal of the letter dated 09.06.2022 addressed by the Assistant Commissioner of Customs to the appellant, we find that though the said letter was signed by him, but the views of the Administrative Commissioner of Customs was conveyed that the request for amendment/conversion of shipping bills cannot be adhered to. Thus, we are of the considered opinion that the decision for rejection of the letter of appellant, seeking amendment of shipping bills was taken by the Commissioner of Customs and not by the officer lower in rank than him. Since, the Administrative Commissioner has communicated the view regarding non-entertainment of the application for amendment of the Shipping Bills, the order or decision passed by him cannot be appealed against before the Commissioner (Appeals) in terms of Section 128 ibid, wherein, it has been mandated that decision or order passed by an officer of Customs, lower in rank than a Commissioner of Customs, can only be appealed against before the Commissioner (Appeals) and not otherwise. Therefore, we are in agreement with the order passed by the learned Commissioner (Appeals) that he has no jurisdiction to entertain the appeal against the decision of the Administrative Commissioner. Accordingly, we do not find any infirmity in the impugned order, and thus dismiss the appeal filed by the appellant.
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2024 (5) TMI 19
Smuggling - Absolute confiscation of the twelve gold biscuits of foreign origin - No licit document produced in support of acquisition, possession or transportation of the gold - Penalty - retracted statements - 'reasonable belief' - Applicability of sec. 123 - carrying the gold at the time of interception - HELD THAT:- We observe that the reasonable belief on which the officers presumed that the gold bars/pieces were of smuggled nature is not supported by any corroborative evidence. There is no document available on record to establish that gold bars/pieces were smuggled into India without payment of customs duty. The impugned order has concluded that the said gold bars/pieces were smuggled into India only on the basis of assumptions and presumptions without any concrete evidence to substantiate this claim. Hence, we hold that material evidence available on record does not establish the reasonable belief that the gold bars/pieces were smuggled into India without any valid documents. Applicability of the provisions of Section 123 of Customs Act 1962 in this case, we observe that Section 123 puts the burden of proving that the gold is not smuggled one on the person who claims ownership of the gold. This section is applicable only when there is a reasonable belief that that the gold in question are smuggled in nature. In this case, the discussion in the preceding paragraphs has established that there is no ground for holding the reasonable belief that the gold are smuggled in nature. When there is no material evidence available on record to establish that the gold bars/pieces were smuggled into India without any valid documents, the provisions of Section 123 of the Customs Act are not applicable. The purity of the gold is 995.2 mille, 995.1 mille and 995.0 mille which is below the International Standard of Purity. Accordingly, we hold that the Order passed by the Adjudicating Authority confiscating the gold bars/pieces mainly on the basis of the statements, is not sustainable in law. Thus, the gold bars/pieces cannot be confiscated based on the retracted statements without any other independent corroborative evidence. Penalty imposed u/s 112(b)(ii) - Under Section 112(b), penalty is imposable when the person is found to be dealing with goods for which prohibition is in force or the goods are liable for confiscation. The gold bars/pieces found in possession of the appellant were not established as smuggled in nature and hence they are not prohibited goods. The gold bars/pieces were seized at Imphal, away from the Indo-Myanmar international border. The appellant was carrying the gold which he claimed that they were domestically purchased by his father and he inherited the same. We observe that the investigation has not brought in any evidence to counter this claim. Hence, we find merit in the argument of the appellant that penalty is not imposable on him u/s 112(b)(ii) of Customs Act, 1962. Thus, we set aside the impugned order and allow the appeal filed by the appellant.
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2024 (5) TMI 18
Re-classification of Thorn - Transaction value - Undervaluation and Mis-declaration - erroneous classification - ineligible exemption - demand duty - Confiscation - Penalty - Imports Aluminium scrap described as Thorn - Violation of import restrictions under the FTDR Act - FTDR Act has three categories of goods free , restricted and prohibited , the Customs Act has only prohibited goods and everything else is considered freely importable - HELD THAT:- No dispute about the rejection of the classification of the imported Thorn under CTI 7602 00 10 and its reclassification under CTI 7602 00 90. The importer s only contention is that it had mistakenly classified it under CTI 7602 00 10. Therefore, the re-classification must be upheld. Transaction value under Valuation Rule 12 and re-determination of the value under Valuation Rule 9 - The Additional Commissioner recorded that since Thorn was a restricted item, there were no contemporaneous imports of identical or similar goods. Valuation Rule 6 is not a method of valuation and it only states that if the value cannot be determined under Valuation Rules 3,4 or 5, it shall be determined under Valuation Rule 7 or Valuation Rule 8 and at the request of the importer, Valuation Rule 8 can be applied without applying Valuation Rule 7 first. Valuation Rule 7 is a deductive method and it provides for determination of value based on the value of such goods sold in India and after making certain deductions. Valuation Rule 8 provides for computed value based on the cost of production of such goods in India. The Additional Commissioner, having recorded that these were not possible in this case, followed Valuation Rule 9 which is the residual method. He determined the value as per the method recommended by the Directorate General of Valuation in such cases based on the aluminum content of the imported scrap and the London Metal Exchange (LME) prices of the metal. We find that the method followed by the Additional Commissioner for determining the value is correct and proper and this decision has been correctly upheld by the Commissioner (Appeals) in the impugned order. We find no reason to interfere with the valuation. Absolute confiscation of the imported Thorn - We find that clause (d) makes the goods imported into India contrary to any prohibition under the Customs Act or under any other law for the time being in force. Import of Thorn was restricted under the FTP and therefore, it could not have been imported without a licence. Since Thorn was imported in violation of the prohibition under FTP, it was liable to confiscation u/s 111(d). The imported goods cannot be confiscated u/s 111(m) because of a wrong classification or claim of an ineligible exemption notification. In this case, the importer imported Thorn and entered an incorrect classification at the 8-digit level in the Bill of Entry and gave a value as per its transaction value. When examining the self-assessment, the incorrect classification was discovered. The importer declared the value as per its transaction value. This transaction value was rejected by the officer and its value was re-determined. Thus, the two deviations from the declaration of the importer in the Bill of Entry are- the change in classification and re-determination of value by the officer. Simply because the officer has changed the classification and the valuation, the goods do not become liable to confiscation u/s 111(m) because the goods did correspond to the declarations and only the classification and the valuation which are matters of opinion were changed by the officer . Thus, we find that the Thorn imported by the appellant was correctly confiscated u/s 111(d) and 111(o) but its confiscation u/s 111(m) was not correct. The question which arises is, if in this factual matrix, was the absolute confiscation of the imported Thorn correct or it could have been released on payment of redemption fine. We find no reason to believe that aluminium scrap with only 1.2% of other material such as iron, plastic, etc. will be hazardous to the society if released into the hands of a manufacturer of ingots. On the other hand, import of Thorn requires a licence which the importer did not have and hence it was confiscated. In the factual matrix of this case, considering all relevant factors, we find that it would meet the ends of justice if the confiscated Thorn valued at Rs. 27,48,405 is allowed to be redeemed by the importer u/s 125 on payment of a fine of Rs. 4,00,000/-. Penalties u/s 112(a) (i) and 114AA on the importer and Shri Jain - The importer imported Thorn without the required licence and therefore it is squarely covered by section 112(a). Penalty not exceeding the value of the goods could be imposed under this section. The value of the goods as determined by the impugned order is Rs. 27,48,405/- and therefore, a penalty of Rs. 4,00,000/- is within the limits and is in the factual matrix, in our opinion, just and proper. As far as the penalty on Shri Jain is concerned, we find that he was a partner of the importer and in that capacity, he played the role in importing the goods. We do not find sufficient justification to also impose penalty on Shri Jain u/s 112 (a) (i). We, therefore, set aside the penalty on Shri Jain under this section. The importer only made an erroneous classification which is not a declaration or document but is its self-assessment. The importer also declared the value as per its transaction value which the officer deemed it necessary to re-determine. The importer can only declare the value based on what he knows and there was no mis-declaration. Thus, we find that there is no mis-declaration, let alone, one with intent either by the importer or by Shri Jain. Therefore, the penalties imposed u/s 114AA on the importer and Shri Jain cannot be sustained and need to be set aside and we do so. Thus, both appeals are disposed of as below: (a) CUSTOMS APPEAL filed by the importer is partly allowed and the impugned order is modified to the extent of allowing redemption of the confiscated goods on payment of redemption fine of Rs. 4,00,000/- u/s 125 and setting aside the penalty imposed u/s 114AA. (b) CUSTOMS APPEAL filed by Shri Jain is allowed and the penalties imposed on Shri Jain u/s 112 (a) (i) and 114AA are set aside.
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2024 (5) TMI 17
Undervaluation - Imports of high-end foreign cars - concessional duty benefit - Notification No.21/2002 Cus - Interest - Penalty - Whether the revenue authorities are correct in redetermining the assessable value of the car imported by the appellant - HELD THAT:- The first appellate authority, while ordering the re-determination of the assessable value, has inter alia held that the imported vehicle was undisputedly new, which finding has again been accepted by the revenue without challenging the same. In the impugned order, the first appellate authority has referred to an alleged e-mail and an alleged original sale invoice raised by the Japanese dealer on the UK dealer, which according to the first authority, justify the fixing of assessable value at ₹49, 84, 163. Further, the Ld. first appellate authority has held that since the vehicle is held to be a new one, the same would also entitle the appellant for concessional rate of BCD. We have seen the invoices, one which was raised on the Broker at UK by the Japanese dealer and the other one which was raised by the UK Broker on the appellant; both are for two different cars; one refers to Ultimate Silver colour car carrying an invoice amount of 8,900,000 Yen and the other refers to a Black colour car carrying an invoice amount of 63,000 USD. That apart, invoice raised by the Japanese dealer is dated 18.08.08, but the invoice raised by the UK dealer and the appellant is 30.06.08 which is much before the date of even purchase by the UK dealer, hence, there has been much ado about nothing insofar as the invoices are concerned and therefore, the alleged difference in the purchase value by the appellant as made out in the Order-in-Original which was upheld in the impugned order lacks any merit. We reiterate that it was the revenue, which alleged irregularities/under-valuation and hence, it was incumbent upon the revenue to prove its case. But however, other than uncorroborated e-mail and two different invoices, no documentary evidence is furnished before us by the revenue, in support. Hence, we cannot agree with the stand of the revenue which lacks merit, for which reason the impugned order becomes unsustainable. In the result, we set aside the impugned order and allow the appeal with consequential benefits, if any, as per law.
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Insolvency & Bankruptcy
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2024 (5) TMI 16
Liquidation of the Corporate Debtor - SRA has not made the payments within the timeline allowed under the Resolution Plan for the upfront payments - Section 33(3) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- When the CoC had already been taken a decision in its Meeting dated 08.07.2022 against the liquidation, there are no reason for Respondent No.1 to file the Application against majority decision. The key words in sub-section (3) of Section 33 are resolution plan approved by the Adjudicating Authority is contravened by the concerned corporate debtor . Thus, contravention by the SRA was to be proved - There is no material on the record to indicate that Respondent No.1, who has filed IA No.2767 of 2022 has brought into the notice of the Adjudicating Authority about the Resolution dated 02.12.2022. It is clear that Respondent No.1 having not brought on the record, the subsequent events, i.e., Resolution dated 02.12.2022, where it has participated and voted against the Resolution, clearly indicate that Respondent No.1 intended to obtain order of liquidation by concealing relevant facts. As noted above, Respondent No.1 in his Application has also not impleaded CoC, SRA or RP, whereas an order was sought by Respondent No.1 for liquidation. When the Adjudicating Authority directed the RP by order dated 04.05.2022 to convene the Meeting of CoC to take a decision, as to whether Corporate Debtor be liquidated or not, the decision taken by the CoC was a commercial decision of the CoC, i.e., not to liquidate the Corporate Debtor and the said commercial decision was not required to be interfered by the Adjudicating Authority by the impugned order directing for liquidation. The legal position that extension of time is not modification of the Resolution Plan is well settled and that fact that whether the time is extended for one month or one year, does not change the legal position. The time extension for payment of amount as per the Resolution Plan is not modification of the Plan. The very basis of order passed by Adjudicating Authority that not to liquidate the Corporate Debtor would lead to modification of the Resolution Plan is fallacious and unsustainable. The SRA having already deposited the amount along with interest @ 10% in the form of fixed deposit before the largest Financial Creditor as permitted by Resolution dated 02.12.2022 by the Financial Creditors, the RP shall proceed to distribute the amount to the Financial Creditors as per the Resolution Plan and decision of the Financial Creditors dated 02.12.2022, from the amounts already deposited by the SRA. The impugned order is set aside - appeal allowed.
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2024 (5) TMI 15
Appointment of the Appellant as the liquidator - non-compliance of Regulation 31A of the Regulations as the mandatory written consent form, as stipulated in Form AA Schedule II has not been filed before the Adjudicating Authority - appointment of Respondent No. 2 as the liquidator though it was not approved by the SCC - locus to file appeal - HELD THAT:- Regulation 31A(11) of the Regulations categorically provides for a written consent prior to the filing of the application for replacement of the liquidator - It is an admitted fact that no such written consent was submitted by the Appellant to the SCC when it had voted in its favour in 28th meeting of SCC nor it was annexed with the application filed by the erstwhile liquidator for his replacement with the Appellant by the Adjudicating Authority. As per Circular no. IBBI/CIRP/023/2019 dated 14.08.2019, Form No. IP1 is regarding pre-assignment which provides that this includes consent to accept assignment of an IP as IRP/RP/Liquidator/Bankruptcy Trustee, the details of IP and the applicant, the details of the person which will undergo the process, terms of consent, terms of engagement, filing of application before AA and withdrawal before admission, etc. to be filed within three days of the relevant date - In the present case, the relevant date was the date when the alleged consent was given by the Appellant i.e. 29.08.2023 when it had sent written consent to the Adjudicating Authority and the SCC as alleged and it was incumbent upon the Appellant to have it uploaded within three days on the portal of the IBBI which is again conspicuous by its absence. Thus, in such circumstances, it is apparent that the Appellant had not given any written consent on 29.08.2023 as alleged rather no written consent has been given in terms of Regulation 31A(11) of the Regulations which is required to be given on Form AA of Schedule II of the CIRP Regulations, therefore, there is no error in the finding recorded by the Adjudicating Authority in this regard. The argument of the Appellant that if the written consent was not given then at the most it is a defect which is curable but the judgment relied upon in this regard in the case of Tek Travels Pvt. Ltd. [ 2021 (4) TMI 813 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , NEW DELHI] is not applicable because a written consent to act either as the IRP/RP or the liquidator is a mandatory requirement under the law which has to be obtained before the application is filed. Whether the Adjudicating Authority has committed an error in appointing the Respondent No. 2 as the liquidator though it was not approved by the SCC? - HELD THAT:- In this regard, reference may be had to the decision of this Court in the case of CA. V. Venkata Sivakumar Vs IDBI Bank Limited, 2022 (12) TMI 1056 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI BENCH] in which it has been held that combined reading of above case laws and provisions alongwith Section 33 and Section 34 of the Code, would make it clear that the AA which had the powers to appoint the Liquidator will also have the powers to remove the liquidator for reasons, the AA may find fit, just valid and proper . Whether the Appellant has no locus to file the appeal? - HELD THAT:- The submission made by the Respondent that the Appellant has no locus to file the appeal has substance because it was only a proposed/prospective liquidator and no inherent right was there to be appointed as such, therefore, the aggrieved person, at the most could have been either the erstwhile liquidator who had filed the application for replacing him with the Appellant or the SCC who had approved the appointment of the Appellant subject to the approval of the Adjudicating Authority. There are no merit in the present appeal and the same is hereby dismissed.
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2024 (5) TMI 14
Competence of maintaining the appeal by the present appellants - Seeking approval of the resolution plan submitted by Successful Resolution Applicants - homebuyers as a class assented to the plans - HELD THAT:- As a matter of fact, the tripartite agreement was challenged as void but the said application was dismissed by the Adjudicating Authority against which the RP filed the appeal before this Tribunal which was dismissed on 05.01.2022 holding that the RP had no locus to file the application. It was further held that the transfer of portion of plot by sub-lease was effected on 27.09.2016 whereas CIRP was initiated after more than two years i.e on 26.11.2018. It was further held that the RP has no ground to doubt the transaction which is more than two years prior to commencement of CIRP. The association did not raise any plea of fraud in transferring the plot by sub-lease and the RP failed to make out a case that the sub-lease was executed for depriving the rights of homebuyers. Also in the case of Piya Puri [ 2022 (8) TMI 1111 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] the same view has been taken while discussing Section 25A of the Code and Regulation 16-A(9) of the Regulations. It has been held that where the majority (more than 50%) have voted in favour of the resolution plan approving the same, the dissenting homebuyers who are in minority have to go alongwith the views of the majority and are not entitled to prefer the appeal. In view of the law laid down by the Hon ble Supreme Court and this Court coupled with the fact that the homebuyers as a class through authorised representative have voted to the extent 87.60% approving the resolution plan, the other homebuyers who are in minority have to follow the decision of the majority and cannot challenge the resolution plan in appeal as they do not fall within the definition of aggrieved person and thus, the appeal at their instance is not maintainable. There is a merit in the objection raised by the Respondent and hence, the appeal at the instance of the present appellants is not maintainable and the same is hereby dismissed.
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2024 (5) TMI 13
Initiation of CIRP - Relevant date of default - Delay in making payments towards interest - interest debited in the cash credit facilities which were serviced by the Respondent with delay - Period prior to period stipulated under Section 10A of IBC or not - COVID-19 pandemic Period - Respondent declared as NPA - HELD THAT:- Section 10 A of the Code was introduced by amendment Act of 2020 dated 05.06.2020 with the purpose to support the business and industry who were adversely affected due to covid 19 pandemic. Section 10 A of the Code provides temporary suspensions on initiation of CIRP, which was provided initially for six months with the provision to be extended from time to time as notified - proviso to Section 10 A clearly mentions that no application shall ever be filed for initiation of CIRP of for the said default occurring during the said period , which signifies that the Parliament clearly envisaged to bar initiation of any application for CIRP, in respect of default which has occurred on or after 25.03.2020 for a period as notified from time to time. Section 10 A of the Code, by nature, is preventive and prohibitory and begins with non obstante clause i.e., notwithstanding anything contained in Section 7,9 and 10 and therefore, places complete embargo for initiation of CIRP under these Sections for the period beginning with 25.03.2020 till stipulated period. However, explanation clarify the position that Section 10 A is not meant to be applicable or embargo for initiation of CIRP for default occurred prior to 25.03.2020. The bar on the filing of application for the commencement of CIRP during stipulated period does not extinguish the debt owed by the Corporate Debtor and creditors/ lenders may continue to exercise their rights to pursue their legal remedies under Section 7,9 and 10. In the present appeal, the Appellant fairly stated that due occurred on the last date of February, 2020 but was payable on 01.03.2020. Hence, strictly speaking the date of default can not be 28.02.2020 as claimed by the Appellant in Part IV and at best could be as 01.03.2020 i.e., when it became payable - the mere fact of a debt being due and payable is not adequate to justify the initiation of CIRP at the instance of the creditor, unless the default on the part of the Debtor is established. The Interest Dates is shown as monthly but no particular date has been specified and the Appellant has pleaded that it become due on last date of month but payable on 1st of the following month - the statement of stock is to be submitted on monthly basis as part of the financial covenant, but no where it is indicated that submission of stock statement by the Respondent to the Appellant is condition precedent or breach of which result into default of debt. The default is required to take place with reference to debt which is outstanding and become payable. Normally a loan recall notice mentions all the details including reasons for default and is a formal communication from the lender requesting the borrower for repayment of outstanding loan balance - here, it is noted that the alleged date of default has bee mentioned as 28.02.20220 ( it should have been 29.02.2020 being leap year) as the Appellant mentioned that the instalment become due on the last date of the month and to be payable on 01.03.2020 and as per RBI Circular dated 27.03.2020, the moratorium started from 01.03.2020 for three months which was further extended for further three months. Thus the Respondent was covered under RBI guidelines and the default could not have been taken as 28.02.2020 or even on 01.03.2020 due to RBI Guidelines and subsequently due to Section 10 A of the Code w.e.f. 25.03.2020. The Appellant, therefore, was not entitled to initiate the CIRP in the given background of the facts as well as various RBI guidelines and the provisions of Section 10 A of the Code. Appeal dismissed.
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Service Tax
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2024 (5) TMI 12
Levy of service tax - Renting of immovable property service - a person within meaning of Finance Act, 1994 as it stood prior to 01.07.2012 or not - period prior to July 2012 as well as post 01.07.2012 - HELD THAT:- The issue decided in the case of CUDDALORE MUNICIPALITY VERSUS THE JOINT COMMISSIONER OF GST CENTRAL EXCISE, THE ASSISTANT COMMISSIONER OF CENTRAL EXCISE SERVICE TAX AND VIRUDHACHALAM MUNICIPALITY VERSUS THE ASSISTANT COMMISSIONER, OFFICE OF THE ASSISTANT COMMISSIONER OF GST AND CENTRAL EXCISE, CUDDALORE [ 2021 (4) TMI 500 - MADRAS HIGH COURT ] where it was held that 'though under Rule 2(1)(d)(E) of the Service Tax Rules, 1994, service tax is payable by the service provider, it has to be held that if such services are provided by a Government or Local Authority, they are exempted under Section 65D(1)(a) of the Finance Act,1994 as amended and as in force from 01.07.2012. Only ancillary service provided by a third party towards renting of immoveable property of a non-governmental or local body will be liable to pay service tax like any other service provider. Therefore, service tax is payable by the service provider himself.' The writ petition is allowed.
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2024 (5) TMI 11
Challenging the validity of show cause notice (SCN) - Recovery of Swachh Bharat Cess - service provided by the petitioner by putting in rail linings - exempted in terms of Sl.No.14(a) to Mega Exemption Notification No.25/2012-ST dated 20.06.2012 as amended by Notification No.6/2015-ST dated 01.03.2015 or not - HELD THAT:- This Writ Petition is premature and is therefore liable to be dismissed. The second respondent has issued the detailed Show Cause cum Demand Notice which may indicate the predisposition of mind in the said notice. The petitioner shall therefore file a detailed reply giving reason as to why the petitioner should not be held liable to pay the service tax for the service rendered by him by putting up the rail linings in the premises of the third and fourth respondents on behalf of the fifth and sixth respondents. This Writ Petition stands disposed of.
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2024 (5) TMI 10
Eligibility to make adjustment of excess service tax paid against future service tax liability - Appellant raised three supplementary invoices due to increased packing costs for their customer. However, the customer rejected these invoices, leading the appellant to revise their claims and submit a revised invoice. - Only reason for rejecting the appeal by the Lower Appellate Authority is that the appellant has filed a refund claim for the entire excess tax paid on the 3 supplementary invoices originally raised - HELD THAT:- It is to be observed that the appellant could not have filed refund claim for the full excess service tax paid and simultaneously used a part of the excess service tax paid towards service tax liabilities in subsequent months. It is also noted that the appellant has submitted the refund claim under Section 11B of the Central Excise Act, 1944, as made applicable to Finance Act, 1994. This refund claim was rejected by the Original Adjudicating Authority on the ground that the appellant has adjusted a part of the credit taken. On appeal, the Commissioner (Appeals) vide Order-in-Appeal No. 594/2018 dated 19.12.2018, had rejected their appeal upholding the Order-in-Original, which was remanded by the CESTAT for denovo consideration. The stage at which these proceedings are pending is not coming out from the facts in this appeal. The decision of the Lower Appellate Authority affirmed holding that the appellant is eligible for adjustment of the service tax liability on the subsequent supplementary invoice raised against the excess service tax paid on the original supplementary invoices which were not paid by their customer Viz., M/s. Tata Steel Limited. It is found that the appellant has submitted Chartered Accountant s Certificate to the effect that they have cancelled 3 supplementary invoices raised originally and that they have not received any consideration in respect of these invoices. The impugned Order-in-Appeal is not sustainable and ordered to be set aside - Appeal allowed.
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2024 (5) TMI 9
Nature of activity - manufacture or service - Activity amounting to manufacture or not - crushing of lumps - time limitation - HELD THAT:- As per the Section 2(f) from the sub-clause (ii) of Section 2(f), it is clear that in relation to any goods in the section or Chapter notes if the activity is specified as amounting to manufacture is resultant goods will qualify as manufactured goods. In the present case also as per Chapter Note i2) under Chapter 25, the crushed ground powdered form of the product covered under chapter heading 2501, 2503 and 2505 is a manufacturing activity. Therefore, the appellant s activity is clearly a manufacturing activity. Support derived for the case of SN. SUNDERSON (MINERALS) LTD. VERSUS SUPTD. (PREVENTIVE), C. EX., INDORE [ 1994 (3) TMI 111 - HIGH COURT OF MADHYA PRADESH] where it was held that the operation of crushing brings into existence a new product which has a different name, character and use. Process in this case is `manufacture' of lime stone chips which are excisable goods liable for duty under Chapter 25 of the Central Excise Tariff Act, 1985 at the rate of 12 per cent. The Collector, Central Excise, is right in levying duty on lime stone chips. From the above, it can be seen that any activity that amounts to manufacture of excisable goods is excluded from the definition. As discussed above, we arrive at a conclusion that the crushing of lumps into powder is an activity amounts to manufacture, when this being so, the manufacturing activity is excluded from the definition of Business Auxiliary Service, therefore, no service tax under the said head shall sustain. Time Limitation - HELD THAT:- Considering the nature of the goods, the demand for the extended period was set aside in various cases - reliance can be placed in the case of Hindustan Construction Company Limited [ 1996 (9) TMI 156 - CEGAT, COURT NO. II, NEW DELHI] dealing with the issue that whether the crushing of stones into stones of smaller size amounts to manufacture, classifiable under sub-heading 2505 as in the present case, the Larger Bench by majority of order though held that the activities amount to manufacture but the demand for the extended period was set aside. The demand is not sustainable on limitation also - the impugned orders are not sustainable - Appeal allowed.
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2024 (4) TMI 1126
Classification of services - Erection, Commissioning or Installation Service or not - services of laying of optic fibre cables provided to M/s.BSNL - suppression of facts or not - Extended period of Limitation - HELD THAT:- The department has issued clarification on disputes by Board s Circular No.123/5/2010 that have arisen with regard to works related to cables. In the table given, in para-3 at Sl.No.3, it is mentioned that the laying of electric cables is exempt from levy of service tax. Sl.No.2 states that laying of cables under or alongside roads is exempted from levy of service tax. Sl.No.2 is not qualified with the word electric cable . The word cable is used in general sense and will apply to telecommunications cables also. It is opined that the clarification issued by the Board would apply and that the said activity is exempted from levy of service tax. The department themselves had a contrary view holding that the activity is not subject to levy of service tax. Further, the Tribunal in the case of CCE, LUCKNOW VERSUS M/S RAJ ELECTRIC WORKS [ 2017 (9) TMI 793 - CESTAT ALLAHABAD ] had held that the activity of laying of opting fibre cables for M/s.BSNL is not subject to levy of service tax. The Tribunal in the said case had followed the Board s circular and also other decisions which have categorically held that the activity is not subject to levy of service tax. The demand of service tax cannot sustain and requires to be set aside. The issue on merits is answered in favour of the appellant. Time Limitation - suppression of facts or not - HELD THAT:- There is no suppression of facts brought out by the Department. The appellant has accounted the entire consideration received by them in their books. The demand has been raised on the figures obtained from the records maintained by the appellant. Further the issue is interpretational in nature. In such circumstances, the demand raised invoking the extended period also cannot sustain. The show cause notice is time-barred. The appellant succeeds on limitation also. The impugned order is set aside. The appeal is allowed.
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2024 (4) TMI 1125
Levy of service tax - Municipality provided services / facilities while discharging sovereign functions or not - services are in the nature of fees, fine charges collected by the Municipality while discharging the functions enlisted in 12th Schedule of the Constitution or not - reverse charge mechanism - major part of the demand is under Renting of Immovable Property Services - Extended period of limitation - HELD THAT:- The Hon ble High Court in the case of CUDDALORE MUNICIPALITY VERSUS THE JOINT COMMISSIONER OF GST CENTRAL EXCISE, THE ASSISTANT COMMISSIONER OF CENTRAL EXCISE SERVICE TAX AND VIRUDHACHALAM MUNICIPALITY VERSUS THE ASSISTANT COMMISSIONER, OFFICE OF THE ASSISTANT COMMISSIONER OF GST AND CENTRAL EXCISE, CUDDALORE [ 2021 (4) TMI 500 - MADRAS HIGH COURT] had analysed the issue as to whether demand of service tax can be raised in regard to services / facilities provided by Municipality / Corporation. It was held that Municipalities (local authority) were rendering such services as sovereign function and therefore the amounts received is outside the purview of levy of service tax. In the said judgment, the Hon ble High Court considered the liability to pay service tax for the period prior to 01.07.2012 as well as after 01.07.2012 - It was held that the Government or local authority is exempted from payment of service tax on Renting of Immovable Property Services or for other services. The above decision was rendered by the Hon ble High Court on 22.03.2021. However, prior to this decision, the Hon ble Jurisdictional High Court at Madurai Bench in the case of Madurai Corporation Vs. The Commissioner of Central Excise [ 2020 (9) TMI 1303 - MADRAS HIGH COURT] had considered the issue of taxability of renting of immovable property and vide judgment dated 09.09.2020 held that Municipality is liable to pay service tax - In the case of Madurai Corporation, the Ld. Single Bench Judge sustained the demand mainly on the view that it was observed by the Hon ble High Court in the batch case that the Municipality can pass on the burden of service tax to the tenant (recipient of service tax). It is represented here that the Department has filed appeal against the decision passed by the Ld. Single Judge in the case of Cuddalore Municipality and that assessee has filed appeal against the decision passed in the case of Madurai Corporation. These appeals are pending before the Hon ble High Court. Since, the Hon ble High Court in the case of St. Thomas Mount Cum Pallavaram Cantonment Board [ 2023 (4) TMI 1024 - MADRAS HIGH COURT] has remanded the matter for considering the issue afresh, it is opined, that in the interest of justice, these matters also require to be remanded to the Adjudicating Authority to consider afresh the issue as to whether Municipality is liable to pay service tax under Renting of Immovable Property Services and other Services. Time limitation - HELD THAT:- The assessee being a local authority, which is a wing of the Government, it cannot be said that assessee has suppressed facts with intent to evade payment of service tax. So also, there is no positive act of suppression alleged in the Show Cause Notice against these Municipalities. As the matter is remanded, the Adjudicating Authority is directed to consider the issue on limitation also. The Department has filed appeal aggrieved by dropping or reducing the demands. In case the demand of service tax is sustainable, the Adjudicating Authority is directed to quantify after looking into the actual amounts received in respect of each services. The appeals are allowed by way of remand to the Adjudicating Authority.
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2024 (4) TMI 1124
Classification of service - works contract service or erection, commissioning and installation services - scope of the supply to the recipients of services include the materials as well - suppression of facts or not - Extended period of Limitation - HELD THAT:- There are force in the arguments of Appellant that the scope of their services also included the supply of material. The same is supported by the facts as recorded by Ld. Commissioner in Para 8(d) of the Order in Original dated 30.10.2014 wherein it is clearly coming up that the Appellant were also required to supply the materials. Therefore, the appropriate classification for the services provided by the Appellants would be works contract services and not erection, commissioning and installation services . Reliance placed on the decision of coordinate bench at Chennai in case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST CENTRAL EXCISE, CHENNAI [ 2018 (9) TMI 1149 - CESTAT CHENNAI] wherein it is held that demand of service tax under the taxable category of erection, commissioning and installation only if the services are in the nature of services simpliciter. However, as per the facts recorded by Ld. Commissioner in the present case it clear that the scope of services of the Appellants also include supply of materials and therefore, the demand of service tax under the taxable category of erection, commissioning and installation services is not sustainable in the present case. The decision of Real Value Promoters is followed in many other decisions as well. The impugned order is set aside - appeal allowed.
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Central Excise
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2024 (5) TMI 8
Recovery of rebate claim - Adjusted rebate claims towards their existing liabilities - petitioner's eligibility for rebate on the exports made during months of March, 2013; July, 2011; December, 2011; October, 2011; and January, 2011 - HELD THAT:- Although the Department succeeded before the Appellate Commissioner, vide Order-in-Appeal and the petitioner's revisions were dismissed on 31.03.2014 and recovery were ordered in terms of Order-in-Original, which stands confirmed by the Appellate Commissioner's Order-in- Appeal, the fact remains that these orders have been set aside and the case has been remitted back to the respondents to consider the issue afresh as far as rebate claim for Rs. 27,71,599/-. Thus, there is no demand that is remaining in force to be unenforced as on date for a sum of Rs. 27,71,599/-. There is no justification in adjusting the above said amount of Rs. 27,71,599/- from the rebates on exports made by the petitioner, which the petitioner is otherwise entitled to. Adjustments have been made against the respective Order-in-Original have already been given above. Hence, the amounts adjusted have to be refunded back to the petitioner together with interest. In case, in the remand proceedings, the petitioner is held ineligible for the rebate on the exports made by them in the month of April, 2012, the respondents can independently recover the amount from the date of other amount that may be refundable as on the date of the order to be passed by the Revisional Authority. These Writ Petitions are allowed.
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2024 (5) TMI 7
Withdrawal of Compounding scheme - Declaration made in the year 1997-98 can be treated as the declaration for the year 1998-99 under Section 3A of the Central Excise Act read with Rule 96ZO(3) of the Central Excise Rules, 1944 or not - whether the present applicant had withdrawn its offer at the beginning of the Financial Year 1998-99? - HELD THAT:- The first communication that the applicant wrote to the revenue authorities is dated 15.6.1998 when it indicated its intent to discharge duty liability on actual production basis. However, prior to that date, for the month of April, 1998, the applicant had already discharged duty liability on compounded basis. Having done that, the applicant had clearly indicated to the revenue authorities its intent to remain under the benefit of the compounding scheme for the Financial Year 1998-99. It is self-contradicted contention being advanced that though the applicant had paid up the compounding fee for the month of April, 1998, it had not agreed to be retained under the benefit of the compounding scheme. As to the mode in which the applicant may ever have applied to discontinue the benefit of the compounding scheme, Rule 96ZO(3) of the Rules leaves no doubt that a declaration was required to be filled by the applicant to be admitted to the benefit of the compounding scheme. It must have been filled at the relevant time i.e. August, 1998, in terms of the said provision. Clearly, the applicant was not required to submit the same on year to year basis. Once the scheme has been interpreted by the Supreme Court, it is mandatory that option once exercised for a financial year, may not be withdrawn midway. The only recourse that applicant may have taken may be to apply to the jurisdictional authority to discontinue the benefit of the compounding scheme from the beginning of the next Financial Year i.e. 1.4.1998. For such option to be exercised, the applicant ought to have made that application before the date i.e. 1.4.1998, and in any case before making the deposit of the compounding fee for the month of April, 1998. Having done otherwise, the applicant lost the opportunity to withdraw from the compounding scheme for the Financial Year 1998- 99. Application dismissed.
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2024 (5) TMI 6
Method of Valuation - Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 or cost plus job work charges method to be adopted by them at the time of clearance - receiving goods from principal manufacturer namely M/s. Marico Industries and carrying out job work on the goods - demand alongwith interest and penalty - HELD THAT:- A Coordinate Bench of this Tribunal in M/S. BHAVANI ENTERPRISES, SREE MOOKAMBIKAI POLYMERS, M/S. SMITH ENTERPRISES VERSUS COMMISSIONER OF CENTRAL EXCISE, PONDICHERRY AND VICE-VERSA [ 2018 (2) TMI 139 - CESTAT CHENNAI] has examined an identical matter, wherein they have observed 'it needs to be mentioned that Rule 8 applies when goods are not sold. The goods (HDPE bottles) are sold by appellant to M/s. Marico. The appellant does not captively consume the goods nor does M/s.Marico consume it on behalf of appellant.' The impugned orders are not sustainable and merits to be set aside - Appeal allowed.
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2024 (5) TMI 5
CENVAT Credit - Allegation of receipt of only invoices without receipt of duty paid goods - non-existent certain manufacturers and 1st stage dealers - non-compliance with the provisions of Rule 9(5) of the Cenvat Credit Rules, 2004 - recovery alongwith interest and penalty - HELD THAT:- In the instant case, that the appellant had verified that the invoices issued by the 2nd stage dealers were as per the prescribed format under Rule 11 of the Central Excise Rules, 2002, and the said dealer was duly registered with the central excise authorities. The goods were transported in vehicles which had GRs/bilties. The record of the receipts and usage was maintained in the statutory records by the appellant. The payment was remitted through banking channels. Shri Sushil Malani, Director has in his statement stated that all necessary precautions were taken by them as per the provisions of Rule 9(5) of the Cenvat Credit Rules, 2004. It is evident that the appellant had taken all reasonable precautions as per legal provisions. Consequently, the penalties imposed on the appellants can also not be sustained. The impugned order is set aside - appeal allowed.
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2024 (5) TMI 4
Recovery of wrongly utilized credit - utilization of Cenvat Credit availed on Basic Excise Duty (BED) for payment of EC and SHEC - violation of Rule 3 (7)(b) of Cenvat Credit Rules, 2004 - Period between April 2013 and January 2014 - HELD THAT:- The very same issue was considered by Tribunal in the case of M/S. VEDANTA LTD. VERSUS CCE, TIRUNELVELI [ 2018 (7) TMI 158 - CESTAT CHENNAI] and the Tribunal held that the demand confirmed alleging that the appellant cannot utilize the credit availed on Basic Excise Duty for discharging Education Cess and Secondary Higher Education Cess cannot be sustained. In the said case the Tribunal followed various decisions in which Rule 3 (7)(b) of Cenvat Credit Rule was also analysed. In the case of COMMISSIONER OF C. EXCISE, DIBRUGARH VERSUS PRAG BOSIMI SYNTHETICS LTD. [ 2013 (11) TMI 487 - GAUHATI HIGH COURT] , the Hon ble Guwahati High Court considered the issue in detail as to whether National Calamity Contingent Duty (NCCD) is a duty exempted under Notification No.32/99 - CE dated 08.07.1999 and if not whether CENVAT credit availed under Cenvat Credit Rules, 2004 can be utilized for payment of such duty which is not exempted under such Notification - Hon ble High Court held that NCCD is nothing but a duty of Excise and in para 8 of the said judgment the question whether the CENVAT credit can be utilized for payment of NCCD was discussed and held in favour of assessee. The Hon ble Supreme Court in the case Unicorn Industries [ 2019 (12) TMI 286 - SUPREME COURT] has observed that the duty on NCCD, Education Cess and Secondary Higher Education Cess are in the nature of additional Excise duty and it would not mean that the area based exemption Notification dated 09.09.2003 would be applicable to these duties (NCCD), particularly, when there is no reference to the Notification issued under Finance Act 2001. The Hon ble jurisdictional High Court had considered the decision in the case of M/s, Unicorn Industries also to reach the conclusion that Cess being duty of excise the importer can pay Cess using MEIS Scrips. From the above, there are no hesitation to hold that the decision of the Tribunal in the case of M/s. Vedanta Ltd. is squarely applicable. The demand therefore cannot be sustained. The impugned order is set aside. The appeal is allowed.
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2024 (5) TMI 3
Reversal of CENVAT credit - Investment in shares - Nature of activity - Sale or service - Exempt service or not - Press mud is waste product like Bagasse or not - exigibility of goods/service tax - burden on Revenue to prove the case. Taxability - Press mud is waste product like Bagasse or not - exigibility of goods/service tax - burden on Revenue to prove the case - HELD THAT:- The impugned demand cannot sustain since Press mud is no different from Bagasse, which is also a waste product, which is also a result of the manufacturing process of a different product and, consequently, the impugned demand cannot sustain - Hon ble Allahabad High court in the case of M/S BALRAMPUR CHINI MILLS LTD. THROUGH ITS GENERAL MANAGER VERSUS UNION OF INDIA, MINISTRY OF FINANCE DEPARTMENT OF REVENUE [ 2019 (5) TMI 972 - ALLAHABAD HIGH COURT] has held that ' Rule 6 of the Cenvat Credit Rules would have no application for reversal of Cenvat Credit in relation to Bagasse.' - demand set aside. Reversal of CENVAT credit - Investment in shares - Exempt service or not - HELD THAT:- The appellant had invested in shares/securities that were giving dividend income but, however, we fail to understand as to what was service element involved in such investment. The revenue has only fastened the liability on surmises and without there being any positive findings in this regard. It was for the revenue to prove that investment itself was a service, in order to demand service tax. Rather, the first appellant authority himself has at paragraph No.14.01 observed that ''such investment would be an activity outside the definition of service, being a mere transaction in money'' but, however, has concluded in the same para that activity of investment in shares and derivative trade satisfy the definition exempted services under Cenvat Credit Rules, 2004. There are no logic in treating the mere investment as an exempted service because, the revenue has not specifically alleged if there is any service in the first place. Secondly, up to 01.07.2012, even if it is assumed to be an exempted service, then the same was not taxable. With the introduction of negative list w.e.f. 01.07.2012, S. 66B of the Finance Act empowers the levy of service tax on the value of all services other than those in the negative list, which are provided or agreed to be provided, by one person to another. Exempted service, although exempted , nevertheless should satisfy the ingredients of service in the first place. In this case, by making an investment the appellant does not do any activity for another for a consideration. Further, specific exclusion from the definition of service is given to transactions involving transfer of title in goods or immovable property by the way of sale , since trading in security involves transfer of title in goods, the activity of trading in securities cannot therefore be said to be a service - the authorities below have grossly erred in demanding the tax on the investment made, by treating the same as service although exempted and consequently, the impugned order is set aside. Appeal allowed.
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CST, VAT & Sales Tax
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2024 (5) TMI 2
Permission for withdrawal of petition - new management of the petitioner will not be held responsible for any outstanding statutory dues and other claims for the period prior to the commencement of CIRP - HELD THAT:- Bearing in mind the developments that have taken place in the matter, the Special Leave Petition stands disposed of as having become infructuous - The Special Leave Petition is, accordingly, disposed of as withdrawn.
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Indian Laws
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2024 (5) TMI 1
Interest on the penalty amount - for the period when the initial order was stayed - demand on the ground that Respondent/CCI could not have directed payment of interest on the penalty amount without following the procedure laid down under the Competition Commission of India (Manner of Recovery of Monetary Penalty) Regulations, 2011 - HELD THAT:- It is pertinent to mention that the amount of interest which is stipulated in the notice is the amount that is stipulated in Regulation 5 of the 2011 Regulations. Regulation 5 also specifically states that if the amount specified in the demand notice is not paid within the period specified then interest is leviable. It is further fortified that the demand notice also stipulates that the amount has to be paid within 30 days of the receipt of the demand notice under Form-I. These provisions are, therefore, completely mandatory. The Apex Court in SRI MOHAN WAHI VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS [ 2001 (3) TMI 4 - SUPREME COURT ] while considering on the power to impose interest on the delayed payment of penalty amount, has observed ' once the demand ceased to exist and the fact was brought to the notice of the Tax Recovery Officer by the assessee, the former should have cancelled the recovery certificate and, therefore, with effect from that date till the date of refund, the interest should be paid by revenue.' The interest can be levied only in a manner provided by the statute. Further, the Hon ble Apex Court in a number of Judgments has held that when there is a power, coupled with duties, to do a thing in a particular way it should be done in that way only and other modes are forbidden. The Impugned Order is set aside inasmuch as it levies interest on the delayed payment of penalty amount from 10.12.2018 till the date of payment - Petition allowed.
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