TMI Tax Updates - e-Newsletter
April 19, 2023
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Provisional attachment - power of competent authority to repeat the provisional attachment after period of one year - As the adjudication proceedings have begun, and the petitioner would be participating in the said proceedings by filling its reply and availing reasonable opportunity of hearing, which will be extended by the authorities, the legality and validity of second provisional attachment order need not to be gone into. - Interim relief grated earlier shall continue to operate till the competent GST authority completes the adjudication proceedings and pass necessary orders. - HC
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GST:
Cancellation of GST registration of petitioner - It is beyond cavil that a summary of a show cause notice cannot be a substitute of a proper show cause notice and would entail violation of principles of natural justice. In the absence of clear charges upon which the person so alleged is required to answer, proper opportunity to defend itself stands denied. - orders quashed - HC
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GST:
Availment of ITC - fulfilment of conditions of Works Contract or not - The petitioner do not fall within the definition of Section 17(5)(c) of the CGST Act, 2017. The demand raised on 30.09.2019 and the penalty imposed under Section 74(1) of the CGST Act,2017 is ultra vires, contrary to law - HC
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GST:
Classification of goods - lamp oil (trade name - Deepa Jyothi Lamp Oil) - Though the Mahara Jyothi is marketed as lamp oil, classification can be done only as per the contents of the item and not as per the end use, unless it is specifically mentioned so. Therefore, as per the provisions of Chapter 15 of the CTA, RBD Palmolein Oil is covered under tariff heading 1511 90 20. - AAR
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Income Tax:
Penalty u/s 271AA - failure of the assessee to report the intentional transactions - As seen that the AO wrongly applied the amended Section 271AA which is effective from the assessment year 2012-13. That apart, for the delay in furnishing an information, the same could be covered under Section 271G of the Act. However, the AO dropped the proposal to impose penalty under Section 271G of the Act. - HC
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Income Tax:
Validity of notice u/s 148-A - In the present case, the show cause notice was issued to the petitioner on 26.03.2022 (Annexure P-2) and on the 7th day itself, the impugned notice dated 01.04.2022 was passed. The petitioner instead of filing reply chose to approach this Court. - Petition dismissed - HC
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Income Tax:
Addition u/s 69A r.w.s 115BBE - unexplained gold jewellery found at the time of search - the assessee cannot be asked to explain the bank transactions of an unrelated party. Evidences in the form of confirmation, books of account, stock register and ledger account along with bank statement cannot be brushed aside lightly and considering these evidences, we do not find any merit in the impugned addition made u/s 69A - AO directed to delete the addition - AT
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Income Tax:
Addition u/s. 40A(3) - additions made towards cash payments in excess of prescribed limit - Since, the assessee was only an agent for distributor and collected money from exhibitor/theater owners on behalf of distributors, payment made by the assessee to various parties on behalf of producer of movie cannot be considered as income/expenditure of the assessee to invoke provisions of section 40A(3) of the Act. - AT
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Income Tax:
Validity of assessment u/s 153A - the additions as finally made to the total income of the assessee on account of transactions reflected in the Bank account of the assessee with HSBC, Geneva, Switzerland and income relating thereto for both the years under consideration are beyond the scope of section 153A as the assessments for the said years had become final prior to the date of search and there was no incriminating material found during the course of search to support and substantiate the said addition. - AT
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Income Tax:
Long Term Capital Gains - benefit of indexation on cost of improvement incurred - The assessee had failed to demonstrate by any evidence the cost of improvement like bills / vouchers, approval of the local authorities and claim of expenditure claimed in the earlier return of incomes. Assessee is not entitled to the relief claimed in these appeals. - AT
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Income Tax:
Addition on account of 5% of labour expenses - Before Tribunal, the assessee has neither given any evidence nor furnished the details of number of labourers, casual labours or their salary or attendance register to substantiate such claim. In absence of any evidence or explanation, find that the AO was quite justified in making addition/disallowance to the extent of 5% of the labour expenses. - AT
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Income Tax:
Additions u/s 69C - purview and scope of section 69C is totally different from the disallowance of expenses found to be not genuine - The basic premise with the CIT therefore for finding error in the order of the AO, that the disallowance made by him of contractors’ expense came under the purview of section 69C of the Act is found to be untenable in law. His finding of error, as a consequence whereof, that the same not being subjected to tax at a special rate provided u/s 115BBE of the Act also as a result does not survive. - AT
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Income Tax:
Revision u/s 263 - the AO has not made any enquiry and accepted the return of income filed by the assessee, as it is, without enquiring about the issue raised by the PCIT. - Whatever return of income filed by the assessee has been accepted by AO, blindly and without conducting any enquiry, hence order passed by the AO is erroneous as well as prejudicial to the interest of Revenue. - AT
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Income Tax:
Addition u/s 68 - genuineness of transactions - Authorities below have not further discharged the onus shifted onto their shoulders to bring on record any positive adverse material against the assessee controverting the documentary evidence filed by the assessee and establishing the fact that the assessee could not substantiate the identity and credit worthiness of loan creditors along with genuineness of transactions and factum of repayment of the alleged creditors. - AT
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Income Tax:
Genuineness of expenses - Because subsequently those parties could not confirm the transaction, it cannot be inferred that expenses incurred by the assessee were not genuine. It is also an accepted fact that none of the parties were found to be bogus or the purchases were found to be nongenuine. There may be many reasons that notices u/s 133 (6) remained unserved or not responded to. But, merely that fact, cannot result into disallowance. - AT
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Customs:
Jurisdiction of the Deputy Commissioner to reopen the assessment order and review its own order, in favor of importer - admissibility of the refund claims - The Commissioner (Appeals) had rightly observed that the Deputy Commissioner had no jurisdiction to review its own order and reassess the bill of entry once again after the goods were cleared on payment of duty and the same was bad in view of the decision of the Apex Court in ITC - AT
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Customs:
Mis-use of duty free licences - benefit of the exemption under the license is not available on the strength of a fraudulent licence - The appellant in this case has not even remotely fulfilled its obligation as a buyer of the licences/ scrips. In fact, the appellant had not even bought the licences/scrips but only purchased the benefit from the licences/scrips. Therefore, the impugned order correctly confirmed the demand of duty from the appellant. Since, the duty is payable the corresponding interest also has to be paid, as applicable. - AT
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Customs:
Final assessment of bills of entry - Reduction in price after negotiation - import of Steam (Non-coking) Coal in bulk - Section 14 of the Customs Act, 1962 also talks of the price which is either paid or payable to the seller. In such situation it will be improper if importer is asked to pay customs duty on an amount more than what was the consideration for the transaction. The actual transaction value paid is required to be accepted for assessment purpose, particularly when the genuineness of the reduction is not under dispute. - AT
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Indian Laws:
Coercion and economic duress - The Respondent’s claim fits in the description of an attempt to initiate “ex facie meritless, frivolous and dishonest litigation” - There were no allegations of coercion or economic duress compelling SPML to withdraw any pending claims under the subject contract as a condition for the return of the Bank Guarantees. - High Court has committed an error in allowing the application under Section 11(6) of the Act. High Court ought to have examined the issue of the final settlement of disputes. - SC
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Indian Laws:
Detention order - The preventive detention laws in India are a colonial legacy, and as such, are extremely powerful laws that have the ability to confer arbitrary power to the state. In such a circumstance, where there is a possibility of an unfettered discretion of power by the Government, this Court must analyze cases arising from such laws with extreme caution and excruciating detail, to ensure that there are checks and balances on the power of the Government - SC
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Indian Laws:
Anti-competition - Cartelisation - unfair trade practices - Paper industry - The petitioner has been given an opportunity of producing evidence before the DG during the process of investigation and by the orders impugned the DG has called upon the petitioner to file its objections / suggestions to the investigation report. It cannot be said therefore that the petitioners’ doors are closed - Petition dismissed. - HC
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Service Tax:
CENVAT Credit of Service Tax paid - exempt services or not - the services rendered by the appellant in this case, insofar as the same related to the handling of export cargo, is excluded from taxability and thus, the same cannot be brought as ‘exempted’ under Rule 2(e) ibid. Once it is held as ‘excluded’, there is also no scope to consider the same as an ‘exempted’ service just for the purposes of Rule 6 of the CENVAT Credit Rules, 2004. - AT
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Service Tax:
Benefit of exemption - handling of agriculture produce by a cargo handling agency - it is found that the exemption is provided to handling of agriculture produce by a cargo handling agency and it is not service specific whether for “cargo handling service” or for “port service”. Cargo handling agency can undertake handling of agriculture produce within or outside port. Thus, the appellant were eligible for the benefit of the notification no. 10/2002-ST dated 01.08.2002. - AT
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Central Excise:
Appealable order or not - Letter written by the Superintendent directing, the assessee for not availing Cenvat Credit - in the facts of the present case the letter written by Superintendent is a decision against which the appeal lies before Commissioner (Appeals) under Section 35 of the Act - the order of the Commissioner (Appeals) is absolutely legal and correct hence the same is upheld. - AT
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Central Excise:
Remission of duty on the goods lost in fire accident - The position in law is very clearly stated in Rule 49 according to which duty is chargeable only on removal of the goods from factory premises or from an approved place of storage - no duty was demandable irrespective of what the insurance companies had done or not done. - There was no cause for demand of duty from appellant in the instant case - the Commissioner’s order is misconceived and incorrect in law as well as in fact - AT
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Central Excise:
Valuation - Recovery of Central Excise Duty - the freight and handling charges shown separately in the invoice of the appellant is also not includable in the assessable value of the excisable goods, consequently, duty demand on the said elements is not sustainable. - AT
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Central Excise:
Classification of goods - Compounds of PBT - The classification of the product decided by the commissioner will have no adverse effect on the eligibility of the notification so long the product falls under chapter heading 3907 and 3908 and the same is polyester chips and nylon chips irrespective of the same is not in the pure form therefore, the appellant are eligible for exemption notification in respect of their product namely polyester chips and nylon chips. - AT
Articles
Notifications
Circulars / Instructions / Orders
Case Laws:
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GST
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2023 (4) TMI 705
Principles of natural justice - extension of time sought for filing reply - time extended on the request of the petitioner till 20th April, 2022, but no reply was submitted by the petitioner - HELD THAT:- The time for filing reply was extended for the petitioner firstly till 28th December, 2021 but no reply was submitted, thereafter, it was again extended on the request of the petitioner till 20th April, 2022, but no reply was submitted by the petitioner. In the interregnum, on 8th January, 2022 without submitting any reply, he had sought personal hearing. Petitioner's counsel says that certain documents were being demanded by him which were not supplied. If it is so, then all this can be seen in appeal u/s 107. We could understand if a reply was submitted by the petitioner and in such reply the petitioner took the plea about non-furnishing of certain documents and at the same time exercised his option for personal hearing, which is referable to Section 75(4) of the Act, 2017. In such a case, of-course we may have interfered but we see no reason to interfere at the behest of petitioner, who did not submit any reply but sought personal hearing. None of decisions annexed with the petition apply to the facts of this case. However, at this stage, Shri Rohit Shukla informed that against the order dated 21.05.2022 passed u/s 74 of the Act, 2017, the appeal could have been filed within a period of 30 days, which was extendable for one month and no more. We find that this petition has been filed only on 21st March, 2023, meaning thereby the period for preferring the appeal had expired much prior to filing of this petition - Writ petition is dismissed.
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2023 (4) TMI 704
Provisional attachment of properties as well as the bank accounts of the petitioner - power of competent authority to repeat the provisional attachment after period of one year - Wrongful availment of Input Tax Credit - authority to direct the closure of the industry of the petitioner by passing the provisional orders of attachment and cancelling the registration of GSTIN and issuance of direction to block the input tax credit - HELD THAT:- In view of the nature of the order passed here, the court is not required to go into the merit of the said contention about competency of the authority to pass second provisional attachment order after expiry of one year. Attachment order - authority to direct the closure of the industry of the petitioner by passing the provisional orders of attachment and cancelling the registration of GSTIN and issuance of direction to block the input tax credit - HELD THAT:- The petitioner is not in a position to dispute the issuance and receipt of the above show cause notice. The show cause notice issued is in respect of all the five financial years in respect of which the allegations against the petitioner about wrongful availment of Input Tax Credit are made - with the issuance of show cause notice, under section 74 of the Act, there is no gainsaying that the proceedings for adjudication have commenced. As the adjudication proceedings have begun, and the petitioner would be participating in the said proceedings by filling its reply and availing reasonable opportunity of hearing, which will be extended by the authorities, the legality and validity of second provisional attachment order need not to be gone into. It would be rather a proper course to be adopted to direct the authorities to complete the adjudication proceedings time-bound. Once the proceedings are over, the rights of the parties shall stand crystallized leaving the order of provisional attachment to its own fate. Petition disposed off.
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2023 (4) TMI 703
Cancellation of GST registration of petitioner - cancellation on the ground that the returns furnished by the petitioner under Section 39 of the Central Goods and Services Tax Act, 2017 were with incomplete details and that there was failure to furnish returns for a continuous period of six months - Notification dated 31.03.2023 issued under Section 148 of the Central Goods and Service Tax Act, 2017 - HELD THAT:- Clause (c) of the aforesaid Notification would apply to the facts of this case for which there is no dispute, holding that no further extension of time period for filing application for revocation of cancellation of registration shall be available in such cases. As the Notification would indisputably apply to the facts of this case, the petitioner may approach the competent authority to avail the benefit of the Notification and seek revocation of the cancellation of registration - If the petitioner approaches the competent authority in light of the Notification dated 31.03.2023, the authority will take appropriate decision without booking any delay. Petition disposed off.
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2023 (4) TMI 702
Cancellation of GST registration of petitioner - cancellation for the reason of Non-existent Taxpayers under Risky Exporters Category in DGARM Report - HELD THAT:- It is well settled that the Authority that is required to take the decision cannot do so on mere directions of another authority without fully satisfying itself as to the reasons for taking the said decision. It is clear from the impugned order dated 26.09.2022 that the concerned officer has passed the said order merely on the direction of another Authority. Further, the impugned order does not provide any clue as to why the petitioner s GST registration was cancelled. The impugned show cause notice as well as the impugned order cannot be sustained and the same are accordingly set aside. Petition allowed.
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2023 (4) TMI 701
Condonation of delay (delay is one week shy of four months) in filing appeal - TNGST Act - HELD THAT:- In such cases (where delay is more than 120 days), it calls upon the Court to examine whether there was any justification available for having approach this Court belatedly and only then consider intervening. In the present case, the petitioner has stated that the delay was due to the mistake of the accountant only. That apart, incidentally, though being a point on merits, this has not weighed with the Court in intervening in the matter, the very validity of Section 16(4) of the Act in terms of which the respondent has reversed input tax credit has been challenged and is pending consideration in WP.No.8154 of 2022 and other cases, though not at the instance of the petitioner. Seeing as the petitioner is a small trader, and an explanation of some nature has been set out in the affidavit, the petitioner may be permitted to approach the appellate authority before whom all conditions for entertaining the appeal such as pre-deposit would be applicable. If appeal is filed within a period of one week from today, it shall be entertained without reference to limitation but ensuring compliance with all other requirements including pre-deposit - this writ petition is dismissed.
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2023 (4) TMI 700
Cancellation of GST registration of petitioner - Alleged wrongful claim of ITC and wrongful distribution of ITC benefit - Opportunity of hearing provided to the petitioner - violation of principles of natural justice - HELD THAT:- It is beyond cavil that a summary of a show cause notice cannot be a substitute of a proper show cause notice and would entail violation of principles of natural justice. In the absence of clear charges upon which the person so alleged is required to answer, proper opportunity to defend itself stands denied. It is also apparent from the materials on record that contrary to the requirement of Section 75(4) and (5) of the Act and the ratio rendered on the very subject by this Court in the case of M/s Godavari Commodities Ltd. [[ 2022 (4) TMI 1026 - JHARKHAND HIGH COURT] ], no opportunity of hearing was granted to the petitioner before passing an order which is adverse to him - It also appears that the relied upon documents which forms the basis of passing of the impugned order, have not been supplied to the petitioners. Let it be made clear that that writ petitions have been decided only on the ground of violation of principles of natural justice and failure to follow the procedure prescribed under the Act - petition allowed.
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2023 (4) TMI 699
Availment of ITC - fulfilment of conditions of Works Contract or not - Case of petitioner is that the demand on the ground that such ITC availed on works contract service for supply of construction of an immoveable property was in violation of Section 17(5) of CGST Act is incorrect and the respondents are not entitled to collect the taxes under the Input Tax Credit since the credit has to be given under the Act - HELD THAT:- It is clear that the petitioner has fulfilled all the conditions of work contracts as he is providing work contract services under a contract for construction of building of a Hotel wherein transfer of property in goods is involved in the execution of such contract. The Hotel Polo Pvt. Ltd. is immoveable property. So, the petitioner has been providing work contract services to the owner of the hotel and not for it s own. Further, in providing taxable work contract services for the said construction of Hotel Building, he is entitled to take Input Tax Credit on the Goods and Services being utilized for providing the taxable work contract services. The petitioner do not fall within the definition of Section 17(5)(c) of the CGST Act, 2017. The demand raised on 30.09.2019 and the penalty imposed under Section 74(1) of the CGST Act,2017 is ultra vires , contrary to law and thus, the impugned order dated 01.02.2022, passed by the respondent no.3, the appellate authority affirming the order passed by the adjudicating authority on 13.10.2020, is liable to be set aside and quashed.Petition allowed.
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2023 (4) TMI 698
Rejection of application for extension of time - Jurisdiction for rejecting the extension - inconsistency with Rule 40(1)(b) of GST Rules - HELD THAT:- The petitioner has admittedly made a representation/application for extension of time before the first respondent and the first respondent instead of passing orders on the said representation, kept the matter pending for nearly a year and thereafter, the second respondent has passed the order impugned in this writ petition stating that the petitioner's request was rejected by the first respondent and the said order has been issued with the approval of the first respondent. The order impugned in this writ petition is set aside and remitted to the first respondent, who shall pass appropriate orders, after hearing the petitioner, within a period of four weeks from the date of receipt of a copy of this order. The writ petition is disposed off.
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2023 (4) TMI 697
Classification of goods - lamp oil (trade name - Deepa Jyothi Lamp Oil) - to be classified under tariff heading 15.18 or not - HELD THAT:- It is evident that RBD Palmolein Oil is covered under tariff heading 1511 90 20. Further, Chapter Heading 1518 provides for classification of Inedible Mixtures or preparations of vegetable oils or of fractions . Refined Bleached Deodorised (RBD) Palmolein Oil is a fraction of Palm Oil obtained by a process called fractionation. The Applicant has stated that they have proposed to market one of their RBD Palmolein which is of edible grade without changing its basic and essential character as Mahara Jyothi, which is intended to be introduced as lamp oil - from the submissions of the applicant it is evident that Mahara Jyothi is nothing but edible RBD Palmolein. Though the Mahara Jyothi is marketed as lamp oil, classification can be done only as per the contents of the item and not as per the end use, unless it is specifically mentioned so. Therefore, as per the provisions of Chapter 15 of the CTA, RBD Palmolein Oil is covered under tariff heading 1511 90 20. It is found that in a AAR ruling in the case of M/s Sri Kanyakaparameshwari Oil Mills [[ 2019 (7) TMI 619 - AUTHORITY FOR ADVANCE RULING, KARNATAKA] ] it was held that Deepam Oil which was an inedible mixture of Gingelly oil, Palmolein oil and rice bran oil intended to use as lighting lamp for God, was classifiable under Chapter Heading 1518. As indicated in Para 5.4, Chapter Heading 1518 provides for classification of Inedible Mixtures or preparations of vegetable oils or of fractions - But in the instant case, the Mahara Jyothi oil is neither a mixture of one or more oils nor is it inedible. It is an edible RBD Palmolein and hence, the ruling of AAR in the above cited case is distinguishable. In as much as the said Mahara Jyothi oil, as per the submissions of the applicant, is edible and is RBD Palmolein without any additives or mixture of other oils, it is rightly classifiable under 1511 90 20.
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Income Tax
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2023 (4) TMI 696
Penalty u/s 271AA - scope of amended Section 271AA - failure of the assessee to report the intentional transactions and also to furnish incorrect information in the return of income with reference to such international transactions - HELD THAT:- As seen that the AO wrongly applied the amended Section 271AA which is effective from the assessment year 2012-13. That apart, for the delay in furnishing an information, the same could be covered under Section 271G of the Act. However, the AO dropped the proposal to impose penalty under Section 271G of the Act. Further, for non-filing of Form-3CEB as per Section 92E of the Act within the due date of filing the return, the Assessing Officer had already levied penalty under Section 271BA of the Act. Decided against revenue.
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2023 (4) TMI 695
Validity of notice u/s 148-A - As argued notice was served requiring Assessee to response within one day - mandation of minimum of 7 days to respond to the show cause notice - as argued amended procedure under the Finance Act, 2021, respondent No. 1 was bound to allow a minimum of 7 days to respond to the show cause notice after the same is served upon the petitioner - HELD THAT:- Notice was served upon on 26.03.2022 requiring Assessee to response within one day i.e 27.03.2022, is without any basis, as the opportunity of being heard was provided to the assessee, as the notice was issued on 20.03.2022 at the address given on the PAN database through speed post. The petitioner herself admitted that the notice was served upon her on 26.03.2022. Reference was made to Clause (b) of Section 148 of Act 1961 and as per this clause, the petitioner could have filed an application for extension of time. But the petitioner neither filed any reply nor filed any application for extension of time. The order dated 01.04.2022 (P-3) has rightly been passed on 7th day as per Clause (b) of Section 148 of Act 1961. On this very issue, Hon ble the Supreme Court in a case of Principal Commissioner of Income Tax, Mumbai vs. I-Ven Interactive Ltd, Mumbai [ 2019 (10) TMI 785 - SUPREME COURT] held that issuance of notice at the address listed in the PAN database is sufficient compliance of issue of notice, and that in the absence of any specific intimation to the Assessing Officer, the Assessing Officer would be justified in sending notice at the available address mentioned in the PAN Database. In the present case, the petitioner was having the knowledge of notice on 26.03.2022 and she has not given any reply to the said show cause notice. Thus, the impugned order came to be passed on the 7th day i.e on 07.04.2022. The notice has been sent at the address given on the PAN Data base. AO initiated the proceedings in accordance with Section 148A read with Section 149/151. The approval of specified authority as per Section 151 of Act 1961 was obtained at every stage. The petitioner chose not to file reply to the notice and hence the notice issued on 20.03.2022 through speed post at the address given on the PAN Data base was sufficient to return a finding that the respondents had served the notice at the correct address. Moreover, petitioner herself has admitted that the notice was received on 26.03.2022. Whether the petitioner having been served the notice at the correct address, the proceedings initiated for reassessment can be quashed ? - The answer is No . Further the case i.e Jindal Forgings case [ 2022 (7) TMI 600 - JHARKHAND HIGH COURT] cited by learned counsel for the petitioner will not be applicable to the facts of the present case, as in that case only three days time was given to the petitioner to file reply. In the present case, the show cause notice was issued to the petitioner on 26.03.2022 (Annexure P-2) and on the 7th day itself, the impugned notice dated 01.04.2022 (P-3) was passed. The petitioner instead of filing reply chose to approach this Court. Finding no merit, the writ petition is dismissed.
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2023 (4) TMI 694
Addition u/s 69A r.w.s 115BBE - unexplained gold jewellery found at the time of search - Certain documents were seized from the residence of the assessee which represented vouchers for sale of old jewellery made by the assessee and her family members - HELD THAT:- Facts on record show that in response to summons u/s 131(1A) M/s Arjun Traders submitted its reply along with copy of Income tax Return, computation of income, balance sheet, Profit and Loss Account along with all Annexures for A.Ys 2016- 17 and 2017-18 along with copies of all bank account statements from 01.04.2016 to 30.09.2016 along with copy of stock register and copy of ledger account of purchase and sale. With these evidences on record submitted before the Investigation Wing, it can be safely presumed that M/s Arjun Traders is a regular assessee. Therefore, it was incumbent upon the AO to make direct enquiries from the officer of M/s Arjun Traders if it did not appear before the AO during the assessment proceedings. AO has questioned the deposits made in the bank account of M/s Arjun Traders. We fail to understand how the assessee is responsible/answerable to the transactions made by an unrelated party in its bank accounts. Interestingly, on similar facts, the AO has also made addition in the case of sale of jewellery to Assure Jewels Pvt Ltd. where a person appeared before the AO and in the case of M/s Arjun Traders, none appeared. Nothing prevented the AO to force the attendance of M/s Arjun Traders since the AO has all the powers vested with that of a court u/s 131 of the Act. As mentioned elsewhere, the assessee cannot be asked to explain the bank transactions of an unrelated party. Evidences in the form of confirmation, books of account, stock register and ledger account along with bank statement cannot be brushed aside lightly and considering these evidences, we do not find any merit in the impugned addition made u/s 69A - We direct the AO to delete the addition - Decided in favour of assessee.
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2023 (4) TMI 693
Addition u/s 69A r.w.s 115BBE - accommodation entry receipts - CIT(A) concluded by holding that since the transactions are not in the name of the assessee, the assessee cannot claim the benefits arising from such transactions - HELD THAT:- Provisions of section 69A can be invoked only when the assessee is found to be owner of any money, bullion, jewellery or any other valuable article and such money, bullion, jewellery or valuable article is not found recorded in the books of account and the assessee offers no explanation about the nature and source of acquisition of the said asset or, explanation offered is not satisfactory in the opinion of the Assessing Officer, then such asset is deemed to be the income of the F.Y in which such asset is found. A bare perusal of the assessment order clearly shows that no money, bullion, jewellery or valuable article was found during search conducted on 07.04.2017 which is F.Y. 2017-18 relevant to A.Y 2018- 19. Then, we fail to understand how the provisions of section 69A have been invoked for A.Y 2015-16 which is under consideration because u/s 69A of the Act, addition can be made in the year in which asset etc is found and since no such asset was found during the course of search, section 69A of the Act cannot be applied to the alleged loss. The transaction sheet extracted in the body of the assessment order shows that it pertained to M/s Rajlaxmi Commodities Pvt Ltd and not to the assessee. Therefore, if any person needs to be questioned about the impugned loss is M/s Rajlaxmi Commodities Pvt Ltd and not the assessee. The entire addition has been made merely on surmises and conjectures and hypothesis. Moreover, we fail to understand how the statement recorded on 29.12.2015 is relevant for the search conducted on 07.04.2017. In fact, in his statement itself, in reply to question Nos. 22 and 24, Shri Naresh Aggarwal has categorically stated that all transactions were recorded in the books of account of M/s Rajlaxmi Commodities Pvt Ltd and in reply to Question Nos. 25 and 32, Shri Naresh Aggarwal has stated that profit and loss of USR ID 3 pertained to M/s Rajlaxmi Commodities Pvt Ltd. The undisputed fact is that income from the same transaction USR 3 for A.Y under consideration has been accepted by the department as income of M/s Rajlaxmi Commodities Pvt Ltd. There appears to be no motive behind the allegation that the assessee Shri Sanjay Singhal has taken accommodation entries to reduce his taxable income as he has never claimed any loss in his return of income. The undisputed fact is also that transactions are not in the name of the assessee and therefore, the assessee cannot claim benefits arising from such transactions in his return of income. Decided against revenue.
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2023 (4) TMI 692
Addition u/s 68 - Unexplained credit - Bogus share capital and share premium - onus to prove the identity and creditworthiness of the share subscribing companies and the genuineness of the transactions - HELD THAT:- We notice that the alleged sum was found credited in the books of accounts maintained by the assessee. Second part of the Section is that the assessee offers no explanation about the nature and source thereof but the same is not applicable in the instant case since the assessee has offered the explanation about the nature and source by filing complete documentary evidences to prove the identity and creditworthiness of the share subscribers and the genuineness of the transaction. Now, the third part is that if the explanation offered by the assessee is not satisfactory in the opinion of ld. AO now, for ld. AO has to express his opinion of having not satisfied and the same needs to be supported by specific observation rebutting the explanation offered by the assessee. But the same is completely absent in the instant case. Assessee has provided sufficient explanation with all documentary evidences but ld. AO made no efforts to examine those details and found some fault/discrepancy in the same. AO ought to have appreciated that the share subscribers are private limited companies and were having sufficient share capital, reserve and surplus in their regular books of accounts and out of such available funds the alleged share subscribers have invested in the assessee company. In our considered view, ld. AO failed to cross this hurdle as provided under the provisions of Section 68 of the Act before making the addition. We under the given facts and circumstances of the case most importantly that the year under appeal is AY 2008-09 and the proviso to Section 68 of the Act specifically brought in for examining the share application money/share premium received in the case of the companies has been brought into the Income Tax Act w.e.f. 01.04.2013, are of the considered view that prior to this amendment if the assessee had offered sufficient explanation about the nature and source of the alleged sum credited in the books which in this case is share capital and share premium and has discharged its onus by providing complete documentary evidences to prove the identity and creditworthiness of the share subscribers and genuineness of the transaction and ld. AO failed to record any discrepancy in such details, no addition u/s 68 called for. We thus, set aside the finding of ld. CIT(A), delete the addition made u/s 68 of the Act and allow the effective grounds of appeal in ground raised by the assessee.
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2023 (4) TMI 691
Addition u/s. 40A(3) - additions made towards cash payments in excess of prescribed limit - payments made for purchase of Right of the film Osthi and Vaanam - as argued money collected from exhibitors and theatre owners as an agent on behalf of the distributor, same cannot be treated as expenditure of the assessee - assessee is in the business of film distribution under name and style of Chimbu Cine Arts, a proprietary concern. The appellant is also the managing director of M/s. Kural TV Creations Pvt Ltd, which is also in the business of film distribution - HELD THAT:- It is an admitted fact that M/s. Reliance Big Entertainment Pvt Ltd, is the producer of the movie Vaanam.There is a tri-party agreement dated 09.11.2011 between M/s. Reliance Big Entertainment Pvt Ltd and M/s. Kural TV Creations Pvt Ltd and also M/s. Balaji Real Media Private Limited It is important to adhere to the pre-determined release date of the movie, the assessee was under obligation to settle the accounts of various parties as directed by the producer of the movie M/s. Reliance Big Entertainment Pvt Ltd. Since, the assessee was acting as an agent of M/s. Kural TV Creations Pvt Ltd, they have directed the assessee to settle the accounts of various parties on behalf of M/s. Reliance Big Entertainment Pvt Ltd and accordingly, the assessee has made cash payments to various parties on behalf of the M/s. Reliance Big Entertainment Pvt Ltd and debited to the accounts of M/s. Kural TV Creations Pvt Ltd. If you go by the arrangement between the parties, the assessee is neither producer of the movie nor distributor and exhibitor. But, he has acted as an agent for distribution and marketing of movie. Therefore, amount paid by the assessee to various parties and debited into ledger account of Osthi right purchase account and VTV production Vaanam account, cannot be considered as amount paid for purchase of movie, even though the assessee by mistake has debited said amount to profit and loss account. It is a settled principal of law by various decisions that, entries in books of accounts will not decide the taxability of any income, but what is relevant is to see the nature of income and its taxability. Since, the assessee was only an agent for distributor and collected money from exhibitor/theater owners on behalf of distributors, payment made by the assessee to various parties on behalf of producer of movie cannot be considered as income/expenditure of the assessee to invoke provisions of section 40A(3) of the Act. Business expediency in making cash payments - Unless, the accounts of various persons including technicians of the movie was settled, it is impossible to release the movie on the specified date for public audience. Since, there was a business expediency in settling of accounts of various parties and also as per the directions of the producer of the movie, the distributor of M/s. Kural TV Creations Pvt Ltd, directed the assessee to make payment to various parties out of amount collected from exhibitor/theatre owners. The assessee, as per directions of his principle paid amount to various parties and debited to their accounts. Therefore, from the above, it is very clear that there is business expediency in making cash payments and thus, we are of the considered view that provisions of section 40A(3) of the Act cannot be invoked in the given facts and circumstances of this case. The provisions of section 40A(3) of the Act, cannot be made applicable to cash payment made by the assessee. Therefore, we direct the AO to delete additions made towards disallowance of cash payments u/s. 40A(3) of the Act. Decided in favour of assessee.
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2023 (4) TMI 690
Draft assessment passed in the name of non-existent entity - approval of scheme of amalgamation - Notice in the name of amalgamating company - HELD THAT:- We are guided by decision of Maruti Suzuki India Ltd. [ 2019 (7) TMI 1449 - SUPREME COURT] where it has been held that the assessment order passed in the name of non-existing company i.e. amalgamating company, which ceased to exist, is a substantive illegality and invalid. Reverting to the facts of the present case, after approval of scheme of amalgamation by NCLT Mumbai dated 25-10-2018 the entity M/s. Berco Undercarriage India Pvt. Ltd. being the amalgamating company had ceased to exist and as we have examined all the respective orders passed by the revenue authorities post such amalgamation are in the name of the said M//s. Berco Undercarriage India Pvt. Ltd. the amalgamating company which wasn't existing anywhere after amalgamation - All orders issued post this amalgamation in the name of M/s. Berco Undercarriage India Pvt. Ltd. becomes substantially illegal, invalid and void ab-initio. Decided in favour of assessee.
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2023 (4) TMI 689
Penalty u/s 271(1)(c) - Defective notice u/s 274 - additions for unexplained cash credit and commission @ 5% - HELD THAT:- As we note that the notice is an omnibus notice without specifying the specific charge upon the assessee and in such circumstances, Higher Courts have held that penalty levied is not sustainable. As decided in the case of Mr. Mohd. Farhan A. Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] wherein it has been held that no specification of charge in the penalty notice leads to same becoming void and penalty on that count is to be deleted. Thus due to defect in the penalty notice, penalty is not sustainable, hence the same is quashed. Decided in favour of assessee.
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2023 (4) TMI 688
Validity of assessment u/s 153A - assessment barred by limitation - completion of assessment proceedings after the expiry of time limit prescribed u/s 153B[1] - period available to the AO is less than 60 days for the purpose of limitation - Whether CIT[A] has not following the proposition of law laid down in the Finance Act, 2012? - addition made on account of deposit/ investments in HSBC Geneva bank account - HELD THAT:- Though this ground is not specific about the assessment order is barred by limitation, but considering that the CIT[A] has not following the proposition of law laid down in Finance Act, 2012 , which means about the amendment made in Clause [viii] of the Explanation to section 158B[1] of the Finance Act 2012, thereby extending the period of limitations from six months to 12 months with effect from 1st day of July 2012. Competent Authority namely Under Secretary [FT TR-III][2] vide its letter dated 21-02-2013 sought for information under the provisions of Exchange of information article to Indo-Switzerland, DTAA. Since the reference been made after 1st July 2012, the amended extension period of 12 months will be applicable in the present case. Memorandum explaining the changes in the Income Tax Act vide Finance Bill 2012 stated that the time period to be excluded would start from the date on which the process of getting information is initiated by making an reference by the Competent Authority in India to the foreign tax authorities and end with the date on which information is received by the Commissioner. In the present case since the reference was made on 21-02-2013 by the Competent Authority, the extended 12 months period expires on 20- 02-2014. But the normal time barring period for completion of assessment order is on 31-03-2014. Thus there is 38 days time available from 21-02-2013 to 31-03- 2014. Since the regular time limit of 38 days available with the AO, as per the above proviso, 60 days namely further time of 22 days, that is upto 22-04- 2014 is available to the AO for completion of the assessment order. However the Ld Assessing Officer completed the assessment order on 17-02-2015 which is clearly barred by limitation. Both the AO and Ld CIT DR could not able to justify that the assessment order passed is well within the period of limitation. CIT[A] in his Appellate order at paragraph 6.19 has elaborately dealt this issue and held that the assessment order is barred by limitation, since the same is passed after 22-04-2014. Therefore no hesitation in holding that the assessment orders passed by the Ld Assessing Officer on 17-02-2015 are clearly barred by limitation and the assessment orders are non existing in the eye of law. Thus the Ground raised by the Revenue is devoid of merits and the entire Revenue appeals fails and deserve to be dismissed. Whether any incriminating material should be seized during the course of search for making assessment under section 153A? - We find that the document relied upon by the AO is not an evidence much less admissible evidence in view of the fact that data shown IS NOT IN ORIGINAL BUT PHOTO COPIES, which were not authenticated. It neither have any signature of the Banking Authority nor it has the Bank Logo/emblem in it. Mere appearance of some personal details of the assessee on the three pages photostat copy does not validate the information as true and correct. Since personal details are easily available from known sources and therefore such details do not validate the case of the AO in any manner. What the AO attempted to draw an inference that the assessee owns and maintains foreign bank account, based on some unverified sheet of paper which is indicative of a bank statement, it is upon the AO to prove the truthfulness of the same. But till the stage of second appellate proceedings before this Tribunal, being the highest facts findings authority, the Revenue failed to prove the same with necessary materials and proper evidences. Decided against revenue. Authenticity of Documentary evidence - The very fact that the information available with the department was not authentic, is the reason why search took place, as the Revenue wanted to confirm this unauthentic information with some corroborating material (to be hopefully found from the possession of the assessee). The only requirement/plea of the assessee was that, he may be given copy of any document to prove the allegation, which was NOT PROVIDED since it is non-existing document. This amply proves that the satisfaction note of the Investigation Wing was also on a wrong footing as they came only for roving inquiry. Unauthenticated and uncorroborated sheets of papers should not be considered as evidence, whether primary or secondary and therefore addition made by the Ld AO on such document is liable to be deleted. Ground raised by the Revenue namely deletion of addition made on account of deposit/ investments in HSBC Geneva bank account are devoid of merits and the same is liable to be dismissed. Processing of returns of income filed by the assessee as made by the Assessing Officer under section 143(1) could not be regarded as assessment and it is, therefore, not a case where the assessments for both the years under consideration could be said to have been completed - Special Bench, Mumbai in the case of All Cargo Global Logistics Ltd. ( 2012 (7) TMI 222 - ITAT MUMBAI(SB)] wherein it was held that in a case or in a circumstances where the proceedings have reached finality, assessment under section 143(3) read with section 153(3) has to be made as was originally made and in a case certain incriminating documents were found indicating undisclosed income, then addition shall only be restricted to those documents/incriminating material. Additions as finally made to the total income of the assessee on account of transactions reflected in the Bank account of the assessee with HSBC, Geneva, Switzerland and income relating thereto for both the years under consideration are beyond the scope of section 153A as the assessments for the said years had become final prior to the date of search and there was no incriminating material found during the course of search to support and substantiate the said addition. The said additions made for both the years under consideration are, therefore, deleted allowing the relevant grounds of the assessee's appeals.
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2023 (4) TMI 687
Deduction u/s 80P denied - return of income had been filed late - CPC jurisdiction to make the disallowance in question, in the order u/s 143 (1) - scope of amendment to section 143(1) (a)(v) brought in by Finance Act, 2021 - HELD THAT:- It is not in question that section 80AC of the I.T. Act, as amended by Finance Act, 2018, stipulated that for claiming deduction u/s 80P of the Act, the return of income was required to be filed before the due date, as prescribed by section 139(1) and in the present case, the return was filed belatedly. It was only by the amendment to section 143(1) (a)(v) brought in by Finance Act, 2021, that the CPC can be said have been vested, exercising powers u/s 143(1)(a), to make disallowance on the ground of belated return. Prior to that, as per the un-amended provisions, the AO could disallow a claim u/s 143(1) (a) only on the grounds of arithmetical error or that the Assessee had made an incorrect claim, etc. See 'Fatehraj Singhvi Ors. v. UOI and Ors'; [ 2016 (9) TMI 964 - KARNATAKA HIGH COURT] It goes without saying that in the absence of enabling powers, no disallowance can be made. As such, enabling provisions being absent, the CPC did not have the jurisdiction to make the disallowance in question, in the order u/s 143 (1) - we find support from 'The Lanjani Co-operative Agri Service Society Ltd., VPO Lanjani, Kangra (HP) [ 2022 (9) TMI 345 - ITAT CHANDIGARH] Decided in favour of assessee.
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2023 (4) TMI 686
Assessment u/s 153C - Addition of Long Term Capital Gains - claim the cost of improvement and indexation cost - HELD THAT:- What has been sold by the assessee were merely piece of an open lands and not any constructed property. The assessee in the return of income had claimed the long term capital gain and in the said capital gain, the assessee had claimed the cost of acquisition and cost of improvement with indexation. In our view, the cost of improvement, is required to prove with contemporaneous evidence showing that some construction or improvements were carried out on the plot of land after its original purchase in the year 2004, and before it was sold by the assessee on 21.11.2015. The information contained in the sale deed (including the site plan) clearly shows that what has been sold by the assessee was a vacant piece of plot and not a built up property. To claim the cost of improvement and indexation cost, assessee has to furnish some evidence and in the absence of any evidence or information, then the information contained in the registered sale deed is required to be accepted. Further, the information contained in the registered sale deed relates to the assessee and therefore, we are of the opinion that the Assessing Officer was right in invoking the jurisdiction u/s 153C. Decided against assessee. Denying the benefit of indexation on cost of improvement incurred - There was no reason for the assessee to mention the incorrect extent of construction in the sale document, by virtue of which the assessee had transferred the land and the building if any existing thereon. In view of the above, we do not find any discrepancy in the decision of ld.CIT(A). We may point out that the law of evidence clearly provides that when there is any infirmity between the documents filed by the parties, the contents of the registered document will prevail over the other document. The assessee had failed to demonstrate by any evidence the cost of improvement like bills / vouchers, approval of the local authorities and claim of expenditure claimed in the earlier return of incomes. Assessee is not entitled to the relief claimed in these appeals. Even the case laws relied upon by the assessee are of no help as the facts of those cases are clearly distinguishable. Admittedly, none of the decisions cited supra dealt with the issue of appreciation of evidence of registered sale deed and claim of the cost of improvement and indexation based on the certificate issued by the Civil Engineer. Thus, ground No.3 of the assessee is also dismissed. Accordingly, the appeal of the assessee is dismissed.
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2023 (4) TMI 685
Charging interest u/s 234A passed u/s 154 - return in response to notice u/s 153A was filed in said notice period - HELD THAT:- Notice u/s 153A of the Act was issued on 13-02-2015 requiring the assessee to file ROI for the A.Y. 2009-10 to 2015-15 within 30 days of receipt of the notice The assessee filed the return of income u/s 153A for the A.Y. 2014-15 on 12-03-2015 i.e. with the time allowed by notice u/s 153A of the Act. It may be worthwhile to mention that the limitation for default in filing of the return u/s 153A would start from the expiry of the time allowed by the AO in the notice u/s 153A and the assessee filed the return within the time allowed by notice u/s 153A of the Act and, therefore, there is no delay in filing the return of income by the assessee as provided u/s 153A of the Act. No interest is leviable u/s 234A of the Act. Appeal of the assessee is allowed.
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2023 (4) TMI 684
Disallowance of depreciation on vehicle - DR for the revenue submits that for claiming depreciation on asset particularly vehicle, the ownership is sine qua non. Assessee is not the owner of such vehicle - HELD THAT:- CIT(A) in A.Y. 2013-14, allowed relief to the assessee without verification of fact whether similar depreciation is claimed by son of assessee or not. No finding about the prime condition about the ownership was considered and discussed, therefore, totally differ from the finding of ld. CIT(A) in A.Y. 2013-14 and concur with the finding of ld. CIT(A) for the year under consideration. The case laws relied by the ld. AR of the assessee are not at all applicable on the facts of the present case. Thus ground of appeal related to disallowance of depreciation of vehicle is dismissed. Addition on account of 5% of labour expenses - addition for want of proper evidence - HELD THAT:- Once the addition was made for want of evidence, cannot be allowed without holding that there is sufficient evidence to substantiate such claim. Now adverting to the facts for the year under consideration, as noted above that the ld. CIT(A) partly concur with the findings of the AO that no supporting evidence was given. Before Tribunal, the assessee has neither given any evidence nor furnished the details of number of labourers, casual labours or their salary or attendance register to substantiate such claim. In absence of any evidence or explanation, find that the AO was quite justified in making addition/disallowance to the extent of 5% of the labour expenses. Therefore, uphold the orders of lower authorities qua this issue. In the result this ground of appeal is also dismissed.
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2023 (4) TMI 683
Revision u/s 263 by CIT - As per CIT unexplained and unjustified expenditure, came within the purview of section 69C and should have been taxed at the special rate provided u/s 115BBE at 60% plus surcharge at 25%, but the AO had subjected the same to tax at the normal rate only - HELD THAT:- As is evident from bare perusal of the order of the AO, disallowance related to expenses incurred by the assessee in relation to subcontractor which were not found to be genuine. Section 69C on the other hand, brings to tax expenses incurred, source of which remain unexplained. Therefore, purview and scope of section 69C is totally different from the disallowance of expenses found to be not genuine. The basic premise with the CIT therefore for finding error in the order of the AO, that the disallowance made by him of contractors expense came under the purview of section 69C of the Act is found to be untenable in law. His finding of error, as a consequence whereof, that the same not being subjected to tax at a special rate provided u/s 115BBE of the Act also as a result does not survive. There is, we hold, therefore no error in the order of the AO, as noted by the CIT in his order passed under section 263 of the Act, and the same is accordingly set aside on this count alone. Appeal of the assessee is allowed.
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2023 (4) TMI 682
Unexplained/unaccounted cash - Cash receipt found from the premises of loan party - Assessee contention that the impugned cash receipt is a dumb document as the same was not signed or written by its director or employee, not found from its premises. Shri Hitesh Bagdai from whose premises such receipt was found categorically denied to have received such cash - CIT-A deleted the addition - HELD THAT:- The assessee on credit of interest also deducted tax at source under the provision of section 194A of the Act. Furthermore, in the immediate subsequent year i.e. in the month of April 2009, the entire loan amount along with interest was repaid to the party through banking channel which is much before the date of search. The revenue has not raised any iota of doubt on the genuineness of the interest claimed by the assessee which evidences that the amount of interest on the loan by the assessee was genuine. We also find the Hon ble Gujarat High Court in the case of the CIT Vs. Rohini Builders [ 2001 (3) TMI 9 - GUJARAT HIGH COURT] wherein the facts and circumstances were identical to the facts narrated above that loan was received through banking channel and same was repaid along with interest through banking channel. The transaction of loan shown by the assessee is genuine. Thus, in our considered opinion addition cannot be made based on impugned cash receipt found from the premises of Shri Hitesh Bagdai which has been denied by the both assessee and Shri Hitesh Bagdai. Hence, the ground of appeal of the Revenue is hereby dismissed.
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2023 (4) TMI 681
Penalty levied u/s 271G - failure to furnish information or documents as required by Sec. 92D(3) in respect of International Transactions - HELD THAT:- TPO arrived at a conclusion that assessee's arguments regarding industry practice and difficulty in maintaining documentation on that account cannot constitute reasonable cause. TPO found the contention of the assessee regarding many varieties of stock and its continuous mixing, resulting in stock losing identity contradictory with the claim that the each has a different price. It was therefore concluded that the assessee has failed to provide any authentic information, data or document in respect of segmental accounts with respect to transactions made with AEs and non-AEs, violating lawful requirement under clauses d, g, h, I and j of Rule 10D(1) r.w.s. 92D and under Rule 10D(3). Penalty was levied at 2% of value of the international transaction. On appeal, the ld CIT(A) observed that although the TPO has rejected the TNMM as MAM in the case, no adjustment to the Arm s Length Price of the transaction of sale and purchase of Diamonds to the AE has been done. Peculiar facts related to the diamond business pose practical difficulties in maintaining segmental details and the same constitutes a reasonable cause. CIT(A) held that imposition of penalty u/s 271G of the Act is not sustainable under the facts and circumstances as well as under the law. CIT(A) deleted the penalty. As gone through the above order of ld CIT(A) and noted that there is no infirmity in the conclusion reached by ld CIT(A). We decline to interfere with the order of Id. CIT(A) in deleting the aforesaid penalty u/s 271G - Appeal of the Revenue are dismissed.
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2023 (4) TMI 680
Revision u/s 263 - Non disclosure of income on account of sundry receivables - as per CIT AO has not even mentioned the most important fact that during the year under consideration a survey was conducted on the premises of the assessee and substantial income was disclosed - whether AO considered the disclosure of income properly and determined the income of the assessee for the year under consideration on the basis of documentary evidences available at the time of records and if any further clarification or verification or enquiry was to be conducted whether such action has been taken or not? - HELD THAT:- It is important to mention here that the AO is not only an adjudicator but also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry. The meaning to be given to the word 'erroneous' in section 263 emerges out of this context. It is because it is incumbent on the AO to further investigate the facts stated in the return when circumstances would make such an inquiry prudent that the word 'erroneous' in the section 263 includes the failure to make such an inquiry becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct. We note that object of section 263 of the Act is to ensure that leakage of Revenue is plugged and tax due to the state not reaching the coffers of the state is prevented by exercise of revisional jurisdiction by the Principal Commissioner/Commissioner. Besides just obtaining the information by AO/and just having documents in assessment file, in respect of the issue raised by the PCIT cannot be taken as akin to enquiring about the information in respect of the issue raised by the PCIT. In appropriate cases, AO should conduct further enquiry also. In the assessee's case under consideration, what the talk about further enquiry, the AO has not made any enquiry and accepted the return of income filed by the assessee, as it is, without enquiring about the issue raised by the PCIT. AO did not issue any notice u/s 142(1) of the Act to conduct enquiry. Besides, no any reply was given by assessee. Whatever return of income filed by the assessee has been accepted by AO, blindly and without conducting any enquiry, hence order passed by the AO is erroneous as well as prejudicial to the interest of Revenue. Thus we are of the view that revisionary jurisdiction exercised by the Ld. Pr. C.I.T. u/s. 263 of the Act was in tune with the facts and evidences on record, as narrated above, therefore we uphold the order of ld PCIT and dismiss the appeal of the assessee.
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2023 (4) TMI 679
Income deemed to accrue or arise in India - taxing the fabrication charges as Fees for Technical Services u/s 9(1)(vii) of IT Act and Article 12 of India-Singapore DTAA - Assessee stated it is an admitted fact that the assessee being tax resident in Singapore avails the benefit of Indo-Singapore DTAA and contends that it does not have a permanent establishment in India thereby stating that the fabrication charges is not liable to be taxed in India - HELD THAT:- Tribunal has held that the charges received by the assessee for carrying out of re-fabrication of the bushings does not tantamount to make available of technical knowledge, experience, skill, know-how or process . The Tribunal has also held that as there is no transfer of technology involved in the said process, it cannot be taxed under Article 12 of the Indo-Singapore tax treaty. By respectfully following the said decisions in [ 2022 (7) TMI 1396 - ITAT MUMBAI] we hereby allow the grounds raised by the assessee. A.O. is directed to grant credit for taxes paid by way of TDS for the fabrication charges received by the assessee. Appeal filed by the assessee is allowed.
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2023 (4) TMI 678
Penalty u/s 271(1)(c) - furnishing of inaccurate particulars of income - Estimation of income on bogus purchases - HELD THAT:- Assessing Officer had made addition of entire bogus purchases, however, did not doubt the sales made against such purchases. We observe that the Tribunals in various decisions have held that where sales are not disputed, entire alleged bogus purchases cannot be disallowed and only the gross profit on the alleged purchases to be disallowed. After taking into consideration the various decisions of the Tribunal that no penalty under section 271(1)(c) is leviable on estimated additions and also after taking into consideration the decision of Hon ble Rajasthan High Court in the case of CIT vs Krishi Tyre Retreading Rubber Industries [ 2014 (2) TMI 21 - RAJASTHAN HIGH COURT] , case of CIT vs Sangrur Vanaspati Mills Ltd [ 2008 (2) TMI 285 - PUNJAB AND HARYANA HIGH COURT] and the decision of Subhsh Trading Co Ltd. [ 1995 (11) TMI 37 - GUJARAT HIGH COURT] we direct the Assessing Officer to delete the impugned penalty levied on estimated addition. Therefore, the appeal of the assessee is allowed.
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2023 (4) TMI 677
Penalty u/s 271(1)(c) - disallowances u/s 14A read with Rule 8D - HELD THAT:- As copy of penalty notice makes it apparent that the AO had failed to distinguish and inform the Assessee as to it the notice was issued for concealment of income or furnishing inaccurate particulars and a proforma in a mechanical manner the notice was issued. The judgment relied by Assessee in the case of Ganga Iron Steel Trading Co.[ 2021 (12) TMI 1094 - BOMBAY HIGH COURT] reiterates the settled provision of law that if notice is vague then the penalty proceedings initiated on that basis were vitiate and for that purpose Hon ble High court relied its full bench judgment in Mohd. Farhan A Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT] Thus the penalty proceedings are void ab initio. Accordingly, grounds raised by the Assessee are sustained. Decided in favour of assessee.
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2023 (4) TMI 676
Addition u/s 68 - identity and credit worthiness of loan creditors along with genuineness of transactions and factum of repayment of the alleged creditors not proved - HELD THAT:- Neither the AO nor ld. CIT(A) has controverted a very relevant submission of assessee that assessee has repaid loans to the respective creditors before initiating the assessment proceedings and in such a situation the genuineness of transaction and identity creditworthiness of creditors cannot be doubted by the AO Authorities below have not further discharged the onus shifted onto their shoulders to bring on record any positive adverse material against the assessee controverting the documentary evidence filed by the assessee and establishing the fact that the assessee could not substantiate the identity and credit worthiness of loan creditors along with genuineness of transactions and factum of repayment of the alleged creditors. Therefore, we are unable to agree with the findings recorded by the ld.CIT(A) in confirming the addition made by the AO u/s 68 and, thus, we are inclined to hold that the ld.CIT(A) has confirmed the addition without any justified reason and basis and, thus, the same is not found to be sustainable. Respectfully following the judgement of Hon ble Supreme Court in the case of Orissa Corporation Pvt. Ltd. [ 1986 (3) TMI 3 - SUPREME COURT] , judgement of Hon ble jurisdictional High Court of Delhi in the case of Mod Creations Pvt. Ltd. [ 2011 (8) TMI 476 - DELHI HIGH COURT] as relied by the ld. Counsel of the assessee the grievance of the assessee is allowed.
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2023 (4) TMI 675
TP Adjustment - comparable selection - HELD THAT:- Global Procurement Consultants Ltd.company provides technical assistance in enhancing equality, transparency, efficiency and effectiveness or procurement and implementation service to help attain desired institutional and corporate objective. The expertise or this company is available to various sectors including power, water resources, transportation, industries etc., hence not comparable. Decision of the ld. CIT(A) is accepted. Power System Operation CL - function of a grid maintenance company are completely different from a marketing company. The company is also not in to marketing of power. Even otherwise the marketing of power is an entirely different ball game as compared to marketing of other goods and services. The company is not comparable and should be excluded. MMTV Ltd. company owns several websites that serve as online search portal company to the needs of the customers. A perusal of the several websites which are owned by the company indicates that it is primarily in business of internet related business.FAR not comparable. Hence, the decision of the ld. CIT(A) is accepted. Info Edge (India) Ltd company owns several websites that serve as online search portal company to the needs of the customers. A perusal of the several websites which are owned by the company indicates that it is primarily in business of internet related business.FAR not comparable. Hence, the decision of the ld. CIT(A) is accepted. Crystal Hues Ltd. - Assessee has no objection to consider this as a comparable. The decision of the ld. CIT(A) is not accepted. Quippo Valuers and Auctioneers Pvt. Ltd. company which is in activities of auctions and valuations is functionally different from the appellant. The functions involved in auctions are totally different from promotion - FAR not comparable. Hence, the decision of the ld. CIT(A) is accepted. Concept Communications Ltd. corrected OP/OC may be taken - The decision of the ld. CIT(A) is not accepted. DHFL Property Services Ltd company has two activities namely technical consultancy and project advisory, but the segmental results are not available, therefore, it cannot be selected and should be excluded.FAR not comparable. Hence, the decision of the ld. CIT(A) is accepted. Apitco Ltd. in absence of any segmental data, the company cannot be taken as comparable on an entity level.FAR not comparable. Hence, the decision of the ld. CIT(A) is accepted. Addition of account marketing intangibles developed by the appellant as a result of marketing expenditure on the basis of Bright Line Test (BLT) vide order under section 92CA(3) - TPO applied a markup of 15% on the nonroutine expenditure of the appellant based on the PLR of the SBI - HELD THAT:- Revenue came into appeal before ITAT on the grounds that the ld. CIT(A) ought not to have relied on the verdict of Hon ble High Court of Delhi in the case of Sony Ericsson [ 2016 (1) TMI 1234 - DELHI HIGH COURT] as the department has filed SLP before the Hon ble Supreme Court. At this juncture, it would suffice to hold that the judicial discipline mandates to follow the ratio of the Hon ble Jurisdictional High Court and hence the appeal of the revenue on this ground is liable to be dismissed.
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2023 (4) TMI 674
TP Adjustment - comparability of companies - application of turnover filter - HELD THAT:- We hold that companies listed in original grounds of appeal whose turnover in the current year is admittedly more than Rs.200 Crores should be excluded from the list of comparable companies. Three sixty Logica Testing Services Pvt.Ltd. - As this company fails RPT filter and hence should not be regarded as a comparable company. Comparability for ITES Segment - Rejection of Companies not functionally similar to ITES segment as companies being in the field of KPO which cannot be equated or compared with a company rendering ITeS.
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2023 (4) TMI 673
TP Adjustment - Payment for intra group services - TPO held that assessee has failed to prove the requirement of such services, rendition of such services, benefit arising out of receipt of such services and therefore, he determined the Arm s Length Price of all these three transactions of intra group services - HELD THAT:- As the services of the assessee has not been benchmarked by examining the documents produced by the assessee for this year, we are not inclined and impressed with the argument of the learned authorized representative that the addition deserves to be deleted. According to us, the transactions deserves to be tested for its arm s-length price for this year. Therefore, we set-aside the issue of determination of the arm s-length price of the international transaction of intragroup services back to the file of the learned transfer pricing officer who has to examine the same from the perspective stated by us earlier. Set aside ground appeal of the assessee back to the file of the learned transfer pricing officer to determine the arm s length price of the intragroup services based on the documents already produced by the assessee. Addition based on amounts reflected in annual information return - HELD THAT:- Difference in the annual information return about the gross income included by the assessee in its financial statements, this is the first trigger point for investigation. Merely because there is a difference, the addition cannot be made Argument of the assessee also cannot be accepted that merely because assessee has disclosed more income, the difference between the annual information return and the books of account of the assessee can be ignored. Therefore, we set-aside this ground of appeal back to the file of the learned assessing officer with a direction to the assessee to show conclusively that what are those income which have been included in the computation of total income of the assessee in the earlier year and what are those receipts included in annual information return which are pertaining to the cost of the material and not the commission income of the assessee. Unless, this information is available, it cannot be ascertained that whether assessee has offered commission income correctly or not. Accordingly ground is set aside to the file of the learned assessing officer for proper examination. Addition merely on the ground that no response was received from the parties to whom notices u/s 133 (6) of the act were issued - HELD THAT:- Some of the notices were not served, some of the notices were returned as the parties have left the premises and some of the notices were served but no replies were received. We find that the expenses incurred by the assessee were not found to be bogus as books of accounts were accepted by the learned AO. It is also fact that assessee has discharged the liability toward those parties by account payee cheque or bank transfer. Because subsequently those parties could not confirm the transaction, it cannot be inferred that expenses incurred by the assessee were not genuine. It is also an accepted fact that none of the parties were found to be bogus or the purchases were found to be nongenuine. There may be many reasons that notices u/s 133 (6) remained unserved or not responded to. But, merely that fact, cannot result into disallowance. Further, it is not the case of the assessee that they have not deducted tax at source on payment made to most of the parties. To support it, assessee has produced form number 16 A. Before the learned AO. That form also contains the permanent account number of the parties to whom the payments have been made. In view of this, we do not find any reason to sustain the disallowance. Accordingly, same is deleted. Disallowance u/s 14A - HELD THAT:- Under consideration on which the exemption is claimed. If that be the fact, there cannot be any disallowance in the hence of the assessee u/s 14 A of the act. Accordingly, we direct the learned assessing officer to consider the claim of the assessee and if there is any disallowance offered by the assessee, it needs to be tested that if assessee has not earned any exempt income. There should not have been any disallowances u/s 14 A of the act. Therefore, direction is given to the assessee to show the facts of not having any exempt income but having made the disallowance u/s 14 A of the act in the return of income, the learned AO may examine the same and decide the issue in accordance with the law.
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2023 (4) TMI 672
TP Adjustment - Interest on outstanding receivables - HELD THAT:- On identical facts, the Tribunal in assessee s own case for assessment year 2017-2018 [ 2022 (8) TMI 1364 - ITAT BANGALORE] had restored the matter to the AO / TPO with specific directions to determine the ALP with regard to interest on delayed receivable by following the rules with a proper benchmarking study. Thus following the co-ordinate Bench order of the Tribunal in assessee s own case, we restore the grounds back to the files of the AO / TPO - Ground allowed for statistical purposes. Disallowance u/s 43B - Adjustment made in the intimation u/s 143(1) - HELD THAT:- The present appeal of the assessee arises out of the final assessment order (final assessment order, which has considered the issues which are adjudicated by the TPO, the draft assessment order and the DRP s directions). Therefore, the issue of adjustment made in the intimation u/s 143(1) cannot be raised in the present appeal before the Tribunal. However, we notice that the assessee has filed rectification application as against the intimation u/s 143(1) of the I.T. Act. The assessee shall pursue rectification application u/s 154 .
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2023 (4) TMI 646
Rectification of mistake u/s 254 - recalling the order of Tribunal [ 2020 (9) TMI 1288 - ITAT MUMBAI] - Department submitted that the Tribunal has dismissed aforesaid appeal of the Revenue on account of low tax effect in the light of CBDT Circular No.17/2019 dated 08/08/2019 - DR pointed that the assessment in the aforesaid case was reopened on the basis of information received from the Sales Tax Department, Government of Maharashtra. Therefore, the appeal by Revenue falls under exception mentioned in para 10(e) of the CBDT communication dated 20/08/2018 - HELD THAT:- The Tribunal vide order dated 16/09/2020 had dismissed the appeal of Revenue on account of low tax effect. A perusal of the assessment order passed u/s. 143(3) of the Act shows that the assessment was reopened on the basis of information received from Sales Tax Department, Government of Maharashtra. Though the information was received from DGIT (Inv), but the source of information was Sales Tax Department. This clearly indicate that the reopening was based on information sourced from external agency. In the aforesaid facts the Tribunal order dated 16/09/2020 is recalled and the appeal is restored to its original number.
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Customs
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2023 (4) TMI 671
Jurisdiction of the Deputy Commissioner to reopen the assessment order and review its own order - admissibility of the refund claims - import of Aluminum Scrap Mix (Tense and TT grade) weighing 24.980 MT from Benin which were classifiable under chapter heading 76020010 - it is found that declared value to be on the lower side as compared to the price available for similar product being imported by other importers - HELD THAT:- The basic question in the present appeal revolves around the jurisdiction exercised by the adjudicating authority in reviewing its own order. The said issue has already been decided by the Apex Court in the case of ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [ 2019 (9) TMI 802 - SUPREME COURT ] relying on the decisions in COLLECTOR OF CENTRAL EXCISE, KANPUR VERSUS FLOCK (INDIA) PVT. LTD. [ 2000 (8) TMI 88 - SUPREME COURT ] where it was held that Re-assessment is permitted only under Section 17(3)(4) and (5) of the amended provisions. Similar was the position prior to the amendment. It will virtually amount to an order of assessment or re-assessment in case the Assistant Commissioner or Deputy Commissioner of Customs while dealing with refund application is permitted to adjudicate upon the entire issue which cannot be done in the ken of the refund provisions under Section 27. Following the ratio in the case of ITC , this Bench in a recent decision of M/S HOLY LAND MARKETING PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS, NEW DELHI [ 2023 (2) TMI 46 - CESTAT NEW DELHI ], in categoric terms held that once an order permitting clearance of goods for home consumption is issued there cannot be any more assessment as the only recourse available is to file an appeal before the Appellate authority and therefore concluded that the Deputy Commissioner had no authority to issue an order of assessment after the goods were permitted to be cleared for home consumption. In the present case, the customs officers having found that the self assessment by the importer was not correct, reassessed the goods whereby the value of the goods was enhanced. The importer readily agreed with the said reassessment and paid the enhanced customs duty and got the goods cleared from the ICD. The fallacy in the approach of the importer was that after the goods were cleared, he made a request to the adjudicating authority to reassess the bill of entry and the adjudicating authority erroneously went ahead to reassess them by accepting the value of the goods declared by the importer. Such a procedure is neither available under the provisions of the Customs Act nor such an interpretation is discernible from any case law on the subject - The proper course for the appellant was to challenge the order of assessment enhancing the value as declared by him and therefore the Commissioner of Appeals rightly set aside the order of reassessment by the Deputy Commissioner. Once the order of assessment was no longer in existence, the claim for refund is automatically unsustainable, particularly in view of the analogy that the claim for refund is maintainable only in the event the bill of entry originally assessed was modified by way of an order in appeal, which the appellant herein had chosen not to file and rather adopted an innovative way of seeking the relief, having no sanctity in law. The question which arises is if the assessment is final on issue of an order permitting clearance of goods for home consumption and an appeal can be filed by both sides against the assessment, what is the nature of this power under section 28. It has been held by the larger bench of the Supreme Court in CANON INDIA PVT. LTD. Versus COMMISSIONER OF CUSTOMS [ 2021 (3) TMI 384 - SUPREME COURT ] that the power under section 28 is a power to review the earlier decision of assessment and it is not inherent in any authority but is specially conferred on the proper officer. What is evident is that the relevant date to calculate the time limit to issue a notice under section 28 is the date on which an order permitting clearance of goods is given. This is also the date on which the scope of assessment under section 17 ends - It is evident that the time limit for filing an appeal before Commissioner (Appeals) is the date on which the order of the officer is communicated to him. In case of goods cleared for home consumption, the date of such order is when the clock starts ticking for filing the appeal (unless the proper officer delays issuing a speaking order). The Commissioner (Appeals) had rightly observed that the Deputy Commissioner had no jurisdiction to review its own order and reassess the bill of entry once again after the goods were cleared on payment of duty and the same was bad in view of the decision of the Apex Court in ITC - there are no justification to interfere with the said order and we accordingly, affirm the view taken by the Commissioner. In view of the settled legal position on the issue of jurisdiction as discussed above, the case law cited by the appellant in M/s Bright Point India Pvt. Ltd., vs. C.C. Mumbai, Air Cargo, [ 2021 (11) TMI 285 - CESTAT MUMBAI ] is not applicable in the facts herein. The judgements cited on merits of valuation needs no consideration as we are deciding the issue of jurisdiction against the appellant. Hence we are not inclined to accept the submissions of the appellant. Since the appeals are being dismissed on the ground of jurisdiction, it is not required to dwell on the merits of the matter or the issue of unjust enrichment which is otherwise covered by the decision of the Apex Court in Union of India Vs Solar Pesticides Pvt. Ltd. [ 2000 (2) TMI 237 - SUPREME COURT ]. Appeal dismissed.
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2023 (4) TMI 670
Mis-use of duty free licences - M/s. Kirti Cargo [Kirti] was indicated as the Customs Broker /Custom House Agent (CB/CHA) in the Bills of Entry but they were actually filed by one Shri Sharafat Hussain [Sharafat] who was neither a licenced CB nor was the employee of Kirti - manipulation of license and fraudulently getting wrong figures entered about the licenses in the Customs EDI system effectively showing enhanced values of each licence in the system - Confiscation - penalty - HELD THAT:- The matter in this case is identical to the case of M/s Nidhi Enterprises [ 2022 (11) TMI 869 - CESTAT NEW DELHI] inasmuch as the appellant did not pay the duty as required, but instead of paid a percentage of the duty payable to Sharafat who, in turn, used fake/forged scrips/licenses to clear the goods. The appellant was not aware as to which scrip or license would be used to clear its goods because they were never transferred in its name. Without transferring the licenses, Sharafat transferred the benefit of the licence to the appellant. In doing so, he also manipulated the license itself in collusion with the officers and entered wrong figures in the customs EDI system thereby magnifying several fold the benefit under the license. It is a well settled legal principal that fraud vitiates everything and nobody can profit from the fraud whether or not the fraud itself was committed by that person. In this case, the fraud of forging and manipulating the license was done by Sharafat and Vinod Kumar Pathror and not by the appellant. It is for this reason, the FIR filed by the Department with the Economic Offences Wing of the Police also does not include the appellant as a suspect. However, the benefit of the exemption under the license is not available on the strength of a fraudulent licence and the appellant is liable to pay the duty. In the case of Nidhi Enterprises, this Tribunal held that the buyer of the licenses has to fulfill the requirement of Caveat Emptor . The appellant in this case has not even remotely fulfilled its obligation as a buyer of the licences/ scrips. In fact, the appellant had not even bought the licences/scrips but only purchased the benefit from the licences/scrips. Therefore, the impugned order correctly confirmed the demand of duty from the appellant. Since, the duty is payable the corresponding interest also has to be paid, as applicable. Confiscation and penalty - HELD THAT:- Neither the manipulation by entering the wrong details of the licences/scrips in the Customs EDI system nor clearing the goods without producing the original licence at the time of clearance of goods would have been possible without the collusion of the officers concerned. Therefore, the officers have necessarily to be complicit in the offence but action against the officers is not part of these proceedings. Learned authorised representative states that the matter relating to the involvement of officers has been referred to the Central Bureau of Investigation which is investigating the matter - Also, if the involvement of the officers is a far more serious matter than mere action under the Customs Act and it also needs to be investigated from the point of Prevention of Corruption Act and Central Civil Services Conduct Rules. As far as the imported goods in this case are concerned, they were clearly liable for confiscation under section 111(o). As they were not available for confiscation, they were not actually confiscated nor has any redemption fine been imposed - the goods were correctly held as liable for confiscation under section 111(o). Levy of penalty under section 114A and section 114AA - HELD THAT:- Penalty under section 114AA is imposable only if knowingly or intentionally a false declaration, statement or document is made, signed or used. In the factual matrix of this case, we found no evidence that the appellant had knowledge of the fraud/forged licences/ scrips being used to clear the goods and therefore, the penalty under section 114AA cannot be sustained - Penalties were imposed under sections 112 (a) (ii) and 114AA on Shri Jain, the Director of the appellant firm. Penalty under the section 112 can be imposed for any action or omission which renders the goods liable to confiscation under section 111. In this case, the goods were exempted from payment of duty subject to come conditions and those conditions were not fulfilled. The case is squarely covered under section 111 (o) and the goods have been correctly held to be liable for confiscation. Consequently, the penalty under section 112 (a) (ii) on the appellant needs to be upheld. Appeal filed by the appellant is partly allowed by setting aside the penalty imposed on the appellant (M/s. Bimal Papers Pvt. Ltd.) under section 114AA and upholding rest of the impugned order insofar as it pertains to the appellant M/s. Bimal Papers Pvt. Ltd.
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2023 (4) TMI 669
Final assessment of bills of entry - Reduction in price after negotiation - import of Steam (Non-coking) Coal in bulk - re-negotiation of price by parties (at lower side, as the coal supplied by the exporter was not as per the quality standards specified in the purchase order) - whether the final assessment of imported Coal should have been done as per the reduced price US$ 86 PMT re-negotiated by the parties to the contract after completion of imports in question? - HELD THAT:- In light of the statutory provisions, the factum of actual payment of the price in terms of the contract/ agreement cannot be ignored while determining the value of the goods under Section 14 of the Act. Further the fact are not disputed in this matter that in respect of the quality of coal consignment actually arrived in India was different. In support of this, appellant also produced the analysis report. We also observed that disputed price adjustment is due to quality and rejection clause mentioned in the purchase agreement. As per the purchase agreement dtd. 22.08.2008, the price originally decided for the coal having the specified quality standards. However the quality analysis report clearly held that the coal supplied does not fulfil the specification as laid down in the purchase order. The said fact nowhere disputed by the revenue in the present matter. We may, however, hasten to add that in such a situation the genuineness and the necessity of reduction in the price are required to be scrutinised very carefully. In the instant case, the Ld. Commissioner (appeals) has not examined the genuineness of the price reduction, and has proceeded to reject the appeal of the appellant. It is, however, added that the Commissioner (Appeals) did properly examine the cogency of the reasons for price reduction though he was not convinced to accept the same. Thus, if there was a genuine cause for reduction in the price of the imported goods and the seller was also convinced that there is need for reduction in the price earlier agreed and accordingly accepted the lower price negotiated between the seller and the importer. Section 14 of the Customs Act, 1962 also talks of the price which is either paid or payable to the seller. In such situation it will be improper if importer is asked to pay customs duty on an amount more than what was the consideration for the transaction. The actual transaction value paid is required to be accepted for assessment purpose, particularly when the genuineness of the reduction is not under dispute. The assessment authority needs to examine the matter afresh. Accordingly, the appeal is allowed; the impugned order is set aside, and the matter is remitted back to the original authority for fresh consideration, particularly in relation to the verifying genuineness of transaction of appellant and foreign supplier and their payment particulars, agreement, purchase order, invoice, quality inspection reports, actual transaction value etc. related to the disputed transactions - appeal allowed by way of remand.
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Corporate Laws
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2023 (4) TMI 668
Ineligibility to participate in the tender process since the net worth quoted by it was inclusive of the value of its preference shares - whether the value of preference shares can be included while computing net worth ? - whether the Respondent erred in declaring the Petitioner ineligible to participate in the tender process in terms of the Request for Selection? - HELD THAT:- Section 43 of the Companies Act, 2013 provides that share capital can be of two kinds i.e., equity share capital and preference share capital. Explanation (ii) of Section 43 provides that preference share holders have a preferential right in respect of payment of dividend and in respect of repayment in case of winding up or repayment of capital. Explanation (iii) of Section 43 provides that the capital shall be deemed to be preference share capital notwithstanding that it is entitled to either rights in respect of dividends, in addition to the preferential rights to the amounts specified in sub-clause (a) of clause (ii), and in respect of capital, in addition to the preferential right to the repayment, on a winding up, of the amounts specified in sub-clause (b) of clause (ii). A perusal of Section 55, provides that preference shares cannot be redeemed within the share capital of the company. It, therefore, means that other than two sources i.e., out of profits and out of proceeds of fresh issue of shares, no other source can be used for redemption of preference shares. Clause 4.3.1 (c) of the NIT states that net-worth is to be considered in accordance with the Companies Act, 2013. In the NIT, the tenderer has not specifically excluded preference shares from the definition of net-worth. The mode of calculation of net worth which has been adopted by the Respondents to exclude the Petitioner from further stages of the tendering process is contrary to the Sections of the Companies Act. Clause 4.3.1(c) of the NIT does not exclude preference shares from the definition of net-worth rather it states that net-worth is to be considered for this clause shall be the total net worth as calculated in accordance with the Companies Act, 2013, then the net-worth has to be calculated as per the Companies Act, 2013 and no other method can be permitted to be adopted. There is no reason as to why the tender must exclude preference shares while calculating the net-worth. Respondents cannot be permitted to adopt a method which runs contrary to the provisions - balance sheet is not an indicator of the true net worth of a company. Balance sheet reflects the share capital of a company and its treatment as an asset or liability to the company on the date of preparation of the balance sheet. It is not disputed that balance sheets are to be prepared in accordance with extant accounting standards. In the facts of the present case, the tenderer has decided to exclude preference shares from the definition of net worth on a wrong notion that preference shares is a liability which is contrary to the Sections in Companies Act. Only when the preference shares are redeemable at the instance of the shareholders then only the preference shares can be called as a liability and not in all cases. Preference shares are redeemed out of profits or out of a fresh issue meant for the purpose and not from the existing share capital. Since the entire basis of calculating net worth by the Respondent is contrary to the provisions of the statute, this Court has no other option but to hold that the decision of the tenderer to exclude preference shares from the calculation of net worth is arbitrary and irrational. The challenge of the Petitioner to its exclusion from the tendering process has to be accepted. The Respondent is directed to re-work the net-worth of the Petitioner herein by including the preference shares while calculating its net-worth and take a decision as to whether the Petitioner s financial bid can be considered or not. The writ petition is allowed.
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Insolvency & Bankruptcy
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2023 (4) TMI 667
Challenge to Liquidator's authority to direct freezing of petitioner's account (director of company), that is facing insolvency proceedings - HELD THAT:- The legal position as to the limited scope of interference in matters pending before the NCLT is no longer res integra in view of the decisions of the Supreme Court in Swiss Ribbons (P) Ltd v. Union of India [ 2019 (1) TMI 1508 - SUPREME COURT ] and Ghanashyam Mishra and Sons. Pvt. Ltd. v. Union of India [ 2021 (4) TMI 613 - SUPREME COURT ] - In those decisions, the Apex Court declared that IBC, 2016 being a self contained Code, the High Courts should refrain from interfering with the resolution process. Moreover, having resorted to the alternative remedy, the petitioner cannot collaterally challenge the same order through a writ petition. In any case, the dispute as to the authority of the Liquidator to enforce the order of NCLT has lost its relevance as per Ext.R2(e), the NCLT itself has passed the order freezing the petitioner's account. The writ petition is hence dismissed, without prejudice to the petitioner's right to pursue his remedy before the NCLT or NCLAT, as the case may be.
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PMLA
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2023 (4) TMI 666
Money Laundering - predicate offence - legality of quashing the proceedings of petitioner - case of Revenue is that the proceedings against A1 to A3 and A9 have only been quashed and that in the said circumstances, when the proceedings are pending against the other accused for the predicate offence, the proceedings against this petitioner cannot be quashed - HELD THAT:- The order taking cognizance by the Magistrate was set aside and it cannot be said that proceedings are pending against other accused. However since the petitions were preferred by accused 1 to 3 and 9, the concluding portion was accordingly spelt out. In view of the quashing of proceedings against accused in the predicate offence, following the judgment of Hon ble Supreme Court in VIJAY MADANLAL CHOUDHARY ORS. VERSUS UNION OF INDIA ORS. [ 2022 (7) TMI 1316 - SUPREME COURT] , the proceedings in ECIR/HYZO/34/2021, Directorate of Enforcement, Hyderabad Zonal Office are hereby quashed. The criminal petition is allowed.
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Service Tax
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2023 (4) TMI 665
Levy of Service tax - management, maintenance and repair services - applicability of Board Circular No. B-2/8/2004-TRU dated 10.09.2004 and Board Circular No. 80/2004 dated 17.09.2004 - penalties under section 76 and 78 - extended period of limitation - HELD THAT:- The two Board s circulars relied upon by the learned counsel explained the scope of various services and their taxability. The Circular dated 17.09.2004 discussed the scope of service tax on business exhibition services, airport services, transport of goods by air services, opinion poll services, construction services etc. but it did not say anything about the scope of service tax payable on management, maintenance and repair services . Similarly, the Circular dated 10.09.2004 also discusses various changes made in the Finance Bill (No. 2) 2004 to the service tax provisions but this Circular also does not discuss the scope of management, maintenance and repair services . Therefore, these two circulars do not come to the aid of the appellant. It is undisputed that the services were provided by the appellant to RHB and PHED. Before the Commissioner (Appeals), the appellant had contested the demand relying on the provisions of section 98 of the Act which exempted non-commercial Government buildings during the period on and from 16 day of June, 2005 till 28 May, 2012. Commissioner (Appeals), however, found that the appellant s services were not covered by this section as the appellant had not managed or maintained or repair any non-commercial Government buildings, but had maintained pipelines as admitted by the appellant itself - the learned Commissioner (Appeals), is fully agreed upon. There is no case for the appellant to claim an exemption from payment of service tax under management, maintenance and repair services either under section 98 of the Act or under the two CBEC Circulars, indicated above - Undisputedly, the appellant had not maintained any non-commercial buildings of the Government, but had maintained pipelines which were not exempted under any notification or provision or circular - thus, the impugned order was correct and proper in confirming the demand under the head of management, maintenance and repair services. Extended period of limitation - HELD THAT:- It is evident from SCN that the appellant had not disclosed the value of these services which it had rendered to the department - there are no reason to hold that the demand was time barred as the appellant had suppressed the value of these services for the department. Penalties under section 76 and 78 - HELD THAT:- They have already been reduced proportionately by the Commissioner (Appeals) in the impugned order. There are no reason to interfere with them. The impugned order is correct and calls for no interference - Appeal dismissed.
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2023 (4) TMI 664
CENVAT Credit of Service Tax paid - exempt services or not - hire charges for the use of Fork Lift and Cranes for providing cargo handling services in the Inland Container Depot, which were hired from M/s. St. John Heavy Equipment Ltd., for loading, unloading and transporting both export and import cargos - export of services or not - exempt service or not - Circular No. 868/6/2008 dated 09.05.2008 - whether the Revenue is justified in demanding Service Tax at the rate of 8/6% of the value of services rendered and received in respect of export of cargo by treating the handling of export cargo as an exempted service? HELD THAT:- It is clear from the definition under Rule 2(e) ibid., as was applicable for the periods under dispute, that an exempted service is one on which no Service Tax is leviable. That is to say, but for the fact that it is exempted, otherwise the tax is leviable. Further, no service could be treated as an exempted service unless it is specified so under Rule 2(e) ibid - The definition of cargo handling service per Section 65 (23) ibid. clearly excludes the handling of export cargo and hence, the lis between the appellant and the Revenue here is whether the exclusion tantamounts to exemption and consequently, whether the same could be brought within the definition under Rule 2(e) ibid. The services which are excluded cannot be given the colour of exemption just to fit it somewhere so that a benefit flowing from the statute to a taxpayer is denied. The words does not include in the definition of cargo handling service takes the service very much out of the purview of taxability, thereby touching upon the jurisdiction of the taxing authority and hence, the same, at no stretch of imagination, could be held or equated with an exempted service. Hence, the services rendered by the appellant in this case, insofar as the same related to the handling of export cargo, is excluded from taxability and thus, the same cannot be brought as exempted under Rule 2(e) ibid. Once it is held as excluded , there is also no scope to consider the same as an exempted service just for the purposes of Rule 6 of the CENVAT Credit Rules, 2004. The Revenue is not justified in demanding the Service Tax by treating the handling of export cargo as an exempted service - Appeal allowed.
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2023 (4) TMI 663
Liability of Interest on CENVAT Credit wrongly taken (credit availed but not utilised) - appellant had taken 100% credit on capital goods in the year 2009-10 itself - As per department since appellant have erroneously taken 50% cenvat credit of Rs. 23,47,192/- in the year 2009-10 instead of taking in the year, 2010-11, the appellant was liable for payment of interest on such cenvat credit wrongly taken - Rule 14 of Cenvat Credit Rules 2004 - penalty - HELD THAT:- Rule 14 has been interpreted by the Hon ble Supreme Court in the case of UOI AND ORS. VERSUS IND-SWIFT LABORATORIES LTD. [ 2011 (2) TMI 6 - SUPREME COURT] - Hon ble Supreme Court in the case of Union of India v. Ind-Swift Laboratories Ltd., has interpreted the unamended Rule 14 which was applicable to the appellant during the financial years in question and, has categorically held that a bare reading of such rule would clearly indicate that the manufacturer or the provider of the output service becomes liable to pay interest, along with the dues where Cenvat credit has been taken or utilized wrongly or has been erroneously refunded. The Hon ble Supreme Court, accordingly, held that if the said Rule 14 is read as a whole, the Hon ble Supreme Court did not find any reason to read the word or in between the expressions taken or utilized wrongly or has been erroneously refunded as the word and . Another issue raised by the Appellant is that subsequent amendment brought to Rule 14 of Cenvat Credit Rules, 2004, the expression taken or utilized wrongly has been substituted with taken and utilized wrongly be read as clarificatory in nature and hence retrospective in application - this issue has also been considered by the Mumbai Bench of this Tribunal in M/S BALMER LAWRIE CO LTD VERSUS CCE BELAPUR [ 2014 (2) TMI 545 - CESTAT MUMBAI] where it was held that This amendment rule makes it absolute clear that the amendment is with effect from 17-3-2012 and not before. In view of the express provisions in the Amendment Rules, the argument of the appellant that amendment being in the nature of substitution would have retrospective effect cannot be accepted. It is a trite law that every statutory provision is prospective only unless it is explicitly provided that it is retrospective in nature and the legislature provides for such retrospective operation. In the present case, no such retrospectivity has been provided by the legislature in respect of Notification 18/2012-C.E. (N.T.), dated 17-3-2012 and, therefore, the argument of the Counsel in this regard and the decisions relied upon in support of the same cannot be accepted . There are no merit in the contentions raised in the appeal that mere availment of Cenvat credit without its utilisation of the same will not attract interest at appropriate rate under Rule 14 of Cenvat Credit Rules, 2004 as was in force during the relevant time. Penalty - HELD THAT:- Ld. Commissioner after considering all the facts rightly extended the benefits of waiver of penalty to the appellant - the said waiver of the penalty shall be subject to payment of interest of Rs 84,460/- by the Appellant within 30 days of receipts of this order. Appeal allowed in part.
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2023 (4) TMI 662
Benefit of exemption - handling of agriculture produce by a cargo handling agency - Classification of services - Port Service or cargo handling service? - case of appellant is that the service under the category of port service also include the service of cargo handling service and since the service provided by them was a cargo handling service - availability of benefit of service tax exemption under notification 10/2002-ST dated 01.08.2002 - HELD THAT:- It is an admitted fact that the noticee has rendered services of supervision over internal shifting of cargo within port area, loading, unloading of cargo and reporting thereof. These services would have been covered under the category of cargo handling service if provided outside the port area and therefore it can be construed that the appellant are a cargo handling agency which provide port services to M/S Mundra Port and Special Economic Zone Ltd, Mundra. Thus, in the facts of the case it can be safely concluded that the appellant is a cargo handling agency providing cargo handling service within the port area with authorisation from M/S Mundra Port and Special Economic Zone Ltd, Mundra i.e. a port but by virtue of definition of port services under Section 65(82) read with Section 65(105)(zn) of the Act, they are classified as port service and not cargo handling service . It has also been clarified by CBEC vide Circular No. B/11/1/2002-ST, dated 01.08.2002 - the circular states that Cargo handling services are provided in the port also. Whether such service will be covered in the category of port services or cargo handling service? In this context it may be mentioned that port services cover any service provided in relation to goods or vessels by a port or a person authorized by the port. This includes the cargo handling service provided within the port premises. Therefore, to this extent there may be an overlap in cargo handling service and the port service. However, since port services cover all the services in relation to goods and vessels and therefore more specific to port, the service provided in a port in relation to handling of goods would be appropriately covered under port service and no separate levy will be attracted under the category of cargo handling agency service. Similar would be the case in respect of service provided for storage of goods in the port premises . On carefully reading the notification no. 10/2002-ST dated 01.08.2002, it is found that the exemption is provided to handling of agriculture produce by a cargo handling agency and it is not service specific whether for cargo handling service or for port service . Cargo handling agency can undertake handling of agriculture produce within or outside port. Thus, the appellant were eligible for the benefit of the notification no. 10/2002-ST dated 01.08.2002. Case remanded back the case to the original adjudicating authority to re-determine the demand and decide the case afresh after allowing the benefit of notification no. 10/2002-ST dated 01.08.2002 to the appellant - appeal allowed by way of remand.
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2023 (4) TMI 661
Levy of service tax - Commercial or Industrial Construction Services - Erection, Commissioning Installation Services - Construction of Complex Services - Dredging Services - Cleaning Activity Services - Supply of Tangible goods Services - Storage Warehousing Services - It was alleged that the appellant by wrongly showing various taxable service provided by them under exempted service category had not paid the Service tax - period from 2005-06 to 2009-10 - HELD THAT:- Appellant claims that most of demands have been raised under the wrong category of services hence not sustainable. It is also found that in the present matter service tax demand has been confirmed by the Learned Commissioner on the activity related to the drainage line/ pipe line under Erection, commissioning/installation services. However as per the Larger Bench decision in the case of M/S. LANCO INFRATECH LTD. AND OTHERS VERSUS VERSUS CC, CE ST, HYDERABAD [ 2015 (5) TMI 37 - CESTAT BANGALORE (LB)] the said activity of laying pipelines is not covered under the erection, commissioning/ installation service. Appellant herein also claimed that Learned Adjudicating authority wrongly confirmed the demand under the head of cleaning services, whereas their activity is not covered under the scope of cleaning services. It is also observed that the submission of the learned Counsel as well as submission made in the appeal memorandum that the adjudicating authority has not dealt with issue of service provided under the category of construction of complex service services in proper perspective. Appellant claimed that they had not constructed any building or part thereof, having more than 12 residential units. Further the bunglow constructed by the appellant at KPT colony for use by the employee of M/s Kandla Port Trust is for personal use hence not taxable. The issue needs to be remanded back to the adjudicating authority for re-appreciation of the claim of the appellant. This is a fit case for remand the matter to Learned Adjudicating authority for re-consideration of the overall case - The appeal is allowed by way of remand to the adjudicating authority.
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2023 (4) TMI 660
Levy of Service Tax - amount collected by the appellant towards liquidated damages, supervision charges and hire charges - appellant is a public sector undertaking established by the Government of Madhya Pradesh for transmission of electricity within the city of Jabalpur and is a successor company of the State Electricity Board. Consultancy Services - HELD THAT:- The issue that arises for consideration is as to whether service tax could be levied on the amount collected by the appellant towards consultancy charges. This issue was examined by a Division Bench of the Tribunal in MADHYA PRADESH POORVA KSHETRA VIDYUT VITRAN CO. LTD. VERSUS PRINCIPAL COMMISSIONER CGST AND CENTRAL EXCISE BHOPAL [ 2021 (2) TMI 155 - CESTAT NEW DELHI ] and after placing reliance upon the decision of the Gujarat High Court in TORRENT POWER LTD. VERSUS UNION OF INDIA [ 2019 (1) TMI 1092 - GUJARAT HIGH COURT] , the Tribunal held that It is clear from the aforesaid judgment of the Gujarat High Court that the activities that are related/ancillary to transmission and distribution of electricity would be exempt from payment of service tax since transmission and distribution of electricity is exempted. It is also clear from aforesaid decision that all services related to transmission and distribution of electricity are bundled services, as contemplated under section 66F(3) of the Finance Act, and are required to be treated as a provision of a single service of transmission and distribution of electricity, which service is exempted from payment of service tax. In the present case the amount collected towards consultation services is in connection with services which are incidental to the transmission activities carried out by the appellant - demand do not sustain. Liquidated damages - HELD THAT:- This issue was also examined by the Division Bench of the Tribunal in M/S MADHYA PRADESH POORVA KSHETRA VIDYUT VITARAN COMPANY LIMITED VERSUS COMMISSIONER OF CGST CENTRAL EXCISE, MADHYA PRADESH [ 2022 (4) TMI 773 - CESTAT NEW DELHI ] and after referring to the decision of the Tribunal in M/s M/S SOUTH EASTERN COALFIELDS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RAIPUR [ 2020 (12) TMI 912 - CESTAT NEW DELHI] which decision has been accepted by the Board, observed that no service tax can be levied on the amount collected towards liquidated damages or penalty for breach of any of the terms of the contract - demand set aside. Hire Charges - HELD THAT:- The Commissioner has confirmed the demand proposed on the amount received as hire charges for the reason that these charges have been recovered for use of equipments and machineries rented to the vendors and contractors without giving legal right of possession and effective control. Learned counsel for the appellant has not been able to controvert the findings recorded by the Commissioner in the impugned order. The confirmation of the demand under this head is, therefore, justified - Demand upheld. The confirmation of demand on the amount collected on account of consultancy charges or liquidated damages cannot be sustained and is set aside. However, the confirmation of demand under hire charges is upheld - appeal allowed in part.
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2023 (4) TMI 659
Non-payment of service tax - port services - It appears that no action was taken pursuant to the above SCN issued on 23rd April, 2007 which was for the period 1st October, 2005 to 31st March, 2006 and after 10 years impugned notice was issued - HELD THAT:- After lapse of 10 years second impugned notice dated 30th October, 2017 was issued to the Petitioner asking him to appear for hearing. The Petitioner filed an application dated 9th November, 2017 before the authority expressing its inability to collect documents after such a long lapse of time. Thereafter, the present petition was filed in this Court. On 11th December, 2017, an interim order was passed staying further proceeding pursuant to the impugned notices. That interim order has continued. The Petitioner places reliance on another judgment of the CESTAT, South Zonal Bench, Bangalore in the case of Aspinwal and Co. Ltd. v. Commissioner of Central Excise [[ 2010 (10) TMI 321 - CESTAT, BANGALORE] ] answering a similar issue in favour of the assessee. Civil Appeal No. 10763 of 2017 [[ 2023 (2) TMI 991 - SC ORDER] ] filed against the said judgment stands dismissed by the Supreme Court of India on 11th January, 2023 [[ 2023 (2) TMI 991 - SC ORDER] ]. The net result is the orders answering the issue in favour of the Petitioner have been upheld by the Supreme Court of India. The impugned notice dated 23rd April, 2007 and further letter dated 30th October, 2017 issued by the Department to the Petitioner are hereby quashed. Petition allowed.
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Central Excise
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2023 (4) TMI 658
Refund claim - principles of unjust enrichment - both the lower authorities rejected the refund holding that the appellant had not discharged its responsibility to show that it had not passed on the burden of the excise duty to any other person - HELD THAT:- Learned counsel for the appellant produced, a Chartered Accountant s certificate by Ravindra Rathi Co. dated 20.3.2023. However, there are no supporting documents such as the P L Accounts and Balance sheets to this certificate. The first paragraph of the certificate indicates that the principal manufacturer and the sole selling agent will not reimburse/charge any amount on account of excise duty . The second paragraph indicates that the appellant charged excise duty from the Sole selling Agent. The third paragraph indicates that excise duty has neither been charged nor collected by the appellant - It is not clear from the above certificate if the appellant charged excise duty as mentioned in the second paragraph of the certificate or it had not collected or charged from anyone in the market as indicated in the third paragraph of the certificate. There are no supporting documents with this certificate which may help clear this ambiguity. This certificate was not even produced by the appellant before the lower authorities and it has just been issued by the Chartered Accountant after the impugned order was passed. The lower authorities should have an opportunity to examine this certificate and supporting documents, if any, that the appellant can produce and decide if the appellant had passed on the burden of excise duty on to anyone else or not - the matter is remanded to the original authority to examine the CA certificate dated 20.3.2023 along with any supporting documents which the appellant may produce and decide the matter after giving an opportunity to the appellant to present its case. The appeal is allowed by way of remand to the original authority.
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2023 (4) TMI 657
Appealable order or not - Letter written by the Superintendent directing, the assessee for not availing Cenvat Credit - The letter dated 25.09.2012 further stated that recovery action along with penal actions would be initiated if the respondent availed/ utilized the credit. - Appeal lies before Commissioner (Appeals) under Section 35 of the Act or not, against the letter or not - HELD THAT:- There is no dispute that appellant have sought allowance of credit in respect of input service attributed to dutiable goods which was very much in accordance with the Cenvat Credit Rules. The Superintendent vide letter dated 25.09.2012 denied the benefit claimed by the appellant-assessee. It is also stated in the said letter that in case of availment of credit which was claimed by the appellant, penal action shall be taken against the respondent. The said letter therefore is clearly a decision given by a proper officer. From the plain reading of Section 35, it is clear that any decision or order passed by a proper officer below the rank of Commissioner is appealable before Commissioner (Appeals). Accordingly there is absolutely no ambiguity in Section 35. The letter whereby the Superintendent has clearly held that respondent is not eligible to take credit, the said letter is clearly a decision against which appeal lies before Commissioner (Appeals) as per the strict interpretation of Section 35 - It is also noticed that if the department s contention is accepted then the respondent left with no remedy against denial of substantial benefit claimed by the respondent and respondent is remediless. Reliance also placed by respondents in the case of USHA INTERNATIONAL VERSUS COMMISSIONER OF CUSTOMS (I) , MUMBAI [ 2017 (2) TMI 239 - CESTAT MUMBAI ] where it was held that once an application of refund has been filed before the refund sanctioning authority, the said authority is duty bound to decide the refund application one way or the other. The refund application can either be rejected or allowed in part or in full. Thus, in the facts of the present case the letter written by Superintendent is a decision against which the appeal lies before Commissioner (Appeals) under Section 35 of the Act - the order of the Commissioner (Appeals) is absolutely legal and correct hence the same is upheld. Appeal dismissed.
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2023 (4) TMI 656
Remission of duty on the goods lost in fire accident which occurred on 22-01-1998, rejected - denial on the ground that Appellant have failed to produce details in respect of claim of excise duty from insurance company - Rule 49 of Central Excise Rules, 1944 - HELD THAT:- From the rule it is clear that where excisable goods have been destroyed or lost by natural causes or by unavoidable accidents and the proper officer is satisfied about the same, duty shall not be demanded. In this case it is not in dispute that the goods were destroyed due to fire accident and it is on record that the accident has taken place due to electric short circuit. In the present matter Ld. Commissioner for rejecting the remission of duty held that assessee could have saved the goods by storing in a approved store room. Hence the loss was indefinitely avoidable and goods could have been saved. The loss of the excisable goods in the instant case cannot be attributable to un-avoidable loss due to natural causes. Assessee kept the excisable goods in the temporary godown made up of Bamboo Poles and Tarpaulin. Thus it reveals that it was grave lapse on the part of the assessee for not taking precautions for keeping safe place. As per the first proviso of Rule 49 the manufacturer shall on demand pay duty leviable on any goods which are not shown to the satisfaction of the proper officer to have been lost or destroyed by natural causes or by unavoidable accidents during handling or storage. The finding of the Learned Commissioner that the appellant had been negligent in safeguarding excisable goods is not reasonable as the appellant s stake in the destroyed goods was much higher than the stake of the Revenue. Nobody would deliberately indulge in such act or exercise which may result in huge loss and therefore while interpreting Rule 49 the authorities are required to be liberal. For rejection of remission of duty Ld. Commissioner take the ground that Appellant stored the goods in store -room without obtaining the permission for storing of excisable goods. However the Rule 47 of Central Excise Rules 1944 provide that a manufacturer shall provide a store-room or other place of storage at his premises for depositing goods made on the same premise without payment of duty. Here, the word same premises means factory in which the goods are manufactured - there are force in argument of Ld. Counsel that as per the Notification No. 2/93 dtd. 13.02.1993 power to approve store room under rule 47(3) was delegated to Superintendent of Central Excise who was also licensing authority. In the present matter license was granted by the Superintendent as per procedure and he approved the ground plan. The same should be considered as sufficient approval for the purpose of storing the goods in the factory. The facts that the goods was stored in the temporary store room and panchnama drawn by the Superintendent of Central Excise is not disputed. In the panchnama proceeding nowhere it was mentioned that the goods was stored outside the factory premises. Therefore in our view on this ground remission of duty cannot be denied. In the matter of SHAKTI SPINNERS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, LUDHIANA [ 2004 (3) TMI 129 - CESTAT, NEW DELHI ] the tribunal by relying the judgment of SPORTKING INDIA LTD. VERSUS COMMISSIONER OF C. EX., CHANDIGARH-I [ 2002 (7) TMI 136 - CEGAT, NEW DELHI ] held that The perusal of the Rule 49 reveals that the goods should be either stored in the storage room or any other approved premises for the purpose of claiming remission of duty in the event of destruction of goods by fire or any other natural cause. The factory being the approved premises where the goods were lying at that time therefore, the appellants' claim for remission of duty could not be rejected. The crucial fact admitted by both the sides in this case is that the goods in question was destroyed due to fire within the licensed premises /factory premises and the appellant had duly informed the Central Excise officers and the loss was duly evaluated. Under the circumstances, there was no question of demanding any duty. The position in law is very clearly stated in Rule 49 according to which duty is chargeable only on removal of the goods from factory premises or from an approved place of storage - no duty was demandable irrespective of what the insurance companies had done or not done. Therefore, the Ld. Commissioner is obviously wrong in denying the remission of duty by observing that the Appellant have failed to produce details in respect of claim of excise duty from insurance company. In this regard, the arguments of Ld. Counsel also agreed upon, that insurance claim having no bearing on claim for remission of duty. The judgments relied upon by the Ld. Counsel in this context squarely applicable. There was no cause for demand of duty from appellant in the instant case - the Commissioner s order is misconceived and incorrect in law as well as in fact - Appeal allowed.
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2023 (4) TMI 655
Valuation - Recovery of Central Excise Duty - freight and handling charges recovered from their customers - forming part of assessable value of excisable goods cleared by them from their factory premises - whether the amount shown separately as freight and handling charges in the invoices can be included in the assessable value u/s 4 of the Central Excise Act, 1944 or not? - HELD THAT:- There is no evidence on record to show by the department that said charges are nothing but arrangement for reducing the assessable value of goods. In the absence of any such evidence it has to be held that the entire element of freight and handling charges shown separately in the invoices is nothing else but freight and handling charges. It is now a settled law as per the relied upon judgments by the Learned Counsel that any amount collected separately as freight in the invoices cannot be included in the assessable. It is held that amount charged as freight handling charges and separately shown in the invoices cannot be included in the assessable value u/s 4 of the Central Excise Act, 1944. Therefore being the same facts and issue involved in the present case also, the freight and handling charges shown separately in the invoice of the appellant is also not includable in the assessable value of the excisable goods, consequently, duty demand on the said elements is not sustainable. The impugned order is set aside - The appeal filed by the appellant is allowed.
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2023 (4) TMI 654
Classification of goods - Compounds of PBT - classifiable under Chapter Sub Heading No. 39079190 of the schedule to Central Excise Tariff Act, 1985 or not - Compound of Polyamide - classifiable under Chapter Sub Heading No. 39081090 of the schedule to Central Excise Tariff Act, 1985 or not - recovery of differential Excise Duty with interest and penalty - denial of exemption notification no. 4/2006-CE - extended period of limitation - HELD THAT:- From the above exemption N/N. 4/2006-CE, it is found that the exemption is granted to polyester chips falling under chapter heading no. 3907 and nylon chips falling under heading no. 3908. It is to be noted that for the purpose of exemption eight digit subject heading has not been prescribed under the notification therefore, it is clear that all the polyester chips falling under 3907 is eligible for exemption similarly, all the nylon chips falling under 3908 is eligible for exemption. The adjudicating authority has denied the exemption relying on the clarification given by the Chemical examiner and chemical examination report - The adjudicating authority has put entire emphasis on the clarification issued by Chemical Examiner that against the question raised before the chemical examiner that whether the product compound of PBT can be reported as polyester chips or not. The chemical examiner has answered as above that the sample is other than pure PBT and other than pure nylon chips. From the above clarification, it is also clear that even though both the products are not pure PBT and pure nylon chips but both are pre-dominantly consists of more than 70% of polyester and nylon. It is settled law that any chemical compound is classifiable on the basis of its active ingredient only. In the present case, since both the products are admittedly pre-dominance of Polyester and Nylon, the same are classifiable under 3907 and 3908 respectively. Undisputedly, the form of the product is in chips so therefore, both the products are clearly qualified as polyester chips and nylon chips being constituent of pre-dominantly polyester and nylon respectively. The classification of the product decided by the commissioner will have no adverse effect on the eligibility of the notification so long the product falls under chapter heading 3907 and 3908 and the same is polyester chips and nylon chips irrespective of the same is not in the pure form therefore, the appellant are eligible for exemption notification in respect of their product namely polyester chips and nylon chips. Extended period of limitation - HELD THAT:- The appellant categorically informed the department vide letter dated 29.12.2006 that they are eligible for exemption. With these correspondence, the revenue was absolutely free and nothing prevented them to issue show cause notice well within the normal period of limitation. However, the show cause notice was issued on 02.11.2010 covering the period from August 2006 to June 2009 invoking proviso to Section 11A(1)of the Central Excise Act, 1944 - there is absolutely no suppression of fact on the part of the appellant therefore, the entire demand raised under the extended period will not sustain on limitation itself therefore, the demand is liable to be set aside on the ground of limitation also. Appeal allowed.
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CST, VAT & Sales Tax
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2023 (4) TMI 653
Maintainability of petition - availability of alternative remedy of appeal - Violation of principles of natural justice - failure to follow the mandatory provisions of Section 21 of the Himachal Pradesh Value Added Tax Act, 2005 - validity of Tax Demand Notice/Assessment Order - HELD THAT:- A perusal of the provision of Section 45 of HP VAT Act, shows that remedy of appeal is available against order assailed by way of instant petition, subject however to the limitation provided therein. As per the above provision, no appeal shall be entertained unless it is filed within sixty days from the date of communication of the order appealed against, or such longer period as the Appellate Authority may allow, for reasons to be recorded in writing. In the present case, the Assessing Authority had passed the order on 30.12.2022. During the course of arguments, the learned counsel for the petitioner on a query by this Court, has submitted that the same was supplied to the petitioner on 30.12.2022 itself. It appears that since the petitioner had failed to file the appeal within the prescribed period of limitation, therefore, he has approached this Court by invoking the extraordinary writ jurisdiction to overcome the hurdle of limitation for filing the statutory appeal. The petitioner had statutory remedy available to it but had failed to avail the same within the stipulated period. Thus, the instant petition is not bonafide. No reason whatsoever has been assigned for not availing the remedy of appeal by the petitioner. The writ petition is dismissed, being not maintainable.
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Indian Laws
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2023 (4) TMI 652
Coercion and economic duress - It is the case of Appellant NTPC that there were no subsisting disputes between the parties in view of the Settlement Agreement dated 27.05.2020 and that the application for arbitration is an afterthought and abuse of the process - HELD THAT:- This Court has consistently been holding that the arbitral tribunal is the preferred first authority to determine and decide all questions of non-arbitrability. In Pravin Electricals Pvt. Ltd. v. Galaxy Infra and Engg. Pvt. Ltd. [ 2021 (3) TMI 382 - SUPREME COURT] , Sanjiv Prakash v. Seema Kukreja and Ors. [ 2021 (4) TMI 319 - SUPREME COURT] , and Indian Oil Corporation Ltd. v. NCC Ltd., [ 2022 (7) TMI 974 - SUPREME COURT] the parties were referred to arbitration, as the prima facie review in each of these cases on the objection of non-arbitrability was found to be inconclusive. Following the exception to the general principle that the court may not refer parties to arbitration when it is clear that the case is manifestly and ex facie non-arbitrable, in BHARAT SANCHAR NIGAM LTD. ANR. VERSUS M/S NORTEL NETWORKS INDIA PVT. LTD. [ 2021 (3) TMI 447 - SUPREME COURT ] and Secunderabad Cantonment Board v. B. Ramachandraiah Sons [ 2021 (3) TMI 612 - SUPREME COURT] , arbitration was refused as the claims of the parties were demonstrably time-barred. The allegations of coercion and economic duress are not bona fide, and that there were no pending claims between the parties for submission to arbitration. The Respondent s claim fits in the description of an attempt to initiate ex facie meritless, frivolous and dishonest litigation - There were no allegations of coercion or economic duress compelling SPML to withdraw any pending claims under the subject contract as a condition for the return of the Bank Guarantees. On the contrary, the only allegation by SPML was with respect to NTPC s illegal action of interlinking the release of the Bank Guarantees with some other contracts. This was precisely the argument before the High Court, and, in fact, this submission is recorded by the High Court while issuing notice and injuncting NTPC. This fact clearly indicates that the plea of coercion and economic duress leading to the Settlement Agreement is an afterthought. This is a case where the High Court should have exercised the prima facie test to screen and strike down the ex-facie meritless and dishonest litigation. These are the kinds of cases where the High Court should exercise the restricted and limited review to check and protect parties from being forced to arbitrate - High Court has committed an error in allowing the application under Section 11(6) of the Act. High Court ought to have examined the issue of the final settlement of disputes. Appeal allowed.
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2023 (4) TMI 651
Detention order - Smuggling - Gold - incongruity between the Pankaj Kumar case [ 1969 (5) TMI 56 - SUPREME COURT ] and the Abdullah Kunhi Case [ 1991 (1) TMI 244 - SUPREME COURT ], and if such a friction exists should the point of law be referred to a Larger Bench - friction between the two Constitutional judgments of this Court - illegible documents written in Chinese submitted to the appellant - grounds enough for quashing the impugned detention order or not? Whether there exists an incongruity between the Pankaj Kumar case and the Abdullah Kunhi Case and if such a friction exists should the point of law be referred to a Larger Bench? - HELD THAT:- The detention order under both laws can be passed either by the Government, or by the specially empowered officer. However, under Section 3 of the Preventive Detention Act, the specially empowered officer, within 12 days of the detention, has to seek for an approval from the Government for continued detention, and only if the Government approves the same can the detention be continued. This process of seeking an approval from the Government is essentially a transfer of power from the empowered officer to the Government, making the Government the detaining authority after the initial lapse of 12 days. In the COFEPOSA Act however, no such approval is required from the Government, and hence the detaining authority and the Government remain to be two separate bodies independent of each other. In the COFEPOSA Act, since the detaining authority is separate from the Government, both, the Pankaj Kumar Judgment [ 1969 (5) TMI 56 - SUPREME COURT] and the Abdullah Kunhi Judgment [ 1991 (1) TMI 244 - SUPREME COURT ] would apply, but in different spheres - it can be clearly seen that any apparent conflict, as contended by the appellant, stands resolved, and both sets of judgments operate symbiotically and harmoniously within the said Act, without there existing any tension between them. The mandate to wait for the decision of the Advisory Board, as per the Pankaj Kumar Judgment [ 1969 (5) TMI 56 - SUPREME COURT ], would apply to the central Government, however, the detaining authority, being independent of the Government, can pass its decision without the decision of he Advisory Board. Since no conflict exists, the need to refer the point of law to a Larger Bench also ceases, and hence we hold issue No.1 in favour of the Respondents. If there exists no friction between the two Constitutional judgments of this Court, can the impugned detention order be quashed on grounds of the 60-day delay in consideration of the representation made by the appellant? - HELD THAT:- In the present case at hand, the appellant-detenue, availing his rights sent a representation to both, the specially empowered officer and the Government. The detaining authority in the present case decided on the representation expeditiously and without waiting for the decision of the Advisory Board - the detaining authority, and the Government, have worked precisely within the procedure established by law, and hence the impugned detention order is not liable to be struck down on this ground - this Issue is held in favour of the respondent. Whether the illegible documents written in Chinese submitted to the appellant herein are grounds enough for quashing the impugned detention order? - HELD THAT:- In cases where illegible documents have been supplied to the detenue, a grave prejudice is caused to the detenue in availing his right to send a representation to the relevant authorities, because the detenue, while submitting his representation, does not have clarity on the grounds of his or her detention. In such a circumstance, the relief under Article 22(5) of the Constitution of India and the relevant statutory provisions allowing for submitting a representation are vitiated, since no man can defend himself against an unknown threat. The principle of parity is squarely applicable in this case, since another co-detenue with identical circumstances, has already been granted the relief of quashing the detention order against him. In the case of Gian Chand v. Union Of India Anr, this Court while deciding on a quashing of a detention order, categorically held that in cases where a similarly placed co-detenue has already been granted the relief of a quashing of the detention order, the principle of parity must apply, and the same relief should be extended to other similarly placed detenues - issue decided in favour of the appellant. The preventive detention laws in India are a colonial legacy, and as such, are extremely powerful laws that have the ability to confer arbitrary power to the state. In such a circumstance, where there is a possibility of an unfettered discretion of power by the Government, this Court must analyze cases arising from such laws with extreme caution and excruciating detail, to ensure that there are checks and balances on the power of the Government - the impugned detention order is liable to be set aside - appeal allowed.
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2023 (4) TMI 650
Dishonour of Cheque - insufficient funds - discharge of legally enforceable debt or not - compounding of offence - section 147 of NI Act - whether this court can recall its judgment dated 23.11.2022 passed in Cr. Revision No. 228 of 2022, affirming judgment of conviction and order of sentence passed by learned Courts below? - HELD THAT:- This Court vide judgment passed in Gulab Singh v. Vidya Sagar Sharma [ 2017 (12) TMI 1837 - HIMACHAL PRADESH HIGH COURT ], while relying upon judgment of Hon'ble Apex Court as well as other Constitutional Courts has already held that court, while exercising power under Section 147 of Act can proceed to compound offence even in those cases, where accused stands convicted. In the case at hand, petitioner-accused has already handed over the amount ordered to be paid by the court below to the respondent-complainant, as has been stated by him in his statement taken on record and as such, this court, in terms of S.147 of the Act and guidelines framed by Hon ble Apex Court in Damodar S. Prabhu v. Sayed Babalal H. [ 2010 (5) TMI 380 - SUPREME COURT] , can proceed to compound the offence. Application disposed off.
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2023 (4) TMI 649
Anti-competition - Cartelisation - unfair trade practices - direction to furnish certain documents and details and to make submissions on the quantum of penalty that may be levied in the event, the petitioner is held to have acted in contravention of the Competition Act, 2002 - rejection of request of the petitioner to cross examine the informant - HELD THAT:- In accordance with the procedure under Section 26(8) of the Act read with Regulation 21(7) of the Competition Commission of India (General Regulations), 2009 the CCI forwarded a copy of the Director General s report to the opposite parties in the respective cases, one of them being the petitioner. The report was so forwarded so that the petitioner is given an opportunity to file its objections / suggestions to the report. The order also indicates that an opportunity of oral hearing was to be provided. These investigation reports dated 17.2.2019 and the order accompanying the report dated 2.5.2019 are on record. The impugned orders dated 1.8.2014 and 17.11.2015 only recorded a prima facie opinion that the parties have colluded and formed a cartel for increase of prices in different varieties of paper and thereby warranting investigation for anti-competitive practices under the provisions of Section 3(1) read with Section 3(3)(a) of the Act in the paper industry. What is evident therefore that the information filed was neither restricted to a particular set of manufacturers but was in context of the entire paper industry connected with different varieties of paper. Reading the investigation reports and the orders passed under Sections 26(1) read with Section 26(3) of the Act would indicate that the order is an administrative order which only forms a prima facie opinion. The petitioner has been given an opportunity of producing evidence before the DG during the process of investigation and by the orders impugned the DG has called upon the petitioner to file its objections / suggestions to the investigation report. It cannot be said therefore that the petitioners doors are closed. After affording a reasonable opportunity and considering the objections and suggestions, the Commission based on the investigation reports will take an appropriate decision - The High Court in its writ jurisdiction cannot delve into the merits and demerits of the report when as is also evident from the impugned order by which the request of the petitioner for cross examination of witnesses has been rejected that the CCI has granted liberty to the petitioner to file affidavits in rebuttal to dispute the conclusions drawn by the DG based on the depositions etc. Petition dismissed.
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2023 (4) TMI 648
Dishonour of Cheque - insufficient funds - discharge of legally enforceable debt or not - rebuttal of presumption - HELD THAT:- In the case at hand, there is no denial, if any, by the petitioneraccused with regard to his having availed the facility of loan and issuance of cheque as well as his signature thereupon, rather an attempt has been made by the accused to carve out a case that cheque in question was issued as security. While making statement under Section 313 Cr.PC, accused nowhere denied factum with regard to issuance of cheque as well as signature thereupon, rather he attempted to carve out a case that he had given a blank cheque to someone else, but same was misused by the complainant. Since there is no dispute, if any, with regard to issuance of cheque as well as signature thereupon of petitioner, presumption as available under Sections 118 and 139 of the Act comes into play, which clearly provides that there shall be presumption available in favour of the holder of the cheque that same was issued towards discharge of the lawful liability - Probable defence can be raised by the accused by referring to the documents adduced on record by the complainant or by leading some cogent and convincing evidence. However, in the case at hand, accused, despite ample opportunities, failed to raise the probable defence. The Hon ble Apex Court in M/s Laxmi Dyechem V. State of Gujarat [ 2012 (12) TMI 106 - SUPREME COURT ], has categorically held that if the accused is able to establish a probable defence which creates doubt about the existence of a legally enforceable debt or liability, the prosecution can fail. To raise probable defence, accused can rely on the materials submitted by the complainant. Needless to say, if the accused/drawer of the cheque in question neither raises a probable defence nor able to contest existence of a legally enforceable debt or liability, statutory presumption under Section 139 of the Negotiable Instruments Act, regarding commission of the offence comes into play. Since after having carefully examined the evidence in the present case, this Court is unable to find any error of law as well as fact, if any, committed by the courts below while passing impugned judgments, there is no occasion, whatsoever, to exercise the revisional power. True it is that the Hon ble Apex Court in KRISHNAN ANR. VERSUS KRISHNAVENI ANR. [ 1997 (1) TMI 529 - SUPREME COURT ]; has held that in case Court notices that there is a failure of justice or misuse of judicial mechanism or procedure, sentence or order is not correct, it is salutary duty of the High Court to prevent the abuse of the process or miscarriage of justice or to correct irregularities/ incorrectness committed by inferior criminal court in its judicial process or illegality of sentence or order, but learned counsel representing the accused has failed to point out any material irregularity committed by the courts below while appreciating the evidence and as such, this Court sees no reason to interfere with the well reasoned judgments passed by the courts below. This Court sees no valid reason to interfere with the well reasoned judgments recorded by the courts below, which otherwise, appear to be based upon proper appreciation of evidence available on record and as such, same are upheld - the present criminal revision petition is dismissed being devoid of any merit.
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2023 (4) TMI 647
Unlawful actions of the committee members and Jubilee Hills Cooperative House Building Society in respect of sale deed No.2675 of 2020 and Gift deed No.26BB of 2020 - the accused had transferred the property in the name of A7, thereby committed offences of cheating, breach of trust, impersonation and also evading income tax - HELD THAT:- Time and again, this Court and the Hon'ble Supreme Court has found that summoning a person as accused to face criminal trial is a serious step taken by the criminal Court and such summoning can only be done when the Magistrate finds on the basis of facts that the ingredients of the offence alleged are prima facie made out. For the said reason, cognizance order bereft of proper reasoning is liable to be set aside and accordingly set aside. The findings of the police during the course of investigation reflect the role of Ch.Sirisha in filing W.P.No.16087 of 200Z aggrieved by the direction of Registrar of Cooperative Societies not to transfer the property and succeeded. Further, the inspection of site by the Society employees and Ch. Sirisha for illegal encroachments was subject matter of Crime No.91 of 2020. The said cases were suppressed and not stated either in the complaint or the protest petition or in the statement made by Sri B.Ravindranath before the Court. There is a clear suppression of facts in the proceedings at the time of filing both criminal complaint and also the subsequent Protest petition filed by B. Rarvindranath ,on behalf of the Society. Suppression of material facts is a ground for disallowing criminal prosecution. Parties cannot come to Criminal Courts with unclean hands and prosecute a person criminally by suppressing material facts. In such an event, this Court under the inherent powers will not hesitate to quash the criminal proceedings. The complaint was in fact made by the society and the earlier Secretary B.Ravindranath has filed both the complaint and also the protest petition on behalf of the society. The society has now new committee members and it was unanimously resolved that there was no authorization to B. Ravindranath to file the criminal case representing the Society. As such, it was resolved unanimously by the Committee that the launching of prosecution against the petitioners was without any authority and steps have to be taken by the society for withdrawal of the prosecution against these petitioners and appointed the present General Secretary K.Rajeshwar Rao to act on behalf of the society, which is Jubilee Hills Society Limited. The property is that of the society and the society itself represented by its members are not inclined to prosecute the case stating that the Society is not aggrieved. Further no authority was given by the society to B.Ravindranath to lodge the compliant. Criminal Courts are not arenas to fight out personal disputes and wreak vengeance - The Society is having no grievance of the transaction in registering the plot to Ch. Sirisha and when it is found during investigation that the allegations made by B. Ravindranath of impersonation and cheating were found to be false, the proceedings before the trial Court, both on facts and law, cannot be permitted to continue. The proceedings against petitioners/A1 to A3 in Criminal Petition No.545 of 2023 and petitioner / A9 in Criminal Petition No.439 of 2023 in C.C.No.6229 of 2022 on the file of XVII Additional Chief Metroplitan Magistrate, Hyderabad are hereby quashed - Criminal petition allowed.
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