TMI Tax Updates - e-Newsletter
April 27, 2024

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy Service Tax Central Excise Indian Laws

Highlights / Catch Notes

• GST:

  Interest and penalty liability - Petitioner discharged GST liability before issuance of SCN - Petitioner sought permission to approach the appellate authority by way of statutory appeal. - While the respondent highlights the failure of the petitioner to remit tax on outward supplies, the court considers the circumstances surrounding the case. Given that the tax liability was settled in 2019 and 100% penalty was imposed, the court deems it just and appropriate to permit the petitioner to file a statutory appeal. However, since the time limit for filing the appeal has expired, the petitioner is required to remit a specified amount as a condition for filing the appeal.
  Visit to Get Source

  ---

• GST:

  Imposition of 100% penalty - Late Filing of Writ Petition - Petitioner seeks an opportunity to contest the liability towards penalty by way of statutory appeal - The High Court acknowledged that the petitioner had indeed paid the entire tax and interest liability. Considering this, and the fact that the petitioner had not filed an appeal earlier due to the intention to discharge liability, the Court deemed it just and appropriate to permit the petitioner to file a statutory appeal specifically concerning the penalty.
  Visit to Get Source

  ---

• GST:

  Violation of principles of natural justice - Demand of GST - mandate of Section 75 (4) stands complied or not - appellant has been non-suited on the ground of alternate remedy - The Court, after analyzing the relevant provisions of the CGST Act and considering legal precedents, concluded that the appellant's right to a meaningful opportunity of hearing was indeed violated. Therefore, they set aside the order and directed that the appellant be granted a personal hearing in accordance with the statutory requirements.
  Visit to Get Source

  ---

• GST:

  Cancellation of registration of petitioner - appeal has been dismissed on the ground of same being time-barred - The High Court acknowledged that denial of GST registration adversely affects the petitioners' ability to conduct business, thereby impinging on their right to livelihood under Article 21 of the Constitution of India. The Court noted that similar issues had been addressed by other High Courts, which granted relief to petitioners in analogous situations. The High Court set aside the impugned order and granted the petitioners ten days to file appeals against the cancellation of their GST registrations.
  Visit to Get Source

  ---

• Income Tax:

  Scope of challenge to orders passed by the ITSC - Validity of exercising discretion by the ITSC in granting relief to the assessee - Granting immunity from prosecution and certain penalties - The High court noted that even if certain interpretations by the ITSC were incorrect, these do not constitute a violation of the Income Tax Act and thus do not warrant interference. - The High Court dismissed the petition of the revenue, upholding the ITSC’s decisions. The court emphasized that the ITSC’s role is not to provide detailed reasons for every decision but to act within the legal framework and discretion provided by the Income Tax Act. It stressed that the ITSC’s decisions are meant to be a "package deal," and dissecting these decisions into parts to accept or reject them is not feasible. The court reiterated that the judicial review is limited to examining whether the ITSC has adhered to the process and provisions of the law, not the correctness of its decisions.
  Visit to Get Source

  ---

• Income Tax:

  Unexplained Cash Credit u/s 68 - Authenticity of the Will - sale consideration claimed to have been received by the appellant from sale of gold ornament and diamonds, which were given to him by his late grandmother by way of a will - The Tribunal noted the discrepancies in the age of the testator and absence of probate were crucial in questioning the authenticity of the Will. The appellant failed to provide independent evidence to corroborate the existence and possession of the assets at the time the Will was made. The Tribunal found it improbable that a housewife without a visible source of income could possess such high-value assets. Consequently, the appeal of the assessee was dismissed.
  Visit to Get Source

  ---

• Income Tax:

  Levy of penalty u/s 271(1)(c) - Denial of exemption of capital gains u/s 10(38) on account of sale of shares - The Tribunal also emphasized that the Revenue had failed to provide an opportunity for cross-examination to the assessee, which was a violation of the principles of natural justice. It noted judgments that stressed the importance of allowing the assessee to rebut any adverse evidence. The Tribunal concluded that in the absence of the quantum addition, the penalty under Section 271(1)(c) could not stand.
  Visit to Get Source

  ---

• Income Tax:

  Denial of benefit u/s 115BAA - while filing its return of income as it was unable to upload Form 10-IC due to technical glitches - Scope of CBDT circular - Despite the technical glitch in uploading Form 10-IC, the Tribunal noted that the CBDT Circular had condoned the delay in filing the form, subject to certain conditions. The Tribunal emphasized that circulars cannot curtail the benefits conferred by the law upon the assessee and should be interpreted liberally. Therefore, the Tribunal held that the appellant was entitled to the benefit under section 115BAA(1), notwithstanding the delay in uploading Form 10-IC.
  Visit to Get Source

  ---

• Income Tax:

  Assessment order passed u/s 153A - valid approval granted u/s 153D or not? - The Tribunal found that the approval granted under Section 153D was generic and lacked specific reasoning for each assessment year. It noted discrepancies in the approval process, including the absence of year-wise reasoning and the mechanical nature of the approval. Ultimately, the Tribunal concluded that the approvals granted in this case did not pass the test of legitimacy and rendered the assessment orders null and void.
  Visit to Get Source

  ---

• Income Tax:

  Computation of short term capital gain - allowable expenditure u/s. 48 - management fees - The Tribunal observed that there were contradictory decisions regarding the allowability of management fees under Section 48 of the Act. Referring to precedent cases, the Tribunal noted that when two views are possible, the view favorable to the assessee should be preferred. Considering the arguments and precedents, the Tribunal allowed the appeal of the assessee.
  Visit to Get Source

  ---

• Income Tax:

  Disallowance u/s 36(1)(vii) - bad debt claim in respect of identified debts - The Tribunal found no flaw in the information provided by the assessee regarding the bad debts claimed under section 36(1)(vii) and not under section 36(1)(viia). Moreover, it observed that the issue had been consistently decided in favor of the assessee by the Tribunal for preceding years, and the appeals filed by the Revenue against these decisions were dismissed by the Hon’ble Delhi High Court.
  Visit to Get Source

  ---

• Income Tax:

  Validity of assessment passed w/o intimating u/s 143(1) - Denial of exemption u/s 11 and Claim of Expenses by the CPC - The Appellate Tribunal noted that the return of income and Form 10B were filed within the extended period due to the COVID-19 pandemic, as per the order of the Supreme Court. Relying on the Supreme Court's decision, the Tribunal held that there was no delay in filing the returns, and thus, the disallowance of expenses by the CPC was incorrect. The Tribunal directed the Assessing Officer to allow the exemption claimed under Section 11 of the Act.
  Visit to Get Source

  ---

• Customs:

  Refund Of excess amount of duty paid on short shipped quantity - Valuation - erroneous calculation of FOB value of the subject consignment - The Appellate Tribunal found in favor of the appellant, ruling that the assessment of customs duty was incorrect as it was based on the wrong basis, resulting in excess duty payment. The Tribunal also noted the appellant's entitlement to a refund for both the short shipment and the erroneous calculation of FOB value. Moreover, the Tribunal emphasized the importance of adhering to principles of natural justice in adjudicating such matters and considered legal precedents supporting the appellant's position.
  Visit to Get Source

  ---

• Customs:

  Import of road construction machines - Benefit of exemption - Actual user conditions - requirements of a valid contract for road construction. - The Tribunal acknowledges that the importer lacked a valid contract at the time of filing the BE. However, it considers the circumstances surrounding the contract's absence, noting that the contract requirement should be interpreted purposefully to ensure the machine's intended use aligns with the notification's objectives. The Tribunal distinguishes the present case from the precedent cited by the appellant, emphasizing the specific conditions that led to the denial of exemption in the previous case and their absence in the current scenario. - Ultimately, the Tribunal upheld the decision of the Commissioner (Appeals), affirming the eligibility of the imported machines for exemption.
  Visit to Get Source

  ---

• Customs:

  Transaction value - Valuation (Customs) - Special or abnormal discount to the related buyers which were in excess of 3% discount - The Appellate Tribunal observed that the discounts were not deemed exclusive to related parties, and thus did not influence the transaction value. The Tribunal found that the department failed to provide concrete reasons to discard the declared transaction value. The arguments against accepting the transaction value were based on conjecture and lacked factual substantiation. In conclusion, the Tribunal set aside the impugned order, stating that the appellant had successfully proven that the declared price reflected the true transaction value.
  Visit to Get Source

  ---

• Customs:

  Challenging the assessment of Bill of Entry - Benefit of concessional rate of customs duty and CVD under N/N. 12/2012-Cus. - The Appellate Tribunal found that the Commissioner (Appeals) should have considered the appeal on its merits instead of rejecting it based on the assumption that the appellant had accepted the reassessment. The Tribunal referenced a Supreme Court judgment, highlighting that both the revenue and the appellant have the right to appeal against an assessment order.
  Visit to Get Source

  ---

• Customs:

  Violation of principles of natural justice - denial of cross-examination - pre-mature appeal - The Tribunal ruled that the issue of denial of cross-examination could be raised after the Principal Commissioner passes the final order. Hence, the appeal was dismissed with liberty granted to the appellant to raise the issue before the Tribunal after the Principal Commissioner's decision. Furthermore, the miscellaneous application and the early hearing application were disposed of.
  Visit to Get Source

  ---

• Customs:

  Smuggling - Burden of proof - Confiscation of Silver Jewellery, Silver Boondi & Indian Currency - The Tribunal's decision emphasized the lack of evidence and failure to meet the burden of proof required for confiscation under the Customs Act. The Tribunal supported the Commissioner (Appeals)'s findings that the Revenue had not demonstrated reasonable belief or provided sufficient proof of the goods being smuggled or the currency being illegal proceeds.
  Visit to Get Source

  ---

• Indian Laws:

  Validity of Arbitral Award - Ordering the petitioner to repay advances for rejected testing kits with interest and legal costs - The court observed that the arbitrator had duly considered the claims and counterclaims, particularly focusing on the submissions related to the fitness and quality of the testing kits as well as the procedural aspects followed during the arbitration. - The court found no grounds of "patent illegality" or conflict with public policy in the arbitral award. It noted that the arbitral tribunal had adequately considered all relevant evidence and legal provisions, including the contested proviso to Section 16(1) of the Sale of Goods Act, 1930. - Ultimately, the High Court dismissed the petition, upholding the arbitral award.
  Visit to Get Source

  ---

• IBC:

  Liquidation of the Corporate Debtor - Application seeking extension of timeline for making the payments under the approved Resolution Plan dismissed - The tribunal found that extending payment deadlines does not constitute a modification of the resolution plan but is rather an accommodation to ensure its successful implementation. The tribunal thus set aside the lower court's decision and granted the extension for payment of the fourth and fifth tranches until a specified future date. - The tribunal emphasized that the creditor should adopt a collaborative approach to facilitate the resolution process rather than focusing solely on liquidation.
  Visit to Get Source

  ---

• Service Tax:

  Non-payment of service tax - Double Taxation - Service receiver had already discharged the service tax liability - The Appellate Tribunal acknowledged that the service receiver had deposited the entire service tax amount on the works contract services provided by the appellant. It noted precedent indicating that once tax is paid by the service recipient, the Revenue cannot confirm the same tax against the service provider to avoid double taxation. - Regarding the limitation period, the Tribunal agreed with the appellant that invoking an extended period was unjustified. It referenced decisions indicating that when services rendered are reflected in public documents like Balance Sheets and Income Tax Returns, the invocation of an extended limitation period is not warranted unless there is evidence of mala fide intention.
  Visit to Get Source

  ---

• Service Tax:

  Interest liability - seeking waiver of interest since the payment of service tax was paid under the amnesty scheme - The tribunal observed that the appellant's payment of service tax, even under an amnesty scheme, necessitated interest payment as a corollary. Therefore, the appellant's contention for exemption from interest payment was deemed untenable. Regarding the refund claim, the tribunal affirmed that the appellant's payment of service tax without contestation implied acceptance of the department's stance. Additionally, the tribunal reasoned that the amnesty scheme, under which the appellant paid the tax, did not absolve them from interest liability.
  Visit to Get Source

  ---

• Central Excise:

  100% EOU - Levy of Excise Duty on wastages - shortages - handling loss - The tribunal noted substantial discrepancies between the iron ore quantities reported and the actual quantities exported. The appellant argued these discrepancies were due to cumulative losses over several years, which were common in the industry. However, the tribunal found no proper documentation or verification from the appellant substantiating these claims. The tribunal found that the appellant had contravened the stipulated conditions by failing to pay duties on the iron ore claimed as handling losses. The concessions under the notification were not applicable due to non-compliance with the notification’s conditions. - The tribunal supported the invocation of the extended period of limitation.
  Visit to Get Source

  ---

• Central Excise:

  Classification of goods - agglomerate plastic granules - Despite the apparent conflict between Chapter Note 3 and Notes 6 and 7, the Tribunal referred to the General Notes to Chapter 39 in the Harmonized System of Nomenclature (HSN) to resolve the conflict. - The Tribunal agreed with the appellant's contention that their goods should be classified under headings 3901 to 3914 rather than under heading 39159029. This decision was based on the interpretation of Chapter Notes 6 and 7, which specify that waste, parings, and scrap of a single thermoplastic material transformed into primary forms should be classified under headings 3901 to 3914.
  Visit to Get Source

  ---

• Central Excise:

  CENVAT Credit - generation of electricity which, later on, is cleared to its sister unit - The Appellate Tribunal finds that the appellant is indeed entitled to Cenvat Credit on inputs and input services used for the production of electricity, which is transferred to its sister unit at Urse free of cost. The Tribunal emphasizes that since the electricity is transferred free of cost, the valuation should not be based on the price of electricity sold by other entities. The Tribunal relies on precedent and distinguishes the case from situations where electricity is sold for a price outside the factory.
  Visit to Get Source

  ---

• Central Excise:

  Recovery of amount of CENVAT Credit short reversed/not paid by the Noticee - The Tribunal upheld the department's position, ruling that the goods cleared under the exemption notification should be considered exempted. Regardless of the lack of change in RSP, the appellant claimed the benefit of the exemption, making the goods exempted for calculation purposes. - However, the Tribunal disagreed with the department's assertion that wrong assessment under self-assessment regime tantamounts to an intention to evade duty. It highlighted that the onus was on the department to prove the elements required for invoking the extended period of limitation. As the entire demand fell beyond the normal period of limitation, it was deemed time-barred and unsustainable.
  Visit to Get Source

  ---

Articles

• A simplified GST guide designed for commission agents and brokers.
• Delhi HC issued notice to decide on the taxability of providing corporate guarantee by holding company to a subsidiary
• WAIVER OF INTREST UNDER SECTION 234A, 234B AND 234C OF INCOME TAX ACT, 1961
• Rs. 3731 Crore Penalty Demand from the employees set aside

Case Laws:

• GST

• 2024 (4) TMI 1034
  Violation of principles of natural justice - impugned order does not take into consideration the reply submitted by the Petitioner and is a cryptic order - HELD THAT:- The observation in the impugned order dated 29.12.2023 is not sustainable for the reasons that the reply dated 09.11.2023 filed by the Petitioner is a detailed reply with supporting documents. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is incomplete, not duly supported by adequate documents, unable to clarify the issue, not clear and unsatisfactory which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner - Further, if the Proper Officer was of the view that any further details were required, the same could have been specifically sought from the Petitioner. However, the record does not reflect that any such opportunity was given to the Petitioner to clarify its reply or furnish further documents/details. The impugned order cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order is set aside and the matter is remitted to the Proper Officer for re-adjudication - Petition disposed off by way of remand.

  ---

• 2024 (4) TMI 1033
  Interest and penalty liability - Petitioner discharged GST liability before issuance of SCN - Petitioner sought permission to approach the appellate authority by way of statutory appeal. - Benefit of the proviso to Section 50(1) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- Petition is disposed of by permitting the petitioner to present a statutory appeal before the appellate authority subject to the condition that the petitioner remits a sum of Rs. 2.5 lakhs (Rupees two lakhs fifty thousand only) towards interest liability as agreed to within a period of three weeks from the date of receipt of a copy of this order. Subject to remittance of the amount specified above, if a statutory appeal is presented within the aforesaid period of three weeks, the appellate authority is directed to receive and dispose of the same on merits without going into the question of limitation.

  ---

• 2024 (4) TMI 1032
  Imposition of 100% penalty - wrongful availment of Input Tax Credit - Late Filing of Writ Petition - Petitioner seeks an opportunity to contest the liability towards penalty by way of statutory appeal - HELD THAT:- By taking into account the fact that the entire tax and interest liability was discharged and that an appeal was not filed earlier since the petitioner intended to discharge liability to that extent, it is just and appropriate that the petitioner be permitted to file a statutory appeal only insofar as it pertains to penalty. Petition is disposed of by permitting the petitioner to file a statutory appeal only with regard to the penalty imposed under impugned order dated 12.09.2023 within two weeks from the date of receipt of a copy of this order. If such statutory appeal is filed within the aforesaid period, the appellate authority is directed to receive and dispose of the same on merits without going into the question of limitation.

  ---

• 2024 (4) TMI 1031
  Violation of principles of natural justice - appellant has been non-suited on the ground of alternate remedy - personal hearing was not given (on seeking adjournment for personal hearing) - mandate of Section 75 (4) stands complied or not - Tax not paid or short paid - HELD THAT:- The opportunity of hearing when is contemplated under the statute, it has to be comprehensive and it cannot be short-circuited. The show cause notice reflects that the date of reply was given on 30.10.2023 and before the personal hearing date is given, it would be about a superfluous and would defeat the actual intent of the legislation of giving an opportunity of hearing. It is not expected that before the reply is filed, an assessee can be heard and thereafter the reply is filed. It is against the normal procedure and is against the normal practice of the parties that personal hearing is preponed and the reply is subsequently filed. This is not the intent of provisions of sub-Sections (4) and (5) of Section 75. The Supreme Court has in number of occasion has held that the opportunity of hearing means granting real and meaningful opportunity and adequate time must given to prepare and present the defence - Supreme Court in UMA NATH PANDEY VERSUS STATE OF UP. [ 2009 (3) TMI 526 - SUPREME COURT] has observed Time given for the purpose should be adequate so as to enable him to make his representation. In the absence of a notice of the kind and such reasonable opportunity, the order passed becomes wholly vitiated. Thus, it is but essential that a party should be put on notice of the case before any adverse order is passed against him. It is one of the established principles of Common Law that officials taking action of a judicial nature must give an adequate opportunity of being heard to a person against whom the action is proposed to be taken. In the given case without filing the reply, it cannot be understood how personal hearing can be justified. When the assessee is burdened with a tax liability, then the intent and the object of the statute are strictly to be complied with. Prima Facie, sub-Section 4 of Section 75 of the CGST Act was completely shelved before the order dated 29.12.2023 was passed - The Supreme Court in KALPRAJ DHARAMSHI ANR. VERSUS KOTAK INVESTMENT ADVISORS LTD. ANR. [ 2021 (3) TMI 496 - SUPREME COURT] has held that when the principles of natural justice has not been followed, the litigant would be entitled to invoke the jurisdiction of High Court under Article 226 of the Constitution of India. Now coming back to the hearing, the judgments which has been relied on by counsel for the appellant i.e. FINO PAYTECH LIMITED VERSUS UNION OF INDIA, THROUGH THE SECRETARY, MINISTRY OF FINANCE ANR. [ 2024 (4) TMI 284 - BOMBAY HIGH COURT] and MS KEC INTERNATIONAL LIMITED VERSUS UNION OF INDIA AND 3 OTHERS [ 2024 (2) TMI 359 - ALLAHABAD HIGH COURT] , also fall in the same line wherein, the High Courts have repeatedly held that when the statute contains a mandate of hearing which is synonym to natural justice, it cannot be given a go bye or can be made porous, therefore, the order dated 29.12.2023 wherein, it has been recorded that the personal hearing was given on 11.10.2023 and 25.10.2023 would amount to defeat the rules of natural justice and the object of the legislation. The order if is allowed to be maintained, it would amount to allow a script with flaws. Thus, the appellant would be entitled for personal hearing according to mandate of sub-Sections (4) and (5) of Section 75 of the CGST Act. Appeal allowed.

  ---

• 2024 (4) TMI 1030
  Cancellation of registration of petitioner - appeal has been dismissed on the ground of same being time-barred - HELD THAT:- The controversy involved in this writ petition is squarely covered by the order passed by a Division Bench of this Court in POONAMCHAND SARAN S/O LATE MANGALRAM SARAN, MOHAN SINGH S/O LATE SHRI SALAM SINGH VERSUS UNION OF INDIA [ 2022 (10) TMI 180 - RAJASTHAN HIGH COURT] where it was held that Both the petitioners are given liberty to file appeal against the cancellation of their GST registration to the competent authority within ten days from today. Upon such appeals being filed, the same shall be considered and decided on all aspects in accordance with law excluding the bar of limitation in preferring the appeal by the petitioners. The present petition is disposed of in the same terms while quashing and set aside the impugned order dated 28.12.2023 (Annex.3).

  ---

• Income Tax

• 2024 (4) TMI 1029
  Scope of challenge to orders passed by the ITSC - Validity of exercising discretion by the ITSC in granting relief to the assessee - Granting immunity from prosecution and certain penalties - Revenue is unhappy with the findings of the ITSC on 8 points, viz., income-Revised percentage of profit, cash loans, bogus purchase from Dwish Enterprise, disallowance under Section 14A, NCDs / shares issued to Cyprus and Mauritius based entities, NCDs issued to Kolkata based entities, claim of marketing expenses and penalty and prosecution. HELD THAT:- In the case of income revised percentage of profit, data considered are documents/materials that were seized by the department. Considering the evidence and material before them and the submissions made, the ITSC restricted the additional account of on money at 20% of total money receipts and allowed claimed expenditure to the extent of 80%. It is a discretion that the ITSC exercised and there was nothing wrong in that. Whether to examine and how much to examine should be left to the discretion of the ITSC. Similarly for item (ii) cash loans, (iii) Bogus Purchase from Dwish Enterprises and (iv) Penalty and prosecution. The Apex Court in Jyotendrasinhji Vs. S. I. Tripathi [ 1993 (4) TMI 1 - SUPREME COURT] held that the order of the ITSC is in the nature of a package deal and that it may not be ordinarily possible to dissect its order and accept what is favourable and reject what is not. Moreover, it is open to the ITSC to accept an amount of tax by way of settlement and to prescribe the manner in which it is to be paid. ITSC has the discretion to condone the defaults, penalties or prosecution, where it thinks appropriate. Thus, the sole limitation upon the ITSC is to act in accordance with the provisions of the Act. Even if the interpretation placed by the ITSC on documents is not correct, it would not be a ground for interference since a wrong interpretation of documents cannot be said to be a violation of the provisions of the Act. The Apex Court has held that the scope of enquiry by the High Court under Article 226 should be restricted to i) whether the ITSC has acted in accordance to the provisions of the Act and ii) whether the order passed by it has prejudiced assessee apart from the ground of bias, fraud and malice which constitute a separate and independent category. In N. Krishnan vs. Settlement Commission And Others [ 1989 (3) TMI 77 - KARNATAKA HIGH COURT] it is held that the ITSC is the forum for self surrender and seeking relief and not a forum for challenging the legality of assessment order or orders passed in any other proceedings. The Karnataka High Court held that the power conferred on the settlement commission is so wide that it can take any view on any questions of law, which it considers appropriate having regard to the facts and circumstances of a case including giving immunity against prosecution or imposition of penalty. Therefore, in our view, ITSC was entitled to exercise discretion while passing the impugned order and has exercised its discretion. In our view, there is neither violation of any mandatory procedure prescribed under any of the sections of Chapter XIX-A of the Act nor any violation of any of the Rules of natural justice. Further, it cannot be said that the reasons assigned by the ITSC for granting relief sought for by assessee have no nexus to the decision taken. As held by the Apex Court in Kotak Mahindra Bank Ltd [ 2023 (9) TMI 1231 - SUPREME COURT] the members of the ITSC have been appointed by Central Government in accordance with Section 245B (3) of the Act for their integrity and outstanding ability and for special knowledge and experience in, problems relating to direct taxes and business accounts. The members of the ITSC, therefore, cannot be questioned for their decision or for exercising their discretion. In the circumstances, as it is evident from Section 245 of the Act that the Central Government has appointed the members as their representatives to settle the disputes with assessee, which reflects the confidence they had in the members because the persons appointed are of integrity and known for their outstanding ability and expertise and for the special knowledge and experience in problems relating to direct taxes and business accounts. Therefore, these members have been authorised to settle the disputes on behalf of the Government and it does not lie in the mouth of the Government to challenge the decision taken by their own representatives without making allegations of bias or fraud or malice. Rule discharged. Petition dismissed.

  ---

• 2024 (4) TMI 1028
  Unexplained Cash Credit u/s 68 - Authenticity of the Will - sale consideration claimed to have been received by the appellant from sale of gold ornament and diamonds, which were given to him by his late grandmother by way of a will - onus to prove with regard to creditworthiness and genuineness of the transactions - AO observed that the source of increase in capital of the assessee through the sale of jewellery and diamonds is not verified and explained - THELD THAT:- It is clear from a bare reading of the Will that there are several inconsistencies and contradictions in it. Firstly, the age of the testator is stated to be 75 years in para 1 whereas it is over 70 years in para 2. The testator unlikely to make such glaring mistake when she states that she was mentally fit and healthy and that she has not executed any other will or testament - Though she had 4 sons and 2 daughters, she has not given anything to her 3 sons and 2 daughters in this Will by stating that she had earlier given to all other daughters and sons (except father of the assessee) whatever she and her husband wanted during their hard times as well as on various occasions and festivals. However, no details regarding the gifted assets or their values to other children have been specified, unlike the case of the appellant. She has gifted all her shares and other properties at Sl. Nos.1 and 2 of the Will to her son Sevantilal. The value of assets given to the father of assessee is also not high. She has ,however, gifted gold ornament weighing about 738 grams and 187 carats of diamonds to her grandson, Milan Sevantilal Seth (appellant herewith). It is beyond the realm of human probability that she gifted/ gave away such high value gold jewellery and diamonds to her grandson but there is no evidence of any such gift to her own children (3 sons 2 daughters). There are also no supporting documents to prove the source of the aforesaid assets, since she is a housewife with no regular source of income. Also, there is no independent evidence apart from the Will which can prove that she was in possession of the impugned assets at the time of creation of the will. It is also not clear as to why the receipt of gold jewellery and diamonds of such high value was never shown either in the Income-tax returns or the Wealth-tax returns of the assessee for a very long period of 17 years upto AY 2017-18. Neither any evidence of these valuables in the income-tax details of the grandmother has been produced before us. The reasons for not showing such high value of the assets could not be satisfactorily explained by the Ld. AR. No corroborative evidence has been furnished by the Ld. AR to support the case of the appellant. Shares have also been gifted but no details regarding the quantity and value of shares is mentioned. No DMAT account or any evidence from Stock Exchange was produced to support the Will . Another very important fact is absence of probated will in this case. On a specific question by the Bench, the Ld. AR fairly admitted that there is no probate in the present case. Probate is a legal process of proving a will in a Court and confirming its validity. In absence of the probate and existence of overwhelming surrounding circumstances discussed above, the explanation of the appellant regarding the nature and source of the impugned gold jewellery and diamonds is not prima facie satisfactory. In view of the facts discussed above, we agree with the concurrent findings of the AO and Ld. CIT(A) that the said will deed is concocted and cannot be relied upon. A bare reading of section 68 of the Act reposes in the AO the jurisdiction to enquire from the assessee the nature and source of the sum credited in his books of account. If the explanation given by the assessee is found not to be satisfactory, further inquiries can be made by the AO himself, both in regard to the nature and source of the income credited by the assessee in the books of account. The section accords statutory recognition to the principle that cash credits which are not satisfactorily explained, or not at all explained, might be assessed to be tax as income of the assessee. It is well established that identity of the creditor, creditworthiness or capacity of the creditor to advance the money and genuineness of the transactions are the three ingredients which are required to be cumulatively satisfied by the assessee to escape the mischief, the provisions of section 68 of the Act. The assessee has not been able to properly explain and satisfy the aforesaid conditions so as to discharge the onus cast on it. The creditworthiness of the will maker and genuineness of the transaction has not been proved for the reasons that assessee s grandmother was a housewife with no regular sources of income. No evidences have been produced to show that she was in possession of so many assets to give to the appellant and her six children. The Will deed appears to be a concocted story as no specific details/quantification is mentioned in it of the assets given to other children. Shares have also been gifted but no details regarding the quantity and value of shares is mentioned. No DMAT account or any evidence from Stock Exchange was produced to support the Will. There is also inordinate and intentional delay in submission of the details. As the Will was made in January, 1999 but no Income-tax or Wealth-tax details were furnished for 17 years long upto 2017-18 or for the prior period to prove the existence of the gold jewellery and diamonds. The officially authenticated copy of a probated will is not available with the appellant. Thus we hold that the onus with regard to creditworthiness and genuineness of the transactions has not been discharged satisfactorily as mandated in section 68 of the Act. Therefore, the addition made by the AO and upheld by the Ld. CIT(A) is sustained and the grounds are dismissed.

  ---

• 2024 (4) TMI 1027
  Levy of penalty u/s 271(1)(c) - Denial of exemption of capital gains u/s 10(38) on account of sale of shares - company was not doing substantial business and not declaring dividend and accordingly disallowed the claim of exemption - penalty deleted by Ld. CIT(A) on the ground that since the issue in quantum proceedings has been decided in favour of the assessee by Hon ble ITAT - HELD THAT:- It is a well settled law that once the additions made in quantum proceedings have been deleted, then there is no question of sustaining levy of penalty u/s 271(1)(c) of the Act. In the case of CIT v Shah Alloys [ 2012 (9) TMI 957 - GUJARAT HIGH COURT] the Gujarat High Court held that penalty need not be imposed when addition made, which was basis for penalty, was set aside. Also In the case of CIT v. Shishpal [ 2001 (9) TMI 41 - RAJASTHAN HIGH COURT] addition was made as unexplained investment under Section 69 and penalty was imposed under Section 271(1)(c).The aforesaid addition was deleted in quantum appeal. The High Court held that since the very foundation for imposition of penalty had become non-existent, penalty would not survive. Also in case of LRs Management. [ 2023 (5) TMI 351 - ITAT RAJKOT] it was held that Where quantum addition made by AO was deleted by Tribunal, there remained no basis for levy of penalty under Section 271(1)(c) of the Act. Thus once the quantum proceedings itself have been decided in favour of the assessee, there is no scope of levy of penalty under Section 271(1)(c) of the Act, we are here by dismissing the appeal filed by the Department.

  ---

• 2024 (4) TMI 1026
  Denial of benefit u/s 115BAA - while filing its return of income as it was unable to upload Form 10-IC due to technical glitches - scope of circulars or directions amending provisions of the Act - DR has argued that the appellant company has not exercised its option for taxation u/s 115BAA of the Act at the time of submitting ROI electronically in accordance with condition 3(ii) of the above CBDT circular - whether the appellant company being a domestic company is entitled to get its tax liability computed in accordance with the provisions of section 115BBA(1) of the Act? HELD THAT:- In view of rule 21AE, the appellant assessee domestic company was to exercise its option for the benefit of computation of its tax liability u/s 115BAA(1) in accordance with the provision of sub-section 5 of section 115BAA for the relevant assessment year 2020-21 by furnishing prescribed form No. 10-IC electronically. It is not disputed that there was a technical problem in uploading the form 10-IC. This fact is substantiated by the referred CBDT circular dated 17.03.2022. CBDT circular condoned the delay in filing form 10-IC for the relevant A.Y. 2020-21. According to Para 2 of the circular, it is understood that the delay was condoned upon receiving representations stating that form 10-IC could not be filed along with the ROI for A.Y. 2020-21, which was the first year of filing the form. As far as the compliance of condition No. (ii) of CBDT circular by the appellant domestic company is concerned, the option by the appellant could be exercised only by uploading from 10-IC prescribed under Rule 21AE of the rules on 02.05.2021, the delay in uploading this form 10-IC was already condoned by the CBDT. It is well established precedent that a circular of CBDT, no doubt, has the force of law, can even supplant the law in cases where it is beneficial to the assessee and can mitigate or relax the rigors of the law. The powers of the CBDT in issuing circular for general guidance are subject to two important conditions. One is that it does not entitle the income tax authority including the Board to issue instructions or circulars contrary to the substantive provision of law or curtailing the relief to which the assessee is otherwise entitled under law. It is also settled law that circulars are not binding on assessee. The circular cannot therefore curtail the benefit conferred on assessee or be contradictory to the Act. Hon ble Apex Court in Union of India V/s Wood Paper Ltd. [ 1990 (4) TMI 55 - SUPREME COURT] has held that the condition regulating the computation of benefit should be interpreted liberally. We are of the consistent view that the appellant assessee, as a domestic company, was free to opt for the beneficial part of the relevant law. The appellant company having exercised its option in consonance with aforesaid provision of law and having opted as per the procedure prescribed under the aforestated rule, is entitled to the benefit of section 115BAA(1) for the purpose of computation of income at the rate mentioned thereunder. The condition No. (ii) of CBDT dated 17.03.2022, thus, cannot be interpreted to take away the statutory right vested in the appellant assessee under the Act. CIT(A) has failed to rationally appreciate and diligently apply the relevant law on the facts of the present cast. We therefore set aside the order passed by CIT(A) along with assessment order to the aforestated extent. The aforesaid point related to the grounds of appeal, is accordingly determined positively in favour of the appellant assessee. AO is thus directed to compute the tax liability of the appellant assessee, a domestic company in accordance with the mandate of Section 115BAA(1) of the Act. The matter is restored to the file of AO for the statistical purposes.

  ---

• 2024 (4) TMI 1025
  Assessment order passed u/s 153A - valid approval granted u/s 153D or not? - as submitted by assessee combined/consolidated approval issued u/s 153D by the Additional CIT/Central Range-7 Delhi without any reference on the order sheet and the same is mechanical one HELD THAT:- As referring to approval accorded makes it evident that such approval is generic and listless and accorded in a blanket manner without any reference to any issue in respect of any of 5 assessment years. Apparently, the approval has been granted on a dotted line without any availability of reasonable time which firms up the belief towards non application of mind. Besides, the approval has been granted in a consolidated manner for all assessment years for which voluminous assessment orders were prepared. The whole sequence of action apparently appears to be illusory to merely meet the requirement of law as an empty formality. It is also alleged on behalf of assessee that the draft assessment orders are not available on record as no such draft Assessment order has been referred while according the approval u/s 153D of the Act. The approval granted under section 153D of the Act should necessarily reflect due application of mind and if the same is subjected to judicial scrutiny, it should stand for itself and should be self-defending. There are long line of judicial precedents which provides guidance in applying the law in this regard. Thus in the instant case, approving authority did not mention anything in the approval memo towards his/ her process of deriving satisfaction so as to exhibit his/her due application of mind. We may observe that the above approval letter issued by the Addl. Commissioner says that the approval has been granted subject to certain conditions. Plain reading of the letter of approval granted by the Addl. Commissioner, clearly depicts that the Addl. CIT had routinely given approval to the AO to pass the order only on the basis of letter of the Ld. A.O. without any application of mind. From the said approval, it can be easily inferred that the approved has been accorded with certain conditions. Thus, the sanctioning authority had in effect abdicated its statutory functions and delightfully relegated its statutory duty to the subordinate AO, whose action the Additional CIT, was supposed to supervise. The said approach of the Additional CIT, Central has rendered the Approval to be a mere formality and cannot be sustained in the eyes of law. Thus approval granted by the superior authority in mechanical manner defeats the very purpose of obtaining approval u/s 153D of the Act. Such perfunctory approval has no legal sanctity in the eyes of the law. See SMT. SHREELEKHA DAMANI [ 2018 (11) TMI 1563 - BOMBAY HIGH COURT] Thus the approvals so granted under the shelter of section 153D of the Act does not pass the test of legitimacy. The Assessment orders of various assessment years as a consequence of such inexplicable approval lacks legitimacy. Consequently, the impugned assessments orders in the captioned appeals are non-est and a nullity and hence the same are quashed. Appeals filed by the Assessee allowed.

  ---

• 2024 (4) TMI 1024
  Computation of short term capital gain - allowable expenditure u/s. 48 - disallowance of claim of management fees on the ground that it is not an allowable expenditure u/s. 48 as it is not wholly and exclusively incurred in connection with transfer of asset - HELD THAT:- Section 48 of the Act gives the mode of computation of income chargeable under the head Capital Gains . The section allows deduction in respect of expenditure incurred wholly and exclusively in connection with transfer of capital asset and the cost of acquisition and cost of improvement, if any. The contention of the assessee is that the management fee paid by the assessee to BNP Paribhas is linked to earning of short term capital gain arising from transfer of securities. We find that similar issue had come up before in the case of KRA Holdings Trading Investments Pvt. Ltd. [ 2013 (9) TMI 1013 - ITAT PUNE] Revenue rejected assessee s claim of deduction of Portfolio Management Fee for similar reasons as has been expressed in the instant impugned order and ITAT allowed the claim of the Portfolio Management fees as an allowable expenditure. Similar view has been taken by the Tribunal in the case of Nadir A Modi [ 2017 (4) TMI 567 - ITAT MUMBAI] . In the aforesaid case payment of management fee was allowed to the assessee by placing reliance on the decision in the case of KRA Holdings Trading Investments Pvt. Ltd [ 2013 (9) TMI 1013 - ITAT PUNE] . There are contrary decisions of the Tribunal on allowability of Management Fee u/s. 48 of the Act. It is a well settled proposition that when two views are possible, the view in favour of assessee should be preferred [Re. CIT vs. Vegetable Products Ltd [ 1973 (1) TMI 1 - SUPREME COURT] . Thus, in the facts of the case and the decisions referred above, ground No.1 of appeal is allowed. Disallowance u/s. 14A - assessee has earned income exempt from tax u/s. 10 - No suo-moto disallowance was made by the assessee for earning of exempt income - HELD THAT:- AO has straight away invoked the provisions of Rule 8D without recording dissatisfaction with regard to assessee s claim of no disallowance of expenditure u/s. 14A of the Act. The provisions of section 14A(2) of the Act envisage that the Assessing Officer having regard to the accounts of assessee, if not satisfied with the correctness of the claim of assessee in respect of expenditure in relation to earning exempt income, then the AO shall determine the amount of expenditure incurred in relation to exempt income in connection with Rule 8D(2). Where the assessee has made any suo-moto disallowance or no disallowance u/s. 14A of the Act the provisions of Rule 8D are not attracted automatically. AO has to record his dissatisfaction having regard to the accounts of the assessee, with reference to the correctness of the claim of assessee u/s. 14A of the Act. Though no specific proforma or the manner of recording such dissatisfaction has been prescribed, nevertheless the dissatisfaction of the AO should be objective and emanate from his observations in the assessment order. In the instant case, we find that the Assessing Officer has simply recorded the submissions of the assessee and thereafter invoked the provisions of Rule 8D by referring to the decision in the case of Godrej Boyce Mfg. Co. Ltd. [ 2010 (8) TMI 77 - BOMBAY HIGH COURT] However, the AO while referring to the aforesaid decision failed to take note of the manner in which dissatisfaction has to be recorded u/s. 14A of the Act, as explained by the Hon ble High Court. Since, the AO has failed to record dissatisfaction as mandated u/s. 14A(2) of the Act, disallowance u/s. 14A of the Act in the instant case is unsustainable - Decided in favour of assessee.

  ---

• 2024 (4) TMI 1023
  Disallowance u/s 36(1)(vii) - bad debt claim in respect of identified debts - HELD THAT:- The assessee has brought on record a chart containing party-wise details of accounts which have been claimed as bad debts i.e. identified debts u/s 36(1)(vii) which, according to the assessee has never been claimed u/s 36(1)(viia). As pointed out by the Ld. AR, the appeals of the Revenue filed against the decision of the Tribunal on the impugned issue for AY 2013-14 to 2015- 16 stand dismissed by the decision of Hon ble Delhi High Court [ 2023 (10) TMI 1244 - DELHI HIGH COURT] Revenue had also gone in appeal before the Hon ble Delhi High Court against the order of the Tribunal on this issue for AY 2016-17 as well but the Hon ble Delhi High Court following its decisions for AY 2013-14 to 2015- 16 held that no substantial question of law arises for consideration by this court . Appeal of the assessee is allowed.

  ---

• 2024 (4) TMI 1022
  Validity of assessment / adjustment u/s 143(1) without prior intimation u/s 143(1) - Denial of exemption u/s 11 and Claim of Expenses by the CPC - HELD THAT:- Assessing Officer CPC, before making any adjustment/disallowance to the returned income as per the return of income filed by the assessee is duty bound to intimate the same to the assessee either in writing or in the electronic mode. However, we find that no such intimation has been given to the assessee before making the said adjustment or disallowance either in writing or in electronic mode. We have also examined the records of assessment proceedings on e-portal relating to the assessee as placed before us and observe that the ld. AO, CPC has not followed the mandate of first proviso of section 143(1)(a) of the Act and consequently , the order passed under section 143(1) of the Act is not as per the mandate of provisions of the Act and has to be quashed. In the instant case as the adjustment has been made by the ld. Assessing Officer, CPC to the income of the assessee without even giving any intimation in terms of proviso to section 143(1)(a) of the Act and, therefore, the said order is quashed as invalid and nullity in the eyes of law. In the result, the additional ground is allowed. Denial of exemption u/s 11 - Disallowing the capital expense and revenue expense - return of income and Form 10B was not filed by the assessee on time - HELD THAT:- We find that admittedly the return of income was filed in Form 7 and Form 10B on 31.03.2021 and 30.03.2021 while the extended due date for filing the return of income in relevant assessment year was 15.02.2021. We note that the COVID 19 pandemic was spread all over the country and the entire country rather the entire globe were completely brought to standstill. And so was the condition so far as the assessee trust is concerned. So considering all these practical difficulties for making compliances, Hon ble Apex Court has extended the period of limitation with respect to judicial or quasi-judicial proceedings. So as per Hon ble Apex Court [ 2022 (1) TMI 385 - SC ORDER] vide its order dated 10.01.2022 there is no delay in filing the return of income as well as Form 10B and, therefore, the order of the ld. CIT(Appeals) upholding the order of ld. Assessing Officer, wherein the exemption claimed under section 11 of the Act by the assessee-Trust has been rejected resulting into disallowance of capital expenditure, revenue expenditure and also statutory exemption exemption of 15% of total receipts u/s 11(1)(a) which is incorrect and against the ratio laid down by the Hon ble Supreme Court. Accordingly we set aside the order of ld. CIT(Appeals) on this issue and direct the AO allow the exemption claimed u/s 11. Appeal of the assessee is allowed.

  ---

• 2024 (4) TMI 1006
  Delay of 690 days in filling appeal before HC - Dealy due to procedural issues in the new faceless appeal scheme - Intimation u/s 143(1) - disallowance of assessee's claim for deduction of delayed deposit of employees share of contribution towards ESI/PF u/s 36(1) (va) - HELD THAT:- The reason that the delay in filing of the present appeal can by no means be held to be justified for the reason that partners of the assessee firm had remained unaware about the order passed by the CIT (A) which was dropped in the e-mail account of his accountant, viz. Shri Amitabh Paul. As the reason given by the assessee firm regarding the inordinate delay involved in filing of the present appeal does not inspire any confidence, and in fact reveals a lackadaisical conduct of the partners of the assessee firm, therefore, the same cannot be summarily accepted on the very face of it. Considering the callous and lackadaisical conduct of the partners of the assessee firm who ought to have remained vigilant about their income tax matter was held by the ITAT. The expression sufficient cause will always have relevancy to reasonableness. The action which can be condoned by the court should fall within the realm of normal human conduct or normal conduct of a litigant. However, as the appellant/ assessee in the present case is acting in defiance of law, therefore there can be no reason to allow its application and condone the substantial delay of 690 days involved in preferring of the captioned appeal. Hon'ble Supreme Court in Ramlal, Motilal and Chotelal v. Rewa Coalfields Ltd. [ 1961 (5) TMI 54 - SUPREME COURT] that seeker of justice must come with clean hands, therefore, now when in the present appeal the assessee appellant had failed to come forth with any good and sufficient reason that would justify condonation of the delay involved in preferring of the captioned appeal, the ITAT declined to condone the delay of 690 days, without adverting to the merits of the case and hence dismissed the captioned appeal of the assessee as barred by limitation. As far as the issue involved pertaining to claiming of deduction under section 36 (1) (va) of the IT Act 1961 on delayed payment of employees share of contribution towards ESI/PF in the instant case is concerned is no more res integra. The Hon ble Supreme Court has decided the legal issue on merits in the matter of Checkmate Services P. Ltd [ 2022 (10) TMI 617 - SUPREME COURT] Thus the present appeal filed by the appellant is not only devoid of merits but also barred by limitation as provided under Section 253 of the Act. The learned ITAT has rightly dismissed the appeal of the assessee.

  ---

• Customs

• 2024 (4) TMI 1021
  Refund Of excess amount of duty paid on short shipped quantity - Valuation - erroneous calculation of FOB value of the subject consignment - Export of Metallurgical Grade Gibbsitic Bauxite of Indian Origin - 100% EOU - violation of principles of natural justice - whether the refund claim was considered by the adjudicating authority or not - HELD THAT:- It is clear from reading provision of sec.14 for Valuation of goods, that what is exported are goods as presented for export at Indian port with the value having been indicated as the transaction value being the value for export from India for delivery at the time in place of exportation (being India) in the case of export goods and such value commonly taken as FOB value. The goods exported were as per description of Metallurgical Grade Gibbstic Bauxite and goods were assessed in the country of exportation as per the price initially agreed. The goods remained in the sea and were during the shipment exposed to moisture. The moisture over and above permissible was found at the port of discharge and price was renegotiated and the fresh price was arrived at to avoid termination of contract due to slightly higher moisture content. Situation to that extent was similar to the contract of M/S. ORE CASE (INDIA) V/S. COMMISSIONER OF CUSTOMS, CENTRAL EXCISE S.TAX, BBSR-I AND COMMISSIONER OF CUSTOMS (PREVENTIVE), BHUBANESHWAR[ 2023 (10) TMI 757 - CESTAT KOLKATA] Excepting that instead of humidity element it was ferrous content in that case. It is to be noted in that case, it is on record that assessment at the time of exportation was on provisional basis and subjected to the final outcome of ferrous contents. The ferrous contents in any case cannot be different, in normal course at either of the ports of export and import. However, in this case, it is not coming on records, as to whether the assessment was provisional, or whether the department was made aware of likely variance in prices due to higher moisture content which is likely to happen even in course of shipment being in the sea. Further whether any moisture content was declared in India at the time of export is not forthcoming. Again it has to be decided as to what was the export goods at the time of exportation and what was the price at the time of exportation as per the statutory provisions, indicated above. Matter is therefore, remanded back to the original adjudicating authority to check up on all these facts specially if the assessment was provisional or department was aware of the contract which provided for variance in price at the later stage. Further, since the department has not raised the issue initially that appeal was required to be filed by the party as per the decision of ITC case (cited supra). Department is precluded from raising the same in the instant remand proceeding. Party is free to raise its other legal objection if any. Appeal disposed of by way or remand.

  ---

• 2024 (4) TMI 1020
  Import of road construction machines - Benefit of exemption - Actual user conditions - requirements of a valid contract for road construction. - Goods declared as New Python 5000 Pothole Patchers Machine - duty exemption under Notification No. 12/2012 (Sl. No. 368, list 16) - adjudicating authority denied the benefit of notification to the importer on the ground that the imported machines being used to patch-up or repair minor cracks / potholes which develop on the existing road surface were not found specified under List 16 - Validity of contract with NHAI etc. for the construction of roads in India - HELD THAT:- We find that Boards Circular F No 345/17/2008-TRU, dated 23/02/2009 has not been issued in connection with Customs Notification No. 12/2012 but is pertaining to Service Tax levy. Interpreting a notification benefit with a Circular issued for another enactment is always fraught with danger of misinterpretation. There is nothing in the exemption notification to show that only machines used for construction activities should be given its benefit and not extended to machines for maintenance and repair activities. The machines listed in list 16 cover a whole gamut of road construction activity like, paver finisher, surface dressing eqp., kerb laying, bridge inspection unit, stone crushing plant, tunnel excavators etc and not to road laying equipment/ machines alone. The matter has been discussed elaborately at para 7 of the impugned order. Further machines at Sl. Nos.4 and 5 can also be used for repair and maintenance activities of roads. We hence do not find the impugned order to be erroneous on this ground. It is not Revenue s case that the said contract was not entered into with this authorized agency. The Respondent has explained that one of the conditions for bidding for the contract was that they should be in possession of a machine for carrying out the contracted work. Hence the contract could only have been applied for while possessing a machine, necessitating its prior import. We feel that it is impossible for every notification to perceive exhaustively situations and circumstances that may emerge after its issue and where its application may be called for. Hence the process of interpretation combines both a literal and a purposive approach. The purpose of the concession is to ensure that the machine is used for the purpose specified in the notification. In exceptional cases the exemption could have been extended provisionally with a bond and finalised after a reasonable opportunity was given to the importer to produce the contract. Thus, we find that the learned Commissioner (Appeals) has used his discretion fairly and judicially in interpreting the notification and his order does not merit interference. The appeal is hence rejected and the matter disposed of accordingly.

  ---

• 2024 (4) TMI 1019
  Transaction value - Valuation (Customs) - Related person - loading of import value - Modular panels of different sizes for use in the construction industry - imports raw materials - provisional duty assessment - special or abnormal discount to the related buyers which were in excess of 3% discount - HELD THAT:- We find that the Chairman and Managing Director of Paschal Germany has confirmed that their normal trade practice in the course of international trade is to offer discount at the range of 25% to 40% of the normal sale price to all their customers located across the globe including the group companies/ affiliates. The importer has also demonstrated that even at the time that they were not in existence in India their parent company had allowed 25% discounts to buyers like NCC in India. The cash discount of 3% is allowed by the parent company if the subsidiary pays the import bills within the time. No cash discount was ever availed by the Appellant as the import payments could not be made to the suppliers within the time. The cost construction statement duly certified by the CA shows that on average the profit margin was around 16%. None of this was refuted through facts. The OIO also mentions that the learned Adjudicating Authority did not find any cash flow back towards Royalty/ Technical Know-How fees/ Licence fee in respect of the imported goods. We find that the department at the first instance has not shown any concrete reason to discard the transaction value. The OIO states that it appears that the importer is giving 25% discount to their related parties and may be another 3% as per the terms and condition of the price list. He goes on to opine that there can not be mass production of such machinery plant which warrants such huge discount , without any factual substantiation. The whole arguments to discard the transaction value are based on conjectures and surmises. This being so the question of determining a fresh value as per the CVR does not arise. The Commissioner (Appeals) after examining the matter is also unsure about the exclusive nature of the discounts affecting the transaction value on the imported goods and states in conclusion that the discount enjoyed by the importer appears to be a special one made only for related importers . On the other hand he has gone beyond his statutory functions, traversed beyond the scope of the appeal and taken on the role of an investigator directing the lower authority to examine why the loading of value should not be at 25%. Hence the impugned order must fail both for sustaining the OIO which was based on conjectures and surmises and could not give any concrete reasons to discard the declared transaction value and further for exceeding his statutory functions by ordering a fresh enquiry. Thus, we set aside the impugned order. The appeal succeeds and is disposed of accordingly.

  ---

• 2024 (4) TMI 1018
  Challenging the assessment of Bill of Entry - The assessing authority initially rejected this claim, prompting the appellant to file a revised Bill of Entry without claiming the benefit of these notifications. Subsequently, the appellant filed an appeal challenging the assessment made by the Customs authorities. - Benefit of concessional rate of customs duty and CVD - appeal rejected by taking the recourse of Section 17(5) of the Customs Act, 1962 - HELD THAT:- In the present case, it is found that after rejection of the appellant s claim of benefit under the above said notifications as declared in their Bills of Entry, they paid the duty under protest and preferred appeal before the learned Commissioner(Appeals). Therefore, the learned Commissioner(Appeals) ought to have decided the appeals on merits instead of rejecting the same by observing that the appellant has accepted the re-assessment. Further, the Hon ble Supreme Court in the case of ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [ 2019 (9) TMI 802 - SUPREME COURT] has held that Revenue as well as appellant can prefer an appeal against the order of the assessment. The impugned order is set aside and the case is remanded to the learned Commissioner(Appeals) to decide the issues on merit, after affording an opportunity of hearing to the appellant. Since the assessment involved in the appeals is around a decade old, it is directed that the denovo proceeding be completed within three months from the date of communication of this order. Appeal is allowed by way of remand.

  ---

• 2024 (4) TMI 1017
  Violation of principles of natural justice - denial of cross-examination - Pre-mature appeal - HELD THAT:- Though appellant contended that denial of cross-examination would prejudice the case of the appellant, but it would always be open to the appellant to raise this issue once the final order is passed by the Principal Commissioner. It would not be appropriate, at this stage, when the Principal Commissioner is in the process of adjudicating the show cause notice, to examine this issue. The appeal is, accordingly, dismissed with liberty to the appellant to raise the issue of denial of cross-examination before the Tribunal after the Principal Commissioner decides the matter.

  ---

• 2024 (4) TMI 1016
  Smuggling - Confiscation of Silver Jewellery, Silver Boondi Indian Currency - third country origin - Penalty - recovery of contraband goods from the house and Gaddi - Burden of proof - presumption u/s 123 - HELD THAT:- We find that the search made on the basis of that respondent is dealing with the contraband goods and during the course of investigation, no contraband goods were recovered. The respondent being a trader in silver ornaments/silver boondi, was searched and 79.58 kgs. of Silver Jewellery, 50 kgs. of Silver Boondi, Indian Currency amounting to Rs. 79,00,000/- were recovered. These were presumed by the Revenue and these are the third country origin, but no such evidence has been produced by the Revenue to allege that these are third country origin. In fact, during the course of investigation, it is a fact on record that boondi silver and silver jewellery were recovered from the shop of the respondent. So, the question arises that in the absence of any seizure of Port or Airport or not having any foreign markings on the goods seized from the respondent, how the officers came to the conclusion that the goods are third country origin goods. Therefore, first, onus on the Revenue is to make a reasonable belief that the goods are of third country. Admittedly, no such evidence has been produced by the Revenue to allege that to make a reasonable belief, the goods are of third country origin. In the absence of that, the goods in question cannot be confiscated. Furthermore, the confiscation of Indian Currency recovered from the respondent was not proved by the Revenue that the same is sale proceed of the goods of third country origin. In that circumstances, the Indian Currency cannot be seized or confiscated. We do agree with the observations made by the Ld. Commissioner (Appeals). Thus, we do not find any infirmity in the order passed by the Ld. Commissioner (Appeals) and do agree with the same. Hence, we do not find any merit in the appeal filed by the Revenue. Accordingly, the same is dismissed.

  ---

• Insolvency & Bankruptcy

• 2024 (4) TMI 1015
  Approval of Resolution Plan - appellant submitted that the personal guarantees given by the individual guarantors, could not have been made the subject matter of the resolution plan with regard to the Corporate Insolvency Resolution Process of the corporate debtor - HELD THAT:- Issue notice, returnable in the week commencing 20.08.2024. Notice will be served by all modes, including dasti.

  ---

• 2024 (4) TMI 1014
  Liquidation of the Corporate Debtor - Application seeking extension of timeline for making the payments under the approved Resolution Plan dismissed - HELD THAT:- The Resolution Plan indicates that Resolution Applicant is a technocrat entrepreneur, who is a M. Tech from Indian Institute of Technology (IIT), Mumbai and holds more than three decades of experience in the field of Boilers and Thermal systems related equipment s design and manufacturing. In his Resolution Plan, the Appellant claimed completion of various projects and detailed the potential and technologies developed by the CD. As per the Resolution Plan, the amount was to be paid in six tranches. There is no dispute that first three tranches were paid in time and the fourth tranche, which was due on 15.04.2023, could not be paid and fifth tranche also became due in October 2023. It is relevant to notice certain clauses of the Resolution Plan, which contains the sources of fund. Para 5.1.2 refers to Sources of funds and one of the items, which was mentioned at Item 10 in table funds for Resolution is Recoveries from Litigation, from which it was expected that between 18-24 months Rs.51.40 lakhs would be recovered and total recovery was expected to be Rs.1040.85 lakhs. The Adjudicating Authority has jurisdiction to grant extension of timeline in making the payment in a Resolution Plan and the view of the Adjudicating Authority that granting of extension of the timeline is modification of the terms of the Resolution Plan is not a correct view. Further, for extension of timeline it is not necessary that CoC should express its concurrence, only then the Adjudicating Authority can exercise its jurisdiction. The jurisdiction is there with the Adjudicating Authority in appropriate case. Granting extension of time in payment as per Resolution Plan for implementation of the Resolution Plan, appropriate jurisdiction is always vested with the Adjudicating Authority to pass appropriate order. The Adjudicating Authority committed error in rejecting application filed by the Appellant seeking extension of time for payment, on the wrong premise that since the CoC has not approved the extension, the extension cannot be granted. The extension of time in payment is not the modification of the Plan - the order passed by the Adjudicating Authority rejecting application filed by the Appellant is unsustainable and is set aside. The Appellant is entitled for extension of sometime under the Resolution Plan, so as to ensure that the Plan is fully implemented and complied with - application allowed.

  ---

• Service Tax

• 2024 (4) TMI 1013
  Non-payment of service tax - Works Contract Service - Service receiver had already discharged the service tax liability - demand raised on the basis of third party information i.e. data revealed from ITR/Form 26-AS from Income Tax Department - Extended period of Limitation - HELD THAT:- It is found from the records that the service receiver PVVNL deposited the entire service tax amount on the works contract services provided by the Appellant. This Tribunal in the case of NAVYUG ALLOYS PVT. LTD. VERSUS CCE C, VADODARA-II [ 2008 (8) TMI 100 - CESTAT AHEMDABAD] has held that once tax is already paid on the services, it was not open to the Department to confirm the same against the Appellant in respect of the same services, since after accepting the said tax from service recipient, Revenue did not refund the same. Extended period of Limitation - HELD THAT:- The demand is barred by limitation having been raised by invoking the longer period. The Revenue picked up the figures from the Income Tax Return maintained by the Assessee. The Income Tax Return has been held to be public documents by various decisions and it stands concluded that when the income arising from various activities stand reflected in the said public documents, it cannot be said that there was any suppression or misstatement on the part of the Assessee so as to invoke the longer period of limitation - Reference can be made to Tribunal s decision in the case of C.S.T. NEW DELHI VERSUS M/S. KAMAL LALWANI [ 2016 (12) TMI 398 - CESTAT NEW DELHI] , laying down that extended period is not invocable if services rendered are reflected in Balance Sheet and Income Tax returns and no evidence stands produced that non-payment of duty was due to any mala fide intention. The impugned order is set aside and the appeal filed by the Appellant is allowed.

  ---

• 2024 (4) TMI 1012
  Interest liability on delayed payment of tax - seeking waiver of interest since the payment of service tax was paid under the amnesty scheme - appellants have incurred expenditure towards the Import of Services such as CMMI Course Development Fee/CMMI Certified Lead appraiser per appraisal fee/CMI Institute per appraisal fee etc from CMMI Institute, USA for the services received from them - Reverse Charge Mechanism - Rejection of refund - HELD THAT:- The appellants have paid the Service Tax allegedly on being informed about the clarification issued by CBIC. So called clarification, appears but an Amnesty Scheme notified for the benefit of defaulters proposing to give immunity to those who pay Service Tax evaded along with interest. Having accepted the liability, the appellants had no choice but to pay the applicable interest. Though the appellants could have argued that when Learned Commissioner (appeals) has dropped the penalty on the grounds that there was no suppression, fraud etc, the demand could not have been confirmed invoking extended period. They are not disputing the demand of service tax. Hence, their argument that interest is not payable does not hold water. Therefore, the appellants have lost the opportunity and there is no way that they could accept the Service Tax liability but not the interest applicable thereof. The Courts and Tribunal have been consistently holding that, under Excise, Service Tax provisions, payment of interest is a corollary to the payment of tax and the liability is automatic. The appellants having paid service Tax and having not disputed the payment of the same, whether or not under the said Amnesty Scheme, cannot seek exemption from payment of interest. To this extent, the stand of the appellants is not acceptable. The appellants are liable to pay interest on Service Tax paid in a delayed manner. Rejection of refund - HELD THAT:- The appellants have paid the service tax after being pointed out by the audit - Having paid service tax and having not challenged such payment, the appellant has accepted the contention of the department. Moreover, the appellants have paid the applicable service tax on being communicated the contents of the circular issued by CBIC; as discussed above, the clarification is a sort of amnesty scheme wherein the tax defaulters were given immunity from payment of penalty in case the duty has been paid along with interest. Therefore, the admissibility of credit in such situation is subject to provision of Rule 9(1) (bb) and therefore, no argument at length, on the issue of provisions of Section 142(7) of CGST Act, 2017, are applicable to the appellant. Appeal dismissed.

  ---

• Central Excise

• 2024 (4) TMI 1011
  100% EOU - Levy of Excise Duty on wastages - shortages are to be considered as handling loss as claimed by the appellant - extension of benefit of no duty or liable to pay duty on these admitted losses/shortages - Time Limitation - HELD THAT:- From the N/N. 23/2003-CE dated 31.3.2003 and the provisions at para 6.8 of the Foreign Trade Policy clearly mentions that the DTA clearances include Scrap/waste/remnants arising out of production process or in connection therewith may be sold in DTA, as per SION notified under Duty Exemption Scheme, on payment of concessional duties as applicable, within overall ceiling of 50% of FOB value of exports. In respect of items not covered by norms, DC may fix ad-hoc norms for a period of six months and within this period, norms should be fixed by Norms Committee. Ad-hoc norms will continue till such time norms are fixed by Norms Committee. Sale of waste / scrap / remnants by units not entitled to DTA sale, or sales beyond DTA sale entitlement, shall be on payment of full duties. Scrap / waste / remnants may also be exported. In the present case, it is an admitted fact that the goods were manufactured and cleared but were found short either while loading or transportation or for various other reasons which have not been explained or have any norms in the industry that envisages such shortages/losses etc; the fact that they have approached the Development Commissioner/DGFT substantiates the Revenue s argument that there was no concept of wastages or losses allowed to the Appellant. Since it is an admitted fact that neither the Development Commissioner nor the DGFT have fixed any norms in spite of their repeated representations, the question of allowing these wastages as handling losses is not within the purview of the Department. Therefore, the appellant is liable to pay duty on these wastages/losses. The eligibility of concessional duty is available, provided the DTA clearances are within 50% of overall ceiling of the FOB value of exports. The appellant claims that their clearances are within this 50% limit and if so, they are eligible for the benefit of the concessional rate of duty. Notification No.4/2006 dated 01.03.2006 is not relevant for 100% EOU. Time Limitation - HELD THAT:- It is an admitted fact that the shortage was detected by the Department only on 25.08.2011 and the show-cause notice was issued on 29.01.2014 which is within 5 years of the date of knowledge. In fact, no return was filed explaining the shortages and it was noticed only after visiting the unit and the return was filed at a later date. The Hon ble Supreme Court in the case of THE COMMISSIONER OF CENTRAL EXCISE VERSUS M/S. MEHTA CO. [ 2011 (2) TMI 2 - SUPREME COURT ] held that A bare perusal of the records shows that the aforesaid reply was sent by the respondent on receipt of a letter issued by the Commissioner of Central Excise on 27-2-1997. If the period of limitation of five years is computed from the aforesaid date, the show cause notice having been issued on 15-5-2000, the demand made was clearly within the period of limitation as prescribed, which is five years. Based on the above the demand is within 5 years from the date of knowledge and therefore the claim of the appellant that it is time barred is unacceptable. The demand of duty upheld but the benefit of the Notification No.23/2003-CE dated 31.03.2003 extended, without extending the benefit of SAD since the appellant has not proved that VAT has been discharged on these shortages. The matter stands remanded for redetermination of duty after extending the benefit of Notification 23/2003-CE dated 31.03.2003. The appeal is allowed by way of remand.

  ---

• 2024 (4) TMI 1010
  Classification of goods - agglomerate plastic granules - classifiable under Heading 39159029 as waste, paring and scrap of plastic, or as polymers of ethylene in primary form under 39019090? - availability of concessional rate of 5% under Notification No. 21/2002-Cus., dated 01.03.2022 - HELD THAT:- The chapter heading 3915 does not apply to waste, parings and scrap of a single thermoplastic material transform into primary form and for such material the appropriate heading is 3901 to 3914. A perusal note would indicate that the terms primary form applies to lumps, powder and granules. The chemical examiners report clearly holds that the goods are single thermoplastic material and are in form of lumps, powder granules etc. The chemical examiner further holds that the goods are in primary form. In these circumstances, the attempts to sustained classification of goods under heading 3915 cannot be upheld. In terms of Notes 6 and 7 and in terms of the chemical examiner report, it is apparent that the goods are not classifiable under heading 3915 being of single thermoplastic material in primary form. If single thermoplastic material is transform into primary form from waste scrap, it would remain classifiable under heading 3901 to 3914. Thus, it is apparent from the explanatory note of HSN that the impugned goods cannot be classified under heading 3915 and have to be classified under heading 3901 to 3014 depending on the material. In the instant case, the Chemical Examiner Reports have clearly indicated that the material is polyethylene and it is in primary form. In this instant case, the goods being polyethylene are classifiable under heading 3901 - there are no merit in the impugned order and the same is set aside - appeals are allowed.

  ---

• 2024 (4) TMI 1009
  CENVAT Credit - inputs and input services used for the generation of electricity which, later on, is cleared to its sister unit situated at Urse free of cost - reversal in terms of provisions of Rule 6(3A) of Cenvat Credit Rules, 2004 with interest and penalty - HELD THAT:- In the case in hand there is no such allegation about sale of electricity in the show cause notices but authorities below have proceeded on the premise that during this period the appellant had sold the electricity to MSEDCL also. As per records, during the period in issue the electricity was supplied only to the sister unit at Urse and that too free of cost and in an identical situation this Tribunal in appellant s own case M/S. FINOLEX INDUSTRIES LTD. VERSUS COMMISSIONER OF CGST, KOLHAPUR [ 2023 (3) TMI 1478 - CESTAT MUMBAI] has held that no reversal needs to be made in respect of electricity supplied to their sister concern by the appellant. In that appeal at some point of time the electricity was also sold to MSEDCL, therefore for calculation purposes the matter was remanded back to the adjudicating authority but since in the case in hand there is no allegation of sale of electricity to MSEDCL in the show-cause notice therefore no remand is required. In yet another decision the Hon ble Rajasthan High Court, in the matter of COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX, JAIPUR VERSUS SHREE CEMENT LIMITED [ 2018 (9) TMI 822 - RAJASTHAN HIGH COURT] where the facts were almost similar, while dismissing the Appeal filed by Revenue, held that the decision of the Hon ble Supreme Court in the matter of M/S. MARUTI SUZUKI LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, DELHI-III [ 2009 (8) TMI 14 - SUPREME COURT] will not apply and the view taken by the Tribunal is just and proper that the cenvat credit of inputs and input services used in the power generated in the captive power plant and transferred to the sister concern is admissible to the assessee since the input and input services were ultimately used in the manufacture of dutiable final products either by the assessee or by their sister concern. The appellants are entitled to cenvat credit on inputs and input services used for production of electricity which is transferred to its sister unit at Urse free of cost - the impugned order is set aside - appeal allowed.

  ---

• 2024 (4) TMI 1008
  Recovery of amount of CENVAT Credit short reversed/not paid by the Noticee alongwith interest and penalty - exempt goods or not - benefit under Notification No. 12/2012-CE dated 17.03.2012 (Sr. No. 179) - assessment in case two options available - revenue neutrality - Extended period of Limitation - HELD THAT:- The amount of CENVAT credit available on the inputs and the amount which needs to be paid as duty on the final products cannot determine whether the goods are dutiable or exempted. If, duty is paid, even if it is one rupee, the goods are duty paid and it is immaterial how much, if any, CENVAT credit on inputs or input services was available. Therefore, the goods cleared by the appellant claiming the benefit of Notification No. 12/2012-CE (Sr. No. 179) are clearly exempted goods as the appellant had claimed the benefit of exemption notification and should have been considered as such while calculating the amount of CENVAT credit to be reversed under rule 6(3A) of CCR. The alternative submission of the appellant is that it can now re-assess the duty, forego the exemption notification 12/2012-CE, and claim CENVAT credit of the duty paid on its inputs - HELD THAT:- It is true, that if more than one options are available, the assessee can choose what is most beneficial to it. If it chooses wisely, it will gain and if it does not choose wisely, it will lose. In this case the appellant had made the choice while self-assessing the duty. Assessment including self-assessment is appealable before the Commissioner (Appeals) and there is nothing on record to indicate that the appellant had appealed against its assessment - the contention of the appellant cannot be accepted. In ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV [ 2019 (9) TMI 802 - SUPREME COURT] the Constitution Bench of the Supreme Court held that all assessments, including self assessment, can be assailed before the Commissioner (Appeals). There are no provision under which the assessee can retrospectively revise its own self-assessment. Revenue neutrality - HELD THAT:- The concept of revenue neutrality was only brought in through a series of judicial pronouncements for the limited purpose of determining if the assessee could have had an intention to evade to justify invoking extended period of limitation while raising the demand under section 11A. The settled legal position is that if the entire exercise is otherwise revenue neutral, the assessee could not have had any intention to evade and, therefore, extended period of limitation cannot be invoked. So far as the normal period of limitation is concerned, revenue neutrality or even revenue negativity makes no difference to the application of the provisions of the law. Extended period of limitation - HELD THAT:- It is for the department to prove that one of the elements required to invoke the extended period of limitation were present in the case. It makes no difference if the assessee is operating under self-assessment as every assessee operates by self-assessment. It must also be noted that if the excise returns require information in a particular form and once it has been provided as required, the assessee has no further responsibility - Indisputably, the entire period of demand in this case is beyond the normal period of limitation and hence the demand is time barred. The impugned order is set aside - appeal allowed.

  ---

• Indian Laws

• 2024 (4) TMI 1007
  Validity of Arbitral Award - Ordering the petitioner to repay advances for rejected testing kits with interest and legal costs - Grievance of the petitioner is that the petitioner could not reexport the testing kits as the seals of the testing kits had been tampered/broken - HELD THAT:- Scope of interference under Section 34 of the Arbitration and Conciliation Act, 1996 is very limited. This Court can neither sit as a Court of appeal or re-appreciate the evidence placed before the Arbitral Tribunal or substitute the finding of the Arbitral Tribunal with its own conclusion on facts or evidence. In this connection, the decision of the Honourable Supreme Court in PROJECT DIRECTOR, NATIONAL HIGHWAYS NO. 45 E AND 220 NATIONAL HIGHWAYS AUTHORITY OF INDIA VERSUS M. HAKEEM ANR. [ 2021 (7) TMI 1343 - SUPREME COURT ] is invited wherein, it was held that the power to set aside an Arbitral Award under Section 34 of the Arbitration And Conciliation Act, 1996 does not include the authority to modify the award. It further held that an award can be 'set aside' only on limited grounds as specified in Section 34 of the Act and it is not an appellate provision. It further held that an application under Section 34 for setting aside an award does not entail any challenge on merits to an award. The Honourable Supreme Court in Ssangyong Engineering and Construction Co Ltd versus National Highway Authority of India [ 2019 (5) TMI 1879 - SUPREME COURT] has held that an award can be set aside on the ground of patent illegality under Section 34 (2-A) of the Arbitration And Conciliation Act, 1996 only where the illegality in the award goes to the root of the matter. It further held that erroneous application of law by an Arbitral Tribunal or the re-appreciation of evidence by the Court under Section 34 (2-A) of the Arbitration and Conciliation Act, 1996 is not available - The Court held that the above ground is available only where the view taken by the Arbitral Tribunal is an impossible view while construing the contract between the parties or where the award of the Tribunal lacks any reasons. The records also indicate that the petitioner had been promised to return the balance as and when payment were received from the buyer on the export made by the petitioner. Therefore, even on this count, theory put forward before this Court that the Impugned Award suffers from patent illegality is not acceptable. Therefore, the impugned Award does not call for any interference - There is nothing on record to show that there is a patent illegality in the impugned award or to infer a conclusion that the impugned award is in conflict with the public policy of India. The impugned award indicates that the evidence was examined and there was an admission by the petitioner to refund the amount on the returned 1,48,800 test kits. The interpretation placed by the arbitral tribunal in so far as proviso to Section 16 (1) of the Sale of Goods Act, 1930, also does not call for any interference. This original petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 has to fail - Therefore, this original petition is liable to be dismissed and is accordingly dismissed.

  ---