TMI Tax Updates - e-Newsletter
April 25, 2024
Case Laws in this Newsletter:
GST
Income Tax
Customs
Insolvency & Bankruptcy
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Highlights / Catch Notes
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GST:
Detention of the goods and vehicle - stock transfer - Penalty - The petitioner argued that the detained goods were part of a stock transfer and not subject to tax. However, the appellate authority failed to consider this crucial aspect, leading to a flawed decision. Consequently, the High Court set aside the appellate authority's order and remitted the matter for fresh consideration, emphasizing the need for a thorough examination of the petitioner's objections.
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GST:
Penalty for Non-filing of monthly return - Seeking permission to file GSTR 3B Return - Seeking refund of amount illegally debited from the Electronic Cash Ledger towards interest and penalty - It was established that the petitioner initiated the tax payment within the prescribed timeline, absolving them of any responsibility for delays. The High court ruled that the petitioner's timely action discharged their obligation, and any issues arising post-payment were beyond their control. Consequently, the court directed the adjustment of the penalty and interest against future tax liabilities, without incurring any additional liability. This judgment underscores the importance of timely compliance and the need for efficient payment processing mechanisms.
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GST:
Validity of Orders passed u/s 73 - excess claim of Input Tax Credit [ITC] - Inadequate Consideration of Replies - The Court noted that the Proper Officer appeared to have not applied their mind to the petitioner's submissions, as evidenced by the superficial reasons provided for rejecting the replies. The lack of detailed examination indicated a procedural flaw in the adjudication process. Considering the deficiencies in the impugned orders, the High Court deemed it appropriate to set aside the orders and remit the matter to the Proper Officer for re-adjudication.
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GST:
Recovery of demand of service tax - CIRP Proceedings under IBC - The effect of the approved resolution plan on the liabilities of the appellant - The High court noted that the proceedings under the Insolvency and Bankruptcy Code had commenced before the issuance of the show cause notice. The appellant argued that all claims were frozen upon approval of the resolution plan, citing relevant Supreme Court precedent. - The court concluded that the points of law raised needed consideration. Thus, it decided that the appellant need not pursue alternate appellate remedies, especially when the jurisdiction of the second respondent was questioned. The writ petition admitted for hearing.
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GST:
Seeking rectification in Form GSTR-1 - limitation period - Works contract services - Input Tax Credit (“ITC”) - non-uploading of the invoices in GSTR-1 as B2B invoice - The High Court held that despite the payment of taxes by the petitioner, the procedural requirements were not met, particularly the timely correction of errors in GSTR-1 filings. The decision underscored the principle that while the tax system allows for rectification of mistakes, such allowances are bound by strict timelines to prevent abuse and ensure tax compliance.
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Income Tax:
TP Adjustment - selection of MAM [Most Appropriate Method] - The High Court upheld the Tribunal's decision, affirming TNMM as the appropriate method for benchmarking transactions. It criticized the TPO's one-to-one comparison and affirmed Assessee's use of TNMM. The High Court found fault with the TPO's reliance on the Bloomberg database without adequate clarification or consideration of Assessee's objections. It supported Assessee's contention regarding the reliability of Indian Customs data.
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Income Tax:
Deemed income u/s 56(2)(x) - Defective Show cause notice - Addition of Unexplained investment u/s 69 - charged to tax u/s 115BBE - The High Court found that the show cause notice issued to the petitioner was defective as it did not specify whether the stamp duty value was proposed to be treated under Section 56(2)(x)(a) or Section 56(2)(x)(b) of the Act. This lack of specificity deprived the petitioner of a reasonable opportunity to respond effectively. Additionally, the assessment order failed to mention Section 56(2)(x) of the Act in its operative part, indicating a deviation from the grounds stated in the show cause notice. The court emphasized that the issuance of a show cause notice is not an empty formality and serves the purpose of providing a fair opportunity to the affected party.
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Income Tax:
Obligation to pass a draft assessment order u/s 144C (1) - Petitioner asserts that even in partial remand proceedings from the Tribunal, the Assessing Officer (A.O.) is obliged to pass a draft assessment order u/s 144C - The High Court, referring to relevant precedents, holds that the A.O. is indeed obligated to pass a draft assessment order in all cases involving proposed variations in the returned income. It emphasizes that failure to comply with this procedure constitutes a jurisdictional error, rendering the impugned order void ab initio. Consequently, the High Court concludes that the impugned order lacks jurisdiction and must be quashed.
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Income Tax:
Rejection of application u/s 119(2)(b) for condoning the delay in filing the Form 10B - delay was about 1257 days - Exemption u/s 10(23C) - assessment of trust - The High Court noted that the petitioner had a history of timely compliance with filing returns and Form 10B for other assessment years. Considering this, the Court inferred that the failure to file for the relevant assessment year was likely due to human error. The Court referred to a similar case where delay due to oversight by the auditor was accepted as reasonable cause. Ultimately, the Court allowed the writ petition, quashing the order of the revenue authority and condoning the delay in filing Form 10B.
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Income Tax:
Validity of Reopening of assessment u/s 147 - reason to believe - Reply of the assessee through reproduced but the contents thereof are not even referred or analyzed prima facie - The High Court observed that the Assessing Officer had not adequately considered the evidence presented by the petitioner in response to the notice. According to Section 148A(d) of the Income Tax Act, the Assessing Officer is required to decide the validity of issuing a notice based on the material available, including the assessee's reply. However, in this case, the Assessing Officer's decision seemed to ignore the petitioner's evidence.
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Income Tax:
Reassessment proceedings against company insolvent/dissolved - The court held that any tax notices for hearing appeals related to reassessment orders issued after the approval of the resolution plan should be considered void. This is because such proceedings would lapse and could not be sustained under the IBC framework. The court reaffirmed the principle that the approval of a resolution plan under the IBC results in the extinguishment of all claims not included in the plan.
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Income Tax:
Assessment of trust - Rate of Tax - Maximum Marginal Rate (MMR) - The ld. AR of the assessee argued that the trust should be taxed based on the specific provision of section 164(2) of the Act, rather than section 164(1) as applied by the AO. The Tribunal agreed with the ld. AR's interpretation, citing similar precedents and provisions of the Income Tax Act. It directed the Assessing Officer to charge the assessee as per the provisions of Section 164(2) of the Act.
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Income Tax:
Disallowance of bonus paid to directors u/s 36(1)(ii) - assessee paid a bonus in addition to the remuneration to two of its directors - The revenue contended that bonus payment was a tax avoidance scheme. The tribunal analyzed the law and precedent, ruling in favor of the appellant, citing legitimate compensation grounds. The conversion of limited scrutiny and penalty initiation were considered premature and thus not upheld.
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Income Tax:
Addition of the suppressed gross receipts as were disclosed by the assessee company during the survey proceedings u/s. 133A - The AO initially added the entire unrecorded amount as income, but the Tribunal agreed with the Commissioner's approach that only the profit element should be taxed. This decision was based on the principle that the total sales could not be regarded as profit and was supported by various judicial precedents.
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Income Tax:
Validity of Assessment order as time barred - delay dispatching assessment order - The Tribunal, after considering the submissions and relevant precedents, concluded that the assessment order was indeed time-barred due to being dispatched after the prescribed time limit. As a result, the Tribunal set aside the assessment order. Consequently, the Tribunal did not delve into the other issues raised by the assessee.
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Income Tax:
Addition in assessment u/s 153C - Addition u/s 69 - addition on basis of loose papers on which name of the appellant was mentioned along with some other parties - The Assessee contested the addition, arguing that the documents lacked authenticity and were not maintained in the ordinary course of business. The Appellate Tribunal, after thorough review, upheld the Assessee's contention and dismissed the addition, citing lack of corroborative evidence and failure to conduct necessary enquiries. Thus, the Tribunal ruled in favor of the Assessee, allowing the appeal.
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Income Tax:
Nature of receipts - interest earned on FDs during the year was prior to commencement of business - The Appellate Tribunal referred to a previous decision involving the assessee for assessment years 2013-14 and 2014-15, wherein the ITAT Ahmedabad Bench ruled in favor of treating interest income earned on FDs before the commencement of business as capital receipts. Based on this precedent, the Tribunal upheld the decision to treat the interest income as capital receipts. It dismissed the Department's objection regarding the nexus between borrowed funds and investments, deeming it irrelevant in light of previous assessments.
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Income Tax:
Additions of income earned - Taxable Person - Land transactions facilitated by a financier but executed in another's name - Taxable in the hands of company or Individual - Protective Assessment in the Hands of Individual - Burden of proof - The tribunal determined that the economic substance of the transactions indicated that Individual acted as a mere financier or conduit rather than as a principal participant. It concluded that the income should not be assessed in the hands of Such Individual as he did not exercise control over the land or the transactions beyond merely being the named party in the documentation. - This case highlights the complexities involved in transactions where the nominal parties do not reflect the true nature of the economic interests at stake.
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Income Tax:
Addition u/s 69 r.w.s. 115BBE - Higher rate of tax treating the surrendered income as unexplained investment / income - Amount surrendered during a survey due to stock discrepancies and an excess cash amount. - The Tribunal concluded that since the income from the surrendered stock was from regular business operations, it should not be taxed under the harsher provisions of Section 115BBE. They pointed out that the Assessee's books were audited and no discrepancies other than those already declared were found. Thus, the addition made by the AO under Section 115BBE was overturned.
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Income Tax:
Rectification u/s 154 - The Assessee argued that the assessments u/s 143(1) and 143(3) merged, precluding further additions u/s 154, while the Revenue contended that they were distinct assessments. The Tribunal found that there was no merger between the assessments and upheld the validity of the rectification u/s 154. It concluded that the additions made under Section 143(1) were not revisited during the assessment u/s 143(3), necessitating rectification to correct the apparent error. The Tribunal differentiated the present case from previous precedents and dismissed the Assessee's appeal.
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Customs:
Detention Order under COFEPOSA - legal heirs of detenu - Smuggling - diesel oil of foreign origin - The High Court addressed the challenge against a detention order issued under COFEPOSA, wherein the petitioner sought to quash the order on various grounds. These grounds included the detenu's alleged lack of English proficiency, delay in execution, non-application of mind by the detaining authority, and inadequate provision of requested documents. The court examined each contention and found them to be unsubstantiated. It concluded that the detenu's endorsement in English, previous affidavit in English, and his evasion of arrest contributed to the delay in execution.
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Customs:
Levy of penalty - mis-declaration of goods - unflavoured boiled supari - reduction of the penalty under section 112 by the Commissioner (Appeals) - according to Revenue reduction was very high and unwarranted. - The Tribunal analyzed the CRCL report, emphasizing the discretionary nature of penalty imposition and the responsibility of the adjudicating authority to exercise it judiciously. Finding no substantial evidence to support the allegations and considering the respondent's reasonable classification, the Tribunal upheld the penalty reduction, affirming the decision of the Commissioner (Appeals).
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Customs:
Suspension of license of public bonded warehouse - bonded goods were stored in non-bonded tanks - appellants pleaded that the disputed goods cannot be confiscated, when subsequent permission for bonding of tanks was given by the department - The Tribunal noted that the licensee had obtained necessary permissions for the activities questioned by the adjudicating authority. These activities were carried out under the supervision of customs officials, thereby aligning with the legal requirements stipulated under the Customs Act, 1962. The Tribunal found that the imposition of penalties and redemption fines were not justified as the licensee had complied with all relevant regulations and permissions were duly granted.
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Customs:
Classification of imported goods - Navigation System - Multifunctional Devices or not -The Tribunal upheld the Order-in-Appeal No.84/2018, confirming the classification of the imported multifunctional device under Chapter Heading 8527. It rejected the appeal based on detailed evidence from the product’s catalogue and technical literature, which indicated that the device serves multiple functions typical of an infotainment system in motor vehicles. The decision also addressed the issues of misdeclaration and suppression, penalizing the appellant for not accurately declaring the product's multifunctional nature at the time of import.
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Indian Laws:
Legal implication of a promotional trailer - absence of specific content from the trailer in the movie - promotional trailer is an offer or a promise - unfair trade practice - The Supreme Court clarified that a promotional trailer is unilateral and does not constitute an offer or contract. It serves to encourage viewers to purchase tickets for the movie but does not create any binding agreement regarding the content of the film. The Court held that there was no deficiency of service as the transaction of purchasing a movie ticket was independent of the promotional trailer. The absence of specific content from the trailer in the movie did not amount to a breach of contract or deficiency in the service provided.
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Indian Laws:
Dishonour of Cheque - territorial jurisdiction - Foreign instrument - Cheque not made payable in India; and, was not drawn on a bank in India - The court noted that the cheque, though foreign, was presented for payment in Delhi, thereby invoking the jurisdiction of Indian courts per the amended Section 142 of the NI Act. The amendments allow for the court within whose local jurisdiction the cheque is presented for collection to have authority over the matter. The court concluded that Section 138 of the NI Act, despite the cheque being a foreign instrument, applied due to its presentation in Delhi. The NI Act’s provisions cater specifically to where the cheque was presented and dishonored, making the place of its origin irrelevant in this context.
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IBC:
Offences triable by Special Court - offences other than the Companies Act i.e. under the IBC Act - The Supreme Court held that the IBC is a complete code in itself and incorporates the provisions of the Companies Act concerning Special Courts by reference to the state of the law at the time of the IBC's enactment. The Court clarified that such incorporation means subsequent amendments to the Companies Act do not alter the jurisdictional framework established by the IBC for trying its offenses. This was deemed "legislation by incorporation" rather than "legislation by reference." The Court overturned the High Court's decision, reinstating the jurisdiction of the Special Courts under the Companies Act to try IBC offenses and remanding the case for consideration on its merits.
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Service Tax:
Judicial Discipline - Seeking refund of accumulated Cenvat credit - input services or not - The department had not accepted the judgement in the case of Paul Merchants and filed a Civil Appeal before the Supreme Court - The Tribunal emphasized the importance of judicial discipline, citing the Supreme Court's ruling in Union of India versus Kamlakshi Finance Corporation Ltd. The Commissioner (Appeals) was criticized for failing to adhere to judicial discipline by disregarding the Tribunal's previous decisions. It was emphasized that the Commissioner was obligated to follow the Tribunal's orders unless they were stayed or set aside by a higher court.
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Service Tax:
Works Contract Service - availment of Composition Scheme - The Tribunal set aside this demand, recognizing the appellant’s exercise of the composition scheme as valid, even if not explicitly communicated in writing, following the precedent of Mehta Plast Corporation v Commissioner of Central Excise, Jaipur. The payment under the scheme itself was considered an implicit exercise of the option.
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Central Excise:
Refund of accumulated credit - Eligibility to CENVAT credit to a manufacturer of goods having ‘nil’ tariff rate of duty - The Tribunal found that the provisions under Rule 6 of the CENVAT Credit Rules, 2004, specifically exempt goods cleared for export from restrictions on CENVAT credit usage. Therefore, the Tribunal held that the Commissioner (Appeals)'s denial of CENVAT credit was incorrect and not legally sustainable.
Articles
Notifications
Circulars / Instructions / Orders
News
Case Laws:
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GST
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2024 (4) TMI 950
Validity Of order passed by the competent authority in purported exercise of powers u/s 129 (3) - detention of the goods and vehicle - stock transfer - Penalty - Demand of applicable tax - HELD THAT:- The short contention is that the detained goods were being transported as part of a stock transfer. The goods were not being moved in pursuance to any sale or purchase. The goods were not liable to tax. The detention of the goods and imposition of tax and penalty were unlawful. According to the learned counsel for the petitioner, the aforesaid ground has not been considered by the appellate authority while rejecting the appeal of the petitioner. Thus, the ground raised by the petitioner merits consideration by the appellate authority in the first instance. Clearly, the appellate authority has failed to do so. Failure of the appellate authority to advert to the said objections of the petitioner, reflects non application of mind to germane issues and vitiates the impugned order passed by the appellate authority. The impugned order dated 28.12.2020 passed by the appellate authority is consequently set aside. The writ petition is allowed to the extent indicated above.
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2024 (4) TMI 949
Penalty for Non-filing of monthly return - Seeking permission to file GSTR 3B Return - Seeking refund of amount illegally debited from the Electronic Cash Ledger towards interest and penalty - HELD THAT:- Whatever be the true facts, this much is clear that the petitioner had initiated the payment of tax for the month of April, 2023 within time, in the manner prescribed. The amount was debited from its account, within prescribed time. To that extent, failure may never be attributed to the petitioner- in timely payment of the tax amount. The levy of late fee (Section 47) and interest (Section 50) under U.P. GST Act, 2017 may arise only in the event of failure on the part of an assessee to file a return and/ or payment of due tax within time. Insofar as the delay may be attributed exclusively to the respondent-bank after such payment was made by the petitioner within time, on that statement itself the levy of penalty remains unwarranted. What errors may have been committed by the bank/ or GSTN may not involve the petitioner. Thus, leaving it open to the GSTN and the Bank to device a better mechanism to ensure prompt credit and debit entries to arise in real time as may not create any doubts or disputes in future, the present writ petition stands disposed of as below. The amount of penalty Rs. 1,07,710.51/- and interest Rs. 100/- deposited by the petitioner under protest may be adjusted against the tax liability for the month of April, 2024 onwards without incurring any liability as to interest on that amount.
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2024 (4) TMI 948
Validity Of Order passed u/s 73 - Show Cause Notice issued proposing a demand - Penalty - excess claim Input Tax Credit [ ITC ] - No opportunity granted to file reply - HELD THAT:- Perusal of the Show Cause Notice dated 24.09.2023 shows that the Department has given separate headings i.e., under declaration of output tax; the tax on outward supplies under declared on reconciliation of data in GSTR-09; excess claim Input Tax Credit [ ITC ]; Scrutiny of ITC availed and ITC claimed from cancelled dealers, return defaulters tax non payers. To the said Show Cause Notice, a detailed reply was furnished by the petitioner giving disclosures under each of the heads. The observation in the impugned order dated 28.12.2023 is not sustainable for the reasons that the reply dated 11.10.2023 (uploaded on portal on 24.10.2023) filed by the Petitioner is a detailed reply. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is unsatisfactory, which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner. Thus, the impugned order dated 28.12.2023 cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 28.12.2023 is set aside and the matter is remitted to the Proper Officer for re-adjudication. It is clarified that this Court has neither considered nor commented upon the merits of the contentions of either party.
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2024 (4) TMI 947
Cancellation of the GST registration retrospectively - Validity Of Order passed and Show cause notice - barred by limitation - Petitioner unable to conduct business because of the owner s ill health resulting in default of filing returns and obeying notices - HELD THAT:-Pursuant to the said impugned order, Petitioner filed an application dated 02.11.2019 seeking revocation of cancellation of GST registration. On the said application, Petitioner was issued Show Cause Notice dated 24.05.2022 for rejection of application for revocation of cancellation of registration. It merely stated Any Supporting Document - Others (Please specify) - GSTIN is neither Aadhaar Authenticated nor e-KYC verified. We notice that the Show Cause Notice and the impugned order are bereft of any details. Accordingly, the same cannot be sustained. Neither the Show Cause Notice, nor the order spell out the reasons for retrospective cancellation. It is important to note that, according to the respondent, one of the consequences for cancelling a taxpayer s registration with retrospective effect is that the taxpayer s customers are denied the input tax credit availed in respect of the supplies made by the taxpayer during such period. Although, we do not consider it apposite to examine this aspect but assuming that the respondent s contention in this regard is correct, it would follow that the proper officer is also required to consider this aspect while passing any order for cancellation of GST registration with retrospective effect. Thus, a taxpayer s registration can be cancelled with retrospective effect only where such consequences are intended and are warranted. Thus, order dated 24.09.2019 cannot be sustained and is accordingly set aside. The GST registration of the petitioner is restored. Petitioner shall, however, make all necessary compliances and file the requisite returns and information inter alia in terms of Rule 23 of the Central Goods and Services Tax Rules, 2017. The petition is accordingly disposed of in the above terms.
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2024 (4) TMI 946
Validity of Orders passed u/s 73 - excess claim of Input Tax Credit [ITC] - Inadequate Consideration of Replies - Levy of penalty - No opportunity of Personal Hearing - HELD THAT:- Perusal of the Show Cause Notices dated 05.09.2023 and 29.09.2023 shows that the Department has issued both the notices on similar grounds and headings i.e., excess claim Input Tax Credit [ ITC ]; Scrutiny of ITC availed and scrutiny of ITC reversals, to the said Show Cause Notices, detailed replies were furnished by the petitioner giving disclosures under each of the heads. Pursuant to the said Show Cause Notices, Petitioner was issued reminders dated 21.12.2023 thereafter Petitioner filed replies dated 26.12.2023 to the said reminders. The observation in the impugned orders dated 31.12.2023 is not sustainable for the reasons that the replies dated 14.12.2023 and 03.10.2023 filed by the Petitioner are detailed replies 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 dated 03.10.2023 is unsatisfactory and reply dated 14.12.2023 is not supported with proper calculations/reconciliation and relevant documents, which ex-facie shows that the Proper Officer has not applied his mind to the replies 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. Thus, impugned orders dated 31.12.2023 cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, impugned orders dated 31.12.2023 are set aside and the matter is remitted to the Proper Officer for re-adjudication. Petition is disposed of in the above terms.
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2024 (4) TMI 945
Validity Of Show Cause Notice issued defective - cancellation GST registration - HELD THAT:- This Court does not interdict a Show Cause Notice and delegates the authorities to adjudicate the Show Cause Notice, however, we note that the subject Show Cause Notice itself is defective and does not give any details or particulars. The Show Cause Notice in the reasons column has merely extracted the provisions of law. It states that the petitioner has issued invoices or bills without supply of goods or services, however, no details of invoices, bills or non-supply of goods or services has been mentioned in the Show Cause Notice. In view of the fact that the Show Cause Notice is bereft of any details and suffers from infirmities that go to the root of the cause, we are not exercising the power of remit and directing the proper officer to re-adjudicate the Show Cause Notice. Thus, we quash the same. The impugned Show Cause Notice dated 12.10.2022 is accordingly set aside. Petition is disposed of in the above terms.
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2024 (4) TMI 944
Alternate appellate remedy - Validity Of order-in-original - Recovery of demand of service tax - CIRP Proceedings under IBC - The effect of the approved resolution plan on the liabilities of the appellant - HELD THAT:- In the instant case, the proceedings before the NCLT, Kolkata Bench for approval of a corporate resolution plan was initiated in the year 2018, to be precise, on 08.01.2018 and the show cause notice was said to have been issued on the erstwhile company dated 05.11.2019. The resolution plan was approved by the NCLT, Kolkata Bench on 04.09.2019 and affirmed by the NCLT, New Delhi on 04.03.2021 and a special leave petition filed against the said order before the Hon'ble Supreme Court was dismissed on 04.05.2021. Thus, it is seen that the process under the Insolvency and Bankruptcy Code, 2016 had commenced much prior to the issuance of the show cause notice. Therefore, the above points of law are required to be considered, more particularly, the law laid down by the Hon'ble Supreme Court in several decisions of which we may refer to the decisions in the case of Ruchi Soya Industries Ltd. Ors. vs. Union of India ors. [ 2022 (3) TMI 60 - SUPREME COURT ] wherein the Hon'ble Supreme Court held that the claim in respect of the demand having not lodged before the appropriate authority after public announcements were issued under Sections 13 and 15 of the I.B.C., as such, on the date on which the resolution plan was approved by the NCLT, all claims stood frozen and no claim, which is not part of the resolution plan, would survive. We are satisfied that points of law are required to be decided in the writ petition and, therefore, the appellant need not be relegated to avail the alternate appellate remedy under the Act, more so, when the jurisdiction of the second respondent has been questioned. Therefore, we are of the view that the writ petition should be heard after an affidavit-in-opposition is filed by the respondents and a decision should be taken on merits and in accordance with law. In the result, the appeal and its connected application stand allowed and the order passed in the writ petition is set aside. The writ petition is admitted for hearing. The order-in original dated 21.11.2023 impugned in the writ petition shall remain stayed till the disposal of the writ petition.
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2024 (4) TMI 943
Seeking rectification in Form GSTR-1 - limitation period - Works contract services - Input Tax Credit ( ITC ) - non-uploading of the invoices in GSTR-1 as B2B invoice - non-payment on the ground of financial distress due to COVID-19 - failed to deposit the tax liability - HELD THAT:- The primary object behind the CGST Act is levy and collection of tax on intra State supply of goods or services and the matters connected therewith or incidental thereto. However, it is understood that the CGST Act, 2017 is a complete Code and the aggrieved party may loose certain benefits by operation of the provisions thereunder. Section 39 of the CGST Act provides that every registered person other than an input service distributor or a non-resident taxable person shall for every calendar month or part thereof furnish a return of inward and outward supply of goods and service. There are other requirements/ stipulations u/s 39 which every registered person/Firm is required to comply. Sub-section (2) to Section 16 lays down the conditions for availing of the Input Tax Credit by every registered person, and one of the conditions is that the details of the invoice or debit note was furnished by supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified in Section 37. Under sub-section (1) to Section 37, the details of outward supplies of the goods and services or both affected during a tax period must be furnished on or before the tenth day of the month succeeding the tax period. Proviso to sub-section (3) provides that no rectification of error or omission in respect of the details furnished by the registered person of the outward supplies under sub-section (1) shall be allowed after the thirtieth day of November following the end of the financial year to which such details pertain. We have come to a conclusion that no relief can be granted to the petitioner-Firm. As to the prayers made in the writ petition, there shall be issues regarding limitation and implied knowledge to the petitioner-Firm. According to Mr. Ankit Kanodia, the learned Sr. counsel for the petitioner-Firm, a notification was issued under which the time for filing the return was extended up to 7th February 2020, but then, there are further periods of dispute starting from 2018-19, 2020-21 2021-2022. In M/s Mahalaxmi Infra Contract Ltd. [ 2022 (11) TMI 323 - JHARKHAND HIGH COURT] , the mistake in the entries pertained to just one Tax Invoice and there was no dispute on facts. M/s Mahalaxmi Infra Contract Ltd. had made the entry in respect to the Tax Invoice dated 17th January 2019 in the GSTR-1 against the GSTIN of another entity which was not the recipient of the supply. Therefore, the GSTR-2A return of the said entity reflected the same but it did not avail the Input Tax Credit for that entry. However, the ECL which was the recipient of the supply against tax invoice dated 17th January 2019 availed the Input Tax Credit for such transaction but reversed the entry on realizing the mistake. This was the background in which the writ Court permitted M/s Mahalaxmi Infra Contract Ltd. rectification in the return filed by it. Whereas, in the present case, even payment of the entire liability was not made by the petitioner-Firm. Mr. Ankit Kanodia, the learned Sr. counsel for the petitioner-Firm has made a statement in the Court that now the entire liability has since been paid, by the petitioner-Firm. May be that is the correct factual aspect but for that reason the powers under Article 226 of the Constitution of India cannot be exercised ignoring the statutory regime under the CGST. The writ Court while exercising its jurisdiction and powers under Article 226 of the Constitution of India shall remain alive to the considerations whether the relief sought is barred by any law or the relief if granted shall be in the public interest. The writ Court shall also remain conscious that it has to adjudicate the prayer made in the main petition and should not travel beyond that merely because some statement of fact has been made or brought on record by filing supplementary affidavit. As we glance through the writ pleadings, the petitioner-Firm did not provide correct and sufficient information s, and this is not correct to say that the petitioner-Firm could know about the mistake sometime in 2022. Thus, we are not inclined to entertain this writ petition which is, accordingly, dismissed.
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Income Tax
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2024 (4) TMI 942
TP Adjustment - selection of MAM [Most Appropriate Method] - Assessee had adopted Resale Price Method ( RPM ) for import of coal and Transactional Net Margin Method ( TNMM ) for import of pulses from its Associate Enterprise ( AE ) for determining Arms Length Price ( ALP ) - Assessee had also exported rice to its AE and followed TNMM to ascertain ALP - ITAT has held that choice of method is not an unfettered choice of the taxpayer, but has to be exercised on touchstone of principles governing Most Appropriate Method ( MAM ) as prescribed u/s 92C(1) of the Act and the TPO has overriding power of course correction as per Section 92C(3) of the Act. HELD THAT:- Whenever both methods, i.e., CUP as well as TNMM can be applied, the traditional transaction methods are to be preferred over traditional profit methods. He thereafter proceeded to apply the CUP method and conducted a search on the Bloomberg database to find the sale price of rice. Without ascertaining or explaining in detail whether the rates were for products exported from India or from any other country or specifying whether the rates relate to controlled or uncontrolled transactions or whether it relates to retail or wholesale market, the TPO simply proceeded on the basis of Bloomberg database. In fact Assessee had even provided the rates accepted by the Indian Custom s Department for export of rice and requested that the same be considered for CUP analysis as the same would be more reliable. Assessee also submitted that it realized more price on exports than the rates quoted by the Custom Authorities. The TPO without explaining as to why he wanted CUP method to be followed and not the TNMM followed by us as Assessee and without clarifying whether the rates applied were for products exported from India or any other country or whether it related to controlled or uncontrolled transactions or retail or wholesale or as to why the Custom s rates are not acceptable, proceeded to fix the ALP purely relying on the Bloomberg database that was available with them. DRP also did not accept Assessee s objections in its entirety. The ITAT accepted that these were the mistakes in the order of TPO, inasmuch as the TPO without realizing the factual aspects, simply rejected the method adopted by Assessee. It is also recorded that Assessee s contentions that Bloomberg database was not reliable or that Assessee s export price was more than the Indian Custom s quoted rate and accordingly, exports are at ALP even under CUP method has not been controverted by the Departmental Representative. No reason to find fault with the conclusion arrived at by the ITAT. No substantial questions of law, therefore, arise. Appeal dismissed. ITAT justification in stating that CUP is most appropriate method for bench-marking the transaction of import of minerals - HELD THAT:- ITAT accepted the contentions of Assessee that it had compared its import rates of coal imported from a country against the indices published by the agencies of the same country. ITAT also accepted that the rates are generally declared for a particular quality available in that country and the same quality should have been imported by Assessee and hence, it cannot be presumed that the price quoted does not take into account ash moisture content. The ITAT also rejected the reasons given by the TPO that Assessee has made arbitrary adjustment to the prices quoted by the indices with the intention to bring the same to the tolerance level of +/- 5%. It accepted the scientific calculation given by Assessee to arrive at the prices. The ITAT has arrived at its conclusion on factual basis with valid reasons. No substantial questions of law arise.
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2024 (4) TMI 941
Deemed income u/s 56(2)(x) - Defective Show cause notice - Addition of Unexplained investment u/s 69 - charged to tax u/s 115BBE - stamp duty value of the said flat unexplained - case was selected for scrutiny under CASS to examine Capital Gains Deduction Claimed - SCN issued why the stamp duty value of the said flat should not be treated as deemed income of petitioner u/s 56(2)(x) and deduction u/s 54F of the Act be denied - order passed in which Respondent No. 3 proposed to treat the entire stamp duty value of the said flat as unexplained investment u/s 69 and charged to tax u/s 115BBE of the Act. As submitted Development agreement was executed by and between the owner of the building owners of the building agreed to grant development rights in respect of the building and agreed to permit the developer to develop the property on terms and conditions mentioned therein, wherein the developer was required to provide permanent alternate accommodation to the tenants/occupants and as mandated by Maharashtra Housing and Area Development Authority (MHADA), the developer entered into permanent alternate accommodation agreement with the tenants/occupants. HELD THAT:- Admittedly, no notice has been issued to assessee/petitioner calling upon assessee to show cause whether the entire stamp duty value be treated as unexplained investment under Section 69 of the Act. In the affidavit in reply, the answer given to this allegation of petitioner that no notice was given to show cause under Section 69 of the Act is that the assessment was getting barred by limitation and there was no time for further show cause notice and hence the Faceless Assessing Officer (FAO) has passed the assessment order after considering all the submissions and possible aspect of the case and agreement value of the new purchased property is treated as unexplained investment under Section 69 of the Act and added to the total income of assessee. In the assessment order though there is reference to Section 56(2) (x) of the Act and the reply/objections filed by petitioner in response to the show cause notice, in the operative part there is no reference to Section 56(2)(x) of the Act. The courts have time and again held that issuance of show cause notice is not an empty formality. Its purpose is to give reasonable opportunity to the affected persons to effectively deal with the allegations in the show cause notice. In our view, even the show cause notice dated 23rd August 2022 is defective in as much as even though it had reference to Section 56(2)(x) of the Act, it did not mention whether the AO proposed to treat the stamp duty value as deemed income of assessee under clause (a) or clause (b) of Section 56(2)(x) of the Act. This is because both are separate provisions and under either of these two clauses the stamp duty value could be treated as deemed income. By not specifying whether Section 56(2)(x)(a) or Section 56(2)(x)(b) of the Act was applicable, the A.O. first of all has not given reasonable opportunity of showing cause to the assessee. Assessee would be totally unaware of the grounds which had prompted the A.O. to arrive at a prima facie conclusion and issue show cause notice. The power that the A.O. had was required to be executed properly. Moreover in the assessment order that is impugned in the petition, the A.O. has chosen to give Section 56(2)(x), a go by and treat the stamp duty value of the flat as from unexplained source under Section 69 of the Act. There is no reference to Section 56(2)(x) of the Act in the operative part of the order. Thus the impugned order cannot be sustained. The allegations in the affidavit in reply that assessee has claimed tenancy rights as colourable device in order to get an exemption under the provisions of the Act and evade the tax liability also cannot be accepted because if the A.O. had evidence to that effect the same should have been stated in the show cause notice.
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2024 (4) TMI 940
Obligation to pass a draft assessment order u/s 144C (1) - whether on remand the A.O. was obliged to pass a draft assessment order u/s 144C (1)? - HELD THAT:- The Division Bench of this court in Dimension Data Asia Pacific PTE Ltd. [ 2018 (7) TMI 1256 - BOMBAY HIGH COURT] has considered this issue. The court held that even in partial remand proceedings from the Tribunal, the A.O. is obliged to pass a draft assessment order u/s 144C (1) of the Act. In our view this is a clear case of jurisdictional error. The assessment order passed by the A.O., i.e., impugned in this petition is vitiated on account of lack of jurisdiction and requires to be quashed and set aside as void ab initio.
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2024 (4) TMI 939
Rejection of application u/s 119(2)(b) for condoning the delay in filing the Form 10B - delay was about 1257 days - assessment of trust - Petitioner/trust explained the cause for delay on the Chartered Accountant/Auditor - According to Petitioner, when it sent Form No. 10B to the Department for submission after filing the return, the Departmental staff refused to acknowledge the manual submission and Petitioner was told to file the same online - HELD THAT:- Admittedly, Petitioner is a charitable trust. Admittedly, Petitioner has been filing its returns and Form 10B for AY 2015-16, for AY 2017-18 to AY 2021-22 within the due dates. On this ground alone, in our view, delay condonation application should have been allowed because the failure to file returns for AY 2016-17 could be only due to human error. Even in the impugned order, there is no allegation of mala fide. As held in Sarvodaya Charitable Trust [ 2021 (1) TMI 214 - GUJARAT HIGH COURT] the approach in the cases of the present type should be equitious, balancing and judicious. Technically, strictly and liberally speaking, Respondent No. 1 might be justified in denying the exemption by rejecting such condonation application, but an assessee, a public charitable trust with almost over thirty years, which otherwise satisfies the condition for availing such exemption, should not be denied the same merely on the bar of limitation especially when the legislature has conferred wide discretionary powers to condone such delay on the authorities concerned. Moreover, in our opinion, Petitioner does not appear to have been lethargic or lacking in bona fides in making the claim beyond the period of limitation which should have a relevance to the desirability and expedience for exercising such power. We are conscious that such routine exercise of powers would neither be expedient nor desirable, since the entire machinery of tax calculation, processing of assessment and further recoveries or refunds, would get thrown out of gear, if such powers are routinely exercised without considering its desirability and expedience to do so to avoid genuine hardship. Thus delay was not intentional or deliberate. Petitioner cannot be prejudiced on account of an ignorance or error committed by professional engaged by Petitioner. In our view, Respondent No. 1 ought to have exercised the powers conferred. Thus we quash and set aside the impugned order passed under Section 119(2)(b) of the Act dated 25/10/2023 and condone the delay in filing form 10B.
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2024 (4) TMI 938
Validity of Reopening of assessment u/s 147 - reason to believe - Reply of the assessee through reproduced but the contents thereof are not even referred or analyzed prima facie - whether it is a fit case to issue notice u/s 148 of the Act or not - HELD THAT:- AO has reproduced the reply filed by the assessee and the contents thereof are not even referred or analyzed prima facie to come to the conclusion that it is a fit case to reopen the assessment. Petitioner along with the reply has reproduced the following documentary evidence of purchase, delivery and payment to show the genuineness of the transactions entered into with M/s. S. K. Enterprises. This Court, by order [ 2024 (4) TMI 891 - GUJARAT HIGH COURT] has directed the Respondent to place on record the original papers containing the documents which are supplied by the petitioner in reply to the notice u/s 148A(d) of the Act. Respondent as stated that the documents have been placed on record by the petitioner, as referred hereinabove. Thus we are of the opinion that the impugned order and the notice are required to be quashed and set aside remanding the matter back to the Assessing Officer to pass a fresh order under Section 148A(d) of the Act within a period of four weeks from the date of receipt of the copy.
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2024 (4) TMI 937
Reassessment proceedings against company insolvent/dissolved - whether the demand raised pursuant to the assessment order passed after the resolution plan approved by the NCLT on 1st July, 2022 would extinguish or not? - HELD THAT:- The Hon ble Apex Court in case of Ghanshyam Mishra Sons (P) Ltd [ 2021 (4) TMI 613 - SUPREME COURT ] has held that once a resolution plan is duly approved by the adjudicating authority under sub-section (1) of section 31 of IBC, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors [including the Central Government, any State Government or any local authority, guarantors and other stake holders. On the date of approval of the resolution plan by the adjudicating authority all such claims which are not part of the resolution plan shall stand extinguished and no person is entitled to initiate or continue any proceeding in respect to a claim which is not part of the resolution plan. In view of the above conclusion arrived at by the Apex Court after considering the entire Scheme of the IBC, the demand which was raised pursuant to the order by issuing the demand notice cannot be said to be in respect to a claim which is part of the resolution plan. The proceedings which were continued under section 147 r.w.s. 144 by the respondent, was also not a proceeding in respect to a claim which is not part of the resolution plan. In such circumstances, the notices issued by the CIT (A) and reference for the hearing of the appeals filed by the petitioner challenging the assessment order would extinguish on 01.07.2022 as no demand would remain in existence in absence of any claim raised before the RP by the respondent authority - so far as the framing of the reassessment pertaining to the Assessment Year 2018-19 in absence of any demand pending as on 01.07.2022 and as such demand raised subsequently would not be a part of the claim to be made before the RP. As no demand to be claimed was in existence when the NLCT passed the order on 01.07.2022 and therefore, the demand which has arisen pursuant to the assessment order dated 13.03.2022 cannot be said to have been extinguished. Therefore, so far as notices issued by the CIT (Appeals) are accordingly quashed and set aside.
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2024 (4) TMI 936
Delay in filling of an appeal before ITAT - delay of eight years, eighty-eight days - HELD THAT:- Assessee does not have sufficient reason for such a huge delay of eight years eighty-eight days. In this case, assessee failed to file Return of Income for A.Y. 2015-16, therefore, Department issued notice u/s 148 on 30.03.2022. One of the issues in the re-assessment proceedings was non-availability of registration under section 12AA of the Act. Assessee in the affidavit had admitted that at that point of time, assessee realized about rejection of 12AA application in 2014. Even after that assessee had filed appeal before this Tribunal on 09.03.2023 i.e. after a gap of one year. Thus, even after realizing the fact, assessee delayed filing of appeal by one year. The procedure for registration u/s 12AA was amended by Finance Act, 2020. Accordingly, assessee had applied for provisional registration and it was granted to assessee on 24.09.2021 for A.Y. 2022-23 to A.Y. 2024-25. Thus, even at the time of applying for provisional registration under the amended scheme, assessee failed to realize that assessee s application for registration under 12AA was rejected on 11.11.2014. Chronology of these events explain that assessee was callous and not serious towards the registration. As assessee s application for condonation of delay is rejected. Accordingly, appeal is dismissed on the ground of delay.
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2024 (4) TMI 935
Exemption u/s 80P(2)(a)(i) or u/s 80P(2)(d) - appellant is a cooperative society engaged in the business of providing credit facilities - HELD THAT:- It is an admitted fact that the appellant is a cooperative society engaged in the business of providing credit facilities. It does not enjoy any license to carry on the business of banking from Reserve Bank of India. Therefore, as held in the case of PCIT vs. Annasaheb Patil Mathadi Kamgar Sahakari Pathpedi Ltd. [ 2023 (5) TMI 372 - SC ORDER] that the assessee is eligible for deduction u/s 80P(2)(a)(i) of the Act. Reliance in this regard can also be placed on the decision of Quepem Urban Co-operative Credit Society Ltd [ 2021 (5) TMI 406 - BOMBAY HIGH COURT] . Allowability of exemption under the provisions of section 80P(2)(a)(i) in respect of interest income earned by a cooperative society from the scheduled banks - The Coordinate Bench of Pune Benches in the case of M/s. Ratnatray Gramin Bigar Sheti Sah. Pat Sanstha Maryadit [ 2018 (12) TMI 1926 - ITAT PUNE ] taken view in favour of the assessee following the judgment of Hon ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. [ 2015 (2) TMI 995 - KARNATAKA HIGH COURT ] The interest income earned on fixed deposits with cooperative bank/scheduled bank partakes character of the business income, which is eligible for deduction u/s 80P(2)(a)(i) of the Act. Therefore, direct the Assessing Officer to allow the exemption u/s. 80P(2)(a)(i) of the Act. Thus, the grounds of appeal filed by the assessee stand allowed.
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2024 (4) TMI 934
Penalty u/s 271(1)(c) - CIT(A) deleted addition made u/s 69C based on the Remand Report filed by the AO - as argued quantum proceedings were subjudiced and it was requested by the appellant to keep the penalty proceedings in abeyance till the disposal of quantum appeal - HELD THAT:- The present appeal is against penalty order under section 271(1)(c) of the Act levied on the basis addition made u/s 69C of the Act for A.Y. 2010-11 and A.Y. 2012-13. Since the ld.CIT(A) has deleted the addition under section 69C of the Act, the penalty does not have any limbs to stand. In these facts and circumstances of the case, we direct the AO to delete the penalty levied under section 271(1)(c) of the Act. Accordingly, grounds of appeal filed by the assessee are allowed.
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2024 (4) TMI 933
Assessment of trust - Rate of Tax - Maximum Marginal Rate (MMR) - Charging the assessee as per the provisions of section 164(1) or 164(2) - rate as applicable to Individual and AOP - issue raised by the assessee that the trust has not issued any exemption u/s 12A of the Act. Though the assessee s income can be charged to tax at maximum marginal rate or as per the normal provisions of the Income Tax Act Assessee argued that beneficiary are the general public so there is no share of beneficiaries whether known or unknown as the assessee is trust so charging the assessee as per the provisions of section 164(1) as held by the CIT(A) is incorrect and the relevant facts has not been appreciated - HELD THAT:- On going through the trust deed it is apparent that there is no share of beneficiary whether no one or unknown as the assessee trust is so charging the assessee as per provisions of Section 164(1) is incorrect and the relevant provisions of section 164(2) of the Act which is specific charging of section for a trust. Thus, when the specific provisions of charging tax, the general provisions cannot be made applicable in this case. The ld. AR of the assessee also submitted that similar issue has been dealt with by the Revenue for assessment years 2015-16, 2016-17 2018-19 as per provisions of Section 164(2) of the Act. As decided in SHRI DIGAMBAR JAIN MANDIR TRUST CHARANWAS VERSUS AO, MAKRANA, ITO, WARD-1, MAKRANA [ 2024 (4) TMI 661 - ITAT JODHPUR] assessee trust shall be charged to tax u/s. 164(2) at the rate as applicable to Individual and AOP - decision of the ld. CIT(A) to charge the assessee u/s. 164(1) is not correct it should be charged based on the specific provision of the Act u/s. 164(2) of the Act and the tax rate as applicable to that 164(2) will apply to the rate of the AOP/Individual and the initial exemption is also available to such assessee. Thus we direct the ld. Assessing Officer to charge the assessee as per provisions of Section 164(2). Appeal of the assessee is allowed.
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2024 (4) TMI 932
Addition u/s 69A - amount received in cash from persons for online fund transfer through novapay online portal and deposited in Bank - as per AO assessee has not produced / furnished the details showing from whom cash was collected and for which purpose - HELD THAT:- As during the two months of demonetization only the assessee carried both types of work viz. deposit of utility bills and Hotel and Ticket bookings. The assessee had executed an Agreement with Novapay which is a portal for money transfer mainly. The assessee was working for this portal earlier also, but the quantum of commission was very low as is evident from the entries appearing in form 26AS. It is apparent from TDS made by above named Novapay that during the months of December 2016 to March 2017 the quantum of commission has recorded growth as compared to commissions in the months of April, 16 to November, 2016. The bank statements of the assessee evidences that the amount deposited by the assessee in the bank accounts during these two months of demonetization was transferred to other accounts as is apparent from the transactions appearing therein. Thus, when the assessee has is not directly benefit for cash deposit by making any personal investment but has transferred the money for services he rendered to the party whose service are availed and the commission arising out of that activity was already taxed in the hands of the assessee. The bench also noted that the activities of the assessee are genuine based on the fact that during the period of two months of demonetization the assessee had deposited only Rs. 27,500 as SBN out of total deposit of more than 56 Lacs and there is no allegation against the assessee that the assessee had deposited amount in SBN. Based on the discussion so recorded and evidences in the form of form no. 26AS bank statement and TDS deducted on commission the cash deposited by the assessee cannot be taxed u/s. 69A of the Act. Appeal of the assessee is allowed.
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2024 (4) TMI 931
Disallowance of bonus paid to directors u/s 36(1)(ii) - assessee paid a bonus in addition to the remuneration to two of its directors - it is the plea of the assessee that both the directors are promoter directors of the company having a diploma in electronic engineering with 35 years of experience in the IT Industry and that both the directors are actively involved in the day-to-day affairs of the company and a bonus of Rs. 96 lakh each was paid for the services rendered by them and also because during the year under consideration, total turnover and sales turnover increased by 44% and 55%, respectively, as compared to the preceding year HELD THAT:- As directors had declared a salary of Rs. 60 lakh and a bonus of Rs. 35 lakh received by them. Thus, it is not a case wherein the bonus was received by the directors only in one year. Accordingly, we are of the considered view that the decision of the Special Bench of the Tribunal in Dalal Broacha Stock Broking (P.) Ltd.[ 2011 (6) TMI 251 - ITAT, MUMBAI] has been rendered in its own set of facts, which are completely different from the facts of the present case. Further from the financial statement of the assessee, we find that the turnover from the sale of products increased from Rs. 39.77 crore in the assessment year 2014-15 to Rs. 61.61 crore in the assessment year 2015-16. The aforesaid facts also distinguish the present case from the facts in Dalal Broacha Stock Broking (P.) Ltd. (supra), as in that case, it was noted by the Special Bench that the steady rise in performance was due to improved market conditions as the taxpayer was a stockbroker who was getting commission on sale/purchase of shares by the investor/traders. However, in the line of business of the assessee, wherein it is engaged in dealing in computers, networking solutions, and providing maintenance and facility management services, it cannot be denied that without the dedicated efforts turnover from sales and services cannot increase. Thus, aforesaid factors also support the case of the assessee that the bonus was a reward for the work of the promoter directors, who were actively involved in the day-to-day affairs of the company, in addition to the salary paid to them. Accordingly, in view of the aforesaid facts and circumstances, we are of the considered view that the assessee is entitled to claim deduction u/s 36(1)(ii) of the Act in respect of payment of bonus to its directors. Therefore, the impugned disallowance u/s 36(1)(ii) of the Act is deleted. As a result, ground no.1 raised in assessee s appeal is allowed.
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2024 (4) TMI 930
Revision u/s 263 - Order of AO is erroneous in so far as prejudicial to the interest of revenue - Addition u/s 68 as receipt of cash from depositors unexplained - lack of enquiry on the part of AO - HELD THAT:- It is settled position of law that while framing an assessment, the AO has dual role, i.e., he is an investigator and also an adjudicator of the matter. If the AO failed to carry out the investigation, vis-a-vis, the facts of the case, then such is a case of lack of enquiry and the order of the AO can be termed as erroneous. While acting as an adjudicator, if the AO took some view which is contrary to law or the AO failed to consider the provisions of law of income tax, then also such an order is erroneous. If the assessment proceedings are erroneously conducted and the revenue is suffering loss then such an order falls under the ambit of the provisions of section 263. Similarly, if the AO failed to consider the provisions of Income-tax or formed a view which is contrary to law, then such an order also falls under the ambit of section 263. When we analyse the facts of the present case in the light of above principles of law, then we are of the firm view that it is a case where the order of AO is erroneous in so far as prejudicial to the interest of revenue. In the present case, certain facts are very strange such as the assessee does not even know the name and contact details of the persons who have deposited cash in his saving bank account. The assessee has also denied about the details of goods purchased for customers and sent to customers. Assessee has shown his inability to provide the details such as invoices of goods, transport bilties etc. Therefore, it is a clear cut case of lack of enquiry. There was complete inaction on the part of the AO and hence, the order of assessment is erroneous in so far as prejudicial to the interest of revenue. In this era of digitalization, where even a vegetable vender is using digital mode of payment, huge cash transaction creates doubt in the mind of a person of common prudence. However, a suspicion, howsoever, is strong, cannot partake the character of evidence and hence, solely on the basis of suspicion, an action cannot be justified. But in the circumstances of the present case, the AO has failed to conduct any enquiry to dislodge the suspicious cash transactions. AO is duty bound to carry out proper investigation of facts and then to form a plausible view on such facts. Moreover, the assessee would get full opportunity in set aside assessment proceedings to justify the receipt of cash from depositors in the light of provisions of section 68. So far as the contention of the assessee that for the assessment year 2014-15, the assessee was also assessed u/s. 143(3) and no revision has been made in that case by the Revenue, though the modus operandi of the assessee in that year was the same, is concerned, this contention of the assessee is of no relevance because it is settled position of law that principle of res judicata is not applicable to the Income-tax proceedings and each year is a separate year. Hon ble Supreme Court in the case of Distributors (Baroda) Pvt. Ltd. [ 1985 (7) TMI 1 - SUPREME COURT] has held that to perpetuate an error is not heroism. We are of the firm view that it is a case of lack of enquiry on the part of the AO and hence, PCIT has correctly exercised his jurisdiction u/s. 263 of the Act. Decided against assessee.
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2024 (4) TMI 929
Exemption u/s 11 - Charitable activity u/s 2(15) - denial of claim as activities of the assessee involve rendering of services in relation to carrying on of a trade, commerce or business - as submitted assessee is engaged in activities for upliftment of the poor, providing training and skill development of the poor in the rural areas, in the backward districts of the State like Bihar, Jharkhand, Orissa, Madhya Pradesh, Chhattisgarh and West Bengal etc. The assessee gets grants from Central and State Government and also donation from the various organizations like, GATES Foundation etc. HELD THAT:- As decided in own case [ 2021 (9) TMI 1094 - ITAT DELHI] assessee is apparently not involved in any trade, commerce or business and as such the proviso to section 2(15) is not applicable. Exemption under section 11(1) is allowed to the assessee. Accordingly, the Assessing Officer is directed to allow exemption under section 11, with all the consequential benefits. Ground of the appeal are allowed.
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2024 (4) TMI 928
Validity of Revision u/s 263 - AO accepted the reply of the assessee on three items/issues whereas only two items/issues were added to the income of the assessee as mentioned in para 2(i) and 2(v) of the revisionary order - HELD THAT:- We note that during the assessment proceedings, the AO has specifically called for information after issuing notice u/s 142(1) of the Act dated 30.06.2016 and assessee specifically replied the issues raised and offered its explanation as to why these items did not warrant disallowance or addition which was accepted by the AO. In our opinion, the AO has taken a plausible view which also appears to be correct and therefore the ld. PCIT cannot invoke jurisdiction u/s 263 of the Act to substitute his view for that of the AO. The case of the assessee finds support from the decision of Gabreal India Ltd. [ 1993 (4) TMI 55 - BOMBAY HIGH COURT] PCIT has simply exercised jurisdiction by giving directions to the AO without pointing out as to how the view taken by the AO was wrong thereby rendering the assessment passed him his as erroneous and prejudicial to the interest of the revenue. The case of assessee finds support from the decision of D. G. Housing [ 2012 (3) TMI 227 - DELHI HIGH COURT] wherein has held that it is incumbent upon the PCIT to record an objective findings as to how the issues raised in the revisionary proceedings has rendered the assessment as erroneous. Appeal of the assessee is allowed.
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2024 (4) TMI 927
Addition u/s. 68 - cash deposits in the bank account of the lenders which was the immediate source of credit for the lender - unsecured loan received during the year from lender firm - lender firm which had advanced loan to the assessee is not a Non-Banking Finance Company (NBFC) and is engaged in the business of trading of pulses, while the assessee is a trader in cotton cloth. HELD THAT:- The primary undisputed facts are that assessee had to invest a sum towards share capital in a company proposed to be set up at Nagpur to produce Denim cloth, in the capacity of the promoter of the company. For that purpose, the assessee obtained financial support from lender firm [M/s Banwari Lal Naresh Kumar], with whom the assessee has close relationship for over 40 years. The proposed investment in the company was a step in forward integration of the business interests of the assessee. With regard to cash deposits made in the bank account of the lender firm, it is pertinent to note that partner of the lender firm was examined by the ld. AO u/s. 131(1A) who duly explained the sources of cash deposits made in the bank account of his partnership firm and confirmed the fact of advancing loan to the assessee. Since the statement was recorded on 28.12.2018 i.e. during the fag end of the proceedings, partner sought to answer all the questions that were posed by the ld. AO to him and also sought time for replying to certain questions to produce further evidence to support his statement. Since no details were called for in the summons issued u/s. 131(1A) of the Act by the ld. AO , partner of lender firm had admittedly not carried any material with him while giving the deposition before the ld. AO. So he had to sought time obviously to furnish further evidences in support of his statement. We find that the ld. AO had merely overlooked all the relevant materials submitted by the assessee which also stood confirmed by the lender in the statement u/s. 131(1A) of the Act and proceeded to treat the loan received as unexplained cash credit u/s. 68 of the Act and disallowed consequential interest thereon. Once the cash deposits made in the bank account of the lender firm had been accepted as coming from explained sources by the revenue under scrutiny assessment of the lender, the revenue cannot take a divergent stand in the case of the assessee that those cash deposits had emanated out of undisclosed sources of the assessee which had been deposited in the lender s bank account and monies received by assessee in the form of unsecured loan. We find that Shri Naresh Goel in his statement u/s. 131(1A) of the Act had categorically explained the modus operandi of the business of the lender firm and had duly replied that the firm generates cash on a daily basis out of its sales. Hence the said cash sales were deposited by the lender firm in its bank account in cash. That s why no additions were made in the hands of the firm by the ACIT, Circle 47(1), Delhi. Even though the case of the assessee was selected only for Limited Scrutiny in the hands of the lender, still if the Assessing Officer had found anything alarming, he could have converted the Limited Scrutiny into Complete Scrutiny by seeking permission from the competent authority in the manner known to law. This was admittedly not done in the case of the lender, which goes to prove that the ACIT, Circle 47(1), Delhi did not find anything alarming with regard to cash deposits made in the bank account of the lender firm and did not doubt about its sources. The scrutiny assessment proceedings of the lender firm for the very same assessment year itself explains the creditworthiness of the lender and genuineness of the loan transaction with the assessee. Hence we have no hesitation to hold that assessee had duly proved the three necessary ingredients of section 68 of the Act in respect of unsecured loan received during the year from Banwari Lal Naresh Kumar (lender firm). Consequentially the interest paid thereon would also be allowable as deduction u/s. 36(1)(iii) of the Act as it is not the case of the revenue that the borrowed funds were not used by the assessee for business purposes. Accordingly, the grounds raised by the assessee are allowed.
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2024 (4) TMI 926
Addition of the suppressed gross receipts as were disclosed by the assessee company during the survey proceedings u/s. 133A - discrepancy noticed w.r.t. undisclosed income found duly admitted under oath during the survey as against corresponding disclosure in the return - Suppression of gross receipts - whether it is the profit element of the aforesaid unaccounted cash receipts that was liable to be credited in the profit and loss account (as offered by the assessee company); or it was the entire amount of the unaccounted receipts which that was to be credited to the profit and loss account while computing the income of the assessee company, as had been so done by the A.O? HELD THAT:- Adverse inferences drawn by the A.O as regards crediting of the profit element embedded in the unaccounted banquet booking receipts of Rs. 3.39 crore (approx.) in the profit and loss account of the assessee company, had rightly been dealt with and vacated by the first appellate authority. To sum up, the view taken by the A.O that the expenses corresponding to the unaccounted receipts of Rs. 5.18 crore (approx.) already formed part of the expenses claimed by the assessee company in its books of accounts had rightly been found to be incorrect and dislodged by the first appellate authority. We concur with the CIT(Appeals) that now when the assessee company had credited the profit element embedded in the unaccounted banquet booking receipts in its profit and loss account for the immediately succeeding year, i.e., A.Y 2018-19, which thereafter had been accepted by the A.O vide his order passed u/s 143(3) for the said succeeding year, therefore, an inconsistent approach could not have been adopted for rejecting the claim raised by the assessee company on the same lines during the subject year, i.e., A.Y. 2017-18. Once the A.O while scrutinizing the case of the assessee company for the immediately succeeding year, i.e. A.Y. 2018-19 had approved the credit of the profit element embedded in the unaccounted banquet booking receipts of Rs. 99.21 lacs (supra) in the profit and loss account by the assessee company, therefore, it is incomprehensible that by adopting an inconsistent approach a similar offer of the profit element by the assessee company pertaining to its unaccounted banquet booking receipts for the year under consideration was not be accepted. It is not the claim of the department that the facts and circumstances leading to credit of the profit element of the unaccounted banquet booking receipts by the assessee company in its profit loss account for A.Y 2018-19 was distinguishable as against those for the subject year, i.e., A.Y 2017-18. Our aforesaid view that the department cannot be allowed to adopt an inconsistent approach based on the same set of facts is supported by the judgment of the Hon'ble Supreme Court in the case of Radhasoami Satsang [ 1991 (11) TMI 2 - SUPREME COURT] We concur with the CIT(Appeals) that there was no justification for the A.O to have held the entire amount of unaccounted banquet booking receipts as the income of the assessee company, as it was only the profit element attributable to the said receipts which was rightly credited by the assessee company in its profit loss account for the subject year. Our aforesaid view is fortified by the judgments of President Industries [ 1999 (4) TMI 8 - GUJARAT HIGH COURT] and DCIT Vs. Panna Corporation [ 2014 (11) TMI 797 - GUJARAT HIGH COURT] . Also, a similar view had been taken in the case of CIT Vs. Balchand Ajit Kumar [ 2003 (4) TMI 76 - MADHYA PRADESH HIGH COURT] . Accordingly, finding no infirmity in the well-reasoned order of the CIT(Appeals), we herein approve the same to the extent he had vacated the addition. Decided in favour of assessee. Disallowance of 10% of expenditure, on ad-hoc basis - HELD THAT:- AO while working out the aforesaid disallowance of the assessee s claim for expenses (on an ad-hoc basis), had neither pointed out any infirmity in the assessee's claim for deduction of the aforesaid expenses; nor brought on record any such observation which would reveal that its claim for deduction of expenses was not as per the mandate of Section 37 - As observed by the CIT(Appeals), the expenditure incurred by the assessee company during the year under consideration was found to be in the same ratio as those incurred in the immediately preceding year. As observed by the CIT(Appeals), and rightly so, the comparative decline in the assessee s claim of expenditure vis- -vis its total receipts in the immediately succeeding year, i.e., A.Y. 2018-19 was for justifiable reasons. Also, the reasonableness of the assessee's claim for deduction of expenses can safely be gathered from a comparative analysis of those booked by him in the immediately last two preceding years. We concur with the CIT(Appeals) that the comparative analysis carried out by the A.O of the expenses incurred by the assessee company during the whole year vis-a-vis those incurred by him for two months, i.e. April, 2017 and May, 2017 could by no means be held to be a feasible comparison. We are also persuaded to concur with the CIT(Appeals) that certain expenses incurred by the assessee company in the aforementioned two months, viz. April, 2017 and May, 2017 (which were adopted as a yardstick) would have been booked after the aforesaid months, therefore, no proper comparison of the expenses incurred by the assessee company during the whole year could have been carried out as against those incurred during the aforesaid two months. Thus in the absence of any material having been placed on record by the A.O which would substantiate that the assessee s claim for deduction of the aforesaid expenditure, i.e. to the extent of 10% of its claim was not in order; or did not satisfy the provisions of Section 37 of the Act, we find no infirmity in the view taken by the CIT(Appeals) who had rightly vacated the said disallowance to the said extent based on his well reasoned observations. Thus, Grounds of appeal No.2 and 3 raised by the revenue are dismissed.
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2024 (4) TMI 925
Validity of Assessment order as time barred - delay dispatching assessment order - as submitted assessment order was required to be passed on or before 31/12/2016 i.e. within 21 months of the end of Assessment Year in which the income was first assessable - HELD THAT:- Though in the body of the assessment order, the date of passing of the order has been mentioned as 28/12/2016, the assessment order has been dispatched only on 02/01/2017 as per the postal track consignment produced. Thus, keeping in view of the order of the coordinate bench of the Tribunal in the case of Pankaj Sharma ( 2019 (2) TMI 789 - ITAT DELHI] we are of the considered opinion that the assessment in dispute is time barred and accordingly we set aside the assessment order by allowing the Ground No. 1 of the assessee.
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2024 (4) TMI 924
Addition in assessment u/s 153C - Addition u/s 69 - addition on basis of loose papers on which name of the appellant was mentioned along with some other parties - HELD THAT:- The appellant agreed to purchase plot having size of 300 sq. meters for a total consideration of Rs. 27,00,000/-. Out of the total consideration of Rs. 27,00,000, a payment of Rs. 24,30,000 was already made by the appellant. Annexure LP-2 is a sheet which mentioned name of those farmers who have sold the land/plots to certain individuals (including the appellant) along with the plot size purchased. This page also has information of amount but there is no evidence to show what is the context for mentioning these amounts. In the impugned assessment order, the addition is made by the assessing officer solely based on this loose sheet. The AO had inferred that amount of Rs. 9,00,000 mentioned against the name of Sh. Vipul Gupta actually represents 10% of the total consideration i.e. Rs. 90,00,000/-. Against the said alleged value, the assessing officer held that amount of Rs. 27 lacs has been paid by the appellant through banking channel and the balance amount was alleged to have been paid in cash merely on the basis of surmises and conjectures and but same is mere work of speculation. As observed in the case of Sh. Rishi Aggarwal [ 2023 (12) TMI 1304 - ITAT DELHI] there is no corroborative evidence. AO did not consider the need to summon the seller or the person searched, or to record the statement of the author/searched person/seller by giving an opportunity to assessee to cross examine the said person. AO has not even made any enquiry about the value of the property purchased by the assessee. Since the document relied as incriminating material to make addition in assessment u/s 153C of the Act, is not one which is kept in ordinary course of business, and the author of the document is not identified and disclosed to the assessee and the transaction is not verified by any enquiry, then only on the content of the documents the addition is not justified. Thus after taking into consideration, the decision of Sh. Rishi Aggarwal (supra) as such nothing is required to be determined on first principle basis. Thus, the grounds raised by the assessee are sustained. The appeal of the assessee is allowed.
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2024 (4) TMI 923
Nature of receipts - interest earned on FDs during the year was prior to commencement of business of the assessee-company - Objection of the Department is that the assessee had not shown any nexus between the funds borrowed and the specific investment made by it, is not found relevant as such nexus has to be examined in the year in which the investments were made for the first time - HELD THAT:- In the present case, the investments were made in the earlier years that is continuing in the current year and the assessee-company is deriving interest income on the Fixed Deposits made by it in the earlier years. Respectfully following the decision of the Co-ordinate Bench in the AYs 2013-14 2014-15 [ 2020 (3) TMI 1194 - ITAT AHMEDABAD ] we hold that the interest income earned on Fixed Deposits pertaining to the prior period commencement of business was in the nature of capital receipt . As held in that year the preoperative expenses of the assessee has to be adjusted with this capital receipt and only the balance expense, if any, need to be amortized as per provisions of Section 35D of the Act. Accordingly, the CIT(A) had rightly allowed the claim of the assessee. Appeal filed by the Department is dismissed.
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2024 (4) TMI 922
Additions of income earned from transactions carried in the hands of present assessee holding as acted as a conduit of the present assessee - Taxable in the hands of company or Individual - Protective Assessment in the Hands of Individual - Burden of proof - Facilitator of transaction - Transaction taxability as the Assessee is neither the legal nor economic owner - only reason for taxing the alleged income in the hands of present assessee was that assessee has lent money to T. Nadakrishna to purchase the immovable property - Main contention of the ld. D.R. is that the entire transaction of purchase of this impugned property in the name of T. Nadakrishna has to be treated as transaction carried out by the present assessee and Mr. T. Nadakrishna is a name lender to present assessee - HELD THAT:- Providing source of funds to Mr. T. Nadakrishna to purchase the property cannot be only reason to treat the transaction as carried out by the present assessee. The assessee is just the lender of the funds to facilitate the transaction of purchase of impugned property. As rightly pointed out by the ld. A.R., assessee is only a financier, who provided the finance to Mr. T. Nadakrishna to purchase the property just like a banker and these transactions are duly reflected in the hands of T. Nadakrishna and immovable property being owned by T. Nadakrishna and subsequently, he himself only transferred the property in his name to M/s. SPR Developers Pvt. Ltd. who is a different legal entity. The burden of proving the transaction as carried out by T. Nadakrishna on behalf of the present assessee and the apparent purchaser T. Nadakrishna is not the real owner always rests on the person asserting it to be so. This burden has to be strictly discharged by adducing legal evidence of a definite character, which is neither directly proved by the lower authorities directly nor established by indirectly and no inference could be drawn to hold it so. While considering the particular transaction as colourable device, the intention of the person, who contributed the purchase money is determinative of the nature of transaction. The intention of the person, who contributed the purchase cost has to be decided on the basis of surrounding circumstances, the relationship of the parties, the motives governing their action in bringing about the transaction and their subsequent conduct. The revenue authorities failed to prove anything otherwise by adducing cogent evidence. There was no intention of the present assessee to purchase the property in the name of T. Nadakrishna and the intention was only to advance money to T. Nadakrishna to purchase the property by himself. The payment part of the sale consideration provided by present assessee could not be the sole criterion to infer that the sale deed in favour of T. Nadakrishna as a transaction for and on behalf of the present assessee. For this purpose, we place reliance on the judgement in the case of Mangathai Ammal (Decd.) through LRS and Others Vs. Rajeshwari Ors. [ 2019 (5) TMI 1086 - SUPREME COURT] - Accordingly, we are of the opinion that if any income arise out of this impugned transaction to be considered in the hands of T. Nadakrishna only. Any transaction in which the professed intention and the intention gathered from the documentation are the same, must be considered to be genuine transaction and not colourable device adopted to evade tax by assessee. In the present case, the parties involved herein entered into a transaction according to their free will and that choice has always been protected, the only rider being that both the professed intention and real intention should be the same. The departmental authorities have no right to vary the terms of contract are result of the transaction between the parties merely because the agreed terms are not to their liking in the sense that they do not add to the collection of the taxes. In our opinion, in the present case, the transaction have to be given effect as they are executed on bona fide belief though it was resulted in reduction of tax liability since these transactions are genuine, bona fide and not colourable transactions. Further, the impugned transaction undertaken by T. Nadakrishna was right from the inception conceived and controlled by himself not by the present assessee M/s. SPR Spirits Pvt. Ltd. To sum up as held by Hon ble Supreme Court, Binapani Paul [ 2007 (4) TMI 752 - SUPREME COURT] that the source of money had never been the sole consideration. It is merely one of the relevant considerations but not determinative in character. Accordingly, this ground of appeal of the assessee is allowed.
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2024 (4) TMI 921
Addition u/s 69 r.w.s. 115BBE - amount surrendered during survey on account of difference in stock and excess cash difference - contention of the Assessee is that when the income / investment is already surrendered during the survey and also offered for taxes while filing return of income, the same cannot be treated as unexplained investment - HELD THAT:- The statement of the Assessee has to be read as a whole and not in piecemeal especially where the Revenue is relying on the same statement and in such circumstances, the defence available to the Assessee in terms of part of the statement not been considered by the Revenue cannot be ignored. The mere fact that survey/search proceedings have been initiated at the business premises of the Assessee doesn t mandate the AO to automatically invoke the deeming provisions and before invoking the deeming provisions, he has to call for the explanation of the Assessee and only where the explanation so offered is not found satisfactory, he can proceed and invoke the deeming provisions. In the instant case, we find that the difference in stock so found out by the authorities has no independent identity and is part and parcel of entire stock, therefore, it cannot be said that there is an undisclosed asset which existed independently and thus, what is not declared to the department is receipt from business and not any investment as it cannot be co-related with any specific asset and the difference should thus be treated as undeclared business income. Following the said decision of DCIT Vs. Shri Ram Narayan Birla [ 2016 (9) TMI 1354 - ITAT JAIPUR] has taken a similar view holding that the excess stock so found during the course of survey was part of the stock and the Revenue has not pointed out the excess stock has any nexus with any other receipts other than the business being carried on by the Assessee. The surrender on account of advances were relating to the business being carried on by the Assessee. CIT(A) has also returned a finding that the advances were admitted as being related to business activity of the Assessee. Where the same has been found unrecorded in the books of account, the same has to be brought to tax under the head business income . Thus, the income surrendered during the course of survey cannot be brought to tax under the deeming provisions of section 69 and 69A of the Act and the same has been rightly offered to tax under the head business income . In absence of deeming provisions, the question of application of section 115BBE doesn t arise for consideration. Decided in favour of assessee.
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2024 (4) TMI 920
Rectification u/s 154 - disallowance u/s 36(1)(va) for delay in depositing employee contribution of PF/ESI - Rectification was made relating to the additions u/s 36(1) by giving reason that addition was missed by the assessing officer while passing order u/s 143(3) - Doctrine of merger of intimation u/s 143(1) and the assessment order u/s 143(3) - If intimation u/s 143(1) of the Act got merged with assessment order u/s 143(3) and consequently AO was not justified to make addition by way of rectification u/s 154 on the basis of facts which have been considered during assessment - HELD THAT:- While exercising power u/s 154 r.w.s. 143(3) AO has not gone back to reconsider the issues examined u/s 143(3) and make an addition thereupon. It is not a case where rectification power was exercised consequent to any change of law or applying a different proposition of law than one considered while framing assessment u/s 143(3) of the Act. The rectification order as reproduced above makes it apparent that the income determined vide intimation u/s 143(1) was taken as income for making further additions u/s 143(3) assessment. Certainly that was a mistake apparent from record as the intimation u/s 139(1) stood final after withdrawal of the appeal by the assessee. Accordingly, the difference between the returned income and the assessed income u/s 143(1) was erroneously ignored while passing order u/s 143(3). Therefore we are of view AO had committed no error in exercising the rectification powers u/s 154. As with regard to applicability of the doctrine of merger of intimation u/s 143(1) and the assessment order u/s 143(3) the proposition of law in case Title M/s. Areca Trust [ 2024 (3) TMI 707 - ITAT BANGALORE] where the additions made under intimidation u/s 143(1) and !43(3) are on different issues and heads and intimation u/s 143(1) of the Act stood final after withdrawal of appeal by assessee, on what so ever erroneous belief, there was no merger of two orders. Whether addition could be made by learned AO by exercising powers u/s 154 of the Act where learned AO had accepted the return filed u/s 139 of the Act vide intimation u/s 143(1) of the Act ? - There in the question of delay in deposit of the employees contribution was very much in the assessment records upon which the intimation u/s 143(1) was served upon the assessee and no disallowance was made. However, here in the case in hand the addition was made in intimation u/s 143(1) of the Act with regard to disallowances on account of delayed contribution of PF and ESI and the house property income, in intimation u/s 143(1) of the Act. In scrutiny assessment these issues were not under examination so as to say that while exercising powers rectification the Ld. AO has made rectification due to any change in opinion of law or fact.
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Customs
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2024 (4) TMI 919
Detention Order under COFEPOSA - legal heirs of detenu - Smuggling - diesel oil of foreign origin - seeking to impugn detention order dated 02.05.2005 on the ground that proceedings under SAFEMA have been initiated (action against detenu was initiated under SAFEMA during his lifetime) - HELD THAT:- As per investigation conducted by DRI, detenu was found to be the person who was directly involved in the smuggling and for organizing the finances as well as logistic and, therefore, detention order passed under Section 3(1)(i) of COFEPOSA was fully justified. It is also reiterated that detenu, when he was alive, could have easily prayed this Court for disposal of his writ petition on merit but he himself submitted that it be dismissed as withdrawn with liberty to raise all the issues in case of initiation of any proceedings under SAFEMA. Petitioner is not justified in asserting that the earlier writ petition was withdrawn on 16.08.2007, with liberty as sought for, as it could not reach for final hearing. The orders available on website rather indicate that at one earlier point of time the final arguments were heard on merits and the matter was even reserved for judgment. Be that as it may, there is nothing to infer that the detenu had withdrawn the petition as it could not reach final hearing. On the contrary, he himself had sought withdrawal, albeit, with liberty, as aforesaid. After the demise of detenu, fresh summons and Notice in connection with proceedings under SAFEMA have been issued to his legal heirs. We have seen such communication dated 15.02.2019 and 08.12.2021. In later communication, detenu has been referred as affected person no. 1 (AP-1) and his wife as affected person no. 2 (AP-2) and according to such notice, there are two immovable properties in possession of AP-2 and she has, merely, been called upon to indicate the source of income or the means through which said two properties had been acquired. In case, affected person is in a position to satisfactorily explain about the manner in which the properties were acquired, naturally, there might not be any adverse action of any kind under SAFEMA. Thus, the petitioner can always respond to such notice appropriately - coming back to the instant petition, there is nothing here which may compel to quash the detention order. Contentions made by the petitioner are found to be without any substance. There is nothing to indicate that detenu did not know English and it is also quite obvious that detenu was evading service and execution of the detention order and since the repeated visits at his premises did not yield any result, eventually, publication had to be carried out in newspaper - There is also nothing which may portray that the time lapse, between detention order and its execution, is such as would lead to the inference that the live-link between the prejudicial activity of the detenu and the object of detention, namely, to prevent him from indulging in such prejudicial activity, stood snapped. The petitioner herein is always at liberty to agitate all contentions in such proceedings under SAFEMA and she would also be at liberty to agitate about the delay in initiation of such proceedings - there are no merit in the writ petition. The writ petition is dismissed.
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2024 (4) TMI 918
Levy of penalty - mis-declaration of goods - unflavoured boiled supari - reduction of the penalty under section 112 by the Commissioner (Appeals) - according to Revenue reduction was very high and unwarranted and according to the respondent it was fair and proper - what does the expression shall be liable to , in section 112 (and 111, 113, 114, etc.) signify? Does it mean that a penalty shall be imposed or that a penalty can be imposed? - HELD THAT:- A common misunderstanding of this expression is that the adjudicating authority has to only see if the goods fall under one of the clauses of Section 111 or 113 and if so, confiscate them and to see if the persons fall under section 112 or 114 and impose penalty. However, the expression is not shall be confiscated but it is shall be liable to confiscation . Similarly section 112 says shall be liable to penalty and NOT penalty shall be imposed . Liable to be means likely to be and not shall be . After finding if the goods fall under one of the clauses of the section, the adjudicating authority can exercise his discretion and decide not to confiscate them. If the violation is, for instance, a technical violation or a minor violation, the adjudicating authority has the discretion to NOT confiscate the goods although they are liable to confiscation. The High Court of Delhi has, in JAIN EXPORTS (P) LTD. VERSUS UNION OF INDIA [ 1988 (5) TMI 50 - SUPREME COURT] held that not only does the adjudicating authority have the discretion to decide whether or not to confiscate but he has to exercise this discretion judicially and not arbitrarily. However, since the penalty under section 112 is based on the actions which rendered the goods liable to confiscation under section 111, it would be necessary to see how serious were these actions by the respondent. The Commissioner (Appeals) recorded that there was a reasonable cause for the respondent to classify the goods under CTI 2106 9030. He recorded that there were rulings by the Advance Ruling Authority that boiled areca nut does not fall under CTH 0802 at all - Merely because the importer s classification of the goods is different from that of the officer, the importer cannot be penalised. The Commissioner (Appeals) is fully agreed upon that the respondent had a reason to believe that the goods were classifiable under CTI 2106 9030 and this classification cannot be held against the respondent. Misdeclaration of nature of the goods - HELD THAT:- The CRCL test report does not say what the imported goods were nor does it deny that the goods were unflavoured boiled supari . Secondly, it comments on the classification of the goods as per supplementary notes- Note 2 to Chapter 21 . Classification of the goods under Customs Tariff is the responsibility of the importer or the proper officer or any further appellate authority. The chemical examiner in CRCL has no role to play in the classification because classification is a part of assessment which is a quasi-judicial and appealable order. All that the chemical examiner should say is what the goods are, what is the purity, etc. It is thus found that the allegation of mis-declaration of the nature of goods is not very serious especially since it is based on a somewhat ambiguous test report of CRCL. There are no reason to interfere with the order of the Commissioner (Appeals) insofar as the reduction of penalty under section 112 is concerned - the impugned order is upheld - appeal dismissed.
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2024 (4) TMI 917
Suspension of license of public bonded warehouse - bonded goods were stored in non-bonded tanks - appellants pleaded that the disputed goods cannot be confiscated, when subsequent permission for bonding of tanks was given by the department - Sub-section (2) of Section 58B of the Customs Act, 1962 - HELD THAT:- It is an admitted fact on record that the appellants have obtained the public bonded warehousing license from the competent authorities for carrying out the activities therein. Whenever the imported goods were required to be stored in the warehouse, the appellants have taken necessary permission from the competent authority for movement of goods from the customs station for the purpose of depositing in the warehouse. The activities of removal of goods from one warehouse to the other were always within the knowledge of the department and such activities were undertaken by the appellants with due permission from the department. Reading of the above statutory provisions vis- -vis the activities undertaken by the appellants as the warehouse licensee, it is found that none of the said provisions have been contravened or violated by the appellants inasmuch as in respect of all the B/Es listed above, the activities were carried out with the approval and necessary permission given by the department as well as under supervision of Customs. In view of the statutory provisions regarding the warehoused goods and the instructions issued by the CBEC, it is amply clear that movement of goods within the bonded warehouse is permissible, subject to the condition that such activities should be within the knowledge of the department and necessary approval for such activities should be obtained by the warehouse licensee - the appellants have complied with such statutory provisions in carrying out the activities within the warehousing station(s). Therefore, it cannot be said that the goods dealt with by the appellants are liable for confiscation and accordingly, the appellants cannot be exposed to penal consequences provided under the statute. The impugned order dated 08.01.2024 has invoked the provisions of Section 111(h) and 111(j) ibid for confiscation of the goods and for imposition of the redemption fine on the appellants. The provisions of Section 111(h) ibid are attracted for confiscation in the eventuality, when any dutiable or prohibited goods unloaded or attempted to be unloaded in contravention of the provisions of Section 33 ibid or Section 34 ibid. It is not the case of Revenue that the appellants had not obtained the permission from the department for carrying out the activities within the bonded area - It is a fact on record that the bulk liquid cargo dealt with by the appellants are not prohibited for importation and that the appellants had obtained due permission from the customs department for carrying out the activities within the warehousing premises, which is evident from the above tables, mentioning the date of permissions issued by the department including the specific tank numbers for which such permissions were being issued by them - the provisions of Section 111(j) ibid are not attracted for confiscation of goods in the circumstances of the present case. Since there is no improper importation of goods and more specifically, the goods are not liable for confiscation as per the provisions under Section 111 ibid, the provisions of Section 112 ibid shall not be attracted for imposition of penalty on the appellants. Further, the provisions of Section 114AA ibid cannot also be invoked in the present case, inasmuch as there is no mis-declaration, nor any forged documents were presented by the appellants with the intent to evade payment of customs duty - There is nothing on record in the form of any evidence to show that proper accounting for receipt, transfer or removal of the goods in the warehouse was not maintained by the appellants in terms of extant Regulations dealing with warehousing of goods - Furthermore, all the activities were under the direct supervisions and control of the customs officers posted in the warehouse. Similarly, the penalty clause contained in Section 117 ibid cannot also be attracted in the case in hand, inasmuch as no licensing conditions were violated by the appellants. There are no merits in the impugned order dated 08.01.2024, insofar as it has ordered for confiscation of goods, imposed redemption fine and penalties on the appellants. Since there are no substance in confirmation of the adjudged demands towards fine and penalties, the impugned order passed for revocation of suspension of warehousing operation shall also not be sustained - the impugned order is set aside - appeal allowed in favour of appellants.
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2024 (4) TMI 916
Classification of imported goods - Navigation System - Multifunctional Devices or not - classifiable under CTH 8527 2900 or under Chapter Heading 8526 9190? - penalty u/s 114A of the Customs Act, 1962 - Extended period of Limitation - HELD THAT:- The Bills of Entry placed on record is seen, where the description of the products was mentioned as Navigation System . However, on investigation, after verifying the catalogue and the instructions manuals, it was found that the goods were actually described as infotainment system . The importer is an accredited client where certain privileges are extended to them and the Bill of Entry was cleared under RMS, the lapse was noticed only after SIIB investigation and therefore, the Commissioner (Appeals) was right in invoking suppression/mis-declaration, since the goods were mis-declared by the appellant knowing very well as per the catalogue and the manual that they were multifunctional devices. The appellant s only defence is that though the catalogue/technical literature is only for the purpose of marketing to show that it is a one stop solution to all the features required in the car cannot absolve them from the responsibility from making a true and correct declaration of the description of the product so as to decide its appropriate classification by the assessing authorities. Also, this itself proves that the appellant was well aware of all the features but still decided to declare them only as a navigation equipment thus wilfully mis-declaring the products. Penalty under Section 114A of the Customs Act, 1962 - HELD THAT:- The appellant s only defence is that though the catalogue/technical literature is only for the purpose of marketing to show that it is a one stop solution to all the features required in the car cannot absolve them from the responsibility from making a true and correct declaration of the description of the product so as to decide its appropriate classification by the assessing authorities. Also, this itself proves that the appellant was well aware of all the features but still decided to declare them only as a navigation equipment thus wilfully mis-declaring the products. Therefore, the Commissioner (A) was justified in invoking the suppression on the ground that the facilities provided to the appellant being an Accredited client was misused by mis-declaring the facts. Accordingly, the differential duty with interest is upheld along with mandatory penalty under Section 114A of the Customs Act, 1962. Extended period of limitation - HELD THAT:- The Hon ble Supreme Court in the case of Commissioner of Central Excise Ahmedabad Versus M/s. Urmin Products P. Ltd. And Others [ 2023 (10) TMI 1112 - SUPREME COURT] observed Thus, in the event of mis-description, wrong description or erroneous description or intentional improper classification of the product manufactured, would not tie the hands of the Competent Authority from piercing the corporate veil to ascertain the true nature of the product and reclassify the same, necessarily after affording an opportunity of hearing which would be in compliance of the doctrine of natural justice. In view of the above, it is found that the Commissioner was justified in invoking the extended period of limitation. The impugned order is upheld - the appeal is rejected.
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2024 (4) TMI 915
Refund of SAD - denial of refund claim on the ground of failure to submit necessary documents - HELD THAT:- As per the Order-in-Original, the respondent produced documents and when objection was made, the representative of the respondent appeared for personal hearing and produced VAT Challan and Chartered Accountant s Certificate. However, VAT Challan does not show the Bill of Entry and for that reason it is concluded that the respondent failed to comply with the conditions stipulated in the notification. In appeal, while allowing the appeal, the Appellate Authority has given a very detailed order - Only objection is that said VAT Challan could not be correlated with the imported goods as per the Bill of Entry. There is no requirement for mentioning Bill of Entry number in the Sale Tax/VAT Authority on the sale of goods and certificate of Chartered Accountant with details linking each of the sale invoices with the corresponding Bill of Entry alone is sufficient for said correlation. There are no reason to interfere with the order passed by the Appellate Authority - appeal dismissed.
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Insolvency & Bankruptcy
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2024 (4) TMI 914
Offences triable by Special Court - Offenses under the IBC - offences other than the Companies Act cannot be tried by the Special Court consisting of Sessions Judge or Additional Sessions Judge or not - Whether the Special Court under the Code would be as provided under Section 435 of the Companies Act as it existed at the time when the Code came into effect, or it would be as provided under Section 435 of the Companies Act after the 2018 Amendment? HELD THAT:- This Court has held that once a finding is recorded that an Act is a self-contained code, then the application of either of the doctrines i.e. legislation by reference or legislation by incorporation would lose their significance particularly when the two Acts can coexist and operate without conflict. This Court further held that, in case of general reference in the Act in question to an earlier Act but there being no specific mention of the provisions of the former Act, then it would clearly be considered as legislation by reference . In such a case, the amending laws of the former Act would become applicable to the later Act. However, when the provisions of an Act are specifically referred and incorporated in the later statute, then those provisions alone are applicable and the amending provisions of the former Act would not become part of the later Act. This Court in the case of Girnar Traders [ 2011 (1) TMI 1343 - SUPREME COURT] held that, if the legislature intended to apply the provisions of the Land Acquisition Act generally and wanted to make a general reference, it could have said that the provisions of the Land Acquisition Act would be applicable to the MRTP Act, 1966. This Court observed that such expression was conspicuous by its very absence. This Court held that both these Acts i.e. Land Acquisition Act and the MRTP Act, 1966 are self-contained codes within themselves. This Court observed that the State Legislature while enacting the MRTP Act, 1966 has referred to the specific sections of the Land Acquisition Act in the provisions of the State Act. This Court further observed that none of the sections require application of the provisions of the Land Acquisition Act generally or mutatis mutandis. The provisions of Section 236(1) of the Code. Under Section 236(1) of the Code, reference is offences under this Code shall be tried by the Special Court established under Chapter XXVIII of the Companies Act, 2013 - It can thus be seen that the reference is not general but specific. The reference is only to the fact that the offences under the Code shall be tried by the Special Court established under Chapter XXVIII of the Companies Act. The provision of Section 435 of the Companies Act, 2013 with regard to Special Court would become a part of Section 236(1) of the Code as on the date of its enactment. If that be so, any amendment to Section 435 of the Companies Act, 2013, after the date on which the Code came into effect would not have any effect on the provisions of Section 236(1) of the Code. The Special Court at that point of time only consists of a person who was qualified to be a Sessions Judge or an Additional Sessions Judge. The impugned judgment and order dated 14th February 2022, passed by the learned Single Judge of the High Court of Judicature at Bombay in Writ Petition No.2592 of 2021 is quashed and set aside - Appeal allowed.
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2024 (4) TMI 913
Condonation of delay of 181 days in filing appeal - HELD THAT:- The delay of 181 days is beyond the maximum period which can be condoned under Section 62 of the Insolvency and Bankruptcy Code 2016. The Civil Appeal is accordingly dismissed on the ground of limitation.
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Service Tax
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2024 (4) TMI 912
Recovery of service tax alongwith interest and penalty - works contract service provided by the petitioner between 01.10.2016 to 30.06.2017 - HELD THAT:- The issue is now covered by the decision of the Division Bench of the Principal Seat in M/S. RAJU CONSTRUCTION, REP. BY ITS MANAGING PARTNER, R. SURESH BABU, M/S. VENKATESWARA ENGINEERING CONSTRUCTIONS, REP. BY ITS MANAGING DIRECTOR, MADESAN SIVAPRAKASAM, M. VEDIAPPAN, V. VENGAN VERSUS THE GOVERNMENT OF INDIA, REPRESENTED BY ITS SECRETARY, MINISTRY OF FINANCE, NEW DELHI, THE SENIOR INTELLIGENCE OFFICER, O/O. DIRECTORATE GENERAL OF GST INTELLIGENCE, TRICHY REGIONAL UNIT, THE GOVERNMENT OF TAMIL NADU, REPRESENTED BY ITS FINANCE SECRETARY, FORT ST. GEORGE, CHENNAI [ 2022 (12) TMI 1336 - MADRAS HIGH COURT] where it was held that The prayer for a direction to refund of tax already paid by the petitioner also cannot be countenanced as these petitioners are liable to tax. Therefore, wherever the Orders-in-Original have been passed, the respective petitioners are given liberty to file statutory appeal before the Appellate Authority subject to the compliance of the other requirements of pre-deposit the amount as is contemplated under Section 35F of the Central Excise Act, 1944 as made applicable to the Finance Act, 1994, within a period of thirty (30) days from the date of receipt of a copy of this order. The Writ Petition is dismissed with liberty to the petitioner to file a statutory appeal before the appellate Commissioner under Section 85 of the Finance Act, 1994 within a period of 30 days from the date of receipt of a copy of this order.
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2024 (4) TMI 911
Seeking refund of accumulated Cenvat credit - input services or not - Judicial Discipline - The department had not accepted the judgement in the case of Paul Merchants [...................................] and filed a Civil Appeal before the Supreme Court - HELD THAT:- The question of judicial discipline was examined by a three member bench of the Supreme Court in UNION OF INDIA VERSUS KAMLAKSHI FINANCE CORPORATION LTD. [ 1991 (9) TMI 72 - SUPREME COURT ]. The Assistant Collectors in that case flouted the orders of the Appellate Collector on the ground that the order of the Appellate Collector were not acceptable to the department. The assessee filed a Writ Petition before the Bombay High Court which passed strictures against the Assistant Collectors. Union of India filed an appeal before the Supreme Court which upheld the strictures passed by the Bombay High Court. Evidently, in this case, the Commissioner (Appeals) has refused to follow judicial discipline on the ground that the order of this Tribunal on the ground that it has not been accepted by the department. The very statement that a judicial decision is not acceptable is an objectionable phrase as held by in Kamlakshi Finance and the Commissioner (Appeals) was bound to have followed the order of this Tribunal since it was not stayed, suspended or set aside by a higher court. By displaying gross judicial indiscipline, the Commissioner (Appeals) has caused considerable harassment to the appellant without any benefit to the Revenue. It is to curb this tendency that the Supreme Court had dealt with the issue at length in Kamalakshi Finance. The impugned order is set aside - Appeal allowed.
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2024 (4) TMI 910
Levy of service tax - Works Contract Service - availment of Composition Scheme - GTA service - CENVAT Credit in terms of Rule 6(3) of CCR, 2004 - works Contract executed on or after 01.07.2012 under other works contract - Credit denied on the ground that the documents prescribed under Rule 9(1) of the CCR were not submitted - suppression of facts or not - extended period of limitation. Works Contract Service - availment of Composition Scheme on 25.01.2008 - HELD THAT:- W.e.f. 01.06.2007, the appellant has been discharging service tax liability on the said service under the Composition Scheme . In the absence of any laid down procedure under the law specifying the time limit, we observe that the payment of service tax itself should be construed as exercise of the option by the Appellant when such option was continued by the Appellant till the related works contracts were completed - this issue is squarely covered by the decision of the Tribunal, Delhi in the case of MEHTA PLAST CORPORATION VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR [ 2014 (5) TMI 1131 - CESTAT NEW DELHI] wherein it was held that the option to be exercised is not required to be exercised in writing and the very fact of payment of duty under the composition scheme reflects upon the option of the assessee - the appellant is eligible for availment of Composition Scheme for payment of service tax and hence the demand confirmed in the impugned order by denying the benefit is not sustainable - demand set aside. GTA service - HELD THAT:- The demand has been mechanically confirmed without verifying the documents submitted the appellant. The documents submitted by the appellant needs to be verified. The demand confirmed without verifying the documents is not sustainable. Accordingly, the demand confirmed in the impugned order on this count is set aside and the matter remanded to the adjudicating authority to verify the documents submitted by the appellant and determine the service tax liability, if any, after giving an opportunity to the appellant to explain their case. The appellant should also cooperate with the department and furnish all the documents for verification. CENVAT Credit in terms of Rule 6(3) of CCR, 2004 - providing construction service to Airports Authority of India in Jammu Kashmir and to Unitech Hi-Tech Structure Limited, an SEZ unit which are exempted services - HELD THAT:- The main objective of the Rule 6(1) is to ensure that the assessee should not avail the CENVAT Credit in respect of input or input services which are used in or in relation to provision of exempted services - In the present case, since the appellant has reversed the credit attributable to exempted services along with interest, the demand of an amount equivalent to 6/8% of the value of exempted services confirmed in the impugned order is not sustainable - the demand of reversal of CENVAT credit of Rs.37,91,781/- in the impugned order is set aside. Works Contract executed on or after 01.07.2012 under other works contract - HELD THAT:- The appellant is liable to pay service tax as Original Works on the 40% value of such works contract as prescribed in Rule 2A(ii)A of the Valuation Rules. It is observed that the department has not brought in any evidence to substantiate the allegation that the contracts executed by the appellant were in the nature of completion and finishing service to demand service tax under Other Works on the 60% value of such works contract as prescribed in the said Rules. Accordingly, the demand of service tax of Rs. 19,32,135/- (including Cess confirmed in the impugned order on this count is not sustainable and hence the same is set aside. Credit denied on the ground that the documents prescribed under Rule 9(1) of the CCR were not submitted - HELD THAT:- The invoices were not checked by the audit team on the pretext that the documents are voluminous and will take lot of time and they have to conclude the audit within three days. The audit has concluded that the entire cenvat credit availed and utilised by the Appellant during the period 2009 10 to 2012 13 as irregular and the same has been confirmed in the impugned order. It is observed that the demand has been mechanically confirmed without verifying the documents submitted the appellant. The documents submitted by the appellant needs to be verified. The demand confirmed without verifying the documents is not sustainable - the demand confirmed in the impugned order on this count is set aside - the matter remanded to the adjudicating authority to verify the documents submitted by the appellant and determine the eligibility of Cenvat credit after giving an opportunity to the appellant to explain their case. Suppression of facts or not - extended period of limitation - penalty - HELD THAT:- It is a settled position of law that when the matter involves interpretation of statutory provisions and the assessee acted on a bona fide belief, extended period of limitation cannot be invoked. We observe that there is no evidence available on record to invoke the extended period of limitation. Accordingly, the demand is not sustainable on the ground of limitation also. For the same reason, no penalty imposable on the appellant. Appeal disposed off.
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2024 (4) TMI 909
Liability of appellant to pay service tax - vague SCN - SCN does not mention the category of service under which the demand has been proposed by the Department - HELD THAT:- On perusal of the Show Cause Notice as well as the order passed by the Adjudicating Authority and the Commissioner (Appeals), it is not found as to what is the category of service alleged to be rendered by the appellant. Merely because, the appellant received some amounts from M/s. Neyveli Lignite Corporation, it cannot be said that they have rendered service. In the Show Cause Notice, it is stated that the appellant rendered the activity of AMC of North Dump Yard, Afforestation and watching and up keeping of community halls. It is not clear what is the category of these services. The Department has not stated whether the activity falls within the definition of a particular category of service. The Tribunal in similar set of facts had set aside the demand observing that when the category of service has not been mentioned in the Show Cause Notice, the demand cannot be sustained. In NPS CONSTRUCTION VERSUS COMMISSIONER OF CGST CENTRAL EXCISE, PONDICHERRY [ 2024 (4) TMI 532 - CESTAT CHENNAI] , the Tribunal followed the decision of the Hon ble Supreme Court in the case of COMMISSIONER OF C. EX., BANGALORE VERSUS BRINDAVAN BEVERAGES (P) LTD. [ 2007 (6) TMI 4 - SUPREME COURT] wherein it was held that when the Show Cause Notice does not mention the specific category of service so as to inform the assessee about the allegations raised against them, the demand cannot sustain. The impugned order is set aside - Appeal is allowed.
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2024 (4) TMI 908
Recovery of service tax alongwith interest and penalty - non-payment of service tax by suppressing the value of taxable service. Demand confirmed for the reason that the appellant had accepted their liability for payment of service tax, and they had disputed the demand only on the account of quantification, in respect of which both the authorities have concluded that the appellant had failed to substantiate their claim by producing the relevant records for verification. HELD THAT:- The appellant has during the period prior to 16.06.2005, issuing invoices, claiming the service tax from their service recipient. On Invoice No 13-18/2005-06 dated 26.05.05 Service Tax of Rs 6377.00/- has been charged as per the above chart on a taxable value of Rs 189439/- and on invoice No 19/05-06 dated 26-May-05 a service tax of Rs 23,795/- has been collected. During the period prior to 16.06.2005 appellant as per his own submission has collected service tax of Rs 30,172/- on the taxable value of Rs 462239.00. As appellant was himself charging and collecting the service tax, even prior to 16.06.2005, the claim for deduction made by the appellant for deducting this value from the taxable value cannot be acceded to. Thus the gross value of taxable service on which the demand of service tax is made, after allowing the deductions in respect of PF, Bonus and Service Tax paid by M/s Hindalco, as per the chart submitted by the appellant comes to Rs 63,90,554.77/- (Rs 1,77,87,709.00 - Rs 15,16,602.00 Rs 10,45,027.23 - Rs 88,35,525). The demand has been made by taking table value of Rs 64,41,735/-. There are not much difference in the taxable value determined by the department for making the demand and the taxable value that can be determined on the basis of the chart submitted by the appellant. In case of COMMISSIONER OF C. EX., MADRAS VERSUS SYSTEMS COMPONENTS PVT. LTD. [ 2004 (2) TMI 65 - SUPREME COURT] Hon ble Supreme Court has held Once it is an admitted position by the party itself, that these are parts of a Chilling Plant and the concerned party does not even dispute that they have no independent use there is no need for the Department to prove the same. It is a basic and settled law that what is admitted need not be proved. There are no merits in the appeal - appeal dismissed.
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2024 (4) TMI 907
Non-payment of service tax - suppression of value of taxable service provided - demand confirmed for the reason that the appellant had accepted their liability for payment of service tax, and they had disputed the demand only on the account of quantification, in respect of which both the authorities have concluded that the appellant had failed to substantiate their claim by producing the relevant records for verification. HELD THAT:- The major deduction which has been claimed by the appellant from the gross value of taxable services is on the account of services provided by them before the same became taxable, specifically the services under the category of Supply of Tangible Good services. These service became taxable with effect from 16.05.2008. Appellant have claimed that the value of the taxable services provided by them under this category for the period prior to levy of service tax. Was about Rs 84,17,327.67. If the claim of the appellant is admitted the gross value of taxable service will be reduce substantially. Appellants had made this claim before the adjudicating authority and the first appellate authority and had submitted a chart duly certified by a Chartered Accountant, showing that the during the entire period of dispute the invoices issued by the appellant were in respect Truck, Tractor, Dumper Hiring Charges on some of the invoices even the registration number of vehicle was also mentioned. The coverage of the services under the category of taxable service was gradually widened, every year. Appellants have claimed that the major chunk of the services provided by them were within this category and specified as taxable service only from 16.05.2008. As no finding has been rendered by the adjudicating authority or the first appellate authority on this aspect, while adjudicating the case, the matter needs to be remanded back to the original authority for recording specific findings on this issue. The matter remanded back to the original authority for reconsideration of the issue to the extent of allowing deduction of Rs. 84,17,327.67/- which appellant claim were received by them against the services of Supply of Tangible Goods service prior to 16.05.2008, the date from which the service was made taxable - Appeal is partly allowed to the extent of remanding the matter to original authority.
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2024 (4) TMI 906
Liability of sub-contractor to pay service tax - main contractor discharges tax on the gross value - Extended period of limitation - suppression of facts or not - penalties - HELD THAT:- After issue of the Circular No. 96/7/2007-S.T. dated 23.08.2007, there is no ambiguity regarding the liability of a sub-contractor to pay Service Tax even in cases where the main contractor pays Service Tax on the gross value. The demand involved in this Notice pertains to the period from 2007-08 to 2011-12 i.e., after the issue of the Circular mentioned hereinabove. Thus, the submission of the appellant that they were not aware of the liability to Service Tax as a sub-contractor, is not agreed upon. The Larger Bench of the Tribunal in the case of Commissioner of Service Tax v. M/s. Melange Developers Pvt. Ltd. [ 2019 (6) TMI 518 - CESTAT NEW DELHI-LB] has decided that even when the main contractor has discharged Service Tax, the sub-contractor is required to pay Service. In view of the decision of the Larger Bench and by relying on the Board Circular, it is held that the sub-contractor is liable to pay Service Tax even if the main contractor pays Service Tax on the gross value of the services. Extended period of limitation - suppression of facts or not - penalties - HELD THAT:- The appellant has been filing their returns regularly, thereby intimating the liability to Service Tax. Thus, no suppression of facts with intention to evade payment of tax exists in this case - the extended period of limitation cannot be invoked against the appellant. For the same reason, the penalties imposed on the appellant are set aside. Appeal disposed off.
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2024 (4) TMI 905
Invocation of Extended period of Limitation - Suppression of facts or not - Classification of services - real time courses provided by the Appellant - Online information and data base access and/or retrieved service (OIDAR service) or commercial training or coaching service? - HELD THAT:- On perusal of the facts in the instant case, we note that the appellant was asked to submit copies of their Balance Sheet for the period 2007 2008, along with the details of the payments collected from clients/members on account of each of the services provided by them from 1.4.2007 to Sept 2008 and list of members and clients from whom such payments had been collected. It is seen that the appellant did not reply to the letter nor did they supply the requisite information. This was followed up with letter dated 23.02.2009 requesting the appellant to furnish the details on the gross amount collected and the amount on which service tax had been paid during the period 01.4.2007 to 31.01.2009. As the appellant did not cooperate, it is seen that the Asst Commissioner of Service Tax, Division 1, issued a show cause notice dated 05.3.2009 under Section 77 of the Finance Act, 1994 for non-furnishing of information. Following the receipt of this notice, the appellant filed their letter dated 17.3.2009 and supplied certain information. The Department took a view that the information supplied by the appellant prima-facie was incorrect and grossly undervalued. Having two sets of annual financial statement showing different figures clearly establishes the malafide intent of the appellant to mislead the investigations. Further, it is noted that the details as submitted by the appellant vide their letter dated 17.3.2009 was incorrect and the allegation of suppression of the taxable value is substantiated by the adjudicating authority in the impugned order. The Supreme Court s explained suppression of facts in PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY [ 1995 (3) TMI 100 - SUPREME COURT ], wherein the Apex Court examined whether the Department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso to section 11A of the Excise Act. The proviso to section 11A of the Excise Act carved out an exception to the provisions that permitted the Department to reopen proceedings if the levy was short within six months of the relevant date and permitted the Authority to exercise this power within five years from the relevant date under the circumstances mentioned in the proviso, one of which was suppression of facts. It is in this context that the Supreme Court observed that since suppression of facts has been used in the company of strong words such as fraud, collusion, or wilful default, suppression of facts must be deliberate and with an intent to escape payment of duty. The intention of the appellant to deliberately escape payment of tax is corroborated by the fact that two sets of Balance Sheets for the same year showing different figures of income were found during the search operations. The contention that the department had relied on the data which was based on the statement of Mr. Manoj Kumar Satyawali who is not a technical expert to generate such figures from the server, is not acceptable as the employee was working as Technical Support Executive-Customer Care and was incharge of the in-house server. In his statement, he has stated that he can only extract data, but did not have the power to amend or change the data. Therefore, the demand confirmed for by the instant show cause notice is liable to be upheld. The activity undertaken by the appellant from April 2009 was that of basic learning programs which were pre-recorded on a CD/DVD. The customers/subscribers may use such CD/DVD for their learning nothing more than this is being undertaken. From the above, it is noted that the activity being undertaken by the appellant is a sale and did not involve any service. For the period till 30.6.2012, vide Not No. 12/2003 ST, the value of goods, if any, was to be deducted for the levy of service tax. It is also noted that service tax and VAT are mutually exclusive taxes, and therefore levy of one would exclude the other - It has also been brought to notice that the subsequent show cause notices for the period 2013 14 and 2014 15 have been decided in the appellant s favour. It is also been pleaded that these orders have not been challenged by the department and have hence attained finality. It is also noted that the appellant did not have any authorised training centres as well. Consequently, the demand under Franchise service confirmed in respect of the demand notice dated 17.10.2011 does not survive. The demand confirmed in respect of the show cause notice dated 21.4.2010 for the period 2007-08 and 2008-09 along with interest, and equal penalty imposed under section 78 is upheld - the issue relating to quantification of the demand taking into consideration the contentions regarding cum-duty tax is remanded to the adjudicating authority for recalculation of demand and consequently the amount of penalty under Section 78 of the Finance Act, 1994 - the demand confirmed under the remaining 5 show cause notices set aside - appeal is allowed partially by way of remand.
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Central Excise
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2024 (4) TMI 904
Maintainability of petition - alternative appeal - waiver of pre-deposit - seeking the petitioner be relegated to appeal jurisdiction under Section 86 of the Finance Act, 1994 and direct the Tribunal to grant waiver of pre-deposit - HELD THAT:- An alternative efficacious remedy is available to the petitioner wherein, the petitioner has already filed his appeal. The very fact that the petitioner has already filed the appeal, precludes this Court from now examining this matter in writ jurisdiction. The petitioner cannot be allowed to be sitting on the fence. The filing of this petition is nothing but an after thought as the petitioner wants to escape the liability of payment of pre-deposit, which is mandated by law. In a catena of judgements, the Supreme Court and various High Courts have categorically held that the condition of the pre-deposit cannot be waved/modified by the High Court in its extraordinary discretionary writ jurisdiction. Any discretion to be exercised by the writ Court is judicial in nature and is required to be exercised only in accordance with law. If the High Courts were to interfere/tinker with the amount of pre-deposit to be deposited, the entire provision of pre-deposit would become otiose. A Division Bench of this Court in Shri Subhash Jain v. Commissioner of Central Goods And Service Tax [ 2023 (4) TMI 52 - ALLAHABAD HIGH COURT] has categorically held that in case of Central Excise Act the Courts does not have the power to waive the pre- deposit. The Division Bench of Bombay High Court in Kantilal Bhaguji Mohite v. Commr of C. Excise Service Tax, Pune-III [ 2019 (2) TMI 1029 - BOMBAY HIGH COURT] has similarly laid down the ratio with regard to waiver of pre-deposit. The judgements in Shri Subhash Jain and Kantilal Bhaguji Mohite are binding - this petition has no merit - petition dismissed.
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2024 (4) TMI 903
CENVAT Credit - inputs - respondent does not possess any furnace to use such inputs in or in relation to manufacture of final product - whether for the purpose of eligibility of Cenvat Credit, the classification of the input is irrelevant? - burden of proof upon the respondent to establish that the goods covered under Central Excise Tariff sub-heading No.72044100 procured by the respondent treating them as `inputs has been used in the manufacture of finished products without requiring a furnace in the factory - HELD THAT:- As a general proposition, the Tribunal may be right that the classification issue will not be a relevant issue for the purpose of claiming of Cenvat credit. However, when an issue is argued before this Court at the instance of the assessee and the revenue, the Court is bound to consider the same. Having said so, it is now require to examine whether the Tribunal was right in allowing the assessee s appeal - In paragraph 13 of the impugned order, the Tribunal has taken note of the factual position and found that the assessee had purchased goods from SAIL and others and they have been subjected to heating, straightening to make them suitable for rolling and sometimes cut to sizes and then rerolled to manufacture their final products and the rolling mill installed by them have the capacity to roll such items. This factual position appears to have not been shown to be wrong by the Department. Further, the Tribunal has noted that the respondent s rolling mill has the capacity to roll such items and the Department has not produced any evidence to counter the claim. The argument on behalf of the revenue before is by referring to the observations made by the adjudicating authority in paragraph 6.2 of the order-in-original dated 13th February, 2017. However, the said observation is not relatable to the respondent assessee since the adjudicating authority after referring to the classification under Tariff Item No.72044100 makes an observation that for manufacture of MS Flat/Bar, MS Channel, MS Round, MS Angle, MS Ribbed Bar etc. There is a requirement of ingots and billets. However, this observation made by the adjudicating authority does not relate to the factual position of the assessee s case. Thus, there are no question of law much less substantial questions of law arising for consideration - appeal dismissed.
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2024 (4) TMI 902
CENVAT Credit - removal of capital goods as waste and scrap - waste and scrap of fire brick after use in the kiln during the period 2010-11 (upto February 2015) - Rule 3 (5A) of Cenvat Credit Rules, 2004 - HELD THAT:- Rule 3 (5A) of Cenvat Credit Rules, 2004, though provides that in case of removal of capital goods as waste and scrap, the assessee is required to pay the duty after reducing 2.5% per quarter for the period of use of capital goods. However, the appellant have taken the support of decision of BIRLA CORPORATION LTD. VERSUS COMMR. OF C. EX., RAIPUR [ 2002 (11) TMI 239 - CEGAT, COURT NO. IV, NEW DELHI] which deals with the provisions of 57S (2)(c) of Central Excise Rules, 1944 which provides that in case of removal of capital goods as waste and scrap, the assessee is required to pay the duty after reducing 2.5% per quarter for the period of use of capital goods. The appellant have taken the support of decision of Birla Corporation Limited which deals with the provisions of 57S (2)(c) of Central Excise Rules, 1944 where it was held that where capital goods are sold as waste and scrap, the manufacturer shall pay the duty leviable on such waste and scrap. It can be seen that the provisions for payment of duty on waste and scrap of capital goods in both the above rules are almost Pari-Materia, therefore, the decision of Birla Corporation is applicable. In view of the above decision the principal bench of Tribunal held that the use of fire brick which is dismantle from the under shell of kiln is not liable to duty as waste and scrap. Since the fact of the present case is identical to the above decision and considered view taken by the Tribunal on the identical facts, the duty on waste and scrap is not liable to be paid. In the present case also the appellant is not liable to pay the duty confirmed by the lower authority - the impugned order is set aside. Appeal is allowed.
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2024 (4) TMI 901
Reversal of CENVAT Credit - Interest liability on Reversal - reversal of proportionate input credit relating to the exempted goods cleared every month properly during the periods from November 2007 to January 2011 and from November 2008 to December 2010 - Rule 6(3)(a) and Rule 6(3)(ii) of CENVAT Credit Rules - HELD THAT:- The appellant s claim that sufficient balance was available in CENVAT Credit account to reverse the credit and no pecuniary benefit was derived in any manner has not been contested by Revenue. Under the CENVAT credit scheme there was no co-relation of the raw material and the final product, and the manufacturer is entitled to use the credit at any time thereafter when making payment of excise duty on the excisable product. The government has not been deprived of duty on the date it became due as sufficient credit was available to take care of the debits made even without taking the disputed credit into account. The Hon ble High Court of Karnataka in COMMISSIONER OF CENTRAL EXCISE SERVICE TAX LARGE TAXPAYER UNIT, BANGALORE VERSUS M/S BILL FORGE PVT LTD, BANGALORE [ 2011 (4) TMI 969 - KARNATAKA HIGH COURT] has examined the judgment of the Hon ble Supreme Court in UOI AND ORS. VERSUS IND-SWIFT LABORATORIES LTD. [ 2011 (2) TMI 6 - SUPREME COURT] and distinguished the same. The Hon ble High Court held that when the assessee has not taken the benefit of the CENVAT credit, there is no liability to pay interest. Once the credit entry was reversed, it is as if the CENVAT credit was not available. Also, no interest is payable in the circumstances and the question of imposition of a penalty does not arise. The impugned orders are hence set aside, and the appeals are allowed.
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2024 (4) TMI 900
Refund of accumulated credit - appellant who pays service tax under reverse charge mechanism can also be called output service provider or not - manufacturer of goods having nil tariff rate of duty is eligible for Cenvat Credit at all. Refund claim - HELD THAT:- The comprehensive coverage of MODVAT was achieved by 1996-97 by introduction of Central Value Added Tax (CENVAT).Later CENVAT scheme also allowed credit of services and the basket of inputs, capital goods and input services could be used for payment of both central excise duty and service tax. Thus, it does not stand to reason, for denying input tax credit and its refund in certain situations, on the ground that the legal provisions of such a refund is not applicable to such other persons, who have been made liable to pay service tax under Section 68(2) ibid. Further, it is also found that the above issue is no more open to dispute as in the appellants own case COMMISSIONER OF CE SERVICE TAX, KOLHAPUR VERSUS ROYAL FOODSTUFF PVT. LTD. [ 2018 (8) TMI 601 - CESTAT MUMBAI] , the Tribunal has held that they are eligible to refund of CENVAT credit under Rule 5B ibid and distinguished the other cases where the Tribunal had ordered for dismissal of the appeals filed by the appellants. Eligibility to CENVAT credit to a manufacturer of goods having nil tariff rate of duty - HELD THAT:- The provisions under Sub-rule (6)(v) to Rule 6 clearly provide that the restriction or denial for non-availability of Cenvat credit under various sub-rules of Rule 6 shall not be applicable for manufacture of exempted goods which are cleared for export. Thus, the findings of the learned Commissioner (Appeals) in denial of Cenvat credit on the ground that the appellants being manufacturer of Nil rated goods, would stand covered by the restriction under Rule 6(1) ibid is incorrect and is not legally sustainable. Furthermore, the above issue is no more res integra in view of the judgement delivered by the Hon ble High Court of Bombay in the case of UNION OF INDIA VERSUS SHARP MENTHOL INDIA LTD. [ 2011 (4) TMI 27 - BOMBAY HIGH COURT] where it was held that since the exempted menthol crystals as well as dutiable peppermint oil manufactured out of duty paid menthol have been exported by the assessee, the provisions of Rule 6(1) to 6(4) of the 2004 Rules are not applicable and as per Rule 5 of 2004 Rules, the assessee was entitled to avail the Cenvat credit of duty paid on menthol used in the manufacture of exempted menthol crystals and utilize the said credit for payment of duty on clearance of peppermint oil either for home consumption or for export. In the present case, since the peppermint oil has been exported on payment of duty, the assessee was entitled to claim rebate of the duty paid on peppermint oil. Thus, it is found that there are no strong grounds to deny refund of CENVAT credit under Rule 5B of CENVAT Credit Rules, 2004. Consequently the impugned order dated 29.09.2015 is not legally sustainable. The appellants are eligible for total refund of CENVAT credit of Rs. 12,65,459/- in respect of the claims given - the impugned order is set aside - appeal is allowed in favour of the appellants.
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2024 (4) TMI 899
Short payment of Central excise duty - reversal of irregular credit - revenue neutrality - difference in book stock and physical stock - Proof of replacement of goods - Extended period of Limitation. Short payment of duty - stock transfer of goods to their sister concern - HELD THAT:- Demand has been raised on the appellant holding that certain elements of cost have not been added while ascertaining the assessable value. It is observed that the department has not adduced any evidence to the effect that which cost was not included and why such cost is to be included. In the absence of any specific cost not added in the assessable value by the appellant, we observe that the allegation of the department is not substantiated. Revenue Neutrality - HELD THAT:- The entire exercise is revenue neutral and thus the demand is liable to be set aside on this ground alone - reliance placed on the decision of this Tribunal in the case of M/S. HINDALCO INDUSTRIES LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, BHUBANESWAR-II [ 2023 (5) TMI 720 - CESTAT KOLKATA] wherein on similar facts, this Tribunal has held that when the entire exercise is revenue neutral, the demand is not sustainable as the duty paid will be available as credit for their sister unit and there is no loss of revenue to the exchequer. The demand confirmed in the impugned order on this count is not sustainable and accordingly, the same is set aside. Short payment of duty on the goods sent free of cost to customers - HELD THAT:- The appellant has adopted the valuation method of 110% of the cost, to pay duty on the free supplies to customers - it is observed that when similar goods are not sold by the appellant, the valuation adopted by the Appellant is valid and thus we hold that there is no short payment of tax. Accordingly, the demand confirmed in the impugned order on this count is not sustainable and hence the same is set aside. Denial of CENVAT Credit taken on the goods rejected by the customers and returned to the supplier and subsequently replaced - HELD THAT:- When the goods are purchased as inputs but are later returned for being defective and are replaced by the supplier, credit cannot be denied to the supplier. In support of this contention reliance placed on the decision of the Tribunal in the case of ERICSSON INDIA PVT. LTD. VERSUS COMMISSIONER OF C. EX. S.T., JAIPUR [ 2014 (10) TMI 896 - CESTAT NEW DELHI] , Approved in COMMR. OF C. EX. S.T., JAIPUR-I VERSUS ERICSSON INDIA PVT. LTD. [ 2018 (1) TMI 1266 - RAJASTHAN HIGH COURT] . Proof of replacement of goods - HELD THAT:- It is observed that the SAP entries will prove that the goods retuned have been replaced or not. However, credit on the goods returned cannot be denied to the appellant on only procedural ground. Accordingly, the demand confirmed in the impugned order on this count is not sustainable and hence the same is set aside. Denial of CENVAT Credit related to services not used in relation to manufacture of final products - HELD THAT:- It is observed that the credit in this case has been availed by the Appellant on certain installation and other services which were availed in respect of Erection, Commissioning, Installation provided by the Appellant at the head office. It is observed that there is no specific finding in the impugned order for denial of this credit to the appellant. Accordingly, the appellant is eligible for this credit. Demand of duty on account of difference in book stock and physical stock in respect of Plate Hardox and MS Plate - HELD THAT:- The duty has been demanded from the appellant on the assumption that the said goods have been removed without payment of duty. We observe that the department has not produced any evidence to substantiate the allegation that the goods have been clandestinely removed by the Appellant without payment of duty. It is a settled law that no demand can be raised without any evidence or proof of clandestine removal. Since there is no evidence available on record to substantiate the allegation of clandestine removal, the demand confirmed in the impugned order on this count is not sustainable and accordingly the same is set aside. Since the demands of central excise duty and the reversal of Cenvat Credit confirmed in the impugned order are held to be not sustainable, the question of demanding interest and imposing penalty on the appellant does not arise. The impugned order is set aside - appeal allowed.
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CST, VAT & Sales Tax
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2024 (4) TMI 898
Prayer for listing the review petitions in open Court/oral hearing - Taxability - gutka/gutkha/guhtka - appellants argued that state legislatures were not empowered to levy sales tax on those articles, in view of the provision in the Constitution enabling the Union to levy additional duties of excise, and further that in any case, the rate of state tax cannot exceed the limit prescribed by the Central Sales Tax Act, 1956. HELD THAT:- Prayer for listing the review petitions in open Court/oral hearing is rejected - no case for review of the common judgment dated 4-5-2023 is made out. The review petitions are, accordingly, dismissed.
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Indian Laws
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2024 (4) TMI 897
Legal implication of a promotional trailer - promotional trailer is an offer or a promise - unfair trade practice - absence of specific content from the trailer in the movie - whether there is any deficiency in the provision of the entertainment service that the consumer has availed by paying the consideration through the purchase of a ticket? - HELD THAT:- A promotional trailer is unilateral. It is only meant to encourage a viewer to purchase the ticket to the movie, which is an independent transaction and contract from the promotional trailer. A promotional trailer by itself is not an offer and neither intends to nor can create a contractual relationship. It is well-established in contractual jurisprudence that an advertisement generally does not constitute an offer and is merely an invitation to offer or invitation to treat . Since the promotional trailer is not an offer, there is no possibility of it becoming a promise. Therefore, there is no offer, much less a contract, between the appellant and the complainant to the effect that the song contained in the trailer would be played in the movie and if not played, it will amount to deficiency in the service. The transaction of service is only to enable the complainant to watch the movie upon the payment of consideration in the form of purchase of the movie ticket. This transaction is unconnected to the promotional trailer, which by itself does not create any kind of right of claim with respect to the content of the movie. In various decisions, LAKHANPAL NATIONAL LTD. VERSUS M.R.T.P. COMMISSION AND ANOTHER [ 1989 (5) TMI 321 - SUPREME COURT] , KLM ROYAL DUTCH AIRLINES VERSUS DIRECTOR GENERAL OF INVESTIGATION AND REGISTRATION [ 2008 (10) TMI 353 - SUPREME COURT] . This Court has held that a false statement that misleads the buyer is essential for an unfair trade practice . ibid. A false representation is one that is false in substance and in fact, and the test by which the representation must be judged is to see whether the discrepancy between the represented fact and the actual fact would be considered material by a reasonable person. The ingredients of unfair trade practice under Section 2(1)(r)(1) are not made out in this case. The promotional trailer does not fall under any of the instances of unfair method or unfair and deceptive practice contained in clause (1) of Section 2(1)(r) that pertains to unfair trade practice in the promotion of goods and services. Nor does it make any false statement or intend to mislead the viewers - There is another important distinction that we must bear in mind, i.e., the judicial precedents on this point do not relate to transactions of service relating to art. Services involving art necessarily involve the freedom and discretion of the service provider in their presentation. This is necessary and compelling by the very nature of such services. The variations are substantial, and rightly so. The findings of the impugned order that there is deficiency of service and unfair trade practice is set aside - appeal allowed.
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2024 (4) TMI 896
Dishonour of Cheque - territorial jurisdiction - Foreign instrument - Cheque not made payable in India; and, was not drawn on a bank in India - whether the presentation of the subject cheque at the Branch in Greater Kailash-I, New Delhi will be sufficient to invoke the provisions of Section 138 of the NI Act and make the complaint filed by the respondent no. 2 as maintainable? - HELD THAT:- In the present case, the cheque in question is not made in India; it was not made payable in India; and, was not drawn on a bank in India. It is, therefore, not an inland instrument - In the present case, the cheque in question is therefore, a foreign instrument . While it is true that in the absence of stipulation that the cheque can only be presented for payment at Dubai, the cheque could be deposited by the respondent no. 2 at its bank in India as far as Section 135 of the NI Act, it requires the cheque to be specifically made payable at a place different from where it was made or indorsed. In my opinion, therefore, merely because there is no prohibition on the cheque being presented for payment at a place different from where it is made or indorsed, Section 135 of the NI Act cannot be attracted - as far as a cheque is concerned, unless specifically made payable at some other place, it must be presented at the bank upon which it is drawn, that is, where the bank of the drawer is situated. This would also have the effect on the place where the offence under Section 138 of the NI Act is said to have been committed, as shall be discussed herein below. In DASHRATH RUPSINGH RATHOD VERSUS STATE OF MAHARASHTRA ANOTHER [ 2014 (8) TMI 417 - SUPREME COURT] , the Supreme Court has held that a reading of Section 138 of the NI Act in conjunction with Section 177 of the Cr.P.C. leaves no manner of doubt that the return of the cheque by the drawee bank alone constitutes the commission of the offence and indicates the place where the offence is committed. It held that the place, situs or venue of judicial inquiry and trial of the offence must logically be restricted to where the drawee bank is located. It held that the complainant is statutorily bound to comply with Section 177, etc., of the Cr.P.C. and therefore, the place or situs where the Section 138 complaint is to be filed is not of his choosing; the territorial jurisdiction is restricted to the court within whose local jurisdiction the offence was committed, which is where the cheque is dishonoured by the bank on which it is drawn. The offence under Section 138 of the NI Act is deemed to have been committed at a place where a cheque is delivered for collection at the branch of the bank of the payee or holder in due course, and the offence shall be inquired into and tried only by a court within whose local jurisdiction, if the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course, as the case may be, maintains the account, is situated. In the present case, the cheque was presented for payment by the respondent at Delhi. There is no prohibition of the cheque being deposited by the respondent no. 2 for collection in Delhi. Therefore, in terms of Section 142(2) of the NI Act, the Court at Delhi shall have jurisdiction to inquire into and try the offence under Section 138 of the NI Act. In the present case, due to the amendment in Section 142 of the NI Act, now the dishonour of the cheque, due to its presentation for payment at the bank of the respondent no. 2 at Delhi, is deemed to have taken place at Delhi. Though, Section 134 of the NI Act states that in absence of a contract to the contrary, the liability of the drawer of a foreign cheque is regulated in all essential matters by the law of the place where he made the cheque, there is nothing in the said provision which would exclude the application of Section 138 of the NI Act read with Section 142 of the NI Act. Merely because the payee or holder in due course of a foreign cheque chooses to present the cheque in India out of mala fide, the application of the provision of Section 138 of the NI Act and the jurisdiction of the court where such cheque is deposited for payment, cannot be ousted. The unexplained delay itself is sufficient ground for this Court to refuse to exercise its inherent jurisdiction under Section 482 of the Cr.P.C. to quash the complaint at this belated stage. There are no merit in the present petition, the same is dismissed.
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