TMI Tax Updates - e-Newsletter dated: April 4, 2024 - with Direct Tax, Indirect Tax and GST Updates and Updates on FTP, FEMA, IBC & Corporate Laws etc. published on TMI with Latest Case Laws

Login

Tax Management India. Com
Law and Practice : Digital eBook
Research is most exciting & rewarding

Case Laws Acts Notifications Circulars Classification Forms Manuals Articles News D. Forum Highlights Notes

TMI - e-Newsletter TaxTMI Levy of GST - Royalty- seigniorage fee paid by the... TaxTMI Levy of Penalty u/s 129(3) of the Central Goods and... TaxTMI Levy of penalty - goods were undervalued - The High... TaxTMI Cancellation of GST Registration - Legal Validity... TaxTMI Control of income-tax authorities - U/s 118 -... TaxTMI Foreign Exchange Management (Foreign Currency... TaxTMI Amendment to Regulation 3.1 of FEMA, Mode of... TaxTMI Amendment to Regulation 4 of FEMA, Mode of Payment... TaxTMI Securities and Exchange Board of India (Investment... TaxTMI Securities and Exchange Board of India (Research... TaxTMI Taxation on gains arising out of compulsory... TaxTMI LTCG - year of assessment - The Tribunal noted... TaxTMI Penalty u/s. 270A - Under-reporting of income /... TaxTMI Exemption u/s 11 - assessee has not e-filed or not... TaxTMI Scope of SCN - impugned order proceeds on a... TaxTMI Latest Case-Laws TaxTMI Latest Notifications + Circulars TaxTMI GST Council Decisions TaxTMI

Follow us:


Tax Updates - TMI e-Newsletters

Home e-Newsletters Index Year 2024 April Day 4 - Thursday ← Older Newer →
TMI e-Newsletters FAQ
Login to see detailed Newsletter
TMI Tax Updates - e-Newsletter April 4, 2024 Case Laws in this Newsletter: GST Income Tax Customs PMLA Service Tax Central Excise Highlights / Catch Notes GST: Validity of Order for Demand Notice - The case involved a dispute over Input Tax Credit (ITC) availed by the petitioner for purchases made from a supplier who failed to fulfill certain GST obligations. The Department issued a demand to recover the ITC, alleging contravention of relevant provisions. The petitioner, however, argued procedural irregularities, asserting that the adjudication authority passed orders without proper consideration of their submissions. They claimed unawareness of the proceedings until orally informed about the recovery by the Department. The High Court, considering the petitioner's contentions, condoned the delay in filing the appeal and directed them to pay a portion of the disputed tax before preferring the appeal. Visit to Get Source GST: Seeking revocation of the Cancellation of the GST registration retrospectively - petitioner not found functioning from the given address - The High Court examined the petitioner's challenge against the retrospective cancellation of their GST registration. The petitioner argued that the cancellation was based on a mistaken identity, as the Field Visit Report cited was not related to them. The Court acknowledged the petitioner's concerns and directed the competent authority to review the revocation petition and address the alleged errors within two weeks. The petitioner was granted the opportunity to pursue additional legal recourse if necessary. Visit to Get Source GST: Principles of natural justice - decision was not taken by same members of AAR who have heard the case - Taxability - club and association services - principle of mutuality - services such as short-term accommodation, restaurant and recreational services provided by them to its members - The Appellate Authority set aside the ruling of the AAR and remanded the matter back to reconsider the application, considering all contentions raised by the Appellant. - They emphasized the need for the AAR to address the Appellant's arguments regarding the retrospective amendment and the applicability of the principle of mutuality. Visit to Get Source GST: Exemption from GST - Pure services or not - supply of service for turpentine treatment - The MOU provided by the applicant indicates the provision of security guards to a Panchayat Samiti, which is considered a local authority. However, the service of security does not directly relate to functions entrusted to a Panchayat under Article 243G of the Constitution. - The absence of specific work orders or contracts provided by the applicant makes it difficult to determine the nature of these services. However, based on the description provided, it appears that these services involve the supply of goods along with manpower, making them composite supplies and not pure services. Consequently, they do not qualify for exemption under the notification. - The Advance Ruling Authority concludes that the applicant is not eligible for exemption benefits under Sr. No. 3 of Notification No. 12/2017-Central Tax (Rate) Visit to Get Source GST: Supply or not - future contracts - works contract services - pure services or not - supply related to the business of pumping stations and reservoirs - The Authority rejected the application for a concluded supply, as advance rulings are only applicable to ongoing or proposed transactions. The Authority reaffirmed that advance rulings are limited to ongoing or proposed transactions, as per the Act's definition. - Future contracts for works contract services were deemed not covered by the exemption notification. Therefore, the application for future transactions was also rejected. Visit to Get Source Income Tax: Validity of Income Tax Settlement order - additions made with respect to the infusion of share capital and the denial of benefit of deductions u/s 80IC - second round of litigation - The Court found substantial merit in the assessee's submissions regarding the infusion of share capital. The Court concluded that the addition of INR 11.26 crores by the ITSC was unsubstantiated, especially in light of evidence suggesting the funds' availability for such investment by the implicated company in the relevant assessment years. - The High Court observed a pivotal mistake in the ITSC's handling of share capital issues, particularly failing to account for the Department's contradictory stances and the non-application of Section 115BBE of the Act, which pertains to tax on income with unexplained credit. Visit to Get Source Income Tax: Validity of reassessment proceedings - scope of new regime u/s 148A - The High Court found that the respondents misinterpreted the Supreme Court's directive in Union of India & Ors. vs. Ashish Agarwal. The directive was not to reopen completed assessments but to treat notices issued post-April 1, 2021, under the unamended provisions as if they were issued under the new provisions of Section 148A. - The Court underscored that the procedural safeguards introduced by the Finance Act, 2021, through Section 148A were aimed at protecting the assessee's rights. - Consequently, the Court quashed the impugned SCN issued u/s 148A(b), the order u/s 148A(d), and the notice u/s 148. Visit to Get Source Income Tax: Denial of registration u/s 12AB - filing Form-10A in wrong section code - The High Court noted that the petitioner had indeed furnished the required information digitally in response to the notice dated 05.12.2022. - The Court found that the rejection of the petitioner's application for registration under Section 12AB lacked proper reasoning. The order dated 16.03.2023 was set aside, and it was directed that the application for registration be restored for reconsideration by the Commissioner of Income Tax (Exemption), Hyderbad. Visit to Get Source Income Tax: Delay in issuing Refund under Direct Tax Vivad Se Vishwas Scheme 2020 - interest on delayed refund - Despite the issuance of Form No. 5, the refunds for the Assessment years 2010-11 and 2012-13 were not promptly processed, leading to grievances from the petitioner. - The High Court examined the circumstances and precedent, noting that the delay in issuing refunds was not adequately explained by the department. Relying on the principles established in the Tata Chemicals case, the court concluded that the petitioner was entitled to interest on the delayed refunds. Visit to Get Source Income Tax: Disallowance of interest u/s 36(1)(iii) - The AO had disallowed the interest claimed by the assessee on advances made to its Director, citing a lack of nexus between the advances and the business activities of the assessee. The assessee contended that the advances were made for business purposes and out of commercial expediency. - The Appellate Tribunal recognized the importance of establishing a clear nexus between the advances and the business activities of the assessee. It also emphasized the need to verify the availability of interest-free funds with the assessee at the time of advancing the loan. - The ITAT ordered the AO to examine the additional evidence provided by the assessee and provide an opportunity for the assessee to substantiate its case. Visit to Get Source Income Tax: Exemption u/s 11 - benefit denied on delay in filling the audit report - The Appellate Tribunal acknowledged the delay in filing Form 10B but noted that the issue of denial of exemption solely on the grounds of this delay has been addressed in various judicial precedents. It cited the Gujarat High Court's decision in Sarvodaya Charitable Trust vs. ITO(E) and similar rulings by other benches. These rulings established that if a trust substantially satisfies the conditions for exemption under section 11, denial of exemption solely on the basis of a procedural delay is unjustified. Visit to Get Source Income Tax: Estimation of income - Excess stock found during the survey operation - The ITAT highlighted that only the profit element embedded in such purchases should be added to the income of the assessee. - Considering the absence of evidence regarding the fate of the unaccounted purchases in the assessee's financial statements, the Tribunal deemed it necessary to estimate the profit element for tax purposes. While the assessee suggested a profit rate of 2%, the Tribunal deemed a higher rate appropriate, settling at 5% for the sake of justice and fair play. Visit to Get Source Income Tax: Condonation of delay - delay of 1607 days in filing the appeal by the assessee before ITAT - The Tribunal acknowledged the significant delay but emphasized that the length of the delay should not be the sole determining factor. It considered the reasons provided by the assessee, including ill health and financial stress, and compared the delay to similar cases where longer delays had been condoned. Ultimately, the Tribunal found sufficient cause for the delay and decided to condone it. - Regarding the addition u/s 69, the Tribunal noted that the orders of the AO and CIT(Appeals) were ex-parte. It directed the case to be restored to the file of the Assessing Officer for fresh adjudication. Visit to Get Source Income Tax: Time limit to file application u/s 80G(5) - assessment of trust - The tribunal interpreted the provisions in light of the Budget Speech of the Hon’ble Finance Minister 2020, highlighting the intent behind the introduction of provisional registration to simplify compliance for new and existing charitable institutions. - The tribunal noted that the provisions allowed for provisional approval and subsequent regular registration. It reasoned that the time limit for application, specifically mentioned in clause (iii) of the proviso to Section 80G(5), was applicable to trusts or institutions commencing activities after provisional registration. However, for existing trusts or institutions engaged in charitable activities before provisional registration, the six-month time limit applied from the expiry of provisional registration. Visit to Get Source Income Tax: Taxability in India of receipts of foreign AEs - Fee for Technical Services (FTS) - Master Service Agreement relied upon - The Tribunal extensively reviewed the MSA, emphasizing that it established an independent contractor relationship between the Indian entity and its foreign counterparts. It highlighted that the foreign entities had ownership of the intellectual property developed, bore the risk of performance, and had an obligation to indemnify the Indian entity for errors or performance issues. - The ITAT's ruling clarifies the distinction between revenue sharing from a consolidated project and FTS, reinforcing the principle that the nature of the payment depends on the underlying contractual relationships and the actual conduct of parties. - It was held that payments made by HCLT to the foreign AEs could not be construed as FTS. Visit to Get Source Customs: Classification of imported goods - Menthol Scented Supari - The High court observed that 'Menthol Scented Supari' squarely fits within the ambit of Chapter 21, as defined by Supplementary Note 2. This note explicitly mentions 'Supari' as a preparation containing betel nuts, with or without other ingredients like menthol, excluding lime, katha (catechu), or tobacco. - Applying these rules, the court deduced that the specific mention of 'Supari' under Chapter 21 takes precedence over the more general classification of nuts under Chapter 8. The court underscored the legislative intent to classify 'Supari' distinctly, reinforcing its decision with statutory interpretations. Visit to Get Source Customs: Import of hot rolled steel plates and steel sheets - Fixing of minimum import price - The petitioner argues that they applied for registration within the stipulated timeframe of 15 days, as required by paragraph 1.05(b) of the Foreign Trade Policy, despite a delay in actual registration. - Despite a delay in registration, the court finds that the petitioner acted in accordance with the Foreign Trade Policy by submitting the letter of credit within the required timeframe. The court emphasizes that the petitioner's compliance with the policy's spirit should be considered. - Matter restored back. Visit to Get Source Customs: Classification of imported goods - Rice Mill Rubber Roller - The Tribunal held that the imported "Rice Mill Rubber Rollers" should be classified under CTH 4016, as argued by the respondent. The Tribunal examines the relevant Section Notes and Chapter Notes, particularly those under Section XVI, to ascertain the appropriate classification. It concludes that the exclusion clause under Section XVI applies to the imported goods, supporting their classification under CTH 4016. While acknowledging the vulcanization of the goods, the Tribunal emphasizes the material composition and characteristics necessary for their intended use. - Consequently, the appeal filed by the appellant dismissed. Visit to Get Source Customs: Smuggling - Gold - absolute confiscation - onus to prove - The Tribunal noted that the gold seizure occurred during a town seizure, and the gold lacked foreign markings. The person in possession had stated that it was purchased from a legitimate source in Chennai. Therefore, the Customs Officer lacked sufficient basis to conclude that the gold was of foreign origin or smuggled. - The appellant provided detailed evidence of the gold purchase transaction, including the source of funds and the seller's details. The Tribunal found this evidence credible and sufficient to establish the legitimacy of the purchase. - Consequently, the Tribunal set aside the impugned order, granting the appellant consequential benefits. Visit to Get Source Customs: Classification of imported goods - quicklime - The Appellate Tribunal ruled in favor of classification under tariff item 2522 1000. Decision based on the analysis of the nature of the goods and their intended use. - The Tribunal determined that the impurities and chemical composition did not meet the purity benchmark for classification under tariff item 2825 9090. Findings based on test reports and interpretation of relevant standards. Visit to Get Source Customs: Revocation of Customs Broker License - Overvaluation and misdeclaration with intent to claim drawback under section 75 of Customs Act, 1962 - The tribunal acknowledged the breach of the obligation to advise compliance with customs regulations but found no evidence to support the other alleged breaches. They clarified that the appellant's role was limited and that they were not responsible for valuation or declaration of goods. - Considering precedent cases and mitigating circumstances, the tribunal overturned the revocation of the license and reduced the penalties imposed. While recognizing a breach in KYC norms, the tribunal deemed the imposition of all penalties for this single breach excessive. Visit to Get Source Customs: Classification of imported goods - plastic regrind - waste or not - restricted goods or prohibited goods - The Tribunal acknowledges the restrictions on the import of plastic waste under the Foreign Trade Policy (FTP) but finds that the lower authorities failed to provide sufficient evidence to justify the classification of the disputed goods as 'waste.' As a result, the Tribunal sets aside the decision to confiscate the goods. - The Tribunal deems the proposed destruction of goods as unlawful under the Customs Act, 1962, and orders the goods to be released to the importer. Visit to Get Source Customs: Classification of imported goods - The Tribunal underscored the principle that classification should be determined based on the specific descriptions provided in the Tariff Act, favoring specificity over general descriptions. The Tribunal decisively found that: Sea Squad Swim Seats and Arm Bands were more aptly classified under the heading for water sports equipment, given their specific use for swimming activities, particularly for children, which does not diminish their classification as sports equipment. - Swimming Goggles, Headgear, and Fabric Hats were determined to be incorrectly classified under a general heading for sports equipment. Instead, they were found to be more accurately classified under their respective specific headings related to their actual use and material composition. - In conclusion, the Tribunal allowed the appeals filed by the importer, granting them the benefit of lower duty rates. Visit to Get Source PMLA: Money Laundering - Scheduled offences - whether the Non-Bailable Warrants (NBW) issued against the petitioner are liable to be quashed? - The High Court affirmed the trial court's decision to issue NBWs against the petitioner, citing repeated non-compliance with court summons and a deliberate avoidance of legal proceedings. The Court underscored that the issuance of NBWs was a measured response to ensure the petitioner's court appearance, given the lack of cooperation and evasion from the judicial process. - The judgment reaffirms the principle that while courts must safeguard personal liberty, they must also ensure that such liberty does not undermine the legal process or obstruct justice. Visit to Get Source Service Tax: Principles of natural justice - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - The petitioner argued that it had already declared and paid taxes on the mentioned turnover. - The High Court found merit in the petitioner's argument that the Designated Committee violated procedural requirements by not issuing Form SVLDRS 2 and denying a personal hearing before issuing Form SVLDRS 3. - Consequently, the High Court quashed Form SVLDRS 3 and remanded the matter back to the Designated Committee. It directed the committee to issue Form SVLDRS 2 to the petitioner and provide an opportunity for a personal hearing before passing a reasoned order. Visit to Get Source Service Tax: Classification of services - Reverse charge mechanism (RCM) - Place of provision of services - Services procured from two overseas companies by the appellant, a Special Economic Zone (SEZ) unit engaged in software development - The Tribunal found the services provided by the overseas companies were in the nature of "intermediary services" rather than "Business Auxiliary Services." It emphasized that intermediary services involve facilitating or arranging the provision of services between two or more persons without altering the nature or value of the services. - Given the intermediary nature of the services, the place of provision was determined to be the location of the service providers (outside India), thus falling outside the scope of taxable services under the Indian Service Tax regime. - The Tribunal observed that the reverse charge mechanism did not apply in this case, as the services did not qualify as taxable services within the taxable territory of India. Visit to Get Source Service Tax: Demand of service tax - The appellant argued that it was engaged in the construction of false ceilings and was a sub-contractor for the main contractor, who had allegedly paid service tax on the total work. - The Tribunal upheld the Department's decision of best judgment assessment, emphasizing that the appellant failed to register, pay tax, or file returns. The argument of being a sub-contractor was dismissed, and it was clarified that even subcontractors are liable to pay tax on their services. - The Tribunal affirmed the imposition of penalties, considering the appellant's failure to fulfill their tax obligations and provide sufficient documentation. Visit to Get Source Service Tax: Classification of services - The appellant declared itself as a provider of "cargo handling services" to the income tax department but as a goods "transport agency services" provider to the service tax department. The department initiated inquiries suspecting misclassification of services. - he Tribunal found that the appellant transported small consignments, often door to door, with a standard declaration excluding items typically barred from courier packages. These characteristics aligned more closely with courier services than goods transport agency services. - Upholding the classification as courier services, the Tribunal set aside the demand for an extended period of limitation and the penalty under section 78. Visit to Get Source Service Tax: Classification of service - Services in relation to providing vehicles to associates, in course of its business activities - The Tribunal found that the services related to vehicle sales and incentives did not constitute 'Business Auxiliary Services' as defined under the Finance Act. It reasoned that discounts and incentives are a reduction in purchase price and do not represent consideration for services rendered to the vehicle manufacturers. This was supported by several precedents which established that such incentives are akin to trade discounts and not taxable services. Visit to Get Source Central Excise: Exemption from Duty - Supply chain dynamics of food preparations intended for free distribution to economically weaker sections under a government-approved program - The tribunal found that the appellant's products were indeed eligible for the exemption under Notification No. 12/2012-CE. It was determined that both the Complementary Weaning Food (CWF) and the Blend of Critical Processed Materials (BCPM) manufactured by the appellant were intended for free distribution to beneficiaries under the ICDS scheme, fulfilling the criteria laid down in the notification. - The tribunal also addressed the invocation of the extended period for the demand of duties. It concluded that there was no suppression of facts by the appellant that warranted such invocation, making the demand unsustainable on limitation grounds as well. Visit to Get Source Articles High Court allows refund of ITC reversed when Tax is paid by the Supplier GST INVESTIGATIONS – RECENT DGGI GUIDELINES SIMULTANEOUS PROCEEDINGS PERMISSIBLE UNDER TABITRATION ACT AND NEGOTIABLE INSTRUMENTS ACT? Revenue Department is not empowered to seize Cash under GST Notifications Customs 22/2024 - dated 2-4-2024 - Cus Seeks to fully exempt the applicable export duty on exports of Kalanamak rice not exceeding 1000 MTs subject to the specified conditions. DGFT 02/2023 - dated 3-4-2024 - FTP Export of Onions (under HS code 0703 10 19) to UAE Circulars / Instructions / Orders Customs - PUBLIC NOTICE No. 15 / 2024 - dated 16-3-2024 Monthly Public Notice containing therein list of EGM errors News Advisory: Self Enablement For e-Invoicing Regulatory Insights into 2024 (Special Address - delivered by Shri M. Rajeshwar Rao, Deputy Governor, Reserve Bank of India - March 30, 2024 - at the India Investment Summit & Awards organised by Mint in Mumbai) CCI approves acquisition NFCL Assets and 100% shareholding of ZeroC by AMG India using proceeds of investments received from AMG Entities, BSI, Gentari, and Platinum Rock CCI approves acquisition of 100% equity stake of Sharekhan Ltd. and Human Value Developers Pvt. Ltd. collectively by Mirae Asset Capital Markets (India) Pvt. Ltd. and Mirae Asset Securities Co. Ltd., respectively CCI approves acquisition of Compulsorily Convertible Preference Shares (CCPS) in Northern Arc Capital Limited by International Finance Corporation (IFC) CCI approves subscription of compulsorily convertible preference shares of Pritam International Private Limited by India Advantage Fund S5 I, HCL Corp, Mirabilis Investment Trust, Mr. Aashil Apurva Shah and Mr. Ansh Ashit Shah CCI approves acquisition of 10.39% shareholding of Annapurna Finance Private Limited and subscription to its certain debentures by Piramal Alternatives Trust CCI approves subscription to 14,25,79,161 equity shares of Max Life Insurance Company Limited by Axis Bank Limited CCI approves acquisition of shares of MG Motor India Private Limited by IndoEdge India Fund – Large Value Fund (LVF) Scheme Case Laws: GST 2024 (4) TMI 106 Validity of Demand Order - Seeking opportunity to upload the supporting documents, inter-alia, the invoices, payment proof etc. and also an opportunity of personal appearance - HELD THAT:- Learned counsel for petitioner submits that the petitioner had appeared before the concerned authority, however, since a large number of matters were listed in one day before the proper officer and no record of appearance is maintained, the impugned order records that petitioner did not appear. He further submits that a reply was submitted, however, on account of an error in the office of the petitioner, annexures to the reply, though mentioned in the reply, could not be uploaded. He prays that an opportunity be given to the petitioner to upload the supporting documents, inter-alia, the invoices, payment proof etc. and also an opportunity of personal appearance be given to the petitioner. The impugned order dated 29.12.2023 is set aside. The matter is remitted to the proper officer to re-adjudicate the Show Cause Notice. Petitioner shall file all the relevant invoices and the supporting documents within a period of two weeks from today. Thereafter, the property officer shall re-adjudicate the Show Cause Notice after giving an opportunity of personal appearance. 2024 (4) TMI 105 Validity of Order for Demand Notice - Without considering any submission, the adjudication authority passed order - petitioner was under the bona fide belief that the 1st respondent is satisfied with the reply - filled appeal on online forum - sufficient cause from non-presenting the appeal within the period of three months as per Section 107(1) - HELD THAT:- In the instant case, though the petitioner has submitted his reply dated 17.05.2023 to the show cause notice in which the date was mentioned as 18.05.2023 and the petitioner was not aware of the order passed by the adjudication authority on 02.08.2023 and a DRC-07 notice on 03.08.2023. The petitioner was under the bona fide belief that the 1st respondent is satisfied with the reply dated 17.05.2023 and the proceedings are kept in abeyance. Only after the receipt of oral communication with regard to the recovery by the department the petitioner came to know about the proceedings of the 1st respondent. Thus , this Court is of the considered view that the delay of 2 months and 21 days is condoned on condition that the petitioner shall pay 15% of the disputed tax on or before 25.03.2024 and on payment of the same, the petitioner may prefer the appeal before the 1st respondent. The Deputy Commissioner (ST), GST Appeal, Chennai, within a period of two weeks thereof. In the result, the writ petition stands disposed of. 2024 (4) TMI 104 Seeking revocation of the Cancellation of the GST registration retrospectively - petitioner not found functioning from the given address - HELD THAT:- Petitioner submits that he has already filed a revocation petition and candidly stated that in case a fresh field visit is required, petitioner would be willing to accept the same. Thus, petition is disposed of directing the proper officer to consider the revocation petition filed by the petitioner in accordance with law as also the contention of the petitioner that an incorrect Field Visit Report has been relied upon. The Competent Authority shall pass an order within a period of two weeks from today. Petition is disposed of in the above terms. 2024 (4) TMI 103 Validity Of assessment order - No opportunity of personal hearing - tax demand - pre-GST period - notice in Form ASMT-10 issued alleging discrepancies in returns - HELD THAT:- The operative portion of the impugned assessment order clearly indicates that the tax liability was confirmed by disregarding the objections of the petitioner that the receipts in Form 26AS pertain to the pre-GST period. The relevant Form 26AS is on record and prima facie indicates that some of the receipts pertain to the pre-GST periods. In these circumstances, the interest of justice demands that the petitioner should be heard. Solely for this reason, the impugned assessment order warrants interference, albeit by putting the petitioner on terms. Accordingly, the impugned assessment order is quashed subject to the condition that the petitioner remits 10% of the disputed tax demand as agreed to within a maximum period of two weeks from the date of receipt of a copy of this order. Subject to being satisfied that 10% of the disputed tax demand was received, the assessing officer is directed to provide a reasonable opportunity, including a personal hearing, and thereafter issue a fresh assessment order in accordance with law within a maximum period of two months thereafter. W.P. is disposed of on the above terms. 2024 (4) TMI 102 Principles of natural justice - decision was not taken by same members of AAR who have heard the case - Taxability - club and association services - services such as short-term accommodation, restaurant and recreational services provided by them to its members - principle of mutuality - HELD THAT:- The contention of the appellant is noted that though the said amendment was retrospective, however, it was not passed by all state assemblies as well as it was not operational till the date when the Ruling was pronounced. This amendment was brought into force vide Notification No. 39/2021-Central Tax dated 21.12.2021 w.e.f. 1.1.2022. The Advance Ruling has been pronounced on 27.09.2021 on the basis of an amendment which was not operational as on the date of pronouncing Ruling. The appellant avers that such a Ruling is not sustainable and deserves to be quashed. The AAR need to take note of the contentions pass a speaking order with reference to them. It is also noted that the decision was not taken by same members of AAR who have heard the case - This is a violation of the principles of natural justice. The Ruling of the AAR, Rajasthan is set aside matter is remanded back to AAR to decide the application de-novo after all the contentions of the appellant. 2024 (4) TMI 101 Scope of Advance Ruling application - Net impact of GST on the cost of a pre-GST lump sum contract - Computation of value of supply to levy GST of a lump sum work contract entered under pre-GST tax regime - HELD THAT:- The subject application for Advance Ruling made by the applicant is not maintainable and hereby rejected under the provisions of the GST Act, 2017. 2024 (4) TMI 100 Exemption from GST - Pure services or not - supply of service for turpentine treatment - supply of manpower - man with machine - security services - anti-termite services - service provided to Central Government, State Government, Local Authorities, Governmental Authorities, Government Entities such as Gram Panchayats, Panchayat Samiti viz. Block Development Officer and Other Government Agencies viz. Central Warehousing Corporation - HELD THAT:- It is found appropriate to discuss the definition of Pure Service . Nowhere Pure Service has been defined under GST Act and Rules, framed thereunder. However as per general terms, Pure Service is a service that does not involve the supply of any goods or the use of goods as a material for rendering the service. Examples of Pure Service include consultancy, training, software development, accounting, legal services, etc. Pure services are intangible and cannot be touched, tasted, or seen. Security service - HELD THAT:- It is found that Security Service, provided by the applicant, is not entrusted to a Panchayat under Article 243G of the Constitution or to a Municipality under Article 243W of the Constitution. Therefore, the applicant is not entitled to avail exemption in term of Serial No. 3 of Notification No. 12/2017-CT(Rate) dated 28.06.2017. Manpower with machine supply - Anti-termite Treatment - Pest Control Service - HELD THAT:- The applicant has not supplied any copy of work order with regard to provision of Manpower with machine; Anti-termite Treatment and Pest Control Service, consequently it is not possible to determine the nature of service. However on perusal of the contents, mentioned in their submission, it is evident that these services have been supplied with goods. Therefore the same is termed as Composite Supply and not Pure Service. The applicant is not entitled to avail benefit under Sr. No 3 of Notification No. 12/2017-CT (Rate) dated 28.06.2017 in respect of supply of Manpower with machine and Anti-termite Treatment, Pest Control Service. 2024 (4) TMI 99 Supply or not - future contracts - works contract services - pure services or not - supply related to the business of pumping stations and reservoirs to be undertaken by the applicant is covered under the notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, amended by Notification No. 2/2018 dated 25.01.2018 and further Notification No. 16/2021 dated 18.11.2021 or not - HELD THAT:- The contract covers civil works wherein the supply of goods is also involved and thus such service falls under Works Contract service and hence it can't be a pure service. Further the applicant vide their letter dated 08.06.2022, addressed to the contractee M/s BWSSB clearly mentioned that the O M services consist of both supplies of labour / manpower and material and hence, the same shall be covered under works contract and cannot be considered in the nature of pure services . Thus, from the available information, the future contracts that the applicant intends to undertake are in the nature of works contract services for construction of pumping stations and reservoirs. The said services are not covered under any of the entries of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended. It is concluded that the question posed by the applicant is related to supplies undertaken by them, to M/s BWSSB, Bengaluru, prior to the date of filing of the application for advance ruling and thus no ruling can be given on the question. Thus the instant application is not maintainable and liable for rejection under the provisions of the GST Act 2017. Further, as for the question on future supplies is concerned, based on the available information the supply is of works contract services and is not covered under any of the entry in the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended. Income Tax 2024 (4) TMI 98 Maintainability of petitions on the issue of low tax effect' - threshold limit for filing the appeal under Interest Tax Act - HELD THAT:- Clause 5 of the Circular instruction dated 27.03.2000 though primarily applicable to cases under the Income Tax Act expressly mentions by way of example, wealth tax, gift tax and estate duty and insofar as the taxes which are not mentioned, use of the word etc. is significant. This implies that Circular instruction has mentioned only a few of the direct taxes which would be coming within the scope and ambit of the said Circular but insofar as those Acts, which are not specifically mentioned, the expression etc. is significant. We find that the said Circulars would also cover the Interest Tax Act as it is direct tax and can be read within the scope and ambit of the word Et Cetera . Admittedly, the Special Leave Petitions assail orders where the threshold limit is less than Rs.2,00,00,000/- (Rupees Two Crores). Special Leave Petitions are dismissed owing to low tax effect . 2024 (4) TMI 97 Validity of Income Tax Settlement order - additions made with respect to the infusion of share capital and the denial of benefit of deductions u/s 80IC - second round of litigation - HELD THAT:- While holding in favour of the petitioner-assessee insofar as the claim for deductions under Section 80IC of the Act and the investments made towards substantial expansion of an existing unit, it took into consideration the fact that in the reports which were submitted to it, no tangible material or evidence had been gathered and which may have cast a doubt on the claim as raised. It further significantly found that the assessments for AYs 2006-07 to 2008-09 in the case of the petitioner- assessee had been completed u/s 143(3) of the Act. ITSC holds that a perusal of those orders would establish that its claim for Section 80IC benefits had been elaborately examined and allowed by the AO in each of those AYs . It also took into consideration the certificate issued by the Director of Industries. On an overall conspectus of the aforesaid, it came to conclude that the petitioner-assessee would be entitled and eligible to claim deductions u/s 80 IC of the Act albeit up to AY 2013-14. Additions pertaining to the share capital investment made by M/s Amit Goods and Supplier Private Ltd. is concerned, we find that the petitioner-assessee had duly drawn the attention of the respondents to the fact that an addition of INR 37.60 crores had been made in the income of that entity in the course of assessments undertaken for AYs 2007-08, 2008-09 and 2009-10. In those assessments, an amount of INR 37.60 crores was added in the hands of M/s Amit Goods and Suppliers Private Ltd. on the allegation that it had invested its own funds by re-routing the same as share capital. Additions made in the course of assessment proceedings initiated in respect of M/s Amit Goods and Suppliers Private Ltd having been subjected to tax and the source of the funds having been duly identified by the respondents themselves. In our considered opinion, therefore, the ITSC clearly erred in making the addition of INR 11.26 crores while settling the income upon the application preferred by the petitioner-assessee. Of equal significance is sub-section (2) which commences with a non obstante clause and provides that no deduction in respect of any expenditure, allowance, or set off of any loss shall be allowed to the assessee while computing its income referred to in sub-clauses (a) and (b) of Section 115 BBE(1) of the Act. The aforesaid provision thus for the first time appears to have introduced a disqualifying criterion with respect to income added by virtue of Section 68 of the Act. We are therefore of the considered opinion that the surrendered income would not fall within the ambit of Section 115 BBE since the said provision did not even exist for the AYs in question. Section 115 BBE came to be inserted by virtue of Finance Act, 2012 with effect from 01 April 2013. As Mr. Ganesh rightly points out, since the aforesaid provision did not even exist at the relevant point in time, the same could not have been invoked by the ITSC. We are of the considered opinion that the issues which stand raised at the behest of the Department would have to be answered against them. Consequently, we refuse to grant the reliefs as sought by the respondents-Department to set aside the ITSC s impugned order insofar as it granted immunity from penalty and prosecution to the petitioner-assessee or for that matter its decision to allow the claim of the petitioner-assessee relating to infusion in share capital from M/s Balaji Enterprises, M/s Sai Enterprises and M/s Molu Ram Pramanand and allowing the claim of deductions under Section 80IC of the Act. We set aside the order of the ITSC in part and insofar as it relates to additions made with respect to infusion of share capital by M/s Amit Goods and Supplier Private Limited. We also set aside ITSC s order, which held that addition of unsubstantiated share capital into the account of the assessee under Section 68 of the Act would not qualify for the benefits of deduction under Section 80IC of the Act. The petitioner-assessee shall be entitled to consequential reliefs. 2024 (4) TMI 96 Validity of reassessment proceedings - scope of new regime u/s 148A - As per revenue as decided in Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT] held that all reassessment notices issued after 01 April 2021 would be treated as notices referable to clause (b) of Section 148A and the procedure prescribed therein being followed thereafter - respondents thus read Ashish Agarwal as mandating the aforesaid procedure being liable to be followed irrespective of the stage of the reassessment proceedings and thus extending even to situations where final orders may have come to be passed on culmination of reassessment. According to the petitioner, the judgment in Ashish Agarwal only sought to cure the procedural defects which beset notices issued after 01 April 2021 and where the Department proceeded on the assumption that it would be the unamended reassessment provisions which would apply and the directions in Ashish Agarwal were merely intended to validate such notices and cannot possibly be read or construed as warranting the reopening of reassessment proceedings which had attained finality even though the same may have been commenced on the basis of notices issued post 01 April 2021. HELD THAT:- We are of the firm opinion that Ashish Agarwal neither intended nor mandated concluded assessments being reopened . The respondent clearly appears to have erred in proceedings along lines contrary to the above as would be evident from the reasons which follow. Firstly, Ashish Agarwal was principally concerned with judgments rendered by various High Courts striking down Section 148 notices holding that the respondents had erred in proceeding on the basis of the unamended family of provisions relating to reassessment. They had essentially held that it was the procedure constructed in terms of the amendments introduced by Finance Act, 2021 which would apply. None of those judgements were primarily concerned with concluded assessments. It is this indubitable position which constrained the Supreme Court to frame directions requiring those notices to be treated as being under Section 148A(b) and for the AO proceeding thereafter to frame an order as contemplated by Section 148A(d) of the Act. Our view of the judgement being confined to proceedings at the stage of notice is further fortified from the Supreme Court providing in para 8 of the report that The respective impugned Section 148 notices issued to the respective assessees shall be deemed to have been issued under section 148A of the Income Tax Act as substituted by Finance Act, 2021 and treated to be show cause notices in terms of Section 148A(b). As would be manifest from the aforesaid extract, the emphasis clearly was on the notices which formed the subject matter of challenge before various High Courts and the aim of the Supreme Court being to salvage the process of reassessment. This is further evident from the Supreme Court observing that the AO would thereafter proceed to pass orders referable to Section 148A(d). We consequently find ourselves unable to construe Ashish Agarwal as an edict which required completed assessments to be invalidated and reopened. Ashish Agarwal cannot possibly be read as mandating the hands of the clock being rewound and reversing final decisions which may have come to be rendered in the interregnum. The petitioner never questioned the validity of the original notices on grounds which were urged before the various High Courts and where assessees had questioned the invocation of the unamended provisions. The petitioner chose to contest the reassessment proceedings on merits. It is also admitted before us that the petitioner was also not a party to the Man Mohan Kohli batch of matters. There was therefore no justification for the respondent to have issued notices afresh seeking to reopen proceedings which had been rendered a closure prior to the judgment rendered in Ashish Agarwal. At the cost of being repetitive we deem it appropriate to observe that the Ashish Agarwal judgment neither spoke of completed assessments nor did it embody any direction that could be legitimately or justifiably construed as mandating completed assessments being reopened and moreso where the assessee had raised no objection to the initiation of proceedings. We are also of the firm opinion that even para 25.5 of Ashish Agarwal would not sustain the stand taken by the respondent since the same clearly confines itself to decisions or judgments rendered by a High Court invalidating a notice under Section 148 and the manifest intent of the Supreme Court being that its judgment would apply and govern irrespective of whether an appeal had been laid before it. We also bear in mind the pertinent observations rendered by the Constitution Bench in High Court Bar Association [ 2024 (3) TMI 63 - SC ORDER] when it held that a direction under Article 142 of the Constitution should not impact the substantive rights of those litigants who are not even parties to the lis - Thus we quash reassessment proceedings and impugned SCN issued u/s 148A(b), the order issued u/s 148A(d) as well as the notice referable to Section 148 - Decided in favour of assessee. 2024 (4) TMI 95 Denial of registration u/s 12AB - filing Form-10A in wrong section code - allegation of Denial of principles of natural justice - HELD THAT:- Managing Trustee of Parmeswari Bai Memorial Trust has furnished explanation sought for regarding Form-10A. Though, the explanation is stated to have been furnished to the Commissioner of Income Tax (Exemption), Income Tax Department, Hyderbad, the same has not been considered in its proper prospective by assigning reason, which is one of the essential facets of principles of natural justice. However, vide order passed by the CIT (Exemption), Hyderabad, the application of the Petitioner-Assessee for registration under Section 12AB of the Income Tax Act stood rejected. In the circumstances, the order passed being without reason as is apparent from the record, stands set aside and it is directed that the application for registration u/s 12AB is restored for reconsideration by the CIT (Exemption), Hyderabad. 2024 (4) TMI 94 Delay in issuing Refund under Direct Tax Vivad Se Vishwas Scheme 2020 - interest on delayed refund - DR as informed that though the department conceded that the amount ought to be refunded and has eventually refunded the amount, interest should not be levied on account of the technical reasons due to which the payment of refund got delayed - HELD THAT:- Identical issue decided in UPS Freight Services India Private Limited [ 2023 (9) TMI 34 - BOMBAY HIGH COURT wherein held that Except a bald statement in the affidavit that delay in issuing refund has been attributable to some technical issues, there is nothing substantial in the affidavit and as concluded that the Petitioner shall be entitled to the interest on the amount from the date the refund became due till the date it was actually paid, at the rate of 6% per annum which is the rate prescribed under Section 244(A) of the Income Tax Act. In view of the above, this Writ Petition is partly allowed. We direct the department to calculate the interest at the rate of 6% per annum to be paid within 30 days. 2024 (4) TMI 93 Disallowance of interest u/s 36(1)(iii) - interest charged @ 12% of average advance outstanding - advances given to director - nexus between the advance given to the Director and the business of the assessee - admission of additional evidences - assessee held that there was no nexus between the advances given and the business of the assessee - whether the assessee had availability of sufficient interest free funds with it, as on the dates on which funds were advanced by it to Shri Harpal Singh, Director? HELD THAT:- Such availability of funds can be ascertained on documentary evidence, which is proved on record unrebutted. We are of the considered opinion that the statement of bank account of the assessee for Financial Year 2013-14, relevant to the year under consideration, i.e., assessment year 2014-15, the assessee's Annual Tax Statement in Form 26AS for the year under consideration, the ledger of Director in assessee's books, the capital account of Director in the books, the partnership firm where director [Shri Harpal Singh] was a partner, the Partnership Deed, the PAN of Partnership firm and the assessee's balance sheet for assessment year 2014-15, are required to be adduced as evidence, and the Form 26AS would show the veracity of the assessee's contention that it had received Income Tax refund on 21.12.2013, as contended. Transfer of such refund to partnership firm would also be reflected in the bank statement. The factum of Director, being a partner in partnership firm would be evincible from the Partnership Deed and PAN Card of partnership firm Perusal of the bank statement would also divulge as to whether the funds were given out from the debit balance or the credit balance in the bank account and would also allow ascertainment of the truthfulness or otherwise of the assessee's contention that its bank account is devoid of drawing power and it maintains a credit balance and that the interest rate charged is zero . Still further, the ledger of Harpal Singh Capital Account in the books of M/s Synergy Thrislington would show as to whether indeed interest free funds were credited in the capital account in instalments, or not. In fact, the perusal of the partner s capital account juxta-posed with the assessee's account would evince the flow of funds, i.e., debits and credits. The alleged payment on behalf of Director to the firm would also be evincible from the ledger of director in the books of the assessee. Too, the availability of interest free funds with the assessee at the relevant time can very well be ascertained from the balance sheet of the assessee. Since these documents were not made available by the assessee before either of the authorities below, finding these documents to be very material and relevant for adjudicating the matter, as discussed herein above, we deem it appropriate to restore the issue to the AO to verify the correctness and authenticity of these documents, produced for the first time before us and to adjudicate the issue afresh after providing adequate opportunity of being heard to the assessee. This is entirely in keeping with the decision of the Third Member of the Tribunal in the case of Char Bhai Biri Works Vs ACIT , [ 2003 (3) TMI 316 - ITAT PUNE] Therein, the assessee filed certain additional evidence before the Tribunal for consideration. It was stated that some of the papers might have already been given to the Revenue authorities, but since details were not available, all those papers should be treated as additional evidence. Those documents were found to be very material and relevant for adjudicating the matter. Since those documents were not available with the AO and were produced before the Tribunal for the first time, it was held that the issue was to be restored to the file of the AO to verify the correctness and authenticity of such documents, and also to adjudicate the gross profit issue afresh after providing adequate opportunity to the assessee of being heard and looking into comparable cases. In the present case, we are alive to the fact that the best evidence in the shape of the account statement was not produced by the assessee before the authorities below. However, as discussed we have found the afore-enumerated documents, including the bank statement of the assessee, to be very material and relevant for adjudicating the matter in a just and proper manner. It is, therefore, that exercising our powers under Rule 29 of the ITAT Rules, that we are ordering all these documents to be adduced in evidence. Thus the matter is remanded to the file of the AO to verify the correctness and authenticity of the documents discussed and to provide adequate opportunity of hearing to the assessee with regard thereto and to re-adjudicate the matter. Ordered accordingly. Appeal allowed for statistical purposes. 2024 (4) TMI 92 Exemption u/s 11 - benefit denied on delay in filling the audit report - as per DR even the dead line extended by the board was up to 365 days whereas in this case delay is much beyond. Thus, the same is rightly denied to the assessee by the CPC - HELD THAT:- Assessee placed on record that an order of the CBDT F.No. 225/358/2018/ITA.II dated 08.10.2018 wherein the due date extended upto 31.10.2018 and the assessee in this case e-filed the form no. 10B on 28.01.2020. The bench also noted that even otherwise the issue that the whether the assessee denied the benefit of exemption as a trust merely on the reason that the audit report in Form no. 10 B filed belated. This issue is decided by Sarvodaya Charitable Trust [ 2021 (1) TMI 214 - GUJARAT HIGH COURT] where assessee, a public charitable trust registered u/s 12A, had substantially satisfied condition for availing benefit of exemption as a trust, it could not be denied exemption merely on bar of limitation in furnishing audit report in Form No.10B especially when the legislature has conferred wide discretionary powers to condone such delay on the authorities concerned. The similar issue is also dealt in the case of ITO(E) Vs. Shri Laxmanarayan Dev Shrishan Seva Khendra [ 2023 (7) TMI 293 - ITAT AHMEDABAD] and Sh. Rajkot Vishashrimali Jain Samaj [ 2023 (3) TMI 765 - ITAT RAJKOT] . On being consistent to the view in the matter we direct the Jurisdiction Assessing Officer (JAO) to consider the Form no. 10B through belated and allow the claim of exemption u/s. 11 of the Act to the assessee. Appeal of assessee allowed. 2024 (4) TMI 91 Estimation of income - Excess stock found during the survey operation - assessee has declared profit at the rate of 1.87% from AY 2007-08 to AY 2013-14 which can be considered a yardstick to work out the profit out of such unaccounted stock - whether the gross value of the unaccounted stock is liable to be added to the income of the assessee or some percentage of profit embedded in such unaccounted stock should only be brought to tax? - HELD THAT:- Unaccounted purchase in itself does not give any rise to the income to the assessee until it is sold out. Though the assessee has claimed before us that such unaccounted stock has either been sold in the year under consideration or has shown as part of closing stock or the same has been sold in the subsequent assessment year. AR appearing before us has not brought anything on record demonstrating from the financial statements that such unaccounted purchases have either been shown as part of the closing stock or sold out in the current/ subsequent year. Thus, in the absence of such details and to render equitable justice to the assessee and the revenue, we are of the view that some percentage of profit on such unaccounted purchases/stock is required to be added. The assessee before us has suggested vide letter dated 10-01-2022, such percentage of profit at the rate of 2% of the value of unaccounted stock. The above submission of the assessee has nowhere been countered by the revenue. However, we note that the above percentage of the net profit shown by the assessee is from disclosed business whereas the issue before us is of unaccounted stock found in the course of the survey. Therefore, we are of the view that the percentage of net profit of such unaccounted purchases/ stock should be higher than the profit already shown by the assessee from accounted/disclosed transaction. Hence, for the sake of justice and fair play, we hold that profit element embedded in such unaccounted/excess stock shall be brought to tax @ 5% - Decided partly in favour of assessee. 2024 (4) TMI 90 Condonation of delay - delay of 1607 days in filing the appeal by the assessee before ITAT - reasons specified therein for the delay was ill health and bankruptcy eventually running away from the society and police which has created lot of stress upon the assessee - Whether delay was inordinate or excessive? - HELD THAT:- Certainly, the delay is significant. But length of the delay becomes insignificant if there was sufficient cause for such delay which prevented the assessee in filing the appeal. As such we need to consider the cause for the delay and not the length of the delay. Accordingly in our considered view when there was a reasonable cause, the period of delay may not be relevant factor. As in KSP. SHANMUGAVEL NADAR AND OTHERS [ 1984 (4) TMI 24 - MADRAS HIGH COURT] Hon ble Madras High Court was pleased to condone the delay for 20 years approximately by holding that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Thus, the delay in the instant case is just of 1607 number of days which cannot be considered to be inordinate or excessive in comparison to the delay of 7330 days approximately. What is the sufficient cause of delay? - It is trite law that where a case has been presented in the Court beyond limitation, the petitioner has to explain the Court as to what was the sufficient cause which means an adequate and enough reason which prevented him to approach the Court within limitation. From the medical details filed by the assessee, we find that the assessee was having one or the other medical issues right from the financial years 2008-09 to 2019-20 which may not be of serious concern, but the ill-health of the assessee cannot be ruled out. Likewise, the assessee in the affidavit has also submitted that he was under a lot of financial stress and was declared as an insolvent. Furthermore, he was running away from the police and society. There was also a case against the assessee of cheque bouncing as evident from the details available on record. If we aggregate all these factors, the fact that the assessee was having a stressful life cannot be ruled out and assessee was not in sound mind to take correct decisions on legal proceedings. Besides the above, we note that all the credits in the form of cheque and cash deposits in the bank account of the assessee has been added to the total income of the assessee. The AO has done so in the absence of any cooperation from the side of the assessee despite the assessee being afforded several opportunities. However, what we find is this that there is no discussion in the assessment order as far as withdrawn from the banks is concerned. Thus, it is transpired that all the credits appearing in the bank has been treated as income of the assessee though the assessee during the assessment proceedings vide letter dated 22 January 2014 has submitted details with the request to tax the income under the provisions of section 44AF of the Act. As such, the reply submitted by the assessee vide letter dated 22 January 2014 was rejected by the AO stating that the detailed furnished was incomplete but how was it incomplete, the order of the AO is silent. It is the settled law that only the credit sides of the bank do not represent the income. Thus it is the fit case where the delay has to be condoned irrespective of the duration/period of the delay. In this case, the non-filing of an affidavit by the Revenue for opposing the condonation of delay itself is sufficient for condoning the delay of 1607 number of days. We also note that there is no allegation from the Revenue that the appeal was not filed by the assessee within the time deliberately. Therefore, we are inclined to prefer substantial justice rather than technicality in deciding the issue - Thus we condone the delay of 1607 days in filing the appeal and proceed to hear the appeal on merit for the adjudication. Addition u/s 69 - As order passed by the ld. CIT-A and the AO is ex-parte. Furthermore, there was also delay in filing the appeal before the ITAT which has been condoned in the preceding paragraph after giving detailed reasons. The same reasoning can also be applied for non-appearance of the assessee before the revenue authorities while restoring the issue to the file of the AO for fresh adjudication as per the provisions of law. It is also directed to the assessee to extend the full co-operation during the assessment proceedings. Hence, the ground of appeal filed by the assessee is allowed for the statistical purposes. Penalty u/s 271(1)(c) - We note that the quantum addition against which the penalty under section 271(1)(c) of the Act was imposed by the revenue authorities, such quantum addition has already been set aside to the file of the AO [supra] for fresh adjudication as per the provisions of law. Accordingly, the penalty levied in the case on hand is not sustainable and liable to be deleted. The AO is at the liberty to proceed with the penalty under section 271(1)(c) of the Act in pursuance to the outcome of the quantum matter. 2024 (4) TMI 89 Time limit to file application u/s 80G(5) - assessment of trust - Rejection of application filed in Form No.10AB for approval u/s 80G(5) stating that assessee has not filed application within the statutory time limit - scope of New Procedure for registration - whether the application of the assessee was time barred or not? - assessee has received registration u/s 12AB and was granted Provisional Registration as Trust/Institution HELD THAT:- When we read the Budget Speech of the Hon ble Finance Minister 2020 and the Memorandum of Finance Bill, 2020 together, it becomes clear that the concept of Provisional registration was mainly to facilitate the registration of newly formed Trust/Institutions which have not yet begun the activities. The parliament in its wisdom has decided to differentiate between the Trust which were newly formed and the trust which were already doing charitable activities - There is Second category of trust/institutions which were already doing Charitable Activities but had never applied for registration u/s.80G(5) of the Act. It is not mandatory that every charitable trust/institution has to apply for registration u/s.80G(5) - there is no bar in the Act that such trust or institutions cannot apply for registration u/s.80G in the new procedure. In these kinds of cases, the Trust/Institute though doing charitable activity may apply first for the Provisional Registration under the Act. After getting the Provisional Registration the Trust/Institution have to apply for Regular Registration. These kind of Trust/Institutes will fall under sub clause (iii) of the Proviso to Section 80G(5) of the Act, since they have obtained Provisional registration. As per KP VARGHESE case [ 1981 (9) TMI 1 - SUPREME COURT] statutory provision shall be interpreted in such a way to avoid absurdity. In this case to avoid the absurdity as discussed, we are of the opinion that the words, within six months of commencement of its activities has to be interpreted that it applies for those trusts/institutions which have not started charitable activities at the time of obtaining Provisional registration, and not for those trust/institutions which have already started charitable activities before obtaining Provisional Registration. We derive the strength from the Speech of the Hon ble Finance Minister and the Memorandum of Finance Bill. 2020. Therefore, in these facts and circumstances of the case, we hold that the Assessee Trust had applied for registration within the time allowed under the Act. Hence, the application of the assessee is valid and maintainable. Decided in favour of assessee. 2024 (4) TMI 88 Disallowance u/s. 14A - CIT(A) restricted disallowance - assessee has suo moto made a disallowance - HELD THAT:- Assessee s plea of non recording of dissatisfaction by the A.O rejected as A.O. is casted upon the onus to explain with cogent reason for the dissatisfaction in the assessee s claim and the decisions relied upon by the assessee and the first appellate authority does not support the assessee s case for the facts and circumstances of this case. As settled preposition of law that even the investment made in sister concern has to be taken into consideration for computing the disallowance u/s. 14A of the Act as per the Special Bench decision of Ahmedabad in the case of Shri Vishnu Anant Mahajan [ 2012 (9) TMI 1205 - ITAT AHMADABAD] . It is also pertinent to point out that after the introduction of Rule 8D in the Income Tax Rules vide Notification No. 45/2008 w.e.f. 24.03.2008, no arbitrary disallowance u/s. 14A was to be done by the ld. A.O. and the ld. A.O. was to compute the disallowance in accordance with section 14A r.w.r. 8D of the Rules. In this note, we deem it fit to remand this issue back to the file of the ld. CIT(A) to decide the grounds of disallowance made u/s. 14A on the merits of the case in accordance with the provision of the Act after duly considering the submission of the assessee. Hence, ground allowed for statistical purpose. Adjustment of the book profit u/s. 115JB of the Act in relation to the expenditure relatable to earning income - HELD THAT:- As this issue has already been decided in the case of Vireet Investment (P.) Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] which has held that for computation under clause (f) of Explanation 1 to section 115JB(2) of the Act restart to computation u/s. 14A r.w. Rule 8D should not be made where there is a separate mechanism available for adjustment to the book profit of such expenditure incurred. As these issues are identical and covered by various decisions including the decision in assessee s case, we deem it fit to allow the grounds raised by the assessee in its cross objection. Disallowance u/s. 36(1)(iii) - advance/funds transfer was not for business activities - assessee had appointed a person[Shri Nilesh Janardan Thakkar] to identify, assist and aggregate lands and paid the advance to him - DR has contended that the said transaction is a colorable device and there was no genuine business transaction - assessee controverted the said fact and had stated that these advances are from assessee s own fund and not from borrowed funds - HELD THAT:- Transaction with Shri Nilesh Janardan Thakkar has been carried out by the assessee since A.Y. 2008-09 for its business purposes and the Tribunal has held that the assessee s interest free funds are in excess of the advances given to the said parties. The Tribunal by placing reliance on the decision of Reliance Utilities Power Ltd.[ 2009 (1) TMI 4 - BOMBAY HIGH COURT] has deleted the addition on the ground that if the interest free funds of the assessee are in excess of the loans advance then it can be presumed that the funds invested by the said entities are not out of the borrowed funds. The ld. AR for the assessee vide his submission has furnished the statement of the assessee s interest free funds where it is observed that the interest free funds are more than the investment and the advances made by the assessee. Decided in favour of assessee. Unexplained money with respect to the sale of immovable property - correct assessment year - assessee contended that since the transfer of property had taken place in March, 1999 relevant to F.Y. 1998-99, the same cannot be taxed during the year under consideration - assessee s contention that the sale actually took place in 1999 for a consideration and handed over the possession to the buyer in the same year along with all the original documents, was not accepted by the A.O. for the reason that the assessee has failed to furnished the evidences and the other supporting documents to establish its claim - HELD THAT:- As observed that the assessee has furnished additional evidence before the ld. CIT(A) establishing the fact that the original agreement was executed in 1999 for which the assessee has paid consideration and the possession of the property was also handed over in the year 1999 while entering into in Memorandum of Agreement with Siemens. CIT(A) has sought for the remand report from the ld. A.O. on these facts and held that it was only the registration of the said agreement that had taken place during the year under consideration - CIT(A) had deleted the impugned addition made by the ld. A.O. on this ground - we find no infirmity in the order of the ld. CIT(A) - Decided against revenue. TP Adjustment - ALP determined for the performance guarantee - prescribed methods for determining the ALP of the international transactions - HELD THAT:- As observed that neither the assessee nor the lower authorities have adopted any of the prescribed methods for determining the ALP of the international transactions for the reason that the assessee has not considered the same to be an international transaction and the TPO has also not applied any of the prescribed method as being the most appropriate method for determination of the ALP. CIT(A) has also not determined the ALP for financial guarantee by applying MAP. As the transaction of issuance of corporate guarantee to its AE given by the assessee on behalf of its AE is held to be an international transaction, the same has to be determined at ALP by bench marking the said transaction by applying any of the method prescribed under the provisions of the Act. The determination of the ALP in the case of another assessee or that because in assessee s case for other years cannot be a detrimental factor for determining the ALP, as the provision is clear that TP adjustments has to be made as per the provisions of the Act in case of each assessee for every year. Various decisions of the Hon'ble Jurisdictional High Court relied upon by the AR has held that the letter of comfort given by the assessee on behalf of its AE does not come under the purview of an international transaction and the provision also clearly excludes letter of comfort within the expression of international transaction . Having stated so, there is no necessity for determining the ALP for the said transaction. We are of the considered view that the matter should be remanded back to the file of the TPO for the purpose of applying any of the prescribed methods for determining the ALP of the international transactions only to the extent of the finance guarantee given by the assessee on behalf of its AEs. As the performance guarantee has already expired in 2013, there would not be any necessity to determine the ALP and, hence, we confirm the deletion made by the ld. CIT(A) on this ground. 2024 (4) TMI 87 Revision u/s 263 - Bogus purchases - estimation of income - assessee made cash purchases from the open market, since the sales had been confirmed, no disallowance was made by the AO under the provisions of Section 40A(3) - lack of enquiry, as held by the ld. PCIT - HELD THAT:- As correctly submitted on behalf of the assessee, the claim made representing the purchases could have been added to the income of the assessee and only the profit margins embedded therein could be subjected to tax. AO did precisely this by disallowing the higher purchase cost, as alleged, on purchases made from M/s Gaja Nand Pardeep Kumar, as compared to other independent parties - Details of purchases made by the assessee from M/s Gaja Nand Pardeep Kumar, with copies of purchase bills have been filed. As correctly contended on behalf of the assessee, it is seen that it was on having considered the aforesaid detailed reply filed by the assessee alongwith the concerned evidences, that the AO, vide order passed under Sections 147/143(3) of the Act, the AO made addition on account of difference of purchase price concerning purchases made by the assessee from M/s Gaja Nand Pardeep Kumar, in comparison to purchases made from other entities, on the same day. The application of mind on the part of the AO in the aforesaid assessment order is evident from the fact that the AO clearly held that in the enquiry conducted by issuance of summons and by calling for information from the Market Committee, Dabwali, the stated firm of M/s Gaja Nand Pardeep Kumar, Dabwali was found to be non existent. It was on these basis, that the AO held that it appeared that the assessee had made purchases from the grey market at prices much lower than that recorded in the books of account and that the assessee had obtained bogus higher rate purchase bills from the said party, in order to suppress gross/net profit. The AO, therefore, made addition on account of difference of purchase price and added an amount. It was only the profit element embedded in the entire purchases made, that could have been brought to tax, which is exactly what has been done by the AO following case Sathyanarayan P. Rathi [ 2013 (6) TMI 257 - GUJARAT HIGH COURT] , Shri Ganpatraj A Sanghavi [ 2014 (11) TMI 295 - ITAT MUMBAI] AND Pradeep Shantilal Patel [ 2013 (11) TMI 1646 - GUJARAT HIGH COURT] PCIT has observed that the assessee had made cash purchases from the open market, as the sales had been confirmed, but the AO had failed to acknowledge this fact and no disallowance had been made under Section 40A(3) - It has rightly been contended that the AO has passed the order after making all possible enquiries and the ld. PCIT has gone wrong in holding it to be a case of lack of enquiry, attracting the provisions of Section 263 of the Act. As discussed, it is patent that during the assessment proceedings, the AO had made all possible enquiries into the matter of purchases. The ld. PCIT, on the other hand erred in not repeating the categorical response made by the assessee by way of its reply. As correctly pointed out, it is seen that the facts and the report of the Investigation Wing of the Department were all available with the AO during the assessment proceedings and there was no new fact having emerged after the passing of the assessment order or any fact that had been skipped by the AO. Proper enquiries had been conducted by the AO and the assessment had been framed thereon. The assessment, therefore, had wrongly been treated by the ld. PCIT as erroneous within the meaning of the provisions of Section 263 of the Act. There is nothing on record to show that the income assessed has not been assessed in accordance with law. The requirements of invocation of the provisions of Section 263 of the Act are not fulfilled and so, the revision itself is not sustainable in law, it being, at best, a case of two possible views, of which, one view has been adopted by the AO. In the entirety of the facts and circumstances discussed herein above, it is found that the revisional proceedings, culminating in the impugned order are not sustainable in law, look at from any angle. Accordingly, the grievance of the assessee is justified and is accepted. The order under appeal is set aside and quashed and that passed by the AO is revived. Ordered accordingly. Revision u/s 263 - as per CIT genuineness and creditworthiness of unsecured loans, verification of sundry creditors and payments made to the partners' is based on fundamental misconception of facts and provisions of law and thus not in accordance with law and, therefore untenable - HELD THAT:- Purchases having been duly accepted, adverse inference against the assessee was wrongly drawn with regard to sundry creditors u/s 68 of the Act. PCIT evidently erred in holding that the AO had failed to verify the genuineness and credit worthiness of the sundry creditors. PCIT further went wrong in observing, in the face of the evidence produced by the assessee, that the AO had not called for any ledger documents and confirmation of accounts of the sundry creditors. The ld. PCIT further went wrong in holding that the AO had failed to make any independent enquiry to verify the genuineness of the creditors. The impugned order in this regard is also set aside and reversed and the assessment order is revived with regard to the issue of sundry creditors also. Issue of payments made to partners - Where no disallowance with regard to either partners remuneration or interest paid to partners has suffered disallowance in the earlier years as well as in the immediately succeeding assessment year, in scrutiny assessment proceedings, no disallowance in the year under consideration is called for, in order to maintain consistency, too for the reason that adverse inference was drawn against the assessee in this regard only on the ground that copy of Partnership Deed had not been placed on record. Otherwise too, as rightly contended, both the payments, i.e., either on account of remuneration paid to partners, or on account of interest paid to partners is taxable in their respective hands and not in the hands of the assessee. Therefore, no adverse inference under the provisions of Section 263 of the Act could have been drawn. We find the grievance of the assessee to be justified. We hold that the ld. PCIT has erred in holding that the AO had failed to check whether all the payments made to partners were in accordance with the Partnership Deed and the Income Tax Act. The ld. PCIT also went wrong in observing that the AO had not even called for the copy of the Partnership Deed and had not brought the same on record. Decided in favour of assessee. 2024 (4) TMI 86 Taxability in India of receipts of foreign AEs - Master Service Agreement relied upon - case set up by the appellants is that they and HCLT are part of the HCL group with the assessee being subsidiaries and associated enterprises of HCLT and HCL America (HCLA) provides service to clients of HCLT outside India as per agreement entered into with the HCLT. The assessee companies provide marketing and sales support as well as on site services - HELD THAT:- Considering primarily a Master Service Agreement which is relied by the assessee and the coordinate Bench in ITA No.537/Del/2021 [ 2024 (1) TMI 309 - ITAT DELHI] says that Master Service Agreement entered into between HCLT and the foreign AEs is in the nature of a business arrangement, by which the dominant intention of the parties to come together and serve the overseas customers is fulfilled, HCLT was merely distributing the receipt of payment from the overseas customer to the group entities for their share of the work and the payment received by the foreign AEs from HCLT was only in the nature of revenue sharing and cannot be construed to mean that services were provided by the foreign AEs to HCLT. Co-ordinate Bench further held that both HCLT and the foreign AEs are jointly rendering services to the customers located outside India; billing is done on a consolidated basis on the customer by HCLT (including the services rendered by the foreign AEs to the customer located outside India); payments are received by HCLT from the customer located outside India and thereafter, revenue is shared by HCLT with the foreign AEs for the proportionate volume of services rendered by the foreign AEs to the customer. Also held that AO erred in holding that the services were rendered by foreign AEs to HCLT and the said findings of the AO are contrary to the binding directions of the DRP of the order wherein DRP held that major part of module development and writing of codes on software application is carried out by HCLT and only some of it is being done by foreign AEs; that both HCLT and foreign AEs are working together on the server of the client to develop the final product. Coordinate Bench after analyzing the statements of employees recorded in survey proceedings held that the same actually support the contentions of the foreign AEs. The Bench held that on analysis of the statements in a holistic manner, it was clear that that both onsite and offsite personnel of the foreign AEs and HCLT respectively were responsible for writing the code; that the respective teams of the foreign AEs and HCLT work directly with the foreign customer's managers; that in majority of the projects, the entire development environment is owned by foreign customer; that the code and test scripts are worked on from foreign customers' servers and provided directly on the said servers; that the integration is normally done through customer build machines that integrate the various units of code into a solution. It was, accordingly, held that payments made by HCLT to the foreign AEs could not be construed as FTS. Decided in favour of assessee. Amount received by the Appellant for rendering BPO services included in assessed income - As submitted that in all other cases, the assessing officer has not assessed to tax the receipts of the foreign AEs in respect of BPO services. Only in the impugned orders passed in the aforesaid 3 cases, payments towards BPO services have also been brought to tax. It is submitted that addition in respect of the same deserves to be deleted on the same reasons as the ones recorded by the Hon ble Tribunal in order dated 20.12.2023 passed in the case of foreign AEs. We concur to the same. Customs 2024 (4) TMI 85 Classification of imported goods - Menthol Scented Supari - to be classified under Chapter 21 as a product of betel nut known as Supari or under Chapter 8 as just areca nut? - HELD THAT:- Firstly, vide Finance (No.2) Act, 2009 dated 19th August, 2009, there has been an insertion of Note 6 in Chapter 21, which specifically relates to Tariff Item 2106 90 30 relating to supari and stating that the process of adding or mixing cardamom, copra, menthol, spices, sweetening agents or any such ingredients other than lime, katha (catechu) or tobacco to betel nut, in any form, shall not amount to manufacture . However, this amendment was only under the Central Excise Tariff Act and not the Customs Tariff Act. Secondly, w.e.f. 1.7.2017, the GST Act was introduced and the concept of taxation itself has undergone a change from manufacture to supply . The Supplementary Note 2 in Chapter 21 of CGST Tariff is also verbatim the same as Supplementary Note 2 under Chapter 21 of the Customs Tariff Act, 1975. This only exemplifies the intention of the legislature to have always treated supari as a special entry and not as a betel nut under the general entry of nuts . There are force in the submission of the Learned Counsel for the Appellant that the Customs Tariff Act still continues to employ the same phraseology that was available under the unamended Central Excise Tariff Act and that too when the Apex Court had dealt with the same issue, the ratio laid down by the Apex Court in CRANE BETEL NUT POWDER WORKS VERSUS COMMR. OF CUS. C. EX., TIRUPATHI [ 2007 (3) TMI 6 - SUPREME COURT] case would still hold the field and apply to the case on hand, it cannot be accepted that the said limb of argument, in view of our categorical finding that there being a specific entry for Supari under Chapter 21 and it would take precedence over the general entry under Chapter 8, the question of applying the ratio laid down by the Apex Court would not even arise for the simple reason that the issue on hand is only revolving around classification of Supari under Chapter 8 or Chapter 21 and the facts of the case before the Apex Court was entirely different and the issue was whether process involved in manufacture of sweetened betel nut pieces would result in a totally new product or not. Under the Customs Tariff Act, the question of manufacture loses its relevance since the Act deals only with the tariff applicable to the goods or products imported from outside the country, in an as is where is basis, or rather the product as imported in whatever form is the basis for levy of Customs Tariff. Thus, the judgment of the Hon'ble Supreme Court in Crane Betel Nut Powder Work's case cannot be said to be a bar U/s. 28(i) of the Customs Act. The findings of the CAAR are just and proper, applying the legal position in a proper perspective. The same does not warrant interference in appeal. There are no irregularity in the Advance Ruling issued by the Authority and the same is not hit by Clause B of sub-section 2 of Section 28-I of the Customs Act, 1962 as not being covered by earlier rulings on the same subject matter, by the Appellate Tribunal or Court. Appeal dismissed. 2024 (4) TMI 84 Import of hot rolled steel plates and steel sheets - Fixing of minimum import price - The petitioner argues that they applied for registration within the stipulated timeframe of 15 days, as required by paragraph 1.05(b) of the Foreign Trade Policy, despite a delay in actual registration. - Violation of principles of natural justice - irrevocable commercial letter of credit not registered with the jurisdictional Regional Authority (RA) within 15 days - importer neither appeared for personal hearing nor replied to the show cause notice. HELD THAT:- The respondent decided to proceed ex-parte on the basis that the importer had neither appeared for personal hearing nor replied to the show cause notice. As indicated earlier, the reply of the petitioner to the show cause notice along with the acknowledgement is on record. Even proceeding on the assumption that such reply was not received by the respondent for any reason, the impugned order becomes unsustainable in the face of such reply and the contents thereof. It should also be recognized that that the petitioner has placed on record not only Notification No.38 but also the irrevocable letter of credit dated 02.01.2016 and evidence that the petitioner applied for registration on 18.02.2016, which is within the stipulated 15 day period. In these circumstances, it is just and necessary that the petitioner be provided an opportunity. Therefore, the impugned order is quashed and the matter is remanded to the respondent for reconsideration. The petitioner is permitted to re-submit the reply dated 11.09.2021 along with all supporting documents to the respondent within 15 days from the date of receipt of a copy of this order - Petition disposed off. 2024 (4) TMI 83 Classification of imported goods - Rice Mill Rubber Roller - classifiable under CTH 4016 or under CTH 8437? - N/N. 12/2012-CE (Sr. No. 155) dated 17.03.2012 - HELD THAT:- The reading of the serial number 9, clearly suggests inclusion of Rice Mill Rubber Rollers under this Heading within its ambit as pertained to machine and appliances of Section XVI. Elaborate reference was made to the Apex Court s decision in KOHINOOR RUBBER MILLS VERSUS COLLECTOR OF C. EX., CHANDIGARH [ 1997 (2) TMI 125 - SUPREME COURT] . Relevant portions of the Hon ble Apex Court s Order in holding the classification under 4016 of the CTH. As observed by the Hon ble Apex Court what supplements the aforesaid classification is the Explanatory Note at serial number 9 under Item 40.16 of the Harmonized Commodity description and Coding System (HSN), as also noted by the Hon ble Apex Court in its order. While it is not disputed that parts of rice mill machinery are incorporated under CTH 84379020, however, by virtue of the relevant Chapter Notes and Section Notes as referred above and in accordance with Rule 1 of the General Rules for the Interpretation of the Tariff Schedule, of the import tariff schedule, it is undeniable that the imported goods merit classification under Heading 4016 9990. This Tribunal in the case of COMMISSIONER OF CUSTOMS, CHENNAI VERSUS M/S. NIRMALA AGENCIES [ 2016 (6) TMI 863 - CESTAT CHENNAI] had also considered the impugned question of classification of Rice Milling Rubber Roller, Paddy De-husking Rubber Roller, wherein the identical question of law is concerned with and following the decision of the Hon ble Apex Court, the Tribunal in the aforesaid decision held that the said goods were appropriately classifiable under 4016 9990. There are no infirmity in the order of the learned Commissioner (Appeals) - appeal dismissed. 2024 (4) TMI 82 Smuggling - Gold - absolute confiscation - redemption fine - penalty - failure to produce any documents regarding the possession of gold - discharge of onus to prove - HELD THAT:- Admittedly, the seizure of the 2 gold bits is a town seizure at Renigunta Railway Station when the employee of the appellant was on-board the train. Further, admittedly the 2 gold bits totally weighing 697 gms are of irregular shape and size, having no foreign markings. Further, the person who was in possession at the relevant time - Mr Kaluva Hari Obulesu had stated that he had purchased the said gold at Chennai and was carrying it to Proddutur for his employer/appellant. Under these facts, there was no basis on which the Customs Officer could have formed an opinion that the gold is of foreign origin and/or smuggled in nature. Both the appellant and his employee Mr Kaluva Hari Obulesu have stated that the gold have been purchased at Chennai from Mr Hari Gopal against payment made in cash. They also gave the proper address and location of Mr Hari Gopal at Chennai. The appellant also explained the source of money for the purchase of gold - Revenue have rejected this contention on the basis of report received from Chennai Customs, that when their person went to enquire from Mr Hari Gopal, he could not locate him - the report received vide letter dated 17.08.2020 from the office of Commissioner of Customs is not a RUD and hence no reliance can be placed on the same. Accordingly, the appellant have discharged the onus under Section 123 of the Customs Act. All the allegations made by Revenue are by way of assumptions and presumptions which have no legs to stand. The impugned order set aside - appeal allowed. 2024 (4) TMI 81 Classification of imported goods - quicklime - to be classified under tariff item 2522 1000 of First Schedule to Customs Tariff Act, 1975 or under tariff item 2825 9090 of First Schedule to Customs Tariff Act, 1975? - concessional rate of basic customs duty (BCD) vide N/N. 50/2017-Cus dated 30th June 2017 (at serial no. 120) and of integrated goods and service tax (IGST) vide rate N/N. 01/2017-Integrated Tax dated 28th June 2017 - HELD THAT:- Besides the appropriateness of logic claimed as justification for revision of classification by adjudicating authority, which fails in the light of decisions supra, the impugned order relies on ruling by an Authority which does not bind the appellant herein or the Tribunal. It is also found inappropriate that the adjudicating authority has chosen to denigrate the findings of an appellate authority which is only in the domain of constitutional courts, for discarding the plea of precedent in rulings of the Tribunal in COMMISSIONER OF CENTRAL EXCISE, HYDERABAD-III VERSUS M/S BHADRADRI MINERALS PVT. LTD. [ 2015 (10) TMI 1836 - CESTAT BANGALORE] and in M/S. JINDAL STAINLESS (HISAR) LTD. VERSUS COMMISSIONER OF CUSTOMS NEW DELHI [ 2020 (8) TMI 743 - CESTAT NEW DELHI] and suffices to set aside the impugned order. It is found that the benchmark of purity, as settled by above decisions, was not attained at the time of import of the impugned goods. Further, the elaborate and detailed discussion in M/S VIRAJ PROFILES LIMITED VERSUS COMMISSIONER OF CUSTOMS (PREVENTIVE) , MUMBAI [ 2023 (10) TMI 1260 - CESTAT MUMBAI] resolves the controversy, once and for all, on heading 2522 of First Schedule to Customs Tariff Act, 1975 being the correct one. The impugned order set aside - appeal allowed. 2024 (4) TMI 80 Revocation of Customs Broker License - forfeiture of security deposit - imposition of penalty - export of textile articles - overvaluation and misdeclaration with intent to claim drawback under section 75 of Customs Act, 1962 - HELD THAT:- From the records, it appears that the offence by the exporter was one of overvaluation with intent to claim drawback under section 75 of Customs Act, 1962 beyond that entitled. Though misdeclaration too, has been cited, there is nothing on record to evince that description or quantity was also called into question. It is apparent that, in the absence of evidence to the contrary, the appellant was not responsible for ascertainment of value or declaration of value. There is nothing on record to indicate that undue benefits were received by them either. The appellant was found to have contravened the obligation to advise compliance with Customs Act, 1962 and to report non-compliance. Value, being a contractual element, is convergence of intent in monetary terms; it can be limitless but, for the purposes of assessment, is limited to a conceptual framework that is rarely without controversy when disputed. An adjudicatory finding of overvaluation is based on certain parameters which has consequence in law without altering the contracted engagement - There is no evidence to substantiate the charge; moreover, this is a tertiary consequence of one of the other charges, viz., that of not having been in contact with the exporter to which failure to advice does not add for enhancing gravity of breach but merely conjoins. The appellant has been charged with failure to verify antecedents and identity of client as well as operations at the declared address. This is, probably, the only obligation that specifies identifiable action on the part of customs broker and against which failure to measure up can be ascertained. It is on record that the appellant had not contacted the exporter at all. That is the most fundamental of obligations and breach thereof jeopardizes the reliability of the broker. The only breach that survives does not merit harshest of retribution - the revocation of licence under regulation 20 of Customs Broker Licencing Regulations, 2013 and the penalty imposed under regulation 22 of Customs Broker Licencing Regulations, 2013 is set aside - forfeiture of deposit is upheld - appeal allowed in part. 2024 (4) TMI 79 Classification of imported goods - plastic regrind - waste or not - restricted goods or prohibited goods - to be classified under tariff item 3915 1000 of First Schedule to Customs Tariff Act, 1975 or under tariff item 3901 1090 of First Schedule to Customs Tariff Act, 1975 - discharge of onus for displacing the declared classification - confiscation - redemption fine - penalty - HELD THAT:- The entirety of the dispute lies within the entry of goods for import under section 46 of Customs Act, 1962 and to be cleared, in terms of section 48 of Customs Act, 1962, for home consumption subject only to satisfaction of proper officer that duties, as leviable, has been discharged and that goods are not prohibited for import. Duties of customs are assessed as leviable by application of rate of duty determined by classification within First Schedule to Customs Tariff Act, 1975 to value as determined by the valuation provisions emanating from section 14 of Customs Act, 1962. The other, viz., prohibition , is an entirely different facet of clearance and undertaken as agency function which, though resort is permissible to the Central Government in section 11 of Customs Act, 1962. The findings of the lower authorities appear to have been caught in circular reasoning of cause and effect as re-classification is seen to have been caused by references to purported restriction on import of waste in Foreign Trade Policy (FTP) and standards formulated by Bureau of Indian Standards (BIS), which the imported goods were held to be, and the restrictions on import of waste plastics brought to bear upon the goods consequent to determination that the goods are waste corresponding to tariff item 3915 1000 of First Schedule to Customs Tariff Act, 1975. It is moot if the different statutes intended waste of plastics to coincide so but that caution does not seem to have impressed itself on the lower authorities. The determination that impugned goods had been misdeclared and prohibited for import is rooted in the purported designating of plastic regrind , in two of the three consignments, as waste by the Central Revenue Control Laboratory (CRCL) - it cannot be concluded from the test reports if the Deputy Chief Chemist concerned intended this to inform classification exercise or to be acted upon for furtherance of restriction in the Foreign Trade Policy (FTP). The onus for displacing the declared classification has not been discharged. The test reports do not lead to the conclusion that classification was to be altered or that the goods are restricted for import. In fact, the entire proceedings are vitiated by lack of any expert ascertainment of the nature of the goods - Between uninformed zeal and deliberate harassment is a very thin dividing line and no whit is added to the credibility of an institution when such blurring occurs in patently ill-considered enforcement. The impugned order is not based on appreciation of facts in totality and has not taken the proposals in the show cause notice to legal and logical conclusion - the impugned order set aside - appeal allowed. 2024 (4) TMI 78 Valuation of imported goods - Quinizarine - enhancement of value - determination of value on the basis of value of contemporaneous import by same importer (Appellant) from the same supplier - HELD THAT:- In the present case though the Bills of entry of contemporaneous import were relied upon, the adjudicating authority failed to consider the circumstance of the variation of the price of the imported goods existed at the time of export from China to India. Further it is also noticed that Ld. Commissioner (Appeals) has not given any finding on the reason of price variation of goods submitted by the Appellant. It is also observed that other than Bills of entry of contemporaneous import, there is no other evidence to show that the assessee have suppressed the value. It is also observed that the appellant have relied upon various judgments on the disputed issue which Learned Commissioner (Appeals) had no occasion to consider. The judgments relied upon by the appellant shall apply directly only after verifying the facts of each case. Since the above issues have not been dealt in a proper manner by both the lower authorities, the matter needs to be reconsidered as a whole. Accordingly, the impugned order is set aside and the matter remanded to the Ld. Adjudicating Authority for passing a fresh after providing sufficient opportunity of personal hearing to the appellant - appeal allowed by way of remand. 2024 (4) TMI 77 Classification of imported goods - Sea Squad Swim Seats - Arm Bands - Bio Fuse Fitness Fin - Swimming Goggles - other Headgear of rubber or plastics - Fabric hats - to be classifiable under CTH 9506/9004/6505/6506 respectively or otherwise? - benefit of Customs N/N. 12/2012-Sl. No. 503 and C.Ex. N/N. 1/2011-Sl. No. 126 and Customs N/N. 21/2012-Sl. No. 1 with effective rate of duty (BCD-Nil CVD-6%) - HELD THAT:- CTH 95062900 covers any item as long as they are categorised as water sports equipment. Once the items are accepted as used for swimming, be it for recreation or otherwise in the swimming pool, classification of these items under CTH 95069990 as meant for Outdoor games is not correct. The impugned orders have accepted the fact that the items in question are meant for kids and used for swimming but the finding that they are not used for competition but used for fun and so not classifiable as water sports equipment is not a logical finding. If kids swim for pleasure and not for competition, it does not become an activity other than swimming. Having held that the items under consideration viz. Sea Squad Swim Seats, arm bands and bio fuse fitness fins are meant for kids while swimming and the more specific heading would be 95062900 and not 95069990 which heading covers various outdoor games like boxing, badminton, hockey which are distinguishable from swimming. The impugned orders have erred in classifying Sea Squad Swim Seats, Bio-Fuse Fitness Fin and arm Bands under 95069990 as they were meant for recreation of babies/ kids in relation to swimming and the classification of these items under the category of outdoor games under CTH 95069990 is legally incorrect. CTH 95069990 falls under 950691 which covers Articles and Equipment for general, physical exercise, gymnastic or athletic . Once having agreed that the Swim squad seats, bio fuse fitness fin and arm bands meant for kids to remain afloat in water, it cannot be thereafter held that these items can be classified for use in Outdoor games - Generally, swimming is considered as a sport rather than a game. It does not mean that no game is played in swimming. Water polo is played in water which is considered as a game. Further the items under consideration cannot be used for any of the Outdoor games specifically listed out under 950691. These items can only be used for swimming and so the classification under 95069990 is incorrect - these items are more appropriately classifiable under 95062900. The impugned order in 3rd appeal has erred in classifying Head Gear, Fabric hats and Swimming Goggles under CTH 95069990. Instead goggles are classifiable under 90049090, headgear under 65069100, Fabric hat under 65050090 which are specific headings for these items which has never been disputed by the Department or the Assessee in earlier imports. Accordingly, the head gears, swimming goggles and fabric hats are not classifiable under CTH 95069990. Thus, appropriate classification of Sea Squad Swim Seats, Arm Bands, Tech Paddles, etc., is under CTH 9506 2900 of Customs Tariff Act, 1975 - The impugned order set aside - appeal allowed. PMLA 2024 (4) TMI 76 Money Laundering - Scheduled offences - whether the Non-Bailable Warrants (NBW) issued against the petitioner are liable to be quashed? - HELD THAT:- As recorded in order dated 05.12.2023, the petitioner had not appeared before the learned Trial Court. However, the exemption application filed on behalf of the petitioner was allowed for that day only by the link Court which was hearing the matters on the said day. An exemption application was again preferred by the petitioner on 05.01.2024, and the same was dismissed by the learned Trial Court considering his previous conduct of repeated absence from the Court and also the fact that he was not on bail in this case. The learned Trial Court had also directed the petitioner to appear physically on the next date of hearing failing which NBW would be issued against him - Despite there being clear directions for the petitioner to appear physically before the learned Trial Court, another exemption application on his behalf was filed on 02.02.2024, which was dismissed by the learned Trial Court with the observations that there was repeated physical absence of the petitioner before the Court, despite giving assurance/ undertaking to do so, on previous various dates, and thus, there were no grounds to allow the exemption application as he was not even on bail in this case, and also considering the fact that no relief had been granted to the petitioner/accused by this Court in the connected CBI case. The learned Trial Court had dismissed the exemption application filed on behalf of petitioner and had observed that Bailable Warrants were not being issued against the petitioner, and an opportunity was being afforded to him, but with a clarification that his failure to appear physically on the next date of hearing would lead to issuance of NBW against him. On 11.08.2023, 19.09.2023, 05.12.2023, though he was allowed to appear virtually by the learned Trial Court, it was observed that the same was allowed only for one occasion and he had to appear physically before the Court - Having taken note of the orders passed by the learned Trial Court on 31.05.2023, 19.07.2023, 11.08.2023, 19.09.2023, 05.12.2023, 05.01.2024, 02.02.2024, this Court is of the opinion that despite the fact that the petitioner had not obtained bail from the learned Trial Court after cognizance had been taken and summons had been issued against him, the learned Trial Court was lenient with the petitioner on several occasions by not issuing warrants against him, though he was not appearing physically before the Court despite repeated directions in this regard by the learned Trial Court. In this Court s opinion, what can be readily discerned from the records of the case and the orders passed by the learned Trial Court is that the petitioner had been afforded several opportunities by the learned Trial Court, to appear before it physically and repeated warnings had been issued that his failure to appear before the Court would lead to issuance of coercive process i.e. NBW. It is only thereafter that the learned Trial Court was left with no other option but to issue NBW against the petitioner. It is also relevant to note that the learned Trial Court had also considered in its previous orders, the conduct of the petitioner during the course of investigation i.e. his non-appearance before the investigating officer despite five summons being served upon him, the fact that complaint under Section 174 of IPC had been filed already against him by the prosecuting agency, and also the fact that NBWs had been issued against him in the connected CBI case and relief had been denied to the petitioner by this Court also in the CBI case as he had failed to return to India despite giving undertakings on numerous occasions. This Court is of the opinion that the impugned order dated 02.02.2024 suffers from no illegality or infirmity insofar as it has directed issuance of Non-Bailable Warrants against the present petitioner - the present bail application alongwith pending application stands dismissed. 2024 (4) TMI 75 Maintainability of petition - availability of alternative remedy of appeal - Money Laundering - scheduled offences - main contention raised by the petitioner was that he did not have a proper opportunity to place before the adjudicating authority certain documents which were at the relevant time not in his possession - HELD THAT:- If one goes through the scheme of the PMLA, sub-Section 1 of Section 26 provides for the filing of an appeal by any person aggrieved by an order made by the adjudicating authority, under the Act, before the Appellate Tribunal constituted under Section 25 therein. This appeal is to be filed within 45 days from the date of receipt of the copy of the order. The proviso to Section 3 of Section 26 empowers the Appellate Tribunal to condone the delay beyond the period of limitation of 45 days. Thus, the scheme of the Act provides for two appeals, i.e. first to the Appellate Tribunal and the second appeal, both on law and on fact, to this Court. Looking to the scheme of the Act, where the second appeal is before the very Court where the petitioner has now chosen to invoke its power under Article 227, it would be inappropriate for this Court to exercise its writ powers under Article 227 of the Constitution, when the second appeal is to the very same Court. Considering the fact that the petitioner has approached this Court within a period of 45 days limitation under Section 27 of the PMLA, it would be appropriate for the Appellate Tribunal before whom the petitioner may now file an appeal to consider this fact and exercise its jurisdiction to condone the delay in terms of the proviso to sub-Section 3 of Section 26 favourably. The petitioner makes a statement that he would file an appeal before the Appellate forum within the period of four weeks from today - The Appellate forum may also consider the additional documents to which reference has been made in paragraph 3 of this order whilst disposing of the appeal. Needless to state that these documents may be considered only after the respondents file their say to the application that the petitioner would move along with his appeal memo on that count. The petition shall stand dismissed as not maintainable in view of the alternate and equally efficacious remedy available of an appeal in terms of Section 26 of the PMLA. Service Tax 2024 (4) TMI 74 Principles of natural justice - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - dispute regarding the amount payable under the Scheme - department alleged that there was a difference of services shown in the Income Tax Returns vis-a-vis the value shown in the service tax returns for the period under dispute - requirement to grant personal hearing to the declarant - HELD THAT:- As per the provisions of the Section 127 of the Sabka Vishwas Scheme and Rule 6 of the Sabka Vishwas Rules, the Designated Committee was required to issue Form SVLDRS 2 indicating the amount which, according to the Designated Committee, was payable by the Petitioner and giving an opportunity of personal hearing to the Petitioner. If such a Form SVLDRS 2 had been issued by the Designated Committee then the Petitioner would have got an opportunity of personal hearing and of making written submissions by filing Form SVLDRS-2A. However, in the present case, without issuing Form SVLDRS 2, the Designated Committee has straight away issued Form SVLDRS 3, thereby depriving the Petitioner of an opportunity of a personal hearing. This action of the Designated Committee of straight away issuing Form SVLDRS 3, without issuing Form SVLDRS 2, is not only in violation of Section 127 of the Sabka Vishwas Scheme and Rule 6 of the Sabka Vishwas Rules but is also in total violation of the principles of natural justice. Form SVLDRS 3 is required to be quashed and the matter is required to be remanded back to the Designated Committee for taking a fresh decision in the matter, after giving an opportunity of hearing to the Petitioner - Form SVLDRS 3, dated 2nd December 2020, is hereby quashed and set aside. Petition allowed by way of remand. 2024 (4) TMI 73 Classification of services - appellant is registered SEZ unit under the Special Economic Zone Act, 2005 for carrying out authorized operations namely Software Development - Agreements with IVP-US and BACS - IVP-US had provided services for identification and prediction of market trends in US - Business Auxiliary Service or intermediary services - reverse charge mechanism - place of provision of services - revenue neutrality - period April, 2013 to June, 17 - interest and penalty - HELD THAT:- The terms and conditions of agreement indicate that IVP US AND BACS were working as an Agent of the Appellant. All the elements required for qualifying intermediary were present in the above agreement. IVP US AND BACS could not alter the nature or value of main service, value of intermediary services was clearly identifiable and the services provided by intermediary were clearly identifiable. There were three persons involved in the above deal, i.e., the Appellant, Clients of the Appellant and IVP US OR BACS. Reference is made to the decision of the CESTAT in the case M/S. EXCELPOINT SYSTEMS (INDIA) PVT. LTD. VERSUS CST, BANGALORE [ 2017 (10) TMI 806 - CESTAT BANGALORE] where the party was engaged providing project support services, consulting services, marketing on product, technical support services, providing advice, clarification and technical assistance to customers on behalf of the group company located outside India and payment received in convertible foreign exchange. The party in the said matter contested that he was providing services in nature of Business Auxiliary. It is seen that demand was raised and subsequently confirmed under reverse charge mechanism treating the place of provision of services within taxable territory. Under the Place of Provisions of Services Rules, 2012 (POP Rules), place of provisions of services were specified for different services - In the present case services for which demand was raised were intermediary services. In accordance with Rule 9 of the POP Rules, place of provision of service of intermediary service was location of service provider. Service providers in the instant case were located in USA. Hence, place of provision of service was USA. As both the service provider and service recipient were located in non-taxable area, service tax demanded in this case is not sustainable. The demand in the instant case pertains to April,13 to June,17 when the definition provided under section 65 was not in existence. The classification of service on the basis of a non-existing provision is bad in law. With effect from 01.07.12, all services except services mentioned in negative list were made taxable. Contrary to that, definition of intermediary was available even after 01.07.12 and nature of impugned services were within four corners of intermediary services. Thus the observation of the Pr. Commissioner is not sustainable and liable to be set aside. It is also important to note that the Appellant was a SEZ unit and was availing Cenvat credit of taxes paid on its input services. Services which were provided by IVP US/UK were input services for the Appellant. In this case service tax was payable under reverse charge mechanism under notification No.30/12-ST dated 20.06.12 by the service recipient and the same was available for taking back in the form of Cenvat Credit. Thus, there was no gain to the government exchequer in that case. It is a case of revenue neutrality. Once demand is not sustainable, interest and penalty under Section 78 would not be imposable. The impugned order is set aside - appeal allowed. 2024 (4) TMI 72 Best judgment assessment under section 72 of the Finance Act, 1994 - liability to pay service tax of appellant, being sub contractor - works contract service or commercial or industrial construction service?. The first submission of the appellant is that its contracts involved both use of materials and rendering of services and hence they were works contract services and not commercial or industrial construction service - HELD THAT:- Such an assertion was also made before the Commissioner (Appeals) and before him, it was further asserted that the appellant had paid VAT on 65% of the value of the contracts. The appellant did not produce any document to support either its assertion that the contracts were composite contracts or that it had paid VAT on any part of the value of the goods of the contract. There is nothing in the appeal to support this assertion. This submission, therefore cannot be accepted. The second submission is that the appellant was illiterate but it was still the responsibility of the officers to determine the correct tax liability - HELD THAT:- The assertion that the appellant is illiterate is not borne out from the appeal itself because he signed (in Hindi) not only on the appeal but also on other documents enclosed with the appeal - Even if the appellant is not very educated and is running the business, he will have some records, bills, etc. which he could have produced. Under these circumstances, the adjudicating authority was correct in determining the tax liability based on the documents produced before him. There is nothing in these appeals even to support the assertion of the appellant that it had rendered works contract service and the amount which it had received were inclusive of the materials. The appellant also submitted that it was for the audit team to determine how much tax was paid by its service recipient Ahuja and also find out how much tax was paid by all other service providers who had provided services to Ahuja and from that determine how much is due from the appellant - This assertion that every other assessee has to do their job properly and produce records and file returns and based on their returns, the tax liability of the appellant should be determined is misconceived especially considering that the appellant had not produced its own records to support its assertion. It is also to be noted that the letters from Ahuja produced by the appellant before the Commissioner (Appeals) also did not clearly state that Ahuja had included the value of the services rendered by the appellant in the taxable value which it declared and paid tax. Nothing produced in this appeal supports the contention of the appellant (a) that it was not required to pay service tax; or (b) that the main contractor had paid service tax on the total amount including the value of taxable services rendered by the appellant; or (c) that the appellant had entered into composite works contracts which included the supply/deemed supply of goods and that the appellant had paid VAT on the value of the goods. The appellant did not take the registration or pay service tax or file returns. Even when the investigation was commenced, the appellant did not produce anything other than its bank statements - the impugned order is correct and proper and calls for no interference - Appeal dismissed. 2024 (4) TMI 71 Classification of goods - goods transport agency services or courier service - recovery alongwith interest and penalty - invocation of Extended period of Limitation - HELD THAT:- The undisputed facts are that the appellant was transporting a large number of small consignments for its clients and was issuing booking slips. Before issuing the booking slips it was getting an undertaking that the consignment does not contain personal mail, currency notes, jewellery contraband etc. , which is a standard declaration for courier services because the courier companies are barred from carrying these as a part of courier packages - It is also not in dispute that the appellant is using the tracking number generated by a sister firm for all its consignments like its other sister courier companies. It is found that the services rendered by the appellant have all the essential characteristics of courier service and not of goods transport agency service . The appellant could have entertained a belief that they were classifiable under the goods transport agency service and, accordingly, classified its service, paid service tax and filed returns. Classification of the service is a part of a self-assessment by the appellant. The self-assessment is subject to scrutiny and if necessary best judgment assessment under section 72 by the officer and the appellant had been filing returns. It is the responsibility of the officer to scrutinize them. Wherever the appellant had not filed returns or not assessed service tax correctly, it is the responsibility of the officer to initiate best judgment assessment within time from the date of filing of return or the last date for filing the return for a particular quarter. Had this been done, the fact that the appellant qualified its services as goods transport agency service , while it has all the characteristics of a courier service , would have come to light and demands could have issued within time. The ground for invoking extended period of limitation and imposing penalty under section 78 that the appellant had indulged in deliberate misclassification of taxable service is not correct. The assessee is expected to classify its services and pay service tax as per its understanding. It was the job of the officer to scrutinize the returns and if no return is filed by due date, it was his responsibility to call for its records and complete the best judgment assessment. This was not been done in this case and the delay occurred in raising a demand beyond the normal period of limitation for this reason. The extended period of limitation under the proviso to section 73(1) of the Finance Act could not have been invoked. The classification of the service under the courier service upheld - the demand for extended period of limitation and a penalty imposed under section 78 set aside - demand for normal period of limitation is upheld with interest thereon - appeal allowed in part. 2024 (4) TMI 70 Recovery of ineligible input service credit along with interest and penalty - denial of credit on such invoices which were issued in the name of its agent during the period 2007-08 to 2011-12 - privity of contract - HELD THAT:- There is no dispute that the Input Services were rendered by the service providers that and that these services were utilized by the appellant. There is also no dispute that the appellant had rendered its output services on which it paid appropriate service tax. The only dispute is that the invoices for input service were issued in the name of agent of the appellant and not on the appellant itself. It is also not in dispute that the appellant had paid for these services and there is no evidence that the agent had paid for the services. In view of above, there are no reason to hold that the services were not utilized by the appellant or that the appellant had not paid for the services. It is true that the input invoices should have been in the name of the appellant instead of being in the name of its agent but, in our view, the mere fact that they were issued in the name of the agent is not sufficient to deny the substantive benefit of CENVAT Credit to the appellant when the utilization of the services and payment for them by the appellant is not in doubt. The impugned order set aside - appeal allowed. 2024 (4) TMI 69 Short payment of service tax - Management, Maintenance and Repair service - Works Contract service - Erection, Commissioning or Installation service - appellant had deposited the service tax even before the issue of the show cause notice - cum-tax benefit - interest and penalty - extended period of limitation - HELD THAT:- It is undisputed that the appellant had received the amounts indicated in the Forms 16A and in the show cause notice. It is also undisputed that these amounts were received by the appellant for providing services and that such services were taxable. The only exception is the services rendered to M/s Adani Power, which was a unit within the SEZ and, therefore, according to the appellant was exempted from the payment of service tax. In respect of services rendered to M/s Sigma Construction, the appellant s only defense is since it had rendered the services as a sub-contractor, it need not pay service tax. It was decided by the larger Bench of this Tribunal in case of Commissioner of Service Tax, New Delhi vs. Melange Developers Pvt Ltd [ 2019 (6) TMI 518 - CESTAT NEW DELHI-LB ] that service tax has to be paid by the sub-contractor also in addition to the main contractor and if the main contractor wants he can take credit of the service tax paid by the sub-contractor as an input service - there are no force in the submission of the appellant that no service tax is to be paid on services rendered to M/s Sigma Construction as a sub-contractor. The demand on this count must be sustained. The services rendered by the appellant to M/s Adani Power are claimed to have been rendered to a unit in SEZ. This contention of the appellant was made before the original authority but it was not accepted for the reason that the exemption under Notification No. 09/2009-ST dated 03.03.2009, which exempts services from payment of service tax was a conditional exemption, and certain conditions were not fulfilled. Extended period of limitation - HELD THAT:- The appellant was bound to pay service tax after assessing it correctly. It is a different matter if there is a difference of opinion and the appellant had entertained a genuine belief that service tax was not payable on any service and hence did not pay service tax. Therefore, the appellant had suppressed the value of services rendered by it to M/s Instrumentation Limited, Kota with an intention to evade payment of service tax and, therefore, extended period of limitation was correctly invoked to raise demand of service tax. Interest - penalty - HELD THAT:- If no service tax was separately charged on the invoices by the appellant and only the total amount was received, the amount in such invoices should be considered as cum-tax amount and service tax should be calculated accordingly. Consequently, the amount of interest if any, also needs to be recomputed. Penalty under section 76 also needs to be recomputed accordingly. The impugned order is modified to the extent that the demand of service tax on the services rendered to M/s Adani Power located in SEZ is set aside. Any amount paid as service tax before the issue of show cause notice also needs to be adjusted. Wherever the invoices were raised without separately showing service tax, amounts received should be considered as cum-tax receipts. The amount of differential duty may be re-calculated as above. Consequently, the amount of interest and penalty also should be recalculated. The matter is remitted to the original authority only for the purpose of calculation in the manner indicated above - appeal allowed. 2024 (4) TMI 68 Classification of services - Commercial or Industrial Construction services or Erection, Commissioning or Installation Services - benefit of abatement under N/N. 1/2006-ST - period for the April 2010 to March 2011 and 2011-12 - HELD THAT:- On the similar issue this Tribunal in WESTERN CORROSION CONTROLLER VERSUS C.C.E. S.T. -VADODARA-I [ 2022 (1) TMI 450 - CESTAT AHMEDABAD] remanded the matter to the Original Adjudicating authority. Following the same with regard to the present controversy also, with the similar observations, the matter remanded to the Original Adjudicating authority. The appeal is allowed by way of remand to the adjudicating authority for deciding afresh. 2024 (4) TMI 67 Classification of service - Commercial or Industrial Construction Service (CICS) or Works Contract Service (WCS) - completion and finishing services - suppression of facts or not - Extended period of limitation - HELD THAT:- It is observed that in the present matter appellant claimed that service tax under works contracts came into effect w.e.f. 01.06.2007 and accordingly appellant paid service tax on gross amount of contracts under the category of works contract and duly reflected the same in ST-3 returns. Appellant paid the tax and filed ST-3 returns under the category of Works Contracts. The provisions of work contract composition scheme as well as Rule 2A of Service Tax Valuation Rules are specifically made applicable to the works contract service, subject to fulfilment of various conditions so that the tax liability can be restricted only to the service portion of the contract. Admittedly, no service tax can be levied on sale of goods or transfer of goods in property. In fact, the Hon ble Supreme Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT] held that prior to 1-6-2007 there is no machinery provisions for levy and assessment of service tax on indivisible works contract. The provisions of work contract composition scheme as well as Rule 2A of Service Tax Valuation Rules are specifically made applicable to the works contract service, subject to fulfilment of various conditions so that the tax liability can be restricted only to the service portion of the contract. Admittedly, no service tax can be levied on sale of goods or transfer of goods in property. In fact, the Hon ble Supreme Court in the case of Larsen Toubro Ltd. held that prior to 1-6-2007 there is no machinery provisions for levy and assessment of service tax on indivisible works contract. The eligibility of the appellant either for the composition or for valuation under Rule 2A of the Valuation Rules are to be examined afresh by the Ld. Adjudicating Authority - it is also found that the entire amount has been confirmed without indicating the breakup of the amount attributable to the goods and services rendered by the appellant in the present matter. The impugned order is set aside - matter is remanded to the Ld. Adjudicating authority that to ascertain if VAT /Sales Tax has been paid for all the contracts under the category of works contract. If the appellant has paid VAT/Sales Tax under the head of Works Contract then Service would fall under the category of Works Contract Services. The appeal is allowed by way of remand to the Adjudicating Authority. 2024 (4) TMI 66 Classification of service - Business Support Services (BSS) or not - services in relation to providing vehicles to associates, in course of its business activities - Business Auxiliary Services (BAS) or not - business promotion activities provided/rendered in the course of business activities - Authorised Service Station services or not - services involved in servicing of vehicles during the free warranty period provided/rendered during the course of its business activities - CENVAT Credit - method adopted by the appellants assessee by foregoing certain amount of Cenvat credit in respect of provision of exempted service is correct in terms of provisions of Rule 6(3A) of CCR, 2004 or not - penalty is imposable u/s 77, 78/76 of FA - period of dispute in this case relates to 01.04.2011 to 30.06.2017. Levy of service tax in respect of services provided in relation to business promotion activities in course of appellant s business activities - HELD THAT:- The facts of the case need to be examined along with the legal position in respect of levy on payment of service tax. From the facts of the case, it is found that the various schemes under which the discount/incentives were received by the appellants from the manufacturer of motor vehicles by way of credit notes, were essentially in the nature of schemes conceptualized by such manufacturer wherein the discount given to the ultimate consumer is borne by both the manufacturer and the appellants dealer. As per such schemes, the appellants had forwarded to the manufacturer the proposal of discount to be given to the ultimate consumer, for their consideration and approval - The discounts offered in the above manner by issue of credit note also amount to reduction in purchase price of the individual vehicles which are covered during the aforesaid volume/value of sales. In respect of reimbursements scheme, various discounts offered depending on the specific model of the vehicles being sold during a particular specified period, the appellants dealer extends such benefits to all eligible buyers of the vehicles. Hence, the said benefit of discount for incentives/ reimbursable amounts also results in reduction of net sale price of vehicles to the ultimate consumer. In the case of RELIANCE ADA GROUP PVT LTD VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI-IV [ 2016 (3) TMI 810 - CESTAT MUMBAI] , the Tribunal has held that cost sharing arrangement in common services/activity as per agreed arrangement among them cannot be subjected to service tax. CBIC has vide its circular No. 87/05/2006-ST dated 06.11.2006 has also clarified on the service tax issues relating to authorized motor vehicle dealers and service stations, which have also been discussed elaborately in the case of M/S MY CAR (PUNE) PVT. LTD. VERSUS CCE, PUNE-I [ 2016 (1) TMI 1155 - CESTAT MUMBAI] , wherein the Tribunal has observed that the discount/commission/incentives given for sale of cars, is no way comparable to services provided to customers at free of charge for which reimbursement charges are given by the car manufacturer - the Tribunal have held that the incentives/ commission is solely related to trade discounts for sale of cars in accordance with the regular practice as well as the agreement/schemes that were in vogue in the industry, and these cannot be treated as compensation received by the appellant for any services provided to the car manufacturer. Levy of service tax - Business Support services - services in relation to providing vehicles to associates, in course of its business activities - HELD THAT:- The learned Commissioner had concluded that the nature of activity of supplying vehicle to the goods transport agency, by the appellants is squarely covered by the ambit of the exemption notification No.25/2012 ST dated 20.06.2012 and by agreeing to the points submitted by the appellants, learned Commissioner had held that the said service cannot be categorized/classified under the head Business Support Services . As there is no grievance expressed by the appellants in the appeals filed, on this issue as it is not against them and there is no appeal filed by the Revenue against the dropping of the demand on this issue, there is no need to deal with the above issue. Levy of service tax - Authorised Service Station services - Free services provided during the warranty period - HELD THAT:- The issue had also been decided by the Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE, PUNE-I VERSUS SAI SERVICE STATION LTD [ 2017 (5) TMI 1144 - CESTAT MUMBAI] , by setting aside the service tax demand it was held that the issue is no more res integra as identical issue came up before the Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE CUSTOMS, NASHIK VERSUS M/S AUTOMOTIVE MANUFACTURES LTD [ 2015 (12) TMI 549 - CESTAT MUMBAI ] wherein the Tribunal held that service tax liability cannot be on the part of margin given by the manufacturer to the dealers being inclusive of the charges of free sale service. Reversal of Cenvat credit in terms of Rule 6(3A) of Cenvat Credit Rules, 2004 - HELD THAT:- It is found from records of the case, in particular from the Final Audit Report No.236/2016-17 submitted by the Deputy Commissioner, Service Tax Audit-III, Mumbai, it has been specifically mentioned that the during the course of audit, the Audit wing had observed that the appellants had maintained CENVAT registers as per Service Tax registrations obtained for various premises. The Audit wing had also observed that the appellants had not availed Cenvat credit on inputs services which have been utilized only for exempted services; however, Cenvat credit has been availed common input services within each of the registered location. It is also explained by the appellants that they had not obtained service tax registration in respect of two premises, since no service is rendered in these places and they only undertake trading of vehicles for which they are discharging appropriate VAT before the jurisdictional Sales Tax Authorities - in the present case, neither there is any cursory examination of the same nor any specific findings recorded by the learned Commissioner in the impugned order. In the absence of clear finding for demand of reversal of Cenvat credit and for demand of service tax on other income without examination of documents, it is found that the same cannot be legally sustainable. There are no merits in the impugned order dated 13.10.2020, insofar as the adjudged demands were confirmed on the appellants, holding the activity as taxable services. Consequently, the demands of service tax and imposition of penalties confirmed in the impugned order dated 13.10.2020 is not legally sustainable. Appeal allowed. Central Excise 2024 (4) TMI 65 Condonation of delay in filing the appeal - It was held by High Court that The delay in filing the appeal is too long without any cause much less sufficient for adopting liberal approach also. In the absence of any cause shown, delay cannot be condoned. Therefore, the application is rejected - HELD THAT:- There are no reason to interfere in the matter - The Special Leave Petition is hence dismissed. 2024 (4) TMI 64 Utilization of CENVAT credit - Area Based Exemption - manufacturer/producer receiver of goods, working under N/N. 1/2010, can avail Cenvat Credit of inputs purchased from the manufacturers who are also availing the same Notification - extended period of limitation - suppression of facts or not - HELD THAT:- On going through the provisions of the Rules it is clear that in terms of Rule 3, a manufacturer/ producer of excisable goods or an output service provider can avail Cenvat Credit of Goods/Services received by them and on which applicable duty/tax is paid; the only bar appears to be on goods in respect of which benefit under Notification No. 1/2011 Central Excise dt. 1st March 2011 is availed or goods specified at serial nos. 67 and 128 in respect of which the benefit of an exemption under Notification No. 12/2012 Central excise dt. 17/03/2012 is availed. Cenvat Credit Rules cannot be read in isolation. If the Notification No. 1/2010 is not listed under Rule 12 for a certain period, it cannot be held that credit would still be admissible in view of Rule 3 (1). Such a proposition would not only render the other Rules of the Cenvat Credit Rules, particularly Rule 12, not only redundant but also would lead to unintended interpretation. This bench cannot preside over to look into Legislative intent in the Cenvat Rules framed, particularly when there is no ambiguity in the wording of the Rules. It s a clear case of inclusion or otherwise of a Notification for certain period under Rule 12 of Cenvat Credit Rules, 2004 - the appellants are not eligible to avail Cenvat Credit during the impugned period, that is 01/05/2012 to 19/01/2014, as the notification No 1/2010 is not mentioned under Rule 12 ibid during the relevant period. Extended period of Limitation - suppression of facts or not - appellants did not disclose relevant facts in the ER-I Returns or through any correspondence and only because of the audit, Revenue could find out that the appellants have availed ineligible credit - HELD THAT:- Courts and Tribunal have been consistently holding that in order to invoke extended period, a positive act of fraud, collusion, suppression of facts etc. with intent to evade payment of duty, needs to be established. In the absence of the same, extended period cannot be invoked. Looking into the fact that the appellants have been regularly filing the ER-I Returns and have been availing self-credit of duty paid and the same was being sanctioned/ratified by speaking orders, it is found that suppression cannot be alleged. The Tribunal has held that extended period cannot be invoked for the only reason that a discrepancy has been found during the course of the audit. Therefore, the appellants succeed on limitation. The appellant has not made out any case on merits. However, they succeed on limitation - Appeal allowed on limitation. 2024 (4) TMI 63 Clandestine removal - appellant have not accounted for the excisable goods in the records - non-entry of the final products and waste and scrap in Daily Stock register - adjudicating authority failed to consider vital submissions made by the appellant - violation of principles of natural justice - confiscation under Rule 25 of CER - HELD THAT:- It is found that the adjudicating authority has not considered the vital submissions made above by the appellant. Therefore, the principle of natural justice has not been complied with by the adjudicating authority - despite giving his finding in respect of the other proposal of the show cause notice he has not given any finding in respect of the proposal (ii) and (vii) of the show cause notice. It is incumbent on the Commissioner to pass an order on each and every proposal made in the show cause notice and he cannot be silent in the operating portion of the order on any of the proposal made in the show cause notice. There is a clear error in the order. In the absence of reasons in support of the order it is difficult to assume that the authority had properly applied provision of laws before passing of the order. Since no order was passed on the above two proposal, the whole matter needs to be remanded for passing a fresh order. The learned Adjudicating Authority granting fair opportunity of hearing shall pass a reasoned and speaking order in respect of the concerned charges to hold whether sustainable or not. Such exercise shall meet the scrutiny of law. Entire matter remanded to the Ld. Adjudicating Authority for passing a de novo order within a period of six months from the date of receipt of this order - appeal disposed off by way of remand. 2024 (4) TMI 62 Valuation - inclusion of freight charges for delivery at buyer's place in the transaction value - removal from factory gate - HELD THAT:- It is found that freight have been charged separately and received separately. It is also noticed that the buyers of the goods-Western Coalfields Ltd., Nagpur and M/s Bharart Coking Coal Ltd. (A Subsidiary of Coal India Ltd.) have issued purchase order specifying the price for the goods separately and also specifying the transportation cost for the supply of goods. Accordingly, appellant have supplied the goods and raised invoices for the price of goods and the transportation. Thus, it amounts to showing the cost of transport separately in the invoices. The place of removal is factory gate, however the goods were delivered at customer place. Therefore goods were sold for delivery not at the place of removal (i.e. factory gate) but at other place i.e. customer door step. On perusal of copies of the purchase orders placed by the M/s Western Coalfields Ltd., Nagpur and M/s Bharat Coking Coal Ltd. and invoices issued by the Appellant. From the invoices it is seen that the freight shown in the invoices is in addition to basic price of the goods. It is clear from the terms of the purchase order that basic price and other components have to be indicated separately. Therefore, there is no dispute that basic price and the freight components are clearly indicated separately in the invoices and therefore criterion i.e. cost of transportation should be in addition to the basic price of the goods stand fulfilled. There are no valid reason for disallowing the deduction for the freight paid inasmuch as the sales are FOR destination - It is also found that a coordinate Bench of CESTAT in the case of STERLITE OPTICAL TECHNOLOGIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE CUSTOMS AURANGABAD [ 2015 (9) TMI 1023 - CESTAT MUMBAI] has taken a view in identical facts that freight will be allowable as a deduction from the composite price. Thus, the contention of the Department to include the freight amount in the assessable value does not meet the test of law and hence not legally sustainable. Hence, there are no merit in order passed by the appellate authority. The impugned order is set aside - appeal is allowed. 2024 (4) TMI 61 Exemption from Duty - Wrongful availment of N/N. 12/2012-CE dated 17.03.2012 - food preparation supplied to Women Industrial Co-Operative Societies intended for free distribution to the economically weaker sections of the society - Department denied the benefit of the exemption contained in the impugned Notification to BCPM on the ground that the Appellant Assessee did not supply the same directly for free distribution to the economically weaker sections of the society and had supplied the BCPM only to WCS for further manufacture of Complementary Weaning Food - suppression of facts - Extended period of limitation. HELD THAT:- The Expert Committee introduced a new product in the name of BCPM and also the role of Private Enterprise in the manufacturing activity, to ensure supply of quality products to the beneficiaries. From the above, it is found that the scheme has been announced by the Government with the aim to supply nutritional food supplements to Children, Pregnant and Lactating women free of cost, through women cooperative societies. As the societies do not have sufficient infrastructure for processing of Ragi malt, the processing and supply of BCPM was envisaged through a Private Enterprise and the Appellant Assessee was awarded the contract for the supply of BCPM to WCS and also to ensure qualitative supply of the nutritional food supplement from WCS to the weaker sections of the society. From the above, it emerges that BCPM was never considered as a separate product. But, in the scheme formulated to supply the nutritional supplement primarily through the women cooperative Societies, BCPM being an integral part of the scheme, it has been supplied after being added with roasted wheat flour at WCS, in the name of CWF to the beneficiaries. Effectively, only one final product namely CWF has been supplied under the ICDS scheme either by the Appellant Assessee directly or through the WCS as mandated by ICDS. There is no dispute regarding the eligibility of the exemption notification to the product CWF. Since, the Department has denied the benefit of exemption provided in Notification No. 12/2012 only to the product BCPM, the discussion confined only on the availability of the said exemption to BCPM. Now, coming to the eligibility of the exemption provided under Notification No. 12/2012-CE dated 17.03.2012 to the product BCPM, it is observed that the benefit of the Notification No. 12/2012 has been extended to the product CWF, as the same has been manufactured and sold by the Appellant Assessee directly to the Anganwadis, the limb of ICDS Department. Whether the product BCPM manufactured by the Appellant Assessee and supplied to the WCS is entitled for the exemption contained in the Notification No. 12/2012? - HELD THAT:- It is observed that CWF is the product intended to be supplied to the beneficiaries under the ICDS scheme. BCPM, as a separate product would not ordinarily come into existence during the course of manufacture of CWF. BCPM, as a separate product, has been introduced only by the Expert Committee suggesting the Technical Specification for BCPM. It is observed that all the essential ingredients such as Malted Ragi and vitamin premix which are instrumental to contribute amylase activity and micronutrients are contained only in BCPM. CWF has come into existence by mere addition of wheat flour in the ratio of 58:42 in the premises of WCS. The addition of roasted wheat flour with the BCPM does not transform it into a new product with new character and quality - Such certificates have been submitted to the jurisdictional Central Excise Officers, as required under condition No. 5 of Notification No. 12/2012-CE dated 17.03.2012, once in a quarter. Thus, the Appellant Assessee has proved beyond doubt that BCPM has been consumed ultimately by the beneficiaries under the ICDS scheme as mandated in the Notification No. 12/2012 dated 17.03.2012. In the impugned order, the Adjudicating Authority confirmed the demand of central excise duty on the ground that the BCPM manufactured and supplied to WCS are not intended for distribution to the beneficiaries of the ICDS scheme, as they were not supplied directly to the Anganwadis - the Commercial Tax Department has issued a clarification to the effect that BCPM is in the supply chain of the scheme and was intended for free distribution as mentioned under Clause 36(2)(v) of the Tender Document and the benefit of the Notification is applicable to BCPM. The Adjudicating Authority has relied upon the decision of the Hon ble Supreme Court in the case of Harichand Shri Gopal [ 2010 (11) TMI 13 - SUPREME COURT ] wherein it was held that in order to avail any condition-based exemption, the condition specified in the said notification has to be fulfilled. In the present case the Appellant Assessee has fulfilled all the conditions as stipulated in the Notification No. 12/2012. The Ld. Adjudicating Authority has imported the word directly into the notification and arrived at a conclusion that the benefit of the notification would be available only if the food preparations are directly supplied for the intended purpose. We observe that the Notification only envisages that BCPM, in this case, has to be supplied for the beneficiaries of the ICDS scheme - the Appellant Assessee has fulfilled the conditions of the Notification 12/2012-CE to avail the benefit of the said exemption notification. Accordingly, it is found that the above said decision relied upon by the Adjudicating Authority in the impugned order is not relevant to this case. It is an admitted fact that the Respondent Assessee paid VAT on the sale of BCPM. In view of the VAT payment, the Department took the view that BCPM is different from CWF. It is observed that when BCPM was sold to ICDS and delivered to the WCS, there was a transfer of title against the consideration and VAT was paid. This VAT payment has no relevance to the provision of service rendered to the WCS, as the definition for Service excludes the transfer of title of goods as clarified in Paragraph 2.6.4 of the Education Guide issued by CBEC. Therefore, levy of service tax is not permissible on the value of goods on which VAT has already been paid. The Lower Authority has rightly relied upon the decision of the Hon ble Supreme Court in the case of BHARAT SANCHAR NIGAM LTD. (BSNL) VERSUS UNION OF INDIA [ 2006 (3) TMI 1 - SUPREME COURT ] and held that the contract entered into by the Respondent Assessee is a composite contract for the supply of BCPM and no separate invoices were raised for the service charges and hence the inbuilt price cannot be vivisected, to demand Service Tax - the decision of lower authority regarding dropping of the demand of Service Tax in the impugned order is in accordance with the law and it requires no interference as prayed for by the Department. Extended period of limitation - HELD THAT:- The proforma attached to the said letter indicates that the Appellant Assessee did produce all the documents called for therein for scrutiny by the Audit party. A perusal of the list of documents submitted to the Audit party clearly reveal that the Appellant Assessee has furnished all documents to the Audit party and no abjection was raised. Further the decisions of various appellate fora quoted by the Appellant Assessee in their reply were not considered by the Adjudicating Authority. In view of the above, we observe that there was no malafide intention established on the part of the Appellant Assessee to suppress any information before the Department with an intention to evade payment of duty. Accordingly, the submission of the Appellant is agreed upon that there is no suppression of fact with an intention to evade payment of duty exists in this case - it is observed that no incriminating documents of any kind has been brought on record to substantiate the allegation of suppression. The entire demand has been raised based on the statutory documents submitted by the Appellant Assessee. Therefore, the demand confirmed in the impugned order by invoking extended period of limitation is not sustainable and accordingly is ordered to be set aside on the ground of limitation. The demand of Central Excise duty along with interest and penalty confirmed in the impugned order is set aside. The dropping of demand of Service Tax by the Adjudicating Authority is upheld - the appeal filed by the Appellant Assessee is allowed on merits as well as on limitation.
← Older Newer →

Quick Updates:

What's New:
Latest Case Laws

What's New:
Latest Notifications

What's New:
Latest Circulars

F: QUANTUM OF PENALTY UNDER THE IGST ACT

F: Penalty under Section 73(1) of CGST Act, 2017

F: Section 17(2) Rule 42

A: Supreme Court orders about alleged bogus capital gains on alleged penn...

F: ONLINE SOFTWARE IMPORT DUTY CALCULATION REG

C: Verification of authenticity and genuineness of Certificate of Origin ...

H: Levy of interest and penalty - transition of amount wrongly claimed as...

C: Acceptance of Electronic Certificate of Origin (e-CoO) issued by the i...

H: Levy of penalty @200% - e-way bill which was generated by the appellan...

H: Eligibility for Input Tax Credit - Failure to report outward supply - ...

H: Seeking cancellation of the GST registration - The case involved a pet...

H: Reference to Departmental valuation officer [DVO] without first reject...

H: Validity of reopening of assessment - Validity of grant the approval b...

H: Validity of reopening of assessment - Petitioner received another noti...

H: Penalty levied u/s 271(1)(c) - Transfer pricing adjustment - assessee ...

H: Disallowance of commission paid to foreign agents - The Tribunal uphel...

H: Penalty u/s. 271(1)(c) - Referring to a precedent set by the Hon’ble S...

H: Deduction u/s 80IA(4) - Disallowance of project facility expenses - Re...

H: LTCG - deduction u/s 54 denied - Despite the assessees claim of having...

H: Validity of assessment framed u/s 143(3) by Non- jurisdictional ITO - ...

H: Addition u/s 69A - cash loans given by the assessee as unexplained - d...

H: Addition u/s 68 in the hands of partnership firm - capital introduced ...

C: Nomination for Mutual Fund Unit Holders – exemption for jointly held folios

C: Ease of doing business- Fund manager for Mutual fund schemes investing...

N: Reporting Entities notified for Aadhaar authentication service of the ...

N: Regarding amendment in Notification No. 77/2023 -Cus. (N.T.) dated 20....

N: Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold ...

A: Navigating the MSME Terrain: Insights from a Consultant's Perspect...

A: How to Decode the Form 16A Password for TDS on Non-Salary Income

A: SEZ units furnishing LUT are not required to pay GST on RCM for servic...